The results of the 2018 Rental Affordability Report from ATTOM show that buying a median-priced home is more affordable than renting a three-bedroom property in 54% of U.S. counties analyzed for the report.
The updated numbers show that renting a three-bedroom property in the United States requires an average of 38.8% of income.
The least affordable market for renting was Marin County, CA, just over the Golden Gate Bridge from San Francisco, where renters spend a staggering 79.5% of average wages on rent, while the most affordable market was Madison County, AL where 22.3% of average wages went to rent.
Buying a home makes sense socially and financially. If you are one of the many renters out there who would like to evaluate your ability to buy this year, let’s get together to find your dream home.
Just like with any product or service, the law of supply and demand impacts home prices. Any time that there is less supply than the market demands, prices increase.
In many areas of the country, the supply of homes for sale in the starter and trade-up home markets is so low that bidding wars have ensued, and the busy spring-buying season is just around the corner.
CoreLogic recently conducted an analysis on national home prices at the time of sale for their January 2018 MarketPulse Report and found that a third of homes sold for at least list price.
“The share selling above list price was almost three times the trough in January 2008 and represented more than one-fifth of total sales.”
Many markets in the western part of the country and around major cities are experiencing higher shares of homes selling above list price.
“San Francisco had the largest share of homes—76 percent—that sold for at least the list price, and Seattle and Los Angeles followed with 63 and 51 percent, respectively. Miami had the lowest share—16 percent—of homes selling at or above the list price.”
Increased demand during the spring and summer months, the traditionally busier seasons for real estate, will no doubt influence how many homes continue to sell over list price.
This should not be seen by sellers as permission to overprice their homes, though. Buyers are becoming more and more educated, especially those who have been searching for their dream homes for a while now while waiting for new inventory to come to market.
Realtor.com gives this advice:
“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”
Without a large wave of new listings coming to market, buyers will continue competing with each other for the homes that are available. If you are thinking of selling your home, now may be the time to do so before more competition comes this spring. Let’s get together to determine the demand for your house in our area.
According to Ellie Mae’s latest Origination Report, the average FICO® Score on all closed loans dropped to 722 which is its lowest mark since April. The average includes all approved refinance and purchase loans.
FHA and VA loans showed the most opportunity for millennials looking to enter the market with low down payments and even lower FICO® Score requirements.
Ellie Mae’s Millennial Tracker revealed that those who purchased homes in December with an FHA Loan were able to do so with an average down payment of 4% and a FICO® Score of only 684.
Joe Tyrell, EVP of Corporate Strategy at Ellie Mae commented on the opportunity this brings to buyers,
“With the average credit score dipping, lenders are extending credit to borrowers who may have had no previous access to the housing market.”
More and more potential buyers are able to qualify for a mortgage loan now! If you are debating a home purchase, let’s get together and evaluate your ability to buy today!
Many potential homebuyers believe that a 20% down payment is necessary to buy a home and have disqualified themselves without even trying. The median down payment for all buyers in 2017 was just 10% and that percentage drops to 6% for first-time buyers.
Zillow Senior Economist Aaron Terrazas’ recent comments shed light on why buyer demand has remained strong,
“Looking into 2018, rent is expected to continue gaining. More widespread rent growth could mean home buying demands stay high, as renters who can afford it move away from the unpredictability of rising rents toward the relative stability of a monthly mortgage payment instead.”
It’s no surprise that with rents rising, more and more first-time buyers are taking advantage of low-down-payment mortgage options to secure their monthly housing costs and finally attain their dream homes.
If you are one of the many first-time buyers who is not sure if you would qualify for a low-down payment mortgage, let’s get together and set you on your path to homeownership!
There are many people sitting on the sidelines trying to decide if they should purchase a home or sign a rental lease. Some might wonder if it makes sense to purchase a house before they are married and have a family, others might think they are too young, and still, others might think their current income would never enable them to qualify for a mortgage.
We want to share what the typical first-time homebuyer actually looks like based on the National Association of REALTORS most recent Profile of Home Buyers & Sellers. Here are some interesting revelations on the first-time buyer:
You may not be much different than many people who have already purchased their first homes. Let’s meet to determine if your dream home is within your grasp.
Whether you are a renter who is searching for your dream home or a homeowner who feels like your only option is to renovate, you have at least one thing in common: feeling stuck in place.
According to data from the National Association of Realtors’ Profile of Home Buyers & Sellers, the average amount of time that a family stays in their home remained at 10 years in 2017. This mark ties the highest marks set in 2014 and 2016. Back in 1985, when data was first collected on this subject, homeowners stayed in their homes for an average of only 5 years.
There are many reasons why homeowners have decided to stay and not to sell. A recent Wall Street Journal article had this to say,
“Americans aren’t moving in part because inventory levels have fallen near multidecade lows and home prices have risen to records. Many homeowners are choosing to stay and renovate, in turn making it more difficult for renters to enter the market.”
Sam Khater, Deputy Chief Economist for CoreLogic, equated the lack of inventory to “not having enough oil in your car and your gears slowly [coming] to a grind.”
Historically, a normal market (in which prices increase at the rate of inflation) requires a 6-7 month supply of inventory. There hasn’t been that much supply since August of 2012! Over the course of the last 12 months, inventory has hovered between a 3.5 to 4.4-month supply, meaning that prices have increased and buyers are still out in force!
Challenges in the new-home construction market have “helped create a bottleneck in the market in which owners of starter homes aren’t trading up to newly built homes, which tend to be pricier, in turn creating a squeeze for millennial renters looking to get into the market.”
“Economists said baby boomers also aren’t in a hurry to trade in the dream homes they moved into in middle age for condominiums or senior living communities because many are staying healthy longer or want to remain near their children.”
Don’t give up! If you are looking to move-up to an existing luxury home, there are deals to be had in the higher-priced markets. Demand is strong in the starter and trade-up home markets which means that your house will sell quickly. Let’s work together to build in contingencies that allow you more time to find your dream home; the right buyer will wait.
Many potential homebuyers believe that they need a 20% down payment and a 780 FICO® score to qualify to buy a home, which stops many of them from even trying! Here are some facts:
Americans ranked “owning a home I love” higher than any other options (including “starting a family” and “finding a fulfilling career”) as an important part of the American Dream.
Despite some claims that homeownership’s importance to the American Dream is in decline, the report found that the dream of homeownership remains strong.
Of Americans who said they think achieving the American Dream is important, 70% think homeownership is important to the dream, and 41% think homeownership is very important to the dream.
Hearth addresses the desires of millennials by explaining:
“Contrary to popular opinion, millennials who want to achieve the American Dream are 5% more likely than Baby Boomers to think homeownership is important. And two-thirds of millennial renters view homeownership as important to the American Dream. Although millennials are often portrayed as fickle and transient, they actually seek the stability of homeownership even more than their parents.”
“Contrary to popular opinion, millennials who want to achieve the American Dream are 5% more likely than Baby Boomers to think homeownership is important. And two-thirds of millennial renters view homeownership as important to the American Dream.
Although millennials are often portrayed as fickle and transient, they actually seek the stability of homeownership even more than their parents.”
The report concluded:
“This survey revealed a powerful finding: Across demographic groups, homeownership remains a precondition of the American Dream.”
Married couples once again dominated the first-time homebuyer statistics last year at 66% of all buyers, according to the most recent Profile of Home Buyers & Sellers. It is no surprise that having two incomes to save for down payments and contribute to monthly housing costs makes buying a home more attainable.
Many couples are deciding to use what would otherwise be their wedding fund as a down payment on their first home, as unmarried couples made up 8% of all first-time buyers last year. If you’re single, don’t fret; you can still buy your dream home! Single women made up 17% of first-time buyers in 2016, while single men accounted for 7% of buyers.
According to a survey by the Wedding Report, the average cost of a wedding in the United States at the start of the year was $25,961, which equates to a 10% down payment on a median priced home.
A recent article from the New York Times found that many singles are now asking their parents to allow them to use the money they’ve saved up for their wedding day to instead buy a home.
In the case of Carrie Graham, a Protestant minister from Austin, TX, her parents had saved a ‘five-figure sum’ for her wedding and were more than willing to give her that money as a down payment on her dream home. Graham told The New York Times,
“Buying the home wasn’t me saying, ‘I’m never going to get married’ or I am going to get married.’ My own home had way more than equity benefits. It was a real gift to have a home in an extremely desirable neighborhood in a city that I love. It’s brought me joy.”
More and more first-time homebuyers are finding a way to purchase their dream homes, even if that means delaying their dream weddings.
So, you’ve been searching for that perfect house to call a ‘home,’ and you finally found one! The price is right, and in such a competitive market, you want to make sure that you make a good offer so that you can guarantee that your dream of making this house yours comes true!
Freddie Mac covered “4 Tips for Making an Offer” in their latest Executive Perspective. Here are the 4 tips they covered along with some additional information for your consideration:
“While it’s not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”
This ‘tip’ or ‘step’ should really take place before you start your home search process.
As we’ve mentioned before, getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).
“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.”
According to the latest Existing Home Sales Report, the inventory of homes for sale is currently at a 3.7-month supply; this is well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream homes.
Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as soon as possible.
Freddie Mac offers this advice to help make your offer the strongest it can be:
“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.”
Talk with your agent to find out if there are any ways that you can make your offer stand out in this competitive market!
“It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford.Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”
“It’s likely that you’ll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you’ll be glad you did your homework first to understand how much you can afford.
Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”
If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home.” If the inspector uncovers undisclosed problems or issues, you can discuss any repairs that may need to be made with the seller, or cancel the contract.
Whether you’re buying your first home or your fifth, having a local professional on your side who is an expert in their market is your best bet in making sure the process goes smoothly. Happy House Hunting!
The biggest challenge to today’s housing market is the shortage of housing inventory for sale. A normal market would see a six-month supply of homes for sale. Currently, that number is below four months. This is the major reason home prices have continued to appreciate at higher levels than historic averages.
The good news is that builders are now starting to build more homes in lower price ranges.
The Housing Market Index from the National Association of Home Builders (NAHB) reveals that builder confidence increased last month. HousingWire quoted NAHB Chief Economist Robert Dietz about the reason for the increase in confidence amongst builders.
“The HMI measure of future sales conditions reached its highest level since June 2005, a sign of growing consumer confidence in the new home market. Especially as existing home inventory remains tight, we can expect increased demand for new construction moving forward.”
Builders are not only jumping into the market – they are doing a better job of matching current demand. The Wall Street Journal recently reported:
“In a shift, new households are overwhelmingly choosing to buy rather than rent. Some 854,000 new-owner households were formed during the first three months of the year, more than double the 365,000 new-renter households formed during the period, according to Census Bureau data.”
The WSJ article went on to say:
“Home builders are beginning to shift their focus away from luxury homes and toward homes at lower price points to cater to this burgeoning millennial clientele.”
The graph below compares 2016 to 2017 new construction sales by price point. As we can see, builders are slowly beginning to shift to prices more favorable to the first-time and non-luxury buyer.
There is a drastic need for a larger supply of home inventory to meet the skyrocketing demand. Builders are finally doing their part to help rectify this situation.
If you are considering moving up to your dream home, it may be better to do it earlier in the year than later. The two components of your monthly mortgage payment (home prices and interest rates) are both projected to increase as the year moves forward, and interest rates may increase rather dramatically. Here are some predictions on where rates will be by the end of the year:
“While full employment and rising inflation are signs of a strong economy, they also have the potential to push mortgage rates and house prices up. The higher rates and higher prices create significant affordability concerns, which may continue to characterize the housing market for the rest of 2017.”
“By the time we get to the fourth quarter of this year, we will still be under 5 percent – we are thinking 4.7 percent…Something north of 5 percent by the time we get to 2018, and by the time we get to 2019, we show fourth-quarter rates hitting 5.5 percent.”
“Despite some regional disparities, title agents and real estate professionals do not expect increasing mortgage rates to have a significant impact on the housing market this spring. Continued good economic news, increasing Millennial demand and confidence that buyers will remain in the market even if rates exceed 5 percent bode well for 2017 real estate.”
“We will probably see rates higher at the end of year, around 4.5%.”
If you are feeling good about your family’s economic future and are considering making a move to your dream home, doing it sooner rather than later makes the most sense.
Buying a home can be intimidating if you are not familiar with the terms used during the process. To start you on your path with confidence, we have compiled a list of some of the most common terms used when buying a home.
Freddie Mac has compiled a more exhaustive glossary of terms in their “My Home” section of their website.
Annual Percentage Rate (APR) – This is a broader measure of your cost for borrowing money. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay. Because these costs are rolled in, the APR is usually higher than your interest rate.
Appraisal – A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties. This is a necessary step in getting your financing secured as it validates the home’s worth to you and your lender.
Closing Costs – The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs, items that must be prepaid or escrowed and other costs. Ask your lender for a complete list of closing cost items.
Credit Score – A number ranging from 300-850, that is based on an analysis of your credit history. Your credit score plays a significant role when securing a mortgage as it helps lenders determine the likelihood that you’ll repay future debts. The higher your score, the better, but many buyers believe they need at least a 780 score to qualify when, in actuality, over 55% of approved loans had a score below 750.
Discount Points – A point equals 1% of your loan (1 point on a $200,000 loan = $2,000). You can pay points to buy down your mortgage interest rate. It’s essentially an upfront interest payment to lock in a lower rate for your mortgage.
Down Payment – This is a portion of the cost of your home that you pay upfront to secure the purchase of the property. Down payments are typically 3 to 20% of the purchase price of the home. There are zero-down programs available through VA loans for Veterans, as well as USDA loans for rural areas of the country. Eighty percent of first-time buyers put less than 20% down last month.
Escrow – The holding of money or documents by a neutral third party before closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.
Fixed-Rate Mortgages – A mortgage with an interest rate that does not change for the entire term of the loan. Fixed-rate mortgages are typically 15 or 30 years.
Home Inspection – A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.
Mortgage Rate – The interest rate you pay to borrow money to buy your house. The lower the rate, the better. Interest rates for a 30-year fixed rate mortgage have hovered between 4 and 4.25% for most of 2017.
Pre-Approval Letter – A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you're a serious buyer. Having a pre-approval letter in hand while shopping for homes can help you move faster, and with greater confidence, in competitive markets.
Primary Mortgage Insurance (PMI) – If you make a down payment lower than 20% on your conventional loan, your lender will require PMI, typically at a rate of .51%. PMI serves as an added insurance policy that protects the lender if you are unable to pay your mortgage and can be cancelled from your payment once you reach 20% equity in your home. For more information on how PMI can impact your monthly housing cost, click here.
Real Estate Professional – An individual who provides services in buying and selling homes. Real estate professionals are there to help you through the confusing paperwork, to help you find your dream home, to negotiate any of the details that come up, and to help make sure that you know exactly what’s going on in the housing market. Real estate professionals can refer you to local lenders or mortgage brokers along with other specialists that you will need throughout the home-buying process.
Questions to ask moversWhen choosing movers, it's important to have them come to your home to give you visual estimates so they can see exactly what you need moved. When they're in your home, it's also important to ask them questions about themselves and the moving company. Here are some to ask them - and the answers you should expect.
A bad moving company won't stay in business very long, so if it's been around for a decade or more, that's a good sign. Also ask how many moves they do a year - the more they do of something, the better the odds that they're pretty good at it.
This is a good test of their knowledge of the moving industry, and of their customer service skills. You want someone who explains the often confusing terminology in the moving industry, and not someone who rushes through their explanations or seems to be using insider language in an effort to confuse you. If you don't understand something, ask.
Experience counts for a lot - it's not easy tallying up the costs for moving quotes, so someone who's relatively new at it, or new to the moving industry, should be a bit of a concern, particularly if they have any problems answering your other questions.
The worst trait in a mover is overpromising, either on price or when you can expect to get your things. You will receive your delivery within a particular time frame, so you should be wary of any moving company that tries to give you an exact date for your items to arrive - there are just too many things that could go wrong to foul those dates. Here's more information on moving company delivery windows.
Most movers have the usual canned references; avoid these. Ask instead if the moving company does repeat work for any area businesses - businesses won't put up with shoddy treatment, so if they use the same mover time and again, that's a great sign.
In particular, ask about whether you'll pay for packing materials. A commonly heard complaint is that the moving company overcharged for packing materials that the customer didn't know about. And don't ask about 'hidden costs'. No moving company will admit to the costs being hidden. Instead, they'll say that they're in the contract. So ask to see all of the charges in the contract instead.
This is another test of the moving consultant's knowledge, as well as a test of how you can expect to be treated. A thoughtful and complete answer is a good sign that you will be treated thoughtfully during your move.
Many Americans got some depressing news last week; either their tax return was not as large as they had hoped or, in some cases, they were told they owed additional money to either the Federal or State government or both. One way to save on taxes is to own your own home.
According to the Tax Policy Center’s Briefing Book -“A citizen's guide to the fascinating (though often complex) elements of the federal Tax System” - there are several tax advantages to homeownership.
Here are four items, and a quote on each, from the Briefing Book:
“Homeowners who itemize deductions may reduce their taxable income by deducting any interest paid on a home mortgage. The deduction is limited to interest paid on up to $1 million of debt incurred to purchase or substantially rehabilitate a home. Homeowners also may deduct interest paid on up to $100,000 of home equity debt, regardless of how they use the borrowed funds. Taxpayers who do not own their home have no comparable ability to deduct interest paid on debt incurred to purchase goods and services.”
“Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes.”
“Buying a home is an investment, part of the returns from which is the opportunity to live in the home rent-free. Unlike returns from other investments, the return on homeownership—what economists call “imputed rent”—is excluded from taxable income. In contrast, landlords must count as income the rent they receive, and renters may not deduct the rent they pay. A homeowner is effectively both landlord and renter, but the tax code treats homeowners the same as renters while ignoring their simultaneous role as their own landlords.”
“Taxpayers who sell assets must generally pay capital gains tax on any profits made on the sale. But homeowners may exclude from taxable income up to $250,000 ($500,000 for joint filers) of capital gains on the sale of their home if they satisfy certain criteria: they must have maintained the home as their principal residence in two out of the preceding five years, and they generally may not have claimed the capital gains exclusion for the sale of another home during the previous two years.”
We are not suggesting that you purchase a house just to save on your taxes. However, if you have been on the fence as to whether 2017 is the year you should become a homeowner, this information might help with that decision.
Disclaimer: Always check with your accountant to find out what tax advantages apply to you in your area.
What is a pre-approval and why do you need it? When shopping for a home, you're going to be asked at some point whether you've been "pre-approved" or whether you have mortgage "pre-approval." You're going to want to answer "yes" to these questions -- buyers who can are in a much better position to purchase a home. Why? Read on to find out.
In real estate lingo, to say you have been "pre-approved" or that you have mortgage "pre-approval" means you have a commitment in writing from a lender to lend you a specific amount to buy a home under certain conditions (e.g., length of the loan and interest rate). A pre-approval holds more weight than a loan pre-qualification, which is an estimate of how much you may be able to borrow.
It's important to have pre-approval for several reasons: It will let you know how much you can spend on a home and the size of mortgage you'll be able to obtain, it will give you an advantage when it comes time to bid on a property, and it will speed up the process when you find a home you want to buy.
When you have a pre-approval letter for a loan, you'll know exactly how much you can borrow, and possibly the length of the loan (15 years, 30 years, etc.) and your interest rate. This will give you an idea of how much you can spend on a home and what your monthly payments will be like should you purchase the property.
Buyers prefer sellers who have their financing in place. They don't want to choose a buyer who seems to be a qualified buyer, but can't come up with the funds to buy the house.
If you are pre-approved with a reputable lender, you may be able to win a bid over another buyer should multiple buyers be interested in a particular home -- even if the offers from the other buyers are higher.
When it comes time to place an offer on a home, having a pre-approval letter will speed up the process. That's because you won't have to wait to hear from a lender as to whether or not you've been approved.
You'll want to talk to a few lenders to search out loans that will best suit you and your financial situation. The lenders will require certain information, including: your income, your employment situation, how long you've been employed, and any debts you may have -- e.g., student loans, car loans and credit card debt -- and the source of your down payment.
You may be asked to show your tax returns, bank statements and W2 forms. The lender will use this information to determine the maximum loan you can qualify for and your monthly mortgage payment.
The lenders will also check your credit report and whether you have funds for a down payment and closing costs.
But, even when you do get pre-approved, remember that there are some caveats: Pre-approval letters can be time-sensitive and are subject to an appraisal on the home you're purchasing, so while a pre-approval gives you a firm idea of how much you may be able to borrow, it's still not a concrete guarantee that you'll get the loan.
Home buying negotiation tips You've found the home of your dreams, now it's time to negotiate with the seller to make it yours. Follow these tips to negotiate the best price you can without upsetting the seller and ruining the deal.
Start off negotiations by offering a fair price to the seller. You can offer a price that's lower than the asking price; just don't offer one that's too far off-base from the home's fair market price. If you start off with a severely low-ball offer, you'll negatively taint the negotiations from the get-go, and may even prompt the seller to reject your offer outright.
Know as much about your local market as you can, such as the selling price of homes comparable to the one you hope to purchase -- before entering into the negotiation process. Seek out the advice of your real estate agent (she or he has most likely been through the negotiation process multiple times) and get advice from family and friends who've recently purchased a home.
Try to find out as much as you can about the home seller's situation. Is the seller in a hurry to move, say because of a job transfer or a divorce? If so, he or she may be willing to offer a lower price to make a sale happen. Or, has the seller owned the home for quite some time and seen substantial appreciation in the home? In that case, the seller may be more willing to negotiate on price (versus a seller who's purchased recently and may not have seen much appreciation in the home's value).
This may sound silly, but if the seller can see you as a person -- not as some dollar-signs attached to an offer, you may be able to get a better deal. Write a letter to the seller, telling him or her how much you like the home and why it's the perfect one for you. You may want to add why it's a perfect one for your children to grow up in -- don't be afraid to tug a few heartstrings!
While it may help to establish a personal connection with the seller, you don't want to let the seller know too much, either. Try not to tell the homeowner exactly how much you love the home -- it may come to hurt you during the negotiation process. If the seller were to know, for example, that the house is the perfect one for you and you'd be willing to do almost anything to get it, this will give him or her the upper hand. Try to keep a "poker face" as much as you can during the negotiation.
Decide what's most important to you during the negotiation. Is it getting the absolutely lowest price or getting the seller to make needed fixes to the home? If you decide what's most important to you, you can smooth the way during the negotiation process by compromising with the seller on some points while holding out for the ones that matter most.
Don't assume that items like the washer and dryer are included with the house. Negotiate what will be included in the sale -- e.g., the refrigerator, the dishwasher, etc., and make sure that those items are written in your contract.
While you'll want to get what you've negotiated into writing, you may want to get it in photos, too. Take some pictures of items that you've negotiated to remain in the home and include them with the contract. That way, there's no way to debate, for example, just which custom window treatments are supposed to stay in the home.
It's a good idea to ask for more than you want during the negotiation process. Don't ask for the sky, but you might want to request more concessions than you need -- say, also asking to keep the dining room chandelier when you really only want the roof repaired. That way, you can "give in" to the seller on items like the chandelier, but get items that really matter -- like moving into a house where the roof won't leak.
Negotiations proceed best when both parties are reasonable and don't let their feelings get in the way. When negotiating the purchase of your new home, try not to let your emotions take control. The worst atmosphere for negotiations is an adversarial one, where the buyer and seller are at odds with each other and refuse to compromise. Listen to the seller and try to understand where they are coming from.
You've survived house hunting and the bidding and negotiating on your new home, and now it's time to make it yours. But to do so, you have to sit down with various people, which may include the seller, your real estate agent, title and mortgage company officials and possibly your attorney at what's known in real estate lingo as the "closing table."
At closing, you will close on the purchase of your new home, and if you are taking out a mortgage, on your home loan, as well. The whole process may take about an hour. Here's what's expected of you:
Before the actual closing, you'll most likely have the opportunity to perform a walkthrough of the property and confirm that the condition of the home is as it should be, as specified in the sales contract.
At closing, you'll be paying for your share of the closing costs, and will be bringing the down payment, so be sure to bring a certified check or a cashier's check. Your lender will provide a lender's check for the remaining balance that's due on the home.
Your HUD Uniform Settlement Statement (which both you and the seller will sign) will detail the closing costs (plus all the monies involved in the transaction), as well as who is expected to pay them.
You will also be required to show proof of your identification, such as your driver's license or passport.
Bring a copy of and proof of payment for your homeowner's insurance, plus your flood insurance policy, if you have one. Your lender may want to review these before allowing you to close on the home.
To transfer ownership of the home, both the buyer and seller will be required to sign several documents.
You may be required to review and sign the purchase agreement, a promissory note for your loan, mortgage documents, title documents, the settlement statement and the truth in lending statement (which will outline the costs of your loan, your payment schedule and amount financed), while the seller will also sign the settlement sheet -- and, importantly -- the deed to the home to transfer ownership of the property to you. Copies of these documents will be filed at the county recorder's office, but be sure to keep your own copies as well.
Once all the necessary paperwork is completed and everything is in order, you will be given keys to the home. While you will no doubt immediately change the locks upon moving in, the keys are the final sign that the home is indeed yours.
4 Ways to
Deal If Your Appraisal Comes in Low
The home-buying process is a high-stakes thrill ride full of
exhilarating ups and scary downs, but unquestionably one of the most
deflating moments is when the appraisal comes in significantly lower than the accepted
offer. This is, to use technical real estate lingo, “a bummer.”
Either you feel as though you got the raw end of a
deal by paying more than the property’s worth or, if
you don’t have extra cash to hand over, the deal can crumble into
dust. (Your lender’s not going to fork over money for a higher loan amount if
the appraisal came in lower than expected, so you’ll have to make up that
“In a rising market, low valuations are pretty common
because appraisals are based upon sales that closed when prices were lower,”
says Diane Saatchi, a senior broker with Saunders & Associates in Bridgehampton, NY. “The reverse is so in a
In other words: Appraisals can’t keep up with how quickly
homes are selling in a hot market, so you’re bound to see lower-than-expected
values placed on homes.
So, what do you do if this happens to you? You have four
Sometimes called a “rebuttal of value,” the appraisal appeal
takes some work. In fact, it’s a total team effort.
The homeowner, loan officer, and often the real estate
agent work together to find better comparable market data to justify a higher
That means everyone puts on their best Sherlock Holmes garb
and gets to work looking for anything that helps the claim for higher valuation.
Perhaps the appraiser overlooked some comps (homes similar in style, location,
and square footage sold within the past few years).
It’s not uncommon to discover, for instance, that the
appraiser used a comparable sale that looks like it’s in great condition, when
in fact the home was trashed when purchased and has already been rehabilitated.
The loan officer writes an appeal using the new
comparables and then sends it to the appraiser. There might be some
negotiating back and forth until all parties come to a compromise with a new
Spoiler: It’s a hard battle to fight.
2. Order a
Most often, if the appraised value is not as high as the
agreed (contract) price, the seller’s agent will ask to see the comps and get a
second or third appraisal.
But it will likely cost you–you’re not only paying for
the first appraisal (in your closing costs), but you’ll pony up for any
additional appraisals as well. They can range between a few hundred dollars and
$1,000 depending on the area. Occasionally, real estate agents or sellers will
foot the bill if they really want to keep the sale.
with the seller
If you’re lucky, you and the seller will both budge a
You might go back to the sellers and ask them to reduce the
price or split the difference. The seller is under no obligation to do so, but
they may prefer to do this rather than take a chance of losing you as a buyer,
and starting over again. It is likely that another buyer will have the same
issue, so the seller might be better off renegotiating with you unless they
have other offers.
Sellers might be more willing to cooperate, especially if
the Federal Housing Administration is involved. Lenders often require the use
of their own FHA-approved appraiser, and these appraisals are “locked in” for
The seller could be forced to take a poor appraisal or wait
it out for a buyer with a different loan.
While the seller will usually be upset about the low
appraisal value, most reasonable sellers eventually come to terms with the fact
that any other appraisal values by potential future buyers will most likely
come in at about the same value.
4. Walk away
No one wants to let a property slip through their fingers,
especially if it feels like their dream home. But beware of ignoring a low
appraisal—you could end up losing thousands whenever you decide to sell.
If you have an appraisal contingency in your contract, you can walk away, get
your deposit back, and hope for better luck the next time around.
9 Home Expenses You Have to Budget For
Article Shared From Trulia
If you think qualifying to buy a
home takes financial stamina, budgeting for your home month by month and
sticking to a long range plan can require the strategy and dedication of a
Ideally, lenders recommend that no
more than a third of your income should go toward housing costs. Here's what
you spend those dollars on:
budgeting: recurring monthly expenses
If you successfully figured out how to save for a down
payment and budgeted your income to pay off
debts like student loans and credit cards to qualify for a mortgage, you may
feel like once you've bought a house you can relax. The reality, however, is
that home budgeting doesn't stop when you close on your house. That was just
the practice run. For as long as you own a home, exercise similar strategies to
those you used when your goal was to buy. They can help you manage your income
to cover recurring expenses like these:
The Bureau of Labor Statistics'
Consumer Expenditure survey indicates that 58 percent of the one third goes to
pay your mortgage. If you have a fixed rate mortgage the payments remain the
same, but escrow payments that can include property taxes, homeowners'
insurance premiums, and private mortgage insurance fluctuate. Payment amounts,
therefore, are adjusted by your lender periodically to cover increases.
They increase with the value of your
home but are tax-deductible
Typically insurance premiums
increase each year. You may want or be required to have supplemental insurance
for disasters such as floods and earthquakes, or elect to increase your
coverage if you acquire more valuables. Shop around if this severely stretches
Private mortgage insurance (PMI).
If you purchased with less than a 20
percent down payment, you may be required to pay PMI for several years until
you build at least 20 percent equity, or for the life of the mortgage. Double
check with your lender for how long you must pay.
Homeowners' association (HOA) dues.
The amenities and services provided
by an HOA vary considerably. They may or may not include full or partial
landscaping services. HOA dues can increase as their budget requires.
These include your power bill,
heating fuel, water, sewer, garbage, phone service, cable, and/or internet, all
of which can increase.
But that is not all, oh, no. That is
for your home maintenance, emergency repairs, and upgrades
You don't buy a house just to pay
the expenses listed above while you let it fall down around you. It's probably
one of the largest investments, if not the largest, you'll make in your
lifetime. You want to maintain its value, and when possible, improve and
enhance it. If that one-third portion of your income seems bursting at the
seams already, put your money-saving skills to work because you need to put
something aside for the following expenses:
Budgeting for regular maintenance.
Routine maintenance includes
inspections, replacing worn parts, cleaning, and landscaping. How much do you
need to save for maintenance costs? Traditional advice says you can expect to
spend annually from one to two percent of what you paid to buy your home, but
if you bought an older home, a fixer, or a foreclosure in poor condition, it
can likely be more. For a closer estimate, however, consult a home maintenance
checklist and price out the current cost
of these services in your area -- or the price of necessary tools and supplies
if you plan to do routine maintenance yourself. Include cleaning supplies and
associated costs, too. Add them all up and divide by 12 to establish a budget
and a monthly savings plan for routine maintenance -- things like changing HVAC
filters and annual inspections, gutter cleaning, window washing, and roof
Fund for emergency repairs and
If you know the age of the various
components of your home such as the roof, large appliances, furnace, windows,
and wiring, for example, you can figure their remaining life expectancy by
consulting the longevity chart for home
components from the International
Association of Certified Home Inspectors (InterNACHI). Research the approximate
cost of replacing them, then prioritize budgeting based on when they might conk
out. Establishing this type of emergency fund, especially if you expect some of
them to need replacing at the same time, can help you manage some hefty
expenses when the time comes. If you can't make necessary repairs or
replacements and try to sell the house first, you may take a hit on the selling
price or even lose buyers if a home inspector reveals that your house needs
Saving for home improvements.
Even if your new home is move-in
ready, most homeowners have a wish list for future renovations or necessary
additions. Prioritize yours on the basis of your home's condition -- is the
roof leaking, for example? -- then on your comfort or family growth. If you
have anything left in your monthly home expense budget, put what you can aside
for that dream kitchen, bathroom remodel, or attic bedroom each month.
Buying a home can be one of the best
decisions you make, but if you're a first time buyer, you need to prepare
yourself for the financial demands. Serious budgeting -- and sticking to your
budget when consumer distractions abound -- takes fortitude. Are you up for the