Homeowner's Insurance vs. Warranty and why it matters

The path to homeownership is both a massive and confusing undertaking. With so many steps and hurdles, very few adults can claim to understand each step fully. Most first-time homebuyers—along with some of the most seasoned buyers—rely on experts to help them wade through the process and determine what is a must and what is a waste of time, money, and other resources. Homeowner’s insurance Requirements While it may not be required by law in Virginia to purchase homeowner’s insurance, you will be hard-pressed to find a lender willing to give you a loan without proving you have a policy established. On the other hand, a home warranty is an optional, elected expense. It plays no role in loan-ability and is usually purchased after the home. So what's the difference? Differences in coverage Homeowner’s insurance protects you, your structure, and your belongings from the burden of an assortment of unforeseen events—think weather, fire, theft and vandalism. Whereas a standard insurance policy provides coverage to repair or replace your home and its contents in the event of damage, increased coverage policies could also cover medical expenses and the loss of use. Homeowner’s insurance is intended to lessen the blow caused by the unpredictable; it will not cover normal wear and tear; termite, insect or rodent damage; rot and mold; or any issue chalked up to improper maintenance. A home warranty, on the other hand, can be purchased yearly to help offset the cost of  servicing, repairing, or replacing major appliances and whole house systems. It acts as a financial buffer should one of the big-ticket items in your home breakdown! It can also extend the protection you get from those manufacturer warranties after they run out. From plumbing, and HVAC issues, to water heater and roof leaks, a home warranty can help make unexpected headaches a little more bearable. Warranties will not cover cosmetic damage, damage from improper use, neglect or pre-existing conditions. There's really no comparing homeowner’s insurance to a home warranty; not only is one required while the other optional, but their coverage differs completely. At the end of the day, there's really no definitive answer on whether or not you should add a warranty to your homebuyers shopping list. Our suggestion is to do your research and do what's best for you and your new investment!

6 Priorities to Consider When Buying a Home

Buying a home can be a very exciting but also daunting task. You may find this process easier to tackle by creating a list of priorities to focus on. Here are the six priorities we believe to be focal points that break down the enormity of home buying into smaller, more manageable tasks. Find a local broker or lender  Not all lenders or brokers are a fit for you. Be picky and do your research prior to choosing a lender or broker. You want to ensure the financial institution you look into offers the loan product you want to utilize such as VA, Jumbo, Non-QM, 100% Financing, VA, VHDA, etc. Wondering what questions are good questions to ask your lender? Read our blog “What Questions to Ask Your Lender” and make sure you receive answers you do not only feel confident in, but also understand. Education is key during the borrowing process. Ensure that the financial institution you decide to utilize informs you throughout the process and educates you every step of the way. Do not borrow blindly. This is a large purchase, oftentimes the largest you will make in your lifetime. Do not be afraid to ask questions because a great lender will have your best interests in mind at all times guiding you through loan products, making recommendations to benefit you long term, and will check in on you regularly providing information, answers, and explanations when needed. Get preapproved before house shopping   We cannot stress this enough, but, PLEASE get approved prior to beginning your home shopping experience. Okay, yes, it’s an extra step in the process but trust us you want to do this. How disappointing would it be for you to go see a home, fall in love with it, and decide to put an offer in, only to get approved for under the asking price? Receive a preapproval prior to house shopping so as to avoid this kind of let-down. Getting preapproved is easy! Most loan companies and institutions have online forms that can be quickly filled out and will generally be followed up with a phone call. Visit our apply now page to take the step towards obtaining a preapproval with us!  Just to ensure the preapproval process goes smoothly and efficiently, please have on hand the following information:   Identification  Income Verification Debt Statements Proof of Assets  Lastly, it is a good rule of thumb to not make any major lifestyle changes during this process such as large purchases (cash or credit), opening new lines of credit, depositing large sums of money into your account (venmo dumping, etc.) that are not regular payments such as your paycheck.   Establish a budget  Start preparing a reasonable budget for your purchase by determining what is financially feasible and what is not. Ensure that you incorporate a cushion in your budget to account for closing costs, Earnest Money Deposits, and other costs such as inspection and appraisal fees. Do your research to gauge market value of inspection and appraisal service fees and know that closing costs are typically 2-3% of the purchase price but can vary depending on various factors. When establishing a budget for purchasing a home, also consider what you are willing to pay monthly as a mortgage payment. Decide upon an ideal mortgage payment and the highest you are willing to pay per month. This will help determine which loan product or loan term will best suit your financial needs.  Make a list of your wants and needs It is quite easy to get caught up in the whirlwind that is buying a home. By making a list of your wants and needs you are better able to establish which home is going to be the right fight for you. Going into the home buying process knowing what you are willing to negotiate or compromise on and what you must have, will narrow your pool of options. Time is money in the real estate and mortgage industry and we want to make certain you are fully prepared going into the search. Consider the neighborhood and location, size of lot, year the home was built, bedrooms, bathrooms, amenities, etc. when narrowing down your list. Prioritize these wants and needs as well so you know whether a fourth bedroom is more or less important than a bonus room or office. This way you can sift through properties quickly and find the one that gives you exactly what you need and more. Set reasonable expectations Finding the perfect home for you does not happen overnight. Being honest with yourself during this step of the process is critical. Unless you are planning on having an unlimited budget, odds are you will have to compromise on one or more things. Not all homes will be new builds, some may need a little love and cosmetic upgrades. Are you willing to take on this task and does it fit into your budget? Managing expectations in the real estate market is hard. You may be faced with a 10-plus offer situation on a home you really love. Is offering over asking something you are able to do? If so, by how much? Take into consideration the timeline. Are you in a position to have a longer escrow period and closing date or do you need the process expedited because you are expected to be moved in X amount of time for your new job or position? All of these points come into play when setting expectations during the home buying process. Please be forthcoming with yourself but also kind. This is not meant to be a step in your life that brings you stress but new beginnings. Be patient and think everything through.  Find a trusted realtor  Lastly, find a realtor who works with you and for you. Your choice in a realtor should coincide with your goals for homeownership. Look for an agent that you get along with very well and communicates with you effectively. You will be communicating with each other for the next month at the very least! Make sure this is an individual you can listen to, feel comfortable being candid with, you feel heard by, and most importantly has your best interest in mind at all times. Take into consideration their prior experience. Who taught them their trade and what kind of experience will this agent provide you? Make sure that you ask them about the area you are looking to move to. You want an agent that knows the location like a local and can guide you knowledgeably. When looking into their references, do not just go by word of mouth. Search through their online reviews. You want a well-rounded opinion before deciding. Ask them about their fees. Do they charge an extra percentage for commission? How are they paid? DO NOT let any realtor or agent push you around. In a market that is constantly changing, some real estate professionals will just look to make a quick sale and commission and push you into a home and contract you are unhappy with. Check if they can adapt to your viewing needs and not just look through their own personal perspective. Remember, you are the average of those you spend your time with. The same goes for the work environment. Look at a realtors team, their reviews, and who they are as it could be a determining factor. Lastly, check their negotiating skills. Ask for examples of negotiations in past sales. What did they yield?  We hope that you have taken away at least a few pieces of advice to help your home buying journey! Information is power - especially when it comes to purchasing a home. Now, good luck and happy house hunting!

Is Homeownership Still the American Dream?

Defining the American dream is personal, and no one individual will have the same definition as another. But the feelings it brings out - success, freedom, and a sense of prosperity - are universal. That's why, for many people, homeownership remains a key part of the American Dream. Your home is your stake in the community, a strong financial investment, and an achievement to be proud of.  A recent survey from Bankrate asked respondents to rank achievements as indicators of financial success, and the responses prove that owning a home is still important to so many American today (see graph below): As the graph shows, homeownership ranks above other significant milestones, including retirement, having a successful career, and earning a college degree.  That could be because owning a home is a significant wealth-building tool and provides meaningful financial stability. The National Association of Realtors (NAR) explains: "Homeownership builds financial security. With 65.5% of Americans owning homes, the net worth of a typical homeowner is nearly 40 times the net worth of a non-owner." There are other ways your home acts as more than just a roof over your head, too. The Mortgage Reports highlights a few of the many benefits homeowners enjoy, including: Your equity (and wealth) grows through home price appreciation. Your housing costs are fixed - and that can help combat rising costs from inflation. You'll have greater privacy and the opportunity to customize your living space.  Plus, homeowners tend to be more active in their community. Like NAR says: "Living in one place for a longer amount of time creates and [sic] obvious sense of community pride, which may lead to more investment in said community." What Does That Mean for You? If your definition of the American Dream involves greater freedom and prosperity, the homeownership could play a major role in helping you achieve that dream. When you set out to buy, know there are incredible benefits waiting for you at the end of your journey. You'll have a place you can call your own. feel most comfortaable, and grow your wealth. First American puts it best, saying: "Homeownership remains central to the pursuit of the American Dream. It is a critical driver of economic mobility, delivering financial and social advantages..." Bottom Line Buying a home is a powerful decision and a key part of the American Dream. And if homeownership is part of your personal dreams this year, let's connect and start the process today!

A Shift in the Market Tide

As economists scramble to update their 2022 housing forecasts issued back in December and update midyear forecasts to factor in the curveballs the market has been pitched, we have been diligently paying attention to the changes and analyzing what is to come. It’s no secret that rates are soaring, and disruptions are ensuing. The market shift is here, and we want to talk about it. With the national inflation unexpectedly accelerated and running rampant at 8.6%, the highest seen since December of 1981, comes a hike in interest rates in an attempt to get inflation under control. Compounding with a desperate need for inventory in the Real Estate Market to restore balance and sanity, more and more buyers are finding themselves pushed out of the sphere of opportunity to purchase a home. With an increase of interest rates, on top of the barely there inventory, buyers have no other option but to fork over more cash to even have a competitive foothold in the purchasing arena. Simply put, non-cash buyers who could afford to shop and purchase a year ago are expected to pay more and get less through tough trade-offs when you consider their need to take out a loan and face the rising rates. Homeownership has become increasingly expensive. Additionally, Home sellers will need to adjust their expectations considering the above. The bidding wars will look a little different, offers may not be tens of thousands of dollars over asking prices, and buyers may not be as willing to waive all contingencies. Though still deemed a sellers’ market, the buyers’ struggle with affordability and interest rates will undoubtedly shift the tide. As we continue to track trends in the market and look towards possible solutions, one thing is for certain – you can take heed knowing that we are a long way from a crash. If it were not for last year’s record-breaking numbers, this year would trend on being a very good year. Look to the bright side, if sales do fall that could give inventory levels the boost it needs for buyers to find properties and have options.