7 Steps to Take Before You Buy a Home

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Exterior of tudor house
By doing your homework before you buy, you’ll feel more content about your new home.

Most potential home buyers are a smidge daunted by the fact that they’re about to agree to a hefty mortgage that they’ll be paying for the next few decades. The best way to relieve that anxiety is to be confident you’re purchasing the best home at a price you can afford with the most favorable financing. These seven steps will help you make smart decisions about your biggest purchase.

1.  Decide how much home you can afford.

Generally, you can afford a home priced two to three times your gross income. Remember to consider costs every homeowner must cover: property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care if you plan to have children.

2.  Develop your home wish list.

Be honest about which features you must have and which you’d like to have. Handicap accessibility for an aging parent or special needs child is a must. Granite countertops and stainless steel appliances are in the bonus category. Come up with your top five must-haves and top five wants to help you focus your search and make a logical, rather than emotional, choice when home shopping.

3.  Select where you want to live.

Make a list of your top five community priorities, such as commute time, schools, and recreational facilities. Ask a REALTOR® to help you identify three to four target neighborhoods based on your priorities.

4.  Start saving.

Have you saved enough money to qualify for a mortgage and cover your down payment? Ideally, you should have 20% of the purchase price set aside for a down payment, but some lenders allow as little as 5% down. A small down payment preserves your savings for emergencies.

However, the lower your down payment, the higher the loan amount you’ll need to qualify for, and if you still qualify, the higher your monthly payment. Your down payment size can also influence your interest rate and the type of loan you can get.

Finally, if your down payment is less than 20%, you’ll be required to purchase private mortgage insurance. Depending on the size of your loan, PMI can add hundreds to your monthly payment. Check with your state and local government for mortgage and down payment assistance programs for first-time buyers.

5.  Ask about all the costs before you sign.

A down payment is just one home buying cost. A REALTOR® can tell you what other costs buyers commonly pay in your area — including home inspections, attorneys’ fees, and transfer fees of 2% to 7% of the home price. Tally up the extras you’ll also want to buy after you move-in, such as window coverings and patio furniture for your new yard.

6.  Get your credit in order.

A credit report details your borrowing history, including any late payments and bad debts, and typically includes a credit score. Lenders lean heavily on your credit report and credit score in determining whether, how much, and at what interest rate to lend for a home. The minimum credit score you can have to qualify for a loan depends on many factors, including the size of your down payment. Talk to a REALTOR® or lender about your particular circumstance.

You’re entitled to free copies of your credit reports annually from the major credit bureaus: EquifaxExperian, and TransUnion. Order and then pore over them to ensure the information is accurate, and try to correct any errors before you buy. If your credit score isn’t up to snuff, the easiest ways to improve it are to pay every bill on time and pay down high credit card debt.

7.  Get prequalified.

Meet with a lender to get a prequalification letter that says how much house you’re qualified to buy. Start gathering the paperwork your lender says it needs. Most want to see W-2 forms verifying your employment and income, copies of pay stubs, and two to four months of banking statements.

If you’re self-employed, you’ll need your current profit and loss statement, a current balance sheet, and personal and business income tax returns for the previous two years.

Consider your financing options. The longer the loan, the smaller your monthly payment. Fixed-rate mortgages offer payment certainty; an adjustable-rate mortgage (ARM) offers a lower monthly payment. However, an adjustable-rate mortgage may adjust dramatically. Be sure to calculate your affordability at both the lowest and highest possible ARM rate.

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Dirty Secrets in your Home

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dirty secrets8 Dirty Secrets in Your Home

In denial about the crud that’s festering in the nooks and crannies of your home? The maintenance and cleaning pros we talked to say these eight jobs are among the grossest — and among the most important. We have defined 8 Dirty Secrets in everyone’s home, and one job could even save your life.

Deep breath …

1. Cruddy Undersides of Rugs

Look under your area rugs for a nasty surprise — a sea of grit and dust — despite regular vacuuming.

What to do:

  • Move furniture, fold over the rug, and vacuum dirt and dust from its underside. Sweep and mop the floor, too.
  • While you’re under the hood, check the rug’s condition. If there’s no staining or discoloration, a good floor cleaning and vacuuming of the rug’s underside is enough.
  • If pets, kids, or wine have left their mark, invest in a professional cleaning. A pro will run between $1.50 to $3 per square foot of rug, depending on the type of rug. Delicate natural fibers are usually more costly to clean than synthetics.

2. Disgusting Disposal

Your kitchen has more germs than even your bathroom. And your garbage disposal and its splash guard flaps just might be the most disgusting place in the house — slimy, smelly, and befouled with old food.

What to do:

  • Scrub the underside of the rubber flaps with an old toothbrush and warm, soapy water.
  • Pour a 1:1 ratio of white distilled white vinegar and baking soda down the drain. Let it sit overnight and flush with boiling water to sanitize.
  • Toss frozen cubes of white vinegar (just freeze it in an ice tray) down the disposal while it’s running. This will sharpen and sanitize the disposal’s grinding blades.
  • Freshen up the drain with slices of lemon or other citrus fruit. Peels are OK, but if you have fruit to spare, the citrus acids will help disinfect and freshen.

3. Greasy Kitchen Vent Hood

Your range vent hood works hard to absorb smoke, steam, and grease. Just like you change air filters to extend the life of your HVAC, you should clean the vent filter. Not only will this make the vent more efficient, it’s a safety measure. Should you have a grease fire, a greasy hood and filter can spread the fire into your home’s duct work.

What to do:

  • Remove the hood filter according to directions for your vent hood model. If you don’t have the paper manual anymore, search online for a copy.
  • Soak the filter in a kitchen-grade degreaser.
  • Once most of the grease has dissolved, rinse the filter with soapy water.
  • While you’re soaking the filter, clean the greasy interior of your vent hood.
  • Use a kitchen-grade degreaser for the hood like the one you’re soaking the filter in.
  • Wipe the hood’s interior with a sponge or rag.

4. Crumby Kitchen Crevices

No matter how spotless your kitchen surfaces are, crumbs, morsels, and drips of stuff have fallen into the crannies between appliances and countertops, tempting bugs and vermin.

What to do:

  • For appliances with a bit of ground clearance, like a refrigerator, use the vacuum crevice attachment to suck out the yuck.
  • For appliances with less room to maneuver, attach microfiber cloths to a yardstick with rubber bands. Slide and grab under and between appliances.
  • Sneak an old-school feather duster between counter cracks or under appliances. Get one with an extra-long handle ($15 to $25) or use a flexible duster specifically designed to slide under appliances.

5. Grimy Fans and Ceilings

Dispatching the out-of-sight, out-of-mind dust (sloughed-off skin cells, dust mites, and outdoor allergens) that lives on ceiling fans and light fixtures means better indoor air quality and fewer allergy problems.

What to do:

  • Dampen the inside of a pillowcase and slide it over each ceiling fan blade. As you slide it off, run your hands along the sides of the blade to wipe up dirt and dust so the dreck doesn’t rain down on you. Get a spotter if you’re balancing on a ladder or chair.
  • For less-dusty ceiling fans, use a microfiber duster that’ll grab the blades. ($7 to $20)
  • For oily or grimy buildup on ceilings, especially in the kitchen or bathroom, run a flat mop tool with a microfiber or soap-cloth attachment along the ceiling. Dish soap will do nicely.
  • Remove light shades or covers from ceiling fixtures to wipe out dust and bugs. But turn the light off first.

6. Grungy Toilets

You’re not getting down-and-dirty with your toilet until you scrub where the commode meets the bathroom floor.

What to do:

  • Check that the caulk at the base of the toilet is sealing the area. If it’s worn, remove the remaining caulk with a utility knife. Then re-seal it. For extra germ-fighting, choose a caulk with Microban, which offers antimicrobial protection.
  • Slide a feather duster behind the tank to brush off any dirt or dust, and use a sponge or damp microfiber cloth to scrub all the way around the porcelain base.

7. Debris-Filled Crawlspace

No one wants to crawl around under the house — except bugs and rodents. If you suspect critters are playing house, skip the DIY and consult a pro. Otherwise, it’s a good idea to check your crawlspace annually to check for water penetration and clean out debris.

What to do:

  • Wear personal protective equipment, such as coveralls, a dust-mask, goggles, and gloves.
  • If you see mold, don’t disturb it. Call a professional mold remediation company.
  • If you don’t see mold, check your vapor barrier for holes, deterioration, or uncovered areas. If you’re handy and comfortable with working in cramped crawlspace conditions, you can fix it yourself with supplies from your local hardware or home store. Otherwise, call a handyman. If the problem seems more extensive (major holes or large uncovered areas), call a foundation specialist.
  • Make sure there’s no standing water on top of the vapor barrier. That could mean water is coming from leaking pipes or gutters. It’s a recipe for mold and rot. Call a pro who specializes in foundation or crawlspace work pronto.
  • Push out trash through the nearest vent or access door. When you go outside to collect the debris, secure vents and doors so nothing else will blow, crawl, or slither in.

8. Linty Dryer Vents

This is one of the most important dirty jobs, because cleaning your clothes dryer’s lint trap and vents will extend its life, improve its efficiency, and save your life. Clothes dryers cause more than 2,900 structural fires, injuring 100 and killing 5 people on average each year. “Failure to clean” is the leading contributing factor to these fires.

How to prevent dryer fires.

What to do:

  • Use a dryer vent cleaner (about $15), a long, flexible, thick metal cord that snakes through the dryer vent’s dark corridors, to sweep out lint and dust.
  • Use your vacuum’s crevice tool to suck out hangers on in the lint trap.
  • Vacuum underneath and around the back of the dryer to clear out any remaining lint colonies.

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Related: The Best, No-Sweat Cleaning Tips

Getting rid of the grossest stuff in your home
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Decorating Mistakes – Atlantic RE Brokerage

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Decorating Don'ts

Hey, we know: Moving into a new home is exciting. Like, obsess over decor blogs and catalogs, binge-watch HGTV for eight-hour stretches, find ways to interject phrases like “open kitchen shelving” into everyday conversations .exciting. So it’s understandable that you’re dying to start filling every corner with stuff as soon as you’ve unpacked your last box. Beware: Time and again, interior designers see overeager new homeowners make the same mistakes when furnishing their home. Big mistakes!  Read all about these Decorating Mistakes and tread carefully into your new space.

Mistake No. 1: Buying everything at once

Of course, you want to make those empty rooms look like home, sweet home, pronto. So you whip out your laptop and go on a mad room-by-room shopping spree for every stick of furniture from coffee tables to your canopy bed. 

But Mark Clement of MyFixItUpLife.com urges a completely different strategy: “Stop, sit down, get out a piece of paper, and plan.” Great decorating, he says, is about taking your time to think through the rooms. Make a list of what you need to furnish the whole house; then focus first on the two to three most important rooms—generally the more exposed parts of the house such as living room, kitchen, and family room. From there, proceed at a pace where you’re certain you love (or at least deeply like) each purchase you make.

It really is OK to take up to a year to decorate a new home. You’re going to be living there for a while, remember?

Mistake No. 2: Decorating around a legacy piece

It might be your mother’s armoire or that overstuffed chair your husband bought when he was still single, or maybe it’s a bookshelf you paid a ton of money for and wouldn’t consider tossing. Regardless, trying to decorate around some of these pieces will only cause you grief. Odds are they’ll push you into a certain layout or color scheme—even one that might be completely wrong for you or your new home.

I’ve personally been saddled with two wide, black Barcelona chairs for the past decade, creating a living room motif that is simply too dark and cluttered for the space. (Welcome to my pain.) What I should have done, according to experts, is place them in a different context (a bedroom, perhaps), sold them, or put them out on the street. Hello, Goodwill? 

Mistake No. 3: Trusting your ‘eye’ rather than a tape measure

Professionals know that measuring accurately is a critical step in design.  “Measuring a space is imperative before you purchase anything,” says Homepolish designer Will Saks. It’s not just a question of whether a piece of furniture will fit, but how it will look sitting there. “You need to understand the dimensions of a space so the scale will feel balanced,” Saks adds. 

Everything needs to be proportionate to the architecture of the room. “While a large, overstuffed Chesterfield might look great in the store, in a tiny apartment it might end up looking like a fat guy in a little coat,” says Saks.

And always remember to measure doorways and hallways before purchasing large pieces. There are few things more soul-crushing (or, for the delivery guys, more backbreaking) than lugging a sofa up six flights of stairs only to discover it doesn’t fit through the doorway. Most companies will give you the minimum clearance you need for delivery, but it’s up to you to ensure that it will truly fit. In most cases, it’s the height of a sofa that is the key measurement, not the width or depth.

Mistake No. 4: Cramming rooms like a clown car

Take a deep breath: It’s OK to have some empty spaces and walls. You want to be able to move around freely without having to hurdle a cocktail ottoman. Granted, while Saks maintains that “how much furniture you decide to put in a space is completely dependent on the aesthetic you want to achieve,” if you’re going for a more sleek look, stick to a few key pieces in a room to create the feeling of openness. The same goes for artwork—one large frame can create an art gallery feeling. 

Mistake No. 5: Looking like a page from a catalog or decor mag

Ah, it all looks so great in print, but in your home, it’s a different story.

“I know it’s tempting to want to buy everything all at once and from the same place—those catalogs and stores are styled so well,” says Saks. “But refrain from doing so. To me, the most interesting designs are the ones that are aesthetically mixed.”

His tips: Incorporate vintage or one-of-a-kind pieces into your space to make it feel personal and curated. Pair that spanking new sofa with a beautiful, vintage credenza. Shop for accessories and artwork on Etsy and at flea markets so that your home feels unique. Because as nice as catalogs look, ask yourself this: Do they look like a home? Like your home? 

Rosie Amodio is a writer/editor who has written for brands such as Self, InStyle, Wetpaint, and The Nest. A native New Yorker, Rosie is obsessed with NYC real estate, though she dreams of living on the beach in Southern California.

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Rent or Sell – Atlantic RE Brokerage

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sell or rentShould I Rent or Sell My House?

By: Dona DeZube

When it comes to deciding whether you should rent or sell your house, are you worried you’ll make the wrong financial moves? Here’s how to make the right call.

When your current home no longer suits you, selling it is a popular option. But in some cases, turning it into a rental home might make more sense.

” decision, including:

  • Your financial situation.
  • Local market conditions for rental homes.
  • Your future housing plans.
  • Your tolerance for being a landlord.
  • State and federal income taxes.
  • Current and projected home prices.

Other factors to consider include:

Is Your Move Permanent?

Going away for a few years and planning to come back to the area? It may be cheaper to rent your house and move back in when you return, rather than paying sales commissions to sell your current home and purchase of another one when you get back.

You’re Being Transferred, But You Are Likely Coming Back

Suppose you have owned and lived in your home for two or more years but are now being transferred to a different city temporarily, after which you plan to return. You can rent your home for up to three years without losing the chance to sell it with no capital gains tax. So long as you owned and lived in the house for two of the five years prior to the sale, any capital gain on the sale can generally be excluded.

Therefore, by turning your home into a rental, you keep the option to move back in when you return, or sell it and avoid paying capital gains tax on any gain you might have.

Can You Rent Your Home for Enough to Cover the Mortgage Payment and Expenses?

If you can, keeping your house can be a smart way to help fund your retirement. Each month your tenants pay rent. You likely won’t pay tax on that income if you have enough expenses to offset it (like mortgage interest and repair costs).

When you finish paying off your mortgage or once you retire, you can sell the house and convert your equity into a lump sum, or continue renting it and collecting income during your retirement.

Do You Need More Tax Deductions?

When you rent your home instead of selling, you get to depreciate it for tax purposes. In most cases, you divide the amount you paid for the house, plus the cost of major improvements (less the value of the land) by 27.5 (that’s how many years the tax law says a house must be depreciated) to arrive at your annual depreciation.

For example, if you paid $100,000 for the house, and the portion allocated to the land is $20,000, you get to deduct $2,909 in depreciation annually ($80,000/27.5). Along with this, you can deduct other expenses, such as property taxes, repairs, and community association fees.

You Think Home Prices Are Going to Rise Over the Next Five Years

Even if your rental income doesn’t cover all your expenses (mortgage, property taxes, repairs, etc.), you might make up that loss if your home’s value rises before you sell it.

Say your home is worth $100,000 today and your expenses are $1,000 a year more than the rent you can collect. Over 10 years, you’ll lose $10,000 ($1,000 x 10 years), but if your home sale nets you more than $110,000, you’ll make money despite those annual losses. Your annual losses might be tax deductible, saving you money on your tax bill.

What’s Your Home’s Condition?

Renters, more so than buyers, can be willing to overlook outdated home fixtures because renters know they’re just passing through your home, not owning it.

If you don’t have the money to invest in improvements and your home’s fixtures scream 1970s (and not in a good, retro chic way), renting may be the better choice.

You Need the Profit From Selling Your Home to Fund Your Move-Up Home

If you need a different home and must sell your current home so you can use the equity as a downpayment, you might want to sell your home vs. renting it.

If you don’t need all the equity in your home for your downpayment, you might be able to take out a home equity loan or refinance into an investor loan and use the loan proceeds as your downpayment, and still make your home a rental.

You Freak Out About Condition and Panic Over Repairs

When someone lives in your home, they can scuff the walls, burn the countertops, and forget to water your prized shrubberies. If you can’t live with that wear and tear, sell rather than rent your home.

Becoming a landlord usually means you still have to maintain your house. You’ll get the bills when the plumbing springs a leak or the refrigerator dies. If making DIY repairs is beyond you and paying for upkeep is going to cause you to panic, opt to sell your house vs. renting it to save your sanity. You can save many of these headaches by using a property manager, but this, of course, will cost you.

Can You Evict a Tenant Who Fails to Pay?

If you wouldn’t have the heart to force out a renter who didn’t pay, you shouldn’t become a landlord — or if you do become a landlord, plan to have a pro manage your property.

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Which listing price is better – $200K or $199K?

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BOCA RATON, Fla. – Aug. 10, 2016 –Which listing price is better – $200K or $199K? – For real estate agents, it’s an age-old question: Is it more effective to list a home for a round number, such as $200,000, or is it more effective to make the first digit smaller and list a home for $199,000?

According to a study done by Florida Atlantic University (FAU), the $199,000 list price tends to be better for a seller. 199900The results were published in the Journal of Housing Research – an official publication of the American Real Estate Society (ARES).

“These findings will help real estate brokers and sellers of homes develop more informed listing and marketing strategies to better suit sellers’ needs,” says Ken Johnson, Ph.D., ARES publication director, real estate economist at Florida Atlantic University’s College of Business and co-developer of the Beracha, Hardin and Johnson Buy vs. Rent Index.

The study looked at 1,000 buyers in Virginia and a pool of more than 370,000 listings. The researchers were able to determine the impact of “rounded pricing” listing strategies versus “just below pricing” listing strategies by looking at the results following a sale.

“Our study suggests that by using the just-below pricing strategy sellers can price their home slightly higher without driving away potential buyers,” says Eli Beracha, Ph.D., of Florida International University, who conducted the study with Michael J. Seiler, Ph.D., of The College of William & Mary.

Part of the key rests on how sellers price the home in the first place. They study found that just-below sellers tend to look at actual value and raise the asking price higher, but only to a point below a round number. Sellers who chose a round number in the first place tend to price their home closer to actual value.

“On average, buyers are more attracted to a house priced at $199,000 than to a house priced at $200,000, and it appears that just-below pricing works out favorably for sellers in terms of their bottom line,” Beracha says. “Based on our research, the just-below pricing strategy yields a selling price that is, on average, roughly 2.5 to 3 percent higher – $5,000 to $6,000 on a $200,000 house – compared with a rounded pricing listing strategy.”

While residential real estate agents widely disagree on the appropriate pricing strategy to use when listing residential real estate for sale, the researchers found that homebuyers more often prefer homes priced using a “just below” pricing strategy. This preference allows sellers to list their home for a higher initial listing price.

On the other hand, rounded priced homes typically spend less time on the market and their selling price is closer to the listing price that just-under priced homes. Overall, however, the just-below pricing strategy outweighs the lower discount and shorter time on the market associated with similar rounded-priced strategy homes, according to FAU.

“We tested the age-old debate concerning the best technique to price a home when listing it for sale,” Seiler said. “We find that using a price just below a round number works best, particularly in connection to the left-most digit in the price. So, $199,000 works better than $200,000.”

© 2016 Florida Realtors®

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Home are Flying off the Market – Atlantic RE Brokerage

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selling fastThis year is shaping up to be the best in a decade for home sales (yay!), but that doesn’t mean that buying a home is easy (uh-oh). Houses are flying off the market at the fastest rate since the housing bust in 2007, so we know that buyers must be working hard to find that perfect home and get it under contract. Harder than ever, perhaps.

By
Jonathan Smoke


 

Insights from our daily surveys of visitors to realtor.com® tell us that their biggest challenge is the low inventory of available homes, which is holding us back from seeing even more sales.  In June, the No.1 obstacle to making a purchase, as reported by 40% of buyers on realtor.com, was simply finding a home that met their needs. This was also the top problem last June, but then only 37% of buyers reported the issue.

And it’s no wonder that more people are reporting that just finding a home is a problem. We have about 13% more people looking to buy this summer, yet there are 5% fewer homes for sale. No matter how you do the math, it adds up to a shortage for buyers.

So it’s not surprising that this low level of inventory—along with the rapid-fire speed at which homes are selling and the high level of price appreciation—has led to the general perception that we’re in a seller’s market. Fair enough. But that doesn’t mean it’s all smooth sailing for sellers either.

In fact, sellers report that their biggest issue is time: In June, 40% of sellers said they had just started thinking of selling.

That percentage has been growing each month this spring, so at least we can be encouraged by more owners thinking of selling their homes as prices recover and mortgage rates remain temptingly low.

But selling isn’t a simple matter when you don’t have a place to go.

The No. 2 problem for potential sellers is finding a home to purchase first. At least the 18% who reported this as a selling obstacle aren’t willing to risk selling their current home without having a new one under contract. And that certainly makes sense in this market.

We estimate that currently 90% of sellers also intend to buy, so clearly whether the purchase needs to come before or simply close to the current home’s sale, not being able to find a home is limiting both demand and supply.

Then the next biggest issue for sellers is making necessary improvements in order to sell. With remodeling and home improvement booming, potential sellers are running into challenges getting their own improvement projects completed—possibly because of competition for top-notch contractor services.

Sales typically peak in June or July, but this year might turn out to be an exception. With low mortgage rates, continued evidence of strong demand, and an increasing number of both buyers and sellers just starting to explore, we could have an extended peak.

But here’s the thing about peaks: They don’t last forever. The seasonal pull is as powerful as the tide—eventually we will run out of time as school starts, weather shifts, and a new president gets elected. These factors will likely make this fall slower than usual, especially relative to the very busy spring and summer.

If you are thinking of buying this year, get out there now! The clock is ticking louder than ever.

 

Jonathan Smoke is the chief economist of realtor.com, where he analyzes real estate data and trends to develop market insights for the consumer.

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Homes are flying off the Market – Atlantic RE Brokerage

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selling fastThis year is shaping up to be the best in a decade for home sales (yay!), but that doesn’t mean that buying a home is easy (uh-oh). Houses are flying off the market at the fastest rate since the housing bust in 2007, so we know that the low inventory has buyers working harder to find that perfect home and get it under contract. Harder than ever, perhaps.

By
Jonathan Smoke


Insights from our daily surveys of visitors to realtor.com® tell us that their biggest challenge is the low inventory of available homes, which is holding us back from seeing even more sales.  In June, the No.1 obstacle to making a purchase, as reported by 40% of buyers on realtor.com, was simply finding a home that met their needs. This was also the top problem last June, but then only 37% of buyers reported the issue.

And it’s no wonder that more people are reporting that just finding a home is a problem. We have about 13% more people looking to buy this summer, yet there are 5% fewer homes for sale. No matter how you do the math, it adds up to a shortage for buyers.

So it’s not surprising that this low level of inventory—along with the rapid-fire speed at which homes are selling and the high level of price appreciation—has led to the general perception that we’re in a seller’s market. Fair enough. But that doesn’t mean it’s all smooth sailing for sellers either.

In fact, sellers report that their biggest issue is time: In June, 40% of sellers said they had just started thinking of selling.

That percentage has been growing each month this spring, so at least we can be encouraged by more owners thinking of selling their homes as prices recover and mortgage rates remain temptingly low.

But selling isn’t a simple matter when you don’t have a place to go.

The No. 2 problem for potential sellers is finding a home to purchase first. At least the 18% who reported this as a selling obstacle aren’t willing to risk selling their current home without having a new one under contract. And that certainly makes sense in this market.

We estimate that currently 90% of sellers also intend to buy, so clearly whether the purchase needs to come before or simply close to the current home’s sale, not being able to find a home is limiting both demand and supply.

Then the next biggest issue for sellers is making necessary improvements in order to sell. With remodeling and home improvement booming, potential sellers are running into challenges getting their own improvement projects completed—possibly because of competition for top-notch contractor services.

Sales typically peak in June or July, but this year might turn out to be an exception. With low mortgage rates, continued evidence of strong demand, and an increasing number of both buyers and sellers just starting to explore, we could have an extended peak.

But here’s the thing about peaks: They don’t last forever. The seasonal pull is as powerful as the tide—eventually we will run out of time as school starts, weather shifts, and a new president gets elected. These factors will likely make this fall slower than usual, especially relative to the very busy spring and summer.

If you are thinking of buying this year, get out there now! The clock is ticking louder than ever.

Jonathan Smoke is the chief economist of realtor.com, where he analyzes real estate data and trends

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The Hidden Costs of Refinancing—Atlantic RE Brokerage

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Costs of Refinancing

With mortgage rates at historic lows,  many homeowners are contemplating refinancing their mortgage.   Why not? After all, negotiating for a lower interest rate saves you tons of money, right? Well, yes and no. Got that?  Read on to learn some of the Hidden Costs of Refinancing.

—————————————–

The fact is, many homeowners are blindsided when they learn that there are a slew of costs for refinancing that can hit your savings hard. And there’s the hassle factor. After all, even though you’ve already been approved for the loan originally, lenders will want to reassess your credit history and your home once again before they agree to refinance your loan. That takes work (and paperwork), and you’ll have to pay to get these things done.

 

“Just because your neighbor refinanced doesn’t necessarily mean it makes sense for you to refinance,” says Staci Titsworth, a regional manager with PNC Mortgage in Pittsburgh. A lot of it boils down to how much you’ll save in interest. For example, a 3% drop in your interest rate will probably save you plenty, but a 0.5% drop may not be worth the pain and paper shuffling it entails.

 

To help you weigh whether refinancing is right for you, we thought we’d clue you in to some of the lesser-known fees you’ll have to cough up to get the job done. (They vary by area; these are ballpark estimates.) And while some of these expenses are fixed based on your specific loan and personal finances (mainly credit score and income), others are negotiable. So don’t be afraid to see if there’s any wiggle room to save some money where you can!

Application fee

Cost: $75 to $300

This covers the costs of processing your loan refinance request, including the lender checking your credit report. You will likely have to pay this fee, unlike other fees on this list, even if your refi is denied.

Prepayment penalty

Cost: One to six months’ worth of interest payments

Some lenders will slap you with fees for ending your original loan early.  Prepayment penalties are typically assessed at 2% to 4% of the original loan amount. Your loan agreement should spell out whether you’re subject to prepayment penalties. (FHA loans do not have any.) However, you may be able to get these penalties knocked off—or at least reduced—by negotiating with your lender. If you’ve been a responsible borrower (i.e., you’ve made your payments on time and in full every month), you should have more negotiating power.

Appraisal fee

Cost: $300 to $700

When you got your original loan, the lender charged a fee to have an appraiser assess the home and make sure that the property was worth at least as much as the loan amount. The same procedure takes place when you refinance. Bonus: You’ll get a professional opinion on the current price of your home. Sweet!

Home inspection fee

Cost: $175 to $350

Even though you probably got a home inspection when you first bought your place, a lot can change over the years, so your lender will want to recheck the property for any new problems that have cropped up. One potential way to cut costs: Reach out to the home inspector you used when you purchased the property and ask if you can get a discount for being a repeat customer.

Title search and title insurance

Cost: $700 to $900

When you refinance, your lender will want to conduct a title search  and get title insurance as safeguards—just as it did the first time around. After all, new liens on the property or other issues may have come into the picture since the first time this search was conducted. To save cash, dig up a copy of your original title report to save the lender some of the legwork of sifting through your home’s title history from scratch.

Attorney review/closing fee

Cost: $500 to $1,000

Most lenders charge borrowers for fees paid to the lawyer or title company that conducts the closing. There isn’t much room for negotiating price here, since they typically charge a fixed hourly rate.

Points

Cost: 0% to 3% of the loan principal

Time for a quick re-education. There are two types of points: origination points and discount points. Origination points are what the lender charges to cover the administrative costs of processing the loan. However, you may be able to negotiate this fee if you use your original lender, who may be willing to offer financial incentives in order to retain your business. After all, it doesn’t want you going elsewhere for your loan. Advantage: you! Use it.

Now let’s move on to discount points, which are optional. But here’s why you should consider them: You’re essentially prepaying the interest on your new loan—which, in turn, reduces your monthly mortgage payment. If you’ve got a stash of cash you can put toward points, this is a great way to save on interest down the road. But you need to calculate your break-even point to determine whether or how many discount points you should purchase, says Titsworth. For example, if you plan on staying in the home for five years and know that you’ll recoup the costs of purchasing the discount points in three years, they’re worth buying. Ask your lender to crunch the numbers to be sure.

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Daniel Bortz is a Realtor in Maryland, Virginia, and Washington, DC. Daniel is also a writer with a background in financial reporting and editing. His work has appeared in Money magazine and National Geographic Traveler and on CNNMoney.com, Entrepreneur.com, TheFiscalTimes.com, USnews.com, and HuffingtonPost.com.

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