Mortgage rates are the interest rates set for a home loan. It is also known as a “mortgage.”
Mortgage rates are derived from mortgage-backed securities (MBS), bonds backed by U.S. mortgages. Mortgage rates vary depending on the type of loan and the lender and can be confusing!
Understanding what factors influence mortgage rates might help you comparison-shop for mortgage rates and feel confident that you’re receiving a fair price. Ready to dive in?
How Mortgage Rates Are Determined
Comparing loan offers is critical if you want to get the greatest home deal. Unfortunately, loan estimates are jam-packed with data and statistics, which can be challenging to understand if you’re a first-time buyer.
Don’t let all of these figures overwhelm you, though. As long as you understand the mortgage rate you’re receiving, you have a solid foundation on which to compare your loan options.
What Are Mortgage Rates?
A mortgage rate is the interest rate you’ll be charged to borrow money. The yearly interest amount will be a proportion of your total loan balance.
There are two types of mortgages: fixed-rate and adjustable-rate. Your interest rate is constant throughout the duration of your loan with a fixed rate.
For example, a lender quotes you a 6% fixed mortgage rate on a $300,000 loan. This means you’ll pay 6% of your loan balance every year until you sell the home, refinance, or pay it off.
An adjustable-rate mortgage (ARM) is a type of home loan with an interest rate that fluctuates after a certain amount of time. For example, the 5/1 ARM is one of the most popular adjustable-rate mortgages. For the first five years, you will receive a set interest rate, and then it adjusts once a year after that.
Factors That Determine Mortgage Rates
Lenders set mortgage rates on a borrower-by-borrow basis. They consider many different factors, both larger economic and personal factors like the borrower’s individual financial situation.
Larger economic factors can include:
Strength of the economy
Housing construction and other market conditions
On the other hand, personal economic factors typically include:
Down payment size
Loan size, type, and term
Location of the property
Your unique financial position will have an impact on the interest rates you’ll get. The quality of your credit score, as well as factors like your down payment size, the amount of money you’re borrowing, your income, and more, will all play a role.
To get the lowest interest rate, you should have:
A good credit score
A down payment saved up
A low loan-to-value ratio
A low debt-to-income ratio
How To Shop For The Right Mortgage Right
Mortgage rates are unpredictable, changing without notice or warning. When shopping for a mortgage, it’s vital to understand the techniques as well as have a strategy. You must shop the “right way” if you want to get the best deal.
It’s also essential to keep in mind that when you’re looking for a mortgage rate, you’re shopping for a mortgage rate as well as any associated closing costs. You can’t have one without the other.
Mortgage lenders will never offer you a rate without including any associated costs, so keep an eye on your quotations – a rock-bottom rate is meaningless if your closing expenses are incredibly high.
There are two options for obtaining mortgage rates. You may either look for a particular mortgage rate or a specific closing cost. When you can isolate a single loan variable for comparison, such as “cost” or “mortgage rate,” it’s simple to determine which mortgage company is offering the best deal.
Let’s pretend you want a rate of 4.00 percent, for example. This is your “fixed” variable. So all you have to do now is inquire about mortgage lenders’ lowest closing fees at a 4.00% interest rate.
Alternatively, let’s say you want to take out a loan with no closing costs. In this scenario, closing expenses are your fixed variable – they’re $0.
To choose the best mortgage lender, simply inquire with each one about what their interest rate would be if there were no closing costs. Then, you pick the lender who offers you the lowest rate.
Are you looking to buy a home in the near future? If so, understanding what factors influence mortgage rates might help you comparison-shop for mortgage rates and feel confident that you’re receiving a fair price. Interest rates can be fixed or variable, depending on the type of loan product desired – it’s important to compare both types before making a decision.
We can help you get a fair price for mortgage rates. So call us at (406) 969-4141 or reach out online today. We’ll get back to you with personalized advice on how to find the right loan company today!
We have contacts in Billings, Montana, that help our clients find the rate for them so that they can get the house they want when they want it.
If you’ve been thinking about buying a home, then you might be starting to panic about a down payment. A down payment is the cash amount you’re usually required to pay upfront and is usually a certain percentage of the total. So, for example, a $350,000 home would be $35,000.
When applying for a mortgage to buy a house, your down payment will contribute to the home’s overall purchase price and represent your initial ownership of the home. After that, your mortgage lender provides the rest of the payment for your house, and you’ll make mortgage payments monthly for a pre-determined amount of time.
Lenders require a down payment to show that you are serious about buying and have the funds to make payments. There are a few exceptions to that, however, and we’ll get into that here. Read on as we talk about everything you need to know about down payments.
Everything You Need To Know About A Down Payment
Coming up with enough money for a down payment is usually the most significant roadblock when it comes to buying a house. So let’s discuss how much you really need.
Minimum Down Payment Requirements
Though it’s not always required, you’ll likely hear the advice that you should put at least 20% down on a home to increase your chances of getting approved for a mortgage with the best rates. However, it’s important to note that most minimum down payments vary depending on the type of mortgage.
FHA loans are backed by the Federal Housing Administration and can require as little as 3.5% for first-time home buyers.
On the other hand, VA loans are guaranteed by the U.S. Department of Veterans Affairs and usually do not require a down payment. These loans are reserved for current and veteran military service members and eligible surviving spouses.
USDA loans, supported by the U.S. Department of Agriculture’s Rural Development Program, are another loan program that requires no down payment. They are for rural and suburban homebuyers who meet the income limits and basic requirements.
Most down payment requirements can also vary by lender and the borrower’s credit history. For example, loan providers might require a higher down payment if you have a meager credit score, while those who have excellent credit get better rates.
What Are The Pros And Cons Of Putting 20% Down?
Though you might not have to put 20% down on your new home, we thought it would be beneficial to look at the pros and cons of how a larger down payment can affect you.
If you can put 20% down, you’ll be able to avoid being required to buy private mortgage insurance (PMI). PMI is insurance that protects your lender if you default on your mortgage.
Another benefit of putting more of a down payment down on your home is access to better interest rates. The interest rate is known as the percentage of the principal or outstanding balance on your mortgage that your lender will charge you every month. The more money you put down, the less of a risk you seem to lenders.
In addition, when you put down a larger down payment, your overall loan is smaller, which means that you’ll pay less in interest over time. This also translates to smaller monthly payments.
Lastly, larger down payments give you a competitive edge over other buyers. People who have saved more for the home buying process usually have their finances in order, which means you’ll have fewer problems finding a lender.
Cons Of Putting 20% Down
We know that putting that large of an amount isn’t right for every buyer. There are a few drawbacks to saving a 20% down payment.
First, it can feel financially risky. Once you put money down on your mortgage, it’s not easy to get it back. So some might warn you to put a little less down and instead keep liquid cash and build your emergency fund.
Secondly, less money in your bank account means less money for those minor repairs your new home might need. The larger the down payment, the less money you’ll have to take care of things that arise when you first move into your home.
Lastly, it can take a long time to save 20%, and each month you’re not spending paying a mortgage, you’re wasting on rent, which many buyers don’t think is worth the larger down payment.
Can You Buy A House Without A Down Payment?
Yes! As we mentioned above, if you qualify for specific programs, you can buy a home with no money down. In addition, government-backed loans are insured by the government, making them less of a risk for lenders because it promises that the government will cover the financial loss if you default on the loan. This means that lenders will be more willing to give you better interest rates and less strict down payment requirements.
Both VA loans USDA loans have a zero-down payment guarantee, given that you meet the minimum qualifications set by the USDA and the Department of Veteran Affairs (VA).
Bottom Line When It Comes To A Down Payment
Though at the end of the day, there is no one-size-fits-all answer. An excellent place to start is to look at how your down payment will affect your monthly payment. Talk to your mortgage lender or use any number of online mortgage calculators to help you plan out how much you can reasonably afford. With just some basic info, they can break down your estimated mortgage and help you plan what down payment amount makes sense for you.
Talk to your local real estate agent too. They deal with home buyers every day and have some great resources and references to help you make sure your finances are in order. Do you still have questions? Contact 41 Realty Group today.
Have you been imagining your dream home and are ready to get out of the rental game? Buying the home you’ve always dreamed about is one of those life accomplishments that tops everyone’s bucket list. Though we all have different items on our wish list, most of us hope to find a home that feels explicitly like it was made for us.
There are several things to consider as you search for that perfect property for you and your family. First, you’ll want to look for your dream home in a location that you’re family will be happy in for a long time. Then, don’t be afraid to be a little bit picky, and hold out until you find the home that feels right. Read on for more tips to help you find the right home (and be able to afford it when you do!).
Tips To Help You Get Your Dream Home
Buying a home is an exciting time, especially when you find the perfect home on your first try. However, there is a lot to do when it comes to the buying process. Here are a few tips to help you get into your dream home.
Assuming you aren’t going to pay for it with cash, the first thing you need to do is to get pre-approved by a mortgage lender. Pre-approval is essential when you’re ready to start looking for your dream home for two reasons. First, it tells sellers that you’re a serious buyer, and second, it means you exactly how much you’re qualified to borrow.
Without taking this step, you might end up falling in love with a house that you can’t afford. Getting your finances sorted before you even start looking will help you set better expectations, and you won’t end up with any frustrating surprises later on.
Set Your Dream Home Budget
Now that you have a ballpark of how much you qualify for, you can start to set a reasonable budget for yourself. Typically it is recommended that you strive for a mortgage payment that is no more than 25% of your take-home pay on a 15-year fixed-rate mortgage. Though 30-year mortgages seem more affordable, you end up paying a fortune in interest – which only builds the bank’s wealth.
In addition, when you set your budget, you’ll also want to account for some of the costs that go into buying a new home, like higher utilities, new furniture, or even HOA fees. Don’t forget to budget for home-buying expenses, too, like moving costs, closing fees, and upgrades and repairs within the home itself. Finally, you want to plan for any hidden fees, so your savings don’t get any more depleted.
Find a Real Estate Agent You Trust
Once you’ve been approved for a mortgage and have a better idea of your budget, it’s time to find a real estate agent. There are several ways to go about choosing an agent. The first is to ask for referrals. Ask your friends and family who they’ve used and liked in the past.
Your mortgage lender might also have a team or broker in mind when they meet with new clients. Once you have collected a few names from the people you trust, call and meet up with prospective agents and figure out who you might want to move forward with.
When you choose your agent, you should keep in mind how long they’ve been working in the industry, what their main niche is, and how familiar they are with your area. It’s also a good idea to confirm their method of communication and make sure they are available when you need them.
Choose The Right Location
You’ve heard the old adage – Location! Location! Location! This definitely rings true when it comes to finding your dream home.
It’s important to remember that your house itself isn’t enough to be considered your dream home. Instead, it’s part of a larger community that you and your family have to exist in on a daily basis. With that in mind, you must find a neighborhood that suits your family’s needs too. For example, do you want to be close to downtown so you can walk or bike to local events? Are you looking for a suburb where you and your kids can play and feel safe?
Creating this wishlist will help your agent narrow down their inventory and help you find the perfect home in the area you want to be in.
Consider Lot Location and Size
The lot in which your home sits is often an afterthought when it comes to purchasing a home, but we think you should add it to the top of your list. Of course, you can always alter your home and upgrade its interior, but you can’t change the land.
When looking at specific properties, consider the lot’s location and size before officially submitting an offer. Does it have that big backyard you’ve always dreamed about? Does it have a great view you’ll be happy to look out for years to come? If anything about the property seems like a compromise to you, it might be a good idea to walk away. It’s better to choose the better lot with a fixer-upper house than it is to select an updated house on a poor lot.
When it comes to buying your dream home, it’s important that you are patient and don’t be afraid to be picky. Wait for the right house at the time. We’ve seen many buyers who just settle for a house they don’t love just because they were tired of looking.
The key is to find yourself a good real estate agent who has a deep understanding of your needs and doesn’t want you to settle for good enough. The right agent will be just as committed to your dream as you are and will have your back throughout the entire process.
Looking for what steps you need to take in order to prepare to buy a house? If you’re looking to put your rental days behind you and move into a home you can finally call your own. Now’s the time to start planning. Even if you don’t think that you’ll be ready in six months or a year from now, there are things you can do to prepare yourself and your family. Crossing the following items off your list will make the home-buying process a little bit easier. Read on for a couple of tips you can get started on right away.
Prepare To Buy A House With These Tips
Getting ready to buy your first house can feel a little bit overwhelming. From credit scores to down payments, mortgages, and more, there is a lot to process. So here’s a brief guide to help you get ready to make one of the most significant purchases of your life. Prepare to buy a house with these easy tips.
Check Your Credit & Start Saving
A good credit score is one of the first things mortgage lenders look for when you’re considering buying a home. It proves that you’ve got a good track record at paying off past debts like student loans and credit card bills. The higher your credit score, the easier it is to qualify for lower interest rates and help make your home more affordable.
Several credit reporting agencies are available online, and many of them will keep you a free copy from all three credit reporting bureaus: TransUnion, Equifax, and Experian. Many of these sites will also give you ways to help you improve your credit and give you an overview of why you have the score you have.
Having cash reserves is also essential for buying a home, as you need to prove to a lender that you can afford housing payments, even payments that might be higher than your current rental rates. This means that you should start saving now! In addition, you’ll need to prepare for a down payment, inspections fees, and maybe more.
Get Your Documents In Order & Talk To A Mortgage Lender
If you’re close to putting an offer on a house, you’ll want to start collecting documents that verify your finances. This includes paystubs, W-2’s, bank statements, and even copies of tax returns. Too often, homebuyers don’t consider mortgage shopping until it’s too late, and someone else buys their dream home who had their finances in better order. A mortgage pre-qualification and mortgage pre-approval can help you with the buying process. Though these two steps sound very similar, they are, in fact, quite different.
A pre-qualification is a preliminary step in providing the mortgage lender with just some basic information about your finances online. Though it isn’t verified, it can be used to determine whether you might qualify for financing. On the other hand, a pre-approval involves submitting an actual mortgage application and providing your lender with supporting documentation. This usually includes tax returns, paycheck stubs, financial statements, a credit check, and more.
Getting pre-approved is the most crucial step before even starting before house-hunting. Some Realtors and sellers will only work with pre-approved buyers.
Mortgage lenders will review all of your information and determine how much you can afford to spend on a property. Though a pre-approval doesn’t 100% guarantee financing, it does go a long way to making it happen. A pre-approval tells you what you will be able to afford before searching for a home – which makes it a significant step.
Find A Real Estate Agent
Though buying a home can be complicated and even intimidating, it gets much easier when you have a professional on your side to answer questions and look out for your best interests. A buyer’s agent can help you find the right house, give you negotiation advice, and get you a reasonable price for your future home.
Don’t rely on the seller’s agent to provide advice and guidance, as it’s their job to help the seller, not the buyer. Though we’d love for you to consider our team at 41 Realty Group, you should always get recommendations from your friends and family. In addition, read online reviews, talk to a few agents, and get advice from other people who have bought a home recently before making a final decision.
Make Sure You Have Earnest Money Ready To Go
As we mentioned before, it’s good to have cash reserves on hand when trying to prepare to buy a house. Once you find that perfect property, you’ll be required to submit an earnest money check with your offer. Earnest money is basically good faith money that says, “I’m a serious buyer.”
Though the actual amounts vary from house to house, they typically range from 1% to 2% of the purchase price – usually a minimum of $1,000. Of course, the seller doesn’t get this money; to be clear, funds are held in an escrow account and are either returned to you at closing or applied to either closing costs and/or your down payment.
Final Thoughts To Prepare To Buy A House
We know that buying a house is a huge decision. But, even in this market, where it feels like there aren’t a lot of homes on the market, you shouldn’t rush. Don’t act too quickly or skip vital steps like a home inspection or getting preapproved. At 41 Realty Group, we want you to find the home of your dream at the price you can afford. So let us help you prepare to buy a house and get all of your real estate questions answered. We’ll help you find the right mortgage lender, help you with the paperwork, and of course, walk you through every step of the process. Get in touch with us here.
Though the world finally seems to be opening up a bit, and the process of buying and selling homes might look a little different than it did pre-coronavirus. It’s probably going to be a while before anyone feels completely comfortable inviting strangers to come in and out of their homes. Thankfully, technology today makes it possible to give potential buyers a better look at a home from a safe distance, eliminating physical showings until they are absolutely necessary.
A video tour won’t always live up to the traditional showing experience, but it can decrease the number of people who aren’t serious about buying at the present time. Everyone is adapting to be respectful, and open house etiquette is adapting too! Here we provide some helpful tips on proper open house etiquette, both in general and in a post-pandemic world.
Easy Open House Etiquette Tips Post-Pandemic
We’ll start with some open-house precautions that many sellers put into place and then move into more general open house etiquette tips meant for buyers.
Open House Precautions
Here are a few precautions for sellers and agents to make an open house run smoothly and safely.
Leave all the lights on in the house for the entire showing. That way, buyers and agents don’t have to touch light switches. In addition, this saves everyone from having to sanitize these areas.
Offer booties at the door so that all visitors can cover their shoes and keep the walkways clear and clean.
Set up cleaning stations in common areas. Provide alcohol-based hand sanitizers throughout the house, and keep soap and paper towels on the counter next to sinks.
Keep cleaning wipes and disinfectant cleaners handy so that common surfaces can be wiped down between each showing or buyer. Wipe down doorknobs, cabinet handles, faucet handles, and countertops, and any other areas that you believe visitors might have touched.
Encourage all attendees of an open house to wait to enter a room until other people have left. There should be plenty of areas left to explore in the meantime or consider having staggered visiting so that only one family is in the house at a time.
Do’s & Don’ts For Open House Etiquette
Now that we’ve established precautions let’s get into some basic open house etiquette for potential buyers.
Let The Listing Agent Know If You’re Working With Another Agent
As a buyer, it’s good etiquette to let the agent hosting the open house know if you’re working with someone else. Most realtors will ask you this outright, but it’s a good rule of thumb to have your agent’s business card in hand to pass on to the hosting agent.
Open house etiquette ultimately boils down to respect. Buyers should respect the home and treat it the way they would want their home to be treated. You wouldn’t want people going through your personal items, so keep the seller’s privacy in mind.
Avoid going through medicine cabinets or nightstands or other furniture items that don’t pertain to the house.
It’s important to remember that open houses put the seller in a vulnerable position, so take care when touring the home. Sellers are motivated and want their homes to sell, but their personal possessions should still be respected.
Leave Your Shoes At The Door
We mentioned booties earlier to go over the top of shoes, but it might be good to remove your shoes altogether. It’s a simple courtesy that could go a long way. After all, this could be your potential home, and you want the floors and carpet to be in pristine condition. When in doubt, slip the shoes off at the door.
Don’t Go To The Bathroom
Another tricky situation that comes up in open houses is whether it’s polite to use the bathroom or not. As a rule of thumb, it’s better not to go, but the situation isn’t always so black and white.
It’s hard to set rigid guidelines because sellers don’t want to isolate potential buyers or be insensitive to basic human needs. However, as a buyer, try to go before or after and only ask if it’s a real emergency.
Leave The Inspection Process To The Pros
Though your parents, friends, and random family members have great intentions as they accompany you to the open house, make sure that the role of “home inspector” is left to the professionals.
Though some flaws might be obvious, don’t make any hard and fast decisions until a licensed and insurance inspection company has taken a look. Of course, most buyers mean no disrespect, but there is a checks and balances system in real estate so that a buyer can make a safe and informed decision before buying.
While general snooping around should be avoided, you should definitely check the closets. Open up the doors in the house is entirely acceptable when it comes to open house etiquette.
Sometimes homes have hidden walk-in closets or small closets where you expect a large one. Storage space is an essential factor, so feel free to open those doors to see what’s behind them.
Schedule A Private Showing
It’s important to remember that an open house is different than a private showing. Open houses are to help you add a home to your list of potential buys. Can you envision yourself living there? Do you like the quick walkthrough of the home?
If you can, and you do, then it’s time to schedule a private showing where you can get a closer look at the home and get more information from the agent. A private showing is where you can look a little closer and scrutinize the details, while an open house is to help you get a better sense of what you’re looking for.
Looking For A House in Billings, MT or Surrounding Areas?
If you’re looking for a house in Billings, MT, and are curious about who is still holding open houses, get in touch with us today! All the experts at 41 Realty Group would be happy to help you find your dream home, plus give you the low-down on how the seller feels about holding an open house. We’ll answer your questions, establish your wish list, and give you an idea of how the market is looking right now. So call us today at (406) 969-4141 or contact us online.
In our first installment of Billings Best, Nicole King sits down with Sam Hensler of Dynamic Analysis to discuss home inspection information. Together they go into more detail regarding home foundations, how soil contents affect house settling, common homeowner mishaps, and so much more. This video also shadows Sam on an actual home inspection with a new buyer.
This video is long, but the knowledge you’ll gain as a homeowner or a potential buyer is invaluable. Watch below or scroll below for the full transcript.
Home Inspection Information You Should Know In Billings, MT
Here is the transcript for the first episode of Billings Best, which discusses home inspection info you don’t want to miss. The transcript covers the first half of the video before Sam goes on a home inspection to show you what to look for.
Nicole: Hey there, I’m Nicole King, broker-owner of 41 Realty Group. I’m here at Dynamic Analysis with Sam Hensler, the owner, and we’re here to chat a bit about what is going on in the greater Yellowstone Valley Area.
Kind of the elephant in the room that everybody’s been hearing a lot about is some foundation and soil movement and things out in Copper Ridge. We are definitely not going to talk specifically about Copper Ridge today but Sam, and he’s going to give you all his credentials here in just a moment, but he is well versed in soils and foundations as a structural engineer and I just wanted him to tell us kind of what to expect from areas around the Billings Area as far as soils and structure and what people should really be looking for in homes in those areas and how they can best take care of their homes so it can last as long for them in the best condition possible. So thanks for meeting with me.
Sam: Yeah, absolutely.
Nicole: All right so tell us about you, your credentials and why we should rely on you as an expert.
Sam: Sure so MSU grad and graduated with a degree in engineering at MSU. Went on to design uranium processing plants for a company out in Bozeman for five years and worked on building designs and infrastructure and large industrial designs and then moved out to Billings where i got involved in more building and residential specific construction and the design for those. And something I had never heard of but the need for structural engineers to evaluate homes that were being bought and sold which was not something that I had seen before but apparently happens pretty often here. And then now I do about 800 of those a year.
Nicole: 800? Every year? So visiting existing residential structures to evaluate their structural integrity.
Nicole: Okay, so when you get called out what are the things that you see most often?
Sam: Yeah, yeah, it depends on the area. Certain areas have specific issues whether they’re relating to the soils in that area for instance if we go south of the river then the soil changes completely and now we’re worrying about heaving soils that are pushing up on slabs and pushing all the guts of the home up and potentially lifting that the floor the roof up off the foundation, so things like that are more concerning once we go there.
If we’re going along the rims then we’ve got issues with slope stability and rock fall and collapsible materials and air pockets and all sorts of weird shifting in the debris field of a former landslide for going out in areas where you have a lot of soil that was deposited by wind like the northwest portion of billings there’s a lot of of compressible and collapsible soils that can move foundations.
If we’re looking at the older part of town then we’re looking at a lot of foundations that may not have that many usable years left depending on how they’re originally constructed and how well they’ve been taken care of for the last 100 years.
A lot of times there’s homes that have been heavily modified because they used to build homes pretty small and would just add on to them and I see a lot of homes that have had bearing walls removed or portions of the walls that are meant to hold the building up in a windstorm. A lot of times people dig out there, underneath their floor and put upgraded utilities like a large furnace or water heaters or things like that and they’ll undermine their foundation because it was only six inches deep to begin with and then a simple hose being left on could cause the foundation to collapse at that point. So it really depends on the issue and what part of town you’re in and when your house was built and how well it was taken care of and what kind of soil it’s on.
Nicole: Okay, so if you’re thinking of giving homeowners, either people who are about to be homeowners or currently homeowners, some advice on things that they need to be doing, kind of no matter what area of town they live in, what are some major things that they really need to be doing to make their house last for them?
Sam: Sure, so the number one thing that everyone’s probably heard of by now is just keeping good drainage and there’s a lot of reasons why keeping good drainage is important for areas that have hydro sensitive soils, soils that will react when water is mixed in with them. So like a swelling soil like you have south of the river or a collapsing soil that we have up in along the rims or in the northwest part of town that will collapse when they get wet.
It’s really important that we keep the soil underneath the foundation dry to prevent it from moving, but also, for instance, if you’re in Laurel where there’s high alkalinity in the water and in the soil it will react chemically with the concrete and dissolve the foundation out from underneath the house.
Nicole: That doesn’t sound like a good thing.
Sam: No, it doesn’t and it happens to a lot of homes out there. It’s a slower process but a lot of those homes are in that age where I have seen foundations completely converted back to sand and we’ve had to replace foundations just because it dissolved, just disintegrated right underneath the house because water was pulling up and carrying sulfides into the, into the concrete where it would evaporate in the dry basement air and build up and disintegrate the concrete.
We get frost heave out here any time that you get freezing conditions which we can’t really avoid unless you heat a space so if you have an unheated garage, it’s an issue. If you have a shallow foundation, that’s an issue, if you have frost susceptible soils which are fine particle soils like silts and clays which we have all over and we have moisture, which also can’t really get rid of then you’re going to get frost heave so that’ll lift up on any slabs that are unheated throughout the year. So like garages we’ll see a lot of slab heave movement which will change the drainage of the slab and potentially cause all your watershed from your car to drain towards the foundation and cause further issues in the foundation.
There is lots of spalling like freeze-thaw spalling, just in concrete that gets beat by the Sun. Concrete’s really porous, the water will actually absorb into it, which is not something a lot of people know but water can pass through the concrete fairly easily, just really slowly. So if you have in the Spring while you’re getting lots of freeze thaw, the water will move into the concrete and the foundation and then freeze at night and can pop things off and you’ll get a bunch of spalling along your foundation as the thickness of the foundation wall just kind of erodes and then you can start to expose rebar which will get wet and then that’ll rust and expand and pop your foundation more.
So a lot of things mostly related to water damage to the foundation and the soils beneath the foundation.
Nicole: So what are some of the most common reasons that you see water go towards the foundation? Is it sloping towards, planting gardens next to the houses? Tell us what you’re seeing most often.
Sam: Drainage, for sure, and especially in new homes, it’s really common when they’re building a house they, you know, they dig down to the bottom of the foundation and they they build everything up from there and then they put the soil back in they backfill it up along the foundation wall.
And a lot of times it doesn’t get compacted very well in that spot so right along the foundation wall it can get pretty fluffy and you’ll have your landscaper set your landscaping drainage so that’s draining away from the home but within the first couple years it can, all that air that’s trapped underneath the underneath the surface there, can escape and all of a sudden that drainage starts to collapse and turn negative and now you’re draining back towards your foundation.
That’s probably the most common thing I see, especially in newer homes, is just over time that backfill slumps and now you have negative drainage and need to redo your landscaping.
Sam: Gutters are another thing a lot of people just let their gutters drip right next to the foundation and then water pools up there so you need some good extenders on there.
Nicole: How long should extenders go?
Sam: I like six feet, it doesn’t matter too much as long as it’s discharging the storm water in an area that has positive drainage is taking the water away from the foundation it doesn’t really matter how long they are if it just comes pouring right back to the house.
Nicole: Sure. I see a lot of times that they terminate inside gardens where it’s got like a concrete barrier all the water goes up against that and then it just stays in that garden so getting it on the other side of whatever edging someone might have, things like that.
Sam: Yep, ideally, so newer homes you’ll see where they have the concrete edging the little curving that’s five, between three and six feet around the home and so if you can kick it out over that that’s ideal in an area where you don’t need to remove it for lawn mowing because people tend not to put it back.
Nicole: Yes, I see that a lot.
Sam: Yeah, but a lot of places will do underground discharges okay so the downspout will actually go underground and it’ll either come out and pop up in the yard somewhere or it will go to an underground drain field depending on where the house is located. If you have hydro sensitive soils it’s generally not a good idea to inject the water underneath the surface because those sorts of soils don’t accept water very readily so if you can keep it on the surface it’s more likely to just roll away. But if as soon as you get it underground then it’s just going to percolate in and get into an area where it’s really not supposed to.
I tend to stay away with subterranean discharges if I can, if you can keep it on the surface and just let gravity do all the work it works out better, more often perfect.
Nicole: Sure. Anything that you see a lot that you wish people would just stop doing that we haven’t talked about yet?
Sam: So many things.
Nicole: Top two.
Sam: Let’s see, oh yeah think about that for a little bit. Let’s see so I work on both ends of a structural lifespan. So I design new things for people to build and I do forensic evaluations of things that are failing and it costs much more money to fix something that’s failing than it does to just build something correctly from the get-go. So I think the biggest thing is just making sure that even if you’re doing a simple retaining wall or just about any structure a lot of things are more complicated than people really understand. And even if they have a contractor who they think is really confident in certain areas, if you’re doing anything that’s outside the norm it’s a good idea to get a professional involved and have their opinion weigh in and see what really needs to be done.
A lot of people think it’s expensive to spend a couple hundred or maybe a couple thousand up front on a design but compared to spending tens of thousands of dollars to come back and fix it later, it’s much cheaper.
Nicole: Yeah, I see the tens of thousands to fix something when I enter the picture as a real estate agent a lot, so I would love it if they would get a hold of you first.
Sam: Yeah, absolutely.
Nicole: Let’s switch to not just getting water away from the house but what are some things – a lot of times I see ventilation not proper in attics, bathrooms that the vents discharge into the attic, what kind of structural problems can that cause?
Sam: So, I see pretty hefty mold and water damage in certain circumstances. I think the worst I’ve seen is either dryer vents or furnace vents venting into an attic or into a crawl space and completely demolishing all the framing. You can definitely get the same thing with bathroom vents because it’s a lot of moisture that you’re moving into the attic and that wood will soak up that moisture and you can get mold growth.
If you have OSB sheeting for your roofing that will soak it up right away and lose a lot of its structural integrity and start to grow mold pretty quickly. So in general keeping the moisture outside the building envelope is a good idea you don’t want to dump it anywhere inside of the area you’re trying to keep the environmental conditions out of.
Nicole: Okay, so if somebody is worried that they have some structural problems, things that they’re like, I don’t really know if this is quite right, if this is the way I should be doing it. When is the point that they should probably get a hold of you or someone like you?
Sam: Well, in general, if you’re going to build any sort of structure if you’re not working with a contractor that is reputable and understands what they’re doing and going through the appropriate permitting process because you need to permit almost everything. There’s a handful of things you don’t need a building permit for, but in general in order to get a permit you need to have a plan it’ll be reviewed by the city. If the city doesn’t feel that the contractor’s plan is done appropriately or isn’t considering all of the possible issues that could arise then they’ll request that an engineer take a look at it and then it comes to me. Or you can start there and have an engineer take a look at it first and develop a plan or an architect anyone who knows what they’re doing basically and going through the right channels to make sure that it gets done correctly
Nicole: Okay, sounds good. Is there, how do people get a hold of you and find out about your services?
Sam: I’m online you can Google “Dynamic Analysis” or “structural engineering and Billings” and I should pop up there somewhere and then my number you can email me through the website or reach out to me. I think I’m on Facebook but I’m not, I am on facebook but i’m not on Facebook often.
Nicole: I get to follow all your fun snow adventures and things like that on Facebook yeah that’s great, awesome. Thank you, Sam.
The second half of the video shows Sam leading a buyer through an actual home inspection so that you could see what to look for. To get more help from Sam Hensler and Dynamic Analysis, go to dynamic-mt.com.
Due to COVID-19, mortgage rates are at an all-time low, which means a renewed interest in homeownership. Especially as young people are tired of seeing their rent costs rise every year, the idea of having equity becomes more and more alluring.
There are plenty of benefits that come with owning a home, including building a path to a greater financial future. However, first time home buyers might be shocked at the real costs of homeownership. In addition to mortgage payments, the real cost of owning property involves plenty of hidden expenses. Here we go over which costs are simply financial and which might be a surprise to you. We’ll look at the most common expenses and how to deal with them.
Your Guide To The Costs Of Home Ownership
Though your house is one of the most significant purchases you can make, other ongoing expenses come with homeownership. Things like closing costs, down payments, moving, and more, let’s discuss some of the things you’re most likely to encounter.
Homeowners’ insurance is not an unexpected expense; almost every bank and mortgage company requires that you have insurance before giving you a loan. The premiums will likely be included in your mortgage payment. A lot of times, your homeowner’s insurance premiums will be paid from your escrow account, like your property taxes.
Remember that premiums often rise annually, particularly if you increase your coverage to reflect your property or possessions’ rising value.
Another surprise that home buyers often don’t realize is that most homeowner’s insurance does not cover “acts of God.” You’ll need additional coverage for floods, hurricanes, earthquakes, and even water damage from storms.
All homeowners are required to pay property taxes. The township, city, or country where your home is located will determine the tax rate, not your bank. Property tax is basically a guaranteed perpetuity payment that is made at your expense. Like with any tax, you don’t have a say in how much it will be, but there are strategies to help lower it.
When it comes to your home, water can be its worst enemy. The primary job of your roof is to keep water out. A leaky roof can cause cosmetic damage both inside and out of your house, and it could destroy belongings inside and even damage the integrity of the structure.
Roof damage usually happens when shingles get cracked, blown off, or damaged in some ways. Roofs will inevitably need to be restored or replaced eventually, so make sure you have an inspector look at it closely when you buy – you might be able to negotiate the price if the roof is in bad shape.
The Heating, Ventilation and Air Conditioning (HVAC) System
Your home’s HVAC system is a complex system in your home that controls heat, cooling, and the overall circulation of air throughout the residence. This system should not undergo cheap DIY fixes; you should be prepared to hire an HVAC professional from time to time.
You’ll likely need to buy new units at some point, be it at the time of purchase or later down the road, as these systems do wear out over time. Replace the furnace and AC filters to help keep them running efficiently.
We recommend having your HVAC systems inspected at least once per year. Do some research in your area, as many companies over service or maintenance plans might reduce the cost of an annual inspection and provide other benefits, like lower costs on parts or even reduced pricing on emergency visits.
The Electrical System
Faulty wiring and other electrical issues cause a decent amount of fires in homes every year. As a homeowner or future homeowner, we suggest that you have a basic understanding of how these electrical systems work to keep your home and family safe.
If you’re facing any sort of systemic problem or in the middle of significant remodeling, make sure you call in a trusted and licensed electrician to make sure everything is installed correctly and up to current codes and safety standards.
Another on our list of the costs of homeownership is plumbing issues. Clogged drains and other small plumbing problems will happen from time to time, and they usually aren’t a big deal.
However, some older homes might present larger problems, specifically if they contain galvanized iron water pipes. These pipes become clogged with mineral deposits over time and will gradually reduce the water pressure in your house. The bad news – you can’t repair these; they must be replaced entirely.
Talk to your real estate agent and your home inspector to determine what to expect before you buy.
HOA and Condo Fees
If you buy a property within a condominium associate or a homeowners’ association (HOA), you will be required to pay a monthly or quarterly fee. This fee will include the cost of things that benefit the entire neighborhood, from snow plowing to landscaping, garbage collection, and more.
HOA fees can rise steadily, or your HOA might deem it appropriate to charge extra for individual extra projects to benefit the neighborhood, like adding a new security system, renovating buildings, or even repaving the parking lot. Check with your agent or the association itself to see what these fees will be before you buy.
The Costs of Home Ownership Include Furnishings and Appliances
You might have already thought about this, but it’s likely that your new home will be larger than where you’re currently living and might require some extra furnishing. Plus, some appliances in your home might be considered fixtures and be included in the sale price of your home, like dishwashers or ovens; other appliances are not always included. This means if the seller doesn’t want to include the refrigerator or washer or dryer, you might have to buy new ones.
You should also consider how old your home is. If it’s more than ten years old, the appliances included in the sale price might be on their last leg anyway. Be sure to budget for replacing some of those high dollar items, like your water heater or cooling system.
Cost of Home Ownership Key Takeaways
Typically, when people think about the costs of homeownership, they are only thinking about the mortgage payment. They don’t always consider property taxes, insurance, maintenance fees, and repair costs.
Though homeownership has many perks, there are some unexpected expenses to be aware of, like the ones we mentioned above. Some costs are beyond your control, like property taxes and homeowners association fees. Ensure you’re aware of the costs of homeowners insurance, especially if you live in a natural disaster-prone area.
The most costly part of homeownership relates to your house’s overall upkeep, including repairs and monthly expenses. The experts at 41 Realty Group can help you stay well informed about the average monthly costs of owning a home and help you avoid expensive surprises. We would love to help you budget your expenses and help you buy the home you want.
Are you thinking about starting the process of buying a home? There’s a strong chance that at least one person has suggested that you get a mortgage pre-approval. There are many good reasons why it is a good idea to get pre-approved.
Let’s dive into why this piece of paper is vital when it comes time to buy a home, especially if you’re a first-time buyer.
4 Reasons Why You Need To Get Pre-Approved
Before we get into some of the benefits that come when you get pre-approved for a mortgage, let’s first discuss what a pre-approval letter is.
A mortgage pre-approval letter from your lender assures you, your real estate agent, and sellers that you have the ability financially to complete any purchase of any home that meets the lender’s guidelines. This letter will also include a specific pre-approved interest rate, though it’s important to note that mortgage rates are variable. Mortgage lenders will consider the same factors they would consider for traditional mortgage approval, like your debt to income ratio and your credit score. The more your finances are in order, the more you’ll get pre-approved to borrow.
Your pre-approval letter will show you what you can afford to spend and what your monthly payment might look like.
Some of the required documents you might need when applying for mortgage pre-approval are:
Pay stubs and W-2s
Bank, retirement, and investment account statements
Financial statements (if self-employed)
Letters of explanation for credit blemishes
Another thing to mention is that pre-approval is different from pre-qualification. Many lenders will issue “pre-qualification” letters, which ask you about your financials, but it doesn’t hold the same weight as a pre-approved letter. A pre-qualification can be useful as an estimate for how much you can afford, but a pre-approval gives you approval on a specific loan amount.
You’ll Know Exactly How Much House You Can Afford
The first significant benefit that comes when you get pre-approved is that you’ll know exactly how much house you can realistically afford before you even begin house hunting. Knowing this information narrows down your options and makes the selection process more efficient. Plus, it will save you the heartache of realizing the home you fell in love with doesn’t align with your budget.
It Makes You a More Serious/Attractive Buyer
You might know this already, but there are two types of markets: buyers’ markets and sellers’ markets. In a buyer’s market, inventory is high, but the demand is low, which means you might have more wiggle rooms in terms of the purchasing process. However, in a seller’s market, inventory is low, and more people need to buy homes, which means that buyers need any advantage they can to get ahead of the competition.
Just like the oceans’ tide, these markets ebb and flow from season to season. If you’re trying to buy in a seller’s market, then having a mortgage pre-approval can set you apart as a serious buyer who has the funds to close the sale.
Put yourself in the seller’s shoes. If two buyers are putting an offer in on your house, but only one has actually been approved for a loan for that offer, who do you think you should sell to? In almost every case, the buyer who has been pre-approved will get the house, as there is a lot less risk of the deal falling through due to lack of appropriate financing.
It Increases Your Negotiation Power
In addition to making you a more attractive buyer to sellers, you’re giving yourself more flexibility in bargaining and negotiations when you get pre-approved. Sellers know that a buyer who has already been qualified for the listing price or offer amount might be more willing to make compromises because the sale is a sure thing.
A mortgage pre-approval can help you strengthen your buying position and may make it more likely that you get some other things you might ask for, like repairs, improvements, or even having the seller cover closing costs for you.
You’ll Close Faster
On average, it can take about 50 days to close on your home. Several factors cause this timeline, and that includes mortgage approvals. If you already have your pre-approval in hand, you might be able to speed up the process so you can move into the home of your dreams earlier than you might have been able to otherwise.
When you start the closing processing, securing finances is the first step. However, when you already have your mortgage pre-approval, financing is already squared away, and you can jump into the appraisal and inspection process. Especially when the seller wants to close sooner than later, having your pre-approval lender upfront is a beneficial advantage.
The Bottom Line To Get Pre-Approved
When you need to get pre-approved, the first thing to do is to determine who you want your lender to be. You can get a mortgage pre-approval from up to three different potential lenders, and it might be a good idea to do so. Getting approvals from multiple lenders allows you to compare rates and select the option with the best lending terms.
Here’s some specific information in regards to your finances that your potential lender will ask you for:
First, they’ll need some personal information to run a credit check, like your social security number and proof of identity. They’ll also want to see proof of your income for the past two years, including all W-2s or alternate tax information and anything else they might need related to your source or sources of revenue. Lastly, you’ll need to provide any documentation relating to assets outside of your income, including investments, monetary gifts, and more.
Once you gather all of this info, the process to determine how large of a mortgage you qualify for can take anywhere from a few days to a few weeks, depending on who you’re working with. Typically your mortgage pre-approval is valid for anywhere in your state from 60-90 days, which usually is enough time to search for and make an offer on a home. A general rule of thumb is not to make any significant changes to your finances between getting your mortgage pre-approval and buying your new home, as major purchases or taking on more debt will most likely invalidate your existing pre-approval amount. When you’re ready to start looking for your dream home, we can help! Give us a call, and we’ll refer you to our favorite lenders and give more tips to consider as a first-time homebuyer.
If anyone knows how difficult being a first-time home buyer can be, it’s us. There are so many steps, tasks to complete, requirements, and documents to fill out. Many people looking to buy are anxious about the process because, more often than not, this is the biggest financial decision they will ever have to make. However, we want to encourage first-timers not to be afraid of the process and enjoy some of the advantages of buying for the first time.
To make this process a little easier and clear up some of the mystery, we’ve compiled a brief overview of what to expect from the buying process. Hopefully, these tips will help ease some of your worries and make life a little easier before buying your first home.
Your Go-To Guide As A First-Time Home Buyer
Thinking of buying your first home? Here’s everything you need to know to get started.
First Things First – Get Pre Approval
All first-time home buyers feel both the exhilaration and the fear that comes with buying a home for the first time, and it’s no surprise you’re here looking for tips. Our first piece of advice? Shopping for a home, no matter your budget, without getting preapproved for a mortgage is a big mistake.
Getting preapproved before you even start looking for a home can help you in a variety of ways. First, it ensures that you have the financial ability to purchase a home, and also makes sure that you know how much you can actually afford. In addition, it lets real estate agents know that you are serious about buying a house.
Shopping for a home before you get approved runs the risk of finding homes that you love that aren’t in your price range. This means you find a way to buy a house you really can’t afford or every other house you look at is a disappointment. Instead of getting your hopes up, start by evaluating your finances and talking to a mortgage lender. Then create a list of must-haves and deal-breakers for the home that you want, so that when you get that pre-approval letter, you’ll know where to start looking.
Consider The Costs of Home Ownership
Like we mentioned above, it pays to know the state of your finances before you really start to look for houses. Any first-time home buyer needs to consider the true costs of homeownership. For example, your down payment requirement will depend on the type of mortgage you choose and the lender. Many lenders offer first time home buyer loans that allow as little as 3% down. But even a small down payment can be challenging to save for. A 3% down payment on a $300,000 home is still $9,000.
Another thing that a lot of people don’t consider is the closing costs. There are the fees and expenses that come with finalizing the mortgage, and they can range from 2% to 5% of the loan amount. Sometimes you can ask the seller to pay a portion of these closing costs and shop around for some of those other expenses that come up. Some other expenses might include having the home appraised, getting a home inspection, running a title search, private mortgage insurance, and other surveys. Ask your real estate agent for all of the ins and outs when it comes to closing costs.
Don’t forget any immediate move-in expenses! You’ll want to make sure you have some funds after moving in for home repairs, upgrades, and any new furnishings you might want.
Choose The Right Real Estate Agent
Another important aspect to consider when you are a first-time home buyer is to make sure you choose the right agent. The right agent will be able to meet all of your needs and guide you through the entire process.
Make sure you have a connection and mutual trust with your agent. Get referrals from your friends and family and ask them about their experience. Then ask your potential real estate agent about their process for first-time home buyers.
Pick The Right Type Of House And Neighborhood
With the help of your agent, the next step is to find the right house in the right neighborhood. Think about your long term needs and whether you need a starter home or a forever home. If you’re thinking about starting a family or expanding your current one, then it might make sense to buy a home with a little extra room.
You’ll also want to weigh the pros and cons of different home types, and knowing your lifestyle and budget will help you. Though condos and townhomes are more affordable, sharing walls and having neighbors close by means less privacy. Maybe you’ve found the perfect neighborhood but can’t afford a move-in ready home, in which case a fixer-upper might be your best bet.
Whatever you choose, make sure you check out the neighborhood thoroughly. It might even be a good idea to test out the commute from your home to your workplace or your children’s schools.
Make An Offer and Close On Your Home
When it’s time to make an offer, your real estate agent will help you decide how much is fair to offer for the house, along with any conditions you might want to ask for. Your agent will contact the seller’s agent and do all of the negotiating for you. Offers and counteroffers will be handled until ultimately, an agreement is reached. Once you reach an agreement, you will then make a good-faith deposition, and the process will then transition into escrow. Escrow is the short period of time during which the seller takes the house off the market with the expectation that you will buy it – provided you don’t find any issues with the house during the inspection.
Once you reach an agreement, and there are no serious problems with the inspection, you are ready to close! Closing is the process of signing a ton of paperwork in a very short time period, and your Realtor will help you make sure everything goes smoothly.
Let 41 Realty Group Help You Find The Perfect Home
First-time home buyers shouldn’t be afraid of the complex process because you’ll have a real estate agent on your side to help you with every step of the way. Hopefully, you have a better idea of what to expect so that when you’re ready for this fun and life-changing commitment, you’ll be ready. At 41 Realty Group, you’ll find a team of agents who love helping others make Billings their home. Give us a call or contact us online to let us help you start this process.