For veterans and active military, VA loans are a great way to achieve the dream of homeownership. More than 22 million service members have used these flexible, no down payment loans since 1944.
But when people hear “no down payment,” they often don’t realize they’ll still need some cash on hand to finish the deal.
“Zero down does not mean zero to close,” points out Gwen Chubirko, broker in charge at Genesis Realty Co. in Kannapolis, NC. The good news is that buyers don’t have to go in blindly: Your VA loan-savvy real estate agent will be your ally in helping you estimate the costs you will need throughout the process, no matter where you live.
“Our goal is to save veterans money and get them into a home that they’re happy with,” says Realtor® John Ulrich, broker associate with Illustrated Properties in Manalapan, FL.
While the amount you need to close will vary according to your location and situation, experts say you can usually expect to need about 3% of the purchase price on hand to close.
Want to break it down? Here are some home-buying costs that veterans and active military shouldn’t overlook.
1. Credit report Buyers will often pay this fee, which runs, on average, about $30, to their lender when they first apply for a loan. Be aware that this fee is nonrefundable even if the loan doesn’t close.
2. Earnest money The earnest money deposit is key to the home-buying process. It essentially allows you to put a “hold” on a house while you conduct the inspections and appraisal. Without earnest money, you could theoretically make offers on many homes, essentially taking them off the market until you decided which one you liked best. As the name suggests, it shows that you are earnest about moving forward on the purchase.
“The seller wants that buyer to have some money in the game when they take the house off the market,” Chubirko explains.
Depending on where you live, you can expect to put down anywhere from 1% to even 10% of the home’s purchase price as earnest money. (In some highly competitive markets, buyers are making even larger deposits in an effort to stand out.)
But don’t worry! Whatever you put down for earnest money will go toward your down payment and closing costs as soon as the deal goes through. (If the deal falters, you could lose some or all of your deposit, depending on the reason why the agreement tanks.)
3. Appraisal All VA loans require an appraisal to ensure the property is up to acceptable standards and meets the VA’s Minimum Property Requirements. What does that mean? Well, an appraiser will calculate the square footage, confirm the property is worth the price you’re offering, and that it’s safe, structurally sound, and sanitary. Among other things, the appraiser will check for safe mechanical systems, acceptable roof life, and hazard-free basements and crawl space. VA buyers will often pay for the appraisal upfront, but they may be able to recoup the cost at closing.
4. Home inspection While the appraisal is required, a home inspection is technically optional (except for a pest inspection, which is required in certain states and can cost roughly $50 to $150). But you never want to take a pass on the inspection, unless you’re buying a tear-down (not with a VA loan!).
The home inspection is your all-too-crucial opportunity to uncover any problems with the house before you make it official. It’s also your chance to point out repairs you can ask the seller to make on your behalf (and those repairs could cost much more than the inspection itself, which is going to run about $300 to $500.)
5. Recording fees Recording fees must be paid out of pocket at the time of closing. This is the fee you pay the county to record your mortgage in the public record, and the cost varies from county to county.
6. Real estate transfer taxes These costs vary by state—from none in Indiana, to a $2 flat fee in Arizona, to $2 per each $500 in value in New York. States, counties, and municipalities collect these taxes to transfer the title of the property from the previous owner to the new owner.
7. Title insurance Title insurance protects you (and your lender) in the event there are title issues from previous owners of the home. The average cost of title insurance is around $1,000 per policy, but that amount varies widely from state to state and depends on the price of your home.
8. HOA fees If you buy a home in an area where there is a required homeowners association, you will need to pay the application fee, which is variable depending on the local rules. Then there are your monthly dues. For a typical single-family home, HOA fees can cost homeowners around $200 to $300 per month, although they’ll be lower or much higher depending on the size of your unit and the amenities.
9. Loan origination fees An origination fee is one of several that will make up your closing costs. The VA allows lenders to charge up to 1% of the loan amount to cover origination, processing, and underwriting costs.
The bottom line? While VA loans are a great option for any veteran hoping to buy a house, being prepared before you apply will ensure no surprises throughout the process.
Ready to make a Move?
Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.
One of the hardest parts of selling your home is all the unknowns: Who will buy your place, and for how much? How long will it take? That uncertainty might make you particularly eager to soak up advice from just about anyone who’s willing to share. Problem is, just because your sister or co-worker swear by certain rules that worked for them, it doesn’t mean they’ll be a magic solution for you, too.
Fact is, a lot of the real estate advice circulating out there is outdated, region-specific, or just plain wrong. As proof, check out this list of tips that many home sellers hear … then learn how these words of wisdom don’t always hold water. Let this serve as a reminder that when selling a home, you should take everything you hear with a huge grain of salt.
‘You should always list your home in the spring’
Common knowledge says home-buying season starts in the spring and goes through the fall. Not true, says Melisa Aponte, a real estate agent with the Keyes Group in Miami, FL.
“January is a great listing month,” she points out. “People are back from the holidays and ready to start looking.”
Well, at least in places that don’t have a nasty winter, like Miami. Which makes a larger point about real estate advice in general, Aponte says: Every market is different, and what’s great advice in one area can be terrible advice in another.
Besides, when it comes to deciding when to list a home, there are two sides to the coin. Busier times mean more buyers, but also more sellers and more competition. Listing your home when inventory is low could snag the right buyer quickly. Life is unpredictable, and there will always be buyers looking in the “off season,” too.
‘You’ll find your buyer at an open house’
Open houses are exciting, akin to a debutante ball where your home makes its fresh-faced appearance to scads of suitors all at once. And that’s fine, but don’t expect this to be the venue where you find “the one” who makes an offer. While that can occur, open houses are more like parties, filled with swains who aren’t ready to settle down, says Anita Clark, a real estate agent in Warner Robins, GA. Serious home buyers will more often request a private one-on-one showing instead.
Of course, you don’t want to skip the open house entirely. It’s a great way for people to browse, and hey, you never know. Maybe your looky-loo neighbor has a family member who would love to buy your place after all. But it’s time to let go of the idea that an open house is a key step on the road to your ultimate buyer.
‘You can save money by paying less in commission’
Reluctant to fork over the 6% commission that real estate agents typically request to sell your home? Sure, that may seem like a lot of money, but what you might not realize is just how much work an agent does behind the scenes.
“A lot of people don’t understand that an agent’s job is more than just listing the home on the MLS,” says Aponte. Agents’ commissions pay for their time and for marketing materials. Posters, flyers, broker open houses, and yard signs all come from the money you pay your agent.
But beyond that, “it gives your agent the power to offer money to other agents who have qualified buyers,” she explains. That’s because the buyer’s agent and the seller’s agent split the commission.
Though in an ideal world, buyers’ agents would show them every property in their price range, regardless of commission, unfortunately it doesn’t always work that way, says Aponte.
“So if there are a lot of properties on the market and you’re only offering 2% commission, there are agents who won’t show that property,” she says.
Ultimately, you get what you pay for, and a higher commission can often justify itself in the sense that you can reel in tons of buyers, and (hopefully) spark a bidding war that’ll fetch top dollar.
‘Price your home high—and hold out for a buyer who’ll pay it’
Of course you want to get the most you can for your property. Still, pricing it sky-high and hoping a gullible buyer will fall for this aspirational sum? Not a great plan.
“I want to sell your property for a million dollars too, but I would be doing you a disservice to price it that way if the comps are saying $500,000,” says Aponte. Home buyers are highly sensitive to overpaying, and will quickly steer clear. And the longer your house sits on the market, the more buyers will begin to think something’s wrong with it … and lob you a lowball offer.
The best way to avoid this debacle is to price a house right from the start—not too high, not too low—and then seriously consider any offers that roll in, even if they aren’t as great as you’d hoped. To start things off, you can enter your address in a home value estimator to get a ballpark figure of how much your home is worth, then fine-tune that number with an agent’s help.
‘Here’s what the market is going to look like next year…’
Sure, it makes sense that real estate professionals will make educated guesses to help guide buyers’ and sellers’ decision-making. The operative word here is “educated.” Fact is, nobody really knows what the market is going to do; if they did, the housing crash of 2008 would have looked a lot different!
“Beware of ‘future’ predictions that don’t come from a reputable source,” says Dillar Schwartz, a real estate agent in Austin, TX. Sure, your brother-in-law or best friend might be trying to help, but keep in mind that their armchair philosophizing about the future of real estate is just an opinion—nothing more.
Ready to make a Move?
Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.
Home sellers often hear that if they ever hope to find a buyer, they must whip their house into perfect shape—fix this, paint that, overhaul your horribly outdated kitchen. But just looking at the list of renovations is exhausting!
This leads many to wonder: Do I really need to do all that just to sell my home?
If that’s how you feel, here’s some good news: There actually are some good reasons—meaning reasons other than sheer laziness or lack of budget—to not bother renovating before you sell. Really.
Your rock during emotional moments. A home is so much more than four walls and a roof. And for most people, property represents the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you stay focused on the issues most important to you.
Surprised or secretly relieved? Here’s why you should give yourself permission to skip certain upgrades before putting your house on the market.
1. You can’t read your buyers’ minds
Talia McKinney, a licensed real estate salesperson for Nest Seekers International in Brooklyn, NY, once had a seller who updated her kitchen floors and countertops and splurged on high-end, stainless-steel appliances in the hopes of getting more money for her sale.
Unfortunately, “the buyer who got into contract wanted a different color floor, different countertops, and black matte appliances. They basically wanted to rip out and change everything my seller just renovated,” says McKinney.
The moral of this story: Don’t assume you know what can drive a potential sale.
“When a buyer comes into a home, they have a vision of what they want. Just because something is new and renovated doesn’t mean they’ll pay a premium on that,” McKinney says. “Leave the property as is or do minor touch-ups rather than put a lot of money into upgrades.”
2. Renovate on the cheap, and it’ll show
It’ll make a difference all right—but not for the reason you may think.
“Every time I walk with a buyer through a home that has laminate floors, Home Depot light fixtures and vanities, or cheap cabinets, there is a visceral disappointment factor—an ‘Add that to the list of things I need to budget for once we close,'” admits Courtney Poulos, broker-owner of ACME Real Estate in Los Angeles.
“Rarely does the cost of any home renovation increase the value of the property enough to offset the renovation costs, time, and energy,” says Terrie O’Connor, broker and president of Terrie O’Connor Agency, which handles luxury real estate listings in Saddle River, NJ, and other towns.
3. Small upgrades won’t change the house itself
“I have seen instances in which a flipper buys a cute, little house that needs work, and thinks that just by some painting, tiling, and a new builder-grade kitchen, they can sell the house for two-thirds more than they paid,” says Lori Hoffman-Chlapowski, a licensed real estate broker for William Raveis Real Estate in Chappaqua, NY.
They seldom do, she says. “The house is still small, and buyers are keenly aware when a renovation is cheaply done.”
And so, the property sits on the market. Until, she adds, “the seller can finally find a buyer willing to pay just a bit more than the renovation itself cost.”
4. Taking the DIY route might make things worse
Jose Hernandez, a real estate consultant in Chicago, once had sellers forgo professional contractors and redo bathrooms themselves to save money.
“But while the tile and vanity were new, it was all improperly installed,” he remembers.
Cheap repairs don’t add value, Hernandez cautions. Rather, “sometimes they negatively affect the value because the buyer sees it as another project that has to be redone.”
5. You might end up going overboard
First, you fix the floor. Then you realize the kitchen cabinets need to be replaced. And the countertops. And the sink. And, hell, you might as well do the appliances, too. Once you start fiddling with stuff in your kitchen (or bathroom, or any other room of your house), you may realize you keep finding more and more stuff that needs to be (cheaply and quickly) redone.
“I’ve seen plenty of clients overspend or design too specifically and then net less money than they would have if they had just sold the home in its prerenovation condition,” says Mark Cianciulli, a Realtor and a co-founder of the CREM Group, in Los Angeles.
And while a full renovation can return you a lot of money when you sell, there’s no guarantee. And by the way, did you really mean to do a full renovation?
What you should do instead
Want to get your house ready to sell without going overboard? Here’s how to tread that fine line.
Take care of major problems: First things first, “fix any maintenance issues that might prevent a future buyer from getting financing,” says Amine Aghzafi, managing partner and real estate agent with the Sheehan Agency, in Jupiter, FL.
If your roof, water heater, or plumbing are ancient, consider replacing those items before they cause issues at inspection time.
Not sure of your home’s problem areas? “Consider having a presale inspection before putting the house on the market,” says Aghzafi. “This will bring to light any major points that need addressing and help prioritize costs if your budget is limited.”
Go for truly easy DIY upgrades: Swap out old light fixtures, switch out new handles on your kitchen cabinets, and paint the trim in your home to instantly improve the contrast with the current paint. These are all “inexpensive upgrades that add significant value to your home and will cost a fraction of a full or partial remodel,” Cianciulli says.
Stage your home: Home stagers systematically pack up your personal items, clear out your clutter, and rearrange (or remove) furniture to optimize your home’s flow. Then they bring in their own gorgeous furniture and accessories.
“The proper furnishings showcase the home’s best features, while drawing attention away from any negatives,” says O’Connor. “It creates a mood for the buyer.”
A staged home will also shine in the online listing, which is crucial.
“Buyers today are getting that big first impression of a property long before they physically see it,” says O’Connor.
Choose a price buyers can live with: “Price your home in a way that allows buyers to accommodate making personal choices,” says Poulos. “Some buyers really want to put their own stamp on their new home.”
Don’t think of this strategy as “giving up.” After all, the faster your home sells, the more money you’ll save in the end.
Ready to make a Move?
Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.
Lenders establish a required “loan to value” or “LTV” for each loan program, even loans that do not require a down payment. The property is the lender’s collateral in the transaction and an independent appraisal will help support the value of the subject property. Private mortgage insurance, or PMI, can be waived if the loan amount reaches a certain LTV. For instance, a conventional loan might require PMI with a 10% down payment but waive the requirement with a down payment of 20% or more. Value is determined by an appraisal.
There are different levels of a property appraisal. A standard, or full appraisal is one where the licensed appraiser does some initial in-office research to identify recent sales of similar properties in the neighborhood. The appraiser will first identify similar properties and record the sales price of each home. After performing this initial research, the appraiser will then make a physical inspection of the home, both on the outside, or the exterior, and the inside of the home. The selected loan amount may set the guidelines for the type of appraisal required or the type of appraisal required will be identified in the “results” of an automated approval.
A full appraisal will require photos of the outside and inside of the home and include these in the report. The appraiser will also take exterior photos of the similar homes chosen by the appraiser. The photos will support the final value of the home. An interior inspection can also impact the final value. Both the interior and exterior of the home must be in good condition and the photos will support that.
On the interior however, two homes that look very similar from the outside might look very different on the inside. One home might have an upgraded kitchen with granite countertops and high end appliances while the other does not. These “adjustments” will be noted in the report. The home with the high end kitchen will have its value adjusted upward due to these improvements.
Another type of appraisal is a desk review. A desk review computes the value of the home by online research only. No physical visit to the property is necessary and all research is done in-house. A desk review typically is the result of a high-equity transaction. For instance, the loan amount requested is $200,000 and recent home sales in the area suggest a $500,000 value. When a loan application is run through an automated underwriting system, the results, or “findings” will indicate the level of an appraisal needed.
A drive-by appraisal includes in-house research as a starting point and then a physical visit to the subject property. A drive-by means the appraiser visits the home, makes note of the condition of the property and takes exterior photos. The appraiser can also take photos of the comparable sales used in the report.
When the findings indicate the type of appraisal needed, an individual lender can make its own guidelines. For instance, even though the findings ask for only a drive-by appraisal, the lender might override that decision and request a full appraisal. On the other hand, a lender can’t do the reverse and only do a drive-by or desk review when the findings ask for a full appraisal. And finally, because there is less work performed with a drive-by, the appraisal fee will be lower than a full appraisal.
Ready to make a Move?
Bardell Real Estate are the experts in helping you with your selling, buying or renting needs near Orlando, Florida. Make your Disney area experience a forever memorable one. Call us now to speak to a real estate agent.
Home sellers often hear that if they ever hope to find a buyer, they must whip their house into perfect shape—fix this, paint that, overhaul your horribly outdated kitchen. But just looking at the list of renovations is exhausting!
