How to Say Goodbye to Renting and Hello to Home Ownership

How to Say Goodbye to Renting and Hello to Home Ownership

How to Say Goodbye to Renting and Hello to Home Ownership

Becoming a first-time homeowner takes a lot more than a desire to buy a house. It takes a lot of effort on your part to save up a down payment — which is usually a pretty good sized chunk of change — research neighborhoods, get pre-approved for a loan and other steps. Fortunately, it is quite possible to say goodbye to renting and hello to homeownership, especially when homeowners-to-be consider the following tips:

Focus on the Down Payment

In order to leave the land of rent, you are going to need a down payment — plain and simple. While it is common to put down 20 percent, some lenders now allow a much smaller amount, and first-time home buyer programs may go as low as 3 percent. While a smaller down payment may sound enticing, a 5 percent down payment on a $200K home is still $10,000 — not exactly a small sum. If saving money does not come naturally for you, don’t worry. With some relatively minor lifestyle changes you can speed up the down payment savings process. Come up with a savings plan to determine how much you need to set aside every week or month and then find ways to “find” that money in your budget. Using the $10,000 example from before, if you are determined to buy a home in two years, you’ll have to come up with about $415 a month to stash into your down payment account. Take a close look at your monthly bills and determine what you can pare down or eliminate — maybe you are paying $75 a month for a gym membership you rarely use, or you pay $40 extra for premium satellite channels that no one watches. These services can be cancelled and the money can go directly into your savings account. Eat out less, have Starbucks twice a week instead of every day and if you need to, consider a side hustle on the weekends to reach this magical monthly amount of $415.

Avoid Identity Theft

Unfortunately, the chances of becoming a victim of identity theft increase when you are buying and moving into a new home. The stacks of documents that are part of buying a home and that are filled with your personal information may accidentally fall into the wrong hands, and once you move, mail may not be routed correctly and thieves may steal your mail and your identity from your old mailbox. Prevent this situation from happening by purchasing an identity theft protection program; find a trusted company that will help safeguard your personal data. In addition to letting you know when a bank pulls your credit report and asking if you have authorized this inquiry, certain services will monitor your financial activity and alert you if anything is amiss.

Check Your Credit Report

When you start the pre-approval process for a loan and then move on to the Big Kahuna of applying for an actual mortgage, your credit report will be pulled numerous times. Your credit score will then be used to determine if you are approved for a loan, and what type of interest rate you will get. Please do not wait until you have the down payment saved and you are champing at the bit to go look at houses to check your FICO score — check your credit as early in the process as you can. If you have a credit card that has been issued through your bank, give them a call and see if they can run your report for you for free; in the cases of some credit cards, they also offer a free monthly FICO score check. Read through the report and check for any errors; this includes credit lines you never opened and delinquent payments that you know were made on time. Dispute any mistakes that you find and look for ways to boost your credit score, like paying down credit card bills and setting up automatic bill pay so you are never late with your payments.

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Want a home that’s for sale by owner?

Want a home that's for sale by owner?

Want a home that’s for sale by owner?

Does It Makes Sense To Buy A New House Before Selling The Old One?

Does It Makes Sense To Buy A New House Before Selling The Old One?

Does It Makes Sense To Buy A New House Before Selling The Old One?

You’re interested in moving. You need to sell your old house first before buying a new one, right? After all, you don’t have enough of a down payment for the new house without selling the old one, and you are pretty certain your bank will not qualify you for two mortgages.

You are in a dilemma; houses in your area are currently receiving multiple offers. Inventory is low. Sure, you can sell your house under the same circumstances, but will you be able to identify a new house so that you can simultaneously move from the old house to the new one? Unlikely. Do you sell the current house, move to a rental [or hotel) while you identify and try and close on the new house? Is the extra hassle of moving twice and the added stress of the inability to simultaneously close on the sale and purchase the new worth it? IF you could purchase a new house while still living in the old house, is it worth the added costs involved with having a second mortgage until you sell the old house? How much is “peace of mind” worth in not having the pressure of having to purchase a new house (because you sold the old house too soon)?

These questions are a reality in today’s world in many parts of the country, specifically, the San Francisco Bay Area, because of the real estate rebound after the Great Recession. According to Jeff Stricker, a real estate professional with Alain Pinel Realtors specializing in the Silicon Valley in California, his clients are faced with these exact situations much of the time, as property is swooped up almost as soon as it hits the market, and, many times, with multiple, over asking prices. Jeff states that, although it is great for his clients as sellers, those same clients face challenging hurdles when buying a replacement property; competing against other buyers, some with cash only offers, who are willing to bid up a property far beyond the asking price in many circumstances. Some buyers are just so frustrated with the process of competing and getting outbid that they act in ways that they normally would never have thought. Overbidding. Settling for a house that they may not have originally envisioned. The list goes on.

Jeff, however, decided to think outside the box. What would happen if another house was purchased (without the added pressure of “living out of a suitcase”, if you will) prior to the sale of the old house? Is it even possible with the banking regulations that were placed upon financial institutions as well as homeowners over the past decade due to the “mortgage meltdown” that happened in 2008 and on? Dodd Frank rules that placed inordinate restrictions on the ability of homeowners to obtain financing left many people unable to get loans in which they previously were easily able to qualify.

Jeff decided to come up with a spreadsheet wherein, if he plugged in some assumptions, he could figure out if it would make economic sense to acquire a new house before selling an old house. The other part of the equation was to find a lender who would allow for a homeowner to purchase a new home without first selling the old home; thus, carrying two mortgages at the same time. Since most conventional lenders would not touch this, Jeff had to look to alternative sources. He found a company called Pacific Private Money, in Novato, CA that specializes in such a product.

Pacific Private Money can lend enough to the borrower to purchase the new home if there is enough equity in the old home to justify a combined Loan to Value (LTV) of 70% or less. Sometimes, if there is not enough equity in the old home, the borrower needs to add cash to bring the LTV to 70%, but, the ability to purchase a new home without having to sell the old one first can solve many issues for the homeowner. First, the new home can be identified without adding pressure since the homeowner is still living in the old house until the new house closes escrow. Second, the stress of moving twice is eliminated. Third, and probably the best (and possibly most surprising) is that this solution may actually cost LESS in terms of increasing net equity to the household than selling the old house and buying a new house with the proceeds from the old house (and new mortgage) in most circumstances wherein the new house is more expensive house than the old house.

In a rising market, the earlier the purchase of the more expensive new house and the delay of the sale of the old will increase the net equity to the homeowner more than the costs associated with carrying two mortgages.

For example, let’s assume the old house is worth $1,000,000 and there is currently a 1st mortgage of $200,000. The homeowner desires to purchase a new home for $1,400,000 and has $100,000 in the bank that can be used for a down payment. We will look at two scenarios; the first is where the homeowner sells the current house, rents for a period of time, and then purchases a new home. The second scenario is where the homeowner borrows the money in order to secure the new home while owning the old home.

Obviously, there are many moving targets with both scenarios, such as how much it will cost to rent a place (in the event of selling the old house first) as well as how long it takes to identify and close on the new house, storage costs for belongings, the cost of obtaining a private loan, and the appreciation assumptions for both houses, just to name a few.

Here is a calculation making the following assumptions; it takes nine months to close on a new house after selling the old house; houses in the area (both old and new houses) are appreciating at 1% per month; interest earned on bank deposits are at 1% per annum; storage costs are $1,000 per month, a conventional bank loan is not available because the homeowner does not qualify and has to use a private loan company; the costs for the private loan are 9% plus 2 points; the interest rate on the old house is 3% per annum.

As you can see, in a rising market, where the new house is worth more than the old house, there is a significant benefit to using a private loan to purchase the new home and sell the old home at a later date. Waiting 9 months to eventually acquire the new house has tremendous opportunity costs, as compared to a net benefit of purchasing the new house right away and eventually selling the old house.

Although assuming a 1% per month appreciation of real estate may seem aggressive, the San Francisco Bay Area, and specifically the Silicon Valley, has experienced such growth. However, even if we lower the appreciation to .5% per month, we still see a fairly significant benefit to purchasing the new house now rather than waiting to first sell the old house and then buy the new house.

Aside from the economic benefit, other factors need to be considered; the lack of stress of moving twice should the homeowner decide to sell the old house first and then purchase the new house; what if the homeowner finds the house of his/her dreams now and does not want to let the house slip away? In today’s market, sellers are not willing to take contingent offers. Can the homeowner budget for both houses at the same time while waiting for the old house to sell? Is the market rising? Is the new house more expensive than the old house? How long will it take to sell the old house? These are just some of the issues to consider before deciding one way or the other; however, and this can’t be stressed enough — when a homeowner finds a house they like, they do not want to lose the opportunity of buying it. This means that they can start looking at new houses before putting their old house on the market. This also allows them time to make any repairs or fix up their old house so as to maximize its value prior to putting it on the market.

Once homeowners know that there is a potential to purchase a new house before selling their old house, they can be proactive in obtaining a commitment letter from the lender. Of course, homeowners should see if they qualify for a conventional loan for buying the new house (owning two houses at once), but they should keep their minds open to procuring a private loan should the bank turn them down. Pacific Private Money is such a private loan company.

 

 

 

WRITTEN BY EDWARD BROWN

Home Buyers & Sellers, Pay Attention in 2018!

Pay Attention in 2018!

Pay Attention in 2018!

We may have a tricky year ahead of us, so what’s the best and easiest strategy for consistent success in 2018?

Pay Attention!

Start the year with or without New Year’s Resolutions, but commit to success this year by paying attention:

#1. To how well informed you and information sources you rely on are

#2. To what’s really going on around you — real and fake, and

#3. To how you react to what’s going on around you — online and off.

Whether you are a real estate owner or a wanna-be… whether you intend to buy or sell in 2018, so much is shifting in real estate, in the economy, and everywhere else that nothing should be taken for granted or assumed in 2018. Concentrate on getting the facts not just someone else’s bias view of where advantages lie for you.

#1. A lot changed in 2017 and the full implications of those changes will continue to emerge in 2018.

Pay attention to ramifications and compromises, subtle and otherwise, attached to changes in everything from tax law and net neutrality to technology’s continued re-write and disruption of much we’ve take for granted:

  • Real estate ownership will be impacted by changes to tax law, estate planning, resulting neighborhood development, and interactions between these and many more elements. Where will advantages lie for you?
  • Changes in the business world may directly or indirectly influence job or retirement security for your family. This in turn may impact qualification for financing, mortgage renewal, and real estate affordability. Projected reductions in funding and donations for social and community support programs and organizations may have widespread impact in neighborhoods, community development, and in education. These shifts may reduce location benefits which, in turn, can affect real estate value. How will your location be affected in 2018?

#2. Whoever or whatever you blamed for distractions in 2017 will be with you in 2018 and might even be worse.

There are only so many hours in the day and only so many dollars in your pay check. Distractions that erode concentration on your needs and goals, and distractions that feed impulse spending will be expensive in many ways. Pay attention to what takes you off point, off track, and off goal to ensure you stay in control. You may blame others for distracting you, but it’s your powers of concentration that should be continually honed and improved to keep you ahead of the pack.

  • Saving for a down payment, home renovation, or to pay down an existing mortgage requires a written budget strategy to guide you toward clearly-defined results.
  • Paying monthly condominium fees, mortgage payments, or heating bills is exhausting when approached as month-to-month catch-up. Shift your focus to cutting costs and increasing income long-term and you’ll move beyond a monthly survival perspective to establish a constructive, long-term frame of reference for success.
  • Steady, dramatic increases in online shopping over the 2017 holiday season mean many households may be combining the impulse spending facilitated by credit cards and click-here shopping carts to undermine their budgets even more dramatically than ever. As the volume of online shoppers increases, convenience, cost saving, and product satisfaction may be compromised, so it’s only the novelty of online shopping that addicts. What’s all this got to do with achieving your core real estate ownership goals?

#3. Significant amounts of what you believed you knew in 2017 about real estate, finance, insurance, home security, mortgages, work, and the internet will be out of date in 2018.

Pay attention to which laws, regulations, services, and real estate expenses have actually changed not just been endlessly, sensationally rehashed in the media and online. Accurate information and clever strategies are gold.

  • Tweets, posts, and other online content arrive in increasingly-overwhelming rates and volumes. This leaves less and less time to uncover facts and realities and to actually learn and think about relevance to you. From shopping or applying for a mortgage to searching for a new home or viewing property, virtual video and online content bring these and other real estate activities onto your laptop and your mobile phone. Is this distance-learning leaving you better informed and smarter real estate-wise than face-to-face meetings with real estate experts and hands-on location and property investigations?
  • Searching out professionals who keep up with change within their profession is a challenge. Time pressures leave some professionals parroting what they hear and see in media and online instead of carrying out thorough research themselves. How do you make sure you receive the professional advice you need to interpret changes from your real estate point of view?

Realty Times and my “Decisions & Communities” column will continue to provide you with real estate facts and perspectives that keep you asking more of yourself and the professionals who advise and serve you.

Let’s meet the challenges and opportunities of 2018 head on!

 

 

 

 

WRITTEN BY

Moving To A 55 and Older Community: Is It Right For You?

Moving To A 55 and Older Community: Is It Right For You?

Moving To A 55 and Older Community: Is It Right For You?mortgages.com

For a lot of people a 55 and older community can mean spending your retirement living with people your own age, being active, and exploring new hobbies right in your own neighborhood. It sounds a little like the social life of college without the studying. And who wouldn’t want that? What should you know before you buy?

Social club

One of the benefits of a 55 and older community is the social aspect. Not only is it easy to meet people your age, but most communities also have planned events ranging from golf to art. We always talk about why location matters in real estate. And this is no different. Think about what you want to spend your days doing? If you love skiing, Florida probably isn’t the best location for you.

Security

Most 55 and older communities are gated and have private security. Find out exactly what kind of security your community will offer. If this is going to be your second home, the extra security can bring big peace of mind when you’re away.

No one under 55 allowed

This one is a given. If you’re thinking about a 55 and older community, you probably consider this a pro. But it can quickly turn into a con. You might not realize how much you enjoyed the sound of kids playing in the street until you don’t hear it anymore. And if there’s a family emergency, it might mean that your adult kids or grandkids couldn’t live with you. There might also be restrictions on how long younger visitors can stay. And that might mean the end of Camp Grandma during the summer.

The old neighborhood

Don’t underestimate the connection you feel with your old neighborhood, especially if it’s where you raised your family. If that’s the case, it might be worth it to keep both homes for now and work your first home into your estate planning. That way it can stay in the family.

HOA

All those activities and amenities come a at a price, homeowners association fees. Like any home with a homeowners association, there might be strict rules about things like what color you paint your home, how many (and what type of) pets you can have, and what you can plant in your yard. That might be a fair tradeoff for you, but if you’re used to making home improvements on a whim, you might want to think twice.

Home Negotiation tips to close the deal

Home Negotiation tips to close the deal

  There is no simple formula for home negotiations.  There is no if C happens then you should go to counter F.  It’s not that simple.  Some of it comes with past experience.  Some if it comes with being able to read the opposite party and to read between the lines.  This home negotiation tip is for both buyers and sellers.  Negotiating the sales price or repairs on a home is so different than many other types of sales negotiation. That is what confuses people. Here in Detroit we have many Tier 1, Tier 2 and 3 negotiators that deal with Ford, GM, and Chrysler. These negotiators are hard nosed and good at what they do, and they wonder why the tactics they use everyday do not work with home sales.  In most cases you cannot be a hard nosed negotiator and expect the other party to succumb to your demands or to close the deal.

There are a few reasons why hard nosed negotiations do not work and why some negotiators end up frustrated and not at the closing table.  After all the ultimate goal is to get to the closing table.

1.) There are emotions involved. Sellers have an emotional attachment to the house because they have remodeled the home, or raised their children there, or think the house is the greatest in the world even though it needs major updating. Seller’s sometimes have the rose colored glasses on. Buyers are usually less emotional about the house, but they too get emotional sometimes when the negotiations get tough. In car sales, equipment sales, and many other types of sales and sales jobs there is no emotions. It’s about product and price. Not so with all home sales.

2.) In equipment sales or negotiating with the big auto companies both sides want to make the deal work and work hard to come to an agreement.  They are negotiating to meet in the middle because there are a limited amount of companies to deal with.  There is may be prior relationships between the companies.  In house sales that is not always the case.  Seller’s usually DO NOT HAVE TO SELL THE HOUSE, nor DO BUYERS HAVE TO BUY.   The buyers can move onto the next home, and the sellers can keep turning down offers as long as they want. In equipment sales there are usually only a few companies to choose from. Not in real estate there are always more homes coming to the market. They may not be as nice, or as updated, but there will be more homes coming to the market if you are willing to wait.  They can put up the house for sale next year, or wait until spring to buy.

It is the same with sellers. I just heard yesterday about a seller that has turned down 5 offers. After 5 offers you should get an idea of what a buyer is willing to pay for your home. Yet there are some unreasonable sellers that will still want more after multiple offers on their house. The seller just rejected my clients offer that was higher than the previous 4 offers.  Sellers and buyers do not have to close the deal. And it is common for buyers or a seller to quit negotiating and walk away from the deal. Sometimes they just don’t care or are unreasonable in their demands and wants. It is common for one party to base their price in reality and the other party in the transaction living in dream land.

So when negotiating on a sales price you want to be the one grounded in reality. You want your agent to look at the recent solds in the neighborhood. That way the agent or you can look at the recent sold prices of comparable homes and be able to give a range of what the home is worth. That is so important whether you are the seller or buyer. Know what the current market value of the home is your priority.

Having the knowledge of the range of what the home is worth gives you a basis of what to offer (if you are the buyer ) or what to accept (if you are the seller). If you are unreasonable in what you want then do not be surprised when the other party stops negotiating or walks away. It is the same way for you. If the other party is unreasonable in their demands then it is smart for you to walk away.   The other party has an incentive to close on the home, but they cannot be forced to accept what you think or what you want. Even if you are right on, they may be the unreasonable one. There is nothing you can do about it. Many buyers do not have to buy the one house or the seller does not have to sell.  That is the difference in home sales in most cases…. they do not have to.  If you are a hard nosed negotiator you may learn the hard way and lose the house.  So the key is how bad do you want to buy or sell?

I hope this negotiating tip of understanding the mind set of the opposite party, and what has to be done in the home sales process will help make your home sales negotiation more fruitful. It will save you aggravation if you understand this up front. It does not matter if it is waterfront home for sale in Oakland County or any home in Mesquite, NV. …..realize that many times hard nosed negotiations fail in the real estate business.

The goal should always be to find a win win for both parties.

 

 

Why Do Home Buyers Wait For Spring?

Why Do Home Buyers Wait For Spring?

Search Mesquite NV. homes for sale at; Mesquite-realestate.com

Why Do Home Buyers Wait For Spring?

Why do they wait until the competition ramps up and all the other buyers are ready to buy? Why do buyers wait for the “hot” spring market with its price increases and multiple offers?

  • Some buyers delay because they are doing what is expected – “we’re always done it this way” thinking is common in real estate.
  • Others may need the first warm rays of sun and the fragrance of spring flowers for motivation.
  • There may be more listings later in the spring, as sellers react for the same two reasons above, but increased buyer competition may cancel out advantages.Indications are that this will be an active spring market with real estate price and mortgage rate increases which extend deep into 2017. Getting ahead of this momentum may bring benefits and real estate you can love.

    You’re got nothing to lose by shopping now and a lot to gain. Here are Five Smart-Buying Tips for Getting a Jump on Spring:

    Tip #1: Find a real estate professional who is has a lot of experience in the locations you’d consider and with the type of property (detached house or condominium) you want to own.

    Learn what you need to do to prepare to make an offer and what to look for in the properties you’ll view. You’ll also discover the listing price range to shop in and which are the best locations in your buying range. If you don’t start this strategic relationship first, you’ll miss out on many of the advantages of an early start.

    Tip #2: Build your professional team to be ready for offer time.

    Your real estate professional may have recommendations for mortgage brokers, home inspectors, real estate lawyers, and surveyors. Take three names for each and interview them to determine the fit and what they consider the extent of their professional responsibilities to you.

    • For example, concentrate on locating a mortgage broker who has the experience, contacts, and interest to help you finance your purchase. The questions you ask the real estate professional about price range, size of mortgage, and steps in the buying process should also be directed to the mortgage broker. The mortgage pre-approval letter, which may be essential at offer time, will only be truly useful when you’ve been professionally vetted and stamped as mortgage-worthy.

    #Tip 3: Stop Wasting Time and Concentrate on Real Estate.

    There’s a lot to learn and to think about when buying real estate, so your productivity matters. The US 2016 versionof Deloitte’s sixth annual Mobile Consumer Survey revealed more online time wasting than ever:

    • More than 40 percent of consumers check their phones within five minutes of waking – text messages (35%) and email (22%)
    • Each day is disrupted since we look at our phones approximately 47 times. Sleep is disrupted: more than 30% check their devices 5 minutes before sleep and about 50 percent in the middle of the night.
    • Every 60 seconds on Facebook, 510,000 comments are posted, 293,000 statuses are updated, and 136,000 photos are uploaded. The average Facebook visit is 20 minutes; Facebook reports visitors spend more than 50 minutes a day using Facebook, Instagram and Messenger. (Source: Zephoria)
    • Millennials (25 to 34-year-olds) demonstrated higher levels of mobile device interest and use than the phone-hooked younger demographic.
    • Postpone binge watching the latest hyped series until after you buy your dream home.

    Tip #4: Sell Yourself on Success

    According to sales inspiration Dale Carnegie, author of How to Win Friends and Influence People, “The only way to influence someone is to find out what they want, and show them how to get it.” To achieve success, clarify, with the help of professionals, exactly what you want and need from a real estate purchase. Then decide to get it. The professional team you select will provide the know-how and will help you refine your dreams into an achievable goal for the location and price range involved. Do your homework, so you understand what they show you.

    Tip #5: Motivate Yourself During This “Buy-athon”

    What motivates you to want to own real estate? Postpone as many non-real-estate distractions as possible. Clarify what will sustain you through the often-stressful buying process. Use slogans, affirmations, or whatever it takes to persist. You may make offers and lose out on one or more properties before you find yours. Persist using self-motivation – that’s your job. No one else can motivate you. No one cares as much about the outcome as you do.

    What are you waiting for? Get the jump on spring!

    Final Smart-Buying Tip:Don’t get in the way of the professionals finding out what you want and helping you get it.