Location, 🔥 Location 🔥 Location!! Property is located in an up and coming area minutes from downtown, the Galleria and, the Energy Corridor. Adorable 3 bedrooms, 2 bath home with a HUGE backyard. Enjoy the large fenced backyard with shade trees, just perfect for family BBQs. Ready For Move In! Laminate and tile floor throughout. Open floor plan. Ceiling fans throughout the home. Kitchen includes a refrigerator. Never flooded.
New construction within close proximity makes it attractive for future appreciation or new development. There is plenty of space for a single family home, or several single family homes. Buy and hold for future appreciation.
Needs vs. Wants
Housing is a need; wants are items that help you live more comfortably. Wants are not completely necessary but certainly nice. For example, can you live without a private pool? yes. Can you live without a kitchen? Probably not.
When starting your search, be flexible. Give yourself the opportunity to explore options. You will start with a list but more than likely this list will change as you are introduced to more homes.
Be prepare for the likelihood that you won’t get everything you want. There will be compromises, trade-offs and finding the best possible property for you and your family. One home might lack a game room but its in a perfect location. Another might have a great yard but will force you into a longer commute. Decisions, decisions, decisions…
The MOST important decision is location. This is something that cannot be changed. You can renovate a home, add a bedroom or bath, etc. but you cannot move the home. Explore the surrounding area. Do you like the proximity to work, shopping, school zoning, restaurants, friends and family?
Check out this worksheet that can help you through the deciding process.
TRICK OR TREAT! I’m happy to be participating in this event on Oct 20, 2019 and Oct 27, 2019 from 12-4 It’s free and should be super fun for kids.
Enjoy face painting, rock wall, food trucks, activities under every tent, inflatables, arts and crafts, door prizes, music, onstage performances, HFM goodie bags and more!
Come by and bring your witches and goblins for some fun activities and trick or treating!
Come by my booth and tell your kiddos to give me the secret password “boogers” for a special goodie bag.
Do you need more space?
Spend Less – Get More! Buying a home is very rewarding in many ways.
This is the number 1 reason why people buy a home. The home buying process can be daunting. It’s one of the largest purchases that you will make during your lifetime. That said, the process is easier when you have the right team on your side. A good lender, REALTOR® and home inspector will guide you through the process stress free.
Right now in most areas we are in a buyer’s market. Rates are still low so it’s really the perfect time to buy.
What’s holding you back? Let’s explore some common misconceptions.
1. You need 20% down to buy a home
Many buyers believe that they need 20% down to buy a home. This is a very common misconception. There are FHA loans that will permit a 3.5% down payments and some conventional loans that will go as low as 3%. If you are or were in the military, VA loans require zero down! In addition, if the home is a rural area, USDA loans will also require no down payment.
2. You need a credit score in the 700s or better
This is no longer the case. There are many different loan programs available that will qualify many different buyers. It’s important to speak to a lender and have them analyze your situation. In most cases they will be able to get you qualified. If you like a list of mortgage lenders contact me at email@example.com.
3. Don’t have too many lenders check your credit because that will lower your score
You have the right to shop for a loan. FICO, the company that computes the credit scores lenders use. Allow consumers to “rate shop”. When doing to make sure that you are comparing the same types of products. Don’t focus exclusively on interest rates. Sometimes a lender will increase your closing costs by making you pay down points in order to get you a better interest rate.
4. Adjustable rate mortgages are bad
We all heard a lot of negative things about adjustable mortgage rates after the mortgage melt down in 2008. Adjustable mortgage rates are not all bad and can be a great option for someone that plans of paying off a home in 5 years or if you plan on selling the home within 5 years. This will provide you will a low interest rate for the first five years on the loan and that maybe all you need. Speak to a lender about options.
5. You just need enough money to cover your down payment in savings
There are several upfront cost when buying a home. The down payment is usually the largest but you will need to cover the following as well:
- Earnest Funds: Once your offer for a home is accepted, you will have to deposit your earnest funds with the title company. Earnest funds are typically 1% of the sales price. For example: if the home is being sold for $200,000, your earnest funds will be $2000. These are funds that will be applied towards your down payment at closing so they are not in addition to the sales price offered.
- Option Fee: An option fee is a fee that is offered to the seller in exchange for a set number of days for you to complete your due diligence and be able to cancel the agreement if you find something that you don’t like. This fee will also typically be credited towards the balance due at closing if you proceed with the purchase. This is money well spent because as little as approximately $200 or less you can take your time and inspect the property before you fully commit.
- Inspection Fee: It’s always a good idea to have your home inspected. This usually will cost about $350-$450 on average. This is also money well spent. This is a large purchase and it’s important to know the condition before you commit to the sale.
- Appraisal Fee: This is a fee that the bank will ask you to pay in advance for the appraisal of the property. This fee will run between $450-550 typically. It is part of the closing cost and will be credited at closing.
- Reserves: The lender will usually want to see that you have around 2 months of mortgage payments in savings as reserves.
- Closing Costs: When you first get pre-qualified by a lender they will give you wants called a loan estimate. In it, the lender will disclosure all your costs; including your down payment, loan costs and closing costs. Closing costs can add up. Most of the closing costs go to what’s call pre-paids. This is a set amount that the lender will require to start your escrow account.
6. It’s cheaper to rent than it is to buy
Rent is expensive and normally there are a lot of upfront fees when renting a home. Along with those fees there are restrictions. Explore the option to buy. I think you’d be surprised that your monthly payment can be the same or less than a rental property.
7. You don’t need a home inspection for new construction
Whenever you are buying a home, be it new or a resale, it is always best that you have the home inspected. Even new homes have issues that come up during an inspection. A home is a major purchase. The investment in a home inspection is nothing compared to the cost of buying a home with major problems
8. It is cheaper to buy a home that needs work
It can be but in many cases you end up spending a lot more on a rehab than you do on a move-in ready home. Many people watch these HGTV shows and feel that rehabbing a loan is easy. It’s not! There are always surprises and these surprises can be costly.
In many cases buyers go in with good intentions of getting the work done but faced with the cost and time of the repairs, they are put off. Over time they let the repairs go and ultimately they are never get done.
9. I can save money by not using a REALTOR®
As a buyer, it will normally not cost you anything to have an agent on your side. In most instances the seller pays the buyer’s commission. There is not reason to not have ally on your side.
Before submitting an offer it’s important to review comparable sales in the area and overall market conditions. Every home is different and it’s important to look at all aspects of the home before submitting an offer. The surrounding area is very important. You can change things about the home but you can’t change its location.
10. I need to find a home before I speak to a mortgage lender
This would be false. It’s important to be pre-qualified before you start looking. Sometimes the bank will qualify you for more or less than expected.
When you find that perfect home, your offer is submitted with your pre-qualification letter. Don’t run the risk of losing the perfect home. By the time you get qualified the home might be gone.
Note: A qualified real estate attorney should be consulted to answer any questions as well as write the sales contract and promissory note.
What is owner finance?
Owner financing is also known as seller financing. This can be an option for people that can not qualify for a conventional bank loan.
In an owner finance agreement, the owner or seller will act like the bank. They will list the finance terms they are willing to offer. Owner financed deals are recorded with the County. The buyer’s interests is protected. An additional protection is that a trustee has the deed instead of the seller. The Deed of Trust in an owner financed deal will show that the buyer is the rightful owner.
Just like a traditional bank loan, there is usually a down payment, amortization period, a possibly balloon payment and a set or adjustable interest rate. The terms can be customized to fit the needs of the seller and buyer.
Most owner-financing deals are normally short term and a typical arrangement might involve amortizing the loan over 30 years but with a final balloon payment due after five. The idea is that after 5 years the buyer may be in a better financial position and can now get a traditional loan.
How does it work?
A contract is negotiated. The contract should include a Seller Finance Addendum that will disclose the terms of the agreement. It should cover the balance to be financed, the down payment, interest rate, balloon payments, pre-payment penalty, etc.
Part of the closing documents will include a promissory note. This is a very important document; it will include all the loan terms, the loan amount, the amount of your monthly installments, interest rate, payment schedule, late fee terms, balloon payment (if applicable) and when and how you need to pay.
Most promissory notes will have a due-on-sale clause that will make the entire balance due if the buyer decides to sell the property before the balance is paid off.
A deed of trust will also be signed and it’s usually recorded at the county’s clerks office. This legal document protects the seller in case the buyer defaults on the loan. It will allow the seller to foreclosure of the property if payments are not made.
Like any option, there are pros and cons. Let’s explore these below.
- Buyers that can not traditionally qualify through a bank might qualify through a seller directly. Banks sometimes have a very black and white way of looking at things. A seller might evaluate the buyer’s entire potential and make a decision based many other factors.
- The loan terms can be customized to fix the parties needs.
- Flexible down payments.
- The closing may be faster. With a traditional loan the closing can take 30-45 days.
- The closing costs could potentially be less. They might not include some of the normal lending fees
- The loans terms can be less desirable.
- The sales price and down payment requested could be higher.
- Interest rates can also be much higher than market rates.
- The amortization period might be too short or too long for comfort.
- The seller might include a balloon payment after 5-10 years.
- There usually is no appraisal involved so you might pay more that market value (Do your research).
- There might be pre-payment penalties
- The interest rates might not be fixed.
Ultimately owner financing can be a good option for both buyers and sellers but there are risks.
Buyers be warned
As a buyer thinking about owner financing, do your due diligence. Research the property, the community, the seller, etc.
- Beware of homes that are exclusively being offered as owner finance. Why? Are they selling the home for much more that market value? Is the home in poor condition? Are they trying to avoid home inspections or appraisals? Ask the questions.
- Did the seller ask your for a credit report, financial statements, proof of income, etc? If the seller is not looking into your finances, walk away. They should care if you can afford the home. Ideally you want your monthly payment to be less than 30% of your monthly income.
- Is the home paid off? If the seller owes a balance on the home, there is a higher risk for the buyer. You may be punctual in your payments but what happens if the seller doesn’t apply your payment to his mortgage? His mortgage company can foreclose of the home. You can end up losing all the funds you have paid towards the home plus the home itself!
- If the seller still owes a balance make sure that their mortgage does not have a due on sale clause. If they do have a due on sale clause, the bank can his bank demand immediate payment of the debt in full if the house is sold to you. If the lender isn’t paid, the bank can foreclose. To avoid this risk, make sure the seller owns the house free and clear or that the seller’s lender agrees to owner financing.
- Balloon payments – with many owner financing arrangements, a large balloon payment becomes due after a set number of years. If you can’t secure financing by then, you could lose all the money you’ve paid so far, plus the house.
- Consider having the home inspected. A home inspection is always an option for a buyer. These inspections are typically completed by a third party inspection company and will typically cost $350-550. If the seller does not allow you to have the home inspected, let this be a warning sign. What is he/she hiding?
- The seller should provide you with seller’s disclosures. All seller should disclosure issues that they know to be wrong with the property.
- Since a bank is not involved, there might not be an appraiser. In a traditional bank loan process, the bank will send an appraiser to evaluate the property’s worth. The appraiser will issue his opinion on value and condition. An appraiser is not an inspector, but if they see something that might effect the property’s value, they will note it and possibly force the parties to make repairs before the bank approves the loan. You as a buyer can order an appraisal of the property. If you are not sure of the market value of the property, speak to an REALTOR® or hire an appraiser.
- Research the community and schools. Even if you don’t have school aged kids, schools can make or break a property’s resale worth. Properties zoned to poor preforming schools might not resale as well as those zoned to excellent schools.
- Traditional owner-financed transactions often close in a lawyer’s office without title insurance, although it might be wise for the buyer in such transactions to at least obtain a title report indicating what liens, lawsuits, and judgments may affect the property. There has been fraud in this area. People that are not the true owners of a property might try to sell or rent a home they know to be vacant.
- This is one of the largest purchases you will probably make. You might want to consider hiring a real estate attorney to review the terms of the contract prior to signing an agreement.
- The owner will normally keep title to the house until the buyer pays off the loan. If the buyer defaults, the seller keeps the down payment, any money that was paid, plus the house.
Sellers be warned
As a seller you too run risks when owner financing a home. Do your due diligence before signing a agreement.
- SAFE Act – Sellers who engage in more than five (5) owner-finance transactions in a 12 month period must now have a Residential Mortgage Loan Originator License according to the Secure and Fair Enforcement for Mortgage Licensing Act, also known as the SAFE Act.
- If you owe a mortgage on the property, speak to your lender to see if you have a due on sale clause. If you do, then owner finance may not be possible. Once you sell the home your mortgage balance will come due entirely. Speak to your lender and see if they will agree to owner financing.
- Make sure to review the buyer’s income. Their financial strengths, their credit or lack of credit, their available funds, etc. Speak to the buyer’s employer if they are not self employed. If they are self employed, considering looking at a few years of tax returns. You will decide what you find acceptable or not.
- Think about hiring a servicing company to receive the payments and establish an escrow account. This way the payment can be applied to the balance owed directly.
- The seller must determine that the buyer has the ability to repay the loan (and this must be supported by verifications and documentation).
- Although you won’t have to worry about insuring the property or making repairs as needed, you do run the risk of having to foreclose if the buyer stops making payments.
- Repair cost – if you do take back the property for whatever reason, you might end up having to pay for repairs and maintenance, depending on how well the buyer took care of the property.
- New Year Resolutions
- Does your home make you happy?
- Home Safety
- Taxes and Deductions
- Get your affairs in order (Transfer of Death Deed)
- Is your Air conditioner ready for summer?
- Pest Prevention tips
Let’s talk Homeowners Insurance
While you never want to leave yourself without a safety net, you also don’t want to overpay for insurance you don’t need (and will hopefully rarely use). Aim to strike a balance that will provide you with adequate protection at an affordable price.
Homeowners Insurance Covers Things Like:
Most Standard Policies DON’T Cover Things Like:
Some homeowners choose to supplement their insurance coverage by purchasing a home warranty, which covers many of the systems and appliances in your home that are NOT covered by homeowners insurance. While policy terms and coverage vary, a home warranty will often cover the cost (after deductible) to repair or replace components of your HVAC, electrical, plumbing and some appliances that fail due to age or typical wear and tear.
Unlike homeowners insurance, home warranties aren’t required by mortgage companies. But many homeowners like the added financial protection and peace of mind that home warranties provide.
A Home Warranty Covers Things Like:
Now that you understand the basics of homeowners insurance, you should be ready to start shopping for a policy that best fits your needs and budget. Your goal should be to minimize your risk while maximizing the value your policy provides.
Once you’ve purchased your policy, avoid setting the annual renewal on autopilot. Instead, take some time to consider factors that have changed over the past year. Home improvements, a shift in market conditions, a new home-based business, or even growth in your overall net worth could mean it’s time to reassess your coverage.
Need Guidance? We Can Help!
If you have questions about purchasing homeowners insurance or a home warranty—or if you would like a referral to a reputable broker—give us a call! We’re here to help.
Okay, you made one of the most important decisions in your life: you’re buying a home! You found your ideal home. It’s in your desired neighborhood, close to everything you love, you dig its design and feel, and you’re ready to finalize the deal.
But, whoa … wait a minute! Buying a home isn’t like buying a toaster. If you discover something’s wrong with your new home, you can’t return it for a refund or an even exchange. You’re stuck with your buying decision. Purchasing a home is an important investment and should be treated as such. Therefore, before finalizing anything, your “ideal” home needs an inspection to protect you from throwing your hard-earned money into a money pit.
A home inspection is a professional visual examination of the home’s roof, plumbing, heating and cooling system, electrical systems, and foundation.
There are really two types of home of inspections. There is a general home inspection and a specialized inspection. Most general inspections cost between $267 and $370. The cost of the specialized inspection varies from type to type. If the inspector recommends a specialized inspection, take that advice because buying a home is the single most important investment you’ll make and you want extra assurance that you’re making a wise investment.
By having your prospective new home inspected, you can:
- Negotiate with the home seller and get the home sale-ready at no cost to you
- Prevent your insurance rates from rising
- Opt-out of the purchase before you make a costly mistake
- Save money in the short and long run
How Much Money Can a Home Inspection Save You?
A home inspection helps to find potential expenses beyond the sales price, which puts homebuyers in a powerful position for negotiation. If there are any issues discovered during the home inspection, buyers can stipulate that the sellers either repair them before closing or help cover the costs in some other way. If the sellers do not want to front the money to complete the repairs, buyers could negotiate a drop in the overall sales price of the home!
Perhaps even more importantly, a home inspection buys you peace of mind. Your first days and months in a new home will set the tone for your life there, and you don’t want to taint that time with worries about hidden problems and potential money pits.
To help you understand how much money a home inspection can save you, here are some numbers from HomeAdvisor to drive the point home … so to speak.
Roof – Roofing problems are one of the most common issues found by home inspections. Roof repair can range between $316 and $1046, but to replace a roof entirely can cost between $4,660 and $8,950.
Plumbing – Don’t underestimate the plumbing. Small leaks can cause damage that costs between $1,041 and $3,488 to repair. Your home inspector will look for visible problems with the plumbing such as leaky faucets, water stains around sinks and the shower, and noisy pipes. Stains on walls, ceilings, and warped floors show plumbing problems.
Heating and Cooling – Ensuring the home’s heating and cooling system is working properly is very important. Your home inspector will make you aware of any problems with the existing system and let know you whether the system is past its prime and needs replacing. You don’t want to throw down $3,919 to replace an aged furnace. Nor do you want to spend $5,238 replacing an ill-working air conditioner. Replacing and repairing a water heater gets pricey too. Wouldn’t you rather use your savings for a vacation?
Electrical Systems – When thinking of the electrical system, no problem is better than even a small problem. Electrical problems might seem small, but they can blossom into thousand-dollar catastrophes. Make sure your home inspector examines the electric meter, wires, circuit breaker, switches, and the GCFI outlets and electrical outlets.
Foundation – If your home inspector sees that the house is sinking, that means water is seeping into the foundation; cracks in walls, sticking windows, and sagging floor also indicate foundational problems. The foundation is so important that if the general inspection report shows foundation problems, lenders will not lend money on the home until those issues are solved. Foundation repairs can reach as high as $5,880 to repair.
As you can see, a small investment of a few hundred dollars for a general home inspection can save you tons of money and future headaches. To save even more money, you might consider investing in a specialized home inspection as well. A specialized inspection gets down to the nitty-gritty of all the trouble spots the general home inspection might have located.
How Much Money Can a Specialized Inspection Save You?
A general home inspection can trigger a need for a specialized inspection because the general home inspector spotted something off about the roof, sewer system, the heating and cooling system, and the foundation. If humidity is high where you’re buying your home, a pest inspection is recommended. Usually, a pest inspection will check for mold as well as pests. Most homebuyers have a Radon test done to ensure air quality.
Roof – Roof specialists examine the chimney and the flashing surrounding it. They also look at the level of wear and tear of the roof. They can tell you how long the roof will last before a new one is needed. They’ll inspect the downspouts and gutters. The average cost of a roof inspection is about $223. Most roof inspections will cost between $121 and $324.
Sewer System – Making sure your sewer system has no problems should happen before the closing because what might look like a small problem can turn into a large problem in the future. If any issues pop up, you can negotiate with the seller about needed repairs or replacements before closing. Cost of inspection will vary; on the low side, it might cost you around $95, and on the high side, it might cost you $790. Compare these numbers to repairing a septic tank, which can cost, on average, $1,435 (though it could reach as high as $4,459), and you can see that the cost of an inspection is worth it when you catch the problem before you buy.
Heating and Cooling System – A HVAC specialist will check the ducts for blockage and for consistent maintenance of the unit. The repairs needed might be small or they might be big, but this small investment will save you headaches and lots of money down the road.
Foundation – A foundation specialist will pinpoint the exact problem with the foundation. The specialist will look at the grade or slope of the home. The ground should slope away from the home in all directions a half inch per foot. Most homeowners have spent between $1,763 and $5,880 to repair their foundation. And the average cost to re-slope a lawn is at $1,705. Most homeowners paid between $933 and $2,558 to re-slope their lawn.
Pest Inspection – Termites eat a home’s wood structure from inside out and can cause thousands of dollars worth of damage to your home. Other pests can turn your dream home into a nightmare. Depending on the humidity of where you live, you should a pest/termite inspection every two years or so. You can start with your potential new home. Most inspections are extensive and cost between $109 and $281. The good news is that most pest management company will guarantee the past inspection if bugs show up.
Radon Test – Radon is a naturally occurring invisible odorless gas that is the second leading cause of cancer. A radon test is a good test to have done as a good habit. The cost of radon test is low and its cost varies from state to state. Here’smore information about Radon.
Steps You Can Take to Save Money Using a Home Inspection
To help yourself save with a home inspection, you will need to:
Attend the inspection – Attending the inspection is important because it’s an opportunity for you to ask questions.
Check utilities – Checking utilities let’s know the energy efficiency of your potential home.
Hire a Qualified Home Inspector – We can recommend bona-fide home inspectors to you. You can compare our recommendation with all inspectors who belong to the American Society of Home Inspectors. While the decision of who you work with is always yours, we can educate you so that you make a wise homebuying decision.