Hidden Costs for New Homeowners

When the time comes for you to buy a home, new homeowners need to understand that there are ‘hidden’ costs and fees when you are ready to sign on that dotted line. We are calling them ‘hidden’ because they are not included in the actual price of the home, these costs are obtained through the buying process and at the time of closing.

Here is a breakdown of those ‘hidden’ costs.

 

Home Inspection

Although this is an optional expense, it does protect you from purchasing a home that may have a lot of issues that may not be obvious. These can include things like mold, problems with the heating or cooling system or water leaks. A rough estimate for a home inspection is $300-$500. Keep in mind, if you end up not buying the house after the inspection, you are still obligated to pay the fee.

Appraisal

This is a necessary fee that asses the home and property so your lender knows that you are paying what the property is worth. There are times when a seller may have to adjust their asking price due to an appraisal coming in under the amount of asking. Appraisal fees can run $200-$500.

Loan Application Fees

These fees start the entire loan process. A lender will need to run your credit report to ensure you can qualify for a home loan. That fee is included in the application fees. These typically run $75-$300.

Title Services

Title services include running a title search on a property, paying the notary to notarize all the documents that you sign, and the required government filing fees. It is important to get a detailed invoice for these fees so you are fully aware of what you are paying for. These fees run $150-$400.

Origination Fees

These fees go to the lender for creation of the loan. These are paid upfront and include processing the loan application. the underwriting process and the actual funding of the loan. These fees are usually based on a percentage of the loan amount and range from 0.5%-1.5%.

Private Mortgage Insurance (PMI)

If you put less than 20% down on your new home, the lender will require you to purchase PMI. This protects the lender from losing money in the event of a foreclosure. This fee can be re-assessed at such time as you have equity in your home. This fee is based on a percentage of the original loan amount as well.

 

Disclaimer- All dollar amounts and percentages are estimates. 

 

Choosing Investment Properties in Utah

Don’t let the fear of being a landlord keep you from looking into purchasing investment properties. In fact, investment properties can generate great passive income and there are several options to managing the property that can make you a passive participant.

 

If you do not think you can manage your investment by yourself, be sure to calculate property management fees into your strategy. Be sure you learn about fair housing laws and other laws that pertain to the property you are considering purchasing.

Consider taking a landlord or Property Management class to learn how to select tenants, screen them to be sure they qualify, etc.

 

Be aware that many condo complexes have rental restrictions. You will make sure you have covered all these before proceeding.

 

If you choose a home that needs a lot of repairs you will get more phone calls from the tenants, and you may have more liability if protections like smoke detectors, safe electrical systems, etc are not in the home.

 

Choose your strategy. Generally, you get good cash flow or better appreciation. Homes in suburbs of SLC tend to cash flow better because of lower price points but do not go up in value as much as areas like downtown, sugar house, near universities, etc.

If you limit or deny pets, you will limit your pool of potential renters. If you allow pets, be sure to get pet deposits and pet rent.

Summer Housing Trends

The climate of the current housing market it still a positive one. Housing trends that we have seen in the past year will continue for the most part especially these highlighted trends. According to reports, unemployment is low and the overall economy is in good shape, making home ownership still a viable option.

 

Home Prices Are Rising Slowly: Part of the reason is due to increased mortgage rates and the overall economy. Uncertainty tends to discourage buyers who may already been on the fence. In addition, over the past few years, home prices increased as buyers competed for fewer homes.

Interest Rates May Be on the Rise: After years at a standstill, interest rates are forecasted to increase an average of 5% on a 30-year mortgage. The Federal Reserve raises the rates to help stabilize the economy and controlling inflation. Rising rates make homes less affordable.

Majority of Home Buyers Are Millennials: Most are in stable careers and with getting older, they are looking to buy their first homes in middle to upper-middle class neighborhoods. Baby boomers are retiring and downsizing, thrusting the millennials into leading the market.

Home Equity Will Still Increase-In 2018 the estimated equity increase was 2-6%, that is predicted to continue into 2020.

Urban Centers & Main Metro Areas are Getting Expensive: Cities that adjourn or are within easy commuting distance of main urban areas are suddenly seeing HUGE growth on the market. Here in Salt Lake, that means we are seeing areas like Murray, Millcreek, Holladay, Rose Park and Sandy explode!

What Does a Real Estate Agent Do?

People often wonder what a real estate agent does besides hosting open houses and maybe having the occasional headshot on a billboard. Actually, there are so many aspects to being a good real estate agent, here is a short break down for you, that way, when you need one, you will know what a good one looks like.

 

 

Price Your Home to Sell

One that is qualified and experienced in your area can help you price your home correctly. If your home is overpriced or underpriced you lose out either way. Underpriced means that you aren’t maximizing the dollars that you can get for your property. Overpriced means that it will languish on the market and not sell. And you end up often accepting less than it is worth in the long run.

They Handle All the Paperwork

It can be difficult to get a contract when you are competing against multiple offers when selling your home. A good agent will watch the market and let you know if any changes have occurred and make recommendations on what to do next if so. There are so many steps in buying and selling a home, your agent will have your best interest in mind from start to finish and will facilitate the transaction up until closing.

Marketing

Staging, getting the best photos and bringing in people to see your home is vital to it selling. A good agent knows all the tricks of the trade that can get your home the most exposure and ensure it shows well.

How To Find & Work With a Property Manager

Making the decision to work with a property manager or management company is not one to take lightly. After all, having investment property is a big undertaking in itself, you defiantly need a reliable property manager to entrust it to. Hiring the right property manager will defiantly make the rental process much easier for you in the long run.

Here are few tips when looking for one to hire.

 

Do your research.

 

Find out how many other properties they manage and how many are vacant.

 

  • How do they advertise property that is available for rent?
  • Are there any negative reviews about them?
  • Check with the Better Business Bureau and Real Estate Commission as well.

Ask for referrals.

 

Real estate agents are a great resource when looking to hire a property manager.

Ask around to other property owners, who do you know that also has rental property? Who do they use? Check with the Better Business Bureau and Real Estate Commission for this as well.

 

Meet with them in person before hiring them.

 

Often your first impressions are the best way to decide. Meet with him/her to get a sense of their professionalism, knowledge etc. Get clarification on how they can be reached, text, phone call, email etc. There is nothing more frustrating than hiring someone to manage something and they are difficult to reach when needed.

Look over the contract with a critical eye.

 

If something seems off or unfair, ask for clarification. Do not sign anything until you are certain that this property manager best suits your needs. Also make sure the costs are in line with your expectations and other companies.

Property management is a competitive field, doing your due diligence will pay off and you will enjoy the extra income the rental property can provide by choosing the best person/company for the job.

Why You Should Work With a Realtor

Working with a realtor to buy or sell a home is not only a good idea, it will take most of the stress out of the process. From dealing with the financials to writing contracts that protect you in the transaction, working with a realtor is an important first step to having a successful sale.

10 Reasons why you should work with a realtor:

 

1. Hiring a realtor will ensure your property is listed at the right price, as a result it will help it sell faster.

 

2. Presenting your property in the best manner is also vital to the sale, from staging to pricing, a professional can help direct you in this process.

 

3. Exposure is key. Realtors work for you, ensuring that your property has the proper exposure, from open houses to social media.

4. Working with a professional will ensure your contacts are signed and initialed correctly so there are no hiccups at closing. Working with a realtor streamlines the entire closing process and allows you to just show up at a scheduled time.

5. A realtor will schedule showings and appointments to see the property, all while keeping you in the loop on any progress.

6. Hiring a realtor gives you the peace of mind knowing that a professional ‘has your back’ and is working diligently to meet your needs throughout the real estate transaction. Have questions on any part of the process? Your realtor is there to help.

7. Typically, higher price offers will be presented when working with a realtor, resulting in your property selling at top of the market.

 

8. Negotiations and inspection issues are addressed by the realtor, therefore taking that responsibility off of you.

 

9. Closings are sped up when working with a realtor.

 

10. A realtor will have current market knowledge, knowing what homes have sold for in the area, therefore ensuring you have it priced correctly.