Rate Commitment Many Lenders will guarantee an interest for a client while they are shopping for a home. The purchaser is then protected if interest rates rise during this shopping period. This can be an extremely important advantage, it will not only save the borrower money but could also save them from loosing their dream home when they finally find it.
When interest rates rise the amount of mortgage financing a borrower qualifies for can be reduced. It is possible that your maximum affordable mortgage could be thousands of dollars less after an unprotected interest rate spike. This reduction in available financing could very well require you to ante up a larger down payment. If you do not have the additional savings your maximum affordable home price could be reduced.A rate commitment usually requires a full pre qualification of the applicant. Rate commitments vary from one mortgage lender to another. Some will guarantee the rate for 30 to 60 days or longer. If rates rise during the commitment period the borrower is assured of either the lower of the committed rate, or the rate one day before closing. Some mortgage lenders offer commitments that guarantee the lowest market rate during the commitment period, or the committed rate. Your Mortgage Consultant can pre qualify your with the right mortgage lender and insure your rate commitment meets your needs.
Pre qualification Pre qualification means that your lender has reviewed and verified all the available financial information detailed in your application and has determined the maximum amount of financing you can afford. A pre qualification is different from a simple rate commitment. A rate commitment is where the lender guarantees that "if" you qualify for a mortgage they will offer the agreed upon interest rate. Agreeing to an interest rate does not require the lender to complete the preliminary underwriting while a pre qualification does.
In order to complete a pre qualification the lender will require all of the information contained in their mortgage application. This will mean that you will have to provide them with most of the documentation necessary for a full mortgage approval. The effort is well worth it as you will then be assured of mortgage financing in the pre qualified amount.
The benefits of being pre qualified include the comfort of shopping for a home within your price range without the risk that complications will arise in the final hour. Also, there are the benefits of being able to make a stronger purchase offer without "subject to financing" conditions. This will allow your Realtor to negotiate harder and reach an agreement before a competing purchaser makes a better cash offer.
Pre qualifications are only subject to the lenders approval of the property, usually determined by an appraisal after a purchase offer has been agreed to. The borrowers income, expenses, credit history and verification of down payment have all been considered in advance. A pre quantification is simply a calculation of the the amount of mortgage the applicant "may" qualify for. The gross income amounts used are not verified, nor is the applicants employment, credit history or net worth. Pre-quantifications are often confused with a full pre qualification and should be used as a preliminary guide only.
The calculation to determine your maximum mortgage financing is based on your income and expected expenses. Assume you and your co-applicant have a combined monthly gross income of $5,000. If the mortgage lenders maximum GDSR is 32% you can spend $1,600 on shelter costs. In this case your maximum shelter cost payment is $1,600. By subtracting the monthly heating costs, condo maintenance fees, and property tax cost from the applicants maximum payment the lender can then determine the maximum mortgage payment.
Given this maximum mortgage payment figure the lender can easily calculate the maximum amount of financing you will qualify for based on your income. The procedure is simply the reverse of calculating a mortgage payment given the payment amount, amortization and interest rate.
Serving people in finding Condominiums (condos) in Toronto, Brampton, Mississauga, & Oakville. Please subscribe to my blog if you want to be updated on a regular basis. Many new Condos to be announced in coming months. So, stay tuned. Paul Cheema
Tuesday, 6 May 2008
Monday, 5 May 2008
Avoid extreme makeover to your home for selling
When you have decided to sell your home, it's probably time to start thinking about how to make that home stand out from the rest.
But before planning a single project, beware: Homeowners aren't able to recoup as many improvement costs as they did in recent years, according to a recent study by Remodeling magazine. In fact, real-estate agents advise clients not to overdo it regardless of what the local market conditions are like.
The property should rather be neat, clean and look spacious rather than making it top of the line. The usual trend by the sellers is to add the cost of reno to the price of the home which a prudent buyer refuses to pay by looking at the prevalant market conditions.
Since the asking prices are based largely on comparisons with similar homes in the area, buyers have more negotiation power over the price of the home.
To keep costs down and spend remodeling dollars wisely, consider the following five tips:
- De-clutter your home. Go ahead if you have to rent a storage unit to hold open houses and plan showings. That will cost less and make more room for the prospective buyers to enjoy the property.
- It is always better to get a home inspection done before listing the home as it removes those issues which can hold a potential sale. It is normal for a buyer to seek discount of $ 2-3 for every $ 1 worth of defect. So move ahead, get that aspect taken care of.
- Replacing something as necessary as a furnace helps create a favorable perception of how well a seller took care of the home.
- Look outside!! Pay attention to exterior details such as the condition of siding and windows. According to Remodeling magazine's 2007 Cost vs. Value Report, a wood window replacement recovers an average 81.2% of its cost at resale and a siding replacement recovers an average 83.2% of its cost. The payoff for those projects is much better than for an upgrade that a buyer might not need; a home-office remodel, for example, recovers 57% of its cost. The estimates are national averages for midrange (not upscale) homes.
- Spend time in the bathroom!Freshening up the bathroom doesn't have to be expensive, but could be important. It's most important for the bathroom to be clean, but also consider replacing fixtures, the tub, the sink and the toilet -- if they need it. Replace cracked titles and curled linoleum. The replacements don't have to be expensive, Aldrich added. A toilet can cost less than $250, and she recommends taller, handicapped replacement toilets to appeal to an aging population.
- Keep it small in the kitchen. The other room that often sells a house is the kitchen. But it might be best to keep renovations modest. The Cost vs. Value Report found that homeowners could recover 83% of the cost of a minor kitchen remodel at resale compared with 78.1% of a major kitchen remodel.
But before planning a single project, beware: Homeowners aren't able to recoup as many improvement costs as they did in recent years, according to a recent study by Remodeling magazine. In fact, real-estate agents advise clients not to overdo it regardless of what the local market conditions are like.
The property should rather be neat, clean and look spacious rather than making it top of the line. The usual trend by the sellers is to add the cost of reno to the price of the home which a prudent buyer refuses to pay by looking at the prevalant market conditions.
Since the asking prices are based largely on comparisons with similar homes in the area, buyers have more negotiation power over the price of the home.
To keep costs down and spend remodeling dollars wisely, consider the following five tips:
- De-clutter your home. Go ahead if you have to rent a storage unit to hold open houses and plan showings. That will cost less and make more room for the prospective buyers to enjoy the property.
- It is always better to get a home inspection done before listing the home as it removes those issues which can hold a potential sale. It is normal for a buyer to seek discount of $ 2-3 for every $ 1 worth of defect. So move ahead, get that aspect taken care of.
- Replacing something as necessary as a furnace helps create a favorable perception of how well a seller took care of the home.
- Look outside!! Pay attention to exterior details such as the condition of siding and windows. According to Remodeling magazine's 2007 Cost vs. Value Report, a wood window replacement recovers an average 81.2% of its cost at resale and a siding replacement recovers an average 83.2% of its cost. The payoff for those projects is much better than for an upgrade that a buyer might not need; a home-office remodel, for example, recovers 57% of its cost. The estimates are national averages for midrange (not upscale) homes.
- Spend time in the bathroom!Freshening up the bathroom doesn't have to be expensive, but could be important. It's most important for the bathroom to be clean, but also consider replacing fixtures, the tub, the sink and the toilet -- if they need it. Replace cracked titles and curled linoleum. The replacements don't have to be expensive, Aldrich added. A toilet can cost less than $250, and she recommends taller, handicapped replacement toilets to appeal to an aging population.
- Keep it small in the kitchen. The other room that often sells a house is the kitchen. But it might be best to keep renovations modest. The Cost vs. Value Report found that homeowners could recover 83% of the cost of a minor kitchen remodel at resale compared with 78.1% of a major kitchen remodel.
Myths and Truth about home inspections
Having faulty or misguided beliefs about home-inspection services can lead to poor buying processes and final decisions.
Myth: All qualified home inspectors are alike.Truth: Just because someone claims to be an inspector--even a certified inspector-doesn't mean he or she is qualified. Not all states require home inspectors to be licensed. Before choosing an inspector, examine the person's credentials and be sure you trust not just the certification but the certifying body. You can find if someone is a member of the American Society of Home Inspectors or the National Association of Home Inspectors online at www.ashi.org or www.nahi.org. Another good standard for finding a home inspector is to ask him or her how many inspections they perform in a year. At least 200 inspections is a good number.
Myth: The inspection report functions as a list of repairs the seller needs to complete.Truth: The seller can choose to use the inspection as a repair list, or as a negotiation tool to move the deal forward.
Myth: The home inspection will go fine without your presence.Truth: You don't need to be there, but it's a good idea and a great way to learn how to operate systems in the home and understand its condition. It also lets you ask questions of the inspector andthe seller.
Myth: You don't have to bother getting a home inspected if it's being sold "as is."Truth: A home sold "as is" should certainly be inspected, so you, the buyer, know exactly what "as is" means. These homes aren't being sold free of defects, only with any defects left unrepaired. Many states require the seller to disclose known defects or other conditions that could affect the value or salability of the home, but impose no further obligation.Myth: A termite inspection is enough.Truth: A home inspection covers more than just looking for termites. Home inspectors look at the home's entire structure and all major systems, such as plumbing, electricity, and any internal climate control systems such as heating and central air. If a home inspector does find potential termite problems-or other issues that are dealt with by specialists, such as chimney or structural problems-he or she will recommend a qualified inspector for that.
Myth: You don't need to have an inspection for a newly built home.Truth: This could be one of the costliest myths of all. A recent Consumer Reports investigation found 15 percent of new homes sold had serious defects, and studies suggest things are getting worse. In another study, 41 percent of the homes examined, constructed by various builders, revealed problems such as mold and moisture, and 34 percent had frame and structural problems.Home inspectors conduct avisual inspection of all elements of a home and check items such as the water heater and built-in appliances, building a foundation of knowledge about the home and its systems.
Source: Pillar to Post (www.pillartopost.com)
Myth: All qualified home inspectors are alike.Truth: Just because someone claims to be an inspector--even a certified inspector-doesn't mean he or she is qualified. Not all states require home inspectors to be licensed. Before choosing an inspector, examine the person's credentials and be sure you trust not just the certification but the certifying body. You can find if someone is a member of the American Society of Home Inspectors or the National Association of Home Inspectors online at www.ashi.org or www.nahi.org. Another good standard for finding a home inspector is to ask him or her how many inspections they perform in a year. At least 200 inspections is a good number.
Myth: The inspection report functions as a list of repairs the seller needs to complete.Truth: The seller can choose to use the inspection as a repair list, or as a negotiation tool to move the deal forward.
Myth: The home inspection will go fine without your presence.Truth: You don't need to be there, but it's a good idea and a great way to learn how to operate systems in the home and understand its condition. It also lets you ask questions of the inspector andthe seller.
Myth: You don't have to bother getting a home inspected if it's being sold "as is."Truth: A home sold "as is" should certainly be inspected, so you, the buyer, know exactly what "as is" means. These homes aren't being sold free of defects, only with any defects left unrepaired. Many states require the seller to disclose known defects or other conditions that could affect the value or salability of the home, but impose no further obligation.Myth: A termite inspection is enough.Truth: A home inspection covers more than just looking for termites. Home inspectors look at the home's entire structure and all major systems, such as plumbing, electricity, and any internal climate control systems such as heating and central air. If a home inspector does find potential termite problems-or other issues that are dealt with by specialists, such as chimney or structural problems-he or she will recommend a qualified inspector for that.
Myth: You don't need to have an inspection for a newly built home.Truth: This could be one of the costliest myths of all. A recent Consumer Reports investigation found 15 percent of new homes sold had serious defects, and studies suggest things are getting worse. In another study, 41 percent of the homes examined, constructed by various builders, revealed problems such as mold and moisture, and 34 percent had frame and structural problems.Home inspectors conduct avisual inspection of all elements of a home and check items such as the water heater and built-in appliances, building a foundation of knowledge about the home and its systems.
Source: Pillar to Post (www.pillartopost.com)
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