Conventional Real Estate Loans and High Balance Mortgages

Conventional Real Estate Loans: Benefits and How High-Balance Loans Differ

Conventional real estate loans are a popular choice for homebuyers because they offer several advantages over other types of loans. In this article, we will discuss the benefits of conventional loans and how high-balance loans differ from traditional conforming loans.

Benefits of Conventional Real Estate Loans

There are many benefits to choosing a conventional real estate loan. Some of the most notable benefits include:

• Lower interest rates: Conventional loans typically have lower interest rates than government-backed loans, such as FHA loans. This is because conventional loans are not insured by the government, which means that lenders take on less risk. Conventional loans are the comfy sofa.
• Higher loan limits: Conventional loans have higher loan limits than FHA loans. This means that you can borrow more money to purchase a home with a conventional loan.
• No private mortgage insurance (PMI) required: If you have a down payment of 20% or more, you will not be required to purchase PMI. PMI is a type of insurance that protects the lender in the event that you default on your loan.
• More flexible underwriting: Conventional loans have more flexible underwriting guidelines than FHA loans. This means that you may be able to qualify for a conventional loan even if you have a less-than-perfect credit score. We can close a conventional loan with a 600 FICO mortgage middle score, with reserves or money in savings to be able to cover future payments.
• Faster closing times: Conventional loans typically have faster closing times than FHA loans. This is because the underwriting process is less stringent for conventional loans. Exceptions can be allowed by a Desktop Underwriter. Exceptions may increase the interest rate.
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High-Balance Loans

High-balance loans are a type of conventional loan that allows you to borrow more money than the conforming loan limits. Conforming loan limits are set by the Federal Fannie Mae and Freddie Mac. In 2024, the conforming loan limit for most areas is $766,500. Look here for your county dollar limit: https://sf.freddiemac.com/articles/news/loan-limit-values-for-2024

High-balance loans are typically used to purchase more expensive homes. They may also be used to refinance an existing mortgage if the new loan amount is greater than the conforming loan limit.

High-balance loans typically have higher interest rates than conforming loans. They may also require a larger down payment. However, they can still be a good option for borrowers who need to borrow more money to purchase a home.

Here are some of the key differences between conforming loans and high-balance loans:

• Loan limits: Conforming loans have lower loan limits than high-balance loans. The dollar amounts are decided by the United States Government annually and are specific to the county where the real estate loan is going to secure.
• Interest rates: High-balance loans typically have higher interest rates than conforming loans.
• Down payment requirements: High-balance loans may require a larger down payment than conforming loans and higher FICO requirements.

Which type of loan is right for you?

The best type of loan for you will depend on your individual circumstances. If you have a good credit score and a large down payment, you may be able to qualify for a conforming loan with a low interest rate. If you need to borrow more money, you may need to consider a high-balance loan.

Caroline Gerardo

NMLS 324982

949  784  - 9699

 

Guide to Buying a Home

 

 

 

The Essential Guide to Reading and Inspecting Like a Pro: A First-Time Homebuyer's Handbook

Congratulations! You've decided to take the plunge into homeownership. This is an exciting time, but it can also be overwhelming, especially for first-time home buyers. One of the most important steps in the home buying process is doing your due diligence, which means reading and inspecting the property carefully. This blog post will guide you through the essential steps you need to take to ensure you're making an informed decision about your biggest purchase yet.

1. Do Your Research: Read, Read, Read!

Before you even start scheduling house tours, it's important to educate yourself about the home buying process. There are tons of great resources available online and in libraries, so do some research and learn as much as you can. This will help you ask informed questions during viewings and avoid any nasty surprises down the road.

Some key things to read about include:

• The different types of home inspections: A general home inspection is a must, but you may also want to consider additional inspections for things like radon, termites, and asbestos.
• How to read a property disclosure statement: This document will list any known problems with the property, so it's important to read it carefully and ask questions if anything is unclear.
• Your rights as a buyer: Knowing your rights will help you protect yourself throughout the buying process.

2. Get Ready to Inspect: Be a Keen Observer

Once you've found a house you're interested in, it's time to schedule a home inspection. But don't just rely on the inspector to find everything. You should also be actively involved in the inspection process. This means:

• Arriving early: This will give you time to walk around the property on your own and take note of any obvious problems.
• Asking questions: Don't be afraid to ask the inspector about anything you don't understand. The more you know, the better.
• Taking notes and pictures: This will help you remember what the inspector said and will also be helpful if you need to negotiate repairs with the seller.

3. Don't Be Afraid to Negotiate: Knowledge is Power

The home inspection report is a valuable tool that can help you negotiate repairs with the seller. If the report reveals any major problems, you may be able to get the seller to fix them before you close on the house. You can also use the report to negotiate a lower purchase price.

Here are some tips for negotiating repairs:

• Be prepared to walk away: If the seller is unwilling to make the necessary repairs, you may have to walk away from the deal. It's better to do this upfront than to end up with a money pit.
• Get estimates from contractors: This will help you show the seller what the repairs will cost.
• Be professional and respectful: Even if you're frustrated, it's important to stay professional when negotiating with the seller.

Buying a home is a big decision, so it's important to take your time and do your due diligence.

Bonus Tip: Get a Homeowner's Warranty!

A homeowner's warranty can help protect you from unexpected repair costs. It's a good idea to get one when you buy a home, especially if it's an older home.

If you have any questions, please feel free to leave a comment below.

Happy house hunting!

Additional Tips:

• Hire a qualified inspector.
• Get multiple quotes for repairs.
• Don't be afraid to ask for help from your real estate agent.

By following these tips, you can make sure that you're getting the most out of your home inspection and protecting yourself from any surprises down the road.

 

Property inspection: Examine the physical condition of the property. walk through turn on every water faucet/ light switch/ examine underneath/climb on roof/ look at ceilings for patches/ inspect for leaks and visible mold. The costliest repairs are roof, HVAC, basement leaks, foundation problems...

Title search: Ensure the property has a clear title with no legal issues. A history of liens and recordings, plat map, boundaries, a survey of the lot square footage/ 

Comparable sales analysis: Review recent sales of similar properties in the area. Comps are closed sales in past three months with a conventional LOAN. Comps should be similar in lot size and home size square footage. They also should have similar age, utility, view, and be in same tract or neighboring streets.

Contract review: Carefully read and understand all contracts and agreements. If you do not understand something, send an email inquiring. In real estate the only thing that matters is what is in writing. Keep those emails.

Financing options: Explore various financing options and get pre-approved.

Local regulations: Familiarize yourself with local zoning laws and regulations. This can be either the city or county planning department. They hold the records on construction of the site.

Home appraisal: Get an appraisal to determine the property's market value. A residential appraiser usually has seen inside many of the adjacent houses by either appraising the interior or walking through broker open houses. His or her valuation is an opinion but considered true by lenders. Appraisers are licensed by the state. Uniform Standards of Professional Appraisal Practice (USPAP) is a national standard that establishes standards for all types of appraisal services. USPAP compliance is required for state-licensed and state-certified appraisers involved in federally-related real estate transactions. 

Bottom of Form

 

Disclosures: Request all necessary disclosures from the seller. The seller is supposed to provide all non-permitted additions, any past hazard claims, any defects in construction, any non-working items, and any problems with the title. An owner-occupied seller has great obligations to disclose what they know about conditions of the neighborhood as well as the subject property.

Negotiation strategy: Work with your broker to develop a solid negotiation plan. Or ask your lender for help.

 

Caroline Gerardo

NMLS  # 324982

 

949 -  784- 9699

Pennsylvania Title, Escrow, Attorney to Close Your Real Estate Purchase

Navigating the Keystone State: Your Guide to Pennsylvania Title and Escrow Companies

Buying a home in Pennsylvania is an exciting but sometimes daunting endeavor. With all the paperwork and legalities involved, navigating the intricacies of title and escrow services can feel like deciphering a cryptic puzzle. But worry not, future homeowners! Demystify the role of title and escrow companies in your Pennsylvania real estate journey.

First things first: what are title and escrow companies?

• Title companies: Think of them as historical detectives for your property. They research public records to ensure the seller has legitimate ownership and uncover any potential claims or liens on the property. They also issue title insurance, protecting you from any hidden title defects that may arise after closing.
• Escrow companies: They act as the neutral third party holding on to funds and documents until both buyer and seller fulfill their closing obligations. They collect your down payment, mortgage proceeds, and closing costs, ensuring a smooth and secure transaction.

Why do you need them?

These companies play a crucial role in protecting your investment and streamlining the closing process. They handle intricate legal details, freeing you to focus on finding your dream home. By ensuring a clean title and secure handling of funds, they give you peace of mind and reduce the risk of delays or complications.

Choosing the right partner:

With numerous title and escrow companies in Pennsylvania, finding the right one is key. Here are some tips:

• Ask your real estate agent or lender: They'll have firsthand recommendations based on experience and local reputation.
• Check online reviews: Get valuable insights from past clients on company responsiveness, efficiency, and communication.
• Compare fees and services: Different companies offer varying fee structures and service packages. Find one that aligns with your budget and needs.
• Schedule consultations: Meet with representatives to discuss their process, experience, and communication style. Find a company you feel comfortable and confident with.

Bonus tips:

• Title insurance quotes are going to be pretty similar as they are regulated.
• Ask about additional services offered, like notary services, Closing Protection Letter, Trust Certificate, Vesting Amendments, special recordings, contract changes, or document recording. These costs can vary. Get a breakdown.
• Communicate openly and ask questions throughout the process.

Remember, choosing the right title and escrow company is an investment in your peace of mind and a smooth closing experience. With careful research and informed choices, you can navigate the world of Pennsylvania real estate with confidence and excitement.

Additional resources:

• Pennsylvania Department of Banking and Securities: https://dobs.pa.gov/
• American Land Title Association: https://www.alta.org/

Enjoy the journey of finding your Pennsylvania dream home!

Pennsylvania has many real estate closing escrow companies, including title companies, escrow services, and title settlement companies: 

• Two Rivers Title Company LLC: A multi-state company that offers title solutions and closing options 
• World Wide Land Transfer: Offers escrow services for a variety of transactions, including commercial settlements, financing files, and purchase business 
• Capstone Land Transfer: An impartial third party that offers escrow services and manages financial details 
• First Title & Escrow: Offers title and closing services across the country 
• Universal Settlement Services of PA, LLC: A locally owned title settlement company based in State College, PA 
• Armour Title: Offers advice, guidance, and customer care for buying and selling residential and commercial property 
• Security Settlement Services, Inc.: A full-service company that handles title insurance and all aspects of real estate closings 

Other escrow companies in Philadelphia, Pennsylvania include: 

• OCF Realty
• Solo Real Estate
• Title Forward - Philadelphia
• Maxwell Realty
• Keystone Title Services
• Christopher Real Estate Services

In Pennsylvania, the buyer has the legal right to select the title company but often the listing agent chooses. Listing or buyers agent may encourage you to use a real estate attorney for closing but it is not required by law and adds extra costs.

 

Walk Away From House After Home Inspection

Terrible Things in a Home Inspection to Walk Away From

Buying a home is a big decision, and one of the most important steps in the process is getting a home inspection. A home inspection is a visual examination of the home's major systems, from the foundation to the roof. It's designed to give you a clear picture of the home's condition and any potential problems that could need to be addressed.

While most home inspections will uncover some minor issues, there are some things that should be considered dealbreakers. These are the things that could cost you a lot of money and heartache down the road.

1. Foundation problems

The foundation is the backbone of your home, and if it's not in good condition, it can cause major problems. Cracks in the foundation, uneven floors, and bowing walls are all signs of foundation problems. These problems can be expensive to fix, and they can also lead to other problems, such as water damage and structural instability.

2. Major roof problems

The roof is another one of the most important parts of your home. It protects you from the elements, and if it's not in good condition, it can cause major problems. Leaks, missing shingles, and sagging rooflines are all signs of major roof problems. These problems can be expensive to fix, and they can also lead to water damage and mold growth.

3. Extensive water damage

Water damage is one of the most common problems that homes face. It can be caused by a variety of things, such as leaks, floods, and poor drainage. Water damage can lead to a variety of problems, including mold growth, structural damage, and rot. If you see extensive water damage during your home inspection, it's best to walk away.

4. Termites or other pests

Termites and other pests can cause major damage to your home. They can eat away at wood, insulation, and even wiring. If you see evidence of termites or other pests during your home inspection, it's important to get a professional exterminator to take a look. In some cases, termite damage can be so extensive that it's not worth fixing. Tenting or spraying can kill them but they are back in six months if you don’t remove the water or tubes or access to dinner. They make holes in everything made of natural materials. Painting or puddy over to hide the damage only encourages more trouble. I'm not going to talk about other vermin here, but openings to the attic and floor are doors for creatures.

5. Unpermitted work

If you see any unpermitted work during your home inspection, it's a red flag. This means that the work was done without the proper permits from the city or county. Unpermitted work can be dangerous and it can also make it difficult to sell your home in the future. I have a handy neighbor who moonlights as, well likes to think he is Kevin O’Conner from This Old House but in reality he has no license, no knowledge, and yes his jeans fall down exposing his back side. Fake Kevin likes to cut corners and hide the mistakes.

6. Asbestos or lead paint

Asbestos and lead paint are both hazardous materials that can be found in older homes. If you see evidence of either of these materials during your home inspection, it's important to have them tested by a professional. Asbestos and lead paint can be expensive to remove, and they can also pose a health risk to you and your family. You are required by law to disclose lead and asbestos when you sell as they can cause cancer and birth defects.

7. Knob-and-tube wiring

Knob-and-tube wiring is an old type of electrical wiring that is no longer up to code. It's a fire hazard, and it should be replaced by a qualified electrician. You will recognize the round porcelain discs. Thie is an old electrical wiring system. Two copper wires, one hot and one neutral, run through ceramic or porcelain knobs and tubes. The knobs hold the wire in place, often in contact with a component of the house, such as wooden beams. The tubes run the wires through the frame, keeping them from fraying or away from flammable materials.

 

8. Mold

Mold is a fungus that can grow in damp or humid environments. It can cause respiratory problems and other health problems. If you see mold during your home inspection, it's important to have it tested by a professional. There are thousands of types of mold, some cause health problems, some just common fuzz. Leaking water, old failing roof, water heaters, and plumbing fixtures are often the source of the original problem. If left untreated the mold expands and grows.

9. Radon

Radon is a naturally occurring gas that can cause lung cancer. It's important to test for radon in your home if you live in an area where radon levels are high. You may need a professional to run the test.

I would not buy a kit from Home Depot or Temu.

10. Sinkholes

Sinkholes are large holes in the ground that can be caused by a variety of things, such as erosion or the collapse of underground caverns. If you see a sinkhole on the property, it's important to have it inspected by a geotechnical engineer.

If you see any of these things during your home inspection, it's important to talk to your inspector and your real estate agent. They can help you decide whether or not to walk away from the deal. It's important to remember that it's better to walk away from a bad deal than to buy a home that could cost you a lot of money and heartache down the road.

 Caroline Gerardo

NMLS 324982

If you need a name of a local inspector or Realtor to trust, call me

949  784 - 9699