Orem, UT

Understanding Mortgages, Getting the best Rate.

By: Robert A. Hulme - Realtor, Mortgage Loan Officer

As a home buyer, it only makes sense to try and get the lowest rate possible when obtaining a Home Loan. After all, the rate is the primary factor in determining your house payment. But how do you get a low rate when applying for a home loan? This is the primary question that most home buyers want to know. I would like to explain some important ideas that you need to keep in mind.

Credit Score

One of the primary factors in helping to determine your interest rate is your credit score and financial history. In other words the best interest rates are usually reserved for those with the highest credit score. So if you credit score is not very high the chance of getting a lower interest rate is not very good. It is very important, that, prior to applying for a home loan, you pay all of your bills on time and that you do carry some line of credit so you can show the lenders that you pay your bills.

Type of Loan

Recently, I am sure you have noticed that the home loan market has taken a dramatic change. There are not nearly as many programs available as there used to be. Most banks require that the home buyer contribute more down payment. They feel that with the higher down payment , the buyer will be less likely to default on their loan. But there are still a few loan programs available, so make sure that your loan officer takes you through all the types of loans that you have available to you based on your financial situation.

Yield Spread Premium

The one factor that most home buyers are not familiar with is Yield Spread Premium. Yield Spread premium is usually disclosed to the home buyer in the good-faith estimate as being between 0% and 4%. The loan officer doesn't have to tell you the exact percentage, mainly because he/she does not know for sure, because rates are constantly changing. Most states are now required to disclose the final Yield Spread Premium on the closing documents. Make sure you understand this concept thoroughly prior to going to closing, because you could be real surprised if you don't. Avoid any problems at closing by having your loan officer explain this program in detail during the transaction. Yield Spread Premium is where most loan officers make the bulk of their commission. The balance comes from the Loan Origination fee. Most important, is become informed, ask many questions of your loan officer throughout the entire process.

Purchasing a home can be a wonderful experience, if you are not prepared prior to entering the process it can be a bad a one. Make sure you keep your credit in good standing, save up as much money as possible for a down payment and become informed and everything will go great. Good Luck.

Home Buyer - Seven Factors of a Loan Transaction

By: Robert A. Hulme

When you are ready to buy a new home, the first step in the Purchase Process is qualifying for a Home Loan. Listed below you will find the seven factors of a Loan Transaction.

Debt to Income Ratio - These are used to determine the borrower's capacity to repay the mortgage. Higher ratios represent increased risk and should be offset by compensation factors.

Loan to Value - this is the ratio of the amount borrowed to the appraised value or sales price of the real property expressed as a percentage. It describes how much of the property's value is being borrowed.

Capacity - this is the ability of the customer to repay the mortgage based on the customer's monthly income.

Credit - This answers the question: Is the borrower willing to repay the debt?

Capital (Cash) - Does the borrower have enough cash to meet the transaction requirements?

Collateral - Property pledged as security for a debt.

Compensation Factors - These are items that offset any high risk factors present on a loan.

I just wanted to bring these factors to your attention prior to starting you home search. Remember, when you are ready to start looking for that new home, talk with a loan officer and get pre-approved, this will help your realtor when it comes time to make an offer.

For Sale by Owner vs. Realtor

By: Robert A. Hulme - Realtor

When it comes time to sell your home, one big decision needs to be made. Can I sell my home by myself or should I use a Realtor? Everybody wants to make as much money as they can when it comes time to sell their home, but it is necessary to maintain realistic expectations if there is to be a successful sale transaction. The For Sale by Owner option is often perceived to be best way to make the highest profit when selling a home. In theory, that makes a lot of sense, but there are so many variables that the results usually come out the opposite. In fact, statistics from the National Association of Realtors report that only 16 % of those who listed their home For Sale by Owner, were successful in selling their home. The main drawbacks can be divided into two main categories, Buyer Perception and Seller Frustration.

Buyer Perception

Buyers often have a negative perception of a seller who is selling on their own. Some see the refusal to hire a Realtor, as cheap, and they begin to wonder how far that cheap goes. They wonder if maybe the Seller even cuts corners in maintenance, repairs, or upgrades. They think the Seller is going to be hard to work with when it comes time to negotiate terms.

Seller Frustration

There really is a lot of work involved in selling your house on your own. You have to field all the phone calls yourself and conduct all the showings. Unless you have a very flexible schedule, you will lose potential buyers simply because you are unable to accommodate their schedules. Sellers are often frustrated by the low offers they receive, but buyers realize you are not paying any commission and therefore have more room to negotiate. They want to save money too, and expect you to understand. Most frustrating to Sellers is organizing the closing and understanding the paperwork.

Does this mean that you should not ever list FSBO? There is always the chance that your house is the exact property that a buyer is looking for so they throw a sign in the yard for a few weeks and see what happens. If you have not sold by then, call a Realtor to guide and protect you, and help you through the process.

Buying your First Home

By: Robert A. Hulme - Realtor

Well the time has come; you are finally out making a good living. You are beginning to get tired of paying rent, the number one advise that friends and family are giving you is, Buy a House. By this time you are about to be hitched and have probably saved enough money for a down payment. After a fair amount of thinking about it, you jump over the first hurdle and decide to go for it. Now once you are focused about what you want you then jot down a list of things you want in a house. That being done the search begins. These days the task of sifting through hundreds of potential houses is not as hard. With a few mouse clicks, you can see multiple house listings and take virtual tours of houses for sale.

The key points to consider are the location and the surrounding neighborhood of the house and your estimated budget. It is important to talk with a loan officer and determine if your budget ideas sound reasonable, and get a preapproval letter if possible, this will help a lot latter on you will see. Once you have set out the criteria its time to take yourself down to a real estate agent. An efficient real estate agent will pay close attention to your wants, needs, and show you houses accordingly. This will ensure that within the span of two weeks you will have a maximum number of houses to see which will fit your desired profile.

Then starts the personal viewing process, and this is a long, tiresome process indeed. Careful attention is needed when venturing out to see homes. Once you start seeing places that you like, slow down and don't make the biggest mistake of your life by jumping for the first house that you see. Even if the first house you see actually has the perfect room size, the awesome kitchen and even the ideally shaped terrace, wait. Mark it out as one of your favorites and see others. While inside the house, be thorough with your investigations and personal observations. Mark out all the things you like about the house and mark out the things that you do not like. Take a good look at all the rooms and the roof as well as if its accessible, and make a note even if it is not.

After leaving the house rate it personally from 1-10. Also, take a good look at its surrounding location. Note the size and shape of the car parking area, and take note of the lawn and back yard shape and size. Another thing to focus on is the garage. Lastly insist that the Realtor tell you about all the defects of the house that are not openly visible. Ultimately, revisit the top selected houses to make an informed decision.

Bank Owned Properties - Utah County Real Estate

Banks are not in the business to hold onto an inventory of homes. They want to get rid of these homes yesterday. This makes for a great opportunity for you, the home buyer or investor, because most of these homes are well below market value. Once the bank owns the property they will handle eviction if any, take care of some repairs, pay past HOA and/or other maintenance dues, and then will negotiate with the IRS, removal of tax liens, if any.

How do banks sell REO Property? (Real Estate owned by the Bank)

Most banks have an REO department that handle the sale of these properties. They certainly would like to get the best price of course. When you make an offer, the banks will usually make a counter offer. Don't be surprised to get a higher counter offer than you might expect. Banks want to show their shareholders and investors that they are trying to get the highest possible price for the house. You should counter the counter offer. Your offer will likely be reviewed by an approval panel. Even after they accept your offer they include wordings like "subject to Corporate approval".

Condition of the Property

These homes are almost always sold "as is" with the right to inspect. You incur the inspection expenses (termite, general home inspection, mold, etc.). An inspection contingency period must be included in your offer that will allow you to terminate the sale if any of the inspection reveals damage that the bank will NOT correct.

Make sure you have someone representing you who understands this process, when you are trying to negotiate on a Bank owned property. It is important that you have someone who knows how to handle repairs and all the steps necessary for a smooth closing.

Robert A. Hulme