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Serving South Florida

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For over 35 years

Real Estate Closings

Using Home Equity To Buy  Another Property

Interest rates are rising and so it the equity in your current real estate holdings. There are alternatives to financing a second home or investment property other than a traditional mortgage. If you have a large amount of equity in your first home, you could obtain enough money through a Home Equity Loan to pay for most—if not all—of the cost of a second home.
Using a home equity loan (also called a second mortgage) to purchase another home can eliminate or reduce a homeowner’s out-of-pocket expenses. However, taking equity out of your home to buy another house comes with risks.
If you’re interested in using home equity to purchase a new home, the value of your house will need to be high enough to support the loan, and you’ll have to meet your lender’s requirements. Here’s how to get a second mortgage to buy another house.
1. Determine the amount you want to borrow. Before taking equity out of your home to buy another house, decide how much you want and need. Home equity loans limit how much you can borrow. In most cases, you can only access up to 85% of the equity in your home.
2. Prepare for the application process. Your approval for a home equity loan will depend on multiple factors. The value in your home will determine the maximum amount of equity available, and your financial information will determine how much of that equity you can borrow. In addition, your lender will look at your credit score, income, other outstanding debts and additional information.
3. Shop around for a home equity loan. When taking out a home equity loan for a second home, you can use any lender. The loan does not have to be with your current bank or mortgage company. So the best way to get a competitive interest rate is to shop around and get quotes from multiple lenders. As you compare, look at the interest rate, loan terms, fees and estimated closing costs. You can also negotiate with the lender on the rate or a particular term.
4. Apply to the loan with the best terms. Once you’ve determined the loan with the best terms, you’re ready to apply. You’ll submit the application and provide the requested information. Your lender will order an appraisal of the home or determine the value using another method.
5. Close on the loan. After you go through the underwriting process, your loan will be ready to close. Before finalizing the loan, make sure you understand the terms carefully. Also, know that the Three-Day Cancellation Rule allows you to cancel a home equity loan without penalty within three days of signing the loan documents.
Before you use a home equity loan for a second home, consider the pros and cons of taking equity out of your home to buy another house.
Pros:
·      You’ll reserve your cash flow. Using home equity to buy a second home keeps cash in your pocket that you would otherwise use for the home purchase. This increased cash flow can result in a healthier emergency fund or go towards other investments.
·      You’ll increase your borrowing power. Buying a house with equity will allow you to make a larger down payment or even cover the entire cost — making you the equivalent of a cash buyer.
·      You’ll borrow at a lower interest rate than with other forms of borrowing. Home equity products typically have lower interest rates than unsecured loans, such as personal loans. Using home equity to purchase a new home will be less expensive than borrowing without putting up collateral.
·      You’ll have better approval chances than with an additional mortgage. Home equity loans are less risky for lenders than mortgages on second homes because a borrower’s priority is typically with their primary residence. This may make it easier to get a home equity loan to buy another house than a new separate mortgage.
Cons:
·      You’ll put your primary residence at risk. Using a home equity loan to buy a new house can jeopardize your primary home if you’re unable to handle the payments.
·      You’ll have multiple loan payments. Taking equity out of your home to buy another house means you’ll potentially have three loans if you have a mortgage on both your primary residence and the second home in addition to the home equity loan.
·      You’ll pay higher interest rates than on a mortgage. Home equity products have higher interest rates than mortgages, so you’ll be borrowing at a higher total cost.
·      You’ll pay closing costs. When using equity to buy a new home, you’ll have to pay closing costs, which can range from 2% to 5% of the loan amount.
Other options for buying a house with equity
Using a home equity loan to buy another house is just one path borrowers can take. Here are a few additional options for using equity to buy a new home.
Cash-out refinance
A cash-out refinance is one way to buy another property using equity. A cash-out refinance accomplishes two goals. First, it refinances your existing mortgage at market rates, potentially lowering your interest rate. Secondly, it rewrites the loan balance for more than you currently owe, allowing you to walk away with a lump sum to use for the new home purchase. Taking equity out of a home to buy another with a cash-out refinance can be more advantageous than other options because you’ll have a single mortgage instead of two. However, interest rates on cash-out refinances are typically higher than standard refinances, so the actual interest rate will determine if this is a good move.
Home equity line of credit
A home equity line of credit (HELOC) is another option for using home equity to purchase a new home. HELOCs are similar to home equity loans, but instead of receiving the loan proceeds upfront, you have a line of credit that you access during the loan’s “draw period” and repay during the repayment period. This method of using equity to buy investment property can be helpful if you’re “house flipping” because it allows you to purchase the property, pay for renovations and repay the line of credit when the property sells. However, interest rates on HELOCs are typically variable, so there is some instability with this option.
Reverse mortgage
Homeowners 62 or older have an additional option of using equity to buy a second home — a Home Equity Conversion Mortgage (HECM). Commonly known as a reverse mortgage, a HECM allows borrowers to access home equity without making payments. Instead, the loan is repaid when you leave the home. Reverse mortgages provide a flexible way of using equity to buy another home, as borrowers can choose between receiving a lump sum or a line of credit. However, keep in mind that while you won’t make payments with a reverse mortgage, interest will accrue. This causes the loan balance to grow and can result in eating up all the home’s equity.
 Alternate forms of financing for purchasing a second home include:
  • Private money lenders
  • Seller financing
  • Peer-to-peer lending
  • Hard Money Loans
  • Personal Loans

Florida Closing Cost Primer for Buyers

Florida Closing Costs

Closing costs are inevitable when you’re buying or selling a property. While they vary from state to state, the amount you’ll pay in Florida depends on both the property and the county it sits in. As a buyer, you’ll have to cover most of the fees and taxes.  In Florida, you’ll also have to post a fee for documentary stamps (or doc stamps), which is a percentage of the sales price. Then there are the taxes. You’ll likely be subject to property and transfer taxes.

Neither party is responsible for 100% of the closing costs in Florida, which includes fees, taxes, insurance costs and more. The buyer typically pays between 3% to 4% of the home loan’s value and is responsible for the bulk of the fees and taxes. The seller usually pays between 5% to 10% of the home’s sale price. Closing costs also vary among counties.

Condos are regulated by the Florida Condominium Act. The legislation lays out your rights to the property and gives you an “undivided interest” in all the common areas of the building. You’ll have to pay a monthly maintenance fee or a yearly homeowners association fee to cover the servicing of those areas that fall under the “undivided interest.” The fee isn’t tax-deductible.

If you are getting a mortgage The fees shown on the Good Faith Estimate can be difficult to understand but can be broken down into five sections.

One-time fees

  • Appraisal fee
  • Reinspection fee
  • Credit application, credit report and credit supplement fees
  • Mortgage origination fee
  • Lender’s title insurance policy (optional owner’s title insurance)
  • Escrow fee
  • Home inspection fee (optional)
  • Closing attorney fee
  • Courier fee
  • Bank processing fee
  • Recording fee
  • Notary fee
  • Loan discount points

Recurring fees

  • Homeowners insurance
  • Property taxes and tax servicing fees
  • Mortgage insurance premiums
  • Flood certification fee (in some areas)

Appraisal fees

Lenders typically require an appraisal as part of the underwriting process, before financing a home purchase. Appraisals will vary in price depending on the location and size of the property. The lender hires an appraiser to provide the fair market value of the home, and the buyer pays the lender.

Mortgage origination fee

Every lender will charge a mortgage origination fee, which covers their service and administrative costs. The average loan origination fee is 1% of the total loan amount. Buyers should shop for lenders with both experience and low origination fees.

Title insurance policy fees

Lenders typically require borrowers to purchase insurance to protect the financial institution from future title claims. This policy is called lender’s title insurance and the cost depends on the location and size of the property.

Owners title insurance protects the Buyer from future claims against the title.  The customary party that pays for the Owners Title Policy varies by County in Florida.  In Sarasota,Collier, Miami-Dade and Broward County, the Buyer pays for title insurance and chooses the title company.  In all other counties, it is the Seller’s responsibility.

Escrow fees

During the purchase and sale transaction, your funds will enter a holding account managed by a third party — an escrow company. When the transaction is complete, the escrow representative will disperse your down payment, fees, and loan proceeds to the appropriate individuals.

Home inspection fee

A home inspection is a common contingency for a home purchase. As the buyer, you can hire an inspector to evaluate the condition of the home and its systems prior to purchase. Home inspection costs vary depending on the size and age of the property. You will pay the inspector for their service out-of-pocket, and this amount is separate from the purchase and sale transaction.

Attorney Fees

Florida is a Title Theory state and does not require that an attorney be used to close a real estate transaction.  Private real estate attorneys, or borrower’s attorneys, are an additional and optional cost for buyers who want a specialist to assist them with contract-related issues or professional advice beyond the scope of their agent’s abilities. Private real estate attorneys charge by the hour or charged a fixed rate for the transaction and rates vary based on their level of expertise and services provided.

Documentation fees

During a financed home purchase, several institutions need to process information and create official records.

  • The courier fee allows lenders to send your documents to necessary parties
  • The bank processing fee pays the bank for handling the necessary loan documentation.
  • The lender uses the recording fee to pay the county to file a public record of the transaction.

Loan discount point fees

When locking your interest rate with your lender, you’re allowed to buy down the rate. To do this, you pay “points” — essentially, paying interest in advance. One point is equal to 1% of the loan; but that does not translate to a 1% drop in interest rate. Not all buyers choose to buy down their interest rate, but when they do, the rates vary by lender.

Homeowners’ insurance

As a stipulation of your financing, you will be required to purchase homeowners’ insurance. You will continue to pay the insurance premium on a yearly or twice-yearly basis directly to your insurer, or monthly via an escrow payment that is part of your monthly mortgage payment to your loan servicer. Homeowners insurance policy fees range based on the amount of coverage and the size of the property.

Property taxes

Your property taxes will be prorated based on your closing date. Some buyers pay their taxes in lump sums annually or biannually. If you don’t pay this way, you might escrow the taxes, which means they would be included as an escrow line item in your monthly mortgage payment to your loan servicer. Property taxes are paid in arrears in Florida.

 

Mortgage insurance premiums

If your loan amount is more than 20% of the value of the home, you are typically required to pay insurance to protect your lender’s investment. Mortgage insurance is generally escrowed but may vary from lender to lender. Some lenders will also charge a one-time application fee for mortgage insurance.

Flood insurance

Depending on the location of your property, you may also be obligated to purchase flood insurance to help protect your lender’s investment. Flood insurance policies range by risk level, based on location and are a Federal Program and the pricing cannot be competitively shopped for.

What are the closing costs for cash buyers?

Cash buyers are still required to pay for things like notary fees, property taxes, recording fees, and other local, county and state fees. Unlike a buyer who is using financing, cash buyers won’t have to pay any mortgage-related fees. But most cash buyers still opt to pay for things like appraisals, inspections, and owner’s title insurance.

Closing costs can vary depending on where you live in Florida, the type of property you buy and how much it sells for. While the seller forks over some money, the buyer pays for the bulk of the fees and taxes, which typically add up to 2.5% of the average sale price depending on the time of year you close ( proration sensitive).

2022 South Florida Real Estate Projections

Nationally, expect slower housing price appreciation, easing inflation and rising interest rates in 2022, according to a survey of more than 20 top U.S. economic and housing experts by the National Association of Realtors® (NAR). “Overall, survey participants believe we’ll see the housing market and broader economy normalize next year,” Yun said. “Though forecasted to rise 4%, inflation will decelerate after hefty gains in 2021, while home price increases are also expected to ease with an annual appreciation of less than 6%. Slowing price growth will partly be the consequence of interest rate hikes by the Federal Reserve.”

Fed boosts to interest rates do tend to move rates higher on longer-term loans, such as 30-year mortgages. Yun expects the 30-year fixed mortgage rate to increase to 3.5% as the Fed raises interest rates to control inflation but noted this is lower than the pre-pandemic rate of 4%.

In South Florida Home prices are projected to continue to grow, but slower than the past year. “We don’t expect to see the same price appreciation we had last year, though we don’t expect to see a decline in pricing,” said Eli Beracha, director of the Hollo School of Real Estate at Florida International University. A Realtor.com forecast predicts that South Florida housing prices may rise almost 6% over the next year, while a Zillow forecast predicts that home price appreciation could shoot up by 15%.

A few factors are going to cause slower price growth: more inventory as sellers try to capitalize on the hot market, new developments hitting the market and an increase in mortgage interest rates. Demand from foreign and out-of-state buyers will continue to drive South Florida’s housing market, but experts also expect new inventory to alleviate some of the pressure that has been fueling the pandemic-era housing boom.

Experts say the market will still favor sellers, as demand and limited inventory will keep the balance in their favor. Bidding wars and multiple offers on homes will probably still be a common.

The supply chain issues, and lack of labor will continue to lead to increased construction costs and thus higher prices for buyers.

Caveat Emptor- Buyers Beware!

Caveat Emptor
Caveat Emptor, “Let the buyer beware.” is a real estate principle that warns buyers to “beware” and do their due diligence. It is of paramount importance, for Florida real estate buyers, since the majority of real estate agents are transactional agents.  When a purchase contract for property says the buyer is to take the property “as is,” the seller truly means “as is.” Under the doctrine of caveat emptor, property buyers are held responsible for inspecting the quality and condition of the land or building before the final execution of the purchase contract.
If the buyer does not exercise due diligence during the Inspection Contingency Period and fails to examine the property, then the seller is shielded from liability for any defects. Additionally, the burden of proof is on the buyer to show that the seller actively concealed a material defect.
Florida courts continue to adhere to caveat emptor, which was reaffirmed in the Florida Fourth District Court of Appeals decision for Florida Holding 4800, LLC v. Lauderhill Mall Investment.There are three exceptions to the caveat emptor doctrine in Florida, including (1) where the purchaser has been prevented from making an independent inspection of the property due to a trick or artifice, (2) where the purchaser does not have an equal opportunity to become apprised of the fact, and (3) where one of the parties attempts to disclose facts and fails to reveal the whole truth. Nonetheless, these exceptions are difficult to claim in court because the buyer has the burden of proving that the seller actively hid the material fact to sidestep any “as-is” language of a contract.   Additionally, oral representations by the seller regarding the property’s condition are explicitly contradicted by any “as is” language in the written agreement. This notion rests on the buyer’s inherent ability to inspect the property and withdraw from the property agreement if the quality of the land or building does not meet their expectations.
There are two forms of representation available under a Broker license held by a real estate professional according to Florida law: the Single Agent and the Transaction Broker. These two relationships entitle the buyer or seller to different upheld duties by the real estate professional.  Full disclosure applies exclusively to single agent brokers. Limited confidentiality is a transaction broker duty.
A Single Agent is defined by Florida Statutes Chapter 475, Part I as a broker who represents either the buyer or seller of real estate, but not in the same transaction. It is the highest form, providing the most confidence to the customer that the Realtor represents only the customer’s interest. In the case of an Exclusive Buyer Agent the buyer is their CLIENT and the single agent owes the buyer a fiduciary duty.
The duties of a single agent that must be fully described and disclosed in writing to a buyer or seller in agreements for representation include the following:
  • Dealing honestly and fairly
  • Loyalty
  • Confidentiality
  • Obedience
  • Full disclosure
  • Accounting for all funds
  • Skill, care, and diligence in the transaction
  • Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing
  • Disclosing all known facts that materially affect the value of residential real property and are not readily observable
Disclosure of these duties must be made before or during entrance into a listing/representation agreement, or before the showing of property.
A transactional agent is defined as a real estate agent who provides limited representation to a buyer, a seller or both, in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent.
Section 475.278(1)(b), Florida Statutes, presumes that a licensee is operating as a transaction broker, unless the customer and broker establish a single agent or no brokerage relationship, in writing.
Most U.S. states now require a Sellers Disclosure Form, often called “disclosure notices,” “property disclosures,” or “property condition statements.” On these forms, sellers must advise the potential buyer of any material defect they’re aware of in the home — usually within a few days of finalizing the purchase agreement or sales contract. Filling out this form is NOT a legal requirement in Florida and many real estate transactional brokerages are taking the position that they are not going to provide a written disclosure from the Seller.
Before deciding to finalize a Contract for Sale the Buyer is provided with an Inspection Contingency Period. You are advised to include some of all the following in your due diligence.
·      Conducting professional inspections of the building and its systems. This could include roof inspections, electrical inspections, HVAC inspections, WDO Inspections, and more.
·      Reviewing the property’s records, including its past owners, title, deed, property survey,  and other important documents. Make sure to look for past code violations, too.
·      Having the property’s value professionally appraised. Your lender might require this anyway if you’re financing the property.
·      Reviewing the property’s compliance with local zoning and land-use regulations.
·      Having an environmental assessment conducted on the lot and the building.  Are there hazardous materials in the building, like lead-based paints? You’ll also want to know if the property is in a flood zone.
·      If you plan to renovate the property you’re buying, bringing in a contractor or consultant is also a smart move. You’ll want to assess the property’s condition as well as the potential repair costs and structural feasibility of the project.
As a home buyer in Florida, you should only seek out an Exclusive Buyer Agent. They owe you a fiduciary duty and are charged with full disclosure of all known facts regarding the property, community and hold your interest in strict confidence. They will work for you to get all the answers you need to make a valid and informed purchase decision.

Pros and Cons of Escalation Clauses

An escalation clause is language inserted into a purchase offer for a home that’s intended to make sure a buyer is the highest bidder. It’s typically used when a buyer and their real estate agent strongly believe a house will receive multiple offers.

An escalation clause states that the buyer will pay a certain amount of money above the highest offer the seller receives. It generally includes a ceiling cap to make sure the buyer doesn’t agree to pay more money than they can afford.

An escalation clause can be a powerful technique when used correctly, but unfortunately it is seldom used as effectively as it could be. Such a clause increases, or escalates, a contract above its originally offered Sales or Contract Price when the Home Seller has received another Contract.  The intent of the Clause is to crush competing contracts by automatically and incrementally increasing the buyer’s offer price by a pre-determined amount above other offer(s).

Typically, there are three distinct parts to any escalation clause that’s included in a real estate contract.

Proof of a bona fide offer: You can rest easy knowing that sellers can’t just use an escalation clause as an excuse to make you pay a higher sale price. When the contract asks for “proof of a bona fide offer,” it means that the listing agent must be able to prove that another offer came in with a purchase price higher than your original suggestion. Typically, the listing agent will send over a copy of the page from the other buyer’s purchase agreement that shows the higher price. However, any identifying information for the other buyer will be redacted.

An escalation amount: The escalation clause should also include an amount by which you’d like to outbid any higher offers.

A price cap: The price cap represents the maximum amount you’re willing to pay for the property, or how high you’re willing to allow your offer to go. If an offer is submitted that is higher than this amount, be aware that your offer may be taken out of the running.

Pros of Using an Escalation Clause

  • Including an escalation clause in your offer indicates to the sellers that you’re truly invested in buying the property. It shows that you’re willing to go above and beyond what’s required in order to become the home’s new owner.
  • Some buyers love the idea of negotiating; others don’t. If you fall into the latter group, including an escalation clause in your offer might be a smart idea. Since it gives the seller a solid idea of your positioning upfront, it cuts down on the back-and-forth that needs to happen between you and the sellers.
  • If the market conditions are highly competitive — a “Seller’s Market” — or the particular property is head and shouldersabove the rest, or both, you as a Home Buyer are likely going to find yourself competing for the home against other would-be homeowners.
  • Using an escalation clause will continually bump up the price you pay, but only if there are other offers that trigger it.

Cons of Using an Escalation Clause

  • If a buyer includes a maximum price in an escalation clause, the seller will immediately know the buyer’s top price thereby compromising the buyer’s bargaining position. By providing a price cap for your escalation clause, you’re essentially telling the sellers how much you are willing to pay for the home, and there’s nothing to stop them from simply presenting you with a counteroffer at that price.
  • An offer containing an escalation clause may not become enforceable until a specific price is entered into the contract and the buyer sees the price the seller has specified.
  • The seller may fabricate a fictitious offer in order to drive up the sales price for a buyer who uses an escalation clause.
  • Real estate brokers are prohibited from drafting escalation clauses, because doing so would constitute the unauthorized practice of law. Hiring an attorney is recommended but will increase the buyer’s costs.
  • If multiple buyers were to include escalation clauses in their offers, a bidding war may follow. If no buyer is willing to commit to a specific price, then no contract is ever formed and no property is sold.
  • Since the use of an escalation clause implies that a prospective buyer is willing to pay more than other buyers, it may motivate sellers to seek higher prices, a disadvantage to the buyer using the escalation clause.
  • While the use of escalation clauses may lead to higher sales prices, a benefit to the sellers, they could also discourage buyers who do not want to use escalation clauses.
  • A broker who discloses the price/terms of an offer without the buyer’s consent or otherwise gives one party an unfair advantage over another risks disciplinary action by the Commission. A seller’s best response in a multiple offer situation where one or more of the buyers is using an escalation clause will likely be to invite all buyers to make their highest and best offers.  That way, each buyer is given an opportunity to buy the property at the price and terms he or she is willing to pay and the seller will receive the best offer from each buyer rather than an incremental offer from a buyer who wants to offer slightly more than a competing buyer.

Don’t make the mistake of thinking the Highest Contract Price will always win; other TERMS of a contract can often prove more valuable to the Sellers.

Having a knowledgeable Exclusive Buyers Agent is invaluable for situations like this and for understanding the risks and possible benefits of opening negotiations in this manner. The seller has the right not to respond to any offer, whether or not it contains an escalation clause.

Tips for Buying a Home in a Seller’s Market

Seller's market
Seller's market

Buying a home in a Seller’s market always has its challenges. But when you’re trying to do it in a seller’s market, the difficulty can reach a new level. When the market favors the seller, time is of the essence. Multiple offers happen with more regularity in a seller’s market than a buyer’s market, because a seller’s market is defined in part by low inventory and a surplus of home buyers. A beautiful home that is priced well can attract more than one offer.

In a seller’s market, you should always assume you’re competing against several other offers. However, that doesn’t mean you can’t buy a new home in a seller’s market, when there are more buyers than homes, and sellers can afford to hold out for higher offers. You just need to make sure you do it right and arm yourself with the right information:

Here are a few things to consider as you prepare your offer when buying in a seller’s market:

Choose an Experienced REALTOR: In sports and in business, it’s important to have the best players on your team when facing fierce competition. In a seller’s market, that means choosing a real estate agent who not only has proven expertise in the neighborhoods you’re interested in but is also highly responsive and efficient. Make sure to use an Exclusive Buyer’s Agent that owes you a fiduciary and works in your best interest.

Demonstrate Credit Worthiness: You should get Pre-Approved for a home mortgage with a local lender before touring homes if you need to get financing. By obtaining a pre-approval for a mortgage before you start home shopping, you’ll know how much buying power you have. Your offer may have far more credibility than competing ones where buyers didn’t take this step.

Lower Your Expectations: When the inventory of homes is limited, you probably can’t afford to wait for the perfect house to hit the market. Prepare yourself to adjust your expectations. It makes the most sense to make exceptions to your criteria for things that can be changed. For example, you can renovate or add a bathroom someday, but you can’t change the home’s location or lot size.

Make your Best Offer first, be Ready to Bid: Make your best offer but be prepared for it not to be your final offer. High home prices can lead to home appraisals that don’t climb as fast, leaving lenders to not fund the loan. Home buyers should have money set aside the pay the difference between a contracted purchase price and the appraisal.

By Prepared to Make Concessions: Your relative lack of power in a seller’s market doesn’t just affect the question of price. It carries over to every other aspect of the deal, too. Shorten the inspection period, be flexible on closing dates; you should be prepared to accommodate the seller’s needs even if it is an inconvenience to you.

Don’t be that buyer who wants to wait until the weekend to view a home in a seller’s market. By the weekend, that home could be sold. Try to be one of the first showings. Sellers usually don’t enjoy having buyers come through their homes at all hours of the day, so most would like to see their home sold quickly. If you write a good, fast, and clean offer, your chances of acceptance are far better than those of a buyer who is unprepared or is unrealistic on price.

Finally, don’t get carried away with the pressure to buy, even in a seller’s market. Remember that a home decision has a long-term impact on your financial future. It may be better to let a house go than make a poor decision that’s expensive to change.

Keeping Home Buyers Safe During COVID-19 Pandemic

Home Buying and COVID-19
Home Buying and COVID-19

 

How I Keep Buyers Safe During The COVID-19 Pandemic:

 

Buying a home is never a simple undertaking. Even at the best of times, house hunting comes with lots of built-in stressors, from mortgage approvals to bidding wars and beyond. But house-hunting during the corona-virus pandemic? That changes the game entirely.

Although it’s a scary time to be out and about checking out real estate, it is still possible to do so and stay relatively safe. The industry has rapidly adapted, introducing approaches that minimize exposure to the virus.

A trusted Exclusive Buyers Agent is always a key ingredient in a successful home-buying experience. During the COVID-19 pandemic, this asset is absolutely non-negotiable.

Virtual Showings:
Many agents are now working remotely and conducting most of their business virtually. Instead of Open Houses, just ask me to provide you with a Virtual Tour of the property using Facebook, Skype or WeChat. Also remember that listing pictures may not tell the whole story. Special camera lenses and creative angles often make rooms appear larger than they actually are. Look out for potentially distorted pictures (which often have angles that curve somewhat) and learn to take such shots with a grain of salt. Listing agents only take photos of the positive aspects of the home. I will review the entire home with you and provide you with a constructive and truthful assessment of the condition , location and if it meets your needs.

Home Tours:
If you want to tour a property, I can provide you with masks, hand sanitizers and shoe covers. During the tour, it’s also now customary me to open all doors, so that home buyers can explore closets and other enclosed spaces without touching anything as they look.

If you do make an offer that’s accepted and you head to the closing table, real estate agents and attorneys are also adapting to remote closings.

Remote Mortgage Approval
One smart way to stay safe right now is to work with a loan officer who is set up to work remotely. Most lenders have already made the entire mortgage process digital. There is no need for you to meet a lender or show up at a closing table any longer.

Remote Home Inspections
I am offering clients the option of doing a remote inspection, where I am with the inspector in the property alone and review the findings with Buyers virtually. The Inspector and I walk you through the home’s deficiencies and operations in advance of sending you a formal report.

Virtual Home Appraisals
Home appraisals required by a lender generally include a site visit, which is not possible in some parts of the country where this is not considered an essential service. Luckily, appraisals pertain only to those getting loans, so cash buyers can skip this process entirely. But if you are getting a mortgage, fear not, virtual appraisals are generally accepted by most lenders today.

Remote Home Closings
In-person home closings—where all parties come together to sign contracts, swap keys, and shake hands—are, for the most part, not happening right now. Mobile closers are going to the Buyers for the final execution of documents. They are practicing safe social distance practices and there is no “closing table” any longer. Keys will be brought to you personally or couriered.

There is no limit the the services and adaptability that Optima Properties offers its clients…..we are currently assisting in the lot selection, model selection, and construction of a home virtutally for several clients who will not see their new home until the day they move in.

 

Should You Refinance During The COVID-19 Situation?

Covid-19 and Refi

Covid-19 and Refi

Rates are lower than ever; when a refinancing is done right, it can save you thousands of dollars. But not every potential refi makes the cut. Sometimes the expenses just don’t justify the potential savings.

It is time to refinance your home mortgage if the terms lower your mortgage interest rate, pay off their mortgage years earlier, or saves thousands in interest over the life of the loan. You can save serious money by refinancing your mortgage. But due to refinancing fees and expenses, not every refi makes financial sense.

COVID-19 is creating changes with lenders and how they are doing business. This is resulting in refinancing taking longer and getting stricter than it has been in the past. Although the mortgage process is considered essential as a financial transaction, depending on where you live, there may be changes related to COVID-19  involving your appraisal, rate lock and closing process.

Rates are quite low and because your home is your biggest financial investment, the equity can be very useful as a resource in times of trouble. But if you’re thinking of financing your home loan there are several steps you should take to make sure that it’s the right move for you.

How Long Do You Plan On Being In Your Home?

Being able to answer this question will help you figure out the term length you want on any refinanced mortgage; but there’s another reason asking this question …

If you plan on moving within the next 5 – 10 years, it could be worth your while to look at an adjustable rate mortgage ( ARM).  You get a lower rate initially with an ARM because the rate can adjust after the teaser period. But if you move before the end of the fixed-rate time frame, you don’t have to worry about whether the rate is going up and down in the end. Additionally, your payment will tend to be lower because most adjustable rate mortgages are based on 30-year terms.

Age Of Current Loan

The age of your current loan sometimes plays a role in whether you can refinance. Even if you can refinance, it does not always make sense.  When you refinance you have to pay closing costs.  If you are not planning on staying in the house past the breakeven point when the savings and the additional expenses paid starts to net to overall reduced costs for home ownership, the it is not the time to refinance.  You may want to accelerate buying a new home to realize the saving from lower interest rates.

Plans For Monthly Savings

If you determine that you’re going to save money by refinancing based on the rate and term you can get, make sure that you have a plan for what you’re going to do with the monthly savings in order to put yourself in a better financial position. No one knows exactly when COVID-19 is going to end and how long it will take for the economy to recover. If you can save money now, you can work on establishing the savings need should the vaccine be delayed or we continue with a longer recession

You could use your savings to build up an emergency fund. Maybe you choose to allow yourself to save money in the future by paying off high-interest debt now. You can also use this to catch up on saving for retirement if you stopped contributing temporarily while dealing with the situation caused by the virus.

It’s a very volatile market right now, so we advise all of our clients to rely on the advice of their Home Loan Expert and Financial Advisors at all times.

The Mortgage Refi Process

Approving a mortgage is a complicated process, one that requires a lender to validate a borrower’s income, check the value of the home being used as collateral and scrutinize the title history of the property.

Just as refinancing applications picked up, the coronavirus pandemic dramatically changed the way everyone in the mortgage industry works. Loan officers no longer go to the office. Appraisers stopped walking through houses. And no one gathers around the title company’s closing table. The process is a little slower because everybody’s working from home right now. Things that would take an hour to do are taking a day sometimes.

It is more difficult to verify a borrower’s employment. A task once dispatched with a quick call to the borrower’s human resources department now means leaving a voicemail and waiting a day or two for a response.

Meanwhile, homeowners looking to refinance may have to get in line behind buyers who need a mortgage so they can close on a house which are a priority with lenders.

The mortgage industry already had been digitizing, and lenders quickly adapted to many changes. One stumbling block, though, is that most lenders still require some documents to be signed in the presence of a legal witness and notarized.  Florida allows for mobile notaries and they are busier than ever.

Sometimes, documents are being signed remotely and online and mobile notaries are not allowed yet.  You need to allow time for in person notarization and overnight mailing of documents.  Digital closings may be the way of the future, but we are not there yet.

What You Can Do to Secure a Smooth Refinance

Here are a few ways you can make the refi process as smooth as possible:

— Get your paperwork in order. Don’t let something simple like a missing document delay your refinance. Collect PDFs of financial documents, including pay stubs, bank statements, tax returns and retirement accounts.

— Make sure the lender will honor your rate lock. In normal times, lenders extend rate locks for 30 to 60 days, meaning you won’t have to pay more if rates go up before your loan closes. These aren’t normal times, though, and many refinances aren’t closing within 30 to 60 days, so make sure your lender is willing to extend your rate lock if your deal is delayed.

— Keep your credit score tight. Now isn’t the time to miss a payment, take on new debt or otherwise do anything to lower your credit score. Lenders are being especially strict about borrowers’ credit histories.

 

COVID-19 Real Estate Home Buying Process

Real Estate Process
Real Estate Process

COVID-19 Real Estate Home Buying Process

With the current COVID-19 pandemic, the federal government has labeled residential and commercial real estate as an essential business. Yet, COVID-19 has changed how real estate is conducted not only with how Realtors are showing properties but also how real estate transactions are closed.
One thing is certainly sure: being an “essential” business does not necessarily mean business as usual.
Pre-Closing
The New National Association of Realtors (NAR) guidelines follow and strictly adhere to all CDC safety guidelines. NAR supports and encourages that all brokerage firms order their agents to shelter in place and avoid all social interaction.
Such stay at home mandates and social distancing regulations have pushed real estate agents to become creative. Instead of having open houses, real estate agents are using virtual property showings, and Facebook live open houses. There are programs for customers to even design their home using digital tools, watching videos of the construction as their property is being built. Realtors are doing initial showings over video chat services like Face Time, Skype or Zoom.
Contract
Perhaps the real challenge COVID-19 poses to home buying is not necessarily shopping for the home—rather, it is closing on one.
Issues with contracts focusing on force majeure clauses, or clauses that provide for a delay or opportunity to get out of underlying obligations in the event of unforeseen or uncontrollable events have been an emerging issue during this pandemic.
The development of the COVID-19 Extension Addendum to Contract allows for time periods and dates to be extended as a result of the Corona-virus pandemic.
Closing
Once contract issues are overcome, the closing itself has evolved due to this crisis.
Make sure that you or the Seller only use an escrow and Title company that is capable of handling the closing. Specifically ask whether they use online or mobile notaries. Also determine if the local recorder’s office uses electronic recording and whether the title company is equipped to record the deed electronically.
Many documents in the closing process require a notary, and notarization is normally required to be done-in person. The Florida legislature and Governor signed into law effective January 1, 2020, a new law that allows for what is called remote online notarization (RON). This is a huge game-changer in the State of Florida, particularly in the area of real estate closings. No longer do parties all have to get together at a certain set time around the conference room and execute documents. Now, from the comfort of your own home, provided that you have your own laptop or smart phone, you can execute documents online and remotely and have those documents notarized. While the technology is new, it is not that new. It is the same technology that is used to validate your passport or driver’s license when you go through security at an airport. This validation technology is now being used for remote online notarization (RON).
If, for example, you are in another state and are closing on real estate located in Florida, or, perhaps, you are in a profession (such as being a doctor and on call) that makes it difficult to attend a closing, you can now remotely video into the closing and notarize your documents from the comfort wherever you might be. Documents are produced online for your review, and at the point that you are prepared to execute those documents, you can do so remotely. A notary is present at the time online, not physically with you, and that notary is then able to confirm and validate that you executed the documents without any duress or coercion.
There is a caveat, however, and that is that while remote online notarization, in theory, should work all over the world, it really is more of a domestic service for people within the United States. It is difficult for the technology, at this stage, to validate foreign credentials.
Appraisals and home inspections are other aspects of residential real estate closings are evolving during this pandemic. The Federal Housing Finance Agency is allowing alternative appraisal methods such as “drive by” appraisals where appraisers drive through the neighborhood and walk around a property without going into it. They are also doing “desktop” appraisals using public data to generate property values.
The loan process will likely take longer than in the past and I am encouraging my buyers to agree to no less than a 60 days closing if a loan is needed. You need to take this into consideration with your home buying timeline if you need to close on a property by a certain date.
Moving during a Pandemic
 I recently published an entire BLOG article on this subject which you can read here along with other articles that you may find informative.

Guidance for Moving During COVID-19

Moving with COVID-19

The novel coronavirus (COVID-19) has put a stop to the normal routines of everyday life both in the U.S. and abroad. And while social distancing is the course of action to take until told otherwise, moves aren’t always something that can wait. Real estate is considered an essential service in all states and there are many services providers to assist you in facilitating a move to a new home.

By taking extra safety precautions and minimizing social contact, you can still move safely.  If you are about to move, you can still pull it off with a little extra planning and a few precautionary steps.

Here are some tips for making your move as safe, seamless and stress-free as possible.

Moving Companies:

There have not been any notable shutdowns of service among major moving companies. That being said, decisions about closures may be left to individual franchise owners. If you have already scheduled your move and haven’t heard anything, assume that your moving company is still providing services unless told otherwise, but still call just to confirm.

If you’re worried about moving during a pandemic for a move that is still upcoming and for which you haven’t scheduled movers, it’s hard to say what will and will not be available in the months to come. For now, continue to do research on companies and ask directly what steps are being taken when you reach out. What has changed at this point is largely going to be related to the customer experience itself, including frequent hand washing among movers and no physical contact between movers and clients.

If you need to select a moving company, ask for a virtual quote and see if the company offers fully contactless service.  Forgo handshakes, for obvious reasons. A smile and a generous tip (sent through Venmo, PayPal or another contactless digital platform) are a welcome substitute. These companies have virtual estimate procedures available for competitive quotes

Moving companies are taking the coronavirus pandemic very seriously. To that end, companies across the country have put into place protocols designed to protect their employees and their customers. These include:

  • Following federal and local guidelines around social distancing and sanitization
  • Conducting virtual surveys instead of in-home surveys to provide estimates
  • Frequently sanitizing trucks and equipment
  • Practicing social distancing with customers and, as much as possible, among moving teams
  • Wearing masks and gloves
  • Keeping trucks stocked with hand sanitizer

All of these practices help ensure that moving services can remain available in a safe way.

Car shipping companies open during COVID-19 outbreak

Company Status Additional info
AmeriFreight Open Learn more
Montway Auto Transport Open Learn more
Sherpa Auto Transport Open Learn more
Ship a Car Direct Open Learn more
uShip Open Learn more

Interstate moving companies open during COVID-19 outbreak

Company Status Additional info
Allied Van Lines Open Learn more
American Van Lines Open Learn more
Expedia Van Lines Open Learn more
First National Van Lines Open Learn more
International Van Lines Open Learn more
Interstate Moving & Relocation Group Open Learn more
North American Van Lines Open Learn more
PODS Open Learn more
Silver Star Moving Group Open Learn more
United Van Lines Open Learn more

 

Storage Services

Same as moving companies, major storage companies continue to run operations. What you might be able to expect however is limited hours of accessibility and/or a reduction in the number of customers who are able to access their units at any one time. Storage companies should also be following proper hygiene practices, including sanitization of access pads and the requisite six feet or more of space between customer and customer and customer and employee.

Storage companies open during COVID-19 outbreak

Company Status Additional info
CubeSmart Open Learn more
Extra Space Storage Open Learn more
Public Storage Open Learn more

 

What If I’m Moving By Myself?

The process of a DIY move looks pretty much the same now as it did before COVID-19, minus the ability to have a couple friends come over and lend a hand in exchange for pizza. Some additional things that you will want to do however include keeping hand sanitizer, soap, and paper towels accessible at all times, we well as making a detailed plan for both your departure and arrival.

Major rental truck companies continue to be in service, as they are considered essential for transportation and personal mobility needs. Again, what may be different is the experience, since companies like Enterprise and U-Haul have put into place their own protocols for physical distancing. This means that your pick-up and drop-off location may not be at the branch office, and that you’ll have to make your reservation online or over the phone instead of in person.

If you rent, talk to your current landlord about how you can safely drop off keys and collect your security deposit, and talk to your new landlord about the process for a safe move in. Putting in a blueprint of steps ahead of time will help you maintain social distancing during your DIY move and answer any questions you might have about the process.

Truck rental companies open during COVID-19 outbreak

Company Status Additional info
Budget Open Learn more
Enterprise Open Learn more
Penske Open Learn more
The Home Depot Open Learn more
U-Haul Open Learn more

 

How to Prepare For Your Move

One silver lining is that social distancing means that you might have more time to devote to organizing your home prior to your move and getting rid of the things you no longer want or need. If you plan on donating items like clothing, linens, furniture, shelf stable non-perishables, etc., call the place that you would like to donate to ahead of time and see what their policies are. While many people are in need during this time, it’s likely not going be quite as easy as just driving to your nearest donation center and dropping stuff of (but that doesn’t mean you shouldn’t do it).

Junk removal companies open during COVID-19 outbreak

Company Status Additional info
1-800-GOT-JUNK Open Learn more
College Hunks Hauling Junk Open Learn more
LoadUp Open Learn more
Waste Management Dumpster Rentals Open Learn more

 

 

To prepare for a move amidst COVID-19, be sure to keep the following steps in mind:

Contact your movers

This is important to confirm your reservation and discuss best practices for moving day. Moving companies are putting in lots of safeguards to help protect their clients, and it helps to be on the same page as them in terms of what is expected.

Buy all of your supplies at once

You are going to want to get it right with just one trip to the store, so make sure you know exactly what you’re going to need for your move. Don’t use free or recycled moving boxes. The coronavirus can live on cardboard for as long as 24 hours, so now is not the time to be picking up free moving supplies from places that are recycling them. Boxes that you already have in your home are fine, but if you need any extras then you’ll need to go to the store and buy them new (even better if you can then purchase them through self-checkout). Better yet, order all your moving supplies online and have them shipped to your residence.  Clean as you pack.  Use this opportunity to sanitize your belongings, wiping items down with disinfectant. If you don’t have any, you can make one with a solution of one tablespoon bleach to one gallon of water.

Finish packing at least 24 hours before the movers arrive

Coronavirus can last a long time on surfaces, including up to 24 hours on cardboard boxes. Your movers will be wearing gloves, but for everyone’s safety you should still have your boxes packed and sitting untouched at least a day before your movers arrive.

Provide hygiene products for your movers. 

To aid your movers in following necessary hygiene practices, be sure to leave out products that they can use while they transport your items to and from the moving truck.  That includes soap and paper towels by the sink, and hand sanitizer by the door that they’ll be entering and exiting through. If you’re concerned about having enough supplies, let your moving company know so they can be sure to bring them along for use during the move.

Be transparent and flexible

In advance of your move, reach out to your neighbors — especially if you live in an apartment building — and share the date and time you plan to move. This gives everyone in your direct vicinity an opportunity to avoid unnecessary contact and let you know if your timing is a problem.

When you move into a new home, deep clean it

Be sure to deep clean and sanitize your new home before you move into it. Here are a few resources and tips to help:

CDC’s recommendations on how to clean and sanitize your home

  • Use disinfectant wipes for quick cleanings over the most high-touch areas – doorknobs, sinks, cabinet pulls, refrigerators, etc.
  • Use disinfectant sprays for areas that can’t be wiped clean. You can use Lysol, for example, on your couches and mattresses which will touch many surfaces during a move (the ground, the inside of a truck, etc.).
  • Use this CDC bleach mixture recommendation on your new tile floors. Use a disinfecting wet mop cloth on your hardwood floors As you unpack, be sure to also disinfect your computer and accessories (keyboards can get pretty gross – here’s how to clean them), your television remote controls, credit cards, wallet, and more.

If you have an extra minute, here are some additional things to consider 

  • Prioritize your internet setup. Scheduling an internet installation date at your new home is critical for staying connected to friends and family. There are 1-2 hour call wait times at cable and internet providers right now, as more and more people call to increase speeds and bandwidth. You can’t bank on getting an appointment as easily as you have in the past. Additionally, consider a high bandwidth plan to account for changes in working from home, video calls, multi-device streaming, etc.
  • Stocking your kitchen full of groceries will feel a bit different this time around. Try Shipt or Instacart, or delivery options from your local grocery store.

Additional resources:

Moving is stressful under the best of circumstances; this is a scary time and certainly takes moving stress to the next level.  With some planning and organization, you can relocate and stay safe even in an environment with a pandemic.