|Posted on March 3, 2014 at 9:35 AM||comments (0)|
Can Seller Incentives Get Your Home Sold Faster?
Jan 28, 2014
By: Michele Lerner
While some real estate markets have shifted to a sellers’ market, buyers in some parts of the country still have the upper hand. If you’re selling in a market like that or have an unusual home to sell, you may want to consider offering some incentives to buyers to nudge them to make an offer on your property.
Which Incentives Work?
Most Realtors say that the very best incentive to sell your house in any market is to price it fairly and make sure it’s in excellent condition. If for some reason you need to sell your home quickly and don’t have the time or money to make home improvements, you can try to sell it ‘as is’ – but you’ll definitely need to lower your price below the market rate for comparable properties.
Other than pricing, you can also offer financial incentives in the form of closing cost assistance, but how much you can offer depends on the rules f the particular loan program that your buyer is using to finance the purchase.
Some sellers try to attract attention and a contract by offering unusual incentives to buyers. Whether these work isn’t always clear because sometimes the buyers might have opted to purchase the home even without a perk or two.
Creative Seller Incentives
If you’d like to try enticing buyers with incentives, you need to think about your potential buyers. Identify the types of buyers who might be interested in your home: Are you selling a luxury home or a starter home? Are your prospective buyers young professionals, empty nesters or a young family? The incentives you offer should be tied to the interests of your buyers and to the specifics of your home.
Here are few ideas to consider:
◾If you live on or near water, consider including a kayak or jet ski along with the purchase price of your home.
◾Similarly, if your home is located near a prime fishing spot – whether it’s a river, lake or ocean – think about offering fishing equipment to buyers.
◾When you’re selling a vacation home, you might want to offer a gift card for new furniture or buy (and leave with the purchasers) new linens or kitchen supplies.
◾ If you’re selling a condominium or a property located within a homeowners association, consider offering to pay a year’s worth of fees. This would be particularly appealing to first-time buyers who are often concerned about affordability.
◾If you live in a community with a country club, you can also offer to pay for a year’s membership in the club or perhaps the initial fees for your buyers.
◾While you’re not likely to leave behind a beloved family pet, if you’re moving from a home with a lot of land to a smaller property, you could consider offering to leave a dog or even a horse at the home.
◾When the real estate market was particularly slow, some homeowners offered to include their high-end car, such as a Mercedes or BMW or a sports car, in the sale price of the home.
When you’re working with your listing agent on a marketing plan for your home, be sure to discuss the pros and cons of seller incentives. Think about what you might be able to offer that would boost, rather than reduce, your profits when your home sells
|Posted on January 31, 2014 at 9:05 AM||comments (0)|
Don’t Have Enough for a Down Payment? Try Mortgage Insurance
Buy, Finance | By: Angela Colley |
For many would-be homeowners, coming up with a down payment that’s 20 percent of the home loan they want just isn’t possible. And most lenders view a down payment below 20 percent as a sign that the prospective home buyer is a high risk. However, rather than not giving the buyer a loan, a lender may offer an alternative: mortgage insurance.
Mortgage Insurance Basics
Travis Saling, a loan officer with Team Home Loans in California, likens mortgage insurance to auto insurance. With auto insurance, everyone pays into a pool each month. If a customer gets into a wreck, the insurance company uses the pooled funds to cover the cost of repairs. With mortgage insurance, you’ll also pay into a pool to help the lender cover losses and costs if a homeowner defaults on their loan. Mortgage insurance also helps the lender offset risks and allows them to make loans to buyers with smaller down payments. However, how much you’ll pay each month and how long depends on both your individual loan circumstances – like your credit score or down payment amount – and what type of loan you choose.
According to Saling, if your down payment is less than 20 percent of the total value of your loan, the lender will always require you to pay private mortgage insurance. There are two types of PMI, borrower paid and lender paid.
With borrower paid PMI, your monthly PMI payments are added to your monthly mortgage payment, and you’re responsible for paying the extra fee each month. However, Saling says, “once you’ve had PMI for two years and your loan balance reaches 78 percent [of your total loan], the PMI will drop off automatically.”
When you choose lender paid PMI, your lender will charge a higher interest rate and use the extra interest payments to cover your PMI. You won’t have a monthly PMI payment this way, but Saling warns, “You’re stuck at the rate forever for as long as you have that loan.” Meaning, unlike borrower paid PMI, the higher interest rate won’t drop off after two years.
Loans backed by the Federal Housing Authority always require mortgage insurance payments, or MIP — the FHA’s version of PMI. How much you put down upfront will determine how long you pay MIP. “If you put down less than 10 percent, that mortgage is on your loan for life,” Saling said. ”If you start under 90 percent, then you have to have the mortgage insurance on your loan for 11 years or until you sell or refinance.”
When it comes to paying MIP, the FHA has two fees. First, you’ll pay a one-time upfront fee during closing. After closing, individual payments will be rolled into your monthly mortgage payment.
Loans backed by the U.S. Department of Veterans Affairs do not come with mortgage insurance, regardless of your down payment amount. Instead, VA-backed loans come with a one-time funding fee due at closing. However, not everyone qualifies for a VA loan. To qualify, either you or your spouse must be a veteran of the U. S. military.
|Posted on January 24, 2014 at 8:40 AM||comments (0)|
by Holly Hill
If you are looking to purchase a home and make a move this spring or even summer, you will need to start now to find the perfect home, in the perfect neighborhood, at the perfect price.
Here is a timeline for what you should do to successfully meet your goals!
6 months prior to target move date:
Sign up for listing alerts, make a list of your MUST HAVES. Be realistic about this. Needing a 3 bedroom, 2 bath home in a specific school district are great must haves. Wanting a fenced in yard or deck are wants and can be negotiated during the buying process or added after move-in.
Watch pricing trends on the homes that meet your requirements.
Contact a lender to start the pre-approval process. Don't rule out Mortgage Brokers as a great option for lending. Banks look for the perfect borrower, mortgage brokers look for the perfect lender to fit the borrower.
4 months prior to target move date:
Finalize financing options.
Narrow down your search by price and start looking at homes that fit your needs and price range.
3 months prior to target move date:
You should now begin looking at homes with your Real Estate Agent and narrowing down the details that will make up your perfect home. Keep in mind, what can be changed, what cannot be changed, and what are we willing to do after move-in.
2 months prior to target move date:
You should have narrowed down your options to 3 top choices.
Take a second look at the top 3 and make a list of pros and cons to each.
Make an offer on your top choice!
|Posted on January 14, 2014 at 11:40 AM||comments (0)|
If you’ve promised yourself you’ll become a homeowner for the first time in 2014, we’ve got five, easy-to-accomplish resolutions to help get you there.
1. Boost Your Credit Score
Your credit score will play a key role in your mortgage approval and rates. At the beginning of the year, order your credit reports from AnnualCreditReport.com, a free service authorized by federal law. Go over each report, dispute any errors, and pay off old debts.
In the meantime, avoid big-ticket items such as cars or furniture and don’t apply for new credit. Jon Sterling, a regional sales manager for real estate offices in Northern California, says, “An inquiry itself causes a credit score to temporarily drop, and acquiring more debt by buying something, or the capacity to acquire more debt by opening a new credit account, can have dramatic effects on [your] mortgage situation.”
2. Save Up to Put Down
According to Sterling, you’ll typically need a 20 percent to 30 percent down payment to qualify for the best mortgage rates. At the beginning of the year, try cutting optional expenses to save more. For example, cutting out an $85 cable bill will save you $1,020 in a year. Remember, every little bit helps you avoid higher interest rates or private mortgage insurance.
3. Find the Best Real Estate Agent
Finding a great real estate agent takes time but will pay off in the end. Sterling recommends you find a buyer’s agent who “can give you a few recent testimonials from happy buyer clients. Be sure to check those references to be sure they are legitimate.” To get started, ask friends and family for referrals or search realtor.com®’s Find a REALTOR® database.
4. Get Pre-Approved
Knowing what you can afford, what you qualify for, and what type of loan you want can help you find the best deal when you’re ready to apply for a mortgage. To get started, research the differences between conventional and unconventional loans and use a mortgage term comparison calculator to get an idea of the cost. When you’re ready to shop for mortgages, use realtor.com®’s Get a Mortgage Quote tool to see current rates and get quotes from lenders in your area.
5. Find Your Dream Home
Sterling says potential home buyers should be “reading and researching as much as they can” as soon as they can. Don’t wait until you’re ready to shop to start looking at homes. Start early by researching neighborhoods in your target city and viewing homes online to get an idea of pricing. Once you’re ready to shop, you’ll have a much better idea of what you want and what you can afford.
|Posted on January 6, 2014 at 10:45 AM||comments (0)|
Moving In Together? Make Moving Day Go Smoothly
Move | By: Angela Colley |
Moving in together?
Planning on taking the plunge and moving into a new place with your significant other? Moving day can be one of the most exciting experiences of the journey — as long as everything goes smoothly, of course.
By the way, you’re not alone. A survey by the National Center for Health Statistics found 48 percent of women aged 15-44 interviewed between 2006 and 2010 had lived with a male partner before marriage — compared with 34 percent of women in 1995.
Use these tips to keep the first day you live together organized and easy.
Toss What You Won’t Use
Many couples move only to realize once they start packing that they have more than they know what to do with. To reduce the excess, you and your partner should spend a few days clearing out your respective clutter before you move. Go room by room and take out anything you haven’t used in six months. You can sell those items or donate them to charity for a tax deduction at the end of the year.
Once you’re both done purging your stuff, decide what will go into your new home. Making these decisions may not be easy, but finding agreement ahead of time will make moving easier. To avoid arguments, start by deciding what is a “must keep” for both of you and then use a floor plan of your new home to decide where to put your favorite items. Finally, fill up the rest of the space with your best pieces and sell or store the rest.
Moving inevitably comes with costs. Before you move, sit down and decide how you’ll do the move. For example, do you want to pay for professional movers or rent a truck and enlist the help of friends? How are you situated with boxes and other package supplies? Once you have a plan, set a date with the movers or friends and find packing supplies as soon as possible. Being an early bird may help you cut costs.
Create a Battle Plan
Packing and moving from two separate locations can get hectic, but a well-organized plan will keep problems to a minimum. For example, a few days — or weeks — before you move, come up with a battle plan that includes packing each person’s belongings and setting the pick-up times for each house. It will also help to assign tasks ahead of time. If you both know your roles, you’ll be able to work faster and avoid arguments in the process.
Keep Boxes Organized and Labeled
Combining stuff is more complicated than moving one person. To avoid moving day mistakes, make sure your boxes are well organized. For example, writing the designated room on each box will make the moving process easier, and writing the content of each box will make unpacking a breeze.
If you can get through the move smoothly, it might just mean you’re meant for each other.
|Posted on January 1, 2014 at 9:55 AM||comments (0)|
What You Should Know About Your Home and Your 2013 Taxes
By: Dona DeZube
Published: December 12, 2013
It’s the last year for three sweet home tax benefits, but the first for a way simpler home office deduction.
These days few things start a fight on Capitol Hill faster than taxes. Despite the fact that three important tax benefits used by millions of American homeowners are days from expiring, Congress is unlikely to do anything to re-up them any time soon.
So if you’re eligible, tax year 2013 is possibly the last time to claim the private mortgage insurance (PMI) deduction, the energy tax credit, and debt forgiveness benefit, all of which all expire on Dec. 31, 2013.
At least there’s one piece of good news for homeowners: If you have a home office, there’s a new, simpler option for calculating the home office deduction for which you may qualify on your 2013 taxes.
Meanwhile, here’s what you need to know about those expiring benefits as you ready your taxes:
This tax rule lets you deduct the cost of private mortgage insurance, which is what you pay your lender each month if you put down less than 20% on a home. PMI protects the lender if you default on the home loan. Your deduction could amount to a couple hundred dollars depending on your tax bracket and other factors.
Find out if you qualify for and how to take the PMI deduction.
This sweet little tax credit lets you offset what you owe the IRS dollar-for-dollar for up to 10% of the amount you spent on certain home energy-efficiency upgrades, from insulation to water heaters. On the downside, the credit is capped at $500 (less in some cases). But on the bright side, the right improvement could lower your utility bills indefinitely.
Related: Take back your energy bills with these high-ROI energy-efficiency practices.
When you go through a short sale, foreclosure, or deed-in-lieu, your lender typically lets you off the hook for some or all of what you owe on your mortgage.
That forgiven mortgage debt is income, on which you’d typically have to pay income tax.
Suppose you’re in financial distress and your lender agrees to let you short-sell your home, say for $50,000 less than you owe on the mortgage, and forgive you for the balance. Without the protection of the Mortgage Debt Forgiveness Act, you’ll owe income tax on that $50,000.
It’s likely if you had the money to pay income tax on $50,000, you’d have used it to pay your mortgage in the first place.
New Simplified Option for the Home Office Deduction
This may be the last year for the benefits above, but a new one kicks in for the 2013 tax year. If you work from home, you may qualify to use a new, simplified option for claiming the home office deduction when you file your 2013 taxes.
How much simpler is it? It lets you claim $5 per sq. ft. for up to 300 sq. ft. instead of having to compute the actual expenses of your home office using a 43-line form. To calculate the square footage of your office, just multiply the length of two walls. For example, an 8-by-10-foot room is 80 sq. ft. And at $5 per, that’s $400.
Although using the simplified option is obviously easier, the basic requirements for claiming the home office deduction haven’t changed. Your home office still must be used for business purposes:
On a regular basis.
Related: Which Home Office Set-Ups Qualify for a Deduction?
Why Might the Tax Benefits Not Be Renewed?
Although the expiring tax benefits were renewed retroactively in past years, that may not happen in 2014 because many in Congress would like to see comprehensive tax reform rather than scattershot renewals of individual provisions. This could delay a decision on the homeownership tax benefits until the big picture budget and tax issues are resolved.
So if you can, enjoy them now!
|Posted on December 11, 2013 at 7:20 AM||comments (0)|
By: Michele Lerner
Whether you’re buying a home in dire need of complete renovation or just want to modernize the kitchen or flooring of a property before you move in, an FHA 203k loan insured by the Federal Housing Administration could be the solution to your financing issues.
How Do You Qualify for an FHA 203k Loan?
In general, an FHA 203k loan allows you to wrap your renovation costs into your mortgage with one loan and one closing. The amount you borrow is a combination of the price of the home and the estimated price of the repairs, including labor and materials.
Your down payment of 3.5 percent (the minimum required by the FHA loan program) will be based on the full loan amount and, of course, your monthly payments will be higher since you’re including repair costs in the same loan. You’ll need to qualify according to the standards of your lender, typically with a credit score of 640 or higher and with a maximum debt-to-income ratio of 43 percent, including the new monthly payment. The full loan amount must be at or below the maximum limit for FHA loans in your area, which in many housing markets is $417,500.
As with any FHA loan, you’ll be required to provide complete documentation of your income and assets and your credit profile; but you’ll also need a detailed proposal for your home, including a cost estimate. An appraiser will estimate the value of the home in its current state and estimate the home’s future value based on the cost of the renovation.
How FHA 203k Loans Work
There are two types of 203k loans: a streamlined version and a regular version. The streamlined 203k program is meant for homes that don’t need structural repairs and are capped at a maximum of $35,000 in repairs. No minimum amount of repairs must be made. Traditional 203k loans have a minimum requirement of $5,000 and can be used for structural repairs. Both loan programs require the repairs to start within 30 days of the loan closing and to be completed within six months.
The FHA has specific guidelines about types of projects you can finance with a 203k loan, but generally the only home improvements that you can’t finance are luxury items such as adding a swimming pool.
A Few Caveats
All FHA loans, including 203k’s, require you to pay mortgage insurance for a minimum of 11 years, and usually for the entire length of the loan. This could raise your monthly payments higher than anticipated. Interest rates are slightly higher on 203k loans compared to other FHA loans, and they also require an extra fee of $350 or 1.5 percent of the loan amount.
Because of the extra paperwork involved, 203k loans take a little longer to process than other loans, so you’ll need to be patient.
When deciding which home improvement projects to do, consider the neighboring homes in your community. If you’ve improved your home far beyond the level of comparable homes, it can be difficult to recoup your investment when you eventually decide to sell.
If you would like to use an FHA 203k loan, it’s best to work with a lender who has experience with them. Lenders with significant 203k loan experience can recommend contractors and help you with the paperwork
|Posted on November 18, 2013 at 10:25 AM||comments (0)|
As a home seller, you can work with a Realtor to identify potential buyers for your home, but chances are your buyer will be young, particularly if you’re selling to a first-time buyer.
According to the 2013 National Association of Realtors® Home Buyer and Seller Generational Trends study, 31 percent of recent buyers were Generation X Americans (those born between 1965 and 1979), followed closely by Millennials, also called Generation Y (born between 1980 and 2000), at 28 percent.
If you own an older home, you may need to make some adjustments to your marketing and tweak your home so that it appeals to these younger buyers.
Offer Perspective on Your Home’s Condition
Many first-time buyers are leery of purchasing a home that will require a lot of maintenance or repairs, so you may want to schedule a home inspection before you list your home and provide a reassuring report about potential problems that are non-existent or that you’ve already addressed. If you don’t want to take the time or money to make repairs, you can offer an upfront rebate to your buyers to cover their renovation expenses.
If you know your home needs some major improvements to attract buyers, you can provide prospective buyers with possible renovation plans that demonstrate whether the structure can be expanded or perhaps has attic space that can be finished. You can also have a lender prepare an example of a renovation loan from the FHA 203(k) program or the Fannie Mae HomeStyle Renovation program that allow borrowers to wrap renovation costs into their purchase loan.
A home warranty can be purchased at minimal cost to provide peace of mind about potential repairs to your appliances.
Market Your Community
Younger buyers are often looking for neighborhoods with good schools, recreational amenities and a strong sense of community where they can establish their family. Pick up brochures for local attractions or make your own list of great parks, playgrounds and walking trails; and contact information for local soccer league organizers, the swim team or community groups that support the arts, block parties and local festivals. If you live in an area with restaurants, nightlife or plenty of commuting options, you can provide information about those amenities, too.
Your buyers want to visualize a lifestyle for themselves and you can provide the information that helps them recognize the benefit of living in your community.
Showcase Your Home’s Best Features
All buyers want to see a home that looks clean and bright, but younger buyers are particularly attracted to homes with plenty of natural light. Older homes sometimes have smaller windows and smaller rooms, but you can improve the appearance of these rooms by using brighter light bulbs, removing window treatments and trimming back overgrown trees or shrubs from your windows.
Stage your home by removing any excess clutter, storing your heavy and dark furniture, and adding mirrors to bounce the light around the rooms.
Bring in a few young relatives or neighbors to get their suggestions about what they might like to see in your home, and work with a Realtor who can help you add a touch of youth to your aging home.
|Posted on November 15, 2013 at 10:30 AM||comments (0)|
I know you are probably thinking, how can it be both a buyer's and a seller's market?
I agree it is a unique environment in the real estate market right now, but here is why.
1. Intrest rates are low, making it a buyer's market
2. Home prices are rising, but at a managable pace. This is great for both buyers and sellers and especially those selling a home and buying a different home. The market is PERFECT for this type of transaction right now.
3. There are still great deals out there. Still wanting a bargin, they are still on the market. It is a great time to scoop up an investment property.
4. Finally, sellers are seeing a bump in the offer price because there is not enough inventory on the market.
Thinking of buying, selling or both, there may not be a better time. December sales are forecasted to rival July's sales, typically the busiest month of the year. Don't miss out. If you are waiting to sell because you think you will take a loss, get with a professional and have a market analysis completed. You will probably be surprised.
|Posted on November 12, 2013 at 8:10 AM||comments (0)|
How Soon Can You Buy a Home after a Foreclosure?
Applying for a mortgage after a foreclosure
By Ben Apple
A foreclosure can be a big blow to your desire to own your own home. After all, you worked hard to buy your home only to see it taken away from you. You may think you will never again be in a position to buy another one. However, while your credit score will indeed be affected by a foreclosure, it may only be a matter of time before you can once again apply for a mortgage. It all depends on the circumstances of the foreclosure, the foreclosure waiting period, your ability to increase your credit score and the type of loan that you are prepared to apply for.
The standard waiting period for buying a home after a foreclosure is seven years. This is the period required by Fannie Mae, a federally chartered corporation that purchases a significant number of American mortgages. However, even then, you are likely only to be successful in your mortgage application if you have re-established your credit score after the foreclosure. While a record of your foreclosure will only remain on your credit report for seven years, your new lender will want to ensure that you are not a high-risk candidate for a loan.
There are a number of ways to increase your credit score. If, after the foreclosure, you will be renting a property, find a place that falls within your means. This will help you to save money for a down payment on a new home. It may also be worthwhile to obtain a secure credit card, where you make a deposit to the card's issuer and the credit limit is tied to that amount. Paying off your purchases on the card will reflect well on you when you apply for a mortgage.
Lenders also take note of a borrower's employment status. It is therefore to your advantage to find steady employment. The longer you remain on a job when applying for a loan, the greater are your chances of being approved.
If the foreclosure was the result of documented extenuating circumstances, the Fannie Mae waiting period will only be three years, rather than seven, before you can apply for another mortgage.
Extenuating circumstances are non-recurring events that are beyond your control that resulted in a sudden, significant and prolonged reduction in income, or a catastrophic increase in your financial obligations.
If your foreclosure was caused by such circumstances, you will need documentation supporting your claim in order to apply for a mortgage after three years. Documents could include those that confirm the event, such as a copy of a divorce decree, medical bills and job severance papers. Other types of documents that you could produce include those showing your inability to resolve the problems that caused the event, such as insurance papers or tax returns.
If you are prepared to meet their conditions, some lenders that do not sell their mortgages to Fannie Mae may be prepared to loan you funds soon after a foreclosure.
These lenders likely will require large down payments and high interest rates. Depending on your financial situation, you might need to lower your expectations in terms of what type of home you are looking to buy. A smaller home may, for example, mean that you will need to borrow less, thereby increasing your chances of obtaining a loan and reducing the amount that you will need to repay.
However, the longer you wait before applying for another mortgage, the more time you will have to re-establish your credit score, which could lead to loans with more favorable conditions.