Dec 29, 2017
A new year brings new goals! If home-ownership is one of your aspirations in 2018, below are the top six mistakes you should avoid when getting a mortgage.
MISTAKE 1: FAILING TO CHECK YOUR CREDIT
There are so many things that that rank high in terms of importance, but realistically, having good credit is a big factor to obtaining a mortgage. Start by first educating carefully reviewing your credit report – you can get one free from each credit reporting agency annually. If your credit needs work, it’s best to take some time to whip it into shape so you’ll qualify for the lowest interest rate – which can save you a lot of dough over the life of your mortgage loan!
MISTAKE 2: NOT PLAYING THE COMPARISON GAME
When it comes to obtaining a mortgage, not all lenders are created equal. Each lender has different mortgage rates, so shopping around for the best deal can save you a big chunk of change. Also, you’ll have several different loan types to choose from – these vary widely and have a huge impact on the size of your monthly mortgage payment. I’m happy to discuss the various options that will work best for you.
MISTAKE 3: NOT LINING UP FINANCING FIRST
It’s so easy to find yourself casually browsing Zillow and falling in love with the “perfect” home. One of the biggest disservices you can do to yourself is to become attached to a home, only to realize during the mortgage application process that you can’t afford it. One of the smartest things you can do as a new homebuyer is to meet with mortgage lender first to see how much you can afford. Taking this step as a buyer paints a detailed picture of your finances, allowing your lender to tell you the specific amount you’re approved for and giving the seller peace of mind that you’ll be able to move forward with an offer.
MISTAKE 4: NOT SAVING ENOUGH FOR A DOWN PAYMENT
Perhaps your lender said you qualify for a $200,000 home, so you begin looking at homes right around that amount – but don’t forget to consider the down payment that you’ll need to have at closing. At a minimum, for a $200,000 FHA loan (with 3.5% down), you would need to bring $7,000 plus additional closing costs and fees in cash to the table in order to close on the home. If you don’t have that amount of money stashed away, take some time to build up your savings before you start your home search. One way to plan savings for a down payment is to automatically deposit into your savings account- start by putting 20% of your paycheck into savings for a few months.
MISTAKE 5: NOT PREPARING FOR ADDITIONAL FEES
In addition to the cash you’ll need for a down payment, there are other fees you’ll be responsible for in order to close on your new home. Some of these fees may be negotiable, but many are fixed. Be prepared to shell out cash for the appraisal, title, insurance, up-front real estate taxes, lender fees, and more. Several days before closing, you’ll receive a closing disclosure, which breaks down the terms of your loan, all final costs expected at closing and the details of who pays and who receives money at closing.
MISTAKE 6: MAKING BIG PURCHASES BEFORE CLOSING DAY
You’re probably so excited about moving and planning how you’re going to decorate your new home – but before you go on a spending spree, put that credit card away! Your finances will be thoroughly analyzed during the underwriting process, and your lender will expect your financial situation to remain largely the same until closing day. As hard as it may be, avoid spending money on things outside of your necessities (groceries, gas, utilities, etc.) until you’ve closed on your new home.
If you can avoid these big mistakes when buying a home, the mortgage process should be smooth sailing! Be sure to contact me to discuss your mortgage options-
Bill Duggan, Sr. Mortgage Banker, Atlantic Bay Mortgage Group 757-615-5172 email: billduggan@atlanticbay.com
Apr 16, 2014
Talk to 10 different people about homeowners associations (HOAs), and you’ll likely get 10 different opinions. Some people love living in a development with an HOA, while others find it too restrictive. Depending on your lifestyle and needs, it can be a great experience or one that feels too intrusive. Today about one in five Americans live in a house with home-owner or condo fees.
HOAs began in the mid-19th century but didn’t really gain in popularity until the early 1960s, as an outgrowth of the postwar housing boom and the growth of the middle class. Typically, an HOA is incorporated by the developer during the development and sales process, and gradually control and ownership are transferred to the home purchasers upon completion of the project. The original owner/developer quits membership in the association and has nothing more to do with it. Anyone purchasing a home in an existing housing development with an HOA must become a member. There is no other option. The overall purpose of the HOA is to represent the residents. Depending on how active these associations are, they can be quite effective in providing forums for common home-owner representation and needs.
HOAs Are Like Small Towns
A homeowners association governs the development like a small town. The HOA’s powers include imposing fines, organizing activities and providing certain services. It can also levy assessments and force home owners to pay them. Many HOAs have yearly dues, and a homeowners association can legally impose monetary fines to enforce its decisions. The groups usually appoint a board of directors, which may then elect an association president and other officers. Meetings are typically monthly but can be quarterly, depending on the size of the group.
If the HOA is larger, it will likely be broken down into committees. Committees are also appointed for various activities: maintenance, membership dues and neighborhood representation. An accounting committee or, in smaller HOAs, an individual is assigned to present the annual budget and monitor expenses and funds collected. During the foreclosure crisis, some HOA’s began to lose revenue as people living in homes facing foreclosure stopped paying their fees.
HOAs Can Promote Neighborhood Harmony and Uniformity
HOAs offer many benefits to the home owner. According to the bylaws of the association, it can collectively represent the group for whatever purposes assigned. For example, to maintain a certain degree of conformity, the association can stipulate which changes are permitted for the exterior of the buildings. Sometimes the HOA can determine acceptable noise levels. If there are common areas, such as gardens and pools, the members can appoint an internal management committee or elect to bring in an outside maintenance company. On snowy days, a snow-removal company may need to be called in, and this service will be paid for out of the association’s funds. For condos or groups with shared structures or parking lots, fees can go to upkeep.
HOAs Can Be Restrictive and a Financial Drain
If you want to change the color of your house or even add a new tree, you may run afoul of your local organization. Also, if your HOA decides to undertake a major capital improvement project and the governing group approves it, you may be left with no choice but to pay your share. If you fail to pay your dues or you go against the HOA rules, you could be assessed fees and late charges. If you disagree with some of the rules, it can be very hard to get them changed.
Overall, most people see an HOA as a positive. According to the Foundation for Community Association Research (FCAR), 70 percent of residents in common-interest communities say they are satisfied with their community-association experience. The FCAR’s research also found that 76 percent believe their own community-association rules “protect and enhance” property values.
Realtor.com
Apr 16, 2014
Most homes on the market are owner-occupied, but that’s not always the case. In recent years, many home owners ended up renting out their homes when they could not sell but needed to move elsewhere. Now that the market is shifting, many of those accidental landlords are looking to sell. At first glance, buying a home that’s been rented out by the current owner may not appear different from buying any other home, but there are some potential issues to keep in mind.
1) Check the overall condition.
Some rental homes are in terrific shape: The renters have kept up with maintenance and have even made improvements such as fresh paint. In other cases, the rental hasn’t received much love. Because the home isn’t truly their own, some renters can be rough on a rental. Also, renters may not notice or report some of the maintenance issues that an owner would readily pick up on and address. A rented home may have additional wear and tear, especially if it has been used as a rental for many years and through multiple tenancies. Ask your insurance agent to check the history of past insurance claims on the property
2) How’s the neighborhood?
Factor in the neighborhood: Are the surrounding homes mostly rentals? Is the neighborhood mostly single-family homes or a mix of multi-rental units along with other homes? Owner-occupied neighborhoods can be better protected against possible market-value fluctuations. Also look at the appearance of other homes on the street. Do they have well-tended yards? How does the condition of the home you are looking at compare? If the home you are interested in compares poorly with others in the area, that may help you strike a better deal.
3) Is it occupied?
If there are tenants, tour while they aren’t home. While a tenant can be a source of information about a home, they may not want to move and may try to prevent the sale by complaining about the property. Look for signs of obvious damage, holes in the walls, stained or ripped carpeting, damaged flooring, leaky faucets, and mold. Be sure to check out all rooms and the basement, garage, or attic. You can tell a lot about how the home has been maintained by looking at how the tenants are living in the property
4) Is it unoccupied?
If a home has been unoccupied for a while, find out for how long. Sometimes — although less common lately — these homes are listed at a reduced price. Unoccupied homes may have lacked attention and may need repairs or basic maintenance. If the home was unoccupied and the utilities have been turned off, that may prevent a prospective purchaser from doing a thorough home inspection. Depending on the area, sometimes utilities can be turned on temporarily, but it often requires putting the utilities in the prospective buyer’s name. Vacant homes can also have broken pipes, leaky roofs, mold or damage from pests, so a thorough inspection is vital.
Check the HVAC and get a home warranty. Being a rental sometimes the air conditioning filter was probably not changed, and that is the worst thing for the system. Your home inspection will alert you to any repairs the home may need before you move in, and it can give you bargaining power if there are potential issues.
Realtor.com
Oct 24, 2013
Major weather events such as Hurricanes Katrina and Sandy have demonstrated the devastation that sudden flooding can cause. While major storms like these thankfully don’t happen on a regular basis, even a small amount of flooding can be a major concern for a home owner. It doesn’t necessarily take a big storm to cause trouble: Heavy rains or melting snow can lead to flooding if drainage is insufficient. Anywhere there’s rain, there can be flooding. But how do you know if you need flood insurance?
Fixing flood damage can cost thousands of dollars. Standard home owner’s insurance doesn’t typically cover flooding. The National Flood Insurance Program (NFIP) offers flood insurance to home owners and renters. People who live in high-risk areas are legally obligated to take out flood insurance if they have a federally backed mortgage. If you live in an area that benefits from a program like NFIP, you will need to take out flood insurance to get a mortgage. Even if you do not live in one of the NFIP communities, your mortgage provider may insist that you take out flood insurance. If none of these provisions applies to you, insurance is your choice, but it’s probably a very good decision. You can find out more about the practicalities of buying flood insurance from the Federal Emergency Management Agency (FEMA).
You may be required to take out flood insurance if your mortgage lender specifies this in your policy. Make sure to check out any small print in your mortgage contract. Mortgage lenders often have the right to change the requirement for flood insurance even after your mortgage payments begin. If this happens, your mortgage lender should contact you to let you know that you should buy flood insurance. There are also designated flood-hazard areas defined and categorized by FEMA; these are at higher risk for flooding. It may be hard to buy a home in these areas without adequate flood insurance.
Flood risk often changes over time. FEMA updates flood hazards across the country. Flood maps, also known as Digital Flood Insurance Rate Maps, show flood risk at a property-by-property level. When new maps are issued, your risk may change, as well as whether you will require flood insurance. If your property is mapped out of a high-risk area, your insurance rates can go down. However, if you are mapped into a high-risk area, you will probably be required to purchase flood insurance, if your mortgage is held through a federally regulated or insured lender. You can check out the update schedule on the FloodSmart website
FEMA advises that even houses in low flood-risk areas should have flood coverage. According to FEMA records, since 1978 over a quarter of all flood claims have come from home owners in areas with low or moderate flood risks. According to statistics gathered by the NFIP, within a 30-year mortgage, a home owner has a 9 percent chance of making a claim for fire damage, compared with a 26 percent chance of making a flood-damage claim.
Realtor.com
Sep 11, 2013
Most homes on the market are owner-occupied, but that’s not always the case. In recent years, many home owners ended up renting out their homes when they could not sell but needed to move elsewhere. Now that the market is shifting, many of those accidental landlords are looking to sell. At first glance, buying a home that’s been rented out by the current owner may not appear different from buying any other home, but there are some potential issues to keep in mind.
1) Check the overall condition.
Some rental homes are in terrific shape: The renters have kept up with maintenance and have even made improvements such as fresh paint. In other cases, the rental hasn’t received much love. Because the home isn’t truly their own, some renters can be rough on a rental. Also, renters may not notice or report some of the maintenance issues that an owner would readily pick up on and address. A rented home may have additional wear and tear, especially if it has been used as a rental for many years and through multiple tenancies. Ask your insurance agent to check the history of past insurance claims on the property.
2) How’s the neighborhood?
Factor in the neighborhood: Are the surrounding homes mostly rentals? Is the neighborhood mostly single-family homes or a mix of multi-rental units along with other homes? Owner-occupied neighborhoods can be better protected against possible market-value fluctuations. Also look at the appearance of other homes on the street. Do they have well-tended yards? How does the condition of the home you are looking at compare? If the home you are interested in compares poorly with others in the area, that may help you strike a better deal.
3) Is it occupied?
If there are tenants, tour while they aren’t home. While a tenant can be a source of information about a home, they may not want to move and may try to prevent the sale by complaining about the property. Look for signs of obvious damage, holes in the walls, stained or ripped carpeting, damaged flooring, leaky faucets, and mold. Be sure to check out all rooms and the basement, garage, or attic. You can tell a lot about how the home has been maintained by looking at how the tenants are living in the property.
4) Is it unoccupied?
If a home has been unoccupied for a while, find out for how long. Sometimes — although less common lately — these homes are listed at a reduced price. Unoccupied homes may have lacked attention and may need repairs or basic maintenance. If the home was unoccupied and the utilities have been turned off, that may prevent a prospective purchaser from doing a thorough home inspection. Depending on the area, sometimes utilities can be turned on temporarily, but it often requires putting the utilities in the prospective buyer’s name. Vacant homes can also have broken pipes, leaky roofs, mold or damage from pests, so a thorough inspection is vital.
Check the HVAC and get a home warranty. Being a rental sometimes the air conditioning filter was probably not changed, and that is the worst thing for the system.
Your home inspection will alert you to any repairs the home may need before you move in, and it can give you bargaining power if there are potential issues.
Realtor.com
Aug 7, 2013
When you tour a new development, you are often shown the model home. The home has the all the gleaming finishes and perfect layout you desire. The model home is a marketing tool designed to show how beautiful your home can be — so why not buy the model itself? In many developments, the model is sold at a discount, because it isn’t as new as the other, freshly created homes.
Before you sign on the dotted line, there are some things to consider. While the home is new, it has seen a lot of foot traffic and use; it’s generally more “slightly used” than a completely new, untouched home. Another issue to consider: If the development is new, the model may not be available for immediate occupancy, because it is still being used to attract other home owners. It’s always important when moving into any new development to find out how many other owners are currently residing in your new neighborhood.
Pro: The model has the top-of-the-line finishes. Generally the builder will use the most desirable options to outfit the model home, including upgrades that would cost extra in other homes.
Con: The finishes may not work with your decor. If you buy a new, unfinished home, you may be able to choose some of the finishes yourself. Also, while the home is technically new, it is also slightly used. You have no way of knowing how many people have tromped through, flicking on light switches, turning on taps, and metaphorically kicking the tires on the home.
Pro: It’s beautifully decorated. The model home has generally been staged and styled by an interior designer for maximum appeal.
Con: It’s not decorated to your taste. If you don’t like the style of the model home, you may end up spending money redecorating to make the home align with your personal preferences. Also, if you have your own furniture, you may not want to pay for new furnishings. Make sure that the carpet and flooring aren’t too worn. If you notice any wear and tear, build those allowances into your offer.
Pro: The home has been landscaped to provide a more appealing look.
Con: Because the landscaping may be designed for low maintenance and lower water bills, it may not have the lush green lawn you desire. Also consider the location of the home: The model is often in the front of a development, while other homes may offer more privacy.
Pro: The appliances are often included and are generally top-of-the-line.
Con: If the home has been a model home for some time, the appliances may be a year or two old and could be outside the warranty. Ask the builder about warranties on all appliances included in the sale. Because the heating and cooling systems may have been working overtime for months, you may want to get a home warranty to cover any potential issues.
Work with a buyer’s agent who can help you negotiate so that you get the best deal possible. Even though you are buying a new home, make sure it has a through inspection. The model home is often where builders test out new ideas, and you want to be sure that the construction is solid and that no corners were cut.
Realtor.com
