Getting the Paperwork Started for a Home Purchase
The resolve to buy a home is both thrilling and worrying. You may have just begun your search, or you may have already discovered the home of your dreams. Purchasing real estate compels you to do a bit of research, coordination and paperwork, but you will obtain your reward for excellent preparation when the loan process and closing progress goes smoothly and without incident.
The first step in this process is getting a copy of your credit report. Since so many buyers find mistakes on this document, you need to check yours and make sure that everything on the report is accurate. If you do find a mistake, try contacting the creditor first to correct any problems. Just because you have a low credit score does not mean you cannot buy a house, you may just have to pay a higher interest rate.
Get Your Paperwork Organized to Expedite the Approval Process
After you have gone through the procedure of picking a lender and the type of mortgage you want to get, the lender will have execute a verification of employment. You can contact your human resources department and let them know that they can anticipate the arrival of this form. That can make the return time for that document much faster.
You will also need a minimum of one month’s worth of pay stubs or payment records from your current employer. Make copies of these and retain the originals. Find the most recent W2 forms that your employer sent you for the last two calendar years. Your lender needs these wage and tax statements from you as well as from your spouse or other individual with whom you are applying for the mortgage. Find your 1040s and make copies of the documents. Obtain the two most recent years of tax returns even if you have not yet filed your return for the the just-past calendar year.
Collect Personal Documents to Complete the Process
Lenders request just a few more pieces of paperwork to make their mortgage decision. Locate at least three months of your checking and savings accounts statements and give photocopies to your lender. You will also need to make copies of any asset statements, be sure to include those for retirement accounts, stocks, bonds, or mutual funds. If your mortgage lender is a local business, bring along your driver’s license so the lending agent can make a copy of it for identity verification purposes. If not, send in a copy of it with the other necessary paperwork. If you do not have a license, a passport will suffice.
Look through your personal accounts and write down a list of all your present debts and how much you owe. Include in the list any car loans, credit cards, other real estate loans, and student loans, and take notice of how much you pay each month for them. Some lenders require copies of these statements. In addition, scrutinize personal financial records and make note of how much accessible cash you will have on hand after you have given your down payment at your home’s closing. Bring copies of your Social Security card as well as that of the individual with whom you are buying the house if both of your names will be on the loan. Once your paperwork is in order, the mortgage process should conclude seamlessly.
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How to Get Started in Real Estate Foreclosure Investing
With the increase in Real Estate property appreciation rates across America, a prospective foreclosure buyer may want to fix up a property to improve its value to live in, to rent out or to resell. The strategy a buyer pursues will determine which foreclosure property to buy and the location.
For example with San Diego, California’s media home prices topping at 0K+, a couple might not be in a position to afford a home of their own in San Diego, California. Yet, might be able to purchase a foreclosure property in another area or state with lower housing prices but in a faster growing market or with better future appreciation growth potential; when the property increases it’s value in a few years time, sale of the property could provide the necessary capital to purchase in the San Diego area.
Locating Foreclosure Properties
Finding foreclosure properties can be done by visiting the local recorder’s office and making photocopies, since listings are added on a daily basis, this can be daunting.
Using the internet, a number of web sites allow searches by state, county, city, and zipcode. All the sites listed below offer listings for a fee. Take advantage of the free trial period offered to fully evaluate thier listings. The sites should offer the latest listings with daily/monthly updates.
Determining the Distressed Property Valuation
Once you have identified a foreclosure property of interest in an area you have researched, determining the value proposition will determine whether or not to continue. The determination will be influenced by your investment strategy, i.e., whether you wish to live in, to rent out or to resell are factors to consider as well as your investment time frame.
The first step in foreclosure property valuation is the obtain information regarding the area. A number of web sites offer free sales comparables or “comps”. This information greatly assists in determing the property value.
Securing Financing
Due to the quick window of opportunity a foreclosure presents, it is important for a potential buyer to be pre-qualified before engaging in Real Estate Foreclosure Investing.
Also, knowing the amount of monies available to the investor can be a guide to locating areas within the U.S. that are with the the investment range
Being pre-qualified allows the buyer to be in a financial position to purchase the foreclosure property. Pre-qualification provides an important edge in competitive markets. Once approved, financing in-hand makes negotiations easier.
Finding and working with Real Estate Agents
The single most important aspect of foreclosure investing involves finding and working with a Real Estate agent.
If a foreclosure property is being considered out of the area or state, then working with a local agent in that area -who can advise on the condition, knowledgable about the growth potential, advise on local conditions, is an important relationship to develop.
Since a majority of Real Estate agents focus on “traditional” real estate transactions, mentioning “foreclosures” might cause them to balk at potentially working with an prospective investor; Therefore, educating the agent on the opportunity of working with you is important.
“Buyer’s representatives” have the home buyer’s interests at heart, and are charged with finding the right property and negotiating the best price for their clients. Picking the right real estate agent will make a buyer’s life much easier. There are agents who specialize in the foreclosure market, with specific experience in REO properties.
Look for an agent with foreclosure transaction experience, as well as knowledge of local, regional and state laws. But it’s also important to consider the agent’s knowledge of the area; their ability to close a deal; and their access to other professionals (attorneys, lenders, mortgage and title professionals) to ensure that the buyer is in good hands.
Making an Offer
Once you have determined the property valuation, researched the area and appreciation growth potential, and established a relationship with a Real Estate agent making an offer amount somewhere below the market value is the final step.
If the property is bank owned (REO), you could prepare an offer similar to a typical purchase offer, contingent on a full inspection and title search.
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