From Renter To Owner: 8 Important Reminders Before Making The Transition

If you’re renting now, you most probably dream of having your own house one day. In fact, you’re probably already looking into buying a property to your name right now. So aside from finding that perfect dream home, what else do you have to prepare for in buying your own place of residence? Here are 8 important reminders before making that renter-owner transition:

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1. Make a Realistic Renter-to-Owner Timeline

After the tedious task of searching and even after your seller accepts your offer, you may think that the job is done. You’re move-in ready! Not just yet. Be reminded that it may take around 30-50 days to close a home. You have to make sure that you time it right with the end of your lease. You don’t want it to be a renter-homeless-owner story!

2. Know the costs associated with homeownership

Costs, costs, costs! There’s a lot more to pay for upfront than just a security deposit as a renter—from deposits, home loan origination, title insurance, land surveys, home inspection, insurance escrow, appraisal, among others. Then, of course, you have to consider mortgages, home association dues, etc. in the long run.

3. Study Rent-vs. Buy Math

More costs mean more math. This will be more than just rental payment vs. P.I.T.I. A more accurate comparison will also include after-tax-benefit homeownership costs and rent costs.

4. Know Your Tax Benefits

With all these costs, don’t worry, your tax deductions will significantly lower the costs of homeownership. Mortgage interest and property taxes will be deductible in filing annual tax returns, and reduce your taxable income.

5. Start preparing your credit score now

In getting the best mortgages, credit scores are very important. Those who lend want reliable and on-time payers, after all. If you only have one credit card, start getting more now, while you have time to grow your credit score. More credit accounts are seen as better.

6. Research mortgage options

You can’t only shop for the best-fitting home for you, but also the best-fitting lender too. Compare rates of your mortgage based on your loan type, location, purchase price, down payment, and as mentioned earlier, credit history.

7. Prepare for more responsibilities

These include maintenance issues from the roof of your home down to its very foundation. Set up insurance and even an emergency fund for these responsibilities.

8. Think long term

Consider the fixed features of the home such as location, think of the things you may want to alter in the long run, even take note that the neighbors you will have in this new home may be your neighbors for life, and if need be, think about the property’s resale value.

How To Deal With Low Ball Offers On Your Home

You might have expected that your house would sell for exactly what you set the price for, and a buyer making an offer for much less could be pretty frustrating. So what exactly makes for a lowball offer? Typically its 25 percent or less below list. But with all things being unequal, what makes an offer a lowball may vary from market to market and price range to price range.

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You could know off the bat when an offer is just downright ridiculous, but it’s still best to not let your emotions get the better of you and consult with your agent because they might have a better gauge and understanding as to how offers go. It’s tempting to block off further negotiation with buyers who make such offers but remember to keep your calm because after all, you are engaging in business. It could be that your buyer may have just gotten bad advice from people around them on how they should price their offer, so it’s still advisable to keep communication lines open. The offer may have not started on the right foot, but tables can be turned if you just know how to negotiate.

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Don’t waste your time thinking how you might be perceived. Consider all offers with a cool head and you might end up with a good deal. You can have your agent ask the buyer’s end on their reasons for making an offer lower than the asking price. Knowing their answer could actually be beneficial to you; you could view your property using a different lens. Are there parts in the house that needs fixing? Has the house been for sale for longer than the ideal time? Knowing the answers to questions such as those would help you evaluate just what you need to improve on it so that it could look more appealing to the market.

A trusty and experienced agent could spot when a buyer – despite making a low offer – is smitten with the house and are willing to raise their offer.

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If you’re going to make a counter offer, it’s best to present it with data such as a market’s list-to-sales price ratio. Also, you can have your agent make a written document containing the best comparable homes to yours. Include the following statistics from two months ago to the same measurements today:

a.) Number of similar homes on the market.

b.) Number of similar homes sold and closed since the listing’s inception.

c.) Number of listings that expired unsold.

d.) Number of pending transactions.

e.) Number of new similar listings (your competition) with the data sheets and pricing

By knowing all these information, you would have an wise estimate on the lowest and highest price you can expect.

10 Important Fixes/Repairs To Make Before Selling Your Home

If you’re about to sell your home, having it in top shape will definitely up your chances of getting it sold quickly. It shouldn’t just be about making it look beautiful; you have to consider functionality as a major aspect in a buyer’s decision. A buyer will most likely have a professional home inspector check for faults in your home, so it’s advisable for you (with the help of your agent) to address problems beforehand.

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1. Paint – Doing this will instantly revamp your home, and it’s one of the most cost-effective methods into making your house look appealing to buyers. Light-colored, neutral tones make your rooms look more spacious and it also makes it look as if it’s blank canvas, where your buyers can help picture how they want it to look once they move in.

2. Kitchen – The kitchen is one of the most functional spaces in a home. You don’t have to stuff it with new appliances to make it look like a dream kitchen, but just make sure to address problems regarding usability. Leaking faucets and old sinks must be repaired, and the dishwasher or range that is out of shape should be replaced. Also check if hinges or tracking in your drawers and cupboards need fixing.

3. Flooring – No one wants to live in a home with sub-par flooring. Buyers prefer hardwood floors, so if your house has that and it’s in good condition, make sure to make it known by removing carpeting. But if you don’t, there are a number of low-cost options such wood plank tiles or highly upgraded laminated flooring.

4. Bathroom – Just like the kitchen, the bathroom is a very functional space in a home. Check for leaky faucets and if necessary, replace caulking in the areas like shower, sink, and toilet to help in keeping the moisture out. Also keep in mind that making it clean goes a long way. Have the toilet as white as possible, and have your grouts steam-cleaned.

5. Roof – If your roof is in bad shape, it’s advisable to cater to this before you set your house up for sale so that renegotiation and price reduction won’t be on the table once a buyer makes an offer.

6. Exterior – Your curb is where buyers get a first impression of your home. Include fences in your paint job, patch up cement cracks in sidewalks, and resurface asphalt driveways if necessary. If you have extra cash to spare, add in bright flowers and plants to spruce up your curb.

7. Lighting – The lights sets the atmosphere of the home – the brighter they are, the more enticing and welcoming your rooms will look. Make sure that lights are working properly both on the exterior and interior of your home. Don’t forget to check if your switches work, too!

8. Air conditioning and heating systems – As mentioned previously, your home may most likely be subject to a house inspection so it’s good to get ahead of them and take care of minor repairs. Having this in top shape will definitely give you an advantage over other sellers.

9. Plumbing – Your house may look good in terms of its aesthetics but if there’s problems in the practical aspects of the home, buyers might step back. You can tend to minor fixtures yourself but if you want to be assured that the plumbing is in a good condition, hire an expert to inspect and fix.

10 . Knobs – They may seem trivial but buyers could be critical of everything. If something as basic as a door knob is not working, buyers might think that the more important parts of the house are not working too.

The 5 Biggest Red Flags To Spot When Purchasing A New House

Whether it’s your first time buying a home or have had experience in purchasing properties, it’s very important to be reminded of what can be a problem after the sale has been made. After all, we want to minimize costs and get the best deals. How can this be done? Home inspections are crucial in the process of house hunting. Sure, the house is charming and homey, but there might be some cracks and rotting that are signs of major damage. Here are five of the biggest red flags to spot:

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1. Any Foundation or Structural Issues

Cracking is one of the biggest signs to watch out for in terms of foundation problems. Cement settling, for example, may be indicated by small cracks in the basement. Larger cracks on the other hand, may be a symptom of structural integrity issues of the home. You may also take note of unfit doors. If you have a hard time closing and open doors in the house, this may mean a larger structural issue. Specifically, check if the door fits squarely in its doorframe.

2. Pest/Insect Problems

Aside from sending shivers down your spine, having pests in your home may also mean wood destruction. The most common pests you should look out for are termites, powder post beetles, and carpenter ants which may damage your home.

3. Random Freshly Painted Walls

Freshly painted rooms are normal because this makes the property feel clean and fresh. But if only one wall or area of a room looks freshly painted, this may be a sign of the seller trying to cover up a problem. This is automatically a cause of concern, and you should ask about it right away.

4. Amateur Workmanship or Repairs

The older the home, or the longer a family has stayed in it, the more repair work the previous homeowner or another amateur may have done. You will most commonly see this in areas of plumbing, carpentry, and electrical work. It is best to watch out for leaky faucets, toilets, missing trim work, and other potential do-it-yourself/handyman projects in doing home inspections.

5. Neighborhood

Remember, in purchasing a home, you are not only going to live in the specific lot, you will also be living in the neighborhood. If a house seems perfect, and do not have the above red flags, make sure that it also has a neighborhood with an overall good condition. How do you know this? Take note if there are a lot of vacant lots in the area, and if the other houses are boarded up. If you can, also check the crime rate in that particular area—is it increasing or decreasing? This may not only affect your stay in the home, but also the property’s resale value in the future.

3 Important Questions To Ask Before Choosing A Real Estate Agent

Hiring an agent is a must if you’re off to sell your property. Of course you want to be represented by someone who’s competitive and is also trustworthy and easy to communicate with, since an agent will have access to information about your finances. You may ask for recommendation from friends and family, or look up online. Once you have a list of names, call them up for an interview. Here’s 3 important questions you should ask:

Experience is the best teacher, especially for this kind of job. An agent that can’t sell will not last long in the field since their earnings are commission-based. It’s ideal to hire someone who has years of experience under his or her belt – they’ve bulked up their contacts, are more prepared to handle situations when faced with conflict, and are better communicators and organizers. Ask for their history of sales over the past 6 months and the areas that they’ve covered. This will help you gauge how competitive they are and how much they know about the market, which are both deciding factors in choosing an agent. Although experienced agents are the better option by default, novices have good things going on for them too. They’re definitely eager and enthusiastic to make that sale. Ask if they’ve been under the wing of a mentor and look up the credentials of that person too. Newer agents will tend to have more time to cater to you since they probably don’t have a string of clients just yet.

This will help you determine if your prospective agent has time for you. If she is working with a dozen other clients, ask her what her strategy is in juggling all of you while still delivering the best possible work. Also ask if she has a team on her side to help her. In line with this, ask for references from past clients. They will of course give you contact to a client with which they had a smoothest transaction with but it’s still best to know firsthand how their experience with the agent went.

This will test if your prospective agent is adamant on selling your property. If she asks for things such as details on the property, what your preferred marketing strategy is, what your timeline is in making the sale, your preferred mode of communication and available hours, it’s an indication that she is making way for a client-centered transaction which works best to your advantage.

3 Important Questions You Must Ask A Listing Agent During An Open House

Open houses are a good opportunity for you to meet personally with the seller and their listing agent so take advantage of this moment to get the details that will help you decide if you will push through with making an offer or look elsewhere. Here’s 3 questions you definitely need to ask as a prospective buyer:

Buying a house is probably the biggest investment you’ll ever make and it’s best to be critical on where you could possibly put a big amount of your money and time on. Open houses are designed to please your senses – there’s fancy lights, newly-painted walls, fragrant candles, you name it! But there might be issues on areas you can’t spot right on such as issues with the roof (ask what material the roof is made of; tile and slate roofs last 50+ years, while asphalt shingles last 15-20 years), wiring, sewage, drainage, heating and air-conditioning systems etc. You can opt to do the investigation yourself while touring the house, and if you’ve spotted issues that the listing agent did not disclose upon your asking – low water pressure, dripping sinks, subflooring covered by a fancy carpet -- that might be a sign to step back. Also ask if the home appliances and systems are covered by a home warranty. Keep in mind that it is required by the law for sellers to disclose to buyers any code violations or structural issues. You can ask for written seller’s disclosure and take photos of problem areas so you could review them when you make your offer.

You can find this information on your own but asking the listing agent can put the information in context. If it’s been on the market for a long time, you could have more bargaining power. But it could be that the sellers had a previous transaction with a buyer whose financing fell through. In the case where the house has been on sale for only a short while, there might be a sling of buyers expressing interest. The information you get will be useful when you make your deal.

It’s good to know information about people you will be surrounded with for a good lot of time in your family’s life. Ask details that correspond to your lifestyle, like if the neighborhood is kid-friendly, or if it’s congenial to retirees. Also ask about nearby schools, hospitals, police and fire stations and make your own research on their credibility and efficiency.

Beware Of These 3 Home Insurance Purchasing Mistakes!

A homeowner’s insurance is a type of property insurance that covers a private residence and its’ assets when losses and damages occur. Once a house is insured, it is typically protected from four incidents:  interior damage, exterior damage, loss or damage of personal assets/belongings, and injury that arises while on the property.

Whether you’re a first time home buyer or not, mistakes can be made. It may cost you a lot if you fail to carefully pick the insurance that’s right for you. We’ve round up the list to 3:

1.     Not understanding exclusions – Every home insurance has exclusions and it’s important that you know which kinds of damage your insurance doesn’t cover. Damages from flooding and earthquake are usually not covered if you’re not located in a coastal area or near a fault. But remember that inland flooding can occur from ground water, as with the case in New Jersey, New York, and Vermont during Hurricane Irene. As for earthquakes, damages in your house may still occur once it hits even if you don’t live near a fault line. It’s also important to note that most policies don’t cover mold and sewage backup, which often happens after a heavy downpour. Mold insurance can run up to $300-$400. It’s advisable to add this in to your insurance if it’s an old home you’re eyeing (and if it isn’t built with mold resistant materials) or if your area is humid. Sewage backup on the other hand only costs about $40 per year so it wouldn’t hurt to add that in, too.

2.     Underinsuring your home – Once a disaster hits and your home needs rebuilding or your valuables need replacing, your insurance should be able to cover up these costs. A mistake commonly made by homebuyers is that they buy only enough insurance to cover their mortgage. Even an amount equal to the current value of the home may not suffice once a house needs rebuilding, because labor and supplies may need to be factored in. Ask help from your agent for the average rebuilding cost per square foot in your area and see if your coverage is close to that figure. Another smart move is to make an inventory of your valuables such as art, jewelry, furniture, antique -- gather your receipts and take photos of the items, then you may schedule an endorsement to raise your limit for contents coverage.

3.     Setting the wrong deductible – The deductible is the amount of money that you pay toward a claim before insurance pays. Be careful to not set it too high or too low, for choosing the former may have you paying for more and your insurance paying for less (or not at all!), and by choosing the latter you may have to pay more than you should for premiums each year. Consult with an expert so that you could make the best decision.

A Complete Guide To Closing Costs

First-time buyers may not be aware of the long list of fees under Closing Costs. Buying a house is a big investment and a tedious process, but we’ve got you covered on the details of these expenses – what they’re for, and how much they usually cost.  In this article, the closing costs are divided into three categories: Lender Fees, Insurance Fees, and Title Fees.

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Lender fees

Within three days of receiving your application, your mortgage company has to give you a Loan Estimate which itemizes estimated interest rate, monthly payment, and total closing costs for the loan. Here are some of the fees that could be included in that list:

·       Loan Origination Fee – This is the fee for generating and processing your loan. The rate is usually 0.5-1% of the total loan amount.

·       Discount Points – Basically this is for when you want to buy an interest rate. The amount of this depends on what rate was initially given to you and what rate you want to apply for. Note that this may be optional.

·       Processing Fee – This is for submitting and gathering your loan application. Usually this costs less than $500 in the United States.

·       Appraisal Review Fee – A professional appraiser will check the property for its market value. Lender require this to make sure that the house is actually worth what was declared in the contract.

·       Credit Report Fee – A credit report is a detailed account of your credit history and your credit points. Lenders require this for qualification purposes for the loan. Usually it’s the lender’s company themselves who order this from a credit report bureau.

·       Courier Fee – Lenders employ couriers to deliver documents during the transaction. Some lenders will put this under the processing fee.

·       Underwriting fee – This fee is for a series of steps that evaluate your loan application, like verifying the documents that you have passed, checking if the appraisal on your house is consistent with comparables, and assessing whether you income level is at par with your liabilities.

·       Documentation preparation – Once the underwriting approves your loan, legal documents and miscellaneous such as the mortgage note and deed of trust should be prepared for closing.

·       Wire transfer fee – This is the cost for wiring funds to an escrow company.

 

Title Fee

·       Recording Fee – This fee is for recording the deed and mortgage at the local court house. The amount for this fee depends on the number of pages in the document

·       Notary Fee – Documents such as the deed of trust must be notarized by a registered Notary Public before it can be recorded at the court house. This amounts to usually $10.

·       Title Insurance – This is protection for you as a buyer to make sure that the title is clean and that no contentions will be made against you as the new owner of the house. This may be optional.

·       Escrow fee – This is paid to the escrow company or the attorney who made the closing. This is usually a split expense on the buyer and seller.

 

Insurance

·       Private Mortgage Insurance (PMI) – This is required by lending companies if you made a down payment below 20%. When the deal is closed, this expense will be rolled into your monthly mortgage payment.

·       Homeowner’s Insurance – This financially protects the property and its contents from disasters such as fire and theft. Most lenders require 1/6 of the amount of this to be put into an escrow account at closing.

·       Flood Insurance – This will be required from you by the lender if the house is located in a flood zone.

10 Important Things To Know Before Listing Your House For Sale

Putting up your house for sale puts you in a place of responsibility as the owner, because of course; we all know that earning profit is not that easy. But rest assured that after this experience, you will have gained more skills, insights, and tricks!

1.     Do your homework: research on the price range of properties in your area – Doing this saves you from overpricing or under pricing your house. Look into houses within your area that are of similar feature to yours in terms of lot size, number of bedrooms, bathrooms, and parking capacity. If you have time to spare, visit these homes yourself during their open houses. Checking competition will also help you evaluate not just the right price for your home, but also things that you could improve on your house to make it look more marketable.

2.     Make your house market-ready – With all the available (free) information for everyone today, buyers have higher standards in choosing a house. They may have envisioned the perfect home on their mind through browsing magazines or photos on Instagram or Pinterest, and it would be of an advantage to your property if you at least try to make it look as if it’s straight from their dream. If you’re willing to spare extra cash and effort, you could hire a team of professionals composed of a home stager, landscaper, painter, and handyman. Just make sure that you account these expenses for your final pricing. No budget? You can opt to go DIY. Also, the cheapest way to make your home market-ready is to make sure that it’s clean and free from clutter at all times.

3.     Hire a reliable agent – You shouldn’t just hire an agent from a pool of names and faces listed in your directory; ask trusted friends for referrals on agents and interview them before hiring. Ask the right questions to your prospective agent so that you know how selling your house will be handled.

4.     Have a professional inspect your house before pre-listing – Buyers might make their offer contingent upon certain inspections such as pest and septic, so it might be a good idea to hire a professional home inspector in order to tend to the issues you may not have spotted on your house. Ask for a detailed report from your home inspector and have them include photos for proof.

5. Any season is a peak season for selling a house, except winter – As most people are busy with Holiday errands and out-of-town, out-of-country trips and social gatherings, there wouldn’t be much buyers on the hunt for houses. You could put your listing on hold until spring comes, but if you’re taking your chances, you could still try during winter, as there are also fewer sellers. That means less competition!

6. Prepare necessary documents – Your agent will notify you of the necessary documents needed once the selling transaction begins. This may include documents on title of property and outstanding balance on mortgage (if any) & pay-off balance. Gathering these documents ahead of time will ease the way for a faster transaction.

7. Yup, it may not sell like hot cakes – Despite countless preparations (including the emotional one) and seeing your house as The Best Ever in the Market, it may not sell as quickly as you thought and wanted it to be. Relax, a house is a huge investment on the part of the buyer, and they may be nitpicky on the average and flaky at worst.

8. You could be your own salesperson, too – Don’t rely solely on your agent to do all the marketing – you could ask a photographer friend (or if you know how to take good photos yourself) to capture your home as beautiful as possible. You could use social media to your advantage by putting up ads on Facebook and Instagram (it’s actually cheap), or just by simply posting it in your social media accounts and asking friends and family to share it.

9. Have a gauge on your potential profit (or loss) – Reduce the selling price to the following expenses that will be incurred throughout the selling process:

 
  • Title charges
  • Government recording and transfer changes
  • Real estate agent sales commissions
  • Additional settlement charges
  • Debt obligations that needs to paid off on an ongoing mortgage
  • Home repairs and enhancements prior to listing

10.  Research on current tax laws – You could have your agent explain this to you as they may be knowledgeable and updated on tax laws, but it’s good to also do some research on your own. It could also help you when estimating your potential profits after selling.