Should you get a Survey for Your New Property?

Should you survey your property? Is it the seller’s responsibility or the buyer’s?

Every state is different and it is best to ask your Real Estate representative prior to signing a purchase contract. In Utah, it is a “buyer beware” thought process. This essentially means that the buyer takes on the responsibility of paying for all of the inspections, surveys, etc., as part of the buying process. If you want to request the seller provide you with a survey, then it’s good to make that part of your requests in your purchase contract. It is the buyer’s prerogative to ask.

I suggest you ask for references on local surveyors and get quotes from three different ones. I’ve seen pricing on the same parcel go from $700 to $3,000 depending on the surveyor. You also need to make sure your surveyor is giving you the type of survey you need. A metes and bounds only? Add survey caps in? Topographical lines added? What kinds of features do you want listed? Fences, improvements, flood zone lines? Make a list and ask your surveyor what things he/she might suggest you add as part of your survey.

I highly recommend surveys, especially for raw land parcels or lots outside of subdivisions. Homes and lots inside newer subdivisions should have recent surveys done. In these cases, it may be good to get a surveyor to highlight or place points if they are missing.

I’ve seen land parcels where a neighbor built half their cabin on the adjacent parcel. I’ve seen surveys where the neighbor built their rock wall fence and driveway partially onto the neighbors yard. I’ve had properties surveyed where the surveyor found major mistakes from the previous surveyor and we had to spend an extra couple of weeks correcting the line discrepancies. If there is any question at all where your lot lines are PLEASE GET A SURVEY! It could save you thousands of dollars, court time, headaches and grief. 

If you are concerned about your surveyor, I'd recommend getting references, checking to make sure their license is in good standing, etc. The best thing to do is ask your Realtor. They, no doubt, will have various referrals to suggest.  If you are using an engineering firm to build your home, they will also have a survey crew as part of their team.

Next post:  Home Warranty

 

5 Hazardous Waste Products that could be on Your Purchase Property

You may have diamonds in your eyes as you are purchasing your new home or land. You may believe it’s impossible for hazardous wastes to exist on your property. Regardless, it is always a good idea to get an expert opinion from a professional in the field. There are several good professionals available in the Zion Canyon area.

Your Real Estate agent may know some general information about hazardous wastes, but, unless we are considered an expert, our opinion should not be relied on. Ask your real estate agent for referrals of experts in the area.

Here are examples of hazardous waste that could affect your purchase property:

1. Lead Paint

Lead paint is generally a potential concern in buildings built prior to 1978. It was banned after that. If the home you are buying is pre-1978, then a lead paint pamphlet is required to be given to the buyer. The seller is required to provide the buyer with a lead paint disclosure. All parties including the Real Estate agents involved sign this disclosure.

The buyer then has the option to have a lead paint test performed on the home to determine if the paint has lead. If it has lead, then it does not necessarily mean that the buyer should opt out of the sale. As long as the buyer knows the proper procedures for mitigating lead paint and they are willing to accept those conditions, then that is all that is necessary.

2.   Radon Gas

Radon gas is a naturally occurring gas that emanates from various parts of the earth. When it is allowed to build up in an enclosed space and inhaled for a period of time, it can cause all kinds of damage. In the out of doors, where it is allowed to dissipate into the atmosphere, it is not dangerous. Newer homes have more of a concern for potential radon, especially those with basements. I would highly recommend researching the “in’s and out’s” of radon gas so that you understand what it is, what it can do and how to mitigate it. Most home inspectors know how to test for Radon.

3.   Asbestos

Asbestos was used in the early part of the century for its fire resistance, tensile strength, sound absorption and affordability. However, if particles are released into the air and inhaled, then it can potentially get lodged into your lung tissue thereby causing serious diseases like lung cancer, mesothelioma and asbestosis. If you have asbestos on your property, it’s best to have it removed by a professional so that you can avoid the release of fine particles.

4.  Methamphetamine

Some homes have been condemned due to methamphetamine production that happened on sight. The residue left in the building is extremely dangerous to live around. The building does not have to go through an outright destruction. It can be professionally cleaned up.

Some buyers may still not choose to live there. I believe that, even though it may have undergone a clean up, the value will be decreased simply due to the amount of buyers that will decline on purchasing it regardless of clean up. You may only find out about this hazard by talking with the local police department and seeing if it was ever condemned.

5.   Hazardous Waste Dumped on Land 

Lastly, we will discuss potential hazardous wastes that have been dumped on/in the land.

Examples:      a. Old town dumps that occurred on the site.

                       b. Old gasoline tanks that were buried under ground.

           c. Old barrels of fuel/oil that were dumped on site.

Please wander your ground and look carefully everywhere. Ask the neighbors. Ask a qualified environmental engineer.  Ask the governing body. You may be amazed at the information you receive.

There are federal laws that require the present landowner and ALL previous owners be responsible for the cost to clean up any hazardous wastes. Even if you owned it for a couple of months and knew NOTHING about it, you still may be required to share in clean up costs. Always better to be safe then sorry!

Important Point 

TAKE THE TIME TO RESEARCH YOUR PROPERTY 

Types of Loans for a Home Mortgage

John Staples, Loan Officer for Patriot Home Mortgage, has put together some great information on the different types of loans available including the requirements. This is a good, basic introduction.

More information on how to contact John Staples is listed below.

Conventional Loans 

• Minimum FICO of 620 (If loan requires PMI, 680-700 FICO will be required) 
• Debt Ratios of 28/36, must have AUS approval 
• As low as 3% down payment 
• Private Mortgage Insurance (PMI) required for LTV greater than 80% 

FHA Loans 

• Minimum FICO requirement: 580 (620 for most lenders) 
• Down payment as low as 3.5%
• Up Front Mortgage Insurance Premium (UFMIP) is 1.75% 
• Annual mortgage insurance as high as 1.35% 
• Debt Ratios of 31/43 

VA Loans 

• Minimum credit score not imposed by VA but most lenders require 620
• Max Loan amount based on county limits and borrower eligibility 
• 100% financing available if veteran has sufficient entitlement 
• VA Funding Fee (can be financed into loan) 
    o 2.15% First use for Veteran 
    o 2.4% First use for qualifying Reservist 
    o 3.3% subsequent use 

USDA/ Rural Development Loans 

• Areas in Southern Utah include: Parts of Ivins, La Verkin, Toquerville, and Hurricane (Hurricane and Cedar City will be removed on Oct. 1, 2013) 
• Minimum FICO requirement: 640 
• No down payment required
• Debt ratios limited to 37/47, must have GUS approval 
   o County Income limits: http://www.rurdev.usda.gov/HSF-Guar_Income_Limits.html
   o Geographic Eligibility: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Maximum financing: The maximum USDA Rural Development Loan amount is 102% of the appraised value of the home (100% plus the 2% USDA RD Loan guarantee fee). 

For more information or to contact John Staples:

John Staples | Loan Officer

Patriot Home Mortgage

Direct: (435) 215-1324

Office: (435) 256-8813

Email: john (at) patriothomemortgage (dot) com

Marcia's Input

This is some really great info on the types of loans available out there. The basics anyways.  It is certainly beyond the scope of this blog to go into information like ARM Loans, Balloons etc., so I am not going to go there. If you maintain an interest in some of these alternative loans, then I will recommend you talk with a lender about them.

I will give a plug here for John Staples at Patriot Home Mortgage. He went out of his way to get me this information for the blog. I really appreciate that!! He has done a bang up job for a few of my clients recently. He was able to procure loans for their home purchases in a very quick turn around. He kept up with me and my clients throughout the whole process and we got the loans closed very quickly. Great job!

As a Realtor, I am supposed to give out the names and numbers of a different lenders. If you want to get a list of the lenders some of my clients have used in the past that have received great results, then feel free to email, text or call me and I will furnish you with a list of their names and numbers.

How to Get a Home or Property Loan

Where do I get my loan?

That is a great first question.  There are so many options out there.  Most Realtors have found at least a few great lenders that they like to recommend. The best lenders are those that help their clients get into good loans with great rates and do their best to get that loan with little to no problems as well as quickly.

How to find a good Lender

It is generally a good idea to talk with at least three different lenders to see what rates and fees they can offer you. I’d also find out which loans they may recommend for your personal financial situation. 

Have a good conversation with the various lenders. Through this process you are likely to find one that will work well with you. It is really important that the lender be able to listen to your needs and that they can be with you every step of the way through the process.

Why I suggest Mortgage Brokers

When I discuss lenders with my clients I often give them the name of a couple of lenders that are loan brokers.

Mortgage Brokers can generally broker a loan from a number of sources.  This is one of the biggest advantages to using a mortgage broker. They can listen to your financial picture and help you find a loan that will fit your needs. 

One of my clients was able to get better rates and fees from a major national bank through the loan broker I recommended compared to the mortgage officer who came from the same bank.  

The one drawback I have experienced from a mortgage broker, however, is finding a loan for a challenging property.

When to go to a Local Bank or Credit Union

When I am trying to get a buyer into a property that has loan issues, whether it is a lot, a modular or manufactured, or in a niche area with appraisal issues, I will strongly urge my client to talk with one of the local, community banks or credit unions. 

The local banks and credit unions are in a much better position to understand the various local markets and the appraisals that come out of those areas with comps that are not standard. Local banks generally have a vested interest in helping fund local projects and homes. Some of the local banks do not sell the loans but service them in house.

When to go to a Major Bank

The third category of popular lending options are the major banking institutions such as Bank of America, Wells Fargo, Chase Manhattan etc.  

These banks are large conglomerates with multitudes of personnel and departments in separate areas all over the country. They may have the ability to offer better rates or fees then some of the other institutions. I have worked with some of these “in house” lenders and have found for the most part they do fine as long as the property is a standard home with relatively few issues. If your credit is A grade the loan goes through generally very quickly and smoothly. 

The biggest problem I have seen with some of these larger conglomerates is the lack of really great customer service. If you don’t care about someone really helping you understand the loan your getting or the process you are going through then it may be a good financial move to get a quote from one of these lenders as well.

Timing for a Loan 

At this point in our market it is a great idea to talk with your lender about timing for a loan closing on the home you want. For instance, Bank of America was requiring 60 days for a home I just worked on with a gal. The lender we used could have gotten the loan done in less then 30 days if the seller wasn’t using Bank of America as well.

Cogs in the Wheel

The following is how my experiences have left me feeling about the various lending institutions I have dealt with over the years. Picture a machine with cogs in the wheel.

• Mortgage Brokers usually seem to have their wheels greased and on caffeine! Who cares how many cogs they have. They are bright, happy and running for you.

• Community banks have few cogs and seem to go at a fairly good pace. Pretty steady humming. They can do a good job and if a hiccup occurs they seem to roll with it pretty well as they all communicate with each other.

• Large Banks have many cogs and the cogs don’t always work together. Or the one cog doesn’t always know what the other cogs are doing and they run against each other. If you get squished in between the cogs no one notices. The machine just keeps running. No one really knows who is in charge of the wheel. Seems like it just runs by itself. But if you can get in while it’s running smoothly, they can crank a lot of stuff out. They just don’t take hiccups in the machine very well. 

Your experience may be different and you can certainly dialog with me about it but after 12 years of working with all the various lenders I have seen a fairly similar pattern in the various lenders I have worked with.

Next Week: We will explore different types of loans. We don’t want to tire you out too soon!

Financing Issues in Buying a Property

1.    Buyer qualifications

2.    Buyer needs

3.    Property classification

4.    Location of Property

5.    Type of lender used

6.    Type of loan required/desired

7.    Appraisal issues

As you begin to think about placing an offer on a potential property, the fact of financing comes up. How will you ultimately pay for your purchase? Do you have the available cash for the down payment, closing costs and the inspections and appraisals? Do you want to use all cash for your purchase? Can you re-finance an existing property to pay for your new purchase? Do you need to get a loan? What kinds of loans are out there? Which loan will fit your needs best? Where do I start and which option is best for me?

Choosing a Lender

These are just a few of the questions you may ask during the lending process. There are just as many when it comes to choosing who your lender will be and many things to consider while making your choice. To start with, it is often a great idea to get some referrals from your Realtor and then discuss your needs with at least three lenders to get an idea of which one may have the best deal for you.

I often recommend my clients look at a variety of lenders and banks depending upon their situation and the property they are looking at. Some banks are simply a better fit for one property over another. Banks lend differently on a standard “stick built” home versus a modular or manufactured home. Improved lots are a bit harder to lend on and many banks will not lend on them unless a construction loan is being sought after. Raw land (meaning no utilities stubbed to it) is very difficult, if not impossible to lend on. In the cases where the property is going to have a difficult time with a conventional loan, I often recommend to the seller, as well as the buyer, to consider seller financing. Seller financing can be a very streamlined loan and can be very beneficial to both parties if the terms are good.

Why Location Matters for Lending

In addition to the  “type” of property you are looking at, we need to look at location as well. Some locations are simply easier to lend on over others. The lending process requires an appraisal. An appraisal is an opinion of value for the day written by a trained professional appraiser. The appraiser has very rigid guidelines he/she has to follow while putting the appraisal together. We will go into a little more depth on the appraisal process in a separate section. For now we will just concentrate on how the location can affect the appraisal process.

Niche Markets

One of my areas of expertise is the Springdale, Utah, market. Springdale is a very unique market. It is highly desire-able and only has a handful of properties available. As we know from economics, demand and supply drive pricing. High demand, low supply drives pricing up. The appraisers goal is to find at least three similar sales in the past 6 months to a year. In a small niche market like Springdale, that is often very difficult. The appraiser is left with possibly three sales in the past year but the sales are not similar. The appraiser then has to do a lot of justifying dialog in his/her appraisal. I have seen banks outright reject the appraisal and deny the loan because they don’t want to base their loan off of an appraisal that is too far from “standard”. In these cases I often recommend talking with a local bank instead of a large national chain bank or a loan broker. Local banks and credit unions will know the niche market and understand the difficulties of the appraisal process there.

So far we know we have to consider:

a.    Buyers qualifications, abilities and personal needs in choosing a lender and a loan.

b.    Type or classification of property we are trying to purchase.

c.    Location of the property in terms of available comparisons.

We also need to consider the lender we use. Does our lender work for a national or statewide bank? A local bank or credit union? Or is our lender a loan broker? Is our lender licensed to do business in the area of the property? Is our lender qualified? Can we work well with our lender?

Interview your Lender

All good questions to consider. Beyond these questions we should interview our lender to see if he/she can work well with us throughout the buying process. You want to have a lender who can help guide you with the dates in your contract and actually help you meet those dates. Can your lender help you get the right loan for your needs? Good interest rates? Discount points? Closing costs for the loan? All of these questions should be considered when shopping for a loan.

If you have a CPA or a tax accountant it would also be wise to discuss your lending options with this person as well. They are getting paid to help you use your money wisely and they can be an invaluable part of your purchasing process.

Next week… we will ponder a bit more on differences in lending institutions and types of loans to look at.