Real Estate Information

The first thing I tell my Buyers is to visit with a mortgage loan officer (or 2) to determine how much they can spend on a property.  Most of my clients can’t afford to pay cash and so it’s imperative to learn their spending limit and how the house payment will impact their budget.

I encourage my Buyers to obtain a Pre-Qualification Letter rather than a Pre-Approval.  What’s the difference?

• Pre-Qualification means the information you provide to the mortgage officer has been verified with the appropriate documents and a credit check. 
• Pre-Approval is usually just talking for 20-30 minutes with a mortgage officer with no proof of income, credit score, etc.  With the limited information and with no verification the lender gives his/her “best guess” of what the Buyer can afford.    

I believe the first choice, Pre-Qualification, is the only choice for 3 important reasons.

1. The Realtor will be able to concentrate on finding homes in the real price range. It’s a waste of everyone’s time and effort for a Realtor to show a Buyer houses for $250,000 if their real limit is $150,000.    

1. When an offer is made on a home the Seller will know they have a serious Buyer if the Buyer is Pre-Qualified.  That makes a huge difference in the ever important negotiation process.                    

1. The most important reason is the Buyer can have the peace of mind they need when looking for and buying a home.  The Buyer now knows his/her top limit.  If the Buyer’s top limit is $150,000 they can look for a home up to $130,000.  That way they have plenty of cushion to pay fees, moving charges and closing costs. 

Why is Your Credit Score so important?  Why do credit bureaus exist and why do they keep score of your credit usage and history?  Here are three reasons that directly affect us all:

• Credit Cards – banks could not issue these without knowing their RISK
• Debit Cards - banks could not issue these without knowing their RISK
• Checks – stores could not accept checks without knowing their RISK

Risk?  Simply put, banks and creditors need to know how likely you are to pay back the money you owe.  The more likely you are to meet your obligations the lower percentage rate you will pay.  If you have a low credit score instead of denying you a loan or a credit card banks will charge you a higher rate of interest.  However, if your credit score is really low they won’t risk doing business with you.

For mortgage or car loans your credit score makes a huge difference in what you pay every month. There is a fabulous chart at http://www.myfico.com/Default.aspx .

It gives you a real life example of what you will pay for a mortgage or car payment with your current credit score. 

• A person with a credit score range of 760 to 850 will pay $750 dollars a month in principle and interest for a $150,000 mortgage. 
• A person with a credit score range of 620 to 639 will pay $905 a month for the same $150,000 mortgage.  This is a dramatic difference and can make the difference of living the American dream of owning a home or not.

Get smart.  Clean up your credit score.  You deserve to get ahead in this life.  This is an important step in getting your life on track.

I’m often asked by Buyers how to get the best rate when shopping for a mortgage.  My advice seems to differ from most of the gurus I read on-line.  I have helped so many people secure homes and have learned some really important realities when looking for a mortgage.

1. Most gurus advise you to “shop around:”

It’s vital to have two (2) lenders give you an offer.  One lender should be a recommendation from someone you trust - for example, your family, friends or Realtor.  The second offer should come from the bank where you do business.  Be certain to stay local with your mortgage lender and stay away from long-distance or Internet lenders.  Why?  Because when you have a problem (and problems are inevitable) it’s vital to have someone local you can talk to face-to-face.  Also, it’s so important to understand all the charges on the mortgage.  As a Buyer it’s not possible to know your Internet lenders’ concept of ethics; whereas you have plenty of sources to learn a local company’s ethical practices.  Finally, Internet lenders pull your credit information so many times it actually lowers your credit score.

2. Know how Credit bureaus figure your credit score:

Here is a good rule of thumb to remember about how credit scores are figured. 

• Payment history – 35% 
• Total Amounts Owed – 30%
• Length of Credit History – 15%  
• New Credit – 10%

Type of Credit in Use – 10% (This is a wild card factor such as the types of credit lines

3. Therefore, forewarned is forearmed.  It’s important to:

• Pay bills on time.
• If mistakes occur on your credit report – get them fixed!             
• Pay down your credit cards.  Lenders want you to owe less than 50% of the credit limit.
• Be careful applying for new credit when shopping for a loan

Use only a reputable local lender and clean up that credit report so you can get the best rate on your mortgage loan.  You can help yourself and get the best rate and the best deal.

Everywhere I look color is beginning to pop out of the ground.  The forsythia is in bloom with its cheery yellow flowers. The daffodils in my garden have bright yellow tips. Lavender “Bright Eyes” along the sidewalk make me smile every time I see them.

Early April is probably too early for planting annuals here in Omaha.  The suggested time for putting those tender new plants in the ground is May 15 when all fear of frost is gone but usually I can’t wait that long. If you have a vegetable garden then April is not too early to begin planting root vegetables. It’s best to wait on lettuces. 

If you’re a homeowner then you should know that the curb appeal of your home has so much to do with your landscaping. It is a wise decision to invest in a few carefully selected and attractive shrubs, trees and a healthy lawn.  Then fill in with the color of flowers. It’s best to pick flowers that are native to the area. The lawn and garden expert where you buy your flowers can help you with a good selection.

The latest trend is to plant flowers of the same type and color clumped together – much like flowers found in nature.  Patches of tulips, petunias or salvia can make a bold statement as well as add beauty to your landscape. We have beautiful spring times in Omaha. You can add to that beauty and to the value of your home by tending your yard and garden.

It’s Spring! Time to roll up those shirtsleeves and get to work. Many homeowners are looking for great projects designed to enhance their lives as well as their homes. One of the best improvements I can recommend is adding a deck. This is a terrific way to increase the living space and the value of your home. In these beautiful warm months a deck is a place to enjoy nature, entertain family and friends and work on that tan.

A deck also dramatically improves the appearance of your home and increases its value at the same time. For approximately $10,000+ most homeowners saw an 85% return on the total cost of the deck projects. Begin by doing some vital planning. Ask yourself a few questions: Where are you going to build the deck? How large is it going to be? What materials will you use? Are you going to do the job yourself or hire someone?

It’s so important to check with local authorities to determine what permits and safety inspections may be required when building a deck. Hiring a reputable, professional contractor can save you hours of research. They are usually equipped with the right tools, information and contact to get the job done right.

This is my favorite time of year. I feel so energized and ready to tackle those tasks I’ve left undone during the cold winter months. I hope you feel the same way – let’s flex those muscles.

There are so many homeowners who wish to advertise they have an extra bedroom in the basement. Many are so disappointed when their realtor explains the finished room can NOT be counted as a bedroom. According to local law, a bedroom must have 2 main items - a closet and an egress window.

Egress windows have several requirements:

1. It must be located on an exterior wall.

2. It must open directly to the outside. It can not open into another room. An individual must be able to get directly to the yard, street, alley or court.

3. The actual opening must be 5.7 square feet. It was explained to me that a fireman fully equiped with fire-fighting gear must be able to get in easily through the egress window. This means the frame cannot be just 5.7 square feet but the actual opening must be that size.

4. The space from the floor to the sill must be no higher that 44 inches.

5. The window must be easy to open from the inside. An individual shouldn't need any special instructions to operate the window so escape is possible.

6. It is vital that you check with your local authorities to make certain you know all the requirements before you remodel the basement.

An extra bedroom can add a lot of value to a home. Make certain the room you create can qualify as a bedroom. Dont' throw away your precious remodeling dollars.

It is my pleasure to introduce you to a business associate of mine, Kevin Capece, with Farmers’ Insurance.  I’ve known Kevin for some time now and know him to be an excellent agent who is always looking for ways to protect his clients.  Kevin has agreed to let me share with you his Top 10 Ways to Save on Home Insurance.  Kevin can be reached at kcapece@farmersagent.com.

1).   Age of Home – If you have a newer home, you may be eligible to pay lower premiums. Also, if you have recently renovated your home and updated your heater, plumbing, wiring and roof, your insurer may now consider your homes age to be only as old as the most recent update on your home. Call your agent for the details.

2).   Blanket Endorsement for Jewelry – Insuring jewelry can be expensive if you list each item individually on your policy. Consider a blanket endorsement on your policy that will cover many items of jewelry up to a specified limit on the policy. Often there will be a specific limit per piece of jewelry in addition to the total amount covered. For example, the policy may insure all jewelry in the home up to $10,000 but no more than $2500 for any one piece of jewelry. Contact your agent for more details.

3).   Claim-Free – To be eligible for this discount you must be claim free for a period of time - Usually 3 or 5 years.

4).   Credit – Your credit plays a major role in determining what your final policy premium will be. Many insurers can no longer give you an accurate quote for a policy until they actually check it out. Insurers used to look at things like your loss or claims history and a few other factors to determine your rate. However, in recent years, insurers have added your credit as a major tool in evaluating what your final premium will be. Generally with these companies, a good insurance score (or good credit score) means a more favorable rate. This practice has gone on in the banking industry for as long as most folks can remember. The philosophy is that a group of risks with good credit in the same area will have fewer losses than a similar group in the same area with bad credit. In today’s insurance marketplace, good credit can mean lower policy premiums.

5).   Dwelling Coverage Amount – Review the dwelling coverage amount on your homeowners’ policy. You could be over-insured. Many insurers base this amount of coverage on the purchase price of the home. If the home is completely destroyed and must be replaced, the land will still be there and the insurer will be rebuilding from the ground up. The land value is often a big part of the purchase price of a home. Also, obtain the exterior square footage of your home, and call your agent to have he or she assess the correct replacement cost of your home. The insurer often obtains the square footage from you and if it is not accurate, your home could be over insured or even worse, underinsured. You want it to be just right. You bear the ultimate responsibility for insuring your home to the proper amount. The dwelling coverage amount is the single most important area of your policy to review with your agent. Call today. (402) 932-9630.

6).   Have Your Policy Re-Written – Many insurance companies periodically develop different rating plans and premiums for the same policies. If your policy was re-written with the exact same coverage in the new plan, your rate would likely be different in this newer rating plan. You could pay more or less in the new rating plan. Also, most companies will charge an extra premium for a claim and will continue to charge you until the end of the policy term. This could mean that you could pay significantly more than necessary if you had your policy re-written after the loss is over 3 to 5 years old. Often, there may be some disadvantages to having your policy re-written so check with your agent.

7).   Increase Your Deductible – Many policies carry a standard $500 deductible, but you can request a higher deductible such as $750, $1000 or higher and often save a substantial amount of money. By agreeing to be responsible for a bigger part of the total amount of the claim, the insurer will reward you with a lower premium. For many, this is one of the best ways to save money over time. Call your agent for all of your options.

8).   Rate Territory   - Most insurers develop rating territories or areas to help determine what premiums to charge you. You would expect to pay more if you live in a big city than if you live outside the city is an example of this. Check with your agent to make sure that you are being properly rated for the territory that you live in. Often, many rating territories have more than one zip code and even though your policy shows the correct zip code, you could be rated in the wrong county and paying the wrong premium! Call your agent today to explore this often over-looked option.

9).   Roof Type – Depending on what type of roof you have, you may qualify for different types of policies from the insurer. For example, if you have a flat roof on your home you may not qualify for the same type of policy as you would if the roof was pitched or an "A" shaped roof. Your roofing material could also be considered as well.

10).   Security System – If you purchase a security system for your home, almost every insurer will give you a discount. If your home alarm system is capable of notifying the police and/or the fire department directly should either be triggered, you will generally get a bigger discount for having both. Having either will generally give you a discount as well.

March is the month we welcome Spring and daylight savings Time.  As you set your clocks forward for Sunday please consider the following checklist for home maintenance.

1. The first thing you should do is make certain you have fresh batteries in your fire alarms and carbon monoxide detectors.  These are two items you don’t want to neglect.  It may mean the difference of life or death for your family.

2. Check your fire extinguishers.  They must be properly pressurized.  You can do this by looking at the gauge and making certain the needle is in the green section.   If you get any other reading it’s time to replace the extinguisher.  It may be less expensive to get the extinguisher serviced.  Find a dealer near you in the yellow pages.

3. It also a good idea to check out the gutters.  They are probably full of winter-time debris.  We are heading into the time of year for Spring rains so you want things flowing well.

4. This is a great time of year for interior painting.  Pick out a room that needs updating and get to work.  With your imagination and a good quality paint you can transform that tired room into whatever strikes your fancy.

 5. Check out your garden.  Protect the tender young plants that may be peeking out of the ground in your garden.  The nice weather may get you inspired to do some additional year clean-up.  Just keep in mind that the City of Omaha

will not begin collecting yard waste until the week of April 6, 2009.

6. Don’t’ forget to celebrate St. Patrick’s Day.  My Mom used to tint all our food green when I was a kid.  She was incredibly creative and came up with fantastically fun food.  For the adults why not put a drop of green in to your glass of beer. 

Finally, just enjoy March.  The days are longer and the smell of earth fills the air.  It’s a terrific month.

If you are a first –time homebuyer or have not owned a principal residence in the last 3 years, then “listen up.”   If you purchase a home and close on the property between January 1, 2009 and December 1, 2009, then you may be eligible for a tax credit up to $8,000.  The tax credit was implemented originally for up to $7,500 on homes purchased after April 9, 2008.  It was supposed to end as of July 1, 2009 but has been superseded by the new American Recovery and Reinvestment Act.

There are some other changes worth noting as well.  Although prohibited in the earlier version, purchasers who utilize revenue bond financing can now use the tax credit.  One of the biggest changes is there will be no repayment for purchases on or after January 1, 2009 and before December 1, 2009.  How great is that!

In the earlier version, if a home is sold before a 15-year repayment period ends, then the outstanding balance of the repayment amount is recaptured on the sale of the home.  In the new version, if you purchase and close on a home between January 1, 2009 and December 1, 2009, then the entire amount of the credit is recaptured on the sale only if the home if sold within 3 years.

If you are a first-time home buyer or someone who is buying a home after not owning one for 3 years then this credit may be yours.  It is so important to talk to your lender and your real estate agent so you can comply with all the rules.  Getting an $8,000 tax credit is a real incentive to BUY NOW.  In Omaha real estate prices good, there is plenty of inventory to choose from and that $8,000 tax credit is a sweet deal.

If you have questions then give me a call at 02-967-4251 or email me at Marie.Otis@cbshome.com.  I want to help you get the help you deserve.

Our new President announced a plan this week to save up to 9 million households from losing their homes.  The Homeowner Stability Initiative is designed to provide incentives to mortgage lenders to cut mortgage payments to no more than 31% of a homeowner's income.  this is huge because so many people have lost jobs and are taking lower paying substitutes just to put food on the table.

The second portion of the initiative will help those homeowners who find themselves "under water."  This term means that mortgagees now live in homes where the principle still owed on the mortgage is below what they paid for the home.  It is estimated that somewhere between 4 and 5 million (nearly 27 percent) of Americans find themselves in this position.

In addition, nearly $200 billion in losses faced by Fannie Mae and Freddie Mac will be covered by the U.S. Treasury Department.  These ambitious efforts may help stem the tide of the downward trend in our economy.

I caught an interview on TV this week with Roger Morrissey, the Douglas County Assessor.  He reported that the average sale price in Omaha residential real estate drooped over $5,000 in the last 2 years.  Roger went on to predict that the assessed value of the average home may drop another 3% in Douglas County.

It will be interesting to watch how this will all unfold.  Republicans are predicting that the economic recovery plan will be a huge bust that will saddle our children and grandchildren with enormous debt.  On the flip side, the President is quoted as saying, "that stemming the tide of foreclosures is key to turning around the recession-bound economy."

What do you think is going to happen?  Give me your feedback.  I'd love to hear what you believe will happen.  Use the comment section below or email me at Marie.Otis@cbshome.com or give me a call at 402-697-4251.