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Want to be a landlord?

August 24, 2023 by chorton Leave a Comment

Some people believe that real estate is the best way to build long-term wealth. It’s possible that this is true, but it doesn’t mean you should buy a bunch rental properties and wait for the rent to come in. If you’re curious, let’s take a look at some things you might not have considered.

First, you should know that a rental property will require a higher down payment than if it were your primary residence or a beach house. You can expect to pay at least 20% down for most programs, and slightly higher rates, when you buy an investment property.

Why are these loans slightly more expensive? Lenders have calculated the risk associated with renting and determined that if your financial path suddenly hits a few speedbump, the rental property will be the first to be sold compared to your home.

If you don’t own a house, it may be difficult to find financing for a rental. First-time homebuyers are not a good match for rental properties. You should buy a primary home first and then let the lenders know your track record for on-time payments over a period of two years before you consider investing.

It is also important to consider whether you can use your new rental income as a way to pay off or even cover the entire cost of your new mortgage, insurance and taxes. Although many real estate investors say this is a very important consideration, you shouldn’t expect the lender to use the new rental income in order to qualify you for a new home loan. The two-year rule applies again. Lenders will want to know that you can manage not only the new mortgage, but also the tenants and maintenance concerns. You’ll have to show that you can do this.

Once you’ve established a track record, lenders will use your rental income to offset any new payments. This is where the wealth begins to build. You can buy and finance your second, third, or fourth rental using the new rental income.

Finally, over time, real estate values do in fact appreciate. There will be bumps along the way, but over the long term real estate values add to your wealth profile. Real estate can help people build wealth over time. You just need to be aware of what to expect.

Original Blog: https://realtytimes.com/mortgage-advices/item/1047307-wanna-be-a-landlord?rtmpage=null

How Much Should A Down Payment Be?

June 27, 2023 by chorton Leave a Comment

Saving for a down payment is a major part of buying a house. The down payment you make when you sign a mortgage is your down payment. Lenders often refer to down payments as percentages.

The down payment is what you own initially when you purchase a house. Your lender will cover the rest.

The standard is usually referred to by 20% but is this the truth?

You may feel that a 20% deposit is too high for you to afford, but is it really?

Considerations to consider when making a down payment

What are the Benefits of 20% down?

There are benefits to putting down 20%.

You don’t need to purchase private mortgage insurance, or PMI. The PMI protects your lender in the event that you default on your loan.

Your lender may agree to cancel PMI if you do not put down 20% but reach a certain level of equity.

The higher the deposit you make on your mortgage, the lower the rate of interest you will get.

The higher the down payment you make, the lower the risk you are to a lender, and the better the terms you’re likely get.

You could save thousands over the course of the loan if you put down 20%, and got an interest rate two points lower. The bigger your down payment, the smaller the monthly payment.

The real estate market is still competitive despite COVID-19’s economic downturn. A larger down payment will also make you look more attractive to sellers.

It’s important to buy in a market that is hot.

The downsides of putting 20% down

There are some downsides of a higher down payment.

You’re also taking on more financial risks. This can be scary for some buyers, as they will have less money in an emergency fund to cover any unexpected events. If you don’t save enough money, it will be difficult to pay for repairs and updates. It could also take many years to save up 20% of the purchase price.

Can you buy a home without a down payment?

You can buy a house without a down payment if you use a government-backed mortgage. These loans are insured by the federal government, which makes them less risky for lenders.

VA loans and USDA loans are two of the most popular government backed loans without a down payment. VA loans are for service members, veterans and some surviving spouses. USDA loans are available to buyers who qualify in suburban and rural areas.

What is the difference between a personal loan and a business loan?

The type of loan that you are likely to receive is crucial when deciding how much down payment you will need.

The down payment requirement for a conventional loan on a primary home is left up to the lender. Some lenders may require as little as 3 % down payment, for instance. Some lenders offer lower down payments for qualified borrowers.

A minimum credit score of 580 is required to qualify for an FHA loan. If your credit score falls below 580, you will need to pay at least 10%.

This means that for buyers, there are both advantages and disadvantages to the traditional 20% deposit guideline. It’s important to determine what is best for your finances and shop around for the loans that are most suitable for you. You don’t have to give up your dream of owning a house if you can’t make the 20% down payment.

Original Blog: https://realtytimes.com/archives/item/1040895-how-much-should-a-down-payment-be?rtmpage=

Renovating Your Home? Check Out Our FAQ’s!

June 10, 2023 by chorton Leave a Comment

How do I choose a contractor?

Ideally, you should build a relationship with your contractor that is similar to the one you have with your real estate agent. It should be based on trust and make you want to return to them for future needs. Your contractor should be very good at listening and communicating. You want your contractor to “get” what you want for your home and to keep in touch with you every step of the process. Do your research by checking out the reputation of contractors, speaking with other clients and looking at their previous work before making your choice.

How much will my project be?

The answer will depend on the scope of the project. However, to ensure that your contractor is able to provide you with the best estimate, it’s important to write down all the details of your plan. Renovations often take longer and cost more than expected. This is because homeowners make changes or additions along the way or don’t realize they may need to reroute outlets and electricity if they move a wall. You have to consider each item individually.

How long will it take to finish the renovations?

This depends on how much work is done and how many changes you make along the way. The more planning you do before you start, the better estimate you can get from your contractor.

How do I prioritize my projects?

You may want to plan your project in phases if you live in your home while renovations are taking place. This will allow you to live in some rooms and work in others. You may need to phase projects depending on the cost and available funds.

Where do I start?

Start by doing a lot of online research. Start a look book for your home. You can do this in a notebook, or online. Collect pictures of the finishes and looks you like. Visit kitchen, bathroom, flooring, appliance and flooring showrooms, and talk to different contractors to get ideas and pricing.

Do I need permits?

Your contractor will be able to tell you which projects require permits. Be sure to follow all permitting regulations. Failure to do so can lead to further work being required.

How much will renovating my home increase its value?

Homeowners often believe that improvements will increase the value of their home. However, sometimes, what they consider improvements can be liabilities for future buyers. Don’t spend so much on your house that it is more expensive than other houses in the neighborhood. Be careful not to add style preferences that are difficult to change, such as ornamental fixtures, radical architectural features, or unusual landscaping.

How do I pay for renovations

If you can afford to pay cash for your renovations then that is a great option. If you don’t have the cash, you could consider a home-equity loan with a manageable payment or a revolving credit line that you can use to pay for renovations and any emergencies that may come up later.

What Is a Verified Approval Letter – and How It Helps in a Competitive Market

April 29, 2023 by chorton Leave a Comment

“Congratulations, your offer has been accepted!”

There is no doubt that those words are a cause for celebration to any prospective homebuyer, but they are especially true when competing with other buyers in a hot market. There are many factors that you cannot control when competing against other buyers, but there is one thing that can give you the edge. Get a verified approval letter (VAL), a written offer that proves to sellers that your financing has been confirmed.

The process to get a VAL can be relatively simple, even at a time when purchasing a home is a daunting task. It’s easy to connect with an expert who will perform a thorough analysis of your credit score, debt, income, and employment status. You’ll then receive a Verified Loan Approval letter so you can shop in confidence. It’s also helpful to have a conversation with a Home Loan Expert.

I have personal experience of buying a house in a hot market for 2020. In a seller’s marketplace, we had to prepare more than when my husband and I bought our first home in a buyer market several years ago. She made it clear from our first meeting that being pre-approved might not be enough. She stressed that we should take extra steps to demonstrate to sellers that we are serious about buying a home, even before touring any homes. A VAL is a step above a preapproval letter. It shows that we are serious and ready to buy, even before touring a single home.

Unlike with a pre-qualification, getting a VAL requires pulling credit scores. However, we knew we’d have to take this step in our home buying process eventually, so the slight ding to our scores was a non-issue when compared to the benefits of the VAL. In a market where moving quickly is key, having these steps done ahead of time meant that there was no down time once we were ready to make an offer. With this pre-approval, we could show sellers, yes, we could afford homes up to a certain amount and, no, our financing wasn’t going to be an issue for closing.

I am grateful we took our agent’s advice to check this task off the list before looking at houses. We soon realized that houses would come and go in a single day in our market. If we found one we wanted, the last thing we needed to do was scramble to get a pre-approval letter. By getting a VAL in advance that is valid for 90 days, buyers can be confident they can be competitive when ready to make an offer.

At the same time, going through the pre-approval process helped us get a clearer picture of what we could afford. Although we couldn’t control the ever-changing mortgage rates and how that would affect our ultimate payments when we purchased a new home, we knew how much we would be approved to spend on a home. It also gave us a chance to assess our real comfort level with our budget, which led us to set our personal “max” below the pre-approval figure.

All the while, we were also preparing to sell our home—which, let me tell you, was a very different experience! In this position, we knew we could confidently expect a handful of competitive offers within days of listing our home. Again, our Realtor counseled us to take into account whether a potential buyer had a pre-approval letter. We knew that if we were looking at two side-by-side offers for the same amount, the buyer who came with a locked-and-loaded VAL would win out.

After practicing patience and having a bit of luck, we were able to confidently make an offer on a home that checked all of our boxes. Even in a hot market, that one offer was all it took: Our bid backed by a pre-approval was accepted!

Although our lender still needed to consider the home’s appraisal value, condition and title before giving us the official approval, we were glad to know our finances weren’t going to hold up the process. When we turned around to list our first house, we were thrilled to get a number of offers within the first few days—and ultimately went with a buyer who had a pre-approval letter.

I can say from experience that buying a house in a competitive real estate market is an exercise in coping with a lot of unknowns. From waiting for the right house to hoping the seller will accept your offer, learning how to take deep, calming breaths is a helpful skill to have. With a Verified Approval Letter, though, you don’t just have to cross your fingers and hope for the best—you can actually give yourself an advantage.

– Emily Glover

Are you thinking of buying? Our agents at Preferred Properties of Texas are here to help!

Original Blog: https://www.realtor.com/sponsored/verified-approval-letter/

Buying Your First Home? Know These 3 Things

April 4, 2023 by chorton Leave a Comment

It is a joy to work with first-time buyers. I love helping first-time home buyers find their first home and teaching them the process of buying a home. These are the three things you need to know before you begin looking.

1. Only work with one agent. It is best to work with one agent for your real estate search. Your agent will work with you to find the perfect property and negotiate all terms for your transaction. It is important that the agent gets to know you personally and your family so they can negotiate on your behalf. Remember that an agent who shows you a house is ethically the one who should handle the transaction. You are also dealing with the seller’s agents if you call an agent through a yard sign. Although most professionals can handle both sides of a transaction professionally it is more beneficial to work with someone you know well and who will look out for your best interests as the buyer. Your agent is not paid; the seller pays him or her upon closing. You are still hiring an agent to work for your business. Therefore, it is important to interview as many agents as possible and to choose the one you like best.

2. Pre-approval is required for financing. A lender must be pre-approved unless you plan to pay cash for your home. It helps you to set a realistic price range for house hunting. Frustration can result from looking at houses you cannot afford to buy. The mortgage lender will tell you how much you can borrow and also what your monthly payment will be. They will also give you information about closing costs and what you should do to protect your eligibility during the loan process. A current pre-approval is important to ensure you don’t lose your chance to buy another house. You will need to make an offer on the house you have found. The pre-approval letter must be included with your offer. I am happy to give you the names of local mortgage lenders who have been great to my clients.

3. There are some upfront costs. After you have found the perfect house and agreed on the terms and price, and signed the contract, it is time to pay your escrow deposit, also known as “good faith”, deposit. If you cancel the deal due to reasons not covered by the contract, this is money that you risk. It is usually between 1% to 5% of the sale price, but it can vary depending on the terms you and the seller have agreed to in the contract. During negotiations, your agent can help you with this. The escrow deposit is a part of the final sales price.

4. A certified home inspector should inspect the property. The cost of this inspection varies depending on how large, old, and what features the property has, but it is typically around a few hundred dollars. This amount will be due at the time service is rendered. Based on the results from the first inspection, you may choose to pay for additional inspections. If the inspector finds a problem with your HVAC system, you might need to pay a fee to have an HVAC contractor inspect it. To be able to move forward confidently with your purchase, you want as much information as possible during the inspection period.

5. A survey and appraisal of the property will be required. These costs are added to closing costs and should not be paid upfront. In the unlikely event of closing, however, you might be asked for a credit card number.

All of these steps will be covered during your home-buying journey. Are you ready to get started? Give Preferred Properties of Texas a call!

Consider A Few Things Before Buying Something AS-IS

March 9, 2023 by chorton Leave a Comment

You might come across listings that advertise a property as-is if you are looking for a new house. It’s an option for sellers who want to sell quickly.

The homes are often less expensive than comparable properties for buyers.

There are many benefits to buying a home in its current condition, especially in this competitive housing market. However, it is important to fully understand the implications.

Sellers list their house as-is and will not make repairs or modifications before they close on the property. Sellers cannot guarantee that everything will be in good condition or working order. A Seller’s Disclosure is not required.

It’s your responsibility to repair any problems that you find after you purchase a property advertised as “as-is”.

A seller selling as-is must still meet minimum disclosure standards in each state and federal. These standards will inform you about lead paint conditions.

A home being listed as-is does not necessarily mean that it is inoperable. A home can still be listed as-is, even if it has minor or major problems.

This could happen when a seller is in financial distress or if they are in a hurry and don’t have time to wait for contractors to complete even minor cosmetic work.

It’s possible that the home is no longer livable in its current condition. Your lender might not be happy with you making the necessary repairs.

Certain livability requirements are required for many types of loans. These minimum property requirements are also known as MPRs. These MPRs will be assessed by appraisers.

Conventional loans are not guaranteed or insured by the federal government. Fannie Mae, Freddie Mac and many other conventional loans conform to these criteria. Fannie Mae or Freddie Mac homes can be bought if they have minor problems. The house must be safe and any structural problems should be normal wear and tear.

You might still be eligible for a conforming loan for as-is property if you have plumbing leaks, interior damage, or missing light fixtures.

The MPRs for government-backed loans like VA loans are more stringent than other types.

An inspection is required if you are interested in purchasing a home as it stands. An inspector will help you to understand the problems and let you know how much it might cost to fix them.

A inspection is not required for an appraisal.

A lender will usually require an appraisal to determine the property’s value. You might choose to have a home inspection.

Sellers can refuse to inspect a property as-is. This is a red flag.

A home being sold “as-is” does not necessarily mean that it is complete. A seller could list a property as is but refer to only certain parts. Broken pools and sheds are often partial features that can be added as-is.

Ask the seller what they mean by “as-is.”

You don’t have to waive your right for disclosures when buying an “as-is” home. You must be aware that the sellers are bound by federal and state regulations regarding disclosures about any issues in the house.

Each state has its own disclosure laws. Some states, for example, have water damage disclosure regulations.

You may be able sue a seller if they fail to inform you about a problem in your state.

Lead paint is the only federal disclosure requirement. The seller must disclose if the home was built prior to 1978.

If you are considering buying a home as is, a good agent can help. An agent who is knowledgeable about disclosure laws can help you understand what the implications are for buying as-is.

These can make you more confident about your purchase decision, or help you decide when it’s best to not buy.

Original Blog: https://realtytimes.com/consumeradvice/buyersadvice/item/1044463-what-does-as-is-mean-for-buyers?rtmpage=