Danny Resendes' Blog
Zoning laws have been in place in the United States for many years. They serve communities in a number of ways. As a home buyer, it is important to know and understand the zoning laws that cover any property you consider purchasing.
Generally, residential zonings laws indicate what kind of structures can be built in a particular area. Some residential zones are restrictive and allow for only single-family homes within a neighborhood, other locations may welcome multi-family complexes. Some commercial zones allow space for both businesses and housing in the same area. If the home you are considering is in a location like this, be prepared for businesses to change and grow, potentially impacting the neighborhood.
If you run a business from your home or plan to do so, be aware that this activity can be restricted within a residential zone. The general aim of this restriction is to keep traffic issues at bay as well as to limit noise or other disruptions within a neighborhood. Even if your business is conducted virtually, it’s still wise to check with your local zoning board to gain an understanding of the rules specific to your community.
Perhaps your dream is to raise goats or maybe you plan to move a flock of chickens with you when you relocate. Residential zones can have different rules that govern animals on your property. In some cases, farm animals are not allowed at all while other zones may limit the number of animals you can keep within a certain amount of acreage.
It is possible to request a zoning change in some cases but the process can be difficult and long drawn out. With that in mind, it is best to know and understand local zoning laws before entering into an agreement to purchase.
Most homebuyers take out a mortgage when they purchase a house, and there are several different types of mortgages to choose from. Here are some of the more common mortgage options and the benefits of each one.
Conventional 30-Year Fixed Mortgages
Perhaps the standard starting point for a mortgage is the conventional 30-year fixed home loan. This mortgage is underwritten by a private lending institution but conforms to standards set forth by federal programs. The terms of the loan last for 30 years, and the interest rate is fixed so that it doesn’t change throughout this period.
A conventional 30-year fixed mortgage is a good option for many homebuyers. It lets you spread out the cost of a house across three decades, and you know what the interest and payments will be for the full duration of the loan.
Conventional 15-Year Fixed Mortgages
Conventional 15-year fixed mortgages are just like their 30-year counterparts, except these last half as long. Because the duration of these mortgages is half as long, homebuyers end up paying a lot less in interest.
You’ll have to pay more per month if you cram your mortgage into 15 years, but the interest savings are substantial. If you can afford higher monthly payments, this option will end up saving you a lot.
Adjustable-rate mortgages come in various durations, just as fixed-rate mortgages do. The difference between the two is that the interest rate on an adjustable-rate mortgage can adjust. The interest rate is set according to an index, and as the index changes so does the interest rate on the loan. Which index is used and how adjustments are made are detailed in the paperwork of a loan.
Most adjustable-rate mortgages come with lower initial interest rates than fixed-rate mortgages offer, although the rates on adjustable mortgages can end up being much higher. If you can financially manage an increase in your mortgage’s interest rate, this option might be a way to save a little bit of interest (although there is risk involved).
The federal government offers several guaranteed mortgage options for qualifying individuals. Some of the most common ones are VA and FHA guaranteed home loans.
In these programs, the government guarantees a mortgage if the homebuyer fails to make their payments. This reduces the risk to the lender, and many lenders relax their qualification requirements as a result.
If you can’t get a conventional mortgage and qualify for a federally guaranteed program, one of these could help you attain the dream of home ownership.
We all know that buying a home is a significant decision that comes with a great deal of financial planning and preparation. However, few of us are taught the ins and outs of actually obtaining a mortgage to make your dream of homeownership come true.
Mortgages are a complicated business that is always changing, both with fluctuations in market rates and with policy decisions.
But, if you’re hoping to buy a home in the near future, it’s important to understand all of your options when it comes to mortgages.
In today’s post, we’re going to address the 20% down payment myth, where that number comes from, and what your options are when it comes to applying for a mortgage.
Where does the 20% down payment number come from?
For most people, 20% of a house is a serious amount of money that would take years to save up. If you’re a first-time homebuyer and don’t have any equity to use from selling another house, 20% may seem like an impossible amount to save within the time you want to buy a home. Fortunately, there are several ways to buy a home without having 20% in cash saved up.
But first, let’s understand where that number comes from.
Most mortgage lenders will want to ensure that lending to you is a safe investment of their money. They want to know that they’ll earn back what they’re spending. To do this, they use several methods.
First, they’ll check your credit history to see how often you pay your bills in time. Then, they’ll want proof if your income and financial stability. Finally, they’ll ask for either a down payment or a guarantee that you will pay them back. Here’s where that 20% comes in.
If you don’t have 20% of the mortgage amount saved for a down payment, you will typically have to pay something called private mortgage insurance. This is an extra monthly fee, on top of your mortgage payments with interest, that you pay to ensure the lender that they’re seeing a return on their investment.
Most homeowners put much less than 20% down
If you’re feeling bad about the amount of money you have saved for a down payment, don’t be! In fact, most first-time homebuyers put, on average, just 6% down on their first home.
Since first-time homeowners don’t have the benefit of equity they’ve accumulated by making payments on their previous mortgage, they often have to come up with down payments out of pocket.
Other options besides a 20% down payment
There are several ways to secure a mortgage without putting 20% down on the home. First, check to see if you are eligible for any loans that are guaranteed by the government. These can come from the Department of Veterans Affairs (VA), or the USDA single-family home program.
The third option is to take on private mortgage insurance until you’ve paid 20% of your mortgage payment.
Private mortgage insurance can be paid to an insurance company or to the federal government in the case of FHA loans, you can put down as low as 3.5%.
Between these three options, you should be able to find a mortgage that you can afford and one that will give you the best possible financial stability in the long-term.
A homebuyer must stay focused throughout the property buying journey. Otherwise, a buyer risks missing out on an opportunity to acquire the right house at the right price.
Now, let's take a look at three tips to help you stay on course during the homebuying journey.
1. Craft a Homebuying Strategy
Creating a homebuying strategy enables you to outline the steps that you'll need to take to make your homeownership dream come true. Plus, with a homebuying plan in place, you'll be better equipped than ever before to streamline your house search.
Think about where you want to live and what you want to find in your ideal residence. Then, you can make a checklist of home must-haves and wants. And once you develop this list, you can enter the housing market with a plan in hand.
2. Get Pre-Approved for Home Financing
Home financing plays an important role in a buyer's ability to acquire a residence. If you ignore home financing as you move along the homebuying journey, you may struggle to get the finances you need to purchase your dream house.
Oftentimes, it helps to get pre-approved for a mortgage so you won't have to worry about home financing as you move along the property buying journey. To get pre-approved for a mortgage, you should meet with a variety of banks and credit unions. That way, you can learn about all of your mortgage options and select a mortgage that matches your finances.
As you review your mortgage options, don't hesitate to ask questions. Banks and credit unions employ home financing specialists who can remove the guesswork commonly associated with getting a mortgage. These specialists are happy to respond to your mortgage concerns and questions and ensure that you can make an informed home financing decision.
3. Work with a Real Estate Agent
When it comes to staying focused during the homebuying journey, it generally is a good idea to hire a real estate agent. This housing market professional can offer plenty of assistance throughout the property buying journey. And by doing so, a real estate agent will ensure that you can seamlessly navigate the property buying journey and achieve your desired results faster than ever before.
A real estate agent understands the challenges that buyers frequently encounter when they pursue houses and can help you plan accordingly. Furthermore, a real estate agent will guide you along each stage of the homebuying journey and do everything possible to help you avoid potential pitfalls.
Also, a real estate agent provides comprehensive support as you get ready to finalize a house purchase. He or she will help you get ready for a home inspection, appraisal or closing and ensure that you can purchase your ideal house at a budget-friendly price.
Don't lose focus as you pursue your dream residence. Instead, use the aforementioned tips, and you can stay on course and accomplish your homebuying goals.
If you're like many Americans, your home is your biggest asset. And if you're thinking of selling your home to use the profits for a new home, sending the kids off to college or simply adding it to a retirement fund, there are a few things you may want to avoid to make sure your home sells.
Setting the Price too High
Some sellers make the mistake of thinking their home is worth more than comparable properties. A lot of times, living in the home and becoming attached to it may cause an overestimation of the value of upgrades or dismissal of the lower price tag of similar homes with similar features.
When you price a house too high, though, the property may stay longer on the market and go through several price reductions before it finally attracts interested buyers. And if you happen to be in a new home already, you might be paying two mortgage payments while waiting for a buyer to place an offer. Putting the right price on your home helps ensure buyer interest and a quick sale.
Neglecting to Order a Pre-inspection
Some buyers are open to fixing problems, but your cost during the negotiation phase may be significantly higher than it would have been if you hired a contractor to fix any preexisting issues.
A way to solve this problem is to order your own inspection before you put your house on the market. This is also a great way to establish buyer trust, showing that you are transparent about the house's issues when you give them the report or show the report of the issues being fixed.
Going Overboard on Presale Renovations
You love your home, and you want to prove to the buyer that it is a gem. But sinking too much money into presale renovations can mean spending money that you may not get back during the negotiations. You also want to be careful that you're not spending your renovation budget on cosmetic enhancement when the house needs structural improvements. That is another excellent reason to invest in a home inspection prior to putting your house on the market.
Failing to Choose the Right Agent
The real estate agent you choose to sell your home makes all the difference -- and with buyers' agents requesting up to 6 percent in closing fees, it's important to make sure you find someone who will work hard for you.
What should you look for? Good chemistry tops the chart, since you need to be able to trust your agent to act in your best interest. Other important factors are familiarity with the local market, experience selling houses in your price range, access to good marketing databases, and evidence of a strong network.
Ready to get started with the home selling process? Contact me, and we'll get the ball rolling!