Tuesday, July 21, 2009

Home Buying Seminar

About 2 months ago I attened a Home Buying Seminar presented by Keller Williams

This was a friendly 2h long basic introduction of the buying process.
This was more oriented towards "home" buyers than investors and really insisted on the emotions involved with finding and buying the "dream home".

Their talk was followed by a presentation from Chase introducing the basics about mortgages.

Below are some notes I took.

- all the California Realtors offer Job Loss Insurance till 31 dec 09 (a $1500 value over 6 months)

- When buying a house never use the seller's agent as the buyer's agent (conflict of interest)

To pick the rigt buyer's agent, interview at least 3 of them before picking the one you want to work with.
Ask them question, How long have been in the area? how many customers at a time? average time to find a house...

For 1% increase in loan interest rate => your purchasing power decreases by 10-12%!

Different types of sales:
- Short sales a.k.a. pre-foreclosures
=> the sellers owes more than the value of the house
=> if the sale goes through, the lender will lose the missing money
=> the lender has to approve it
=>the house is sold AS IS

==> these sales are often stuck for up to 6 months, they are hard to close, you can cancel your offer at anytime, more offers can come in.

- in foreclosure
=> the owner stopped paying mortgage for 5 months or more
=> the bank tries to foreclose

- bank owned a.k.a. R.E.O. a.k.a. foreclosed
=> the bank owns the house
=> the bank will give quick responses on offers (2/3 days for a yes/no)
=> the house is sold AS IS, but a contract can force repairs or credit towards closing costs (= pay for the repairs)

- Property inspection of a house $450
- Termite inspection $150
- Closing Costs => 3%

Before buying a house,
- inquire whether there has been any new projects on the house? any add-on? or rezoning (flood zone, earthquake...)
- meet your future neighboors (even for investment property! good tenants will want good neighboors)
- home warranty => generally covers equipment and appliances such as dishwashers, plumbing systems, electrical systems etc. that fail due to normal wear and tear.

The Buyer's remorse
- I paid too much, I bought too fast, I didn't see enough homes...


Loan qualification will check
- Capacity to pay back: income, work history, debt
- Credit Score (need over 720)
- Capital
---Down Payment
---Cash Reserve (at least 2-6 months of expenses required)
---Cash for Closing costs (if seller doesn't pay them)
- Collateral : Appraisal of the property

Debt to income ratio should be below 38%
You can withdraw 10K penalty free from the 401K to use as down payment.

FHA loans have the same rate for everyone.
- down of 3.5$
- 1st time buyer or not

ACORN program
- down of 3%
- doesn't require mortgage insurance

- down 5%

Loan Pre-qualification is free => just give your data (do it online !)
Loan Pre-approval will usually have a fee ($300), is valid for 90 days only, all paperwork is verified Hard credit pull, W-2s, bank statements, employments....

You can improve your FICO score by 10-30 points within 30 days by opting out from Credit Card's mail list at www.optoutprescreen.com

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