Easy Agent Blogs

Let’s get this out of the way upfront: When buying a home, the down payment isn’t the whole ball of wax.

When budgeting for a home, you’ll need to factor in other expenses as well and one of the largest of these are closing costs. Because they aren’t due until closing, many homebuyers don’t focus on them as much as they should.

Yes, they can be pricey but there are ways to save money on them.

First-time buyer?

Closing costs include all the fees charged by the lender and others to help facilitate your purchase of a home.

Before loan approval, you’ll be given a Loan Estimate. This is a three-page form that outlines an estimate of these fees. By law, the lender must supply you with the Loan Estimate within three days after the submission of the loan application. Find a sample of the form online at consumerfinance.gov.

Another form of note is the Closing Disclosure, which you will receive at least three days before closing.

“A Closing Disclosure is a five-page form that provides final details about the mortgage loan you have selected,” according to the Consumer Financial Protection Bureau.

“It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs),” they conclude.

Check out the sample Closing Disclosure, here.

How much are closing costs?

There’s no definitive answer to this general and common question. Even the “rule of thumb” varies, from between 2% and 5% to between 3% and 6% of the home’s purchase price.

Putting it into dollars, closing costs on a home purchased for $325,000 would be between $6,500 and $19,500.

What the fees typically pay for

Fees vary according to lender, but if you’d like an idea of what you might pay, see page 2 of the Closing Disclosure, here.

Let’s take a closer look at the most confusing closing costs for buyers and how to negotiate with the lender to lower it. Use the sample copy of the Loan Estimate, mentioned earlier, to follow along.

First, shop around for a lender

Many new homebuyers latch on to the lender offering the lowest mortgage interest rate and that often turns out to be a huge mistake.

As you now know, there is far more to the cost of a loan than interest rate.

First, decide that no matter how tempting an offer is, you will solicit offers from at least three lenders.

Next, compare them according to each lender’s APR or the stated rate. What’s the difference?

The stated rate, or interest rate, states the annual cost of the mortgage.

The APR, “Unlike an interest rate … includes other charges or fees such as mortgage insurance, most closing costs, discount points and loan origination fees,” according to the pros at Bank of America.

Experts are divided over which rate to compare. For a deeper understanding, visit themortgagereports.com.

Origination charges

Loan origination fees are, simply, the fees lenders charge to initiate your mortgage. This is one section of this form you’ll want to compare to other lenders’ offers.

“This is where we’ll find the “junk” fees — the add-ons a lender uses to make more money,” according to Hal M. Bundrick at nerdwallet.com.

You may see other fees listed in this section, such as:

• Administration fee
• Processing fee
• Document preparation fee
• Appraisal review fee

“Remember, any fee in Section A ‘Origination Charges,’ is negotiable and part of the lender’s profit strategy,” Bundrick said.

He also offers this negotiating trick that can be used even before you receive the Loan Estimate:

“… ask each lender you’re considering: ‘If we proceed, what are all of the origination charges that I will find listed on the Loan Estimate under Loan Costs, Item A?” Use those exact words and get their response in writing.”

Feel free to reach out with any homebuying questions. We’re happy to help.

Twenty-five percent of May 2021 homebuyers waived the home inspection in their efforts to win a bidding war, according to research from the National Association of REALTORS®.

It’s a dangerous tactic and one we don’t recommend.

Yes, the results of a home inspection can derail the entire deal. At best, especially if the problems are significant and the buyers are still willing, it can significantly slow down the transaction while negotiations reopen and work gets done.

But waiving your right to an inspection isn’t wise.

Which repairs are mandatory?

Various states require certain fixes before the sale is consummated. California, for instance, requires that the water heater be strapped to the wall (earthquake safety regulations).

In Nebraska, the home must have “… working smoke detectors and carbon monoxide detectors at the time of sale,” Matt Steinhausen, a longtime professional home inspector in Lincoln, Nebraska tells Valerie Kalfrin at homelight.com.

As a whole, there are no federal laws mandating certain repairs in a home sale. This is why many homes are sold in as-is condition. If the problems are serious enough, these homes may only attract cash buyers, typically investors.

And, there’s a reason for this.

Lenders generally won’t lend money to purchase a home with certain problems. Many insurers want their say in the matter as well.

Home inspections that reveal safety and health issues, violations of local building codes or structural problems may not qualify for a mortgage.

The Veteran’s Administration, for instance, requires that the home adheres to its Minimum Property Requirements (MPR). You can find a list of them at benefits.va.gov.

Buyers using an FHA-backed loan may run up against some problems as well because FHA expects the property that they lend money on to adhere to its requirements. These requirements include that the home must offer:

• Adequate entry and exits (for example, windows) from the bedrooms to the home’s exterior.
• Non-leaking roof. A roof that isn’t worn.
• No structural problems.
• No peeling paint if the home was built before 1978.
• No “Defective exterior paint surfaces in homes constructed post-1978 where the finish is otherwise unprotected.”

These represent a few examples. For a more in-depth look at FHA requirements, visit HUD.gov.

Which repairs should I request?

After the lender and the insurance company have their say on which repairs they require, there may be other issues that make you uncomfortable. Anything that will impact your health should be at the top of the list of repair requests, along with any structural issues.

Check the home inspection report for anything that indicates:

• Electrical hazards
• Mold
• Problems with the heating/cooling system
• Wood-destroying pest infestations
• Plumbing issues
• Water damage

Any of these problems aren’t necessarily deal breakers. Approach all repair requests in a spirit of respect and good faith and be willing to work with the seller on getting them resolved.

Cosmetic repairs, by the way, are rarely entertained.

Repairs aren’t guaranteed

The current housing market strongly favors the home seller. The demand for homes is so high, in fact, that buyers are not only not in the driver’s seat or even riding shotgun; they’re hitchhiking.

Sellers tend to decide what they will fix and what is open for negotiation with the buyer. In any of the common multiple-offer situations, it’s almost a take-it-or-leave-it scenario. There’s always another buyer right behind you.

In the current market, it’s important to “weigh the risk of playing hardball,” cautions Kalfrin, and we agree.

Weigh it against your desire for the home and your budget.

It’s crucial that you work closely with your real estate agent when faced with a repair request. We deal with these requests daily and can help you through the process.

It’s wise to have a plan for that day when you say “I’m outta here!” to the work world. Your happily ever after won’t be so rosy if you’ve put off the planning.

We aren’t talking financial planning here; after all, we’re real estate agents, not financial experts.

What we’re talking about is geography–where you’ll live. The lifestyle you hope to pursue will bear on your choice of location. At least it should.

Do you plan on slowing way down or going into this phase of your life with wild abandon? If it’s anywhere near the latter, we have a suggestion for you: Downsize.

Especially if lots of travel is in your future, the last thing you need is a big house and all its accompanying maintenance to anchor you in place.

Consider selling the house and buying a condo. Read on to find out why.

You’ll lower your housing expenses

Whether you’re single or heading into retirement with a spouse or partner, ditching the family home for a condo is a sound financial decision.

First, condos typically cost less to purchase than single-family homes. For example, although condo prices have risen steadily over the past decade, the median sales price in March 2021, nationwide, was $289,000 (quickenloans.com).

During that same period, the median sales price of an existing single-family home was $334,500, according to the National Association of REALTORS®.

This represents a more than 15% difference (or $45,500) in price.

Not only will you save money on the purchase of a condo rather than a single-family home, but you’ll spend less heating, cooling and maintaining a condo.

Yes, there are fees involved in condo ownership. The bonus here is that these fees help cover any major maintenance and repair costs in the community.

You’ll have fewer maintenance hassles

Although some condo communities feature homes with small yards, they pale in comparison to what you may have now. The most popular situation is a community with common areas, maintained by the homeowners association (HOA).

This means you eliminate the exterior painting, lawn mowing and snow shoveling you did when you owned a single-family home.

You’ll enjoy more amenities

Depending on the type of home you currently own, buying a condo may offer you far more amenities.

Even the smaller condo communities tend to offer swimming pools and clubhouses. A slight step-up in value and you may live in a secure community with a doorperson, concierge, fitness center and more.

Most of these goodies cost residents nothing because the fees are included in the HOA dues.

Your home may be safer and more secure

If you plan a bit of a wanderlust lifestyle when you retire, you can’t go wrong with with the home security a condo offers.

Be aware that small condo communities experience more burglaries per year than single-family homes, according to the U.S. Department of Justice. Condo communities that include 10 or more units, however, have lower burglary rates.

There are several reasons for this. First, larger condo communities typically offer more security features, making it tougher for the bad guys and gals to gain access to the community as well as the individual units within.

The pros at brinkshome.com offer another reason. “Single family houses are often attractive targets, as their large size promises would-be thieves greater rewards and their numerous access points make them more difficult to secure.”

Owning a condo will allow you to hit the road for as long as you want with far less worry than if you leave behind a large single-family home.

You couldn’t pick a better time to make this decision. The real estate market still favors sellers. And, the amount of equity you’ll have to work with after the sale may shock you.

Take advantage of that equity to downsize your finances and your life during retirement.

 

If you’re thinking of jumping into the 2022 real estate market, either by buying a home, selling a home or both, understanding what is in store for the market in the future is imperative to making a wise decision.

Since nobody has a crystal ball to help discern the future, we rely on experts in various economic niches for our housing market prognostications every year. Are they always spot on? Nope, but some get awfully close.

So, let’s dive in.

Who are these people and how do they come up with forecasts?

Economic forecasters come in a variety of forms.

“Private sector companies may have in-house economists to focus on forecasts most pertinent to their specific business … Alternatively, they might rely on Wall Street or academic economists, those attached to think tanks or boutique consultants,” explains Daniel Liberto at Investopedia.com.

He goes on to caution us that “… economic forecasting is often described as a flawed science.” Examples include White House economists who will often publish rosy scenarios in an attempt to get the public onboard with certain legislation.

It’s no different in the housing market. Those with a “dog in the fight,” such as certain large real estate websites, rarely forecast discouraging news. In fact, while researching for this blog post, we found evidence of just that. One large real estate-related company’s 2022 forecast is the exact opposite of what other economists are predicting.

At any rate, economic forecasters, in general, rely on “… statistical models with inputs of several key variables,” according to Liberto. The variables are chosen according to the industry being studied. For instance, when forecasting future housing market conditions, economists use:

• Interest rates
• Unemployment/employment rates
• Impacts on income, such as inflation
• Supply and demand of homes
• Housing affordability
• Availability of mortgages
• New housing construction data

Learn more about these variables at economicshelp.org.

Since space prohibits a deep dive into all of these, we’ll concentrate on the ones that our clients seem most concerned about.

Mortgage interest rates

Mortgage interest rates determine the volume of homebuyers in the market. When rates are high, those at the lower end of the affordability scale leave the home-buying process.

Low interest rates, on the other hand, encourage homebuyers and dry up the inventory of available homes.

Danielle Hale, chief economist at realtor.com® forecasts that mortgage interest rates will “Average 3.3% throughout the year, 3.6% by end of year.”

To prove our economy can change quickly, Hale’s forecast was published prior to the latest news from the Fed: they are anticipating three interest rate increases in 2022.

“New projections based on the median forecast by Fed officials see the federal funds rate rising to 0.9% by the end of 2022, to 1.6% by the end of 2023 and to 2.1% by the end of 2024,” according to Greg Robb at marketwatch.com.

While the rates expected are higher than we’ve experienced in the past year, they may still remain at historic lows.

And 2022 home prices?

Attempting to time the market is never a good idea. By the time it corrects, it’s too late to take advantage of the previous market.

“Will next year be a good time to sell?” is a question we field a lot lately. Let’s see what economists have to say about it.

Economists that we follow say that prices will soften in the new year, but slowly. Realtor.com experts claim that over the course of 2022, the median existing home price will rise 2.9%

If that projection comes true, it would represent the slowest rate of growth since 2012, according to Lance Lambert at fortune.com.

So, what could change this scenario? Rising mortgage rates could dry up demand, causing prices to plummet.

What may be more likely to occur are changes in the jobs market. The new Corona variant is still quite mysterious and how our lawmakers respond to it could impact the employment scene.

Best guess? It depends …

The housing market’s strength depends on a number of variables, one of the most important of which is the health of the job market.

“The Great Resignation,” new variants of the coronavirus and other factors have thrown all predictions about 2022’s jobs market to the wind.

California, for instance is expecting “… fewer payroll jobs …” in 2022 “… than previously anticipated,” according mercurynews.com’s George Avalos, citing the Anderson Forecast.

I know this is a lot to consider as you think about timing your home sale or purchase. Our best advice to you is to jump in as soon as you can.

Feel free to reach out for assistance; we’re happy to help.

 

Impulse buying. We’ve all heard the term and many of us have succumbed to the temptation to indulge in the act, especially in a retail setting.

It’s why the chewing gum and candy bars are located where folks line up to pay for their groceries. It’s the lure of the basket of low-priced goodies near the cash register at your favorite bath and body store.

Unfortunately, overspending on a home, especially one that may not fit your wants and needs, is far more traumatic to your finances than impulse buying at the grocery store.

Psychologists say that the best way to avoid impulse buying (and, thus, overspend) is by having a clear idea of how much you can spend, arming yourself with a detailed list of what you need and not allowing yourself to be distracted.

This is good advice for house hunters as well

So, step number one, before you dive into creating a wish list, is to visit a lender to find out how much you can afford to spend on a home. There’s no sense looking for a home with tennis courts if you can only afford a condo, right?

Now, on to the wish list.

Make it realistic

Now that you know your home-buying budget, let’s get real on the wish list. To help you get your thoughts flowing, consider the following:

• What you most deeply value in a home
• What you cannot tolerate in a home

Think about these items in regards to not only where you currently live but other homes you’ve lived in as well.

If another bathroom is something of value to you, put it on the list. If you need a snappy commute, put that on the list. Avid gardener? Ensure the home has the space for you to create the garden of your dreams.

Remember, however, that this isn’t a fantasy list. Each item on the wish list should be possible to find in a home within your budget.

Which neighborhood do you want to live in?

Once you get the home’s details nailed down, it’s time to figure out where you want the home to be located. Here are some things to think about:

• Proximity to preferred school(s)
• Does the area fit your lifestyle? If you have children you’ll want to figure out if there are lots of other kids for them to play with. On the other hand, if you want peace and quiet, you’ll want the opposite in a neighborhood.
• Crime affects everyone and if it’s a concern, you’ll need to do some research. Regulations forbid real estate agents from discussing crime rates with consumers, but there are other ways to sleuth. Check with the local police department and go online to areavibes.com and the US Department of Justice’s National Sex Offender Public Website.
• Any future plans for the area? Check with the city planning office.
• What are the neighbors like? You can get a good idea about this by actually stopping and talking to anyone you see outside. Also pay attention to how well nearby homes are maintained because this will impact the future value of the home.

Don’t forget to bring your list with you when we meet. This way we can find (hopefully) exactly what you’re looking for.

When it comes to choosing a home to buy, there are exterior people and then there are interior people.

Exterior/interior describes what turns them on most about any particular home. It’s the gardener vs. the chef, the spring and summer outdoor entertainer vs. the I-need-a-fireplace-in-my bedroom person.

The latter group is far larger than the former, which is why when it comes to advice online, you’ll find lots of it geared toward what to look for inside a home.

Even the number of MLS photos of a home’s exterior pale in comparison to those of the interior.

Which is why today we turn our attention to the home shopper who jumps out of the care and breezes up the walkway to a home-for-sale’s front door with nary a look at the exterior.

Slow down. Take your time when you get out of the car. If the home is appealing to you, check out the exterior before getting back into the car.

Check out the landscaping

Sure, you can always change a home’s landscaping. It can be pricey, but it’s certainly doable.

It’s most important to check out the number of trees on the property. Trees, large or small, can be considered good or bad.

Let me explain.

Large, older trees can be problematic if they have invasive roots and are grown too close to the home’s foundation, swimming pool or other sensitive areas.

Then there are the big trees that were planted too close to the home and now look as if they’re ready to eat the home’s roof.

On the other hand, large, older trees that aren’t posing a risk to the home’s structure actually add value to the home and may even help you save on home energy costs.

Foundation

See those cracks in the foundation? Before you get nervous about them, keep in mind that they may mean nothing.

Or, they may mean you should run, quickly, back to your car.

Of the five types of foundation cracks, if the one you notice runs vertically on the foundation, there’s nothing to be concerned about, according to the pros at Complete Basement Systems in Colorado.

“… they’re a common sight in many homes and non-threatening.,” they claim. “Vertical cracks tend to slant slightly (within 30 degrees). To seal them, water-resistant epoxy or polyurethane injection is applied to the cracks.”

Diagonal cracks are also among the least dangerous. They are caused by what is known as “differential settlement.”

Although they aren’t among the scariest of foundation cracks, “… cracks that run diagonally at 30 to 75 degrees …” should be checked by a professional.

When buying a home, the most important cracks to have inspected are those that run at a horizontally.

“Several types exist and all indicate serious structural problems,” the folks at Basement Systems warn.

Check out their website for more information.

Ah, a sparkling swimming pool!

Listing descriptions of homes for sale are often tantalizing, right? If the home features a swimming pool, the adjectives come fast and furious.

If you’ve never owned a home with a swimming pool, brush up on their upkeep. From getting the chemicals balanced to skimming leaves and scrubbing the walls, there is a lot that goes into maintaining a clean and hygienic swimming pool.

And how will you know if a pool and its equipment at a home for sale has been properly maintained?

Ask your agent to obtain maintenance records from the seller. At the very least, find out the age of the pool and the equipment.

Look for cracks and, if you find any, have the pool inspected by a professional.

Yes, it’s an additional expense to hire a pool pro. But, consider this:

“A new, energy-efficient heat pump cost $4,500. We bought a pool-cleaning robot for about $800. Just to get the pool running, we spent about $10,000,” Sally Herigstad says of her buying-a-home-with-a-pool experience.

“Last summer, we spent about $500 on repairs, plus another $200 on chemicals,” she continued.

Her advice?

“If you have your heart set on using a pool, consider having a pool expert inspect your property before you buy the house. Be reasonably confident you can afford to fix the pool and maintain it, or no one will be having any fun with it.”

We’re happy to help you find the specialists required to give you peace-of-mind during your home purchase. Reach out anytime.

 

 

Although estimates differ depending on who is asked, 40 to 50 percent of all American marriages end in divorce.

There’s a piece of trivia to take to heart during those long, often confusing nights when you stay awake and wonder “What happened?”

But now is not the time to dwell on the past, but to deal with what’s currently happening. As painful as it may be, separating the marriage assets in preparation for the divorce is one of the uglier aspects of divorce.

There are several options as to what to do with the house when couples split up. The most common among these include:

• One party keeps the home by buying the other’s share.
• One party retains occupancy of the home temporarily (such as to raise the couple’s children in the family home).
• The house is sold and the proceeds split between the parties, according to their agreement.

If you and your soon-to-be-former spouse have decided to sell your home, we’d like to help you learn what to expect from the process.

The listing process

Listing a home is typically a pretty straightforward process but, unless the two of you remain on good terms, the “typical” doesn’t apply during a divorce sale.

Every aspect of the listing must be a joint agreement, from how much work you’ll do to prepare the home for the market to how much to ask for the home.

Easier said than done at this point in the marriage, right?

We understand that it may seem impossible to come to a meeting of the minds so what we do is arm both of you with the information that may help you get there.

We’ll tour the home, making note of what we think should be done to prepare. We’ll work diligently to come up with an attractive yet aggressive list price for the home. From there, it’s up to the two of you.

This is the part of the process where, despite the memories the home holds, despite the dreams that may be dashed at this point, you’ll need to also divorce yourself from your emotions wrapped up in it.

Only then will the two of you be open to advice on what needs to be done to sell the home quickly and for top dollar.

The marketing process

We won’t tell other agents or prospective buyers why you’re selling your home, so if you want them to know about the divorce, you’ll need to give us permission to blab.

It’s truly none of anyone else’s business and, sadly, we’ve learned that news of a divorce sale causes many buyers to submit ridiculously low offers.

While living in a home that’s on the market is challenging to most who sell, when there is rancor in the house it becomes even more difficult. Keeping the house presentable at all times is hard even under the best conditions and last-minute requests to view an already disrupted home life need to be expected, planned for and accommodated.

The offers to purchase

Reviewing offers as they come in is probably the most challenging part of the process. Nothing will happen with an offer unless the two of you are in complete agreement.

This agreement extends to everything that a buyer may want to negotiate, from time limits for the removal of contingencies to price.

Discuss this up front. If you can agree to at least put your differences aside during this aspect of the purchase process it will go a long way toward a successful outcome.

Dividing the proceeds

Both of you will need to meet with your lawyers in advance of the sale to determine how to divide the proceeds from the sale. Once we have a buyer, we’ll submit instructions to the escrow company outlining the distribution agreement and the escrow officer will take it from there.

Distribution needs to be determined before we get an offer to purchase.

We have worked with many clients who are in your exact situation so we understand the challenges you face. It’s our goal to make the process as easy on both of you as possible.