Q & A's
Section
WHITE HOUSE REALTORS
"Let Our Family Help Your Family With All Your Real Estate Needs"
Q. What are contingencies in a purchase contract?
A. When your purchase a home, you want to anticipate potential problems so that if something does go wrong, your can cancel the contract without penalty. These are called "contingencies" and you must be sure to include them when you offer to buy a home. For example, some "move-up" buyers often agree to purchase a home before selling their previous home. Even If the home is already sold, it is probably a "pending sale" and has not closed. Therefore, you should Make closing your own sale a condition of your offer. If you do not include this as a contingency, you may Find yourself making two mortgage payments instead of one.
There are other common contingencies you should include in your offer. Since you probably need a mortgage to buy the home, a condition of your offer should be that you successfully obtain suitable financing. Another condition should be that the property appraises for at least what you agreed to pay for it. During the escrow period you are likely to require certain inspections, and another contingency should be that it pass those inspecitons.
Q. Can I list my house for over market value to see what happens, then lower it later if it doesn't sell for the higher price?
A. Later, when you drop your price, your house is "old news." You will never be able to recapture that flurry of initial activity you would have with a realistic price. Your house could take longer to sell.
Even if you do successfully sell at an above market price, your buyer will need a mortgage. The mortgage lender requires an appraisal. If comparable sales for the last six months and current market conditions do not support your sales price, the house won't appraise. Your deal falls apart. Of course, you can always attempt to renegotiate the price, but only if the buyer is willing to listen. Your house could go "back on the market."
Once your home has fallen out of escrow or sits on the market awhile, it is harder to get a good offer. Potential buyers will think you might be getting desperate, so they will make lower offers. By overpricing your home in the beginning, you coudl actually end up settling for a lower price than you would have normally received.
Q. Can I buy a house after a bankruptcy?
A. Probably. There are two issues to consider.
First, lenders like to see two years of good credit after a bankruptcy is resolved. However, there are instances where lenders will finance with a year of good credit. Second, lenders want to know why you have gone bankrupt. There is a substantial difference between a bankruptcy that is created by reckless financial habits and simple financial disasters -- a car wreck, medical costs, the plant closed after 30 years, the town was underwater for three weeks, etc. In other words, not every bankruptcy is a by-product of financial negligence.
Q. What advise would you give to help me decide between my two favorite houses?
A. You can make such a tough decision easier by going back to your starting point. Ask yourself these questions:
Review your priorities - Do both properties meet your stated housing needs?
Seek new information - what else should you know about the house, the neighborhood, local schools, transportation, and community facilities?
Compare the added features for each home - Are there benefits that outweigh any shortfalls in your priority list?
Keep resale in mind - If you intend to move in five or 10 years, which home will probably be easier to resell?
Analyze the costs of both homes - How does the price of each compare, and how do the long-term costs such as heat, locat taxes and fees, transportation and other day-to-day living expenses stack up?
Q. How does being "pre-approved" help me?
A. You meet with your lender ahead of time to provide your income, asset, and credit information before shopping for a home. This allows you to shop for a home knowing how much it is going to cost and what your monthly payments will be. It also helps in your negotiations on a contract because the seller realizes that you are a qualified buyer. Furthermore, the entire loan process is expedited and can be closed much sooner.
Q. Are there any problems that a title search cannot reveal?
A. There are some "hidden hazards" that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his or her marital status, resulting in possible claim by a legal spouse. Other "hidden hazards" include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you've purchased your home and can jeopardize your right to ownership. In an extreme case, you could lose your entire home and property - and still be liable to pay off the balance of your mortgage. Title insurance is your policy of protection against loss if any of these problems - even a "hidden hazard" results in a claim against your ownership.
A. Start by thinking about your situation. Are you ready to buy a home? How much can you afford in a monthly mortgage payment? How much space do you need? What areas of town do you like? After you answer these questions, make a list of "wants" and "needs". Then call me! I will conduct a personal home search for you and will give your MLS printouts of everything that is available that meet your needs and hopefully most of your "wants". We will then start viewing houses to find the home that is perfect for you and your family.
Q. How do I begin the process of buying a home?
A. MIP is the amount paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing
Administration (FHA) or to a private mortgage insurance (MI) company.
First, the bad news...If your loan closed before January 1, 2001, the only way to remove the mortgage insurance is to pay off the loan
or refinance the mortgage. Now, the GOOD news!!....Effective for all loans closed on or after January 1, 2001, FHA's annual
mortgage insurance premiums will be automatically canceled under the following conditions:
1. For mortgages with terms more than 15 years, the annual mortgage insurance premiums will be canceled when the loan to value
ratio reaches 78%, provided the mortgagor has paid the annual mortgage insurance premiums for at least five years.
2. For mortgages with terms 15 years and less and with loan to value ratios 90 percent and greater the annual mortgage insurance premiums will be canceled when the loan to value ratio reaches 78 percent, irrespective of the length of time the mortgagor has paid
the annual mortgage premiums.
3. Mortgages with terms 15 years and less and with loan to value ratios of 89.99% and less will not be charged annual mortgage insurance premiums
Q. What is MIP (Mortgage Insurance Premium) and what are requirements for deleting MIP insurance? ("MIP" is
associated with "FHA" financing)
A: There are some improvements that rarely pay off, such as adding a swimming pool. These improvements are fine if you and your family will enjoy them, but keep in mind that they rarely increase the value of your home. They may even make your home more difficult to sell.
You should also avoid making too many expensive improvements that go beyond what is typically found in your neighborhood. You don't have to cut corners, but owning the most expensive home on your block can be another obstacle when it comes time to sell your home.
One last piece of advice, avoid getting too fancy. Everyone's tastes are different, so choosing colors and materials that appeal to a broader range of people will make it easier when you need to sell.
Q: Will adding a pool increase the value of my home?
A: You can receive feedback 24 hours a day, 7days a week with our exclusive internet feedback system. When you list your home with White House Realtors you will be given an internet link to your personal website which is pass code protected with a code that will only be given out to you and your agent. You will then be able to go online at your convenience and get an updated report of any showings and feedback that we receive from those showings. This system receives rave reviews from all of our Sellers. We know it's important to receive the information you want, when you want.
Q: If I list my home with your office, how often will I receive feedback from showings of my home?
Q. How do financing details and incentives affect your offer?
A. There may be times when, as part of your offer, you request the seller to pay all or a portion of your closing costs, or provide some other financial incentive. One common request is asking the seller to provide funds to temporarily buy down your interest rate for the first year or two. Such incentives can be especially effective if a buyer is tight on money or pushing their qualifying ratios to the limit. Whenever you ask for incentives such as these, you will probably find the seller less willing to negotiate on price. After all, what you are really asking for is to have the seller to give you some money to help you buy their house. The end result is that, for a little relief in the beginning, you are willing to pay a little more in the long run.
Q. Do I need to complete a Residential Property Condition Disclosure form for my home that I have listed with a Real Estate Professional?
A. The Tennessee Residential Property Disclosure Act states that anyone transferring title to residential real property must provide information about the condition of the property. The completed form constitutes that disclosure by the Seller. The information contained in the disclosure are the representations of the owner and are not the representations of the real estate licensee or sales person, if any. It is not a warranty, or a substitute for any professional inspections or warranties that the purchasers may wish to obtain.
If the residential property is a new construction or the home owner has not occupied the residence for three or more years, a waiver form may be completed in lieu of the Residential Property Condition Disclosure Form.
Q. In the state of Indiana, do you have to complete a sales disclosure form if the home is a brand new construction and never been occupied?
A. In the state of Tennessee, a Tennessee Property Condition Diclosure Exemption form must be completed on New Construction. You will need to check with your state to review Indiana's State Law.
A. If the property is still deeded to you, your daughter will not be able to sell the home. Please consult your CPA regarding your capital gain liability.
Q. I rented a home to my daughter on a verbal rent to own basis. Now she wants to sell and gain the equity. She has less that good credit. I would like to help her out but I don't want to wind up paying capital tax. Are there and good solutions?
