Getting A Mortgage: Step by Step

How Do I Make An Offer On A Home?

Consulting a real estate agent is not a bad idea for figuring out what price to offer a potential seller.  Here we will cover a few key points in determining how to make an offer on a home you’re interested in.

Collect Data

Why is the seller selling their property?  They might be hesitant to tell you, but you can still gather information outside of speaking with the seller’s agent.

What does market tell you?

If you’re making an offer in a buyer’s market, there will be less competition for the home.  The seller will be more receptive to any valid offer simply because there are fewer buyers.  However, if you’re buying in a seller’s market it will be harder to negotiate with a seller because there are potentially many offers.

What did the seller pay for the property?

This is always good information to have, but will only have bearing if the market is depressed and the home has appreciated little.  In this case, the seller’s asking price may be very close to their original purchase price.  The price may increase based on any improvements to the property.

How much does the seller owe on their mortgage?

It is not likely that the seller will accept an offer for less than what they owe unless they are in default or are willing to participate in a short sale.  If the balance on the mortgage is high and the home is empty, a seller may be paying for two homes, making negotiation easier.  However, if the balance is low, the seller may not be influenced to sell quickly as they can wait to see exactly what the market will bear for their property.

What do similar properties sell for?

Look at similar properties in the area and make sure they compare in age, size and location.  What is the average sell price and time frame for properties in the area you’re looking at.  Use the data from the most recent home purchases and don’t go beyond six months as most home appraisers will not consider it valid.  Ask your real estate agent for a report that covers the last six months of the area.  How much is the gap between the list price of the home and what they sold for.  This number should indicate where you take the seller in the negotiation.

What is the average square foot cost?

Usually, smaller home will sell at a higher price per square foot than larger homes.  It is not reasonable to assume the average square foot cost and multiply it by square footage and come up with the price of the home.  It’s more reasonable to check the trends and is if these averages are increasing or decreasing and use it to your advantage in a negotiation.

How many days has the home been on the market?

Real estate agents will sometimes take listings off the market and then re-list them as a new listing.  Your real estate agent can find out if the property you’re interested in is an expired listing.  If the number of days on the market is longer than the average, the seller might easily be motivated to sell quicker.
Though easier said than done, try not to become emotionally attached to the property you want to make an offer on.  Always prepare a counter offer and keep several other properties in mind in the event your offer is rejected by the seller.

What Types Of Programs Are Available For My Mortgage?

Local home buying programs can differ from state to state.  There may a program sponsored by your state, local government or other organization which could be a great fit for your mortgage needs.

For more information on Local Home Buying Programs, please visit the U.S. Department of Housing and Urban Development.

Search For The Right Lender

Mortgage Align is a great place to start for your ideal lender.  We have a database of nearly 1,000 lenders from across the United States.  When you fill out one of our free mortgage consultation forms, our proprietary software matches the information you submitted with the best possible lenders.    Our lenders can match your needs against government loan programs like FHA or VA or your state and local housing programs.  You will receive their contact info immediately and can begin the path to obtaining your new mortgage.  Talk to the lenders recommended by Mortgage Align, compare costs and shop interest rates, negotiate to get the best deal for you and your family.

How Can I Shop For A Home Loan?

To effectivley shop for a home loan you must search for the right lender and get approved for a mortgage.  You can start right here at Mortgage Align.

RESPA – Real Estate Settlement Procedures Act

RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.

For more information on RESPA, visit the U.S. Department of Housing and Urban Development website.

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