Real estate terms to know

 

So you want to buy or sell a home? Here are some words to know:

 

So you are entering the real estate world? Whether you are trying to buy or sell a home (or do both!), you need to familiarize yourself with the lingo.

You don’t want industry jargon to confuse you and keep you from missing something crucial. Here are 15 real estate buzzwords to keep you in the know.

1. Home inspection

This is the chance for the buyers to have the home inspected by a third party.

2. Closing

The final step in a real estate transaction, a closing is the transfer of the title of the property for money or other considerations.

3. Down Payment

The down payment is the amount of money that a buyer pays upfront in order to purchase a property. This amount is typically between 5% and 25% of the value of the property.

4. Escrow

When a third party holds property, cash and the property title until all conditions of the property agreement have been satisfied. The third party, likely a lawyer, will then hand over the assets to the respective parties, as outlined in the agreement.

5. Fannie Mae/Freddie Mac

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are two government-sponsored enterprises that purchase mortgages from lending institutions. Their purpose is to promote stability and affordability in the housing market.

6. Lien

A lien occurs when a legal claim is put on a property in order to receive payment for debt or for services rendered. The holder of the lien can sell the property in order to recover the money owed. Points Mortgage points are upfront charges the lender may add to the overall price of the mortgage. One point is equal to 1% of the total amount of the loan.

7. Prequalification

When a potential buyer is screened by a lender or third party to see how much the buyer can borrow as well as the terms of the loan. This is purely informational and does not obligate the lender but it is a great place to start to figure out your budget. 

8. Pre-Approval

Pre-approval from a bank locks in an interest rate for a specific amount of time. It comes after prequalification. It is an in-depth process that requires a potential buyer to provide a lending institution with proof of income and debts. The lender will most likely check your credit report in this process.

 

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Unexpected costs of buying a house

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When people think of buying a home, they just about the amount the down payment and the monthly mortgage payments.

Some don’t think about the other fees and costs. Be sure to factor these unexpected costs of buying a home into your budget:

Home inspection: It is something we recommend all of our buyers get. It helps buyers learn all about their new digs. Unless the seller has already had an inspection or it is negotiated that the seller will pay for it, the bill goes to the buyer. They can cost between $300 and 700, depending on the size of your house.

If you want mold, asbestos, termite, or radon testing, the cost just went up.

Closing costs: This will consist of mostly fees. Prices vary, but it rarely is more than 3 percent of the purchase price. It goes towards:

  • Government filing fees
  • Real estate broker commissions/fees
  • Loan application fees
  • Appraisal fee
  • Processing fees,
  • Flood/hazard insurance premiums (paid in advance to qualify for mortgage)
  • Mortgage insurance (if your downpayment is less than 20 percent)
  • Cost of transferring title and deed, or title search fees and title insurance
  • Escrows, impounds, and other piggyback payments.

Here’s a nice little site showing closing costs by state.

Unexpected repairs: Things happen. Leaks, creaks, and other surprises will arise. Be sure to budget for surprise repairs you might encounter and take care of your home each month

Property taxes: This wonderful bill comes right around the holidays and is due in January. When we work with buyers, we make sure they know the cost of property taxes as it says so right on our MLS sheets.

Furniture/decorations: When you move from an apartment to a home, you will need more furniture. If you’re moving from home to home, sometimes you need a few more items. These miscellaneous items can add up.

(Side note: If you are looking for home decorating ideas, our pinterest is great!)

Appliances: Unless your home price comes with everything, that new fridge will be near the top of your priority list.

New service costs: Signing up for gas, electricity, cable TV, internet, and other services often come with a one-time sign-up or hook-up fee. They also include hours spent on hold attempting to activate service and troubleshoot why that new service isn’t working. 

By lacrossefinehomesgroup Posted in Buyers

Mortgage rates increase

Fixed-rate mortgages were on the rise this week, following a 25 percent monthly jump in new-home sales and an improving job outlook report, Freddie Mac reports in its weekly mortgage market survey.

Freddie Mac reports the following national averages for mortgage rates for the week ending Dec. 5, however, it is always best to check with your lender to get a better estimate for your situation.

  • 30-year fixed-rate mortgages: averaged 4.46 percent, with an average 0.5 point, rising from last week’s 4.29 percent average. Last year at this time, 30-year rates averaged more than a full percentage point lower at 3.34 percent.
  • 15-year fixed-rate mortgages: averaged 3.47, with an average 0.4 point, rising from last week’s 3.30 percent average. A year ago, 15-year rates averaged 2.67 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.99 percent, with an average 0.4 point, jumping from last week’s 2.94 percent average. Last year at this time, 5-year ARMs averaged 2.69 percent.
  • 1-year ARMs: averaged 2.59 percent, with an average 0.4 point, dropping from last week’s 2.60 percent average. A year ago at this time, 1-year ARMs averaged 2.55 percent.
By lacrossefinehomesgroup Posted in Buyers

October 2013 Home Sales Report

Wisconsin’s red-hot real estate market cooled in October, with sales of existing homes nearly identical to October of last year, according to the most recent housing report issued by the Wisconsin REALTORS® Association.

For the full report, click here. We are going to break down the West Region.

In La Crosse County, sales for the month were down about 15 percent from 2012. Overall, home sales were flat across the western region.

oct home report

It’s the second time in three months La Crosse County has seen sales drop. August sales were down 14 percent from 2012, though September sales rebounded strongly. The slow rise of home interest rates might be why. Interest rates on 30-year home mortgages reached 4.49 percent in September, more than a full percentage point higher than in January.  But rates dropped again in October to an average of 4.19 percent.

But all of this doesn’t mean there aren’t plenty of reasons to buy or sell.

Why to buy during holidays

Why to sell during holidays

There are still plenty of homeowners listing their homes and plenty of buyers looking to move. Year-to-date sales in the state are 12.4 percent higher than the first 10 months of 2012.

oct home ytd

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Why to buy during the winter season

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There are a lot of things going on during the year-end festivities. Would you want to buy a house as well?

If you aren’t terribly picky, the answer might be yes.

Sellers usually avoid the end of the year because the mix of weather, shorter days and busy schedules make it tough for buyers to find time to get to their home.

Plus, they might want to decorate it for the holidays, not keep it unpersonalized.

But those who do choose to sell at year-end are often under pressure and highly motivated to cut a deal.

And that’s why the year-end might be a smart time to buy: Determined house-hunters can take advantage of sellers’ urgency.

There can be pros for buying a home.

Price

With less buyers competing to buy, sellers might lower prices or concessions. Sellers might be willing to negoatia

Less competition from other buyers during the holiday season might mean you’ll be able to negotiate a favorable price for a home you want to purchase.

Still, with fewer homes from which to choose, you might have to lower expectations. If you download the Keller Williams Realty app, you will have the market at your finger tips.

Offer accepted

With less buyers, there are less offers coming through so sellers might be more willing to look at your offer or accept it and negotiate.

Better interest rates on mortgages

The drop in demand to buy a home at holiday season means that lenders experience less requests for mortgage money at this time. This can mean a more favorable mortgage for buyers — a great reason why it’s the best time to buy a house. Interest rates drop every December through January on a cyclical basis.
A lender can offer you a low interest rate or even cancel some fees to secure your patronage. Do your homework and shop around (don’t forget to include the many online options) in order to get the best rate.
Loan officers advise that it’s best to get prequalified with a mortgage broker or lender early because loan closing turnaround times can range from 30 to 60 days.

Quick closing

With less home closings, schedules are open and everyone from home inspectors to appraisers to banks have more room to get buyers in early.

Enjoy the summer vacation

With the house already found and bought, when spring rolls around, buyers can sit back and relax.

Cons

The biggest downside is the limited supply of for-sale homes, which occurs mainly because sellers are so uninterested.

If you can’t find a home you like, you might be able to tap into homes that aren’t on the market. Your agent can make calls for you to find the homes that are on the fence.

Don’t worry about the snow either. Snow can cover defects that will only be found once the ink has dried and the ice has thawed. How to fix that is to ask for pictures of the house during the warmer months. A home inspection will also relieve some of the risk.

The most important thing to ask is your real estate agent what their availability is so you aren’t surprised.

If you are interested in buying a home during the holiday season, don’t hesitate! Contact us and we will help you!

La Crosse Fine Homes Group, LLC., of Keller Williams Realty

By lacrossefinehomesgroup Posted in Buyers
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Download our mobile app

Take your househunting everywhere you go with the Keller Williams Realty app.

  • Easily connect with your agent and send property inquiries instantly.
  • Draw a circle on the map or drop a pinpoint to search that area.
  • See property details and full-screen photos, get driving directions, mark your favorites, create notes about what you liked, or share it with family and friends.
  • Estimate your home loans with a free mortgage calculator.
  • View Open Houses in your area. View Rental Properties in your area.

Here are some how-to instructions to get the app:

Search “Keller Williams Realty” in google play or app store.

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Open app and agree to all terms.

Enter Sue Mravik’s agent code (KW2MD9IE2 – that is an ‘i’ after the 9, not an 1).

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Sit back and search.

You can refine your search by criteria.

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You can narrow or broaden your search using the map function.

If you use the pinpoint function, you pinpoint a location and it will give the nearest houses for sale.

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Or you can draw boundaries and the app will list the properties for sale in the boundaries.

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You can click on properties and see a ton of information on the property.

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If you find something you want to see, just click contact and get in touch with Sue!

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Still have questions? Give us a call or check out some FAQ’s here.

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Buying vs. renting

A lot of people want to own a house. Not only is it nice to be able to paint, have pets and entertain friends, but owning a home can be a better way to spend money than renting.

You have many options to consider and choices to make. Buying a home is a big responsibility, financially and emotionally, but most people want to own a home. Homeownership often is referred to as “the American dream.” Why is it so special? Among the reasons: Real estate often is an excellent investment, perhaps the number one source of wealth-building for families.

pro v cons

Owning a home has many benefits.

When you make a mortgage payment, you are building equity – and that’s an investment.

Owning a home also qualifies you for tax benefits that may assist you in dealing with your new financial responsibilities – such as homeowners’ insurance, real estate taxes, and upkeep – which can be substantial. But given the freedom, stability, and security of owning your own home, they are definitely worth it! Owning your own home also can be a great source of pride and stability.

But homeownership may not be for everyone.

It’s a big financial commitment – starting with the initial shock of your purchase (including a “down payment” and fees paid to a real estate agent, the lender and others) followed by years of monthly mortgage payments, real estate taxes, property insurance and maintenance costs. When you decide to purchase a home, you accept responsibility for paying for these expenses. They are additional costs to your monthly mortgage payment and should be included in your budget estimates:

  •  Property Taxes and Special Assessments
  •  Home/Hazard Insurance
  •  Utilities
  •  Maintenance
  •  Home Owner Association (HOA) Fee if applicable.

One of the advantages of renting is being generally free of most maintenance responsibilities and the flexibility of moving almost as soon as you decide. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for your housing needs. There are many considerations in choosing between renting and buying:

There are tax advantages to homeownership in both the short and long terms. The mortgage interest and real estate taxes are tax deductible, which allows you to subtract part of your housing related expenses from your taxable income, which could reduce your tax bill. In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.

Buy vs. Rent cost comparison

The chart below shows a cost comparison for a renter and a homeowner over a seven year period. The renter starts out paying $800 per month with annual increases of 5%.

cost comp

The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000. After 6 years, the homeowner’s payment is lower than the renter’s monthly payment. With the tax savings of homeownership, the homeowner’s payment is less than the rental payment after 3 years.

By lacrossefinehomesgroup Posted in Buyers

Inventory in La Crosse County

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The inventory for La Crosse County in increasing.

In May through August, the inventory was just under eight months. In the past two months, that has increased to more than nine.

What does inventory mean, exactly?

It means how many months it would take, in theory, to sell the homes that are currently listed if no other properties came on the market.

As we see these numbers, we are able to better predict how the market is looking. (Keep in mind, though, that estimating is not a guarantee.)

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The inventory can persuade pricing. Keep in mind that the above picture and below descriptions are a rough guideline. There are no hard month-long guidelines for the market.

With one to five months inventory, there are fewer homes for buyers to chose from, so there is more competition for the ones that are listed. Sellers have much more negotiating power and prices tend to move up.

When there are about five to seven months of inventory, the market is as normal as it can be. Neither buyer nor seller has the advantage.

When there is more than seven months of inventory, things shift to the buyers because there are many houses sale. Sellers might have to lower prices or give incentives like home inspection or new roofs.

With the inventory being at 9.79, buyers are favored.

Are you a buyer that is interested in taking advantage of the market, contact us!

La Crosse Fine Homes Group, LLC, of Keller Williams Realty

This month in real estate: October 2013

 

Recent research reveals that first-home buyers throw their hats into the ring when three things are aligned:

-Current market conditions

-Financial readiness

-Location and price

All three are true. If a first-time home buyer only has two of the three above, it can be a long road for them.

If the buyers know the market is right and have found the home they want, but can’t afford it, they are sad.

If they have the money for a down payment in a location they prefer but it is a seller’s market, they might lose out. However, if the market is right and the buyer has the finances in order, a little patience will pay off for finding the right home within a specific location and price.

When it comes to helping first-timers, we know how. Give us a call!

La Crosse Fine Homes Group, LLC., of Keller Williams Realty