Resale ROI - Return On Investment

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Should I Use a Mortgage Broker or Find My Own Lender?

When shopping around for home loans, potential buyers often ask this question: "Should I use a mortgage broker or find my own lender?" The answer depends on your financial situation, your willingness to fill out paperwork, and your comfort level with the mortgage process.

"It's smart to compare multiple sources to determine the terms that work best for your personal financial situation," says Bruce Elliott, ORRA president and REALTOR® in Orlando, FL.

If there's ever a time to do your research, it's now.

So before you embark on the mortgage process, let's take a look at the pros and cons of hiring a mortgage broker versus finding your own lender.

Using a mortgage broker
A mortgage broker takes your mortgage application and shops it to various lending institutions to find you the best deal. The broker helps you navigate the process with your individual financial needs in mind.

"The mortgage process is so convoluted," says Stephen Rybak, a senior managing director at Guardhill Financial Corp. "Nine out of 10 lenders are offering the same rates. We're here to take care of people and make the process easy."

Using a mortgage broker offers some advantages:

• You have to fill out the mortgage application only once. After that, the broker contacts the lenders on your behalf.
• You have an advocate. The mortgage process can be a paperwork nightmare, especially for first-time buyers. A broker helps you with all of it, every step of the way.
• A broker has access to many different lenders. "We work with more than 50 different banks," says Rybak. "We know the best terms they can offer."
• If you have anything negative in your credit past, a broker can help. "A mortgage broker can also help borrowers who may have derogatory marks on their credit such as bankruptcy, foreclosure, or late payments history," says Elliott.

Using a mortgage broker has some disadvantages:

• Paying a fee for the broker's help. It depends on the specifics of the loan and the broker, but having a middleman can sometimes lead to higher fees and costs. Always carefully read all of your loan documents and ask about any fees you don't understand.
• A slower process. "Working with a broker may slow down your application process, because the broker has to shop around," says real estate expert Michele Lerner.

Going directly to a lender
If you feel comfortable shopping around, going directly to the source—whether it's a bank, credit union, or mortgage company—could be the better option for you.

Going directly to a lender has some advantages:

• You can be as hands-on as you want to be in finding the right deal for you.
• If you go with your own banking institution, you may qualify for customer loyalty rates. "Many of these institutions have special programs you may be eligible for, including a low down payment loan," says Lerner.
• If you use your bank, the paperwork is faster and easier.

Finding your own lender has some disadvantages:

• It's up to you to do all the shopping around, which can be overwhelming, especially if you're new to the process.
• You have to fill out a separate application every time. Instead of just one application package, you'll be applying from scratch with each institution you're interested in.
• You don't get as much guidance. At a bank, you don't get to choose the loan officer you work with.

Feel free to shop around
If you're still not sure, talk to a few mortgage brokers and get quotes from a few banks and see which appeals to you the most. There truly isn't a one-solution-fits-all answer.

Just remember that finding a mortgage interest rate is only the beginning of the process. Ultimately, you're looking for someone—broker or lender—who is going to help you through to closing day, so make sure you choose a mortgage partner you trust and feel confident in.

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Preparing to Sell Your Home? The Best 5 Projects to Do Now

Planning on selling your home soon? Take an objective look around your home from a buyer’s perspective. What would stop you from making an offer? What do you need to do to put your home’s best face forward? Here are some projects to jump on now in order for your home to be in tip-top shape for a sale: Update Your Curb Appeal

“Curb appeal is important,” says Steve Modica, sales associate and property manager at HomeXpress Realty Inc. in Tampa and St. Petersburg, Fla.

• Make sure the bushes are all trimmed.
• Re-mulch or replace stone walkways and paths
• Remove any dead plants and trees, and aerate your lawn so it will be lush.
• Pressure wash the driveway, the front walk, and the exterior of your home.
• If need be, have the exterior of the house painted.
• At the very least, apply a fresh coat of paint on the front door.

#2 Get a Home Inspection

The NATIONAL ASSOCIATION OF REALTORS® says 77% of homebuyers have an inspection done before completing a home purchase. To avoid nasty surprises once you’re in the process of selling your home, have your own inspection done, and make any repairs before you list the home.

You should know that if the inspection does discover any flaws, even if you fix them, you will have to disclose them. But that’s still a much better strategy than letting the buyer find flaws, which gives them bargaining leverage.

#3 Replace Flooring and Paint Walls

Determine if your carpets need replacing or just a deep, professional cleaning. If they need to go, consider if hardwood or another flooring material might be more appealing to buyers.

You’ll also want to inspect interior rooms for dirty or scuffed walls that need a fresh coat of paint. “Paint the whole wall, don’t just do touch-up repair work, because it never looks as good,” says Modica. Also, if you have eccentric or loud wall colors, now is the perfect time to update to a more neutral palette. Stagers recommend beiges, light grays, and off-whites.

#4 Tackle the Basement, Attic, and Garage

Often overlooked, these storage meccas can become a catch-all for junk. Get down and dirty in these hot spots and organize them from top to bottom. Install shelving, pegboards for tools, and hanging brackets for bicycles and other large sporting equipment. Your goal is to pitch the junk, sell what you no longer need, and categorize the rest.

“Donate or recycle clothes and bedding you don’t use anymore in order to free up storage space in your closets, basement, and garage,” says Amy Bly, a home stager at Great Impressions Home Staging in Montville, N.J. These areas should look roomy, well-organized, and clean.

#5 Consult a Stager

Buyers need to picture themselves living in the house, and they may have trouble doing that if all your personal effects are on display. In order to accomplish that, a professional stager can create a plan for you.

Bly spends about two hours walking through a property assessing curb appeal, interior flow, closets, bookcases, media cabinets, flooring, and more.

“I give homeowners a multi-page, room-by-room form they can use to take notes on my recommendations,” says Bly. She typically recommends things like neutralizing out-of-date decor, removing old furnishings and carpeting, and updating light fixtures. She also suggests the type of shower curtains, towels, bedding, and pillows to display for an upscale look.

Getting a jump on these fall projects will give you a leg up on selling in the spring. Today’s buyers are savvier than ever before, so when you’re ready, have a friend or relative drop by for a tour and point out anything you may have overlooked.

8 Costly Missteps New Homeowners Make in Their First Year

The negotiations are over. Your mortgage is settled. The keys to your first home are in hand. Finally, you can install your dream patio. You can paint the walls without losing your security deposit.

Heck, you could knock out a wall. You’re soooo ready to be a homeowner.

So ready in fact, you’re about to make some costly mistakes.

Wait, whaaat?

“You have to rein it in and be smart,” says Daniel Kanter, a homeowner with five years under his belt. Especially in your first year, when your happiness, eagerness (and sometimes ignorance) might convince you to make one of these eight mistakes:

#1 Going With the Lowest Bid

The sounds your HVAC system is making clearly require the knowledge of a professional (or perhaps an exorcist?).

But you’ve been smart and gotten three contractor bids, so why not go with the lowest price?

You might want to check out this story from a Michigan couple. Rather than going with a remodeler who’d delivered good work in the past, they hired a contractor offering to complete the work for less than half the cost, in less time.

A year later, their house was still a construction zone. You don’t want to be in the same spot.

What to do: Double-check that all bids include the same project scope — sometimes one is cheaper because it doesn’t include all the actual costs and details of the project. The contractor may lack the experience to know of additional steps and costs.

#2 Submitting Small Insurance Claims

Insurance is there to cover damage to your property, so why not use it?

Because the maddening reality is that filing a claim or two, especially in a relatively short period, can trigger an increase in your premium. “As a consumer advocate, I hate telling people not to use something they paid for,” says Amy Bach, executive director of nonprofit United Policyholders, which works to empower consumers. But, it’s better to pay out of pocket than submit claims that are less than your deductible.

Save your insurance for the catastrophic stuff. “You want the cleanest record possible,” Bach says. “You want to be seen as the lowest risk. It’s like a driving record — the more tickets you have, the more your insurance.”

Some insurance groups, like the Insurance Information Institute and National Association of Insurance Commissioners, say it’s hard to generalize about premium increases because states’ and providers’ rules differ. But this stat from a report by UP and the Rutgers Center for Risk and Responsibility at Rutgers Law School is pretty sobering: Only two states — Rhode Island and Texas — got top marks for protecting consumers “from improper rate increases and non-renewals” just for making:

• An inquiry about a claim
• A claim that isn’t paid because it was less than the deductible
• A single claim

Your best protection? Maintaining your home so small claims don’t even materialize.

#3 Making Improvements Without Checking the ROI

Brandon Hedges, a REALTOR® in Minneapolis-St. Paul, recalls a couple who, though only planning to stay in their home for a few years, quickly replaced all their windows. When the time came to sell, he had to deliver the crushing news that they wouldn’t get back their full investment — more than $30,000.

New windows can be a great investment if you’re sticking around for awhile, especially if windows are beyond repair, and you want to save on energy bills.

Just because you might personally value an upgrade doesn’t mean the market will. “It’s easy to build yourself out of your neighborhood” and invest more than you can recoup at resale, says Linda Sowell, a REALTOR® in Memphis, Tenn.

What to do: Before you pick up a sledgehammer, check with an agent or appraiser, who usually are happy to share their knowledge about how much moola an improvement will eventually deliver.

#4 Going on a Furnishing Spree

When you enter homeownership with an apartment’s worth of furnishings, entire rooms in your new home are depressingly sparse. You want to feel settled. You want guests at your housewarming party to be able to sit on real furniture.

But try to exercise some retailing willpower. Investing in high-quality furniture over time is just smarter than blowing your budget on a whole house worth of particleboard discount items all at once.

What to do: Live in your home for a while, and you’ll get to know your space. Your living room may really need two full couches, not the love seat and a recliner you pictured there.

#5 Throwing Away Receipts and Paperwork

Shortly after moving in, your sump pump dies. You begrudgingly pay for a new one and try to forget about the cash you just dropped. But don’t! When it comes time to sell, improvements as small as this are like a resume-builder for your home that can boost its price. And, if problems arise down the road, warranty information for something like a new furnace could save you hundreds.

What to do: Stow paperwork like receipts, contracts, and manuals in a three-ring binder with clear plastic sleeves, or photograph your documents and upload them to cloud storage.

#6 Ignoring Small Items on Your Inspection Report

Use your inspection report as your very first home to-do list — even before you start perusing paint colors. Minor issues that helped take a chunk of change off the sale price can cause cumulative (and sometimes hazardous) damage. Over time, loose gutters could yield thousands in foundation damage. Uninsulated pipes? You could pay hundreds to a plumber when they crack in freezing temperatures. And a single faulty electric outlet could indicate dangerous ungrounded electricity.

What to do: Get the opinion and estimate of a contractor (usually at no charge), and then you can make an informed decision. But remember #1 above.

#7 Remodeling Without Doing the Research

No one wants to be a Negative Nancy, but there’s a benefit to knowing the worst-case scenario.

Homeowner Kanter tells the time he hired roofers to remove box gutters from his 1880s home. Little did he know, more often than not aged box gutters come with more extensive rot damage, which his roofers weren’t qualified to handle.

“We had to have four different contractors come in and close stuff up for the winter,” he says. Had he researched the problem, he could have saved money and anxiety by hiring a specialist from the start, he says.

What to do: Before beginning a project, thoroughly research it. Ask neighbors. Ask detailed questions of contractors so you can get your timing, budget, and expectations in line.

#8 Buying Cheap Tools

You need some basic tools for your first home — a hammer, screwdriver set, a ladder, maybe a mower.

But if you pick up a “novelty” kit (like those cute pink ones) or inexpensive off-brand items, don’t be surprised if they break right away, or if components like batteries have to be replaced frequently.

What to do: For a budget-friendly start, buy used tools from known quality brands (check online auctions or local estate sales) that the pros themselves use.

4 Ways To Avoid DIY Mistakes

New backsplash? You’ve done it. Upgrading a faucet? No problem. You’re a DIY master. But what about that electrical issue? Or fixing a leaky roof? Even though you (and your BFF, YouTube) have pulled off many DIY projects, you know there are projects you’ve no business trying on your own. But what about those projects that fall somewhere in between “I got this” and “I’m calling the pros”? How can you know if a project is really DIYable for you?

For Lucas Hall, finding that answer has been trial and error. As a “DIY landlord” for more than two years and founder of Landlordology, an online resource for landlords, he’s gutted three homes and renovated countless others.

“I’m just handy enough to be dangerous,” Hall says.

He’s suffered more than his fair share of DIY disasters, and with each, he’s learned a valuable lesson about his own limits, as well as how he can do better next time.

Think 10 Steps Ahead
When Hall updated a tiny kitchen in one of his rentals, he installed a brand-new, expensive fridge — and then built a peninsula countertop extension.

“We thought it was the greatest idea,” he says. But adding the peninsula narrowed the space in front of the refrigerator, making it impossible to remove without lifting it entirely up and over the extension. (Ever tried to lift a fridge?)

“I’m just praying the fridge doesn’t die on me, because I’m going to have to hire four or five burly guys to get it out,” Hall says. “Or just Sawzall the thing in half.”

DIY lesson: Measure once, measure twice, measure again, and think through every possible scenario before changing a room’s layout.

Don't Go With the Cheapest Option
Speaking of kitchen appliances: Hall was looking for an island range hood, which can be extra-expensive because it needs to be attractive from all angles. Dismayed by the prices he found elsewhere online, he went to Amazon, where he found an $800 hood on sale for about $250.

“Of course, it was from a brand we hadn’t really heard of,” Hall says.

Less than a year after installation, the hood was on the fritz. Removing the appliance was a challenge. The electrical wiring needed to be redone, and the wall needed to be drywalled, requiring a professional contractor.

“It probably cost me three-fold to fix my mistake,” says Hall. “For any appliance that’s more complicated than plugging it in and rolling it into place, upgrade and buy something that’s not going to break on you within a year.”

DIY lesson: For any DIY project, the cheapest option, from materials to appliances, should raise a red flag.

For Specialty Work, Seek Specialty Advice
Hall is no electrician, but since he’d done some minor electrical work before, he figured the job of adding a dimmer switch would be no big deal.

“We hung a chandelier in the dining room, and figured you might want to dim this giant chandelier for a relaxing candlelit dinner,” says Hall. Because the space had switches at both entrances, he added a dimmer to both — the more the merrier, right?

Wrong.

“After four hours spent blowing circuits and lightbulbs and struggling to get this chandelier to dim correctly, we called the manufacturer,” Hall says. Spoiler alert: You just can’t have two dimmer switches for one circuit.

A dimmer works by modulating the amount of electricity flowing through the circuit; adding another causes chaos. A little research would’ve indicated the second dimmer switch was a no-no.

“It just flips out,” says Hall. “It doesn’t know how much dimming should be happening. The lights were flickering like a poltergeist.”

DIY lesson: No one blames you for not being a specialist, but any time you’re taking on a specialty project make sure to do your research first or consult a pro.

DIY When Help is Available (aka, NOT on a Holiday)
Holidays might be a great time to tackle minor DIY projects, but if you’re working on anything that could require a professional if things go south, consider waiting for a normal business day.

“I was trying to get a property ready to rent,” says Hall. “Time is money. It was the Fourth of July … and I was adding a new cabinet [in the bathroom].”

It sounds easy enough, but the unit was in a condo building with a centralized water system; there wasn’t a water shut-off valve for just that bathroom. Not wanting to shut down the water for the entire building on July Fourth, he decided to risk it.

And oh, what a risk it turned out to be. When trying to loosen a pipe, the whole thing broke off. It was rusted out. Water sprayed out so hard, it hit him in the chest. After rushing to the basement, he flipped every knob he found until the water shut-off.

“Luckily my property was on the first floor and the basement was a laundry room, because water was leaking through the floor, destroying drywall,” Hall says.

Being a holiday, the rest of the day was no less of a disaster. The condo association’s emergency line sent him a plumber who was angry to be missing his holiday events and drinking as he tried to fix the problem. Sloppy work resulted in a fire — in a building with no water.

“He runs to my fridge and starts grabbing anything liquid — milk, a bottle of Sprite, cans of beer,” Hall recalls. “He’s dumping water into the middle of the wall, punching holes in it, trying to find the fire.”

DIY lesson: Always do tricky DIY projects when you know a pro — a pro you trust — can help out in a hurry.

How To Use Comparable Sales To Price Your Home

How much can you sell your home for? 
Probably about as much as the neighbors got, as long as the neighbors sold their house in recent memory and their home was just like your home.

Knowing how much homes similar to yours, called comparable sales (or in real estate lingo, comps), sold for gives you the best idea of the current estimated value of your home. The trick is finding sales that closely match yours.

What makes a good comparable sale?
Your best comparable sale is the same model as your house in the same subdivision—and it closed escrow last week. If you can’t find that, here are other factors that count:Location: The closer to your house the better, but don’t just use any comparable sale within a mile radius. A good comparable sale is a house in your neighborhood, your subdivision, on the same type of street as your house, and in your school district.

Home type: Try to find comparable sales that are like your home in style, construction material, square footage, number of bedrooms and baths, basement (having one and whether it’s finished), finishes, and yard size.

Amenities and upgrades: Is the kitchen new? Does the comparable sale house have full A/C? Is there crown molding, a deck, or a pool? Does your community have the same amenities (pool, workout room, walking trails, etc.) and homeowners association fees?

Date of sale: You may want to use a comparable sale from two years ago when the market was high, but that won’t fly. Most buyers use government-guaranteed mortgages, and those lending programs say comparable sales can be no older than 90 days.

Sales sweeteners: Did the comparable-sale sellers give the buyers downpayment assistance, closing costs, or a free television? You have to reduce the value of any comparable sale to account for any deal sweeteners.

Agents can help adjust price based on insider insights
Even if you live in a subdivision, your home will always be different from your neighbors’. Evaluating those differences—like the fact that your home has one more bedroom than the comparables or a basement office—is one of the ways real estate agents add value. 

An active agent has been inside a lot of homes in your neighborhood and knows all sorts of details about comparable sales. She has read the comments the selling agent put into the MLS, seen the ugly wallpaper, and heard what other REALTORS®, lenders, closing agents, and appraisers said about the comparable sale.

More ways to pick a home listing price
If you’re still having trouble picking out a listing price for your home, look at the current competition. Ask your real estate agent to be honest about your home and the other homes on the market (and then listen to her without taking the criticism personally). 

Next, put your comparable sales into two piles: more expensive and less expensive. What makes your home more valuable than the cheaper comparable sales and less valuable than the pricier comparable sales?

Are foreclosures and short sales comparables? If one or more of your comparable sales was a foreclosed home or a short sale (a home that sold for less money than the owners owed on the mortgage), ask your real estate agent how to treat those comps.

A foreclosed home is usually in poor condition because owners who can’t pay their mortgage can’t afford to pay for upkeep. Your home is in great shape, so the foreclosure should be priced lower than your home.

Short sales are typically in good condition, although they are still distressed sales. The owners usually have to sell because they’re divorcing, or their employer is moving them to Kansas.

How much short sales are discounted from their market value varies among local markets. The average short-sale home in Omaha in recent years was discounted by 8.5%, according to a University of Nebraska at Omaha study. In suburban Washington, D.C., sellers typically discount short-sale homes by 3% to 5% to get them quickly sold, real estate agents report. In other markets, sellers price short sales the same as other homes in the neighborhood.

So you have to rely on your real estate agent’s knowledge of the local market to use a short sale as a comparable sale.

9 Steps To Selling Your Property

8 Hidden Costs When You Buy A Home

With your focus on building your down payment fund and figuring out what your mortgage payment will be, it's easy to overlook some of the smaller fees that come along with a home purchase. Here are eight and what they could cost you.

1. Home Inspection

A home inspection helps protect you from purchasing a home that could be a lemon. 

So you don't want to forgo it. Inspectors ill look for signs of structural issues, mold, and leaks; assess the condition of the roof, gutters, water heater, heating and cooling system; and more. Inspections cost between $300 and $500, and whether or not you end up purchasing the property, you still need to pay this fee. 

2. Appraisal Fee

This appraisal report goes to your lender to assure it that the property is worth what you're paying for it. This report worked in our favor a couple of years ago when our home came back appraised for $10,000 less than our bid; the sellers had to reduce their asking price in order to move forward. An appraisal can take about 2 hours and costs between $200 and $425.

3. Application Fees

Before ever approving you for a loan, the lender is going to run your credit report and charge you an application fee, often lumping the credit report fee in with the application fee. This can run $75 to $300. Be sure to ask for a breakdown of the application fees to understand all costs.

4. Title Services

These fees cover a title search of the public records for the property you're buying, notary fees for the person witnessing your signature on documents, government filing fees, and more. These can cost between $150 and $400, and it's important to get a line item for each cost.

5. Lender's Origination Fees

Your lender will charge you this upfront free for making the mortgage loan. This includes processing the loan application, underwriting the loan (researching whether to approve you), and funding the loan. These fees are quoted as a percentage of the total loan you're taking out and generally range between 0.5 to 1.5%.

6. Survey Costs

This report ($150 to $400) confirms the property's boundaries, outlining its major features and dimensions.

7. Private Mortgage Insurance (PMI)

When you put down less than 20% on your new home, the lender requires that you purchase PMI, which is a policy that protects the lender from losing money if you end up in foreclosure. So PMI is a policy that you have to buy to protect the lender from you. PMI rates can vary from 0.3% to 1.5% of your original loan amount annually.

8. Tax Service Fee

This is the cost (about $50) to ensure that all property tax payments are up to date and that the payments you make are appropriately credited to the right home.

Always ask questions when it comes to understanding the fees you're paying. If possible, print out documents and go through them with a highlighter to indicate any areas you have concerns about. Discuss them with your lender or real estate agent and determine if you can negotiate any of them down. Don't be afraid to price shop to ensure you're getting the best value. Just because you're spending hundreds of thousands on a home doesn't mean you should be comfortable throwing thousands of dollars at fees.

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5 Ways To Save On Home Renovation

Is your kitchen hopelessly outdated, and your bathroom a blast from the past? 

Then it sounds like you're overdue for some home improvements. There's just one problem: Remodeling can be a huge undertaking-and a costly one at that. 

The average kitchen remodel will set you back $60,000; a bathroom overhaul, $17,908. Ouch! But hey, that's just the average price homeowners pay.

 Plenty of home renovations can fall way under that wire if you know some tricks to keep your home improvement budget in check. Check out these smart ways to save on home renovation costs to achieve the home of your dreams without blowing wads of cash.

1. Don't do a complete remodel

Unless the room needs to be completely gutted, you can cut costs by refurbishing existing fixtures. When renovating the kitchen, staining the current cabinetry, replacing old drawer handles and knobs, and refacing moldings can save you thousands of dollars.

In fact, refinishing existing cabinets can save you up to 50% compared with the cost of buying new cabinetry, according to Angie's List. You can also cut costs by purchasing materials (e.g., granite, flooring, or lighting) yourself, says Chris Dossman, a real estate agent with Century 21 Scheetz in Indianapolis.

2. Pick decent, midgrade materials

Picking premium options or materials can raise the cost of your remodeling project substantially. One area where you'll find a major price difference? Carpeting.

While basic olefin and polyester carpeting costs around $1 to $2 per square foot, wool can cost upward of $9 to $11 per square foot, according to Angie's List. Those costs add up if you're recarpeting a large room or an entire floor.

Another biggie? Countertops: Granite costs $60 to $100 per square foot; laminate (i.e., Formica) looks like granite for $10 to $40 per square foot.

3. Do prep work yourself

To reduce the hours your contractors will need to put in-and save money on labor-do light prep work yourself, says Dossman. By removing and discarding old carpeting on your own, for example, you'll shave time off the installer's bill, which can lead to substantial savings when you consider that many companies charge an additional $4 per yard to remove old carpet.

4. Go DIY, but know your limits

Another way to cut remodeling costs is, of course, to do the work yourself. That's a good move for small projects, like painting a bedroom, where the work is fairly simple. Also, the materials you'll need, including paint, brushes, sandpaper, and tape, cost only $100 to $200. (Professional painters, meanwhile, charge $25 to $100 an hour.)

With larger projects, however, rolling up your sleeves probably isn't the best decision-especially if you lack handy skills. For major home improvement projects, you'll most likely want to hire a professional to do the work-it'll cost more, but it's worth it. Let's face it: The last thing you want to do is cheap out and need to pay a second contractor to redo the work.

Here are six home improvement projects you should never do yourself.

5. Shop around for the best (and budget-friendly) contractor

Last but not least, a home remodeling project is only as good as whom you hire. It's crucial to find a reliable contractor who will quote you a fair price and deliver high-quality work. To find this special someone, you'll want to meet with at least three contractors and get in-person bids. Doing so will give you a good idea of the price range; it'll also give you a sense of whether you'd be comfortable working with the person.

When vetting contractors, pay attention to small details, like whether they show up on time for the appointment.

Punctuality indicates whether the person is well-organized, which can affect how much you'll have to pay, says Matt Parker, a real estate agent in Seattle and author of "Real Estate Smart: The New Home Buying Guide."

If a contractor has a habit of running behind schedule, that might affect how long the project will take to complete-and how many hours of labor you'll need to pay for. The adage -time is money- can be painfully true when contractors are involved, so you want someone who takes your time seriously.

Another money-saving safety measure: Insist on seeing all renovation estimates in writing, and get a cap on the hours if possible. Meanwhile, a punch list can ensure that the renovation isn't officially done until you're satisfied. Any contractor who isn't willing to provide this par-for-the-course paperwork may not be worth the trouble, because it protects you both in case any part of your renovation goes off the rails.

5 Reasons You Should Buy A Home Right Now

Steps To Get The Best Mortgage Rate

If you're in the market for a mortgage, chances are you've been instructed to shop around for the best rates. But just because you've been told to shop around doesn't mean you know how.First, you'll need to contact a lender to get your credit scores. Craig March, a personal mortgage consultant with Inlanta Mortgage in Janesville, Wis., says you should share your credit scores with other lenders rather than letting each one you contact pull your credit history, because multiple inquiries could lower your scores.
 "There are so many different credit score models that the score you see as a consumer may not be the same as the one a mortgage lender sees, so it's important to get your score from a lender," says Mark Richards, a senior mortgage loan officer for TD Bank in Washington, D.C.
Brian Martucci, a mortgage lender with GetLoans.com in Washington, D.C., says every borrower must be prepared to answer the following questions before a lender can provide an accurate mortgage rate quote:

• How large is your down payment? Interest rates vary according to your loan-to-value ratio.

• Are you buying a single family home or a condominium? Martucci says a borrower purchasing a condominium with a loan-to-value ratio above 75% will pay a one-quarter percentage point higher interest rate.

• Are you refinancing or purchasing? Interest rates may be higher on a refinance, especially if you are taking out cash, which could raise your rate by one-eighth of a percentage point.

Your plan for the best rates

No. 1: Establish a baseline. Get a referral from someone you trust and contact the recommended lender to obtain your credit scores and discuss your loan options. Your lender can help you compare Federal Housing Administration and conventional financing, as well as various loan terms, so you can make an informed decision on which loan program and terms you want before you contact other lenders.

No. 2: Contact a mix of financial institutions. Interest rates fluctuate constantly for a variety of reasons, including the occasional promotion of a particular loan product by a financial institution. For example, some lenders who are eager to generate more purchase loans might offer the best mortgage rates for homebuyers but not for refinancing homeowners, says Martucci. Sometimes a credit union or bank will introduce a new loan product and offer better mortgage rates in order to entice borrowers, says March.
"It's best to diversify and try a mix of places, such as a direct lender, a regional bank, a credit union, a community bank and a national bank," says March.

No. 3: Decide when you want to close. The length of your lock-in period will impact your mortgage rate, so discuss your target close date with each lender and ask about the charges for different loan-lock periods.
"Make sure you tell the lender when you expect the closing to be, because you want to lock in the interest rate for the right length of time," says Richards. "Many lenders charge one-eighth percent more if you must lock-in the loan for 60 days. If you need a 90-day loan lock, your interest rate could be as much as one-third percent higher."

No. 4: Ask about fees. The variation in fees associated with a loan are one reason why you shouldn't comparison shop solely based on the best advertised interest rate. Sometimes a mortgage at a lower advertised rate can end up costing you more because of all the fees associated with it.
"Some lenders blend all their fees into a loan preparation fee, while others separate them out, so be sure to ask for the total amount it will cost to close the loan," says Martucci.
Generally, a mortgage with higher fees should have a lower interest rate, says March.
If you're refinancing, use HSH.com's Tri-Refi Refinance Calculator to compare your options for paying closing costs. Experiment with the options to find out if you should you wrap the closings cost into the loan amount, pay them in cash or choose a "no-cost" mortgage.

No. 5: Consider whether you should pay points. One of the largest expenses can be the points attached to a particular loan. Each point is equal to one percent of your loan amount.
"You need to make sure you discuss with each lender how the loan will be structured in terms of whether you are paying points or not," says March.
If you intend to stay in the home for the long term, such as 10 years or more, you may want to pay points to keep your interest rate as low as possible for the life of the loan. If you plan to sell in a few years, paying a lot of cash upfront to pay points may not be worth it, says Richards. A lender can show you the difference in interest and monthly payments to help you decide whether worth it to pay points.

No. 6: Call lenders on the same day. Because mortgage rates fluctuate constantly, you should call lenders as close to the same time as possible on the same day to compare rates, says Martucci.
"If possible, call within the same timeframe, because a bond rally could mean that mortgage rates have dropped dramatically from the morning to the afternoon," he says.
After you have organized your financial information, follow the six steps above to ensure that you get the best mortgage rate available.ge rate available.

Five Tips to Win a Multiple Offer Situation on a Home

Don’t lose your game face. Though multiple offers aren’t quite the jungle they were back in 2012, homes in popular neighborhoods continue to face stiff competition. In August 2013, 60.5% of offers written by agents across the country faced bidding wars, a drop from 63.3% in August 2012. It signals a welcome trend for buyers, but tight inventory conditions and relatively low mortgage rates mean that multiple offer situations are still a reality. 

1. Be realistic

If you’re looking for a home in a sought-after neighborhood, be aware that a winning offer will likely be at or above asking price. This knowledge will help you construct a competitive offer at the outset that is still within your comfort zone. In early 2013, many buyers waived inspection and financing contingencies in an effort to win the bid. This approach can be effective, but it can also be an uncomfortable level of risk for some buyers. Knowing what you’re willing to do in advance will make it easier to make decisions when the timing demands it.

2. Prepare your financing

Whether you’re planning to get a mortgage or are paying in cash, make sure you have financial documentation ready to send. If you’re getting a mortgage, you’ll need a pre-approval letter. Being pre-qualified doesn’t cut it, since it doesn’t formally verify your income, assets and credit. If you’re paying in cash, be ready to submit proof of funds, which can be an original bank statement, open equity line of credit, copy of a money market account balance, or certified financial statement. Pre-approval or proof of funds need to be available at a moment’s notice and are expected, not optional. In addition, offering earnest money (often 1-3% of the purchase price) is another signal to the seller that you’re serious, so think about how much you’re willing to pledge.

3. Do a pre-inspection

In the past, inspections typically happened right after a seller accepted a buyer’s offer. However, the rise of bidding wars prompted savvy buyers to schedule inspections before placing an offer, giving them more knowledge about the home and making it easier to waive inspection contingencies. Doing a pre-inspection can put you ahead of other buyers by removing complexity from your offer, and also shows a seller that you mean business.

4. Be flexible

Selling a home can be a whirlwind. Any flexibility a buyer can offer a seller has the potential to reward them. Being lenient on closing or possession dates might make an offer more palatable to a seller in the midst of one of life’s most stressful times; moving.

5. Personal touch

Though it isn’t standard practice in every market, personal notes from potential buyers can humanize a transaction and tip the scales in your favor. I’ve seen several instances where offers were accepted based on the letter, even though they weren’t the highest. This works particularly well if the sellers are attached to their home, but not always so well for estates, where family members may have competing priorities and be less emotionally attached to the home.
If you’re anticipating a multiple offer situation, be sure to discuss your strategy and the risks involved with your real estate agent. With the right attitude and approach, you can get the house you’re looking for. 

Explaining Escrow: The Escrow Process in California

What are the escrow steps? The California escrow process has 10 steps: 1. Prepare Escrow Instructions. These are done on the escrow holder’s printed forms. All principals – the buyer and seller -- sign the instructions, which set forth the parties’ understanding of the transaction. An initial deposit usually accompanies the instructions. For a home purchase, the instructions must include: • Purchase price and terms; • Agreement as to mortgages; • How buyer’s title is to appear (called “vesting”); • Matters of record subject to which buyer is to acquire title; • Inspection reports to be delivered into escrow; • Proration adjustments (involves taxes and insurance); • Date of buyer’s possession of the property; • Documents to be signed by the parties, delivered into escrow, and recorded; • Disbursements to be made, costs and charges and who pays for them; and • Date of closing. 2. Order Title Search. This title search is performed on the subject property, resulting in a “Preliminary Report” from a title company. The escrow holder examines this report for items not contemplated in the instructions. For example, is there a lien (or additional loan) on the property that wasn’t reported? The seller must clear any such item or it must be brought to the attention of the buyer. 3. Request Demands and/or Beneficiary Statements. This request for information goes to any lenders of record. The document will be either: • a “Demand for Pay-off,” if the seller’s existing loan is to be paid in full through escrow; or • a “Beneficiary Statement,” if buyer is purchasing the property “subject to” or assuming a loan. 4. Accept Structural Pest Control Report and Other Reports. These reports might include plumbing or roofing reports. They all pertain to the property’s condition, and are kept in escrow. The escrow holder might also obtain any necessary approvals from the seller or buyer due to information in a report. For example, whether the home needs to be sprayed for insects. The reports are delivered at close of escrow. 5. Accept New Loan Instructions and Documents. This happens if the buyer is obtaining new financing for the home. The escrow holder also obtains the buyer’s approval/execution of the documents. The escrow agent must also satisfy all lender’s instructions before using the lender’s funds to complete the transaction. 6. Accept Fire Insurance Policies and Complete Settlement. By this step, it’s almost time to close the transaction. Here, following the buyer’s and seller’s instructions, the escrow holder: • accepts and delivers any fire insurance policy and transfers the insurance; • makes all payments on property taxes and insurance (called “prorations”); • completes the accounting (settlement) details; and • informs the principals that escrow is ready to proceed. 7. Request Closing Funds. The escrow holder cannot disburse any funds until all items, such as checks or drafts, have cleared and become available for withdrawal. 8. Audit File in Preparation for Closing. In this step, the escrow holder: • accounts for all funds and documents; and • determines that the parties have complied with all escrow instructions. 9. Order Recording. At this point, the escrow holder authorizes the title company to run the seller’s title and to record the necessary documents. This can happen provided no change has occurred in the seller’s title since the preliminary title report was issued. 10. Close Escrow. This is what you’ve been waiting for! Closing the deal. The escrow holder can “close escrow” after confirming recording, by: • preparing settlement statements for buyer and seller; • disbursing all funds; and • delivering documents to the party or parties involved.