Facebook
X
Pinterest
Copy Link
How Interest Rates Affect Home Buyers
Last week, the real estate market was set abuzz by an almost 0.5% decline in the 30-year fixed-rate mortgage (FRM) interest rate. It dropped from a high of 7.08% to 6.61% in just one week. Why? Reports began to surface that inflation may have already peaked back in June. However, several Fed members tried to keep expectations in check. After all, one month of positive economic news does not a trend make. They even suggested that more prime rate increases should be expected in the near future. If you wish to buy an Inland Empire home anytime soon, you need to understand how interest rates affect you.
How Interest Rates Affect Home Buyers
Redfin conducted a survey that found just how much of an impact higher interest rates hit home buyers’ budgets. They found that home buyers could purchase a $517,000 home at 3% with a $2500 monthly budget for their mortgage. But when that rate rose to 6%, that same $2500 budget only allowed them to pay $400,000 for a home. With the current 6.61% rate, that sale price comes down even more. With an average sale price for a Riverside, CA home coming in at $577,000 last month, Inland Empire home buyers continue to feel the pinch.
How to Get Yourself in the Best Financial Position to Buy a Home
You cannot control interest rates. However, you do have some control over your finances. If rates go up again (and they might), you may need to increase your budget to accommodate your mortgage payment. That means getting your credit in tip-top shape. That way, you qualify for the best rates. It also means paying down as much debt as possible and coming up with a larger down payment. It also may mean looking outside of your dream neighborhood. And the old real estate advice of buying the worst house in the best neighborhood still rings true. Talk to your lender well before you start looking for your new Inland Empire home. They can provide you with an excellent roadmap of where to concentrate your financial efforts to prepare yourself for homeownership based on your current situation.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Home Selling Tips for a Changing Market
Like much of the rest of the country, the Riverside real estate market really flourished over the last couple of years. We saw double-digit increases in home prices. Unfortunately for sellers, the market has cooled off a bit over the past few months. Multiple offers and same-day-as-listed sales appear to be thing of the past. Even so, anyone who bought their Inland Empire home pre-pandemic may still own a nice chunk of equity in their properties. So, putting your home on the market is still a profitable enterprise. Here are a few home-selling tips that you might want to consider as our market changes from the seller’s favor to a more balanced market (tipping toward the buyer’s favor).
Home Selling Tips for a Changing Market
Buy Down Buyer’s Interest Rate
Interest rates rose above 7% for the first time in over 20 years. It looks like they may even climb higher. This may restrict home buyers’ budgets. As the seller, you may consider offering to pay down the buyer’s interest rate to make it a little more affordable for them to buy your home. This can either be done through a credit or by paying points at closing. The amount each point costs varies per lender. But it usually costs 1% of the total mortgage. Each point typically lowers the interest rate by 0.25%. On a $500,000 home, a point could cost you $5000. However, that is a small price to pay to get your home sold more quickly.
Price Reduction
One of the most important things any seller should focus on is setting an appropriate price when initially listing your property. That is especially true when home selling in today’s transitioning market. But if you find your house sitting on the market for a couple of weeks with no buyer interest, you might want to consider reducing your price. To spark renewed interest in your listing, there are two trains of thought. First, make a statement with a 5% drop. This may be enough for spur interest from multiple buyers. Or perform a “micro drop” (1% every couple of weeks or so). Some buyers look for recent price changes because this may indicate that the seller is more eager to negotiate with them. Talk to your real estate agent to determine which option works best for your property.
Sweeten the Pot
With everyone feeling the crimp in their budgets nowadays, anything you can do to lessen a buyer’s costs once they move in may help motivate them to seal the deal. For example, offer to replace your worn-out roof or almost out-of-date HVAC system before closing. At the very least, offer a credit at closing equal to the cost of replacement. Ask your agent to find out if the buyer was interested in specific artwork, furniture, or other items that you would be willing to part with. Sometimes, even throwing in your riding lawnmower might be enough to make a buyer sign a contract with you.
Pay for a Home Warranty
Finally, offer to pay for a home warranty. Gas. Groceries. Utilities. The cost of everything has gone up recently. Bring peace of mind for your buyer (and a sales contract) to the table with a home warranty. Forbes says that a mid-tier home warranty in California costs about $540 a year (or $45 per month). You (the seller) pay for the first year and then the new buyer can opt to pay for it after that or just let it expire. It is completely transferrable to the new owner upon closing.
These are just a few home-selling tips that may help you secure a sale during this changing market. When you are ready to list your property, contact me. I’d love to discuss how we can turn a “for sale” sign into “sold”.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
An Amateur’s Guide to Taking the Best Listing Photos
They say that a picture’s worth a thousand words. Well, 97% of people use the internet at some point during their search for a house. Therefore, you need to make sure that your listing photos really show off the best aspects of your Inland Empire home. Now, some real estate agents include professional photos as part of their services. But if they do not and a professional photographer is not in your budget, you may want to keep these tips in mind when taking your own listing photos.
How to Take the Best Listing Photos
Clear Out the Clutter
Always clean and stage your property before taking any photos. Every bit of dirt, dust, and clutter shows up in photographs. Make sure to stash away any signs of pets (dishes, food, litter box, etc.). Store toys in toy boxes or containers and put them neatly away in the garage or closet. Clear off the countertops completely in the kitchen and bathrooms. Keep holiday decorations out of the picture until after you finish taking your listing photos. Scrub those windows until they are absolutely spotless.
Plan Your Pics
Taste varies from person to person. But most buyers like to focus on a few specific areas when searching for a home. So, take at least two wide photos of the front of the property. Include one or two wide-angle photos in each of the primary bedrooms, kitchen, and livingroom. Also, include a good shot of the primary bathroom. Then, make sure to include a shot of any other well-organized features you wish to include, such as a walk-in closet or a nicely-sized pantry.
Wide-Angle is the Best Angle
Inside. Outside. It does not matter. Use a wide-angle lens when taking photos of your home. This allows you to capture the entirety of your curb appeal in one shot. Plus, it helps make rooms appear larger and allows for a better focus on the space. This is especially helpful in smaller, harder-to-access spaces.
Use a Tripod
You do not have to spend a ton of money on a tripod in order to make a huge difference in the quality of your photos. Tripods reduce the chances of blurry, out-of-focus pics, especially when using the long exposure function on your camera. Plus, it helps create consistency in your photos by using the same exact height in each room. This tends to be more pleasing to the eye.
Pay Attention to the Lighting
Natural light is great. That is one of the reasons you want your windows to be super clean. But some areas need more help to make your listing photos pop. So, make sure each room includes a good light source located outside of the camera’s eye to illuminate each area properly.
When in doubt, talk to your REALTOR®. They may have tips and tricks to help you capture the perfect shot for each important area of your Inland Empire home.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
How Principal-Only Payments Work for Homeowners
Congratulations on buying an Inland Empire home. Now that you’ve settled in, let’s talk terms. When you signed your mortgage loan papers, your lender provided you with a breakdown of your monthly payment. It includes your principal and interest. At the beginning of your loan, most of your payment goes towards your interest with little going towards your principal. But many lenders allow you to make extra payments that help you pay down your principal faster. These are called “principal-only payments” and will save you tens of thousands of dollars in interest over the life of your loan.
Principal-Only Payments
As the name suggests, these payments get directly applied to your principal (the amount of the loan you took out). You still need to make your regular monthly payment. For principal-only payments, contact your lender first. They usually want you to make a completely separate payment that you designate to be applied only to your principal. Sometimes, if you do not make this distinction, your extra payment may just be applied to the next month’s payment (which goes to the principal and interest instead of just the principal). That defeats the whole purpose of making that extra payment.
How Does This Help?
When you take out a mortgage loan, it starts up the amortization process. This determines how much of each payment gets applied to the principal and how much goes to interest. The interest applied is determined by your principal. So, if you reduce your principal, you reduce the amount of interest applied. Plus, reducing your principal ahead of schedule also gets your loan paid off faster. Additionally, it helps increase your equity.
Weighing the Pros and Cons
Saving tons of money in interest. Paying off your Inland Empire home faster. Getting to use that money to pay off other debts or invest it. All of that sounds fantastic, right? It is! But you need to know the possible downsides of principal-only payments as well.
Some lenders charge a significant pre-payment penalty. Also, some lenders charge a fee to process extra payments. Check your paperwork or ask your lender about this before making any extra payments. Finally, that money you set aside for paying down your mortgage loan cannot be used for anything else…like paying off other debt right now. Instead, you must wait until later to have the extra cash to pay off your current debt. Weigh these pros and cons carefully before you decide to make any additional payments. You do not want to put yourself in a worse financial situation because of it.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Kitchen Updates for the Budget-Conscious Home Seller
We are smack dab in the middle of the holiday season right now. Fortunately, you can still decorate (with a bit of restraint) even when you try to sell your home during the holidays. However, you need to let your home shine through those decorations. Overwhelmingly, today’s buyers put an updated kitchen and bathrooms at the top of their list. So, before you list your property, consider making some of these kitchen updates that won’t break the bank.
Kitchen Updates for the Budget-Conscious Home Seller
Stash the Stuff
Clear counters make them (and your kitchen in general) look much larger. It also gives the impression that your kitchen includes tons of storage. Remove items from your cabinets that you do not use on a regular basis. Pack them away. Then, neatly place your blender, toaster, spices, etc. inside the cabinets. This allows easy access when you need them but clears the counters for when buyers come looking.
Keep Counters Clean
Another one of the “kitchen updates” that actually cost you nothing to perform. Seems like a no-brainer, right? But you might be surprised how many sellers forget this simple step. Buyers like to run their hands over surfaces. You don’t want sticky, stain-filled counters to be the impression they are left with.
Easy Island Solution
Extra prep space in a kitchen always impresses. But, adding a permanent kitchen island typically costs between $3000 and $5000. For the budget-conscious home seller and for those with smaller kitchens, add a butcher-block counter on wheels. This allows the homeowner to wheel it out when they need it and then tuck it away when they are done.
Add Light
No one likes a dark room, especially in the kitchen. And if your kitchen includes those old fluorescent lights popular in the 80s, it is definitely time for an update. Replace those with nice pendant lighting over an island. Or add flush-mounted or recessed lighting in their place. Under cabinet lights also add extra lighting directly where you need it, on your countertop workspace.
Update the Appliances
Today’s home buyers also like to see energy-efficient appliances. That includes the refrigerator, stove, and dishwasher. If your appliances belong in a museum, you need to replace them. Fortunately, many companies offer great sales at this time of year. So, you may even score yourself a discount for these kitchen updates.
Fix the Flooring
Old linoleum. Broken tiles. Torn vinyl. Our kitchens see a lot of traffic. Because of that, our floors take a beating. But you do not need to spend an arm and a leg to make your kitchen floors look great. Check out options at your local big box store. While installation can oftentimes be done by a homeowner, pay a little extra for the pros if you do not feel up to the task. You want your floors to look their best.
Add Some Green to Get More Green
Finally, add a few plants here and there for a nice finishing touch. A window herb garden provides wonderful smells, adding another subconscious layer of “buy me” to your decor.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
First-Time Homebuyer Guide: When You Find “The One”
For the past couple of weeks, I’ve been trying to make the Inland Empire home-buying process a little easier for first-timers by providing you with a guide of sorts to help ease the stress this so often creates. First, we talked about what to do before you start looking at homes. Then, we talked about the actual search itself. Now, in this final post for my First-Time Homebuyer Guide series, let’s discuss what happens when you find a home you love.
First-Time Homebuyer Guide: When You Find “The One”
Time to Make an Offer
While we rarely see bidding wars anymore, you still need to create a solid offer to present to a seller. Talk to your real estate agent. Find out what they believe would be considered a strong offer. While it is easy to get excited when you find a home you absolutely love, never offer more than you are comfortable with. Make sure to include your pre-approval or pre-underwriting letter (if not paying cash). Highlight the fact that you do not have to sell a home before you can purchase a new one. Sellers like to hear that. Plus, it provides some flexibility on timing that puts you ahead of many other buyers.
Schedule Your Home Inspection
Technically, a home inspection is not required in the State of California. However, even with a newly constructed home, problems may lurk below the surface. Therefore, real estate professionals strongly encourage you to hire a professional to perform your home inspection. They may find something you never noticed during your initial walk-through of the home. Keep in mind that the inspection rarely comes up with absolutely no issues…even on a new build. Fortunately, most problems are very fixable.
Time for Your Home Appraisal
When you borrow money to pay for your home, your lender requires that a home appraisal be conducted. If the appraised value comes in under the agreed-upon sale price, it may hold up your sale (or cancel it altogether). At that point, you (the first-time homebuyer) must make a decision. Either come up with more money out of pocket to make up the difference, try to talk the seller down in price, or walk away from the deal.
Closing Time
Finally, the last step in my First-Time Homebuyer Guide: closing time. Your agent will schedule a time to meet to sign the paperwork (usually at the title company). Bring your photo ID, a cashier’s check or certified check for money due at closing (closing costs, down payment, etc), and any other paperwork required. Your real estate agent should let you know ahead of time what you need to bring. Once you sign all the closing paperwork, you officially receive the keys to your new home. Just remember that the home does not officially become yours until the paperwork gets filed at the recorder’s office. This may take an extra business day to complete. Congratulations! You are now a homeowner!
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
First-Time Homebuyer Guide: Searching for Your First Home
Buying an Inland Empire home often brings with it some uncertainty, especially for first-timers. So, I thought I would put together a helpful first-time homebuyer guide. Last week, I talked about what to do before you start looking for a home to better prepare yourself for the process. Now, let’s go shopping!
First-Time Homebuyer Guide: Searching for Your First Home
Create a List of “Wants” vs “Needs”
It only helps you if you sit down and create a list of what you need in an Inland Empire home. For example, how many bedrooms and bathrooms do you need at a minimum? How many square feet? Do you want a single-family home or would you prefer a townhome or condo? Single-story or multiple-story? Turn-key or fixer-upper? This helps your agent weed out the properties that do not fit your needs so you do not waste your time.
Feel Free to Conduct Your Own Search, Too
Your REALTOR® can access properties that you may not have on the MLS. But feel free to conduct your own search as well. According to a joint study conducted by the National Association of REALTORS® and Google, 90% of home buyers used the internet at some point during the home buying process. If you see something you like, let your agent know so they can set up an in-person tour for you. Drive around the neighborhoods you like and look for any “for sale” signs. Keep an eye out for open houses.
Another great way to get an idea of what you like in finishes, amenities, and size is to visit model homes in new communities around the Riverside area. Sometimes, what you think you like may not actually translate well when you see it in real life. For example, perhaps you believe 1500 square feet is plenty of room for your family. But when you actually go into a property that size, you might find that you actually need more room. Many of us are visual and tactile creatures. So, seeing designs in person helps us get a better picture.
Even with new construction, real estate experts strongly suggest you still use your own agent. The salespeople you find at model homes represent the builder. They have the builder’s best interest in mind, not yours. Now, that does not mean that they are out to “get you”. However, you still need someone on your side when dealing with any real estate transaction, especially when you are a first-time homebuyer. So, before you start looking, contact me. I’m always happy to help.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
First-Time Homebuyer Guide: Before You Start Looking
Tired of renting? Ready to buy? Anxious about it? Completely understandable, especially for the first-time homebuyer. Let me help you relieve some of that stress by offering a guide to what you need to do before you start looking for your first home.
First-Time Homebuyer Guide: Before You Start Looking
Save For Your Down Payment & Closing Costs
Your first step should obviously be to save up some money. If you want to qualify for the best interest rates and avoid Private Mortgage Insurance (PMI), you need to put at least 20% of the sale price down on your mortgage loan. However, many people don’t have that much saved up. Fortunately, many mortgage programs allow anywhere from 0% (for VA or USDA loans) to 10% down. Closing costs can add another 2% to 7% of the home’s sale price into the mix.
Check Your Credit Score
To qualify for the best interest rates (or qualify for a loan at all), you need to whip your credit into shape. First, check your credit score by visiting AnnualCreditReport.com. A Federal Trade Commission study found that one in five people found an error on at least one of their credit reports. If you find an error, visit the appropriate credit agency’s site (TransUnion, Equifax, or Experian) to find out how to dispute erroneous information. Each agency requires its own process to do this. This takes some time. So, the sooner you start, the better.
Get Pre-Approved For a Mortgage Loan
After your credit is in the best shape possible, talk to a lender. In fact, talk to a few. Different lenders offer different programs. When you decide on one, start the pre-approval process. Do not mix this up with pre-qualification. That takes a few minutes and only lightly touches on your finances. Pre-approval requires you to provide bank statements, paycheck stubs, and any other pertinent financial information. You also need to list your debts. Basically, it’s the starting point of the loan process and takes a bit of time. But it is well worth the effort. Once the lender analyzes this information, they A) tell you if you would be approved for a loan and B) tell you how much you would be approved for. That helps you narrow your focus when you search for a property. Plus, sellers like to see a pre-approval letter included with your offer. Just remember that a pre-approval is not an actual approval.
Hire a Real Estate Agent
Some people think this should land higher on the list. While an important step, it helps to get started on the other steps first because they may take a bit of time. Finding the right real estate agent is important, especially for a first-time home buyer. Specifically, you need a buyer’s agent. They listen to the features you want in your Inland Empire home and then they search for homes fitting your requirements in their extensive database. Then, when you find the right property, they negotiate on your behalf to get you the best deal possible. As a bonus, their fees are actually paid by the seller at closing.
When you are ready to start your search for your very first Inland Empire home, contact me. And if you need advice on how to get started on any of the other steps to owning your first home, I’m always happy to help.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Holiday Decorations for the Home Seller
As September comes to an end, many people begin preparing for the holidays. Halloween is just six weeks away. Thanksgiving takes place three and a half weeks after that. Then, Christmas Eve falls exactly four weeks (to the day) after Thanksgiving. And, finally, we welcome the new year one week later. Many people love to decorate their homes for the holidays. However, you probably heard that you need to stage your property using a simple, neutral palette in order to appeal to a broader buyer base when selling your Southern California home. Fortunately, there are ways to participate in holiday decorations for home sellers. You just need to tone it down a bit.
Holiday Decorations for the Home Seller
Keep It Simple, Silly (KISS)
No matter what holiday you decorate for, keep all adornments simple. Add a holiday hand towel to the kitchen and bathrooms. Perhaps, add a decorative light or two. A wreath on the door welcomes guests while saying “happy holidays”. Only use a few small-ish accent pieces in each room (meaning three to five…not ten to twenty). The big inflatable snowmen and 12-foot tall skeleton need to stay in storage until next year.
- Nature Nurtures
When in doubt, go natural with your holiday decorations. Pumpkins easily turn from Halloween decor to a celebration of the fall harvest and Thanksgiving. Just leave off the jack-o-lantern carving. Instead, paint a silly face on the front and turn it around after Halloween. Summer squash, apples, speckled swan gourds, leaves, branches, and pinecones all work great for any end-of-year holidays. Plus, they easily transition from one holiday to the next with little to no effort. Cut branches and/or flowers from your garden. Add them to a decorative vase and place them with a few pretty fairy lights on the mantle, on an end table, or on the window sill.
Coordinate With Existing Color Scheme
Complement your current color scheme with holiday hues in a similar palette. Clashing colors make rooms look too busy, overdone, and unattractive. These turn buyers away rather than invite them in for a closer look.
Keep Decorations Size-Appropriate
Unless the room is super-sized with cathedral ceilings, you might want to take a “pass” on that huge evergreen Christmas tree this year. A smaller, more appropriately-sized tree ensures that buyers see the room as something they would like to live in.
Let the (Natural) Light In
Finally, lighting plays a huge part in many holiday decorations. However, you still want buyers to see how much natural light fills up a room. So do not place decorations in areas that block out that natural light. Keep windows decor-free and keep extra-dark decorations to a bare minimum.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
What Homeowners Insurance Does Not Cover
As a homeowner, you need to know the difference between homeowners insurance and a home warranty. Both provide their own unique coverage of different areas of your Inland Empire property. Lenders require that everyone who borrows money for their home purchase must also take out insurance on their home. While it helps to know what this insurance covers, it is equally important to understand what it does not cover. That way, you may properly prepare yourself in case these issues arise in the future.
What Homeowners Insurance Does Not Cover
Mother Nature
A typical homeowners policy does not cover things like damage from earthquakes. In Southern California, that may pose a problem. However, many insurance companies here also offer separate policies for earthquake coverage. While a homeowners policy typically covers flooding due to a burst pipe inside your home, it will not cover it if Mother Nature created the flood. Unfortunately, private insurance companies usually cannot afford to cover the extensive damage flooding creates. But the government stepped in to provide this insurance for homeowners living in flood-prone areas. In fact, FEMA announced earlier this year that some Riverside County homeowners may be eligible for a 20% discount on flood insurance.
Some Mold Issues
If you find mold from a burst pipe or water damage due to firefighting efforts inside your Inland Empire home, your homeowners insurance policy usually covers the cost to remediate it. However, if Mother Nature or another force outside of your home caused the mold (humidity, a slow leak), most homeowners’ policies do not cover the damage.
Sewer and Drain Backup
This is another item not covered under a typical homeowners policy. If you live in an area that sees flooding around drainage areas during a heavy downpour, you might want to consider obtaining water backup coverage when you get your flood insurance. It is separate from flood insurance but might equally be worth checking out if this may be a potential problem during high rains.
Regular Wear and Tear
Homeowners’ insurance is meant to cover most unavoidable emergencies. Unfortunately, the cost to repair holes in the walls due to you moving furniture around or carpet falling into disrepair due to regular wear and tear falls on your shoulders, not the insurance company. Therefore, it makes the most sense to stay on top of any regular maintenance and repairs as they arise. This helps identify bigger issues when they are more manageable (and more budget-friendly to repair).
Always ask your insurance agent about what your homeowners insurance does and does not cover when you sign up for it (or at any time you have a question). They know the policy best and are your best information source related to your insurance policy.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
