Tag Archives: advice

Home Repairs You Cannot Afford to Ignore

Home repairs are an issue that many of us tend to dodge. We understand the necessity of the repairs; however when it comes down to it many of us do not have the time or money to fix everything.

rodent house infestationThe following list of minor home repairs could end up costing you big money if you continue to procrastinate:

  • Rodent incursions – Rats, mice and other vermin love to chew through insulation and wiring and are suspects in many house fires.
  • Soaring fuel bills – This is more than a pocketbook issue, since poorly functioning systems can cause deadly carbon monoxide buildup in your home.
  • Peeling paint – Paint is like a home’s skin. It’s the first line of defense against incursions by water and pests. Water that seeps into wood can lead to rot.
  • Flickering lights – It might be that the wiring in your house is dysfunctional or you have too many appliances hooked up to a single circuit. Either one can cause a fire.
  • A water leak – Left unchecked, leaks can lead to rot, dry rot, mold and termite infestations. Water can cause roofs to collapse, foundations to buckle and all manner of expensive repairs. Water-related problems can also get your home blackballed by insurance companies worried about mold-related claims.

Location, Location, Location…

When it come to real estate anyone can tell you that three of the most important factors in where you buy a home are location, location, location. This is one of those terms that we hear all the time and which becomes especially salient as we are searching for our dream home.

All too often buyers will be caught up in the excitement of the home buying process and make an offer on a home that seems too good to be true. unfortunately, many times it does turn out that the “perfect home for the reasonable price” is too good to be true.

The reason is simple – location. Buying a home in the wrong location is going to have a dramatic impact on how happy you are in your new home and also on the value of your home when you decide to sell.

For this reason it is important that you do your homework beforehand and pick out possible neighborhoods that suit your lifestyle. At the same time, keep an eye on that future date when you might put your new home back on the market and pick a neighborhood that is know for good schools and well maintained public facilities.

Once you have narrowed down the neighborhoods, visit the neighborhood and pick the best house available.

You’ll be happier in the end if you plan well in the beginning.

TOP TEN Legal Mistakes Buyers Make

In the complicated maze of trying to buy a home are the pratfalls and obstacles that can be so costly that you can regret ever buying a new home!
Call a Realtor(R) who is full time and has the track record to get the results you deserve.  The Department of Real Estate website will be able to tell you if there are any reprimands or suspension for any licensed agent or broker.

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A Fixer-Upper Purchase Strategy

A Fixer-Upper Purchase Strategy

You are attracted to a house that is perfectly located but it just came out of foreclosure and needs a lot of work to make it habitable. To swing the deal, you need to finance both the purchase and the required repairs. How do you do that?

Getting the mortgage required to purchase a house is only one of the challenges facing the buyer when the house needs work. The second challenge is finding a way to finance the needed repairs. The standard purchase mortgage doesn’t do that because it is based on the lower of sale price or the appraised value of the home in its current condition.

An obvious solution is a second mortgage, but they are not available in the current market except where the first mortgage is too small to do the buyer any good. Second mortgage lenders are still smarting from the steep losses they suffered on second mortgages written during the go-go years leading up to the financial crisis. An unsecured personal loan would be extremely costly if it were available at all.

The solution to this problem is a mortgage on which the loan amount is based on the value of the property after needed repairs have been made. Then one mortgage would cover both a purchase and the repairs needed to make the house habitable. This is future value financing, and it is available through a special FHA program termed “203(k).” This program is available to both home purchasers and existing homeowners who want to rehabilitate their properties in conjunction with a refinance.

The Section 203(k) program is complicated because FHA as the risk bearer has to make sure that the future value of the property upon which the mortgage amount is based actually materializes. To protect itself, FHA requires an appraisal of the property’s value after completion of the planned rehabilitation, in addition to an appraisal of the property “as is.”

Further, before the mortgage is insured, the lender must create a rehabilitation escrow account that contains the money allocated for expenses. FHA has procedures in place to assure that draws against this account are properly disbursed and accounted for, and that the rehabilitation work is completed.

Lenders are encouraged to participate in 203(k)s by the insurance against loss provided by FHA. However, 203(k)s are more complicated and involve more paperwork than the mainstream FHA program, and participating lenders use specially trained staff. As a result, many lenders don’t offer 203(k)s. Lenders that do offer them charge a rate above that on standard FHAs — figure on paying about 0.25 percent more.

The borrower looking for future value financing must deal with multiple players. In a typical case, the real estate agent who shows a potential buyer a house in need of work will recommend a lender who will pre-approve the borrower for a 203(k). The preapproval is based on estimates of sale price and repair costs. The sale price estimate is provided by an appraiser selected by the lender who values the property on both an as-is and after-repairs basis. The repair cost is provided by a licensed general contractor who is usually recommended by the lender.

In addition, if the repair costs are more than $35,000, FHA requires the borrower to retain a HUD-approved consultant to help manage the process. Among other things, the consultant prepares the required architectural exhibits, and monitors the improvements at each stage. HUD provides a list of consultants and sets their fee schedule, but does not warrant their performance. Lenders will usually recommend consultants that they have worked with, and this is one case where a lender referral is likely to serve the borrower well. The consultant’s fee can be included in the mortgage.

Increased use of 203(k) in the next few years is expected. Millions of homes emerging from the foreclosure process will enter the market, and many of them have been neglected and need work.

Jack Guttentag is professor of finance emeritus at the Wharton School of the University of Pennsylvania.

Home seller pitfalls to avoid

Six years after the market peaked in 2006 and prices started to decline, many sellers are still in denial about the current market value of their homes. It’s difficult for most sellers to accept the reality of today’s home-sale market, whether they bought at or near the peak and will lose money selling today, or bought decades ago but are still stuck at 2006 prices.

One homeowner recently remarked that she was aware that home prices had dropped quite a bit over the last five years. But she felt that her home hadn’t lost any value.

It’s hard for homeowners to divorce themselves emotionally from a home they’ve enjoyed. But this is what sellers need to do so that they can make rational decisions about a list price that will actually result in a sale.

This decision should be based on listings that have sold in your area that could be considered somewhat comparable to your home. Some sellers go to open houses to evaluate the competition. If you’re still emotionally wrapped up in your home, the exercise can be futile. You return home feeling that the other homes aren’t as good as yours.

home sellersPut yourself in the buyers’ shoes. This is easier for sellers who are also buying in this market. They know what it’s like to want to make sure they’re getting a good deal. Your house needs to be listed at a price that is enticing to buyers because it represents a good value. In most areas, buyers are buying in a market knowing that prices may continue to decline before the market fully recovers.

HOUSE HUNTING TIP: Be wary of real estate agents who tell you that your home will sell for a higher-than-supportable price just to get the listing. Then they work on you over time until you reduce the price to market value. Agents refer to this as buying a listing.

It’s hard to resist the temptation of trying for a higher price than the comparable sales indicate. However, you won’t be happy if your home is on the market for months with no activity, and each time you drop the price it feels like too little too late. You can end up selling for less later if home prices in your area are still declining.

Refinance appraisals are notoriously inaccurate in terms of market value — either too high or too low. An appraiser is attempting to gauge what price a buyer would pay when there isn’t a ratified contract that states what a buyer will pay. A high refinance appraisal can leave the seller with a false expectation.

Listing your home based on what you want or need to net from the sale won’t motivate buyers to pay more. Buyers pay market value. They’re won’t overpay in today’s market.

Find out what buyers are looking for in your area and see how your home matches up to their expectations. Generally, today’s buyers are looking for a home that is well-located, in good condition and is priced right for the market.

If your home needs a lot of work compared with the competition, you’ll either need to have work done before selling, or discount your price accordingly.

Walkable neighborhoods are highly desirable in some areas. If your home doesn’t offer this amenity, you may have to make a price accommodation.

THE CLOSING: For best results, be realistic about the current market value of your home and what preparation it needs in order to sell successfully in today’s market.

Dian Hymer is a real estate broker with more than 30 years’ experience and a nationally syndicated real estate columnist.

Real estate tips to guard against losing your home

Real estate tips to guard against losing your home

Time and time again, home-buyer wannabes state that the reason they are still fence-sitting is that they don’t want to end up in the same trouble the last generation of homeowners did.

Well, there’s a very slim chance of that happening, given the changes in the market climate: Homes are at rock-bottom prices (not sky-high), and mortgage guidelines are so conservative it is nearly impossible to even find one of the zero-down, quick-to-adjust, stated-income mortgages of yesteryear.

With that said, though, there is a handful of rules today’s home buyers and homeowners can follow to dramatically minimize the chances they will ever face losing their homes:

1. Never a borrower or a lender be. OK, so maybe NEVER is strong, but you’d be surprised at how many foreclosed homeowners actually bought their homes with conservative loans and at low prices many years ago, but got into trouble taking new mortgages and pulling cash out at the top of the market (then not being able to refinance or make the adjusted payment at the bottom).

Today’s home buyers can avoid this fate by starting out their homeowning careers with some ground rules in place around borrowing against their homes.

A good (albeit conservative) place to start is this rule: Decide not to borrow against your home equity for anything but well-planned home improvements.

Here’s another one: Whatever you do, don’t borrow against your home to lend money to someone else. I’ve seen dozens of homeowners over the years borrow to make an “investment” in a friend’s business or to lend money to a child or a parent. Borrowing against your home’s equity to make an investment in a business you know nothing about is a complete gamble with your home. Don’t do it.

2. Stop financial codependency. Related to the rule of thumb about borrowing to lend is this change of the bad habit of financial codependency.

This comes up most often when homeowners borrow money against their home or tap into their emergency cash cushion (leaving themselves unable to make their mortgage payments if they lose their job, etc.) to help an adult child make their own mortgage payments or bail them out of another crisis situation.

It also comes up where one spouse supports another spouse’s habit of overspending, debting, underearning, gambling, or even substance abuse, and ends up going into a financial hole as a result. Over time, these cases can create the temptation or even desperation to further leverage your home, and can run through a savings account, leaving the homeowner exposed and vulnerable in the face of a temporary disability, job loss or recession.

There are a number of powerful books on the market about how to cease being codependent, but many people struggle to recognize they even have this issue until it’s too late. Here’s a hint: If you regularly use money to protect a loved one from the natural consequences of their behavior, you are engaging in codependent behavior.

3. Stay conscious. Going on money autopilot, without occasional check-ins, is the root of many financial woes. Many money experts recommend automating your monthly payments so that your recurring bills are paid on time, every time. And almost any homeowner will vouch that there are few bills that seem to come up as frequently as your mortgage!

The problem is that once you automate your payments, it’s very easy to fall into the habit of simply ignoring your actual statements — and they may contain information that flags issues before they snowball into serious problems.

One homeowner recently realized that through no fault of her own, and despite never having missed an auto-payment, her home was facing foreclosure — all because the bank had somehow erroneously started crediting her payments to someone else’s mortgage account!

Also, financial autopilot mode can support habits like overspending and overdebting; the minimum payments may always get made without much attention from you, but the overall balances will rear their ugly heads and possibly pose a threat to your ability to pay your mortgage, in the event you ever face a job loss, medical bills or other financial crisis.

4. Do your own math before you buy. Only you can know the full extent of your non-housing-related financial obligations and values. Things like catch-up retirement savings, tithing and charitable giving, private school tuition, medical costs and the like can take big chunks out of your monthly budget that your mortgage pro is not accounting for when he or she tells you how much of a mortgage you’re qualified to borrow.

So, before you ever speak with a mortgage broker, it’s up to you as a responsible buyer and adult to get a very clear understanding of your own personal income and expenses, assets and priorities, and to use that knowledge to decide how much you can afford to put down and to spend monthly for a home.

Fortunately, an increasing number of are buyers doing this, and actually choosing to buy a home that costs much less than they are technically qualified for.

5. Don’t buy a house to fix a family or psychological problem. Beware of “pulling a geographic” — moving to a new neighborhood or town to try to run from your problems and bad habits.

Experts caution against expecting the move to solve the problem on the grounds that, in the words of mindfulness guru Jon Kabat-Zinn, “wherever you go, there you are.” If you have bad habits in Chicago, moving to L.A. doesn’t purge the bad habits — only working on the actual dysfunction itself will do that.

There’s a real estate-specific version of pulling a geographic, which we’ll call “pulling a residential.” This is where people buy a home or buy a new home in an effort to cure a deeper family or psychological issue; sort of like that old (and equally bad) idea of having a baby to try to save your marriage.

If your children are fighting because they lack personal space, that’s one thing. But if there are deeper issues going on with your children, your family or your relationship (even your relationship with yourself), do not fantasize that owning a home or moving up is going to automatically solve them.

In fact, the opposite is often true: The larger the financial and maintenance obligations that come with a home, the more a mortgage and property taxes can add strain to already troubled relationships.

Tara-Nicholle Nelson is an author and the Consumer Ambassador and Educator for real estate listings search site Trulia.com.

Is it a “Happy New Year” for the Housing Market?

Goodbye 2011 & Hello 2012! Is this a Happy New Year?

Is it goodbye to a bad year or hello to the same?  While the economy is still struggling, unemployment slightly better, and real estate showing signs of improvement only to retract its position, I believe the glass is still half full, with an asterisk.

What's in store for 2012's housing market?The holiday season began strong on Thanksgiving weekend, reports are that retailers numbers receded which led to heavy markdowns the week of Christmas. Final numbers are still to come, while job growth is modest, mostly in low-paying sectors like retail and hospitality. This past year also saw an increase in credit card spending for gifts as a result of higher gasoline, food prices, and general inflation.

With mortgage rates still at historic low rates, the housing industry is still struggling with values dropping, even though sales have shown signs of recovery. With more than one in every five borrower still owing more than their home is worth, many homeowners are too pressed to spend on much more than the essentials which leave us to the big question: WHAT SHOULD I DO?

With all predictions expecting more of the same this year as last, there is still and always will be optimism, but each homeowner out there who is still upside-down, either waiting for or in a modification, is so far upside down that they most likely will never recoup the past negative equity in the future.  They are at the same time struggling to make ends meet with just the essentials. Mortgage companies and investors are still holding the belt tight and are not reducing principle for most people waiting for  modifications or who have them–leaving homeowners to finally make that decision that enough is enough.

There are opportunities to purchase and leave your upside-down home, but you would need to act fast. Other opportunities are also available and action now will help you live a life more care-free and stress-free in a fast-paced, ever-uncertain economic time.

Call me now and let’s talk. My direct line of contact is 619-890-3648.

God Bless

Creating Extra Storage Space

Here’s some tips on finding that extra storage space in your home–which we all need, especially with those holiday decorations coming down and needing to be stowed away!

Creating Extra Storage Space

One common complaint that is often expressed by homeowners is that their home does not have enough storage space. As a lack of space has more to do with how space is utilized, this problem is extremely easy to fix.

    • Extend upper cabinets all the way to the ceiling. Many kitchens waste valuable space when they stop 6 inches below the ceiling.
    • Make your closets more accessible. Low closet doors complicate access to the top shelf of a closet. Oversize doors – even ceiling high models – make it easier to store bulky items on high shelves.
    • Go to the garage. Even in garages where parking is a tight fit there is room in the space above a car’s hood for wall mounted cabinets to store little used items – closed cabinets are recommended.
    • Annex the back of a closet to create built in storage for an adjacent room. A shallow cabinet wedged between the wall studs can serve as an extra kitchen cupboard or a family room bookcase.

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