4 Hot Trends for Outdoor Spaces

4 Hot Trends for Outdoor Spaces

Regardless of its size, a home’s outdoor space should be a showpiece in a listing.

“This year it’s really about making your outdoor space function like an interior space for all things fun, lounging, and entertaining,” Gretchen Kennelly, a San Diego interior designer, told realtor.com®.

Designers offered up some of their trend insights to realtor.com® for homeowners or sellers trying to maximize a home’s outdoor potential, including:

Alternative flooring options

Outdoor rugs have been common in recent years, but more flooring options are emerging, such as porcelain. Porcelain is known as being durable and simple to install, which is adding to its popularity. “Porcelain pavers can create this beautiful transition without creating a huge divide between the two living spaces,” says Joe Raboine, national design and training specialist with Belgard. Ikea’s beechwood deck tiles are another way to enhance a patio or balcony’s flooring without spending a fortune, says designer Christina Harmon.

Vertical gardens

A garden can fit in any space outside; just go up instead of out. Vertical gardens maximize the available space by growing herbs and veggies upwards. Arbors, arches, pergolas, and gazebos can help enhance a vertical garden. “They’ll create the ambience of an outdoor garden ‘room’ and give a sense of height and depth to an otherwise small space,” Raboine says. Read more: The Hot Home Trend of Vertical Gardens

Attention-getting lighting

“This year is the time to brighten up the exterior of your home in unexpected ways,” Michael Amato, creative director at the Urban Electric Co., told realtor.com®. “If you have an all-white painted brick or stucco home, adding lighting in a fun color like blue with gold hardware creates interest. If your house is already painted a fun color, lighting presents a great opportunity to work in a contrasting color for a striking statement.” Hanging stringed Edison-styled bulbs along an outdoor space can create a festive flair to a backyard too.

Blues and greens

Deep blues and greens are on trend this season in outdoor spaces. Fabric cushions and umbrellas are showcasing the color. “This year, it’s all about outdoor spaces that feel luxurious rather than cheesy,” Harmon says. “Think lots of neutrals coupled with gorgeous jewel-toned greens and furniture and accessories that create a truly indoor-outdoor vibe.”

Source: “Outside Is the New Inside, and 7 More of the Year’s Biggest Outdoor Design Trends,” realtor.com® (May 9, 2018)

Lower Rates Do Little to Spur Loan Demand

Lower Rates Do Little to Spur Loan Demand

Mortgage rates dropped last week, but that didn’t seem to push homeowners or home buyers to take advantage. Total mortgage applications—for home purchases and refinances—dropped 0.4 percent for the week. Volume is now 6 percent lower than a year ago, the Mortgage Bankers Association reported Wednesday.

Refinance applications, which tend to be the most rate-sensitive, dropped 1 percent last week and are now 18 percent lower than a year ago. Mortgage rates were considerably lower a year ago when compared to today.

In what should be a prime time for home buying, mortgage applications for home purchases were essentially flat last week, dropping 0.2 percent. Home purchase applications are barely 3 percent higher than a year ago, the MBA reports.

Homeowners and home buyers are facing higher financing costs. Mortgage rates have been moving higher since the beginning of the year and were at their highest averages in more than four years last month. But last week rates offered some relief, with the 30-year fixed-rate mortgage falling slightly to 4.78 percent.

“Mortgage rates dipped slightly last week driven mainly by concerns about global growth,” says Joel Kan, an MBA economist. “The refinance index continued to slip and was at its lowest since 2008, as was the refinance share of applications.”

Source: “A Brief Respite for Interest Rates Fails to Spur Mortgage Applications,” CNBC (May 9, 2018)

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FHA Borrowers Get Help Funding Solar Panels

FHA Borrowers Get Help Funding Solar Panels

A growing number of lending programs are helping homeowners pay the upfront costs of solar panels. One lender, Guild Mortgage, an independent lender, recently announced a program that allows home buyers to lump the costs of solar panels into an FHA loan. California residents will be the first to have access to the program.

Guild Mortgage’s FHA Solar program follows Federal Housing Administration loan requirements and offers down payment options as low as 3.5 percent. The down payment is based on the purchase of the home before the panels are added into the cost of the mortgage. “This program will give more options to home buyers looking for solar because it gives them the flexibility to purchase panels and add them to any home they choose,” says Guild Mortgage President and CEO Mary Ann McGarry. “FHA Solar is ideal for individuals who are looking to buy a home that they plan to live in for several years and realize the return on their investment. It will also be attractive to customers who want to lower their monthly utility bill and have a greener footprint.”

David Battany, Guild Mortgage’s executive vice president of capital markets, says the data shows that an increasing number of people are searching for homes with solar installed and that the trend will likely continue. “Few lenders currently offer programs for the purchase of solar panels with a new home,” he says. “We see this as a great opportunity to serve the next generation of home buyers.”

Other programs are also available for financing solar, such as PACE loans. Also, some homeowners fund the purchase of solar panels through a second trust deed.

Source: Guild Mortgage

How to Prevent a Low Appraisal

How to Prevent a Low Appraisal

Many buyers are offering more than the asking price on properties undergoing bidding wars, but when the appraisal reveals the true market value of the home, they may find they’ve agreed to pay too much. Home sales commonly fall through when a property appraises for less than the price the buyer offers; the seller may be unwilling to accept a lower offer, and the buyer may decide the deal isn’t worth it.

Appraisal issues are still one of the most common causes of delayed settlements, according to March data from the REALTORS® Confidence Index. Real estate professionals report that appraisal issues delayed 19 percent of closings in March, which was the second most reported problem behind “issues related to obtaining financing.” Bankrate.com recently offered some tips for protecting your transactions from low appraisals.

Buyers likely will want to ask their lender to find an appraiser who works regularly in the county where they’re purchasing. Appraisers who know the area are less likely to evaluate properties based on flawed data. Buyer’s agents should be present during an appraisal appointment in order to provide the appraiser appropriate comps and explain any information that could be skewing the comps.

In some cases, sellers are being preemptive—getting an appraisal before listing their home and using that appraisal to set a realistic list price. If they’ve done this, they’ll want to give a copy of their prelisting appraisal to the buyer’s appraiser.

Also, remember that your clients can contest a low appraisal. The appraiser or a supervisor may consider taking into account any new or overlooked information when an appraisal has been questioned.

Source: “How to Avoid a Low Home Appraisal,” Bankrate.com (May 2, 2018)

Why Pre-approval Isn’t a Reliable Stop Gap

Why Pre-approval Isn’t a Reliable Stop Gap

It’s common advice for buyers to obtain a mortgage preapproval letter from a lender before going out with a real estate agent to look at homes. The rationale is that preapproval puts in writing the loan amount a buyer is qualified to receive, all but guaranteeing the price range the buyer can afford. Agents can then be reassured they are not wasting time on a client whose financing is likely to fall through.

Well, that’s flawed thinking.

A preapproval letter is not a loan commitment, which most real estate professionals understand. But equally important is that preapproval does not identify potential issues or “red flags” that may prevent a loan from closing. At best, a preapproval letter indicates that the lender is interested in providing financing to your client. At worst, it provides a false sense of security; it’s analogous to a purchase offer that contains a “Hubbard clause,” a condition that a buyer’s purchase is dependent upon their ability to sell another property. How many people would consider that type of scenario advantageous?

Preapproval does not take into account potential changes to a buyer’s financial situation, which could affect their loan offer. While a buyer may think their budget can easily support a down payment and monthly mortgage bills, a lender’s guidelines may show otherwise. If certain income or assets are not stable and continuous, then they are not considered verifiable. And if they are not verifiable, the lender removes the income or assets from the loan application—which frequently results in a loan denial.

This doesn’t mean there’s no value in requesting that your buyers obtain preapproval letters from their lenders. But it’s necessary to be aware of the red flags that lurk in the financial landscape of many buyers and to offer guidance on how to correct them. They may surface in credit reports, income documents, or asset account statements. And when they surface, they can be lethal to a real estate deal. The most common red flags include but are not limited to:

Credit Reports

• Disputed accounts
• Collection or judgment accounts
• Deferred student loans
• Late payments on installment loans

Income

• Recent changes in employment or job responsibilities
• Self-employed for less than 2 years
• Tax returns have Schedule E losses
• Tax returns reflect alimony payments
• Inconsistent history of supplemental income
• Base pay fluctuates from one pay period to another
• Gaps in employment

Assets

• Large cash deposits
• Insufficient funds to cover closing costs
• Insufficient funds to cover post-closing reserves

You’re not responsible for knowing when these red flags surface, and you shouldn’t be expected to resolve them for your clients. But you need to communicate to your customer why they are problematic for his or her mortgage application, as well as corrective steps. A key ingredient of your action plan should be to recommend a loan officer to your buyer who is willing and able to provide a “red flag analysis.” This analysis is a detailed, comprehensive disclosure that quantifies a buyer’s creditworthiness and his or her maximum purchase power. It is based on the client’s credit report and verifiable income and assets. Like a preapproval, the analysis is not a loan commitment; its value rests in eliminating the shortcomings of a preapproval letter, creating a positive environment for everyone.

Source: Capstone Mortgage Company