Buying a House? Here’s Some Advice You’ll Hear—and Should Totally Ignore

Buying a house? Then you’ll no doubt hear tons of advice from people who’ve been through the home-buying process before and want to pass their sage wisdom onto you. Problem is, sometimes the advice that “everybody knows” is right isn’t.

Fact is, housing markets change over time—and the rules vary widely based on where you’re looking to live, along with lots of other specifics. Just so you can keep your eye peeled for the home-buying advice you might hear that could lead you astray, here are common tips to take with a grain of salt.

‘You can save money by buying a fixer-upper’

Sure, shows such as “Fixer Upper” make it look easy, but rest assured, purchasing a run-down home and turning it into something special “is not for the faint of heart,” says Dan Bawden, former Remodelers Chairman of the National Association of Home Builders.

“If you have no knowledge of renovation, it’s a lot riskier,” Bawden says. Unless you’re an experienced remodeler, he suggests getting an inspection with estimates from a remodeling contractor before you buy.

Even if you have the ability (and time) to do the fixing up necessary, or have found a reliable contractor who can do the work while staying within your budget, you have to factor in the time you’ll be paying the mortgage and bills without being able to live in the home. Six months of paying rent on top of your house payment can quickly eat into what you saved on your “great deal.”

Bottom line: For the inexperienced, the line between fixer-upper and money pit is perilously thin. Make sure the stress of a remodel is worth the savings.

‘Foreclosures and short sales are bargains, too’

Short sales and foreclosures are often not the deals they appear to be, especially for inexperienced buyers.

“In this market, even banks want to get top dollar for their properties,” says Melisa Aponte, a real estate agent with the Keyes Group in Miami. “People can overpay for a property and still have to go through all the hassle of doing the work on it.” This is especially true for people using FHA loans, which have strict requirements about the condition of the homes they are used to purchase.

It’s difficult for novices to know what they’re actually buying, explains Dillar Schwartz, a real estate agent in Austin, TX. “The price tag may be fair, but the damages are often severe and the room for negotiation is limited.”

With foreclosures sold at auction, you’re buying the property as is: You can’t even go inside before purchase. Is that really a risk you’re willing to take, however great the price is?

‘Always buy the worst house on the best block’

On the face of it, this seems like good advice: Pick the ugly ducking in your area, and the higher value of surrounding homes will elevate its value, which means your home’s price has nowhere to go but up! And that’ll be great when you’re ready to sell.

Still, though, what if you don’t want to live in the “worst house”?

While it’s important to think about resale value, most buyers aren’t real estate investors; they’re people buying a home they’re going to live in. Even on the best block in the world, a home that’s too small for your family or that has other deal-breaker qualities is not going to be a good fit.

It’s better to find the right house in a less expensive neighborhood. After all, in a few years, your neighborhood can change, trees will grow, your neighbors’ landscaping could improve, but your house isn’t going to sprout another two bedrooms.

‘You need a neighborhood expert’

Of course you want an agent who knows the area, but do you really need a neighborhood expert? What on Earth does that even mean?

“I think it’s kind of a fake term,” says Schwartz. “Most cities aren’t as divided as you think.” In fact, working with a neighborhood expert can hurt your search if your agent doesn’t suggest properties in more than one small area.

Even if you think you know for sure where you want to buy, “there may be other opportunities out there that are a better fit, and for a better price,” says Schwartz.

She suggests looking at how many clients an agent has worked with overall as a measure of expertise, not just how many homes the agent has found in a certain neighborhood.

“Beware of reading too much into a designation,” she warns.

‘Cost per square foot gives you an apples-to-apples comparison’

Sure, looking at the price per square foot can help you compare properties of different sizes, and is often used as a benchmark for prices in a neighborhood. But that metric can be misleading.

“Price per square foot isn’t always the best data to make an investment decision off of,” says Schwartz.

That’s because there are many very important factors that don’t show up in that number. For example, you’re looking only at interior space. For real apples-to-apples comparisons, you need to consider the yard, garage, unfinished basement, and anything else that doesn’t qualify for the “official” square footage. It also doesn’t take into consideration the number of bathrooms and bedrooms (only the size), or the condition of the home. Price per square foot is just part of the story.

The most important thing to remember when you’re buying a home is that nothing is universal. Advice that makes sense in one market could be absurd in another—which is all the more reason to work with a real estate agent you trust and feel comfortable asking questions. Here’s more on how to find the right real estate agent in your area.

 

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Source: https://www.realtor.com/advice/buy/buying-a-house-advice-to-ignore/

April 16, 2018   No Comments

Mortgage Interest Rates Have Begun to Level Off

Mortgage Interest Rates Have Begun to Level Off

Whether you are a buyer searching for your first home, or a homeowner looking to move up to your next home, you should pay attention to where mortgage interest rates are heading.

Over the course of 2018, according to Freddie Mac’s Primary Mortgage Market Survey, rates have increased from 3.95% in the first week of January to 4.40% in the first week of April.

At first glance, the difference between these numbers in such a short amount of time could be concerning, but if we look at the graph below, we’ll see that rates have already started to level off and return to the mark set in February.

Mortgage Interest Rates Have Begun to Level Off | Keeping Current Matters

This is great news for anyone looking to buy a home this spring! The spring is always one of the busiest seasons for home buying, and with rates increasing even more, buyers have come off the fence to lock in great rates! This is still great advice as the experts believe that rates will continue to rise throughout the year.

Every month, Freddie Mac, Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors release their projections for where they believe mortgage rates will be in the coming months. If we take the average of what each of the four organizations is predicting for the second quarter, rates are expected to rise to about 4.48% by June.

That average climbs to 4.73% by the end of this year.

So, what does this mean?

Waiting until the end of the year to buy, with rates still projected to increase, will end up costing you more money on your monthly mortgage payment. For every $250,000 you need to borrow to purchase your dream home, you will spend $49.21 more per month, $590.52 per year, and over $17,700 by the end of your 30-year mortgage.

And that’s just the impact of your interest rate going up!

Bottom Line

If you are ready and willing to purchase a home, find out if you’re able to by sitting with a local real estate professional who can evaluate your needs and help you with next steps!

Written By The KCM Crew

Source: https://www.keepingcurrentmatters.com/2018/04/11/mortgage-interest-rates-have-begun-to-level-off/

 

April 16, 2018   No Comments

One-Story vs. Two-Story Home: Which Is Better?

One-story versus two-story home: Which is better? When house hunting, this question is worth considering—and the answer isn’t as simple as you might think. The number of floors in a home affects not just the way it looks, but also how easy it is to navigate and maintain, how much you’ll pay for heating and cooling, and much more.

Just so you know what you’re in for based on the number of stories you buy (or build), consider this list of the pros and cons of one-story versus two-story homes.

One-story homes: Pros and cons

Whether you have your eye on a ranch house or bungalow, living life on one floor has plenty of positives. Here are some of the advantages:

  • Maintenance is a piece of (one-layer) cake. One-story homes are easier to maintain because everythings on the same level, points out Nathan Garrett, owner of Garretts Realty in Louisville, KY. On a daily basis, that means no schlepping a vacuum cleaner or loads of laundry up two flights of stairs. From an exterior point of view, everything from power-washing to window washing to painting stays easy and on the groundno scaffolding necessary.
  • Single-story homes are simpler to design. Thinking about building your dream house? One-story homes are simplest to design and thus less expensive to design, explains Rachel Preston Prinz, founding director of Archinia and Architecture for EveryBody in Santa Fe, NM. Theyre also easier than two-story houses to structurally engineer and can be built with prefab components, if that’s your jam.
  • They’re safer to navigate. Have toddlers or an elderly parent living with you who might not be able to safely handle stairs? A one-story home means fewer risks of falls and accidents. It also means that once you get old, you can safely age in place.
  • They’re easier to evacuate. In case of a fire, you’ll be able to open any ground-floor window and crawl out to safety. (Just don’t plant rose bushes directly under your planned escape routes.) Live in an earthquake zone? One-story (wood-framed) houses are the safest structures to be in during a quake.

Now for the potential drawbacks of single-story homes:

  • Building and adding on can be costly. If you’re building a home from the ground up, a larger footprint requires more land, says Prinz. A one-story house also requires more materials such as for the foundation, roofing, and windows. And since plumbing and HVAC runs will need to be longer, thus requiring more power, you’ll need bigger, pricier systems.
  • There’s less privacy. Not everybody likes the letter carrier passing right by their bedroom window to drop off packages. While it’s true that not every single-story house means you’re all that exposed, second stories tend to be more secluded.

Two-story homes: Pros and cons

Whether you fancy a Cape Codsaltbox, or romantic Victorian, there’s a sense of elegance that’s inherent in multistory houses. Can you imagine the White House as one story? Certainly not Buckingham Palace. Aesthetics aside, here are the other perks you get with a two-level house.

  • Extra privacy: A second floor makes for an easier separation of public and private spaces, points out Prinz. If youve ever had guests over and sent your kids upstairs to watch a movieor your in-laws are crashing in the guest room downstairs and you need to get away in your master suitewell, you know what we mean.
  • Lower risk of burglary: You have a significantly lower risk of a break-in if you accidentally leave a window open on the second floor [rather than one on the first], says Shayan Jalali, a sales associate for Keller Williams in Boston. A thief is unlikely to shimmy up your drain pipe just to check out your goods, and far less likely to shimmy down it with your flat-screen TV.
  • More design options: In two-story homes, its fun to play with the massing and scale of spaces, says Prinz, much more so than with just one level.
  • Potential views: If you live in a picturesque area, this advantage speaks for itself. Who doesn’t love a good balcony or second-floor porch?

That said, two-story homes aren’t perfect. Here are the downsides.

  • Greater risk of accidents: Lets talk about those stairs for a moment. They present a potential danger for young children and can be cumbersome for anyone with mobility issues, says Jalali. Youll need to deploy baby-proof gates or figure out a way to make your staircase accessible to any loved ones whose movement is limited. That isnt cheap. Most stairs are difficult to adapt for disabilities, says Prinz. Making a second floor accessible can cost upward of $20,000 for a lift.
  • Costlier heating and cooling: Heat rises; cold air drops. As a result, your upstairs will run hot, your downstairs cold, and you’ll have to adjust your heating and AC accordingly. In fact, some experts say that a two-story home may have double the heating and cooling costs of a single-story home of the same square footage.
  • Potential for higher noise level: If not designed well, a multilevel home can have you covering your ears. If your bedroom opens directly onto a great room balcony or the floor isnt properly designed for acoustics, youll hear people walking and talking above you, cautions Prinz.

Source: https://www.realtor.com/advice/buy/one-story-vs-two-story-home-which-is-better/

April 10, 2018   No Comments

Financial Don’ts When Getting Ready To Buy A Home

If you’re in the process of buying a home, you’ve probably already met with a lender who advised you on what to do and what not to do during the escrow process. But if you’re just getting ready to buy or plan on doing so in the near future, following a few financial tips can mean the difference between qualifying…and not, and also getting a decent rate. These are a few universal “don’ts” that will help you stay on track, even before you get a lender involved.

Don’t take out more credit

If you’re thinking you’re going to buy a house in a matter of a few months, forget that new laptop on the Best Buy card, forget that new car, and forget that Old Navy card. Sure, it’s only a $30 pair of pants. But, taking out more credit can harm your debt-to-income ratios, which can make you look like a credit risk. And that’s not worth it, no matter how cute the pants are.

Don’t pay off all your current credit cards

Your lender will tell you specifically what you should pay down and what you should leave alone, but banks tend to like responsible credit management. In some cases, that may mean carrying a small balance on one or more cards.

Don’t charge up all your cards to the limit

“Responsible credit management” does not mean running every available card up to the limit and/or only making minimum monthly payments. Banks will not look kindly on this when you go to get approved for a loan.

Be careful with old debts

You may think that in order to qualify for a mortgage or get the best possible rate you have to pull your credit and go back through every single entry to identify and take care of anything negative. You’re right about the first part. Pulling your credit so you know what you’re working with is critical, and financial experts recommend doing it annually, regardless of what you’re planning (or not planning) to buy. But be careful with old debts. It doesn’t hurt to ask a lender what should and should not be taken care of. But, in general, you’ll want to:

Pay in full instead of making settlement arrangements – It’s not uncommon for debt collection companies to send out settlement offers that allow you to settle debts for less than the total amount. While this can sound tempting, it likely won’t yield the results you’re looking for. Yes, it’ll stop the harassing phone calls and persistent letters. But if your goal is to get the debt to disappear from your credit report, you’ll be disappointed.


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“When you settle your debt, the activity usually shows up on your credit report as ‘debt settled’ or ‘partial payment’ or ‘paid in settlement.’ You can talk to the settlement company about the specific language they use, but the bottom line is: this is a red flag on your report,” said clearpoint. “FICO doesn’t reveal how much your score will drop, exactly, and your report doesn’t indicate how much of the original debt was forgiven; it simply shows you settled. Either way, it still points to the fact that you may be a credit risk.”

Stick to newer debts – Older debts that are getting close to falling off your report should be the last thing you pay. “You also want to consider the statute of limitations on your debt,” they said. “Most past debts remain on your credit report for seven years, so if you’re close to the time frame when the debt falls off, settling it may not make much of a difference. There’s an ethical argument to be made here, but practically, you might just be settling a debt that was about to disappear anyway.”

Be careful with debt consolidation

If you have a lot of outstanding debt, are in over your head with credit cards and store cards, and can only manage the minimum monthly payment on all your existing loans, you’re likely going to have a hard time qualifying for a mortgage. You may be tempted to lump your debt together into one payment through a credit consolidation company, but beware the consequences. There may be startup fees, interest rates on the consolidation loan could skyrocket after an initial teaser rate expires, and, in some cases, an improvement in credit is years away.

Don’t get lax with your payments

Your lender will reinforce this, but it bears repeating that even after you’ve been prequalified, you need to keep your payments current on your car, your Visa, etc. Your lender will do a recheck before closing just to make sure nothing has changed in your credit report, and if you have new issues, it could impact your loan.

Don’t move money around

“We know a story of one homebuyer who almost lost his home because he had stated on his application that the down payment was coming from a mutual fund account. Then, two days before closing, he decided to sell a baseball card collection instead,” said HSH.com. “The loan had to be underwritten all over, his ownership of the collection, its value and its sale had to be verified, the closing was delayed and the fees increased.”

Don’t change jobs before you buy your home

This is a big no-no don’t if you’re in the process of buying a home or are about to. Among all the other financial information your lender will be collecting in consideration of your loan, they will also be asking about your employment history. You’re obviously less likely to be approved if you’re unemployed (unless you’re independently wealthy, and, in that case, Congratulations!). A recent job change may also be problematic if the bank is feeling jumpy about your job security

Written by Jaymi Naciri

Source: https://realtytimes.com/consumeradvice/mortgageadvice/item/1005579-20170928-financial-donts-when-getting-ready-to-buy-a-home?rtmpage=null

April 9, 2018   No Comments

Home Improvement Projects That Aren’t Worth DIYing

Generally, DIY can save homeowners money. For example, HomeAdvisor reports that a homeowner who chooses to install their own linoleum flooring may save as much as $5,000 compared to a homeowner who hires a contractor. However, some projects are simply too complex, involve too much risk and require too much specialty knowledge for homeowners to DIY.

Damage from Smoke or Fire

Smoke and fire can do terrible damage to a home. Smoke damage can affect everything from clothing to upholstery, carpet and the very walls of the home.

While homeowners can use specialty cleaning products to remove soot, and can replace drywall relatively inexpensively, odor removal requires specialty tools that can be expensive to purchase and difficult to rent. Thermal fogging and ozone treatment are two of the most common methods that professionals use to remove the smell from a home.

A typical homeowner will pay between $3,000 and $22,000 for smoke damage restoration, yet performing the DIY project may be even more expensive. If the homeowner’s efforts fail, hiring a contractor afterword to finish the job could make the effort more expensive than if the homeowner had hired the contractor in the beginning.

Damage from Wind

Wind can damage everything from the home’s siding to roof. Repair work can be extensive, and many DIYers take much longer than contractors to make repairs. During that time, the home is vulnerable to damage from rain and the other elements. Homeowners who try to repair their own roof or siding may save on labor but could cause other costly problems while fixing one problem at a time.

The advantage of hiring a contractor for this work is that the contractor has all the tools on hand to fix the job and will likely have a crew of people as well. Whereas a damaged roof and siding can be repaired in a weekend by a contractor, a homeowner could take many days or weeks.

Wind damage can cost between $2,000 and $10,000 to repair via a contractor. Homeowners hoping to save money can do some of the work on their own. For example, the homeowner can cut fallen tree branches to a more manageable size, then may haul them away to save on clean up costs from the contractor.

Earthquake Retrofitting

This type of project requires a lot of specialty knowledge about a variety of systems in the home. Retrofitting takes place in the basement or crawlspace and up into the exterior walls. Earthquake retrofitting is done by bracing the walls and by anchoring the home to the mud sill or bolting the foundation, whichever is appropriate.

The cost to earthquake retrofit a home is approximately $4,000. However, if the efforts fail, the home could be seriously damaged or completely destroyed. Foundation repair after an earthquake can cost as much as $25,000, while the replacement of the entire home is far more costly. The best way to ensure that the home will survive a major earthquake if one happens is to hire a contractor.

Mold Damage

Mold is a serious problem that often occurs after a flood. Water damage after a flood can cost between $1,000 and $4,000 to repair, with mold remediation being a large part of that. Angie’s List reports that mold remediation can cost between $2,700 and $3,300. Mold remediation costs over $500 should be handled by a licensed contractor because mold remediation can be invasive and could potentially do damage to the home.

Mold remediation involves an assessment of the home, contamination control, source removal and moisture control. This multi-faceted project must be comprehensive, or mold will return.

Homeowners who aren’t sure about a DIY project can contact their contractor for more information. Speaking to a contractor can help the homeowner get a sense of how much a project will cost and whether it can be completed as a DIY.

Written by Monica Thomas

Source: https://realtytimes.com/consumeradvice/homeownersadvice/item/1016430-20180406-home-improvement-projects-that-are-not-worth-diying?rtmpage=

April 6, 2018   No Comments