Lee Morof's Real Estate Blog

It’s amazing that in a year with extremely low mortgage rates being reported around the country, closing costs are up by as much as 6% from the previous year. Part of the reason for this is that the stricter regulations on loans have increased the costs to banks, and they always find a way to pass on new costs to the consumer.

Understanding Third-Party Closing Costs

When closing on a mortgage the borrower will notice a long list of additional fees that they are expected to pay for. These can range from insignificant into the thousands of dollars depending on the state and the deal. When looking at these fees you will notice that some are third-party fees.

This is not out of the ordinary and you are not being taken advantage of. These costs are for services rendered by outside companies at the request of the mortgage lender to make sure everything is in order with the property.

Closing Costs You Can Expect To Pay

Anybody going through the mortgage process for the first time should expect to see several odd sounding terms on the bill. The first is ‘origination’ or ‘processing’ which is the primary fee the lender charges for creating the mortgage.

Other fees include discount points, flood certification, title insurance, credit report and appraisal. These are all necessary for buying a home and should be expected to appear when closing.

The Trick Behind Zero-Closing Cost Mortgages

With closing fees adding up it may seem like a good idea to opt for a mortgage that has absolutely no closing costs if it’s offered. While no money will be required up front, it adds up in the long run.

This is because the lender is making a deal. They agree to pay all the closing costs for the borrower in exchange for a slightly higher interest rate, which will pay out for them over the course of the mortgage.

The amount you can expect to pay really depends on the cost of living and real estate market where you’re buying.

It is common for those who are interested in buying real estate in the near future to tune into news stories about the real estate market, and many may have heard that there is speculation about a real estate bubble that may pop soon. While this gloomy outlook on the real estate market can strike fear in some hearts and may deter a purchase until a later date, the fact is that this is an excellent time to purchase property. In fact, there are three good reasons why potential buyers may want to start moving forward with their buying plans soon.

Low Interest Rates

Most who have plans to purchase real estate will need to apply for a mortgage loan to complete their transaction, and today’s low interest rates are highly competitive. Low interest rates make the cost of borrowing money to purchase real estate lower, and this means that the mortgage payment that may be locked in may be lower. There is some speculation that interest rates will rise in the coming weeks or months, and this means that now may be a great time to take advantage of lower interest rates.

Great Deals Available

More than that, there are some great real estate deals available for buyers to take advantage of. Real estate values in many areas have rebounded in recent years, but some areas are still off historic highs. In addition, there may be foreclosures, short sales and other types of transactions that can result in buyers saving money on their property purchase.

The Benefits Of Home Ownership

Another benefit associated with making a purchase now is that home buyers can start enjoying the financial benefits of home ownership sooner. These benefits include the ability to build equity through debt reduction and value appreciation as well as tax benefits associated with owning property. These are benefits that can have a true impact on a person’s financial situation, and it may be financialy advantageous to have access to these benefits sooner rather than later.

There will always be speculation about what the real estate market may do in the coming weeks, months and years, but it is impossible to accurately determine how the market may act. With this in mind, it may be best for buyers to take advantage of currently great market conditions rather than attempt to time the market in the future. Home buyers can get more information about market conditions by speaking with their trusted real estate professional.

Selling a home is more than real estate listings and making the home appealing to potential buyers. One factor to take into account when buying a home is its location, meaning the community surrounds the home.

For sellers as well as buyers, it’s important to highlight the benefits of living in a particular community. After all, neighborhoods will have an enormous impact on the future buyer’s living experience.

It’s All About Walkable Neighborhoods

According to a Portland, Oregon-based company, City Observatory, there’s a growing demand for homes located in walkable neighborhoods. A decades-long love affair with commuting from suburban areas to work in the city has greatly lost its appeal.

Also, the growing demand for walkable neighborhoods is fueled by people desiring convenient access good schools as well as to entertainment options like movies, restaurants, and shopping. There’s also an appeal for easy access through reliable public transportation.

This trend has been around for a while now. In 2013, the National Association of Realtors found that 57 percent of study participants wanted smaller homes and shorter work commutes.

Fifty-five percent of participants said they would gladly get a small house with a small yard if it meant easy access to stores, schools, and restaurants. Plus, a walkable neighborhood also significantly increases property values. So play up the nearby community benefits that would entice potential buyers.

Great Neighborhood Amenities

Other favorable community amenities bicycle paths and libraries, parks. These are great bonuses for neighborhoods to attract fitness-minded individuals and promote a family-friendly atmosphere for buyers with kids. Speaking of kids, living in an excellent school district usually yields higher home values.

According to a survey conducted by the Demand Institute, almost half of participants wanted a pet-friendly neighborhood. In fact, this factor ranked higher than easy access to public transportation and even public schooling.

Neighborhood Safety

Safety is a top concern for most homebuyers. Although, there’s little one can do to quell neighborhood violence there are things an owner can do to make their home safer. They may want to consider studying security features on homes in their neighborhoods and adopt what they can, within reason.

What Potential Home Buyers Don’t Want In A Neighborhood

According to the National Association of Home Builders (NAHB), fewer home buyers were least impressed with communities with golf courses, a high population, gated communities, and mixed-use communities.

Homeowners, when listing a home, seek the help of a trusted real estate agent experienced in listing the best features of both the home and the community surrounding it.

A short week after the Labor Day Holiday provided a slack schedule for economic news. Bloomberg reported that residential investment for the second quarter of 2015 represented 3.34 percent of the Gross Domestic Product. Compared to the long-term average reading of 4.56 percent, analysts said that the Q2 15 reading suggested pent-up demand in the housing market that could help propel the economy through any setbacks that could occur when the Fed raises rates.

Pent-Up Housing Demand a Plus when Fed Raises Rates

Job openings rose in July to 5.75 million as compared to June’s reading of 5.32 million. This is a positive indicator for the economy and for the housing sector, as consumer confidence in terms of buying a home typically relies on stable employment and a strong labor sector.

While economic indicators are looking good for housing construction, analysts note that a shortage of construction workers could affect construction of new residential units. Analysts said that children born during the 1980’s will lead the next wave of first-time home buyers, with millennials following. This trend could last for the next 10 to 15 years and is expected to bolster housing markets.

More lenient mortgage lending requirements and rising confidence among home builders were also cited as positive indicators for housing.

Mortgage Rates Mixed

Freddie Mac reported that average fixed mortgage rates rose by one basis point to 3.90 percent for 30-year fixed rate mortgages and 3.10 percent for 15-year mortgages. The average rate for a 5/1 adjustable rate mortgage fell by two basis points to 2.91 percent. Average discount points for a 30-year fixed rate mortgage were unchanged at 0.60 percent and rose to 0.70 percent for 15-year fixed rate mortgages and to 0.50 percent for 5/1 adjustable rate mortgages.

Job Openings Rise as Weekly Jobless Claims Fall

July job openings rose to 5.75 million from June’s reading of 5.32 million; this was the highest number of available jobs since records have been kept. Analysts said that the high number of job openings clearly indicate that the labor force is not able to supply the workers needed by employers. Jobs available range from professional to service related work; this suggests a universal trend rather than hiring challenges within specific job areas.

Hiring activity fell in July to 4.98 million from June’s reading of 5.18 million. July separations also fell, which suggests that employers are having problems finding skilled workers and are holding on to experienced workers.

Weekly jobless claims fell to 275,000 from the prior week’s reading of 281,000 new jobless claims.

What’s Ahead

Next week’s scheduled economic reports include Retail Sales, Consumer Price Index and Core CSI along with the NAHB Wells Fargo Housing Market Index, Commerce Department reports on housing starts and building permits. The Fed’s Federal Open Market Committee will issue its customary statement on Wednesday, followed by highly-anticipated press conference by Fed Chair Janet Yellen.

Moving is stressful. Don’t worry. There is an app for that. Technology makes moving easier than ever. Here are three mobile apps that help sellers manage their moves efficiently and with minimum stress.

App One: Move Advisor

First on the list is Move Advisor. This app not only received top reviews from users, it is free. The easy-to-use interface walks sellers through the moving process with four features.

Move Advisor provides users with a comprehensive moving timeline, a home inventory checklist, a moving company locator, and a moving quote.

The moving timeline lets users put in their moving date and any other information. The app then creates a personalized to do list. Each week is broken down into tasks to ease stress and prevent last minute panic.

The home inventory helps itemize the household. The app allows users to easily map out their homes room by room. The app keeps track of what needs to be moved, the volume and weight of the shipment, and how many boxes, furniture blankets, and moving vehicles are needed to move.

Finding a mover is easy with this app. It provides a list of local movers and quotes to make the selection process stress free.

App Two: My Move

My Move is another free app that streamlines the moving process. It focuses on informing users about what to expect from a move, finding a moving company, and properly organizing the move.

Information is invaluable. The app provides access to blogs about moving as well as an in-depth article about what to expect from a move on the app homepage.

The professional relocation assistance searches the top moving companies by state or name and includes reviews to help users make informed decisions. The quote process is as easy as a few taps of a finger. The relocation checklist is easily customized and straightforward, simplifying the packing process.

App Three: State Farm Move Tools

State Farm insurance company offers a highly interactive and visually appealing moving app designed to provide organizational assistance during the move. It comes with a to-do list, a packing tool, a label tool, an inventory, and many helpful moving tips.

Moving is easy with these three apps. Simplify the moving process by downloading one or all today. For more useful tips, contact a real estate agent for professional advice about moving, buying, and selling a home.

Being pre-approved for a mortgage isn’t just a way to get a step ahead, in many cases it’s a necessity to buying a home. Many sellers don’t want to go through the negotiation process of selling their home only to have the buyer drop out when they can’t get approval for the mortgage they were relying on.

The Difference Between Pre-Qualification And Pre-Approval

Pre-qualification is a faster process than pre-approval and is usually a best estimate based on how the borrower answers certain questions about their financial history and status.

Pre-approval is way more valuable to a borrower than pre-qualification because it is a commitment from a lender for a decided amount after they have completed an in-depth verification process based on the submitted documentation.

Preparing For The Pre-Approval Process

The majority of lenders will require the same documentation in order to pre-approve anybody for a mortgage, but there is more information they will need in certain cases.

Anybody applying for a pre-approval will need to ready at least two years’ worth of financial information, including W-2s, Form 1099s and federal tax returns as well as current banking and financial records.

Here is where the pre-approval process gets more in-depth, not only will the lender need to see how much money the applicant has in their bank, but they will need proof as to where the money came from. The lender will need to know the difference between income, gifts or investment withdrawals to help them make their decision.

Having this information ready in advance will speed up the process significantly.

Prepare Proof Of Assets And Allow A Credit Check

Applicants will be required to prove ownership of all assets and will need a letter to prove that any cash gifts given to them to assist with the payment are not loans that need to be paid back. This is important information that will help a lender make a decision, so having the letter ready will save a lot of time.

The lender will also need to check the applicant’s credit to compare it to the applicant’s income. Many people refuse the credit check because they are afraid it will impact their credit score, but the impact is very low and the lender needs this information. It is also a good way to learn about any errors in the credit report early, before they can pose a problem down the line.

The process is not nearly as intimidating as it appears, and an experienced real estate agent can help you prepare everything you need well in advance of applying for pre-approval.

One of the most stressful parts of selling a home is the dreaded home inspection. Getting the most value from a home inspection is crucial, especially since any missed item can cause a significant amount of trouble a few years or decades down the road. With that in mind, let’s take a look at a few tips on how one can get the most value from a home inspection.

Keep Calm And Inspect On

Having a stranger poke around every corner of a house with a microsope is frustrating. Homes have emotional value and no one wants to hear about their homes’ flaws. The key to a successful inspection lies in remaining calm. Getting angry and or arguing with an inspector is a sure way to lose money.

Stay calm, smile, and accommodate the inspectors. The payoff is worth it.

Understanding The Process

Buyers depend on home inspections to protect them from purchasing a money pit. They want to know what they are getting into. This means that the buyer hires the inspector, not the seller. The seller must do everything they can to present a good face to the inspector because the inspector is not on their side. Inspectors investigate every aspect of a home from the roof to the yard. They look for problems that require immediate address and problems that might arise down the road. Negotiations take place once the buyer receives the inspection report.

Good Presentation

Home inspections are rather like selling the house all over again. Take the time to dress for success. First impressions are very important when it comes to any sale. Dress nicely and act politely. Clean up the home. Touch up areas that need new paint and put some new flowers in the garden. Repair minor problems like loose gutters, faulty steps, and trim work. Make the inspector work to find problems instead of providing obvious issues.

Update The Indoors

Most homeowners are aware of what needs to be done. The time to take care of existing issues is before the inspection. Get electrical systems and heating and cooling systems tuned up by a professional. Take care of minor roof repairs. Address any plumbing issues. Not only does this save sellers money during negotiations, it also shows that they take good care of their home and can go along way towards getting the best price for the home.

The best way to get the most from a home inspection is to talk with an experienced real estate agent. The next best way is a good presentation and addressing known issues prior to inspection. Inspectors look more closely at homes with obvious problems than homes that appear to be well taken care of. Don’t wait. Start preparing for your inspection today.

Last week’s economic news included reports on construction spending, private and public sector employment data and a report from the Fed indicating that any move to raise interest rates may be delayed. The details:

Construction Spending Meets Expectations, Beige Book Indicates Wage Pressures

Analysts said that construction is gaining strength and could soon be the strongest sector of the economy. Construction spending for July met growth expectations of 0.70 percent as compared to June’s reading of 0.10 percent. The Commerce Department reported that this reading translated to a seasonally adjusted annual rate of $1.98 trillion, which was the highest rate of spending in the construction sector since May 2008.

Residential construction spending was up 10.80 percent year-over-year in July, with both single-family and multifamily construction posting double digit gains.

The Federal Reserve issued its Beige Book report last Wednesday, which indicated that wage pressures in many of the 13 Fed districts could cause rising inflation, which the Fed has cited as a component in any decision to raise the federal funds rate. The Fed has set a benchmark of 2.0 percent inflation as an indication for raising rates, but doesn’t expect to see this reading in the short term.

Higher wages increase consumers’ discretionary spending, which would contribute to more hiring and increasing demand for goods and services.

Mortgage Rates, Weekly Jobless Claims Higher

Freddie Mac reported that average mortgage rates rose across the board last week. The rate for a 30-year fixed rate mortgage rose by five basis points to 3.89 percent; the rate for a 15-year fixed rate mortgage wash higher by three basis points and the rate for a 5/1 adjustable rate mortgage also rose by three basis points to 2.93 percent. Average discount points were unchanged at 0.60 for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Weekly jobless claims rose to 282,000 new claims against last week’s reading of 270,000 new claims and expectations of 275,000 new jobless claims. While this was the highest reading for new jobless claims in since late June, the reading for new weekly jobless claims has remained below the 300,000 benchmark for the last six months.

The four-week rolling average of new jobless claims rose by 3250 new claims to an average of 275,500 new claims. Analysts said that layoffs are declining and that workers who lose their jobs are finding new employment quickly.

Continuing jobless claims fell by 9000 to a reading of 2.26 million for the week that ended August 22.

ADP Employment Rises, Non-Farm Payrolls, National Unemployment Rate Fall

Private sector payrolls increased by 190,000 jobs in August as compared to July’s reading of 170,000 jobs according to ADP. This supports the trend of stronger hiring seen by economists in recent weeks. The government reported that Non-farm payrolls, which include public and private sector jobs, fell to 173,000 jobs against July’s reading of 245,000 jobs.

The Commerce Department reported that the national unemployment rate dipped to 5.10 percent in August against expected reading of 5.20 percent and July’s reading of 5.30 percent. The declining unemployment rate further supports economic growth and stronger labor markets.

What’s Ahead

This week’s economic reports include job openings, the usual weekly reports on new jobless claims and mortgage rates and a report on consumer sentiment.

Curb appeal is often neglected by sellers. So much attention is spent getting the inside of a home cleaned up that the outside is left until last. This is a mistake. Landscaping and gardens are the first things a prospective buyer sees. Following these tips ensures homes look their best and give a positive first impression.

Spruce Up Mulch

A fresh layer of mulch brings out the color in a garden and makes gardens look well-tended. Homes on the market in the spring, summer, or fall benefit from a fresh application of mulch prior to putting a home on the market.

Clean Up

Cluttered yards full of toys and tools are unattractive. Pick up any clutter and place it out of sight of prospective buyers.

Branches, leaves, and other debris are equally unsightly. Rake leaves and eliminate brush to give lawns a clean, manicured appeal. This is important year round.

Renting a power washer to clean driveways and walkways is also advisable. A clean driveway and gleaming walkways invite prospective buyers to picture themselves strolling through the yard.

Trim Grass And Shrubs

Overgrown grass and shrubs look unkempt. Take the time to cut the grass and sweep or blow the clippings off of driveways and walkways. Trim shrubs and trees to desired shape and height, and clean up all trimmings.

Don’t worry about trimming out of season. Well-manicured landscapes suggest that the rest of the house is equally well maintained.

Fresh Plantings

Add a little color in the garden to increase its appeal with some fresh flowers. A new planting ensures blooms look their best, especially against that new application of mulch.

Tend To All Garden Beds

This is the time to spruce up all garden beds. Remove weeds and trim up perennials to create a well-maintained appearance. Remove or trim back any plants that look dead or otherwise unhealthy.

Address Water Issues

Yards with fountains, faucets, pools, and irrigation systems require additional care. The time to fix issues is before the showing.

Resolve any issues with irrigation systems. Clean fountains and pools of algae and leaves. Fix leaky faucets as they suggest issues elsewhere with plumbing.

Fixing up the outside is just as important as a clean interior. Making gardens, lawns, and landscaping appear attractive and well maintained gives prospective buyers a positive first impression.

Don’t wait until the day of the showing. Start working on landscape staging a month before putting a home on the market. Call your trusted real estate agent today for more staging tips.

Title insurance is one of the few types of protection policies available to homebuyers and one that is often overlooked because of its optional nature.

Because title insurance is purchased simultaneously with the home, it can be very easy to forego when looked at alongside all the additional fees that are associated with purchasing property.

This is typicaly not advisable, as title insurance is one of the smartest forms of protection a homeowner can buy. Here are just three reasons why every purchaser should get title insurance.

It’s The Best Protection Against Fraud

Title insurance protects the owner of a home from any claim made against their property, whether or not they are responsible. These include unpaid mortgage balances on the home, an improper foreclosure or any form of real estate fraud perpetrated by the seller.

Fraud is more prevalent now than ever before and has started to gain momentum in real estate as well. Forgeries are easier to create in the electronic age and criminals take advantage of today’s ‘do-it-yourself’ attitude to sell property they don’t actually own to unsuspecting victims.

The Insurer Performs An Exhaustive Title Search

Countless records are now made public online for low one-time payments to access them. But does anybody really know what they should be looking for? Title insurers are experts at finding anything suspicious with a home and researching exhaustively to make sure everything about the transaction is legitimate.

And if it’s not, the insurance still covers the buyer for any losses incurred if they are ordered out of their new home should a claim be made against it. Then they will research the claim to make sure it isn’t a fraudulent one.

Title Insurance Is A One-Time Fee

Although it is a large fee, title insurance only needs to be paid for once. Unlike other insurance policies that are either monthly or annually, title insurance is a one-time fee that is acquired at the time of closing. Most mortgage lenders require that their title insurance policy is paid for by the borrower anyway, so it’s not a giant leap to take out your own policy the same time.

Title insurance will also protect against mortgage fraud or any unpaid mortgages the home already has. Although title insurance is strongly recommended, it is a good idea to speak with a professional about it so that any questions you have may be answered.