Remember, you’re trying to buy or refinance your home – one of the first things a lender looks for is responsible payment patterns on your current housing situation.
Even if you plan on closing in the middle of the month, or if you’ve already given notice, continue paying that rent until you’ve signed your final loan documents.
It’s always better to be safe than sorry.
DO stay current on all accounts
Much like the first item, the same goes for your other types of accounts (student loans, credit cards, etc).
Nothing can derail a loan approval faster than a late payment coming in the middle of the loan process.
DON’T make a major purchase (car, boat, big-screen TV, etc…)
This one gets borrowers in trouble more than any other item.
A simple tip: wait until the loan is closed before buying that new car, boat, or TV.
DON’T buy any furniture
This is similar to the previous, but deserves it’s own category as it gets many borrowers in trouble (especially First-Time Home Buyers).
Remember, you’ll have plenty of time to decorate your new home (or spend on your line of credit) AFTER the loan closes.
DON’T open a new credit card
Opening a new credit card dings your credit by adding an additional inquiry to your score, and it may change the mix of credit types within your report (i.e. credit cards, student loans, etc).
Both of these can have a negative impact on your score, and could result in a denial if things are already tight.
DON’T close any credit card accounts
The reverse of the previous item is also true. Closing accounts can have a negative impact on your score (for one – it decreases your capacity which accounts for 30% of your score).
DON’T open a new cell phone account
Cell phone companies pull your credit when you open a new account. If you’re on the border credit-wise, that inquiry could drop your score enough to impact your rate or cause a denial.
DON’T consolidate your debt onto 1 or 2 cards
We’ve already established that additional credit inquiries will hurt your score, but consolidating your credit will also diminish your capacity (the amount of credit you have available), resulting in another hit to your credit.
DON’T pay off collections
Sometimes a lender will require you to pay off a collection prior to closing your loan; other times they will not.
The best rule of thumb is to only pay off collections if absolutely necessary to ensure a loan approval. Otherwise, needlessly paying off collections could have a negative impact on your score.
Consult your loan professional prior to paying off any accounts.
DON’T take out a new loan
This goes for car loans, student loans, additional credit cards, lines of credit, and any other type of loan.
Taking out a new loan can have a negative impact on your credit, but also looks bad to underwriters and investors alike.
Director of Relocation
1. The price is right. The median single-family home price hit its lowest in more than a decade when it reached $154,600 in January, according to the National Association of REALTORS®. That was the lowest since October 2001. During the height of the housing market in July 2006, the median home price for a single-family home was $230,900.
2. It’s cheaper to buy than rent. In nearly every major metro market, it is cheaper to buy a home than rent. Rents have been on the rise the last few years and are predicted to continue to rise. Meanwhile, home affordability is at record highs, which means that buying a home is more within reach to the median income family.
3. Inventories of for-sale homes are shrinking. Ned Davis Research estimates that excess inventories of homes to be eliminated by the end of next year. When excess supply dries up, people start building more new houses, which has the virtuous effect of reducing the unemployment rate and increasing the economy generally.
4. Mortgage rates are at record lows. Mortgage rates have hovered near record lows for weeks, which has helped pushing housing affordability higher. For example, the average 30-year fixed-rate mortgage, which is the most popular among home buyers, is 3.59 percent, according to Freddie Mac—just above its record low set on July 26 of 3.49 percent average. It’s conceivable that at some point in the next 30 years, your interest rate would be less than the rate of inflation.
Director of Relocation
There are many benefits of owning a home. Yet some first-time buyers are skeptical of purchasing with the uncertainty surrounding the housing market.
The uncertainty many reference when speaking about the housing market involves a specific date when home values will increase. Since no one can pinpoint this date, the word uncertainty (when paired with the housing market) often reveals a negative connotation.
There are some factors we can be certain about in this housing market such as home values rebounding. This is true; the housing market often moves in cycles.
It’s safe to assume that many Americans harbored the same uncertainty during the George H. W. Bush administration in the early 1990s when the national homeownership rate fell from its previous historic high of 64.4 percent in 1980 to a low of 64.1 percent in 1991.
In the 1960s Lyndon Johnson illustrated a correlation between homeownership and accountability by stating “owning a home can increase responsibility and stake out a man’s place in his community…The man who owns a home has something to be proud of and reason to protect and preserve it.”
This statement is still true more than 50 years later. There are many reasons to take pride in homeownership such as:
Appreciation – Buying a home now (at the current rates) can almost ensure your home’s appreciation in the future. Mortgage rates are near historic lows and home prices in many parts of the country are down. This is the perfect recipe for home appreciation. Additionally, many foreclosed homes are available for a fraction of the original cost. This can translate to a higher profit if you decide to sell once the market rebounds.
Property Tax Deductions – For income tax purposes, real estate property taxes for a vacation home and first home are fully deductible. The IRS (Publication 530) provides detailed tax information for first-time buyers that may answer many questions about what deductions homeowners are eligible for.
Preferential Tax Treatment – If you own your home for more than a year and receive more profit than the allowable exclusion after the sale of your home, the profit will be considered a capital asset. Capital assets are given preferential tax treatment.
Equity Building – Many factors such as credit qualification, loan flexibility, and annual percentage rate (APR) contribute to the final decision of what type of mortgage loan best fits your goals. Yet, a new trend being used by some homeowners is to actually add money to their monthly payment to decrease the principal balance of their loans at a much faster pace. This trend is called equity building. Equity builders usually select a home loan with a lower interest rate (and a shorter term loan such as a 15-year fixed) to help build equity faster. This rapid payment process allows borrowers to:
Equity building is a beneficial trend that’s becoming more and more popular with fiscally responsible homeowners. Also, home equity is the largest single source of household wealth for most Americans.
Pride – Homeownership offers many benefits to many different types of people. For some homeowners, playing your music as loud as you want and painting the walls the color of your choice is a perk. For me, homeownership will permit me to build an NBA regulation size basketball court on my own property. For my coworker Joel Jarvi, home ownership may allow him to build the indoor slide of his dreams. No matter who you are, homeownership is a purchase, commitment, and journey that’s sure to bring you pride.
Furthermore, when the uncertainty surrounding the housing market fades and
the market rebounds, homeownership may in fact transform that pride to profit
through a home sale.
Director of Relocation
FOR THE INSIDE
Clear all unnecessary objects from furniture throughout the house. Keep accessories and objects on the furniture restricted to groups of 1, 3, or 5 items. In general, a de-cluttered home helps the buyer mentally “move in” with their own things. Rearrange or remove some of the furniture in your home, if necessary. Many times home owners have too much furniture in a room. When it comes to selling your home, thin out overcrowded rooms to make the rooms appear larger.
Clear all unnecessary objects from the kitchen countertops. If it hasn’t been used for three months…put it away! Clear refrigerator fronts of messages, magnets, pictures, etc.
In the bathroom, remove any unnecessary items from the countertops, tub, shower stall, and commode top. Keep only the most necessary cosmetics, brushes, perfumes, etc., in one small group on the counter. Coordinate towels in one or two colors only. Take down, reduce, or rearrange pictures and objects on walls. Patch and paint all walls, if necessary. Review the house interior, room by room, and…
1. Paint any room needing paint.
2. Clean carpet and draperies that need it.
3. Clean windows.
Pack up and store. If you need room to store extra possessions, get a storage unit. Leave on certain lights during the day . During showings turn on ALL lights and lamps. Set a background tune. Play light FM music every day in the house, for all viewings.
FOR THE OUTSIDE
Go around the perimeter of the house and move all garbage cans, discarded wood scraps, extra building materials, etc., to the garage or, if applicable, take them to the dump.
Check gutters and roof for dry rot and moss. Make sure they are swept and cleaned.
Examine all plants. Plants are like children…they grow so fast. Prune bushes and trees. Keep plants from blocking windows: “You can’t sell a house if you can’t see it!”
Remove any dead plants, weed all planting areas, and put down fresh mulching material.
Keep your lawn freshly cut, edged, and fertilized during the growing season.
Clear patios or decks of all small items, such as little planters, flower pots, charcoal, barbeques, toys, etc.
Check the condition of the paint on your home, especially the trim and the front door. The first impression, or “curb appeal,” is very important.
Try to look at your house “through a buyer’s eyes,” as though you’ve never seen it before. This exercise will help you see what needs to be done. Any time and money invested on these items will usually bring you the return of more money and a quicker sale.
Director of Relocation
The security of your transaction begins with the quality of your advisors and one of the most important advisors in a real estate transaction is your lender.
If you do not already have a local lender you are working with we are happy to recommend several for you to choose from that we know and trust.
1. Looking at homes before loan pre-qualification can be very disappointing. You don’t want to fall in love with a home you ultimately find you cannot afford. You will always compare what you CAN afford to the more expensive homes you saw, making it very difficult to find one that you will like.
2. When you find the home you want to submit an offer on we need to submit your loan pre-qualification letter with the offer. (In February 2011 the Arizona Association of Realtors added the “Pre-qualification Form” to the purchase contract. This page tells the seller that you are able to qualify for the mortgage). If you do not have your loan approval you run the chance of the home being sold to another pre-approved buyer while you begin the process.
3. It is important that you are aware of the changing mortgage industry requirements and tightening lending standards to be sure you are comfortable with what will be required of you in terms of down payment, fees, type of loan, etc. It will diminish the anxiety associated with borrowing and the decisions that have to be made.
4. We would typically make an offer lower than list price and your offer carries more weight if you have a pre-qualification letter to accompany it. The seller is more willing to negotiate with a strong, able buyer.
5. You very well may find yourself competing with other offers on the same home. If you submit your offer with your pre-qualification letter the seller will give you stronger consideration.
6. Finally, if in the process of speaking to a lender you find you cannot currently qualify that lender will help you determine what steps to take over the coming months to get you into a position where you can qualify (what you need to repair or how much you need to save to qualify) so you can eventually move forward exploring your options for your new home.
Director of Relocation
2. Appreciation – While year-to-year fluctuations are normal, real estate has long-term, stable growth in value.
3. Equity – Money paid for rent is money that you’ll never see again but mortgage payments let you build equity ownership interest in your home.
4. Savings – Building equity in your home is a ready-made savings account. When you sell you can take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.
5. Predictability – Unlike rent, your fixed-mortgage payments do not rise over the years so your mortgage payment may actually decline as you own the home longer.
6. Freedom – The home is yours. You can decorate and make improvements any way you desire and benefit from your investment for as long as you own the home.
7. Stability – Remaining in one neighborhood for several years gives you a chance to establish lasting friendships, and offers your children the benefit of educational continuity.
Director of Relocation
Here are 5 things you should consider:
1. The time of day when you first lay eyes on a prospective house can affect your impression of the neighborhood, so it would be recommended to visit at different times of the day. A neighborhood can be totally different at night than it is during the day.
2. Neighborhood choice could be a pocketbook issue and not just because of the house and property taxes but commuting costs – time and money are both critical. One home might be $10 cheaper on the mortgage than another home but the “other” home might cost you $80 more in gas to get to and from work or school.
3. If you are comfortable with it, ask questions of people who live in the neighborhood. You could go for a walk around doggie walking time and just pass by and say “hey, I am thinking of buying a home in this neighborhood – can you share your thoughts about it with me?”
4. The Internet is very helpful for researching the “nitty-gritty”. Neighborhoodscout.com, for example, is a subscription service that offers in-depth looks at such considerations as crime stats, school performance data and price-appreciation/depreciation records of area homes. Crime stats for Tucson can be found at http://www.pimasheriff.org by zip code or http://www.trulia.com/crime.
5. Some neighborhood characteristics can be hard to cram into numerical categories or scores. http://www.nabeWise.com has taken 65 “quality of life” characteristics and set them up as criteria for neighborhood-hunters. For example, you can actually search for “trendy” or “clean” neighborhoods, neighborhoods with liberals or conservatives. Maybe you want to be near farmer’s markets or public transit or nightlife, as we mentioned in the beginning of this article. You just need to fill out your “checklist”.
Director of Relocation
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