Open House Red Flags

You have found a few properties online that you love and notice they are having open houses soon, great news! The pictures certainly make the house look perfect, but seeing the house in-person will give you an opportunity to see its true appearance. When attending an open house, it is important to look past the sparkling new kitchen appliances and really focus on the bones and details of the home. By doing this, you will be able to identify any red flags that may raise concern. Be sure to pay attention to the following items.

Nearby Properties for Sale

Right off the bat, one of the first things you should notice is how many other properties are for sale in the neighborhood. If there are a handful of other homes for sale, this could be a sign the area is undesirable or possibly becoming unsafe. If you are still interested in the property after the open house, drive by the home at different times of the day to get a feel of the neighborhood.

Condition of the Roof

Another one of the first things you should examine is the roof. If there are shingles missing or it looks like shoddy repair work has been completed, it may lead to leaking which could be costly. Once inside, ask the agent if there have been any roofing issues and examine the ceiling for signs of leakage.

Smell/Scent of the House

If you smell any kind of musty or mildew smell, this could be an indicator there are leaks or mold present. Mold and water damage can hit your wallet hard if they are not taken care of immediately. Also take note if the house has a severely strong smell of air fresheners; the sellers could be trying to blanket a foul odor.

Electric and Lights

When walking through the home, make sure all the light switches and outlets work. Electrical problems can be a huge inconvenience to new homeowners, causing financial worries and even safety hazards. Also take notice if you switch on a light or appliance and another light dims or an appliance falters, there could be an underlying issue.

If you want to make an offer on the house but are concerned about some red flags, there are some things you can do about it. You are able to negotiate with the seller and see if they will repair the issues. Minor problems like chipping paint or damaged hardware may be easy fixes for sellers and will save you some money and time in the future. If larger issues like landscaping hazards or a damaged roof is worrying you and the seller will not fix it, consider a renovation loan. A renovation loan allows you to combine home improvement costs into your mortgage, fixing the repairs.

Bottom line- if you are seriously interested in a property, inspect everything at the open house so you can address any issues in advance.

Pre-Qualification vs. Pre-Approval

You’ve heard the terms pre-qualification and pre-approval, but what do they mean? They are the same thing, right? Not quite! The terms have been used interchangeably, but their true definitions differ. We’re going to break it down and explain the difference between the two.

Pre-qualification

The very first step to take if you are ready to start your new home search is to get pre-qualified. This is a no-cost, no-commitment, 10-20 minute analysis that will give you a great starting point for your new home loan. You can do this in-person or on the phone with a loan officer, or in most cases complete an online form. You will need to provide some basic information such as income, current monthly debts and credit score, but typically you won’t need to provide any documentation. By providing these items, your lender will be able to determine an estimate of your maximum monthly mortgage payment and how much you can borrow. These aren’t concrete numbers, more of a gauge so you know your price range.

Pre-approval

Once you have been pre-qualified, the next step would be to get pre-approved. This process is more involved, requiring more paperwork and the help of a loan officer. Documents you typically need to provide are copies of your paystubs, bank statements and tax returns; additional documents may be needed as well. The loan officer will also pull your credit report to get a better understanding of your credit history and financial situation. Once your information has been reviewed, your loan officer will provide you a pre-approval letter stating how much you are approved to borrow. Having a pre-approval letter can give you a competitive edge against other buyers; it shows the seller you are serious and ready to buy.

You should refrain from making large purchases and incurring new debt at this time, as this can affect your pre-approval amount. Keep in mind getting pre-approved does not mean final approval; once you put an offer on a home and the offer has been accepted, the loan will still need to go through processing and underwriting before final approval is granted.

Getting pre-approved will help speed up the home buying process since you will have a solid foundation of information. Once you are pre-approved, you are on your way to homeownership! Contact one of our loan officers to get started.

What Happens at Closing

You’ve made it to the final step in the home buying process, closing. After all of the settlement documents have been signed and funds distributed, ownership of the property will transfer and the house is finally yours! Here’s what you can expect in the days leading up to your closing.

Prior to Closing

At least 3 days prior to closing, you will receive your initial closing disclosure (CD). This document shows your closing costs, terms of the loan and how much money you need to bring to closing. Review this document carefully to make sure all the fees are correct. If you have questions or fees do not look correct, don’t be afraid to reach out to your loan officer. You should already have the date and time for settlement, but it won’t hurt to confirm with your settlement agent. If you are taking time off of work, give yourself at least a couple of hours for settlement. Your settlement agent should have also discussed wiring closing funds to them.

Closing Day

What to Bring
If you have wired your money to the title company, bring the proof of wire transfer and also your checkbook in case there are any last minute changes to the CD. Be sure to bring your ID, driver’s license or passport.

Who Attends
There are a few people who may attend closing. Your real estate agent and title insurance company/settlement agent will be there to guide you through closing and make sure everything runs smoothly. Your loan officer may attend if he or she is able. Sometimes the seller and their agent will attend, but often times the seller will sign their documents prior or at a different location, which is totally fine!

Signing Documents
Your hand is going to get a workout today! There are many different documents to sign at closing. Make sure your name shows the correct spelling and the property address is correct on all docs. If there are any mistakes, let your settlement agent know so they can be corrected. A few of the most important documents you are going to sign are the CD, deed, deed of trust (DOT) and note. The CD shows your closing costs, terms and cash to close. The deed transfers ownership of the property from the seller to you. The deed of trust (mortgage) pledges the property as security for repayment of the note. The note is a promise to repay your mortgage and it has the amount owed, interest rate, dates due and length of repayment. Your closing package may consist of 30-40+ documents.

Getting the Key
Once all of the documents have been reviewed and signed, you get the keys and the house is yours. Time to start enjoying your new home!

Breaking Down Homeownership Programs

Buying a home is a big, if not the biggest, purchase you are going to make. You may have heard there are a lot of costs when it comes to buying, and hearing the word “down payment” may strike a small sense of panic, but it doesn’t have to! There are many programs offered to help home buyers afford their dream house.

State Housing Finance Agencies offer state specific programs to residents who need help purchasing a home. These programs can be in the form of a loan or grant, and assist with closing costs, down payment, and even student debt relief.

A few of our most popular homeownership programs are geared for home buyers looking to purchase in the state of Maryland and Washington DC. Take a look below to see just a few options that are available.

DC Open Doors– DC Open Doors is a program offered by the DC Housing Finance Agency (DCHFA) and provides borrowers with options to purchase in the District of Columbia. Qualified first time homebuyers and repeat buyers are eligible for the program. DC Open Doors provides:

  • Down payment assistance loans (DPAL) available to qualified borrowers in the full amount of your required minimum down payment, requiring less up-front money out of your pocket.
  • DPAL is a 0% interest rate, 5-year forgivable loan, meaning you only have to repay the loan if you sell, refinance or no longer occupy the property within the first 5 years.

DC Home Purchase Assistance Program (HPAP) – Available to first time homebuyers providing assistance with down payment and closing costs. HPAP provides:

  • Down payment assistance up to $80,000 based on household income.
  • Closing costs assistance for 4% of the home purchase price or $4,000 (whichever is less).

Maryland Mortgage Program (MMP) – The Maryland Mortgage Program is offered by the Maryland Department of Housing and Community Development and provides borrowers with program options to purchase in the state of Maryland. The 3 main loan program types available through MMP are:

  • Grant Assist: Provides up-front financing to assist borrowers with down payment and closing costs. Grants do not need to be repaid.
    • Special Assistance Grant Program: Grant of $1,500 or $2,500 (depending on the Area Median Income). May be combined with other MMP conventional loans.
    • Flex 4% Grant: Grant of 4% of the first mortgage. May not be combined with other MMP programs.
  • Loan Assist: Provides up-front financing to assist borrowers with down payment and closing costs.
    • 1st Time Advantage 3% Assistance: No-interest second loan equaling 3% of the first mortgage. No payments are due on the second loan until the first mortgage is paid off, refinanced or transferred.
    • SmartBuy 2.0: Helps qualifying homebuyers pay off student debt during the purchase of their home.
  • Rate Assist: Provides low interest rate options for homebuyers which lowers the monthly payments.
    • Maryland Preferred Rate: Offered on 30-year, fixed rate loans. Cannot be combined with closing cost or down payment assistance.

There are also a number of other state specific agencies, such as Virginia Housing Development Authority (VHDA), Rhode Island Housing (RIH), and MassHousing, to name a few. It’s always a good idea to know all of your options, and which one is best before you take the plunge. All of our loan officers have a wealth of knowledge on each of these programs and will be able to provide you with additional information. Be sure to contact one of them today to find your best option!

 

*Conditions and guidelines vary depending on the agency

Will Your Home Value Sink or Swim?

It’s been a long, hot summer so far; thank goodness for that backyard swimming pool to cool you off! There’s really no better feeling than walking out your back door and jumping in your own swimming pool. But what happens to that tropical paradise when those cold, winter months roll in? And when it comes time to sell your home, is your pool adding value to your home or hurting the resell value? Many factors can come in to play when deciding if a pool will increase or decrease your home’s value.

How much use do you get from the pool?
If you live in an area where it is warm for most of the year, then a pool may be a good investment. Keeping up with the maintenance costs won’t seem like as much of a burden when you are actually using the pool. However, if you live in an area where only 3-5 months of the year are suitable for swimming, it may be a turn off to keep up with monthly costs.

How does your house compare to your neighbor?
If you live in a neighborhood where most of the homes have pools, then having your own pool could increase your home’s value. Since this is a desirable feature in the area, when ready to sell your home, it will probably be a little bit easier. If you live in a neighborhood where pools are uncommon, or there is a great community pool down the street, it may not make sense to have one in your backyard.

Is an in-ground pool better than an above-ground pool?
In-ground pools have the potential to add more value to your home than above-ground pools. An in-ground pool will typically last longer and require less refurbishing every few years. Since above-ground pools can be easily dismantled and removed, they most likely will not add any extra value to your home. If selling your home, potential buyers might see an above-ground pool as an eye sore, especially if there is no landscaping surrounding the pool to help it blend more easily into the backyard.

Has the pool been property maintained?
Pool maintenance costs can add up, but it may be more costly to you if you don’t keep up with proper care. A well maintained pool will look attractive to potential buyers, making your entire home more sellable. Neglecting to take proper care of your pool may make it harder to sell your home because it would be an added expense and hassle for the new owners. If a pool is in poor condition, it could decrease the value of your home.

If you are looking to purchase a home that already has a swimming pool, or are thinking of adding a pool to your own backyard, take the above factors in to consideration. Try not to think of a swimming pool as an asset to your property, but rather an added value to your lifestyle and personal enjoyment.

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