Deidre Pfeifer

Real Estate Agent, California

Understanding the Difference Between a Mortgage Pre-qualification and a Pre-approval

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Understanding the Difference Between a Mortgage Pre-qualification and a Pre-approvalIf you’re in the market for a new home and you’ve been researching mortgages, you’ve likely come across the terms “pre-qualification” and “pre-approval”. While these terms are self-explanatory in some circumstances, they are quite different in regards to mortgage financing.

In today’s blog post we’ll explain the difference between a mortgage pre-qualification and a pre-approval.

Pre-qualification: an Initial Look at Your Mortgage Options

The first – and easiest – step on the way to receiving mortgage financing to buy a home is known as pre-qualification. During this process you’ll meet with a mortgage advisor or lender who will assess your financial history including your current income and any debts that you might have. Using these numbers they’ll perform a quick calculation that suggests how much mortgage financing you might qualify for when you’re ready to buy a home.

Your mortgage professional will also answer any questions that you might have about the process, including what interest rates you may qualify for, how much you’ll need to invest in your down payment and more.

Pre-approval: a Conditional Mortgage Commitment

After you’ve been pre-qualified for your mortgage and you’re ready to start looking for a new home you’ll go through the pre-approval process. At this time your mortgage advisor or lender will take a much deeper look into your current financial situation, including pulling a credit report to assess how much risk they will have in lending you money. You’ll also complete a full mortgage application as this will allow your lender to get a conditional approval for a certain amount or range. Finally you’ll be informed about the interest rate and the terms of the mortgage once you find your new home and complete the purchase.

The Final Step: Finding the Perfect Home

Now that you’ve been pre-approved and have received a conditional commitment from your lender, you’re ready to find that perfect new home. On top of having a better idea of your price range and what you can afford, you’ll find that sellers are far more receptive to your offers as having a pre-approval signals that you’re a serious buyer who is ready to make your move.

When you’re ready to buy your new house or condo, your local mortgage professional is ready to help. Contact them to learn more about pre-qualification, pre-approval and your financing options. Enjoy your new home!

Winter is Here: Prepare Your House with These Three Home Maintenance Tips

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Winter's Coming: Prepare Your House with These Three Home Maintenance TipsHave you prepared your home for the winter? With colder temperatures starting you’ll need to spend an hour or two getting your home ready to deal with the possibility of harsher weather and below-freezing temperatures, depending on where you live. Let’s take a look at a few quick home maintenance tips that will help you get your house ready for the cold of winter.

Check Your Roof, Gutters and Spouts

Your roof is one of the most important structural elements in your home and one that is going face the brunt of any inclement weather that passes through your area. If you feel comfortable on a ladder, climb up and quickly inspect the roof for damage or missing shingles. You’ll also want to clean the gutters and drain spouts, removing leaves and other gunk so that water can flow freely from your roof to the ground.

Drain Your Faucets, Hoses and Irrigation System

If you have exterior faucets and hoses you’ll need to flush out and drain any remaining water before storing them away for the winter. In-ground irrigation systems should have an anti-freezing treatment performed by a professional as freezing can cause a significant amount of damage to pipes and outlets.

Check Your Doors and Windows for Drafts

Leaky windows and doors can cause your heating bill to skyrocket, so spend a few minutes going around the house to inspect seals and frames to see if anything is leaking. Pay close attention to any single-pane windows as leaks can appear over time due to expansion caused by temperature fluctuations. It takes just a few cents worth of caulking to save many dollars in wasted heat.

Store Your A/C and Prep Your Furnace

Finally you’ll want to ensure that your air conditioning unit has been fully shut down and properly stored. If you have an in-ground unit, you’ll also need to cover it to protect it from rain, snow and wind. If you use a furnace to heat your home, be sure to clean or replace its air filter and consider firing the entire system up so you can check the ducts for leaks.

These home maintenance tips will help keep your home in peak condition and prevent damage that can reduce your resale value. If you’re thinking about selling your home, give your local real estate agent a call and they can assist you with getting the process started.

First Time Buyers: Understanding How Property Taxes Work and What You Can Expect to Pay

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First Time Buyers: Understanding How Property Taxes Work and What You Can Expect to PayAre you about to buy a house or condo for the first time? Congratulations! Owning your own piece of real estate is a liberating experience and one that will provide you with the foundation to build your personal wealth and equity. Once you own your own home you’ll be responsible for a variety of new costs, including property taxes which are assessed by your local government to pay for municipal services. In this blog post we’ll share how property taxes work and what you can expect to pay when you buy your new home.

It All Begins with a Local Property Tax Assessment

As mentioned above, local governments assess property taxes as a means for paying for police officers, fire fighting services, road maintenance and the other various costs that come with running a town or city. Whether you’re buying a house, a townhouse or a condo, the property that your home sits on is inside of an area known as an “assessment area”. When the local government determines what your local tax levy or tax rate will be, they will assess your home based on the real estate market value of similar homes in the area. You can multiply your tax rate by the assessed value of your home to determine how much you’ll owe in property tax.

Property Taxes as Part of Your Closing Costs

When you close on your new home you’ll have to pay property taxes, and your real estate agent will help you to understand how much these taxes will be and how they will be paid. In most cities and counties you’ll pay a pro-rated amount of property tax that covers the time span from the date you purchase the home until the end of the year, after which time you’ll be paying your full assessed rate.

Don’t Forget Your Overall Tax Picture

Finally, don’t forget that property taxes can be factored in to the rest of your overall tax picture. Check with your accountant or another financial professional to determine whether or not you can write your property taxes off against your income tax to save some additional money. There are numerous tax benefits to owning a home, so it’s best to start using them from day one.

As with all other taxes, property taxes are a fact of life that every homeowner faces. When you’re ready to buy a new home and to learn more about how property taxes will affect your purchase, contact your local real estate agent today.

Buying an Investment Property? Here’s How You Can Maximize Your Rental Revenue

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Buying an Investment Property? Here's How You Can Maximize Your Rental RevenueWhether you’re buying a ski-in/ski-out condo at your favorite resort or you’re thinking of picking up a small home in a busy tourist area, buying a property for short-term rental purposes can be an excellent investment that quickly begins to provide additional revenue.

Let’s take a quick look at a few steps that you can take to maximize the revenue that your investment properties bring in each month.

Upgrade Your Home to Give It a Luxurious Feel

It should go without saying that if you want your home to rent for a high price it has to have a significant amount of value behind it. After you purchase the home, spend some time on upgrades that help to enhance the home’s beauty and usability. If possible each sofa should be a sofa-bed so that additional guests can stay the night. Upgrade the televisions, have Wi-Fi internet access available and provide a phone number that guests can call if anything goes awry.

Professional Photos and Copywriting

If you’re renting your property out to short-term or vacationing tenants you’re most likely going to use online services like VRBO, HomeAway or AirBnB to attract new business. While these sites have a lot of visitor traffic you’re also going to face a high level of competition from other property owners in the area. It’s worth paying a professional photographer to take pictures of your home as well as having a professional copywriter handle the sales copy for your listing. These are one-time costs that can help you to defeat your competition and close high-ticket clients.

Cater to Large Groups or a Niche Crowd

There are a number of “niche” travelers out there and if you can cater to these groups you’ll find that you’re able to charge more than the average vacation property. For example, you may be buying a home in a popular wedding destination that can be marketed to couples who are being married. If you’re buying a larger 3 or 4 bedroom home, be sure to note that it can house large groups who may be traveling together.

Referrals and Repeat Business

Finally, don’t forget to ask your clients to refer you to their friends and family who many want to stay in your unit, and always invite them to return in the future. You may want to consider offering a discount to repeat visitors to encourage them to visit annually.

Renting out your vacation home or investment property can provide a lucrative income stream as long as you have a professional approach and focus on providing a high level of customer service. When you’re ready to start shopping for the perfect investment properties, contact your local real estate agent.

What’s Ahead For Mortgage Rates This Week – December 1, 2014

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What's Ahead For Mortgage Rates This Week December 1 2014Last week’s scheduled economic events were packed into Tuesday and Wednesday, but several housing-related reports were released including the Case-Shiller National and 10-and 20-City Home Price Indices for September, The FHFA House Price Index also for September, and New and Pending Home Sales for October.

Case-Shiller, FHFA Report Slower Growth in Home Prices

According to Case-Shiller home price indices released Tuesday, the national rate of home price growth has slowed from August’s year-over-year reading of 5.60 percent to September’s reading of 4.90 percent. This was the lowest rate of home price growth in two years and was seen by analysts as a positive development in terms of sustainable price growth.

Double-digit percentage gains in home price growth in 2013 and earlier this year drove many would-be home buyers to the sidelines as narrow inventories of homes caused bidding wars in high-demand areas. 20 cities tracked by Case-Shiller had mixed results, with home prices falling in nine cities, rising in nine cities and prices were unchanged in two cities.

FHFA, the Federal Housing Finance Agency and overseer of Fannie Mae and Freddie Mac, reported year-over-year price growth of 4.30 percent in September against August’s reading of 4.80 percent. Lower price gains for September were expected as the prime period of summer sales wound down. FHFA reports on home prices related to mortgages and properties held by Fannie Mae and Freddie Mac.

Pending and New Home Sales Show Mixed Results

The National Association of Realtors® reported that the Pending Home Sales Index dipped to 104.3 in October as compared to September’s reading of 105.1.Lawrence Yun, chief economist for the National Association of Realtors®, said that lagging wage growth and tight mortgage credit conditions were stalling demand for homes. Pending home sales usually close within two months and serve as a gauge for upcoming home sales and mortgage activity. A reading of 100 for the Pending Home Sales Index is equivalent to pending home sales performance in 2001.

Better news came from the Department of Commerce New Home Sales report for October. New home sales achieved a five month high with a reading of 458,000 new homes sold on a seasonally-adjusted annual basis. October’s reading was 0.70 percent higher than September’s reading of 455,000 new homes sold, but missed analysts’ expectations of 469,000 new homes sold. New home sales increased by 1.80 percent year-over-year with regional rates as follows:

  • Midwest: +15.8 percent

  • Northeast +7.1 percent

  • West -2.7 percent

  • South -1.9 percent

The median price of new homes rose to a record high of $305,000 in October. The supply of new homes rose to a 5.60 month supply from September’s reading of a 5.50 month supply of new homes.

Mortgage Rates Fall or Flat, Jobless Claims Rise

Freddie Mac reported that the average rate for a 30-year fixed rate mortgage fell from 3.99 percent to 3.97 percent; the average rates for 15 year mortgages and 5/1 mortgages were unchanged at 3.17 percent and 3.01 percent respectively. Average discount points were unchanged for all loan types at 0.50 percent.

New Jobless Claims rose to 313,000 last week and surpassed 300,000 for the first time in several weeks. Analysts had expected a seasonally-adjusted reading of 288,000 new jobless claims. Analysts said that a rise in claims could indicate a slower pace in hiring, but said that weekly readings are too volatile to indicate a trend. The four-week average of jobless claims was 294,000 new claims, which was near an eight-year low.

What’s Ahead

Next week’s scheduled economic events include Construction Spending, the Fed’s Beige Book Report, Non-Farm Payrolls and the National Unemployment Rate. Freddie Mac’s PMMS report on mortgage rates and Weekly Jobless claims will also be released as usual.

Buying a Home with a Mortgage? A Quick Guide to Closing Costs and What to Expect

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Buying a Home with a Mortgage? A Quick Guide to Closing Costs and What to ExpectWhether you’re just starting to shop for a new home or you’ve already found the perfect new house and you’re ready to submit an offer, if you’re taking out a mortgage loan to cover some of the home’s purchase price you should be aware of the various closing costs you may encounter.

In today’s blog post we’ll share a quick guide to closing costs and what you can expect to pay when you buy a new home.

What Closing Costs Do Buyers Typically Pay?

As you move forward in the home purchase process you’ll incur a variety of fees that cover document preparation, inspections and other services that are required to fully process your mortgage. Your application and processing fees cover the cost of preparing your loan application and submitting it to your lender. Your credit report fee covers the cost of pulling a credit report which is used to assess your suitability for a mortgage and whether your loan is worth the risk.

You’ll likely pay an appraisal fee as you’ll need a proper appraisal of the home’s value, and you may need to pay a flood certification or survey fee depending on where the home is physically located. Additional fees that you may incur include wire transfer fees, commitment fees, courier fees and private mortgage insurance application fees.

Finally you’ll also encounter a number of closing costs that aren’t directly related to your mortgage, including insurance costs, attorney fees, property taxes, government filing or recording fees and more.

Consider Negotiating with the Seller

It may be worth asking the seller to pay some – or all – of your closing costs, depending on the offer that you’ve submitted and how strong of a negotiating position you’re working from. Trust in your real estate agent’s advice in this regard as you’ll want to avoid spooking the seller by asking them to cover costs that they didn’t anticipate.

As you can see, there are a number of different closing costs that you may encounter when you purchase a new home. An experienced mortgage professional will help you to better understand these costs and can show you areas where you may be able to find some additional savings. 

Case-Shiller Home Prices: Price Growth Slows in September

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CaseShiller Home Prices Price Growth Slows in SeptemberAccording to the Case-Shiller National Home Price Index, annual home price growth slipped to a seasonally-adjusted rate of 4.80 percent in September. This was 0.30 percent lower than August’s year-over-year reading of 5.10 percent.

Cities posting the highest year-over-year gains in home prices were Miami, Florida 10.30 percent, Las Vegas, NV with a gain of 9.10 percent, San Francisco, California posted a gain of 7.90 percent, Dallas home prices gained 7.40 percent and home prices increased by 6.70 percent in Portland, Oregon.

David M. Blitzer, chairman of the S&P Dow Jones Index Committee, said that Florida and the Southeastern region showed sustained strength. Citing gains in builder confidence and housing starts and pre-crisis levels for foreclosures and mortgage defaults, Mr. Blitzer said that the outlook for housing in 2015 should be “stable to slightly better.”

Analysts said that higher inventories of available homes had slowed home price growth. Cooling home prices allow more buyers into the market, which creates a better balance between buyers and sellers. Rapidly increasing home prices in late 2013 through early 2014 forced buyers onto the sidelines as investors and cash buyers drove home prices higher and raised demand for available homes.

Cities Post Incremental Month-to-Month Gains

Case-Shiller’s 10-and 20-City Home Price Indices were 15 and 17 percent below their mid-2006 peaks with 18 of 20 cities tracked showing slower growth in September than in August. Top month-to-month gains were incremental, with Miami, Florida and Charlotte, North Carolina gaining 0.60 percent, Las Vegas, Nevada gained 0.40 percent and Dallas, Texas gained 0.30 percent. Denver, Colorado, Tampa, Florida and Portland, Oregon posted month-to-month gains of 0.20 percent.

Cities posting no month-to-month gain included Los Angeles, California and New York City.

The steepest decline in month-to-month home prices was seen in Washington, D.C. at -0.40 percent., followed by Atlanta, Georgia at -0.30 percent San Francisco, California, Atlanta, Georgia, Chicago, Illinois, Detroit, Michigan and Seattle Washington posted month-to-month declines in home prices of -0.20 percent. San Diego, California and Boston, Massachusetts posted declines in month-to-month home prices of -0.10 percent.

FHFA House Price Index Unchanged in September

The Federal Housing Finance Administration posted no gain on its month-to-month reading for September, although analysts had expected a gain of 0.40 percent from August to September. Year-over-year, FHFA reported a 4.50 percent gain in home prices between the third quarter of 2013 and the same period in 2014.

On a positive note, Seasonally-adjusted home prices for purchase-only transactions rose in 40 of 50 states during the third quarter of 2014. The top five states posting the highest annual home price gains were Nevada, Hawaii, California, North Dakota and Florida.

You Ask, We Answer: Should I Consider a Warranty when Buying a New Home?

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You Ask, We Answer: Should I Consider a Warranty when Buying a New Home?Are you buying a new home? If so, you’ve likely pondered whether or not you should invest in a warranty to protect your investment. In today’s blog post we’ll briefly explore home warranties including some of the pros and cons of buying one and how they differ from homeowner’s insurance.

The Benefits of Buying a Home Warranty

Home warranties are an excellent solution if you’re buying a brand new home which has a lot of new appliances and fixtures inside of it, or if you’re not really the “do it yourself” type and would prefer to make a service call if something inside of your home breaks down.

For example, imagine that you have a home warranty that covers your central air conditioning system and one day it stops working. You simply call the warranty provider to book a service call and as long as the problem falls within the scope of your warranty the repairs are completed without any additional cost to you.

How a Home Warranty Differs from Homeowner’s Insurance

Home warranties and homeowner’s insurance are vastly different but work together to protect your investment. Insurance policies cover your home against unexpected damage – fires, crime, wind storms, water damage and more, depending on your policy. A home warranty tends to cover items inside of the home – the furnace, the plumbing, electrical wiring and appliances – and will provide you with discounts on repairs or replacement should the covered items break down or otherwise stop working.

Cost and Other Home Warranty Downsides

Of course, there are a few downsides to buying a home warranty. You’ll need to pay the up-front purchase cost of the warranty unless you’re buying a brand new home in which the warranty is included. You’ll also find that warranties generally won’t cover a lack of maintenance due to the previous homeowner, which can be a bit of an issue if something breaks down and you find out it’s not going to be covered. Finally you may find that any necessary repairs are actually less costly than the warranty itself.

As you can see, home warranties aren’t the perfect solution for every scenario but if you’re buying a new home they are an option worth considering. For more information about home warranties and how they will affect your purchase, ask your real estate professional as they’ll be able to share their guidance and expertise.

What’s Ahead For Mortgage Rates This Week – November 24, 2014

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Whats Ahead For Mortgage Rates This Week November 24 2014Last week’s scheduled economic news included the NAHB/Wells Fargo Housing Market Index, Housing Starts and Existing Home Sales. FOMC meeting minutes were released along with weekly Freddie Mac mortgage rates and weekly jobless claims.

In addition, the National Association of Realtors® suggested that FHA should lower its mutual mortgage insurance premiums (MMI) as its fund for paying claims has normalized since recession.

Homebuilder Confidence Nears Nine-Year High

The National Association of Home Builders/ Wells Fargo Housing Market Index achieved a reading of 58 for November. This was two points higher than the expected reading of 56 and four points above September’s reading. This was the fifth consecutive month of readings above 50.

Readings above 50 indicate that more builders are confident about housing market conditions than not. Components of the index improved with builder confidence in present sales of new homes up 5 points to a reading of 62, confidence in sales over the next six months rose by two points to 66, and the reading for prospective buyer traffic rose four points to 45.

Housing Starts Slow, Existing Home Sales Suggest Stronger Housing Market

Housing starts were lower by 2.80 percent in October at a seasonally-adjusted rate of 1.01 million against an expected reading of 1.03 million and September’s reading of 1.04 million homes started. October’s reading was affected by a 15.50 percent drop in multi-family construction, but single-family home construction increased by 4.20 percent. Analysts noted that the multi-family sector is notoriously volatile.

The National Association of Realtors® reported that the seasonally-adjusted annual rate of existing home sales for October exceeded the expected reading of 5.15 million with 5.26 million existing homes sold. October’s reading also surpassed September’s reading of 5.17 million previously-owned homes sold. October’s reading represented a 1.50 percent increase over September sales of existing homes, and was the highest reading since September 2013.

The median price of previously-owned homes rose to $208,500 in October, which represented a 5.50 percent increase year-over-year. The inventory of homes for sale is higher with a 5.1 month supply of homes available, which was a year-over-year increase of 5.20 percent. Higher inventories of homes available and low mortgage rates were seen as factors contributing to more home sales.

Builders, Realtors® Call for Lower FHA Premiums

Kevin Kelly, chairman of the National Association of Home Builders and the National Association of Realtors® called for the FHA to lower its mortgage insurance premiums. The cost of FHA loans, which require borrowers to pay an upfront mortgage insurance premium and annual premiums that are pro-rated and added to monthly mortgage payments, were seen as an obstacle to first-time and moderate income homebuyers. This request was based on a report that indicated the FHA fund for paying mortgage insurance claims is in the black for the first time since 2011.

Mortgage Rates, Jobless Claims Fall

Freddie Mac reported that average mortgage rates fell across the board on Thursday with the average rate for a 30-year fixed rate mortgage lower by two basis points at 3.99 percent, and the average rate for a 15-year fixed rate mortgage lower by three basis points at 3.17 percent. The average rate for a 5/1 adjustable rate mortgage dropped by one basis point to 3.01 percent. Average discount points remained the same for all loan types at 0.50 percent.

The Commerce Department reported that new jobless claims fell to 291,000 from the prior week’s reading of 293,000. Analysts expected a reading of 280.000 new jobless claims, but this was the tenth consecutive week of readings for fewer than 300,000 new jobless claims. The four-week rolling average of new claims rose by 1750 to a reading of 287,500. The four week average reduces the volatility of weekly jobless claims and provides a more accurate reading of unemployment trends.

What’s Ahead

Next week’s scheduled events include the Case-Shiller 10 and 20-City Home Price Indices, FHFA’s House Price Index and New and Pending Home Sales reports. There are no reports set for Thursday or Friday due to the Thanksgiving Holiday.

The 3 Minute Guide to Real Estate “Flipping” and How to Get Moving Today

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The 3 Minute Guide to Real Estate If you’ve been thinking about investing in a real estate project you may have considered buying a distressed house or two at a steep discount in order to fix them up and sell them at a higher price. This is known as “flipping”, and in today’s post we’ll share a quick guide to flipping homes and how to get started with this type of real estate investing.

Assessing Your Budget and Tolerance for Risk

We’ll start by stating the obvious: when you buy real estate with the intent of flipping it, losing money is a very real possibility. You’ll need to assess your own tolerance for risk and decide how much you want to invest in your real estate venture.

If you’re new to buying homes it’s a great idea to start small – an inexpensive “fixer upper” house or a condo – and work your way up from there. Spend some time crafting a budget to assess how much you’ll be spending to acquire the home and in repairs or renovations, and what you expect to receive when you sell.

Shopping for Suitable Houses and Condos

Once you’ve got your budget prepared and your finances are in order you’ll need to start looking for a suitable home. The ideal listing is one that is priced at a discount to all of the other homes in the neighborhood as the home is in some state of disrepair or has certain issues that need to be fixed up. Spend some time browsing through local property listings which are sorted by price and note which options are the least expensive. This is where you’ll want to start.

Scale Things Up by Finding a Partner

After you’ve bought, repaired and sold a home or two you’re likely going to want to scale things up. Consider bringing on a partner who can help shoulder some of the workload or one that may want to invest capital so that you can buy homes in a higher quantity. Remember, this is business; if you work with someone else you’ll want to formalize your arrangement with a written contract.

As with any business venture, there’s a bit of a learning curve that you’ll need to overcome when you begin flipping houses. As long as you’re patient and ready to move when you find the perfect home, you’ll soon find success with your real estate investments. To learn more about flipping houses and to get started with finding properties in your area, contact your local real estate agent today.

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