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How-To: Win Your Bidding War

by Alexandra Zega

When entering a bidding war, you need to put your best foot forward. With multiple offers to consider, the seller needs to see that you're serious and ready to act fast. Below are a few tips to help you knock out the competition.

Be prepared. While it might seem smart to lay your offer on the table right away, don't do so unless you're fully prepared, pre-approved for a loan, and have all of your paperwork and finances in order. Otherwise, the seller won't take you seriously and will pass your offer over for someone who has completed their homework.

Be quick. This may seem counterintuitive to being prepared, but it's important to act fast when you see a home you like, or it will go to another bidder. This is why it's important to get your finances in order before you even begin searching. That way, you can put an offer in right away when you find a good fit.

Don't overbid. Offering more than the home is listed for may seem like a way to get a leg up on the competition, but overbidding and exceeding the home's appraised value can decrease your chances of a loan--and the seller (or their agent) knows that. If you overbid, be sure you can afford the excess cost flat out.

Don't underbid. In a bidding war, your offer needs to be just right. Just like the seller won't take you seriously if you overbid too much, they surely won't consider your lowball offer if they have offers from many other buyers. To find your “Goldilocks” price point, figure out the maximum you can afford, and then offer that.

Get under their emotional skin. Last year, everyone was back to writing “love letters” to the sellers of a home they were crazy about. Now, you can one-up everyone and really stand out from other offers by making a video of you and your family talking about why you love this home, and why you can see yourself in it. Does that third bedroom look perfect for your new baby? Then get her on the camera. Is that basement office perfect for running your business? Talk about that.

As a Member of the Top 5 in Real Estate Network®, I have a wealth of real estate and homeownership information that may be of help to you. Feel free to contact me any time to learn more about this important information, and be sure to forward this article on to any friends or family that may be interested as well.

What is the Difference: Amortization and Negative Amortization

by Alexandra Zega

If you’re applying for a mortgage for the first time, it may feel like you’re learning a second language. All of the terms and regulations can seem daunting. One that doesn’t need to be is “amortization,” which is just the act of paying off debt in regular installments over a period of time.

When you amortize a loan you basically pay off the principal by making regular installment payments; the process typically takes place gradually over several years.

Another term you may be hearing is “negative amortization.” What is the difference? When your monthly payment isn’t enough to cover the loan interest, then your loan principal increases rather than decreases. This is called negative amortization, otherwise referred to as “deferred interest.”

Negative Amortization causes the loan balance to increase rather than decrease. This often happens with adjustable rate mortgages (ARMs). Negative amortization has to be repaid, which means your payment will rise in the future. The larger the negative amortization, the more you will be required to amortize the loan in full.

So you may be wondering, why would anyone use a negative amortization loan?

The main reason people use negative amortization loans is to lower monthly payments. Some homeowners use loans with negative amortization to purchase a house they otherwise can’t afford, resting on the idea that in the future, they will have more income and can make larger payments.

With negative amortization, a persistent rise in interest rates reduces the equity in the house unless the negative amortization is offset by house appreciation. As a result, some use negative amortization if they believe that the house will be worth much more in the near future.

As a Member of the Top 5 in Real Estate Network®, I have a wealth of real estate and homeownership information that may be of help to you. Feel free to contact me any time to learn more about this important information, and be sure to forward this article on to any friends or family that may be interested as well.

How to Pick the Right Lender

by Alexandra Zega

 

For many borrowers, the challenge is not merely finding a lender. It’s sorting through the confusion of banks, brokers, online lenders, and more to find the right lender. With so many options, it can be confusing and challenging to find the best deal, or a company that you trust. Below are a few pro tips.

1. Talk with your real estate professional
It’s always a great idea to ask your real estate agent for lender recommendations. While some brokerages have affiliations with specific lenders, most professionals will suggest several credible lenders, not just their in-house option. And because the lender they recommend wants to keep a good relationship with the agent who is sending them referrals, they will most likely take great care of you.

2. Contact the lender before you fill out an application
Before you spend a ton of time filling out an application, call or visit your local bank to talk with someone one-on-one.

This will give you great insight before you even begin the paper work. How do they treat you? Is their customer service up to par? Are they pressuring you into filing an application?

There’s no point in pursuing a lender that doesn’t make you feel comfortable, so why waste time with an application?

3. Turn the interview tables
After your application is submitted, you will be asked to have an interview. Interviews are always nerve wracking, whether they’re for a new job, or a new loan. But take this opportunity to ask the lender any and all of the questions you may have.

While you want to be approved, you also want to make sure you’re making the right lending choice, so don’t be afraid to turn the tables a bit in the interview. Not sure what to ask? Try a few of the following questions:

  • How long will it take to process my loan application?
  • What is the minimum down payment required?
  • What might delay my approval?
  • Do you offer loan rate locks?
  • Is there a prepayment penalty?
  • What are the discount points and origination fees?

4. Study rates, points and fees
When comparing lenders, there are three things you can whittle your attention down to: rates, points, and fees. Things like taxes and insurance won’t vary too much from lender to lender, so these aren’t as important. However, rates, points, and fees can differ greatly from lender to lender, and the numbers all affect one another, so be sure to pay close attention and calculate carefully.

As a Member of the Top 5 in Real Estate Network®, I have a wealth of real estate and homeownership information that may be of help to you. Feel free to contact me any time to learn more about this important information, and be sure to forward this article on to any friends or family that may be interested as well.

Displaying blog entries 1-3 of 3

The property listing data and information, or the Images, set forth herein were provided to MLS Property Information Network, Inc. from third party sources, including sellers, lessors and public records, and were compiled by MLS Property Information Network, Inc. The property listing data and information, and the Images, are for the personal, non-commercial use of consumers having a good faith interest in purchasing or leasing listed properties of the type displayed to them and may not be used for any purpose other than to identify prospective properties which such consumers may have a good faith interest in purchasing or leasing. MLS Property Information Network, Inc. and its subscribers disclaim any and all representations and warranties as to the accuracy of the property listing data and information, or as to the accuracy of any of the Images, set forth herein.”