October 15, 2014

Real Estate Tips: Solutions for buyers needing jumbo loans.

Filed under: Real Estate — Chuck @ 4:36 pm

The real estate market really heated up over the summer, and as we head into the slower season real estate brokers are still staying busy with buyers and sellers. The Federal Reserve in the USA has indicated that it will keep rates steady and low, for now, but still buyers are not going to wait around for the historically low mortgage rates to slip away.

Meanwhile sellers are feeling more confident as consumer sentiment increases, the unemployment numbers continue to be optimistic, and housing prices across the board rise. Those increases in home values are most noticeable in some of the pricier markets and regions, which is where the ability to match buyers with appropriate loans become critical.

The Challenge of the Jumbo Loan
But putting a buyer into a higher priced home, despite the rewards of higher commissions, can be complicated. That’s because once the price of the property hits a certain level conventional loans, like those backed by Fannie Mae, are no longer applicable. The borrower needs to use a so-called “jumbo loan,” and that generally means paying significantly higher rates and fees because of the additional risk those large loans represent.

2014 Definitions for Jumbos
Prospective home buyers shopping around for conforming, conventional and FHA loans in 2014 need to know that the maximum amount allowable is set each year. For this year, the conforming or conventional limit for a single family home is $417,000, except in some rare cases where the property is located in an especially pricey area. There are exceptions made, for example, in places like Hawaii that have higher limits or what is known as “super conforming loans.”

Ways to Avoid Jumbo Mortgages
If the buyer can afford it and qualify, despite the larger monthly payments that can result from steeper interest rates, a jumbo is no problem. But oftentimes that will not be the case, and it could make the critical difference between qualifying for the mortgage loan or being rejected. In order to save the transaction, Realtors need to know what kinds of creative options are available. That is, of course, where the help of an experienced mortgage loan officer can be invaluable. But real estate agents should have some strategies at this disposal.

One way to avoid a jumbo in favor of sticking with a conventional conforming loan is to have the buyer make a larger down payment. Say, for example, that the sales price is $550,000. If the buyer makes a 20% down payment equal to $110,000 that leaves a mortgage of $440,000. But if the buyer can scrape up another $23,000 to add to that down payment then they can bring the total loan amount down to $417,000.

In some cases the buyer may also be able to take out a separate additional loan in order to combine two loans – one that is conforming plus that extra loan – and still cover the purchase price. If the mortgage winds up being $425,000, for instance, then the buyer should look for other sources of loan money worth at least $8,000 that can be added into the formula to lower the total amount of the primary loan to $417,000.

Although the interest rate on the smaller loan will likely be steeper, it can help your buyer qualify for a significantly lower conforming rate on the primary loan. That will save them tens of thousands of dollars over the lifetime of the jumbo, and if they adopt an aggressive repayment strategy they can probably repay the entire smaller loan fast, eliminating it completely.

Homeowner Tips: October Chores and Projects

Filed under: Home Owner Tips — Chuck @ 4:20 pm

October in most parts of North America offers the last best chance to get homes and yards ready for the onslaught of winter, so there are some chores that cannot be postponed this month. Otherwise they will create more aggravation than is necessary. But taking care of a few errands around the house now will make life a whole lot easier, and home maintenance much less labor intensive, as you move forward into the colder months.

Gardening Chores
• Many gardeners wonder why their clay or terracotta pots don’t last more than one season, and in most cases it is because they leave soil in them over the winter months. The problem is that the dirt in those pots contains moisture, and when it freezes that creates cracks in the pots. In some cases the phenomenon can also split a plastic planter. So remove all of the potting soil from your pots and planters.

• Get your bulbs in the ground now, too, because the right time to plant crocuses, daffodils, tulips, and other flowering bulbs is before the first frost. Once the ground freezes and hardens you may be too late to ensure a healthy burst of color when spring comes next year.

• While you’re doing those yard chores don’t forget to fertilize the lawn, preferably with an organic mix that is high in phosphorous content. That will feed the turf so that next year’s grass will be lush, green, and vibrant, not pale and sparse.

Equipment Maintenance and Care
• Drain garden hoses and store them inside, and also drain the water out of any underground sprinkler systems. That will prevent splits, cracks, and leaks that occur when water in those pipes freezes and expands. Drain outdoor water valves, too, and cover spigots with foam insulation.

• Before putting away the landscaping tools, trim back any weeds, shrubs, or branches that are too close the house. That prevents them from scraping your roof or siding turning heavy winds or falling on the house during an ice storm. It also eliminates some of access points of rodents and insects who will be seeking warmth and shelter inside before long.

• Once you are finished you can drain the fuel from equipment like lawn mowers and weed eaters and – if you are finished with it – your leaf blower. Store those tools away and replace them with easy-to-access winter tools such as the snow blower or snow shovel.

If you have storm windows you’ll want to remove your screens and replace them with storm windows. After the screens are down check to see if they have any rips that need to be repaired, give them a good cleaning, and store them away for next year. Then check around the window frames and foundation for cracks and caulk or seal any areas that need attention.
Be sure to caulk and insulated where pipes and electrical wires enter the home, because those gaps are where much of your heat can escape. Sealing the house now will save money on utility bills. You may also want to apply heat-shrinked plastic to windows on the inside, an easy task that can be done with a hair dryer. That step alone has the potential to save you hundreds of dollars by lowering your energy bills over the coming months.

Inspection Reports: How to respond when issues related to electrical wall outlets are found by the inspector.

Filed under: Property Inspection — Chuck @ 11:42 am

One of the most common categories of things flagged on home inspection reports are relatively minor issues with the electrical system. In particular, telltale signs that there may an issue related to electrical outlets. If you are a home buyer who hired an inspector to check out the house before you go to closing, should you be concerned? What if you are doing a pre-sale inspection as a homeowner about to put your property on the market? Is this reason for worry?

Don’t stress-out. Just follow the inspector’s recommendations, which usually include doing a basic repair or having the situation looked at by an qualified electrical contractor. Communicate with your inspector if you have any questions or are not clear about anything on the report. That may, however, not even be necessary. Good inspectors also do a great job of communicating about the issues they observe through text, photos, or a combination of both used their printed reports. But they are available to help if you do have questions or want them to explain the situation to your contractor.

Common Wall Socket Issues
Here are some examples of commonly cited home inspection issues related to wall outlets:
• The face plates or outlet covers are missing or broken and chipped so that they do not completely cover the junction box or outlet cavity. Exposing the wires creates an unnecessary safety risk.

• GFIC style circuit breaker outlets are not in use where they are needed to protect you from accidental electrocution, in places near water, for example, like bathrooms and kitchens.

• The outlet is configured to accept a 3-pronged plug, which should mean that the connection is grounded. But the outlet is not grounded, so this presents a safety hazard.

• The inspector noticed burn marks on the face plates of wall outlets. Those could be a sign that the electrical lines are overloaded or short circuited – an issue that could lead to something as catastrophic as a fire.

• The inspector has tested the outlet but found that it is not operational. If you plug a lamp into it, for instance, it won’t work because there is no electrical current available.
What to Do Next
To get to the bottom of any of these kinds of issues you will probably want to have an electrician visit the home and do further testing.
• If you are scared because there are burn marks on the face plate, for example, remember that is conceivable that the electrical system is perfectly safe and that the old face plate was put right back on the outlet after the electrical problem was alleviated.

• Maybe the homeowner or handyman did not want to spend money on new face plates, for example, when the old ones served the purpose just fine, even if they did have cosmetic blemishes on them.

• Similarly, you should never automatically assume that just because there is a GFCI style face plate over an outlet that the outlet is properly wired. Likewise, people often put 3-pronged outlets on sockets that are not grounded.

• So having a qualified expert conduct a thorough investigation and fix any problems that may be discovered is always the wise choice.
Negotiate Between Buyer and Seller

If these issues arise during a real estate transaction, someone may wind up having to pay for the cost of a service call from an electrician. They may also have to pay for subsequent repairs. Those could be minor, or could lead electricians to find even deeper and more substantial problems. Whatever the outcome, before paying for any remedies you should sit down with your real estate agent and negotiate an agreement. Normally this results in either the buyer paying for the repairs and then receiving a discount on the sales price from the seller, or the seller doing the repairs before closing to the satisfaction of the buyer. You may also decide to postpone repairs until after closing, and in that case the buyer is usually given a cash allowance or discount by the seller to compensate them for the expense.