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What Every Home Seller Needs to Know About Mortgages

August 27, 2015

 

mortgage-preapproval

 

 

 

From the Zillow Team

If you’re planning to sell your home, you have several mortgage-related factors to consider — in addition to packing up and finding a great listing agent. Here are some of the most common mortgage-related questions among sellers.

Do I have a mortgage prepayment penalty?

A mortgage prepayment penalty is a fee banks charge for paying off your mortgage, and it can reduce your net cash significantly. You’re more likely to have this fee if your mortgage was put in place before the 2008 financial crisis, but mortgages obtained post-crisis can still have prepayment penalty fees if you pay off the mortgage within the first three years.

The most common prepayment penalty fee structure is six months interest on your outstanding balance. So if you have $275,000 left on your 4.25 percent mortgage, your prepayment penalty would be $5,483.75.

Your “note” will contain a provision explaining whether you have a prepayment penalty. However, often the note says you don’t have a prepayment penalty, but an addendum to the note says you do. So check your closing paperwork carefully.

How soon after I sell will my mortgage get paid off?

When your sale closes, the buyer’s funds will be used to pay off your mortgage loan. This payoff is handled by an escrow company or attorney depending on your state, and they’ll use buyer’s funds to pay off your mortgage within one to two days of closing, then send you a final closing statement (along with your net proceeds) to confirm payoff.

What are the tax implications when I sell my home?

If you sell a home you’ve lived in for two of the past five years, you’re exempt from paying taxes on capital gains up to $250,000 if you’re single and up to $500,000 if you’re married.

Your capital gain is your sale price minus selling costs and tax basis. Selling costs are real estate agent fees plus any staging or other closing costs from third parties like a title or escrow company. Tax basis is your purchase price plus improvements (renovating the kitchen, remodeling the bathroom, or adding a deck) minus any depreciation you’ve taken.

If you bought the home you live in for $250,000, spent $20,000 remodeling the kitchen, didn’t take any depreciation, sold it for $635,000 using an agent with a five-percent commission, and paid $1,800 in closing costs, your capital gain would be $331,450.

You’d pay tax on a capital gain of $81,450 if you were single — or no capital gains tax if you were married.

How do I calculate my net proceeds from my sale?

If you were a married couple in the example above, and had a loan balance of $125,000, the net proceeds calculation is sales price minus selling cost minus loan amount, netting you about $476,450.

If you were single, the calculation must also account for about 25 percent state and federal capital gains tax on the $81,450 gain, which is about $20,363. In this case, you’d net about $456,087.

When do I get pre-approved to buy a new home?

Once you’ve calculated your estimated net proceeds from selling your home, the next step is to get pre-approved for a new mortgage.

When getting pre-approved, provide your lender with your estimated net proceeds figures so they can target your down payment. If you haven’t talked to a tax advisor yet to estimate your net sale proceeds, a mortgage advisor can do rough calculations for you. Just remember, a licensed mortgage pro isn’t a licensed tax pro, so their estimates of your net proceeds will be unofficial.

What if I’m trying to buy a new home without selling first?

There are two ways to determine if you can buy without selling first.

The first (and most common) way is to qualify for the full financial obligations of both homes. If your income is enough to sustain this, you’re all set.

The second (and more rare) way is to work with a lender who might allow your primary residence debt to be excluded. If you can provide your lender with a signed listing agreement and a detailed comparable sales analysis from your real estate agent, you might be able to get the new loan without including the debt on the outgoing home. This option is usually only available in select hot markets, and your overall financial profile still must be very strong.
 
Here is the most recent information on the San Diego housing market. For specific information on your neighborhood or a market analysis on your home, please send me an email or call me at 619-888-2117.

Homebuyers Credit Knowledge and Confidence

August 20, 2015

Here is the most recent information on the San Diego housing market. For specific information on your neighborhood or a market analysis on your home, please send me an email or call me at 619-888-2117.

CreditKnowledgeandConfidence

Real Estate @ a Glance: August 2015 Edition

August 10, 2015

Better RE glance

Here is the most recent information on the San Diego housing market. For specific information on your neighborhood or a market analysis on your home, please send me an email or call me at 619-888-2117.

Reportable Period :: JULY 2015 :: SAN DIEGO ASSOCIATION OF REALTORS®

Median Sales Price: $482,750
Days on the Market Until Sale: 35
Housing Affordability Index: 34%
Months Supply: 2.6

totalrealesateoverviewsandiego

 

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Home Buyer Characteristics

July 30, 2015
Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117.

HomeBuyerCharacteristics

10 Uncommon Home Inspections to Consider Before Selling

July 23, 2015

home-inspections Hire inspectors to perform these 10 specialized home inspections to reveal potential problems before you’re scrambling to close on your home sale.

Selling your home can be a fraught proposition in even the most booming of markets. In particular, it’s that looming home inspection that can trigger the night sweats.

What will the inspector discover? What hidden home flaws will end up costing you? The savvy seller, however, knows to get ahead of the game. Pest inspections, foundation assessments, mold testing — there are plenty of specialty inspections you can have done on your home while prepping it for sale.

Here are 10 uncommon home inspections you might want to consider before listing your property:

1. Termites and other pests

Mice are the pests you see; termites and their buggy counterparts are the ones you don’t. A proper pest inspector will get into your home’s crawl space and turn up any evidence that six-leggers have been snacking on your beams. They can also look for dry rot, which is caused by fungi and can also lead to wood disintegration.

2. Asbestos

Scary but true: If your home was built before 1975, there’s a good chance asbestos is present in one or more of its building materials. It’s most commonly seen as thermal insulation in basements, but back in the day, asbestos could be found in anything from window caulk to attic insulation. Now for the good news: In and of itself, asbestos isn’t a health hazard. It’s only when it begins to crumble that you should worry. Bring in an inspector to assess the condition of any known asbestos; if he recommends removal, tackle that before listing.

3. Foundation

If yours is an older home, the threat of foundation settling looms large. A bit of settling is expected, but when you’re heading into Tower of Pisa territory, that’s where the troubles start. A foundation engineer can come in and look for telltale signs — a cracked wall, a twisted window frame, horizontal cracks in the foundation itself — and then offer a timetable for repair. (Foundations settle very slowly, and if a buyer plans to stay in the home for only a few years, they might not be as concerned.)

4. Electrical

Houses go through many iterations: a home business here, a couple of rental apartments there. That also means a lot of electrical rewiring, which can lead to code violations. Bring in an electrician you trust who’s also familiar with the neighborhood architecture and history so they know what problems to look for.

5. Chimney

Sure, that wood-burning fireplace is a major draw to buyers, but you’re also going to field a lot of questions about its condition. A chimney inspector can make sure the flue liners and inside bricks are in good shape and that smoke is exiting the house properly. If yours is a nonworking fireplace with the potential of being opened back up (another buyer draw), you might want to send someone up to your roof to inspect the chimney exterior.

6. Lead

Again, just because lead paint was officially banned in 1978 doesn’t mean it isn’t still lurking in your home — it might be left over from a bygone era or have been illegally applied in the ’80s. If you have any concerns — and especially if your home is likely to attract buyers with young children — bring in a certified lead abatement contractor. At the least, you’re doing the neighborhood a public health service.

7. Roof

Roof repair is one of those expenditures that make buyers wish they’d never entered the real estate market in the first place. Hire someone who specializes in your specific roof material (rubber, slate), and if damage exists, get a firm estimate on the repairs or replacement so a buyer doesn’t overstate those costs later during negotiations.

8. Soil

If you live on a hill, there’s always a chance the soil could crumble in ferocious weather; a soil inspector can affirm your land’s stability. If you have a large plot that might woo potential gardeners, an inspector can also test for soil contamination.

9. Trees

You love that gnarled old chestnut in the backyard but have always wondered why its leaves grew so sparsely. Before pitching the idea of a treehouse to the next owners, bring in an arborist to test the tree’s long-term viability. Tree care, including removal, is surprisingly costly, so buyers tend to grumble about old-growth beauties that are unstable or otherwise unhealthy.

10. Mold

It’s not just for hypochondriacs anymore. The health dangers of mold are well documented, and its threat frequently looms in the minds of real estate shoppers. A good mold inspector will ask you the history of the home, including any past water damage, and then do a visual tour of your place before testing for various spores.

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117.

5 Deck Makeover Projects Under $300

July 16, 2015

outside deck home improvements

 

By: John Riha, ClientDirect

 

Want to upgrade your deck but watching your budget? Here are 5 easy deck makeover ideas, many well under $300.

1. Add Solar Lighting
If you’d like your wood deck to come alive when the sun goes down, add solar lighting. Solar lights don’t need an on/off switch — they light up when it gets dark, then fade away 4-6 hours later. You won’t have to plug them in or wire anything, either. Their solar-charged batteries are renewed every day, and the lights are built to withstand all kinds of weather.

Types and cost:
Paper lanterns (made from synthetic, weatherproof nylon; $20-$30) are made for hanging and come in all sorts of fun shapes, sizes, and colors.

Carriage lights can be fixed on top of a pillar or railing newel post. $45-$150.

Solar illuminated replicas of old-fashioned mason jars can be set on any flat surface, about $35.

Rope lights have small LED bulbs inside a flexible cord. A 25-foot-long rope with solar charger and stand is $25.

What else: Suspend lanterns from overhead trellises, railings, and nearby trees, where they’ll shed a soft, colorful glow. Wind rope lights around rafters and railings.

2. Install a Stone Landing at the Foot of Your Deck Stairs
Dress up the transition from your deck to your yard with a little hardscaping — a stone landing at the bottom of your deck stairs. Stones are a natural compliment to wood decks, and they’ll help prevent mud from forming where there’s heavy foot traffic.

Cost: Flagstone is priced by the pound; you’ll spend $60-$100 for enough stone for a 3-foot-by-4-foot landing.
How-to: Techniques for installing a landing are the same as putting in a patio, although you’ll have to temporarily support your existing stairway while you work around — and under — it.

What else: You should be able to add a landing in less than a day. It’ll get done faster if you hire a pro, but it’ll cost you another $150-$200 in labor.

3. Put Up a Privacy Screen
Whether you’re relaxing alone au naturel or entertaining friends, a little home privacy is always welcome. You can add some vertical supports and fill in a variety of cool screening materials that are as nice for your neighbors to look at as they are for you.

Types and costs:
Bamboo fencing comes in a 6-foot-by-16-foot roll for $20-$25.

Lattice panels are either wood or plastic, $15-$30 for a 4-foot-by-8-foot panel.

Grow climbing plants on a trellis ($20-$100) to create a living privacy screen. Plant climbing vines in tall containers ($40-$120) to raise them above the deck surface and give them a head start filling in your screen.

Outdoor fabric resists moisture and fading; $12-$120 per yard. You’ll pay another $20 to have a seamstress cut and hem a 3-foot-by-5-foot panel.

How-to: Your privacy screen should integrate with your deck; make the framework using the same basic materials as your deck railing and structure.

Add some flash by building a frame with 2-by-2- or 2-by-4-inch uprights spaced 1 foot apart, then weaving aluminum flashing between the uprights.

What else: Make sure to position your privacy screen where you’ll get maximum benefit. Sit on your deck and check your lines of sight.

4. Paint a Faux Floor Rug on Your Decking
Punch up a boring old deck with a faux rug. This is a fairly low-cost project with a big wow factor, and one you can share making with your (well-behaved) kids. It works best on a newly cleaned deck (see below).

Cost: Most of your cost will be deck stain or paint in various colors. Because you won’t be using that much stain per color, you can buy quarts. Figure $15-$20 per quart.

How-to: Figure out a size, sketch out the design on your decking, and then all you have to do is paint or stain between the lines. You can use painter’s tape as a guide, but a little leakage is likely on a wood decking surface.

What else: Keep a few basic cleaning supplies on hand for any drips or spills. After the stain is dry, coat the entire deck with a clear deck sealer.

5. Wash and Refinish Your Wood Decking
The ultimate deck makeover is none other than a good cleaning. Applying a coat of deck sealant afterwards ensures your wood decking looks great and will last for decades.

Cost: There are many brands of deck cleaning and brightening solutions. Some require the deck to be wet; others need the decking to be dry. Some are harmful to plants and you’ll have to use plastic sheeting to protect your landscaping. Consult the instructions carefully. You’ll pay $15-$25 per gallon, enough to clean 300 sq. ft. of decking.

How-to: Scrubbing with a good cleaning solution and rinsing with a garden hose is more foolproof than scouring your decking with a power washer that may damage the surface of the wood.

What else: After you deck is cleaned, apply a coat of deck stain or clear finish. The sealer wards off dirt, wear, and UV rays, and helps prevent deck splinters. A gallon covers 250-350 sq. ft., $20-$35/gallon.

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117.

6 Reasons to Reduce Your Home Price

July 9, 2015

real estate lower price

 

While you’d like to get the best price for your home, consider our six reasons to reduce your home price.

Home not selling? That could happen for a number of reasons you can’t control, like a unique home layout or having one of the few homes in the neighborhood without a garage. There is one factor you can control: your home price.

These six signs may be telling you it’s time to lower your price.

1. You’re drawing few lookers.
You get the most interest in your home right after you put it on the market because buyers want to catch a great new home before anybody else takes it. If your real estate agent reports there have been fewer buyers calling about and asking to tour your home than there have been for other homes in your area, that may be a sign buyers think it’s overpriced and are waiting for the price to fall before viewing it.

2. You’re drawing lots of lookers but have no offers.
If you’ve had 30 sets of potential buyers come through your home and not a single one has made an offer, something is off. What are other agents telling your agent about your home? An overly high price may be discouraging buyers from making an offer.

3. Your home’s been on the market longer than similar homes.
Ask your real estate agent about the average number of days it takes to sell a home in your market. If the answer is 30 and you’re pushing 45, your price may be affecting buyer interest. When a home sits on the market, buyers can begin to wonder if there’s something wrong with it, which can delay a sale even further. At least consider lowering your asking price.

4. You have a deadline.
If you’ve got to sell soon because of a job transfer or you’ve already purchased another home, it may be necessary to generate buyer interest by dropping your price so your home is a little lower priced than comparable homes in your area. Remember: It’s not how much money you need that determines the sale price of your home, it’s how much money a buyer is willing to spend.

5. You can’t make upgrades.
Maybe you’re plum out of cash and don’t have the funds to put fresh paint on the walls, clean the carpets, and add curb appeal. But the feedback your agent is reporting from buyers is that your home isn’t as well-appointed as similarly priced homes. When your home has been on the market longer than comparable homes in better condition, it’s time to accept that buyers expect to pay less for a home that doesn’t show as well as others.

6. The competition has changed.
If weeks go by with no offers, continue to check out the competition. What have comparable homes sold for and what’s still on the market? What new listings have been added since you listed your home for sale? If comparable home sales or new listings show your price is too steep, consider a price reduction.

G.M. Filisko is an attorney and award-winning writer who made strategic price reductions that led to the sale of a Wisconsin property. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Consider me your resource for all things real estate!  Selling, buying, upsizing, downsizing, relocating, investing, vendor referrals, shoulder to cry on during renovations and more.  Just send me an email or call me at 619-888-2117.
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