Archive for the 'Home Buyer Information' Category
Deed Restrictions Dos and Don’ts
March 2nd, 2010 categories: Home Buyer Information | views
If you are living in Spring Texas, you will find it hard to escape deed restrictions. As about 99% of our Spring Texas subdivisions have deed restrictions. The existence of deed restrictions means you will have someone telling you what you can and can’t do to your yard and house.
I know not everyone is fond of deed restricitons but since there are no zoning laws in Spring Texas, deed restrictions are about the only way to protect your home’s value from your neighbors bad tastes.
Since you can’t get rid of deed restrictions, you might as well learn how to live with them.
Deed Restrictions Dos:
- Do read the subdivision’s deed restrictions before you purchase a Spring Texas home. If you don’t like the subdivision’s deed restrictions, you can terminate your real estate contract. Although, you must terminate the contract during the option period to avoid a penalty.
- Do respond promptly to deed restriction violation notices. Ignoring the violation will not make it go away. It will only proceed to the next step which will be to turn the matter over to the lawyers. Once the lawyers are involved fees start racking up and your HOA is not going to kindly waive the fees for you.
Deed Restrictions Don’ts:
- Don’t paint your fence to match your house. Deed restrictions prohibit the painting of fences. Only a clear coat of varnish is allowed.
- Don’t run a pet rescue home. Deed restrictions place a limit on the total number of pets and species you can have residing at your home.
- Don’t turn your front yard into a tropical oasis. I know it may look great but check the deed restrictions first because they may specirfy only pines and oak trees in the front yard.
- Don’t run an auto shop in your driveway. Cars on blocks and in non-working condition is an eye sore in addition to being a deed restriction violation.
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Don’t flush your credit score down the drain
February 17th, 2010 categories: Home Buyer Information | views
Maintaining a great or even a good credit score is tough. Sometimes no matter how hard you try that pesky thing called life still manages to get in your way.
But if you want to buy a house in Spring Texas or any other place for that matter you are going to have to maintain a good credit score. As a good credit score will get you a home loan and a great credit score will get you a lower interest rate saving you thousands upon thousands of dollars.
So how do you maintain a good credit score? Probably the easiest way is to know what not to do. Spendonlife.com created this great chart (click on the chart to enlarge) that depicts how paying your bills late damages your credit scores. The later the payment the further down the drain your credit score goes.
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Sellers existing survey reduces home buyers closing costs
February 12th, 2010 categories: Home Buyer Information | views
The costs to close on a Spring Texas house are significant easily totaling several thousand dollars. Due to the magnitude of the closing costs, it is easy to understand why buyers are looking at every way possible to save money. One way you can save money is by using the sellers existing survey. How much can you save? Around $300 to $500 which is how much it will cost if you have to get a new survey for the house.
Both your lender and the title company have to agree to accept the sellers existing survey and the majority of time they will. But the majority of the time is not all of the time. Thus there are instances in which you will not be able to use the existing survey the seller has of his Spring Texas house.
The sellers existing survey may not be accepted if:
- after the date of the survey, permanent structures were added to the property such as a pool, gazebo, or a room addition.
- the survey contains an inaccurate description of the property such as the lot and block of the property is wrong.
- the survey is over 10 years old. This time frame of 10 years is not a hard and fast rule as surveys do not have a specified expiration date. In fact I have seen lenders and title companies accept surveys that were 30+ years old. But the lender or in this case the lender’s attorney has the power to reject a 10 year old survey and require you spend money on a new survey.
Bottom line – don’t get excited when you hear the sellers have an existing survey for the house because it doesn’t always work out that you will get to use it.
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Who decides the closing date?
February 8th, 2010 categories: Home Buyer Information, Home Seller Information | views
Who decides the closing date? Do the buyers? Do the sellers? Do the real estate agents? Does the loan officer?
In a residential real estate transaction there are many terms that will need to be negotiated between you and the sellers and the closing date is one of them.
As a buyer, you are probably ready to move-in to your new Spring Texas house tomorrow. As the sellers can’t seem to get their stuff, out of what you are already calling your house, soon enough.
As a seller, moving out tomorrow would be impossible because over the years you have lived in your home you have collected stuff. Not just a little stuff but a lot of stuff. All of it needing to be packed. Packing which certainly can not be done in just one day.
As a buyer, its impossible to try to predict what date the sellers would prefer to close on. Instead its just best to worry about what date fits your schedule. Later you can determine a date that will work for both yours and the sellers schedules.
Where to begin? To decide upon a date to close on, you need to ask yourself a series of questions:
- How long will it take your lender to process your loan? 30 days? 45 days?
- Do you have any upcoming trips that will have you out of town on certain days?
- Do you have to be out of your apartment or the place you are currently living by a certain date?
- Are you trying to bring the bare minimum amount of money to the closing table? If the answer is “Yes”, then you will want to close towards the end of the month to reduce the quantity of days you are charged interest on your home loan.
- In Spring Texas, closings take place at title companies. Closings only occur Monday – Friday. As the title companies are NOT open on Saturdays and Sundays nor on Holidays. So those days are out.
- When are you wanting to move in? If you are wanting to move in over the weekend, then ask for a closing date that falls on a Friday.
Review your answers to these questions and decide what date works best for your schedule then let the negotiations begin. Typically negotiating the closing date is fairly easy, especially if the sellers are truly wanting to sell their Spring Texas home. But there are other times when deciding upon a closing date turns out to be the most difficult term for buyers and sellers to reach an agreement on.
Read also:
- What is a sellers leaseback and should you get one?
- What stays and what goes with a Spring Texas house?
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New form, no e-file, and longer wait
February 3rd, 2010 categories: Home Buyer Information | views
If you purchased a home after November 6th, 2009 or are planning on purchasing a home this year and taking advantage of first time home buyers tax credit, there are a couple of changes you need to know.
New Form – form 5405 is the form you need to claim the first time home buyers tax credit. But if you purchased your Spring Texas home after November 6th, 2009, not just any form 5405 will do. You need to use the revised form 5405. You can download the revised form 5405 and its instructions.
No e-file- that’s right only snail mail will do. Due to six year old children claiming the first time home buyer tax credit, the IRS is requiring buyers to provide a copy of their HUD-1 settlement statement as proof that a house was actually purchased. Smart idea on our government’s part to require documentation. But not as convenient for you to claim the home buyers tax credit.
Longer wait- Due to the snail mail requirement and the IRS not being ready to process any first time home buyers tax credits until mid-February, your check will be showing up in your mailbox a couple of weeks later. The IRS typically processes refunds in 4 to 8 weeks but early filers should expect the processing time to be 7 to 11 weeks.
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Making sense of the new GFE and HUD-1
January 26th, 2010 categories: Home Buyer Information | views
Loan officers, escrow officers, and Realtors® have all been scrambling over the last 60 days to either implement or simply to understand the revamped GFE and HUD-1 settlement statement that went into effect on Jan. 1, 2010.
The purpose of the new GFE (Good Faith Estimate ) is to help make shopping for a home mortgage easier for borrowers and the purpose of the new HUD-1 (Housing Urban Development -1 settlement statement) is to make comparing the GFE to the settlement statement easier. Both really good things for borrowers and changes that were long overdue.
The new GFE is a huge improvement over its predecessor and it should make it easier for borrowers to compare the loans terms amongst various lenders.
What was wrong with the OLD GFE that the NEW GFE fixes?
1. Standardization. Previously the GFEs provided by lenders did not look the same making it difficult … if not impossible to compare GFEs from different lenders.
2. Identification of fee originator. The old GFE did not identify whether a fee was charged by the lender, the title company, or the insurance company. If lender 1 estimated lower third party charges than lender 2, you were lead to believe that you would be spending less money by using lender 1. As a borrower you were left trying to make decisions based upon misleading information.
3. Lender charges reduced to two items. Its a whole lot easier to identify the bottom line or the bottom number when all of the lender’s charges are rolled up into just two line items. Previously you had a list of 8 to 10 separated out charges which would be okay if Lender A called his charges the same as Lender B but that was not case. Lender A would call it a processing charge and Lender B would call it an administrative charge.
The amount of the lenders charges on the GFE have to match exactly to the HUD-1 / closing statement. They can not change.
4. Terms of loan are front and center. The old GFE did not identify if the interest rate on a borrowers loan could increase, if the loan has a balloon payment, or if there was a prepayment payment. These are all identified now on page 1 of the GFE in the Summary of your loan section. Below is an example.
The GFE does freeze the origination charge but it does not commit the lender to the rates and points shown on the GFE. The rates and points on the GFE are not final until they are locked by the lender. If the loan has been locked when the borrower receives the GFE, the GFE will show the lock period of usually 30 to 60 days. Read the rest of this entry »
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Sellers contribution to buyers closing costs slashed 50%
January 22nd, 2010 categories: Home Buyer Information | views
This week the FHA announced changes for FHA home loans. The good news is the changes were not as drastic nor potentially devastating to the housing industry as what they could have been.
In a nutshell, the changes which will become effective sometime this summer are:
1. Maximum seller contribution to buyers closing costs reduced from 6% to 3% of the sales price. Of the three changes to FHA home loans, the reduction in the amount sellers can contribute to a buyers closing costs has the biggest impact. But even the impact of this change is going to be small.
A few years ago, it was common practice for buyers to essentially roll their closing costs and prepaids into their loan but these were the good old days. With the extra scrutiny on appraisals, buyers are no longer able to add the 4% to 5% in closing costs and prepaids on top of the sales price and still have the house appraise.
2. Upfront Mortgage Insurance Premium raised from 1.75% to 2.25%. The 0.5% increase will be a small increase in a home buyer’s monthly payment. For example on a $150,000 loan the $0.5% increase would be $750. The Mortgage Insurance Premium can be added to the loan amount.
So at today’s interest of 5%, an increase of $750 in the loan amount would increase a home buyer’s monthly payment by $4.03. Less than the cost of a combo meal at the majority of fast food restaurants.
3. If a borrower’s FICO score is below 580, the borrower would be required to put 10% down instead of 3.5%. Requiring borrowers to have a higher credit score to qualify for a minimum down payment of 3.5% is going to be of moot impact. The majority of lenders already require borrowers to have a minimum credit score of 600 or 620 to qualify for a FHA home loan. Even if the borrower was willing to put 10% down there are very few lenders who are willing to give him a loan.
If you are going to be a first time home buyer and planning on getting an FHA loan what does all these changes mean to you?
If you are planning on buying before summer, these changes will not impact you. The changes would have been made after you purchased your home in Spring Texas.
If you are planning on buying a home after spring, then you better be ready to bring more money to the closing table. Because the sellers will only be able to contribute a maximum of 3% to your closing costs and prepaids which will leave you footing the tab for the remaining 1% to 1.5%.
Read also:
- How do damage points affect your FICO credit score?
- First time home buyers tax credit, what is it, how much is it, and when does it expire?
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How do damage points affect your FICO credit score?
January 13th, 2010 categories: Home Buyer Information | views
Over the years, the secret behind how your credit score is calculated and how different “what ifs?” affect it have been guarded better than the Bush’s baked beans recipe . That is until recently as FICO has shared how different “what if?” scenarios can affect your credit scores .
Did you max out your Macy’s card over Christmas? Expect a credit drop of 10 to 45 points. Did you get behind and had to make a 30 day late payment? That mis-step just cost you a whopping 60 to 110 points.
What I found most interesting about the damage points is how financial mis-steps are tougher on people with great credit scores. In a few years there will be less people with great credit scores and a lot more with only decent credit scores because the FICO credit rating system makes great credit scores tougher to keep.
I have been fielding more and more questions about credit and home loans lately. The questions are coming from both buyers and sellers. The two main questions are “Are buyers still able to get loans?” and “Are the lenders requiring higher credit scores?”. The answers to both these questions are “Yes”.
Lenders are still lending money and loans are still available. The documentation and verification process is more stringent than it was a couple of years ago. Credit scores have become more important too. A couple of years ago, a borrower could get a loan with a 580 or maybe a 560 credit score. That is not the situation today. If you need a loan in order to buy that house in Spring Texas you want, you are going to need a minimum of a 620 credit score.
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Water costs on the rise …… AGAIN!!!
January 11th, 2010 categories: Home Buyer Information | views
That’s right again! Last summer, the cost of watering my Spring Texas yard increased and I wrote a post about it titled “Are the days of cheap water gone?”. The answer to the question was Yes. The portion of my water bill identified as Regional Water Authority had increased from $0.99 to $1.50 per 1,000 gallons. An increase of 51% . Now, $0.51 doesn’t sound like a lot but considering my average water usage during the summer months is 26,000 gallons that $0.51 increase meant my monthly water bill increased by $13.26.
But that was last summer’s rate. On January 1st, 2010, the Regional Water Authority groundwater pumpage fee increasedfrom $1.50 to $1.75 per 1,000 gallons. An increase of 16%. And when my MUD converts to surface water in the early part of 2010 the Regional Water Authority fee will increase to $2.20 per 1,000 gallons. An increase of $0.70 or 47% over last summer’s rate.
Thus I can anticipate the Regional Water Authority portion of my water bill to be $57.20 this summer instead of the $39.00 in the summer of 2009. In addition to the Regional Water Authority charge on my water bill, there is a charge for water, sewer, and Texas Comm Environ Quality.
Unfortunately there is absolutely nothing I can do about the rate increase. As the reason for the rate increase is to pay for the infrastructure constructed by the North Harris County Regional Water Authority (NHCRA). The NHCRA was created to comply with mandates to reduce our dependence on groundwater. Thus the NHCRA laid infrastructure to connect our MUDs with Lake Houston for a source of surface water.
We have just reached the first mandated deadline of January 1, 2010 that requires 30% of our water to come from surface water. In 2020, 70% of of water is mandated to come from surface water and by 2030 the surface water requirement increases to 80%.
Since the days of cheap water will soon become a distant memory, it’s time we all begin implementing ways to conserve water. Here’s a good list of 100 ways to conserve water to get you thinking.
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8 ways for homeowners to save money
January 8th, 2010 categories: Home Buyer Information, Home Seller Information | views
Did the holidays drain your bank account? If so, here are some tips to help you save money on the costs of homeownership this year.
1. Claim all your real estate tax exemptions - one of the easiest ways to reduce the taxes on your Spring Texas home is to claim the homestead exemption offered by the state. Go to the Harris County or Montgomery County appraisal district websites to see what exemptions are currently being applied to your account and to determine if you are eligible for any additional exemptions such as the over 65 or disability exemption.
2. Check the settings on your programmable thermostat - Adjust the heat settings to lower temperatures while you are at work and at night. Turning your thermostat down 10° – 15° for 8 hours will reduce your heating bill by 5% to 15% a year.
3. Shop your kilowatt hour rate – In Texas, electricity is deregulated giving you more than one choice of provider. Go to Powertochoose.org to compare the rates of the electrcity providers that service your area. Last summer I changed our electric provider and reduce our rate by 30%.
4. Install insulation or a radiant roof barrier - If your home is more than 5 years old there is a good chance it was not built with a radiant roof barrier. Installing a radiant barrier which can be done in existing homes will lower the temperatures in your attic and lower your cooling bill by 5% to 15%.
5. Eliminate unnecessary water usage - Last summer, the cost of water in Spring Texas increased and it increased again on January 1, 2010, and it is going to increase again by the end of March. Our days of cheap water are gone and its time to get serious about conserving water. By setting your sprinkler systems to water during the early morning hours or late evenings you will be increase the effectiveness of your watering and be able to reduce your watering times.
6. Review your homeowner’s insurance policy – Call your insurance agent and review your homeowners insurance coverage and deductibles. Next call 2 or 3 other insurance agents to get quotes for comparable levels of coverage. The rates for homeowners insurance varies greatly from company to company. You may be surprised how much you can save by changing the homeowner’s insurance companies.
7. Replace older inefficient appliances – If you have an old refrigerator or a washer and dryer that you have been meaning to replace this could be the year for you to do it. Due to the American Reinvestment and Recovery Program, you will get an additional incentive / rebate ranging from $45 to $1,600 for replacing old appliances with qualified energy efficient appliances. Not all of the details of the program have been released but the rebate is only available for purchases made from April 16 to April 25, 2010.
8. Unplug and turn off - When you leave a room turn off the lights and the television. My Dad instilled this money saving practice into us when we were very young. As I don’t think nothing made my Dad as mad as coming into an empty room and seeing the lights and television on. In addition to turning off the lights and television, you should turn off the home computers and printers when not in use.
Unplug the toaster oven, coffee maker, toaster, electric can opener, and clock in the spare bedroom. All of these still use electricity even when they are not in use.
If you have a great way to save money on the costs of homeownership, please share it with us by adding it in the comments section.
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