Closing Day Surprises

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For many buyers, closing day can’t come fast enough. Once the offer is made and accepted, the time between can seem like eternity. For many, closing day goes smoothly. For others, there may be some unexpected surprises that pop up. While closing day problems are not usually anticipated by a buyer, they are not unheard of, and depending on what kind come up, some can be minor while others can impact the entire deal. Here are some of the most common closing day surprises.

unnamed 1 300x224 - Closing Day SurprisesWalk-Through Surprises

For many buyers, a final walk-through is a must before closing as it allows the buyer to ensure the property’s condition hasn’t changed since the last visit and that any agreed-upon repairs have been done per the contract. If moving furniture created a new hole in the wall, agreed-upon fixtures have been removed, or the property is in total disarray, the issues need to be addressed immediately. The buyer’s agent should work with the seller’s agent to resolve any surprises that have come up. Walk-through issues are generally not deal breakers, but they can be a thorn in a buyer’s side.

Document Surprises

A common surprise at closing is an error in the documents. Errors can include misspelled names, incorrect addresses, and even incorrect loan amounts or missing pages. Some issues can cause an hour or two delay, while others can result in a much longer delay. To avoid any document surprises, a buyer can request to see every document ahead of closing. Loan documents should be scrutinized prior to closing; by law, a buyer should receive a Loan Estimate form and Closing Disclosure form three days before closing. Once these forms are received, it’s up to the buyer to double-check the loan amount, down payment amount, interest rate, and all personal information, including spellings. If questions arise, the sooner they’re answered the better.

Title Surprises
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deed

When buying a home, a title company will make sure the title to a property is legitimate by doing a title search, which is essentially a thorough examination of property records to make sure the title is clear of any liens or claims on the property. Title surprises can include: IRS tax liens, unpaid property taxes, judgments, contractor or mechanics liens, identity affidavit, and encroachments. Some of these surprises can be resolved on closing day; others may take a significant amount of time to resolve and will undoubtedly delay closing. Once escrow opens, the title company completes a preliminary title report and sends it to the lender and agents involved — a buyer can get a copy from his/her lender or from the title company and check if there are any preliminary issues. Many purchase agreements include a specific time period for the buyer to bring up any concerns regarding the title, so if there are issues w ith the title, get the ball rolling on resolutions as soon as possible.

Credit Surprises

For buyers applying for a mortgage loan, maintaining the same level of credit between being approved and the final closing is extremely important for a successful transaction. A person’s credit can be impacted by anything: changing jobs, getting a new credit card, closing a credit card, falling behind on payments, and even adding additional debt through large purchases. Surprises when it comes to a buyer’s credit can be a deal breaker for the lender; to prevent issues, a buyer can contact the lender ahead of closing to discuss any surprises that may have come up and come to a solution. The best way to prevent credit surprises: avoid making large financial decisions prior to closing.

unnamed 3 300x199 - Closing Day SurprisesMortgage Surprises

Credit surprises can impact a mortgage loan, but there are other mortgage surprises that can come up on closing day. In a hot real estate market, lenders can be incredibly busy and inundated with loan applications. Sometimes, a buyer’s loan file can find itself on the bottom of the pile, meaning there may be important items omitted, documents missing, or extra information needed to complete the file on time. For a buyer applying for a mortgage loan, asking the lender what documents will be required ahead of time can save time and prevent headaches on closing day. Buyers can also call or email the lender to make sure they have all the important documents, items, etc. to complete the loan file on time. Before closing, a closing agent will be assigned to the transaction (the closing agent coordinates the final steps of the transaction to make sure all documents and funds are in order and handled correctly) — the bu yer can contact the closing agent to make sure the lender has all the needed documents, and if there is still any doubt, copies of all the documents and anything else that may seem important or pertinent to the transaction can be brought to closing.

Remember, your real estate agent is working on your behalf. Keep your agent informed — your agent wants to help you as much as possible, and he or she can be a great resource when you have questions.

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Live with Shannon – Open House & Live-Stream

Live with Shannon

April 23rd at 2pm to 4pm

3409 QUAIL CHASE CV MURFREESBORO TN 37129

Join Shannon Orrand with Team George Weeks for an Open House and live-stream at this beautiful 4 bedroom brick home located in north Murfreesboro in the Oakleigh community. Beautiful custom millwork, hardwood, fireplace, in-ground pool and more!

Ask Shannon questions on live video or come on down to the Open House and ask in person. This home is in a wonderful location and at a great price!

3409 Quail Chase Cv

 

Considerations for Selecting a Real Estate Agent

If you’re considering buying or selling a home, selecting a real estate agent is the first important decision you will have to make. While there are many qualified real estate agents out there, it’s important to decide on a professional who will understand your needs and individual preferences, someone who you can respect and trust. Nearly four out of five homebuyers and sellers enlist in the help of a real estate professional or broker.Whether you’re looking to buy a new home or sell the one you’re in, choosing a professional who best fits your needs is vital. Here are some questions to consider when choosing an agent:

  • How long have they been a real estate professional?
  • Do they work full or part time?
  • How long have they been working in this particular area?
  • What type of homes do they usually handle?
  • How much of their business comes from repeat customers or referrals?
  • How many homes did they sell last year?
  • How often can you expect to be updated, regardless of any progress?

Above all you should choose an agent that you feel comfortable with. Your real estate professional will be your guide through the entire process of buying or selling a home, and can be a valuable resource. Make sure that whomever you select is well suited to your demands.

Dealing with Financing

As the events of the last few years in the real estate industry show, people forget about the tremendous financial responsibility of purchasing a home at their peril. Here are a few tips for dealing with the dollar signs so that you can take down that “for sale” sign on your new home.Dealing with Financing 300x200 - Dealing with Financing

Get pre-approved. Sub-primes may be history, but you’ll probably still be shown homes you can’t actually afford. By getting pre-approved as a buyer, you can save yourself the grief of looking at houses you can’t afford. You can also put yourself in a better position to make a serious offer when you do find the right house. Unlike pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history. By doing a thorough analysis of your actual spending power, you’ll be less likely to get in over your head.

Choose your mortgage carefully. Used to be the emphasis when it came to mortgages was on paying them off as soon as possible. Today, the debt the average person will accumulate due to credit cards, student loans, etc. means it’s better to opt for the 30-year mortgage instead of the 15-year. This way, you have a lower monthly payment, with the option of paying an additional principal when money is good. Additionally, when picking a mortgage, you usually have the option of paying additional points (a portion of the interest that you pay at closing) in exchange for a lower interest rate. If you plan to stay in the house for a long time—and given the current real estate market, you should—taking the points will save you money.

Do your homework before bidding. Before you make an offer on a home, do some research on the sales trends of similar homes in the neighborhood with sites like Zillow. Consider especially sales of similar homes in the last three months. For instance, if homes have recently sold for 5 percent less than the asking price, your opening bid should probably be about 8 to 10 percent lower than what the seller is asking.

Relocating to the Big City

Relocating to the Big City 300x200 - Relocating to the Big City

Moving from a small town or suburb to a large city can be an intimidating proposition. Here are a few tips to help make your move as painless as possible.

Research before you move. It’s important to understand the culture you’re joining. Do research online and find out about school systems, neighborhoods, parking, weather, public transportation, and laws that are native to that area. If you can, visit a city before moving and connect with someone who’s lived there before.

Have a plan. There are a lot of steps to go through before you start packing the moving truck. Find housing before you leave, or at least know where you’ll stay while you look for a home. Never sign a lease on an apartment that you haven’t seen. If you can’t get there, find a friend or an employer to check for you. Have a job waiting for you, or if that’s not possible, know what you’ll do for money in the first few weeks of living there. Try to line up things like driver’s licenses, car insurance, renter’s insurance, and parking passes ahead of time as well.

Get involved. Meeting people in a big city can be daunting. Don’t expect the neighbors to knock your door down with a casserole when you arrive: city life is often too noisy and hectic. Take the initiative. If there are things you liked to do in your town, find ways to do those things in the city. Try new things. Volunteer. Big cities offer so many opportunities to engage other people, so find what you like.

Mind your wallet. City life is expensive. Everything costs more: food, insurance, clothes, rent. There are also a lot more ways to get ripped off, whether legally or criminally. Be careful how you spend, and know where your money is going.

From Empty Nest to Full House… Multigenerational Families Are Back!

From Empty Nest to Full House… Multigenerational Families Are Back! | Simplifying The Market

Multigenerational homes are coming back in a big way! In the 1950s, about 21%, or 32.2 million Americans shared a roof with their grown children or parents. According to a recent Pew Research Center report, the number of multigenerational homes dropped to as low as 12% in 1980 but has shot back up to 19%, roughly 60.6 million people, as recently as 2014.

Multigenerational households typically occur when adult children (over the age of 25) either choose to, or need to, remain living in their parent’s home, and then have children of their own. These households also occur when grandparents join their adult children and grandchildren in their home.

According to the National Association of Realtors’ (NAR) 2016 Profile of Home Buyers and Sellers, 11% of home buyers purchased multigenerational homes last year. The top 3 reasons for purchasing this type of home were:

  • To take care of aging parents (19%)
  • Cost savings (18%, up from 15% last year)
  • Children over the age of 18 moving back home (14%, up from 11% last year)

Donna Butts, Executive Director of Generations United, points out that,

“As the face of America is changing, so are family structures. It shouldn’t be a taboo or looked down upon if grown children are living with their families or older adults are living with their grown children.”

For a long time, nuclear families (a couple and their dependent children) became the accepted norm, but John Graham, co-author of “Together Again: A Creative Guide to Successful Multigenerational Living,” says, “We’re getting back to the way human beings have always lived in – extended families.”

This shift can be attributed to several social changes over the decades. Growing racial and ethnic diversity in the U.S. population helps explain some of the rise in multigenerational living. The Asian and Hispanic populations are more likely to live in multigenerational family households and these two groups are growing rapidly.

Additionally, women are a bit more likely to live in multigenerational conditions than are their male counterparts (20% vs. 18%, respectively). Last but not least, basic economics.

Carmen Multhauf, co-author of the book “Generational Housing: Myth or Mastery for Real Estate,” brings to light the fact that rents and home prices have been skyrocketing in recent years. She says that, “The younger generations have not been able to save,” and often struggle to get good-paying jobs.

Bottom Line

Multigenerational households are making a comeback. While it is a shift from the more common nuclear home, these households might be the answer that many families are looking for as home prices continue to rise in response to a lack of housing inventory.

You Can Never Have TMI about PMI

You Can Never Have TMI about PMI | Simplifying The Market

When it comes to buying a home, whether it is your first time or your fifth, it is always important to know all the facts. With the large number of mortgage programs available that allow buyers to purchase a home with a down payment below 20%, you can never have Too Much Information (TMI) about Private Mortgage Insurance (PMI).

What is Private Mortgage Insurance (PMI)?

Freddie Mac defines PMI as:

“An insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

Once you’ve built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. Freddie Mac goes on to explain that:

“The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $30 and $70 per month for every $100,000 borrowed.” 

According to the National Association of Realtors, the average down payment for all buyers last year was 10%. For first-time buyers, that number dropped to 6%, while repeat buyers put down 14% (no doubt aided by the sale of their home). This just goes to show that for a large number of buyers last year, PMI did not stop them from buying their dream homes.

Here’s an example of the cost of a mortgage on a $200,000 home with a 5% down payment & PMI, compared to a 20% down payment without PMI:

You Can Never Have TMI about PMI | Simplifying The Market

The larger the down payment you can make, the lower your monthly housing cost will be, but Freddie Mac urges you to remember:

“It’s no doubt an added cost, but it’s enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

Bottom Line

If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, let’s get together to discuss our market’s conditions and to help you make the best decision for you and your family.

The Truth About Housing Affordability

The Truth About Housing Affordability | Simplifying The Market

From a purely economic perspective, this is one of the best times in American history to buy a home. Black Night Financial Services discusses this in their most recent Monthly Mortgage Monitor.

Here are two of the report’s revelations:

  1. The average U.S. home value increased by $13,500 from last year, but low interest rates have kept the monthly principal & interest payment needed to purchase a median-priced home almost equal to one year ago.
  2. Home affordability still remains favorable compared to long-term historic norms.

The report explains:

“Even though the value of the average home in the U.S. increased by about $13,500 over the last year, thanks to declining interest rates it actually costs almost exactly the same in principal and interest each month to purchase as it did this time last year.

Even taking into account the fact that affordability can vary – sometimes significantly – across the country based upon the different rates of home price appreciation we’re seeing, that’s a pretty incredible balancing act between interest rates and home prices at the national level…

Right now, it takes 20 percent of the median monthly income to cover monthly payments on the median-priced home, which is well below historical norms.”

However, the report warns that affordability will be dramatically impacted by an increase in mortgage rates.

“A half-point increase in interest rates would be equivalent to a $17,000 jump in the average home price, and bring that ratio to 21.5 percent. This increase is still below historical norms, but puts more pressure on homebuyers.”

Bottom Line

If you are ready and willing to purchase a home of your own, let’s get together to find out if you are able to. Now is a great time to jump in.

The Dangers of “Tight Mortgage Credit” Headlines

The Dangers of “Tight Mortgage Credit” Headlines | Simplifying The Market

The availability of mortgage credit is not at the same level that it was during the boom in housing (2005), and that’s good news. However, the constant headlines which talk about “tight credit” are causing some potential home buyers to doubt their ability to purchase. We want to rectify the misconception of what is required for a down payment in order to purchase a home in today’s market.

Freddie Mac recently discussed the confusion many first-time homebuyers have about the down payment they need in order to buy:

“Did you know that the average down payment among first–time homebuyers is 6% and it’s 13–14% for repeat buyers…It’s possible to put down even less.

Many potential homebuyers think that only the FHA helps make mortgage loans with low down payments. Not true.

Freddie Mac’s Home Possible mortgage products let qualified homebuyers put down as little as 3%.”

Brenda Garcia Lemus of John Burns Real Estate Consulting reports that this is also the case with newly constructed homes: 

“Our home-builder clients sell hundreds of homes every weekend to buyers with 5% down payments and below average credit scores. Yet, many middle-income households with average credit and access to a 5% down payment assume they cannot become homeowners because of the ‘tight credit’ headlines.”

Bottom Line

Before you ‘disqualify’ yourself, let’s get together to find out if you qualify to buy today.