About Financing

Don't Make These Mistakes

You are about to make what will most likely be the largest transaction of your lifetime: your mortgage loan. Unfortunately, many home-buyers do not take the time to research some of the little, but weighty, nuances of mortgages. Researching the mortgage process takes little time, compared to the tens of thousands of dollars it could save you.

Doesn't it make sense to become as completely informed, as possible, before you buy your next home? This special report is designed to help you avoid nine common mistakes. Remember that the right lender can help you make good, sound, business decisions, based on your personal financial situation.

Find a Reputable Lender:

This is the most important choice you can make when starting the loan process. If you don't trust your lender, you are in for a long, and difficult, home-buying experience.

Pricing:

Don't be lured into a mortgage company strictly by promises of low rates. Find out how long the advertised rate is guaranteed for. Make sure there is enough time to close on your loan. Some companies may make these "promises", but will try changing the rate, prior to closing. They may claim that your "lock-in" rate has expired, so make sure you have the expiration date in writing. In some cases, the lender may even try to delay your closing to break the "lock-in" rate. In other cases, the delay may be beyond the lender's control. Make sure to allow yourself plenty of time for closing. Delays in the process are not uncommon, and everyone (builders, title companies, even yourself) is to blame.

Programs:

You will see several programs that offer special low-interest rates. Keep in mind that they may not be the best program for your situation. Make your lender explain what programs they feel best serve your needs, and more importantly, why.

Fixed or Adjustable Rate Mortgage (ARM):

Conventional thinking is that fixed is always best. While this is sometimes true, it is not always the case. The key here is to ask, "How long am I going to live at this property?" An ARM can actually be a better choice, if you are going to be in the home for a short time. The average, for how long a first time homebuyer keeps their loan, is less than four years. In general, the longer you plan on keeping your home, the better a fixed rate mortgage will suit your needs.

Don't try to bottom out the market:

Deciding when to lock in to a loan rate can be difficult. Many people will float, trying to guess when rates have hit bottom. Unfortunately, in many cases they will wait too long, and end up with a much higher interest rate. There is nothing wrong with floating, but keep a close eye on economic indicators. Your daily newspaper, or even the nightly news, can be an excellent source of information on the latest interest rate activity. As closing nears, it might be worth locking in.

Negotiate problems prior to closing:

It's common for an issue to arise before closing. Waiting until closing will rarely be in your best interest. For instance, if you accept $600 at closing, in lieu of the seller making a repair, and after closing you discover that the repair will actually cost 200, you've obviously made a bad decision. Whether the builder agreed to include an item, and hasn't, or the seller has made a repair that is not acceptable to you, discussing a solution, before closing, will give both parties time to analyze, and determine options.

Be prepared for closing costs:

In addition to the down payment, you will need to pay fees, and other closing costs, at the time of the final transaction. Closing costs for a home in Olympia WA typically range from 2 percent,, to 6 percent, but will be dependent upon your situation. Lenders must provide you with a "Good Faith Estimate." The "Good Faith Estimate" will lay out all costs so that you may know what to expect at closing.

Close at the end of the month:

When making a mortgage payment, you will be paying interest that has accrued from the previous month. Upon closing, however, your lender will charge you prepaid interest, for the date the loan is recorded, through the end of that month. Therefore, one way to lower your closing costs is to close in the latter part of the month. This will lower the amount of prepaid interest that you must pay.

Look out for hidden fees:

Check for certain miscellaneous fees, such as inspection, notary, and document preparation. These kinds of fees can mean hundreds of dollars in closing costs. Remember that this is your money at stake. Never should you be afraid to ask for explanations of fees you are being asked to pay.

We sincerely hope these tips, and ideas, are of value to you. If there is any way we can be of service, please contact our office.

Insurance Types Associated With Buying A Home

Homeowner's Insurance:

Homeowner's insurance covers replacement costs for damages that may have been caused by fire, wind, or other disaster, that could affect the value of the Olympia WA area home. Typically, the insurance, also, includes personal liability, and theft coverage.

Flood, or Quake Insurance:

This is additional hazard insurance coverage, that is required for properties in [Profile.market, located in a designated hazard zone, as established by the Federal Emergency Management Agency (FEMA). As we tour properties, we will let you know if the property is in a hazard zone.

Private Mortgage Insurance (PMI):

Insurance that is required for conventional mortgage loans, when the borrower's down payment on the house is less than 20 percent of the loan value.

Title Insurance:

This policy protects both the buyer, and lender, by insuring a clear chain of title. In other words, it insures that the person who sells the house has the legal right to do so.

Standard Costs Of Closing

There are certain standard costs associated with closing the sale of a home. These fees are going to be allocated between the buyer, and the seller, as explained in the purchase and sale agreement.

While we negotiate the sales agreement for you, we will be working to get the sales price you want on your new Olympia WA home. We will, also, work to minimize the number of closing costs that you would be responsible for.

We will walk you through the closing costs, answering any concerns you may have, and we will explain which costs are decreed by law, to be yours, and which might be negotiable.

Good Faith Estimate:

Buyers will receive a "Good Faith Estimate" of closing costs when the loan application is submitted to the lender. The estimate is based on the loan officer's past experience, and may not include all of the closing costs. We will be glad to review the "Good Faith Estimate," for you, and answer any questions, and will highlight any missing costs, and estimates, we believe to be low.

Standard Closing Fees - Loan-Related Fees:

Loan Origination Fee

Points (optional)

Interest Payment

Escrow Account

Appraisal Fee

Credit Report

Taxes:

Property Taxes

Transfer Taxes and Recording Fees

Insurance:

Homeowners Insurance Flood, or Quake Insurance

Private Mortgage Insurance (PMI)

Title Insurance

Applying For A Loan

For many purchasers, applying for the mortgage loan can be one of the more stressful parts of purchasing a Olympia WA home. This need not be the case. If you follow a few easy steps, you'll sail through the loan application process. If you start by making a list, of any questions you have, about the loan program, you will be better at understanding the pros, and disadvantages, of the various loan programs, that you may qualify for, including the advantages, and disadvantages, of Fixed Rate Loans, versus Adjustable Rate Loans.

Then you will need to decide if you want to lock-in, or float, the loan's interest rate for your new home. By locking-in the rate, this means that the lender commits to the mortgage interest rate for the loan - typically at the time the loan application is submitted. Should you decide to float the rate, you can lock-in the interest rate, anytime between the loan application day, and the closing day. Olympia WA buyers opt to "float the loan" when they predict interest rates will drop after their loan application date, and prior to closing. The danger there is that rather than dropping, interest rates may rise, increasing the mortgage payment.

You will need to decide if you want to pay additional points to lower your interest rate. Typically, you can elect to pay additional points (each point is 1 percent of the mortgage loan payable in cash at closing) to lower the interest rate of your mortgage loan.