Advice for Consumers

Welcome to the Advice for Consumers blog, where you'll find tips about buying, selling, and leasing property, and so much more.
  • New windows are an expensive investment, easily costing $300 to $1,000 per window, and most homebuyers don’t factor in window costs when searching for a new home. However, if you’re aware of what to look for when touring a home, you can spot windows that may need repair or replacement. Here are things to pay attention to: 1. Windows that are difficult to open and close. You might not be able to test every window in the house, but try some out. If you are unsure, you can ask permission.  2. Damage to window frames. Look for signs of water damage, rotted wood, or recently made repairs, both inside and outside.  3. Missing hardware. Most hardware can be replaced, including cranks for casement windows, but if the hardware is missing, it could be a sign that the window does not work properly.  4. Foggy double-pane windows. Condensation between the panes of glass means the seal has been broken and the energy efficiency of the window has been compromised.  5. Single-pane windows. This is a sign that the windows are fairly old and not very energy efficient. New double-pane windows are much more energy efficient.  Consider future maintenance when surveying the windows. Wood windows need to be scraped and painted every few years. If new windows are an option, there are number of low-maintenance models available, including vinyl, fiberglass, and composite, as well as wood windows where the wood is exposed inside but covered with vinyl or aluminum outside to protect it from the elements. If you get to the stage of the buying process where you visit the property with a home inspector, point out any concerns you have. While you may not have planned to spend money for window fixes as a new homeowner, you’ll benefit in the long run by having a more energy-efficient home. Fran J. Donegan writes on home improvement for Home Depot. Fran is a longtime DIY author and has written several books, including Paint Your Home. To review a number of window installation options, you can visit homedepot.com.

  • In Lehman’s Terms I saw a driver run a red light recently and it got me thinking about laws. There are laws that benefit our society, and laws that arguably do more harm than good. But what about laws that are just unnecessary? These unnecessary laws often seem to be among the most intrusive into our daily lives and lead to a lack of trust in our government. Nowhere is this truer than in Washington, D.C., where our federal government has reached new lows in public confidence. Laws with consequences Most unnecessary laws can be classified into a category I call the Laws of Unintended Consequences. Every day, private citizens must attempt to live and do business in a system that is fraught with layers upon layers of legislation that was passed with the best of intentions but ultimately collapsed thanks to unintended consequences. A great example of this was the attempt by Congress to respond to the 2008 financial crisis with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. An attempt at reform Dodd-Frank was a quick-fix congressional action designed to rein in Wall Street and squelch the actions of unscrupulous lenders to protect the consumer—certainly an honorable goal.  Except that the act created a bureaucratic quagmire of governmental regulations that add considerable cost to real estate transactions, delay closings, and prevent qualified homebuyers from obtaining the American Dream of homeownership. The regulatory authority of Dodd-Frank was ultimately turned over to half a dozen federal agencies and led to the creation of two new agencies, one of which is the Consumer Financial Protection Bureau. As an example of the challenges Dodd-Frank created, a CFPB initiative implemented last year has made it difficult for real estate professionals to obtain copies of their clients’ closing documents. This is a common practice that enables real estate agents and brokers to answer clients’ questions and look out for their best interests. After much lengthy outcry by real estate professionals and consumers, the CFPB is now considering reversing course and proposing updates to this unnecessary rule.      This relatively new agency has far-reaching supervisory powers over most financial institutions. And for the first time in history, a federal agency now has jurisdiction over many non-banking financial companies, including mortgage companies. To me, the worst part of the CFPB is that it operates outside the purview of Congress.  In Lehman’s terms, this means Congress created a superagency with significant enforcement powers to levy fines and penalties, but Congress has no oversight over the CFPB’s actions.  Most lawmakers agree that Dodd-Frank went too far and has actually hurt some of the consumers it was trying to help. Unfortunately, any repeal or reform efforts have been thwarted by congressional gridlock and partisan bickering. Fixing—and avoiding—the problem The Laws of Unintended Consequences are not limited to the federal government.  Just like at the federal level, repealing a state law is a difficult—if not impossible—proposition. The solution is something Texas lawmakers discovered decades ago, and no matter how much our state changes, lawmakers haven’t compromised this basic premise of lawmaking: The best way to avoid unintended consequences of laws is to not pass those laws in the first place. Texas does this by avoiding knee-jerk reactions to isolated and often minor events. Most state legislatures have followed the federal government model and now meet on an annual and almost full-time basis. The Texas Legislature meets only for 140 days every two years. This gives lawmakers plenty of time before session to slowly and deliberatively consider legislative intent of laws and the consequences of their actions. This system works, and it’s what makes Texas the free-enterprise envy of the nation. That is an intended consequence to be proud of. Mark Lehman is vice president of Governmental Affairs for the Texas Association of REALTORS®. 

  • It's tough out there right now for first-time homebuyers. Even though home sales are rising, the share of first-time buyers fell in 2015, according to data from the National Association of REALTORS®. Part of that is the difficulty of saving for a downpayment and strict financing requirements, but in many areas, the inventory of appealing, entry-level homes is limited. Where there is a dearth of updated or move-in-ready homes for first-time buyers, some will consider buying a fixer-upper. If that's you, make sure you know what your options are for financing the purchase and renovation of your first home. While using a traditional mortgage to purchase the home and financing the renovation separately is an option, there are loan products that combine the cost of the home and the renovation in one payment. The Federal Housing Administration's 203(k) program allows homebuyers to finance $5,000 to $35,000 in renovation costs as part of their mortgage. Many of the same rules and restrictions that apply to typical FHA-insured single-family residential mortgages also apply to 203(k) loans, but there may be more fees charged by the lender for additional services that are part of the 203(k) process. The value of the property must fall within FHA limits for the area, as well. With this program, the money is held in an escrow account and released as the work is completed. Like other FHA products, insurance is required throughout the life of the loan. Interested buyers can find a lender using HUD's online tool. While the 203(k) program is limited to primary residences, FannieMae's HomeStyle Renovation mortgages can be used for one-unit second homes or investment properties. HomeStyle mortgages are more like traditional mortgage products in terms of requirements for downpayments and private mortgage insurance, where mortgage insurance can be dropped after a set amount of equity in the home is reached. The amount buyers can borrow through the HomeStyle program depends on either the post-renovation value of the home as determined by an appraiser or the purchase price plus renovation costs, whichever is lesser. HomeStyle loans are also subject to conventional mortgage limits. Unlike the 203(k) program, there is no online tool to find a lender that deals in HomeStyle mortgages. Work with your lender and your Texas REALTOR® to get the property that's right for you. 

  • People from all walks of life want to move to Texas. According to the U.S. Census Bureau, the state is home to five of the nation’s fastest-growing cities, and the two largest metro areas in Texas gained more residents in the past year than any other metro area in the country. What does that mean for homebuyers? Competition. One way to increase your chances of getting the home you want is to know the mortgage process. Understanding different loan types and terms With loans, there is no right or wrong choice. Instead, look at each option as good, better, or best. You need to work with a lender who can explain all your options and the anticipated outcomes before you make a final decision. The lender should identify your wants and needs and educate you on what’s available. Mortgage rates have been near or at all-time lows, so see if you can lock in that low interest rate for the term of the loan—regardless of whether it’s a 15-, 20-, or 30-year mortgage. If your lender suggests an adjustable rate mortgage (ARM), make sure you known how the “adjustable” component affects the loan. ARMs have benefits, but the overall savings on an ARM are not usually significant enough to offset the risk of mortgage-rate uncertainty. You could also save money by selecting a shorter term, such as a 15-year mortgage, but the payments will be higher. You’ve identified the best loan … now what? You’ve picked the loan product, but don’t jump into the home search yet. First, seek preapproval for the loan. Remember, competition is fierce, and working with a lender to underwrite your file for preapproval will allow you to quickly submit a concrete offer. This is a competitive edge because it shaves weeks off the processing time, which is appealing for the seller. In addition to getting preapproved for your loan, another way to make your transaction go smoothly is to work with a REALTOR®. No one understands your real estate market or the process of buying property as well as your Texas REALTOR®. Don’t forget to enjoy the experience The homebuying experience is sometimes described as confusing and stressful. It should really be one of the most exciting times in your life. Make no mistake, the process can be overwhelming, but that does not mean it can’t be enjoyable. Work with trusted partners that will educate you and make this a memorable event and provide a sense of accomplishment that comes from realizing the American dream of homeownership. A native Texan, Jason Dickson is Texas regional manager for Churchill Mortgage, a prominent and financially sound leader in the mortgage industry, providing conventional, FHA, VA, and USDA residential mortgages across 36 states.

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