The dictionary’s definition of the word incentive reads “a thing that motivates or encourages one to do something.” It’s also a word used by new home builders to encourage buyers to use their preferred lender by tying a certain amount of “play money” to the equation. These are funds can be applied toward the buyer’s design center choices for upgrades (higher-end appliances, hardwood floors, etc.) or toward financing, such as closing costs or a loan rate buy-down. While builder incentives are nothing new, it has always been a touchy subject for buyers, who often walk in to a builder’s subdivision pre-approved by their own lender.

 

The first thing new home buyers should understand is that they are always free to use whichever lender they choose —be it their credit union, their bank, or even their cousin who happens to be a mortgage guy. That’s the law. If they do decide not to use the builder’s lender, however, the builder is not bound to offer incentive monies.

 

Exceptions do exist. If the builder’s lender cannot provide the same product as the outside lender, OR if the builder can’t broker the deal through the buyer’s desired lender, the incentive may still apply.

 

It’s wise to look at both sides of this equation. Why do builders sometimes ‘sweeten the pot,’ so to speak, for buyers to use their own preferred lender? For one, builders take a lot of risk in building a home and then tying it up until close of escrow, which may take up to 6 months after their buyers sign on the dotted line. Pre-approvals do fall through, and it’s a double whammy if this happens at the last minute to a house customized to their buyers’ tastes. Multiply this risk for a subdivision of potentially hundreds of homes, and you might get the picture.

 

An in-house lender (one owned by the same entity that owns the builder), whose only priority is to its builder accounts, must not only get buyers pre-approved in a timely fashion for the house construction to proceed. It must also educate the builder on whether it is prudent for them to take a particular home or home site off the market for what may be an extended period of time. This is the “well-oiled machine” of sales, construction, lender, and design center personnel, all of whom meet regularly to track progress on every facet of the home buying and home building process. Their goal is a seamless build as well as a seamless closing, handing buyers the keys once their names are on record without having to “carry” the house a day longer than necessary —hopefully just in time for the moving van to arrive. But an outside lender will be just as concerned about accountability, as their credibility is on the line as well and a seamless close can mean future business for them, possibly even referrals. And unlike the in-house lender, they are capable of refinancing the loan down the road if warranted. Outside lenders can often be more competitive with pricing, potentially saving borrowers thousands of dollars over the life of the loan, freeing them up to buy their own upgrades after close of escrow.

 

There is no doubt about it. Tying thousands of dollars in incentives to using an in-house lender gives buyers little reason to shop around. However, it’s prudent to take note of the builder’s lender’s rates and loan programs and check to see if they are competitive. Do an apples-to-apples comparison on their loan with outside lenders.

 

Builder incentives can get you that surround sound system you’ve always dreamed of without having to put out any long-term money up front, but in the end anything you spend over and above the incentive monies will be added to the loan principal unless, of course, you don’t pay for it outright. This usually works out well for cash-strapped buyers who have holes in their pockets for a while after the move-in.

 

What can buyers do to feel reassured that they are getting the best deal? They can “shop” their loan and make a decision based upon their own bottom line. If they are already pre-approved by their own lender when they walk into a builder’s sales office and are happy with that loan program, they can either forgo the builder’s incentives altogether or they can try to make the builder’s lender to match the program and rate they already have. Your mortgage payment is something you’ll be living with for a good, long time. So whichever lender you choose, we think they will agree that it’s always best to be aware of all your options.

 

 

Source: TBWS


 All infor

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Is cash still king? While it may feel powerful to have that all-cash ace up your sleeve as you look for the perfect property, thinking home sellers swoon over all-cash offers (which they do), it’s wise to go into a purchase of this kind with your eyes wide open. Why? Unlike other home buyers out there, you’ve got the luxury of options.

 

Think it’s only millionaires that have enough money lying around to make an all-cash offer? Think again, because these deals are surprisingly common. According to a recent report from ATTOM Data Solutions, all-cash offers made up 29% of single-family home and condo sales in 2017, and most of them are not on behalf of the filthy rich. When we learn that billionaires like Mark Zuckerberg buy homes with mortgages when they clearly don’t need to, however, it should give us pause to think.

 

At first glance, an all-cash offer looks like a no-brainer because of its lack of risk to the seller and even to you, as long as you are not using every penny you have on a house. Even those buyers with a loan pre-approval in hand still run the risk of having a last minute smudge surface on their credit, one of those pesky little storm clouds appear on a title search, a job loss or change happening mid-stream no one could foresee, or anything else that can affect the final approval. Loan procurement is also contingent upon a home appraisal meeting the negotiated selling price so that the lender feels secure in its investment. All these what-ifs are eliminated with an all-cash offer unless a buyer’s verified funds suddenly disappear before the close of escrow.

 

So the question remains: is it always the wisest decision to make an all-cash offer if you can? Here are a few pros and cons of an all-cash offer.

 

Tough seller’s markets create bidding wars. All cash, then, can help you eliminate the competition and catapult your offer to the top of the list. It can also speed up escrow periods by eliminating a number of contingencies.

 

All-cash offers can strengthen your negotiation stance and persuade sellers to accept less than their full asking price because of the sure-deal aspect of it. However, in today’s low-inventory seller’s market, don’t expect to get a crazy-good deal just because you’re paying cash.

 

Laying out the green means less paperwork and no delays. It can also offer sellers the option of a quicker close, since there is basically little-to-nothing to hold up the deal.

 

Without a mortgage, you save money on fees such as closing costs, title insurance, etc. The most obvious advantage is, of course, that the home is yours and not the bank’s from day one. No worries about a foreclosure, either.

 

On the minus side, you’ll be tying up a lot of money in one asset instead of diversifying your financial portfolio — something you learned a long time ago was not always the best course. Unless you are one of the lucky ones who have tons of money to spare, that means limiting your your liquidity. It also means you’ll miss out on good-sized tax deductions. This is especially true if your home’s value is under $750K under today’s new tax laws. Those are the biggies, and they are nothing to sneeze at. It may be wise to think about how even taking out a mortgage and keeping up payments for ten years or so gives you options. If emergency situations arise in your life, you have more ready cash. You also have the option of paying off the loan at any time, which can offer you and your family a lovely sense of security.

 

All-cash buyers can pool their purchase money from variety of sources, including personal savings, cash gifts, and inheritance, but experts advise having your home-buying funds in one account to make it easier for you to keep track of the money you’re going to need. And don’t forget bank transfers can get delayed. You won’t want to be moving money around shortly before closing.

 

Prove you’ve got it. You can’t expect to beat out other offers on a home saying you’ll be paying cash unless you provide the home seller with a copy of your bank statement as proof of funds when you submit your offer.

 

Sweat the small stuff. There are other home-buying expenses in play here. You’ll still have to budget for the costs that come with any home purchase, including the property taxes, homeowner’s insurance, condo or association fees, if applicable, and a professional home inspection.

 

Make sure you build an emergency fund that will cover living expenses for at least six months, including one for future property taxes, because they are something that will never go away. Financial advisors agree that if you have extra cash after that, you’d be smart to funnel it into a retirement account, since a home alone should not constitute your entire nest egg.

 

 

Source: TBWS

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Buying a first home can be a daunting process. Apart from the somewhat complex issue of financing, there is the matter of finding the “perfect home.” Here are some things buyers should maybe not sweat—and some surprising facts about what they should be concerned about.

Your furniture doesn’t fit

As you look at all those houses on the market, you may be visualizing how your favorite chair and dining room table will fit in the space. Unless your furniture has some special significance to you—it came over on the Mayflower with your great-great-great grandma—it’s probably not something you should let guide your decision. You may decide that the other features of the home are just what you want, even if your furniture doesn’t fit. You may want to use the new home as an excuse to upgrade your furniture.

The décor is hideous

Let’s face it: some people have horrible taste in wall colors. A seller may have had a fondness for deep purple paint on the living room walls and other deeply saturated primary colors in every other room. These colors will influence your impression of the home. Try to resist these kinds of negative impressions; painting is cheap, even if you hire a contractor to do the work for you.

What you can’t change

Although you can change many attributes of a home, like décor, furnishings and even appliances, there are those that you can’t change, such as the view, construction, and location.

The most important feature

An important aspect of the location, and one that most buyers pay attention to, is the school districts. Realtor.com conducted a survey of 1,000 home buyers in 2013 to explore the importance of schools to their buying decision. Even though the survey is from four years ago, there is every reason to believe they are relevant today.

The survey found that 3 out of 5 home buyers surveyed said that school boundaries would drive their home purchasing decisions.

When asked about school districts:

  • 90.53 percent said school boundaries are “important” and “somewhat important.”
  • 2.04 percent were “neutral” around importance of school boundaries
  • 7.43 percent said school boundaries are “unimportant” and “very unimportant”

School districts also affected what they were willing to pay for a home:

  • 23.59 percent would pay 1 percent to 5 percent above budget
  • 20.70 percent would pay 6 percent to 10 percent above budget
  • 8.98 percent would pay 11 percent to 20 percent above budget
  • 40.33 percent would not go above budget

School districts were also more important than a pool or spa—two generally popular amenities:

  • 62.39 percent would do without a pool or spa
  • 50.60 percent would give up accessibility to shopping

Even for the young home buyer who does not plan to start a family soon—or ever—these findings are important. A home is the largest investment most people will ever make, and keeping the market appeal in mind for that time in the distant future when they may be ready to sell can make that first home an even better investment.

 

Source: TBWS

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How To Choose The Right Neighborhood To Buy A Home

The old real estate cliche’ about “location, location, location” is true, as the area of the city where your home is located will have an impact on its future value as well as your lifestyle.

So what factors should you consider when you are choosing which neighborhoods to house hunt within?

Proximity to Your Daily Needs

If you work downtown, living out in the suburbs means that you will be adding time for a commute onto your day.

While this might be worth the cheaper prices for properties out of the town center, it is something to consider when making your decision.

You will also need to consider whether the house is near shopping centers, schools, doctors, dentists and other services that you will need regularly.

Planned Developments

When you are choosing a neighborhood to buy in, do some research into what developments are planned in the future for that part of town.

For example, you might be able to get a cheap price on a home that is out of the way, but a new proposed highway leading straight into the town center that will be built in the next five years could increase property values considerably.

Overall Atmosphere

Take a walk around the neighborhood where you are considering buying and get a sense of the overall atmosphere. Are there a lot of families living there? Are there green places to relax? Are people friendly and saying hello to you?

You want to live in a place where you feel welcome and comfortable.

Property Values

Different neighborhoods will have a range of house prices and you will want to look for something with the right balance of value.

Some areas of town will be very expensive but very nice; other areas will have cheap house prices but might not be as pleasant to live in. Take the time to find the neighborhood that is in the middle, where you will find the right house, and neighborhood, at a good price.

These are just a few of the factors to consider so that you can choose the right neighborhood to buy in.

For more information about buying a Richmond home, feel free to contact your trusted mortgage professional today. 

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A Few Red Flags To Look For When Buying Real Estate

If you’re looking to purchase real estate, keep in mind that the homes you are considering might be in need of repairs or improvements.

In a recent study done by a major home inspection company, at least 40 percent of previously owned homes on the market have at least one serious issue or defect.

When buying real estate, you should have a professional inspection performed on the property to look for any issues that might not be visible to the untrained eye.

It’s better to identify this damage before you buy so that you are not stuck with budget-busting renovations.

Below are a few major red flags you should look for when buying a home.

Foundation Damage

Look at the slope of the yard. If the land slopes towards the house, this could be causing water to run down into the foundation, which will result in moisture damage. Take a look at the foundation for any bulges or cracks that could indicate serious issues.

Faulty Wiring

Your home inspector should be sure to check the electrical wiring — especially if it is an older house. If there are any flickering lights, circuits that don’t work, or warm outlets, these are telltale signs of wiring issues that might be expensive to fix.

Ceiling Stains

This is usually a sign that something in the house is leaking. Ceiling stains are common underneath bathrooms when a toilet, shower or bathtub has a leak. A leaky roof could be an even more expensive repair.

When you are negotiating to buy a house and damage is discovered, you can either change your mind about the sale or renegotiate for a lower price that factors in the cost of repairs. Either way, it is always worth having the home professionally inspected to identify red flags and avoid any surprises.

Please call me, your trusted mortgage professional for more information about buying your next Henrico home.

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Questions to Ask Your Home Inspector Before Buying Your HomeImagine how frustrated you’d be to find out that the hot water heater wasn’t working – in the middle of your very first shower in your new home!

This, among other very good reasons, is why you should have a home inspection before you buy your home.

When you buy a home, you need to know exactly what you’re buying.

A home inspection is an important part of buying your home. Before you hire a home inspector, ask candidates a few questions to make sure you hire a trustworthy inspector.

What Does Your Inspection Cover?

Not all inspections are the same. Ask for copies of previous home inspections so you can see exactly what they will check inside the home.

If you are concerned about something specific, like a leaky faucet in the bathroom, mention that to the inspector so they can check it out.

Are You Licensed Or Certified?

If you live in a state that licenses home inspectors, ask to see their license. Most reputable home inspection professionals provide this information right at the start of your home inspection.

At the very least, choose a home inspector who belongs to American Society of Home Inspectors. This shows a level of professionalism and education that you can trust.

What Kind Of Report Will You Give Me?

You should expect a written report detailing what the inspector found. Most inspectors will give you a typed report within a week of the inspection.

Many even take digital color photos of any issues with the home in order to make their report as clear as possible. Make sure the inspector will be available to explain anything on the report that doesn’t make sense to you.

Will I Be Able To Attend The Inspection?

If the inspector refuses to let you be present during the home inspection, find someone else. This is your chance to know exactly what you are buying and what potential repairs you or the seller will have to make.

Please feel free to contact your trusted mortgage professional today to answer this and any other question you have on the home buying process.

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First Things First What To Do Upon Moving Into Your New HomeIf you have purchased a new home and are going to move in soon, what are the first few things that you will need to do upon moving into your new home?

Moving can be very stressful, but having a checklist can make your move effortless.

Here are 6 easy steps that can eliminate any frustration and help you feel safe and secure: 

Change Your Address

You will need to change your address for all magazine subscriptions, bills and other services. You can update your mailing address online or visit your local post office to find out what needs to be done.

Set Up The Utilities

When you move into a new home, you may get all of the contact information from the previous home owner or real estate agent for the utility companies. Be sure to change the services into your name before you move in, such as gas, cable, electricity, internet, telephone, sewer and water.

Change The Locks

You have no way of knowing who the old home owners gave a copy of the key to, so having the locks changed is something that you should do right away when you move into your new property.

Have The Carpets Cleaned

Get your life in the new house off to a fresh start by having the carpets steam cleaned before you move your furniture in. You could either rent a steam cleaner or pay a carpet cleaning service, but either way this will make the house feel really clean and new.

Figure Out Your Breaker Box

Another important first step to owning your new home is to figure out which breakers control each part of your home.

Knowing how the breaker box works will ensure that you can flip the right switch when you need to. You might need to ask someone to help you by standing in another part of the house and letting you know which lights come on or off when you flick the switches.

Check Your Smoke Alarms

The smoke alarms and CO monitors in your home might not have been checked recently, so make sure that they are functioning properly. Depending on how old they are, you might need to change the batteries. This is an important maintenance task for your own safety.

These are just a few of the important first steps that you should take when you first move into your brand new home.

For more information about buying a new home, feel free to contact your trusted mortgage professional today.

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5 Important Tips To Help Smooth Your Move With TeensYou’ve got a new job offer across the country and you are planning to pack your things, buy a home and make the big move.

However, when you tell your 17 year old daughter your plans, she lets out a mournful wail and cries that it is not fair. How can you possibly take her away from all of her friends, her favorite hangout spots and the cute boy she just started seeing?

Moving is a difficult transition and it is often even more traumatic for teenagers. The teenage years are an important stage where young adults establish their individuality and independence and during this time their social circle is extremely important to them.

Being removed from that against their will can make any teen feel sad, confused, angry and resentful. Also, fitting into a new social scene in a different location can be a challenge for a teen that might be singled out as the “new kid”.

How can you help your teen during this transition so that the experience will be easier on them?

5 Tips To Help Your Teen Move More Smoothly

Here are some tips that will make the experience of moving a little bit easier on your teenager:

  • Give them as much notice as possible so that they have time to adjust to the idea of moving. They will feel like they have enough time to say goodbye to their friends and close a chapter of their lives.
  • Try to schedule the move around the school calendar, as moving in the summer is much less disruptive to your teen’s life than relocating in the middle of the school year.
  • Make sure that they have ample time to spend with their close friends before they leave and once you arrive, understand that they might go through a grieving process of missing their old pals.
  • When you get to your new home, make sure that your teen has plenty of ways to keep in touch with their old friends, such as an internet connection and a cell phone plan.
  • Encourage your teen to get involved in the community of your new hometown, like joining sports clubs or attending events. This can help them to make new friends.

Moving to a new city is always exciting but offers challenges like this one for families. For more advice on moving to a new Henrico home, contact your trusted mortgage professional today.

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Three Tips To Get The Best Financing On Your Second HomeAre you buying a property as your second home? Perhaps you are looking for a small cottage or apartment where you can escape to for your vacations, or maybe you want to have another home closer to your relatives?

Maybe you want to rent out your second property and make a steady income from your investment. Whatever the reason, a second piece of real estate can be a fantastic investment. However, sometimes getting a mortgage on your second home can present a challenge.

Generally, a mortgage lender will have tougher standards for vacation home — or second home — loans than primary home loans. This is because usually when you are buying a second home your finances will be stretched thinner and you will have less money to spare due to already paying a mortgage on your primary home.

This additional risk may mean that your second home mortgage can be more difficult to close and likely could carry a higher interest rate.

Here are three tips to keep in mind that will help you to get the best mortgage on your second property:

Build up a decent amount of savings.

Your mortgage lender will want to be able to see that you have a large amount of savings in reserve so that you will have enough to pay for the mortgage even if you were to lose your job or other income source.

Pay off any credit card or installment debt.

Many lenders will be hesitant to approve your second home mortgage if they see that you have a lot of debt on your credit card. They will want to see that you have a low debt to income ratio so that you will be able to pay back the loan.

Use your primary home as a resource.

If you have always made your payments on time and you are well on your way through paying off your first house, you may have equity to borrow against for some or all of your second home purchase. Be careful here though.  There is a little known IRS regulation that requires the second home be financed under it’s own home loan within 90 days of closing to get the best tax advantages.

These are just a few tips to keep in mind in order to make getting a mortgage for your second property as easy as possible.

To find out more about investing in a second home or vacation property, contact your trusted real estate professional today. 

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