Southeast Florida Real Estate News

 

Oct. 6, 2019

8 Mortifying Questions You'll Be Asked When Applying for a Mortgage

mortgage-questions-asked

 

If you need a mortgage to buy a home, rest assured: Prospective lenders will ask you a lot of questions. After all, loaning someone money is a risky proposition, so they'll want some assurance you'll pay them back!

So what questions might they ask you? Allow us to outline the most common queries during a consultation, and to tell you what constitutes a decent answer—and what doesn't. That way, your mortgage pre-approval process won't be derailed by any big surprises.

Ready? Make sure you have answers to these questions before you start the loan application process.

 

1. What is your credit score?

For starters, let's look at your credit score—the numerical representation of how well you've paid off past debts. If you're in the dark on what your credit score is, get your score for free at CreditKarma.com, or your full report at annualcreditreport.com. You may also be able to get a free score through your bank or credit union, or another financial institution.

Lenders typically offer the best interest rates to customers with the highest credit scores, generally 750 and above. Yes, you may get a loan without a good credit score. But you'll pay higher interest rates if you do. Try to improve your score before you apply for a loan.

2. Do you have sufficient credit history?

A common misconception is that if you have a great credit score, you have the credit issue covered. Casey Fleming, author of "The Loan Guide: How to Get the Best Possible Mortgage," sees people who are proud of the fact they only have one credit card, which they hardly use, and a credit score of almost 800."It's not just the score," he says. "The whole purpose of the credit report is to have some sort of record that you have been able to establish credit and pay it back as agreed, reliably." If you haven't done that, lenders won't be in a hurry to lend you money. You have what is known as "thin credit."

If you only have one credit card, for example, you may not qualify for a prime loan with the lowest interest rates, regardless of your credit score. Your loan officer may recommend that you go out and get another credit card, or take out a small car loan, and come back when you have built a better track record of paying back debt.

3. How much is your countable income?

"Not everything you make necessarily counts," warns Fleming. "It's not unusual for someone to have this idea they make $200,000 per year, and an underwriter says they actually make $100,000 per year."

The reason? A lender may not include any income that is sporadic, new, or for something that the lender determines isn't a sure thing. Plus, ending a verifiable source of income you've had for years can also send up red flags, even if you have a new source of income to take its place.

Heather McRae, senior loan officer at Chicago Financial Services, Inc. in Chicago, IL, had one mortgage refinance borrower who retired during the loan approval process. Even though he had plenty of money from his pension and Social Security benefits, they had to wait a couple of months to document his new retirement income before he could get the loan.

Take-home lesson? Make sure your lender is aware of any recent changes to your income—not just the amount, but where it's from.

4. Have you changed jobs recently?

People often move and buy a home at about the same time they change jobs. That can be a problem, especially if the new job compensates you in a way that's different from the old one.

For example, say you were making an $80,000 base salary at your last job. You moved for a great job, where you get a $60,000 base salary, plus expected bonuses of $40,000, plus stock benefits. If you're expecting the underwriter to count your salary as $100,000 or more, you'll be disappointed. "If you don't have a history to document that you have received that over two years, you can only use the lower base salary," says McRae.

If you changed job fields, and your base pay stayed the same or improved, your loan approval may depend on the lender you are working with. Some lenders don't care if you've even changed job fields completely, as long as you are a W-2 employee. Other lenders want you to stay in a new job field for one or two years first to establish yourself, before they'll loan you money.

5. Do you have enough cash on hand?

Lenders expect you to have enough assets, such as cash and securities, to be able to pay for your down payment, inspections, and closing costs. An amount in reserve is important, too. The catch is that you probably won't be able to count 100% of your assets for these purposes.

For example, say you have $20,000 in the bank, your parents have promised to give you $10,000 to help with the down payment, and you have $80,000 in your stock brokerage account. Sounds like you have $110,000 available to buy a house, right?

The lender won't see it that way. They'll count the $20,000, assuming you can show with bank statements showing that it's been in your account for a while. The promise from your parents is less sure. The lender may want to see the money in your account, and get a signed letter from your parents stating that the money is a gift.

As for the $80,000 in your stock brokerage account, it may not be worth as much in the lender's eyes as you think. Lenders often knock 25% to 35% off the value of a stock portfolio, according to Fleming. They assume selling off a stock portfolio and other securities will incur expenses. You may owe taxes on capital gains—they don't know how much, so they'll assume the worst.

Also, the stock market fluctuates, so if you have to cash in to buy a house, you could have to sell stock on a down day. If you need to sell stock to buy a house, and you are borderline on qualifying to have enough assets, consider cashing in before you apply for a loan.

What if you're saving money in a shoebox under the bed? It doesn't count. Put your money in the bank, and keep it there for at least a couple of months, so that it shows on your bank statements.

6. How much other debt do you have?

You could have a great income, plenty of cash, a high credit score, and still not qualify for a loan. The deal killer may be all the other monthly payments you have to make, from credit card companies to auto loans. You can even be derailed by back taxes, due to the Internal Revenue Service. Lenders compare your monthly debt payments to your income to determine whether they think you can handle your mortgage.

Tempted to go out and buy new furniture for your new house before the loan closes? Watch out—that added monthly expense can throw off your debt-to-income ratio, and ruin your chances of getting a loan. It's a classic mistake.

7. What home are you hoping to buy?

You can't control everything. For example, you could be trying to buy a condominium, and it turns out that the condo association isn't viable, by underwriter's standards. McRae says that sometimes the condo association doesn't have enough insurance coverage, or other problems come up.

8. Are you single, married—or getting a divorce?

Lenders aren't going to ask you how you're getting along with your spouse. But they are interested if you are in the midst of a divorce, or if you have other major changes going on in your life that can affect your finances.

McRae had some clients who were getting a divorce in the middle of the transaction. The couple didn't think they needed to mention this. They thought it wouldn't make any difference, because they were still both on the loan and the divorce was amicable. However, the husband was obligated to pay alimony and child support. The underwriters had to charge the alimony and child support as expenses to the husband. Meanwhile, they couldn't give the wife credit for those payments under underwriting guidelines, because she had not been receiving them for six months. In the end, it killed the deal. They couldn't get the loan.

Bottom line? Make sure to keep your loan officer informed about what's going on. You can do whatever you want after the loan closes, as long as you keep up your payments. But when in doubt, avoid making big changes to your life and financial situation before or during the loan approval process.

Article Courtesy Realtor.com

Posted in News
Oct. 2, 2019

How Long Does It Take to Close on a House?

How long does it take to close on a house? During your house-hunting adventures, you've turned on (and hopefully off) at least 20 water faucets and peered into about 50 closets (oh, the things you've seen!). And now, at long last, you've saved your down payment, researched mortgage rates, shopped for just the right lender, and (finally!) found the perfect home. Your mortgage has been painstakingly secured with that winning lender, you've made an offer, and it has been accepted. More good news: Your home inspection comes off without a hitch. Congrats!

Now, exactly how long does it take to close on a house? It's the eternal question in real estate—for both buyers and sellers. Read on to get the gist of the closing process and the timeline you can expect, plus a guide to what can slow things down in the home-buying process—or speed things up.

How long will it take to complete the process?

One recent study found that real estate closing times are getting longer—on average it now takes 50 days. And while that may seem like an eternity to eager buyers or sellers, there's good reason home buying doesn't happen lickety-split. For one, buyers who require mortgages It turns out, home buying is more than just saving for a down payment, completing a mortgage application, and making an offer. Even if the terms of the sale are agreed upon by all parties, it's still wise to anticipate a bump or two in the road.

Here are the typical hiccups—ranging from lender snags to insurance oversights—that can increase the time it takes to close on a home sale.

It turns out, home buying is more than just saving for a down payment, completing a mortgage application, and making an offer. Even if the terms of the sale are agreed upon by all parties, it's still wise to anticipate a bump or two in the road.

Here are the typical hiccups—ranging from lender snags to insurance oversights—that can increase the time it takes to close on a home sale.through lenders must finish the loan application process and home appraisal.

Home buyers should also use this time to complete their due diligence by reviewing the property title and completing a home inspection, says Todd Huettner of Huettner Capital. This chunk of time also gives both the seller and buyer time to plan their move.

What can slow down a closing?

Even though a mortgage has been secured and a property is under contract, the occasional hitch can take the closing process from warp speed to ultra slo-mo. This is where you learn that sometimes, the most seemingly straightforward home-buying process can still be fraught with obstacles.

  • Funds: Yes, you guessed it. The most common reason for a delayed closing is usually related to buyer financing, says Jerry Koller of California's International Home. The leading issue: getting a mortgage approved by a lender. Buyers can avoid this time drain by obtaining a mortgage pre-approval letter from the lender, something many sellers require along with an offer. And remember, even with a mortgage pre-qualification for a conventional loan, it can take 30 days for the lender to complete its due diligence once an offer is made, so plan accordingly. All-cash buyers save a significant amount of time by avoiding the mortgage process—a fairly obvious real estate fact of life but one worth noting nonetheless. (Side note: Choose a loan officer who communicates well and can walk you through the process step by step, and financing will feel much less overwhelming.)
  • Appraisal disparities: In order for a mortgage to be approved, the lender needs an appraiser to value the home. But if the appraiser's valuation comes in low, it will take time to renegotiate the price of the real estate and rework the mortgage through the lender.
  • No insurance: Failing to secure homeowner insurance until the last minute slows down a closing, since it's often required in the terms of the mortgage before you move in, says Paul Moore, a real estate agent and broker in Virginia. Be sure you know ahead of time what, if any, insurance stipulations your home loan has.
  • Contingencies: "If a buyer needs to sell their existing home and/or a seller needs to buy a new home, this could also delay the expected closing date," says Colin T. McDonald at Re/Max Capital in Albany, NY.
  • Short sale: Sometimes a home is sold at a price lower than what the owner still owes on the mortgage. This is known as a short sale. In this case, the owner must have the lender for the original mortgage loan agree to accept a pay-off amount lower than the remaining balance on the mortgage. This can sometimes prove a challenging task and can potentially impede the closing process.

How to speed up a closing

If you want to ensure your purchase reaches the closing date finish line in record time, here are things you can do to help.

  • Resolve title issues: Sellers should resolve any problems—such as a tax lien—regarding the title to the property, says Susan Naftulin, president of Rehab Financial Group. Provide the title company with copies of the satisfactions before the title search, to avoid any red flags. If you haven’t satisfied the lien, informing the title company that you want it paid out of closing proceeds will keep the process moving along.
  • Address repairs: A home inspection usually generates a laundry list of repairs that need to be resolved before closing. While sellers can make the repairs, in general, it's much faster for them to just reduce the price or give the home buyers a tax credit so they can make their repairs on their own time.
  • Communicate: Jack Matos, director of escrow operations at Proper Title, based in Palatine, IL, says buyers with questions about the closing documents or walk-through concerns need to immediately inform their Realtor® or attorneys. "Any significant changes at this late hour will require new forms and review periods," he says. All that said, don't feel pressured to just rush through things without fully understanding them. Your real estate agent is there to make sure you're comfortable throughout the entire closing process. When in doubt, don't be afraid to take a breather and discuss whatever's nagging you, until you're confident you can sign on the dotted line.

Article Courtesy Realtor.com

Posted in News
Oct. 1, 2019

How to Buy a House in Your 20s—and Why You Really Should

buy-house-in-20s

Curious about how to become a homeowner in your 20s? If you're dubious it can be done, we get it. Between entry-level salaries, college loans, and the desire to just be young and have fun, 20-somethings often think buying real estate is beyond their reach. No so! It is entirely possible to buy a home in your 20s, and it will benefit you big-time down the road. Here's how you can make your home-buying dreams come true much sooner than you think.

How to buy a house in your 20s: Save for a down payment

Being a homeowner with a mortgage is not like renting. To afford to buy a house at your age, you'd better have some cash saved up for a down payment on your mortgage—a lot of cash, actually.

Granted, you don’t have to put down 20%, but doing so enables you to avoid paying private mortgage insurance, a premium that can increase your monthly payment by up to 1.15%.

If you don’t have a ton of money in savings, one way to afford the down payment is to ask Mom and Dad for financial help. Another option to afford the down payment bill is to apply for down payment assistance.

Depending on your income and other factors, you could qualify for one of over 2,200 down payment assistance programs nationwide, which help out first-time home buyers with low-interest loans, grants, and tax credits.

So, how much money are we talking about? Well, one study found that buyers who use down payment assistance programs save an average of $17,766. Sadly, most consumers aren't aware of these programs, or assume they're too difficult to qualify for. Don't be one of them!

Along with a down payment, homeownership will require you to pay the monthly mortgage, property tax, and homeowners insurance. But sellers usually take care of the closing costs for real estate transactions.

Shore up student loan debt

Student loan debt has surged to an average of $28,950 per borrower, reports the Institute for College Access & Success. But college debtdoesn’t automatically prevent you from becoming a homeowner.

Most mortgage lenders require a borrower’s debt-to-income ratio—how much money you owe divided by your income—to be no more than 36%. So, someone making $6,000 a month and paying $500 a month in student loan debt would be able to afford a maximum monthly mortgage payment of $1,680—in many markets, that's plenty to buy real estate. But, if you’re shouldering too much student loan debt to qualify for a mortgage, you may still have a few options.

One way to make room for a mortgage is to refinance and extend the life of your college loan. This results in smaller monthly payments over a longer period of time, so you’ll have more you can put toward a mortgage. The caveat is you'll end up paying more in interest over the life of your college loan, but it means you can buy a home now and, in turn, take advantage of today’s low mortgage interest rates, says Heather McRae, a senior loan officer at Chicago Financial Services.

Moreover, nearly half of states today offer housing assistance to college grads carrying student loan debt. For instance, New York's new Graduate to Homeownership program provides assistance to first-time buyers/college grads in the form of low-interest-rate mortgages or up to $15,000 in down payment assistance. You can meet with a mortgage lender to find out if you qualify for one of these programs.

Check your credit score

Unlike older generations, home buyers in their 20s tend to have shorter credit histories. That can be a problem, since if you have limited credit history, the odds are greater that you have a mediocre credit score—the numerical representation of how well you've paid off past loans (like credit cards).

Mortgage lenders usually require borrowers to have a minimum credit score of 660; they also look at your credit utilization ratio—your current debts, divided by the credit limit on the sum of your accounts.

For example, if you’re carrying a $400 debt on your credit card and have a $1,000 credit limit, your credit utilization ratio is 40%. Unfortunately, relatively new credit users tend to have a higher credit utilization ratio.

You’ll want to get a free copy of your credit report at AnnualCreditReport.com. Check for errors—1 in 4 Americans spots mistakes on their credit report, according to a Federal Trade Commission survey. And, if your credit isn’t up to par, you may have to take a few months to raise your score. Or you can get someone with good credit(like your parents) to co-sign the loan for you to help you become a homeowner.

Purchase a starter home

As a first-time home buyer, you don’t have to find your “forever home” right now.

“I tell young buyers all the time, ‘This is your first home—it’s not your last,'” says Linda Sanderfoot, a real estate agent at Coldwell Banker in Neenah, WI.

In fact, there are a couple of big financial benefits to buying a starter home while you’re in your 20s. First, your mortgage payments will probably be more affordable, since you’ll likely be buying a cheaper house. Second, you may be able to get a 5- or 7-year adjustable-rate mortgage and qualify for a lower interest rate than you would with a 30-year fixed-rate loan—a good decision as long as you plan on moving to your dream home before the loan's interest rate lock expires. Talk to your real estate agent about buying a starter home.

Plan for unexpected home expenses

All home buyers should have a rainy day fund to pay for emergency home repairs such as roof damage or a gas leak, as well as monthly mortgage payments, closing costs, insurance, and property tax. And this is especially important for young or first-time buyers. Why? Research shows many millennials are less financially responsible than older generations.

A study by TD Ameritrade found that more than 9 in 10 millennials overspend, fall short on savings, or take on additional debt at least once a month per year. Furthermore, a recent GoBankingRates.com survey found 52% of millennials said they feel pressure to keep up with their friends due to always going out.

Consequently, “Don’t buy at the top of your budget," says Sanderfoot. "Unless you’re buying new construction, you need an emergency fund for big repairs.”

She adds that home buyers may also want to get a home warranty, which is a policy that would cover the cost of maintenance and repairs for certain home appliances if they break down. (Plans start at about $300.)

Article Courtesy Realtor.com

Posted in News
Oct. 1, 2019

What Is a Property Lien? An Unpaid Debt That Could Trip Up Your Home Sale

what-is-a-lien

Property liens are one of the most common conditions that can slow down a real estate transaction. So what exactly is a lien on a house? In general, it is a legal notice that's put on file as the consequence of an unpaid debt. When creditors want you to know that you owe them, and they mean business, they may choose to take legal action by placing a lien on your biggest asset, your home.

A lien, or debt, can feel like a huge black spot on your record, but there's no need to panic. In the real estate world, they're much more common than most buyers and sellers realize. Read on for your must-know guide to resolving such claims and moving forward with the sale.

What are property liens?

"A lien usually comes from either unpaid taxes, a judgment made in court, or from unpaid bills," explains Jocelyn Nager, a lawyer who specializes in debt collection.

A claim filed against property could include missed mortgage payments or any payments owed to contractors for work done on the home. Payment to creditors for the lien will be required before a property can be purchased.

Types of liens on houses

There are a number of liens that creditors may place on your home. These are the most common:

  • Mechanic’s lien: When general contractors, carpenters, plumbers, painters, or other repair companies work on your home, they may file a claim on the property as insurance to make sure they’re paid.
  • Judgment lien: If you have lost a court case and there was a judgment against you, the winning party of the lawsuit can file this against your home until the payment is collected. This type of lien is also sometimes imposed by an attorney if you do not pay your bill for legal services.
  • Tax lien: If you do not pay your federal, state, or county taxes, the government may file a tax lien on your home for what you owe on your property.

How does a lien affect a real estate transaction?

Once a property is put under contract for a mortgage, the title company will perform a search for any liens that have been filed against the property. Simply put, if one turns up, it puts the transaction temporarily on hold.

Mortgage companies will not agree to finance a property until the lien is satisfied, or paid off, which is the responsibility of the seller. In most cases, this will encourage the seller to take quick action toward resolving the debts. However, the seller might also refuse payment or contest the claim. If this happens, the sale must be put off until a definitive outcome can be reached.

If a seller refuses to pay, the buyer has two options. Since the refusal can be viewed as a breach of contract, the buyer then has the right to walk away from the sale without losing his or her earnest money deposit. Alternatively, the buyer can accept financial responsibility for any liens, in order to move the transaction along.

In a cash transaction, the buyer and the seller are free to come to a resolution on their own.

What to do if your property is subject to a lien

The first step is for the sellers to determine whether the property lien is genuinely their responsibility. Because these holds are searched for by name, sometimes multiple matches will pop up.

Family members who share similar names or those whose names are unusually common may find themselves being asked about liens they did not incur. In this case, it's best to work with your real estate agent and title company to determine what proof is needed to clear up the issue. Usually, all it takes is something as simple as the verification of your birthdate or home address.

If, however, you're the seller and the property lien is on your house, it's crucial to start resolving the issue as soon as possible. You'll want to get in touch with the lien holder and arrange how to pay it off. Typically, the repayment will come out of the proceeds of the sale of the house, so you'll want to take the title company's advice on how best to handle the situation. In particularly complicated situations, like tax liens, you might also want to seek legal counsel.

If you're the buyer purchasing a property in foreclosure or a sale at auction, it's possible that you will have to pay off any lingering debts. That's why it's critical for buyers to be aware of what they're getting into before bidding on one of these properties. While they might seem like a better deal upfront, they can end up costing much more than a traditional sale when all is said and done.

Article Courtesy Realtor.com

Posted in News
Sept. 23, 2019

5 Dire Mistakes People Make Moving Their Pets to a New Place

moving-pets-mistakes

Moving involves so many tasks: planning, packing, hiring movers, enlisting emotional and physical help, and lots more. Moving with pets can add even more to your to-do list.

When we moved a couple of years ago, I never really considered how our two Lab mixes, Coco and Cookie, would handle it. That was a big mistake. I looked up a few tips online and tried my best to put them into practice. But, for the first few days in the new house, my dogs were stressed and anxious, got into fights with each other and barked all the time—all unusual behavior.

After a couple of weeks, they started to adjust, and their anxiety subsided. But it got me wondering what I could have done to make this move less traumatic for them.

To help keep your animals calm and safe when moving to a new place, we've highlighted some top mistakes pet owners make in the process. Here are some moves that experts say pet owners should avoid if they want a smooth transition.

1. Keeping pets around on moving day

Moving day will probably be chaotic, so boarding pets, or having them stay elsewhere for the day or overnight, is a good idea, says Nicole Ellis, a pet expert and certified professional dog trainer with the online pet sitter and dog walker network Rover.

Cats can be confined to a specific room in the old or new place to keep them away from the activity, says Mikel Delgado, a cat behavior expert at Rover. She suggests placing a sign on the closed door that reads, “Cat Inside: Please Do Not Open Door,” to prevent escapes.

We boarded our dogs for a few days during our move, which gave us time to start unpacking and get their things set up before bringing them home. Knowing they were safe and out of the way made the move less stressful.

2. Washing pets’ things before the move

Familiar smells ease pets’ anxiety, Ellis and Delgado say. It may seem like a good idea to wash your pets' belongings or buy them new things before a move for a fresh start, but don’t.

Beds, blankets, toys, litter boxes, and food and water bowls bring the scent of the old home into the new one, and this substantially reduces pets’ stress and helps them adjust, they say.

Delgado also suggests not packing pets’ items until the last minute, so they’ll feel at home while you’re preparing to move.

3. Not keeping an eye on them in their new environment

Once you've moved, Ellis recommends watching your pets closely as they explore their new place—and checking (inside and outside) for possible escape routes. For instance, even if your new house has a fence, “Dogs can jump higher than we are often aware, so keeping them company outside is always safest,” she says.

She also suggests walking them around the neighborhood one step at a time to ease them into new sights and sounds, which can be overwhelming.

Another tip: Introduce yourself and your pet to neighbors. Give your number to neighbors and explain that your pets are still adjusting to a new place, so if they’re barking too much, neighbors can politely tell you.

4. Changing their setup too much

For cats, “Home turf is everything,” Delgado says. Cats are territorial and feel safest in familiar spaces; moving can cause unusual behavior, such as hiding, fearfulness, and being more vocal. Setting up a “safe room” with your cats' necessary and favorite things for the first few hours, days, or even weeks helps them adjust.

Once cats get comfortable and are acting like their normal selves, they can be free to explore the rest of the house, Delgado says.

Ellis recommends arranging beds, crates, and toys as close to the old setup as possible. Giving dogs a sense of familiarity with where their stuff is located makes them feel more at home.

This is a tip I found online that seemed to work for us. We placed our dogs’ beds next to the couch in the living room of the new home, similar to where they had been in the old home, and put their water bowl in a similar spot in the kitchen. I also didn’t wash their favorite blankets and bedcovers before we moved, even though it was tempting.

5. Changing your pets’ routine

Routines are important for both dogs and cats, so sticking to regular feeding schedules, walk times, play activities, and other familiar tasks creates stability.

“They really rely on their favorite blankets, beds, and scratching posts to feel safe, and routine is very important to cats,” Delgado says.

Our dogs love their routine. They wake up at 6 a.m. every morning, ready to go outside to use the bathroom and then have breakfast. We kept up this schedule in the new house.

The bottom line is that settling pets into a new place will take time. How much depends on the individual animal, the pet experts say. Ellis urges pet parents to have medical records, microchip numbers, and current photos on hand, in case a pet gets lost.

Pets may show signs of stress and anxiety for several days, but there should be signs of improvement, Delgado says. If not, or if pets aren’t eating, call the vet.

Article Courtesy Realtor.com

Posted in News
Sept. 1, 2019

What Is a Home Warranty? Peace of Mind for Home Buyers

home-warranty

What is a home warranty? In a nutshell, it's a policy a homeowner pays for that covers the cost of repairing many home appliances if they break down.

After all, lots of things you buy come with a warranty in case they break down, from cars to smartphones. But what about homes? It turns out you can get a home warranty plan, too.

“Home warranties provide financial protection from a service provider for homeowners who might be faced with unexpected problems with their appliances,” explains Shawna Bell of Landmark Home Warranty.

Many people buy a one-year home warranty plan right when they close on a home, since such protections can provide some much-needed peace of mind that you won't get hit with unexpected, out-of-pocket expenses soon after moving in. Imagine what a bummer it would be, after all, to wake up one morning to a broken boiler, knocking appliances, a leaking water heater, dripping plumbing, or malfunctioning fridge in your new home.

A home warranty plan can lessen those homeowner and appliance worries, which for many is worth every penny. A couple of warranty plans to consider: Choice Home Warranty and TotalProtect.

What does a home warranty, like one from Choice Home Warranty, cover?

Don't mistake a warranty for homeowners insurance, which covers your home's structure and belongings in the event of a fire, storm, flood, or other accident. Home warranty companies, in comparison, will cover repairs and replacements on home  systems, including electrical systems, plumbing, water heater, washer, and kitchen appliances due to normal wear and tear—no calamities required.

Home warranty companies, including Choice Home Warranty and Home Service Club, generally set up a service contract to cover the following items (you can read a sample contract to find out):

  • Basic home systems such as plumbing and electrical
  • Heating and cooling systems, including the water heater
  • Appliances such as the washer and dryer
  • Kitchen appliances such as the oven, range, built-in microwave, and garbage disposal

How much do home warranty companies charge?

While homeowners are often required to get homeowners insurance along with their mortgage, home warranties are a fully optional purchase. Basic coverage starts at about $300 and goes up to $600 for more comprehensive plans, says Bell.

A homeowner can include add-ons to a service contract if needed (e.g., coverage for a swimming pool, various appliances, or an external well).

Although many home warranty companies offer plans to homeowners at any point, the best deals can often be snagged if purchased when you become a first-time home owner. You're eligible for these plans whether you're buying a condo or single-family home. And some warranty plans are the "build-your-own" type, which means you can customize a basic plan to cover particular systems (like plumbing) and appliances, or you might include optional add-ons like a tuneup for your HVAC.

“The home warranty offered at the time of the real estate transaction typically offers the most comprehensive coverage and price points, so that’s why it’s the ideal time to lock it in,” Bell says.

At the end of the first year, you usually have the option to renew your home warranty or bail with your service provider.

Benefits of home warranties for home buyers and sellers

A home warranty benefits homeowners by providing reassurance that they can move in without worrying about shelling out even more for add-on or surprise repairs.

A home warranty can also benefit home sellers (if they don't have it already), since it can cover these elements during the listing period; some home warranty companies even offer free seller’s coverage during this time with the hopes that the buyer will decide to continue the coverage. Often, home sellers will offer to pay for the first year of a buyer's home warranty to entice buyers to bite.

But not everyone thinks home warranty companies are worth the cost. Typically a warranty isn't necessary with new homes, since most of the appliances are already covered under manufacturers' warranties. But in general, the older your home, the greater the odds that something'sbound to break, and the wiser it is to get a home warranty. Best of all? Not all home warranty companies differentiate between newer and older homes in terms of cost, making a warranty an especially cost-effective option if you are purchasing an older home.

Be sure to read the fine print on the contracts from a warranty company such as Home Service Club and Select Home Warranty. And remember, this type of warranty doesn't usually cover pre-existing conditions and you may have to pay a deductible if something breaks.

What if something breaks under a home warranty

Home repairs are a big headache, so you're probably wondering if that broken appliance, leaky plumbing, ductwork, or HVAC is a covered item under your home warranty. To find out whether you may have to pay a deductible, call your provider or customer service to connect with a qualified contractor in your area.

One thing to remember is that a home warranty does not mean you're off scot-free for a certain "covered item." Typically you'll have to pay for a service call, service fee, or part of the bill up to your home warranty deductible first.

While not everyone will think a home warranty is worth it, it is a good idea for people who lean toward being better safe than sorry when buying a home. Consider the appliances you own and how reliable your plumbing is. Speak with your real estate agent for advice, and then check out the home warranty companies in your area (try Select Home Warranty and TotalProtect). This way, you can read a few sample contracts and decide for yourself.

Article courtesy Realtor.com

Posted in News
Aug. 5, 2019

6 Surprising Things You Never Knew You Had to Do Before the Movers Arrive

do-before-movers-arrive

Moving is stressful, so you’d be forgiven if after packing the last box you thought that you were finally done. Now it’s just time to wait for the movers to arrive, right?

Not exactly.

Working with professional movers is a great option for people making big moves, moving with kids, or moving large or fragile items that would be otherwise impossible to transport. But while many moving companies do a great job of providing end-to-end service, there are some things that only you can do to make the whole process run smoothly. Here’s our list of six surprising things you’ll need to do before the movers arrive in order to avoid disaster.

1. Make a clear path

Whether you live in an urban apartment or a two-story house in the country, there are bound to be obstacles for your movers. By anticipating these issues before they happen, you can make everyone’s job easier, and possibly even save some money by taking up less of the movers’ time.

First, you should consider the parking situation outside your home. Where will the movers be able to leave their truck when packing up your stuff? If you do have that house in the country, this might not be an issue. But if you’re living in an apartment or urban area, chances are good that a huge double-parked truck won’t be taken very kindly by the neighbors.

“If you live in an apartment building or if there is limited parking in your area, ask the movers if they will handle the logistics or if you need to do so,” says Ali Wenzke, author of "The Art of Happy Moving."

Some moving companies might be familiar with your neighborhood and know how to park in a way that doesn’t raise any red flags with the neighbors. But if they tell you they’d like your help with the logistics, then this will be on you to handle before they arrive.

“You may need to contact your building manager,” Wenzke says, “or the local city government to get the appropriate signage and allowances.”

There are other things to consider, too—like the state of your driveway.

Pat Byrne, operations manager of Long Island–based moving company Moving Ahead Moving & Storage, always asks clients to remove ice and snow to avoid any accidents during the move. You should also make sure the driveway and front access points are clear of debris—like kids’ or pet toys that might pose a slip hazard.

2. Make necessary reservations and get your paperwork together

Some apartment buildings might have service elevators available for use. This would be another time-saving question to ask your building manager in advance.

“See if service elevators can be reserved and whether the building needs any paperwork from movers—like a certificate of insurance,” says Byrne.

3. Protect your house, including your floors

To prevent damage to your house during the move, you should be aware of what furniture is going out the door, and anything fragile in its path that might be at risk of breaking.

“Lightbulbs, fixtures, pictures, mirrors, wall hangings should be removed from the main areas where furniture will be moved,” Byrne says.

And don’t forget about the hardwood floors. Nothing will put off a buyer more than seeing skid marks illustrating the path your sofa took out of the place.

“If you have hardwood floors or tile in any rooms, let your movers know ahead of time so they can prepare the right materials—and make sure your contract includes hardwood floor protection,” advises Miranda Benson, marketing coordinator at San Francisco–based moving company Dolly.

4. Measure!

On a related note, you'll want to measure your furniture and make sure any large items will fit through the front door in the first place.

“Nothing is more heartbreaking than finding out the gorgeous sectional you spent hours assembling is not going to make it through your front door unless you spend more hours disassembling it,” Benson says.

 

5. Pack up the kids (and pets)

Not literally, of course. But you should take the time to consider where your family will be when the movers are at work. If paying for a space in the nearby pet hotel isn’t an option, at least consider keeping your pets in a safe space within your home.

“Pets should be kept in a room with everything they need that movers won’t need to access,” Byrne advises. “You’d want to do this even if your pet is friendly, to avoid [their] accidentally getting out of the house or injured.”

Similarly, young kids should also be kept out of the way on moving day. This is important for their safety as well as the safety of your moving team.

“The last thing you or your movers want to worry about is whether your 2-year-old's scream is going to shock them at the wrong time," Benson says.

6. Make yourself available

Once the family is out of the house, it’s time (drumroll, please) to sit down and relax—sort of. Find a central point in your home (that’s out of the movers’ way) and simply plan on making yourself available to them as they move your stuff.

Do we mean supervising their every move and reminding them the box is marked “fragile”? Probably not. But you should be around to help answer any questions, or alert movers to anything special they should know about your place.

“There are little things about your house that you only learn from living there: The hallway closet door never stays closed, the third step down has a slight bend, a pack of hornets tends to congregate around the back door, so use the front—these are all valuable things that make your movers' lives easier,” Benson explains.

“On top of that, being available to answer questions, whether that's in person or via phone, can make your move much smoother," she adds.

Article courtesy Realtor.com

Posted in Market Updates
July 26, 2019

How Important Are Schools to Homebuyers

housing schools

 

 

Home Buyers Forego Garages for School Districts

  • 78 percent of buyers in their preferred school district gave up home features to get there
  • Most common compromises include a garage, large backyard, and updated kitchen
  • Nearly three-quarters of respondents say good schools were important to their search

 Today’s seller’s market is forcing buyers to make compromises, but new survey [1] data shows buyers remain steadfast in their desire for their preferred good school districts. In fact, they are willing to give up two of their most desired home features — a garage and updated kitchen — to get into the right school district they want.

Most buyers understand that they may not be able to find a home that covers every single item on their wish list, but our survey shows that school districts are an area where many buyers aren’t willing to compromise. For many buyers and not just buyers with children, “location, location, location,” means “schools, schools, schools.”Three-quarters of respondents indicated schools were important in their search

The majority of successful buyers surveyed, 73 percent, indicated that school boundaries were important to their search, with 39 percent indicating very important and 34 percent important. Only 18 percent said they were unimportant or very unimportant, and 9 percent of buyers were neutral on the question.

The desire for particular schools varied significantly by life stage and age. Ninety-one percent of buyers with children said that school boundaries were important or very important, compared to 34 percent of those without children. Similarly, younger buyers were more likely to say that schools were important. Eighty-four percent of those 35-54 years old and 86 percent of those 18-34 years old indicated they were important, compared to 37 percent of buyers 55-plus. More than half of older buyers 55-plus said school boundaries were unimportant or very unimportant.

Buyers compromise on their top home features for good schoolsSeventy-eight percent of buyers for whom schools were important and who were able to get into their preferred district said they had to compromise on home features; 22 percent did not. The features they most commonly reported giving up were a garage (19 percent), a large backyard (18 percent), an updated kitchen (17 percent), desired number of bedrooms (17 percent), and an outdoor living area (16 percent). According to realtor.com’s spring home buyer survey a garage was the No. 1 feature home buyers were looking for this year, followed by an updated kitchen, and an open floor plan.

Older buyers were less likely to say they had to compromise with 42 percent of buyers 55-plus reporting they made no compromises, compared to 21 percent of 35-54 year-old buyers and 17 percent of buyers aged 18-34.

Buyers define good schools by test scores and accelerated programs

Test scores were the factor most often selected by buyers as a hallmark of a good school (59 percent), followed by having accelerated programs (53 percent), arts and music (49 percent), diversity (43 percent), and before- and after-school programs (41 percent).

Younger buyers were more likely than older buyers to cite diversity as a factor that makes for a good school — 49 percent for 18-34 year-olds, compared to 37 percent for 55-plus. More older buyers placed importance on whether a school has accelerated programs — 62 percent for 55-plus vs. 50 percent for buyers under 55.

Buyers looking for homes in a specific district or school boundary, can search specifically within these parameters on realtor.com.® Buyers simply enter the name of a school or district into the search box on the realtor.com® home page. Homes within the area are then presented on a map with a “pin” showing the school name and location.

Perhaps unsurprisingly, given the importance recent buyers placed on schools, many home shoppers are already using this feature to look for homes.  Below we’ve compiled a list of the most searched for schools based on home searches using the school search feature on realtor.com in 2018.

Article Courtesy Realtor.com

Posted in Market Updates
July 24, 2019

What Is an Amortization Schedule? Mapping Out Your Mortgage Payments

mortgage payment

What is an amortization schedule? When you borrow money to buy a home, one of the documents you’ll see is an amortization schedule provided by your mortgage lender who could be a retail bank, a mortgage bank, a mortgage broker, or other lender. The word “amortization” refers to the repayment of a debt through regular payments until the loan is paid off in full.

What is an amortization schedule?

In essence, an amortization schedule outlines your loan payments each month and helps keep you on track.

When you take out a fixed-rate mortgage—whether it's for 30 years or any other term—your lender calculates an amortization schedule based on the beginning balance, interest rate, and number of payments that shows your payment for each month of your loan.

The schedule shows your interest calculation and how the payment is divided into principal and interest, so you know how much of each you pay each month. It also calculates the outstanding balance of your loan as you progress through the loan term.

By looking at your amortization schedule calculator, you can see how the amount of interest you pay changes compared with the amount of principal you pay during the life of the loan.

You can view your amortization table on a monthly or yearly basis. In the early years of your mortgage, the schedule shows that your monthly payment is almost entirely interest. The higher your interest rate, the more interest expense you pay with each monthly payment. Gradually that shifts due to amortization—lowering of the balance by periodic payments. By the end of your loan schedule, the calculator shows your payments going almost entirely to pay down your principal.

Thinking about refinancing your loan?

When you make your first payments on a home, you may not pay attention to your balance or how your payments are split. You may be happy to be in a home and keeping up with the payments.

After you’ve owned your property and made payments for a few years, though, you may be thinking about refinancing or selling. In that case, you’ll need to know your balance so you can estimate your home equity. You can find this information on the amortization schedule calculator, or on your latest mortgage statement.

If you decide to refinance, remember if you switch from one 30-year loan to another, you’re restarting the interest clock and could end up paying more over time, even with a lower rate. For example, if you get a new loan after seven years of payments into a new 30-year loan, you’ll be paying interest on your home for a total of 37 years, between the two loans. It may be worth it, however, if you qualify for a lower interest rate.

Paying down your principal loan balance

Another reason to pay attention to your amortization table—and to use an amortization calculator—is you can easily see the benefit of making extra payments to reduce the principal balance on your loan. While your monthly payments won’t change unless you start over with a new loan, you can pay off your loan early by making additional payments.

In fact, you can use amortization to your advantage to save money and pay off your loan faster. If you make an additional loan payment of $1,000, for example, a calculator will show you that it saves you more than $1,000 over the life of the loan. That's because the additional payment helps you amortize your loan faster; in other words, lower the balance and thus save on interest expense.

Here are three ways to pay down your balance faster:

  • A little extra each month: Round up your payment and designate it to pay down your principal.
  • A lump sum payment: If you get a windfall, bonus, or tax refund, use it to pay down your balance.
  • Biweekly payments: By paying half of your mortgage every two weeks, you end up making one extra month’s payment each year.

You can try different scenarios on a calculator to see how even small, regular additional amounts can speed amortization of your loan along.

Regardless of how you make extra payments on your amortizing loan, make sure your lender applies the payment to the principal amount, if your goals are to decrease total interest expense and shorten the effective term of the loan.

Study your amortization schedule when you get it to see if you can accelerate your loan payoff date.

Article courtesy Realtor.com

Posted in Market Updates
July 24, 2019

Staging and Selling a Home With Kids: Yes, You Can!

stage-with-kids

Staging your home is universally acknowledged as one of the most important things you can do to make it appeal to potential buyers. And while no one ever goes in thinking it'll be easy, it doesn't have to be an insane amount of work, either—which is especially good news for home sellers who have kids. After all, few expect a home occupied by children to be perfect; that said, it should still adhere to some of the basics of staging, by being clean, inviting, and depersonalized.

This may seem like a lot of hassle, especially when buyers probably knowyou have kids. Won't they forgive a few minor details? Maybe not, says Mary Hall Mayer, a Realtor® with Warburg Realty in New York City.

“It’s psychological," Mayer says. "A dirty-feeling house implies nothing is well-maintained—not your appliances, or even the wooden floor concealed by a large area rug.”

So whether you’re selling a house with messy preteens or trying to stage while your toddler throws food across the room, we'll walk you through the process of transforming your home so it's seller-ready. Read these tips from the experts that will help you prepare your house (and your children) for a staging success.

Strike a balance

Just like any other room in the house, the kids’ rooms should be tidy and clean. Does this mean playtime is banned while your house is on the market? No. But it does mean you’ll need to get tough about what really needs to stay.

“The first thing I like to remember is that, if I'm showing an occupied unit, it's occupied by everyoneliving there,” says New York City–based real estate broker Brian Letendre. “Let's find out what's absolutely essential to normalizing the day to day for the children, and get a storage space to put any overflow.”

One of the best ways to make your home inviting (besides keeping it clean) is to depersonalize. We don't mean transforming it into a sterile space, just a neutral one that could comfortably belong to anyone, even a buyer without kids.

“You always want the prospective buyers to get a glimpse of what life would be like in the unit for them, without too much of the seller's personality there,” explains Letendre.

That means you’ll be putting your storage unit to work, and filling it with items like old monogrammed baby furniture or those abstract clay art projects made by your kids before they could even walk.

Remove larger toys that might otherwise dominate the room, like play sets, dollhouses, or that 4,000-piece Lego Death Star set.

Corral the small stuff

Once you’ve packed the big items off to storage, it’s time to gain control of the small stuff. You know—all of those half-used crayons and McDonald’s Happy Meals toys that have been accumulating for years.

A good approach is to invest in a collection of baskets or bins. Pick something that adds some style to your space, rather than detracts from it. That means stay away from hideously bright plastic bins; the point is to make your space look like it was organized by a professional.

Kim Jones, a Realtor and owner of Louisville-based L+K Home Organization, sold her home when her twins weren’t even a year old.

“The toys you keep are the ones kids play with every day,” she explains. “Rather than leave them out, get containers and shelving. To maintain organization, it’s important to place the toys back in a manner where it’s easy for the kids to help in the cleanup process.”

If your kids are old enough to help, encourage them to keep their space clean and organized.

“Labeling the containers, baskets, and bins gives the look a finishing touch but makes it easy for everyone to identify where things go back” says Jones. “If your kids are too young to read, use pictures instead.”

Prevent messes before they happen

When the bins are labeled and ready to go, it’s time to start thinking about all of the little messes that happen with kids—and how to prevent them when you have prospective buyers coming over.

"Now isn’t the time for art projects," says Danielle Schlesier, a Realtor in Brookline, MA. "Pack up tempting supplies like paint, markers, crayons, and glitter.”

Another good point is to watch what you cook on showing days. Here's a tip: Skip the waffles and maple syrup for breakfast. In fact, keep any sticky, high-spatter foods off the menu for those days, and plan to have the kids out of the house at least 30 minutes prior to your open house, giving you some time to clean up if necessary.

Do a final sweep

Toys organized, messes cleaned up, kids waiting outside—it looks like you’re ready to go, right? Not just yet.

Despite all of your hard work (and we see you!), there are still a few final places you’ll want to check before heading out.

Mayer, of Warburg Realty, offers up her final checklist. “Clean [off] fingerprints and sticky handles that people may open, like closet doors, appliances, doorknobs, mirrors, and glass.”

If nothing else, you should make sure your buyers can’t guess that morning’s breakfast based on the door knobs.

Article Courtesy Realtor.com

Posted in News