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Down Payment Saving Tips
One of the biggest obstacles for Inland Empire home buyers tends to be saving up for their down payment. That typically runs anywhere between 3.5% and 20% or more of the sale price. For a $500,000 home, that means you need between $17,500 and $100,000. (The more you put down, the lower your monthly payment.) But do not forget about your closing costs. Buyers pay around 2% of the sale price in closing costs, according to The Mortgage Reports. Before you freak out over how you’re going to come up with that much money, saving up for your down payment and closing costs may be a little easier than you think.
Down Payment Saving Tips
Open a Dedicated Savings Account
Preferably, this savings account should be at a completely different bank than your normal one. Additionally, make this a bank that includes limited access. This reduces your chances of tapping into it for frivolous expenses. Plus, automate your savings. Most employers offering direct deposit allow you to allocate your earnings into more than one account. This puts money away before you even see it and helps keep your spending in check.
Withdraw From Your IRA Account
Traditional and Roth IRAs are both great places to put your money while saving for a down payment. You may take out as much as $10,000 for your down payment when buying a home. With a traditional IRA, that money will be taxed. However, with a Roth IRA, you do not pay tax as long as you have had it for five years or more and are a first-time home buyer. Just remember that whatever you take out of your IRA affects how much you have for retirement. So, talk to your financial advisor about the pros and cons of using this method for your down payment before making a final decision.
Minimize Frivolous Spending
And speaking of keeping your spending in check, take a look at your spending habits. Now, that does not mean that you need to live like a hermit while saving up for your Inland Empire home. Instead, make a few subtle changes and you might see your savings add up quicker than you think. For example, if you find yourself spending $10 to $15 dollars a day for lunch, take leftovers from dinner the night before to work. That saves you anywhere from $200 to $300 a month. Minimize eating out. Notice that I did not say “eliminate”. Instead of eating out for lunch and dinner on the weekends, opt for a nice lunch (the cheaper of the two meals) on Saturday or brunch on Sunday and cook for yourself at home the other times. That can add up to $50 to $100 savings per meal for two people.
Get rid of cable and sign up for a streaming service instead. Instead of paying $200 to $250 a month, you pay as little as $10 instead. Eliminate your $40 gym membership and opt to walk or run for free. Finally, empty out your purse or pockets of any change at the end of the day. Save it up in a coin jar. When the jar gets full, take it to your bank to deposit into your savings account. Just remember to put the money you would have spent on any of these things into your savings account.
Look at Assistance Programs
Finally, check out available down payment assistance programs. Riverside County offers down payment assistance and homeowner education classes. Cal FHA and GFSA also offer assistance for first-time and low-income California home buyers.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Home Buying Tips for Navigating a Seller’s Market
Several years ago, home buyers had the pick of the litter when it came to purchasing a Southern California property. Decent interest rates and tons of inventory helped first-time buyers easily enter the market. Oh, how the tide has turned. Rising interest rates, low inventory, and high buyer demand put us in a strong seller’s market. As of April 2022, Riverside homes sold for 2.8% above asking on average. And it does not show signs of slowing down anytime soon. So, if you plan on investing in a property during a seller’s market, keep these home buying tips in mind.
Home Buying Tips for Navigating a Seller’s Market
Worst House/Best Neighborhood
Many of today’s buyers prefer a move-in-ready home. But these come at a premium cost. Thus, lowering your expectations and buying a fixer-upper might prove much more budget-friendly…and profitable. For decades, real estate experts suggested buying the worst house in the best neighborhood in order to increase your return on your investment. Just make sure to keep the costs of renovation/repair in mind when putting in your offer.
More Earnest Money, More Attractive the Offer
When a seller accepts your offer, you must place an Earnest Money Deposit in escrow. Also considered “good faith” money, this deposit goes towards your down payment once the sale goes through. Oftentimes, this costs between 1% and 3% of the purchase price of the Inland Empire home. But, as one of my home buying tips in a seller’s market, I suggest that you put at least 3% down if not a little more. Not only does it show the seller that you are serious, but it may also push your offer up high enough to outshine other buyers you compete with.
Get That Pre-Approval Letter
Gone are the days of pre-qualification being enough for a buyer to be taken seriously. Most sellers will not even consider an offer without a pre-approval letter. But if you really want your offer to stand out above the rest, get your loan to pre-underwriting status.
Add an Escalation Clause
If you really believe this house is your dream property, add an escalation clause into your offer when you find yourself competing against other buyers for the home. For example, let’s say that a seller lists their house for $450,000. You are willing to pay as much as $475,000. But you find out that someone else also put in an offer. So, you offer $450,000 but add in an escalation clause that states you will pay $5,000 above the highest offer up to $475,000. Your offer never rises above your limit but it also does not go higher than $5,000 over the highest offer either. That might be just enough to make a seller accept it.
Lease-Back Option
Once a homeowner sells their property, they need to find another home. A 30-day escrow may not provide enough time to do so. So, another one of my home buying tips to follow in a seller’s market is to offer a lease-back option. This allows the seller to stay in the property for a specific time period (usually 30 to 60 days after the close of the sale) and for a specific amount of money per month. Basically, once the buyer becomes the owner, they also become the landlord for a short time.
Not all of these options work for every situation. Talk to your REALTOR® to determine which ones offer the best advantage for you to seal the deal. When you decide you want to look for your next Inland Empire home, contact me. I’m always ready to help you navigate the market, whatever it may be.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Home Upgrade Areas to Focus On
With so many people spending more time in their homes over the last couple of years, millions of homeowners faced the reality that their properties needed some updating or renovation. What used to “work fine” no longer fits the bill. So, whether you plan on living in your Inland Empire home for a while or need to put it on the market soon, here is where you should focus your efforts with your home upgrade for the best return on your investment.
Home Upgrade Areas to Focus On
Flooring
Flooring has come a long way over the past several decades. Today’s buyers love wood flooring. And when I say “wood”, I mean wood laminate, vinyl wood planks, solid hardwood, and engineered hardwood. Carpeting works fine in the bedrooms. But kitchens, hallways, and main living areas need wood flooring. In fact, when you use the same flooring materials throughout all of the main living areas, you make your home’s floor plan appear much larger.
Kitchen
They say that the kitchen is the heart of the home. So, if your “heart” looks a bit worse for wear, you might want to focus your home upgrade efforts there. A bit of paint and new hardware for your cabinets and drawers goes a long way to update an outdated kitchen without breaking your bank. Do your countertops need some zhushing up? According to Better Homes & Gardens, the five best budget-friendly countertops are butcher block, concrete, laminate, solid-surface, and tile.
Bathrooms
Strapped for cash? One room that benefits really well from a home upgrade is the bathroom…especially, the master bathroom. Here, flooring choices can be very important. Replace a shower/tub surround with tile. Paint or replace the cabinets. Add new hardware. Get rid of the wall-sized flat-panel mirror and add one or two framed mirrors above the sink(s) in its place. Place a newer, nicer light fixture above each mirror as well. Newly tiled backsplashes look great in here, too. If you have a good tub in place, you might be able to reglaze it instead of replacing it altogether.
Garage Doors
Finally, this may sound odd, but replacing the garage doors brings you the second-best ROI of any remodeling projects you might tackle on your Inland Empire home. The first is adding/updating a manufactured stone veneer to the exterior of your home. Garage door replacement makes sense. After all, it takes up a huge portion of the front elevation of your home. At an average cost of $3800, it is well worth the monetary investment, too.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
How Bankruptcy Affects the Home Buyer
The last couple of years affected the lives of billions of people around the globe. For some, that meant losing their job. If you took a financial hit to your household income, you might have needed to declare bankruptcy. Afterward, you managed to pull yourself up, dust yourself off, and found a great job. In turn, you started looking at the possibility of buying an Inland Empire home. With rents going up, it seems to make the most sense. But you start to wonder how your bankruptcy may hinder your chances of purchasing a property of your own.
How Bankruptcy Affects the Home Buyer
How Long Must I Wait Before I Can Buy a Home?
One of the most often asked questions for a home buyer is how long do I have to wait after declaring bankruptcy before I am eligible to get a home loan? Factors for this vary. Typically, you must wait a minimum of two years. Even VA loans require a two-year waiting period. However, a conventional loan requires a two to four-year waiting period after bankruptcy discharge to even be considered eligible for applying for a mortgage loan. As time goes on and you put distance between you and your bankruptcy discharge, your score should improve significantly.
Time is Not the Only Factor
You also need to bring up your credit score. FHA loans require a score of at least 580 for a 3.5% down payment. However, if it falls below 580, you might still receive approval. You just need to increase your down payment significantly.
How to Help Increase Your Score While Waiting
Avoid late payments at all costs. Request a free credit report from AnnualCreditReport.com for each of the three credit reporting agencies. Check each for any mistakes. File a dispute with the appropriate agency if you find errors. Keep new credit to an absolute minimum. Instead of obtaining unsecured credit (such as credit cards or personal loans), apply for a secured card instead. These typically have lower interest rates and fees than an unsecured card. Why? Because your card is backed by your own money. This helps build your credit back up faster without loading you down with high rates and fees.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Home Selling Costs That Eat Into Your Profit
You have probably heard the phrase “never count your chickens before they hatch”. Well, the same goes for your profits when selling your Inland Empire home. Just like buying a house, it also costs money to sell a property. So, before you count up all the profit you expect to receive, keep these home selling costs in mind.
Home Selling Costs That Eat Into Your Profit
Repairs
The majority of home buyers today want a turn-key property, not a fixer-upper. Falling behind on your regular maintenance tasks may cost you a pretty penny at the bargaining table. Smaller tasks should be tackled before you list by a reputable handyman. For major repairs (such as a roof replacement or HVAC overhaul), it might work more to your advantage to either lower your list price or offer a credit at closing. Replacing a roof in Riverside costs as much as $11,000+. But you only receive 72% of that cost back.
Professional Photos
Many homebuyers begin their search for Inland Empire homes online…even before contacting a real estate agent. Since the start of the pandemic, this number has only gone up. So, if you want to make a great impression (and bring buyers to your door), you need to showcase your property with high-qualify professional photos. Fortunately, many real estate agents work closely with photographers and videographers. They may even include photos and video as part of their services. If so, yay! It will not cost you extra. However, if they do not, it is still well worth the money to get a pro out to highlight your property’s best assets.
Landscaping
Never neglect your curb appeal. You might get away with an older paint scheme and slightly worn-out flooring. But buyers always want to see a nicely landscaped yard. Therefore, another one of the home selling costs that eat into your profit is hiring someone to make your curb appeal pop. Luckily, you can save some money by doing some of the work yourself.
Closing Costs
Yes, even sellers pay closing fees as part of their home selling costs. These include real estate commissions, transfer tax, title insurance, mortgage processing fees, escrow fees, and notary fees. You also pay any outstanding property taxes as well as a prorated water and sewage bill dependent upon the date of closing. Also, any remainder of your mortgage (including a second mortgage, if applicable) must be paid out of the money received for your home’s sale. If you used a real estate attorney for any part of your transaction, their fees must be paid at closing as well.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Pre-Approval vs Pre-Underwriting
When buying an Inland Empire home in the past, you may have heard about pre-qualifying and pre-approval. In today’s highly competitive real estate market, most sellers will not even look at an offer if the buyer does not include a pre-approval letter. But, there is something even better than a pre-approval letter. And that is pre-underwriting. So, what is the difference between the two?
Pre-Approval vs Pre-Underwriting
Pre-Approval
When you go through the pre-approval process, you fill out your initial loan application with your lender. Then, you provide them with bank statements, paycheck stubs, tax returns, and any other financial documentation they request. They verify your employment status and run a credit check on you. Using all of this information, they determine if you 1) qualify for a mortgage loan and 2) the maximum amount you qualify to borrow.
Pre-Underwriting
After all of the pre-approval process ends, your loan then goes to underwriting. The underwriter conducts a more thorough audit of all the information you provided in the pre-approval process. It also takes a longer amount of time. Therefore, if you can get your loan as far as possible in pre-underwriting before you even write an offer on an Inland Empire house, your time in escrow shortens up. This makes an antsy seller very happy!
When you deal in a highly competitive seller’s market like ours here in the Inland Empire, you want your offer to look as good as possible. Pre-underwriting helps with this endeavor. However, since this is a relatively new option, some lenders do not offer it. For this reason, you need to ask your lender about it first thing.
After you get your financing together, contact me. I’d be happy to show you what’s available in your price range here in the Inland Empire. I look forward to hearing from you soon!
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Priority Tasks for Your Move Into Your New Inland Empire Home
Moving into a new Inland Empire home is an exciting time. In fact, you’re probably daydreaming about decor, paint schemes, and new furniture. But before you get into the fun stuff, there are some basic priority tasks for your move that you should cover first.
Priority Tasks for Your Move Into Your New Inland Empire Home
Change the Locks
Even if you’re promised that new locks have been installed in your home, you can never be too careful. It’s worth the money to have the peace of mind that comes with knowing that no one else has the keys to your Inland Empire home. Changing the locks can be a DIY project or you can call in a locksmith for a little extra money.
Steam Clean the Carpets
It’s good to get a fresh start with your floors before you start decorating. The previous owners may have had pets, young children, or just some plain old clumsiness. Take the time to steam clean the carpets so that your floors are free of stains and allergens. It’s pretty easy and affordable to rent a steam cleaner. In fact, your local grocery store may have them available.
Call an Exterminator
Another one of your priority tasks for your move-in should include calling an exterminator. You probably haven’t spent enough time in the house to get a view of any pests that may be lurking. Call an exterminator to take care of any mice, insects, and other critters that may be hiding in your Inland Empire home.
Clean Out the Kitchen
If the previous occupants wanted to skip on some of their cleaning duties when they moved out, the kitchen is where they probably cut corners. Wipe down the inside of cabinets, clean out the refrigerator, clean the oven, and clean in the nooks and crannies underneath the appliances.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Dispelling Refinancing Myths for the Inland Empire Homeowner
“Refinancing” is a scary word for many people. But that shouldn’t be the case for you. For many Inland Empire homeowners, refinancing can not only lower your monthly payments and help with your monthly budget, but it can save you thousands of dollars in the long run. Let me ease your mind a bit by dispelling some common refinancing myths for you.
Dispelling Refinancing Myths for the Inland Empire Homeowner
You’re Not Too Late
For years now, we’ve been hearing that interest rates will be on the rise. And while they have taken off recently, you’re still in a great position to drastically lower your interest rate. But you need to move fast. Rates are continuing to rise weekly. The general rule is if your mortgage interest rate is more than 1% above the current market rate, you should definitely consider refinancing. However, if your interest rate is near or below the current interest rate, you might want to wait it out for a bit.
It’s Not Too Time-Consuming
Another one of the refinancing myths I want to dispel is how long it takes to refinance. Don’t brush off refinancing just because it seems like a long and daunting process. An informational call with a lender to see how rates compare will only take a few minutes. There are also some programs for streamlining the application process. And besides, isn’t the amount of money you could save worth the time and effort?
ARMs Can be Refinanced, Too
Seeing your Adjustable Rate Mortgage (ARM) increase after the introductory period can be incredibly stressful and place a squeeze on your budget. Many people assume they’re stuck. But ARMs can be refinanced just like fixed-rate mortgages. You can even switch to a shorter term fixed-rate mortgage, such as 15 or 23 years. The longer you’re planning to stay in the home, the more sense it makes to look into refinancing.
If you are considering refinancing your mortgage, contact your local bank first. Then, talk to other lenders about your options. Your bank is not the only lender offering refinancing. Terms and programs vary with each lender. So, it makes sense to shop around before settling on one.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
Must-Have Tools for Southern California Homeowners
When you own your Southern California home, things are going to break and, unless you want to spend your money on visits from a neighborhood handyman, you’re going to need to fix them yourself. Luckily, you don’t need an arsenal of tools to handle most home maintenance fixes. These five tools will cover most of your basic projects.
- Cordless Drill
A cordless drill is one of the must-have tools for installing cabinets, drawer pulls, hinges, picture frames, shelves and hooks, and more. Whether it’s for do-it-yourself projects or repairs, you’ll use your cordless drill just about every month. - Drain Cleaners
Shower and bathroom sink drains are susceptible to clogs because of the daily buildup of hair and whisker clippings. (Anyone with hair knows this.) You can use chemical clog removers like Drano, but they’re expensive and the lingering chemical scent is unpleasant. Instead, buy some plastic drain cleaners that can reach into the drain to pull out the clog of hair and gunk. You can purchase them on Amazon or at a local hardware store for a low price. - Shop-Vac
No matter how careful you are, spills and accidents will happen in your Southern California home. There are some tasks that just can’t be handled with paper towels or a standard vacuum, like pet messes or broken glass. - Clippers
Even the minimum amount of care for your landscaping will require some clippers/pruners/shears to remove damaged branches, vines, thick weeds, and any other unruly plants in your yard. You can find them at any home improvement store. - Flashlight
You’re going to want something a little more powerful than your iPhone flashlight when you’re in the crawlspace! These are the flashlights Bob Vila recommends for homeowners to keep on hand.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
What to Negotiate When Buying an Inland Empire House
Whether you are a first-time homebuyer or a seasoned veteran, the negotiation part of the transaction can be a little daunting and stressful. However, it is necessary to ensure that you are getting the best possible deal for your money. So, what should you negotiate when buying an Inland Empire home?
What to Negotiate When Buying an Inland Empire House
Closing Costs
Your closing costs are determined by a variety of factors. But you can expect them to be between 2% to 6% of the purchase price, according to local Riverside County escrow company Parkfield Escrow. Ask the seller to cover some or all of the closing costs upfront or request a closing credit that can be used to make specific updates and fixes to the home.
Furnishings
Love how the seller has furnished and decorated the home? Buyers often negotiate keeping couches, fixtures, landscaping items, patio furniture, appliances, and more. And many sellers agree, wanting to make the home more appealing.
Inspection and Closing Timing
Buyer offers that include a quick inspection and close timeline are often more attractive to sellers who have been going through the process for far too long. Just ensure you allow yourself ample time to get your financing in place and complete proper, thorough inspections.
Home Warranty
Sellers will often agree to pay the premium on the home warranty at closing. Then, they hand it off to the new homeowner, who is responsible for the deductible on any future claims.
Repairs
Your inspection may uncover small or large repairs needed to bring the Inland Empire home up to standard. You can negotiate to have these items fixed before closing or ask for a price reduction to cover the costs.
Keep in mind, however, that the more contingencies you place on a home’s sale, the more likely that the seller will refuse your offer and move on to another. This is especially true in a competitive seller’s market. Talk to your real estate agent to help you determine which negotiations are a “must” and which should be left off the table.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
