Category: Real Estate

It’s so easy to assume that the home you’re shopping for is the one you will live in for the rest of your life. As we all know, however, times change, tastes change and, yes, people change.

Nests empty out or become fuller. Jobs may be relocated. A neighborhood can change and may no longer be the dreamscape it once was.

While keeping an eye toward the future is always a good idea when making any major financial investment, unless your name is Nostradamus, your predictions may be hit or miss.

Buyers looking to make their first home purchase are faced with a difficult choice: Should they buy a starter home or a forever home?

Here are a few things to consider.

Define “starter home,” please

Starter homes tend to be small–just one or two bedrooms–and valued below the median price for the area’s market. The least expensive starter homes are often fixer-uppers that require substantial work and renovations.

People move into starter homes with the intent of selling them several years down the road for a profit, and using the equity to move into a larger house.

Other folks prefer to hold off buying until they can buy their “forever” home. They may strategically save their money until they can afford their dream house, and, although it is seldom the case that they remain in that home for life, it is their intention to live in the home for the foreseeable future.

Pros and Cons to Buying a Starter Home

Starter homes require less of an initial investment than their larger, fancier counterparts. There is also a chance that the value will increase faster than that of the larger forever home. A good example of this is happening now, with so many homebuyers flooding the starter home market, values have skyrocketed. It’s a great time to sell a small home.

A smaller home is also far less stressful on a homeowner’s budget, beyond the smaller down payment and loan required to buy it.

Your monthly house payment may turn out to be less than what you currently pay in rent and the cost of maintenance and monthly utilities will be far less than they would be in a larger home.

Since you’re saving money every month, put some aside for renovations to help boost the home’s value.

On the flip side, it’s easy to outgrow a starter home when you’re young and growing a family.

As well, starter homes are often older and may require more frequent repairs.

Holding out for that “forever home” may be tempting but not wise. With interest rates so low, the time to buy a home is now and, although the inventory of starter homes is low, we’ve had great success helping our clients find them.

The important thing is to jump into the market soon so you can start building equity. That’s not going to be easy when you’re paying a larger house payment each month, more property taxes than those of a smaller home and increased utility bills.

Questions? Feel free to reach out to us.

It typically starts as a fleeting thought – in and out of your brain before you can really grasp it.

But, as time goes on, as the landlord becomes more demanding or the threat of yet another rent hike becomes unbearable, the idea of owning your own home may become so overpowering that you finally look into the feasibility.

Can I afford it?

It’s not as hard to figure out as you may think. Get out your calculator and let’s crunch some information.

Get in the right mind-set

One mistake we frequently see with our renter-to-owner clients is that they use more caution with their monthly budget when buying a car than they do when buying a house.

Think about it: The amount of your car payment is the leading factor in deciding how much you’ll spend on a car, right?

Since a house payment is far larger, you should use this same yardstick when determining how much you are willing to pay for a house.

Even if you’re approved for more, stick to looking at homes priced within your monthly budget.

Your finances

Before you know how much you can spend, you need to get crystal clear on your income and your debt. How much comes in every month and how much goes out? And, is there a chance that either will increase or decrease in the future?

For instance, if you’re planning on starting a family, your debt level will increase. If you’re finishing up a college degree for that better job you’ve been hankering for, your income may increase.

Get clear on not only the full picture of your current financial reality, but how it may or may not change down the line.

Start with your current income

Dig out last year’s tax return or your pay stubs to figure out how much money you have to spend each month (your take-home pay).

Do the same for any other income earners who will be co-borrowing with you for a home.

How much of that income is spent on debt?

Now let’s figure out how much of that income is spent every month. Add up your payments for the following:

• Credit card payments – since these sometimes vary, use the minimum monthly payment amount listed on your statements.
• Alimony payments.
• Child support payments.
• Installment loan payments (such as for a car, personal loan or student loan).

These are the debts the lender will scrutinize, but, for budget purposes, you need to know the total amount of money you spend every month, so also add in:

• Commuting expenses
• Groceries
• Dining out
• Clothing
• Entertainment
• Pet expenses
• Gifts
• Vacations
• Donations
• Any other routine expenses

Don’t include your current mortgage payment or rent. Subtract the sum of your expenses from your income.

This is how much money you have every month to pay for housing. Financial experts typically recommend spending no more than 30 percent of your before-tax income on rent or a mortgage payment.

If your result appears to be too low to afford a home, look for ways to trim your budget. Then, visit your accountant or tax specialist.

He or she can run the numbers on different scenarios that include the tax benefits of homeownership which may paint an entirely different picture.

Looking good?

If, on the other hand, your finances appear to be set for homeownership (and your credit profile as well), you’ll need to ensure that you have enough money for the actual purchase process. This includes a down payment and closing costs.

The amount you’ll need for a down payment depends on the loan program you decide to use. If you’re a qualifying veteran or you use a USDA Rural Development Loan you may not have to pay anything. Otherwise, plan on paying from 3.5 to 20 percent of the loan amount as a down payment.

The amount of money you’ll need at closing depends on a number of variables. For instance, many home sellers will pay a portion of the buyer’s closing costs. In 2016, homebuyers paid, on average, $3,815 for closing costs, according to ATTOM Data Solutions.

Home prices have skyrocketed since 2016, however, so plan on paying more than that (unless the seller agrees to help you pay closing costs).

A note on the down payment

If you’re short on cash and long on the desire to own a home, you may want to consider trying to qualify for one of the many down payment assistance programs available.

Reach out to us with any questions. We’re happy to help.

 

While selling a home isn’t quite the massive challenge many try to make it out to be, as with any process, there is always the possibility something may go wrong.

Our experience has taught us where these possible pitfalls lie so we’re pretty good at avoiding them.

Two in particular, however, are solely in the seller’s hands. Sadly, and either of them can be deadly to the successful sale of your home (or the purchase of your next one).

Here are two we see most often.

1. Not taking the seller disclosure statement seriously

The seller disclosure statement is something that the buyers can, and will if the need arises, use in a court of law.

Grab your attention?

Good, because this is one document to take seriously. Regardless of how busy you are, find a block of time to devote to completing it, in a quiet spot, where you can consider each answer you provide.

You’re not expected to know what’s lurking behind the walls of your home (unless you do, then you need to disclose it), only problems that you are aware of.

If you are less-than truthful, and something goes wrong that the buyer can prove you knew about, you may be liable for both monetary losses and, in some cases, punitive damages.

In some instances, buyers have been able to cancel the sale – even after living in the home – and the seller is forced to take it back and return the buyer’s money.

If what you fail to disclose results in injury or death, you may even end up in prison, on criminal charges.

Yes, it feels odd to disclose the home’s flaws to the very person you are hoping will find it flawless, but protect yourself and be completely honest on the seller’s disclosure.

If you have any questions about it, please ask.

2. Not understanding the mortgage process

If you’re buying a home to replace the one you’re selling, get to know the loan process. Unfortunately, too few mortgage professionals take the time to explain even the most basic parts.

A common misunderstanding shared by many homebuyers is that loan approval means they’re in the clear and, once the contingencies are removed (such as the home inspection and the appraisal), the home is pretty much theirs.

What they haven’t been told is that the lender will do one final “pull” of their credit to ensure that nothing has changed since they accepted the borrower’s application. It’s known as a “soft pull,” because it doesn’t impact the borrower’s credit rating.

Changes, such as applying for credit, will show up on this report, impact your score or debt-to-income ratio and your loan may be cancelled.

Until you sign the closing papers, don’t apply for credit, don’t switch jobs or move money from one account to another. Leave the financial aspects of your life exactly as they were when you applied for the loan.

As always, reach out to us if you have any questions on the home buying and selling process. We’re happy to answer them.

The weather outside may be a bit frightful, but it’s not so bad that folks aren’t out shopping for homes. And, selling a home in winter is a brilliant idea.

Surprised?

Studies show that homes are far more likely to sell within six months than during any other season.

Of course, we want yours to sell a lot quicker than that, so let’s take a look at some ways to entice those chilly homebuyers out of the nice, warm car and into your home.

Clear the way

A huge pile of snow between the curb and the home isn’t a way to invite people to look closer at the home. It’s not safe, either.

Ensure that the access to the home, whether it’s via the driveway or a walkway, is clear of ice, snow and debris.

Sal Vaglica of This Old House magazine suggests spraying the areas with a liquid magnesium chloride blend before it snows. This, he claims, will “keep ice from bonding to hard surfaces.”

Use 1 gallon of the solution per 1,000 square feet to be treated.

Make the front door pop

In snowy areas, a jolt of color is unexpected and charming. Slap some color on the front door, via semi-gloss exterior paint.

Don’t be shy here – choose a bold but deep color, such as charcoal gray or black. Zillow’s 2018 Paint Color Analysis studies show that homes with black front doors sold, on average, for nearly 3 percent more than homes without black front doors.

“For a seller, painting a front door is one the least expensive home prep projects, but also one that can have a powerful impact on a home’s sale price,” according to Zillow home design expert  Kerrie Kelly.

Anything you can do to add color to the home’s exterior will boost its appeal and the perfect

Don’t stop with paint

How about some new hardware to further jazz up that newly-painted front door? Consider a striking new door handle.

Then, take a look at what surrounds the door and update those items as well. For instance, consider larger, bolder house numbers, a new porch light cover and mailbox.

Gardening, in winter?

If there’s snow, there really isn’t much you can do to spruce up the landscaping. What you can do is tidy it up by removing broken limbs and debris.

Consider adding some potted plants along the walkway or on the porch. Use colorful planting pots and some bold winter-hardy plants. Get ideas on what to plant, here.

Other curb appeal-boosting options to consider:’

• Twinkle lights in the trees
• Winter wreath on the door
• Buy a new doormat
• Line the walkway with luminaries (get DIY instructions at APieceofRainbow.com and TripSavvy.com), or buy them ready-made at Amazon.com, HomeDepot.com and Wayfair.com.

Many industries offer unique services. Sure, you can cut your own hair, but can you make it look like this year’s hot, sleek bob?

You can also repair your own roof. Keep in mind however that 36 percent of all fatalities result from falls – from roofs.

Some jobs are better left to professionals, especially those jobs that impact your safety, pocketbook and, yes, even your looks.

We know what you’re thinking: Why should you give up some of that hard-earned home equity to some real estate agent when you are perfectly capable of selling the home yourself?

Read on. 

Real estate agents do far more than show homes

Many consumers feel that all a real estate does is tour homes all day, showing them to potential buyers. While that is a big part of many agents’ jobs, it is in no way all they do.

Each transaction that an agent is involved in contains a myriad of small details. A transaction can fail if any one of these falls through the cracks; they are that critical.

And, these details are something the average homeowner can’t possibly know about unless he or she has sold real estate as a professional.

So, aside from showing homes and marketing homes for sale come all the details that must be juggled by someone who is an expert detail juggler. That someone is a professional real estate agent.

Real estate agents clear up all the jargon and confusion

Yes, a real estate attorney can help you decipher a home purchase contract, but at a hefty price and with no guarantee you’ll walk away from the conversation with a better understanding of what the contract means.

Then, there are the common terms you’ll need to understand, inherent in all real estate transactions.

From mortgage jargon, like “DTI” and exactly what is included in closing costs to real estate terms, such as “contingencies” and “chain of title,” your real estate agent has all the answers.

Are you aware of a buyer’s duty of “due diligence” and how not knowing about this duty can negatively impact not only the purchase, but your future enjoyment of the home and your finances?

Appraisals and home inspections: you may need an adviser to deal with the results

There are two steps in the home sale and purchase process that are common yet produce the most anxiety (other than waiting for loan pre-approval): the appraisal and the home inspection.

Most real estate consumers don’t understand that results of either inspection that are less than optimal don’t necessarily kill the deal.

There are ways to deal with a low appraisal or a less-than-perfect home inspection report that can keep everything on track. But, again, most homebuyers and sellers aren’t aware of these procedures. Real estate agents deal with them often and are experts at finding a solution to benefit all parties.

This valuable knowledge is something you won’t receive if you don’t have a real estate agent representing you.

Your final chance

Homebuyers have several chances to view the home after signing the purchase agreement. They will often attend the home inspection and, sometimes, the sellers permit them an additional visit to take measurements or to oversee requested repairs.

One visit is set in stone, however, and that is known as “the final walk-through.” The purpose of this visit is to ensure that the home is in the same condition it was when you agreed to purchase it and it typically takes place within the week leading up to closing.

The final walk-through is not an additional opportunity to negotiate.

In other words, if you notice something objectionable during the walk-through that you hadn’t noticed before, it’s too late to bring it to the seller’s attention (which is another reason you need your agent’s second set of very experienced “eyes” during the early phases of the process).

Far too many buyers treat the final walk-through casually, breezing through the home, blissfully unaware of what they should be on the lookout for. Without a real estate agent by your side, you will have no idea.

These are only a handful of the unique services that agents provide.

I can’t tell you how many times I’ve pointed out features of a home (both bad and good) that my clients didn’t notice, how many times I’ve negotiated even minute contract terms for clients when they weren’t around to witness, how often I’ve recommended trusted tradespeople, inspectors and lenders to my first-time buyers to ensure they don’t get ripped off.

As mentioned earlier, there are so many details that real estate agents deal with daily that most consumers have no way of knowing about. But now you know about at least a few of them.

 

 

 

It’s tough being a newbie at anything, right? Learning new lingo, how things are done and how you’ll do them is a little confusing at first. Once you get the hang of it, though, everything becomes clear and you can relax into whatever it is you’re learning.

The same holds true for the home-buying process; when you’ve never bought a home before it can be challenging to know where to start and tempting (but not wise) to jump into the process by looking at homes for sale.

So, let’s get you off to a good start – one that will lead to success when buying your first home.

The money stuff

Waiting for loan preapproval is brutal for those who have no idea where they stand on the credit scale. Those in the know, however, are far more confident, understand the loan process better and still have fingernails when the preapproval decision comes in.

Be a member of the latter group by ordering your credit from the “Big 3” credit reporting agencies, Trans Union, Experian and Equifax. By law, you are entitled to a free copy from each agency every year or if you’ve been turned down for credit.

Make sure you order your reports from AnnualCreditReport.com, the only company authorized by the government to provide these free reports.

When you get your reports, read over them carefully, keeping track of any problems you find. Each report will tell you how to file a dispute, so if you do find errors, even seemingly insignificant ones, file one. Even a small discrepancy can cause a big impact on your credit score.

Go over your finances, figuring out how much money comes in every month and how much goes out, paying close attention to recurring debt payments. The lender will do the same when it figures your debt-to-income ratio, or DTI.

If you want to calculate where you stand now, you’ll find information on how to determine your DTI on the Consumer Financial Protection Bureau’s website.

If your DTI is high, work on bringing it down by either bringing in more income or paying off some debt.

Stash some cash for your down payment, closing costs, home inspection fees and earnest money deposit. The National Association of Realtors recommends setting aside between 2 and 7 percent of the purchase price of a home just for closing costs, although I think 7 percent is rather high.

Shop for a mortgage

I’m happy to refer you to some of the lenders my clients commonly work with, or ask friends, family and colleagues for a referral to someone they enjoyed working with.

You’ll typically need the following documents when you meet with a lender to apply for a mortgage:

• If you are self-employed you’ll need tax returns otherwise, gather up your pay stubs and W2s.
• Copies of the bills you pay every month.
• Bank statements (including blank pages).
• I.D.

Document requirements vary depending on your personal situation and the lender, so ask for a complete list of what you’ll need to supply.

Make your wish list

Yay! The fun part. Now you can start thinking about that new home. What exactly do you want? Use these considerations when trying to figure it out:

• Nail down the location. Do you need to live near schools, downtown, public transportation? Do you want a neighborhood with lots of activity or something more serene? Kids nearby or few kids?
• What type of home do you want? Is there a particular architectural style? New or old?
• What are your must-haves when it comes to the interior of the home? Include things such as the number of bedrooms, bathrooms, square footage of the house.
• Describe your dream home. Once we know your budget, we can pare it down, but for now list everything you want in a home. Carpet or hardwood, gourmet kitchen, an office, a media room, gym, space to garden and views are something that might go on this list.
• Finally, name three features that you simply must have in your new home. These items are non-negotiable and they’ll be at the top of the list.

These are the basic steps in the home-buying process. Take steps 1 and 2 and then call us for help with your wish list.

Take the steps in order and you’ll be moving in no time!

As we celebrate Veterans Day in November, I would be remiss to not mention one of the most misunderstood and overlooked veteran’s benefit, the VA home loan.

• Of the more than 20 million U.S. military veterans, only 10.5 percent utilize their home loan benefits.
• When those who aren’t using this benefit were asked why, more than 33 percent responded that they didn’t know about the VA loan guarantee (2010 National Survey of Veterans). Another large group claims that FHA loans are easier to obtain.
• The largest groups of respondents to the National Survey of Veterans who were unaware of the program’s existence were older veterans and unmarried surviving spouses.

While not at all flag-waving worthy, these statistics can, and should change. It starts with the real estate/mortgage industry taking responsibility for educating veterans and their spouses about the VA home loan program and its benefits.

The loan, in a nutshell

The U.S. Department of Veterans Affairs offers a home loan guaranty, promising the veteran’s lender that the veteran will repay the loan.

Now this guaranty doesn’t cover the entire loan amount. Should the veteran default on the loan, the VA guaranty covers from 40 to 50 percent, depending on the size of the loan.

VA home loans can be used to:

• Buy a single-family home or a condominium unit in a VA-approved project.
• Build a home.
• Simultaneously purchase and improve a home.
• Improve a home’s energy efficiency.
• Buy a manufactured home and/or lot.

VA loan advantages

Today there are only two easy ways to finance a home with no down payment: through the United States Department of Agriculture Rural Development Program and through the Veterans Administration.

Thinking of a FHA-backed or conventional loan? If you put down less than 20 percent, you’ll be subjected to the required monthly payment for MIP (mortgage insurance premium) for the former and PMI (private mortgage insurance) for the latter.

This insurance, which benefits the lender should the borrower default on the loan, can add quite a chunk to your monthly mortgage payment.

The amount you’ll be required to pay depends on how much you borrow and the loan-to-value ratio. You’ll find an FHA MIP rate chart at LendingTree.com.

The VA loan, on the other hand, has no monthly mortgage insurance premiums, there are limitations on how much you’ll spend on closing costs, and the loan has no prepayment penalty.

If you choose a newly constructed home, the builder is required to purchase a 1-year home warranty for you.

How to get one of these bad boys

As with anything that comes from the government, eligibility can become complicated (wait until you see the appraisal requirements!).  You are eligible for a VA-backed loan if:

• You have what the VA considers “suitable credit.”
• You have sufficient income to pay your bills and your mortgage payment.
• You plan on occupying the home.
• You have a valid Certificate of Eligibility (COE).

The latter is easy to obtain. In fact, a VA-savvy lender should be able to get your COE through the online ACE system. Learn how to choose the right lender for your VA loan at Military.com.

If for some reason your records can’t be accessed, you’ll need to apply to the VA for your certificate. We can help you with that.

Remember, you’ll be applying for this mortgage through traditional lender and each has its own guidelines so you’ll need to meet the lender’s requirements as well.

Yes, your credit score and overall financial picture will be examined, but the lending process for veterans isn’t quite as stringent as it is for civilians.

Houses a bit like your kids’ shoes – before you know it, they don’t fit anymore.

And, while we never hear folks say they regret having children, we often hear that they wish they’d bought a larger home.

While a growing family is one good reason to think about moving up, there are other aspects to upsizing that offer bonuses you may not have considered.

Larger Homes Offer More

That sounds a bit like a “well, duh” comment, but bear with us.

We aren’t just referring to the extra square footage here. Think about roomier closets, glorious amounts of storage space, the ability to comfortably house out-of-town guests and more elbow room in which to find a bit of privacy when you need it.

If you made a priority list to refer to when you shopped for your current home, you no doubt ended up making compromises. When you upsize, however, you’ll find that both of you (and maybe even the kids) will finally get some of the options you dreamed about but had to give up.

Finally, a larger home offers the option of growing into it. You may not be currently thinking of having another child or offering a room to an aging parent, but isn’t it nice to not have to consider moving again should either of these come to pass?

The financial benefits of a larger home

Depending on the equity you have in your current home, you may be able to keep your house payment quite close to what you’re paying now. After all, that equity will go a long way to cutting down on the initial cost of the new home.

Then, consider this: money has rarely been cheaper to borrow than it is right now. If you make the move now, before interest rates increase, you’ll save significantly when it comes to your monthly mortgage payment.

Then, consider the resale value of the new home. In 2016, for instance, the average American home included 2,400 square feet of living space, according to the Census Bureau.

And a National Association of Homebuilders survey finds that most older members of our largest generation, the Millennials, prefer living in a home with at least 2,475 square feet of living space with either three or four bedrooms and a minimum of two bathrooms.

So, look to the future, because it looks quite rosy for owners of larger homes. Demand should be high enough to mean more money in your pocket when you decide to sell.

Upsizing: Get clear on your goals

You already know you want a larger home, but it’s important to understand your other goals. As discussed earlier, the amount of room you need right now will change if you plan on growing your family or take in an older family member.

And, if you have children, consider how close you’ll need to live to schools.

Other goals to consider include:

• Your commute time to work
• Desired nearby amenities
• The type of floor plan you’ll need to accommodate your family’s lifestyle

Need to save money? Shop strategically

The more move-in ready a home is, the more competition you’ll encounter when shopping for homes, and competition drives up home prices. If you’re on a tight budget, overlook those turnkey properties and search for a home that many need some simple upgrades.

Once you’ve settled on a neighborhood or two, buying one of the worst homes on the block can be a good financial strategy. It’s the old “rising tide” adage – the surrounding homes will lift the prices of all the homes in the neighborhood.

If a home is sitting on the market because of cosmetic issues, and priced accordingly, consider looking at it to see if it meets your needs.

Sure, there’s a lot to consider about upsizing. But, take the process one step at a time and you’ll not only get rid of some of the stress, but find that moving up is one of the best decisions you’ve ever made.

Whether you’re a crazy cat lady with a house full of felines or you prefer the company of just one kitty, if you watch closely you can learn a lot about successful house hunting.

Of course, you never want to rub up against a homeowner’s couch or destroy the roll of toilet paper in their bathroom, but there are three cat characteristics in particular that you might put to good use when searching for a home.

1. Be a hunter

Cats are serious hunters. Even when the prey is a stuffed mouse, they practice their stealth and hunting prowess.

Watching a cat hunt is a lesson for home buyers. If a cat were house hunting instead of mouse hunting, she would stalk the latest MLS listings tenaciously, pouncing immediately on those that look tasty.

Don’t give up the hunt because it seems too challenging. Crouch, crawl, stare hard and then twist, curl and pounce when that perfect home is within striking distance.

Ok, so you don’t need to go through the physical gyrations that cats do when you’re on the hunt for the perfect house, but you do need to use that same laser-focus, remain flexible and be oh-so-tenacious.

Keep in mind that the absolute perfect home for any one person probably doesn’t exist, unless it’s custom-built. Decide what your priorities are and aim for fulfilling at least three of them.

Then, be flexible enough to compromise on the others if they conflict with your partner’s priorities.

2. Don’t be distracted by shiny objects

Staged homes are attractive, there’s no doubt about it. Especially if the staging was performed by a professional, it’s so easy to see yourself living there.

Homes with features you’ve been dreaming of (a fireplace in the master bedroom, that to-die for Wolf® range or the perfectly-perfect-for-entertaining backyard can blind you to other, perhaps undesirable aspects of the home.

Don’t be like your cat – easily distracted by shiny objects.

But do be like kitty in that you should be curious. Look beyond the sexy paint colors and amazing décor to the bare bones of the home. Don’t be distracted – be curious.

3. Remain aloof

Many cats are mysterious, somewhat aloof and can keep you guessing about why they even allow you in their presence.

Once you find a home that you’re excited about, don’t EVER show it — at least not around the homeowner or the homeowner’s agent (or the homeowner’s Nest Cam).

Maintain that cat-like aura of coolness, disinterest or, at the very least, neutrality.

The worst thing you can do is gush over the home, expressing your love for it and your overwhelming desire to own it – at any cost.

Nope, this is the time to be very cat-like and back off, as aloof as possible. When how you feel about the home is inscrutable to the homeowner, you’re in a stronger negotiating position.

Oh, one other thing your cat can teach you – when we win the battle for the home of your dreams you are allowed to purr in contentment