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How to Make Buying a Beach House an Affordable Thing to Do

October 1, 2017 - 11:04am

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:

The dream of purchasing a beach house is potentially one that you’ve had since you were a teenager or young adult; however, setting aside the money for this venture is an entirely different project. Instead of continuing to watch your dream shrink, consider some strategies for making a beach house a reality.

Look for Less Desirable Locations
In your view, any house on the beach is likely in a desirable location, but that really depends upon what the buyer is looking for. One thing that you should consider is how the school district can have a significant effect on the price of a house. If you are looking for a summer home or you may not have children, the quality of the school district may not affect you at all. As a result, you can buy in a community that has a school district of a lower quality, which will likely mean a lower price.

Research Seasonal Communities
When you’re looking to purchase a house, you might think you need to buy a place that is yours to visit throughout the year; however, that isn’t necessarily the case. You may be able to find a home in a community that is only open to residents for a set number of months per year. During the colder seasons, it may close down. Due to the fact that you’re unable to inhabit the house year-round, you may have a greater chance of procuring a lower price.

Rent the House
beach house is a desirable location for many people, which provides you with the opportunity to rent it to them. You could rent your house out on AirBnB, for example. Some people decide to rent their houses out for the majority of the year and spend a short amount of vacation time there themselves, and others choose to just rent the house during peak seasons. You can decide what works for you.

Buy a Smaller House
In most cases, people looking to buy beach houses are not planning to live there during the entire year. As a result, you probably don’t need a prodigious beach house. Even when you want to make the beach house your full-time residence, ask yourself what you are willing to sacrifice to get a house on the beach. When you don’t intend to have children, one or two bedrooms in a house might be just right.

Thinking about buying a beach house might feel overwhelming to you because of the perceived costs; however, you can actually make this wish a reality.

For the latest real estate news and trends, bookmark RISMedia.com.

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Categories: Real Estate

4 Real Estate Deal-Breakers and How to Fix Them Efficiently

September 18, 2017 - 2:36pm

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:

The real estate sales process can be stressful and seemingly complicated. Even a relatively smooth process can take ample negotiations and may require weeks to pass before you can close on the transaction. Some deals are increasingly complicated, and major roadblocks may develop that threaten the entire project. These are a few of the more significant factors that buyers and sellers may run into during the real estate sales process that could potentially prevent the deal from going through as planned.

Unpleasant Decor
Unpleasant decor is something that buyers notice immediately, and some will only make an offer on the home contingent to some decorative updates being completed before closing. For example, some buyers may detest bold paint colors on the walls or may feel that the decor in the kitchens and bathrooms is too outdated; however, sellers may believe that the home is priced appropriately for the as-is condition and that they should not make concessions because of decor. Both real estate agents need to review sales comps in the area to determine if other homes selling in this price range have similar decor or if they have recently been upgraded. The agents should make the buyer and seller aware of realistic expectations based on market conditions, and one or both parties may need to make concessions based on a sales price and property condition that is justified by the market.

Major Repair Issues
Home repair issues may be known by both parties before a property inspection is complete, but the inspection report can potentially reveal more issues that have not been discussed. Many buyers may try to negotiate to have repair work completed before closing. You may consider taking a course on renovations (like Rules of Renovation) and other significant home improvement projects before you agree to take on any huge projects as a buyer or a seller. These courses can help you to better estimate the cost and time it will take to complete the work that is needed.

A Low Appraised Value
Many buyers will apply for a home loan to pay for their purchase. Mortgage lenders typically offer a loan amount that is a percentage of the sales price or appraised value, and they will take the lesser of these two figures into consideration. This means that an appraised value that comes in lower than the sales price could reduce the loan amount to an uncomfortable amount for the buyer. More than that, the buyer may not want to pay more money for a house than it is worth. The feasible options are for the seller to lower the sales price or to work with the appraiser to increase the appraised value.

Title Issues
It is customary to review the title history on a property before finalizing a purchase, and this is a required step for anyone who is applying for a mortgage loan. This process essentially determines if the seller clearly holds title to the property or what obstacles need to be cleared before the seller can convey title to the buyer at closing. Some issues are minor and can easily be dealt with prior to closing by the title company and the seller. In some cases, however, a real estate lawyer needs to be contacted to resolve the matter.

Many real estate deals will close without a hitch, but many others will develop one or several of these issues. Many issues can be overcome when the buyer and seller work together and when enough time and patience is given to resolve the issues. You may also have to use third-party services, such as a title company or real estate lawyer, to address the issue properly.

For the latest real estate news and trends, bookmark RISMedia.com.

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Categories: Real Estate

Infographic: 5 Down Payment Savings Tips

September 12, 2017 - 2:01pm

Sixty percent of homebuyers put 6 percent, or roughly $15,500, down on a median-priced house, according to the National Association of REALTORS® (NAR). Work toward that goal with these tips:

For more information, please visit www.nar.realtor.

For the latest real estate news and trends, bookmark RISMedia.com.

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Categories: Real Estate

Learning the ABCs of FICO

September 12, 2017 - 2:00pm

Most people don’t think too much about their FICO scores until they want to get a loan. No matter the type of loan you want—mortgage, new car—the higher your FICO score, the more likely you’ll be approved.

Understanding the five factors that make up your scores can be the first step toward improving them. Financial experts at the Motley Fool break down where your scores come from and suggest a few ways to improve them.

Know Where Your FICO Score Comes From

Payment History – Thirty-five percent of your score is determined by whether you pay your bills on time every month.

Credit Utilization Ratio – Thirty percent reflects your credit utilization ratio—the percentage of available credit you’re using. Using less than 30 percent of your available credit can help your credit score.

Length of Credit History – Fifteen percent reflects the length of your credit history. Paying bills consistently over time can definitely work in your favor.

New Accounts – Ten percent of your score is based on the number of accounts you open. Opening too many new accounts simultaneously suggests you’re highly reliant on borrowing to keep up with your expenses.

Credit Mix – Ten percent reflects the types of accounts you have. Credit bureaus make a distinction between your credit card accounts versus student loans, car loans, and mortgages.

Three Ways to Improve Your FICO

Pay off a chunk of your balance. If you carry a balance, pay off as much as you can, even if it means you must work a second job or sell off stuff you no longer need or use.

Ask for a raise in credit limit. If you’ve paid your bills consistently, this may not be difficult to get—and since your credit utilization ratio carries significant weight, that should help to improve your overall score.

Correct reporting errors. It’s estimated that 20 percent of credit reports contain errors. If you spot one on yours—such as an error in the amount you owe or a paid-off account not shown—getting it corrected will almost certainly boost your score. Review your FICO score for free once each year to make sure it’s accurate.

For the latest real estate news and trends, bookmark RISMedia.com.

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Categories: Real Estate

How to Qualify for an FHA Mortgage

September 10, 2017 - 11:02am

(TNS)—If you’re concerned about getting approved for a conventional mortgage, keep your dreams of homeownership alive by considering a mortgage insured by the Federal Housing Administration. For borrowers who meet FHA requirements, this mortgage alternative is a terrific way to buy a home with a low down payment and less-than-perfect credit.

What Are the Requirements for an FHA Loan?
In order to obtain approval for an FHA loan, the borrower must satisfy the following requirements:

  • Steady Employment History – Borrowers typically must have been regularly employed within the past two years. Self-employed borrowers have to prove that their business has drawn stable income for at least two years; verification, such as tax returns or company documents, is required.
  • Ability to Pay – This is determined by two formulas: the front-end ratio and the back-end ratio. The front-end ratio refers to the entire amount that the borrower spends on housing costs, and it must be less than 31 percent of the borrower’s gross income, with some exceptions that push limit up to 40 percent. This includes expenses such as the principal, interest, property taxes, homeowners association fees, mortgage insurance, and homeowner’s insurance. A borrower’s back-end ratio, also known as the debt-to-income ratio, encompasses all of the borrower’s debts, including the mortgage payment, credit debt, and personal loans, and it should be less than 43 percent.
  • Financial Soundness – The borrower must have a credit score of at least 580 and be able to afford a minimum down payment of 3.5 percent. Some institutions may accommodate lower credit scores if the borrower is able to pay a larger down payment. She must be a minimum of two years out of bankruptcy and not have a foreclosure in the past three years. All her federal student loans and income taxes must be current.
  • Residency – The borrower must be a lawful U.S. resident with a valid Social Security number, and she must be the occupant of the home.

What Costs Are Associated With an FHA Mortgage?
Like conventional mortgages, there are costs associated with FHA loans that the borrower has to pay when the loan closes, including lender fees, prepaid interest, inspection expenses, and attorney fees. The FHA mortgage program permits lenders and property sellers to pay some or all of the buyer’s closing costs.

To insure the mortgage against default, the borrower must also pay an annual mortgage insurance premium. The MIP varies based on the terms of the loan, including the principal, loan-to-value ratio, and term. On average, expect to pay 0.85 percent of the loan amount each year.

Borrowers may be required to pay a one-time additional mortgage insurance fee at the time of closing, called the Up-front Mortgage Insurance Premium. As of 2017, the UFMIP is equal to 1.75 percent of the mortgage.

Want to learn how long it’ll take you to pay off your mortgage? Run the numbers through Bankrate’s mortgage calculators.

What Are the Disadvantages of an FHA Mortgage?
Since an FHA loan permits a lower down payment, you can expect to pay more interest over the life of the loan than you would with a conventional mortgage that necessitates a larger down payment.

Visit Bankrate online at www.bankrate.com.

©2017 Bankrate.com
Distributed by Tribune Content Agency, LLC

For the latest real estate news and trends, bookmark RISMedia.com.

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Categories: Real Estate

7 Essentials Every Millennial Needs in Their First Home

September 7, 2017 - 2:04pm

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:

More and more millennials are buying homes, representing around 45 percent of all purchase loans, and most first-time millennial homebuyers are on a limited budget.

While you may not be able to find the perfect home that checks every box on your dream home list, you can find a home you can improve on or add to over time.

As you hunt for your first home and make the big purchasing decision, make sure your checklist of new home essentials includes the following seven musts.

  1. Energy-Efficient Features
    Not only is energy efficiency trendy, but it also saves you money on your power bill and reduces your carbon footprint. When viewing homes on the market, look for energy-efficient features like double-paned windows, solar panels, attic insulation, LED lighting, and ENERGY STAR appliances. When you move in to your new domicile, invest in the Nest Learning Thermostat, which helps save you money on your energy bill and allows you to control your house’s temperature from your phone.
  1. An Entertainment Center
    Moving from an apartment to a home means more room, so celebrate with an entertainment space. Equip a portion of your living room with a comfy couch, a big screen TV, and a stereo system. Don’t forget a TV package and a streaming stick to access your favorite channels, such as HBO and Starz, and streaming services, including Netflix and Hulu. Trust us—your friends will thank you, and your home will be everyone’s favorite hangout.
  1. Smoke Alarms and Carbon Monoxide Detectors
    A smoke alarm and carbon monoxide detector should be on every level of a house, especially near bedrooms. While walking through homes, check to see if a property has up-to-date smoke alarms and carbon monoxide detectors. You may want to install smart versions, like the Nest Protect, a smoke and carbon monoxide alarm. The system checks its batteries and performs silent tests on a regular basis so you don’t have to.
  1. A Home Security System
    Burglary rates have been steadily increasing over time, but installing a security system can help you feel safer and protect your new home. If you buy a house that doesn’t have a home security system, you can easily install the necessary equipment with options such as the Scout Home Security System. You can connect a door panel, access sensor, motion sensor, video camera and more, depending on your needs.
  1. A Home Improvement Magazine Subscription
    Whether you like it or not, owning a home comes with a lot more responsibility than renting. You’ll occasionally spend weekends and afternoons fixing something or working on a home project. Even though just about every project type is available on the internet, subscribing to a home improvement magazine, like Better Homes & Gardens, serves as a homeowner’s initiation to all house-centric projects. Along with tips for home maintenance, you can also find inspiration for your next project in the leaves of these handy prints.
  1. Wallpaper
    No, we’re not back in the 1960s. Wallpaper is back and trendier than ever. If you find a home with wallpaper, don’t leave screaming. Depending on the style, you may be able to make it look modern, or, if a room is boring and you aren’t sure how to spruce it up without breaking the bank, try a modern wallpaper trend, such as a marble pattern. If you aren’t sold on the idea, try temporary wallpapers that are easy to remove.
  1. Plants
    Greenery is one of the biggest home decor trends, so bring the outdoors inside with houseplants. Not only do they clean the air, but they’re also inexpensive ways to decorate a room and brighten up even the darkest of spaces. For a small room, decorate with a tall cactus or fiddle leaf fig tree to make the area look bigger. Don’t have a green thumb? Try a faux plant, which only requires occasional dusting.

These must-haves are just a few to add to your checklist for an ideal dwelling. Think we missed something? Share what other essentials you think should be on every millennial’s new home list.

For the latest real estate news and trends, bookmark RISMedia.com.

The post 7 Essentials Every Millennial Needs in Their First Home appeared first on RISMedia.

Categories: Real Estate

8 Best Upgrades to Personalize Your New Home

September 4, 2017 - 2:02pm

Editor’s Note: This was originally published on RISMedia’s blog, Housecall. See what else is cookin’ now at blog.rismedia.com:

Before you move into your new house, you may want to make upgrades. These add value to your investment, improve your home’s function and allow you to express your personality. Plus, making upgrades before you move in reduces inconvenience later. Consider the following upgrades to make your new house feel like home.

  1. Enhance the Kitchen
    Quality kitchen upgrades ensure the room meets your family’s needs, and add value to your home. Consider several changes that improve the quality and function of your kitchen:
  • Get high-end, energy- or water-saving appliances.
  • Lower the bar counter from 42 to 36 inches so it’s more accessible.
  • Install quartz countertops.
  • Add lighting under the counters.
  • Choose matching fixtures and hardware.

Worried about staying on budget while renovating the most expensive room in the house? According to HomeAdvisor’s Kitchen Cost Guide, it costs the average homeowner between $12,500 and $33,500 for a full kitchen remodel.

  1. Redo the Flooring
    It’s definitely easier and more affordable to upgrade a house’s flooring before you arrange all the furniture. Consider stain-resistant carpeting in high-traffic areas, or install hardwood in connected rooms for a sleek appearance.
  1. Update the Bathroom
    Spruce up a bathroom already in the house or add an additional bathroom before your move. When renovating a bathroom, consider your current and future needs, such as your family size or entertaining habits. Several possible changes include:
  • Install a double sink.
  • Install a walk-in shower or Jacuzzi tub.
  • Choose decorative shower, floor or wall tile.
  • Customize the lighting or fixtures.
  • Hang extra shelves for storage.
  1. Bring in New Cabinetry
    Before you unpack all your possessions, install new cabinetry that helps you get and stay organized. The kitchen and bathroom cabinets have a big effect on your home’s function and appearance. Choose cabinet finishes and designs that match your personal style and color scheme. You can hang the old cabinets in the garage or attic to expand your storage space.
  1. Update Electrical Wiring
    Older houses may have outdated wiring, or you may find that you need additional outlets in certain rooms. Walk through your house, visualize how you will use each room and plan any electrical wiring updates. With help from an electrician, you can add outlets in the living room to accommodate your gaming systems or wire the den ceiling for a new fan.
  1. Wire for Internet Service
    Improve security and speed in your new home with wired internet throughout the house. It allows you to install and use a variety of electronics, including security cameras, in any room. Full-house wired internet also prevents outside users and hackers from accessing your network and potentially harming your family.
  1. Add Lots of Storage
    Getting extra storage throughout your house before you move helps you completely unpack and organize your home the way you want. The price of installing a new closet is about $1,800, as found on HomeAdvisor. Choose from a variety of cabinet types, shelving, and overhead storage designs and materials that match your needs and preferences.
  1. Transform the Laundry Room
    While you probably plan to use your laundry room primarily for laundry, you may wish to transform it into a functioning pantry, drop zone or mud room. Rearrange the washing machine and dryer hookup to make room for pantry storage. Consider adding a bench and hooks for shoes, backpacks and umbrellas, too.

For the latest real estate news and trends, bookmark RISMedia.com.

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Categories: Real Estate

You Don’t Have to Make a Down Payment on a VA Loan—Should You Anyway?

August 27, 2017 - 11:02am

(TNS)Many VA borrowers know that the VA home loan doesn’t require a down payment.

Indeed, the U.S. Department of Veterans Affairs, which guarantees this type of mortgage, is practically famous for its zero-down option, which opens the doors of homeownership to veterans, active duty service members, surviving spouses and other VA-eligible buyers. Many VA borrowers have little or no cash to purchase their first home.

VA loans also don’t require mortgage insurance, which is usually the case when you don’t put down 20 percent.

Though a down payment isn’t required for a VA loan, borrowers can still make one. Should they? Or is the no-money-down strategy so attractive that a down payment never makes sense?

The answer depends on the borrower’s type of military service, homeownership experience, cash position and other factors.

Down Payment Lowers Funding Fee
The main benefit of making a down payment is paying a lower funding fee.

The funding fee supports the loan guaranty, which encourages lenders to offer VA loans at lower rates and with easier qualifying guidelines.

Borrowers typically finance their funding fee as part of their loan amount, rather than pay it upfront at closing.

VA borrowers in the Reserves or National Guard pay a slightly higher funding fee with or without a down payment.

Borrowers who have a service-connected disability are generally exempt from funding fees.

First-Use Funding Fees Lower With Down Payment
The funding fee for eligible first-time homebuyers is 2.15 percent of the loan amount with no down payment.

With a 5 percent down payment, the fee is reduced to 1.5 percent. With 10 percent or more down, it drops to 1.25 percent.

Subsequent Funding Fees Higher
The funding fee is 3.3 percent for VA buyers who use the program to buy their next home if they don’t make a down payment.

With a down payment, the funding fee for subsequent-use again drops to 1.5 percent with 5 percent down, and 1.25 percent with 10 percent down.

For example, the monthly principal and interest payment for a $200,000 home loan with no down payment, a 3.5 percent interest rate and 30-year term is $898.

Financing the 3.3 percent funding fee adds $6,600 to the loan amount and raises the payment by $30 to $928.

A 5 percent down payment reduces the fee to $3,000 and the payment to $912.

That means the borrower would save about $16 each month.

Down Payment Lowers Monthly Payment
Don’t forget that a down payment also lowers the borrower’s base loan amount and monthly mortgage payment.

“The 5 percent down payment factors in (to the savings) as well because you’re financing 5 percent less,” says Mike Dill, corporate trainer at Guaranteed Rate.

For borrowers who need to “target their payment within a certain range,” to use Dill’s characterization, a down payment could mean the difference between qualifying for the loan and not qualifying.

Down Payment Finances Future Closing Costs
A down payment could make it easier to sell a home if the buyers want to move before they build equity through monthly payments or appreciation and without paying closing costs out of pocket.

Closing costs to sell can be 6 percent or more of the home’s value.

“If you didn’t have any equity, potentially you’d have to write a check for that amount,” says Michael Frueh, director of Loan Guaranty Service at the VA in Washington, D.C.

The alternative could be a default or even foreclosure.

Other Uses for Your Cash
Despite these advantages, only 22 percent of VA buyers made a down payment in 2015, according to Frueh. The other 78 percent bought with no money down. The VA doesn’t track how many subsequent-use borrowers rolled over equity from a prior home they sold toward a down payment.

Frueh says the average VA borrower has only about $10,000 at closing.

That cash might be better used for home-related purchases, repairs or other purposes. As Dill says, “The advantages of putting money down are so slim compared with keeping that money in case you have repairs or as a safety net.”

Consider Return on Investment
Borrowers could invest the money they didn’t use for a down payment in other assets or use it to pay off consumer debt, such as an auto loan, credit card or student loans.

A borrower who purchased a $200,000 home and later sold it for $300,000 could net $80,000, use $30,000 to make a 5 percent down payment for a new $600,000 home and keep $50,000 in cash, tax-free.

Visit Bankrate online at www.bankrate.com.

©2017 Bankrate.com
Distributed by Tribune Content Agency, LLC

For the latest real estate news and trends, bookmark RISMedia.com.

The post You Don’t Have to Make a Down Payment on a VA Loan—Should You Anyway? appeared first on RISMedia.

Categories: Real Estate