Most people fall victim to the belief that you can't build a house without the ability to obtain a construction loan, or without having deep pockets. However, there is a way! When you stumble across a builder who "finances" their own builds, this makes it all possible! This means that you can actually build a brand new home when you are using traditional financing such as USDA, FHA, VA, or Conventional loans. 

How is it possible?

It's quite simple actually - the builder is selling a final finished product, which the lender uses as the collateral to back the mortgage should the buyer default. With construction loans, there's no collateral to back the loan because the house has not been built yet. But when you build a home with a standard mortgage, the builder "finances" the build of the house by financing and/or purchasing the materials needed to build and pay subcontractors directly. It's very similar to buying an already existing home, but now you have the ability to build what you want rather than settling for what you don't want! 

What's the process?

When given the ability to compete against your own budget rather than other buyers for an existing home, you have more flexibility with what's possible. You also have more options for what can be done (within budget). While staying within your budget, you're given the ability to build your home rather than buying an existing home. When working with a builder who gives a buyer such flexibility, the buyer has the ability to pick the land, the style of house, and all other details that go into the building process! Obviously there are a lot of little details (that can also be major) that come into play when building - this is intended to be a general overview. 

The way it works is you find the land you want to build on, the builder buys the land and builds the house! All that is needed on the buyer's end is the pre-qualification/approval letter, and whatever deposit is agreed upon. From there, the lender begins the underwriting process while the builder begins the building process. Once the house is complete, the lender will send an appraiser to appraise the property and ensure it is 100% complete (or to whatever requirements the lender has, as these can vary). Afterwards, if everything looks good, the buyer and builder close on the property!

So the answer is yes, it's possible to build a new home using traditional financing. The key is to find the right builder!

If you're in the market for a home in New Hampshire, and you're interested in learning more about building a NEW construction home using a traditional mortgage - Contact us today!

Construction Loans vs. Mortgage Loans

When it comes to building a house, most people assume that you need to have deep pockets to obtain a construction loan. They're not wrong to assume that, as most builders do require cash installments, or a form of construction financing from a lender. Construction loans are available to anyone who meets the qualifying eligibility requirements.

So what is a construction loan, and how are they different from typical mortgage loans?

 A construction loan is used to finance the construction of homes, vacation homes, commercial buildings, offices, etc. Construction loans are different from traditional mortgage loans in a variety of ways:

1. Funds Due

The main difference is that with a Traditional Mortgage, the financed portion of the funds are provided all at once at the time of closing. On the other hand, a Construction Loan pays out a certain amount throughout specific stages of the build.  

2. Down Payment Amounts

Construction Loans typically require a larger down payment than traditional mortgage loans, and the interest rates tend to be higher as well. In addition, during the building process, the borrower is required to make interest only payments.

3. Length of Financing

Constructions loans place time frames on the building process, typically requiring that the project be complete within 12 months. Once the build is complete, the construction loan can be paid off in a variety of ways, depending on the term of the original loan. In some cases, construction loans are paid off with "end loans" which is another term for a mortgage. Or, the construction loan can also be paid off in full by the borrower once the build is complete.

This differs from regular mortgages because traditional loans vary in length (typically between 5-30 years) and are determined by the original loan terms. You also start paying monthly mortgage payments a month or two after closing. 

 

Why are those obtaining traditional mortgages usually unable to build a house?

This is because mortgages requires some sort of asset or collateral to back the loan. To explain further - a mortgage is used to finance the purchase of an existing home. This existing home is used as collateral should the borrower default on their loan. However, when building a home, there is no collateral since there is no existing home to secure the loan. This is why people believe they either need loads of cash, or, the ability to obtain a construction loan, if they want to buy a home.

Does this mean I can't build a home without having deep pockets or getting a construction loan?

NO! It is actually common to stumble across a few builders who do not require a specific type of financing to build from the ground up. That means building a house is possible when you're obtaining a typical mortgage financing such as USDA, FHA, VA, Conventional, etc. 

Contact us today to learn how we can help build your perfect home!

 

There's a lot of information about applying for a mortgage and becoming a first time homebuyer, so it can be hard to tell what's right and what's wrong. Even more, some common myths make homeownership seem scary and out of reach. So we're here to settle these myths once and for all! FYI, Myth #5 is our favorite....

MYTH #1: You need 20% down to buy a home. 

 

FALSE! This myth can make many people think twice about buying a home. 20% down used to be the norm, but there are so many other options these days. If you're able to put 20% down on your new home, great! Putting 20% down is the most financially beneficial option in the long run. But not everyone can afford to do that since 20% on a $300,000 home is $60,000 - a hefty sum of money! 

Nowadays, banks offer all sorts of loans with different interest rates and down payment options. Most of the time, if you don't put 20% down, you'll need to pay PMI (private mortgage insurance) which is a small percentage of your loan that you pay each year. Some banks will offer no PMI options, but you might pay a higher interest rate.

Check out a few low down mortgage options with no PMI:

• TD Right Step Mortgage - offers a down payment as little as 3% with no PMI
• Navy Federal - offers $0 down for members with NO PMI (you'll pay "points" on the loan instead - a small % tacked onto the entire loan); if you know a family member or friend who is a member at Navy Federal Credit Union, they can refer you to become a member.
• VA Loans 

 

MYTH #2: You only need money for a down payment. 

 

False! What many first time buyers don't know is that there are many costs associated with buying a home, and a down payment is just the beginning. When you buy a home, there are several other costs involved:

• Inspection Costs - The national average for an inspection cost is $336, but your realtor may know a few quality inspectors for a good deal, so be sure to look around and don't settle on the first one you find.
• Appraisal Fee - The average range is $300-550, but will ultimately depend on the condition and size of the home and property. 
• Closing Costs - These are typically 2-5% of the loan principal that you'll have to pay on closing day. Luckily, there is a way to lower what you have to pay out of pocket:
  • If you're trying to avoid paying closing costs on closing day, you can negotiate a deal with the sellers to have them help pay your closing costs.  
• Lender Fees - These fees vary by lender but may include: 
  • Application Fees - Averages between $300-$1000
  • Loan Origination Fees - Averages between 0.5% - 1% of the total loan
  • Underwriting Fees - Averages between $400-900
• Title Insurance - The average cost of title insurance is $1000 per policy, however, these vary by lender and can be found for much lower!

 

MYTH #3: You can only buy a home with a credit score of 700 or above. 

This myth turns many people off to the home buying process. Many people think they need an excellent credit score to even think about buying a home - but think again. 

Sure, a 700+ credit score will get you a good interest rate and loan. However, if you're below 700 (and we mean even sometimes well below), many banks will still give you a loan with certain stipulations (extra fees, higher interest rate, etc). Although you may still qualify for a loan, it's important to make sure that you can afford those extra stipulations set by the bank. 

If you have a steady income but feel your bad credit will get in the way, don't fret. Start doing your research on low credit loans offered to those who can prove a steady income, but have unfavorable credit due to past conditions or circumstances.

 

MYTH #4: All lenders are the same. 

This is very wrong! Many people think all lenders have the same rules and regulations when in fact, they're all different. While most mortgage processes are similar, each lender will have their own fees, protocol, guidelines, and rules. Huge corporate lenders often have too many applications to put in the time and effort to get to know each applicant, so it can be a less personal (and longer) experience. 

On the other hand, smaller and local lenders will provide a more personal experience, and inevitably a smoother, faster lending process. Do your research, ask your realtor, and make sure you're using a lender that fits all your needs. When you're looking for a lender, you'll want to find a lending agent you like who seems to fulfill all your request and needs as a home buyer. 

 

MYTH #5: You don't need an agent to buy a home. 

This one is the WORST myth! We promise you'll regret not using an agent to buy (or sell) a home.

An agent is a professional just like any other. Would you count on a google search to fix a broken leg? Probably not. Professionals exist for a reason - they're the best at what they do and they know the topic inside and out. Using a real estate agent is your way of putting trust in a professional in that field. 

A good agent will guide you through the entire home buying process and answer any questions you may have along the way. They find houses in your price range, with your wants/needs, but they also hold the key to some properties that aren't even on the market yet. Real estate agents can know about a home even before it hits the market, which may mean you can have access to an amazing home and property before anyone else!

Agents will also get you a better deal. Our agents know when they see a good deal and they know when they see a bad one. They know comps in the area and always have their buyers best interest at heart - so if you're looking for a good deal, they'll try to do whatever they can to make it possible! 

Agents also do a large bulk of the work for you, so you'll stress less and have more time to take care of what's important to you during the process. When using an agent, you develop a relationship with them and discuss your wants, needs, and goals for your future home. They're responsible for keeping an eye out on the market and contact you when one pops up. Without a realtor, you'll spend hours upon hours searching homes on the internet that may not even still be for sale. You see, websites like Zillow, etc often have listings up that are already under contract. That means an offer has been accepted on that house and it's not really still available. You may have to shop around for one, bu do yourself a favor and use a good, FULL-TIME realtor! 

Whether you're hosting guests or selling your home, curb appeal matters! A clean and inviting exterior makes guests (and potential buyers) feel warm and welcome.

Professional landscaping can be costly, but there are plenty of affordable ways to boost your home's curb appeal without breaking the bank.

Check out these 10 easy, budget-friendly ways to boost your home's curb appeal:

1. Light Up Your Gardens & Walkways

Dark homes feel uninviting. For a welcoming vibe, add some affordable landscape lighting! Line your walkways and/or gardens with solar powered landscape lights. You can find these at Home Depot for 6$ each (or less), and they're low maintenance and powered by the sun!

2. Refresh the Front Door

A new coat of paint on the font door can make all the difference, and shouldn't cost more than $25 to DIY! If you're feeling bold, choose a color to make the whole exterior pop.  Make sure to purchase quality outdoor paint to prevent chipping and protect from harsh weather. 

When choosing a door color, choose a few options and bring the swatches outside in the natural light (day & night) before you make your final decision. To ensure you love your color, grab a few sample colors and paint them on your door. Look at the colors in all sorts of outdoor lighting (daytime, night time, cloudy, sunny, etc). 

3. Add a Wreath

Wreaths are not just for Christmas! Adding a wreath to your door can make visitors feel more welcome, and there are many types of wreaths for all seasons. Some wreaths can be very expensive, but you can also make your own for cheap!

There are many affordable wreaths on Amazon.com. While most of these wreathes are bare, you can decorate them yourself with dollar store finds including: faux flowers, burlap ribbon, buttons, paint, seasonal decor, etc. 

Amazon Wreaths

4. Update Your Outdoor Lighting

Outdated lightening can make your whole exterior feed drab. Updating your lighting will add instant curb appeal, and it can be done for an affordable price! Home Depot has many budget-friendly lights - see below:

Home Depot Lighting

5. Add Seating

If you have a porch, add seating to make the space feel more cozy! You can find affordable outdoor chairs, side tables, and benches on Wayfair.com and Overstock.com. If you sign up for their website updates, they'll give you a 10-15% off coupon for your first purchase!

If you don't have a porch, try adding a bench in a garden nook, or near the front door. Add a few outdoor pillows for more pops of color!

6. Add a Welcome Mat

Add a decorative welcome mat to create an inviting vibe right when guests step up to your door! You can find several affordable, large welcome mats under $15 at Home Depot, Wayfair, Overstock, Walmart, and Target!

7. Add Potted Plants or Hanging Baskets

Adding potted plants will boost your curb appeal immediately! If you have a porch, add a few hanging baskets to fill in empty space, and add vibrant colors to your exterior without spending a ton of money (and time) planting in the ground!

8. Update Your House Numbers and Mailbox

This is one of the cheapest ways to give your exterior an upgrade. Adding a new mailbox will help make the exterior feel fresh and new. You can also find affordable outdoor numbers at Home Depot, or, check out Etsy.com for some home made address signs!

Etsy Address Signs

9. Add a Mini Mailbox Garden

This upgrade will add an extra boost to your new mailbox! First decide whether you want perennials or annuals. Perennial plants and flowers will come back each year and are low maintenance, but they're often less vibrant and colorful than annuals. Annuals are more maintenance, but you'll have more varieties and colors to choose from!

Perennials to Plant: 

• Lavender
• Verbenia
• Rosemary
• Hysopp
• Daylilies

Annuals to Plant:

• Geraniums
• Petunias
• Salvia
• Zinnia

10. Decorate for the Holidays

Everyone loves holiday decorations! A few adjustments to your outdoor decor during season changes and holidays will make your home a fan favorite in the neighborhood.

We mentioned changing up wreaths during seasons and holidays, but try adding a few other decorations: pumpkins, holiday signs, and of course, winter and Christmas decor! Need some holiday inspiration? Pinterest is the place to go!

As REALTORS®, we are often asked: What is a short sale? Should I buy a foreclosure? What is the MLS and why do I need to use it? So we put together a quick article to help you better understand some of these commonly-used real estate terms!

 

Check out the terms below for a quick definition and a few pros and cons:

1. SHORT SALE

A short sale is when the seller owes more on the mortgage than what the current market value is, or the sales price of the home when they are trying to sell. Short sales are sold for a price less than what is currently still owed on the mortgage by the previous owner. For sellers, a short sale is usually done to avoid a foreclosure.

Pros:

• Sellers can avoid a foreclosure, while buyers can get a great deal on a home!
• There is usually less competition with short sales than with foreclosures.

Cons:

• Short sale purchases can be a lengthy process and involve more paperwork than a normal sale.
• Special approval from lenders is required, adding to the lengthy process.
• The property is most likely sold as-is, which may mean the house is not in great condition. 

 

2. FORECLOSURE

A foreclosure is a home that is that the previous owner defaulted on (stopped paying their mortgage) and the bank took possession of the property. Similar to how a car gets repossessed if someone stops making payments. These properties are often in a wide range of conditions and historically take more time to close on with banks, lenders, etc. While there are risks with purchasing a foreclosed home, there is also an opportunity to own a home for a very affordable price!

Pros:

• Buyers can purchase below market value.
• Banks often willing to give financing.
• Higher return on your investment, as you re purchasing a home under market value
• There may be an option to purchase in a "pre-foreclosure stage" - purchase from the seller at an affordable price, instead of the bank, before the bank reposesses the home. 

Cons:

• Homes are sold As-Is, which can often mean the home has been neglected and not very well-maintained
• Investors love foreclosures, so there can be a lot of competition for these types of properties in a desired area.
• The process to purchase a foreclosure is usually a bit longer and requires more paperwork.

 

3. REVERSE MORTGAGE

A reverse mortgage is essentially a loan against the equity you've already built on your home. In other words, you can borrow from your home's equity. These types of mortgages are designated for the elderly who need cash, but do not want to, or cannot, sell their home. 

 

4. FOR SALE BY OWNER

A for sale by owner is a property that is being sold by the owner, without a real estate agent. In this scenario, most people think they can save a lot of money by not using an agent. However, what sellers don't know is that there are a lot of costs associated with selling your home, and agents can actually save you a lot of money AND time. There are also a lot of risks for the seller and buyer as they take on liability and don't know the legalities involved.

Food for thought - would you show up to court to represent yourself after googling "how to practice law?"

 

5. A "COMP"

A comp is a home that is comparable to the specific property you're looking to buy.  Comps include recently sold homes that are in the surrounding area and are similar in size, layout, condition and features as the home you're trying to buy (or sell). Finding comps helps sellers price their home accurately, and it also gives buyers an idea of what a home for sale is worth. 

 

6. THE MLS

All REALTORS® use the MLS, or Multiple Listing Service, which is the database that provides information on properties for sale. Every property that is listed in the MLS is given its own identification number. When a listing has been uploaded into the MLS database, the MLS then shares its data (the listing) with EVERY real estate website that allows you to search its properties.

 

7. MLS NUMER

Ever wonder why almost every home that is listed by a REALTOR has an MLS number? Every property that is uploaded into the MLS is given its own identification number, or MLS number, to organize and identify properties. When a property/home is purchased/sold, that MLS number is then considered "used up".

 

So, what's the best website to use to search available properties?

This answer is easy, it’s www.Keelerfamily.com 

In all seriousness, we are often asked what the best website is to search for available listings. In reality, all real estate websites use something called an IDX. Some IDX’s are better than others, but the IDX establishes a direct data connection between the MLS and the website using it. This allows you to search the MLS database on your website. It’s like using a search engine to help you sift through what you want to find on the Internet, but in this case, it's only properties.

Our IDX is ideal, and I like to consider keelerfamily.com the “GOOGLE” of real estate websites, but I could be bias!  

 

 

How to Own a Home for Cheap!

If you can not afford a home for hundreds of thousands of dollars, but you want to get out of your Mom’s basement, off your friend’s couch, or out of your stingy landlord’s apartment, you CAN!

Many people are scared away from purchasing a home because they are under the impression they are going to pay hundreds of thousands of dollars, when in reality they do not have to.

 

There are three main routes you can go to find affordable housing:

1) Location, Location, Location!

The first route one can go to find affordable housing is to look in locations where housing demand is low. In areas where there is a low demand for housing, the buyer often has leverage come negotiation, and can score a much better deal than in areas with high demand.

In low demand areas, homes are often priced for a lot less than in high demand areas. The Buyer can always ask for more money off the list price and negotiate a winning deal through their REALTOR®. To find these low demand areas you will need to rely on the knowledge and expertise of your REALTOR®. 

2. For the love of condos

The second route you can go to find affordable housing is by looking into condominiums. There are a plethora of condos that are under $200,000 and there are some under $100,000. When looking at condos in this price range, people often find that their mortgage payment is less or the same as their current rental payment.

Condos are also great for people that like the low maintenance requirements of a rental but want the benefits of homeownership. If you own a condo and you have a leaky faucet, you’re probably going to have to hire your own plumber to correct the issue, but your condo association often covers many other expenses. Depending on the condo, the association may maintain and upkeep the outside structure, the land, gardens, shrubberies, snow plowing, walkways, trash, common areas, pool, clubhouse, fitness center, and other amenities. Your REALTOR® will help identify what services and amenities the condo you are interested in comes with.

3) Manufactured Homes

The third and final route you can go to find affordable housing is to look into manufactured homes or what many people know as mobile homes. Manufactured homes come in many different shapes and sizes. People are often surprised by how nice many manufactured homes are and that many manufactured home parks come with many of the features of a condo.

In my practice of real estate, I have identified that most manufactured homes are located in a park where the home is owned but the land is leased. Like a condo, a manufactured home park may upkeep the park, the land, gardens, shrubberies, snow plowing, walkways, trash, common areas, pool, clubhouse, fitness center, and other amenities. Your REALTOR® can help you find wicked good deals on manufactured homes and can often do so for under $100,000.

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I love helping clients buy and sell real estate because in the transaction, one size does not fit all, making every transaction unique. Many buyers are challenged with finding affordable housing and are uninformed of their options because they are not working with a quality REALTOR®. There is a housing option for you, whether it is in an affordable area, in a condo, or in a manufactured home and it is our job to find it for you!

Warm Regards,

 

You are super-duper excited because you and your family have made the decision to find a new place you can call home. Yay! But before you make your big purchase, make sure you do not make these 3, all too common, homebuyer mistakes.

Mistake #1: Searching for your dream home before applying for a mortgage pre-approval.

You just concluded the most successful showing of your life and you know that this home is the one for you. You tell me “David, I want to buy this home!” You’re envisioning sipping some margs on that beautiful stone patio with the girls and taking a dip into that heated in-ground pool after a long day at work.

However, your dreams come to a screeching halt as I inform you an offer can’t be made. “What? Why?” you ask nervously. “I need a pre-approval letter from your lender. Have you called them yet?” I ask, already knowing your depressing answer. Your shoulders slouch forward and you raise your hand smacking yourself in the head knowing that your agent has told you to get pre-approved at least a thousand times (And he’s been counting).

Because of your negligence, the dream home of a lifetime falls under contract with another Buyer that is pre-approved and you’re going to have to find another home. This is not a good position to be in and you’re going to let everyone down, especially yourself.

If you are not pre-approved by a reputable mortgage lender you are simply a window shopper and not a real Buyer. When it comes time to submit an offer you have no ammunition to pull the trigger on that deal. Even worse, many Sellers won’t even let you in their home unless you can furnish a pre-approval letter.

So please, before we go look at homes, call your mortgage lender and get pre-approved!

Mistake #2: Assuming you need a 20% down payment or that your credit is not good enough.

Homeownership is one of the most rewarding feelings someone can have, but all too often I see people get robbed of their own dreams by assuming they need 20% down or assuming their credit is not good enough. Never assume these things when purchasing a home because, well, we all know the expression when someone assumes.

To give you some encouragement, I often see people who highly doubt their abilities to purchase real estate pleasantly surprised after speaking with a lender. Make the call to a few reputable mortgage lenders and the worse you’re going to hear is “no.”

Mistake #3: Waiting for the Unicorn.

As a master dealmaker, I will be the first to tell you that no one, ever, gets 100% of what they want in a home or in life. Why? Because here on Earth nothing is perfect and by accepting that reality you’re going to make it a lot easier on yourself when looking for a home.

Unless you have deep pockets to build a custom-built new construction home, you are probably going to purchase a home that you made a compromise on. For example, you come across a beautiful ocean-front property that’s priced to move but the kitchen does not have the exact cabinetry that you want.

You don’t have to purchase this home, but you may say to yourself “Wow, I love this home, I’m really digging the price, but I don’t like that ugly yellow cabinetry in the kitchen. Because everything else is on point, let’s submit an offer David, and later down the road, I’ll replace those awful kitchen cabinets.”

Being able to accept that nothing is perfect allows your mind to open up and see what you can do after purchasing the home to make it fit you and your needs just right. This is called potential. By waiting for the Unicorn property you will most likely never find the home you are looking for, many good homes will pass you by, and you’re going to end up tiring out and settling.

I know that after you read this article you are going to be more prepared than most Buyers out there which is going to make YOU more competitive in the market place. Sit down with your REALTOR and have a conversation with them to find a reputable mortgage lender for pre-approval and express to them your needs and wants, and explicitly distinguish the two. Once you do this, you have built a rock-solid foundation to begin your home search and I can not wait to see what you find!

Warmest regards,