Why should I get pre-qualified now?

So you've seen that the real estate market is 'back' and it seems like everyone is thinking about purchasing a new or another home.  With prices increasing, it is the time to start the process if you want to purchase in the next year or so.  Many people don't realize that while you may not be ready to purchase right now, this is the time when you need to start the process so when you are ready, you will have a smooth process without surprises.  Here are six reasons why you should apply for a mortgage even if you don't plan on buying until 2015:

1. MAX SALES PRICE.  You need to determine your maximum sales price based on your income and current debt payments.  This number will tell you how much house you can buy.  This gives you a cap to use when you are online browsing homes and neighborhoods and to set realistic expectations. If your max is near the minimum sales price for an area and prices are increasing, you will likely be priced out of that area so you'll need to focus on some backup areas to move to in 2015.

2. HOA FEES.  Annual association dues are not as big of a concern on single family homes as they impact you more on townhomes/condos with monthly HOA dues.  Even though these fees are not a part of your mortgage payment, you lender treats them like they are and count them against your debt-to-income ratio.  So you may find the right property in the sales price range you want BUT if the monthly HOA fees are too high, you will not be able to qualify even though you qualify on the mortgage alone.

3. PROPERTY TAXES.  These affect single family homes more than they do condos and are more of a factor in Dekalb and Fulton County.  Your annual tax bill is amortized into your mortgage payment so it can greatly increase the payment and cause you not to qualify. A good loan officer will recognize this and give you a cap on where the taxes need to be assuming you stay within the sales price range and have a decent price on hazard insurance--which is also amortized into the mortgage payment.

4.TYPE OF LOAN.  Your basic loan types are FHA and Conventional loans.  FHA loans require 3.5% down and Conventional 5% or more (usually 10%).  FHA loans have standards that the property must pass in order to qualify for financing.  Mainly, the home cannot exceed $5,000 in lender required repairs.  This is crucial to know when assessing properties that need repairs in order to be occupied.  With condos, you must ensure the community is FHA approved which many are not due to a multitude of reasons.  Knowing if you're using an FHA loan up front will allow you to filter out homes that cannot qualify and save you time, money, and headache!

5. LOCATION.  Based on the results of your pre-qualification, you will be able to determine what areas of town you can move to.  Your ideal areas may be out of your price range or may not have enough inventory of homes that qualify for your financing criteria.  While it is important to know where you want to move to, getting pre-qualified will determine where you can move to.  If you require down payment assistance, you'll want to know what areas are eligible and/or what counties offer programs that you can qualify for.

6. TASTE FITS THE BUDGET.  Once you've analyzed where you are loan wise, you can determine if your wish list matches up with your budget.  In other words, if you can afford what you want.  The best process of elimination is to select your top 3 areas, minimum number of bedrooms, and size/style requirements. These are items that cannot be changed.  Other aesthetic items like wood floors, stainless appliances, kitchen islands, etc. are things that can be added later to make the home your own.

I have a full list of the lenders I close loans with; any of them can assist you with starting the process now so you can purchase later!

Home Inspection Top 5

One of the biggest myths about home inspections is that they are required. Home inspections are actually optional but usually recommended for peace of mind for the buyer.  There is a saying among agents (or maybe it's just me) that you can send three inspectors into a house and come back with three totally different reports.  While items each inspector chooses note or omit, there are some basic items that should be unanimous like code violations and safety hazards.  When it comes to cosmetic repairs and maintenance items, some inspectors can create a phone book of 'repairs' that can intimidate some buyers. But no worries, here are the top five things you need to look for in a home inspection

ROOF
   Starting from the top to the bottom a leaking roof can cause immediate damage to studs, rafters, and drywall. That moisture can then breed mold if not remedied.  Roof repairs can be reasonable, but replacing a roof can be extremely expensive.  If a house needs a new roof it is an expense that can be worth walking away from. When a roof has existing issues, there is no guarantee that your hazard insurance company will cover a new roof.

ELECTRICAL
   Outdated electrical systems or those with missing components can become a headache quickly. Older systems may require new breaker boxes & outlets.  Damaged or missing systems could add up to a ton of labor hours for an electrician to troubleshoot and remedy the issue. On top of that, it's an immediate fire hazard so any system with faulty components should be avoided if the owner is not willing to make the necessary repairs.

PLUMBING
   Plumbing issues can be very deceptive as they seem like very simple fixes, but the labor to repair them can get pricey. Broken, buried water lines & septic tanks are the more well-known issues to avoid but not many people know about things like polybutelene pipes which can be a nightmare if they begin to leak. There are home warranty companies like Old Republic & 2-10 Home Warranty that actually cover these systems and companies like Delta Mechanical in Lawrenceville that specialize in overhauls of these systems.  The labor for plumbing is two-sided since you pay for the parts & labor PLUS the expense of a separate contractor to repair the drywall & repaint walls that have to be opened to access the plumbing.

STRUCTURAL
   In my almost 12 years of real estate I haven't seen many homes with a structural problem, but when I did they were immediately evident. In some cases, the entire sections of the house will need to be rebuilt in order to preserve the structural integrity of the home. Sadly, some damage can be irreversible and the only options are to rebuild or temporarily brace the structure as there are not many long term solutions.

FOUNDATION
    While basements are the most popular location of a foundation issue, homes built on a crawl space and even homes on a slab can have foundation problems.  Crawl spaces can uncover an inadequate number of pillars and peeling back the carpet on a ranch may reveal a crack in the slab of the home. Most basement repairs can be done, but the prices can range from $4K to $60K+!!!

Mostly a home inspecting is to give you an unbiased assessment of a properties condition before you purchase it.  It also educates you on the numerous maintenance requirements a house demands along with the consequences if those items are not maintained. You should use your home inspection as a tool to negotiate repairs to be done prior to closing as well as a blueprint to items you need to address once you purchase a home and assume the responsibility for maintaining it.

HOW REAL ESTATE AFFECTS TRAFFIC

     

Metro Atlanta experienced 3"- 4" of snow followed by below freezing temperatures leaving icy roads and combined with a mass exodus of commuters caused a traffic nightmare causing stranded motorists. There was a similar occurrence in 2011 when the area experienced 5"-8" of snow but since it happened on a Sunday night, there were not as many people on the roads and traffic was not as bad.  Metro Atlanta is one of the only metropolitan areas that even if you live in the city, you'll still need a car due to the lack of extensive public bus/rail systems like you would find in Chicago or New York---even though Atlanta is the ninth-largest metro area with a population of about 5.3 million people. This recent turn of events will have some people rethinking where they live as it pertains to their commute and go about their daily activities.  Commercial real estate (mainly retail & office/industrial) and residential real estate are a factor in how these people will assess whether or not to move to a certain area. Let's look at how residential real estate affects infrastructure.
      To make it simple, when people inhabit a new area, as more people move, there roads are built to accommodate traffic & retail shopping built to service them. When new homes, condos, and apartments go up, the impact on traffic in the immediate area is obvious. New lights, turning lanes, or even streets are installed to help ease traffic.  As that area grows, the on-ramps and interstates themselves grow to accommodate the new commuters.  The money to fund these projects come, in part, from property taxes.  When legislation or new taxes are proposed for road projects, voters have the opportunity to vote to have their property taxes increase to pay for these projects. The residents directly influence the traffic by funding or declining taxes/legislation for new infrastructure.
      The Untie Atlanta campaign that was shot down in 2012 which proposed more mass transit and road projects in Fulton County. The recent shutdown of the city is an example of why proposals like this which will increase mass transit are needed.  Improved mass transit (mainly railways) provides an alternate form of transportation in/out of the city as well as means to evacuate when roads are not an option.  The same way the taxes are proposed and can be voted for/against, residents can also attend public hearings to approve/oppose new construction in their area. Enough opposition to a project from residents can deter the construction or allow it to move forward. An example of this is in Dekalb County when in a 5-year period a Wal Mart, a hotel, and a 400+ unit apartment complex were added---all within a 2 mile radius! This caused horrendous conditions to an already heavy commute between Panola and Evans Mill Road.  The most prevalent example of this working was the Gwinnett County SPLOST. It was recently renewed; it's most noticeable projects are the Sugarloaf Parkway extension, the revamping of the I85 / SR-316 junction, and the overpasses on SR-316 which are still under construction. Residents have the power to approve projects that will improve conditions.  If there is no opposition from the residents on negative impact projects, unfavorable commutes can be a reality almost overnight.
      The extension of public transportation systems (especially bus lines) have had tough times getting approval when up for a vote for various reasons.  This appears to the be the only solution to Atlanta's traffic woes; it is one of the ONLY cities where (as a native Bostonian brought to my attention) two major interstates actually MERGE TOGETHER THROUGH THE HEART OF THE CITY!!!  Expressway additions like the outer perimeter and Northern Arc were both snubbed by budgetary constraints, political pressure, and public opposition. The fact that some of the land originally designated for it was sold to housing developers during the real estate boom that peaked & crashed didn't help either.  New express lanes are being used but the fact that they do not have their own on-ramps/exits seem to defeat the purpose if you have to get back into traffic to access/exit them.
      When assessing an area to relocate to you want to take into account and satisfy your 3 main reasons for moving---whatever they may be. You then need to take into account your commute, access to retail, school systems, and taxes (i.e. what you get for your money) if they are not already in your top three!

2014 METRO ATLANTA REAL ESTATE FORECAST PART ONE

   2013 was a huge year in real estate for Metro Atlanta. Not only did we see sales increase all across the board, but the low inventory of homes pushed prices up.  There are three areas that you will see all around you this year as signs that the housing market is growing stronger.  I wouldn't say it's 'back' simply because it's been back for over two years now. News flash, the market rebounded in 2011! Let's look at 3 key areas: new construction, traditional sales, and foreclosures/short sales.
   The low inventory of homes in high-demand areas spawned a new construction boom that will catapult 2014.  All through Gwinnett, Cobb, and Fulton County builders were able to get back to good ol' days of new construction. Decorated model homes, on-site agents, standing inventory with incentives and pre-construction contracts. Extremely high-demand school districts with low resale inventory saw new communities pop up in the $300K+ range. Communities with vacant lots now new have builders constructing comparable homes. In-town areas are seeing undeveloped lots being sold and homes going up starting at $600K.  The benefit?  Everyone likes NEW! The downside?  Well, there are many. In most cases the aesthetics are inferior in quality compared to the original homes in the first phase(s). In the entry level in-town homes, the kitchens and master bedrooms are more grand but the secondary bedrooms/bathrooms and living spaces have suffered.  In the suburban homes, the interior floor plans have grown, kitchens have become more open, maintenance is also more economical with the removal of the two-story family and some builder moving away from gas utilities.  The short comings are in the appliance packages, standard flooring & fixtures, the exterior brick-front construction, smaller lot sizes, and backyard shrinkage.  Builders have continued the cut backs on items like refrigerators, garage door openers, window screens, alarm systems, shower doors, closet racks, architectural shingle roofing & gutters.  But overall, the trade-offs what what you get for your money being worth it or not, is in the eye of the buyer.  Granted, the housing market in 2014 is very similar to the market 6-8 years ago sparked by the current demand so skimping on those items is still justifiable.  What is not the same is no more shady builders.  With tight reigns still on commercial and builder financing, the only builders you see now are reputable ones who are solid financially; John Weiland, D.R. Horton, Ashton Woods are some names you'll recognize but others like Paran Homes & Almont Homes have numerous communities going up throughout the Metro Atlanta area.
   If you're looking at traditional resale homes, the most important thing (which hasn't changed with the new year) is to determine what the home is worth. Getting a quick Zestimate never hurt anyone, but it's what it says it is, an estimate! The good folks at Zillow actually confirmed this on my fan page a year ago (has it been that long?!?!)  To get the true retail value you need to look at homes that have sold within a 3-6 month period, within a 1-mile radius, similar square footage, age, and interior characteristics as ALL of these play a big part in the value of a home. A zip code change or a school district can drastically affect the value of a home even though it's less than a mile away! Finished basements, square footage, and number of bedrooms/bathrooms are also key so you need access to all of this information to compare, adjust cost, and determine the true value of a property. With that you'll then need to analyze the seller's mortgage position to determine the seller's bottom line and formulate an offer than gets you the best deal that a seller will accept! Sounds easy right? Well it AIN'T!!!! That is what great agents are for!
    Foreclosures and short sales are still big buzz words but both lost steam in 2013. Foreclosures because of the lack of them and short sales because the unemployment rate went down and more people were able to stay in their homes! Good for people, bad for inventory. Fannie Mae, Freddie Mac, and HUD foreclosures are still entering the market consistently, but the bank foreclosures are few and far between.  The trick now is getting your hands on one!  Short sales (sadly) haven't gotten any shorter and they can still take 3-9 months to close. My personal short sale listings average a 4-month turn-around from list to close. I still have some that drag out up to 6 months and hell, I know what I'm doing!
  Purchasing in a sellers market can be a real drag with all of the competition and low selection, but doing your homework up front and creating a strategy makes the difference between you either finding a home and keeping your sanity or driving you crazy and driving you around Atlanta!