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What Every Homebuyer Should Know About FHA Loans

Saturday, August 22, 2015
by The Hat Team

The Federal Housing Administration (FHA) is a government agency within the U.S. Department of Housing and Urban Development (HUD). FHA is not a lender. It provides an insurance fund that protects lenders against borrower loan defaults. Therefore, to obtain an FHA loan, a homebuyer must get their loan through an FHA-approved lender. The actual loan and mortgage for your home is actually with a commercial lender.

home buyerNot all FHA-approved lenders offer the same interest rates and costs, even for the same loan. Therefore, borrowers need to shop around with multiple lenders for the best total package for an FHA loan.

Here’s some good news…

  • Perfect credit is not a requirement of FHA. The FHA does not dictate a minimum credit score. However, lenders can overlay their own requirements on top of what FHA requires. FHA provides leeway in underwriting for the lender by insuring the loan, but the final decision about the loan is in the lenders hands.

    The lenders’ underwriting of a loan is targeted at ensuring that the homebuyer “has the willingness and capability to repay the loan, but we do have flexibility beyond pure credit score to look at the borrower’s financial situation,” according to Vicki Bott, HUD deputy assistant secretary.
     
  • The minimum down payment is 3.5% of the purchase price of the home. Borrowers can use their own savings for the down payment. But, they can also use other sources such as a gift from a family member.
  • Closing costs may also be covered. FHA allows home sellers, builders, and lenders to pay some of the borrower’s closing costs. However, lenders often charge a higher interest rate if they agree to pay closing costs.

Here are some cautions…

  • Homebuyers should get a Good Faith Estimate (GFE) of closing costs from the lender when shopping for their loan.
  • Mortgage Insurance is a must. Two premiums are required on all FHA loans: first, an upfront premium of 2.25%, charged when the homebuyer gets the loan (but may be financed in the loan); and second, an annual premium of 0.55% paid monthly with the mortgage payment.

Many homebuyers feel this all sounds expensive. However, the alternative is potentially not qualifying for a loan at all. The borrower must compare total costs of the purchase with the equity that potentially is possible in the long haul…along with careful shopping for the loan. Click here for more details.

Information courtesy of Montgomery AL Realtors Sandra Nickel Hat Team.

 

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Get Ready for College

Thursday, August 20, 2015
by The Hat Team

One of the important things as a parent is to plan for their children’s education. Let’s look at two different approaches: a savings account or investing in rental real estate.

for rentAssuming your child is five years old and you start putting $250 a month in a savings account earning 2%, in 13 years you’d have $44,497.41 to pay for their college. Anticipating that isn’t going to be enough, you’d have to save $500 a month to end up with $88,995.

Another way would be to make a lump sum contribution of $20,000 today in a mutual fund earning 5% that would be worth $37,713 in 13 years. You’d have to make a $47,196 initial contribution to end up with the same $88,995.

An alternative to savings would be to invest in a $100,000 home in a good area. Assuming a three percent appreciation and rent of $1,000 a month, an initial investment of $23,500 could have a future wealth position of $83,838 at the end of 13 years.

Obviously, this is just an example of why rental homes are the IDEAL investment providing Income, Depreciation, Equity build-up, Appreciation and Leverage. While rentals certainly have more risk and management than a savings account, they do provide an opportunity for a higher rate of return.

If you’re concerned about paying for college tuition in the future, it is certainly worth investigating the possibility of investing in rental homes today.

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Do I Really Need a Home Warranty?

Wednesday, August 12, 2015
by The Hat Team

This blog is not about selling home warranties! It’s about providing information, some of which you may not have considered before.

home warranty

Both buyers and sellers benefit from home warranties! That is especially true when the sale/purchase involves an older home. RISMedia.com recently interviewed Mark Barry, with American Home Shield. He said, “New homeowners want to be confident that they made a smart purchase and to know that they’re prepared for the unexpected” after they purchase.

But, what about sellers? Consider what a home warranty provides for both sides of a transaction, starting with defining “home warranty.” A home warranty policy is a little like an insurance policy, but different. Insurance typically pays out a predetermined amount of money if something goes wrong. Examples include an auto accident, a fire covered by homeowners insurance, and life insurance.

A home warranty covers breakdowns of home systems, such as heating and air conditioning components, and major appliances. It does not just pay out for a loss. It either repairs the component that failed or replaces it.

Home warranty companies have contracts with local repair companies. When something goes wrong with your home, a local contractor is sent to repair it. If it can’t be repaired, it will be replaced. The warranty policy defines deductibles and restrictions…so read the fine print!

Benefits to sellers are often overlooked. A seller can buy a home warranty policy in advance of putting their home on the market. Some benefits to doing that are…

  • Protection against the cost of breakdowns during the selling process
  • Prevention of a buyer opening downward price negotiations while under contract
  • The marketability of the property is enhanced with the added protection
  • The policy can be transferred to a buyer, making the property more attractive

Homebuyers, especially first time buyers, are looking for assurances. A home warranty gives them confidence that they’re not buying unforeseen problems due to their inexperience.

  • The home warranty can be transferred to the new owner
  • The buyer is protected against breakdowns for up to a year
  • The annual policy is renewable at the new owner’s option

In short, there is potential peace of mind for both buyers and sellers in your home sale/purchase. Do some research and make sure both parties have clear expectations. Make sure you understand what the policy does, and does not protect. And then rest easy that you are protected.

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Looking To Add Value To Your Home? Consider an Outdoor Space

Tuesday, July 21, 2015
by The Hat Team

There are many reasons to consider adding an outdoor living area to your home! The benefits are many and personal. But, one added benefit is the value it can add.

outdoor spaceA recent article in RISMedia, a real estate information leader, highlighted 5 reasons to invest in outdoor spaces. According to IBISWorld, a market research firm, “investing in outdoor living provides a good return on investment for most people, making it an ideal home improvement project.”

Here are some benefits to consider:

  1. Personal enjoyment. Why spend money on home improvements unless they provide personal enjoyment for your family? This can range from providing a space to relax and unwind, to providing a place to simply enjoy each other and have fun, to providing fun for the kids.
     
  2. Save money by having an enjoyable place for your recreation right in your own backyard. Having outdoor spaces at your home means that it is custom made to your desires and you don’t have to get in your car to go somewhere else. The money saved in gas or fees to join a club can be better spent on your own space.
     
  3. Entertaining opportunities abound with your own private outdoor space. Imagine your indoor entertaining space flowing to the outdoors with a place for a fireplace or outdoor barbecue kitchen. It creates more opportunities for adults to have a space to talk and for the kids to have their own recreation opportunities.
     
  4. Benefits of nature. Lot’s of research demonstrates the benefits of spending time outdoors, including stress reduction and improved mental clarity and concentration. Stepping out of your indoor environment into a relationship with nature in any form transforms our ability to relax.
     
  5. Resale value of your home will be enhanced almost immeasurably by creating outdoor spaces. You shouldn’t necessarily count on recuperating 100% of the cost, but HGTV claims that homeowners recoup 65%-90% of their investment just by adding a deck! Meantime you and your family enjoy the added benefits of the outdoor living, and when you decide to sell there is an intangible added attraction for potential buyers.

Bob Dallas, CEO of UltraOutdoors.com, explains “not only is it good for the value of your home, but it’s a solid investment for…giving your family a relaxing area where they can re-charge their batteries.”

Research the many options including outdoor fireplaces, kitchens, water features, decks, sitting areas, and landscaping. The possibilities literally range from the extravagant to the very modest. Consider seeking the help of a design professional. The key is finding just the right combination of possibilities for the enjoyment of your family.

Information courtesy of Montgomery Realtors Sandra Nickel Hat Team.

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Three M's of Homeownership

Saturday, July 11, 2015
by The Hat Team

Among the many reasons people have to own home, they include having a place of their own, to raise a family and to share with friends. Additional benefits include security, investment, peace, pride and enjoyment.

home maintenance 250.jpg

Together with the benefits come the responsibility to take care of the home for its livability and viability as a sound decision. A homeowner’s concerns can be broken down into three areas.

The maintenance on the property is something that every homeowner deals with. Changing filters are easy to handle yourself. Other things might require a skilled professional but identifying the “right” one can be challenging.

Minimizing expenses can reduce the cost of living in the home. It’s good to recognize when a repair is appropriate compared to a replacement. Reputable and reasonable service providers are key to keeping expense low.

Managing debt and risk becomes the financial side of the effort. Taking advantage of low interest rates or shorter terms for refinancing, making additional principal contributions are just a few ways to manage debt. Home warranty programs and homeowner insurance tips can reduce risk.

We sincerely want to be a resource for you not only when you buy or sell but all of the years in between. It is actually the reason we send this newsletter to you.

Information courtesy of Montgomery AL Real Estate Experts Sandra Nickel Hat Team.

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Is It Time To Downsize Your Home?

Friday, July 10, 2015
by The Hat Team

If you’ve officially joined the ranks of the empty-nesters. one of the first questions that usually comes to mind is should we downsize our home. The kids are gone and we probably don’t need this big house. But is buying a smaller home right for you? Obviously, there are pros and cons to consider about both your finances and lifestyle before making a decision.

downsizeReasons not to downsize:

  • The family is spread all across the country and you want to have a place for everyone to gather for the holidays and vacations.
  • You’ve been in your current home for many years and have filled it with mementos you don’t want to part with.
  • You’re not emotionally ready to pack up and leave a lifestyle you worked hard to create. Leaving family, friends and familiar surroundings is more than you can bear.
  • You enjoy the feelings that go along with your larger home. A smaller home will not feel right for your current lifestyle.

Reasons to downsize:

  • The lower (or zero) mortgage payment that comes with a smaller home would give you more discretionary funds to travel and enjoy other recreational activities.
  • A smaller home means less to maintain and more time to play.
  • You and/or your spouse are not able to navigate the stairs like you use. A single level home is more desirable.
  • A smaller, newer home is more efficient and cost effective.
  • You need to be closer to a family member who needs assistance and your attention.

If you decide to downsize, make sure the new home fits both your lifestyle and pocketbook. Talk with a real estate professional about how much money you will net from the sale of your current home, as well as the costs of buying another one. Look into how much it would cost to move and to maintain the smaller home. Make sure it really is cheaper to live there. Downsize only once you’re satisfied that the finances make sense.

Buy into your new lifestyle

A smaller house in your current neighborhood could be the right decision if your priority is maintaining close ties to neighbors. Just make sure there are amenities like public transportation and stores nearby if your health begins to deteriorate.

A retirement community could be perfect if you never want to move again and you want to focus on travel, hobbies and perfecting your golf stroke instead of mowing the lawn. Talk to current residents to see whether they’re happy with the rules and the way things are run. Another option you may prefer is a condominium to eliminate the maintenance but not be locked in for life like many life care communities.

It is a big decision to downsize. So, make it carefully, do not rush, and get professional advice about the real estate and financial aspects of moving.

Information provided by Montgomery AL Realtors Sandra Nickel Hat Team.

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4 Tips to Prepare Your Home For Summer Vacation

Friday, July 3, 2015
by The Hat Team

Summer has arrived!  Many families plan for their summer vacation months in advance but did you know that you need to prepare your home for your vacation as well?  Below are a few tips on what you should do to prepare your home for your summer vacation.   

  • summer vacationMow your grass before you leave for your vacation.  I would suggest that you set the mower on the shortest cut you can get so that you don’t have to worry about it growing up while you are gone.  If you are going to be gone for an extended period of time you may want to arrange to have a family member mow your yard at least once while you are gone.  Mowing your yard before vacation makes it look like you are still at home and therefore may keep away potential intruders. 

     
  • Another thing you should do before you leave on vacation this coming summer is to contact the post office and have your mail canceled while you are gone.  You can pick your mail up at the post office once you arrive back home and start your service back up.  This may sound like a huge ordeal but it really is an easy way to keep things neat and tidy while you are away from home.  This simple act will also deter intruders.
     
  • If you don’t want your house to stand out as if no one is home, you may need to install a flood light that is activated by motion outside of your home.  This way if someone walks up to your house that is not suppose to be there the neighbors will be able to see them and can report anything out of the ordinary.  Another thing you can do with lights is to set a few inside lights on a timer so that it looks like you are home.
     
  • Some water heaters have a VAC mode otherwise known as a vacation mode. If you have this setting on your water heater it’s a good idea to use it while you are away.  Doing this is not only a good way to save on your bill but it is also a good way to avoid any type of flooding that may occur while you are gone.  The last thing you want to come home to is a flooded house due to a broken or burst pipe.

Hopefully these tips will get you started in the right direction before you set off on your summer vacation and you’ll be able to relax and have fun without worrying about your house! 

Information provided by Montgomery AL Realtors Sandra Nickel Hat Team.

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Montgomery AL Real Estate For Sale: 3706 Cricklewood Dr

Tuesday, June 23, 2015
by The Hat Team

Montgomery Homes For Sale:

3706 Cricklewood Dr Montgomery, AL 36109
MLS #318836

Splendidly Renovated in Dalraida!

Distinguished Dalraida home has had stunning and complete renovation! Breathtaking views of the sparking pool with new liner from den, breakfast room, kitchen and main bedroom! Need 4 bedrooms, it’s got it! Kitchen includes hard surface flooring, granite counter tops, tile back splash, and stainless appliances. New, new, new... fixtures, hardware, lighting, new roof, new windows, new upper and main level HVAC and the list goes on. Two separate living spaces for entertaining, one overlooks pool, one has a fireplace! Home comes with a one year AHS Warranty for your peace of mind. Corner lot and fenced backyard with refreshing cool pool! Large metal storage building with roll up door to store all your things or even your car! Call us or your favorite agent to view today!

Marketed by Montgomery Alabama Realtor Sandra Nickel, Sandra Nickel Hat Team.

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Take Pictures Now

Thursday, June 11, 2015
by The Hat Team

Preserve the memories you’re making by taking photographs of your home now. The pictures will remind you of the role your home played with your family and life.

houseReminiscing is easier when scrolling through pictures to remind you of people and times. One of the least heard regrets is that we should have taken more pictures.

Shots to consider:

  • The front of the home from across the street    
  • Times when your yard and plants looked exceptional
  • Holiday decorations
  • Special occasions in the homes like birthdays, anniversaries, graduations, etc.
    Home improvements
  • Major purchases for the home
  • Times when the home looked the best and the worst
  • Family, friends and pets in the home
  • Your children’s height marks on a door frame
  • The view from a favorite window

From an organizational standpoint, put the pictures in a folder with your address as the name. Even if you don’t take time to name each picture, you’ll have the file date to identify when it was taken. Since the cost of film and processing has disappeared, there is little reason not to chronicle your life in pictures.

Information courtesy of Montgomery AL Realtors Sandra Nickel Hat Team.

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4 Tips for Buying Your First Home

Thursday, May 28, 2015
by The Hat Team

If you are in the market to buy your first home, you have come to the right place.  We are going to give you a few tips that might make buying your first home a good experience.  Buying a home can be a fun and exciting experience.  Buying your first home is a monumental time in your life and needs to be done right to assure you get all that you want out of it. 

  1. home buyerThe number one tip for having a great first time home buying experience is to find the right Realtor.  Sure you can find a Realtor quickly and easily as they will all likely be eager to help you with your home purchase but if you don’t find the right one you may be sorry later.  It is good to find a Realtor that shares some of your personality traits.  You may want to actually interview a few different agents before making your decision.  A good place to start looking for an excellent Realtor is by asking your friends and family members who they may recommend.
     
  2. Finding the best mortgage lender is also a key to a quality first time home buying experience.  Lenders are a dime a dozen so you need to be careful who you choose.  You may find that one lender in your area of town may offer a much better deal than one on the same side of town.  Again you may want to “interview” a few different lenders to find out who is willing to give you the best deal possible.  Keep in mind that mortgage lenders are basically sales people.  They are trying to get you to get your mortgage with them versus another lender.  Use that to your advantage.
     
  3. When buying your first home, be sure not to let your feelings and emotions get in the way if you get bad news. For example,  if you have your heart set on a particular house and then you find out that it is way out of your price range or that there are many problems that need addressing with the home  you are going to need to be able to quickly move on to the next house without getting upset about it.  You can make any house a home once you move in and put your own personal touch on it so don’t get discouraged and don’t be too quick to jump into purchasing the first house you see or like.
     
  4. Before buying your first home it is a good idea to have all of your financial affairs in order.  For instance if your debt to income ratio is a bit off you need to work on that before making a home purchase.  You are going to want to get the most house for your money and by doing your best to get your finances in order and get pre-qualified before you start looking you will be moving in the right direction. 

Information courtesy of Montgomery AL Realtors Sandra Nickel Hat Team.

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