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Thursday, April 22, 2021
Should You Finance Your Renovation?
You can finance your house, your car, your new teeth, and your college degree. We just got a quote from a company that offers financing on new board-on-board fences But no thanks on the interest rate that is triple what we have for our mortgagewell live with our existing fence a bit longer, thank you..
If youre looking to finance your renovation, youve got options there, too. Sure, you can take out a home equity line against your home once it appreciates in value, but youll have to pay interest. What if there was another option?
There is: zero interest credit at Home Depot and Lowes.
Move into a new home and hate your floors, your fridge, or your kitchen countertops? With credit from Home Depot or Lowes, you can finance your updates, breaking the cost into more doable monthly payments. So is it for you? Lets find out by examining the pros and cons also, you can check out the different Home Depot programs here and compare the offerings at Home Depot and Lowes here.
Or new floors or a new bathroom or anything your home is dying for. If you dont have another viable option for doing the renovations you need, this could be the answer. The amount of credit you are offered, the length of the term, and the corresponding monthly payments will obviously vary.
Interest makes what you purchase more expensive, which can make it take longer to pay offespecially if youre only make the minimum payment every month. Remove the interest and you have
You may not want to shell out several thousand dollars for Quartz countertops, but a 200 monthly paymentthat doesnt sound so bad, right?
Of course, youre probably not thrilled about committing to more money going out every monthespecially since you may not be totally sure yet whether or not youll have discretionary funds left over at the end of the monthbut are you more or less thrilled about those horrid countertops?
If youre the type that hates to wait and loves instant gratification, this will definitely be exciting.
Then again, it does feel good to set a goal and achieve it.
The biggest downside to no-interest credit offerings like these is the punishment involved if you dont make good on your responsibilities. Miss one payment or make it late, and youre busted. Not only will you immediately incur interest at whatever rate they pre-warned you about when you opened your account and it can be obnoxiously high, but interest will also now be owed back to the initial credit amount. Your monthly payment will jump dramatically, making it challenging to even get the balance paid off.
Becoming a first-time homeowner takes a lot more than a desire to buy a house. It takes a lot of effort on your part to save up a down payment which is usually a pretty good sized chunk of change research neighborhoods, get pre-approved for a loan and other steps. Fortunately, it is quite possible to say goodbye to renting and hello to homeownership, especially when homeowners-to-be consider the following tips:
In order to leave the land of rent, you are going to need a down payment plain and simple. While it is common to put down 20 percent, some lenders now allow a much smaller amount, and first-time home buyer programs may go as low as 3 percent. While a smaller down payment may sound enticing, a 5 percent down payment on a 200K home is still 10,000 not exactly a small sum. If saving money does not come naturally for you, dont worry. With some >
Unfortunately, the chances of becoming a victim of identity theft increase when you are buying and moving into a new home. The stacks of documents that are part of buying a home and that are filled with your personal information may accidentally fall into the wrong hands, and once you move, mail may not be routed correctly and thieves may steal your mail and your identity from your old mailbox. Prevent this situation from happening by purchasing an identity theft protection program; find a trusted company that will help safeguard your personal data. In addition to letting you know when a bank pulls your credit report and asking if you have authorized this inquiry, certain services will monitor your financial activity and alert you if anything is amiss.
When you start the pre-approval process for a loan and then move on to the Big Kahuna of applying for an actual mortgage, your credit report will be pulled numerous times. Your credit score will then be used to determine if you are approved for a loan, and what type of interest rate you will get. Please do not wait until you have the down payment saved and you are champing at the bit to go look at houses to check your FICO score check your credit as early in the process as you can. If you have a credit card that has been issued through your bank, give them a call and see if they can run your report for you for free; in the cases of some credit cards, they also offer a free monthly FICO score check. Read through the report and check for any errors; this includes credit lines you never opened and delinquent payments that you know were made on time. Dispute any mistakes that you find and look for ways to boost your credit score, like paying down credit card bills and setting up automatic bill pay so you are never late with your payments.
At the start of April, it was announced mortgage rates in the U.S. have risen for a seventh straight week. The average for a 30-year loan was 3.18, which was up since last week when it was 3.17. That was the highest since June, according to Freddie Mac data.
Rates have gone up from their record low in January, which was 2.65.
The increase has meant homes are more expensive for buyers, and thats coupled with the pressure of competing for a low inventory of properties.
There have been bidding wars, particularly in certain parts of the country, as people have been moving out of apartments and urban areas, searching for more space during the pandemic.
The National Association of Realtors reported their index of contracts to buy previously owned homes did go down in February, by the most since April 2020. While much of the real estate boom ended up being fueled by shifts brought about by COVID, April 2020 was a tough month for real estate because country-wide lockdowns were stopping potential deals.
Freddie Macs chief economist Sam Khater said that purchase demand is still strong, but some buyers are starting to feel the pinch of the increased mortgage rates and reduced affordability and inventory frustrations.
Refinancing booms have also started to slow, which could be problematic for the mortgage industry, following their record 2020.
Its possible that borrowing costs could keep going up, and yields for the 10-year treasuries are climbing as well.
The rate trajectory for the rest of the year does depend quite a bit on the strength of the economic recovery. There is optimism thanks to available coronavirus vaccines, but mortgage rate increases are showing the foreshadowing of a very strong economic recovery. If that doesnt come to fruition, rates may stop their decline or start moving in the other direction.
However, some experts, like the Mortgage Bankers Association, expect rates could go as high as 3.6 by the end of 2021. The forecast three months ago from the same group was for rates to go to 3.5 late in 2021.
So what does all this mean?
Many analysts are expecting a pretty significant pullback in refinancing. Its likely to slow quite a bit by the second half of 2021.
Even though the expectation is that mortgage rates will go high enough to slow refinancing, experts believe that theyll still be at a point thats low enough to encourage buyers.
Michael Fratantoni, chief economist at the Mortgage Bankers Association, believes that there will be a record volume of mortgages in 2021.
While the Federal Reserve doesnt directly set mortgage rates, it does create an environment that lends itself to rates. The Fed cut rates when the pandemic recession started, and they have continued to signal they will keep rates low. There is a significant cor>
Frantantoni said they think the Fed will continue to keep short-term rates at around zero through 2022 and only begin to slowly raise rates in 20223.
When going through the process of hiring a professional homeowner association manager, its necessary to know what services you are interested in receiving. While each company offers a set of core services, the set varies from company to company. Its up to the client to define the scope of work so that proposals received can be compared and contrasted.
The following are common duties performed by homeowner association management companies. Use it to screen prospective management candidates.
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At the height of the real estate boom in the mid-2000s, buyers who otherwise wouldnt qualify for a traditional loan could buy a house with very little documentation. Because of this ease of qualifying, real estate markets heated up, driving up home prices. Buyers would essentially flip a property after just a few months making money on the sale.
Soon thereafter, the bubble burst. There were no more people to issue such loans to. In turn, that meant that buyers who intended to flip a property for a short term purchase discovered the home they intended to sell couldnt find any buyers. Because they couldnt qualify for a traditional, verifiable loan, they began to default. And it all went downhill from there.
The CFPB stepped in and put an end to all this. New guidelines were introduced to stem the tide of foreclosures in an attempt to get the economy back on track. One of these new guidelines was the ability to repay, or ATR. This guideline required lenders to verify and document income from applicants and prove they had enough monthly income to pay back the new mortgage. Essentially, the mortgage industry returned to the good old days where lenders verified pretty much everything.
As the industry began to settle down and lenders returned to traditional underwriting, a new program was introduced which didnt directly verify monthly income but did so in another way. Instead of paycheck stubs or income tax returns, lenders would verify income by looking at bank statements over the past 12-24 months. Why? Bank statements, either personal or business, would show deposits being made. Lenders could determine how much someone made each month by adding up all the deposits.
Such loan programs were aimed primarily at self-employed borrowers. Many self-employed borrowers could have somewhat complicated tax returns. Sole-proprietors, LLCs, Trusts and Corporations all filed tax returns. Throw in things like depreciation, expenses and third-party income and one could see how much paperwork would actually be needed. Instead of these various income tax returns, lenders simply looked at bank statements for third-party verification of income.
These loans arent exactly no-doc or low-doc programs but theyre very close to it. Minimum credit score requirements are typically higher compared to a fully documented loan and more down payment will be needed at the settlement table. The program is not only more convenient for the buyers but also require less overhead when evaluating a loan program submitted by someone who is self-employed or >
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Seven DIY Bedroom Updates For A Chic Sleeping Space
Even though its the place we spend hours in, >
You dont have to be afraid of tackling this important space; little changes can make a big difference, and many can be made this weekend without outside help. Shake out those muscles and get ready to make that bedroom beautiful
Create an urban chic look with a feature wall of exposed brick or go romantic with this look. Theyre both of the peel-and-stick variety, which means theyll go up and come down easy. The no-commitment aspect of these wallpaper options makes them the perfect choice for those who havent done much in the bedroom because they thought they needed to strike the ultimate inspiration.
You can also revitalize an old dresser or pretty up a boring nightstand with a roll of the stuff. It sticks to almost anything and is removable and repositionable in case you make a booboo.nbsp;
You could spend several hundreds of dollars or more on an upholstered headboard, but with a trip to Michaels or Hobby Lobby and a couple of hours of your time, you can make you own for much less. A couple of sheets of MDF, some batting, some buttons, and your fabric of choice is just about all you need. This is one of our favorite tutorials for creating a DIY headboard that looks like it came right out of a catalogue.
You dont have to get new bedding to create a fresh new feel in the place where you lay your head. Plush pillows can give the bed some oomph. "If you only make one tweak to upgrade your bedroom, it should be the way you >
Peel-and-stick tiles arent just for kitchen backsplashes. Turn a regular old bedroom mirror into a standout. The whole project can be done in mere minutes. Tip: Measure first so you know exactly how many tiles you need and so you dont end up with awkward spacing. And, be sure about the placement before you add pressure because once the tiles adhere, theyre not easy to remove.
A patterned rug large enough to bring a cushy feel to your bedroom floor can be pricey. With stencils and chalk paint, you can transform a simple, inexpensive rug into something that looks like it came from an expensive decor store.nbsp;
Stencils are a great choice for bedroom furniture, too. "A little sanding and some paint can give new life tonbsp;any piece of furniture, but if you really want to transform an old piece, this is anbsp;DIYers best-kept secret:nbsp;stencils," said Country Living. "Using stencils tonbsp;givenbsp;a piece of furniture a makeover is an easy way to create a completely custom and one-of-a-kind piece.nbsp;Its also a brilliantnbsp;way to refreshnbsp;wood furniture that has seennbsp;better days."nbsp;Add some new knobs, and, voila
Inexpensive molding can make your plain, flat, bedroom or closet doors infinitely more interesting.nbsp;Check out how many different ways you can realize this easy update on Decorating Your Small Space.
Septic systems or sewer systems: whats better? Whats the difference? Homeowners flush their toilets, run their sinks and take showers without putting a second thought into the sewer systems that allow for this luxury.
All of these functions >
1. Sewer system
2. Septic system
Sewer systems are different than a septic system because one >
A sewer system requires no maintenance, but youll need to pay monthly fees for using the system. Local governments allow the homeowner to hook up the local sewer system, which will ensure all of your waste is gone forever.
Youll pay monthly, but you never have to worry about septic system costs and repairs.
Sewers can become clogged and they may backup over-time. This happens when neighbors and others in the community are flushing wet wipes or pouring grease down their drains. When major blockages occur, everyone is impacted.
You may not pay for the unclogging upfront, but your fees may rise to cover the expenditures.
A septic system is your own system, and this is a tank system thats often able to hold 1,000 gallons of water. The three-layer system connects to the home, and the system is placed in the ground on the homes property.
Often seen as an eco-friendly option, you wont pay monthly fees to use your septic system.
Clogging of the system is also your fault. If the system becomes clogged, this is due to your actions: i.e. youre flushing items that cannot breakdown in the system.
Septic systems can be costly to install, and all of the maintenance and repair fees must be paid by the homeowner.
But "sewer betterment" fees are often imposed on homeowners, with some fees being in the 10,000 range. This may include fees for installation and repairs. When these fees are considered, this is often higher than the cost to install a septic system on the land.
Septic systems do need to be pumped, and this can cost 200 - 300 every 3 5 years.
Concrete tanks can last 40 years with proper maintenance, while steel tanks have a lifespan of 15 20 years.
"Septic systems should be inspected and pumped a minimum of once every three to four years. You may not be experiencing any problems now, but a full septic tank may allow unwanted solids to flow into the drain field, which is the part of the system that consists of a distribution box and a series of connected pipe," explains Apollo Drain.
Septic systems also offer the benefit of being able to build a home in a remote area, which may not have a sewer system connection close by. But when sewer systems are close to the home, theyre often chosen because they can handle large amounts of waste at a time. During storm periods where heavy rains occur, sewer systems are able to handle the water with much greater ease than a septic system.
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Pre-pandemic, earning the big bucks involved donning traditional business attire and heading downtown to the office every day. Not now.
During the pandemic, moving up in the business world means having more and more freedom not to look or act like youre part of the traditional business world.
These days, going to the office may mean me>
For decades, employers equated working from home with employees slacking off. This productivity misconception meant advances in technology like WiFi and mobile computing did not spawn anticipated widespread teleworking or working over phone lines:
Even tech industries creating the remote-work software and bolstering the internet kept their employees coming to the office. Giants like Apple and Google built monuments to their genius to captivate their thousands of workers on site.
The real estate and development industries were dedicated to helping workers live as physically close to work as was affordable.
Real estate value was tied to work proximity and convenient commutes.
Then the pandemic kicked in during the spring of 2020 and that traditional thinking came under attack.
More than a third of US households working from home report the shift to staying home is more common during the pandemic than before. According to Working from Home During the Pandemic, authored by the U.S. Census Bureaus Journey to Work and Migration Statistics Branch, those who switched to telework have higher income, education, and better health.
This socio-economic pattern proves that the pandemic theme were all in this together is a misconception.nbsp;
Beyond medical inequalities, the pandemic is not, financially, socially, or work-wise, affecting everyone in the same way or to the same extent:
Many industries and their must-go-to-work employees have been devastated by the pandemic. Real estate, on the other hand, is flourishing and not just because interest rates are low.
Many individuals, families, and small businesses see the pandemic through the lens of a recession: lost income, lost jobs, homelessness, failure to pay expenses like rent or credit card debt, struggles with food insecurity. Many of those who can work from home have earned more and saved more during the pandemic than before Covid hit. Their discovery that you can work from anywhere drives these home buyers out of major urban areas and condominiums to find their spacious dream home.
Households with members who teleworked more frequently reported higher levels of income and education and better health than those in which no one changed their typical in-person work in response to the pandemic. Renovations to incorporate home office demands are a common result.
All this means that skyrocketing real estate demand for live anywhere housing, up-grading square footage, and space-generating renovations does not include everyone.
Since August 2020, the Census Bureau has asked participants in the Household Pulse Survey: Did any adults in this household substitute some or all of their typical in-person work for telework because of the coronavirus pandemic, including yourself?
Figure 1. nbsp;
Census Bureau findings include the following statistics, which are reflected in Figure 1:
Among those surveyed between Aug. 19 and Dec. 21, 36.9 answered yes.
Of those in poor health, 4 in 5 79.9 reported that no one in their household switched to telework or changed their telework habits, compared to just over half 52.4 of those in excellent health.
In the highest-earning householdsthose with annual incomes of 200,000 or more73.1 switched to telework. This is more than double the percentage 32.1 of households with incomes between 50,000 and 74,999, a range that includes the 2019 median U.S. household income 65,712.
Lowest-earning households were less likely to switch to telework. Only 12.7 of households earning under 25,000 reported teleworking in lieu of in-person work.
Those with a bachelors degree or higher were more than three times as likely as those with a high school education or GED only to have an adult in their household substitute in-person work for telework: 61.7 compared to 19.1.
How respondents described their health status as excellent, very good, good, fair or poor also >
The public outcry to keep each other safe from the virus has put many on their best behavior. Employers are now often as intent on having employees shift to working from home as employees are themselves. This combined, and often collaborative, effort has improved work flexibility and established creative virtual solutions.
However, even outside of the context of the COVID-19 pandemic, income, education, and health are closely cor>
Will pandemic telework patterns persist post-pandemic?
Work from anywhere also means anyone in the world could take your job.
Companies actively pursuing AI and machine learning may need fewer and fewer workers.
When the Covid-19 spotlight is off them, employers may lower compensation for teleworkers claiming its cheaper and more fulfilling for them to work from home.
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Resource Alert: nbsp; Household Pulse Survey: Household Pulse Survey Public Use File PUF
Microdata files contain individual responses to survey questions. They can be used to create custom tabulations and allow users to delve further into the rich detail collected in the Household Pulse Survey HPS. All weekly HPS microdata files are >
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What To Do When An Appraisal Comes in Low
When someone is buying a home and theyre going to use financing in the form of a mortgage, they need an appraisal to cement the deal. Before a bank is going to extend credit, they want to make sure theyre not giving someone a loan thats more than the fair market value of the house.
Thats where an appraiser will enter the scene. An appraiser will give their unbiased opinion on the value of the home.
If the appraisal is less than what your offer is, then you may feel frustrated and even a little devastated.
This isnt an uncommon situation, however. One of the big reasons for contingency issues is the appraisal.
An appraisal goes over the condition of a property, and they have to be certified in the state where theyre working. Appraisers look at a wide variety of features like the year the home was built, zoning details for the neighborhood, construction details like the type of foundation, and the utilities and amenities.
An appraiser will come up with a report for the lender in around a week or so, but for VA and FHA loans, the appraisal report can take longer to finish because it has to be more detailed.
There are a lot of reasons an appraisal can come in low. A lack of comps can be one reason. For example, the market might be moving faster than appraisers, so home values in a hot market could be going up rapidly, but appraisals might not be matching that pace. Theres also an issue if for example there have been a lot of remodels in a neighborhood to bring the overall value of the comps up.
So what if your appraisal comes in low? What can you do?
If youre worried a pending sale wont go through, both a buyer and a seller have options.
The buyer might be able to make up for the difference in the appraised value and the sale price using cash.
The reason a lender even cares about the appraisal value is that it impacts the loan-to-value ratio.
In some instances, a lender wont let a buyer make up the difference in cash, so there could be another option here which is a buyer covering some of the closing costs on the sellers end.
The simplest solution, when possible, is to reduce the price if it was priced too high. The lender will be happy, and so will the buyer and then the deal can go through. You have to think that if you let one buyer walk away over the issue, that theres certainly a high likelihood the next buyers lender could have the same issue.
You dont have to accept an initial appraisal. That doesnt mean that your lender wont go with the first one, but its worth a shot to dispute it or to ask for a second one.
You should always ask for a copy of the appraisal report as a seller, so you can go over it and make sure there are no glaring mistakes.
Only a lender can technically demand another appraisal, and they may or may do that, but its worth trying.
You can ask the real estate agents who are working on the deal to create a list of comps that would highlight the justification for the sale price thats been agreed on. Once thats compiled, you can give it to an underwriter and ask them to review the appraisal.
Finally, aside from flat-out canceling the transaction, you might be able to negotiate and come to an agreed-upon middle point. For example, a seller might agree to pay some of the difference between the sale price and the appraisal.
There are options, but you have to find whats going to work for you, and if youre working with a good agent, they should be able to help you find a solution if an appraisal comes in low.
If your real estate business is in need of a transformation this year, then youre in the right place Switching things up is important in the real estate business to help you stand out from the crowd and establish yourself in a busy marketplace. By finding your niche, rebranding and creating great content for social media, you should be able to do just thatnbsp;
In order to be as successful as possible in the world of real estate, it is important that you find your niche. Pinpointing your passion and becoming an expert in that area will not only make work more enjoyable for you, but clients will have more trust in your ability to find them the perfect home in that niche.nbsp;
Perhaps you love holiday properties, renovation projects, energy-efficient homes or historic properties. Gradually transfer your focus to that area and build your portfolio. You are likely to be much happier and also to have a more committed client base. Look into any qualifications you might need for that area and work towards those, too.nbsp;
This will help to set you apart in the world of real estate and to establish a strong sense of belonging in the industry.nbsp;
As you begin to hone in on a new niche, it is the perfect time to rebrand your business. Brand identity is a huge part of real estate, as your branding says everything about who you are as a realtor and what you represent. You can highlight your speciality through branding in order to establish yourself in the industry.nbsp;
Some people believe rebranding can hold back the success of a business, which can be true in some cases, however when it is done properly it is also a fantastic opportunity to build a trustworthy and >
Social media can help to completely transform a business. There are many different directions you can go in, but the key is to make sure the content is great. Post high quality images and videos of property, create engaging content that will provide value to users and add some character to the profile to set you apart.nbsp;
You could provide client success stories, with a brief interview if they consent to being posted about their experience with you as a realtor and the process of the purchase. Also, you could offer exciting videos of new properties using a drone or good quality camera. Finally, you could also provide useful videos on how to help buyers through the home buying process, which would show you are knowledgeable in the area and that you care about your clients wellbeing.nbsp;
So, there you have it Three ways that you can transform your real estate business in 2021. Once you have found your niche, it will be much easier to rebrand and create great content that you are passionate about. Take your time with this and invest where you need to, and your business will thank you for it in the years to comenbsp;
Earnest money is just one of the many terms to know when it comes to buying a home. Its something you might initially overlook, but not understanding earnest money can create roadblocks in your process to buy a home once youre ready to make an offer.
In simple terms, the earnest money is a deposit that you put down to show that youre serious about buying a house. You want to show the seller that you really do want the home, and earnest money might be anywhere from 1 to 5 of the total purchase price.
It helps sweeten your offer to a seller and shows them that you want to take the necessary next steps to buy their home.
Then, in exchange for the earnest money, the seller will take their home off the market. Theyll start to work to arrange things like inspections.
Earnest money goes into an escrow account while you wait on your closing. The escrow account is with either the sellers broker or title company, or an escrow company.
Theyre essentially secu>
Again, earnest money is typically anywhere between 1 and 5 of the price you agree on with the seller to buy the house. Theres a lot of variance in this, though. For example, in some locations, you might do a fixed amount and in others you could pay a percentage.
In very popular housing markets, you can see very high earnest money deposits. Your real estate agent will help you know whats in line with your area.
This can be an area of confusion for some buyersearnest money is not a down payment. Your down payment is fully separate from earnest money and is anywhere from 10-20 of your homes purchase price.
You need to make sure that when youre thinking about how much a house will be, youre adding up your earnest money and your down payment. Your earnest money is due when you make an offer, while your down payment and closing costs are due later.
When you enter into a purchase agreement, it will outline contingencies. These are situations that are agreed upon where you can walk away from a deal and still get your earnest money back.
For example, you might have an appraisal contingency in case the appraisal is lower than the sale price.
Your real estate agent will help you decide the contingencies to put in your contract.
If youre in a highly competitive market, you might agree to nonrefundable earnest money. Thats very risky because if your sale falls through, the seller gets to keep your money.
If you break the terms of whatever your purchase agreement is or you decide you dont want to buy a house anymore, then the seller can keep your earnest money.
This is why its important to work with a qualified real estate agent. Theyll help you understand what you need to know before you sign anything because otherwise, you could end up giving up a lot of money that you potentially cant afford.
As a final note, earnest money isnt required. If youre buying in a market thats not very competitive, you may not need to worry about it. Its instead a good way to beef up an offer, especially if youre worried there could be multiple offers on the house you want.
Question: How many members does it take to propose a governing document amendment?
Answer: There is usually no minimum number required to propose an amendment. Any member in good standing can propose an amendment. That said, the Board is not required to ensure a proposed amendment is in proper form, legal, etc. The member proposing an amendment should provide to the Board in writing:
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The specific amendment language.
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The reason the amendment is necessary and background.
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An opinion letter from a knowledgeable attorney that confirms the amendment complies with the governing documents, state and federal law.
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Willingness to pay for extraordinary costs associated with the amendment process research, attorney opinions, mailings, etc..
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These requirements are reasonable and will limit the number of amendment proposals to those that are seriously supported. Although it is not required, including the names of other members that agree with the amendment as evidenced by their signatures on the a petition will help expedite the procedure. The greater the support, the sooner it will be dealt with.
Question: Our bylaws state that our dues are past due after the 5th and carry a 2 percent late fee. The late fee is a pittance and many of our members are habitually late. What can be done to increase the penalty?
Answer: Besides amending the bylaws to increase the late fee which takes an appropriate vote of the members, the Board should adopt a comprehensive Collection Policy which includes a provision for turning over all accounts delinquent for more than 60 days to an attorney for collection, filing of lien, etc. These additional collection costs can be added to the outstanding balance and are usually an incentive for most folks to pay their bills. The Board could also enact an "administrative fee" of, say, 15-25 to cover the cost of time and supplies it takes to get a late notice out.
Another collection tactic is an Acceleration Clause which is triggered if payments are late for, say, 60 days. In this case, homeowner fees for the remaining part of the year are accelerated called due.
This tactic is, of course, more effective when invoked early in the year.
So there are a number of alternatives the Board can use to enforce timely payments. Of course, any additional collection penalties and procedures proposed by the Board should be reviewed by a knowledgeable HOA attorney in your state prior to enactment. A sample Collection Policy is available at Regenesis.net in the Policy Samples section.
Question: Our condominium is undergoing a total siding replacement this summer. The building is 30 years old and has single pane windows. Many believe we should replace the windows as well but replacement is an owners responsibility. Can the HOA force the issue?
Answer: If window replacement is an owners responsibility, the HOA cannot force an owner to participate in a window replacement project. However, it is very likely that getting all the windows replaced at the same time will reduce the cost by up to 50 percent due to bulk buying and having the siding removed for the installation.
Buying this many windows at once qualifies the HOA for factory direct pricing and with the HOA contracting the installation, the cost will drop dramatically over the best price any owner could ever hope to get. Installing new windows now also ensures that the new siding is not altered or damaged by future window replacements.
Noise reduction and utility savings of thermapane windows always justifies spending the money. Your window distributor can provide you with savings and pay back calculations. Energy efficient windows will also increase the unit market values due to enhanced curb appeal and livability. Between reduced energy costs and increased market value, this one is a no brainer.
The Board simply should make its case and assume all owners will fall in line. If you only get a majority, it is still possible to amend your governing documents to make window replacement an HOA responsibility. Then, the HOA could move forward with the project even over the protests of a minority, or move ahead for those that agree and require future installations by owners to comply with the same standard. Finally, siding replacement time is also a good time to consider exterior lights and door replacement.
Question: One of our homeowners runs a landscaping company and wants to bid our work. He isnt licensed or insured. Comment?
Answer: The HOA should only hire contractors that are licensed, bonded and insured. It is usually a bad idea to hire homeowners even when they are properly licensed. If it doesnt work out, you not only would have to fire a contractor, you will alienate a neighbor. Plus, there is an unavoidable conflict of interest in this kind of arrangement.
One of the key components to a loan approval is affordability. In fact, theres a mortgage guideline referred to as ATR, or ability to repay. Lenders are required to make sure the borrowers can afford the new monthly mortgage payments. The new mortgage payment will include not just the principal and interest portion but a monthly allotment for taxes and insurance, even if taxes and insurance are paid separately from the principal and interest part.
Affordability compares the total mortgage payment with gross monthly income. This results in a percentage, or a ratio. Most loan programs carry two such ratios, a front and a back ratio. The front ratio is the total mortgage payment while the back ratio includes the mortgage payment plus other monthly credit obligations such as car payments or credit cards. Ratios do not include other expenses such as utilities or other such everyday cash outflows.
For example, if a mortgage program asks for a front ratio of 30, that means the mortgage equals 30 of gross monthly income. A 3,000 mortgage would have a 30 front ratio with a 10,000 per month gross monthly income. If the program then asks for a back ratio of 43, then to use the same scenario, total expenses for both front and back would come to 4,300.
Debt ratios however are typically not hard and fast rules. Someone could have a 3,200 mortgage payment and still be able to qualify for the same program. These program guidelines are issued by the entity that will ultimately buy the mortgage, typically either Fannie Mae or Freddie Mac. Individual lenders may also impose their own internal ratio requirements. If Fannie says a program needs a front ratio of 30, a lender could require the ratio be no greater than 30, even if Fannie allows some leeway. What lenders cannot do however is exceed maximum ratio requirements.nbsp;
Loan programs, most of them anyway, are approved electronically with an automated underwriting system, or AUS. When a loan application is submitted through an AUS, a decision is issued almost immediately. This process also means a loan application could have a front ratio of 35 and still be approved. If the automated approval is indeed issued, the ratios are essentially ignored. That is unless the ratio exceeds an established limit. For example, if the back ratio limit is 50 and the loan carries a back ratio of 52, the loan will likely be turned down.
Okay, lets return to affordability as it >
Yet just because someone can qualify for a higher amount, the mortgage payment might be somewhat uncomfortable for the applicant. Sometimes the new payment crosses a payment shock threshold. If someone is used to paying 1,000 per month in rent but discover they can qualify for a 2,000 payment, that could be a shock. If this is you and you find out how much you can qualify for but its way more than youre used to, dont feel obligated to take the maximum. Youre going to be the one making the monthly payments, not the lender. Take what youre comfortable with. If thats the maximum, then fine. Otherwise, stay in your own lane and get a mortgage amount thats familiar with you.
Many people complain about small kitchens but tiny spaces arent always to be dreaded. If youre selling your home and your kitchen is, well, compact, know that you can find ways to achieve big appeal with a little creativity.
Sometimes small kitchens can be dark, making them feel even smaller. But if you remove the curtains from any windows in your small kitchen, itll let light in and open up the area. Instead of curtains, you can use small blinds that are recessed inside the frame of the window. These are easy to clean and still provide some privacy even when the blinds are open.
Most people have a tendency to let kitchen clutter build up on the counter tops and walls. Removing items from the counters, kitchen table, and even off the walls will make the space feel bigger. Yes, I know these items on the counters are useful but when youre selling your home, a little inconvenience may help you receive a higher offer and youll probably agree, thats worth it Take the appliances and either store them in the kitchen cabinets or, if there isnt enough room, pack them up. Youre moving soon, anyway.
Clearing off photos and miscellaneous papers that are stuck on your refrigerator door or kitchen walls will also help make your kitchen look bigger. If youre tight for space, mounted storage units can be added to your kitchen walls to free up limited counter-top space. But again, too many storage units, even the decorative kind, will give people a feeling like the walls are closing in on them. The same goes for hanging pot racks from the ceiling. Be sure to leave some open wall space and to use storage units that arent completely solid. The open units, if the shelves arent stuffed, will give a less closed-in feeling.
Going with lighter colors tends to open up a room. Light and bright colors are also very inviting and friendly, making them a perfect choice for the kitchen. You can use a darker accent trim to create some contrast. You can also use decorations including floral arrangements or even some colorful kitchen appliances to add spice to the kitchen.
Wall-mounted or under-the-cabinets-mounted appliances can save valuable kitchen counter-top space. You might even have a way to wall-mount your kitchen faucet. In one small home design, the faucet was mounted to the wall, creating a very distinctive look. The counter-top was a standard 24 inches deep but elsewhere the counter-top was reduced just slightly down to 21 inchesvery subtle and hardly noticeable but it allowed more floor space in a tiny kitchen.
Small kitchens dont have to be an eyesore. Some even prefer less space because theres less to clean. If you know the audience youre marketing your home to, you can play up the homes best featuresincluding, perhaps, a small, quaint, and simple kitchen.
One of a lenders main jobs is to evaluate risk. If a lender looks at a loan application, what is the risk in making a home loan? Hows the credit look? Can the borrowers comfortably afford the new monthly payment? Is the property going to be owner-occupied or will it be a rental? How much down payment is involved? All of these questions and more must be answered before a final approval can be issued. Certainly having good credit is a positive as is affordability. Lenders also view rental properties as a higher risk than an owner-occupied home, thus the higher interest rate and additional down payment for a rental. But the down payment can carry considerable weight. The more down payment a borrower comes to the table with, the less risk for the lender.
It used to be that a minimum down payment could be 20 or 30 or more, depending upon the individual lender. Yet its obvious that kept a lot of folks out of a home, especially for first time buyers. Yet in the late 1950s, a private company came up with an insurance policy that addressed the hefty down payment issue. Instead of coming to the table with 20 or more for a down payment, a private mortgage insurance policy, or PMI was created. PMI allows consumers to buy and finance a home without a large down payment. Yet sometimes PMI gets a bad rap, as something to be avoided at all costs. Thats not the case. PMI isnt a bad thing, its a good thing.
PMI is called a private mortgage insurance policy because the policy is applied toward a conventional loan. Government-backed mortgages, such as VA and FHA loans, also have forms of PMI but those can last through the life of the loan regardless of current market value.nbsp;
A PMI policy is paid for by the borrowers but in the lenders favor. Lets say someone has a down payment of 5 plus some funds for closing costs. Instead of waiting and waiting until the savings account has the magical 20 down amount, the borrowers can put down 5 and take out a PMI policy. PMI pays the lender the difference between the down payment and 20. Should the loan ever go into default, the lender is compensated for the 15 difference. Without PMI, the borrowers would have to sit on the sidelines for a while.
In addition, PMI isnt a forever thing. Most policies will automatically fall off when the loan balance reaches 78-80 of the original value through natural amortization. That can take a while, most any amortization table will show that, but it will magically go away at that time. Further, borrowers can pay down a mortgage balance to reach the needed figure on their own. Borrowers can request the lender drop PMI due to an expected increase in property values. Or any combination of these. Again, unlike some government-backed loans, private mortgage insurance can go away at some point in the future.
Consumers should talk to their loan officer to get a thorough understanding of the impact of a down payment. But they should also be aware the PMI isnt a bad thing. Its a good thing and gets eligible borrowers in homes faster.
Question: Our Board dealt with a contentious issue recently. When it came time to vote, one of the directors pulled out a proxy from an absent director authorizing her to vote on his behalf. Is that proper?
Answer: Proxies are not appropriate for board meetings since directors are elected by the members to perform HOA business. Elected officials are not entitled to have others stand in for them. Proxies, of course, are appropriate for votes that involve the general members who are having someone represent their personal interests.
Question: A couple of our six building condominium roofs are beginning to fail. We recently performed a reserve study and discovered we do not have enough in reserves to do all the roofs let alone the other components for which the HOA is responsible. In order to avoid a special assessment and/or increase in maintenance fee to catch-up, some directors are suggesting doing one building at a time. Another is suggesting we let the residents in each building pay for their own roof replacement. Do you have a good response?
Answer: Replacing roofs one building at a time is a very bad idea. It complicates the maintenance and warranty issues and provides some unit owners with an improvement that all do not enjoy. Units with new roofs sell for more than those with old roofs. The HOA cannot circumvent its maintenance responsibility by passing it off to owners. Besides contradicting the governing documents, individual owners simply will not do it properly.
If money is lacking, a special assessment is called for and the board has a fiduciary duty to move forward with it. And reserves require an adequate funding plan so this problem doesnt continue.
Question: My HOA recently passed a Transfer Fee of 2 percent of a condos sale price. Many of the unit owners are up in arms about this fee. Do you have any advice?
Answer: All HOA governing documents define how expenses are to be allocated to the members. The norm is either equally or according to square footage where footage varies significantly.
Charging a Transfer Fee changes the prescribed allocation formula and blackmails buyers to pay if they want to "join the club." Some HOAs justify the charge as newcomers contributing to the reserve fund just like current owners have. The problem is, newcomers dont owe the reserve fund a penny since they havent benefitted from the assets. Proper reserve funding requires that money is set aside as the assets deteriorate. That way, each member pays for assets they directly benefit from, no more, no less. Charging a future owner for reserves is wrong and improper.
The general rule and often described in the HOAs governing documents or state statute is that changing the expense allocation structure requires approval from 100 percent of the owners or the owners being affected and often their lenders since the fee structure directly impacts the lenders collateral. This will never happen because who will vote to pay more?
From a practical standpoint, transfer fees inhibit sales by reducing the pool of buyers that are willing to pay them. Reducing the pool of buyers has an adverse affect on market values. Maybe your HOA is one of a select few that can charge with impunity but during a buyers market, this policy will cause values to fall and sales to fail.
Question: When I purchased my condo, I bought loss assessment insurance coverage. My HOA recently filed a lawsuit against the builder for construction defects. To pay for the legal fees, the Board levied a special assessment of 2000 per unit. When I made a claim against my insurance for this assessment, I was told that costs of litigation were not included under the protection. Help
Answer: Loss assessment coverage only kicks in as the result of a covered claim. That means that if the HOAs insurance doesnt cover a claim in full and the HOA needs to special assess the members for the balance, loss assessment coverage would cover an owners share up to the limits of the coverage which is usually 1000 unless the owner has purchased extended coverage. Legal fees are generally not a covered claim. But insurance policies vary from company to company. Press your agent to explain your coverage in detail.
Question: I made an offer to purchase a condo recently and was advised to review the reserve study. Basically, the HOA has almost no money set aside and is planning to special assess each member 1,000 to cover painting. I really love this condo but my gut instinct told me to steer clear of it because of the lack of reserve money. Did I make the right decision?
Answer: You did the right thing and would do the Board a big favor by passing on your reasons for backing out. More and more, informed real estate agents and buyers look closely at HOA reserve funding because lack of it always means special and unpredictable assessments and usually mean the property isnt being maintained consistently. When reserves arent adequate, smart buyers move on to another property where they are adequate and often pay more money for a similar property. HOAs that lack adequate reserves will lose buyers and market value.
If you want to buy a home, one agreement option available is rent-to-own. Of course, not every homeowner is going to agree to it, and it comes with a set of pros and cons.
The following is a breakdown of everything you should know about rent-to-own when it comes to buying a house.
A rent-to-own purchase has appealing elements, but there are risks.
Basically, when you enter into this type of contract, you agree that youll rent a property for a set period of time before you then gain ownership. The time you rent can be a few months to several years, dependent upon your contract.
An individual can own the property, or a company might.
The contract dictates that the seller will keep a certain amount of money from each rent payment. That goes toward the equity when the buyer purchases the property.
There are two specific types of agreements that are categorized as rent-to-own. Theres a lease option agreement and a lease-purchase agreement. When you follow the lease option agreement, you have the option to buy the home after the time you agree on. On the other hand, with a lease-purchase agreement, you have a legal obligation to buy the house.
While every process might have its own unique elements, some of the things to anticipate in a rent-to-own transaction include:
First, the agreement will specify a purchase price. The price could be based on the current value of the home or perhaps the estimated future value. It could be that theres an official price when a buyer and seller agree to a contract and sign it, but other times, the purchase price is decided when a lease expires.
Then, as part of your contract, you pay a set amount of rent each month. You can expect that the rent payment is going to be more than comparable rent prices in the neighborhood because a portion is being set aside toward your future purchase.
The seller may ask you to cover all maintenance expenses, so when you enter into one of these agreements, its important to know exactly what you agree to.
You pay the seller a one-time fee which isnt refundable, and then some sellers will put that toward your equity in the home. Its usually calculated as a percentage of the purchase price of the home.
Your contract will dictate a specific lease term.
If you are going to buy a house at the end of the lease term, youll need to get financing, so there will be a closing date set.
For buyers, the upsides of rent-to-own agreements include:
Youre gradually building your down payment rather than having to come up with a large sum upfront and all at once.
You dont have to worry about competition from other buyers when youre ready to purchase.
You dont have to qualify for a mortgage right away, so you can work on building your credit score.
While it might initially sound great, there are quite a few downsides to a rent-to-own agreement.
Youre going to pay more in rent than you would for a comparable home because you are essentially being forced to set aside a down payment. At the same time, you could also rent a home thats less expensive and then put your own money aside in an interest-earning bank account to work toward your down payment.
You do still have to pay the option money that isnt refundable, including if your deal ends up not working out.
You are likely going to have to pay for all the maintenance and repairs on a home that you dont yet own.
If the value of the home goes down, you might be stuck with a purchase price in your agreement thats much too high.
There are situations out of your control that could cause you to lose the equity you put in the home. For example, if the home were to go into foreclosure, it goes to the bank.
You have to weigh the pros and cons of your personal financial situation and decide what works for you.
Its often more advantageous as a buyer to get your finances in order and go the traditional route, as opposed to rent-to-own.
Spring is always an interesting and exciting time in real estate, so what are analysts expecting we can see this year?
It appears, depending on how the economic recovery comes along, that mortgage rates could continue to increase. Rates have been on the rise for weeks, while earlier in the year, they were holding under 3. Analysts believe that it would be a good time for borrowers to try and lock in low rates now, with the anticipation theyll tick upward through the year.
The 30-year fixed-rate mortgage is anticipated to average 3.1 through the spring months, while it was averaging 2.9 during the first quarter of the year, according to Fannie Mae.
Its almost universally agreed that as more Americans are vaccinated, there will be more economic recovery, and therefore an upward movement in mortgage rates.
While there may be a slowdown compared to the hot market of the past year, theres an expectation there wont be a major crash. Price appreciation could slow down, and new homes might build up a bit more.
Homebuyers or would-be homebuyers often felt frustration over the past year. It was difficult if not impossible, to find available properties, and when something went on the market, it would be scooped up in days or sometimes just hours.
Now, however, homeowners may be more likely to list properties because more people are vaccinated, so there will be less of a fear of catching COVID-19 from people coming into their homes.
While there is the expectation that inventories will increase, there may still remain limited options, particularly in some markets.
Another trend that could continue influencing the real estate market this spring and beyond is millennials. Nearly five million millennials are set to turn 30 this year, and theyre now making up the biggest segment of home buyers. In 2018, millennial homeownership was at record lows, but theres evidence thats changing.
Around 86 of younger millennials and 52 of older ones are buying first homes, and some are buying luxury properties that are well beyond what you think of as a starter home.
Millennials will likely drive the market throughout 2021. There was a survey from the National Association of Home Builders in the fourth quarter of 2020 that found 27 of millennial respondents said they planned to buy a home in the next 12 months, up from 19 in a previous survey.
Online real estate services are continuing to grow in popularity, and regardless of the state of the pandemic, thats unlikely to change.
There are so many ways technology was accelerated in real estate over the past year. From virtual showings to the use of a fully virtual agent to mobile or online closings, there are a lot of ways that technology is facilitating a simpler home selling or buying experience. Its becoming increasingly possible to buy or sell a home without ever leaving your current. nbsp;
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