Real Estate Tip of the Week: What’s a Reverse Mortgage?

You might have heard about reverse mortgages – but what are they, exactly?

These are a type of loan that allows homeowners – aged 62 and older – to borrow some of their home’s equity as tax-free income. Most of these homeowners have already paid off their mortgage.

“Regular” mortgages consist of the homeowner paying the lender, but in a reverse, the lender pays the homeowner.

How the heck does that work, you may ask?

First, it comes down to how much the homeowner can actually borrow. This is known as the principal limit, and it varies based on the age of the youngest borrower or eligible non-borrowing spouse, current interest rates, the Home Equity Conversion Mortgage (HECM) limit, and the home’s value.

So – why would homeowners think about applying for a reverse mortgage? How does this help them?

These mortgages can be used for supplementing retirement income, covering the cost of any needed home repairs, or paying for any sort of out-of-pocket expenses.

And just like “regular” mortgages, there are several types of reverse mortgages:

  • Home Equity Conversion Mortgage (HECM): this is the most popular type and are federally insured. These usually have higher upfront costs, but the funds can be used for any purpose.
  • Proprietary Reverse Mortgage: This is a private loan, so it is not backed by the government.
  • Single-purpose Reverse Mortgage: These are usually offered by nonprofit organizations as well as state and local government agencies. This loan can only be used to cover one specific purpose.

Reverse mortgages offer older homeowners to supplement income in retirement, pay for renovations, or other expenses. Although this might seem like the perfect option for you, it’s always best to talk with your lender to discuss your finances and how things might look in the long run. You can also speak with a HUD-approved counselor before committing to a reverse mortgage by visiting HUD’s online locator, here.

For more tips and news, stop by Alliance Title’s Blog.

Where are Buyers Moving?

Looks like cities are getting the boot – or at least, aren’t the place many homebuyers are looking to purchase.

According to a recent report from Knock, a real estate technology company, nearly 6 out of every 10 pandemic homebuyers opted for a new, often less populated city within the same state they currently live.

With COVID changing much of our world, more and more homeowners and buyers were able to start working remotely, which ended up changing how the real estate market worked as a whole.
Sean Black, Knock’s co-founder and CEO, explains, “Almost overnight, our homes took on a whole new meaning. In addition to where we live, they became where we go to work, go to school, workout, and everything in between. It prompted us to re-evaluate what we want and need our home to be.”

More space is the key – with our homes becoming more and more of the space where we’ve grown accustomed to doing most things, homeowners and buyers are looking for room to grow.

40% of survey responders insisted on moving for a larger home, 39% wanted to move to a quieter neighborhood, and 37% wanted more outdoor space.

We’ll see what 2021 and beyond brings to the real estate market in terms of what buyers and sellers want and need.

Stop by Alliance Title’s blog for more real estate news and guides.

Homes Age Too: Homeowners Staying Longer

Homeowners haven’t been jumping to move – on average, homeowners have been living in their homes for about 10 years (which is double that between the years of 2000 and 2009).  There are plenty of reasons why homeowners might choose to keep put – what are yours?

According to the National Association of Home Builder’s analysis of census data, the median age of an owner-occupied home is 39 years old. This is up from a median age of 21 in 2005. More than half of these homes were built prior to 1980, and about 38% were built before 1970.

Housing professionals believe that this might mean that this aging housing stock shows a growing remodeling market. Older homes do need updates or repairs – which makes sense to plenty of homeowners. But it also might mean that homeowners are turning to remodels because of rising home prices.

Take a look at NAHB’s Median Age of Housing Stock by State infographic below:

NAHB’s Infographic

Stop by Alliance Title’s Blog for more real estate news.

Hot Hot Hot: Tips to Buy a Home in a Seller’s Market

We all know it – the real estate market is totally in favor of seller’s right now. And it’s a crazy, busy time!

But if you’re a buyer, what are you supposed to do to stand out and close the deal on the home of your dreams?

Buying a home in a seller’s market might present its challenges, but it doesn’t mean buying a home that you love is impossible.

Check out our suggestions below:

Do Your Research

Gather the data and research you need to better understand what houses are currently available for sale through real estate listings. When you find homes you’re interested in, take a moment to drive out and visit the neighborhood to get a better idea on the home’s surroundings and if you enjoy the local area.

This step will allow you get a better idea of what you’re looking for without feeling pressure to put in an offer. And you’ll also be able to have better conversations with your real estate agent on the make or breaks.

Get an Agent

Speaking of real estate agents – it would greatly help your transaction if you hired one. Agents have tools and resources not available to the public to find listings before they hit websites like Zillow.

Agents will also be able to guide you through the real estate process. Our recent Guide on Hiring a Real Estate Agent can give you more info!

Receive the Loan Approval

Make sure you’ve done the work of comparing mortgage interest rates from different lenders. After you find a mortgage loan that works for you, work with your lender to receive preapproval.

Preapprovals shows sellers that you’re serious – which can help set you apart from other buyers.

Offer a Rent-Back Agreement

If you’re trying to really stand out from the crowd (and aren’t in a rush to move), you can instruct your agent to let the seller’s know you’d be interested in a rent-back agreement. This gives the sellers more wiggle room in their timeline of moving out, and would give you quite the edge. Rent-back agreements are just that: agreements. If it comes to this, make sure to work with your agent and come up with a plan that suits you.

Don’t Waive

You might be reading that plenty of buyers are waiving the home inspection to help the sellers like them more – and yes, while the sellers theoretically would like that, it isn’t necessarily good for you. If the home inspection comes back with some pretty bad reports, you want to be able to back out.

BUT, you can set a standard home inspection instead. If the inspector finds only minor issues with the home, the seller knows you’ll move forward with the deal without asking for repairs.

Keep Positive

2021 (so far) has been pretty tough for buyers. With a lack of inventory and prices reaching record highs, your patience will be put to the test. But it doesn’t mean you can’t find the best deal for you.

Focus on what you can control, and stay within your financial limits.

Check out Alliance Title’s Blog for more real estate homeowner/buyer/seller guides.

Homebuyers Quick to Offer More than Asking Price

Guess how many homes have sold above their listing price during the month of May?

51%! – which is up from 26% one year ago.

Redfin’s recent study looked at homes sold in 400 U.S. metros that found most homebuyers are scrambling to purchase and seal the deal. 57% of the homes that went under contract had an accepted offer within the first two weeks on the market.

But what’s even more interesting, is that Redin’s study also found that the number of homes listed for sale is down 49% from 2019.

What this means, is that the real estate market has a lack of inventory – but that doesn’t seem to halt buyers from stepping forward and fighting for their dream home.

Redfin’s Chief Economist, Daryl Fairweather, explains, “[…] the fact that homes keep selling for more and more above asking prices goes to show that many people want a home than there are homes for sale. I don’t see that changing until mortgage rates increase, which will likely happen later this year. But until then, the housing market will remain red-hot.”

Also noted in Redfin’s study – the median home sales price hit a higher sales record ($354,250).

We’ll have to keep an eye on the market as mortgage rates fluctuate, contractors hurry to build, and sellers and buyers figure out their next steps in their real estate journey.

For more real estate news, stop by Alliance Title’s Blog.

Are You a Cool Neighbor?

How close are you to your neighbors? We’re not talking about proximity.

A recent survey from SafeHome.org surveyed more than 1,000 Americans about their neighbor relationships to sort out what neighbors look for in other neighbors, and, if they would “tell on them” if a situation arose.

Depending on what situation occurs in the neighborhood, 38% of neighbors would choose to overlook an offense if it didn’t bother them, whereas 15% stated they have called the police on a neighbor when witnessing some type of occurrence.

So what’s the biggest thing neighbors find annoying or aggravating? – Violating noise ordinances. The survey found that 11% of respondents admitted to the activity in their home or neighborhood, but 26% stated that they were called out for being too loud.

Take a look at SafeHome.org’s infographic below and see where you might stand with your neighbors:

Check out Alliance’s Blog for more fun news, tips, and guides.

Builders Setting Restrictions for Home Construction

This isn’t news – the real estate market is hot, and construction is trying to keep up with homebuyer demand.

Rising construction costs haven’t been helping builders; items such as appliances, cabinets, and Sheetrock are causing delays in projects. To combat this growing problem, builders are changing up the way they handle requests.

According to the National Association of Home Builder’s survey conducted in April, 63% of builders nationwide are limiting the number of contracts they sign each month, and some builders are accepting bids for empty lots and contracts.

Other builders are trying to protect themselves against fluctuating prices – like including opt-out clauses for both the builder and buyer, since it’s getting more and more difficult for builders to give you a hard price. 

The new hoop to jump through isn’t trying to sell homes, but rather, trying to build homes.

For more real estate industry and economy news, stop by Alliance Title’s Blog.

Real Estate Tip of the Week: Seller Disclosures

We hope we didn’t lose you at the title – Seller Disclosures! They aren’t meant to be scary…in fact, they’re there to protect not only the seller, but the buyer too!! It’s important to understand what a disclosure is and how it benefits you.

So, what is a seller disclosure?

In real estate, seller disclosures are the seller’s legal responsibilities to reveal known defects about the home or property they are selling.

These vary by state and must be in writing. Seller disclosures are different from an inspection report – which should be done separately. Think of it this way: the inspection report lets the seller/buyer know what needs to be fixed or updated, which should then be listed on the seller disclosure.

Buyers are given the disclosure so they can assess if they’d like to move forward with the sale. They can make preparations if they choose to move forward, possibly negotiate a lower price – pretty much whatever they’d like to do. That could even be just “ignoring” any sort of issue in the home to deal with later. But essentially – these disclosures protect the buyer from making any unwanted sale or accidental problems in the future.

If a seller doesn’t include something (that has been told to them by the inspection report), then the seller may face legal trouble for not having it disclosed.

What’s usually on a seller disclosure?

  • Health & safety: mold, radon, asbestos, or foundation problems are common examples.
  • Renovations: any work the seller has put into the home, whether it was permitted or not.
  • Pests: termites, rodents, etc.
  • Mechanical: Water, sewer, AC/HVAC, appliance problems, etc.

Who can help with a seller disclosure?

You don’t technically need the help of a real estate agent for this – but it would greatly help both parties if an agent was on the case. Agents can make sure things that need to be included are on the report, and they can help the buyer make a good choice.

For more real estate tips and tricks, stop by Alliance Title’s Blog.

How to Prep Your Home for Summer

Spring sprung exactly a month ago – which means the warmer weather is bound to be heading your way (if it hasn’t already)!

Have you planed the updates your home needs to better protect itself in those warmer months? Not sure what those updates are? Check out our tips below:

Air Conditioning Unit

Make sure you’ve changed any clogged or dirty filters – if you ignore this step, your HVAC will run longer than it needs to, which means you’re paying more money.

Set your AC to the highest comfortable temperature – set it higher while you’re away and turn it down when you return. The U.S. Department of Energy suggests increasing your thermostat to warmer temperatures while you’re away and programming it to around 78°F when you’re at home for the best energy savings.

Roof

Your roof might have gone through some stuff during the winter months – ice, snow, and wind storms all could have damaged your roof in some way shape or form. As soon as you’re able, take a look and check for any missing or damaged shingles, check flashing around pipes and chimneys, and inspect any caulked areas (skylights).

Lawn Care

Make sure your lawnmower and other yard tools are ready for use before you get your yard looking in tip-top shape! Check for any fallen debris from trees and make sure you take a look at your sprinklers before turning them back on – i.e., checking for broken, clogged or missing sprinkler heads, sunken heads that have dipped below the ground, or high vegetation, to name a few.

Your home should be safe, comfortable, and efficient for summer use!

Check out Alliance’s Blog for more real estate guides and homeowner tips!

Remote Online Notarization & ALTA Support

 U.S. Sens. Mark Warner (D-Va.) and Kevin Cramer (R-N.D.) have reintroduced the bipartisan bill, The Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act of 2021 (Senate Bill 1625)  that would allow for immediate nationwide use of remote online notarization (RON) – this would allow the notary and signer to complete the transaction in different physical locations.

This bill is supported by the American Land Title Association (ALTA), the Mortgage Bankers Association, and the National Association of Realtors.

What would the SECURE Notarization Act do, exactly?

ALTA lists them on their article, here:

  • Authorize every notary in the U.S. to perform RON.
  • Create national standards requiring use of tamper-evident technology, multifactor authentication of a signer and retention of an audio-visual recording of the notarial act.
  • Allow signers outside the U.S., such as military personnel and their families, to easily and securely notarize documents.
  • Create national standards requiring use of tamper-evident technology.
  • Follow a similar structure of complementary state/federal legislation, such as the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA).

Diane Tomb, ALTA”s Chief Executive Officer, explains, “The SECURE Notarization Act allows businesses and consumers the ability to execute critical documents using two-way audiovisual communication. Current requirements for a signer to physically be in the presence of a notary are often impractical and sometimes impossible due to social distancing limitations resulting from the spread of COVID-19, as well as other roadblocks for in-person signing, like military service overseas and time constraints.” 

The 2021 ATLA Advocacy Summit (currently virtually underway) will discuss this bill further and encourage members of Congress to support the bill.