Field Notes

The economy has been brutal. Whether you are a first-time buyer, or looking to relocate, upgrade or downsize, it seems like all the assumptions that were true 5 years ago have turned in to that old adage about “when you assume……”. So where are we now?

1) Loans – During my 20 plus years in banking, getting a loan was a function of some basic common sense concepts; do you make enough money to make the payments, have you paid back people who have loaned you money in the past, and is your collateral sufficient to secure the debt. Then things got crazy, and anyone with a thready pulse could get a loan for 100% ( or more) of any house they decided they wanted a lender to buy for them. I could go on and on about why I thought this happened, but for our purposes now, suffice it to say the pendulum has swung back to the old days. So here are the key things that will help get your loan approved:

A) Employment Stability – not necessarily in the same job, but in the same field. If you want someone to loan you money for 30 years to buy a house, you have to be able to show that you can reasonably be able to expect to make a living during that time. 2 years is the usual expectation for stability. Longer is better. If you are self-employed, be prepared to show 3-4 years of tax returns to demonstrate continuity of income.

B) Credit – your credit score demonstrates a number of things, primarily that when people loan you money ( credit card, car loan, student loan, etc) that you repay it as you agreed to. Another important thing is available credit versus what you have borrowed. If you have only 1 credit card, and it is maxed out, then it looks like you will spend all of whatever someone offers to lend you. It is better to have several cards with low or no balances, that you use and pay back. This way you show discipline as well as reserves available for emergencies.

C) House Values – for a long time, values just went up and up and up, so lenders were comfortable with loaning 97-100% of value. A look at the last few years shows the fallacy of this assumption. So you need to save some money for your down payment, and some cash reserves. Closing costs can usually be worked in to the purchase contract, but nothing says “I’m serious” to a lender like walking in to the deal with your cash while asking for theirs.

2) House Values (again) – Buying a home to live in should be approached as a medium or long term investment, not a short term one. Unless you buy a fixer-upper ( and fix it up) and you happen to buy in a neighborhood that appreciates right after you get there ( which no one can guarantee ) do not expect to be able to sell your house in a couple of years and make a profit. Buy the house you want to be in, in the neighborhood you want to be in, for the next 3-5 years ( or longer). Things may change, requiring moves you didn’t plan, but  setting your expectations realistically is key.  A few other old saws if you are buying with an eye to resale;  location, location, location  ( better a small house with issues in a desirable neighborhood than a grand show home in a less desirable one), don’t buy the biggest or most expensive house on the street, spend your improvement dollars where they will give the best payback (kitchen, bathrooms).  If you plan on expansion, due the math.  If adding more space will cost you $200/sq ft, and houses in your neighborhood sell for $125/sq ft, it doesn’t make sense.  Reverse those numbers, and expansion is a great idea.

Be Real About What Is Important- As my favorite home inspector says, there is no such thing as a perfect house.  As with most of life, choosing your first home is a process of knowing yourself and what is important to you to achieve happiness.  Chances are good, unless you have unlimited funds, your first home will not be everything you ever want .  Prioritize.  Do you want curb appeal to make you the envy of your friends, or do you stay in so much you care more about the inside flow and space?  Do you have to have a bathroom for every member of the household ( and one for guests) or is it more important to have a kitchen that allows you to  spread out and create culinary masterpieces?    Is it more crucial that your house has old historic charm or that everything works like new and you have 10 outlets in your living room?  What things that you want that are not there can be fairly easily achieved (within your budget)?    What can you let go of, and what is non-negotiable?

I guess home buying has gone Retro-Chic.  But you can do it.  And I can help. A lot.

M

Meg Observations

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Meg Observations

1)Porter Road Butcher (PRB) – James and company have brought deliciousness to East Nashville ( and for that matter, Nashville as a whole).  I love being able to say “honey, I’m going to the butcher, what do we need?”!  The best Filets and Strips we have ever eaten, fantastic house-made sausages, pate, etc.  The prices, lower than Whole Foods.  Also carrying Hatcher Dairy, local artisan cheeses, eggs, breads, broths, Al Fresco pastas, and a bunch of other stuff.  I stop there first for a number of things on my list, and am always pleasantly surprised at the new options.   On Gallatin Road at the corner of Calvin, right across from SunTrust Bank. www. prbutcher.com

2)The Pharmacy – great burgers, draught root beer, sweet beer garden, home made shakes and malts, sodas and phosphates.  Really good beer selection.  Reasonably priced ( burgers, sides, beer and root beer for 2 $30 with tip).  They might be a little too successful for their own good right now, kitchen gets overwhelmed and there are long waits if you show up at 6 or later. Go at 4:30 or 5, have a great time.  McFerrin and West Eastland, behind Holland House.

3) 5 Points Pizza – finally, a really tasty Pizza in Nashville.  Which is even better reheated the next day, so buy a whole pie and take home leftovers.  The Garlic Knots and homemade Marinara are sublime, love the Spinach Salad, really sweet wait staff.  And they are open Mondays, when almost everyone else is closed.  Smart move!  Woodland St at 11th ( 5 Points, of course )

4) Jenni’s Splendid Ice Cream – is it a chain if it’s only other locations are Cleveland Ohio? Barely, so we will let go of our attitude about it.  Ice Cream like you never imagined.  My current favorites are Goat Cheese with Cognac Figs, and Tres Leches Pop Cake.  And how soon before Backyard Mint returns for the summer?  Open everyday til 11, homemade waffle cones, free tastings ( they almost insist ).  Eastland at Porter, in the Walden building.

5) Bagel Face Bakery – Kristen and Rae are baking up the best bagels I’ve had outside of New York.  The new location ( Main St and 6th St) offers seating, coffee and bagel sandwiches, including a magnificent Lox/Onion/Tomato/Capers/Cream Cheese.  All your favorite flavors (  I gotta have the classic everything  bagel ) open mornings, including Sundays, like all good bagel shops should be.

Enjoy!

Megan

Meg Observations

Nashville has a lot of great neighborhoods.  I am partial to East Nashville for a number of reasons ( old houses, diversity, arty, great restaurants and bars, great value for your real estate dollars, Shelby Park and Vinnie Links, lotsa people out and about all the time), but I have to admit, there are other neighborhoods with appeal as well.  If you want close to Vanderbilt, and Hospital Row, without paying the typical close to Vanderbilt prices, I think Sylvan Heights has a lot to recommend it.

Sylvan Heights is Sylvan Park-adjacent, starting at about 37th Ave and continuing east to I-440.  So you get all the nearness of the “downtown” Sylvan Park area around Murphy Rd and 46th Ave, but without the big price tag.  The homes are more modest, and are a little newer ( 1930s and forward) but you can buy over 1000 square feet for less than $200,000.  It’s a great place for a first-time homeowner, as well as a nice place to buy if you just need a place to live for your post-graduate degree or internship.

The neighborhood has mature trees, plenty of parking, and you can bike to Vandy if you are so inclined.

Quiet, affordable, and close-in. Check out Sylvan Heights if you are looking for the west side of town without breaking the bank.

Meg Observations

Lenders want your business, so by all means, shop around.  A bad lender can, at worst, kill your deal and make you lose your house purchase, and at best, add stress that you don’t need during an already hyper time, namely buying your new home.  Here are a few things to keep in mind….

1) Not All Loans Cost the Same – when shopping for a lender, find out what fees they charge in addition to their rate and “points” .  This can be significant.  Almost all lenders will charge you for an appraisal, credit report, and flood certification ( about $500 total).  After that, its off to the races.  You can see underwriting fees, doc prep fees, application fees, tax service fees, wire fees, review fees and, of course, origination points and discount points. Trust me, the borrower is not the one getting the discount.    The industry lovingly refers to all those items in the above statement with the word fee after them as JUNK FEES.  They are different from lender to lender, and can range anywhere from $0 to $2000 or more.    So when you are talking to potential lenders, find out what their junk fees are, not just their interest rate and points.

2) Go With a Responsive Loan Officer – if they don’t return your calls quickly while you are applying for the loan,  heaven forbid how slow they will be once we are in contract.  A responsive loan officer is available evenings and weekends, and will call you back within an hour or 2, unless they have already let you know they will be unavailable for a specific reason.  If you have to wait a day to hear from them, this is not promising.

3) Broker, Banker or Mortgage Lender? – If you like your bank, definitely check out their loan programs.  You already have a relationship with them, and may get additional free services if you have a mortgage with them.  But their loan officers may have a slightly more 9-5 mindset, so check their availabilty to your calls on off hours.  Mortgage Lenders work for a company that funds their own loans, so you should not encounter any shocks with what loans can and can not be worked out.  Mortgage Brokers rely on investors to fund their loans, so odd things can come up at the last minute ( I had a deal where a week before scheduled closing, the investor insisted that there be a stove in the house- this caused several days of scrambling stress to resolve ).

4) Get a Referral From a Trusted Source – this could be your friends, family, Realtor, co-worker.  Go with someone with experience in the business, because funky stuff always comes up, and you want someone who has seen it before.

5) Get Pre-Approved- you want to realistically understand what your costs will be to help you shop for the right priced house.  And if you are going to add closing costs to your purchase offer, it is essential that your lender can tell us how much we need to ask for.  There is no bummer quite like leaving money on the table at closing because  we got bad advice from the lender.

Don’t be afraid to grill your prospective lender.  Your will be paying them and their company a lot of money to get the loan, and a lot of money down the road.  They need you as much as you need them.  And make sure your Realtor is knowledgable about possible loan pitfalls, to give you another experienced advocate in this process.

Happy Shopping

Megan

Meg Observations

What a few days.  If we could just get the weather to get the concept of “moderation in all things”.  Many Nashvillians are in a world of hurt right now, and our hearts go out to them.  Here in East Nashville, defined as it is by the border of the Cumberland River, things have gotten smaller.  Because the river has gotten a lot bigger. Titans Stadium – parking lots and the field itself mostly covered.  Division street industrial area – covered.  Shelby Park and Shelby Bottoms Greenway, mostly covered.  A lot of Moss Rose- covered.  As of this writing, I still don’t think the Cumberland has crested.  We can only hope it recedes as quickly as it has risen.  Many low-lying areas here in East Nashville are also still under water, and yet, on the whole, I think we have fared better than a lot of the city.  Some businesses in the 5-Points area took on some water, but for the most part, things looked like a normal albeit warm spring day today in East.  It has been a curious few days.  The list-serv was full of offers to volunteer, suggestions on how to drain your basement if your sump pump failed ( or was non-existant ), commiseration.  I spent a part of Sunday helping bail water from a neighborhood business basement ( save the chocolate cakes!).   Nashville has shown a lot of heart and class over the last serveral days, and will continue to do so in the days aheads. Stay safe and dry.

Meg Observations

All of us real estate agents want buyers to have a “sense of urgency” , but taking out the inherent cheese factor of that, there are some important timelines right now that could save buyers a lot of money.  Conversely, missing these dates can cost you money in certain circumstances.  Keep in mind, things change all the time, but here are a few items to keep in mind:

1) FHA UFMIP  going up early April- what does that mean?  When you buy with an FHA loan ( very common if you have limited money to put for a down payment ) one of the ways they structure the loan to keep your payments down is by dividing your mortgage insurance premium into an “Up Front Mortgage Insurance Premium” (UFMIP) and a monthly premium added on to your payment.  This charge is going up in early April, so if your going to buy anyway, get your contract accepted and to your lender in the next week.  They need several days to get an FHA file number attached to your loan, and if you have this ahead of the increase date, you get the cheap rate.  Could be thousands of dollars in savings.

2) MORTGAGE RATE INCREASES in early April – while no one really knows what rates are going to do, the US Government has been pumping money in to buying mortgage backed securities, helping keep rates really low, but are set to stop doing this soon.  Most market watchers think this will lead to an increase in mortgage rates.

3) HOMEBUYER’S TAX CREDIT – you have to be in contract by end of April, and close by end of June, to qualify for this credit.  You could be leaving $6500 to $8000 on the table if you miss these dates.  Chances are, a short sale will not close in this time frame if you aren’t already in process.  Beware of construction delays as well if you are purchasing a brand new home or condo.

4) FHA SELLER’S PARTICIPATION – in early June, FHA is set to reduce the percentage of a purchase price that a seller can contribute to a buyer from 6% to 3%.  This could mean the need for more cash needed by the buyer, or higher monthly payments depending on how this contribution is structured.

So, should you buy now if you weren’t even considering it because of these changes? Probably not.  But by all means, if you are in the market for a new home, don’t lose money because you missed these dates.

Happy House Hunting!

Megan

Meg Observations

There has been a lot of discussion since the “mortgage meltdown” that mortgages are impossible to get, not affordable if you can get one, that generally if you are a first time buyer you are out of luck.  I was a banker for over 20 years before I became a Real Estate Agent, including originating mortgages for my clients, so I have watched all of these developments over the last few years with my own unique perspective.  I am not without judgment about what was happening in mortgage lending then and now, and in real estate purchasing as well.  Here is some of my moralizing on what is real and imagined, what is reasonable and what is not.

The Mortgage Pendulum was Wildly Swinging over the Past 5 Years -  As a banker ( until 2004 ) mortgages were cumbersome, paper work intensive, slow and unwieldy to get.  When I got in to Real Estate, I started noticing that seemingly anyone with a thready pulse could qualify for a mortgage.  The pendulum swung a little far back toward the the first scenario, but I believe it is settling to a place where it should be.  It shouldn’t be a full time job to try to get one, but basic concepts like making the income to qualify for your payments, having paid back money lent to you in the past, and putting aside some money to pay for down payment and/or closing costs have been recognized again as crucial steps toward someone lending you money to help buy a house.  Too often the attitude of buyers over the last few years has been ” I’ve decided I want a house, and I want the bank ( mortgage company, etc ) to buy me one”.

Mortgages Are Available – I have been working with a lot of first time buyers, and they can get mortgages.  FNMA ( the government-guaranteed program ) can accept loans  for a lot of house with as little as 3.5% of the purchase price brought to the table.  This means lenders can originate these loans.  If you are concerned you can not get a loan approval, speak to a lender before you start your house search, find out how much you can qualify for, and if there are steps you need to take now to get you ready to buy in the next 6-12 months.  If you have been doing the right things already, such as working steadily, saving money and paying your bills on time, you should not run in to obstacles to getting a home loan.

Rates are Still Fantastic – Fogey  Alert  – when I got in to banking, the Prime Rate was 21.5%.  Mortgage rates were over 15%.  Through the 1990s, if I could get my clients a mortgage rate under 10% they were ecstatic.  So don’t tweak if rates went from 5.25% to 5.5% while you are shopping.  Don’t think rates are horrible if they go back over 6%.  These are great rates.  By all means, shop around so you don’t end up with the only lender over 6% if everyone else is at 5.5%.  But if a 1/4 to 1/2 percent change in the rates is going to make or break your home purchase, I personally think you are trying to buy too much house.  Trying to time the bottom of the rate market while you are home shopping is like trying to determine the right minute to sell your stock.  An exercise in futility.   And if buying your house is going to be a tight squeeze on your budget, get a fixed rate.  A variable rate can make sense for many buyers, but you should know what your realistic plans are to know if this is right for you.  Talk to your mortgage person, or me, to get a firm handle on your options.

Recent news reports indicate that the drop in home prices is bottoming out in many markets.  Combine that with a first-time home buyers tax credit, great rates, available mortgages and a big supply of houses on the market, and you have an excellent time to purchase a new home.  Just be realistic about what you can afford, and what you really need in your first house ( there will probably be others – after all, are you still driving your first car? ) .

Meg Observations home mortgage, home purchase, mortgage rates, tax credit

When it comes to home inspections, many professionals sound like Jack Nicholson in “A Few Good Men” when talking about their clients: You want the truth? You can’t handle the truth! But when getting a home inspection, you need to wrap your mind around being able to handle the truth.  Otherwise, your home inspection will talk you out of the home you want to purchase, or if it is not thorough, it will not provide you with the information you need to make an informed decision.  The following are my thoughts on home inspections.

1) Never Purchase A Home Without One – The only exception is if you are purchasing a structure you intend to tear down (immediately).  Even new construction, get a licensed inspector.  You will be able to recover this fee in repair requests, and an inspection can save you massive amounts of money if it uncovers major problems in your prospective new home.

2) Use Only Licensed Home Inspectors – If you plan on requiring repairs as part of your contract, you are toast if you are not using an inspector licensed in the state of Tennessee.  Additionally, if the inspector is hurt or damages the property during the inspection, you want someone who carries their own insurance.  While your friend, relative or co-worker might save you a few dollars on the cost of the inspection, do you really want to look them in the eye at the party, family reunion or office if they missed something crucial in your home that you end up paying for down the road?  I think not.

3) Attend The Inspection – It is amazing what you can learn about your new house just by dogging the inspector around and asking questions.  This will also allow you to get some perspective on any issues the inspector uncovers ( and there will be issues ).

4) There Is No Such Thing As A Perfect House – If you are not prepared for some things that need to be repaired and/or improved,  then you are probably not ready to own a home.  Think of your inspection as a nice road map for things you will want address going forward.  Weekend projects appeal to you?  You will have a bunch of stuff to keep you busy.  It will be important to analyze your inspection and decide what items you can’t live with ( repair requests ) and what things you can live with.

5)  Make Sure Your Inspector Is Inspecting Everything They Can – this goes with attending the inspection.  Your inspector should “walk the roof”.  They can’t see cracked plumbing boots, damaged shingles, bad repairs and questionable flashing from the ground.  Some friends of mine had an inspector arrive having forgotten his ladder at a previous inspection.  He missed roof problems that cost them many thousands of dollars their first year in the house (they were not my clients) .  Your inspector should get into the crawl space ( in every corner ) and let you know if it is inaccessible for some reason.  Your inspector needs to get in to the rafter/attic area even if it is a tiny little access hole.  They will not cut holes in the wall, or empty out cluttered closets and move a lot of furniture to get to stuff, so if you are in contract on a very cluttered house, make sure your contract requires the seller to clean up before the inspection.  The seller is also required to have the utilities on so the inspector can check HVAC, Electrical and Plumbing issues.  If these things are not happening at your inspection, demand that they do.

6) Other Inspection Items – you can inspect virtually everything that is important to you. Radon testing, sewer line testing, mold/air quality, lead-based paint.  Talk with your Realtor about those things that are most crucial to you. Then it is a matter of balancing costs of inspection vs possible return if problems are uncovered.

A home purchase is probably more money than you have every spent on anything before.  Don’t cheap out to save a few hundred dollars.  It will almost always come back to haunt you.  And demand an inspector that will give you an accurate picture of your new house’s strengths and weaknesses, not just make you feel all warm and fuzzy to avoid “killing the deal”.  Because that warm fuzzy feeling can go away quickly if you are hit with problems a good inspector could have uncovered.

Buy Smart

M

Meg Observations

Nashville is becoming more of a “foodie” town, as evidenced by 3 of the 5 places on my list.  They have opened since I moved here in 2000.  Here we go . . . .

1) MARGOT CAFE – I can not say enough good things about this East Nashville establishment.  The ambiance is warm and interesting, funky and intimate.  It is housed in an old gas station right at 5 points.  The service is excellent, highly professional but never snooty, attentive but no one hovers.  And the food.  The menu changes daily, so you never get dish burnout that can happen at other places.  I moved here from San Francisco, and have often told Chef/Owner Margot McCormick that this is the one restaurant in Nashville that, if we were both transplanted to San Francisco, I would still frequent.  About 90% of my dining experiences have been transcendent, the other 10% just really good.  The dishes are subtle and interesting, the portions are perfect, and the presentation is lovely.  This is the place I always bring my friends visiting from out of town, and they are never disappointed.  You won’t be, either.

2) CITY HOUSE – This new addition to Germantown is hugely welcome.  Finally, a great Italian restaurant in Nashville.  I took my friend, an Italian upstate New York transplant, there, and she practically broke down in tears.  They specialize in curing their own meats and making their own sausage ( as well as going local for the meat they use) and it shows.  A cool space, great staff, and unusual, delicious dishes make this my favorite new restaurant in Nashville.

3) SITAR – Surprisingly good Indian food in a town not known for ethnic cuisine.  This west-side staple serves quickly ready, tasty dishes, from Samosas to Massaman Curry to Chicken Tikka.  And really good garlic Naan.  If you don’t drink much, 2 people can get out for under $40, making it very affordable as well.  My only criticism, those Windex bottles ( go there and you’ll see what I mean ).

4) SOUTH STREET – Really good Memphis style dry rub barbeque ribs.  Fun atmosphere, and great outdoor space in the spring and summer.  They have gotten a little pricey for what they are (IMHO) but always a satisfying meal.

5) J ALEXANDERS – I never thought I would see a chain restaurant on my list, but if they all did it as well as J Alexanders, the world would be a happier place.  Consistency is the key.  Friendly, professional service from the hosts to the wait staff, calm and inviting spaces, and well-prepared, interesting American basics, including the most sinfully good Macaroni and Cheese you will ever have.  Also a great burger, good steaks, excellent Salmon.  Be forewarned, most of the portions are gigantic, so prepare to share or doggie-bag it.

Bon Appetit!

Meg Observations