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Must-have features and resources for downsizing homebuyers

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Key insights

  • When it comes to planning for retirement, downsizers should look at more than just single-level living options.
  • As home prices continue to rise, some would-be downsizers may prefer to renovate their existing home. Programs are available to help with that.
  • Rising home values are great when you’re selling — but they mean your buying budget doesn’t stretch as far.

The youngest baby boomers are now in their late 50s and the mega-demographic continues to shape the American economy and the housing market. As boomers head into retirement, many remain unsure about their future housing.

Whether you’re planning to downsize in the next year or just want to learn more about what kind of features and resources exist for downsizers, here are insights you can use as you plan your second act.

Top features for downsizing homebuyers

For most downsizers, single-level living is at the top of the list. When you’re still in great shape, it may not seem like a huge deal to have your laundry setup in the basement or your bedroom on the second floor. But having to navigate steps several times a day eventually takes a toll on aching joints, so older homebuyers should look at ramblers or other one-level living options as they downsize.

Additionally, downsizers may want to consider these features:

  • Wider hallways that can accommodate walkers, wheelchairs or railings
  • An open floor plan
  • Carpet, rather than rugs (which tend to cause trip-ups)
  • At least one no-step entry into the house
  • Pull-down levers, rather than round doorknobs
  • A step-in shower, rather than a traditional bathtub
  • Pull-out kitchen drawers (rather than cabinets that make you bend and hunt)

Aging in place? Consider these modifications

If you’d prefer not to move from your current home, it’s smart to update your existing residence while you’re still feeling super-spry. It can be difficult to visualize your space completely reconfigured, but most homes can be updated to accommodate single-level living.

If you live in a rambler, you may have the simplest renovation plan of all. Make sure to move the laundry to the main floor, if it isn’t already — you can always convert a bedroom closet into a space for your washer and dryer, if another space isn’t immediately apparent.

If you live in a two-story with all the bedrooms on the top floor, you may have to get a bit more creative. Consider converting your traditional living room into a family room with a TV and repurposing the family room into your master bedroom. If your first floor only has a half bath, you’ll need to expand it to include showering capabilities and additional space.

Not sure you can afford to take on these renovations? In both Minnesota and Wisconsin, there are local programs that offer low-interest financing for homeowners who wish to improve the livability or efficiency of their homes.

Search loan programs in Minnesota.

Search loan programs in Wisconsin.

The affordability factor

Many would-be downsizers are surprised to see how much their home values have risen in the last decade. It’s welcome news as a seller, but it also means your buying budget may not go as far as you’d like.

Together, we can meet to analyze and discuss how much your home could sell for in today’s market, as well as the properties and communities that may best suit you as a buyer.

Getting started

Whether you’re seeking solutions for yourself or your aging relatives, reach out any time.

Condo buying: The step-by-step guide

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If you are thinking of buying a condo, but aren't sure which steps to take first, these steps can get you started. Here are insights into the three phases of buying a condominium.

Research and planning phase (4 steps)

1. Begin your search online

It's natural to wonder what kinds of condos are for sale in your desired area, so take some time to research the cost, condition and amenities of condos in the city or neighborhood where you hope to reside.

2. Hire a real estate agent

Before you get too far into the process, it’s important to hire a REALTOR® who can help you navigate everything from budget, to location, to the nitty-gritty details of securing a loan. Get in touch today and we’ll get you on the road to owning a condo.

3. Get pre-approved

Together, we’ll work with a mortgage consultant to get pre-approved on a loan. The pre-approval process is important because it can help you confidently determine your budget and begin looking at condos in earnest. Pre-approved buyers may also be preferred by sellers, as a pre-approval indicates that a lender is more likely to approve the deal.

Your lender can walk you through the details of the type of loan you’ll secure. While some first-time buyers prefer FHA loans, not all condo complexes accept FHA financing. By understanding the type of loan you qualify for early on, you can keep your search narrowed down to condos that are within your reach.

4. Determine your criteria and wish list

Condos can be a great, flexible living option for buyers who want their own space but don’t want to take on all the maintenance that comes with a single-family home. But condos can also have strict regulations and guidelines for residents, so you’ll want to be sure to weigh the mechanics of each condo complex as you tour them.

Prior to touring condos in person, brainstorm some upfront questions that might help you narrow down your search.

  • Does the building allow pets?
  • Are there designated areas for smoking?
  • Does the building have on-site security personnel, alarms, cameras or other safety features?
  • What are the condo HOA fees and what do they cover?
  • Will you be able to rent out the condo in the future?

Touring and selecting phase (4 steps)

5. Start scheduling showings

The real fun begins once you can start touring potential properties. Together, we can make a list of condos you want to see in person, then weigh the pros and cons of the condo unit and the complex’s amenities as you walk through.

Be sure to pay close attention to the cost of the HOA fees for each condo unit you tour; you may find that some condo fees go toward amenities that you don’t really care about. You can save money by selecting a condo with amenities and services that fit your lifestyle and priorities.

6. Do your due diligence on condos you tour

While it’s important to respect the privacy of the current condo owner (that means no snooping in their dresser drawers), you should also do your due diligence as you tour the condo. That means double checking:

  • Underneath rugs and behind furniture for potential damage or defects
  • That appliances have been well-cared for
  • The condition of built-ins or other fixtures
  • That the light switches, ceiling fans and garbage disposal work
  • For adequate water pressure

You may also wish to visit the condo at different times of the day or different days of the week. You’ll be able to get a feel for the community (and how busy the rooftop deck gets) by visiting on a Saturday afternoon or evening, but you may also want to see how bright the natural light is in the morning.

7. Make a strong offer

Once you’ve found the right property, it’s time to make an offer. We’ll strategize to determine a competitive bid and any contingencies you want to include.

Inspecting and closing phase (5 steps)

8. Apply for the loan and get the condo appraised

Once your offer is accepted, you’ll officially apply for your home mortgage loan. You’ll work with your mortgage consultant to file the paperwork and your lender will begin the approval process.

Getting a loan approved for a condo requires a slightly different process, as your lender will have to approve your application and the condo complex in which you hope to reside. Don’t worry — we have plenty of experience in this field and we’ll work together with your mortgage consultant to complete this important step.

Another important step in the lender approval process is the appraisal. Your mortgage consultant will order an appraisal to ensure that the property has sufficient value to support the loan you are seeking. In this step, an appraiser will assess everything from the condo unit’s location and condition, to the general upkeep of the condo community, to the recent sold prices of similar condos nearby.

9. Get the condo inspected

It’s also advised that you hire a home inspector who can check to ensure the property is safe and free from major issues like structural damage and plumbing and electrical issues. While an appraiser is in charge of verifying the value of a condo, an inspector’s role is to educate the buyer on issues that may factor into the current and future condition and valuation of the property.

10. Review relevant documentation from the HOA

In both Minnesota and Wisconsin, the condo seller is obligated to disclose a number of documents to the buyer before closing.

These documents include:

  • A map (also called a plat) that shows the exact location of your condo unit within the complex.
  • The declaration, which is a legally binding document that encompasses the rules of the complex and its usage, as well as the collection and enforcement of HOA dues. Declarations are more difficult to change than a rule or regulation because they require a vote of the unit owners and often require the consent of two-thirds or more of the owners.
  • The bylaws, which outline how the HOA is governed — including how many board members serve on the HOA and how they are elected.
  • The rules and regulations, which cover the remaining rules that are not “set in stone” within the declaration, but are nevertheless enforced across the complex.

While your inspection will help you understand the condition of your individual unit, these documents will shed light into the “health” of the condo complex and the HOA that governs it.

As you review the documents, pay special attention to:

  • The monthly condo fees that are charged by the HOA.
  • The HOA’s current budget (which includes the number of delinquent HOA fee payments from condo unit owners).
  • Projects the HOA is currently taking on and any projects they have approved for the future.
  • The responsibilities that the HOA takes on, vs. the responsibilities of the individual condo owners.
  • Any lawsuits the HOA is currently involved in.

It’s important to review this packet carefully, as you have only 10 days in Minnesota (or 5 business days in Wisconsin) to review it and revoke your purchase contract if you feel that the condo purchase is no longer the right fit.

11. Verify that the condo’s title can be transferred to you

It’s also important to verify that the condo seller is able to convey the condo unit free and clear of any title issues. Prior to closing, you’ll hire a title company to research the condo unit and its history of ownership, and to verify that the owner can deliver title to you free of any judgments, liens or other matters that may affect your full ownership rights.

Your lender will likely require that you purchase lender’s title insurance so their risk is minimized; most buyers purchase owner’s title insurance so they’re protected as well.

12. Attend your walk-through and closing

Once your loan is approved and the title research is complete, you’re ready for your final walk-through before the closing. Tour your condo unit one last time to ensure that nothing has been removed, replaced or damaged, then head to the closing where you’ll sign the final closing and loan documents and collect your keys.

Congrats! You’re a condo owner. Now, who’s helping you move in?

Ready to get started?

Whew. That’s a lot of information, right? If you’re ready to get started on the path to condo ownership, but need an expert to guide your way, reach out.

Can I sell my haunted house?

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Key insights:

  • Minnesota disclosure laws do not require sellers to disclose “perceived paranormal activity” to buyers.
  • Carbon monoxide leaks and electricity shorts can cause spooky occurrences in your home.
  • It can help to look into your home’s history to determine what is behind the slamming doors or drafty areas.

Have you ever felt a draft that can’t be explained, or watched a door in your house slam shut when you’re home alone? It’s more common than you think! According to the National Association of REALTORS®, 28% of surveyed Realtors said they’ve had to sell a home or help a buyer who believes that their current home is haunted.

But how does “perceived paranormal activity” affect the ability to sell a home? And are there ways to scientifically explain (and debunk) the spooky goings-on in your home? Let’s explore what you need to know if you are living in a house that seems haunted.

Do I have to tell a buyer if my house is haunted?

Per Minnesota’s disclosure laws, sellers must state if there are any “material facts” that could affect the buyers’ use or enjoyment of the property. One exception to this law is that home sellers do not have to disclose “perceived paranormal activity” to any homebuyers. This law was put into effect after a homeowner in New York sued when they found out they were about to buy a “haunted” house.

The short answer, then, is that you do not have to disclose to buyers that you believe your house is haunted.

Boom! Crash! What’s really causing that noise?

There’s a longstanding feud between scientists who believe they can explain away most paranormal activities and the so-called “ghost hunters” who spend their time communicating with the other side. While we’re a no-judgment zone, we do know that some drafts, sounds and light flashes can be explained logically.

Here are a few common causes for haunted house happenings:

Drafts: If your home has unexplained cold areas or the doors keep slamming shut, don’t immediately assume a ghost is upset you replaced her vintage door knocker. Check windows, doors and your chimney to ensure they are all properly sealed and see if the drafts vanish for good once the gaps are filled in.

Noises in the walls: Before you decide that the noises in your walls or attic are due to paranormal activity, put out traps or hire a professional to check for rodents, bats and squirrels. Even small critters can make deceivingly loud noises that are easy to mistake for an intruder or apparition.

Flickering lights: Whether your lights flicker on and off or the bulbs burn out quickly without explanation, consider hiring an electrician to check for electricity shorts in your home.

Orbs of light in photos: Do your photos tend to include orbs or flashes of light that don’t come from your interior lighting? Make sure that your camera lens is clean of dust, debris and hair particles. And if the orbs only show up occasionally, consider that it could be from floating particles in the air — which is especially common in attics, basements and other rooms that don’t get much traffic or routine cleaning.

Visions: If you suddenly start to have persistent visions of paranormal figures or scenes inside your house, be sure to check carbon monoxide levels immediately. After prolonged exposure, the toxic gas can lead to hallucinations that are even more dangerous than they appear.

What else can I do?

If logical explanations fail, consider doing some research on your home’s history. The property’s location and past owners may be able to help clarify what you are seeing and hearing. If it would give you peace of mind, you can also hire a paranormal team to assess the home.

Whether your home is haunted by ghosts, too many belongings… or you just want a fresh start, get in touch today.

Ask an Edina Realty Lawyer: How do I legally get rid of fall leaves?

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Homeownership can be complicated, but we also think it’s one of the most rewarding ventures out there. In our series, Ask an Edina Realty Lawyer, we are hoping to demystify some of the trickier aspects of buying, selling and owning a home.

In this edition, one of our lawyers discusses how homeowners can legally dispose of the leaf piles that are overtaking their yards.

Dear Edina Realty Legal,

Fall is here and I need to do something with all the leaves piling up in my yard. Can I burn them? Or push them into the street for the street sweeper?

Burning leaves used to be quite common, but many municipalities now ban or discourage leaf burning for a variety of reasons, including safety, air pollution and health impacts. That said, whether you can burn leaves or have the street sweeper take the leaves away depends on where you live. Most cities have adopted regulations regarding leaf disposal and leaf burning and even if you live outside the city limits, there are rules and regulations to consider. Let’s explore how to legally dispose of all those leaves overtaking your front and back yards.

The state law on leaf burning

The Minnesota Department of Natural Resources (MDNR) requires open burning permits for any fire that is more than three feet high and three feet in diameter, unless the ground is covered in three inches of snow or the fire is contained in an approved burner or similar device.

For Wisconsin residents, the Wisconsin Department of Natural Resources (WDNR) also offers burning permits; the need for an open burning permit is dependent upon the location of your proposed burn.

A permit will allow you to burn vegetative materials including grass, leaves and other brush. So if you do want to burn your fall leaf piles, you can obtain a permit from any MDNR Forestry office, fire warden, or through the MDNR's website. In Wisconsin, you can both determine if your location requires a permit and obtain a permit through the WDNR’s website or by visiting a WDNR office or an emergency fire warden.

Local regulations on leaf burning

Getting a permit may be just the first step to legally burning your leaves, though. You should also check with your local government authority to ensure you’re not breaking a local ordinance.

Many cities have adopted stricter regulations regarding open burning; cities from Edina to Aurora have outright prohibited leaf burning. And while open burning is likely acceptable (and quite common) in rural areas, you should still check your county, township, or village regulations if you reside outside city limits. You’ll also want to consider environmental impact as well as personal health and safety risks that can accompany leaf burning.

If I can’t burn my leaves, what are my disposal options?

If you cannot burn your leaves, can you rake them into the street and wait for the street sweeper to pick them up? Probably not.

While some cities, like Mankato, offer a leaf vacuum service for residents, most cities prohibit pushing leaves or other yard waste into the street; the buildup could have a potentially damaging impact on natural bodies of water and can plug sewer drains.

However, your garbage hauler may offer an easy (and affordable or free) yard waste pick-up service. Typically, the company will require you to bag up the leaves in a yard waste bag, then they pick it up curbside with your usual trash and recycling.

If that’s not an option, many local governments have yard waste disposal sites. Contact your local government authority to see if there is a disposal site nearby.

And of course, there are other ways to repurpose leaves! You can always consider getting into the world of composting, or using your leaves as mulch to protect your plants over our long Midwestern winters.

The Edina Realty Legal Department serves as in-house counsel for Edina Realty and does not represent private clients. This Insight is not intended to provide legal advice.

Is fall the best time to buy and sell a home?

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While you’ve undoubtedly heard about spring market frenzy, you may not know what to expect when buying or selling a home in the fall. Many find that buying and selling in autumn is less stressful and allows them to use the winter to build a feeling of home.

Here are insights you can use as you consider buying or selling a home in Minnesota or western Wisconsin this fall.

Something’s in the air

Before we get into the market numbers, let’s discuss what Edina Realty regional manager Marge Kane calls “the fall feeling.” Whether you’ve lived in the Midwest your whole life or recently moved here, you’ll notice that as the air and leaves get crisper, everything seems a little smoother than it did in the summer. (Even attending three soccer games on the weekend feels refreshing when you have a flannel blanket and a warm cup of coffee on the sidelines.)

Similarly, fall just feels like a great time to start over in a new home. “Many buyers have mentioned that they love moving into a new home in fall because it’s the right time for a fresh start. Plus, when you move in the fall, you get to spend your winter ‘nesting’ and really making a home your own. If you buy in the spring, you’re more likely to be outside and less likely to paint, decorate or organize for the long-term during those first few months of homeownership,” explains Kane.

Digging into the numbers

Fall may feel like the right time to move, but what do the housing market numbers say?

Annual national market trends show that since 1999, the most popular months for home sales are May, June, July and August; comparatively, November, December, January and February tend to be the slowest months for real estate activity, according to information published by the National Association of REALTORS®. Generally speaking, real estate activity moderates in autumn months as renters stay put and families with children avoid changing school districts mid-year.

While spring and summer are known as the peak times in the market, the housing market doesn’t hibernate when the leaves start to turn colors. In these more moderate sales months, motivated buyers and sellers tend to work toward straightforward, mutually beneficial transactions.

What fall sellers should expect

Sellers with homes under the $300,000 price point will likely still see a flurry of showings after they list, given the high demand for the limited inventory of homes for sale in this price point. Sellers with higher-priced homes should neither expect a bidding war nor lowball bids; in 2019, the average seller has recouped at least 97% of their original list price.

In the fall, open houses and showings are usually attended by serious buyers. This could mean that you see less in-person traffic than you would if you listed in April, but you’ll also host fewer “looky-loos” who are unlikely to make an offer. Selling in the fall could also mean a faster path to closing, as your buyers likely have a reason to be entering the market at this time and may be motivated to get settled before the holidays.

Remember, today’s buyers are discerning and have high standards. Sellers should work to build curb appeal and fix up the interior of their home to show pride of ownership before listing their homes for sale.

What fall buyers should expect

Above all, buyers can expect more buying power! Low, low interest rates make it a great time to be a buyer (the best time in years, in fact). If you were pre-approved for a loan before the interest rates fell in early August, you may want to ask your mortgage consultant to run the numbers again. Even a small dip in interest rates can lead to a boost in buying power.

Buyers who attend open houses will see that they are less crowded than in the spring and summer months. This could mean that you have less competition, or it could mean the competition is fierce with a small pool of equally motivated buyers. Reach out any time for insights on the inventory and desirability of your selected neighborhood and price point.

Should buyers be worried about a recession?

Would-be buyers may be wary as whispers of a potential recession grow louder. It’s important to remember that after the last market downturn, stricter mortgage standards were put into place to help ensure responsible borrowing and lending. When you apply for a mortgage, your mortgage consultant will help you understand how to build a responsible buying budget that takes into account your goals and retirement plans.

Last, unemployment is another factor that tends to help predict market shifts. For now, unemployment remains low in Minnesota and western Wisconsin.

Thinking of getting started?

As you can see, the fall is about more than pumpkin-flavored treats and bagging up that ever-growing leaf pile. If you’re thinking of buying a home or are ready to put your property on the market, reach out now to get started.

For even more insights on the process of home buying or selling, follow #BuyerInsights and #SellerInsights on Facebook, Instagram and Twitter.

Why isn’t anyone building starter homes?

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Key insights

  • Starter homes are in high demand, so why aren’t builders building less expensive homes?
  • In addition to land, labor and building materials, builders have to factor in regulatory fees when determining their developments.
  • High regulatory fees can also make it difficult for builders to add any new construction in the starter home price point.

The median home price of a Twin Cities single-family home rose to $285,000 in July — but many buyers are still hoping for a starter home in the low or mid-200’s. The competition in these lower price points is fierce, with buyers snapping up properties in days or even hours.

So why, even with the consistently growing demand for these lower-priced homes, are there so few new construction options for this demographic of buyers?

The short answer is that between materials, labor, land and required permits, many builders simply can’t afford to build anything in that price range. Let’s explore why.

The cost of building a new construction home

When building new construction, builders have to first consider the cost of land. Builders may purchase large plots of land, where they plan to put up communities with hundreds of homes. In other cases, they may buy a smaller plot of land with plans for just a few homes. As with any real estate transaction, plots closer to the city or with good commute potential tend to be more expensive than rural plots.

Builders must also take into consideration the materials and labor required to build each property. There are hundreds of tasks that must be completed for each home; builders hire contractors and specialists who complete everything from laying foundation to custom-building cabinets to wiring the home for electricity.

In recent years, builders have seen a labor shortage. Commercial and residential new construction has been rising steadily as the economy has gained steam, but many of the workers who left the industry during the recession have not returned to their previous line of work. With this labor shortage and (to a lesser extent) the rising costs of materials, a recent report featured in an article by MinnPost shows labor and materials costs in the Minneapolis metro area have gone up by a third since 2009.

And then there are the regulatory channels. In both Minnesota and Wisconsin, the builder needs to get a permit to build. They’ll also work with the natural resource department(s) to review potential issues related to stormwater, wetlands and watershed. They may also need to work with the park department to pay park fees or even build a new park for the community.

All of these costs add up, and in Minnesota, they can add up to between 20-30% of the total cost of a new construction home, according to the Star Tribune. In Wisconsin, the regulatory costs tend to make up less of the total cost.

The cost of building in Minnesota vs. Wisconsin

According to a recent study from Housing First Minnesota, a homebuyer purchasing a new construction home in Wisconsin could save tens of thousands of dollars over a homebuyer purchasing the exact same property in Minnesota.

From Kare 11 News:

“Housing First Minnesota partnered up for a study about this topic and broke down the estimated cost of a new house in Corcoran, Minnesota. The estimated construction cost is $182,000. The administrative costs that go into it were estimated at $56,000. The total cost of the home came in at $372,000.
“The study estimated the exact same build in the community of Hudson, Wisconsin and the total price was $43,000 cheaper, with the savings split between land and administrative costs.”

In other words, Wisconsin land tends to be cheaper and their regulatory fees are less expensive, too. Overall, it means that Wisconsin buyers may be able to access a wider variety of affordable housing options than Minnesota buyers.

Need to find a starter home?

We work every day to help buyers within every budget. We’re confident that we can help you find your dream home, whether it’s a stunning new construction property or an historic home with plenty of charm.Get in touch today to get started.

Homebuyer dictionary: Every term you need to know

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Buying a home is one of the biggest investments an individual can make. Whether you’re a first-time homebuyer or you’re preparing to re-enter the home buying market, there are many real estate terms to know.

For help keeping it all straight, refer to our homebuyer dictionary throughout your home buying journey.

Adjustable-rate mortgage (ARM)

Most homebuyers take out loans when purchasing a home. An adjustable-rate mortgage (ARM), typically has a lower interest rate at the beginning of the loan period. Depending on your specific loan, the initial rate can be locked in for a specific period of time. Then, once the introductory period is complete, the loan will readjust annually based on the market index.

Closing costs

Homebuyers and sellers both pay closing costs at the time of sale. For a buyer, closing costs usually include fees associated with the home loan, inspection, appraisal, taxes, homeowner’s insurance and title insurance. Buyer-related closing costs can range from 2 to 5% of the total home price.

In certain cases, a buyer may ask the seller to pay for some or all of their closing costs during the negotiation of the home sale.

“Comps”

Comparable sales, or “comps,” is a term used to describe homes of similar condition to the home you wish to buy. When you are determining how much to offer on a home, your REALTOR® may provide you with comps to help you determine a fair offer. Homes that are included in your comps will be nearby and of similar size and condition.

Conforming loan

A conforming loan is meant to meet (or conform to) standards that are established by Fannie Mae and Freddie Mac, which are two government-sponsored institutions that purchase and sell mortgages on the second market.

Conforming loans limit the borrowing amount a buyer can borrow. In Minnesota and Wisconsin, a single-family home loan must be under $484,350 to be considered a conforming loan. Multi-unit properties may have higher borrowing limits.

Conventional loan

Conventional loans are not guaranteed or insured by the federal government, and lenders minimize their risk by having more stringent standards for conventional loan borrowers. The minimum down payment for a conventional loan is 5%, but buyers are encouraged to make a down payment of 20% if they are able. There are two types of conventional loans, conforming loans and non-conforming loans.

Contingent

When searching for homes to buy, you may find some listed as contingent. A contingent property is under contract with another buyer. However, the final sale of the house is dependent, or contingent on certain conditions that must be met. If the conditions (including inspection, the buyer’s ability to obtain financing, appraisal) are not met, the home may come back on the market.

Credit score

Lenders evaluate the likelihood that you will repay your mortgage loan based partially on your credit score. A credit score is determined by your payment history, amount of debt, length of credit history and a variety of other factors. In general, a higher credit score will increase your chances at scoring the best loan terms. However, there are ways to get a mortgage with a low credit score.

Down payment

The down payment is a lump sum of money that buyers are required to pay when purchasing a home. It is a portion of the total home sale price that is paid out-of-pocket to seal the deal. Down payments typically range from 3% to 20%, or more, of the total selling price.

Down payment assistance programs

Down payment assistance programs are available to help individuals as they purchase a home. Various down payment programs exist, and each has different qualification guidelines. Typically, these programs include loan assistance, closing cost coverage and other financial support.

Escrow

Escrow is when a neutral third-party holds onto something of value for a predetermined amount of time. In Minnesota and Wisconsin, escrow is only used after you have purchased your home. If you financed your home, you will begin sending monthly payments to your lender. Your lender will collect your mortgage premium and interest, but they will also collect money to be paid out for your property taxes, homeowner’s insurance and mortgage insurance. Your lender will keep the extra money “in escrow” until the payments become due, then they will make these payments on your behalf. In addition, if there is work that needs to be done on the property (like the replacement of a roof), funds may be held in escrow to ensure that the work gets done.

FHA loan

The Federal Housing Administration grants FHA loans, or “helper” loans, for buyers who can afford a monthly mortgage payment but may struggle with other aspects of getting approved for a loan or who have limited funds to make a down payment. For this reason, FHA loans are great for first-time buyers. Keep in mind, FHA loans are a bit riskier for lenders to take on, so FHA borrowers will have extra expenses like mortgage insurance.

First-time homebuyer savings account

A first-time homebuyer savings account offers a tax incentive to individuals who are saving for a home purchase. In addition to the homebuyers, other people (like parents and grandparents) can contribute to the home savings account.

Fixed-rate mortgage

With a fixed-rate mortgage, your initial interest rate will not change over the life of the loan. This type of loan offers predictable monthly payments of principal and interest.

Homeowner’s insurance

Homeowner's insurance helps protect your property from natural disasters, theft and other unexpected circumstances. In most cases, your homeowners insurance premium will become a part of your monthly mortgage payment, along with your principal, interest and taxes.

Interest rate

Your interest rate is the monthly interest charged on your home mortgage loan. Interest is calculated as a percentage of your total loan balance. Depending on what kind of loan you have — fixed-rate mortgage or adjustable-rate mortgage (ARM) — your interest rate may stay the same or change over time.

Listing

When searching for a home to buy, your real estate agent may tell you that they are taking you to see a few listings. Listing is just another name for a home that’s been “listed” for sale and is available on the market.

Multiple listing service

Real estate agents post their active properties on the multiple listing service (MLS). This online resource allows agents to publish their active property listings so they can be found by other real estate agents and potential buyers. MLS listings offer information such as home prices, property details and photos.

When you search for homes on Edina Realty, you’ll see the most accurate search of active, available for-sale homes in Minnesota and western Wisconsin.

Mortgage

A mortgage is a document, signed by a borrower, that gives the lender a security interest in the property. The mortgage is recorded against the title to the property. If the borrower fails to make mortgage payments, the bank may foreclose on the mortgage and take ownership of the property.

Mortgage loan

A home mortgage loan is the amount of money you have borrowed from the bank to purchase your home. Typically, mortgage loans are paid back in 15 or 30-year terms.

The mortgage loan is primarily made up of principal and interest. In short, principal is the total balance of the loan and interest is the percentage of the loan that a homeowner pays their lender in exchange for borrowing money. Homeowners contribute monthly payments to pay off their mortgage loan.

Mortgage gift funds

A mortgage gift fund, also known as a down payment gift, is monetary help that close family and friends may offer homebuyers to afford the down payment of their home. Depending on the size of the mortgage gift fund, the money must be closely recorded and tracked throughout the home loan process.

Mortgage insurance

When buying a home, your lender may request that you pay mortgage insurance as part of your loan terms. This insurance protects the lender if for some reason you become unable to pay your monthly mortgage payment.

Pending

After most of the contingencies have been removed from a homebuyer’s initial offer, the home’s status will update to pending. A pending property indicates that the sale is moving forward toward closing. Usually, a pending sale only requires a financial contingency, title sign-off and final walk-through to be considered complete.

Pre-approval

When buying a home, you will need to submit an official mortgage application and documented financial history to your home loan lender. After the home loan lender validates your information, you will be pre-approved for a mortgage. With your pre-approval notice, you’ll also receive an estimate of the loan amount that you’ll be approved for, along with potential interest rates.

Pre-qualification

For a rough estimate of home loan options, buyers may choose to get pre-qualified for a loan. This is a less official step in comparison to pre-approval. However, you can get an idea of your buying power with a pre-qualification via automated online or phone questionnaires. Pre-qualification provides a general idea of what your home loan could be, and it should only be used for personal reference.

Principal

Your home mortgage loan is primarily made up of principal and interest. Principal is the outstanding balance of your mortgage. In other words, principal is the total amount of your home sale price, minus any payments you have made on its balance. This is separate from the interest you pay on your mortgage, which is a percentage paid in addition to the principal of your loan.

Realtor

When purchasing a home, you will likely work with a Realtor to find your ideal property. Realtors have even more qualifications than real estate agents. Realtors have pledged to follow the code of ethics established by the National Association of Realtors. This pledge is a strict commitment, indicating that the needs of the client will be put first. All Edina Realty agents are proud to be Realtors.

VA loan

VA loans are available to many military, veterans, reservists and National Guard members. Additionally, spouses of military members who died on active duty, or due to a disability or injury from military service, are also eligible to apply for VA loans. VA loans may provide short-term advantages and benefits for the entire life of the loan.

Ready to buy?

By now, you’re well-versed in buying terms. For additional help in the home purchase process, reach out today and we’ll get to work!

How do I choose the right size rug for a room?

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Key insights

  • Choosing the right rug for a space can be tricky if you don’t know the rules that interior designers live by.
  • In general, it’s best to size up if you’re between two different rug sizes.
  • It’s important to consider the size of your room and furniture when choosing a rug for a space.

Whether you’ve moved into a new house or have decided it’s time to spruce up your existing space, you may wonder what size rugs you should buy for a bedroom, dining room or living space. After all, the right rug can help define a space and give it the decorative boost it needs, but a too-small rug can actually make a room look smaller or more cluttered.

So, how do you find the right size rug for a room? To answer this, we interviewed Robin Strangis, American Society of Interior Designers member and interior designer at Loring Interiors in International Market Square. Let’s dive in!

When it comes to choosing a bedroom rug, you’ll need to consider the size of the room, bed and nightstands, says Strangis. “I always like it when the edges of the rug line up with the edges of the nightstand. It creates an enclosed area around where you sleep. And when you include the nightstands under your rug, it means that you’ll be stepping out of bed onto the rug. That’s ideal — you don’t want to step out of bed onto hardwood.”

When it comes to smaller bedrooms or kids’ bedrooms, the same rules apply. Strangis says that you can get away with a 5x7’ rug under a twin bed; it will enclose the bed and still (likely) leave some space for other bedroom furniture on adjacent walls.

Should the living room furniture all fit on the rug?

If the space is large enough, it’s best to have all the furniture on the living room rug. But that’s not a hard-and-fast rule, says Strangis.

“We used to have a rule, years ago, that a piece of furniture shouldn’t be half on and half off the rug in the living room. That’s no longer true. These days, if you have to move the rug so it’s halfway under the sofa, but it extends past the chairs in the same arrangement, that’s okay. That would be better than having the rug under the whole sofa, but the chairs not on it at all.”

What’s the right size rug for a dining room?

When selecting a dining room rug, consider pile height in addition to size, says Strangis.

“Ideally it’s nice to have a rug that’s 30 inches all around the table. That way, when you pull out your chair, it won’t catch on the end of the rug. But if you don’t have enough space for the chairs to stay on the rug as you pull back, then be sure to choose a low-pile height rather than a thicker, plush rug.”

Choosing rugs for an open floor plan

With the rise of open floor plans, rugs have become an important design element. They help to distinguish different spaces within the same larger room. But are there any faux-pas you should avoid when selecting rugs for an open floor plan?

“Remember that color is the unifying element,” says Strangis. “So if you have a living room open to a dining area, and you need rugs in both areas, you want to stay in the same general design character and to choose rugs with similar coloring. In other words, don’t select an ornate Oriental rug in the living room and then a tribal Tibetan rug in the adjacent dining room.”

It’s not impossible to play with different colors, textures or design styles in an open floor plan, though. If you do want two very different rugs incorporated into your house, consider putting one of them in a bedroom or study. Make sure each distinct style is separated by a wall or door.

Help! All my rugs are too small!

It’s common for people to move into larger homes and find that their previous rugs are too small for their new space. In that case, should they scrap the rugs altogether in the short-term, rather than putting a too-small rug in a larger room?

“It might be possible to change the placement of a too-small rug to make it work for a new, larger room,” says Strangis. “You could try putting the rug under and in front of a credenza or chest, instead of under the main seating area. But if you find that doesn’t work, it probably is better to exclude the rug until you can buy one that properly fits the space.”

Still not sure? Tape it out

If you’re still struggling with rug size selection, Strangis recommends this low-budget experiment:

“Get a roll of masking tape or painter’s tape and tape off the different sizes of rug you’re considering. This works best if you have the furniture in the room, so you can get a better sense of how it will all fit. But it can work in an empty room, too — a too-small rug will be pretty obvious.”

The last word of advice from Strangis is that if you’re in doubt, size up. A too-small rug will likely always look wrong, but a rug that’s just slightly bigger than needed will blend into the space over time.

Need to stage your home?

The right size rugs can help your home shine for buyers! Get in touch today to learn more about the benefits of staging and styling before a home goes on the market.

How do I know it’s the right time to refinance?

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Key insights:

  • As rates continue to drop, more and more borrowers are refinancing in 2019.
  • The average refinancer in June 2019 saved $171 a month after they refinanced their existing mortgage.
  • Everyone’s finances and loan terms are different, but there are simple charts that can help you determine if refinancing could be a smart move.

Why are homeowners refinancing in 2019?

Feel like everyone is talking about refinancing their mortgage? You’re not imagining it — as mortgage interest rates have continued to dip lower and lower, many homeowners are finding that they can save money by refinancing their mortgage to lower their interest rate.

But just how much is everyone saving? According to stats from the Mortgage Bankers Association, the typical refinancer in June 2019 saved $171 a month after refinancing their mortgage. (Get the details on their math here.) And since this article posted, rates were reduced even further, offering the potential for even greater savings.

Sounds pretty great, right? We think so, too. Let’s dive deeper into the numbers to help you assess if refinancing is right for you.

I bought when rates were low. Should I refinance?

Rates have been quite low over the last few years, so many recent buyers may wonder if refinancing will really help them. And while this is a better question for your mortgage consultant, who can evaluate your exact loan terms and finances, we can offer a bit of data to help guide you. (Reach out to get help finding the right mortgage consultant for you!)

This is what you should know: If 2018 was a good year for mortgage borrowers, 2019 has been a great year. Freddie Mac stats show that in 2018, the average interest rate for a 30-year fixed mortgage was 4.54%; as of August 1, 2019, rates for the same mortgage averaged 3.75%.

That means that even if you got the lowest rate when you bought last year, refinancing to a currently lower rate may save you money over time.

Wondering what your monthly payments could look like? Check below to find a mortgage loan amount comparable to yours, then compare how different interest rates affect what you owe in monthly principal and interest.

Note that green cells represent the average interest rate for 2018; cells in yellow represent the August 1, 2019 average of 3.75%.

Monthly Principal and Interest Payment1

Loan Amount

3.75%

4.000%

4.250%

4.500%

4.750%

5.00%

$250,000

$1,158

$1,194

$1,230

$1,267

$1,304

$1,342

$300,000

$1,389

$1,432

$1,476

$1,520

$1,565

$1,610

$350,000

$1,621

$1,671

$1,722

$1,773

1,826

$1,879

$400,000

$1,852

$1,910

$1,968

$2,027

$2,087

$2,147

What are my refinancing options?

Everyone has the same primary motivation when refinancing: to pay less in interest. But keep in mind that there are a few different ways to refinance, depending on your current financial situation.

Pay it off at the same pace. You don’t have to start fresh with another 30-year mortgage. If you’ve been in your home seven years, for example, you can request a 23-year loan. In the end, you’ll still pay off your loan in 30 total years. With a lower interest rate on your 23-year mortgage, you can either pay less each month or keep your payment the same to get ahead of your payment schedule.

Pay it off faster. When refinancing, you can also switch to a 15 or 20-year loan term. This will typically increase the amount due on the principal each month, but you’ll pay much less in interest over time.

If your primary goal is to lower your monthly payment, you can also restart your 30-year term. You may benefit from a lower monthly payment and lower interest rates, too. Over time, you can use the savings to help fund retirement or school tuition, or you can overpay your mortgage each month to get ahead of your payoff schedule.

How do I know if it’s the right time to refinance?

Your finances are as unique as your fingerprints, so the best way to know if you should refinance is to speak with a mortgage consultant about your current loan and rate, current and long-term financial goals, how long you plan to remain in your home and the best path forward for you.

Keep in mind, though, that the typical refinancer (as of June 2019) is saving more than $150 a month due to today’s low rates. They may not last forever so if you have a higher rate than what is offered today, be sure to reach out and we can get you on the path to refinancing with a certified mortgage consultant.

1. Mortgage amounts are based on 30-year fixed rate conforming loans with a 20% down payment. Interest rates are based on current market conditions, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables.
Examples are provided for educational and illustrative purposes only. The payment amounts do not include homeowners insurance or property taxes, which must be paid in addition to your loan payment. Your actual payment may be higher. This is an illustration and does not reflect your actual loan information, cost or the exact interest rate for which you may qualify. Please contact us for current interest rates. Your loan’s interest rate will depend upon the specific characteristics of the loan transaction and your credit profile up to the time of closing. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. If the down payment is less than 20%, mortgage insurance may be required and could increase the monthly payment and APR. Speak with your mortgage consultant for more information regarding the content contained on this page.
All first mortgage products are provided by Prosperity Home Mortgage, LLC dba Edina Realty Mortgage. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Licensed by the NJ Department of Banking and Insurance. Licensed by the Delaware State Bank Commissioner. Also licensed in AL, AR, AZ, CO, CT, DC, FL, GA, IL, IN, KS, KY, LA, MA, MD, MI, MN, MO, MS, MT, NC, ND, NE, NH, OH, OK, OR, PA, RI, SC, SD, TN, TX, VA, WA, WI, WV and WY.
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©2019 Prosperity Home Mortgage, LLC dba Edina Realty Mortgage. All Rights Reserved.

How to help elderly parents downsize or stay in their homes

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Key insights:

  • As parents and relatives age and become less independent, it’s important to proactively discuss their future living arrangements.
  • While decisions about aging can be emotionally taxing, removing some of the logistical concerns can help minimize the overall stress.
  • It may be important to set up a Power of Attorney (POA), which names a designated decision-maker in the event that your parent is unable to make their own choices.

Aging is hard on everyone, and there is perhaps nothing more stressful than trying to navigate the long-term living arrangements of your parents or other aging relatives and friends as they grow older and less independent. Whether you’re in the early stages or need to make decisions fast, here is a quick primer on how to legally navigate their living arrangements as they age.

Aging in place: Avoiding probate

If your parents plan to stay in their current residence, you may want to have an open conversation about what will happen to their house after they pass. Most couples own their home as “joint tenants,” which means that if one dies, the other spouse automatically has full ownership of the house. If the surviving spouse dies, transferring the house to an heir or selling it to someone might require going through probate, which can be a lengthy court process. There are ways to avoid probate. A common way is to create a trust and to transfer ownership of the house to the trust.

If your parents know who they want to have control over the property, then they might want to consider a Transfer on Death Deed. A Transfer on Death Deed automatically transfers the property to the chosen recipient and does not require them to go through probate to do it.

It’s important to note that in a Transfer on Death Deed:

  • The owner of the property can revoke the deed at any time prior to their death
  • The heirs have zero claim over the property while the current owner is still alive

In other words, it’s a straightforward, flexible document that could save everyone a lot of headaches in the long run. If you know your parents mean for you (or other siblings or heirs) to inherit the property after they pass, you may want to discuss setting up the deed with them.

Avoiding probate will be helpful, but there will still be complicated decisions regarding the home, especially if there are multiple heirs. Your entire family may find it helpful to set up a Power of Attorney document so that everyone knows who will sign legal papers and make final decisions when necessary. You may also want to contact an estate attorney to make sure all the bases are covered.

Moving on, on their own

If your parents are ready to move out and they want to handle the logistics of hiring a REALTOR® on their own, your role may be more supportive. Offer to help them get rid of the decades’ worth of belongings and to clean up the house before listing. Be sure to block off several days surrounding the move to help with the physical, last-minute logistics.

Of course, it’s possible that the decluttering is beyond what you can reasonably do without professional help. In that case, there are junk removal services that will do the work for you by clearing out boxes, appliances, mattresses and any other cumbersome items clogging up storage areas. Check out services like Junk King or 1-800-GOT-JUNK for help.

If they’re moving to a retirement community or another residence with a smaller footprint, there are services that can help them select important belongings to keep. Senior moving specialists like the folks at Gentle Transitions can pack their belongings up safely and set them up at their new residence so they can immediately move into a place they recognize as home.

Moving on, but in need of aid

If your parents or relatives are ready to move from their home but are unable to handle the logistics, it’s a smart time to set up a Power of Attorney (POA). A POA is a legal document that designates an adult to make decisions on behalf of another adult; these decisions can include financial decisions like selling a property. If the POA is “durable,” the authority to make decisions continues even if your parents are no longer competent to make decisions on their own.

It’s advised that the POA be granted to someone who is close enough to the individual that they can make informed, sensitive decisions about what is best for them. In some cases, the individual’s adult child may be the right choice for a POA and in others, it may be best for the POA to be a more distant relation or a family friend.

Setting up a Power of Attorney in Wisconsin or Minnesota
Each state has its own requirements for POAs and many have specific forms mandated by statute.

These forms must be signed in front of a notary public. It’s critical that the individual requesting the POA is of sound mind to consent; if they are deemed unable to consent, then the POA cannot be put into place.

Once the POA is in place, the newly designated POA can work with the individual to determine:

  • A moving timeline
  • The right Realtor for the job
  • Logistics, including decluttering or using a junk removal service
  • Their future residence

If your parents are unable to make decisions on their own

If your parent is not competent and has not given you POA, you can apply to the court for guardianship or conservatorship. If granted, you’ll be able to make decisions about their life and finances, including their property and possessions. This can be a painful and time-consuming process, so it’s best to get POA set up before you need to go down this path.

Need help navigating this tricky path?

We’d be honored to serve you as you work to respectfully transition your parents or other aging relatives. Get in touch any time for help, insights and resources.

Status Definitions

For sale: Properties which are available for showings and purchase

Active contingent: Properties which are available for showing but are under contract with another buyer

Pending: Properties which are under contract with a buyer and are no longer available for showings

Sold: Properties on which the sale has closed.

Coming soon: Properties which will be on the market soon and are not available for showings.

Contingent and Pending statuses may not be available for all listings