Let’s start by saying home inspections are very important and are always recommended when you are buying a home. They are done by a professional once a seller accepts your offer and before a buyer formally signs contracts. The inspection allows you to inspect the home much more thoroughly with a professional and will provide you with a summary of the condition of the home. While home inspections are rather cheap in comparison to the cost of a home they could range anywhere between $400-500. It’s important that before a buyer goes through a home inspection they have the right expectations on why they are getting a home inspection and what they can expect to get out of getting one.
Sellers know about the obvious issues with their home and have a reasonably idea how a home inspection is going to go before it is even done. In a lot of cases they already considered this when they listed there home and is already built into the price. Home inspections are very important since they look at things that aren’t easily visible like the roof, electric system, attic, utilities, appliances, etc. and could point out major issues with the house that were previously unknown. However buyers need to have reasonably expectation and not assume they will be able to get a large reduction in cost by making a long list of issues.
If the home inspection reveals some concerns it’s important to relay those issues to their agent in a timely manner so they can be addressed. The seller had three options when they receive such a list. First they can fix any repairs or concerns that come up. Secondly they can offer to give the buyer a reduction in sales price or work credit. And lastly they can simply say no.
In today’s market the sellers are in more of a position to say no then they have been in some time. Home inspections are also very important so that the buyer know what they need to do with the home in the future as an owner. A good inspector will point out some advice that they buyer could do to help with the maintenance of the home and upkeep. This information is very important as well and the buyer should keep the report and look through it after closing. To wrap things up every buyer should get an inspection and carefully go over it. The report will show any concerns that need to be addressed immediately and also point out things you may need to budget for in the future. By having these expectations you will have a transaction that is much smoother and less stressful.
NYS pressed the reset button on all homeowners’ star exemptions. Star exemptions are provided to owner occupied homes and NYS wants to crack down on anyone taking advantage of the star exemption that actually don’t live at the property.
What does this mean for you?
Even if you have been approved for the star exemption you will now need to re-apply and prove proof of the home being your primary residence. Please see the link below for the application and read the direction carefully for acceptable forms of proof of residency. If you have any questions feel free to call us and make sure you get it in prior to January 2nd 2014. Thank you!
1) Prices of homes are going up. The secret no one is telling you yet is by next spring rates could be in the high 5%’s or Low 6%’s. The Federal Reserve has been artificially holding down mortgage rates down in the 3%’s for as long as they could. They have indicated they will not continue to hold rates down the way they have been. Just the indication in June that the Federal Reserve might “taper” their bond buying caused rates to go up over 1%. Add this to higher priced homes and your buying power is decreasing
2) It’s all about your credit score. Your credit score has more to do with what rate you get than any other factor.
3) Opening a new account causes huge reductions in Fico Scores. A new car loan could cause a 15-20 point reduction in your credit score, leading to a higher rate. This also means not opening new credit cards. That 10% discount you get at Target or Kohl’s, could cause you to get a .25% higher rate for the next 30 years.
4) Mortgages are easier to get today than they were yesterday. Banks are finally allowing lower down payments and credit scores to qualify for a mortgage. This however doesn’t mean that the paperwork and documentation is getting easier.
5) You may not qualify for what you want today, but a good Loan officer might be able to help you restructure your credit or debt so you can qualify next month. It’s important to get your Loan Officer involved early.
6) You get what you pay for. If you go to 1-800-internet-bank you will be doing business over the phone and internet. You wouldn’t buy your house off eBay, you shouldn’t get a mortgage this way either. Internet banks won’t understand your market area, they have trouble tracking your documents and you will be signing all your disclosures by yourself, with no idea what they mean. An in person application is the cornerstone for your whole home purchase. Without one, you can’t be sure what you are signing, or applying for. Plus getting the wrong type of mortgage program because the loan officer never truly evaluated your whole picture, could cost your 10’s of thousands of dollars over the first 10 years.
1. "I have no money for down payment or closing costs"
Response: There are many different types of programs some of which are geared for people who don’t have a significant amount to put down. One program in particular is the SONYMA program available to New York residence. They provide 97% financing with a 3% down payment assistance loan that is completely forgivable so long you live in the home for a certain amount of time. (100% financing). Another great program is the FHA mortgage that only requires 3.5% down which can come from a gift, retirement account withdrawal, and many other sources. They will also allow a 6% sellers concession where the seller will credit you 6% of the purchase price back to you so that you can pay your closing costs. There are many great loan programs for all different types of borrowers.
2. "My Credit is no good"
Response: you need some form of credit to obtain a mortgage however there are some programs that will tolerate some “scratch and dent” credit. Many buyers don’t realize that they can actually pay down some debt and the mortgage company can do something called a rapid re-score that will increase your credit scores overnight. That could be the difference of qualifying and not. In addition banks will tolerate judgments on your credit so long that they are paid. Don’t make assumptions and meet with a professional to evaluate your credit with you. Most of the time a few easy adjustments and payments could raise your credit score 20-60 points overnight!!!
3. "Even if I qualify on paper I can’t afford those mortgage payments."
Response: Most people heard about the tax benefits of homeownership but don’t fully understand how they work. Assuming you will not be taking out a loan for 1.1 million than you can take advantage of the tax benefits. The real estate taxes and interest portion of your mortgage payment are tax deductible. So assuming real estate taxes are $8,500 and the interest paid for the year is $14,507 (300,000 at 4.5% interest) your total deduction would be $23,007. If you multiply your total deduction ($23,007) to your current tax rate than you will find out how much extra cash you will receive from being a homeowner. So assuming you tax rate is 31% than 23,007 x .31 = $7,132.17 or $594 per month!!!
It’s important that you seek the information from a professional who will guide you and educate you fully about buying a home. The anxiety of not knowing is much worse than finding out you have to do a few things before you can buy a home. It’s important to have a plan so that you’re ready when the time feels right!!!
Most first time homebuyers don’t really know what it is like to be in a sellers’ market. In recent years buyers were in the driver’s seat and usually got there way during negotiations. That is starting to chance with a decrease in inventory in the lower to median price point of each town. The first thing we noticed which actually started 6-8 months ago was seller’s unwillingness to make any adjustments or repairs after a home inspection. This was mainly due to the sellers feeling there were selling the home for fare less than they wanted. Just recently particularly in the last 60-90 day we are seeing homes selling close to full asking price and in some instances above asking price. The fact of the matter is that inventory is low due to many homeowners not able to sell their home because they don’t have any equity and we are in the peak of the housing market season.
The fact of the matter is that if you are in the market to buy a home it’s important to tour the home you want to see right away! You don’t want to compete with other buyers and get beat out by another offer. Make sure your realtor is available for you with at a minutes notice so that they are giving you the best chance of getting the home you want. By doing that you will greatly increase your chances of getting you home accepted.