Q&A

With todays Real Estate market theres obviously no way we could have all the answers posted on our site. If you have any Real Estate or Financing questions that you do not see here please feel free to ask your question(s) below, Be sure to add your email so when we reply you’ll get your answer right away!

Question: HOW DO I KNOW IF I’M READY TO BUY A HOME?
Answer: You can find out by asking yourself some questions:

Do I have a steady source of income (usually a job)? Have I been employed on a regular basis for the last 2-3 years? Is my current income reliable?
Do I have a good record of paying my bills?
Do I have few outstanding long-term debts, like car payments?
Do I have money saved for a down payment?
Do I have the ability to pay a mortgage every month, plus additional costs?

If you can answer “yes” to these questions, you are probably ready to buy your own home.

Question: HOW DOES PURCHASING A HOME COMPARE WITH RENTING?
Answer: The two don’t really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.
Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that’s an investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities- like insurance, real estate taxes, and upkeep- which can be substantial. But given the freedom, stability, and security of owning your own home, they are worth it.

Question: HOW DO I SELECT THE RIGHT REAL ESTATE AGENT?
Answer: Start by asking family and friends if they can recommend an agent. Compile a list of several agents and talk to each before choosing one. Look for an agent who listens well and understands your needs, and whose judgment you trust. The ideal agent knows the local area well and has resources and contacts to help you in your search. Overall, you want to choose an agent that makes you feel comfortable and can provide all the knowledge and services you need. You are at the right place.

Question: WHAT SHOULD I DO IF I’M FEELING EXCLUDED FROM CERTAIN NEIGHBORHOODS?
Answer: Immediately contact the U.S. Department of Housing and Urban Development (HUD) if you ever feel excluded from a neighborhood or particular house. Also, contact HUD if you believe you are being discriminated against on the basis of race, color, religion, sex, nationality, familial status, or disability. HUD’s Office of Fair Housing has a hotline for reporting incidents of discrimination: 1-800-669-9777 (and 1-800-927-9275 for the hearing impaired).

Question: HOW CAN I FIND OUT ABOUT LOCAL SCHOOLS?
Answer: You can get information about school systems by contacting the city or county school board or the local schools. We may also be knowledgeable about schools in the area.

Question: HOW CAN I FIND OUT HOW MUCH HOMES ARE SELLING FOR IN CERTAIN COMMUNITIES AND NEIGHBORHOODS?
Answer: We can give you a ballpark figure by showing you comparable listings. If you are working with a REALTOR, they may have access to comparable sales maintained on a database.

Question: HOW CAN I FIND INFORMATION ON THE PROPERTY TAX LIABILITY?
Answer: The total amount of the previous year’s property taxes is usually included in the listing information. If it’s not, ask the seller for a tax receipt or contact the local assessor’s off ice. Tax rates can change from year to year, so these figures may be approximate.

Question: WHAT OTHER TAX ISSUES SHOULD I TAKE INTO CONSIDERATION?
Answer: Keep in mind that your mortgage interest and real estate taxes will be deductible. A qualified real estate professional can give you more details on other tax benefits and liabilities.

Question: IS AN OLDER HOME A BETTER VALUE THAN A NEW ONE?
Answer: There isn’t a definitive answer to this question. You should look at each home for its individual characteristics. Generally, older homes may be in more established neighborhoods, offer more ambiance, and have lower property tax rates. People who buy older homes, however, shouldn’t mind maintaining their home and making some repairs. Newer homes tend to use more modern architecture and systems, are usually easier to maintain, and may be more energy-efficient. People who buy new homes often don’t want to worry initially about upkeep and repairs.

Question: WHAT QUESTIONS SHOULD I ASK WHEN LOOKING AT HOMES?
Answer: You can find out by asking yourself some questions:Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet)? Also ask about the house and neighborhood, focusing on quality of life issues. Be sure the seller’s or real estate agent’s answers are clear and complete. Ask questions until you understand all of the information they’ve given. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive. The HUD Home Scorecard can help you develop your question list.

Question: HOW CAN I PROTECT MY FAMILY FROM LEAD IN THE HOME?
Answer: If the house you’re considering was built before 1978 and you have children under the age of seven, you will want to have an inspection for lead-based point. It’s important to know that lead flakes from paint can be present in both the home and in the soil surrounding the house. The problem can be fixed temporarily by repairing damaged paint surfaces or planting grass over effected soil. Hiring a lead abatement contractor to remove paint chips and seal damaged areas will fix the problem permanently.

Question: WHAT TYPES OF LOANS ARE AVAILABLE AND WHAT ARE THE ADVANTAGES OF EACH?
Answer: Fixed Rate Mortgages: Payments remain the same for the the life of the loan

Types

15-year
30-year

Advantages

Predictable
Housing cost remains unaffected by interest rate changes and inflation.

Adjustable Rate Mortgages (ARMS): Payments increase or decrease on a regular schedule with changes in interest rates; increases subject to limits

Types

Balloon Mortgage- Offers very low rates for an Initial period of time (usually 5, 7, or 10 years); when time has elapsed, the balance is clue or refinanced (though not automatically)
Two-Step Mortgage- Interest rate adjusts only once and remains the same for the life of the loan
ARMS linked to a specific index or margin

Advantages

Generally offer lower initial interest rates
Monthly payments can be lower
May allow borrower to qualify for a larger loan amount

Question: What is a 1031 Tax Exchange?
Answer: For comprehensive information on 1031’s see the IRS site or confer with a licensed 1031 agent. (Back to Top)
In laymen’s terms a 1031 transfer allows a person to transfer the equity of a rental property into a new investment. The previous property may have been partially or wholly depreciated but the seller will not suffer capital gains tax as long as all of the equity is transferred. Often the new property is refinanced after the transfer freeing up the investors capital for further investments.

Question: What is “A” paper
Answer: A paper is a term used by underwriters to refer to a loan which meets the parameters set by Fannie Mae/Freddie Mac for loans those organizations will buy or purchase. Also referred to as conforming, A paper says the borrower has adequate credit, income and job history for a given loan.

Question 3: What is “B” paper?
Answer: “B” paper on nonconforming is a loan which does not meet the requirements set out by Fannie Mae. At least one factor has caused the loan to be unacceptable. The borrower may be borrowing a large percentage of his income, his credit score may be low or his income erratic or poorly documented. These loans have higher rates and more fees than A paper. If you believe you are eligible for a conforming loan and are not being offered one see another lender.

Question: What is pre-qualified?
Answer: A pre-qualification is a statement by a loan officer that a person appears qualified based on the answers to some questions. None of the information has been verified and neither buyer nor seller should rely on this statement. Please do not go looking for your dream home with just a Pre-Qual letter.

Question: What is pre-approved?
Answer: A buyer can be pre-approved after they have applied for a loan and had a credit report run. A pre-approval will have some exceptions, the fewer the exceptions the stronger the preapproval. Remember the preapproval is only as good as the institution issuing it.

Question: Why should I be pre-approved?
Answer: Pre-approval has many benefits. The buyer is assured of his/her purchasing power and only shops within that range. The agents involved and the seller are all assured of the buyers serious intent. This assurance of ability and intent makes the preapproved buyer a more desirable than someone who has not put forth the effort. Not being preapproved can cost the buyer thousands in negotiating.