Facebook
YouTube
LinkedIn
You are here: Home » 2014 » December

WOOD FLOORS FYI

Hardwood floors are lovely. I have them in my current house and in my house before that. While they are expensive to put in, they do raise the resale value of the home (although not dollar for dollar). Many buyers prefer them for easier clean-up and they don’t stain like carpet does. Today I want to point out something about hardwood floors that could be kind of a “gotcha” if you aren’t aware of it. Recently I’ve had two clients opt to put in hardwood floors from two different flooring providers. They each picked out two completely different varieties of hardwood, but both were gorgeous.

 

The problem came when the flooring company was almost finished. At least, my clients thought they were almost finished. You see, when they started the job, the flooring companies took all the interior doors off the hinges so they could get the old carpet out and install hardwood through the doorways. The flooring went in, the flooring workers left, but the doors remained stacked up in the garage, and then the flooring companies expected to be paid. Both of my clients said, “But what about the doors?” Now, mind you, these are two different clients, and two completely different flooring companies, but their response was almost word-for-word exactly the same, “The doors don’t fit now because the hardwood is taller than the carpet was. You’ll have to hire a carpenter to trim the bottom of the doors. We don’t do that.” After some verbal wrangling and hassle, the doors got done, but my clients were not happy that they weren’t advised about this BEFORE the job was started.

 

So just a warning to you if you are getting quotes to have hardwood floors installed to replace carpet. Make sure you get a bid that includes trimming and replacing all the doors if needed.

SHORTER WAITING PERIODS

In years past, it was pretty rare to have a short sale or foreclosure on your record. Because of that, mortgage lenders weren’t in a big hurry to lend to people that had one of those. They would often make someone wait 5-7 years until they would approve them for a mortgage loan again. This worked out OK for the lenders back then because they could still make all the loans they wanted.

 

Fast forward to when the mortgage meltdown happened and a huge swath of Americans experienced a distressed sale of their home. The market appears to be in a recovery now, and lenders are now much more willing to lend money than they were just a few years ago. But they are finding that many of their potential customers don’t qualify because they are still within the 5-7 year waiting period.

 

I’ve been expecting lenders to start to shorten their waiting periods. A few of them did a year or so again, and now more of them are following suit. There was a recent announcement that one of the major lenders that used to have one of the longest waiting periods is now shortening from 7 years down to 4 years. And there are many other lenders that have dropped their waiting periods to 2 years. I also know of one aggressive lender that has NO waiting period after a foreclosure or short sale. However, that lender only offers adjustable-rate loans for that situation. Most people really want to lock in a fixed rate loan right now. But still it’s nice to know that if you had a distressed sale in the last 5 years, you now have a lot more options to buy a home again sooner than in the recent past.

3% DOWN PAYMENTS ARE BACK

For a long time, home buyers had to come up with at least 20% down to buy a home. Then it got reduced to 10%, then 3%, then nothing, and then at the peak of the madness, buyers could get loans for 125% of the value of the home and sometimes even walk away from the closing table with money in their pockets after buying a home!

 

When the mortgage meltdown happened, lenders really tightened up their guidelines and the low, low down payment plans were few and far between, or they were really, really hard to qualify for, and also very expensive in regards to fees.

 

As of right now, FHA loans are the go-to loans for low down payment as they can go as low as 3.5% down. Since they are basically the only source for these, they’ve been jacking up their fees and insurance rates because they had no competition (and because this is still a risky loan and FHA lost a TON of money in the recent past!)

 

However, changes are coming that will make the FHA loans look much less desirable, in my opinion. This past week Fannie Mae and Freddie Mac announced that they will start backing mortgages with down payments as low as 3%. At first glance this isn’t much different than the 3.5% down payment for FHA loans, but there is more to the story!

 

When a buyer gets an FHA loan, they have to pay the mortgage insurance every month until the loan is either paid off or refinanced. In the old days, FHA would let that insurance come off when the value of the house rose, or the balance was paid down enough to where there is at least 20% equity. Fannie and Freddie will allow the mortgage insurance to come off let FHA used to, so this would be a BIG advantage to them over FHA. So if you are shopping for a mortgage, be sure to ask your lender representative about these new 3% down loans.

BATTERY CHIRP

So lately I’ve been battling “low battery chirp” at my home, my office and my parents’ home. I’ve learned a LOT about these detectors that I didn’t know before! I woke up at 3 am a few weeks ago due to a smoke detector chirping, and of course it was a super-high ceiling in my house, so I had to get the extension ladder out while wearing my pajamas. Good luck going to sleep after THAT!

 

A few days later I hear chirping at my office. We have quite a few close to each other, so it was hard to tell which one was chirping. I take them all down and start replacing batteries one at a time, but I still hear chirping. Come to find out that some detectors keep a small charge even AFTER you remove the battery, so they can still chirp for a while even WITHOUT a battery. So it wasn’t until I replaced ALL the batteries that I finally got rid of all the chirping.

 

Then a week later my mom calls because she is hearing chirping. Hey, I’m an expert at this now! So I replace all the batteries in her detectors and put them back up. A few minutes later, “Chirp!” I take them all down and test the batteries, which test fine, but still I hear a “Chirp!” somewhere, but it doesn’t seem like it’s coming from any of the detectors. I take them all down and put them in a sealed box in the garage but I still hear a “Chirp!” inside the home. I’m thinking I’m either going insane, or I’m on some hidden camera TV show! Finally I pay attention to the plug-in carbon monoxide detector and IT’S the one chirping! Apparently these detectors now have battery backup (the first few I bought years ago did NOT have them) so now you know!

 

CALL YOUR INSURANCE AGENT

It’s a good idea to check in with your insurance agent now and then to have them review your home insurance policy with you to see if you have too much, or not enough coverage on your home.

 

Speaking broadly, there are three main types of insurance for your home: #1. Liability (if something happens to someone on your property plus more) #2. Dwelling (the building itself) #3. Contents (the stuff in your house – furniture, computers, etc.).

 

Assuming you have a loan on the property, your lender will require that you keep enough insurance to re-build the property if it burned to the ground (what they call “replacement cost”). Most people think you need to have insurance to cover what your home is worth, and that’s not exactly accurate. For starters, you don’t need to insure your lot. The dirt is likely not going anywhere, so you just need to cover the building itself. And now that values are up, it may be cheaper to rebuild your home than to buy it new. So you may need less coverage than you think. Also keep in mind that your lender only cares about the structure. If you have some very expensive personal items (collections, jewelry, etc.) you’ll want to make sure those are covered, too. Lastly, some insurance companies say that as long as you have coverage for at least 80% of the replacement cost of your home, they’ll pay 100% of the cost to replace it. These would all be good discussions to have with your agent to make sure you have enough coverage so you are protected, and also not too much so you aren’t wasting money.

 

Return to top of page

Contact Us

  • Sharp Realty
  • 320 Fairview Ave.
  • Brentwood CA 94513
  • P: 925.240.6683
  • F: 925.524.2302
  • E: info@SharpHomesOnline.com
  • DRE# 01858431