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Buyer FAQ |
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What You Can Afford |
 How do you determine the value
of a troubled property?
How long do bankruptcies
and foreclosures stay on a credit report?
How
much does my real estate agent need to know?
How
much will I spend on maintenance expenses?
What
can I afford?
What is Fannie Mae's low-down program?
What is
the standard debt-to-income ratio?
When is the
best time to buy?
Where do I get information on
housing market stats? |
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Question: How
do you determine the value of a troubled property?
Answer: Buyers
considering a foreclosure property
should obtain as much information
as possible from the lender, including
the range of bids expected.
It also
is important to examine the property.
If you are unable to get into a foreclosure
property, check with surrounding
neighbors about the property's condition.
It
also is possible to do your own cost
comparison through researching comparable
properties recorded at local county
recorder's and assessor's offices,
or through Internet sites specializing
in property records. |
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Question: How
long do bankruptcies and foreclosures stay on a
credit report?
Answer: Bankruptcies
and foreclosures can remain on a
credit report for seven to 10 years.
Some lenders
will consider an borrower earlier
if they have reestablished good
credit. The circumstances surrounding
the bankruptcy can also influence
a lender's decision. For example,
if you went through a bankruptcy
because your employer had financial
difficulties, a lender may be more
sympathetic. If, however, you went
through bankruptcy because you overextended
personal credit lines and lived beyond
your means, the lender probably will
be less inclined to be flexible. |
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Question: How
much does my real estate agent need to know?
Answer: Real
estate agents would say that the
more you tell them, the better they
can negotiate on your behalf. However,
the degree of trust you have with
an agent may depend upon their legal
obligation.
Agents working
for buyers have three possible
choices: They can represent the
buyer exclusively, called single
agency, or represent the seller
exclusively, called sub-agency,
or represent both the buyer and
seller in a dual-agency situation.
Some states require agents
to disclose all possible agency
relationships before they enter
into a residential real estate
transaction. Here is a summary
of the three basic types:
- In
a traditional relationship,
real estate agents and brokers have
a fiduciary relationship
to the seller. Be aware that the seller
pays the commission of both
brokers, not just the one who lists and
shows the property, but also
to the sub-broker, who brings
the ready, willing and able buyer
to the table.
- Dual agency exists
if two agents working for
the same broker represent the buyer
and seller in a transaction.
A potential conflict of interest
is created if the listing agent
has advance knowledge of another
buyer's offer. Therefore, the
law states that a dual agent shall
not disclose to the buyer that
the seller will accept less
than the list price, or disclose to
the seller that the buyer will
pay more than the offer price,
without express written permission.
- A buyer also can hire
his or her own agent who
will represent the buyer's interests
exclusively. A buyer's agent
usually must be paid out of the buyer's
own pocket but the buyer can
trust them with financial information,
knowing it will not be transmitted
to the other broker and ultimately
to the seller.
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Question: How
much will I spend on maintenance expenses?
Answer: Experts
generally agree that you can plan
on annually spend 1 percent of the
purchase price of your house on repairing
gutters, caulking windows, sealing
your driveway and the myriad other
maintenance chores that come with
the privilege of homeownership. Newer
homes will cost less to maintain
than older homes. It also depends
on how well the house has been maintained
over the years. |
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Question: What can I afford?
Answer: Know
what you can afford is the first
rule of home buying, and that depends
on how much income and how much debt
you have. In general, lenders don't
want borrowers to spend more than
28 percent of their gross income
per month on a mortgage payment or
more than 36 percent on debts.
It
pays to check with several lenders
before you start searching for a
home. Most will be happy to roughly
calculate what you can afford and
prequalify you for a loan.
The price you can
afford to pay for a home will depend on six
factors:
1. gross income
2. the amount of cash you
have available for the down payment,
closing costs and cash reserves
required by the lender
3. your outstanding
debts
4. your credit history
5. the type of mortgage you select
6. current interest
rates
Another number lenders use to
evaluate how much you can afford
is the housing expense-to-income
ratio. It is determined by calculating
your projected monthly housing
expense, which consists of the
principal and interest payment
on your new home loan, property
taxes and hazard insurance (or
PITI as it is known). If you have
to pay monthly homeowners association
dues and/or private mortgage insurance,
this also will be added to your
PITI.
This ratio should fall between
28 to 33 percent, although some
lenders will go higher under certain
circumstances. Your total debt-to-income
ratio should be in the 34 to 38
percent range. |
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Question: What
is Fannie Mae's low-down program?
Answer: Fannie
Mae is expanding the availability
of low-down-payment loans in an
effort to help more people nationwide
qualify for a mortgage.
Two new
programs will help potential buyers
overcome two of the most common
obstacles to home ownership, low
savings and a modest income.
To
address many first-time buyers'
struggles to save the down payment,
Fannie Mae developed Fannie 97.
The program provides 97 percent
financing on a fixed-rate mortgage
with either a 25- or 30-year loan
term through Fannie Mae's Community
Home Buyers Program.
Fannie Mae's
new Start-Up Mortgage will assist
buyers with a 5 percent down payment
who are at any income level. Yet
applicants do not need as much
income to qualify and less cash
for closing than with traditional
mortgages. Borrowers will receive
a 30-year, fixed-rate mortgage
with a first-year monthly payment
that is lower than the standard
fixed-rate loan.
Freddie Mac, Fannie
Mae's counterpart, also offers
low-down-payment loan programs. |
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Question: What
is the standard debt-to-income ratio?
Answer: A
standard ratio used by lenders limits
the mortgage payment to 28 percent
of the borrower's gross income and
the mortgage payment, combined with
all other debts, to 36 percent of
the total.
The
fact that some loan applicants
are accustomed to spending 40 percent
of their monthly income on rent
-- and still promptly make the
payment each time -- has prompted
some lenders to broaden their acceptable
mortgage payment amount when considered
as a percentage of the applicant's
income.
Other real estate experts
tell borrowers facing rejection
to compensate for negative factors
by saving up a larger down payment.
Mortgage loans requiring little
or no outside documentation often
can be obtained with down payments
of 25 percent or more of the purchase
price. |
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Question: When is the best time to buy?
Answer: Here
are some frequently cited reasons
for buying a house:
- You need a tax break. The mortgage
interest deduction can make
home ownership very appealing.
- You
are not counting on price appreciation
in the short term.
- You can afford the
monthly payments.
- You plan to stay
in the house long enough
for the appreciation to cover your transaction
costs. The costs of buying
and selling a home include real estate
commissions, lender fees
and closing costs that can amount to more than
10 percent of the sales price.
- You prefer
to be an owner rather than a renter.
- You can
handle the maintenance expenses and headaches.
- You
are not greatly concerned by dips in home
values.
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Question: Where
do I get information on housing market stats?
Answer: A
real estate agent is a good source for finding
out the status of the local housing market.
So is your statewide association of Realtors,
most of which are continuously compiling
such statistics from local real estate boards.
For
overall housing statistics, U.S. Housing
Markets (meyersgroup.com) regularly publishes
quarterly reports on home building and home buying.
Your local builders association probably gets
this report. Finally, check with the U.S.
Bureau of the Census in Washington, D.C.; (301) 763-3199; census.gov. The Chicago Title company also has
published a pamphlet, "Who's Buying Homes
in America." Write Chicago Title 601 Riverside
Ave., Jacksonville, FL 32204; (888) 934-3354; ctic.com |
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HOME VALUATION |
| Monitor the value of your property, get an
idea of what your home is worth today. |
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FEATURED PROPERTIES |
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Foster City |
| Bed/Bath |
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3/2 |
| Sq ft |
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1,540 |
| Asking Price |
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$798,000 |
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San Mateo |
| Bed/Bath |
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2/2 |
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$529,000 |
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San Mateo |
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2/2 |
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1213 |
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San Mateo |
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San Mateo |
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1,254 |
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San Mateo |
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1,130 |
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Redwood City |
| Bed/Bath |
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4/3.5 |
| Sq ft |
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2,951 |
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