Category Archives: Ideas for Home Buyers

Huntsville among the best places for home ownership in the U.S.


Financial literacy and consumer advocacy site NerdWallet has ranked Huntsville and Birmingham-Hoover among some of the best places for homeownership in the U.S.

NerdWallet, which studied 100 populous areas and categorized the winning metros by size, listed Huntsville as its No. 1 small metro and Birmingham-Hoover as its No. 9 large metro for homeownership, affordability and area growth.

The city of Huntsville was lauded for having a homeownership rate of 70.9 percent, median monthly household income of $4,534 and a 1.2 percent population growth from 2011-12. The analysis also found that homeownership costs are 26.6 percent of a resident’s monthly household income in Huntsville.

“Huntsville is located in northern Alabama where the Army’s Redstone Arsenal, Cummings Research Park and NASA’s Marshall Space Flight Center anchor the local economy in the technology, space and defense industries,” said Jaime Ortiz, an analyst for NerdWallet. “The area is also home to the University of Alabama in Huntsville where tech-focused programs like UAH’s College of Engineering train a highly skilled workforce. The deep talent pool of engineers attracts top employers like Boeing to Huntsville, providing local residents an abundance of job opportunities.

Other areas to make the small metro list were Fort Wayne, Ind., Myrtle Beach/North Myrtle Beach/Conway, S.C., Charleston, W. Va., Ocala, Fla., Naples/Marco Island, Fla., Columbus, Ga., Springfield, Mo., Fort Collins/Loveland, Colo., and Wilmington, N.C.

The NerdWallet analysis said Birmingham-Hoover has a homeownership rate of 70.1 percent, median monthly household income of $3,888 and a 0.4 percent population growth from 2011-12. The Jefferson County metro averages $1,264 in monthly homeownership costs.

The large metro list featured several other areas, including Raleigh/Cary, N.C.,
Charlotte/Gastonia/Rock Hill, N.C./S.C., Salt Lake City, Indianapolis/Carmel, Ind., Nashville/Davidson/Murfreesboro/Franklin, Tenn., San Antonio/New Braunfels, Texas, Jacksonville, Fla., Louisville/Jefferson County, Ky., and Denver/Aurora/Broomfield, Colo.

Do you live in one of Alabama’s Top 10 cities? Click here to find out.

via Which Alabama cities are the best places for homeownership? 2 state metros make national list |

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Is it Worth Paying Points On a Mortgage? – Keller Williams Realty

When financing a home purchase or refinancing a current home, you have to make a number of decisions. You will have to choose from among a half dozen different mortgage types available to you. Regardless of which type of mortgage you choose, you’ll be faced with another question: should I pay points?

Points, or discount points, are a cash payment that you make to the bank (or your mortgage lender) to get a lower interest rate on your loan. A lower interest rate means a lower monthly payment and savings to you, the homebuyer. The lender also benefits by getting some cash up front, so points can be a win for both parties. However, paying points for a reduction in your interest rate isn’t always worth it. Let’s look at some simple scenarios to answer the question, “Should I pay points on my refinance or new mortgage?”

Let’s assume you are borrowing $250,000. You are quoted an interest rate of 5 percent on a 30-year fixed rate mortgage. This means that every month you’ll be paying $1,342.05 in interest and principle for your mortgage. By the way, you don’t need to be a math wizard to calculate these numbers, your mortgage broker or bank loan officer will provide this information to you, and there are great mortgage calculators online that make doing the math a snap.

Here’s how buying points works: on this same type of loan you might see that paying 1 point lowers the rate to 4.675 percent. Each point equals 1 percent of your total loan amount. So, with our $250,000 loan, 1 point costs $2,500. The math looks like this:

[points] / 100 x [loan amount] = [cost of the discount]

1 / 100 x $250,000 = $2,500.

Also, points may appear on mortgage rate tables a few different ways – as number or a percent, and sometimes under the heading “points” or “discount.” Despite these stylistic differences, the numbers are always the same.

So, we know that to reduce this mortgage interest rate from 5 percent to 4.675 percent will cost $2,500. Now let’s figure out if it’s worth it. The new monthly payment at this lower rate is $1,292.84. This is $49.21 less than the payment for the loan at 5 percent. By spending $2,500 we save nearly $50 a month. Since our 30-year mortgage will last 360 months, that’s a savings of almost $18,000.

It sounds good, saving $18,000 by paying $2,500. But keep this in mind, you only get your $18,000 in savings if you stay in the house for 30 years. With a savings of $49.21 per month it will take you over four years to break even. Here’s the math:

[cost of the discount] / [monthly savings] = [number of months to break even]

$2,500 / $49.21 = 50.8 months (or 4 years and 3 months)

If all these savings sounds great, conventional wisdom actually tells us this is not a great deal. Most experts agree that it is not worth paying points on a mortgage if you won’t break even in less than four years.

This is true for a few reasons. Most likely you won’t be in your house for 30 years, so you never realize the full value of the savings. Second, your cash has value today. In the above scenario, if you spend $2,500, you break even in four years and three months, and double your money in eight years and six months. Could you make better use of this cash? When you pay points, you’ve spent the money, so it can be redeemed no matter how long you’re in the house. For it to make sense, in the above scenario, you’d ideally like to be saving about $60/month not $50.

Deciding whether it is worth paying points on a mortgage can be confusing because it’s difficult to know exactly how long you’ll be in a house and how your financial situation might change over time. If you’re faced with the dilemma of whether you should pay points during a refinance or home purchase, the simple formulas and guideline above can help you through the process.

via Keller Williams Realty – Market Insider.

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How to Negotiate: 7 Clever Home Buying Negotiation Tactics – Keller Williams Realty

Getting the house you want at the price you want can be tricky – even in a buyer’s market. Sometimes a home seller just isn’t willing to budge on price. Don’t despair! There are other ways to sweeten the deal and drive it to close in a buyer’s market. Here are seven tips on how to negotiate with a home seller.

Get the Dirt on the Home Seller

Learn as much as you can about the motivations and situation of the home sellers. For instance, if they’re living in the house and they need flexibility around the closing date, you could offer to be flexible on closing if they move on terms. In the case of estate properties, take some time to learn about the heirs – where they live, what kinds of houses they live in and whether or not they are in legal or financial trouble. It sounds creepy, but most of this information is available for free online once you have the names of the home sellers. You can also research obits and marriage documents that are in the public domain. The more you know, the more leverage you have when it comes time to negotiate.

Know What the Property is Worth

Work independently or with your agent to research comparable sales in the immediate area of the home, then make an offer at least 10 percent below what the market says it’s worth. Dig into the details to figure out how the home you want to buy stacks up against comps, and look for ways to communicate the legitimacy of your offer or requests by backing it up with data. For instance, if all comparable sales have a pool, waterfront property or updated kitchens and the house that you want doesn’t, point that out. Use this data to justify your offer or other requests to create value if they won’t budge on price.

Don’t be Afraid to Ask

If there are things that you want or need to feel comfortable with the deal, ask for them. The home seller can always refuse, but if you don’t ask, you don’t know. If you’ve created leverage by learning about the property and the seller’s situation, you can use this information to ask for things, such as repair of items found during the inspection period or appliances that weren’t listed on the original contract for the house. Don’t make assumptions. Even if your realtor balks at the idea, always ask.

Offer a Quick Close

The faster a deal gets done, the more quickly the home seller can cash out their asset and move on with life. Homes that remain on the market or unsold for extended periods of time become costly to sellers (especially if they’re unoccupied) and start to decline in condition. Offering a quick close builds confidence with the seller as it means that there’s less time for things to go sour with the deal. If you’re situation allows for this negotiation tactic, you might be able to either lower your price or get other benefits in exchange.

Make an As-Is Offer and Ask for the Furniture

If you want to make a reasonable but low offer on a property, consider the pros and cons of presenting an “as-is with right to inspect “ offer. The upside is that you can walk away from the deal if the inspection frightens you. The downside is that what you see is what you get, leaky plumbing, termites, mold and all. If you really want a property and are willing to take it as-is, but aren’t really comfortable with the seller’s floor price, ask for the furniture or other non-fixed assets that make the deal more palatable such as a boat or fitness equipment.

Ask the Home Seller to Cover Closing Costs

If you’re apart on price for the home itself, one way to get around the cash crunch and get a deal done is to meet the home seller on price, but ask them to cover all or part of the buyer’s closing costs. Some home sellers might balk, but if they’re able to do this and want to finish the deal with a sale at a particular price point, this technique can work.

Be Willing to Walk Away

Buying a home can be an intensely emotional experience, but at the end of the day it is really just a business transaction. This means you can’t get attached, and you have to be willing to walk away if you’re unable to negotiate with a home seller or if the seller becomes unreasonable. If the seller’s agent senses desperation or over-eagerness on your part, they might interpret that as a signal that they have the upper hand. Silence can be your friend. Hold your cards close and always be willing to walk away.

Find your dream home here: Madison County Home Finder

via Keller Williams Realty – Market Insider.

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Home Mortgage Environment in Huntsville, AL

Below are the responses I provides for a recent Huntsville Times interview on the current home loan market in Huntsville and Madison County, Alabama.

1.  Locally, are potential homeowners finding that banks are lending again as it relates to securing mortgages?

No. Banks are much more cautious today than they were four or five years ago. Minimum credit standards have been raised significantly. More documentation is being required and the process has been lengthened to ensure that everyone involved has two or three looks at a potential borrower.

 2.  If, in fact, securing mortgages is increasingly difficult, what short-term and long-term effects will this have on the Huntsville area real estate market?

The short term effect has been to slow the housing recovery by eliminating previously qualified buyers from the market. Seventy percent of our national economy is driven by consumer spending. When you reduce the single largest consumer expenditure (the home) it poses a significant risk to our economic recovery.

3.  What can a potential home buyer do to put themselves in the best position to secure a mortgage?

Potential borrowers need to start by looking at their own credit reports. If they are married, both spouses need to check out their credit records. If there are inaccuracies, they need to have them corrected. They also need to pay down as much debt as they can without sacrificing down payment funds for their new home.

 4.  You mentioned getting pre-approved.  Why should someone wanting to buy a home do this and what is involved?

In today’s market preapproval is critical to a happy outcome. Most of the mortgage loan officers I know will do a complimentary preapproval for the buyer. They will look at the credit reports, make suggestions on possible improvements and help the buyer establish a budget to work with.

 5.  What role does a Realtor play in the process of securing a mortgage?

As Realtors, the only part we play in the mortgage process is providing referrals to mortgage loan officers if the buyer does not already have a contact. We can give the buyer the names of several great local lenders we have worked with before and have the confidence that they will get the job done right.

 6.  How wary are homeowners who are selling their homes of potential buyers who are not pre-approved?  Are their concerns legitimate?

There are a significant number of sellers who are now requiring that an offer be accompanied with a buyer preapproval letter. I always recommend that my sellers have a preapproval before they take their home off of the market. Nationwide, almost a third of all sales contracts are canceled because of financing issues.

 7.  Do these issues mostly pertain to first-time home buyers/owners?

Financing issues are not unique to first time home buyers. Everyone who needs a mortgage to buy a home has to go through the same scrutiny. In today’s real estate environment the credit issue is the major deal breaker. My advice is to start early with your credit reports and a good mortgage loan officer before you ever start looking at potential homes.


The new strict mortgage standards were put in place to correct the easy money policies that created the last real estate boom. As always, the pendulum swings to far on both sides of the problem. Understanding the current mortgage environment will allow the potential borrower to be better prepared to navigate the mortgage process. By starting early, getting their records in order and meeting with a mortgage loan officer first, they’ll eliminate the stress that an unprepared borrower endures and have a much more enjoyable home buying experience.

Find your next home here: Madison County Home Finder

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How to Shop for Your First Home

The need for more space was what got Kim and Jason Fitzsimmons thinking about buying their first home. They’d been married for a year and realized that a small apartment, even with two bedrooms, wasn’t big enough for all they’d accumulated.

But it wasn’t until they had their income taxes done that they learned from a tax preparer about the deductions they could get from owning a home. The Fitzsimmonses then got serious about buying their first home, and about doing it before the end of the year. Deducting the mortgage interest from their income taxes would make buying a home less expensive than renting. While that isn’t true for everyone (check with your tax preparer first on home deductions), the couple started doing their homework and soon were out looking for their first home.

It’s tempting to just go out and start shopping for your first home. After all, that’s the ultimate goal and the most fun part. But doing your homework first will pay off in less stress and more savings. If you’re a first-time home buyer, whether for tax reasons, the desire for more space or just for the chance to have your own washer and dryer, here are tips to get you started.

1. Know how much you can afford
This should be the first step in buying your first home so you don’t waste your time, or a real estate agent’s, by looking at houses that you can’t afford a mortgage on. The Fitzsimmonses visited a real estate broker who helped them determine how much of a loan they would qualify for, based on their income and credit. They also factored in property taxes, maintenance, utilities, insurance and possible homeowner-association dues. They totaled those expected costs and set up an experiment: After paying the rent on their apartment, they set aside money equaling the difference between their rent and the projected cost of homeownership. They did this for a few months so they could get used to making the payments. A loan calculator will help figure out how much a home loan will be.

2. How long will you stay in your first home?

The longer you live in your first home, the better the savings because you’re spreading out the upfront costs of buying a house. Those costs include a real estate agent’s fee, closing costs, inspection fees and loan fees — which can add up to 10 percent of the sale price, or approximately 18 months of rent.

3. Get a loan
Getting pre-approved for a home loan helps make buying a first home faster and easier, especially if there are multiple offers on the home. Your mortgage lender or broker should be able to give you an estimate, down to the penny, of how much money you’ll need in closing costs. Then you’ll know how much of your savings to set aside for a down payment, which will help determine how much your loan — and the monthly mortgage — will be. Putting down 20 percent will eliminate the need for mortgage insurance, although your lender or broker might be able to find loans at good rates that don’t require 20 percent down. This is where it really pays to shop around for the best loan rate and terms.

4. Know the market
After determining where your finances stand, the fun part begins in finding out what you can afford and where you want to buy your first home. Research neighborhoods that interest you and find out the median price of homes there. You can research homes on websites such as Madison County Home Search or others you trust. Finding homes similar to the kind you want, and in the same neighborhood, will give you an idea of how fair the price is when you are ready to buy.

5. Shop around
Every house buy requires sacrifices, and you won’t get everything you want. There are many factors to consider, such as how much room you need. Does your first home have to be a single-family home or will a condo work? Is it near transportation, good schools, parks, shopping and your other essentials? Does the home have the amenities you want, such as a fireplace, dining room, backyard, pool or deck?

Find a real estate agent to represent you, or if you’re brave and want to do it on your own, go out and shop on your own. Either way, stick to these five steps and you should be fine.

Buying a house, whether your first home or several down the line, is one of the most stressful and expensive transactions you’ll ever undertake. But if you do your homework and prepare for it with the above steps — figuring out how much you can afford, how long you’ll stay, getting a loan, studying the local market, and shopping for a house — it should be a lot easier.

via How to Shop for Your First Home | AOL Real Estate .

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Home Buyer Resources: Alabama Housing Finance Authority

Promoting affordable housing for all Alabamians is the Alabama Housing Finance Authority’s primary goal. I believe teaching you to be an informed home buyer is just as important as offering you assistance through various AHFA programs. I’m confident the information in “Building Blocks to Homeownership” will be invaluable to you. Please use it as your reference guide as you make important decisions regarding one of the most significant purchases you’ll ever undertake.

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The Hidden Costs in Home Buying

Today, mortgage rates are hovering around 4% which is historically low. Home inventory in Madison County is at historically high levels. Homes are taking longer to sell and prices have been declining for several years. In other words, it’s a great time to be a buyer!

If this is your time to buy, congratulations. There are a lot of choices and conditions are perfect for you. To guarantee a happy outcome, you need to do your homework. The information in 10 Steps to a Stress Free Home Buying Experience” will help you prepare.

In Alabama, any time you make an offer for a home, your Realtor® will prepare an “Estimated Closing Statement” for you. In this statement you’ll see the expected charges for things like title insurance, mortgage preparation, attorney charges, property tax adjustments and other costs associated with acquiring and closing your new home. There is also a section that estimates your monthly payment.

Charges that aren’t listed on the estimated statement are the topic of today’s article. Specifically, home inspection costs. The home inspection is a vital step in the home buying process. I always recommend that my clients do at least the general inspection. A home inspector will charge between $300 and $500 to do a general, eyes only, inspection of the home you are purchasing. Most home buyers are familiar with this type of inspection and are prepared for the expense, which is paid at the time of inspection. However, the general inspection only represents the beginning of your inspection process. Other experts may be needed to evaluate different areas of the home that you or the generalist may have concerns about. Here are some other areas that you should be prepared to have inspected if needed:

1. Radon – Radon is a colorless, odorless and tasteless gas that occurs naturally in rocks and soil. Radon is harmlessly dispersed in outdoor air, but when trapped in buildings can increase the risk of lung cancer, especially at elevated levels. More information about Radon may be found at You may elect to have radon testing as part of the general home inspection process. The test fee usually is around $150. If elevated radon levels are found, a mitigation system can be installed by the seller.

2. HVAC – Depending on the age, output and visible condition of the heating, ventilation and air conditioning system, you may need to hire a technician to do an inspection of the system. In Huntsville you can have a heat pump serviced and inspected for around $100. The main problem you are looking for is whether or not the system is losing freon. If it is, there is a leak in the system somewhere and repairs could go into the thousands of dollars.

3. Termites – Yes, we do have a lot of them in Alabama. Recently, our Board of Realtors moved the cost of this inspection from the seller to the buyer. You’re actually requesting a “Wood Infestation Report” from the termite company. The cost is approximately $125 and the report will identify any past or current termite activity in the home. If there is current activity, the seller will need to do a treatment. If there’s damage from termites, that’s an issue for the request for repairs.

4. Structure – Foundation problems can develop under any home regardless of the area. In Madison County we have a geologically weak limestone sub-structure. This substructure, which helps support your home’s foundation, is weakened over time by climate, rain and other ground water that finds its’ way into the limestone and begins to erode the substructure. When this happens, the ground shifts causing tell-tale signs of foundation problems to appear. These inspections will cost between $100 and $300 depending on the size, structure and location of the home.

5. Roof – Home inspectors used to go up on the roof and do a pretty good job of determining it’s condition and life expectancy. Today, most of them don’t go up top to inspect. They may take a photo from a ladder, but if there are any concerns about the integrity of the roof you should have a roofer inspect it. Most of the time this inspection can be done for less than $100. You could also ask the homeowner if they have had an insurance company out to inspect for damage.

6. Pool – You only need this if…. That’s right, if you have a pool. I recommend this inspection regardless of the visible condition of the pool. The inspector will be able to give you an idea of the life expectancy of the liner, the condition of the filters and motors and also any other obvious, to a pool guy, deficiencies that may exist. Normally this inspection will cost $100 to $200.

As you can see, you may need to employ several specialists to get a complete picture of the condition of your new home. Other areas that may need extra attention include surveys, septic tanks, mold and stucco siding. Every buyer should do at least the general inspection and move ahead if any of the other areas generate any cause for concern. The main point is to be prepared for these expenses in case they are warranted. Initial inspections are critical to give you peace of mind regarding the largest financial investment of your life.

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