Valuing a Property as a First Time Homebuyer

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First time homebuyers can make the task of finding the right home for sale a lot less complicated by having an awareness of the steps in the home buying process. Once you get to know these easy steps, you will be able to make the best new home purchase to suit your needs and budget. Valuation of the home or determining what the home is worth from your perspective is one of the most important steps in the home buying process.

The true value of the home does not only consist of the price. Since value depends on the individual, identifying the elements that you would want to have in your new home can make the search among the many homes for sale a lot easier. The true value of the home is based on what it is worth to you and the benefits that you will get from investing in that piece of real estate property.

When you begin the valuation process of any of the homes for sale, the first step that you can take is to review its actual dollar cost and compare it to the other homes for sale in the same neighborhood. This can be done by studying the MLS listings of the area and discovering how much the seller had paid for the home, if possible. Finding out how much was paid will give you a baseline amount to use in your assessment, whether or not it is lower or higher than the seller’s current asking price. Other factors that you have to take into consideration is when the seller had bought the home because if more than 3 years has elapsed, an estimate based on the purchase price will no longer be accurate.

The second step that a home buyer can take is to figure out how much repair work is needed and what the cost will be. Ask yourself a few questions like “If I move in next week, what has to be done to make it livable and lovable?” or “What needs to be fixed and how much will it cost?” Sometimes, the cost of repairs is factored into the asking price but if it is not, it is to your advantage to know what the add-on expenses you may be facing in the near future.

The third step in determining the value of the home is to project what it may be worth in three years, ten years or twenty years. Is the home located in a brand new subdivision or an historic part of town? What is the average appreciation value of the home year to year in that particular neighborhood? The appreciation value may be a powerful ‘pull factor’ for a particular property, especially if you are a first time homebuyer in a buyer’s market.

When deciding which among the many homes for sale to purchase, try to look at the different properties available in the various neighborhoods to see what best suits your needs and your budget. Finding out what the true value of the home that you are interested in goes far beyond the price of purchase. There is more to a buying a new home that just what simply meets the eye. Find out more about the current homes for sale in the different neighborhoods and what benefits you can get as a first time home buyer.

Mortgage Pre-Approvals and Buying a Home

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Finding the right home to buy is not easy as it may seem. Most prospective home buyers get frustrated when they are asked for the pre-approval letter. Mortgage pre-approval is one of the home buying processes that let the buyers determine if you are a serious buyer. In fact, this is the most crucial step that will help you get a mortgage loan for buying a home. During the mortgage pre-approval process you will be required to submit documents such as bank statements, tax returns, and employment verification. Moreover, your credit report is very vital in this process.

Once you get mortgage pre-approval from the lender, you will be more trustworthy in the eyes of the sellers or a real estate agents. Also, you can show this letter to the sellers when bidding for a property. It demonstrates your ability to purchase the property and makes you more attractive to the sellers.

Importance of mortgage pre-approvals in the home buying process

#1. Shows your capability to buy a home

Unless you are planning to purchase a house for cash, you have to arrange for some financing. It can be very frustrated to search for a home for several days only to find that you cannot afford it. However, with the mortgage pre-approval letter, the realtors and sellers will have more confidence in you.

#2. Refine your search

The mortgage pre-approval letter will help you know how much you can spend. In fact, this will save you time from searching for homes that you cannot afford. It can be very hurting to find your dream house only to be denied because you cannot afford it. In this case, the mortgage pre-approval will help the realtors find a home that is within your price range.

#3. Allow easier negotiations with the seller

In most cases, sellers are more willing to negotiate with buyers who are pre-approved that those who don’t have a pre-approval letter. Moreover, the seller will give you preference for the offers that might be in the house.

#4. Better results from the Realtors

Usually, realtors will prefer to work with buyers who have a pre-approval letter. In this case, the realtor will know the deal is less likely to collapse. Moreover, the realtor can easily find your dream house because they know what you can afford.


Finding your dream home can be challenging if you have the right mortgage financing. However, mortgage pre-approval letter will make the sellers have trust in you. Moreover, the realtors will be more willing to work with you.

Home Appraisals: What They Are and Why They’re Important

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A home appraisal is basically an in-depth report on a house, created by an expert, known as the appraiser. This appraisal’s primary function is to determine the fair market value of the house being assessed. This market value is reached by taking into consideration several important factors about the property including:

  1. The floor area or size of the living space.
  2. The market value of comparable nearby homes.
  3. The features and facilities of the neighborhood.
  4. The year of construction of the property.

An appraisal is generally performed for the execution of most home loans, and also sometimes for home refinancing transactions and almost done in case somebody is planning to purchase the house. In the real estate world, after the buyer and the seller have settled on a purchase price, the lender involved will have the appraisal done by an independent third party, the appraiser. The buyer is the one required to bear the cost of the appraisal. This cost can range from $200 up to $500.

Also, appraisals can be reviewed. Appraisers may sometimes make mistakes and an appraisal may differ significantly from expectations. In this case, a review of the appraisal may be done. It rarely happens that the appraised value exactly matches the price on offer. An appraisal usually has two different outcomes, each with a significantly different impact on the transaction.

Let us assume that the buyer and seller have mutually agreed on a purchase price of $120,000, but the value of the property according to the appraisal, comes out as say, $125,000. This is actually good news for the home buyer. Assuming that all other factors fall into place, one can then proceed to disburse the loan as planned with the added benefit of $5,000 in spontaneous, built-in equity already in the property.

However, if the negotiated price is $120,000 and the appraisal comes out with a property value lower than this amount, for instance, $110,000, then it can create a significant delay in this deal. This can result in a lot of inconvenience for both parties, the buyer as well as the seller. The buyer has in this case, offered to pay a higher amount than the home is technically worth, according to the appraiser. Due to this, the lender cannot give the buyer a loan of more than what the home’s worth is. The only possible solutions are to either increase the down payment to reduce the total loan amount or to try and negotiate a lower price with the seller. Apart from this, the home appraisal can be reviewed to modify the appraisal amount.

The Risks Associated With a Home Equity Line of Credit

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To fully understand what a home equity line of credit or a HELOC is, you need to chunk this into two terms: home equity and line of credit.
-Home equity – is the market value of your home less the total amount of debts that are associated with or registered to it.
-Line of credit – also referred to as a credit line, it is an arrangement wherein a bank or a lender extends a specified amount of credit to a borrower for a certain period of time.

Combining the two, you get the term “home equity line of credit” (obviously) which is a form of revolving credit and which takes your home equity as collateral. Anytime you need money, you can make use of – or in mortgage lingo, DRAW from – your credit line. Basically, a home equity line of credit works in the way a credit card does. As long as you don’t go beyond your credit limit, then you can continue to draw money for needs such as medical bills, tuition fees and home improvement expenses.

Please note that using money from your home equity line of credit should be done sparingly. This should only be used for really important payments or purchases. Drawing money from your home equity line of credit to pay for everyday expenses is not a wise idea. This is because of the ultimate risk that’s associated with this financial option – as outlined below:

The Ultimate Risk: Foreclosure

In this kind of financial option, non-payment of your dues could result to the foreclosure of your home, as is the case with other mortgages – Toronto or elsewhere. Therefore, you should make sure that you attend to your dues in a timely manner. Although you can only pay the “minimum,” it’s always a wiser idea to pay more than that. This will ensure that the amount for repayment will considerably get lower – and to assure that your monthly payments are not only used to cover for the interest rate.

Other Risks

Note that with a home equity line of credit, the “health” of your credit limit largely, if not entirely, depends on the market value of your home. If you lender senses that the value of your home significantly decreases or if they have sufficient reason to believe that you cannot keep up with your monthly payments, they may either freeze your account or reduce your credit limit.

In both cases, you should talk with your lender. Ask them how you can restore your account. You should be able to prove to them that the value of your home has not considerably decreased. You should also show to them that you are still well in the way of being able to make the necessary payments on a regular basis. Your argument would bear more weight if you can show some proof. So provide documentation if you must.

When talking doesn’t seem to solve the problem, then you may consider shopping for another line of credit. Of course, look for the best mortgage rate – Richmond Hill or elsewhere. With any luck, you can get an arrangement that allows you to pay off your original home equity line of credit with another one. Mortgage and credit professionals run aplenty and they’d be more than happy to be of service to you.

What Can Hurt Your Credit Score

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Your credit score, a three-digit number that is ranging from 300 to 850 points, assumes a significant part in our everyday life It gives potential loan specialists how well we a chance to can deal with our finances. The following are what hurts your credit score, Please give careful consideration to it.

Asking for Too Many Loan Rate Quotes Online 

Getting a credit rate cite online is quite simple. You can get a quote on your auto credit, individual advance, understudy advance, or mortgage advance in seconds.

Missed payments 

Assuming your bills is much worse than paying late. Decide not to put your head in the sand and exacerbated things than it as of now is. After around six missed payments moneylenders, typically charge your record off. This record status is one of the worst items on your credit report.

Late payments 

Your installment history has a tendency to be important in the calculation of your credit score. If you don’t fulfill your financial obligations on time, you may lose 100-200 points. It is important to make timely payments to maintain a positive rating.

Overwhelming debt 

Credit authorities figure the ratio between your equalization and available credit. If you borrow a ton of assets, the rate of debt/available credit (additionally called utilization ratio) goes up. It will hurt your credit score. Continuously attempt to keep your debt lower than 30% of your spending limit.

Collection agencies 

If you don’t eliminate your debt, moneylenders can hire third-party agencies to gather installment from you. The name of the collection office and the measure of cash you owe will be listed in the report. Avoid these call at whatever point you can.

It will show that you are a high-risk client.

Timid away from loans or debts 

While it is great to have no debts, it likewise implies you don’t have a credit history. This will bring about a lower score for you. The thing is that loan specialists need to see that you can handle credit and the only way they can tell is you exhibit this ability by having some form of credit previously.

Canceling old accounts 

15% of your credit score is determined by the length of your credit history. If you close your old accounts, you shorten your credit history.

Closing cards with available credit 

When you scratch off your card, the measure of available credit lessens, however your debt remains the same. Along these lines you increase your utilization ratio. That is bad for your credit score.

Declaring bankruptcy

Bankruptcy can put your credit score down into the least ranking. You will need to work hard to re-establish great rating. Search for alternative solutions to eliminate your debt. You can counsel with a credit counselor or a debt relief office.

Various inquiries 

Applying a few credit card applications within a short period will harm your credit score. The creditors can recommend that you are in a serious financial inconvenience. Try not to apply for any plastic that catches your attention!

Having credit cards only 

Your credit report reflects what sorts of credit you have had: credit cards, charge cards, retail accounts, and installment loans. It is advisable to have a sound mix of credit to make your credit score higher.

Reverse Mortgage Scams: What They Are and How to Avoid Them

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A reverse mortgage scam occurs when perpetrators blatantly mislead a senior to take out a lump sum payment on a home’s equity to pay for a bunch of fictional items, costly repairs they don’t need, reverse mortgage counseling fees, attractive insurance policies and investments and feeder fee annuities from their fraudulent company and later these fraudsters disappear with the money and the senior is left with no cash or equity in their home. This results to various challenges such as eviction and poverty due to unpaid loan recovery and much more.

The two most common reverse mortgage scams are the equity theft and foreclosure rescue. In an equity scam , the fraudster purchases a house that is in a foreclosure or distressed/abandoned, sells it to a senior citizen who takes out a reverse mortgage after occupying the property for sixty days and once the transaction goes through perpetrator disappears with the proceeds. In the foreclosure rescue scam, the perpetrator identifies seniors who are at a risk of losing their homes due to foreclosure, convince them to obtain a reverse mortgage to save the property but will then inform the senior that he /she does not qualify. They encourage him to take a traditional mortgage at which point the property and its equity will be transferred to the fraudster.


However it is possible for a person to be able to avoid being a victim of reverse mortgage scams and misfortunes. This is possible through a number of ways listed below .these are:


  1. Every person should not wait until they are desperate for a mortgage that means you should avoid making financial decisions under stress as this limits the options that you would have to choose from.
  2. Always compare the offers in the market to be on the safer side and check the reputation of those offering them with the Better business bureau.
  3. Avoid those lenders who offer both a mortgage and investments too but rather choose a financial planner, financial officer or an asset manager for investments and in every uncertain investment apply the rule of thumb.
  4. Always consult more than one lender to clarify if a repair suggested by any one lender really exist or it’s just a fraud.
  5. Always consult a third party before signing papers offered to you if you do not know why you are signing them.
  6. Attend the closing of any deal in person to avoid any unknown changes to you on the terms and conditions.
  7. Always be suspicious of anyone telling you that you can own a house without a down payment.
  8. Do not accept payment from individuals for home you did not purchase.
  9. Do not respond to unsolicited advertisements.


In case it has happened or happens to you it’s always good to come out and report to the authorities who may help you recover the personal loses and you may be in a position to save other seniors from suffering the same fate and help them avoid reverse mortgage scams.


6 Signs it is Time for a Mortgage Refinance

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Dealing with a mortgage is always tricky when financing it. However, when you understand the indicators, you can always restructure it to fit your needs. Here is a guide on the signs that will tell you when to refinance it if you are looking for the best deals in the financial market:

  1. When you are planning to buy another investment property

Buying a new investment property can sometimes help you grow your money value in the long run. However, this might be challenging when you have no idea on what to do during the time as you do pay the mortgage of your home. You may seek refinancing to aid you solve your problems.

  1. When you are having huge debts

When you are at a point of defaulting on your personal debt, it is advisable to seek refinancing to assist you consolidate your debts as a way of easing your finances.

  1. When there exists better rates within the market

The market rates often change with time. You must know the existing market rates when you need excellent deals. You can always refinance your loan when you find better rates within the market. With better rates, you will be certain of making some savings in terms of amount of money that you will repay as interests. Those who have tried it have been satisfied with the better market rates thus helping them save money whenever they are looking for excellent deals.

  1. When you want to renovate your home

Think it is time to replace leaky faucets, repaint your home, or make major changes. This means you will need a strong refinancing procedure that may be a burden to your life. When you are in such a situation, you can take an opportunity to understand when to refinance to get out of it faster.

  1. When rates in the market are about to rise higher

Though interest rates may be recording lows, you should always know that they would always fluctuate depending on the dynamics of the market. As a borrower, you can always anticipate a rise in interest rate through switching your loan to a fixed rate if your currently do have a variable rate. Through this, you will enjoy lower interest rate for a much longer at the same time enabling you make some savings depending on the amount of money that you would spend.

  1. When there are changes in your financial situations

Having a rough time when repaying your mortgage can be difficult when you do not know what to do. However, through this process, you can always know what to do in your financial situation such as birth of a child or unemployment before seeking refinancing to switch to that loan you can easily afford.