Financing the construction of your dream home may seem like a complicated process compared to the standard home purchase or refinance of an existing home.
Until recently, two loans were required when building your dream home—one for construction and one for permanent financing. This meant that you had to pay closing costs on both loans, not to mention the extra paperwork, time and hassle involved. But with the introduction of the single-close Construction-to-Permanent Loan—combined with the ease and speed of online loan approvals—building your dream home has become easier, faster and best of all, less costly.
The term "Single-close loan" refers to one loan that covers both the construction phase and permanent home mortgage. Online lenders have made great strides in streamlining the entire loan process - from pre-approval to builder acceptance and project approval.
Once you have decided that a Construction-to-Permanent Loan is the right loan for you, you are ready to take the first step by determining the loan amount for which you qualify. For most online lenders, this is an easy process that can be done in just minutes. (Keep in mind that your lender is loaning you money based upon your dream. So they will need to see your dream as clearly as you do!)
In addition to standard credit documentation, your lender will want copies of the following to start the process:
1. Final plans and specifications (home plans). These are needed in order to obtain an appraisal.
2. Purchase contract for the lot or Settlement Statement if you have already purchased the land.
3. Construction contract. This is the agreement you have with your builder that details the project and the costs.
4. Line Item Cost Breakdown or Budget. This is generally prepared by the builder and includes a detailed breakdown of all costs.
5. Description of Materials to be used in the construction of the home. For example, wood shingle roof or lightweight tile; clear heart redwood siding or cedar shingle.
Most lenders need to verify that the builder you selected is experienced and has a proven track record to perform under the terms of the contract. IndyMac Bank, a leader in online housing lending, has a particularly streamlined builder acceptance process. In minutes, you and/or your builder can input information online and receive an immediate acceptance. (This also benefits the builder, because their contact information becomes available to other individuals looking for a builder.)
It is also important to know that, unlike a standard home purchase, funds during construction are disbursed based upon a percentage of completion.)
IndyMac borrowers have easy access to their construction loan information through a personalized, secure web site called "My Loan Information." Here, borrowers can request draws, view available funds for each item in their budget, and monitor their account billing statement.
To learn more about IndyMac Bank’s home construction loans
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=76
Wednesday, June 20, 2007
Pros and cons of old and new homes
When deciding between an old or new home, the list of pros and cons is lengthy.
To begin, people often assume that workmanship in past generations was superior to what is practiced in today's workplace. Given the value denigration in much of our culture, this is probably true in a general sense. But to apply this as a blanket condemnation of current construction quality would be a grave mistake. Good and bad craftsmanship have had their place in every era, and builders with skill and integrity are by no means an extinct species.
The advantages of newer homes include up-to-date standards for structural stability, energy conservation and general safety, especially with regard to electrical systems, fireplaces and heating equipment. Also on the plus side are the lack of general wear, the modern design features, contemporary conveniences, and in the case of a newly built home, the builder's warranty. Newer homes are often (but not always) found in upcoming and developing areas, where value appreciation may be more pronounced than in localities where older homes are found. Thus, in many cases, there can be investment advantages with a new or relatively new residence.
Of course, newer homes can also be the products of low bid subcontractors, resulting in any number of faulty conditions. Brand new homes come with builders' warranties, but these provide no assurance that the builder will respond favorably when there is a problem.
With many older homes, there are also advantages, such as proven stability, established landscaping, ambient character, and antique design features. But here also, there is a list of down-side considerations. There are many issues involving deterioration, wear and obsolete design. Many older homes have been upgraded to offset these disadvantages, but such improvements are not always the work of qualified persons, nor is such work always done with a permit.
With rising utility costs, lack of energy efficiency in an old home is also a major consideration, and upgrades in this area can be cost prohibitive. Insulation in ceilings, walls and floors is often substandard or nonexistent, and old style windows waste heat almost as badly as if they were open. Old heating equipment is typically not designed for efficient use of fuel, requiring more money to produce a given amount of heat. Furthermore, with old heaters, safety problems are more likely to occur.
In many respects, the choice between a new or old home hinges upon individual considerations, such as personal likes and dislikes, long-term objectives, available time and capital for home improvements, do-it-yourself skills, age and season of life, etc. When all factors are considered, the choice should be the one that is most consistent with your practical needs, desires and finances. And as always, it should include the disclosure advantages provided by a well-seasoned, qualified home inspector.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=68
To begin, people often assume that workmanship in past generations was superior to what is practiced in today's workplace. Given the value denigration in much of our culture, this is probably true in a general sense. But to apply this as a blanket condemnation of current construction quality would be a grave mistake. Good and bad craftsmanship have had their place in every era, and builders with skill and integrity are by no means an extinct species.
The advantages of newer homes include up-to-date standards for structural stability, energy conservation and general safety, especially with regard to electrical systems, fireplaces and heating equipment. Also on the plus side are the lack of general wear, the modern design features, contemporary conveniences, and in the case of a newly built home, the builder's warranty. Newer homes are often (but not always) found in upcoming and developing areas, where value appreciation may be more pronounced than in localities where older homes are found. Thus, in many cases, there can be investment advantages with a new or relatively new residence.
Of course, newer homes can also be the products of low bid subcontractors, resulting in any number of faulty conditions. Brand new homes come with builders' warranties, but these provide no assurance that the builder will respond favorably when there is a problem.
With many older homes, there are also advantages, such as proven stability, established landscaping, ambient character, and antique design features. But here also, there is a list of down-side considerations. There are many issues involving deterioration, wear and obsolete design. Many older homes have been upgraded to offset these disadvantages, but such improvements are not always the work of qualified persons, nor is such work always done with a permit.
With rising utility costs, lack of energy efficiency in an old home is also a major consideration, and upgrades in this area can be cost prohibitive. Insulation in ceilings, walls and floors is often substandard or nonexistent, and old style windows waste heat almost as badly as if they were open. Old heating equipment is typically not designed for efficient use of fuel, requiring more money to produce a given amount of heat. Furthermore, with old heaters, safety problems are more likely to occur.
In many respects, the choice between a new or old home hinges upon individual considerations, such as personal likes and dislikes, long-term objectives, available time and capital for home improvements, do-it-yourself skills, age and season of life, etc. When all factors are considered, the choice should be the one that is most consistent with your practical needs, desires and finances. And as always, it should include the disclosure advantages provided by a well-seasoned, qualified home inspector.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=68
Real estate not always secured with highest bid
Most sellers would be delighted to receive multiple offers. However, figuring out which offer to accept is not always as simple as you might think.
Suppose you receive three offers. One is for $495,000: your asking price. Another is for $10,000 more. And the highest offer is for $525,000—$30,000 over the list price. If you look at price alone, you'd have no reservations about accepting the highest offer.
However, there's more to consider about an offer than the price. The $495,000 offer might be from a preapproved buyer who has a $250,000 cash down payment and no appraisal contingency. This means that if the house appraises for less than the offer price, the buyer cannot use this to back out of the contract without risking losing his deposit.
The lender should have no problem granting the buyer a mortgage for approximately 50 percent of the sale price, even if the appraisal comes in low. The more cash down, the more likely the lender will approve the loan.
The highest-price offer might be from a buyer with a 5 percent cash down payment and an appraisal contingency. This means that if the property appraises for less than the purchase price, the buyer has an automatic out of the contract. Even if he doesn't want out, the lender won't be willing to grant a mortgage in the amount the buyer needs to complete the sale. With only 5 percent down, there's a good chance that the buyer won't have enough extra cash to make up the difference between the appraisal amount and the purchase price.
The third offer could be contingent upon the successful close of the buyer's home that is currently under contract. If the deal on his house falls apart, the buyer can withdraw from your contract without penalty. If this happens, you'll be back on the market searching for a new buyer.
So, in terms of a risk analysis, the lowest price offer appears to be the best offer. One option would be to counter the lowest offer with a higher price, based on the fact that you have two offers higher than his. Before making a counter, however, consider that the buyer could say no and disappear form the scene leaving you with two riskier offers to choose from.
If you have already purchased another home, you might be better off leaving the price alone on the lowest offer and simply ask for a quick close. A quick close could save you the cost of interim financing, which would effectively put more money in to your pocket.
HOME SELLER TIP: To simplify the task of comparing multiple offers, make a chart including a grid of all the variables that could effect your decision. On the far left make a column for the offers. List them by the buyer's, or their agent's, name. Then create a row at the top of the chart for the most important elements of the offers. Each element will head a separate column on the grid chart. Elements might include: the price, the amount of the down payment, whether or not the buyer is preapproved, the closing date and the contingencies.
When analyzing offers, the fewer the contingencies, the better. Contingencies can complicate a contract by providing more opportunities for a transaction to fall apart.
THE CLOSING: In general, you're looking for the highest price, the quickest close and the least number of contingencies. But, a lower-priced offer with a quick close and few contingencies could be better than a higher priced offer.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=166
Suppose you receive three offers. One is for $495,000: your asking price. Another is for $10,000 more. And the highest offer is for $525,000—$30,000 over the list price. If you look at price alone, you'd have no reservations about accepting the highest offer.
However, there's more to consider about an offer than the price. The $495,000 offer might be from a preapproved buyer who has a $250,000 cash down payment and no appraisal contingency. This means that if the house appraises for less than the offer price, the buyer cannot use this to back out of the contract without risking losing his deposit.
The lender should have no problem granting the buyer a mortgage for approximately 50 percent of the sale price, even if the appraisal comes in low. The more cash down, the more likely the lender will approve the loan.
The highest-price offer might be from a buyer with a 5 percent cash down payment and an appraisal contingency. This means that if the property appraises for less than the purchase price, the buyer has an automatic out of the contract. Even if he doesn't want out, the lender won't be willing to grant a mortgage in the amount the buyer needs to complete the sale. With only 5 percent down, there's a good chance that the buyer won't have enough extra cash to make up the difference between the appraisal amount and the purchase price.
The third offer could be contingent upon the successful close of the buyer's home that is currently under contract. If the deal on his house falls apart, the buyer can withdraw from your contract without penalty. If this happens, you'll be back on the market searching for a new buyer.
So, in terms of a risk analysis, the lowest price offer appears to be the best offer. One option would be to counter the lowest offer with a higher price, based on the fact that you have two offers higher than his. Before making a counter, however, consider that the buyer could say no and disappear form the scene leaving you with two riskier offers to choose from.
If you have already purchased another home, you might be better off leaving the price alone on the lowest offer and simply ask for a quick close. A quick close could save you the cost of interim financing, which would effectively put more money in to your pocket.
HOME SELLER TIP: To simplify the task of comparing multiple offers, make a chart including a grid of all the variables that could effect your decision. On the far left make a column for the offers. List them by the buyer's, or their agent's, name. Then create a row at the top of the chart for the most important elements of the offers. Each element will head a separate column on the grid chart. Elements might include: the price, the amount of the down payment, whether or not the buyer is preapproved, the closing date and the contingencies.
When analyzing offers, the fewer the contingencies, the better. Contingencies can complicate a contract by providing more opportunities for a transaction to fall apart.
THE CLOSING: In general, you're looking for the highest price, the quickest close and the least number of contingencies. But, a lower-priced offer with a quick close and few contingencies could be better than a higher priced offer.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=166
Realtor VS. \"For Sale By Owner\"
Why do we need a real estate agent? After all, an agent will charge thousands of dollars to sell even an average home, and that commission comes right off the top! Heck, with the Internet and all, we can do practically everything that an agent would do, so why should we pay out all that money?"
Many home sellers have similar thoughts, and because so much money is at stake, these questions deserve some serious thought.
In today's world, the sale of real property is not just a marketing exercise; there are many legal issues involved which can create liability in the sellers. Of all the things you want and expect from selling your home, a lawsuit is probably not one of them.
Unfortunately, residential transactions have seen an alarming increase in the number of claims and lawsuits. Of these claims, the majority are filed against sellers, by their buyers. Home sellers who think they can "go it alone" might want to seriously ponder the observations of a lawyer who has defended many sellers and real estate agents against claims made by "the Buyers from Hell."
In most states, the process by which title to real property is transferred is rather complicated, and the typical home seller is not familiar with the many legal issues that can and do arise, even in a fairly simple transaction. Important decisions must be made concerning contract terms, escrow matters, transfer of title, apportionment of costs and any number of other matters. Also, bear in mind that a simple missing word, or a mistake in grammar can create a dispute which, in turn, can give rise to a lawsuit. Aside from the problem of drafting the contract language itself, sellers can face other dangers as well. For example, did you know:
Experienced, professional real estate agents understand these kinds of risks, and they can help you to minimize them in a variety of ways. They devote many hours to training and educational programs which emphasize risk reduction, and protecting their clients' interests.
Now, there are any number of reasons why your buyers may decide to take action against you (sometimes, they just don't feel like making the payments any more). However, most of these complaints allege problems with the condition of the property, and/or representations made to them about the property or the transaction. An experienced agent knows how to reduce the risk of these types of complaints, by including effective "AS IS" and other clauses in the contract language, and by providing for such things as a professional home inspection, and a home warranty.
When a problem arises in the transaction, an experienced agent can move swiftly to "nip it in the bud." Their thorough understanding of the myriad facets of modern transactions can help them to identify the real problem, and to either solve it themselves, or by calling upon resources that the typical seller simply does not have access to.
There is no escaping it: the best way to deal with a complaint is to prevent it in the first place. The organized real estate community has spent a lot of time thinking about how to reduce the likelihood of claims, and has responded to this threat in a number of ways. For example, the standard contract forms that most agents use are chock full of language which can help protect you, and reduce your exposure to claims and litigation.
Of course, I don't mean to scare you with all this! But hey, it is a jungle out there. Indeed, I've only touched on a few of the pitfalls of selling your home on your own. Take it from someone who knows: selling your home without professional help is very risky business indeed. Yes, it costs money to employ a real estate agent, but if you find the right one, you will likely be able to sell your property faster, while at the same time reducing the chances that your buyer will come back to haunt you.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=216
Many home sellers have similar thoughts, and because so much money is at stake, these questions deserve some serious thought.
In today's world, the sale of real property is not just a marketing exercise; there are many legal issues involved which can create liability in the sellers. Of all the things you want and expect from selling your home, a lawsuit is probably not one of them.
Unfortunately, residential transactions have seen an alarming increase in the number of claims and lawsuits. Of these claims, the majority are filed against sellers, by their buyers. Home sellers who think they can "go it alone" might want to seriously ponder the observations of a lawyer who has defended many sellers and real estate agents against claims made by "the Buyers from Hell."
In most states, the process by which title to real property is transferred is rather complicated, and the typical home seller is not familiar with the many legal issues that can and do arise, even in a fairly simple transaction. Important decisions must be made concerning contract terms, escrow matters, transfer of title, apportionment of costs and any number of other matters. Also, bear in mind that a simple missing word, or a mistake in grammar can create a dispute which, in turn, can give rise to a lawsuit. Aside from the problem of drafting the contract language itself, sellers can face other dangers as well. For example, did you know:
- that buyers who look for "FSBOs" usually offer 6-10% below the price of comparable properties because they know you are not paying a commission?
- that there are substantial risks involved when a seller agrees to "carry back" a note from the buyer; risks that can cost you thousands of dollars?
- that your good credit rating can be ruined by your buyer's default, many months, or even years, after that buyer "assumes" your loan?
- that a clever buyer can stay in possession of your property for many months after he defaults on the contract, and in effect "live for free" at your expense?
- that most buyer complaints involve alleged damages of less than $10,000, yet you could be forced to spend thousands in attorney's fees to defend such a claim?
- that alleged failure to disclose such things as previous repairs, insects, exact lot lines, and the presence of certain types of mold/fungus in the property are the source of many lawsuits against sellers?
Experienced, professional real estate agents understand these kinds of risks, and they can help you to minimize them in a variety of ways. They devote many hours to training and educational programs which emphasize risk reduction, and protecting their clients' interests.
Now, there are any number of reasons why your buyers may decide to take action against you (sometimes, they just don't feel like making the payments any more). However, most of these complaints allege problems with the condition of the property, and/or representations made to them about the property or the transaction. An experienced agent knows how to reduce the risk of these types of complaints, by including effective "AS IS" and other clauses in the contract language, and by providing for such things as a professional home inspection, and a home warranty.
When a problem arises in the transaction, an experienced agent can move swiftly to "nip it in the bud." Their thorough understanding of the myriad facets of modern transactions can help them to identify the real problem, and to either solve it themselves, or by calling upon resources that the typical seller simply does not have access to.
There is no escaping it: the best way to deal with a complaint is to prevent it in the first place. The organized real estate community has spent a lot of time thinking about how to reduce the likelihood of claims, and has responded to this threat in a number of ways. For example, the standard contract forms that most agents use are chock full of language which can help protect you, and reduce your exposure to claims and litigation.
Of course, I don't mean to scare you with all this! But hey, it is a jungle out there. Indeed, I've only touched on a few of the pitfalls of selling your home on your own. Take it from someone who knows: selling your home without professional help is very risky business indeed. Yes, it costs money to employ a real estate agent, but if you find the right one, you will likely be able to sell your property faster, while at the same time reducing the chances that your buyer will come back to haunt you.
http://www.americanhomeguides.com/homebuying_tips_view.php?RowID=216
Buyer’s Remorse - Did You Make a Huge Mistake?
When you were in hot pursuit of the "American Dream" you were excited about the future and owning your own home -- researching neighborhoods, searching MLS sites on the internet, viewing homebuyer’s magazines full of appealing homes that were just "minutes from the beach" with "fantastic views" and "cozy family rooms."
Next came the really good stuff – looking at houses. Full of imagination and optimism for the future, you wandered about each home envisioning a happy and contented life for you and your family. The first house might have been "too big," and another was "too small," but finally you found one that was "just right."
So you made an offer and waited anxiously and excitedly for the counter-offer. Finally, you and the seller agreed on terms and you bought yourself a brand new home!
Congratulations! Break out the champagne and celebrate!
However…
Later that night or perhaps the next day, you started worrying.
Did you make the right decision? Can you afford it? Is it the right time? Should you have waited? What if you lose your job? What if this happens? What if that happens? Anxiety and stress set in. Sleep may be hours in coming.
This is a normal reaction to buying a home. It is called "buyer's remorse."
This is what you do...
Take out a pen and paper right now and draw a line down the center of the paper. Calmly and logically, think of all possible advantages to buying a home and write them down on one side of the page. Afterwards, you should list all the disadvantages on the other side of the paper.
This process is supposedly how Ben Franklin used to weigh tough decisions.
After you get done writing your lists, you may think back on your anxiety and think you were being silly. After all, buying a home is obviously a good decision. Your list proves it. But your reaction was normal and shared by many. You see, buying a home is not entirely a rational process. It is an emotional process, too.
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