What Do HOA Fees Cover: Homeowners Association Expenses Explained

What is an HOA?

Are you confused about the meaning of an HOA? HOA is short for a homeowners association. Lots of people ask real estate agents how an HOA works and what purpose does it serve. Once they understand the purpose of a homeowners association they ask what the HOA fees cover.

An HOA is a group or organization in a neighborhood that makes and enforces rules and regulations for homes or condos for the benefit of its owners.

Buyers who purchase within an HOA become members and must pay association dues, known as HOA fees.

Before buying into an HOA, it is vital to understand the rules and regulations. You may find that some of the rules are not what you’ve been accustomed to. In fact, if the rules and regulations are overbearing, you could find yourself in the position of not wanting to live within the neighborhood.

On the other hand, you may love the thought of having guidance and uniformity. Some of the biggest advantages of living in an HOA are preserving and upkeep of the homeowners association’s homes and neighborhood.

One of the most common questions home buyers have is what do the HOA fees cover? Let’s take a deep dive into what you need to know about homeowners association expenses.

HOA Fees
How Do HOA Fees Work?

What Are HOA Fees?

Homeowners association fees are paid to maintain the common areas and shared spaces in your home and neighborhood. Being part of a homeowners association makes it a lot simpler to live in than having a home where you are responsible for all the maintenance.

So, if you have an expensive emergency in your house, you have to find the money to fix it. Where in the HOA, expenses are shared amongst everyone in the community.

An elected committee governs the HOA fees in your neighborhood. All of the expenses should be approved by those who reside within the community.

In larger HOAs, there is often a paid office team organizing contractors and paying bills. Other HOAs can be staffed by using outside contractors. Sometimes this can be a problem when work is not completed satisfactorily.

HOA costs depend on the neighborhood and type of project. It is not uncommon for HOA fees to range anywhere from a few hundred dollars up to $1000 in some luxurious settings.

Homeowners association fees are influenced heavily by what kind of perks are offered for living within the community. For example, neighborhoods that offer community pools, gyms, and tennis courts, naturally would cost more to maintain and operate.

However, a lower-cost townhouse without a pool, gym, or other amenities could be far less expensive. Costs can be as low as $100 per month in some locations around the country.

HOA expenses in a high-end city center may include concierge, spa, and gym, making them much more expensive to live in. You could potentially see fees as high as $3-$4 thousand per month. Think of the rich and famous.

How Are HOA Expenses Distributed?

If you live in an HOA within a condo or townhome complex, you may have underground parking, with a car space allocated to every apartment in the building. Part of the maintenance with this living style is security, as we all feel safer in a secure building.

Rubbish collection is another cost, as rubbish has to be taken down to the basement and removed from the building. Companies are often hired to fill this role.

The pool must be maintained, the ground manicured, plants pruned, and the gym equipment is cleaned. While these perks are probably the reasons you bought in, the cost can be a bit high for some retirees. Perks such as these are often standard in retirement communities. It is often a significant reason seniors downsize into a neighborhood that has an HOA.

Do Homeowners HOA Fees Go Up?

Of course, everything rises with inflation, and there will always be new projects or remedial work to be carried out on the homes and neighborhood.

Some HOAs schedule increments annually, so if you are preparing a five-year budget, you may want to factor in the cost. Doing so will be helpful to work out what your expenses will be projected at in the future.

It will be vital before buying to take a look at the homeowners association bylaws, rules, and regs, along with the latest financial state. You should make sure to have a contingency for document review in your offer.

What If You Can’t Pay The HOA Fees?

You can be fined or taken to court, and a lien could be placed on your property. It can also be embarrassing not to pay because, in committee meetings, they often have nonpaying homes as agenda items and discuss strategies to recover the funds.

HOA expenses are very much worth paying, as in most cases, you do get your money’s worth. Because there is power in numbers, you often get better value for money with more people paying to get the best deal for your HOA.

Before you move into a condo, townhouse, or home, check how your HOA fees will be apportioned, and make sure no special assessments are pending.

Special assessments would mean that you will have to come up with an extra lump sum to fix an unexpected expense. Nobody likes financial surprises, so it is essential to research any significant expenditures on the horizon.

How Do I Choose The Right HOA Neighborhood?

Form a working relationship with a high-profile local agent. Once they know what you are looking for, they will help you to find your perfect HOA.

The best buyer’s agents will know most communities in the town or area. Real Estate agents have their ears to the ground and often hear positive or negative things about a particular neighborhood and the accompanying homeowners association.

Moving into an HOA is a terrific idea when it is a well-oiled machine. Living within a homeowners association can make your life more simple, especially from a maintenance standpoint. If you’re the kind of person, who travels a lot, it really makes a lot of sense.

First-time home buyers who do business travel could find living in an HOA to be the perfect situation.

Final Thoughts on HOAs

In the area you are planning to live in, there hopefully will be a wide range of suitable HOAs to choose from. As long as you pick an HOA neighborhood that does not have strange bylaws or overbearing rules, you’ll probably enjoy the living situation.

The key is doing the proper due diligence. Without that, you could make a bad mistake that you’ll regret. Take the time and do the proper research. Hopefully, you have found this guide to HOAs to be useful. You should now know a bit more about what HOA fees cover.

Source: realtybiznews.com

Pending Home Sales Fall in January as Inventory Constrains Buyers>

The numbers: The index of pending home sales fell 2.8% in January after four consecutive months of declines, the National Association of Realtors said Thursday. The index captures real-estate transactions where a contract was signed but the sale has not yet closed, making it an indicator of where existing-home sales will go in the months ahead.

The median forecast of economists polled by MarketWatch had called for a 0.5% decline in pending sales on a monthly basis.

“Pending home sales fell in January because there are simply not enough homes to match the demand on the market,” Lawrence Yun, the chief economist for the National Association of Realtors, said in the report. “That said, there has been an increase in permits and requests to build new homes.”

Compared to 2019, pending sales were up 13%, indicating that the housing market remains strong despite the weakness that has crept in during the winter months.

What happened: Pending sales didn’t fall across all regions, as contract signings increased slightly in the South. The largest decline in pending sales occurred in the West, where the index dropped 7.8%, closely followed by the Northeast (-7.4%).

The big picture: A record-low inventory of homes is leaving buyers with few options to choose from, and builders have even begun selling a vast array of properties that haven’t been built yet to meet this demand.

But there’s evidence that demand could begin to suffer as affordability concerns grow. “The timely weekly mortgage purchase applications index is signaling a slowing in activity,” said Rubeela Farooqi, the chief U.S. economist at High Frequency Economics, while citing mortgage application data from the Mortgage Bankers Association. The latest reading signified the lowest level for mortgage applications since mid-May of last year, Farooqi noted.

Some of the decline in the volume of mortgage applications was a reflection of the disruption in Texas caused by recent winter storms. But generally speaking, rising mortgage rates are reducing interest from home buyers to an extent. With prices also quickly rising, buying a home is becoming less and less affordable, which could hinder home sales in the months to come.

What they’re saying: “Home buyers are staying surprisingly active during the colder months. However, buyer demand is getting squeezed by a scarcity of ‘For Sale’ signs and rising mortgage rates,” said Realtor.com senior economist George Ratiu.

Source: marketwatch.com

22 Cities Where Home Appreciation Is Spiking

Couple looking at their old home
Photo by Hurst Photo / Shutterstock.com

Extreme demand for homes is pushing home values up at a rate not seen since before the Great Recession, a new Zillow report finds.

Several trends — including new millennial homebuyers, record-low interest rates, trends related to the coronavirus pandemic and the relatively small pool of homes for sale — have converged to heat up the market. The hot sellers’ market is a contrast to flat growth in rental prices nationally, as we reported in “Rent Prices Have Dropped in These 9 Formerly Hot Markets.”

The Zillow Home Value Index rose 9.1% from January 2020 to January 2021, the report says. Year-over-year home value growth hasn’t been this high since June 2006.

That rate may even pick up a bit: Zillow economists expect values to rise 10.1% from January 2021 to January 2022.

The demand has shortened the length of time that homes stay on the market, to a median of just 18 days as of mid-January. Compare that to 46 days at the same time last year and the year before.

A demographic bomb is a factor in the hot market. Millennials — defined by Zillow as Americans ages 25-34 — are entering their peak homebuying years. The number of these millennials increased by 12% — or, about 4.9 million people — between 2010 and 2020.

The generation’s size adds to the housing demand. Also, younger buyers are less likely than older ones to sell a previous home when they buy, which is expected to help keep the pool of homes for sale tight.

Government-stoked low mortgage rates — averaging 2.74% for a fixed-rate 30-year mortgage in January — are driving demand as buyers try to seize the opportunity to either pay less for a home or buy a more expensive one than they otherwise could.

Says Zillow:

“An extraordinary number of home buyers, with budgets supercharged by rock-bottom mortgage interest rates, are competing over a limited supply of homes for sale.”

The pandemic is a final factor. Many workers are now clocking in virtually instead of at the office, driving some to seek larger homes and others to move to smaller, more-affordable markets, Zillow says.

While home values increased in all of the 50 largest metro areas in the U.S. from January 2020 to January 2021, some have seen steeper growth rates than others.

Here are the 22 major markets where home values grew 10% or more, along with their typical home price and their home price growth rate:

  • Phoenix: $335,975 (up 17.1% from January 2020 to January 2021)
  • San Jose, California: $1,314,799 (up 14.2%)
  • Austin, Texas: $384,446 (up 13.7%)
  • Salt Lake City: $436,390 (up 13.7%)
  • San Diego: $689,361 (up 13.5%)
  • Seattle: $594,223 (up 12.8%)
  • Tampa, Florida: $257,499 (up 12.8%)
  • Milwaukee: $219,381 (up 12.1%)
  • Cincinnati: $208,352 (up 12%)
  • Providence, Rhode Island: $357,761 (up 12%)
  • Riverside, California: $433,226 (up 11.7%)
  • Buffalo, New York: $193,583 (up 11.4%)
  • Sacramento, California: $478,817 (up 11.3%)
  • Indianapolis: $204,141 (up 11.3%)
  • Memphis, Tennessee: $174,063 (up 11.3%)
  • Cleveland: $176,069 (up 11.1%)
  • Charlotte, North Carolina: $265,397 (up 10.9%)
  • Columbus, Ohio: $234,276 (up 10.8%)
  • Philadelphia: $277,775 (up 10.6%)
  • Kansas City, Missouri: $227,059 (up 10.6%)
  • Pittsburgh: $178,282 (up 10.4%)
  • Detroit: $198,979 (up 10.3%)

If you’re in the market for a new home or refinancing for your existing home, check out the mortgage rate comparison tools in Money Talks News’ Solutions Center.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

Zillow Will Now Buy Your Home for Its Zestimate Price

Posted on February 25th, 2021

Zillow appears to be putting its money where its mouth is by offering to buy properties at their Zestimate price.

No longer is the Zestimate just a number you can fantasize about, assuming your home qualifies for the company’s iBuying program known as Zillow Offers.

The Zestimate Turns 15 Years Old

  • Zillow introduced the Zestimate all the way back in 2006
  • They claim it was the first time homeowners had instant access to free estimated home values
  • Zestimates are published for nearly 100 million homes nationwide with a median error rate for on-market homes of just 1.9%
  • Today’s algorithm uses public records, feeds from MLSs, artificial intelligence, computer vision, and a deep-learning neural network that even factors in photographs

Zillow’s new initiative coincides with the 15th anniversary of their popular home valuation tool known as the Zestimate.

The free quasi-appraisal tool was launched in 2006 and essentially put Zillow on the map by providing homeowners and prospective home buyers with a quick tool to see what a home was worth.

Today, their complex algorithm goes beyond public data and MLS feeds and uses things like artificial intelligence and computer vision that allows it to incorporate data from photographs.

In other words, if images are uploaded that show a new kitchen or bathroom, or even just new paint or more expensive fixtures, your Zestimate might get a boost.

They claim all these improvements to the always-evolving Zestimate give it a median error rate of just 1.9% for on-market homes.

While that sounds pretty impressive, it doesn’t mean you should just sell your home to Zillow and call it a day.

Where Zillow Is Buying Homes for Their Zestimates

Sell for Zestimate price

  • If your home is eligible you’ll see an initial cash offer prominently displayed at the top of your property listing page
  • The initial offer is before taxes/fees are factored in and also subject to the accuracy of property information
  • Currently available in a large number of markets including Phoenix, Charlotte, Orlando, San Diego, and Los Angeles
  • The company plans to expand the pool of eligible homes over time as the Zillow Offers platform grows

At the moment, the company’s “buy at the Zestimate price” deal is available on a limited number of homes in markets where Zillow Offers currently operates.

This includes a pretty large number of cities, including:

  • Phoenix and Tucson, Arizona
  • San Diego, Los Angeles, Riverside, and Sacramento, California
  • Denver, Colorado Springs, and Fort Collins, Colorado
  • Miami, Jacksonville, Orlando, and Tampa, Florida
  • Atlanta, Georgia
  • Minneapolis, Minnesota
  • Las Vegas, Nevada
  • Charlotte and Raleigh, North Carolina
  • Portland, Oregon
  • Nashville, Tennessee
  • Dallas, Houston, and San Antonio, Texas

To see if your home is included, simply head over to your property’s listing page on Zillow and look for a prominent “Sell to Zillow for your Zestimate” box.

If it’s there, this means you can begin negotiations at that price, before the company factors in things like taxes, fees, and repair requests.

Their offer is also subject to eligibility and accuracy of property information. In other words, they’ll need a human being to back up the findings of their Zestimate technology before they proceed with an offer.

My assumption is the more cookie-cutter the property, the more likely it is to have one of these instant offers.

That means a property in a housing tract that is moderately priced and similar to other properties nearby.

Conversely, they probably aren’t doing this for high-priced properties or homes that have unique features.

Is Selling at the Zestimate Price a Good Deal?

  • Zillow has referred to the Zestimate as a starting point in the past
  • And that could still be the case if you take them up on this offer once they negotiate the price
  • They’ll also factor in repair costs, listing costs, their service fee, and more
  • When all is said and done you could be looking at sales proceeds that are 10%+ below the Zestimate

While Zillow boasts about its high accuracy rate for the Zestimate, it doesn’t mean it’s a no-brainer to just sell your home to Zillow.

While they claim their median error rate is just 1.9% for listed properties, what about properties that aren’t listed, i.e. YOUR HOME.

Personally, I always feel that the Zestimate is lower than the comparable Redfin Estimate, and often lags home price data.

In other words, the Zestimate typically displays a price that feels a little bit in the past, whereas the Redfin Estimate appears to show a more forward-looking price.

Put another way, the Zestimate seems to mirror what someone paid for a home, while the Redfin Estimate often feels more like what a buyer would pay.

That’s just my personal opinion, but I’ve been tracking these numbers for years, and I’ve rarely seen a Zestimate that’s higher than a Redfin Estimate.

This is especially important given the fact that it’s a seller’s market at the moment.

Lastly, you need to consider the fees charged for selling to Zillow Offers, including prep and repair costs (they’ll be reselling your home quickly), along with the Zillow service charge.

They say that service charge is 2.5% on average, which is on top of the ~6% in selling costs that mirrors what a pair of traditional real estate agents would earn, along with 1-2% for closing costs like transfer taxes, escrow, etc.

All said, you could be looking at 10% off the Zestimate, not including repair requests, so your actual walkaway cash could be much lower.

Of course, the same can be said of a traditional sale (minus that service charge), and you get to sell immediately without the usual inconvenience, aggravation, and uncertainty.

But that’s where the service fee comes in. It’s more like a convenience fee.

In any event, this is an interesting development and a sign that Zillow wants its Zestimate to serve a larger role than just a free home price estimate.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.com

Lender credits: How a mortgage lender can pay your closing costs

What are lender credits?

Lender credits are an arrangement where the lender agrees to cover part or all of a borrower’s closing costs. In exchange, the borrower pays a higher interest rate.

Lender credits
can be a smart way to avoid the upfront cost of buying a house or refinancing.

Getting
closing costs to $0 means you can put more of your savings toward a down
payment — or, in the case of a refinance, lock in a lower interest rate without
having to pay upfront fees.

But lender credits aren’t always the right
choice. For some borrowers, it makes sense to pay more upfront and
get a lower interest
rate. 

Here’s how to negotiate the best mortgage deal for you.

Check your no-closing-cost mortgage options (Feb 25th, 2021)


In this
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How lender credits work

Lender credits are a type of ‘no-closing-cost mortgage’ where the mortgage lender covers all or part of the borrower’s closing costs.

Of course, lenders don’t pay borrowers’ closing costs out of generosity. In exchange for absorbing closing costs, the lender charges a higher interest rate. The ‘extra’ interest paid by the homeowner over time eventually repays any fees covered by the lender. 

Lender credits can be structured a few different ways, depending on what the lender agrees to cover and how much the borrower is willing to increase their mortgage rate.

For example:

  • The lender might cover all the borrower’s closing costs
  • The lender might cover its own fees and third-party services (like the
    appraisal) but not prepaid items (like property taxes and homeowners insurance)
  • The lender might cover only its own
    fees and none of the third-party services or prepaid items

The more of your closing costs a lender pays via lender credits, the higher your interest rate will be, and vice-versa.

Mortgage
pricing is flexible, and you can take advantage of tools like lender credits to
negotiate a rate and fee structure that works well for you.

Check your no-closing-cost mortgage options (Feb 25th, 2021)

How to compare mortgages
with lender credits

If you’re
considering a home loan with lender credits, it’s important to weigh the
short-term savings versus the long-term cost.

You might
eliminate your upfront cost with lender credits. But accepting a higher
interest rate means you’ll pay more interest in the long run. You’ll also have
a higher monthly payment.

If you keep
your loan its full term — typically 30 years — the amount of ‘extra’ interest
you pay could far exceed the amount you would have spent on upfront closing
costs.

However, most
home buyers don’t keep their mortgages for the full term. They sell or
refinance within a decade or so. And if you’ll only keep your loan a few years,
having a slightly higher interest rate might not matter as much.

So you need to
consider how long you plan to keep the mortgage before selling or refinancing
to decide if lender credits are worth it.

You should
also compare no-closing-cost loans from a few different mortgage lenders.

Each lender
structures lender credits differently — so you might find one that covers the
same amount of closing costs, but charges a lower interest rate than
another. 

And be sure to compare offers on equal footing.

If you look at
one lender quoting a zero-cost mortgage, and another that’s only covering origination
fees, for example, you’re going to see very different rates. So make sure all
the lenders you compare are covering the same amount and types of closing
costs.

You can find you total closing costs and how many lender credits are included on the standard Loan Estimate you’ll receive after applying with any lender. These documents make it easy to compare home loan offers side-by-side to find the better deal.

Are lender credits worth
it? An example

Typically, the
less time you keep your mortgage, the more you’ll benefit from lender credits.

Here’s an
example:

  No Lender Credits With Lender Credits
Loan Amount $250,000 $250,000
Interest Rate* 3.0% 3.75%
Upfront Closing Costs $9,000 $0
Interest Paid In 5 Years $35,500 $44,500
Interest Paid In 30 Years $129,500 $166,800

*Interest
rates are for sample purposes only. Your own interest rate with or without
lender credits will vary.

This home
buyer can take a 3% interest rate on a 30-year fixed-rate mortgage, with $9,000
in closing costs (3.6% of the loan amount). Or, they can accept a 3.75%
interest rate with $0 in upfront closing costs.

If the
homeowner keeps the mortgage 5 years or less, lender credits are likely worth
it.

At the end of
year 5, they will have paid $9,000 in ‘extra’ interest due to their higher
rate. But they saved $9,000 upfront. So if they sell or refinance any time before
the end of year 5, the savings from lender credits outweigh the added cost.

This point —
where the upfront savings level out with the long-term cost — is known as the
‘break-even point.’

If this
homeowner stays beyond the break-even point, they end up paying their
lender more in added interest than they saved upfront. So it’s easy to see how
lender credits don’t make as much sense if you plan to keep your loan a long
time.

However, there
are some scenarios where lender credits are worth it even for long-term
borrowers.

Lender credits in a rising interest rate environment

Even if you’ll
spend more in the long run, there are still scenarios where lender credits can
make sense. That’s especially true in a rising rate environment.

For example:

  1. A first-time home buyer wants to buy at today’s low interest rates, but
    only has enough saved for a down payment — not closing costs. This person could
    take a small rate increase, and may still lock in a lower rate than the one
    they’d get if they had to save another year or two and rates rose during that
    time  
  2. A homeowner bought their home a couple years
    ago and has an interest rate 2% higher than today’s rates. They want to
    refinance at today’s low rates but can’t afford closing costs. They could
    likely take a rate above the current market, get their closing costs paid by
    the lender, and still save money every month compared to their old loan

In these
cases, the higher interest rate is relative. Some homeowners can take a rate
increase on their lowest offer and still ‘save’ money overall.

Often, lender
credits are a matter of timing. They allow homeowners and home buyers to lock
during a low-rate environment, even if they don’t have the cash to cover
upfront fees out of pocket.

And remember,
lender credits aren’t all-or-nothing.

You don’t need
to take a big rate increase and get closing costs to $0. You can have the
lender cover part of your closing costs and take only a slight rate increase.

Make sure you
talk to lenders about all your options. And if one lender doesn’t offer the
right combination of rate and fees for you, shop around for another company
that will.

Compare no-closing-cost loans (Feb 25th, 2021)

Lender credits vs. discount points

Lender credits
work the opposite way, too. Instead of paying less upfront and taking a higher
rate, you can pay more upfront and get a lower interest rate.

This strategy
is known as ‘points,’ ‘mortgage points,’ or ‘discount points.’

Whereas lender
credits save you money upfront but increase your long-term cost, discount points cost you more
at closing but can save you a huge amount of money over the life of the loan.
Having a lower interest rate also reduces your mortgage payments.

Take a look at
an example:

  With 1 Discount Point No Points Or Credits  With Lender Credits
Loan Amount $250,000 $250,000 $250,000
Interest Rate* 2.75% 3.0% 3.75%
Upfront Closing Costs $11,500 $9,000 $0
Interest Paid In 5 Years $32,500 $35,500 $44,500
Interest Paid In 30 Years $117,500 $129,500 $166,800

*Interest
rates are for sample purposes only. Your own interest rate with or without points
or credits will vary.

One discount
point typically costs 1 percent of the loan amount and lowers your rate by
about 0.25%.

In this case,
one point costs the borrower an extra $2,500 at closing and lowers their rate
from 3% to 2.75%.

By the end of
year 5, the homeowner has already saved $3,000 in interest compared to the
original rate quote. And the longer they keep their mortgage, the more that
discount point will pay off.

By the end of
year 30, they’ve saved $12,000 compared to the original rate — and nearly
$50,0000 compared to the no-closing-cost mortgage.

This is just
another example of how borrowers can use mortgage pricing to their advantage.

The homeowner
staying long-term can pay for discount points and save themself tens of
thousands of dollars over 30 years. The person buying a starter home or a
fix-and-flip can eliminate their upfront cost and sell before the higher
interest rate starts to matter.

It’s up to you
to decide what makes the most sense based on your home buying or refi goals,
and your personal finances.

Your loan
officer or mortgage broker can help you compare options and choose the right
pricing structure.

Negotiating your interest rate

Both lender
credits and discount points involve negotiating with your mortgage lender for
the deal you want.

You’ll be in a
better position to negotiate low closing costs and a low rate if lenders
want your business. That means presenting yourself as a creditworthy borrower
in as many areas as you can.

Lenders
typically give the best rates to borrowers with a:

Of course, you
don’t need to be perfect in all these areas to qualify for a mortgage. For
instance, FHA loans allow credit scores as low as 580. And if you qualify for a
USDA or VA loan, you can buy with 0% down.

But making
improvements where you can — for instance, by raising your credit score or
paying down debts before applying — can make a big difference in the rate
you’re offered. 

Today’s mortgage rates with lender credits

Today’s rates are still at historic lows. Many
borrowers can get their closing costs paid for and still walk away with a great
deal on their mortgage.

The trick is to compare mortgage loans from a
few different lenders.

If you want a zero-cost mortgage, make sure
you ask specifically for quotes with lender credits so you can find the lowest
rate on the mortgage you want.

Verify your new rate (Feb 25th, 2021)

Compare top lenders

Source: themortgagereports.com

6 First Time Home Buying Mistakes I Made When I Bought My First House

Are you thinking about buying a house? Do you want to avoid common home buying mistakes?

I bought my first house when I was only 20 years old. Even though that was a little over 11 years ago, I have looked back many times and wondered how I did it.first time home buying mistakes

first time home buying mistakes

I made so many first time home buyer mistakes!

Of course, I was young and had a lot to learn. But, I definitely could have done more research to avoid many of the home buying mistakes I made, like not comparing interest rates or understanding the total cost of buying a home.

I’m not alone in how I approached buying a house. There are many people who simply do not understand everything that goes into buying a house, and that’s something that can negatively impact your finances and cause stress. 

Over the years, I have received many emails about buying a house in your early 20s or when you’re young. I also get lots of questions from people who have been renting and are thinking about buying their first home.

I thought it would be interesting to look back on the home buying mistakes I made and explain how to avoid the same mistakes I made. Hopefully you can be a better prepared home buyer than I was!

The mistakes first time home buyers make can cost you money and may even lead to regret. Perhaps you’re wondering why you even bought your home!

One thing you may not know about me is that the first house I ever lived in was actually my own. Growing up, we always lived in small apartments and rented. I wanted to have a home of my own – moving so often as a child was tiring.

Buying a house and being a homeowner was a completely new thing for me.

I had never done yard work, had to deal with house maintenance, home repairs, or anything like that.

I was as new as could be when it comes to living in a house!

It was a buyer’s market when we started searching. It was back in 2009, so the housing market was coming down. This meant that a monthly mortgage payment wasn’t too much more than rent at an apartment.

I felt like I was ready to buy my first house, and I needed a place to live.

So, buying a house seemed like a logical decision.

I made many home buying mistakes, like I said. While I made it through everything, my mistakes could easily have led to major financial trouble.

Read on below to learn more about mistakes home buyers make and my first-time home buyer tips.

Related content on home buying mistakes:

Here were some of my home buying mistakes.

 

first-time home buyer mistakes

This was our first house.

I didn’t prepare.

I was only 20, so I didn’t really understand how things worked, even though I thought I did at the time.

I found an online mortgage lender, and back in 2009, that was kind of a new thing. The company ended up doing a bunch of odd things and made a bunch of paperwork mistakes. It almost seemed scammy because online mortgages were so new at the time.

While my realtor was great and a family friend, she recommended a mortgage loan officer to me, and I just used that person.

The loan officer was great and very friendly.

But, I didn’t compare interest rates at all, I didn’t try to raise my credit score before I started looking at homes, and more.

Instead, I should have been paying attention to my credit score and worked to increase it before I started looking at rates. Then, I should have applied with multiple mortgage lenders and found the best interest rate.

Basically, I didn’t prepare.

Had I spent time increasing my credit score and shopping around for better rates, I could have gotten a better interest rate and saved money on mortgage payments.

While a small percentage difference in interest may not sound like much, it makes a big difference in how much you pay each month and how much you pay over the course of your loan.

For example, here’s the difference in two 30-year mortgages on a $200,000 home (this is before annual taxes being added in to the monthly payment):

  • With an interest rate of 3.25% your monthly payment would be $870, and you would pay $313,349 over the course of your loan.
  • With an interest rate of 4% your monthly payment would be $955, and you would pay $343,739.

That’s a difference of $85 a month, and you will have paid $30,000 more once your mortgage is paid off.

Looking back, I would have done more research on the home buying process and the factors that impact interest rates.

One of the easiest things you can do to avoid this mistake is to start paying attention to your credit score. You can receive free credit reports and credit scores, and I recommend reading Everything You Need To Know About How To Build Credit to learn more.

I avoided adding up all of the costs because it was scary.

Okay, so I knew that having a house could/would be expensive, and luckily we were fine, but wow, are there a lot of costs!

I avoided adding them all up for a while because I knew they would be higher than I thought. Eventually I did, and I was right – adding everything all together was a doozy.

We didn’t start adding up these costs until we were farther along in the buying process, and this is one of the home buying mistakes many people make. 

There are lots of people who only think about their mortgage payment, but there are so many more costs associated with buying a home

Before we purchased a home, we should have gone through all of the typical costs of owning a house and compared it to our housing budget. Comparing your current budget to your new homeowner’s budget will tell you whether or not you can actually afford to buy a home.

Here are some of the homeownership costs you want to consider:

  • Gas/propane.  Many homes run on gas in order to have hot water, to use the stove, and so on.
  • Electricity. Generally, the bigger your home then the higher your electricity bill will be.
  • Sewer. On average, your sewer bill may cost around $30 a month from what I’ve seen.
  • Trash. This isn’t super expensive either, but it’s still a cost to include.
  • Water. Water bills can vary widely. I know many who live in areas where the average water bill is a few hundred each month.
  • Property taxes. Property taxes can vary widely from town to town. You may find yourself looking at two similar houses with similar price tags, but the property taxes may differ by thousands of dollars annually. That is a LOT of money. While it may seem small when compared to the actual home purchase price, remember that you have to pay property taxes annually and a difference of just $3,600 a year is $300 a month for life.
  • Homeowners insurance. Homeowners insurance can be cheap in some areas but crazy expensive in others. Don’t forget to look into the cost of earthquake, flood, and hurricane insurance as well as that can add up quickly depending on where you live – not thinking about these was one of the home buying mistakes I made.
  • Maintenance and repairs. Even if your home is brand new, you may have to pay for repairs, which is something that will come up eventually. No matter how old your home is, repair and maintenance costs will eventually come into play.
  • Homeowners association fees. This can also vary widely. You should always see if the house you are interested in is in an HOA because the fees can be high and there may also be rules you don’t like.
  • Home furnishings. Furnishing your home can be done cheaply, but I know some who buy huge homes but can’t afford to put anything in them, such as a table, a bed, and so on. Why own a $500,000 house if you don’t have any furniture?

 

I probably should have spent less on the actual house.

While the house we bought was less than the amount we were pre-approved for, I definitely think that we could have found a house for even less.

We bought at the top of our budget, and this is one home buying mistake that can really get you in trouble.

Thinking back on it, the amount that we were pre-approved for, as young 20 year olds, was pretty insane. I am very glad that we did not buy a house that was that expensive.

It’s not uncommon to be approved for much more than your budget realistically allows for. Just because the bank approves you for a $350,000 mortgage, for example, does not mean you can afford to buy a house at that price.

We bought at the top of our budget thinking that we would get better jobs eventually. While that worked out in our favor since we were each barely making above minimum wage, it was a decision that could have ended quite badly.

 

We were living paycheck to paycheck and didn’t have an emergency fund.

We were young and didn’t have high paying jobs when we bought our house. In fact, we were barely making more than minimum wage at our jobs.

While we never racked up credit card debt, I did accrue student loans and we were living paycheck to paycheck.

Had one major (or even minor) thing happened with our new house, the only option would have been taking on debt. This is not where you want to be if you have just taken out a big mortgage. 

The best way to avoid this first time home buyer mistake is to set some money aside for emergencies before you buy, and to buy a house that fits in your budget. You want to be able to continue saving while making your new monthly home payments.

 

Make sure your home insurance covers what you need.

While I never had to use my home insurance, there were a few things that it did not cover, and I should have at least thought about them beforehand.

One of the biggest coverage issues was flooding. Flooding is a common problem where we lived in Missouri, yet I didn’t realize until a few years after I had already lived in the house that flooding was not covered unless you signed up for an additional policy.

Now, we weren’t in a floodplain – your lender may require you to buy special flood insurance if you live in a floodplain – but basement flooding was still a fairly common issue where we lived. 

Another special insurance consideration are earthquakes. Many normal home insurance policies do not cover earthquakes.

You can avoid this home buying mistake by researching what is the best kind of insurance policy for where you live. Floods and earthquakes aren’t a problem everywhere, but in some places you may want to have that kind of coverage.

 

Have a larger down payment.

We were 20, and we didn’t have a lot of money saved up before we bought our house.

Therefore, we did not put down a 20% down payment. That might sound like a lot, but 20% is the recommended amount to put down if you want to avoid PMI (private mortgage insurance).

A lender charges PMI because putting less than 20% down makes the loan look like a riskier investment for them. PMI protects lenders from borrowers who default on their loans.

PMI is normally around 0.5% to 1% of the mortgage annually, and it’s added to your monthly payment. If you borrowed a $200,000 mortgage, you would likely pay between $1,000 to $2,000 a year until you paid down enough of your mortgage principal to remove PMI.

We put less than 5% down towards our house purchase, and this led to us having PMI.

I don’t remember exactly how much we paid each month for PMI, but looking back, I could have used that money to pay off my student loans faster, save more, and so on.

While having a larger down payment isn’t one of the home buying mistakes I could have easily changed back then, in general, just saving more money instead of frivolously spending it in the beginning would have been a good decision.

Related content: Can You Remove PMI From Your Mortgage?

 

So, what’s going on with the house now?

As many of you know, we sold our house over 5 years ago. We wanted to travel more, and selling our house made more sense than keeping it.

We actually sold it for quite a loss, as the market was further down than when we bought it.

I’m happy that we bought the house – it taught us a lot, gave us responsibility, and gave us a place to live! And, it taught us how to avoid home buying mistakes in the future.

One of the things I haven’t mentioned is what we paid each for our mortgage. Our monthly payments were just under $1,000. 

Where we lived in the midwest is known for being a low cost of living area. I can’t imagine how we would have bought a house in some other parts of the U.S.

But, the low cost of living meant that buying a house at 20 was more doable.

Is it normal to regret buying a house? Is it normal to have buyers remorse after buying a house?

I don’t know what the statistics are on home buyers remorse, but it does happen. Hopefully with the tips before buying a house above, you can avoid that as much as possible.

Also, being realistic when it comes to what to expect when buying a house can help greatly as well.

What home buying mistakes did you make when you purchased your home?

Related Posts

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Source: makingsenseofcents.com

Mistakes I Made When I Bought My First House At The Age of 20

Are you thinking about buying a house? Do you want to avoid common home buying mistakes?

I bought my first house when I was only 20 years old. Even though that was a little over 11 years ago, I have looked back many times and wondered how I did it.first time home buying mistakes

first time home buying mistakes

I made so many first time home buyer mistakes!

Of course, I was young and had a lot to learn. But, I definitely could have done more research to avoid many of the home buying mistakes I made, like not comparing interest rates or understanding the total cost of buying a home.

I’m not alone in how I approached buying a house. There are many people who simply do not understand everything that goes into buying a house, and that’s something that can negatively impact your finances and cause stress. 

Over the years, I have received many emails about buying a house in your early 20s or when you’re young. I also get lots of questions from people who have been renting and are thinking about buying their first home.

I thought it would be interesting to look back on the home buying mistakes I made and explain how to avoid the same mistakes I made. Hopefully you can be a better prepared home buyer than I was!

The mistakes first time home buyers make can cost you money and may even lead to regret. Perhaps you’re wondering why you even bought your home!

One thing you may not know about me is that the first house I ever lived in was actually my own. Growing up, we always lived in small apartments and rented. I wanted to have a home of my own – moving so often as a child was tiring.

Buying a house and being a homeowner was a completely new thing for me.

I had never done yard work, had to deal with house maintenance, home repairs, or anything like that.

I was as new as could be when it comes to living in a house!

It was a buyer’s market when we started searching. It was back in 2009, so the housing market was coming down. This meant that a monthly mortgage payment wasn’t too much more than rent at an apartment.

I felt like I was ready to buy my first house, and I needed a place to live.

So, buying a house seemed like a logical decision.

I made many home buying mistakes, like I said. While I made it through everything, my mistakes could easily have led to major financial trouble.

Read on below to learn more about mistakes home buyers make and my first-time home buyer tips.

Related content on home buying mistakes:

Here were some of my home buying mistakes.

 

first-time home buyer mistakes

This was our first house.

I didn’t prepare.

I was only 20, so I didn’t really understand how things worked, even though I thought I did at the time.

I found an online mortgage lender, and back in 2009, that was kind of a new thing. The company ended up doing a bunch of odd things and made a bunch of paperwork mistakes. It almost seemed scammy because online mortgages were so new at the time.

While my realtor was great and a family friend, she recommended a mortgage loan officer to me, and I just used that person.

The loan officer was great and very friendly.

But, I didn’t compare interest rates at all, I didn’t try to raise my credit score before I started looking at homes, and more.

Instead, I should have been paying attention to my credit score and worked to increase it before I started looking at rates. Then, I should have applied with multiple mortgage lenders and found the best interest rate.

Basically, I didn’t prepare.

Had I spent time increasing my credit score and shopping around for better rates, I could have gotten a better interest rate and saved money on mortgage payments.

While a small percentage difference in interest may not sound like much, it makes a big difference in how much you pay each month and how much you pay over the course of your loan.

For example, here’s the difference in two 30-year mortgages on a $200,000 home (this is before annual taxes being added in to the monthly payment):

  • With an interest rate of 3.25% your monthly payment would be $870, and you would pay $313,349 over the course of your loan.
  • With an interest rate of 4% your monthly payment would be $955, and you would pay $343,739.

That’s a difference of $85 a month, and you will have paid $30,000 more once your mortgage is paid off.

Looking back, I would have done more research on the home buying process and the factors that impact interest rates.

One of the easiest things you can do to avoid this mistake is to start paying attention to your credit score. You can receive free credit reports and credit scores, and I recommend reading Everything You Need To Know About How To Build Credit to learn more.

I avoided adding up all of the costs because it was scary.

Okay, so I knew that having a house could/would be expensive, and luckily we were fine, but wow, are there a lot of costs!

I avoided adding them all up for a while because I knew they would be higher than I thought. Eventually I did, and I was right – adding everything all together was a doozy.

We didn’t start adding up these costs until we were farther along in the buying process, and this is one of the home buying mistakes many people make. 

There are lots of people who only think about their mortgage payment, but there are so many more costs associated with buying a home

Before we purchased a home, we should have gone through all of the typical costs of owning a house and compared it to our housing budget. Comparing your current budget to your new homeowner’s budget will tell you whether or not you can actually afford to buy a home.

Here are some of the homeownership costs you want to consider:

  • Gas/propane.  Many homes run on gas in order to have hot water, to use the stove, and so on.
  • Electricity. Generally, the bigger your home then the higher your electricity bill will be.
  • Sewer. On average, your sewer bill may cost around $30 a month from what I’ve seen.
  • Trash. This isn’t super expensive either, but it’s still a cost to include.
  • Water. Water bills can vary widely. I know many who live in areas where the average water bill is a few hundred each month.
  • Property taxes. Property taxes can vary widely from town to town. You may find yourself looking at two similar houses with similar price tags, but the property taxes may differ by thousands of dollars annually. That is a LOT of money. While it may seem small when compared to the actual home purchase price, remember that you have to pay property taxes annually and a difference of just $3,600 a year is $300 a month for life.
  • Homeowners insurance. Homeowners insurance can be cheap in some areas but crazy expensive in others. Don’t forget to look into the cost of earthquake, flood, and hurricane insurance as well as that can add up quickly depending on where you live – not thinking about these was one of the home buying mistakes I made.
  • Maintenance and repairs. Even if your home is brand new, you may have to pay for repairs, which is something that will come up eventually. No matter how old your home is, repair and maintenance costs will eventually come into play.
  • Homeowners association fees. This can also vary widely. You should always see if the house you are interested in is in an HOA because the fees can be high and there may also be rules you don’t like.
  • Home furnishings. Furnishing your home can be done cheaply, but I know some who buy huge homes but can’t afford to put anything in them, such as a table, a bed, and so on. Why own a $500,000 house if you don’t have any furniture?

 

I probably should have spent less on the actual house.

While the house we bought was less than the amount we were pre-approved for, I definitely think that we could have found a house for even less.

We bought at the top of our budget, and this is one home buying mistake that can really get you in trouble.

Thinking back on it, the amount that we were pre-approved for, as young 20 year olds, was pretty insane. I am very glad that we did not buy a house that was that expensive.

It’s not uncommon to be approved for much more than your budget realistically allows for. Just because the bank approves you for a $350,000 mortgage, for example, does not mean you can afford to buy a house at that price.

We bought at the top of our budget thinking that we would get better jobs eventually. While that worked out in our favor since we were each barely making above minimum wage, it was a decision that could have ended quite badly.

 

We were living paycheck to paycheck and didn’t have an emergency fund.

We were young and didn’t have high paying jobs when we bought our house. In fact, we were barely making more than minimum wage at our jobs.

While we never racked up credit card debt, I did accrue student loans and we were living paycheck to paycheck.

Had one major (or even minor) thing happened with our new house, the only option would have been taking on debt. This is not where you want to be if you have just taken out a big mortgage. 

The best way to avoid this first time home buyer mistake is to set some money aside for emergencies before you buy, and to buy a house that fits in your budget. You want to be able to continue saving while making your new monthly home payments.

 

Make sure your home insurance covers what you need.

While I never had to use my home insurance, there were a few things that it did not cover, and I should have at least thought about them beforehand.

One of the biggest coverage issues was flooding. Flooding is a common problem where we lived in Missouri, yet I didn’t realize until a few years after I had already lived in the house that flooding was not covered unless you signed up for an additional policy.

Now, we weren’t in a floodplain – your lender may require you to buy special flood insurance if you live in a floodplain – but basement flooding was still a fairly common issue where we lived. 

Another special insurance consideration are earthquakes. Many normal home insurance policies do not cover earthquakes.

You can avoid this home buying mistake by researching what is the best kind of insurance policy for where you live. Floods and earthquakes aren’t a problem everywhere, but in some places you may want to have that kind of coverage.

 

Have a larger down payment.

We were 20, and we didn’t have a lot of money saved up before we bought our house.

Therefore, we did not put down a 20% down payment. That might sound like a lot, but 20% is the recommended amount to put down if you want to avoid PMI (private mortgage insurance).

A lender charges PMI because putting less than 20% down makes the loan look like a riskier investment for them. PMI protects lenders from borrowers who default on their loans.

PMI is normally around 0.5% to 1% of the mortgage annually, and it’s added to your monthly payment. If you borrowed a $200,000 mortgage, you would likely pay between $1,000 to $2,000 a year until you paid down enough of your mortgage principal to remove PMI.

We put less than 5% down towards our house purchase, and this led to us having PMI.

I don’t remember exactly how much we paid each month for PMI, but looking back, I could have used that money to pay off my student loans faster, save more, and so on.

While having a larger down payment isn’t one of the home buying mistakes I could have easily changed back then, in general, just saving more money instead of frivolously spending it in the beginning would have been a good decision.

Related content: Can You Remove PMI From Your Mortgage?

 

So, what’s going on with the house now?

As many of you know, we sold our house over 5 years ago. We wanted to travel more, and selling our house made more sense than keeping it.

We actually sold it for quite a loss, as the market was further down than when we bought it.

I’m happy that we bought the house – it taught us a lot, gave us responsibility, and gave us a place to live! And, it taught us how to avoid home buying mistakes in the future.

One of the things I haven’t mentioned is what we paid each for our mortgage. Our monthly payments were just under $1,000. 

Where we lived in the midwest is known for being a low cost of living area. I can’t imagine how we would have bought a house in some other parts of the U.S.

But, the low cost of living meant that buying a house at 20 was more doable.

Is it normal to regret buying a house? Is it normal to have buyers remorse after buying a house?

I don’t know what the statistics are on home buyers remorse, but it does happen. Hopefully with the tips before buying a house above, you can avoid that as much as possible.

Also, being realistic when it comes to what to expect when buying a house can help greatly as well.

What home buying mistakes did you make when you purchased your home?

Related Posts

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Source: makingsenseofcents.com

The Hottest Cities in Real Estate Right Now Are ‘Spillover Markets’—Where Are They?

The past year was the ultimate roller-coaster ride in real estate—long upward climbs, steep drops, and no shortage of hairpin curves along the way. And the ride hasn’t come close to slowing down so far in 2021. According to the data on realtor.com® for the first month of the year, it’s clear that the coronavirus pandemic has reshaped house-hunting patterns, and is also driving a whole lot of buying activity.

Our latest deep dive into the hottest U.S. markets for real estate—those metros where homes are flying off the market and listings rack up tons of views from eager buyers—shows plenty of changes from the status quo. We’re seeing “spillover markets,” which are close to a larger metro but have lower prices, dominate the ranking. And that’s true for the market that made it to No. 1 for the first time in almost 10 years: Stockton, CA.

Stockton is a city of about 310,000 people that’s about 72 miles east of San Francisco’s East Bay area. The Stockton metro also encompasses Lodi, a smaller town of about 67,000 that has vineyards and a wine country vibe.

“What we’ve been seeing is, inventory is superlow,” says Jerry Patterson, a Realtor® with Cornerstone Real Estate Group in Stockton. “In Lodi, it’s down 56% compared with this time last year.”

Half of all homes in Stockton and Lodi were selling in fewer than 37 days in January—22 days faster than in January 2020. That’s also 39 days faster than the norm in the rest of the country.

Patterson traces the housing shortage to just after the initial pandemic shutdown last spring.

“It took a couple of months for the listings to dry up—before lockdown, there was a normal amount of inventory,” he says. As in other places, homeowners have been reluctant to put their homes on the market and risk exposure to the coronavirus from potential buyers coming through.

Now, there’s a dearth of homes for sale, plus buyers flooding in from the Bay Area armed with extra cash. He estimates a 60-40 split between local and out-of-town home buyers. While the median listing price here was $480,000 in January, that’s a bargain compared with San Francisco, where it’s around $1 million.

“We’ve always seen [Bay Area buyers] come in here, but now even more so. They’re coming in hordes, but now with lots of cash,” Patterson says.

While they might not be making all-cash offers, often they’re putting up extra cash if a home doesn’t appraise at the agreed-upon selling price, to ensure a sale. Four- and five-bedroom homes are the most popular properties, although starter homes with two or three bedrooms are still in demand by younger couples and families as well as empty nesters.

Two other spillover markets for the Bay Area made the list: Vallejo, just north of San Francisco, and Sacramento, the state capital that’s farther east than Stockton. In general, smaller markets continued to grow in popularity, as they did last year, while denser, larger urban areas became less popular. The 40 largest U.S. markets dropped 27 spots, on average, since last year.

The hot list

Rank Metro Median Dayson Market MedianListing Price
1 Stockton, CA  37 $480,000
2 Rapid City, SD 22 $240,000
3 Burlington, NC 40 $296,000
4 Vallejo, CA 27 $525,000
5 Fort Wayne, IN 42 $225,000
6 Colorado Springs, CO 46 $532,000
7 Lafayette, IN 50 $275,000
8 Reno, NV 46 $637,000
9 Spokane, WA 44 $399,000
10 Sacramento, CA 36 $599,000
11 Topeka, KS 42 $146,000
12 Concord, NH 53 $355,000
13 Yuba City, CA 53 $445,000
14 Modesto, CA 43 $459,000
15 Janesville, WI 53 $227,000
16 Springfield, OH 54 $137,000
17 Fresno, CA 38 $365,000
18 Ogden, UT 36 $496,000
19 Columbus, OH 53 $307,000
20 Pueblo, CO 50 $339,000

Source: realtor.com

The Golden Rule Doesn’t Apply in Marketing Anymore!

For years, the Golden Rule has been applied to the realm of marketing and selling. Treating people like you would like to be treated seems not only morally right but a good practice in the business world.

Sherlock: not having an accurate view of sales performance is a recipe for disaster
Pat Sherlock

Throughout history, this maxim has been upheld as a key to professional and personal success. But, when it comes to today’s marketing efforts, it doesn’t apply as it once did. What has happened to diminish the Golden Rule in selling?

Social media has forever changed the way consumers purchase products, including home loans. In mortgage banking, the average age of originators is between the late 40s and early 50s. Experian notes that the median age of first-time home buyers is 34.

According to Smart Insights, there are significant differences between how specific age groups use social media to discover and research products. The key takeaway is that older originators who assume that younger prospects use the same social media platforms they do risk disconnecting from an important target audience.

This is not surprising, but it is an overlooked topic by many lenders, especially banks, that often dictate what social media platforms and content the sales force can use. Case in point: while the originators’ age group (45 to 54) researches products via social media 33% of the time, younger prospects (25 to 34) do so 50% of the time.

For originators concentrating on purchase money and first-time home buyer loans, not being active on the same social media platforms as prospects will hamper sales performance. This becomes even more problematic when lenders provide generic content that is not personalized for prospects and referral sources.

Once our current refinance market inevitably shifts to a purchase money environment, it will be critical for originators to align their social media marketing efforts with the usage patterns of prospects in order to succeed.

Social media platform preferences are only part of the picture. Just as important is the type of content being published. Consumer demand for online video content has grown exponentially, a trend that will undoubtedly continue. Faster download speeds and cost-effective production have made it easier than ever for sales professionals to harness the power of video for their marketing efforts.

While COVID-19 restrictions forced many originators to make video sales presentations instead of meeting prospects in person, this format is here to stay. The issue is no longer whether originators should be on video, but how good they are at convincing prospects to do business with them via this medium. Moving forward, while AI can streamline product selection and loan processing tasks, a computer can’t duplicate the warmth, interest and caring that a salesperson can convey in a video presentation.

Originators who put the time and effort into developing and perfecting video presentation skills will win in today’s marketplace. This isn’t about being a Hollywood movie star but more about a salesperson being real, current, and tech-savvy. This one skill will separate better originators from the rest of the pack.

Are your originators meeting customers where they are? Are they providing marketing content in a way that consumers want to receive it? These are critical considerations for producers who want to connect with their best prospects.

Pat Sherlock is the founder of QFS Sales Solutions, an organization that helps organizations improve their sales talent management and performance. For more information, visit https://patsherlock.com.

Source: themortgageleader.com

Amerifirst Financial Review: They Take Home Purchase Lending Seriously

Posted on February 24th, 2021

It’s not every day you come across a large-scale independent mortgage lender that has been around since the 1980s, but Amerifirst Financial Inc. fits that description.

The Arizona-based company understands that there’s more to the mortgage business than just refinances, which is why their goal is to be the lender of choice for real estate professionals in all the markets they serve.

This could be a pretty smart strategy if and when interest rates rise and the pool of eligible refinance candidates begins to run dry.

If you’re thinking about buying a home, Amerifirst could be good choice for your financing needs since they’re heavily focused on purchase loans. Let’s discover more about them.

Amerifirst Financial Fast Facts

  • Direct-to-consumer retail mortgage lender
  • Founded in 1989, headquartered Mesa, Arizona
  • Offers home purchase financing and mortgage refinances
  • Funded more than $2 billion in home loans last year
  • Most active in Arizona, Colorado, and California
  • Licensed to do business in 43 states and the District of Columbia
  • Also operate several DBAs including AFI Mortgage, Spire Financial, and Truly Mortgage

Amerifirst Financial Inc. is a direct-to-consumer retail mortgage lender, meaning they operate a call center along with branches throughout the country.

The company was founded all the way back in 1989 and is headquartered in Mesa, Arizona, which is just east of Phoenix.

They also have branches in nine states, including Arizona, California, Colorado, Florida, Mississippi, Nevada, Oregon, Texas, and Utah.

Amerifirst appears to specialize in home purchase financing, with roughly two-thirds of total volume dedicated to home buyers.

The rest can be attributed to mortgage refinances, including rate and term refinances and cash out refinances.

Last year, the company funded more than $2 billion in home loans, with nearly a billion in their home state of Arizona.

They’re also very active in Colorado and California, and have a decent presence in Nevada and Texas as well.

While they’re licensed in most states nationally, they don’t seem to be available in Delaware, Hawaii, Maine, New York, Rhode Island, Vermont, or West Virginia.

How to Apply with Amerifirst Financial

  • You can get started instantly by visiting their website and clicking “Apply Now”
  • They offer a digital mortgage application powered by ICE that lets you complete most tasks on your own
  • It’s also possible to browse their online loan officer (or branch) directory first to find someone to work with nearby
  • Once your loan is submitted you can manage it 24/7 via the online borrower portal

Amerifirst Financial makes it super easy to get started on your home loan application.

Simply head to their website and click on the big “Apply Now” button and you’ll be off to the races.

That will take you to their digital mortgage application powered by ICE that lets you input all your personal and financial details electronically.

Then you can link financial accounts using your credentials to avoid having to scan/upload or track down your documents.

Additionally, you can order your own credit report and eSign disclosures to speed through the more painstaking part of the process in a matter of minutes.

Once your loan is submitted and approved, you’ll receive a to-do list with any conditions that must be met to get to the finish line.

You’ll also be able to track and manage your loan via the online borrower portal, and get in touch with your lending team if and when you have questions.

Those who prefer a more human touch can also visit a local branch and/or browse the online loan officer directory to learn more about the individuals who work there.

It may also be advisable to speak with a loan officer first to discuss loan pricing and available loan programs, then proceed to the online mortgage application.

In any case, they make it really simple to apply for a mortgage and manage your loan from start to finish thanks to the latest technology.

Protect Your Transaction Pre-Approval for Home Buyers

Protect Your Transaction

One perk to using Amerifirst Financial, especially if you’re buying a home in a competitive market, is their “Protect Your Transaction” loan commitment.

It goes beyond both a pre-qualification and pre-approval in that it’s underwritten upfront by a real human loan underwriter.

In fact, the PYT even comes with monetary assurance (up to $15,000, with an additional $5,000 for first responders and teachers), which represents their belief in the strength of your application.

So if the loan falls through and it turns out to be the lender’s fault, you could be entitled to that cash, which can also be shared with the seller. This may strengthen your offer.

Next to a cash offer, they believe it provides the greatest assurance that they can provide financing for your home purchase.

And that could just be enough to give you edge versus other home buyers on a hot home.

It may also give you peace of mind in the process, knowing you can actually get financing when all is said and done.

Loan Programs Offered by Amerifirst Financial

  • Home purchase loans
  • Refinance loans: rate and term, cash out, streamline
  • Conforming home loans
  • High-balance and jumbo home loans
  • FHA/USDA/VA loans
  • Down payment assistance
  • Green Value Mortgage
  • Fixed-rate and adjustable-rate options available

Amerifirst Financial offers both home purchase loans and refinance loans, including rate and term, cash out, and streamline refinances.

You can get financing on a primary residence, including townhomes/condos, along with a vacation home or 1-4 unit investment property.

They offer all the popular loan types, including conforming loans backed by Fannie Mae and Freddie Mac, high-balance and jumbo loans, and government-backed options like FHA, USDA, and VA loans.

They also offer an exclusive loan program known as the “Green Value Mortgage” that offers a reduced interest rate, fees, and discounted mortgage insurance if your property has a green score of 75 or lower.

You may also be eligible to receive up to 3.5% of the purchase price as a non-repayable gift. All the more reason to go green!

In terms of loan programs, you can get either a fixed-rate mortgage such as a 30-year or 15-year fixed, or an adjustable-rate mortgage like a 7/1 or 5/1 ARM.

Amerifirst Financial Mortgage Rates

One slight negative to Amerifirst Financial is the fact that they don’t mention their mortgage rates anywhere on their website.

As such, we don’t have any clues about their loan pricing relative to other banks and lenders out there.

The same goes for lender fees, which aren’t clearly listed on their website to my knowledge.

This means you’ll need to get in touch with a loan officer to discuss rates and fees to ensure they are competitively priced.

Be sure to compare their rates/fees with other lenders before you proceed to the application if you want peace of mind on pricing front.

Customer service and competence is always important, especially when it comes to a home loan, but so is cost.

Amerifirst Financial Reviews

On Zillow, Amerifirst has a very impressive 4.98-star rating out of 5 from roughly 900 customer reviews, which is quite impressive given the volume of feedback.

On LendingTree, they have a perfect 5-star rating, though it’s based on just about 30 reviews. They also have a 100% recommended score there.

If you’re looking for more reviews, you can also check out local ones on Google for their brick-and-mortar branches nearest you.

Lastly, the company is Better Business Bureau accredited, and has been since 2014. They currently enjoy an ‘A+’ rating based on complaint history.

To sum it up, Amerifirst Financial could be a solid choice for someone purchasing a home (especially a first-time buyer) thanks to their robust Protect Your Transaction loan approval and variety of down payment assistance programs.

Amerifirst Financial Pros and Cons

The Good

  • You can apply for a home loan from any device in minutes
  • Offer a digital mortgage application powered by ICE
  • Lots of loan programs to choose from
  • Discounts for those who purchase a green home
  • Protect Your Transaction loan approval for home buyers
  • Excellent customer reviews from former customers
  • A+ BBB rating, accredited business since 2014
  • Free mortgage calculators and mortgage dictionary on site

The Not

  • Not available in all states currently
  • Do not list mortgage rates or lender fees on their website

(photo: nathanmac87)

Source: thetruthaboutmortgage.com