Why Use A Realtor When Buying A Home?

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North Scottsdale home photoBuying a home can be a difficult time and may pose a significant challenge if you’ve never been through the process before. But even if you feel like you’re an experienced pro at the process, there may be a few ins and outs you aren’t aware of. When it’s time to buy your next home, don’t hesitate to look for a good realtor to help you out. You may be surprised what a difference a realtor can make.

Experience:  Realtors know a lot more about what a home is worth than you might, even if you’ve been shopping around for a while. Although you may always be willing to pay above the value of a home if you find one you can’t live without, it’s also a good idea to have someone along who can help you keep a good head on your shoulders about the price.

Negotiation:  A realtor’s experience can go a long way toward help you with the negotiation part of the homebuying process. The realtor can work with the seller’s realtor to help you find a price that works well for you, but your realtor can also help you catch repairs that may need to be factored into the final price. If you want these repairs to be taken care of before the home is yours, a realtor can help there, too.

Access:  When you’re buying a home, you have to wait until the listings show up on web sites before you can choose the ones you want to go take a look at. When a realtor is helping you, however, you’ll have access to listings as soon as they hit the market. Your realtor can help you schedule appointments to view homes that aren’t widely publicized, which may help you find something you never even knew existed.

Paperwork:  Last but not least, your realtor can help you make sure all your paperwork is filed correctly and in a timely fashion so you don’t miss any important deadlines. Sometimes, the homebuying process can be held up or may fall through altogether if you make just one mistake on your paperwork. With a realtor to double check everything, this is a lot less likely to happen.

Having a realtor as part of your homebuying process may seem unnecessary, especially if you’ve ever purchased a home before, but it always pays to have someone who knows what they’re doing on your side. Your realtor will work with you to find the perfect home to suit your needs and make you happy for many years to come.

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Why HOAs Are a Good Thing

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Homeowners’ Associations, or HOAs, don’t necessarily have the best reputations nowadays.  From the overzealous curb appeal checks (leaving your trash can out a minute too long is a no no!) to the fines for fading paint on your home’s façade, it can certainly be argued that HOAs aren’t every homeowner’s cup of tea.  However, there are some very solid arguments regarding the benefit of these HOAs.

First, depending on the neighborhood of course, HOAs often fund and maintain the community amenities.  Whether your community features gated access or roving security, or community pools and clubhouses, or even pocket parks and sport courts, these amenities are supported and maintained via HOA fees.  The hassle of these fees is often outweighed by the benefits and your enjoyment of these amenities.

Second, HOAs establish and enforce the regulations that ultimately protect the value of your property and home.  Without these regulations, it can be argued that homeowners would not be incentivized to maintain the exterior of their homes, or their landscaping.  Your neighbor cannot do anything to his or her home that would adversely impact the value of your own home, without the threat of and imposition of hefty fines.  Simply taking a drive through a neighbourhood without an HOA, which likely features a few run-down homes, is proof of this argument.

Finally, HOAs often maintain and instil a sense of community.  HOAs can be used to resolve disputes between neighbours without having to involve the local police department.  Many HOAs will organize community events such as carnivals and potlucks.  Other HOAs spearhead neighbourhood watch groups, which help boost neighbourhood security.

 

Is an FHA Loan Right for You?

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scottsdale home photoFHA loans are mortgage loans that are part of a government loan program run by the Federal Housing Administration, which is part of HUD (the U.S. Department of Housing and Urban Development).  The FHA has been regulating and insuring mortgage loans since 1934.  Originally conceived as a program to assist low-income Americans with buying homes during the Great Depression, today the FHA is the single largest insurer of residential mortgage loans.

First-time and younger homebuyers are some of the biggest beneficiaries of FHA loans given the maximum loan limit imposed by the HUD/FHA program.  This limit does vary by state.  In Arizona, and Maricopa County specifically, the maximum FHA loan amount is currently $279,450 for 2017.  The FHA loan permits homebuyers to obtain a mortgage up to this amount with only a 3.5 percent down payment of the purchase price (compared to the standard 5 percent with a conventional loan).

Other beneficiaries of FHA loans are those with lower credit scores.  Potential homeowners with credit scores ranging from 580 to 600 may be eligible for FHA loans.  The FHA guidelines are also much more lenient with potential homeowners as the FHA permits monetary gifts from family members as well as local down-payment assistance programs and state grants.  Moreover, FHA loans permit non-traditional credit references such as insurance, utility or rent payments if you haven’t yet established solid credit.

If you’ve experienced a short-sale, bankruptcy or foreclosure, you may be able to purchase your next home much sooner under the FHA loan guidelines.   These guidelines do also include requirements such mortgage insurance premiums (which increase the overall cost of the loan as they are financed into the loan amount).  Moreover, monthly mortgage insurance is permanently added onto the life of the loan, versus a conventional loan which will curtail the insurance once 78% of the loan payment is reached.  Finally, FHA loans may only be used to purchase single-family homes and townhomes, and not condominiums (unless the condo community is FHA-approved).

Are you considering buying a new home? Click here to create a custom home search.

What is PMI?  

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buying process people photoNavigating the home-buying process can be akin to traveling in a foreign country where one isn’t familiar with the language.  There is a lot of vocabulary that isn’t familiar to non-real estate professionals.  One such term is PMI.  PMI, or private mortgage insurance, is insurance for lenders.  Homebuyers who have at least 20% of the sales price as their down payment on their new home must pay PMI.  Lenders require PMI in these situations because they’re assuming more risk when they are investing more in the home than you are.

The actual rate and monthly cost of PMI varies from homebuyer to homebuyer.  The rate and cost depend on several factors such as the value of your new home, the type of loan you’re signing and your credit score.  

The good news is that if you make timely payments on your mortgage every month, your PMI will disappear when you reach 20% of the equity of your home.  This varies from lender to lender, however, as some lenders will stop PIM when you reach a 78% loan-to-value ratio.   While this ratio may occur naturally as you make payments, it may also increase due to your home’s value increasing.

If this is the case, you can request that the lender remove your PMI payment.  This typically occurs when you present the lender with an independent appraisal to prove your home’s value has appreciated to the 78% loan-to-value ratio.  This is at the discretion of the lender, however.  Be sure to ask what your particular lender’s policies are in this regard, before you sign the loan documents.

Another way to remove the PMI is by refinancing your home loan.  For example, if there is a reduction in mortgage rates and you decide to refinance, you may also be able to ask your lender to remove the PMI.  Finally, there are “no PMI” loan programs out there.  However, these programs typically feature a higher interest rate or higher fees in lieu of the monthly PMI amount.  Be sure you have all of the information, regardless of the type of loan.

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Searching for Senior Housing in the Valley of the Sun

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When it’s time to search for senior housing, either for your loved one or for yourself, the options can be overwhelming. How does one begin to do the research and choose from the multitude of housing here in the Valley of the Sun?

s grayhawk condosThe Internet has absolutely made this often-stressful project much, much easier. Typing “senior housing” followed by the city in which you’d like to conduct your search (for example: senior housing Scottsdale) in your search engine will reveal multiple websites which list senior housing options. Using the map option on these websites, or even in the search engine main page, can be very helpful when it comes to finding senior housing within a few miles of relatives or friends, or even doctors’ offices and hospitals.

Many of these websites will also break down the types of housing into whatever is relevant to your search. For example, are you looking for housing simply for seniors age 60 and above? Or are you looking for independent senior living, or assisted living, or continuing care? There are also specific housing options for seniors coping with Alzheimer’s. Once you’ve narrowed down your search parameters to the relevant types of housing, you can sometimes read reviews of these properties, left by seniors who reside at these properties, and their friends and family members. While these reviews, like any reviews, should be taken with a grain of salt and a bit of healthy skepticism, they can be helpful in weeding out some properties that may obviously have too many issues with patient care, for example.

Some websites you may find helpful in your search include: seniorhousing.com,  boomerater.com, yelp.com. Of course, I’m also available to help you with your search for property in any senior living communities.

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Mortgage Calculators

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You’ve decided to purchase a home!  Congratulations!  Now comes the difficult part of determining how much home you can actually afford.   Luckily there are several free mortgage calculators available online that will assist you with this process.  You just need a few pieces of information to plug into the calculator.

Scottsdale 2 story home photoFirst, you need to know the price of the house you’d like to purchase.  This is a great starting point for your search because you will know very quickly if the houses in this price range will work for your actual budget.  Then you will need to input the amount of your down payment.  This amount will likely depend on the type of loan you’d be obtaining as certain loans require certain percentages of down payments.  The next step will be to input the length, or term, of the mortgage you’re seeking.  This term will typically be 30 years or 15 years.  Finally, you will need to know the annual interest rate of the loan.  Most mortgage calculators will have today’s interest rates handy.

After inputting this information, the mortgage calculator will give you your monthly payment, as well as an amortization or payment schedule.  Remember that your monthly mortgage is only part of the cost of owning your home, as homeowner’s insurance, property taxes and HOA fees in some cases will also make up this cost.

Some mortgage calculators you may want to try include the following:

www.mortgagecalculator.org

www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx

www.QuickenLoans.com/Calculator

We are available to answer any questions you may have about this process.  We look forward to working with you in your home search!

Click here to to browse the interactive NE Valley neighborhood map.

First Time Homebuyer Programs

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Congratulations!  You’ve decided you’re tired of renting and you’d like to look into purchasing your first home.  If you’re an Arizona resident, Arizona has some great programs to assist you with this process, specifically with the down payment portion of your home purchase.  The Arizona Department of Housing offers two different programs to assist you with your down payment, dependent on your own personal and financial circumstances.

scottsdale home photoFirst, the HOME PLUS Home Loan Program features a 30-year fixed-rate mortgage with a down payment assistance grant that can be used toward the down payment and / or closing costs.  This grant and mortgage are applicable to the purchase of a primary residence here in Arizona, and your income cannot exceed $92,984.  The purchase price of the home is limited to $371,936 with this program.  Finally, you’d be required to complete a homebuyer education course before closing.  This course can be completed through an approved Internet-based program.

Second, the Pathway to Purchase down payment assistance program offers a 30-year fixed rate mortgage with a down payment assistance second mortgage equal to 10% of the purchase price. The second mortgage is a five–year forgivable lien against the subject property at a 0% interest rate and no required monthly payments.  This program applies to homes purchased in targeted areas in 17 specified cities.  The income and purchase price limit are the same as the HOME PLUS home loan program.  This program also applies only to existing, previously occupied properties only, so new construction and spec homes are not permitted to be purchased under the parameters of this program.  Finally, this program applies to Fannie Mae HFA Preferred mortgages only.  As with the HOME PLUS program, the homebuyer must complete a homebuyer education course before closing.

We hope these resources offer a good starting point for you to explore the home buying process.  We’d be happy to walk you through any specific questions you may have, and would be happy to show you homes that meet the qualification parameters.

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What is the Difference Between Condos and Townhomes?

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Condominiums and townhomes are very popular real estate options for several types of buyers, from recent college graduates and Millennials to Baby Boomers and empty nesters.  They are also smart investment opportunities in certain communities, as often they can be easily rented out on short and long term bases.  But while these two types of dwelling share many similar features, they are, in fact, two different structures for purposes of real estate.

Grayhawk CondoCondominiums, generally speaking, are one of many units inside a larger building, that can sometimes be several stories high.  Legally speaking, you’re buying “air space” when you purchase a condominium, as you are purchasing everything within the walls of the unit you buy.  You are also purchasing a fraction of the condo community itself.  This fraction is based on the number of units in the complex, so if there are 25 units, you own one-twenty fifth of the community.  This gives condo owners an interest in the common areas of the community itself.
Townhomes, on the other hand, include the land on which the townhome sits.  While condos are typically all on one level inside the space, tonhomes often are built vertically, with multiple stories within the home.  This is to maximize the land space, as well as maximize the interior space.  Townhomes, unlike single-family homes, typically have shared walls, at least on one side of the home.  Unlike in a condominium, however, there are rarely neighbors above or below the townhome residents.  While condominium owners are typically not responsible for exterior maintenance or upkeep, townhome owners usually are responsible for these items, including any roof repairs or replacement.

Whether you are interested in condominiums or townhomes, there are many options in every price range throughout the Valley of the Sun.  I look forward to helping you explore these ownership opportunities!

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Post-Foreclosure or Short Sale Home Buyers

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Scottsdale Real EstateWhether you are re-entering the market after a foreclosure or short sale, there are a few things you will need to know.  There are mandatory waiting periods before these homeowners can apply for a new mortgage.  For a new FHA loan, the required waiting period is three years, whether it’s a prior foreclosure or a short sale.  The waiting period begins the date the prior foreclosure or short sale was actually recorded, not when the homeowner has left the home.  So if the transaction took several months to be negotiated, those months need to be excluded from the three-year time period.

For a conventional loan, the waiting period is typically four years after a short sale, and seven years post foreclosure.  VA loans typically have a waiting period of only two years.  There may be extenuating circumstances such as a significant reduction or income that may reduce these timeframes.

Homeowners who have gone through a short sale or foreclosure will also have to take special care to raise their credit scores.  Paying down or paying off any other debt such as credit card debt or automobile loans are the quickest way to do this.  Pulling your credit reports from the three national credit companies—Equifax, Experian, and TransUnion—and examining them closely for any outstanding debts and liabilities is another important step to take before applying for a new mortgage.  If there are any inaccuracies, you will need to notify these credit bureaus as soon as possible.

Finally, there are many resources to assist these homeowners who want to re-enter the housing market.  The Arizona Department of Housing, for example, has a program called the HOME Plus Home Loan Program which may offer assistance with down payments thanks to grants.  Another mortgage program to consider may be The Pathway to Purchase Down Payment Assistance Program, which provides a 30-year fixed-rate mortgage with a down-payment assistance second mortgage (equal to 10 percent of the purchase price, or up to a maximum of $20,000).

I’d be happy to help you navigate these mortgage solutions or find others that may be more suitable to your personal situation.

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What Exactly Are Closing Costs?

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buying_home_cycle photoAnyone who has ever been involved in assuming a mortgage, or even watched a few real estate shows on HGTV, is familiar with closing costs.  But what exactly are closing costs?  Here’s a quick rundown of these additional fees.

Simply put, closing costs are additional fees associated with processing the mortgage, and are not paid to the mortgage company.  Generally speaking, closing costs are assumed by the buyer of the property (VA mortgages are one exception to this rule) and are paid at the time of closing of escrow.  The bulk of closing costs is comprised of lender’s fees.  These fees include the appraisal fee, which is an independent assessment of the value of the property being purchased, as well as the credit report and any property taxes.  Lender’s fees also include mortgage and homeowner’s insurance, as well as any flood certification and pre-paid interest charges.  These fees may also include origination and discount points depending on your lender, as well as loan application and loan processing fees.

Title fees are also part of closing costs.  These fees include the title service fee, which covers the handling of title documents and funds, as well as half of the settlement and escrow fees, which cover the fees for the title search and examination.  Finally, title fees also include any title insurance.   Recording fees are another part of closing costs and include recording fees, transfer taxes and an affidavit of property value.   HOA transfer fees and HOA dues are typically also included within closing costs.

While this is a quick overview of closing costs and is by no means an exhaustive list, I hope this has shed some light on these omnipresent fees in real estate transactions.  Every transaction is different, and while I am unable to give legal, tax or accounting advice, I look forward to helping you navigate your own process with ease and clarity.

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