Ted Yates

Hi Sara,

I agree with those before me here that you should be cautious. I would look at:

- The difference in rate between a 5/1 and a 30 year loan. If you don't save much, why take the risk? At times, the two rates track very closely but at times the 5/1 is considerably less expensive.

- How long do you plan to keep the property? And contrary to popular opinion, the "breaking point" is not 5 years. I have a 7/1 and calculated that even if rates had skyrocketed, I would have saved enough in the first 7 years to pay the higher rates for almost another 3 years. That gave me 10 years to sell or refinance and I am happy with the decision. There are caps on how much the rate can go up.

- Can you get a 30 year loan? When I was a loan officer, one the biggest advantages to ARMs was that the qualifications were lower. More often than not, if you can get a 30 year loan, it's better for you.

- What are the other terms of the loan and do you fully understand them? How much can the loan adjust on the first adjustment? How much can it adjust each year thereafter? What is the maximum rate that it can go to? What index does it use (usually LIBOR or MTA) and what is the margin?

And I think the most important question - what would be the rate if it were adjusting today? Adjustable loans can go up even if the prevailing rates are stable or go down. For example, say your 5/1 started at 6% and then adjusted to LIBOR + 4% (LIBOR in this case is the "index" and 4% the "margin"). If the LIBOR rate stayed right where it is today, your loan would adjust to 3.23% + 4% = 7.23%.

ARMs are not bad, but you need to understand how they work. It's hard to say what would be best for your particular situation, but if you have excellent credit and plan to stay there a while, I would tend towards the 30 year loan.

No matter what kind of loan you get, make sure that you understand it.

I hope that helps.

Ted - Tue Aug 12 2008, 08:41

Would you use the same lawyer as the person suing you? Or ask the coach of the opposing team for suggestions? If not, then why would you use the same agent as the seller?

It amazes me that it is even legal. I would want someone who is squarely on my side that has my best interests at heart. That might be contrary to what the other side wants and they are paying the bill. I definitely recommend getting your own agent.

As MaryAnn said, the legal docs are the Real Estate Agency Relationships Disclosure.

Best of luck to you. - Mon Aug 11 2008, 10:29

Hi Anna,

It usually works out best to start with the lender and then find a Realtor. By starting with a lender, you will know what you can afford. Having started with a lender also makes your offers stronger. Lending has become a crazy business, so I would look for someone that has been around a while and does nothing but loans. If you have a relatively easy loan - good credit, income, etc. - you can go straight to Wells Fargo or B of A. If you are interested in a first time buyer program, government program or low down, you might be better off with a broker. I recommend Call Michele Kole - 858.627.9559 or email michele@koleco.net.

I would use a mid-size Realtor that works the neighborhoods you are interested in. The really big realtors can't spend much time with each client, so you are likely to get an assistant. Realtors that do too little business are not as likely to be on top of the current market or as practiced at negotiations.

Two things I would avoid:
- Realtors that also do loans. You are investing a lot of money. Get an expert in Real Estate transactions and one in loans.
- Buying from the listing agent. You would not use the same lawyer as your opponent - why use the same real estate advisor? You really deserve to have someone on your side with your best interests at heart.

Feel free to contact us for referrals. We work the central San Diego costal area and are happy to give you names of experts in other San Diego areas. Good luck

Ted - Sun Aug 3 2008, 09:17

Becoming an agent is pretty easy - see the posts below. The hard part is making a living at it.

My advice - find a great Realtor to work for as an assistant. You won't make much money the first year or two anyway. Especially at your age. Would you want to trust a 20 year old with no real estate experience with half a million bucks?

A good realtor will teach you how to attract and retain clients. You get instant credibility when working with a top agent. In a couple of years, you are still young, but have industry experience, confidence and knowledge on your side. Learn how to create and market to a database of clients. Learn how to put together a winning listing presentation. Learn how to market a property. Then strike out on your own and be part of the 20% that makes 80% of the money.

Finding the right agent is the key. I would talk to professionals that work with a lot of agents. Escrow agents and title reps know which agents do a good business and are good to work with and which agents to avoid. They may also know of agents that could use a little help.

Best wishes to you. - Fri Jul 18 2008, 16:01

Amber.

I would definitely look at a few more homes just to be sure. You might see something that you wouldn't have thought of - maybe a neighborhood that you didn't think you could afford. At the very least, you will have a better idea of the competition. The seller knows what else is out there and you should too. Looking at a few more will also help eliminate second guessing yourself later.

Best wishes in your new home. - Fri Jul 18 2008, 15:36