Lee Morof's Real Estate Blog

Kids of all ages often have a hard time dealing with moving. They may not be able to understand why the family can’t stay in the same place forever. Even with explanations, children often can’t readily envision how amazing the new place will be.

Here are some ideas for helping your kids deal with the move.

1. Make It Easy To Stay In Touch

For a lot of kids, a big sore spot with moving is having to say goodbye to friends and schoolmates. They may even feel like you’re intentionally wresting them away from their friends. To demonstrate how much you understand the sacrifice, make a gift of a cute set of note cards, stamps included. Even if your child chooses to text or email old friends instead of write, they’ll appreciate your gesture.

2. Visit The New Community

If possible, bring your kids to visit the new neighborhood where you’ll be moving. Encourage positive anticipation by signing them up for things like a library card, pool membership or a community event such as an Easter egg hunt, relay race or something similar. Consider enrolling them in a fun local class such as pottery, horseback riding, or something else they would enjoy. This helps your kids to focus on the upcoming activities instead of leaving their friends behind.

3. Strive To Keep Old Routines

When you’re busy packing and readying for the big move, old routines often fall by the wayside. But children need routines to feel safe. Strive to keep as many old routines as possible in the preliminary days and weeks before the big move. For example, if Wednesday is always family game night, stick to the plan. Your kids will feel more secure knowing that some things will stay the same, even in a new location.

Above all, make the time to listen. Your child might have concerns that you hadn’t thought of, like having to give up their dog or cat in order to move to the new house. Don’t worry, though. Kids tend to adjust very well to new situations. With your support and a few tips like the ones mentioned above, your children will make a happy transition to your new home.

A trusted real estate agent can be a wonderful resource who can point you toward family activities in the area of your new home. Be sure to make contact as soon as you are ready to start your new home search.

You have lots of choices when it comes to choosing a real estate agent. Aside from deciding if you’d prefer to work with a man or woman, and what age range you’d like them to be, here are some tips to help ensure that you pick one that is best suited for your needs.

Signs In Their Bio

The first thing to do is read the bios of any real estate agents you’re considering. Bios tell a lot about an agent, including what certifications they hold and how long they’ve been an agent. Some bios even have some personal information such as charitable interests or a little about their family life. Look for signs that the agent’s interests and certifications align with your needs.

Relevant Experience

A lot of real estate agents specialize in a certain area such as short sales or helping first-time homebuyers. If your situation falls into a particular category, you could look for a real estate agent who caters to your particular needs. This can simplify the experience, since the real estate agent will have some expertise in navigating the details of the transaction. Look for relevant experience in their bio, or ask them personally.

Good Rapport

You’ll likely be working with your real estate agent for a long time. The relationship between you and your agent should be pleasant. Not only should you have a good rapport with your agent, but you should be able to feel like they understand the human aspect of what you’re trying to achieve with your home buying or selling. You can gauge the rapport with a prospective agent with a simple phone call or brief in-person interview before you hire them.

Presentation

Make sure that your real estate agent makes a good personal presentation. They should comport themselves in a professional manner and dress accordingly. Remember that your agent will be representing your home and your interests to others. You’ll get the best results when your agent professionally reflects your goals in the transaction.

Your partnership with a trusted real estate agent is an important part of a successful real estate experience and transaction. A number of real estate agents will be vying for your business. Use these tips to make sure that you choose the one who best matches up with your needs, personality and style.

Last week’s economic news included Federal Reserve Chair Jerome Powell and weekly readings on mortgage rates and new jobless claims.

Fed Faced with Public Mistrust of Institutions

Federal Reserve Chair Jerome Powel said in a speech to a group of teachers that the Federal Reserve is paddling against a current of public mistrust of the institution. Mr. Powell assured his audience that the Fed was “working in a non-political way” to support the economy.

Mr. Powell said that the Fed was working to earn public trust and said that the Central Bank must be accessible to ordinary Americans and lawmakers. In support of his remarks, Chairman Powell cited three meetings he had with lawmakers and a possible meeting at the White House.

Publicity of a recent dinner with President Trump caused speculation that the Fed may be influenced by the administration. Analysts connected last Monday’s White House dinner with the Fed’s sudden reversal of its plan to raise the target range of the federal funds interest rate. Chairman Powell said that he wanted the nation’s prosperity to be widely shared; he cited “education and mobility” as key components of achieving his goal.

Mortgage Rates, New Jobless Claims

Freddie Mac reported lower mortgage rates with a decrease of five basis points across the board for the three types of mortgages it tracks. Rates for 30-year fixed rate mortgages averaged 4.41 percent, rates for 15-year fixed rate mortgages averaged 3.84 percent.

Rates for 5/1 adjustable rate mortgages averaged 3.91 percent. Last week’s mortgage rates were approximately the same as for a year ago, but analysts said that less buyer competition and more available homes this year would encourage would-be homebuyers into the market.

First-time jobless claims were lower than the prior week at 234,000 new claims filed but were higher than the expected reading of 225,000 new claims filed, which was based on the prior week’s reading of 253,000 new claims filed. The reading for the four-week rolling average of new jobless claims gained 4,500 claims for a reading of 224,750 new claims filed over the most recent four weeks. Analysts said that although the four-week average was higher, it remained near historic lows.

What‘s Ahead

This week’s scheduled economic news includes readings on inflation, retail sales and consumer sentiment. Weekly readings on mortgage rates and new jobless claims are also scheduled.

Savvy home buyers often get great deals on new home constructions by asking for deals and discounts and doing some up-front research. 

Home builders often dislike offering steep discounts in sales prices because they want everyone in the community to feel like they bought their property at a fair price. Maintaining sales prices also helps with future home appraisal values. It helps all of the buyers in a neighborhood to keep sales prices consistent and growing. 

Fortunately, you can still get great discounts that can reduce the cost of your new home.

Ask the builder if they can do the following:

Settle Closing Costs 

Closing costs vary depending on your state. On average, the costs can be as high as $10,000. In Colorado, for example, a standard closing is about 3 percent of the selling price.

It’s important to note that closing costs vary widely and can be structured in many ways. Make sure to consult a trusted mortgage finance professional to get the best information on your situation. But if the builder pays the bill, that money remains in your pocket. Isn’t that a great discount? 

Buy Down Your Interest Rate 

Although interest rates are low, if a builder is willing to buy down your rate further as part of the closing, it would reduce the amount you pay monthly in interest on your mortgage payment. That makes it manageable in the long run. Once again, your mortgage professional can give you the best details on this idea.

Offer Free Upgrades 

Most homes have standard built in appliances. To get high-end appliances, home buyers normally have to pay for upgrades. Ask your builder if you can get the upgraded home appliances or other upgrades without paying extra. It’s a great strategy to move into an improved new home. 

Additional Discounts 

To sweeten the deal, home builders can throw in additional discounts such as automated garage doors, landscaping, finished basements and window coverings. These discounts are worth asking about.

Although these strategies are great, there are some situations that make it more difficult to get sales concessions. Therefore, as you negotiate, keep the following in mind: 

• If business is going great, deals become more unlikely as builders have little motivation to give discounts. 
• You may not end up with the perfect home you want since you may be buying a home that’s near completion or already built. 
• The best home locations may be taken because properties in prime lots are usually the first to sell. 

Knowledgeable buyers are most capable to cut great deals. Therefore, research new construction homes in your preferred neighborhood, visit some homes and compare what deals you can get. Above all, don’t hesitate to ask questions of your trusted real estate and mortgage professionals.

The Tax Cuts and Jobs Act of 2017 instituted some of the most dramatic changes to the financial landscape in the United States in over 30 years. These adjustments to the IRS code have an effect on everyone who earns and spends money in this country.

What changes can real estate investors expect to see from the new legal standards?

Higher Standard Deduction, Less Itemized Deductions

Before the reforms, single tax filers were allowed a standard deduction of $6,350. Married couples filing jointly were given $12,700. The standard deduction is the amount of income you can earn before any income taxes are applied. If a married couple made $50,000 in one year, they would only pay taxes on $37,300. With the new laws, single filers receive a $12,000 deduction and married couples get $24,000. 

However, with the increased standard deduction comes significant decreases in itemized deductions. Many smaller real estate investors depend on tax credits for homebuyers to make their purchases more profitable. Those have been removed from the list of approved deductions. 

Real estate investors need to adjust their strategy to take full advantage of new tax trends. Rather than focusing on flipping homes for profit, investors may consider holding on to properties and leasing them as rental units.

Mortgage Tax Deduction Changes

Homeowners who live in their primary property are still allowed to deduct a portion of the interest paid on their monthly mortgage. However, those who have taken out home equity lines of credit are no longer able to claim a deduction for those interest payments.

This is a big change for some real estate investors. It’s a common strategy to use home equity lines of credit to finance other projects. Without the extra deduction, these loans are still a great option for quick cash. However, investors will take more time to realize profits with this strategy.

Decrease In State And Local Tax Deductions

Investors use state and local tax deductions to increase their return on investment. Under the new rules, property owners are limited to a $10,000 maximum deduction. Real estate investors who operate in high-income areas will see a significant increase in their yearly tax bill. The $10,000 limit is unlikely to offset the high price of property taxes in places like California and New Jersey.

Newer investors who don’t hold a lot of properties can consider buying in markets with lower state and local tax rates. Those who are currently invested could sell some of their lower-producing properties to lighten the burden on their tax bills.

The new tax laws are a challenge for real estate investors. But with some planning and the right information, your business can still produce a generous profit.

If you are interested in investing in a new property, be sure to partner with a trusted real estate agent. 

It’s no secret that mortgage lending institutions look favorably on steady paychecks and positive debt-to-income ratios. That can leave many self-employed prospective home buyers feeling anxious about getting approved for a mortgage. But just like the 9-to-5ers who get regular paychecks, self-employed people earning a good living can get approved with a little due diligence.

The primary concern of mortgage lenders is not necessarily where your revenue comes from, it’s confidence that you can meet the monthly obligations. A lender probably wouldn’t see a significant difference between someone who was paid every two weeks and another paid monthly. Why should a self-employed earner be any different? While there are differences, that doesn’t necessarily have to be a bad thing.

Self-Employed Mortgage Applicants Face ‘Different’ Scrutiny

When reviewing a self-employed person’s mortgage application, the lender can expand their consideration to items related to your business. Factors such as stability, longevity, location, and viability are issues that can come into play.

This type of review mirrors that of steady paycheck earners in terms of length of employment, history of layoffs and other potential revenue setbacks. There really isn’t a higher standard than for self-employed mortgage applicants. You enjoy a different professional life, and the process reflects those differences. That being said, there are a number of things you can do to put your best foot forward toward mortgage approval.

Strengthen Your Self-Employed Mortgage Application

First and foremost, every mortgage applicant must be able to demonstrate an ability to meet the monthly payments on paper. There is no way around the debt-to-income ratio. And although many self-employed people exercise some lifestyle flexibility in terms of tax deductions, your numbers have to prove you can take on a mortgage. That being said, there are important items you may want to consider when applying for a home loan.

• Revenue Stability: Volatile swings in revenue are not generally persuasive. Lenders tend to like steady and positive growth reflected in your business and personal earnings.

• Tax Returns Matter: This can be particularly problematic for people who find creatively legal ways to make revenue tax exempt. Home offices and company cars can lower your taxable income, but they also reduce your ability to pay the mortgage, at least on paper. Plan ahead by strategically filing strong earned-revenue tax returns.

• Consistency Matters: There are a few ways to demonstrate consistency. It can be level monthly earnings or multiple years of tax returns in the same business. Your income may only be considered if it fluctuates in a way that frightens lenders.

• Good Credit: Some cash-oriented people tend to discount the value of credit scores. The adage that “cash is king” may apply to the down payment, but a poor credit history can hurt your chances with lenders. Think “credit is king” when applying for a home loan.

Being self-employed does not mean you are at a strategic disadvantage when applying for a mortgage. But keep in mind that the home loan review can be slightly different.

As always, your best next step would be to consult with your trusted allies in real estate transactions – your trusted home mortgage professional and your trusted real estate agent. These partnerships can make a world of difference in the success of your home buying experience.

When used as a part of an effective real estate investment strategy, hard money loans are an excellent tool to quickly increase holdings without risking existing properties. However, these loans aren’t for everyone.

What investors get the most value from hard money loans?

Investors With Less-Than-Stellar Credit

Investors with credit challenges can qualify more easily for hard money loans. That’s because these loans aren’t based on the borrower. While you will have to prove a measure of creditworthiness, hard money lenders are more interested in the property you plan to buy. If you default on your payments, the lending bank simply takes possession of your property. For that reason, high-value properties in good condition fetch the best terms with hard money lenders. 

If you’re turned down for more conventional funding sources, you may still be able to move forward with a hard money loan for the right property.

Cash-Strapped Veteran Investors

When the market is hot, it’s not unusual for an investor to sink the majority of their liquid assets into new properties. However, this can leave them left out in the cold when new properties come up for sale.

Experienced flippers who are temporarily out of cash can use hard money loans to fund the purchase of additional properties. This allows them to continue expanding their holdings without compromising money earmarked for other projects. The short loan term is no problem for these investors since they know a property sale is always imminent.

Quick Investments: When You Can’t Wait

Sudden auctions can be a blessing to real estate investors. Sometimes, however, these deals pop up at the least opportune time. If you have your eye on a property that promises to go fast, a hard money loan can get you the cash you need in less time than conventional sources. That means you can take advantage of rock-bottom cash auctions quickly.

Since hard money loans don’t have the most favorable repayment terms, many investors choose to convert them into more conventional loan structures after the initial purchase. This strategy allows investors to participate in quick sales without sacrificing too much profit to interest payments.

Hard money loans are a unique source of funding for real estate investors. Use them wisely to realize the benefits and increase your investment income.

Your trusted home mortgage professional can help guide you through all of your financing options. Another important key partnership is with your trusted real estate agent. These skilled professionals are well-versed in many types of real estate transactions. 

Last week’s economic reports included readings new and pending home sales, Case-Shiller housing market indices and consumer sentiment. Weekly reports on mortgage rates and first-time jobless claims were also released.

New Home Sales Rise as Pending Home Sales Fall

Sales of new homes rose 17 percent in November for an eight-month high. Year-to-date sales of new homes were only 2.70 percent higher than for the same period in 2018.New home sales rose to 657,000 sales as compared to expectations of 563,000 sales and November’s reading of 562,000 sales. Analysts cautioned that Commerce Department readings for new home sales are prepared from a slim sampling of sales and are subject to volatility.

Pending home sales slumped in December to a negative reading of -2.20 percent as compared to November’s seasonally-adjusted annual reading of -0.90 percent. Analysts said the dip was likely caused by consumer concerns over the government shutdown and potential future shutdowns.

December’s reading was the twelfth consecutive negative month-to-month reading. Real estate pros and analysts cited ongoing challenges including high home prices and mortgage rates as contributing to fewer contract signings.

In related news, the Federal Reserve’s Federal Open Market Committee elected not to raise the Fed’s target federal funds interest rate range, which is currently 2.25 to 2.50 percent. Domestic and global economic concerns led committee members to pause interest rate hikes.

Case-Shiller reported lower home price growth in November with a year-over-year annual reading of 5.20 percent growth. Las Vegas, Nevada, Seattle Washington and Denver Colorado held the top three spots on the Case-Shiller 20-City Home Price Index.

Mortgage Rates, New Jobless Claims Rise

Freddie Mac reported slightly higher average mortgage rates last week; 30-year fixed mortgage rates averaged 4.46 percent and were one basis point higher than for the prior week. 15-year fixed mortgage rates averaged 3.89 percent and were also one basis point higher.

The average rate for 5/1 adjustable rate mortgages was six basis points higher at 3.96 percent. Discount points averaged 0;50 percent for 30-year fixed rate mortgages and 0.40 percent for 15-year fixed rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

First-time jobless claims surged last week to 253,000 new claims filed. Analysts attributed the spike in new jobless claims to seasonal quirks that were not expected to last. The four-week rolling average of new jobless claims is considered less volatile and rose by 5,000 new claims to 222,250 initial claims filed.

The University of Michigan released its Consumer Sentiment Index last week; the January index reading of 91.20 was higher than the expected reading of 90.70 but was the lowest since President Trump’s election. December’s index reading was 98.30; analysts blamed the government shutdown on the sudden dip in consumer confidence.

What‘s Ahead

This week’s economic news includes the President’s State of the Union speech and speeches by Fed Chairman Jerome Powell. Weekly reports on mortgage rates and new jobless claims will also be released.

With the right combination of strategy, knowledge, and luck, flipping houses can create big profits for short-term investors. However, your path to success starts at your first auction.

For first-timers who are intimidated by their lack of experience at public auctions, follow these steps to ease the confusion of your first property purchase.

Locate Auctions In Your Area

Finding live auctions is as simple as an internet search. Websites run by government agencies list homes that have been seized due to tax liens or foreclosures. Try searching databases maintained by:

• Fannie Mae
• The FDIC
• The US Department of Housing and Urban Development

Another option is your local newspaper. Banks publish foreclosure notices in the public notice section. You can also find advertisements from auction companies and information from the sheriff’s or county tax collector’s office that helps you hunt down low-cost properties.

For busy investors who plan to use real estate as an extra income, be certain to enlist the help of a professional real estate agent. They often keep lists of homes in foreclosure in the surrounding area.

Assess Available Properties

All properties are not created equal. To find the right fit for your project, find the following information for each potential listing.

• Current bid price
• Previous purchase price
• Length of time property has been unoccupied
• Property condition
• Number of bedrooms and bathrooms
• Sales history of homes in the surrounding neighborhood

This information isn’t always readily available. You may be able to find more information via an MLS search, public lands records, or various real estate websites that publish property data. Of course, if you’re working with a real estate agent, they will provide all the data you need to make the right decision.

Some auction sites include pictures and map data. At other auctions, bidders may be allowed to visit the property or hold open houses before the sale occurs.

Perform A Title Search

When you’ve found a few properties that you like, take some time to do a thorough title search. This process ensures your property doesn’t come with some unfortunate surprises.

During your search, you’ll need to:

• Obtain records from the tax assessor to verify the tax status of the property.
• Locate the property’s deed either physically or online.
• Investigate the property’s sales history to ensure no one else can claim ownership.
• Check for liens, unpaid mortgage commitments, and legal judgments against the property.

Once a property has cleared these steps, you’ll be ready to start placing bids on your first investment property.

Trying new things can be daunting as well as exciting. Don’t forget to rely on your trusted and reliable real estate professional to guide you along your home buying venture.