Lee Morof's Real Estate Blog

For those who are thinking about buying or selling a home during the pandemic, they may feel like this is a difficult task. Even though it is true that this is going to be a challenge, people are able to increase their success rate by adapting to a new environment. When it comes to buying or selling a home during the pandemic, there are a few tips that everyone should keep in mind.

Many Showings Are Going To Be Virtual

Make sure that everyone is ready to provide a virtual tour or go on one themselves. Of course, everyone is currently living in an era of social distancing. Therefore, everyone has to make sure that they do not unnecessarily expose themselves to anyone. Virtual tours are a great way to adapt to this measure while still purchasing or selling a home. For those who are thinking about providing a virtual tour to someone else, make sure to take the time to explore all of the options available. Some software programs are going to be better than others.

Ensure There Is A Safe Way To Buy And Sell A Home

It is critical to think about other safety measures that people can take as well. Everyone has to make sure that they endear themselves to as many buyers as possible. In addition to providing virtual tours, it may also be helpful to provide hand sanitizer. Or, people need to make sure that they bring hand sanitizer. Of course, make sure to wear a mask at all times when someone is going to be within 6 feet of someone else. This is another important safety measure that everyone should take.

There Is Help Available During The Pandemic

Finally, it is also a great idea to note that there is financial help available. Lots of people have struggled during the pandemic. That is why there are financial resources available. Be sure to speak with a trained professional and figure out if there are ways to make the process of buying or selling a home just a little bit easier. This could end up saving someone a lot of time and money during the process.

Are you thinking about selling a home that you have rented out for some additional revenue? If so, you’re likely trying to discern how to best inform the current tenants and conduct the sales process in a way that works well for all of the parties involved. In today’s blog post we’ll explore how to sell your home while you’re renting it out to tenants and share three tips that can make the process a bit easier.

#1: Review Local Laws and Your Tenancy Agreement

First, you’ll want to break out your tenancy agreement and download any state, provincial or municipal laws that apply to landlord-tenant relations. Selling a home with renters living in it can result in a number of sticky situations. You’ll want to ensure that you conduct yourself in accordance with the rule of law as you may end up in court if the process goes sour.

#2: Communication is a Vital Part of the Process

Next, you’ll need to ensure that you’re communicating with your tenants every step of the way. Meet with them to let them know that you would like to place the home on the market, and explain how the sales process is going to work. Allow your tenants to ask questions and to state their case as they may be willing to buy the home from you if they can afford it, or if the price is right. Be polite but firm; you don’t want to encourage any hostility but this is your property and ultimately, your decision.

Don’t forget to fully inform your tenants as to how home showings will work, as they’ll likely be concerned as to who is being provided with keys to their home.

#3: Incentives Can Sway an Unruly Tenant

Finally, if you’re faced with some unruly tenants that are making the sales process challenging you may find that financial incentives make them back off a bit. You’ll need their cooperation in keeping the home relatively clean and tidy, so you may want to consider offering some gift certificates or paying a portion of the rent in exchange for their help. If you’re hosting an open house over a weekend, offer to put their family up in a nice hotel somewhere in town where they can enjoy a weekend together.

While selling a home with tenants living inside is rarely easy or fun, it’s certainly doable. When you’re ready to learn more about the home selling process, contact your local real estate agent as they can share their expertise and guidance to ensure you get the most from your sale.

Last week’s economic news included reports from Case-Shiller Home Price Indices and data on pending home sales. No weekly data on jobless claims were released due to the New Year holiday, but Freddie Mac did issue its weekly report on average mortgage rates.

Case-Shiller Reports Home Prices Reached 6-Year High In October

U.S. home prices reached their highest level in six years according to Case-Shiller’s National Home Price Index. Home prices rose by 8.40 percent year-over-year in October as compared to September’s home price growth reading of 7.00 percent. Demand for homes rose during the Covid pandemic as families moved from congested urban areas to less crowded suburbs and rural areas. Ongoing shortages of available homes fueled rising home prices as mortgage rates fell to record lows. 

Case-Shiller’s 20-City Home Price Index showed a 7.90 percent year-over-year growth rate in October as compared to September’s home price growth rate of 6.60 percent.  Phoenix, Arizona led the 20-City Index with a year-over-year home price growth rate of 12.70  percent. Seattle, Washington posted a year-over-year home price growth rate of 11.70 percent, and San Diego, California followed closely with a year-over-year home price growth rate of 11.60 percent.

Cities posting the lowest home price growth rates in October were New York, New York with 6.00 percent home price growth; Chicago, Illinois posted year-over-year home price growth of 6.30 percent and Las Vegas Nevada home prices grew by 6.40 percent year-over-year,

Analysts did not expect home price growth to slow any time soon. Relocation and the anticipated retreat of the pandemic as vaccines become available were expected to fuel home price growth as the economy improves.

Pending Home Sales Fall in November, Average Mortgage Rates Mixed

The National Association of Realtors® reported  -2.60 percent a drop in pending home sales in November; this was the third straight month of falling pending home sales. Pending home sales are sales for which purchase contracts are signed but have not closed.

Mortgage Rates Mixed

Freddie Mac reported mixed average mortgage rates last week. The average rate for 30-year fixed-rate mortgages rose by one basis point to 2.67 percent; the average rate for 15-year fixed-rate mortgages dropped by two basis points to 2.17 percent and rates for 5/1 adjustable rate mortgages dropped by eight basis points to 2.71 percent on average. Discount points averaged 0.70 percent for fixed-rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

What’s Ahead

This week’s scheduled economic reports include readings on construction spending, minutes from the Fed’s FOMC meeting, and payroll data for public and private-sector jobs. The national unemployment rate will also be released. Weekly readings on mortgage rates and jobless claims are also expected.

Moving is not exactly enjoyable at any time of the year, but it can be especially stressful in the winter. Moving all of your items when it is snowing and blowing outside makes things a lot tougher. However, if you prepare accordingly and have the right attitude, you’ll find that your move will go much smoother. Here are five relocation tips that will help ease the stress of a move.

Do not Pack Your Winter Supplies

When you are moving in the wintertime, you should keep your winter supplies, such as a snow shovel and salt, in the car with you. For example, let’s say you get to your new place and there is a lot of snow on the ground. If you have your shovel nearby, you can dig out a path from the driveway to the front door. If you see ice on the ground, you can sprinkle salt on it to prevent falling and hurting yourself.

Pay Attention to the Weather

It is a good idea to watch the weather reports the day of your move. If they are predicting a big snowstorm or other dangerous conditions, it may just be best to reschedule your move to a different day.

Hire Movers

Hiring movers will cost some extra money, but it will be well worth it. If you hire professional movers to move your belongings, you will not have to worry about carrying heavy furniture in the snow and ice. They have the experience to get your items moved in a timely manner.

Get Your Car Serviced

If you are moving a long distance, you should get your car serviced beforehand. Take it to a trusted mechanic and have him check your tires and brakes. If you let a professional look at your car before your move, you will be less likely to break down on the road.

Protect Your Entryways

When you move in the winter, you can bring in a lot of snow and salt from the outside, damaging your floors. That is why you should place cardboard or plastic on your flooring before you start the moving process. It will prevent snow, ice and other particles from ruining your floors.

Moving during the winter is not exactly pleasant, but it does not have to be impossible. If you follow these helpful tips, you will have a much easier move. If you have any more questions, you should contact our trusted real estate professional today.

Many homeowners do not realize that the risk of a flood is a significant factor that plays a role in not only homeownership but also the closing process. Even though flooding is a major risk, many homeowners do not carry enough coverage. Without proper flood insurance, homeowners risk losing millions of dollars. Therefore, it is prudent for those who are looking for a home to factor flood insurance into their home search. This can streamline the closing process down the road.

Exploring Options For Flood Insurance

When homeowners think about flood insurance, they are often directed to the National Flood Insurance Program (NFIP). While this is one option, there are also private options available that could provide better prices and more favorable terms. Private options exist in all 50 states in addition to the Washington DC area. They can be used to satisfy the requirements of banks, credit unions, and lenders at the time of closing.

Calculate The Risk Of Flooding

While a flood can happen at any time, some homes are in riskier locations than others. Therefore, homeowners need to take a look at the individual risk of flooding at a specific property in which they might be interested. In some cases, homes might be located in high-risk areas where flood insurance still might not be required. Homeowners need to make sure that they understand the risk of flooding of a potential property and protect it accordingly. Homeowners’ insurance usually does not cover flood events, so a separate policy is typically needed.

The Requirements Of The Lender

There are some situations where homeowners might have their closing process delayed purely because they did not realize that the lender required flood insurance. During the preapproval process, it makes sense for homeowners to ask the lender if they require flood insurance. That way, homeowners will be able to factor the cost of flood insurance into the search process and expedite their closing later.

Invest In Quality Home Insurance

For many homeowners, their home is the most valuable investment they will ever make. Therefore, it has to be protected appropriately. This includes flood insurance. Check out flood insurance options ahead of time to streamline the closing process later.

For most people, their home is the most valuable investment they will ever make. Therefore, it needs to be protected. This is where homeowners’ insurance is critical. At the same time, buying the right amount of homeowners’ insurance can be a bit of a challenge.

A home that is underinsured leaves the homeowner vulnerable to situations involving fires, floods, and theft. On the other hand, nobody wants to throw away money unnecessarily by over-insuring the home. How can everyone purchase the right amount of homeowners’ insurance?

Review The Coverage Every Year

First, people’s needs are going to change from year to year. Therefore, everyone should review their policy annually. For example, actual cash value only reimburses someone based on the current condition of the home. For example, if a home was built ten years ago, the actual cash value will only provide someone with the depreciated value of the home and not the original value. While this might be enough at the beginning, it may not be enough ten years from now. Everyone has to make sure they purchase enough insurance to cover the cost of rebuilding the home, excluding the cost of the land.

Overlooking Valuables And Liability

Another common mistake that people make when it comes to homeowners’ insurance is overlooking issues such as valuables and liability. Most people have enough insurance for the structure of the home. Most people do not have enough insurance to cover liability claims and valuables. Liability claims might arise if someone gets hurt on the property and the homeowner gets sued. Valuables are important if the home burns down or if someone steals something from the home. All homeowners must have enough homeowners’ insurance to protect themselves against potential liability claims (such as someone slipping and falling in the home) and the loss of valuables (such as electronics and jewelry). Everyone has to make sure they document these valuables appropriately.

Purchase The Right Amount Of Homeowners’ Insurance

Make sure you include everything to purchase the right amount of homeowners’ insurance. Review current construction costs as part of the process. Finally, review the fine print of the homeowners’ insurance policy every year to avoid being underinsured or over-insured.

Last week’s economic news included readings on sales of new and previously-owned homes and consumer sentiment. Weekly average mortgage rates were also released, but readings for jobless claims were not released due to the Christmas holiday.

Single-Family Home Sales Fall in November

Sales of new and previously owned homes were lower in November. Fear of rising covid-19 cases and the usual slump in home sales during the winter holidays contributed to fewer home sales. Rapidly rising home prices cooled buyer interest; short supplies of pre-owned homes for sale drove prices of new homes higher as demand increased.

Inventory of new homes increased by 14 percent as the median price of a new single-family home rose to $335,000, which was five percent higher year-over-year. George Ratiu, a senior economist with Realtor.com, said that would-be homebuyers were dealing with an increased divide between their home-buying preferences and affordability.

Rising materials costs continued to drive new home prices up; builders faced challenges in constructing affordable homes due to higher materials costs and lower profit margins.

November sales of previously-owned homes were lower with 6.69 million sales reported on a seasonally-adjusted annual basis as compared to October’s reading of 6.86 million sales. Short inventories of available pre-owned homes caused a dip in sales as buyers competed for fewer available homes. Shortages of available homes are expected to persist into 2021 and to drive home prices higher. Affordability will challenge many buyers even as mortgage rates remain at or near record lows.

Mortgage Rates Lower

Rates for fixed-rate mortgages dipped last week according to Freddie Mac. The average rate for a 30-year fixed-rate mortgage was one basis point lower at 2.66 percent; rates for 15-year fixed-rate mortgages averaged 2.19 percent and were two basis points lower. The average rate for 5/1 adjustable rate mortgages was unchanged at 2.79 percent. Discount points averaged 0.70 percent for 30-year fixed-rate mortgages, 0.50 percent for 15-year fixed-rate mortgages,  and 0.20 percent for 5/1 adjustable rate mortgages.

The University of Michigan reported a lower index reading of 80.7 for December as compared to an expected reading of 81.0 and November’s reading of 76.9. A post-Thanksgiving surge in Covid-19 cases caused consumer sentiment to fall.

What’s Next

This week’s scheduled economic readings include Case-Shiller’s Housing Market Indices, pending home sales, and weekly readings on mortgage rates and jobless claims.

The coronavirus pandemic has had a massive impact on everyone. This pandemic has led to massive economic issues as well. Given the ongoing crisis as it relates to student loan debt, many students are wondering how the pandemic is going to impact their student loans and how their student loans are going to impact a potential mortgage payment. There are a few points to keep in mind.

Freddie Mac

In general, loans backed by Freddie Mac are going to use the student loan payment that is marked on the credit report. If this amount is $0 or unknown, then the lender is going to use 0.5 percent of the outstanding loan balance. This should also be reported on the credit report. Then, the lender will provide the borrower with information on possible mortgages.

Fannie Mae

When it comes to loans that are backed by Fannie Mae, students might still be on an income-driven repayment plan. In this case, the monthly payment might be zero and the lender may qualify a potential borrower with this $0 payment. On the other hand, if the loans have been deferred or are in forbearance, then the lender may calculate a payment that is equal to approximately 1 percent of the remaining balance on student loans. 

FHA Loans

For individuals going through FHA, the lender is going to run a few calculations. The lender may look at one percent of the remaining balance on the loan, the monthly payment that is reported on the credit report, or the actual documented payment as long as the borrower provides ample evidence. The lender will likely use the greater of these amounts in calculations. 

Why Do These Student Loan Payments Matter?

Credit reports are an essential part of the home-buying process. It is critical for everyone to understand what their student loan payments are and how they might impact their credit report. Furthermore, their student loan payments are also going to have an impact on the monthly mortgage payment they can afford. Therefore, it is important for everyone to make sure the information documented on their credit report is accurate when it comes to their student loans.

If you are looking for a home, then you probably have a budget in mind. You also need to know about the most common factors that influence the price of a home. One factor that always seems to play a role in the price of a home is the quality of the school system. This makes sense. After all, a lot of people who are looking for a home have children (or are planning on having children) and want to make sure they have access to a quality education. At the same time, is it truly worth the price increase to have access to a better school district?

The Quality Of The School District And The Price Of The Home

Numerous surveys have consistently shown that the majority of homeowners are willing to go over their budget price for the perfect and home and the location certainly plays a role. In this manner, the quality of the school system absolutely factors into the right location.

When people think about going over budget, they often think about a higher monthly mortgage payment; however, other costs are going to increase as well. For example, you might need to pay a higher down payment, pay more in home insurance to protect the home, and pay more in property taxes. Therefore, is this truly worth it?

This Is A Subjective Decision

In the end, the answer to this question is always going to be subjective. Therefore, you need to decide what matters most to you and your family and compare this to the premium that is put on the home. For example, the school rankings and test scores are certainly important factors. At the same time, they only tell one small part of the story.

For example, you also want to see how much money the school district spends on each of its students. The more money they spend, the more they care about their students. You also want to think about the diversity of the school district as well, as this is closely correlated to the overall quality of the education each student receives. Compare these factors to your budget to see if it is worth the price of living in that school district.

There are a lot of people who have spotted the record-low mortgage rates right now and are wondering if they can refinance successfully. While many people apply for a refinance of their current home loan, not everyone will be approved. Furthermore, a home refinance is not the best option for everyone. Those who want to qualify for record-low refinance rates need to keep a few key points in mind.

Be A Strong Refinance Candidate

First, homeowners need to make sure that it is actually worth their time to refinance to a lower home mortgage rate. In general, homeowners want to make sure they are able to save at least three-quarters of a percentage point when compared to their current home loan to make a refinance worth their while. If they cannot save this much money on their home loan, then they may end up spending more money on the refinance in closing costs.

Act Quickly

The real estate market is volatile right now. Therefore, home refinance rates are often moving targets. As a result, the interest rates that are published this week could change in the span of a few days. By the time loan packages are returned to the lender, the rates might not even be accurate anymore. Therefore, all homeowners need to be willing to act fast. Have pay stubs, bank statements, and tax returns ready to go when the lender asks for it.

Have The Money For Closing Costs

One of the most common reasons why homeowners lose out on the best interest rates is that they do not have the money ready to pay closing costs. By the time the homeowners get the money together, the refinance rate might have passed them by. Usually, closing costs fall somewhere between two percent and five percent of the total loan amount and this amount is usually due at signing.

Qualify For The Best Mortgage Rates During A Refinance

With mortgage rates falling to record lows, now is a good time for many homeowners to refinance. On the other hand, homeowners need to set themselves up to qualify for the lowest mortgage rates. Following these steps can place homeowners in a position to be successful when they apply for a refinance.