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Updated:
Thursday, October 29, 2020
October Real Estate Roundup
Freddie Macs results of its Primary Mortgage Market Survey shows that "The record low mortgage rate environment is providing tangible support to the economy at a critical time, as housing continues to propel growth. Strong purchase demand is helping to lift the construction, manufacturing and transportation industries that build new homes and it is also leading to more consumer spending for owners, who are selling or improving their homes. On the refinance front, many consumers are smartly taking advantage of the ability to lower their monthly payment, which means they can spend, save or pay down debt more so than they have in the past."
30-year fixed-rate mortgage FRM averaged 2.81 percent with an average 0.7 points for the week ending October 29, 2020, down from last month when it averaged 2.90 percent. A year ago, at this time, the 30-year FRM averaged 3.78 percent.
15-year FRM this week averaged 2.32 percent with an average 0.6 points, down from last month when it averaged 2.40 percent. A year ago, at this time, the 15-year FRM averaged 3.19 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage ARM averaged 2.88 percent this week with an average 0.3 points, down from last month when it averaged 2.90 percent. A year ago, at this time, the 5-year ARM averaged 3.43 percent.
Some analysts are predicting the number of foreclosures will go up as we near the end of 2020. While the housing market is strong, coronavirus shutdowns have significantly impacted the economy, and unemployment remains high.
If youre waiting to see if you can find a deal in the form of a foreclosure, its important to be prepared for the process. Many of the elements of buying a foreclosure are similar to buying any other home, but if youre clear on what to expect, you can streamline the process.
There are two general types of foreclosed homes. There are bank-owned homes and real estate-owned properties REO. The lender owns the homes in both scenarios. The primary difference between the two is the stage of the foreclosure.
Bank-owned homes are in the midst of foreclosure, so the homeowner has quit making payments, and their lender is taking steps to remove them from the home. Foreclosed homes are bank-owned properties that go to auction. If the home doesnt sell at auction, its still owned by the bank, but its an REO. REO properties have been in an auction and still arent sold. The lender will often try to sell through them REO agents.
Foreclosures tend to be cheaper and sometimes significantly less expensive than similar properties in the area. Many foreclosures are sold well below market value. You might also get other benefits of buying a foreclosed home, such as lower interest rates, reduced down payments, and you may avoid appraisal fees and some closing costs.
There are situations where you can find a deal on a distressed property, but its not bank-owned.
For example, theres the pre-foreclosure phase. This means the lender has let the borrower know they are in default, but if the homeowner can sell the property, they might avoid foreclosure proceedings. Short sales are when a lender takes less for a property than whats owed on a mortgage. You dont have to be in default for a lender to approve a short sale.
There are also government-owned properties. When a property bought with a government-backed loan goes into default, the federal government owns it.
If you want to buy a foreclosure, the following are the steps to expect:
Its a good idea to have a preapproval for a mortgage from a lender before you start looking for foreclosed properties. Preapprovals will show youre serious about buying, and it will guide your search.
Its important to have an agent on your side whos experienced in dealing with foreclosures. If you dont have a specific property in mind, they can help you find options in your area.
Just because youve found a property in foreclosure doesnt necessarily mean you dont have to be competitive in your offer. Youre probably already going to be getting a substantial deal, but if you make an offer too low it can be rejected.
You buy foreclosed homes as-is. Whoever is on the seller side isnt going to make any repairs. Whatever is needed becomes your responsibility if you buy the property. That means you need to know what youre heading into when you make an offer. If you do an inspection and the problems are too much for you, you should pass on the property. The inspection is only to help you make a decisionwhatevers found isnt going to be much in the way of a negotiation tool.
If you buy a home at auction, you dont have the opportunity to do an inspection.
Usually, if you buy a home at an auction, you cant even go inside beforehand.
There are a lot of risks that come with buying a foreclosed home. There are often problems and hidden costs that you may not even discover in inspection. Its also a slow process.
Theres a lot of paperwork when buying a foreclosure. Banks tend to be slow on their response times with these properties, and if a bank has a backlog of foreclosures, it can take months for them to respond to an offer.
None of this automatically means buying a foreclosure isnt a good option for you. It just means that you need to prepare yourself for these hurdles.
Question: Our governing documents contain this provision: "No dwelling shall be used for any purpose other than for a single family residence." A board member has been housing a teenage nephew and his friend. No rent is being charged. Does this constitute something more than a single family residence? The situation is causing problems among the neighbors due to complaints of late night parties and traffic.
Answer: Extended family is generally accepted under the "single family residence" definition as long as no rent is being charged. The friend issue is pushing the definition envelope.
However, late night activity that disturbs the neighbors, whether by family or guests, is a violation of HOA rules. This particular homeowner is a board member so the duty to comply with basic rules is even more important.
The real issue is the disturbance, not the rental arrangement. The issue needs to be framed plainly: Either the kids abide by the rules or there will be ramifications assuming that the HOA has established fines and penalties.
Question: We are having an issue regarding allowing signs on the common property. Our governing documents requires board approval for all signs. In the past, the board has given approval for For Sale signs only -- but not For Rent signs or any other sign. Recently, there were three For Sale signs up at once, all with board approval. Several homeowners complained that the signs were detracting from the appearance of the property and the Board adopted a policy to not allow any signs on the property. Thoughts?
Answer: If the Board has the authority to approve signs, the Board has the authority to enact a Sign Policy. However, the Board cannot enact a policy that prohibits signs since the governing documents imply that signs are allowable. Only an appropriate majority of members as defined by the governing documents can vote to amend the governing documents to eliminate signs altogether.
But such an amendment is not recommended. For Rent and For Sale signs are standard fare in every part of the country with the exception of a few elite communities. These signs are temporary and designed to assist members in a legitimate business enterprise which all will undertake at some point in time. It is, however, appropriate to control the size, look, number, longevity and topic of signs.
Political signs, for example, can only be displayed for, say, 30 days before an election and then be removed within 48 hours of the event.
Question: One of our homeowners sued the board over a disputed policy decision. Our board did not purchase Directors amp; Officers insurance, even though the governing documents required it, so attorney fees were paid for from the HOA operating funds. Some of us think thats not right. What should be done?
Answer: If the governing documents require the HOA to have Directors amp; Officers insurance, thats what it means. Damp;O is specifically designed to provide legal defense for the Board in situations like you describe. There are many HOA Boards that havent a clue what Damp;O insurance is and have never read the governing documents to even know there is a requirement for it. As long as the HOA doesnt get sued, they look like heroes because they saved the HOA premium expense. But now that your Board has been sued and there was no Damp;O, they dont look so smart.
So, was the oversight out of ignorance or deliberate defiance of the requirement? If the board made a conscious decision not to spend the money for this insurance, to quote Ricky Ricardo, "You The Board got some splaining to do." Since Damp;O is usually inexpensive, there is no good reason not to have it.
Your kitchen may be the place where your family spends the vast majority of their time. Thats common, and as such, we often want our kitchens to reflect our >
With that being said, a kitchen remodel is a huge undertaking, financially, and just in terms of logistics. Rather than jumping in, you need to prepare yourself for what to expect and make sure its something your family is ready for.
Before you make any plans, think about your life>
There are minor upgrades you can make to your kitchen to refresh the >
If you have young kids at home and youre going through renovations, safety becomes an issue.
Many people are also working from home right now, so will you be able to continue doing that with construction going on around you?
According to HomeAdvisor, the average cost of a kitchen remodel is just over 25,300, which comes out to around 150 per square foot. The total cost varies depending on the size of your kitchen, whether or not you change the layout and the materials you choose.
You could do a minor remodel including refacing cabinets, upgrading your sink and adding a new backsplash for around 10,000. A much larger renovation costing upwards of 30,000 may include custom cabinetry, new flooring and countertops and high-end appliances.
Do you have the money to spend, and if so, is this how you want to spend it? If youd have to finance the project, how will those added monthly debt payments affect your budget and life?
If youre planning to sell your home soon, the project could pay for itself but you need to ensure you design a kitchen that will appeal to a wide set of tastes and dont make it too personal to your family.
Inevitably if you set a budget for a kitchen remodel, youre going to go over, so give yourself padding with that in mind.
If the layout of your kitchen isnt functional and you think it needs to be changed, its going to be more time-consuming and expensive than primarily aesthetic changes. You will need to work with a contractor, even if you plan to do some of the work independently.
Its important to understand which walls are load-bearing.
You will also need to talk to a professional to understand how to move plumbing, venting, and electrical components if youre changing the layout.
If you think you can do all the work in your kitchen on your own to save money, what can ultimately happen is that you make mistakes along the way. Then, you pay more to fix them. Sometimes its a better option to find a >
You might also want to hire a designer or at least consult with one if youre changing the layout. A designer can help you understand how layout changes will impact the flow of the kitchen, and they can help you with an optimal placement that will work for not just your family but potential buyers if you sell in the future.
A kitchen remodel is a huge undertaking. If youre considering it, prepare yourself for how itll affect your day to day life and finances.
Covid-19 has ambushed economies all over the world, with leaders and businesses desperately trying to find a healthy balance between protecting people and protecting the economy. So many industries have been left in an unpredictable state, including the real estate market. Lets have a look at 5 important things you should know before taking the leap and investing in real estate.
Historically, real estate has been a >
When investing in a property, whether that be to renovate and sell or to rent out, choosing a location with sustainable demand is essential in order to make a reasonable return on your investment. With the financial uncertainty that comes with a pandemic of this scale, people are looking for the best possible value for money and they want to be sure that if they are taking a substantial financial risk, it will fulfil all of their needs. If youre looking at investing in a flat, the younger generation are looking for amenities when they are renting, so there are a few things you should look out for. Local bars and restaurants, gyms and proximity to public transport, to name a few. If youre looking for a suburban property with the hopes of targeting a family, aim for areas close to large parks, countryside public footpaths, good schools and supermarkets. Consider who you are wanting to target and what they will be looking for before making the important decision of where to invest.nbsp;
For the first time in a long time, many mortgage lenders are demanding 15-20 deposits as a result of Covid-19. If you are a cash buyer, this wont be a concern, but if you are >
To summarise, residential real estate seems to be the safest investment at the minute. With the financial difficulties facing many potential buyers and renters, make sure you select a property in a great location that people cant refuse. Finally, if youre >
Full Story >
Why Lenders Use Gross Monthly Income vs. Take-Home Pay
It might seem curious to some why mortgage companies use gross monthly income when determining affordability instead of take-home pay. After all, its the take-home pay that consumers use to pay bills including the mortgage but also other monthly expenses as well. Credit card debt and auto loans are paid each month but so are things like mobile phone bills, food, gas and other expenses. But there are a few good reasons why lenders use the gross amount instead of net pay.
First, its a universal application. Everyone is qualified using the very same guidelines. Lender A uses gross monthly income and so does Lender B and Lender C. When calculating debt-to-income ratios to evaluate affordability, the debt ratio guidelines use gross monthly income. There are a few loans that do take into consideration monthly expenses and residual income, but most every other program uses gross monthly income.
Second, lenders arent aware of individual deductions. One person might have a monthly deduction for health care while someone else would have their health care paid for by their employee as a company benefit. Someone else might have a cable bill while another party cut the cord a long time ago. Child support payments, student loans and other monthly expenses can vary from one person to the next. Its almost impossible for those in the secondary markets to individually adjust a single loan program based upon individual choices. Fannie Mae and Freddie Mac for example have debt ratio guidelines but these are also based upon gross monthly income. Net income is flexible whereas gross monthly income is not.
When employers report income each year to the IRS, the amount reported is gross income, not net. When consumers are asked to document their loan application as it >
Another reason is how consumers view their own income. Sure, they will know what the amount will be on each individual paycheck, but when asked how much they make each month or even each year, they know the gross amount automatically. I make 100,000 per year is the gross amount, for example. Consumers who try and figure out their annual pay using net income would be difficult to discern. It can be done, but its the gross income they remember. When employers advertise for a new employee and the subject of pay comes up, its the gross amount. Theres no way an employer would know the financial situation of an individuals deductions and expenses to explain how much they pay each month.
If youre thinking of buying your first home and want to know what you might qualify for, theres no shortage of online prequalification calculators to get started. Sometimes though, consumers can enter their take-home pay instead of gross monthly income not realizing theyre short-changing themselves when they do so. Lenders, believe it or not, want to keep it simple. They use gross income, not net.
It may sound surprising, but doing Halloween dcor right may actually help you sell your home. Doing it wrongwell, were terrified just thinking about it. Heres what not to do when decking out your house for the spooky holiday.
Your home is strung with witch lights, gravestone markers dot your front yard and Casper the Ghost greets visitors at the door, said MassRealty. How will potential buyers take your home seriously when your kids insisted on decorating for the holiday.
You may pride yourself on your intricate displays of horror and mayhem, but its best to save that for your new place. Sure, your very realistic zombie playground may be a hit with the neighbors every year, but selling your home will require you to keep your professionalismafter all, youre trying to sell your house, not spook people away from your front lawn, said DreamCasa. Avoid any cringe-worthy Halloween dcor like bloody handprints, tombstones, or morbid scenes.
You dont need your front porch to look like a grocery store display. A tasteful mix of pumpkins and gourds can be inviting. Keep the tasteful thing in mind when youre carving, as well. The last thing you want is to attract attention to your Richard Nixon pumpkin instead of your newly painted front door.
Keep an eye on the kids carved pumpkins, too. If you dont want to offend them by hiding the less-than-perfect pumpkins during an open house, you can simply turn the faces toward the wall for showings.
If buyers cant take their eyes off your admittedly impressive skeleton collection, theyre not paying enough attention to your floorplan and features. You want buyers to notice the home, not whats in it.
If youre in a neighborhood in which every home decorates for Halloween, you dont want to be the one party pooperthis could make your home stick out for the wrong reason. Save the hanging witches and inflatable Dracula for another time and go for something elegant that speaks to the design sense buyers might find inside. We love these luminary pumpkins that are carved with repeating geometric patterns.
Its fall and, in many areas, lawns will be dormant soon and yards wont be in their best spring shape. But that doesnt mean you shouldnt make an effort, especially if youre trying to get your home sold. A simple clean up, new mulch, and a couple of baskets of fall flowers near the door can be all it takes to look fresh and new.
This is problematic regardless of the time of year, but fall can be eye-opening for buyers who incorrectly assume that they may be able to command spring or summer home prices without the same competitive conditions. Your agents competitive market analysis should serve as a guide.
Spring is often thought of as the best time for planting, but do you know that plating in fall offers some significant advantages for your garden? In fact, marketing ploys aside, fall is the best time for planting and starting a garden
Below are some reasons why fall is the best time for planting perennials, trees, and shrubs in your garden:
The cooler weather in fall is easier for the plants and gardeners alike. The ground isnt semi frozen and not too dry and the weather isnt too warm or cold. The plants wont get too stressed because they wont be subjected to extremes in weather and hence can recover faster after planting.
There is no need to plant right away because you wont have to worry about plants drying up or the ground being too hot. As for trees, planting them when theyve lost their leaves is actually better because they wont have to exert energy growing leaves and can focus on growing roots. This is the biggest fall advantage, helping the plant grow better roots so that theyll have energy to display gorgeous foliage and blooms come spring time. The fall to spring transition is quicker than waiting for a full year before getting to see the results of your handiwork.
You wont have to water as much in fall, so thats less maintenance effort from your part. You will also not have to baby sit new plants and fret about whether they will survive or not because of the overall milder weather.
A good tip for planting in fall is to water the plants in their pots a few hours before you transport them to their new homes. This lets them soak up water and be better prepared for planting. Water the hole theyll be placed in too before planting.
Fall allows you to see sparse areas of your garden that need more plants. It is the best time to plan out next years garden and start planting it. Youll know exactly how the other plants look like and how much space they take when they got foliage and blooms, allowing you to add pops of colour where you know you need it.
Gardening supplies are typically at their peak prices in spring but are cheaper in fall when some shops even close their business for the winter. Shop for non-perishable supplies, seeds, and maybe some bulbs in fall. You can probably get gardening tools at discounted prices and perhaps some fertilizers, netting, pebbles, and similar things. Watch out for sale in pots too
Financing for new construction as well as financing an existing home both involve getting a loan with real estate as the collateral. Theyre both the same in that manner but clearly different in others. Lets look at the differences between financing new construction and financing an existing property.
When someone decides to buy an existing home and take out a new mortgage, the options are nearly unlimited. First, there are fixed rate and adjustable rate mortgage options. Fixed rate programs simply mean the selected interest rate remains the same throughout the life of the loan. This provides easier financial planning for those who intend to keep the property for the long term, knowing what their mortgage payment will be in say year 28. The payment will be exactly the same as in year 1. These loans can have terms ranging anywhere from 10 to 30 years, with some portfolio type mortgages being as long as 40 years.
An adjustable rate mortgage as the name implies can adjust but to do so the loan must follow very specific rules laid out in the note. An adjustable rate mortgage, or ARM, can adjust based upon a selected index and then adding a margin to that index to arrive at the new mortgage rate until the next adjustment period. There are also consumer protections called caps that limit not only how much the rate can move at the new adjustment period but also how much the rate can adjust over the life of the loan. ARMs also can have various terms. In general, for both types of loans, the shorter the term, the higher the monthly payment but at the same time there is less overall interest paid over the life of the loan.
A construction loan is used to finance new construction. Mortgages used to finance an existing property cannot be used to finance new construction. Construction loans are issued only for as long as it takes to build the home. Once the home is completed, the construction lender sends out an inspector for one last inspection to make sure the home is finished and is ready for occupancy. When this determination is made, the construction loan must be replaced by a permanent mortgage, the same types of home loans used to finance an existing property.
When a construction lender provides financing for a new home, the loan amount is based upon the plans and specifications laid out by the builder. All the costs, both hard and soft are added up. These loans also typically ask for more initial equity from the borrower. While a home for an existing property can have very low down payments, sometimes zero, a construction loan might ask for a down payment of something like 20. If the borrowers already own the lot on which to build, the lot typically accounts for the initial 20 equity required. A loan for an existing home can be found at a mortgage company or through a buyers own bank, while a construction loan is usually provided only by a bank.
When youre considering buying a home, there are two terms youll hear, both of which are >
Understanding these terms is critical because theyre going to help you know what you can afford as you search for a home, and theyre also how youre going to demonstrate youre a serious buyer to a seller.
Both are similar in that they are steps along the way to get a mortgage, but if you have a preapproval, you dont necessarily need a prequalification.
A mortgage prequalification means that you provide a lender with some general financial information. The goal is to help provide you an estimate of how much you can afford when youre buying a home.
The information you provide for prequalification is usually self-reported. Most of the time, it doesnt include verification of your credit report. You can get a prequalification without dinging your credit report with a hard pull.
When youre prequalified, you receive a letter that will show you can afford to buy. You can show it to your agent and sellers, and it may be helpful in the process, but not as much as a preapproval.
A preapproval carries a lot more weight in the buying process. When youre preapproved, youve submitted your financial history and the lender has verified the information you provide by checking your credit report, your employment and income, and your assets and debts.
For a preapproval, youll have to submit information like your total monthly expenses, W2s, pay stubs, and if you already own property, your mortgage statement.
Once you submit all the necessary documents, you receive a preapproval letter. This letter will outline the amount youre approved for, and the type of mortgage a lender will give you as well as the terms.
A preapproval serves as an offer by the lender to you, and there is usually an expiration of the offer. For example, you might have 90 days to buy a home based on your preapproval.
The following are steps to follow to get a mortgage preapproval:
Get your own credit score. The higher your score, not only the more likely you are to be approved but the better the terms youre likely to be offered. With most lenders, if you have at least a 740 credit score, youre likely to qualify for the most favorable terms.
When you check your credit score, go over your report and make sure there arent errors that need to be addressed.
Calculate your debt-to-income ratio. To buy a home, you should aim to have a ratio of 36 or less. Your DTI is a ratio of your gross monthly income that goes toward paying debt.
Gather the documents youre likely to need to submit, such as your tax forms, employment details, and banking and account information. If youre self-employed anticipate showing at least two years of income tax returns.
Finally, when youre applying for preapprovals, shop around and talk to multiple lenders. This will help you find the lender thats right for you so you increase your chances of getting approved, but also so that you can save money on interest with better terms.nbsp;
"Nuisance" has been defined as "something that causes harm" and "a bit of a bother." Nuisances are a pretty common occurrence in homeowner associations since living in close proximity is bound to create friction from time to time. Most HOA governing documents include language like: "No resident shall engage in offensive activities which are a nuisance, or interfere with the quiet enjoyment of other residents."
These "nuisance" provisions trigger the need for the HOA to control certain resident behavior. The problem is there is a growing belief in the legal community that these provisions themselves may be a nuisance for the boards responsible for enforcing them.
One problem is simply defining the term "nuisance." The obvious goal of nuisance provisions is to prevent residents from making other residents miserable. But the broad wording of typical nuisance provisions leads to arguments of whether such provisions apply to almost any activity, or none of them. This ambiguity causes board members charged with enforcing them to echo former Supreme Court Justice Stewarts statement about the difficulty of defining obscenity: "[I cant define it], but I know it when I see it."
In the same vein, many HOA boards would agree that they recognize a nuisance when they see it. However, this approach has mixed results. Behavior that infuriates one person might go unnoticed or overlooked by another. Hyper-sensitive residents may deem all sounds as offensive, while others may refuse to recognize how their neighbors could find the most offensive behavior unacceptable.
The typical nuisance language in HOA documents doesnt offer much guidance to the boards who must mediate these disputes. One option is to list the activities or behaviors that will constitute a nuisance. Generally, the board has the authority to adopt resolutions "to clarify" the governing documents. A nuisance resolution could include:
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Barking dogs at any time
Unsupervised pets in the common areas
Loud music, TV, singing. etc. between 10 p.m. and 8 a.m.
Obnoxious odors
Use of chemicals or equipment that cause life or fire safety concerns
Tobacco or barbecue smoke that migrates between units
Housekeeping that causes fire safety or health conditions overly cluttered, attracts vermin, mold, etc.
Other activities that the Board deems to be a nuisance catch all provision
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Is a nuisance a bit of a bother or something that causes harm? Good question. But this is an area in which the board needs to establish a policy that works most of the time and then focus on those special cases that require more thought or mediation.
Excerpts used with permission from an article from HindmanSanchez.com
Homeownership. It shifts so many things. If youre coming from an apartment, you may experience conveniences like direct-access garages and walls that arent shared for the first time. If youve been renting a home, you will probably feel a new sense of security and peace of mind once the mortgage is in our name. Not to mention the itch to repaint, re-imagine, and redo at least a few dozen things.
Want to know just how becoming a homeowner can change your life? Read on.
"The largest measurable financial benefit to homeownership is price appreciation," said Investopedia. "Price appreciation helps build home equity." Added Real Estate ABC: "The principle you pay on the mortgage is like putting money in the bank, in the form of equity."
If you worry every time your lease comes up for renewal, those days are gladly over. Unless you refinance or take cash out once you have enough equity, your house payment is your house payment.
The feeling you get when you come home to your place - the place you scrimped and saved for and the place that represents a lifelong dream - well, theres just no substitute.
Pride of ownership extends to the homes and area around your house as well. Whether or not you move to a neighborhood with a homeowners association, buying a house will undoubtedly make you more invested in whats going on around you. And that can mean increased property values if neighbors band together for common improvements.
Dont be surprised if you start quoting Drew and Jonathan Scott or using terms like "mitered corners" and "refaced cabinets." Which is good news, because the changes you make to your home wont just mean greater enjoyment while you live there, but also potentially greater profit when you go to sell.
"Home ownership means you have free rein in the aesthetics of the home. When renting, you do not have the advantage of changing your environment to please you," said Real Estate ABC. "You may be able to paint a room, but need to repaint back to the original color scheme when you move. Owning your own home means you can do whatever you please to make your environment both personalized and, in the process, add value to the home."
But so will your satisfaction.
"The second largest financial benefit of owning a home is tax savings," said Investopedia. "The biggest of these is the ability to deduct the annual interest paid on a mortgage from income. Private mortgage insurance may also be a write off, on addition to fees paid at closing. If you have paid points, either discount or origination, you can deduct these as well."
When youre in the process of buying and after you close escrow, youre more likely to be tuned into whats going on in the market and in your neighborhood. This can help you to make smart decisions about updates, upgrades, and refinancing, and can also make you a trusted resource among your friends who want to buy.
With a home to take care of, you may be more clued in to other long-term investments and less wiling to spend frivolously.
The Federal Housing Administration insures what are called FHA loans. These mortgage loans provide opportunities for buyers with less-than-perfect credit or limited down payments to purchase homes, but they arent without potential pitfalls.
FHA loans are available to borrowers with a credit score of at least 580, and you have to make a minimum 3.5 down payment. Theyre a popular option for first-time home buyers.
Lenders such as banks and credit unions issue the mortgages, which are insured by the FHA. That protects the lender if the borrower defaults, which is why the terms are more favorable than a traditional mortgage.
Around eight million single-family homes have loans insured by the FHA.
You can use an FHA loan to refinance single-family houses, to buy a single-family home, to buy some multifamily homes and condos and certain mobile and manufactured homes. There are particular types of FHA loans that can be used to renovate an existing property or for new construction.
The biggest differentiator between an FHA loan and a conventional mortgage is that its easier to qualify for an FHA loan. You may get a loan with a lower credit score than you would otherwise, and your mortgage insurance payments may be lower too.
There are also fewer restrictions as far as using gifts from family or donations for your down payment.
If you have a FICO score of at least 580, you have to make a 3.5 down payment. With a FICO score between 500 and 579, youre required to make a 10 down payment, and mortgage insurance is required. Your debt-to-income ratio needs to be less than 43 whereas with a conventional loan its usually 36. You do need to have proof of income and steady employment, as you would need with a conventional loan.
There are limits on the mortgage amount you can get with an FHA-guaranteed loan. The limits vary based on your county, and in 2020 these ranged from 331,760 to 765,600. The limit amounts are updated by the FHA each year based on fluctuations in home prices.
The primary benefits of an FHA loan are that buyers who wouldnt otherwise qualify may be able to own a home and for a lower down payment. Sometimes the FHA will help facilitate coverage of closing costs. If you have problems making payments on an FHA loan you may be eligible for a forbearance period if you qualify.
You will have to pay an upfront mortgage insurance premium with an FHA loan to protect the lender. The fee is due when you close and its 1.75 of your loan. You will also have to pay an annual mortgage insurance premium for the life of your loan. The amount can range between 0.45 and 1.05.
When you buy a home with an FHA loan, it has to meet strict standards in terms of health and safety.
Also, while there are set standards from the FHA, approved lenders can create their own requirements.
Youll have to first find an FHA-approved lender to get one of these home loans. Youll need some documents, including proof of U.S. citizenship, legal permanent residency, or eligibility to work in America. Youll need bank statements for at least the past 30 days, and youll probably need to show pay stubs.
Some of the information your lender may be able to obtain on your behalf, such as your credit reports, tax returns and employment records.
There are advantages to an FHA loan because it expands homeownership to more people than conventional loans. Its just important that if youre considering this loan you understand the costs and that youre not taking on more than youre financially prepared for because of the less stringent approval requirements.
Owning real estate overseas is often a lifelong dream. It can look different for everyone. For example, maybe your goal is to retire in Tuscany, or perhaps you want to buy a second home but keep your primary residence in the U.S. You might want to purchase property now where youll live later, or you could want to move overseas full-time.
Regardless of your situation, many specifics vary depending on where you want to buy, but the following are some general considerations to keep in mind.
No matter where you want to buy or when, you should go into it with an understanding that its complex. There are legal and financial issues, as well as travel->
To help streamline it, you should work with local professionals. First, a local lawyer can be extremely helpful when youre buying property as a foreigner. You should also use a buyers agent who specializes in international transactions.
There are very specific rules dictating who can buy what in most countries. For example, theres a rule in Mexico that if youre a foreigner, you cant own property on the coast, but there are ways to go around this by using a Mexican bank trust.
Some places wont let foreigners buy property altogether. For example, Switzerland has very strict restrictions on foreigners buying property. You can only buy property if youre an EU or EFTA national who has a Swiss residence permit and lives in Switzerland, or have a Swiss C permit.
In many cases, mortgages overseas arent available to U.S. buyers, and U.S. banks typically wont lend you money to buy something internationally. Even if you can find a location where you might be eligible for mortgage lending, youre probably going to have to make a down payment of anywhere from 30 to 50 and your terms arent going to be very favorable.
You may also have to get a life insurance policy that totals your mortgage, and the bank lending you money will have to be named the beneficiary. At the same time, depending on your age you may not be eligible for life insurance in some countries.
What this means is that you should have cash if you plan to buy overseas. You might be able to get developer financing, or you can use the proceeds of a self-directed IRA if you plan to use the property as a rental or investment only.
If you buy property in a foreign country, you may be taxed both when you buy it and sell it. You may also have to make payments throughout the year, similar to property taxes in the U.S.
Finally, before you buy anything overseas you need to have an exit strategy you can turn to if necessary. You may think youll never sell, but unexpected life and financial situations can arise. What taxes would you owe if you did sell? Would you even be able to sell? What is the market like where youre buying and what is it likely to look like in the future?
As the pandemic evolves, real estate professionals continue to adapt to changeboth for themselves and their clients.
Over the past months, I have been struck by repeated situations in the media and on social media that reminded me that professionals in all fields often overlook opportunities to improve adaptability while in the midst of change.
With more shifts on the pandemic horizon, why not take proactive steps to increase your adaptability by building up your powers of resourcefulness, flexibility, and resilience?
The pandemic is a health crisis not an economic crisis nor a global-scale natural disaster, so capital will be available when the crisis abates and the necessity for massive rebuilding will not delay recovery. Pandemic impact will be lessened, counterbalanced, and eventually ended by well-founded, improved, and sustained personal and societal confidence.
Once we are confident as individuals, families, and organizations that we will be safe from catching or spreading Covid-19, stand back. Individuals, businesses, communities, and countries will forge ahead when not constrained by fears of contagion.
Speakers and panelists at the virtual 2020 Urban Land Institute ULI Fall Meeting agree that the pandemic will not continue forever. Varying estimates of when it will end are linked to how quickly an effective vaccine can be developed and distributed. Uncertainty at the timing prevailed with some voicing certainty for next spring, others predicting next fall, and still others forecasting at least another year or so.
As you stay safe and keep others safe, consider reinforcing your professional expertise by incorporating:
Widespread agreement that Covid has been an accelerator of trends leaves us with the knowledge that some pre-Covid hindsight may be useful in projecting into our post-Ccvid futures. The more conscious you are of what was really going on before the pandemic, the better youll be at predicting details and identifying opportunities associated with amplification of real estate trends >
Example: 18-hour cities, defined by ULI as less intense version[s] of some of the biggest global centers while still maintaining an international character and a vibrant urban core, continue to dominate The Top 10 Markets [list below] powered by strong growth, homebuilding outlook, affordability, and job prospects.
ULI and PwC US >
The Top 10 Markets in Emerging Trends in Real Estate 2021
1. Raleigh/Durham, N.C.
2. Austin, Texas
3. Nashville, Tenn.
4. Dallas/Fort Worth, Texas
5. Charlotte, N.C.
6. Tampa/St. Petersburg, Fla.
7. Salt Lake City, Utah
8. Washington D.C./North Va.
9. Boston, Mass.
10. Long Island, N.Y.
Progress involves risk and letting go. You cant achieve change while you cling to the way its always been. We cant embrace technology the way we have during the pandemic and hold on to the way weve always thought. Work and education are just two areas that technology has rapidly redesigned under social-distancing pressures. For digital transformation to be effective, the way we define work, learning, and, therefore, productivity must be transformed too. Until you shed bias and out-dated standards and reach out for fresh perspectives, progress is just talk.
Example: Our love affair with online tools and toys has led to consistently elevated expectations for technology. In a ULI session about the Networked Economy, Lisa Picard, CEO of EQ Office, said technology has heightened the speed at which we expect what we want: Everything. Everywhere. All the timeNot Work From Home but Work From Anywherenbsp; What is missing is that our standards and language lag behind. The pandemic has changed the nature of work and where we do it, but definitions of productivity must change as well. For example, instead of expressing intent as get the most out of workers think bring the best out in individuals.
The decisions you make, large and small, determine the present and shape the future. Even deciding not to decide is a decision. The more you leave to chance, the less certain the present and future. The more often you dig in to uncover choices for clients and yourself, the more often confident decisions emerge.
According to ULI: Social unrest and protests in cities across the country have also played a role in the reevaluation of presence in urban cores. 70 of respondents agree that the real estate industry can address and help end systemic racismfrom promoting diversity, equity and inclusion within the sector, to looking for ways to develop underserved communities. On a rating scale of social issues in real estate, income and racial inequality moved from little to moderate importance last year, to moderate to great importance.
Example: Onay Payne, Managing Director, Clarion Partners LLC shared a statistic to illustrate social inequity that also emphasizes that inequity will not be resolved by chance but by choice. Payne, an Emerging Trends general-session panelist, told reportedly 4,000 virtually-attending real estate professionals that, on the financial scale, the top 50 individual Americans possess as much net worth as the bottom 165 million Americans.
Has the dazzling speed at which Covid-19 changed everything proven to you that nothing is beyond change?nbsp;
Simply, commit to conscious effort, search for choice, and shed accumulated crap to achieve progress.
For more by PJ Wade, visit PJs blog: Whats Your Point?nbsp;
If youre in a tough sellers market or just looking to get top dollar for your home, you want to do any little thing you can to make your house stand out in a potential buyers mind. Staging is one of those things that can make the difference between a sold sign and a house that lingers on the market.
The National Association of Realtors suggests that staging has a real impact on home sales. In fact, a majority of realtors report that staging increases the sales price of a home anywhere between 1 and 10 percent. However, the real impact of staging seems to be how quickly a home is sold, with 39 percent of Realtors stating that it greatly decreases the time spent on the market. Buyers agents confirm the positive impact of staging, stating that 77 percent of buyers were better able to picture a home as their own when it was staged.
Of course, there is an art to staging a home, and a poorly staged home can have a negative impact on a potential sale. Here are five tips for staging your house that will have you putting up that SOLD sign in no time.
Before thinking about decorations or furniture placement, the No. 1 suggestion of realtors is to declutter and deep clean. Clear countertops and other surfaces, and pack away anything that is not essential. Your goal is to remove anything that will distract buyers from seeing the positive aspects of your house, which is why realtors often suggest removing family photos and overly personalized decorations like your giant bobble head collection. Remember, decluttering includes removing excess furniture, which help make your rooms feel bigger.
Once youve removed furniture that is unnecessary or too large for the space, group furniture into conversational groups away from the wall, instead of pushing sofas and chairs to the corners. You want there to be a flow to each room, and keeping the walls clear of big furniture will actually make the room feel bigger, says HGTV.
Although youll need to declutter, you still want your space to feel like a lived-in home. Do this by decorating with groups of accessories like vases, books or plants. Staging professionals often recommend grouping similarly hued objects in odd number pairings of varying heights and shapes.
While you want to keep your staging dcor fairly neutral, adding one or two bold accent pieces will help highlight a particularly great feature of your home. Adding a dramatic chandelier that matches the >
Mirrors can help brighten a dark hallway, bring light into a room and make a room seem larger, says Forbes. For a big impact, get a cheap mirror and add a decorative frame, or group a lot of small mirrors in differing shapes and sizes. In a room with a window, place mirrors across from the window to reflect the sunlight.
Staging is all about helping potential buyers create an emotional connection with your home. Help buyers picture themselves living in the house by decluttering, grouping furniture and accessories, adding one or two bold accents and using mirrors. Now get ready for the offers to roll in.
If youre a homeowner and thinking of maybe refinancing or youre out shopping for a new home, certainly interest rates are part of the picture. Rates determine your monthly mortgage payment as well as determine affordability. In either case, its important to know that any rate you see advertised on the internet or a rate you get from your loan officer arent immediately available for you. Mortgage interest rates can change daily and, in some instances, when the markets are somewhat volatile, rates can even change from the morning to later in the day. Regardless, whatever rate you see isnt any good until you lock that rate in. How do you lock in a mortgage rate and what is the process?
First and perhaps foremost, dont expect to pick up the phone and call a mortgage company and request a rate lock. Lenders take rate locks just as seriously as you and wont lock in a rate from someone whos just placed a phone call. Lenders want a bit more commitment than that. To get to this important first step, it means you must at minimum submit a loan application and provide the requested documentation.nbsp;
Lenders can quote rates over the phone to give you a general idea of what the rate market is doing but there are different factors involved when lenders quote a specific rate to a client. FICO scores, occupancy, equity in the transaction matter. Some of this information wont be known until you apply for the mortgage and send in copies of your paycheck stubs, W2s and other requested documentation.
Once youve reached this stage, you might be in a position to lock. But maybe not. There are no universal guidelines lenders must adhere to as it >
Rate lock periods can vary but most rate locks can range from 10 to 60 days or more. The longer the rate lock period the higher the rate and/or fees will be. The strategy is to lock in your rate for the shortest period as possible while still meeting your settlement date or to give the lender enough time to approve your loan, deliver your loan papers to the settlement agent, sign the papers and return them to the lender for a final review.
Finally, if your rate lock expires while your loan is still in process, most lenders will >
Full Story >
What Online Dating Can Teach You About Selling Your Home
Online dating is a big business; according to eharmony, forty percent of Americans use online dating and twenty percent of all committed >
When you create a dating profile, youre trying to capture the essence of your beauty and personality. Apply the same principle to your home for sale. If youre not certain what your homes best features are, your agent will su>
You wouldnt go on a date wearing tattered or stained clothes, so dont show your house with tattered or stained furnishings. If your couch has seen better days, a throw rug and a few pillows may be all you need to disguise the damage.
Stained carpets? Try steam cleaning first. If that doesnt work, get an inexpensive area rug. Worn tables? Cover them with a stylish tablecloth.
Dont be afraid to go for it with a bit of flirtation. Just like a dating profile that insists on lifelong celibacy or is aggressively chaste may not attract the right attention and the same certainly goes for those that go waaaaay beyond flirtation, a home that shows blah and boring probably wont garner much notice.
"Popular wisdom says that when you put your home up for sale, it should be made to appear as bland and beige as possible," said The Kansan. "Well, like a lot of popular wisdom, this idea is only partially true. A low-key look helps potential buyers to envision how their own possessions will fit into the house, but a dash of zest will help your property to stand out from the crowd...in a good way.
Take a sexy pool shot with the fountain going. Transform your boring bed into a hotel masterpiece with pillows and turned-down bedding. Add a little sparkle to your dining room table, your fireplace, your sideboard. And for open houses, appeal to the senses with a sparkling clean home, soothing music in the background, and chocolate chip cookies freshly made in the oven.
You know the old saying: You only get one chance to make a first impression. Its true whether youre meeting a date for the first time or touring a home. If the first impression of your home is one of patchy grass, piles of leaves, overgrown greenery, and chipping paint, there probably wont be an opportunity for a second impression. A little attention to curb appeal could pay big rewards.
You dont hide great hair under a hat or muscled arms under an oversized sweatshirtnot if you want to show your best assets. Use this same idea in your home. If your granite counters are hiding under cutting boards and bills and blenders and magazines and scented candles and vessels full of stirrers and wooden spoons and spatulas, well, then how can anyone see what youre working with? Clean up your stuff so people can fall in love with your homes best features.
In other words, take great pictures. You never want to misrepresent the condition of the home, but rather showcase the best bits. Dating profile pics focus in on key features: pretty eyes or a great smile. Pictures of your house should do the same. If your kitchen is updated, show it off. Same for a nice master bath or well-designed master bedroom. Large yard? By all means, add a few photos of this desirable space.
Youd hardly put pictures of yourself online surrounded by dirty clothes. It would seem like a given that sellers would apply the same logic when listing their home. But in some cases, you would be wrong.
On your dating profile, that means smile big. As it translates to your house, it means open up those blinds and let the light in. And it wouldnt hurt if you put out a vase of flowers or two.
Old-fashioned hair and out of >
Online dating is all about communication, so those who are participating are bound to get feedbackunwanted or not. Home sellers can also expect to get feedback. But if your agent, other agents who viewed the home, and everyone who came to tour it during an open house are all telling you the house is unkempt, in need of obvious repairs, or is way too pricey for the condition or neighborhood, you may want to listen. Just like a man whose profile is offensive to women will likely not get him dates, a home that is turning buyers away instead of turning them on is not likely to sell.
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