Tri-Valley Home Buyers Archives - Page 5 of 6

Hidden Costs for Home Buyers

July 5, 2016 by temineth Leave a Comment

Buying a house, they said. It will be so easy, they said. Until all of a sudden, you have these hidden costs and fees popping up all over the place. I don’t want you surprised at all with any of the costs or fees involved in buying or selling a house but you do need to know that buying a house does require some money.

There are many billboards, signs and advertisements out there touting the you can buy a house with zero down and no money. Do you really want to be a homeowner if you have no money in the bank? That’s a serious question that deserves some serious consideration.

Now, I’m not saying that you need hundreds of thousands of dollars or even tens of thousands of dollars in order to be a homeowner but there are certain costs and fees associated with buying a house that all homeowners, especially first-time homeowners can tend to be surprised about. I want you aware of everything and doing your homework, including reading this blog post, will put you in a better position financially.

Here are some hidden costs to buying a home.

Out-of-pocket home inspection costs.

This is one of the expenses that will not be included in your closing costs. Unless your real estate agent or financial lender has done some creative consolidating, chances are you’ll need to pay for your home inspection out-of-pocket. This means you’ll need to write a check or give a credit card to the home inspector while they are there before or right after the home inspection. Home inspections tend to run anywhere from $350-$800. On average is about $400. If you can’t afford a home inspection out-of-pocket, you probably should not be buying a house. The home inspection is a vital part of the home buying process and not understanding everything you can about the home from a professional’s point of view could lead to some costly mistakes in the future. Make sure you have this money set aside for the home inspection.

10 Point List to Know if You’re Ready to Buy a House

The appraisal fee.

When borrowing money your lender will want to make sure that the home you are purchasing is worth the amount you are borrowing, which is why they’ll need to order an appraisal that you’ll need to pay for. The lender will typically hire an independent certified appraiser to assess the property value of the home. It will document varies features that make the home valuable and they can typically run between $250 and $600. This upfront fee will be charged directly to the borrower by the lender and may or may not be included in the closing costs.

Escrow fees.

Some lenders will require that an escrow account be set up in conjunction with a mortgage loan agreement. This will house money to pay ongoing property related expenses on the homeowners behalf including homeowners insurance, private mortgage insurance and property taxes. There also may be an additional deposit required at closing for this account. Be sure to check with your lender or your real estate agent about these additional fees.

Potential survey costs.

Not all homes will require a survey but it may be required so everyone knows exactly where your property’s boundaries are. This could be several hundred dollars but again, not required however, you will be paid directly to the surveyor.

5 Secrets Every House Hunter Should Know

Earnest money deposit.

When you first make an offer on a home you’ll need to write a check or money order for an earnest money deposit. This holds the property as the first right of refusal to buy the home. This could be anywhere from 1% to 5% of the purchase price of the home so this is a good chunk of money that could be several thousand dollars. This will go toward your down payment at closing. This money will not be deposited until mutual agreement is secured on the purchase and sale contract.

Closing costs.

When you finalize the sale on your new property closing costs will include a variety of courier fees, escrow and title company fees, appraisals, lending fees, points etc. and may or may not include some of the previous points as well. This could be anywhere from $5000-$20,000 based on the price of the home. This can be rolled into the cost of the home if the property can bear the value however, talk to your lender about this so that you’re not stuck with a $10,000 bill that you didn’t know about.

Buying a home should be fun but understanding all of the details about the transaction and the lending practices will help you be better prepared for the entire process. For more information or to get started or to answer any questions you might have about homebuying in the Tri-Valley area contact my office today.

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Buy First, Sell First? Which Comes First?

June 28, 2016 by temineth Leave a Comment

Oh that tricky question; what should you do first? List the home? Make an offer on another one? Is it okay to buy and sell simultaneously? What’s the risk and what happens is one falls through?

This can be a stressful situation but it’s not uncommon. Many homeowners buy and sell at the same time. It can be a bit easier if you’re doing the swap in the same town. Out of town or even out of state can be very stressful but not if you plan ahead and be strategic about the move.

Here are some simple tips anyone can do when buying and selling at the same time.

Talk to your agent about what is the best move.

Simply talking to your agent about the marketing, the desirability of the neighborhood and how fast your home might sell can help you plan for this transition. If the market is hot, you might consider finding a home first and locking that in before listing. If the market is slow, consider listing first and finding a home later. Your agent will tell you honestly which direction to try first.

Should you go contingent?

Contingent is when you put in an offer on a house with a condition that you can’t finalize the payment until after your home sells. There may be some stipulations to this as well, such as, the home must already be listed, accepted offer, etc..

Contingent offers are also pretty tricky. Many homeowners in a hot market will not accept a contingent offer because they know about your offer is probably right around the corner. They are much less desirable and many listing agents will tell their sellers to decline a contingency offer.

This doesn’t mean that sellers won’t consider a contingent offer but it might be very risky and you may lose out on the home you really want. Each situation is unique and even micromarkets in particular communities and neighborhoods can vary from place to place, so it’s extremely important to be in top communication with your real estate agent about the best move for each house.

What about a bridge loan?

A bridge loan or even a home equity line of credit, can offer a loan extension from one house to another. A bridge loan, allows you to tap the equity in your current home with short-term financing in order to buy your new home before your old house sells. You’re basically financing to homes at the same time but just temporarily. Once your current home sells you can pay off the temporary bridge loan and move into your new home.

The downside is that very few lenders offer these types of homes. They’re more likely to recommend a HELOC, home equity line of credit, in order to make the down payment. Remember though, with a HELOC you will be paying two mortgages.

I typically recommend that my homeowners put their home up for sale first and then once they’ve negotiated an accepted offer, they can get serious about finding and purchasing a new home. This can be a tricky situation however, especially if you’ve found the home you love before you’ve even listed your current home. This is why I recommend not looking at homes until you’re ready.

Again, it all comes down to timing and understanding the individual markets that you’re buying in and selling in. Talk to your real estate agent before making any serious moves so that you can plan ahead, strategize the right plan of action and be prepared for a roller coaster ride over the next couple of months.

The right agent can certainly make all the difference in the world. Contact me today and let’s get started finding out what would be the best option for your situation and your location.

10 Point List to Know if You’re Ready to Buy a House

June 8, 2016 by temineth Leave a Comment

Think you’re ready to buy? It’s exciting and a little scary when you think about buying, purchasing and owning a home of your own, especially if you’ve never done it before. But you also want to know you’re ready. If you’re not, owning a home can be stressful. It’s a big responsibility but a worthy one if you’re ready.

Here’s our 10 point checklist to find out if you’re ready to buy a home.

#1. You’re comfortable making a monthly housing payment.

If you’ve already been paying rent or some other housing payment each month then you are prepared for the monthly mortgage payment but you’ll be expected to pay to the bank each month. Depending on where you live, sometimes rent can be just as much or even sometimes more than a mortgage payment. If you’ve gotten into the habit of making an on-time payment each month, you should be ready for monthly mortgage payment.

#2. You have a little bit of money in the bank.

If you’re living paycheck to paycheck barely making ends meet each month, the house may not be the best option. Renting means that you have very little responsibility in repairing or replacing items that break from natural wear and tear. When you own a home, you are the only one that will pay for this repair or replacement. You need a little bit of extra money in order to take care of any emergencies that might arise.

#3. You have some savings.

This is more than simply having money left over each month after your paycheck; this is money saved up for either a down payment and/or closing costs. When you purchase a home you’ll need an earnest money deposit, which is usually 1% to 3% of the purchase price of the home. This could be several thousands of dollars. If you do not have money for a down payment or earnest money deposit, chances are your mortgage will be extremely high and sellers may not accept your offer.

#4. You have good credit.

I didn’t say perfect credit because you don’t need perfect credit to apply for a home loan and get approved but you do need to meet a certain requirement for credit score and credit history in order to qualify. Talk to your lender about what these qualifications are and get a copy of your credit history.

#5. You’re planning on staying a while.

If you like to move every six months to two years, buying a permanent house may not be the best option. Buying a house is a long-term commitment so unless you’re planning on staying at least 3 to 5 years, you might stick to renting for now.

#6. You’re ready for more responsibility.

Whether you purchase a single-family house or condominium your responsibilities will increase. You are now responsible for appliances should they break, mowing the lawn or keeping up with the landscaping and maintaining the structure in general.

#7. You’re ready for tax breaks.

As a homeowner you can receive certain tax credits and deductions on your mortgage interest and property taxes each year.

#8. You understand the market and know that it’s a good time to buy.

If all the other factors come into play but the market is just terrible, it may not be time to buy and this is no fault of yours. Talk to your real estate agent about the best time to buy in your neighborhood and in your market. There are typically more homes on the market during the spring and summer but you might be able to get a better deal in the fall or winter. Talk to your agent about the type of market we’re in and if it’s a good time to buy.

#9. You understand the hidden expenses of owning a home.

There are many additional costs of homeownership that new homebuyers tend to overlook. You will need to pay homeowners insurance, taxes and possibly private mortgage insurance or PMI, which is added onto your monthly mortgage payment in the cases of a low down payment or zero down payment loan. You may also pay homeowners association fees monthly, quarterly or annually if you buy a condominium or a home in an association.

#10. You don’t have a lot of debt.

If you simply have school debt or a car loan, that may be OK but if you have numerous credit card debts, maxed cards, loans and too much debt in general, it will be difficult to get a loan and extremely difficult to add one more payment to your monthly bills. Pay down some debt first before applying for a loan.

I know this is a lot of information and it’s a good checklist but it is extensive. However, verifying all of these items will make homebuying much easier and it will make that monthly payment that much easier to afford and manage each month.

If you feel you’re ready for homebuying please contact me now to get started looking at homes today. Still have some questions on whether or not you qualify? Click here now for free consultation about homebuying, the market and answers to all your real estate questions.

5 Secrets Every House Hunter Should Know

June 1, 2016 by temineth Leave a Comment

To really get the most out of your house hunting experience you may have done little bit of research, scoured the market and read real estate articles ad nauseam. You might think you’re an expert at this point but no one is an expert better than a professional that buys and sells real estate on a day-to-day basis. Gaining insights and secret tips from real estate agents and brokers could be the key to saving money and finding the home you really are going to love for years to come. Here’s our five secrets of every house hunter should know before jumping in the market.

#1. Think strategically.

Our bay area market is hot and there are new developments popping up all the time but it may not be fast enough. Buyers, especially first-time homebuyers need to think strategically in order to land a house in a hot market. It can be so frustrating looking at multiple houses only to be bid out time and time again. However, there’s always a way to gain an advantage over the competition. One way is for your agent to pull tax records of sellers to get information to use on a personal letter to the seller. This personal letter could be the ideal way that you get the home. Also, ask your real estate agent to share your needs on social media and with other agents for insight on homes that may be have yet to hit the market.

#2. Research and scope out the neighborhood.

Before making an offer on a particular home, check out the neighbors and the neighborhood around that home. Perhaps they’re having a garage sale in your desired neighborhood and you can ask the homeowner questions as your shopping. You can also sometimes find neighbors out watering the lawn and you can simply asked them about the neighborhood, the marketand what they like or dislike about a particular area.

#3. Use pricing psychology.

Pricing a house is very similar to pricing just about anything. $5.99 seems like a better deal than $6, even though we know that it’s basically the same. Pricing a house works very similar. If the property is listed at $625,000 and you know that the property has already received several offers, you may be tempted to go over the highest asking price with a flat number such as $650,000. However, raising it with an odd number such as $648,000, or $647,000 etc., may be the unique bidding number that will get yours noticed over the others.

#4. Be a great buyer.

Don’t be a lowball buyer that insults the seller at every turn. Sellers are more attracted to buyers that they like and that may share some interests. The personal letter can offer an insight into your personality and character and if you’ve already seen the inside of the home you might make notice of some of the things that stood out to you such as their baseball collection, unique design taste or complement them on or remodel they’ve recently completed.

#5. Keep an open mind.

Try not to let outside stigmas alter your perception of the home. Many people feel that a home where a senior citizen may have lived and even perhaps have passed away in is a reason to discard the property but chances are the the person that lived here took very good care of the property even though they may still have pink Formica, vinyl floors and original wallpaper. Keeping an open mind could give you a better chance at success and keep competitors away.

These five tips can make it a lot easier to find and purchase the home of your dreams. For more information please contact me today and let’s get started looking at a variety of homes in your desired area.

Best Places for Young Families in Northern California

May 12, 2016 by Dale Corpus Leave a Comment

Northern California has a reputation for pricey living, but young families are still finding affordable homes and good public schools in the suburbs of Sacramento and Fresno, as well as areas east of San Francisco.

Half of the 10 best places for young families in Northern California are clustered in suburbs of the state capital, NerdWallet found. Three other communities in our top 10 are in the eastern part of the Bay Area, where the tech industry is booming, and two are farther south, in the Fresno area.

NerdWallet’s analysis

By statistically comparing such factors as home prices, education, income growth and a crime risk score, NerdWallet identified the best places to start your search for the Northern California community that’s right for you and your family. We crunched the data for 202 places in Northern California — cities, towns and census-designated places with at least 10,000 residents. Not every place got top marks in all the categories we looked at, and housing affordability is an issue in some places.

Key takeaways

Family-friendly places came in pairs: Three sets of spots on the top 10 list are neighboring places — Rocklin and Roseville; El Dorado Hills and Folsom; and Dublin and San Ramon.

Second “bests”: Half of the cities on this year’s top 10 list also appeared on NerdWallet’s lists of the Best Cities for Young Families in Northern California 2014 or the Best Cities for Young Families in California 2014.

Best places for young families in Northern California

1. El Dorado Hills

El Dorado Hills, just east of Sacramento, earned a crime risk score of “most safe,” the highest possible mark. Homes aren’t cheap here — the median home value is $472,000, compared with the Northern California median of $304,650 — but median family income here is high, too, at $129,292. El Dorado Hills students are served by Buckeye Union School District, Rescue Union School District and El Dorado Union High School District. Top community attractions include El Dorado Hills Town Center and the area’s more than 200 acres of parks and open space.

2. Folsom

Folsom’s claim to fame may be its prison, but this suburban Sacramento city has a lot to offer families as well. Median family income in Folsom is high at $116,527, and it’s a community with plenty of young families — 30% of families include at least one child under the age of 18. Folsom earns a “safe” crime score, and poverty rates are low. Folsom Cordova Unified School District serves students in the area. The city offers a wealth of opportunities for outdoor recreation, and family attractions nearby include the historic district’s Sutter Street, the Folsom Railway Museum, Folsom’s Pioneer Village and the Harris Center for the Arts.

3. San Ramon

Living in San Ramon isn’t cheap; the San Francisco suburb’s median home value of $722,700 is the highest in our top 10. But families in the Contra Costa County city also earn a high median income of $151,494. San Ramon’s crime risk score is “most safe,” the highest possible, and 43% of families include at least one child under 18, the most in our top 10. Students here attend the award-winning San Ramon Valley Unified School District. Top attractions in San Ramon include the San Ramon Performing Arts Center, the San Ramon Art & Wind Festival as well as the city’s many trails and parks. San Ramon recently began a $4.45 million expansion and renovation of its main library, which will reopen in early 2017.

4. Dublin

Dublin, in Alameda County, is located on the BART train line, allowing for a car-free commute to San Francisco, and its crime risk score of “most safe” is the highest possible. Median family income grew 54.88% in Dublin from 1999 to 2014, the second-highest amount in our top 10. The Dublin Unified School District is expanding: A new kindergarten complex at James Dougherty Elementary School is scheduled to be completed in fall 2017, and a new K-8 school in the Jordan Ranch development is scheduled to open in fall 2018. Each year Dublin hosts Splatter, a popular food, art and wine festival for the whole family. The city is home to a wide range of parks and open space areas, including the 654-acre Dublin Hills Regional Park.

5. Kingsburg

Kingsburg, in Fresno County, has the lowest median home value in our top 10, at $219,700. Median income grew a whopping 57.15% on average from 1999 to 2014, the highest such jump in our top 10. Kingsburg is a “less safe” city according to its crime score, which is just under the state median. Elementary schools in Kingsburg operate on a charter system, which also includes one junior high school and Central Valley Home School. Kingsburg High School operates its own school district. Kingsburg pays homage to its heritage with its Swedish Village and annual events including the Kingsburg Swedish Festival and Julgransfest Christmas Tree Lighting.

Methodology

We analyzed 202 places in Northern California with populations of 10,000 or more. Northern California was defined as all counties in California, excluding the 10 southernmost counties of Imperial, Kern, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara and Ventura. Certain places were excluded because of missing data. Our methodology focused on four factors:

Home affordability. Home affordability, 30% of the total score, was calculated by averaging index scores for median home value and median selected monthly owner costs. The lower the costs, the higher the score. Data came from the American Community Survey, a division of the U.S. Census.

Growth and prosperity. Growth and prosperity are 20% of the total score. The two metrics were growth in family income from 1999 to 2014, and median family income in 2014. Data are from the American Community Survey.

Family friendliness. To measure whether an area is a good place for families, which is 20% of our total score, we looked at the percentage of married couples with at least one child under age 18, the average crime score as provided by NeighborhoodScout, and the percentage of families in poverty with at least one child under age 5.

Educational quality. Using data from SchoolDigger.com, every place was given a percentile score relative to other places in the state. Education is 30% of the total score.

Anna Helhoski is a staff writer at NerdWallet, a personal finance website.

This article originally appeared on NerdWallet.

Dale Corpus

925-380-1657

Dale@KeytotheBay.com

Why You Need a Tri-Valley Real Estate Agent

May 2, 2016 by temineth Leave a Comment

Buying or selling real estate in California’s Tri-Valley area and the Bay area real estate market is a very unique experience when you choose to work with an Tri-Valley Real Estate Broker. I don’t only love where I live, I have a deep working knowledge of the area that is much more in depth and wide than what you would expect from a local Realtor. When most area brokers cover one or two Bay area counties at the most, I have hometown experience in various markets including San Ramon, Pleasanton, Livermore, Dublin, Danville and Fremont. Based in San Ramon, service Alameda and Contra Costa County as well as individual communities and towns. In effort to create a more valuable service for my clients, Key to the Bay maintains all continuing education courses and connection to the local MLS. With my top local expertise, state of the art technology and time tested industry experience, your experience will make navigating even the most complex transaction smooth and easy.

The Bottom Line

The bottom line? Using a local real estate broker will save you time, money and heartache. Not only can I facilitate any real estate transaction, I understand home financing better than the average buyer trying to go it alone. My site offers the most up to date property listings, comparisons, and benchmarks because the most current and accurate data will always come from the MLS, of which Dale Corpus Real Estate is a member. Additionally, for sellers, my marketing and guidance from a seller’s perspective can save a lot of stress. Could you really price your home on your own with accurate comps of what’s nearby? It takes research, knowledge and tried and true experience.

You may think you’re saving money by opting out of using a broker but most buyers will leave money on the table and sellers will lose money on the deal, even after paying a commission. Statistics tell the tale, it truly is better to use an agent when buying or selling… and where are you going to go? To the experience and skilled knowledge of your local Tri-Valley real estate professional. Give me a call today.

Dale Corpus

925-380-1657

Dale@KeytotheBay.com

How to Get a Great Deal on Tri-Valley Real Estate

April 18, 2016 by temineth Leave a Comment

For those that live in California’s Tri-Valley area you know the prices are pretty high compared to the rest of the country but can you still get a deal? It may all come down to finding tricks of the trade, unique buying strategies and investing a little bit of time and research in order to find the right property a great deal. Here are some unique ways in order to get a great deal on your next Tri-Valley home.

#1. Pay cash.

Now, I understand that not everybody can but if you can, it really is one of the best ways to get a better deal. Sellers see cash is a great opportunity to get the home sold quickly and close fast. If this is something that you can manage you’ll usually have a shorter escrow. And save money on lots of closing costs and of course paying cash save you hundreds of thousands in interest.

#2. Purchase a home in a developing neighborhood.

This is where a lot of research really comes into play. You want to have a great buyers agent that understands exactly what you’re trying to accomplish and then researches neighborhoods, the type of home you’re looking for and great deals in order to make a move on the right property. The best way to do your research is to pay attention to news broadcasts, business journals and local city websites about new construction and changes happening in a particular neighborhood. If it looks like a neighborhood is transitioning from lower income into renovated homes or perhaps they are tearing down an old abandoned stripmall in order to develop a Starbucks and more modern conveniences, this might be the perfect time to buy a home in the neighborhood. You’re likely to get a great deal especially if you combine a lot of these tactics when purchasing the home.

#3. Consider a fixer-upper.

This is definitely something to strongly consider and research before you pull the trigger. You don’t want to buy a home that requires you to put more money into it and you’re going to get out of it. By coupling this with buying a home in a developing neighborhood you can also gain quite a bit of equity on the backend. You could save a lot of money by doing most of the remodeling yourself but you’ll want to have a home inspection and understand how much money you’ll be putting into the fix-up before closing.

#4. Buy at an auction.

Even though foreclosures are down across the country some homes are still going through the process. It’s these homes that typically end up at an auction and bidders can likely get a bargain. However, you’ll probably be in competition with investors and those that by home specifically to flip and many times they require and all-cash payment. But, if you can do it, you’re likely to get a great deal. Keep in mind that these homes are usually in poor condition so be sure to check them out before bidding and if you buy in a developing neighborhood, that’s all the better.

If you’re looking for the best deal throughout the Tri-Valley area and you need an agent on your side to help facilitate the transaction and do the research for you contact my office today. I’d be happy to set up a meeting with you about what you are looking for and start the research process to get you the right property for your needs.

Tri-Valley Mortgage Mistakes and How to Avoid Them

March 30, 2016 by temineth Leave a Comment

Buying a home is a big step and an exciting one too so you want to make sure that you don’t make any mistakes during the home buying process. Now, this is not to say that is very easy to make these mistakes but sometimes, unknowingly, homebuyers can make a lot of mistakes during the mortgage process of the just don’t realize can harm their chances of actually getting a loan. When buying a home in the Tri-Valley area I urge all of my buyers to get pre-approved first. This is usually the first mistake many buyers make.

Not getting Pre-Approved.

This is where you actually sit down with a lender and figure out how much money you can spend on a house. The lender will determine how much income you’re receiving each month and how much is going out in debts, loans and basic utilities. From there, the lender will determine how much in a monthly mortgage payment you can handle which will relate to the total cost of a home. This also is a way to determine what your interest rate will be based on your credit history, report and score. Many homebuyers feel that they can simply enter some information on a mortgage calculator to determine their price range but unfortunately, if they’ve not gone through lender, their financing is not secured. Sellers look for secure financing and low risk offers. By being prepared with a preapproval letter ahead of time, you can ensure the seller that you’ve already done your financial homework.

Changing your identity.

This might sound like a crazy task but you might be surprised as to how often this happens. For instance: if a couple is planning on getting married and they’re buying a house at the same time, between the time the couple was approved for a loan versus when it closes, the wife’s last name could’ve changed. This is changing your identity and it could really negatively affect your chances of getting a home loan. Yes, you are the same person but don’t make any of these major identity or name changes until the property closes.

Making large purchases before closing.

Once the lender has determined how much you can afford you don’t want to change that in any way. This means it is not the time to finance a vehicle, spend large amounts on new furniture or other major appliances or take out loans of any kind. Consider freezing all of your assets, liabilities, loans and big spending until the closing is completed.

Not answering questions to your escrow or lender in a timely manner.

Everyone is working towards the closing date. There are numerous parties involved in the buying and selling of real estate and anything can hold up that process. Make sure you respond to phone calls and requests in a timely manner and don’t get frustrated if escrow or title officers ask for more identification or specific documents. They need to make sure that you are the correct person buying the home and that your identity is protected. Also consider all costs involved and ask about the costs including taxes, HOA dues, insurance and appraisals.

By keeping all of these things in mind you can ensure that your deal will close on time without a lot of hiccups. Of course, every single transaction is different so even if you’ve done everything possible those rare instances can happen or things simply fall through. By avoiding all of these mistakes you have a better chance at setting yourself up for successful homebuying purchase.

Who Pays for the Tri-Valley Home Appraisal?

March 21, 2016 by temineth Leave a Comment

When purchasing a home or condominium throughout California’s Tri-Valley area, many buyers wonder who actually pays for the home appraisal. There are a lot of closing costs and different fees built-in for buyers and sellers in a purchase and sale agreement. Sellers pay for excise tax when selling the property and several courier fees all culminating into their own closing costs. Buyers also have several closing costs and one of those includes the appraisal.

In order for a lender to properly evaluate a property they must discover fair market value on a home. Lenders will order a home appraisal for all borrowers to make sure that they’re not overpaying for a home and is the property is the proper value for what the borrower is requesting.

Federal banking regulations require that the lender order the appraisal. This is not something the buyers can do on their own. If the buyer was planning on purchasing a home with cash and they wish to have an appraisal conducted they would need to pay for it out of their own pocket. But, because it is the lender that is requesting the value, they will order the appraisal but still make the buyer pay for it. However, federal law also entitles all buyers to receive a copy of the completed appraisal.

Lenders will usually collect the cost of the appraisal upfront. If it is not collected upfront it will be added into the closing costs. Appraisals typically cost between $400 and $500 but appraisers can charge additional fees, especially if they need to make multiple trips for different reasons. Most of the time, and appraiser will be able to conduct the appraisal in one trip. Extenuating circumstances may prevent the appraiser from conducting the entire appraisal at the scheduled time. This could be due to a tenant or a seller that’s being unreasonable and not allowing the appraiser to tour the property or the home or for some reason there was a major part of the property that was an accessible at the time.

An appraisal is not a home inspection. Home inspections are simply a report on the structure and integrity of the property and the construction itself. An inspector will not base documented value to the home but may be able to tell buyer what the costs of replacing certain items could be. However, buyers should not take this into account when viewing the appraisal. Often times, buyers will say “the appraiser only said that this was worth $300 but my inspector said it was worth $500!” The appraiser is really the one that will determine the value of the home. Now, if there’s something that the appraiser has missed or has grossly undervalued in the home, the seller can certainly contest this. For instance: if the seller had upgraded a particular feature in the house that may not be visible to the outside with some high quality materials that could add a lot of value to the property, the seller can make note of this and asked that the appraisal be changed. However, it is up to the appraiser to determine the value in the end.

If the property does not appraise for the borrowed amount, the buyer will either need to come up with the difference on their own or the seller will need to lower the price. If neither are willing to budget, the transaction will usually be terminated because financing will not be completed.

For more information on appraisals, Tri-Valley real estate or if you have questions on a particular property or transaction feel free to contact me today.

What is California Mortgage Insurance?

March 7, 2016 by temineth Leave a Comment

Mortgage insurance, also referred to as PMI, or private mortgage insurance is typically only found on loans where the borrower did not make a minimum 20% down payment. This can be a big hurdle, especially for first-time homebuyers, to come up with a large down payment of at least $10,000 or more depending on the price of the home. A 20% down payment on a $500,000 home is $100,000, something very few first-time homebuyers are able to save. This is where mortgage insurance comes into play. Lenders will allow a borrower to make a down payment of less than 20% on certain types of loans including an FHA loan or VA loan and because of the lower down payment there needs to be some sort of mortgage insurance for the lender themselves. This is known as a private mortgage insurance or lenders mortgage insurance.

Lenders want to make sure that if a borrower defaults on the loan and the lender has a risk of losing money, mortgage insurance will protect the lender by providing the money payable to the lender only to recoup any losses. Lenders tend to think that buyers who are unable to put 20% down might be more inclined to default on their loan. While this is true or not, lenders would still need to recoup the cost if the borrower defaults.

Mortgage insurance typically does not protect the borrower but it can still benefit the borrower. It allows the borrower to make a payment of less than 20%, which means that many borrowers would be able to be homeowners far sooner than have they saved the 20%. And even though it benefits the lender primarily, it is the borrower’s responsibility to pay the premium.

Mortgage insurance rates are based on the mortgage amount, loan terms, the down payment size, the borrower’s credit score and history. On average, the mortgage insurance rates are about $50 per month per $100,000 borrowed. Premiums can be paid up front or incorporated into the loan. Some insurance providers may offer discounts to borrowers with more modest incomes or higher downpayments but these are things to check with your lender about.

One good thing about the mortgage insurance is that it won’t last for the entire life of the loan. It is only required until the loans principal balance reaches 80% of the value of the home. Ironically the same amount should the borrower had put 20% down to begin with.

In 1998 the US Homeowners Protection Act required lenders to cancel the borrower paid mortgage insurance when the loan reached 78% of the appraised value or a sale price, whichever is less. This would mean that a borrower typically needs 22% equity in their home to have it automatically canceled. However, borrowers can call and request cancellation after a year or two of paying it or if the home can be appraised or valued at 80% of the loan.

Private mortgage insurance is also tax-deductible and is usually the least expensive option for low down payment borrowers. However, the Congress extends the tax break on a yearly basis so be sure to check with your lender on if this is still the case each year.

Private mortgage insurance can definitely benefit borrowers and that they don’t have to have the full 20% in order to buy a home but, you have to remember to cancel it when you can so that you don’t have to keep paying it when you don’t have to.

For more information on the different types of loans, lenders or options contact my office today.