Ask Savvy! Frequently Asked Questions
I need to get a mortgage to buy my next home. How does a lender decide if they should give me a loan or not?
There are a number of factors that a lender will consider when determining a borrower’s ability to repay a loan. Two factors include a credit score and a debt-to-income-ratio. What’s a debt-to-income-ratio?! This is how much of your monthly income will be left over to repay the loan after other recurring monthly payments have been made. – Savvy + Co. Real Estate
Is January a good time to list my home? Or should I wait until the spring?
Believe it or not, this is a good time to put your home on the market! Every local real estate market is a little different but it is a good idea to get your home on the market now so that when the second week of February rolls around you have already measured the heated square footage, staged the property, had a professional photographer take fantastic photos, etc. It’s better to be ahead of the market instead of behind. Additionally, the buyers who are looking at this time of the year are serious buyers and they need to move right away. – Savvy + Co. Real Estate
My loan officer tells me I need Private Mortgage Insurance but I already have insurance on my current house. Is this a sneaky junk fee?
Unfortunately not. Private Mortgage Insurance or PMI, is totally different than Home Owners Insurance. Home Owners insurance protects you from disasters with your house. If a tree falls on it, some one breaks in, or if a pipe bursts and floods the laundry room, your home owners insurance will step up and help cover the cost to repair you house.
Private Mortgage Insurance is Insurance for your Mortgage holder (bank) to protect them incase you don’t make your mortgage payments. If you get foreclosed on they can go to the mortgage insurance provider and get reimbursed for part of what is due to them. So you can see PMI doesn’t benefit you at all. And Home Owners Insurance is a important necessity. You can shop for the best Home Owners policy with the best coverage and price for you. But you can not shop for the PMI.
The only way to avoid paying for PMI is to put down enough money when you purchase so your bank will not require it. Usually you will have to put at least 20% down. However some banks now have programs where you can avoid it with 10% down. Ask a Savvy Real Estate agent to recommend lenders that can help you avoid PMI. – Lexie Longstreet
I’m buying a house and I’m confused. What is the difference between Due Diligence money and Earnest Money? How do I get it back? Cara
Great question Cara. Lots of people are confused about this. In 2011 the North Carolina Offer to Purchase contract changed to what is now referred to as a Due Diligence contract. This contract requires the Buyer to offer the Seller a Due Diligence Fee in exchange for the Seller taking their house off the market and essentially “holding” it for the Buyer to investigate. The Buyer and Seller negotiate this period of time along with the amount of money that is required for the Due Diligence fee. In a bidding war a buyer might offer $5000 so they can lock down that house. Or if a home has been on the market for a year with little interest, and a lot of obvious repairs, the buyer might only offer $200. It’s all negotiable.
The buyer writes the DD payment straight to the seller and does not get this back. It is the cost of putting the house under contract. However, the buyer can walk away from the contract for ANY reason or NO reason at all. This makes the buyers have an upper hand and thus this is why Sellers would like to get as much DD fee as possible.
Earnest Money is additional money that only comes into play after the due diligence period is over. The buyer gets this money back if they cancel the contract before the end of the Due Diligence period. However, be careful, if you change your mind after 5 PM on the DD end date you will not get your earnest money back. At that time it goes to the Seller. So make sure you do your “Due Diligence” fast and thoroughly. Expect to spend at least $1000 to $2000 during your Due Diligence period in addition to your DD fee. (Home, radon and termite inspections, appraisals, survey are some of the items you will be spending money on.) – Lexie Longstreet
My tax evaluation just went up $58,000! I want to appeal it but my neighbor was happy that his went way up. What is better to have a low tax value or to have a high tax value? I’m so confused. Paul
I always feel it is better to have a lower tax value than a higher tax value. As you pay less taxes! However many home buyers consider tax value a measure of your homes worth. They look at the tax value and don’t want to offer too much over that number. If your tax value is extremely low they will hold it against you in their offer. (I know… it’s nuts!)
And if your tax value is very high it can hurt you because buyers will be looking at their total payment, and if your tax bill adds an extra $100 to their monthly payment, they may choose a home with a lower tax value.
It is best if your tax value really is a close reflection of what you think your home would sell for on the open market. Currently in Mecklenburg county many of the tax values are off because the evaluation was done based on sales that happened before the market took a tumble. With values now going up rather quickly your tax value may be in line with todays market. Consult a Savvy agent and they can look at recent sales so you will have a good idea if your tax value is too high, too low or JUST RIGHT. – Lexie Longstreet
I’m getting my house ready to put on the market and want to know what are some of the best improvements I can make. I have a lot of personality in my paint colors and think the next buyer will like them too! What do you suggest? Tina
Hey Tina, Even though you like your colors the odds of the next buyer loving them as much as you do is probably pretty small. Most buyers like to paint to their taste – to match their throw pillows, curtains or sofa. So having a house that is too colorful makes them think they are buying a house with a lot of “projects”. Each room in your house becomes a “project” in their mind. I would suggest you consult with a real estate agent that has experience selling in your area and they can make some good color recommendations. Every neighborhood is different. In Noda you can get away with a few more colors than you can in Ballantyne. And a high end patterned wall paper gets high marks in Myers Park but is a turn off in Waxhaw.
Another consideration is the way the photos of your house will look online. If every picture has a different color: red, blue, yellow, when a buyer clicks thru your photos online it looks like a box of crayons. This is not good. A house might flow with color when walking thru,because the blue kids bedroom might be way up stairs but if the first four or six photos online are all different colored walls… it ads up to a sensory shocker and will reduce the number of showings you get.
Now my very own pet peeve: SHINY PAINT. I think the paint stores must get bonuses for selling eggshell or glossy paint. It is terrible for the look of a room on a good day. But for resale it is a killer. It comes off looking like a cheap rental ready for the next tenant so the walls can be washed off. Paint your walls with a good quality flat paint. Flat paint hides all the imperfections. Where glossy paint highlights them. Flat paint also is really easy to touch up. If you have a knick or a scuff, you can just touch that one little area and be good to go. Eggshell paint can not be touched up. You will have to re-roll the entire wall corner to corner if you want to fix a flaw. – Lexie Longstreet
I’m a big fan of neutral hues . . . like Sherwin-Williams Rainwashed (#SW6211). This color looks like a silver sage green. I also favor Benjamin Moore’s Stonington Gray (#HC-170) because it’s a mixture of gray and beige. – Victor Ahdieh