Are you planning to buy a home? Looking for a home especially your first home is exciting but also can be stressful and a bit overwhelming. In the end, your objective is to secure the home of your dreams at an affordable price. Unfortunately, there are many missteps that home buyers commonly make which could negatively impact the goal of owning a home.
To better your chances of owning a home, I have outlined a few of the more common mistakes that home buyers make:
If you have any questions on this blog or are interested in buying or selling real estate in South Florida and are not currently working with an agent, please don’t hesitate to contact me jaykenney@SFPropertyTeam.com or via my cell at 954-547-9483.
At the beginning of the year, housing experts all agreed that 2017 was going to be the year where we would see mortgage rates begin to rise. After years of historically low rates, and an improving economy, the question wasn’t if they would increase but instead how much they would increase. Some thought we could see rates in the 5% range by the end of the year.
However, the exact opposite has happened. Instead of higher rates by mid-year, we actually have the lowest rates of the year (as reported by Freddie Mac). The following graph shows the weekly mortgage rate for a 30-year fixed rate mortgage for the first half of the year.
According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.96% which is still near record lows in comparison to recent history. The interest rate you secure when buying home not only greatly impacts your monthly housing cost but also affects your purchasing power.
Purchasing power can be defined as the amount of home that you can afford to buy for the budget which you have to spend. As rates increase, the price of the house you can afford will decrease if you plan to stay within a certain monthly housing budget.
The chart below shows what impact rising interest rates would have if you planned to purchase a home within the national median price range and planned to keep your principal and interest payments between $1,850 -$1,900 per month.
With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5%.
With interest rates hovering around 4% for most of 2017, many buyers have benefitted from the lack of rising home prices which has helped with affordability. If you are felling optimistic about your economic future and are considering purchasing a new home, doing so sooner rather than later makes the most sense. Experts are predicting that rates will increase by the end of 2017 and will be about three quarters of a percentage point higher, at 4.5%, by the end of 2018. With that said, no one knows for sure where interest rates will be in 6 months. However, you can still get a mortgage at historically low rates right now. If predictions are correct, waiting until next year to buy could cost you thousands of dollars a year for the life of your mortgage. The cost of waiting to buy can be defined as the additional funds it would take to buy a home if prices and interest rates were to increase over a period of time.
In addition to historically low mortgage rates, down payments under 20% are the new normal and the average FICO Scores of approved loans are actually lower today than in the past few years. It is important that you fully understand what is going on in your local housing market and know what is to be expected if your preferred option is to finance to buy your new home.
If you are not currently working with a real estate agent and are interested in buying or selling property in the South Florida Area, please do not hesitate to contact me at (954)-547-9483 or via email at jaykenney@SFPropertyTeam.com.
The single most important factor to consider when selling a home is to ensure that the home is priced correctly for current market condition. Price is the amount actually paid in a real estate transaction not necessarily the asking price or amount offered. It may be more or less than market value. It is, nonetheless, the amount the buyer is willing to pay and the amount that the seller is willing to accept.
Many homeowners want to base their list price on what they paid for their home, the balance of their mortgage, the amount of any renovation or on the profit they want to make. In reality, your home is only worth what the market will bear. In other words, what a willing buyer will pay for the home in the current market conditions.
To set the correct price, you should undertake the following:
When pricing a home, it is also important to have a contingency plan should the initial price be rejected by the market. This saves time and helps set expectations. If your home is on the market and you are not receiving offers, it is more than likely overpriced. Pricing your home just 10% above market value dramatically cuts the number of prospective buyers that will even see your house.
Every homeowner wants to get the best price for their home. As outlined in this blog, correct pricing out of the gate is key. Additionally, use a real estate professional to help educate you on current housing market conditions, guide you on proper pricing and represent your property to qualified buyers. Some sellers may think they would net more money if they didn’t have to pay a real estate commission. However, multiple studies have shown that homes typically sell for more money when handled by a real estate professional.
Should you have any questions on pricing a home or are interested in buying or selling real estate in South Florida and are not currently working with a real estate professional, please call me at 954-547-9483 or email at jaykenney@SFProprtyTeam.com
If you are thinking about selling your home and wondering what improvement projects and/or other upgrades pay off, this blog is for you! The top upgrades that don’t cost a lot of money and will present the home in the best possible light include the following:
By taking an inventory of what relatively low cost upgrades that provide a maximum rate of return can be made will go a long way to ensure that your home is appealing to buyers.
Should you have any questions on the above information or are interested in buying or selling real estate in South Florida and are not currently working with an agent, please do not hesitate to contact me at jaykenney@SFPropertyTeam.com or via my cell at 954-547-9483. Read the rest of this entry »
Once you have executed a purchase and sale agreement for your new home in 2017, you may be wondering “what happens next?” In 2017, more than 5+ million homes are expected to be sold. In each instance, the agreement will culminate in a “closing”. In the purchase and sale agreement, a closing date which has been mutually agreed upon along with a location at which the closing will be held are designated. Closings are typically scheduled for between 30 to 60 days from the execution date of the agreement, although some closings for an all cash transaction can be scheduled for less than 30 days, and other closings (i.e. new construction) may be scheduled for more than 60 days.
The period between contract execution is sometimes called “being in escrow” where the sale is pending. It is during this time that the buyers perform additional due diligence including arranging for a home inspection and finalizing a mortgage if financing is the preferred option to purchase the home.
In only rare instances would a buyer waive a home inspection as it generally uncovers repairs or other issues with the home that should be addressed prior to closing. Should a home inspection be desired, be sure that you have checked the appropriate box in the purchase and sale agreement and request 5-10 days to conduct the home inspection. It should be noted the seller will want to minimize the inspection period as the buyer has the option of walking away from the agreement at any time during the inspection period.
Should the inspection uncover a number of needed repairs, the seller can make the necessary repairs, reduce the purchase price or give the buyer a credit so repairs can be made by buyer or refuse to make any repairs. Which option sellers ultimately decide to go with will ultimately depend on how quickly the seller wants to sell the property. The buyer must be prepared to walk away from the agreement should seller refuse to make repairs and offer no reduction.
Assuming you have been pre-approved for a mortgage previously, once you are under contract, you should move to lock in the lowest available rate if your lender hasn’t already quoted you a rate. Additionally, during this time, your lender will request income and asset verification, signatures on disclosures and other documents required to meet loan guidelines. Your lender will also order an appraisal of the home to be purchased to ensure that the home appraises for equal to or more than the amount of the loan.
Once all these items have been completed, the lender will issue a final underwriting approval which is known as being “clear to close.”
A closing is typically held in the offices of a title company and involves the completion and signing of all required paperwork to finalize the agreement between buyer and seller. Additionally, the closing costs, which are all costs required to close the real estate transaction are settled at closing. For information on closing costs such as what are they and who pays the respective costs, please refer to my blog post of August 2015, where I have written about these costs. It is important to note that you should review your final HUD Settlement Statement to ensure that all the collections are accurate and that you have been given all the credit for deposits and other agreed upon buyer and seller credits. Additionally, double check all lender, title and escrow fees to determine that they are accurate.
As one of the final steps of the closing, once all the required signatures have been recorded, money is transferred from buyer to seller. The money is usually transferred in two parts: The first part is the remaining portion of the down payment, which is the down payment less the earnest money deposited in the escrow account as outlined in the purchase and sale agreement. It should be noted that funds to the seller may not be paid in cash or with a personal check, only wired funds will be accepted in Florida.
The second part is the funds from the lender which make up the difference between the buyer’s down payment and the home sale price. After all the documents have been signed, the deed of ownership will be transferred from seller to buyer and recorded by the title company representative or attorney. At this point, the buyer has assumed ownership of their new home.
Closing Day is often one of the happiest moments in one’s life if it involves purchasing your dream home. However, the process leading to closing can also be one of the most stressful, particularly if financing is involved.
Should you have general questions on the closing process or be looking to buy or sell real estate in the South Florida market and are not currently working with a real estate agent, please contact me at jaykenney@SFPropertyTeam.com or via my cell at 954-547-9483.
If you are contemplating selling your home be aware of the following mistakes individuals regularly made when selling a home.
If you are contemplating selling your home in the South Florida area and are not currently working with a real estate agent, I would be happy to meet with you to discuss your real estate goals. I can be reached directly on my cell at 954-547-9483 or via email at jaykenney@SFPropertyTeam.com .
Prior to setting out to conduct your first “walk through” of an apartment or condo that you are considering buying, you need to have a well thought out plan. Such a plan could include a list commonly referred to as the “Punch List” of things to look at to determine their respective condition. The list is generally broken down by room so there is a systematic approach to conducting a “walk through”.
The following will provide a highlight of key items that any “walk through” should include:
Living Room/Bedroom /Dining Room /Hallway
In addition to the above, you will want to get a general feel for the space. Do rooms flow making it easy to move from one room to another? What is the size of the rooms’? Be sure the rooms work with your furniture or their intended use. How is the natural light in the home? Do windows provide the natural light that is desired?
In closing, knowing as much as you can before and during the “Walk Through” will make you a better buyer and one step closer to buying the right home.
If you would like more information on the “Walk Through” process or are interested in buying or selling a property in the South Florida area, (and not currently working with an agent), please do not hesitate to contact me personally at (954) 545-9487 or via email at jaykenney@SFPropertyTeam.com
There are many different types of mortgages available to home buyers. As a borrower, one of your first decisions is whether you want a fixed-rate or an adjustable-rate mortgage loan. All loans fit into one of these two categories or a combination “hybrid” category.
Fixed-rate mortgage loans have the same interest rate for the entire repayment term. As a result, the amount of your monthly payment will stay the same, month after month and year after year. It will never change, with the same interest rate and same monthly payment, for the entire term of the loan whether it be a 10, 15, 20, 25 or 30 year term.
Adjustable-rate mortgage loans (ARMs) have an interest rate that will change or adjust from time to time. Typically, the rate on an ARM will change every year after an initial period of remaining fixed. It is therefore referred to as a “hybrid” product. A “hybrid” ARM loan is one that starts off with a fixed interest rate before switching over to an adjustable rate.
There are other choices as well. You will have to decide whether you want to use a government insured loan or a conventional “regular” type of loan. The key differences between these types of mortgages are as follows:
It is important to note that borrowers can combine the types of mortgages. For example, a borrower could choose an FHA loan with a fixed interest rate or a conventional loan with an adjustable rate ARM. In addition to the above, loans can be further classified by the size of the loan and can fall into either a conforming or jumbo category:
When financing is the preferred option for payment, home buyers should know the types of mortgages available and the advantages and disadvantages for each.
Should you be interested in purchasing or selling a home in the South Florida area and are not currently working with an agent, please don’t hesitate to contact me at jaykenney@SFPropertyTeam.com or 954-547-9483.
Wishing all a wonderful holiday season and a Happy New Year!
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