REAL ESTATE 101: Frequently Asked Questions
Hey guys! Well, we in Southeast Louisiana dodged yet another storm but in this case a “shower/mist” named Barry. Things are just beginning to get back to normal here but one thing’s for sure: that good ol’ Southern heat is in full force outside! Hope you’re staying cool!
Anywho, another blog post is here! This week I thought it pretty fitting to finally discuss some common real estate questions many buyers and sellers have. As you know, I’m here to assist you in reaching your real estate goals and what a better way to start a meaningful dialogue than to discuss a few of the most common questions many of my new clients have. Here goes:
What do I need to get started?
In the words of my late great grandmother, all you really need is a “made-up mind”. In other words, once you’ve made up your mind to pursue a goal, that’s all you need to achieve your heart’s desires. The possible hurdles in between will only be minor. But to be clear, you always start with financing. So that means: check your credit score. Do you have at least 2 years of consecutive employment in the same field? Have you any money saved for down payment and closing costs? After you answer all those questions, it’s time to contact your Realtor to get the process started.
How much should I save to prepare to purchase?
Well, it all depends on your purchase goals, your loan product and your prequalification amount. Many loans only require a 3.5% down payment while others may require 5% while others may require 10% or 20%. You’ll also need money saved for inspections (ranges from $200-$500) and closing costs (depends on property location, taxes, title fees, insurance costs, etc.). Now there are several programs to assist with purchasing dependent upon your county or parish of residency BUT as I tell me clients, “It’s better to have the money saved than to need it [as there’s no guarantee this money will be granted to you. There are a number of qualifications that must be met in order for you to receive funds and that’s IF there are any left at time of your purchase.]” So the answer is, “It’s best to stay focused on your goals, be disciplined, and save.” It may be hard but it’s worth it.
If I am pre-qualified for a certain amount and I purchase a home less than my pre-qualification amount, can I be given the difference?
No. Your pre-qualification amount specifies the amount of money the bank will lend you. It’s not “your money”. If you have a renovation loan product you’ve been prequalified for, the monies allocated for renovation will be allocated directly to the licensed and bonded contractor that has been hired to remodel your property. Same thing if during the negotiation process the seller has allocated money for repairs, you (the buyer) don‘t get that money in hand. It’s given directly to the contractor in compensation for his/her services once repairs have been completed on your property.
What are owner financed properties?
So, I get this question a lot. Owner financing comes in 2 forms: lease-purchase and bond for deed properties.
Lease-purchase properties are properties that can first be leased with an option to buy. None of the monies paid during the lease term will be applied to the price of the home. So this option can be viewed as an advantage for the seller and a huge disadvantage to the buyer. I never suggest my buyers go with this option. As for my seller clients, that’s up to them if they feel they’ll attract viable buyers who think this option attractive.
On the other hand, the bond-for-deed option has a bit more favorable terms for buyers but not so much for sellers. Bond for deed contracts do not require a loan pre-qualification (neither a credit check) but many do require a large down payment plus a set monthly installment amount as well as a balloon payment (usually in the form of a traditional loan) at the end of the monthly payment term. This option usually works better for the buyer as your monthly payments ARE paying down the home price BUT if you are unable to pay the balloon payment at the end of the agreed upon term, the previous owner is once again the owner of your now former home. Bond-for-deed terms are incredibly strict and on-time payment is highly recommended. This option may not be attractive to sellers who want to completely be free of the home their selling as there’s a possibility that the home could be given back to them in the case of a default.
How can I find out more about foreclosed properties?
So the foreclosure process can be long an arduous for interested buyers as current owners are granted many rights and usually a large time frame to pay their defaulted balance before auction. Then after auction, if the bank buys the property back, buyers will have to wait until the property is listed for sale usually by a local realtor. Even then, if a buyer was to agree to purchase, 98% of the time the bank will have no information on property condition and will also usually refuse to complete or allocate monies for any repairs before or after purchase. So there’s a huge risk involved. Is it worth it? That would depend on your personal finances and real estate portfolio plans. You can find out more about foreclosed properties through your local sheriff‘s office website or through sites such as: www.hudhomestore.com, www.auction.com, and www.homepath.com.
How much do you charge to be my Realtor?
Can you believe it? I’m FREE for buyers/investors and of course, everything is negotiable for my seller clients. I’m always here to help!
Do you have a question you’d like to ask? I’m all ears! Comment below, email firstname.lastname@example.org, or text me 504-883-1836. I’m here to ease your real estate fears!
While you’re at it, you can download my FREE ”Homebuying Simplified” Guide when you sign up for my mailing list at www.soldbythebelle.com! It’s a really simple, easy, no frills read and it’ll help you to understand the homebuying process from beginning to end.
Til next time, stay cool! ☀️