What You Should Know About Buying a Condo

SOURCE: Freddie Mac

As you explore your homebuying options, you may find that a condo is the perfect fit for your lifestyle, budget and homeownership goals. But what exactly is a condo, and how does it differ from other property types? Here is everything you need to know before buying a condo.

A condo is an individual unit within a larger residential development in which residents own their units rather than rent them. A condo can be any architectural style: garden-style, a townhouse, a high-rise, or a detached home.

For some buyers, condos combine the benefits of apartment living, such as convenient amenities and fewer maintenance responsibilities, with wealth-building opportunities and the stability of homeownership. Condos can also be more energy-efficient, saving you money on utility bills.

Things to Consider Before Buying a Condo

There are a few important things to keep in mind when exploring the idea of a condo purchase.

• Condo association: Most condos have a condo association, which is similar to a homeowner’s association (HOA), that oversees the financial management and the upkeep and maintenance of shared areas.

• Condo association fees: Fees will vary depending on what services and amenities are included. Make sure you factor this cost into your homebuying budget.

• Rules and regulations: In addition to maintenance, the condo association is also responsible for enforcing any rules and regulations that property owners must follow.

• Long-term plans: Even if you plan to live in the condo for a long period of time, it’s a good idea to think ahead about your options when you are ready to move out. Will you keep it as a rental property? Will you sell it? What improvements can you make to increase the property value?

The Buying Process

• Mortgage pre-approval: Before you buy, you’ll want to compare several mortgage lenders and choose one you’d like to work with. Your lender will help you complete a loan application, determine if you qualify for a loan, and issue a pre-approval letter detailing the amount of money they are willing to lend you. This is an important step as it will help you determine the price range for your search.

• Finding the right condo: Once you know what you can afford, work with your real estate agent to discover available properties that match your housing needs. Do your research on the property to make sure you have a full picture of what you’re buying.

• Making an offer: When you’ve found the right place, your real estate agent will help you determine an offer amount, submit and negotiate your offer, and finalize the contract.

• Review the resale package: Once you make an offer, check to see if a Resale Disclosure Package is available. The information contained in the package will help you to determine if the condo is financially sound.

• Inspection and due diligence: An inspection and appraisal will help ensure the amount you pay is aligned with the home’s value.

• Closing the sale: The final step in securing your new condo is closing. On closing day, you’ll pay closing costs and sign documents to make the sale official and get the keys to your new home.

Depending on your situation, purchasing a condo could be the right choice as you explore your next homebuying opportunity. If you are in the market for a condo, building a trusted homebuying team and exploring available resources can help you navigate the process with confidence.

SOURCE: Freddie Mac

How to Survive a Major Remodeling Project

SOURCE: Houzz

Get expert tips for improving your home while preserving your sanity

A significant home improvement project rates high on the list of life’s most stressful tasks. Horror stories abound, causing racing pulses at the mere thought of contractors taking over your home. But it has to be done! That new kitchen, bathroom or bedroom suite won’t come into being until you enter the fray. Forewarned is forearmed, so read this essential advice to accompany you on your journey.

1. Plan and Prepare

It’s study time. The more time and effort you invest in the run-up to your project, the better.

Sketch out clearly the scope of the work envisioned. Online resources such as Houzz will help you build up a clear picture of exactly the look you want. You can browse photos and save the ones you like to ideabooks to share with family members and your pros. Visit showrooms and suppliers to see samples of products and finishes and tour houses for sale in your area for inspiration on what you may realistically expect to achieve.

Establish at an early stage which professionals you need on your project. Architects, interior designers and engineers each bring expertise which may be essential to a successful outcome for your project.

Finding the right contractor, builder or design-build firm is the holy grail. While you should aim to get three competitive quotes, the best advice is to choose the best one you can. You will save time and money in the process.

2. Create a Written Agreement

A signed, written outline of the work to be done, the agreed-upon period for completion and the agreed-upon price is essential. The more detail you can include here the better, including products to be used and the standard of finish expected.

If working with a professional team, you should be signing a formal, legal contract with the contractor.

3. Expect (Lots of) Dust and Dirt

It’s shocking how quickly a habitable home reverts to a building site once work of any scale begins. It seems as if every particle of dust that ever settled in the furthest recess is shaken out in the process.

Major work may require that you move out for the duration. If you’re staying put, keep the spread of dust to a minimum by sealing off those rooms where work is being done from those unaffected.

Talk to the builders about dust management and ask them to put up dust protection sheets for you. These will protect any built-in or fixed furniture in the vicinity of the work that can’t be removed.

Make a careful plan in advance of how you’ll live around the project. Do you need to turn the spare room and bathroom into a station for microwave dinners and washing-up? If space is tight and your options are stressing you out, talk to your builder about any temporary measures they might be able to help with — moving the stove or installing a temporary sink, for instance.

4. Monitor Progress

Visit or inspect the site being remodeled frequently to keep on top of what’s being done and to make sure you’re happy with the quality of work. The best time to do this is before or after the day’s work. A noisy, busy building site is not conducive to focused attention.

Arrange a regular, formal meeting or catch-up on site with key participants to review progress, discuss challenges that have emerged and map out decisions that need to be made. These are usually undertaken on a weekly basis and should be documented, with the details circulated to all parties.

5. Agree on Lines of Communication

To avoid misunderstandings between you and your contractors, it’s essential that there is a clear line of communication between you and them. If you’re embarking on work along with a spouse or partner, agree in advance which of you will be responsible for dealing with the contractors.

If you’re employing an architect or other professional, all instructions and requests to the builder should be channeled exclusively through your professional. Keep and circulate a written record of all your dealings, in paper or digital form.

6. Avoid Changes

This is where your homework and advance research will pay off. Even minor changes can lead to cost over-runs and time delays, which can quickly spiral out of control and be difficult to monitor. The more decisions you make in advance, the quicker materials can be ordered and work can progress.

You will still be bombarded with a plethora of detailed decisions to be made along the way, all of which, of course, will be flagged as urgent. Dealing with these will, hopefully, be made easier in the context of the clear vision that you have formed for your home.

7. Stay Calm and Focused

Building work tends to be all-consuming, with a unique, frantic pace of its own. Those urgent decisions seem endless.

This means it’s a good time to sign up for a yoga course or schedule in some definite, relaxing downtime over the course of the work. This will help you maintain perspective and the energy levels needed to bring the project to fruition.

8. Celebrate the Wins

You will get there! The project may run over time and over budget, and you may have your own battle stories to add to the anthology, but your enjoyment of a beautiful home crafted to suit your every need will make it all worthwhile.

SOURCE: Houzz

The Truth About Down Payments

SOURCE: Keeping Current Matters

If you’re planning to buy your first home, saving up for all the costs involved can feel daunting, especially when it comes to the down payment. That might be because you’ve heard you need to save 20% of the home’s price to put down. Well, that isn’t necessarily the case.

Unless specified by your loan type or lender, it’s typically not required to put 20% down. That means you could be closer to your homebuying dream than you realize.

As The Mortgage Reports says:

“Although putting down 20% to avoid mortgage insurance is wise if affordable, it’s a myth that this is always necessary. In fact, most people opt for a much lower down payment.”

According to the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. In fact, for all homebuyers today it’s only 15%. And it’s even lower for first-time homebuyers at just 8% (see graph below):

SEE GRAPH HERE

The big takeaway? You may not need to save as much as you originally thought.

Learn About Resources That Can Help You Toward Your Goal

According to Down Payment Resource, there are also over 2,000 homebuyer assistance programs in the U.S., and many of them are intended to help with down payments.

Plus, there are loan options that can help too. For example, FHA loans offer down payments as low as 3.5%, while VA and USDA loans have no down payment requirements for qualified applicants.

With so many resources available to help with your down payment, the best way to find what you qualify for is by consulting with your loan officer or broker. They know about local grants and loan programs that may help you out.

Don’t let the misconception that you have to have 20% saved up hold you back. If you’re ready to become a homeowner, lean on the professionals to find resources that can help you make your dreams a reality. If you put your plans on hold until you’ve saved up 20%, it may actually cost you in the long run. According to U.S. Bank:

“. . . there are plenty of reasons why it might not be possible. For some, waiting to save up 20% for a down payment may “cost” too much time. While you’re saving for your down payment and paying rent, the price of your future home may go up.”

Home prices are expected to keep appreciating over the next 5 years – meaning your future home will likely go up in price the longer you wait. If you’re able to use these resources to buy now, that future price growth will help you build equity, rather than cost you more.

Bottom Line

Keep in mind that you don't always need a 20% down payment to buy a home. If you're looking to make a move this year, reach out to a trusted real estate professional to start the conversation about your homebuying goals.

SOURCE: Keeping Current Matters

5 Common Real Estate Closing Day Surprises and How to Deal

SOURCE: Realtor.com

Areal estate closing is an anxiety-inducing time, even if it goes smoothly. Add something unexpected, and it will throw you for a loop.

I was thrilled when the sellers accepted my offer on a tear-down lot in McLean, VA, the perfect place to build my own “Downton Abbey”–style manor. And the deal went forward without a hitch—that is, until closing day.

Soon after I arrived at the title company’s office on the big day, my real estate agent sheepishly handed me a set of 40-year-old covenants that restricted what I could build on the site. Looking back, I know that I should have smiled politely at the six people gathered and suggested we reconvene later after I’d studied this giant wrench in my plans. But I didn’t want to inconvenience everyone, so I closed the deal.

It was an agita-inducing mistake. Even though those covenants didn’t derail my dream home’s construction, they caused me constant anxiety.

This is not just a concern for those building a home from scratch: For many home buyers, closing day is daunting, and coping with last-minute surprises can be tricky. Some problems are minor and easy to solve; others can wreck a deal. So which are which? Let’s take a look.

Ugly walk-through revelations

The dreaded walk-through is the top reason for surprises on closing day, and for good reason: This final inspection of the home happens the day before your settlement—or even the morning of—so there’s little time to prepare for whatever problems might pop up.

Who knows? A sudden storm could have poured water into the basement, or now that the furniture is all gone, cracks in walls or other flaws may be exposed.

How bad is it? If the problem is serious, like flooding, you should definitely proceed with caution. To avoid this snafu, make sure to inspect a home as thoroughly as possible before your final walk-through to avoid last-minute surprises.

Don’t be shy about asking for another look-see after a big storm to vet for dampness or flooding. But a last-minute discovery of a problem is not necessarily a deal breaker. Just ask the seller to cover the cost of those repairs, and put the funds in escrow. Be sure to come with estimates from professionals on how much those fix-its will cost.

What stays, what goes

Another common issue that crops up during the walk-through is misunderstandings about which items get transferred with the sale. For instance, maybe you loved the seller’s antique stove, ceiling fan, or other household item and assumed it would stay—but you find out the sellers took it with them.

How bad is it? Unless you’re really attached to the item, you may want to let this one slide if you want this deal to go through. The easiest way to avoid these misunderstandings is to delineate in a contract what remains in the house or must be moved out, says Ben Niernberg, executive vice president of business development at Northbrook, IL–based Proper Title, LLC.

“Be very detailed on what’s staying and going,” he says. “Washer, dryer, ceiling fans, fixtures, appliances—be diligent during your initial inspection.” Also, make sure the contract reflects your expectations.

Credit challenges

Even though you were probably approved for a mortgage a month or so earlier, even small changes in your financial picture since then can affect your credit score and create problems up to the moment you close on the property. Changing jobs, applying for a credit card, falling behind in paying bills, even sudden infusions of cash can red-flag your deal.

How bad is it? Pretty bad. If a lender withdraws the offer, you won’t be able to close until you secure another mortgage, which could take weeks. Or, if the lender wants to increase your interest rate, as it usually does in these situations, then you’ll have to decide if you can still afford the purchase.

To head this issue off at the pass, contact your lender the day before closing to discuss and solve any issues that may have turned up. Also, try to avoid making any sudden financial moves in the weeks leading up to the close, like quitting your job or receiving a $10,000 “gift” from a family member to help out with home buying—that could, ironically, throw a wrench into the process.

Real estate closing money transfer misunderstandings

On a real estate closing day, the chief order of business is to transfer funds. Some financial institutions and title companies prefer cashier’s or certified checks; others want funds to be transferred electronically. Show up with the wrong paperwork or account numbers, and you’ll be left scrambling.

How bad is it? This misunderstanding should be nothing more than a speed bump. To avoid it, ask your agent and lender before closing what form of payment is required. Also bring your checkbook to pay for small items that might crop up, like an unpaid electric bill.

Title trouble

A title company—which confirms details about your property such as past ownership, liens, and the aforementioned covenants—could bring up issues on closing day. If that happens to you, don’t be afraid to step back and insist on taking time to digest any details, problems, or stipulations attached to the property.

How bad is it? It depends on what the search turns up. Some problems, like tax liens or a claim on the property from a relative or co-owner, can postpone a real estate closing. Other things, like the covenants I mentioned above, or unpaid HOA dues, may be surprises but not deal breakers. But any and all title defects must be fixed before you can close on the property. It may be frustrating, but when you leap into homeownership, it’s always better to be safe than sorry.

SOURCE: Realtor.com

3 Key Factors Affecting Home Affordability

SOURCE: Keeping Current Matters

Over the past year, a lot of people have been talking about housing affordability and how tight it’s gotten. But just recently, there’s been a little bit of relief on that front. Mortgage rates have gone down since their most recent peak in October. But there’s more to being able to afford a home than just mortgage rates.

To really understand home affordability, you need to look at the combination of three important factors: mortgage rates, home prices, and wages. Let’s dive into the latest data on each one to see why affordability is improving.

1. Mortgage Rates

Mortgage rates have come down in recent months. And looking forward, most experts expect them to decline further over the course of the year. Jiayi Xu, an economist at Realtor.com, explains:

“While there could be some fluctuations in the path forward … the general expectation is that mortgage rates will continue to trend downward, as long as the economy continues to see progress on inflation.”

And even a small change in mortgage rates can have a big impact on your purchasing power, making it easier for you to afford the home you want by reducing your monthly mortgage payment.

2. Home Prices

The second important factor is home prices. After going up at a relatively normal pace last year, they’re expected to continue rising moderately in 2024. That’s because even with inventory projected to grow slightly this year, there still aren’t enough homes for sale for all the people who want to buy them. According to Lisa Sturtevant, Chief Economist at Bright MLS:

“More inventory will be generally offset by more buyers in the market. As a result, it is expected that, overall, the median home price in the U.S. will grow modestly . . .”

That’s great news for you because it means prices aren’t likely to skyrocket like they did during the pandemic. But it also means it’ll probably cost you more to wait. So, if you’re ready, willing, and able to buy, and you can find the right home, purchasing before more buyers enter the market and prices rise further might be in your best interest.

3. Wages

Another positive factor in affordability right now is rising income. The graph below uses data from the Federal Reserve to show how wages have grown over time: 

SEE GRAPH HERE

If you look at the blue dotted trendline, you can see the rate at which wages typically rise. But on the right side of the graph, wages are above the trend line today, meaning they’re going up at a higher rate than normal.

Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage. That’s because you don’t have to put as much of your paycheck toward your monthly housing cost.

What This Means for You

Home affordability depends on three things: mortgage rates, home prices, and wages. The good news is, they’re moving in a positive direction for buyers overall.

Bottom Line

If you're thinking about buying a home, it's important to know the main factors impacting affordability are improving. To get the latest updates on each, give me a call or send me a message.

SOURCE: Keeping Current Matters