Are you like most homeowners, completely unaware of the average appliance life expectancy of each product you own? What happens when your dishwasher goes out? Is it in need of a simple repair or has it lived well past its best by date? It’s hard to know if it’s time to invest in a new appliance or ante up for the repair unless you know what you should expect from each appliance.
Being a homeowner comes with some expected costs which includes maintenance, repair, and replacement of household appliances. When you know how long you can expect your appliance to last you are better able to budget for these costs so that you will never be hit with an unexpected expense. In order to ensure you can make the most of your appliance life expectancy, it’s important you keep up on the cleaning and routine maintenance that each manufacturer suggests. This will keep the appliance running smoothly and hopefully stave off any repairs that can easily be prevented.
I had the pleasure of chatting with Robin Nouu of Snowflake Donuts on Louetta in Spring, Texas. Watch the video below as she talks about the donut shop, explains some of their specialty items, and gushes about her customers. You will absolutely want to stop by for one of her famous boudain egg rolls!
Today I visited the new community of NorthGrove, specifically the builder Chesmar Homes. I spoke with Pepper Smith, one of the company reps, who was happy to tell us a little bit about their product. Take a look!
Being a veteran means that a person has put his or her life on the line for our country. One of the ways that we as a country repay our gratitude to veterans is by providing them the benefit of the VA Home Loan. VA Home Loans are mortgages guaranteed by the U.S. Department of Veterans Affairs. They provide several benefits over traditional home loans.
In 1944, President Franklin D. Roosevelt signed the Servicemen’s Readjustment Act which is commonly referred to as the G.I. Bill. This provided funds for education, unemployment insurance, and housing to war veterans who were just returning from WWII. The National Resources Planning Board studied what the 15 million men and women would most need upon their return. The bill was an attempt to stave off a post war depression by providing opportunities for troops to gain new skills through education and training. Veterans still use these benefits to this day to go to college and obtain low interest, low cost home loans.
In short, most veterans who left the military in good standing (no dishonorable discharge) are eligible for a VA Home Loan. A person will likely be eligible if he or she is a part of one of the following groups:
- Active Duty Service Men and Women – Anyone who served a minimum of 90 days in the military during war time.
- Active Duty During Peacetime – Anyone who served a minimum of 181 days as full time military personnel during peacetime.
- National Guard or Reserves – Anyone who serves a minimum of 6 years in the National Guard or Reserves.
- Surviving Spouse – An unmarried person whose spouse either perished while serving active duty or passed due to a service related disability.
There are certain requirements for different time periods; post Vietnam, for example. But those general guidelines are a good place to start determining eligibility. You can visit Military VA Loan for a more detailed outline of those guidelines.
Once a person has determined his or her eligibility they need to obtain their Certificate of Eligibility (COE). This verifies for the lender that you are able to obtain a VA Home Loan. A veteran may request their own COE, however the process may be timely taking anywhere from 4-6 weeks. To expedite the process, a VA approved lender may request the COE online and receive it in minutes. Obtaining a COE is NOT a borrower’s necessary first step in the process. Speaking to a lender first is usually the way to go.
Benefits of a VA Home Loan
Why would a veteran select a VA Home Loan over any other loan offered? The benefits can be wonderful to the borrower. Some of the most highly toted benefits include:
- No Down Payment – This is generally the reason most veterans choose to use their benefit. With no down payment required it can save the service member thousands up front.
- No Private Mortgage Insurance – With other home loans, a borrower can be required to carry a PMI policy if they do not put at least 20% down upon purchase of the home. This insurance policy can add a significant amount to a home buyer’s monthly mortgage payment.
- Low Interest Rates – While the Department of Veterans Affairs does not directly offer these loans, they do partially guarantee them, which allows banks to remain competitive in their offerings.
VA Home Loan Closing Costs
While a down payment is not required, a VA Home Loan will still incur closing costs. These closing costs can vary anywhere from 1-3% of the loan amount on a larger home purchase to 3-5% on smaller homes. The seller is allowed to pay all of the veteran’s closing costs up to 4% of the home sale price. This will be negotiated at the time of offer.
The VA limits the amount of fees a lender may charge a veteran which is a great benefit to the borrower. The following are expenses a veteran can expect to incur when utilizing a VA Loan.
- VA Funding Fee – This number can vary greatly and depends on the service person’s history; is he active duty, was she a member of the Reserves, how long did they serve, etc. These will determine the funding fee charged but one can expect somewhere between 0.5-3.3%. This funding fee may be waived if the borrower is receiving disability from the VA. The funding fee will go directly to the Veterans Administration and helps pay for the VA program.
- 1% Origination Fee – The VA only allows the lender to charge a 1% origination fee on VA Home Loans. If this fee is charged to the veteran, they may not charge for other things such as processing and underwriting.
- Discount Points – A borrower may choose to pay down their interest rate by paying for discount points on their loan.
- Third Party Fees – During a home purchase transaction, third party fees may be incurred. These can include, but are not limited to: appraisal, recording fee, credit report fee, flood certification, survey, etc. Be clear about which of these will be your responsibility as they are ordered.
- Pre-Paid Items – Lenders will require that certain balances be paid up front to maintain the integrity of the collateral on the property. These items include, but may not be limited to: property insurance, flood insurance, escrow deposit/tax and insurance reserves, etc.
Non Allowable Fees
Non allowable fees are fees that are typically charged to a borrower when obtaining a loan that MAY NOT be charged to the veteran when obtaining a VA Home Loan. There are two lists of non-allowable fees. Which list of non-allowables applies to the veteran’s loan depends on whether the lender is charging the 1% loan origination fee OR if they are going with a more piecemeal approach to the loan. To get the list that pertains to the loan you are getting, consult your loan officer. The items that are always non-allowable, regardless of loan origination fee charge or not, are as such:
- Lender charged attorney fees
- Mortgage broker fees or commissions
- Real estate agent commissions
- Fees for an appraisal requested by the seller or lender for a Reconsideration of Value
- Flood Zone Determination fees requested by lender or appraiser
In some states, a wood destroying pest (termite) inspection is required by the VA. Some states count this as a non allowable cost to the veteran, while some do not. Texas requires an inspection, but a borrower may pay for the inspection in our state. Typically, however, lenders will set it up as a seller incurred fee.
If you are a veteran and are considering a VA Home Loan, I hope this information proved helpful. The VA Home Loan is a wonderful option for those who are eligible to be able to purchase a house without paying a lot of the fees normally associated with the process. If you have questions, or if you would like me to introduce you to a VA approved lender, please don’t hesitate to ask. I am happy to help you with any aspect of your home buying journey.
Home buying doesn’t have to be daunting. I want to make sure you understand the entire process from start to finish. Below you’ll find a convenient infographic that outlines the 10 basic steps to home buying from start to finish. Let’s go through them in a little more detail.
I know everyone wants to jump right in and start looking at houses. While that may be the fun part, if you’re really serious about home buying, we need to get our ducks in a row. That means you really need to take a good, hard look at your finances and credit first. As I mentioned in the previous post, you need to pull up your credit scores and see what you’re working with. If you don’t know what your credit score means, take a look at the infographic in the other article to understand how far off from getting accepted for a loan you really are. One major thing that really contributes to your readiness in the home buying process is paying down your debt. Lenders look at your debt to income ratio to determine your credit worthiness just as much as they do your credit score. So if you make a lot of money, but you still have a ton of debt, you may need to make sure that is taken care of before you can be approved. You also need to make sure that you can’t JUST afford your mortgage. There are costs associated with home ownership that need to be considered as well. Included in your mortgage payment you’ll have to consider property taxes, interest, and insurance; both PMI if required, and homeowner’s. Not to mention, what if something breaks? Can you afford to replace an AC in the middle of Houston’s blazing hot summer? Keep in mind yard maintenance, HOA fees, and all of the things that can break. Not everything will always be covered by your home warranty! Lastly, make sure you understand the process of home buying in and out so you understand what will be expected of everyone involved.
Ok, you have that stuff all figured out and you’re ready to get serious about home buying. Great! The next step is to speak with a lender. This is NOT the place to be shy. What we need here is complete transparency. You may think you can fudge on the numbers, but you’re not going to do yourself any favors here. Be honest about all your income and all your debt. It will come out in the end anyway, but it’s best to know before you go under contract! Often it only takes 15 minutes to get started, so get a trusted lender on the phone and have him or her pull the information to see what you can get pre-approved for. This does two things; it sets your financial expectations up with reality and it gives you credibility when you finally find the home you want to put an offer on. Besides, any Realtor worth working with is going to ask you if you’re pre-approved before showing you anything anyway. While looking at homes is fun, we don’t get paid to open doors. We want to know that you’re a serious buyer and respect our time as well.
That brings me to the next step. You need to hire a Realtor®. One bonus for you, 99.999% (percentage is an estimate) you won’t have to pay for you yourself! Typically the seller will offer compensation to the agent who brings the buyer so you get fiduciary representation without the fee! Great! There are instances where this might not happen, in which case you and your agent will have an agreement between both parties to work that out. What does hiring a Realtor® get you during the home buying process? Realtors® are a fiduciary which means they must put your interest above their own. They are bound by a code of ethics that means that you are protected. It’s important you find an agent who you think you can work well with. Feel free to interview a couple before making a decision. You should feel confident in your Realtor® to represent you in this major transaction. Expectations between both parties should be set. What this means is that both parties understand that time is valuable on both sides, and neither one will waste the others resources. Communication standards should be set so there will not be a lapse. Do you prefer to receive an email to a text? Be sure to let the agent know. What does he or she do about off hour communication? Can you accept that this person may not be available all hours of the night? Do you trust that he or she will get answers to you in a timely manner? Compatibility is important here.
Now that you’ve found representation, your Realtor® will likely begin the online home search. Personally, when working with clients during the home buying process, I will set up a daily email that sends new homes that meet your criteria that we outlined during the interview. It’s fun, but it’s also an important way for you to get a feel for what is available in your price range. Get to looking at the neighborhoods that keep popping up. Maybe even go drive them at night and see what it’s like. Note the nearby restaurants and stores. Even if you don’t have children, take a look at the schools and see how they measure up. While you may not have kids, someone who might someday buy your home might, and this is an important thing to consider. Is there major highway access that will make your commute easier? Really put yourself there to see if it fits how you envision your life. Then narrow down the location to look more intensely.
Once you have narrowed down the areas you like, it’s time to start looking at homes. This may be the most fun part of home buying. If I may suggest, I think this is the time to be really picky. You should outline your “must haves” and “absolutely nots” with your agent so that if a house pops up that looks ok but doesn’t have your must have or does have an absolutely not, DON’T SEE IT. If you are not completely deliberate in your home search you can end up wasting both your and the agent’s time. Only go see homes that you are absolutely dying to see. On the flip side, don’t get too emotionally invested in a house. In real estate, it ain’t over until the ink is dry. While it’s important to love the house you’re going to ultimately live in, getting emotionally invested in a home before it’s yours can cause you to make silly, and often costly mistakes.
So you’ve found “THE ONE”! How wonderful. We love this moment. It’s time to make an offer! Your agent should pull “comps” (comparable homes that have sold and are for sale) so you know what the going rate is. Is it a hot market? Has that home been sitting there for a while? There are a lot of factors to consider when submitting an offer and your agent will help you in figuring out what to do. Ultimately, though, that will be up to you. During this step, you may receive a counter-offer from the seller. Don’t panic! This can be a good thing. Rather than an outright refusal, they are considering your offer with a small change. Are you willing to meet them in the middle? This is up to you. This is where NOT being emotionally invested comes into play.
Once both parties are satisfied with the terms you will execute a contract. Congratulations! Your offer has been accepted and you are “under contract”. This is where we really put our nose to the grindstone to make sure everyone ends up happy at the closing table. Several things have to happen along the way, though. First things first, we open title at the local title company and the wheels begin to turn!
Your executed contract will outline whether or not you have an option period (you typically want this unless you’re an investor who buys without worrying about incurring a lot of risk). This period is completely negotiable, but let’s use, for example, a 10 day option period. During that 10 days it is up to you, as the buyer, to do your due diligence. What this means is that you want to inspect the property and make sure that there aren’t any glaring issues that you need to address. You will hire an inspection company to come out and do a thorough and comprehensive inspection of the entire home. The company will then provide you with a very detailed report of its findings. It is up to you to make sure you understand everything outlined. Ask questions! It’s ok, you hired them. If you don’t understand something written in the report, be sure to get some clarity. Along with a basic home inspection, you may consider a termite and pest inspection. If the roof is questionable, it might be worth having someone out to look at it. Cover your bases here. This will be a big investment. Once you get all these reports back it’s time to determine if there is anything worth addressing with the seller. During the option period you are free to back out of the contract without losing anything other than the fee you offered for the option period. If you find out that the house is falling into the ground and want to back out, that’s your right. But if the water heater just looks like it needs to be replaced and isn’t THAT big of a deal, maybe you can ask the seller to replace it. Depending on what issues pop up, you can determine how you like to proceed. Your Realtor® will then notify the seller’s agent of your requests and you can negotiate again. If everyone agrees, we move forward.
As your loan goes through underwriting, the lender is going to order an appraisal. This means an appraiser comes to the home and assesses it’s value. If the home value is determined to be at or above your offer price, you’re good to go! There are times when an appraiser might request certain repairs be done to satisfy certain loan requirements. The buyer and seller can then determine how to handle these requests. If they choose not to complete them, the loan cannot be granted and often times the buyer is able to terminate the contract, provided they maintained that protection in the write up. Most of the time, though, the buyer and seller both want this transaction to go through so some sort of negotiation will happen yet again. If the house fails to appraise at sale price there are a few options which I will outline in future posts. But for now, let’s just imagine that your house appraised and you are good to go! Now we just wait for title and the lender to give us a clear to close!
Three days prior to closing you will receive your CD (closing disclosure) to review. Make sure that everything looks good and correct anything if you see any mistakes. It happens. No big deal. Once you have received the clear to close, be sure to do your final walk through and acceptance. This will be your last chance to make sure any repairs have been done, any included appliances are in working order, etc. If something is amiss it’s now or never time. Get it fixed before you sign on the dotted line.
Assuming the walk through went without a hitch, the last and final step is closing! Congratulations, you are a new home owner! You and your agent will go to the title company where you will sign a bunch of documents which makes the home yours. Once funding is approved, your agent will hand over your keys.
Now see? That wasn’t so hard, was it? Are you ready to get the process started? Give me a call or drop me a line.
It’s not unusual for people to believe that they are unable to purchase a home. They are happy to continue renting thinking they could never get into a home of their very own and begin building equity. I’m here to tell you that’s just not true! Here are some of the most common home buying myths, busted.
- I will have to put down 20% to purchase a home. False! There are certain government backed loans that allow borrowers to put down as little as 3.5%, and sometimes even zero if they qualify. It’s best not to speculate. Get a lender on the phone now and see what is available to you now. If you need a referral to a lender, please reach out to me and I would be happy to connect you.
- Only people with a lot of money can afford to buy a home. False! While income is important, it is not the top determining factor in qualifying for a loan. What the lender is really going to pay attention to is your debt to income ratio. That means if you don’t make a lot of money but you ALSO don’t carry a lot of debt, you are sitting in a good position. Like I said above, connect with a lender and see if you qualify. You may be surprised.
- My credit score is too low. A lot of times this keeps people from even considering home buying because they think they just can’t qualify. This may not be the case. As I mentioned in the previous post, you can qualify with a score as low as 500 but it can be tough. You may be required to have a larger percentage down with a lower FICO score. But if you have a score of 580 or higher you may qualify for as little as 3.5% down. Again, it’s no use speculating. Know for sure and speak to a lender.
- It’s cheaper to rent than to buy and be responsible for home repairs. Any landlord worth his or her salt is going to make sure their investment is protected. Guaranteed they have factored in the cost of home repair and maintenance into your rent, along with taxes, insurance, and other expenses. Why not use your money to protect your OWN asset, and put that toward your own home?
Are you rethinking things now that you know that I’ve addressed some of the most common home buying myths? Are you going to start looking at your options? I hope so! There are easy ways to get you on the path toward home ownership.
Before you even begin the process of looking for a home (the fun part) you have to get all of your ducks in a row and do the boring adult stuff like learning about loans and figuring out if you even qualify for one. So let’s start at the very beginning and outline what you need to know to even find out if you can borrow money. You can easily pull your personal information on your personal credit report and credit score. It really isn’t all that hard once you start the process, but I find sometimes it seems so unapproachable people avoid it all together and continue renting when they could absolutely be homeowners.
Get Your Report and Score
First things first, you need to pull your credit report. You can do this once a year, for free, from all three major credit reporting agencies at Annual Credit Report. Why are we looking at your credit report? You want to make sure everything is on the up and up. Do you see a debt listed that isn’t yours? You have some work to do to address that. Do you have an account in collections? You’re going to need to clear that up before you can borrow money.
Secondly, we need to look at your credit score. The FICO, Fair Isaac Corporation, score is going to be the most widely used by lenders so we’re going to look at that. Your credit score is going to be dependent on the following factors: 35% payment history, 30% amount owed, 15% length of history, 10% new credit, 10% types of credit used. While the exact formula is “top secret” this should give you an idea of what things are the most important to creditors. Your score is important, because the higher your score rating, the more likely you are to get a suitable, lower interest loan. Scores range from 300-850 and different loans have different minimum scores to be approved.
FHA Loan Minimum
In 2018, the MINIMUM credit score for an FHA loan is 500. But in order to be able to take advantage of the 3.5% down payment option, borrowers are going to need to have at least a score of 580. It isn’t a given that you will be approved with that number, however, as each lender has their own additional requirements on top of that. It isn’t uncommon to see a minimum requirement of at least 600 for an FHA loan these days. These all vary from institution to institution so check with your lender to find out their individual requirements.
VA Loan Minimum
VA loans are available to eligible former and current service members. While the VA has not set a minimum credit score, lenders typically look for a credit score of 620 or higher.
Conventional Loan Minimum
A conventional loan is going to require a higher credit score because it is not a government backed loan, but rather a loan provided by a private lender. You’ll find that the average minimum credit score for a conventional loan is 640.
USDA Loan Minimum
A USDA loan is not going to be available to everyone as it is location dependent. But, provided the property you are purchasing is in a qualifying area, a USDA loan is going to require a credit score of 640 or higher.
It’s important to note, that credit scores are not the only thing lenders look at when determining whether your qualify for a loan or not. They will also take a look at employment history, how much debt you currently carry, and how much of a down payment you are able to put down.
In later posts, I will outline in much more detail what each of these loans requires and offers to you as a consumer, but for now, as a first step, it’s important to see where your credit scores line up. Are you sitting at 700 and have a wider array of options available to you? Or are you looking at a lower score that you’d like to bump up?
*The information presented in this blog is in no way meant to be considered financial advice. Data given is in no way a guarantee of loan approval, nor does the information provided ensure a line of credit. Please speak with a loan officer to determine your actual credit worthiness. Numbers here are meant only as a guideline.*
As you move toward the home buying process, one of the first things you need to do is assess your finances. This means you need to pull a credit check, see if you need to do some damage control, and really figure out if you are in a position to buy. When you finally speak to a lender, your head might start spinning when they start throwing phrases at you that you aren’t familiar with. So I’ve put together this handy Lender Vocab Quick Sheet to help.
Get familiar with these terms so you know what you’re going into. Being a first time home buyer is a big decision and I want to make sure you understand the process fully. From pre-approval to PITI (principal, interest, taxes, and insurance) and everything in between, let’s make sure you leave without any questions left on the table.
I know it may seem a bit premature to throw this at you, being as this is my first post, but I want you to get acquainted with the terms and then we will go over each more in depth. Keep following the blog as I walk you through the process of both buying and selling a home. By the end you will feel completely prepared for this momentous life decision.