House Buying Tips Archives

What is a Warranty and a Statutory Deed?

January 11, 2022 By Jeremy

A warranty deed is when a person selling a plot of land, a house, or a property, can guarantee they own the rights and title of the land and that this person is legally allowed to sell the property to you. Warranty deeds are not the same as quitclaims as a quitclaim is when the seller believes they own the rights to the land but cannot guarantee a clean title.

The purpose of the warranty deed is to give you some assurance as a home buyer that you will be able to buy the property without any issues. But even with a guaranteed warranty deed in place, it is still wise to have a title search done by a reputable and independent title company. By having the title company do a complete search for potential problems you have a second set of eyes and don’t need to just take the seller’s word for it.

Warranty deeds are normally transferred from the seller to the buyer during the escrow process, and if everything follows regular practices the transfer will be recorded by the county recorder’s office. This is one of the places a reputable [Read more…]

Will Buying a House Impact My Credit Score?

January 4, 2022 By Jeremy

Yes buying a house will impact your credit score negatively at first, but if you make payments on time regularly then buying a house will have a positive impact on your credit score.

At first, when you apply for a loan, your lender will issue a hard inquiry which will negatively impact your credit score. According to FICO, a single hard inquiry should only have a five-point or less drop to your credit score. Since hard inquiries are a common part of purchasing a home, this is an important point to keep in mind if you have bad credit.

After the sale has been finalized, you may see another small drop in your credit score. This is because any loan that adds to your total debt will slightly negatively impact your credit score.

While purchasing a home has a negative impact on your credit score initially, you will be able to recover and even improve your credit score quickly as you’ll be making monthly payments back to your lender and your lender will be reporting these payments to the credit bureaus. Thus you are building a better credit track record which helps to increase your credit score.

Let’s jump into a bit more detail about how buying a house benefits your credit score. [Read more…]

What is Real Property?

December 14, 2021 By Jeremy

Real property is defined as the ownership of a property (also known as a parcel), including the land and everything that is attached to the land or property whether it is natural or artificial.

Basically anything that is physically nailed down to the property or grows on the property and has roots in the ground can be defined as real property. A potted plant that is not growing in the ground is not real property whereas a plant whose roots have breached the ground surface is real property.

Common examples of real property include:

Your house
Flowers, trees, and crops that grow in the ground
Sheds, gazebos, or anything with a foundation
Doors and windows attached to the house
Ponds and waterways confined to the property boundaries
Any mineral or resource below the ground

What real property allows you is the right to lease, modify, rent, and do whatever you want with the property. On the contrary, anything not under the umbrella of real property is defined as personal property. This generally includes anything that is not nailed down or can be physically moved, such as your personal possessions.

You’ll come across the phrase “real property” in your property searches as well as a title search that evaluates claims on “real property”, which is why it’s important to understand what real property is.

Now that you know what real property is, lets dive deeper into the differences between real property and personal property, and also learn what is included in real property taxes.

Differences Between Real vs. Personal Property

The difference between real and personal property is that real property encompasses everything that is native or attached to the land and personal property is what you can take with you that is not attached to the land.

For example, any raw building materials such as wooden [Read more…]

What is a Mortgage Broker? And What Do They Do?

December 7, 2021 By Jeremy

A mortgage broker is a person that comparison shops home loans for you so that you can save time and find the best deal possible.

Mortgage brokers may work independently or on behalf of a larger brokerage. And while your real estate agent will likely have a broker recommendation for you, working with an independent mortgage broker may be advantageous if you have bad credit or are searching for loans that are not offered by traditional lenders. And saving time and getting a great deal aren’t the only benefits to using a mortgage broker.

Mortgage brokers are paid a commission, known as an origination fee, which is only paid once you agree to the terms of a loan. This means that they only get paid when they find a loan that you agree to, so they’re going to go to bat and get you a great offer.

It is important to know that mortgage brokers do receive a higher commission if you agree to a bigger loan with higher terms, so make sure you feel them out first. But rest assured that mortgage brokers also know you’ll likely be researching rates as well, so your researching incentivizes your mortgage broker to find you the best deal possible so that you are more likely to sign and your mortgage broker gets paid.

Now let’s look at what a mortgage broker does and how a mortgage broker benefits you as a buyer. [Read more…]

What is an Escrow Agent? How Are They Part of Real Estate?

November 30, 2021 By Jeremy

An escrow agent is the person who handles all escrow services when you buy or sell a home, such as distributing money between the buyer and seller and managing all of the necessary paperwork to help you close. Escrow agents help make sure that all financial documents are completed in a timely and accurate manner. They also may assist in a number of other jobs, such as writing the deed, initiating a title search, and finding title insurance.

Escrow agents are typically agreed upon by both your lender and the seller to help manage the transaction. By acting as a neutral party, escrow agents represent the interest of both the buyer and seller to help minimize risk in real estate transactions for both parties.

But, you still may be wondering who an escrow agent works for and who hires an escrow agent. Let’s dive in to learn more about who your escrow agent works for, what their job is and other questions you may be thinking.

Who Does the Escrow Agent Work For?

The escrow agent works for both the buyer and seller and is typically agreed upon by both parties or their agents. The primary interest of the escrow agent is to handle all of the terms and contingencies of a real estate contract and will help to ensure you have a smooth transaction. [Read more…]

What is Ownership Interest in a Property?

November 23, 2021 By Jeremy

Ownership interest in a property defines your rights as an owner of a property or that you have a claim to the property. Ownership is the highest form of interest and typically gives you the full rights as an owner to do what you please with the property, within the limits of the law.

You don’t have to live in a home to have an ownership interest in a property. Likewise, you can have an ownership interest if you inherit a property, split the property in a joint tenancy with your spouse, or invest a little amount in exchange for a percentage-based interest of the property.

While owning a property may seem fairly straightforward, understanding what ownership level is becomes important when applying for specific loans.

For example, HUD defines a first time homebuyer as someone who has not had an ownership interest in a home for the last three years. Even if you did not live in the home or had a 1% financial interest, you still would not qualify for an FHA loan or other first time homebuyer programs.

Now that we know what ownership interest in a property is defined as, we need to discuss what qualifies as ownership interest in a property. [Read more…]

What is a CLUE Report? And How to Order One.

November 16, 2021 By Jeremy

A CLUE Report, otherwise known as a Comprehensive Loss Underwriting Exchange Report, is a document that provides a list of all insurance claims that have been made on a house. CLUE Reports are used by insurance companies to determine whether or not they want to cover your home, how much they want to cover your home for, and the rates your coverage will be at. But CLUE Reports do not solely benefit insurance companies.

CLUE Report disputes can help you uncover any hidden damage or issues that a previous homeowner may be hiding. Similarly, a CLUE Report can also be a good selling point when you are selling your home as long as no claims have been made in the past 7 years as it may appear your home is in really good condition.

Now that you know what a CLUE report is, let’s jump into what is included and how you can order a CLUE report for your home or the one you’re thinking about buying.

What Does a Clue Report Include?

A CLUE Report includes all insurance claim information about a property for up to 7 years. [Read more…]

What is Off-Market in Real Estate?

November 2, 2021 By Jeremy

Off-market in real estate means that a house is for sale but is not listed on multiple listing services (MLS). Only licensed real estate professionals will have MLS access so if a house is listed as 0ff-market it may mean that the house is also for sale by owner. But there are plenty of times when a professional real estate agent may also list a property off-market.

The reason a seller and agent may choose to do an off-market listing instead of the MLS is to protect the client’s privacy or negotiate a higher sales price.

Bonus tip: If you are buying or investing in homes, off-market in real estate means you can access additional inventory that other buyers are not seeing and in many cases access really unique properties.

The term off-market in real estate is not the same as pending or contingent sales, which are still listed on an MLS, but not necessarily active. For example, your home may be considered off-market if it is sold before it is listed or if you sell your home without the help of an agent or broker (FSBO).

To learn more about what is off-market in real estate, we would like to show you the advantages of off-market real estate deals.

The Advantages of Selling Your Home Off-Market

There are a number of advantages to selling a home off-market:

Protected privacy
Limiting the buyer pool to increase quality
Less price negotiations
Eliminating unsolicited offers

For example, many celebrities like to sell their home off-market to keep their privacy protected during a major transaction. Additionally, if you have an expensive home and don’t want to waste your time with low-ball offers, an off-market sale can help you find more motivated buyers.

Investors like to purchase off-market homes that are hard to sell through traditional means because they are in disrepair or have an existing lien on them. If you are an investor, you can [Read more…]

How Much Does it Cost to Buy a House?

October 26, 2021 By Jeremy

The cost to buy a house varies depending on where you live, the demand for the type of house you want to buy, closing costs, and how good of a negotiator you are. One important thing to keep in mind is that the monthly payment you’ll make on your mortgage should be no more than 30 percent of your monthly income. But this only applies to you if you’re a consumer buying a house and not if you’re an investor, wholesaling real estate, or if you are paying cash for a house.

If you’re paying cash for the house then you’re paying for everything up front so there is no need to worry about affording a mortgage. Investors and wholesalers are either going to pay for cash upfront or they’ll be using a hard money loan and have already forecasted a net income on the resale and this is part of their business. They do not plan on living in the house which is why their monthly income is not important whereas you as a home buyer or resident is.

But why are we saying the monthly payments for non-professional home buyers should be no more than 30% of your income?

Simple, a bank or mortgage lender needs to [Read more…]

What is Escrow Balance?

October 19, 2021 By Jeremy

An escrow balance is the amount of money a lender sets aside to pay for homeowners insurance, mortgage insurance, future interest, and property tax payments.

As most of these payments are often made on an annual or semi-annual basis, your lender will bundle all of these payments together in an escrow account to be paid alongside your monthly mortgage payment.

When you access your monthly mortgage statement, you will find your mortgage payments separated into three categories:

Interest Payments
Principal Payments
Escrow Payments

Unlike interest and principal, escrow payments don’t count toward the actual debt of your loan. Rather, escrow counts toward the auxiliary services and fees, such as insurance premiums and property taxes that must be paid under law.

Your lender handles payment of your escrow services because it would be difficult for most people to come up with the considerable sum of money required each year to pay for property taxes, semi-annual insurance premiums, etc.

Now that you know what escrow balance is and how it works, lets look over some common questions about escrow balance.

Can I transfer money out of my escrow account?

[Read more…]