Steps to Buying a Foreclosed Home

By Bill Gassett Let me guess: You are interested in buying a foreclosure property? When you want to buy a home, but the mortgage payments are difficult to afford, buying a foreclosure can look attractive. The unfortunate previous homeowner will have struggled with the costs of the mortgage, ending up with the home foreclosing to the lender. The bank or other financial lender wants to sell these homes and get as much of their money back as they can. They are looking to get their money back quickly, and this can mean selling for less than the market value. This is where you can pick up a bargain that would otherwise cost more than you could afford. Buying a foreclosed home is a little different from a standard sale, and there are some things you need to know. While you might be concerned about purchasing a foreclosure, if you are prepared to do more research and take slightly more risk, there could be significant savings to be made. Let’s review the foreclosure procedures and the steps you should follow to successfully close on a home. Stages of Foreclosure A foreclosure goes through different stages, and this will change what you have to do to buy the home. Short Sale The pre-foreclosure is when the property is still owned by the person who is having difficulty with the mortgage payments. They are keen to sell to avoid the full foreclosure of their home. This is also known as a short sale, and the seller will often need the permission of the lender to sell the home for less than the loan amount....

5 Ways to Boost Your Credit Score

Plan on applying for a home mortgage, car loan or new credit card? Lenders will be looking at your credit score to determine if you’re a responsible borrower. The higher your credit score, the more likely a lender will qualify you and offer the best terms. Although boosting your score requires time and discipline, here are five simple steps to take: 1. Pay Bills on Time When lenders review your credit report, they’re very interested in how reliably you pay your bills. That’s because past payment performance is usually considered a good predictor of future performance. You can help this credit-scoring factor by paying all your bills on time. That includes not just credit card and loan bills, but also bills for rent, utilities, cellphones and so on. Similarly, paying late or less than the minimum amount can hurt your score. Use automatic payments or calendar reminders to help ensure you pay on time every month. If you’re behind on payments, bring them current ASAP. Although late or missed payments appear as negative information on your credit report for seven years, their impact on your score declines over time: Older late payments have less effect than recent ones. 2. Pay Off Debt The credit utilization ratio is another important number in credit score calculations. It’s calculated by adding all your credit card balances at any given time and dividing that amount by your total credit limit. For example, if you typically charge about $2,000 each month and your total credit limit across all your cards is $10,000, your utilization ratio is 20 percent. Lenders prefer ratios of 30 percent...

Mold: Know the Facts

If you are in search of a new home, it’s vital that you learn how to detect mold in homes, get the home seller to disclose any information about mold and be prepared to negotiate around any mold problems that come to light in the course of the sale. Let’s face it, no one wants to purchase a house with a mold problem but these sneaky little spores aren’t always easy to detect, and if you’re willing to tackle the problem yourself, you may get a good deal on a home. For those who don’t really understand, mold is a fungus which can cause health-related problems and is a costly, time-consuming problem to fix. Although some molds are visible and even odorous, mold can also grow between walls, under floors and ceilings, or in less accessible spots, such as basements and attics. The Environmental Protection Agency explains that molds produce allergens—substances that can cause allergic reactions, irritants, and in some cases, potentially toxic substances. Inhaling or touching mold or mold spores may cause allergic reactions in sensitive individuals, including hay fever-type symptoms, such as sneezing, runny nose, red eyes, and skin rash. Some forms of mold can also be the trigger for asthma attacks. Mold grows best in water-soaked materials (paneling, wallboard, carpet, attics), but can survive in almost any damp location. That’s why many indoor mold problems begin with an aging, weathered, leaky roof that may allow water to enter the home. Spores are very easily aerosolized and once they are disturbed, hundreds of thousands of spores can fill the air within a short period of time. Because...

A Quick Breakdown of Your Homeowners Insurance

As new homeowners will learn, borrowers need to provide their lender with proof of homeowners insurance for the full value of the property (usually the purchase price) in order to be approved for the loan.Typically, the standard insurance policy protects your new property and some possessions against damage or theft. But what, specifically, will it cover? Limited Damage to the Home’s Interior and Exterior Your insurer will compensate you for repairs or rebuilding costs resulting from fire, hurricanes, lightning, vandalism or other covered disasters. Damage that is the result of floods, earthquakes and/or poor home maintenance is generally not covered unless you have purchased ‘riders’ for that protection. Loss or Damage to Personal Belongings Clothing, furniture, appliances and most other home contents are covered if they are destroyed in an insured disaster. You can even get “off-premises” coverage that enables you to file a claim for lost jewelry, for example, no matter where you lost it. But there may be limits on the amount of protection. According to the Insurance Information Institute, most insurance companies provide coverage for 50 to 70 percent of the amount of insurance you have on the structure of your home. If your house is insured for $200,000, there might be $140,000 worth of coverage for possessions. If you own expensive art or jewelry, and provide proof of their value, you can purchase a ‘floater’ policy to fully insure them. Personal Liability Liability coverage protects you from lawsuits filed by others. If your dog bites your neighbor, your insurer will pay her medical expenses. If your kid breaks her expensive vase, you can file a...

4 Things That Shouldn’t Worry You When Buying a Fixer-Upper

By Anica Oaks Gauging a potential fixer-upper is a complicated undertaking that requires experience, knowledge and good judgment to know the difference between a serious fault and a cosmetic flaw. There are many different things that you should look at and consider when buying a fixer-upper; however, there will likely be several obvious problems that you don’t need to worry about too much: Ugly Paint and Siding Even the most hideous paint or siding can be removed. Most fixer-uppers have exterior issues, so buyers expect to redo a lot of the outside of the house in the months or years after the purchase. As long as the wood supporting the walls, windows and roof is in good shape, the external aesthetics can be easily modified to suit your tastes. Damaged Doors Dented, dirty and well-worn doors can certainly be an eyesore, but they’re also relatively easy to replace. Replacing aging wooden doors with modern material gives the new homeowners a chance to inspect and reinforce the entire molding. It’s also a good opportunity to replace locks on all doors and windows with a fresh set. Broken Windows Even a few panes of broken glass can impact the overall aesthetic of a home. Fortunately, it’s also one of the easiest problems to address when improving a fixer-upper. Talk to comprehensive window professionals to develop tailored solutions that are both economical and effective. There’s nothing wrong with simply replacing old windows with something new, but you can also modify the entire molding to fit a new style or size. Deck and Patio Problems For some homeowners, a solid wrap-around deck is...

3 Money Tips for New Homeowners

Being in your first home is an exciting time in your life. But coming up with a down payment may not have been the toughest part of it. Aside from buying furniture, painting and decorating, and making those first fixes, you should probably give your finances an overhaul to accommodate the costs of homeownership. Financial experts from The Motley Fool offer three important money tips: Create a new budget. A lot more will change in your monthly budget than the difference between your rent and your mortgage payment. You may be taking on utility payments for the first time, or those costs may increase depending on your new square footage. If you suddenly have a lawn to maintain, that will be a new expense. Money managers suggest you track all your expenses for at least three months, then update your budget as needed. Prepare for repairs and maintenance. Most homeowners spend between one and four percent of their home’s value on repairs and maintenance. So, if your home is worth $300,000, expect to shell out anywhere from $3,000 to $12,000 a year on upkeep. If you need to do something major, like replace a faulty heating system or roof, your costs could climb even higher. Aim to pad your emergency savings so that you have funds to tap when needed—somewhere between three and six months’ worth of living expenses. Be ready to meet tax payments. Unless you’ve rolled your mortgage insurance and property taxes into your monthly mortgage payments, you will face a good-sized property tax payment twice or sometimes four times a year. Be aware of the amount, and set aside...

HOAs and How They Can Impact Your Purchase

There are a multitude of things house hunters need to consider before choosing a home, such as price, location, schools, distance to work—the list goes on and on. Most homebuyers may not think about the costs and rules associated with buying a house that’s part of a homeowners’ association; however, it is an issue they may run across. For those unfamiliar, a homeowner’s association (HOA) is a legal entity that manages a shared housing complex—that doesn’t just mean a condo or a series of town homes. In some cases, it includes a suburban housing development with shared space or a specific neighborhood. If a home is part of an HOA, the information should be available right in the MLS. You can always ask your REALTOR® to be sure. The last thing you want is an unexpected fee tied to your home purchase. Though the costs vary, most HOAs collect monthly dues and the money is earmarked to fund activities or repairs for fellow participants. This could include things like block parties or lawn maintenance. Keep in mind that you can’t “choose” to be excluded from an HOA. If you buy a home that has one, you’re required to be part of it and pay the dues. The structure of an association can vary, depending on the total number of members, but most have a president, treasurer and some elected board members. When you’re part of an HOA, there are rules you must follow. And depending on how strict yours is, it can be a pain. For instance, there may be a rule about what color you can paint your...

How Much Money Do You Need for a Down Payment?

Buying a home often requires years of saving for a down payment, which is money that a buyer pays upfront toward the cost of a house. This is the immediate equity that a buyer has when purchasing a home. Unless buying with cash funds, the rest of the money comes from a loan. Different lenders require different amounts of money down based on a variety of factors. Lenders refer to a down payment in terms of a percentage of the purchase price. Private Loans Private lenders typically prefer that buyers put down 20 percent. Some will accept lower down payments, but those borrowers are considered a higher risk. Lenders want a guarantee and require borrowers with lower down payments to pay for mortgage insurance. This is a policy that pays the lender if the borrower defaults on the loan and the house winds up in foreclosure. The cost of mortgage insurance depends on the size of the down payment and loan, as well as the borrower’s credit score. Mortgage insurance tends to be expensive, which is why many people decide to put off buying a house until they can save enough money to put down 20 percent. If you put down 20 percent, you will have a better chance of being approved by a private lender, and you will also generally qualify for a lower interest rate, fees and monthly payments. Government Programs The Federal Housing Administration (FHA) allows borrowers to obtain mortgages with as little as 3.5 percent down. FHA guarantees a portion of the amount borrowed and offers loans at lower rates than private lenders. FHA charges...

Is Buying a House in Foreclosure a Good Idea?

When shopping for a new home, everybody wants to get a good deal. Many buyers consider properties in foreclosure because they are often available at below-market rates. While you may be able to find the home of your dreams for less money than you thought, there are some factors to consider. Advantages of Foreclosed Properties Houses in foreclosure are typically sold at prices below market rates because banks want to get rid of them as quickly as possible. This can allow savvy buyers to score great deals. If you want to own a home in a pricey neighborhood or with expensive amenities, but you have a limited budget, you might be able to get what you want with a foreclosed property. Another reason to consider a house in foreclosure is the potential to make a profit in the long run. Since foreclosed properties are sold at low prices, if your house appreciates in value and you sell it in the future, you stand to earn a significant profit. Potential Problems There are some downsides to consider. One of the most important is that the condition of the house may be sub-par. If the owners were unable to pay their mortgage, they might have also put off necessary repairs and maintenance. Since foreclosures are generally sold “as-is,” you would be responsible for making those repairs. That could significantly increase your costs and also delay your move-in date. Sometimes people living in foreclosed houses are problematic. They might want to stay and need to be evicted, which can be a lengthy process. They might also be angry about losing their home...

The Master “Change of Address” Checklist for Your Next Move

Any time you move to a new home, things change. A new neighborhood, new people to meet and a new address. With the stress of a big move and the excitement of starting the next chapter in life, there are important tasks that need to get done, but are inevitably put on the back burner. Once your boxes are unpacked and you start to settle in, the next step is to identify any and all places where your address needs to be updated. Trying to figure out every company, account or personal document that needs to be updated can be just as stressful as move-in day. So, instead of digging through your mail and potentially missing a bill, check out this master list of all necessary (and possible) places you may need to update your address. Government Agencies: Post Office DMV – License, Vehicle Registration (Plates, if you moved out of state) IRS/Other Tax Agencies Social Security Administration Voter Registration Financial Providers: Banks/Credit Card Company Loan Providers Accountants Utilities: Gas/Electric Company Cable/Internet/Phone Provider Cell Phone Carrier Insurance Companies: Health/Dental/Life Insurance Provider Car Insurance Provider Home/Renter’s Insurance Provider Personal, Family & Pets: Employer Doctor/Dentist Schools (If you have children) Veterinarians (If you have pets) Memberships & Services: Online Accounts (Amazon, PayPal, etc.) Streaming Services (Netflix, Hulu, etc.) Subscriptions (Magazines, meal delivery, etc.) Clubs/Organizations (Costco, BJs, Sam’s Club, etc.) Gym And last but not least, don’t forget to update your friends and family of your new address. Once you make your way through this checklist, you can officially call your new house your home! Reprinted with permission from RISMedia. ©2020. All rights...

5 Ways to Know Whether a Fixer-Upper Is a Good Deal or a Money Pit

For homebuyers on a tight budget, it’s tempting to consider buying a home in need of repairs; it may grant you access to a coveted neighborhood or a larger home than you could otherwise afford. But sometimes, a fixer-upper can be more than you (and your budget) bargained for, and the home seller is the one who ends up with the great deal by unloading their problem home on you. Money Crashers offers these five things to watch for that could be signs you’re investing in a money pit. The listing says ‘as-is.’ This signals that the seller is not in a position to make any repairs before selling. Before you proceed with such a home, find out exactly what repairs will need to be made and get a quote or two from a contractor. If you’re afraid of losing the home while you investigate these costs, make an offer with an escape clause in the contract. Also, be aware that the appraiser must sign off on the house as habitable, which is a condition for most home loans. You smell moisture. If the air smells damp or musty in the home, it could be a sign of water damage and mold, which can quickly make a home uninhabitable. Have a mold test done and carefully investigate ceilings for leaks, and basements and foundations for cracks. Sloping or sagging floors. If the floors look uneven or seem to be sloping, this could be a sign of serious structural damage. A simple way to know for sure is to place a marble on the floor and see if it rolls on its own....

7 Insurance Factors to Consider When House Hunting

If you plan to buy a house, you’ll also need to purchase homeowners insurance. An insurance policy can help protect you, your family and, of course, your new home in case the unforeseen happens. Because coverage can add a significant amount to the overall cost of homeownership, however, it may pay to keep in mind that certain features of a home can affect the price and availability of insurance. To help you save and ensure that you’re properly protected, the Insurance Information Institute offers some factors to consider when house hunting: 1. Quality and location of the fire department. Houses that are located near highly rated, permanently staffed fire departments usually cost less to insure. This also holds true for homes that have a hydrant nearby. 2. Proximity to the coastline. Houses located on or near the coast will generally cost more to insure than those further inland. They’ll also likely require a separate hurricane or windstorm deductible. In some coastal communities, private homeowners insurance coverage may not be readily available. Instead, you may need to purchase insurance through a state-run insurance program. 3. Age of the home. A stately, older home can be quite beautiful, but ornate features like plaster walls, ceiling molding and wooden floors may be costly to replace and can raise the cost of insurance. And plumbing and electrical systems can become unsafe with age and lack of maintenance. If you’re considering buying an older home, find out how much it’ll cost to update these features and factor that into the cost of ownership. 4. Condition of the roof. A new roof matters to insurers...

Top 10 Reasons to Hire a Buyer’s Agent

Why Have a Buyer’s Agent When Purchasing a House? Buying a house is one of the most significant undertakings you’ll make in your entire life. It’s not simply about finding the right home for you and your family; more than anything, buying a house is about making the right financial investment on a long-term basis. Before you even put down your earnest money deposit, an exceptional buyer’s agent will have been doing several things for you, including searching for the right property and starting the due diligence process when you do. There are a plethora of reasons you should turn to a buyer’s agent when you start the house-buying process. Below are some of the most essential reasons to hire a buyer’s agent when purchasing your next house: 1. It’s Free One of the first things you need to know about hiring a buyer’s agent is that it’s not going to cost you anything. That’s right; 99 percent of the time it won’t cost you a dime! A buyer’s agent will be paid by the home seller once the home is sold. Not only is it free, but a buyer’s rep will be saving you both time and money. As always, it’s essential to have a good working relationship with an agent. In other words, make sure you find one that you feel comfortable working with. 2. Going to the Listing Agent Isn’t Smart For some reason, lots of buyers think they’ll get a better deal if they go to the seller’s agent. This is one of the biggest myths in real estate and could cost you considerable money in...

So You Want to Buy a Vacation Home? Consider This First

If you’re in the midst of hunkering down for a chilly winter, you may find yourself dreaming of warmer locales. If only you had a second home somewhere more climate-friendly to escape to… If those dreams are getting closer to becoming a reality and a vacation home is on your to-do list, be sure to take these four steps first: 1. Really research locations. Make sure it’s a place you’ve spent lots of time in, and, therefore, want a permanent place there. A warm climate is only one attraction. Also consider ease of access (can you hop in the car, or does getting there require connecting flights?), weather-related concerns, like flooding or severe storms, community amenities and access to the services you’ll need. 2. Get your family’s input. Many envision a vacation home as the place where they’ll gather the whole family for summer break and holidays, but it doesn’t always pan out that way. If you’re investing in a second home that you want your family to frequent, be sure to include them in the conversation. Their idea of the perfect location may not match up to yours. 3. Analyze affordability. If you’re really crunching the numbers to make this happen, make sure you’re not putting yourself in a financially tight spot. Perhaps you’re planning to rent out your second home when you’re not using it. If so, make sure you’re willing and able to take on the responsibilities of being a landlord, and factor in the costs that come with that, as well. If you’re going the Airbnb route, check into regulations and fees associated with the location you’re buying...

Tips for Buying a Foreclosure

By Bill Gassett Are you considering buying a foreclosure or bank-owned home? It can be tempting to look at foreclosed properties if you want a bargain, but are the lower prices really worth the potential problems? A different approach is needed when you are looking to buy a foreclosed house. Below are some tips and tricks to make the process smoother. It’s essential to know that these kinds of real estate transactions can be a bit riskier than your traditional purchase. Quite often, first-time homebuyers are under the impression that foreclosure properties are the bargain of the century. While at times there is a discount, don’t expect it to be monumental. If only going from a renter to a homeowner translated into instant equity. Unfortunately, it rarely ever works that way. Keep your eyes wide open and use these simple tips for buying a foreclosure: Is It a Good Idea to Buy a Foreclosed Home? A foreclosed property has been recovered by the lender when the owner was unable to keep up their mortgage payments. The lender wants to get as much of their money back, and they want to do it quickly. This leads to foreclosed homes coming on the market for less than the value they really offer. For buyers, this can present an excellent opportunity to save thousands on the house. There are some downsides and potential pitfalls to purchasing a foreclosed property, and it won’t be for everybody. If you’re happy with the higher risks involved and can move quickly on a deal, this could be a way to get a decent discount on a home. Here’s what you’ll need to do...