Housing season has officially begun. As anyone in the real estate business will tell you, spring is when most people buy, sell and renovate their homes. Whether youre in the market, on the market or getting ready to remodel your kitchen, you need a home team you can trust. These tips from SelectQuote Auto & Home will help you pick the right realtor, contractor and mortgage broker for your needs – and save you money in the process.
HOW TO CHOOSE A REALTOR
The purchase or sale of a home is one of the most significant financial decisions you can make. Thats why it is so important to pick a realtor whos right for you, as opposed to just going with a friend who happens to be in real estate. Here are three criteria to help you find the right realtor for your needs:
- Use an actual realtor. The terms agent, broker and realtor are often used interchangeably. However, not all agents or brokers are realtors. A realtor is a real estate professional who is a member of the National Association of Realtors and subscribes to its strict code of ethics, which in some cases goes beyond state law.
- Are they experienced? Whether you’re looking for a realtor to help buy or sell a house, you don’t want to be part of someone’s learning curve. One of the first questions you should ask a potential realtor is how long they’ve been licensed and how long they’ve worked in the area. You can also research realtors using sites like HomeLight, which gives you license numbers, years of experience, number of homes sold, average time on the market, and average sales price.
- Stay local. If youre selling, go with a realtor who has recent sales not only in your city or town, but in your actual neighborhood as well. If you’re buying, your realtor should be familiar with the schools, crime rate, taxes, and demographics of the community where youre looking to buy.
HOW TO CHOOSE A CONTRACTOR
For most homeowners, the hardest part of any home renovation isnt the work itself, but finding a competent and reliable contractor to do the job. Weve all heard stories about contractors who tear out a kitchen or bathroom and never finish the job, or end up charging double to triple their original estimate. These considerations will help you find the right contractor for your renovation:
- Know what you want. Dont talk to a contractor until you know exactly what you want and have some semblance of a plan in place. Youll get a more accurate estimate if you can be specific about the projects you want done and the materials you would like to use to make them happen. Call your local government and find out which permits youll need.
- Ask for references. Friends, relatives, co-workers, or neighbors who have done similar projects are usually your best resources for contractors. If you know anyone in domestic construction, ask them, too. The employees at your local hardware store may also be able to provide you with decent referrals. Once you’ve selected a few candidates, talk to their previous clients and subcontractors to get a sense of how they do business. If you can speak with their current customers, even better.
- Choose the right contractor for the right project. Someone who did a great job tiling your neighbors bathroom isnt necessarily the right person to renovate your kitchen or put a bedroom over the garage. The contractor you choose should have plenty of experience doing exactly the type of project you have in mind.
- Dont pay up front. Any contractor worth their salt wont be able to start right away. To book the job, you shouldnt exceed a 10 percent down payment. Meanwhile, your final payment of 10-15 percent shouldnt happen until 30-45 days after the job is complete.
HOW TO CHOOSE A MORTGAGE BROKER
For most of us, buying a home means paying off a mortgage. The total interest you pay on that mortgage can vary significantly depending on the type of loan you get, which is where a mortgage broker comes in. Because mortgage brokers have access to a pool of mortgage lenders, they can comparison shop for a loan that matches your profile and needs at an interest rate that works for your budget. However, the wrong mortgage broker could set you up with a lender who offers the highest profit for the broker, rather than the best mortgage for you. Here are three tips for choosing a mortgage broker who will put your interests first:
- Know who youre dealing with. In todays market, its not always clear whether youre working with a mortgage lender or mortgage broker. Thats because most mortgage lenders, like Bank of America or Citibank, have both retail and wholesale divisions. Retail divisions offer loans through bank branches, while wholesale divisions offer loans through mortgage brokers at interest rates much lower than retail rates offered to the general public.
- Find out how your broker is compensated. Most mortgage brokers are compensated in one of two ways: fees or yield spread premiums. The broker’s fee often comes in the form of points, in which one point equals one percent of the loan amount. On the loan documents, you might find this listed as the lender’s origination fee or mortgage broker commission. You might also find additional fees for application, funding, processing, and document preparation. Yield spread premiums are a less transparent form of payment. While not necessarily harmful to the borrower, they serve primarily to increase compensation paid to the broker. In general, you should favor brokers who are paid in points over those who take yield spread premiums. And dont be afraid to ask what your broker will make from the mortgage lender on your loan.
- Do your research. Ask friends, family members, your attorney, or your realtor for mortgage broker recommendations. Once you have a few to choose from, find out how long each has been in business. Anyone with less than three years of experience in home loans probably isnt a safe bet. References are arguably your best form of research. Request contact information for two or three of a brokers most recent clients, and ask if they would do business with that broker again. If the broker wont provide references, move on. Finally, ask each broker to name a few of their top mortgage lenders. If you dont recognize their names, that may be a sign to look elsewhere.
If youve just bought a home, securing a homeowners insurance policy should be at the top of your to-do list. So heres a bonus tip for rounding out your home team: Call SelectQuote Auto & Home. In minutes, your personal agent will recommend the right homeowners insurance package for your needs, and comparison shop 16 highly-rated companies for your lowest price. To get started, click here or call 1-888-267-3282.