CrossroadsREO

Home Buying / Lending FAQ's
Here are some answers to your home-buying and mortgage questions.

Q: What do I need to do before submitting an offer?
A: Before submitting an offer, the real estate agent should have a completed and signed real estate purchase and sales contract and the earnest money deposit from the buyer. We also recommend that the buyer and agent should perform a thorough investigation of the subject property, and investigate financing for the buyer's potential purchase.

Q: Can you describe the offer process used to sell properties displayed on the crossroads-reo.com web site?
A: Bank-owned properties listed on the CROSSROADS REO web site are being sold through a competitive offer process in which offers are submitted electronically to the bank for evaluation and review. The bank will submit a reply (counter-offers and/or accept/reject notifications) back to the listing agent who will communicate the response to the prospective buyer. Please note that banks frequently receive multiple offers on the same property, which may require additional time to prepare and send a response. >CROSSROADS REO does not guarantee the timely delivery of this notification; ultimately, it is the buyer's and the agent's responsibility to check the status of their offer with the listing agent.

Q: After I submit an offer, how is it evaluated?
A: The lender primarily evaluates offers based on the net funds received by the lender after deducting the selling agent's commission. In general, the lender will accept the offer with the highest net amount. Notwithstanding, the lender reserves the right to accept, reject, or counter any submitted offers, even the highest offer.

Q: If my offer is accepted, then what happens?
A: The party submitting the accepted offer is required to send a completed and signed real estate purchase and sales contract and the earnest money deposit to the listing agent within the time frame that stated in the lender's Terms and Conditions appearing on each property listed on the Crossroads Reo web site. The party submitting the accepted offer will receive information on how to complete the transaction and instructions to help the buyer through the paperwork process.

Q: Can I reduce or cancel my offer once it has been submitted?
A: No, the buyer and the agent cannot reduce or cancel the offer once it has been submitted. To ensure that the lender and listing agent are able to successfully complete the sales transactions, CROSSROADS REO only accepts serious offers. The buyer and the agent need to review the offer carefully before submitting it.

Q: How can I get a loan to buy a Bank-owned property?
A: The lender doesn't make loans directly for any properties listed on the CROSSROADS REO web site. In order to ensure that your purchase will close, we encourage potential buyers to be pre-qualified for the amount of an offer for a property. We also recommend that potential buyers investigate financing before submitting an offer, since failure to obtain financing will result in the cancellation of the offer. The real estate agent should be able to get financing information for his/her buyer. Most of the homes are website DO NOT QUALIFY FOR LENDER FINANCING.

Q: What are the various closing costs involved in a mortgage transaction?
Closing costs can be divided into 3 main categories:

• Lender fees. Fees paid to the lender for the processing of your loan, such as discount points and origination and application fees.
• Third-party fees. Fees paid for services rendered by parties other than the lender, such as title insurance, flood certification and recording fees.
• Prepaid costs. Costs that are collected at the time of closing for items such as prepaid or per diem interest, property taxes and hazard insurance.

Q: How much home can I afford?
The amount of home you can afford is based on the amount of mortgage loan you can comfortably handle. Generally, the amount of mortgage you qualify for is based on 3 factors:

• Your monthly payments as a percentage of your income
• How much cash you have for the down payment and closing costs
• Your credit history

Q: What types of mortgage loans are available?
There are many types of mortgages available, including mortgages tailored for first-time home buyers, low-income home buyers, and buyers who need very large loan amounts (those loans are often called jumbo loans). The most general concepts for types of loans are as follows:

• Fixed-rate mortgage. You pay the same interest rate and same monthly payment of principal and interest for the duration of the mortgage. The most common terms are 30, 20 and 15 years. Fixed-rate mortgages are best if you plan on being in your home for many years.
• Adjustable-rate mortgage (ARM). The interest rate stays fixed for an initial interest rate period, which typically ranges from 1 to 7 years. Then the rate will adjust up or down annually for the life of the loan based on a specified index. An ARM is a good option if you believe interest rates will go down over the next few years or if you plan on staying in your home for just a few years.
• Combination loan. A loan where you receive a first mortgage combined at the same time with a second mortgage. This option may help you avoid the costs of private mortgage insurance (PMI) and/or the higher rate of a jumbo loan.

Q: What are the benefits of a 15-year mortgage?
A 15-year mortgage allows you to own your home in half the time of a conventional 30-year mortgage. Although payments are higher with a 15-year mortgage, you'll save a considerable amount of money in interest over the life of your loan and build equity faster.

Q: Are there any special programs for first-time home buyers?
Yes. There are special mortgage programs for individuals who meet certain income requirements, who are financing property in certain low-income areas, or who meet other special requirements. Such loans offer:

• Lower down payments than most other financing options so you won't need as much cash to buy a home
• Competitive interest rates
• Manageable payments for every budget
• Reduced closing costs and mortgage loan fees

Q: What are the tax advantages of owning a home?
Income tax reduction. In the early years of a mortgage, most of your monthly payment covers interest on the mortgage. In most cases, the mortgage interest (and property tax) may be itemized and deducted from your taxable income, lowering your overall tax bill. Therefore, your after-tax cost of homeownership may be lower than renting. There may be tax implications if you later sell the home at a profit. Consult your tax advisor for more information.

Tax deductible borrowing power. As your home equity increases, you can borrow against it for almost any need with a home equity loan or line of credit. Because your home equity loan or line of credit is backed by the equity in your home, you may be able to deduct that interest from your taxable income. This could lower your final tax bill. Consult your tax advisor and IRS Publication 936 (Mortgage Interest Deduction) regarding deductibility of interest.

Q: Should I get prequalified for a mortgage before I shop for a home?
Getting prequalified for your mortgage is an important step before you shop for a home. It tells you how much home you can buy and makes applying for your mortgage easier. A mortgage prequalification can also give you additional leverage with a seller in negotiating the best possible terms of the sale.

You can get a response in less than 10 minutes when you prequalify for a mortgage online with most local lenders. There are just a few easy steps involved in the prequalification process.

Q: What's an impound/escrow account?
An impound/escrow account is an account set up by a lender to hold funds that are set aside for the payment of property taxes and insurance. In addition to the principal and interest payment on your mortgage loan, you may elect—or be required—to put aside additional funds each month in an impound/escrow account to pay for property taxes and mortgage and hazard insurance. The lender holds the money in an impound/escrow account and makes the payments from the account when they are due.

Q: Can I get a loan if I'm not a U.S. citizen or if I live outside the country?
Yes. As long as the property you are buying or refinancing is in the United States.

Q: What if I have bad credit?
You can start taking steps now to help improve your credit rating and your qualifications for loan approval. Here are a few quick tips that should help:

• Review your credit report and have any errors corrected
• Pay all your bills on time
• Make adjustments to how and when you use your credit cards
• Avoid credit-repair companies who charge a fee for services
• Work with reputable nonprofit credit counseling organizations
  

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