Mortgage Insurance–what am I insured against?

If you’re in the process of purchasing a new home, on your bank paperwork, you may have noticed something called “mortgage insurance.” Not sure what it is? There are several different types of insurance that homeowners should be familiar with. Here, I will explain the basics.

Title insurance:
Title insurance from the seller comes from the title company. It protects home owners and lenders from damage or property loss that may happen because of liens or other defects in the title to the property. Each title insurance policy is subject to specific terms, exclusions, and conditions.

Homeowner’s insurance:
Homeowner’s insurance/hazard insurance/fire insurance is a policy issued from an insurance company and it protects your property as well as the contents and possessions inside. It also provides liability coverage against accidents in the home or on the property.  At closing, homeowners will pay for the first year’s policy in full.

Mortgage insurance:
This type of insurance is not a benefit to a homebuyer. When a lender provides a loan and the buyer puts less than 20% down on the purchase, the lender takes a bigger risk. If the buyer ends up defaulting on the loan and they don’t have much “skin” in the game, it’s possible that the lender won’t cover their loan amount when it comes time to liquidate the property. This cost can be paid within your monthly mortgage payment or up front and it will cover the lender’s loss if something were to happen. For some types of loans, particularly FHA loans, the premium will last for the life of the loan, even though your equity position might get you above the 20% mark. Conventional financing will typically have a provision for mortgage insurance that can be removed once the homeowner has 20% equity in the home.

Buying a home requires many different steps and there is a lot of research that is required. The insurance process can be complex and sometimes confusing, especially if you haven’t gone through the home buying process before, and that’s one of the many reasons why it is important to work with a well-qualified, experienced, hands-on Realtor. If you have questions about it, I’m happy to sit down and talk with you about any questions you may have!

Posted on September 5, 2017 at 7:31 pm
Nancy Johns | Category: Home Buying Tips, Selling Your Home | Tagged , , , , , , , , , , , , , , , , , , , ,

Key items before closing on a home

The process of buying or selling a home is very detailed and requires a lot of moving parts. Once the end is in sight, you’ll need to prep for closing day. Planning for closing day can help make things run a little bit smoother. So whether you’re a buyer or a seller, here are some important must-knows on what you’ll need to have in place for closing day.

For the seller:

  • Repairs will need to be done and receipts obtained
    • Before closing can happen, all repairs that were requested during the selling process will need to be complete. Once everything has been done, be sure that all of that is documented well and that you have all receipts readily available.
  • Be ready for a buyer walkthrough
    • Once repairs have been completed, the buyer will likely want to do a walkthrough to make sure everything looks in order.
  • Arrange for your utilities to turn off
    • Call your utility companies, cable/Internet company, and any other services that will need to be turned off and transferred to your new residence. However, it’s important to note that you shouldn’t cancel your homeowner’s insurance on your current address until the final sale of the home has been recorded.
  • Gather all brochures, keys, garage door openers, etc.
    • If you have collected brochures/manuals on specific appliances in the home, or you have other important documents that need to be left for the new homeowner, make sure you have those readily available. In addition, you’ll need to leave them the keys to the home, mailbox, and any garage door openers you have.
  • Sign documents
    • This is the biggest step that transfers ownership and gets the process moving toward completion! It can happen several days before the “closing date.”

For the buyer:

  • Obtain receipts for completed repair work
    • If repairs were done in the home you’re purchasing, make sure you get all of the receipts and warranties associated with the work that was done. Keep these in your records in case you need to refer to them later or in case something goes wrong with the repair down the road.
  • Do a walkthrough
    • This is your chance to make sure that the repairs were done right and that things are good to go so you can move forward with signing closing papers.
  • Set up utilities
    • Call your utility company and schedule a time when you want water/electricity to come on. While you’re doing this, schedule a time for Internet/cable service to be hooked up, or any other services that you will need ready to go when you first move in.
  • Sign any last minute lender information
    • This is an important step! You will need to sign a closing disclosure that needs to be acknowledged to start a 3-day waiting period before you can sign final closing documents.
  • Sign documents at escrow
    • Here, you’ll sign papers that allow you to complete the home buying process. After the sale is recorded, you’ll get keys to your home and you’ll be able to start moving in!

If you’re confused about which step comes next, don’t worry! I will be there to walk you through the process. If you’re looking to buy or sell a home, contact me today for information on how I can help.

Posted on July 3, 2017 at 4:11 pm
Nancy Johns | Category: Home Buying Tips, Selling Your Home | Tagged , , , , , , , , , , , , , , , , , , , , ,

The Closing Process: From the Seller’s Point of View

So you’ve made it through the home inspection and the appraisal on your home sale and now you only have to ‘finish up’ with the closing, right?

First of all ‘closing’ is a process not an event.  There are lots of steps involved in the last week before recording, which is actually when the home changes ownership.  As of October 3 of this year, there is a new federal set of guidelines (TRID) that involves a very complicated sequence of timed events which must be taken into account as we schedule this last week of activities.

There are two perspectives for all this: one for the seller and one for the buyer. However, they are totally intertwined.  It starts with the final approval of the loan and the generation of a financial summary of the transaction called the Closing Disclosure.  Depending on the bank (and different ones are reading the guidelines differently), this disclosure must be delivered to the buyer and acknowledged by them. After this, there is a waiting period of at least 3 and up to 7 business days.  Most lenders will not let anyone sign until the waiting period is over.  Then, loan documents are generated, sent to escrow, and the signing appointment is set up.  Both parties will sign (not at the same time) and then escrow gets clearance from the lender to record. Once recording occurs, the seller gets their funds.

This process of course gets more complicated if the buyer is getting their funds from a property sale (now there are two sets of TRID guidelines) or someone is out of town (at least one of the seller documents—the deed—must be signed ‘wet’ and the original returned to escrow before recording) or any number of logistic elements. 

Here are some tips that can help the closing process go smoothly:

Tip #1: Stay organized.
Realtors are trained to help walk you through each step of the closing process, but it is helpful to keep your Realtor in the loop in regards to packing, moving, and where you will be living during the last week of the closing process. Keeping organized will help reduce any frenzied feelings and will help save you time in the long run.

Tip #2: Be patient.
Patience is key during this process. You likely want to get things done as quickly as possible, but the closing process will take some time and if you know this going into it, you’ll be better prepared to make it through without a lot of stress. 

Thank goodness you have an experienced guide through all this—me!  We’ll work it all together and make it over the goal line smoothly. 

Posted on November 24, 2015 at 5:56 pm
Nancy Johns | Category: Home Buying Tips, Selling Your Home | Tagged , , , , , , , , , , , , ,

Tips on Saving For a Down Payment


Have you dreamt of home ownership since you were young? You may have been thinking about what type of house you want and what neighborhood you want to live in. You have probably started thinking about how much money you’ll need to buy a home and saving up for the down payment is a big part of the equation. There are a few tips on how you can save up for the down payment and it may not be as hard as you might think.

Tip #1: Figure out how much you need.  
The first step to home ownership is getting a financial plan in place so you can know exactly how much you can afford and how much you will need when it comes to finding a home that meets your criteria. Review your credit and contact a local lender that can help you walk through the steps of what it takes to buy a house. Talk to your real estate agent and determine what houses are available in your price range and exactly how much of a down payment you need. Down payments usually range from 3% to 20%, which depends on the lender and what type of loan you get.

Tip #2: Save, save, save.
When you decide to make the leap into saving for a down payment, you will need to take a close look at your spending habits. In what categories can you cut your spending? Do you eat out regularly or travel on a consistent basis? Or, do you treat yourself to a fancy mocha a few times a week? Cutting back on even little things like that can put more money into your down payment account.

Tip #3: Earn extra money.
If your budget is already as tight as it can get, consider some ways to make a little extra cash on the side. Check out Craigslist for part time work opportunities or freelance gigs. Or, take on a tutoring job for a few high school or college age students in your field of expertise. No matter what your training or skills, there are probably some jobs that are simple, don’t require a lot of time, and can put some extra money in your account every month toward your goal.

Tip #4: Be patient.
Saving for a down payment is usually a process that takes a while.  When you first start, set a goal and then set some rewards or mini-celebrations as you go along.  For example, if you want to save $8,000 total, plan on a little celebration when you reach the half way mark – maybe it’s a fun weekend getaway trip or a fancy dinner out at your favorite restaurant. Celebrating along the way helps keep you excited and motivated to keep on going!

The process is well worth it and will put you on the road toward financial stability and in the end, home ownership! 

Posted on February 2, 2015 at 5:58 pm
Nancy Johns | Category: Home Buying Tips | Tagged , , , , , , , , ,

How can you have a successful home buying experience?

Are you eager to get out there and buy a home? The market is pretty hot right now, with great interest rates with a variety of charming homes for sale. But, buying a home can also be pretty overwhelming, especially in a market where inventory is on the lower side and buyers just like you are looking to get a good deal. Whether you’re a first time homebuyer or you’re experienced in buying and selling homes, there are some simple ways to have a successful, more enjoyable home buying experience.

Tip #1: Find and use an experienced Realtor™.
There are a lot of options out there when it comes to choosing a realtor. So, find a Realtor™ that you trust – one that has significant market knowledge as well as community knowledge. In addition, this person should be able to prove successful home sale transactions in months and years past. Your Realtor™ should be someone that is looking out for your best interest and is there to work with you throughout the process. They are there to find the best home for you within your budget and you’re there to supply what they need to get the job done right. Home buying is a real partnership between a client and the Realtor™.

Tip #2: Know what you can afford.
This may seem obvious, but it can be a little bit more complicated than what it seems. Talk with an experienced lender and get pre-approval, but keep in mind that what you’re pre-approved for doesn’t always mean that’s what you can afford. Look closely at your monthly and yearly finances and consider your investment strategy. Knowing how much you’re able to take on for a mortgage payment before you start searching for houses will save you and your Realtor™  significant time and energy in the long run.

Tip #3: Know how you’re going to transition from current housing.
Consider what happens if you find a home that you want to buy before your current home is sold or before your lease is up. If you need to break a lease, add this into your home buying costs so you can be prepared when it comes time to move. If you need to sell your home, ask your Realtor™ how the market is doing in that area. If you need to find interim housing, have that lined up just in case you need it to fall back on. No homebuyer wants to end up homeless before closing on the new home is final!

In the end, remember that it’s ok to ask questions along the way. In fact, please do! Your Realtor™ will want to be sure that your questions are answered so they have the information that they need to find a great home for you and your family.
 

Posted on June 4, 2014 at 8:45 pm
Nancy Johns | Category: Uncategorized | Tagged , , , , , , , ,