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Lesser-Known Fees That Factor Into the True Cost of Home Buying

by Sandi Pressley

Buying a home can be a tricky process, and there are plenty of little costs that can add up. How can you prepare to cover these costs?

Since most people focus on the larger costs, such as the down payment and mortgage payments, they tend to overlook the smaller fees that come with buying a home.

Here are a few of these lesser known fees and what they could cost you.

Home Inspection

A home inspection is critical to protecting you from buying a home with hidden issues that could ruin your finances. The inspector looks for structural and general issues with the home. Inspections cost between $300 and $500, and whether or not you end up purchasing the property, you still need to pay this fee. You may also have to hire a specialist if specific issues are found, such as foundation issues or termites.

Appraisal Fee

This appraisal report goes to your lender to assure it that the property is worth what you’re paying for it. If you’re selling, review the appraisal thoroughly for any oddball numbers or descriptions that could affect the value of your home. An appraisal can take about 2 hours and costs between $200 and $425.

Application Fees

Before ever approving you for a loan, the lender is going to run your credit report and charge you an application fee, often lumping the credit report fee in with the application fee. This can run $75 to $300. Be sure to ask for a breakdown of the application fees to understand all costs.

Title Services

These fees cover a title search of the public records for the property you’re buying, notary fees for the person witnessing your signature on documents, government filing fees, and more. These can cost between $150 and $400, and it’s important to get a line item for each cost.

Private Mortgage Insurance (PMI)

When you put down less than 20% on your new home, the lender requires that you purchase PMI once you reach 78% of your loan-to-value ratio or you have 22% equity. So PMI is a policy that you have to buy to protect the lender from you. PMI rates can vary from 0.3% to 1.5% of your original loan amount annually.

Tax Service Fee

This is the cost (about $50) to ensure that all property tax payments are up to date and that the payments you make are appropriately credited to the right home.

Always ask questions when it comes to understanding the fees you’re paying. If possible, print out documents and go through them with a highlighter to indicate any areas you have concerns about. Discuss them with your lender or real estate agent and determine if you can negotiate any of them down.

Don’t be afraid to price shop to ensure you’re getting the best value. Just because you’re spending hundreds of thousands on a home doesn’t mean you should be comfortable throwing thousands of dollars at fees.

Check back on our blog every week for more real estate advice and local articles about living in Albuquerque. And make sure to follow us on Facebook for up to date real estate news for Albuquerque and surrounding areas.

HOT HOME LISTING OF THE WEEK!

8309 Rancho Paraiso NW, Albuquerque, NM 87120  $269,000

4 Bedrooms / 3 Bathrooms (2 full, 1 partial) / 2276 Square Feet

You don't want to miss this picturesque almost 1/4 acre with backyard access. This is a fabulous 4 bedrooms home. Master is on the first floor. Spacious, well appointed kitchen. Light, bright wonderful family home. Pride of ownership is apparent. Balcony with fantastic views upstairs. Sought after neighborhood with easy access to all amenities. Don't wait to see this sensational home!

Contact the Sandi Pressley team for additional details! 

Get your Morning Inspiration with the Sandi Pressley Team

How to Seal the Deal When Closing Your Home

by Sandi Pressley

The time has finally come. You're about to seal the deal on your new home! The keys are nearly in your hands.

As you cross the finish line, what are some things to consider?

What Does "Closing" Mean?

Closing simply means that you sign the final paperwork that gets you the keys to your new home.

The process really begins when you sign a purchase and sale agreement, which specifies the closing date. It usually takes about 4 - 6 weeks from the signing date to closing date. During this time, purchasing funds are held in escrow, where your money is safe until the deal is officially done.

What's a Closing Disclosure?

A Closing Disclosure, or CD, is provided by the lender at least three days before settlement. The CD discloses you final loan terms and closing costs.

The reason for this step is to make sure there's no surprises during the final closing. You should let your lender and title company know right away if there's a significant discrepancy between the Loan Estimate and CD. Depending on what the underlying issue is, the closing has to stop and a new closing disclosure must be sent out with a new three-day review period.

The main things that can't change between by the time you get the Closing Disclosure is the interest rate and lender fees. Some items can change by only 10% (fees paid to local government to record the mortgage might be one); and others can change without limit, like prepaid interest, because it can’t be predicted at the start of the loan process.

When Will the Final Walk-Through Happen?

Usually within 24 hours of the settlement, you and your agent will do a walk-through of the home, making sure any repair work that the seller agreed to make has been completed.

If any repair work is missed, your agent will contact the listing agent and, in most cases, negotiate to get the seller to compensate you at closing, This will usually be in the form of a personal check for the costs of fixing the problems yourself.

Worst-case scenario: You have to delay closing to resolve problems. In the unlikely event that happens, your agent will help you address the issue.

How Much Will I Pay for Closing Costs?

Closing costs can be frustrating for home buyers, as there can be unexpected surprises.

Costs are split between you and the seller, but as the buyer you’ll cover the lion’s share. You can generally expect your closing costs to be 3% to 4% of the home’s sales price. So, on a $300,000 home, you can pay anywhere from $9,000 to $12,000 in closing costs. (Meanwhile, the seller typically pays closing costs of 1% to 3% of the sales price.)

You can try to predict closing costs with calculators which lets you plug in your mortgage details to get a rough estimate of what your costs will be.

Check back on our blog every week for more real estate advice and local articles about living in Albuquerque. And make sure to follow us on Facebook for up to date real estate news for Albuquerque and surrounding areas.

HOT HOME LISTING OF THE WEEK!

8309 Rancho Paraiso NW, Albuquerque, NM 87120  $269,000

4 Bedrooms / 3 Bathrooms (2 full, 1 partial) / 2276 Square Feet

You don't want to miss this picturesque almost 1/4 acre with backyard access. This is a fabulous 4 bedrooms home. Master is on the first floor. Spacious, well appointed kitchen. Light, bright wonderful family home. Pride of ownership is apparent. Balcony with fantastic views upstairs. Sought after neighborhood with easy access to all amenities. Don't wait to see this sensational home!

Contact the Sandi Pressley team for additional details! 

Get your Morning Inspiration with the Sandi Pressley Team

Getting a Mortgage With a Low Credit Score

by Sandi Pressley

Here's a fact many people don't know. The credit score to buy a house can be as low as 580!

Having a low credit score doesn't mean that owning a home is impossible. It will mean, however, that a mortgage will cost you more than if you had perfect credit. But there are still many lenders that will work with you.

Here’s what you need to know about low-credit score mortgages:

What Counts as "Low Credit"?

We first need to get past the myth that you have to have amazing credit to buy a house. Lenders will take into account your entire financial picture. If you have a stable income, regular payment history, and cash in hand, this will all help if your credit isn't so stellar.

Here’s how FICO generally categorizes credit scores:

  • 800+ = Excellent credit score
  • 740-799 = Very good credit score
  • 670-739 = Good credit score
  • 580-669 = Fair credit score
  • Below 580 = Poor credit score

Having a credit score below 669 usually makes you what is called a  “subprime” borrower, according to FICO. This means that a loan will cost more, since you're a bigger risk. You will also have fewer options.

Your primary low-credit-score mortgage option will be FHA , which sometimes give loans with credit scores as low as 580. But the lower your score, the more it will cost you.

How Does Your Credit Score Affect Interest Rates?

Having a lower score means you will usually pay more of a down payment, higher interest rates, and private mortgage insurance.

Buy Now Or Work On My Credit?

If you pay a ton for rent, then buying now might be better, then you can refinance when your credit improves. For others, it may be smart to how promptly you pay your bills; it accounts for 35% of your score. A lender can help you decide. Or you can use an online tool to estimate the cost of different scenarios.

If you’re going to apply for a low-credit-score mortgage, more cash in the form of a bigger down payment helps. Plus, it can reduce your interest rate, which reduces your monthly payment.

How Do I Boost My Credit Score?

If you opt to work on your credit before getting a mortgage, here are a few ways to do it:

  • Look into rapid rescoring. You’ll work through your lender to fix errors and update information with the credit bureaus quickly, sometimes within days or weeks, rather than months. This isn’t credit repair, but a way to accelerate getting updated information through the system and into your report. Discuss with your lender whether this is a worthwhile pursuit for your circumstances.
  • Find a reputable credit counselor to guide you as the industry is fraught with scams.
    • Check your credit report for errors.
    • Pay off credit card balances.
    • Pay off other outstanding collections.
    • If you don’t have credit, get a credit card or small loan and establish a good payment history. (No credit is low credit.)

Even if you have a low credit score, a mortgage isn’t out of reach. While it may cost you more to buy now, in the end, it may be less expensive than waiting. And you’ll get the joy of owning a home to call your own.

Check back on our blog every week for more real estate advice and local articles about living in Albuquerque. And make sure to follow us on Facebook for up to date real estate news for Albuquerque and surrounding areas.

HOT HOME LISTING OF THE WEEK!

1133 Santa Ana Avenue SE, Albuquerque, NM 87123  $499,000

4 Bedrooms / 3 Bathrooms (2 full, 1 partial) / 3550 Square Feet

 Oversized .46 Acre Corner Lot! Incredible backyard for entertaining family & friends with the great room & game room opening on to the covered patio, pool area and beautiful landscaping! Conveniently located close to the golf course, shopping, easy access to KAFB, Sandia Labs, downtown ABQ!!

Contact the Sandi Pressley team for additional details! 

Get your Morning Inspiration with the Sandi Pressley Team

If you have your home on the market, you'll soon be getting offers. When that happens, you'll need to decide which offers are best for you.

Your real estate agent will be a huge help with this. Agents know how to determine the pros and cons of an offer, since there's more to it than just dollar signs. They have a sense of your financial and personal goals, so they can help you decide if the offer being made matches those goals.

Before the first offer rolls in, here’s what you need to know about the offer evaluation process, including the main factors that should go into making a decision with your agent.

When vetting offers, evaluate these areas in addition to price:

The earnest money deposit.

An earnest money deposit, or EMD, is the amount of cash a buyer will pay when the agreement is signed to show they're serious about buying your home. This money is usually held by the title company and goes toward the down payment at closing.

A standard EMD is 1% to 3% of the cost of the home. If a buyer tries to back out of an offer for no good reason, the seller typically keeps the EMD. Therefore, the higher the earnest money, the stronger the offer.

The down payment. 

In most cases, a mortgage requires some down payment. The size of a down payment can determine the strength of an offer. As a seller, your main concern is for the transaction to close. And for that to happen, the buyer’s mortgage has be approved.

In most cases, a larger down payment indicates that a buyer has the cash to make sure the sale goes through. This means that if the appraisal comes in higher than your contract’s sale price, the buyer with a higher down payment would more likely be able to cover the difference with the large amount of cash they have available.

The closing date. 

Closing is when the final paperwork is signed and the sale is final. The entire process, from accepting an offer to closing, takes between 30 and 60 days.

Three days before closing, the buyer receives a closing disclosure from the lender, which he compares with the loan estimate he received when he applied for the loan. If there are material differences between the buyer’s loan estimate and closing disclosure, the closing can’t happen until those amounts are reviewed and approved. But this is rare.

Some transactions can take more time, depending on the buyer’s financing. For example, the average closing time for a Federal Housing Administration (FHA) loan is 43 days, according to Ellie Mae.

Whether you want a slow or quick settlement will depend on your circumstances. If you’ve already purchased your next home, for instance, you probably want to close as soon as possible. On the other hand, you may want a longer closing period if you need the proceeds from the sale to purchase your new home.

Check back on our blog every week for more real estate advice and local articles about living in Albuquerque. And make sure to follow us on Facebook for up to date real estate news for Albuquerque and surrounding areas.

HOT HOME LISTING OF THE WEEK!

1133 Santa Ana Avenue SE, Albuquerque, NM 87123  $499,000

4 Bedrooms / 3 Bathrooms (2 full, 1 partial) / 3550 Square Feet

 Oversized .46 Acre Corner Lot! Incredible backyard for entertaining family & friends with the great room & game room opening on to the covered patio, pool area and beautiful landscaping! Conveniently located close to the golf course, shopping, easy access to KAFB, Sandia Labs, downtown ABQ!!

Contact the Sandi Pressley team for additional details! 

Get your Morning Inspiration with the Sandi Pressley Team

Tips to Save for a Down Payment on Your First Home in Albuquerque

by Sandi Pressley

Buying your first home bring up all sorts of good feelings. But before you get there, you have to get through the daunting task of making sure you have enough for a down payment. You may have to come up with as much as 10% - 20% of the purchase price, which can be a large sum.

So now its time to get creative! Here's 3 creative ways you can put together the money you need faster than you may think.

Crowdsourcing

Crowdsourcing has become a popular way for people to raise money for projects. Popular crowdsourcing sites such as Kickstarter have been used to fund all sorts of projects. So why not crowdsource your first home?

If you're getting married, for example, you can skip the traditional registry and use sites such as Feather the Nest and Hatch My House to raise your down payment. According to Hatch My House, they've helped home buyers raise more than $2 million for down payments.

Ask the Seller to Help (Really!)

Seller concessions are where the seller will work with you to reduce closing costs. If the seller wants to close the deal quickly, they may work with you in this way. The fewer the closing costs, the more money you can put toward your down payment.

You real estate agent may be able to help you negotiate a deal, such as 2% of the overall sales price in concessions to help with the closing costs.

There are, however, limits on concessions depending on the type of mortgage. For FHA mortgages, the cap is 6% of the sale price. For Fannie Mae-guaranteed loans, the caps vary between 3% and 9%, depending on the ratio between how much you put down and the amount you finance. Individual banks have varying caps on concessions.

Government Options

You can also look into programs through the U.S. Department of Housing and Urban Development, or HUD, that help with down payments and closing costs. If you meet particular income requirements, you may qualify.

Your profession may also determine what programs are available through HUD. The Good Neighbor Next Door Sales Program can help those who are law enforcement officers, firefighters, teachers, or EMTs.

If you're a veteran, the VA will guarantee part of a home loan through commercial lenders. In many cases, you don't need a down payment or private mortgage insurance, and it will help you secure a  competitive interest rate.

Check back on our blog every week for more real estate advice and local articles about living in Albuquerque. And make sure to follow us on Facebook for up to date real estate news for Albuquerque and surrounding areas.

HOT HOME LISTING OF THE WEEK!

9300 Thornton Avenue NE, Albuquerque, NM 87109  $375,000

4 Bedrooms / 3 Bathrooms (2 full, 1 partial) / 2717 Square Feet

 Light, bright and open floor plan on this custom-built NE Heights beauty with 4 bedrooms and over-sized 3 car garage. Full pitched tile roof. Separate laundry room with W/D that stay! Close to schools, shopping and lovely park!

Contact the Sandi Pressley team for additional details! 

Get your Morning Inspiration with the Sandi Pressley Team

How to Avoid Home Contractor Scams

by Sandi Pressley

We all know the story. You hire a contractor who you think will do the job right and honestly, only to be slighted in the end.

Most contractors can be trusted. But as with any profession, there are definitely some who spoil the whole batch. How can you tell if your contractor is scamming you? What can you do to protect yourself?

Don't Pay For the Whole Job Up Front

Let's say your contractor asks for money up front for materials. While it's fair to pay some money to get the job going, you should beware if they ask for more than 30% up front. Some dishonest contractors may just run off on you once they get the money, or just do a sloppy job, knowing you can't fire them since they have your money.

How to protect yourself: Never prepay more than $1,000 or 10% of the job total, whichever is less. That should be enough to establish that you’re a serious customer so the contractor can work you into his schedule.  That's the only valid point of paying up front. If your contractor needs to rent equipment, they should be able to do so on credit with their suppliers, provided the contractor really is the professional they profess to be.

"Trust Me"

If your contractor agrees to do what you need exact to your specs, along with other items, make sure it's in writing. Don't just go by a verbal agreement. If you don't get it all in writing, then a dishonest contractor may just start leaving things out. And there's really nothing you can do about it legally.

How to protect yourself: There isn't much you can do legally if you signed a contract that doesn't include all the details. Make sure you get all the details in writing. And if you need to add anything, make sure you initial each addition and have the contractor initial it as well.

"I Don’t Need to Pull a Permit"

Any significant amount of construction will require a permit. This will allow building officials to visit the site on occasion to make sure the work meets code.

An unlicensed contractor may try to get around this on smaller jobs by saying that the authorities won't notice. Yet on larger jobs, it's more likely that it will be noticed. So the contractor may ask you to get a a homeowner’s permit, an option available to do-it-yourselfers.

The problem with getting your own permit is that you will not only be lying to the authorities about who's doing the work, but it also makes you responsible if something goes awry. That means that you have to answer to the inspector instead of the contractor.

How to protect yourself: Always demand that the contractor get a building permit. Yes, it informs the local tax assessor about your upgrade, but it weeds out unlicensed contractors and gives you the added protection of an independent assessment of the work.

Check back on our blog every week for more real estate advice and local articles about living in Albuquerque. And make sure to follow us on Facebook for up to date real estate news for Albuquerque and surrounding areas.

HOT HOME LISTING OF THE WEEK!

9300 Thornton Avenue NE, Albuquerque, NM 87109  $375,000

4 Bedrooms / 3 Bathrooms (2 full, 1 partial) / 2717 Square Feet

 Light, bright and open floor plan on this custom-built NE Heights beauty with 4 bedrooms and over-sized 3 car garage. Full pitched tile roof. Separate laundry room with W/D that stay! Close to schools, shopping and lovely park!

Contact the Sandi Pressley team for additional details! 

Get your Morning Inspiration with the Sandi Pressley Team

Tricks for Hosting a Great Open House in Albuquerque

by Sandi Pressley
Open House. Those two words are exciting to home buyers. This is their chance to
peruse your home without as much pressure.
 
An open house is also a chance for the seller to throw the doors open and dazzle buyers, to make them fall in love with their lovely home.

What are some ways you can make your open house a hit with buyers?

Time It Right

Typically, agents will hold open houses for about 2-3 hours, between 11 am - 5pm on the weekend. This is a time when buyers are more flexible, since many don't work on the weekend. Just make sure to avoid holding an open house on a holiday, during a big community event, or on Super Bowl Sunday or another big game day.

Let Your Agent Take the Lead

Your real estate agent plays two roles during an open house. For you, they direct the open house and give you instructions on how to prepare for the big day. For buyers, they're the host, making guests feel welcome and showing off the features of your home.

Your job is to make your house look like a million bucks — or more like $300,000, depending on your price range.

The job of your agent is to take care of the rest. That will include:

  • Staging your home, or recommending a reputable stager that you can hire
  • Hosting the open house
  • Communicating with home buyers and buyers’ agents
  • Receiving feedback during the open house and communicating that feedback to you

Your agent will also recommend that you leave while they show off your house to strangers. Why should you follow that advice? Because it makes good business sense for you.

  1. A home owner’s presence can make it awkward for the buyer. Buyers want to make assessments on their own, without worrying about how the seller might react or try to influence them.
  2. Buyers may have trouble picturing themselves living in the house when the owner is right there, say, serving lemonade in the kitchen.
  3. Sometimes sellers say too much. You might point out something that you think is a nice feature or amenity of your home, when it’s something that might turn off a buyer. You might blurt out something that could tip your negotiating hand, like how motivated you are to sell, or that you always wanted to update the retro kitchen, but just never got around to it.

The last things you want buyers to think after the open house is, “This place needs work,” or “This seller is desperate — I have the upper hand.” So, let your agent take the lead. This won’t be their first rodeo. They know the nuanced ways to show your home in its best light so that buyers will be dazzled. They also know how to strategically answer questions from buyers to help set you up for success later, during negotiation.

Check back on our blog every week for more real estate advice and local articles about living in Albuquerque. And make sure to follow us on Facebook for up to date real estate news for Albuquerque and surrounding areas.

HOT HOME LISTING OF THE WEEK!

2536 Sarita Avenue NW, Albuquerque, NM 87104  $165,000

3 Bedrooms / 2 Bathrooms (2 full, 0 partial) / 1232 Square Feet

 Convenient location near Old Town & Rio Grande! Wonderful home with tile roof, refrigerated air, great room with fireplace open to kitchen with breakfast bar & pantry. Nice layout featuring master bedroom separate from the 2 additional bedrooms, great covered patio & attached 2 car garage. All appliances stay! Don't miss this turn key property!

Contact the Sandi Pressley team for additional details! 

Get your Morning Inspiration with the Sandi Pressley Team

Ways to Disaster Proof Your Home

by Sandi Pressley

Cleaning gutters and trimming trees is not everyone's favorite pastime. But when a storm hits, these mundane tasks can serve as your home's armor.

These tips will get your home ready for disasters, like water damage to your home, power outages, and more.

Clean Gutters to Prevent Water Damage

Cleaning the gutters may seem like a simple task, and that's why many people put it off. Yet clogged gutters can lead to a great deal of damage over time. Water can overflow and penetrate your home's foundation. Water can also seep into your attic and damage walls.

While you clear out debris, make sure to also check the downspouts for clogs by flushing them with water from a garden hose. If you're not up to doing all this, just hire a pro.

Protect Your Roof from Storm Damage by Trimming Trees

You know what happens in severe storms. Tree limbs break away and fall. If huge tree limbs are dangling over your house, you’re at risk for major roof damage. Cut back limbs to reduce their weight.

Also, make sure they’re at least four feet above the roof. Tree limbs make great balance beams for critters to tumble into your attic; don’t make it easy on them.

Install a French Drain to Keep Storm Water Away

French drain is a lightly sloped trench (1 inch per 8 feet) filled with round gravel and a pipe that diverts water away from your house.

The drain can be shallow or deep depending on whether you’ve got a soggy lawn or a bigger problem with water entering your basement during heavy storms.

Prepare for a Power Outage with a Generator

We all know that power outages area a reality in strong storms. An hour or two of darkness is merely an inconvenience. But when an outage lasts more than a day, it can get hazardous and costly.

Investing in a portable or standby generator is a very smart decision. Make sure that the generator can handle your appliance needs as well. A four-slice toaster might use a whopping 1,650 watts, way more wattage than a portable AC unit (often under 500 watts).

Install Impact-Proof Doors and Windows

Not all doors are the same when it comes to handling storms. Impact-resistant windows, doors, and garage doors can inhibit high winds that cause structural damage from entering your home. Impact-resistant windows and doors may get you a discount on your home insurance. 

Update Your Insurance

Review your homeowners insurance to make sure you can actually rebuild your home if it's destroyed or heavily damaged in a storm. Also make sure your policy covers flood damage.

Plus, make updates based on recent home improvements, like that fancy burglar alarm you just installed, and ask about any new discounts for bundling with your car insurance.

Check Fire Extinguishers

Fire extinguishers don't actually expire, but it's seal can weaken over time. This can render it useless. Check that the locking pin is intact and the pressure gauge or indicator is pointing to “full.” (Sometimes this is a green bar.)

And did you know you’re supposed to keep a fire extinguisher on each floor? Or that different rooms require a different type of extinguisher? If not, a fire-safety shopping spree might be in order.

HOT HOME LISTING OF THE WEEK!

2536 Sarita Avenue NW, Albuquerque, NM 87104  $165,000

3 Bedrooms / 2 Bathrooms (2 full, 0 partial) / 1232 Square Feet

 Convenient location near Old Town & Rio Grande! Wonderful home with tile roof, refrigerated air, great room with fireplace open to kitchen with breakfast bar & pantry. Nice layout featuring master bedroom separate from the 2 additional bedrooms, great covered patio & attached 2 car garage. All appliances stay! Don't miss this turn key property!

Contact the Sandi Pressley team for additional details! 

Get your Morning Inspiration with the Sandi Pressley Team

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