First-Time Home Buyers, Part VIII: Grading Local Schools

When thinking of buying a home, most people research various neighborhood amenities, including local schools.  Regardless of whether you have children, schools can affect property values and are an important consideration when buying a home.

Here are four ways to tell if area schools are having problems:

Local test scores are low or dropping. Low test scores can be a product of resource shortages, poor teachers, lack of commitment by the school district or parents.

Student enrollment is dropping. If fewer families are moving into the neighborhood, or parents are choosing schools outside the neighborhood, the school may be having problems.

Poorly maintained or vandalized buildings. Inadequate upkeep may be a sign of funding shortages and low involvement from parents.

Troubles at PTA meetings. Tension among parents or between parents and the school’s teachers or management may indicate serious problems in a school.

If you have any doubts about the school quality in your target neighborhoods, please email me and I’ll be happy to discuss them with you.  Learning about local schools helps you make an informed choice about where you live.

Erik Langerak
eriklangerak@yahoo.com
865-335-5998

First-Time Home Buyers, Part VII: Your Monthly Mortgage Payment

When you’re thinking of buying a home, you may wonder what your mortgage payment will look like. When you have a mortgage, you’ll have several different portions of your payment each month.

Your mortgage payment consists of principal, interest, taxes and insurance (often appreviated as “PITI”), and sometimes additional fees, such as homeowners association dues.

Principal is the money you borrowed to purchase the home.

Interest is the cost of borrowing money.

Taxes are paid by homeowners to local governments, and are usually a percentage of the assessed property value.

Insurance helps protect against financial loss from fire, natural disasters or other hazards.  Most lenders require you to have a homeowner’s insurance policy on your home because it will help protect their investment as well as yours.

Remember, many loan quotes will only include your principal and interest.  You will also need to factor in the taxes and insurance to calculate your total monthly mortgage payment.

When you’re ready to take the next step to buying your home, please get in touch with me.  I’ll be happy to explain the process further and help you narrow your home search.

First-Time Home Buyers, Part VI: All About Downpayments

An important aspect of getting a home loan is saving money for your downpayment.  You have many choices to make your new home more affordable to you.

Lenders used to require a down payment of at least 20 percent of the home’s purchase price.  These days, however, many lenders offer flexible home loan programs allowing you to put very little down — 3 percent or less of the price.  For some buyers it’s possible to buy a home with no down payment at all, or to receive help from local down payment assistance programs.

If you decide to make a down payment of less than 20 percent, your lender may require Private Mortgage Insurance (PMI), which protects the lender in case you cannot repay the mortgage.  Talk with your mortgage professional to find out the smartest deal for you.

You’ll also need to pay for closing costs, which are costs associated with initiating a loan.  These can include loan origination fees, discount points, attorney fees, recording fees, and pre-paids.  They often will total from 3-5 percent of the home price.

Once you have your down payment and loan pre-approval, it’s simply a matter of finding the right house — which is where I come in.  Please call or email when you are ready to take this next step towards owning your own home.

Erik Langerak
865.805.913
eriklangerak@yahoo.com

First-Time Home Buyers, Part V: Choosing Your Neighborhood

Buying a home is an investment in the neighborhood as well as the house.  In fact, the character and amenities of the neighborhood may be as important to the property value as the house itself.  No matter what kind of neighborhood you’re looking for, it’s important to know its history and future when you decide to buy.  Here’s what to research:

1. Recent sales — find out if the market is slow and what homes have been selling in that area.

2. Homes now for sale — what homes are listed in the area, and are they listed above past sales?  This will give you a good idea of the area’s overall market value.

3. Home appreciation — historical data on sales gives the best indicator of a neighborhood’s potential.  Are homes appreciating at 3%, 5%, 10% or higher every year?

4. Schools — school scores and district boundaries are very important to research before moving into a neighborhood.  The closest school is not always in your district, and school scores reveal if a neighborhood is invested in the schools’ success.

5. Crime — get the hard facts about any problems in the neighborhood.  Don’t depend on anecdotal information.

6. Demographics and growth — find out how the area is growing and changing.

7. Community — learn about neighborhood features, such as public schools, shopping areas, parks, commuting options and more.

I can help you with this information!  Feel free to shoot me an email at eriklangerak@yahoo.com with any questions you have.  You’ll find that the more you know about the neighborhoods you’re considering, the easier it will be to narrow your search for a new home.

Soul Search At Dawn

New Year’s Day is literally tomorrow, and amidst all the holiday hullabaloo, I’ve attempted to remain a bit detached from the circus all around.  Some may consider that cold, callous, and other names I won’t repeat here, but to me it’s all a bit retail-centered and media-inflamed.  So if you can look past all the hype and aimless busy-ness and get at the heart of the season, I would say that’s the most important and worthwhile pursuit.

Which brings me to the objective of this post.  In recent months, I’ve had little time to seriously dwell on what sets me apart from competitors, but sooner or later that very subject arises.  As a rule, one of the things I really enjoy about the real estate profession is how much more collaborative it is rather than competitive.  Too many (realtors, especially) view it as a cut-throat walk of life (and sometimes it can be), rather than a team sport.  I’m reminded of the formula for a successful new planned development such as one we’re working on right now: if all the team members eliminate greed and focus on the end result, everyone wins.

However, when a prospective client is sitting in your office and wants to know what YOU can do for them, you’d better have an answer ready without even thinking about it.  Stumbling about indicates lack of clarity and uncertainty, and your client will go find themselves an agent who has clarity and certainty (as well as professional knowledge), and consequently in their minds deserving of their commission.

Some of the objectives and attributes posted here may well be copied by some and shamelessly presented as their own material.  Well, so be it.  Those are the inherent risks in writing a blog like this one.

First, a few basics.  I would warn you of the phrase “everybody does it”.  Should you hear this coming from your agent with respect to a practice that doesn’t really seem fair or ethical, it’s a huge red flag.  Glossing over rules just because he may be able to get away with it doesn’t make it the right thing to do.  Walk away.  I’m here to tell you everybody doesn’t do it.

And now, a revelation that may well get me shot someday: THERE IS NO STANDARD COMMISSION.  Let me repeat that for the box seats.  NO STANDARD COMMISSION.  I don’t care what a different agent or broker or TV personality or man on the street may say.  There is absolutely no such thing as a set commission, in any kind of transaction.  There may be a minumum that a brokerage is willing to accept, sure.  They need to put food on the table and pay the bills.  But if you hear a figure mentioned in the same sentence with “state law” or “real estate contract policy”, it is a blatant lie.  Every commission is negotiable.

So how could I then claim to be worth more to you than the agent down the street who will take your listing for less commission percentage?  Ah, now we’re getting to the heart of the matter.  Below I’ve listed what I consider to be the most important aspects of Buyer’s Agents and Listing Agents.  Read over these and then see how the agents you’ve been working with stack up.

BUYER’S AGENT

• I represent you during the entire transaction.  Starting from the home search, to writing the offer, to handling negotiations with various vendors involved in the transaction.  This allows you to relax and know for sure that things are going well and in your best interest.
• I provide many of the services necessary in the home-buying process.  This saves you valuable time and reduces frustration.
• I can pre-qualify you for a loan before we start looking at houses.  You’ll know exactly how much house you can afford.
• I can help you arrange for a home inspection to look for hidden defects that could be very costly.
• I will help you find the right insurance by shopping for quotes so you can compare coverage.  You’ll have all the information you need to make an informed decision.
• I shop multiple mortgage companies to find the best rates and terms.  I’ll explain the fees that could add to your closing costs or mortgage loan.
• I help you choose a title insurance provider that will keep your costs as low as possible.
• Most importantly, I work in your best interest.  This means complete honest, integrity, reliability, and full disclosure of all relevant knowledge of any property involved.  I am duty bound to a strict code of ethics to ensure that the property you are buying or selling is transferred to or from your possession safely, legally, and with minimum hassle.

LISTING AGENT

• Safety — I will ensure that your home is not visited by complete strangers, nor will they be unaccompanied.  Anyone touring your house will be accompanied by me, and I will have gotten to know them very well before they ever set foot on your doorstep.
• I will save you time by putting your home on the MLS, as well as hundreds of other websites simultaneously.  Ask your agent if they know how to do that.  The technology is here, and anyone not running to keep up is in a different era.  Your property deserves to be seen by as many eyes as possible!
• I only bring pre-qualified buyers to view your property.  Not screening prospective buyers is simply a waste of everyone’s time.  Open houses are a similar waste of time — they simply give your neighbors a chance to check out your floorplan and socialize.
• Fliers will be distributed to the neighborhoods surrounding your property for maximum coverage.  These can be created digitally in matter of minutes — if your agent is still doing postcard mailings for his or her listings, they are very much behind the times.

There is more, of course, much more.  This, however, is an excellent starting point, and some of the groundwork upon which all real estate practice should be laid.  None of these commitments are taken lightly by me, but it is a combined responsibility I am proud to shoulder on a daily basis.  With all of this in mind, I look forward to the new year (unlike so many today), glad to be able to do what I do, meet so many amazing people, and serve my fellow man.  May 2009 only bring you the very best of life.

Erik Langerak

The Tangled Web

There is a fantastic article on MSNBC.com that explains a great deal about the mortgage industry and in particular why it’s so difficult to modify an existing mortgage.  Unfortunately, it’s the reason so many will simply do what it takes to get qualified for a new mortgage on a new house and simply let the first mortgage default and their old house get foreclosed on.  They are willing to live with the black mark on their credit score for 5 or so years in exchange for being able to bail on their mortgage note.

It’s kind of a long article, as a heads-up, but it’s very informative.  So much so that I made a separate page for it here.

The Saddest Thing . . .

Dear Reader,

The holiday season is in full swing, and the glittery tinsel hides, for many, a really tough time financially.  In the past 12 months, thousands have filed for bankruptcy, foreclosure, and worse.  Many more thousands are on the path, if they haven’t reached the end as of yet.  In today’s market, more and more people know someone who is struggling with their mortgage payment as a result of a sharp increase in their interest rate, plunging stock market, skyrocketing gas prices during the fall, or hikes in their utility bills.

Ladies and gentlemen, this ought not to be!

If you or someone you know is facing a possible foreclosure, I have information that can help.  The sooner we act to help someone in this position, the better the outcome.  And make no mistake — it takes acting.  Ignoring those notices and hoping for the best is not the answer, nor will it make the situation go away.  Once a house starts into the foreclosure process, it can be difficult to stop, and the ramifications can be long-lasting:

1. The owners may face substantial late fees.  ”Substantial” in this case does not mean “small”, in any way.
2. The owners may lose all of their equity.  For those who have been in their home for awhile, this is not a small amount either.
3. The owners may suffer with a mark on their credit that will take years to erase.

Please understand, this does not have to happen!  There are a number of effective strategies to help the homeowner forestall a foreclosure.  Renegotiating the loan is one possibility.  You would be amazed at how easy it is to pick up the phone and simply call the bank up to explain your situation.  They are willing to work with you!

Two other options are a short sale (selling for less than the loan amount with bank approval) or a quick sale (selling for more than the loan amount but at a lower, more attractive market price).

As a full-service real estate agent, I am committed to help clients with all their housing needs.  Whether it is to help preclude foreclosure, pull equity out of their home for investment properties, or assist them in either finding a new home or sellling their current one, I will ensure that the process goes smoothly.

Foreclosure is a nation-wide epidemic, but it’s also in our own backyard.  If I can help you or anyone you know hold onto their home (or at least minimize the losses), please email me.  I appreciate the opportunity to be your trusted real estate resource.

Warm Regards,

Erik Langerak

First-Time Home Buyers, Part IV: Pre-Approval

Pre-approval can be a very valuable step towards purchasing a home.  Many home buyers get pre-qualified for a home loan early on, and then become pre-approved before beginning a serious home search.  By completing your mortgage application prior to choosing a home, you can get a pre-approval letter stating how much home you can afford.

Your pre-approval letter lets you know exactly how much you can spend, and it shows home sellers and real estate agents that you’re serious about buying a home.  This may give you leverage in the negotiation process.  Many sellers actually prefer to work with pre-approved buyers, especially i hot real estate markets.  And contrary to what the media would have you believe, there are a great many hot markets out there today.

To find a mortgage professional and get started with your pre-approval for a loan, feel free to shoot me an email.  My goal is to provide you with practical information as you consider your next move, and I look forward to working with you.

First-Time Home Buyers, Part III: How Much Home Can You Afford?

First-time buyers are often unsure about the financial aspects of purchasing a home, and you may have many questions burning in your mind. How much can I afford? Do I need a large downpayment?

Your home price range will be determined by your income, credit history, the cash you have for a downpayment and closing costs, and your debt ratio. How much you earn compared to how much you owe is a considerable factor in how much the bank allows you to borrow.

The financial rule of thumb is: your total monthly debt service (which will include your monthly mortgage), shouldn’t be more than about 36 percent of your gross monthly income. Most experts say that your monthly housing expense, including taxes and insurance, should not exceed about 28 percent of your gross monthly income.

Naturally, every situation is different, and each lender has different rules about working with buyers. A number of choices within your control can affect your monthly payment as well. For example, you might choose an adjustable-rate loan, which has a lower initial payment than a fixed-rate program (not recommended for most situations, however — seek expert counsel before deciding!). Similarly, a larger down payment may lower your monthly payment.

If you’d like more information about how much home you can afford, please don’t hesitate to shoot me an email. I can help you get the mortgage information you need!

First-Time Home Buyers, Part II: Considering Moving?

When you’re thinking about making a move, the first steps in the home-buying process are:

1. Deciding when you want to make your move.
2. Establishing your price range.
3. Thinking about what type of home you would like.
4. Deciding where you would like to live.

The next step is usually finding out how much loan you can qualify for and choosing the type of financing that will work best for you.

If you’re in the “thinking about it” stage, you will want to speak with a lender about receiving pre-qualification. If you choose to become pre-qualified, the lender will determine how much you can borrow based on financial information you provide to the lender. Pre-qualification is useful for making preliminary decisions about how much home you can afford, but does not assess your credit-worthiness.

Next, you will need to fill out a loan application and go through the lender’s loan approval process at a later date. When you decide to buy a home, you will want to become pre-approved for a loan prior to beginning your home search.

Please don’t hesitate to call or email me for additional information about the buying process. My goal is to provide you with practical information as you consider your next move. When you’re ready, I will do everything in my power to help you find your dream home and handle all the details of the transaction, so all you need to do is pack!

Erik Langerak
The Realty Hut
e eriklangerak@yahoo.com
c 865.805.9613
o 865.824.1255