6 Selling Mistakes

 

If you’re selling, don’t do these things – take some notes from the video!
1. Don’t Sell Before The House Is Ready.

If it doesn’t present well, it won’t sell well.

2. Don’t Over-Improve

People buy houses in neighborhoods.

If yours is so “improved” that it sticks out you’re hurting your chances at selling.

3. Hire Wrong

Make your agent choice for business reasons.

Personal relationships matter, but experience and expertise will determine financial success in your sale.

4. Don’t Hide Anything

Covering up or ‘failing to mention’ real problems doesn’t work.

State disclosure laws are strict and you can be sued after the sale for anything that should have been made clear.

5. Don’t Rush

You should know about your mortgage, including pre-payment penalties your market conditions and trends and your options for your next home before jumping on the market.

6. Don’t Get Too Emotional

Your attachment to your house and your own financial needs

don’t really matter in the transaction.

If you can’t set them aside the sale won’t go as you’d like it to.

Remember – it was your home but to the buyer it’s as a house.

 

What Is An Appraisal?

 

Every house is unique; appraisers are trained and licensed for expertise in putting a value on properties.

Appraisers don’t work for the buyer or the seller;  their primary mission is actually to protect the lender who’s risking money against the home’s value.

Appraisers have to weigh factors about the property and location – including size, condition and comparable properties – to appraise its current value.

They know how to focus on conditions that affect value; dishes in the sink don’t; damage and neglect do.

Appraisals lower than the proposed purchase price can affect transaction details. The seller might have to lower the price

or the buyer might have to increase down payment or fund additional escrow.

Appraisal seems a lot like inspection, but they’re not the same.

You can think of it this way:

Appraisers report on value to the lender

Inspectors report on condition of the house and major components to the buyer.

So – expect both appraisal & inspection in your transaction.

What Does The Closing Process Involve When I Sell?

 

As this video explains, a signed sales contract doesn’t mean your house is sold. There are still financial, contractual and legal steps for both sides.

The buyer has to get financing to meet the contract terms – which includes credit checks.

The property is inspected and appraised; title insurance and escrow accounts are set up while you locate new housing, pack and move. And take care of any obligations like painting or repairs. After the contract is signed, it can take a month or more of closing steps to reach the closing meeting.

So plan on that when you plan to sell.

What Steps Need To Be Taken To Secure A Loan?

 

You’ll see some pictures in this video to help you remember later, but the first step in securing a loan is to complete a loan application.

To do so, you’ll need the following information.

  • Pay stubs for the past 2-3 months.
  • W-2 forms for the past 2 years.
  • Information on long-term debts.
  • Recent bank statements tax returns for the past 2 years.
  • Proof of any other income.
  • Address and description of the property you wish to buy.
  • A sales contract on the home you want to buy.

During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1-6 weeks.

What Is An Escrow Account? Do I Need One?

 

As we show you in this video, an escrow account is an account, established by your lender, to set aside a portion of your monthly mortgage payment to cover annual charges for homeowner’s insurance mortgage insurance (if applicable), and property taxes.

Escrow accounts are a good idea because they assure money will always be available for these payments.

If you use an escrow account to pay property tax or homeowner’s insurance make sure you are not penalized for late payments since it is the lender’s responsibility to make those payments.

What Are Discount Points?

 

Discount points allow you to lower your interest rate. While this video simplifies things to help you remember, “points” are essentially prepaid interest with each point equaling 1% of the total loan amount.

Generally, for each point paid on a 30-year mortgage the interest rate is reduced by 1/8 (or.125) of a percentage point.

When shopping for loans, ask lenders for an interest rate with 0 points and then see how much the rate decreases with each point paid.

Discount points are smart if you plan to stay in a home for some time since they can lower the monthly loan payment.

Points are tax deductible when you purchase a home and you may be able to negotiate for the seller to pay for some of them.

Can I Pay Off My Loan Ahead Of Schedule?

 

Usually, Yes. Like the guy in the video says, by sending in extra money each month or making an extra payment at the end of the year you can accelerate the process of paying off the loan.

When you send extra money, be sure to indicate that the excess payment is to be applied to the principal and keep records.

Remember that payment applied to loan principal is not tax-deductible. Most lenders allow loan prepayment, but some loans may have prepayment penalties.

Ask your lender for details.

What Types Of Mortgage Loans Are Available?

 

This video tells you about the most common types: Fixed Rate, ARM, Balloon and 2-Step.

First, Fixed Rate Mortgages: Payments remain the same for the life of the loan generally 15 years or 30 years. Interest rates remain the same, so payments are predictable.

A second common type is an Adjustable Rate Mortgage, or ARM. ARM Payments increase or decrease on a regular schedule with changes in interest rates increases are typically subject to limits.

Third, Balloon Mortgage: These offers very low rates for an Initial period of time usually 5, 7, or 10 years when time has elapsed, the balance is due or refinanced though not automatically.

Finally, a Two-Step Mortgage- Interest rates adjusts only once and remains the same for the life of the loan.

Many other types are available, including government-insured mortgages and VA loans for veterans. Talk to lenders and real estate professionals to assess your situation.

How Large A Down Payment Do I Need?

 

There are mortgage options now available that only require a down payment of 5% or less of the purchase price. You’ll see some pictures in this video to help you remember later – the larger the down payment, the less you have to borrow and the more equity you’ll have.

Mortgages with less than a 20% down payment generally require a mortgage insurance policy to secure the loan.

When considering the size of your down payment consider that you’ll also need money for closing costs moving expenses, and – possibly – repairs and decorating.

What Is Loan To Value (LTV) And How Does It Affect The Size Of My Loan?

 

While this video simplifies things to help you remember, the loan to value ratio is the amount of money you borrow compared with the price or appraised value of the home you are purchasing.

Each loan has a specific LTV limit. For example: With a 75% LTV loan on a home priced at $100,000 you could borrow up to $75,000 (75% of $100,000) and would have to pay $25000 as a down payment.

The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV the less cash homebuyers are required to pay out of their own funds.

So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require mortgage insurance policies.