Are Your Home Buying Expectations Too High?

Fraught with just about every emotion under the sun, home buying can be easy…OR IT CAN BE HARD!

The Highs and Lows of Home Buying

Home BuyingI have a dear friend who has been known to say, “The anticipation of an event is often times greater than the event itself.” Which I’ve come to completely understand.

So often, the idea of buying a home, touring every weekend through open house after open house and even the idea of where to put ‘your’ sofa are wonderful feelings. It’s the expectation after a while that this home buying thing is a ton of fun and oh so carefree.

Those feelings are soon replaced with ‘tasks’ and ‘chores’ like trying to get all your documents together for your home loan, spending days running around trying to get offers and counteroffers signed around and dealing with inspection reports, deadlines and addenda’s!

The reason all this craziness is so…crazy is simply because you didn’t have THE TALK with your real estate broker.

Having THE TALK With You About Home Buying Expectations

If you’ve purchased, or sold for that matter, a home recently…you have at least one story to tell about your experience.

Every so often, I will hear one of my buyers say, “I wish I would have known that.” And, even a seller will say to me, “Our Agent never told us about this when we bought the house.”

It’s not enough to assume the buyer or seller who is entrusting their greatest financial asset knows what you know! In this Go-Go world, it’s important to take the time to understand the layers of “what-ifs” and “should of seen that coming” well before these things become an issue.

Spending the proper amount of time going over scenarios that may arise…because they have and I want you to know about them, is time very well spent. Letting your clients visualize an instance that may come up makes them forewarned and forearmed for what might happen during the transaction. The most important part of this process is when things go smoothly, your clients will attribute it to them having THE TALK more times than not.

Let’s put THE TALK in a Football context. Take the game between our beloved Seattle Seahawks and those poor Green Bay Packers for the 2014 NFC Championship. I’d say that was a game that many thought the Pack were going to win easily. I know some folks; die hard Seahawks fans, actually left the stadium after Russell Wilson threw his 4th interception.

Could anyone on the Packers sideline know what was about to happen in the last 4 minutes or so of that game…NO WAY! There isn’t a player on either team that will ever forget what happened at the end of that game. Yet, there wasn’t a single play that couldn’t have been defended differently had the Packers been better prepared. They let their expectations of going to the Super Bowl get in their way of preparing for the greatest comeback I’ve ever witnessed. OK, I’m getting carried away here.

Simply put, I’ll venture to bet that for as long as any member of the Green Bay Packers continue to play, they will always be forewarned and forearmed that ‘things happen’. And to go from the high’s of thinking you were going to the Super Bowl to the low’s of losing that and more…in less than 5 minutes.

My point is THE TALK is having a conversation about ‘things happening’. You don’t need to necessarily know what or how ‘things happen’ but that helps. No, it’s about helping the buyers take off their rose colored glasses to know this may not be as smooth as they had expected. I’m not talking about scaring you or being a pessimist. In fact, those who know me know I’m the eternal optimist! But, I’m also pragmatic and I think having all your ducks in a row doesn’t always prevent things from not going exactly to plan!

Expectations need to be established, understood and in some cases even tempered so a mole hill doesn’t turn into a mountain. THE TALK should always include ‘what-ifs’.

Home Buying is Fun When You Know the ‘What-ifs’

Take the time to interview your real estate broker and ask a lot of questions…I mean a lot!!! Find out what they know and don’t know. And be realistic that the experience may not always match the expectations and setting those expectations with goals and facts rather than hopes and dreams will always make the home buying process more fun. 

 


Janet 
SimonsI am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.

Janet Simons | Certified Residential Specialist | Real Estate Broker
Mountain Valley Real Estate


3 Things Every First Time Homebuyer Needs to Know

Are you a first time homebuyers? Have you wondered what it takes to really enjoy the home buying process? Let’s find out.

Even if you have bought or sold real estate in the past, many of the things that are the most stressful parts of a real estate purchase can be easily dismissed if you have the conversations you need to have…with the right people…and as early in the process as possible!

1. Property Taxes and Mortgage Insurance –

Many first time homebuyers are well prepared for what they know…and equally unprepared for what they don’t know!

Knowing how much house you can afford is largely dependent on how large a mortgage (basically, a home loan) you can handle. Bare in mind, most loan programs come with some added costs that some first time homebuyers don’t always take into consideration. 2 costs that tend to sneak up on a first time homebuyer is mortgage insurance and property taxes.

Mortgage Insurance* – This is typically required when down payments are below 20%. Rates can range from 0.32% to 1.20% of the principal of the loan per year based upon loan factors such as the percent of the loan insured, loan-to-value (LTV), fixed or variable, and credit score. 

*Wikipedia

Property Taxes – To ease the burden of writing 2 big fat checks each year for property taxes, some first time homebuyers will wrap this cost into their overall monthly payment by paying a portion of their yearly property tax bill with their mortgage. This can be set up through escrow and, depending on how much your property taxes are, can add a few hundred extra dollars to your monthly payment.

Start your research by using a simple mortgage calculator to see whether you can afford to pay the monthly mortgage on the kinds of houses you have in mind as well as these 2 extras I just mentioned. I’ve inserted a simple mortgage calculator so you can get an idea how they work

Mortgage Calculator

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Just remember, owning a home involves more than a monthly mortgage. Knowing this early and planning for it can certainly make for a smoother transaction!

What are some other costs first time homebuyers need to know?

Don’t forget the standard day-to-day expenses you’ll also incur once you own that home.

  • Utilities
  • Homeowner or condo association dues
  • General Maintenance

Apply the old rule – You don’t want to be house rich but pocket poor!

2. Inspection & Appraisal –
The cost first time homebuyers need to make to insure their largest investment is sound!

Most first time homebuyers know about the inspection and appraisal as a necessary part of the home buying process. What is not usually known is how much it costs.

In most instances, a first time homebuyer has to rely on friends, family or their real estate broker to help them find a qualified and knowledgable home inspector. Most home inspector will cost anywhere from a couple hundred dollars and up! However, if there is a need to have any additional inspections based on findings that are outside the scope of their home inspector, all of the sudden, the money starts jumping out of their pocket!

Some additional inspections that a first time homebuyer should be aware of:

  • Sewer and water main inspections – This service can be performed by a licensed plumber and may include a camera being sent down the sewer line to see if there are any blocking issues such as roots or cracks in the pipe.
  • Septic System Inspection – In most cases where the home is serviced by a septic system, the lender will require this as a condition of the loan however, no first time homebuyer wants this to be an issue after they take possession so it’s money well spent!
  • Well Water Inspection – Same as with the septic system…most lenders will make this a condition of the loan but you likely will incur the cost.

3. Home Inspections are not PASS or FAIL –

This is when the first time homebuyer gets to flex their negotiation muscle!

On an occasion, I will work with a first time homebuyer who is under the impression their home inspector is there to ‘check off’ on the house! I quickly help them understand that the inspection of the home is as much a vehicle to get any items fixed found during the inspection as it can be a negotiation tool to get a new price or even a potential sum of money to address any needed repairs that the seller can’t or won’t remedy. This is known as a ‘Hold Back’ and can be negotiated as part of the purchase and sale agreement.

An Educated First Time Homebuyer is a Smart First Time Homebuyer!

In every opportunity where I have helped educate and empower my first time homebuyer before we ever start looking at house, I almost always finding the home buying process less stressful, more positive and head and shoulders better…for all parties involved!

 


Janet 
SimonsI am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.

Janet Simons | Certified Residential Specialist | Real Estate Broker
Mountain Valley Real Estate


How Much Does it Cost to Buy a Home

Let’s Take a Look at What it Cost to Buy a Home

The cost to buy a home is not limited to the number you offer or what you see on the flyer! And while most home buyers are very savvy when it comes to ‘crunching the numbers’ when it comes to the month to month requirements of home ownership, the conversation of what will it cost to buy ‘YOUR’ home should be had long before you head off to the closing table!

Whether you’ve purchased real estate in the past or are looking to become a homeowner soon, knowing exactly what it cost to buy a home can be a real eye opener if you don’t know the right questions to ask…or more importantly, who to ask!

Who is the best to help me understand how much it cost to buy a home?

Although your REALTOR® or just your agent (Yes, there is a difference) is arguably your first line of defense when it comes to protecting you and your investment, they may not always have the exact answers to your financial questions and the overall cost to buy a home.

This is not to say he or she is not educated or a wealth of knowledge and information about the home buying process and market conditions. But, sometimes the best professional to know what you’re exactly going to pay…to the penny…is a member of your team that you may not even know!

Meet the Team

Of course your REALTOR® is the best resource for the obvious cost to buy a home such as the cost of an inspection. But, getting to know who is handling your title and escrow for instance, can be a excellent resource for knowing where all those closing dollars are being spent.

Having a knowledgable person who is handling your closing paperwork will allow you to get a strong indication of your overall ‘Out of Pocket’ expenses that are not usually discovered or talked about during the flurry of activity of buying a home.

Below is a quick breakdown of who and what are involved in the transaction when figuring the cost to buy a home: 

  • Appraisal
  • Homeowners Association
  • Insurance Binder
  • Well and Septic Inspection
  • Lender
  • Credit Report
  • Private Mortgage Insurance
  • Title Policy
  • Escrow Fee (Closing Costs)
  • Property Taxes
  • Utilities (Gas, Phone, Sewer, Water, Garbage, Cable, Internet, Alarm System and good old fashioned Electricity)
  • Moving Expenses
  • Rekeying your doors

Knowing the cost to buy a home after you bought the home

The above list may be something many buyers have planned for. But, what about all those ‘goodies’ after you close? These are expenses new homeowners can put off but it’s not long before you have to address certain items to insure your largest investment keeps its value.

  • Paint – You will ultimately want to put your own ‘stamp’ on your new home. Best way to do this is with a fresh coat of paint. An expense that can be put off but your heart wants what your heart wants and sooner than later…you will want to paint believe me!
  • Windows – Upgrading your windows to a more energy efficient system is a common first expense. This can save you hundreds if not thousands in energy bills in just the first few years of homeownership and money well spent!
  • Landscaping – I’m not talking about a complete redo but you will want to maintain your lawn and pretty flower beds and that takes a lawnmower, flower food and more than likely, a whole bunch of new flowers and pretty pretty’s from your local home and garden center.
  • Appliances – This can wait but it’s not a bad idea to at least have a budget for a dishwasher or dryer just in case the worst happens and they conk out on ya!
  • Furniture – Also considered more of a luxury than a necessity but you know as well as I do that you never have enough furniture to fill up your new home!

Of course the one cost to buy a home you NEVER have to concern yourself with…

You never pay your REALTOR® a commission when you buy your home! That’s right…some buyers are unaware that the cost of working with an experienced and knowledgable Real Estate Professional like myself is absolutely FREE TO YOU!!! 

To learn more about the cost to buy a home or a more in depth breakdown of what I’ve covered here, please contact me directly at the information below and I’d be honored to answer all your home buying questions!

 

 


Janet 
SimonsI am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.

Janet Simons | Certified Residential Specialist | Real Estate Broker
Mountain Valley Real Estate


What is Title Insurance?

Are you curious about what Title Insurance is and more importantly…who pays what and how much?

Title InsuranceHere is a simple breakdown of which policy is paid by the Seller and which is paid by the Buyer…and how it protects both parties in a real estate transaction!

What the Home Seller Title Insurance Policy looks like.

Title insurance for property owners, called an Owner’s Policy, is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and is valid for as long as the owner or his/her heirs have an interest in the property.

Only an Owner’s Policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search. Possible hidden title problems can include:

  • Errors or omissions in deeds
  • Mistakes in examining records
  • Forgery
  • Undisclosed heirs

What the Home Buyers Title Insurance Policy looks like.

Title insurance for the home buyer is really not for the home buyer at all. Rather, the policy is intended for the mortgage lender. And aptly enough, it’s called a Loan Policy. Most lenders require a Loan Policy when they issue a mortgage loan. The Loan Policy is usually based on the dollar amount of the loan and it protects the lender’s interests in the property should a problem with the title arise.

It’s also important to note that the Loan Policy does not, in fact, protect the buyer but again, insures that the property is protected against any title defects and although paid by the buyer at closing, does decrease each year and eventually disappears as the loan is paid off.

I hope you found this brief explanation of Title Insurance helpful. If you have an questions about this or any other part of a real estate transaction, don’t hesitate to contact me!


Janet 
SimonsI am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.

Janet Simons | Certified Residential Specialist | Real Estate Broker
Mountain Valley Real Estate


What is PMI?

PMI or Private Mortgage Insurance is basically a lenders insurance policy!

For many homebuyers, their down payment amount is a significant sum and with the minimum down payment requirements going up (we’ll expound more in an upcoming post) many homebuyers need to know and budget for PMI!

Why do I need to pay PMI?

What is PMI? Janet Simons | Chehalis Valley RealtyIf your down payment on a home is less than 20%, you’re going to be required by your lender to have PMI or mortgage insurance. This insurance policy essentially protects the lender in the event you default on your loan obligation!

When you take a loan to buy a home you not only do you pay the principal but you need to budget for the interest, taxes and yes the insurance…not just homeowners insurance but the Mortgage insurance too!

Is there more than one kind of PMI?

Not only is there Private Mortgage Insurance but there is Government Mortgage Insurance as well that is mainly done through the FHA! If you get an FHA loan and put down less than 20%, you will almost certainly experience this type of Mortgage Insurance. The Private type of Mortgage Insurance can be found through multiple corporations so be sure to have that conversation with your lender before you get too far in the loan process!

How much will I pay for PMI?

Like most things, the cost and the amount you’ll pay for PMI can vary. This again, is a great conversation to have with your lender.

In general, the amount you pay for PMI will depend on a number of factors:

  1. Amount of your down payment
  2. Amount of your loan
  3. The type of loan you have

Also, be sure to understand the tax deductions implications associated with PMI. Ask your financial advisor how you can claim your PMI on your tax returns!

What does PMI look like?

Here is an easy breakdown for you:

Loan Amount = $175,000
Down Payment = 10%
Amount Borrowed = $157,500
PMI Premium = 0.49%
$157,500 X 0.0049% = $771.75
Divide $771.75 by 12 monthly payments and your PMI will be $64.31 each month!

I hope you found this information helpful. If you have any additional questions about PMI or any part of the loan process, please feel free to contact me at the resources below!


Janet 
SimonsI am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.

Janet Simons | Certified Residential Specialist | Real Estate Broker
Mountain Valley Real Estate