Six Musts Before You Buy a Home

 Purchasing a home is one of life’s biggest adventures and you want to make sure your decision is the best for the long run. This is why it is so important to do these six important things before you take the plunge into homeownership.

Figure out how much home you can afford

You do not want to be house poor, which means you purchased a home that you really cannot afford. A good rule of thumb is to never spend more than 30% of your take home pay on a home. This means that it not only includes the price of the home, but also things like mortgage interest, taxes, insurance, maintenance and renovations. Some professionals in the industry also advise not to spend over 28% of your gross monthly income on housing costs and no more than 36% on total debt. They call this the 28/36 rule.

When a mortgage lender wants to see how much you can afford, they usually use the 28/36 rule. You do not want to exceed more with your debt-to-income ratio. If this happens you will end up paying a higher interest rate if you even are qualified for a mortgage.

Budget for closing costs

Closing costs can be different for different areas of the country and the different loans that are available. If you purchase a home for $250,000, you will need to come up with around $5,000 to $17,500 for closing costs. Closing costs include a charge for obtaining your credit score, application fee, property taxes, appraisal fee, loan interest, homeowners insurance and title insurance.

“The biggest mistake that first time homeowners make is they forget that they need closing costs – not just the down payment of say 10% or 20%,” says Barbara Corcoran.

Save for a down payment

There are some loans out there that do not require a down payment, but these are far and few in between. Usually a down payment is the buyer’s choice of how much they want to put down. Just remember, that the less you put down up front, the more the mortgage loan will be which will make your payments higher. Most in the industry will suggest at least a 20% down payment which will clear you of any private mortgage insurance.

Check your credit score

Your credit score can be the ticket to a mortgage and good rates. “This is the number that mortgage lenders will look at to determine whether you are creditworthy, and thus dictates whether you’ll qualify for a home loan, and the rates you will get. Major lenders often require a minimum credit score of at least 620, if not more,” reports Realtor.com.

Get pre-approved for a mortgage

This is a must when it comes to making an offer. A pre-approval lets a seller know you can afford their home and you mean business. “In hot markets, mortgage pre-approval is almost required for a seller to take your offer seriously. That’s because it spells out exactly how much a lender has agreed to loan you, thus assuring the seller that you’r both willing and able,” says Realtor.com.

Make sure the neighborhood is a good fit

You want to be able to grow into your home and your neighborhood. Getting to know the area is a must. You would hate to move in and not be able to sleep the first night because of a street light outside your bedroom window. “You’re not just buying the property you’re looking at. You’re also buying into the whole neighborhood. That’s why you have to be certain that it has the vibe and amenities you want,” explains Realtor.com.

A Realtor can help you through the home buying process from start to finish. A real estate agent knows the ends and outs of the current market and will help your buying process be a huge success.

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What Questions To Ask Before Purchasing a Home

 No matter if you are a first-time homebuyer or this is one of many home purchases, it can be an exciting time.  According to the National Association of Realtors, homeowners stay in their homes an average of 8 years before moving. Purchasing a home is a long-term investment, and you should take a moment to ask yourself these questions before making the purchase.

1. What can I comfortably afford?

When you are considering what is comfortable for you to spend each month, this doesn’t just include your mortgage payment, but other home expenses as well. These additional expenses include taxes, homeowner’s insurance, homeowner’s association dues, utility cost and maintenance. A good rule to follow is to make sure that all your expenses which include your total house payment, taxes and insurance should be below 28% of your gross monthly income.

2. Which loans do I qualify for?

In order to figure this out, you will need to already have a lender. Your lender can go through all of the options and help you weigh the pros and cons of each. For example, if you want to have a monthly payment that stays the same, you would want to go with a conventional fixed-rate mortgage.

3. How much will you need for your down payment?

A lender can help factor in what kind of loans you will qualify for which in turn will determine your down payment. A VA loan requires a low down payment and in some circumstances no down payment at all. Other loans such as a conventional loan like to have a 20% of the home’s purchase price as a downpayment. On some loans, a higher down payment can lower your monthly payments and your interest rate.

4. What’s PMI? Do I have to pay it?

PMI is also known as private mortgage insurance and is required on many loans if the down payment is less than 20% of the home’s sale price. For example, if you do obtain a conventional loan and put less than 20% down, you will also have to pay PMI. Once you pay your loan down, your PMI can come off.

5. What interest rate do I qualify for? How can I lower it?

Your mortgage interest rate is very important in the life of your loan as it has a direct impact on your monthly payment. When you are shopping around for a lender, compare their APR (annual percentage rate) and their lender fees. Once you have chosen a lender, they can help you with ways to lower your interest rate.

6. What will my monthly payment be?

A lender can estimate your monthly payment based on the purchase price of a home, your down payment and your interest rate. There are also tons of monthly mortgage payment calculators online that can help you with a ballpark figure of how much you will pay a month.

7. What are the closing costs?

Closing costs include origination fees, discount points, appraisal, document preparation, title insurance, and home inspection. Closing costs run anywhere from 2% to 5% of your loan amount. Before you close on your home, your lender will provide you with an itemized list of estimated closing costs.

8. How long will the closing process take?

You want to make sure to give yourself enough time to get your financing in order, so put a reasonable closing date on your offer. Obtaining financing and getting everything in order for your home to close can take between 30 to 60 days.

If you are in the market for a new home, now is a great time to ask a real estate agent for their expertise. They can not only help you with the home-buying process, but will also be able to direct to a good lender.

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FHFA New Credit Score Rules

 The Federal Housing Finance Agency will have new guidelines for credit score models for lenders. These new guidelines will have a positive impact on many that were not approved for a loan in the past. Freddie Mac and Fannie Mae will be given the new guidelines to follow when determining if they can accept a mortgage from a lender.

Money is freed up by Freddie Mac and Fannie Mae when the agencies purchase mortgages from lenders. The lenders will then have more money freed to make home loans. Currently, Freddie Mac and Fannie Mae can only purchase conventional loans that meet certain criteria. These scores and criteria are determined by FHFA and mortgage lenders have been using FICO scores 2, 4, and 5 (these are considered outdated models).

“The mortgage industry didn’t have a choice in the matter. They were essentially forced to use older FICO scores by the FHFA. All other types of lenders have long since moved on from those legacy scoring models,” explains credit expert John Ulzheimer.

Under the new guidelines, lenders can use more up-to-date FICO scores, FICO 10T, and VantageScore. VantageScore is FICO’s direct competitor. Lenders will now only have to proved credit reports for two of the three major credit bureaus. FICO 10T and VantageScore being picked up by the new guidelines is the biggest change in a positive way.

These two sources will gather data from more sources included payments for rent, utilities or cell phone service. VantageScore also requires a shorter credit history, FICO has a six month-minimum for credit history. The source also has scores that show up for 37 million Americans that do not show up under FICO. Surprisingly these that show up only on VantageScore, more than 13 million have a credit score above 620.

Using the updated credit score modeling will also help with the racial homeownership gap. According to the Urban Institute around 53 million Americans do not have FICO scores (when using the older scoring models). Out of these 53 million, 29.5% of Black households and 27.3% of Hispanic households compared to only 16.7% of white households.

If you are in the market for a new home, check with lenders to see when you can take advantage of this updated policy. Meanwhile, choose a Realtor who can help you with the homebuying process.

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Homeownership For Retirees

 Homeownership is a big life change and comes with many unique challenges. Keeping up with a home can be daunting and if you are in your retirement years, this might not be how you want to spend them. Owning a home after you retire can affect your health, finances, and your well-being.

“It’s a complicated question because it involves emotions and decades of memory. Living in the right place can add to your longevity and promote healthy retirement lifestyles. And likewise, the wrong place can shorten your longevity and shorten the aging process. I’ve seen it with my own eyes,” explains Nancy Schwartz, founder and transformational strategist for Envision Healthy Retirement.

Since this can look different for different people, retirement planning should be done on an individual basis. If you are unsure of what do, hire a professional. In the meantime, here are three questions to ask yourself when you are retired and considering homeownership.

1. Can You Afford to Stay in Your Home In Retirement?

Your current financial situation will be the biggest determining factor when asking yourself this question. “If you still have a mortgage on your house, are you going to be able to afford that? If a spouse passes away, can you still afford that once you lose Social Security or if the pension gets reduced?” asks Kimberly Strosnider, president and founder of Estate and Wealth Management Services LLC.

How much money is tied up in your home is another determining factor. It might be in your best interest to sell your home to help finance your retirement. “If you don’t have a nest egg put aside, does it make more sense to sell the home, get a smaller place, and then use the equity to help finance your retirement?,” asks Strosnider.

As an example say you are a homeowner of a million dollar home that you do not want to sell. You cannot bank on that $1 million as discretionary spending but it is holding cost. Think of it as renting to yourself. Remember owning a home has many expenses, so you cannot think of this home as a liquid asset you can leave your children.

2. Is Your Home Set Up for Aging?

If you live in a three story home on a hill, this might not be the best suited home for you to live in as you age. When decided if your home is suited for aging, you need to look at everything from the layout to the size. Look at the accessibility of bedrooms and where you can add safety features to bedrooms and bathrooms. If you have stairs in your home, you might want to factor in getting a chair lift.

Sad to think about, but you need to think about if you have to live in your current home alone, could you keep it up. As you get older, maintenance gets harder. When you are alone, you also would like to live close to friends and family.

3. What Lifestyle Do You Envision in Retirement?

The kind of lifestyle you choose once you retire, will greatly affect the type of home you want to live in. If you want to travel, then a smaller home with less upkeep would be a smart choice. “Many clients who come see me, their number one goal is to travel. How much of a house do you need if you’re going to be traveling a lot?” comments Schwartz.

When making a decision like this, look at all the elements of your personal situation. Not only do you need to look at the practical side, but also how you feel about this decision. Important factors to include are financial, health, family and lifestyle.

“This is a huge decision that can affect your health and longevity. I come back to: Take time, learn all you can, asses it, and make the best decision possible. And then find that love, safety, and belonging in your new or your same home again,” advises Schwartz.

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Exciting New Trends for the Current Homebuyers

 The current housing market is starting to cool along with the buyer frenzy. Professionals in the industry have three trends that can benefit a buyer when they go to buy a home.

1. More Homes To Choose from

For the past several years, the housing market has hit a record low in housing inventory. This coupled with high buyer demand made it hard to even find a home to purchase. The Calculated Risk reported that homes for sale increased by 39.5% in the last week of October 2022 from the same time in 2021. It is still a seller’s market, but the good news for buyers is that there is more inventory to choose from when finding your new home.

2. Bidding Wars Have Eased

With the demand for buyers over the past several years came huge bidding wars. Luckily, for buyers today, things are different. According to the National Association of Realtors (NAR) the offers on sold homes have declined recently. This fall, September showed the average was 2.5 offers per sale, which was down from the 3.7 offers per sale from last September 2021. Since this has started to slow down, the bidding wars are as well, making it a great time to get back into the market and search for a home without the huge influx of competition.

3. More Negotiation Power

When there is less competition for buyers, then there is more negotiation power on your side. The last couple of years has seen buyers willing to skip things like appraisals and inspections in order to win a bidding war. The National Association of Realtors (NAR) shows that buyers in today’s market are not waiving all contingencies. Appraisal and inspection are two very important factors when it comes to purchasing a home. A survey from Realtor.com shows that 95% of current sellers are accepting a house inspection from a buyer. Sixty-seven percent of sellers negotiated with buyers on repairs found during an inspection.

There are still challenges buyers must face in today’s market, but they are becoming more scarce. Now is a great time to purchase a new home, first find a local realtor who can help you on your journey to getting your dream home.

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Follow These Two Suggestions When Purchasing A New Home

Springtime is a time when many home buyers come into the housing market. This spring, the housing market is still going strong with tons of competition. If a homebuyer finds a home they like, there is no time to think if you want to compete for an accepted offer. Here are two important things you should take action on before purchasing a home.

Bulk Up Your Credit Score

A homebuyer's credit score can either hinder or boost your chances of purchasing a home. Credit scores determine whether a homebuyer can get approved for a loan. Before starting the home buying process, a homebuyer needs to make sure their credit score is 650 or higher.

Lower Your Debt-To-Income Ratio

A homeowner's debt-to-income ratio is very important. It can not only affect getting a mortgage but can also affect the price of a home a homebuyer can purchase. A good debt-to-income ratio is less than 43% according to the Consumer Financial Protection Bureau. For example, if a homebuyer's monthly income is $5,000 and monthly expenses are $1,000, then the debt-to-income-ration is 20%.

If you are considering purchasing a home, make sure to not only follow these two things but also contact a Realtor. A Realtor can help you with the process from start to finish. They will find the perfect home for the perfect price.

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Five New Rules To Follow When Purchasing A Home In This Current Red-hot Market

 The COVID-19 pandemic played a large part in the current strong housing market. Bidding wars have been predominant for the past year and a half. Now that the interest rates are starting to rise, the competition is getting even stronger. Here are five new rules to follow when buying a home in 2022.

1. Lock in a mortgage before you start your search

In the past, homebuyers would find a home and then get pre-approved. This is not the case in 2022 because of the strong demand. This fast-paced market makes it essential to get pre-approved before you start the homes search process.

“You should be pre-approved by a lender and knowledgeable about your finances before you even begin your home search,” says Beverly Burris, an agent with William Means Real Estate in Charleston, SC. “With houses going under contract as quickly as they are right now, often within days or sometimes hours of going to market, there is no sense in going to see a property before speaking to a lender and learning what you can afford.”

2. Shop for homes priced below what you can afford

Once you get pre-approved you then know how much you can afford. Homebuyers in the past have purchased a home on the high end of their mortgage approval and that resulted in a recession. Today, homebuyers are encouraged to purchase a home below the top of their price range.

“These days, houses are selling for more than their list price and, as a buyer, you’re more than likely going to end up in a bidding war,” Lori Ozley, a manager with Birmingham HomeBuyers explains. “If you look at properties that are under your budget, you’ll have room to submit a competitive offer that goes above the asking price.”

3. If you love a property, act fast

Purchasing a home is a big deal so most homebuyers want to think on it before they make the big leap. Today's market does not afford homebuyers this luxury.

“If you are interested in a property, you must act quickly or you risk losing out to another offer. When you really like a property, you should sit down with your real estate agent, go through the comp research, and work on putting together an offer the very same day,” says Bill Samuel, the agent and investor behind Blue Ladder Development.

4. Put your big number out there from the start

When it comes to purchasing property, negotiations have always been part of the process. This is not the case today in this hot market. Homebuyers need to put their best offer forward at first.

“Be prepared to make your best and final offer from the beginning,” advises Jodi Dougherty, a luxury broker at Downtown Realty Company in Chicago. “Since sellers often receive multiple full-price offers, you may not get an opportunity to counteroffer if you come in too low.”

5. It will probably take multiple tries before you succeed

Don't give up, there are tons of other homebuyers looking at the same homes in the same market. It might take more than once to put your best foot forward and have your offer accepted.

‘You can almost plan on having several offers not go through before one is accepted,” explains Brian Chinn, leader of the Brian Chinn Team at Newberry Real Estate in Tyler, TX. “While that isn’t always the case, it happens more often than not in this market.”

If you are interested in purchasing a new home, contact a Realtor who can help you through the process. “It’s easy to get frustrated,” Chinn adds, “but having patience is key.”

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Several To Follow Tips For Single Homebuyers

 Just because you are single doesn't mean owning a home is not a reality. In fact, Freddie Mac reported that 28% of all households are sole-person. That is roughly 36.1 million and is still increasing.

“Our calculation suggests that there will be an additional 5 million sole-person households in the United States by the next decade. This means 42% of the household growth will be contributed by sole-person households," concludes Freddi Mac.

Here are several tips to follow if you are single and want to make the dream of homeownership come true.

1. Know Your Credit Score

When you purchase a home solo, you will only have your credit score to depend on. In order to qualify for a loan, you will need stable finances and good credit history. According to Investopedia, since lenders are only looking at one score it needs to be in tip-top shape. They recommend reviewing your credit report before starting the lending process.

Knowing where your credit score falls will help your decision on if and when you should take that leap of faith in purchasing. If your credit is not so good, focus on improving it before starting the home buying process.

2. Explore Down Payment Options

A down payment is another factor to consider. If you do not have enough saved up, there are down payment programs that can help you determine how much and how to save for a home. A loan officer can help you determine which loan program best suits your personal financial needs.

3. Think About Your Future Home and Your Needs

There are so many homes to choose from when it comes to styles and options. Spend time thinking about what type of home will fit your lifestyle. Here are some questions to think about when considering what type is best for you. Do you want a short commute to and from work? Do you want a big yard for a pet or space for outdoor entertaining? Do you want an extra bedroom for guests? Do you want a home office due to working from home? Do you want a condo with lower maintenance than a detached home?

The process seems daunting and can be a challenge but with a Realtor on your side, it becomes a much easier process. A professional sales agent can help you make the best choice for the right price.

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May 2021 Home Sales Highest Level Since 2005

The past year has been a whirlwind for the housing market in a good way. There has been a boom in sales

as seen in pending home sales up the highest level of sales for May since 2005. According to the National Association of Realtors, May 2021 was up 8% compared to April 2021 and 13% from the sales in May 2020.

“May’s strong increase in transactions – following April’s decline, as well as a sudden erosion in home affordability – was indeed a surprise,” said Lawrence Yun, NAR’s chief economist. “The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3%, and from an uptick in listings.”

All four regions saw an increase in pending home sales in May. The Northeast had a 15.5% increase, the Midwest climbed 6.7%, the South rose 4.9% and the West increased to 10.9% month over month.

Although the market is still hot, weekly mortgage demand did take a 7% downturn in May 2021.

“While these hurdles have contributed to pricing out some would-be buyers, the record-high aggregate wealth in the country from the elevated stock market and rising home prices are evidently providing funds for home purchases,” Yun said.

The could have stemmed from the home price increases. The S&P Case-Shiller National Home Price Index rose 14% year over year in April 2021. This increase was the largest gain in its 30-year history. The median home price has also increased which has made it harder for first-time homebuyers.

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Buying Your First Home, Here's the Scoop on How Much Money You Should Set Aside

 

Buying a home is a big life decision and knowing the facts before you buy can be priceless. Many buyers are shocked when they see how much money they need upfront to purchase a home. According to Unison’s 2019 Home Affordability Report, it takes buyers across the country an average of around 14 years to save for a home downpayment.

“As a general rule of thumb, experts say you should not be spending more than 30% of your income on housing expenses,” says USA TODAY Housing and Economy reporter Swapna Venugopal. “Aside from the mortgage payment, this includes costs like mortgage interest, property taxes and maintenance.”

The price of an existing single-family home rose 18.4% to $334,500 in March 2021. Here are some things you can do to achieve your goal of saving for a downpayment.

Start with savings, income, good credit

Before you even start your home search, you need to look at your finances and understand where you stand with your financial obligations. A good thing, to begin with, is how much house can you afford with your current income, how much you have saved for a downpayment, the mortgage you can qualify for, and what the local real estate market is currently doing. There are other living expenses and costs that come with owning a home. You will have annual taxes and home maintenance to pay for.

“You should have secure employment, some savings set aside, and be able to secure a good mortgage with an excellent credit score,” says Omer Reiner, a licensed Realtor and President of FL Cash Home Buyers LLC in Florida.

In order to get good rates on a mortgage, you will need good credit. It is best to check your credit score by obtaining your credit report before you start your home search. The rule of thumb says a good score is around 670 - 739. It depends on the lender, but a score closer to 700 is ideal if you’re thinking about getting preapproved for a mortgage,” Venugopal says.

The down payment

The down payment is a big part of the deal when it comes to owning a home. The down payment is a percent of cash that you pay at the closing. Usually, you need to put at least 20% of the purchase price down upfront.

If a downpayment is a concern, some government-backed loans from FHA or USDA will allow as little as 3.5% down or no down payment. If you have to put less than 20% down, then you will also have to have private mortgage insurance (PMI). Most lenders require PMI which does increase your monthly expenses.

Mortgage terms

Just like anything else, lenders are in competition and want your business. When shopping for a mortgage, ask what the rate and closing costs are. You will want to get preapproved by a lender who will verify your income and credit. A seller is more prone to choose a buyer with a pre-approval than one without.

Get a quote from several lenders for a mortgage. Have your credit reviewed for the quotes. It would be a disappointment to be told you could get a certain rate and then be given a higher rate because of your credit score.

Closing costs

The down payment is only one part of the finances you need to bring to the table at closing. Homebuyers will have to also pay closing costs which include expenses on title insurance, attorney fees, appraisals and taxes.

A homebuyer should be prepared to pay 1% to 5% of the sale price. Remember when buying a house you should also have money set aside to cover home maintenance, repairs and upgrades.

If you are in the market for a new home, call a local Realtor who can help you through the home buying process.

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Questions Homeowners Should Ask Themselves Before Downsizing

 

One of the most popular reasons to downsize is becoming empty nesters but this is not the only reason to downsize. Many homeowners just want a smaller home or move to the city into a high-rise condo. If you are considering downsizing your home for whatever reasons, making an informed decision is best. Before taking the leap, do an honest evaluation of what you feel your outcome will be if you decide to downsize. Here are several questions Realtor.com advises those who are seeking to downsize need to ask themselves.

Does it make financial sense to downsize?

Just because you downsize doesn't mean you are saving money. If you are downsizing to a condo, there will be additional condo fees that will add to your monthly expenses. Homeowner association fees for townhomes and condos usually include things such as landscaping, maintenance of common areas, trash and pest control.

“Consider the amount you will spend on these fees, and be mindful that HOAs tend to go up every year,” says Susan Bozinovic, a Realtor® with Century 21 Town & Country in Troy, MI.

Also, there are many other factors that can increase your expenses such as your new mortgage, taxes, cost of insurance, home maintenance and upgrades. You might be moving into a more expensive area of town or your smaller new home might need upgrades or renovations before moving in.

2. What are the financial implications of selling my home?

“Sellers need to be aware of how this sale affects their overall financial picture in regard to possible property tax increases or basis transfers and capital gains tax, and how that fits into their long-term financial planning,” says Wendy Gladson, a real estate consultant at Compass in Los Angeles.

You need to take into consideration other expenses that will occur when selling your home. These other expenses include local real estate transfer taxes, loan payoffs, home warranty, commission fees. You might be selling your home for $50,000 more than you paid for it but these fees will affect your bottom line.

3. What am I most excited about leaving behind?

Leaving a home that has many memories is hard. A smaller home means less cleaning and maintenance but make sure you are ready to leave your bigger house. If you dream of sitting outdoors on your patio instead of cleaning rooms that are rarely ever used then it is time to downsize.

4. Where will I park?

If you are downsizing to live in the city, then parking might be an issue. In the city, you might have to rent a space in a parking garage or park on the side of the street. This is not the only issue, if you are still moving in the suburbs, some smaller homes only have a one-car garage. It would not be fun to have to move cars each time you need to go somewhere.

5. What will I do with all my stuff?

A smaller living space will mean fewer rooms. If you currently have a home office, a gym, guest room or two living rooms then you will need to get rid of some of your furniture. Go through your stuff and determine what you want to keep. If you do not have enough space in your new home, then a storage unit might be the answer.

6. Should I consider a condo instead of a smaller house?

There are pros and cons to both a condo and a single-family home. There is less privacy in condos but you do not have to keep up with a yard. There is less maintenance with a condo but there are higher HOA fees associated with condo living.

7. Is the floor plan practical for your needs?

When you are downsizing, every square inch is a place to put your stuff. The floor plan is very important when it comes to getting the most space out of a smaller home.

8. Where do I want to move?

This is determined by several factors. If you are not yet retired then you will probably want to be close to work. Those that can work from home need to make sure to have some space for a home office.

When making a decision to move to a new city, state or country, make sure to determine if there are the services and lifestyle options you want in the new areas. A good idea would be to rent for a year in the new area to make sure that it is right for you.

9. Am I ready to downsize?

A good idea would be to take a look at homes in your desired area before you make a decision to downsize. You might envision yourself in a quaint one-bedroom bungalow but actually walking into one and visualizing you living there is the best way to determine if you could live in a smaller space.

“That’s when you’ll realize how small smaller really is. You’ll find yourself comparing what you have now to what you’ll have in the smaller home,” says ays Leneiva Head, principal broker/owner of Welcome Home Realty in Antioch, TN.

In a smaller home, you will have smaller rooms as well. You might be in a space that is more confined than you would want. Being mentally prepared for such a move is imperative. If you jump the gun and downsize without thinking through your decision, you could be making a big mistake.

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High-Performance Home Appraisal Guide

Photo by John Tekeridis from Pexels

  

High-performance homes are becoming more and more popular, but is the market up to date with appraisals for these specialty homes? Builders, sales agents and homeowners can take several steps to ensure local appraisers, lenders and the general public about what makes your durable, energy-efficient, healthier home stand out from the competition.

Step 1:

Make sure to highlight the home's high-performance features when marketing the home. This can be done by advertising, educating, teaching, highlighting and displaying these high-performance features.

When advertising, make sure to include the features that make the home more comfortable, energy-efficient and water-efficient. Point out how these will help lower utility bills. For tips on verbiage to use or ideas on what to highlight, check out Home Performance Counts.

Educate and teach others about the results of an Energy Rating Index (ERI) which includes the Home Energy Rating System (HERS) score or Home Energy Score (HES). All sales agents and sales staff should know what an ERI, HERS and/or HES rating means and how to articulate the ratings to consumers and others in the industry.

Features such as independently verified green home certifications should be highlighted in the marketing materials. The National Green Building Standard is a great example that should be put on flyers and web pages. During open houses, display the ERI, HERS or HES ratings and an explanation of the potential energy savings. Also, display certification plaques that show the home is approved by the National Green Building Standard.

Step 2:

Buyers should choose a lender who is familiar with high-performance homes. Local mortgage lenders who have a separate appraisal panel of trained professionals with experience valuing high-performance homes are critical to get the value your above-code home deserves. It is important for a lender to choose an appraiser that is on the Appraisal Institute’s green registry. This way both the lender and appraiser will not be hesitant to appraise the home higher for its energy-efficient upgrades.

Step 3:

The sales contract for a high-performance home should include Residential Green and Energy Efficient Addendum. What this means is the high-performance features that are behind the walls and cannot be seen will be included. This documentation will help the appraiser fully understand the higher price when it comes to an above-code home.

Step 4:

Just like interviewing a sales agent, interview the appraiser before you choose them to appraise the home. Not only ask about their appraisal experience but also ask if they are familiar with ERI scores and HERS ratings. Find out what classes or courses they have taken on high-performance valuation.  The Federal Housing Administration, the U.S. Department of Veterans Affairs, Fannie Mae and Freddie Mac all require that the appraiser has requisite knowledge prior to accepting the assignment, and the only way to enforce that is to ask about their knowledge and experience upfront.

Including these steps in the appraisal process will ensure a high-performance home will be given the right amount the home is worth. Choosing a sales agent who is versed in energy-efficient homes will help buyers with the home buying process.

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Homebuyers Weekly Mortgage Demand on the Rise

According to the Mortgage Bankers Association, the total mortgage application volume rose 4.1% the week of July 13th from the week before. Homebuyer demand is hotter than ever, especially with the record low mortgage rates.

“Mortgage applications increased last week despite mixed results from the various rates tracked in MBA’s survey,” said Joel Kan, an economist for the trade group. “The average 30-year fixed-rate

mortgage rose slightly to 3.20%, but some creditworthy borrowers are being offered rates even below 3%.”

There was a small increase to 3.20% in the average contract interest rate for a 30-year fixed-rate mortgage with a conforming loan balance of $510,400 or less. For loans with a 20% down payment points (including the origination fee) went up from 0.33 to 0.35. The average on the 30-year fixed mortgage was 88 basis points higher than it was at the end of June.

This small jump encouraged homebuyers to act which increased the refinance application volume up 5% for the week and 122% from the same week a year ago. According to the seasonally adjusted index data “the refinance share of mortgage activity increased to 64.8% of total applications from 64.2% the previous week.”

Mortgage applications to purchase a home rose 2% the week of July 13th and were reported at 19% higher than this time last year. That marked the ninth straight week of annual gains. According to Fannie Mae chief economist Doug Duncan, close to 60% of all outstanding loan balances have around a half-percentage point incentive to refinance.

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Tips to Find the Best Loan for A First Time Homebuyer

There are many different kinds of mortgages to choose when purchasing a home. Not every mortgage is right for you. Here are some tips to follow when choosing which mortgage best fits your needs.
Do your homework. You will want to first research special mortgage programs. There are a great number of programs out there which can assist first-time home buyers. Programs can help with down payments, lower your interest rate or help with other expenses you might have such as a student loan. These programs can help you along the way by allowing you to build equity in your home. Professionals can help with finding the best program to suit your needs, check with your lender or Realtor.

Go with a local. Big programs such as federal programs are more well known but there are many programs for first time home buyers through their city or state. Detroit and Baltimore have used first-time home buyer programs to promote revitalization in their downtown areas. Many states have used

programs to urge first-time homebuyers to purchase their first home in rural areas. Always check your city or state government’s websites to see if there are any programs available to assist you. Another resource would be the community development or housing department.

Don’t overlook your mortgage rate. An obvious focal point is the price of your home. This is not the only thing you should focus on. Your mortgage rate is just as important. This number can tell you how much you will pay in interest every month. The lower the rate, the less you will pay. The easiest way to lower your rate is by a good credit score. Not every first-time buyer has a solid 20 % to put down with an excellent credit score. Many lenders allow you to purchase discount points with can lower your interest rate. Purchasing points is prepaying your interest rate which lowers your overall interest rate by approximately .25%. There are positives and negatives to buying down your rate with discount points. Your lender can help you with this decision.

There’s always an adjustable-rate mortgage (ARM). This can be a great way to start off your first home buying experience. How an ARM works is simple. You will start off with a set period with a fixed rate which will then adjust after a certain period of time. In other words, if you have a 5/1 ARM, you will have a fixed rate for 5 years and then after the 5 years, your interest rate will adjust every year. The rates will not always rise but can also fall. If the rates have gone down you could end up paying less but if it goes up, you will pay more. This is a great way for a first-time to use the first 5 years to improve credit, lower debt and raise your income in order to get a 15 or 30-year fixed-rate mortgage.

Just like an employer interviews for the right employee, the same goes for the right lender. You need to talk to several lenders about getting a mortgage. Shopping around can give you negotiating power and the lowest mortgage rate. You will want to research average rates for your area.

Have your paperwork in order. When applying for a mortgage, your lender will want your monetary life story. Get all your documents together before meeting with a lender. Many lenders will not lock in a rate and start your application until they have all your documents.

Keep your finances the same. Do not make a huge financial change when you are in the process of obtaining a mortgage. Do not apply for a new credit card, get a new car loan, or change jobs. If you do this, the mortgage lender will have to start your application process all over again. You will need to wait even longer to close on your new home.

Getting a loan for a home can be a daunting task but if you do your due diligence, the process will be a lot less painful in the end.

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Friendly Lenders For Potential Home Buyers

According to the Urban Institute Housing Finance Policy Center, mortgage lenders are becoming more flexible with riskier applicants. Their quarterly credit availability report found that they are lending to people with lower credit scores, higher debt-to-income ratios and smaller down payments.

The report finds that the Federal Housing Administration (FHA), Department of Veterans Affairs (VA) and the Department of Agriculture’s rural home loans are taking the highest risk levels since before the crash. In fact, Fannie Mae and Freddie Mac have steadily taken more risk since 2009. This is great news for potential home buyers, especially those with less than perfect credit scores.
“Significant space remains to safely expand the credit box,” Laurie Goodman, vice president of the Housing Finance Policy Center, says.

The current lender risk levels are very low and will still stay within the “reasonable lending standards.” Loan officers around the country have seen a creative side to the lending industry recently which gives the “credit-strained buyer” hope. John Meussner, executive loan officer with Mason-McDuffie Mortgage Corp. in San Ramon, California, says he has seen a perfect example of this.

“Recently we saw one investor roll out a product offering up to $2 million in financing for FICO scores down to 600,” said Meussner.

The loan mentioned, will allow the borrower to have made a late payment on a mortgage within the past year and have major incidents such as foreclosure or bankruptcy. Many lenders will now take a score in the mid-500s with a small down payment. In the past, Fannie and Freddie have required a FICO score of around 750 to obtain a home loan.

The requirements might be a little less risky but lenders are still doing their homework on their potential borrowers. Paul Skeens, president of Colonial Mortgage Group in Waldorf, Maryland believes that the attention to documents in unbelievable detail has kept the market from seeing a lot of defaults.





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An Economic Balancing Act

After the fall of the economy in 2007, policymakers want to keep a healthy balance in today’s economy. The Federal Reserve does not want to repeat what some economist consider to be the worst financial crisis since the Great Depression of the 1930s.

According to a statement released by the Federal Reserve, the labor market is continuing to strengthen and the “economic activity has been rising at a strong rate.”

This week Fed policymakers agreed to keep the rates the same for November 2018.  The reason for

this decision was based on the continued growth of the American economy.  The Federal Reserve wants to make sure the growth stays at a healthy rate, neither too fast nor too slow. The benchmark rate, the determining factor for the cost of borrowing on credit cards, mortgages and other loans, will stay between 2% to 2.25%

Markets have gone up this month and the Fed will more than likely raise rates at the final 2018 meeting. This also suggest the rates will raise several more times in 2019. Policymakers explain that this is a standard reaction to the strong economy.  This will give central bankers some cushion if a downturn were to occur.

Not all of the aspects of the economy are at full force. Business investments have risen very little and the investors are curious to see if the Fed officials will anticipate a lower growth in next year’s forecast.

The job market is strong. In October, employers added 250,000 jobs.  Wages have also gone up 3.1% year-over-year. While this is good news for Americans, officials fear that low unemployment and higher wages might speed up inflation which could force the central bank to raise rates aggressively.

Taking Care of the Details During the Closing Process

You’ve found or had a builder build your perfect home for you, and now it is time for you to complete the transaction and close on your home.  Closing day, if you have never done it before, can be a nerve-wracking process, so this article will help you with the requirements for that day.
In the original sales contract, there will be a “close-by” date that doesn’t necessarily mean the actual day that you will close on your home. This date is established to make sure that the contract is completed in a reasonable time period that is acceptable to both the buyer and the seller.  That way, there is a deadline to sell or buy the actual home.  The close-by date can be a “goal” of sorts to close

on your home. Much will determine the final closing date, mostly the time it takes for the appraisal, loan application, mortgage approval, and a final walk-through if you are building a new home.  The title company is the actual entity which sets up the closing for the home.  A title search / abstract is done on the property or the home itself to ensure that you have a clear title upon closing.  This process can also affect the timing of the closing.

Once the title company and you have received your closing disclosure from the lender, then any financial questions, closing cost questions, or tax questions are answered, and the closing is ready to happen.  The title company and lender work closely together to make sure that both parties are able to make the final closing date. So, ideally, you, as the buyer, should be able to set your closing date, but it typically ends up being more of a lender / title company decision.

In order to avoid additional interest and closing costs, you may want to suggest at the beginning of the process that the closing date be as close to the end of the month as possible.  A closing date after the 20th of the month can move out the date of your first payment and save the cost of daily interest until the first loan payment is due.

Another thing that you can take care of on your end is to make the move from your old place to your new place as smooth as possible. As soon as you can find out your closing date, you can make sure that you will be able to move out immediately afterwards so that you don’t incur anymore charges at the place where you are currently living.

For the closing day itself, you might want to bring your closing disclosure which the lender will typically send you 3 days prior to closing with you on the day of closing.  That way, you can compare what you previously received and the final closing documents to make sure that they match.  Also, if you feel like you will have questions or issues at closing, you can make sure that a representative of the lender and your Realtor (if you used one) shows up at closing to support you.

Buying a new home or a previously owned home can be an exciting adventure, but you will have to be prepared to take care of all of the details of the buying process with the help of your Realtor, the lender and the title company.  Since everyone involved in the transaction benefits financially, don’t hesitate to reach out to them to ask any questions or get the help you need during the closing process.

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