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Preparing for a 2021 Home Purchase

January 12, 2021 by Kathy Reichle Leave a Comment

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 a few months 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.

couple discussing purchase with man at table

Preparing to finance your purchase

One of the first things you’ll want to think about is the financing for your home purchase. Talk to a real estate professional and ask for an introduction to a mortgage lender, if you don’t already have one in mind.

Talk to your lender about the pre-approval process. When it’s time to begin seriously looking for your new home, you will want to have a pre-approval in place so that you can show sellers that you are serious about any offer you may make and that you are approved for a home mortgage.

In the meantime, you’ll want to check your credit score and your credit report to ensure that there are no mistakes. If your score is less than optimal, explore strategies for raising it in the months ahead. These can include:

Paying bills on time
Having rent and utility payments added to your credit report
Paying down debt and avoiding accruing new debt

In addition, talk to your lender about the types of home mortgage products you qualify for—VA, FHA, and conventional, among others—and the credit score range you’ll need so that you can be approved for each.

Determining your price range

By working with your lender you’ll be able to come up with a ballpark price range for your home search. This will be important as it will help you to narrow down the neighborhoods, home types, and home sizes you should be considering.

Remember, just because you qualify for a certain amount, you don’t have to shop at the top of your budget. Consider your lifestyle, other debt, future plans, and disposable income needs when determining your home purchasing power.

Comparing potential markets for your search

This is a good time to begin looking at markets where you might be inclined to move. Talk to your real estate agent to find out what features you’ll find in the areas you’re considering. Determine what you are looking for so that you can narrow down your search. Do you care more about:

Recreational opportunities?
Children’s programming?
Dining and nightlife?
Convenient shopping and services?
Commute times?
Larger lot sizes?
Larger homes?
Resale potential?

If possible, spend some time in your potential neighborhoods. Shop at the stores, eat in a local restaurant, and visit a nearby attraction. Check out the people to see if they seem like good future neighbors for you and your family.

Comparing potential home styles and features

Spend some time looking over listings to determine what home styles and features are most important to you. Put together a wish list and prioritize with must-have, nice-to-have, and optional items. Determine how different updates, upgrades, and other features impact price. Consider what you might be willing to add or change after the purchase and what you’ll want to have completed before you move in.

Preparing for associated expenses

Buying a home brings with it a large number of expenses before, during, and after the purchase process. It’s important for you to have an idea of these ahead of time so you can ensure that your savings are adequate. Remember, you won’t be able to run up additional debt while your mortgage is in underwriting, so it’s important to have a budget in mind before you begin.

Expenses for your home purchase may include any or all of the following:

Earnest Money Deposit (EMD): 1–5% of the purchase price
Down Payment: Generally 3–20% of the purchase price
Closing Costs: Variable (discuss with a real estate professional or lender)
Moving Costs: Variable
New furniture and design elements
Needed repairs and improvements

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.

Overcoming Barriers in the Home Search Process

December 16, 2020 by Kathy Reichle Leave a Comment

This year has been a long one for both buyers and sellers in markets all around the world. Disruptions to the spring real estate market, economic uncertainty, and, of course, the threat of illness caused unprecedented upheaval for anyone who was trying to make smart decisions about a home sale or purchase. If you’ve been looking for a new home to buy, you could be forgiven for feeling anxious and frustrated right now.

However, there is no reason to give up on your goals and there are plenty of ways to ensure that you can still find the right home for you and your family. With a little flexibility and a willingness to recalibrate, you and your real estate professional will be able to help you achieve your goals and make the move that you’ve been dreaming about throughout 2020.

Why buying a home is harder right now

If you started out looking for a home during the early spring of 2020, chances are you may still be on the hunt. COVID-related disruptions slowed down and complicated many home searches just like yours. Here’s why you may have been struggling with multiple offers and a protracted search process.

Low inventory

COVID-19 brought with it many uncertainties including economic anxiety, job loss, and fears for physical safety. For many homeowners, this translated into an unwillingness to put their house on the market since they were initially unsure of how safe home tours and moving processes would be and whether a job disruption might interfere with their ability to purchase a new home. This led to low inventory in markets across the country, especially in specialty sectors like the luxury home market.

Low interest rates

One of the federal government’s first initiatives to offset the financial impact of COVID-19 was to lower interest rates to unprecedented levels. This has continued throughout the year since March and has resulted in truly extraordinary buyer demand. Coupled with low inventory, this demand has meant multiple offers and homes selling for well above both asking price and appraised value.

Logistics

Simply put, it can be difficult to look for a home right now, especially in highly competitive and desirable markets. Homeowners are less willing to allow in-person open houses or tours, meaning that some of your options may only be available via a virtual viewing. In addition, high demand may make it more difficult to schedule tours, informational inspections, and other aspects of the search and purchase process.

How to overcome a frustrating home search

If your home search has been protracted, you may be starting to struggle with the emotional and psychological impact. However, in order to achieve your goal, it can be helpful to take a step back and reposition yourself for a new strategy. Here’s how.

Reevaluate your priorities

What did your wishlist look like when you first started looking for a home? Did you insist on a turnkey space? Were you focused on a very narrow choice of acceptable styles or neighborhoods? Did you require that all of the updates and upgrades be made before you would consider a particular home? It may be time to re-evaluate your requirements and work with a real estate professional to formulate a new list of priorities.

Here are some of the things to take into account as you rethink your home search:

Some of the most previously in-demand neighborhoods may be less desirable if you are now able to work from home permanently and if you will no longer have to commute to work each day.
Many home buyers are currently conducting information-only home inspections with no required repairs prior to closing. If you’ve been holding out for a turnkey property, you may now be willing to take on some of the improvements yourself in order to facilitate a successful home purchase.
How has your lifestyle changed since the pandemic began? Some of the things you thought you needed may be different now. Perhaps the second home office is more important than the upgraded kitchen you previously required. Consider whether you need to revise some aspect of the size or layout of your space in order to expand your list of possibilities.

Reexamine your options

While you may have previously been looking for a single-family home, now you may be thinking about bringing an elderly relative to live in your household. You may be considering buying a duplex or a home with an attached apartment or carriage house, suitable for either short-term or long-term rental. Either of these options may provide additional income which would allow you to increase your budget and broaden your search.

Talk to the experts

A real estate professional knows what is working for other clients in today’s market, and what markets are becoming more in demand and where inventory is a little more plentiful. In addition, a real estate professional may know of pre-market listings that offer you a better opportunity for a successful purchase.

A mortgage lender may be aware of more favorable loan terms which would allow you to work with a larger budget so that you can increase your number of potential properties. A contractor may have ideas about how you can turn an as-is fixer-upper into your dream home more affordably than you ever thought possible.

By talking to the people who know the market best, and letting them help guide you to think outside the box, you may just find that your assumptions and requirements have been holding you back. Work with the experts to come up with alternative solutions to help you get into the home of your dreams.

BY CHRISTY MURDOCK EDGAR

Moving from the City to the Suburbs

November 28, 2020 by Kathy Reichle Leave a Comment

One of the unexpected side effects of the COVID-19 pandemic has been a growing population shift from the city centers to suburban and rural areas. Driven in part by the availability of work-from-home job opportunities, many individuals and families are also motivated by the promise of more open space, outdoor living, and increased privacy. If your homebuying plans include a move away from your small, in-town apartment or condominium, here are some of the things to take into consideration as you prepare to make that transition.

Homebuying in the Suburbs

Even if you grew up in the suburbs, if you’ve spent most of your adult life living in the city, you’ll experience a bit of a learning curve. Buying and maintaining a suburban home can bring with it a number of new challenges and you’ll want to be prepared both logistically and financially.

Choosing the right neighborhood

It’s important to determine what your most important deciding factors will be as you choose the neighborhood that will be home for you and your family. Perhaps you are looking for award-winning school systems or magnet schools with specific programs. Maybe you want larger lot sizes and an emphasis on outdoor living. Maybe you’re moving to the suburbs in order to be closer to family members. Whatever your purpose, you’ll want to communicate it to your real estate agent or broker at the outset of your search.

In addition, think about the amenities that you currently enjoy most and look for suburban enclaves that offer them. If you’re a major foodie, look for an area with an exciting local restaurant scene. If your day is dependent on a great cup of coffee, look for an area with one or two exceptional local roasteries. Exurban and suburban areas aren’t just the big-box, generic locations they used to be. Many of them have their own unique culture and their own local charms, so choose the one that’s right for you and your family.

Planning for your new commute

If you’re used to walking to work or taking reliable public transportation, you’ll need to figure out how your new life in the suburbs will affect your commute time. Even if you’ve been able to work from home during the pandemic, if you’re planning to return to the office next year, you’ll need to get a sense of the timing involved.

At some point when you have narrowed down the neighborhood for your home search, you’ll want to drive to and from work during rush hour in order to get a sense of traffic patterns and the length of your commute. Keep in mind that in many areas, traffic density has still not returned to pre-COVID levels, so you’ll only get a rough approximation of your new commuting time.

Cost Considerations

Many people are attracted to the suburbs because they get more for their money in terms of both square footage and the reduced cost of living. Items like groceries and gas are indeed cheaper in the suburbs, but there are other costs associated with suburban living that you’ll need to take into account.

Homeowner’s Association fees

Remember when you are working with your mortgage calculator to keep an eye on HOA fees and include them in your budget. Remember, too, that some HOAs cover a variety of resort-style amenities, while others only pay for common space maintenance and upkeep. Determine what services you’re looking for and find out what will be covered in the neighborhood that you choose.

Recreation and amenities

What kind of lifestyle do you plan to adopt once you’ve moved out of the city? Will the kids be playing travel sports? Will you want to maintain your workout routine? Are you hoping for additional recreational activities, like more time to golf or improve your tennis skills? Putting more time and effort into recreational activities can involve a major financial outlay for new equipment, coaching or instruction, membership fees, and other expenses. Factor these in as you put together your monthly budget.

Lawn care and upkeep

If part of the charm of suburban living is mowing the lawn and raking leaves on the weekend, your only lawn care cost may be a good mower and some work gloves. If you want to outsource your yard maintenance, however, you’ll add a fair amount to your bottom line. Take into consideration both the potential maintenance costs of your new home and your willingness to actively participate in the upkeep process.

Furnishings and decor

If you’re moving from a small flat in the city to a larger suburban home, you’ll have a fair amount of shopping to do. From additional furnishings to fill all of those larger rooms to rugs, window treatments, and other items, you’ll need to spend some money before you feel truly settled in. Remember to wait until you have closed on your new home before making any major purchases, especially if you’re planning to finance them, as that can affect your mortgage underwriting process.

Commuting and travel

If you have been living in the city car-free, you’ll need to factor in the cost of a new vehicle for you and your spouse as well as all of the associated expenses. In addition, if your commute involves tolls and parking in the city or light rail travel, you’ll need to calculate those costs as well. If you enjoy travel and have been used to taking the subway to the airport, you may need to begin to add on the costs of long-term parking or other ground transportation to your travel budget.

Outdoor living costs

Many people are fleeing the cities to take up residence in the suburbs in large part because of the access it gives them to outdoor spaces and activities. Maintaining a pool, outdoor kitchen, and other outdoor spaces can add significantly to your costs, both during the purchase process and in terms of monthly upkeep and utilities. Be sure to add these in as you plan your monthly expenses.

Backyard Structures: The New Necessity

August 4, 2020 by Kathy Reichle Leave a Comment

Take a look at your current outdoor space. Maybe you have a terrace, patio, or deck. Maybe you have a table and chairs or some outdoor sports equipment. But what if you could put that space to really good use? What if you could use your backyard to create a space that adds value to your home’s equity—and to your everyday life? For many homeowners, the best new home improvement or addition isn’t connected to the home at all—it’s a specialty backyard structure.

Whether you’re looking for space for your new work from home lifestyle or you want to build more financial security into your life, a separate exterior space offers convenience, flexibility, and privacy. Here are some ideas for making that backyard space more useful than ever.

Guest House

For those with big families or a home located in a desirable resort area, a guest house is a great option for an upgraded backyard space. Keep in mind storage options for your guests’ luggage and include basic toiletries like toothpaste, toothbrushes, and shampoo. While you might not need a full kitchen in a guest house, a wet bar with an ice maker and small beverage refrigerator is a great option and a welcome addition to your guest house design.

Pool House

Long a staple of elegant luxury homes, the pool house is beginning to look like a necessity. Here you’ll find a great place to store pool toys and floats, with floor coverings and furnishings that can stand up to wet bathing suits and flipflops. Include a cabana bath for added convenience, and WiFi for quiet rest time when kids need to get out of the sun.

She-Shed or He-Shed

Whether it’s intended for the man of the house or the woman of the house, an outdoor structure can provide a place for peace and privacy. Create a football-themed media room for the ultimate backyard man-cave. Create a serene space for her to pursue her hobbies or just get away from the hustle and bustle inside the main house.

Granny Shed

If you have in-laws who frequently come over to help with the kids or are looking to integrate elderly parents into your household, the so-called Granny Shed is a great option. It preserves the privacy and autonomy of grandma and grandpa while providing the support that they may need as they age and mobility becomes more of an issue. The single-story design and smaller size will help with home upkeep and safety. Consider adding features like extra lighting, additional handrails, and grab bars to provide extra security and comfort for aging family members.

Fitness Studio

Whether you’re looking for a standalone home gym or a yoga studio, you’ll be more inspired to keep up with your daily workout routine when going to the gym is as easy as stepping out of your back door. Create a combination space with a variety of gym equipment, mirrors, and a barre so that the whole family can take part, from the smallest ballerina to the strongest weightlifter.

Homeschool Classroom

As COVID-19 shut down schools, many parents found themselves struggling with helping their students study at home. One of the reasons? Too many distractions. If your school district is planning to remain closed for part or all of the school day over the next year, or if you’re thinking of continuing to homeschool your children, it may be time to create a separate space devoted to study.

A remote learning environment can help your child separate from their normal spaces, like a bedroom or playroom, and focus on schoolwork. Add bookshelves and tables as well as educational posters to create a stimulating learning environment. Include upgraded WiFi for fast access to the online classroom.

Home Office

As businesses decide to offer work from home as a permanent role for more and more of their workers, many two-income households find themselves struggling to create space for dueling Zoom meetings and uninterrupted work-time. A separate workspace creates the distance you need to be more productive while still remaining at home. Make your separate home office the dedicated workspace for one of you, or make it a rotational space for either person’s virtual meetings, phone calls, and work that requires undivided attention.

Rental Unit

Economic disruption caused by the pandemic has some people rethinking their financial planning. If you have the space, a separate structure may be a great option for conversion into a small rental unit. If you live in a college town or in an area with a large population of renters, you may want to use the space for long-term leases. If you live in a resort area, you may want to host short-term and vacation renters.

Remember to determine what structural elements are required for rental properties in your area and whether your HOA sets limits on rental properties in your community. In addition, consult with your CPA or financial advisor on the tax implications of a rental property, consult your lawyer on the legal liability associated with such a unit, and determine what adjustments you’ll need to make to your insurance coverage.

Design Options for Your Backyard Structure

One of the best features of your backyard structure is that it doesn’t have to conform to the style of your residence. In many cases, you can indulge your own individual design aesthetic and add a touch of whimsy with a fanciful guest house or other exterior space in a style totally different from that of the main home. Here too, be sure to check with your HOA to ensure that there are no restrictions governing the design or placement of your secondary structure.

By: Christy Murdock Edgar