Frequently Asked Questions

Stress-Free Program 6 Tips for a Stress-Free Home Purchase

It's no secret that the real estate market is hot right now! In metro Atlanta, we're experiencing some of the lowest inventory levels we've seen in over a decade, causing an extremely competitive market, with many listings getting multiple offers within the first few days of hitting the market. As if purchasing a house wasn't stressful enough!

So, Forbes states that "1 in 3 buyers cried during the process, 2 in 4 experienced anxiety (…) and 2 in 5 described buying their first home as the 'most stressful event in modern life."

While purchasing your next (or first) home is a big decision, cig one, the decision's no reason this should cause distress. Here are tips to help you reduce stress and anxiety throughout home-buying.

1. Be Flexible As much as having a checklist of your desired home is a must-have, you must also be realistic about the market. Unless you have an unlimited budget, you need to know that there is no such thing as a perfect house. Instead, learn to be flexible by prioritizing your wants vs. needs and go for the one with the most items on your list.

2. Work with an expert.  Working with a professional is always safe and a great stress reducer. When talking about investing thousands of dollars into a down payment, it is essential to have guidance and counseling. A great real estate expert can save money and help you make an educated, stress-free decision. That said, do your due diligence when choosing a real estate agent!

3. Budget correctly.  Be realistic about your budget and assess the type of home you want. Planning thoroughly will give you an accurate idea of the monthly mortgage you can afford. Try and save a little extra for maintenance costs. Start saving for your down payment beforehand so your stress about money can be significantly reduced.

4. Establish a closing date.  Be strict about timing when you find your home and are ready to close. Coordinate appropriately with the end of your current lease and ensure you have enough time to move (that way, you are not rushing). Establish a timeline in advance and try to stick to it.

5. Have a closing strategy.  Ensure you gather your team, including an attorney, mortgage professional, and home inspector. Have a closing checklist, and make sure you complete it. If you are in the closing stage, you are at the end of the road. Have a final walk-through, and make sure you don't have any hesitations or doubts. Ask for a vendor list and request the owner's manuals for all appliances. Prepare and bring the required documents to go to closing so everything runs smoothly 

6. Be loyal.  As a client, make sure you are a good one. If you want to have the undivided attention of your agent, you need to be loyal to him. Please don't go with ten different agents; stick to one, build a relationship, and ensure it is trustworthy.

7. Celebrate! Once your closing is complete, take time to celebrate! Purchasing a home can be quite the journey, with a lot of work along the multiple-month trek. So, take some time to relax and enjoy your new home!

Why do lenders require homeowners' insurance?

Homeowner's insurance pays for losses and damage to your property if something unexpected happens, like a fire or burglary. When you have a mortgage, your lender wants to ensure your property is protected by insurance.

That's why lenders generally require proof that you have homeowner's insurance. Standard homeowner's insurance doesn't cover damage from earthquakes or floods, but it may be possible to add this coverage. Homeowner's insurance is sometimes called "hazard insurance." ."My homeowners pay for their homeowner's insurance through an escrow account as part of their monthly mortgage payment. You make the payments to the lender, and the lender holds the principal amount for insurance in an escrow account. Then, when the bill for the insurance is due, the lender pays it from the escrow account.

The cost of your homeowner's insurance and any similar insurance to protect the property is listed on page one of your Loan Estimate in the "Projected Payments" section. However, it's usually a good idea to do your insurance costs. You can shop separately for homeowner's insurance and choose the provider and plan that is right for you. If you don't have insurance, your lender can buy it for you and charge you for it—but your lender must give you advance notice. If your lender buys insurance on your home because you did not keep up your homeowner's insurance, that insurance may only cover the lender and not you. It may also be more expensive than you could buy on your own.

Why need to Inspect a Home? Before Buy?

 In almost all traditional sales, the seller is required by Georgia law to provide a Seller Property Disclosure Statement (SPDS) to the buyer within the first three days after the seller accepts a purchase offer and within the buyer's ten-day inspection period.

Buyers who purchase a bank foreclosure will not receive the SPDS. Banks are exempt from providing the buyer with any disclosure, including the SPDS. Some Short Sale Sellers and Investors erroneously think they are exempt from giving the SPDS to a buyer. They are NOT exempt!

 The SPDS may reveal material facts about the physical condition of the property known to the seller and list repairs the seller is aware were made.

 The Seller Disclosure (SPDS) does not replace the buyer's inspection performed after a contract is mutually agreed upon. The review aims to find the home's significant, not cosmetic, defects. It is highly recommended buyers hire a professional home inspector to inspect both NEW and RESALE homes before closing thoroughly.

 Suppose a significant fault is discovered, and the buyer and the seller cannot resolve the problem. In that case, the buyer may cancel the contract within the inspection period and have their earnest money refunded. Therefore, completing all inspections and tests for the buyer before submitting their BINSR (Buyer Inspection Notice and Seller Response) repair request to the seller before the 10-day inspection period expires.

 The seller is not required to make ANY repairs not specified in the purchase contract, and it is mutually agreed to be done by the seller before closing escrow. Therefore, the buyer should require a copy of the SPDS and carefully walk the property before writing an offer!

 The seller's repair of pre-existing defects, not a part of the original purchase contract and later discovered during the inspection period, is negotiable - but not assured. The buyer's remedy is to accept the seller's response or cancel the purchase contract and escrow during the buyer's 5-day response after reviewing the seller's response to the Buyer's BINSR Repair Request.

 The Physical Property Inspection will focus on the following areas:

Mechanical: Heating, air conditioning, appliances, exhaust fans, vents, evaporative cooler, ceiling fans, garage door, garage opener, and solar system.

Plumbing: Fixtures, lines, water heaters, sewer or septic system, and wells.

Electrical: Capacity, wiring, code compliance, and out-of-date systems.

Structural: Doors, windows, roof, foundation, fireplace, chimney, drainage, and ventilation system.

Optional: Pool and spa, sprinkler/drip system, exterior lighting, Pest/Termite Inspection, and environmental hazards such as radon, lead, asbestos, mold, and mildew.
Environmental hazards are not part of and are beyond the scope of a physical home inspection and would be additional tests the buyer would have to order.

 I recommend the buyer be present at the end of the home inspection to hear the home inspector's verbal summary of the home inspection, ask questions, have the inspector show the buyer the problems found, and thoroughly review the full written report with photos describing areas of concern when delivered to the buyer. Not all situations are serious, and the buyer may opt to correct them after closing escrow. Use the Home Inspection report as a "honey-do list" to be fixed soon after taking possession while they are "top of mind."
 
If significant repairs are needed, the buyer can request the seller to make them under the sales contract provisions. However, the seller is not obligated to make any repairs discovered after all parties executed the offer unless the repairs were part of the purchase contract and the seller agreed to cause them or the defects are warranted items as described in the Georgia purchase contract. An answer here.  

 Suppose the seller agrees to make some repairs, declines to make other repairs, or ignores the repair request. In that case, the buyer may cancel the contract within the allotted time and have the earnest money deposit returned to the buyer.

Understanding Title Insurance

What is title insurance? Newspapers refer to it in the weekly real estate sections, and you hear about it in conversations with real estate brokers. If you've purchased a home, you may be familiar with the benefits of title insurance. However, if this is your first home, you may wonder, "Why do I need yet another insurance policy?" While that question can raise several issues, we will start with a general answer.

A home is one of the most expensive and important purchases you will ever make. You and your mortgage lender will want to ensure the property is yours and that no one else has any lien, claim, or encumbrance on your property. The Land Title Association, in the following pages, answers some questions frequently asked about an often misunderstood line of insurance - title insurance. What is the difference between title insurance and casualty insurance? Title insurers work to identify and eliminate risk before issuing a title insurance policy. Casualty insurers assume risks. Casualty insurance companies realize that a certain number of losses will occur each year in a given category (auto, fire, etc.). The insurers collect premiums monthly or annually from the policyholders to establish reserve funds to pay for expected losses. Title companies work in a very different manner.

Title insurance will indemnify you against loss under the terms of your policy. Still, title companies work before issuing your policy to identify and eliminate potential risks and prevent losses caused by title defects that may have been created in the past. Title insurance also differs from casualty insurance in that the most significant part of the title insurance premium dollar goes towards risk elimination. Title companies maintain title plants containing information regarding property transfers and liens for many years. Maintaining these title plants, along with the searching and examining of titles, is where most of your premium dollar goes.

Who needs title insurance? Buyers and lenders in real estate transactions need title insurance. Both want to know that the property they are involved with is insured against certain title defects. Title companies provide this needed insurance coverage subject to the terms of the policy. The seller, buyer, and lender all benefit from the insurance title companies provide. What does title insurance insure? Title insurance offers protection against claims resulting from various defects (as set out in the policy) that may exist in the title to a specific parcel of real property, effective on the policy's issue date. For example, a person might claim a deed or lease giving them ownership or the right to possess their property. Another person could claim to hold an easement, giving them a right of access across your land. Yet another person may claim that they have a lien on your property, securing the repayment of a debt.

That property may be an empty lot or hold a 50-story office tower. Title companies work with all types of real property. What types of policies are available? Title companies routinely issue two types of policies: An "owner's policy," which insures you, the Homebuyer, for as long as you and your heirs own the home, and a "lender's" policy, which guarantees the priority of the lender's security interest over the claims that others may have in the property. What protection am I obtaining with my title policy? A title insurance policy contains provisions for paying legal fees in defense of a claim against your property covered under your policy. It also contains indemnification provisions against losses resulting from a covered claim. A premium is paid at the close of a transaction. No continuing tips are due, as with other types of insurance. What are my chances of ever using my title policy? By acquiring your policy, you know that necessary matters have been searched and examined so that title insurance covering your property can be issued. Because we are risk eliminators, the probability of exercising your right to make a claim is very low. However, claims against your property may not be valid, making the continuous protection of the policy all the more critical. When a title company provides a legal defense against claims covered by your title insurance policy, the savings to you for that legal defense alone will significantly exceed the one-time premium.       

What if I am buying property from someone I know? You may not know the owner as well as you think you do. People undergo changes in their personal lives that may affect their title to their property. People get divorced, change their wills, engage in transactions that limit the use of the property, and have liens and judgments placed against them for various reasons. There may also be matters affecting the property that are not obvious or known, even by the existing owner, which a title search and examination seeks to uncover as part of the process leading up to the issuance of the title insurance policy. Just as you wouldn't invest based on a phone call, you shouldn't buy real property without assurances about your title. Title insurance provides these assurances. The risk identification and elimination process performed by the title companies before issuing a title policy benefits all parties in the property transaction. It minimizes the chances that adverse claims might be raised, reducing the number of shares that must be defended or satisfied. This process keeps costs and expenses down for the title company and maintains the traditional low cost of title insurance.

Article by CLTA

What you need before selling your Home,  Making a Good First Impression

If you want buyers interested in your home, you must show it in its best light. An excellent first impression can influence a buyer emotionally and visually, thus prompting them to make an offer. In addition, the buyer first sees what they think when considering the asking price. A wrong first impression can dissuade a potential buyer. Please don’t show your property until it’s all fixed up. You do not want to give buyers a chance to use their negative first impression as a means of negotiation. Ask around for the opinions others have of your home. Real estate agents who see houses daily can give solid advice on what needs to be done.

Consider what architects or landscape designers have to say. It would help if you had objective opinions, and it’s sometimes hard to separate your personal and emotional ties to the home from the property itself. Typically, some general fix-ups must be done outside and on the inside. As a seller, you should consider the following:

Landscaping - Has the front yard been maintained?

Are areas of the house visible to the street in good condition?

Cleaning or Redoing the driveway - Is your driveway cluttered with toys, tools, trash, etc.?

Painting - Does the exterior and the interior look like they have been well taken care of?

Carpeting - Does the carpet have stains? Or does the carpet look old and dirty? 

Before Selling  your Home need a Plan of Action.

Analyze why you are selling - If you understand your motives, you can better negotiate and get what you want, whether a quick sale, a high price, or somewhere in the middle. Prepare your home for the buyer - Maximize your property's strengths and fix its weaknesses. You want the buyer to leave your home with a lasting good impression. Find a good real estate agent who understands your needs - Make sure your agent is loyal to you and can negotiate to help you achieve your goals. In addition, they should be assertive and honest with you and the buyer. Be prepared for negotiation - Learn and understand your buyer's situation; what are their motives? Can you demand a big deposit from them? Try to lock in the buyer so that the deal goes through. Negotiate for the best price and terms - Learn how to counteroffer to get maximum value from every request. Ensure the contract is accurate and complete - Be honest with your disclosures; you do not want to lose the deal because you were lying or diminishing your home's defects. Insist the buyers get a professional inspection. This will protect both you and the buyer. 

For Sale By Owner - A Good Idea?

FSBO (pronounced fizz-bo), or For Sale By Owner, sells your home without a professional real estate agent or broker. The idea behind FSBO is that you save approximately 6% of the agents’ commission by selling your home. 6% may not sound like a lot, but it can add up, especially on more expensive homes. But before you run off and decide to sell your home FSBO, you must remember that there must be a cost to get savings like that. So what’s the catch? Selling FSBO is hard. A lot harder. Only about 10% of sellers who decide to do FSBO succeed. And not all of them end up saving themselves money. FSBO sellers often accept a lower price for their home than they would with an agent. There are, of course, other issues as well. Can you afford to make selling your home your full-time job? Because for a lot of FSBO sellers, that’s precisely what it is. When selling any home, do you have the time and capital to spend on marketing, advertising, inspections, paperwork, phone calls, showings, and problems? Selling with a professional agent also has other advantages. An agent can get your home listed on the MLS (Multiple Listing Service) and other popular websites where homebuyers and other agents can easily find it. Professional real estate agents also have an extensive network that allows them to find a buyer more quickly. So before you decide to sell your home yourself, consider just how much time and effort you can spare for selling your home and how important it is that your home sell sooner rather than later.

Know Why You Are Selling

If you know precisely why you are selling, it is easier to follow the right action plan for getting what you want. If you are a seller who needs to close a sale as quickly as possible, you should know that getting the highest price possible is not one of your priorities. It does not mean that you won’t or cannot get the highest price, but it means that the price is not the deciding factor. A buyer who can give you a quick closing time will appeal much more to you than a buyer who can offer you more money, but the negotiation and closing time drag on. Knowing how low you will go regarding the selling price is always good. This will help eliminate some of the offers you find simply offensive or ridiculous. Even though you should consider all requests seriously and the terms of each offer, sometimes, if you know the bottom line and are strict about it, you can save time. Once you know what your limits and reasons are, discuss them with your agent so that they can help you set your goals realistically. If you decide to list your home on your own, make sure you research the current market and get the proper advice you need regarding legal issues, etc. The key is to be realistic and know your goals so they can be met.

Mortgage 101 

Preparation
Your doc in a row.
Before you start your path to homeownership, plan for it. That means compiling a list of needs and wants, finding a real estate agent you trust, and setting a realistic budget to help you understand what you can afford and where.

Pre-Approval 

Your “Golden Ticket"
” A pre-approval gets you approved for a specific loan amount and comes with a certified pre-approval letter that makes you more attractive to sellers. We’ll run your credit and review other key financial details to get it. We’ve got your budget covered, first-time home buyers. 

House Hunting

Everybody’s favorite part.
Maybe you’ve noted a few “For Sale” signs in the neighborhood. Or perhaps you’ve got a bunch of tabs open on your laptop. Either way, you’re now ready to start touring houses. Work closely with your real estate agent and keep that wants-and-needs list ready.

Lock & Appraise

That is a great rate—a fair price.
So you’ve found your home, put in an offer, and the seller accepted. Congrats! It’s time to discuss loan options and rates with a loan originator. We’ll make sure you understand the big picture and the small details. Once your rate is locked and guaranteed, we’ll order an appraisal to ensure you get a good home deal.

Underwriting 
She was crossing t’s—dotting i’s.

The underwriting process starts once your application has been submitted and your loan is locked. Our underwriters will analyze your financial details—including credit history, debt-to-income ratio, income, employment, etc.—to help protect you (and us) from unnecessary risk.

Closing Time: Almost home.

Once the seller accepts your offer, your lender will help you to tie up loose ends and finalize all the details. In the meantime, your new home will be appraised and inspected to ensure everything’s up to snuff. After that, you sign closing disclosures and pay closing costs. And after that? Keys.

Home Buying Terms:  You Should Know

Do home buying terms make your head hurt? Here, we’ll break down the jargon you should know in ways you can understand. Interest rate Probably the most basic home buying term on this list, interest rates are fundamental to all forms of lending. In the simplest terms, interest is what you pay a lender to borrow money. Whether you’re looking to lend money to buy a home, a car, or pay for school, you want your interest rate to be as low as possible so you end up paying less over time. Closing costs:  Getting a loan can take a while, and you’ll have to deal with closing costs throughout the process. Closing costs usually come from third parties, including home appraisal and title fees. You have to pay for these as they arise, but your lender can help you plan for them and put money aside ahead of time. Equity Equity is the overall value of your home once you subtract what you owe in loans. For example, you may have a home that is worth $400,000. If your current balance is $300,000, you have $100,000 in equity. So, how do you build equity? Pay off your mortgage or increase the value of your home.  

Seller’s/buyer’s market:  When you’re looking to buy a house, your real estate agent may tell you it’s either a seller’s or buyer’s market. A seller’s market implies more buyers than available homes in a given area. Seller’s markets are super competitive, so be ready for bidding wars and potentially miss out on your first choice. Buyer’s markets are the opposite and obviously what you want as a prospective buyer. When there are more homes than potential buyers, there’s less competition, and prices tend to drop.  

LTV LTV, or loan-to-value, is a ratio used to describe the overall size of your loan versus the value of the home you’re buying. It will always be expressed as a percentage and comes from dividing the loan size by the home’s value. LTV is critical in understanding how much you’ll be able to borrow. Funding fee Funding fees are government fees buyers pay that protect the lender from loss and fund the loan program itself. Government loans like VA and FHA have funding fees, but waivers are sometimes available. Ask your loan originator if you’re eligible for a funding fee waiver! Speaking of loan originators. . . . loan originator Not to be confused with a mortgage broker, a loan originator is a representative of a financial institution that assists buyers in their mortgage application process. A mortgage broker is a licensed professional who works on a buyer’s behalf to secure financing through a bank or another lender. In short, a loan originator works for a lender, while brokers are independent. Underwriting is the process lenders follow to assess an applicant’s income, assets, and credit and offer the applicant a loan. Underwriting typically happens after a mortgage application has been submitted. Your lender will comb through your personal information and financial records to determine whether you qualify for a loan. Are you thinking about applying for a mortgage? It’s a good idea to get your affairs in order ahead of time!  

What are some home-buying terms you have trouble understanding? Tell us on social media, and we’ll help you out!

Luis (Lou) Hernandez Realtor®