Blog - South Florida Residential Team | South Florida Residential Team

Where Are Interest Rates Heading for Rest of 2019

June 20th, 2019

One of the most important things to consider when buying a home with financing is the interest rate that you will be charged to borrow the money. The question that currently being asked is “Are Low Interest Rates Here to Stay?” We are currently at a 21-month low in interest rates.

One year ago at this time, the interest rate on a 30-fixed ate mortgage was 4.54%. One year later, we saw that rate drop to 3.82%. Home buyers and refinance candidates are getting mortgages in the low 4% points when most housing agencies predicted that rates would be near 5% at mid-year 2019. However, lower rates in the future may becoming less likely. There is a higher probability that rates will rise again. All major housing authorities are predicting higher rates. If these agencies are correct, rates will start to climb soon to reach the average predicted year-end rate in the range of 4.38%. That is still a very good rate but it is not as low as what is available now.

The Federal Open Market Committee (FOMC) also commonly known as “the Fed” meets eight times a year but four of those meetings hold special significance. At these four meetings, the group releases the potential direction of interest rates. In March, the Fed announced that it would not raise rates 2-3 times in 2019 as predicted. This resulted in lower mortgage rates and generated much refinance activity. Yesterday, the Fed announced that it will leave rates unchanged for the time being which should keep interest rates at current levels.

If you have been sitting on the sidelines, it could very well be a good time to jump in the market either to buy or refinance. A 0.80% lower rate on a $350K mortgage equates to a savings of $170 per month. Annually, this would translate to a savings of $2,040 and over the life of a 30-year mortgage, a savings of more than $60K. To a home buyer, this could mean buying a larger or more updated home or one in a more desirable neighborhood. For those interested in refinancing, it provides more leeway in your monthly budget.

We have already seen how experts who create mortgage rate forecasts can get them wrong. If the Fed sees that the economy is doing well, it may raise the federal funds rate at its July 31st or September 18th meeting. This action would cause higher interest rates for mortgages. The bottom line is that if you are serious about buying a home with financing or refinancing, act now before interest rates start to creep back up.

Should you have any questions or are looking to buy or sell residential real estate in South Florida and not currently working with a Realtor, please call me at (954) 547-9483 or email me at jkenney10f@gmail.com. Thanks

Jay Kenney

How To Make a Great Offer on a Home

May 25th, 2019

You have finally found your dream home and want to ensure that your offer is accepted and the dream of making this home yours comes true. The following will provide a few tips that will make your offer irresistible to sellers:

1.) Work with your real estate agent to understand what similar homes in terms of size and condition recently sold for in the same neighborhood. This will provide you with pricing information on what buyers were actually willing to pay for homes similar to the home that you are interested in making an offer on. Use this information as a basis for formulating your offer.

2.) If you are able to pay cash for the home, this will put you in a stronger position than a buyer who is using financing. Cash offers are less likely to fall apart as the sale is not dependent on receiving loan approval. Also, cash deals tend to close faster due to the time lenders may need to approve the amount of financing that the buyer requires.

3.) If you prefer not to pay cash, you will need a mortgage. If this is the case, be sure that your finances are in order. A few months prior to looking for a new home, check your credit report allowing time to dispute any errors and take the necessary steps such as paying down debts that will improve your credit score. You can get your reports once a year from the three major credit bureaus at www.annualcreditreports.com. Next step is to get a lender’s pre-approval. This won’t guarantee that you’ll get a loan but it will show sellers that a lender has verified your income your income and credit score and has determined that you can afford payments on a mortgage for a designated amount. This will indicate to sellers that you are ready to purchase and have already committed to a lender.

4.) Include a healthy deposit as part of the offer. The deposit will show the seller how serious a buyer you are. You have the option of making an initial deposit either with the offer or three days from the execution of the agreement. Additionally, you have the option to make a second deposit which could further demonstrate your seriousness as a buyer. For any reason allowed by the agreement that your offer does not result in a closed sale, you are entitled to receive 100% of your deposit money back.

5.) Should you opt to have an inspection of the home, do not take the maximum number of days allowable per agreement to have an inspection performed. Instead of upwards of 15 days, opt for 5-7 days. Sellers prefer a shorter time frame as the buyers have the option to walk away from the agreement for any reason during the inspection period. Sellers prefer to work with buyers who can work with shorter inspection periods,

6.) Offer to close in as short a time frame as possible . Many sellers prefer to close within 30 days. If you can offer a shorter time frame that may be very well received by the seller. Cash deals generally allow for a quicker close. With financing, always confer with your lender to determine how many days that they need to approve your mortgage. Be sure that the seller is aware of your willingness to work with their timetable to close. If the sellers want to remain in the house for a short time after closing, offer them a lease back which means that you would be their temporary landlord.

7.) Don’t include demands on your offer that would irritate the seller. If it is customary in your area for the buyer to pay for their own title insurance then don’t ask the seller to assume this cost. Don’t make a lot of unnecessary changes to the agreement which would require approval and initialing by both parties. These agreements have been drafted by real estate attorneys and are designed to protect both buyers and sellers. For any desired changes to the standard agreement, consider using an addendum to the agreement for this purpose.

8.) After conferring with your real estate agent, determine your best offer that you are willing and able to pay. As previously stated, make your offer based on recent closed sales of comparable properties in the neighborhood so there will not an issue if the property is appraised.

9.) Where financing is involved, be sure to secure your real estate agents feedback as to whether you should put forth your best offer. Depending on local market conditions, you may only get one more chance to make an impression on the seller. It may be unwise to make a low offer hoping the seller will give you a counteroffer. If the seller has received multiple offers, the low offers are generally not ever considered. Keep in mind that in addition to the offer price, sellers also look at other costs and expenses, the financial stability of the buyer along with the timeline related to the inspection period and closing date that work best.

Should you have any questions or have an interest in buying or selling residential real estate in South Florida and not currently working with a real estate agent, please call me at (954) 547-9483 or email at jkenney10f@gmail.com. Until Next time…..

Real Estate Disclosure Laws: What Sellers Need to Disclose

April 26th, 2019

Florida law does not provide an exception for a home that is sold “As Is”. That means that the buyer agrees to take the home in its existing condition without the seller having to make any further repairs or improvements. However, the “As Is” clause does not relieve sellers from their responsibility to disclose latent issues that they are aware of that materially affect the value of the home. Florida law requires sellers to disclose these issues even if the buyer does not ask whether the seller knows about any defects. Examples of such issues that could materially affect the value of a home can include:

1.) Environmental hazards such as asbestos, lead and mold

2.) Insect and pest infestations such as termites

3.) Electrical issues such as wiring or other problems with heating or air conditioning

4.) Foundation issues such as cracks

5.) Disputes about property boundaries or problems with the title to the home

It should be noted that sellers are not obligated to disclose any defects that are obvious such as a broken window or hole in the wall. Only latent defects which include those that cannot be seen during a normal inspection must be disclosed. Additionally, the seller must have knowledge of the defect or issue at the time of the sale. To assist sellers in making all relevant disclosures, The Florida Association of Realtors has developed a 4-page standard form that the seller completes detailing their knowledge on the condition of many property characteristics such as:

1.) Claims Against the Property: are there any current or future claims or court proceedings that affect the property?

2.) Homeowners Associations: is the property subject to rules of a condominium or condo association?

3.) Property Boundaries: are there any disputes regarding the property boundary lines?

4.) Sinkholes: does the property contain any past or present sinkholes?

5.) Environmental Hazards: does the property have any asbestos, lead, mold or Chinese drywall issues?

6.) Key Home Components: are there any problems with essential components such as roof, plumbing, electrical wiring, heating and air conditioning systems?

Florida law does not require that sellers make such disclosures in writing. Such disclosures can be made verbally. However, if a seller makes oral disclosures, it may be difficult to prove in the event that the buyer purchases the property and later finds problems with the home. For this very reason, it is recommended that the seller disclosures be provided in writing. If the buyer does claim to have discovered a defect that was not disclosed by the seller; it is the responsibility of the buyer to demonstrate the following:

1.) the seller was aware of the defect and failed to disclose

2.) the defect has a substantial impact on the value of the home

3.) the buyer was not aware of the defect at time of purchase

4.) the defect would not have been easy for the buyer to detect

The purchase of a home is one of the most important financial decisions that one will make. To protect your purchase, it is recommended that buyers opt to have an inspection of the home performed by a licensed home inspection professional prior to closing on the property. The As Is agreement provides a clause that the buyer wishes to have an inspection conducted up to 15 days following the execution of the agreement. During this time, the buyer has the option to walk-away from the agreement should an issue be uncovered by the inspection and the seller fails to remedy.

Should you have any questions on the above or have an interest in buying or selling residential real estate in South Florida and not currently working with a Realtor, please do not hesitate to contact me at (954) 547-9483 or via email at jkenney10f@gmail.com.

Jay Kenney

Rights Related to Service Animals and Emotional Support Animals in Florida

March 20th, 2019

The following will provide general information on assistance animals in what constitutes a service animal and emotional support animal along with the respective rights of the tenant/buyer and landlord/condo association. The American with Disabilities Act (ADA) 2010 Regulations define a service animal as “any dog that is individually trained to work or perform tasks for the benefit of an individual with a disability including a physical, sensory, psychiatric, intellectual or other mental disability. If they meet this definition, dogs are considered service animals under the ADA regardless of whether they have been licensed or certified by a state or local government. It should be noted that in most instances, the service animals are dogs but the law does not mandate that to be the case.

Under the ADA, an individual with a disability is a person who has a physical or mental impairment that substantially limits one or more major life activities of such an individual; a record of impairment; or be regarded as having such an impairment. Examples of tasks that could be performed by service animals include but are not limited to:

*guiding people who are blind or have low vision

*alerting people who are deaf or hard of hearing

*providing non-violent protection or rescue work

*pulling a wheelchair

*assisting an individual during a seizure

*alerting individuals to the presence of allergens

*retrieving items

*providing physical support with balance to individuals with mobility issues

*calming a person with PTSD during an anxiety attack

Under the ADA, landlords are allowed to ask the owner of a service animal two verification questions: “Is this a service animal that is required because of a disability? and “What task has the dog been trained to perform?” By law, the landlord is not able to ask “What’s wrong with you?” They are only allowed to ask about the need for the service animal which is legally considered an assistance device such as a cane or a walker rather than a pet.

The ADA requires that service animals be accommodated in housing. However, the federal Fair Housing Act (FHA) has a broader service animal definition that allows tenants to request a reasonable accommodation for any assistance animal including emotional support animals. Almost anything can be considered an emotional support animal including a dog, cat, hamster, snake or parrot. The requirements you need to meet in Florida to qualify for an emotional support animal are the same as in other states. The specific requirements for owners of emotional support animals include:

*A licensed mental health professional needs to determine that an emotional disability exists

*The mental disability is in the Diagnostic and Statistical Manual of Mental Disorders

*The identified condition substantially limits ability to participate in at least one major life activity

*The professional has to determine that an emotional support animal would help treat the condition or ease the symptoms

*An emotional support animal letter which is a prescription for an emotional support animal

*The letter must come from a licensed mental health professional and be on the mental health professional’s official letterhead

*Must include the therapist’s license details, issue date, and state

In the case where a landlord is severely allergic to dogs, the landlord must consider the renter’s request for reasonable accommodation; and if, granting the request could impose an undue hardship. The determination of undue hardship must be reviewed including the options of alternative accommodations to meet the tenant’s requirement. If an alternative solution cannot be found, it could be treated as a denial and the landlord should be able to show that additional reasonable accommodation were proposed.

If the tenant/buyer has fulfilled the Florida emotional support letter requirements and proof has been provided, the emotional support animal cannot be rejected even with condos that do not accept pets. The Fair Housing Act provides the right to live with an emotional support animal regardless of your condo association’s rules. However, the landlord has the ability to make a claim on the tenant’s security deposit fro any damage the service animal may cause at the end of the tenant’s lease, If anyone challenges the validated emotional support animal requirements, the owner of the support animal can file a complaint with HUD.

Should you have any questions on the above, please do not hesitate to let me know. Also, if you are looking to buy or sell residential real estate in South Florida and not currently working with a Realtor, please call me at (954) 547-9483 or via email at jkenney10F@gmail.com. Many thanks!

Ways Real Estate Can Generate Wealth

February 22nd, 2019

The rising of home prices over time also known as appreciation is how the majority of wealth is created in real estate. While prices fluctuate, over the long run real estate values have always increased, and there is no reason to believe that this is going to change.
One thing to consider as it relates to real estate appreciation affecting your Return on Investment (ROI) is the fact that appreciation combined with leverage offers maximum return. By nature, real estate is one of the easiest assets to leverage. Not only is it easy to leverage the financing of it, but the terms are very favorable compared to any other kind of loan. Interest rates are currently below 5%, down payments can be as low as 5% and loans can be amortized over a 30-year period. If you buy a property for $300,000 and it appreciates to $330,000, you have a 10% return. However, if you have financed putting down a 10% down payment, you actually have doubled your investment with a 100% return.
One of the best benefits of investing in real estate is the fact that not only are you generating revenue but also are paying down your loan with every payment. You often hear that with rental properties, it’s actually the tenant who is paying off the loan. When investing in residential real estate, ensure that any purchase you make generates more income than it costs to own resulting in a positive cash flow and can appreciate over time. Smart investors always purchase property with a positive cash flow providing a consistent revenue stream independent of market whims affecting capital appreciation.
Forced equity is a term used to refer to the profit that is made when an investor makes improvements or enhancements to a property to make it worth more. Unlike appreciation where you are subject to market conditions that you cannot control; forced equity allows investors the ability to pro-actively increase the value of the property.
Historically, in real estate, your risk of loss is minimized by the length of time you own the property. When the market improves, the value of your home increases, and as a result, you build equity, Unlike the stock market, where there is risk and several external factors that can negatively impact your investment, real estate provides more control of your investment.
It is also a fact that the longer you hold onto real estate, the more money that you will make. The housing market has always recovered from past bubbles that caused home appreciation to drop, and from those who held on to their investments during down markets; prices have returned to normal.
It is important to know that the purchase price is the main factor that determines your profit in the future. To buy right, it is best to work with a professional Realtor who knows the local market and can determine the potential value of a property. Once you know the market value, factor in any renovation and other costs to accurately determine your potential profit. There are many ways to generate wealth but investing in real estate is one of the better ways to do so.
Hope that you have found this blog to be of value. Should you have an interest in buying or selling real estate in the South Florida market and not currently working with an agent, please do not hesitate to contact me at (954) 547-09483 or via email at jaykenney@SFPropertyTeam.com.
Jay Kenney

HOW MUCH HOUSE CAN I AFFORD?

January 18th, 2019

Once you have decided to buy a home, you will need to determine how much home you can afford to spend to purchase that home. Unless, you are paying cash for the purchase, you will need to consult with a loan lender on what you can qualify for in terms of a mortgage. It is important to note that the maximum amount that you may qualify to receive does not necessarily mean it is what you can afford. Rather than considering the total dollar amount, look at the monthly-related expense and compare that amount to your monthly net income. This will help determine how much home that you can afford.

Mortgage lenders generally look at the amount involved in paying the mortgage. When assessing your ability to pay, lenders include expenses such as the principal, mortgage interest, real estate taxes, homeowner’s insurance, any mortgage insurance or homeowner’s association fees. However, lenders do not include home-related expenses such as utility expenses as well as general maintenance and repair-related expenses in owning a home. It is difficult to estimate the specific amount that you may need for maintenance and repairs; however, an anticipated annual cost of 1% of the value of the home can be used as a general rule.

Additionally, you should also include your daily living expense items such as gasoline, car maintenance, groceries, restaurants and entertainment, vacations, gym and clothing. Having an idea of the monthly cost of such items will help determine what you can afford. You should include these costs in your monthly debts to give you a realistic picture of how your money is being spent.
However, you should also include the need to save for emergencies and retirement. Financial experts generally believe that you should have up to six months of expenses in savings. This includes your total housing payments and all other monthly expenses. This should protect you from defaulting on a mortgage should your income stop. In addition to saving for emergencies, you should factor in a fixed amount to save for retirement each month.

Your long-term goals should also play a role in how much house you can afford. If you anticipate your income changing in the future, you need to plan for the worst-case scenario. By so doing, you will be in a better position to cover your mortgage payments.

As a general rule, home buyers seeking a mortgage have been well served by the 28/36 rule. This rule states the following:
*Monthly housing costs which include mortgage payments, insurance, property taxes and condo or association fees shouldn’t exceed 28% of your monthly gross income.
*Monthly debt payments including credit card bills and student loans shouldn’t exceed 36% of your monthly gross income.

In addition to considering your housing costs and debt payments, you also need to determine how much you have for a down payment. The more you are able to put down as a down payment, the more home you can afford. A higher down payment will also lower your monthly mortgage payments and even reduce what you may pay for private mortgage insurance (PMI). Paying more upfront is always a good way to ensure your mortgage payments don’t become a financial burden later.

Prior to applying for a home mortgage, you should know your credit score and history, The higher the credit score and better your credit history, the more likely that you will be able to qualify for a lower interest rate and a lower down payment. In addition to checking your credit score, you should ask your lender for a mortgage pre-qualification letter. This essentially is a bank telling you how much money you can qualify for in terms of a mortgage. However, as previously stated, this amount is not necessarily what you can afford.

Hope you have found this to be of value if you are thinking of jumping into the real estate market. If you have an interest in buying and/or selling residential real estate in South Florida and not currently working with a Realtor, please do not hesitate to contact me via email at JayKenney@SFPropertyTeam.com or on cell at (954) 547-9483. Many Thanks
Jay Kenney

Where are Interest Rates Heading in 2019

December 18th, 2018

If you are thinking of buying in 2019 with financing, you will want to know the effects of rising interest rates on your ability to buy a home. As interest rates climb, you may find that you can no longer afford that home you wanted. Even a small increase in the rate will have a negative impact on the amount that you can qualify for in a home mortgage. A buyer who is able to afford a monthly mortgage payment of $1,450 would qualify to buy a $300K home with a 4% interest rate assuming all other variables remain the same. With a 5% interest rate, the price of home that the buyer could afford would drop to $275K. The interest rate that you secure has a direct impact on your monthly payment. The higher the rate, the more the payment will be.

There are things that the buyer can do that will help to qualify for a higher mortgage. The buyer could increase the amount of money being put down as down payment, talk with 3-4 lenders who may be able to offer a better interest rate, reduce their debt to income ratio or improve their credit score.

According to Freddie Mac’s U.S. Economic & Housing Market Outlook, interest rates were projected to increase steadily throughout 2019 with a projected rate of 5.3% by the end of the year. However. a combination of weaker economic data, stock market volatility and increasing softening from the FED may result in these projections to be reduced. It is also likely that the FED will end once-a-quarter rate hikes in 2019 as originally projected.

With rising interest rates, homeowners who have low interest rates will not want to give up this rate by selling their home. These homeowners are increasingly renovating their existing home rather than buying a new home which would come with a higher interest rate. Inventory of homes for sale are already low and buyers will have a smaller inventory of homes as increasing rates and home prices make everything more expensive. If you are thinking of refinancing or buying a new home, do it now as interest rates will only continue to rise. Despite the fact that interest rate will increase, rates are still at historically low levels compared to where rates were 10, 20 and even 40 years ago.

If you are interested in buying or selling real estate in South Florida and not currently working with a Realtor, please do not hesitate to contact me via email at JayKenney@SFPropertyTeam.com or cell at (954) 547-9483. Wishing everyone a wonderful holiday season!

How To Prepare For A Home Inspection

November 16th, 2018

Once the offer has been accepted, the next step, is for the the home to be inspected. Generally, there is a clause in the Purchase and Sale Agreement which allows the buyer to have the home inspected during a mutually agreed upon time period which is generally 10 days from contract execution. The cost of the inspection is the responsibility of the buyer as the inspection report benefits only the buyer. The seller does not receive a copy of the written inspection report as it goes directly to the buyer within 24-48 hours of the inspection being completed. It is not necessary for the seller to be at home during the inspection which typically takes between 2-3 hours. It is not only not necessary for the seller to be at the inspection but preferred as most buyers feel uncomfortable with the seller being home for the inspection.

As as seller, you want to ensure that the inspection does not uncover any major or other issues which could cause the buyer to walk away for the deal. The Agreement allows for buyer to cancel the agreement during the inspection period without penalty. Buyer could also ask for seller to renegotiate the purchase price or make the repairs or other upgrades needed as outlined in the inspection report.

As background, the standard home inspection is a primarily visual examination of the visible and accessible components of the home’s heating system, central air conditioning, interior plumbing and electrical systems in addition to the roof, attic and visible insulation, walls, ceilings, floors, windows and doors, basement and the foundation.

To prepare for a home inspection, sellers should do the following:
1.) Clean the house.
2.) Leave the utilities connected and pilot lights on.
3.) Make sure that electrical sockets, light fixtures, switches and fans work.
4.) Confirm smoke and carbon monoxide detectors operate.
5.) Check that faucets and toilets run properly and don’t leak.
6.) Clean stove and oven so they won’t smoke and set off alarm when tested.
7.) Verify doors and windows open/close and all hardware works.
8.) Clear obstructions around furnace, water heaters and attic access.
9.) Leave keys for any outbuildings and exterior electrical boxes.
10.) Remove brush and debris from exterior inspection points.
11.) Gather documentation for renovations or repairs that have been made.
12.) Provide sketch showing location of any septic tank and well
13.) Have pets either restrained or away from the home.

By undertaking the above, you have put yourself in a much better position for the home to receive a clean inspection report. Should you have any questions on the above or have an interest in buying or selling real estate in South Florida and not currently working with an agent, I would welcome the opportunity to work with you. I can be reached on cell at (954) 547-9483 or via email at JayKenney@SFPropertyTeam.com.

Tips For Photographing Your Home for Sale

October 25th, 2018

When listing your home for sale, your main objectives will be to get it sold for the best price possible within the shortest time frame with the least inconvenience. Having professional looking photos of the home will go a long way to achieve these goals. With the vast majority of home buyers starting their searches online, it is key that your home stands out in the listing photos. It is well well established that a listing with pictures attracts more attention than one without. Homes with few or no pictures are often passed over in searches as buyers think that there must be something wrong with the house.
With regards to photography, you can either take the photos yourself or hire a professional photographer who has experience in photographing homes for listing purposes. I always use a professional photographer to ensure the home is presented online in the best possible light. However, if you opt to take the photographs, the following tips will be of interest:

1.) The home should be free of clutter and well maintained. It is important that the person who is looking at the photos can imagine living in the home with their furnishings. Put away magazines/newspapers, personal photographs, loose papers and toys. It is also recommended that you remove any evidence of pets such as food and water bowls, pet beds and toys.

2.) There is nothing better than natural sunlight for taking photographs. You should schedule your picture taking for a bright sunny day. Be sure to open all curtains and blinds/shades to allow as much natural light as possible. Also, turn on all lights as the brighter the area to be photographed is; the better photographs will be. Photos taken on a dark overcast day will produce dull photos that do not present the home in the best light.

3.) When photographing a room, it is always better if the shot is taken from the doorway looking into the room. Exterior photos of homes or condominium buildings look better if taken from an angle rather than directly from the front. This allows buyers to see the depth of the home or building.

4.) Prior to photography, the home should be thoroughly cleaned from top to bottom. In the kitchen, be sure that counters and appliances (i.e. refrigerators) are clean and free of photos and papers. The trash can should be moved to the pantry or closet and any dishes in the sink should be put in dishwasher.
With regards to bedrooms, make all beds using freshly pressed sheets, bed skirts and comforters. Clear the nights tables and dresser of any personal items including framed family photos. The dining room and living room should be free of any clutter and personal items. The furniture in these rooms should be placed to allow for walk-thru by buyers.

5.) The front exterior is usually the first photos that buyers see so you need to ensure that the house has curb appeal. Be sure that the lawn, bushes, planters and flower beds have been freshly cut and pruned as it shows that the home has been well maintained.

Selling your home is like selling a product . It must be marketed properly to reach a desired buyer. Although, your furniture and decor work for your lifestyle, it is important to optimize your home for the future owner. Some sellers may consider the use of a professional home stagger to ensure it looks its best online through the photographs. According to the National Association of realtors, 50% of staged homes experienced up to a 10% increase in dollar value offers from buyers. Also, 62% of seller’s agents say that staging decreased the number of days the home was on the market.
Should you have any questions on photographing your home for sale, I would be happy to speak with you. If you have an interest in buying or selling in the South Florida market and not currently working with an agent, please do not hesitate to contact me at JayKenney@SFPropertyTeam.com or via cell at (954) 547-9483. Many thanks!

How to Choose a Mortgage Lender

September 16th, 2018

When it comes to selecting a mortgage lender, it pays to shop around and talk to at least three lenders for comparison purposes in what each can offer in terms of interest rates and specifics of the loan. Another option to consider is to work with a mortgage broker who can obtain quotes from multiple lenders that match your needs as detailed in your mortgage application.

Prior to committing to a specific lender, ask what type of loans that they offer. Lenders will seek to secure personal information from you along with what you are looking for in terms of a mortgage. Ask the lender to explain the pros and cons of fixed-rate loans, adjustable-rate loans, interest-only loans and negative-amortization loans. Determine which are the most popular loans offered and why buyers prefer these particular mortgages. You should also determine how much in total will you be paying over the life of the loan. Also, ask what type of mortgage would the lender recommend in your specific situation.

If the interest rate quoted is adjustable, determine its adjustment frequency, maximum annual adjustment, highest rate (CAP), index and margin. If points are quoted, each point equates to 1% of the loan amount. Points basically lower the interest rate meaning the more points you pay, the lower the interest rate. Lenders may also charge origination fees in addition to points so be sure to ask.

It should be noted that the costs of a loan include not only fees that go to the lender but also costs related to third-party vendors or fees such as the appraisal, credit report, lender’s title policy, inspection reports, escrow and recording fees. An estimate of these fees constitutes the loan estimate which lenders are required to provide buyers when an application has been completed. As part of the loan application, the following information is required: name of borrower, social security number, property address, estimated value of the property, loan amount and income. Take note of the quoted interest rate, monthly payments, lender and processing fees, closing costs and down payment requirement.

It should be noted that interest rates fluctuate and change daily. If you believe that interest rates will be going up, you should look to lock in the rate with the lender. Prior to doing this, ask the lender if there is any charge to lock in the rate and how long will the rate be locked-in. The alternative is to pay the rate which is quoted on the day your loan funds.

In some states, prepayment penalties are no longer allowed so be sure to ask if there are any charges or penalties for prepaying the loan. If penalties could result, it is important to determine how much is the penalty, what are the terms of the prepayment and would the prepayment penalty apply if you refinanced the loan with the lender at a later date.

Average loan processing takes between 21-45 days. It is important that your closing date on your purchase agreement is in line with the loan processing time frame. If the lender is not able to close on or before the closing date outlined in the agreement, the buyer would have to ask for an extension to allow the needed time for the lender to fund the loan. The seller would have to agree to this extension. Additionally, if accepted by the seller, the purchase agreement would need to to be amended to reflect the new close date and the buyer and seller would have to initial the change. Ask the lender what could possibly delay a closing in your situation and how long after the loan application has been approved will the loan fund.

Should you have an interest in buying or selling real estate in South Florida and not currently working with an agent, please contact me at JayKenney@SFPropertyTeam.com or via cell at (954) 547-9483.