Easy Agent Blogs

One of the most confusing aspects of the home purchase, at least for first-timers, is the mortgage process. From the weird terminology used to how it all happens, we frequently meet with dazed stares when we say the “M” word.

The word “mortgage,” by the way, comes from an old French word for “dead pledge.” It was so named because the debt dies when it’s paid off.

We think it’s aptly named because 30 years feels like we’ll be paying on it until we die.

At any rate, the process isn’t as complicated as it seems. Let’s take a look at one aspect of obtaining a mortgage that we receive a lot of questions about: origination fees.

Everybody needs to get paid, right?

There is no getting around it, origination fees “… can add several hundred or thousands of dollars to the total cost of your loan,” according to Angela Brown at FoxBusiness.com.

And, no, the fees that you’ll pay aren’t included in the interest rate.

Enter: origination fees. Thinking of them like the lender’s paycheck for processing your loan takes some of the sting out of paying them. After all, everybody needs to get paid.

Some charge more than others, which is why it’s important to compare the offers from several lenders. We’ll show you how to do that, below.

What’s included in the fees?

What lenders include in origination fees varies, which is why, again, it’s important to take your time shopping for a mortgage.

Some of the more common fees include:

• Processing (what you’ll pay to have your documents examined and the information verified)
• Application fee (a somewhat silly fee you pay just for the “privilege” of applying for a loan)
• Underwriting fee (checking to ensure you qualify)
• Appraisal fee (a charge for reviewing and analyzing the home’s appraisal report)
• Document preparation fee
• Funding

Note, again, that not all lenders charge fees for some of these tasks. In fact, there are loans out today that charge zero origination fees.

The pros at eloan.com, however, offer a warning about these loans:

“These lenders are likely to factor in the cost of the loan process into other areas of the loan, such as the interest rate. When comparing loans, be sure to check whether the origination fee is or isn’t included in the annual percentage rate or APR.”

How much are these fees?

Naturally, the fees vary according to lender and your financial picture. As a rule-of-thumb, “Home buyers typically pay about 0.5% of the amount they are borrowing in origination fees,” according to Hal M. Bundrick, certified financial planner and “… a NerdWallet authority in money matters.”

Aly J. Yale, at credible.com, states a range (0.5% to 1.5% of the loan amount), or “… $1,000 to $3,000 on a $200,000 home loan.”

Many of these fees, by the way, are negotiable.

How to compare lenders’ origination fees

Many real estate consumers don’t understand that a mortgage application is just that: an application. It does not bind you to the lender, legally. The lender will either accept or deny the application and you can then either accept or deny their offer.

Submitting applications to several lenders is not only ok, it’s wise.

Lenders are required, by law, to supply you with a 3-page form, the Loan Estimate (see image below). This form will supply you with all the information you need to compare lender offerings.

You’ll find the lenders’ origination fees listed on page 2, section A.

“When comparison shopping lenders, the key is identifying the fees that are valid, perhaps even negotiable, and the fees that are tacked onto a loan to pump up a lender’s profit,” also known as “junk fees,” Bundrick suggests.

You are welcome to shop around for some of the fees, as noted on the Consumer Financial Protection Bureau’s sample below.

Another important thing to look for when comparing lenders’ offers is the loan’s annual percentage rate or APR. In fact, this figure is the one to use in your lender comparisons, not the advertised rate.

The latter is what the loan will cost each year. The APR is the advertised rate with the fees tacked on, “… such as mortgage insurance, most closing costs, discount points and loan origination fees,” according to the pros at Bank of America.

Their best advice is to “Compare one loan’s APR against another loan’s APR to get a fair comparison of total cost — and be sure to compare actual interest rates, too.”

Although the homebuying frenzy continues, millions of Americans whose employment was impacted by the pandemic are being left out.

Without a job, maintaining a decent credit score can be challenging. However, you will get back on your feet and there are ways to fix the damage so that you can buy that dream home.

Credit score basics

“The goal of a credit score is to provide a quantifiable prediction of the likelihood of default in the next 24 months,” according to Thomas Wade with the American Action Forum.

In other words, it determines a borrower’s creditworthiness.

The scale of credit scores ranges from 300, the worst possible, to 850, “… considered the unicorn of the financial world: a perfect credit score,” according to Stefan Lembo Stolba at experian.com.

Only 1.2% of credit scores from FICO® have reached that magic number, so don’t feel bad if you aren’t among them.

Scores that fall below 850, are grouped as follows:

• 300-629 Poor
• 630-689 Fair
• 690-719 Good
• 720-850 Excellent

FICO, short for Fair Isaac Corporation is the data analyst that determines these scores. They do so by analyzing our credit reports from the “big three” credit reporting agencies, Experian, Equifax and TransUnion.

The most important thing to understand about your FICO score is that it’s fluid, moving up and down according to how you use credit.

Rule number one to raise your credit score

The easiest way to increase your FICO score is by avoiding late payments. Every month, pay your bills on time.

If you think this sounds too simple to be true, consider this:

“… someone with an average credit rating of 707 can raise their score by as much as 20 points by paying all their bills on time for one month,”

according to Jessica Seid, CNN/Money staff writer.

The credit card trap

There are tricks to using credit cards and loans when it comes to trying to repair your credit. These tricks are evident when we consider how the reporting agencies look at credit card use.

• Age of credit–Older credit, whether cards or loans, makes the potential borrower appear less risky. New credit can ding your FICO score by as much as 10 points.
• Balances– Maxed out credit cards can cause up to a 70 point reduction on your credit score. The agencies want to see available credit.
• Lack of accounts–If you have no credit card or loans, credit agencies will wonder why.

If you’ve been caught in the credit trap, start paying down your high balances first. Don’t close any credit cards.

No credit score?

A 2019 report from the Consumer Financial Protection Bureau (CFPB) showed that “22% of Americans Don’t Have a Credit Score,” according to Matt Frankel, CFP at fool.com.

Because they have no history of credit use, the credit reporting agencies consider these people credit risks.

If you are among this group, you’ll want to do the opposite of those with low scores. Get and use a credit card, ensuring that you pay the entire balance, on time, every month.

Tip: Obtain a secured credit card from a company that reports to the credit reporting agencies.

How to fix your credit score, step-by-step

• Obtain your reports from all three of the major credit reporting agencies. Americans are entitled to one free credit report from each, annually, from annualcreditreport.com. For additional information on the free credit reports, visit the Federal Trade Commission’s website.
• Comb through the reports looking for errors. Dispute any that you find. The FTC website shows you how.
• Vow to pay your bills when due.
• Reduce your credit card balances.
• Since older, seasoned credit is more attractive to credit agencies, don’t let old cards go stale. Use them, but remember to pay off the balance when due.
• Request an increase to your credit limits. Avoid the temptation to max out the additional credit, though.

Come on, admit it: You started watching those DIY home selling and staging TV shows the minute you made the decision to sell.

You’re not alone. But you should keep in mind that those amazing TV stagers have unlimited budgets and tons of people to help them.

The shows don’t reflect the reality of the basic American home seller’s situation.

Depending on how you’ve maintained the home since you bought it, preparing it for the market can be expensive. All the repairs, the painting, the cleaning and decluttering – it’s a lot of work as well.

Add on the price of hiring a professional home stager and we’re talking some big money coming out of your pocket.

Making your home the belle of the local real estate market is, however, one of the most important things you can do to appeal to a broad range of buyers and make top dollar at the closing table.

Enter: Kids

The most annoying part of selling a home when you have children is having to keep it tidy and staged while it’s on the market.

The second most annoying aspect is those potential buyers who ask for a last-minute showing.

We’ll get to some tips for the latter in a minute. First, let’s talk about staging a home that harbors children.

Plan for chaos

Those last-minute showing requests are a pain. But if you truly want to get the home sold you need to accommodate buyers–and get the kids on board.

Consider the following tips:

Determine how long it will take you to tidy up the home in time for a buyer to do a walk-through. Then, ask us to put a notice in the MLS that you require that much notice for showings.

For instance, if it will take you an hour, we’ll let buyers’ agents know that you need an hour’s notice for showings.

This will give you at least enough time to cover the basics of pick-up, cleaning and getting yourself and the kids out of the home.

Keep the kids distracted while you tidy up. Unless, of course, your kids are immensely helpful and quick. (If so, care to trade?) Otherwise, park them in front of the TV so they stay put and don’t create new messes.

Purchase some laundry baskets from the dollar store and use them to stash toys, mail, dirty dishes and all the other clutter you encounter as you run through the home, tidying up. Then, throw the baskets in the trunk of the car to get them out of sight.

One online parent suggests that you check every toilet before leaving the house. Kids – potty – flush – if yours are like mine when they were little, they tend to skip the latter.

Prioritize

Let’s take a list of the basics of straightening up when you have limited time. These tasks are prioritized from the most important to the lease.

Start in the kitchen:

• Move the dirty dishes from the sink to the dishwasher and scrub the sink.
• Remove clutter from the countertops and then wipe them clean.
• Wipe down the stove.
• Take out the trash.
• Sweep the floor.

Move on to the bathroom(s):

• Flush the toilet and put down the toilet seat.
• Clear the clutter from the countertops and wipe them down.
• Clean the sink and wipe water spots off the faucet.
• Take out the trash.
• Replace soiled towels with fresh ones.
• Sweep the floor.

Work on the entry way:

• If you have a table in the entry way, remove any clutter and dust.
• Remove all clutter from the entryway and the areas of the home visible from it.

Turn your attention to the bedrooms:

• If you haven’t made the beds yet, do so now.
• Pick up toys and stash as many as possible out-of-sight
• Remove all clutter.

On your way out the door, turn on all lights in the home (including in the closets) and open all the window coverings.

Count heads to ensure you aren’t leaving any little ones behind and head to the park, congratulating your babies on a job well-done.

Buying your first home is exciting. At first.

If you’re like most, at some point the anxiety creeps in. It’s normal. As with anything new, you have questions, you may have fears and, at times, may even feel stressed out. Even repeat homebuyers feel anxious during the homebuying process.

“As it turns out, many Americans, about 40%, say buying a new home is the most stressful event in modern life …” according to housingwire.com’s Kelsey Ramirez, citing a survey by a nation-wide real estate website.

Thirty-three percent of those surveyed said they were reduced to tears at some point during the homebuying process.

It all boils down to a lack of confidence-the same malady that afflicts all of us when learning a new process.

There are certain points in the process that are more stressful than others so today we’ll introduce you to those and point you to where you can learn more.

Learn all you can about the mortgage process

Surveys say that most consumers know very little about mortgages. For instance, “Many people believe that if you don’t have at least 20% down, you can’t buy a home,” according to the folks at rocketmortgage.com.

It’s a myth. There are many home loans on the market with only a 3% down payment requirement. Some have zero down payment terms.

Rules for qualifying for a mortgage are also misunderstood. Many consumers are under the impression that the qualification process is stricter than it is. Yet, when asked about qualification standards, such as debt-to-income ratio, about half of the buyers surveyed didn’t know anything about them.

If you don’t think you can afford a home, you may be laboring under some common misconceptions. When you clear those up, you’ll go into the mortgage application process far more confidently. Here are some websites to help you get up to speed:

• Consumer Financial Protection Bureau
• Rocket Mortgage
• Motley Fool
• The Mortgage Reports
• Freddie Mac

Once you’re familiar with the process, start searching for a lender. Ask friends, family and colleagues who they used (if they had a good experience).

Then, start applying for mortgages, keeping an eye out for the lender that is the best at getting back to you promptly and that is able to explain things in easy-to-understand terms.

Go ahead and apply to several. You are under no obligation if they say yes and, it gives you a chance to compare lenders to find the best rates and terms.

If you’re worried about your credit score from all of credit pulls, don’t be. “Fair Isaac Corp. (FICO), the creator of the FICO model, states that multiple mortgage inquiries that occur within 30 days of one another do not affect your FICO score,” according to Greg Depersio at investopedia.com.

To be safe, according to Craig Berry at themortgagereports.com, try to submit all of your loan applications within a two week period.

Stressed about the down payment?

Earlier, we discussed the down payment myth. For some homebuyers, however, even a 3% down payment is a fortune. It shouldn’t stop you from pursuing your dream of homeownership, however.

If you serve, or have served in our nation’s military, or you are the surviving spouse of someone who served, you may qualify for a U.S. Department of Veterans Affairs (VA) home loan. These loans require zero down payment. Learn more about this program at va.gov.

The U.S. Department of Agriculture (USDA) also offers a no-down mortgage for those who wish to purchase in eligible rural areas. To learn if the home you have your eye on is considered “eligible,” enter the address here.

The USDA offers several programs and you can learn more about them online at usda.gov.

You’ll can also apply for the various municipality, state and federal down payment assistance programs. Ask your lender for a list or search online.

Hire the right real estate agent

Interview real estate agents carefully to ensure that you find the right one for your needs. After all, your real estate agent will be your advocate during the homebuying process; you’ll be doing a lot of leaning on your agent.

During the interviews, ask questions, share your concerns and pay attention to the responses. Choose someone who understands how stressful the process can be and helps put you at ease.

It has been said that “knowledge is power.” The more you know about the process of buying a home, the more empowered and less stressed you’ll feel.

It doesn’t take much to turn off buyers. Right now, however, there are so many in the market, clamoring for homes in decent areas and in good condition, that homes are practically selling themselves.

Getting the most money possible for your home, however, requires a bit of work. Skipping the following, basic tips, is like throwing money away.

Let’s see if we can step up your home’s game so you can reap maximum rewards.

1. Ignore your home’s appearance from the curb

“Curb appeal” isn’t just a concept from home and garden TV shows; it’s actually what gets homebuyers out of the car and into the house.

Stand at the curb and take a look at the exterior of your home and the landscaping. Like what you see?

If not, a little bit of elbow grease can change that.

If your home needs painting, paint it. Stick with neutral colors, such as gray, taupe and white, according to the experts at Benjamin Moore.

For a pop of interest, paint the door a coordinating color. Black is popular right now, but red and blue are attractive as well.

Next, turn your attention to the landscaping. Just as you’ll need to do to the interior, clean the landscaping of any debris. If the lawn isn’t dormant, mow it and add fresh mulch to the beds.

Then, add attractive plants (even if they’re potted). Ensure that the exterior of the home is as inviting as possible.

2. Assuming since you can’t smell it, buyers won’t either

We’ve all walked into a home and been blasted by stinky, stale odors. Whether they come from pets, kids, cooking or cigarettes, these odors can have potential buyers running for the door.

Fabrics hold odors so consider having upholstered furniture professionally cleaned. Change the HVAC filters for they, too, tend to hold odors. Dry-clean or launder drapes, curtains and throw rugs.

If the odor is cigarette smoke, you may need to paint. Wash the ceilings and walls first with ammonia and water. Then, use a shellac-based primer, such as Zinsser B-I-N, before applying the paint.

3. Your bathroom seen better days

Yes, we understand how difficult it is to keep the hardest-working room in the home tidy. But bathrooms are important to buyers, so yours should be spotless and completely depersonalized.

After cleaning and painting (if necessary), remove personal items, such as toothbrushes, mouthwash, toothpaste, shampoo, etc. from the countertop and the /tub shower’s interior. Ensure that the shower curtain and the toilet lid are closed.

A good rule of thumb for the bathroom is that if something is not decorative, remove it from view.

4. Your home’s interior gives off a“cave” vibe

For as long as we can remember, homebuyers value a light and bright atmosphere over all else. Most of the time they don’t know why a dark home feels uncomfortable; it’s more of a perception.

It’s imperative to remedy a lack of natural light in the home. You can do this with additional lighting and by opening all window coverings.

Dark and gloomy doesn’t sell homes. Light and bright does. Light up every dark space in the home.

5. Assume buyers won’t look at your garage.

You won’t like this one.

Clean the garage.

In their efforts to de-clutter their homes for sale, we see many clients shove all the excess into the garage. Bad move, especially in light of the fact that 86 percent of homebuyers want garage storage space.

Show them how roomy yours is by removing oversized items (take them to storage) and cleaning the garage with the same zeal you did when cleaning the home. Organize what’s left so that the room screams “Look at all this storage space!”

Ensure that while it’s on the market, your home is the belle of the neighborhood. Correcting these five deal breakers is inexpensive and easy but play a big role in your home’s presentation.

You have only one chance to impress the home inspector. Of course, you can’t possibly know everything that might show up on the inspection report, but you can make your home appear well-maintained and take care of some common problems before the inspector knocks on the door.

1. Clear all access points that the inspector will use. These include the attic, water heater and electrical panel.
2. Change the HVAC filters and clean the fuzz off the vent covers.
3. Ensure that all light switches work and replace burned-out bulbs.
4. Clean out the fireplace. Check the damper to ensure that it is operating properly. Cracks in the brick? Seal them with a high-temp silicone sealant.
5. How are those windows? Replace cracked glass and torn screens. Then, open every window in the home to make sure they slide smoothly (both upon opening and closing). While they’re open, take a rag and some cleaning solution to the tracks. Finally, clean both inside and outside glass.
6. Another common problem that makes its way onto too many inspection reports is water-damaged wood, especially the soffits, fascia, window sills (and here you thought you were finished with those windows!) and door trim.
7. Cracks and holes in stucco should be sealed. We found a YouTube video (“How to Repair Cracks and Holes in Stucco”) that will walk you through the process.
8. The pros at TheBuildingInspector.net suggest that owners of wood-framed homes should ensure that mulch isn’t piled up the foundation. “You should be able to see 4 inches of exposed foundation,” they suggest.
9. Those same pros urge you to ensure that your kitchen appliances are clean and that they work properly. (Ice maker as well).
10. Fix any leaks in the ceiling. Then, seal the stain and paint.

Remember, the home inspector will perform a visual inspection of the home and its components. This includes the HVAC system, plumbing, heating, gas lines and electrical panel.

The inspection will take between two and three hours and, as tempting as it may be to be present, the buyer (who hired the inspector) will often tag along, with his or her real estate agent, naturally.

If you have any questions about the home inspection process, please feel free to ask. We’re happy to provide all the information you need.