Finding The Right Real Estate Agent

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Finding The Right Real Estate Agent

When I started looking for a house, I realized that I didn't know what I was doing. Listings looked pretty similar, and I couldn't tell which houses were good investments. I was stumped, and I realized that I needed to work with a professional real estate agent. Unfortunately, choosing an agent was another challenge. I interviewed several different professionals before I found one that I was comfortable working with. This blog is all about finding a great real estate agent, so that you aren't worried about spending your life savings on a brand new house. After all, buying a house is one of the biggest investments you will ever make.

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Your Options If The Appraisal Comes In Low On The House You Want To Buy

As you begin shopping for homes to buy, you may find one you absolutely love and want to buy. If so, your first step is getting the seller to accept your offer. Once this happens, you can begin the loan work on the home, and one step in this process is getting an appraisal. As long as the appraisal comes back with the right value, everything will be fine. Unfortunately, there's a chance it will come back too low. If this happens, here are the options you have.

Ask The Seller To Lower The Price

The amount of money you need for the down payment on the house will depend on the appraisal amount. Your lender will probably only loan you 80% of this amount. If the appraisal comes in low, this will decrease the amount the lender will offer you, which means you will have to put more money down if you still want to buy the house.

It does not hurt to talk to the seller about this. You can explain that the appraisal came in at a lower amount than you expected, and you can ask if he or she would drop the price. If the seller will not budge on the price, you could still buy the house; however, you may need to put more money down.

Pay Private Mortgage Insurance

Another option you have is to buy the house for the agreed-upon price and put down the money you had planned to. If you do this, you will have to borrow more than the standard 80%, which means you will be required to pay private mortgage insurance (PMI). This insurance is necessary when a person borrows over 80% of a home's value, and it is designed to protect the lender that issues the loan.

The downside to this option is that your monthly mortgage payments will be higher. PMI is roughly 0.3 to 1.5% of the purchase price of a house per year. For example, if the PMI rate is 1% and you borrow $220,000 to buy a house, the PMI you will pay per year will be $2,200. This is then divided by 12 to determine how much extra you must pay per month.

Once the principle balance of the loan dips below the 80% mark, you will be able to stop paying the PMI on the loan.

The other option you have is to back out of the deal and look for another house to buy. If you have any questions about homes for sale in your area, contact a real estate agent today. To learn more, speak with a business like Sheryl Lyons Real Estate.


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