Mike Capelle, Broker/Owner
Mike Capelle, Broker/Owner

What’s Going On With Mortgage Rates?

This month on December 16th, the Federal Reserve System (the U.S. central bank—the “Fed”) hiked interest rates for the first time in nine years. In the days since the Fed move, mortgage rates actually dropped. How is this possible? What’s going on with mortgage rates? Will this trend continue?

Immediate mortgage rate reaction to Fed meeting

Most U.S. mortgage loans up to $417,000 are packaged into bonds called Mortgage Backed Securities (MBS), and these bonds trade daily in global financial markets. To a large degree, MBS investors determine mortgage rates offered to consumers. Supply and demand determine the market prices investors will pay for mortgage-backed securities. These prices feed back through the mortgage industry to determine the interest rates offered to consumers. Higher MBS prices mean that lenders make more on the mortgages packaged into those MBSes, which means they can originate loans at slightly lower interest rates. Throughout each day, mortgage rates fall when MBS prices rise, and mortgage rates rise when MBS prices fall.

Mortgage rates rose as investors sold MBS ahead of the December 16 Fed meeting. It was widely expected the Fed would hike the short-term Fed Funds Interest Rate, but without knowing how the Fed might position 2016 rate policy overall, MBS investors took the conservative stance of selling ahead of the meeting.

Then when the Fed meeting announcement actually came out, the Fed said it was only hiking the Fed Funds Rate by .25 percent, and will take a “gradual” approach to increasing rates in response to the improved economy. Bond markets reacted positively, and MBS buying resumed, pushing mortgage rates down.

Keep in mind when you hear about the Fed raising interest rates, they are not talking about mortgage interest rates. They are talking about the Federal Funds Rate charged for lending money between banks, a method used to influence the economy. The Fed does not control or determine mortgage interest rates. But, when the Fed does raise the Federal Funds Rate it can affect how investors buy and sell stocks and bonds. If investors buy more stocks and less bonds like mortgage backed securities, mortgage interest rates could rise.

Mortgage rate outlook based on revised Fed policy

Now markets are estimating the “gradual” Fed Funds Rate hikes will happen about four times in the next year, for a total of about one percent. The Fed Funds Rate is intended to influence broad rate markets overall, but not necessarily to have a direct impact on mortgage rates. As such, if 2016 estimates call for Fed Funds to rise one percent, mortgage rates probably won’t rise by that full amount. However, there is one other element of Fed policy that does directly impact mortgage rates.

In response to the financial crisis, the Fed started buying MBS in January 2009 in order to push up MBS prices and keep mortgage rates down. In recent years, they slowed their highly aggressive MBS buying, but still buy enough MBS to influence mortgage rates. The December 16 Fed statement reaffirmed they’d continue this MBS buying as they move through their Fed Funds Rate hiking cycle. This eased MBS market concerns, and should prevent a sharp spike in mortgage rates.

What does it all mean to me?

I know, it’s all a bit too much to grasp. So we turn to the experts. And given all relevant factors, market estimates call for mortgage rates to rise by about 0.5 percent by mid-2016.

A Zillow survey just showed that 70 percent of current home shoppers wouldn’t be deterred by rates rising this amount, although 45 percent of these shoppers said they might scale down their price range. If rates rose 0.5 percent, the monthly mortgage payment on a $300,000 home would increase only $88 per month.

So mortgage rates will certainly impact – but shouldn’t derail – your home buying plans for 2016.

When you are ready purchase a home, Sunset Vista Realty is ready to help. Check out our Buyer Services.

— Source: Zillow Blog

Mike Capelle, Broker/Owner
Mike Capelle, Broker/Owner

Home Value Don’ts

Your home is one of your biggest financial investments, but you can easily reduce the value of that investment by how you treat it. Here are five things to avoid that could reduce your home value.

Rough Renovations

Renovation projects are likely the first thing that comes to mind when people think about increasing home value. It’s true that putting money into good renovations is a solid investment and will raise your home’s value, but there is a vital emphasis on these being good renovations—done with proper permits and in a professional manner. A project improperly done can make your home look rough or a do-it-yourself mess. Prospective buyers will see poor renovations as something they’ll have to redo, rather than a selling point for the home. Unpermitted changes can make your home unfinanceable for buyers. So plan your projects carefully and enlist professional help if you need to.

The Wrong Renovations

Along with poor-quality renovations, getting the wrong kind of renovation can also hurt your home value. Kitchen and bathroom renovations have the highest impact, but you need to get them right. The secret lies in simplicity and mass appeal. In kitchens, it’s safest to stick with renovations to the sink, countertops and cabinets, and updates to the appliances. In the bathroom, invest in neutral, attractive flooring and fixtures. Express your individuality with decorative accents—not with permanent features.

Extreme Customization

It’s your home, so you’re free to express your personality in the interior however you’d like. But when you’re trying to sell, consider that your personal tastes could be different than those of some buyers. Prospective buyers like to visualize their own lives and belongings in a house, and that’s difficult if the interior is highly customized. You don’t need to paint every wall white, but put yourself in a buyer’s shoes and choose neutral colors and decor likely to appeal to a wide range of people.

An Untidy Exterior

The exterior is the first part of your home that potential buyers will see. If your yard is in serious need of some weeding or trimming, it will make your house look messy and give buyers the impression that the yard will require a lot of upkeep. Old fences, worn siding and peeling paint all give buyers the impression of future improvement projects of the less-fun variety. If you’re ready to list your house, keep your exterior free of extraneous items, like kids’ toys, for showings.

Skipped Upkeep

Performing routine maintenance plays a large part in preserving your home’s value and can even increase its appeal. Devise a home maintenance schedule and stick to it. Even simple tasks like regularly changing your furnace filter can make a difference in your home’s condition and value. Most buyers do not want to immediately deal with deferred maintenance.

— Inspiration: U.S. Bank Blog

Mike Capelle, Broker/Owner
Mike Capelle, Broker/Owner

Buying Versus Renting

Renters today face the highest monthly charges in history and costs just keep rising month after month. In fact, U.S. renters pay an average of 30 percent of their monthly income on rents while homeowners pay just 15 percent on mortgages. The steep cost of rent makes buying appealing, but many renters don’t have enough disposable income after their rent charges to save for a down payment. So what are renters to do when faced with the choice to keep paying astronomical rents or stretch finances to buy? When does buying versus renting make sense?

Are you ready emotionally to own?

Is owning a home of your own a goal that you are dedicated to achieving? You must not only have the desire, but also the drive to save a down payment, and the time and energy to spend looking for the right home and working through the process to purchase it. You also must be prepared to start caring for/working on your own home—repairs and maintenance will be your responsibility for a home you own. Your spending habits must be disciplined enough to make mortgage payments and plan for additional expected costs.

The more you save the more house you can buy; or the larger the down payment and consequently the smaller the monthly mortgage would be. Get yourself on a budget so you know where your money is going each month. Then, take a look at what you’re spending and look for ways to cut back. $10 to $50 here and there can add up to toward a down payment.

Are you ready financially?

First, you need a stable income to qualify for a loan. Then, your debt to income ratio must be low, so pay down unnecessary debt. Check your credit report and clean up any negatives (free from annualcreditreport.com). Ensure that you are doing everything possible to maintain the best credit score.

Know that the cost of home ownership is more than a down payment and mortgage; there are insurance, tax, and maintenance costs. The standard percentage used by lenders is no more than 28 percent of your gross income should apply toward principle, interest, taxes and insurance; this is a guideline, and most individuals should keep it to 25 percent or less. A good way to figure out how much house you can afford is to build a budget that includes your fixed expenses; anticipated future expenses such as a new car, vacations and child care expenses; and what you spend each month on extra things that the bank doesn’t take into consideration like dining out, pets, shopping or entertainment. You want to be able to live a comfortable lifestyle without having to sacrifice due to a burdensome mortgage.

When is it financially beneficial to rent instead of buy?

There is nothing wrong with renting. Only once you’re ready to settle down, should you consider buying. And then you must make sure you can actually afford a house that fits your desires.

If you’re looking at just the financials, there are only a couple of situations where it’s better to rent instead of buy. The first situation is when you only plan on living in one location for a couple of years. Due to closing costs and other costs associated in buying a house, it can take a few years for buying to get ahead of the rent. The other situation would be in a location where the housing market is really overpriced. Yes, rent rates will be high too, but you might be better off in the long term waiting for the market to correct, or considering more affordable areas, and purchasing a house for a lower price.

When rent is just as much as buying, you need to take a look at the options, assuming you feel you have job stability to keep you in one place for at least 5 to 7 years, which is the national average time a first-time buyer owns their first home.

How to get started

The place to start is with the experts—a Realtor and a lender.

Talk to lenders to find out what loan programs might be available to you, what down payment would be required, and what you can afford. Buying a home with less than a 20 percent down payment will most likely trigger the lender to require private mortgage insurance, which can cost an additional 1 percent of the entire loan balance each year.

Decide what features in a home are “must haves” and which are “wish fors.” Talk to a Realtor to discuss your goals and budget, and for advice on how to go about purchasing a home. It may take time to find a home that meets your needs, and know that you will probably not get everything you wish for. Depending on the state of the local real estate market, you may need to act quickly when you find “the one.” Be sure in working with your Realtor that appropriate inspections are called for in your purchase contract.

When it’s time to pursue home ownership, Sunset Vista Realty is ready to help. Check out our Buyer Services.

— Inspiration: Zillow Blog

Mike Capelle, Broker/Owner
Mike Capelle, Broker/Owner

Home Not Selling?

Is your home not selling? In a strong market, if a home is priced right and shows well, it should sell within the first six weeks. If it doesn’t, many sellers become frustrated, especially if their agent begins pushing for a price reduction.

It’s a common rub: the seller thinks the agent just wants a quick sale, but the agent sincerely wants to help the seller get action. Agents understand that a listing loses momentum and excitement soon after being listed. Buyers will think of a home as stale, tired, or flawed if it sits on the market too long. Here are some ways to get more traction if your home is not generating offers.

Location, price and condition are key

You can’t change your home’s location, but you do have some control over the other two important buyer considerations. If the home is still sitting on the market after a few months, and especially if it has had no showings or offers, you need to look at the price and the condition.

You have two big choices to make if you are ready to sell. The first is to take the home off the market and make some changes, such as staging, de-cluttering, and altering the look of the kitchens and bathrooms.

If you are getting specific feedback about one part of the home, change it. A few months off the market will ensure that, when it comes back on, there will be a new set of buyers taking a look at your fresh listing.

If you are unwilling to make the needed changes to the home, the other option is to reduce the price. I recently visited with sellers who had built a brand new beautiful home with excellent finishes and fixtures. But after being listed for four months, they only had two showings, and this was in a market where homes were selling with multiple offers within weeks.

The issue was the location. It was the absolute best home on a very tough block, and the setting was not private. In this case, the sellers had no choice. There was no moving or improving the house. The only option was to drop the price. The sellers opted to take the home off the market and rent it because they were not ready to sell at the recommended price.

Make sure you and your agent are on the same page

Discuss your intentions with your agent upfront, and listen to their feedback. A price reduction or low offer shouldn’t come as a surprise. But if the home isn’t selling, and the seller wants to see action, a good listing agent will ask for offers, follow up with interested parties, and let them know that the seller is motivated to sell. Reducing the listed price may not be necessary if there’s a buyer who understands that the seller will entertain an offer below the asking price.

You may have to see firsthand how the market works. If you list your home at a lower price than you’re comfortable with, you may be sorry if you get offers right away. But if you price it higher and don’t get any response after some time, then you will see the market speak for itself and should be prepared to make adjustments. I share listing activity showing online consumer engagement with my clients’ properties in order to help them make smart choices about adjustments.

Every scenario is different, and it’s so important to work with an agent who is in synch with your strategy and can help you adapt to your market.

— Source: Zillow Blog

Mike Capelle, Broker/Owner
Mike Capelle, Broker/Owner

Plan for New Mortgage Disclosures

Beginning October 3, 2015, home buyers applying for a mortgage will receive new rate and fee quote forms from lenders.

These federally required consumer mortgage disclosures, which go by the name TILA-RESPA Integrated Disclosures (or TRID), will make it easier for you to understand rate and fee quotes from lenders. However, they will also slow down your home-buying process.

Lenders must not only deliver these new rate and fee disclosures to you twice during the home loans process — after application and before closing — but also must comply with disclosure timing rules in the beginning and end of the loan process.

Speed wins when writing home purchase offers, and this extra time can mean the difference between a seller accepting and rejecting your offer. Here’s how to optimize your timing so you can write offers that will close faster than competing buyers.

Loan estimate disclosure and timing rules

The first new disclosure is called the Loan Estimate. This document clearly shows your rate quote, loan term, line-item fees, and cash needed to close. Before the lender can collect fees for critical next steps in the loan process —like ordering an appraisal, the lender must now obtain your intent to proceed based on the quoted terms. The Loan Estimate must be given to you within three days of applying for a mortgage. The federal agency that made and enforces the TRID rules—the Consumer Financial Protection Bureau (CFPB)—allows for mail or electronic delivery of the Loan Estimate.

If you applied with a lender who’s using mail delivery (or you don’t have computer access to receive electronic disclosures) late on a Wednesday, they would mail your Loan Estimate and intent-to-proceed disclosures Thursday, you might get it Saturday, and they couldn’t collect fees and order your appraisal until they received your consent Monday, which is already day six into the process.

If you applied with a lender who’s using electronic delivery late on a Wednesday, they could deliver your Loan Estimate and intent-to-proceed disclosures for you to consent to online that evening, and they could collect fees and order appraisal that same evening — all on the first day of the process.

Closing disclosure and timing rules

The second new disclosure, called the Closing Disclosure, looks almost exactly the same as the Loan Estimate, which makes it easy for buyers to review the closing terms and compare them to the originally quoted terms. It also provides further clarity on closing costs by showing which line item costs are paid by buyer, seller, and third parties. The lender must provide this document to you at least three days before closing. The new CFPB disclosure rules don’t allow Sundays and holidays to count in this three-day waiting period, and day one is the day after you get the Closing Disclosure.

For example, if a lender sent your Closing Disclosure on a Wednesday, the three-day waiting period is Thursday, Friday, Saturday. Then they can fund your loan and close your home purchase on Monday, which is day six from the time you received the disclosure.

What is the fastest timing for the new disclosure process?

Prior to October 3, 2015, you could fund the same day you got final disclosures, and real estate agents are accustomed to writing purchase contracts based on this old timing.

As of October 3, your agent and lender must coordinate closely when writing purchase contracts to make sure your agent accounts for these new TRID timelines to write the fastest contract possible.

Shortest timeline post-application: If your lender is mailing disclosures, the CFPB’s new TRID rules add about six days in the beginning of the process from application to appraisal order. If your lender is using electronic disclosures and you have computer access to receive them, they can go from application to appraisal order in one day.

Shortest timeline pre-closing: All lenders must comply with the three-day waiting period after the Closing Disclosure is ready. But as the example above illustrates, the pre-closing waiting period can actually be more than three days.

So here’s the key to making sure your mortgage process goes as quickly and smoothly as possible: When you find a lender in your current home shopping journey, ask them about their notification process for the new TRID rules, and have them clarify closing timelines for your real estate agent before you write any offers.

— Source: Zillow Blog

Mike Capelle, Broker/Owner
Mike Capelle, Broker/Owner

Zillow is Not a Real Estate Company

Zillow has done an incredible job marketing themselves as the “go to company” for both sellers and buyers over the past few years. Unfortunately, many sellers have been disappointed by their inaccurate data. Realtors get to deal with the misinformation they and many other “professed” real estate resource sites display to the public on a daily basis.

First of all, these are marketing companies, they are not real estate companies. Their data is second and third generation at best and many times months if not years old. Their information does not take qualifying conditions into account.

The consumer’s version of where current local real estate information can be found is Realtor.com. No other source for real estate data will be more accurate because Realtor.com is the official consumer website of the National Association of Realtors with direct data feeds, and is the only site we recommend to both buyers and sellers.

The first thing to do when selling a home is to gain the wisdom and insights of an experienced pro. Reach out to two or three trusted friends or business associates and ask for the referral of a Realtor that they feel is a good one.

Once you’ve listened to each agent’s proposed marketing plan, which will include providing a true market value of your home, choose the individual that you feel has your best interest at heart. You want to pick the agent that you feel not only knows what they are talking about and will have your best interests at heart.

If your chosen professional is truly committed to doing what is best for you while gaining your confidence for future referrals, they will also be willing to earn that right by putting your success ahead of their own needs. When you find that agent, you’ve found the right one.

Source: Monte Mohr, The Tennessean

Mike Capelle, Broker/Owner
Mike Capelle, Broker/Owner

7 House Hunting Mistakes

If you’re thinking about purchasing your first home, it’s tempting to dive right in and start looking at houses. But before you dedicate your Saturday to visiting every open house in the city, you need to know what you’re looking for. Otherwise, the process of shopping for a home is likely to be long and frustrating. Ill-prepared and uninformed buyers will find it more difficult to discover the home that’s right for them, much less get to the stage where they’re ready to make an offer on a property.

Here are 7 house hunting mistakes first-time house hunters often make when shopping for their dream home. Avoid these errors and you should find it easier to find the home that’s right for you.

1. Not getting pre-approved for a mortgage

Shopping for a home before you know how much you’ll be able to borrow is setting yourself up for disappointment. Before you head to a single open house, you should get a mortgage pre-approval, so you know how much your lender will actually let you borrow. Otherwise, you run the risk of falling in love with a home you can’t afford. Get pre-approved, and then find a home, so you’ll make a financial decision versus an emotional decision.

2. Confusing a pre-qualification with a pre-approval

Mortgage pre-approval and pre-qualification sound like pretty much the same thing. But there’s a crucial difference between the two, and first-time buyers who don’t understand the distinction can find themselves frustrated later on.

A pre-qualification is the first step in the mortgage application process. It involves providing some basic financial information to your lender, who will then give you a rough idea of what kind of mortgage you might qualify for. Pre-approval is a more rigorous process where your lender looks closely at your financials and then tells you exactly how much you’ll be able to borrow and at what cost.

Rely on a pre-qualification when shopping for your home rather than a pre-approval and you could be in for a nasty shock if you aren’t actually approved for the mortgage you expect.

3. Getting distracted by the staging

Savvy sellers do all they can to make their home appealing to potential buyers. At a minimum that means making sure a property clean and clutter-free. But some sellers take it to the next level, adding details, from attractive drapes to a dining table with stylish place settings, that are designed to appeal to your gut, rather than your head. Sometimes, stagers will even use smaller furniture to make a room look bigger than it really is, or cover up floor damage with rugs or furniture.

Good home staging can make it easier for you to envision yourself in a home, but staging can also draw attention to the decorating and away from the actual structure. Make sure you’re falling in love with the house itself, and not the surface details added by the stager.

4. Not figuring out how much you can really afford

The amount you’re approved to borrow and the amount you can afford to spend on a house aren’t always one and the same. Your bank may be offering to lend you $400,000, but they aren’t thinking about your other financial goals, like saving for retirement or putting away cash for your kid’s college fund. Take on a huge mortgage, and you could find yourself financially stretched.

Plus, there’s the fact that home ownership comes with additional expenses that renting usually does not. These can include everything from higher utility bills to increased landscaping costs, as well as needing to have cash on hand for unexpected repairs. Before you even start looking at houses, you need to have a clear idea of what you can really afford so that you don’t get in over your head.

5. Fixating on just one neighborhood

Location is everything when it comes to real estate. But if you’re only interested in buying a home in one or two select neighborhoods, you could find your search more difficult. You’ll probably have fewer homes to choose from, especially if your budget is tight and the area is attractive to a lot of other buyers.

A better approach might be to focus on what kind of neighborhood or community you want to live in, and then looking for homes in areas that fit your criteria. That might mean looking at homes in neighborhoods you’re less familiar with but that still fit your needs, which could make it easier to find your dream property.

Brainstorm some of the things in a neighborhood that are important to you, and drive around various neighborhoods that have those qualities. While you don’t want to overlook factors like safety or good schools, a more open-minded approach could lead to a world of unexpected opportunities.

6. Focusing on cosmetic issues

Picky buyers may turn up their noses at less attractive homes, which may cause them to overlook a diamond in the rough. So-called problems you should ignore when house-hunting include an ugly paint color (either on the exterior or interior of the home), dated furniture or style (unless you’re buying the home furnished, you’ll be decorating it to your own taste), and even certain easily altered architectural details, like a lack of crown moldings.

While minor cosmetic issues shouldn’t cause you to automatically say no to a home, be wary if superficial problems are also paired with signs of neglect, like a lawn that hasn’t been cared for, unusual odors, or mold.

7. Thinking every problem is an easy fix

Watch an episode or two of “House Hunters” and you may get the idea that even the most dilapidated or dated property can be rehabbed into your dream home. But before you start mentally tearing down walls or rearranging the kitchen layout, consider that serious problems with a home’s flow or design could be a red flag, as well as a potential money pit.

Removing walls to create an open layout can be an expensive proposition. Taking out a non-load-bearing wall may cost just a few thousand dollars, but tearing out a load-bearing wall in a two-story home may cost tens of thousands. Likewise, moving electrical and plumbing in your kitchen can cost far more than simply upgrading to new appliances and counter tops. If you envision making big changes to a home, talk to a contractor about how much such work will cost before you agree to purchase the house.

— Source: USA Today

Mike Capelle, Broker/Owner
Mike Capelle, Broker/Owner

What Are Real Estate Comps?

Real estate comps, or comparable sales, is a term anyone on either side of a real estate transaction should know well. It refers to homes located in the same area and very similar in size, condition and features as the home you are trying to buy or sell.

Buyers look at comps when deciding what price to offer on a home, and sellers use them to figure out how to best price their home for current real estate market conditions. Real estate agents look at comps all day long as a way to keep on top of their local market. If you are a buyer or seller, it’s helpful to have a strategy to analyze comps, because all comps aren’t created equal.

Location is the highest priority

If you are trying to price a home or figure out its value, you need to look nearby. The market is based on location, so keeping as close to the subject property as possible — meaning, within the same neighborhood — is the most effective approach.

If you can’t get enough comps nearby, it’s fine to keep expanding out. But there will always be a boundary, like a geographic region, that you need to stay within.

Timeframe matters

The best comps are homes that are currently “pending.” Why? Because a pending home is a piece of live market data. A pending home means that a buyer and seller made a deal, and that deal will reflect the most up-to-the-minute stats on the market.

A good local real estate agent, leveraging his network, can get a fairly accurate idea what the ultimate sale price or range is for a pending deal. Try to stick with sales in the past three months, and never go more than six months, because older data is not reflective of the current market.

Factor in home features

Once you have location and timeframe, it is key to look for homes with similar features that have sold, as opposed to comparing price per square feet. While the latter is helpful, it won’t consider factors like views, a new designer kitchen or a finished garage vs. unfinished.

If you have all three bedrooms on the top floor, look for something similar. Try to compare your subject property to like properties when it comes to traits like total size, the number of bedrooms and bathrooms, and the size of the lot. You can make adjustments once you have found similar homes.

Don’t overanalyze the comps

Putting your trust in a good local agent will keep you from agonizing over the petty details of each comparable home. Your agent is likely familiar with some of the recent sales, and can help shed light on why one comp fares better than another. You may not know that one home was next to a fire station or across from a parking lot, or that another didn’t have a real backyard, but your agent will. These small nuances will affect the home’s value.

— Source: Zillow Blog

Mike Capelle, Broker/Owner
Mike Capelle, Broker/Owner

8 House Hunting Mistakes

If you’re thinking about purchasing your first home, it’s tempting to dive right in and start looking at houses. But before you start visiting every every available house in the area, you need to know what you’re looking for. Otherwise, the process of shopping for a home is likely to be long and frustrating. Ill-prepared and uninformed buyers will find it more difficult to discover the home that’s right for them, much less get to the stage where they’re ready to make an offer on a property.

Here are eight big mistakes first-time house hunters often make when shopping for their dream home. Avoid these errors and you should find it easier to find the home that’s right for you.

1. Not getting pre-approved for a mortgage

Shopping for a home before you know how much you’ll be able to borrow is setting yourself up for disappointment. Before you look at a single listed house, you should get a mortgage pre-approval, so you know how much your lender will actually let you borrow. Otherwise, you run the risk of falling in love with a home you can’t afford.

Get preapproved, and then find a home. That way you’ll make a financial decision versus an emotional decision.

2. Confusing a pre-qualification with a pre-approval

Mortgage pre-approval and pre-qualification sound like pretty much the same thing. But there’s a crucial difference between the two, and first-time buyers who don’t understand the distinction can find themselves frustrated later on.

A pre-qualification is the first step in the mortgage application process. It involves providing some basic financial information to your lender, who will then give you a rough idea of what kind of mortgage you might qualify for. Pre-approval is a more rigorous process where your lender looks closely at your financials and then tells you exactly how much you’ll be able to borrow and at what cost.

Rely on a pre-qualification when shopping for your home rather than a pre-approval and you could be in for a nasty shock if you aren’t actually approved for the mortgage you expect.

3. Getting distracted by the staging

Savvy sellers do all they can to make their home appealing to potential buyers. At a minimum that means making sure a property clean and clutter-free. But some sellers take it to the next level, adding details, from attractive drapes to a dining table with stylish place settings, that are designed to appeal to your gut, rather than your head. Sometimes, stagers will even use smaller furniture to make a room look bigger than it really is or cover up floor damage with rugs or furniture.

Good home staging can make it easier for you to envision yourself in a home. But make sure you’re falling in love with the house itself, and not the surface details added by the stager.

The point of staging can be to draw attention to the decorating and away from the actual structure. Don’t ignore defects that the staging has hidden.

4. Not figuring out how much you can really afford

The amount you’re approved to borrow and the amount you can afford to spend on a house aren’t always one and the same. Your bank may be offering to lend you $400,000, but they aren’t thinking about your other financial goals, like saving for retirement or putting away cash for your kid’s college fund. Take on a huge mortgage, and you could find yourself financially stretched.

Plus, there’s the fact that home ownership comes with additional expenses that renting usually does not. These can include everything from higher utility bills to increased landscaping costs, as well as needing to have cash on hand for unexpected repairs. Before you even start looking at houses, you need to have a clear idea of what you can really afford so that you don’t get in over your head.

5. Fixating on just one neighborhood

Location is everything when it comes to real estate. But if you’re only interested in buying a home in one or two select neighborhoods, you could find your search more difficult. You’ll probably have fewer homes to choose from, especially if your budget is tight and the area is attractive to a lot of other buyers.

A better approach might be to focus on what kind of neighborhood or community you want to live in, and then looking for homes in areas that fit your criteria. That might mean looking at homes in neighborhoods you’re less familiar with but that still fit your needs, which could make it easier to find your dream property.

Brainstorm some of the things that are important to you. Do you want to live near a store that carries international foods? Drive around the neighborhoods closest to those stores. While you don’t want to overlook factors like safety or good schools, a more open-minded approach could lead to a world of unexpected opportunities.

6. Focusing on cosmetic issues

Picky buyers may turn up their noses at less attractive homes, which may cause them to overlook a diamond in the rough. So-called problems you should ignore when house-hunting include an ugly paint color (either on the exterior or interior of the home), dated furniture or style (unless you’re buying the home furnished, you’ll be decorating it to your own taste), and even certain easily altered architectural details, like a lack of crown moldings.

While minor cosmetic issues shouldn’t cause you to automatically say no to a home, be wary if superficial problems are also paired with signs of neglect, like a lawn that hasn’t been cared for, unusual odors, or mold.

7. Thinking every problem is an easy fix

Watch an episode or two of “House Hunters” and you may get the idea that even the most dilapidated or dated property can be rehabbed into your dream home. But before you start mentally tearing down walls or rearranging the kitchen layout, consider that serious problems with a home’s flow or design could be a red flag, as well as a potential money pit.

Removing walls to create an open layout can be an expensive proposition. Taking out a non-load-bearing wall may cost just a few thousand dollars, but tearing out a load-bearing wall in a two-story home may cost up to $30,000. Likewise, moving electrical and plumbing in your kitchen can cost far more than simply upgrading to new appliances and counter tops. If you envision making big changes to a home, talk to a contractor about how much such work will cost before you agree to purchase the house.

8. Most Importantly, Not Engaging a Realtor Early

With the abundance of information available online about buying and a home, not to mention the prolific advice you will get from family and friends, it’s easy to question the value of a REALTOR® in the process. But a good REALTOR® has the expertise and experience to assist you every step of way towards a successful purchase, so it pays to talk to a REALTOR® early in your search.

At Sunset Vista Realty, we strive to stand out by satisfying our clients with personable, direct attention, and with straightforward, trustworthy communications, providing excellent service to each person based on individual, unique requirements. We help our buyers find the property that best suits their desires and budget, never pressuring to compromise. When it’s time to pursue home ownership, Sunset Vista Realty is ready to help. Check out our Buyer Services.

— Source: USA Today

Mike Capelle, Broker/Owner
Mike Capelle, Broker/Owner

Home Insurance Gotchas

Think You’re Covered? Your home insurance may not help with these problems. A standard homeowners policy offers coverage for a wide variety of perils — theft, vandalism, fire, wind, lightning and ice, among others — but not for everything. Here are six situations not usually handled by standard home insurance coverage. Be sure to ask; you may need to bolster your policy to be covered.

Mold

Mold in your home is bad news. It can cause major health problems for you and your family, and can even make your house uninhabitable. Insurance providers handle mold in a variety of ways. Some limit coverage for damage caused by mold, while others don’t cover mold at all.

Every state except Arkansas, New York, North Carolina and Virginia allows insurers to exclude mold coverage unless the condition results from a covered peril. For example, if the water from a burst pipe in your home causes mold, your insurer might cover it.

If you find out that you aren’t sufficiently covered for mold, you can purchase a separate rider to cover mold in your home.

Pests

From mice and rats to termites and dry rot, standard home insurance policies do not cover damage from pests. That means if a rat chews through your electrical wiring or termites destroy the wood support for your roof, you’re on your own.

The best way to tackle this issue is through prevention. Keep an eye out for signs of pests and dry rot around your property. If you see something suspicious, call an exterminator before the problem gets out of control.

You might also schedule regular termite/pest inspections. By the time you see damage, it could be too late.

Sewage back-up

Backed-up sewers can wreak havoc on a home, causing thousands of dollars in damage. Most insurance agents will ask you about this coverage when you’re buying a home insurance policy, but many consumers ignore the topic.

You can add this coverage to your policy. It generally only tacks $40-$50 onto your premium, according to the Insurance Information Institute (III).

Floods

Standard home insurance policies do not provide coverage for flood damage. For flood coverage, homeowners must purchase a flood insurance policy through the National Flood Insurance Program.

While many mortgage lenders require flood coverage as a loan condition, homeowners in moderate- to low-risk flood zones have the option to forgo it altogether.

Before you decide to take a chance, you should know that 25 percent of all NFIP claims come from people outside of mapped high-risk flood areas.

A flood insurance policy starts at as little as $129 a year in low-risk areas.

Earthquakes

Earth movement or earthquakes are not covered by standard home insurance. Homeowners who live in shaky parts of the country should see if their insurer offers a rider on their current homeowners policy, or search for a separate policy all together.

The cost of earthquake insurance varies widely according to the risk in your region.

Sinkholes

Common in states like Florida, Texas, Alabama, Missouri, Kentucky, Pennsylvania and Tennessee, sinkholes can cause cracks in walls, floors and even in your home’s foundation. However, sinkholes are not covered by standard home insurance. Sinkholes are defined as earth movement and, therefore, would fall under earthquake coverage.

In some states, insurers offer specific coverage for sinkholes, or adding earthquake coverage could cover sinkholes, but you should talk to your insurer to see what your options are.

If you aren’t sure what’s covered by your specific home insurance policy, call your provider and review your coverage with a licensed agent. An agent can not only help you better understand your policy, but also assist you in adding coverage if necessary.

Inspiration: Zillow Blog