5 Biggest Home-Buying Fears (and How to Face Them)

Buyers’ biggest real estate fears sometimes hold them back from buying — not just around Halloween, but throughout the year. The scary thing is, these fears are sometimes well-founded.

Here are some of the issues that commonly keep home buyers awake at night, and what you can do about them.

“The house has a cracked foundation, dry rot, or a leaky roof”

Renovating, fixing and repairing are on few buyers’ wish lists. When faced with the home of their dreams, they fear the inspection. What if there is dry rot, or a roof or foundation issue?

Most homes will need routine maintenance, and a good inspector will point this out. But it’s important not to let your fears get the best of you. Much of what the inspector comes up with during the inspection is for informational purposes only. Every problem does not need to be repaired right away.

The inspector’s job is to point out every issue he sees in the house. Ask him to explain how bad the issue is, and how long it can go before needing replacement or repair.

If an issue arises that needs immediate attention, go back to the seller and see if they will repair or credit you back to repair after you close.

“I’ll lose my deposit”

Buyers typically put in an earnest money deposit with a signed contract. Typically, this is 3 percent of the purchase price. The seller does not cash the check. Instead, the money sits in an escrow account and can’t be released without both parties’ signatures.

It’s nearly impossible for a buyer to lose their deposit. If you have an inspection, disclosure review or loan contingencies, work closely with your real estate agent to mark those timeframes.

If you need to remove these contingencies in writing, plan to firm things up a day in advance. If you are in negotiations around a contingency date, be sure to extend the contingency date to keep yourself under contract.

“I’ll lose the house”

If you find the home of your dreams, you may have to move fast. Particularly in competitive markets, many homes sell before the first open house to quick acting and super-motivated buyers.

If you see a new listing hit the market, be sure to let your agent know right away. Try to make an appointment to see the home as soon as possible.

Also, find out immediately how the seller’s agent plans to handle any offers received. Sometimes they will take the first offer, especially if it’s a good one. More often than not, the seller and the agent will have an offer date to review offers or ask for best and final offers by a certain day.

If you are travelling or busy with work, be sure not to miss out on your dream home. Be in constant contact with your agent, and flag potential homes that look like a great fit.

“My agent doesn’t have my best interest in mind”

Great agents are always on the prowl for new properties, checking out the market and protecting your best interest at all times.

Some buyers fear that their agent might have different motivations, or that they aren’t on the same page. If you have doubts, change agents. Never settle or take any random agent that comes along as your buyer’s agent.

You and your agent should be committed to each other. Sit down before you begin the process and speak to your agent, much like a job interview. And if you have any doubts about your agent’s abilities or motivations, find another agent.

“We’ll never find a house in time for…”

A real estate purchase should never be rushed. If you have a firm deadline creeping up, make a plan B.

For example, many buyers face an expiring lease or a school application deadline. If you are three months out from a deadline and you haven’t found a house, take the pressure off by putting an alternate plan in place.

Home buying is an expensive and complicated transaction. You don’t want to rush into a purchase and make a mistake. It’s much easier and safer to get another rental or find a temporary address or try some out-of-the-box idea. It may be a little inconvenient, but you can handle it.

If something scares you about a home, the buying process, or a third-party involved in the sale, voice your concerns. Listen to your voice of reason, and stick with your gut.

Many home buyers’ initial fears will fall by the wayside as the buyer gets into the market. Take it slow, and don’t be afraid to take a step back to allow time and space to think things through. It’s better to take your time than to let buying your dream home become a nightmare.

Shared from:http://www.zillow.com/blog/biggest-home-buying-fears-184728/

Low Down Payments Make a Comeback!

Borrowers who have steady income and good credit, but not much money in the bank, will find that it recently became easier to buy a home.  Down payment requirements, which rose after the subprime mortgage crisis, are easing again as lenders and mortgage backers try to draw in new buyers.

"It's one of the things that's inhibiting first-time homebuyers," said Rob Chrane, president of Down Payment Resource. "There are a lot more people who can qualify for a home that don't realize that they can."

FHA cuts insurance costs

The Federal Housing Administration has long backed loans for borrowers with lower credit scores and with down payments as low as 3.5%, but until this year it also required hefty insurance payments.

FHA monthly insurance premiums dropped dramatically at the beginning of 2015. The change, from 1.35% to only 0.85%, will make FHA loans a better choice for some borrowers after years of prohibitively high premiums, said Anthony Hsieh, chief executive officer of loanDepot, one of the largest FHA lenders in the country.

"We're starting to get back to what's reasonable," said Hsieh. "The crisis has shaken the market so much that there is no doubt there was an overreaction."

Fannie and Freddie

Fannie Mae and Freddie Mac guarantee more than half the country's mortgages. At the end of 2014, the two government-backed companies announced plans to slash minimum down payments from 5% to 3%.

The new program from Fannie Mae went into effect in December, and the one from Freddie Mac will begin in March. Both are only for first-time homebuyers, and the Freddie Mac program is restricted to low-income borrowers.

Related: Where zombie foreclosures are making a comeback

Loans backed by the two mortgage giants still require private mortgage insurance for down payments below 20%.

And just because Fannie and Freddie are willing to buy loans with looser requirements doesn't mean the lenders themselves will change their standards.

"It's a phenomenon of the post-recession where lenders learned their lesson," said David Stevens, president of the Mortgage Bankers Association. "They learned that simply because the investor will allow it, the lender may still not feel comfortable doing it."

"Rural" and VA loans

Other types of low-down payment loans have also become far more popular since the recession.

Despite its name, loans from the Department of Agriculture are available to borrowers in many locations that are hardly rural, and they include no-money-down financing. To be eligible for USDA loans, a borrower must have dependable income and decent credit, and can't already own a home, exceed certain area median income thresholds or live within certain urban areas.

Related: What will your monthly mortgage payment be?

Department of Veteran Affairs loans are also booming, coming close to outnumbering FHA loans. Although not available to the average American homebuyer, VA mortgage backing allows veterans and surviving spouses to purchase property with no money down, no outside insurance and limited closing costs.

Average VA interest rates are lower, and credit and income requirements are also more flexible than conventional loans.

A return to easier credit

The shift toward loans with lower down payments has drawn criticism from some politicians -- after all, easy loans with little money down contributed to the crisis that led to the Great Recession.

Stevens said that new rules for qualified mortgage loans and more diligent underwriting by lenders will protect the lending market.

"Down payment has become the single largest barrier to home ownership," said Stevens. "Quite frankly, it's going to be a lot safer and sounder this time than it was in the past."

Reposted from:  http://money.cnn.com/2015/02/16/real_estate/low-down-payment-mortgages/index.html