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What to Tell Your Kids When They Want to Buy Their First Home

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When you buy your first house, it’s a thrilling time. It’s a little scary, but it’s still a lot of fun. You’ve probably bought your first home, second home or even third one. So you’re familiar with the process. There’s a new language in real estate and mortgages. Some words are only used within the real estate world. The word “mortgage” is a good example. Mortgage is also used in other contexts, but it is most commonly associated with real estate. You may remember when you bought your first house. You were probably excited and anxious, but as the business side of the deal begins to take shape it takes on an entirely new dimension.

What do you do when your eldest calls you at dinner and says, “I’m ready to stop renting, and I want to buy that house I saw on the street.”? There are many reactions, but the most common is to tell your child it’s more than just excitement. You’ll also find some boring things. For starters, there’s a lot of paperwork to sign.

Not only will they need money to pay for the down payment, but also for closing costs. The ‘hard’ costs, such as an appraisal or credit report, but also the’soft’ costs like property taxes and insurance. Prepaid interest can also be a cost. Prepaid interest may need a short explanation. When a monthly mortgage payment is made, the payment is applied according to the number days owned the previous month. If someone closes and sells a home on 31st, the first mortgage payment will include that day. If you close on the 15th of the month, 15 days’ interest will be collected. Rent payments are applied to the next month.

Your children also need to understand that a mortgage is an entirely different type of commitment. You can’t just walk away. Renting allows you to move on to another property after the lease period is over. You’re required to hold a mortgage until you sell the house or decide to refinance. There will still be a mortgage. Lastly, the responsibility for property taxes and insurance falls to the children and not the landlord.

Do not discourage your children from buying. Just let them know that there is more to it than the down payment.

Original Blog: https://realtytimes.com/archives/item/1022835-should-you-buy-a-home-warranty?rtmpage=

Should You Buy a Home Warranty?

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We’re buying our first home. It seems like a fairly tame query, right? Post it on Facebook or Nextdoor, and you’ll be amazed at the passionate responses. You could ask “What political party do I belong to?”

Who knew people were so passionate about home warranties? Expect to hear some people call them a “scam” or at least a waste. Some will tell you how a warranty saved their furnace from freezing in the winter because they could not afford to fix it without it.

The decision is ultimately a personal one and will be based on your comfort level with the cost of replacing an expensive item in your home like the air conditioner or hot water heater if it malfunctions. We’ll break down three key details so you can make a well-informed decision.

Know the cost

Money Talks News reported that a basic home warranty can cost between $350 and $500 per year. Angie’s list says that a warranty usually covers kitchen appliances, plumbing and water heaters, heating and electrical components, sump pumps, whirlpool bathtubs, ceiling and exhaust fans and sump pumps. “‘Enhanced’ plans can be purchased for an additional $100 to $300 and provide coverage for items such as a refrigerator, garage door opener, washer and dryer, and air conditioning system. You can add optional coverage, such as for pools and septic system.”

You can usually break the annual cost down into monthly payments, but that’s not the only thing you have to pay. You’ll also have to pay for service calls. If you need a professional to fix a broken tub or microwave, you’ll have to pay for that.

“Home warranty deductible or service call fees is an important concept that you should master if your goal is to find the best home warranty plan for your needs,” said Home Warranties. Most home warranties require a deductible, or service fee, with an average of $75 per visit. Some companies, such as American Home Shield and TotalProtect Home Warranty let their customers select the amount of the deductible, depending on the amount paid. The higher the premium the lower the deductible.”

Consider your peace of Mind

Many homeowners choose a home warranty to cover major “just in case” scenarios. Just in case your air conditioning unit burns out. Just in case your hot water heater fails. If you don’t have the money to pay for a costly repair, it is a good idea to keep supplemental funds in reserve. The cost of these items can be thousands of dollars. According to HomeAdvisor, the average price for a new AC unit and installation is $5,413.

“A home warranty can be a good buffer for a homeowner without an emergency fund or a homeowner that wants to protect his emergency fund,” said Investopedia. Home warranties are also a good idea for people who don’t know how to fix things or who don’t want the hassle of finding a contractor. Warranties are also a good idea for people who have expensive appliances.

But…understand not everything is covered

There’s always the chance that your warranty will not cover an item for some reason. “A home warranty does not mean that the homeowner will spend no money on home repairs,” said Investopedia. Some problems will not be covered by a warranty, either because the homeowner did not purchase coverage for the item or because the warranty provider does not offer coverage for the item. Home warranties don’t usually cover components that aren’t properly maintained. If the warranty company denies the claim, the homeowner is still responsible for the service fee, as well as the repair costs.

In our case, the limitations in our home warranty contract about the replacement of outdated components and refrigerant for our broken air conditioner meant that we had to pay $1,500 out of our own pocket. It’s important to read the fine print.

Original Blog: Should You Buy a Home Warranty? – Realty Times

No Perfect Home Exists: What You Should Know About Home Inspections

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Many first-time home buyers find buying a house a frightening experience. They know that they will be maintaining or improving the home, but have little or no experience in maintenance. So they buy a house in perfect condition. They hire a home inspection company to find all the flaws.

There is no perfect home. Air conditioners break down, plumbing pipes leak, and roof tiles blow away in the wind.

When you are buying a house, set reasonable expectations about what the home inspector can do. Their job is to inform about the integrity and state of what you are buying, both good and bad.

An inspection of a home should last several hours. This is enough time to cover all the built-in appliances and all the mechanical, electrical, and gas systems.

An inspector does not test for pests, or sample the septic system. You need inspectors who are industry-specific for these tasks.

Here’s what you need to do.

1. Make sure that the inspector you hire has a license. Home inspectors’ responsibilities vary depending on state law and their area of expertise.

2. Ask what is covered by the inspection. Some inspection companies offer environmental services, including radon and lead-based paint. Be prepared to schedule and hire several inspectors to meet your lender’s needs and to pay hundreds of dollars for each type.

3. Some inspection reports only cover one building, the main house. If you are having a specialty inspection, such as a termite inspection, ensure that the inspection includes all buildings on the property, including guest houses, detached Garages, Storage Buildings, etc.

4. Attend the inspection, and follow along the inspectors. You will be able to see the problems yourself and determine what is important, what needs replacing now or in the future, and what is not.

5. Do not expect the seller to fix or replace all negatives found on the report. Some items are not negotiable if you’re applying for a VA or FHA guaranteed loan. You must let the seller know about them. Otherwise, you should be careful how you negotiate with the seller.

Home inspections not only point out the problems but also what is working well. You can use it to help you make a final decision on the home, whether to ask the seller to do repairs or offer a lower price, or buy the house as-is or not at all.

Original Blog: https://realtytimes.com/archives/item/1015714-20180308-no-perfect-home-exists-what-you-should-know-about-home-inspections?rtmpage=

What is a Title Search?

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It’s exciting to buy a home. It can be stressful and overwhelming, because there are many steps to take to reach the closing.

One of these steps is a title search.

You may think that the seller has the right to sell the home when you buy one. It’s not always true. You may find that someone else has a claim on the property.

A property title search can be useful in this situation.

What Happens during a Title Search?

A title search can be used to confirm that the property you are buying is owned by its legal owner. A title search will also reveal if there are any liens or claims against a property which could affect your decision to buy it.

A property title is not the same as a deed or a document.

The title refers to the concept of ownership rights.

A title company or attorney can perform a property search. They want to make sure that there isn’t another entity or person that could claim a stake on the home.

A title search is necessary if you are getting financing. Mortgage lenders will require you to do one before they approve your loan.

Who does a title search?

A title loan company or an attorney may do the search. The location of the home you are buying will determine who does the final search.

As a buyer after a contract has been signed, you can ask your attorney to order a title search. The attorney can complete the work or pass it on to a title company. The completed report is then sent to the seller’s agent. The seller’s agent is responsible for managing and resolving any issues that may arise.

You can find a variety of information sources when you conduct a title search.

County Land Records
* Deeds
* Property plats
* Tax Liens at the State and Federal Level
* Divorce records
* Bankruptcy court documents
* Construction liens
* Judgments

A title search will also reveal details about mortgages that are associated with the property.

How long does it take?

A title search could take anywhere from a few hours to a couple of weeks. The older the house you are looking to buy, the longer it will take for a title search because there may have been several owners and transactions.

What if there are issues?

Some of the issues that may arise during a title research include:

* A broken chain in the title. In this case, the chain may be missing a deed. This is common for older homes.
* Incorrect description on the deed. There could be an incorrect or missing description in a deed. This would require obtaining a correct deed.
* Missing interests. If there is a transfer through an estate, then the heirs of that property must have relinquished any interest. If they haven’t, you will need to obtain deeds to release the property from those who have an interest.
* Liens are a legal claim on a property that is often used to recover a debt. Title searches can reveal if a lien is on a property, and if it’s expired or if payment is required.

A title search is an important part of the home buying process. If you have any questions about the title search process or its results, speak to your Realtor.

It could be costly and stressful to deal later with a lien or judgment. If you buy a house and there is a judgment on it, then it could become your responsibility.

Original Blog: https://realtytimes.com/archives/item/1042638-what-is-a-title-search?rtmpage=

Shopping For Mortgage Rates the Right Way

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You’ll want to shop around for mortgage rates when you are ready to purchase and finance a house or refinance a mortgage. Every day, lenders set their rates. During a volatile, but not unheard of, mortgage market, lenders can set their rates more than once a day. The Fed does not set the typical 30 year fixed-rate mortgage. It is set by the individual lender. The Fed does influence mortgage rates, but only indirectly. Although some adjustable rates may reflect Fed action, your fixed rate loan is still in the hands of the lender.

How do you compare rates? Here are some things that you should do:

Compare rates the same day.

Mortgage rates are affected by market conditions. A rate quote given on Monday may be different from one on Thursday. To be fair to yourself and to the market, you should set aside a day to shop for rates. When you look at rates on a site, be sure to pay attention to the date that they were posted. You need to make some phone calls if it was posted a few days ago.

Shop at the same time every day.

You can help yourself by shopping the same day. The rate quoted in the morning may be different by the afternoon.

Shop for the same program.

Get a quote only for the exact same mortgage program. You cannot compare the rates of a 30-year loan with those for a 15-year loan, for example. You shouldn’t compare fixed rates with adjustable rates.

Points?

If you are shopping in the morning and getting quotes for 30 years, be sure to get the exact program. For example, get a quote on a 30-year loan with a single point. Get a quote for the same “lock” period. Most lenders offer different rate guarantees or locks for different time periods. A lender may offer a 10-day lock, 30-day lock and so on. The longer the lock, the higher the rate.

Compare lender fees. A lender may offer a better rate than others, but they might also charge higher loan fees.

Sometimes it can be difficult to compare apples with apples, but by following these steps you will be able to do just that.

Original Blog: https://realtytimes.com/archives/item/1047958-shopping-for-mortgage-rates-the-right-way?rtmpage=

6 Things That Happen When You Become a Homeowner

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Being a homeowner means more than just having a set keys and your name written on the deed. You may feel a rush when you finally take possession of your home and realize that you have a place in the world, literally. That’s only the beginning. Here are some more things to expect.

You learn what pride of ownership is

Nothing compares to being a proud homeowner. You may be proud of your car, your clothes and other small possessions. Buying your first place is an accomplishment, and you get to come home to that accomplishment every day.

You’ll enjoy greater peace of mind

After you have moved in, unpacked and taken a deep breath, you will have that moment. That moment when you realize “This is mine.” Fortunately, this moment occurs often. You’ll know when you see your countertops and realize that you can change them in any way you like. You can also get a pet without asking permission. You can paint your walls any color you like.

You’ll be obsessed with paint colors

Spend hours at Home Depot collecting paint chips. Even if all you want to do is paint the walls white, it’s not easy. “There are hundreds and hundreds of white paints available, and most of them are considered white,” said The Spruce. “This makes choosing a plain white paint color nearly impossible.”

You’ll learn skills that you never imagined

You may soon be able refinish your floor, tile a backsplash and snake a toilet. You can hire people to do these tasks and any other you may need in your home, but doing it yourself can be more satisfying and cost-effective.

If you have a limited budget after purchasing your first home, it’s likely you’ll also need to learn how to maintain your lawn. Get your edging skills down.

Prioritize your tasks differently

Oooh! That skirt is so cute. But if you buy it, you’ll want the shirt and the jacket and the boots, and the jewelry, and, before you know it, you’ve spent half the money it would take to update your fireplace.

Invest in yourself

When you invest in your home with money and sweat equity, you impact its value. This is an investment not only in your home but also in you and your family’s future.

Original Blog: https://realtytimes.com/archives/item/1035879-6-things-that-happen-when-you-become-a-homeowner?rtmpage=

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