Watch For Old Numbers

If you’re buying a home and using cash or a conventional loan, there is no reason for you to read the rest of this, except for additional knowledge. If, however, you’re getting an FHA loan, there’s something new that you need to be aware of.

When a property goes under contract for buyers that are purchasing the home with FHA financing, the lender gets a HUD “case number”, which identifies the property to HUD for the FHA financing (Reminder: HUD stands for “Housing and Urban Development” and is in charge of FHA financing). However, if that transaction falls through without closing, that case number still exists for that property. Your lender will have to get that case number transferred to your transaction with your lender so that they can complete the FHA financing. In other words, an FHA/ HUD assigned case number stays with the property regardless of  whether or not the first transaction for FHA financing closes or not.

This is, in most cases, not a big deal. However, it is incumbent on cooperation between agents and lenders to get the case number and other documents relevant to FHA financing transferred to the new participants of the transaction.  Any appraisals or other FHA related items must be transferred from the old lender to the new one (if the lender has changed). The biggest effect of this on transactions we’ve seen with instances of this issue has been time, because the transfer of these documents and other items take several days to get done (and that’s WITH cooperative participants).

For more information, visit us on the web at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.

Going to the Specialist

Many real estate contracts, including the contracts used most commonly used by the Greater Springfield Board of REALTORS®, not only give the homeowners the right to a property inspection, but the added right to have a specialist inspect the house if the buyer would like. These specialist inspections are most likely going to be for components such as the furnace, air-conditioning, or roof. 


So why have a specialist’s inspection? Well, many inspectors will go through and do a property inspection, and make sure that there are certain things on certain components. However, they are very reluctant to identify specifically or diagnose a certain problem with a component without a specialist. This is no different than going to a doctor who examines symptoms before sending you to a specialist to actually diagnose and fix the problems.

However, we’ve noticed a trend in the last couple of years, where buyers have noted that they are going to have a specialist’s report, and either not had one or turned in the report to the listing agent after the five-day period. This is a bit dangerous because not having a specialists report or turning it in late means that the buyer is accepting that condition (furnace, air, roof), as if there was no specialists inspection needed at all. So make sure that if you say you’re going to have a specialist’s inspection, you get it completed and turned in within the 5-day period’s time.

For more information visit us on the web at www.springfieldfirsthome.com or simply call or text us at 417.872.9222.

A Reason to Talk to a Lender First

We recently encountered a couple considering their purchase of their first home. Like many other first time homebuyers, they hadn’t yet talked to a lender. When deciding on a certain house, THEN they decided to talk to a lender about whether or not they qualified. Now, this is a usual occurrence, but when they spoke with the lender, they found that one spouse had good income and good credit, but the other had a good income…and not so good credit. We’ll leave it to you to decide whether it was the husband or the wife that didn’t have very good credit, but nevertheless, they now have to decide whether or not to buy a less expensive home because of that lower credit score, or to wait until the credit situation is “cleaned up”. This story is not unusual, and it is a further example of why all buyers should meet with a lender and be preapproved before looking at homes that they may not be able to attain.

For more information, visit us on the web at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.

Out In the Country Part 3

To continue our series about buying your first home in the country, we need to discuss one big difference between buying a home in the city and buying a home in the country: the size of the lot, or the amount of land on which the house sits.

In a more suburban or rural setting, a buyer is much more likely to encounter a larger bit of land thab thay would in looking for a home in the city, Lots of 3 to 5 acres are common in these areas, abd a buyer needs to know what type of financing program they are using and how that fininacing program approaches properties with more acreage. Some financing progrmas dont allow andy extra acreage at all, and this will havean impact on whether or not you qualify for a loan. All buyers should be aware of the impact that this may have on their lending.

For more information, visit our cite at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.

Out in the Country Part Two

Continuing our series about buying a first home in the country, let’s talk about some “business”- septic inspections. 

Property out in the country doesn’t have the benefits of a city sewer system. So instead, it uses a septic tank to dispose of ‘waste’. It’s going to be important to both the buyer and the buyer’s lender that the septic system meets county and state guidelines for size and usefulness, and that it’s functioning properly. As part of your inspection, you should, and most lenders will require, an inspection of the septic system to make sure that it is properly functioning.

While we recommend these inspections, we do not necessarily recommend that the buyer be present for this inspection. A septic inspection is not always a great experience to witness, so don’t think that you need to be there to see the actual inspections. Just know that it is in fact an important thing to inspect.

State and county guidelines require that septic systems be of adequate size, and many counties have a rule of tank capacity per bedroom to make sure that the people living there do not overload the system. An overloaded system does not filter correctly, and so when the waste passes through the lateral system, over capacity does not allow it to process fully, and allows the waste to flow into the natural system without being processed. The county inspectors will also make sure that the flow rate of the system is proper for the size.

For more information, visit us at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.

Out In the Country

Since we’ve started this blog, we’ve talked a lot about buying a first home, primarily in the city. We were reminded recently that we shouldn’t forget the opportunities available for first time buyers out in the country, a little bit off the beaten path.

Buying your first home, in a suburban or rural setting, brings with it a few more issues, such as  septic tanks, wells, fences, and additional acreage, but there are as many reasons to buy in the country as there are anywhere else. And because some financing programs such as USDA are geared towards non-city areas, you may find an especially good deal out there. USDA doesn’t even require a down payment, so there’s even more incentive to get out of the city.

In the coming days we’ll talk about the additional potential issues for buying your first home in a more suburban or rural setting, but in the mean-time feel free to search for a home in your price range in this rural or suburban area and as usual we’ll be there to help in any way that we can.

For more information, visit our website at www.springfieldfirsthome.com ,or simply call or text us at 417.872.9222.

Are You Serious?

We were contacted by some buyers recently who would like to look at a house, but told us that they weren’t real sure just how serious they were about it at that point.

We understand that first time homebuyers (well, any homebuyers) have a process that they go through before they are totally ready and totally serious about buying a house. That process begins by just toying with the idea of moving or buying a home. That process then moves into looking online or driving by houses, and just considering the area or benefits that may come with buying a house in that location. Only after most homebuyers have started looking around and get a better idea of what they’re looking for, or they see a house that seems to meet their ideal of what their house should be like, do they really start getting serious about the purchasing process. Again, we understand this process.

Regardless of where you are in the decision making about buying your first home, just let us know that you want to go look at homes. Again, when you start seeing homes that meet your search criteria and can have a professional sit down and help you determine what you want- or more importantly, what you need-  in a home, then you can get serious about purchasing that home.

For more information about purchasing your first home, visit us at www.springfieldfirsthome.com, or simply call or text us at 417.872.9222.

Don't Call Me Earnest!

Many people want to know what earnest money is. What does it mean and what happens to it?

Earnest money is an initial “deposit” made by the buyer at the time he or she writes an offer on a property. There are really two purposes of earnest money all rolled into one big one. The first is to show or demonstrate to the seller that the buyer is in earnest in their offer, that they’re serious- the point being that the greater the amount of money, the more earnest they are in their offer. Therefore, if looking at two identical offers from two different buyers, the one with the larger amount of earnest money demonstrates higher likelihood to the seller that that particular buyer will close on the contract.  The second purpose of earnest money is to possibly provide the seller with funds that the seller can collect of the buyer defaults on a contract.

Earnest money is deposited in the escrow account of whoever the escrow agent is, usually the selling broker. The funds are held in this escrow account until it’s time for closing, when the escrow agent (again, usually the selling broker) writes a check to the title company. Or, if a contract doesn’t close, the funds are paid as directed by a release form to the contract. 

In cases where the buyer and the seller cannot agree who gets the earnest money, then the money is held for a period of time before being sent to the State Treasurer’s department. They are held there until either the parties agree, or the funds simply become property of the state.

As to whether or not the amount of earnest money- or earnest money at all- show that a buyer is in earnest or not, we can’t really argue. But for the most part, if the amount of earnest money is not such to cause somebody to seriously contemplate as to whether or not they will default on a contract or not, it is, in general, somewhat of an anachronism. Earnest money is, therefore, not required for a contract.

For more information on buying your first home, click here.  Or, simply call or text us at 417.872.9222.

Don't Forget Broadway

If you’re in the mood to look at older homes for your first home purchase, don’t overlook homes that are on Springfield’s north side, such as just north of Commercial Street along North Broadway, in an area called Woodland Heights, in the general area of Grant Beach Park and north from there. This great area is currently undergoing a great change as some of these older houses in Springfield have been remodeled or refurbished, and is just great for the most amounts of square feet for the price. This process which happens from time to time in areas of older homes, sometimes referred to as re-gentrification or redevelopment.

A good example of this can be found at 1421 North Broadway, for only $85,000. This house has over 1,600 square feet of living space, and has been refurbished to the point that it may look better now than it did back when it was first built in 1896! Some of the original glass and woodwork is still evident, it has all of the modern conveniences. Definitely one to see!

We’re glad that some of the homes that are rich in Springfield heritage are back on the market and in good shape, many reminiscent of the glory days of the past.  It’s just another great area of Springfield not to overlook when searching for your first home.

For most information on buying your first home, visit our website at www.springfieldfirsthome.com

Personal Property in a Transaction

Working with some buyers recently, we encountered sellers that had generously agreed, in their listing, to leave their washer and dryer as part of the transaction. They either didn’t want it anymore or didn’t want to move it, and the buyers thought that it was a great deal. A washer and dryer, basically free, when they purchased this new house.

There is an issue, however, with financing and the inclusion of personal property in the transaction. When using government financing such as FHA and VA, an appraiser will sign a value to that included personal property. In this case, if the appraiser decided that the washer and dryer were worth $500, this would have an impact on the loan amount that the lender could make under FHA financing.

For example, if the property value were $100,000; and then appraised for $100,000; the maximum loan under FHA financing would be 96.5% of this cost, which would be $96,500. However, with a $500 value on the washer and dryer, the underwriter must decrease the amount of maximum mortgage allowed, dollar per dollar, based on the value of the personal property. Thus making the maximum loan available $96,000 even, therefore increasing the down payment required for the buyers by $500.

The thought behind this is very reasonable once you stop to think about it. The bank/lender/FHA doesn’t want to lend money on personal property. The purpose on the loan is for the real property, and so they have to assume that part of the value in the transaction is the value of the personal property.

So, despite the fact that it sounds like a good deal, the value of personal property have a direct impact on the real estate transaction and the loan. Therefore, we discourage the inclusion of that type of personal property on a real estate contract.

For more information on buying your first home, visit www.springfieldfirsthome.com.

Watch the Line

In most cases, when traveling from one town to another there is a break between the towns, and this end of developed area usually also indicates the boundary between the school districts. However, keep aware on the west side of Springfield that West Bypass is generally the line between the Springfield school district and the Willard school district. This means that all of the development (including quite a bit of new development) on the West side of West Bypass, some still in the Springfield city limits, is actually in the Willard school district. Many of these houses are looked at by first time buyers.

This isn’t to say that one school district is better than the other. In fact, in the last few years, Willard has become very desirable, and has had an impact on property values in the area. Our only intent here is to make clear to other people that may not already know what the many people with homes on the western side of West Bypass are actually in the Willard school district. 

This line travels on west bypass from Sunshine to Nichols Street, and then varies somewhat east until you get to Farm Road 112, a little north of Kearny street. There are also some other areas, such as an area by Ashcroft Estates, that are within the Willard school district.

As usual, when needing more information, click here.   

A Friend InDEED

We’re aware that there are times when a prospected home-buyer learns that someone they know- a friend or family member- is preparing to sell a house. And so the question becomes, “Why can’t I just buy a house from my friend or family member? This will save us both money.” On the surface this doesn’t sound like a bad idea, and we would sound completely self-serving if we said that everybody all the time had to buy with a professional real estate brokerage. Sometimes that isn’t the case. That being said, there are three big things to consider before going down this particular road.

The first danger is getting personal feelings involved in real estate transactions, and there are two ways this can happen. One, a transaction could go bad. There could be some situation or issue come up that could cause hard feelings between you and your friend or family member for years to come. Nobody wants to lose a friend over a real estate transaction. The other way that this may cause a potential issue is if you made a bad real estate decision, or found yourself doing something that really wasn’t in your interest to spare the feelings of your friend or family member to avoid those hard feelings being created.

Secondly, there are issues that come up in a real estate transaction that most consumers don’t have the experience or knowledge to fix themselves. Shared driveway agreements, shared well agreements, title policy problems- all of these things are problems that real estate agents work with on almost a daily basis. So when they come up, it’s dealt with more smoothly by them. Also, a buyer and seller that are not real estate licensees might find themselves in a situation that they may not know how to get out of.

Finally, even before problems appear, there may be warning signs that a trained real estate agent knows to look for, or thinks to themselves, “I can take care of this now and save everybody a whole lot of time later.” Many times, with buyers and sellers themselves, they don’t see those warning signs, and then they’ve got problems.

So in conclusion, some people don’t need real estate agents involved in order to buy from a friend or family member. Most people do. In most real estate transactions, especially where financing is involved, you need someone who is familiar with all the various issues that can come up, look for the danger signs, fix them before they become a real problem, and someone who may act as an advocate for you, whatever the case may be.

For more information about buying your first home, visit us at www.springfieldfirsthome.com. Or call/text us at 417.872.9222.

One is Silver and the Other's Gold: New Construction vs. Older Homes

While we’ve extolled the virtues of new construction in this blog, we don’t want anyone to forget about older homes.

You know, older homes have a few advantages themselves. First, you may get more square footage for your money. Construction costs are higher for newer homes, as in plumbing features, fixtures, and amenities that were not available when older homes were built. You’ll also find bigger room sizes in older homes- room sizes which new construction simply can’t compete with. 

Also, a lot of older homes are in great locations- closer to commercial and entertainment districts. For example, University Heights in the area around Missouri State University and the Roundtree area around Springfield are much closer to downtown, campus, Glenstone, and South National, much closer than many places featuring only new construction.

So if you’re looking for a good value for your first home, don't forget about the houses that were built 30+ years ago. You may be pleasantly surprised at what you’ll find.