Keep close tabs on your credit by checking it at least once a year. One thing you should do when buying a home for the first time is to find a lender who you’re comfortable dealing with.

Getting a mortgage before you shop for a home will save you lots of time and will make sellers that much more likely to accept your offer over others.

Buying a home can be a confusing and complicated process, especially for a first-time home buyer. But if you follow these tips, you can make sure things go as smoothly as possible.

• Mistake #1: Not finding the right person to guide you through the home buying process
• Mistake #2: Not checking your credit report and score
• Mistake #3: Not making your offer look good enough to sellers

Mistake #1: Not finding the right person to guide you through the home buying process

Many people forget that it’s just as important to shop around for the right real estate agent and lender as it is to shop for the right home. A wrong person leading you through this extensive process can lead to hassles and headaches. Having someone help you through the home buying process can match your needs and goals with the right mortgage possibilities.

Solution:
To find both the right real estate agent and lender, get referrals from family and friends. Do research online. Ask your potential real estate agents and lenders lots of questions! They should seem willing and able to answer any and all questions you may have. The more you ask, the more educated you can be to make the right decisions.

A good real estate agent should show you many houses that fall within your price range so that you know what’s on the market and can compare each one to how well they suit your needs. A good mortgage banker should be willing to guide you through the entire mortgage process. Make sure you feel at ease with each person. They should be friendly and accommodating to your needs, you don’t want them to pressure you into doing something you’re not comfortable doing.

Mistake #2: Not checking your credit report and score

You wouldn’t go into a car dealership and buy a car without knowing how much it costs. So why would you go to a lender without knowing what kind of mortgage you could get?

Solution:
Knowing what kind of mortgage you can qualify for depends on a number of different variables including your credit score. According to Federal law, you can now get a free copy of your credit report once every 12 months. Generally speaking, the higher your credit score, the better interest rate and loan you can get.

If your credit score is low due to mistakes on your credit report, you can dispute those errors to have them corrected. This could help raise your credit score. If it’s low due to things like late or missed payments, then you can take action to improve your buying habits and eventually raise your score.
Get more tips on improving your credit score.

Mistake #3: Not making your offer look good enough to sellers

If you make an offer on a house, it’s important to make it enticing to the seller. And if your offer isn’t attractive enough, you could lose the home of your dreams to another buyer.

Solution:
To make an attractive offer on your dream home, you need to understand the difference between a pre-qualification and a pre-approval.

A pre-qualification only gives you an idea of how much you might be able to borrow. But you haven’t applied for anything and your financial information has not been verified by the lender. .

A firm pre-approval is a much better way to go. The Canto Team offers a Fast Trac Buyer pre-approval* while you shop for a home. Because much of your information has been verified, you’ll have an edge over other buyers. You’ll have a very good idea how much you can spend on a home and sellers will know you’re serious about your offer. Learn more about our Fast Trac Buyer approval by calling us at (888) 724-7402..

If you do your research and educate yourself by asking a lot of questions, you can avoid these common mistakes and make your first-time home buying experience a positive one.

Buying a home? Mortgage closing costs are what you pay to close your loan application.

Where do they go? Some costs and fees go to third parties, some are state and local government fees that must be covered and some go to your lender.

Mortgage closing costs are fees charged for services that must be performed to process and close your loan. At the time you apply for a loan, lenders are required by law to disclose to you, in writing, what the estimated mortgage closing costs will be. This is known as the Good Faith Estimate.

Costs and Fee Associated with Your Home Purchase

In addition to making your down payment, there are other costs and fees associated with your home purchase. Average closing costs generally range from $2,500 to $5,000 or about six percent of your loan – a sizable amount of money when you consider this is paid upfront at closing. But where exactly does it all go?

A common misconception about mortgage closing costs is that they all go to the lender, when in reality; many of the costs are related to services performed by others. Mortgage closing costs cover expenses associated with getting a home loan, from inspections and appraisals to title insurance, taxes and more. It is important to check your lender fees and closing costs carefully. If a lender boasts incredibly low rates, it’s possible they will try to make up the difference with exorbitant lender fees.

Below you’ll find possible closing costs in an average loan transaction broken down into three groups: third party fees, state and local government fees, and lender fees.

Mortgage Closing Costs – Third-Party Fees

Many of your mortgage closing costs go to a third-party for services necessary to complete the transaction. Lenders typically have no control over these fees.

• Appraisal ($225 – $450)
  The appraisal is required to determine the fair market value of the home. A property appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. Therefore, an appraiser is needed to make this determination.
• Credit Report ($15 – $30)
  When you apply for a mortgage, you have to prove that you are capable of paying it back. Lenders will obtain a copy of your credit report to review your borrowing history and ultimately determine if they should risk lending you money. This fee goes to the credit reporting agency like Experian, TransUnion or Equifax.
• Closing Fee ($150 – $400)
  This fee is paid to the title company or attorney for conducting the closing.
• Title Company Title Search or Exam Fee ($150 – $400)
  This fee is paid to the title company for doing a detailed search of the property records for your home. The title company will look at prior deeds, court records,property and name indexes, and many other documents. This is to ensure that there are no liens or problems associated with your ownership of the property.
• Survey Fee ($150 – $400)
  A survey of the property may be required to verify boundary lines for your property and to ensure that there is no encroachment on the lot.
• Flood Determination/Life of Loan Coverage ($15 – $25)
  This cost goes to determining whether or not your property is located in a federally designated flood zone. If the property is found to be located within a flood zone, you will need to buy flood insurance.
• Courier Fee ($30)
  This covers the cost of transporting documents to complete the loan transaction as quickly as possible to avoid paying additional interest on your mortgage loan.
• Title Insurance (Lender’s Policy) (Varies – generally between $175 – $875)
  This covers the costs of assuring the lender that you own the home and the lender’s mortgage is a valid lien.
• Title Insurance (Owner’s Policy) (Varies – generally between $175 – $875)
  This is an insurance policy protecting you in the event someone challenges your ownership of the home.
• Homeowners’ Insurance (Varies – $300 and up)
  Homeowners’ Insurance is required to cover possible damages to your home. In the event of a fire or other damage, homeowners will receive this insurance to cover the costs of rebuilding. Your first year’s insurance is often paid at closing.
• Buyer’s Attorney Fee (Not required in all states – $400 and up)
  This fee is paid to the attorney who prepares and reviews all of the closing documents on your behalf.
• Lender’s Attorney Fee (Not required in all states – $150 – $500)
  This fee is paid to the lender’s attorney for preparing and reviewing all of the closing documents on behalf of the lender.

Overview

Real estate is a tangible, cash generating asset that appreciates with time. In other words, it can become a profitable investment and make you some nice cash.

Purchasing real estate is usually a good way to invest your money and increase your long-term financial security depending on market conditions. In other words, now is a really good time to buy investment real estate.

Purchasing real estate is a good way to invest your money and provide yourself some increased financial security. It’s a good way to increase cash flow and offers many profitable investment options. But, if you’re new to real estate investing, you may ask, “What is real estate investing all about? What are the benefits to me and how can I get started?” We’ll answer all those questions and help you get on your way to investing in real estate now.

What is Real Estate Investing?

Real estate is a tangible, cash-generating asset, much like gold or silver, and appreciates in values just like these precious metals. Being a tangible asset, however, it does not function like a bond or stock that can quickly lose value; it remains an excellent, long-term way to invest.

Real estate investors benefit from financial leverage, using a mortgage to build wealth in a way that other forms of investments do not. Real estate investment has proven to be a powerful method of creating wealth over time and there are three main forms of return-on-investment (ROI): cash flow, return on taxes and appreciation.

Cash Flow

Cash flow represents the most direct type of return, since it is money you can “put in your pocket” right away. Investing in real estate is a way to increase your cash flow. That, in turn, can provide the working capital you need to further expand your investment opportunities and obtain greater financial security.

Return on Taxes

Many investors in higher tax brackets are less concerned with cash return and more focused on the tax advantages of real estate investment. A great tax benefit for the new investor is a first-year, 100% tax deduction for up to $100,000 of business equipment purchased. This would include appliances.

Then there’s also the tax benefits of being able to deduct mortgage insurance as well as points paid on a home loan. Consult a tax consultant.

Appreciation

The largest ROI is typically from home appreciation. Properties can have significant increases in value over time and if you have long-term goals, one option is to buy land without a structure on the property. If you buy property in the path of development, you may be able to sell at a profit in the future, perhaps when you’re ready to retire and need more income.

What Are the Benefits to Real Estate Investing?

Renting

Real estate is such a smart investment option because you can maximize your ROI by finding excellent properties that can be purchased at a great price. Some properties may need more work that others, but with a little TLC, it can be turned into a nice rental property. Renting property allows for a steady and reliable stream of cash flow from the rental payments since there is a high occupancy demand for a well-kept and reasonably priced rental property.

Flipping

If renting is not for you, you can also purchase, repair and resell for attractive profit. This is referred to as
“flipping” a property and is a popular real estate investment option. If you’re handy and ambitious, this option may be a better alternative to renting the property out.

Start Investing in Real Estate Now

Some basic strategies can be used successfully in all real estate market conditions and get you started on becoming a real estate investor:

• Do your research: Educate yourself about the differences between renting and “flipping” properties and which markets offer the best opportunity.
• Select an area of interest: Choose an area where you think you could get a satisfactory return on your properties. Assess the true value of these properties based on when you expect to rent or sell the property. Keep in mind, the value of a particular house is not solely what it appraises for, but also what someone is willing to pay to rent or buy.
• Learn about your market: This will help save you time by avoiding homes that are not worth the investment.
• Enlist the aid of a real estate professional: a real estate professional can help you find good properties, negotiate the best prices and speed up the home buying process.
• Contact a reputable mortgage lender: a good mortgage banker can help you determine which mortgage options are best for your situation and answer any questions you may have. Whether you decide to rent or flip your investment property, there are some excellent financing options available.

Investing in real estate is among the best ways to develop income streams and offers many profitable investment options. Knowing your market and having a plan before you begin to invest is key in your success as a real estate investor. Determine your best interest and take the plunge; your pockets will thank you for it later! If you’d like to know more about financing an investment property, call us at The Canto Team and speak to one of our Expert Mortgage Consultants today at (888) 724-7402.

Overview

Once you’ve found a home that meets your needs, it’s time to make an offer. In deciding the amount of your offer you and your agent have to weigh several factors – asking price vs. comparable home sales, market conditions, other potential offers, how badly you want the home, the home’s condition, if you’re approved for a loan, etc. A good agent is invaluable in this step and can do wonders for keeping your inevitable making-an-offer jitters at bay.

The Purchase Agreement

You’ll sign a purchase agreement that your agent will supply and that indicates the amount of your offer and may also include details that stipulate, for instance, which appliances stay and when you’d like to take possession, etc. You’ll put down “earnest money,” a deposit to show that you’re willing and able to buy the home – earnest money is usually a small percentage of the asking price and later applied as part of your down payment. An earnest money deposit is a check you write to the seller and that your agent holds until the offer has been accepted. This is different from the deposit your mortgage banker will accept from you when you are ready to begin the mortgage process from us.

The Counter Offer

Your agent presents your offer to the seller’s agent who in turn presents it to the seller. Then, you wait. It may seem like a long time because the waiting can be excruciating, but most offers stipulate a response within 24 to 48 hours. They sign your contract agreeing to your offer, decline your offer or submit a counter offer. If they present you with a counter offer, you can either agree with their terms or make another counter offer. This process continues until you come to an agreement that satisfies everyone. Then it will be time for the inspection.

The Home Inspection

You have a right to inspect the home you’ve made an offer on, and indeed, most purchase agreements are contingent upon inspection. You are highly advised to hire a qualified professional to inspect the home. It’s the best way to be sure the home is in good condition and that some unexpected disaster won’t strike like the plaster ceiling in the dining room dropping during your first dinner party.

What is it?

A thorough inspection is an objective examination of the home, from top to bottom, inside and out including heating, cooling, plumbing and electrical systems, walls, floors, ceilings, foundation, roof, gutters, spouts, insulation and ventilation, major appliances, garage, etc. The inspector you hire should check everything and leave you with a detailed report listing the condition of each item, as well as recommended repairs.

What if the home inspection reveals problems?

You don’t need to be there when the home inspection takes place, but its best that you are – it usually takes a few hours. You’ll learn not only about the condition of the house but how everything works and you can ask questions as you go along.

If there are problems, don’t panic. Most inspections of older homes will reveal a number of items that aren’t quite right. You’ll decide whether to deal with them or renegotiate with the seller. For instance, a seller may adjust the purchase price of the home or simply repair the problem – depending on what it is. There’s always the chance that the home is in such bad shape or has some monumentally costly problem that it’s out of the question. In that case, get your deposit back and resume your house hunting.

Where do I find a home inspector?

Ask around – friends, family and colleagues – for someone they’d recommend. Your real estate agent should also be able to give you a list of names. You can even search for home inspectors in your area on the American Society of Home Inspectors web site. Be sure to ask for references and check them. You’ll want someone with a lot of experience.

How much does it cost?

The cost varies from community to community and from state to state, but anywhere from $250 to $400, depending on the location and property.

Homeowner’s Insurance

You’ll need homeowner’s insurance before you close on your home. No lender in the land will give you a mortgage without it. It’s important that together your equity in the home and your lender’s investment are insured against damage. You may have only a microwave, a futon and a spoon to put in your new home, but you’ll want a policy that covers your personal belongings as well.

Once your home is inspected and you’ve decided to go ahead with the home purchase, the processing of your loan really gets underway. It’s at this time you’ll need to show proof of homeowner’s insurance. A good place to start exploring your insurance options is with the company that insures your car. Often insurance companies offer discounts when you hold more than one policy. There are many types of insurance policies; your agent will help you decide which is right for you.

What Exactly Are Closing Costs?

It’s one of the most asked questions by home buyers. Lenders are required by law to disclose in writing – known as a Good Faith Estimate – your estimated closing costs and fees. A summary of possible closing costs you might have to pay, depending on the loan program you select, is included in the downloadable version of the Smart Home Buyer Guide. Additional costs might apply depending on your state, your loan product and your down payment amount. For instance, title companies handle most closings; however there are some states that require an attorney to conduct the closing. In those states, borrowers are not required to pay a title company closing fee.

The Closing

The closing is the completion of a real estate sale and loan transaction. It’s the final step in the home buying process. At the closing you’ll not only sign your documents, but you’ll get the keys to your new home.

When?

The timing of your closing is important. You’ll want to schedule it to your best advantage. For instance, you might want to schedule it toward the end of your lease so as to not pay unnecessary rent, or, if possible, around the time of the closing of the home you’re selling.

Before your closing, you’ll receive a document that outlines the costs you’ll pay at closing. You’ll be asked to bring a valid picture ID, a certified check if applicable and any other additional documents that your circumstances may require.

It’s customary to take a final walk through of the property shortly before the closing to make sure the home is in the condition you expect it to be.

Who?

A closing can be attended by any number of people and may or may not include the seller, the lender, you, the seller’s mortgage holder, respective attorneys, the real estate agent, the transfer agent (if it’s a co-op), the managing agent (if it’s a condo) and the title company representative. For a list of some of the closing documents you’ll be required to sign, see our mortgage document explanation.

Everyone signs the appropriate documents, checks are exchanged, you’re given the keys to the home and you’re done.

Where?

With The Canto Team, we conduct the closing at a location that’s convenient to you. At your real estate agent’s office, or attorney’s office.

Keep your paperwork!

Whew. You’re done! You’ve bought your new home. You’ll want to protect your investment also. The best way (besides insurance) is to keep your paperwork in order and in a safe place. That way you’ll be able to access it easily when you need it, for instance, at tax time, to refinance, or when you sell your home. Remember, The Canto Team can help you manage your home financing now and in the future.

The Closing Is Just the Beginning!

As a Canto Team client, you’ll enjoy an on-going relationship with your Mortgage Banker. To help you manage your mortgage, your Mortgage Banker will keep you informed of industry trends and new home financing options. Published exclusively for our valued clients, you’ll receive our weekly “Mortgage Market Guide” newsletter. In it you’ll find useful articles and tips on everything from home improvement, real estate market, the economy, buying and selling real estate and special offers that can save you money.

Overview

You’ve found the home of your dreams, the paper work has been processed and a closing date set. The next step is to order an appraisal to gauge the true value of the home.

There are several questions surrounding the appraisal process and what to expect. The appraisal is ultimately your safeguard against spending more on your home than it’s worth.

You are ready to move forward with your home purchase. You’re taking advantage of the best buyer’s market in decade. Whether you’re a first-time home buyer or an experienced buyer moving to a new home, this is the time to do it. Prices are lower than they’ve been in years and you are cashing in on the opportunity. Maybe you’re even a property investor, scooping up homes at record lows to turn a profit later. Whatever the reason, you know that now is the time to buy a home!

You have found the home of your dreams, the paper work has been processed and a closing date set. The next step is to order an appraisal to gauge the true value of the home.

There are several questions surrounding the appraisal process and what to expect. The appraisal is ultimately your safeguard against spending more on your home than it’s worth. It’s also a safeguard for your mortgage company to not lend out more on a property than it’s currently worth. Appraisers are always 3rd parties in the mortgage process (it’s illegal for the appraiser to work directly with or for the mortgage company) and they have only one purpose – to realistically judge a property for its actual worth at the time of the appraisal.

If you prefer to read, below are the top things to understand about an appraisal. These should answer most of your questions regarding the appraisal process during a home purchase, but in case you still have questions, please call us at (888) 724-7402 or email ted@tedcanto.com and we’ll answer all your concerns.

1. How long will an appraisal inspection take?
   The physical appraisal inspection usually lasts anywhere from 5-30 minutes, depending on the size and complexity of the home. The appraiser will make note of the floor plan or any significant upgrades and features.
2. Measuring the House
• An appraiser has several different ways of obtaining measurements to the house.
• Physically measure the property
• Obtain measurements from a prior mortgage survey
• Obtain measurements from a previous appraisal
• Obtain measurements from county or city assessor’s records
• Square footage is generally determined from exterior measurements.
• Please keep in mind that proper county permits are required in order to include any square footage that had been added on to the home.
3. Finished Basements and Gross Living Area
• Basements, below grade or partially below grade area are typically not considered part of the square footage or room-count on an appraisal, regardless of window size, ceiling height or walk-out features.
• Adjustments to value may be made in favor of finished basements
4. Cost Improvements
   Improvement costs are not usually recovered in the market. For example, one may have spent $45K in remodeling their kitchen. The remodel may have included granite countertops, tumbled marble backsplash and glazed porcelain flooring. However, the additional value given by the appraisal will only be for the updated kitchen and will not take into account the separate materials and their cost. Also, improvements such as a new roof, new furnace, new windows, etc. are considered a part of typical wear and tear and do not typically bring additional value.
5. Differences in Bedroom Counts
   The market recognizes very little difference between a 3-bedroom and a 4-bedroom home. Typically there is not an adjustment for this and the difference in square footage is adjusted under the Gross Living Area. There is usually a market difference between 1-, 2- and 3-bedroom homes and comparable sales for 1- and 2-bedroom homes are typically difficult to find.
6. Comparable Sales Data
• Recently closed sales similar in location, size, style and features are used to help determine value during an appraisal. These sales must be closed and verified by a public data source at the time of the appraisal inspection. Comparable home sales should have taken place within the last 90 days; however that’s not always possible in slower markets. Additionally, the sale should have taken place within 1-mile of the home being appraised. Distance and time guidelines are usually exceeded for rural property locations. Comparable sales within your subdivision (if applicable) would be looked at first – however, not all homes sold in your neighborhood may be comparable. For instance, your home may be a ranch home with an unfinished basement and a two-car garage. The home next door to you may have just sold, but it is a 4-bedroom colonial with a fully finished basement and 300 more square feet of living space. These homes wouldn’t be considered comparables.
• Evaluations must be based on the closest comparable homes. Similarly, appraisers must consider the most recent sales in your area, regardless of the value.
7. Appraiser Qualifications
• To become an approved appraiser with The Canto Team, all appraisers must submit a completed package to Academy Mortgage management for review. Each appraiser must provide their licenses, E&O insurance, fee schedule, coverage areas, three work samples, and a W-9 form. The first five orders are flagged for audit to determine if the appraisers are meeting our standards. All of these standards and requirements are put in effect for one simple reason – to make sure our appraisers provide excellent service and fair appraisals for our clients 100% of the time – no exceptions!
• Certified trainees are allowed to complete appraisal inspections in many states. The supervisory appraiser must sign the report which will place full responsibility of the appraisal report and its contents on the supervisory appraiser. The appraisal is still valid.
• The appraiser is NOT an employee of Academy Mortgage. All appraisers who work with us are 3rd parties, licensed to perform appraisals in specific counties. The majority of the information in an appraisal comes from the MLS (Multi Listing System) which is available to licensed real estate professionals.
8. Appraisal Reassignment
   An appraisal CANNOT be reassigned to another mortgage company regardless of a consent form from the prior company. The exception to this guideline is an appraisal completed for the purpose of an FHA loan within the specified time frame allowable by FHA.
9. Appreciating/Depreciating Values
   In general, homes across the county are experiencing a decrease in value. This could lead to varying reported values in a short period of time. For example, a home appraised 6 months ago at $200, 000 could now be valued at $150,000 depending on how homes sold in the recent months following the original appraisal.

Understanding the appraisal process is a very important part of getting the right home purchase mortgage. Knowing how appraisals work will allow you to work closer with your mortgage banker to find the best possible mortgage for your situation. If you have any questions about appraisals or buying a home in general, please call us at (888) 724-7402.