8 Mistakes to Avoid if you’re thinking about building or remodeling a home

Have you ever walked into a home (either a brand new one or one that’s been around for 25 years or more) and said to yourself, “I wonder what the builder was thinking when they built this house?”

Maybe you are thinking of finally building your dream home. Or considering downsizing the one you currently own. Or need to remodel the one you currently live in.

Here are 8 things to keep in mind:

  1. Have a vision of what you want your home to look like. The floor plan is just the first step in the process. There a hundreds of thousands of decisions you will need to make. Take just the bathroom – what color tile? What pattern? Will the cabinets match? Faucets? Countertops? The floor? And that’s just one bathroom!
  2. Find the right people – By people, I mean an architect, a builder, sub-contractors, suppliers. Are they licensed and bonded? More importantly, can you get along with them? Do they offer suggestions? Are they difficult to deal with?
  3. Visit the construction site often – Be sure that the home/remodeling is being built to your expectations. Ask questions. Make suggestions. Visiting your home every other day is recommended.
  4. Building too big of a home – Don’t think about what size you need right now—but what you will need 7 to 10 years from now. A well-designed 3,000 sq. ft. home may work just as well as an ill-designed 5,000 sq. ft. home.
  5. Work that you can do to reduce costs – Ask the builder what sweat equity he/she will allow you to do to help reduce costs. Painting the walls or staining the trim. Maybe you have a friend who is a licensed electrician who would charge you less.
  6. Think about the upgrades – When a builder provides you with a price to build your home/remodeling, it’s usually based on “medium grade” materials. Take kitchen cabinets for example. What type, color and grade are included? Or should you pay $8,000 extra for solid maple cabinets instead? It depends on your budget and if you can find something that you like in the medium grade so you can use the money for something else. Other than you loving maple wood, there is very little resale value in upgraded cabinets when it comes time to sell. Consider only adding your MUST HAVE upgrades.
  7. Think about selling your home in the future – Even if you never plan to sell your home, your descendants may have to do so. Build your home so it’s not a nightmare to sell.
  8. Think about monthly mortgage payments – When you have been pre-approved for your mortgage amount there are a few things to consider.
    • What will the interest rate be when the home is completed?
    • How much will extra upgrades add to the monthly payment?
    • How much money will you need after the closing (window coverings, furniture, landscaping)?

If you’d like to see new homes that are available in Northeast Ohio without leaving your home- check out the virtual parade of homes 24/7 at http://www.ncbia.com.

The North Coast Building Industry Association site (www.ncbia.com) also has a list of builders, realtors, etc that can help you build or remodel a new home.

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How to get rid of “You’re Pre-approved” calls and junk mail using pre-screened opt-out

Do you get junk mail from other mortgage companies, insurance agents, credit card companies and car dealers with ads telling you that you have already been pre-approved to do business with them?

Well, let me tell you why!

Credit bureaus make a ton of money selling “credit profiles” to companies that are looking for a certain type of financial history. While they don’t know your social security number, the company sending you the pre-approved offer goes to the credit bureau and pays for a list based on certain criteria—criteria like minimum credit scores, geographic areas, mortgage or car loans, or outstanding credit card balances.

If you read the tiny, tiny print, they must also disclose that you were “pre-screened” and that’s why you were sent the marketing solicitation.

Also, in the tiny, tiny print (that you can barely read), they must disclose how to Opt Out so your name and address are not sold, which also eliminates some of your junk mail.

Instead of reading the fine print, I want to tell you how to opt out of receiving the pre-screened offers.

First, the website to visit is OptOutPrescreen.com/selection. You have a couple of options:

  1. You can opt out from receiving offers for five years. This can be done online but you’ll have to renew every five years.
  2. You can opt out permanently. However, you must download a form and MAIL it to the address provided.
  3. You can also opt back in if you opted out previously.

Here’s another link to Frequently Asked Questions that describes what happens when you opt out.

If you need help opting out, please feel free to call me.

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Shopping for a competent tax preparer

 Tax season is upon us, so I thought I’d share ….. 

Last year, the IRS announced that all tax-preparers are required to

• Register with the Federal Government

• Pass a competency test

• Take continuing education courses

• Obtain a federal Preparer Tax Identification Number (PTIN) 

But, even if they are registered and have a PTIN number, it does not necessarily mean that they are competent.  In a recent audit, the IRS had found substantial errors—overlooking common deductions, or incorrectly interpreting the tax code.  

You might even want to hire another tax preparer to review previous tax returns to make sure you claimed everything you were entitled to deduct. 

Before hiring a tax preparer, consider the following:

• Check with the Better Business Bureau to see if any complaints have been filed

• Check to see if they have a PTIN number from the IRS

• If CPA or Attorney, check with your state’s professional board for complaints and if they have a current license

• Ask what continuing education courses they have taken within the last 12 months

• Ask if they belong to any professional organizations

• Ask how long they have been preparing tax returns

• Ask if he/she is familiar with the “type” of tax return you need to file

• Find out how they determine the fees you will pay (will it be hourly or flat fee?)

• How many clients have they represented in IRS audits?

 

Steer clear of tax preparers who claim they can get you a larger refund—without reviewing your paperwork first.

 

Steer clear of tax preparers who charge a “percentage” of your refund—the tax return may contain inaccurate info in order to pump up the refund amount.

 

Steer clear of tax preparers who have “a lot” of experience with representing clients who have been audited—this may be a sign that they claim “questionable” deductions.

 

If you need a good tax preparer, please email or call me, because being in the mortgage business, I know several who are truly competent and I know will help you get your tax return filed accurately and filed on time.

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Have you ever been fired by a client?

Have you ever been “fired” by a client?  

Unfortunately, it happens. 

Experts tell us that the main reason is the real estate agent/builder/sales professional did not live up to the client’s “expectations.”  While it can be difficult to know what those are at any given time, here is a list of five questions that every real estate agent/builder/sales professional should be prepared to answer.  In fact, a written document with this information would be ideal so you can review with the client before they sign the buyer agency or any agreement.

1.What are your working hours? If you say you are available 24/7/365, be prepared to back it up by answering your phone at 2 am.  If not, be very specific.  Certain times of the day.  Days of the week.  Or if your client has a unique work schedule, a mutually agreeable time.

2.What’s your experience? Review the types of transactions you specialize in.  List the designations that you have earned.  People don’t understand “real estate/mortgage lingo” so give a short description of your niche, including what education was involved in getting your designations.

3.How many successful transactions have you closed? You don’t have to be the highest producer, but they need to know the number of transactions, the type of sales and over what period of time.

4.What to expect if you are sick, out of town or not able to call – Is there another agent, an assistant or a team to back you up? Or will they have to wait till you can get in touch with them?

5.Ask them what they EXPECT from you – It’s critical that you ask and understand what the client expects from you. Take notes, read the list back to them, and make sure you know exactly what they mean.

 

After your meeting, I suggest that you send an email outlining what you discussed, including what you think they expect from you. 

Communication is the key to happy clients! 

And I can assure you that “communication” between you and your clients is at the top of my priority list!

 

P.S What form of communication do you prefer during the loan process- phone call or email updates??

 

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2020 changes in mortgage lending

There have been a lot of positive changes & growth this year in mortgage lending, real estate, and new construction- all have been for the better.

Conforming loan limits for 2020 have been raised to $510400 for single family properties. That equates to a single-family property owner occupied purchase with as little as 5% down as high as $537,000 without any increase in rate for a Jumbo loan! FHA loan limits for 2020 for single family homes in most areas of Northeast Ohio have been raised to $331760- that’s a sale price of $343,000 with the minimum 3.5% down payment FHA requires.

Interest rates have held steady at under 4% for 2019.

The demand for jobs in the skilled trades is rising. If you’re in the market for a new career- consider any of the skilled trades- electrician, plumber, HVAC, carpenters, & plumbers. The Lorain County Joint Vocational School is a great place to contact for classes. A vocational education can offer a satisfying career path and financial gains.

The North Coast Building Industry Association has the Virtual Parade of Homes that’s open 24/7 if a new home is in your future for 2020. Check it out at www.ncbia.com/consumers/parade-of-homes.

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13 Most Desired Outdoor features homebuyers want now

The National Association of Realtors published the results of a survey regarding the value of outdoor features, how they contribute to the curb appeal and how they increase the value of your home. 

According to the NAR, curb appeal plays a significant role in tackling any outdoor project. Among REALTORS®, 94 percent have suggested sellers improve their curb appeal before listing a home for sale. When working with a residential seller, 99 percent of NAR members believe curb appeal is important in attracting a buyer (79 percent very important, 20 percent somewhat important). Ninety-seven percent believe curb appeal is important to a potential buyer (66 percent very important, 31 percent somewhat important). 

Here is a list of the top 13 outdoor features (by desirability) that add value to your home when it comes time to sell it:

1. Landscape Maintenance – Annual mulching, trim bushes, rake leaves & dead grass

2. Landscape Upgrades – Flowering shrubs, at least 2 trees, unique sidewalk (flagstone, brick), stone features

3. Standard Lawn Care Service – Regular application of fertilizer, weed control, insect control

4. New Patio – Backyard area – concrete, brick or flagstone (minimum 18 x 16 feet)

5. New Deck – Attached to the home (minimum 14 x 18 feet)

6. Tree Care – Fertilizing, spraying, trimming and pruning (tree removal if necessary)

7. Landscape Lighting – LED/Solar lights around patio. Address of home.  Landscape features such as trees, bushes or statues.

8. Statement Landscape – Unique trees.   Benches.  Flower/herb gardens

9. Irrigation Systems – Both lawn and/or bushes around the home

10. Outdoor Kitchen – Inset grill, small refrigerator, countertop space

11. Fire Feature – Outdoor fireplace (wood burning or gas). Fire pit.

12. Water Feature – A fountain or fish pond

13. New Pool – Depends on the area of country

 

PS- What would your add to this list?? If you or someone you know is looking to do any of these projects- the North Coast Building Industry Association has members that can help with these or other remodeling projects. Check out www.ncbia.com- there’s also a virtual parade of home available to view 24/7 if you’re in the market for new construction.

 

 

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Why Credit Scores Vary between Credit Reporting companies

This week’s consumer tip focuses on credit- 

Credit scores are one of those things that has consumers (and sometimes lenders) scratching their heads and saying, “How did they come up with THAT credit score?” 

The one you hear about the most are FICO scores (acronym for the Fair Isaac Corporation, the creators of the FICO score). It’s the one that most mortgage lenders use as one of the benchmarks to see if you qualify to refinance or purchase another home.  Usually 3 scores are provided, and the lender uses the middle score as the basis for granting (or denying) a loan. 

The thing about FICO scores is that the credit score may vary from lender to lender.  Why?  Because over the years, Fair Isaac has updated their credit scoring model software (best estimate, about 85 times), but the credit bureaus who buy the software from Fair Isaac do not always update their own software.  One lender could be using the latest version while another lender’s model is several years old. 

However, not everyone uses FICO scores as a guide.  Here are some other credit scoring models that are used: 

Auto Loans – If you apply for an auto loan through a dealer, they have developed their own credit scoring models, which are completely different from those used by lenders. 

Insurance Companies – Your insurance premium you pay for homeowners or car insurance also depends upon the credit scoring model that insurance companies use.  Oh, and it will vary with different insurance companies. 

Vantage Scores – If your occupation/employment requires you to be “licensed” (especially in the financial services industry) and to obtain (or maintain) your professional license, Vantage Scoring model software is used. 

Free Credit Reports – According to law, you are entitled to one free credit report (per bureau) every year.  While it won’t be exactly what lenders see when they order a credit report on your behalf, it will be “in the range” and is a good indicator of what to expect.

 

As I mentioned, you are entitled to one free credit report—PER BUREAU.  Go to AnnualCreditReport.com and you can request one credit report from EACH of the bureaus listed. 

A word of caution!  Be careful when signing up for offers to provide you with a FREE credit report.  If you are asked to enter your credit card number, what you are really signing up for is a credit monitoring service—that may cost you over $300 per year.

 

Please let me know if you’d like me to review your credit report.  I can make suggestions on how to increase your credit score.  Sometimes it just takes a little tweaking to increase it by 25 to 50 points.

 

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Do You Know the 5 ways to hold title to real property?

Recently I was asked by two unmarried borrowers, “How should we hold title on the home we are buying?” I wanted to share with you the most common methods of holding title to real property. (Disclaimer:  This is for information purposes only, and it’s always best to check with a real estate attorney.) 

•Joint Tenancy with Rights of Survivorship

•Tenancy in Common

•Tenants by Entirety

•Sole Ownership

•Community Property ( Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin. Puerto Rico)

 

5 Different Ways to Hold Title on Real Property There are different ways to hold title to real property, and each method has its advantages and disadvantages.  With each example, I suggest that you contact an attorney or your estate planner to make sure that the way you hold title is appropriate for you and your family.

 

Joint Tenancy with Rights of Survivorship – Joint tenancy with rights of survivorship is when two or more people hold title to real estate jointly, with equal rights to enjoy the property while still alive.  In the event of death of either party, the ownership rights pass on to the survivors.

Advantage – The parties who own the real estate need not be married or even related.

Disadvantage – If the property is sold, the title to the property cannot be transferred without the okay of the other person(s). Another disadvantage is that if a creditor has a legal debt to collect against one of the owners, and files a lien against the property to collect the debt, the lien will affect all owners.

 

Tenancy in Common – Tenancy in common is when two or more people hold title jointly, with equal rights to enjoy the property during their lifetime.  However, it’s different from “joint tenancy” – tenants in common hold title “individually” for their respective “part” of the property.  For example, three people could hold title, with one person having 50% ownership and the other two with 25% ownership each.  Each person can sell their portion of ownership or will their percentage to another person in case of their death.

Advantage – Allows for one owner to use their portion of the property for liens/borrowing purposes and not encumber any leans against the other owner’s portion/percentage.

Disadvantage – If the property is sold, all liens must be paid off for a total transfer to take place.

 

Tenants by Entirety – Tenants by entirety is ownership “assumption” that a husband and wife are one person for legal purposes and conveys ownership as one person.  This method can only be used when owners are legally married.

Advantage – If one of the spouses dies, the title to the property is automatically transferred to the spouse and no legal action, will, or probate is needed for this to occur.

Disadvantage – In the case of a divorce (depending upon state law), the “title” to the property automatically converts to “tenancy in common”, meaning that one owner can transfer ownership of their 50 percent to whomever they wish.

 

Sole Ownership – Sole ownership can be held by an individual person or an “entity”, like a corporate or a trust.  The most common are single men or single women who buy real estate.  However, a married person may want to hold title alone (without their spouse).  In this situation, a title company or the laws of your state may require the spouse who will not take title to acknowledge that they know the other person is buying real estate and they do not want to be on title.

Advantage – As a sole owner, no other owner needs to be consulted to sell or place a lien on the property.

Disadvantage – Should the sole owner die or become incapacitated, the sale or transfer to the real estate would have to be settled in court. That is, unless the sole owner had a will or an official document (like a pre-signed deed) that gives ownership to another person. 

 

PS- If you need a referral to a real estate attorney- I can share several names that you can contact.

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Are you dreaming of…. a vacation home??

If a vacation home is on your “bucket list” for 2019- here’s some information about financing that vacation home you’ll want to review before you go shopping.

For conforming loan limits up to $484,350 for a single family home (in most locations), you’ll need at least 10% down payment for a fixed rate mortgage and a minimum credit score of 620. If you’ll be building your vacation home and taking out a construction loan for  your single family vacation home, you’ll need 20% down. A gift is an acceptable source of down payment on the purchase of your vacation home. Your lender may also require you to have reserves of 2 months of the principle, interest, taxes and insurance payment on the new home. Reserves are not funds the lender holds- they are funds you have available to you after the closing of the loan. This may be a savings account, investment or retirement account that you have access to. The seller may also contribute towards your closing costs.

For Jumbo loans over $484,350 for a single family home (in most locations), the lender may require 25% or 30% down payment & a minimum credit score of 720. The down payment is required to be the borrowers own funds-  no gifts allowed on second/vacation homes. Your lender may also require that you have reserves of 12 months principle, interest, taxes and insurance payment on the new property.

Before you go looking for your vacation home, talk to your lender to get preapproved and ask if they lend in the state in which your vacation home will be located. You’ll want to work with a lender that you’re comfortable with for the purchase of your dream vacation home.

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Happy New Year

Happy New Year! Today is the first business day of the year. I am looking forward to helping more clients achieve the American Dream of Homeownership in 2019. Whether the client is a first time buyer or building their dream home,  I have the tools here at Dollar Bank to make that dream come true even more quickly than before.

We have the ability to directly submit a loan to an underwriter after the  loan application documents are e-signed if we have the income and asset documentation in the loan file. Utilizing this feature, we can get a conditional loan commitment within 24-72 hours from loan application signing. The approval is contingent upon the title work and the appraisal and any other conditions the underwriter may put on the approval.

Fannie Mae has raised conforming loan limits in most areas of the US for single family homes to $484,350 for 2019 and FHA has raised maximum loan limits. There are some high cost areas in the US where the conforming loan limits are higher. Conforming loan interest rates are lower than Jumbo loan rates. Jumbo loans are loans that are over $484,350 for a single family property in most areas of the US. The interest rates for Jumbo loans are at least .125% higher than conforming loan interest rates & the loan guidelines are different than conforming loan limits. Higher FHA maximum loan limits help more borrowers qualify to purchase a home due to lower credit score requirements, higher debt to income maximums,  lower down payment requirements and higher allowable seller contributions towards borrowers closing costs, points, and prepaids.

Here’s the link to the 2019 FHA loan maximums by county:

https://entp.hud.gov/idapp/html/hicostlook.cfm?CFID=1550057&CFTOKEN=58a5d96973ab9bd1-EA06932D-0BE2-D7C5-3B11B0F25248E35E

Here’s the link to the new conforming loan limits for 2019:

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Maximum-Conforming-Loan-Limits-for-2019.aspx?fbclid=IwAR22iZgpL04Tr6Fjg4Hhbc6DbDQSjBbumzCyM94h-ORZykNCwHINcuZ0C7A

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