Listen to the Podcasts!
May 31, 2006 | Leave a Comment
The Charlottesville Area Real Estate Blog now features audio podcasts! All of the podcasts will be available in MP3 format. You can listen to the first one here: Download PodcastIntro.mp3
My plan is to make these podcasts available on a regular basis. In the future, the podcasts will probably be a "Week/Month in Review." I will be able to highlight and comment further on some of the posts, and also cover things that I didn’t get a chance to cover on the blog. The format is just as limitless as the blog itself, so let me know what you want hear about. In the near future, the podcasts should be available for download on iTunes as well.
Be on the lookout for more podcasts!
You Know Your Scores, Now Know the Difference
May 31, 2006 | Leave a Comment
Hopefully, you read my post on Monday, the 29th, about credit scores (How Much do You Know About Your Credit Score?). Hopefully, if you hadn’t done so already, you made an attempt to try to find out more about your credit score. If did this, and did on through one of the credit reporting websites, you may want to cross-reference it.
I found an article from The Washington Post that does a good job of explaining the difference in your scores.
In the future, remember that if you want to know your true FICO score, the place to do it on the web is direct from FairIsaac at My Fico.
VDOT Funds Used to Improve Localities
May 31, 2006 | Leave a Comment
VDOT has given funds to a few local counties that they can use for improvements, as reported in this article from The Daily Progress. Most of the artcile focuses on the improvments that Fluvanna County will be making to the Pleasant Grove area.
Having been to Pleasant Grove very recently, and the Fluvanna Heritage Trail as well, I can say that the county is obviously committed to improving the area for its residents and visitors. It is always good to see a local government willing to do things that improve the quality of life for residents and improve the ability of the community to attract visitors.
Avoid These Mortgage Mistakes
May 30, 2006 | Leave a Comment
Let’s face it, we all make mistakes. One place time that you definitely want to avoid making mistakes, whenever possible, is applying for a mortgage. The last thing you want to do is make a mistake that you pay for over 30 years– with interest.
So if you want to avoid making mortgage mistakes, take a look at this article. In case you don’t want to read the whole thing, I will list the 8 mortgage mistakes the author talks about, and add my own insights:
1) Not fixing your credit: This is a big one. A small difference in your credit score can mean a HUGE difference in the amount of money you end up paying over time. Your credit score is a major factor in determining what interest rate you receive, so you want that score to be as high as possible before you get the loan.
2) Not looking for 1st-time home buyer programs: If you are a first-time buyer, do a little research and see if the government or any private lenders are offering special programs or incentives for you. If you aren’t a first-time buyer, perhaps you are in a profession that is eligible to take advantage of some of these programs. There are many programs for public servants such as police, firefighters, and teachers.
3) Not getting pre-approved for a loan: As the article points out, there is a difference between "pre-approval" and "pre-qualification." Get a pre-approval letter as soon as you can. Presenting a pre-approval to sellers shows that you are serious and shows that you definitely can buy their home. It gives you much more leverage when putting an offer on a home.
4) Borrowing too much money: I tell my clients this all the time, "You don’t have to spend it just because the bank will give it to you." There is ABSOULETLY NO REASON to spend all the way to your limit. The bank is going to give you a range in which you can spend. A good idea is to spend at least 5-10% less than what they are willing to give you. This amount is a huge difference over 30 years.
5) Not shopping around for rates and terms: You should ALWAYS compare rates and terms for loans with different lenders. Even if your mortgage broker is your best friend or family member, you owe it to yourself and your family to make sure that you are getting the best financial deal possible in order to ensure security for the future. If your friend or family member doesn’t have the best rates or terms, negotiate with him or her. If they are a true professional, they will understand your position.
6) Paying junk fees: This can be a one that is hard to find. Make sure that you examine very closely the Good Faith Estimate you receive from your lender. If you see any fees that you think are a bit out-of-whack, ask about them. Maybe they can’t be reduced, maybe they can, but you deserve to know what all the fees are for.
7) Not planning for closing costs: This is very important. Many people go to buy a home and have to ask the seller to credit them for the closing costs. This is not a good idea, if you can at all avoid it. $7,000-$10,000 added to the price of the home for closing costs doesn’t seem like a lot to most people, but if you had that money and could pay for it yourself, you wouldn’t be financing it over 30 years– plus interest. Plus, having closing costs added to the price of a home means that the home is going to have to appraise for that additional amount. Sometimes, this can be a risky proposition. Having closing costs financed falls in the category of KISS (Keep It Simple Stupid). Why add something if you can avoid it.
Not having enough cash on hand after closing: This goes hand-in-hand with #7. Make the effort to save enough money so that you can pay your closing costs AND have money left over after closing. As the article points out, 3 months reserves is probably a good idea.
If you can keep these 8 things in mind when you go to apply for your mortgage, you will be off to a great start.
Caveat Emptor: New Construction Contracts
May 30, 2006 | Leave a Comment
The contract is the very thing that initiates and rules a home purchase transaction. While it is a document of the utmost importance, very few people really understand all the clauses that can be involved. This is especially true of new-construction contracts. These contracts are, very often, written by attorneys who work for the construction company. Here in our area, many builders use their own contracts, and the rest usually use the Blue Ridge Homebuilders Association contract. No matter which contract it is, be aware that they generally have clauses built in that heavily favor the builder. I found the following article that does a good job of explaining many of the possible pitfalls in a new construction contract.
There is absolutely nothing wrong with using these contracts. In most cases, the builder is going to require it if you want to purchase the home. It is your responsibility, and that of your agent, to go over the contract carefully and make sure that everyone understands the possible ramifications of agreeing to all of its terms. If you see something that doesn’t quite seem right, ask questions. You may not get the answer that you want, but at least you will have the knowledge required to make an informed and intelligent decision.
The End of Down-Payment Assistance?
May 29, 2006 | Leave a Comment
The IRS recently handed down a ruling that effects the non-profits out there that supply down-payment assistance to people who are using FHA loans to buy homes. The ruling could mean an end to these organizations. BankRate put out a very good two-page article on the ruling and the impact it could have.
If the ruling really does affect these organizations, there could be a significant drop in the number of FHA loans that get issued. Although, I happen to agree with the assertion that these down-payment assistance programs can sometimes have a negative effect in that they allow people who maybe shouldn’t be buying a home to get a loan. In the long run, a ruling like this may be good for the industry in that it will force people to save for a loan. Saving is something that Americans could definitely do more of.
How Much do You Know About Your Credit Score?
May 29, 2006 | Leave a Comment
Most people know that their credit score is very important when they go to apply for a home loan; but how much to people really know about credit scores? According to a recent survey, not very much:
Consumers Still Don’t Fully Understand Credit Scores
(May 25, 2006) — A new survey conducted by the Consumer Federation of America and Providian Financial concludes that American consumers understand credit scores better than ever, but most still are unaware of the basic facts about credit scores and their financial importance.
For instance, more than 75 percent of those polled mistakenly believe that they have the right to obtain their credit score for free once annually. This is true only of a consumer’s credit report, but not his/her credit score.
A large number of consumers also remain in the dark about the characteristics of credit scores, with only 27 percent understanding that scores measure credit risk–not credit knowledge, amount, or attitude.
When it comes to something as important as your credit score, you should try and make as much effort as possible to stay up-to-date on it. This means not only monitoring your score, but talking with a financial professional or credit counselor who can advise you on how to increase your score.
For me, I found that my bank, Bank of America, offers a service that will monitor my credit score at the three major credit reporting bureaus (Equifax, Transunion, and Experian), and then notify me by mail when there is any change in the score, positive or negative. I pay a yearly fee for the service, but it is definitely worth it to me.
You can also get your score from MyFICO. This site not only allows you to find out your score, it also has great information about how your score can affect your mortgage interest rate.
Monitoring your credit score is important for a few reasons. One is that it can alert you to possible fraud or identity theft, and another is that it can tell you if the things you are doing are helping or hurting your scores. If you want advice as to how you can improve your score, try talking to a financial professional or credit counselor. You can learn more about improving your score and finding a counselor at The National Foundation for Credit Counseling.
$75M is now Chump Change
May 26, 2006 | Leave a Comment
If you saw my previous post on what was the most expensive home listed in the US, at $75M, and thought to yourself, "man, that is a lot of money for a house," get a load of this: The Donald is selling his waterfront Florida mansion for a whopping $125M! Read all about it in Forbes Magazine’s latest list of the most expensive homes in America.
Leave it up to Donald Trump to come up with a real estate blockbuster.
April Home Sales in Area Up, But So Is Inventory
May 26, 2006 | Leave a Comment
Yesterday, I wrote about the national home sales statistics. Today, I am going to let you know what the sales were like for the Charlottesville Area. For the purpose of this survey, I used the statistics from the CAAR MLS for the areas of Charlottesville, Albemarle, Fluvanna, Greene, Louisa, and Nelson.
Total March Sales: 259 Avg. Price: $344,601
Total April Sales: 264 Avg. Price: $329,063
This means that sales grew 2%. Curiously, this is exactly opposite from the national results of home sales. When compared to the same time a year ago, however, the news is not as good. The area experienced 20% LESS sales in April 2006 than in April 2005.
The bigger news may be the fact that the total MLS inventory for the same area in April was 2358 units. At the current rate of sales, it would take 8.93 months to sell out this inventory. Last year, this number was never higher than 5.6 months.
For the year, through April, the area is down 15% when compared to last year’s sales.
In case you had any doubt that this years market is slower, these statistics should remove it. If you are planning to put your home on the market, be realistic with your price, and be realistic with your expectations as to your time on the market. Things are changing in the Charlottesville Area.
Home Additions We All Dream Of
May 26, 2006 | Leave a Comment
People are always asking me, what type of additions/renovations they can make to improve the value of their home. I imagine that this is partially a product of the plethora of television shows out there that show people how "easy" it is to renovate a room and instantly add $10,000 to the home’s value. I have some issues with most of these shows, but that is a subject for a different post.
If you are one of the wealthy, however, the question is not "What can I do?" but rather "What CAN’T I do?" If you have ever dreamed of that home bowling alley or movie theater, than this article is for you.
Not included on this list are the types of things that vast amounts of space can get you. For example, I saw an interview with Ted Nugent on TV not too long ago where they interviewed him next to his cannons. CANNONS! Complete with their own firing range. Forget bowling alleys, movie rooms, or rock walls, nothing helps you blow off a little steam after a long day quite like your very own artillery range.
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Disclaimer
My name is Daniel Rothamel. I am a licensed real estate agent in the Commonwealth of Virginia and a member of the National Association of REALTORS. As such, I adhere to a strict code of ethics and all laws with regard to equal housing, which is reflected in the content of this blog. My broker is Strong Team REALTORS, 86 Joshua Lane, Palmyra, VA 22963; (434) 589-5800. My VA Real Estate License number is 0225 077325. All of the opinions in this blog are mine, unless otherwise noted.
