The biggest perk of being a homeowner is you can build home equity over the period of repayment. As you pay the mortgage your equity in a home increases simultaneously. Additionally, a Home Equity Line Of Credit (HELOC) is a financial product enabling homeowners to borrow a chunk of that equity against their homes. If you are someone who is thinking of using HELOC apart from securing a second mortgage loan; read our blog about why avoid using your home equity line of credit. And make a decision later.
What Is Home Equity?
Home equity or also known as real property value is the unencumbered interest of a property. It is the difference between your home’s worth and the outstanding balance of all credits on the property.
Example – Your home’s worth is $300,000 and you’ve paid $25,000 of the mortgage. Additionally, you’ve put down 20% ($60,000) which signifies you have $85000 equity in the home.
What Is A Home Equity Line Of Credit?
A HELOC (Home Equity Line Of Credit) is similar to a credit card. Although the limit is purely based on the equity you have in your home, most banks offer about 80% of your equity. HELOCs often have a lower interest rate in comparison to other loans and the interest may be tax-deductible.
As HELOCs have a lot to offer, using them for leisure and entertainment can be an indicator that you are misusing the allowance. Even if the HELOC is cheaper than a credit card, it is still a debt that must be avoided for funding a luxurious lifestyle. Given are some of the activities you must avoid while using your home equity line of credit.
Paying For A Vacation
Adding to other activities, spending your home equity line of credit on a vacation can be a bad decision. HELOCs are a source of cheaper debt in comparison to other kinds of credits, people use them for sponsoring trips. Also, the HELOC offers interest rates below 6% whereas credit cards may be on the steeper end offering 14%-25% interest rates. When you borrow from the home equity you are only aggravating the issue, as you may be risking your home while using HELOCs.
Buying A Car
There was a time where HELOC rates were reasonably cheaper than auto loans. Eventually, the cheaper rates enticed people, enabling them to use HELOCs although it’s not the case anymore. Furthermore, buying a vehicle or car, in this case, is a bad idea for many reasons. When you take an auto loan with a HELOC your loan is secured by the car you purchased. If your financial condition worsens you may end up losing the car. Additionally, if you’re unable to make repayments you may also lose your house. Adding to the rest, an automobile is a depreciating asset.
Paying Off Credit Card Debt
When calculating your repayments paying off expensive debt with cheaper debt may make a lot of sense. However, in some cases, this debt transfer can skip the underlying issue, which is a lack/shortage of income or inadequacy to control spending. It is vital to understand what led you to create credit card debt in the first place. You can only pay a credit card debt if you have the discipline to pay the principal of the loan initially.
Paying For College Education
The primary reason for people using HELOCs as mentioned above is because it’s cheaper than other credits. This makes it a big reason for using it for your child’s college education, however, using HELOCs may put your house at risk. You may have to think twice before using the home equity line of credit as it may risk losing your house. Additionally, if the amount is significant and you’re unable to pay the principal within 10 years. You may carry the added burden of mortgage debt into retirement.
Investing In Real Estate
Should I invest in real estate with HELOCs? The ultimate answer to this question is that it’s a risky proposition. There are many uncertain circumstances that may affect this decision. Reasons like sudden renovation, or a downturn in the real estate market, etc. can be a pitfall. Due to the same reason, many people have been trapped in debt, which makes repaying a tough task.
Bottom Line
There are many other ways to fund your requisites apart from HELOCs may it be for education, getting a car, or planning a trip. It is best to avoid using the home equity line of credit and use your savings or other available credit options. Furthermore, if you want to sell your house fast you can get in touch with Elite Properties. We are a cash buying company offering fast closings and no-obligation offers. Call us today at 718-977-5462 to know more.
You might be doing all things right to sell your house starting from decluttering extra stuff to carrying out improvements. Although, all your pain and time may go to waste and won’t make a difference to a potential buyer, reason, or bad neighbors. Buyers these days do not miss a single point whether it’s asking about the history of the house or negotiating terms with home sellers. One of the points that a smart buyer won’t miss is checking the neighborhood and the neighbors. Sometimes living in a good area is not enough if you have loud, disrespectful, and rude neighbors that bring down the impression of the neighborhood. If you are facing the same issue and can’t sell the house due to bad neighbors? Here’s what to do.
Talking To Your Neighbors
Communicating can solve any bitter relationship and it may also solve the problem from the root cause. Talking politely about any issue to your neighbor can avoid retaliation situations. You can bring up the topic of selling your house and explain to them your situation. This might diffuse the old problems and smoothen the tiring home sale process. Make sure to be reasonable with your request and assure yourself that reaching out to them in the first place is probably for the best.
Offer To Help If Required
Very often your neighbors may have an unsightly lawn that probably is not mowed for more than 6 months. This is just one scenario, they might have junk outside their house or garbage lying all over. In such circumstances, you can offer them help in moving the junk, helping to mow the lawn, or cleaning the garbage. Offering help may take up a lot of your time and money, whether it’s calling for lawn maintenance or a junk removal service. By doing this you are not only helping your neighbors but, also making way for a profitable home sale.
Seeking Outside Help
Let us agree that we all can be a little noisy sometimes but, if you have a loud neighbor who is consistently noisy, it can be a problem. If this is the case, and your neighbor resides in a rental property you can find out the owner of the property and inform them about their tenant/s. On the other hand, you can contact the homeowners association and find out the noise ordinances. You can check if the neighbor is violating any ordinances by yourself before contacting any agency outside. There are certain guidelines set by the homeowner association regarding the maintenance of homes in certain neighborhoods.
Raising Concern To City Or County
At times, people face bad circumstances where the neighbor can trespass on their property directly or indirectly. In such a case, you’d want to raise the concerns and take it up with the authorities. However, you may want to check your municipality’s code enforcement and noise statutes. Post which you can report to the police or concerned officials if there are any violations.
Sell Your House To Cash-Buying Companies
We understand that selling your house comes with a lot of responsibilities. Your hands may already be full of staging and decluttering stuff. Although, you may want to check the area where you reside too. Identify the problem areas and start working towards them for a better sale. It’s not just neighbors that can be a potential problem but also the neighborhoods.
If you are still unable to sell your house fast due to the constraint of strict deadlines you can consider selling your house to Elite Properties. We are a cash-buying company, which means we buy houses as-is without the concerns of bad neighbors in any location and condition. Sell your house to us and rest assured we offer the best cash offers based on a fair market price. Call us today at 718-977-5462 and sell properties with us.
Your kids have moved out, and it’s probably time for you to think about downsizing your home. You might want to consider staying in a house with fewer rooms and accessible facilities. Furthermore, the extra space in your house determines the equity that can potentially be converted into cash. Additionally, make sure you ask these 4 questions while selling your house for retirement.
#1 What Is The Reason To Sell Your House?
Selling your house to a cash buyer in NY may seem like the best option. Although, you may still want to consider looking at financial numbers while seeing other options. Selling your house is not only about making money but also making your life easier post-retirement. If take a look at the statistics, according to a study it was shown around 64% of seniors chose downsizing to lower their monthly expenditure on housing costs. Whereas, around 44% stated owning a huge house is too much work and maintenance.
When you decide to sell a house you are inclined to buy a house of your choice as you have definite advantages over young buyers, how? Starting with you likely have more cash to offer, school districts are not an obstacle, and living near your workplace is not required anymore. All of this is a bonus while you hunt for a property of your choice.
#2 What Is Better While Retirement, Buying Or Renting?
Buying a house may sound like the safest option while planning your retirement. Although, there are some touchdown points you may want to consider. In some cases, renting is the most feasible option. To begin with, renting a house makes sense if you want to save the constant repair costs. Furthermore, renting promises a predictable monthly expense flow making your life much easier. It enables you to even change your mind and change the current house or just look for more space, fewer amenities, etc. Also, if you plan to move out of the city or even the country you have the liberty to do so when renting.
#3 Is Piling Up Extra Cash For Retirement On Your Mind?
Most of the retirees who downsize soon discover expenses they never knew about. Moving altogether can be a lifestyle change as you might live in new weather, clothing, furniture, etc. Although, downsizing from a huge bungalow to a condo can result in a significant amount of savings.
#4 Do You Have Enough Funds To Fix Up Your Old House?
Let’s get it straight, the longer you live in a house the more difficult it gets to sell it later. Furthermore, selling the property can be an expensive undertaking as it will definitely require improvements. If you don’t have enough funds handy to renovate your house or take up any new improvement project, it is best to sell it as-is for cash. Selling a tenant-occupied property for cash will save you from the extra costs and troubles of selling your house the traditional way.
Conclusion
If you want to avoid the hassles of falling into the straining home-selling process, you may consider selling your property to a cash-buying company. At Elite Properties, we buy and sell properties online and provide a no-obligation offer to our customers. Selling your home to a cash-buying company will give you hard cash in return. Sell your house as-is and save that extra money from drowning in real estate agents and home improvements. Call us today at 718-977-5462 and our experts will offer you the best solutions.
After a lot of house hunting, you’ve finally found the home of your dreams. A house with the right amount of rooms and a beautiful front yard so, what do you do next? How do you turn yourself into a homeowner from being a potential buyer? It’s simple, you apply for a mortgage to finance the purchase of your new home. As simple as it sounds there’s a lot that goes into applying for a mortgage and one of them is the mortgage underwriting process. If you’re a potential buyer, here’s a Step By Step Detail On Mortgage Underwriting Process.
What is Underwriting?
Underwriting is a critical step in the mortgage approval process where a qualified individual, known as an underwriter, assesses your financial information and determines whether you meet the lender’s requirements for a loan. This process involves a comprehensive review of your creditworthiness, income stability, debt obligations, and the property’s value. The underwriter’s role is to minimize the lender’s risk and ensure that you can repay the loan.
What Is Mortgage Underwriting Process?
An underwriting process merely determines whether a buyer is able to pay back the loan to the lender. It is a process due to the lender, assessing the risk of lending money. The lender here will assess and verify your income, debts, assets, etc. towards the decisive approval for your loan.
What Goes Into Mortgage Underwriting
A mortgage underwriter’s responsibility is to assess the overall risk of the potential buyer, and whether he/she would be able to repay the mortgage. The underwriter evaluates the factors which help the lender comprehend a buyer’s financial condition that including –
Additionally, the underwriter also aids the lender in determining if the buyer may or may not see a forthcoming loan approval. The motive of this process is to ensure the buyer doesn’t end up closing a mortgage that they can’t afford. An underwriter further will investigate the buyer’s credit history, order an appraisal, verify the income and employment, analyze the Debt-To-Income Ratio, and lastly, verify your payments and savings.
Here’s what an underwriter does:
A mortgage underwriter is a crucial player in the loan approval process. They are responsible for assessing the risk associated with lending to a borrower and determining if the loan meets the lender’s guidelines. Here are some key responsibilities of a mortgage underwriter:
1. Review Your Credit History: This includes a thorough examination of your credit report, credit score, and payment history.
2. Analyze Your Finances: Lenders typically adhere to federal financing guidelines. For example, Fannie Mae guidelines require borrowers to have a maximum loan-to-value (LTV) ratio of 97 percent, a credit score of 640 or higher, and a maximum debt-to-income (DTI) ratio of 36 percent. The lender might also incorporate its own criteria. Additionally, they’ll consider specific aspects of your financial situation. If it’s an income-producing property, they might assess whether you plan to occupy the property alongside tenants and take into account your financial reserves, such as investments, assets, and savings.
3. Conduct a Property Appraisal: The approval of your loan is influenced, in part, by the relationship between the amount you’re borrowing and the value of the home you’re purchasing (used as collateral). As a result, the underwriter will request a property appraisal to ensure that the asking price aligns with recent sales of comparable homes in your area.
4. Render the Approval Decision: Once all the necessary reports and paperwork are gathered, the underwriter makes the critical decision to approve or deny your application.
Common Factors That Can Impact Mortgage Underwriting
Mortgage underwriting is a complex process that takes into account various factors to assess your eligibility for a loan. Let’s explore some of the common factors that can impact mortgage underwriting.
Credit Score: Your credit score plays a significant role in mortgage underwriting. Lenders use this three-digit number to evaluate your creditworthiness and predict your ability to repay the loan. A higher credit score indicates a lower risk for the lender, making it easier for you to secure a favorable loan.
Income: Underwriters carefully evaluate your income to determine if you have the financial capacity to make regular mortgage payments. They will assess your employment history, stability, and the consistency of your income. Generally, a higher income level makes you a more attractive borrower.
Debt-to-Income Ratio: Your debt-to-income (DTI) ratio is another crucial factor in mortgage underwriting. It measures the proportion of your monthly debt payments to your monthly income. Lenders prefer a lower DTI ratio, as it indicates that you have enough disposable income to comfortably handle mortgage payments.
Employment History: Underwriters consider your employment history to gauge the stability of your income. They typically look for a steady employment track record, preferably with the same employer or within the same industry. Frequent job changes or gaps in employment can raise concerns for lenders.
Property Value: When underwriting a mortgage, the value of the property you’re purchasing or refinancing is also assessed. Lenders want to ensure that the property’s appraised value aligns with the loan amount. A lower loan-to-value ratio (LTV) is generally preferred, as it reduces the lender’s risk.
Understanding these common factors can help you prepare better for the mortgage underwriting process.
What Information Do Underwriters Look at?
Mortgage underwriters analyze a range of documents and information to assess your eligibility for a loan. Here are some of the key items they review:
Credit Report: Underwriters obtain your credit report from the three major credit bureaus – Experian, Equifax, and TransUnion. They scrutinize your credit history, including your payment history, outstanding debts, and credit utilization. A clean credit report with a history of timely payments enhances your chances of approval.
Income Documentation: Underwriters review your income documentation, such as pay stubs, tax returns, and W-2 forms. They verify the stability of your income source and calculate your debt-to-income ratio. Self-employed individuals may need to provide additional documentation, such as profit and loss statements or business tax returns.
Bank Statements: Underwriters analyze your bank statements to assess your financial health and verify your assets. They look for consistent deposits, large cash transactions, and any red flags that could indicate undisclosed debts or financial instability.
Employment Verification: Underwriters verify your employment history and income by contacting your employer directly. They may request additional documentation, such as employment verification letters or recent pay stubs, to confirm your income details.
Appraisal Report: Underwriters review the appraisal report to ensure the property’s value aligns with the loan amount. They assess the property’s condition and location to determine its marketability and potential risks.
By understanding the information underwriters evaluate, you can gather the necessary documents and ensure that your financial records are in order. Now, let’s explore the step-by-step process of mortgage underwriting.
Types of Underwriting Categories
There are three main types of underwriting process. Those are: loans, insurance, and securities.
Loan Underwriting
All loans, in some capacity, undergo the process of underwriting. This involves the evaluation of an applicant’s credit history, financial records, collateral value, and other factors that vary based on the loan’s size and purpose. The appraisal duration can range from a few minutes to several weeks, depending on whether human intervention is necessary.
The most common form of loan underwriting that involves human underwriters is for mortgages. This is the type of underwriting that most individuals encounter. The underwriter assesses an individual’s income, liabilities (debt), savings, credit history, credit score, and more, considering their unique financial circumstances. Mortgage underwriting typically has a “turn time” of a week or less.
Refinancing often takes longer, as buyers facing deadlines receive preferential treatment. The loan applications can be approved, denied, or suspended. The most receive “approval with conditions,” requiring clarification or additional documentation.
Insurance Underwriting
In insurance underwriting, the focus is on the potential policyholder – the individual seeking health or life insurance. The medical underwriting for health insurance was used to determine pricing and coverage decisions. These are based on health status, often considering pre-existing conditions. However, since 2014, under the Affordable Care Act, insurers are no longer allowed to deny coverage or impose limitations based on pre-existing conditions.
Life insurance underwriting aims to evaluate the risk of insuring a potential policyholder based on factors such as age, health, lifestyle, occupation, family medical history, hobbies, and other criteria determined by the underwriter. The outcome of life insurance underwriting can lead to approval, along with various coverage options, prices, exclusions, and conditions, or outright rejection.
Securities Underwriting
Securities underwriting, which evaluates the risk and appropriate pricing of specific securities. That are related to Initial Public Offerings (IPOs), is typically conducted on behalf of a potential investor, often an investment bank. Following the underwriting process, the investment bank may purchase (underwrite) securities issued by the company attempting the IPO and then sell those securities in the market.
Underwriting ensures that the company’s IPO will raise the necessary capital and provides the underwriters with a premium or profit for their services. Investors benefit from the vetting process that underwriting provides, enabling informed investment decisions.
This type of underwriting can encompass individual stocks and debt securities, including government, corporate, or municipal bonds. Underwriters or their employers purchase these securities to resell them for a profit, either to investors or dealers (who sell them to other buyers). When multiple underwriters is involved, it is referred to as an underwriting syndicate.
What Is Automated Underwriting Vs Manual Underwriting
A mortgage underwriter has two options to assess the loan application. The first is to do it manually and the other through software. The one with software is known as automated underwriting. An automated underwriting process is much easier and faster than the manual one as a computer evaluates it. Although, it has some limitations that are non-negotiable like inconsistent income, poor credit score, etc. That may be a deal-breaker for borrowers. Hence, in such circumstances, manual underwriting is an easy option. Furthermore, in some situations, lenders combine automated and manual underwriting to avoid the complications of the loan application.
Mortgage Underwriting Process Steps
As explained above in brief, an underwriter evaluates your finances and forwards them to the lender. Although, there are more aspects that need to be analyzed while proceeding with the underwriting process. Some of the aspects are given below.
1. Income
While assessing a buyer’s income the underwriter requires a set of documents as proof to determine if he/she can cover the monthly mortgage payments. As a buyer, you’ll need to submit documents like –
Adding to the above, the underwriter will verify if the buyer’s income is as mentioned in the payslips (or any other format where the income details are provided). Also, the underwriter will verify your employment status with the employer as well.
2. Assets
Your assets help you qualify for a mortgage. As they can sold for hard cash if you fail to satisfy the outstanding loan amount. An underwriter will go through your savings accounts, stocks, and property if any. As the closing amount ranges from anywhere from 3%-6% lenders use assets to make sure the buyer makes monthly payments post-paying closing costs.
3. Credit
It is one of the most important aspects of mortgage approval, is assessing your credit score. An underwriter will evaluate your credit score to understand how well you have managed to repay your past loans. Assessing your credit score helps the underwriter to predict your capacity to repay the loan.
4. Collateral
The underwriter needs to understand the worth of the house you’re interested in buying. The motive for seeing the collateral risk is to avoid putting the buyer’s money in a house that is not worth it. Hence, as a part of the closing process, the lender will order an appraisal.
Potential Underwriting Consequences
There can be only three possible consequences of the underwriter’s evaluation as given below.
1. Conditional / Contingent Approval
You can submit documents to satisfy the underwriter’s questions. Although, you’ll be clear to close while the documents go through the assessment. One of the most common requests includes verification/proving large amounts of deposit in the buyer’s bank. In such situations, a gift /donation letter from the donor is vital to prove it’s not a loan.
2. Suspension
This means there are significant questions in your file for which a loan officer will work with you closely to resolve the underwriter’s questions.
3. Denial
If the buyers got the loan pre-approved and review of their finances thoroughly, their loan will still be ultimately declined.
How Long Does Underwriting Take To Complete?
The underwriting process takes up to 5-8 days. Although, there are dependencies like your financial condition, loan type, missing paperwork, etc. that may prolong the whole process. Additionally, a point to remember, underwriting is a mere part of the process. A complete closing can take up to 40-50 days in total.
Tips for Smooth Mortgage Underwriting Process
1. Organize Your Documents
The key to a streamlined mortgage underwriting process is to have all your financial documents ready before applying for a loan. Keep the following document ready when you apply:
Employment details from the past two years (for self-employed individuals, include business records and tax returns)
W-2s from the last two years
Pay stubs covering 30 to 60 days before application
Comprehensive account information, including checking, savings, CDs, money market accounts, investment accounts, and retirement accounts
Additional income details, such as alimony, child support, annuities, bonuses, commissions, dividends, interest, overtime payments, pensions, or Social Security payments
A gift letter if you’ve received funds from friends or relatives for your down payment
2. Enhance Your Credit Profile
A lower credit score can make mortgage approval challenging and result in a higher interest rate. Improve your creditworthiness by taking the following steps:
Pay down existing debts
Avoid applying for new loans during this period
Aim for a favorable debt-to-income (DTI) ratio (ideally 36% or less)
Review your credit report for errors and dispute inaccuracies
3. Consider a Larger Down Payment
The underwriter also evaluates your loan-to-value (LTV) ratio, which compares your loan principal to the property’s value. A higher LTV ratio puts the lender at more risk if you default on the mortgage. You can improve this ratio by making a substantial down payment upfront. Borrowing less through a larger down payment increases your chances of qualification. Don’t hesitate to explore down payment assistance programs or seek support from family and friends.
By following these steps, you’ll pave the way for a smoother mortgage underwriting process. Also, well-prepared and maximizing your chances of loan approval.
Takeaways
A pro tip to speed up the process is to keep the documents in place, maintain a good credit score and always put a larger down payment. This way it’ll make the mortgage underwriting process a smooth sail. Furthermore, if you are in a hurry to move out and don’t have time for a traditional home-selling process then sell your house to Elite Properties. We buy houses as-is which means no hassles of legal documentation. We close a deal in less than 7 days and offer you hard cash. Call us today at 718-977-5462 and sell your house fast for cash.
What Are the Steps in the Mortgage Underwriting Process
Mortgage underwriting involves several stages that culminate in the lender’s decision to approve or deny your loan application. These steps are
The process begins with completing a loan application and submitting it to the lender.
Once your application is received, the underwriter performs an initial review to ensure all necessary documents and information are included.
Underwriters analyze your credit report, income documentation, and other financial records to assess your creditworthiness.
Underwriters review the appraisal report to ensure the property’s value supports the loan amount.
Underwriters may issue a list of conditions or additional documentation required for loan approval.
Once all conditions are satisfied, the underwriter grants final approval for the loan.
What are the factors that impact the duration of mortgage underwriting?
Several factors can impact the duration of mortgage underwriting, those are
Application Accuracy
Lender’s Workload
Complexity of the Loan
Third-Party Involvement
How Long Does Mortgage Underwriting Take?
On average, the underwriting process takes approximately 30 to 45 days from the time of application submission. However, it’s important to note that this timeframe is just an estimate, and the actual duration may differ.
FAQ
What Are the Steps in the Mortgage Underwriting Process
Mortgage underwriting involves several stages that culminate in the lender’s decision to approve or deny your loan application. These steps are
The process begins with completing a loan application and submitting it to the lender.
Once your application is received, the underwriter performs an initial review to ensure all necessary documents and information are included.
Underwriters analyze your credit report, income documentation, and other financial records to assess your creditworthiness.
Underwriters review the appraisal report to ensure the property’s value supports the loan amount.
Underwriters may issue a list of conditions or additional documentation required for loan approval.
Once all conditions are satisfied, the underwriter grants final approval for the loan.
What are the factors that impact the duration of mortgage underwriting?
Several factors can impact the duration of mortgage underwriting, those are
Application Accuracy
Lender’s Workload
Complexity of the Loan
Third-Party Involvement
How Long Does Mortgage Underwriting Take?
On average, the underwriting process takes approximately 30 to 45 days from the time of application submission. However, it’s important to note that this timeframe is just an estimate, and the actual duration may differ.
Buying a house is one of the most massive financial decisions a person will ever make. So it’s important that you’re completely confident that you’ll be able to manage your mortgage before you commit to it. Don’t just find the perfect home and rush into something you aren’t ready for. Take time to consider these questions, and make sure your finances are in order before you move ahead with your house search. Check out this guide on ‘7 Questions You Need To Ask Before Buying A House and learn more about whether or not you are ready to buy a house.
Here are some deciding factors to determine whether you may buy a house or not.
1. Do You Have Enough Capital For A Down Payment for Buying a House?
Having a 20% down payment is one of the most common perceptions while buying a house for the first time. Although, it’s not completely the truth. A homeowner needs a minimum of 3.5% – 10% for an FHA home loan and around 3% – 5% for a conventional loan.
For example: If you want to purchase a house worth $900,000 your lender will require a total of 3% as a down payment depending on the type of loan you qualify for. Hence, 3% of $900,000 will be $27,000 as the down payment.
The only thing to remember is the larger the down payment the lesser will be your EMIs and interest. Although, in a lower down payment you are entitled to pay Private Mortgage Insurance (PMI) that protects your lender in case you don’t pay your mortgage. This is only applied when you put less than 20% downpayment, the PMI will be added to the monthly payments.
2. Do You Have A Good Amount Of Savings And Emergency Funds?
You may have saved enough money while thinking about making a big down payment, but did you think about closing costs? Closing costs include multiple fees like legal fees, lender fees, taxes, etc. The total is usually 2%-5% of the home’s purchase price. Additionally, there are many things that show up while a home inspection related to home improvement which you might want to care of. If the septic tank is leaking or there are cracks in the ceiling, this is where you’ll need emergency funds.
3. How is your credit score?
The first thing homebuyers think of is having a perfect credit score with no red dots. Although, the truth is you don’t need to have a perfect credit score to buy a house. There are multiple home loan and homebuyer programs available for first-time homebuyers that do not require a perfect score. Furthermore, a minimum credit score of 600 or higher is favorable. Keep in mind a high score (that is above 700) will aid in qualifying for a lower mortgage rate.
4. Worried About Having A Handle On Your Debt?
Buying a home doesn’t mean you have to be debt-free. You might have an outstanding student loan, car loan, bills, etc. which makes purchasing a home difficult. Fortunately, many companies these days understand it is impossible to expect potential homebuyers to be debt-free. The main objective of most companies is to know if you will be able to fulfill the mortgage payments. Keep in mind the savings you have versus how much you’ll pay in the future.
Your lender will have a look at your debt-to-income ratio, which simply means what chunk of your monthly income goes into debt payments. You need to have a 43% debt-to-income ratio to qualify for any mortgage on the house.
5. Can You Afford Your Monthly Expenses for Buying a House?
The first while figuring out expenses is to know if you can afford additional payments to your existing monthly expenses. To calculate this you can use an online mortgage calculator. Additionally, you must also check with the other financial aspects like –
Property insurance and taxes
Other Home expenses (sewage, garbage, internet, etc.)
It is vital to do your calculations before you move on with the transition from renting to buying your house. As you might be paying multiple bills already and there’s going to be an additional amount as a mortgage payment.
6. Do You Have A Stable Income Source for Buying a House?
Having a stable job is extremely important for home buyers as losing a job after moving into a new house can be a nightmare. A stable job is a good indicator for lenders as then qualifying for a mortgage and fulfilling the amount is possible. Furthermore, even if you can show financial stability on paper, you must only buy a house knowing your income will remain steady in the future.
7. How Much Space Do You Need?
Before buying a house always ask yourself the question ‘how much space do you need?’ While planning on money and other aspects you may forget this important aspect. Whether you need an extra room for office space or a gym thinking through it is always advisable. If you have kids or expecting a child, then buying a house with extra space is ideal.
Takeaways
Buying a house comes with a long list of questions and contingencies. Make sure you think through the options and make a wise decision. If you’re someone who wants to sell your house fast before moving to a new one you may contact us at Elite Properties. We’re ‘we buy houses all cash’ company which offers people home selling and buying services with no obligations. You can get in touch with us by calling 718-977-5462.
As a seller, you simply can’t deny the fact that there’ll always be a lot of paperwork involved while selling your house. Whether you pick a real estate agent for a home sale or you do it yourself, there’s no running away from the verification and paperwork. Home selling is a big transaction and if you need to know what goes into a home selling process then read this blog till the end, ‘Selling house by Owner? Check The Paperwork You Need’.
Where To Find The Right Paperwork?
Starting off, different states have different laws and you’ll have to line up all the necessary documents according to your state. It is extremely vital to do your research and gather all the information before proceeding with showings. Now the question is how and where do you find the appropriate documents to sell your house by owner?
A real estate attorney can help you provide all the information and legal documents that you need while selling your house. Keep in mind hiring an attorney will require fees, so make decisions on your suitability. Additionally, there are also state and county government websites that help you find relevant information.
Documents Needed For A Home Sale
Given below is a list of documents that you’ll require before proceeding with the home sale with the process. (Note: the documents mentioned below may differ depending on the states you reside in)
Property Survey
A survey document determines the boundaries of the specific land or property based on the legal documents filed on it in the past. The document also includes details about fences, driveways, etc. if any.
Receipts And Warranties
The document helps in documenting information on any new appliances or improvements done to your house.
Plans And Permits
This document ensures that you have made changes or upgrades in your house with due permissions, additionally, it’s proof for the potential buyer to cross-verify.
To get this document you’ll have to visit the municipality, get the permit pulled post which you’ll have to get an inspection done, do necessary repairs, and again get the house inspected again. The certificate signifies that your house is safe to reside in and is compliant with all the building codes.
Loan Documents
The document usually comprises your first mortgage, second mortgage (if any), and any home equity lines of credit (if any).
Latest Utility Bills
The document showcases the monthly amount spent on the household such as electricity, gas, water, etc.
This document signifies a detailed set of rules established by the body that governs the neighborhood. The rules usually contain information about pets, noise level maintenance, etc.
Floor Plan or Blueprints, If Available
Having a plan or a blueprint of your house makes the buyer understand in-depth about the property. Make sure you have two sets of all the documents, furthermore, make sure to add anything that pertains to the ownership of your house.
Selling House by Owner, Here’s How You Do It
If you’re stuck with limited funds, selling a house to an owner is the ideal way out. To know how it’s done follow the process below –
Assess Your Property’s Value
Always assess the value of your property before listing it. There are certain setbacks while you list your house like over or underpricing. What do you do in a situation where you are aware of the drawbacks? First off, check the estimated value of your house from home value sites available on the internet.
By only paying a small amount for an FSBO home evaluation you’ll have a licensed professional who’ll do an in-depth evaluation of your home. In 5-7 business days the person will visit your house and you’ll have a detailed report in your hand.
Get Your Home Sale Ready
It is an unsaid rule to keep your home in its best shape before putting it on the market. You might want to showcase your home’s full potential by rearranging furniture, decluttering waste, and giving your walls a fresh coat of paint.
Promote Your Home’s Sale
As old-school as it may sound, putting a sign in your yard saying ‘for sale’ makes a lot of difference in the sales. People in the neighborhood will take note of the sign and spread the word. Furthermore, list your house on famous FSBO (For Sale By Owner) listing sites and MLS (Multiple Listing Service) and take that extra step to generate more traffic to your house.
Negotiate The Sale
A buyer will always offer a price that’s below the asking price or ask you to pay the closing costs, here’s when you have to negotiate. At this stage, you’ll need documentation, within days of accepting the buyer’s offer it is mandatory to have a copy of their mortgage approval. Post this the buyer will submit a written offer that is mutually acceptable. It is only now that you must draw up a contract that includes closing concessions, final price, closing date, location, and a list of contingencies.
The contingencies are put in the contract by keeping in mind the buyer’s security and allowing them to back out if things fall out of place.
Close On the Sale
A closing may either take place at the real estate attorney’s office or the title company depending on the state laws. Make sure everyone is on the same page and the communication is free of any loopholes as the date of closing is the final stride to complete the sale.
Disclosure Statement
What is a disclosure statement? It is a document required by most states that outlines defects of the property. It may include mold, flooding, lead paint, radon, structural problems, etc. A disclosure statement protects the seller from any post-sale claims made by the buyer of which they didn’t know initially. Fill out this Disclosure Form before selling the property.
Things That Must Be Included in a Real Estate Contract?
Here’s a list of things that you must touchdown while drafting a real estate contract –
Property And Its Characteristics
Identity Of the Parties Involved
List Of Fixtures/Personal Property
Purchase Price
Earnest Money Amount and Financing Terms
Target Closing Date
Contingencies
Proration
Title
Closing Cost
Notice Or Default Legalese
Miscellaneous Provisions
Conclusion
If you’re a first-time seller and trying to sell your house on your own, we hope the blog might help you in the process. Furthermore, if you wish to sell properties online you can contact Elite Properties, we buy houses New York and if you want to know more about the process of selling house by owner, contact us today at 718-977-5462.
The facade of real estate has changed with time and new-age processes like virtual tours, virtual staging, advertising online, etc. , are pulling the limelight. With the moving age of the internet selling and buying is as easy as a click. The dynamics of business are constantly evolving whether it’s real estate or groceries. People prefer convenient alternatives rather than the traditional home selling process. Nowadays, people are attracted to iBuying, don’t know what is it? Scroll through our blog, ‘Is iBuying Worth The Hype? What is an iBuyer?’ to know more about the topic.
What Is An iBuyer?
To put it in simple words, an iBuyer is a company with ample finances that makes an offer on your behalf based on algorithms. The term “iBuyer” is a fusion of words where I denote ‘instant’ combined with the word ‘buyer’. The company makes all the trades and makes the whole process convenient for both buyers and sellers. iBuyers try to sell your house with a profit margin and give you cash in return once sold.
iBuyers buy your house as-is which means selling your house without spending a ton of money. It enables a buyer to avoid the extra upfront costs that incur while closing. Additionally, it avoids the need for real estate agents or brokers.
How Does An iBuying Model Work?
As given above iBuyers use algorithms to determine the ideal price of a home, which are based on comps (comparables). The iBuyers provide instant offers to sellers in as few as 24 hours once you fill out the requisites in the form. A potential seller will have to go to the iBuying website and fill out a form, post which they receive an offer. For instance, if the seller accepts the offer then the sale is likely to close in just a few weeks.
How do iBuyers make profits?
iBuyers usually buy a property with a discount as-is. They add value to the property by making minor improvements to optimize the selling price post which they list on MLS. Additionally, iBuyers provide an in-house financing service to customers which helps in earning good profits. A service charge typically ranges from 5% (can be higher or lower, relies on the tenure of selling your house)
Pros And Cons Of Selling Your Home To An iBuyer
iBuying is a great way to close deals fast, although it comes with a set of pros and cons. Some of them are given below.
Pros of iBuying
Capable of fast closings (as less as a couple of weeks)
Avoid the hassles of legal verification, inspection, or appraisals
Does not require walkthroughs
Avoid paying the upfronts costs while closing deals
Cons of iBuying
May require some amount as a listing fee, which is usually higher than a real estate commission
Currently, only a few iBuying companies are active and providing services
Less selling prices, usually below the fair market value
In most iBuying models the house may have to satisfy the ideal house criteria
Is iBuying Really Worth It?
Whatever method you use to sell your house whether it’s a traditional home sale or iBuying, will have some advantages and disadvantages. It is all about what suits you best. Although, if you choose to sell through an iBuyer, make sure to do your due diligence. Besides, it is equally important to go through all the fine print and policies including the other costs and fees if any.
Conclusion
If you are someone who wants to sell your house fast and doesn’t have enough time to wait? You can get in touch with Elite Properties. We buy houses for cash online in New York and offer you enticing deals over your as-is property. Furthermore, if you wish to learn more about a house sale then call us at 718-977-5462, we’ll be happy to help.
A home selling process is not a one-time transaction, there are multiple steps that come into play while selling a home. You might have to deal with the state and municipality laws that may affect the ultimate sale process. Although, some steps are pretty standard. If you’re a seller and want to know what is the ultimate home sale process then read, Home selling process, when is a home actually sold?
The Home Sale Purchase agreement is the next step after making an offer. When a buyer makes an offer you can either accept it, reject it, or make a counteroffer. In cases, while accepting or rejecting an offer the deal has a definite outcome although, in a counteroffer, it’s back and forth.
A counteroffer can come from a single buyer or multiple buyers collectively, which is a lengthy negotiation process. When such an instance takes place your house goes from listed to available, and then pending sale. Once you accept the house sale offer, it’s time for you and the buyer to sign the agreement that includes the following terms –
ID verification of both the home seller and home buyer
The legally verified description of the property
All Finances (purchase price, closing costs, buyer financials, down-payment)
Home sale conditions that need attention
Timeline for the home sale (offer expiration, contingencies, closing date)
Home Selling Process, When Is A Home Actually Sold?
Inspections Before Home Sale
A buyer will schedule a home inspection prior to the closing date. The motive of a home inspection is to secure the buyer’s future investment. An important point to note is that if your house has any defect which will cost you money your home may reopen negotiation terms.
For example, while inspecting, if the inspector discovers a crack in the foundation, it will need repairing before the sale which requires a lot of funds. These kinds of inspection discoveries are time and money-consuming, which leads to missing out on a great deal. As a seller make sure you carry out an inspection in advance to avoid any hassles.
Approval For Buyers Loan
In order to approve the buyer’s loan, it is essential that both the buyer and the seller boil down on the same selling price. Post-approval of the offer there is a home appraisal. The buyer will send all the documents to the lender after which the underwriting process commences. The underwriting process can take anywhere from a couple of weeks to a couple of months. Keep in mind the home is still not considered sold even after the approval of the loan.
The Contingency Sale
In simple terms, when a buyer has to close on their existing home prior to purchasing another property leads to a contingency sale. It is vital that the contingency is completed before closing and passing the ownership of your house. A buyer may satisfy a contingency by depositing the funds to close escrow or signing a release of contingencies. Although, depositing all the purchase price to close contingency will still not derive ownership of the house.
When Is The Home Considered Sold?
Technically, a home isn’t sold until the seller no longer owns the property or has ownership of the house. Once you sign the contract and receive the price of the property only then the house sale is complete.
Conclusion
We understand that a home selling process can be physically and mentally draining. Although, if you are planning to sell properties online you can get in touch with Elite Properties NY. Elite Properties is a cash-buying company that offers hard cash in exchange for distressed houses NY. Call us today at 718-977-5462 and we’ll help you in a smooth home sale.
Staging is a way to market your property for better profits.
What is Virtual Staging?
Like traditional staging, it is an innovative marketing technique that showcases multiple features of your house. It is a method to entice prospects and convert them into buyers. If you are planning to sell your house, then you must try to impress potential buyers with virtual staging.
A virtual staging as the name says is done virtually with the help of computer software that shows various uses of spaces/rooms. It includes demonstrating the potential placement of the decor, furniture, accessories, appliances, etc., in high definition.
Ideal Spaces For Virtual Staging
To begin with, virtual staging is best suited to vacant properties. If your home is occupied with furniture and other stuff you might want to opt for traditional staging. Although vacant homes, homes with obsolete furniture, and houses that have tenants are ideal spaces for staging.
When it comes to staging, this staging is a lot cheaper than a traditional one. A traditional staging will cost you several hundred dollars a month although, it is completely dependent on the stager you hire. Additionally, the prices may vary depending on the type and quantity of furniture you rent and the number of rooms that require staging. On the other hand, this staging may cost you anywhere from 39-199 dollars per room. Again, this is all reliant on the contractor, the number of rooms, the location, and the spaces that require staging.
Pros And Cons Of Virtual Staging
If done right, it can be a great way to sell your house fast. You will need a professional stager and will have to work with a reputable company with a wide and fine portfolio of completed projects.
Pros of virtual staging –
Highlight the best features of your room/house
Cost-efficient
Best way to entice buyers and sell properties online
Customizable to stage the number of rooms
Cons of virtual staging –
Can be a little expensive while remove furniture or other items from pictures
Can be difficult if the room is occupied unless you have vacant room pictures handy
The furniture and decor are not real and only exist in a virtual space
Pros And Cons Of Traditional Staging
A traditional staging doesn’t always require a professional stager. Although, hiring a professional provides an eye for detail and creates a space that entices buyers. Besides, there are some pros and cons of traditional staging.
Pros of traditional staging –
Provides a real-life perspective while walkthroughs to buyers
Can make spaces appear larger and enable buyers to gauge the size of the space
Does not require a professional stager
Cons of traditional staging –
Can be on the expensive side
Extra upfront costs for furniture and decor
Can be an extra pile of work as the market can be uncertain in terms of selling your house
Virtual Staging Mistakes To Avoid
Hiring a virtual staging company that is not up to the mark can be a potential mistake. The virtually staged pictures must look so realistic that buyers fail to recognize it’s computer-generated.
Other mistakes most people make are –
Buyers tend to imagine things as they are shown virtually. It is vital to provide buyers with vacant and staged room images that offer a better perspective to their imagination.
The second mistake is staging the house for the worse instead of making it look appealing. Remember overdoing the furniture and decor will only make the room look chaotic and not pleasing.
Lastly, using virtual staging when it’s not needed. If your property looks fine just by shifting furniture and changing the rugs then it is advisable to avoid this type of staging.
Is It Possible To Sell Your House With Virtual Staging?
Virtual staging can be a big asset while you sell your house. Although, there are some points you might want to touch down before hiring a staging company. Avoid over or underdoing, creating a balanced look will do wonders. Virtual staging can help you sell your house fast, but if you want to avoid the hassles of hiring a stager you can sell your house as-is to Elite Properties NY. Call us today at 718-977-5462 and learn about how to sell your house for cash.
