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What to Watch Out for When Buying a Home
Saving up for a down payment and closing costs. Getting your credit into tip-top shape. Lowering your debt-to-income ratio. These are the basics of buying a home. But before you settle on “the one”, watch out for these possible red flags.
What to Watch Out for When Buying a Home
Odors
Sellers use fragrance to entice buyers. They also may use fragrances to mask larger issues. Use your nose to root out musty smells. This may indicate a potential water leak or even mildew/mold. Likewise, pet smells could mean possible damage to flooring that may extend beyond the carpet pad or underlining. Also, beware of overly fragrant properties. You won’t know for sure if the seller is trying to hide a problem or not until you get an independent home inspection done.
Messy/Dirty
Again, most sellers want to put their best face forward when selling their property. So, if they cannot even manage to clean up the house before they sell it, what else are they not taking care of? Make sure you look carefully beyond the mess.
Too Good to Be True
On the other hand, beware of a home that looks “too perfect”. Sure, the furniture is placed beautifully. And the accessories are stunning. Instead, look beyond the flashy topcoat and investigate the “bones” of the property. That’s where the value lies. Again, this is where a good home inspection comes in handy.
Surroundings
How’s the neighborhood? Well-kept lawns and tidy appearances tend to indicate pride of ownership. Cars on the lawn and poor curb appeal bring down your property’s value. Do your homework before you buy. Safewise offers seven tools to help you find out just how safe your neighborhood is.
Commute Time
Finally, with more and more people going back to work at a physical office again, commute time becomes another concern when buying a home. Pay attention to the amount of time it takes you to get from home to work and back again. Believe it or not, the daily grind becomes a drag pretty quickly, especially if it involves an hour or more drive time each way per day. Is the home really worth the hassle of dealing with traffic?
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Home Selling Tips: What NOT to Do
A few weeks ago, I gave some tips about how to sell your Inland Empire home during the fall. I talked about the importance of pricing your property appropriately, curb appeal, and adding natural elements to your home’s decor. Well, I figured I should probably also provide you with some home-selling tips highlighting what not to do. These can prove just as important.
Home Selling Tips: What NOT to Do
Poor Decor Choices
I spoke of great decor choices in my blog post about selling your home in the fall. On the flip side, overly glitzy or kitschy decorations for the holidays really turn buyers off. Likewise, crowded counters, walls, and shelves make even large spaces feel cramped. Also, “loud” or really dark paint colors make rooms feel less than inviting. That’s not exactly the vibe you want to give to buyers. Pare down your decorations and keep them neutral to make it easier for buyers to picture themselves living in the space. Speaking of poor choices…
Leave the Bathroom Carpet Intact
Honestly, I’m not even sure why this became a trend in the 1960s or 1970s. The mere thought of what lies within that once-plush, shaggy carpeting fills me with dread. And I’m not the only one. You may think it’s not a big deal. But buyers look at that and think “It’s going to cost money to change that”. In turn, they automatically start totaling up how much lower their offer may be to compensate. A quick update with tile gives you a chance to give your bathroom a facelift…and attract more buyers. Here are a few ideas for what tile to consider when remodeling your bathroom.
Avoiding the “Deep Clean”
Buyers look at everything. They open every door, cabinet, and drawer. Nothing escapes their gaze. Photographs pick up on just about every speck of dirt and dust as well. Therefore, you need to make sure you scrub your countertops, appliances, windows, window sills, carpets, tile or wood flooring, baseboards, and even the walls.
Ignore Stains and Smells
Imagine stepping into a home and being smacked in the face with the intense smell of smoke or pets. We tend to become “nose blind” to these smells when we live amongst them on a day-to-day basis. But someone stepping into your house for the first time will not be so lucky. The same goes for stains on the floors, walls, or cabinets. Tackle those issues before you list.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Assumable Mortgage 101
The crisp fall weather isn’t the only thing cooling off in Southern California. Home sales fell slightly in October compared to September 2023. But the median sale price also declined a little bit. In fact, according to a Rocket Homes market report, almost 2/3 of all Riverside County homes sold in October sold for at or below the list price. And with interest rates still high, buyers and sellers both are looking for ways to make a deal. One of those ways is with an assumable mortgage.
Assumable Mortgage 101
What is It?
Basically, an assumable mortgage allows a qualified buyer to take over the seller’s current mortgage to become the new owner of a property. As of the writing of this post, a 30-year fixed-rate mortgage sits at 7.5%. Let’s say a seller bought their home for $400,000 with 10 down three years ago and secured a 3.11% interest rate. They pay approximately $1540 per month for their mortgage and interest. If they purchased that same home today for the exact same amount, their payment costs almost $1000 more per month. So you can see where an assumable mortgage may sound like music to a buyer’s ears, right
How Does It Work?
First, the seller’s lender needs to be contacted no matter what type of loan is involved. If you make an informal arrangement with the seller without involving the lender, the lender may come back and demand immediate payment in full of the mortgage note. That could leave you struggling to find financing to come up with that money.
Next, you sit down with the lender to go over your financial information and creditworthiness. Just like if you bought a home through the traditional way, you must provide proof of income, a listing of your debts, documentation of all assets, proof of employment, etc. The lender then runs your credit. Then they review all of this information to see whether or not you are approved to assume the mortgage. Once approved, the lender releases the seller from any financial responsibility and places it on the buyer’s head.
Lenders do not require an appraisal for these types of mortgages. That eliminates one stumbling block a traditional buyer faces. However, buyers should still obtain a home inspection while in escrow. This gives you a better picture of what you are walking into.
Not All Mortgages Qualify
Unfortunately, not every mortgage is assumable. Typically, FHA, VA, and USDA loans allow for a buyer to assume the mortgage as long as certain criteria are met. For FHA and VA loans, this may mean getting approval from the lender first. On the other hand, most conventional loans are not assumable. Your agent should be able to find out what type of mortgage is involved in the sale. Plus, you should always talk to your lender about terms before you sign any paperwork.
While an assumable mortgage sounds fantastic for buyers, they do not work for everyone. And they may prove slightly harder to qualify for than a traditional mortgage. However, they also may save you thousands of dollars a year if approved. Talk this over with your REALTOR® as well as your lender to see if this is an option you wish to pursue.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Home Improvement Projects You Can Complete This Weekend
Do you have company coming into town for the holidays? Does your Southern California home need a pick-me-up? Instead of spending thousands of dollars on a new front door or garage door (which still brings the best return for your investment), consider one of these home improvement projects that play nice with your bank account and take less than a weekend to complete.
Weekend Home Improvement Projects
Front Door Facelift
For a quick and inexpensive alternative to a front door replacement, consider applying a vibrant paint color instead. A bright shade of red, blue, green or yellow makes a statement and costs less than $100. You might even want to zhuzh it up a little more by replacing the hardware, adding a brass door knocker, or even installing a pretty kickplate.
Add or Update Knobs and Pulls
Something as simple as replacing or adding knobs and pulls to your cabinets and drawers makes a huge difference in the appearance of your kitchen or bathroom. Home improvement stores offer a variety to choose from. Whether you prefer modern, traditional, chrome, oil-rubbed bronze, antique brass, or polished nickel, the possibilities are infinite.
Smarten Up Your Thermostat
While this may not add the “wow factor” to your design, a programmable thermostat costs between $70 and $220 but can save you several hundred in heating and cooling costs throughout the year. Buyers Guide names the Google Nest Learning Thermostat as their top pick for programmable thermostats for any household.
Add Plants
While fake plants feel like an obvious choice, embrace the real deal. Plants help clean the air inside your home as well as provide stress relief while boosting your mood. Get some easy-to-care-for houseplants like a jade plant, a spider plant, a snake plant, or a peace lily plant. These all thrive in just about any climate with minimal care.
Create Your Own Art Gallery
Gather together your favorite photographs. They can be of your wedding, family get-togethers, important moments, or even places you traveled to. Go to thrift stores and garage sales to find frames in similar colors or finishes. Print those photographs as black-and-white prints. Then choose one wall and create a photo gallery.
Closet Lights
Finally, this one may not wow your guests but it will certainly make you happy any time you open your closet door. Install lights inside your closets. No matter the size of your closet, you may be surprised at how luxurious something as simple as a light can be inside of your closet. While this sounds like an expensive option, prices start as low as $20 and require no electrical wiring.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Fair Market Value Explained
When selling a Southern California home, you need to come up with a list price. After all, list your home at too high of a price and it may sit on the market for a while. Price it too low and you leave money on the table that should have ended up in your pocket. It helps if you know what the fair market value (FMV) of your home is when coming up with that list price. But what exactly does that mean and how do you determine that number?
Fair Market Value Explained
What is FMV?
In the real estate market, a home’s fair market value is the price that a property would sell for if sold on the open market. In this scenario, both the buyer and seller are reasonably knowledgeable about the property in question and the area surrounding it. They also agree on the price of the home. But we all know that several things affect the actual price of a property for sale (supply and demand, the home’s size, its age, the neighborhood, etc). Thus, negotiations become an important factor in completing a home sale.
How Is FMV Calculated?
Various elements help determine a Southern California home’s fair market value. These include current local market trends, comparing what other properties in the area recently sold for, an appraiser’s official determination of your property’s value, and price-per-square-foot analysis. All of the information may overwhelm the typical layman. That is why you need to hire a real estate agent that knows your neighborhood.
What is This Info Used in Real Estate?
Well, it can actually help raise or lower your list price based on the popularity (or lack thereof) of your neighborhood. However, government entities determine your property taxes based on the FMV of your property. The higher the value, the more you owe. It also may affect your tax credits or estate taxes. Did you bequeath your home to someone in your will? Inheritance taxes are based on the FMV of your property. Insurance companies use the FMV to decide the replacement value if your home gets damaged or totaled in an emergency. That list may not cover every scenario but it gives you a basic idea of how fair market value affects various aspects of real estate.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
The Importance of Your Credit Score
Lenders look at several things when determining whether or not to approve you for a home loan. Income. Debt. Debt-to-income ratio. Down payment. And, of course, your credit score. Did you know, though, that you should not let your credit slip once you sign those closing documents?
The Importance of Your Credit Score
Before You Buy a Home
A good credit score shows lenders that you handle debt responsibly. With a higher score comes better interest rates, too. With rates well above the 7% mark, you want to save wherever possible. While some programs allow for a 580 FICO score, that also means paying a much higher interest rate. Besides, conventional loans require a minimum of 620, with other loans requiring at least a 640 score for approval.
After You Buy a Home
I know what you’re thinking. “But Muna. Once I am an official homeowner, why can’t I be less vigilant about my credit score?” Well, several reasons. First of all, employers sometimes look at your credit score when considering you for a job. They equate good credit with responsibility. Second, saving money on your credit cards. Credit card companies offer better rates for those with better scores. Third, new home, new furniture, right? Well, that may mean borrowing money to pay for it. Again, a better FICO score means a better interest rate. And that translates into saving money.
Next, what about when interest rates start to fall? It may not seem possible now, but there is a good chance that interest rates will come down again in the future. At that time, you may want to refinance at a lower rate in order to save some money on your mortgage. If you let your score take a hit, that may not be possible. Finally, what about when you decide to sell your current home and look for something else? You’re going to need that great score to get the best rates then, too. It’s much harder to bring your score up to a great level if you let it tank first.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
How to Add Storage to Your Home
Storage. No matter the size of your home, we all seem to need more storage. Whether you just moved into your new Southern California house or want to list it soon, you may need to add storage. If so, here are a few economical and inventive ways to do that without breaking the bank.
How to Add Storage to Your Home
Shelves
Never underestimate the simplicity and economy of shelving. Bathroom limited on space? Add a few shelves. (Good Housekeeping offers up some brilliant ideas here.) Running low on storage in your kitchen? Add a few shelves. (HGTV provides some interesting thoughts on open shelving in the kitchen here.) Just about any “dead space” in your home can be better used for storage with shelves. Living rooms look great with built-in bookshelves, too. Add a couple of drawers or decorative bins to stash away toys and other knick-knacks you don’t want guests to see.
Repurpose a Closet
With a few pieces of wood, some nails, and a little imagination, you can transform that old utility closet into an extra pantry, linen closet, or any other extra space needed. In the bedroom, most closets have extra space above the clothing rod. Add a shelf or two above to keep your luggage, out-of-season clothing, hats, bags, etc. Speaking of out-of-season, utilizing space-saver bags to vacuum-seal both clothing and bedding that you won’t be using for a few months.
Multi-Function Furniture
Furniture provides a fun and unique way to add storage to just about any room. A bench with built-in storage placed at the end of your bed, in your entry way, or in the living room provides additional seating as well as a great place to store blankets, shoes, toys, or whatever you need to stash away fast. You can also find ottomans and coffee tables with built-in storage. A bench seat under a window offers up a lovely place for reading as well as extra storage. Create an eat-in kitchen with a dining table and bench seating for a lovely breakfast nook. Store extra tablecloths, holiday linens, and those kitchen appliances you only use on special occasions here.
Roll-Away Options
Many companies offer slim cart options with wheels for easy roll-away storage in even the tightest of spaces. Add one to your kitchen to keep spices, seasonings, oils, and sprays organized and easy to reach. Keep your laundry essentials available when needed and tucked away when not. Use one in the bathroom for extra toilet paper and cleaning supplies.
Look Up
Finally, look up. When vertical space is limited, consider adding storage courtesy of your ceiling. A net or hammock for your child’s stuffed animals gets them off the floor yet tucked away. A pot rack keeps pots and pans readily available to use and frees up space in your cabinets. Garages also tend to collect a lot of “stuff”. This “stuff” can get out of hand pretty quickly, too. Consider adding shelving that hangs from the ceiling for your sports equipment, camping gear, holiday decorations, or anything else.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Homeowners Association: Pros and Cons
Becoming a homeowner includes a few expenses. Before you sign your final paperwork, you must come up with a down payment, closing costs, inspection fees, and other miscellaneous fees. Once you sign on the dotted line, there is your mortgage, insurance, and, for some owners, an HOA fee. Have you ever wondered what exactly a Homeowners Association does and whether they are worth it or not?
Homeowners Association: Pros and Cons
What is a Homeowners Association?
Basically, an HOA is a third-party organization (outside of the builder and homeowner) that creates the rules for a subdivision, planned community, or condominium complex and enforces these rules. These rules may range from whether or not you can park on the street to what color you may paint your home. Roughly 55,000 communities in California alone are overseen by HOAs. If you purchase a new build, chances run high that it includes an HOA. Like most things, HOAs offer a good side and a not-so-good side.
HOA Pros
On the plus side, an HOA usually offers amenities such as a community clubhouse, pool, gym, and/or park. Your HOA fees cover the maintenance of these amenities as well as the maintenance of public areas in and around the community. Also, they enforce guidelines that ensure homeowners keep the exterior of their properties looking good. This helps with property values. If you’ve ever lived near a home where the owner doesn’t keep up a well-manicured appearance (ie, “lets the property go”), then you understand what I’m talking about.
HOA Cons
Unfortunately, HOAs also come with a few negatives. First, any change you want to make to the exterior of your home (whether changing the fencing, painting, adding a shed, or putting in a concrete pad for your RV) must be approved by the HOA board first. Want to utilize your property as a rental? Again, you must take it up with the HOA board first. Next, they may hit you up for an additional fee if their expenditures outweigh their reserves. For example, if the roads in your subdivision are looking a bit worse for wear, they may request an additional sum of money to help pay for resurfacing. And if you fall behind on your dues, believe it or not, the HOA may legally force you into foreclosure. However, that is a rare occurrence and is only used as a last resort.
Rules and regulations vary from HOA to HOA. Talk to your REALTOR® about whether or not the community you wish to buy into includes an HOA. If so, find out what those rules and regulations consist of. Make sure you are willing to abide by them before you sign on the dotted line.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Home-Selling Tips for the Fall
Last weekend, we officially said “goodbye” to summer and “hello” to Fall. While late spring/early summer tends to bring out the most buyers in Southern California, that does not mean that you missed your chance to sell your home. Quite the contrary. Buyers look for homes pretty much all year round. Let me offer up a few home-selling tips to help you slap a “sold” sign in your front yard this Fall.
Home-Selling Tips for the Fall
Price It Right
First of all, setting the appropriate list price has no “season”. You always need to price your Southern California home appropriately for the current market. Otherwise, the number of buyers out there does not matter. They’ll pass your home by if you ask too much for it. Do not trust those online home value estimators either. Instead, ask your REALTOR® to help you determine the right list price for your home.
Spruce It Up
Next, staged homes sell quicker than unstaged ones. Fortunately, Autumn offers up some of the most gorgeous colors in nature that also look good in your home. Add in soft natural colors like pumpkin, plum, golden yellow, and maroon with throws, accent pillows, vases, and even wall art. One way to create wall art on the cheap is by recovering your books in these fall-centric colors. Wrapping paper, wallpaper samples, and even construction paper make this a quick, simple, and inexpensive way to color-coordinate your bookshelves. Put branches clipped from the outside of your home into clear glass bottles with pretty ribbons wrapped around the neck. Place these in various locations around your home for more fall-inspired decor.
Remember Your Curb Appeal
Finally, do not neglect the outside of your Southern California home. Mow your grass regularly. Trim bushes and trees. Keep trash bins on the side of the house (out of sight from the curb). Store bikes, tools, and other items nicely in the garage or shed. Then, contact me when you are ready to list.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
How Can I Lower My Mortgage Rate?
You decided to buy a Southern California home. You saved up enough money for your down payment and closing costs. After you asked the right questions, you find a lender you trust. Now, it’s time to talk money. As of the writing of this post, interest rates for a 30-year fixed-rate loan sit at around 7.18%. Now, that may cause concern for some home buyers. But there are a few ways in which you could possibly lower your mortgage rate and make homeownership a little more affordable.
How to Lower Your Mortgage Rate
Go Adjustable
First, instead of the fixed-rate mortgage that many home buyers chose when rates were lower, try an adjustable-rate mortgage. The rate starts off lower and stays that way for a set period of time (anywhere from the first three to the first ten years of the loan). However, after that set period, the rate then goes up. If you plan on staying in your home for only a few years before selling it, this might actually make more sense than a fixed-rate loan.
Shorten Your Term
Another way to lower your rate is by going with a shorter term. Right now, Freddie Mac shows interest rates for a 15-year fixed-rate mortgage are 6.51%. That’s 0.67% lower. However, with a short term comes higher payments. On the positive side, though, that also means building equity faster and paying off your loan in a much shorter amount of time. So, if you can afford to make higher payments each month, it could be well worth it.
Paying Points
Yet another way to lower your rate is by paying for discount points. Each point costs about 1% of your loan value. For example, if you borrow $400,000, a point costs $4,000. For that point, your interest rate decreases by 0.25%. However, the pricing varies from lender to lender. Also, you need to determine whether the time it takes to recoup your costs of paying for points is worth the expense. Your lender can help you with these calculations.
Increase Your Down Payment
Some mortgage programs only require 3.5% down. But if you pay even 5% of 10%, you look like a better credit risk to lenders. In turn, your rate goes down. If you can come up with 20% down, you get the best rates possible and you no longer pay PMI, which can save you a few hundred a month.
Shop Around
Finally, shop around. Rates, terms, and fees vary from lender to lender. So, it never hurts to check out a few different lenders before deciding on which one works best for you.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
