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One of the first steps in the home buying process is gaining pre-approval for a mortgage loan. This gives you a realistic idea of the home prices that you can afford and allows you to make a strong offer when you do find the right house. While there are a lot of factors that impact your loan approval and the interest rates that lenders will offer, there are a few steps you can take to make sure that you’re getting the best home loan and mortgage rate.

A look at mortgage rates

As of mid-September of 2022, the average national mortgage rate for a 30-year fixed rate loan broke 6 percent for the first time since 2008.  We’re seeing the continued effects of inflation on the housing market, with mortgage rates and prices rising throughout the nation.  These higher rates and prices have begun to slow the housing frenzy.  In July, the median home sale price in New York City was $775K, a -1% change year-over-year.  There were a total of 3342 transactions, down 21% compared to the same month last year.  However, according to NAR, determined homebuyers are still purchasing homes, mostly because buyers can lock in a fixed monthly payment that is no longer susceptible to inflation like rent prices are.

Because of the stability that homeownership offers; units that are priced right, at least according to today’s standards of home prices, are attracting more potential buyers and receive more than one offer.  To help buyers stand out in the market, it’s more important than ever to get preapproved for a home loan.  Lenders look at a variety of factors when determining if you qualify for a loan, including your credit score and the amount of your potential down payment.  These factors can positively or negatively impact the mortgage rate and amount that you’re approved for, so before settling on one rate and lender, here are some important steps to take to find the right loan for you.

Don’t just look at the rates online

Most mortgage lenders list their current average rate on their websites.  But the key word here is average.  This number does not reflect each borrower’s current financial situation, so you can’t know if that is the exact rate that you would get approved for if you applied to that lender.  To know what rate you would get, you need to go through the preapproval application process.  Lenders will look at your debts, assets, and income to determine what you can afford and offer a loan amount and interest rate that reflects your financial situation.  To know which lenders to apply to, talk with your real estate agent, look at the loan types that lenders offer, and consider expanding your search to different banks, credit unions, and online lenders.

Apply to multiple lenders

Once you’re ready to start the preapproval application process, you’ll want to apply for loans through multiple lenders.  It’s recommended that you apply to three to five different lenders to save the most money.  According to Freddie Mac, for a home priced at $250,000, getting one additional rate quote can save an average of $1,500 over the life of the loan, with the number rising to $3,000 for comparing five lender options.  These savings are dependent upon the price of the home, so for a house worth double that of the example, the savings would be doubled.

As a note, lenders do a hard credit pull when you apply for a loan, which can lower your credit score.  However, when you apply for multiple lenders within a fifteen-to-thirty-day period, they’ll count as one single inquiry, so your score shouldn’t be dinged multiple times.

Compare loan estimates

After applying for a loan with multiple lenders, you’ll receive loan estimates from those lenders.  This document will list the loan amount, interest rate, closing costs, lenders fees, and other important factors that will help you see exactly what they’re offering you as the borrower.  You can compare rates and payments across the lenders to ultimately determine which one works the best for you.  This is a good opportunity to ask the lenders to clarify anything that you’re uncertain of since it is a big decision that you don’t want to make lightly.

While it might take a little time to find the best mortgage loan and rate for you, weighing your options can help you save thousands of dollars on your loan.

Filed under: Blog, Brooklyn, Buying, Condominium, Cooperative, Finance, Financial Tips, Home Buyer, Homeownership, Interest Rates, Investing, Mortgage, Real Estate, Real Estate Questions, Real Estate Tips by Ryan Roberts
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The home buying process comes with a language all its own, and two of the terms you may have heard are prequalified and preapproved.  While both can be essential parts of obtaining a mortgage and buying a home, you may not know what they mean.  Check out the information below to learn how each term may benefit you during your home search.

What Does it Mean to Prequalify? 

When you prequalify for a home loan, it means you’re getting an estimate of how much you may be able to borrow based on the information you provide about your finances and your credit check. While it isn’t as formal as being preapproved, getting prequalified is an excellent first step when you begin your home search, as it will help you establish your budget and know how much you may be able to borrow.  This process will also introduce you to the various mortgage options you have to choose from.

Information needed for prequalification includes:

• Credit check
• Income information
• Debts and assets
• Bank account information
• Down payment amount

The prequalification can be completed online, over the phone, or in person.  You’ll receive a prequalification letter, which you can use to show an agent or seller that you’re serious about buying.  Although it can be helpful, a prequalification isn’t seen as being as serious as a preapproval.  The lender goes off the information you provided and does not verify everything you’ve given them is correct, up to date, and comprehensive.  Meaning, that while you may get a loan for the amount stated, it can also change when a lender does a more thorough check.

What Does it Mean to be Preapproved?

The pre-approval process involves a lender investigating your income, assets, credit history, and debts before providing you with an amount they believe you can afford.  Getting preapproved confirms to the seller that you’re serious about buying their home and that you can secure a mortgage, making you more likely to complete the purchase.  Being preapproved can be extremely valuable in a competitive market, as it will help you stand out from the other home buyers.

You don’t have to receive prequalification for preapproval.  If you know you’re financially prepared to buy, you can decide to move ahead with the preapproval process.

Information needed for preapproval may include:

• Credit check
• Paystubs from the last thirty days
• Bank statements from the previous two months from all accounts
• Investment account statements from the last two months
• W-2 and 1099 statements from the previous two years
• Federal tax returns from the last two years
• Driver’s license
• Social security number
• Total monthly expenses
• Down payment amount

Additionally, if someone is helping you pay for the home, you’ll need a gift letter signed and dated by the individual assisting you.

Once you submit this information to a lender, you should receive their decision within ten business days.  If you are preapproved, you’ll receive a preapproval letter informing you of the offer to lend you a specific amount for sixty or ninety days, along with the type of mortgage the lender is willing to offer.  Since the lender verifies the information you provided, this is a much more serious step than prequalification.

While you may receive preapproval for a mortgage, it’s important to remember it does not guarantee a mortgage.  If there is a change to your income, assets, or debt level before the closing date, a lender may decide to deny the loan.

Filed under: Blog, Buying, Condominium, Cooperative, Finance, Financial Tips, Home Buyer, Homeownership, Investing, Mortgage, Multi Family, Real Estate, Real Estate Questions, Real Estate Tips, Uncategorized by Ryan Roberts
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If you’re considering purchasing a home, debt-to-income ratio (DTI) is an important term to familiarize yourself with.  Your DTI can ultimately make it easier or harder for you to qualify for a mortgage.  So knowing your DTI can help you better understand how you can best move forward into homeownership.

What is debt-to-income ratio?

Filed under: Blog, Buying, Condominium, Cooperative, Debt, Finance, Financial Tips, Home Buyer, Home Value, Homeownership, Investing, Mortgage, Multi Family, Real Estate, Real Estate Questions, Real Estate Tips by Ryan Roberts
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We’ve all felt the effects of inflation, whether through higher gas prices or spending more on food at the grocery store, but it’s left many of us wondering what it means for the housing market.  While inflation can be somewhat unpredictable, we can look at a few key ways it’s been known to impact the housing market and also can better understand what it means for homeowner and homebuyers.

What is inflation?  

Inflation is the increase in the prices of goods and services over time.  The level of inflation is determined by the broader impact of higher prices and is measured through a few different indexes, with the most common being the Consumer Price Index (CPI).  CPI looks at the average cost of living, including goods and services such as transportation, food and medical care.  It helps to identify periods of inflation and how it influences the affordability of the cost of living.

Ultimately, a rise in inflation means a decrease in purchasing power, as the dollar doesn’t go as far as it did before.  Deflation, on the other hand, comes with an increase in purchasing power as prices of goods and services drop.  Therefore, home prices and the cost of rent fluctuate with the level of inflation, influencing the housing market.

Supply and Demand 

The law of supply and demand examines the relationship between buyers and sellers, specifically the price of a good and the willingness of a buyer to pay that price.  Inflation has a direct impact on supply and demand.  Historically, the demand for houses may be lower during higher periods of inflation because of higher mortgage rates, something that can cause houses to sit unsold for longer periods of time and their prices to sometimes drop.  While that might not seem like great news for homeowners, it’s worth noting that the overall value of houses steadily increases over time, meaning that houses will still likely sell for more that what homeowners initially paid for them.  And if time isn’t of the essence and homeowners can wait longer to sell, then the market would eventually balance out.

On the other hand, this can be good news for homebuyers since there’s less competition for homes as more people may wait for mortgage rates to drop again.  Since inflation can be somewhat unpredictable, it’s not always easy to determine when exactly rates will rise or fall.  Ultimately, homeownership is still a highly valuable investment for a variety of reasons.

Why homeownership is valuable 

As mentioned earlier, inflations causes the cost of all goods to rise, thereby impacting the general affordability of the cost of living.  Gas prices rise, groceries cost more, the cost of materials are higher, and housing costs increase.  It’s not necessarily a one-to-one relationship, but inflation has broad reach.  Higher mortgage rates might deter people from their pursuit of homeownership, leading more people to look into rental options.  However, rent is always fluctuating.  The price you pay for a rental will continually be susceptible to the current economic market, so you’ll rarely have a long-term fixed monthly payment.  Brooklyn median rents with concessions hit a new high at $3,206, a 7% increase from the month prior and a 21% increase from this time last year.  On the other hand, when you buy a home with a fixed mortgage rate, you’ll have one steady payment that will not change even as inflation increases or decreases.  The house would also appreciate over time, meaning the value of the property will increase.  Any initial down payment ends up being worth more since that number was determined by the cost of the house and the mortgage rate when purchased.  Homeownership is an investment, but it’s well worth it.  And in the long term, mortgage rates as of August 2022 are still lower that the historical average of 8 percent.

Inflation isn’t forever

The good news for both buyers and sellers is that inflation doesn’t last forever.  It eventually must end, otherwise money would continue to be devalued which would have a greater negative impact both nationally and on individuals.  So for the benefit of everyone, you can trust that inflation will decrease over time.

Filed under: Blog, Brooklyn, Buying, Condominium, Douglas Elliman Real Estate, Finance, Home Buyer, Home Value, Homeownership, Inflation, Interest Rates, Investing, Mortgage, Real Estate, Real Estate Questions, Real Estate Tips, Renting, Selling, Supply and Demand, Uncategorized by Ryan Roberts
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Has the idea of buying a condominium crossed your mind?  There is a lot to like about condo living, including reduced maintenance obligations and ample amenities.  However, living with increased regulations and being close to neighbors may not be suitable for you.  Make sure to carefully consider all the pros and cons of buying a condo and how they fit into your lifestyle.

What is a condominium?

A condo is a private residence within a larger community.  It is like an apartment, except you own the unit instead of renting it, and you can renovate or customize your space. There are typically multiple units on each floor, and you may have neighbors above, below, or next to you.  There also may be shared areas and amenities, including swimming pools, lounge areas, roof decks, and fitness centers.

The pros of buying a condominium 

Several benefits appeal to a wide range of homebuyers when it comes to condos. They give empty-nesters the freedom to travel without the concerns of home security, and condos allow first-time homebuyers to own property at a lower cost than a single-family home and build equity.

Less upkeep

A single-family home requires plenty of maintenance to keep it looking great, but a condo has many of these responsibilities covered. Most condos have a homeowners association (HOA) that’s responsible for exterior maintenance like mowing the grass and snow removal, along with upkeep of the roof, building exteriors, amenities, and shared spaces. This means you’ll have to spend less time and effort on making the property look great.

Affordability

A report by the National Association of REALTORS® found that the average condo price is more than $50,000 cheaper than a single-family home.  Additionally, condo insurance is typically much less expensive than homeowners insurance because you’re paying for coverage of a smaller space, and you do not need insurance for the outside of your condo.

Amenities

Having facilities like a fitness center or roof deck provides luxuries you may not be able to afford in a stand-alone house.  These amenities can be a great way to get to know your neighbors and create lasting friendships.  In addition to a roof deck or lounge, many condo communities hold events like game nights and barbecues, which are great opportunities to socialize.

Security

A condo community typically has a level of security you won’t find in a single-family home, such as a doorman to watch out for any emergencies.  Additionally, having neighbors close by can provide an unofficial level of security when you’re away.

The cons of buying a condominium

While condos will appeal to a handful of people, it just isn’t the best option for others. Make sure to consider these points before buying a condominium.

Common Charges

All the perks of having the additional amenities and fewer maintenance responsibilities come at a price in the form of fees. When you buy a condo, you’ll likely have to pay monthly common charges on top of your mortgage and insurance costs. This money goes toward the upkeep of the community’s shared spaces and exterior. You may also have to pay an additional fee to use some of the amenities.  However, you can sometimes opt-out if you won’t be using them.

Condominium Association Rules

In addition to the fees, the condominium can have a list of rules you must abide by.  These will vary from community to community and may include the number of visitors you may have at one time, the type of pets you can have, or how you can decorate an area like your terrace, which can be a little overbearing for some potential homebuyers.  Before agreeing to buy a condo, make sure to review the condominium’s governing documents, and consider how any monthly fees or rules will affect your life.

Lack of privacy

Being in closer confines does mean you’ll sacrifice a level of privacy in a condo. Sharing walls with neighbors on both sides of your condo, and potentially above or below you, means you may hear increased noise. Fellow condo owners may be outside or in the hallway late at night or in the early morning. Likewise, your neighbors may not be receptive to you entertaining guests or playing music.

Resale market

You may have a limited market to appeal to if you plan to resell your condo in the future.  For example, a growing family with pets may find the space restrictive and want a house with a private yard.  Others may not feel comfortable with the condominium’s regulations.  If you’re considering buying a condo, it’s beneficial to speak to your real estate agent about the unit’s potential resale value and any other factors that could play a part in determining that value.

Before you buy a condominium, make sure to consider these factors in your decision.

Filed under: Blog, Brooklyn, Buying, Common Charges, Condominium, Douglas Elliman Real Estate, Home Buyer, Home Value, Investing, Real Estate, Real Estate Tips, Selling, Uncategorized by Ryan Roberts
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An appraisal is a critical part of the homebuying process, as it determines the value of the property before a lender agrees to move through with a mortgage.  But how is this value calculated? Check out this list of seven factors that impact the value of a home during an appraisal.

Condition of the home

First, the appraiser will note some of the general details of the home, ranging from the materials used throughout the house to the property’s overall condition.  If anything is unsound or unsafe inside the home, the appraiser will make a note of it.  From broken appliances to missing shingles, signs of deferred maintenance may negatively impact the home’s value.  Appraisers will also look for signs of infestations.  Upgrades to features like the electrical system, roof, or windows, could positively impact the home’s value.

Age of the home

The appraiser will consider the age of the home when calculating its value.  However, you shouldn’t expect a newer home to receive a higher value than an older home due to its age.  While new homes will likely have fewer issues when it comes to maintenance, well-maintained older homes located in historic districts tend to have a higher appraisal value.

Size

The amount of living space inside a home will influence the property’s overall value, and a larger home will typically be worth more than a smaller home in the same market.  Appraisers will account for the square footage, along with the number of bedrooms and bathrooms.  Additionally, storage space will also be a factor, as large closets, along with a useable attic and basement, will help a house appraise at a higher value.

Location

A home’s location could impact its value based on several factors, including crime rate, school district, road maintenance, and the distance between the house and schools, hospitals, fire stations, and police stations.  If the home is next to an undesirable neighboring property, like a landfill, its value may be lower.  Also, the home’s location within the community may affect the value.  If the house is on a quiet street, it may be worth more than a home on a busy road in the same neighborhood.

Renovations

If a home has received upgrades since its last appraisal, renovations like a new garage or kitchen makeover can impact its value.  Even more practical upgrades, like a new roof and energy-efficient appliances, can increase the home’s value.

Filed under: Appraisal, Blog, Brooklyn, Buying, Contractor, Home Buyer, Home Value, Investing, Mortgage, Real Estate, Real Estate Tips, Renovations, Selling by Ryan Roberts
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Over the past year, the real estate market has been marked by unpredictability and, at times,  overheated competition.  This has resulted in some buyers bowing out after one too many disappointments while other potential buyers put off their home buying plans, hoping that things would settle down.

Whichever type of buyer you are, you may be thinking ahead to the new year and planning to begin a search for a new home.  If so, it’s vital to prepare for the challenges and opportunities that lie ahead.

Financial Preparations

Preparing yourself financially will be one of the most important aspects of your homebuying plan. While many potential buyers have a good grasp of the savings required for a down payment, they may not be prepared for the other expenses associated with home buying, including:

• Earnest money deposit (EMD)
• Closing costs
• Application, origination, and underwriting fees
• Home inspection
• Appraisal
• Moving expenses

Of course, one of the factors that has made the housing market so active over the past year and a half has been the record-low interest rates for home loans.  As you prepare to purchase a home in the near future, you’ll want to keep track of those rates.  While they are not projected to rise significantly, they are projected to rise, so it’s important to gauge the impact that upcoming changes will have on your bottom line.

Remember, the terms of your mortgage can be highly variable depending on your overall financial history and your creditworthiness.  A lower credit score can have a significant impact on your interest rate and chances of approval. Be sure to check your credit report well ahead of time to ensure that there are no surprises and to make any needed adjustments.

In addition, be mindful that a lower down payment mortgage option may result in the need for additional mortgage insurance, raising your monthly payments.  Take this into consideration as you plan your homebuying budget.

Market Research

Planning ahead for your home purchase gives you a great chance to do some research on your chosen neighborhoods.  While this includes proximity to work and neighborhood amenities, it also includes tracking the prices of comparable properties in your target area.

Talk with a real estate agent or broker to develop a baseline for current comps and historic trends in the neighborhood you’re interested in.  Remember that there has been significant market movement over the past year and a half, with home prices rising at a record pace in many communities.  Understanding the change in home values over the past several years can give you a more realistic perspective.

In addition, work with a real estate professional now to develop a targeted search based on your neighborhood and property preferences.  This will allow you to see when new properties come on the market that fit your criteria so that you can begin to develop a sense of how values are changing over the next few months.

Real estate inventory has been low in many places, driving home prices higher and resulting in multiple offers for most new listings. You may have experienced some of these competitive situations and backed off from your home search temporarily.  If you continue to see low inventory levels in the months ahead, talk to a real estate agent about alternatives, including:

• Alternative neighborhoods
• Adjustments to your wish list
• Availability of fixer-upper properties
• New construction in your market
• Changes to your financing to make your offer more competitive

Wish List Creation

Once you have honed in on your chosen neighborhood and put together your numbers, it’s time to take a look at your wish list for your next home. You may find that your preferences are out of step with homes in your chosen neighborhood or that you are underestimating the cost of some of the bells and whistles you have in mind. It’s important to consult with an agent or broker to make sure that your wish list makes sense for the neighborhood and budget you’ve targeted.

Remember, while you may be hoping for a turnkey situation with no repairs or improvements needed, that may not be realistic in the current market. Consider what changes you might be willing to make either before your move-in date or after. Think about your budget and see if you can stretch it to make some desired updates and upgrades on your own dime.

In the long run, it may be better for you to add some flexibility to your wish list. You don’t want to overlook a great property just because it doesn’t check off every single box.  You also don’t want to overpay for a property in lieu of making some minor changes on your own.

Mindset Shifts

Filed under: Appraisal, Blog, Brooklyn, Buying, Douglas Elliman Real Estate, Finance, Home Inspections, Interest Rates, Investing, Market Research, Mortgage, Real Estate, Uncategorized by Ryan Roberts
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While you may have been ready to buy a home during the 2020 spring market, the uncertainties caused by the pandemic may have put a damper on your plans.  At this point, you may be uncertain about your post COVID 19 real estate goals and unsure whether the opportunity to work from home will inspire you to move to another market or another type of home.

If you’re looking to get ready for a home purchase down the road, this plan will help ensure you’ve covered all your bases.  From finance to logistics, it’s important to think through the changes on the horizon to streamline your 2021 home purchase.

Preparing to finance your purchase

Comparing potential markets for your search

Planning for your upcoming move

Once you’ve determined where you’re moving and the type of home you’ll move into, you’ll need to begin planning for the move itself. If you’re in a rental home, check with your landlord to determine how much notice you’ll need to give before ending your lease as well as what information needs to be included in that notice. You’ll also want to check on month-to-month rental options, in case you are not ready to close at the end of your current lease.

You’ll want to save up money for your upcoming move but the budget can vary widely depending on the services you require. While you may be able to manage a do-it-yourself move for only the cost of a rental truck, a professional move can cost thousands of dollars. This price can be further increased depending on the distance of the move as well as services like packing and unpacking.

If you’re moving with children, you’ll want to spend some time preparing them for the emotional impact. If possible, take them to visit their new neighborhood, play in the park, or spend a day with classmates at their new school. The more you can do to communicate and demystify the process, the more comfortable (and excited) the youngest members of your family will be on moving day.

Filed under: Blog, Buying, Finance, Investing, Mortgage, Real Estate, Selling by Ryan Roberts
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It really depends on the house and the situation.  There may be two reasons a house is marketed as an “As Is” Property.  The first may be because the seller just doesn’t have the money to make the necessary repairs, and wants to get out from under the cost of repairing the property. 

The second reason is much more difficult.  A word of caution is in order.  The house may have serious problems! Something serious may be defective…so buyers beware.  Generally speaking, an “As Is” property tends could have a major structural or functionally obsolete (i.e. expensive!) problem.  Typical problems may range from a faulty roof, termite damage, problems with the foundation, leaking pipes or other plumbing problems, to problems with the electrical or mechanical systems to name a few.

It is in the buyer’s best interest to have a full home inspection completed and all the problems documented, so that the buyer is aware of any potential problems with the property. 

Filed under: Blog, Electrical, Home Inspections, Investing, Real Estate, Roof, Uncategorized by Ryan Roberts
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If you’re thinking of investing in a house now or wondering whether you should wait and continue renting, here are three important things to consider:

• Renting vs. Buying:  If you rent a home, it could cost you less each month…and you might have more money to invest in other endeavors.  But if you invest in a home you can benefit from a huge tax advantage where you can deduct mortgage interest and property tax payments as well as other expenses from your federal taxable income.
• Housing Prices and Interest Rates:  You may be waiting for the housing prices in your area to fall.  They may not.  However; usually when they do, the interest rates will be higher.  The amount you gain could be significantly less over the long term cost of the mortgage.  Therefore, waiting may not be in your best financial interest.
• The Break-Even Point:  The average break-even point for buying and selling a house is five to seven years.  If you plan on renting for longer than this time frame then buying could be a good economical consideration.

Filed under: Blog, Buying, Interest Rates, Investing, Renting by Ryan Roberts
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