New construction or moving into an established home? On the surface, new and shiny seems like the obviously answer. New builds are – well – new! You can customize the cabinets, the floor plans, new appliances… it all sounds great. BUT is it really the best choice? Today we’ll dive into the differences between new construction and existing home purchases and why you might choose one over the other.
The average residential resale value in Spokane for last month was a little more than $245,000, while the average cost for new construction homes on less than an acre was almost $370,000. That’s about a $125,000 price difference. It really adds up once you start adding the cost of upgrades or any fees that result in changing the floor plan. Plus there is much more opportunity for some negotiating when you’re buying an existing property. That option isn’t really available with new construction: it is what it is. You also have to consider the cost of adding fencing, landscaping, grass, etc. to new construction. That can tack on an additional $10,000 – plus time and effort.
Everyone knows there’s more to homeownership than just the listing price, though: repairs and renovations add up! That’s one nice thing about new construction. They are unlikely to need big repairs for several years and if they do? It’s typically covered under warranty. Plus renovations are few and far between, because you can do all that customizing when you are building!
New builds can take six to nine months to complete. This could be a positive or a negative, depending on your situation. You have more time to gather a down payment and there’s less competition…but you’re waiting almost a year for your home to finish. Once you find a home to buy on the resale route, you can move-in in about 30-45 days.
New construction is typically happening where there’s a lot of land…and that’s usually where there is a long commute. You’ll likely be on the outskirts of town, which is a HUGE draw to many people, but an equally big downfall for many others.
So to wrap up, existing homes give buyers more flexibility in cost and location, and you can move into them a whole lot faster. However, with new construction homes you won’t have to deal with repairs for awhile, you are typically further from the hubbub of the city and there’s more time to stockpile your down payment. You just need to look at all the variables and determine what’s best for you and your family.
So you’re starting the house hunt – or at least entertaining the prospect – and you’ve heard step one is getting pre-approved. Today we’ll dive into what “pre-approval” means, why it’s important and the documents a lender will likely need to make it happen.
What is a pre-approval?
First of all, pre-approval is a mortgage amount that a lender is saying 1) he or she is confident you have the ability to make the necessary down payment of X amount and 2) you have an income that can sufficiently cover mortgage payments for the pre-approval amount. It’s not a commitment or a guarantee to loan you that amount of money. Why? Because it still has to go through underwriting once you have an accepted offer. It’s the lender saying: “I am 99% sure they can qualify just fine for this amount and I have gotten to this number by checking into their financials.”
What will the lender need from me?
What financials are they talking about? Well you’ll need to provide income information, such as: a couple months of pay stubs, tax returns and W-2s from the last two years, bonuses, child support, etc. The lender will also need to see your other assets like bank account statements or investments. And finally, he or she will need to check out your credit score. Those are the basics, but they may ask for other documents or information to get you pre-approved.
Why do I have to get pre-approved?
So why is it so important to get pre-approved? First of all, in a competitive seller’s market like we have today, offers aren’t getting the time of day if you don’t supply a pre-approval letter. It proves the ability to purchase the home from a financial standpoint AND that you have done due diligence of getting pre-approved – so you’re serious about this! Plus, do it for your own sake. There isn’t much worse than falling in love with a house, deciding to make an offer for $250,000, only to find out you can only get a loan for $240,000. You might know you have amazing credit or the ability to make a large down payment, but it is so important to take this step early and make sure all your ducks are in a row.
Can’t I just get pre-qualified?
There is also a huge difference between getting pre-qualified and getting pre-approved. A quick 10 minute call with a lender, telling him or her that you “make X amount of money, can put Y amount down and your yearly expenses are Z” can get you pre-qualified. But that doesn’t hold very much weight with sellers. It’s more for your own information. Getting pre-approved will prove to be worthwhile.
How long does the process take?
The whole process of getting pre-approved can take about a week or two – depending on how long it takes you to get the documents together. So if you’re considering buying a home, get the process started early! It’s free, there’s no harm in it and the pre-approval will last for about three months.
If you’re looking for a lender to get started with, let me know. I have a couple tried-and-trues whose contact information I can gladly send your way. I promise they’ll help you out and make the whole process pretty painless!
So you’ve taken the big step and decided you’re ready to buy a house… now what? Today we’ll go through the steps of the buying process and what you can expect when buying a house.
Step one? You have to find an agent who you click with and who knows their stuff. First you’ll need to have a consultation with them. It’s a quick 30 to 45 minute meeting to go over your wants and needs for your new house. It’s a chance for you and the agent to get on the same page, you can ask them any questions you might have and they can get a better understanding of what your goals are and what’s important to you.
Next you need to get pre-approved. Your agent might have a preferred lender or a couple of lenders they’ve worked with and who are quite reliable. They can give you contact information for them, or if you have someone you’ve worked with in the past, feel free to use them as well! Don’t hesitate to contact a couple of lenders. You can chat with them, see who you’re most comfortable with and who you click with the most. Then you’ll work with them to get going on the pre-approval process. If you are able to get required documents to them quickly, they can likely get back to you in a day or two. However, it can take a whole lot longer if you drag your feet on getting them what they need: so make it happen soon! A lot of people say “I have great credit, I’m not worried about getting approved” or “I make good money. I know I can afford a payment of X.” That’s great, but more goes into it than that. Both credit and what you make are of course key factors, but lenders will go through all financials. Plus, GOOD lenders will chat with you about your comfort level of payment. Just because you can afford a $2,000/month payment, doesn’t mean that it won’t stretch you thin and cause a lot of stress in your life! Plus, pre-approval letters are requirements with offers (and some showings) in today’s market.
Now the fun part: looking at houses! A lot of buyers want to skip to this step, but it’s important you do the other two first and get your team set. Let’s be real: with social media and the internet, you’ve been looking at homes for much longer than when you contacted the agent or lender. But to physically get into those houses is a whole other story! I get it. I’ve had buyers who fall in love with the first house they see. They put in an offer and they get it! Then I’ve had buyers who have looked at 30 houses and it took 4 different offers until theirs was accepted. So this stage could go really fast or it could take awhile. It depends on your motivation level and what is out there.
From there on out, you put in an offer and once it gets accepted, you need to get an inspection and an appraisal. From the time you put in an offer on a house until it closes and it’s yours is typically anywhere between 30 and 45 days.
I’ve put together a handy packet that I give all of my potential buyers. It goes through this whole process with a bit more detail and expected timelines of each stage. If you’d like a copy, let me know and I can send one your way!
Once you decide to make the big step to purchase a new home, going inside prospective homes can really be an exciting time. However, it is important to make sure that you aren’t searching for a “Bigfoot.” I’m talking about that 100% perfect house, that checks every single one of your “wants,” and it’s at an amazing price. I’m here to tell you: it just doesn’t exist – unless you’re flexible. Here are some important things to keep in mind when starting the search to make sure you aren’t being unrealistic.
A lot of house hunting comes down to price. What kind of house does my budget afford? If you have been approved for a $250,000 mortgage, you can find a perfectly wonderful home. However, you will not find a home for $250,000 dollars that is 3,000 square feet, updated with gleaming hardwood floors throughout, brand-new stainless appliances, a huge backyard, new roof, air conditioning, and in one of Spokane’s most desirable neighborhoods. It’s just not going to happen. A big backyard and a minimum of 2,800 square feet might be non-negotiables for you – and that is completely doable. BUT it’s important to know that you will need to give a little in other areas to stick to your $250k budget. Perhaps the home is a little dated or the location might not be exactly where you ideally wish it were.
Stick to your budget
It might be easy to think: “oh, I’ll just go look at houses that are $300,000 and meet my criteria. That’s close enough!” But if you’ve been pre-approved for a $250,000 mortgage or that’s the price you’ve decided you are most comfortable at for monthly payments, you need to stick to that price range. You wouldn’t go test drive a 2019 Lamborghini when your budget only allows you to afford a Ford. I’m not knocking Fords! There are plenty of wonderful Fords, but don’t be testing out the Lamborghini’s or you’ll be bummed about the Ford. When you’re searching for your next home, it’s important to stay focused, and that includes being and staying within your realistic budget.
And finally, I suggest making a needs list and a wants list before you start searching. Needs are exactly that: non-negotiables; “I’m not buying the house unless it has X.” Needs tend to be things that are more difficult to change: location, square footage, lot size, whether there’s a basement or an attached garage, etc. Wants are “nice to have” items, but not deal-breakers: updated appliances, new carpet, number of bathrooms or bedrooms, landscaping, a pool. It’s okay to have a lot of items on your wants list, just don’t get too attached to them all and be willing to flex a little bit.
Buying a house takes time. And no house – even that perfect little rancher with the wrap-around porch and fenced-backyard that just came on the market yesterday! – is worth jumping into before you’re ready. Make sure you have all your ducks in a row, that you aren’t overextending yourself financially, and that your agent is on the same page as you…oh, and that you aren’t searching for a Bigfoot.
We’re revving up to head into winter in the Pacific Northwest. So today we’re checking out a couple winter activities around Spokane when you just need to get away (but not too far away) – besides just skiing and boarding!
What can warm you up better than a craft beer tour?! The Inland Northwest Ale Trail is a fun way to discover new, small batch beers from local craft breweries around town. There are almost 50 breweries on the handy Ale Trail map, so you can plan to hit up your favorites and some newbies! You can print off the Ale Trail map at inlandnwaletrail.com or pick one up at any of the participating breweries or sponsors. Then you’re off! Visit at least 12 breweries, get a stamp at each, and then collect your reward: a 32-ounce growler. There’s no time limit, so spend a couple weekends with friends, slowly collecting along the way!
Lake Coeur d’Alene Holiday Light Cruise
If you’re looking for something to really get you in the Christmas spirit, head to Lake Coeur d’alene and hop aboard the holiday light cruise! You’ll immediately be transported to gorgeous a winter wonderland. The boat will dock at the north pole about halfway through where the kiddos can go see elves, Mrs. Claus and of course Santa himself – who obviously knows all the kids names – and he’ll read out who made the cut on the nice list this year. Cruises start just after Thanksgiving and go through New Year’s Day. Good Morning America named the Coeur d’alene holiday light show as one of the nation’s best holiday destinations a few years ago, so you know it’s good! And while you’re in Coeur d’alene, check out some of the great shops and wonderful restaurants. You can definitely spend a full, joyous day here!
Okay, this might be cheating a little bit, because the primary focus here is skiing and snowboarding BUT I’m including it because those aren’t the only options there! There’s an indoor waterpark complete with a lazy river, surfing and of course water slides! If something a little more low key is your style, make sure to book a room at the adjacent hotel, where you can cozy up to the fireplace and relax with a good book! If you’d like to get on the mountain but skiing or boarding aren’t your thing, there’s a tubing hill that’s fun for all ages. You get to ride the gondola from downtown Kellogg to the top – which is a gorgeous activity on it’s own. Fun fact: that’s actually North America’s longest gondola – at 3.1 miles long. It was the world’s longest for a long time until it was topped by one in Turkey a few years back.
There are a lot of things to considering when moving, one of them being: where should I move to!? Here are the biggies that you should take into account when decide which area to move to.
Cost of living
Different areas within the same town typically have different price tags. For instance if you take a 1600-square foot, 3 bed, 2 bath house that is well-maintained and has some upgrades in the Shadle neighborhood and pick it up and plop it on the South Hill… the price is going to change. So what’s important in your house search? Are you looking for a lower price tag in a 1950s neighborhood? Or are you looking for old-school charm in a 1900s neighborhood?
According to Realtor.com, almost 75% of buyers say living in a good district is important to them. Of course this will come with a higher price, though. One thing to keep in mind is that real estate agents really can’t tell you if a school district is “good” or not. Due to the Fair Housing Act, agents can’t steer a buyer to or away from a neighborhood based on a buyer’s race, ethnicity, religion, gender, national origin, disability or family status. Because of that, we can’t say if a home is in a “good” or “bad” school district. The best I can do is give objective criteria, so school test scores and websites with more information…and you have to do the research yourself. For school stats, I recommend checking out greatschools.org or schooldigger.com. And if you see a house you love and are considering putting in an offer on? Schedule an appointment with the schools counselor. Do a walk through of the school. If your teenager is big into band? Ask the counselor about their program there! If they’re big into football? Ask to meet the coach! The school be able to help answer questions you have and then you can determine if the school is a good fit for you and your kiddos.
Along with the Fair Housing Act, agents cant say anything about crime in the area either. So if you ask the innocent question “is this a safe neighborhood?” or “what’s the neighborhood like?”, your agent can’t answer it, but he or she can point you to the right resources. The Spokane County Sheriff’s Office has a crime map with everything from car prowlings to robberies – just google Spokane County Regional Crime Map to find it. A few other sites are crimemapping.com and spotcrime.com. Plus, use your inspection period to visit the neighborhood during different times of the day. Just do a drive-around at night and you’ll get a feel for the neighborhood and if it’s a right fit for you.
Proximity to work and social activities
We’re lucky here in Spokane that the rush hour commute doesn’t typically tack on an additional 2 hours to our work day…each way. BUT it is incredibly convenient to be close to work, close to your gym, close to the kid’s club soccer facility, close to your parents. Wherever you find yourself driving to and from several times a week, it is helpful to be close.
Today’s lesson is homeowners insurance 101: what it is, why you need it for a mortgage and how much it is.
Homeowners insurance (also called home insurance or property insurance) covers several things:
- Property damage (pretty self-explanatory)
- Personal property loss (for example if your house is burglarized or damaged due to an event that’s covered by your insurance)
- Personal liability (if someone is hurt on your property or if you’re responsible for property damage or injury due to negligence)
What you receive in compensation completely depends on the damage done and the limits that are spelled out in your policy. When it comes to personal property, items like jewelry and cash on-hand typically have limits, but you can increase the limits with additional premiums.
So really, homeowners insurance is a safety net. If your house is damaged or completely destroyed, it can be difficult to make those costly repairs or possibly rebuild out-of-pocket.
Most states (like Washington) don’t require you to have homeowners insurance IF you own your home outright. However, if you are among the many who get a mortgage, your lender will require homeowners coverage. That’s because technically your mortgage company is part owner of the house and they need to protect its value.
As far as natural events go, standard insurance typically covers fire, wind, snow and sleet. A few natural events usually require additional coverage, such as flooding and earthquakes. That’s why if you live in a floodplain your lender will more than likely require additional coverage.
The cost of homeowners insurance is usually based upon the value of your property. Washington has one of the lowest rates in the nation. The national average is $1,288 while Washington’s average is $653. Spokane is right around $600. States prone to natural disasters (eg Florida, Oklahoma, Alabama) have premiums right around $3,000.
If you’re buying a new home and already have homeowners insurance through a provider with your current home, you can work with them to transfer coverage to your new house. If you don’t currently have homeowners insurance or if you’re a first time homebuyer, your lender can find and assign you one. I recommend doing some checking around with different companies and getting quotes. If your car insurance provider also provides homeowners insurance, you can bundle it and typically get a discounted price for both.
If you need to get setup with an insurance agent to chat with, let me know. I have a few recommendations that I can send your way.
Life just seems to slow down during fall time in the Pacific Northwest. Here are a few local day trips that are fun for the whole family:
It’s all about harvest time up at Green Bluff right now. Green Bluff is a grower’s association of about three dozen family farms (plus many more vendors and shops), sitting on 12 square miles just north of Spokane. You can pick your own produce, enjoy food from some of the best food trucks around, and experience all sorts of activities for the kiddos.
The Apple Festival is a huge draw. It’s every weekend in September and October, featuring every kind of apple imaginable available for picking, freshly-pressed cider, and of course caramel apples. Another big draw during the fall? The many pumpkin patches. Pick your perfect pumpkin, enjoy a hay ride and wait in a ridiculously long line for pumpkin donuts: it’s worth it!
Next up, take a couple hour trek to Sandpoint for the day! Known for gorgeous views of Lake Pend Oreille and Schweitzer Mountain, this can be a wonderful weekend getaway. It’s not quite skiing or boarding time, but you can still get active on the mountain by going for a hike or a bike ride. Plus, shopping in Downtown Sandpoint or the Sandpoint Shopping District won’t disappoint! If some down time is more your style, enjoy a beer at one of Sandpoint’s craft breweries.
Scenic Pend Oreille River Train
And finally: head to Newport to hop on a train! The Newport and Priest River Rotary Club runs a family-friendly scenic train ride that runs most weekends until the end of October. The Scenic Pend Oreille River Train heads along the Pend Oreille River, while the crew tells the history of the area: from Native Americans to fur trappers, gold rushers and gamblers. The trip’s about an hour and a half roundtrip. Make sure to book in advance, though, as there are only a couple weekends left! Tickets are $15 for children and seniors and $20 for adults. Head to SPORTtrainrides.com to check out available dates and book your tickets.
Some neighborhoods have this little thing called a homeowners association. Some people believe HOAs are a helpful organization to keep everything in the neighborhood uniform and looking its best. Others see them as an annoying $200-ish bill you have to pay to have someone tell you what you can’t do to your own property. Today we’re exploring what an HOA actually is, where your money usually goes, and what could happen if you were to stop paying the bill.
If you make an offer on a home that has an HOA in place, you’ll eventully get these papers called “covenants, conditions, and restrictions” or CC&Rs. When you sign on your house, you’re also signing off on these CC&Rs – promising to abide by them. It’s the HOA’s job to monitor homes and make sure everyone’s following the rules. Those CC&Rs can cover everything from the color of your house, to the type of fencing you can put up, and even the breed of your dog. They can require you to have a tree in your front yard or a certain type of curtains on street-facing windows. The goal of an HOA isn’t to be annoying or micromanage people, but just to make sure the neighborhood keeps its “look” – if you will.
HOAs also maintain common areas. For instance, if there’s a community swimming pool and the heater breaks…someone has to pay for that, and that’s where the HOA comes into play. Sometimes they hire out to maintain parks or plow the neighborhood’s streets, they may cover city service’s like water, sewer and garbage, or manage the neighborhood’s security system and gate.
Typically HOAs are about $100-200 a month, but they can be as low as $200 a year. The price typically depends on the services the HOA offers. Members of an HOA are usually charged a bit more than the monthly expenses, so that a reserve can be built up, in case of an emergency or big-ticket items.
If you get fed up with the HOA and start breaking rules or stop paying dues, you could get hit with a big fine, sued, a lien may be put on the home or it may even be foreclosed on.
HOAs aren’t for everyone. So before you make an offer on a home that has an HOA in place, look over those CC&Rs and make sure you are okay with everything your HOA will do and monitor.