If you’re thinking of buying property, you’ll probably apply for a mortgage. But before lenders decide what they’re willing to offer you, they’ll want some financial background, such as your employment history, salary, bank-account balances, and your credit history.
While you could wait to find out how your financial picture appears to lenders after they’ve decided whether to loan you money, you’d be better off finding out first. One way is to request a free credit report so you can see what a lender might see.
A credit report shows how much you borrow, whether you pay on time, or if you’ve been sued or declared bankruptcy. A credit report is not the same as a credit score. It usually costs money to find out what your credit score is, and can vary depending on the source you obtain it from.
You can request one free credit report every 12 months from each of the three major consumer credit-reporting agencies: Equifax, Experian and TransUnion. But you don’t have to get all three reports at once. Obtaining one report at time, like quarterly, can help you monitor changes and is a good way to find out if you’ve become a victim of identity theft.
A credit report gives you insights into your financial habits. For example, you’ll see how well you do at paying debts on time and if you tend to borrow within your means. Checking your credit report now also gives you a chance to find errors, which you can correct before they affect your ability to qualify for a mortgage loan. And if you find legitimate flaws, you might be able to take steps to improve your credit standing before purchasing a property.
Ask your REALTOR ® for help with the mortgage loan process, and see if he or she may be able to help you find resources to repair your credit if necessary.
Thanks to Texas Realtors Staff and TAR for providing this information for this blog!
August 14th, 2019:
June 26th, 2019:
7 Real Estate Myths Buyers Actually Belive!
Here are seven myths about the buying process — busted! Share them with your friends, family and potential clients.
1. Agents are paid a salary by the brokerage and the commission is ‘extra’
Guess what? The agent only gets paid at the end of the transaction through a commission. Meanwhile, the best agents will work their tails off to get buyers their dream houses.
That usually entails at least 20 trips back and forth to show buyers homes, finding out answers to the buyers’ questions, triangulating between the listing agent, homeowners association, county and city, researching public records, making phone calls to the mortgage lender with continually revised closing cost spreadsheets prepared with different down payment scenarios and interest rates.
We must then spend the time explaining how all this works to the buyers, write offer after offer and cancelling or rearranging personal plans so that we can show the buyer a house so they don’t miss out.
All of that is done without a paycheck the day the agent starts working with the buyer.
If the buyer decides to purchase and purchase through that agent, and only ifthat transaction goes to closing will the agent get paid.
How long the process takes from end to end is anyone’s guess, and could range from a couple of months to years, depending on the buyer.
2. Every home that’s for sale can be found on consumer websites
Not exactly. You see most multiple listing services (MLS) share their database of properties for sale (and rent) through a feed that syndicates to numerous websites.
Not all of these websites update regularly or show the true status of a property.
In fact, most times properties that are shown for sale that are in fact no longer available and are under contract or sold.
So, by relying on consumer websites, you could be missing out on a hot new listing that just hit the market before it shows up on sites other than the MLS.
Furthermore, working with an agent affords you access to properties that may not be formally on the market yet through their network of contacts.
This could include someone who is interested in selling but had not taken any steps to put their property on the market.
3. There is nothing wrong with calling listing agents to see if homes we are interested in if our agent is not available
Buyers tend to think, “We hate to bother them every time there is something we see of interest.”
This approach can and will backfire on a buyer.
A listing agent’s job is to represent the seller. Buyers who ask them to show their listing put everyone in a precarious professional situation. Agents don’t like to step on other agents’ toes and do not want to be put in an awkward situation.
While buyers can still use whatever agent they want to assist in writing an offer, the entire scenario can create a lot of bad feelings with the listing agent being put out after doing a lot of work meeting the buyers at the property and providing information and details, and so forth.
If a buyer has an agent, they need to work through their agent for all showings. Agent communities are small worlds in that word will get out very quickly about the buyers calling every listing agent in certain areas to see homes on their own.
Listing agents will grow suspicious and will surely want to know which agent the buyer is working with, whether they have been pre-approved and what their status is, as far as being able to buy a home.
4. A house ‘passes’ or ‘fails’ an inspection
False. The purpose of a home inspection is to provide an overview of the home’s condition at the day/time the home was inspected, along with an assessment of each component in the home as to whether it is functioning in the manner which it was intended to do. An inspector does not state whether a home “passes” or “fails.”
5. A buyer can and should ask for every item found on an inspection report to be fixed, whether it is an actual repair or even cosmetic in nature
An inspector needs to be thorough in their observations for the purpose of raising an awareness and informing the buyer about the property they are going to purchase.
While a buyer should discuss with their agent what repairs — if any — should be addressed by the seller, this is another negotiation point in the transaction that could involve some back-and-forth, depending on what is being requested.
It will likely be a compromise. If an item is a suggested improvement — such as adding gutters, this is something the seller will likely not do.
The seller may prefer to reduce the price or offer a credit toward closing costs in lieu of them doing some or all of the repairs.
6. The lower I offer, the more the seller will come off of their asking price
Au contraire, my friend. In real estate, usually the lower the offer means the less the seller will counter — or in some cases — not at all.
Unless it is truly justified, offering a significantly lower price for the sake of it can put the seller off. They may think the buyer is not serious and completely shut down.
The buyer will then have to come back at another price to see if they can get the seller to restart negotiations.
7. The bank will send someone out to tell me if I’m paying too much
The appraiser will not tell the buyer what to pay. An appraisal is subjective and defined as an art and not a science. Some appraisers are more conservative in their adjustments, and some are more generous, all while staying within lending guidelines.
If an appraisal comes in at less than the price you are paying for the home, that does not obligate you to buy the house, but at the same time, that does not mean the seller must sell it to you at the appraised value.
This becomes a renegotiation point between the buyer and seller. Both parties could agree to split the difference, or the seller could come down in price but not want to offer other concessions that they had previously agreed to, such as paying for closing costs, a home warranty or doing repairs.
(The information in this blog was cited by my broker, JW Ross.)
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