Homebuyers should know how important it is to have at least a 20% down payment saved up before they make an offer on a Summit NJ real estate property.  This doesn’t only make you an attractive buyer and help you get the best rates; it can also save you money.  Without at least this much to put down on a home, the buyer will have to purchase private mortgage insurance.

Private mortgage insurance is a policy that protects the lender from default.  If you fail to pay the mortgage, your lender is protected against a major loss.  The buyer foots the bill for a PMI policy even though he is not the one who receives the benefit from it.

The charges for PMI will vary from lender to lender.  It typically runs about one half of one percent of the total value of the loan.  While this sounds like a small percentage it can calculate to a higher number than you might expect.  Your Summit NJ realtor can tell you more about what to expect from lenders in your area.

Take the value of your estimated loan and multiply it .005 to see how much your PMI could cost.  You may be surprised at the results.  When you take into account that PMI payments are not tax deductible, the cost is even higher.  Keep this amount in mind when you are browsing the Summit NJ listings.

PMI can be avoided entirely by keeping you loan-to-value ratio at 80%.  This means that the value of your loan is no greater that 80% of the value of the home itself.  By saving up and paying a down payment of at least 20%, you start out with the desired ratio.

If you aren’t able to make the 20% down payment mark, you can still buy a home although this was not always the case.  There was a time, not so long ago, when lender would not consider making a loan with a smaller down payment.  In fact, having a PMI policy may allow you to purchase a home with as little as 3-5% down.  Your Summit NJ real estate agent may be able to get you into a home sooner or help you purchase a more expensive home by purchasing PMI.

Your PMI policy is cancellable, too.  The law requires an automatic cancellation of the policy once you own 22% of the home.  You may also be able to cancel once you hit the 80% value ratio.  Talk to your lender for more specifics on their PMI requirements.

You’ve finally found it: your perfect home.  Or at least one as close to perfect as can be found in the Summit NJ listings.  You’ve researched, budgeted, toured and now it’s finally time to make an offer.  You sit down with your agent to write the offer and she asks you what contingencies you would like to place on it.  This is not the best moment to respond with a blank stare.

A contingency is a type of “if-then” statement that your agent can write into an offer.  It says that if a certain thing happens then you will pay the seller a certain amount of money.  If that thing doesn’t happen, then you are released from the contract without penalty.  That means you get your earnest money back and you have no further responsibilities to the seller.  It’s a small clause that protects you from getting stuck in a bad bargain.

An example of contingencies your Summit NJ realtor may suggest is to make the offer contingent on the home passing inspection.  Another would be to have the offer contingent upon an independent appraisal coming in at or above the negotiated price.  These protect you from ending up with a home in unlivable condition or one that was vastly overpriced for the market.  Other contingencies may include getting your financing approved or seeing your current home sold.  The seller can also ask for contingencies like finding a replacement home prior to closing.

The seller is not obligated to accept your contingencies.  If you include the contingency of your current Summit NJ real estate property selling before you close, the seller may decline your offer and wait for a buyer who is ready to move.  While you don’t want to make your offer overly complicated, here are several contingencies you should consider.

•    Independent appraisal.
•    Home inspection.
•    Pest control inspection.
•    Septic tank or sewer line inspection.
•    Roof inspection.
•    Lead-based paint (if the home was built prior to 1978)
•    Radon and mold testing.
•    Clear title search.
•    Condition of the property at closing and/or the final inspection.

Try to keep your list to a minimum and include only the necessary items.  Asking for a contingency to keep an appliance or piece of furniture may not be worth the risk of having the seller reject your offer outright.  Your Summit NJ real estate agent can help you decide what other contingencies you may need to include based on the age and condition of the home you are buying.

Changing Realtors

Many relationships, both business and personal, fail.  It’s an unfortunate fact that not every pairing is made in heaven, whether it’s a friendship, a marriage or a business partnership.  You may find yourself wondering whether it is time to “break up” with your Summit NJ realtor and find a better match.

Why would I change real estate agents?
People switch agents for any number of reasons.  They may not feel that their Summit NJ real estate agent is aggressive enough.  They might not like his marketing techniques or there could be a personality clash.  It could even be a matter of ethics.

Can I legally change realtors?
The answer to this question depends on whether or not you have signed a buyer’s or seller’s representation contract.  If you have, you are obligated to stick with your agent till the contract ends.  Then you are both free to do what you like.  If you have not made any contractual agreements, then you are free to choose another agent at any time.

Is it a good idea to switch realtors?
This point is not as clear as the legal conundrum.  When you are buying or selling Summit NJ real estate, you should try not to bounce from agent to agent because word gets around.  You won’t want to be seen as a problem client.  Change agents only if you feel the work is truly not being done.  Before you make the switch, carefully consider your expectations and determine if they are reasonable.  You may want to talk to a friend or colleague to see if you could be in the wrong.

When should I make the change?
If you have signed a contract, you cannot legally switch realtors till the contract has elapsed.  On a more person note, you should not feel badly about switching agents if they are not doing the work.  Marketing a home is hard work and it takes a lot of effort.  Combing the Summit NJ listings for the right home for someone else is just as hard.  Your realtor should be working hard for you and if he isn’t, it’s OK to find someone who will.

Is there a proper etiquette for this situation?
There is no official policy for dropping a realtor but basic etiquette applies.  A brief note, written with kindness, stating your reasons for changing would be appropriate.  A realtor cannot improve if he does not know what he is doing wrong.  You might even be able to salvage the relationship with a dose of honest communication.

It’s not healthy to stay in a bad relationship and that includes business partnerships.  If your partnership with your realtor has failed, assess your goals and your expectations and move on to a healthier relationship.