Category: Real Estate

The open house has been a part of home selling for more than 100 years, according to the National Association of REALTORS® (NAR).

Fast forward to today and, although still a tool that many real estate agents use, the open house has decreased in popularity. We can thank the internet for that. With online access to video tours, virtual tours and 3-D floor plans, many homebuyers decide which homes to view online, not by driving around and visiting open houses on weekends.

According to Home Buyers and Sellers Generational Trends, the NAR’s annual survey, when asked about the first step taken during the home buying process, only 2% of respondents visited an open house.

While more than half of homebuyers found the home they eventually purchased online, only 4% purchased a home they found with a “yard/open house” sign.

With a changing market, however, an open house just might be what helps sell your home. Let’s take a look at ways to ready the home for the big day.

Let folks know

Yes, your real estate agent will get the word out about your open house, but who better to spread the word among the neighbors than you? Ensure you visit them and extend an invitation to the open house.

Ask if they know anyone who might like to live in the neighborhood and urge them to bring those folks along on open house day.

Don’t forget people you work with. Ask your real estate agent for a handful of fliers and pass them out at work.

The four-legged family members

The best thing to do with pets during the open house is to find someplace for them to go. If you can’t take them with you when you leave for the day, can you keep them at a family member or friend’s home? If not, how about a day at the groomers or doggy daycare?

Remove all evidence of the furry friends, such as crates, bowls and toys and attend to any pet-related repairs.

Secure what needs securing

We’ve found that most open house attendees are honest folks. But, there is the occasional exception. For this reason, it’s important to secure certain items in the home, such as weapons, prescription drugs and valuables.

Taking these items off-premise is the best way to assure that they’re secure.

Don’t leave any financial information, such as bank statements, investment information, blank checks, credit or other bank cards in plain view or in drawers, unless the drawer can be locked.

Do it yourself or hire someone, but get it done

Clean your house. Keeping a clean house is probably the most tedious task of selling a home, but cleaning it for the open house is critical.

We aren’t talking tidying up here, but cleaning deeply, until the house is immaculate. Professional house cleaners often suggest that you come up with a system and one that we like starts at the front door. From there, you work your way around the home from left to right or right to left, whichever you choose.

As you move through the home, start each new area by cleaning from top to bottom, from the ceiling to the floor. This way you don’t miss any spots that are commonly missed such as that area where the ceiling meets the wall, the baseboards and the light fixtures.

Then, turn your attention to the garage. A two-car garage is in demand with homebuyers but that same garage offering obvious storage options is something folks clamor after.

Clean and declutter the space and then highlight any storage options it offers.

The open house is your home’s chance to grab local homebuyers’ attention. Ensure that it puts its best ‘foot’ forward for a quick sale.

Yes, Mom, money does sometimes grow on trees. The experts at the Appraisal Institute say that anything you do to better the appearance of the outside of the home will increase its value. In fact, updating the home’s landscaping alone may increase the value up to 11% according to a Michigan State University study.

This is, most likely, a direct result of another study’s findings (National Association of Landscape Professionals). This survey found that 84% of Americans feel that how a particular home is landscaped would impact their decision to buy it.

So, what do these professionals consider “good” landscaping?

Good landscaping is ‘sophisticated’

While the sophistication of a landscape design is something that is hard to put into words for most consumers, like art, they know it when they see it.

The study defines a sophisticated landscape as one that includes a balance of large deciduous trees, evergreen plants, annual color plants and colored hardscape. The latter includes all non-plant features, such as decorative brick, pavers and gravel.

The study found that a home with only a lawn in the landscape, valued at $150,000, can gain $8,250 to $19,050 more in value with an upgraded, sophisticated landscape.

By the way, The Michigan State University study’s respondents ranked a landscape’s sophistication as most important when considering the perceived value of a home.

Size does matter

For homes located in a region of the country where trees take significantly longer to grow tall, a large tree may add more to the home’s value than smaller trees. “A mature tree can often have an appraised value of between $1,000 and $10,000,” according to experts at the Council of Tree and Landscape Appraisers.

Other studies, such as one conducted by the Arbor Day Foundation, claim that any trees on the property may add up to 15 percent additional value to a home.

As an added bonus, a young healthy tree offers the cooling equivalent of 10 room-size air conditioners running 20 hours a day, according to the U.S. Department of Agriculture.

Mix it up a bit

Achieving diversity isn’t a worthy goal only for the human race, but for your home’s landscaping as well.

For the most bang from your landscaping buck, consider following the Michigan State University study findings by planting annual color plants and adding colored hardscape to the yard.

Annual plants are those that complete their lives in one season. They can be planted anywhere, but look especially striking in beds, borders and containers. Typically planted in the spring and summer, some annuals to consider include vinca (Vinca spp.), zinnia (Zinnia spp.) and sweet pea (Lathyrus odoratus).

Plant shorter annuals toward the front of the beds and taller, or climbers, toward the middle and rear.

Whatever you do, don’t go minimalist

Minimalist landscape schemes that contain only small plants actually detract from a home’s value, according to the Michigan study. If you’re on a tight budget and can’t afford an entire landscape makeover, consider adding at least one of the more important aspects of a sophisticated landscape design.

Since plant size is second in value to sophisticated design, consider adding at least one tall tree and sprinkling the landscape with splashes of annual color. The Arbor Day Foundation offers a handy calculator on its website that allows users to choose a type and size of tree to determine how much value it will add to the home.

When you’re getting ready to move, it’s common to want to lighten the load. Unfortunately, most of your excess belongings, whether they’re waiting to be sold, given away, donated or stored, end up in the garage – with all the other stuff you’ve stuck out there over the years.

It’s like a giant junk drawer and, while your home is on the market, it will be visible to anyone who views the home. It’s unfortunate that with all of the advice out there about staging a home for sale, few of the experts recommend staging the garage.

A few years ago the National Association of Home Builders (NAHB) published a study of homebuyers and what they’re seeking in their new home. More than half of them said they want a garage and 86 percent said that a garage with storage is either desirable or essential.

If you’re ready to tackle the cleanup of that giant junk drawer we have a couple of tips for you.

1. Pull it all out

That’s right, pull everything out of the garage and onto the driveway. This leaves you with a completely blank slate with which to work your magic.

Now you’ll need to clean the garage – which isn’t at all like cleaning a house. The tools and products you’ll need depends on how the garage was used. If it was used as storage your job will be easy. If, on the other hand, you did wood working or auto repair projects in the garage, you have your work cut out for you.

The best way to start is with a thorough sweeping of the walls and the floor, then a power washing. You may need to finish up by using a scraper to get at the paint splatters and other substances that remain after washing.

If it’s oil or grease that remains, you’ll need a concrete degreaser and a deck brush to scrub the area clean.

2. Splash some paint around

When the floor dries, it’s time to get some paint on the walls and finish the floor. Semi-gloss finish paint is ideal for the walls and epoxy floor coating will make the garage floor look pristine. The guys at This Old House claim that coating the floor is an easy DIY job and show you how on their website.

2. Lug it back in

While everything dries, sit down and figure out how you’ll organize the items you’ll be bringing back into the garage. Whether that involves building or buying shelves, plastic bins, pegboard on which to hang things or a combination of all three, plan it out on paper.

Get tips and ideas at HGTV.com, Pinterest.com and RealSimple.com.

Then, bring in only the items that you’ll truly need before you move. Organize everything according to your plan and take the rest to storage or give away, sell or donate them.

Every neighborhood has that one guy whose garage is so clean it seems like you can eat off the floor. That guy (or gal!) should be you by the time you’re finished.

Congratulations! You now have the sexiest garage in your neighborhood.

The process of buying and selling homes is somewhat mysterious to many Americans – especially first-timers.

To make matters worse, friends and family, as soon as they learn you’ll be involved in the process, tend to offer their advice. This is how myths are formed – by people making assumptions about how something works.

Let’s see if we can debunk some of the most common home selling myths that real estate agents face every day.

Myth: The seller determines the home’s value

Fact: Buyers determine the value of a home and their opinions are reflected in the prices of sold homes in the area.

The International Society of Appraisers quotes the Department of the Treasury’s fair market value definition as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, and both having reasonable knowledge of relevant facts.”

Buyers base their willingness to buy on several factors, including the size and condition of the home, its location, current market conditions and the sales prices of comparable homes.

The list prices of area homes merely reflect what the sellers are hoping to get. Don’t assume that the $375,000 list price of the house next door represents market value in the neighborhood.

Recent sale prices are indicative of what buyers are willing to pay and, thus, market value.

Myth: To leave room for negotiation, it’s smart to price the home high in the beginning.

Fact:  Overpriced homes take longer to sell and typically sell under market value.

There are several reasons why this happens. First, by overpricing the home you are excluding your real buying pool. Buyers who can afford to pay what your home is truly worth won’t bother looking at it, because it’s not priced in their range.

The house will attract buyers that can afford to pay more for a home and yours simply won’t stack up to the others in the price range. By alienating both pools of buyers you are wasting those valuable first two weeks of marketing when your home is a new listing.

Overpricing the home is only a safe strategy in a seller’s market, when there are few homes available and lots of buyers in the market. In a buyer’s market, however, your overpriced home will languish on the market.

Myth: There’s no need to make repairs if you are giving the buyer a repair credit.

Fact: Today’s homebuyers want a home that is in move-in condition.

Can you blame them? Few homebuyers want to move into a house knowing that they will be inconvenienced by ongoing repair work. Which is why the majority say they want a home in move-in condition.

To sell the home quickly and for top dollar, make major repairs before you put the home on the market. Not only will the home then be considered move-in ready, your agent can mention the repairs in the home’s marketing materials.

Myth: Home improvements pay for themselves when you sell.

Fact: Few home improvement projects return 100 percent of your investment, according to Remodeling magazine’s annual Remodeling Cost vs. Value Report.

If the home is a fixer, and you do major renovations, you will get a higher price for it than you would if you didn’t do the work. It is doubtful, however, that you’ll make all your money back.

Replacing the garage door is the closest you’ll get to recouping all the money spent – a 93.3% percent return on investment.

Make improvements to the home based on how they will increase your comfort and your enjoyment of the home.

Myth: Choose the real estate agent that recommends the highest list price.

Fact: An agent that recommends a price substantially higher than what other agents recommend may be trying to “buy” your business.

It’s an old trick and, while not many agents engage in the practice, some do. You’ve already learned about the dangers of overpricing your home and this scheme takes it one step beyond. After 30 days or so, the agent will come to you and ask for a price reduction.

By this time, the home has lost valuable marketing time and now, with a price drop, it may become stigmatized. Buyers will wonder what is wrong with the home that has caused it to sit on the market. The price drop invites bargain shoppers, hoping to cash in on your perceived desperation.

Choosing a listing agent is one of the most important steps in the home selling process. Choose your agent based on experience and credentials, not on lofty promises.

 

It’s no mystery that, at any given time, the current economy impacts home values, but that’s not the only predictor of a home’s worth. Foreclosures in the area, local planning department aims and even the habits of your neighbors can determine the worth of your home.

Then, there are schools. Did you know that the quality of the local school district has a direct impact on your home’s value?

Whether or not you have children, the schools in your area will determine the asking price of your home. How? Read on.

Resale value is an important consideration when buying a home

The current market value of a home is based on what a willing buyer will pay for it. Imagine all the “willing” buyers out there with children. These buyers do their homework and decide to buy homes in a “quality” school district. Can you blame them?

When enough of these parents pay a premium price to live in a good school district in your community, expect the prices to rise in those areas and to remain stagnant or even fall in others. If your home is among the “others,” you didn’t do your homework before buying.

Hey, that’s understandable. Most Americans don’t consider their home to be the major financial investment that it is. Understandable, yes. Wise? No.

When you put together the wish list of what you want in a home, please include the words “resale value.”

Need proof?

Numerous studies show that a good school district positively impacts value. One 2009 study, conducted by Ken Corsini at Georgia Institute of Technology, found that homes near schools with schooldigger.com ratings of four or five stars held their value better during the Great Recession than those near schools with fewer stars.

David Figlio, professor of education, social policy and economics at Northwestern University, noticed that in Florida, homes located near schools awarded an “A” rating by the state gain an additional $50,000 in value versus those near schools with a “B” rating.

This premium gap is notable in the award-winning Bellevue school district in Washington state as well. There, homes are valued 15 percent higher than those in other districts.

Buyers agree

“Fifty-three percent of buyers with children in the home under the age of 18 years said the quality of the school districts is an important factor when purchasing a home,” according to studies by the National Association of REALTORS®.

An earlier study showed that nearly one-fourth of buyers were willing to pay 1 to 5 percent above their home purchasing budget for a home in a highly rated school district.

What makes a “good” school district?

One of the most common determinants of school quality is test scores. For instance, the website GreatSchools.org bases its ratings primarily on test scores.

Although castigated by some, U.S. News and World Report’s annual high school rankings are based on three criteria:

• Scores on state-mandated tests
• How effectively the school educates minority and disadvantaged students
• Participation in and performance on the International Baccalaureate and Advanced Placement exams.

Additionally, an older study sponsored by the Andrew W. Mellon Foundation suggests that “mean test scores are significantly related to property values.”

How much more is a good school district worth?

Determining a dollar value for homes located in high-performing school districts seems to be the only area the experts disagree on. Some researchers support study claims that homes in school districts with high test scores are worth $16,000 more than similar homes in poor-performing districts.

A Brookings Institution report indicates that, on average, homes in high-scoring school districts are worth $205,000 or more than those in low-scoring districts.

Figlio says that homes in top districts net a 23 percent premium over homes in other districts. The positive news is that no matter the fortune of the housing market – whether it’s rising or falling – the premium remains consistent.

Although the size and price of a home are always key considerations, when considering the home’s future value, the quality of the school district may sometimes trump all else.

Planning a wedding is one thing. Add a home purchase to that chaos and you have a recipe for a whole bunch of stress.

If you’ve decided that you can handle both projects and have your heart set on carrying your bride — or being carried by your groom — over the threshold of your own home, you’re not alone.

One in four couples between the ages of 18 to 34 searched for and bought a home before they tied the knot.

Before you and the fiance hop in the car and start checking out homes, read on for a few tips.

Consider your financial situation as individuals, not a couple

One of the first decisions you will need to make about the home purchase is about who will be applying for the mortgage – both of you together or just one of you. The decision should be based on your financial situation/credit. Make separate lists containing the following information:

• Your credit score
• Your annual income
• Your total debt

If your credit scores are significantly different, you may want to allow the high scoring partner to apply for the mortgage. A higher score means a lower interest rate and, thus, lower house payments.

If you decide to include the lower scoring partner on the mortgage, be aware that the low score will most likely dictate the interest rate you get.

If the high scoring half of the couple has a significantly lower income, however, you’ll need to make a decision on what is more important: a lower interest rate or a higher loan amount.

Learn about the different ways of holding title

Joe and Sarah are engaged and plan on buying a house together before the wedding. Sarah has been employed in a management position with a large firm for six years and holds a 720-credit score.

Joe, on the other hand, lived the high life during his bachelor days, moved around a lot and frequently found himself dodging bill collectors. Although he’s settled down and has held the same job for over a year, his credit score is 560.

The couple, with the help of their lender, decides to have Sarah apply for the mortgage. Not only are their chances of approval higher, but the interest rate will be lower than it would be with Joe applying as a co-borrower.

Joe is disappointed as he’d hoped for this to be a joint venture.

This is where the manner of holding title comes into play

Just because Sarah is on record as the responsible party for the mortgage payments, she can add Joe’s name to the deed after the deal closes. First, though, they need to make a decision on how they wish to hold title.

Two of the most common ways of holding title are joint tenants and tenants in common. Joint tenants own equal shares of the home. When one of the tenants dies the other automatically takes control of the deceased’s share, regardless of anything else stipulated in a will.

Known as the “right of survivorship,” this method of holding title avoids the probate process. If one partner in the joint tenancy wants to sell his share of the property, the joint tenancy ends and the new owner becomes a tenant in common, with no rights of survivorship.

Joint tenancy has certain tax consequences for the survivor so work with an attorney and your financial planner before deciding on this method of holding title.

“Tenants in common” is the most common way for unmarried partners to hold title. Under this method there is no right to inherit the other’s share upon death. Instead, the ownership transfers to those named in the will or living trust.

Unlike joint tenants, tenants in common can own unequal shares of the property. For instance, Sarah can own 60 percent and Joe can own 40 percent.

Again, there are legal ramifications of holding title as tenants in common so consult with your attorney before making a decision.

Adding a name to the title is typically be accomplished with a quitclaim deed.

Possible problems

No couple – especially those in the throes of wedding planning – wants to consider that they may not make it to the altar.  Broken engagements do happen, though, and it’s important to protect yourselves.

Meet with an attorney and discuss the possible legal pitfalls of a breakup before you get married, including the division of the property and equity. A written agreement as to what will happen in the event you don’t exchange vows will protect both of you.

Once the home purchase and legal issues are out of the way you can concentrate on those chiming wedding bells and the promise of marital bliss.

We probably don’t need to tell you that the housing market is in flux. Current news headlines are screaming that the 6% slide in home sales in July signals a slide into a “housing market recession.”

Although we are far more optimistic about the market, we can’t deny that it is changing, and that selling a home during a market in flux can pose difficulties.

If that home is a condo, the rules change. Selling a condo is a bit different than selling a single-family home.

“The good news is that condos tend to sell faster than single-family homes even in a down market, because condos are typically smaller, cost less, and have lower maintenance costs,” according to Lisa Johnson Mandell at realtor.com.

The trick is to make your condo stand out from all the others on the market. Whether the unique feature is location, condition or amenities, it’s important to market the property to appeal to what buyers are looking for.

An experienced, knowledgeable listing agent can help you, but if you know what to expect, it may free you to be more motivated to get that condo sold.

Step 1: Price the condo competitively

The list price of your condo can make or break a successful sale. Buyers’ agents know what local property values are and they won’t bother showing their clients yours if it’s overpriced.

An overpriced property also invites counter offers which, if you’re in a hurry to sell, can significantly slow down the process.

Your real estate agent will offer his or her opinion of price, but, ultimately, it’s up to you to say yay or nay.

If you’re tempted to start high in the hopes of coming down in price later, keep in mind that over-priced properties tend to remain on the market longer and may eventually end up selling for less than market value.

Step 2: Get your condo move-in ready

Perception is so important in the home selling process that according to a study by Maritz Research, 63 percent of homebuyers surveyed said they are willing to pay more for a home that they feel is in turnkey condition.

By “turnkey” they may mean “… that it has been fully and newly renovated,” according to Liz Smith at smartasset.com.

But, not always. If the home is impeccably clean, tastefully presented and gives the impression that they won’t have to do much to it when they move in, it may be perceived as move-in ready.

Replace ratty carpets, update lighting and add fresh paint to make the condo more appealing.

If you have room in your budget for a professional home stager, consider hiring one.

Not only do these pros understand the latest decorating trends but they also understand who your target buyer is and can create a specific impression to attract that buyer.

Best of all, as little as $300 to $400 spent on staging returns a 586% return on your investment, according to the Home Sale Maximizer Guide.

Step 3: Out-compete your competition

This step is for informational purposes because the tasks outlined are ours. This is one reason why your choice of listing agent is so important.

Condo shoppers may get the impression that all complexes are alike. Although many do look similar, amenities vary.

If your complex boasts a pool, so do many others. But, in our marketing materials, we’ll turn that pool into an oasis of sparkling blue, clean and heated luxury.

We’ll do the same for the other amenities in your complex to make the descriptions irresistible.

Step 4: Be proactive

While none of us has a crystal ball, it pays to think of what might happen in the future. If the market should take a sudden turn in favor of buyers, you will be kicked out of the driver’s seat.

Decide now if you will offer incentives to the buyer should that scenario come to pass.

This might include paying closing costs, including some of the furniture that the buyer has her eye on or a home warranty. We once read about a home seller who included their dog in the purchase because the buyers fell in love with it!

Hopefully, it won’t come to that but at least you are aware of the possibility. We can do this.

Let’s get started.

There are several government-backed mortgage programs to help very-low and low-income Americans. FHA, for instance, offers a low-down payment option for those who qualify.

The Department of Agriculture Section 502 loans are the only federal programs, however, that offer loans to not only low-income Americans, but very low-income buyers as well.

In fact, “… the annual average income of a direct borrower is $27,500 and 80% of borrowers have annual incomes that do not exceed $35,000,” according to the National Rural Housing Coalition’s 502 Success Paper.

Highlights of the program include:

• Borrowers do not need a down payment
• The direct loan’s interest rates start at 1 percent
• The program offers payment assistance, making the loan affordable to many who might otherwise not be able to afford a home.
• Borrowers must attend homebuyer education classes and sign a document stating that the subsidy will be repaid.

The loan

Many homebuyers who research what the USDA offers don’t realize that two loans are offered as part of the Section 502 program. One is a guaranteed loan (much like the FHA loan) while the other is a direct loan from the government. The latter is what we’re covering today.

The direct loan is provided by the government, which acts as the loan’s servicer as well. This means the borrower makes all payments directly to the government. Because the government is the lender, it can be more flexible on income limits than conventional lenders.

Borrower eligibility

USDA’s Section 502 direct loan program is open only to American citizens and legal residents with very low incomes.

Unlike conventional lenders, the USDA does not have stringent credit score requirements, but will ensure that the borrower has a history of responsible use of credit and has the ability to repay the loan.

To learn if your income qualifies, visit USDA.gov and click on the abbreviation for your state.

Additional eligibility requirements include that the borrower must:

• Not currently have “… decent, safe and sanitary housing,” according to the USDA.
• Not be able to obtain a mortgage on conditions that you can meet from other resources.
• Agree to live in the home permanently, until it is sold.
• Be a U.S. citizen or eligible non-citizen.
• Have the legal capacity to incur a loan obligation
• Be in good standing from previous participation in any federal program

The home you choose to purchase must match the criteria

The home you choose must be modest in size, design, cost and amenities. The USDA considers homes with a square footage under 1,800 square feet modest and amenities must not include a swimming pool or any income-producing buildings.

Now, here is the tricky part: The property must be located in an “eligible area” the USDA defines as rural.

There’s an easy way to find out if a home you have your eye on will qualify. Go online to the program’s website, read the Property Eligibility Disclaimer and, if you agree with it, click on “Accept” on he right side of the page. Enter the property’s address in the search bar.

Subsidy Calculation

Mortgage payment subsidies are based on the applicant’s income, and determined at the time the loan is approved.

The USDA website offers consumers the Single-Family Housing Direct Self-Assessment tool. Here, you can enter your information to learn if the Section 502 Direct Loan is a good fit for you.

A few weeks ago, monsoon rains flooded several Las Vegas casinos. Parts of the iconic Strip were turned into lagoons, according to the news. Then, there was the recent and devastating flood in Kentucky.

A state of emergency has been declared in two West Virginia counties after recent flooding. Missouri, Colorado and even Death Valley have experienced floods in recent weeks.

In fact, seven million people in several states are under flood watch as of this writing.

No, this isn’t anything new. Floods are “America’s most frequent and expensive disaster,” the experts at the non-profit Flood Defenders say.

They go on to quote a University of Maryland study that claims “America has experienced an urban flooding event once every 2-3 days for the past 25 years.”

Most important of all is that, according to the Federal government, 99% of U.S. Counties were impacted by a flooding event between 1996 and 2019.

Obviously, it’s important to find out if a home you have your eye on is located in a designated floodplain.

What is a floodplain?

A floodplain, according to the Federal Emergency Management Agency (FEMA), includes any area on land that is “… susceptible to being inundated by floodwaters from any source.”

That’s just one of the words that you may need to have defined during your search for information about flood insurance. Run up against another head-scratcher? Find the definition online at FEMA.gov.

Homeowners insurance doesn’t cover flood damage

Many new homeowners or about-to-be homeowners are shocked that their insurance on the home doesn’t cover any damage from flooding.

This can be a bit confusing because very often “water damage” is covered. Flood damage, however, is differentiated from water damage by the following definition:

Flood damage is caused by “a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties,” according to the experts at FEMA.

Kanner and Pintaluga, a property damage law firm, offers this distinction: “Water damage caused by flooding is not covered by homeowners or renters policies because it is considered a gradual event rather than sudden or accidental.”

“As a rule of thumb, if the water first touches the ground before entering your home, it is considered flood damage,” they conclude.

How can I protect my pocketbook from flood damage?

Even though homeowners insurance generally doesn’t cover flood damage, you are not without protection options: The National Flood Insurance Program (NFIP), managed by FEMA.

“You can purchase flood insurance through the National Flood Insurance Program or one of the more than 50 private insurance companies that offer the coverage,” according to the folks at FEMA.

If you own your home outright you may not even have flood insurance. Many Americans take the gamble and don’t purchase coverage.

It’s lower income homeowners who typically lack coverage, but can you blame them? “… the cost of federal flood insurance is rising as climate change increases damages to homes,” senior research scientist Alexander de Sherbinin tells Anuradha Varansai with Columbia Climate School.

He goes on to claim that rising flood insurance rates may put low-income homeowners at risk for losing their homes. “… insurance payments may go from $600 a year to up to $3,000 to $6,000 by 2022,” he said.

How to find out if that home you love is in a floodplain

Visit FEMA’s website to locate flood maps for the area. Enter the home’s address in the box and click on “Search” and you will be taken to a map of the neighborhood and details on flooding in the area.

Your best bet, however, is to call your homeowners insurance agent to find out if a home you are considering purchasing is in a flood zone.

Then, visit rocketmortgage.com to learn the risks of buying a home in a flood zone.

Questions? Although we aren’t insurance professionals, we are happy to point you in the right direction to get your questions answered.

There is a huge misconception among homebuyers that the best lender is the one who offers a product with the lowest interest rate. Here is why this may not be the case:

• The rates advertised may not apply to the loan product you want.
• The true Annual Percentage Rate (APR) may be higher – a lot higher.
• Bait & Switch is still alive and well in the mortgage industry.

Although we aren’t finance experts, our best advice is to shop by comparing each company’s APR. This is because this figure reflects the annual percentage rate with points and fees included. We’ll get deeper into this in a moment.

The best place to start when shopping for a mortgage lender is where you do your banking. Find out what kind of rates and products they offer, and use this to compare against other lenders.

Contacting a mortgage broker may be a good next step. These mortgage professionals do the shopping for you, from a broad array of loan products with various lenders.

When you call or visit lenders, look into the following aspects of their loan products:

• Request the lender’s current interest rates and ask if these rates are the lowest for just that day or for the week and if the rates quoted are for adjustable or fixed mortgages.
• If you are interested in an adjustable-rate mortgage, ask when the rates will increase, how the rate and payments will vary and whether or not payments will decrease with a reduction in rates.
• Ask the lender for the loan’s APR, which, as mentioned earlier, is a figure that represents the yearly rate and includes points, fees and other charges.
• Request that the lender or mortgage broker express the points as a dollar amount. This will make it easier to determine exactly how much you’ll be paying for the quoted loan and easier to compare it to other offers.
• Fees are sometimes lumped together under one category. Ask the broker or lender to separate them so that you can compare the fees associated with this loan to other loans. Ask for clarification for any fee you don’t understand

If you won’t be using an FHA, USDA or VA loan, find out how much the lender requires as a down payment. Also ask if Private Mortgage Insurance (PMI) is required and, if so, how much the premium will increase your monthly mortgage payment.

As of August, 2015, the Good Faith Estimate (GFE) form that the lender is required to supply to a borrower has been replaced with the Loan Estimate and Closing Disclosure. This form still itemizes the loan’s terms and fees but it goes into more detail and is easier for consumers to understand than the old standardized forms.

The Closing Disclosure must be given to the borrower three days before closing.

 The Mortgage Process

Here’s what to expect during the mortgage process:

• Fill out and submit the loan application.
• Your loan package goes to the processing department where all the information is verified.
• Your package is sent to the underwriter, who decides whether or not to approve the loan. If the underwriter approves your loan, you will be mailed a “commitment letter.”

These are just the bare-bones steps in the process and no two applicants are the same; so your mortgage process may vary.