865 Real Estate

East Tennessee Real Estate & Neighborhood Source

Knoxville Real Estate: How a Pre-Approval can eliminate heartache

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Knoxville real estate mortgage pre-approvalMany buyers who have not been given guidance in the current home buying process believe that the first step is getting online to search internet sites or going out with a Knoxville real estate agent to view Knoxville homes for sale.  If this is the first thing you are doing then you are skipping the most important step. Unlike the past when a buyer with marginal credit could typically qualify for a larger mortgage payment, today’s stringent lending guidelines have completely changed. Unless you have excellent credit and a solid income history, you cannot even guarantee that you will be approved. For those who are approved, there are parameters that can effect your interest rate, as well as the amount of loan for which you qualify. For the most productive experience in buying a Knoxville home there is a specific process that should and ultimately will take place, but straying outside the order of these steps can ultimately cost you time, money, and heartache.

First and foremost a buyer should speak with one or more lenders to get a pre-approval.  You may ask yourself, why is this more important than looking at homes right away.  It is because this step is the one that all of the others hinge on. It tells the buyer how much home they can afford and the price range in which they and their Knoxville real estate agent should be looking. Buyers who fail to follow this first step, may end up looking in a price range that they cannot afford, and ultimately be let down. By viewing homes they cannot afford, they will then have to lower their expectations.  This makes it more difficult to find a home they will like, because they have been exposed to homes with amenities and features above their price range.

Another important point to be made is the difference between a pre-qualification and a pre-approval. A pre-qualification looks only at a buyers credit history and income, and does not guaranty a loan. On the other hand, a pre-approval both looks at AND VERIFIES a buyer’s credit, income, and debt and provides a loan approval within a specific dollar amount with certain conditions and terms. Becoming pre-approved means you can comfortably search for your dream home, knowing exactly how much you can afford.

Using Video Previews of Knoxville Homes for Sale for Relocating Clients

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Knoxville real estate previewsTroy Stavros, lead buyer’s agent at the 865 Real Estate is using video technology to assist both local and relocating clients in searching Knoxville homes for sale. Stavros said, “As the leading listing team at Gables & Gates, REALTORS we were already utilizing live video and professional photography for our home sellers, but have recently found out what a time saver it can be for my clients searching through the Knoxville homes for sale to buy. I was working with a few different families doing a corporate relocation into the Knoxville area when the idea came to me.”

“We are always looking for ways to make the process of buying Knoxville real estate easier for our clients”, commented Stavros. “I witnessed these families on a time crunch, struggling to get into town to look at Knoxville homes for sale while their kids were still in school, or while they were trying to transition from their old corporate position to the new one here in Knoxville. It can be very stressful. My solution was first to get all of their search criteria: from their dream home, to the house with which they could still be happy, to what they absolutely did not want. Second, if they could be in town we would visit some homes so I could observe their responses to what they were seeing. Then if we were unable to find the home on that first trip out, after they left Knoxville, I decided that they could still view homes that fit their criteria through the lens of my video camera. Our Knoxville Home Preview videos were born out of trying to lessen the stress of our relocating clients.”

“I’ve had multiple out of town clients say that they would get the family together to huddle around the computer with popcorn to watch the preview videos, excited to see if it could be their next home. This excitement would oftentimes lessen the negative feelings that some of their children might have felt about relocating.”

The key according to Stavros is the buyer consultation completed with the clients prior to starting the home search. This would allow them to paint the picture of the house they were looking for. It was then just a matter of finding the homes that fit their criteria and eliminating those that did not. Stavros would choose the homes to video as well as take recommendations from the clients as they searched the 865 Real Estate website from their end.

“It’s been a very popular tool for our clients. We have even had clients buy a home, site unseen, because of the video and their trust in that we had a firm grasp on their wants and needs.”

Closing costs in Tennessee are in line with the national average

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closing costs in KnoxvilleOrigination and title costs on a $200,000 mortgage averaged $3,754 nationwide, down 7.4 percent from 2011, based on Bankrate’s annual survey. Origination fees declined 1 percent; while title and closing costs shrank nearly 12 percent. For the third straight year, New York had the highest closing costs at $5,435, followed by Texas at $4,619 and Pennsylvania at $4,467; while Missouri, Kansas, and Colorado had the lowest closing costs at $3,006, $3,193 and $3,199, respectively.

How do closing costs in Tennessee stack up?

The average closing cost on a $200,000 mortgage in Tennessee in 2012 is $3,747 (in line with the national average) — $1,587 for origination fees and $2,160 for title and closing costs.

Bankrate.com surveyed up to 10 lenders in each state in June 2012 and obtained online good faith estimates for a $200,000 mortgage to buy a single-family home with a 20 percent down payment in the state’s largest city. Costs include fees charged by lenders, as well as third-party fees for services such as appraisals and title insurance. The survey excludes taxes, property insurance, association fees, interest and other prepaid items.

SOURCE: BANKRATE.COM

FHA 203(k) loan wraps repair costs into your 30 year mortgage

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remodeling in KnoxvillePurchasing a fixer upper or foreclosure in Knoxville means you are getting a getting a good deal, but with that deal is the price of repairs. Foreclosure website RealtyTrac, states that foreclosures sold at an average discount of 27% compared to non-distressed properties in the first quarter of 2012. A great option for Knoxville home buyers picking up a fixer upper or foreclosure is the FHA203(k) loan. It allows potential buyers who want to purchase a discounted foreclosure but don’t have cash for the repairs to wrap the cost of repairs into their loan.

According to HUD, the 203(k) program is the department’s main program for rehabilitating and repairing single family properties, and it’s viewed as an important tool to revitalize neighborhoods.

Eligibility for the property requires that it be purchased as a primary residence, and it must be a one-to four-family residence that has been completed for at least one year.

The maximum loan amount that can be obtained for the property is based on the value or the purchase price of the property before rehabilitation (whichever is less), PLUS the estimated rehabilitation costs (or 110% of the property after improvements, according to HUD).

How a low-ball offer on a Knoxville home for sale can cost you more

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low ball offers in KnoxvilleAre you hurting yourself by submitting low-ball offers on a Knoxville home for sale? A year ago 10% of REALTORS® were vocal about receiving low-ball offers on homes for sale. A low ball offer consists of an offer submitted by a potential home buyer for 25% or more below the list price.  According to a National Association of REALTORS® survey of its members, that number has dropped drastically.

The survey taken in March of 4,500 agents and brokers returned the data that  NO REALTORS® complained about low-ball offers.  What is the reason for the drastic reduction in low-ball offers?  The same thing we’ve talked about in recent articles, a lack of good and marketable inventory.  The sudden drop in inventory of for-sale homes has led to fewer homes available to sell.

Home buyers thinking they still have an opportunity to steal a Knoxville home with a low-ball offer are finding that their offers are more often being rejected or being countered closer to the original asking price.  Sellers, knowing they are priced correctly, are negotiating aggressively with low-ball offers which oftentimes has the final sale price landing close to the original asking price.

So what is the moral of this story?  Throwing out low-ball offers at sellers may have been an effective approach between 2008 and early 2011. But now, in 2012’s Knoxville housing market it could be counterproductive if you truly want to buy.

 

Getting pre-approved in Knoxville doesn’t mean the bank won’t deny your loan!

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buying a home in KnoxvilleIf you have listened to the national news at all, you know that banks have tightened their underwriting standards making it more difficult for some Knoxville home buyers to get approved for financing.  The very first step you should take in buying a Knoxville home is getting pre-approved for a loan to know where you stand and what price range/payment will be comfortable for both you and the bank.

While some may think getting pre-approved in Knoxville makes your loan ready to close, think again.  There are things you can do between the time you are pre-approved and the time you are ready to close that can kill your loan approval.  Buyers must be very careful not to do anything that could potentially harm your credit before closing.  Examples of things that have made banks deny final loan approval and ultimately kill a transaction are running up existing credit cards, applying and opening new credit cards, making large purchases with credit (such as new furniture or appliances for your upcoming closing), buying a car, etc.

You are getting ready to make probably the largest purchase of your life.  Now is the time to be frugal.  If you can’t hold off on the new furniture or appliances, at least wait until after you leave the closing table.

Source: “When Good Deals go Bad,” Chicago Tribune (March 16, 2012)

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