Cincinnati FHA203K Loan

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Using an FHA 203k loan can help you get the home you want - especially if you are looking at building some fast equity in a 'fixer upper'. Looking for a home that's almost perfect? Check out this loan to get funding for the house and any repairs that is bundled together, and a 203k loan may be easier to get than other home improvement loans. First, I'd like to share an example of how this works. We are closing on a home for a client shortly who is purchasing property for 120,000 dollars. After escrowing approximately 10,500 dollars for cosmetic and deck repairs, their "subject to" appraisal came back at 195,000 dollars! That's 64,000 dollars in equity the minute the Deed is recorded! What an awesome program! You can kill two birds with one loan.

203k Loan Bundling

Using a 203k loan allows you to combine loans for purchase (or refinance) and home improvement. This can reduce closing costs and paperwork; multiple loans mean more closing costs, and temporary loans may have higher interest rates than your 203k loan. You kill two birds with one loan.

Keep in mind that 203k loans require a little more paperwork than some other loans because you have to manage and document improvement projects.

Handle Deal Breakers

You may want to buy a home that's almost perfect. However, serious defects may scare lenders off. If sellers won't fix the problem, you can't buy the house unless you use something like a 203k loan. The lender knows you'll fix serious problems that you've agreed to fix, and they can move forward on the deal.

Temporary Housing

203k loans allow you to set money aside for housing while your repairs are completed. You can continue to pay an existing mortgage, or pay rent for up to six months. You won't have to live with an on-going construction project or come up with two housing payments each month.

Large Loans

Using a 203k loan provides access to large loans. Yes, there are limits, but you can borrow enough to finance 110% of the home's projected value after improvement. 203k loans, like other FHA loans, have low down payment requirements (for better or worse). Because they're guaranteed, the interest rate is competitive.

Improvements that Matter to You

The main benefit of 203k loans is the ability to make the improvements you want. Funding for an addition or updating the kitchen is taken care of up front. You can turn the home into something you want. If you're environmentally conscious, you can even choose green appliances and materials

There are many homes available that with a little TLC could be your dream home. A Cincinnati fixer-upper may also make a great investment, especially if you are able to do some of the labor yourself, or you are a savvy buyer. You are the person that has the vision to take that sad-looking little home on a great lot in a good location and turn it into the most desirable home on the list of Cincinnati homes for sale!

Ask your lender if they offer a 203k loan or contact Sarah Close Associates at Keller Williams and we will put you in touch with ours.

Deed Restrictions (10 Things That Can Ruin Your House)

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It is imperative, if you are looking to build or remodel a home, that you are aware of any deed restrictions.  A deed restriction is a provision in a deed that limits what can be built on a property, or how a property can be used.  So if you want to assure that your dream home will not turn into a nightmare, here are common deed restrictions that any property owner should be aware of.

Obstructing a Neighbor’s View

Many deeds have agreements in them that state that the neighboring properties views must be the same as when the agreement was reached, which may have been decades ago.  Though extremely popular in resort towns where views of mountains or the beach are highly valued, these restrictions are also in place in many communities with more subtle views. 

Type and Number of Vehicles

In order to keep neighborhood streets from appearing cluttered, some properties may have restrictions on the number of cars each house may keep in the driveway and parked on the street.  If there are multiple members of your household that are driving age and have a vehicle, make sure you are aware of any restrictions that may prohibit some of these vehicles from being parked in the driveway or street.

Building Fences

The size and style of fence which may be built on a property are often specified in a deed.  The most common of those outlawed by deeds around the country include chain-link fences or very tall privacy fences.

Removing Trees

This restriction is becoming much more commonplace in many neighborhoods which wish to maintain an environmentally conscious atmosphere or preserve tree-lined avenues.   There may be a complete ban on tree removal or a certain percentage of trees on a property may be protected, so before you start up your chainsaw, brush up on your properties stipulations regarding the removal of trees.

Approving Plans

In an attempt to keep a neighborhood’s identity uniform, many HOAs (Home Owners’ Associations) will need to approve your building plans before construction begins.  So, if you are hoping to build a modern home in a neighborhood full of Victorian-style homes, contact the HOA beforehand to get the go-ahead or you may face an injunction that forces you to alter your building plans to conform to the neighboring houses.

Adjacent Structures

One of the most heavily controlled deed restrictions consists of the building of any adjacent structures on a property, whether it be a shed or pool house.  If the building of such a structure is not forbidden outright, odds are that the type, size, and location of the structure on the property are limited due to a deed restriction. 

No Business Here

Perhaps the most easily adapted deed restriction consists of prohibiting the running of a commercial enterprise out of a residential abode.  The reasons behind such deed restrictions include limiting the number of traffic in the neighborhood consisting of customers and deliveries.  However, recently judges have been finding that these covenants are unlawful restrictions to private rights.

Color Palettes

Lists of approved, or occasionally unapproved, colors which a house can be painted are often provided by home-owner association.  So if you are building a new house or giving your current house an exterior make-over, be sure that the color you choose for your home falls within the permitted color spectrum.

Pet Restrictions

If you have a furry loved one in your family or if wish to keep any sort of livestock on your property for organic food purposes (such as chickens or goats), check with your neighborhood covenant to assure that these animals will be allowed on your property.  Though restrictions on livestock may not surprise a home owner, there may also be restrictions against certain breeds of dogs, pot-bellied pigs, or the number of animals you may have in the house. 

Number of Bedrooms

Deed restrictions are in place to limit the amount of septic use of a household due to the idea that the number of bedrooms in a home correlates to the number of bathrooms.  If you are not able to fit your entire family comfortably into your dream house, then this would be a major setback, to say the least.

Instead of fighting deed restrictions, facing heavy fines, or being forced to alter your after new building or modifications have occurred, a home owner is much better of knowing any limitations set in place due to deed restrictions before buying the property.  Arm yourself with the knowledge of any HOA covenant regulations or deed restrictions before purchasing or remodeling a home, and it will make the transition into the house you’ve always wanted much smoother.

What is a 1031 Tax Deffered Exchange?

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There are three types of 1031 tax deferred exchanges that can take place:

1.) Straight exchanges—two parties trade properties of equal or approximate value. This is the simplest exchange.

2.) Multi-party exchanges—this involves three or more parties buying, selling, or exchanging properties. Don't attempt these exchanges without the aid of a tax professional; they tend to be very complex.

3.) Delayed exchanges—this exchange allows the sale of the relinquished property and the buying of the replacement property to occur at different times as long as stringent rules are followed.This is the exchange most often used.

What's the Advantage of the 1031 in Terms of Taxes?

As the law's title indicates, the capital gains tax is deferred, but not eliminated. However deferral is a great way to leverage small real estate holdings into larger ones! Since you can postpone gains, you're able to use a tax-deferred exchange strategy to transfer equity to a larger property, all without paying taxes!

Another advantage is that there’s no limit on exchanges. This means you can make as many exchanges as you want! So, over the course of your lifetime, you can keep growing income and appreciation by adding new properties without having to pay the capital gains tax!

If you specialize in buying and renovating properties and want to keep reinvesting your profits into larger properties, then this strategy is especially attractive.

Note: If you don’t keep reinvesting, you risk being classified as a real estate dealer by the IRS and will not be able to participate in exchanges.

What Are the Basic 1031 Qualification Rules?

There are some basic rules that must be followed in order to qualify for a 1031 exchange. These include the following:

1.) The properties to be exchanged must be located in the United States. Note: You can exchange foreign property for foreign property and domestic for domestic. However, you can’t mix these exchanges together.

2.) You must trade only like-kind real estate.

3.) An exchange must be made that’s equal to or greater in both value and equity. Any cash or debt relief received above this amount is considered “boot” and is taxable.

4.) The like-kind property must be identified within 45 days of the closing on the initial property.

5.) All proceeds from the initial sale must be turned over to a"qualified intermediary" (also called a QI, facilitator, exchanger, etc.) who is the person or company playing the role of middleman.

6.) Any of the proceeds not under the control of the middleman are subject to taxation.

7.) The middleman holds the funds from the initial property in escrow until such time as the closing on the second property occurs.

8.) The middleman also assists the owner with the preparation of paperwork and other services to ensure the transaction progresses in a smooth manner.

9.) The closing on the second property must take place within 180 days following the close on the first property.

Wow, as you can tell, this is pretty complex subject and can't completely covered here! But if you're an investor or plan to be one, I hope I whetted your appetite for this subject.

And please, if you have any further questions, feel free to call me! I'd love to tell you more!

Not Too Big, Not Too Small? What’s the Perfect Square Footage for Your Home?

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So many homebuyers look at price per square footage as a factor in whether or not to consider a home. While this is a good idea in a general sense, there is no set formula or standard by which you should decide to buy a home when it comes to price per square footage.

In fact, builders will calculate the area of a home differently than an appraiser will. Appraisers’ calculations differ yet from an auditor’s and you could easily end up with three varying numbers that mean little to you as a homeowner.

At the end of the day, what matters most is how you feel in the space. It is important to compare the space to your needs and your usage. Consider where you are coming from and what type of room you require to live comfortably. As you walk through a home, survey each room and imagine your belongings in the area. If it seems the home lacks enough square footage or feels cramped despite a decent amount of area, then it may be a good idea to move on. Conversely, if the layout is set up in a way that despite being a few hundred square feet less than what you had imagined the perfect size it still feels good – then go for it!

If you fall in love with a property but it seems the space is a little too cramped for your taste – there are a few alternatives to consider that might help get around the issue. Décor plays a huge role in how big or small a space may seem. Utilize light colors, varying textures and airy furniture that is set up to make a room seem larger. Similarly, you can paint the walls in lighter hues to draw the eyes away from the walls and into the room itself.

If the issue is larger than that, another option is to consider renovating the space to expand areas of the home in a way to specifically suit your needs. With today’s dwindling inventory, more and more buyers are eager to lock in the phenomenally low interest rates and adjust their requirements slightly. You might get the best of both worlds by adding additional space, customized to your own needs while locking in a great price in a home that you have otherwise fallen in love with!

If you are considering buying a new home and would like personalized attention on this or other aspects of real estate, I invite you to contact us today!  We look forward to serving you!

FSBO - Your Advantages and Disadvantages - Why Shouldn't I Try to Sell My Home by Myself?

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Many home owners think about selling their own home but relatively few attempt it. Why? Because it's an extremely time-consuming and often exhausting process, especially if you're working a full-time job! It's the Realtor who takes this burden off your back.

Nonetheless, I don't discourage you from putting your home on the market and attempting to sell it yourself.
But before you do it, I do encourage you to become extremely knowledgeable about the process and aware of the both advantages and disadvantages of it.

Below, I've provided information on the benefits and drawbacks of doing a "For Sale By Owner" (FSBO) sale. 

Read it carefully and then make your decision!

Advantages of Selling Your Own Home

Of course, the biggest advantage a FSBO is that there's no commission to be paid to a Realtor. You get all the proceeds from the sale, minus any marketing costs you incur.

A second advantage is that you have complete control of the transaction. You don't have to rely on anyone else. You're totally independent.

A third advantage concerns your equity. If it's low, you have the possibility of selling your home without having to write a check.

A fourth advantage is that you don't have to rely on a realtor to schedule showings, answer inquiries, etc.

Disadvantages of Selling Your Own Home

Perhaps the greatest disadvantage is the tremendous amount of time you have to put into the sale.

It's a time-consuming process to do all the paperwork, the marketing and advertising, the showings, etc. by yourself - not to mention the hours it takes to get acquainted with all the legal, financial, and other issues. You must be prepared for this.

A second disadvantage is the costs in terms of marketing and advertising. If you don't exactly what you're doing, this can be very expensive!

A third disadvantage is that you won't have access to the Multiple Listing Service (MLS) unless you pay a fee to have your listing included. If you don't pay that fee, then you'll end up hunting for buyers one at a time, a very inefficient, ineffective, and frustrating process.

The fourth disadvantage relates to your knowledge of the market. If you're not knowledgeable about it, you may not price your house correctly.

That is, you may underprice it or overprice it. If you underprice your home, you lose money. If you overprice it, you lose buyers. By the same token, if you do find a buyer and you're not experienced at negotiation, you could be taken advantage of.

A fifth disadvantage relates to a belief of some buyers. They believe that since you're selling the house by yourself and not paying a commission, then they're the ones who should get the savings instead of you!

My Advice: Do your homework before considering selling your home by yourself! And, if you do decide to go the FSBO route, be fully prepared in all aspects of home sales!

If you'd like more information and advice on selling your own home as well as my real estate services, contact me.

Are Bi-Weekly Mortgage Payments Worth the Time and Effort?

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In most cases, yes! It’s essentially a process by which you make extra payments on your mortgage. That way, you save interest costs and pay off the loan faster.

How Does It Work?

You make a payment to your lender every two weeks instead of once a month. This means that each payment is equal to half of the monthly amount due. The result – you’re paying the equivalent of 13 full payments rather than the usual 12.

It gets even better! The full amount of the extra payment is applied toward the principal. And because the principal balance is the amount on which interest is calculated, paying down principal results in a reduction in accrued interest!

Let’s look a traditional payment monthly schedule vs. a bi-weekly schedule so you can see exactly how it works.

Example 1: Traditional monthly payments

Let’s assume you have a loan balance of $250,000 with a 6 percent interest rate and a 30-year loan term. In this example, your monthly payments are $1,498.88. So, over the life of the loan, you’d pay a total interest of about $289,595.

Example 2: Bi-weekly payments

Using the same loan balance and terms described above, the difference would be the following:

• $749.44 paid every two weeks

• About $225,490 paid in total interest

• This results in a savings of more than $64,000 in interest!

• In addition, the loan is paid off in 24 rather than 30 years

Bi-monthly payments are still a good strategy if you’re an individual who doesn’t plan to keep your house for 24 or 30 years. Why? Because bi-weekly payments still reduce principle, even over a short period of time.

For example, in the first year, the principle is reduced by nearly $1,600. And, at the end of the fifth year, the principle amount has been reduced by about $9,000!

How Do I Arrange Bi-Weekly Payments?

The first task is to contact lenders to find out if they do offer a bi-weekly payment schedule.

If they offer one, ask what the participation requirements are. In typical situations, lenders require you to have payments automatically withdrawn from your bank account since they dislike processing checks every two weeks.

Often, it’s the case that a one-time fee is charged for this service. The fee can be minimal or be in the several-hundred-dollar range, depending on the lender.

So, after all these benefits, how can there possibly be disadvantages to bi-weekly mortgage payments?

Well, the first disadvantage relates to a situation I mentioned above - the lender’s fee is very expensive for the service provided. In such a case, the costs may outweigh or cut down your overall savings.

A second disadvantage occurs when paying bi-weekly is too hard on your budget. Upfront, you need to make sure that you have the money available for the increased payments.

The final potential disadvantage relates to the length of time you plan to stay in your home. That can affect your overall savings on interest.

I recommend that you weigh the pros and cons of bi-weekly mortgage payments by using one of the many online calculators. Just enter your numbers and the calculator will give you a comparison.

If you’d like the assistance of an expert on the subject, contact us immediately!

Days on Market

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Generally speaking, the longer a home is on the market, the more willing a seller is to negotiate. And that means you might be able to get a good deal!

However, notice that I said “generally speaking.” I put in that disclaimer because there are several reasons a home might be on the market for a long time.

One is that it might simply be overpriced. If that’s the case, then you’re in an excellent position to negotiate since the sellers may be anxious to sell the home.

A second reason may be someone has already put an offer on the property, but their financing, credit rating, etc. hasn’t met the requirements of the deal. In short, there was something wrong with the buyers, and nothing wrong with the home. Again, there may be an opportunity for you in this situation.

A third reason is that someone made a simple mistake in the Multiple Listing Service (MLS)! Perhaps the home got listed in the wrong ZIP code or the wrong neighborhood, or the price was simply wrong and listed too high. Now, normally, MLS is very accurate, but, as always, it’s dependent on humans entering information into the system, so mistakes happen!

Fourth, the house may have stayed on the market for so long because the owners simply refuse to negotiate! A real estate agent can help you identify these individuals for you so you don’t waste time and energy on a sale that will never happen.

Finally, a home may stay on the market for a long time because there is something wrong with it either structurally or cosmetically or both!

Depending on the situation, this can also be an opportunity for you as a buyer! You can use it as a bargaining tool; that is, either the home seller fixes the defects or lowers the price to account for the cost of repairing those defects.

However, you should always, always get a home inspection done on such houses! (Or on any house you’re considering, for that matter!). It prevents you from buying a “money pit,” in which you have to throw a small fortune in order to get defects repaired.

Here’s the short and long of it: DOM can sometimes get you a great value in a home; however, you need the expertise and guidance of an experienced real estate agent to pinpoint such values! I can provide you with that expertise. Contact me today!