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.

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.

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.

10 Steps to Getting Top Dollar for Your Home

When you decide to sell your home you should immediately begin referring to it as a house. You’ve become emotionally attached to this place and it’s now time to say goodbye. Start detaching yourself by making some changes that will help you with the sale of the house.

You probably have accumulated a lot of clutter over the years. This must be the first step.

1. Unclutter your home. Start in the basement and either throw things out or rent a locker off premises to store it until you move, but prospective buyers need to see what the house looks like behind all your stuff. This means going room to room and clearing everything out that makes it look junkie and disorganized.

2. Neutralize the personal nature of your home. You may love the native tapestry on the living room wall from Bora Bora but I’ll guarantee, 95% of your prospects will have it on their mind when they leave your home and not in a good way. Nick knacks and generally all things that you’ve previously enjoyed should be stored away until after the sale, that includes grandma’s spoon collection that takes up half a wall in the kitchen. Replace these things with neutral items like picture frames or vase with a simple arrangement.

3. Minor cosmetic work. Once you remove the clutter you will see all the things that you’ve been meaning to get to over the years. Painting where necessary, new carpet/s, moldings repaired, cracked plaster and re-taping/ repairing drywall. When making these improvements think neutral colors for any coverings be it paint or carpets. If you have hardwood floors sand them and finish them. Area rugs can look amazing. Whatever you do, don’t over do it. Try and think like a buyer.

4. Hire a professional cleaner. Once you have the house cleared you should hire a professional cleaning crew to wash the walls, windows, work over the kitchen and bathrooms, clean the floors and shampoo all carpets that don’t need to be replaced. Your house should be spotless and kept this way for the duration.

5. Staging each room. If your rooms are smaller rearrange the furniture to make the room look bigger. For example removing some furniture is better than having too much cramped in. Set your furniture up in conversation pit style. Like a gourmet coffee house, make it cozy. Pull couches away from walls to give the appearance of depth. Remove wall clutter, one or two pictures but no more. Generally make it look inviting.

6. Kitchen and bathrooms. These are the most important rooms in your home to a buyer. Make sure they are impeccable. Plumbing fixtures should be working properly and look like new or they should be replaced. Use a good cleaner or even a metal polish to make them gleam. Showers and tubs need to be spotless! Sinks and vanities need to be pristine and uncluttered. Kitchen cupboards should be orderly, doors opening and closing properly, drawers the same. I can’t stress enough how important these two rooms are to your potential outcome.

7. Doors and windows. First thing prospects see when they walk in your home is a door. Make sure its painted or cleaned up and that it will open and close properly. This goes for screen doors as well. Often screen doors are a problem people let go. Not anymore. Windows should all be cleaned and be sure if someone wants to open them that they work properly. If they have been painted closed as is the case with some older homes, now is the time to get them to open. Do whatever it takes.

8. Garages and workshops. These are the second most important areas. Again remove all clutter from the garage and make it accessible so you can actually park your car in it! As for the workshop, try and organize it so the handy person prospect will appreciate what they can do with their “new shop” when they move in. It’s all about your prospect picturing themselves in your house.

9. Family effort. Everyone in your family needs to be on board with the presentation of the house. This means your kids need to buy into the project and keep their rooms tidy. Bribe them if you need to but everyone has to help maintain the appearance of the entire house.

10. Odors and pets. Wow, is this ever important! If you have pets, only you really love them. When you walk into a house with dogs or cats you immediately smell them, especially if you don’t have your own. Keep litter boxes fresh and clean daily. Restrict your animals if at all possible to certain areas of the home until after the sale. Vinegar and water will do wonders when you clean their areas every other day until the sale is complete, and top it off with effective air fresheners wherever you need them. Vacuum often with carpet fresh powders two or 3 times a week.

This sounds like quite a bit of work and it is. Try and remember that by following these tips you could easily add five to ten thousand dollars to the sale price of your home, maybe more. A little elbow grease now will be a solid investment.