Being a better homeowner is a full-time job. It’s not just about making better decisions when you buy and sell; it’s making better decisions throughout the time you own the home.
It takes good information to make good decisions. Think of times when you need advice on financing, taxes, insurance, maintenance, finding reasonable and reliable contractors and lots of other things. Imagine how nice it would be to have a real estate information line you could call whenever you have a question.
During the purchase or sale, the obvious place to get real estate answers is your agent but where do you go the rest of the time? Since homeowners are now staying in their homes for ten to twelve years or more, they need a reliable resource for good information and advice.
Our objective is to move from a single purchase or sale to customers for life; a select group of our friends and past customers who consider us their lifelong real estate professional. We believe that if we help you and your friends with all their real estate needs not just when they buy or sell but for all the years in between, we can earn the privilege to be your real estate professional.
Throughout the year, we’ll send reminders and suggestions by email and social media that enhance your homeowner experience. When we find good articles to help you be a better homeowner, we’ll pass them along. You’ll discover new ways to maintain your property, minimize expenses and manage debt and risk.
We want to be your “Go-To” person for everything to do with real estate. If you have a question, please call us at . If we don’t have the answer, we’ll find it for you or at least, point you in the right direction.
We’re here for you and your friends…now and in the future. Please let us know how we can help you.
Smart home technology promises to make your home more comfortable, convenient and secure. It may not be the home from the Jetson’s but artificial intelligence is the hope to make it the home of the future which is available now and controlled from anywhere you have an Internet connection.
When Alexa appeared at Christmas-time two years ago, most people thought it was a novelty to ask what the weather will be or to play a song. Few people understood the vision of Amazon would be verbally purchasing everything imaginable and that your calendar, contacts, lights, and appliances would all be connected.
There are plenty of players in the market including Amazon Alexa, Google Assistant, Samsung Smart Things, Apple and others. It starts with a hub that acts like a brain for your system to connect the different home automation devices. You’ll establish an online account with the hub manufacturer so that you can adjust settings and controls.
You could start simple with switch and plug receptacles that would allow you to control lights either vocally through your hub or from your Smartphone or tablet anywhere in the world where you have an Internet connection.
Programmable thermostats can lower your monthly utility costs while conveniently regulating your comfort by adjusting temperatures on your heating and cooling systems. These can be particularly effective in homes with zoned systems where you might live in one area during the day but sleep in a different zone.
Door bells might be one of the next additions to your automation. Not only can you communicate with the person at your door, you don’t have to go to the door to do it. The device cameras are motion activated so you’ll see who is there regardless of whether they rang the doorbell or not.
Door locks can be convenient because instead of giving someone a key, you can issue a temporary code to let them enter. You can give them permanent access and rescind it any time you want without having to change the locks. You’ll know when they enter and leave your home.
Other security options can include door and window sensors, motion detectors and cameras for outside or inside the home. The homeowner will be able to monitor from inside or anywhere else they have an Internet connection.
Smoke and carbon monoxide detectors, as well as water sensors to determine leaking water around water heaters or in basements give homeowners peace of mind.
Most of these devices are available in wireless models so you won’t have to string wire throughout the home. The Wi-Fi can introduce a potential problem of hackers who could illegally access your system. This is true with any home that has a Wi-Fi router and precautions should be taken.
The big box stores like Lowes, Home Depot, and Amazon offer a wide variety of brands and modules. Many people prefer it as a do-it-yourself project and others would rather have a professional do it for them. YouTube has a lot of videos that can probably show you exactly how to install the ones you select.
Price, condition and terms are factors that any owner must consider when marketing their home. Price is usually the easiest to adjust to compensate for shortcomings in location or condition of the home. Improving the condition of the property is more time consuming but updates to kitchens, baths and other things can appeal to a buyer.
One of the most overlooked marketing factors are terms which are also referred to as financing concessions.
Paying part or all a buyer’s closing costs is the most common financing concession. By doing so, the buyer doesn’t need as much cash to get into the home which can be attractive to more buyers.
There is another financing concession that is not used very often in today’s market but it is still allowed and can increase the marketability of a home. A temporary buy-down of the interest rate makes a lower payment for an initial period.
It is still a fixed-rate mortgage that the buyer must qualify for at the note rate and there is no negative amortization. The seller pre-pays the interest in advance at closing so the buyer has lower payments in the initial period.
Instead of lowering the price of the home, let’s say the seller has decided to offer $6,875 worth of financing concessions that the buyer can apply any way they want. One way might be to get a 2/1 buy-down which means that the first year, the payment would be based on 2% less than the note rate of the mortgage and the second year, it would be 1% less than the note rate. The third through thirtieth years, the payment would be the actual note rate.
On a $275,000 home with a 3.5% down payment at 5% for 30 years, the first year’s mortgage payment would be figured at 3% which would be $305.76 less than normal. The second year’s payment would be figured at 4% and would be $157.65 less than normal. The third through thirtieth years, the payment would be the normal payment of $1,424.59.
It would save the buyer $5,560.90 in interest in the first two years and there would still be $1,314 of the financing concession to apply toward the buyer’s closing costs.
The financing concessions paid by the seller give the buyer lower payments for the first two years and less money needed for the closing cost. An added bonus for the buyer is that the buyer can deduct the pre-paid interest the seller paid as qualified mortgage interest.
Some lenders may tell you that temporary buy downs cannot be done. They’ve been around for over thirty years and can still be done today on FHA, VA and conventional loans. Call if you need a recommendation of a trusted mortgage professional or check out a 2/1 Buydown with your own numbers.
The Federal Reserve Board’s Triennial Survey of Consumer Finances recently revealed the net worth of a homeowner was $231,400 compared to $5,200 for a renter. The net worth of homeowners increased 15% from 2013 to 2016 while renters’ decreased by 5%.
Appreciation and principal reduction are the two dynamics that affect a homeowner’s equity. Each payment is applied to the interest for the previous month and the principal reduction to retire the mortgage.
A $300,000 home purchased with a $294,566 FHA mortgage at 5% for 30 years has an average monthly principal reduction $362 in the first year. Two percent appreciation would benefit the buyer by $500 a month. In this example, the equity grows by $860 a month for the homeowner. A tenant would have to invest $660 a month over and above the rent they’re paying.
Based on the assumptions listed above, the $10,500 down payment would become approximately $85,000 of equity in seven years. Leverage and forced savings contribute to the difference in addition to the appreciation and principal reduction.
The rent paid by tenants help the landlord recoup their investment in the home and a return on their investment. Some people say, regardless if a person rents or buys, they pay for the house they occupy. The choice is whether to buy it for themselves or their landlord.
Check out some of the benefits using your own numbers with this fill-in-the blank Rent vs. Own.
There is a little-known mortgage program that could provide the vehicle for the right person to get into a home. If a person sells their home to another for less than the fair market value, the difference in the appraised value and the sales price is considered a gift of equity for the buyer.
FHA requires that borrowers receive gifts of equity only from family members transferring title to the borrower.
An appraisal is required to determine the value of the home. The sales price is subtracted from the appraised value to determine the equity to be gifted. If a home appraises for $300,000 when the owner will sell it for $250,000, the gift is $50,000.
The gift is applied to the down payment. In this example, the borrower would have to qualify for a $250,000 mortgage which would require private mortgage insurance because a 20% down payment on a $300,000 home would be $60,000. If the buyer had an additional $10,000 in cash to put down, the PMI would not be required, and the monthly payments would be lower.
The seller would need to provide a gift letter stating the amount of the gift, the date the gift, and that no repayment is expected or required. It also needs to have the donor’s name, address, phone, email and relationship to the buyer. In addition, the settlement statement will need to show the gift being credited from the seller to the buyer. The lender may require additional documentation.
Beginning in 2018, the annual gift tax exemption is increased to $15,000 per person per year and lifetime exemption to $5.6 million. The fact that the $50,000 exceeds the individual amount doesn’t mean there will necessarily be any gift tax due now. The seller should consult their tax professional.
It may be natural for first-time buyers to be unsure of the process of buying a home because they haven’t been through it before but even repeat buyers need to know changes that have taken place since the financial housing crisis.
The steps in the home buying process are predictable and generally follow the same pattern. It certainly makes the move stay on schedule when you know all the different things that must be done to get to the closing.
- In the initial interview with your real estate professional, you share the things you want and need in a home, discuss available financing and learn how your agent can represent you in the transaction.
- The pre-approval step is essential for anyone using a mortgage to purchase a home to assure that they’re looking at the right price of homes and so they’ll know what they can qualify for and what the interest will be.
- Even with lower than normal inventory, it is difficult to stay up-to-date with the homes currently for sale and the new one just coming on the market. Technology has simplified this process, but the buyer needs to implement them.
- Showings can be accommodated online through virtual tours, drive-bys and finally, a personal tour through the home. Your real estate professional can work with you to see all the homes in the market through REALTORS®, builders or for sale by owners.
- When a home has been identified, an offer is written and negotiation over price, condition and terms takes place.
- A contract is a fully negotiated, written agreement.
- Escrow is opened to deposit the earnest money from the buyer as a sign they’re acting in good faith. The title search is also started so that clear title can be conveyed from the seller to the buyer and that the lender will have a valid lien on the property.
- 88% of home sales involve a mortgage. The lender will require an appraisal to be sure that the home can serve as partial collateral for the loan. If the buyer has been pre-approved, the verifications will be updated to be certain that they’re still valid. The entire loan package when completed, is sent to underwriting for final approval.
- When the contract is completed, at the same time the title search and mortgage approval is being worked on, the buyer will arrange for any inspections that were called for in the contract.
- After all contingencies have been completed, the transaction goes to settlement where all of the necessary papers are signed, and the balance of the buyer’s money is paid. This is where title transfers from the seller to the buyer.
- Possession occurs according to the sales contract.
One of the responsibilities of your real estate professional is to make sure that things are done in a timely manner so that the transaction will close according to the agreement on time and without unforeseen or unnecessary problems.
Even if you’re not ready to buy or start looking yet, you need to be assembling your team of professionals. Let us know and we’ll send you our recommendations, so you can read about them on their websites.
If you have any questions, call us at ; we’re happy to help. Informed buyers lead to satisfied homeowners and that is better for everyone involved.