by Kathe Barge | Dec 1, 2022 | Blog, Buyers, Buying Conditions, Contracts, Helpful Tips, Interest Rates, Market Trends, Mortgage, Property Value, Real Estate
We would like to buy a new home soon but interest rates seem very high – we see advertisements for internet lenders offering what seem to be below market rates. Is this too good to be true?
If you were simply refinancing an existing mortgage debt, you MAY be ok choosing an internet lender. You would just need to be very careful that, before you apply to refinance your loan, you receive from the lender a full disclosure of all the costs and not just the rates. Often times I see lenders have exorbitantly high fees connected with low rates. In a sense, you would be buying down your rate by paying high fees upfront. You would want to be sure to compare them on the same day to a couple of local lenders and understand what you are paying to get the quoted rates. The reason you must compare rates on a singular date is because rates go up and down continuously and a rate may seem lower simply because you called a particular lender on a date rates dropped.
Since you are buying a new home rather than refinancing, I do NOT recommend that you use an internet lender. They do not tend to be familiar with area norms and that can cause you more headaches than you can imagine. There is a long list of particularities to PA Agreements of Sale and the last thing you want to do is have your closing delayed (while your movers are standing at the curb) while you wait for your lender (who does not have a local presence that you can visit personally to address any issues) to sort things out. As they are not familiar with our Agreements and processes, internet lenders may also impose requirements on you that are not requirements generally imposed by local lenders that may disadvantage you later. Finally, internet lenders often do not understand that PA Agreements of Sale declare “time is of the essence” inside the contract – what that means to you is that if you miss your closing date because the lender isn’t ready to close, the seller does have the legal right to declare you in default, keep your hand money and sell the home to someone else.
When buying, why take a risk? Rely on your trusted Realtor to help you find a local lender who offers the most competitively priced loan products and delivers exceptional customer service. Realtors cannot accept referral fees from lenders, so you can be sure we are motivated only by knowing you will have an outstanding transaction. Feel free to reach out to me for help finding you the best local lender to meet your financing needs!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Nov 4, 2022 | Buyers, Buying Conditions, Contracts, Helpful Tips, Interest Rates, Investment Properties, Listings, Market Trends, Mortgage, Property Value, Real Estate
Interest rates jumped up again. Is it time for us to just wait until spring and hope they start to come back down?
If you are a buyer, the real estate market offers you a great opportunity right now! Don’t be fooled by the higher interest rates – this is an awesome market for you to buy in! Why? Because all of the people who you would have been competing with are afraid of the interest rates and sitting by the sidelines. This allows you to have a competition – free opportunity to buy a home! Just six months ago, buyers would have been overjoyed to have an opportunity to buy a home without competition, to have had an opportunity to have had an offer accepted on the first home they offered on instead of their seventh, to have been able to purchase a home at asking price rather than asking price plus 10 percent! Do not miss this golden opportunity – there are some very nice homes available right now. You can refinance later with a convenient no cost refinance loan – get the house now! Once rates start to come back down, the buyers (who have all been sitting by the sidelines with you) will come racing back into the market, and bidding wars will be back. Make the smart move – buy now.
And as a side note, I do not feel we will see a “crash” in prices. Inventory remains at record lows and those homes that are selling continue to increase in their sales prices to new record highs, despite the increasing rates. This is not 2008 – I am not anticipating any “deals” to be had this spring – if anything the natural increase in the buyer pool we see every spring will boost prices because of the extreme lack of inventory. Feel free to reach out to me and we can strategize on how you can take the most advantage of the current real estate market while you still can!
A home’s value is set by the market. Value is always determined by what a buyer is willing to pay for your home. Many factors come into play in setting that value. Market value reflects quantitative factors such as: # bedrooms, # bathrooms, # garages, placement of garages (attached or integral), lot configuration (large and functional back yard? Cliff lot?), location of the home generally, age of roof, age of mechanicals. Market value also reflects more qualitative items: how updated is your home, and is it all new, or just refreshed? What is the floorplan (open concept?) What are your wall colors? There is always a range that value will land in, which we call the range of reasonable. There is no ONE price at which a home will sell. If there are many buyers seeking a home like yours, it will sell at the top of the range of reasonable. If there are not, it will take longer to sell and may sell a bit lower in the range. What the market does not consider in setting a value of a home is what you need from the home. In 2008, many homeowners had used their homes as ATMs and withdrawn large sums of money for educations, vacations and cars. When the market softened, there was not enough equity for them to be able to sell their homes and not be in a short sale situation. This fact, that a homeowner over-extended themselves on mortgages, is not the least bit relevant to market value. The market is also not going to consider what you plan to do next. If you plan to move to Los Angeles to be closer to family and are finding that the Pittsburgh market is not going to yield you enough to be able to buy in L.A., you will need to turn to other investments to make up any difference.
We are in a very robust market – your home is far more likely to garner more now – whatever that may be – than it could have in the past. Forecasters are also suggesting that values will soften by year end. My crystal ball is out for service, but what I can tell you is that every hot market eventually softens. Waiting out the market so that you can get a price that the market is unprepared to deliver at this time may have you waiting many, many years, and during that time you may need to invest even more in your home in order to deliver to the market what it needs in order to deliver an acceptable sale to you.
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Apr 11, 2022 | Buyers, Buying Conditions, Contracts, Helpful Tips, Interest Rates, Listings, Market Trends, Pittsburgh, Property Value, Real Estate, Sellers, Selling Conditions
How do you guard against overpaying in this competitive market?
You have a good reason to worry about prices in the market that we are in. Currently it seems that prices have risen at least 10% in some price brackets since the new year. That’s an incredible amount for the Pittsburgh market which typically appreciates at the rate of 1 to 2% per year. That increase is not being seen a crossed all price brackets – the million dollar plus market has as a general rule seen less. However, the majority of our homes are still seeing multiple offers and the prices are still coming in over the asking price.
Given the current state of the market, there is a high likelihood that those participating in some of the more intense bidding wars going on right now are going to end up overpaying for their homes. If they remain in their homes for 5 to 7 years, however, that should not be an issue. We should see enough market appreciation in a 5 to 7 year period to make up for any premium that might be paid in the current market.
If you are getting a mortgage, the appraisal required by the mortgage company provide some level of protection. However, most appraisers are trying to make their appraisals come in where the market is presently, so that doesn’t exactly protect you from the “bubble” we may be experiencing. Additionally, if you are involved in a multiple offer situation, to be the winning bidder you will probably have to offer some level of “appraisal gap coverage” meaning that you agree to accept the appraisal at a lower number than the purchase price, should that occur. So, you will not benefit from the typical protections afforded by an appraisal.
In the end, the answer to your question is that if you are buying in this market, you are just going to have to come to peace with the fact that you may need to do what appears to be overpaying in order to get a home for you and your family. However, in the end, even if the market does settle down a bit, as long as you are not planning to move in the near future, the market will eventually catch up with any premium you might have to pay.
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Apr 3, 2022 | Buyers, Buying Conditions, Helpful Tips, Interest Rates, Investment Properties, Market Trends, Mortgage, Property Value, Real Estate
How are rising interest rates impacting home sales?
Rising interest rates are definitely impacting buyers. Many buyers are having to step down their affordability levels and focus on homes that are less expensive homes than those they might have considered three months ago. If you are a buyer and have been looking for more than a month, it’s a good idea to check in with your lender and request a new pre-approval and cost estimate so that you can be comfortable with what your payments will look like at the higher rates.
For most sellers, however, the rising interest rates are not impacting home prices. We continue to sell homes astonishingly quickly and at record prices. The pool of buyers considering a home may be different, but their number is not less. At the present time, it does not appear that the notable increase in interest rates has impacted our market in the “affordable” ranges at all.
However, the high-end market (over $1.5M) has always been much more susceptible to broader market factors such as interest rate increases. There has been a notable (and hopefully temporary) decrease in high-end activity in recent months and rising interest rates may be playing a key role in that decline (along with the volatile stock market and other concerning world events). If your home falls into our high-end market, you may need to exercise patience with our market as your time on the market will likely be more in line with historic norms as compared to the current “flash sale” market we are experiencing in the $1.3M market and below.
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Feb 10, 2022 | Blog, Buyers, Buying Conditions, Contracts, Investment Properties, Listings, Market Trends, Mortgage, Property Value, Real Estate
What impact do you think rising interest rates will have on the real estate market?
I can’t tell you how many years the Fed has been warning us that they are going to raise the interest rates, and then nothing happened. But now, it looks like it is finally happening. Less than one year ago, conforming loans with good credit could be procured at rates below 3% fixed. Now they have inched up to 3.75% for conforming loans. While these are still historically great rates, the days of mortgage interest rates in the 3% range appear to be gone and we are slowly inching upward.
What impact will this have on the market? Typically, when rates increase the market slows. Buying power decreases – a buyer will qualify for a smaller mortgage amount when rates are higher. Even if a buyer qualifies for a loan amount, they may not want to pay the added amount each month attributable to the higher rate. Many buyers are cognizant of how much they don’t have available to spend on quality of life purchases, such as dinners out, when they have larger mortgage payments. This boils down to the fact that they may be unwilling or unable to buy at a price they could have last year, and this could depress housing prices.
However, this is counterbalanced by the fact that we are in a market with record low levels of inventory, so it is highly unlikely that interest rates will have any effect on housing prices in the short run. If anything, rising rates should cause buyers to move quickly and lock in homes and mortgages before rates continue to climb. And this would be the most sensible short-term response to rising rates. Buyers – rates are actually going up! The time to act is now!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Jan 27, 2022 | Blog, Buyers, Buying Conditions, Contracts, Investment Properties, Market Trends, Mortgage, Property Value, Real Estate
We are interested in diversifying our portfolio and purchasing rental properties – any thoughts?
The first thing to keep in mind when considering a rental property is how you intend to pay for it. Rental properties are investment properties and subject to different lending rules than the home that you live in. Therefore, a lender will expect that you put more down as a down payment on a rental property and you will pay a higher rate of interest. Typically, lenders are looking for no less than 20% down on your purchase. And of course until you establish yourself as a successful landlord, your income is going to need to be sufficient to support the mortgage on your primary residence as well as any debt on your rental investments.
The second thing you need to think about is what kind of tenant you are interested in renting to. If you are hoping to rent to a family who might be in town for a couple of years with a temporary job assignment, then purchasing an apartment building with one and two bedroom apartments is unlikely to attract the type of tenant you hope to find. In that scenario, you would be looking for a single-family home in all likelihood (or possibly a townhome) in a good school district such as Quaker Valley. If you are hoping to find young professionals, you might look for something closer to downtown that has a trendier vibe to it.
You also need to take a look at the return on investment that you are seeking from the property. You will need to consider how much you are putting down on the property, how much you were paying in interest on any mortgage that you take out, your property taxes, maintenance of the building, any homeowners association fees, and any utilities that might be the responsibility of the landlord (these are typically utilities that are not separately divided in the particular structure, such as water). Putting together a spreadsheet with all of the expenses and your expected income will help you to determine whether or not the anticipated net income is worth the risk of investment to you. Be sure to build in some vacancy months – most properties are not leased 100% of the time.
Finally, you need to give some thought to how you will manage the property. Are you going to hire a property management company to handle that for you, or will you be more hands-on? Who is going to handle maintenance requests when something goes wrong? The beauty of being a tenant is that if something breaks, it’s not your responsibility to get it fixed. But as the landlord, are you going to be taking care of the repairs and if not, do you have a reliable handyman on-call that is willing to handle those items for you. If you are planning for others to manage the property on your behalf, you will need to build those costs into your financial projections as well. If investment properties are something you would like to consider, feel free to reach out to me and we can discuss these opportunities further.
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Sep 23, 2020 | Blog, Buyers, Contracts, Listings, Marketing, Sellers
We have been waiting for a while for some new homes to come on the market –are you anticipating more listings soon?
It has in fact been a very active summer season and it sure does feel like inventory is very low. In fact, we currently have ONLY 82 listings available for sale in the Quaker Valley School District – in most years that number would be approximately 200! So when we say that we need listings, we mean it!
Yes, we do expect that there will be more homes coming on the market in the new year. While March & April tend to be our largest listing months every year, we have had a few introductions recently and as a general rule they have flown off the market. We have a tremendous amount of pent up demand. There are dozens of buyers in every price range sitting on the fence waiting for their “perfect” listing. If you are one of those buyers, you should expect that you will have some stiff competition as we are seeing bidding wars with multiple offers in many price ranges. So make sure you have your financing in order and be prepared to move quickly if you see something that looks like it could work.
If you are one of the many Village dreamers we have out there, start thinking now about what compromises you might be willing to make to get a home. As Pittsburgh grows, our inventory is not keeping up with housing demands and we will continue to see a tighter and tighter housing market and increasing prices. Compromise will be necessary to even get into a home here.
Finally, if you are thinking of selling your home, I have said it many times before, but PLEASE reach out to me! I offer completely confidential consultations and strategic plans to maximize your returns, with a nearly 22-year proven track record. There is no better time to be selling your home!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Jan 20, 2020 | Blog, Buyers, Inspections, Mortgage
We’re first time home buyers. Where do we begin? (continued from last week)
For those of who just picking up the conversation today, check out my blog at www.askkathe.com to read the past two weeks’ introduction to the home buying process. If you are following along, so far you have gotten pre-approved for your mortgage, researched and chosen a buyer’s agent to be your advocate, saved money for your down payment, shopped for a home and gotten one under agreement. Now the fun continues!
Once you have a home under agreement and have deposited your hand money, you will be ready to schedule your inspections. Your buyer’s agent should provide you with guidance in finding reputable home inspectors. You will want to consider scheduling a general home inspection as well as inspections for radon, wood boring insects (termites), mold, and possibly of the sewer lines. If the home has a septic system you will absolutely want to fully inspect the system – they are quite costly to replace. If there is a well on the property, you will want to test both the water quality and the capacity of the well. You may also need to have specialists evaluate aging components such as the roof. You generally have 10 – 14 days to complete your inspections and at the end of that period, you will need to make a request of the seller if you would like any items addressed. To reach a successful conclusion of inspection negotiation, it’s a good idea to keep some simple tips in mind. First, anything on the disclosure should have been considered when you were making the offer – its not a great idea to revisit disclosed items. For example, if the seller disclosed that the roof is at the end of its useful life, asking for money toward a new roof is unlikely to be well received. The same can be said for items you could have easily seen. If the inspector notes that the driveway is cracked and you should have seen it while visiting the home, asking for the seller to pay for a new driveway will also not be well received. So when deciding what, if anything, to request of the seller, eliminate disclosed items and things you noticed when visiting the home and then turn your focus to the items that concern you most. Of course, if there were multiple offers and you were the winner in a bidding war, you may not be able to ask for much if anything as there is likely another buyer on standby! Ultimately, you and your seller will need to reach a compromise on the inspection issues and that agreement will be formalized in a written addendum to your Agreement of Sale.
At the same time you are working through inspections, you will also need to make application for your financing. This must be complete (in other words, you must have all of your paperwork to your lender) within 7 days of the final Agreement of Sale. Applying for a mortgage these days can seem quite challenging – be prepared for the lender to ask for what will seem like a mountain of documents. And do NOT make any major purchase until after you close on your home – changes to your outstanding debt at this point could affect your ability to qualify for a loan at all! Once you get through inspections and mortgage application, it should be smooth sailing. We will cover the final step in the process next week!
307 Grant Street, Sewickley – NEW LISTING!
Incredible central Village home in a phenomenal neighborhood with flat, fenced yard, 2 car garage. Newly remolded kitchen and baths. Upstairs features 3 bedrooms, 2 baths. The main level includes living, dining and family rooms, eat-in kitchen and den. Charming covered back porch. $725,000. Join me for our open house Sunday, 1-3pm.
213 Chestnut Road
Beautifully remodeled Sewickley Village Victorian with high ceilings, open floorplan and fabulous original architectural detailing. Wonderful newer master suite with stylish newer bath. Four finished levels of living space including lower level gameroom. Flat backyard, two car detached garage. In a wonderful Village neighborhood, within a very easy walking distance to Village shops and restaurants. $795,000
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Feb 27, 2019 | Blog, Buyers, Market Trends, Mortgage, Real Estate
We’ve been out of school for a few years, have been great savers and are thinking about buying our first home, but with the recession not so far behind us, it seems like a risky proposition. Any advice?
The millennials, as they are known, are a very risk adverse generation, having watched first-hand as many family members lost their jobs and/or their homes in the last recession. It’s not hard to understand why they have been the slowest generation to embrace home ownership as part of the American dream. But as scary as it might seem to take that first big step, home ownership remains one of the best investments you can make, and the sooner you get in the game, the sooner you will start making measurable progress toward achieving your financial goals.
Keep in mind that most of the housing losses from the 2008 recession were due to the immediately proceeding banking practices that are now far behind us. People were allowed to borrow without proof of ability to pay, to start with, and many used their homes as ATM machines, financing cars, vacations and college educations on their presumed housing appreciation. Today the lending laws are much stricter in an effort to prevent another crisis, and so you can be assured that if a lender has qualified you for a particular loan amount, you have passed some of the strictest standards and are more than well qualified by any objective standard to get in the housing game.
Owning a home will always be a far better choice than renting. It’s a rare day that owning what you are renting wont cost you less every month, and you are building equity (money you get back when you sell someday) with each payment. If you compare how much it costs you to own a home over 30 years, versus how much it would cost you to rent that home over 30 years, you will always have spent less money and in the end, you will have an asset that you own and can resell if need be. In addition, owning a home gives you certain federal tax breaks that renters don’t get, which further reduces the actual cost to you of owning a home. Home owners also lock in their housing cost for as long as they own that home. So while your $2000 rental payment will go up each year as your landlord increases the rent, how much you spend for a mortgage is locked in for as long as you own your home. Stay there 30 years and you will still be paying the same mortgage payment that you are paying today! No landlord will give you that deal!
This is complex, no doubt, and I would be happy to meet with you to go over the numbers in person, but there is no doubt that its never too early to get into the home ownership game!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Jan 23, 2019 | Blog, Buyers, Mortgage, Real Estate
I know you don’t have a crystal ball, but what do you think about mortgage rates right now?
The short answer: I think they will only go up! We just had a slight drop in the rates this past week, but that is not expected to hold. If you are considering buying, now is definitely the very best time to take out a loan – by next month rates could have bounced back up again! There is really only one problem I see with this otherwise sage advice – inventory is very limited right now! You may not find anything that you want to buy!
The good news is we do have a new mortgage product that will allow you to lock the rate for 60 days, even if you haven’t found a home! The process is quite simple. The loan application is processed just like if you had found a home – you make full application and turn in your paperwork. You then have 30 days to get a home under agreement and the remaining 30 days to close. For those of you who are committed to buying in the short term, this is a very good option to guarantee you the lower rate while still giving you time to shop. If you don’t find a home within 30 days, you do lose the rate lock but you would have still completed the paperwork for your future loan application!
Prospective sellers, lower rates are good news for you too! Buyers can afford more when rates are lower and home prices therefore tend to be a little higher. We are officially in the long-awaited spring market, rates have dropped a bit AND we have a scarcity of inventory – the perfect trifecta if you are contemplating a sale! Give me a call and we can develop a strategy to maximize your return in this favorable climate!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Jan 15, 2019 | Blog, Buyers, Mortgage, Real Estate
We are interested in viewing homes but have been told that before doing so, we need to provide a pre-approval letter or proof of funds letter. Is this really necessary?
Getting yourself pre-approved to buy before you start viewing homes is an excellent idea. You will have to have a pre-approval letter to submit an offer (sellers are going to want assurances from an independent third party that you can afford the home before they take their home off the active market to sell to you). And you certainly don’t want to start looking at homes that you think you can afford, or that you were told you could afford last year, before interest rates increased, only to be disappointed to find out that the home you love is outside your price range. Getting a pre-approval upfront is the most sensible approach – in this hot market, you could easily lose out on a home while you wait for a lender to pull your information together and get you the letter. It is best to get it done up front.
Necessary? That depends on the agent you are working with and the sellers of the homes you are viewing. Some agents simply will not put a buyer in their car until they have completed the pre-approval process. On reflection, this makes sense. Realtors are one of the only professions that don’t charge for their time as it is expended – they are paid for their time only when (and if) you actually close on a property. Getting pre-approved upfront shows that you are serious about buying a home and not just out for a house tour! Some sellers also require pre-approvals be provided before they will allow their homes to be shown. As you might imagine, there are some homes that many people would like to see, just for fun, such as very expensive homes or homes of celebrities/ sports stars. However, selling a home is not about providing entertainment to the general public. One would hope that buyers would understand that sellers do not want to take the time to prepare for a showing to a buyer who is just out for fun – and hence, for those homes that might be a curiosity to many, it is important for sellers to require a pre-approval in advance.
If you are serious about a move, then financing, whether through a loan or with cash you have saved, is a necessary part of the buying process. My best advice is to go ahead and line up your financial ducks before you start the home search process. If you need help finding an excellent lender, give me a call!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Jan 3, 2019 | Blog, Buyers, Contracts, Listings, Market Trends, Mortgage, Real Estate, Sellers
It’s a new year and we’re ready for a new home! What should we do first?
Well, you are asking a Realtor that question, so the answer is probably expected! The first thing you should do is call me! Once you have done that, here is a look at what comes next! First, we will meet and determine the likely value of your home in the current market. The market is quite fluid and values move up and down depending on supply. Currently we have had very low inventory for an extended period of time and buyers are getting very frustrated, so it is possible that we may see an uptick in values again this spring. When we meet we will also review all of the many ways I will be marketing your home and the timetable for rolling out the marketing to optimize your result.
Once we set a timetable that works for you, you will want to spend some time “staging” your home. At the most fundamental level, this would involve you “de-cluttering” your home. It’s amazing how quickly we will our closets, basements and attics! Movers are not cheap – you do not want to move more than you know you will want to keep. So now is the ideal time to start the clean-out. In fact, we sometimes have closings as quickly as 3 weeks after an offer is presented, so it is best to assume that you will not have much time to pack later and do the clean-out up-front. This will also help your home show off its spaciousness and storage capabilities! If you are saving things for others (such as the pile of furniture I have stored in my basement for my adult children who I am sure are going to want my 30 year old furnishings someday!), then it would be advisable to find an off-site storage facility and move those items from your home (or more realistically, I would be happy to connect you to charities to come pick them up and give you a tax deduction in exchange – the reality is that those we save for probably really don’t want our stuff anyhow!) If this all seems incredibly overwhelming to you (and you’re thinking you would rather stay put than face the inevitable clean out), I would be happy to connect you to a home organizer that can take on as little or as much as you don’t want to do!
Once you feel you are “de-cluttered,” the next step toward selling your home would be to determine whether any repairs or improvements are needed or recommended. I am happy to walk through your home with you in advance of your listing date and discuss what you might consider addressing and its likely impact on your bottom line. Not ever seller wants to make repairs and improvements and ultimately that choice is yours, but the market data I will provide to you will help you decide whether its worth it to you to make the additional investment in your home. If repairs are not possible, we will work on using the disclosure to make sure you are sharing the items upfront with the buyer and pricing accordingly. This will protect you later from costly repairs if the inspector is the one to raise the issues.
It’s a lot to do, but together we can make your 2019 real estate goals a reality!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Jul 2, 2018 | Buyers, Listings, Market Trends, Mortgage, Real Estate
We’ve noticed interest rates are rising on mortgages. What effect do you think that will have on our market?
You are correct – the fed raised the interest rates AGAIN this year, and have indicated that we need to be prepared for two more rate increases in 2018. Those increases are expected in September and December and many forecasters are expecting that rates will be over 5% by 2019. The economy has been incredibly strong and unemployment is lower than it’s been since the 1960s (excepting one month in 2000). With a surging economy, the fed is forced to raise rates in an attempt to keep investors interested in mortgages, control inflation and avoid a possible future economic crash. Rates are ¾ point higher than they were last year. Nonetheless, historically 6% is considered an excellent interest rate and they are still well below that!
With all of that in mind, today is as good as its going to get for years to come for mortgage interest rates. So don’t procrastinate any longer! If you are thinking of a move, there is no better time than now to find a new home and lock in your interest rate. In September you will likely pay more for the same house over the life of your loan than you would if you bought it roday. What impact will these rising rates have on the market? Some buyers will not be able to afford a home that they could have afforded previously – as rates rise all borrowers will qualify to borrow less and that lower number may or may not be enough for you to be able to buy the home of your dreams. All buyers will pay more for their homes over the life of the loan than the could have had they purchased earlier. Ultimately, higher rates could depress home values as buyers can afford less, but I do not see that happening in this market. We just do not have enough inventory for rising rates to depress home prices…yet. But if we ever bring supply in line with demand again, we may see rising rates soften home values.
Of course, as rates rise it becomes very important to shop your loan product. Those who get two lender estimates save on average $1500 upfront and those that get 5 save $3000 upfront on average. Most buyers will take the time to shop around for a new car, so why not take the same approach toward your mortgage. With rising rates, you will appreciate the upfront savings!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Apr 12, 2018 | Blog, Buyers, Real Estate
Are rising property taxes and the cap on the ability to deduct property taxes on our federal tax returns going to hurt real estate sales?
Unfortunately, the changes in the federal tax laws may already be impacting our housing market – the higher end market, most impacted by the $10,000 cap on the deductibility of taxes, has shown noticeable slowing over last year. Rising tax millage rates are only going to exacerbate the problem, but rising costs have long been a reality of the world we live in and are to be expected.
What we need is a mindset shift, which will be slow in coming. We all need to step back and look at our tax package as a whole. Pennsylvania is a comparatively low taxing state when it comes to income tax. Our state income tax rate is only 3.07% — this is impressively low when compared to many other states (note our neighbors in New York at 8.82%, West Virginia at 6.5% and Ohio at 4.997%, and the top taxing state of CA at 13.3%). What we are saving in income tax, we are paying in part in property taxes and this needs to be kept in perspective before making bold statements about how much property tax one will or will not pay. Additionally, the $10,000 cap on deductibility of taxes as a cap on the combined sum of property and income taxes, so those in higher income tax states will be hit much harder by this. We really do still have it pretty good in PA!
When considering property taxes, rather than focusing on what one is not getting, buyers would be well advised to think about what you are getting. On a $500,000 assessment, the taxes in Sewickley borough would be approximately $41/day. On a million dollar assessment, they would be approximately $82/day. Compare this to the cost of hotels that you stay in on vacation! If you enjoy coming home everyday to a home that feels inviting and relaxing to you, if it is a home that your family thrives in and that provides shelter and sanctuary that you love, that seems like a small price to pay, even without the tax breaks. There is a cost to living – the food we eat (a dinner out can cost more than the daily property tax rate), the gas we burn to heat our homes in these unseasonable chilly Aprils, the cell phone bills to stay in touch with family and friends. Property taxes are just another one of those costs of living. I think it will be a long time (if ever) before we see that tax break return. Reframing our thinking about property taxes, keeping in mind the otherwise low taxing state we live in and the intangible benefits that you and your family receive from living in a home that you love, is my recommended course of action!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Feb 28, 2018 | Blog, Buyers, Market Trends, Mortgage, Pittsburgh, Sellers, Sewickley
What impact do you think rising interest rates will have on the real estate market?
I can’t tell you how many years the Fed has been warning us that they are going to raise the interest rates, and then nothing happened. But now, it looks like it is finally happening. Less than one year ago, conforming loans with good credit could be procured, on a good day, at rates below 3% fixed. Now they have inched up to 4.25% for conforming loans and 4.75% for jumbo loans. While these are still historically great rates, the days of mortgage interest rates in the 3% range appear to be gone and we are slowly inching toward 5%.
What impact will this have on the market? Typically, when rates increase the market slows. Buying power decreases – a buyer will qualify for a smaller mortgage amount when rates are higher. Even if a buyer qualifies for a loan amount, they may not want to pay the added amount each month attributable to the higher rate. Many buyers are cognizant of how much they don’t have available to spend on quality of life purchases, such as dinners out, when they have larger mortgage payments. This boils down to the fact that they may be unwilling or unable to buy at a price they could have last year, and this could depress housing prices.
However, this is counterbalanced by the fact that we are in a market with record low levels of inventory, so it is highly unlikely that interest rates will have any effect on housing prices in the short run. If anything, rising rates should cause buyers to move quickly and lock in homes and mortgages before rates continue to climb. And this would be the most sensible short-term response to rising rates. Buyers – rates are actually going up! The time to act is now!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Feb 8, 2018 | Blog, Buyers, Mortgage, Real Estate, Sellers, Sewickley
If there are so many buyers out there, why aren’t we seeing more sales?
The average time between a first showing and an offer is 3 weeks. Buyers here are historically slow to get going, although some of the fast sales lately are driving home the point that if you like a home, you are well advised to move quickly in making an offer. That said, there are four primary reasons that hold buyers back from buying a home, according to a 2017 REBAC survey. The first and most applicable right now? Seventy-seven percent of buyers aren’t buying because of our inventory – they can’t find what they want. This has been a recurring theme in my articles – we need inventory! I know it’s early in the spring market, but if we don’t start to see homes coming on the market soon it will be a disappointing spring market for buyers.
The second hold back? Fifty-five percent of buyers have unrealistic expectations! If you know anyone looking for a home right now you have probably heard a lot about what is wrong with our homes. Right now, if buyers actually want to get in a home, they are going to have to adjust their expectations. You might have to do some work to make a home work for you. You may have to give up some of the things on your wish list.
Forty-nine percent of buyers hold back from buying for affordability reasons. Often this is price – our prices are increasing, and may be pricing some buyers out of the market. Our property taxes are also quite high here as compared to many other states, and some buyers simply can’t afford the monthly payment once taxes are added in.
Finally, thirty-three percent of buyers have difficulty obtaining financing. This is why it is very important to do the hard work up front! Seek a full pre-approval before you start your home search so that you aren’t disappointed later!
As always, feel free to give me call if I can be of any assistance with your real estate needs. Call or Text 412.779.6060
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Dec 26, 2017 | Blog, Buyers, Mortgage, Sellers, Sewickley
Any updated thoughts on the new tax legislation?
The new tax legislation seems to be on everyone’s mind these days, and seems to be crowding out Christmas cheer a bit. While I do need to advise you to consult your personal tax accountant, I will tell you I have been busy prepaying my 2018 property taxes. Under the new legislation, taxpayers will only be able to deduct a grand total of $10,000 of property and income taxes combined. In our area, property taxes are higher than in many parts of the country, so many people will easily exceed that limit. Paying 2018 property taxes in 2017 helps to insure the full value of their deductibility. Of course, 2018 tax bills have not been issued yet, but if you find your 2017 bills and make a couple of calls, they will be able to tell you how to proceed if this interests you. The taxing bodies are likely thrilled right now with the new legislation – rather than chasing late payers they are receiving their money well ahead of schedule! Of course, if your bank escrows your taxes for you, this may not be an option you can take advantage of.
I’ve also taken the time to pay my 2017 4th quarter Pennsylvania and local income taxes now, for the same reason. While not due until January 15th, the $10,000 limit on the deductibility of property taxes and state/local income taxes combined will result in lost deductions for many. This tax planning is only useful right now, when the old limits (or lack thereof) still apply through 2017.
As far as the legislation itself, I am pleased that congress raised the mortgage deductibility limit to interest on mortgage debt up to $750,000. Interest on debt on second homes is no longer deductible (unless you use it as an investment property, in which case it can offset your rental income), and interest on home equity lines of credit will no longer be deductible. This will definitely affect the way consumers choose to structure their home buying financing. We will be thoroughly digesting the bill so that we can help consumers make the best financing decisions to take advantage of the tax breaks we do have left.
The $10,000 limit on the deductibility of property and state/local income taxes is not ideal, particularly because of the higher property taxes we have in the region. There is a possibility that the limitation will make higher end homes harder to sell, but I doubt that. In the end, consumers will have to have a mindshift and think less of their personal residences as tax breaks and see them for what they really are – a home for their family to come home to every day – their personal sanctuary from what can sometimes feel like a crazy world. And when we see our homes that way, the small piece of our property taxes that Uncle Sam no longer “pays” will seem far less important than it does in the abstract.
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Nov 15, 2017 | Blog, Buyers, Listings, Mortgage, Real Estate, Sewickley
What impact do you think the proposed federal tax legislation will have on homeowners?
For those of you who are unaware, the proposed tax legislation makes several changes to itemized deductions that will impact many homeowners. First, the property tax deduction will be limited to $10,000. In Sewickley borough, if your tax assessment is above approximately $350,000, you will see an increase in your federal income tax as a result of this itemized deduction limitation. Additionally, while existing mortgages are grandfathered, interest will only be deductible on new mortgages of less than $500,000.
The National Association of Realtors believes these new changes could put home ownership out of the reach of many and nullify the home ownership incentive for all but the top 5% of our nation. Home ownership is already at a 50 year low nationwide. For many Americans, a home is the largest investment they will ever own. Studies have also shown that at the end of the day, the net worth of a homeowner is, on average, a shocking 45 times greater than that of a renter, demonstrating how important it is to incentivize home ownership so that Americans have the needed nest egg when they retire.
My predicted impact on our local housing market is that it will soften prices over $350,000. Without the benefit of the tax deductibility of property taxes over $10,000, mid-market buyers will qualify to buy less than they can today, and it will have a downward pressure on prices overall. With the severe inventory shortage we have right now, this is not likely to be immediately evident, but it will likely impede the long-term growth rate. The cap on the deductibility of interest on new mortgages over $500,000 will have a much larger impact on the market overall. Homeowners with large mortgages will be disinclined to make the “choice” moves we are so accustomed to here in Sewickley, because a move will mean they lose the deductibility of a significant amount of interest on their grandfathered mortgage. This will only exacerbate our inventory shortage as homeowners will be likely to just “stay put” and take advantage of the deductibility of interest on grandfathered mortgages. Additionally , for homes priced over $550,000, buyer affordability will drop further as carrying mortgages over $500,000 will be noticeably more expensive, with the potential of exerting further downward pressure on market appreciation. Its hard to know how any of this will help us, but then, I am not an economist – I must be missing something!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Nov 1, 2017 | Blog, Buyers, Contracts, Mortgage, Real Estate, Sewickley
Do you have any tips on how to get through the seemingly daunting mortgage process with as few headaches as possible?
I certainly do! Below are a few pointers on what you should not do if you want your mortgage to move smoothly through the process!
- Don’t quit your job
- Don’t change your job
- Don’t get a promotion
- Don’t buy any large ticket items (like five dollars or more!)
- Don’t make David Copperfield deposits (all funds need to be traceable)
- Don’t forget to tell anyone making a funds gift to you that you will probably need a gift letter and some proof (usually a bank statement) that they had the money to give
- Don’t forget to tell the lender about child support, alimony, wage garnishments or any other payroll reduction
- Don’t co-sign for even a candy bar!
- Don’t schedule a vacation before we close (especially a cruise)
- Don’t order Direct TV, Cable, Telephone or any utility that will pull a credit report unless you want to write a letter of explanation about the credit report to the mortgage company
- Don’t change your name during the mortgage process
- Don’t go window shopping and let people pull your credit
Assuming that seems pretty straight forward to you, below are a few more choices some buyers make that make the process more difficult than it needs to be:
- Not being up front with your loan officer (hiding information)
- Finding a lender on the internet that offers a 0.001 interest rate
- Finding a lender on the internet that offers a 000000.1 interest rate and is from outside of the area
- Using a 100% Online Lender
- Not using the name on drivers license for mortgage docs (use Jr. and Sr. if required)
- Not telling your lender if you lose your job before you close
- Not shopping the Good Faith Estimate
- Delaying paperwork because you are irritated by the frequency and number of requests from the mortgage company
Take these pointers to heart and you will greatly simplify your mortgage process!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Sep 28, 2017 | Blog, Buyers, Mortgage, Real Estate, Sewickley
We are distressed about the property taxes in the Sewickley area. We are qualified to buy well above a price point that comes with a level of property taxes we are comfortable affording. Any thoughts to share?
You are not alone in your concern about our local property taxes. They are high when compared to same value homes in many states. But they are commensurate with property taxes on same priced homes in the other top Pittsburgh area school districts. If you want great schools, its just a cost of being in a top district. And if you don’t use our schools, being in a top school district will still provide steady appreciation of what is likely one of your largest assets – your home.
If you are not from Pennsylvania, it might help to frame property taxes as part of your larger tax picture. Our PA state income tax rate on individuals is only 3.08% — much lower than most states. We also do not have sales tax on food or clothes here, which adds up to even more savings. Our yearly vehicle fee is also only $41 – also far lower than most states. Yes, property taxes in highly rated school districts can be high, but overall this is a lower cost area to live in.
Additionally, if you itemize deductions on your federal tax return, there may be a tax savings for you associated with the deductions of your property taxes – they might not actually cost you as much as you think – your tax advisor can help with this.
In the end, most people spend a lot of time in their homes. Your home should be something you love coming home to, love spending time with family and friends in. I suggest you do not isolate out property taxes as the bad guy keeping you from the home you love, but rather look at your entire cost of ownership – mortgage, taxes, insurance, utilities, maintenance — and if the overall package looks manageable for a home you love, go for it!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Sep 7, 2017 | Blog, Buyers, Contracts, Mortgage, Real Estate
I have a friend who has a mortgage business in another state and he tells me he can handle our mortgage here in Pittsburgh. Thoughts?
It is incredibly tempting to take friends up on offers like this one because we hope when working with a friend we might get a better deal. However, when it comes to mortgages, this is not a good idea! My best advice is to ask your Realtor for several recommendations of local lenders and shop rates and fees. Chances are you will find an equally competitive rate here. Why do I recommend local lenders so enthusiastically?
There are many facets of our real estate contracts that non-local lenders may not be aware of and that may cause a snag in your deal. For example, our contracts declare time is of the essence, so your deadlines are exactly as written in the agreement – there are no automatic extensions as there are in many states. If your lender misses your mortgage commitment date because he doesn’t realize this, the seller could terminate your deal and you could lose your dream house.
Non-local lenders also often do not understand the transfer costs of our area and may mis-quote your loan fees. For example, our transfer taxes vary from borough to borough and are reasonably significant. If an unaware non-local lender does not include the right figures up-front, he might qualify you for more than you can afford, which could cause problems later when your home gets to underwriting and you suddenly find out that you actually don’t qualify!
Local lenders are also far more likely to be vested in the success of your transaction. They probably do a fair amount of business with your Realtor and will go the extra mile because they want to keep referrals from your agent coming. Take advantage of this fact – you are most likely to get the best rates and service from lenders right here in Pittsburgh who are vying for your Realtor’s future referrals and want to make you happy every step of the way!
[contact-form-7 id="115311" title="Get More Information Form"]
As an Associate Broker at HOWARD HANNA REAL ESTATE SERVICES, Kathe Barge, CRS, ABR, CNE, is ready to answer any questions you may have regarding your real estate needs. Feel free to contact her at the office (412) 741-2200 x238, or on her mobile phone (412) 779-6060.
by Kathe Barge | Jul 20, 2017 | Blog, Buyers, Contracts, Home Staging, Listings, Market Trends, Mortgage, Real Estate, Sellers
In your May 11th article, your first item you noted about real estate is that a home is worth what a buyer is willing to pay. I thought a home is worth what it appraises for?”
In my May 11th article (available to those of you who missed it on my website), I did list 12 important things everyone should know about real estate, the first being that yes, a home is only worth what a buyer is willing to pay.
Appraisals are typically done in conjunction with a mortgage application, although they are sometimes done as part of an estate administration or by a homeowner who wants to get a better sense of what a home is worth. Many appraisers are not experts in the neighborhood they are trying to appraise a home in and miss the block by block nuances that greatly affect value. However, even if they are well versed in a particular area, they may not have been in every home and may not understand the special circumstances surrounding why one buyer may have paid a premium and another buyer may have purchased at a discount. Appraisers often don’t have their finger on the pulse of buyer expectations – unlike Realtors, they do not interact directly with buyers and don’t have the opportunity to hear them complain about wallpaper, colored carpets, dated lighting and outdated kitchens and baths. They don’t see firsthand how eager buyers are to purchase newly remodeled homes and the premiums they will deliver for those homes and they aren’t privy to the conversations Realtors have trying to convince a buyer to take on a project. So sometimes they are just too high and that price will not be achievable absent a sizable remodel.
It is also irrelevant how much money a seller has invested in a home. It is important to keep in mind unless renovations were made in conjunction with a home-staging professional in an effort to sell your home, improvements were made for the homeowner’s enjoyment and may not carry any value for a home buyer.
In the end, Buyers in 2017 America are quite savvy. Most view all inventory for many months before choosing a home. They probably know better than a home seller how a home stacks up against what has recently sold. If they don’t, it is all readily available online. So in the end, the price is determined by how convinced a buyer is that the value is in the home.
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Jun 1, 2017 | Blog, Buyers, Contracts, Listings, Market Trends, Mortgage, Real Estate
It’s true! Bidding wars are back in some neighborhoods! The extremely tight inventory, coupled with the influx of spring buyers has made the competition sometimes fierce for well-conditioned homes in great neighborhoods. The first thing you should do to set yourself up for success in a hot market is to get a pre-approval from a reputable local lender.
The pre-approval process is more than a pre-qualification. It involves submitting all documentation to your lender long before you actually make an offer. This includes tax returns, bank statements… The lender will underwrite your loan subject only to the appraisal of your new home once you find it. This makes you an incredibly strong buyer – you could choose to remove the mortgage contingency altogether and insert only an appraisal contingency, but even short of that, knowing that you have taken the time to get fully approved will impress the seller and give you some advantage over other buyers.
Pre-approval (as opposed to pre-qualification) is also important so that you don’t find out 75% of the way through the home buying process that you cant afford the home. Sometimes lenders miss some of the critical pieces of your puzzle during the pre-qualification process that an underwriter will pick up. For example, it is possible that your gross income is high, and that you reported that figure to the lender, but when the underwriter reviews your tax return they see that your AGI (adjusted gross income) is lower due to alimony. Child support payments will also lower the amount of the loan you can qualify for. You may have co-signed student loans or car loans for a child, or a mortgage for a family member. Any debt you have co-signed for, whether it is an asset you use personally or not, will lower the loan size you can qualify for. And of course, pending actions for divorce, as well as dings on your credit you were unaware of (such as doctors bills you forgot to pay) will affect your ability to borrow. Better to take the time to figure this out up front and target homes you know you can afford, rather than being tempted by those out of your price range!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Apr 20, 2017 | Blog, Buyers, Listings, Mortgage, Real Estate, Sellers
Our neighbors home was under agreement and we just heard that it didn’t appraise. Is this a common issue you face and how can it be prevented?
Appraisal failures have become more common since the 2008 recession and the tightening of lending standards. All lenders are required to use pools of appraisers – they cannot control where the appraisal order goes or who does the appraisal. In fact, lenders are to have no contact with the appraiser to avoid undue influence. Unfortunately, some lenders (typically the larger ones as compared to the small local lenders) use large appraisal placement services and an appraisal on a Sewickley home could end up being placed with an appraiser in Monroeville, or worse yet, in West Virginia or Ohio. These non-local appraisers do not know our market and often miss the subtleties of our neighborhoods and inventory. Additionally, many companies use very young people whom they pay a very low wage to complete the appraisal. It becomes a volume business that many rush through, often missing important details (like that third bathroom).
If an appraisal fails (meaning it comes in under the agreed upon purchase price), there is almost nothing anyone can do to correct that appraisal. Unless there is an egregious error, like missing a third bathroom, it is highly unlikely there will be an opportunity to increase the appraisal. Therefore, it is important to set yourself up for success at the time of the initial appraisal. To do this, I ask my sellers to provide a specific list of all updates they have made to their home in recent years. I then personally meet the appraiser at the home and make sure that he is taking note of all of its special features. I also provide him with a list of all of the home’s features and all relevant comparable sales and how they compared to the home he is appraising. By having personal contact with every appraiser and helping him to understand the nuances of our town and the home he is appraising, my sellers are far more likely to receive the appraisal they need to keep their deal on track.
Should your home fail to appraise, rather than reducing your purchase price to meet the appraised price, a creative solution is to pay for the buyer to change lenders and start the appraisal process all over again. This is usually less than $1000 and is usually cheaper than reducing the purchase price. I have seen appraisals come in more than $100,000 apart in a two week time period, which only accentuates how many appraisers just don’t understand our area. It’s usually not that the value isn’t there but that the appraiser just doesn’t get the market. This solution could get your buyer the home they want and you the price you agreed to.
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Feb 2, 2017 | Blog, Buyers, Mortgage, Real Estate, Sewickley, Sewickley Herald
What financing options exist for transitioning between homes if we don’t have to sell our current home to buy our new one and our objective is to remain debt free when the transition is complete?
The process of selling one home and buying another often feels like there are many moving pieces. If you are fortunate enough to be able to buy a new home before you sell your old home, you have put yourself in a wonderfully strong position as a buyer to be able to make an offer on a new home that is not contingent on your old home selling. As we enter what will be a very strong spring market, that will be a big advantage for you!
You have a variety of options on how to pay for your new home. Perhaps you have cash – but with the recent run up in the stock market, this may not be the best time to liquidate your investments.
A particularly affordable alternative might be to put a home equity line of credit (“HELOC”) on your current home, IF you have enough equity in your current home to provide the cash you need to buy your new home. HELOCs tend to involve very low costs to the borrower up-front. They can also remain untapped until you need the money, so you are not paying any interest charges while you are searching for your new home. You can pay the HELOC off as soon as your old home sells, leaving you with less debt (or possibly none) on your new home. Finally, it is something you can arrange for now and be well positioned to jump on a great home when one comes on the market.
Of course, being able to buy without selling may mean you can qualify for a traditional mortgage on your new home. Whether this is the right choice for you will depend on whether and how much debt you want to end up with in the end. If you need a large amount of cash upfront but ultimately would prefer to carry a smaller mortgage (or no mortgage) once your old home sells, consider financing through a combination of loans and pay the second loan off when your old home sells, leaving your with only the first mortgage in the smaller amount. If you intend to carry no debt, there are products with low upfront costs that you can pay off as soon as your home sells.
There are many options to consider when creating a plan that to achieve your long term financial goals – give me a call and I can connect you to trusted financing providers who can help you develop a solid strategy before you find your dream home!
[contact-form-7 id="115311" title="Get More Information Form"]
by Kathe Barge | Dec 15, 2016 | Blog, Buyers, Inspections, Mortgage, Real Estate, Sewickley Herald
We would like to buy a new home in the new year. How much money do we need to have on hand?
The new year will soon be upon us, and with a new year comes a new opportunity for putting your housing dreams into motion. How much cash do you need to be able to close on a home
First, you must have your down payment. You will receive the best lending rates if you have at least 25% down. 20% down was the normal minimum years ago, and that is still not a bad idea if you want to avoid paying PMI (private mortgage insurance). A 10% down payment is also a possibility – you will likely pay an upfront PMI fee, however, for the privilege of putting less down. You can have this PMI waived if you will pay a higher monthly rate- generally .25% more than the rate would have otherwise been. Five percent down is also possible if your loan amount is under $417,000. And of course, with an FHA loan, you only need to put 3.5% down, although the PMI fees are fairly significant.
In addition to your down payment, and PMI if applicable, you should also budget for the following out-of-pocket expenses when you buy a home:
- Inspection fees – you will pay approximately $400 for a general home inspection, $55 for a pest inspection and $135 for a radon inspection. If you add a mold inspection, plan for approximately $225 more.
- Appraisal – approximately $350 charged by your lender to have the how appraised to be sure what you have agreed to pay for the home is in line with the market
- Application fees – this will vary by lender and can be negotiated upfront – plan on approximately $750.
- Transfer Taxes – in Pennsylvania, each party pays a 1% transfer tax (on the sales price of the home)
- Title Insurance – a fee regulated by the state, it is a percentage of the purchase price that varies depending on the price of a home. For a 100,000 home, the title insurance is almost 1% of the purchase price. At $1,000,000, the title insurance is slightly more than one half of one percent.
- Finally, allow approximately $1000 for other miscellaneous fees (title endorsements, recording, settlement, survey)
The best first step toward buying your new home in the new year is to talk to a lender today and begin the pre-approval process. Once you know how much you can afford to buy, you will be better able to calculate how much you need to close, and to align your new year’s savings goals accordingly!
by Kathe Barge | Sep 15, 2016 | Blog, Buyers, Mortgage, Real Estate, Sewickley Herald
Dear Kathe,
How important is your credit score – what should I know about it?
Your credit score is more important than you might think! Many people never consider is how much their “not so great” credit is costing them. Just a 100 point differential in a credit score, from a 720 to a 620 for example, could cost you in excess of $91,000 in additional interest fees paid on a $300,000 loan over the life of that loan! That’s a lot of money to forego because of credit issues.
It is therefore well worth your time to understand what goes into credit, what makes your score go up or down, and how to positively influence your credit score. Your payment history forms the largest part of the score. Just one 30-day late payment can reduce your score a full 50 points! Ouch! Put your bills on auto-pay whenever possible and you will be making great progress toward avoiding this costly mistake! If you miss one payment once, take the time to call the credit card company and beg them not to report it – most will forgive one late pay each year.
How much you currently owe on your credit cards is the second largest piece of the equation. Ideally, you do not use more than 15% of your outstanding credit line, but in no event should you exceed 30%. So, for example, if you have $10,000 in credit available to use, you should not be using more than $1500 – $3000 of that credit. This number is easy enough to manipulate when you are planning on buying a home or refinancing – just refrain from charging in excess of 15% – 30% of the available credit line in the 6 – 12 months immediately preceding your mortgage application and you can positively impact your score.
Credit inquiries can also reduce your score – avoid applying for new credit cards or other loans during the months prior to your planned application. Also avoid closing old lines of credit – having open but unused lines of credit will positively impact your credit utilization percentage. When a credit card company chooses to increase your line of credit that also increases your score, but beware – if they decrease your line due to overuse or late payments, this can reduce your score as much as 100 points.
Lenders generally require scores to exceed 650 in order to obtain a loan at all, and the best rates go to borrowers with scores exceeding 760. Even insurance companies look at credit scores these days and give the best rates to customers with the best credit. There is simply no getting away from the impact your credit can have on your budget. So do yourself a favor and take the time to monitor your own credit and understand how your choices impact your scores – you’ll thank yourself in the long run when you have more money left over to spend on the things you love!
by Kathe Barge | Sep 8, 2016 | Blog, Buyers, Inspections, Listings, Market Trends, Marketing, Pittsburgh, Real Estate, Sellers, Sewickley, Sewickley Herald
Dear Kathe,
We want to downsize but are not sure how to go about that process – do we buy our new home first or sell our current one first?
Your question touches on one of the trickiest scenarios in real estate – sell first or buy first? The answer is different depending on an individual’s circumstances. Buying first is usually the best choice – you can take your time finding the perfect next house. And you can move out of your current home before listing it for sale, which will allow you to stage and present the home without clutter and without the hassle of having to tidy up for showings. However, buying first requires a few things. You must qualify to own two homes at once. You must have a down payment for your new home in a savings account, or an existing home equity line in place on your current home that will allow you to pull out the cash you need for a down payment. And you must be okay with the concept that you may be carrying two homes for an undefined amount of time.
If you do not qualify to own two homes at one time, do not have the required down payment for the new home, or are just too nervous about owning two homes for an undefined amount of time, then your only option is to sell first. It’s a good idea before putting your home on the market to get pre-approved for your new home purchase (you want to be sure you qualify before selling yourself out of your existing home) and to start looking online for new home possibilities. When you get an offer, you may need to act quickly. The buyer for your home is unlikely to be able to wait for you to figure out what you are going to do next. If you need to wait to figure that out, you may lose the buyer. Additionally, to purchase a new home, that seller is likely going to expect that you have already moved through inspections on your current home and have a solid deal. Therefore, you will want to agree to a longer closing date on your current home to give you time to get through the inspection negotiations and select a new home. Of course, there is always the option of renting if you cant find the right home!
It is tricky, but with proper strategic guidance it can be accomplished smoothly and successfully.
by Kathe Barge | Aug 25, 2016 | Blog, Buyers, Mortgage, Pittsburgh, Real Estate
Dear Kathe,
We are planning on buying a new home in the coming months? Should we get prequalified or preapproved for a loan? What is the difference?
Its always important to make one of your first steps in buying a home a conversation with a lender. Pre-qualifications are easy – you just pick up the phone and tell the lender your income and amount you have available to put down towards the purchase, they check your credit and issue a preapproval letter. However, this does not hold much clout with the seller.
A preapproval is a much more rigorous process. Basically, you apply for the loan without having found a house. You give the lender all of the documentation they think they need and they out it through the loan underwriters. This is much more time consuming – these days lenders require quite a long list of documentation and explanation to approve a loan. However, this is something you will have to go through anyhow when you are ready to buy, so its not a bad idea to get it done upfront.
The preapproval process will also save you potential heartache later. Sometimes buyers are surprised at what gets in the way of a loan, You may have child support or student loan debt, for example, that you don’t think to mention in the very simple prequalification process that lowers what you can afford on a monthly basis. It would be unfortunate to find your dream home only to go through the loan approval process and find out that you don’t qualify to buy it. Additionally, sellers strongly prefer preapproval letters from buyers because they know lenders have taken a thorough look. A preapproval letter will make your offer much stronger, which could be important if more than one offer is received.
Keep in mind that whether you go through the prequalification or the preapproval process, this does not bind you to a specific lender. Once you have a home under agreement, you are free to shop rates and costs to choose the best lender for you.
by Kathe Barge | Apr 21, 2016 | Blog, Buyers, Contracts, Market Trends, Mortgage, Pittsburgh, Real Estate, Sewickley, Sewickley Herald
Dear Kathe,
Is it possible to buy a new home contingent on selling our current home?
It certainly is possible to make an offer on a new home contingent on selling your current home! However, an offer with a home sale contingency is not a strong offer. You are asking the seller to stop marketing their home in the hopes that you will sell yours, which can feel like a big gamble to the seller. If this is the direction you need to go in, there are some important tips to keep in mind.
- Sellers are more likely to consider your home sale contingency if their home has been on the market for a long time with no other interest, if we are in a slow market season (fall) and they are unlikely to have any other serious interest in the short term, and/or if you are offering them a very high price which makes it worth taking a chance on you. If you want your offer with a home sale contingency to succeed, make them an offer at or close to asking price.
- Sellers are more likely to consider your home sale contingency if your home is already on the market and you can show that it is priced well for a quick sale and is getting significant showings. If you want your offer with a home sale contingency to be accepted, don’t list your current house at a top-of-the-market price.
- Sellers are more likely to consider your home sale contingency is you choose the type of contingency that allows them to actively market the home to other buyers. Of course, from your perspective you would prefer to lock the house up, but that is unlikely to happen. The right to continue marketing contingency at least allows you to know that you can buy the home at an agreed upon price as long as you get yours sold before another buyer comes along.
Of course, two better options include getting your home on the market and sold so that you can make an offer contingent only upon it’s closing, or exploring options with a mortgage broker that would allow you to make a non-contingent offer.
by Kathe Barge | Mar 17, 2016 | Blog, Buyers, Contracts, Inspections, Market Trends, Marketing, Mortgage, Pittsburgh, Real Estate, Sewickley, Sewickley Herald
Continuing from last week:
Dear Kathe,
We’re first time home buyers – where do we begin?
At this point in our journey to your new home, hopefully you have resolved any home inspection issues that you have and your financing is in process.
There are many pieces to the home financing puzzle that you will not see and some that you will. Financing has gotten quite tight now and you will need to be prepared for a high level of documentation required by the lender. They may ask you to document sources of deposits. They may ask you to document other expenses you are responsible for. They may need copies of letters of employment or bonus guarantee letters. Be prepared to respond quickly to any and all requests. While you are addressing these requests, the lender will order an appraisal to confirm value of the home. There is a range of reasonable in which a home may sell – the lender is simply trying to make sure that you are in that range.
Once your loan is approved you begin the long wait until closing. If you had a particularly delayed closing, you will begin to wonder if you are supposed to be doing something else. The next steps happen right before closing. You will set up your insurance coverage on the home with your insurance agent a few weeks in advance. Coverage options vary widely so you will want to work with an insurance agent who will thoroughly review all of your options with you. About a week before, you will need to call the utility companies to move the utility bills to your name. If you forget to do this, the utilities will simply be turned off and it will cost you more to get them turned back on again. For water and sewer, you will need to show up in person to get them connected, so be sure to schedule that in to your work schedule. Finally, the day before closing you will do your walk through to make sure the home is as you expected it would be. If the seller accidentally removed something you thought was to remain or forgot to make a requested repair, now is the time to raise those issues. Once you close, so does your window of opportunity to resolve any last minute concerns with the seller.
On the day of the closing, you will spend about an hour signing many documents and presenting a cashier’s check for any balance you owe above and beyond the mortgage. Once that is completed, you will receive the keys and may begin the happy process of unpacking into your new home!
by Kathe Barge | Sep 3, 2015 | Blog, Buyers, Contracts, Inspections, Mortgage, Pittsburgh, Real Estate, Sewickley, Sewickley Herald
Dear Kathe,
What impact will the new lending laws have on us as future home buyers?
This is a huge topic that I have attended day long seminars on! On October 1st, new laws will take effect that will impact the way that we all buy and sell homes. Its complex and will take some getting used to, but its important to keep in mind that all buyers and sellers should plan to close their transactions in no less than 60 days, unless the buyer is a cash buyer. Stacked closings, where the sellers close on their home and immediately close on their new home, will, at least until we adjust to the new rules, become much trickier.
To start, much of the terminology has changed. Lenders are now called Creditors. Borrowers are called Consumers. The Good Faith Estimate is no more – it has been replaced by the Loan Estimate – this is what your Creditor gives you to set forth the loan terms. The HUD-1 is also gone. It has been replaced by the Closing Disclosure. And the closing/settlement is now called the Consummation!
The most cumbersome change is that the Consumer must receive their Closing Disclosure 3 days prior to closing. It is generally considered that this requires sending the Closing Disclosure 7 days in advance of closing. To meet these deadlines, Consumers will need to be very prompt in making their loan application and all of getting their documents to the Creditor. If documents are delayed, underwriting will be delayed and the above notice requirements may not be met. If these requirements are not met, your closing will be delayed.
It is recommended that walk-throughs go to a two-step process. A preliminary walk through is recommended 7 days in advance of closing to make sure the seller has complied with all terms of the Agreement of Sale. Sellers – this means that you will need to make your inspection repairs well in advance of closing. Buyers, your agents will need to remind Sellers through their agents to be sure they leave all appliances, clear all personal effects and debris from the home… A second walkthrough is recommended for immediately before closing, but if there are any issues that affect value (such as an appliance that was removed from the home), this will cause a lengthy delay in the closing. Therefore it is critical that all parties know and understand their obligations under the contract.
The new laws are complex – be sure to choose a real estate professional who is well educated on these changes to make your real estate transaction is as smooth as possible. Check back next week for more information on how these new laws are affecting all of us.
by Kathe Barge | Aug 20, 2015 | Blog, Buyers, Mortgage, Pittsburgh, Real Estate, Sewickley, Sewickley Herald
Dear Kathe,
My friend’s closing on her existing home was delayed and she ended up having to delay her closing on her new home, and was stuck with all of her stuff on a moving van and unable to move in to her new home. How can these major inconveniences be avoided?
Back-to-back closings do raise the possibility of delayed closings and moving vans sitting curbside waiting to unload. When there are multiple transactions lined up on top of each other, if one in the line-up fails to close on time, it will affect everything in line behind it. Ideally, transactions would not be back-to-back, but this only works if buyers are paying cash out of existing accounts or have sufficient resources to carry two homes, so that the new home can be closed independently of the closing on the old home. But even if transactions are not stacked, closing delays can still occur, causing unhappy buyers and sellers, because lenders aren’t ready.
So how can these inconveniences be avoided? Selection of your lender and closing agent are absolutely critical. There are a lot of people out there who would like your mortgage and closing business. Many may even be your friends, neighbors or family members. But the relevant question, in addition to rates and fees, is whether they close on time every time. This is where you really need to rely on your agent’s expertise. Even consumers who move frequently only engage in the mortgage process once every few years. A busy agent is dealing with lenders daily. We know who stands behind their word and will not let you down, and who will not. A well-intentioned but poor performing lender can cost you significant unhappy delays – make a careful choice up front.
It is also crucial that you get your lender all of the documentation that he needs immediately at the time of mortgage application. You don’t want to be part of any delay. Finally, even once you have turned in all of your paperwork, its important to check in with your lender weekly, daily the week before closing, until they tell you that they have the “clear to close.” The old saying “the squeaky wheel gets the grease” is never truer than when it comes to closing your mortgage loan – stay in close touch with your lender!
The rules surrounding lending and closing mortgages is about to change again, in October. In an effort to protect consumers, the process will be getting even more cumbersome and delays should be anticipated. Your careful choice of your service providers will become even more critical!
by Kathe Barge | Mar 5, 2015 | Blog, Buyers, Mortgage, Pittsburgh, Real Estate, Sewickley, Sewickley Herald
Dear Kathe,
We’ve been out of school for a few years, have been great savers and are thinking about buying our first home, but with the recession not so far behind us, it seems like a risky proposition. Any advice?
The millennials, as they are known, are a very risk adverse generation, having watched first-hand as many family members lost their jobs and/or their homes in the last recession. It’s not hard to understand why they have been the slowest generation to embrace home ownership as part of the American dream. But as scary as it might seem to take that first big step, home ownership remains one of the best investments you can make, and the sooner you get in the game, the sooner you will start making measurable progress toward achieving your financial goals.
Keep in mind that most of the housing losses from the 2008 recession were due to the immediately proceeding banking practices that are now far behind us. People were allowed to borrow without proof of ability to pay, to start with, and many used their homes as ATM machines, financing cars, vacations and college educations on their presumed housing appreciation. Today the lending laws are much stricter in an effort to prevent another crisis, and so you can be assured that if a lender has qualified you for a particular loan amount, you have passed some of the strictest standards and are more than well qualified by any objective standard to get in the housing game.
Owning a home will always be a far better choice than renting. It’s a rare day that owning what you are renting wont cost you less every month, and you are building equity (money you get back when you sell someday) with each payment. If you compare how much it costs you to own a home over 30 years, versus how much it would cost you to rent that home over 30 years, you will always have spent less money and in the end, you will have an asset that you own and can resell if need be. In addition, owning a home gives you certain federal tax breaks that renters don’t get, which further reduces the actual cost to you of owning a home. Home owners also lock in their housing cost for as long as they own that home. So while your $2000 rental payment will go up each year as your landlord increases the rent, how much you spend for a mortgage is locked in for as long as you own your home. Stay there 30 years and you will still be paying the same mortgage payment that you are paying today! No landlord will give you that deal!
This is complex, no doubt, and I would be happy to meet with you to go over the numbers in person, but there is no doubt that its never too early to get into the home ownership game!
by Kathe Barge | Jan 30, 2015 | Blog, Buyers, Mortgage, Pittsburgh, Real Estate, Sewickley, Sewickley Herald
Dear Kathe:
My wife and I are new doctors and ready to get our own place. We were thinking about renting for a while – how long should we rent for before buying a home?
The rent versus buy decision most often comes down to how much money you have saved. If you have a lucrative job, qualifying for a mortgage at today’s low interest rates is rarely the issue. But coming up with a down payment might be.
If you make $200,000 per year, at current interest rates, and assuming you are not carrying any debt, you could qualify to buy a home for approximately $850,000. That is probably much higher than you imagined. The monthly payment would be approximately $3500/month (principal & interest) with 10% down. But you might find the 10% (or $85,000) down to be the stumbling block and feel renting is your only option.
Renting a nice apartment or small home/townhome would typically cost you $1800 – $2000 each month. That adds up fast – not only don’t you get the opportunity to deduct the mortgage interest that you pay on your tax return each year (thereby lowering the amount of taxes that you owe) but rental payments are all cash lost to you – you are not building any equity that you can recoup someday when you buy. And if you are willing to spend this much each month on rent, you could pay the same amount each month for a mortgage on a $450,000 home if you have the 10% down (which is a much lower $45,000)!
Lenders do typically require 10% down however, unless you use a specialty product like an FHA loan. So if you have no savings, the chances are that unless you can get a “gift” from a family member or incredibly generous friend, you will need to rent until you can amass some savings. However, it is a wise decision to get into homeownership as soon as you can. Even if you buy significantly below what your income qualifies you to buy, just getting in the housing game will save you tax dollars and help you build equity for another home in the future when your savings more closely matches your income. Why pay rent for your landlord to increase his equity in the home you are renting.? With low interest rates, now is the ideal time to explore exactly what it will take to get you in a home of your own!
by Kathe Barge | Oct 30, 2014 | Blog, Buyers, Mortgage, Real Estate, Sewickley, Sewickley Herald
Dear Kathe,
As our children become young aduts, I am wondering what we can do to set them up for success when buying their first home?
Not too long ago, we experienced a time when money was free flowing and loans could be had with a wink and a handshake. But those days are gone, likely forever. When I was a kid, my parents talked about saving the 20% down and being sure to pay all the bills on time in order to be a good position to buy a home, and, after a couple decades, we are right back where we started – save and establish good credit! After many “easy money” years, our newest group of home buyers may not have been educated with the old mantras – save – pay on time – and they may shocked to find out that they don’t have what it takes to get a loan. So what does it take, and what can you do to help?
Saving enough money takes time, and they can never start too young to be savers, but if you are feeling particularly benevolent, most lenders will allow gifts from family for a down payment, with a proper gift letter, of course! Do NOT make the gifts without a gift letter unless it is years in advance – a lender will review their accounts and require substantiation of all recent deposits.
Establishing god credit is something they will need to do on their own, but you can help set them up for success. A loan applicant must have credit in their name (and not a card they are authorized to use that belongs to mom or dad) on three separate lines (cards, car loans) and they must NEVER have made a late payment. The cards DO NOT have to be actually used to establish a credit history – the potential homebuyer just has to have been granted the cards. If they do use the cards, then as a general rule, it is not a good idea to charge more than 50% of the credit granted in any given payment cycle, at least if they are nearing a time when the plan to apply for a mortgage. If they miss a payment, that line of credit is disqualified and they will need to show the existence of 3 lines of credit on which they have never had a miss. If they don’t have three lines of credit showing on their credit report, they will only be eligible for an FHA loan, and must be able to show 12 months of payment history on other things such as a cell phone bill or utility bill in their own name (note: utilities paid on a budget plan do not satisfy this requirement).
So what should you be doing to help the next generation of home buyers? Educate your kids & grandkids about how they will have to learn to use credit cards responsibly and how they will always have to pay their bills on time. When you feel they can handle a credit card (or 3), help them choose appropriate no fee cards. Consider checking in with them to make sure that they are remembering to pay the bills (preferably in full). Some banks make credit cards available to unemployed students as early as age 18 – while these cards must be secured with a certificate of deposit, they allow young adults to begin building credit in their own name. With a little coaching, we can all help the next generation of homebuyers to be ready to successfully purchase their new home.
by Kathe Barge | Dec 12, 2013 | Blog, Buyers, Contracts, Mortgage, Real Estate, Sewickley Herald
In last week’s article I discussed several of the pitfalls that Buyers encounter through the mortgage application process. Keeping your bank statements “boring” is key – avoid undocumented deposits, NSF charges and moving large sums of money around. Also avoid having your credit “pulled” – don’t take advantage of new credit card offers just to save an extra 10%. That’s the start to s smooth application process… but there’s more.
Don’t change jobs, and obviously, don’t quit your current job without inquiring about the impact this change could have on your approval/approvability of your mortgage loan. Employment stability is a big factor in the underwriting loan process. Quitting or changing jobs or even positions within the same company can potentially endanger your entire loan approval. Switching from a salaried position to a commission-based position can pose a problem with your financing. Changing from a W-2 employee to a new job where you are paid as a “1099” independent contractor will also pose a problem. There may be long waiting periods if your employment status moves from that of employee to being an independent contractor. Often lenders will want to see 1-2 years of income tax statements as an independent contractor before they will agree to provide financing.
Don’t file disputes on your credit card accounts if you anticipate applying for a mortgage in the short term. You may have a valid reason for disputing an account with a credit card company, but you should avoid filing a dispute unless you are certain that you are not planning on applying for a mortgage in the near future. Lenders will often reject financing if a borrower has a disputed account on their credit report.
Don’t forget to pay your bills on time (all bills, including the doctor and the dentist) Late payments could cause your account to be sent to collections which could take you months to reverse.
Finally, don’t pack away your financial documents. We know that you are moving and that getting a head start on packing is a must. Please don’t pack away your financial documents as your lender may need them for the processing of your mortgage loan. Please keep all financial records handy including tax returns, W-2’s, paystubs, bank statements, divorce agreements, etc….
If you’ll follow these simple steps, getting a mortgage should be easy and straightforward!
by Kathe Barge | Dec 5, 2013 | Blog, Buyers, Mortgage, Real Estate, Sewickley Herald
Mortgage rates remain low, but the process of obtaining a mortgage is more complex than most buyers appreciate. Underwriters are extremely detailed in their review of mortgage applications – one small “mistake” could derail your entire application. Take the time before you buy to understand the possible pitfalls, and then steer clear for a smooth mortgage process.
First, don’t make large undocumented deposits into your bank accounts. Mortgage guidelines require that underwriters review all deposits reflected on bank account statements. If there are deposits present on a bank statement and the underwriter cannot tell where the funds came from, then the underwriter may ask for you to provide a “paper trail” to document the source of the funds used for the deposit. When making a deposit, keep the associated paperwork (i.e. the “paper trail”) you may have received that would show where the funds came from for the deposit (i.e. check stub, copy of check, receipt for liquidation of another account, etc…). Try not to make cash deposits if at all possible as it is difficult to show where “cash” came from. Try not to move your money around between accounts. There will be plenty of time to consolidate funds if you desire after you’ve applied for your mortgage loan and before the closing date on a home you purchases. Be sure to save ALL pages of your bank statements. Do not throw them away or shred them.
Second, strive to have ‘boring’ bank statements – no NSF charges, no unusual deposits, not a lot of moving around of money between accounts. Achieving this will definitely make your mortgage process go smoother.
Finally, don’t open new credit and don’t take on new debts. Unless advised to do so by your mortgage professional, you should try to avoid having your credit checked by anyone or taking on any new debt (i.e. credit cards, loans, lines of credit, etc…). Numerous credit inquiries may impact your credit score which in turn could affect your mortgage loan and interest rate quote. In addition, underwriters may require that you write a letter explaining the inquiries on your credit report stating if you did or did not acquire any new debts as a result of the inquiry. While it’s tempting to take advantage of an extra 10% off at a department store if you open a new credit card with them, it may be best in the long run to pass on those offers and use one of your existing credit cards.
Check back next week for more tips on making your mortgage application process a smooth one!
by Kathe Barge | Nov 28, 2013 | Blog, Market Trends, Real Estate, Sellers, Sewickley, Sewickley Herald
Trends in real estate come and go just like trends in clothing and interior design. Not so long ago we were, as a country, swept up in a trend of “no doc, no money down” loans that cost most of us mightily as we trudged through the recession. This trend was reasonably short lived, thankfully, but certainly caused extensive damage in its wake. Trends in real estate are looking up, at least in my opinion:
The trend in financing is that buyers must actually have a downpayment, a job and good credit to buy a home. Seem onerous? It’s the way it was until just a few years ago and provides a far stronger base for the housing segment of our economy. We should all be thankful for the tighter lending practices in place that will hopefully help prevent another housing bust.
The trend in borrowing generally is to no longer treat your home as an ATM. Yes, your home is an investment, and someday may provide a nest egg for retirement, but we have all learned the valuable lesson that we cannot expect our home to finance our cars, trips and children’s education – unless we want to be homeless, that is. Good old savings toward goals is back in fashion! The financial planners I know are celebrating this trend!
Lenders are also moving more quickly on short sales, and this is also a trend we should be grateful for. When a homeowner becomes upside down on a home, its important to move through the sale quickly so that everyone involved can get on with their lives.
The trend toward green building is also an exciting change in our market. Many builders are choosing more sustainable and/or healthier building products, which is good for our environment and for our health.
Finally, we have all enjoyed and benefitted from the trend toward low interest rates, which remain at historic lows. It remains a good time to buy your next home, where you and your family can enjoy Thanksgivings for years to come!
by Kathe Barge | Nov 21, 2013 | Blog, Buyers, Contracts, Listings, Mortgage, Real Estate, Sellers, Sewickley Herald
If you are considering a move but have a home to sell, then you may find yourself in a common predicament – do you buy first or sell first?
If you buy first, you may face the reality of owning two homes at once, which could require a lot of belt tightening (and cutting back on coffee runs!) While we have a shortage of inventory and well-priced, well-conditioned homes are moving well, there is still a risk that you may carry two homes for a while (our strongest market period will begin again in early 2014). Of course, buying first allows you to lock in a home you really love.
If you sell first, you don’t have the financial risk of carrying two homes. But there is a possibility that you may be unable to find a home you love when yours sells, and be faced with temporary housing for a while. This may be the lesser of two evils, if you achieve a sales price on your home that you are happy with. And of course, you may have no choice – your lender may require you to sell before you buy.
There is the option of making a contingent offer on a home you like, and we now have the “right to continue marketing” option for this contingency that makes a seller more willing to consider such a contingency. However, the stigma of a home sale contingency still stands and many sellers will not entertain this option.
Perhaps the best avenue is to list your home now and start looking for your new home. Once your home is under contract, you will probably have a good sense of what is available to buy and hopefully have isolated a couple of top choices. At that point you will be ready to make your offer and get moving! Fell free to give me a call and we can design a strategy that suits your specific needs!
by Kathe Barge | Oct 3, 2013 | Blog, Buyers, Market Trends, Mortgage, Real Estate, Sewickley Herald
It has actually been our lucky year! Interest rates fell even lower this year than we would have ever imagined possible, and many buyers were able to buy their dream homes for even lower monthly expenditures. The record low rates certainly spurred a spring market like we haven’t seen in years. As we all know, rates spiked up this summer, with the 30 year conforming rate pushing a little too close to 5% for comfort. Our market slowed significantly in response. From a rational perspective, this is really very surprising. Even at 5%, that is an unbelievable rate compared to historic norms.
In the first ten years of the new millennium, we averaged 5.7% on the same loan products. And in the 80s, when many of today’s homebuyers were born, we averaged 13.99%. So why then does an increase to 4.75% send buyers to the sidelines? We are fortunate to be living at a time when we can still buy at these amazing rates. Why wait for the illusive 3% rates to return, which is unlikely to happen? Inflation will continue to drive prices up, increasing the prices of the homes that are available. The smart answer is clearly to buy now, even at the slightly higher rates.
Today, however, is your lucky day. Rates have dropped for the present moment and, with good credit, you have another chance to buy at 4.25%. Current economic trends suggest that it would be a wise choice to jump on these rates. No cost refinances are still available to you if the rates should drop further, but at least you are hedging your bets against further increases. If you have been sitting on the sidelines feeling like you missed your chance, give me a call and we can design a strategic buying plan for you to maximize your buying power over both the short and long terms.
by Kathe Barge | Mar 15, 2012 | Blog, Buyers, Mortgage, Real Estate, Sewickley Herald
Obtaining financing to purchase a home seems to get more and more complex as the years pass by. Many of my readers are likely long term homeowners who pay their bills on time and are not concerned about getting their next loan, whether its time to move up, down or just across town. But what about the next generation of home buyers? The next generation of home buyers may very well be your kids or grandkids. Our housing market starts at the bottom and builds from there. People buy their first home, which allows someone else to make a move, and eventually all of these moves will affect you and your property value. So equipping the next round of first time home buyers with the tools it takes to actually buy a home benefits us all.
When I was a kid I overheard my parents talking about saving the 20% down and being sure to pay all the bills on time. But we recently moved through a period in our nation’s lending history when money was free flowing and loans could be had with a wink and a handshake. But those days are gone, likely forever.
After many “easy money” years, our newest group of home buyers may not have been educated with the old mantras – save – pay on time – and they may shocked to find out that they don’t have what it takes to get a loan. So what does it take? A loan applicant must have credit in their name (and not a card they are authorized to use that belongs to mom or dad) on three separate lines (cards, car loans) and they must NEVER have made a late payment. The cards DO NOT have to be actually used to establish a credit history – the potential homebuyer just has to have been granted the cards. If they do use the cards, then as a general rule, it is not a good idea to charge more than 50% of the credit granted in any given payment cycle, at least if they are nearing a time when a loan application is planned. If they miss a payment, that line of credit is disqualified and they will need to show the existence of 3 lines of credit that have never had a miss. If they don’t have three lines of credit showing on their credit report, they will only be eligible for an FHA loan, and must be able to show 12 months of payment history on other things such as a cell phone bill or utility bill in their own name (note: utilities paid on a budget plan do not satisfy this requirement).
So what should you be doing to help the next generation of home buyers? Educate your kids & grandkids about how they will have to learn to use credit cards responsibly and how they will always have to pay their bills on time. When you feel they can handle a credit card (or 3), help them choose appropriate no fee cards. Consider checking in with them each month at first to make sure that they are remembering to pay the bills (preferably in full) by the deadline each month. With a little coaching, we can all help the next generation of homebuyers to be ready to successfully purchase their new home.
