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Buying a Home? Do You Know the Lingo? | Keeping Current Matters

Buying a home can be intimidating if you are not familiar with the terms used during the process. To start you on your path with confidence, we have compiled a list of some of the most common terms used when buying a home.

Freddie Mac has compiled a more exhaustive glossary of terms in their “My Home” section of their website.

Annual Percentage Rate (APR) – This is a broader measure of your cost for borrowing money. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay. Because these costs are rolled in, the APR is usually higher than your interest rate.

Appraisal – A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties. This is a necessary step in getting your financing secured as it validates the home’s worth to you and your lender.

Closing Costs – The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs, items that must be prepaid or escrowed and other costs. Ask your lender for a complete list of closing cost items.

Credit Score – A number ranging from 300-850, that is based on an analysis of your credit history. Your credit score plays a significant role when securing a mortgage as it helps lenders determine the likelihood that you’ll repay future debts. The higher your score, the better, but many buyers believe they need at least a 780 score to qualify when, in actuality, over 55% of approved loans had a score below 750.

Discount Points – A point equals 1% of your loan (1 point on a $200,000 loan = $2,000). You can pay points to buy down your mortgage interest rate. It’s essentially an upfront interest payment to lock in a lower rate for your mortgage.

Down Payment – This is a portion of the cost of your home that you pay upfront to secure the purchase of the property. Down payments are typically 3 to 20% of the purchase price of the home. There are zero-down programs available through VA loans for Veterans, as well as USDA loans for rural areas of the country. Eighty percent of first-time buyers put less than 20% down last month.

Escrow – The holding of money or documents by a neutral third party before closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.

Fixed-Rate Mortgages – A mortgage with an interest rate that does not change for the entire term of the loan. Fixed-rate mortgages are typically 15 or 30 years.

Home Inspection – A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.

Mortgage Rate – The interest rate you pay to borrow money to buy your house. The lower the rate, the better. Interest rates for a 30-year fixed rate mortgage have hovered between 4 and 4.25% for most of 2017.

Pre-Approval Letter – A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer. Having a pre-approval letter in hand while shopping for homes can help you move faster, and with greater confidence, in competitive markets.

Primary Mortgage Insurance (PMI) – If you make a down payment lower than 20% on your conventional loan, your lender will require PMI, typically at a rate of .51%. PMI serves as an added insurance policy that protects the lender if you are unable to pay your mortgage and can be cancelled from your payment once you reach 20% equity in your home.

Real Estate Professional – An individual who provides services in buying and selling homes. Real estate professionals are there to help you through the confusing paperwork, to help you find your dream home, to negotiate any of the details that come up, and to help make sure that you know exactly what’s going on in the housing market. Real estate professionals can refer you to local lenders or mortgage brokers along with other specialists that you will need throughout the home-buying process.

The best way to ensure that your home-buying process is a confident one is to find a real estate professional who will guide you through every aspect of the transaction with ‘the heart of a teacher,’ and who puts your family’s needs first.

re-posted from:

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Only ethnic demographic to increase homeownership rate

house key background

The homeownership rate for Hispanics increased in 2016, contrary to other ethnic groups, who all saw a decrease in homeownership.

from http://www.housingwire.com/articles/39132?sf55059658=1

The homeownership rate among Hispanics increased to 46% in 2016, up from 45.6% the year before, according to a report from the National Association of Hispanic Real Estate Professionals. Data from the U.S. Census Bureau shows the overall homeownership rate dropped from 63.7% in 2015 to 63.4% in 2016. At the same time, the African-American rate also dipped from 43% to 42.2% and the Asian-American rate dropped from 56.5% to 55.5%.

Hispanics were the only ethnic demographic with an increase in their homeownership rate. Hispanics also led the nation in household formations with a net increase of 330,000 households in 2016.

The overall homeownership rate in the U.S. is currently hovering at the lowest level in 50 years. Hispanics broke the trend due to their high workforce participation rate, according to NAHREP’s report.

Also helping advance the growth is the increase of Hispanic entrepreneurs in mortgage banking and the real estate brokerage business.

“With credit remaining tight and limited housing inventory in several markets, these numbers are extremely encouraging and a testament to the economic resilience of the Hispanic community,” 2016 NAHREP President Joseph Nery said. “As the mortgage industry continues to recognize the exceptional opportunities in serving the Hispanic market and adjusts accordingly, we expect these numbers to only improve.”

http://www.housingwire.com/articles/39132?sf55059658=1  Kelsey Ramírez

This post below has some great information on how to choose an inspector when purchasing your next home. I would also add to schedule your home inspections as soon as possible after your offer is accepted. You want to allow enough time for repairs to be completed before closing. If there is too much wrong with the house, you will want to move on quickly to find the right house for you.

So you made an offer, it was accepted, and now your next task is to have the home inspected prior to closing. More often than not, your agent may have made your offer contingent on a clean home inspection.

This contingency allows you to renegotiate the price paid for the home, ask the sellers to cover repairs, or even, in some cases, walk away. Your agent can advise you on the best course of action once the report is filed.

How to Choose an Inspector

Your agent will most likely have a short list of inspectors that they have worked with in the past that they can recommend to you. Realtor.com suggests that you consider the following 5 areas when choosing the right home inspector for you:

  1. Qualifications – find out what’s included in your inspection & if the age or location of your home may warrant specific certifications or specialties.
  2. Sample Reports – ask for a sample inspection report so you can review how thoroughly they will be inspecting your dream home. The more detailed the report, the better in most cases.
  3. References – do your homework – ask for phone numbers and names of past clients that you can call to ask about their experience.
  4. Memberships – Not all inspectors belong to a national or state association of home inspectors, and membership in one of these groups should not be the only way to evaluate your choice. Membership in one of these organizations often means that there is continued training and education provided.
  5. Errors & Omission Insurance – Find out what the liability of the inspector or inspection company is once the inspection is over. The inspector is only human after all, and it is possible that they might miss something they should have seen.

Ask your inspector if it’s ok for you to tag along during the inspection, that way they can point out anything that should be addressed or fixed.

Don’t be surprised to see your inspector climbing on the roof, crawling around in the attic, and on the floors. The job of the inspector is to protect your investment and find any issues with the home, including but not limited to: the roof, plumbing, electrical components, appliances, heating & air conditioning systems, ventilation, windows, the fireplace & chimney, the foundation and so much more!

Bottom Line

They say ‘ignorance is bliss,’ but not when investing your hard-earned money in a home of your own. Work with a professional you can trust to give you the most information possible about your new home so that you can make the most educated decision about your purchase.

http://www.keepingcurrentmatters.com/2017/01/29/what-to-expect-from-your-home-inspection/

Is This the Year to Move Up to Your Dream Home? If So, Do it Early | Keeping Current Matters

It appears that Americans are regaining faith in the U.S. economy. The following indexes have each shown a dramatic jump in consumer confidence in their latest surveys:

  1. The University of Michigan Consumer Sentiment Index
  2. National Federation of Independent Businesses’ Small Business Optimism Index
  3. CNBC All-America Economic Survey
  4. The Conference Board Consumer Confidence Survey

It usually means good news for the housing market when the country sees an optimistic future. People begin to dream again about the home their family has always wanted, and some make plans to finally make that dream come true.

If you are considering moving up to your dream home, it may be better to do it earlier in the year than later. The two components of your monthly mortgage payment (home prices and interest rates) are both projected to increase as the year moves forward, and interest rates may increase rather dramatically. Here are some predictions on where rates will be by the end of the year:

HSH.com:

“We think that conforming 30-year fixed rates probably make it into the4.625 percent to 4.75 percent range at some point during 2017 as a peak.”

Svenja Gudell, Zillow’s Chief Economist:

“I wouldn’t be surprised if the 30-year fixed mortgage rate hits 4.75 percent.”

Mark Fleming, the Chief Economist at First American:

“[I see] mortgage rates getting much closer to 5 percent at the end of next year.”

Lawrence Yun, NAR Chief Economist:

“By this time next year, expect the 30-year fixed rate to likely be in the 4.5 percent to 5 percent range.”

Bottom Line

If you are feeling good about your family’s economic future and are considering making a move to your dream home, doing it sooner rather than later makes the most sense.

Agents, did you know you can share a personalized version of this post? Learn more!

house outline on tablet

Every real estate agent wants a well-informed home buyer who’s prepared to take on the responsibility of home ownership. Of course, not everyone is enlightened about the homebuying process when they seek your services. One way to get your clients ready for the transaction is to refer them to homebuyer education courses before they launch their search.

A Sample of Homebuyer Education Programs

HUD provides a comprehensive list of its approved resources, including homebuyer education courses and one-on-one counseling. Here are a few of those programs, which are available online and can be completed at the buyer’s leisure.

Framework
Cost: $75
Time to completion: About four hours
Includes nine education modules with a quiz at the end. Coupons are available, which agents can provide as a gift to clients. After completing the course, users download and save a Certificate of Completion. For buyers who purchase a home through Fannie Mae’s HomePath REO program, the cost of the course will be reimbursed. Fannie Mae also offers closing cost incentives to first-time buyers in the HomePath program who complete the Framework course.

MGIC Homebuyer Education
Cost: Free
Time to completion: About an hour
This program is suitable for buyers who are just beginning to learn about the homebuying process and who do not yet have a lender. It’s approachable and user-friendly, and the course can be taken by a “stealth” user without registering. Users can also register and take a quiz at the end, which will satisfy requirements for Freddie Mac Home Possible programs.

eHome America
Cost: $99
Time to completion: Eight hours, taken online at your own pace
This is one of several financial courses offered through the HUD-approved “Home Purchase” program. It covers topics such as determining if now is the right time to buy, shopping for a home, and getting approved for a home loan.

CreditSmart Steps to Homeownership
Cost: Free
Time to completion: About two hours
This program focuses on good credit: how you can improve your credit score, why it’s necessary to do so, and how it leads to home ownership. Users receive a certificate, which can be used for Freddie Mac Home Possible programs.

United Guaranty’s Home Ownership Course
Cost: Free
Time to completion: Two to three-and-a-half hours
Satisfies the homeownership education requirement for Freddie Mac’s Home Possible affordable home program. After you complete the course and assessment, your lender (if applicable) will be notified by email.

These courses, many of which are now being offered online by lenders and nonprofit community organizations, are useful for all clients — those entering the market for the first time or even making a second or third home purchase. Many real estate professionals try to act as full-service providers able to solve any problem or answer any question, notes Joe Weisbord, director of credit and housing access at Fannie Mae, whose HomeReady program requires prospective buyers to take a HUD-approved homeowner course in order to qualify for a loan. But “people don’t like to admit what they don’t know,” he says, and your clients may not always come to you if they’re embarrassed about their lack of knowledge.

By linking them to a course providing “independent, unbiased information that helps them understand choices they’re going to make,” you’re helping meet your clients’ needs while building trust.

For nervous first-time buyers, those with poor credit, or others who need extra attention while learning the homebuying process, pointing them to a course can also be a great way to solidify the client-agent relationship. Homebuyer courses aim to demystify credit-score requirements, budgeting, shopping for a mortgage, home inspections, insurance, and maintenance, among other items. This takes the pressure off you, and you can spend your time honing in on the type of properties your clients are interested in. You’ll be ready to go once they are, and “it’s less likely that unknown circumstances will arise that will lead to the sale falling apart,” Weisbord says.

But homebuyer courses — many of which are free, but costs can fall along a range of up to $100 — can also convince a prospective buyer that they’re not ready to purchase. That’s still good for the agent in the long run, Lane says. “I’m not afraid of losing [a client]. If someone wants to rush and make a bad decision, I don’t want to be a part of that. It’s important in our business to take our clients through a rigorous fact-finding mission.”

The in-depth programs position buyers who may struggle with the lending process to successfully purchase once they’ve built up their savings or repaired their credit. That could help them secure a more competitive mortgage rate and lead to a bigger home sale later on. “Today’s sale might be critical, but the way to build a real estate career is through a chain of referrals,” says Anne McCulloch, senior vice president for credit and housing access at Fannie Mae. “People who don’t succeed are not the best referrals.”

For certain lending programs, including Freddie Mac’s Home Possible Mortgages, completing a HUD-approved homebuyer education course is mandatory. A newly revised course called Framework, a joint enterprise of the Housing Partnership Networkand the Minnesota Homeownership Center that is available to consumers nationwide, draws on research of best practices in online learning, says Framework president Danielle Samalin. “We’ve learned that content tied to emotional information is more readily retained,” she says, adding that Framework employs motion-graphic videos and homebuyer stories, among other content. “Most people complete it within a day of signing up.”

Other lenders are offering education resources with incentives. In May, Wells Fargo debuted a new program called yourFirstMorgage, which includes a 1/8 percent reduction on mortgage rates for buyers with down payments of less than 10 percent if they complete a homebuyer education course.

For Lane, referring clients to these courses is a way to make her value proposition as a real estate professional stronger. “Every time you provide something for a client, you build that bond,” she says. “It’s a way to separate yourself from the herd, a long-term relationship-building opportunity.”

BY BETH FRANKEN   http://realtormag.realtor.org/sales-and-marketing/feature/article/2016/10/help-clients-get-smarter-about-ownership

 

With inventory below historic numbers and demand still strong, you could be missing out on a great opportunity for your family.

1. Demand Is Strong

The latest Realtors’ Confidence Index from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase… and are in the market right now!
Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

According to NAR’s latest Existing Home Sales Report, the supply of homes for sale is still under the 6-month supply that is needed for a normal housing market at 4.7-months.
This means, in most areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.
There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market this fall.
Also, as builders regain confidence in the market, new construction of single-family homes is projected to continue to increase over the next two years, reaching historic levels by 2017. Last month’s new home sales numbers show that many buyers who have not been able to find their dream home within the existing inventory have turned to new construction to fulfill their needs.
The choices buyers have will continue to increase. Don’t wait until all this other inventory of homes comes to market before you sell.

3. The Process Will Be Quicker

Fannie Mae announced that they anticipate an acceleration in home sales that will surpass 2007’s pace. As the market heats up, banks will be inundated with loan inquiries causing closing-time lines to lengthen. Selling now will make the process quicker & simpler.

4. There Will Never Be a Better Time to Move Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by 5.3% over the next year, according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more (both in down payment and mortgage payment) if you wait.
According to Freddie Mac’s latest report, you can also lock-in your 30-year housing expense with an interest rate around 3.46% right now. Interest rates are projected to increase moderately over the next 12 months. Even a small increase in rate will have a big impact on your housing cost.

for more info:   http://www.realtor.org/reports/realtors-confidence-index

SAN FRANCISCO – Nov. 1, 2016 – Technological advances have made real estate agents especially important to millennials, according to a study by Coldwell Banker, “Wealth, real estate and the high-net-worth investor.”

http://www.floridarealtors.org/NewsAndEvents

The study found that over 70 percent of respondents believe agents are more important than ever, with nearly two-thirds saying they would never buy or sell a home without an agent’s help. More than half of those polled said agents are more important to the home-selection process than friends, family or digital resources.

The main reason millennials value Realtors? They recognized their own lack of experience in the sometimes complicated homebuying process.

However, technology remains important to young adults. A Realtor’s role has diminished in some areas thanks to online tools, such as mortgage calculators; easy access to taxes and other government-related information; and general background info on cities and neighborhoods.

Moreover, technology has changed the process by making it easier to respond quickly to contacts, which is a must for millennials. This demographic also takes into consideration an agent’s reputation on social networks

As a result, a Realtor’s role may not have diminished, but the study suggests that successful agents must adapt to the changing demands and expectations of today’s younger buyers.

Source: Tech.Co (10/27/16) Costa, Diogo

© Copyright 2016 INFORMATION, INC. Bethesda, MD (301) 215-4688

http://www.floridarealtors.org/NewsAndEvents

Estoppel-Postcard_Front

January 2016-Here’s an upcoming issue for homeowners in Florida.

When you’re selling or refinancing your home, if you’re part of a condo association or a homeowners’ association, you need to provide the buyer or lender with something called an “estoppel certificate”. That is a statement of your financial status with the association: Are you current on your association dues? Are there any liens on your home? Since buyers and lenders don’t want to be surprised, providing them with an estoppel certificate is reasonable and a good business practice.

Florida law does allow condo and homeowner associations to charge a “reasonable” fee to prepare one of these estoppel certificates. The issue is what exactly is “reasonable”.

Condo and homeowner associations are required by law to maintain current records of any assessments or liens on the properties they oversee. So the work required to put together an estoppel certificate is fairly minimal. Many associations charge a reasonable fee – $50 or $100 – to provide the certificate. Others, however, have turned this into a revenue stream, charging over $1,000 in some cases to provide a simple piece of paper.

Well, during the 2015 session, Rep. Kelli Stargel (R-Lakeland) and Rep. John Wood (R-Winter Haven) have introduced bills to cap the amount charged by condo and homeowner associations. They’re looking to reintroduce that bill in the 2016 session. The pertinent facts are:

  • $200 cap on fees for any homeowner who is not delinquent on paying association dues and fees;
  • Up to an additional $200 if the homeowner is delinquent; and
  • Up to $100 for an expedited certificate.

Plus, the bill would require associations to provide the estoppel certificate within 10 days, and have the certificate be valid for 30 days.

On the one hand, this seems like a no-brainer to ensure that consumers aren’t being overcharged. $1,000 just to prepare a piece of paper, with information the association already has, does seem like a stretch. On the other hand, there are people who wonder if this isn’t just another example of government intervention and regulation into private businesses. And of course, there are people who think that the bill doesn’t go far enough: even $200 cap seems too high for them.

If you’re a homeowner who belongs to a condo or homeowner association, I’d love to get your take on this. You can email me at AnnalisaWeller1@gmail.com or call me at 727-804-6566.

Annalisa Weller, Realtor®, Certified International Property Specialist

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