Common Credit Myths About Buying a Home

                Whether your annual earnings range well into six figures or they are on the more modest end of national salary average, you know you will probably need credit to buy a home. While you likely know how important credit is to your home-buying plans, you may not be aware of the truth behind some common credit myths.

Myth:   If your bills are paid and you have never defaulted on a loan, mortgage or credit card bill, you do not need to worry about your credit report or credit score.

Truth:   Many factors influence your credit score, and payment history is just one of them. When calculating your score, credit bureaus also consider length of credit history, types of credit used and ratio of credit available to credit used. Even if your payment history is good, scoring lower on one of the other factors could lower your overall credit score.

Myth:  As long as you know your credit score, you do not need to look at your credit report before applying for a mortgage.

Truth:  A lender will certainly look at your credit report, so you should know what is on it before they do. Errors may occur on a credit report, and if there are any negative marks on your credit history you will want to know about them – and address them – before a lender asks.

Myth:  Checking your credit score is a hassle, and it can not really help you manage your credit in the long run.

Truth:  Websites like FreeCreditScore.com make it easy to check your credit score. Keep in mind that lenders use a variety of scores when evaluating credit worthiness, and the one you obtain online will vary from what a lender might see.  Still, any score can be a valuable educational tool that helps you better understand how lenders view your credit.

Myth:   If your credit is not perfect, you will not be able to get a mortgage.

Truth:   Lenders are stricter than they have been in the past and a good credit score and report can certainly make you a more appealing prospect to them. However, a score in the lower range does not mean you can not get a mortgage at all. But a higher score is likely to net you more options – and better terms.

Myth:   When you apply for a mortgage, the lender could share your personal information (including your credit score and history) with other companies.

Truth:   The law limits how banks and other financial institutions can use your information and to whom they can disclose it. If you are not sure how a lender may use your information, ask. Depending on the situation, you may be able to limit disclosure of your information.  Home prices and interest rates are still low across the country, making it a good time to buy a house, real estate experts say. Knowing the truth behind some common credit myths – and understanding your own credit history and score – can help you take advantage of the many opportunities still available for home buyers. 

Common Home Fix-it Mistakes

Seemingly small oversights and errors in do-it-yourself projects and home maintenance can have costly consequences.  A single misstep might mean that a job must be completely redone or that hundreds, even thousands, of dollars must be spent to solve the resulting problems.  Below are some of the most common mistakes that can easily be avoided.

MISTAKE:  Failing to apply grout sealer after laying tile.  Grout stains easily and is extremely difficult to clean.  After you grout your tile, whether on a floor, wall or countertop, wait three to five days for the grout to cure, then apply a solvent-based grout sealer.  (Latex-based sealers are less effective.)  Apply with a small brush or spray bottle and wipe off the excess.  Add a new coat of grout sealer every year and if the grout is in or near the shower, do it twice a year.  Helpful:  Environmental restrictions are making solvent-based grout sealer more difficult to find.  If it is not sold at your local home center or hardware store, try a specialty tile store.  Latex-based grout sealers are better than nothing, but you will have to apply three or four coats to get effective protection.  To clean grout that is already dirty:  Use a cleaner specifically made for grout, such as ZEP Grout Cleaner & Whitener, available at tile and hardware stores.

MISTAKE:  Applying a latex paint directly on top of an oil-based paint.  Latex paint, the most popular paint these days, will not stick to a surface painted with oil-based paint, which used to dominate the market.  Within weeks, the new coat of latex will begin to peel and you will have to strip it off and start again.  To determine whether existing paint is oil of latex-based, wash a section with soap and water, let it dry, then swab it with rubbing alcohol.  If some paint lifts off, it is latex; if not, it is oil.

If you must apply latex paint on top of oil paint, first apply a coat of deglosser, also known as “liquid sandpaper”.  Check the instructions on the deglosser.  Some are effective only if you paint within hours of deglossing.

MISTAKE:  Using the wrong caulk or not preparing properly to caulk  Caulking is one of the cheapest, easiest do-it-yourself tasks, but it is still possible to make mistakes that lead to serious problems.  Some homeowners fail to thoroughly clean the surface that is about to be caulked and then the caulk bonds to the dirt and dust, not to the wood, metal or ceramic underneath, allowing moisture to get into the home’s structure.  Others use the wrong caulk.  Cheap caulks can fail in just a few years, and simple latex caulks will not take paint.  Wall trim often needs to be caulked before painted.  The best choice is a high-quality siliconized latex caulk or a letx-elastomeric caulk.  Either should last twenty years.

MISTAKE:  Painting metal without properly treating rust.  Most metal that is exposed to the elements will rust.  Painting over your home’s rusted metal doors, railings, fences, patio furniture or steel gutters only cloaks the problem.  The rust will continue to consume the metal.

Before painting any rusty surface, sand down the rusted area, then apply Ospho, a phosphoric acid product that retards rust.  Let it sit overnight.  The rusted areas should appear black by the next day, a sign that the rust has been chemically altered so it will not continue to spread.  Apply a coat of Rust-Oleum metal primer over the entire surface of the matal to prevent the spread of any rust that is not yet visible, as where there was visible rust, there is additional rust that cannot yet be seen.  Once the primer dries, you are ready to paint.

MISTAKE:  Not “exercising” water shut-off valves.   When the shut-off valves beneath sinks and toilets go untouched for years, mineral deposits can cause them to seize up and the valves cannot be opened or closed.  Often the only recourse is to hire a plumber to cut the valves out and replace them, at a cost of hundreds of dollars.  This will not happen if you shut and reopen water valves every six months.

MISTAKE:  Neglecting exterior door hinges.  The hinges on an exterior door can rust and seize up, causing significan damage to the door when it is used.  This typically happens to seldom-used doors, but it can happen to a front door while you are on vacation.  If you lubricate exterior door hinges once a year with a silicone spray, they will give you a lifetime of trouble-free sercices.  It is best to not use an oil-based lubricant as it can trap dirt in the hinge.  Open the door before applying the silicone to ensure that the lubricant gets inside the hinge barrel.

MISTAKE:  Allowing a garbage disposal to rust.  Rust can develop in a garbage disposal when it goes unused for as little as a week.  Pour a shot glass of vegetable oil into the disposal before leaving on vacation and it should stay rust-free.  When you return, pour a small amount of dishwasher detergent down the disposal to clean out the oil.     

 

About CC&R’s

CC&R’s, or Covenants, Conditions and Restrictions, are legal limits of usage that can be placed on a piece of property.  Ordinarily when we think of CC&R’s we think of a condo complex, but believe it or not, some cities have homes associations.  When you are purchasing a property in California, you will receive a Transfer Disclosure Statement(TDS) from the seller of the property and one of the questions on the TDS is, “Is there a Homeowners’ Association which has any authority over the subject property?” and another is, “Are there CC&R’s or other deed restrictions or obligations?”  When the buyer sees on the TDS that the seller has said yes to these questions, he should request that the title company provide a copy of the CC&R’s with the preliminary title report. 

California Law allows that either the association or an owner in a common interest development may file a lawsuit asking the court to enforce the CC&R’s.  The law currently requires, with some exceptions, that either the owner or the association must offer to engage in some form of alternative dispute resolution process before filing a lawsuit.  You may wish to consult wth an attorney who specializes in this type of law if you are faced with or contemplating an enforcement matter.

When the rules are broken, penalties might include fines, forced compliance, or a lawsuit by the association.  For example, if an owner attempts to sneak in a large dog into a condominium unit despite a rule specifying a maximum weight for pets, the owner may be forced to get rid of the dog as well as pay fines or face a lawsuit if necessary.

In Citizens for Covenant Compliance vs. Jared A. Anderson, the California Supreme Court concluded that recorded CC&R’s are enforceable even when they are not mentioned in a purchaser’s deed to the property.  As long as the CC&R’s are recorded prior to the execution of a purchase agreement, they are enforceable, even if a misdrafted deed fails to mention them. 

I would like to share one of my recent experiences with CC&R’s of a condominium association.  I was showing townhouses in a popular development in Rolling Hills Estates.  My clients wanted to purchase a townhouse and rent it out for a couple of years and then retire there.  We found a unit that they liked and wanted to make an offer on.  Lo and behold, the CC&R’s required that the owners could not rent out their unit until they had lived there for at least three years.  Well, of course, that sale did not occur. 

Another thing to be aware of is that some of the CC&R’s were written in the 1920’s or 1930’s and some of the restrictions are now illegal.  One of the cities in which I sell property has CC&R’s and a Homes Association.  The restrictions were composed when the property was initially developed and because the developers did not want little cabins or mobile homes on the lots they were selling, there are restrictions about what can and cannot be built.  There are different architectural zones with height restrictions, lot coverage restrictions, and so on.  The CC&R’s also state that if the owner violated the building directives, the Homes Association can require that the owner tear down the structure and if the owner did not, the Association would tear it down and charge the owner for the cost of demolition.  The Association no longer does this but it is still in the CC&R’s.  I recommend that people who are purchasing in that city pay a visit to the Homes Association for clarification about any of the restrictions they may have questions about. 

The upside of CC&R’s and the Homes Association is that no weird construction or unsightly exteriors, like bright neon paint and zero-lot-line structures, are allowed.  This city is beautiful and property values are the most stable in the Palos Verdes area. 

 

Making That Offer on Your Dream Home

You have been looking at homes for a few months now and you believe you have found your dream home.  The asking price is $850,000; how much should you offer?  Here are a few tips about handling that offer:

  • Because you have seen a number of homes, compare the homes you have seen with this one and you will probably have a good idea if the asking price is in the right range.  Your Realtor should be able to provide you with a list of comparable homes that have sold within the last six months and you can derive the list price to sales price percentage.
  • Write the offer to be accepted, not to get a counter offer.  If you are aware of the listed prices and the sales prices, make an offer that is reasonable…one that will make the seller wonder if you will go away if he does not sign it.  If you are within 10% of the asking price, you will have a good chance of coming to terms in today’s market.  In brisker markets we need to be within 5% of the asking price.  If the property is offered below market value, you may consider going over the asking price.  It has been my experience that “low-ball” offers are rarely successful.  Most likely, the owner will either not respond at all or will counter back at full price or will come down only a little bit.  One time I presented a low offer on an investment property.  The owner said, “Get out of my house!”  Needless to say, that deal did not go through.  Because an owner is often insulted by such offers, they are seldom made.  Also, instead of writing an offer of $800,000 for a home priced at $850,000, consider writing it for $815,500; at a glance it is not so obvious how far off the price is and your offer has 5’s in it, just like the asking price.  Ask your agent to find out which title, escrow, and termite companies are acceptable to the seller so you won’t receive a counter offer just spelling out the services to be used.
  • Ask your Realtor not to give too much advance notice to the listing agent that you will be writing an offer.  Because the listing agent represents the seller, he will want to get the highest price for his client.  Nine times out of ten he will be on the phone calling everyone who has shown an interest in the property to get a bidding war going and before you know it there is another offer on your dream home.
  • Ask your Realtor to present the offer in person to the seller and seller’s agent, if at all possible.  The reasons that personal presentations are more successful are:  1.  Your agent will be able to tell the seller all about you and your family and your qualifications and  2.  Your agent will be able to read the seller’s “body language,” which is key to successful negotiations.  3.  Your agent will be more likely to walk away from the table with an acceptance or counter offer.  One time I was presenting an offer to a listing agent because the Seller was out of town.  There was another offer to be presented after mine.  The agent told me what the seller’s terms were and they included price, closing date and amount of the earnest money deposit.  She went on to say that a counter offer would be issued the following morning.   Because I knew what the Seller would require, I went over to the buyer’s house (it was probably after 10 PM) and we re-wrote the offer per the seller’s terms and submitted it to the listing agent.  If we had waited for the counter offer, we would have been competing with the other buyer, but because our offer was exactly what the owner wanted, he signed it without countering back to the other buyer.
  • Be sure your offer is accompanied by a loan approval, proof of funds to close the escrow and a copy of your earnest money deposit.  Because of the difficulties of obtaining a purchase money loan today, most sellers will not even consider an offer without verifying that the prospective buyer is qualified to purchase their homes.  If you are paying all cash provide verification of the funds to close the escrow with your offer.
  • Give the seller time to consider your offer.  When a seller feels backed into a corner, he will often say “no”.

 In closing I would like to add that if you really love a certain home and it is within your means to buy it, go for it!  I have had a few buyers who never got over “the fish that got away”.

Protect Your Home While You Travel

Protect Your Home While You Travel

Planning your next getaway? Unfortunately, an empty house can be a tempting target for would-be burglars. Follow a few simple precautionary measures to secure your home, whether you are leaving for weeks or just a weekend.

Make your home look lived in – Install automatic timer switches on lights, radios, and the TV. They are inexpensive and many include variable timing schedules to create the appearance of activity in the house. Take extra steps to make your home seem occupied by turning off the ringer for your phone and parking a car in the driveway.

Alert the neighbors – Ask your neighbors to keep an eye on the house and leave them an emergency phone number. You might also consider hiring them to mow the lawn, water the plants, and put the trash cans out.

Stop all deliveries – Make sure things don’t pile up on the porch while you’re gone. Newspapers, mail, packages, and door flyers are all tell-tale signs that you’re away.

Secure your doors and windows – Use high-quality deadbolt locks on your doors, additional blocking devices on sliding glass doors, and sash locks on your windows. These can be easily retrofitted.

Install an alarm system – Deter would-be intruders with an alarm system and stickers on the exterior of your home. Many systems offer monthly monitoring for added protection. However, make sure everyone in the home knows how to properly use the system to avoid false alarms.

Remove valuables and keys – Leave your house key with a trusted friend (not hidden outside your home), and take valuables to a bank safe deposit box.

Spending a little time to protect your home before you go on vacation is well worth the effort. You’ll reduce your chances of being targeted and ensure a happy homecoming

Enjoy your trip!

Should I Accept This Offer?

Today’s market can be a difficult one for many sellers to navigate.  While your real estate professional can advise you, the ultimate decision of what offer to accept is entirely up to you.  This decision can come with quite a bit of pressure.  Even in the most favorable of markets this can be a difficult time.  How do you know when to accept an offer?  Here are some questions to consider:

1.  Is the buyer pre-approved?  Selling will involve an investment of time and money.  You may need to find a new home or a temporary rental.  There is nothing worse than buying a new house, only to find out the deal to sell yours has fallen through because the buyer is not qualified to buy.  If a buyer is paying all cash be sure to get verification of funds to close the escrow.  Always make sure the earnest money is deposited into escrow as written in the sales contract and this should be 2-3% of the sales price.

2.  Do you need to move?  The urgency of your move may dictate what offer you accept.  Many sellers need to move quickly for a new job or they may need to sell to avoid foreclosure.  If you are in a rush you may need to accept an offer that is less than ideal.

3.How much do you owe?  You do not want to sell your home at a loss.  Be sure to take closing costs into consideration.  For sellers a quick estimate of closing costs is 1% plus the commission percentage.  I try to provide a more specific amount when an offer comes in so the seller will know what he will probably net from selling for the offered price.  Many markets experienced high levels of depreciation over the last couple of years.  If you are “underwater” on your loan (you owe more than the present value of your home) now may not be the time to sell.

4.  What is the market climate?  Are you likely to get another offer?  How long has your home been on the market?  Have you had many showings?  All of these are factors to consider when contmeplating what offer to accept.

Above all, ask yourself if this offer was a reasonable offer.  There are buyers who may attempt to “low-ball” you.  They may see that your home has been on the market longer than your competition.  They may know that it is a strong buyers’ market.  In response they offer a much smaller amount for your home than it is worth.  You are not obligated to accept or even respond to these low-ball offers.  If you are in need of selling now, every offer warrants your consideration and potential counter offer achat cialis paris.

In the end you must accept an offer that works for you.  You may be willing to accept a lower price for a faster closing date or some other concession or you may want to hold out for the highest dollar amount.  Remember, real estate agents can market your home but only you can sell it.