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Final Home Inspection Walk-Through

by Jon Smith, CRB, CRS, GRI

Before the purchase of your new home is final, a final inspection of the home will need to be completed, A final walk-through is an inspection performed anywhere from a few hours to five days before closing, and its primary purpose is to make certain that the property is in the condition you agreed to buy. Even if you are pressed for time, it is vital that you inspect the property to  ensure that all agreed-upon repairs have been made and nothing has changed with the property since you last looked at it.

Before you begin your inspection, it is a good idea to make a list of things to look for so you can be prepared.  It is also recommended that you have your Sales Contract with you so that you can review any items that should be included with the house.

Here is a list of items to check on a final walk-through:

  • Did the movers bang up the walls, rip the rugs or scratch the wooden floors?
  • Did the moldings around the doors get damaged when they moved an appliance from a room?
  • Does the heating and air conditioning system still work?
  • Are all of the appliances still working?
  • Have all the items that the seller agreed to remove from the home out of the home?
  • Turn on and off every light fixture
  • Run water & look under sinks for leaks
  • Open and close all doors and doors
  • Flush toilets
  • Inspect ceilings, wall and floors
  • Make sure any repairs that were agreed upon have been made

Unfortunately, things don't always go as planned and you may find that there are some issues that have not been taken care of as agreed. You do have options in case this happens. It is a good idea to work with an attorney to come to a satisfactory arrangement.

 

 

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Pros And Cons Of Fixed Rate Mortgages

by Jon Smith, CRB, CRS, GRI

If you are in the market for a new home, chances are you have researched the different types of financing. There are many types of mortgage products on the market today.  But the vast majority of them are fixed rate mortgages with a 15 year or 30 year term.  These traditional mortgages are amortizing, which means that you pay off the entire loan amount by the end of the term of the loan. While these are still the most common type of loan, there are advantages and drawbacks to these mortgages.  Depending on your financial situation, and the prospects of changes in your financial future, a fixed rate mortgage may or may not be the best product for you.

     Let's look at the pros and cons of fixed rate mortgages:

PROS

  • Interest rate on your mortgage cannot be increased for the life of your loan
  • Monthly payment will remain the same for the life of the loan
  • Loan will be completely paid off by the end of the term

CONS

  • Fixed monthly payment amount may be difficult to make at the start of the loan
  • Large percentage of payment goes to interest payment in first years of the loan
  • Usually has a higher interest rate than a variable rate loan initiated at the same time
  • Interest rate cannot be reduced as in some variable rate programs
  • Maybe harder to qualify for, as higher income may be required

Depending on your financial situation, a fixed rate mortgage may be the best solution for you.  If you can afford the monthly payment required to obtain the loan, then the fact that your interest rate and monthly payments will stay the same for the life of the loan while give you peace of mind and make monthly budgeting easier.

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Common Problems With FHA Loans

by Jon Smith, CRB, CRS, GRI

If you're planning to buy a home and are researching the different types of financing, you might apply for an FHA mortgage.

This type of mortgages are great for first-time homebuyers, buyers, buyers with bad credit as well as those homebuyers who do not have the funds for 20% downpayment.

With an FHA loan, it helps banks mitigate this risk by insuring otherwise risky borrowers' mortgages. The FHA agrees to pay the difference between what a home gets at a post-foreclosure auction and what's still owed on the home when a borrower defaults.

With the sluggish economy and problems with the real estate market, the FHA may soon begin tightening its loan standards, leaving some borrowers without the financing they need.

Below are a few of some potential roadblocks you might encounter if you are applying for an FHA loan, and how to get through them.

  • The FHA requires a new property to be livable from day one. As a result, the agency has a strict inspection requirement intended to catch any potential health or safety hazards. You should make sure everything is in working order and address things like a broken window, or a broken fire alarm, as these can create significant delays in the buying process. It is of course difficult to repair these issues if you are not yet the property owner but you will need to communicate with the seller and negotiate the necessary repairs.
  • The FHA also has limits for how high a borrower's debt-to-income ratio can be. It will be more difficult for homebuyers who have more than 30 percent of their monthly income on a mortgage payment or 43 percent on all debts combined. Below are also some additional requirements borrows will need to face:  Show consistent or increasing income, have a steady employment record (at least 2 or more years with the same employer) as well as have no bankruptcies in the last two years.
  • Another issue is that if the property appraisal comes in below the price you've negotiated, the deal is off. A possible solution is that the buyer could try to come up with a larger down payment to help to make up the difference between the appraisal and the negotiated price or possibly negotiate a new price based on the appraisal. Buyers have the advantage in today's real estate market, so the chances of a motivated seller accepting a lower price is good.            

 

First Time Homebuyer Tips

by Jon Smith, CRB, CRS, GRI

Every new homeowner will feel the sense of excitement and pride once they turn the key in their lock in their new home for the very first time. There are some thing that first time homeowners should try to follow to help make the transition into homeownership successful.

1. Don't Overspend on New Furniture and Remodeling 
Buying a home and moving is expensive, there is no argument on that. First time homebuyers can typically have an eye opener when it comes to all the costs involved as well as the increase in monthly utility expenses that may be substanically more than when they rented.  It can be very tempting to spend more money on new furniture, furnishsing for the home and remodeling projects. However, give yourself time to adjust to the expenses of home ownership and rebuild your savings - the projects and that new sofa will still be waiting for you when you can more comfortably afford them.

2. Address Important Maintenance Items 
New homeowners will need to budget for the new expenses that accompanies home ownership-  making repairs. It can be a shock to realize that you will need to address all maintenance issues that come up like plumbing problems, a leaky roof as there is no landlord to call!  It is important to not neglect any problem that could get worse over time, turning a relatively small problem into a much larger and costlier one.

3. Seek Professional Tax Advice When Filing Your Tax Return 
Even if you hate the thought of spending money on an accountant when you normally do your returns yourself, and even if you're already feeling broke from buying that house, hiring an accountant to make sure you complete your return correctly and maximize your refund is a good idea. Home ownership significantly changes most people's tax situations and the deductions they are eligible to claim. Just getting your
taxes professionally done for one year can give you a template to use in future years if you want to continue doing your taxes yourself. And remember, tax preparation expenses are tax deductible, so whatever your marginal tax rate is, think of that as a discount on the cost of the service.

4. Get Properly Insured 
Your mortgage lender will require you to purchase
homeowners insurance, enough to fully replace the property in the event of a total loss. However, you will also need to consider obtaining insurance coverage to help pay your mortgage should you be unable to make the payments.  If you share your home with anyone who relies on your income to help pay the mortgage, whether it's a spouse or a child, you'll need life insurance with that person named as a beneficiary so he or she won't lose the house if you die unexpectedly. Mortgage insurance is another option to help safeguard your home in the event you cannot make your monthly payments.

Owning a home is wonderful but also comes with great responsibilities. It can be difficult to manage your finances well enough to keep the home and maintain the home's condition well enough to protect your investment.

Tips For A Successful Negotiation

by Jon Smith, CRB, CRS, GRI

If you are buying a new home or selling the one you have, you want a successful negotiation and sale. The negotiation process can be both complex and confusing for both sides. Each party wants to have a fair transaction and achieve the best deal. Below are some tips to help you get the most from the negotiation transaction.

1. Time the market right. At this time, we are in a "buyers" market, where most sellers are very motivated to sell, this can give a buyer the upper hand. On the other side,  a "sellers" market, or a market where housing supply and demand are roughly equal might give the seller an advantage. If possible, you want to be in the market at a time when it favors your position as a buyer or seller.

2. Pay attention to the details. Buyers and seller pay a lot of attention to the transaction price. It is a good idea to consider other perks or benefits that can add to the overall worth. For example, if you negotiate that the roof be replaced or perhaps having the seller pay some of the closing costs this can sweeten the deal. Don't be stuck with the idea that the purchase prince is the only financial gain to the transaction.

3. Don't forget about financing. Keep in mind that there are several factors that can impact the final sale:

• Has the buyer been pre-qualified or pre-approved by a lender?  Having buyers that are "pre-qualified" or "pre-approved" are more likely to pose less risk than a buyer who has never met with a lender. This also shows the seller that they are serious about the offer and will give the seller more confidence. that they are a qualified buyer.

•If there is a low interest rate, then there will be a larger selection of potential buyers. More buyers equal more potential demand, which is good news for sellers. On the downside, high interest rates will cause buyers to be more selective or cause them to withdrawal from the market all together.

•The traditional 20% downpayment is not standard anymore. If the buyer has good credit, loans with 5 percent down or less are now widely available. Many loans where 100 percent financing are still available, although not as much as a few years back.

Negotiation is an important tool of the real estate transaction. To be a successful home seller or buyer you should have a basic understanding of negotiation methods, knowing the motivation of the other party and adapting to their style.

Displaying blog entries 1-5 of 5

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Photo of Jon Smith, CRB, CRS, SRES, SFR Real Estate
Jon Smith, CRB, CRS, SRES, SFR
Iowa Realty
3521 Beaver Ave.
Des Moines IA 50310
515-240-2692
Fax: 515-453-6404
 

 

 

Licensed in the State of Iowa