Financing for your first home

Are you getting ready to buy your first home? It is important to know how much you can afford before you begin looking at properties. Talking with a lender and getting pre-approved for a loan puts you in a stronger negotiating position with sellers.

As a rule, your monthly housing costs should not exceed 28% of your monthly pre-tax income. These costs include the mortgage payment, real estate taxes, and insurance. If you have long-term debts, such as student loans or car payments, your monthly payments, including your housing costs, should be less than 36% of your pre-tax monthly income. Some loans, such as VA and FHA loans, are more flexible with these basic guidelines.

Depending on which type of mortgage you select, you can consider houses in various price ranges. An adjustable-rate mortgage will usually enable you to qualify for a higher loan amount. Your real estate agent can help you make the basic calculations. Remember that buying at the top end of your price range gives you more time to outgrow your home, and can save you money over the long term.

C

Help someone avoid foreclosure.

Many people have the impression that most real estate agents only care about themselves and their commissions. I'm here to help you avoid foreclosure if possible. For example, if you are facing a foreclosure sale, you can ask me about the "ask for the note strategy" to delay or stop the foreclosure. I can also refer you to an organization such as NACA.net. NACA.net who does forensic loan audits to determine if the lender violated any RESPA or other requirements. If the lender did so, then you have more leverage to work out a loan modification, a short sale, or some other solution.

Give me a call today. I can help.

Tips for buying a home in 2011 - Why Rent when you can buy?

Here are some good tips to buy a home instead of continuing to rent. Make it your New Year's Resolution.

Resolution #1: I will save up for up-front costs associated with buying a home.
While it is true you can buy a home without the full 20% deposit, home buyers should still make the effort to save for a sizeable down payment. A five percent or ten percent down payment is a step in the right direction. In addition, you will need to account for finances for closing costs. While some sellers will make concessions and pay it for home buyers, not all will, so be prepared for the cost. A good rule of thumb when looking at closing costs is two to four percent of the purchase price.

Resolution #2: I will get my credit in line.
The first step to improving your credit score is to know it. There are several free sites you can use to get your credit score, such as www.AnnualCreditReport.com. The next step will be to pay down/off your credit card debt. Paying down/off revolving debt looks better on your credit report. And be sure that your balance is 30% or less of your credit card limit. High balances, even with regular payments, do not help your final score.

Resolution #3: I will find a qualified agent to represent me.
Buying and selling a home is a huge financial transaction, so it is important to work with a qualified real estate professional who will understand your needs, the real estate industry and the current market. You will want to reach out to your network, interview at least three agents and trust your instincts during selection. You can also visit Homes.com ‘Find a Real Estate Agent’ section to locate a professional in your area.

Resolution #4: I will be an educated home buyer.
Being an educated home buyer is really important for the process to run smoothly and ensure that you enjoy your home search experience. You can begin research on the Internet to learn the various vocabulary terms and each step in purchasing a home. Attending various courses for home buyers and homeowners is also beneficial.

Resolution #5: I will take my time and enjoy the process.
As a recent first time home buyer, I can attest that the home buying process can be stressful, overwhelming and sometimes chaotic. That being stated, you will still need to take the time and enjoy the home search process. Whenever you feel overwhelmed, take a step back and relax. This is your buying experience, and you will ultimately be living in the place you decide.

Closing on your house

If you are selling your house, you may have to jump through a few hoops between the time you and the buyer reach an agreement and the time the money and deed change hands. The structural inspector usually finds a few things that need to be repaired or replaced, and the termite inspection may reveal the presence of unwanted pests. Most buyers will also have a list of items that they want the seller to fix.

The ideal is to have your home as perfect condition as possible in time for the walk-through inspection prior to closing. If you have agreed to complete repairs on your home, it is a good idea to get an early start on the work so there will be plenty of time to correct any "surprises" that may be found. Call several companies to get competitive bids for the work that needs to be done or ask your real estate agent for recommendations.

Presenting the buyers with a clean, well-maintained home will make the process a lot easier for them, especially if they get a case of last-minute jitters.

Rising Rates

Ironically, it could be rising interest rates that finally push home buyers off the fence and into the market.

While Congress is debating the tax-cut compromise, the financial markets have interpreted the proposal as a development that will likely push mortgage interest rates higher than they have been for months.

Analysts are predicting that buyers will move quickly when it looks like rates are going up and are unlikely to come down. "Once people see this might actually be the bottom, they’ll go for it," says Paul Dales of Capital Economics.

The average rate for a 30-year fixed loan increased to 4.61 percent in the week ended Thursday, Dec. 9, from 4.46 percent the previous week. The average 15-year rate rose to 3.96 percent from 3.81 percent.

It's time to make a move if you've been thinking about it.

Final walk-thru before closing

Buyers can be a little cranky on closing day if things go wrong during the walk-through inspection. For example, the sellers' dependable old dishwasher might stop midway through its cycle and the bathroom sink might clog unexpectedly. These situations can create anxiety for the buyers and sellers, but such problems are quite common and usually simple to resolve.

Most purchase agreements require that the major mechanical systems and the appliances being conveyed are in working order at the time of the closing. Defects are often discovered during the structural inspection, allowing the sellers plenty of time to have the repairs made. Occasionally there are last-minute breakdowns or defects that are not spotted until the walk-through inspection. In that case, an agreement can be made with the sellers at the closing to escrow funds for the repair or replacement of the items in question.

Real Estate Tip if you are self employed

There's no question that it could be more difficult for you to get a mortgage loan if you are a free lance viola player than if you are a government accountant. Traditionally, lenders have been more cautious when evaluating loan applications of buyers who are self-employed than people who work for a regular salary.

However, if you are self-employed, there is no reason for you to shy away from applying for a home mortgage loan, especially if your earnings have been in the same field for at least two years. It is a good idea to meet with one or more loan officers before you begin your search. They will probably want to analyze your tax returns for the past 2 or 3 years, keeping in mind that many self employed people can look impoverished on paper, since you can write off some expenses that salaried individuals can not. Try to get pre-approval from the lender, and ask for a letter stating that you have pre-qualified for a loan which your real estate agent can attach to any offer you submit on a home. This will make you more attractive to the sellers.