Are purchase loans different than refinancing - Although all real estate loans are financed along the same guidelines there are some differences in purchase money loans and refinance loans.

Many times a person can purchase a home with one loan program with the direct intent to refinance after a handful of months. Several factors can play into such a scenario, such as a flow of income to be provided after the purchase, or credit repairs, or the value of the home raising quickly, etc...However, most companies require that the initial mortgage be 'seasoned' for a set amount of months before a new refinance is allowed.

In most cases, a refinance to replace the current mortgage with one with a shorter term or a lower interest rate has the same underwriting requirements as a purchase loan. For instance, refinancing a current 30 year mortgage with a 15 year mortgage is often treated the same a purchase money mortgage. On the other hand, a Cash-Out refinance in which the home owner withdraws from the equity built in the house has somewhat stricter qualification threshold.

Ironically some lenders will create a purchase as a refi, if you are in a lease option and have 12 months cancelled checks, you can potentially "refinance" the property based on appraised value and get a lower loan to value.

Some lenders will offer enhancements to the interest rate for new home purchases and higher down payments.

One of the biggest differences is there maybe loan to value reduction if you are planning to take money out on a refinance.

When you refinance their is a 3 day right of rescission period. Where as on a purchase, the transaction will fund that day.

When a homeowner is looking to do a refinance transaction, the lender is required to make sure that the loan has a "net tangible benefit" to the borrower.
An example of a "net tangible benefit" would be when the borrower is taking cash-out to pay off high interest rate credit cards and lowering their monthly obligations.

Many lenders will place purchase transaction loan files ahead of refinances in their underwriting departments. This is because purchases are often much more time sensitive and frequently must ahere to a specific closing date. In a refinance transaction, although the borrower often feels time constraints, closing the loan a few days late usually does not present any hardships.

Refinancing today has become an incredibly fast and easy process compared to the first time you purchased a home.

With a refinance loan you may take cash out, if you have the equity available, lenders won't allow cash out on a purchase.

How will a realtor help me with a home purchase - When you are ready to buy a home there are many steps you need to take, the first taken by most people is to find a good realtor. The realtor will do many tasks for you to make the home buying process run smooth and fast!

If you are buying a home you will not pay any fees directly to the real estate agent, they earn their commissions from the seller's side of the transaction. As a buyer there is really no reason not to work with a real estate agent, and have them represent your interests through out the process.

A Realtor has access to most of the same data used by appraisers. Real Estate Agents can use these records to research sales trends and market values. A good Realtor can help insure that you don't over pay for your home or possibly reccomend a home being offered under market value.

A realtor will be able to assist you with a home purchase by being able to utilize MLS records of almost all homes that are being sold in the area(s) you are looking for. You can tell your realtor exactly what you are looking for, number of bedrooms, bathrooms, basement or not, square footage, etc... and they can easily pull this information up for you very quickly. A realtor will also set up appointments for you to go see the homes that you are most interested in which will save you lots of time and effort.

Since a Realtor is a professional they will be much more knowledgable on how to find you a home. They should be familiar with the area and have a large base of realtors they work with. This makes finding a home easier then doing it alone. As the buyer its the seller paying the fee for your realtor.

As a buyer, you may wish to engage the services of a Buyers Agent. The buyers agent works for you, the buyer. Traditional realtors work for the seller and must always work to the benefit of the seller rather than to yours.

The realtor will be the one to show you each house. They will try to show you a wide range of houses, within your price range in any given neighborhood. You should tell your realtor, exactly what you are looking for in a home, as well as a general area that you would like to live.

Agreement of sale (Purchase Agreement) - "I signed a Purchase Agreement a few days ago, but only the ones there were the Realtors. Will I still be able to get finacing for the house?"

Submitting your purchase offer - You have finally found the home you want to buy and you have been pre-qualified by your lender. The next step in the process is submitting your offer to the seller. This is done with a Real Estate Purchase Agreement (REPC).

Before submitting a purchase offer, a buyer should get pre-approved for a home loan. The purchase offer should reflect the terms of his mortgage accounting for seller concessions needed, lender inspections required, and time lender/broker needs to complete transaction.

Do you have little cash on hand for a down payment or closing costs? If so you should be sure to consider using a seller concession to reduce your out of pocket closing costs. Many lenders allow the seller to contribute 3% - 6% of the purchase price to closing costs. If a seller concession is important to you make sure both your real estate agent and your loan officer are aware of your goals.

Depending on your situation you may be able to have your purchase agreement contingent on certain factors that are important to you. For example if you are selling your current home, you may want to make the purchase of the new house contingent on the sale of your existing home. While this does protect you as the buyer in the event your home does not sell, the sellers may be willing to accept a lower priced offer that does not have any contingencies. A qualified Realtor will be able to give you advice about how best to handle your situation.

Also, a personal letter of intent may be helpful in having your offer stand out above other purchase offers the sellers may receive.

Many times and in most housing markets you are not going to place a bid on a home for the price that the sellers are asking for a home. However, if you are looking to buy a home in a very hot market, in an area where homes are selling extremely quickly, or if you find a home that is listed well below market value you may want to bid the asking price to have a good chance at getting the home before you are outbid. Placing a bid on a home and signing the purchase agreement does not guarantee that you have bought the house or that the sellers have to sell you the home. The property sellers have to accept your bid for the contact to be legally binding. Once the purchase price has been agreed upon and the real estate purchase contract has been signed by all parties you will normally have 5-7 days to submit a mortgage application to a mortgage professional. However, since most Realtors will require a pre-approval letter before you can place a bid on a home most of the you will already have a mortgage application submitted before you have submitted your purchase offer. Submitting your loan application to a mortgage lender will generally begin the mortgage process and the financing of your new home.

Consider getting a pre-approval/pre-qualification certificate from a mortgage broker to accompany the offer. Or at the very least attach a copy of your credit report to the purchase offer to show that you have good credit history and the capability to acquire a home loan. When presented with similar offers, sellers look favorably upon the buyer who can demonstrate that the transaction is unlikely to fall through due to the buyer's inability to secure home financing.

How much cash will I need to purchase a home - The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:

Earnest Money: The deposit that is supplied when you make an offer on the house

Down Payment: A percentage of the cost of the home that is due at settlement

Closing Costs: Costs associated with processing paperwork to purchase or refinance a house

Although one can easily obtain mortgage financing without putting up much cash investment, a homebuyer can often get better loan terms with a larger down payment. home buyers with at least 20% down payment often get the lowest interest rates available.

Look at it from a lender's perspective: If you put a large downpayment into a home, you aren't likely going to default. With this lower risk comes better terms on your mortgage. While you may need no cash to purchase a home, having cash will allow you to secure a lower rate on your mortgage.

If you are in a situation where you would rather save your money then lock it into a home, there is always the possibility of asking for a seller concession and try to get approved for 100% mortgage financing.

While this it is possible in today's lending climate to buy a home with literally no money down, it behooves the borrower to at least expect and prepare for some minimal expenses. Look at it this way, if you can buy a home for as little as first and last months deposit for a rental home, you are way ahead.

In some cases it is even possible to purchase a home with only slightest, or in some instances, even no earnest money deposit. Combined with seller concessions and/or no closing cost loans, it is possible to get into a home with actually no out of pocket expenses.

You must be prepared to come up with the closing costs plus 1 years worth of homeowners insurance upfront, pay for any application fees, appraisal fees and inspection fees.

Even though you're under the impression that all your closing costs will be paid due to seller concessions, sometimes lenders ask for more than what your loan officer expects, such as 6 months tax reserves, when normally it would be 3 months, etc. Don't be surprised if you have to supply a pittance at the closing table.

For homebuyers in California, I offer a unique service. If you choose to use me to represent you as you buyer's agent in addition to securing your financing, I can usually credit several thousand dollars towards your closing costs.

This, combined with 100% financing means you can buy a home with almost no cash out of your pocket. Call me for further details.

You will be provided with a HUD (settlement statement) before closing which details the closing costs and the exact amount you need to bring to the table. A good broker will be able to help you calculate with good accuracy (not exact) what you charges will be.

Don't forget that you will also need to purchase homeowner's insurance in order to complete the transaction. You will have to prove that a full year of homeowner's insurance has been paid for. If you think that you may be a little short on cash, consider putting down less earnest money in order to cover the homeowner's insurance. Many times you can save money on your homeowner's insurance by going to the same person that provides you with your car insurance and any other type of insurance you may have.

Down payment money can often be taken from retirement accounts subject to some restrictions. Contact your mortgage professional and your tax professional to see if a loan from your retirement account or an early withdrawal may be right for you.