Archive for category: For Buyers

Buying a foreclosure isn’t the same as buying any other type of home, and it comes with its own challenges and hurdles you might encounter during the process. With that said, however, it doesn’t have to be as complicated as it might sound, and with the right information to back you up, you should be able to work through the process successfully. Check out the list of tips below to give you a few things to consider when you’re thinking about buying a foreclosure, whether this the first time you’ll be going this route or you’ve done it before.

1. You will not be able to negotiate:  Most of the time, the bank is the one selling a foreclosed home. Because the home is owned by the bank and they want to make back what they can as quickly as possible on it, they aren’t going to be interested in negotiating with you on the price. Every now and then, you may be able to get a slight reduction in the price, especially if the home has been on the market for a long time. However, for the most part, you should expect to pay the asking price for a foreclosed home.
2. You’ll be buying your home as-is: For many of the same reasons why the bank is going to be uninterested in haggling with you on the price of the home, they’re also not going to want to make any repairs to it before you purchase it. They simply want to sell it as-is, which means you’ll need to be okay with the condition of the home before you ever purchase it. That’s not to say you should skip having a home inspection done before you finalize everything, but keep in mind that this inspection is mostly going to be for your own benefit and you won’t be able to request any changes based on its findings.
3. You’ll need a pre approval letter from your lender before you can buy:  Whether you’re borrowing from your bank or from another lender, the bank selling the foreclosure is going to want to see proof that you’ve been approved for a loan before you can finalize the buying process. Basically, they don’t want to end up selling the home to someone who can’t afford it, and they also don’t want to waste time trying to sell it only to find out, in the end, that you can’t buy it for one reason or another.
4. You probably want to work with an agent who understands foreclosures:  Unless you’ve already been through the process of buying a foreclosure in the past and feel pretty confident about it, you need to work with a real estate agent who knows what they’re doing. An agent with experience in foreclosures will know all about the ins and outs of the process and will be able to help you streamline it as effectively as possible. You’ll be much more likely to be successful with your purchase when you go through an experienced agent.

The housing market is hot this year and there may not be many foreclosed homes on the market.  We are local area experts in Scottsdale and Paradise Valley are.  We can find a home that meets your need and budget.

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Homeowners’ Associations, or HOAs, don’t necessarily have the best reputations nowadays.  From the overzealous curb appeal checks (leaving your trash can out a minute too long is a no no!) to the fines for fading paint on your home’s façade, it can certainly be argued that HOAs aren’t every homeowner’s cup of tea.  However, there are some very solid arguments regarding the benefit of these HOAs.

First, depending on the neighborhood of course, HOAs often fund and maintain the community amenities.  Whether your community features gated access or roving security, or community pools and clubhouses, or even pocket parks and sport courts, these amenities are supported and maintained via HOA fees.  The hassle of these fees is often outweighed by the benefits and your enjoyment of these amenities.

Second, HOAs establish and enforce the regulations that ultimately protect the value of your property and home.  Without these regulations, it can be argued that homeowners would not be incentivized to maintain the exterior of their homes, or their landscaping.  Your neighbor cannot do anything to his or her home that would adversely impact the value of your own home, without the threat of and imposition of hefty fines.  Simply taking a drive through a neighbourhood without an HOA, which likely features a few run-down homes, is proof of this argument.

Finally, HOAs often maintain and instil a sense of community.  HOAs can be used to resolve disputes between neighbours without having to involve the local police department.  Many HOAs will organize community events such as carnivals and potlucks.  Other HOAs spearhead neighbourhood watch groups, which help boost neighbourhood security.

Navigating the home-buying process can be akin to traveling in a foreign country where one isn’t familiar with the language.  There is a lot of vocabulary that isn’t familiar to non-real estate professionals.  One such term is PMI.  PMI, or private mortgage insurance, is insurance for lenders.  Homebuyers who have at least 20% of the sales price as their down payment on their new home must pay PMI.  Lenders require PMI in these situations because they’re assuming more risk when they are investing more in the home than you are.

The actual rate and monthly cost of PMI varies from homebuyer to homebuyer.  The rate and cost depend on several factors such as the value of your new home, the type of loan you’re signing and your credit score.  

The good news is that if you make timely payments on your mortgage every month, your PMI will disappear when you reach 20% of the equity of your home.  This varies from lender to lender, however, as some lenders will stop PIM when you reach a 78% loan-to-value ratio.   While this ratio may occur naturally as you make payments, it may also increase due to your home’s value increasing.

If this is the case, you can request that the lender remove your PMI payment.  This typically occurs when you present the lender with an independent appraisal to prove your home’s value has appreciated to the 78% loan-to-value ratio.  This is at the discretion of the lender, however.  Be sure to ask what your particular lender’s policies are in this regard, before you sign the loan documents.

Another way to remove the PMI is by refinancing your home loan.  For example, if there is a reduction in mortgage rates and you decide to refinance, you may also be able to ask your lender to remove the PMI.  Finally, there are “no PMI” loan programs out there.  However, these programs typically feature a higher interest rate or higher fees in lieu of the monthly PMI amount.  Be sure you have all of the information, regardless of the type of loan.

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