Don’t Miss Out On How To Handle Common Home Buying Pitfalls

Don't Miss Out On How To Handle Common Home Buying PitfallsThe process of buying a home can be riddled with obstacles. However, you can avoid many of the most common home buying pitfalls with some advanced preparation. Below are some of the most frequent problems home buyers face, as well as tips for avoiding them. 

You Can’t Qualify For A Mortgage 

Nothing is more frustrating than learning that, even though you make enough money to afford your dream home, you cannot qualify for the mortgage you need. This may happen because your credit score is low or because you cannot verify your income in a way that satisfies your lender. To avoid this pitfall, investigate lenders’ requirements before you begin the application process and make sure you meet them all. 

You Discovered Problems With The Home After You moved In

In some cases, a home may seem perfect at first glance, but problems may be hiding in plain sight. You may move into the home and find that it has a pest problem, leaks, or a broken furnace. The best way to guard against this pitfall is to ask for a home inspection before you buy the property. 

The Appraisal Amount Isn’t High Enough 

Some homebuyers make an offer on a property and hope to get a mortgage to cover the purchase price, only to learn that the property doesn’t appraise for the amount of the requested mortgage. This is more likely in cases where the homebuyer is rolling closing costs into the mortgage. When this occurs, you can either pay the difference, ask the seller to lower the purchase price, or cancel the sale altogether. You can avoid this pitfall by investigating home values before you make an offer, or by saving up a large downpayment that would allow you to pay the difference. 

You End Up With Bad Neighbors 

Chances are that sellers will not be upfront about any problems they may have with neighbors, since these problems could potentially cause you to pass on the home. For this reason, it is always wise to do your own research before you move into any neighborhood. Consider driving by at night to look for any activity that might make you unwilling to live next door. 

The Closing Takes Too Long

It can be incredibly frustrating when it takes weeks or even months to close on the property you love. In some cases, this pitfall may be unavoidable. However, you can reduce the risk of a long closing by having all of your loan documentation ready in advance and avoiding the purchase of homes that may have an extra-long closing process, such as real estate owned properties and short sales. 

Buying a Home? What to Do if Problems Are Found During the Final Home Inspection

Buying a Home? What to Do if Problems Are Found During the Final Home InspectionAs a home buyer, you may go through a number of different steps to ensure that the property that you purchase is in great condition. For example, you may complete an initial walk-through or even several home tours before you make an offer. You may also order a property inspection and even negotiate for the seller to make some repairs on your behalf.

A day or two before your closing date, you may set up a final home inspection to ensure that the home is still in the same condition as the initial walk-through. In most cases, there will be no problems with the final inspection. However, in the event that there is a problem with the final inspection, you will need to know how to handle it.

Work With Your Real Estate Agent

As a first step, you should discuss the issues with your real estate agent. Your real estate agent may have some strategies or ideas that can be used to help you overcome the issue in the best possible way. Minor issues may be resolved with a last minute negotiation to the sales contract. More significant issues may need to be rectified prior to closing, and you may need to delay the closing by a few days or longer until any issues are resolved.

Consider Walking Away

It may be rare for a property to have issues during the final home inspection, and most issues that do arise at this late stage in the buying process may be resolved through negotiations between the buyer and seller. However, in the event that the seller plays hardball and refuses to work with you to resolve the matter, or in the event that the issue is so significant that you are not comfortable with it, it may be an option to walk away from the property.

In most sales contracts, wording is present that requires the property to be delivered to the buyer in the same condition as it was when the contract was signed less general wear and tear. Walking away may not be ideal, but it may be the best option in some cases.

Making a final home inspection is not a requirement, but it is advisable. It can ensure that the home your purchase is in the same condition as it was when you did the initial walk-through, and you can apply these tips if you discover that the home is not in the same condition.

Buying in a Sellers Market

Buying in a Sellers MarketHome buying is often made possible or unreachable due to the local and national economy. Fortunately, what goes up, must come down. So, for buyers who can wait, economic changes in supply and demand can create opportunities. These shifts in real estate are known as buyer’s markets and seller’s markets. 

The seller’s market specifically tends to be the harder one for homebuyers. In short, sellers see a lot of demand, so they can command higher prices for a sale. Things are competitive, sell fast, and inventory is low. 

For buyers, it’s a headache, but there are ways of handling the challenge.

Understand Your Local Market Better

Many people might throw out the statement locally, “Oh good luck, it’s a seller’s market,” but that’s not necessarily the case until you can confirm it objectively. It may be that certain neighborhoods have high demand, but overall regional inventory is available. 

Understanding your local market as a whole and by neighborhood gives a buyer a far better idea of what’s really going on and how to compare homes in different locations.

When Making an Offer, Go With Your Best Offer First

The worst that can happen is someone responds “no.” You didn’t really lose anything with a rejected offer. However, if they accept your offer as-is, then you may have scored a better deal than trying to hedge and bargain down after the fact. Negotiation can be more difficult in a seller’s market, and sellers can be quite motivated to drop a negotiation the instant a second buyer becomes available.

Be Prepared to Move Quick and Bid Fast

Sellers’ markets go fast. Bids are taken in a day and a sale happens the next day or by that evening. If going out to buy, you need to be ready to make an offer on-site. That means also having your pre-approval for financing squared away and having enough liquid assets to cover the down payment along with enough cash to cover closing fees as well. If you’re not wired up already, you will lose sales waiting for your financing prep to get taken care of.

Have Cash, Will Talk

Buyers who are able to show they have the cash to purchase make the process go much more smoothly. Sellers are far more interested in parties who can show they are a firm sale versus those with financing approval still pending. 

Known as earnest money, a deposit placed on a home with larger than the minimum amount will get attention and commitment faster than someone with a nice bid but waiting for financing approval, thereby delaying the seller.

Anticipate Non-Cash Sweeteners

Sellers often have interests or desires to meet when letting go of a home. A buyer who can fathom what these are can improve a buying position considerably.

In some cases, it might be as simple as agreeing to additional time for a seller to move out. 

In other cases, the seller might have an attachment to the home that they want to keep protected versus seeing it destroyed by a new seller. 

Finding these things out can help a buyer make commitments in a sale that make it better for the seller and for the buyer versus other bids.

Sellers’ markets are hard, but there are ways around the challenge and getting into a home you want. By being flexible, creative, and ready you stand a better chance than bidders with half a heart in but one foot still hanging out.

Why Green Homes Are Gold In Your Pocket

Why Green Homes Are Gold In Your PocketIf you’re selling a home today, you know that it’s a seller’s market in many areas throughout the country. What you may not know, though, is that there are still things you can do to make your home even more desirable. From adding SMART home features to properly staging a home, there are plenty of things you can do to drive up the price and create a frenzy of bidding activity for your home. One of those things is to add green features to your home.

What Are Green Home Features?

Adding green features to your home doesn’t mean you’re painting the walls green or going for some odd decor. Instead, it means you’ve added one or more environmentally friendly features to your home. The following are a few green features you can add to your home that will add incredible ROI when the time comes to sell your home.

  • Landscaping with native plants.
  • Water conservation features in kitchens and bathrooms.
  • Energy Star appliances.
  • SMART thermostats, lights, and garage door openers.
  • Recycled countertops.
  • Radiant floor heating.
  • Alternative energy systems such as geothermal or solar energy.

Why Do Buyer’s Desire Green Home Features?

Buyers today are savvier than ever when it comes to the plight of the planet and are constantly seeking changes they can make to reduce carbon footprints and conserve resources. Homes that provide these types of features allow them to do precisely that. More importantly, they don’t have to adjust their lifestyles or even think about making these changes because they’re already made.

Giving Buyers What They Want?

At the end of the day, when you install certain green features in your home, you’re giving prospective buyers the personal satisfaction of knowing they’re purchasing a planet-friendly home, without forcing them to do the work for themselves. It’s a win for those who have grandiose intentions for saving the planet to actually follow through on those intentions.

Will Green Home Features Help You Sell Your Home Faster?

That depends on the local market in the area where you’re selling. However, in many areas across the country, it is a winning proposition. Work with your real estate agent to see if adding one or more of the green features listed above can help you sell your home faster or for a higher price.

3 Things You Must Do after Inheriting a Home

3 Things You Must Do after Inheriting a HomeThere can be a lot of excitement when it comes to the realization that you’ve inherited a home, but simply because it’s an inheritance doesn’t mean there aren’t a few strings attached. Whether you’re expecting to be gifted with a home in the future or you’re currently going through this process, here are a few things you may need to watch out for.

The State Of The Mortgage

Once a home has been effectively handed over to you, it’s important to determine the status of the mortgage with the lender and if anything is still owed. While you have the option of taking over the mortgage in a lot of cases, in the event that there’s a reversible mortgage or you’re choosing to rent it out as a second property, you may not be able to transfer the mortgage. While this can often be a rather seamless process, if money is owed there can be other factors to consider.

Determine If You Want It

If you already have a first home and don’t want to take care of your second property as a rental unit, it’s important to realize that keeping the home may not be the best decision for you. While you have the option of organizing a short sale if you’d like to get it off of your hands, you can also contact a real estate agent who will be able to provide you with advice on how to proceed if you’re unwilling (or unable) to take control of the property.

Is It In Good Condition?

Whether you want to keep the home or not, there can be cases where it’s not even a question if it’s a home that you’re going to end up investing money into without much return. In the situation that a lot of money is owed on the house or there are serious issues with its general condition, you may want to release yourself from the inheritance and move on with your financial situation still intact.

There can be an instant feeling of acquired wealth in the event that you’ve inherited a home, but a home in bad condition or that you don’t want to take care of can end up being more of a headache than anything else. If you’re currently considering your options when it comes to a home inheritance, contact your local mortgage professional for more information.

What’s Ahead For Mortgage Rates This Week – May 3, 2021

What's Ahead For Mortgage Rates This Week - May 3, 2021Last week’s economic reporting included readings from Case-Shiller Home Price Indices, data on pending home sales, and a statement from the Fed’s Federal Open Market Committee. The University of Michigan released its Consumer Sentiment Index and weekly reports on mortgage rates and jobless claims were also published.

Case-Shiller: February Home Prices Rose at Fastest Pace Since 2006

National home prices rose at a seasonally adjusted annual pace of 12.00 percent, which was the fastest pace of year-over-year home price growth in 15 years.  Case-Shiller’s 20-City Home Price Index reported 11.90 percent home price growth year-over-year and 1.20 percent growth month-to-month. All 20 cities reported in
February.

Phoenix, Arizona held its lead with 17.40 percent year-over-year home price growth followed by San Diego, California with 17.00 percent annual home price growth. Seattle, Washington reported 15.40 percent year-over-year home price growth. Rapidly rising home prices were fueled by high demand for homes and slim supplies of homes for sale. Mortgage rates remained below three percent, but rising home prices presented obstacles for first-time and moderate-income buyers as they competed with cash buyers and well-qualified buyers.

The Federal Housing Finance Agency reported that home prices for single-family homes owned or financed by Fannie Mae and Freddie Mac grew by 12.20 percent year-over-year and 0.90 percent month-to-month.

Federal Reserve Holds Benchmark Interest Rate Range Steady

The Federal Open Market Committee of the Federal Reserve voted to hold its key interest rate range steady at 0.00 to 0.25 percent. Although the Fed noted that the economy was improving, Fed Chair Jerome Powell said that the Fed was far from achieving its dual goal of achieving maximum employment and an annual inflation rate of 2.00 percent.

Pending home sales data provided further evidence of economic improvement in March; Home sales for which offers were received but not completed rose to a year-over-year pace of 1.90 percent. Analysts expected pending home sales to grow by 5.40 percent after February’s negative reading of -10.60 percent growth for pending home sales. Pending home sales usually depend on mortgage approval to be completed; lower mortgage rates encouraged buyers to enter the market, but high home prices and strict mortgage approval requirements could cause some pending sales to fall through.

Mortgage Rates, Jobless Claims

Freddie Mac reported little change in average fixed mortgage rates last week. Rates for a 30-year fixed-rate mortgage averaged 2.98 percent and rose by one basis point. Rates for 15-year fixed-rate mortgages averaged 2.31 percent and were two basis points higher. The average rate for 5/1 adjustable rate mortgages fell by 19 basis points to 2.64 percent; discount points for fixed-rate mortgages averaged 0.70 percent and rates for 5/1 adjustable rate mortgages averaged 0.30 percent.

New jobless claims fell to 553,000 initial claims filed as compared to the prior week’s reading of 566,000 first-time claims filed in the prior week.

What to Do With Spot When Buying a Home

What to Do With Spot When Buying a HomeBuying a home in another location far away can be challenging in terms of logistics as well as moving, but it becomes additionally harder for pet owners who may not be able to take their bigger animals with them right away.

Oftentimes folks may have to prepare a newly-bought home for a pet, make multiple moving trips or might not be able to take the new pet to the location at all for a while. All of these situations can be frustrating and difficult for both the pet and owner. Some available solutions can make some sense depending on the situation.

Family or Friends

Ideally, if a person has a family member or friend whom the pet can stay with for a temporary duration, that can be an advantage. If doing so, make sure your pet is already good around other people as it will have anxiety being left in a new place with unknown people for a long time and missing you. Also, make sure whom you leave the pet with has had experience with animals. Folks who have never had a big dog for a pet, for example, may hit you with a surprise when they suddenly can’t care for your pet being overwhelmed a day or week into the favor.

Short-term and Long-term Kennel Services

Alternatively, kennel and animal boarding services can help. Keep in mind you get what you pay for. Low cost kennels will likely keep your animal in a basic unit, often cement, with few amenities aside from water and food and an hour of exercise time. It’s a bit like prison for an animal. Better services focus on care for animals lodged, give them exercise and socialization time, keep their cages or containers clean, and interact with the animals when feeding. These facilities cost more, but they tend to keep the pet mentally healthier during the stay.

Permanent Separation

In some cases, a home buying move may require one to give up their pet completely. The first step should always be to try to give the pet to family or a friend who will take care of the pet right and wants to take on the pet willingly. These are the best situations, and the pet likely may know the person already. It will still be depressed for a while, but the pet will transition better.

If you don’t know anyone willing and a separation is a must, don’t immediately resort to the local pound or animal control as they unfortunately end up having to euthanize animals they can’t adopt out. There are multiple rescue groups based on specific breeds who will take the pet and try to adopt it out to a willing and vetted family and new home that can handle the breed. These groups work nationwide through networks and move former pets to new homes regularly.

Separating from a pet is no fun and often painful, but there are options to provide care temporarily or long-term versus just leaving a pet with local animal control. Planning and some research will typically produce multiple choices locally, and they could very well make your move and new home transition easier.

Home Buying Horror Stories: How Buying a Home Can Go Wrong – and How to Avoid These Mistakes

Home Buying Horror Stories: How Buying a Home Can Go Wrong - and How to Avoid These MistakesWhen you buy a home, you may have dreams of settling into a beautiful new space that meets your needs and that your family can feel comfortable in. While many will enjoy this vision of domestic tranquility after taking ownership of their dream home, others have had their dream turn into a veritable nightmare due to some simple mistakes or oversights on their part. By understanding these mistakes, you can avoid making them yourself.

Paying Too Much For The Property

One the surface, the main cost of buying a home relates to the sales price, and it is true that your monthly housing payment may be the primary related expense. However, other expenses such as homeowners insurance, property taxes, repair and maintenance costs, utilities and more will all need to be factored into the cost of home ownership. Some buyers believe that because an online calculator or a lending professional tells them that they can afford a high priced home that it is the case. You can review your budget and estimate all related home expenses to determine how affordable a specific property is for you.

Finding Out That The Location Is Undesirable

There are many things that can make a location undesirable, and you should take time to become comfortable with the location before making an offer. Consider, for example, if the neighbors like to throw loud parties on the weekend or if there is a teen driver that likes to speed down the street. If you are buying a property with open land or vacant buildings around it, consider researching zoning, and think about future uses for these properties that could influence value and desire.

Discovering That Your Property Is In Bad Condition

Some home buyers discover after purchasing a property that it is not in the best condition, and some even learn that their home needs tens of thousands of dollars of repair work or more. Even properties that appear to be in great condition on the surface may have hidden issues with the foundation, structure, roof, pipes or electrical work, to name a few. You can order a property inspection to learn more about the true condition of a property.

These are among the most common issues that can turn a dream home into a nightmare. When you work with a local real estate agent when buying a home, your agent can help you to avoid unpleasant and costly mistakes such as these.

Stimulus Checks And Your New Mortgage

Stimulus Checks And Your New MortgageMost of the focus on stimulus checks has been on “when” they will arrive, but if you are in the market for a new home (and mortgage) you should know how that payment will impact your financing. Part of the latest Covid 19 relief package includes payments and protections for existing borrowers and renters, but what about those who are looking to buy? According to the IRS, here are a few things to know about how your stimulus impacts your upcoming mortgage. 

Stimulus Money Is Not Taxable

Any funds you are qualified to receive are not taxable; this is important to know as you move forward with your purchase because it allows you to properly anticipate your tax burden for the coming year. 

Stimulus Money Is Not Income

While funds from the stimulus can be used however you’d like, including as part of your downpayment, they are not considered income. If you currently qualify for an income-based mortgage incentive or program, having a one-time boost in income could work against your housing plans. If those extra funds counted as income, some families could find themselves no longer qualifying for programs and loans that have income guidelines. 

Stimulus Money Can Be Used For Your Mortgage

Whether you use it for your down payment, pay points to reduce interest, or even pay off remaining debts to improve your ratios, this money can benefit your home buying plans. 

Every debt you pay regularly impacts the amount of money you can afford to borrow for your mortgage — using a stimulus payment to eliminate one or more credit cards or even car payments can increase the amount of monthly payment you can afford. Making these payments can also improve your credit score, which could qualify you for a better rate. 

Since the current stimulus program can benefit home buyers in several key ways, there is no better time to buy than now. Use your stimulus to maximize your buying power and get the best possible mortgage terms and you’ll be able to access a wider variety of homes.

The Potential Pitfalls of Buying a Second Home for Income

The Potential Pitfalls of Buying a Second Home for IncomeAside from owning a business, owning rental property has been one of the top investment choices for people, most commonly done through buying a second home. Handled right, income properties can generate significant gains for investors, both in terms of real estate appreciation as well as monthly income from tenants. However, it’s not sure a surefire approach to financial success. There are a lot of ways that a budding real estate investor can go sideways with an investment property home purchase as well.

Watch Out for the Seller-Renter

Many times people will sell a home but then offer to rent it from the buyer, essentially trading their home title for ready cash but not really moving out. These situations come up a lot where someone wants to stay where they are but doesn’t want to deal with a mortgage anymore and would rather rent. They are also frequently listed as buyer-direct home sales versus using a traditional route through a real estate agent and broker. The big risk here is that the seller is able to unload the home on the buyer, and then stop paying the rent a few months in. The deal allows them to avoid foreclosure but then it becomes the landlord’s problem to actually evict. By the time the legalities are done and eviction is finally achieved, many landlords have taken a loss on the property and end up selling again. It’s better to have a clean sale with no further obligation between the parties and start with brand-new renters altogether.

Have a Good Strategy Ahead of Time

There are different ways to make a net profit from a rental property. Depending on the cost of financing, down payment and expectations of holding a residential property the driver for profit can be different. Some expect to make a gain both from rental income as well as equity growth. Some realize with the cost of financing, the better plan is to use rental income to pay for the mortgage as much as possible and make the net gain on the property equity appreciation over time. How long a property will be held can come into play as well. Knowing going in what one’s strategy is can help avoid mistakes once a commitment has been made or being surprised if the market has a downturn etc.

Tax Benefits are Different

An income property doesn’t get the tax same deduction benefits of a first home. The mortgage interest deduction, one of the biggest tax benefits possible for an individual is not possible with a rental income property. However, if you are operating your rental property purchased as a business, many of the expenses of running that business can be deducted through the Schedule C form process with an income tax return. Check with a tax advisor or attorney to be sure for your specific situation and interests.

Owner Responsibilities

Just because you rent the property doesn’t mean you’re off the hook. As a new buyer and owner, you’re still responsible for the property taxes due, HOA assessments, utilities and other costs tied to the property. Unless you contractually make the renter responsible, the tax, HOA and utilities will address the property in your name as the owner. Some forget this fact and get a nasty surprise in the mail with a tax or assessment lien on their property.

In short, buying a second home as an income property has the potential for significant investment gain, but it doesn’t operate on auto-drive. You need to still be involved quite a bit and watch whom you rent to when protecting your property interest.