Should I get a 30-year fixed rate mortgage?
When long term rates (i.e. 30 year mortgages) are below 6%, it kind of makes the choice obvious — the 30 year fixed rate makes the most sense in most cases. But as rates begin to creep into the 6’s and above, the appeal of hybrid and adjustable mortgages will increase.
Why? Because very few of us keep our housing situation consistent for 30 years and will never fully experience the benefit of the rate we have paid to have.
When you choose a 30 year mortgage, you are buying the privilege of the rate for 30 years. But what if you are only going to be there for 5 years? Or 10? Or even 15? Sometimes, choosing a 7 year fixed that turns into a 1 year adjustable that is 2 full rate points lower than the 30 year fixed rate makes a lot of financial sense.
As rates will likely inch higher over the next several years, don’t blindly choose a 30 year mortgage just because those before you did. Think about your overall plan for housing and choose accordingly.
What is a contingency?
The best way to think of a contingency is as an ‘if’ in your contract.
- ‘If I am able to sell my house, then I will by yours’ is a contingent contract
- ‘If I am able to obtain a mortgage, then I will buy yours’ is a contract contingent on
- ‘If the home appraises for sales price of above, then I will buy it’ is a contract contingent
- ‘If the 10 acre lot will allow for a conventional septic system to build a 5 bedroom house,
then I will buy the lot’ is a contract contingent on a valid health permit
The contingencies are typically conditions that are considered reasonable to be met and thus, likely to allow the contract to proceed, but not always. They are generally used to protect one side of the transaction or the other.
How does Zillow’s “Zestimate” come from?
I don’t think anyone knows their exact algorithm but it combines sales data, assessment data, asking prices (yes, they use asking prices) and economic data. Their estimates can also be manipulated by adding or subtracting upgrades.
If you click through a bit, you can find their accuracy charts — which lets you know that they are +/- 10% on a good day. But the bottom line is that Zillow and all of the others all arrive a different values. I say that clients should use these estimates IN their analysis, but not AS their analysis.
Do you have inspectors and lenders you tend to work with?
Absolutely, but not for any other reason than they are great operators and true professionals.
There is a perception that may agents will send clients to the service providers who give us kickbacks — this notion is archaic as it is untrue. Kickbacks are illegal and the idea of putting our careers at risk for a few dollars is pretty foolish.
Our recommendations come from our best experiences, thats all, so the ‘kickback’ we get is the superior service that you get.
What are your favorite neighborhoods?
We like a lot of neighborhoods — and we can help you understand the market drivers for each.
At the end of the day, the best neighborhoods are the ones that work best for our clients. Hopefully, our experience and insight can be used to help you understand how to best fit your needs with the place you want to call home.
I want to buy a house to rent out.What are the key things that I should look for to actually make a profit?
There are so many things to consider, but probably the most important is the long term goal. If you are interest in cash flow, then a more moderately priced home tends to cash flow a bit better, but a more expensive home may appreciate faster and sell more quickly when you need to divest of the home. The other major factor is time. If you don’t have a great deal of time, consider and town home or condo that included some level of maintenance. Similar, if you want to be your own landlord, make sure you have the time.
What is tax abatement?
Tax abatement is a program available in the City of Richmond that reduces the real estate taxes due on a property for a finite period of time. The Abatement program can be used by those who improve the values home through renovation. The best way to think of the abatement program is to imagine that city forgoes taxing the improvements made for roughly 7 to 10 years. There are a lot of rules and requirements to qualify, so do your research before you start renovation.
What is a home warranty?
Many times, you will see ‘home warranty’ referenced in remarks about a home. This refers to is a warranty that can be purchased to warrant the systems of a home for generally a period of one year.
Home warranties can be purchased by the seller of a home and transferred to the purchaser at closing. They typically cover mechanical systems, appliances, and other devices in the home. They generally do not cover the structure or materials (roof, hardwood flooring, foundation, etc). New homes, however, come with state mandated structural warranties, as well as manufacturer’s warranties, that last longer than the one year home warranty.