MyHouseValue.com

Suggestions for consumers:

• Know your score. Check your credit score before you make any decisions. Credit scores range from 300 to 850. The median U.S. credit score is about 693, according to Experian, one of the three main credit reporting agencies. A score below 680 usually results in a borrower being charged a higher interest rate or being denied credit. In this economy, you will need a good score to qualify for a mortgage. If your score is lagging, wait a few months. In the meantime, pay every bill on time, pay down as much debt as possible and increase income if possible to improve your chances. If possible, ask creditors for increases on your credit limits to help out the “credit available” aspect of your credit score - but do not tap into the addition.

• Do not stretch too far. Often, borrowers are told they can qualify for a higher mortgage than they can comfortably pay. It is wise to keep housing expenses below 35 percent of your total income. Leave breathing room in your budget so that if something unplanned does occur, you will be able to keep your home. If you are not certain, wait to buy.

• Know the full costs of buying. The down payment and principal and interest on a mortgage payment are only the beginning of home-related costs. For a typical mortgage payment, “escrow” payments, or the costs of home insurance, property taxes, and, in some cases, private mortgage insurance, can total hundreds of dollars per month in addition to principal and interest. Determine the property tax amount - the largest part of the escrow payment - by checking with your real estate agent or county property tax assessor before your buy.

Be sure to not deplete savings or cash on hand when making a down payment, since new homeowners often must complete initial work on the home, such as painting, flooring, landscaping or bringing an older house up to date. After that, a rule of thumb is to budget 1 percent of the home’s purchase price per year for home repairs and upkeep.

• Understand private mortgage insurance. Mortgages with less than a 20% down payment require PMI in case the owner defaults on the loan. When the home owner pays the mortgage down to 80% or less of the home’s value, the home owner can request the lender to cancel the PMI on a conventional mortgage and stop paying the additional amount. Meanwhile, PMI is tax-deductible, at least through 2010.

• Check for prepayment penalties and other provisions. If your loan has a prepayment penalty, borrowers face hefty charges if they pay it off early. This provision also can apply to future refinancing, so be forewarned. To determine if there is a prepayment penalty, review the Truth in Lending disclosure or ask your lender to find out.

Prepayment penalties have come under increased scrutiny since the mortgage crisis began, so if you find your loan has one, voice your dissatisfaction directly and clearly to your lender or broker.

• Consult a tax advisor. First-time home buyers - including people who have not owned a home for at least three years - qualify for a tax credit of up to $8,000 if they purchase a home before Dec. 1, 2009. The credit does not have to be repaid if the buyer keeps the home for at least three years. In addition, all homeowners qualify for tax credits for certain home energy efficiency improvements made in 2009.

• Buyer beware. Some of the lowest prices on homes today are “fixer-uppers” or homes sold “as is” because of foreclosure. Invest in a home inspection before agreeing to purchase any home. You may even be able to split the cost of this inspection - typically less than $400 - with the seller. The inspection will inform you of any faults in the home and help you determine the approximate cost to remedy those problems. Without an inspection, you could wind up owning a home that requires thousands of dollars of repairs.

You have done your homework.  You have determined your fair market value.  You have set our homes price. You have shown your home and gotten and offer and signed it!   So, is your home under contract and now the questions is … have you really sold your home?   Here are 6 must have elements that a real estate contract has to have in order to be valid and enforceable in most US States.

1. Competent Parties - there must be atleast two parties to a contract of sale
2. Names and Signatures / Initials of all parties to the contract of sale
3. Consideration - there must be some sort of promise to pay (deposit, no matter how small)
4. Must be in Writing - if it isn’t in writting is isn’t enforceable!
5. Clear description of the property - normally just the address is acceptable
6. Meeting of the Minds - an unqualified acceptance of the offer so that the seller clearly understands the terms and conditions of the buyer’s offer and the buyer clearly understands the performance required and the timing of these obligations.

It is that easy to sell you home … and if you are not careful … you could miss a required item.  So, review your contract!

There are basically 17 things that every Appraiser considers when comparing your property to other properties in the Marketplace and they are as follows:

1. The current market conditions on the specific date and time of sale.
2. Location, Location, Locations
3. The site/view both looking at the property (in) and looking from the property (out)
4. The design and appeal of the dwelling
5. The quality of construction
6. Age of the property
7. Condition of the property
8. Total number of rooms
9. Number and types of rooms (bedrooms, bathrooms, etc.)
10. Square footage (gross living area)
11. Is there a basement?
12. Is the basement finished?
13. How functional is the property?
14. What is the heating and cooling system
    1. Is there central air conditioning?
       1. Type of cooling system.
    2. Is there a heating system?
       1. Type of heating system.
15. What type of automobile storage is available? (garage, attached/detached, carport, etc)
16. Are there any special features that the property offers?  (porches, patios, pool, fireplace, skylites, etc)
17. Were there any special financing or sales considerations that might have impacted value for the comparable properties?

Again … Remember, an appraisal is just an oppinion of what the property is worth on that day with the inforation that he/she has at hand, in that person’s oppinion!!!!

There are 7 things that every consumer needs to understand about a real estate appraisal.

1. An appraisal is an objective opinion of value.  It is NOT an exact science.  If three appraisers appraised the same exact property, they would assign three different values.  And i personally have seen them vary as much as 10% between them!  So, when you have only one evaluation comleted, did you get the high one, the low one or the exact one? 
2. Most sellers, buyers and lenders want an appraisal that reflects the market value rather than the insured value, assessed value, sentimental value or any other type of value.  (types of value have been covered in earlier blogs)
3. An appraiser’s estimate of value typically reflects the current market conditions in the subject property’s marketplace.  This can change dramatically if market conditions shift.
4. The appraiser’s estimate of value reflects the most probable price the property will sell for without special considerations or circumstances … atleast in their oppinion at that moment in time!
5. The best indicator of market value for a residential property is found by applying the sales comparison approach.
6. Most lenders base a buyer’s loan amont on either the sales price or the appraised value of the property: which ever is less.
7. Many homebuyers today are writing offers to purchase subject to the property appraising at or above the sales contract price.

The thing to remember is that an appraisal is just an individual oppinion of the person conducting the assessment - nothing more, nothing less!!!  BUT if it comes in at less than you are trying to buy or sell for the bank will NOT lend the buyer the money and this can stop the sale dead in it tracts.   As a seller you always want to make sure that you have done your homework and have comparable ready for the appraiser so that you have done their work for them.   This one step will just about assure an appraisal that gives you the value you need.

That’s right … there are EIGHT different kids of value that will establish if and when your property will sell; So, in order to gain top dollar, take the following types of value in to consideration :

1. Assessed Value - what the government thinks your property is worth
2. Insurance Value - what you can protect it for (value wise)
3. Salvage Value - what can you get out of the parts
4. Use Value - what can you do with it?  What other things can you do with it?
5. Replacement Value - what will it cost to reproduce it?
6. Reproduction Value - what will it cost to reproduce it somewhere else - this can be much harder
7. Sentimental Value - this is what the home owner thinks it is worth and is normally high
8. Market Value - when it comes time to sell this is the only one that matters!!!

What are the 5 most common hidden defects to look out for when you Buy A Home ?

The following repairs become expensive.  Be sure to seek the expert opinion and estimates on repairs from reputable preofessionals … and better yet, if something is not right with the home, have the seller fix it.

1. Bad foundation
2. Worn roof
3. Water damage that creates mold … this can be a real show stopper
4. Termite damage - get an expert here and test even if your lender does not require it … this can be hidden and cost more than you could ever imagine to repair.
5. Working components of the home :
                 a - electric
                 b - plumbing
                 c - Heating and Cooling
6. Other areas of concern to consider :
                 a - Title issues
                 b - Adverse Location Issues
                 c - Environmental Issues

SPECIAL NOTE - if a home is on private water and sewer (well and septic) or on a private road (shared driveway) as the buyer you want individual inspections of each.  A certificate of compliance or other written documentation of the test by licnesed and qualified inspectors is critical to your future finances as well as you peace of mind.

The moral of the story is caviot emptor …. let the buyer beware … you must spend the money to have the home looked at with a fine tooth comb.  Do not try to do it yourself or go cheap on the inspector.  Higher the best, pay the money and rest easy AND if the home has issues, get them fixed to the inspectors satisfaction or walk away … do not let yourself be pressured in to a home that is not in great shape UNLESS you know exactly what you are walking into and fully understand what it will take to make it right.

If you should have any questions or comments, please comment here.

Jim Bim

BUY NOW !!! Are you crazzzzzzzzzy … i can hear you saying.  I can tell you this one thing - when everyone else is panicking is exactly the time to buy!  When is the best time to by stock?  When the market is at 14,000 or at 7,000 … exactly 7,000. Well real estate and home values are the equivalent of 7,000 and even better than that mortgage rates are the lowest they have been - 5.25% are you kidding me!!!!   Ask your self this - could you go to the bank and say to the bank president “hey i want to by $200,000 worth of stock and i want you to put up $190,000 and i’ll put up $10,000, can i have the money in 45 days?”  You and i both know that he’d laugh you right out of the bank and yet they’ll lend you 95% of the value of a home in a blink.  Now is the time when a few risk takers will be rewarded in a large way as this market turns around. So, do the right thing, get a great realtor on your side, start looking at homes and pick out the right one and in about 7 years you will look like you are really really smart!!!

Thank You For Reading - Visit JIM BIM