How Can You Apply for a Home Loan with Low Credit Score?

If you are hesitant on applying for a loan because of your poor credit history, don't worry, there is still a way for you to borrow funds to finance your home purchase. In the instance that the borrower is not qualified to be granted a loan, a mortgage lender may ask the loan applicant to provide a co-signer or a co-borrower in order to proceed with the loan.

What is a co-signer? A co-signer is a person who provides guarantee that a loan will be repaid.  The guarantee provided by the co-signer reduces the risk that the lender will lose the money lent to the borrower.  The co-signer signs an agreement stating that in case the borrower, fails to make the payments, he/she will assume legal liability for it.  However, they do not have ownership of the property, the co-signer is just there to insure the loan will be repaid. They only pay if the borrower fails to make the payments. The income, assets and credit history of both parties are considered by the underwriter to approve the loan. Co-signer is often a relative or a friend of the borrower.

What is a co-borrower? A co-borrower is essentially the same as the borrower. He/she is responsible for half of the payments all through the length of the loan.  Co-borrowers are usually spouses or partners who use their combined income to qualify for a larger mortgage than could be obtained singularly.  By being a co-borrower they also have part ownership of the property.  The income, assets and credit history of both parties are also considered by the underwriter to approve the loan.

If you have any questions on how to apply for a loan with a co-signer or a co-borrower, please contact me.

Things you Need to Do Before Making an Offer

Congratulations! You've finally found your dream house and you're ready to put in an offer to make it yours. But before you take that step, it is important to complete these tasks before signing that purchase contract:

1. Get a Pre-approved Loan
Find out how much you can afford to spend on your new home.  You also have to take into consideration the closing costs and the down payment when making an offer.  Having that pre-approval will show the seller that you are serious in buying that home and therefore, will gain an advantage over a buyer who doesn't have a pre-approved loan.

2. Work with an Aggressive Full-Time Realtor
An experienced Realtor who knows the market will be able to get the best deal possible on a home.  Interview your Realtor - even if they are a friend, family member, or a referral.  Ask why you should work with him/her and what is their value proposition to you?   For example, Patrick has sold over 25 houses so far in 2011.  Patrick is a local market expert and has testimonials from clients who are raving fans of his professionalism and dedication.  Don't you deserve the same??

3. Ask your Realtor for a Comparable Market Analysis (CMA)
A CMA is an evaluation of a home's value based on available local market data including:
- How much homes similar to your 'potential new home' have sold for recently
- How long these homes were on the market before they were sold
The more information you have, the better you'll be at putting together an offer and the more leverage you'll have at the bargaining table.

4. Check the Date of Listing
The longer a home has been on the market, may mean that the seller is anxious to sell the property. However, a homeowner who has just listed his property is less likely to accept a bid below asking price than an owner who's been waiting months for a buyer.  This is different for new construction homes because the builder, or listing agent, may be putting the homes on the market prior to the foundations being poured.  Having a Realtor who is well-versed in both new construction and re-sales is very important.

5. Conduct your Own Home Inspection
Buying a home is a big investment, and you can find yourself surprised when something has to be fixed later down the road. If there is a repair needed on the property, you can either ask the seller to shoulder the cost of the repair or reduce the sale price - to cover for the repair expenses.

6. Test out the Commute
You also need to consider the location of your house from your work place. Test out the morning and evening commutes to see if it's a convenient drive. After all, you'll be doing this everyday once you move into your 'new home'.

Having a Realtor work with you on making an offer will be advantageous to you. With his access to numerous database, he/she can give you information that will help you decide on making the right offer that will be accepted by the seller.  If you know of a friend, family member, or co-worker that is in the market to buy or has mentioned how he/she is interested in purchasing a home, please contact Patrick today. 

 

How to Save on Your Annual Homeowner's Insurance Premium

Your home is the biggest financial investment you may ever make. Getting a homeowner's insurance is the best way to protect your biggest investment. homeowner's insurance covers your home as well as the personal belongings inside your home.  It offers protection for you and your family.  With the continuous increase in insurance premiums every year - it is best to know ways on how to reduce the cost of your homeowner's insurance.  Here are some tips that can help you save money on your annual premiums:

1. Shop Around. Get at least 3 quotes from several different insurance companies and compare. You can also ask your family and friends for their recommended insurance companies. Evaluate which companies provide the best customer service and are readily available to answer your questions.

2. Combine your Homeowner's Insurance and Auto Insurance Policies. It is advisable to check out insurance companies that offer both auto and homeowner's insurance.  Some companies offer discounts of 5-15% if you buy both types of coverage from them.

3. Inquire about Discounts. Ask your company about all potential discounts. Different insurance companies offer different types of discounts.

4. Consider Insurance Consequences when Buying a Home. If you're looking at buying a home, also think about the cost of insuring the home. A newer home's electrical, heating and plumbing systems and overall structure are likely to be in better condition than those of an older home. This can lead to a discount on your premiums.

Also, consider the construction of the home and geographical location. If you live on the East Coast, you'll want the house to be able to stand up to wind damage; on the West coast, you need to keep earthquakes in mind.  You can also ask your insurance agent what you can do to make your home less expensive to insure. Improving your home to reduce risks during fire, windstorms or other natural disasters will reduce your insurance premiums.

5. Investigate Group Coverage. You may be able to get a group coverage plan through your employer or a professional or business group. Group coverage is usually cheaper than individual coverage.

6. Review Your Policy Every Year. Make sure that you are not paying for any extra insurance. If you review your policy annually, you will be able to make the necessary adjustments on the value of your possesions.

For example, your insurance coverage includes insuring high value diamond earrings and you've just sold them - your annual premium will decrease if you declare this.

7. Stop Smoking.  Some Insurance companies charge less if no one in the house smokes. This is because if anyone smokes, there is a higher risk of fire accident thus the insurer charges more for the risk.

8. Improve your Credit Score. Many insurers check your credit rating and base your policy on the information they find. Make sure your credit score is in good shape, and if it's not, seek out companies that do not run credit checks.

If you need a list of reputable insurance companies, please contact me.

If the Price is Right!

Congratulations you've decided to sell your home! Now what? There are a lot of crucial decisions to make in a short amount of time in order to market your home effectively.  One of the first questions you'll ask is "What is the value of my house?" and "How much should I sell it for?"  Whether you are selling your house on your own or you are listing your property through a real estate agent, it is very important to know how to set the selling price for your house. Most of the time, the success of a sale depends on whether your property is priced right. If the price is right, you'll surely have a lot of attention.  Here are some factors that can help you determine how to price your home:

1.Get a Fair Market Value Estimate. Realtors can help you give an estimate of the fair market value of your house.  Some home owners ask for this service from time to time just to know what their house value is.
 

2. Check Internet Listings. You may check out http://www.anchoragehomedeals.com/ for property comparisons. Just type in your zip code, select the type of home, number of bedrooms and bathrooms then select the price range to narrow the search to houses like yours. A list of houses that are currently for sale will appear and you can check the price and features of these houses to compare against your house.

3. Driving by the neighborhood and Attend Open Houses. Surveying the area yourself and visiting homes presently on sale will give you idea of how much other homes are priced in the same area. When you visit other houses in person, you will be able to see what features the other houses have and what upgrades have been done and then you can compare it with your house.

4. Home upgrades. The added investment for home improvements can be added to your home's selling price but please bear in mind that the total investment you made for your home improvement won't give you 100% return. For example, you've repaired your bedroom for a cost of $5,000, you can only gain maybe 60%-75% of the total cost you spent.

Your agent, relatives, friends and neighors can help show you the advantages and disadvantages of your house that you don't see because you're too close to the house and not as objective as others.

If you need professional advice on how to price your home right, please contact me. I will gladly guide you in every step of the way.