Tag: Home

DO THESE THINGS FIRST BEFORE MOVING IN

Moving into a new home is an exciting time, and you’re probably daydreaming about decor and paint schemes and new furniture. But before you get into the fun stuff, there are some basics you should cover first.

Change the locks

Even if you’re promised that new locks have been installed in your home, you can never be too careful. It’s worth the money to have the peace of mind that comes with knowing that no one else has the keys to your home. Changing the locks can be a DIY project, or you can call in a locksmith for a little extra money.

Steam clean the carpets

It’s good to get a fresh start with your floors before you start decorating. The previous owners may have had pets, young children, or just some plain old clumsiness. Take the time to steam clean the carpets so that your floors are free of stains and allergens. It’s pretty easy and affordable to rent a steam cleaner—your local grocery store may have them available.

Call an exterminator

Prior to move-in, you probably haven’t spent enough time in the house to get a view of any pests that may be lurking. Call an exterminator to take care of any mice, insects, and other critters that may be hiding in your home.

Clean out the kitchen

If the previous occupants wanted to skip on some of their cleaning duties when they moved out, the kitchen is where they probably cut corners. Wipe down the inside of cabinets, clean out the refrigerator, clean the oven, and clean in the nooks and crannies underneath the appliances.

Ensuring that these initial tasks are taken care of will give you peace of mind before you move in.

A Great Financial Technique to Get Your Home Sold Faster

For most people, the prospect of selling their home can be positively daunting. First of all, there are usually plenty of things to do just to get it ready for the market. Besides the traditional clean-up, painting and fix-up chores that invariably wind up costing more than you planned, there are always the overriding concerns about how much the market will bear and how much you will eventually wind up selling it for.

Will you get your asking price, or will you have to drop your price to make the deal? After all, your home is a major investment, no doubt a rather large one, so when it comes to selling it you want to get your highest possible return.

Yet in spite of everyone’s desire to get the top dollar for their property, most people are extremely unsure as to how to go about getting it. However, some savvy sellers have long known a little financial technique that has helped them to get top dollar for their property. In fact, on some rare occasions, they have even sold their properties for more than they were worth using this powerful financing tool. Although that might be the exception rather than the rule, you can certainly use this technique to get the most money possible when selling your property.

Seller carry-back, or take-back financing, has proven to be a surefire technique for closing deals. Even though most people do not think about when it comes to selling a property, they really should consider using it. According to the Federal Reserve, there are currently over 100 Billion dollars of seller carry-back (seller take-back) loans in existence. By any standard, that is a lot of money. But most importantly, it is also a very clear indication that more people are starting to use seller take-back financing techniques because it offers many financial benefits to both sellers and buyers.

Basically, seller take-back financing is a relatively simple concept. A seller-take back loan is created when a property is sold and the seller performs like a lender by assisting in financing all or part of the total transaction. In effect, the seller is actually lending the buyer a certain amount of money toward the purchase price, while a traditional mortgage company usually funds the balance of the purchase price.

A seller take-back loan is secured with the property. The loan then becomes the secondary mortgage and is fully secured by the property. In most seller take-back financing transactions, the buyer repays the seller with interest in accordance to mutually agreed terms over a period of time.

Usually, the terms call for the buyer to send the payments, consisting of principal and interest, on a monthly basis. This is advantageous because it creates a steady monthly cash flow for the note holder. And if the note holder decides to cash out, he or she can always sell the note for a lump sum cash payment.

Regardless of market conditions, seller take-back financing makes sound financial sense; it provides both buyer and seller with flexible financing options, makes the property easier to sell at higher price and shortens the sales cycle. It also has the added advantage of being an excellent investment that generates a steady cash flow and high return. If you ever need immediate cash, you can always sell the note. The first mortgage holder must be made aware of this second lien on the property in case there are any restrictions. Also, make sure to use an attorney to draw up the paperwork and have the mortgage properly recorded.

If you are planning to sell a property, then consider the many benefits of seller take-back financing.

A Little Known Financial Technique to Help You Get Top Dollar For Your Home

For most people, the prospect of selling their home can be positively daunting. For starters, there are usually plenty of things to do just to get it ready for the market. Besides the traditional clean-up, paint-up, fix-up chores that invariably wind up costing more than you planned, there are always the overriding concerns about how much the market will bear and how much you will eventually wind up selling it for.

Will you get your asking price, or will you have to drop your price to make the deal? After all, your home is a major investment, no doubt a rather large one, so when it comes to selling it you want to get your highest possible return. Yet, in spite of everyone’s desire to get top dollar for their property, most people are extremely unsure as to how to go about getting it.

Some savvy sellers have long known a little financial technique that has helped them to get top dollar for their property. In fact, on some rare occasions, they have even sold their properties for more than they were worth using this powerful financing tool. Although that might be the exception rather than the rule, you can certainly use this technique to get the most money possible when selling your property.

Seller carry-back, or take-back financing, has proven to be a surefire technique for closing deals. Even though most people do not think about it when it comes to selling a property, they really should consider using it. According to the Federal Reserve, there are currently over 100 billion dollars of seller carry-back (seller take-back) loans in existence. By any standard, that is a lot of money. But most importantly, it is also a very clear indication that more people are starting to use seller take-back financing techniques because it offers many financial benefits to both sellers and buyers.

Basically, seller take-back financing is a relatively simple concept. A seller-take back loan is created when a property is sold and the seller performs like a lender by assisting in financing part of the total transaction. This can be a big help to cash strapped buyers that are having a hard time coming up with a down payment, and want to avoid paying mortgage insurance, which is required when putting down less than 20 percent of the purchase price.

In effect, the seller is actually lending the buyer a certain amount of money toward the purchase price. The traditional mortgage lender takes first position, and the take back mortgage will act as a second mortgage. The seller take-back loan is secured with the property just as the first mortgage is. It is important to note that a traditional mortgage lender will usually not agree to take second place, and they must be made aware of the existence of any other financing.

In most seller take-back financing transactions, the buyer repays the seller with interest in accordance to mutually agreed terms over a period of time. The take back loan is recorded as a regular mortgage on the property. Usually, the terms call for the buyer to send the payments, consisting of principal and interest, on a monthly basis. This is advantageous because it creates a steady monthly cash flow for the note holder. And if the note holder decides to cash out, he or she can always sell the note for a lump sum cash payment. This should be spelled out to the buyer in the note.

Regardless of market conditions, seller take-back financing makes sound financial sense; it provides both buyer and seller with flexible financing options, makes the property easier to sell at a higher price and shortens the sales cycle. It also has the added advantage of being an excellent investment that generates a steady cash flow and high return. If you ever need immediate cash, you can always sell the note.

If you are planning to sell a property, then consider the many benefits of seller take-back financing, and make sure to discuss any legal and tax implications with your financial and legal adviser.

Buying A House In A Sellers Market

In different parts of the country right now it’s definitely a sellers market. Inventory of homes for sale is low, interest rates are low, and there are a lot of buyers out there looking to get into a home. The recent uptick in mortgage rates have even more buyers pulling the trigger. So how are you going to find your dream home when you are competing against so many other buyers?

When you find a home you like be sure to act on it quickly! Have your agent give you a tour of the house, don’t wait for an open house to happen! A lot of homes are getting offers within the first couple weeks of being on the market, so it’s important to arrange a showing quickly if it’s a home you are interested in. Wait too long and the home could be under contract.

Once you find the home you like it’s time to make an offer. Your agent should be doing a comparative market analysis of recently sold homes in the area that are similar sizes. This will help you determine if the list price is over or under what it will most likely be appraised at. Once you come up with a number you feel comfortable with, submit it to the seller and hope for the best!

If you find yourself in a multiple offer situation you might want to take a different approach. If it’s a house you really love consider doing an escalation clause. Instead of listing a price of what you’d like to buy at, tell the seller you are willing to pay $2,000 to $3,000 more than the highest bidder and want right of last refusal.

A seller is not going to object to getting more money for their home, and if the highest offer is outrageous you can always walk away from the home knowing it’s not worth it. But this way you’ll have peace of mind knowing that you didn’t overpay by thousands of dollars.

If the seller accepts your offer the house isn’t yours quite yet. It’s key that you get a home inspector to look over the home and try to find any damages that you might not be aware of. This includes things like a cracked foundation, mold, leaks in the roof, and other major repairs.

You can use your inspection as a way to gain leverage in negotiations, asking for items to be repaired or for credits at closing to make up for the repairs that need to be done. If the seller refuses to renegotiate this is one of the several points in the buying process in which you can walk away from the home with a valid reason.

The purchase of your home will also be contingent on the appraisal and your mortgage being approved. Using the right mortgage broker (like yours truly) will insure that the mortgage process won’t be long and frustrating.

Once you are clear to close by the bank the house can finally be yours! But until then be prepared for the emotional roller coaster that is buying a home.

Basic Things to Know When Buying a Home

The most important investment you will ever make is probably the purchase of a home. Finding the right home can be a long and arduous process, but there is no getting around that.

Know Your Wants And Needs

Before embarking on your journey of house hunting, you must know what you really want to find. Sit down with pen and paper and list all the features you care most about, such as:

– Location (in a particular city, school district or neighborhood)

– Size — how many bedrooms and bathrooms

– Parking — a 1-car garage or 2?

– Style — 2-story house or ranch style home?

– Heating — central heating and/or air conditioning?

Equally important, on a new sheet of paper list all the features you absolutely do not want in a house. For example:

– high-traffic area.

– high noise area (airport, train station or highway in close proximity)

– maintenance — major repairs needed

As you look at houses, keep both lists in mind. Your lists may change over time as you do more looking. You’ll want to add or remove features, or perhaps you’ll become willing to make compromises. Realize that you most likely will not find the “perfect” home. Experienced homebuyers will tell you, perfect homes are not found, they are made perfect through hard work.

Get Your Credit Report In Order

Prior to looking at properties, you must get your finances in order. This is the time to review your credit report and clean it up, if need be, to maximize your credit score. Many people do not realize how important it is to check your credit report periodically to make sure it is accurate. You should pay off any past due amounts, or negotiate a settlement price to close the debt. Get such agreements in writing, before paying any settlement. Keep all receipts for any settled items from your credit report since it may take months to get the debt actually removed. You can obtain a free credit report once a year from www.AnnualCreditReport.com

Research Your Home-Buying Options

Decide what kind of property you are interested in. Do you want a HUD property, a foreclosure, real estate, or property for sale by owner?

A number of web sites list homes according to city, state, or price range. Visit these sites to see pictures of homes, many with virtual tours, and review the listing features.

Get Pre-Approved For A Loan

You’re ready now to find a lender and get yourself pre-approved for the loan. Being pre-approved offers a number of advantages. It will clarify the price range you can afford. Also, once you find the home you want, you can place an immediate offer. If you have to wait for pre-approval, someone could buy the house right out from under you. Feel free to contact me to obtain a pre-approval.

Find A Good Real Estate Agent

It is wise for a first time homebuyer to work closely with a real estate agent, no matter what type of property you’re looking for. A knowledgeable real estate agent will make your house-hunting much easier. A good real estate agent is usually a good negotiator, and will be able to help you with the complicated paperwork involved in placing an offer on a house or in closing a deal.

To select a real estate agent, you should check with your friends and neighbors for recommendations. Find an agent you feel comfortable with and who is knowledgeable about the area you hope to buy in.

These are just the basics of home buying. You will find many details you need to master as you move through the buying process, but having these basics under your belt will give you a head start.

Debt-to-Income Ratio –It’s Just as Important as Your Credit Score When Buying a New Home

Your debt-to-income ratio (DTI) is a simple way of calculating how much of your monthly income goes toward debt payments. Lenders use the DTI to determine how much money they can safely loan you toward a home purchase or mortgage refinancing. Everyone knows that their credit score is an important factor in qualifying for a loan. But in reality, the DTI is every bit as important as the credit score.

Lenders usually apply a standard called the “28/36 rule” to your debt-to-income ratio to determine whether you’re loan-worthy. The first number, 28, is the maximum percentage of your gross monthly income that the lender will allow for housing expenses. The total includes payments on the mortgage loan, mortgage insurance, fire insurance, property taxes, and homeowner’s association dues. This is usually called PITI, which stands for principal, interest, taxes, and insurance.

The second number, 36, refers to the maximum percentage of your gross monthly income the lender will allow for housing expenses PLUS recurring debt. When they calculate your recurring debt, they will include credit card payments, child support, car loans, and other obligations that are not short-term.

Let’s say your gross earnings are $4,000 per month. $4,000 times 28% equals $1,120. So that is the maximum PITI, or housing expense, that a typical lender will allow for a conventional mortgage loan. In other words, the 28 figure determines how much house you can afford.

Now, $4,000 times 36% is $1,440. This figure represents the TOTAL debt load that the lender will permit. $1,440 minus $1,120 is $320. So if your monthly obligations on recurring debt exceed $320, the size of the mortgage you’ll qualify for will decrease proportionally. If you are paying $600 per month on recurring debt, for example, instead of $320, your PITI must be reduced to $840 or less. That translates to a much smaller loan and a lot less house.

Bear in mind that your car payment has to come out of that difference between 28% and 36%, so in our example, the car payment must be included in the $320. It doesn’t take much these days to reach a $300/month car payment, even for a modest vehicle, so that doesn’t leave a whole lot of room for other types of debt.

The moral of the story here is that too much debt can ruin your chances of qualifying for a home mortgage. Remember, the debt-to-income ratio is something that lenders look at separately from your credit history. That’s because your credit score only reflects your payment history. It’s a measurement of how responsibly you’ve managed your use of credit. But your credit score does not take into account your level of income. That’s why the DTI is treated separately as a critical filter on loan applications. So even if you have a PERFECT payment history, but the mortgage you’ve applied for would cause you to exceed the 36% limit, you’ll still be turned down for the loan by reputable lenders.

The 28/36 rule for debt-to-income ratio is a benchmark that has worked well in the mortgage industry for years. Unfortunately, with the recent boom in real estate prices, lenders have been forced to get more “creative” in their lending practices. Whenever you hear the term “creative” in connection with loans or financing, just substitute “riskier” and you’ll have the true picture. Naturally, the extra risk is shifted to the consumer, not the lender.

Mortgages used to be pretty simple to understand: You paid a fixed rate of interest for 30 years, or maybe 15 years. As time went on, mortgages started to come in a variety of flavors, such as adjustable-rate, 40-year, interest-only, option-adjustable, or piggyback mortgages, each of which may be structured in a number of ways. Many of these types of loans helped contribute to the mortgage crisis in 2008.

The whole idea behind all these types of mortgages was to shoehorn people into qualifying for loans based on their debt-to-income ratio. “It’s all about the payment,” was the prevailing view in the mortgage industry. That’s fine if your payment is fixed for 30 years. But what happens to your adjustable rate mortgage if interest rates rise? Your monthly payment will go up, and you might quickly exceed the safety limit of the old 28/36 rule.

These alternative mortgage products were fine as long as interest rates didn’t climb too far or too fast, and also as long as real estate prices continued to appreciate at a healthy pace. Make sure you understand the worst-case scenario before taking on one of these complicated loans. The 28/36 rule for debt-to-income has been around so long simply because it works to keep people out of risky loans. As we have gotten further away from the mortgage crisis that helped ruin the economy in the early 2000, lenders are now stretching those ratios based on the strength of the rest of the file.

Make sure you understand exactly how far or how fast your loan payment can increase before accepting a non-traditional type of mortgage. If your DTI disqualifies you for a conventional 30-year fixed rate mortgage, then you should think twice before squeezing yourself into an adjustable rate mortgage just to keep the payment manageable.

Instead, think in terms of increasing your initial down payment on the property in order to lower the amount you’ll need to finance. It may take you longer to get into your dream home by using this more conservative approach, but that’s certainly better than losing that dream home to foreclosure because increasing monthly payments have driven your debt-to-income ratio sky-high.

How to Unpack without Exploding

One of the forgotten steps in moving is the fact that physically moving your belongings from one spot to another is only part of the deal. Once you get your boxes and your mattress and your desk to its final destination, you still have to be able to find everything and put everything where it belongs.

A rule of thumb when surveying your house is that no matter how many box-fulls you think you have, a good idea is to at least increase your most generous estimate by at least 50 percent. And remember, for every box you pack, that’s a box you have to unpack.

According to data from the US Census, 14 percent of all American households last year moved. That translates to somewhere around 40 million people switching addresses.

Most of us take weeks, sometimes months to slowly and painstakingly categorize, wrap and pack all of our belongings. We spend months looking at prospective houses, arguing with our real estate agent and we spend days with our fingers crossed hoping we got the property we wanted.

But once you do get your dream house, then what? You took all this time to get everything ready and then you leave yourself….

ONE

DAY

…..to move everything. Yup, it’s just about as crazy as it sounds. But fear not, there are some common sense tips to keep your head from exploding. If you have the money, there are several companies out there that will help you pack up everything, and then once the movers do their thing, they will unpack pretty much everything. They will even take the boxes with them when they go. They will hang pictures, put your toothbrush in the bathroom and put the sheets on the bed. They will even get the computer up and running.

But, as you can imagine, these types of services aren’t cheap. If they aren’t in your budget, here are some good tips for do-it-yourselfers.

  • “See-through” is your friend. Stay away from opaque brown cardboard boxes and try to use as much clear packing material as you can. Clear plastic bins, Ziploc bags for small things, anything that you can think of that is clear and can hold large amounts of stuff.
  •  Lists Lists Lists. Write down what goes in every single box, so when you wake up that first morning in your beautiful new home and you want that first cup of coffee, all you have to do is grab that list and see that it’s in box 91.
  •  Have the utilities turned on before you move in. This is especially important if you have kids. Moves are traumatic enough for adults, but when little Johnny is having his universe ripped apart, it helps to be able to plop the kids in front of  Dora the Explorer for a bit while you try to recover from exhaustion.

While nothing can really prepare you for the mental and physical stress of moving day, being prepared and taking a few common sense steps can help keep things from getting too out of hand.

Free Moving Checklist

Are you moving in the next few weeks or months?  Are you ready for the move? Have you forgotten anything?

My free Moving Checklist identifies up to 60 things you need to take care of before you move; everything from arranging for transfer of your doctor and dental records to transferring your prescriptions, and whom to notify of your change of address.

It is divided into when to do what, starting 6 to 8 weeks before, straight through the big day. It’s a very handy list you’ll want to have, and it’s yours free with my compliments.

To download your free Moving Checklist, just click on the picture on the right, and enjoy your new home!

 

 

“Renting Back” After Your Home Is Sold

Sometimes it’s helpful to sell your home before you really want to move. This often happens when you are having a new home built, but aren’t sure of the completion date. Is there any way you can sell your home so you’re sure of the funds available for the new purchase, but continue to live in your old home until construction of the new one is complete? Yes, there is with the renting back strategy.

Enter the Lease-Back or Rent-Back Agreement

The particulars of this strategy vary from state to state, but in the strong seller’s market we’re experiencing, buyers will often agree to let the seller stay in the home for a period of time as long as rent is paid. In a competitive situation, the buyer willing to do this will often have the winning bid even though there is another offer as high as his.

The agreement covering the situation states the length of time the seller will remain. It can be done with a specific date named or wording that allows the seller to remain up to a specific date with the possibility of moving sooner. The amount can be a fixed figure paid out of the proceeds of settlement or a monthly amount, or a daily amount. It is usually, but not always, tied to the amount of the mortgage payment under the buyer’s new loan. Sometimes there is a deposit against damage, sometimes not. There is usually a clause saying the seller will hold the buyer harmless for any damage to himself or his property which occurs after the sale is consummated and before the seller moves.

The attorney who draws up your contract offer can create such an agreement. If you’re using online forms, you should be able to find one for this situation. If you’re working with a real estate broker, he or she can handle it for you.

I’ve recently seen a very pleasant example of this idea in action. An elderly widow contracted to have a one level condo unit built in a new community which provides all exterior maintenance. She had had hip replacement surgery and wanted to get away from the drawbacks of the home in which she’d reared her children. The home was large, had stairs and was located on a large, partially wooded lot with many mature perennials and shrubs. Both the home and garden were beautiful, but high maintenance.

Her contract to purchase required a series of deposits and a firm indication as to her source of funds well before settlement on her new condo. The widow put her home on the market. A young couple with two sons was very anxious to buy it. The situation was competitive. They made the widow an offer. She countered their original offer. She did not raise their offer price, which was slightly below her asking price. She did not believe the young couple would qualify for a larger loan. Instead, she did something rather creative.

The widow countered with a proposal that she “rent back” for a period of “up to” a certain date (a date beyond her scheduled competition date on the condo) in exchange for a modest flat sum to be paid to the buyer at settlement. The total rent back period was less than two months. The flat fee was less than the amount of the new mortgage payment for the buyers. However, since they made no payment on their new mortgage the first month, it wasn’t too far out of line. The couple really wanted the home, so they accepted the counter offer.

Another win, win situation was created. The widow only had to move one time and the young couple got a house they probably wouldn’t have in a straight bidding war. If you find yourself in a situation similar to either the widow or the young couple, perhaps you can work out a similar solution.

Buying a Home, What Should Your Offering Price Be?

You may have found the home of your dreams, but you know that you now have to make an offer. You see what the asking price is, but that doesn’t necessarily mean that it’s a realistic number. In order to submit your offer, you need to come up with a number. How do you do that? Try the simple steps below!

In order to get a realistic idea of the price of the home, look at other homes for sale in the area. Make sure that the homes you are looking at are comparable to the one you’re making an offer on. This should help you narrow down your price range.

Comparable sales are how you determine the base number of your offer. These are recent sales of homes in your area that have sold. You want to be able to compare the home you are purchasing to ones that are close in size, number of bedrooms, lot size, bathroom numbers, construction style and garage numbers.

If you have employed the help of a real estate agent, he or she will have no trouble looking up this type of information, and they have the best experience in helping you formulate an offer.

Furthermore, it is important that number you come up with is realistic in relation to the condition of the home. Are there updates that are needed to be completed? Are there serious renovations that you have to do? If so, take these things into account, because they can quickly depreciate the asking price of the home. Calculate how much you have to spend on renovations and updates to see how much you have to deduct at least from the asking price.

Is the seller including anything with the home? If so, what is it really worth? In some cases, sellers will provide the option of purchasing the home fully furnished or with appliances. These are usually items that they charge extra for, but you could purchase yourself much cheaper.

Why is the seller selling the home? In some cases, the circumstances of the seller impact their decision whether or not to accept your offer. You want to get a good deal, which is understandable, but depending on the seller, it may not be realistic. For example, if the seller wants to sell the home quickly, you have a better chance of haggling the price.

Keep in mind, some sellers are willing to wait out the perfect offer that comes close to their number. If the property is highly desirable, you may even have to pay over the asking price to beat the competition. The actual price of the property is never set in stone, and you need to come up with a “fair” price to submit in your offer using the information available to you.

Making your first offer can be nerve wracking and it can really give you insomnia. However, once you get over the initial shock of your first largest investment, you will find that making the offer wasn’t as hard as you thought it would be. Use everything you have just learned for success, and lots of luck!

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