HOW TO FINANCIALLY PREPARE YOURSELF BEFORE LOOKING AT A HOME

June 29, 2020 by chorton Leave a Comment

Prepare Financially Before Looking at Homes

Too often home buyers fail to prepare themselves financially before looking for a home to purchase. Doing so is a common mistake that many future home buyers make even though this may be the largest purchase of their lives. Not taking the proper steps to set yourself up for success could mean that you do not get your dream home, or it costs you more than it should.

Here are some of the best tips for preparing yourself financially before starting the home search process. By doing so you’ll be two steps ahead of the game and well on your way to home ownership!

CONNECT WITH A LENDER FAR IN ADVANCE

Before you start driving around neighborhoods, flipping through listings online or even stopping in to speak with a Realtor, it would be a good idea to know what your buying power is today. If you have a goal to be able to buy into a particular neighborhood, you should put a plan in place to be able to achieve that.

Speaking with a lender first to develop a plan of action on how you can qualify to buy a home in that area or price range is critical.

My recommendation is that you have an initial discussion with a lender nine months to one year in advance. Sound crazy? I know many people do not know that far in advance that they may be buying a home next year. For those who do, this is extremely important.

WHY IS IT IMPORTANT TO PLAN SO FAR IN ADVANCE?

First, your lender will let you know what you can qualify for today based upon your income, down payment and credit score. There are other factors which play a part including credit events and large monthly payments on your credit report.

Income – Income sometimes is difficult to change in one year. Lenders will be looking at your last two years’ tax returns and recent pay stubs when you are ready to apply. They will also require that you have a two-year work history.

Some individuals decide to take a break for personal reasons without realizing that a gap in employment may prevent them from getting loan approval. Documenting your income is essential as well. If you are in a cash business, then you should begin depositing that money into an account on a regular basis so that you can qualify for a bank statement loan. These are just a few examples of what your lender will discuss with you.

Down Payment – This is extremely important, and it will partially determine your buying power. It is also connected to the various loan programs that you may or may not qualify for. You will need to have those down payment funds in your bank account three months before you submit a loan application.

If you have little to no down payment and do not think you can raise additional funds over the next nine months, then your lender will discuss low down payment and loan program options which will then help determine your realistic price range.

If you can get to a twenty percent down payment that is ideal. When you don’t have at least twenty percent to put down, you’ll often be required to pay private mortgage insurance.

PMI is a useless fee that only benefits the lender as protection in the event you default on your loan. Most people will try to stop paying private mortgage insurance as soon as they can.

Credit Score – Your credit score plays a significant role here. It will have an impact on your final mortgage rate, in some instances your down payment requirement, or whether you are qualified at all for a mortgage. Borrowers with the best credit scores generally will get the lowest mortgage interest rate. Therefore it makes sense to put a lot of work into improving your financial status.

The good news though is that it is not that hard to improve your credit scores in as little as 6 months or less. There are creative ways to do it yourself and even some reputable services out there who know how to get your scores raised for you.

Do your best to target a score of 680 or above. There are lenders that can find a bad credit mortgage for you with scores as low as 500 but then your down payment requirement and your rate will be much different.

Credit Events – A credit event is a bankruptcy, foreclosure and in some instances collections. If you have a bankruptcy or foreclosure, your lender needs to know up front so he or she can plan for this. It is preferable to have had these two years prior to applying for a loan.

Less than two years out of bankruptcy for example will prevent you from getting an FHA loan. Collections need to be dealt with. Pay outstanding collection amounts and work to have them removed from your credit report. That can be negotiated with the creditor as part of the payment agreement.

Large Payments on Your Credit Report – Too often potential home buyers fail to qualify because they have too many other minimum monthly payments showing up on their credit report. During the qualification process, lenders need to factor your future mortgage payment as well as the monthly obligations that appear on your credit report.

Together, and when divided into your gross monthly income they make your debt to income ratio (DTI). Each loan program has a maximum DTI allowed. The less that you have in OTHER monthly payments on your credit report, the larger the loan you will be able to qualify for.

In this example, you can see that with a gross monthly income of $6,500, this person would qualify for a $300k loan at current rates using a maximum DTI of 43%. At the bottom, you can see how much more buying power this person has when the other monthly payments are removed.

This example above should hopefully explain why it is important to keep your credit report free from other monthly obligations. If you think there is a chance that you may buy a home in the near future, then do not buy a new car. At least not without discussing the implications with your lender.

In the example above, the person could afford $88k more if there was no car payment when applying for the loan. The truth is that auto lending is much more lenient when it comes to qualifying. Once you are approved and close on your home loan, there is an excellent chance that you can then go and buy the car you want.

RESERVE FUNDS

The cash needed to buy a home is not just about the down payment and closing costs. Lenders will require a few months’ reserves (check with your lender). They want to be sure that if you have a job loss that you can at least make a few payments before you are out of money.

Realistically, you need to plan for a lot more than that. When you buy your home, do you think you may need some money to fix it up the way you want? Even with new construction, there are expenses.

Do you need to buy furniture? Do you own basic home needs like a lawn mower? This is also part of the planning process. Throwing everything you have into your initial purchase without anything left over makes you “house poor” and with one small setback can land you in a very difficult scenario where you could lose your home.

FINAL PERSPECTIVE

Once you have this plan developed with the assistance of a lender, then you can target price points and specific towns or neighborhoods. You will be able to spend time focusing on homes that are a true reality for you.

Developing a plan far in advance and sticking to it will also help make the home buying process much easier and will take the stress out of finding a mortgage. Your realtor will also be pleasantly surprised to know that you have taken the time to make sure you have the ability financially to purchase the home.

If you are thinking about looking for a home at some point in the future, contact a lender today to have a preliminary discussion.

How To Know The Best Time To Sell

June 15, 2020 by chorton Leave a Comment

There is a best time to sell a house. The month—and even the day—you list your home can make a big difference.

Ready to sell? Like comedy and business, timing is everything in real estate. If you’re able to take your time, it can be worth waiting for the best time to sell a house. But even if you have time constraints, you can likely still find the best time to sell within them.

Tips for Determining the Best Time to Sell a House

Pick the Right Month
Zillow research confirms what many people have long suspected: The best time to sell a house is in the spring—specifically, the first half of May. You are likely to sell your home 18.5 days faster and for around 1 percent more during this time. This is true for the 25 largest metros in the country.

In most parts of the country, springtime offers favorable weather conditions for house hunting. But why May? Homebuyers who started shopping in early spring and have not landed a deal by May start becoming anxious. Parents want to be settled into a home before the next school year. This increased sense of urgency can translate into more dollars for sellers.
- Pick the Right Day
  
  You’ve done all the preparations are and ready to list your house—but it’s Monday. Should you? Your real estate agent will probably want you to wait until first thing Thursday morning (we’re talking as close to 12:01 a.m. as possible). Why? Since many people house hunt on the weekends, they typically start looking online on Thursday or Friday to prepare. If you list on Monday, buyers will still see your home, but it will be farther down the page—if your listing is still on the first page at all. To optimize views (which could turhttp://www.trulia.com into more showings), consider listing later in the week.
- Sell Smart During the Off-Season
  
  If you can’t sell during peak selling time in spring, don’t worry. Not everyone is looking to buy in May. If your home is in a warm-weather state, the off-season could be an advantage, as snowbirds might be in town, and there are likely fewer homes on the market.
  
  If your home is in a challenging climate, you can still sell successfully during fall or winter. Make the most of the season by staging your home so that it’s warm, cozy, and inviting for homebuyers. Outside, rake those leaves or shovel that snow. There may be fewer buyers looking, but there will also be fewer sellers listing, making your tidy home stand out.
- Factor in Your Own Timing
  
  Of course, not everyone can choose when they move. Sometimes the best time to sell a house is simply as soon as possible. If you have to move across the country to start a new job in November, any financial benefit you may have gotten by waiting until May to sell will likely be erased by having to pay housing expenses on two properties for half a year.
  
  Of course, the best time to sell a house doesn’t always come down to money, either. If you find the perfect next home for you in August, it might be the right decision to sell and buy at the same time. If you know you’ll never find another place so close to work or your sibling’s house or the best park in town, your lifestyle priorities might win out.
  
  Are you ready to sell your house? Give us a call or visit our website.

Boost Your Home Value for Less Than $300

May 6, 2020 by chorton Leave a Comment

Have you ever noticed how the decision to sell your home inspires grand ideas for major renovations? Suddenly, you can’t see past all the things you think buyers will hate about your home.

We’re here to set the record straight: You don’t have to spend thousands of dollars or weeks of toil and sweat to make a home sale worth your while. With staging—and the help of a high-octane real estate agent you can increase your home’s value without a huge investment.

Does it work? According to the National Association of Realtors, most agents say buyers will pay 1–5% more for a home that’s been staged. That’s a potential $2,000–10,000 added to the value of a $200,000 home!

Want to add a few thousand bucks to your home value? Give these options a whirl. Each of the following scenarios cost less than $300 and can be tackled in just a matter of days.

If you are looking for how to sell a house for more money, you’ve come to the right place!

Option 1: Add Home Value by Neutralizing the Interior

Bob and Judy don’t have to worry about an outdated home. Judy’s a big HGTV fan and regularly works new design trends into her décor. But over the years, her decorating fervor has inspired a different paint color for every room, leaving their open floor plan feeling disjointed.

All they need is a fresh coat of neutral paint to increase the home value and make their home feel light and airy. Bob and Judy don’t have a huge budget, so they decide to tackle the job themselves. They focus on the main living areas and find a bargain on paint and supplies at their local Habitat for Humanity ReStore.

Option 2: Reclaim Family Spaces

Jim and Karen have three kids under six and have gotten used to their home feeling like a war zone. Baby equipment has taken over their living area, and their dining room serves as extra toy storage. If they want to sell their home, they need to make some changes.

After clearing out the clutter, they cozy up the living room by focusing furniture around the fireplace instead of the TV. New lamps light up dark corners, while fresh flowers, new curtains and throw pillows add an extra punch of color.

Karen tops things off by breaking out her best dishes and linens and using them to dress up the dining table.

Option 3: Transform the Master Suite

Laurel is an empty nester who’s looking to downsize now that her kids are off to college. After years of juggling family and career, she realizes she never took time to create her own space to unwind at the end of the day. She gets to work transforming her master suite into a relaxing retreat.

Laurel’s first order of business is minimization. She organizes her linen closet and packs up off-season clothes and shoes. Her treadmill finds a temporary home in her sister’s basement.

Laurel scours local and online outlet stores for everything she needs to prep her home and increase its value. Fluffy white towels inspire a spa-like feel in the bathroom, and a crisp white comforter set creates a fresh focal point in the bedroom. She completes the look with decorative pillows and a set of matching lamps for her nightstands.

Option 4: Pump Up Curb Appeal

Rob is relocating to another state for his job. His real estate agent recommends dressing up the exterior of his ranch-style home.

Rob starts by washing off the layers of grime that have accumulated over the years. Then he paints his front door red and adds decorative house numbers to give his drab entryway a much-needed facelift. Instead of springing for brand-new porch light fixtures, he rejuvenates his existing ones with a specialty spray paint. A cheery welcome mat and brightly colored flowers might not be Rob’s style, but he knows buyers will love the inviting dose of color on his front porch.

Before the For Sale sign goes up, he mows the lawn, trims all the hedges, and tidies up flower beds with a fresh layer of mulch.

What’s Your Plan to Add More Home Value?

Of course, every home is different. We’ve made some assumptions in these examples. But hopefully you found some inspiration to get you started! You can mix and match ideas you see here or come up with a few of your own.

Just be sure to consult your real estate agent first. A good agent knows what homebuyers in your area are looking for and can point you toward improvements that get the most bang for your hard-earned bucks. Need help finding a qualified agent in your area who can help you sell your home? Contact us today!

Rise to the Top of the Pool by Selling Your House Today

April 28, 2020 by chorton Leave a Comment

With the release of the latest Economic Pulse Flash Survey from the National Association of Realtors (NAR), results show that people selling their houses today are holding strong on price. According to the most recent data, 74% of real estate agents noted that sellers are not dropping listing prices to attract more buyers.

Lawrence Yun, Chief Economist at NAR, noted:

“The housing market faced an inventory shortage before the pandemic. Given that there are even fewer new listings during the pandemic, home sellers are taking a calm approach and appear unwilling to lower prices to attract buyers during the temporary disruptions to the economy.”

This inventory shortage, which spread widely throughout the housing market going into today’s economic slowdown, created an environment where there were not enough homes for sale for those who wanted to buy them. With that backdrop setting the stage, Yun also notes:“With the current quarantine recommendations in place, fewer sellers are listing homes, which will limit buyer choices.”

So, with buyer choices already limited going into this season, and more sellers removing listings today, if you’ve been thinking about listing your house, it’s a great time to do so. Many others in your neighborhood may be waiting to make a move or removing their listings, so staying on the market – or jumping into it – could work to your advantage.

Buyers today are serious ones, and with prices holding steady in this low-inventory market, you can feel confident about selling today. Embracing the process virtually, where available, could help your house hit the top of an eager buyer’s list. While your neighbors miss out on this opportunistic time, you don’t have to.

Bottom Line

If buyer choices are limited in your neighborhood, selling now may help your listing rise to the top of the pool. Reach out to a local real estate professional today to make sure you have the expert help you need to succeed in the selling process. Contact our office to speak with one of our knowledgeable agents today.

The Value Of Title Insurance In 2020

April 3, 2020 by chorton Leave a Comment

Innovation is all around us. It seems like every day, new products and platforms are being developed to change the way we look at virtually every process of our lives. One area where we are seeing rapid transformation is in real estate. Over the last few years, we have reimagined how we find properties, obtain financing, get to the closing table and even move into our new property. When it comes to title insurance, all these new innovative factors will affect how a property is insured in 2020 and beyond.

What exactly is title insurance? As a lifelong title insurance professional, I have heard this question more than any other in my life. Being the third generation of my family in the title insurance business, I was born into a world of deeds, mortgages, title commitments, liens and closings. When I say I have heard this question my whole life, I truly mean my whole life.

Title insurance is a unique form of insurance that protects what in most cases is the largest monetary investment you will ever make in your lifetime: your real estate. Whether you are a homeowner, a small investor or a large commercial landlord, obtaining a title insurance policy when you purchase your property can give you peace of mind that your investment is safe and that if there is a problem, you will not be on your own to fight it.

On average across the nation, title insurance costs roughly 0.5% to 1% of the purchase price when you get a policy protecting you as well as your lender (which is customarily required by the bank). On a $300,000 purchase, that only equates to $3,000 for a policy that will protect you as long as you own the property and your lender as long as they hold the mortgage.

Title insurance is unlike other insurance products such as homeowners, medical or auto insurance. It is a one-time payment as opposed to monthly or annually. It does not protect you from future incidents, but rather from what has already happened in the past. By researching the history of the property and the people selling it to you, the title insurance company knows and corrects any issues that could possibly come up in the future based upon these past events.

If the person who sold you their property was not who they said they were, or if there was a lien on the property that was not satisfied, you are protected. If someone knocks on your door one day and says they inherited and have a claim on the property, you are protected. If a bank tries to foreclose a mortgage from before you bought the property, you are protected. When talking about properties worth tens to hundreds of thousands or even millions of dollars, having that insurance for as long as you own the property can give you a level of comfort that is priceless.

There are myriad problems that might arise when purchasing or owning real estate. Even the most seasoned title insurance professional who could have been in the business for 50 years will tell you that new issues always come up that are unprecedented. There are the legacy issues that they have seen time and again, and then there are the “new” problems that typically crop up from new technology and processes being introduced.

Mortgage fraud and cybercrime are the newest threats to the real estate industry. Hackers have determined that real estate and settlement are an easy target and have moved into the space at an alarming rate. In the last year, remote online notarization and e-closings have gained traction across the country and introduced new sets of problems for the industry, such as proof of identity and security. With a move recently toward automation and machine learning, you gain efficiency, but lose the security of human oversight. With e-recording becoming commonplace and the possibility of recording documents on the blockchain, who does the final review of the documents, and how do they get fixed if recorded incorrectly?

With the advent of new technology and an ever-changing landscape of issues that could arise, title insurance is more of a necessity than ever before. The title industry uses its vast resources to pinpoint the issues and find ways to cure them. A title insurance professional spends countless hours staying on top of the trends and current environment of issues. If any issue comes back to haunt you, a national underwriter will have your back. They will defend you in a court of law or make sure you are made whole. No matter how the industry morphs over time, title insurance will make sure you are protected.

That, to me, is worth its weight in gold.

The Realtors at Preferred Properties of Texas in Stephenville in Erath county in the Cross Timbers area of North Central Texas are here to help you buy and sell real estate for over 25 years!

Common Repairs Needed After a Home Inspection: What Must Sellers Fix?

March 27, 2020 by chorton Leave a Comment

Home Inspection Household Repairs

By Cathie Ericson | Oct 16, 2019

repairs-after-inspection

If you’re selling your home, you might wonder if there are common repairs needed after a home inspection. Most buyers, after all, won’t commit to purchasing a place until there’s been a thorough inspection by a home inspector—and rest assured, if there are problems, this professional will find them!

So if your home inspection turns up flaws that your home buyer wants fixed, what then? To be sure, repair requests after an inspection are a hassle, and liable to cut into your profits. So for starters, make sure to read your inspection contract carefully to make sure you don’t get locked into mending something you don’t want to fix.

“As a seller, you should never sign an inspection contract until you fully understand its obligations, particularly where it concerns your responsibility for fixing things,” says Michele Lerner, author of “Homebuying: Tough Times, First Time, Any Time: Smart Ways to Make a Sound Investment.”

And rest assured, there’s no need for you to fix everything a home inspector thinks could stand for improvement; a home inspection report is not a to-do list. Basically inspection repairs fall into three categories: ones that are pretty much required, according to the inspector; ones that typically aren’t required; and ones that are up for debate. Here’s how to know which is which.

Common repairs required after a home inspection

There are some fixes that will be required by lenders before they will release funds to finance a buyer’s home purchase. Typically these address costly structural defects, building code violations, or safety issues, sometimes in the attic, crawl spaces, and basement, and those related to the chimney or furnace.

An inspector will also check whether your septic system and heater are in good condition and verify whether there’s a possible radon leak or the presence of termites (homeowners tend to have many questions on these topics). Other conditions of the home that an inspector may report on include those related to the roof, electrical systems, and plumbing lines and the condition of your HVAC system.

If a home inspection reveals such problems, odds are you’re responsible for fixing them. Start by getting some bids from contractors to see how much the work will cost. From there, you can fix these problems or—the more expedient route—offer the buyers a credit so they can pay for the fixes themselves. This might be preferable since you won’t have to oversee the process; you can move out and move on with your life.

Home inspection repairs that aren’t required

Cosmetic issues and normal wear and tear that’s found by the inspector usually don’t have to be fixed.

“Some inspection contracts will expressly state that the buyers cannot request any cosmetic fixes to be made and can only ask that structural defects, building code violations, or safety issues be addressed,” says Lerner. Furthermore, “state laws may also impact your liability as a seller for any issues uncovered during an inspection.”

Be sure to check your local ordinances to know which fix-its that are found during an inspection legally fall in your realm of responsibility.

Home inspection repairs that are negotiable

Between fixes that are typically required and those that aren’t is a gray area that’s up for grabs. How you handle those depends in part on the market you’re in. If you’re in a hot seller’s market, you have more power to call the shots.

“While buyers are always advised to have a home inspection so they know what they are buying, when there are a limited number of homes for sale and buyers need to compete for homes, they are more likely to waive their inspection right to ask a seller to make repairs,” says Lerner.

In fact, “the best contract for a seller would be for the buyer to agree to purchase your home as is or to request an ‘information only’ home inspection, thus absolving you of any need to pay for any fixes found by the inspector,” she adds.

However, in a normal market, you won’t be able to draw such a hard and fast line related to an inspection.

Work with your real estate agent to understand what items you should inspect and then tackle—and where you might want to push back. Don’t have an agent yet? Here’s how to find a real estate agent in your area.

Just remember: you’ll want to be reasonable when it comes to repairs because you may have already put a lot of time into the selling process, and it’s likely in your best interest to accommodate some fixes rather than allowing the buyer to walk away. Also, depending on the magnitude of the requested fix, it’s not likely to go away. Now that it’s been uncovered by the home inspector, you’ll need to disclose the issue to the next buyer.

How to negotiate home fixes

Here are two sneaky but totally effective ways to handle this home hurdle that’s been uncovered by your inspector:

Offer a home warranty. “I sometimes keep a $500 one-year home warranty in my back pocket as a token to ease concerns found during a home inspection,” says Kyle Springer, a Realtor® with Coldwell Banker in Bowling Green, KY. That can come in handy if there is an element that doesn’t truly need fixing but is still worrying the buyers, such as an aging HVAC unit.
Barter for something of value to the buyer. Often sellers will suggest their real estate agent ask the buyer’s agent if the buyers want appliances or furniture if they have no plans to move them. Springer advises sellers to wait to make that offer until after they get the list from the inspector, because they may be able to beg off certain fixes in exchange for items such as the washer and dryer.

A home inspection can turn up all kinds of issues, but nearly all can be addressed quickly, pleasing buyers and sellers alike.