10 Home Buying Tips Every First-Time Homebuyer Should Follow 

1. Determine Your Budget 

Before you start shopping for a home, it is essential to determine your budget. This will help you narrow down your search and avoid wasting time looking at homes out of your price range. You can determine your budget by calculating your monthly income, expenses, and debts. You should also factor in the down payment— the National Association of Realtors lists 8% as the median down payment for homebuyers aged 23-31—closing costs, and other expenses associated with purchasing a home. 

2. Understand Your Needs vs Wants 

We’re not always honest with ourselves when it comes to what we need vs want in a home. Think through your priorities before looking at your options. What do you absolutely need? Maybe it’s extra bedrooms because you plan on having children, or a yard space for your dog to safely play in. Then, think about what would be nice to have in addition afterwards. It’s possible to get the best of both worlds, but establishing the difference between these two factors will help you find a home that realistically meets your criteria.  

3. Get Pre-Approved for a Mortgage 

Getting pre-approved for a mortgage makes the home buying process smoother. It will give you a clearer picture of how much you can afford as well as establish you as a serious buyer. According to Forbes Advisor, “Many real estate professionals won’t take on buyer clients if they haven’t already been pre-approved.” Thus, pre-approval is an important step and stepping-stone into the next part of the home buying process. 

4. Find a Real Estate Agent 

A real estate agent can help you navigate the home buying process and find the right home for your needs and budget. They can also provide you with valuable information about the local housing market, schools, and other amenities in the area. Remember, you can’t rely on the seller’s real estate agent to have your interests at heart. When choosing a real estate agent, make sure to do your research and find someone who is knowledgeable about the area you’re looking at. 

5. Research the Neighborhood 

When buying a home, research the neighborhood to ensure that it’s a good fit for you and your family. Consider factors such as the crime rate, schools, public transportation, and proximity to grocery stores and restaurants. You can also talk to neighbors and visit the area at different times of the day to get a better sense of what it’s like to live there. 

6. Attend Open House Tours 

Attending open house tours is an excellent way to get a feel for different homes. It will also give you an opportunity to ask questions and learn more about the homes you are interested in. When you go, make sure to take notes and ask the real estate agent any questions you may have. 

7. Get a Home Inspection 

No one wants to buy a home only to be caught by a nasty surprise. Getting a home inspection will help you identify any potential issues with the home before you make an offer. A home inspection can also give you leverage during price negotiations. 

8. Negotiate the Price 

Once you have found a home, it’s time to negotiate the price. Your real estate agent can help you with this process and ensure that you get the best deal possible. When negotiating price, consider factors such as the home’s condition, local housing market, and the seller’s motivation to sell. Try not to go over your budget if you must be competitive in your offer. You may love the home, but extending past your reach causes unwanted financial difficulties down the line. 

9. Buy Homeowner’s and Title Insurance 

These two things are must-haves if you want to protect your home from unforeseen issues. Your homeowner’s insurance is required by the lender and will pay for things that happen during ownership, such as repairing or rebuilding your house after a disaster. Title insurance protects you from things that happened before buying the property, such as failed property tax payments by the previous owner.  

10. Close the Deal 

Once you have agreed on the terms of the sale, it’s time to close the deal. This involves signing a contract and paying the down payment and closing costs. Carefully read through all the paperwork before signing to ensure you don’t agree to anything you aren’t aware of. Remember that your real estate agent can help explain any questions you may have during this process.

One Extra Tip: Enjoy Your New Home! 

Using these 10 home buying tips, you’ll be well on your way to finding the perfect place to call yours. At Perpetual Title, we’re here to support you through every step of the home buying journey, even the steps that come after closing. Continue your path to success by learning the dos and don’ts of what to do after closing. 

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What is a HECM Loan?

A HECM loan—or Home Equity Conversion Mortgage—is a reverse mortgage that leverages the home’s equity as supplemental income, which can then be used at the borrower’s discretion to take care of living expenses, medical bills, and more. A HECM loan is unique from other types of reverse mortgages because it is the only one insured by the Federal Housing Administration (FHA) —meaning it offers the most protection to borrowers. Additionally, this type of loan is nonrecourse; therefore, you’ll never owe more than what your home is worth even if your home’s equity drops after receiving the loan.

HECM loan amounts are based upon:

• Age of the youngest borrower or eligible non-borrowing spouse
• Current interest rates
• The home’s appraised value
• The HECM FHA mortgage limit, which is currently set at $1,089,300

Eligibility

Offering the most protection to borrowers and the most spending autonomy, it’s no wonder that the HECM loan is one of the most popular choices for borrowers. Furthermore, HECM loans are not dependent upon credit score, offering financial requirements that are much more slack than other loans. That being said, there are a few requirements that must be met to receive the benefits of this loan.

To be eligible for a HECM loan, the borrower must:

• Be 62 years old or older
• Use the appraised property as their primary residence
• Have their property approved by the U.S. Department of Housing and Urban Development as a 2–4-unit single-family home, manufactured home, or condominium.
• Fully own the property or have a small mortgage balance
• Keep up with all federal debt payments
• Be able to pay all upfront and ongoing costs, including the required HECM counseling

For retirees 62 years or older, HECM loans provide many financial benefits.

How to Apply

The application process for a HECM loan begins by going through an FHA-sponsored bank. To find a bank that meets FHA standards, the U.S. Department of Housing and Urban Development provides an easy-to-use lender list. Follow these simple steps to locate an approved lender near you:

1. Go to the HUD Lender List Search
2. Select your state, county, and zip code (you can also choose the radius it will search within)
3. Scroll down
4. Uncheck “Title 1 Property Improvement”
5. Check “HECM”
6. Click “Search

Millennial Title is Your Partner for HECM Loan Closings

Highly protected, accessible, and flexible, a HECM loan is an excellent source for supplemental income. At Perpetual Title, our experienced staff works closely with FHA-approved lenders to ensure your loan closing is completed as smoothly as possible. Contact Perpetual Title today to take your first steps towards acquiring a HECM loan.

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What is a Reverse Mortgage?

Unlike a traditional mortgage where you pay the bank monthly for your home, a reverse mortgage is backed by using your home as a security. If you have any outstanding mortgage payments, the remainder of it will be paid off by the reverse mortgage. After that, the remaining funds go to the borrower. To attain a reverse mortgage, there are a few requirements to consider:  

• The borrower must be aged 62 years or older (55 in some states). 
• The home’s equity must be sufficient for the loan. Typically, 50% of accumulated equity is required.  
• Property taxes, homeowners insurance, and basic home maintenance costs must be paid. 
• The property in question must be the primary residence for the borrower for at least a year. 

The 3 Types of Reverse Mortgages

The next step after determining if you are eligible to receive a reverse mortgage loan is choosing what kind to apply for. With three choices to choose from, each option has a unique set of advantages that can aid you in determining which will work best for you. 

Home Equity Conversion Mortgage (HECM)

Home equity conversion purchase offers the most protection for borrowers because it is insured by the Federal Housing Administration (FHA). These loans are nonrecourse, meaning the borrower never owes more than what their home is worth, even if the value drops after receiving the loan. HECM loans also have slacker financial requirements than other loans such as not being dependent upon credit score. HECM’s offer the option of lump sum payments through a fixed rate or adjustable rates where equity can also be turned into lump sums, monthly distributions, a line of credit, or a combination of each. Money can then be used on anything the borrower chooses such as paying for school tuition or debt, taking care of medical expenses, supplementing income, and more.  

Proprietary Reverse Mortgage 

Proprietary reverse mortgages are similar to HECM loans in that they can be used for whatever expenses you wish. However, unlike the conventional institutions HECM loans use, proprietary reverse mortgages are provided by private lenders, meaning they are exempt from FHA regulations and paying mortgage insurance. Therefore, lenders can offer amounts higher than the federal limit, which is why these loans are also called jumbo reverse mortgages. For those who want autonomy over how they use their loan without having to deal with federal restrictions and insurance, higher loan limits, or a combination, a proprietary reverse mortgage may be the right choice.  

Reverse for Purchase Mortgage

Also called a HECM for purchase, a reverse for purchase loan is unique in that its sole purpose is to be used to purchase a home through a single transaction. Once the borrower places a down payment of roughly 40-50% on the home they wish to buy, the reverse for purchase loan immediately resolves the payment by offering to loan up to 50-60% against the home equity. Thus, the slate is wiped clean, and the home is purchased in a single transaction. Those looking to move closer to family, downsize, or want to maximize on their purchasing power during homebuying would be well suited a reverse for purchase loan.  

Take Advantage of Reverse Mortgages

Whatever reverse mortgage you think is right for you, we want to help find the resources you need to take advantage of the opportunity. Perpetual Title is uniquely suited to assist you by offering a team of experienced professionals across the country that can help you navigate each step of the process. Want to learn more about our lending partners? Click here to learn more as well as discover Perpetual Title’s other vast areas of expertise. 

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What is Inflation?

Inflation is the rise in prices, meaning a consumer cannot purchase the same product(s) for the same price. The rate of inflation is often measured by the consumer price index. This calculates the average change over time in the prices consumers pay for products and services. Inflation has greatly impacted numerous industries, but the real estate market has been permanently altered due to this economic stress. The real estate industry has experienced rising prices throughout the years, with every decade being more expensive than the previous. Due to inflation and other economic factors, home prices have grown a dramatic 326.1 % since the 1950s.

Real Estate vs. Inflation

Inflation is a time-sensitive situation and long-term investments are exceptionally important during these times. Commercial real estate is among the few investments that remain protected from the uneasy market and starts on the path of recovery much sooner. These quicker recovery times are a significant factor why investors make a beeline for commercial real estate assets.

A way to fight inflation is through an inflation hedge. This investment protects the decreased purchasing power of a currency that follows from the loss of its value due to rising costs. This process involves investing in an asset that is predicted to maintain or increase its value over a designated period. On the other hand, the hedge could involve taking a higher position in assets, this may decrease in value less rapidly than the currency’s value.

Hedging can help protect the investment’s value. Certain investments might seem to provide a decent return, but with inflation, they can be sold at a loss. Assets that are considered to be part of an inflation hedge can be self-fulfilling; which keeps their values high even though the intrinsic value may be lower.

Real Estate Investment Options

Fractional Ownership

This option allows diversification of the portfolio, and the individual can choose without limitation the assets they would like to invest in.

Unimproved Property

Unimproved property is land with nothing on it including buildings, paths, and crops. Investing in unimproved property is a unique opportunity for investors to diversify their portfolios and tends to be cheaper than purchasing developed land or other types of property.

Commercial Real Estate (CRE)

This option allows the individual to own or co-own commercial property. This is a great option if you have knowledge of the market you are investing in and can handle the formalities involved in the ownership process. Individuals can also choose to purchase wholesale commercial properties. This is a great way to enter begin investing in commercial real estate with little capital or experience, to get started check out these tips.

Real Estate Investment Trusts (REITs)

REITs are companies that work with the purchase, management, or financing of real estate. They allow diversification and remove the unnecessary stress of excessive formalities present when purchasing real estate. Similar to a mutual fund, an individual can choose the REITs, but not the assets it is invested in.

Investors can use a REIT to generate income without having direct ownership responsibilities. | Photo: Reits Market

How Can Commercial Real Estate Protect Investors?

Commercial real estate as an inflation hedge has proven time and time again to be a successful strategy. It’s an asset class that generates predictable returns among other benefits, here are three:

Increasing Rental Income

Property rental prices can be attributed to rising inflation. This can cause an increase in net operating income, which will appreciate the property’s value further. If the property’s value is more than the inflation rate, the investment will not be hampered if they are holding commercial real estate.

The Lease Factor

Lease agreements for commercial real estate are structured in a way that increases the rent at regular intervals throughout the leasing period. Based on the property and demand of the market, the clause for different assets will be different. If these regular increases outpace the rate, the relative return will stay positive.

Property Scarcity

Space will always keep decreasing. Houses, apartments, and other buildings are created to increase the market’s supply. However, this increase in supply causes scarcity of space. In dense real estate markets, high demand and limited supply contribute to the appreciation of prices for real estate, which is positive for investors.

Ready to Fight Inflation? Invest in Property Today!

Using commercial real estate as an inflation hedge is a great strategy to preserve your finances and prevent current and future losses. There are a few money-making options you can pursue, but it is always best to examine all your options and choose the best fit for you, including choosing the right partners. Perpetual Title provides commercial real estate title services across the United States. With in-house attorneys and a team of knowledgeable real estate professionals, we have the experience and expertise to manage your next commercial real estate transaction. To learn more about our commercial title insurance and escrow services or to schedule your closing, contact us today.

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Benefits of Staging Your Home

There are many benefits to staging your home for prospective buyers including: 

Increased Desirability.  

Staged photos can initiate the interest of the buyer in the home and push the homebuying process forward. 

Implements Buyer Urgency

A properly staged house can not only increase desirability but also shorten the length of time on the market. A study from the Real Estate Staging Association found that staged homes spend 72% less time on the market. Buyers are more likely to make a quick offer on a home they consider attractive and looks move-in ready.  

Buyer’s Expectations

Due to the oversaturation of home shows and real estate sites, buyers develop certain standards for what they want their home to look like. If your home is not staged, then it can leave buyers feeling underwhelmed and uninterested. However, if your home is staged, it can meet or possibly exceed the buyer’s expectations.  

Improved Visualization

Before you make a large investment, you want to make sure that it is the right decision for you. Staging gives buyers the chance to imagine living in your home.  

Increased Value in Home

Staging isn’t exactly cheap, but it can increase the dollar value by 1% -5% from buyers. This may not seem like a lot but 5% of a $500,000 home is $25,000.  

 Just by giving your kitchen a facelift it makes a huge difference

Staging Tips

Start with Curb Appeal

First impressions matter! Buyers first see your house’s exterior, so it’s extremely beneficial to give them a positive impression of your home before they even step foot inside. Try power washing the siding, cleaning the gutters, or pulling weeds! These small upgrades can make a dramatic difference.  

Give the Kitchen a Facelift

Kitchens can make or break a home. Consider changing out older, outdated appliances and décor with more modern options. Corroded faucets or hard water stains are significant turn-offs for buyers.  

Depersonalize and Remove Unnecessary Clutter 

Staging allows buyers to visualize them living in your home. However, they are not going to be living in YOUR home. Remove clutter and personalized items from all rooms to give a blank slate for prospective buyers to emotionally connect with. 

Rethink placement

Do not be afraid to move furniture around. Minor changes can make the space more inviting and visually appealing.  

Add potential office space.  

Today, more people are choosing to work from home or homeschool their children, so having a built-in workspace is a huge plus for buyers.  

Show off Storage

Storage always ranks high on a buyer’s wish list. Do yourself a favor and show off your decluttered closets and large kitchen cabinets. Buyers will definitely appreciate the extra space.  

Amp up the Lighting 

Great lighting is one of the easiest ways to make your home appear more warm and inviting. Increase the wattage in your light fixtures and aim for a total of 100 watts for every 50 square feet.  

Time to Fluff the Pillows!

Overall, staging your home can greatly benefit both buyers and sellers. Staging your home will highlight your home’s strong suits, downplay shortcomings, and ideally appeal to the largest possible pool of prospective buyers.

We hope that this blog was informative and helped in your home selling process. For more information regarding the home selling process, contact us today.

The post How Staging Your Home Can Lead to a Faster Sale first appeared on Perpetual Title.

1. Prepare for Home Inspections

Home inspections are a standard part of the buying and selling process. Home inspectors will notify both parties of potential issues and items to repair. To prepare for the home inspection, sellers can take charge and minimize any delays by completing the following:

• Clean out gutters
• Repaint the exterior if weathered
• Caulk around windows, doors, and chimney
• Repair any broken pavers, bricks, or loose railings
• Test smoke and carbon monoxide detectors
• Ensure crawlspace and attic are accessible
• Inspect plumbing fixtures for any leaks
• Replace any burnt out lightbulbs indoors and out

2. Provide Pertinent Information to Your Realtor and Title Company

• Current Mortgage Statement for payoff
• HELOC or Equity Line statement
• Personal Information (social security number)
• Homeowners Association contact information (if applicable)
• LLC or Trust documentation (if applicable)

3. Moving Preparations

As the buyer finalizes items on their end and a closing date has been set, it’s time to pack up your belongings for the move. One way to alleviate some of the stress is by hiring a reputable moving company in the area. We recommend gathering at least three names so that you can compare quotes.

4. Leave Essential Documents and Manuals for Buyer

Collect essential documents such as manuals, receipts, and warranties in a folder for the buyer to easily access.

5. Collect all Remotes, Keys, and Garage Door Openers

Many buyers will change the locks, but until they can make a trip to the home improvement store, they will need the keys. The buyer will also need any remote controls for ceiling fans and garage doors to get full use of the house. Set these aside in one location so they’re easy to find.

6. Clean the House Thoroughly

Once you’re all packed, now it’s time to clean! No one wants to move into a dirty house, yourself included. So, whether you hire a professional cleaning service or do it yourself, the buyer will appreciate being able to move right in without having to get to work immediately.

Cleaning your home when it is vacant is much easier than with moving boxes everywhere.

Once the Closing is Scheduled

7. Notify Change of Address

Be sure to notify friends and family of your upcoming move. You should also fill out a change of address form on the USPS website to ensure your mail is rerouted.

8. Inform Utility Companies

Electric, gas, water, cable, and any other utility companies will need to be notified of your move. Unless they are informed, they will keep charging you even after the new owner moves in. We recommend gathering all your utility bills, phone numbers, and websites in one place to make canceling your services more efficient. Many companies will also allow you to do this online and even input a specific date for the last day of service.

Ask that the utilities be transferred out of your name, not turned off. That way your buyer can have them transferred into their names with ease.

9. Personal Walk Through

Walk through your home one last time to make sure you do not leave anything behind. Check closets, drawers, sheds, and all the nooks and crannies for your personal items. If you’re considering leaving behind any personal property that may be useful to the new owner, just check with the real estate agent.

10. Cancel Insurance

Once the closing has occurred, contact your insurance provider to cancel your homeowners insurance. There’s no reason to keep paying for insurance that you do not need! However, be sure to wait until ownership has been transferred because until then you will be financially liable for any issues.

Closing Day!

With your documents in order, moving completed, and the house ready for the new buyer, the final step in the process is closing day! Before you make your way to the closing table, be sure to have the following items with you:

• License or Government-Issued photo ID; all individuals on the purchase and sale agreement will need to bring their ID.
• House keys, keypad access codes, garage door openers (don’t forget the one in your car).

With closing completed, it’s time to celebrate the sale! While selling a home can be a complex process, Perpetual Title’s experienced and knowledgeable team is here to address all your questions and concerns in the closing process. If you would like to learn more about our closing process or to schedule your next closing remotely or in one of our offices, please contact our team!

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Definite Don’ts

Rack up Credit Card Debt

A new home means new furniture, right? Not necessarily. While some purchases may be justified, please do not go overboard and rack up hundreds or even thousands of dollars in credit card debt. We recommend creating a budget for your post-closing spending so you don’t get in trouble before that first mortgage payment is due.

Forget Tax Breaks

One of the greatest benefits of homeownership is the tax breaks that come along with it including the homestead exemption. The amount you receive will vary by your state. Some counties also offer tax exemptions for homeowners, so be sure to confirm with your county’s assessor’s office whether you’re eligible.

Begin Renovation Projects…Yet

The home inspection report you received before closing will list all the potential problem areas within the home that the prior owner did not address. From resealing windows and cleaning gutters to painting walls and replacing flooring, the list of renovations and issues to fix can be overwhelming. Instead of jumping into a renovation project as soon as you walk in the door, determine the priority items of what should be completed first.

Throw Away Mail

Changing your address after you move can be a headache. If you receive the previous owner’s mail, do not throw it away; just call USPS to let them know and they will help you sort things out.

Ignore Your Neighbors

Introduce yourself to your neighbors when you move in! Keeping your landscape tidy, decorating for the holidays, and showing others that you’re friendly is a good first step in familiarizing yourself with the neighborhood.

Keep your landscape tidy to make a good first impression with your neighbors.

Must Do’s After Closing on a House

Store Documents in a Secure Place

Along with your birth certificate, social security card, passport and other official papers, your closing documents should be added to your fireproof safe for safekeeping. These documents can also be stored on a secure cloud-based website or software such as Google Drive or Dropbox.

Change Locks and Update Keypad Codes

We highly recommend changing your locks and updating garage keypad codes for security purposes. While one of the contingencies at closing is to return all keys to the buyer, it could be possible that there is a key out there that is unaccounted for. Changing your locks and updating the keypad codes provides peace of mind in knowing that you have the only keys that can access your new home!

Deep Clean Before Moving in

The home should be clean upon closing, but in some cases a deep clean may be required. You can either hire a professional cleaning company to come in or you can do it yourself. Some tasks to consider include:

• Steam clean carpets
• Clean included appliances
• Scrub tile grout
• Wash all windows, inside and out.
• Clean and polish wood floors

Check Utility Systems including the HVAC and Water Heater

Familiarize yourself with your home’s utility systems so you know how they all work. Replace the furnace and AC filters to save money, improve air quality, and eliminate any odors. Ensuring that your vents are clean and both systems are running properly so they’re ready when you need them. You can also take the time to drain your water heater and adjust the settings to extend the water heater’s life and improve your energy bill.

Celebrate, of Course!

Homeownership is a milestone worth celebrating and while there are things to do, even after closing, the tasks above are very important and will improve the overall experience for you and your family. So, while you will probably see your to-do list grow over the years, owning a home is an investment worth making. To learn more about the home buying process and Perpetual Title’s escrow and title services, contact our team. We are licensed to close in more than 20 states across the country and can help you make homeownership a reality.

The post Homebuyers: Do This, Not That After Closing on a House first appeared on Perpetual Title.

What is a 1031 Exchange?

Section 1031 of the Internal Revenue Code allows investors to avoid paying capital gains taxes when they sell and reinvest the earnings of the sale into a property or multiple properties of like kind and equal or greater value. By reinvesting, investors will defer the capital gains tax from the sale.

For example, an investor purchases a property in 2015 for $200,000, then by 2020, the property appreciated to $500,000 and the investor decides to sell. The sale will have a capital gain tax of $300,000 and the tax will need to be paid on that gain. However, if the investor decides instead to utilize a 1031 exchange, they can invest the $300,000 they earned into another property and defer the capital gains tax on that sale.

Benefits of 1031 Exchange: Why Should Investors Use it?

While a 1031 exchange may look like a tax loophole, it is a perfectly legal process that allows investors the opportunity to reinvest, build their portfolios, and more. Here are 5 benefits of 1031 exchange transactions:

Reset Depreciation

When declaring taxes from rental income, investors can claim depreciation as an expense toward their deductions. Typically, when selling your rental property, you would have to calculate its depreciation and pay the taxes associated. With a 1031 exchange, the depreciation is carried over into the replacement property and is deferred until the new property is sold.

Increase Cash Flow and Free up Capital

Between tax savings and building wealth through capital appreciation, owning property that produces positive cash flow will grow your assets quickly. You can leverage your assets to get a more expensive replacement property by using your proceeds of the exchange toward a down payment or even consider exchanging for a commercial or rental property to earn a monthly income.

Utilizing a 1031 exchange allows investors to avoid capital gains tax by reinvesting the money earned from the sale.

Diversify Portfolio

By purchasing properties through a 1031 exchange, you can diversify your portfolio by branching out into different markets or types of properties. Owning a single asset or several of the same type exposes you to more risk in the event that the market crashes.

Consolidate Properties

On the other hand, for some investors, owning multiple properties can be costly and time-consuming, especially if the ROI isn’t high enough. Investors can utilize the 1031 exchange to swap these properties for something that is less maintenance and easier to manage.

Transfer Assets and Profits to Beneficiaries Tax-Free

In the event of death, the property and profits associated will be transferred to the designated beneficiaries tax-free.

Perpetual Title Protects Your Investment

As your partner, Perpetual Title recognizes the importance of profitable investment strategies. At Perpetual Title, we understand every aspect of real estate investing as well as its potential risks and rewards. From completing your title work and issuing policies, the team at Perpetual Title is here to ensure your investments remain protected now and in the future. To learn more about title and escrow services, contact us today.

The post Investing in Real Estate? 5 Benefits of 1031 Exchange first appeared on Perpetual Title.