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Chrissy Smith
REALTOR®
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Commercial Real Estate Agent
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July
19

Walk-Through Checklist for First-Time Homebuyers

Boise Homebuyers Checklist

You're about to move into your new home! It's important to do a walk-through to make sure everything is as promised. How do you go about it, though? You've never owned a home before, and you're afraid you'll do it wrong or miss something important.

Don't worry. Our real estate agents will be there to help you through it. In the meantime, here's a checklist of what you're looking for on your final walk-through.

What to Bring

  • The final contract outlining what each of you has agreed to.
  • Inspection report, detailing anything broken in the house and outlining promised repairs.
  • Pen and notebook.
  • Phone with a camera.
  • Phone charger.
  • This checklist.
  • Your real estate agent to guide you through it.

Your Checklist

  • Final Repairs. Go through the inspection report and check that each of the necessary repairs outlined has, in fact, been performed satisfactorily.

  • Bathroom and Kitchen. These are two of the most common sources of problems in a new home. Look for mold growth and leaks. The most likely places are underneath the sinks and by the dishwasher and refrigerator. Turn on the faucets, shower, etc., to make sure they work and have proper water pressure, and flush the toilets.

  • Included Items. What's included with the sale of this house? Is there shelving? Appliances? It should all be outlined in the final contract. Go through to make sure everything is there that's supposed to be.

  • Test Appliances. Turn on the oven and stove to make sure they get hot without smelling like gas. Turn on the furnace and A/C to make sure they blow hot and cold air, respectively. Run the dishwasher through a cycle and the washer and dryer as well. Make sure all appliances work the way they're supposed to.

  • Test Outlets. Take your phone charger, and plug your phone into each outlet in the house to ensure they work properly. Turn each light switch on and off to make sure all the lights are functioning, and ring the doorbell once to see if it can be heard.

  • Doors and Windows. Open and close each of the doors and windows. This will allow you to test whether they move easily if they close and latch securely and if the locks work properly. Make a note if any of them sticks or is otherwise broken.

  • Examine the Grounds. Go through the yard as well. Make sure all the landscaping looks as promised. That includes the lawn, the driveway, and any plants.

  • Check the Garage. Does the garage door open and close as it's supposed to? Are there any holes in the walls or other damage to the general woodwork? Any signs of bugs, rodents, or other pests?

Make notes and take pictures of everything you find. Discuss it all with your real estate agent. If there are any problems or discrepancies, you and your agent can bring them to the seller together and get them sorted out before you move in.

Whether it's your first home or your 50th, there are plenty of Boise homes for sale that can meet your needs. Contact us to help you find the right one for you, and ensure that it meets your standards, every step of the way.

July
9

How to Bridge the Appraisal Gap in Today's Real Estate Market

If you're searching for drama, don't limit yourself to Netflix. Instead, tune in to the real estate market, where the competition among buyers has never been fiercer. And with homes selling for record highs, the appraisal process is receiving more attention than ever. That's because, in a rapidly appreciating market, a property is more likely to appraise below the sales price—which can lead to major repercussions for both buyers and sellers.

It's never been more important to understand the appraisal process and the risks involved. It's also crucial to work with a skilled real estate agent who can guide you to a successful closing without overpaying (if you're a buyer) or overcompensating (if you're a seller). Find out how appraisals work—and in some cases, don't work—in today's unique real estate environment.

APPRAISAL REQUIREMENTS

An appraisal is an objective assessment of a property's market value performed by an independent authorized appraiser. Mortgage lenders require an appraisal to lower their risk of loss in the event a buyer defaults on their loan.

In most cases, a licensed appraiser will analyze the property's condition and review the value of comparable properties that have recently sold. Appraisal requirements can vary by lender and loan type, and in today's market, in-person appraisal waivers have become much more common. If you're applying for a mortgage, be sure to ask your lender about their specific terms.

APPRAISALS IN A RAPIDLY SHIFTING MARKET

An appraisal contingency is a standard inclusion in a home offer. It enables the buyer to make the closing of the transaction dependent on a satisfactory appraisal wherein the value of the property is at or near the purchase price. This helps to reassure the buyer (and their lender) that they are paying fair market value for the home and allows them to cancel the contract if the appraisal is lower than expected.

Low appraisals are not common, but they are more likely to happen in a rapidly appreciating market, like the one we're experiencing now. That's because appraisers must use comparable sales (commonly referred to as comps) to determine a property's value. This could include homes that went under contract weeks or even months ago. With home prices rising so quickly, today's comps may be lagging behind the market's current reality. Thus, the appraiser could be basing their assessment on stale data, resulting in a low valuation.

HOW ARE BUYERS AND SELLERS IMPACTED BY A LOW APPRAISAL?

When a property appraises for less than the contract price, you end up with an appraisal gap. In a more balanced market, that could be cause for a renegotiation. In today's market, however, sellers often hold the upper hand.

That's why some buyers are using the potential for an appraisal gap as a way to strengthen their bids. They're proposing to take on some or all of the risk of a low appraisal by adding gap coverage or a contingency waiver to their offer.

Appraisal Gap Coverage

Buyers with some extra cash on hand may opt to add an appraisal gap coverage clause to their offer. It provides an added level of reassurance to the sellers that, in the event of a low appraisal, the buyer is willing and able to cover the gap up to a certain amount.

For example, let's say a home is listed for $200,000 and the buyers offer $220,000 with $10,000 in appraisal gap coverage. Now, let's say the property appraises for $205,000. The new purchase price would be $215,000. The buyers would be responsible for paying $10,000 of that in cash directly to the seller because, in most cases, mortgage companies won't include appraisal gap coverage in a home loan.

Waiving The Appraisal Contingency

Some buyers with a higher risk tolerance—and the financial means—may be willing to waive the appraisal contingency altogether. However, this strategy isn't for everyone and must be considered on a case-by-case basis.

It's important to remember that waiving an appraisal contingency can leave a buyer vulnerable if the appraisal comes back much lower than the contract price. Without an appraisal contingency, a buyer will be obligated to cover the difference or be forced to walk away from the transaction and relinquish their earnest money deposit to the sellers.

It's vital that both buyers and sellers understand the benefits and risks involved with these and other competitive tactics that are becoming more commonplace in today's market. We can help you chart the best course of action given your individual circumstances.

DON'T WAIVE YOUR RIGHT TO THE BEST REPRESENTATION

You need a master negotiator on your side who has the skills, instincts, and experience to get the deal done...no matter what surprises may pop up along the way. If you're a buyer, we can help you compete in this unprecedented market—without getting steamrolled. And if you're a seller, we know how to get top dollar for your home while minimizing hassle and stress. Contact us today to schedule a complimentary consultation.

October
3

Lowest Mortgage Rates In History: What It Means for Homeowners & Buyers

In July, the average 30-year fixed-rate mortgage fell below 3% for the first time in history.1 And while many have rushed to take advantage of this unprecedented opportunity, others question the hype. Are today's rates truly a bargain?

While average mortgage rates have drifted between 4% and 5% in recent years, they haven't always been so low. Freddie Mac began tracking 30-year mortgage rates in 1971. At that time, the national average was 7.31%.2 As the rate of inflation started to rise in the mid-1970s, mortgage rates surged. It's hard to imagine now, but the average U.S. mortgage rate reached a high of 18.63% in 1981.3

Fortunately for home buyers, inflation normalized by October 1982, which sent mortgage rates on a downward trajectory that would bring them as low as 3.31% in 2012.3 Since 2012, 30-year fixed rates have risen modestly, with the daily average climbing as high as 4.94% in 2018.4

So what's causing today's rates to sink to unprecedented lows? Economic uncertainty.

Mortgage rates generally follow bond yields, because the majority of U.S. mortgages are packaged together and sold as bonds. As the coronavirus pandemic continues to dampen the economy and inject volatility into the stock market, a growing number of investors are shifting their money into low-risk bonds. Increased demand has driven bond yields—and mortgage rates—down.5

However, according to National Association of Realtors Chief Economist Lawrence Yun, "the number one driver of low mortgage rates is the accommodating Federal Reserve stance to keep interest rates low and to buy up mortgage-backed securities." According to Yun, "we will see mortgage rates stay near this level for the next 18 months because of the significance of the Fed's stance."6

How do low mortgage rates benefit current homeowners?

Low mortgage rates increase buyer demand, which is good news for sellers. But what if you don't have any plans to sell your home? Can current homeowners benefit from falling mortgage rates? Yes, they can!

A growing number of homeowners are capitalizing on today's rock-bottom rates by refinancing their existing mortgages. In fact, refinance applications have surged over the past few months—and for a good reason.7 Reduced interest rates can save homeowners a bundle on both monthly payments and total payments over the lifetime of a mortgage.

The chart below illustrates the potential savings when you decrease your mortgage rate by just one percentage point. When it comes to refinancing, the bigger the spread, the greater the savings.

Estimated Monthly Payment On a 30-Year Fixed-Rate Mortgage

Be sure to factor in any prepayment penalties on your current mortgage and closing costs for your new mortgage. For a refinance, expect to pay between 2% to 5% of your loan amount.8 You can divide your closing costs by your monthly savings to find out how long it will take to recoup your investment, or use an online refinance calculator. For a more precise calculation of your potential savings, we'd be happy to connect you with a mortgage professional in our network who can help you decide if refinancing is a good option for you.


How do low mortgage rates benefit home buyers?

We've already shown how low rates can save you money on your mortgage payments. But they can also give a boost to your budget by increasing your purchasing power. For example, imagine you have a budget of $1,500 to put toward your monthly mortgage payment. If you take out a 30-year mortgage at 5.0%, you can afford a loan of $279,000.

Now let's assume the mortgage rate falls to 4.0%. At that rate, you can afford to borrow $314,000 while still keeping the same $1,500 monthly payment. That's a budget increase of $35,000!

If the rate falls even further to 3.0%, you can afford to borrow $355,000 and still pay the same $1,500 each month. That's $76,000 over your original budget! All because the interest rate fell by two percentage points. If you've been priced out of the market before, today's low rates may put you in a better position to afford your dream home.

On the other hand, rising mortgages rates will erode your purchasing power. Wait to buy, and you may have to settle for a smaller home in a less-desirable neighborhood. So if you're planning to move, don't miss out on the phenomenal discount you can get with today's historically-low rates.


How low could mortgage rates go?

No one can say with certainty how low mortgage rates will fall or when they will rise again. A lot will depend on the trajectory of the pandemic and subsequent economic impact.

Forecasters at Freddie Mac and the Mortgage Bankers Association predict 30-year mortgage rates will average 3.2% and 3.5% respectively in 2021.9,10 However, economists at Fannie Mae expect them to dip even lower to an average of 2.8% next year.11

Still, many experts agree that those who wait to take advantage of these unprecedented rates could miss out on the deal of a lifetime. It's hard to imagine that rates may drop even lower. Positive news about a vaccine or a faster-than-expected economic recovery could send rates back up to pre-pandemic levels.


How can I secure the best available mortgage rate?

While the average 30-year mortgage rate is hovering around 3%, you can do a quick search online and find advertised rates that are even lower. But these ultra-low mortgages are typically reserved for only prime borrowers. So what steps can you take to secure the lowest possible rate?

1. Consider a 15-Year Mortgage Term

Lock in a low rate by opting for a 15-year mortgage. If you can afford the higher monthly payment, a shorter mortgage term can save you a bundle in interest, and you'll pay off your home in half the time.12

2. Give Your Credit Score a Boost

The economic downturn has made lenders more cautious. These days, you'll probably need a credit score of at least 740 to secure their lowest rates.13 While there's no fast fix for bad credit, you can take steps to help your score before you apply for a loan:14

● Dispute inaccuracies on your credit report.
● Pay your bills on time, and catch up on any missed payments.
● Hold off on applying for new credit.
● Pay off debt, and keep balances low on your credit cards.
● Don't close unused credit cards (unless they're charging you an annual fee).

3. Make a Large Down Payment

The more equity you have in a home, the less likely you are to default on your mortgage. That's why lenders offer better rates to borrowers who make a sizable down payment. Plus, if you put down at least 20%, you can avoid paying for private mortgage insurance.

4. Pay for Points

Discount points are fees paid to the mortgage company in exchange for a lower interest rate. At a cost of 1% of the loan amount, they aren't cheap. But the investment can pay off over the long-term in interest savings.

5. Shop Around

Rates, terms, and fees can vary widely amongst mortgage providers, so do your homework. Contact several lenders to find out which one is willing to offer you the best overall deal. But be sure to complete the process within 45 days—or else the credit inquiries by multiple mortgage companies could have a negative impact on your credit score.16


Ready to take advantage of the lowest mortgage rates in history?

Mortgage rates have never been this low. Don't miss out on your chance to lock in a great rate on a new home or refinance your existing mortgage. Either way, we can help.

We'd be happy to connect you with the most trusted mortgage professionals in our network. And if you're ready to start shopping for a new home, we'd love to assist you with your search—all at no cost to you! Contact us today to schedule a free consultation.

This article is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

 

September
10

Is a Fixer-Upper Right for You?

 

Are you in the market for a new home and considering one that needs work?

Buying a house that requires renovations can be a great way to find a deal, but before you decide to move forward with an offer to purchase, ask yourself some important questions.

 

Can Your Budget Accommodate Renovations and Unexpected Costs?

While you are compiling costs, don't forget to add any permitting expenses. Check your local city, county, and state regulations so you can acquire the appropriate permits and order any inspections that might be required.

When you've finished estimating your budget, add 15% for unexpected expenditures and repairs required by any inspections, such as lead paint removal, mold remediation, etc. The "Murphy's Rule" of thumb is that everything takes longer and costs more than first anticipated!

Further, you'll need to check with your lender to find out whether you will qualify for a conventional mortgage or will need a renovation loan. Be sure to ask your lender about the financing that might be available to you and what type of home to include in (or remove from) your search.

How Much of the Work Can You Handle Yourself?

One way to keep renovation costs down when buying a fixer is to tackle as much of the work as possible yourself, but it's important to be realistic about what projects truly qualify as DIY. If you have experience in the contracting trades or have renovated a home in the past, you may be able to do much of the work yourself. Most people, though, will need to leave the bigger, more expensive projects to the pros. Determine how much of the work is truly cosmetic and what will require more than some new paint or carpet. Check the ego at the door to avoid getting in over your head and, ultimately, spending more money than you have in the budget – or worse, putting yourself in an unsafe situation.

How Soon Do You Need to Move In, and Do You Have a Place to Stay in the Meantime?

If you have a place to stay and don't need to move into the home right away, then time may not be a major issue. If you need to move in ASAP, a fixer-upper might not be the right choice when buying a house. Depending on the level of work that needs to be done, living in the middle of a renovation with nowhere to get away from the mess can create a great deal of stress. Don't let the "romance" of creating your dream keep you from being realistic about the work it involves. The programs on television may make things look easier than they really are.

Do You Have Trusted Service Providers?

No matter how much or how little of the work you can handle DIY, you'll likely still need contractors, an architect, and other service providers to tackle key tasks. It helps to have people you know and trust – or referrals from trusted sources – when coordinating work on a fixer-upper. Having quality service providers helps keep added costs down and makes it easier to keep the project on schedule.

Do You Have a Vision for the Home You'd Like to Create?

Success with a fixer-upper depends in large part on having a plan and being able to see it through to completion. Before you begin looking at homes, do your best to have a vision of the home that you want to create. Then, as you are house-hunting, keep that vision in mind so you can avoid trying to push a round peg through a square hole. If you are set on a 2-story, looking at a single-story with plans to add on might be one bite more than you are ready to take. Again, be realistic in your expectations and plans.

A fixer-upper can be a terrific way to get a great home. Take the steps needed to protect yourself and your investment by doing your research first!

 

July
16

From Our Lending Partners at Idaho Central Credit Union

 

 

Low Inflation Helps Keep Rates at Record Lows

 

Overview

During a light week for economic data, investors remained focused on the concerning spread of the coronavirus in many regions. Mortgage rates dropped slightly to new record-low levels.

Reduced economic activity resulting from the pandemic has caused a significant decline in inflation, which has helped keep mortgage rates low. The Consumer Price Index (CPI) is a widely followed monthly inflation report that looks at the price change for goods and services.

In June, core CPI, which excludes the volatile food and energy components, was just 1.2% higher than a year ago — the same annual rate of increase as last month. This was down compared to readings above 2% during the first three months of the year.

Both Freddie Mac and the Mortgage Bankers Association (MBA) reported that average rates for 30-year fixed-rate mortgages reached record-low levels again this week, in part due to recent tame inflation data like CPI. In addition, the MBA revealed that applications to purchase a home were 16% higher than a year ago at this time, and refinance applications were a massive 107% higher.

New claims for unemployment benefits continued to decline this week after spiking dramatically due to the pandemic. During January and February, jobless claims typically were a little more than 200,000 each week. Beginning in late March, there were three weeks of readings above 6 million. Since that time, however, they have steadily dropped each week, and the latest results came in at a relatively better level of 1.3 million.

 

 

June
15

From Our Lending Partners at Idaho Central Credit Union

 

 

Economic Activity Picks Up

 

Overview

The data released over the past week revealed an unprecedented decline in economic activity resulting from the pandemic, but also indicated that recovery has already begun. Mortgage markets have been relatively quiet, and rates again ended the week with little change.

Following growth of 2.1% in the fourth quarter of 2019, gross domestic product (GDP), the broadest measure of economic activity, fell 5.0% in Q1 2020, which was the weakest reading since 2008. As bad as that was, however, it does not even come close to the expected decline for the second quarter. The Federal Reserve publishes an estimate of GDP growth, which it updates every few days based on the most recent data. On Tuesday, the Fed projected that GDP will fall over 50% during the second quarter, which is roughly in line with Wall Street forecasts. After that, early estimates from economists for the second half of the year predict sizable gains.

Despite the Fed and Wall Street's dire predictions, the more recent results have shown clear signs of a rebound. Two of the most significant reports released each month, which reflect the most current economic activity, are from the Institute of Supply Management (ISM). The May ISM Services Index rose more than expected to 45.4 from a reading of 41.8 in April. Similarly, the ISM Manufacturing Index increased to 43.1 from 41.5 in April.

The reduced economic activity resulting from the pandemic has caused a decline in inflation, which has helped keep mortgage rates low. In April, the core Personal Consumption Expenditures (PCE) Price Index, the inflation indicator favored by the Fed, was just 1.0% higher than a year ago, down from an annual rate of increase of 1.7% last month. Fed officials have stated that their target level for annual inflation is 2.0%.

Looking ahead, investors will continue watching for news about medical advances to fight the pandemic, Fed actions, government stimulus programs, and plans for reopening the economy.

 

 

 

Disclaimer: All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Information on this site was last updated 12/03/2022. The listing information on this page last changed on 12/03/2022. The data relating to real estate for sale on this website comes in part from the Internet Data Exchange program of INTERMOUNTAIN MLS (last updated Sat 12/03/2022 9:43:43 AM EST). Real estate listings held by brokerage firms other than Coldwell Banker Tomlinson may be marked with the Internet Data Exchange logo and detailed information about those properties will include the name of the listing broker(s) when required by the MLS. All rights reserved. --

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