The Belt Team sells lots of homes to first-time homebuyers and invariably when we meet for the first time, there are lots of misconceptions about what it takes to buy a home. How much money you need for a down payment is almost always one of them.
Here’s an article from Keeping Current Matters about some of the mythunderstandings:
According to a recent survey conducted by Genworth Financial Inc. at the Annual Mortgage Bankers’ Association Secondary Market Conference, mortgage professionals say that first-time buyers still believe a 20% down payment is necessary to buy in today’s market.
Nearly 40% of mortgage industry professionals surveyed believe that a lack of knowledge about the home-buying process is keeping potential buyers on the sidelines. Saving for a down payment is often cited as a huge barrier for first-time homebuyers to make the leap into homeownership.
If homeowners believe that they need a 20% down payment to enter the market, they also believe that they will have to wait years (in some markets) to come up with the necessary funds to buy their dream homes.
The greatest source of confusion cited in the survey results centered around down payments. The results are broken down in the chart below:
Rohit Gupta, CEO of Genworth Mortgage Insurance had this to say,
“While first-time homebuyers continue to drive the purchase market, we believe many are staying on the sidelines due to the misconception that a 20 percent down payment is required to secure a mortgage.
There are various low down payment options available today that allow prospective homebuyers to reach their dreams of homeownership sooner. It is crucial that, as an industry, we proactively educate eligible borrowers about solutions that will enable them to buy a home when they’re ready.”
Don’t let a lack of understanding of the home-buying process keep you and your family out of the housing market. Let’s get together to discuss your options! Call The Belt Team at (703) 242-3975.
Wondering how the real estate market is faring? Take a look at this snapshot from Keeping Current Matters:
What’s most important in the infographic is the quote from Lawrence Yun. You see, sales in November 2015 were down from sales in November 2014. In our opinion, the real reason for this is TRID.
TRID (Truth-In-Lending RESPA Integrated Documentation – or as some Realtors call it, “The Reason I Drink”) is a new government regulation that affects people who are buying and selling homes. We won’t go into all the details (and there are a LOT of them), but the bottom line is that TRID is causing increased costs and delays in settlement. We expect that when numbers come out for December, that many of the expected November closings will show up.
That said – TRID is just another reason why it’s SO important for consumers to be represented by Realtors who do this every day and can help their clients navigate what often feel like shark infested waters. Part of what we do is manage all the details of the buying & selling process. We make sure deadlines are met, you are protected, and that you get where you want to go when you want to be there.
We have heard all kinds of horror stories about delayed closings – Buyers with their household belongings on trucks for days, staying in a hotel because their settlement was pushed back due to a TRID delay. Others where their mortgage loan lock-in expired, only to have to pay hundred or thousands of dollars to extend the rate. Sellers who pack up and move out – but can’t get their money when they need it because the Buyer was held up by TRID.
Terry Belt, CEO of The Belt Team says, “You don’t need to know all the ins & outs of TRID, but your Realtor does. Our advice to you – whether buying or selling a home – is to make sure to work with a seasoned real estate team – the best you can find. It’s in your best interests to use their years of experience and their immense resources to your advantage. When problems arise, and with new regulations like TRID it’s not unusual – you need someone with creativity & pull on YOUR side. The more homes a Realtor sells, the more likely they are to be a great problem solver. So ask for details when you’re interviewing your Realtor. (We even have a list of questions you should ask your Realtor!)”
Schedule an appointment with The Belt Team by calling (703) 242-3975.
The Belt Team is one of the Top 20 Best Real Estate Agents in the State of Virginia (as named by Real Trends) and one of Washingtonian Magazines Best Realtors in 2015. Our mission statement is “Changing Lives For The Better”. If it’s time to change YOURS, call us at (703) 242-3975 TODAY. It’s our pleasure to help you make the RIGHT move.
If you’re buying a home in Northern Virginia, you may have heard talk of new mortgage guidelines & regulations, but aren’t sure what that means for you. So we asked our Partner Paul Diaz, Senior Loan Officer with New Penn Financial, to explain.
Lenders that follow underwriting guidelines and product guidelines exactly when they write a loan will be considered to be making a ‘qualified mortgage”. “Qualified mortgages” will provide lenders and borrowers certain legal protections in the event the borrower should default.
Lenders will more than likely still write mortgage loans that are not considered to be qualified mortgages, but because they will lose some protection should the borrower default on a mortgage loan, most other lenders might just stick to the new definition and stay within the guidelines. This may mean less flexibility in the marketplace for some buyers.
Parameters for a qualified mortgage are as follows:
Have a loan term of 30 years or less.
Not have negative amortization (monthly payment must cover all the interest due).
Not be an “interest only” loan.
Not be a “balloon payment” loan where a large lump sum of the principal is due back at one time (exception made for small lenders).
Upfront points and fees must not exceed 3 percent of the total loan amount. Note: This cap on points and fees may make lenders less likely to offer smaller loans (less than $100,000).
Debt-to-income ratio may not exceed 43 percent. *Note: This can be superseded if the loan is originated and kept in portfolio by a qualified small lender, or if the loan is approved by FHA, VA, USDA, RHS, Fannie Mae or Freddie Mac. But it may become harder for people with higher debt loads to get approved for a new home if they cannot stay below the 43 percent debt-to-income ratio.
This last guideline is likely to affect many Buyers in Northern Virginia.
If you’re wondering how much of a mortgage you can qualify for, contact our partner Paul Diaz at New Penn Financial. He can help you analyze the loan product that works best for your needs and help you get pre-approved for a mortgage. This gives you the power of a CASH buyer!
Northern Virginia housing prices may be rising, but appraised values often lag.
Whether you’re selling a home or buying a home, this can be a problem. It’s not uncommon for a home to sell quickly, sell with multiple competing offers and net a sales price ABOVE list price – only for things to come to a halt because the appraisal comes in low.
One strategy that’s used to battle a low appraisal is to find additional comps the appraiser can use. Oftentimes – that means finding homes that may be under contract, but not yet settled. These homes are likely to have higher sales prices than comps that closed months ago – especially as we head into the hot spring market.
In the past, Realtors were reluctant to release information to appraisers about sales prices until the home had actually settled. But new language in the Northern VA sales contract means this process may become much more common. January 1 changes added a new paragraph called “Disclosure of Sales Price to Appraiser”. The contract now gives authority to brokers to release the sales price of the contract to any appraiser who contacts them to obtain the information.
Although the contract has changed, changes in actual practice often happen slowly because many Realtors are part-time and/or sell very few homes. This means they are not always intimately familiar with the contract and the form changes that happen every six months. This is just another example of why it’s SO important for buyers and sellers to choose Realtors from among the top 10%. The more homes they sell, the better they are at protecting you and avoiding/solving problems such as low appraisals.
If you’re buying a home, you might be wondering whether or not you need title insurance. If you’re getting a mortgage, then your lender will require you to purchase a lender’s title insurance policy; but you also have the option to purchase one for yourself.
What is title insurance and why buy title insurance?
Title insurance is an indemnity contract by which the insurer (title insurance company underwriter) agrees to indemnify the insured( purchaser) against losses covered by the policy. Title insurance is one premium agreement to indemnify a policyholder, in amounts not to exceed the face value amount of the policy (the contract sales price), for losses caused by either on record and off record defects that are found in the title or interest in and insured property to have existed on the date on which the policy is issued .
Title insurance protects the purchaser of real estate property from issues such as:
Over our years in real estate, we have not seen things like this happen very often, but when they have, our clients have been very grateful they bought title insurance. (It’s kind of like health insurance. When you’re young & healthy, it seems like a waste of money to pay for insurance. But if you’ve ever been in an accident or dealt with a catastrophic illness, then you know how important that insurance can be.)
If you’re trying to buy a home in Northern Virginia, you’re well aware that inventory in many areas is just about as low as we’ve ever seen. And it’s been that way all year.
Some buyers & agents are walking around wringing their hands about how their buyers just can’t compete. Or how they lost out on that perfect home because it sold before they even knew it was on the market.
Instead, we like to think outside the box (just look at our car!) And so this year, we searched high & low for what we call our secret weapon – and we implemented the Showing Partner Model.
The concept is based on a study that was discussed at length in the book “Outliers” by Malcolm Gladwell. Basically, the idea is that mastery of a skill to the point of greatness (whether that’s art, athletics, public speaking, music or negotiation) comes with 10,000 hours spent practicing & developing the skill. We decided to apply that study to our business (because our buyers & sellers deserve GREAT, not just good.)
Here’s how the Showing Partner Model works.
Our Lead Buyer Specialist (Tom Reilly) and our Showing Partner (Beth Dadisman) work in tandem. Instead of the traditional model where one agent does everything (or two agents work together to “cover” for one another), our buyers have two agents each working at their specialty – and both working directly with the buyer. That way – each one is twice as good at their particular area of expertise because they hone that skill twice as often. (We do the same thing for our Sellers – with a Listing Specialist and Client Care Manager.)
STEP 1: CONSULTATION
Buyers meet with both Tom & Beth for an initial consultation (no cost, no obligation). You discuss:
What you are looking for IN DETAIL
Why you are moving
General market overview
Market analysis of your target area
STEP 2: LOOK AT HOMES
Beth specializes in knowing the market, showing houses and identifying exactly the right home for our buyers. Because that’s all she does (she does not write contracts, negotiate, etc) – she is SO much more knowledgeable than the average agent. She’s like a hawk stalking the market, swooping in for the kill. (That sounds a bit harsh and she’s really a sweet person, but she looks out for her buyers big time!) And she saves them tons of time because she doesn’t show properties that are not a good fit for the criteria they have identified. (We also have a state-of-the-art home search website that our buyers use. It’s faster and more up-to-date than others, so they see new listings first & don’t miss out!)
STEP 3: NEGOTIATION OF CONTRACT
Tom, who not only is a top-notch, experienced Realtor, also has a legal and technology background. His role is Master Negotiator. When you find that “perfect” home, he moves fast & furious to get the wheels turning. Tom also provides a second set of eyes and an objective perspective on the property you have identified – making sure you are aware of such things as potential resale challenges – so that you are well informed when making an offer.
With inventory so low, the Showing Partner Model is a HUGE advantage. Some buyers have to wait around until their agent has time to show them homes (we had one client whose previous Realtor would only show homes after 6PM!). But between Tom & Beth (and the rest of our team) – our buyers get almost 24/7 coverage. The same thing happens when it’s time to write a contract. Some buyers finish looking at the house and then have to wait for their agent to drive back to their office, draw up the contract and send them the paperwork. In our case, Beth is so skilled at knowing the market and knowing her buyers, that she often has already told Tom which home she thinks the buyers will love. And Tom has already talked to the listing agent and gotten the paperwork rolling.
Here’s how recent buyer Mike Taphorn described it: “Beth from the Belt Team helped us find the home that we were looking for. We were indecisive about whether to stay in Fairfax County or move to Prince William County, and Beth patiently showed us homes in both Gainesville and Clifton/Centreville areas until we found the home we were looking for. And Beth was the one who found, and helped us jump on this listing before it drew too much competition. Beth’s partner Tom also played a key role in negotiating the sales contract and contingencies until we reached settlement.”
One of our favorite buyer success stories from the Showing Partner Model came earlier this year when we identified what we thought would be a dream home for our buyers the Pogors. We showed the property & the buyers fell in love. But it was Friday and an open house was scheduled for Sunday. Tom not only got the contract executed & presented so well & so fast, but also convinced the Seller to respond and ratify the contract and cancel the open house (which was a HUGE relief to our buyers since it likely would have resulted in competing contracts and a higher sales price IF they even got the home.)
If you’re buying or selling a home in Northern Virginia in 2014, you should be aware there are usually changes to the regional contract forms twice a year – on January 1st & July 1st. Examples of forms changing on January 1, 2014 include:
Home Buyers & Home Sellers – make sure you are not caught unaware & put behind the 8 ball!
Terry Belt, Realtor & CEO of The Belt Team says, “It’s not unusual for us to get contracts on our listings on forms that are out-of-date and even on forms that are from other states. Laws change & local practices change – and it’s in YOUR best interests to make sure you are represented by a Realtor who works full-time and is proficient at writing good contracts. Whether you’re buying or selling, you want to be protected and you want clarity on both sides.”
Let’s take the Home Inspection Addendum for example. Under the new form, Buyers (and their agents) need to be especially aware that if the end of the negotiation period comes, and the Seller has not responded to the Buyer’s request to repair or replace items found on the home inspection, the contract does NOT become void (as it does under the 2013 contract). Instead, the Purchaser has the option to void – and if the appropriate Notice to void is not delivered or delivered on time, the contingency is automatically removed & the contract remains in full force & effect.
“What this means“, clarifies Tom Reilly, Lead Buyer Specialist for The Belt Team, “is that the Buyer can void the contract, but must now take proactive action to do so, rather than just allowing the contract to lapse. This is a huge change in practice in Northern VA. We will ensure that our Buyers understand this so that if there are MAJOR inspection issues that arise, and the Seller does not respond or agree to address them, our Buyer will not end up bound by a contract inadvertently.”
This is just one example of MANY changes we will be seeing in 2014. But it’s a great illustration of why it’s important to have an agent representing you who write contracts frequently and is abreast of ALL the changes. The average Realtor in the United States only sells about 5 homes per year. And many buyers & sellers choose to be represented by agents who practice less than full-time – just because they are a family member or friend. Savvy buyers & sellers know that it doesn’t cost any more to be represented by the BEST Realtors in the area. (And it keeps those precious family relationships intact!)
Whether you’re buying a home or selling a home in Northern Virginia, you may be wondering what the top 5 most sought after eco-friendly home features are. Find out in this 1 minute video!
Contact The Belt Team for more information. If you’re selling now, our top-notch Seller Specialists Terry Belt & Kevin Kleifges can help assess which features may add value or salability to your home. Not ready to sell yet? You may want to update and save some money on utilities in the meantime!
Here’s a question we often get asked by our Home Buyers:
“I’m already spending a LOT of money on my new home. Do I REALLY need to get a survey? My lender says they don’t require one. Is this is an area where I can save money by skipping it?”
We advise our Buyers to ALWAYS get a survey. Here’s why:
1. Without a survey, you have no idea whether there are encroachments, easements and other sorts of things that may matter to you (like flood plains or cemetery easements!). For example, on a contract we settled earlier this month, the survey showed that the fence on the property (and the hot tub!) was actually installed over the property line and in the common area of the townhouse community. So the backyard area was really not as big as it appeared to the buyer. AND if the buyer accepted it “as is”, the Homeowner’s Association could at some point require him to move it (at his expense!).
2. When you purchase title insurance, if you do not also purchase a survey, the insurance policy will not insure over these types of issues. Instead, there will be an exception to the policy for survey-related problems. So – if a problem arises later, you will not be covered. Don’t be confused by lender’s title insurance. Their policy (which only insures them – not you) may cover survey issues without a survey (or with the copy of an old survey) – but that is only because of the volume of business they do. Individual buyers are NOT covered without a survey.
Our motto – “better safe than sorry” – especially when it comes to your most precious financial investment – your home!
Contact The Belt Team at (703) 242-3975 if you have other questions about buying a home in Northern Virginia. We are happy to schedule a FREE consultation to walk you through the process!