Ways to Hold a Title

How to Hold a Title

A title provides proof of ownership on a property, in addition to a physical description of the property. It will also have any liens that are on the property in certain situations. There are four different ways that you can hold a title.

  1. Sole ownership

There are a few ways that you can hold a sole ownership title. They are:

  • If you are an unmarried man or woman, your title should read single man or single woman
  • If you are a man or woman who has been married but is now legally divorced, your title should read unmarried man or unmarried woman
  • If you are married but wish to be the sole person on a title, your spouse needs to consent and relinquish all rights. Your title should ready a married man/woman, as his/her sole and separate property
  1. Joint Tenancy

There are two main forms of joint tenancy. They are:

  • Community property. Under community property, a property is acquired by either the husband and wife during the marriage. The property can be received through a gift, devise and descent, by bequest to them, or as a separate property of either. Either spouse can have the right to dispose of their half of the property or will it to another person.
  • Traditional Joint Tenancy. A traditional joint tenancy occurs when there is a joint and equal interest in land owned by two or more individuals. This is created under a single instrument with the right of survivorship. Under traditional joint tenancy, your title will read joint tenants.
  1. Tenancy in Common

Similar to joint tenancy, tenancy in common occurs when co-owners have an undivided interest or have equal rights to the property. However, where is differs is that tenants in common hold title individually for their share of the property. Additionally, there is no right of survivorship and no other tenants can receive a person’s share of the property. Instead, the property goes to the owner’s heirs. If you choose to have a tenancy in common, your title would read tenants in common.

  1. Trust

A living trust holds legal title to the real estate. A trustee holds the title for the trustor or beneficiary, while they retain all management rights and responsibilities.

What is Verification of Income and Assets?

In order to get pre-approved for a mortgage, a mortgage lender will need to verify your income and assets. This will help to determine how much of a mortgage you can afford. It will also help determine what your interest rate will be.

What is Verification of Income?

A mortgage lender requests verification of income to see if you have the means to pay your mortgage payments each month. To confirm your income, a mortgage lender will request a few documents. Typically, you will need two years of W-2s, two years of tax returns, both federal and income, and two of your most recent pay stubs. In addition to this, you should also have ready:

  • Most recent checking account statements
  • Current savings account statements
  • Monthly debt obligations
  • Other loans in your name, including personal, student, and auto loans
  • Most recent credit card statement

To verify your income, the lender may contact your employer directly to confirm your employment. This gives the lender the opportunity to verify the information on your W-2 and pay stubs to ensure it reflects your income amount.

If you are self-employed, you’ll need to show the lender proof of a steady income. This can be shown through a quarterly or year-to-date profit/loss statement and at least two years’ worth of your business and personal federal and income tax returns.

It’s possible that forms of income verifications and document requirements can vary depending on your financial situation, so be sure to confirm with your lender what you will need to provide.

What is Verification of Assets?

Lenders will also want to verify that you will be able to pay the principal, interest, taxes, and insurance in the case of a financial emergency. This is determined by your assets. Liquid assets are those that are easily converted to cash, such as savings accounts, checking accounts, and stocks. Examples of documents you might have to submit to verify your liquid assets are:

Cash can be considered a liquid asset, but it must be seasoned. This means that the cash has been in a checking or savings account for a longer period of time, typically at least two months. Most lenders will want to see at least six months’ worth of liquid assets to plan for an unforeseen financial issue.

You can also submit non-liquid assets, which are assets that are harder to convert to cash, such as property, self-owned businesses, or artwork. However, these might be harder to liquidate in an emergency.

Your Home’s Value and Your Neighbors

How Your Neighbors Affect Your Home Value

When selling your home, one thing that affects whether you can sell your home and how fast you can sell your home is your home’s value. Most people know that a home’s value can be affected by your home, but did you know that your neighbor’s home can also affect your home’s value? Here are four things about your neighbor or your neighbor’s home that can affect your home’s value.

  1. Physical problems

The curb appeal of your neighbor’s home is almost as important as the curb appeal of your home. Any visible signs of disrepair or damage can turn off any potential home buyers from visiting your property. The more damage to your neighbor’s home and yard, the more impact it has on your home’s value. If you are in a neighborhood with a homeowner’s association (HOA), there are most likely guidelines that each homeowner must follow. If a neighbor isn’t following the guidelines, you can report them to the local HOA and they will handle the situation.

  1. Financial problems

A single foreclosure on the same street as your house can affect your home’s value. Delinquent neighbors can also hike up prices of homeowner’s association fees. Finally, if you live in a condo, neighbors who don’t pay maintenance fees can affect your unit’s value.

  1. Legal problems

Your home value is greatly affected by the record of your neighbors. Many communities keep a list of registered sex offenders that is open for public inspection. If you end up with one of these people as your neighbor, it can not only make your home value drop significantly, but it can also take you longer to sell your home. Your home’s value will also decrease if your neighbor has been convicted of any crimes.

  1. Miscellaneous problems

Your neighbor might just be a nuisance. Common problems include neighbors who frequently make noise or have loud parties. Living near any closed-down or vacant businesses or other buildings can also affect your home value, as well as living near loud nightclubs, landfills, or other undesirable businesses and/or facilities.

Writing an Offer Letter

Real Estate Offer Letters

An offer letter is a legal document used by a buyer who wants to place a bid on a house that is for sale. You want the seller to feel positive about you after reading your letter. To make your offer letter the best it can be, follow these seven tips.

  1. Make a connection

You want to make the seller identify with you and your family, so search for something you and the seller have in common. This can be anything from you sharing the same line of work to noticing something similar in their house to yours. During the home viewing, pay close attention to the details so you can make the connection later.

  1. Short and sweet

No one is going to want to read pages and pages of story. Keep it short and sweet, focusing on two or three reasons why you are the best buyer for the home. Try and keep the letter down to a single page.

  1. Keep it positive

Keep the information you put into your letter positive. Don’t focus on the other homes you’ve lost out on. In the worst-case scenario, this can make the seller wonder why you have been having trouble buying a home and make them pass on you.

  1. Emotion

Don’t be afraid to show an emotional attachment to the home. In your offer letter, talk about how you can see your kids playing in the backyard or see your family cooking Sunday dinner together.

  1. Don’t talk about remodeling

Odds are the sellers still have an emotional attachment to at least some part of their home. Remodeling plans will ultimately change something that a seller might love dearly. Keep your plans to yourself.

  1. Wrap it up

Finish your offer letter with a short paragraph that reinforces what you talked about in your previous paragraphs. Show appreciation for the seller’s time and the opportunity to write a letter.

  1. Proofread

Always assume that your seller is a stickler for grammar. Pay attention to grammar, spelling, and punctuation. Additionally, look for things that a spell check might not detect, such as different variations of there, your, and its. After looking it over once, have a friend or family member to review it for you. A fresh eye might catch something that you might have looked over.

Saving on Home Construction Costs

Home Construction Savings

Finding the perfect house can be difficult. If your home search is coming up empty, you may want to consider constructing your own home. As you may imagine, building a home comes with more costs than buying an already constructed one. However, here are a few things you can do to cut down home construction costs.

  • Expand up rather than out

You can start your saving by simplifying your home design. Excavation and foundation are typically the most significant costs when constructing a home. The more a home goes out, the more foundation you need to construct. Instead, consider building a two-story home that equals the square footage of the one-story that you originally want to build.

  • Hire the right home builder

In order to build a cheaper house, you need to hire the best home builder, even if they are a more expensive option. It may sound counterintuitive, but this does actually save you money. A home builder who is inexperienced, uninsured, or unlicensed can actually cost you more money in the long run. An experienced builder can save you money by predicting potential problems. Search for reputable contractors with experience completing the type of home you’d like. Make sure that they are properly licensed and insured.

  • Become a general contractor

If you want to get more hands-on with the project, you can become a general contractor yourself. This can save you up to 20% on the cost of building your home. Make sure to bring in subcontractors to do the work you may not be comfortable completing, such as electrical or plumbing.   

  • Energy-efficient materials

Energy-efficient appliances can mean rebates, tax credits, and more. While it may cost more initially, the long-term savings may be worth it.

  • Avoid change orders

A change order happens when you want to send back an item, such as an appliance or backsplash, and pick out a different one. This adds time to the schedule, as you are waiting for the items to arrive, and extra money to the budget.

  • Avoid site preparation charges

Choose the best site you can afford and design a plan that fits around the site or can be modified for the site. Extra work such as hauling in-fill dirt, clearing trees, blasting rock, and grading are expensive and add extra time to the schedule.

  • Buy a large lot – and split it

Do you have a family member or a friend who you would love to be neighbors with? If you find a property that you love but it too large for just yourself, split it with that person so each of you can build your dream home.

  • Waterfront property choices

Do you want a waterfront property? Oceanfront and lakefront lots are already more expensive than other lots. Instead, consider building your home on a canal or bay lot. They are less expensive but are still water accessible.

  • Submit paperwork on time

One of the most costly delays in construction is getting your plans approved. Seek input from the appropriate people to have the project signed off on early and ensure you’re filling out the paperwork in the correct way.

  • Be aware of the depth

Keep the depth of the construction at 32 feet or less. Any deeper and you’ll need to construct additional features, such as roof trusses. This can add to the additional cost of the overall building. As we mentioned before, if you want a larger house, consider adding another story.

What is the Mortgage Process?

The Mortgage Process

Have you ever wondered about what steps your loan goes through before closing? Wonder no more! Here are the steps your loan goes through before you close.

  1. The loan coordinator

Once you finish the application, the loan coordinator takes care of getting everything in order. They make sure that the following items are in order:

  • Employment history
  • Credit
  • Minimum documentation
  • Residential history
  • Loan amounts
  • Attorney, title, and HOA

If everything is in order, the loan coordinator registers and locks the file and sends it to be disclosed. If not, the file will get sent back to the loan officer to get any necessary items.

  1. Disclosure

Once the application and minimum documentation are verified, the application moves to disclosure. During disclosure, they will compile estimate for all third-party fees, and make sure the title and attorney fees are as low as they can be. Once verified, the loan disclosure and “wet docs” are sent out. After everything is signed, they order the appraisal and title. They additionally send the file along to pre-underwriting. If the disclosure isn’t signed, it stays in the application status and won’t move forward.

  1. Pre-underwriting

After the loan disclosure is completed, the loan is moved to pre-underwriting. The pre-underwriter analyzes the documents received to make sure that the loan qualifies for conditional approval. They will also verify the inspection and make sure they have all additional addendums to any contract that may be in place. If there are any additional files needed, the pre-underwriter will reach out to get those files. The loan will be placed on hold if any critical documents are missing. Once everything is in order, the loan will be submitted to underwriting.

  1. Processing

Once all conditions are met, processing releases the early closing disclosure. The early disclosure may have changed due to survey, title, attorney fees, and prorations. If the early closing disclosure is signed, you can close three days later. If it is not signed, you can close seven days later. After everything is signed, the wire is ordered to be released the day of closing, which will be scheduled after signed documents are received.

  1. Closing day

It’s closing day! At closing day, a cashier’s check to cover final closing costs is needed. For a refinance, there is a three day right of rescission.

Pricing Your Home for Sale

How to Price Your Home

The most important factor when selling a home is pricing the home. An overpriced home won’t get attention and will lose its freshness in the first two or three weeks. After twenty-one days on the market, interest in a home wanes. Pricing a home too low shouldn’t be too much of a worry. Typically, lower-priced homes will receive multiple offers, which will drive the price up to market price. To properly price your home, here are five factors you should consider.

  1. Comparable listings

To start, list every similar home that was or is listed in your neighborhood over the last three months, within a fourth to half a mile from your home. If you live in an area where there are only a few comparable homes or the property is rural, you can extend this distance. Pay attention to dividing lines, such as major streets or railroads. Don’t compare any homes on different sides of the dividing line.

Compare homes with a similar square footage to yours and ones with similar ages. It’s possible that you can have a home built in 1950 next to a home built in 1990, and the home value will differ between the two.

  1. Sold comparables

Compare the original listing price to the final sales price to see if there were any price reductions. Additionally, compare the final sale price to the actual sold price to determine ratios. Adjust your pricing for house size, configuration, and any additional amenities the home may or may not have.

  1. Pending sales

The sales price for pending sales is unknown until the transaction closes. However, you can call the listing agent and ask for the price. Some listing agents may tell you what the home is selling for. You should also take note of how long the home has been on the market. This can give you an indication of how long your home will stay on market.

  1. Withdrawn and/or expired listings

Why didn’t these homes sell? Look for patterns to see if there was something underlying for all of them or if it was individual reasons concerning the home. If the sellers used a cheap brokerage firm, that could be a sign that the firm didn’t spend the money to advertise their home and you should mark not to use that firm.

  1. Market trends

What is the market trend? In a seller’s market, you should be able to price your home higher than the last comparable sale, since there are less inventory and more buyers. In a balanced market, try setting your price at what the last comparable home sold for. In a buyer’s market, you may want to price your home a little lower, since there are more inventory and fewer buyers.

What is a Luxury Home?

Luxury Homes

During your real estate search, you may have come across the term “luxury” or maybe you’ve been watching a lot of Million Dollar Listings. Either way, the term luxury seems to appear a lot, but what exactly does “luxury” mean?

What makes a home luxury?

In real estate listings, luxury is all about the details. If there’s nothing to back up the word luxury in the home’s description, this is a red flag. This usually means the agent is just aspiring for the property to be luxury rather than it actually being luxury. Here are some qualities you can look for to determine whether a property is luxury.

  1. Price

The lowest price you can expect for a luxury home can be anywhere between $500,000 and $3 million. In some hot markets, such as New York City, the lower end of luxury falls around $4 million.

  1. Location

The phrase “location, location, location” is especially true in the case of luxury properties. Luxury properties tend to be in the most highly coveted locations in a city, state, or county. Be that because of a beach or mountain view, nearby the town center, or overlooking the cityscape.

  1. Quality

Standard construction materials, finishes, appliances, and design won’t fly for luxury properties. Materials such as marble, hardwood, crystal and professional-grade kitchen appliances are featured often in luxury properties. Another marking of quality comes from who designed the building. Renowned architects bring a sense of prestige that other buildings don’t have.

  1. Amenities

Amenities such as concierge services, fitness centers, movie theatres, arcade rooms, and more all make a home luxury.

  1. Privacy

Many high-end buyers want their home to be a true escape. Privacy is a huge concern for most of these buyers. Features such as a large yard, high walls, and gated entrances with security guards all provide extra privacy and protection for these buyers.

Seven Questions to Ask When Purchasing a Flipped House

Flipped House Questions

If you’ve ever watched HGTV, chances are you know what it means when someone says a home has been flipped. For those that don’t, a flipped house is one bought at a discount either because of the property’s condition or the seller’s need to move quickly. The investor then makes any necessary repairs or renovations and puts it back on the market for a higher price than they bought it for, reflecting the work they put into the house. If you are thinking about purchasing a flipped house, here are some questions you should ask before purchasing.

  1. Do you get a home warranty?

Although a flipped house typically has new appliances, it doesn’t mean it has a new water heater, air conditioner, and furnace. Ask if the home will come with a home warranty. A home warranty is typically written for a year at a time and can help you save a lot of money if something breaks during that time. You can renew the warranty by paying for it yourself during your second year in the home.

  1. Did the flippers have the right permits?

Ask if you can see the permits that the flippers used to update the house. This will help you ensure that the home is up to any safety codes and standards. You can also have an inspector check the property to make sure that the wiring is up to code and all changes were done correctly and safely.

  1. What do the disclosures say?

If your state is a “full disclosure” state, the seller must disclose any defects of the property or anything that could influence the buyer’s decision. Ask your real estate agent to get a history of all the sales on the property. Look at how many times it has been sold, who owned it before the flippers, how long they owned it, and why they moved. After, look at the disclosures for any possible red flags.

  1. What has been replaced and renovated?

Have your real estate agents to get a list of things that were repaired or replaced. While viewing the home, pay attention to the small details, such as crown molding or the tiling. If these aren’t done correctly, chances are that the flippers may have skimped out on the larger issues that will cost you money later.

  1. How old are the windows and doors?

Look at the windows and doors. Make sure that the windows can open and close easily. In addition, make sure that the doors can be closed fully and can properly lock.

  1. What about the basement?

If there is a basement, make sure to look at it. If it smells moist, it’s possible that flippers just painted to cover up any mold and moisture. A dip in the basement floor can be a sign of water protrusion. Before purchasing, make sure to have a radon test done.

  1. What about the outside?

The outside is equally as important as the inside of a home. Check to see if the fence is in good condition. If there is a pool, make sure to have it inspected as well. You may have to get a separate inspector to do this. Any issues related to the pool can be costly to fix.

What to Do If You Get a Low Appraisal

Low Appraisal

An appraisal is an estimation of a home’s value. But what happens when an appraisal comes in under the home’s selling price? Here’s how to deal with a low appraisal.

Why do low appraisals happen?

The first thing you must ask yourself is why the home appraised for less than the home’s sale price. There are a number of reasons why this may occur. Some of the most common are:

  • Declining market values due to fewer buyers and a larger inventory of homes
  • Incorrect evaluation by the underwriter
  • Overpricing by the seller
  • Fallout from a lot of foreclosures and/or short sales in the neighborhood
  • Inexperienced appraiser who doesn’t understand local influence on value
  • Artificially inflated prices, resulting from multiple offers

Solutions for low appraisals

After you figure out why your appraisal may have been lower than expected, it’s time to think of ways to solve your problem.

  1. The seller can lower the price

If the home was overpriced, the seller can lower the price. This is often the best solution to a low appraisal problem. It’s an easy way to satisfy both the buyer and the lender. The seller doesn’t need to lower the price. However, there is no guarantee the new buyer’s lender will appraise the home higher than the first buyer. Additionally, the seller will have to go through the trouble to sell the property again, which can be time-consuming and expensive.

  1. Buyers can make up the difference

A low appraisal does not mean that a lender won’t lend to a buyer. The lender will just lend based on the agreed-upon ratio in the contract at the appraised value. Buyers can make up the difference in a cash payment. In some cases, the lender will not allow the buyer to give cash for the difference. In this event, the lender will have the buyer pay part of the seller’s closing costs.

  1. Sellers can offer a second mortgage

If the buyer cannot come up with the money to pay off the difference, the seller can offer to take out a second mortgage, which the buyer will pay back in smaller payments or in one lump sum at a later date.

  1. Ask for a list of comps

Ask agents involved to put a list together including recent comparable sales in the area at the agreed-to sale price. Once you have the list together, submit it to the underwriter and ask for a review of the appraisal. Try to get comps that are similar to the property in question.

  1. Order a second appraisal

If your loan in an FHA loan, you can ask your lender for a list of approved appraisers. Either the seller or buyer can pay for the second appraisal. The second appraisal may come in higher than the first, especially if the first appraiser was inexperienced. If your loan is a conventional loan, the second appraisal is subject to the rules of the Home Valuation Code of Conduct.