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Many home sellers are hesitant to hire a real estate agent because they do not see the value in it. This is especially the case for first-time homebuyers who are under the assumption that real estate agents are only concerned about closing the deal and nothing else. This belief prevents them from seeking out a professional in the industry to help them find a home that checks off boxes from their wish list. Here are a few risks that come into play when you purchase a home without using an agent.  

Legalities

Real estate laws and regulations differ from one area to the next. Homebuyers need to be clear on the legalities when it comes to purchasing a home and how to correctly fill out all paperwork. The best way to protect yourself from making any legal mistakes during the homebuying process is to have an agent by your side the whole time to help you stay on track. 

Overpaying 

It can difficult to determine the true value of a home unless you have experience working in real estate. So many homebuyers who do not use an agent wind up overpaying for a home because they overestimated the value of a property. An agent who understands the market will be able to advise you against homes that they feel are bad deals. 

Negotiating 

Real estate agents have negotiating skills that the average person does not. This is because they do it so often because it is a significant part of their job. Also, real estate agents have more knowledge of the local market and the factors that affect the values of homes. It is also likely you are going to be negotiating against the seller's agent who likely has far more negotiating experience than you.

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The home inspection is one of the most critical steps of the home buying process. However, many homebuyers skip it to move forward with their offer on a home. In many cases, the individuals who skip the home inspection ultimately regretting it later on when they uncover issues with the property. Continue reading to discover a few reasons why the home inspection is such an integral part of the home buying process.

Safety 

Safety should be a top priority when you are purchasing a property. You may be surprised at how many issues are uncovered through a home inspection. A home inspection can often reveal safety issues within a home such as mold, carbon dioxide, and radon. This reason alone is arguably one of the most important reasons to invest in a home inspection.

Negotiations

By having a home inspection report in your back pocket, you will have an important negotiation tool as a homebuyer. You can use your inspection report to request a price reduction to make up for issues, or to ask the seller for repairs. If you want to land the best deal possible, a home inspection will help to reduce the likelihood of unforeseen expenses after you close on the home. 

Clarity

Even if you are set on a home, a home inspection may make you rethink your decision to submit an offer. After calculating what you will need to pay for repairs, you may realize that it does not make sense financially. Even if the home still fits your price range, you may not want to deal with repairs like cracks in walls or water leaks. In many cases, a home inspection report allows people to realize that a “move-in-ready” home is not as move-in-ready as they initially thought.

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Are you planning a home showing in the near future? Home showings are excellent for generating excitement about a property. While pictures and virtual tours are popular today, most potential buyers prefer to see a home in-person. Keep reading to discover a few tips on how to make the most of your home showing so your home is sure to sell as soon as possible. 

Monitor the indoor temperature

Potential buyers should be comfortable as they walk through your home for the first time. During the summer months, be sure that your air conditioning is on to prevent your home from becoming too warm and uncomfortable. If you are trying to sell your home during the winter months, make sure that your heat is on so everyone is comfortable inside regardless of the weather. If a potential buyer feels comfortable enough to stay in your home for an extended period of time during a showing, it can help to boost the potential for a sale. 

Avoid using heavy fragrances during staging

As you are staging your home for a showing, avoid spraying fragrances that may create strong odors in your home. Air fresheners or strongly scented candles can emit harsh odors that may cause nausea or headaches. Instead, consider opening up a window to allow fresh air into your home if the weather is favorable and it is not too noisy outside.

Light up the home

A well-lit home is significantly more welcoming than a dark one, as the right lighting will help to showcase your home. Before a home showing, turn on every light in the house. Your goal should be to brighten all dark rooms so onlookers can see your home in its entirety. With this, do not forget to turn on your closet lights are turned on because that make rooms appear more spacious. 

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Most homebuyers today are reliant on the availability of mortgages to purchase a property in the U.S. For years, homebuyers were required to place a minimum of 5% down on a conventional loan. However, the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) recently changed requirements where some home loans now offer 97% financing. This change now allows buyers to put down as little as 3% to purchase a property, making it even easier to buy a home in the U.S. 

  • First-time homebuyers who are currently considering their loan options may want to consider a conventional mortgage, as they are an excellent fit for many reasons. Continue reading for a brief overview of convention mortgages and the role they play in the housing market today.

Conventional mortgage defined:

A conventional mortgage refers to a home loan in which is not secured by a federal government entity like the FHA, VA, USDA. However, is available through a private lender such as credit unions, banks, or mortgage companies. Fannie Mae and Freddie Mac are the two government-sponsored enterprises that can guarantee these types of mortgages. 

What documentation do you need?

In order to obtain a conventional mortgage, a homebuyer needs a variety of documents which includes (and is not limited to):

Proof of income- pay stubs and federal tax returns

Employment Verification- pay stubs (may also contact the employer to verify employment and salary)

Assets- bank and account statements

Other- social security number, driver’s license or state ID card

Credit scores required for conventional home loans

While credit score requirements vary from every lender, 620 is generally the score a buyer needs to obtain a conventional loan. If you are looking to receive the best possible rates, you should strive for a credit score in the mid 700s.

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How would you rate your knowledge of real estate terminology? Most first-time homebuyers have limited knowledge of important real estate terms associated with purchasing a home. Keep reading for a quick overview of the term amortization and learn more about its integral role in the real estate industry today.

What is Amortization?

Many homebuyers in the U.S are unable to pay for a home up front in cash. As such, a majority of homebuyers require a loan. In real estate terminology, this loan is known as a mortgage. The schedule of a homeowners monthly mortgage payments is defined as amortization. This term encompasses the breakdown of which portions of a monthly payment are put towards interest and which are intended for the principal amount. When a homebuyer first receives a loan, they will notice that their monthly payment is applied mostly towards interest on the home. With this, only a small percentage is applied to the principal balance. As the homeowner continues to pay their monthly mortgage payments over time, this portion will decrease and a larger portion of the payment will apply to the remaining balance owed of the property. An amortized loan is entirely paid off when a loan term comes to a close.

Do other types of loans use amortization?

Many types of loans use an amortization schedule detailing payments on a loan. Such load includes auto loans and personal loans that people often receive from banks or third-party lenders.

What are the benefits of amortization?

In most circumstances, both the borrower and the lender benefit from amortizing loan. The borrower primarily benefits from making their payments on time each month, as this prevents both negative impacts against their credit and additional charges. Lenders benefit from receiving a reliable schedule of payments, including principal and interest payments, each month.

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To purchase a home in the United States, you generally need to put down a percentage of the home. This fee is known as the down payment. While many real estate professionals believe you should try to put down around 20% of the total purchase price, there are programs available today which allow people to purchase a home for significantly less, sometimes as little as 3% down. In addition to the down payment, a home buyer will also be faced with closing costs which typically range between 2% to 5% of the purchase price. These fees are paid at the time of the real estate transaction. 

If you are a first-time homebuyer, it is crucial to be aware of closing costs, as such costs could move a home out of your price range. In many cases, certain fees are negotiable and you can always compare quotes between lenders until you are satisfied with the fees attached to the loan. Closing costs will vary drastically based on the home location as well as the type of loan. Keep reading and discover just a few examples of fees that are due when a buyer closes on their mortgage.

Credit Report

Your credit score plays an integral role in determining the interest rate a buyer will get on their home loan. Fees for credit reports are not uncommon, as there is sometimes a cost to have a credit report pulled for a potential buyer to obtain their credit score and history.

Homeowners’ Insurance

In many cases, the first year of insurance is paid at closing. Homeowners’ Insurance will cover any potential damage to the home. 

Origination Fee

The lender will often charge a loan processing fee to cover their administrative costs. In most cases, it is approximately 1% of the total loan cost.

Property Taxes

You will be taxed from your closing date until the end of the tax year at a prorated rate. Property taxes vary by the location of your home.

Prepaid Interest

In many cases, the lender will request the home buyer to cover the cost of the interest they accrue from their closing date until their first payment.

Underwriting Fee 

This fee covers the cost of evaluating a loan application, which determines whether or not to approve a lender for the loan.

Home Inspection

A home inspection will help to both verify the current condition of the home and to check for any necessary home repairs before the homeowner closes on the property.

Can a homebuyer avoid paying closing costs?

A homebuyer may be able to avoid closing costs. as it is sometimes possible to avoid upfront fees on a loan by choosing a no-closing cost mortgage. In some cases, the lender may charge you a higher interest rate on the loan as a result or they could include the closed mortgage fees on the total mortgage. 

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