Why Your Job Matters When Buying a Home

Did you recently change jobs or receive a promotion? Despite what you might have heard, it is still possible to qualify for a mortgage to buy or refinance a home using your new income. The lending atmosphere is rife with misconceptions about job gaps, job changes and occupational changes within the course of an employment time frame. You can get a mortgage if you switched jobs or even changed industries, you just have to approach it the right way to seal the deal.

When determining your ability to pay (and therefore determining how much house you can afford), a lender will calculate your average income based on your pay from the past 24 months. It’s pretty straightforward if you’ve had the same job and same income and pay structure, but if any of those things changed in the past two years — or will change soon, you may face challenges when trying to get a mortgage.

In the past, lenders were ready to strike down loan applications in which there was a job or an industry change. Even real estate professionals will tell you not to change jobs before applying for a home loan. While that very well may be the case for most situations, it is not necessarily so black-and-white.

If you have had a job change, no matter what, a lender is going to need the following things from you — and your employer — in order to close on a mortgage: an offer letter, a role change letter if you have a title change and commensurate compensation package change, and the most recent pay stub and verification of employment.

How Lenders View Hourly Employees

Hourly employees are under the tightest microscope when it comes to getting a mortgage. Why? An hourly employee may have a set full-time schedule, which is ideal for lending purposes. However, if you work slightly less than a full-time schedule, with hours that fluctuate from week to week, this can muddy the waters.

The income gets averaged as long as you’ve been an hourly employee — even if you’re making more money now on a per-hour basis. That’s right, if you were making $40 an hour, and now you earn $50 per hour, the averaged income during the past 24 months – including the lower wage — would apply. So what can you do to get the higher hourly rate factored in to your ability-to-pay calculation?

Here’s what you’ll need from your employer: An offer letter, a current pay sub and a detailed description of the compensation structure with a new employer. These items could get you an exception due to relocation or an alternative circumstance. In either capacity, a most recent verification of employment can bridge the gap between how many hours worked in the year to date, supporting the new federal ability-to-repay requirements.

How Lenders View Salaried Employees

Lenders love salaried employees the most because a set salary streamlines the income calculation in the qualifying process. If you’re changing from one salaried role to another salaried role, despite a job gap, this should be no problem for qualifying for a mortgage so long as you can explain any gaps in the most recent 24 months.

Each job you’ve held in the past 24 months — even if you’ve held multiple jobs — all have to be detailed and itemized with dates so there is no gap in employment. If there is a gap in employment, the lender will need a written explanation detailing the transition. If you have changed jobs from one salaried role to another salaried role, with a different title and a different position — even within a different industry — that still should be fine for your lender as long as you are paid the same way — a flat salaried income.

What If You’re Salaried With Overtime, Commissions or Bonuses?

Have a new job? Or a new salaried role with big commissions, overtime or bonuses? If you do not have a history of this additional add-on income, it cannot be counted for use when qualifying for a new loan.

Here’s an example of a transition that a lender will find acceptable when calculating average income: A police officer has earned overtime plus salary for the past 24 months, and decides to change jobs to become firefighter with overtime potential. In this case, the overtime will be included in the 24-month average. The overtime, bonuses or commissions must be consistent during that time period for that type of income to be included in the average. A borrower can’t have a history of overtime, then change jobs and now have add-on commission income and expect the lender to include the add-on income in the 24-month average when there is no prior history of it.

Changing From Salary to Hourly Pay

If you are moving from a salary role to an hourly role, the lender is going to have to use your hourly income supported with a pay stub and verification of employment. As long as the change is within the same field and your title and role are similar, you should be in the clear.

Future Promotion or Raise On Deck

Congratulations, you’ve been offered a promotion! But first: Has it actually occurred yet? If not, you will be hard-pressed to get the lender to use the projected income, even if it is guaranteed.

If you cannot provide a pay stub with year-to-date income (usually a 30-day pay stub depending on your specific lender requirement), along with a letter detailing the change, you won’t get approved for the loan. Let’s say, for example, you are searching for the house and you know in the next four months your income is going to increase to $6,000 per month because you’ll have a new role within your company. In order for that $6,000 per month income to be used in the calculation, you’d have to get the details of the raise, including the role change letter and at least one pay stub.

So if you are thinking about getting a mortgage, even if it is further down the road, consider opening a dialogue with a lender now so you can be guided through any income bumps the past or future may hold. It is especially critical for homebuyers to get pre-approved with a lender upfront prior to house-hunting. This process includes allowing a lender to review your credit, debt, income and assets to assess your ability to qualify.

This is also a good time to start looking over your credit reports and checking your credit scores so you can address any problems in advance of applying for a mortgage.

Source: blog.credit.com ~ By Scott Sheldon ~ Image: pixabay.com

Homebuyers Are Willing to Make Big Sacrifices for Top Schools

  • About 75 percent of homebuyers said that access to excellent schools was important in their search.
  • Nearly 80 percent of buyers gave up some home features to land in their preferred school district, with about one in five sacrificing a garage.
  • Palo Alto is home to the top-ranked school district and high school in California this year and also claims America’s best college.

Purchasing a home in a good school district has always been a high priority for buyers who have or want children, and recent survey results show just how much a neighborhood’s educational pedigree matters.

Nearly three-quarters of successful homebuyers said that the quality of the school district was either important or very important in their purchasing decision, according to a realtor.com poll and an accompanying analysis by company Chief Economist Danielle Hale. About the same amount — 78 percent — sacrificed some features to score a home in their desired school district.

Although a separate survey conducted by realtor.com earlier this year found that a garage was the No. 1 home amenity, 19 percent of buyers gave up that essential to gain access to an excellent school district. Eighteen percent sacrificed a large backyard, 17 percent gave up an updated kitchen and additional bedrooms, and 16 percent were willing to forgo an outdoor living space.

So what criteria defines a good school in the eyes of homebuyers? For 59 percent, test scores are the most important thing to look for. Next on the list are accelerated curriculums (53 percent) and music programs (49 percent).

The analysis also examined the most popular schools in every state based on 2018 search data from realtor.com. In California, the most searched elementary school is Cordelia Hills Elementary Hills in the Solano County city of Fairfield. For high schools, buyers are performing the most searches for Clovis North High School, located on the outskirts of Fresno.

Excellent educational opportunities are one of the reasons that Silicon Valley remains such a sought-after — and expensive — destination for California homebuyers. Earlier this year, Niche.com ranked school districts in Palo Alto, Los Gatos, Saratoga, and Mountain View as the best in California. Palo Alto’s Henry M. Gunn High School ranks No. 1 in the Golden State, while Stanford University is at the head of the class on Niche.com’s 2018 list of America’s best colleges.

But buyers who are intent on providing their children with a top-tier Palo Alto education will need to dig deep to pull it off. According to MLS data, the median price for a single-family home in the Santa Clara County city in the second quarter was $3.29 million, a year-over-year gain of 15.5 percent.

Source: blog.pacificunion.com ~ Image: pixabay.com

Mortgage protection insurance: Should you buy it?

When you take out a mortgage, you can expect to be pitched mortgage protection insurance. It comes in several forms, but it typically covers your loan payments if you lose your job or become disabled, or it pays off your mortgage when you die.

Would you benefit from mortgage protection insurance? Or is it just another way for your mortgage company to siphon extra money out of your wallet each month while protecting itself upon your death?

The answer depends on your health, financial situation and what you want to happen when you die. Here are the pros and cons of mortgage protection insurance, along with tips for getting the best policy at the right price.

What is mortgage protection insurance?

Mortgage protection insurance, or MPI (sometimes called mortgage payment protection insurance), is simply a form of life insurance. The cost depends on factors such as the amount of your mortgage, your age and your health. For MPI policies that cover a mortgage in the event of disability, costs also vary depending on your occupation.

If you purchase mortgage protection insurance that pays off your mortgage when you die, the insurance company will send a check directly to your mortgage company, leaving your heirs with a home unencumbered by a mortgage.

Payments also go directly to your mortgage company if your policy pays upon disability or job loss — but only for a certain period, typically a year or two, and there may be a waiting period before payments kick in. Also note that disability or job-loss policies pay only the principal and interest on your mortgage. But you may be able to get a rider to cover other mortgage-related expenses, like homeowners association fees.

Many people confuse MPI with private mortgage insurance, or PMI.

“You’re required by law to get PMI if you put less than 20 percent down to purchase your home,” explains Christopher Ketcham, a visiting assistant professor at the University of Houston Downtown, who teaches courses about insurance. “It has nothing to do with disability, job loss or death. It pays the bank if you’re foreclosed on.”

Pluses of MPI

A major benefit of mortgage protection insurance is that it’s typically issued on a “guaranteed acceptance” basis.

“If you fill out the application, few questions will be asked to keep you from getting coverage,” says Kevin Lynch, an assistant professor of insurance at The American College in Bryn Mawr, Pennsylvania. “That’s valuable for people who are uninsurable or insurable at a high rate because of health issues.”

It’s also valuable for people who work in high-risk occupations, such as roofers, who usually can’t get disability insurance.

Consider whether you want to spend the money on a mortgage protection insurance policy after you’ve factored all of the other big costs of owning a home.

Minuses of MPI

Mortgage protection insurance is a waste of money if you own your home outright. In addition, MPI is a declining-benefit policy, which means that even though you pay a set premium for the life of your mortgage, the payoff amount decreases as you pay down your home loan.

Having a policy that wipes out your mortgage if you die may not be best for your family. “When my father passed away very young, my mother’s home was paid off by a lump-sum payment to the mortgage company,” Lynch says. “Her mortgage payment was something like $112 a month. It would have been more beneficial for her to receive the lump sum and earn the 18 percent interest banks were paying in the 1980s while continuing to make the mortgage payment.”

Some financial planners say purchasing MPI is like buying tires, when what you really need is a car.

“Focusing on insuring for the mortgage is relatively myopic,” says Vernon Holleman III, principal at BCG Holleman, a financial planning company in Chevy Chase, Maryland. “Whether to pay off the mortgage upon a breadwinner’s death is a question you can’t answer unless you’re taking a comprehensive look at the family’s finances.”

Choosing and saving on MPI

If you have health or job risks that make life or disability insurance unavailable or too expensive, mortgage protection insurance is probably a smart option. But don’t sign up through your mortgage company without shopping around.

“Ask about the price and features of each policy and whether it can be converted into whole life insurance,” says Ketcham. “Also investigate the insurer’s financial condition through A.M. Best Co., which rates insurers.”

If you’re considering MPI payable upon your death, you might buy a level life insurance instead. Your policy wouldn’t decline in value and would cover not only your mortgage but also your family’s living and educational expenses in the absence of your income.

“You’re far better off using a level product because most insurance carriers allow a later reduction in the policy’s face value,” Holleman says. “If at, say, year seven in your policy, you decide your need isn’t $1 million but only $800,000, you can reduce the face amount and save through the reduced premium. You’re better off controlling the benefit than having it automatically reduced.”

Source: bankrate.com ~ By: G.M. FILISKO

Do You Need A Home Warranty?

When you purchase a home, even a home that isn’t new, there is a very good chance that you will be offered a home warranty. The seller may offer to purchase one on your behalf to provide peace of mind that any component of the home that fails can be fixed affordably. If not, you will likely receive numerous mail solicitations to purchase a home warranty once the sale closes. A home warranty may sound like a great form of financial protection against expensive, unforeseen home repairs. But is it really the safety net homeowners expect?

What Is a Home Warranty?

A home warranty is not the same thing as homeowners insurance, nor is it a replacement for homeowners insurance. Homeowners insurance covers major perils such as fires, hail, property crimes and certain types of water damage that could affect the entire structure and/or the homeowner’s personal possessions. A home warranty does not cover these perils. Rather, it covers specific components of the home.

A home warranty is a contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on a home’s major components, such as the furnace, air conditioning, plumbing and electrical system. A home warranty may also cover major appliances such as washers and dryers, refrigerators and swimming pools. Most plans have a basic component that provides all homeowners who purchase a policy with certain coverages. Homeowners can also purchase one or more optional components that provide additional coverage at additional cost.

Home warranty companies have agreements with approved service providers. When something that is covered by a home warranty breaks down, the homeowner calls the home warranty company, and the home warranty company sends one of its service providers to examine the problem. If the provider determines that the needed repair or replacement is covered by the warranty, he completes the work. The homeowner only pays a small service fee, plus the money she has already spent to purchase the warranty. (For for information, check 6 Tips To Sell Your Home Faster.

What Does It Cost?

A home warranty costs a few hundred dollars a year, paid up front (or in installments, if the warranty company offers a payment plan). The plan’s cost varies depending on the property type e.g., single-family detached, condo, townhome, duplex, and whether the homeowner purchases a basic or extended plan. The cost usually does not vary with the property’s age, unless the home is brand new, which increases the cost of coverage. The home’s square footage also does not affect the price in most cases, unless the property is more than 5,000 square feet. Separate structures, such as guest houses, usually are not covered by the basic policy but can be covered for an additional fee. However, garages should be covered by the basic policy.

In addition to an annual premium, home warranties charge a service call fee (also called a trade call fee) of around $75-$125 every time the warranty holder requests that a service provider come out to the house to examine a problem. If the problem requires more than one type of contractor to visit (e.g., a plumber and an electrician), the homeowner may have to pay the service fee for each contractor.

Having a home warranty doesn’t mean the homeowner will never have to spend a penny on home repairs. Some problems won’t be covered by the warranty, whether because the homeowner didn’t purchase coverage for that item or because the warranty company doesn’t offer coverage for that item. Also, home warranties usually don’t cover components that haven’t been properly maintained. Furthermore, if the warranty company denies a claim, the homeowner will still have to pay the service fee and will also be responsible for repair costs.

The Benefits of a Home Warranty

Like all warranties, a home warranty is supposed to protect against expensive, unforeseen repair bills and provide peace of mind. For a homeowner who doesn’t have an emergency fund or who wants to protect their emergency fund, a home warranty can act as a buffer. Home warranties also make sense for people who aren’t handy or who don’t want to worry about tracking down a contractor when they have a problem. Warranties can also make sense for people with expensive taste in appliances.

The subject of home warranties often comes up during the sale and purchase of a home. A home warranty can provide reassurance to a homebuyer who has limited information about how well the home’s components have been maintained (or how well the home has been built, in the case of new construction). A warranty can also be helpful for someone who has just depleted their savings to buy a home and wants to avoid any additional major expenses. For home sellers, offering the buyer a paid-up, one-year home warranty with the home purchase may provide a measure of protection against buyer complaints about any home defects that arise after the sale closes. However, providing a home warranty does not exempt the seller from her legal requirement to disclose any known problems with the home. (To learn more about protecting yourself, read Consumer Protection Laws You Need To Know.)

Home Warranties Have Drawbacks

If home warranties were perfect, everyone would have one. But they don’t. Why is that?

One major problem with a home warranty is that it will not cover items that have not been properly maintained. What is considered proper maintenance can be a significant gray area and is the source of many disagreements between home warranty companies and warranty holders. In a worst-case scenario, unscrupulous warranty companies may use the improper maintenance clause as an excuse to deny valid claims. In another scenario, the homeowner and the contractor who makes the house call may simply disagree over what constitutes proper maintenance.

Another common problem is that when a homeowner purchases a used home, it might come with a 10-year-old furnace that the previous owner did not maintain. At that point, no matter how well the new homeowner tries to care for the furnace going forward, he can’t correct the previous lack of maintenance. In addition, warranties have numerous exclusions, as well as dollar limits per repair and per year.

Home warranties aren’t expensive compared to the cost of repairing or replacing most of a home’s important components, and this fact is one of a warranty’s major selling points. However, there may be many years when nothing at all breaks down or wears out in the home. In these years, the homeowner gets nothing (except, perhaps, peace of mind) in exchange for his premium. That money could be put into an emergency fund for making the same repairs and replacements that the home warranty would cover. Also, if the homeowner tries to use the warranty and the claim is denied, he will probably feel like the money spent on the premium and the service call fee was wasted.

Home warranties do eliminate the need to find a contractor when something breaks. However, they also eliminate the freedom to choose your own independent contractor if you want the warranty to pay for the repair or replacement. If you don’t like the contractor or the work they do, you may be stuck with them. Furthermore, repairs may be more complicated with a third party (the home warranty company) involved in the process than a direct negotiation between a homeowner and a contractor would be. Also, the homeowner may have little or no say in the model or brand of a replacement component – though the warranty contract should provide for a similar- or equivalent-quality replacement.

The Bottom Line

A home warranty is not a perfect solution to the risks homeowners face. Before purchasing one, homeowners should read the fine print in the home warranty contract and carefully consider whether the warranty is likely to pay off. Home sellers who want to offer a warranty to buyers and homeowners/buyers who would feel more comfortable having a home warranty should also do careful research to find a reputable home warranty company that will actually pay for legitimate repairs when they are needed. (To help you with your home purchase, check out Top Tips For First-Time Home Buyers.)

Source: investopedia.com ~ By:  Amy Fontinelle

The Inside Workings of Credit Scores

Consumers are encouraged to check their credit reports once per year. The primary reason for doing so is to make sure there aren’t any mistakes. Unfortunately, credit reports are prone to contain mistakes. It’s not really the fault of the three main credit repositories, Equifax, Experian and TransUnion because all three are just a database. Whatever is reported to them is what you see. Further, someone with a similar name can show up on someone else’s report. If you’re not the only Bob Smith in town, this is certainly possible.

Someone else’s poor credit might very well be showing up on your report which can directly damage your credit scores. When you find an error work with your loan officer to get it fixed. Your loan officer has working relationships with credit agencies and can help get mistakes fixed and provide a method to get your scores back to where they should be.

But have you ever wondered how these scores are calculated in the first place? They follow an algorithm first developed by The FICO Company years ago. For a while, credit scores weren’t the primary force behind a credit decision but over time the impact of a credit score became more and more important. Most every loan program available today has a minimum credit score and if a score falls below the minimum, there’s some additional work that needs to be done to get those scores back on track.

There are five characteristics of your credit history that make up your three-digit score:  your payment history, account balances, how long you’ve had credit, the types of credit used and how often you’ve applied for new credit over the past couple of years.

Credit scores range from 300 to 850. Let’s say a borrower has a credit score of 600 but needs a 620 to qualify for a particular loan program. Credit scores will improve much more quickly by paying attention to the two categories that have the greatest immediate impact on a score- payment history and account balances.

Payment history accounts for 35 percent of the total score and account balances 30 percent. When someone makes a payment more than 30 days past the due date, scores will fall. An occasional “late pay” won’t really do much damage to a score but continued payments made more than 30, 60 or 90 days past the due date definitely will. By stopping the late payments scores will begin to recover.

Account balances compares outstanding loan balances with credit lines. If a credit card has a $10,000 credit line and there is a $3,300 balance, scores will actually improve. The ideal balance-to-limit is about one-third of the credit line. As the balance grows and approaches the limit, scores will begin to fall and fall even more should the account balance exceed the limit. This category contributes 30 percent to the total score.

The remaining three have relatively little impact. How long someone has used credit accounts for 15 percent of the score but there’s really nothing anyone can do to improve this area other than to wait. Types of credit and credit inquiries both make up 10 percent of the score. By concentrating on payment history and account balances, scores will improve significantly over the next few months.

Source: realtytimes.com ~ By: David Reed ~ Image: pixabay.com

Buying Your First Home? Plan for These Hidden Costs

Get those rainy day funds in order — you’re going to need them.

You’re excited because you just found the perfect home. The neighborhood is great, the house is charming and the price is right.

But if you’re a first-time home buyer, you might find out that the price is pretty far from perfect.

If you’re shopping for your first home, prepare for additional — and often unexpected — home-buying costs. They catch many home buyers unaware and can quickly leave you underwater on your new home.

Expect the unexpected

For almost every person who buys a home, the spending doesn’t stop with the down payment. Homeowners insurance and closing costs, like appraisal and lender fees, are typically easy to plan for because they’re lumped into the home-buying process, but most costs beyond those vary.

The previous owners of your home are the biggest factor affecting your move-in costs. If they take the refrigerator when they move out, you’ll have to buy one to replace it. The same goes for any large appliance.

And while these may seem like a small purchase compared to buying a home, appliances quickly add up — especially if you just spent most of your cash on a down payment.

You’ll also be on the hook for any immediate improvements the home needs, unless you negotiate them as part of your home purchase agreement.

Unfortunately, these costs are the least hidden of those you may encounter.

When purchasing a home, definitely hire a home inspector (this costs money too!) to ensure the home isn’t going to collapse the next time it rains. Inspectors look for bad electrical wiring, weak foundations, wood rot and other hidden problems you may not find on your own.

Worse still, these problems are rarely covered by home insurance. If an inspector discovers a serious problem, you’ll then have to decide if you still want to purchase the home. Either way, you’ll be out the cost of hiring the inspector.

Consider the creature comforts

Another cost is your own comfort. It’s easy to not think fully about what you’re expecting from your new home until after you move in.

Are you used to having cable? If so, is your new home wired for cable? It’s much harder to watch a technician crawling around punching holes in your walls when you own those walls.

And if you’re moving from the world of renting to the world of homeownership, you’ll probably be faced with much higher utility bills. Further, you could find yourself paying for utilities once covered by a landlord, like water and garbage pickup.

Plan ahead

The only ways to face the unknown and unexpected are research and planning. This starts with budgeting both before house hunting and throughout your search.

Look at homes in your budget that need improvements, and then research how much those improvements could cost. Nothing is worse than buying a home thinking you can fix the yard for a few hundred dollars and then realizing it will cost thousands.

There’s really no limit to how prepared you can be. Say you find a nice home that’s priced lower than others in the area because of its age. You may save money on the list price, but with an older house, you could be slapped with a much higher home insurance payment, making the house more expensive in the long run.

This is where preparation comes in. Research home insurance and property prices in the areas you’re considering to make more educated decisions before you ever make that first offer.

Clearly define how much you intend to put toward your down payment, and then look at how much cash that leaves for improvements and minor costs, like changing the locks. That way, when you find a house at the high end of your range, you’ll know to walk away if it requires a new washer and dryer or HVAC system upgrade.

Establish a rough estimate for as many costs as you can think of, and be extremely critical of homes at the top of your budget — otherwise, you could easily end up being house poor.

Know your budget and plan ahead. Buying a home is a lot less scary when you know what you’re getting into.

Source: Zillow.com ~ By: JONATHAN DEESING

A Home Buyer’s Guide to Motivated Sellers

Home shoppers outnumber home sellers in many places. If you’re a home buyer, you need every competitive advantage you can get. That’s why it pays to know how to find motivated sellers and persuade them to choose you.

The definition of “motivated seller” has changed since the depths of the economic crisis about a decade ago, when many motivated sellers were trying to avoid foreclosure. There are fewer of these desperate sellers now, but you can still find motivated sellers if you know where to look.

What is a motivated seller?

“A motivated seller is someone that needs to move out quickly,” explains Sonia Figueroa. Figueroa, a real estate agent with Century 21 Affiliated in Chicago, lists common motivators:

  • The home has been on the market for three months or more, and the sellers feel impatient
  •  The sellers are relocating for a job
  •  The sellers are divorcing. “They’re super motivated because they want to get rid of each other, get rid of their assets and be done,” Figueroa says.
  •  The owner died and the sellers are the heirs. “They just want to price it to sell it, to divvy up the money,” Figueroa says.

Identifying a motivated seller

Here are telltale signs that the seller is motivated: The home is priced to sell quickly, it has been fixed up and staged, and the listing photos were taken by a professional photographer, says Stacy Hennessey, a real estate agent with McEnearney Associates in Falls Church, Virginia.

Another sign is when the seller is willing to negotiate. That’s not the norm in a typical seller’s market, where “if you don’t come with a full-price offer or a near full-price offer with terms that the seller likes, they can say, ‘Thank you, but no. Next!’” says Terri Robinson, a real estate agent with Re/Max Select Properties in Ashburn, Virginia. A motivated seller will make a counteroffer, even to a lowball bid.

And sometimes a home’s listing contains the phrase “motivated seller,” or the seller’s agent says the seller is motivated.

Tips for buying from a motivated seller

Ask what the seller’s priorities are. “The question becomes what are their hot buttons? What are their needs?” Robinson says. Maybe the sellers need a place to live while renovation work on their new house is wrapped up. Or maybe the sellers want certainty that the buyer can qualify for a mortgage.

Offer to solve the seller’s problem. “From the very beginning, having your agent tell the listing agent that you will be flexible and you want to help them out” can give you the competitive edge, Hennessey says.

Get preapproved for a mortgage. With a mortgage preapproval, you can close faster and the seller is assured that the deal won’t fall apart because of problems getting financing.

Offer flexibility on the closing date. Your offer is more competitive if you can adjust your timing to the seller’s timing, Hennessey says. One seller might want to close as quickly as possible, and another might want to wait until the end of the school year.

Offer a larger-than-usual earnest money deposit. Offering more than your area’s customary deposit is a signal that you’re serious. “My sellers always ask me what the deposit is,” says Creig Northrop, president and CEO of Northrop Realty in Clarksville, Maryland. A 1% deposit is standard in Northrop’s market. More than that is “showing sincere interest. So if you can get in the 2% to 5% range of deposits, you’re in really good shape,” he says.

Pay your closing costs instead of asking the seller to pay. Depending on where you are, it might be customary for the seller to pay certain closing costs. Offer to pay them yourself.

Offer to rent the house to the seller for a limited time. Sometimes sellers want to close the sale of their home a few days or weeks before moving into their next home. You can offer to let the seller rent the home for a few days or weeks. Customarily, buyers charge a daily rate of the mortgage payment divided by the number of days in the month. Your offer will stand out if you don’t charge rent.

Source: nerdwallet.com ~ BY: HOLDEN LEWIS

Advice For Spring Home Buyers: Be Prepared For Lots Of Competition

Advice for spring home buyers can be found in this recently released survey from realtor.com® , a leading online real estate destination. Research highlights the reality of today’s home buying markets around the country. Advice and insights into one of the most competitive home buying markets in years can help buyers and let sellers know what to expect. Chief Economist at realtor.com Danielle Hale tells the story behind the numbers.

This year there is even less inventory than last year. According to our February 2018 data inventory is down 8.5% from last February. Days on Market (DOM) fell to 85 nationally from 90 last year.

The big news that impacts buyers according to Hale, inventory has declined for 42 consecutive months. What’s most interesting and what the research showed is buyers are getting the message that it is a tougher market this Spring. Either they have heard, or they have experienced it personally as they made offers and did not get the property, Hale adds.

Listen to Hale’s advice for buyers. You have to know exactly what your comfort zone is and the maximum price you can pay. It’s very important to be thinking about what you can afford as mortgage rates go higher especially if they move up quickly.

Take a look at the research from Toluna who in early March surveyed more than 1,000 active buyers. Clearly buyers are out there armed with as much market knowledge as possible. Many are more determined than before to strike a deal.

Here’s key research from the survey. The message is buyers are serious this Spring with 40 percent of buyers planning to put more than 20 percent down in hopes of getting ahead of the competition. Almost half (40%) of today’s buyers have been actively looking for a home for more than seven months. Many remain hopeful with 60 percent thinking they will close on a home within the next six months. Strategies to nab that dream home include checking listing websites daily, while 40 percent of buyers plan to put more than 20 percent cash down. More than a third are setting price alerts on properties. More than 25 percent will offer above asking price with  31 percent planning to put a larger earnest money deposit down.  Only 6 percent indicated they are not planning to use any tactics to cope with competition.

Boston’s David Bates, a long-time Broker Associate at William Ravis Real Estate sums it up.

“We have had a lot of strong markets, but this probably is the strongest I have seen. In my office, folks are talking about the significant competition for modestly priced properties outside the city, say around $500,000 or less. Someone had a 28-offer situation in Chelmsford, another had a 17-offer situation in Everett. I myself had a nine offer and six offer situations in Beverly. These are not the most sought-after communities in Greater Boston. Perhaps there are a number of things motivating buyers, but high on the list is the lack of affordability in and close to the city.”

If you plan on house hunting this Spring, good luck. If you plan to sell this Spring, chances are your home will sell quickly and possibly for above asking price if it’s priced right, in excellent condition and has location, location, location going for it.

Source: forbes.com ~ By: Ellen Paris, Contributor

Jump Start Your Organizing And Simplify Your Next Move

When you’re selling your home, getting your belongings organized can seem like a low priority. You’re dealing with finding the right real estate agent, the best time to list your home on the market, and maybe even house-hunting for a new place to live.

All of that can keep you quite busy considering many of us have to do those things while we work a full-time job. Organizing your home so that you can simplify your move just doesn’t seem practical.

However, there is one main reason why getting organized can not only simplify your next move but also help improve your chances of selling your home faster and for more money.

When you go through the process of getting organized, you should be eliminating items from your home which helps to clear clutter. Clearing clutter is one of the first things agents and experts who stage homes for sale will tell you to do.

When the clutter is gone, the home can be shown much easier. Potential buyers can see what makes your house so special and different from others in the neighborhood.

If you’re putting off the process of getting organized because you think you should wait until you accept an offer, let me encourage you to get motivated to do it sooner. I’ve seen it happen many times. The homeowner thinks there’s plenty of time and then when an offer is accepted they’re thrust into high gear because the buyer wants to close escrow fast.

Of course, your agent can negotiate the closing date but sometimes a faster closing is a must. Yes, you may be able to rent back from the new owners to give you more time to prepare to move but you can’t avoid the fact that you’ll need to move at some point.

Here are five tips that can help you jump start your organizing and simplify your next move. You will be glad you start before you get an offer to purchase your home.

1. Sort piles of belongings into groups: keep, giveaway, maybe, and trash. The “maybe” pile you box up and seal for six to 12 months. If you don’t have a use for your items in the “maybe” box during the year then perhaps you can donate it.

2. Give yourself plenty of time. Be patient this process of getting organized takes time. Know that when it comes to sorting through personal papers and memorabilia it will take you much longer than reviewing other items. Leave some extra time for the expected reminiscing that will occur.

3. Store your items in clear plastic bins. Using clear boxes helps to let you have a quick view of what’s inside. If you used cardboard boxes or colored bins, then use a pen to clearly label what’s inside and which room it will go in at your new home. You might want to use a large piece of paper to write the label on so that you can reuse the bin again later for another purpose.

4. Get rid of the paper. A big problem in many homes is the paper trail they have from room to room. It could be magazines, newspapers, documents, advertisements, receipts, you name it. Most homeowners keep a lot of paper which creates a lot of clutter. Go through your files and reduce the paper by shredding or recycling documents you don’t need. You’ll find that a lot of what you’re hanging on to, you just don’t need.

5. Do it now! This is the most valuable tip. As soon as you finish reading this, go put a time on your calendar when you will begin to get organized. Placing it on your calendar should help you block off time to get started and prevent procrastination. If you take care of things right away, you’ll find that life gets simpler. The same goes for your move. So, get organized and simplify your next move!

Source: RealtyTimes.com

Terms Every Homebuyer Should Understand

If you’re buying a home, you’ll more than likely be obtaining a mortgage, which you may not know much about. In fact, unless you’ve been involved in a home sale before, there are many things you will be learning about for the first time.

Here is a handy list of some of the key terms that every person involved in a real estate transaction should understand.

Appraisal: The written analysis of the estimated value of a property, as prepared by a qualified appraiser, which often determines if you will qualify for the loan.

Closing: One of the last steps of any sale. This is the meeting where the lender, buyer and seller complete the sale and mortgage process. Once the home closes, the home officially belongs to the new buyer.

Closing costs: This term refers to the money paid at closing to the lender and consists of a loan origination fee, points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. Closing costs usually average between 2 – 6 percent of the total mortgage amount.

Credit report: Simply a report of your credit history that a lender will use to determine if you are a good risk for a loan.

Interest-only mortgage: A loan whereby you only pay the interest portion of the mortgage payment each month.

Interest rate: The annual interest on a loan. The lower your interest rate, the lower your monthly payment will be.

Lock-in: The lender’s guarantee that you will be granted a certain interest rate for a specific time period, such as 30 days before closing.

Origination fee: The fee charged by a lender for processing a loan.

Points: The amount that can be paid to a lender to lower the interest rate on your loan at closing. Each point is equal to 1 percent of the loan amount.

Private mortgage insurance (PMI): For those buyers who put less than 20 percent down on a home, lenders will require you to take out PMI, which is then added to your monthly mortgage payment. This protects the lender in the event that you default on the loan.

Title: The home document that proves ownership of the property.

Source: rismedia.com