Mortgage News January 14, 2022

Understanding Overlays

An overlay is an additional qualifying requirement that enhances mortgage loan guidelines set forth by Fannie Mae and Freddie Mac. They're frequently used to provide stability for mortgage programs. Overlays also give lenders the ability to personalize their loan offerings, and can be applied to traditional, FHA, VA, and USDA loans.

For instance, one lender may require borrowers to have a 680 FICO credit score, while others set the minimum credit score lower so they can serve more borrowers. Overlays aren't permanent; lenders can enhance or remove an overlay at any time, as long as they follow the minimum mortgage lending criteria.¹

Use a French Drain for Pooling Water Problems

Pooling water near a property may not appear to be a big issue, but it can cause foundation problems if it's not addressed. Fortunately, there's a low-tech solution for buyers and sellers alike: a French drain. Originally invented by farmer Henry French in 1859, this system removes water that can damage homes, seep into basements and attract mosquitoes.

DIYers can install a French drain in a weekend, following these tips:²

• Check for underground utilities or power lines before beginning.
• Ensure the trench slope is at least 1%. This will be equal to a 1-inch slope for every 8-10 feet of pipe.
• After the drainpipe is in place, cover it with rock and/or drainage fabric.
• Lastly, fill the remaining space with a blend of porous soil and sand.

Top State Choices for Movers in 2021

Americans are on the move across state lines. The U.S. Census Bureau reported an uptick in state-to-state moves in 2021, with Americans leaving states with high populations in favor of those with better scenery and room to spread out. Montana was the most popular destination, while Florida saw more than twice as many people move into the state as depart. Maine, South Carolina, and Alaska rounded out the top five states of choice.³

Are Wet Rooms the Next Big Trend for 2022?

Move over, bathrooms: Here comes the wet room. More renovators are going with an open floor plan to create a spa-like experience, removing separations between the shower and the rest of the bathroom. Doing so makes the space feel bigger and more accessible, especially for those who are aging or have a disability. Many wet rooms include tiled walls, making the room more attractive and easier to clean.

The wet room has a few drawbacks, however. The larger space will change acoustics, enhancing once-muffled noise. Additional costs for tile and other waterproof materials could increase the price considerably. Finally, you may lose some privacy if you share the wet room with a partner or spouse.⁴

Get Ready for These Three Questions from Sellers

Over the past two years, the real estate market has had a wild ride, with sellers calling the shots. But what questions are they asking as we enter 2022? Here are three of them:

• If we sell, where will we go?
  Selling is the easy part right now; it's buying that's potentially difficult. A lack of residential inventory has made many would-be sellers hesitant to list their properties. However, more new homes are predicted for 2022 as homebuilder sentiment rose in December 2021.⁵
• How should I prepare my home for sale?
  Taking time to declutter, paint, and make minor upgrades ensures their homes will shine on virtual tours and online listings.
• Can you lower your commission?
  Sellers may think a quick sale should result in a reduced commission. Demonstrate your value by outlining all the steps you'll take to sell their homes: writing the listing and taking pictures, negotiating terms and contracts, and overseeing the closing details.⁶

Sources: ¹realtytimes.com, ²inman.com, ³magazine.realtor, ⁴southernliving.com, ⁵nahb.org, ⁶inman.com