Category: Housing Market (Page 8 of 40)

Do You Need a Real Estate Agent When Buying New Construction?

May 20, 2024 / Tom Bonetto

Do you need a real estate agent when buying a newly built home? Can you just use the builder’s representative?

It’s important to understand that as a buyer, when you walk in a new construction site, that on-site agent that’s working in that model home does NOT represent the buyer. They’re representing the builder, and it’s their job to get the builder top dollar and under the best conditions.

The pros of using a real estate agent for new construction FAR outweigh the cons…and it’s not even close.

What Can Happen When You Visit New Construction Without a Realtor?

In many cases, if you visit a builder’s office by yourself, once you sign into a builder’s sales office without your own real estate agent, they may not allow you to have one.

As a buyer, you may be out of luck having a buyer’s agent represent your best interests.

Unfortunately, sometimes nothing is posted anywhere at the builder’s sales center that tells you this. It may be posted in multiple listing services (MLS), but only real estate agents will see it…and that doesn’t do you much good.

So, don’t sign your name or provide other contact information when you visit a new construction development if you are going there without your real estate agent. Instead, speak with your agent regarding new construction. Have them accompany you on your visit to the builder’s site.

Having your real estate agent with you will be one of the smartest things you can do as a buyer.

Negotiations

Negotiation is critical area where real estate agents prove their value.

Purchasing a new home often involves negotiating with builders and developers, who typically have their own interests at heart.

Real estate agents are skilled negotiators, adept at securing favorable terms for their clients. They can negotiate on various aspects, such as upgrades, closing costs, and warranties, ensuring that buyers get the best possible deal.

Their ability to navigate these discussions can result in significant savings and added benefits for buyers.

Legal Issues

Moreover, the legal complexities involved in purchasing a new home absolutely necessitate the involvement of a real estate agent.

The process includes numerous legal documents and contracts that require careful review and understanding. Real estate agents are familiar with these legalities and can ensure that all paperwork is completed accurately and in compliance with regulations.

They will help identify any potential issues or red flags in contracts, protecting buyers from future legal disputes and financial liabilities.

True Value

Real estate agents offer invaluable expert guidance throughout the home-buying process.

For many buyers, purchasing a new home can be overwhelming, filled with unfamiliar terminologies and procedures. A seasoned real estate agent brings extensive experience and knowledge, ensuring that buyers understand every step.

From selecting the right neighborhood to navigating the intricacies of builder contracts, agents provide clarity and direction, preventing potential pitfalls that could arise from a lack of understanding.

In Conclusion

Utilizing a real estate agent when purchasing a newly built home is essential for multiple reasons.

Their guidance, negotiation skills, and legal assistance are just a few of the many values that they bring to the table. By leveraging the expertise of their real estate agent, buyers can make better decisions, secure superior deals, and navigate the complex process with greater confidence and ease.

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

The Mortgage Pre-Qualification | What’s Needed…and Why All The Paperwork?

April 29, 2024 / Tom Bonetto

So, you are thinking about buying a house? Good for you!! Now, let’s get to work on a mortgage pre-qualification.

Many potential home buyers begin looking at homes without understanding the steps involved prior to engaging a Real Estate Professional. It’s essentially a matter of making sure the horse is in front of the cart!

Being prepared with the documents needed for mortgage pre-qualification will help make the process go more smoothly and quickly. Here’s what you will need to provide…

When buying a property, getting pre-qualified is a crucial step in the process of getting a mortgage. Before you can get there, though, your lender will need to review and verify information about your assets, income, and credit.

Standard Buyers

For borrowers who are regular employees (hourly or salaried) and are not self-employed here’s what your lender will need:

Pay stubs from at least the past 30 days
Tax returns (including W-2s) from the past two years
Bank statements from the past two months to three months – checking, savings, money market accounts
Employment information – contact information of employers in the past two years (some employers have an employment verification phone number lenders can call)
Other income sources – bonuses, child and/or spousal support, disability or VA benefits, pension, Social Security or other sources
Account statements from the past two months to three months – 401(k)s and/or IRAs, CDs, mutual funds or other investment or retirement vehicles
Driver’s license, Social Security card or other form of ID
2 years of residential history
Down payment gift letter, if applicable

A few caveats…if you are planning on using part-time employment income to qualify, you will need to have had that job for 2+ years.

Secondly, if you are commissioned or are using bonus income for qualification purposes, you will need to show a 2 year history of receiving those.

Self Employed Borrowers

If you are considered self-employed (or a 25% or more owner of any company from which you derive income), here’s what else will be required, in addition to the list above:

2 years Federal tax returns, business and personal
Year-to-date profit and loss
Copy of business license

A few other consideration for self-employed borrowers…lenders will require that you’ve been in business for yourself for 2 years, minimum.

Also, qualification income will be based on net profit from your tax returns, not gross sales receipts.

Investment Property/2^nd Home Buyers

If you already own a home and are looking to purchase an investment property, your lender will require a few more things:

Schedule of Real Estate Owned – information about the home’s value, occupancy status and purpose, as well as the property’s monthly expenses. You will also need to provide information about your current mortgage, including the lender’s name and account number, loan type, monthly payment amount, outstanding balance and credit limit.
The Schedule E from your 1040 tax return that shows owned properties that are currently rented.
Any investment properties that do not show on your Schedule E will require a copy of the lease of that property.
If you are moving to a new primary residence and will be leasing the home you are in now, the lender will require a signed lease agreement AND a copy of the deposited first month’s rent and security deposit.

Why So Much Documentation?

In today’s regulatory environment, the paperwork requirements can seem quite intrusive.

It seems like they need to know everything about you, including your blood type!

Many of today’s buyers are told by friends and family that the process was much, much easier when they bought their home ten to twenty years ago…and they were right!

There is one main reason that the loan process is much more burdensome for today’s buyer than in prior years…

It’s that the federal government has set new guidelines that now demand that lenders prove beyond a doubt that borrowers are capable of paying the mortgage regularly.

During the run-up to the housing crisis years ago, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home, so new protections were put in place to make sure this can’t happen again.

In Conclusion

Although the process can be cumbersome, if you partner with the right lender, things should work out just fine. Do reach out to me, as it would be my pleasure to be your “Lending Coach” through the purchase process.

Dave Ramsey | Spot-On Regarding Housing

April 8, 2024 / Tom Bonetto

Many know Dave Ramsey from his radio show and his w ebsite where he offers some of the best financial advice around.

Recently, he took a bit of a ‘victory lap’ regarding his real estate market predictions.

Relatively steady home prices, despite higher interest rates, seem to have vindicated Ramsey’s bet. “You were wrong!” he said of his critics, adding, “I freaking know what I’m talking about.”

No Housing “Bubble” – Appreciation to Continue

When the Federal Reserve started raising interest rates in 2022, many were concerned that higher borrowing costs would reduce home sales and prices.

However, Ramsey claims he was skeptical of these concerns and was instead expecting home prices to remain steady or rise modestly. His thesis was based on simple supply-demand dynamics.

“When there is a shortage of an item … prices go up,” he said. “That’s basic economics.”

This theory seems to be vindicated by a report from the National Association of Realtors. Home prices climbed 5.7% over the past year as of February, with the median American home being worth $384,500.

Dave’s Latest Prediction

“Prices will go up,” Ramsey predicts. “This is what’s happening with real estate. I promise you, you can look up this [episode] five years from now and you’re going to go ‘god, that old fart was right again.’”

As for interest rates, Ramsey doesn’t make a firm prediction but advises buyers to focus on prices instead and refinance when borrowing rates go down.

“Marry the house, date the rate,” he said.

Who Is Dave Ramsey

Ramsey also makes efforts to educate people on the ways of using monetary resources judiciously, through his ‘F inancial Peace University,’ speaking in churches and community centers.

Ramsey advises everyone to follow his prime mantra, “Avoid debt at all costs.”

Dave’s 7 “Baby Steps”

One of Dave Ramsey’s financial literacy campaigns features seven “baby steps” that individuals and households should pursue in order to gain financial freedom. Each step should proceed when the previous one has been completed or is near completion. These include:

Establish an emergency savings fund of at least $1,000
Pay off all non-housing debts ASAP starting with those with the smallest outstanding balances (known as the debt snowball method)
Increase your emergency fund to 3-6 months’ income
Invest 15% or more of your gross monthly income into a retirement account like a 401(k) or IRA
Start college funds (if you have children) in qualified accounts like 592 plans and ESAs
Pay off your mortgage as early as possible
Build wealth

In Conclusion

If buyers are waiting to purchase thinking that home prices are going to move lower, that is most likely a bad idea. Instead, Ma rry the House but Date the Rate – purchase today and gain appreciation and refinance later if rates go down. Reach out to me for more, as it would be my pleasure to put a home-purchase plan in place!

Special Round-Table Podcast | The State of Today’s Real Estate Market

March 18, 2024 / Tom Bonetto

I was invited to join a panel of industry experts and discuss the state of today’s real estate market.

We discuss the industry challenges, mortgage rates, and have some thoughts about what might happen in the future, as well.

Here’s the link:

Do check it out, as I think you will gain a few insights and enjoy it!

Owning vs. Renting | The Hard Facts

March 4, 2024 / Tom Bonetto

Imagine turning your monthly expenses into a growing investment, something that could multiply your net worth exponentially.

Not a lot of people know this, but the average homeowner’s net worth is 40 times that of a renter.

Owning a home offers numerous advantages over renting, making it a seriously smarter long-term financial decision for many.

Building Equity

Firstly, homeownership builds equity, whereas renting does not. Each mortgage payment contributes to ownership of the property, gradually increasing the homeowner’s stake in the home.

Over time, this equity can be leveraged for various purposes, such as home improvements, education expenses, or retirement funding.

In contrast, renting provides no return on investment, with monthly payments essentially going towards the landlord’s profit.

Stability and Security

Secondly, owning a home provides homeowners with fantastic stability and security.

Renters, on the other hand, are subject to the whims of landlords and rental market fluctuations, with the risk of rent increases, lease terminations, or changes in rental terms.

Homeownership offers predictability and control over housing costs, particularly with a fixed-rate mortgage where monthly payments remain constant over the loan term.

Furthermore, homeownership helps people to establish roots within a community and create a space that reflects their personal preferences and lifestyle.

Tax Benefits

Another serious advantage of owning a home is the potential for tax benefits.

Homeowners can deduct mortgage interest, property taxes, and certain home-related expenses from their taxable income, reducing their overall tax burden.

Renters do not enjoy these tax advantages, missing out on opportunities to reduce their tax liabilities through housing-related deductions.

Building Long-Term Wealth

Finally, homeownership provides a unique pathway to long-term wealth accumulation and financial security. As mentioned earlier, the average homeowner’s net worth is 40 times that of a renter!

Real estate historically appreciates in value over time, building equity and wealth for homeowners. More on that here…

For example, Case-Shiller recently reported that home prices rose 5.5% last year, with national home values 46% higher since 2019! And prices are forecasted to rise this year due to ongoing high demand and tight supply.

In contrast, renting does not offer the opportunity to build wealth through property appreciation, leaving renters without a tangible asset to show for their housing expenses.

In Conclusion

Switching from renter to homeowner is simpler than you might think. It’s a strategic move towards securing your financial future, as owning a home offers numerous advantages over renting!

Do reach out to me for more, as it would be my pleasure to help you put together a plan to become a homeowner as well as long-term wealth-building strategy.

Category: Housing Market (Page 8 of 40)

Do You Need a Real Estate Agent When Buying New Construction?