Colin O’Neal: Real Estate Broker / Owner of HouseHunters 

 At a glance: Colin O’Neal is a real estate broker who helps home buyers in Keller, Texas and the surrounding Dallas Fort Worth area. He is also the owner of HouseHunters, a residential real estate brokerage that has been serving the community for more than 17 years.

 When buying a home in Dallas/Fort Worth, you need advice from a real estate professional who knows the market and has your best interests at heart. And that's exactly what you'll get when working with Colin O’Neal. Colin is a dedicated real estate professional with 32 years of experience, extensive training, and a strong focus on customer service.

 

Colin has 3 Promises he delivers to all his Clients

      1.      Always Be On Time.

2.      Always Be Brutally Honest.

3.      Always Do What He Says He’s Going To Do.

Helping You Find the Perfect Home

 Dallas Fort Worth is a dynamic, fast-paced real estate market. Home buyers need to be well prepared and "up to speed" before entering the market. Colin knows this well, having worked in the area for many years. He understands local market dynamics and knows how to find the best properties for his clients. Whether you're buying your first home, a second home, or an investment property, Colin can help you do it right.

 

 Experienced with Single-Family Homes, REO, and Short Sales

 The Dallas Fort Worth real estate markets offer buyers a lot of diversity, in terms of property types. There's a mix of single-family homes, bank-owned "REO" properties, and foreclosure homes. Colin O’Neal has successfully closed over 1500 deals on all types of properties. He is a certified REO & HUD Broker currently working with Major Banks and Servicers, making him a valuable asset to his clients. 

 

 Ongoing Education and Training

 Colin realizes the value of professional knowledge and training. He has undergone extensive training and continues to pursue advanced education, in all aspects of the real estate business. This sharpens his skills and helps his keep up with an ever-changing industry.

 

  If you need help buying a home in the Dallas Fort Worth Area, and you'd like to work with an experienced agent who will look out for your best interests, give Colin a call at 817.937.4104 Or email colin@hhdfw.com

 

Jan. 12, 2017

FHA Mortgage Insurance Premiums Have Been Reduced for 2017

Do you plan to use an FHA loan to buy a home in 2017. If so, I have some good news. The Department of Housing and Urban Development (HUD) announced this week that it would reduce the FHA annual mortgage insurance premium (MIP) for 2017. This change will take effect later this month, and it could save homeowners an average of $500 this year according to officials.

In 2017, the annual MIP for most home buyers who use a 30-year FHA loan will be reduced to 60 basis points, or 0.60% of the loan amount. See the table below for details.

Mortgage Insurance Premium Table, and Additional Details

Borrowers who use the Federal Housing Administration (FHA) loan program to purchase a house are generally require to pay two different mortgage insurance premiums, or MIPs. This insurance protects the lender in the result of borrower default.

  •     There's an upfront premium, usually set at 1.75% of the loan amount.
  •     There's also an annual premium, which is the one being reduced for 2017.

On January 9, 2017, HUD officials announced they would be lowering the annual mortgage insurance premium rate by 25 basis points, or 0.25%. This is great news for borrowers who plan to use an FHA loan to buy a house, because they could save an average of $500 per year according to HUD.

The revised annual mortgage insurance rate will apply to most new FHA mortgage loans with a closing / disbursement date on or after January 27, 2017.

The table below was published along with the official policy update sent out by HUD on January 9, 2017. You'll see the reduced mortgage insurance premiums under the "New MIP" column on the right.

The FHA's MIP tables can be confusing at first glance. But there's a method to reading them. For starters, you'll want to find your loan's term or length. If you're going to use standard 30-year FHA loan, refer to the top half of the table where it says: "term > 15 years." Next, use the loan amount column that applies to you. The "LTV" column is essentially the inverse of your down payment. Most FHA borrowers put down 3.5%, since that's the minimum down payment for the program; so the LTV in this case would be 96.5%.

Bottom line: Most FHA borrowers in 2017 will end up with an annual mortgage insurance premium rate of 60 basis points, or 0.60% of the loan amount.

Pros and Cons of the Program

There are pros and cons to every kind of mortgage loan, and this applies to the FHA program as well. Borrowers who use this program generally encounter the added cost of mortgage insurance.

On the surface, this might seem like a drawback to using an FHA loan to buy a house. But this insurance coverage allows people to buy a home who wouldn't otherwise qualify for a mortgage loan with such a low down payment.

In order to avoid mortgage insurance entirely, you would have to make a down payment of 20% or more, or use a "piggyback" loan strategy. Thus, the FHA program is a viable option for home buyers with limited funds saved up for a down payment.

Colin O'Neal | HouseHunters | The Real Estate Experts | 817.898.0145

Jan. 5, 2017

Should I Buy My First Home in 2017?

Happy New Year! Will 2017 be the year you buy your first home? Are you still on the fence about it? Here is some updated information to help you make an informed decision, and to answer the question: “Should I buy my first home in 2017?”

Buying Your First Home in 2017

In most U.S. cities, buying a home makes a lot of sense right now. The housing market is stable, with rising home values reported across the nation during 2016. The job market and the broader economy have improved significantly since the recession years. And in many areas, owning a home is actually more affordable than renting right now.

But these are just the external factors. There are personal considerations as well. You have to make sure buying a home makes sense for you, based on your current financial and lifestyle situation.

For starters, ask yourself the following questions:

  • Do you plan to live in the area for at least the next few years? If so, buying might make sense for you.
  • Do you have steady and reliable income right now, with a reasonable expectation for continued employment and income? If so, you can put another check mark in the “buy” column.
  • Would owning a home improve your quality of life in some way?

If you answered yes to these questions, then 2017 might be a good time to buy your first home.

Mortgage Rates Have Risen

As a first-time home buyer, you should be aware that mortgage rates have risen in recent weeks. In fact, by the last week of December 2016, the average rate for a 30-year home loan had risen to its highest point in more than two years.

At the start of 2017, the average rate for a 30-year mortgage was 4.32%. Analysts with the Mortgage Bankers Association expect rates to rise gradually throughout 2017, possibly reaching 4.7% (for a 30-year loan) by the end of the year.

The point is, if you postpone your home-buying plans until later in 2017, you could end up paying more for a home — and for a mortgage loan. So a strong case could be made for buying sooner rather than later.

I Can Help You Every Step of the Way

I specialize in helping first-time home buyers succeed. I can help you find a home that meets all of your needs, and make a smart offer based on current market conditions. This is the first step to success when buying your first home, and it all starts with market research. This is one of my key skills.

I can help you navigate the complexities of the local real estate market in order to find the ideal home. Please contact me at your convenience so we can talk about your home buying needs.

Posted in Buying a Home
Dec. 20, 2016

3 Reasons to Get Pre-Approved for a Mortgage Loan, Before Entering the Market

If you need to use a mortgage loan to finance your home purchase, it would be wise to get pre-approved for a loan before entering the market. There are several reasons for this, and they are explained in detail below.

What Is Mortgage Pre-Approval?

During the mortgage pre-approval process, a mortgage lender will review your financial situation to determine whether or not you're qualified for a loan. If you do appear to be qualified, they'll also give you a maximum amount they are willing to lend you.

You will probably have to fill out a standard mortgage application in order to get pre-approved. The lender will also request certain financial documents for verification purposes. These might include bank statements, tax returns, W-2 forms, and pay stubs.

3 Reasons to Get Pre-Approved

It's a worthwhile process for several reasons. Here are the four main benefits of getting pre-approved for a home loan, before you start shopping for a house.

1. You can identify potential problems early on in the process.

Lenders can uncover a lot of potential problems during the mortgage pre-approval process. Maybe your debt levels are too high in relation to your income. Maybe your credit score is too low. The sooner you can find out about these things, the better. It gives you more time to correct them.

Without this process, you could spend days or weeks shopping for a home only to find out you're not qualified for a loan. That's a waste of time and energy. Identify problems early, and then work on correcting them. This is the sensible approach. It's also one of the key benefits of getting pre-approved.

2. It helps you narrow down the house-hunting process.

Imagine this: You spend three weeks looking at homes in the $300,000 price range. You look at them online and also by driving through neighborhoods. Then you find a house that is perfect for you. So you approach a mortgage lender to apply for a loan. The lender says they're willing to lend you $225,000 -- max. This can't be right, can it?

So you speak to three other lenders, and they all give you similar numbers. You've just wasted a lot of time by shopping in the wrong price range.

This is another area where mortgage pre-approval benefits you, as a home buyer. Granted, your own personal budget is the most important spending limit to keep in mind. But it also helps to know what the lender is willing to lend you. That way, you can limit your house-hunting process to the types of homes you can actually afford to buy.

3. Sellers and their listing agents will take you seriously.

If you try to schedule a showing to see a home, the listing agent will probably ask if you've been pre-approved by a lender (or if you have some other form of financing lined up).

They do this for the same reason we discussed earlier. They would rather deal with buyers who have been pre-approved, because it indicates there's a good chance they'll get financing.

Now imagine a scenario where the seller gets two offers -- one from a buyer who has been pre-approved, and one from a buyer who has not. The second buyer is an unknown variable, where financing is concerned. Which offer do you think the seller would accept? Which one would you accept?

In short, sellers will be more inclined to accept your offer if it has a pre-approval letter attached. This is particularly important in an active real estate market where multiple offers are common.

Posted in Buying a Home
Dec. 13, 2016

Home Improvements Adds Value

The Cost vs Value Report and Why You Can Beat It

Cost vs Value Report and Why You Can Beat It

As you may have been aware, I conducted an expert roundup a couple of weeks ago where I asked 45 experts what they felt were the best home improvements to increase the value of your home.

Even though the roundup was a great success and produced a number of very useful insights, a number of readers raised some concern. The results seemed to differ from what is typically published in the Cost vs Value Report in that some home improvements in the expert roundup showed a positive return of investment, while in the Cost vs Value Report none yield a positive return.

Wouldn’t it be a sad state of affairs if every home improvement that we made didn’t even recoup what we paid for it?

Well, I’m going to show you today that it is possible to consistently add value to your home that out ways your investment.

I have always been wholeheartedly convinced that the right home improvements do add value over and beyond the cost required to make them and I still do!

I’m going to be explaining to you exactly why this is the case, and why the results of the Cost vs Value report may be skewed metric if you’re using it to assess the return of investment on your home improvement.

Just before we start off, let me just note that I’m not trying to argue that my expert roundup is any better. The Cost vs Value Report is clearly based on much more thorough research and data.

I do, however, think that the outcome of my research is more in line with reality if your intention indeed to increase the value of your home.

So which one is right? Is it possible to make a profit on your home improvement or is the best that you can do to only recoup part of your investment?

What Is the Cost vs Value Report Anyway?

Before we get onto the juicy bits, let’s have a quick look at what the Cost vs Value Report is.

For those of you that don’t know, it is a report published annually and is largely regarded as the industry benchmark for measuring the ROI on home improvements. It only covers the US market at this point in time.

Snapshot of Cost versus Value Report

The costs of the home improvement projects are estimates of generic projects that are generated by RemodelMax, which is a publisher of estimating tools for remodelers.

The resale value data is aggregated through the collection of survey results of around 4,500 members of the National Association of Realtors (NAR).

The members of the NAR are provided with three-dimensional illustrations, construction costs, and median home prices when asked what premium they thought each improvement was worth.

Based on the average home improvement costs, and the resale data collected through the surveys, an average return was calculated which forms the basis of the Cost vs Value Report.

Is the Cost vs Value Report Misleading?

If you are making a home improvement with the objective of increasing the value of your home, the answer is yes. Let me explain.

If you happened to click on the link earlier and had a look at the Cost vs Value Report you would have realized that none of the projects actually generate an average positive return on investment.

In other words, the statistics are stacked against you if you’re making home improvements. You will be losing money (on average) on every home improvement that you make!

However, from personal experience I know that with the right decisions you can consistently deliver home improvements that add value you to your home – if that is indeed your goal.

So why can’t we take the numbers in the Cost versus Value Report as a given as someone that is hoping to increase their home value?

Home Improvement Motivations

The Cost vs Value Report is an average which leaves one big question unanswered.

What is the motivation of the people that chose to make a home improvement? Was it done to increase the value of the property? Was it done to increase the quality of life? Or was it done for some other reason?

The answer is that we simply don’t know exactly what assumption is used in the Cost vs Value Report.

To get a feel for what it may have been, a good starting point would be a recent survey that was conducted by Houzz which noted that only 54% of those who conducted a recent remodeling project, considered increasing home value as an important factor.

Motivations for Home Improvements

This means that 46% did not factor increasing their home value into their decision making. That’s nearly half of the people!

On the other hand, 83% considered improving the look, feel, flow and layout as an important factor. It appears that this by far the primary driving factor when people decide to make an improvement to their home.

The end goal of the latter group isn’t to improve the value of their homes, but it’s primarily to improve their quality of life, regardless of what that may do to the value of their home.

Mr. Smith and Mrs. Johnson

To give an example, imagine that Mr. Smith and Mrs. Johnson both own a three bedroom home in a fairly affluent suburb of Chicago. Mr. Smith knows it will only be a matter of time before he and his family move back to the West Coast which is where he is originally from, while Mrs. Johnson has found her dream home and will happily live there for the rest of her life.

Not being completely happy with the kitchen, Mr. Smith decides he wants to upgrade his kitchen. He always felt it lacked in quality compared to the rest of the house. Being cognizant of the fact that he will likely relocate and sell his home within the next 2-3 years, he decides to do some research on the style of kitchen and the type of improvements that are currently in demand. He decides install new cabinets with light and neutral colors to improve storage, install a tile backsplash, and upgrade to stainless steel appliances.

Mrs. Johnson also isn’t happy with her kitchen, and would also like to upgrade. She is a big fan of pink, and decides to install pink cabinets and pink tiling. They remind her of her childhood. She is also a big wine enthusiast and has always had a dream of having her own built-in wine fridge but this will be an expensive improvement. She wants it so much that she decides to go ahead with it anyway and instead of upgrading her existing appliances to stainless steel, she decides to add install her very own wine fridge. To her the joy that she will get out of this is far greater than installing stainless steel appliances.

Which of the two scenarios do you believe would add more value to a home?

Home Improvement Kitchen Comparison

Original Photographs Courtesy of: Kitchen Images

It’s obvious that because Mr. Smith took the time to research what is in demand and he considered his home’s resale value, his improvements are likely to appeal to a wider audience, and therefore have a greater positive impact on the value of his home.

This doesn’t mean that what Mrs. Johnson did is incorrect but it means that both had completely different objectives when making their home improvements.

Ultimately both parties above achieved their objectives, but it becomes troublesome when we start using this data to measure the return on investment on various improvements – especially when the motivation is to increase the value of your home.

The Cost vs Value Report is likely based on a similar assumption as mentioned in the Houzz report, and it significantly skews the data and lowers the average return calculated for those using it as a reference to increasing the value of their home.

If almost half of the people did not even take home value into consideration, how can we expect the outcome of home improvements to show a positive ROI?

The answer is that we can’t because this wasn’t a desired outcome for many of those that made an improvement to begin with.

Like what you’re reading and interested in more actionable tips when it comes to real estate? Just pop-in your email below and I’ll keep you posted of any future articles. And don’t worry… I hate spam as much as you do!

Home Flippers Generate Consistent Positive Returns

So let’s have a look at a group of people whose primary motivation is their return on investment. Maybe that will paint a more rosy picture.

What better group than home flippers whose sole purpose is to purchase homes, improve them, and sell them at a profit?

In RealtyTrac’s Home Flipping Report for Q2 2014  notes that the average return on investment of 21% was experienced on flipping homes in the US, with an average gross profit of $46,000 per flipped home.

This isn’t a coincidence either. These guys (and girls) are able to consistently make profits by doing this and have been doing so for years and years.

So why are they able to generate a consistent and positive return on investment? Because the ultimate goal of a home flipper is to generate as much return on investment and each and every activity is focused around that goal.

So what does the home flipper do that generates this return?

Well, for one it’s being able to spot a house that is currently undervalued. Often times, this means it is a home that is in bad shape from an aesthetical standpoint so there is little demand for it and as such is sold below-market.

Why do flippers want to buy these properties? Because they feel that they can add value and bring these properties up to a standard that is acceptable to the market and make a profit by doing so.

How do they make a profit? You guessed it — they know that by conducting the right improvements, they are able to find home buyers that are consistently willing to pay a price that is greater than the flipper’s initial investment and the cost of the home improvements that were made.

The flipper doesn’t add a built in wine fridge, he doesn’t paint the walls pink, and doesn’t build improvements that increase the quality of life in the property without it adding any value. He focuses just on the improvements that he know will make his property more marketable and those will help him sell his property at a higher price point.

Focus and motivation is key to making sure you generate a positive return when making a home improvement.

The Completed Puzzle Effect of Home Improvement

How often do you hear that it makes no sense to install a high-end kitchen, with marble countertops, with stainless steel appliances while your bathroom is still sporting vinyl flooring, and plastic showerheads?

Well, the reverse is true when you suddenly decide to upgrade that last room in your house that was still lagging in quality compared to the rest of your home. It makes great sense because suddenly it all starts to click. Your house is suddenly in complete harmony and each and every space complements each other.

I like to call this the Completed Puzzle Effect of Home Improvement.

Tweet: The Completed Puzzle Effect of Home Improvement - when upgrading that straggler room suddenly transforms your home into complete harmony!The Completed Puzzle Effect of Home Improvement – when upgrading that straggler room suddenly transforms your home into complete harmony!

Although I have to admit that I’m speaking from my gut here, I feel that the value increase resulting from this undeniable state of bliss can be much greater than the cost of the home improvement.

Let me know whether you agree or disagree by posting a comment below.

Unfortunately there is no scientific way to measure this because we are starting to get into fuzzy territory, but in my opinion this is where rationality starts to go out the door and potential buyers start to create an emotional bond with the property.

The feeling of we just have to have this property starts to take precedence over would it really be wise to spend this much money? and the chances of receiving a higher offer for your property increases dramatically.

It is an emotional pull that draws potential buyers to your house, and the premium that you end up receiving for the house because of your home improvement, is greater than the sum of the parts that were used to create it.

In the analysis in the Cost vs Value Report there is no emotion involved. People were simply asked to look at a picture and rate the added value as a result of it in a rational way.

The real estate market just doesn’t work that way.

Other Impacts That the Cost vs Value Report Does Not Consider

In an effort to keep this post somewhat concise, let me list out four other factors that you should consider as part of your return that aren’t measured in the Cost vs Value Report.

DIY Versus Professional Home Improvements
The average costs of home improvements in the Cost vs Value Report are based on having those improvements outsourced to a third party. Third party labor estimates are factored into the average costs.

In reality, however, the US Census Bureau has measured that around 37% of all home improvement projects are carried out by do-it-yourselfers.

Again, that’s a pretty significant piece of the pie.

DIY projects can be significantly cheaper than hiring a professional. Just to give an example, this study by Harvard notes that homeowners saved an average of $7,624 on a bathroom remodel by doing it themselves as opposed to hiring a professional.

That’s a significant chunk of change in anybody’s books!

If we look at the average cost of a bathroom remodel from the Cost vs Value Report and subtract this number just for the fun of it, we end up with an average DIY cost of $8,504 for a bathroom remodel.

That means with an average resale value increase of $11,688 as per the Cost vs Value report we now suddenly end up with a profit of $3,184 on the project. This translates to an ROI of 27.2%.

Not too shabby if you ask me!

Cost of Holding
How often do you hear the phrase that time is money?  That’s because it’s true.

The same goes for when you’re trying to sell your home. The longer it takes the more money it will cost you.

A home improvement can improve the speed at which your home sells. This should be measured as part of the return on investment if you are planning to sell your home. The Cost vs Value Report doesn’t take that into account.

Every month that you shave off that time, is another mortgage payment and another set of utility bills saved. This is money in the pocket!

This is particularly relevant for those projects where the intention is the flip the house. The quicker you can offload it, the quicker you free up money that you can invest in the next property.

Tax Implications
Although this generally isn’t relevant for those that have lived in the property since a $250,000 to $500,000 capital gains tax break is given anyway for those that lived in the property in the last 3 out of 5 years prior to the sale.

However, it is for those that buy properties for just investment purposes with the intention of selling them at a later date.

Given that 36% percent of households rented according to the United States Census Bureau, a sizeable portion of those making home improvements are likely to be investors that have never lived in those properties themselves.

Although most home improvements aren’t tax deductible, they do generally allow you to increase your tax base which will likely lower the amount of capital gains tax you pay upon sale of the property.

For example, if you purchased a property for $300,000 and made $20,000 of home improvements to it, your tax base would be $320,000 ($300,000 + $20,000).

If you were to then sell that property for $380,000, you would only have to pay capital gains tax over the $60,000 which is the profit calculated based on your new tax base of $320,000.

This is definitely something you should take into account when making a home improvement and could have a significantly positive impact on the return of your home improvement!

Improvements that Reduce Your Expenses
Lastly are the improvements that add value to your home in other ways by reducing your monthly costs.

Improvements such as this include things like adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.

In addition to the money that you will save by decreasing your utility bill, you’ll also be able to apply 30% of the costs of these improvements as an income tax credit.

Even though we may not be talking big dollars here, these types of investments do add up and can make a significant difference over the long-term that may just turn your negative ROI project into a positive one.

The Cost vs Value Report Can’t Be Applied to Individual Properties

All these factors contribute to the fact that the Cost vs Value report can’t be applied to specific projects in a specific property.

It’s not a decision making tool.

In fairness to the folks at Remodeling that produce the Cost versus Value Report, they are the first to admit that.

In their own words, “The Cost versus Value Report provides an accurate snapshot of the national housing market, but it cannot be applied accurately to an individual modeling project for a particular home at a particular street address”.

So guys and girls remember… if you conduct a home improvement with the right motivations, do your research up front, use a style that is in demand, and make sure you watch the costs – you can more than recoup your investment through home value appreciation

 

I’m curious to know what you think. Leave a comment below and let me know whether you agree or not.

Posted in Selling Your Home
Dec. 9, 2016

HUD Announces Higher FHA Loan Limits for 2017

On December 1, 2016, the Department of Housing and Urban Development (HUD) announced that they would be increasing FHA loan limits for 2017. This change applies to most counties across the country. This means home buyers who use FHA loans will have more financing available, and possibly more properties to choose from as a result.

The FHA loan program is popular among home buyers who have limited funds saved up for a down payment. With this program, eligible borrowers can buy a house with as little as 3.5% down. The qualification criteria are a bit more lenient as well.

Higher FHA Loan Limits in 2017

At the start of December, the Federal Housing Administration (FHA) announced the agency's new schedule of loan limits. Due to an increase in housing prices, most areas in the country will see a slight increase in loan limits in 2017. These loan limits are effective for case numbers assigned on or after January 1, 2017, and will remain in effect through the end of the year.

In high-cost areas, the FHA national loan limit "ceiling" will increase to $636,150 from $625,500. FHA will also increase its "floor" to $275,665 from $271,050. Additionally, the maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $636,150. This amount is 150 percent of the national conforming limit of $424,100.

Due to changes in housing prices and the resulting change to FHA's "floor" and "ceiling" limits, the maximum loan limits for forward mortgages increased in 2,948 counties. There were no areas with a decrease in the maximum loan limits for forward mortgages though they remain unchanged in 286 counties.

FHA's minimum national loan limit "floor" is set at 65 percent of the national conforming loan limit of $424,100. The floor applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit.

Any areas where the loan limit exceeds the "floor" is considered a high cost area. The maximum FHA loan limit "ceiling" for high-cost areas is 150 percent of the national conforming limit. To find a complete list of FHA loan limits, areas at the FHA ceiling, areas between the floor and the ceiling, as well as a list of areas with loan limit increases, visit FHA's Loan Limits Page.

FHA calculates forward mortgage limits based on median house prices in accordance with the National Housing Act. FHA's Single Family forward mortgage limits are set by Metropolitan Statistical Area (MSA) and county. Loan limits for reverse mortgages are also calculated but these do not vary by MSA or county; instead, a single limit applies to all mortgages in the regardless of where they are originated.

Posted in Buying a Home
Nov. 30, 2016

Higher Loan Limits on the way for 2017

On November 23, the Federal Housing Finance Agency (FHFA) announced that it would be increasing conforming loan limits for 2017, for most counties across the country.

They are raising the "baseline" loan limit from $417,000 to $424,100. This is the first time federal housing officials have raised the baseline since 2006. The agency will also increase the conforming loan limits for "higher-cost areas" like San Francisco and New York City. This is being done in response to home-price gains that occurred during 2016.

Higher Loan Limits for 2017

According to the agency's November 23rd news release:

"The Federal Housing Finance Agency (FHFA) today announced that the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2017 will increase. In most of the country, the 2017 maximum loan limit for one-unit properties will be $424,100, an increase from $417,000. This will be the first increase in the baseline loan limit since 2006. In higher-cost areas, higher loan limits will be in effect."

For most counties across the nation, the new loan limit for 2017 will be $424,100. That's for a single-family home. There are higher limits for multi-family properties, such as duplexes and triplexes.

Conforming loan limits vary from one county to the next. You'll find a full list for all U.S. counties on LoanLimits.org.

What Is a Conforming Loan?

Here's a quick lesson in mortgage lingo, in case you're not familiar with these terms. A conforming home loan is one that meets or "conforms" to certain guidelines used by Freddie Mac and Fannie Mae. These two government-sponsored corporations operate in the secondary mortgage market, buying home loans from lenders and selling them to investors.

Fannie and Freddie can only purchase loans that meet certain guidelines, and the size is the most important criteria. In short, a conforming home loan can be sold into the secondary mortgage market, while a non-conforming "jumbo" loan cannot.

Jumbo Mortgages Still Available

Home buyers who need to borrow more than the conforming loan limit for their county still have options. They'll just have to use a jumbo mortgage. This is a home loan that exceeds the caps set by the Federal Housing Finance Agency, and therefore cannot be sold to Fannie Mae or Freddie Mac.

Jumbo loans are still widely available in the U.S., but the qualification criteria can be more strict due to the larger size and higher level of risk involved. Mortgage lenders often require larger down payments and higher credit scores for borrowers seeking these non-conforming loans.

A Response to Rising Home Prices

Conforming loan limits are based on median home prices. So when prices rise significantly over the course of a year, federal housing officials often increase loan limits. Sometimes they do this on a county-by-county basis, raising the limits for some areas while keeping them the same in other areas. This is what they did from 2015 to 2016. But this time around, they boosted the caps for nearly all counties in the U.S.

The nationwide increase for 2017 is significant, because it's the first increase in the baseline loan limit since 2006. This was done to keep pace with rising home values.

Posted in Real Estate News
Nov. 22, 2016

Buyers Beware of Rising Mortgage Rates

Buyers Beware: Mortgage Rates Jump Nearly 40 Basis Points

Are you in the market to buy a home? Will you need to use a mortgage loan to finance your purchase? If so, there's a recent trend you should be aware of. Nationwide, mortgage rates took a big jump last week (as reported on November 17, 2016). And this followed three consecutive weeks of increases.

According to the weekly market survey conducted by Freddie Mac, the average rate for a 30-year fixed home loan rose by nearly 40 basis points last week, compared to the week before. Thirty-year rates climbed to 3.94%. That's the highest they've been this year, since January.
Mortgage Rate Trends for November 2016

On November 17, Freddie Mac -- the government-controlled corporation that buys and sells mortgage loans -- announced that the average rate for a 30-year fixed-rate mortgage (FRM) shot up to 3.94%. That's an increase of almost 40 basis points, or 0.40%, from the previous week's average of 3.57%.

As a home buyer, you should pay close attention to these trends, because they affect your buying power. If rates keep moving along an upward trajectory, it could limit your options in terms of buying a home.

Here are the average rates from the latest market survey, in three loan categories:

* 30-year fixed-rate mortgage (FRM): 3.94%

* 15-year FRM: 3.14%

* 5/1 adjustable-rate mortgage (ARM): 3.07%

Just note that these are averages. The rate you receive on a home loan will vary based on several factors, including your credit score and the type of loan you are using.
Calling All 'Fence Sitters'

Mortgage rates have remained fairly steady through most of 2016. So this recent spike is somewhat surprising. The question is: Is this the start of a new and upward trend, or is it just a fluke? It's too soon to say. But experts are predicting a gradual rise in rates between now and this time next year.

In its latest survey, Freddie Mac's economic team stated: "If rates stick at these levels, expect a final burst of home sales and refinances [for 2016] as 'fence sitters' try to beat further increases…"

The Mortgage Bankers Association predicts that 30-year loan rates will rise above 4% during 2017. Here is their latest quarterly forecast for 30-year mortgage rates, issued in November:

    Q1 2017: 3.9%
    Q2 2017: 4.1%
    Q3 2017: 4.3%
    Q4 2017: 4.4%

If these predictions turn out to be accurate, home buyers who postpone their purchases until later in 2017 could end up paying more for a mortgage loan.

The takewaway: Current trends, as well as long-range forecasts, make a strong case for buying a home sooner rather than later.

Posted in Buying a Home
Nov. 21, 2016

Include a Home Warranty with sale

Five reasons to include a home warranty with your home’s sale

 

A pair of glasses and a silver pen sit on top of a contract.

When you put your home on the market, you’ll clean and de-clutter, and you’ll probably stage it with newer furniture and on-trend décor. But have you considered including a home warranty? It’s not always at the top of every seller’s list, but it can be a huge benefit to you. Here’s why:

It reassures your buyer

A home warranty gives buyers comfort—if something goes wrong with the systems and appliances of the home, they’re protected.

It gives you peace of mind

Having your air conditioning break while your home is on the market is one of the many unpleasant scenarios that can happen. Many home warranty companies include sellers’ coverage when a home warranty is included as part of the sale. Sellers’ or listing coverage is usually free, and will help you repair or replace systems or appliances that break down while the home is on the market. Such coverage is less comprehensive than a regular plan, so check what’s covered and what isn’t.

Your home may sell faster

A study done by the Service Contract Industry Council in 2014 found that homes with a home warranty as part of the sale spent 11 fewer days on the market than homes without a home warranty. If you want to sell your home fast, a home warranty can help.

Your home could bring a higher price

That same study found that listings with a home warranty sold for $2,300 more on average than homes without a warranty. Getting more money for the sale of your home is excellent, but it’s even more alluring when you look at the return on investment.

It provides a higher return on investment than many repairs

Most home warranties cost less than $600. Even if your sales price increase by only half the $2,300 average seen by properties with home warranties, you’re still way ahead. Compare that to the return seen by sellers who replace their front doors, buy a new garage door, or make similar upgrades and you’ll see that a home warranty usually brings a good return on investment.

What benefits have you seen from including a home warranty with the sale of a home?

Posted in Selling Your Home
Nov. 16, 2016

Offers and Counter offers when Buying a Home

Dealing With Offers and Counter-Offers When Buying a Home

When buying a home, you might have to deal with a counter-offer from the homeowner / seller. These back-and-forth negotiations are a normal part of the home buying process. But you need to be prepared for them. This article explains how to handle offers and counter-offers when buying a house.

Three Possible Outcomes of Your Initial Offer

There are three possible scenarios when negotiating the price of a house. When you submit your initial offer, the seller will likely do one of the following:

  1. Accept your offer with no other conditions or changes.
  2. Make a counter-offer by changing certain terms like the purchase price or closing date.
  3. Reject your offer entirely, without making a counter of any kind.

First-time home buyers often believe that the seller is obligated to make a counter-offer, at the very least. But that’s not the case. A homeowner can simply turn you down with no explanation, if they choose to. So keep this in mind as you try to negotiate the price.

Most sellers will either take option #1 or option #2. They’ll either accept the initial offer as it’s written, or sign a counter-offer back to you. After all, these are the only two ways to move the process forward.

Finding Common Ground

If the seller makes a counter-offer, it will probably be based on the price. If they counter with the original asking price, they are basically saying: “We are not willing to negotiate the house price with you.” If they counter with an amount that falls somewhere between the original list price and the amount you offered, it means they are willing to negotiate. They are trying to find middle ground.

What you do next will largely depend on two things:

  • The type of real estate market you’re in
  • How much you want the house

Before you start negotiating the house price with a seller, you need to have a maximum amount in mind. This is the amount you are willing to spend on this particular home. This number will be limited by your housing budget and your pre-approval amount (if you’re using a mortgage loan). But it’s also limited by the current market value of the house. After all, you don’t want to pay more for a home than it’s currently worth.

Support Your Offer With Data

Here’s another important negotiating tip. When you submit your offer to the seller, tell them why you are offering that amount. Your agent can convey this information to the listing agent, or directly to the homeowners. You don’t want the sellers to think you’ve pulled this number out of thin air. You’ll have a better chance of getting your offer accepted if you justify the amount. You can justify it by providing recent sales data that supports your offer amount.

Example: “We are offering $275,000 for this house based on the comparable sales data attached. We realize that this home has a larger lot and several interior upgrades, so we have offered an amount that is above the comparable sales to compensate for these factors. We feel this is a reasonable offer in the current market.”

Your agent can put this kind of statement on paper and submit it with your offer. If you’ve made a reasonable offer for the house, the listing agent would be wise to convince the sellers of this.

Of course, some people are simply unwilling to negotiate. If you encounter a home you feel is overpriced (based on comparable sales data), and the sellers refuse to come down in their asking price, it might be time to move on to the next house.

Posted in Buying a Home
Nov. 11, 2016

Sell As-Is, Not Recommended

We can think of several reasons why a homeowner would consider selling a home with problems, marketed in “as-is” condition. The most obvious, of course, is that there’s no money to perform the required work. This frequently happens in probate sales where the heirs inherit a home in need of work but lack the funds to put the home in market condition. As well, folks who need to relocate quickly for a job often just want the house off their hands so they can move on with their lives.

Although we understand why someone may need to sell a home as-is, we believe our clients need to know the possible ramifications of doing so. Let’s take a look at two reasons you might want to reconsider your decision to sell your home “as-is,” and what to do if you absolutely must.

1.You’ll have fewer qualified buyers if you sell as-is

When your home is advertised as a fixer, which is what most as-is listings are, you’ll partially drain the pool of buyers who can buy your home. For instance, since FHA-backed mortgages require that certain repairs be made before they’ll ok a loan, your buyer pool won’t contain many first-time buyers.

Then, those who are getting a conventional loan may be getting out of the pool as well since many conventional lenders balk at lending money for a home that needs significant work. Many conventional lenders will insist that certain items, such as a roof in need of replacement, be taken care of.

Then, there’s the fact that most buyers just don’t have the money to repair a home after moving in. Although your low price will attract the tight-budget buyer, the reality of the financial outlays after closing may prevent them from proceeding with a purchase.

Your buyer pool now contains mainly cash buyers and most cash buyers are investors – the most real estate savvy homebuyers. They’re out for a bargain and if you hope to sell your home at all, you may end up taking an offer for far less money than you’d imagined.

2.You won’t make as much as you hope

Today’s homebuyers say they want a home that they can move right into, stick their toothbrush in the holder in the bathroom and enjoy their new digs. So, why would a buyer want your home? When you consider this question, there can be only one answer: A buyer would want your as-is home because it’s cheap.

Depending on the extent of needed repairs, you will have to list your home for less than nearby homes that are in better condition. As mentioned earlier, a low listing price will bring out investors and everyone else looking for a bargain. Be prepared to get beat up over your price, regardless of how low it is, and to sell it for less than you’d hoped.

It’s quite possible that it may be more cost-effective in the long run to make the necessary repairs so that you can list at a higher price. This is something you should speak with your accountant about.

If you must sell as-is

We understand that certain home repairs may be financially out of the question for some sellers and they simply must sell the home in its current condition. Here are 3 tips to help:

Stage the home

Appearance matters more in real estate than most other industries. With attention to increasing the home’s curb appeal and some fresh paint and a good scrubbing inside, even the worst home will look better.

Most buyers will decide whether or not to view your home while shopping online, so paying attention to cosmetics makes for compelling listing photos. Sure, they’ll know that there is something wrong with the home (“as-is” advertises that), but if it looks ok, the perception will be that whatever is wrong with it can’t be that bad. Getting more people to view the home in person is the name of the game when it comes to selling quickly and for more money.

Consider a pre-sale home inspection

Sure, you have a good idea of what’s wrong with the home, but there may be more, or less, than you imagine. A pre-sale home inspection will give you the definitive answers you need and will go a long way in showing potential buyers that you’re earnest in your desire to be completely honest about the home’s condition.

Plus, if you supply the buyer with the inspection results before accepting the offer, you’ll be able to weed out those that will eventually back out, after they have their own home inspection.

Disclose everything

Protect yourself by disclosing all known issues concerning the home and the neighborhood. Yes, it feels as if you’re betraying yourself, but disclosure is important if you want to avoid running afoul of the law and winding up in court. Disclose Every. Last. Thing.

Posted in Selling Your Home