Should I Renovate My Current Home or Move To a New One?

There comes a time in many families lives when they realize their First Home no longer fits their needs. Maybe more space is required for a growing family or a pay raise allows you to upgrade to something a little nicer. Before deciding whether to renovate your current home or move into a new one, there are a lot of things to consider.

First, you have to think about finances and your future plans. What is your current home worth? What would your new home budget be and would it provide you with a significant improvement in the current market? What is you dream home? Could renovations even make this possible within your budget? These are all things to consider very seriously when making your decision.

After you ponder these things and determine that both options are possibilities, there are some more specific pros and cons to each choice.

MOVING
Pros:
♦   Fresh Start – Moving allows you to start fresh with a new house in a different location. Whether you go across the street or across the country, it is a very exciting change.
♦   Taxes – In some cases, moving can qualify you for certain tax breaks and your new location may have cheaper taxes. Keep in mind, however, it may be more expensive as well. Be sure to ask your realtor about all of this when looking.
♦   Getting A Mortgage – A new home can allow you to go into the mortgage process with more experience and maybe more money than you had before.
Cons:
♦   Moving – Moving is a brutal process. With packing and shipping and unpacking, it is an extremely stressful process that many people would like to avoid if possible.
♦   Cost – There are a lot of fees associated with moving. Aside from house price, paying for movers and realtor fees alone can seem overwhelming. These are the major two, but other costs can sneak up on you as well.

RENOVATING
Pros:
♦   Your Design – When looking at a new home, you often have to accept that there will be one or two features in every house that you are not in love with. When renovating, you can make sure everything is designed and carried out to your exact specifications.
♦   Keep Your House – Renovating allows you to have an updated version of the house you originally fell in love with. This allows you to keep your community connections and be in the same neighborhood.
Cons:
♦   Unpredictable Expenses – Often times when doing renovations, issues will be found under the surface that can cost extra time and money. This can force you to exceed your budget or have to cut out some of the changes you would have liked to make.
♦   Huge Mess – While your renovations are taking place, your home will be a mess and in some stages, may be unlivable. If you can stay, it will be loud and stressful. If you have to leave, hotels and other expenses add up quickly.

While these tips can help you decide whether to renovate or move, sometimes there is a third option, both. If you have an ideal home in mind that can’t be created out of your current house, it can be hard to find it on the market as well. Buying a house that has the space you need and many good characteristics, but could use work, can be a great option. Houses that require some work can be bought cheaply and renovated into the home of your dreams. Products like the Norcom Dream Home Loan^TM even make it possible to finance your new mortgage and renovations together, all in one loan.

Whether deciding to move, remodel, or both, it is hard to go wrong. The most important thing is to make sure the decision is well researched and that the entire family is on board. Accomplish that, and you will be sure to make the right choice.

What to expect in today’s housing market and things to consider.

The Real Estate market continues to be dynamic as 2012 comes to close. Here are a few things to consider as you weigh the advantages of home ownership.      
         1. Inventory is down 32% from last year
         2. Sales prices are up 29.3%

Buyers must be prepared to make realistic expectations as the market evolves.
•  Expect to be patient with your home selection. I’ve had several buyers lose out on bidding wars before they made the winning offer on the right house.
•  The shadow inventory of houses … owners who are delaying putting their homes on the market until prices improve…is not emerging. Short sales still are taking months to get approved.
•  Continue to see supply down over the balance of this year with higher demand for quality homes from serious buyers.
•   The days of stealing the deal are over. Expect to see slow and normal price increases.
•   Expect to see multiple offers for homes selling in the $150 -$250,000 range.
•   Expect to pay closer to full price, but there are still ways to ask for concessions in the offer.

The results of the presidential election will have a lot to do with what happens to interest rates. Sooner or later, they are going to go up. Combined with higher prices, the dream of home ownership will get more expensive. NOW is the Time To Buy!

Call Me at 860.945.9284 to review your mortgage options and to take advantage of my FREE Mortgage Pre-Approval service. I’m here to help!

Read more on “How to Deal with Today’s Real Estate Changes” by Alan Zeider at: http://www.abc15.com/dpp/lifestyle/sonoran_living/sl_sponsors/real-estate-tips-for-todays-market

5 Negotiating Tips for First Home Buyers

Homeownership is a big step and it is important to make sure that you approach it wisely. The first step is to be Pre-Approved by a mortgage professional you trust to give you the best advice on your mortgage qualifications and your mortgage options,
Then, when you do find the home that you are looking for, there is often the opportunity to negotiate a price that is lower than the list price. 
You need to know what you are doing, because negotiating poorly can cause you to lose the home that you truly want. Work closely with a Realtor you trust. He/She is on your side and has been through the process many times. In addition to their experience, here are 5 Important Negotiating Tips First Home Buyers should consider:  
1.     Try not to get emotional. It can be extremely tempting to bid top dollar for a place that has everything you have ever wanted, but you could end up setting the negotiating standard so high that you can’t afford the house. 
You need to set your limits before you put in an offer and don’t compromise. If you become too emotionally attached to a particular property, you might feel unwilling to pass on an offer that might be unreasonable or simply too much for your budget. Many First  Home Buyers are scared to end negotiations and move on when they probably should. Be as objective as possible, and don’t compromise your standards just to jump into a home.
2.     Get a Comparable Market Analyses (CMA). Here’s where your Realtor can be a big help. Experienced agents can easily supply you with a CMA, which is basically an average price range for recently sold home within the same neighborhood with the same features. 
Ask your real estate agent about comparables before you place your offer. It is important to know whether or not the asking price for the home is reasonable, overpriced or underpriced when compared to others that have just been sold. 
If you are home shopping on your own, you can still contact an agent in your area to get a free CMA. You might be able to find them online.
3.     Access the seller’s motivation level. There are many reasons why people sell their homes. Sometimes people are relocating for job purposes, divorce, moving up, downsizing, or the owner passes away. If the seller is in a situation where they need to be rid of the property quickly, you may be able to bring them down in the asking price. Sellers who seem more relaxed or are not in a hurry to sell may not be willing to negotiate at all.
Whatever you do, gather as much information as you can about who the seller is and why they are selling. The information you find can be positive or negative in terms of getting the price you want; knowing the facts will benefit you either way.
4.     Make a firm and reasonable offer. People who are new to the real estate market assume that in order to get the price they truly want, they should start out very low with their offer. This may not be the best tactic as it could insult the seller and make them want to hold firm to their asking price. 
Use what you know about the CMA, the condition of the property, and the down payment that you can afford to present a fair number. It is perfectly fine to make an offer that is slightly lower if you know the seller is motivated, however, don’t go insultingly low. It is also wise not to add a long list of conditions or requests.
5.     Put everything in writing. Verbal offers are difficult to enforce. Once you and the seller have agreed upon a price and terms; make sure that everything gets printed out and signed by both parties. 
With a verbal agreement, you might remember the agreement a certain way and the seller might disagree with you. You can avoid this problem all together with some ink and paper. Here’s where your agent and attorney can help. Purchase agreements are required to be in writing. Putting everything down on paper will keep confusion out of the picture.

SUMMARY.  Overall, the best way to approach negotiations when you find a property that you like is to proceed with caution. Understand that perhaps it may not work out in your favor and you will need to move on. 
You should not see this as a negative possibility, because the next house might suit your needs better, even if you don’t “fall in love” with it right away. 
Do your homework, be realistic, and be reasonable. When the seller comes to the table with the same rationale, you just might come out of the negotiations as a homeowner.

If I can answer any questions you may have about how changes in the mortgage market affects you, do not hesitate to give me a call.
I appreciate your business and the opportunity to help.

What is a FHA Mortgage Loan?

What is a FHA Mortgage Loan?  The FHA 203(b) Mortgage Loan is the most “basic” FHA-insured mortgage loan. There are several types of FHA-insured loans … a whole alphabet soup of them.  This is the one buyers talk about when they apply for a home loan.

FHA loans are Not Just for First Homebuyers. FHA loans can also be used to:
•  move up to a bigger home
•  downsize to a smaller one
•  Buy a second/vacation home
•  Refinance an existing mortgage loan
•  However … You can have only one FHA-insured loan at a time. You can’t have a FHA insured loan in your name and get a second loan.

But before we go too much further …Let’s Talk About Some Basics.
The Federal Housing Administration (FHA) is a federal agency that insures loans made by FHA-approved lenders. The FHA’s objective is to assist in providing housing opportunities to families who cannot meet the qualification requirements for conventional mortgage loans.
•  FHA does not set interest rates. Rates are determined by market conditions and negotiated between the buyer and the lender.
•  FHA does not lend directly. The money comes from participating lenders. FHA works with these lenders to insure quality, regulatory compliance, and fairness in the lending process.
•  FHA Mortgage Insurance provides FHA-approved lenders with protection against the risk that homeowners will default (foreclosure) on their mortgage obligation. The comfort level of FHA insurance enables these lenders to consider applications from buyers with as little as 3.50% down payment, credit scores in the mid-600 range and low interest rates.

FHA 203b Loan Guidelines:
FHA sets the guidelines to qualify for a 203(B) mortgage. There are a lot of them. Participating lenders may add “overlay” criteria to qualify for their version of the 203b mortgage. For example; FHA sets minimum credit score of 580 to qualify for this program. Most lenders require a minimum score of 640 to qualify. Talk candidly with your mortgage broker about your situation and about his access to lenders who offer FHA mortgages with the overlays that address your needs.
Here is an overview of the more attractive features of a FHA 203b mortgage:
•  Owner occupied homes only — you must intend on living in the property.
•  The program is not restricted First-Time Home Buyers.  Any qualified borrower may utilize these loans for financing the purchase of a new home.
•  FHA insurance enables lenders to offer the program at a lower interest rate than might be available to a buyer with similar circumstances who opts for a conventional loan product.
•  The FHA 203b program allows for a 3.5% down payment. These monies can come from the borrowers’ own savings or can be a gift from family members. The program also allows 100% of the closing costs can be in the form of a gift.
•  The FHA 203(b) will consider the income of non-occupant co-borrower to help qualify for the loan. This is a great way for parents to help young buyers purchase their first home.
•  Seller Concessions: Home sellers can elect to contribute up to 6% of the house purchase price toward the closing costs associated with the loan. Buyers should discuss this option with their Realtor® when negotiating the purchase contract.
•  The 203(b) loan can be structured as a fixed rate mortgage or an adjustable rate mortgage (ARM) loan. There tends to be more flexibility in calculating household income and debt-to-income ratios.
•  The FHA 203(b) can be used to a single family, a duplex, a 3 family, or a 4 family multi-unit, owner occupied property. Remember, with a 3-4 unit loan, the down payment requirement is greater and the buyer must have 3 months mortgage, taxes and insurance payments (PITI) available in savings after the loan closes.

Now Let’s Talk About Mortgage Insurance.
To cover the risk of a borrower defaulting on the monthly payments, FHA charges an Up Front Mortgage Insurance Premium (UFMIP) as well as an annual Mortgage Insurance Premium (MIP).  The cost of this insurance is paid for by the borrower. The UFMIP is typically added to the base loan amount and becomes part of borrower’s monthly payment. The annual MIP is divided into monthly installments and included in the borrower’s monthly obligation.
Recent legislation has made FHA insurance more expensive. Give me a call. Let’srun the numbers to see if an FHA 203(b) is the best option for you and your family

Bottom Line
When your mortgage is insured by FHA, you become a secure and desirable borrower. Lenders are willing to extend benefits to you can’t find with conventional loans. The major benefit of FHA Loans is that you can qualify for a loan with a low down payment. Most conventional loans require a 20% down payment. FHA loans require a 3.5% down payment. With a gift for the down payment and seller concessions for the closing costs, you could move in with very little out-of pocket expense. Plus, should you have low credit scores or low income, you will still be able to take advantage of the benefits that make FHA Loans so affordable. Talk to your loan officer, or give me a call, to see if this is the Right mortgage option for you.