Facebook
Twitter
Pinterest
Copy Link
What to Know About Different Types of Properties
Before buying a home, it’s helpful to know more about the different types of properties available. Some types are better suited for your lifestyle, depending on your goals and finances.
When people envision buying a house, they often think of a single-family home. This is a stand-alone structure where a single family lives, hence the name. But there are many other types of homes available, including condos, townhouses, duplexes, and multi-family homes. Each of these types of properties has its own unique characteristics. It’s best to consider and evaluate all options before starting your home-buying journey.
What is a single-family home?
Buying a single-family home is often associated with the American dream and success. While single-family homes usually provide more freedom and privacy, they are also more expensive. As a buyer, it’s exciting to have the opportunity to personalize your home and make renovations. Then again, house projects aren’t for everyone, so you may prefer purchasing a home that is move-in ready. A great benefit of buying a single-family home is that there are no shared walls. Plus, many single-family homes offer private outdoor spaces. For some home buyers, this is worth the extra cost. For others, they don’t want the upkeep. Some single-family homes are part of a Homeowner’s Association (HOA) with fees, requirements, and expectations. Some HOAs may offer amenities like a neighborhood park or events such as block parties. While some HOAs are strict about lawn and home exterior maintenance, others aren’t. Therefore, it’s important to inquire further if looking at a home that’s part of an HOA.
If you do decide to move forward with purchasing a single-family home, one architectural style to consider is a rambler house. Ramblers are known for their spacious interiors, one-story designs, and welcoming layouts. For those looking to age in place, ramblers can be ideal. No one will have to worry about navigating stairs, and you can enjoy an open floor plan with a central living space and an attached garage.
What is a townhouse?
Typically, townhouses are narrow, multilevel structures with a small yard in the front or back. Townhouses are similar to row houses in that they are built in a row. However, townhouses often have varying architectural designs and roof lines despite being built in a group with shared walls on the sides. Meanwhile, row houses all share a common façade.
For some home buyers, a townhouse may be the perfect fit. Many are more modern and often cost less than single-family houses. Like a single-family house, owners are responsible for exterior and interior maintenance and repair. Also, townhouses usually have Homeowner’s Association (HOA) fees similar to a condominium. However, these fees are usually much less expensive because the focus is on caring for shared areas instead of providing high-quality amenities.
What is a condominium?
Condominiums are divided, individually owned units in a much larger structure. Many look like high-end apartments since they are smaller sized and don’t include land ownership. This can be an attractive option since condominiums are often less expensive. Plus, owners are only responsible for maintaining the inside of their unit.
However, condominiums are unique in that all the residents who live there share the costs of the rest of the building. These costs are covered through monthly HOA fees that can be quite expensive depending on the number of amenities. For example, HOA fees cover the costs of insurance and usual outdoor maintenance. But if the condominium building has a pool, gym, or barbeque pit, then these things are also covered by the HOA fees and drive up monthly costs. On one hand, it’s great because you don’t have to worry about a lot of maintenance. On the other hand, you may not feel the benefits outweigh the increased cost. If you are purchasing a condominium, make sure you research the HOA fees. This includes who oversees managing disbursement, and how often fees are raised.
While not as common, some neighborhoods consist of single-family homes or duplexes that are, on paper, just like condominiums. These neighborhoods often have shared common clubhouses that feature amenities often found in typical condominiums, such as pools, gyms, or other shared perks. These neighborhoods also require HOA fees to cover the costs of these amenities.
What is a multi-family home?
A multi-family home is a broad term that encompasses all dwellings that house more than one family. So this includes everything from a duplex, to a townhouse, to a condominium, to a multi-unit apartment building. If you are thinking about purchasing property as a place to live and as a rental property, you may want to consider buying a duplex or multi-unit apartment building. This will allow you to live on-site and also rent other available units. While this sounds attractive financially, becoming a landlord is a lot of work and a big responsibility. Windermere does offer property management services.
Next Steps
After reviewing the different types of properties and deciding which one is best for you, a Windermere Poulsbo real estate agent can help you get started. Whether you’re a first-time homebuyer or considering downsizing, a local expert can find the best home and community for you. They can also answer any questions you have about getting a home loan and discuss the new Washington State real estate law changes.
Understanding Contingencies When Selling Your Home
If you’re preparing to sell your home in Kitsap County or in the surrounding area, there is a good chance you will find an enthusiastic buyer. However, their offer may contain contingencies. Contingencies are certain conditions that must be met before the sale of a home is finalized. They are often meant to help buyers protect their interests. As the home seller, it’s important to understand contingencies you may encounter when an offer is presented.
Are contingencies common?
Yes, contingencies are quite common. If the required conditions are not met, then the seller or buyer can exit the contract. It is common for a buyer to include contingencies in their offer.
What are common contingencies?
Let’s discuss some common contingencies. First, there is the home inspection contingency. This allows the buyer to have a home inspection within a set period of time. If an inspector finds unsatisfactory conditions or concerning areas, the buyer might negotiate the price or request repairs. The contingency could require repairs to be completed before the home sale is finalized. This is why a pre-listing inspection is so valuable for home sellers. It will ensure you won’t find any surprises that may impede the sale of your home.
An appraisal contingency could play a role in financing. This contingency requires that the house must be appraised at the sale price or higher. Depending on the agreement, this contingency may also stipulate that the sale price will be reduced to the appraised value if the appraisal is lower.
A buyer might also present a home sale contingency to you as the seller. This contingency is often included when buyers are trying to buy a new house while selling their current home at the same time. As a seller, it is important to consider this carefully. You can require a specific time frame for the other home sale to take place. If the other home is not sold in time, that will void the contract. However, you may lose out on other potential offers during that time. But if the buyer’s offer is strong, a home sale contingency can be worth it.
Finally, a title contingency is common. Before the sale is finalized, a search will be conducted to ensure there are no liens or judgments against the property. It’s a good idea to pull a pre-title report prior to listing your home to set yourself up for a smoother transaction.
How can I ensure my home is prepared?
Avoid these mistakes, and get all the necessary documents together. Gather your home’s title history and documentation regarding your property’s condition. Ask your trusted, local real estate agent to conduct a Comparative Market Analysis. Have a pre-listing inspection completed. This will give you time to make necessary home improvements, which will give you a high return on your investment. Staging can also be very beneficial.
Also, consider the Windermere Ready program. Your Windermere real estate agent can create a customized plan of action. And, Windermere can provide financial assistance so you can sell your home for more in less time. Watch the video below to learn more about this advantageous program.
Who should I consult with to review contingencies?
A knowledgeable agent can walk you through it all. They understand your needs and will advocate for them. It’s crucial to have a strong negotiator at your side, especially when discussing contingencies. Don’t be afraid to ask questions so that you can make well-informed decisions.
Short-Term Financing with a Windermere Bridge Loan
Buying and selling a home at the same time is challenging for a variety of reasons. Often, homeowners need their home to sell to have enough money available for the down payment on a new home. A bridge loan is helpful if you can’t wait for your home to sell in order to purchase a new home. Let’s dive into the details.
What is a Bridge Loan?
In real estate, a bridge loan is a short-term loan that allows buyers to borrow a portion of equity in the property they already own. For most homeowners, this means borrowing existing home equity to use as a down payment on a new house. The bridge loan also helps improve immediate cash flow to cover other expenses and financial obligations. Similar to a home equity loan or a mortgage, bridge loans are secured with your current home as collateral.
When securing a bridge loan, you do have to meet certain criteria to qualify since these loans are considered higher risk. Lenders look for a low debt-to-income ratio, a good credit history, and considerable equity in your current home. As a result, a bridge loan may be out of reach for some homeowners.
Windermere Bridge Loan Benefits
Windermere offers an exclusive bridge loan program for clients to help with financing a new home while their current home is still for sale. The bridge loan gives you the confidence to move forward by providing upfront funding using the equity from your current home so that you can make a non-contingent offer on a new one. Windermere’s Bridge Loan program gives you a stronger negotiating position and eases the pressure of having to sell before you buy.
Being able to make a non-contingent offer allows you to be a competitive buyer in a tight housing market. You don’t want to lose the new house of your dreams because you’re waiting for your current home to sell. A non-contingent offer is more attractive to sellers because they don’t have to wait for your home to sell first before closing the deal.
Windermere Poulsbo’s Branch Manager, Julie Bray-Larsen, recognizes the advantages of the Windermere Bridge Loan. In fact, she used the program for her personal home purchase. “The Windermere Bridge Loan allows buyers to compete in a competitive market. With an approved bridge loan, the buyer becomes a cash buyer without a finance contingency and has no monthly payments for 6 months or until they sell the collateral property. There is no appraisal involved on the property being purchased, and the entire process is seamless!”
Windermere Bridge Loan Process
When determining the bridge loan, Windermere looks at the amount you owe on your home, plus the bridge loan. These two loans combined cannot be more than 75 percent of the value of your current home. This helps determine the qualifying bridge loan amount. The approval process for a Windermere Bridge Loan only takes a few days.
No payments are necessary on the loan before your home closes unless you choose to make a payment. The loan fee is just one percent of the loan amount, due upon disbursement of the loan. The principal and interest are due when your current home sells or six months following disbursement, whichever comes first.
What about Interest Rates?
Don’t let higher-than-average interest rates stop you from moving forward with buying a new home. Bridge loans are short-term loans with higher interest rates than regular loans, regardless of what’s happening in the broader economy. This downside is outweighed by the ability to buy the house you want by making a competitive offer.
Additionally, although the current interest rates average 6.75% for a 30-year fixed mortgage in Washington state, real estate experts often say you marry the home, but date the rate. You can always refinance when the rates go down.
Taking the Next Step
If you want to learn more about the Windermere Bridge Loan program, please contact a Windermere Poulsbo real estate agent. They will be happy to answer any questions you have.
Home Buying 101: Important People Involved in the Process
Purchasing a home is a collaborative journey that involves various professionals working together to ensure a smooth process. You may think primarily about you as the buyer and the seller, but there are many others involved. Understanding the roles of key individuals in the home buying process is crucial. Here are some important people to consider throughout the process.
Real Estate Agent: Guiding & Advocating For Your Needs
Your buyer’s agent is your partner in the home buying process, offering specialized knowledge and resources to help you find your dream home. From initial search to closing, their expertise and compatibility with your preferences are essential for a successful collaboration. Additionally, a local agent will provide valuable resources if you’re new to the area. A top-notch agent will know the local housing market well, providing helpful information about the community and specific neighborhoods. You want someone who is well-connected, has great local recommendations, and can really leverage their expertise to help you find a home and a community that suits you. When it comes to crafting offers and negotiating on your behalf, you want someone who will listen, collaborate, and serve as your advocate.
Mortgage Lender: Turning Dreams into Reality
Securing financing is a pivotal step in the home buying process. Mortgage lenders provide various loan options, and getting pre-approved demonstrates your readiness to buy. Choosing the right lender ensures a seamless financial journey toward homeownership. To learn more, read our Q & A with Mortgage Consultant Cherie Kesti. You’ll also want to read about why a local lender can make a huge difference. And, you may want to consider a mortgage rate buydown. This allows you to secure a lower interest rate on your mortgage.
Mortgage Broker: Navigating Financial Terrain
Working alongside your real estate agent, a mortgage broker focuses on securing favorable mortgage terms for your home loan. They bridge the gap between you and the lender, ensuring a smooth transition once the ideal loan product is identified.
Underwriter: Approving Loans
Underwriters play a critical role in the mortgage process, assessing credit history to determine loan approval. Their meticulous review is essential. Any issues may lead to denial or requests for more information before granting approval.
Home Inspector: Unveiling the Home’s Secrets
A thorough home inspection is crucial for identifying necessary repairs. The inspector’s findings set the stage for negotiations with the seller. Buyers often include a home inspection contingency in their offers for potential renegotiation. To learn more, check out our article on how to negotiate after a home inspection.
Home Appraiser: Valuing Your Investment
A professional appraiser assesses a home’s value to ensure the lender is providing the correct loan amount. Their impartial evaluation considers various factors, and any disparities may prompt renegotiations between the buyer and seller.
Listing Agent: Facilitating Transactions
Representing the seller, the listing agent works with your agent to finalize offer details and progress toward closing. Post-inspection, the listing agent becomes the primary contact for repair requests and negotiations.
Title Company: Ensuring Legal Clarity
Before officially owning the property, a title company conducts a thorough search of the property’s history and public records. This ensures the title is in good legal standing, with proper recording of ownership transfer during the closing process.
Homeowners Insurance Company: Protecting Your Investment
After purchasing a home, securing homeowners insurance is crucial. Policies cover various aspects, including property damage, personal belongings, and living expenses during displacement. Tailoring coverage to your home’s specifics ensures comprehensive protection as a homeowner.
We wish you the very best on your journey, and here’s a helpful home-buying checklist to help you get started.
Our Military Connections & Resources for Clients Who Serve
We proudly support our armed forces and their families, and we’re grateful for the sacrifices they make. Many of our real estate agents have worked with military families for years and are well-versed in helping families about to PCS (for our non-military readers, that means Permanent Change of Station). As proud locals, we love introducing newcomers to Kitsap County. A number of Windermere Realtors are either veterans or have family members who are. Whether you’re preparing to move to Kitsap or thinking of selling your home, we’re here to serve you.
Our Ties to the Military
Windermere Realtors like Forrest Arnold are veterans themselves. “As a 19-year-old sailor during the Vietnam event, I was crew during 103 combat missions…all in the midst of Agent Orange…So I’m grateful to have survived that time and to live in Kitsap where veterans are honored with honest appreciation.”
Military family members offer unique perspectives as well. “I was born in an Air Force hospital with my father at war in Vietnam,” says Windermere Realtor Audrey Newell. “I’m the wife of a career Navy officer (ret.). I have seen what service means, and I am thankful to all who serve, and the families and communities that support them.” Audrey also shared this powerful quote by Winston Churchill: “Never was so much owed by so many to so few.”
A Navy spouse and Windermere Realtor, Ida Bear shared a recent, meaningful experience. “Jim and I had the opportunity to visit Normandy, France. We spent a great deal of time there getting our heads and hearts around the selfless commitments made by thousands of soldiers. In the Normandy American Cemetery, we have almost 9,400 Americans laid to rest, most of them killed on one day of conflict. This quote hangs at Normandy and rings true and stuck with me:
“You can manufacture weapons, and you can purchase ammunition, but you can’t buy valor, and you can’t pull heroes off an assembly line.” – Sergeant John R. Ellery, U.S. 1st Infantry Division, landed in Normandy on D-Day
Kitsap County Resources
Kitsap County is a beautiful place to live. If you’re new to the area or looking for resources to assist those who are, we hope these will help you. We’re also proud locals, and many of our agents grew up here. So, if you have any questions, don’t hesitate to reach out.
- Guide to Kitsap County with videos and links
- Kitsap Events Guide with annual and recurring events listed by month
- Military Spouses of Kitsap Group to get connected and receive local recommendations
- Visit Kitsap Peninsula – a great tourism resource
- Windermere Sound Living’s Facebook & Instagram with local events, small business spotlights, and more
Real Estate Resources for Military Clients
If you’re preparing to move, Military OneSource has planning tools and relocation articles. Additionally, that’s where you’ll find the official Department of Defense guide for military installations worldwide. If you’re thinking of buying a home, you can easily learn about different types of VA loans, such as a Purchase Loan and an Interest Rate Reduction Refinance Loan (IRRRL). Branch Manager/Mortgage Consultant, Cherie Kesti, is our partner lender, and she can determine your buying power according to current BAH rates. We also have a helpful Home Loans Q & A article with her.
If you’re thinking of selling, here are some mistakes to avoid. and information about renting vs. selling your home. Our agents can also provide additional information about Kitsap County’s real estate market, Western Washington’s market, and more.
Staging a Home: Costs and Benefits
When it comes to selling your home, it’s essential to stand out to ensure the best price with the most favorable outcome. One effective way to do that is by staging your home. Staging will present your home in the best possible manner, appealing to homebuyers online and in person. Let’s explore the costs and benefits of home staging.
The Costs of Home Staging
Staging a home is an investment, and it’s important to understand the potential costs involved. The expenses can vary depending on the size of your home, the extent of the staging required, and your location. Here are some typical costs to consider:
- Professional Staging Services: According to data from HomeAdvisor, home sellers pay between $778 and $2,851 in home staging costs. However, the price can vary widely depending on how much staging needs to be done, if your home is vacant or not, and how big it is. How long your home is on the market also impacts the cost due to monthly furniture rental fees.
- Furniture Rental: If your home is vacant, you may need to rent furniture and decor to create a warm, inviting ambiance. Furniture rental costs can range from a few hundred to a few thousand dollars per month.
- Repairs and Updates: Sometimes, staging involves making necessary repairs or updates to your property. This may include fresh paint, minor updates, or landscaping improvements. Costs can vary, and a local expert will be able to assess your property’s specific needs.
- Storage Costs: If you need to store some of your belongings while your home is staged, you’ll need to consider storage costs.
- Utilities and Maintenance: While your home is on the market, you’ll need to keep your staged home in excellent condition. This may require additional utility expenses, as well as regular maintenance costs.
If you need financial assistance preparing your home, the Windermere Ready Program has benefitted many of our sellers. We can provide up to $100,000 and the program includes a personal consultation with one of our local real estate agents, high impact updates, and professional staging.
Why Sellers Should Stage Their Homes
Now that we’ve discussed the costs, let’s dive into the compelling benefits of staging your home:
- Faster Sale: Homes that are professionally staged tend to sell faster than unstaged properties. According to the National Association of Realtors (NAR), staged homes spend 73% less time on the market on average.
- Higher Selling Price: Staging can potentially increase your selling price. According to the National Association of Realtors, a 2021 report found that 85% of staged homes sold for 5% to 23% over the listing price.
- Improved First Impressions: Staging helps create a memorable first impression, making your home more attractive to potential buyers. An inviting and well-organized home can go a long way. In a 2023 study, 81% of buyers’ agents said staging a home made it easier for potential buyers to visualize the property as a future home.
- Increased Visibility: In today’s digital age, most homebuyers start their house hunt online. Staged homes typically photograph better, making your online listings more engaging. A captivating online impression can lead to increased clicks on your listing and increased foot traffic at open houses.
Why Use a Local Real Estate Agent
To ensure the successful staging of your Western Washington home, we highly recommend partnering with a knowledgeable, local real estate agent. Here’s why:
- Market Expertise: Our local agents understand the intricacies of Kitsap County’s real estate market. They know what buyers want and will tailor the staging process accordingly.
- Professional Network: Our experienced agents know excellent stagers, contractors, and other professionals who can assist.
- Pricing Strategy: Our real estate agents will help you determine the optimal pricing strategy for your staged home, ensuring you get the best return on your investment.
- Negotiation Skills: When it comes time to review offers, you want someone who will serve as your trusted advocate, using their negotiation skills to secure the best possible deal for you.
In conclusion, the benefits of staging a home far outweigh the investment. A well-staged home sells faster and at a higher price, and partnering with a highly-rated, local real estate agent ensures success. So, if you’re looking to sell your home in this beautiful corner of the Pacific Northwest, feel free to contact us with any questions you may have.
How to Negotiate After a Home Inspection
Even if the house you are buying seems perfect, often a home inspection will uncover necessary repairs. As the home buyer, it’s within your right to request credits or fixes to address those issues. Here are a few tips to effectively negotiate after a home inspection.
Required Repairs
Since a lender is making a financial investment in your new home, they will require an inspection. Additionally, the lender may require certain repairs before moving forward. Sometimes, these requirements are outlined within the loan agreement. Most often, this applies to major defects that could adversely impact a home’s property value. This typically includes structural issues, water damage, pest infestations, and building code violations.
Ideally, home buyers here in Washington won’t have major surprises discovered during the home inspection. Sellers are required to provide a disclosure form outlining defects and details about the home. That said, sellers can be unaware of certain issues, which is why home inspections are still really important.
Ask For Repair Credit
If the home inspection does reveal repairs, often the best strategy is asking for repair credit. Remember, the seller is in the process of packing up and moving on. They are no longer invested in the look and quality of their old home. There is a good chance that the seller won’t approach making repairs with the same level of care and attention to detail that you will. As a result, negotiating a repair credit and lowering the sale price is a great option. This way, the seller doesn’t have to worry about the repair, and you get a better deal. Once the sale is final, you can hire contractors you trust to do the job right. New to the area? Your local real estate agent should be able to recommend someone.
Be Practical
As you review the home inspection and contemplate the repair list, think about your plans for the house. Maybe there is damage on one corner of the kitchen floor, but your plan is to replace the floor eventually. Then perhaps it’s best to forego trying to address this relatively minor issue and focus on negotiating major repairs.
While sellers in Washington State are required to disclose defects, they are not required to fix them. If a major defect is revealed during a home inspection, your lender may require having it repaired. It’s your right as the home buyer to go back to the seller and attempt to negotiate this through a repair credit or a fix-it request. Technically, the seller can refuse. If the seller says no, you will have to decide whether to make the repair yourself or whether to call off the deal.
Consult Your Local Real Estate Agent
Working with a knowledgeable local real estate agent is essential in these situations. A highly rated Windermere Poulsbo agent can guide you through the home inspection process. If the inspection reveals necessary repairs, your agent will work with you to determine which repairs are worth negotiating. They will also negotiate on your behalf. If the seller declines, your agent can help you decide the next best step. Being able to rely on an expert negotiator after a home inspection is invaluable. Any huge financial decision should be made with as much information as possible and with the support of a local, experienced advocate at your side.
For additional information regarding the home-buying process, check out the Windermere Guide to Buying a Home.
Home Loans: Q & A with Mortgage Consultant Cherie Kesti
If you’re a first-time home buyer, the idea of buying a house may be exciting and overwhelming. We’re here to help by answering your frequently asked questions. Here at Windermere, we’re proud to partner with Penrith Home Loans and we love our lender, Cherie Kesti. Cherie is a Branch Manager and Mortgage Consultant with over 20 years in the home financing industry and a proud Kitsap local. She graciously made the time for our Q & A.
What are the most common types of loans for a first-time home buyer?
The most common types of loans for first-time home buyers are Conventional, which offers 3% as the minimum down payment; FHA, which offers 3.5% as the minimum down payment and, of course, VA financing, which offers zero down payment for qualified veterans or active duty members. Any of these programs can be coupled with a down-payment assistance program for those borrowers who qualify, as this is an income-driven program.
How does your credit score impact your mortgage rate?
A credit score can affect a mortgage loan in a good way or bad way. The higher the credit score, the better the interest rate structure, and there are more loan options available. The lower the credit score, the stronger impact it has on the interest rate structure (higher rate) and fewer loan options that may be available to the borrower.
What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?
A fixed-rate mortgage is just that. The interest rate is fixed for the life of the loan, albeit a 30-year term, 25-year, 20, 15 or 10-year term. The adjustable-rate mortgage will have a point in the loan where the rate becomes variable. It may be right away, such as on a home-equity-line-of-credit mortgage, or the rate may be fixed for the first 3 years, 5 or 10 years of the mortgage term before it converts to the adjustable-rate feature. An adjustable rate will have a limit to how high it can go during the life of the loan, called a cap. After the fixed rate term, the rate usually fluctuates once a year based on the index and the permanent margin of the loan term.
What is private mortgage insurance (PMI), and do I need it?
Private Mortgage Insurance (PMI) is default insurance for loan amounts that are greater than 80% of the value or purchase price of the home. This is an amazing tool/feature of a home loan because it allows borrowers to put as little as a 3% down payment on a home loan as owner-occupied. Of course, the more you put down, the less you pay in monthly mortgage insurance. For example, someone putting 15% down will pay less each month than someone putting 5% down. Just like you would want to insure your home for fire damage, PMI acts like insurance for the lender in the event the mortgage goes into foreclosure. It’s very expensive for a lender to foreclose on a home. The monthly mortgage insurance drops off automatically when the loan balance to the original purchase price or appraised value reaches 78%. Homeowners can request the loan servicing company to review for removal when it reaches 80%, and their payments have been on time for the past 24 months.
What is the debt-to-income (DTI) ratio, and how does it affect my ability to get a mortgage?
Debt-To-Income (DTI) ratio is the calculation between the total gross monthly income(s) and the total credit reported monthly debt + alimony or child support obligations + new mortgage payment and sometimes the current mortgage payment if keeping the departing residence. If one carries too much debt for the gross income to stay in line with the mortgage loan guidelines, it may affect the buyer’s purchasing power. Or, it may require the borrower to pay off debt as a condition of the loan approval. Every file is different in how their DTI affects them. But this gives you a good idea of what we look for.
What is the difference between pre-qualified and pre-approved?
Being pre-approved will get you further on the integrity of your purchase offer than just a pre-qualification letter. Pre-approved means that your application has been completed, reviewed by underwriting, and conditionally approved. Conditionally meaning that title, appraisal, insurance, and perhaps updated pay or bank statement are needed before closing. Pre-qualified just means that an applicant may have had a conversation with a loan officer, and credit approval is automated vs. being reviewed and approved by an underwriter. At Penrith Home Loans, we have a unique process we take our borrowers through to get them the highest level of loan approval: Certified Home Buyer.
How much can a borrower afford to spend on a home?
Well, that depends on what their loan qualifications and credit look like. Each borrower brings a unique set of qualification features to their loan application. The Loan Officer or Mortgage Consultant plays an important part in helping each borrower answer that question. The affordability aspect may be influenced mainly by the amount of gross monthly income that can be verified and acceptable. Or, it may have everything to do with how much the borrower can bring to the table as their All-In $$ number drives how much they can afford.
What are the advantages and disadvantages of getting a government-backed loan such as an FHA or VA loan?
A government-backed loan such as an FHA or VA loan are common first-time home buyer programs. FHA self-insures their loans for default which allows borrowers with lower credit scores to qualify for a lower down payment with a little better interest rate than what a Conventional loan may offer. Self-insured just means that there is an up-front Mortgage Insurance Premium amount that is allowed to be financed into the base loan amount (after the minimum down payment is applied). Then, there is a monthly mortgage insurance amount that is built into the payment that stays on there until the loan is paid off or refinanced to a conventional loan. Again, mortgage insurance is default insurance for FHA in the event of a foreclosure.
When it comes to VA loans, this is a popular first-time home buyer program, too. But you can use it subsequently with seasoned VA home buyers, allowing as little as zero down each time. VA charges a Guarantee Fee, which acts the same way when a VA loan goes into foreclosure. The VA funding fee or guarantee fee is allowed to be financed into the loan. The percentage of the VA funding fee charged changes depending on whether the borrower has a down payment or not. The more the down payment, the lower the VA funding fee charged. If the veteran receives a VA-related disability income, then the VA funding fee is waived completely. The advantages of either of these programs are that they allow minimum to no down payment, leniency on credit scores, and allow for a higher DTI than a conventional loan may.
What is a home inspection, and why do you need one before buying a home?
A home inspection is usually not required to finance the purchase of a home unless an appraisal report specifically calls one out. Examples include a roof inspection, an inspection on the well or septic, or a structural inspection if there are concerns pointed out on the appraisal about the health and safety of the structure. A home inspection can be an important part of learning if the home being purchased needs immediate maintenance attention. It can also help you plan for maintenance attention down the road of ownership. You’ll be able to learn more about the inner workings of your home, such as furnaces, hot water heaters, electrical panels, plumbing details, etc. When you own a home, you become responsible for its upkeep, which ensures your home will hold its value over time.
An appraisal report is not a home inspection. It is a report, usually required with a mortgage, that compares the subject home with other recently sold and similar homes in the area for value and condition. The appraiser will want to see the terms of the purchase in hopes that the appraised value of the home will support what it’s being sold for. The lender also looks for the home to be in an acceptable condition for health and safety.
If you have additional questions about home loans, you can contact Cherie Kesti or one of our Windermere Poulsbo Brokers. And, when it comes to lenders, a local lender can make a huge difference. Additionally, you may want to check out our home-buying checklist. Best of luck on your homebuying journey!
Real Estate Insights From Our Chief Economist, Matthew Gardner
Once a month, Matthew Gardner, Windermere Real Estate’s Chief Economist, provides insights on our housing market. We’ve listed some of his recent predictions, thoughts, and conclusions to give you the information you need to make well-informed real estate decisions. And, you can also watch Gardner’s full videos below to learn even more.
The Continued Decline of the Housing Market Index
The National Association of Home Builders released their Housing Market Index for August, and the data was “eye-opening” as Matthew Gardner says. Based on a survey of home builders, this index asks them to give their take on the single-family market. Builder confidence fell for the 8th straight month, dropping below the index level of 50. As Gardner explains, “More home builders currently rate sales conditions as poor than good…Builders have been reporting a spike in canceled contracts recently.” Additionally, all components of the Housing Market Index are at their lowest level since May of 2020. 69% say mortgage rates are the primary reason, and 19% of builders have reduced prices in an effort to increase sales. Gardner says he uses the Housing Market Index as a reliable indicator when it comes to single-family housing starts.
When it comes to new homes for sale, there’s a rise in listings of 32.1% year-over-year. Furthermore, of the homes currently for sale, 67% are under construction. 24% haven’t broken ground yet, and 9% are ready for new owners to occupy them. While it may seem like it isn’t that bad since only 9% are finished, Gardner points out that “builders incur costs every day that the home is not sold, even if that home has yet to be built.”
“With more homes for sale and lower transactions, it would now take more than 9 months to absorb all available homes using the current sales pace.” As a result, new home starts fell by 10.1% between June and July of this year. And, starts have dropped by 18.5% from a year ago.
Affordability is a key issue that Gardner highlights. He also points out how construction costs have impacted builders. And, that is magnified by the fact that they’re competing with rising inventory in the resale market. “Last month, the average price drop was 5% but this is very likely to increase as we move toward the fall.”
To learn more, watch the full video below.
Mortgage Rates and Inflation
In the beginning of 2022, 30-year conventional mortgage rates started at just over 3.1% but have skyrocketed to 6%. While economists like Matthew Gardner expected rates to trend higher this year, no one anticipated such a dramatic increase. That’s because no one could’ve factored in Russia’s invasion of Ukraine and that inflation would continue to climb for much longer than we expected. As a result, “when inflation is running hot, it limits demand for bonds,” Gardner explains. This then “forces the interest rate payable on those bonds to rise and this pushes mortgage rates higher.”
Gardner also looks at other inflation indicators, which point to the fact that slower spending acts as a headwind to further price increases. He also looks at the Producer Price Index, which measures at the wholesale level, not the retail level. “Even though the total rate rose as energy costs continue to impact the manufacturing sector, the core rate has been pulling back again for the past three months.”
Matthew Gardner concludes, “If the trends we’ve looked at continue, I still expect inflation to start slowly creeping lower, which will push bond prices higher, yields will start to, if not drop, then certainly pause. That will allow mortgage rates to hold at – or close to – their current levels for the time being. But we could actually see rates coming down a little.”
You can watch more of Gardner’s videos on Windermere’s YouTube channel. If you have any questions about the information we’ve shared, feel free to reach out to one of our local real estate experts. Our agents are highly knowledgeable and happy to assist you.
Fall Home Sales: Why Autumn is a Good Time to Sell Your Home
Are you thinking about selling your home, but worried since it isn’t spring or summer? Fall is actually a good time to sell your home and it comes with some unexpected perks. Keep reading to learn more about the benefits of fall home sales.
Fall Ambiance
Autumn is a beautiful time of year, especially here in the Pacific Northwest. The leaves are turning, the air feels crisper, and the holidays are fast approaching. All these things can strengthen your home’s curb appeal. Take advantage of autumn’s allure by keeping your yard and home’s exterior pristine. Make time to rake the leaves and keep your gutters clear. By keeping things tidy, you are giving your home’s natural fall foliage a chance to shine. You can also add a touch of autumn ambiance to your home’s indoor spaces by decorating with fall colors. Staging your home with autumn accents gives it an extra cozy feel that draws in potential buyers.
Julie Bray-Larsen, Windermere Poulsbo Managing Broker
Less Competition
Since spring and summer are real estate’s busy seasons, in the fall there are fewer homes listed for sale. Generally, this means less competition for you and fewer options for buyers. With not as many houses on the market, your home has a greater chance to dazzle potential buyers. As Windermere Poulsbo Managing Broker, Julie Bray-Larsen explains, “Fall is a great time to list your home here in Kitsap County. Our weather is still beautiful, so the landscaping is still looking nice. Most importantly, there’s typically less competition in the market. Because there are always buyers out looking, your home will stand out more as a potentially great fit for buyers wanting to purchase and move in before the holidays.”
Serious Buyers
People looking for homes in the fall are serious about buying. Generally, they have a reason to move at that time whether it’s because they are relocating for a job, downsizing, first-time buyers, or service members. “Our large military community in Kitsap means those buyers need to move all months of the year, so that added demand is great for sellers,” says Bray-Larsen. Serious buyers also want to find a place and get settled in before the busy holiday season starts. This adds another level of urgency to finding a home, which can benefit sellers.
Faster Closing
Since there are usually fewer real estate deals during the fall, everyone involved in the transaction process tends to have greater availability. “Mortgage brokers and escrow officers are less busy after the summer rush, so financing is more quickly approved. Therefore, buyers will be ready to go,” explains Bray-Larsen. This greater flexibility also applies to real estate agents, home inspectors, and appraisers. As a result, it’s easier to schedule appointments, and everything moves faster, which is great for sellers.
Now that you can see why fall is an excellent time to sell, check out the Windermere Ready Program. Windermere can assist by investing in important home upgrades or repairs to help you sell for more and in less time. Contact one of our real estate agents for more information.
