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SUNDAY, SEPTEMBER 18, 2016 • AN ADVERTISING SUPPLEMENT OF
HOMEBUYERS
LNP | LANCASTER, PA2 SEPTEMBER 18, 2016 FIRST-TIME HOMEBUYERS GUIDE
LAURA KNOWLESLNP CUSTOM CONTENT CONTRIBUTOR
So you’re a irst-time homebuyer.You’ve found the perfect place. That
cute little brick townhouse. That roomy bi-level. That stylish townhome with a garage. You have the down pay-ment. It’s in your price range. You’re all set. Let’s do this.
Not so fast. One thing that irst-time homebuyers need to know is that there is still a lot to know about buying a home.
“It’s a lot more than just having a down payment and getting a mort-gage,” says Tom Weik, a broker at Kingsway Realty. “That’s why you need a Realtor to guide you through the process. There are a lot of addi-tional expenses that you may never have anticipated.”
It’s true. Maybe you have been saving for a down payment and you are ready to go for it. You’ll be surprised at all the extra that will crop up throughout the home-buying process. Some of these costs are upfront, out-of-pocket costs that might be nonrefundable, even if you don’t wind up closing the deal. Other costs might not come along un-til after you buy that house and dis-cover that homeownership has lots of hidden inancial snags.
Home inspection“Home inspection is one of the big
ones. Most irst-time homebuyers have no idea that they have to pay to have the home inspected,” says Weik.
Why is that? Once you have submit-ted an ofer on a home and the seller has accepted, you need to make sure there are no issues with the house. If there is a septic system or well, you have to have that checked, too. You will need to hire a certiied home in-spector to examine the property from top to bottom before you go to closing.
Know the
hidden costsof owning a home
If the inspector uncovers hidden structural, mechanical or other prob-lems, you will be able to negotiate the repair terms with the seller before you inalize the deal. If you don’t, that defective septic system, leaking base-ment, dilapidated roof or cracked foundation will be your responsibility, along with the cost of ixing the issues.
A home inspection is an upfront, out-of-pocket cost that’s not refund-able, even if the deal falls through. But if you don’t do it, you could end up with thousands of dollars in costs you never imagined.
Appraisal fee“An appraisal fee is another expense
that irst-time buyers don’t always know about,” says Weik.
Before your mortgage lender agrees to lend the money for that dream home, they want to be sure the home is worth what you’re paying and they are lending. The lender will hire an independent certiied appraiser to as-sess the property value of the home for sale. This includes documenting
the various features that make a home valuable, such as a deck, as well as re-searching the prices of comparable homes sold recently in neighboring areas.
OK. So that’s not so bad.
Escrow“Don’t forget that you will probably
need to set up an escrow account with your mortgage,” adds Weik.
An escrow account is required by many lenders. It’s an account set up in conjunction with your mortgage loan agreement. Money goes into your ac-count to be used by the lender to pay property-related expenses, like hom-eowner’s insurance premiums, private mortgage insurance premiums and property taxes.
You will most likely need to make an initial deposit into the escrow ac-count when you go to closing. Then each month, your payment will go to-ward the mortgage payment, which includes principle and interest, and the escrow account that protects the lender by ensuring that these critical
homeownership expenses are paid in full and on time.
Closing costs“First-time homebuyers have prob-
ably heard of closing costs, but many of them are still surprised,” says Weik.
While having enough money saved up for a down payment is a part of what you’ll need, you will also need cash for closing costs. That’s an ad-ditional 2 percent to 5 percent of the
COSTS, page 3
It’s a lot more than just having a down payment and getting a mortgage.
“
”Tom Weik, Kingsway Realty
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home purchase price to cover closing costs, which can include a loan origination fee, attorney fees, prepaid homeowners association fees and taxes. It can really add up.
And there’s more“First-time homebuyers need to have someone guide
them through the process, especially when it comes to hidden costs,” says Weik.
Some of those hidden costs include:n Government recording charges to record your
deed, mortgage and loan documentsn Credit report fee so your lender can get your credit
reportn Title services and lender’s title insurancen Flood life of the loan fees (the government tracks
changes in your property’s lood zone status)n Tax service fee to make sure taxes previously paid
on the house are up to daten Lender’s origination fee.
Moving costsOh, yes, and before you can move into your home and
start paying for maintenance and repairs, you’ll have
Continued from 2
Costs to pay for moving costs, whether that involves hiring a moving company or renting a van.
Home accessoriesSince your home is probably bigger than your apart-
ment, you’ll need more furniture, window treatments, new carpet, looring, stuf for your kitchen, patio furni-ture, a grill and lots more.
Home maintenanceLet’s say you’ve navigated through all these extra
costs. Probably one of the most shocking unexpected costs is home maintenance.
Being a homeowner can mean a seemingly endless parade of expenses. With a home, things go wrong. There’s no landlord to call. You have to call the plumber when the toilet backs up. You have to get the roof re-paired, the air conditioning ixed and the dishwasher replaced.
As a homeowner, you’re responsible for maintenance and repair costs. If you want to make improvements or upgrades, it’s up to you.
That doesn’t even touch on maintenance and repairs to the yard. You’ll need a lawnmower, landscaping ser-vices and lawn treatment. You’ll need to paint the exte-rior and the interior, too, at some point in time. The list goes on and on.
Don’t forget to factor moving expenses and home maintenance into the cost of owning a home.
LNP | LANCASTER, PA4 SEPTEMBER 18, 2016 FIRST-TIME HOMEBUYERS GUIDE
STEPHEN KOPFINGERLNP CUSTOM CONTENT CONTRIBUTOR
You’ve found it: that perfect starter home. Something to put you on the road to homeownership, something to call yours.
It might be a brick row house in a city neighborhood. Or a single-family home in a suburban development. Whatever it is, it’s perfect.
Well … perhaps not so much. There’s always that one thing you’ll want to change. It might be something as small as new paint on the walls to something a little more involved, like undoing a pink-lamingo tile pattern in the bathroom.
Some dream of going all-out with a new kitchen. Breathe, advises Fred Heim, vice president of operations with Renovations by Garman, Eph-rata.
“Sometimes, there’s overlow,” says Heim of kitchen projects. “If we redo the kitchen, we might (end up) re-painting the downstairs.”
Getting that Martha Stewart cook-ing space seems to be a top prior-ity with many a homeowner, whether they are starting out or have been settled into their house for years. However, a project can range any-where from the upper twenties” — as in $20,000, Heim notes — to “as much as $100,000.”
It’s important to keep in mind, says Dave Petrisek, founder of Dutch Quality Contractors, Lancaster, that “obviously, a starter home is a place someone has lived in before,” in most cases.
A good cleaning or a change of loor-ing can do wonders on a small startup budget. And don’t be put of by the easier do-it-yourself eforts. Many looring products ofered today, Pe-trisek says, are of the peel-and-stick type, often cut into easy-to-it pieces. That’s easier — and cheaper — than
having hardwood put down.And if you are casting an eye on
emerging bathroom trends — not something to be done right away, as bathrooms can be as expensive as kitchens — bathtubs are giving way to walk-in showers, Garman’s Heim says.
New electrical ixtures — banish those acrylic ceiling lights from the 1980s! — are an inexpensive way to literally brighten a room. While a wir-ing check is usually included in home inspections before you move in, don’t be put of if some repairs are in order. Most ixes are afordable, Petrisek says, and often involve insuicient amounts of lighting.
A big deal-breaker for starter home buyers might involve windows. Tele-vision is often looded with commer-cials for replacement sets, and while many products are good, it’s easy to run up the price. It’s hard to believe, but in this vinyl age, “a good (existing) wooden window, with a (new) storm window, can be 85 to 90 percent efec-tive” in keeping energy under control, Petrisek notes.
Roofs can be intimidating as well. And the thing is, a good roof — in-spected, of course — might already be on your house. Any leaks might be coming from the little things people don’t think about, such as lashing, the metal trim that rounds out roof edges.
Unless something is really visually hideous — sunlower yellow kitchen loors! — it might be best for starter home owners to keep in mind and old expression: Live with it. If you are going to be in your home at least ive years, you have plenty of time. And don’t think of bashing down walls to reconigure present room layouts.
Says Heim: “Start with the existing footprint.”
Get of to a good startSome negatives in a first home are easy to fix, but others just might be deal-breakers
A new coat of paint, above, might be a doable fix for your first-time
home. But an expensive roof replacment, right, could be reason
to walk away from the sale.
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STEPHEN KOPFINGERLNP CUSTOM CONTENT CONTRIBUTOR
Buying a starter home is a personal decision.So is your credit. And the two are linked together.
And the better your credit, the better chance you have of getting that mortgage and the key to hom-eownership.
According to BB&T, a banking and trust corpora-tion with several branches in the Lancaster area, “Credit ratings issued by the Fair Isaac Corp., also known as FICO scores, range from 350 to 850. Ac-cording to the real estate website Zillow, the medi-an score in the United States is around 720, but the best mortgage rates typically go to those with scores above 740. FHA borrowers can generally qualify with scores of 620 or above. Anything less may re-quire you to take some time to repair your credit.”
So what exactly does that mean?Basically, says Fern Dannis, CEO and chief lending
oicer with Lancaster Housing Opportunity Part-nership, which assists potential buyers and renters, it boils down to “what are the negatives and what are the positives?” on your credit history.
According to Fair Isaac, states BB&T, “your FICO score is based 30 percent on the amounts you owe, 35 percent on payment history, 15 percent on the length
Want to buy a home? Know the scoreof your credit history, 10 percent on the amount of new credit you’ve taken on and 10 percent on your credit mix.
“The most efective way to raise your score is to pay your debts down and pay them consistently on time,” says BB&T.
This can take time. It’s not easy paying down any debt — just ask any holder of a credit card. Organiza-tions such as LHOP (lhop.org or 291-9945) can help streamline matters. They work with organizations such as Experian and Equifax. You can also check the government-related myico.com and, while it seems like an unlikely source, creditcards.com.
While there are constant television and internet ads for “search your credit here,” Dannis warns that some of these well-known names will link you to endless advertisements.
You can work with LHOP to check your score for $6.95 to $15.95, and, if you don’t have a computer, Dannis recommends another local organization, Tabor Community Services.
“They pull credit,” she says of the process of look-ing you up in a legitimate way. Try to steer clear, Dannis says, of doing things on your own at public computers found at local libraries. While ideal for many purposes, hunting your credit isn’t one of
them. Security isn’t as tight and you might only get to print out information one time.
And if approaching middle age has you down, es-tablishing a home credit score is easier for older folks than the young. The older you are the better you are set, Dannis says.
METRO CREATIVE CONNECTION
The best mortgage rates typically go to those with credit scores over 740.
LNP | LANCASTER, PA6 SEPTEMBER 18, 2016 FIRST-TIME HOMEBUYERS GUIDE
DIANE M. BITTINGLNP CUSTOM CONTENT CONTRIBUTOR
When you buy a car, you have to have car insurance. When you own a home, you need homeowners insurance in case of ire or other disasters. Life in-surance can help your loved ones cov-er funeral costs and other expenses after you die.
Then there’s mortgage insurance, which covers a home mortgage. But not everyone needs it.
A lender, such as a bank or mortgage company, typically requires a home-buyer to have mortgage insurance if the homebuyer doesn’t make a down payment of 20 percent of the home’s cost. Homebuyers who do put down 20 percent are not required to carry mortgage insurance.
This insurance helps to protect the lender in case the homebuyer defaults on the loan.
The 20-percent-down igure has long been the industry standard, ac-cording to Leslie Kufel McLaughlin, loan oicer at GMH Mortgage Servic-es LLC, 2250 Erin Court, Lancaster. If a loan covers no more than 80 percent of the home’s initial value, the lend-er is more likely to recoup the loan amount in case of a forced sale, even if the home value has declined, she says.
Also, the buyer has “more skin in the game,” as McLaughlin puts it.
But over time, she notes, there was a demand for lending to become more lexible, as many potential homebuy-ers did not have 20 percent to put down on a home. That’s where mort-gage insurance comes in.
There are two main types of mort-gage insurance: private mortgage in-surance (PMI) on conventional loans
and the mortgage insurance required with a government loan, such as from the Federal Housing Administration. Diferent rules apply for mortgage in-surance on FHA loans.
(Don’t confuse private mortgage insurance with mortgage protection insurance, which typically covers mortgage payments if you become dis-abled or lose your job, or pays of your mortgage if you die. Mortgage protec-tion insurance is voluntary and can be purchased through insurance compa-nies.)
For conventional home loans, there are two types of PMI: borrower-paid or lender-paid.
Borrower-paid, McLaughlin ex-plains, allows the buyer to pay the PMI in a lump sum up front or with the monthly mortgage payment. This would be in addition to the standard mortgage components known as PITI: principal, interest, taxes (real estate) and insurance (hazard, lood or ire).
Borrower-paid insurance can also be a hybrid, with a lump sum paid up front and smaller monthly payments.
With lender-paid mortgage insur-ance, the interest rate is slightly el-evated, with the lender responsible for the lump-sum mortgage insurance payment.
In both cases, the mortgage insur-ance is provided by such national mortgage insurance providers as MGIC, Genworth, Radian and Arch.
The cost of mortgage insurance will vary, depending upon the buyer’s cred-it score and down payment amount, McLaughlin notes. According to the real estate website Zillow, premiums typically range from $30 to $70 a month for every $100,000 borrowed.
Mortgage insurance can be canceled once the borrower reaches 20 percent equity in the home, leaving what’s known as a loan-to-value ratio of 80 percent. McLaughlin points out that only borrower-paid insurance can be canceled.
As a loan oicer, McLaughlin’s job is to determine whether borrower-paid or lender-paid mortgage insurance is the best it. For someone who doesn’t plan to stay in a home long enough to build up the 20 percent equity, say just ive years, the lender-paid insurance
may be more cost efective.McLaughlin recommends that peo-
ple looking to purchase a home “ind a trusted mortgage professional who is going to be conscious of their inan-cial goals and what they’re looking to accomplish and help them evaluate what’s going to be the most cost ei-cient and explain the diferent options, so that they’re clear on what the down payment options are and the diferent ways to structure inances and what kind of monthly payment to expect.”
Do you need
mortgage insurance?It usually depends on your down payment
THINKSTOCK
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You can customize practically any-thing these days, from the kind of information you get on your favor-ite news feed to the sounds on your smartphone.
If you’re shopping for your irst home, you may already know what you want to do to personalize it. However, you may not be aware that certain features can make a home easier and more afordable to customize after you’ve moved in.
As you’re shopping for your irst home, keep in mind these elements that will help make it easier and inan-cially feasible for you to make your new home truly your own:
The right architectureDo you favor a mid-century modern
look? Art-deco? Craftsman? Colonial? It’s important to choose a home in a basic architectural style you love, be-cause while you can afordably change the color and landscaping to make it your own, it’s much harder to create a whole new look.
Energy eicient featuresGreen considerations and energy ef-
iciency are top priorities for many of today’s irst-time homebuyers, so it’s important to look for a home that has conservation-minded features like a high-eiciency water heater or low-low showerheads. The best eco-con-scious home features, however, will also enhance your lifestyle. Upgrades like Energy Star-qualiied, solar-pow-ered, fresh-air skylights provide natu-ral light plus passive ventilation.
If you buy a home that already has skylights, you can personalize them by adding energy eicient blinds in de-signer colors and patterns.
Room to growMore Americans are living in multi-
generational homes. Whether you plan to grow your family by having kids, moving your aging parents in with you, or adopting as many pets as you can, you may ind you’ll need more space in your new home before you’re ready to move out of it.
Homes that have uninished base-ments and/or attics will be easier to customize for your growing needs. Converting an attic or basement into living space can cost much less than having an addition built on your home.
Price that lets you add valueA home that needs some renovation
and upgrading will likely cost less than a comparable new home, but it also
afords you the opportunity to exten-sively personalize your space. If you buy a home that needs work for a price well under your budget limit, you can use the extra money to invest in reno-vations that put your personal stamp on your home. In addition to cus-tomization for additional enjoyment, those upgrades will also allow you to instantly add value to your home.
— Brandpoint
Choose a home you can easily make your own
LNP | LANCASTER, PA8 SEPTEMBER 18, 2016 FIRST-TIME HOMEBUYERS GUIDE
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