What’s Happening With Interest Rates?

July 28th, 2017

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.

Why Setting The Right Sales Price Matters?

June 27th, 2017

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:

  1. Research recently sold comparable properties (known as “comps”) with regards to size, floorplan, condition, location, view and amenities. One can gain valuable information by looking at how your home compares in price to different properties. When looking at recently sold comparative properties, it is important to look at properties that have sold in the past 90 days or less so you are taking into consideration the current market conditions. If you are not able to find enough comparative properties within the past 90 days then you should expand the timeframe to 180 days.
  1. Look at comparative properties that are currently for sale in the market to determine how such properties are priced. To be competitive, sellers must realize that they must price their property similarly to market comparables.
  1. Check out comparable properties that were recently on the market but didn’t sell. If you are considering selling a property similarly priced to homes that were taken off the market because they didn’t sell; you are likely overpricing your home.
  1. You should also look at the most recent housing market data on supply and demand in your local market. Most data is broken down by price range and is used to estimate how long it will take for all homes including in the price range of interest to be sold given the rate homes are currently selling.
  1. Consider market conditions and rates of appreciation in your area. Have prices been increasing or decreasing? In a seller’s market (less than 6 months supply of inventory), properties will be somewhat overpriced, and in a buyer’s market (greater than six months supply of inventory), properties tend to be underpriced.
  1. The future outlook for your neighborhood can impact your price. If development is planned, the future prospects for home appreciation tend to be positive. On the other hand, if retail stores are closing down or a major employer has relocated, expected home prices will likely be lower.
  1. Once you have determined the approximate value of your property, it is important to understand the price range for the list price. For instance, if you have determined that your home is valued at $500K, a price range of $480K – $520K would be appropriate. To set a specific price, you could determine to go with the lower end of the range which would appeal to more buyers. This would be the approach to use if you want to  sell the property in a shorter timeframe. Also, by opting to go with the lower range price, your property will be included in more automated buyer searches. For example, a property priced at $480K would be included in property searches under $500K. If the home is listed at $510K, your property would not be included.

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

HOME IMPROVEMENTS TO ENSURE BEST RETURN WHEN HOME IS SOLD

May 25th, 2017

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:

  • Landscaping is always mentioned as one of the top investments that bring the biggest return. According to a recent survey of 2000 brokers, an investment of $500 can bring a return of four times that amount. Overgrown trees and bushes obscure views, darken interiors, hide unique features of the home and can cause a potential safety hazard. A well landscaped yard will go a long way to enhance the curb appeal of a home.
  • Minor Bathroom Remodel would involve replacing the tub, re-tiling the walls and floors, replacing the toilet, sink, vanity and fixtures. According to HGTV, these upgrades will provide a rate of return of at least 102%. At the very least, be sure to re-caulk the shower and/or tub and consider re-glazing the tub, remove dated wall coverings and apply a fresh coat of paint.
  • Minor Kitchen Renovation involves cosmetic upgrades such as re-facing cabinets and drawers, installing a new sink in addition to a new counter surface and flooring, upgrading to recessed ceiling lighting and possibly switching out the appliances. It does not involve major structural changes in floor plan or relocation of appliances.
  • Exterior Improvements will enhance curb appeal thereby making your home more inviting. In addition to landscaping as previously discussed, a fresh coat of neutral paint will make your home appear larger, brighter and more appealing to potential buyers. If your home was painted before 1978, be sure to test for lead before any sanding or scraping. Vinyl siding and fiber cement siding also provide a maximum rate of return while enhancing curb appeal.
  • Basic Home Maintenance must be considered before making cosmetic or other minor upgrades. Buyers want to take the basic operational systems such as plumbing, electrical, roofing, heating and air conditioning for granted. Nothing will turn off a potential buyer more than a problem with the roof or plumbing that is discovered during the inspection period. To prevent this from happening, check the insulation, repair plumbing leaks and any roof issues, ensure heating and cooling system are operating efficiently and bring any non-compliant electrical issues up to current code. These types of upgrades will go a long way towards maximizing value.
  • Front Entrance-way is a key area not to be overlooked for upgrade improvements. It is well known in real estate that buyers make up their minds within the first 10 seconds of entering a home. Be sure the front door is in good condition with a working doorbell. It should also have some type of overhang to shield against rain. It should be freshly painted with attractive decorative planters placed to each side to enhance the overall curb appeal of the entranceway.
  • Interior Walls and Floors should be freshened and restored. Walls should be painted in a light, neutral color and the trim, doors, baseboards and crown molding should be pained in a semi or high gloss white paint. Floors especially on the main floor should be looking their best. If floors are refinished but worn, have them lightly sanded and resealed. If they are beyond being refinished, consider having them replaced. Broadloom is popular with buyers for use in the bedrooms. If carpet is worn, stained or generally old, replace it with something more contemporary. Neutral slightly textured weaves such as wool “sisal” are very popular.
  • Main Room Updates also include possibly new light fixtures, window treatments, light switch plates and covers. The addition of crown molding or a chair rail can also enhance the overall look and feel of a room.
  • Window Replacement can add a great deal of value and will go far in showing the home in the best possible light. New high impact hurricane windows and sliders will not only upgrade the interior and exterior of the home but will result in lower energy and insurance costs.

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 »

You Have Just Executed a Purchase Sale Agreement; Now What?

April 28th, 2017

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.

Mistakes To Avoid When Selling A Home

March 29th, 2017

If you are contemplating selling your home be aware of the following mistakes individuals regularly made when selling a home. 

  1. Over or Under-pricing A Home’s Value: Too often what a seller thinks their home is worth is not realistic. Overpricing a home can turn buyers away or cause them not to consider the home as it is not in their price range. Additionally, homeowners consistently receive a much lower price when they initially overprice a home and then drop the price numerous times. The longer the home is on the market, the more likely it will receive a deeper discount. On the other hand, under-pricing a home will result in the loss of potential revenue. Determining the correct market price of the home is key to the success and speed of the sale. A correct price should be based on comparable properties relative to size, and condition which have recently sold in the immediate neighborhood. This will show what buyers have actually paid for similar properties that will justify the sales price.
  1. Not Preparing The Home:  It is important that sellers take the time to make the necessary repairs to ensure that the interior and exterior of the home are in good condition. According to the National Association of Realtors (NAR), at a minimum homeowners should conduct a thorough housecleaning, de-clutter, make sure the home is well lit and fix any major aesthetic issues. Additionally, a survey of Realtors conducted by NAR showed an overwhelming number of Realtors said that staged homes make it easier for their new home buyers to visualize a property as their new home. Realtors also reported that staging makes their buyers more willing to tour a home that they viewed on line and to consider the value of the home more positively if it is well decorated.
  1. Working With Buyers Who Are Not Pre-Approved: Prior to working with any buyer, ensure that they are either pre-approved for financing in an amount that supports the desired sale price or have proof of funds for any cash purchase. By so doing, you will not waste time in dealing with buyers who are not financially qualified to purchase your home.
  1. Withholding Information on House Defects From Buyer: It is important that sellers be honest and transparent about the homes’ history and condition. Failing to disclose flaws such as foundation issues, roofs that leak or mold problems will more than likely be uncovered during the home inspection. In such cases, buyers have the right to terminate the agreement, ask the seller to fix the problems or renegotiate the purchase price taking into consideration the potential cost to repair the problems. It is advisable for sellers to either correct the problems prior to listing the home or disclose the problems to the potential buyer upfront. Such disclosures should be included on the Seller Disclosure Form which is completed by the seller who attests to any problems that would affect the value of the home. If issues are not discovered until after the sale, sellers may even find themselves in a legal battle.
  1. Refusing To Negotiate: If you price your home correctly based on market conditions; you should receive a full priced offer or close to a full price offer. However, if you need to sell quickly, you should be open to negotiate the purchase price. Many buyers will start with an offer well below asking price with the goal to pay as little as possible for the home.  They also want to feel like they’ve gotten a good deal. By accepting slightly less than asking price, you will have a better chance of selling your home in a timely manner.
  1. Letting Emotions Affect the Outcome: Once a homeowner decides to sell their home, the home owner must put aside all of the family memories created throughout the years and accept that the sale represents a business transaction- perhaps one of the most important ones of your life. Be willing to accept that people will be walking through your home commenting on everything including layout, paint color, furniture and offering less money than what you think the home is worth. It is important to not let these factors affect your feelings or to take offense. Keeping an objective approach and level head will go a long way to achieving your real estate goals for selling in a timely manner.
  1. Not Working With A Real Estate Agent: Working with an experienced real estate professional can help negotiate a better deal and sell your home more quickly. Unless you know the buyer who is interested in your home and willing to pay your desired price, you are better off working with a real estate professional. An experienced agent can provide support, advice and reassurance to avoid many of the mistakes that sellers make.  From preparation and pricing, to marketing and showing your property, a quality agent can alleviate much of the stress, time and  work necessary to get your home sold. Real estate transactions and contracts can be complicated and negotiating with a buyer’s agent requires a skilled professional who is familiar with the process. The right agent is also someone who has knowledge of the area, strong marketing skills and whose communication styles mesh with yours.

 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 .

 

How to Improve Your Credit Score

February 23rd, 2017
It is important to note that repairing bad credit takes time as there is no quick way to fix a credit score. The best advice for rebuilding credit is to manage it responsibly over time. A credit score reflects credit payment patterns over time with more emphasis on recent information.
Credit scores are based entirely on the information provided on an individual’s personal credit report. Any changes to the credit report would affect the individual’s credit score. For instance, closing two accounts not only lowers the number of open accounts, but it also decreases the total amount of available credit. This results in a higher utilization ratio which generally lowers scores.
You don’t actually rebuild the credit score, you rebuild the credit history which is then reflected by the credit score. The length of time to rebuild your credit history after a negative change depends on the reasons behind the change.
Most negative changes in credit scores are due to the addition of a negative element to the credit report such as a delinquency or a collection amount. Such elements will continue to negatively impact your credit score until they reach a certain age:
  •  Delinquencies remain on credit report for 7 years
  •  Most public record items remain on your credit score for 7 years; although, some bankruptcies can remain for 10 years
  • Unpaid tax liens remain for 10 years
  • Inquiries can remain on credit reports for up to 2 years
 The first thing to do is get a copy of your credit report from one of the 3 credit reporting bureaus which must provide you with one free copy each year.
  1. Review the report for any errors or mistakes and have those items removed from your report.
  2. Negotiate with creditors to remove any debt that may have been caused due to a hardship, such as loss of job or unexpected illness. Some creditors may make a “goodwill adjustment” particularly if you were a customer in good standing up to the point of hardship.
  3. Check your account limits to ensure that the reported limits are current, as opposed to lower than they actually are. You don’t want it to look like you’re maxing out all your credit cards each month.
  4. Get a credit card or two and use them responsibly. Don’t charge too much on each card and pay your bills in a timely manner. A good credit utilization ratio should be no more than 30%.
If you are finding that you are using more credit than previously recommended, even if you’re paying it off before it’s due, the credit bureaus will see this as you using all of your available credit. To remedy this, ask your creditors to increase your credit limit but do not make the mistake of increasing spending due to the higher limits.
  • To maximize any credit score you should do the following:
  • Pay your bills on time as delinquent payments and collections can have a negative impact on a credit score.
  • Maintain balances at low levels on credit cards and other “revolving credit”. High outstanding debt can negatively affect a credit score.
  • Open new credit accounts only as needed. Don’t open accounts just to have a better credit mix.
  • Pay off debt and don’t use unused cards as a short term strategy to improve your credit score. Owing the same amount but having fewer open accounts may lower your credit score.
It should be noted the average credit score of the American consumer is 699. Scores are generally grouped into the following categories:
                                    RATING                                                          SCORE
                                    BAD                                                                350-350
                                    FAIR                                                               650-700
                                    GOOD                                                            701-750
                                    EXCELLENT                                                         750-800
The higher the score, the easier it will be to not only secure credit but to obtain a lower interest rate.
Should you have any questions on credit scores in general or have an interest in buying or selling real estate in South Florida please call me at 954-457-9483 or via email at jaykenney@SFProprtyTeam.com.

 

What to Look for When Conducting a Walk Through of a Property

January 29th, 2017

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

  1. Condition of Walls:
  • Are there signs of molding?
  • Is the ceiling flat?
  • Do the ceilings need to be painted?
  • Do the walls need to be repaired or painted due to stains or discoloration? Any discoloration or stain could indicate a prior or current leak.
  1. Condition of Floors:
  • Are floors exposed or covered with carpet?
  • What is the condition of the exposed floor and is it appropriately finished?
  • What is the condition of the carpet? Is it worn or need a good cleaning?
  1. Light Fixtures:
  • Are light fixtures installed as intended?
  • What is their working condition? Are switch covers and outlet covers in place?
  • Are all light switches and electric outlets in working condition?
  1. Closets:
  • Do closet doors open and close properly?
  • Is the closet hardware and shelving in place?
  • What is the condition of closet walls and ceiling?
  • Is there any smell of dampness present?
  1. Windows:
  • Do all windows open and close properly?
  • Are there any cracks or broken or missing panes in the window?
  • Are windows properly caulked and sealed?
  • Are child guards in place, (if required or needed)?
  1. Air Conditioning:
  • Test the air conditioning and heating systems regardless of current season to ensure that rooms are being effectively cooled and heated.
  • If window units are being used for cooling, make sure that the unit is properly braced to prevent unit falling from window and sealed for efficiency.
  1. Kitchen:
  • Are all appliances: refrigerator/freezer/stove & oven/dishwasher/microwave in working condition? Be sure to turn on each appliance, including individual burners to ensure that they are working properly.
  • Does the kitchen ventilate?
  • Does the rangehood over the stove work?
  • Is there a smoke detector in the kitchen?
  • What is the condition of the sink including; faucets, sprayer and garbage disposal?
  • Are all cabinets in order? Do they open and close as intended?
  • Is the closet/cabinet hardware and shelving as you would expect?
  • How are counter-tops finished? What is the condition of that finish?
  • Are any repairs or maintenance needed?
  1. Bathrooms:
  • Do toilets flush completely without running afterwards?
  • Is there any leaking or sweating at the base of the toilet?
  • What is the condition of tub and/or shower?
  • Do both hot & cold faucets operate functionally?
  • What is the condition of the tile? Is the grout clean and free of mold?
  • Is there any unpleasant smell, odor or dampness present?
  • What is the condition of the sink and countertop?
  • Do the vanity cabinet doors and drawers work?
  • Do hot and cold faucets function properly?
  • Do electric switches and outlets work?
  • Do the lights work?
  • What is the condition of the walls/ceilings?
  • Is there any noticeable water damage on walls/ceiling?
  • Does bathroom ventilate with an exhaust fan? Is it it functioning properly?
  • Is bathroom hardware: towel bars/toilet paper holder/shower door/shower rod installed?

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

 

What Mortgage Should I Choose?

December 28th, 2016

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:

  1. A conventional home loan is not insured or guaranteed by the federal government. This is a key difference from the government backed mortgage type loans.
  2. Government – insured home loans include these popular loans.
  • FHA Loans: The Federal Housing Administration (FHA) mortgage insurance program is managed by the Department of Housing and Urban Development (HUD) which is a department of the federal government. FHA loans are available to all types of buyers. The government insures the lender against any losses that might result from borrowers default. The benefit of the FHA loan is that the borrower can put down a down payment as low as 3.5%of the purchase price. However, the borrower will have to pay for mortgage insurance which will increase the amount of your monthly payment.
  • VA Loans: The US Department of Veterans Affairs (VA) offers a loan program to military service members and their families. Similar to the FHA program, these types of mortgages are guaranteed by the federal government. This means the VA will reimburse the lender for any losses that may result from borrower default. The key advantage of VA loans is that borrowers can receive 100% financing for the purchase of a home which means no down payment is required.
  • USDA Loans: The US Department of Agriculture (USDA) offers a loan program for rural borrowers who can meet certain income requirements and unable to obtain financing through conventional financing. The program is managed by the Rural Housing Service (RHS) which is part of the Department of Agriculture.

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:

  • Conforming Loans are ones that meet the underwriting guidelines of Fannie Mae and Freddie Mac particularly where size is concerned. Fannie & Freddie are government controlled corporations that purchase and sell mortgage based securities to investors. A conforming loan falls within these maximum size restrictions and conforms to pre-established criteria.
  • Jumbo Loans exceed the conforming loan limits established by Fannie & Freddie. This type of mortgage represents a higher risk for the lender due to the size. Jumbo loans are generally for amounts greater than $417K up to $3 Million. As a result, jumbo borrowers typically are required to have excellent credit and larger down payments, when compared to conforming loans. Interest rates are generally higher with jumbo loans.

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!

 

How to Select a Home Inspector & What to Inspect

November 21st, 2016

You have an accepted offer and now the next step is to have the home inspected prior to closing.  More often than not, your real estate agent will have made your offer contingent on a home inspection unless you waive the inspection. This contingency allows you to ask the seller to make or cover the cost of repairs, renegotiate the purchase price of the home or, in some cases, walk away.

When considering home inspection services, you should review the following:

  1. Qualifications: Determine what’s included in your inspection and if the age or location of your home may warrant specific certifications or specialties.
  2. Sample Reports: Ask for a sample Inspection Report so you can review how thoroughly they will be inspecting your home. The more detailed the report the better in most cases.
  3. References: Ask for names and phone numbers of past clients that you can call to ask about their experience.
  4. Memberships: Not all inspectors belong to a national or state association of home inspectors, and membership in one of these groups should not be the only way to evaluate your choice.
  5. Errors & Omission Insurance: Determine what liability the inspector or inspection company has once the inspection is over.

The job of the inspector is to protect your investment and find any issues with the home including but not limited to the following: the roof, plumbing, electrical components, appliances, heating & air conditioning systems, ventilation, windows, fireplace & chimney and the foundation.

Specifically, the roof is examined closely for loose shingles or tiles, and the flashing is tested for tightness. Gutter debris is noted, and all drains are tested for a tight connection to the house. Skylights and chimneys are also examined for proper sealants. With regards to plumbing, all piping is tested, including drains, vents and waste systems. Water ingress and egress is examined, as are the interior fuel and water distributions and the sump pump, if present. All drains are examined for signs of leakage, mineral deposits and the fitting of proper filtering apparatus.

All electrical components are examined to ensure they fit and operate safely. Conductors, grounding equipment and distribution panels are tested for efficient operation. The location of smoke and carbon monoxide detectors are also noted in the inspection report.

Doors, floors, stairways, counters, cabinetry and the number of windows are all cited in the inspection report along with notes on any items that don’t function as they should. This also includes the testing of all interior appliances that are built in or included in the purchase contract.

The entire heating and air conditioning systems are tested to verify that they are in working condition, and the appropriate filters are examined for accumulation. Supply pipes are examined for corrosion. Chimney must be clear of bird nests, and the chimney frame, whether it is made of brick or some other components, is to be sound.

Attic crawl space insulation and vapor retardants are noted in the inspection report. All venting fans that are not working are also included. Under floor insulation, if accessible through the basement, is also examined for deterioration.

A home inspector climbs onto the roof, inspects the foundation and crawls into attic space looking for condensation and/or penetration. With homes in hurricane zones, inspectors will examine roof trusses to be sure they are connected to the frame as per local building code. Walls are examined for leakage or mold. Floor cracks are noted, as is separation from the baseboards. The ceilings, especially around electrical fixtures must be clear of any signs of water leakage.

It should be noted that it is not a home inspector’s job to inspect things cannot be seen. The inspection will not reveal any wiring problems hidden behind drywall or any mold under shower tiles. On average a home inspection should take 2-3 hours to perform. If your dealing with a large home, a fixer upper, or an older home, the inspection would likely take longer. A condo or townhome would take less time and generally can be completed within 1-2 hours. You should plan to attend the home inspection as it provides an opportunity to learn about your home and talk about any possible repairs that may be needed. Most inspectors will provide a written report with pictures. Most inspector’s fees are in the range of $300-$500 but price can vary depending upon the size of the home and the complexity of issues. In some cases, an inspector may recommend that you follow up with a roofing, electrical or plumbing professional to determine specific problems that are not included as part of a general inspection.

Home inspections are required to be performed within an agreed upon number of days from execution of the purchase & sale agreement. It is important that you secure an inspector to perform your home inspection within your contract timeline.

Should you be interested in buying or selling real estate in the South Florida market and are not currently working with a real estate agent, please do not hesitate to contact me at (954) 547-9483 or via email at: jaykenney@SFPropertyTeam.com

WHY CREDIT SCORES MATTER

October 27th, 2016

Credit refers to borrowing, specifically your ability to borrow and the amount you borrow. With regards to loans such as home and auto loans as well as credit cards, your credit is your reputation as a borrower. It provides lenders with information on how likely you are to pay your loans which allows them to determine whether or not to approve your loan request and how much to charge.

Credit is made of information about one’s borrowing history. Most of the information comes from credit reporting agencies which are collectors of information including any of the following:

  • Past loans
  • Current loans
  • Required minimum monthly payments
  • Payment history
  • Public records such as bankruptcy and foreclosure
  • Loans that have been defaulted on and are in collections

However, most lenders don’t actually look at credit reports but rather use credit scores. Credit scores are numbers generated by a computer program that reviews your credit reports. It looks for trends, characteristics and abnormalities in your history. Based on what the program finds, a credit score is created. Scores are easy for lenders to interpret and guidelines are established, FICO Scores range from 300 to 850 where a higher number means lower risk. For example, credit scores above 720 might get approved automatically, scores between 650-719 may get a higher interest rate and other loans are not approved. Lenders typically use a 3 digit score as a means to determine if they’ll approve a loan. In general, the higher the score, the better your chance of getting approved. Having a good score can also help secure a lower interest rate.

There are a multitude of credit scoring models in existence but there’s one that dominates the market: the FICO Credit Score. FICO Credit Scores are the global standard for measuring credit risk and 90 of the top 100 largest U.S. financial institutions use FICO Scores to make consumer credit decisions. FICO Scores are calculated from many different pieces of credit data in a credit report. This data is grouped into 5 categories with respective percentages reflecting how important each of these categories is in determining how FICO Scores are calculated as outlined below.

  1. PAYMENT HISTORY: (35%) Have past credit accounts been paid on time? This is one of the most important factors in a FICO Score
  2. AMOUNTS OWED: (30%) Having credit accounts and owning money does not necessarily mean you are a high-risk borrower
  3.   LENGTH OF CREDIT HISTORY: (15%) How long have credit accounts been established and how long has it been since certain accounts have been used.
  4. CREDIT MIX IN USE: (10%) FICO Scores will take into consideration the mix of credit cards, loans, retail accounts and finance company accounts
  5. NEW CREDIT: (10%) Opening of several credit accounts in a short period of time represents a greater risk especially for individuals who do not have a long credit history

Credit scores can be secured by the three major credit bureaus: Equifax, Experian and Trans Union. These three have the greatest impact on what is most often referred to as your credit. It is important that the information in each credit bureau is accurate. If there are errors in your credit reports, they need to be fixed or you risk being rejected for a loan or could cause other problems such as on job applications or auto insurance pricing.

 

To maintain a good credit score, it is important to do the following:

  • Pay your bills on time. Late payments and collections can have a major negative impact. Paying your bills on time is the most important contributor for a good credit score.
  • Keep balances low on credit cards and other revolving credit. High outstanding debt can affect a credit score.
  • Open new credit accounts only as needed. Don’t open accounts just to have a better mix of credit.
  • Pay off debt.
  •    Don’t close unused credit cards as a short term strategy to improve your credit score. Owing the same amount but having fewer open accounts may actually lower your credit score.

To improve a credit score, you have to rebuild your credit history. The length of time to rebuild this history depends on the reasons behind a less than desired credit score. Most negative changes in credit scores are a result of a negative item on the credit report such as delinquencies or collection accounts. These negative items will continue to impact the credit score until they reach a certain milestone.

  • Delinquencies remain on a credit reports for 3 years
  • Most public record items remain on a credit report for 3 years, although some bankruptcies can remain for 10 years and unpaid liens remain for 10 years.
  • Inquiries remain in a credit report for 2 years.

Good credit begins with knowing where your credit is today. To determine your current credit score, contact one of the three credit bureaus listed in this blog. Under federal law you are entitled to a free credit report from each of the national credit reporting companies every 12 months. Should you have any questions on credit scores needed to purchase a home or condo in South Florida and not currently working with a Realtor, please contact me directly at (954) 547-9483 or via email at  jaykenney@SFProprtyTeam.com



 

The data relating to real estate for sale on this web site comes in part from the REALTOR® Association of Greater Fort Lauderdale. Real estate listings held by brokerage firms other than Keller Williams Ft. Lauderdale Northeast are marked with the IDX logo and detailed information about them includes the name of the listing brokers.

 

All information deemed reliable but not guaranteed and should be independently verified. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) nor Keller Williams Ft. Lauderdale Northeast shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless.