If you are looking to buy or sell a home you have probably received real estate advice from friends, family, and coworkers who think they know best. As well-meaning as they are, those close to you may have heard some frightening myths about the real estate industry. Don’t worry, we’re here to debunk those myths so that you and those close to you have a better understanding of real estate.
If you have found the home for you and you don’t have the preapproval letter accessible, then you may be at a disadvantage when making a successful offer. The real estate market is competitive, and most offers will not be approved without a loan approval letter. Be sure to get preapproval before searching for the perfect home. Then you avoid the potential nightmare of losing your dream home.
A home does not pass or fail an inspection. Rather an inspection is completed so that you can understand the condition of the home. The inspector will provide a report of the key systems of the home and the life expectancy of big tickets items like the roof. You wouldn’t want to purchase a dream home and then have spooky electrical issues. If you want to learn more about inspections read our blog about the 5 Questions You Must Ask Your Home Inspector.
The price of a home is affected by the market conditions, the property’s location, and it’s size. The listing agent strongly suggests a price based on all of these factors. Then the seller may negotiate that price, but the seller is not the one who says, “My home is worth x amount and I’m going to price it as such.” Most prices are negotiable; so don’t be scared away by the initial price.
Holding an open house shortly after listing creates attention for the home. An agent can learn valuable information on what buyers’ opinions are of the home at an open house. Many tech-savvy buyers use the Internet to search for properties first, to filter out the haunted houses. So when they visit an open house and they’re pre-approved, they may be ready to write an offer.
“In reality, the best offer is the one with the highest probability of closing,” said Allen Schild, real estate broker for @Properties in Chicago. Even if you have a high offer, it could come with ghoulish contingencies or a deadly long closing period. Consider different factors, like if the buyer is offering cash before you make your final decision.
Don’t believe everything you hear about the real estate industry without doing your own research. We hope you enjoyed learning about these frightening real estate myths. You may find that there are myths out there that still need to be debunked. Let us know if there are any other myths that need to be brought to light by leaving a comment on our Facebook and Instagram posts promoting the blog!
Do you think it’s time to move to new home? You may have a gut feeling that you are ready for a change. That change may be to pack up your belongings and move to a new home. Although, moving is no easy feat. You have to be ready to take on the challenge, and we’re here to help you decide if that is the right decision.
1. Your house has become too small or too big
You see a beautiful rocking chair at a flea market and know that you have to have it. But where will it go? You suddenly picture your house and see there is no place for this amazing antique rocking chair that is just so ‘you.’ If you look around and notice things are getting crammed in corners, it is time to move to a bigger home with more space.
But what if you have the opposite problem? You have more space than you need. You may be an empty nester and no longer have kids living at home or you no longer have guests spend the weekends at your place. It’s time to move if you have too much space and you’re ready for a smaller, more manageable home.
2. You’re ready to step it up
When you bought your first home you had a job fresh out of college and you were looking for something within your budget. It’s been a few years and your salary has increased significantly. You’re ready to upgrade to a nicer home you can see a brighter future in. Go ahead, and step it up. Buy a house that matches your current budget and say goodbye to your cozy starter home.
3. Your commute is too long
If you feel that you are spending more time commuting to your work and less time with family and friends, then you may consider moving closer to work. If your job is secure and you plan on being with your company for the foreseeable future, then pack up and move closer to work. Commuting can be exhausting and living closer to work means that you will be spending less money on travel expenses.
4. Your kids need a better education
You want the best for your children. If your school system does not meet your child’s needs, you may want to move into a city that does. Do some research. Moving.com has school ratings that pull various report information from a database of nearly 90,000 public and private schools. Ask locals in the area what they think of the school system and of course form an opinion yourself by looking at the school’s website, curriculum, extracurricular activities and online reviews.
5. You’re concerned for your safety
If you feel unsafe walking to your car in the morning, you may want to make a change. One of the top reasons for moving is feeling unsafe in your neighborhood according to moving.com. Remove yourself from a dangerous area by relocating. Loud and disruptive noises, increased criminal activity and environmental hazards are reasons to move out of your current home.
Whatever your reason for wanting to move, we are here to help you, whether it be by selling your current home or helping you find a new home that suits your needs. Contact us today by calling 216-378-9618 and let us know what you think of this blog on our social media channels!
A home inspection can help you determine if a house is the home of your dreams or if you need to reconsider your offer. As such, being present for the inspection is invaluable and is worth the time off of work. You must ask some very important questions when hiring a home inspector and during the inspection itself. Asking these questions will help you get a better understanding of if the home inspector is right for the job and more importantly if the home is right for you.
#1 What does the inspection cover and what does it not cover?
A home inspector inspects over 1,600 features in a home, but there are limits to what they will be looking over. Your inspector should have a list of features that they cover. Be sure to understand what exactly is being inspected and what is not being inspected. Ask the inspector before the inspection what they cover, so there is no confusion.
Most inspections should cover:
- Moisture Problems
- Interior Problems
- Kitchen and Appliances
- Electrical Panels
- Water Heater
#2 Who should fix this and when should it be fixed?
Even the least repair-savvy homeowner can make some simple improvements to their home. Don’t be afraid to ask who should fix an issue and when. A good home inspector should be more than happy to help you understand what needs to be fixed to make the house a home. You, the homeowner, or a local handyman can fix minor issues, while the bigger ones should be left to the professionals. Reading over the inspector’s report can sometimes be confusing. During the inspection, ask the inspector if they would fix the issue and when if the house was their own. This puts the ball in their court, and you can get a better perspective on the severity of the issues.
#3 How much will this cost?
A typical range for a home inspection should be between $300-$500. You have to keep in mind the region, size and age of the house, and scope of services when comparing home inspection prices. Your inspector should never offer to fix a flaw in your home or even refer a service because this is considered a conflict of interest. The American Society of Home Inspectors does not let its members solicit repair work based on inspections they performed themselves.
#4 How long will the inspection take?
The length of the inspection depends on the size and condition of the house. Inspections take place when the seller is not home, which is usually during the day when they are at work. The average inspection time for a single-family house is between two to three hours.
#5 Can you show me how to operate this?
It is highly recommended that you attend your home inspection. It is a great educational experience and can give you perspective on the condition of the home. If a home inspector says you are not allowed to attend the inspection, this is a red flag and you should not continue their services! Home inspectors are there to help you. Asking them how to operate functions of the house gives you less of a headache in the future when you, for example, can’t figure out how to work the thermostat. When walking through the home with your inspector, ask how to operate your water heater, stove, and especially where the emergency shut-offs for your gas, water, and electrical utilities are.
In summary, don’t be afraid to ask questions when it comes to a home inspection. Remember to ask what is being covered in the inspection, the severity of issues in the house, how much the inspection will cost and how long it will take, and how to operate different functions of the home. The answers to these questions will help you gauge if the home is for you. Whether you are looking for a fixer upper or a fully removed home we hope you find the perfect fit for you from inspection to close.
Contact us today if you are looking to buy a home or if you have any questions about inspections!
While conventional wisdom dictates that 20% is the magic number required for a down payment on a home, that soaring figure may make the dream of homeownership seem completely unreachable for many young homebuyers. Between student loans and the rising cost of living in many areas, it’s no surprise that many millennials might struggle to save such a sum.
Thankfully, times have changed, and 20% is no longer the requisite amount for a down payment on a home. In fact, first-time homebuyers only need to worry about saving roughly 3% for a down payment!
In this post, we’ll discuss the three types of loans, benefits of each, and what you need to pay out of pocket for your down payment as well as how to get started.
Conventional Mortgage Loans:
What is a conventional mortgage loan? A conventional loan is not guaranteed or insured by the federal government. These loans are obtained through private institutions such as banks, credit unions, or private lenders.
Unbeknownst to many homebuyers, you can put a down payment on your dream home as low as 3%. This makes buying a home seem more achievable. A conventional loan conforms to a set of standards set by Fannie Mae and Freddie Mac. A new program was set into place in December 2014 allowing for smaller down payments. If you do choose to put down a smaller down payment, you may be required to take out private mortgage insurance and pay monthly premiums.
In order to put down a lower down payment, for example, 3%, you must have a credit score above 650. This may be a difficult feat for those who have loan debt or are starting to build credit. Another factor you have to consider is your debt-to-income ratio. This is the sum of your monthly obligations, like student loans and car payments compared to your monthly income. When taking out a conventional loan your debt-to-income ratio should be around 36% and no more than 43%.
- Not backed by the federal government
- Down payments as low as 3%
- No private mortgage insurance with a down payment of 20%
- Helpful to have a credit score of 650 and above
- Debt-to-income ratio of no more than 43%
Unlike a conventional loan, to qualify for an FHA loan you can have a credit score lower than 650. Your down payment is dependent on your credit score and the higher your score, the less you have to put down when purchasing a home. Those with a credit score of 500-579 must pay at least 10% down. Those with a credit score of 580 and over can pay as low as 3.5% down. FHA loans may be ideal for those with low credit scores due to student loan debt or those who have not built up a high credit score.
The FHA is an insurer, not a lender. Because of this, homebuyers must get their home loans from FHA-approved lenders. Different lenders have different costs, so it’s advised that borrowers compare prices of different lenders. Two private mortgage insurances must be paid on all FHA loans, the upfront premium and the annual premium. The upfront premium is 1.75% of the loan amount. The annual premium is 0.45% to 1.05% of the loan amount depending on the length of the loan term.
- Backed by the government (FHA)
- Down payments as low as 3.5%
- Must pay two premiums
- Credit score of 580 and above: down payments as low as 3.5%
- Credit score of 500 and above: down payments of 10% or more
What is a VA loan? A VA loan is a loan issued by approved lenders and guaranteed by the U.S. Department of Veteran Affairs or VA.
Veterans, active duty service members, National Guard members, and reservists must meet the requirements created by the VA in order to get approved for a VA loan. There may be no down payment required for VA loans depending on the qualified veteran, however, there is a funding fee that varies from 1.25% to 3.3% of the loan amount. Veterans who qualify for a VA loan can purchase a home worth up to $453,100 without putting any money down, although, the loan amount may be affected by the county because the value of the home depends partly on its location.
There is also no private mortgage insurance fee because VA loans are government backed. A great benefit from a VA loan is that the homebuyer can reuse their benefit. They do not have to be first-time homebuyers. If they are first-time homebuyers they can visit Veterans United to learn more about their options.
- Guaranteed by the government (VA)
- May not require a down payment
- Funding fees vary from 1.25% to 3.3% of the loan amount
- Loan amount may be affected by the location of the home
- No private mortgage insurance
Each loan comes with its own pros and cons, qualification requirements, and fees but there is another factor that comes into play when purchasing a home, the price. Whether you are thinking of buying a home now or in the future, it is important to know what price range is best, especially if you are a first-time homebuyer. To prepare for the purchase of a home, a pre-qualification is a quick first step in the process. Sean Hadley, Branch Manager at CrossCountry Mortgage, Inc., advises, “In this initial conversation, you should expect to get an understanding on how the process works and if there are any other financial steps you need to take to put you in the best position financially for your first purchase.” Pre-qualification is easy and free. Anyone in the Northeast Ohio area interested in learning about pre-qualification should visit Young Team Realtors’ preferred lender, CrossCountry Mortgage, Inc.
In conclusion, the three types of loans to consider when you are purchasing a home are conventional, FHA, and VA loans. The type of loan that is best for you varies depending on your credit score and how much you want to pay out-of-pocket. The best first step to take is to visit a mortgage lender, like CrossCountry Mortgage, Inc., to get an idea of the steps you should take when obtaining a loan. Once you conclude the best options for you, your dream home can become a reality.
Without question, Cleveland is radiating incredible growth, excitement, and promise for the future. Most life-long Clevelanders are experiencing first-hand a rebirth, a true renaissance of the city, and this reawakening doesn’t stop at the borders of downtown. Cleveland’s magic extends into its lively, quirky neighborhoods that each offer their one-of-a-kind personalities.
If you’re planting roots in the CLE, here are five of the best neighborhoods to consider calling home.
1. Rocky River
Great for families and outdoor activity lovers.
A pinnacle of Cleveland neighborhoods, Rocky River has it all: beautiful homes, quiet, safe streets, highly rated schools, and a short drive to downtown.
What makes the Rocky River neighborhood so desirable?
- This established neighborhood is an oldy but oh-so-goodie that will never go out of style. Rocky River – shortened to River by locals – lives on the shores of Lake Erie and is more old money than new. Rocky River has stunning Victorian and Colonial-style homes – some with the most beautiful lake views you will ever see.
- This neighborhood has excellent rated schools. Rocky River High School: 10, Rocky River Middle School: 9, Kensington Intermediate Elementary School: 9. In fact, Rocky River Schools are ranked second in the whole state of Ohio.
- This neighborhood has easy access to the Cleveland Metroparks and Emerald Necklace Marina – an outdoor lovers delight. Residents and Cleveland locals flock to the parks for boating, kayaking, paddle boarding, biking, hiking, fishing, and much more.
- This neighborhood has upscale salons, shops, restaurants, and bars that make you feel extra special on a warm summer evening (or anytime, really).
Great for millennials, singles, artists, and entrepreneurs.
Riding the wave that is the Cleveland resurgence, the Detroit-Shoreway neighborhood is on the rise and attracting the likes of eager, ambitious millennials, creatives, and start-ups.
What makes the Detroit-Shoreway neighborhood so desirable?
- This neighborhood is minutes from downtown and Lake Erie. Edgewater Park and Beach is built into this community.
- This neighborhood is home to EcoVillage – a group of newly constructed green homes that work to replace ‘consumption and waste with preservation and regeneration.’
- For those who crave a house that has more charm than is eco-friendly, this neighborhood has what you’re looking for, too, with turn-of-the-century homes that make for modest, low-cost fixer uppers.
- This neighborhood completed a $100 million development project that turned twenty vacant industrial buildings into a beautiful residential development called Battery Park.
- This neighborhood gives off an urban vibe dedicated to sustainability.
- This neighborhood has great bars, restaurants, shops, and art galleries.
3. Ohio City
Great for millennials, young professionals, singles, and artists.
Living west of Downtown Cleveland, Ohio City is a hip, always-happening urban oasis that is concentrated on the well-known West 25th Street. Jam-packed with all the trendy dining and entertainment spots one could want, Ohio City is great for art, business, living, and gathering.
What makes the Ohio City neighborhood so desirable?
- This neighborhood is home to the historic West Side Market. Opening its doors now for over 100 years, the Market consists of 100 locally owned and independent businesses that sell just about everything, such as fresh meats, cheeses, seafood, fruits, veggies, baked goods, spices, flowers, and more.
- This neighborhood offers a mix of historic homes and modern apartment complexes, both of which have proven to be perfect for the vast majority of people who call this neighborhood home.
- This neighborhood has one of the best and longest-standing breweries in Ohio. Great Lakes Brewing Company is Ohio’s first brewpub and microbrewery and has been producing award-winning beer since 1988.
- This neighborhood knows how to do night life with places like Town Hall, Market Garden Brewery, Speakeasy (which is in the basement of Bar Cento), and the list could go on and on. Great bars, great tunes, great vibes.
4. Bay Village
Great for families, parklike setting-lovers, suburban dwellers.
Located on the west side of Cleveland, Bay Village is 15 miles west of downtown but is a highly-coveted suburb of the city with an average livability score of ‘A.’ Great for both young and growing families, Bay Village has a mix of small bungalows and large, charismatic homes.
What makes the Bay Village neighborhood so desirable?
- This neighborhood is a safe, family-friendly suburb receiving an A+ in crime rates from AreaVibes.
- This neighborhood has a superior school district, with Bay Village High School: 9, Bay Village Middle School: 8, Westerly Elementary School: 10.
- This neighborhood is home to one of Lake Erie’s most esteemed lakefront parks in Huntington Beach and Reservation and a pretty impressive public swimming pool, complete with slides, diving boards, splash and spray center, and a toddler area.
- This neighborhood is a tight-knit community where residents foster a strong sense of belonging and have a shared commitment to keeping Bay great.
Great for families, singles, millennials, and young professionals.
Home to the densest population between New York City and Chicago, Lakewood is a large neighborhood that continues to grow. Lakewood boasts a large homeowner and renter population consisting of families, singles, millennials, and young professionals just starting out in this exciting and opportunity-filled city.
What makes the Lakewood neighborhood so desirable?
- This neighborhood is located just outside downtown. Lakewood skips city congestion and is an ideal place to rent or own a home with yards, parks, and sidewalks.
- This neighborhood has good schools. Lakewood High School just completed a major remodeling and reconstruction project that gives students more space and new classrooms.
- This neighborhood is a growing community that offers charming homes built in the early 1900’s. They’re large, reasonably priced, and perfect projects for people who love character and minimal fixer-upper tasks.
- This neighborhood delivers great restaurants, with some even appearing on the Food Network – like the Proper Pig, Melt Bar & Grill, and Angelo’s Pizza.
Cleveland has a multitude of other great neighborhoods – both on the East side and West side of the city. Be sure and check out Tremont, Shaker Heights, Kamm’s Corner, Old Brooklyn and University Circle to see if any of those fit your fancy.
While popular opinion dictates that spring and summer are the hottest markets for real estate, a savvy buyer might think again and buy a home during the off season to score the best deals.
Despite the obvious downsides to a winter house hunt, including lower inventory, weather related hassles, and the extra time it takes to unlace your boots at every open house, other factors make winter a prime buyer’s market.
1. Less Competition
Zillow research suggests that late spring is the best time for home sellers to list to get top dollar for their home, which means that winter could be the best time for buyers looking for a good deal. During spring and summer months, homebuyers often get outbid by more aggressive offers, especially in a seller’s market. Serious buyers can benefit from the lack of competition in the off season as any reasonable offer may get the full attention of the home seller.
2. Motivated sellers
With fewer buyers searching for a home in winter, sellers are more likely to negotiate the terms of sale, which buyers can swing to their advantage. Plus, if a seller is listing their home during winter months, they might have extenuating circumstances prompting the move. Why else would they be listing during the off-season, when they might be likely to net less money on the sale? A buyer might negotiate having the seller cover the closing costs or a home warranty.
3. Fewer delays or service issues
When conducting your home search in the winter, you’ll likely have the undivided attention of not only your Realtor, but also other professionals who serve you through the transaction. Winter is the slower season for all other industry professionals, meaning buyers will likely experience faster, more attentive service at every step of the transaction.
4. Proving weatherproofing
While winter weather might complicate some aspects of a home search, like envisioning the full curb appeal or potential of the garden, the harsh atmospheric conditions actually put other components of your future home to the test. Cold weather will test the strength of your HVAC systems, gutters, and roofs, and you’ll be able to assess drafty areas where windows or insulation might be weak.
If you’re serious about landing your family’s new digs in the New Year, make sure to:
- Budget your holiday spend. While you may be tempted to partake is the seasonal splurge during the holiday season, it’s vital that you maintain your credit score and debt-to-income ratio while you are preparing to purchase a home. A large purchase or additional lines of credit can compromise your credit score and put your potential mortgage in jeopardy, even if you’ve gotten pre-approval. So, practice smart spending and save your funds for your largest gift: your family’s future home.
- Allow for delays in closing. During the winter, everything tends to slow down a bit. The same is true in real estate. Make sure to allow for small setbacks during the closing process to allow for time off work and weather-related delays.
- Be flexible and use your imagination. When searching for a home during the off-season, it’s important to accommodate sellers’ schedules and use your imagination. Sellers may put up showing blocks for the holidays if they are hosting family, so you may have to be patient before visiting your dream home. Additionally, ice and snow might significantly reduce the curb appeal of your potential pad, so you’ll have to use your imagination when envisioning the paver patio and landscaped lot. Come springtime, you’ll be glad you did.
If you’re planning to buy a home in 2018, you might spend your days dreaming about décor and drafting your next DIY endeavor without actually advancing toward your home owning goal. So, before the start of the new year, take a moment to consider a few resolutions that will proactively help get you into a home.
1. MANAGE YOUR CREDIT SCORE AND IMPROVE YOUR DEBT-TO-INCOME RATIO
Unless you are planning to pay cash for your next home, your first step to home ownership is rooted in your credit score. If you don’t already know your score, you can check it through one of the three credit reporting bureaus, Experian, Transunion, and Equifax. Find more information about your credit score, and how to improve it over time.
While you’re preparing to buy a home, it is also smart to check your credit report for any inaccurate information that might be negatively impacting your credit score. You can view your credit report for free at annualcreditreport.com.
After reviewing your credit report, you should also calculate your debt-to-income ratio, that is, the amount of money you owe compared to the amount of money you make. If you’re preparing to take out a mortgage, you should bring your debt-to-income ratio down to 36% or less, and keep it there.
2. CALCULATE YOUR HOME BUYING BUDGET – AND GET PREAPPROVAL
Meet with a loan officer to review your credit files and discuss mortgage programs, and get a pre-approval letter to prove your borrowing power to your realtor and home sellers. While a pre-approval letter does not guarantee that you will receive a loan, it does serve as proof that you have the financial viability to complete a home purchase.
3. DRAFT A HYPOTHETICAL BUDGET AS A HOMEOWNER
While, in many cases, a mortgage payment is cheaper than monthly rent, other costs associated with home ownership might shock first time homebuyers.
In addition to the cost of your home, your monthly mortgage payment will often bundle together other costs like property taxes and home insurance. You can find home insurance quotes online and use your county’s website to calculate a property tax estimate for homes in your city and price range, then incorporate those figures into your monthly home costs budget.
On top of that budget, add in averages for utilities, furnishings, and exterior maintenance to get an idea of the true monthly cost of home ownership. If you’re moving from a small rental unit to a single family house, you might be surprised at how quickly gas and electric costs accumulate!
Finally, even with the routine costs of home ownership and maintenance above, ensure that you can still maintain a stable emergency savings fund in case an appliance fails or other unanticipated damage occurs in your home. Experts recommend that you keep about 1-2% of your home’s total value in savings for any unexpected home repairs.
4. RESEARCH MORTGAGE OPTIONS
Unless you’re paying cash, you’ll need to apply for and secure a mortgage to finance your new home. Of course, you’ll want to get the best rate and terms for your mortgage, so it’s vital that you consider as many options as possible and understand all the information about your mortgage. After all, it’s a huge commitment.
Determine how much you will feel comfortable paying for a down payment. Traditional lenders have historically suggested 20% down, but this large an amount down can be staggeringly unattainable for some first time homebuyers. While some low down payment mortgage options have become available in recent years, you might find additional down payment grants or other assistance through websites like downpaymentresource.com.
5. CREATE A SHORT LIST OF “MUST-HAVES”
While you may dream of owning a luxurious lakeside retreat with two saunas and a lanai, that dream might be out of your reach if you don’t have a flawless credit score and a trust fund to back it up.
So, before you start looking for a home, make a list of the features you want in your future home, and decide which features you would be willing to compromise for the right price or neighborhood. That way, when you’re knee deep in your home search, you’ll be able to focus on the homes that meet your priority requirements, rather than wasting time viewing homes that don’t check off the right boxes.
6. PINPOINT YOUR TARGET AREA
Just like you did with home features, determine the attributes you desire in your future neighborhood and city. Do you want to live in a suburb with a great school system, or would you prefer the bustle of a downtown metropolis?
If you aren’t sure what neighborhood you want to live in, consider taking a day trip to visit some residential areas within a commutable distance of your employer. Then, take your search online and see the average price point of homes in those markets. A loft with city views in an urban center is often priced similar to a spacious colonial in a more rural area. Determine which option fits your lifestyle best, and take into consideration where you see yourself in ten years.
7. FIND A REALTOR
While you might initially feel confident finding a desirable home online without a REALTOR, you might feel like a ship without a paddle once you get into contract negotiations, inspection requirements, and closing costs. An experienced, licensed professional can help you negotiate the complexities of a real estate transaction, and even help you pinpoint your home search with community information and market forecasts for particular neighborhoods.
You can find a professional by browsing profiles and reading recommendations through home search sites like REALTOR.com, Zillow.com, or even Google. If you feel more comfortable offline, visit a few open houses in your neighborhood to meet local agents, ask friends or family members who live in your target area, or ask your lender or financial planner if they have a preferred team. Talk to several agents before signing anything—you’ll want to ensure you can communicate well with the agent you choose, not to mention that they have the training and experience to meet your needs.
Buying a home carries more costs than just a down payment and mortgage.
Even if you don’t have to put any money down on your mortgage, you may be required to show proof of cash reserves, basically enough in savings to keep yourself—and your new home—afloat in case of job loss or other financial setback.
So, start saving as soon as possible for your new home. Consider setting up your bank account to automatically move a certain portion of each deposit to a savings account. If you don’t see the money, you’re less likely to spend it, and you’ll be able to quickly accumulate savings without even thinking about it. Additionally, avoid big purchases, especially anything that affects your credit score, such as a new car, while you prepare to buy a home. Any changes in your credit score, even after you’ve been preapproved for a mortgage, could cause your lender to back out of the deal. In fact, financing setbacks are one of the top reasons why real estate transactions get delayed. Protect yourself, and your home purchase, by playing it safe.
Before buying a home, several sources will probably recommend scheduling an inspection. More often than not, new homebuyers are now calling in additional experts to conduct more thorough inspections of particular systems – such as electrical, HVAC or plumbing. These additional inspections; however, can quickly add up.
So, what can you be looking for on your own or be prepared to ask about the plumbing system when you walk through? Be sure to inspect these three plumbing features.
#1 MAIN SEWER LINE
Problems with the main sewer line are one of the most costly plumbing problems. There are many factors that can cause a main sewer line to deteriorate including the material it’s made of, tree roots cracking their way in and ground shifts.
Before moving in, you might consider scheduling a sewer line video inspection. This will allow you to tell in real time if there are any immediate repairs or replacements necessary and whether you should start saving for future repairs.
#2 WATER HEATER
The average water heater lasts about 10 years depending on how often it’s used, how it was maintained, and the quality of the home’s water supply.
Your water heater is going to provide hot water for showers, dish washing, clothes washing and more. So, if you want to avoid an early and unexpected cold-water shock, it’s best to determine the condition and age of the home’s existing water heater.
Another important factor to consider is the size of the water heater – will it be able to meet your family’s needs the same way it’s meeting the needs of the home’s current family? If you have a larger family, you may need a larger hot water heater.
Lastly, consider the location of the tank. Is it in a location where it could cause serious property damage or hidden in a utility closet where you’ll never remember to check it for leaks? If so, you may want to consider moving it before moving in.
#3 SUMP PUMP
Sump pumps help to prevent flooding from heavy rainfall and fast melting snow.
They also eliminate moisture. According to the American Society of Home Inspectors, more than 60% of homes have moisture in their basements or crawlspaces. Moisture can lead to mold – an extreme health risk for your family.
It is critical to ensure the sump pump is in working order. And, a battery backup sump is always good, too!
With these three inspections down, you’re well on your way to peace of mind with your new home’s plumbing system.
ADVICE FOR FIRST TIME AND SEASONED HOME BUYERS ALIKE
It’s no secret that you want to know as much as possible about the condition of a house before committing to buying. Yet, most home buyers overlook the condition of a system that plays a significant role in the value of every house.
This is most likely because that system – the septic system – is buried in the backyard.
HOME INSPECTIONS DON’T COVER IT ALL
Many buyers think they’re covered when they schedule a home inspection. However, most home inspections only observe interior plumbing, ensuring there are no damaged pipes or leaks and that sinks, toilets, showers and tubs are draining properly.
In reality, while the interior plumbing may appear to be functioning properly, something very different could be happening beneath the backyard. Similarly, just because it works during the inspection, does not mean the same is guaranteed to be true after you move in.
For example, you want to be sure that the septic system can handle the new number of people that will be living in the house. While a system might function correctly when handling 400 gallons per day for two people, it may fail terribly when attempting to handle twice the amount from a family of five.
Another common reason septic systems fail is tree roots. Tree roots crawl into tiny openings in pipes and expand in the sewer line, causing larger cracks and blockage or backups. Waste might flow right by the roots on inspection day, but just a week later as grease, eggshells and other food debris start getting trapped in the roots, you could find yourself with a serious backup.
STEPS TO TAKE TO ENSURE YOU’RE COVERED
Here’s what we recommend:
- Get as much information as possible from the current homeowners about the maintenance of the septic system during the time they’ve lived there.
- Schedule a sewer line camera inspection in addition to your home inspection, especially if the home is over 20 years old.
Finding out how the septic system was cared for and sending a camera through the septic line may reveal one of the following scenarios:
- A fairly new septic line – a desirable selling point providing you with the relief that you will not have to spend thousands on repairs within the next 10 years.
- A sewer line overrun with tree roots, collapsed and beyond repair in some parts, alerting you to consider a new septic line as part of negotiations instead of being caught unaware by the associated costs down the road.
- A sewer line with just a few small cracks and bellies that you can ignore for now, but need to be prepare your wallet to address in a few months.
Still have questions regarding home inspections or sewer inspections? Ask your realtor what’s best for your unique home buying experience.
Content provided by Invisible Excavations, a local Cleveland company that conducts sewer line camera inspections and trenchless sewer repairs and replacements.
Often times, sellers and buyers think that once a home is under contract, the grunt work is over, but typically that is far from true. The buying/selling journey can be a long process and must meet specific agreed upon requirements. If not, the closing may experience delays.
According to a study by the Washington Post, 32% of closings get delayed. Of the third of postponed closings, financing issues triggered 46 percent, appraisal-related problems caused 21 percent of the delays, and home-inspection issues in 14 percent. 90 percent of the time, the buyer is responsible for the delay.
HOME FINANCING SETBACKS
Believe it or not, your credit score can fluctuate enough between loan approval and closing, which could result in the buyer being ineligible for the mortgage. The best way to avoid this is to incur no additional credit during this period, meaning no new car purchases, or any new credit activity at all.
Debt-to-income ratios also can change when an underwriter discovers that a buyer failed to disclose payment obligations such as child support or student loans. To avoid this, disclose absolutely everything to your loan offer. Also make sure you are not doing anything that could affect your qualifying income, such as a sudden job change.
HOME INSPECTION ISSUES
Most real estate transactions have an inspection contingency to ensure the home being purchased doesn’t have any major defects that could cost tons of money in the future.
After a home inspection is completed, the buyer has the opportunity to request repairs be completed or some type of seller concession, in lieu of the repairs. If a seller agrees to make repairs, it’s important that these repairs are done once a buyer receives their mortgage commitment.
If a closing is delayed due to inspections, it’s typically because a seller doesn’t make the agreed upon repairs. You should expect your real estate agent to follow up on the repairs to make sure they are completed well before the closing date so there are no delays.
One way to make sure your home will go through the inspection without a problem is to get a pre-listing inspection by a reputable professional before you list the house on the market. This allows the seller to fix anything important in advance.
UNDER APPRAISED HOME
Problems with a bank appraisal may be a reason your closing gets delayed. The issue normally comes down to the house under appraising for the agreed upon contract price. If the buyer and seller cannot come to new terms, or if the required repairs aren’t made, the deal could fall apart.
As long as your real estate agent is handling the transaction carefully and following up to make sure the appraisal has been completed, the house did in fact appraise, and there were no required repairs, then your closing will clear this contingency.
THE FINAL WALKTHROUGH
The last step before a home closes is the final walk through, which is especially important for the buyer. There are many things that a buyer should be on the look out for at the final walk through.
- Ensure agreed upon repairs are included
- Air conditioning is functioning
- Furnace is functioning
- Utilities are functioning
- Included appliances are functioning
- Toilets are functioning
If any one of these things are not acceptable, the closing will most likely delayed! Since the final walk through typically happens the day prior to the closing or sometimes even on the closing day, it can be extremely frustrating for a buyer. To avoid this, stay on top of the sellers to make sure their keeping their end of the deal, and disclosing if anything could delay the closing at the final walkthrough.
UNREALISTIC CONTRACT DATES
Whether you’re a buyer or seller, it’s imperative that you have a top realtor representing your interests. One of the most common reasons why a real estate closing is delayed is because of unrealistic contract dates that were agreed upon in the purchase offer. An experienced real estate agent knows how to appropriately structure the dates in a purchase offer to mitigate any prolong closings.
The majority of the time, It takes around 45-60 days for contract to close. This depends on the type of financing a buyer, if the property is bank owned, if the home is paid in cash, if there are a number of contingencies in the purchase offer, and other variables. It’s important to have the expectation that your home will take 1-2 months for closing to occur.
A top real estate professional should know whether the contract dates are realistic or not. For example, if you have a top producing listing agent and you receive a purchase offer with unrealistic contract dates, they will know what questions to ask the buyers agent and also what to advise you to counter in the purchase offer.
REACHING THE FINISH LINE
More often than not the deal will close. There just may need to be a few extra days to reach the finish line. The best option is to grant the buyer a contract extension. An extension to the contract establishes a new closing date that can be met in the future.
The new TRID law that went into affect a little over a year ago has pro-longed the closing timeline, but as long as the guidelines are followed, you can avoid delays. Under TRID, a new settlement statement called a Closing Disclosure must be issued to the borrower at least 3 days prior to closing. If that does not occur, the closing will be delayed for up to 7 days.