Advice to women: Shop more


It’s been a while since I wrote anything about the difference between men and women in regards to real estate.  But then I came across a very interesting article.  It turns out that there’s a reason that 32% of women were likely to get a subprime mortgage than men, according to a 2006 study.  They don’t shop enough.

I know, I know.  I am just as surprised as you are.  In fact, when I’m dealing with clients purchasing a new house, it’s often that the women take longer to find something because they want to make sure they’re getting the best deal and are in love with their new home.  So what’s going on here?  It actually makes sense.  Women tend to rely on the instincts of their emotions, trusting a recommendation on mortgage rates from friends, rather than shopping for the best deal.  Men, on the other hand, shop around for the best rate, and, therefore, they generally pay lower rates.  

This was all determined by a 2006 study in Journal of Real Estate Finance and Economics.  According to the article, “It makes sense to Daily Finance columnist Laura Rowley. ‘It’s not surprising, because mortgage shopping can be incredibly complex, so we look to people we can trust to help make the decision,’ says Rowley. ‘But this is one area where you don’t want to get by with a little help from your friends.'”

Rowley suggests that everyone should get at least three written estimates, generally from two mortgage brokers and one direct lender, like your bank.  You’ll want to explain that you’re planning to buy a house in your general price range that you’ve predetermined along with the percentage you’re willing to put down.  And remember that interest rates can change multiple times a day.  So if you find a low rate, you might consider talking to the lender about “locking in” that rate while you search for a house so it doesn’t go back up.  It’s worth everyone’s time to figure out the best rate and the best type of loan in order to save the most money.

If you need a recommendation for a great mortgage broker, please contact me via my Web site.

Finding a home that won’t lose value

Given the current state of the economy, for all of you home buyers out there, I’m guessing that, when you do find a home you’re going to purchase, that you want to find one that won’t lose value.  You’ll want to look for features that will appeal to a seller when you do go to sell, whether that’s in one year or 20.  Here’s a quick list of features in homes that won’t lose value in a recession.

1. Choose a single-family home.  Sure, you may be starting out and want something small, preferably a condo.  However, in a worse economy, condos and townhomes lose their value more quickly than a single-family home.  So ask your Realtor to help you find a smaller detached home.  I have sold many first-time buyers one- or two-bedroom single-family homes, which was just the right size for their needs.

2. Keep carrying costs low.  When you do go to buy, make sure you find a property that is well-maintained and one that doesn’t require a lot of work over time, especially if you don’t plan to stay long.  New buyers get scared with all the costs of a mortgage, taxes, insurance, and maintenance, so whatever you can do to keep costs low will help you in the long run.  Here’s another tip.  If you see a problem, such as water dripping from the roof, make sure to take care of it BEFORE it turns into a large hole, which will just cost you more money because you waited.

3. Know your market.  Certain markets will never lose much value because they are important to certain segments of the population.  For example, a home within walking distance of the Metra in the Chicago suburbs is a great feature for commuters heading into the city.  A home with a swimming pool is going to sell quicker than one without in Arizona.  

4. Keep your kitchen and bathroom up to date.  As I have mentioned in the past, if you’re going to update or remodel any room in your home, these are the two to focus on.  These are the biggest rooms that “sell” a house.  Try to include appliances if you can.  Many first-time buyers don’t have these at their disposal, and it’s another thing that will help keep their costs down.  If you must take yours with you, consider offering an appliance credit instead.

I hope these tips help both potential buyers and sellers.  And to all my readers, have a very Happy Thanksgiving!  Visit me online.

Landlord tips in between tenants

I just ran into a past client of mine.  She was who I had helped rent out her prior home while she bought a different one.  She just had her tenant of one year move out, and now she’s searching for a new one.  She was telling me what was going on, and it got me thinking about certain items landlords need to take care of in between tenants.  I thought this would be important information to share with you.

1. Make sure the tenant returns all keys, garage openers, and any other items that belong to you or your property.  You’ll also want to collect all spare keys so that you don’t need to change the locks.  If you won’t be able to be there when they move out, make sure you designate an appropriate spot for them to leave these items, such as a drawer in the kitchen or bathroom.

2. Switch over your utilities.  This is a big step that a lot of landlords forget to take.  You’ll want to contact your electric company and gas company to make sure that you receive the bills for these.  You’d hate for the tenant to have cancelled the power and go to show potential tenants to find out you have no lights or that your pipes freeze in the winter because you have no heat.  Some companies, like ComEd, even offer a landlord service that you can sign up for.  This is just in the interim between tenants.  Once your new tenant moves in, they can take over the utilities again.

3. Do a thorough inspection.  Make sure the property is left in the same condition as when the tenant moved in.  All problems, such as carpet stains, holes in the walls, etc., caused by the tenant can be taken out of the security deposit.  Make sure you review your lease to find out the deadline for returning the deposit back to the tenant.  You can be held liable if it’s not returned in time.  If there’s any argument about something the tenant causes, it’s a good idea in the future to take “before” pictures and “after” pictures so that you have physical proof.

4. Get a forwarding address.  You’ll need this for the security deposit.  But there’s a good chance that not all mail will make it to the forwarded address and you’ll still be receiving some for the tenant.  This way you can get them any important mail by forwarding it appropriately.  

I’d love to hear any more tips you have either via a comment or by contacting me on my Web site.

Refinance mistakes to avoid

Last week I blogged about the new HARP guidelines and how they can help homeowners refinance when they owe more on the home than it’s worth.  I talked about how the loan has to be owned by Freddie Mac or Fannie Mae and that you have to be current with your mortgage.  Since rates are very low, I do encourage you to try to refinance your home to a lower rate if it’s possible for you and to take advantage of the HARP program if you can.  That said, this week I want to talk about several mistakes people make when refinancing and how to avoid them.

1. Not getting the best rate.  It seems obvious.  One lender offers you 5% and another 4.75%.  You go with the lowest one.  You really have to look at the entire cost of a loan, not just the quoted interest rate.  The APR (annual percentage rate) is what matters most.  Your house can be worth less than you think, especially after an appraisal.  The benefit of the HARP program is that it often doesn’t require an appraisal, which can really affect your refinance.  So make sure you do your research.

2. Think of the objective you want with refinancing.  Is it a lower monthly payment?  Is it that you want your home paid off in 10 years?  Know this before you sign any papers.  A lot of borrowers don’t realize that if you refinance to another 30-year loan and you’ve been paying yours down for 10 years, you just went to 20 more years on your loan to another 30.  So if your plan was to have your home paid off in 20 years, that’s most likely not going to happen anymore.  And let’s say you know your job is going to relocate you in a few years.  A 5-year or 3-year adjustable rate mortgage could be most beneficial and offer you the lowest monthly payment.

3. Don’t refinance when you shouldn’t.  In Number 2 I just talked about the potential of your company relocating you.  So let’s say you decide you’re going to keep your home as a rental.  You have to be careful about refinancing now because your home would no longer be your principal residence.  This could shoot your monthly payments way up.  Discuss with your lender any potentials for not staying in the home long-term so they can help choose the best option for you.  Refinancing may not be it.

4. Be aware of your responsibilities.  Know in advance that lenders will often check your credit again right before closing.  So if you refinance, now is not the time to buy a new car on credit or make a major purchase.  Know when your interest rate lock expires so you get everything completed before that time so you don’t lose the rate you want.

More great advice can be found in this Bankrate article.   And I can be reached via my Web site.