Five Ways To Test A Neighborhood Before Buying a Home

Moving to a new neighborhood can be exciting. You will have the chance to explore local attractions and meet new people. If it is closer to your job, you have the extra benefit of a shorter commute, but keep in mind you will want to test a neighborhood before buying your next home. 

If you are still unsure if you want to live in a new neighborhood, consider trying these five tips:

1.) Rent First Before Buying A Home​

If the finances work out in your favor, consider renting in the neighborhood before buying a home. Renting before committing to investing in a home in the neighborhood will allow you to really learn about the neighborhood. This will give you six months to a year to decide if the area is right for you. If you love the area, start the house-hunting process a few months before your lease is up. 

2.) Walk The Neighborhood Before Buying A Home​

Walk around the neighborhood and take a look at houses and restaurants. You get a better feel for the area by walking as opposed to simply driving through it. Visit the area during different hours of the day to see how daily life changes. Walking the neighborhood later in the day will give you a better sense of the area that may not be present in the mid-day. Communities throughout the same city can have vastly different atmospheres and feelings. Also, pay attention to how the homes in your neighborhood have aged. In some neighborhoods, homes that are only a few years old can show dramatic signs of wear (i.e., warped fascia boards, chipping paint, shutters falling off the windows, dry rot, etc.). Be sure the home you choose is well-built to last!

3.) Talk To Friends In The Neighborhood​

Talk to friends or colleagues that live in the neighborhood to see how they feel about the area. For example, you can ask them about rush hour traffic or which schools are the best. If you enjoy dining out, ask your friends about the restaurants that have the best happy hour specials or live entertainment.

4.) Explore The Neighborhood Dining Options

Chances are you will eat at the places closest to your home instead of traveling far for a meal. Try out some of the local restaurants in the neighborhood. Are these restaurants the types of places you can imagine yourself visiting for date night or to watch the big game?

5.) Take a Neighborhood Staycation

Pretend you are living in the neighborhood by renting a hotel room or Airbnb for a long weekend. This will help you explore the area more in-depth. You’ll be able to commute to and from work as well as get groceries from the nearby supermarket. If you like to jog, you can even find local parks for exercise.

You should love the neighborhood where you buy a home. If you are exploring different neighborhoods to move to, try taking a staycation there, or visit the local eateries. You may just find the perfect place for your next move. Source

DRE ID # 01769353

NMLS ID # 394275

Advice for Buying or Selling a Home in 2025

Mortgage rates are expected to stay elevated for the foreseeable future, which has implications for prospective homebuyers and sellers. But regardless of current mortgage rate trends, Americans will still have reasons to move, whether they want to downsize in retirement or need to relocate for a better job.

Here's what you should consider if you're planning on buying or selling a home in 2025;

What Buyers Should Know: Waiting for Lower Rates Comes at a Price

Good things may come to those who wait, but patience doesn't always pay off in the housing market. Two-thirds of homebuyers are waiting for mortgage rates to fall this year before buying a home, according to a March U.S. News survey. The vast majority of them (85%) wanted to see rates below 6% before entering the market, which hasn't happened – and it isn't expected to happen in the near future.

In the time that homebuyers have been holding out for lower rates, home values have continued to rise. Home prices have appreciated by 15% since the beginning of 2022, according to the S&P CoreLogic Case-Shiller Home Price Index – despite mortgage rates doubling in that time frame.

Real estate markets are expected to stabilize this year, but buyers shouldn't expect housing prices to come crashing down, at least not on a national level. Here are a few home price forecasts from top U.S. housing groups:

• Fannie Mae: Home prices will rise 3.6% in 2025 and 1.7% in 2026.
• MBA: Home prices will rise 1.3% in 2025 and 2026, followed by a 2% rise in 2027.
• NAR: Existing home prices will increase to $410,700 in 2025 and $420,000 in 2026.
• Realtor.com: Existing home sales prices will increase by 3.7% in 2025.
• Zillow: Home values will grow 2.6% in 2025.

Although home values aren't likely to drop significantly, it's still positive that they probably won't keep rising at the double-digit pace seen in 2021 and 2022. Without over-the-top bidding wars to drive home prices through the roof, buyers can expect more properties to choose from.

That's not to say it will be a buyer's market, but there should at least be more balance between buyers and sellers. Buyers may be able to close the deal without waiving important protections like home inspections and appraisal contingencies. What's more, existing home inventory is forecast to improve (at least marginally) as rates drift lower and some previously rate-locked homeowners decide to sell.

Finally, buyers may find less competition in the new home construction market. Homeowners may be reluctant to sell and sacrifice their low mortgage rates, but homebuilders remain eager to close the deal, especially as new home inventory rises. Although new-construction homes are typically more expensive than resale homes, builders may be willing to offer other concessions like price reductions or temporary interest-rate buydowns.

What Sellers Should Know: Remember That You're a Buyer, Too

Perhaps the biggest hurdle facing sellers is that they still need a place to live once they've sold their current home. For many, that means overcoming the lock-in gap to buy a new home at today's rates and home prices.

According to Federal Housing Finance Agency data, the average interest rate on existing mortgages is 4.2% – far lower than the current prevailing rate available to new homebuyers. In fact, 84% of homeowners have a rate below 6%, and rates aren't expected to dip below that threshold anytime within the next few years.

Although many prospective sellers would be hard-pressed to give up their sub-3% mortgage rate, experts predict that that the rate lock-in effect will eventually wear off somewhat as homeowners grow tired of waiting to move.

Plus, a 2023 Fannie Mae survey suggests that low rates aren't the only factor keeping people from selling. While a fifth of mortgage borrowers (21%) say that their low mortgage rate is causing them to stay in their home longer, nearly as many said they simply like their current home (19%). Perhaps unsurprisingly, 13% say they're staying put because home prices are too high.

However, there is a silver lining for sellers who are also buyers: Many homeowners are sitting on a mountain of equity thanks to double-digit home price appreciation since 2020. Successful sellers can tap into that equity to put toward their next home purchase. 

Learn more on this topic from the article here...

DRE ID # 01769353

NMLS ID # 394275

What Is The Closing Disclosure 3-Day Rule

Your lender is required by law to give you the standardized Closing Disclosure at least 3 business days before closing. This is what is known as the Closing Disclosure 3-day rule. This requirement is thanks to the TILA-RESPA Integrated Disclosures guidelines, which went into effect on October 3, 2015.

Prior to these rules, home buyers received two documents: the HUD-1 Settlement Statement and the Truth in Lending Disclosure Statement (instead of the Closing Disclosure). There were two problems with these previous documents: they were confusing, and they were only provided at closing – which offered home buyers very little opportunity to review and make sense of them.

The Closing Disclosure’s 3-day rule now gives you plenty of time to go over the final terms of your loan before you sign your closing documents.

How Does The 3-Day Rule Affect The Closing Disclosure Timeline?

Because of the 3-day rule, the sequence of events leading up to you receiving a Closing Disclosure should be relatively predictable. Lenders are generally careful to avoid issuing a Closing Disclosure before they are certain about what the closing costs and fees will be; they don’t want to have to change the agreement and wait another 3 business days. Source

This means that loan approval, home appraisal, insurance and the calculation of all third-party fees will be completed before the Closing Disclosure is issued to you. The timeline will therefore look like this:

• All costs are calculated.
• The Closing Disclosure form is issued.
• The 3-day rule goes into effect.
• You sign the form.

DRE ID # 01769353

NMLS ID # 394275

What is an FHA loan?

An FHA loan is a type of mortgage insured by the Federal Housing Administration (FHA), which is overseen by the U.S. Department of Housing and Urban Development (HUD). While the government insures these loans, they’re underwritten and funded by FHA mortgage lenders. Many big banks and other types of lenders offer them.

FHA loans have a low minimum credit score and down payment requirement, which makes them especially popular with first-time homebuyers. You can get an FHA loan with a credit score as low as 580 if you have 3.5 percent of the home’s purchase price to put down, or as low as 500 with 10 percent down. These flexible underwriting standards are designed to help more borrowers become homeowners.

You can’t buy just any home with an FHA loan, however. You can’t use this loan to buy an investment property or vacation home. Based on your credit and finances, the lender determines how much mortgage you’d qualify for within the FHA loan limits for your area.

Who are FHA loans best for?

FHA loans are generally best for borrowers with lower credit scores, limited down payment savings or both. This might include first-time or younger homebuyers, or those with smaller incomes.

How do FHA loans work?

FHA loans work like most other mortgages, with either a fixed or adjustable interest rate and a loan term for a set number of years. There are two term options: 15 years or 30.

You’ll also pay closing costs for an FHA loan, such as appraisal and origination fees. The FHA allows home sellers, a home builder or a mortgage lender to cover up to 6 percent of these costs.

To insure these loans against default — that is, if you were to stop repaying your loan — the FHA requires borrowers to pay mortgage insurance premiums, or MIP. These go into the Mutual Mortgage Insurance Fund (MMIF), which helps cover loss claims. Although you’ll pay the premiums as the borrower, FHA mortgage insurance protects the lender — not you.

FHA loan requirements

Here’s an overview of the requirements for an FHA loan:

• FHA credit score: As low as 580 with a 3.5 percent down payment or as low as 500 with a 10 percent down payment
• FHA down payment: At least 3.5 percent down if your credit score is at least 580, or at least 10 percent down if your credit score is between 500 and 579
• FHA debt-to-income (DTI) ratio: At most 43 percent (up to 50 percent in some cases)
• FHA occupancy rules: Primary residences between one and four units
• FHA mortgage insurance premiums (MIP): An upfront premium of 1.75 percent of the loan principal, typically paid at closing; plus annual premiums between 0.15 percent and 0.75 percent depending on down payment and loan amount and term, typically paid monthly

FHA minimum credit score

If you put just 3.5 percent down, the minimum credit score for an FHA loan is 580. You can qualify with a score as low as 500, but you’ll need to make at least a 10 percent down payment. Keep in mind that the FHA sets this limit, but individual lenders might require a higher score.

FHA down payment

For an FHA loan, you’ll need a down payment of at least 3.5 percent. This minimum increases to 10 percent if your credit score is between 500 and 579.

FHA loans allow borrowers to use down payment funds from sources other than their savings, such as a gift from family. Borrowers might also be eligible for down payment assistance to help cover the cost.

FHA debt-to-income (DTI) ratio

To meet the DTI ratio requirements for an FHA loan, your combined monthly debt payments, including your mortgage, shouldn’t exceed 43 percent. No more than 31 percent of your income should go toward your mortgage payments.

That said, your lender could make exceptions for your overall DTI up to 45 percent, 50 percent or even 57 percent with an FHA loan, assuming you have mitigating factors like a lot of liquid assets or can make a sizable down payment.

FHA mortgage insurance

All FHA loans require you to pay mortgage insurance, which is split into two components:

• Upfront premium: 1.75 percent of the loan amount, which is paid either at closing or incorporated into the final loan amount
• Annual premiums: Amount varies based on down payment, loan amount and loan term

For example, if you’re an FHA borrower who opts for a 30-year term and a 3.5 percent down payment, you’ll pay 0.55 percent of the loan amount, divided by 12 and added to your monthly payment. That means if you borrow $300,000, you’ll pay $1,650 a year — or $137.50 monthly — for MIP. Source

DRE ID # 01769353

NMLS ID # 394275

Chattels and Fixtures in Real Estate: Protecting Your Purchase

Understanding the distinction between chattels and fixtures is essential in any real estate transaction to ensure a seamless purchase and avoid post-closing complications. Chattels, being movable personal property, typically appliances, furniture, and decorations, are not automatically included in the sale unless specifically listed in the Agreement of Purchase and Sale. They differ from fixtures, which are permanently affixed to the property, such as built-in cabinetry, light fixtures, and HVAC systems, and are presumed to be part of the real estate unless explicitly excluded in the APS.

While thorough attention during the transaction process is crucial, parties must also be ready to tackle potential post-closing issues, especially those related to the condition and functionality of chattels and fixtures. Problems may arise when items included in the APS are found to be missing, damaged, or not functioning after closing. By default, chattels and fixtures specified in the APS are expected to be in working order at the time of closing, making it the seller’s responsibility to ensure they meet this standard. Common post-closing complaints involve faulty appliances and systems such as ovens, dishwashers, air conditioning units, furnaces, security systems, and locks. If any such items are defective, the buyer may have grounds to seek remedies from the seller. However, when the APS explicitly states that the property, including its chattels and fixtures, is sold “as-is,” the buyer’s options for recourse are significantly limited unless the seller has concealed or misrepresented material facts.

A pre-closing walkthrough is essential for buyers to confirm the condition and functionality of chattels and fixtures included in the APS. This step ensures appliances are operational, light fixtures are intact, and all agreed-upon items remain on the property. If issues are discovered post-closing, buyers should first review the APS to understand their options, as it specifies the items included and their expected condition. Clauses requiring items to be in “working condition” or providing warranties strengthen the buyer’s position. Buyers can then negotiate with the seller for compensation or repairs, as many sellers prefer to resolve minor issues amicably. If negotiations fail, buyers may pursue legal action, such as filing in small claims court for lower-value disputes, provided they can demonstrate a breach of the APS or concealed defects.

Home warranties or insurance can offer solutions for addressing defects. A home warranty plan may cover certain appliances or fixtures, so buyers should review its terms carefully. For systems like plumbing or HVAC, filing an insurance claim might be an option. If repairs are needed, buyers should document all costs to support negotiations or potential legal action.

Preventing disputes over chattels and fixtures starts with a well-drafted APS. These items are integral to real estate transactions, and disagreements about their condition or presence can cause significant frustration post-closing. Buyers can minimize risks by adopting a proactive approach, including precise APS terms, thorough pre-closing inspections, and detailed documentation. Should issues arise after closing, understanding your legal options and engaging in fair negotiations with the seller can help resolve matters efficiently. Source

DRE ID # 01769353

NMLS ID # 394275

Happy Holidays!

 

Happy Holidays from us to all of you! We hope you have a healthy and safe holiday season! Let's make 2025 the best year yet!

Work and Associates Home Loans 

(916) 847-3090

margeate@workhomeloans.com

DRE ID # 01769353

NMLS ID # 394275

What Is A Conventional Loan?

Conventional loans, the most popular type of mortgage, come in two flavors: conforming and non-conforming.

• Conforming loans: A conforming loan “conforms” to a set of Federal Housing Finance Agency (FHFA) standards, including guidelines around credit, debt and loan size. When a conventional loan meets these standards, it’s eligible to be purchased by Fannie Mae and Freddie Mac, the two government-sponsored enterprises (GSEs) that comprise much of the mortgage market.
• Non-conforming loans: These loans do not meet one or more of the FHFA’s standards. One of the most common types of non-conforming loan is a jumbo loan, a mortgage in an amount that exceeds the conforming loan limit. Non-conforming loans can’t be purchased by the GSEs, so they’re a riskier prospect for lenders.

Pros of conventional loans

• Available from the majority of lenders
• Can be used to finance primary residences, second or vacation homes and investment or rental properties
• Can put down as little as 3% for a conforming, fixed-rate loan

Cons of conventional loans

• Need a credit score of at least 620 to qualify
• Lower debt-to-income (DTI) ratio threshold compared to other types of mortgages
• Need to pay private mortgage insurance (PMI) premiums if putting less than 20% down

Who are conventional loans best for?

If you have a strong credit score and can afford to make a sizable down payment, a conventional mortgage is the best pick.

“Conventional loans are flexible and suitable for a wide range of homebuyers, especially those with good-to-excellent credit scores, stable income, and some savings for a down payment,” says Matt Dunbar, senior vice-president of Southeast Region for Churchill Mortgage. “These loans offer competitive interest rates and flexible terms, making them attractive to buyers who meet the qualification criteria.” Source

DRE ID # 01769353

NMLS ID # 394275