Tri-Valley Real Estate Blog

Financing a Non-Warrantable Condo

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What exactly is a non-warrantable condo?

If you are considering purchasing a condo it is good to know that recently there have been some changes to the requirements of lending money through a conventional loan on a condo property.Financing a Non-Warrantable Condo

A conventional loan is the most common and traditional of loans. These loans are those that are within the requirements set by Fannie Mae and Freddie Mac to be federally backed. In other words, the lender is able to sell the loan off instead of holding it in-house or finding a private investor to purchase the loan.

Fannie Mae and Freddie Mac are the largest purchasers of condo mortgage loans in the country. For them to purchase a loan it has to meet their requirements so a majority of lenders will try to stick within these requirements to make sure they are not holding onto mortgage loan products.

Recently these two large mortgage-backing giants set new requirements that condos must be under warranty to be eligible for a conventional loan. This change came after the catastrophic collapse of a condo building in South Florida. It was discovered that repairs were suggested to be made that continued to be put off. Issues arise in an approval when an inspection is done on the property and it is found that the condo association has not kept up-to-date with maintenance as well as other safety concerns with the building. This has led many condo buildings to be deemed unwarrantable.

Options a buyer has for financing a non-warrantable condo

If you are trying to secure conventional financing and find that the condo property is non-warrantable there are two options to move forward with your purchase. You can have the items in question fixed or find a lender that will offer a non-QM mortgage on what conventional lenders determine non-warrantable.

To find this type of mortgage loan it is a good idea to ask the advice of a local mortgage broker in the location where you plan to purchase a condo or condo building. Mortgage brokers are a great resource to tap into for essentially one stop mortgage shopping. They make it their job to know the current mortgage products on the market available for certain situations.

Additionally, you want to find a mortgage broker that specializes in non-QM mortgage products. Non-QM mortgages are those that are willing to lend money outside of the conventional parameters set by Fannie Mae and Freddie Mac and take on the risk of holding the loan in-house or finding their own investor to back it. Many times, non-QM mortgages give more freedom in qualifying for lending in special circumstances.

These are completely safe mortgage products that still check the borrower’s ability to repay the loan while offering them another option to finance their home or investment of an unwarrantable condo property and other types of properties. Many mortgage advisors have helped many borrowers in less than traditional situations to qualify for a reputable loan and make a real estate purchase they would otherwise be turned down for.

Second Home Financing Looks Different in 2022

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From Retired to Renovator; a House Flipping Guide

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From Retired to Renovator; a House Flipping Guide

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From Retired to Renovator, a House Flipping Guide

As a lifelong homeowner, fixing, repairing, updating, and decorating your home, you feel pretty confident you can turn those skills into a home repair and resell business. Or in other words, you want to get into house-flipping.

If painting, landscaping, shopping for appliances, and installing cabinets and floor tile is your happy place, then that may very well be the perfect next career for you.

Dale Corpus Real Estate blog is full of great information any prospective home buyer will find valuable, whether looking for a place to call home or for a place to invest. He’s got the inside track on what you need to know before committing to one of the largest investments most people will ever make.

Choosing the Right Property

The right real estate agent can make all the difference when it comes to selecting the right property for your home renovation project. Oftentimes they’ll have information about homes that are not yet on the market. They’ll be able to negotiate more effectively with the sellers, too, since they know what price homes in the area are selling for now, and what they can expect homes to sell for in the near future. They’ll also be a great resource when you’re looking for contractors and subcontractors.

Getting an appraisal first will be something you’ll want even before you make an offer. Hiring an independent appraiser who can go over the property you’re looking at can save you thousands, if not hundreds of thousands of dollars later. They can tell you if there is structural damage, like weak foundations, bad plumbing, or faulty electrical. Most agents will strongly advise you against purchasing a home that needs structural repair. Instead, finding a home in need of cosmetic updates will be far less costly to you in time and resources.

Choosing the Right Upgrades

Things that boost value immediately are updated appliances, flooring, paint, and wallpaper. For appliances, unless you’re in an area where most of the homes are new or newly renovated, you won’t necessarily need to purchase top-of-the-line models, but don’t be tempted to purchase salvaged or restored appliances. People will expect their appliances to at least be new.

As far as flooring is concerned, hardwood floors are the most popular with homebuyers, with tile and carpet coming in second but most times, you’ll find a mix of all three works in different rooms. It really just depends on how much you expect to sell the home for and what others in the neighborhood have installed. If most of the homes in the market have laminate flooring, you’re in luck since it’s relatively inexpensive and not too difficult to install yourself. A fresh coat of paint in neutral, or earth tones makes it easy for prospective buyers to picture themselves and their furnishing in the home.

Add some unique touches too, to make it stand out from all the other homes, like wallpaper. With peel and stick paper that can be both custom-designed and removed without leaving a residue behind, it is the perfect decorating addition for making your home stand out.

Choosing the Right Business Structure  

If you’ve decided this is the business for you, look into forming an LLC. It will protect your personal assets from any business losses. You can do it yourself online in only a few minutes, just check with the local officials since the rules can vary from state to state.

Choosing the Right Marketing Strategy

Don’t leave all the promotion of your newly renovated property to your real estate agent. Being active in marketing your property means that now you’re ready to create a Facebook ad. You can create your own Facebook ad with pre-made templates that you can custom design with your brand, logo, colors, images, and fonts. Facebook has nearly 3 billion users, so that’s definitely a market you want to tap into.

Real estate is seldom a bad investment, as long as you’re well advised and well prepared to put in the hard work. If so, it can be a wonderfully satisfying way to spend your post-retirement years.

 

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Why it is More Important than Ever to be Aware of Contract Contingencies

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If you have previously purchased or sold a piece of real estate you more than likely know of contract contingencies. A contingency is a specific requirement that needs to be met in order for the contract to be official and the sale of the property to be finalized. Most often buyers or sellers include contingencies for their own interest and protection in the transaction.Why it is More Important than Ever to be Aware of Contract Contingencies

Contingencies are added in or included in standard real estate contracts to help ensure that certain conditions are met before final paperwork is signed. Since the beginning of the pandemic, it was not uncommon for many buyers to waive typical protection contingencies and sellers to include new ones not often heard of.

What to be aware of if You are a Buyer

Requesting a contingency as a buyer helps to give you an escape route from your offer on the property. Every contingency creates an additional hoop that needs to be jumped through or an item that needs to be met before the actual official sale can close. Most often on a buyer’s part contingencies include appraisals and inspections.

With the high competition amongst buyers, it was not uncommon to see many drop the standard traditional contingency for an inspection which holds a home seller to making certain repairs or being willing to negotiate a different price over any significant issues that are found after a professional inspection is conducted on the property. Those who chose the strategy of waiving this contingency do so in hopes of telling the seller they will not be expecting them to make good on any repair issues the home has and help the closing process go much quicker.

One thing to be aware of when you choose to waive an inspection contingency in hopes of making your offer more competitive with several offers on the table is that this does not mean you do not get to have an inspection at all. You can waive the contingency and still pay for an inspection, but you will not have the ability to back out on your offer for any repairs other than ones that make the home completely unlivable.

What to be aware of as a Seller

Right now, during a hot seller’s market, a homeowner has much more leverage to include contingencies in a real estate contract. Adding in contingencies can allow for more time to close on your home if you are struggling to find your next home purchase. One thing to be aware of though is even with a higher amount of leverage adding too many contingencies to the contract could cause buyers to walk away. Even when you have several ready to make an offer.

The bottom line when it comes to real estate contracts for both buyers and sellers is to make sure that you are going over them carefully. You want to make sure that you are not requesting too many contingencies that would make the other party back out of the deal. You also want to make sure that you pay plenty of attention to all of the contingencies in the contract making sure you know exactly what is being requested. A trusted real estate agent can help to walk you through every contract and best advise you on whether to accept or counter offer.

For more information on real estate in San Ramon and the Tri-Valley real estate area, please contact me any time.

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Keep Your Trees in Tip-Top Shape

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Keep Your Trees in Tip-Top Shape

What a blessing to be able to enjoy all the benefits that trees provide us! Not only are they beautiful to look at, but they offer shade in the summer, photosynthesis for oxygen and wood for building. This wonderful natural resource also enhances our quality of life, cleans the air, helps prevent water pollution and soil erosion, provides homes for birds and other wildlife and marks the seasons. Trees are well worth investing in and preserving.

If you are fortunate enough to have one or more trees on your property, it’s easy to take them for granted and let them grow without doing anything to help preserve and protect them. And many trees don’t need special attention to grow and thrive. But, like all living things, trees can benefit from preventative care. Being aware of and quickly responding to possible threats to their good health allows your trees to continue to provide all the wonderful benefits they bring to you and your property.

What to do to help your trees thrive

Annual inspections by an International Society of Arboriculture (ISA) certified arborist is a good idea. The arborist can identify pruning needs and ways to protect the tree from potentially damaging problems. Make sure the tree is getting enough water but also has proper drainage. Pools of water around the base of the tree can cause the tree to drown. Clear the deadwood from the tree and pull weeds so the tree gets the most nutrients from the soil.

What to watch for that can cause problems for your trees

Is your tree leaning? It’s not always a bad thing. Some trees were crowded while maturing and then self-corrected their upward growth, or the tree is exposed to continual high winds and has developed a strong root system to compensate. A tree suddenly starting to lean, however, indicates a problem that should be addressed promptly.

Does the tree have problematic bark or split tops? Deeper than normal cracks in tree bark or unusual amounts of peeling bark are worth noting. As are two distinct tops from one main trunk. Multiple tops weaken the tree as both tops take resources in the attempt to be the dominant stem of the tree.

Is there excessive deadwood or wood decay? Shedding an unusual number of limbs/branches indicates the tree is attempting to conserve resources by reducing its shape, which can mean there’s a problem. Tree decay often manifests as mushroom-like spores (aka conks) growing on the branches or trunk.

Are there indications of insects infesting the tree? There are three main types of insects that can endanger trees: those that bore into the stem, branches or roots, those that chew and attack the foliage or fruit and those that suck moisture from leaves and branches. Boring insects are the most dangerous.

How are the leaves and branches? Compare them to previous year cycles. Are there fewer leaves than normal? Are they changing color and falling at the normal times? Are they firmly attached? You can also break off a small branch, checking its color and flexibility. It’s good if it bends and the cambium tissue below the bark is green and damp. It’s concerning if the cambium is brown and dry and the branch was brittle.

More for Homeowners

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5 Good Reasons to Refinance

What Should You Know about Real Estate Investment Property?

3 Common Real Estate Scams to Watch Out For

Tips for Choosing the Right Home Improvement Contractor

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5 Good Reasons to Refinance

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reasons to refinanceRefinancing can lower your monthly payment, increase your home equity, or allow you to cash-out some of the equity in your home to use for other things.

Are you wondering if you should refinance? Keep reading for 5 good reasons to refinance to help you decide.

1. To Secure a Lower Interest Rate

You may be able to lower your interest rate by refinancing, especially if you bought your home many years ago or if your credit score has significantly improved.

One of the most financially significant terms on your loan is the interest rate. Even a change of a half a percent can mean a significant difference in both monthly payment and interest paid over the life of the loan.

For example, when purchasing a $300,000 home with 20% down, your monthly mortgage payment with a 3% interest rate would be $1,011 per month, before taxes and insurance. If that interest rate were to rise to 4%, the monthly payment would be $1,145. $134 more each month means $1,608 more in interest each year, or over $48,000 over the life of the loan.

A lower interest rate is one of the top reasons to refinance because it can save you thousands over the life of the loan.

Related: Right Now is a Great Time to Refinance Investment Properties

2. Shorten the Length of Your Mortgage Term

Another way to save money over the life of your mortgage is to refinance to a shorter length, usually from a 30 year mortgage to a 15 year mortgage. This is one of the smartest reasons to refinance because if you can swing a higher monthly mortgage payment (and it may not be as high as you think, depending on the interest rate you qualify for), you can end up owning your home outright in half the time.

In some cases, this will mean a significantly higher monthly payment, depending on interest rates. Talk to your lender to see if this might be an affordable option for you.

3. Switch from an ARM to a fixed-rate mortgage, or vice versa

If you purchased your home with an adjustable-rate mortgage (ARM) and the rates have increased past what you could get on a fixed-rate mortgage, you will likely benefit from refinancing.

Depending on expert predictions for interest rates, converting from a fixed-rate mortgage to an ARM may be a good way to save money each month if you plan to move in a few years.

Switching the type of mortgage you have is one of the best reasons to refinance, depending on all the details of your situation and the status of the economy.

4. Get Out of PMI

When you purchase a home with less than 20% down, you will be required to pay private mortgage insurance (PMI) to help protect the lender. If you have lived in your house long enough, or the market has increased significantly enough, you may have enough equity to get out of your PMI and save significantly on your monthly payment.

If you think you might have enough equity in your home to refinance out of PMI, contact a lender to begin the process and put more money back in your pocket each month.

5. Take Out Cash From Your Equity

One of the most popular reasons to refinance it to cash-in on the equity your home has built through a cash-out refinance. In some cases, this can be a risky financial decision, but it all depends on how you use the funds.

A cash-out refinance to finance home renovations that add value to your home is one financially smart way to use your home’s equity. On the other hand, taking cash out of your home’s equity to purchase things that depreciate quickly or have no resale value (think vacations, toys, etc.) may end up getting you further into debt without a good fiscal reason.

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What Should You Know about Real Estate Investment Property?

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What Should You Know about Real Estate Investment Property?

An investment property is real estate purchased to generate income through rental income or appreciation. Investment properties are typically purchased by a single investor or a pair or group of investors together.  

First, know that the buying process is different for an investment property compared to a primary home. Before you invest in property, make sure you meet the following qualifications.

  • You’re Financially Stable

Investment properties require a much higher financial stability level than primary homes, especially if you plan to rent the home to tenants. Most mortgage lenders require borrowers to have at least a 15% down payment for investment properties, which is usually not required when you buy your first home. In addition to a higher down payment, investment property owners who move tenants in must also have their homes cleared by inspectors in many states.

Make sure you have enough money in your budget to cover the initial home purchase costs  as well as ongoing maintenance and repairs. As a landlord or rental property owner, you must complete essential repairs in a timely manner, which can mean expensive emergency plumbing and HVAC repairs. Some states allow tenants to withhold their rent payments if you don’t fix broken home utilities on time. Make sure you budget more money than you think you need for regular and emergency home repairs. Investment property expenses don’t just begin when tenants move in. You also need to budget money for advertising and credit checks to make sure you take in the best tenants possible. A great set of tenants are an asset for your property, while bad tenants can increase your expenses dramatically.

  • The Return On Investment (ROI) Is There

Real estate investors often see positive cash flow with their investment properties in today’s market, but the savviest investors calculate their approximate return on investment rates before they purchase a property.  If you buy a property in a solid area and you know that you can rent to reliable tenants, a 3% ROI is great. However, if the property is in an area known for short-term tenants, a 3% ROI may not be worth your time and effort.

  • You Have Time To Manage It

Investment property management still takes a lot of time. You have to put up advertisements for your space, interview potential tenants, run background checks on tenants, make sure that tenants pay their rent on time, perform maintenance on your property and make timely repairs if something in the home breaks down. You also must do all of this while working around your tenant’s “right to privacy,” a legal standard that prevents you from dropping by unannounced without at least 24 hours of warning in most states.

Before you decide to buy an investment property, make sure you have plenty of time to maintain and monitor your space.

 

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3 Common Real Estate Scams to Watch Out For

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3 Common Real Estate Scams to Watch Out For

Scams are out there in full force, now more than ever. We do everything we can to protect ourselves just when we think we have a handle on it, something comes along that we haven’t thought of before and we need to learn and prepare for that scam.

Scams are all too common in the real estate world but there are a few common ones that we see on a regular basis. Here are some of the three most common real estate scams to look out for. [Read more…]

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Tips for Choosing the Right Home Improvement Contractor

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For some, it may be easy to replace such things as a window, fix a leaky faucet, or make layout changes, but for the rest of us, hiring a contractor is a necessity.  To ensure you receive the best quality of workmanship and service, it is important to choose the right person(s) to get the job done, as a top priority among homeowners is maintaining not only the look but the “health” of the overall structure. [Read more…]

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5 Places Clean Out Before the New Year Starts

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There is nothing like a new year to get us motivated to do some extra cleaning projects. The week between Christmas and New Year’s Day is a great time to get cleaning projects accomplished. Many of us have time off from work and/or are already taking some time to clean up boxes and wrapping and get decorations stored away.

In the midst of running around to get the house back in order after Christmas, here are some other items to clean up and clear out before the New Year arrives to get it started on a motivated foot. [Read more…]

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Ten of the Best Home Improvement Tips From the Experts

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If you’re thinking about improving your home, remodeling, or doing some renovations it’s important to get a lot of information beforehand so that you can plan, prepare, and budget accordingly. We’ve undertaken a few renovations over the years and while I’m not an expert, I can definitely appreciate advice and tips from those that of been there before or constantly do it as in real estate investors or flippers. Here are some of the 10 best home improvement tips from the experts. [Read more…]

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