Tag Archives: Real Estate

“These 6 Charts Tell You Everything You Need to Know About the Real Estate Market”

This article was written in 2016 and it is a little bit simplistic, but overall I think that it is a good quick read to talk about the general state of the economy in relation to Real Estate. I know that in Norman in particular this year we’ve definitely had many conversations about the rental market. If you have anything you’d like to add feel free to comment below or on Facebook.

-Grady

These 6 Charts Tell You Everything You Need to Know About the Real Estate Market

There’s likely no sector as important to the U.S. economy as housing.

In the first quarter of 2016, residential investment accounted for roughly half of the 1.1% increase in real GDP. Historically, this is on the high side, but when you count spending on housing services as well as spending on various kinds of housing construction, the home construction industry can account for as much as one fifth of overall output in the U.S. economy.

That’s why housing has traditionally powered the American economy out of recessions, and that’s why housing’s role as the trigger of the Great Recession was so damning to the subsequent recovery. While housing prices have improved—with home values in some markets higher than before the crisis—there’s evidence that the housing bust has inflicted long-term damage on the home building industry and therefore the American economy. Here are 6 charts from Torsten Slok, Deutsche Bank’s Chief International Economist, that show the state of the housing market and how it’s powering, and holding back, the rest of the economy.

People Really Want to Buy Homes

There’s evidence that the millennial generation has been slow to warm to the idea of homeownership, as they are generally delaying decisions like marriage and child rearing. But as this chart shows, overall, Americans are still in the market for new homes.

But Homebuilders Have Been Slow to Respond to Demand

The rate at which homebuilders are constructing new single family homes remains quite depressed, despite steadily increasing demand. Those in the business have argued that supply-side factors, like increased regulation and a short supply of skilled labor as reasons they have been slow to meet demand.

The Homes Being Built are Mostly for the High End of the Market

There are many metrics that one can use to show that homebuilders have decided that it makes sense for them to target wealthier buyers, but the above chart is striking. During an otherwise sluggish economic recovery, the increase in the size of new homes for sale has actually accelerated.

Because Middle-Class Homebuyers Can’t Get Financing

Home builders aren’t the only business that has been turning it’s back on the American middle, for the simple reason that middle class incomes have been on the decline for years now. Furthermore, the mortgage finance industry is still leery of lending to all but the most creditworthy borrowers.

Rental Markets are Tighter Than They’ve Been in Generations

The lack of credit available for new homebuyers has forced more and more homeowners into the rental market, driving up rents and put further pressure on already strained middle-class budgets.

Hope Springs Eternal

Despite what appears to be a negative feedback loop of stagnating middle-class incomes, tight credit, and a homebuilding industry that can’t profitably cater to most of the country, demographics have analysts hopeful that things will turn around in the future. The modal age in America is 26, and this echo-boom generation has yet to settle down and seriously consider homeownership. Analysts hope that this new demographic wave will jolt the housing sector back into pre-bubble normalcy. And we’re moving in the right direction.

Time heals all wounds, even in the real estate market.

Source: These 6 Charts Tell You Everything You Need to Know About the Real Estate Market

New OKC Listing (4 bed, 3.5 bath) – 1433 SW 71st

A well kept and discretely grand house just minutes from downtown Oklahoma City. Sitting on an oversized lot this split bedroom plan is ready for someone to come and make it their own. This home has 3 possible living rooms, and one could be kept as an office space. The storage unit in the backyard is large, and could be used as a workshop, or it could easily store equipment and motorized toys. This wonderful home is priced to sell, and ready for someone to love it!

Walk Through Tour – 1433 SW 71st St

New Listing Alert!!! If you are looking for a very well kept home in Oklahoma City come check this puppy out! 4 bedrooms, 3 and a half bathrooms, on a great big lot just minutes from downtown. Click on the links below if you'd like more information, or just call your Realtor to set up an appointment.

For more pictures click here —–> https://goo.gl/H3ihYp
To see the full listing click here —-> https://goo.gl/FCMTyE

Grady Carter
Metro Brokers of Oklahoma
Lic. #160723
(405) 474-2905

Posted by Grady Carter – Home Boy Real Estate on Thursday, September 7, 2017

 

Source: 1433 SW 71st — Premier House Tours

Campus Open House, Sunday 8/13 from 2:00 to 4:00 – 636 E. Boyd

What are you doing this weekend?! If you are going to be around Norman in the afternoon you should stop by and see me at 636 E. Boyd Street between 2:00 and 4:00 PM. This house is beautiful, and ready for someone to come and love on it. Who do you know who might want to live by campus in Norman? Well feel free to share this with them 🙂

 

Walk Through Tour – 636 E Boyd

New Listing Alert!!!

636 E Boyd Street, Norman, OK

Check out more pictures here —–> https://goo.gl/osR47t
And see the full listing here ——-> https://goo.gl/wdMnAw

Who is looking for an amazing campus home in Norman, Oklahoma?! Just an arrow's flight from The Mont Restaurant and The University of Oklahoma this amazing historical home has tons of character! It boasts: a split plan with 4 bedrooms, 3 bathrooms, 3 living/flex spaces, and a recently updated kitchen. The kitchen looks out over a fantastic covered patio just waiting to entertain before a game, or to sit on while a rain storm rolls through town. And don't miss the wonderful newly added Pella windows. And if you love older homes you will love these original hardwood floors. There is plenty about the house to tell you about, but I highly recommend that you just come and see it for yourself. Call your Realtor to set up an appointment today!

Grady Carter
Metro Brokers of OK
(405) 474-2905
https://goo.gl/mDdLE3

Posted by Grady Carter – Home Boy Real Estate on Thursday, July 27, 2017

New Norman Listing: 3 Bed, 2 Bath Split Plan – $123,000!!!

Well here is a cute one!

https://goo.gl/wZwdje
New Listing Alert: We've got a cute one! This 3 bed / 2 bath little puppy hit the market this…

Posted by Grady Carter – Home Boy Real Estate on Thursday, March 16, 2017

NEW LISTING ALERT!!! – Walk Through Video Tour, 837 Carol Ann Place

Well, here is a new listing in Moore, Oklahoma that I really love!

837 Carol Ann Place – Walk Through Tour

NEW LISTING ALERT!!! – Walk Through Video Tour
https://goo.gl/r43j0B

*837 Carol Ann Place, Moore, OK 73160*
This awesome home has: 4 Beds, 2 Baths, a 3 Car Garage, an Office and a whole lot more! I'm happy to tell you more about this house, but you can just come on in for yourself by watching our walk through tour. Do you know anyone who might be looking for a house like this? Be their buddy and send them this video, or tag them in the comments. This home is looking for another great group to take care of it next! 🙂

For More Info See The Full Listing:
https://goo.gl/r43j0B

Grady Carter
Realtor®, GRI
Metro Brokers of OK
Lic. #160723
(405)474-2905
www.HomeBoyOK.com

Norman Board of Realtors, Oklahoma Association of REALTORS®, National Association of REALTORS®

Posted by Grady Carter – Home Boy Real Estate on Thursday, March 2, 2017

For More Info See The Full Listing:
https://goo.gl/r43j0B

Staging Tips for Selling During the Holidays | Real Estate Tips | HGTV

 

“Michael always says “K-I-S-S. Keep it simple, stupid.” Great advice. Hurts my feelings every time.” -Dwight K. Schrute, ‘The Office’ television show

Sometimes the most important information is the simplest information. When it comes to listing a house you’re probably better off making things easier on yourself by making a small list of items to take care of. When a buyer walks through your listed property they’re going to want to know what you’d probably most likely want to know as you walk through a house – which is whether or not the property has been taken care of. If you’re getting ready to list your house make a simple list and if you want to talk if over just call your homeboy.

*I would esspecially pay attention to #5.

Grady Carter
Realtor®, GRI
Metro Brokers of Oklahoma
Lic. #160723

 

“Tricks of the trade to help you get top dollar when selling your home.”

10 Best-Kept Secrets for Selling Your Home | Interior Design Styles and Color Schemes for Home Decorating | HGTV

Selling Secret #10: Pricing it right
Find out what your home is worth, then shave 15 to 20 percent off the price. You’ll be stampeded by buyers with multiple bids — even in the worst markets — and they’ll bid up the price over what it’s worth. It takes real courage and most sellers just don’t want to risk it, but it’s the single best strategy to sell a home in today’s market.

How to Sell Your Home: Tips & Tricks 9 Videos

Selling Secret #9: Half-empty closets
Storage is something every buyer is looking for and can never have enough of. Take half the stuff out of your closets then neatly organize what’s left in there. Buyers will snoop, so be sure to keep all your closets and cabinets clean and tidy.
Selling Secret #8: Light it up
Maximize the light in your home. After location, good light is the one thing that every buyer cites that they want in a home. Take down the drapes, clean the windows, change the lampshades, increase the wattage of your light bulbs and cut the bushes outside to let in sunshine. Do what you have to do make your house bright and cheery – it will make it more sellable.
Selling Secret #7: Play the agent field
A secret sale killer is hiring the wrong broker. Make sure you have a broker who is totally informed. They must constantly monitor the multiple listing service (MLS), know what properties are going on the market and know the comps in your neighborhood. Find a broker who embraces technology – a tech-savvy one has many tools to get your house sold.
Selling Secret #6: Conceal the critters
You might think a cuddly dog would warm the hearts of potential buyers, but you’d be wrong. Not everybody is a dog- or cat-lover. Buyers don’t want to walk in your home and see a bowl full of dog food, smell the kitty litter box or have tufts of pet hair stuck to their clothes. It will give buyers the impression that your house is not clean. If you’re planning an open house, send the critters to a pet hotel for the day.
Selling Secret #5: Don’t over-upgrade
Quick fixes before selling always pay off. Mammoth makeovers, not so much. You probably won’t get your money back if you do a huge improvement project before you put your house on the market. Instead, do updates that will pay off and get you top dollar. Get a new fresh coat of paint on the walls. Clean the curtains or go buy some inexpensive new ones. Replace door handles, cabinet hardware, make sure closet doors are on track, fix leaky faucets and clean the grout.
Selling Secret #4: Take the home out of your house
One of the most important things to do when selling your house is to de-personalize it. The more personal stuff in your house, the less potential buyers can imagine themselves living there. Get rid of a third of your stuff – put it in storage. This includes family photos, memorabilia collections and personal keepsakes. Consider hiring a home stager to maximize the full potential of your home. Staging simply means arranging your furniture to best showcase the floor plan and maximize the use of space.

15 Home Staging Secrets

See All Photos

Get expert advice on how to highlight your home’s strengths.

Selling Secret #3: The kitchen comes first
You’re not actually selling your house, you’re selling your kitchen – that’s how important it is. The benefits of remodeling your kitchen are endless, and the best part of it is that you’ll probably get 85% of your money back. It may be a few thousand dollars to replace countertops where a buyer may knock $10,000 off the asking price if your kitchen looks dated. The fastest, most inexpensive kitchen updates include painting and new cabinet hardware. Use a neutral-color paint so you can present buyers with a blank canvas where they can start envisioning their own style. If you have a little money to spend, buy one fancy stainless steel appliance. Why one? Because when people see one high-end appliance they think all the rest are expensive too and it updates the kitchen.

Painting Kitchen Cabinets

See All Videos

Update the look of your kitchen with these pro tips.

Selling Secret #2: Always be ready to show
Your house needs to be “show-ready” at all times – you never know when your buyer is going to walk through the door. You have to be available whenever they want to come see the place and it has to be in tip-top shape. Don’t leave dishes in the sink, keep the dishwasher cleaned out, the bathrooms sparkling and make sure there are no dust bunnies in the corners. It’s a little inconvenient, but it will get your house sold.
Selling Secret #1: The first impression is the only impression
No matter how good the interior of your home looks, buyers have already judged your home before they walk through the door. You never have a second chance to make a first impression. It’s important to make people feel warm, welcome and safe as they approach the house. Spruce up your home’s exterior with inexpensive shrubs and brightly colored flowers. You can typically get a 100-percent return on the money you put into your home’s curb appeal. Entryways are also important. You use it as a utility space for your coat and keys. But, when you’re selling, make it welcoming by putting in a small bench, a vase of fresh-cut flowers or even some cookies.

Curb Appeal Tips

See All Videos

See how to make the all-important first impression.

Source: Staging Tips for Selling During the Holidays | Real Estate Tips | HGTV

Mortgages – Home Loans, Rates, Points and Terms

Being a Realtor® is a funny thing. I like to compare it to being a party planner. I don’t make the ice sculpture, prepare the food – but if the band needs someone to fill in on the mic I’d be happy to :-). I say that to mention that I personally like to see myself as a consultant and an advisor. I am not a lender or a mortgage expert, but I have tried very hard to educate myself on how loans function. In the chart included you’ll see a simplified visualization of an amortization schedule – which shows the life of a loan assuming you simply pay the minimum payment. If you make extra payments that amount over the minimum payment goes 100% to principal assuming that the loan doesn’t have a prepayment penalty. One of the main things that I’d like to convey to home buyers is that the longer that you own your home the more equity and wealth you’ll gain from owning that property. So buying and selling homes more regularly is inherently more expensive. However, if you do need to buy or sell a home it’s important to make sure that you know what you’re moving parts are. Call your HomeBoy if you want to talk about your moving pieces, but in the meantime read this article to get started.

Grady Carter
Realtor®, GRI
Metro Brokers of Oklahoma
Lic. #160723

“Mortgages are liens on a specific piece of property, which enable borrowers to borrow money to live or do business on that property.”

amortization-schedule

Mortgages

If you’ve decided to buy a house, a townhouse, condominium or apartment, it’s almost a certainty that you will join the millions of Americans who are bound to their home by one thing — a mortgage.

Although many people believe a mortgage is a loan, a mortgage is actually the lien on the property. When a bank holds a mortgage on a house, it means the lender has a claim to the property in case the borrower defaults on the loan.

A mortgage loan is similar to a car loan. Both are secured by real property and require a monthly payment to cover principal and interest. Mortgage loans are amortized: they are calculated so that the principal and interest payments are spread out over the loan period (usually 10 to 30 years) gradually until the principal is paid off.

A mortgage is generally the largest debt that the average family carries. At of the end of 2012, Americans families had more than $13.1 trillion in total mortgage debt.

It is important to understand all that is involved when you apply for and maintain a mortgage account.

You monthly payment is calculated by a combination of factors:
  1. The loan amount
  2. The length of the loan
  3. The interest rate of the loan

There is also an initial cost of a getting a mortgage. Those costs can involve traditional and non-traditional lender fees. Common questions that prospective borrowers have include: How do mortgages work? What are the different factors to consider? And how do you know if you qualify?

How Does a Mortgage Loan Work?

When you decide on a home you wish to buy, your mortgage lender works with you, your real estate agent and the seller of the property to close the deal. The deal begins by you being pre-qualified to borrow up to a specified amount of money to pay for the house.

Once you are pre-qualified and you have an offer on a home accepted by the seller, you will work with your mortgage lender to ensure that you have the financial ability to pay for the mortgage every month.

When you’ve met all requirements of the transaction, the lender sets a closing date so that you can sign paperwork to finalize the loan. At closing the bank’s agent issues the cash required to buy the home to the seller and distributes all required fees to the other parties as well.

After closing you must begin making regular payments on your account to avoid default. Defaulting on a mortgage loan could eventually lead to foreclosure, where the bank reclaims the home.

In most cases, to close a mortgage loan you must come prepared with a down payment. The amount varies from about 3.5 percent to 20 percent of the home sales price depending on the lender and the loan program offered.

How to Qualify for a Mortgage

Besides being able to make a down payment, you must meet an extensive list of factors to qualify for a mortgage loan. First, your credit score must be good to excellent. A 2010 U.S. Housing and Mortgage Trends report by CoreLogic showed that 60 percent of borrowers who secured conventional mortgages had a credit score of 780 or higher. More than half of FHA borrowers needed a score of 680 or better.

Additional minimum requirements normally include:
  • A housing expense debt-to-income ratio of 28 percent (called the front-end ratio)
  • A total debt-to-income ratio of 36 percent (called the back-end ratio)
  • A job that you’ve held for at least two years
  • Employment and salary verification
  • Extensive paperwork to document your financial situation
  • A professional appraisal
  • Cash for closing costs

Also, some lenders require private mortgage insurance (PMI) on mortgage loans, particularly when the down payment is less than 20 percent.

Types of Mortgages: Conventional, FHA and VA

There are a number of mortgage options available to you as a borrower. The three general types are conventional loans, FHA loans and VA loans. Each has specified qualification factors.

Conventional loan: This is a loan that is not backed by a government agency. It is a straight agreement between a bank and a buyer. You usually need very good credit and a substantial down payment of at least 10 to 20 percent to secure a conventional mortgage loan.

A Federal Housing Administration (FHA) loan: This is one that is backed by the federal government. This type of loan is common for applicants with credit problems or who cannot afford a substantial down payment.

A U.S. Department of Veterans Affairs (VA) loan: A VA loan is similar to an FHA-backed loan except the VA is the guarantor. It is available to qualified military personnel who are veterans or on active duty.

Fixed vs. Adjustable Rate Loans

Mortgage loans come in all shapes and sizes. They come with short terms (five years, often with a balloon payment at the end); medium terms (15 years) and long terms (30 and 40 years). They also come with fixed interest rates and adjustable (or variable) interest rates, and there are also reverse mortgages.

Fixed-Rate Loans

A fixed-rate loan is just what the name suggests: An interest rate is agreed upon before the mortgage is signed, and that rate never changes for the life of the loan, no matter the length of term.

For generations, the staple loan of the mortgage industry has been the 30-year fixed mortgage. That means a borrower will make 30 years of payments of the same principal and interest payments. This type of loan is the least risky type of mortgage loan.

The popularity of the fixed-rate loan was two-fold. Lending institutions like banks and credit unions liked it because they could count on long-term income at a specified rate. Borrowers liked the loans because they knew what their monthly payment would be for the life of the loan. There are no surprises.

Adjustable-Rate Mortgage Loans

Adjustable rate mortgages (ARM) loans are more complex than fixed rate loans. The bank offers you a low introductory rate for a period of time (usually one to five years) then the rate begins to adjust. The rate varies depending on certain financial indices — usually the Cost of Funds Index (COFI) or the London Interbank Offered Rate (LIBOR).

ARMs are attractive to borrowers who want to enjoy a low monthly payment for a while, but they can become a major burden when the rate goes up.

Other programs include balloon and buy-down loans. With a balloon loan the borrower agrees to make a large lump sum payment at the end of the loan. A buy-down loan is similar to an ARM except the rate change occurs toward the end of the loan period and the interest may vary up to three times instead of every month, quarter or year like ARMs.

Mortgage Rates

The rate of your mortgage means the interest rate of your home loan. It is one of three key drivers – along with the amount of money you borrow and the length of time for which you borrow – of your monthly payment.

As a result of the Great Recession and the bursting of the U.S. housing bubble, home interest rates are at some of the lowest points in history. Lenders are agreeing to 30-year fixed loans with interest rates of less than 4 percent.

How Interests Rates Are Determined

The federal government has three quasi-government institutions that are the primary agencies dominating the secondary mortgage market.

They are:
  • The Federal Mortgage Association – aka Fannie Mae
  • The Federal Home Loan Mortgage Corporation – aka Freddie Mac
  • The Government National Mortgage Association – aka Ginnie Mae

Each agency serves a different function in the mortgage business, but all three help keep money flowing into the market by bundling mortgages. These mortgages are purchased with funds borrowed from investment banks. Fannie, Freddie and Ginnie sell to other investors and large financial institutions, such as pension funds and insurance companies.

In this way, money is continually being pumped back into the lending system. The three agencies provide the funding to individual lenders so they can continue to offer mortgages to new homebuyers. In effect, then, the real supplier of your mortgage is not your bank, which is merely servicing your loan, but the agencies and financial institutions that buy and sell the mortgage-backed securities in an endless cycle of commerce.

It is in this secondary market that interest rates for mortgages are set. These rates are constantly fluctuating based upon the amounts that the various players in the game – the three primary agencies and their customers – set as their profit margins, or “spread,” when buying and selling mortgage-backed securities.

Your Monthly Mortgage Payment

When negotiating a mortgage, it is important to understand that the interest rate does not truly reflect your total monthly costs. The Truth in Lending Act requires all lenders to state on loan documents the Annual Percentage Rate, also known as the APR. The APR is defined as the cost of credit to a borrower in relation to the amount borrowed, expressed as a yearly rate.

Your APR will most always be slightly higher than your interest rate because it includes other items associated with obtaining a mortgage, such as origination fees, any points purchased, prepaid mortgage interest, mortgage insurance premiums, and various other lender fees.

What is most essential to remember is that your interest rate is only one piece of the borrowing puzzle and must be considered in context when applying for the most appropriate and affordable mortgage you can find.

The modern mortgage industry offers a huge array of products. There are also many government-backed mortgage programs, which have their own sets of qualifications and conditions. Take the time to explore all options and don’t believe lenders who advertise unrealistically low interest rates. These are the ones who make up your “savings” in exorbitant lending fees.

Your mortgage payment will likely be a considerable part of your monthly expenses for some time to come. It pays to use your head before signing on the dotted line. Compare offers, be prepared to ask many questions and take the time to do the math, so that your dream home is not accompanied by a nightmare of a mortgage.

Mortgage Points

HOW MANY POINTS
SHOULD YOU BUY?

Mortgage: $90,000

Interest rate: 7.5 percent

Monthly payment: $629.30

Each point costs $900 and will lower your interest rate by one-quarter of a percentage point.

If you purchase two points for $1,800, you are left with:

Interest rate: 7 percent

Monthly payment: $598.78

————————————-

Monthly savings: $30.52

Now divide the cost of the points by the monthly savings.

$1,800 / $30.52 = 58.98

This means it will take 59 months to break even. If you plan on staying in your home for five years or longer, you would be saving money by purchasing those two points.

Although there are many diverse offerings among mortgage lenders, you will find some similarities no matter where you turn. For instance, every mortgage offer will come with an interest rate, a payback period (term), processing fees and the option of paying “points” on the loan.

A point is equal to 1 percent of the principal amount of a mortgage. For example, if the mortgage is for $100,000, each point is worth $1,000. By paying more points on a loan, future home owners can get negotiate down their interest rate, thereby lowering their monthly payment.

One type of points — origination points — is actually a fee that you may be charged when you take out a mortgage. These points do not provide any value to the borrower and should be avoided if possible. Discount points, on the other hand, can be paid to a lender in order to obtain a loan at a lower interest rate.

Depending upon the lender and the daily fluctuations in the mortgage market, each point you pay will reduce your interest rate from one-eighth to one-quarter of a percentage point. You may have the option of paying for up to four discount points or more.

When deciding whether to pay for points —  or how may to buy —  you need to consider how long you plan on staying in the home. That will determine your break-even point, the length of time you’ll need to stay in your house to make the purchasing of points an economically advantageous choice. The longer you stay in your house, the more money you save with a lower interest rate.

Tax Rules and Negative Mortgage Points

In addition to lowering your interest rate, discount points are considered pre-paid interest by the Internal Revenue Service and are tax-deductible. Origination points are not deductible.

But you can only deduct discount points in the year they are paid, and only if several requirements are met, including:
  • Your main home secures the loan.
  • The points you paid conform to established rates and practices in your area.
  • The points were not paid for inspection, appraisal, title, attorney fees or property taxes.
  • The points were computed as a percentage of the principal amount of the mortgage.
  • The amount is shown as points on your settlement statement.

Buyers cannot pay points on Federal Housing Administration (FHA) or Veterans Administration (VA) loans, but on most mortgages, either the buyer or the seller can pay the points or split the cost between them. Points work in a similar fashion in the refinancing of a mortgage, but those points must be deducted on your taxes over the life of the loan and not all at once.

While less common, a lender may also offer you negative points. In that case, a bank would pay you points so that you would agree to pay a higher interest rate. This cuts down on your closing costs, which usually run several thousand dollars, and increases your monthly mortgage payment. This option would only be attractive if you could not come up with the necessary cash at closing.

It’s important to remember that just because a loan is advertised with “no points” does not mean it is the best loan for you. Points are just one item in a complex set of circumstances that you will have to consider when negotiating for a loan. Make sure you understand points and how they relate to the other details in your mortgage application, and compare several offers and combinations before making a final decision.

Reverse Mortgages

A reverse mortgage is a loan that allows you to take advantage of equity in your home. Instead of you paying the bank, the bank pays you a monthly stipend that depends on the value of the home and other factors.

Older borrowers who have paid off most or all of the mortgage balance on their homes and need additional income to cover basic needs commonly apply for reverse mortgages.

The FHA has a special program called the Home Equity Conversion Mortgage (HECM) to help homeowners in need who are over the age of 62. However, it is important to note that the lender has a claim on the property and unless the loan is paid off the homeowner may have to sell the home in the future.

Other Key Mortgage Terms

If you’re new to mortgage loans, here are a few more key terms that you should be aware of before talking to a lender or broker:

Fixed rate loan: A mortgage loan that maintains the same rate throughout the loan period

ARM (adjustable rate mortgage): A mortgage loan that starts off fixed and then varies

Discount points: Up-front payments made to the lender to get a discount on your mortgage interest rate; one point is equal to one percent

Origination fee: A processing cost commonly charged by the lender; included in closing costs 

LTV (loan to value): The amount of the loan divided by the value of the property

Seller’s assistance: A program that allows the seller to contribute up to 6 percent of the purchase price toward your closing costs

Appraisal: A valuation of the home you wish to buy

Closing costs: Fees and expenses due to the lender and other parties to the loan

Escrow: An amount held by the lender to pay for property taxes and hazard insurance; built into monthly payment

Private mortgage insurance (PMI): An insurance policy to protect the lender in case of default; built into your monthly payments if required as a condition of the loan

Amortization schedule: Shows the breakdown of interest and principal you pay with each monthly installment payment over the course of the loan

Underwriting: The process of carefully evaluating a loan application to decide if the borrower is a good credit risk

Source: Mortgages – Home Loans, Rates, Points and Terms

Buying a House First Time Buyer Guide | Financegirl

I love hearing personal stories and explanations about the home buying experience from people who aren’t really real estate professionals, but who have a very valid story to tell. Another example of a “layman’s story” that I posted previously from the website “The Art of Manliness” had some similar themes, and some different ideas as well as this article below. I hope you enjoy it, and if you have any questions or comments please feel free to reach out to me.

Grady Carter
Realtor®, GRI
Metro Brokers of Oklahoma
Lic. #160723

 

“Buying a house seems like something you’re just supposed to do once you reach a certain age. I’m frequently asked why I don’t own a house yet at 29 years old. My reply is always the same: “my student loans are my mortgage”. But that may not be the case for you…”

Buying a House for Beginners: An Overview of the Process and 22 Terms You Need to Know

Buying a house first time buyer guide

Buying a house seems like something you’re just supposed to do once you reach a certain age. I’m frequently asked why I don’t own a house yet at 29 years old. My reply is always the same: “my student loans are my mortgage”.

But that may not be the case for you – you may be ready to buy a house. Whether you’re ready to buy a home is a personal question that should be answered based on your finances (and other things, like commitment to the area and life choices).

I’m a big proponent of the Dave Ramsey line of thinking when it comes to home ownership – buying a house costs you money in the short term but is an asset in the long term. What does this mean? It means that you need to have money to buy a house. Comparing rent to a mortgage payment is not how you decide whether you should buy a home. In fact, most pros suggest that you have an emergency fund of at least 3-6 months in place and put between 10-20% down when you buy a home.

If you are ready to buy a home, then there are certain things that you need to know. Even if you don’t care to know about this stuff — guess what? You still need to learn about it if you’re buying a home (the same applies if your spouse knows the ins and outs — you still personally need to learn it).

To help you, I’ve included the following below:

  1. an overview of the home-buying process
  2. a flow chart of the home-buying process
  3. 22 terms that you ought to know if you are buying a home.
An Overview of Buying a Home: The Story of a Seller, a Buyer, and a Lender

Seller wants to sell his house and Buyer wants to buy Seller’s house. Buyer isn’t a millionaire, so Buyer needs to get help from the Lender (bank) to finance this big purchase. Lender agrees to give Buyer a loan under certain conditions (these terms are always advantageous to the Lender so the Buyer must read carefully). Seller and Buyer go through negotiations until they reach the most important substantive terms of their agreement (usually this is the price and a few other things). After Seller and Buyer have an agreement in writing, the closing process begins. The Seller and Buyer need to do their own due diligence to make sure that this deal is a good idea for each of them. Additionally, the Lender has to make sure the property is valued as it should be and that the Buyer will most likely keep its promise to pay the mortgage. After all parties involved – the Seller, Buyer, and the Lender – do their due diligence, they can begin to sign papers and transfer the property. However, if there are any hiccups with any of the parties, the deal may be called off. Otherwise, at closing, title to the property is transferred and the deal is complete.

This illustration may be too basic and unnecessary for you, but I believe it’s always good to understand the bigger picture (side note: this is basically how all deals work, including business deals).

Buying a House for Beginners: An Overview of the Process and 22 Terms You Need to Know
JULY 20, 2015 BY NATALIE BACON

Buying a house seems like something you’re just supposed to do once you reach a certain age. I’m frequently asked why I don’t own a house yet at 29 years old. My reply is always the same: “my student loans are my mortgage”.

But that may not be the case for you – you may be ready to buy a house. Whether you’re ready to buy a home is a personal question that should be answered based on your finances (and other things, like commitment to the area and life choices).

I’m a big proponent of the Dave Ramsey line of thinking when it comes to home ownership – buying a house costs you money in the short term but is an asset in the long term. What does this mean? It means that you need to have money to buy a house. Comparing rent to a mortgage payment is not how you decide whether you should buy a home. In fact, most pros suggest that you have an emergency fund of at least 3-6 months in place and put between 10-20% down when you buy a home.

If you are ready to buy a home, then there are certain things that you need to know. Even if you don’t care to know about this stuff — guess what? You still need to learn about it if you’re buying a home (the same applies if your spouse knows the ins and outs — you still personally need to learn it).
To help you, I’ve included the following below:

an overview of the home-buying process
a flow chart of the home-buying process
22 terms that you ought to know if you are buying a home.
An Overview of Buying a Home: The Story of a Seller, a Buyer, and a Lender

Seller wants to sell his house and Buyer wants to buy Seller’s house. Buyer isn’t a millionaire, so Buyer needs to get help from the Lender (bank) to finance this big purchase. Lender agrees to give Buyer a loan under certain conditions (these terms are always advantageous to the Lender so the Buyer must read carefully). Seller and Buyer go through negotiations until they reach the most important substantive terms of their agreement (usually this is the price and a few other things). After Seller and Buyer have an agreement in writing, the closing process begins. The Seller and Buyer need to do their own due diligence to make sure that this deal is a good idea for each of them. Additionally, the Lender has to make sure the property is valued as it should be and that the Buyer will most likely keep its promise to pay the mortgage. After all parties involved – the Seller, Buyer, and the Lender – do their due diligence, they can begin to sign papers and transfer the property. However, if there are any hiccups with any of the parties, the deal may be called off. Otherwise, at closing, title to the property is transferred and the deal is complete.

This illustration may be too basic and unnecessary for you, but I believe it’s always good to understand the bigger picture (side note: this is basically how all deals work, including business deals).
Home Buying Process Flow Chart

Here is a chart that I created to demonstrate what a typical home-buying process might look like in a little bit more detail.

Home Buying Flow Chart

 

Real Estate Jargon: 22 Home Buying Terms

Now to the good stuff. Here is a list of 22 terms you need to know before you buy a house (when I originally started writing this post, I thought I could do it in 10 items – turns out there is a ton of stuff you need to need to know).

Real Estate Agent
A real estate agent is a licensed professional who helps the buyer or seller in the house-purchasing process. Most agents work for a real estate broker or realtor. As a buyer, you want to hire a good real estate agent when you are buying a house.

Pre-qualified and Pre-approval
Getting pre-qualified is the first step in the mortgage process (it’s usually pretty simple). You give your lender your overall financial picture, the lender evaluates your information, and then the lender gives you an idea of the mortgage amount that you will qualify for. Note, that – is not a done deal – you may not in fact qualify for the loan for which you are pre-approved (it’s a general idea).

Pre-approval is the second step in the mortgage process. You complete a mortgage application and provide detailed information to the lender (although you will not yet have a house picked out most likely, so the property information can be left blank). The lender will approve you for a specific amount and you will get a better idea of your interest rate. This puts you at an advantage with a seller because the seller will know you’re one step closer to getting a mortgage.

If you get pre-qualified and pre-approved before you pick out a home, then you can move quicker on purchasing a house (you won’t have to make your offer contingent on obtaining financing, which is especially valuable in a competitive market).

Proof of Employment and Income
You will have to provide proof of employment and proof of income to qualify for your mortgage. This shows the lender that you are creditworthy. It’s usually not great to quit your job during the home-buying process for this reason. Some lenders may ask for employment verification later in the home-buying process, so your approval could actually change if you take a lesser paying job during the home-buying process.

3 Types of Loans: Conventional, FHA, and VA
A conventional loan is a loan that is not backed by the government (meaning that the government doesn’t make any guarantee that you will pay the mortgage), and therefore, carries private mortgage insurance if you put less than 20% down. Conventional loans adhere to guidelines set by Fannie Mae and Freddie Mac and are available to everyone, but are more difficult to qualify for than VA or FHA loans (you need better credit and a steady income, for example).

An FHA loan is a loan insured by the Federal Housing Administration (this means that if you default, the FHA will repay the note to the bank). Because the loan is insured, the lender typically offers a low down payment required (3.5%, for example) and low closing costs. Anyone can apply for an FHA loan and an FHA loan is easier to qualify for than a conventional loan. Instead of PMI on your FHA loan, you will have MIP (mortgage insurance premium), which stays with the life of the loan. That means that unlike a conventional loan where you can remove the PMI, on an FHA loan, you cannot remove the insurance without refinancing the entire loan (which you have to qualify for in order to do).

A VA loan is guaranteed by the Veterans Administration and is available only to certain borrowers through VA-approved lenders. Usually, you need to be in the military or a veteran to qualify. VA loans do not carry PMI and there is no money down required.

Adjustable rate vs. Fixed rate
An adjustable rate mortgage (ARM) offers homebuyers with a low interest rate on their loan for an initial period, after which time, the interest rate increases or fluctuates for the remainder of the loan. This loan transfers the risk of rising interest rates to the buyer.

A fixed rate mortgage means that the interest rate on the mortgage is fixed at a specific rate for the entire life of the loan. For example, if you have a 15 year fixed mortgage at 4%, this means that your loan is for 15 years and your interest rate will be 4% for the full 15 years, regardless of the market.

PM (and MIP)
PMI stands for private mortgage insurance. As part of qualifying for a conventional loan, you will have to get PMI if you put down less than 20%. Once your equity in your home reaches 20%, you can get the PMI removed (lowering your monthly mortgage payment). However, with an FHA loan, the insurance stays on the loan for the life of the loan, regardless of the equity in the loan. The private insurance on an FHA loan is called mortgage insurance premium (MIP). There is no way to avoid MIP on an FHA loan.

15 year and 30 year loan
Lenders issue mortgages on 30 year or 15 year terms. You will be hard pressed to find a lender issuing a mortgage for a term other than 15 years or 30 years. The advantage of a 15 year mortgage is that you pay significantly less money in interest over the life of the loan than you would under a 15 year mortgage.

Co-signer
Like any other loan, a co-signer on a mortgage means that the person is binding himself to be legally obligated to make the debt payments should you default. So, if you have your mom co-sign on your mortgage and you default, she’s on the hook legally and will have to make payments. Similarly, if she wants to get off your mortgage, she can’t do so without you refinancing. If a co-signer is required, the lender is effectively saying that your financial history isn’t good enough and they want someone else to be on the hook, too.

Amortization Schedule
An amortization schedule is a complete table showing your payments, principal, and interest over the course of the loan.

Prepayment penalty
A prepayment penalty is a clause that will be in your loan documents (if it exists at all). A prepayment clause says that you will pay a penalty for repaying your debt early.

Offers and Counter Offers
When you buy a house, you will make an “offer”, which is an offer to buy the house. The seller may accept your offer or reply with a counter offer, which will state different conditions than what you offered.

Inspection
A home inspection is an examination of a home done by a home inspector to determine the condition of the home at the time of inspection. You will need to pay for a home inspection if you’re buying a house.

Appraisal
A home appraisal is an examination of the value of the property done by a real estate appraiser. An appraiser determines the monetary value of the property. You will need to pay for a home appraisal in order to provide your lender with the value of the property for which you are trying to purchase in order to get financing.

Transfer Documents
“Transfer documents” refers to the documents relating to the transfer of ownership from the seller to the buyer. Most documents will be signed by the seller and delivered to the buyer for your review. Documents include: 1) deed, 2) bill of sale, 3) affidavit of title (or seller’s affidavit), 4) transfer tax declaration, 5) transfer tax declaration, and 6) buyer / seller settlement statement. It’s important that you do your due diligence and read through the transfer documents to make sure everything says what it should say.

Home Loan Documents
“Home loan documents” refers to the documents relating to the mortgage issued by the lender to you, the buyer. These documents include: 1) note, 2) mortgage, 3) loan application, and 3) Truth-In-Lending Disclosure (TILA). There may be other documents included. It’s always a good idea to read the documents yourself and consider having an attorney read them for you, too.

Real Estate Title Documents
The title company and escrow company will also send you documents to review. The title company will send you the title insurance commitment showing that the party who has title is in fact the seller, in addition to any liens on the title. You should review this document and so should your attorney if you have one. The escrow company will also review it to make sure it says what it should say.

Title Insurance
Title insurance protects you and the lender from the possibility that the seller didn’t have free and clear title when the seller sold you the property. Getting title insurance is a standard step in the home-buying process. Your escrow or closing agent will typically help you get title insurance after the purchase agreement is signed.

Home Warranty
A home warranty includes basic coverage over certain things that may go wrong, such as plumbing, electrical, heating, and major appliances. The warranty is for a certain amount of time (like one year) and you have to pay for it up front if you want it.

Closing costs
Closing costs are fees paid at the closing of the transaction. Closing costs can be paid by the buyer or seller and they can be part of the negotiation process. Closing costs can be thousands of dollars, so don’t forget about them!

Escrow (and Monthly Payment)
When you get a mortgage, your lender may require you to set up an escrow account. A monthly escrow amount is added to your mortgage payment. The escrow payments goes toward real property taxes and insurance that you would otherwise have to pay once or twice a year. Instead, you generally will pay a monthly payment and the money sits in escrow to be paid by your lender when it’s due. This escrow payment is above the principal and interest portion of the mortgage payment and is required.

Homeowners Insurance
Most lenders require you to have homeowners insurance in place in order to obtain a mortgage; however, it is not required by law.

Property Tax
Property tax is the amount of money that you are required to pay based on the property’s assessed value. Property tax can be very costly, depending on where you live. This is something you’ll want to consider when calculating how much you plan on spending on your overall homeownership expenses. Property tax payments are usually due annually, but more often than not, they are divided into and included in your monthly escrow payment.

A Final Note!

In a perfect world, I would love to get a 15 year fixed rate mortgage using a conventional loan where I put down 20% (avoiding PMI altogether) in a great neighborhood close to the city (but not too close) with a white picket fence, red door, and black shutters with a boatload of money in the bank to go with it. But here I am, writing about the process and not buying any homes – I’m just trying to pay off my student loans. What’s my point? Take all of this with a grain of salt. My experiences are based off my friends and their experiences as recent homebuyers. I will say that many of my friends wish they knew more about the process before getting into it. There is power in knowing!

Do what’s best for you given your past experiences, current circumstances, and future hopes and dreams. Make good decisions. Buy a house when it’s right for you – and be smart about it. No one said this stuff was sexy – it’s just part of the process and part of being an adult.

Source: Buying a House First Time Buyer Guide | Financegirl

10 Red Flags To Watch For When Buying A Home

You’ve probably heard people describe nightmare scenarios on television or in person about finding something out about a home after they’ve purchased it. Most of the time the new homeowner will find themselves angry and skeptical of the recent selling party for potentially not disclosing something. The best way to avoid having to figure out what to do in that moment is to thoroughly inspect the home before the purchase is completed – specifically during the contracted inspection period. Well, here are some of the main issues that are worth combing over when inspecting a home.

 

10 Red Flags To Watch For When Buying A Home

Every house is different, and having someone help you investigate is probably a good idea unless if you consider yourself a real estate expert already. If you do want some advice feel free to contact me with the information provided below, or by submitting a question or comment below.

Grady Carter
Realtor®, GRI
Metro Brokers of Oklahoma
Lic. #160723