11 May 2023
By Kevin Gahagan

Should I Airbnb My Home?

Mortgage

Should I Airbnb My HouseOne of the main reasons people Airbnb their homes is to earn extra income. By renting out their homes to guests, hosts can earn money that can be used to pay bills, save for a vacation, or invest in their future. The decision to Airbnb your home ultimately depends on your personal circumstances and preferences.

Here are some factors to consider that can help you make an informed decision:

Legal Requirements: Before you decide to list your home on Airbnb, make sure you are legally allowed to do so in your area. Check your local regulations, zoning laws, and HOA rules to ensure that short-term rentals are permitted. Failure to comply with these regulations could result in legal penalties and fines.

Financial Considerations: Renting out your home on Airbnb can be a great way to earn extra income, but it’s important to consider the financial costs and benefits. Consider the amount of time and money you will need to spend to get your home ready for guests, such as cleaning fees and repairs. Also, consider the opportunity cost of not using your home during the rental period.

Property Management: If you’re planning to rent out your home while you’re away, it’s important to have someone who can manage the property and handle any issues that arise with guests. This may require hiring a property manager or cleaning service, which will add to your costs.

Increased Wear and Tear: Renting out your home on Airbnb can result in increased wear and tear on your property, which may require more frequent repairs and maintenance. This can be especially true if you have multiple guests staying in your home on a regular basis.

Safety and Security: Airbnb offers various safety features and guidelines to protect hosts and guests, but there are still risks associated with hosting strangers in your home. Make sure you have adequate insurance coverage and take necessary safety precautions, such as locking up valuables and installing smoke detectors and carbon monoxide detectors.

If you feel comfortable with the above considerations and believe that renting out your home on Airbnb is a good fit for you, then it could be a worthwhile decision. However, if you have any reservations or concerns, it may be best to explore other options for earning extra income.

10 May 2023
By Kevin Gahagan

What is Cash to Close?

Mortgage

What is Cash To Close“Cash to Close” refers to the total amount of money that a homebuyer needs to bring to the closing table to complete the purchase of a property. It includes the down payment, closing costs, and other fees associated with the home purchase.

How is it Calculated?

The cash to close amount is calculated by subtracting any applicable credits, such as earnest money or seller contributions, from the total amount of funds needed to complete the transaction. The resulting figure represents the final amount of cash that the buyer needs to bring to the closing.

It’s important for homebuyers to carefully review their “Cash to Close” statement before closing to ensure that they have enough funds available to cover the required amount. The statement will typically be provided by the lender or title company several days before the closing date.

The Difference Between Cash to Close and Closing Costs

Cash to close and closing costs are both important concepts in the home buying process, but they refer to different things.

Cash to close refers to the total amount of cash that a homebuyer needs to bring to the closing table to complete the purchase of a property. This includes the down payment, closing costs, prepaid expenses (such as property taxes and homeowners insurance), and any other fees associated with the home purchase.

Closing costs are the fees and expenses associated with obtaining a mortgage loan and closing the real estate transaction. They can include loan origination fees, appraisal fees, title search and insurance fees, attorney fees, and other charges. Closing costs are typically paid at the closing table, but they can sometimes be included in the mortgage loan amount.

Do I Need Actual Cash to Close?

While the term “Cash to Close” may suggest that you need to bring actual physical cash to the closing table, in reality, you typically do not need to bring cash. Most real estate transactions are settled using wire transfers, certified or cashier’s checks, or electronic transfers, rather than physical cash.

When you receive the “Cash to Close” statement, it will provide you with the total amount of funds needed to complete the transaction. You will then typically work with your lender and/or closing agent to arrange for the transfer of these funds to the appropriate parties.

It’s important to note that the exact payment methods and requirements may vary depending on the specific transaction and location. You should work closely with your lender and/or closing agent to ensure that you understand the payment process and have the necessary funds available in the appropriate form.

09 May 2023
By Kevin Gahagan

What Is A Mechanic’s Lien?

Mortgage

What is A Mechanics LienA mechanic’s lien is a legal claim placed on a property by a contractor, subcontractor, or supplier who has provided labor, materials, or equipment to improve the property. The lien serves as security for the payment of the debt owed to the party who provided the services or materials.

Mechanic’s liens are typically used in the construction industry, where contractors and subcontractors may perform work on a property and then have difficulty obtaining payment from the property owner. The lien provides the contractor with a legal means to collect payment for their work by placing a hold on the property until the debt is satisfied.

How a Mechanic Lien is Placed

To initiate a mechanic’s lien, the contractor or supplier must follow a specific set of procedures, which can vary depending on the jurisdiction. Generally, these procedures involve filing a notice of claim with the appropriate government office, notifying the property owner of the claim, and giving the owner an opportunity to dispute the claim.

If the claim is not disputed, the lien will remain on the property until the debt is paid. If the debt is not paid, the lien can be enforced through legal means, such as a foreclosure sale.

Reasons a Mechanic Lien Would be Placed

There are several reasons why a mechanic’s lien may be placed on a property:

  • Non-payment: The most common reason for placing a mechanic’s lien is non-payment. A contractor, subcontractor, or supplier may place a lien on the property if they have not been paid for their work, materials, or services.
  • Breach of contract: If a property owner breaches a contract by failing to pay for work that has been completed, a contractor or supplier may place a lien on the property.
  • Unpaid taxes or fees: Mechanic’s liens may also be placed on a property if the property owner has not paid property taxes, assessments, or other fees associated with the property.
  • Fraudulent or deceptive practices: In some cases, a mechanic’s lien may be placed on a property if the property owner engaged in fraudulent or deceptive practices, such as misrepresenting their financial position or misrepresenting the scope of the work that was required.
  • Dispute over work performed: Occasionally, a dispute may arise between a property owner and a contractor or supplier over the work that was performed. In such cases, a mechanic’s lien may be placed on the property as a way to resolve the dispute and secure payment for the work that was completed.

It is important to note that the laws surrounding mechanic’s liens can vary from state to state, and the specific reasons for placing a lien may also differ depending on the jurisdiction.

Mechanics’ liens can be complicated, and the laws surrounding them can vary from state to state. Therefore, it is recommended that contractors and property owners consult with an attorney who is familiar with the relevant laws in their jurisdiction.

08 May 2023
By Kevin Gahagan

What’s Ahead For Mortgage Rates This Week – May 8, 2023

Financial Reports

What's Ahead For Mortgage Rates This Week - May 8, 2023Last week’s economic news included reporting on construction spending, the Federal Reserve’s decision to raise its benchmark interest rate, and weekly readings on mortgage rates and jobless claims.

Construction Spending Increases in March

The Commerce Department reported that month-to-month construction spending rose by 0.30 percent and year-over-year construction spending increased by $1.83 trillion. Residential construction fell by -0.20 percent in March, which was the tenth consecutive monthly decline in residential construction spending. Non-residential construction spending rose by 0.70 percent in March for the ninth gain in the past 10 months.

Fed Raises Key Interest Rate Range

Federal Reserve policymakers raised the Fed’s key interest rate range by a quarter point to 5.00-5.25 percent at its Federal Open Market Committee meeting held on Tuesday and Wednesday. This was the tenth consecutive rate hike as the Fed continues efforts to control inflation.

Analysts noticed a subtle change in the tone of the Fed’s post-meeting statement and suggested that the less aggressive tone used in the post-meeting statement signaled a softer approach to raising the Fed’s benchmark rate. While some Fed policymakers recently suggested the possibility of a recession, Fed Chair Jerome Powell disagreed: “This is not my own most likely case.” Chair Powell also said that he expected economic growth in 2023 but at a slower pace.

Mortgage Rates Mixed, Jobless Claims Rise

Freddie Mac reported mixed movement of mortgage rates last week as the average rate for 30-year fixed-rate mortgages fell by four basis points to 6.39 percent. The average rate for 15-year fixed-rate mortgages rose by five basis points to 5.76  percent.

Initial jobless claims rose to 242,000 claims filed last week as compared to the prior week’s reading of  229,000 first-time claims filed. Continuing jobless claims fell with 1.81 million claims filed as compared to the prior week’s reading of 1.84 million claims filed.

What’s Ahead

This week’s scheduled economic news includes readings include readings on inflation and consumer sentiment. Weekly readings on mortgage rates and jobless claims will also be published.

05 May 2023
By Kevin Gahagan

5 Important Questions to Ask When Buying New Construction

Home Buyer Tips

Questions to Ask When Buying New ConstructionBuying a new home is exciting. Buying a brand new home can be even more so with the realization of being the first owner and possibly being able to choose your own layout and finishes. The prospect of owning new construction is definitely exciting, but it doesn’t come without its own set of questions.

If you’re in the market for a new home, and considering new construction, make note of the questions below when you begin your property search.

What Are The Long Term Plans For The Community?

Unless you’re looking at custom homes on acreage, it’s likely new construction in your area will be located in a new development or in a master planned community. With this in mind, feel free to ask about the plans for the community.

If it’s a large area, find out if any subdivisions are planned. If there are only a few houses built so far, it’s likely to mean lots of construction in the months to come – which means a lot of noise and construction traffic.

Also ask about the builder. If they’re well known and respected, it’s unlikely they’ll lose funding and the community will then continue on as planned.

What Are The Homeowners Association’s Rules And Regulations?

Many new developments and master planned communities come with a set of rules and regulations set by a homeowners association. If you’ve never lived in a community with an HOA, it’s important to find out the rules before investing in it.

The bylaws and the CC&Rs will let you know what is and isn’t allowed in the community (especially when it comes to the exterior of your home). You’ll also want to find out when the HOA fee begins – in some communities, it can start before the home is even finished.

Are There Any Buyer Or Financial Incentives?

If the community or development is still in the early stages, there might be incentives (like a buyer discount, builder upgrades or other financial incentives or freebies) for buyers.

Sometimes these offers come with a catch – where something is expected from the buyer in return for the incentive – but it’s important to ask about any offers that may be available, especially if the community is still up and coming.

Are Warranties Provided?

New homes often come with different warranties. Ask if a workmanship and structural warranty come with the home.

A workmanship warranty (or builder’s warranty) is a warranty for newly constructed homes that offer limited coverage on workmanship and components of the home like windows, siding, roofs, doors, plumbing, electrical and HVAC. Traditionally, a workmanship warranty will cover a one or two year period; another likely warranty is a structural warranty, which covers the structure of a home.

If a warranty is provided, make sure you know exactly what is and isn’t covered and how much you’re responsible for in case of any issues.

Can you connect me with some current homeowners?

Just as you would check reviews before buying an item online or booking a service, the same can be said for a home builder. Just because the product is a shiny new home doesn’t mean you shouldn’t do your due diligence and check references before making a large investment.

While it’s likely that the builder will provide glowing reviews, checking reference and review websites and even knocking on the doors of current homeowners will provide additional information and give you a wider understanding of the builder and its practices. Talking to current homeowners will provide information about the actual community.

New construction is exciting, but you want to make sure you have all pertinent information before you go through with a home purchase. Your real estate professional will be able to help navigate the waters of new construction.