Seller Tips: Staging Your Home

I heard something in one of my real estate classes that really stuck with me.  We were talking about asking sellers to really clean up their house before putting it up for sale, and how it used to be such a negative thing to have to bring up.  All of a sudden, enter HGTV and the new buzzword of staging, and voila, happy clients, happy realtors. 

Staging your home does not need to be elaborate.  Certainly if you want to go all out and make your house look like something out of the pages of a magazine, go for it.  There are even companies and professionals you can hire who will do the work for you. 

If your budget doesn't lend it self to hired help, think smaller.  There are plenty of things you can do that will spruce up your home without you needing to spend much money.  My mantra:  Declutter, reorganize, repurpose.   

• First step - Decluttering.  There is no way around this.  Buyers will look in your closets, your cupboards, your basement.  When my husband and I had our house for sale we bought many, many rubbermaid totes.  We rented a storage unit, built shelves in the basement and packed up a lot of stuff we weren't using. 

• Have a plan for your junk.  There is no way around this.  If you have kids, they have stuff.  This is where laundry baskets can be wonderful.  If nothing else, throw everything you can into them for a last minute showing and put it in your car.  Clutter needs to be managed.

 

• Paint something.  Two things I would recommend for an instant makeover are your front door and your front steps, if they are wood.  It gives you instant curb appeal, and can make your whole house look better. 

• Look at your furniture differently.  It doesn't have to stay where it has always stayed in your house.  Move around chairs, tables, your couch.  Try a different arrangement, move things away from the walls. 

• Spruce up your bathroom.  Find a basket, pull out some of your nicest handtowels and roll them up, put them in the basket and leave it in the bathroom.  Collect some small toiletries, leave them in a basket in your guest bathroom.  Make your house look inviting.  

• Look at your knick knacks.  Pack half of them away.  Then pack more.  Look at what you have left, and find a new place for it in your home.  Add small arrangements of candles, vases, books.  This is the part where you can try to look like a magazine.  :-)

Your realtor can be a great help, but remember, its not every realtor who can look you in the eye and tell you your house is a mess.  Look at your home with fresh eyes.  Look at it like a buyer.  I know a lot of realtors will recommend you remove all pictures from your house.  I am also a Mom, so I have a slightly different point of view.  You do need to live in your house.  But pare down.  Take the pictures off the fridge.  Pack away all but your favorites.  Think of it this way, for everything you pack now, you don't have to worry about packing it later. 

More staging tips can be found in this article from HGTV.  Enjoy!

Jennifer

5 Ways to Mess up your Loan Approval

Today I want to shed some light on a subject that I think is very important to home buyers.  When you buy a home, there are several stages of the financing process.  Early in the game, you get a pre-approval.  Basically, a lender is going to check your credit, verify your income, and give you an idea of what you qualify for in a loan.  This pre-approval gives you an idea of what you can afford, and also serves as proof of funds when you make an offer on a property.

Typically, within 5 days of having a contract accepted on your purchase, you need to go back to your mortgage lender for the official loan application.  The loan approval can take anywhere from 30-90 days, depending on the type of loan you are looking at.  At the end, before final loan approval is given, your credit will be checked again.

This final credit check is where some buyers can get into trouble.  Think about what happens when you buy a house.  You might need to start shopping.  You go to the store, buy some new furniture and appliances, and have them ready to deliver to your new home.  Sometimes people even go out and buy a car, or a lawnmower, celebrating their deal, anticipating the money from the sale of their house.

The problem is, unless you are paying cash, all these transactions are going to show up on your credit report.  In the case of the new car, you are basically adding to your monthly expenses, which might even throw your debt to income ratio so far off that you no longer qualify for your loan.

So, the rule is, once you apply for a loan, do not do anything that could affect your credit.  Any of the following could damage your chances of getting loan approval for your new home:

• Applying for new credit, whether it be a credit card or a payment plan for your new couch.  
• Withdrawing large amounts of cash from your bank account.  
• Depositing large amounts of cash into your bank account.  
• Missing a payment on something else, or paying a bill late.  It is especially important to keep on top of all of your bills during this time!
• Making a big purchase using a current credit card

What is a home buyer to do if you need to make big purchases?  

• Use cash.  Either start taking out smaller amounts of cash before your loan application, or buy yourself some gift cards to use
• Wait!  Once you are in your new home, there is plenty of time to get your new things together
• Ask a relative for help.  
• Check with your loan officer before you make any purchases, and have them check to make sure you aren't going to mess anything up.  

This information is often surprising to buyers, and I always make sure to share it with my clients.  I hope you find it helpful!  Did I miss anything?  Leave me a comment if you have some other advice to share.  

Jennifer

Money Mondays: Comparing Mortgage Lenders

These days, finding a lender can be tricky.  Mortgage rates are currently at record breaking lows, but getting into a mortgage at those rates can be hard.  I can't stress enough the importance of finding a lender you are comfortable with, and who has good communication with you.  As an agent, I know locally the banks that are easy to work with and those that are difficult.  Find a good lender!  

This article talks about the questions to ask when finding a lender.  You should compare the rates, their credit score allowances, and communication effort.  

Have a good Monday!  

Jennifer

Tips for Comparing Mortgage Lenders 

Even if you elect to get quotes from various mortgage providers online, you can also check local mortgage providers. Your local newspaper most likely provides quotes for some of the most competitive mortgage lenders in your community. You may find that working with a local mortgage provider is most convenient. As you see later on in this article, the amount of paperwork that you’re required to pull together and provide to the lender is substantial. When working with a local lender, the loan-acquisition process may be easier than working with an online lender. 

Be sure to ask the following questions of potential mortgage lenders: 

What is the current interest rate of the mortgage being considered? Are discount points (money you spend to buy down the interest rate) or origination points (fees that some lenders charge) included? Generally, you’ll want a loan with the lowest interest rate without discount points. However, if you have lots of extra cash on hand and plan to stay in the home for a very long time, you may benefit from paying discount points. You should be able to completely avoid origination points. 

Will you please provide me with a good-faith estimate illustrating all my fees and closing costs? If the lender refuses, then don’t do business with them! 

Can I lock in the interest rate, and if so, what will it cost me to do so? Lenders will allow you to secure an interest rate in advance of closing on your mortgage. You may want to lock in the current rate if you suspect rates will go up before closing. Lenders will charge a fee to provide you with a guaranteed rate. The lower the fee, the better! 

What is the minimum down payment required for this loan? Many loans require a 20% down payment. The lender will need to know how much of a down payment you plan on making to determine the right loan options for you. 

What is required for me to obtain a prequalification or preapproval letter? 

Is there a prepayment penalty on this loan? There's absolutely no reason to obtain a mortgage that has a prepayment penalty. If the lender is offering a loan with a penalty for paying it off early, walk away. The chances of you staying in that home and not refinancing your mortgage at some point over the next 30 years are highly unlikely. 

You must remember that the cost of your mortgage includes not only the interest rate, but also the closing costs, which can be substantial. Typically, you should anticipate closing costs to be in the neighborhood of $1,200 to $1,500, but the closing costs do vary greatly between lenders. Generally, these costs must be paid out of pocket, along with any discount points, at closing. However, closing costs and discount points are negotiable items, and you may be able to negotiate with the seller to pay these costs for you. If the seller isn’t paying these costs for you, don’t forget these additional costs must be paid along with your down payment when you close on the mortgage and obtain the deed to your new home.

[source: http://www.dummies.com/how-to/content/tips-for-comparing-mortgage-lenders.html]

Cost vs. Value - Renovations that are worth it

I have had a lot of people ask me what home remodeling projects might be worth it if you are thinking about selling.  I found this report from Remodeling Magazine, and it had good information!

My best tip for you is this.  You are not going to get dollar for dollar returns on any project.  But you live in the house.  Do things that YOU like, that make you feel better about your living space.  I'm not going to lie, granite countertops are going to attract a lot of buyers.  But, you will not be able add the amount you spent on your new counter tops to the price of your house.  It might bring you a buyer though, and that might be worth the price of granite.

Happy Remodeling!

Jennifer

2011-12 Cost vs. Value: Big-Bang Remodeling Projects 

Find out which remodeling projects will provide the biggest bang for your buck this year, according to Remodeling magazine.

MARCH 2012 | BY ERICA CHRISTOFFER

Optimizing the use of space in a home will not only attract buyers but also give sellers more bang for their buck, according to Remodeling’s “2011–12 Cost vs. Value Report,” conducted in cooperation with REALTOR® Magazine and NAR’s HouseLogic.com.

An attic bedroom addition costing $50,148 was expected to recoup 72.5 percent of the cost nationally—inching up 0.3 percent from the 2010–11 report. The minor kitchen remodel also fared well, returning an estimated 72.1 percent of the nearly $20,000 job cost.

The report looks at the estimated cost and expected resale return of 35 midrange and upscale remodeling projects in 80 markets. The estimated costs and returns were derived from a survey of more than 3,000 REALTORS® conducted last summer. As in past years, REALTORS® picked exterior projects to recoup the most at resale. Among those, new fiber-cement siding was expected to provide the highest return, recouping an estimated 78 percent of the $13,461 cost.

Top 6 Returns

Siding Replacement (upscale) - fiber-cement
Job Cost: $13,461
Resale Value: $10,493
Cost Recouped: 78%

Entry Door Replacement - steel
Job Cost: $1,238
Resale Value: $903
Cost Recouped: 73%

Attic Bedroom Addition
Job Cost: $50,148
Resale Value: $36,346
Cost Recouped: 72.5%

Kitchen: Minor Remodel
Job Cost: $19,588
Resale Value: $14,120
Cost Recouped: 72.1%

Garage Door Replacement
Job Cost: $1,512
Resale Value: $1,087
Cost Recouped: 71.9%

Garage Door Replacement (upscale)
Job Cost: $2,994
Resale Value: $2,129
Cost Recouped: 71.1%

Remodeling’s2011-12 Cost vs. Value Report ©2011 by Hanley Wood, LLC. Republication or redissemination of the Report is expressly prohibited without written permission of Hanley Wood, LLC.“Cost vs. Value” is a registered trademark of Hanley Wood, LLC.Visit www.costvsvalue.com for information on all 35 projects. There, you can also download a free PDF providing information on average cost and resale value nationally, regionally, and in a specific market. Estimates for construction costs were compiled by HomeTech Publishing.

Visit HouseLogic.com for great remodeling and home maintenance advice.

[source:  http://realtormag.realtor.org/home-and-design/cost-vs-value/article/2012/03/2011-12-cost-vs-value-big-bang-remodeling-projects]

Buying a Home Series: Closing the Deal

Okay, so you found the one.  Now what?  This is the part where it really helps to have a buyers agent on your side.  There is a startling amount of paperwork that goes into a real estate transaction.  There are so many things beyond the part where you have an offer accepted by the seller, and it is good to have someone organized to see you through it!  If you work with me, I have a detailed checklist - blame the former teacher in me.

Closing actually takes place in several parts.  You are considered under contract once the seller has accepted your offer and both parties have signed the required papers.  This contract is binding, but typically has several provisions, like the buyer obtaining financing and inspections.  The contract will set an approximate closing date, where all financing should be in place, inspections done, and all arrangements made for the seller to actually move out of their house, if the property is occupied.

Understand that in real estate, there are all kinds of things that can happen to change that date.  The bank could be slow getting paperwork from you, the seller could have a closing date on a new home they are working around, or your title company might be busy that day and not able to do it until the next morning.  On closing day, you sign all of your paperwork, but until the deed is filed with the county, you typically do not get ownership transferred.  So don't drive your U-Haul to closing!  Typically, in my market, possession takes place a couple of days after closing to allow for all of this to happen.

After all of this, all that is left is to move in!  This is the last article in this series, I hope it was helpful.  Don't forget to follow me on Facebook too!

Enjoy - good information here!

Jennifer

Closing on a New House

Once you find the house you want, you need to move quickly to make your bid. If you're working with a buyer's broker, then get advice from him or her on an initial offer. If you're working with a seller's agent, devise the strategy yourself. 

Try to line up data on at least three houses that have sold recently in the neighborhood. Calculate the difference between the original list price and the final price of the homes sold. If the average difference is, say, 5% below the asking price, then you know you can make an offer 8% to 10% below, leaving yourself a little room to negotiate. 

If you really want the house, don't lowball. The seller may give up in disgust. 

Another factor to consider in determining your bid is whether the trend in recent home sales is up or down over the past year. For instance, if houses a year ago were selling at list, and recent ones are going at 3% below, then you might want to sharpen your pencil for your opening bid to just 5 to 8% below list. 

There's no foolproof system for negotiating a fair price. In general, don't let the other side begin to believe you are negotiating in bad faith or being deceptive -- any deal you eventually reach has to involve trust on both sides. 

Be creative about finding ways to satisfy the seller's needs. For instance, ask if the seller would throw in kitchen and laundry appliances if you meet his price -- or take them away in exchange for a lower price. Remember, too, that your leverage depends on the pace of the market. In a slow market, you've got muscle; in a hot market, you may have none at all. 

Once you reach a mutually acceptable price, the seller's agent will draw up an offer to purchase that includes an estimated closing date (usually 45 to 60 days from acceptance of the offer). 

Have your lawyer or buyers agent review this document to make sure the deal is contingent upon: 

        1. your obtaining a mortgage; 

        2. a home inspection that shows no significant defects (make sure you're clear on the definition of          "significant"); 

        3. a guarantee that you may conduct a walk-through inspection 24 hours before closing.  This last     clause allows you to check the home after the sellers have moved out so that you have time to negotiate payment for repairs, just in case the movers cause any damage, or that big living room sofa was hiding a hole in the floor. 

You also need to make a good-faith deposit -- usually 1% to 10% of the purchase price -- that should be deposited into an escrow account. The seller will receive this money after the deal has closed. If the deal falls through, you will get the money back only if you or the home failed any of the contingency clauses. 

Now call your mortgage broker or lender and move quickly to agree on terms, if you have not already done so. This is when you decide whether to go with the fixed rate or adjustable rate mortgage and whether to pay points (see "Picking a team"). Expect to pay $50 to $75 for a credit check at this point, and another $150, on average to $300 for an appraisal of the home. Most other fees will be due at the closing. 

If you don't already have one, look into taking out a homeowner's insurance policy, too. Ask for recommendations from friends, your lawyer or your real estate agent. Most lenders require that you have homeowner's insurance in place before they'll approve your loan. 

In addition to the appraisal that the mortgage lender will make of your home, you should hire your own home inspector. Again, ask for referrals, or check with the American Society of Home Inspectors, a trade group. An inspection costs about $300, on average, and up to $1,000 for a big job and takes two hours or more. 

Ask to be present during the inspection, because you will learn a lot about your house, including its overall condition, construction materials, wiring, and heating.  If the inspector turns up major problems, like a roof that needs to be replaced, then ask your lawyer or agent to discuss it with the seller. You will either want the seller to fix the problem before you move in, or deduct the cost of the repair from the final price. If the seller won't agree to either remedy you may decide to walk away from the deal, which you can do without penalty if you have that contingency written into the contract. 

About two days before the actual closing, you will receive a final HUD Settlement Statement from your lender that lists all the charges you can expect to pay at closing. Review it carefully. It will include things like the cost of title insurance that protects you and the lender from any claims someone may make regarding ownership of your property. The cost of title insurance varies greatly from state to state but usually comes in at less than 1% (in Iowa, as little as 0.1% plus a fixed fee) of the home's price. 

The lender might also require you to establish an escrow account, which it can tap if you fall behind on your mortgage or property tax payments. Lenders can require deposits of up to two months' worth of payments. 

After all this rigmarole, the actual closing is often somewhat anticlimactic, though perhaps still nerve-racking. It's a ritual affair, with customs that differ by region. Your lawyer or real estate agent can brief you on the particulars.

[source:  http://money.cnn.com/magazines/moneymag/money101/lesson8/index6.htm]

Photo Fridays - Project Inspirations and More!

Starting today, I want to introduce a new feature on the blog.  Every Friday, I would like to show you examples of project before and afters, brags about renovation or redecorating from my readers, and to have guest bloggers share their stuff.  I hope this becomes an exciting place to find ideas, and to see some real life inspirations.

If you have anything you would like to brag about or share, please contact me!  It can be as simple as a fresh coat of paint that changed the mood, or an organizational change to your playroom. You can email me at jmiller@cutlerhomes.com and I will share the information with you.

Today's project inspiration is transforming a standard entryway closet into an entry nook.  I found this post on one of my favorite blogs, Hooked on Houses , where they were sharing the project from another favorite blog of mine for inspiration, The House of Smiths.

If you have kids, this kind of organization could be a gift from above.  I have three little ones at home, and our closet is always a mess of hats, gloves, shoes and coats.  Having a place for everything and everything in it's place sounds fabulous.

Please follow the links above for a detailed description of how they did it (and what they did with the rest of their stuff), but in the meantime, marvel at the Before and Afters!  Doesn't it look beautiful?  My husband has dreams of doing this in our laundry room, but for now that project is on hold while we finish unpacking and tear down wallpaper!  

Again, please visit The House of Smiths for DIY tips, a description of this project and more.

Happy Friday!

Jennifer

Buying a Home Series: House Hunting

This is the fun part.  You've seen the shows, you go to three desirable homes, discuss granite countertops and closet size, and then pick your favorite.  Right?

Ha.  In reality, according to the National Association of Realtors latest stats, it take the average homebuyer 3 months to find their dream home.  This could mean a lot of looking and talking about closets and countertops.  With the information available online today, you can really find out a lot of information before you go out to look, but don't let the pictures you find online tell the whole story.  A good agent can make even a bad space look good, and a lazy one can make a beautiful house look like a dud.

Do your research.  Find out what neighborhoods you really love, and look at all possibilities in that neighborhood.  Consider homes that might be slightly different from what you are looking for.  Looking for an extra bedroom for your office?  What about a home with less bedrooms, but a great space in the basement?  Think you need move in ready?  What about finding a house with good bones, and doing the updating yourself?

Make sure you have a good buyers agent who will show you the houses YOU are interested in, not just the ones that will make them the most money.  A good agent listens to your needs, adjusts accordingly, and shows you the houses you are interested in.  Contact me if you are looking for someone like that, I would be happy to help.  Also, check out my website, www.jennifersmiller.com where you can set up a Home Finder account where you can search for homes, save the ones you like, and get automatic notifications when new homes hit the market that meet your needs.  I can also set you up with something called Market Watch, where you can see recent home sales, homes on the market, and other stats regarding your area of interest.  It is a great way to keep an eye on your neighborhood.

I hope this article is useful!  I think it downplays the role of a good agent and the fact that they are the key to getting you into homes that you like.  If you are looking for a good buyers agent, contact me today!

Jennifer

House Hunting

Your first step here is to figure out what city or neighborhood you want to live in. (Remember the old saw about "location, location, location.") 

For overall demographics and data on metropolitan areas, you can visit a city site like CNNMoney's annual Best Places to Live list. For more detailed neighborhood information, check out sites like AOL Real Estate, Trulia.com, Zillow.com or NeighborhoodScout for comprehensive school and demographic information on a number of communities. Look for signs of economic vitality: a mixture of young families and older couples, low unemployment and good incomes. 

Pay special attention to districts with good schools (high teacher-student ratios and graduation rates are among the hallmarks), even if you don't have school-age children. When it comes time to sell, you'll find that a strong school system is a major advantage in helping your home retain or gain value. 

Try also to get an idea about the real estate market in the area. For example, if homes are selling close to or even above the asking price, that shows the area is desirable. Try Homegain.com, which is free, or Dataquick.com, which is available only to paid subscribers, to check out recent home sales. 

Your real estate agent may also be able to show you listings. Incidentally, if you have the flexibility, consider doing your house hunt in the off-season -- meaning, generally, the colder months of the year. You'll have less competition and sellers may be more willing to negotiate. 

Be wary of choosing search criteria that are too restrictive. For example, select a price range 10% above and 10% below your true range. Add a 10-mile cushion to the location you specify. If you see a house you are interested in, save it, print it, add it to your bookmark or favorites list, and take note of the MLS code; your agent will want that code to arrange to show you the home in person.  

When you actually start touring homes, bring a notebook and a digital camera to help you remember details. Your real estate agent should supply you with a description of each house and the lot it sits on, the property tax assessment, the asking price, and sometimes a diagram of the rooms. Your camera and notebook are there to record other details, ranging from the cost of heating to the view out the rear window. 

One note: Don't automatically reject a house just because it doesn't measure up to your desires, either in features or price. You can always add a deck, for instance, or update a kitchen. Since the asking price is just a starting point for negotiation, you will be making offers and counteroffers as both parties seek an acceptable price.

[source:  http://money.cnn.com/magazines/moneymag/money101/lesson8/index5.htm]

Buying a Home Series - Finding an Agent

Well, of COURSE I would like you to come to me, but I realize that people like choices, so below is an excerpt from an article on how to choose a real estate agent. You can do the whole thing yourself, practically, but there is still a lot of value in having an agent you trust!

One thing that I always like to remind people is that a buyers agent basically works for free until the time of closing, and then they are paid through the selling agent! Most agencies, including mine, will have a small fee to the brokerage, but it is usually covered with closing costs from the seller. Gone are the days where you go to an agent and they find your home. The stats show that many buyers today find their perfect house online and then go to the agent. Your agent can help you with many things, but ultimately, you are in control.

I think the most important things to look for in an agent are good communication, good organization and a good rapport - you want someone who is easy to talk to and open to any and all questions you might have. I hope this article is useful!

Jennifer

Finding the Right Agent 

With all the tools and advice available today ranging from books and magazines to online advice like this lesson - it would be possible for you to buy your home almost completely without the aid of real estate professionals. That's not necessarily recommended. The housing market, like politics, is basically local, and each state, city, and even neighborhood has a thicket of local laws or customs that you need to understand. For that, it helps to have a team of professionals to guide you. 

You might want to start by finding an agent who can represent your interests in the search. This is not as simple as it sounds. Sure, 85% of sellers list their homes through an agent - but those agents are working for the seller, not you. They're paid based on a percentage, usually 5 to 7% of the purchase price, so their interest will be in getting you to pay more. 

What you need is what's known as an "exclusive buyer agent." A buyer's representative has the same access to homes for sale that a seller's agent does, but his or her allegiance is supposed to be only to you. [T]here are hybrid agencies called either single-agency or dual-agency brokers. In both cases, an individual agent in the firm may represent either sellers or buyers, sometimes both, in the same transaction. Potential conflicts of interest abound in this situation, so if you are seeking a buyer agent but no exclusive buyer agent is available, make sure to ask the agent about conflicts of interest. 

Next start looking for a mortgage lender. Take your time, since you could be paying this loan for 30, even 40, years. Start on the Internet at places like LendingTree.com and E-loan.com. You may also want to check out the rates at CNNMoney.com, Bankrate.com, or HSH Associates. These sites carry nationwide listings of mortgage interest rates and other related information.

Don't limit your search to the Web, though. Once you have an idea of the best rates from national lenders, get on the phone to your community banks and any other institutions with which you may have a relationship. Ask if they can beat the national rates. Often, the local lender can offer a better deal simply because he or she knows the local market and wants to keep your business. 

You might also consider using a mortgage broker, a middleman who keeps tabs on rates from a multitude of lenders. The mortgage broker isn't paid directly by you but gets paid by the bank. However, the fee - usually 1.5 to 3% of the loan amount - may get transferred to you in the closing costs. Most search engines have extensive listings of mortgage brokers. There's also a trade group, the National Association of Mortgage Brokers, which can put you in touch with a broker in your area.

[source:  http://money.cnn.com/magazines/moneymag/money101/lesson8/index4.htm]

Buying a Home Series: Getting your finances in order

One of the most confusing and intimidating things about buying a home is dealing with financing.  For most people, buying a home is the largest financial transaction they will ever make.  It's a big decision, you are looking at big dollar amounts, and you need to find a lender you can trust.  My advice to anyone getting ready to buy is to get an idea of your finances before you even start looking at homes.  I have been in meetings where people are blindsided by something in their credit report, or find out they won't be able to get a loan at all, and it is hard to see the disappointment.  It is true that right now interest rates are historically low, but lenders have really tightened up on who they will make a mortgage for.  It is smart to get your credit in order before you even talk to a lender.  It is smart to meet with more than one, each lender will have slightly different rules for credit cutoffs, etc.  

This article I am including an excerpt of is a little dated, but it gives good information.  Right now, the three most common loans are Conventional Loans (which you can get financed with as little as 5% down, but more commonly this kind of loan is if you have 20% to put down), FHA Loans and VA loans.  FHA loans are NOT just for first time home buyers, which is confusing to some people.  This isn't to be confused with the first time home buyer credits the government was giving out a few years ago!  FHA loans let you put as little as 3% down and are a great option for first time home buyers.  VA loans are for Veterans only, and allow as little as 0% down!

Another thing that is good to know, is that in my area of Ohio, it is very common for part if not all of closing costs to be paid by the seller.  It is not a guarantee, but it is something to consider.  

I hope this information is helpful, if you have questions, contact me, or just leave a comment and I will try to get more information for you!

Jennifer

Finances and Buying a House

For most people, buying a house involves a double financial whammy. First you have to assemble a pile of cash for the down payment and closing costs. Then you must convince a bank to lend you an even more staggering sum - generally 80% or more of the purchase price. 

So your first step, even before you start the actual hunt for a property, should be to get your financial house in order. 

Start with your credit.   
Credit reports are kept by the three major credit agencies, Experian, Equifax, and TransUnion. Among other things, they show whether you are habitually late with payments and whether you have run into serious credit problems in the past. 

A credit score is a number calculated from a formula created by Fair Isaac based on the information in your credit report. You have three different credit scores, one for each of your credit reports. A low credit score may hurt your chances for getting the best interest rate, or getting financing at all. 

So get a copy of your reports and know your credit scores. Try Fair Isaac's MyFICO.com for reports and scores from Equifax and TransUnion. Experian scores and reports can be accessed from www.experian.com. 

Errors are not uncommon. If you find any, you must contact the agencies directly to correct them, which can take two or three months to resolve. If the report is accurate but shows past problems, be prepared to explain them to a loan officer. 

Know what you can afford 
Next, you need to determine how much house you can afford. You can start with one of the Web's many calculators. For a more accurate figure, ask to be pre-approved by a lender, who will look at your income, debt and credit to determine the kind of loan that's in your league. 

The rule of thumb here is to aim for a home that costs about two-and-a-half times your gross annual salary. If you have significant credit card debt or other financial obligations like alimony or even an expensive hobby, then you may need to set your sights lower. 

Another rule of thumb: All your monthly home payments should not exceed 36% of your gross monthly income. 

The size of your down payment will also determine how much you can afford. 

Line up cash 
If you haven't already, you'll need to come up with cash for your down payment and closing costs. Lenders like to see 20% of the home's price as a down payment. If you can put down more than that, the lender may be willing to approve a larger loan. If you have less, you'll need to find loans that can accommodate you. 

Various private and public agencies - including Fannie Mae, Freddie Mac, the Federal Housing Administration, and the Department of Veterans Affairs - provide low down payment mortgages through banks and mortgage companies. If you qualify, it's possible to pay as little as 3% up front. For more, check out Fanniemae.com or Freddiemac.com. 

A warning: With a down payment under 20%, you will probably wind up having to pay for private mortgage insurance, a safety net protecting the bank in case you fail to make payments. PMI adds about 0.5% of the total loan amount to your mortgage payments for the year. So if you finance $200,000, your PMI will cost $1,000 annually. 

Once you've considered the down payment, make sure you've got enough to cover fees and closing costs. These may include the appraisal fee, loan fees, attorney's fees, inspection fees, and the cost of a title search. They can easily add up to more than $10,000 - and often run to 5% of the mortgage amount. 

If your available cash doesn't cover your needs, you have several options. First-time homebuyers can withdraw up to $10,000 without penalty from an Individual Retirement Account, if you have one, though you must pay taxes on the amount. You can also receive a cash gift (from a close family member only, check with your lender for current rules and limits).

Check on whether your employer can help; some big companies will chip in on the down payment or help you get a low-interest loan from selected lenders. You can also tap a 401(k) or similar retirement plan for a loan from yourself.

Buying a Home Series: Investing in a Home

Right now is a great time to be a first time homebuyer.  Interest rates are at historic lows and more sellers are starting to put their homes on the market, even sellers who tried before and were discouraged by the market a few years ago.  For many move-up buyers, it also can be a great time to buy, even if you don't get as much for your current home as you were hoping.  I don't want this article to be discouraging, but there are some serious considerations before making the decision to buy a home.

I hope this article from CNN Money helps you make the right choice!  I am here to help when you are ready, contact me today!

Jennifer
How do you know when you are ready to buy a home?

Home ownership means you no longer pay monthly rent for the roof over your head. You can do what you want with your house (within reason). When you leave, you can sell it to recoup the purchase price and - with any luck - earn a profit too. 

But don't kid yourself. Home ownership comes with a slew of disadvantages, responsibilities, and downright headaches. So before going any further, consider whether your lifestyle and finances make home buying a smart move. 

TIP: High costs mean you should be prepared to stay put. Except in a roaring real estate market, it usually doesn't make sense to buy a home you'll own for less than three or four years. Reason: the high transaction cost of buying and selling property means you could lose money on the deal. If you do make money, you'll pay capital gains taxes if you're in the house less than two years. When home prices are falling, it just makes the case against buying even stronger. So ask yourself if you can really stay put for that long. Will you need to move because you are transferred by your current employer or a new one? Are you thinking of going back to school? 

TIP: It may make more sense to rent. On the financial side, one key question is whether it costs more, on average, to rent or own in your area. The rule of thumb is that if you pay 35% less in rent than you would for owning - including the monthly mortgage, property taxes, and any homeowner's fees - then it's smarter to continue renting. Only if all those answers still point towards owning should you proceed to the next step - getting the money right.

[Source:  http://money.cnn.com/magazines/moneymag/money101/lesson8/index2.htm]

Buying a Home Series: 10 Tips to Get you Started

This month, I want to focus on buying a home.  Some of these articles will be geared towards first time home buyers, but if you are a move-up buyer, or a downsizer, it may still be a good review!  The decision to buy a home is a big one, an exciting one, and one I would love to help you with.

I hope you find this article helpful, stay tuned in January for the rest of the series!

Jennifer

The top 10 things you need to know when buying a home.  

1. Don't buy if you can't stay put. If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner - even in a rising market. When prices are falling, it's an even worse proposition.

2. Start by shoring up your credit. Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

3. Aim for a home you can really afford. The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.

4. If you can't put down the usual 20 percent, you may still qualify for a loan. There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a small down payment.

5. Buy in a district with good schools. In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.

6. Get professional help. Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.

7. Choose carefully between points and rate. When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say three to five years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run. 

8. Before house hunting, get pre-approved. Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

9. Do your homework before bidding. Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that's about eight to 10 percent lower than what the seller is asking.

10. Hire a home inspector. Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.

[Source:  http://money.cnn.com/magazines/moneymag/money101/lesson8/index.htm]

Happy New Year!

All the best to you and yours in 2013!

Sincerely,

Jennifer