Finding a Builder to Construct a Custom Home on your Lot

OCTOBER 18, 2017

By Suzanne Whitenight Pilcher, Marketing Coordinator, Long & Foster Companies.

Perhaps you were lucky enough to inherit property or bought a parcel of land to build your dream home. Now, how do you select the right builder to construct the home you’ve envisioned? Whatever style and size home you’re building, you’ll want to know you’re purchasing a good quality home from a reputable builder.

Where do you start?

It’s best to find companies who are familiar with the building codes in your area, according to Pauline Dent, director of builder & developer services with the Long & Foster New Homes division. Each jurisdiction has specific building codes, so you’ll want to hire someone who knows the codes and can comply with them. The National Association of Homebuilders offers a list of local builders on their website.  In addition, a real estate agent familiar with custom home building can be a great resource.

What’s the builder’s specialty and reputation?

Whether it’s a traditional colonial, modern or craftsman-style home you have in mind, take a look at pictures of the houses each builder has constructed. Ask how many homes they have built that are similar to the design you have in mind.  Then, go to see the products they’ve built in the last few years.

In addition, ask for personal testimonials from past clients. Dent adds you’ll want to talk to a variety of customers, in every stage of owning – meaning those that recently moved in, individuals who have lived in the home less than two years and people who have lived in their houses longer than two years. Ask them if the work was completed on time and on budget and if they had any major issues during construction. Your real estate agent may also have had some experience with the builder to help attest to their reputation.

How much will it cost?

Although it’s important to hire a qualified builder, finding one who can construct a home in your price range is just as critical. Gather quotes from the list of builders you’ve collected and be sure you understand what’s included in each quote. For instance, does the price include site and finish work, landscaping and clean-up of the property? What level of finishings will be included – will you have granite or laminate countertops?

Site work, including land clearing and grading, the construction of driveways and walkways, installation of utilities, permits and fees, can cost more than $60,000 in some areas, according to John Jorgenson, a leading new homes agent in Long & Foster’s McLean, Virginia, office. Check to be sure your builder includes it in the price or you’ll have to budget for these necessary costs.

Just as with any new home purchase, a knowledgeable Realtor can help you find a reputable builder and can guide you through the homebuilding process.

9 Step Guide to Preparing for Your First Time Home Purchase

                                             Step-by-Step Guide for First-Time Homebuyers

RISMEDIA, Tuesday, April 12, 2016— (TNS)—Here’s a secret for first-time homebuyers: No two homebuying experiences are the same. Even with a Zillow sneak peak, a shopper never really knows what homes will look like until they see them in person or what snags they’ll encounter once mortgage lenders and home inspectors get involved.

For some people, it’s the unpredictability of the experience that makes it most exciting. Others prefer to go in armed with as much knowledge as possible. If you fall in the second camp, and you’ve been eyeing open houses, this nine-step guide can help you prepare for your first time buying a house.

Figure Out If Buying Is a Good Idea 

Some first-time homebuyers don’t know that homeownership isn’t right for everyone. There are several scenarios in which renting might be a better option, according to financial planner Katie Brewer, such as the following:

• You plan to move to a new area in the next few years. The costs associated with buying a home can total between 5 and 8 percent of the purchase price of a new home. It can take at least four years — or more in a down market — to recoup that cost in increased market value.
   
• You like having location flexibility. If you’re in a bustling part of town but think you might want something quieter when you settle down, then homeownership might cramp your style — for now.
   
• You don’t want to deal with home maintenance. When the toilet breaks and you’re renting, the landlord sends someone to repair it. If you’re the owner, you have to be prepared to make your own repairs — and to pay for them, too.

Check Your Credit  

Even the most meticulous bill payers can be surprised to find dings on their credit reports. Bills get sent to old addresses, and creditors sometimes make mistakes. You might find someone else’s credit mistakes commingled with your history if that person has the same name or a name similar to yours. Worse yet, you might unwittingly be the victim of credit fraud or identity theft.

“Make sure you don’t encounter any surprises when you’re applying for loans,” says Brewer. She suggested pulling your credit reports from AnnualCreditReport.com or directly from each of the three major credit bureaus — Equifax, TransUnion and Experian — to check for errors or other problems.

Fix Any Errors and Improve Your Score 

“Improving your credit score, even by just a few points, can help you get better financing terms when shopping for a mortgage,” says Ross Anthony, a real estate agent in San Diego. “Interest rates, points and even city-funded first-time homebuyer assistance programs can all be influenced by your credit rating.”

To improve your credit score:

• Contact each of the three credit bureaus and report any errors.
• Pay down your credit card debt.
• Pay off any small balances.
• Make sure to pay all of your bills on time. 

Your lender might have more ideas and options for enhancing your credit score, says Anthony. “Give yourself at least six months to see results,” he says.

Find a Lender

Most buyers spend several months working closely with their chosen lender. You want to make sure you’ve picked someone who understands your financial vision and won’t push products that aren’t in your best interest.

“Many unprepared homebuyers wait until they find their perfect home before seriously sitting down with someone to work through the numbers,” says Anthony. This can be a huge financial mistake. If you haven’t lined up a lender, and you find the home of your dreams, you might feel rushed into picking a mortgage provider.

“Pick a person you trust after talking on the phone with them,” says Matt Oliver, a senior loan consultant in Glendale, Ariz. “You can pick one person to do the prequalification and then shop rates and fees when you get a purchase contract.” It might require a couple of extra steps, but it’s the best way, he added.

Anthony suggested interviewing at least three lenders and getting a prequalification or even preapproval, which holds more weight, before starting your home search. “The more you’ve done upfront, the stronger your offer will be when you get to the negotiating table,” he says.

To get preapproved, you’ll need at least the following:

• Bank statements for the two most recent months
• Verification for the source of your down payment
• Tax returns from the last two years
• A copy of your driver’s license and Social Security card

Set Your Buying Budget

“Most folks underestimate how much their costs will be until they meet with me,” says Casey Fleming, mortgage advisor and author of “The Loan Guide: How to Get the Best Possible Mortgage.” Think about how much cash you have to pay the upfront costs, which will include your down payment and closing costs, as well as what you can afford to fork over each month in mortgage, tax and insurance payments.

“All of your fixed expenses — including the mortgage, student loans, car loans, utilities, cellphone, day care, subscriptions and any other fixed expenses — should be no more than 50 percent of your take-home pay,” says Brewer. “The mortgage company only looks at your income and your loan payments, and not at the rest of your expenses, to determine how much they will lend to you.”

In other words, it’s up to you, not your lender, to figure out how much mortgage you can comfortably afford.

Make a List of Must-Haves 

Decide ahead of time what your ideal house includes, what your deal breakers are and where you’re willing to compromise. “At the risk of sounding pessimistic, it is highly unlikely you will find the perfect home with every feature you want in your ideal price range,” says Anthony. “It just doesn’t happen very often. There will be compromises.”

Anthony suggested each spouse or partner rank his or her top five needs, along with the reasons for each. “If you can establish the ‘why,’ you’ll find it’s often more important than the ‘what,’” he says.

When emotions run high during the home search, as they inevitably do, a prepared list can provide added clarity to your decision-making process.

Find an Agent

When searching for a real estate agent, consider the agent’s industry expertise, of course, but also how willing he seems to jump in and help you when things get messy. First-time — and sometimes second- or third-time — homebuyers can get emotional and make mistakes, some of which can fracture a deal or cost a lot of money to correct.

“REALTORS® are usually compensated (by) the seller of a property,” says Brewer. Make sure you’re working with someone who can see past the compensation structure and keep your needs at the forefront of the home search.

Brewer suggested that homebuyers interview several real estate agents. Don’t settle until you find the one who’s a good fit for you.

Prepare for Emotional Ups and Downs  

Home shopping online can be a blast. The reality of pounding the pavement in search of the perfect house can sometimes be a drag.

“You might not get the first house that you put an offer on,” says Brewer. “You might fall in love with a house online but find out that it doesn’t look as great in person.”

Even after a contract has been signed, there can be problems closing the sale. Your home inspector might find mold in the basement. The home might not appraise for the expected value. Your name could be spelled wrong on the title documents.

All of these glitches could delay your settlement date or even cause your deal to fall through. Get excited about buying your first home, but always remember that it’s not a done deal until you’ve been handed your new keys at the closing table.

Get Ready for a Settlement  

Settlement is when your new home becomes yours officially. You’ll sit down with your title agent or attorney — or possibly both — and sign a mountain of paperwork. Be prepared with a cashier’s check for the down payment, says Oliver. “It will need to match the bank name from the statements you provided to your mortgage lender. It can’t come from an account that’s been undisclosed.”

Finally, settlement is when you’ll be handed the keys to your new house. It’s time to break open a bottle of champagne and celebrate — but probably not in the title agent’s office. Do that in the comfort of your new home, instead.

© 2016 GOBankingRates.com, a ConsumerTrack web property
Distributed by Tribune Content Agency, LLC

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Buying? What You Will Need to Finance a Vacation Home

What You’ll Need to Finance a Vacation Home 

By   Beth Braverman  for  Realtor.com  January 19, 2016

 Growing numbers of Americans these days are living a prime variation of the real estate dream: you know, the one about owning a property in your favorite place that you can use as a second home or just a much-needed escape from the pressures or banality of the everyday. In fact, the phrase “vacation home” practically makes us giddy, whether the place in question is located in the mountains, on the water, or in a bustling city.

Interested? Obsessed, even? Then you’d better get your finances into tiptop shape.

Certainly you’ll find plenty of company. Vacation home sales soared to 1.13 million in 2014, according to the National Association of Realtors®. That’s the highest level since NAR began the survey in 2003, and a 57% increase from 2013.

The spike reflects an improving economy—as well as demographic shifts that have more baby boomers purchasing vacation homes intended to serve as their primary residence after retirement. (Want to win a fabulous vacation home? Click this link to enter the HGTV Dream Home sweepstakes, and you’ll get a bonus entry!)

Seven in 10 vacation-home buyers use a mortgage to finance the purchase. So if you’re considering buying a second home, here’s what your lender will be looking for:

Good credit

                              

You’ll need a credit score in at least the mid-600s to qualify for a mortgage on a vacation home, but the higher your score the better rate you’ll get on the loan.

“Our best rates tend to be for clients who have a 720–740 FICO score,” says Quicken Loans Vice President Bill Banfield. “As the score goes down, the costs increase incrementally.”

If you know you’ll be making a vacation home purchase in the near future, check your credit reports now to see if there are any errors or if your score needs improvement.

A higher down payment

While there are conventional loan programs for primary home residences that allow you to make a purchase with as little as 5% down, you’ll need to put down at least 10% for a vacation home. As with conventional mortgages, putting down at least 20% will give you access to the best possible rates without having to pay mortgage insurance.

Extra cash on hand

In addition to having enough assets to cover closing costs and moving expenses, you’ll need to have cash reserves equal to at least two months’ worth of expenses on the vacation property in order to get loan approval.

Income to support both properties

Ideally, lenders are looking for a debt-to-income ratio of 43% or less for both the vacation home and your primary residence. Typically, that means the total cost of the mortgages and taxes on both homes, along with any other household debt such as student loans or car payments, can’t equal more than 43% of your total family income. In some circumstances, lenders may be able to make an exception.

“If you’re pushing the envelope with your debt-to-income, it helps to have a higher credit score or put down a bigger down payment,” says Kevin Leibowitz, president of mortgage broker Grayton Mortgage.

Proof that it’s a vacation home

The financing requirements of a vacation home tend to be more favorable to borrowers than those for an investment property, so your lender will want to know that the home really is going to be used by you for vacations rather than to rent out for income. Typically that means proving the property is at least 50 miles from your current home and confirming that you have no plans to rent out the home for large parts of the year.

Beth Braverman, an award-winning journalist and content producer, covers real estate, personal finance, and careers.

BUYING A HOME? Tips to Build Your Down Payment Stash.

So You Wanna Buy a House?                  Step 2: The Down Payment

By  Jamie Wiebe  Realtor.com

                                                                                            Alexandr Dubovitskiy/iStock

Scratching together a down payment is probably the most daunting hurdle to buying a home—and there are boatloads of them! But that’s why we’ve launched our 2016 Home-Buying Guide, a series of articles giving you the critical intel you need to buy your own house, step by step. This is the perfect time to start your search in earnest.

Last week in Installment 1, we covered cleaning up your credit score. This week, we’ll unlock the secret to amassing a mountain of cash for the down payment.

Yeah, you already know that Rome wasn’t built in a day. The same holds true for building a down payment. It takes time. But as long as you grease the gears early (like now), you’ll barely notice you’re saving until—boom!— one day in the foreseeable future you’ll be sitting on a pile of money that could pave the way to homeownership … maybe even in time for peak home-buying season this summer.

Sound good? Good.        Here’s how to get started.

Trim those quiet, unnecessary expenses

OK, let’s shift those preconceived notions. Contrary to popular belief, saving for a home isn’t mostly about grueling sacrifice—e.g., holing up in your apartment under a bare light bulb, eating ramen, and piggybacking off your neighbors’ Wi-Fi.

“It’s about a lifestyle change,” says Travis Sickle, a financial adviser with Sickle Hunter Financial Advisors in Tampa, FL. A more sustainable strategy, he says, is to pinpoint your silent money siphons that you barely notice. Odds are you could try some of the following cost-cutting measures without feeling the pinch:

• Replace your $250 monthly cable service with a $10 Netflix standard streaming account, and you’ll save $2,880 per year.
• Cut that languishing gym membership—at $50 per month, you’d save $600 a year. Go running instead!

• Packing lunch will save you about $60 a month—or $720 a year.
• Bike to work. For a 10-mile commute, biking can save you around $5 a day, according to Kiplinger—or $1,250 a year.
• Start a coin jar. Saving all your loose change can have a big impact—up to $700, according to financial blogger J.D. Roth.
• Turning down your thermostat just 3 degrees could shave almost 10% off your electrical bill, netting you $20 a month on a $200 bill, or $240 a year.
• Curb those dinners and drinks out at restaurants, which can quickly add up. If you typically shell out $40 three times a week, reduce that to one evening a week, and you’ll save $80—or $4,160 per year. (Bonus: It’ll make those times you do indulge more special!)

And if you and your significant other team up and try all of the above, that would amount to $10,550 per person, or $21,100 in one year’s time. Just remember that when you’re thinking of ordering a second glass of artisanal craft beer.

Open a dedicated account

If you don’t have a savings account, now’s the time to open one. A checking account is great for daily expenses, but when it comes to saving money—well, they don’t call them savings accounts for nothing. You’ll earn interest on your balance, plus there’s a lot to be said for the mental benefit of having a specific place to stash your down payment. While interest rates haven’t been very impressive in recent years (though, you’ll be grateful for that when it comes time to get a mortgage), it’s still great to have a dedicated account where you can see how you’re progressing toward your goal.

Financial planner Bob Forrest of Mutual of Omaha points out that CDs and money market accounts offer higher gains than savings. You’ll need a larger minimum balance than for a regular savings account, but your goal is to make it grow, not shrink, right? If you’re using a CD, just make sure you don’t withdraw the money before the time is up or else you’ll face some stiff penalties.

Automate your savings

If you’re struggling to put enough money away because of the constant temptations to blow your paycheck, consider automating the process. Ask your employer if you can have your paycheck deposited into multiple accounts—if so, instruct it to send a certain percentage of your salary directly into your savings account. Or go through your bank, setting up automatic withdrawals from your checking to savings account that will force you to keep spending in check.

Tap into your IRA

Another great place to stash your cash? A traditional or Roth IRA, says Forrest. In addition to being a tax-friendly retirement vehicle, it allows you to withdraw up to $10,000 for a home. While withdrawals from a traditional IRA will be taxed, a Roth IRA you’ve owned for more than five years won’t be taxed at all, as long as you’re a first-time home buyer. Just be careful with this method, though, as you will be denting your retirement funds. But combined with other savings, it can quickly add some heft to your growing nest egg.

Check out down payment assistance programs

Depending on the city and state you live in, you may be eligible for down payment assistance programs, which provide money to help people buy a home. Go to Down Payment Resource to find programs you might be eligible for. Most offer up to $15,000, typically in the form of a grant or low-interest loan. Most require your income to be below the area median. But even if you make more, do your research—there are programs that provide funds for higher-income households.

Once your down payment is on a roll, it’s time to start looking for a home—and to do that, you’ll need to determine exactly how much house you can afford. 

Sellers: What Every Seller Should Know About Comparable Sales

What Every Seller Should Know about Comps

RISMEDIA, Saturday, October 17, 2015— “Comps” – or recent comparable sales – give real estate practitioners and appraisers the information they need to price a home at fair-market value. Though comparable data are clear-cut to a professional, how many sellers understand the various tangibles and intangibles that inform these comparisons?

If the gap between seller perception and appraiser opinion is any indication, the answer is few. As a recent Quicken Loans Home Price Perception Index (HPPI) report http://rismedia.com/2015-10-13/homeowners-overvalued-their-homes-for-the-eighth-straight-month-in-september/ shows, homeowner estimates averaged 2 percent higher than those of appraisers – a considerable margin in markets with ballooning home values, says Quicken Loans Chief Economist Bob Walters.

“It may not seem like homeowners assuming their home’s value is 2 percent higher than appraisers’ opinions is significant, but it could make a huge difference in metro areas with higher average home values,” Walters explains.

But this broad brush stroke doesn’t paint a clear picture of every metro area. In Phoenix, for example, which this summer marked the longest streak of year-over-year gains, seller perceptions are more closely aligned with those of professionals.

“In a market that is going up, there isn’t that much of a difference with seller opinions,” says REALTOR® Steffy Hristova of Scottsdale, Ariz. “If the seller has time, the market is moving in the direction they desire. It is harder with sellers who are behind the market – the market moves, but they always think the market will be better tomorrow and it’s too early for them to sell now.”

In those instances of disconnect, the onus is on the agent to educate the seller. Hristova accomplishes this by helping sellers “visualize the data,” presented on one page if possible, and in some cases applying a simple, straightforward formula.

“I adjust the price according to the following schedule: if there are showings and no offers, 4 to 6 percent off; if there are low showings, 6 to 12 percent off; if there are drive-bys only, 12 or more percent off,” says Hristova.

Breaking down the factors that play a role can also be beneficial for the seller. Market activity generally determines the window, but comparable sales can stretch back one month to three months or more. Hristova gleans insight through resources supplied by her regional MLS and

The Cromford Report, provider of residential real estate research and analysis in the Greater Phoenix Area.

“I review statistics from the MLS daily and from available and reliable research sources, study the market dynamics in the neighborhood and in the substitute market for the object property, and review the demand and supply numbers for the zip code and neighborhood and the sales trends,” Hristova explains.

Square footage, a go-to data set for both real estate agents and appraisers, is also on Hristova’s radar. Sellers can expect their home to be evaluated against properties with similar square footage, as well as a like number of bedrooms and bathrooms. Real estate agents may take into account some of the more ambiguous features the appraiser may not consider, as well.

“I focus on the hidden gems of the object property – the ‘wow’ items, the unique design or special appeal of the property,” says Hristova. “It could be the floor plan, specific updates that are particularly attractive, landscaping features, undergrounding wiring, etc. I also analyze potential negatives – types of financing available, location within the neighborhood, proximity to noise, etc.”

And because no two sellers are alike, individual circumstances also warrant consideration. “Will they wait? Will they provide easy access? Will they be willing to repair items?” Hristova asks.

These and other facets, like age, location, lot size, workmanship and energy-efficiency, can all serve as means for comparison. Age, in particular, can be a key variable, because it can indicate the condition (or decrepitude) of the home. According to Trulia, comparables for age are typically pulled within a five-year range.

For sellers, bear in mind comparable data reflect the activities of both buyers and sellers, no matter which the market currently favors. And as Warren Buffett so eloquently sums up:



This post was originally published on RISMedia's blog, Housecall. Check the blog daily for winning real estate tips and trends for you and your clients.hatShou

Buyers & Sellers: Who Owns Your Mortgage?

TRULIA'S BLOG \ MONEY MATTERS

How to Protect Yourself When Your Mortgage Is Sold

By Andrea Murad | September 30, 2015

If your loan was sold to a new lender or servicer, that’s not necessarily a bad thing.

                  

Although you may have signed on with a certain lender when you bought your house, you may find that after a while, your mortgage statements start coming from a new company. While it can be unnerving to see this new name asking for payment, fear not! The practice of selling mortgages in the secondary mortgage market is very common.

In fact, the majority of mortgages are sold in the secondary market after they’re originated. Regardless of which company owns your loan, a loan is a loan — and what’s on your mortgage note hasn’t changed.

But just so you can rest easy, here are answers to common questions you may have about your mortgage changing hands.

Why would a lender sell my mortgage?

The adage that “it takes money to make money” holds true, especially for lenders. Lenders need capital to originate new mortgages, and most mortgages have 30-year terms. If a company were to wait for borrowers to pay off their loans, it would need an exorbitant amount of capital to fund new mortgages. So instead of waiting 20 to 30 years for a borrower to pay down a mortgage, most lenders sell the loans they originate to an investor, such as a government-sponsored enterprise (for example, Fannie Mae or Freddie Mac).

Home mortgages aside, banks and finance companies sell just about every loan they originate so they can raise money to make more loans. Auto loans, credit card loans, and student loans are all fair game to package into bonds that can be sold to both domestic and international investors. Without investors willing to buy these loans, banks and finance companies wouldn’t be able to lend you money from the get-go.

Is it legal for a lender to sell my loan?

Yes, it’s perfectly legal for a lender to perform a mortgage transfer, but not every lender sells every loan. Some lenders hold higher-balance nonconforming loans on their balance sheets; sometimes these same loans are sold to investors so that the lender can free up cash and originate more loans. It really depends, and borrowers cannot stipulate that their mortgage won’t be sold to another lender or that the servicer won’t ever change.

The Real Estate Settlement Procedures Act requires that a lender disclose plans to transfer servicing for your loan to another lender in the Mortgage Servicing Disclosure Statement. If you didn’t receive this document when you applied for your loan, your lender should have mailed it to you within three business days of your application.

How do I find out if my loan has been sold?

Lenders are required to notify borrowers within 30 days of the sale. This notice will include the name and contact information for the new owner of your loan, when your loan will be sold, and whether the sale will be included in public records.

Is the servicing sold too? Are the servicer and lender the same company?

Your lender and the servicer aren’t always the same company. A lender originates the loan and provides the capital for you to buy your new home or refinance your existing home, while the servicer handles the day-to-day maintenance of your loan — things such as processing and recalculating payments, managing escrow accounts, and beginning foreclosure proceedings.

Sometimes the servicer will remain the same after a loan is sold. If the servicer changes, you’ll receive notice of the new servicer that includes details on where to send payments and contact information for questions.

Will my payment change if my loan is sold?

Unless you have an adjustable-rate mortgage, no. Whether your loan rate is fixed or adjustable, your payment may also change if you pay your taxes and insurance through an escrow account and what’s due changes. All other loan terms will remain the same.

What if I send my payment to the wrong lender?

If your payment is already in the mail, you won’t be charged a late fee for mailing your check to your old lender. There’s a 60-day grace period after your mortgage is transferred.

What if I don’t receive any notices, and my servicer has changed?

For borrowers, the transition between lenders and servicers is usually pretty seamless, but that’s not to say mistakes don’t happen. When thousands of loans are transferred from one company to another, issues can arise. If your lender or servicer changed and you weren’t notified, then you can file a complaint online with the Consumer Financial Protection Bureau.

Borrowers should feel confident that they are protected if their loan is sold in the secondary mortgage market. The handoff to a new lender or servicer should be as painless as receiving a few letters in the mail, and being cognizant of where and when to send your payment each month.

- See more at: http://www.trulia.com/blog/how-to-protect-yourself-in-a-mortgage-transfer/?ecampaign=cnews&eurl=www.trulia.com%2Fblog%2Fhow-to-protect-yourself-in-a-mortgage-transfer%2F#sthash.tqmawez4.dpuf