Author: Igor Nastaskin
How to Feel Secure When Getting a Mortgage
Funneling a large portion of your money toward a home can be nerve-rattling, but Realtor.com offers some advice that can help you navigate the scarier parts of the mortgage and home-buying process. Educate yourself on how to get a mortgage Work extra-hard to understand the information needed when it comes time to buy a home. Take baby steps—like checking out a home-affordability calculator that crunches the numbers instantly on your income and debts and estimates what price house you can afford. Once you’ve done that, research the more nuanced idea of debt-to-income ratio (meaning how much you owe vs. how much you make) and make sure yours is no more than 36 percent. Any higher than that, and you may not be able to comfortably buy a house. Learn from other home buyers Friends or family members who’ve purchased a property can be extremely helpful by sharing their own experience and answering any questions you may have. If you have an who managed to buy a great home after bankruptcy or a friend who’s already on his or her third home, now’s a good time to ask them to share their secrets. Understand the basics of a mortgage Before you make open houses a hobby, study up on the basics of applying for a mortgage, making a payment and some of the costs associated with being a homeowner. Think private mortgage insurance and closing costs. It’s wise to become familiar with some of the key terms and major steps. Talk to a mortgage lender Before you ever set foot in a house, you should meet with a mortgage lender. This pro can walk you through the steps needed to prepare for the home-buying process. For example, a lender can tell you exactly how much money you’d be pre-approved for, so you can shop for houses you know you can afford. Stay focused on the numbers that count Seeing the amount of your entire mortgage on paper may make you panic and wonder how you’ll ever be able to pay all that back. Breathe, and choose a more accurate number to fixate on: your monthly payment. As long as you’re comfortable with that, the home-buying process will be easier to visualize. And trust that, in general, the money you put into that mortgage each month helps increase your home equity, which means that over time, it officially becomes your home.
How to Find Your Dream Home
How to find your dream home is exciting, yet an all-consuming, adventure. While it’s fun to swipe through listings and attend every open house in your area, it sometimes can leave you feeling like you’re spinning your wheels and wandering aimlessly from property to property. Here, Realtor.com offers some smart ways to keep your stress levels and sanity on an even keel. Get pre-approved for a mortgage Before you even start looking at online listings, be sure to have your mortgage pre-approval in hand. A pre-approval not only will make it easier to eventually make an offer as a serious buyer, but it also will help you narrow down your property search criteria by detailing the maximum mortgage loan you’re approved for or your instant housing budget. Make a must-have list Before you start looking at houses, write down the non-negotiable features your new home needs. Then if a place doesn’t have everything on the list, don’t go see it. The more specific you are about the criteria, the better. For example, if a garage is an absolute must-have, that is an easy way to narrow down your list of potential homes. In addition to saving time, focusing your list also can help prevent “list creep,” which typically occurs when you see shiny objects in each new house. If you’re not careful, you might find your must-have list has grown from three bedrooms, two baths and a decent commute to a brand-new, professional chef’s kitchen when you barely cook. Home in on the neighborhood Find an area that meets your criteria for amenities, commute and school district, and then spend a weekend exploring before you commit. You could find that you don’t like an area as much as you thought you would because it’s impossible to find parking, or you might discover another hidden pocket that you love and didn’t realize was nearby. Once you’ve taken a test drive and selected a neighborhood that you know is ‘the one,’ home in on listings in that specific ZIP code. Pick a house style and forget about the others Use a similar strategy with types and styles of properties. Once you’ve picked your neighborhood, resist the urge to visit everything that’s available, from condos to townhouses to bungalows. Each type of house has its own unique style, so you can eliminate homes that won’t suit your needs. For example, if you have several younger children and don’t want your bedroom on a different level, avoid Cape Cod-style homes that typically feature two or more bedrooms on the upper level and the master on the main. Document your visits During a single day of showings, everything probably will start to blur together by the time you visit the fourth or fifth property. That’s why you should keep your cellphone handy and snap photos from the moment you arrive. Note: Taking a picture of the for-sale sign or front of the property first makes it easier to distinguish between sets of photos afterward. As you walk through the home, capture photos of everything you like, such as a stellar view or to-die-for chef’s kitchen, as well as anything that feels awkward or out of place, from outdated shag carpet to a strange layout. Also, take notes on the listing sheet, so you can easily remember what features you were trying to capture in the photos. Remember only the top three contenders Determine whether a home is one of your current top three properties or you should forget about it. This means you have to keep only three homes in mind at a time. Stop looking at listings already! At some point, you have to just stop looking for additional options. Some people keep looking even after they have an accepted offer on a great place, still believing something better might come along. Eventually, you have to be satisfied with the choices at hand and make a decision. Just remember: The grass is rarely greener.
Are These Home Features a Waste of Cash?
No one likes to overpay when buying a home. So, if you want to make sure every home-buying dollar counts, check out these home features Realtor.com says often inspire sellers to boost their price. While it’s fine to splurge a little if you truly want these things, on the other hand, you’re just wasting your money if you don’t. A huge yard you rarely enjoy A sprawling green lawn may have a certain curb appeal at first sight, especially if you have kids or plan to spend a lot of time outdoors. If you doubt anyone will be out there much, however, you’re just tossing money out the window. Turns out sellers charge a premium for that patch of grass, and you’ll funnel even more money going forward on lawn maintenance (or else spend your weekends mowing, weeding and pruning the yard). A short commute you won’t use Never pay extra to buy a house near mass transit or within an easy driving distance of major office areas if you work from home, commute during off-hours, work in the suburbs or are retired. Those are homes that regular commuters might covet, prompting sellers to charge much more. Is this an important factor to you? If not, consider a home that’s a bit farther out to save cash. A top school district when you don’t have kids A home zoned for a great public school always will command top dollar, and you’ll also pay for this come tax time. However, if you don’t have (or plan to have) kids, why empty your wallet? Instead, look for homes just outside the district to save on purchase price and property taxes. A single-story house when you’re fine with stairs In many locations, homes all on the same level command a higher dollar value because the baby boomer generation prefers them when downsizing. If you can handle going up a flight of stairs or two, consider a two-story house to get more bang for your buck. (Another bonus? A smaller roof to replace when the time comes.) A bigger house than you truly need Buyers often purchase a home that’s way bigger than they actually need. Then they end up with too much house, and they might not even use the rooms they have. Since a purchase price directly reflects things such as size, why overpay for bedrooms or media rooms you won’t use—and have to heat, cool, furnish and clean? Instead, seek homes that reflect how much space you’ll actually use. A hot neighborhood A buzzworthy neighborhood can send home prices soaring. But getting caught up in the hype and overspending in an area where prices haven’t quite gelled yet can be a risky proposition where you end up overpaying. Buy homes only in new areas that are still a relative bargain. Fancy amenities you won’t use If you don’t drink wine regularly, you don’t need a wine refrigerator—or to pay for a house with one, either. Premium upgrades and add-ons will send a purchase price north, so you’d better make sure you use whatever you buy often. This is especially true when you buy a condo or a home in a planned community since you’ll have to consider the monthly condo or HOA fees you’ll be paying as part of your purchase price. Those fees are for amenities, such as a gym or lounge, so if you don’t plan to take advantage of these features, you’re squandering your money. The nicest house in the neighborhood Although it may be tempting to snag the home with the biggest price tag in a certain ZIP code for bragging rights, you never want to buy the most expensive home in the neighborhood. Having the top comp in a neighborhood might become an issue when it comes time to sell. This scenario leaves little room for your home’s price to appreciate, so you may not be able to recoup what you paid.
Five Tips for Buying a House in Your 20’s
Between entry-level salaries, student loans and the desire to just be young and have fun, twentysomethings often think buying a house is beyond their reach. Not so quick! 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. Save for a down payment Be sure to have some cash saved up for a down payment on your mortgage. Most financial planners recommend that homebuyers make a down payment amounting to 20 percent of the price of the home. So, on your typical $250,000 house, that would amount to $50,000. Granted, you don’t have to put down 20 percent, but doing so enables you to avoid paying private mortgage insurance, a premium that can increase your monthly payment by up to 1.15 percent. If you don’t have a ton of money in savings, one way to afford the down payment is to ask your parents for financial help. Another option to foot the down payment bill is to apply for down-payment assistance. Depending on your income and other factors, you could qualify for one of more than 2,200 down-payment assistance programs nationwide that help homebuyers with low-interest loans, grants, and tax credits. Shore up student loan debt Student debt has leaped to an average of $28,950 per borrower, according to the Institute for College Access & Success. But college debt doesn’t automatically prevent you from being able to buy a house. 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 percent. So, someone making $6,000 a month and paying $500 a month in student debt would be able to afford a maximum monthly mortgage payment of $1,680. In many markets, that’s plenty to buy a house. But, if you’re shouldering too much student loan debt to qualify for a mortgage, you still might 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 during a longer period of time, so you’ll have more you can put toward a mortgage. Note: You’ll end up paying more in interest over the life of your college loan, but it means you can buy a home now. Check your credit score Unlike older generations, homebuyers in their 20s tend to have shorter credit histories. That can be a problem. 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. Unfortunately, relatively new credit users tend to have higher credit utilization ratio. You’ll want to get a free copy of your credit report at AnnualCreditReport.com. Check for errors—one-in-four 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. Purchase a starter home There are a couple of big financial benefits to buying a starter home while you’re in your 20s. First, your mortgage payments probably will be more affordable, since you’ll likely be buying a less-expensive house. Second, you may be able to get a five- or seven-year adjustable-rate mortgage and qualify for a lower interest rate than you would with a 30-year fixed loan—a good decision as long as you plan on moving before the loan’s interest rate expires. Plan for unexpected home expenses All homebuyers should have a rainy day fund to pay for emergency home repairs, such as roof damage or a gas leak. Unless you’re buying new construction, you need an emergency fund for big repairs. Buyers also may want to get a home warranty, which is a policy that would cover the cost of repairing certain home appliances if they break down. (Plans start at about $300)
7 Tips for Selling Your Home in the Fall
Spring and Summer might be the top home-selling seasons, but Fall also is a great time to sell your home because there’s typically less competition and the market is still very active. So, if your house is on the market right now, consider giving it an autumn upgrade with these staging suggestions from Realtor.com. Focus on curb appeal To get off on the right fall foot, place a few potted mums in seasonal colors near the door, and then add a simple, natural wreath. A wheelbarrow piled with pumpkins also is a nice accent, but make sure they aren’t being eaten by squirrels or starting to rot. Complete the vignette with a cute fall-themed doormat and shiny light fixtures. Finally, be sure to take care of any errant foliage before potential buyers arrive. Think autumn, not Halloween While autumn seems to be fairly universally loved, not everyone celebrates Halloween or will enjoy a scary Halloween-themed house. If you just can’t resist veering toward the holiday, at least choose cuter, friendlier Halloween décor, like decorated or carved pumpkins, candy corn and friendly ghosts. Cobwebs, however, are a no-go. Swap out summer hues with autumnal tones If summer is all about bright popsicle tones or beachy blues, autumn is associated with warmer neutrals—think deep reds, burnt oranges and golden yellows reminiscent of the shades of fallen leaves. Sprinkle these warmer tones around your house in your table décor, kitchen and bath towers, accent rugs and art. And always make sure the new colors complement the existing palette. Embrace cozy Give your house an autumn vibe by warming up couches and chairs with comfy throws, blankets and pillows in autumnal tones and textured fabrics such as chenille, herringbone, or corduroy. Swap out airy summer sheers for more substantial drapes or shutters, and trade a summer sisal or jute rug for a wool area carpet. Light a fire, if possible, and make sure there are plenty of candles adorning the tables and counters. Finally, don’t forget to turn on extra lamps. Appeal to buyers’ sense of smell While baking a pie in the oven might be an overused home-selling trick, there’s no better time to do so than fall. Scents of cinnamon, apple and pumpkin spice will all help potential buyers picture themselves baking up something luscious. If baking up a treat isn’t your style, add scents around the home via spice-scented candles, oil sticks or potpourri. Surprise your visitors with something sweet Consider placing a simple cylinder filled with candy corn or other colorful fall candies on a buffet. And probably no one—even those who might not be big Halloween fans—will mind if you put out a bowl of fun-size candies, ready for trick-or-treaters as well as home buyers. Set the table for a feast With Thanksgiving right around the corner, families likely will be thinking about gathering loved ones around, maybe even in the new home. Appeal to this dream by setting the table as though you were expecting a large group for a sumptuous feast. Go big with china and crystal and fall-hued place mats and chargers, and dress the table with a runner accented with a fall-themed centerpiece.
4 Homebuying Moves You May Not Realize You Have to Make
Purchasing a house takes time, patience and careful planning. Many moving parts involved in the process, and sometimes buyers miss crucial steps—which can cost them big-time. Toward that end, Realtor.com reveals some of the more surprising home-buying moves you may not realize you have to make Scrutinizing property disclosures Once a seller accepts your offer, you’re typically provided with a property disclosure statement that essentially outlines any flaws that the seller (and their real estate agent) is aware of that could negatively affect the home’s value. These statements are required by law in most areas of the country, so buyers can know a property’s good and bad points before closing the deal. Because home buyers receive so much paperwork, however, it’s easy to overlook what’s in the property disclosures. Make a point to sit down with your real estate agent and read through the property disclosures together. Look for major issues such as a faulty foundation, leaky roof, HVAC problems, or pest and mold infestations. If you spot something on a disclosure statement that you don’t understand or that raises concerns, ask your real estate agent to bring it up with the listing agent because the seller might have an explanation that will put you at ease. But if the issue makes you seriously question whether you want to move forward, this could be an opportunity to renegotiate the sales price to compensate for the added risk you’re taking on buying this home. Acquiring title insurance When you buy a home, you take title to the property and establish legal ownership that is confirmed by local public land records. As part of the closing process, your lender will require a title search. You’ll also need to purchase title insurance that covers your property. There are two types of title insurance: The lender protects your lender alone and is typically required if you get a mortgage, and the owner protects your financial stake in the home against fraudulent ownership claims. Owner’s title insurance is optional but recommended, because lender’s title insurance won’t protect you personally if the insurance company loses a battle over the legal title. Without owner’s title insurance, you’d be required to pay for the continued fight over the title and could lose your investment in the property. Unlike other types of insurance, title insurance is paid with a single premium at the time of closing. If you’re buying a resale, you may be eligible for a reissue rate, which could offer a substantial discount off the regular premium since the title policy is already in effect, and the title research has already been completed. Preparing for the home inspection Most buyers make their purchase offer contingent on the results of a home inspection, a close examination of the property for defects by a professional. To get the most out of your home inspection, you’ll want to be involved in the process. Before your inspection, examine the interior and exterior of the property for potential problems and areas you would like the inspector to review carefully. For example, this could be the dark spots in the basement or underneath the bathroom sinks that could indicate water damage. Then create a written checklist. You should make sure to attend the inspection yourself to see if any problems arise, and don’t panic if your inspector gives you a seemingly endless list. While there are times when you should worry not every issue is critical. Your inspector will know which problems you should address with the seller. Barring any major renovations needed—such as a new roof or mold removal—your inspector’s visit will simply provide a to-do list that you can tackle one step at a time. Reviewing condo or HOA rules If you’re looking to buy a home in a community run by a condo board or homeowner’s association, you’ll be required to abide by its restrictive covenants. Also known as CC&Rs (covenants, conditions, and restrictions), restrictive covenants are simply the rules you’ll have to follow if you live in that community, as well as fines for infractions. After your offer to buy a home is accepted, you are legally entitled to receive and review the community’s CC&Rs over a certain number of days (typically between three and 10). You’ll want to go over them closely with your real estate agent. If you spot anything in the restrictive covenants you absolutely can’t live with, you can bring it up with the HOA or condo board, or back out of your contract completely with your deposit in hand.
Old House Versus New House: Which Is Better to Buy?
If you’re shopping for a place to live, this may be one of your primary decisions. Is it better to buy brand-new? Or do homes, like wine, get better with time? It turns out there is no one-size-fits-all answer, but there are distinct pros and cons to each purchase. That means your final answer may boil down to a personal preference. Here, Realtor.com tells you what to keep in mind when you’re trying to decide whether an old house or a new house is right for you. Upfront costs: How much house can you afford? New may be nice, but you pay for all that shiny newness. According to recent home price figures, the median cost of a new home is $335,400. Meanwhile, the median cost of an old home—often called an “existing home” in real estate terms—is only $240,500. In other words: You’ll pay almost $100,000 (or 30 percent) more for a new home. That’s a sizable price hike. However, that money you save buying an old home may not remain in your pockets that long, since old homes often are less energy-efficient—and thus will cost more to heat and cool. And sooner or later, something is bound to break down, too. Maintenance: Love it or loathe it? Old houses come with an inevitable need for repairs, replacements, and upgrades. New homes should be worry-free for several years, with a brand-new hot water heater, HVAC system and roof all but ensuring no major out-of-pocket expenses for at least eight to 10 years in most cases. If you’re seeking a life with fewer hassles, or don’t have money in reserve for emergency repairs and unexpected expenses, a new home may be the way to go. With a recently built home, you’ll have peace of mind that all systems are new, up-to-date and there are no problems that could come down the line. Some of those issues can be pretty drastic. For instance, if you’ve never heard about knob-and-tube wiring—commonly found in older homes—look it up. Then look at the cost to have it fixed or replaced. If you do go ahead and pursue the purchase of an aging home, it’s especially important to have a thorough home inspection. Doing so won’t just help you negotiate down the price, but give you an idea of all the problems that need to be fixed. And then you actually need to fix them. A small repair now may save you an extensive overhaul down the road, especially in the case of drainage, roof, windows, doors, and trim. Plus, if you decide to sell your house again, those same old issues will no doubt pop up again during the next home inspection. Investment: Want a proven track record, or are you willing to take a risk? A home isn’t just a family gathering space, but a financial investment. And with an older home, you can see on paper just how much the property has appreciated through the years. Although that doesn’t ensure future market appeal, at least you have something to go on. As for a new home? With no history to look back on, this purchase can be considered more of a gamble. The price could shoot up, or it could plummet. But in case things go south, there is this one silver lining. You’ll have less work to do in terms of making sure the home offers what the market demands in terms of energy-efficiency, design and other amenities. Home design: Dig vintage or modern? Looks matter a lot when it comes to choosing a home, and both old and new homes have their fans. With an older home, you’ll likely get some sense of historic tradition and thoughtful attention to detail. Think crown molding, real hardwood flooring, and if you’re lucky, a secret back staircase or dumbwaiter. On the other side of this debate, brand-new houses often sport the latest and greatest—for example, open living spaces with wide, accessible hallways and bathrooms and kitchens with energy-efficient, on-trend amenities. Can you get the best of both worlds? Want modern amenities, but maybe not in a brand-new home? You do have an option: Buy an older home with good bones and take the opportunity to renovate it or hire someone to do it. In other words, you may not have to choose between an old house versus a new house after all.
14 Factors That Can Stall the Mortgage Closing Process
You’ve found your dream home and your purchase offer has been accepted. Now you have to get through one more step before you move in: mortgage closing. The time it takes to close on a home will vary from one person to the next, but when everything goes right, loan closings can be completed in as little as 21 to 28 days. However, not everything always goes according to plan. Issues can arise that can keep you from settling into your new place for weeks and sometimes months longer than you expected. Here, Realtor.com discusses some of the most common pitfalls that can delay the mortgage closing process. 1. Expensive purchases for your new home Don’t make any pricey purchases with your credit card before closing on your house because it could prevent you from qualifying. After an offer on a house is accepted, some people may be tempted to buy a new sofa, dining set or another expensive piece of furniture. However, real estate experts warn that this could be disastrous. Right before closing, the mortgage lender will pull the buyer’s credit to make sure nothing has changed. If a big purchase shows up, that could become an issue because it means that the buyer is taking on more debt. 2. Death of the original homeowner If there has been a death associated with the desired property, the home may need to go through probate court first to authenticate the former owner’s last will and testament. If that’s the case, your closing will be delayed. In some states, probate can take anywhere from a few months to a few years. 3. Homeowner’s association issues If the previous homeowner has outstanding homeowner’s association fees or fines, this could cause delays. In some cases, you may be able to negotiate those fees with the seller; otherwise, you will be responsible for paying them. 4. Verification problems In some instances, the borrower’s landlord, mortgage company, employer or source of down payment might not be willing to provide verification in a timely manner. Their failure to move quickly can slow you down. 5. Down payment issues There are times when the lender may require the home buyer to put down more cash; this may take time, especially if the buyer lacks the extra funding. 6. Lender may need additional information In some cases, additional info may be requested late in the process. Other times, the lender may misplace a document that will need to be obtained again. 7. Scheduling problems One party—whether the closing agent, attorney, title company representative, lender, buyer or seller—may not be available to meet on the closing day, which can push back timelines. 8. Buyer delays Additional documents sometimes are required if a buyer is self-employed. If the buyer has multiple sources of income, this may need to be documented and verified as well. If the buyer is receiving a down payment from an unconventional source or a gift, this also could slow down the process. 9. Flood insurance requirement If your new home is in a flood zone, you might need to get flood insurance. This may require a benchmark survey, which can take three weeks in some markets. Then it must be reviewed by the mortgage underwriter (the person who approves your loan). Flood insurance, and even homeowner’s insurance, also can sometimes be difficult to obtain, depending on your past history with claims, credit and location. 10. Appraisal disparities Before a mortgage is ever approved, the bank must first appraise the home. If the appraisal comes in low, it may take some time to renegotiate the asking price of the home. 11. Title issues In some cases, a tax lien against the property might need to be resolved before moving forward with the closing process. Other times, the title may have the incorrect signature or attestation. 12. Property damage If there is any type of damage to the property, the lender may require repairs before closing. 13. Contract disagreements The seller sometimes might not agree to the buyer’s contract requests (such as including the entire contents of the home in the deal). This can kill the transaction, or require further negotiation between the agents and other parties involved. 14. Foreclosure If a homeowner is in foreclosure, it can take up to 10 days to get a payoff from the mortgage company. This often includes legal fees.