With interest rates on the rise…now is the time to call

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Why Buyers May Lose If They Don’t Act Now

Rising mortgage rates could have a big impact on the direction your buyers choose when shopping for real estate, economists warn. “Every time the interest rates go up, you eliminate a group of people who can no longer afford to buy a house,” Don Frommeyer, a mortgage broker at Marine Bank in Indianapolis, told realtor.com®. “Some people may have to rent for a period of time until they make more money—or buy a smaller house.”

To avoid further complications in their plans, your buyers may want to speed up their home search this spring, as interest rates are forecasted to move higher in the coming months. Forty-four percent of home buyers say rate increases likely will force them to settle for a smaller, less expensive home that requires a longer commute to their jobs, according to a realtor.com® survey. First-time buyers may be most affected by rising costs, as increasing home prices and interest rates price some out of the market.

Mortgage rates are at their highest levels in more than four years. The 30-year fixed-rate mortgage averaged 4.46 percent last week, according to Freddie Mac, and that’s largely expected to increase since the Federal Reserve said it is likely to raise its short-term interest rates this year. That could prompt mortgage rates to move higher at least three times this year, starting this month.

“For the bulk of buyers, it’s not going to kill their decision to purchase a home,” Rick Palacios Jr., director of research at John Burns Real Estate Consulting, told realtor.com®. “If anything, it will get them off the fence by creating a sense of urgency.” Higher rates are “a kick in the pants for you to start thinking seriously [about buying].”

Rate increases—even minor ones—can add up over time. Realtor.com® offers this example: On a $300,000 house with a 30-year fixed-rate mortgage and 20 percent down payment, the difference between a 4 percent and 5 percent mortgage rate is $142 a month. Calculated over the life of the loan, that is more than an extra $51,000. “Buyers thought they could wait forever because rates were going to stay low forever,” says Palacios. “They’re starting to realize that if they’re going to buy, they should probably buy now.”

Home buyers who are concerned about rising rates may want to lock in with a lender, which guarantees the current rate for a set period of time. Still, don’t let your clients linger on making a decision. It typically costs several hundred dollars to lock in a rate.

Source: “Is It Last Call for Low Mortgage Rate? Why Home Buyers Should Act Now,” realtor.com® (March 7, 2018)

Sealing the deal…. you’re at the finish line!

In Closing: How to Seal the Home-Buying Deal

By: HouseLogic

Sign that paperwork. Write those checks. Get those keys!

The closing. It all comes down to this. The grand finale. Once you have the keys, the house is yours. (Cue: Air horn sound!)

Nice work getting this far. You’re almost a homeowner! Let’s run through some questions you may have as you cross the finish line.

What Does “Closing” Mean?

The close or settlement is when you sign the final ownership and insurance paperwork and get the home’s keys.

The closing process technically begins when you have signed a purchase and sale agreement. That agreement should specify a closing date. Typically — from the signing date to the closing date — closing takes four to six weeks. During this time, purchasing funds are held in escrow, where your money is safe until the deal is officially done.

What’s a Closing Disclosure?

Lenders must provide borrowers with a Closing Disclosure, or CD, at least three days before settlement. This form is a statement of your final loan terms and closing costs.

You have three days to review the CD, Compare it to the Loan Estimate you received shortly after you applied for the loan. If you need a refresher on Loan Estimates, you can view a sample version here.)

The point of this formal review process is to ensure there are no surprises at the closing table. If there’s a significant discrepancy between the Loan Estimate and CD, notify your lender and title company immediately. Depending on what the underlying issue is, the closing has to stop and a new closing disclosure must be sent out with a new three-day review period.

There are a couple things on the LE that can’t change by the time you get the CD — namely interest rate and lender fees. Some items can change by only 10% (fees paid to local government to record the mortgage might be one); and others can change without limit, like prepaid interest, because it can’t be predicted at the start of the loan process.

Explore More Topics:

Prepare for Closing

Buy a Home: Step-by-Step

When Will the Final Walk-Through Happen?

Most real estate sale contracts allow the buyer to walk through the home within 24 hours of settlement to check the property’s condition. During this final inspection, which usually takes about an hour, you and your agent will make sure any repair work that the seller agreed to make has been completed.

During the walk-through, you’ll also double-check that everything in the house is in good working order. Be sure to:

  • Run water in all the faucets and check for leaks under sinks.
  • Test appliances.
  • Check the garage door opener.
  • Flush toilets.
  • Open and close all doors.
  • Run the garbage disposal and exhaust fans.

If the home is in good shape — woo-hoo! Your next stop is the closing table.

If anything is amiss, your agent will contact the listing agent and, in most cases, negotiate to get the seller to compensate you at closing — typically in the form of a personal check — for the costs of fixing the problems yourself.

Worst-case scenario: You have to delay closing to resolve problems. In the unlikely event that happens, your agent will help you address the issue.

Who’s Invited to The Closing?

Certain people will be there. Who, exactly, depends on your state. Typically, you will be joined by:

  • Your agent
  • The seller
  • The seller’s agent
  • A title company representative
  • Your loan officer
  • Any real estate attorneys involved in the transaction

The closing usually takes place at the title company, attorney’s office, or the buyer’s or seller’s agent’s real estate office. FYI: Some states, like California, don’t require an in-person, sit-down closing because they’ve enacted legislation that allows for electronic closings with remote notaries.

Nonetheless, as the home buyer, you’ll have to sign what might seem like a mountain of paperwork — including the deed of trust, promissory note (promising the lender you’ll pay back the loan), and other documents. That cramp in your wrist will be worth it once everything is done.

How Much Will I Pay for Closing Costs?

If you’ve heard people vent frustration with the process of buying a home, then you’ve likely heard complaints about unexpected costs at closing. Let’s unpack what you should expect so you’re not surprised, too.

Closing costs can vary widely by location and your home’s purchase price. Costs are split between you and the seller, but as the buyer you’ll cover the lion’s share. You can generally expect your closing costs to be 3% to 4% of the home’s sales price. So, on a $300,000 home, you can pay anywhere from $9,000 to $12,000 in closing costs. (Meanwhile, the seller typically pays closing costs of 1% to 3% of the sales price.)

You can try to predict closing costs with calculators like Nerdwallet’s, which lets you plug in your mortgage details to get a rough estimate of what your costs will be.

Closing fees often include (but are not limited to):

  • Commission for the buyer’s agent and seller’s agent
  • A loan application fee
  • An origination fee, which lenders charge for processing your loan
  • The appraisal fee
  • A fee for pulling your credit report
  • An underwriting fee, which covers the lender’s costs of researching whether to approve you for the loan
  • A title search fee
  • Property taxes, which are due within 60 days of the purchase
  • A recording fee for filing a public land record with the courthouse

These fees are a bummer. The bright side: Almost all of them are one-time deals.

What Should I Bring? (Other than Champagne?)

At the closing you should have:

  • A government-issued photo ID
  • A copy of the ratified sales contract
  • A homeowner’s insurance certificate
  • Proof of flood insurance, if you’re buying a home in a flood zone
  • A cashier’s check, or proof of wire transfer to cover the remainder of the down payment and your closing costs

Also, talk to your attorney about anything else you might need to bring depending on your state or personal circumstances (such as a separation or divorce decree, should your relationship status affect the closing).

What Is Title Insurance and Why Do I Need It?

Every lender requires borrowers to purchase title insurance — a policy that protects you and the lender from outside claims of ownership of the property. Wait, you may be asking, some random person could show up and claim they own the house? Sounds crazy, but it happens.

Let’s say a previous owner didn’t pay all of their property taxes. Because those taxes remain against the property, the taxing entity could potentially take your home if you don’t have a “clean” title. Title insurance also protects you from ownership claims over liens, fraudulent claims from previous owners, clerical problems in courthouse documents, or forged signatures.

The title company will perform a comprehensive search of deeds, wills, trusts, and public records to trace the property’s history and verify that you’re becoming the rightful sole owner of the property.

Typically, lenders have a preferred title company they work with, but it’s ultimately the buyer’s decision as to which title company to use. Your agent could offer a few referrals.

Title insurance comes in two forms:

  1. Lender’s title insurance, which (no surprise) protects the lender. It’s required.
  2. Owner’s title insurance, which protects you. It’s optional but recommended because it covers your interest in the property. If the insurance company loses a battle over the title in the future but you purchased owner’s title insurance, you’re fully protected. Owner’s title insurance will also cover your legal fees if you have to defend your ownership rights in court.

Unlike most insurance policies, such as homeowner’s insurance, car insurance, and life insurance, title insurance is paid as a one-time fee at closing. The average cost of title insurance is about $544 for the lender’s policy and about $830 for the homeowner’s policy, according to ValuePenguin data. However, costs can vary significantly depending on the home you’re buying, where it’s located, and how much legwork the title company has to perform.

What If There are Last-Minute Issues? Should I Panic?

For your loan to be approved, it has to go through underwriting. The underwriter’s job is to validate all of your financials,confirming that your income, credit, and debt haven’t changed since you were pre-approved for the loan —  as well as to review the property’s characteristics and appraisal. If everything checks out, your mortgage will be approved.

If something goes wrong during underwriting though, you’ll have to address the problem before you can close on the home. Let’s say your credit score dropped because you recently purchased a car with an auto loan, or maxed out your credit cards.This isn’t necessarily dire, but you may need to delay closing as you work with your lender to take steps to raise your score. (Also, for that reason, it’s a good idea to hold off on big purchases, avoid overusing a credit line, and doing really anything that could result in a credit inquiry until after the closing.)

OK — Can I Celebrate Now?

If you’ve made it through close … YES! Once you’ve climbed that mountain of paperwork and have those keys in your hands, you now officially, finally own a home.

Congratulations! You put in a lot of hard work — including to build relationships with your agent, your lender, and other experts along the way.

Now it’s time to start investing in other relationships. Like with your new neighbors 🙂

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What to expect during your home inspection…it’s gonna be o.k.

What to Expect During a Home Inspection

By: HouseLogic

From finding an inspector to dealing with surprises — this is your guide to getting a house checked out.

The first thing you need to know about home inspection: You’ll feel all the feels.

There’s the excitement — the inspection could be the longest time you’re in the house, after the showing.

Right behind that comes … anxiety. What if the inspector finds something wrong? So wrong you can’t buy the house?

Then there’s impatience. Seriously, is this whole home-buying process over yet?

Not yet. But you’re close. So take a deep breath. Because the most important thing to know about home inspection: It’s just too good for you, as a buyer, to skip. Here’s why.

A Home Inspector Is Your Protector

An inspector helps you make sure a house isn’t hiding anything before you commit for the long haul. (Think about it this way: You wouldn’t even get coffee with a stranger without checking out their history.)

A home inspector identifies any reasonably discoverable problems with the house (a leaky roof, faulty plumbing, etc.). Hiring an inspector is you doing your due diligence. To find a good one (more on how to do that soon), it helps to have an understanding of what the typical home inspection entails.

An inspection is all about lists.  

Before an inspection, the home inspector will review the seller’s property disclosure statement. (Each state has its own requirements for what sellers must disclose on these forms; some have stronger requirements than others.) The statement lists any flaws the seller is aware of that could negatively affect the home’s value.

The disclosure comes in the form of an outline, covering such things as:

  • Mold
  • Pest infestation
  • Roof leaks
  • Foundation damage
  • Other problems, depending on what your state mandates.

During the inspection, an inspector has three tasks: To:

  1. Identify problems with the house
  2. Suggest fixes
  3. Estimate how much repairs might cost

He or she produces a written report, usually including photos, that details any issues with the property. This report is critical to you and your agent — it’s what you’ll use to request repairs from the seller. (We’ll get into how you’ll do that in a minute, too.)

The Inspector Won’t Check Everything

Generally, inspectors only examine houses for problems that can be seen with the naked eye. They won’t be tearing down walls or using magical X-ray vision, to find hidden faults.

Inspectors also won’t put themselves in danger. If a roof is too high or steep, for example, they won’t climb up to check for missing or damaged shingles. They’ll use binoculars to examine it instead.

They can’t predict the future, either. While an inspector can give you a rough idea of how many more years that roof will hold up, he or she can’t tell you exactly when it will need to be replaced.

Finally, home inspectors are often generalists. A basic inspection doesn’t routinely include a thorough evaluation of:

  • Swimming pools
  • Wells
  • Septic systems
  • Structural engineering work
  • The ground beneath a home
  • Fireplaces and chimneys

When it comes to wood-burning fireplaces, for instance, most inspectors will open and close dampers to make sure they’re working, check chimneys for obstructions like birds’ nests, and note if they believe there’s reason to pursue a more thorough safety inspection.

If you’re concerned about the safety of a fireplace, you can hire a certified chimney inspector for about $125 to $325 per chimney; find one through the Chimney Safety Institute of America.

Explore More Topics:

Make an Offer & Negotiate

Buy a Home: Step-by-Step

It’s Your Job to Check the Inspector

Now you’re ready to connect with someone who’s a pro at doing all of the above. Here’s where — once again — your real estate agent has your back. He or she can recommend reputable home inspectors to you.

In addition to getting recommendations (friends and relatives are handy for those, too), you can rely on online resources such as the American Society of Home Inspectors’ (ASHI) Find a Home Inspector tool, which lets you search by address, metro area, or neighborhood.

You’ll want to interview at least three inspectors before deciding whom to hire. During each chat, ask questions such as:

  • Are you licensed or certified? Inspector certifications vary, based on where you live. Not every state requires home inspectors to be licensed, and licenses can indicate different degrees of expertise. ASHI lists each state’s requirements here.
  • How long have you been in the business? Look for someone with at least five years of experience — it indicates more homes inspected.
  • How much do you charge? The average home inspection costs about $315. For condos and homes under 1,000 square feet, the average cost is $200. Homes over 2,000 square feet can run $400 or more. (Figures are according to HomeAdvisor.com.)
  • What do you check, exactly? Know what you’re getting for your money.
  • What don’t you check, specifically? Some home inspectors are more thorough than others.
  • How soon after the inspection will I receive my report? Home inspection contingencies require you to complete the inspection within a certain period of time after the offer is accepted — normally five to seven days — so you’re on a set timetable. A good home inspector will provide you with the report within 24 hours after the inspection.
  • May I see a sample report? This will help you gauge how detailed the inspector is and how he or she explains problems.

Sometimes you can find {{ start_tip 84 }}online reviews{{ end_tip}} of inspectors on sites like Angie’s List and Yelp, too, if past clients’ feedback is helpful in making your decision.

Show Up for Inspection (and Bring Your Agent)

It’s inspection day, and the honor of your — and your agent’s — presence is not required, but highly recommended. Even though you’ll receive a report summarizing the findings later on, being there gives you a chance to ask questions, and to learn the inner workings of the home.

Block out two to three hours for the inspection. The inspector will survey the property from top to bottom. This includes checking water pressure; leaks in the attic, plumbing, etc.; if door and window frames are straight (if not, it could be a sign of a structural issue); if electrical wiring is up to code; if smoke and carbon monoxide detectors are working; if appliances work properly. Outside, he or she will look at things like siding, fencing, and {{ start_tip 85 }}drainage.{{ end_tip }}

The inspector might also be able to check for termites, asbestos, lead paint, or radon. Because these tests involve more legwork and can require special certification, they come at an additional charge.

Get Ready to Negotiate

Once you receive the inspector’s report, review it with your agent.

Legally, sellers are required to make certain repairs. These can vary depending on location. Most sales contracts require the seller to fix:

  • Structural defects
  • Building code violations
  • Safety issues

Most home repairs, however, are negotiable. Be prepared to pick your battles: Minor issues, like a cracked switchplate or loose kitchen faucet, are easy and cheap to fix on your own. You don’t want to start nickel-and-diming the seller.

If there are major issues with the house, your agent can submit a formal request for repairs that includes a copy of the inspection report. Repair requests should be as specific as possible. For instance: Instead of saying “repair broken windows,” a request should say “replace broken window glass in master bathroom.”

  • If the seller agrees to make all of your repair requests: He or she must provide you with invoices from a licensed contractor stating that the repairs were made. Then it’s full steam ahead toward the sale.
  • If the seller responds to your repair requests with a counteroffer: He or she will state which repairs (or credits at closing) he or she is willing to make. The ball is in your court to either agree, counter the seller’s counteroffer, or void the transaction.

At the end of the day, remember to check in with yourself to see how you’re feeling about all of this. You need to be realistic about how much repair work you’d be taking on. At this point in the sale, there’s a lot of pressure from all parties to move into the close. But if you don’t feel comfortable, speak up.

The most important things to remember during the home inspection? Trust your inspector, trust your gut, and lean on your agent — they likely have a lot of experience to support your decision-making.

That’s something to feel good about.

Stress-Free Home Loan Guide

Your Stress-Free Guide to Shopping for Home Loans

By: HouseLogic

With this super-simple breakdown of loan types, you won’t get overwhelmed — you’ll find the right mortgage.

When it comes to buying a house, most people know what they prefer: a bungalow or a condo, a hot neighborhood or a sleepy street.

Mortgages, too, come in many styles — and recognizing which type you should choose is just slightly more involved than, say, knowing that you prefer hardwood floors over wall-to-wall carpeting.

First things first: To pick the best loan for your situation, you need to know what your situation is, exactly. Will you be staying in this home for years? Decades? Are you feeling financially comfortable? Are you anxious about changing loan rates? Consider these questions and your answers before you start talking to lenders. (And before you choose a lender, read this.)

Next: You’ll want to have an understanding of the different loans that are out there. There are lots of options, and it can get a little complicated — but you got this. Here we go.

Mortgages Are Fixed-Rate or Adjustable, and One Type Is Better for You

Let’s start with the most common type of mortgage, that workhorse of home loans — the fixed-rate mortgage.

A fixed-rate mortgage:

  • Lets you lock in an {{ start_tip 76 }}interest rate{{ end_tip }} for 15 or 30 years. (You can get 20-year loans, too.) That means your monthly payment will stay the same over the life of the loan. (That said, your property taxes and insurance premiums will likely change over time.)

It’s ideal when: You want long-term stability and plan to stay put.

Here’s what else you need to know about fixed-rate mortgages:

  • 30-year fixed-rate mortgage offers a lower monthly payment for the loan amount (for this reason, it’s more popular than the other option, the 15-year).
  • 15-year fixed-rate mortgage typically offers a lower interest rate but a higher monthly payment because you’re paying off the loan amount faster.

Now let’s get into adjustable-rate, the other type of mortgage you’ll be looking at.

An adjustable-rate mortgage (ARM):

  • Offers a lower interest rate than a fixed-rate mortgage for an initial period of time — say, five or seven years — but the rate can fluctuate after the introductory period is over, depending on changes in interest rate conditions. And that can make it difficult to budget.
  • Has caps that protect how high the rate can go.

It’s ideal when: You plan to live in a home for a short time or you expect your income to go up to offset potentially higher future rates.

Here’s what else you need to know about adjustable-rate mortgages:

  • Different lenders may offer the same initial interest rate but different rate caps. It’s important to compare rate caps when shopping around for an ARM.
  • Adjustable-rate mortgages have a reputation for being complicated. As the Consumer Financial Protection Bureau advises, make sure to read the fine print.

A general rule of thumb: When comparing adjustable-rate loans, ask the prospective lender to calculate the highest payment you may ever have to make. You don’t want any surprises.

Conventional Loan or Government Loan? Your Life Answers the Question

Which fixed-rate or adjustable-rate mortgage you qualify for introduces a whole host of other categories, and they fall under two umbrellas: conventional loans and government loans.

Conventional loans:

  • Offer some of the most competitive interest rates, which means you’ll likely pay less in interest over the period of the loan.
  • Typically you can get one more quickly than a government loan because there’s less paperwork.

Who qualifies? Typically, you need at least a credit score of 620 or above and a 5% down payment to qualify for a conventional loan.

Here’s what else you need to know about conventional loans:

  • If you put less than 20% down for a conventional loan, you’ll be required to pay private mortgage insurance (PMI), an extra monthly fee designed to mitigate the risk to the lender that a borrower could default on a loan. (PMI ranges from about 0.3% to 1.15% of your home loan.) The upshot: The lender has to cancel PMI when you reach 22% equity in your home, and you can request to have it canceled once you hit 20% equity.
  • Most conventional loans also have a maximum {{ start_tip 78 }}43% debt-to-income (DTI) ratio,{{ end_tip }} which compares how much money you owe (on student loans, credit cards, car loans, and other debts) to your income — expressed as a percentage.

Fannie Mae and Freddie Mac set limits on how much money you can borrow for a conventional loan. A home loan that conforms to these limits is called a conforming loan:

  • In most cities, the maximum amount for a conforming loan is $453,100.
  • In high-cost areas, such as New York City and San Francisco, the limit is $679,650.
  • Limits are revisited annually and are subject to change based on each area’s average home price.

A home loan that exceeds these limits is called a jumbo loan:

  • Jumbo loans typically require a higher down payment (up to 30% for some lenders) and a credit score of at least 720. Some borrowers can qualify while putting down 20%, but their credit score has to be higher.)
  • They also tend to have stricter debt-to-income requirements, generally allowing for a maximum DTI ratio of 38%.

There are practical considerations to take into account before getting a jumbo loan too, mainly: Are you comfortable carrying that much debt? The answer depends on your current financial situation and long-term financial goals.

Government loans:

  • Include loans secured by the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), and the U.S. Department of Agriculture (USDA) Rural Development.
  • Are meant to stimulate the housing market and enable folks who may be unable to qualify for conventional loans to still become homeowners.

Who qualifies? That depends on which government loan you’re looking at.

If you’ve had trouble qualifying for a mortgage because of income limitations or credit: 

FHA loans are used by a broad swath of people, including those with lower credit scores and income.

  • You can get an FHA loan with a downpayment of 3.5% if you have a minimum credit score of 580. You can still qualify with a credit score below 580 — even with no credit score — but the {{ start_tip 94 }}down payment{{ end_tip }} and other requirements will be much higher.
  • FHA loans conform to loan limits set by county; these limits typically range from $294,515 to $679,650 in high-cost areas. You can view the FHA mortgage caps for your county at hud.gov.
  • If you get an FHA loan, you must pay an upfront mortgage insurance premium (MIP) and an annual premium of 0.85%. Currently, the MIP is 1.75% of the loan amount — so, $1,750 for a $100,000 loan. This premium can be paid upfront at the mortgage closing, or it can be rolled into the monthly mortgage payment.

Also, a heads-up — the date an FHA loan was issued affects the MIP.

  • If you received an FHA loan on or before June 3, 2013: You’re eligible for canceling MIP after five years, but you must have 22% equity in your home and have made all payments on time.
  •  If you received an FHA loan after June 3, 2013: To stop paying MIP, you’d have to refinance into a conventional loan and have a current loan-to-value of at least 80%.

If you’re in the military, a veteran, or a veteran’s spouse:

  • VA loans offer active or retired military (or a veteran’s surviving spouse) a mortgage with a 0% down payment.
  • VA loans also can have more lenient credit requirements — typically around a minimum 620 credit score — and lower DTI requirements.
  • The VA only allows lenders to charge 1% maximum to cover the costs of originating and underwriting the loan, so you save money at closing. There is, however, an additional upfront, one-time funding fee of 2.15%.

VA loans also don’t charge borrowers mortgage insurance — potentially helping you save a significant chunk of cash on your monthly payment.

Given the benefits, a VA loan is often the best mortgage option for people who qualify.

If your income is limited and you live in a small or rural town:

USDA loans are mortgages for limited-income home buyers in towns with populations of 10,000 or less, or that are “rural in character,” meaning that some areas that now have bigger populations are grandfathered in. You can see whether your town is eligible on the USDA’s website.

  • USDA loans typically have lower interest rates than non-USDA loans.
  • Down payments can be as low as 0%.
  • USDA mortgages also have more lenient credit score requirements than conventional loans.
  • Income limits to qualify depend on location and household size.
  • USDA loans charge an upfront mortgage insurance fee of 1% of the loan amount and annual mortgage insurance premium of 0.35%.
  • And USDA loan borrowers must buy a “modest home” — a property with a market value deemed reasonable for the area, though the USDA does not set specific price limitations.

Only a select number of lenders offer USDA loans; here’s a list of USDA-approved lenders nationwide.

If your job is to help people:

Niche programs, like the Neighbor Next Door from HUD, allows teachers, law enforcement officers, first responders, and government workers — as much as 50% — on eligible homes in revitalization districts.

Note: Downpayment assistance programs offer qualified buyers such things as grants and interest-free loans. Start with your state’s housing finance agency to find options.

Explore More Topics:

Get Home Financing

Buy a Home: Step-by-Step

Now You Know the Basics. It’s Time to Call for Backup

Speaking of your lender: Ultimately, you’ll be working with your loan officer or broker to narrow down these choices, and to find a loan that works for you and your finances. (Just another reason why it’s important to choose a lender you’re comfortable with.)

Your real estate agent should be able to offer some insight, too. And because they don’t earn a paycheck from your loan selection, their advice about mortgages should be impartial.

You know your stuff. And you know whom to ask for help. Who’s overwhelmed? Not you.

 

Making an Offer Like a Boss

 

Make an Offer Like a Boss

By: HouseLogic

These 10 money- and time-saving steps can help you craft a winning bid.

Ah, the offer!

Know Your Limits | Learn to Speak “Contract” | Set Your Price | Figure Out Your Down Payment | Make an Earnest Money Deposit | Review Contingency Plans | Read the Fine Print | Make a Date to Settle |  Write a Fan Letter to the Seller |  Brace Yourself for a Counteroffer

Cinematically speaking, this is the iconic moment — we’d forgive you if you imagined, say, putting a hand on your agent’s shoulder and whispering (in your best Vito Corleone) that you’re going to make them an offer they can’t refuse.

In reality, it’s not that simple (or dramatic). Your offer marks the beginning of a {{ start_tip 80 }}back-and-forth between you and the seller,{{ end_tip }} typically with real estate agents advising you both.

The more intentional you are about your offer, the better your chances of making a successful bid. Follow these 10 steps, and you’ll be well prepared — that’s a true story. (“The Godfather” again. We couldn’t resist.)

#1 Know Your Limits

Your agent will help you craft a winning offer. You can trust your agent’s advice on price, contingencies, and other terms of the deal: It’s a mutually beneficial relationship. The more collaborative you are with your agent, the more quickly you’ll be able to move.

But ultimately, it’s you who decides what the offer will be — and you who knows what your financial and lifestyle limits are. Buying a home means mixing strong emotions with business savvy, so now is also a good time to reflect on your “musts.”

  • Have a top limit to your offer price because you’re also saving for retirement and love beach vacations? Stick to it.
  • Want a vegetable garden or to paint your home’s exterior purple? Make sure your homeowners association rules permit it.
  • Besides reading HOA rules, find out how much the HOA has in reserves to cover common area repairs. You don’t want to be slapped unexpectedly with a special assessment.
  • Want a dog-friendly community? Make sure there are no pet weight limits or preventing you from cohabitating with your (extra-large) {{ start_tip 82 }}canine bestie.{{ end_tip }}

#2 Learn to Speak “Contract”

Essentially, an offer is a contract. The documents and wording vary across the country.

In the spirit of due diligence, take time to review sample offer forms before you’ve found a house (LawDepot.com has purchase agreements for each state). If you’re high-maintenance, a real estate attorney can explain the documents to you so you’re familiar with their vocabulary when you’re ready to pull the trigger on an offer with your agent. Your agent will have offer forms for your state.

Explore More Topics:

Make an Offer & Negotiate

Buy a Home: Step-by-Step

#3 Set Your Price

Homes always have a listing price. Think of it as the seller’s opening bid in your negotiation to buy a home.

As the buyer, your offer will include an offer price. This is the first thing home sellers look at when they receive a bid.

Your agent will help you determine whether the seller’s listing price is fair by running comps (or comparables), a process that involves comparing the house you’re bidding on to similar properties that recently sold in the neighborhood.

Several factors can also affect your bargaining position and offer price. For example, if the home has been sitting on the market for a while, or you’re in a buyer’s market where supply exceeds demand, the seller may be willing to accept an offer that’s below the list price. Or if the seller has already received another offer on the home, that may impact the price you’re willing to offer. Your agent will help you understand the context here.

#4 Figure Out Your Down Payment

To get a mortgage, you have to make a down payment on your loan. For conventional loans (as opposed to government loans), making a 20% down payment enables borrowers to avoid having to pay private mortgage insurance (PMI), a monthly premium that protects the lender in case the borrower defaults on the loan.

But 20% isn’t always feasible — or even necessary. In fact, the median down payment was 10% in 2017, according to the National Association of REALTORS®. Your lender will help you determine what the best down payment amount is for your finances. Depending on the type of loan you get, you may even be able to put down as little as 0% on your mortgage.

You might qualify for one of the more than 2,400 down payment assistance programs nationwide. Many of them make funds available to households earning as much as 175% of area median income. In other words, middle-income households. And the savings can be substantial: Home buyers who use down payment assistance programs save an average of $17,766 over the life of their loan, according to real estate resource RealtyTrac. Find out more about down payment assistance programs in your state.

You can use an online mortgage calculator to see how different down payments would affect your mortgage premiums and how much you’ll pay in interest.

#5 Show the Seller You’re Serious: Make a Deposit

An EMD — short for earnest money deposit — is the sum of money you put down as evidence to the seller that you’re serious (read: earnest) about buying the house. If the seller accepts your offer, the earnest money will go toward your down payment at closing. However, if you try to back out of the deal, you might have to forfeit the cash to the seller.

A standard EMD is 1% to 3% of the sales price of the home (so, that would be $2,000 to $6,000 on a $200,000 loan). But depending on how hot the market is where you live, you may want to put down more earnest money to compete with other offers.

In most cases, the title company is responsible for holding the earnest money in an escrow account. In the event the deal falls through, the title company will disperse the funds appropriately based on the terms of the sales contract. Title companies also check for defects or liens on a seller’s title to make sure it can be transferred cleanly to you.

#6 Review the Contingency Plans

Most real estate offers include contingencies — provisions that must be met before the transaction can go through, or the buyer is entitled to walk away from the deal with their EMD.

For example, if an offer says, “This contract is contingent upon a home inspection,” the buyer has a set number of days after the offer is accepted to do an inspection of the property with a licensed or certified home inspector.

If something is wrong with the house, the buyer can request the seller to make repairs. But most repairs are negotiable; the seller may agree to some, but say no to others. Or the seller can offer a price reduction, or a credit at closing, based on the cost of the repairs. This is where your real estate agent can offer real value and counsel on what you should ask the seller to fix.

Just remember to keep your eye on the big picture. If you and the seller are bickering over a $500 repair to the hardwood floors, keep in mind that’s a drop in the bucket in relation to the size of the bid.

In addition to the aforementioned home inspection contingency, other common contingencies include:

  • financing contingency, which gives home buyers a specified amount of time to get a loan that will cover the mortgage.
  • An appraisal contingency, where a third-party appraiser hired by the lender evaluates the fair-market value of the home to ensure the home is worth enough money to serve as collateral for the value of the mortgage.
  • clear title contingency, where the buyer’s title company verifies that the seller is the sole owner of the property and can legally convey ownership to the buyer.
  • home sale contingency, where the transaction is dependent on the sale of the buyer’s current home.

Although contingencies can offer protection to buyers, they can also make offers less appealing to the seller because they give buyers legal ways to back out of the sale without any financial repercussions. So, if you’re going up against multiple offers, making an offer with fewer contingencies can potentially give you an edge over the competition.

In other words: A chill offer is an attractive offer. But keep in mind you have to be comfortable with the risks that come with this strategy. If you don’t have a financing contingency, for example, and you can’t get a mortgage, you’d likely lose your earnest money deposit since you’re on the hook. (An outcome that’s decidedly un-chill for you.)

#7 Read the Fine Print About the Property

The sales contract states key information about the property, such as the address, tax ID, and the types of utilities: public water or private well, gas or electric heating, and so on. It also includes a section that specifies what personal property and fixtures the seller agrees to leave behind, like appliances, lighting fixtures, and window shades. The seller provides prospective buyers with a list of these items before they submit an offer. This can be another area of negotiation.

Carefully reviewing the property description also helps you know, for example, if the seller plans to take that unattached kitchen island with them when they move. (Stranger things have happened.)

#8 Make a Date to Settle

The sales contract you submit to the seller must include a proposed settlement date, which confirms when the transaction will be finalized. The clock starts as soon as the purchase agreement is signed. If you don’t close on time, the party that’s responsible for the delay may have to pay the other party compensation in the form of “penalty interest” at a predetermined rate.

A 30- to 60-day settlement period is common because it gives the typical home buyer time to complete a title search and obtain mortgage approval, but settlement periods can vary. Some sellers, for example, prefer a longer period so they have more time to move or look for their next house. Being flexible, with respect to the closing date, could give you more negotiating power in another area of the deal.

One thing that’s the same no matter where you live is that you’ll have a three-day period prior to settlement to review the Closing Disclosure, or CD — a five-page form that states your final loan terms and closing costs.

Once the sales contract is signed, the parties can change the settlement date if they both sign an addendum specifying the new day.

#9 Write a Fan Letter to the Seller

Want to make a truly compelling offer? Pull on the seller’s heartstrings by attaching a personal letter to the bid documents. Tell a compelling story about your family and your connection to the area. Get deep about your roots.

Also, sincere flattery can go a long way. Compliment the seller on how their kitchen renovation looks Apartment Therapy–worthy, for instance, or how the succulents in their landscaping remind you of a resort in Palm Springs.

Your agent can help you gather background on the sellers (e.g., are they crazy about their labradoodle, like you are about yours? Did they run a small business from the home, like you dream of doing?). And you should — of course — refer to information you gleaned during the open house or private showing. Use this intel to write a message that really speaks to the seller, and it may very well seal the deal.

#10 Brace Yourself for a Counteroffer

If you’re making a lowball bid or going up against multiple offers, the seller may decide to make you a counteroffer — a purchase agreement with new terms, such as a higher sales price or fewer contingencies.

At that point, it’s up to you to accept the new contract, make your own counteroffer to the sellers, or walk away.

Don’t panic: The next part of our guide walks you through the counteroffer process, and it offers strategies to give you more negotiating power.

The 18 Apps You’ll Want For Your Next Home Rennovation

Remodeling a home can be overwhelming, but the execution doesn’t have to be. Here are 18 Apps available that can help save you time and money from planning to designing your home rennovation:

Home Design 3D

This app allows you to draw rooms and test out furniture. While free for ios and Android, there are some features (such as saving your designs and 3D viewing) that require in app purchases.

Tap Painter

Have you ever held up one of those paint swatches to your wall and tried to imagine what it would look like on a grander scale? Tap painter provides the opportunity to see what your walls would look like in shades from major paint brands like Behr, Sherwin Williams, and Benjamin Moore. Sadly, this app is only available for ios, but the app is free!

iHandy Level

No more clunky levelers! Free on both ios and Android, iHandy works as your (you guessed it) handy leveler that fits in your pocket.

Home Advisor

This app makes comparing and contrasting contractors easy, and when you find the one you would like to use, you can book instantly from the app! This app is free on both Android and ios.

level                   tool                    tool2

Roomscan Pro

This app makes capturing your floor plan as simple as touching your phone to a wall. You can also use the phone on your camera to create your floor plan as well. Roomscan Pro is available solely on ios, and the camera use has to have ios 11 to work properly.

Houzz Interior Design Ideas

Free on both Android and ios, Houzz Interior Design Ideas opens up the design world to app users by granting access to over 16 million design ideas via photos. Best part of the app? It allows you to see what a product would look like in your space in 3D. With over a million products to choose from you may find yourself spending more and more time on this app. With the sketch feature, you can add notes, products, and collaborators to your photos.

Home Improvement Calc

This is a fancy calculator that gives the user access to over 250 unit conversions and home improvement calculations. This app is $1.99 on ios.

Smith: Home Remodel, Improvement, and Repairs

If you have spent awhile researching contractors, this app may save you some time! This app helps you get multiple bids from pre-screened contractors within 24 hours. This app is free on both Android and ios.

Magicplan

This is another app that allows you to create a floor plan on your phone. Create your plan by taking photos of a room. Magicplan is free on ios and Android.

Pintrest

This one might be an obvious one, but it is still worth mentioning. If you are curious about anything, from colors, to design, to products, you can most likely find it on Pintrest. This app is free on both Android and ios.

Handyman Calculator

Handyman Calculator is basically the Android version of the Home Improvement Calc. You can do your home improvement calculations and unit conversions on Handyman Calculator. This app is free on Android.

Thumbtack

Thumbtack is a great resource for finding recommendations for contractors for all of your home- related jobs. Thumbtack is free on both Android and ios.

Photo Measures

Unlike most of the apps on this list, Photo Measures is not free. It costs $6.99 on ios, and is $4.99 on Android. The benefit of Photo Measures is that it allows you to save measurements onto your photos, so not only do you have the data, but you can visualize a space.

design                                   design 3                   design2

 

Havenly

If design is not your strong suit, Havenly can help you find a professional interior designer to work with on your project. You can chat with a designer for free, and book your custom projects through the app. Havenly is free on ios.

Palette Cam

Also only available on ios (free!), Palette Cam lets you take your photos of your home and create custom color palettes.

Handymobi

This app comes with a free toolbox that contains a level tool, calculator, and unit converter. You can organize your products on Handymobi as well as look for and share DIY project ideas and photos. Handymobi is available free on both Android and ios.

Hutch

Virtually try out decor styles in your space just by taking a photo! This app is free on Android and ios.

Chairish

Find your vintage furniture fix on Chairish, an app for buying and selling used or “pre-loved” home decor, furniture, and art. Like some of the other apps previously mentioned, Chairish allows you to virtually see what a piece of decor looks like in your space. Chairish is a free app on ios.

 

Know your Dirt

We are in the midst of the spring planting season, and if you are a garden newbie, you may not have any idea where to start. While it can be exciting to start building your garden boxes or researching the best vegetables to plant, don’t forget to start with the basics. Like knowing your dirt. Being aware of your soil type can save you time and money when planting and maintaining your garden.

bucket

 

The Dirt on…..the dirt

Garden soil is comprised of three particle types: clay, silt, and sand. The largest particles are going to be sand, while the smallest will be clay. The ratio of each of these three particles will determine your soil’s texture, how easy it will be to work with, and how well it will be able to sustain what you plant in it.

Sandy soil dries out quickly (somehow this doesn’t seem surprising) so it requires more water. It is also poor in nutrients, but it drains pretty well. On the other end of the spectrum, clay soil is slow to drain, holding its water and nutrients in. Silt is the medium of the three. Ideally, you want to have a good mix of the three, but sometimes this doesn’t always happen. So what do you do? Add about two to three inches of compost. This will allow your soil to hold more water and nutrients yet prevent soil compaction.

 

PH-Scale

The Two A’s: Acidity and Alkalinity

When I think of chemistry, I tend to imagine that mad scientist Bunsen burners flaring kind of thing, never stopping to consider that soil has chemical properties. Yet when you are a seasoned gardener, the pH level of your soil can be a life or death (if you are a plant) factor. Soil pHs run from 1-14. The higher the pH, the more alkaline your soil is, while a low pH level indicates acidic soil.

Garden soil pH levels rarely run below 5 or above 9, tending to stay in a pocket between 6 and 8. That pH sweet spot is where most garden plants will do well, though there are some exceptions, like certain hydrangeas, blueberries, or azaleas which prefer more acidic soil.

If you find that your soil has a pH balance that is too low, you can balance it out by adding wood ashes or lime. Some people habitually add lime to their gardens, but there isn’t a reason to do this unless the soil pH is really low. Should your soil have the opposite problem and have too high of an alkalinity, the best ways to lower the pH is to add compost or an acidifier like sulfur. You may have to continually make these additions, as soil can bounce back. It may take several years to make the pH changes stick.

 

PH Test

Testing Your Soil’s pH

Most likely, you have never gone out and tested the pH levels in your soil. No judgement here! Once again, the goal is to save you some time and money, so I do recommend conducting a soil test if you are desiring to build and/or maintain a nice garden. While you can have a professional come out to determine your soil’s levels, it may be cheaper to buy a soil testing kit, like these from Home Depot, Lowes, or Amazon. If you do decide to go the DIY route, make sure that when you are obtaining a soil sample to test, that you are collecting multiple samples from different places in your yard and mixing a little bit of each together in order to get accurate or averaged out representation of your soil.

 

 

 

Airbnb Income May Count When Refinancing

Airbnb and Fannie Mae have partnered to provide homeowners a way to report rental earnings as part of their income when refinancing their home. The caveat? So far, this benefit only applies when refinancing through the select lenders they have formed partnerships with. So far, this list includes Quicken Loans, Better Mortgage, and Citizens Bank. Should this program go well, Fannie Mae may consider extending it to all of its lenders.

“This initiative was developed with Fannie Mae to identify new ways of recognizing home-sharing income, making it possible for homeowners to maximize their investment to better reach their financial goals,” Airbnb said in a statement. “The project is part of Fannie Mae’s work to find new, innovative ways to expand the availability of affordable mortgage credit.”

With this initiative, homeowners who have rentals with Airbnb may now find it easier to go through the refinancing process, eliminating the delays, higher interest rates, and other loan limitations they have been encountering. Airbnb will supply its hosts/homeowners with a proof of income statement that they may provide the lender, enabling them to take advantage of lower rates or to tap into the equity brought about by rising home prices.

Have more questions or want to know how to get started? You can access Airbnb’s blog on how to find your Proof of Income or get started with one of their lenders here.

Portland City Council Tentatively Shuts Down Macadam Ridge Proposal

Members of the South Burlingame Neighborhood Association were able to breathe a small sigh of relief February 7th, as the Portland City Council tentatively voted 5-0 to uphold the SBNA’s appeal regarding the Riverview Abbey Mausoleum’s proposed development.

Consisting of twenty-one homes (allegedly cut down from 60), Macadam Ridge would have been developed on about five acres of land located near Taylor’s Ferry Road, adjacent to Southwest Canby Street and Southwest Hume Street.

Macadam Ridge initially had the stamp of approval from a city hearings officer, but it was quickly appealed by the SNBA who had concerns that the proposal didn’t address or limit important impacts to the environment. In addition to believing that the proposal did not preserve enough trees, the SNBA asserted that the Macadam Ridge Proposal failed to properly account for impacts on nearby neighborhoods, traffic, and transit. It was also mentioned in the appeal that any submitted evidence was not given adequate time for review by the neighbors.

At Wednesday’s hearing, about forty appeal supporters stood to testify, while six supporters of the Macadam Ridge Proposal testified in opposition of the appeal. This lead to three and a half hours of testimonies, including that of one of the land owners, Stephen Griffith. In his testimony, Griffith claimed that with the planned proposal the Griffith family would have made some important repairs to a sanitary sewer and stormwater outfall on the land, as well as donate ten of the fourteen acres to the City of Portland for park use.

Despite Griffith’s assertions, the commissioners sided with the SNBA’s appeal, noting that city bureaus had voiced concern regarding the hearing officer’s approval and there being too many unanswered questions from that initial hearing. While this is in favor of the SNBA and their appeal, the vote on the 7th was solely tentative, as the final vote will be cast next week on Valentine’s Day (Wednesday, February 14th).

Do you believe that the tentative vote is an accurate representation of what to expect for the final vote? Should this area be developed at a later date, what do you believe the impact will be to the environment, traffic, and surrounding businesses?

Top 11 Houseplants to Have in Your Home

On a whim, I decided I wanted to learn more about air purifying houseplants. It seemed like a great idea, as plants are pleasant to look at, and if you can extend the life of your home’s air filters, it is a win-win. So onto the internet I went. Now, I have to be honest, it got a little scary. Not so much on the plant side, but in learning about all of the pollutants that they purify. Hear me out. Strangely enough, NASA  has a list of the most beneficial houseplants for air purification. Yes, that NASA.

In the late 1980s, NASA partnered with the Associated Landscape Contractors of America to study houseplants as a way of purifying the air in space facilities. The great news is that it worked, and it also works in our homes, which are more polluted than outdoor air.  So today I have the top 11 (because 10 are not enough!) houseplants that help purify the air in your home, stemming from NASA’s list. Beware, you may start to gaze at objects in your home warily, as they are most likely filled with one of these “Volatile Organic Compounds (VOCs)”: Formaldehyde, Benzene, and/or Trichloroethylene.

Aloe     

Aloe-Vera

This sun-loving succulent is good for more than just helping with that painful sunburn or cut. Known as the “plant of immortality” more than 6,000 years ago in Egypt, Aloe helps clear the air of formaldehyde and benzene, commonly found in so many things ( you will see as we continue) such as paints and chemical based cleaners. Aloe is a great plant to put by the window in your kitchen as it will enjoy the sun filtering through.

Spider Plant

Spider-Plant

This is one of my favorite plants. Why? They are resilient, code for extremely hard to kill. Which, when you don’t have a “green thumb” is fantastic. Give me more spider plants please! On a sentimental note, I do remember we had some of these growing up, and they were fun to hide little figures in. They are easy to grow or re-plant. A spider plant is also considered a safe plant if you have pets in your house. On a VOC level, spider plants battle benzene, formaldehyde, carbon monoxide, and xylene, a solvent used in the leather, rubber, and printing industries. They love indirect sunlight, so there are many rooms that spider plants may reside in.

Gerbera Daisy

Gerbera Daisy

These bright flowers require 6 hours of sunlight a day in order to be at their best. While they will look gorgeous in any room, you may want to consider putting them in your laundry room or your bedroom, as they help filter out trichloroethylene, which you may find if you get clothes dry cleaned.

Snake Plant

mother-in-laws-snake-plant

Why do they call this “Mother-in-Law’s tongue”?? I have no idea, but I plan on researching this later. Snake plants are perfect for your bathroom or bedroom! Yes, the bathroom. The low light and steamy, humid conditions will only help as it filters out pollutants such as that ever pesky formaldehyde, present in cleaning products, toilet paper, tissues, and personal care products. Luckily snake plants are one of the best for filtering out formaldehyde. Snake plants also help absorb carbon dioxide and release oxygen at night, so this may be a great boost for your room.

Golden Pothos

golden-pothos1

The downside of the Golden Pothos is that it is poisonous and should be kept away from small children and pets. So why would I include this plant? Well, this “Devil’s Ivy” is another powerful formaldehyde fighter, which is found in car exhaust. So you may consider hanging a pot of Golden Pothos in your garage to work on those pollutants. It will stay green, even when kept in the dark!

Chrysanthemum

Chrysanthemum-wallpaper

These gorgeous flowers are found in almost every color except for true blue. They are a perfect display for the living room or home office! Chrysanthemums love bright light, so you may find a spot close to a window so your mums can soak up all that direct sunlight. Chrysanthemums filter out benzene, which is found in items like glue, paint, plastics, and detergent. Make sure if you are purchasing chrysanthemums to put indoors that you purchase the floral instead of the garden variety.

Red Edged Dracaena

red-edged-dracaena

Fun fact, the red-edged dracaena can grow up to 15 feet tall, although slowly. So this plant will be great for any room with high ceilings as it works to remove xylene, trichloroethylene, and formaldehyde, which can be introduced to indoor air through lacquers, varnishes, and gasoline. Um, one for every room please?

Weeping Fig

Ficus-benjamina

If you are thinking you have enough plants and are looking to branch out into trees (no pun intended) the Ficus benjamina, or Weeping Fig, would be a perfect addition to any living space. The Weeping Fig helps filter out pollutants (or VOCs) found in carpeting and furniture. Yes, these VOCs include formaldehyde, benzene, and trichloroethylene (I will never forget how to spell these after this).

Azalea

Azalea

These aren’t just outdoor plants?? The Azalea, or Rhododendron simsii), is a shrub that is commonly found in many of our front and backyards in Oregon. It has bright colored flowers, a staple in any children’s bouquet to mom. Doing best in 60-65 degree weather, the Azalea is a perfect fit to a basement, as it can help filter away the formaldehyde found in plywood and insulation. Pretty with a purpose.

English Ivy

Green ivy in pot. Isolated white.

English Ivy is a popular potted plant that requires about 4 hours of direct sunlight per day, and grows best in moist soil. In addition to combating formaldehyde, English Ivy has also been known to reduce airborne fecal matter particles. Gross, but apparently true.

Peace Lily

Peace-Lily-4

This is my other favorite, not just because it is well known for having easy upkeep (weekly watering and shade), but because I love lilies! The Peace Lily topped NASA’s air purifying houseplants list for removing all three of the most common VOCs: formaldehyde, benzene, and trichloroethylene. In addition, it combats toluene and xylene. So if you are looking for that all in one plant, it sounds like this one may be a good candidate.

After learning about all of these helpful houseplants, I have walked away with a few ruminations/observations. I now wonder what in my house is not trying to cause an earlier demise for me, and I think I need at minimum a Peace Lily and Snake Plant. Which plants surprised you on the list? Are there any that you are looking to pick up after learning a little about these 11?