Rochester's Real Estate Gazette

Although a home inspection is not required by law, it is always a good idea to have an objective third party inspect a home you wish to buy. A reliable home inspector can save you literally thousands of dollars in unexpected home repairs.

Paying for the inspection

Usually, the buyer pays for the inspection. But everything in real estate is negotiable. Put it in the contract to split the cost of the inspection to see what the seller says. If they are motivated – and confident in what the inspector will find – they may agree, which will save you a few hundred dollars.

What home inspectors look at

Home inspectors start by looking at exterior features: outside walls, soffits, decks, roof, chimneys and drainage conditions. On the interior, they examine the condition of windows, doors, plumbing fixtures, electrical outlets and switches. They examine the heating and cooling systems. They also look at the attic and crawl space to ensure that they have adequate insulation and ventilation.

And what they don’t

Home inspectors are generalists and usually not qualified to assess things like pools, septic systems and trees and shrubs. If you want to have a termite inspection done, expect to hire a specialist in that area.

Accompany the inspector

A written report doesn’t give you the whole picture. Although it’s not required, if you go along on the inspection you’ll have a better indication of the issues associated with the home.

Questions to ask

It is essential that you trust the home inspector. Make sure to ask questions about the inspector’s background and qualifications, their training and what they’re looking for when they perform their inspection. Here’s a list of questions to ask your inspector (http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/insp/inspfaq) as suggested by HUD.

Finding a home inspector

If you’re in the market for a new home, ask your real estate agent for a list of trusted home inspectors that they use regularly. You can also ask friends and relatives for a referral. Make sure to do some research on the inspector; look for reviews online. In addition, make sure to ask to see a sample report. That way you’ll ensure that you’re comfortable with what the inspector reports and how they report it.

A home inspection is protection for the investment that you’re planning to make. Weighed against the potential cost of repairs and what you pay for your home, it is a wise decision to protect your investment.

For decades, when home buyers were discussing the terms of their mortgage, it was generally understood that it would be paid off in 30 years. But a couple of decades ago, buyers started hearing about the option of a 15-year mortgage.   The allure of the shorter term mortgage is obvious: Shorter terms means you pay less interest.

It isn’t the deal it once was

Using the mortgage calculator at Realtor.com, we can see just how much your payment will be. With a buying price of $200,000 and a 20% ($40,000) down payment, your payment will be $1,086 on a 15-year mortgage at 2.75% APR. On a 30-year mortgage for the same house, same down payment, with 3.5% APR, your payment will be $718. That’s a difference of $368.

The drop in interest rates isn’t what it used to be. In the 1980s, there was a discernible difference in interest rates. The monthly payment on a 15-year mortgage at 8.5% would be $1575, while the same house at 10.5% for a 30-year note would be $1,463. That’s a difference of $108.

Strain on the budget

Many home buyers find that coming up with the extra money month in and month out is prohibitive. Any change to your financial situation could make it more difficult. Having children, buying a new car, a bout of unemployment… anything could put a strain on your already tight budget.

Less flexibility

Paying over 50% more on your mortgage requires fiscal discipline, to be sure. It also means the difference between investing in retirement, taking vacations and spending less money on almost everything in your life.

Paying off your mortgage early

Many people are opting for the 30-year mortgage and taking steps to pay it off early. There are many options for homeowners who want to pay down their mortgage at an accelerated rate. Paying bi-weekly is one option. Simply paying more is another. As your salary rises, pay that much extra on your mortgage. You can also apply windfalls such as tax refunds and bonuses to your principal.

For more ideas about your mortgage options, talk to your REALTOR® and loan professional. They should have ideas to determine your best course of action.

Whether you’re moving across town or across the country, if you have children, one of the biggest considerations when buying a home is the schools they will attend. It is important, but it doesn’t have to be a daunting task and there are resources available that you should look into before making a buying decision.

Use online resources

Fortunately, finding information about schools online is relatively easy. Most districts have a website, so that’s a good place to begin your search. The sites vary in terms of how comprehensive and helpful they are, but most will provide a list of district schools, contact information, schedules, after school programs. Check the individual school website for information about contacting PTO officers. One of the most important pages you’ll need to see is the one highlighting enrollment procedures, so you’ll know exactly what you need to get started.

For a more objective view of the schools in the area, websites such as GreatSchools.org, GlobalReportCard.org and NeighborhoodScout.com offer information about district standardized test scores as well as parent reviews.

Don’t forget social media. Many schools have Facebook and Twitter pages. Do a quick search there and do some looking around.

Coordinate your efforts

There are two common mistakes when trying to coordinate buying a home with choosing a school. The first is finding a school and getting their children enrolled only to discover there are no homes in the area, or none that they can afford. The other is finding their dream home and starting the process of buying it, then finding out there are no schools in the area.

Connect with other parents

The best source of school information is, of course, other parents, so it is beneficial to speak to them about the schools in the area. As stated before, there will be information available on the school’s website about PTO; reach out to them personally. The officers are usually the most involved and will be great sources of information about teachers, principals and administration.

Seek out local resources
Talk to your REALTOR®, who will usually have great information about schools. If they are not experts, they usually have a colleague who they can use as a resource. If you’re relocating for your job, send out an email blast to your future co-workers and ask them for information and recommendations about schools. Check local papers for stories about the schools on your list.

Contact the schools

Once you’ve narrowed your search to a few schools, contact each one directly. Talk to the principal or administrator and have a list of questions ready for them. Ask them to recommend several parents that you can talk to as well.

Have a backup plan in place

Whether you choose a public or private school, there is no guarantee that you’ll get in. Be sure to have a back-up plan in case the school you choose doesn’t work out. Enroll your child in the school that is your first choice, but make sure that you know if there are slots available at two or three other schools on your list, just in case things don’t work out.

Once you’ve settled on a school, make sure to check the website and contact them to ensure that you have all the paperwork and documentation necessary to enroll.

Coordinating choosing a school and finding a home is a necessity when making a move. Doing due diligence by researching the school and reaching out to local resources and other parents will help make the transition process for your child more smooth and eliminate worry for you.

For many, owning a second home is a reality brought on by good financial planning. It can be treated as an investment, a vacation home, a rental property – or all three.

With property values and loan rates low, now might be your best opportunity to buy a second home, for whatever reason you have in mind. However, owning a second home brings with it issues that you should consider before purchase.

Be realistic about your finances

First and foremost, don’t rush into the decision to buy. Even though rates are low, property values are down and people are unloading second homes, you want to avoid purchasing a second home that you can’t afford. Renting it out when you’re not using it sounds like a win-win: although you may be able to cover some costs, it’s unlikely that your property will “pay for itself.”

How you’ll use the property (now and in the future)

Are you looking for a weekend getaway? Or for something that will serve as your retirement home? Finding a property that serves both functions may be more difficult than you’d imagine. Sure, a ski condo is great, but living there and skiing there are two entirely different things. Accessibility to medical care, cost of living, taxes and maintenance are all things to consider if you’re looking for a retirement home.

Tax implications depend upon the use of the property

There are tax implications to consider, based upon how much you use your home and how much you lease it. Know the regulations regarding what you can deduct and what you can’t. Talk to your REALTOR® and be informed. Make sure you can make the payments without the rental income. If you’re not handy, or live far away, you’ll need to hire maintenance and cleaning services.

Financing differs from primary residence

A second home usually falls into a different category than your primary residence, which means that your lender will require a larger down payment, perhaps as much as 30 to 50 percent. You’re also likely to have to pay a higher interest rate and need a higher credit score and substantial income to qualify. Talk to your lender about financing options before you get your heart set on a second home.

Owning a second home may be a dream for you, whether you’re looking for a vacation home, want to retire to the lake or mountains, or want to generate income as a landlord. Think carefully and talk to your REALTOR®, financial planner and lending institution before you make the move.

When it comes to buying a house, everything is negotiable from the commission to who pays how much on the fees to the price. Negotiating a transaction effectively can save you time, money and headaches.

Tip #1: Knowledge is good

Yes, it is vital to know things like how long the house has been on the market and what other houses in the area have sold for, but it’s also important to know why the owner is selling. If they are relocating for a job, that could mean they’ll take a lower offer with quicker closing.

Tip #2: Know your price

Whether you’re buying or selling, knowing what you’ll take or what you’ll give is one of the most important things in the negotiation. Otherwise you’re more likely to concede more than you should.

Tip #3: Remember… it’s not personal; it’s business

Even in “The Godfather” it was business when they went after Vito Corleone. No matter what, keep calm and remember that it’s just a business transaction. Check your ego at the door.

Tip #4: Let them start

Many negotiators make it a point to never make the first offer. It allows you to define the mid-point. In many cases, their first offer may be better than what you would have asked for in the first place.

Tip #5: Set an expiration date

By putting a deadline on your offer, you eliminate the seller’s ability to gather other offers. It shows you’re serious about buying and gets negotiations started quickly. Ask for a response within 24-48 hours.

Tip #6: Use the silent treatment

Negotiating is all about talking, right? People are uncomfortable when no one is talking, but this is exactly why you should use silence to your advantage. They will often interpret silence as disagreement and will break the silence by revising their offer or offering a concession.

Tip #7: Give the reason

No matter what the sticking point, when you decline the other party’s request or ask for some sort of concession, it’s always more effective to give a reason why. It negates their ability to counter.

Tip #8: Ask for financial concessions

If you’re close and seller won’t budge any more on price, you can ask them to pay for all the fees, including city transfer taxes, inspections and appraisals, which can help you alleviate being cash-strapped at closing.

Tip #9: Be nice

This kind of goes along with “it’s not personal,” but realize that if you’re nice, people are more likely to give you what you want. Being respectful and pleasant, even when asking for everything you want, increases the chances of getting it.

Tip #10: Be willing to walk away

It’s difficult when you’ve found a home you love in a great neighborhood, but you have to be willing to end negotiations if you don’t get what you need from the deal.

If you’ve ever bought a home, you know that the amount of paperwork generated can be overwhelming. After signing pages until your hand cramps, you take home a file folder full of documents. 

That’s just what you take home. Now consider the amount of paperwork produced when the selling and buying agent, the lender, the title company and the county (who keeps most of the records) all get copies. 

Now imagine the amount of paper we could save when you consider that according to the National Association of REALTORS®, 4.65 million homes were sold in 2012. It’s staggering. 

The road to a paperless real estate industry

The steps toward paperless real estate transactions include the Uniform Real Property Electronic Act, the Uniform Electronic Transactions Act, and the federal Electronic Signatures in Global and National Commerce Act. In 2000, use of electronic signatures was legalized in the United States. Although technology was lacking at that point to make doing everything digitally, it was an important legal hurdle because it enabled many industries the option of paperless transactions. 

By the end of 2005, counties across the country adopted electronic records management systems. Because the technology has improved and become less expensive in the last few years, that number has continued to grow. 

There have been obstacles toward a completely paperless transaction. Some real estate agencies, title companies and banks have been reluctant to adopt. But their number is beginning to wane. As the process has improved, they can see that it saves them time and money while improving the customer experience. 

The benefits of an electronic closing

For the home buyer, there are many advantages to a paperless closing. Of course, going green is a huge factor. Signing your name once and applying it electronically as you and your REALTOR® go through the process saves time – and a cramped hand. At the end of it all, you walk out with the records of your transaction on a CD rather than a file folder. 

For the REALTOR®, lender and title company, it saves on storage space. It’s more efficient to ship documents electronically than to copy every page and ship them. If one page is missing, it could hold up the entire process. From a record-keeping standpoint, it’s also more efficient to search digital records than paper records. As more companies adopt the technology and save money, they could pass the savings on to the buyers.

Although digital transactions are not available everywhere, make sure to ask your REALTOR® if a paperless closing is an option when you buy your next home. The trees will thank you!

Interest rates are at an all-time low, which can influence homeowners to refinance their mortgages. In some instances, this makes a lot of sense. However, there are some times when refinancing your mortgage may not be your best option.

Paying off credit card debt

Resist the urge to pay off high-interest debt, such as credit card debt, by rolling it into a new mortgage. On the surface it seems like a smart move, but by moving unsecured debt into a loan backed by your home, you put yourself in danger of losing your home if you can’t make the payment. Many consumers are tempted to run up credit card debt when they have a zero balance.

Moving to a longer term

If you have been paying on your loan for more than ten years it may not be worth it to you to refinance. Check the long-term cost of the loan. If you’ve been paying on a 30-year mortgage for 18 years and refinance to get a lower payment, the extra mortgage payments and interest you pay could negate any savings you would realize over the long term.

If you’re not saving at least one percent

This is a good rule of thumb and should be considered the jumping off point. If the monthly savings you’ll see can’t cover the cost of the new loan, it’s simply not worth it. There will be loan fees and other costs.

Taking advantage of a no-cost refinance

There’s no such thing as a “no-cost” mortgage loan. There are several ways to pay for closing costs and fees when refinancing. In every case, the homeowner pays the fees one way or another; either with cash or by including it in the principal. Another option is that the lender would pay the costs by charging a slightly higher interest rate, which means you pay it.

If your credit rating has gone down

Life happens. If your credit rating has gone down, it’s not the end of the world, but it might spell the end of considering a refi. You still may be able to qualify, but at a higher rate. If that’s the case, refinancing could cost you more in the long run.

If you’re planning to move soon

Generally, if you plan to move in less than five years, refinancing may not make sense. It takes time to build up equity; the cost savings over a couple of years may not pay for the expenses associated with refinancing. Consider how long you plan to stay in your home before you refinance.

If you don’t have enough equity

You may be approved by some lenders even if you have little equity in your home. You’ll end up paying the price if you don’t have at least 20% equity because you may have to pay for Private Mortgage Insurance (PMI), which can be expensive and adds to your mortgage payments each month.

A final word about refinancing

There are a lot of options to consider. Do the math. If it will cost you more in the long term, don’t do it. Talk to your lender and REALTOR® before making any decisions.

Your credit score plays an important role when you’re buying a home. Understanding what your score is and how it affects your ability to get a mortgage is essential.

A credit score is used by mortgage lenders to estimate what kind of risk you are. The higher the score, the less likely you are to default. The lender can offer you a lower interest rate. By the same token, the lower the score, the higher the interest rate you will pay.

The FICO score and how it’s calculated

The terms credit score and FICO score are used interchangeably. FICO stands for Fair Isaac Corporation, the company that created the software used to calculate your credit score. 

The FICO score is calculated by looking at a number of factors:

35% – Payment History
30% – Amount Owed
15% – Length of Credit History
10% – Types of Credit Used
10% – New Credit

Knowing is half the battle

Knowing your credit score prior to applying for a loan will help you avoid an unwelcome surprise. If your credit score is lower than you’d like, don’t panic. It’s not the end of the world. You can do a few things prior to applying for a mortgage to clean up your score and save yourself some money. 

There are a number of free credit reporting services that you can use to check your score. You’re looking for false reports, for issues that can be cleared up quickly by working with creditors or disputing them. Your lender and REALTOR® can help identify areas that can be cleaned up prior to making your final application. Improving your score can save you money in the long run. 

As a rule, you’ll need a minimum score of 620 to qualify for a mortgage. Interest rates go down as the score goes up. A score of 760 is needed to get the best rate possible.

Understanding what is in a credit report can help you as you proceed through the home buying process. In the long run, a higher credit score can save you tens of thousands of dollars over the course of your mortgage.

One of the rituals of the American morning is coffee. People love it. Coffee makers come in all shapes and sizes. Some people search to find THE coffee makers that match their kitchen. They can be pre-set, they have alarm clocks and some will even brew just one perfect cup of the stuff that wakes them up and gets them moving.

Next to oil, coffee is the commodity that generates the most revenue worldwide. Entire industries have been built on this morning ritual. Starbuck’s corporatized the corner coffee shop, made it cool and built one of the biggest companies in the country. Coffee houses and chains sprang up after Starbuck’s initial success. In response, McDonald’s changed their coffee and started to offer gourmet coffees for the morning commute. And Dunkin’ Donuts, which sells more coffee in theU.S.than anyone, focuses its corporate advertising on the coffee, not the donuts.

Coffee, or more accurately, the caffeine in coffee, is addictive. It can also be expensive. If you find yourself with some of the symptoms of too much caffeine – jitters, heartburn or acid reflux, irritability, trouble sleeping, stack of coffeehouse receipts in your wallet – you might try these alternatives to the morning joe.

Take a cool shower

Not a COLD shower, a COOL shower. A cold shower can shock your system and there’s no sense in that. A cool shower will get the mind and body going. Try an invigorating body wash, too; something with peppermint in it.

Let there be light

Getting some light is a way to make your body realize that it’s time to get up. Getting outside in the sunshine is a great way to start the day; however, like many, you may be up before dawn. Just turn on the lights in the bedroom and the house. Dark is the enemy to waking up.

Listen to something

Set your alarm clock to your favorite radio station. Turn on the TV. Listen to an audiobook. Quiet is the enemy to waking up.

Get moving

Taking a brisk walk or jog around the neighborhood is a great way to start the day. Any exercise is beneficial. Take your dog for a walk. It benefits them just as much as it does you. Stretching, calisthenics, or yoga are also great ways to get moving in the morning.

Drink a glass of ice cold water

A glass of ice cold water, and we’re talking as cold as you can make it, will help wake you up as much as a cup of coffee will.

Don’t skip breakfast

Eating breakfast kick starts your metabolism. Make sure you get some protein and good carbohydrates. If you absolutely HATE eating breakfast, some people find that eating an apple is beneficial. The natural sugars in them give you energy. (And there is some truth to “An apple a day…”)

Try herbal tea

Hot teas may not be your bread and butter, but you probably didn’t LOVE coffee the first time you tried it, either. There are hundreds of different teas to try so you’re likely to find one that you like. Teas have great properties to help your health, too; many are high in antioxidants, which can help you fight certain types of cancer.

If you’ve tried to cut down on coffee, what’s your favorite way to start the day?

If you’re like most people, you’re planning to have a mortgage in order to pay for your house. It’s almost unavoidable to buy a home without financing.

Conventional wisdom until a couple of decades ago was that a home buyer needed to save at least 20 percent to put down on a house. Recently, though, many people have gotten away from that rule of thumb. In order to promote home ownership, some programs require much less. There are some options that offer zero down.

Simple math

For the sake of this example, the home you’re buying is $200,000. The interest rate is 4 percent. Taxes are 1.5 percent. Private mortgage insurance (more on that later) is 0.5 percent.

Rates calculated using: zillow.com

Lower mortgage payments
Simple math dictates that the more you put down, the less your monthly payment will be. All things being equal, your mortgage payment drops $191 if you have 20 percent down as opposed to zero down. As a new homeowner, that will definitely help your monthly budget.

No mortgage-insurance fees
Private mortgage insurance (PMI) protects the lender in case you cannot pay the mortgage. PMI is required if your down payment is less than 20 percent in most cases. Your lender requires the fee be paid until you reach 20 percent equity in your home. Mortgage insurance can be expensive, ranging from 0.5 to 1 percent of the home’s value annually.

Lower interest rate
With a larger down payment, you could qualify for lower interest rates, a fact not taken into account in the example above. Using the same example, if your interest rate dropped to 3.5 percent, your monthly mortgage payment would be $926.80 and the total interest payment would be $98,649.74. Compared to the 10 percent down payment in our example, you’d save $30,715 over the life of the loan in interest and PMI payments just by paying an extra $10,000 down.

Patience pays

As stated, the example above is simple math, but there’s nothing simple about mortgage math. Ask your REALTOR® and mortgage lender to crunch the numbers for you. Patience pays: taking the time to save money for a down payment offers solid return on investment. Over a 30-year mortgage, having a bigger down payment can save you tens of thousands of dollars on your starter home, helps you build equity faster and puts you on firmer financial footing.