This will begin a series of ten critical questions to ask when you are shopping for a mortgage. Just like a great REALTOR® can make all the difference in the world when it comes to finding, negotiating and closing on the home of your dreams, so to can a great lender/Loan Officer… and great REALTORS® usually know great lenders and Loan Officers.

For the last several years in Texas, home Buyers have been re-using surveys. That is to say, Buyers have accepted the Seller's property survey (which may even be from a previous Seller). Typically, this is done to save the cost of a new survey... which usually cost around $400 for a "normal" lot in a subdivision (i.e. could be more for acreage). However, when you're spending hundreds of thousands of dollars on a home, do you really want to scrimp on $400? No, and here's why...

A survey is how you can tell where your property boundaries, easements, and more items lie. More importantly, it's a tool you can use should a dispute over such items ever arise. For example, if a neighbor says that your fence, deck or even part of your home is on their property, it's hard to argue when you're using a survey that was done ages ago for a previous owners (and not you). And should you then decide to buy a new survey, only to find out that they are correct (oops), it's even harder to hold anyone accountable. You're certainly not going to be able to get any action from the surveyor if there were errors. Most surveys are copyrighted or protected and not (technically) allowed to be copied or transfered to new owners. So, you can't even really go after the old surveyor in court... that would be like trying to sue the manufacturer of the car that you stole from the dealer's lot. Be safe and get your own survey, or don't complain when you find out that part of your pool is in a utility easement and the power company can lawfully tear it up without repair. A new survey will show you the most up-to-date boundary lines, easements and more... and give you someone to hold accountable should they turn out to be incorrect.

There are many reasons why people get behind in their mortgage payments. Some of the most common have always included the loss of a job, bills associated with severe illness or injury, the death of a spouse or divorce. However, more recently we have seen a growing number of homeowners missing payments due to their adjustable rate mortgages (ARMs) simply doing what they should have been expected to to: adjusting. If these homeowners were properly educated during the buying process, and had good representation from a caring, professional Real Estate Agent and/or Mortgage Loan Officer, many would not have financed with ARMs in the first place... and of those that did, most would not be in a financial bind as they would have known what to expect. In actuality, many Americans bought homes with ARMs because these were the only loans that would allow them to qualify to purchase a home in the price range in which they were looking. In other words, in the last several years ARMs allowed many people to buy homes that they really couldn't afford with "normal" fixed loan rates. So, can you guess what happened when those ARMs started adjusting to rates at or above the fixed rates?

The idea of an ARM is simple enough. Your mortgage interest rate is fixed for a set period of time (i.e.  one year, six months, five years, three years, etc.). This "introductory rate" (or "teaser rate") is typically nice and low and expected to adjust, often upwards (unless mortgage rates are unusually high to begin with), hence the name "Adjustable Rate Mortgage". So, after the introductory period, the rate adjusts based on the terms of your ARM. How often it adjusts, and how much, are all determined by the terms of your loan/ARM and, typically, tied to an index like the LIBOR. The Federal Reserve has compiled good info. on ARMs here. There is nothing wrong with an ARM, as long as you know what you're getting into. For someone who wants a lower payment initially, but fully expects to be able to afford the home, even after adjustment, ARMs can work well. Situations calling for ARMs might include someone who plans to sell or refinance in just a few years, or a couple with one spouse raising the kids for the next few years then going back to work. However, things change and you really need to be able to afford the adjusted payment in case you can't refinance or sell (or that spouse can't find work).

The only real problem with ARMs was that, for the past several years, mortgage lenders were qualifying people based on the introductory rate, not what the rate would be after the loan started adjusting. Combine that with the housing boom in this country which saw a surge of new, uneducated/inexperienced Loan Officers and Real Estate Agents. Many of these newbies (and some not-so-new predators) only saw $$$ and didn't look out for what was best for their clients. That has since changed as lenders have been forced to qualify buyers on the ARMs post-adjustment rate and as home buyers, Real Estate Agents and Mortgage Loan Officers have become more educated about ARMs. A side note: hundreds of thousands of Real Estate Agents and Mortgage Loan Officers are predicted to leave the business this year. The exodus began as soon as as the red-hot housing market started to cool off. Back to our topic at hand though: ARMs still have their place, and can still prove valuable for some Buyers. Thankfully, gone are the days of unscrupulous salespeople just barely squeezing someone (financially) into a home with no regard for what would happen once their Adjustable Rate Mortgage started adjusting. Of course, life is cyclical and those days will certainly return for a whole new group of buyers. You can probably expect this in a decade or two, once the housing market is again flying too high and lending practices are again too relaxed.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

How much do you know about the company behind your Real Estate Agent? Generally speaking, Agents are independent contractors and you're really just hiring them, not their company (right?). Well, early in my real estate career I learned that the company behind the agent has a lot to do with their training, attitude and even their integrity. Plus, should you ever have a problem with the Agent you've hired, you may be turning to his or her office to get things set right. You see, technically, when you hired your agent you actually hired their broker... though you'll probably never be aware of this unless something goes wrong (and then it's too late). That's one of the reasons I chose to join Keller Williams Realty. From the company's beginning they chose to encourage a positive culture of integrity and honesty that today permeates most Keller Williams offices and agents. I could feel it in the air when I visited my office for the first time (versus several other firms I visited that just didn't have it... the culture). That positive culture fit right in with my business and personal beliefs and it can be summed up with the company-wide acronym WI4C2TS (pronounced "Why-Four-See-Two-Teas"). These initials stand for:

Win-Win - Or no deal
Integrity - Do the right thing
Customers - Always come first
Commitment - In all things
Communication - Seek first to understand
Creativity - Ideas before results
Teamwork - Together everyone achieves more
Trust - Begins with honesty
Successs - Results through people

If you read the brief paragraph about my business and personal beliefs it's pretty easy to see why I not only found Keller Williams a perfect fit, but why I have prospered in their environment. While the real estate world can be rough and full of questionable business people and practices, it's nice to work in a place full of positive, ethical people that are committed to doing the right thing. I can't speak to every agent and every office, but every Keller Williams class or event that I've been to, and every KW training material that I've ever read, has been right in line with WI4C2TS... and THAT's the kind of company you want behind your Real Estate Agent.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

A common question, especially for first-time Buyers, is "How much money do I need to buy a home?" The answer can vary widely depending on your job, credit, the mortgage market and more. Besides your down-payment, there are certain "Closing costs" associated with buying a home that, again, can vary widely. For example, while someone self-employed might need to put 5%-10% of the sales price down plus several grand in closing costs, not everyone who is "self-employed" does. In fact, most people (self-employed or not) can put as little as 2.25% down and .75% towards closing costs (and have the Sellers pay the rest). Better yet, there are still down-payment assistance programs that allow many Buyers to get into a home for anywhere from a just few hundred to a few thousand dollars. Many first-time Buyers think that they don't have enough money, or good enough credit, and they're simply wrong. If only they would check with someone who knows what they're talking about!  Bottom line: you need to talk with a knowledgeable mortgage lending professional who will let you know how much cash you'll need to purchase a home, how much home you can actually afford, which mortgage programs might work best for you, etc. If all you needed was $500 to buy your own home, wouldn't you want to know about it? Everyone's situation is unique, so don't go thinking that just because a friend you work with couldn't get a mortgage (or he was told that he needed $10K down) that you do too. Check with a pro. to see where you stand (it's FREE). Most good Real Estate Agents know a few good Mortgage Loan Officers (I know I do). Let me know if you would like some help in contacting one.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

Most Homeowners know that they can save some money on their property taxes, in most Texas counties, simply by filing a homestead exemption with the county appraisal district. However, some are simply not aware of the savings while others are just not aware that that they do not have the exemption for their current home. Basically, the exepmtion reduces the taxable value of your property for various property tax categories. How much you save and for what tax categories (city, school, county, etc.) will vary depending on your location and the county's appraised value for your home. Filing is easy enough as most counties have a one or two-page exemption form that can be turned in after you spend your first January 1st in the home. Everyone typically qualifies as long as they don't have a homestead exemption filed for another property/home. You can check to see if you have a homestead exemption on your property by calling your local county appraisal district or visiting their website (like www.CollinCAD.org). Home buyers are sometimes fooled by companies that mail them very "official" looking homstead exemption forms (which they offer to file for $25-$50). Do NOT be fooled by these companies. While some may actually file your exemption (and yes, others may not file at all), I am not aware of any counties local to the DFW area who actually charge for filing your homestead exemption. Basically, these companies make money from those who are not aware of how easy and how cheap (i.e. free) it is to file your homestead exemption. If you haven't double-checked your home with your local appraisal district, it's worth the two minutes it takes to look online.

Other local appraisal district websites:
www.DallasCAD.org
www.DentonCAD.org
www.RockwallCAD.com

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

"We're going to put our house on the market in the spring."

This is a favorite refrain for Sellers. Spring is thought by many Sellers (and even some Agents) to be a better time to sell a home. Plus, there's Spring cleaning going on and it's just before the kids get out of school and a Spring/Summer move is often desirable to both Buyers & Sellers. The "better time to sell" mentality generally equates with Spring being the "busy time" in real estate. While it is true that there are usually more Buyers in the Spring, and usually more homes sold during the Spring, what many Sellers don't think about is the increased competition (there are usually more homes on the market) every Spring. So, what I've been telling Sellers for years is that Spring, in the real estate market, starts in January. The premise for this reasoning is that you want to be on the market before there are lots of other homes, very similar to yours, also for sale. This doesn't mean that you don't need to make sure your home shows beautifully and is ready for sale. You still need to prepare it for sale and make it as close to a "model home" as possible (I always tell my Sellers to go visit a builder model if they want to see a home that sells). Hopefully, after all cleaning and repair projects are completed and the home is ready for showings, it will be a first-choice for those Buyers who don't yet have all the homes to choose from that they will in March (but couldn't wait 'till Spring to get out there and start looking at homes).

For those Sellers that are afraid homes are not selling right now, you might want to reconsider. I've sold over half of my listing inventory in the past couple of months; over the holidays and in the "dead" of winter (which wasn't dead at all for me and most of my clients). There are Real Estate Agents who "take the winter off" or consider it the "slow time" and so they slow down their efforts and spend more time with family or on another business. Interestingly, these tend to be the same Agents who feel that Spring is a better time to sell. Personally, I think these Agents fuel the fallacy that many Sellers have of winter being a bad time to sell a home. I do not subscribe to that school of thought. There are fewer homes on the market right now and the Buyers that are out there are more serious (fewer tire-kickers... it's not as fun to look at homes in the cold). I've never had a problem getting homes sold in the winter months. So, get that home ready to sell and on the market ASAP; the early bird gets the worm.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

Pre-owned home purchases are almost always preceded by an independent inspection by a state-licensed home inspector. However, new homes often get purchased with no such inspection performed. After all, do you really need an inspection on a brand new home that has a warranty, was built according to local, state and national building codes AND was inspected by code enforcement officials?

The short answer: Yes.
The long answer: Many people feel that they don't need an independent inspection because they're buying a brand new home. Builders will usually tell you they are not needed and a few will really try to discourage you from getting one. "We have our own independent inspections done" or "the city inspects every home" are the most common refrains. Inspections, after all, cause delays as they have to address any concerns found due to an inspection. Trouble is, new homes are built by humans... and almost never perfectly. Contractors, sub-contractors, day-laborers and more will often do work on a new home. Don't forget about the nosy neighbors, kids and potential buyers of similar homes in the neighborhood who will probably walk through the build site while the home is being constructed. Many times, work that was done correct by one contractor is undone or messed-up by someone else. Also, after something has passed the city or county code inspections (keep in mind, building code only sets MINIMUM standards), those things are almost never reviewed to see if someone messed-up work that was correct previously. Finally, sites are often not looked at that closely in the first place. If homes look pretty good in a subdivision by a certain construction manager, some may not get checked at all. Code enforcement officials are usually overworked and have LOTS of homes to inspect (and, of course, some are better than others).

If you're thinking your new home warranty will protect you, you're not completely safe there either. Home builder warranties generally just cover the home. Most state that, should something "break", the builder will only repair the home. What if a pipe was installed incorrectly or was damaged after being installed correctly and passing code enforcement inspection. Upon breaking, lets say your furniture, clothing or electronics were damaged. These items are usually not covered by the builder (and you better hope they are covered by your homeowners insurance). Even if nothing was damaged (or you got the personal items covered by your homeowners policy), it may take weeks to get repairs completed. Wouldn't it have been nice to know about that pipe before it broke? An independent inspection could have helped.

So, when do you get a new home inspected? The most important time is the pre-sheet-rock inspection. This is after all of the plumbing and electrical work is completed, but just prior to sheet-rock going up (which can cover-up any problems until it's too late). Other times (often part of a multi-phase inspection) include a pre-pour inspection (just before they pour the foundation and cover-up the plumbing and reinforcement rebar) and a final inspection after the home is completed (also great to do just before your initial "cover-all" warranty runs out). Ask a good real estate agent for the names of a good inspector. After all, what's a few hundred bucks in inspections to insure the largest purchase you've probably ever made is built correctly and built to last?

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

Having someone co-sign on a loan is a great way to get into a car or home if you don't have the credit score (or tax returns, for those self employed) to support a purchase. Not that co-signing is just done by Parents (anyone can co-sign), but Parents often co-sign loans for their kids. Be careful though... If you live in one of the nine community property states listed below, one-half of a married couple co-signing usually obligates both to the debt.
Nine Community Property States: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
You see, co-signing makes the co-signer (i.e. Mom & Dad) just as responsible for the debt as the main signer (i.e. Son or Daughter). So, if the co-signer is married, it makes their partner equally responsible. If payments are not made (or made late), it can adversely affect the credit of both the main signer and both co-signers. It is for this reason, the Federal Trade Commission has a web page specifically about co-signing. See it here:
http://www.ftc.gov/bcp/conline/pubs/credit/cosign.shtm

On a related topic, even though one-half of a married couple may be the one to qualify for a loan, and only the one name is on the loan paperwork, BOTH parties need to sign the sales contract in community property states. The reason: even though the wife (for example) may be the one who qualifies for the loan (i.e. makes the money and has good credit), the husband must also agree to buy the home because their assets will jointly pay for the home. Even if he's a stay-at-home Dad (i.e. no income), in community property states, courts have ruled that Mom wouldn't be able to work and pay for the home without Dad watching the kids, cleaning house, running errands, etc. So be careful... if you have a contract to sell your home to one party, and it turns out they have a "better-half", things could get messy if that spouse decides against the purchase (i.e. they never signed the contract and half of the funds to purchase, in theory, belong to them).

Back to the point at hand though (and a common related question): After Mom & Dad have co-signed, how do we get their names off the loan so that they are no longer liable? Well, the mortgage lienholder has three parties responsible for the loan (which is always better than one). So, they'll probably never remove anyone by choice. The best way to do this is to refinance the loan once the kiddo has improved their credit and/or established better income via subsequent tax returns. They can't say anything if you pay them in-full with a new loan in just the Son or Daughter's name. Of course, you could always try just asking your mortgage lender nicely to remove the co-signer... just listen carefully for the laughter.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

Time and time again, I run into homeowners who want to bring up a past appraisal when we talk about the value of their home. However, it is important to keep a two key questions in mind when you're talking about appraisals:

1. When was the appraisal done?
In a "normal" market, appraisals are generally considered inaccurate if more than a few months old. Certainly anything more than six months old is practically irrelevant. However, in more rapidly moving markets (whether prices are increasing or declining) an appraisal that's more than a few weeks old, let alone a few months, may be out of date. Appraisals are based on the prices comparable homes are selling for in the area around the subject property. So, each time another home sells near you, the value of your home is prone to change.
What does this mean to you? While you may have an appraisal that indicates a specific value for your property, if it's not VERY recent, it's not very accurate.

2. Why was the appraisal done?
Tax appraisal: I won't get into the details here, but while tax appraisals can vary widely, in North Texas they are often at or slightly below a property's true market value. That's not to say that they can't be high, but taxing authorities tend to shoot at or slightly below market value so that they don't get a fight from every single homeowner. That's right, Homeowners in most North Texas counties have the option to challenge their appraisals. So, when a neighborhood's appraisals are coming in high, some homeowners will challenge, others will not. This can make for widely varying tax values (some high, some low, some right on) all in the same neighborhood. However, I've seen entire neighborhoods sell for well above tax roll values while others have sold entirely for well below. Ultimately, this means that tax roll values have little, if any, significance when it comes to putting a true market value on your home.
Refinance and purchase appraisals: These tend to run a little on the high side, and this is generally due to homeowners (and their lenders/appraisers) trying to stretch every single dollar out of their prospective new loan. As lending guidelines tightened up recently, so too did have the values on these appraisals, but I still see them for more than a home would really sell for (almost an "if all the stars aligned perfectly" value for your home).
What does this mean to you? While neither of these are hard-and-fast rules about tax or refi/purchase appraisals, hopefully I've illustrated that these types of appraisals can vary depending on the reason they were performed.. so they are not generally the most accurate judge of true market value.

So how to you go about finding true market value?
Sites like www.Zillow.com claim to give a fairly accurate "Zestimate" of property values. However, reading the fine print for the Dallas area, I found an error margin of almost 9%! Obviously that's unacceptable as this could have you overpricing, or underpricing, your $200K home by around $18K! Ultimately, paying to get your own independent appraisal (letting a good Appraiser know that you need a true market value) is one smart way to go. However, most homeowners prefer to get a CMA (Comparative Market Analysis) by a great REALTOR® as part of their home sale preparations. Though most Real Estate Agents are not certified Appraisers, they are the ones out in the market helping buy and sell homes every day. A great agent can pinpoint the true market value for a property based on the most current market data (sales of nearby, comparable homes) and let you know where to price your home to insure a sale at that price within the time-frame you need. A good CMA can also be used as a tool to challenge your property tax appraisal (I've prepared them for many of my clients over the years). Let me know if you have any further questions on appraisals or CMAs. There's even free CMA request form right at the top of my website (www.CaveRealty.com). Just remember that a CMA value, like an appraisal value, changes with time. If you're thinking about selling in the near future, now (Winter) is a fine time to request a CMA to get an idea what you home is presently worth... but if you won't be Selling until the Summer, expect to need a new, revised CMA (or appraisal) come Spring.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

Isn't technology great? Today's Home Buyers can practically have direct access to the MLS (Multiple Listing Service) like a real estate agent does. This will show them all homes listed for sale by all real estate companies. Many agents initially feared this, worrying that if Buyers could access this information directly, why would they need an Agent? Good Agents embraced it, knowing that educated Buyers are almost always better to work with. As a top Real Estate Agent, I'm not in the business just to find & show homes... almost anyone can do that. I specialize in the entire process: from finding the right home, writing the first offer, negotiating the finer points of the deal (from price and terms to repairs and closing costs) all the way through closing and handing over the keys. There are LOTS of little steps along the way that my years of experience help me make smooth. So, I think it's GREAT to give Buyers access to the MLS... let them set-up their own search criteria, save their favorite properties, see all photos, etc. Most Real Estate Agent/company websites now have the ability for Buyers to search the MLS, some even allow you to save your search, favorite properties, etc. The Home Buyer's Scouting Report^® (HBSR) is simply more powerful, with a few more bells and whistles, than the "normal" home search tools you find on most websites. I ran across the HBSR when a preferred Mortgage Loan Officer asked if I had ever seen anything like it. I hadn't then and still have not to this day. Here's the description I put together from my own experience with the HBSR:

"The Home Buyer's Scouting Report^® allows you to search the entire MLS, similar to the way REALTORS^® find homes and properties for sale. There are over three million listings available, from thousands of real estate companies, across all 50 states! Find the most current property information available, see all pictures available from the MLS, save your search criteria, save your favorite properties and get e-mails of any new or changed listings that match your criteria... plus requests for showings and additional property information are just a click away."

If you haven't tried the Home Buyer's Scouting Report^®, you owe it to yourself to at least watch a demo and see what it's all about. Visit my website (www.CaveRealty.com) and click on the HBSR graphic in the middle of the home page. Or, visit www.IncredibleHomeSearch.com. Then, click on "View Demo". If not the HBSR, be sure you've found some home search tool that at least provides some of the great features available with the HBSR. I've been told by Buyers that, before they found me/the HBSR, they had similar functionality by combining a few different on-line search tools. The good news is that the HBSR is all of these tools in one place... there's no need to search multiple sites. Bottom line: My Buyers LOVE IT and that please me as a top Agent.

So, power to the people! Enjoy the MLS access and the process of becoming a more educated Home Buyer. I'll be here right here beside you to help put that education to it's best possible use in finding the perfect home for you and your family and take the deal all the way to closing/completion (and beyond).

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

First-time Buyers (or first-time investors) are sometimes hesitant "pull the trigger" or write a contract on a home because buying a home is, after all, a major financial decision. However, if you come upon a gem of a home, something you think might really work for you, your family or situation, don't hesitate and lose out. I can't tell you the times that a Buyer has decided to "sleep on it" for a few days only to find that another offer came in and that home is gone (under contract with another Buyer). Even in a Buyer's market, when there are lots of home on the market, the best ones don't generally stick around very long. Then, you're left with the memory of your favorite home and none of the others after that ever seem to match "the one that got away".

Luckily, in Texas when you write a contract to purchase a home there is generally an "Option Period" where Buyers can take a home off the market for a small "Option Fee" and seriously consider their purchase over the course of several days with the option to cancel their contract for any reason (read more here: http://www.realtown.com/ryancave/blog/transactions/optionmoney). Now I'm not suggesting that you go write a contract on every home you might be interested in, that could get expensive at around $100 per home. However, if you have a favorite and you want to "sleep on it", why not go ahead and write an offer? It will probably take a day or two for the Sellers to get back with you anyway (and often they will simply counter your offer). Worst case: They accept your offer and you pay your "Option Fee" and then can think more seriously about it while having the option to cancel at any time (but the home is yours if you want it, they can't sell it to someone else once it's under contract). Trust me, it's far better to risk around $100 than miss out on the home that would have worked so perfectly for you, your family, or your business aspirations.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com

In Texas, almost every real estate transaction requires a property survey showing boundary lines and the location of easements, fences, dwellings, structures, pools, etc. These are important as they can show where you might be allowed to build on to your home, patio, fence, back yard, etc. Also, they show if any of your current real property infringes on neighboring land (i.e. if your fence actually sits on your neighbor's lot). Most Buyers are happy to re-use the survey provided by the Sellers as it generally saves them somewhere around $375. The Sellers sign an affidavit stating that there have been no changes to the property since the survey was done except... (they fill in any changes and if not too great, the survey is often accepted by lender and title co.). However, there are some important issues that Buyers should be aware of when accepting a Seller's survey and affidavit. First, surveys are often copyrighted. This means that they may not be copied legally without the Surveyors permission. The Surveyors won't generally give permission, because they make their money by going out and doing new surveys and don't want to be liable if there are changes to the property not reflected on the old survey. There may be changes to the property that the Seller forgot about or "forgot" to mention. A Buyer has no recourse against the Surveyor who did a survey for the Sellers (they're using a Survey that they didn't pay for, after all). I generally recommend that my Buyers get a new survey if at all possible. When you're making what is often the biggest financial purchase in your life, you don't need to skimp on $375. This way, if a new neighbor says that your fence, pool, fountain, etc. is on their property, you can pull up your new survey and/or call your surveyor to quash the issue. For more information on the Texas Board of Professional Land Surveying, go here: http://www.txls.state.tx.us.

Ryan Cave, The "Caveman"
Truth, Honor & Personal Integrity
214-789-9366
www.CaveRealty.com