Kimberly Wingfield: Philly Real Estate Agent
Kimberly Wingfield
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Demystifying the Home Buying Process: Review

Earlier today, I held a free seminar at the Kingsessing Library on the ins and outs of buying a home – and I’d like to extend my sincere thanks once again to Conita Pierson, the library branch director, and to everyone who attended! Lots of great questions and conversations, and I can’t wait to do it again! (Special thanks to John Hallahan of Wells Fargo, who was kind enough to explain the ins and outs of mortgages, credit, and the lending process in general.)

Today’s blog is a basic overview of what we covered today, a few pointers in general, and some useful links that should prove useful to anyone in the market for a new home. Enjoy!

What you’ll need to get started:

  • A down payment (Varies w/the type of mortgage, but the fairly easy-to-get FHA loans require a minimum of 3.5% of the purchase price. However, if you’re a veteran/current service member of the Armed Forces, you may qualify for a 0% down VA loan with few to no closing costs.)
  • Closing costs. These vary with the price of the home, and include things like transfer taxes, (usually 2% of the purchase price,) deed recording fees ($234.50 in the city of Philadelphia, although that figure is much lower in the neighboring suburbs,) settlement fees, and any mortgage-related fees. These can sometimes equal or exceed the amount of your down payment, so be prepared!

What you’ll need to know about in advance:

  • Title/settlement services: Before you can buy a house, you need to make sure that there are no liens or ownership disputes on the property before the title (basically a certificate of ownership) can be transferred to you. The title/settlement company is responsible for researching public records for any potential problems of this nature, certifying that – to the best of their knowledge – the title is clear for transfer, and issuing title insurance. (Title insurance is something that protects you, the buyer, if there’s a lien/ownership dispute down the line that the title company didn’t uncover. While this is fairly unusual, it can happen – and almost all mortgage lenders will require you to have title insurance to protect their investment.)NOTE: Once an offer has been accepted, make sure that the title is researched as quickly as possible in order to avoid any rude surprises before closing! Ask your real estate agent to write a very short title search deadline into your agreement of sale in order to uncover any problems ASAP!
  • Your credit profile. Creditkarma.com offers a free way to check your credit score, and annualcreditreport.com allows you to check your credit reports from all three bureaus once a year. Checking your own credit via these sites doesn’t hurt your score at all – and searching for the same type of loan within a 30-day time frame (for example, shopping for mortgages,) only counts as one pull against your credit, no matter how many lenders have a look in that span of time. Having an idea of what your credit looks like ahead of time allows you to a.) find, dispute, and fix errors that may be on there before seeking a loan, and b.) allows you to show various lenders what they’ll want to know before they pull your credit. This allows you to shop around for ballpark loan estimates without threatening your credit score in the process. While the lender you eventually choose will pull your credit once you ask for a mortgage, having your credit profile available can help you to help the banks give you an idea of what’s available.The higher your credit score, the lower your mortgage interest rate – and your monthly payment – will be. Most lenders cannot provide a mortgage to anyone with a credit score under 640, with the absolute rock-bottom score for some is 580.If you’re having problems with your credit, seek out the free (or very low-cost) credit counseling services available from a reputable non-profit source. Never give a credit counseling service money to (essentially) forward your monthly payments along to creditors – a reputable outfit should be in the business of explaining how to fix your credit, not claiming that they can do so for you with minimal effort on your part.
  • Down payment assistance programs. I’ve blogged about these before, but there are a number of places in and around Philly that offer need-based down payment/closing cost assistance grants and loans for qualified candidates. Several of these programs require you to attend a series of classes in order for your grant money to be held in escrow – in which case, you’ll have a period of time (usually six months) to find and buy a home. (Down Payment Resource is a great site when it comes to seeing what’s available, as well!)
  • REO (Real Estate Owned) homes vs. conventional sales. Sometimes, a buyer defaults on their mortgage, and the house goes back to the lender. When the lender (Fannie Mae, Freddie Mac, or a bank) then puts the house back on the market for sale, it’s known as an REO property. You can often get a great deal on a property by purchasing an REO, but there are two important things to note in this case.First, since banks, etc. are exempt from paying transfer tax by federal law, the buyer is required to pay ALL of these fees at closing – which adds another 2% of the purchase price to the money you’ll be expected to pay at settlement. (Again, each side usually pays 2% in transfer taxes, but the buyer’s on the hook for the full 4% in an REO situation.) You can potentially ask for a seller’s assist of up to 6% in this case to defray some of the costs, so ask your Realtor about that if you find an REO home that you’d like to make an offer on.Secondly, if you find yourself up against another potential buyer in a multi-offer situation on an REO property, Fannie and Freddie in particular are prohibited from telling you exactly how much the other offer/s are for. You just have to submit your highest and best offer by a certain time and date and hope for the best.

What to look for in a home:

  • Before you search for a place to call home, go ahead and make a list of priorities. For instance, how many bedrooms would you like? Are there any things you might be willing to compromise on? Are there some things you just won’t accept? Once you get a solid idea of what you’re looking for, move on to the next step.
  • Location, location, location. All I can say on this one is to trust your gut. If something feels wrong about a particular house, block, etc. to you, don’t be afraid to move on to the next place. If you feel comfortable in an area or a particular home you’re considering, that’s a great sign – go with it!
  • School districts. If you have kids/are planning on having kids, you might want to research the area schools before looking at houses. However, it should be noted that all residents of PA can send their kids to free online charter schools from home, if that’s a potential option for you.

What to look for in a Realtor:

  • A Realtor should be someone you feel comfortable with when it comes to helping you navigate the process of buying a home. They should be able to answer any relevant questions you may have about the process in general, and should be able to give you solid, reliable information when asked. If you find yourself working with a Realtor who gives you vague answers, iffy information, etc. it’s time to move on. As with any profession, a Realtor should be able to tell you how they came to an answer or conclusion objectively; there’s nothing about the regular real estate purchasing process that the average person shouldn’t be able to understand.
  • Always make sure that a Realtor listens to your budget and requested features. For example, if you’d like a 3-4 bedroom home with space for a garden on a sunny block in West Philly for around $65,000, don’t stick around with a Realtor who shows you properties that don’t match up. (Be realistic – a similar house in Fitler Square or Northern Liberties can’t be found at that price – but a good Realtor should be able to accommodate any sensible request from a client.) Don’t forget that a Realtor works for you –  and you shouldn’t be pushed into viewing/buying a property that you don’t particularly want.

One Response to “Demystifying the Home Buying Process: Review”

  1. January 21, 2016 at 4:03 pm, Deb said:

    Very helpful information! One thing to add for home buyers — when they find a home they may want to buy, recommend they get a property history report that can make them aware of potential issues. For example, a Housefax report includes information on building permit history, loan history, natural hazards (like sinkholes and flood zones), fire incidents, and whether or not the house has a meth lab association. Reports can be accessed quickly and easily at Housefax.com.

    Reply

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About Kimberly Wingfield

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Kimberly Wingfield

Real Estate Agent

kimberly.wingfield@gmail.com

267-536-3928267-536-3928 main

Virtual Realty Group

1418 Robinson Rd, Havertown, PA 19083

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