What makes a good real estate agent for home buyers?

Your real estate agent is one of the most important players in the purchase process when it comes to sticking to your budget and narrowing down your home search. It’s a big job, so make sure it’s a good fit before you commit. As a buyer, your agent should have:

1. In-depth knowledge of the local area
2. A track record of closing quickly, for less than the asking price
3. Clear communication expectations
4. Strong negotiation skills

1. In-depth knowledge of the local area

Much of the housing market varies by location, even down to the street you might be living on. If your real estate agent doesn’t know the area well, they might not be able to negotiate your price based on comparable homes in the same market.

2. Track record of closing quickly, for less than the asking price

To avoid going over your budget, you’ll want a real estate agent who has a proven track record of negotiating a lower final price than what the seller initially asked for. Ideally, they also close quickly. After all, saving money is less satisfying when it keeps you from moving into your new home sooner.

3. Clear communication expectations

We think this is a good rule for any relationship—but we’re not here to talk about your love life. From the start, let your real estate agent know how you’d prefer to be contacted, how often, and when you’re typically available. If there’s a disconnect between what you’re comfortable with and how they operate, they might not be the right agent for you.

4. Strong real estate negotiating skills

The last thing you want is a real estate agent who doesn’t go to bat for you. In addition to researching their online reviews, refer to this real estate negotiating checklist to gauge your agent’s abilities:

• They’re skilled speakers. If they can make you feel confident and comfortable when you first meet, they can do the same with the opposite parties and keep negotiations running smoothly.
• They have additional real estate education. Has your real estate agent taken negotiating classes or pursued additional certifications in their industry? The more they know, the more equipped they are to negotiate reasonable terms for you.
• They know how to prioritize. Ideally, you’ll get everything you want in your home purchase—but negotiation usually entails some compromise. A good agent can recognize when to stand firm and when to back down.

Pro tip: Most real estate agents have both buyer and seller clients, but you may be able to find an Exclusive Buyer Agent (EBA) in your area who works (you guessed it) exclusively with buyers. Try this tool to find an EBA near you.

What makes a good real estate agent for home sellers?

Some indicators of a good real estate agent are universal: in-depth local area knowledge, clear communication, and strong real estate negotiating skills. But as a seller, your agent should also have:

1. A track record of selling at or above the asking price
2. Strong marketing strategies

1. Track record of selling at or above the asking price

To make the most of your sale, your agent should have a track record of negotiating a higher final price than what you initially asked for (or at least a record of sticking to the asking price rather than going lower, depending on the real estate market conditions at the time of the sale).

2. Strong marketing strategies

To attract the best buyers, you want to show your home off at its best. Your agent should be able to provide professional photography, accurate and enticing listings, and a strong social media presence. In the current pandemic market, their ability to offer virtual/video touring options along with in-person open houses is also an asset.

Is there anything else I need to do before choosing a real estate agent?

So, now you know what makes a good real estate agent. But before you go, let’s touch on what makes you a good real estate customer. For sellers, our house selling checklist is a great place to start. If you’re buying, consider getting prequalified for financing with your mortgage lender before choosing a real estate agent.

Prequalification is not an official approval or offer for a home loan. Think of it as an expert estimate of what you could be approved for based on basic information you provide like your income, debt, and credit score. Even though it’s not official, it helps your agent narrow down potential homes within your budget (and lets them know you’re serious about your home search). When you’re ready to get prequalified, our team is here to help.

Whether you’re buying or selling, a good real estate agent should offer strong negotiating skills, clear communication, and an in-depth knowledge of the local area.

The post What Makes a Good Real Estate Agent? appeared first on Cardinal Financial.

Some say “Change is the only constant” and in the mortgage biz, this couldn’t be more true. Whether you’re ready for it or not, change will come, and we all have the choice to either adapt or move on to another industry. The reality of the housing market right now is that there’s still an affordability issue. Even with the economy doing well and interest rates staying relatively low, the affordability and availability of homes is still a struggle. Some experts are optimistic in their housing market predictions for 2019 while others are a bit cynical. Wherever you’re at on the spectrum, it’s safe to assume that many of the same things that characterized last year’s market will follow us into the new year.

5 Bold Housing Market Predictions 2019

1. New construction will rise

Despite labor shortages, new home construction is predicted by many industry experts to continue rising. This makes it especially crucial for real estate agents to make connections with builders and mortgage lenders that work closely with builders. There are many benefits to having those kinds of connections in general, but this year, it will be particularly important to proactively make those connections. Though labor shortages may prevail, when builders start hiring again, you’ll be in their contacts list and set up to do business with their clients.

Here’s a shameless plug: did you know that Cardinal Financial works with builders? We provide fully underwritten approval prior to contract as well as flexible lending terms and products for home buyers who are purchasing newly constructed homes. Plus, we issue automated loan status updates at all important checkpoints for home buyers and real estate agents. What’s better than working with a mortgage lender that knows your pain points and anticipates your needs?

2. Home prices will increase

While housing labor is experiencing shortages, the opposite is predicted to happen with home prices this year. Scotsman Guide recently wrote, “Builders are grappling with increases in the cost to build homes, and this is directly impacting inventory by keeping it persistently low, which also is driving home prices higher.” So although it’s becoming more expensive to build new homes, that’s not the main reason why home prices are predicted to increase. It’s the labor shortages.

In that same article, Scotsman Guide also reported, “It is mostly a lack of available labor, which is the result of multiple factors, including a construction labor force that is not growing fast enough to keep pace with demand and a large redirection of the existing labor force to areas in the country affected by natural disasters.”

At Cardinal Financial, we can get your clients fully underwritten right up front—even without a property address. This gives home buyers the confidence to go in with a strong bid knowing they’re a few steps ahead in the process. And when their offer is stronger than others, it gives both of you an advantage over the competition. Especially in a seller’s market, full up-front underwriting helps seal the deal faster. And it can get your clients to the front of the line if there’s a negotiation.

3. Millennials will drive the market

Each new year is only adding more Millennials to the force of home buying power. In fact, research done by Realtor.com states that “Millennials will account for 45 percent of mortgages in 2019.” This increased competition can make the market tough. Do you know how to reach this generation?

Top 3 Reasons Why Millennials Want to Buy

More than ever, home buyers are starting their home search online, and that includes Millennials. Plus, consumers are increasingly relying on not only the opinions of their friends and family, but of online reviews. This data begs the question: how is your online presence?

Networking and advertising have always been a challenge for real estate agents. But now more than ever it’s important to build a stable online presence. Do you have all the right tools to do it? If not, the good news is, we do. Cardinal Financial has an award-winning, agency-caliber Marketing team that creates hundreds of print and digital co-marketing pieces for real estate agents who partner with us. It’s a competitive market, but the right partnerships make all the difference.

Now more than ever it’s important to build a stable online presence. Do you have all the right tools to do it?

4. Rates will increase steadily

Each time the Fed raises the 10-year Treasury yield, mortgage rates follow closely behind. We saw it happen twice in 2018 and there’s a good chance it’ll happen again in 2019. But when it comes to rates, keep in mind that, as the Scotsman Guide wisely points out, “regardless of any incremental increases, rates are still at historic lows.”

And that’s good news for real estate agents. It could mean that renters won’t be completely turned off from the idea of buying a house this year. That means your business doesn’t have to suffer. You may have to scour the listings a little more to find the right home at the right price but it’s still possible. The key this year will be managing your clients’ expectations and reminding them that, if homeownership is their goal, they might not get everything they want in their first home.

The key this year will be managing your clients’ expectations and reminding them that, if homeownership is their goal, they might not get everything they want in their first home.

5. 2019 will be a seller’s market

The last of my housing market predictions for 2019 is that this year will be a seller’s market. With the economy still going strong, rates and home prices rising, and demand increasing, we’re likely to see a housing market much like the one we had in 2018. Last year’s peak season was arguably a seller’s market exhibiting all those same characteristics.

It could be a tough year for buyers and sellers in the sense that neither of them is likely to get everything they want. But sellers are predicted to continue to have the upper hand. Realtor.com says, “We don’t expect a buyer’s market on the horizon within the next five years.” Still, don’t give up on home buyers. They’re only going to need an awesome real estate agent on their side more than ever before.

How to Win in a Competitive Housing Market

Did this article help you prepare to take on this year’s housing market? Share it on social media to spread the word!

The post 5 Bold Housing Market Predictions 2019 appeared first on Cardinal Financial.

Owning a second home is a dream that many Americans share. Who doesn’t picture themselves living the good life in a beach house from time to time, or spending time in a cozy cabin somewhere in the mountains with their family? While we all like to think about these dream homes, only a relative few are able to actualize these goals. Like any major decision, purchasing a second home comes with pros and cons that you should be familiar with before you make a final choice. Owning a second home may be a dream, but it’s up to you to decide whether it’s the right move for you. Luckily, your good friends at Cardinal Financial are here to help you figure it out.

pro: um, you have a second home.

Owning a second home is a dream for millions of people, and making that move is a great accomplishment! Owning another house in a place away from home is a good look, and it comes with a lot of perks. Weekend getaways are easier, and you’ll always have a place to stay on a family vacation. The only problem is…

con: it’s second home or bust.

Many people with second homes tend to get tied down to one location when it comes to traveling. If your vacation home is a beach house in Florida, it’s hard to justify—much less afford—an alternate vacation overseas unless you’re just loaded. This logic can also box people into feeling that they need to constantly visit their second home to make the investment worth it, which isn’t wrong by any means. It just means you need to be sure that your second home is a place you won’t get tired of in five to 10 years.

pro: you can rent it out while you’re not there.

Renting out your second home is a popular way to generate extra income among people with vacation homes across the country. Many popular retirement spots have very active rental markets that bring in premium rents during the busier seasons. It’s pretty easy to list your home on the internet and find people who will want to stay in your home. The catch is…

con: renting out your home is a lot of work.

Many people say that renting out a second home on your own is like having a second job. If you’re already retired you might welcome the extra work, but if not, it could be tough to deal with. There are rental management services that can rent out your unit for you, but they’ll take a substantial piece of your revenue depending on the services they offer.

Renting out a second home on your own is like having a second job.

pro: you’ll have a place to retire.

Buying a second home in a place you would want to retire can go a long way in making a smooth transition when the time comes. It presents great opportunities to vacation and get acclimated to the area before you move there for good. You can get to know your neighbors and establish community ties that may prove useful down the road. On the other hand, it may convince you to retire somewhere else. Using a second home as a trial run for retirement is a great idea if you’re not quite sure what you want to do when it comes time to stop working.

Owning a second home should be enjoyable, not another financial burden to stress you out.

con: it costs a lot of money!

THIS JUST IN: Houses cost money to own and operate. ALSO JUST IN: A second house would cost even more to own and operate. Ideally, a second home would be smaller than your primary home, but most people have higher standards for second properties they intend to own rather than rent, which can sometimes translate to higher prices. Depending on where you plan on purchasing a second home, the cost may be higher than your primary home. On top of that, you’ll have to pay homeowners insurance, real estate taxes, HOA dues, utility bills, and other expenses like furniture. Now, these costs can be offset by renting out your second home, but like I said earlier, it’s easier said than done.

pro: but you can get tax deductions!

Even if you choose not to rent out your second home, you can still get a sizeable income tax deduction. For example, you could write off both the full amount of the real estate taxes you pay on the property as well as the mortgage interest you pay on the loan used to buy the home. These tax deductions may not offset the costs completely, but they can reduce them to the point of making them a lot easier to manage. Check with your tax professional for a better understanding of the deductions your second home may make you eligible for.

so how do i do this?

First you’re going to want to determine your ideal second home location. Think about the future. Will this be a retirement home? Do you want to be in the mountains? On the ocean? Many resort areas have a wide range of properties to fit a variety of different budgets, and the larger the area you’re considering, the easier it may be to find a property you like enough to buy.

Next, you’re going to want to establish a price range. Owning a second home should be enjoyable, not another financial burden to stress you out. Try not to reach. Pick a home with a price that’s within your means. If not, you’ll end up more financially strained than you’d like to be.

Finally, you’re going to want to talk to a local real estate agent. A good real estate agent that knows the local market will be invaluable in your search for a new home. They can help guide you through the purchase process, and may be able to help you manage the home while you’re away.

Using a second home as a trial run for retirement is a great idea if you’re not quite sure what you want to do when it comes time to stop working.

a final word.

Basically, owning a second home really comes down to whether you have the means to purchase and maintain one without bringing too much financial strain on yourself. Owning a second home may sound like a dream come true, but it’s definitely not for everybody. If you think you can manage, go for it! If you’re second guessing, do your own research. It’s super important to make sure you’re prepared before you pull the purchase trigger. If you’re not so sure, call Cardinal Financial. We can help you through the process and give you real options on how you can responsibly get into a second home.

Have you financed a second home through Cardinal Financial? Where is it? We want to know! Tell us all about your experience with your second home on social media!

The post Benefits of Owning a Second Home appeared first on Cardinal Financial.

1. neighborhood watch

One of the most important elements in buying an investment property is the neighborhood it’s located in. The quality of neighborhood in which you purchase your property will not only influence the types of tenants you attract, but your vacancy rate as well. For example, if your property is located near a college, your tenant pool will likely be mostly made up of students and you will probably encounter vacancies during the summer months. The surrounding areas can also offer public amenities that can boost the value of your property. Knowing the neighborhood you’re buying in and planning accordingly is key in owning a successful investment property.

2. beware of property taxes

No matter where you go, taxes will follow. Property taxes are always something to look out for as an investor as you’ll want to know how much money you’ll be losing to them. High property taxes aren’t the worst thing if your property is in a prime location for long-term tenants, but the two don’t always go hand in hand. The municipality’s assessment office will have all the tax information you need on file, but it’s also a good idea to talk to some homeowners in the community before you make a purchase.

3. Check the number of listings or vacancies

Check for other listings and vacancies in the area. If there is an unusually high number of listings for an area you’re interested in, it may be a sign of a seasonal cycle or it could mean that the neighborhood has “gone bad.” Make sure you know which one it is before you buy. You’ll need to know whether you can cover for any seasonal decreases in vacancies or if the neighborhood just isn’t a viable option for an investment.

4. See the future

It’s important to see what the plans are for the area you’re planning on investing in. You can check with the municipal planning department for information on all the new developments that are coming to the area to get a good glimpse of where it’s heading. If you find that a lot of new apartment buildings, business parks, and malls are in the works, it’s a good sign that the community is growing. On the other hand, you’ll want to be wary of developments that could hurt the value of your property such as the loss of activity-friendly outdoor spaces and additional housing developments that could compete with your property.

5. Price check

It goes without saying that rent payments will be the primary source of income from your investment property, so you’ll want to know what the average rent in the area is before you set your price. If the average rent isn’t enough to cover your expenses (mortgage payment, taxes, etc.), there will be no return on your investment and you’ll have to find somewhere else to buy. Make sure you have a good grasp on where the neighborhood is heading because big future developments could mean an increase in not only rent, but property taxes too.

6. Prepare for a big down payment

Mortgage insurance isn’t available for investment properties, so you’ll need at least a 20% down payment to attain traditional financing. And putting even more down can get you a better rate. You’ll want all the help you can get as loan costs are typically higher for investment properties. If you’re serious about real estate investing, start saving up now! And give us a call. We’d love to help you finance your next investment property.

7. Start small

The process of buying, repairing, maintaining, and managing an investment property isn’t one to make light of. It’s a lot of work! So if you’re just starting out, try to avoid buying a major fixer-upper or a large property. Get your feet wet by purchasing a single apartment, condo, or duplex to get used to the work of investing in real estate and figure out if it’s really right for you.

Do you have any additional tips for anyone looking into real estate investing? We want to know! Tell us on social media!

The post 7 Tips for Buying an Investment Property appeared first on Cardinal Financial.

We are not providing tax, financial, or legal advice in this blog post. The difference between an investment property and a second home lies ultimately in the IRS Code.

Investment property, rental property, second home, vacation home… After a while, these housing industry terms seem to blend. In reality, these terms are actually quite different, both in what they describe and the mortgage rules that apply to them. Searching for some clarity on the matter? This article should help. To find out how an investment property mortgage is different from a second home mortgage, we first need to explain how the properties themselves are different.

Investment property

Let’s talk about investment properties. Many people also call these “rental” properties, and for good reason. These homeowners make side income by renting out their investment property to tourists and vacationers (possibly even using services like Airbnb) or to more long-term guests like residents who pay rent. This kind of homeowner, however, does not live in their investment property—they have a different primary residence. Purchasing an investment property can be an attractive and rewarding investment for many reasons. For one, it helps diversify your investment portfolio—and for those who are into investing, you know that’s a good thing. The money you make from renting your investment property can also be used as payment toward the home’s mortgage, especially if it’s steady rental income from a resident. Now that’s a return on your investment.

But, be warned, investment properties are not the easiest to manage. It can be hard work—particularly if you’re housing a renter. At that point, you’re not just property owner, you’re also landlord and maintenance. Unlike renters, stocks and mutual funds don’t pay rent a week late, irreversibly scratch your hardwood floor, or call you about plumbing issues in the middle of the night. It can be exhausting—not to mention expensive. You’ve probably heard the phrase “It takes money to make money.” Well, that’s true for investment properties. You think renting out your investment property is going to be an instant cash cow, but for a while, in the beginning, it could cost you a lot of money. Don’t forget this property will have a mortgage, taxes and insurance, and utility bills just like your primary residence. As with most financial decisions, there are many pros and cons. Always consult a professional financial advisor and/or legal counsel for guidance before you buy an investment property.

Second home

For some homeowners, their second home is their vacation home (or, as we say in the mortgage industry, their non-primary residence). Think of a second home as the place where you live during certain times of the year, like on the weekends, during the summer, six months out of the year, etc. This could be a beach house or a cabin in the woods. Some of these properties are in second home “communities” where most of the properties in the surrounding area are second homes. This is a different kind of investment—you may not rent it out (although you can), but more likely, you, your family, and your friends reap the benefits of an extra property that’s all yours.

And again, owning a second home requires work and comes with more bills to pay. It’s more responsibility and more property to manage. You have to clean it, maintain it, and ensure its year-round safety and security. Like an investment property, buying a second home is a big decision that demands preliminary legal advice.

Investment property mortgage vs. second home mortgage

Now that we’ve covered the differences between these two types of properties, let’s address the differences between an investment property mortgage and a second home mortgage.

An investment property mortgage is what we call a business purpose loan—a loan for a non-owner occupied rental property. Mortgages for investment properties tend to come with higher interest rates and often require larger down payments. These two factors are designed to protect the lender in the event that the borrower fails to pay their investment property mortgage. Most lenders consider these types of home loans to be riskier simply because, since the home buyer doesn’t live in this home, they might be more inclined to walk away in the event of financial adversity. Lenders believe that a borrower who has invested quite a bit of their own hard-earned money into their property upfront will be more likely to keep the property—and continue paying the mortgage—even in financial crisis.

You think renting out your investment property is going to be an instant cash cow, but for a while, in the beginning, it could cost you a lot of money.

A second home mortgage is different in that you’re more likely to see interest rates and down payment requirements similar to that of a primary residence. If you plan on living at this property for at least 14 days out of the year, it’s considered a second home, and would need a second home mortgage.

We know what you’re thinking. Why not apply for a second home mortgage, use it to buy an investment property, and reap the benefits of a lower interest rate and down payment? Think again. Lenders are smart and their staff is trained to notice this sort of activity. It’s called mortgage fraud and, if you’re caught, you could face some serious fines. Since living at the property for at least 14 days out of the year is the deciding factor between an investment property and a second home, it’s one of the first things underwriters look at when assessing the loan. Take it from us—honesty is the best policy.

We’re always working to provide you with information that can help you make educated homeownership decisions. Did you learn something new by reading this article? Share your thoughts with us on social media!

The post The Difference Between an Investment Property Mortgage and a Second Home Mortgage appeared first on Cardinal Financial.