First Time Home Buyers Should Know Their Buying Power

One of the biggest frustrations for both parties (buyers and sellers) in a real estate transaction occurs when home buyers are not properly approved and thoroughly educated about their mortgage.

For example, a buyer made a full price offer on a $160,000 home that was accepted by the seller. The lender had pre-approved the buyer for the loan. However, the lender had not communicated the monthly payment on a $160,000 mortgage to the buyer.

When receiving that piece of information about three weeks after entering into the contract, the buyer was floored and nervous about making the purchase.

Needless to say, the buyer did not complete the purchase. Understandably, the seller was less than ecstatic about this turn of events.

Before making an offer on a home, always obtain a copy of the Good Faith Estimate that is required to be given to you by your lender within three days after completing a mortgage application.

What did you say? "You don’t have a lender."

"You haven't applied for a home mortgage by completing a Uniform Residential Loan Application (Fannie Mae Form 1003)."

"You didn’t receive a Good Faith Estimate before shopping for a home."

Do any of the previous statements read like Greek to you (and you don’t speak Greek)?

If any of these statements are true for your situation, you are not properly prepared to purchase a home. You might want to hire a team of professionals that will properly educate and guide you successfully through the process.

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Buying Real Estate Foreclosures

Guest Contribution from Rhonda Burgess

Realty World Southern Living - Nashville

Myth: Buying a foreclosure is always the best deal.

Buying a foreclosure is NOT always a good deal. With so many foreclosures and distressed properties on the market right now, one could easily assume that a foreclosure is the way to go. After all, it was a nice house at one time. The lenders have lost so much money lately that foreclosures are being sold for pennies on the dollar, right???

Wrong! While no lender wants to foreclosure on any homeowner, it does happen. We are all told at the closing table "If you don't pay, you don't stay." The main reason why so many people lose their homes is because of illness and being unable to work due to the illness.

Even though these days more and more foreclosures are being attributed to the adjustable rate mortgages, illness is still the #1 cause. And usually what happens during this time of illness is that the house as well as the mortgage is neglected. No maintenance, no pest control, no lawn care, no painting, no cleaning, etc. These houses become a shell of their former selves. Normally by the time the bank has taken it back, this once prized asset has deteriorated in condition and value.

Lenders never want to own real estate. Banks/lenders are in the business of loaning money, not buying or selling real estate. Lenders make even worse property managers so they had that over to Realtors to do.

The marketing job comes back to the Realtor to market that property and get it sold FOR AS MUCH AS POSSIBLE and as quickly as possible. The lenders want to stop the bleeding too.

While in some parts of the country that have been hit especially hard by foreclosures, the vast majority are not selling these properties for pennies on the dollar. Many of the banks have gotten into the home improvement business by rehabbing many of these properties before they place them on the market.

Let me say it again, the banks want them sold FOR AS MUCH AS POSSIBLE.

Simply do the math: If a lender has invested thousands of dollars in rehabbing a property, do you think they are looking for 50 cents on the dollar when it sells?

We get calls from buyers who only want to see foreclosure listings. There are certainly still some bargains to be had in the foreclosure market but buyers need not overlook the other existing homes on the market. If you find a great home that has been loving cared for by their present owner who continues to do the grass cutting, maintenance, etc., at a below market price next door to a foreclosure that needs work for the same price, which one do you choose?

With the sheer number of well-maintained, aggressively-priced existing homes with motivated sellers, buyers need to consider all of the properties on the market and not just focus on the foreclosures.

Foreclosures sure do sound good on paper or in the media, but foreclosures are not always the best deal.

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