Mortgages

Hidden Mortgage Costs to Check for in Maryland

Selling your house is easy since we buy houses for cash in Maryland. However, the stress of buying a home is widely considered one of the biggest stresses for anyone. Considering that for most people it is the most expensive thing they will ever buy, this is not surprising. Ensure you’re are aware of all the hidden costs involved.

Home Inspections

The offer is accepted, in your mind you have already moved in and planned which room will be the nursery or which color you will paint the living room walls. But before you can even think about that, you will need to schedule an inspection, depending on how thorough you want to be (and since it is such a big commitment we would recommend that you get as thorough as you can). You could go for a general inspection but can also stretch to a termite inspection, which will give you a good indicator of the condition of the property. The timeline can depend on if you are selling your house fast. These can cost a few hundred dollars and of course with each added inspection, the cost will rise – it could end up helping you dodge a bullet.

Although not compulsory it is advisable to do so, you can request to see any reports that may have caused a previous buyer to pull out but this is only legally binding in some states.

Closing

Once you have had an accepted offer, whoever you arrange your mortgage through should be able to provide you with a breakdown of the costs that are coming your way. These can include lenders fees can range from admin fees to the transfer of funds. Appraisals can cost you a few hundred dollars so don’t be surprised by this. Depending on state there can be a government filing fee, notary fee and any other fees that come with transferring the deeds.

Post Sale

There are still costs to consider that you may not have had previously if this is your first home. Even for those exchanging on their next mortgage these costs will still have to be factored into your budget. Obviously your monthly payment is your biggest cost, but you will also need to pay taxes and insurance. Mortgage insurance is often applicable if your deposit is below 20% so check for this – it can be up to 1% of your loan. The area you live in and value of your property will determine just what you will pay for insurance.

Repairs

Now that you own the property, the upkeep and maintenance is your responsibility – burst pipe, you can no longer call your landlord, boiler breaks – it hits your pocket. It is best to not enter into a mortgage that will choke you of all your funds. Keep a safety net aside and not just for aesthetic work.

So, you have been warned, the cost of buying a house was always going to be more than the price of the property – of course there is also the interest added but this should be something you are expecting. The best thing you can do to protect yourself against an unwanted surprise is ensure you have saved over what you think you need.

Remember, if you need to sell your house, we buy houses for cash in Maryland.

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Home Improvement, Renovations

Adding Tile to Your Home Can Improve Sale Value

If you are looking to make improvements to your home or want to add something to help sell your home fast, replacing or adding tile can be a welcomed project to any home. Not only is it cost effective, but it is also not overly time consuming and you can save even more time by hiring the help or an expert.

The smallest of imperfections can ruin any tiling project so you want to make sure you hire someone who can get the job done properly. A lot of the time the store you purchase the tiles from can recommend professionals in your area to help, or at least are aware of which you should avoid.

You can get a good deal from a carpenter or other building or renovation expert that does not specialize in tiling, but if you want to ensure the job is done right so you can sell your home fast, it is best to use the services of a true tiler.

When you initially contact the tiler, it is good practice to find out how long they have been in business, anything over 3 years is always a good sign, references should be requested and checked to vouch for the quality of work. Whilst pictures of completed work are always a good place to start, viewing the work in person is a good idea, although not always easy to achieve.

In order to get the best deal, you want to interview more than one tiler and get multiple quotes, if they are way out of your budget, don’t waste your time and move on to the quotes within your range. Make sure you let the tiler know you have a few offers so they know the need to give you a realistic bid.

If you really want to go with one person but they are quoting you too high beyond your budget, ask the workman if they can think of any way they can bring the price down through cutting the cost – he might recommend you change the tiles you intend to use to a good standard of tile that doesn’t cost quite as much, he might appreciate your involving him in your plans for the project.

One way of reducing the cost is by getting hands on yourself. Maybe you can cut the cost of paid labor by doing part of it yourself, ask the advice of your tiler for any way he can recommend if necessary.

There are many ways you can get a good deal through a tradesperson, remember that the initial quote is not always final and can often be negotiated. A few small ways of saving money can all add up and help you sell your home fast.

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Investing, Rentals

Airbnb vs. Traditional Rental. What Makes Sense for Your Property?

So you have a decision to make on your empty property: are you going to try and make money from renting it out to tenants on a contracted rental basis (traditional rental property), or can you put it on Airbnb and make more money that way? There are benefits to both, but which is better?

Your Time

Firstly with Airbnb, you or someone representing you will have to constantly be back and forth between the property. Whether it is letting new tenants in or clearing up once they have left. If you are not doing this you will need to oversee it so the condition of the property is always left in a good condition for the next visitors. There is also the fact that you will have to constantly check Airbnb and may need to answer questions, you could find yourself at the mercy of the app. With traditional renting you have the chance to speak to your potential tenants, sign a contract and once they are in you will only need to visit the property when a problem arises; you may even do it through an agency, although this can cost you it will also save you time. You will only have to visit the rental property or speak to tenants in the event of something that needs addressing.

Money

Airbnb is a good way of making more money from your property. You might get $1000 a month from renting your property to tenants as a traditional rental property. But if you were able to charge $100 a night for your home on Airbnb, your property would only need to be used for more than 10 nights to make more money, and if you managed to fill near on 3 weeks of the 4 in a month you would make around $2000. With traditional rental properties however, your $1000 is steady income every month, whereas you don’t know if anyone is guaranteed to book through Airbnb, unless you are in a desirable location. The money you make on Airbnb also has to be spent on the utility bills, whereas in traditional renting this is covered. You need to weigh which is the most profitable option depending on the cost of utilities in your area.

Flexibility

With Airbnb you are flexible not only on the rate that you charge but also on the amount your rent your place out. If it is in a location you like to visit, you can use your property at the times it is not rented. You can also change your terms and conditions at any point to suit you.

Occupancy

It will be appealing for most to know that their property is occupied, and they do not have to constantly find tenants. That is why a traditional rental property is the favorable option for many. The competition on Airbnb alone can make it challenging for many to make the money they desire. The problem with tenants in a traditional rental property is the fact that if you have difficult tenants, you might be stuck with them for a long time. The other side of this is Airbnb might leave you with some good, some bad every month.

These are all the elements you will need to weigh up when deciding what to do. It depends on the sort of person you are, if you want to leave the property alone and know your income is constant then traditional might be the way for you to rent your property. Maybe you’re more of a people person, or will be ok with the demands of renting your property out on Airbnb, the pros and cons are there for all to see.

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Rentals

Free Lease Agreement Template

So you’ve bought your first rental property. You spent months of researching homes, crunching numbers for positive cash flow, visiting homes on the market, calling realtors, negotiating with loan officers, considering property management companies, reading countless rental property tips blogs, etc. The process was tough, but you’ve made it to the next phase: landing your first tenants.

After positing rental listings on Craigslist and Zillow, you’ve found some potential rental property tenants. You then realize: I don’t have a lease agreement! Real estate laws are complicated and vary from state to state and county to county. You don’t have the money to hire an expensive contract lawyer.

Don’t fret! 8 Day Home Sale has put together a Lease Agreement template. While this lease agreement template is tailored for Maryland, it is generic enough to apply to most states/counties. In addition to establishing a standard rental contract based on monthly payments between the landlord and seller, the lease agreement:

  • Enables the landlord to require a security deposit
  • Protects the landlord from liabilities i.e. breaking of local laws
  • Prohibits unsafe activities i.e. smoking
  • Absolves the landlord of appliance maintenance responsibilities

The lease agreement can be easily modified and clearly marks where details need to be filled in. The rental agreement template is available for download as a docx and pdf.

Download: .docx or .pdf

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For Sale by Owner, Realtors

How to Sell Your Home without a Realtor

The time has come. You have made all of the necessary upgrades, from the new granite countertop to the more visually appealing shower tile in the bathroom. You’ve planted some new flowers to maximize curb appeal, and that clutter that you once had in several rooms is now neatly stored away for another time and place. Now, it’s time to put your home up for sale on the market. Save your hard earned cash by not giving an up to 7 percent commission to real estate agents and their firms, giving you more funds to spend on your new house. Sell your home without a realtor! Here are some tips you can use when you put your home up on the market without having to go through a real-estate agency:

Set your sell price.

Do your research. See what other homes with your size, age and other specifications are going for in your area. Scour the Internet and local listing magazines to establish your price. It’s vital to be realistic during this step. If you ask for too much or too little, you could end up selling your home for less than its worth or waiting a long period of time for your home to sell. This is when you will also decide how you want to accept payments, whether it is direct cash, land agreement, loan, etc. You will also want to think about laws in your area and what you will do during the later negotiation phase of the process.

List your home on the MLS.

The Multiple Listing Service, or MLS, is an extensive guide to all real estate for sale in the United States. If you go through a real estate agency, a realtor will usually do this step for you; however, as an individual seller, you can pay a flat fee of $400 to list your home.

Get the word out about your house.

If no one knows your home is for sale, your research and listing will be in vain. Put up “For Sale” signs in the front yard, leave brochures in key locations within your area, place online ads on Craigslist and in your newspaper and more. Creating a website with your home’s description, photos and other information is also a good advertising tactic when selling your own home. Take some time to really think about what makes your home unique, and highlight those features on your website and other collateral materials.

Host an open house.

This can really work in your favor if it’s done correctly. Before hosting the open house, make sure your home is deeply cleaned, from the floors to ceiling. Scrub the kitchen counters and appliances, clean the bathroom grout, shampoo the carpets… anything you can think of. Make your home comfortable without adding too much of your personal touches. Keep your personal effects tucked away when hosting the open house. The open house is a perfect opportunity to advertise your home and its key features.

We’ll be writing more articles in the future about selling your home without a realtor. Remember, 8 Day Home Sale will buy your home directly without a realtor in 8 days or less.

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Mortgages

How to Refinance Your Home

When it’s time to refinance your home, understanding where to start and the exact steps to take can be daunting. If you’re unsure how to refinance your home, it can be tempting to pick the first action plan and end up paying for longer than you need to just to get a lower payment. Going into the process of refinancing fully prepared will keep your confident with what you want and help you make sure that your refinancing fits your goals while staying manageable for your income.

Your goal in refinancing should be to either shorten or maintain the current term of your home loan, while also lowering the rate of your interest. For example, stay you start out with a loan of $200,000 and an fixed rate of 6%, to be paid off over 20 years. The goal of refinancing is to switch out those terms, and come up with something better. For example, the goal of the refinancing would be the same, $200,000 loan, but with a fixed rate of 4% to be paid off over 10 years.

When you get ready to refinance your home, make sure that you know what your credit score is. If your credit score is a little on the low side, you may want to wait to refinance. The better your credit score is, the lower your interest rates will be when you refinance your home.

Before going in, you’ll need to know your home’s current value. Websites like Zillow are perfect for this. For example, you can search the average home value in any county. Take Prince George’s County in Maryland. You can see here the average home value in Prince George’s County. You can do this for any county that you live in. You can see the average rates for other counties, like Anne Arundel County and Baltimore County. This is a good resource, no matter where you live. Once you know your home’s current value, you can start searching for the mortgage rate that will best suite you. You can do this easily online.

Make sure you have all of the necessary documents and paperwork. Even though it can be a time consuming process, you’ll be glad that you put in the effort. Gather up your bank statements, W2s, and check stubs so that you have everything on hand that your lender might need when it comes time to getting your new interest rate.

Remember: refinancing your home can include an array of upfront costs, such as application fees, fees to process documents, and even a charge to run your credit report. Make sure you have the money set aside for the cost of beginning to refinance your home, not just the money you’ll need to start making payments. You’ll also want to make sure you have money set aside for closing costs. Once you’ve decided and settled, you’ll likely need to pay for even more costs at the end of the experience as well.

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Realtors

Real Estate Agents Should be Chosen Wisely

Your home is more than the place you raised your family, it is also one of the largest investments you own.  When it is time to sell you deserve the best return possible, but is a real estate agent worth those huge commissions?  For the right one – yes!

So does that mean you need to pay 7% commissions to an agent?  Not if you pick carefully.  Commissions are negotiable, but sometimes lower fees can mean less service as well. Are they willing to accept a flat fee versus a commission?  Will they reduce their rate if you conduct your own open houses?

Treat hiring a real estate agent like any other job interview.  No matter what market you live in, there are lots of agents competing for your business.  Interview at least three or four as you would for any contractor.  Before you meet with them, review the quality of their current listings and call some owners from their recent sales. Review the time on market for their listings, and the percentage of selling price compared to the listing price.

All agents will offer some of the basic services, but what more will they do for you?  Have them describe their marketing plan.  How will they provide maximum exposure for your property?   They need to be more creative than simply listing on MLS.  Will they assist in staging your home? Do they use professional photographers?  How many websites, and other advertising mediums will they use?  How many open houses will they conduct? Will your home be a priority over their other listings?

The first item on a real estate agent’s agenda is the appraisal.  It is often tempting to sign on with the agent who promises you the highest listing price, but is their valuation realistic in your market?  Have them show you comparable listings and recent sales in your marketplace.  How knowledgeable are they about those listings?  Can they accurately compare the features of those homes versus yours?

The worst thing an agent can do for you is to overprice your house. In these instances, the house doesn’t sell, so you lower the price.  Now it has been on the market longer than desired and people will think either there is something wrong with your house, or you will be open to a lowball offer.  In this way overpricing may ultimately lead to a lower sale price!

Time spent in carefully selecting your agent will always be a good investment.

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Mortgages

7 Smart Tips for Finding the Right Mortgage Company

Your home is probably the largest purchase you will make — and you will do it with debt.

A mortgage is a loan used to buy property. Because it’s for such a large amount, you want to make sure you’re getting the best mortgage rate and working with a lender that offers the best possible terms.

Before you apply for a mortgage, do a little shopping around to see if you can find a mortgage company that fits your needs and can work with your situation. Here’s how to get a mortgage loan with the right lender for you.

1. Understand your credit situation

Your credit is the most important factor lenders will consider, and some lenders won’t work with you unless you have a certain credit score. Before you start the mortgage process, it helps to know where you stand.

You might discover that you need to work with a mortgage company that accepts alternative credit reporting. Perhaps you need to focus on a lender that offers FHA loans because your credit score is too low for a conventional mortgage.

Be realistic about what to expect based on your credit score, and plan accordingly.

2. Don’t forget community banks and credit unions

Too often, we go right to the “big guys.” However, a lot of community banks and credit unions are willing to work with you. These smaller institutions sometimes service their own mortgage portfolios instead of selling them to bigger banks or investors.

As you shop around for the best mortgage, don’t neglect the local players. You might be surprised at what they can do for you, especially if you have taken the time to build good credit.

3. Look online for a mortgage company

The internet offers unlimited possibilities when it comes to information, products, and services. When I bought my house several years ago, I went through a broker at a local community bank. I was wary of using the internet for such a big transaction.

Today, the internet is a secure place to find a mortgage lender. You can visit an aggregator, share your information, and receive several quotes back. It makes it easy to compare your interest rate options and see other terms.

Even though I was reluctant to use the internet when I bought my home, I changed my tune a few years later when it was time to refinance. My refinance was handled almost entirely over the internet after I found the right solution in an online mortgage.

4. Compare mortgage rates and terms from several companies

You shop around for the best price on a TV. Why wouldn’t you shop around for the best rate on something worth 100 times more than your TV?

Get some quotes for an online mortgage, then bring that information to two or three lenders in your hometown. In some cases, local lenders can meet or even beat what you see online. If you’re interested in more personal service and dealing with large numbers in person, this is a good way to try to get the best terms.

5. Look for a lender that understands your situation

As you compare mortgage companies, find out they have the right options for your situation. If you have a low down payment, for example, you have different needs from someone who can put 20 percent down.

Be upfront about your situation and your challenges. Ask potential lenders questions about your financial situation, and what they can do for you. See how knowledgeable they are about programs specifically designed to help your circumstances, whether you are a first-time homebuyer or someone with an unconventional credit situation.

6. Ask a lot of questions and read the fine print

Take a close look at the mortgage company and what they expect. Find out about any fine print, and ask a lot of questions.

Many of us don’t like to look as though we don’t know what we’re doing. However, if you don’t know what you’re doing as a borrower, it could be extremely costly down the road.

Don’t be embarrassed to ask questions. If someone makes you feel stupid because of what you’re asking, they aren’t the right lender for you. Look for someone patient and willing to explain.

Clarify any terms you don’t understand. Also, find out if the lender requires an “earnest money” payment before starting — and if the lender keeps that money even if the loan doesn’t go through. (Hint: If they are vague about what happens to the earnest money, or if they keep it, consider going elsewhere.)

7. Make sure to compare apples to apples

As you shop around for a mortgage lender, be sure you are comparing apples to apples.

Match up interest rates and other terms, and make sure that your quote for interest rates are on the same types of loans. It’s not uncommon for a newbie to look at a 15-year variable rate from one lender and not realize they are comparing it to a 30-year fixed from another lender.

Be clear about matching up the types of loans available. Go in with some idea of what you want, and take notes. Ask for a print-out of the terms that you can take with you and use in your comparison.

Bottom line

The right mortgage company can make a huge difference in your borrowing experience. Whether you get an online mortgage or go the more traditional route, you want a lender that works for you — and offers you the lowest possible rate.

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Foreclosure

5 Ways to Stop Foreclosure in Maryland

If you have missed more than three mortgage payments, or your lender has filed a Notice of Default (NOD), you might think the loss of your home is inevitable. Even at this stage, there are five strategies you can use to stop foreclosure in Maryland.

Foreclosure Workout. Up until the time your home is scheduled for auction, most lenders would rather work out a compromise that would allow you to get back on track with your mortgage than take your home in a foreclosure.

Short Sale. After your lender files an NOD but before they schedule an auction, if you get an offer from a buyer, you lender must consider it. If they foreclose on your home, the lender is going to simply turn around and try to resell it; if you present them with a reasonable short sale offer, they may see it as saving them the time, effort and trouble of finding a qualified buyer in a soft market. So, if your home is on the market, continue to aggressively seek a buyer for it, even after your lender initiates the foreclosure process. Read our guide on How to Sell Your Home Fast When Foreclosure Looms for action steps you can take to unload your home fast, then make your best pitch as to why your lender should agree to the short sale.

Bankruptcy. Bankruptcy stops foreclosure dead in its tracks. Once you file a bankruptcy petition, federal law prohibits any debt collectors, including your mortgage lender, from continuing collection activities. Foreclosure is considered a collection activity, and so the day your lender becomes aware that you have filed for bankruptcy, the foreclosure process will effectively be frozen. But here’s the rub; once you get to court, the bankruptcy trustee’s role is simply to play referee or mediator between you and your creditors. Bankruptcy really just buys you more time to replace your lost job or recover financially from a temporary disability; it doesn’t let you off the hook for your debts. The law requires your mortgage company and other creditors to work in good faith with you to formulate a reasonable repayment plan so you can get back on track. Consult with a bankruptcy attorney regarding whether filing for bankruptcy is a good strategy for you.

Deed in Lieu. A deed in lieu of foreclosure is exactly what it sounds like. The homeowner facing foreclosure signs the deed to the home back over to the bank — voluntarily. This sounds like it would be a great option, but actually has the same impact on a homeowner’s credit that foreclosure does. Lenders are very reluctant to agree to take a home back through a deed in lieu of foreclosure for a number of reasons: They fear the homeowner will sue later alleging they didn’t understand what was happening, the lender must pay any second or third mortgages or home equity lines of credit (HELOCs) off before executing a deed in lieu, and the lender wants to be certain that the borrower’s financial distress is real. Allowing the foreclosure process to proceed is one way the lender can be sure the borrower is not faking poverty.

As such, a deed in lieu of foreclosure is virtually never granted unless: foreclosure is imminent; the owner has had their home on the market for several months and been unable to sell it; there are few or no junior loans or liens the lender will have to pay off; the seller can document their financial hardship; and the seller initiates the process and documents the voluntary nature of their request for a deed in lieu. Even when all these factors are present, many lenders will not agree to a deed in lieu, but it is worth a try!

Assumption/Lease-Option. Most loans these days are no longer assumable. The average mortgage now contains a “due on sale” clause by which the borrower agrees to pay the loan off entirely if and when they transfer the property. However, if you are facing foreclosure, you might be able to persuade your lender to modify your loan, delete this clause and allow another buyer to assume your loan. The lender may want to assess the new buyer’s qualifications, but it can be a win-win-win option for all. You might be able to negotiate a down payment from the buyer which you can use to pay off your outstanding past due mortgage balance.

In a lease-option scenario, the buyer becomes your tenant, and you continue owning the property until the buyer has saved enough down payment money, improved their credit sufficiently or sold their other home. In some situations, the buyer will make a one-time, lump option payment upfront, paying you to obtain the option to purchase your home. You can apply the option payment to bringing your mortgage current. Then, the buyer will make lease payments monthly which you, the seller, then apply to your mortgage. To successfully use a lease-option to stop the foreclosure process, you must negotiate lease payments that cover most or all of your mortgage payment, property tax and insurance obligations — enough that you can make up any difference and still pay to live somewhere else.

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