7 Things to Avoid Before Purchasing a Home

 

If you have been approved for a mortgage for your next home, you might be assuming you can breathe easy now and concentrate on packing. Not quite yet though.mortgage

While most of your hard work of building a good credit profile and gathering savings for a down payment and closing costs is behind you, it’s important to remember that the lender will recheck your credit just prior to your settlement date and will also need confirm a few details such as your place of employment to make sure nothing has changed.

That’s the key phrase—“nothing has changed.” You will want to maintain the same credit profile you had for the loan approval until your mortgage paperwork is completely signed.

Source: money.aol.co.uk

 

Avoid the following actions to ensure a smooth settlement:

 

1. Don’t apply for new credit: It may seem natural to apply for a credit card at a home improvement store or a furniture store when you are about to become a homeowner. It’s almost become cliché in the mortgage industry, but the warning still bears repeating: Don’t buy a truckload of furniture until after your loan closes. Applying for credit can lower your credit score. Not only will you lose a few points because of a credit inquiry, but if you are approved for new credit, a lender may worry that you will spend up to your new credit limit and then default on your loan.  If you absolutely need to obtain new credit or accrue debt before closing, talk with your loan officer as soon as possible.

 

2. Don’t close any credit accounts:You may be feeling that this is a good time to get your financial house in order by closing unused credit accounts or transferring your debt to a new credit card with a zero-interest balance transfer offer. While that’s a smart move financially, it’s a bad one for your credit score because you lose points when you have a higher usage of debt compared to your limit on one credit card and to your overall credit availability. Wait until your closing is complete before you make these changes. 

 

3. Don’t shuffle around your dollars & cents:Your lender will need the most recent bank statements before you go to settlement, so if you have any unusual deposits you will need to provide complete documentation of where the money came from. If possible, it’s best to move the cash you will need for your home purchase into one account before you apply for a mortgage. If not, make sure you have complete and accurate records readily available.

 

4. Don’t increase your debts:In addition to your credit score, your debt-to-income ratio is extremely important to a loan approval. If you take on more debt you could be in danger of going above the maximum acceptable debt-to-income ratio. Along with increasing your debts, do not co-sign on a loan. It is especially risky during the mortgage lending process since you will be financially liable for someone else’s debt.

 

5. Don’t skip a payment or make a late payment: One of the most important elements of your credit score is your history of on-time in-full payments. Payment history comprises about a third of your credit score. 

One solitary 30-day late payment can clip 60 to 110 points from your credit score. Maybe not a huge deal if you had an 800 score, right? Possibly. However, if that 30-day late payment is a mortgage or rent payment, some lenders will boot your application altogether. Many will require at least 12 consecutive months of on-time payments in order to qualify for a home loan. So don’t get so caught up in your move that you forget to keep up with paying basic bills.

 

6. Don’t buy a car: You may be feeling that a new car would be a nice addition to the driveway of your new home. Resist that feeling. Even if you can easily afford a new car, the depletion of your savings or the addition of a new car loan could derail your mortgage application. Wait until after you have moved to switch to a new car.

 

7. Don’t change jobs if you can help it: While a job change could mean a raise or a path to a better future, it could also delay your settlement. Your lender needs to verify employment and will need paystubs to prove your new income before your loan can go to settlement. Lenders crave stable, reliable income that’s likely to continue.

Lenders are likely to slam on the brakes if you take a new job in a different field, or if you decide to start your own business. Or even if you get a promotion but see some or all of your income shift to a commission basis.

The bottom line: Any change to your employment is significant. Keep your loan officer in the loop, and ask questions when in doubt. The last thing you want is to waste time and money on a home loan you have little chance in getting approval.

 

*****In other words, no matter how hard it is at this exciting time, it’s better to do nothing than to do anything.

 

Sources: Realtor.com & Yahoo.com
7 Things to Avoid Before Purchasing a Home

Renting vs Buying

Couple Front StepsIf you are a potential buyer searching for the perfect place to live, your gut reaction is probably that it is cheaper to rent a home than it is to buy one. However, according to Trulia’s chief economist Jed Kolko, that is not the case. On average in the United States, it is 38 percent cheaper to buy a home than it is to rent one. Of course, this varies from state to state.

 

Of course, while the base cost of buying a home is cheaper than renting one, there are many other factors to be looked at before deciding between the two. Are you looking to stay somewhere for an extended period of time, or will you be living there for less than 10 years?

 

Upkeep is also something to consider while looking for a place to live. On paper the cost of buying a house may be lower, but overall it actually may be less expensive to rent if you have to continually have maintenance work done.

 

Renting also has the upper hand for people looking for jobs. If you are still moving around the job market or do not have a stable long-term position, it is likely more financially responsible to rent a house so that you are able to move if necessary. However, if you are looking to settle down somewhere, in the long run it looks as though it is more profitable to buy a house rather than rent one.

Renting vs Buying

House Hunting Tips

Couple House RealtorIdeally, we’d all love for house hunting to be a quick and easy process that results in the perfect home. Unfortunately not all homes come equipped with a two-story pool and a waterfall, so this is not always the case. Here are some things to keep in mind when trying to find a place that fits all of your needs.

 

Don’t Choose a House for its Awesome Bathtub

Sometimes it can be easy to overlook certain important details—like those dubious mold spots on the ceiling—in favor of a flashy new granite countertop that the owner will be certain to emphasize. When looking at potential houses, keep in mind the difference between the things you need and the things that it would be nice to have. While it can be exciting to find the perfect cabinet handles, make sure you consider them a bonus and not a priority.

 

Living Next Door to a Prison

Location is one of the most important things to consider while looking for your new home. How far is the house from your job or prospective jobs? How far away is the nearest grocery store? What is the neighborhood like? Who are your neighbors? Visit the house at different times of the day to see what changes. Even the house of your dreams can turn into the house of your nightmares if you live next door to a sewage plantation, so it is important to take these things into consideration when you feel like you have found the perfect house.

 

Play Detective

Don’t be afraid to be slightly nosey when it comes to looking for your new home. Remember that you are going to be living there, so it’s important that the house fits all of your needs. Check the cupboards, the closet space, and inside every door. Lift rugs and look under furniture. Try to envision your own possessions in the space and even measure areas to be certain everything fits. While not a deal breaker, it might be upsetting to find out after you move that your vintage bookshelf is taller than the ceiling.

 

It’s Not NASCAR

A common mistake made when house hunting is trying to rush through the process. Whether it’s because it was pushed it off until last minute or because they chose the first decent house presented to them, many people end up with houses not suited to their needs. Take the time to make a checklist of the most important things that you are looking for in a home, and then take the list to each tour. This way while you are making sure that every house has room for your fish tank, you won’t forget that your youngest son needs a bedroom.

While keeping these things in mind, however, remember to relax and enjoy yourself. House hunting is an exciting time full of potential and possibilities for your future, so have fun!

House Hunting Tips

How to Choose the Right Real Estate Agent

Buying or selling your home can be emotional endeavor, but with the help of a dedicated and dependable real estate agent, it can be an enjoyable and peaceful process. There are many aspects that you must consider when trying to choose the agent that is right for you. By following some of these simple guidelines, you will be heading in the right direction for a successful real estate experience.

Research & Record Your ResultsReal Estate

This cannot be stressed enough.  Referrals from family and friends are great but we still encourage you to do your research.  Go to open houses and watch an agent in action; this will help you see them in a professional and casual setting.  Another suggestion is to drive around the neighborhoods in your market place and see which agents and companies dominate the area.   Make a list of your top choices for a Realtor and Google them.  In that list, record the pros and cons from online reviews, ratings, testimonials, etc. 

Schedule Interviews & Ask Questions

This is the biggest step in the process. Keep in mind that as a seller, top agents will market your home on multiple websites and social media.  As a buyer, they will notify you as homes that meet your criteria enter the market. Find out how the agent will keep you updated and represent you during negotiations.  There are hundreds of questions you could ask, but remember to separate the good, better, and best agents by comparing the answers you get to your questions.

Lay Down your Laws with Some Simple Guidelines

Real estate transactions consist of fine details that can be missed and disrupt the whole process if you don’t have the right agent in your corner. Communication is a key aspect and you must stress that your agent needs to be available via email or phone, whichever is preferred.   Set realistic goals and stress that you and your agent must work as a productive team.

When it comes to buying or selling your home, finding the right real estate professional makes the difference!

How to Choose the Right Real Estate Agent

Buying your first home?

ImageIf you are considering buying your first home, planning is essential.  If you are not prepared, the excitement of buying a home could quickly fade behind a pile of paperwork. 

 

Prepare ahead of time by gathering the proper paperwork and ensuring your financial situation is in order.  It could take weeks or even months for this process, especially if you have any credit items that need “fixed”.  Here is some helpful information to get you moving in the right direction:

 

Credit Score

Review your credit report closely.  Credit reports can be obtained for free, annually, from the 3 major credit bureaus, but you may have to pay for your actual credit score.  The score required could depend on the type of financing and price of the home you want.  Most lenders will want to see a score of at least 660.  You should start boosting your credit about a year before you want to purchase.  Try to avoid obtaining new credit cards at least 3 months before applying. Multiple credit checks can lower your score. 

 

Financial History

Having a good payment history is also taken into consideration.  Banks will want to see that you have made auto loan payments and credit card payments on time.  They will also look for bankruptcies and an excessive number of credit lines.  Clean up any history of consecutive late payments at least a year before you apply for a mortgage.  If you rent, they may request a history from your landlord.  Be prepared to show them everything.

 

Adequate Income

Will you have enough money to pay for your home, as well as, all expenses associated with it?  Typically no more than 28% of your gross income can be used for any house payments and 42% of your income must be set aside for other expenses.  Lenders will also consider the time you have been at your current job.  They usually like to see a period of 2 years, unless a job change was made to improve your financial situation.  They might make an exception in that case. 

 

Down Payment

The specifics of how much you need to put down could vary based on the type of loan you are considering.  Typically, conventional mortgages will require 10-20% down, while an FHA loan may require 3.5% -10%, based on your credit score. 

 

Closing Costs

Some areas have higher taxes and homeowner insurance rates.  You should plan on setting aside approximately 5% of the purchase price for these costs.  This may be a little high, but it’s better to have more than not enough at settlement!

 

As a first-time home buyer, being prepared is the best first step.  As soon as you start to think about buying, contact a lender to discuss each of these items in more detail and determine how they pertain to you! 

Happy home buying!

Buying your first home?

Should you buy a home over the holidays?

buying-over-the-holidaysConsidering that the cold, shorter days of winter are upon us and the holiday hustle and bustle is lurking right around the corner – would this really be a good time to buy a home?  Yes, it could be!

Home sellers tend to avoid this time of year due to the weather and holidays, but also because conventional wisdom says that buyers are otherwise occupied.  Those sellers who do attempt to sell are usually highly motivated.  Determined house-hunters can take advantage of this urgency and could find the home of their dreams at a fabulous price.  Read on to discover some other great reasons…

Home inventory could work for or against you.  At this time of year the inventory of available homes is less than at other times of the year.  If you are very particular, you might have trouble finding the right house.  Should you be lucky enough to find your dream home, less competition from other home buyers and typically lower winter-market prices might mean you have more room to negotiate for a great deal!

Better interest rates, means better mortgage terms for you.  The drop in demand this time of year (December thru January), results in fewer requests for mortgage money.  In response to this slowdown, Lenders will sometimes offer lower rates and quite possibly even cancel a few of their normal fees.  Do your homework, shop around; find a lender who is willing to work for you!

Speaking of working, the same applies to the real estate professional you choose.  Carefully select a Realtor who will be highly-motivated and available to help you accomplish your goal before the end of the year!

Faster home closings are historically more conceivable in November and December.  Fewer overall transactions and lenders, who want to close their books at the end of the year, could be the inspiration needed to close transactions more quickly for people buying homes at this time.

A tax deduction for your mortgage interest can be another valid reason to buy a home before the year end.  Speak with a tax professional to determine if a mortgage interest deduction may be applicable to your circumstances.

Planning and effort is what creates your future.  Complete some of your holiday tasks ahead of time, focus on your year-end home shopping.  Find your new home and settle in before the holidays have passed.  When the spring and summer buying frenzy hits for everyone else, you’ll already be relaxing and enjoying your new home!

Begin your home search now!

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 Tips for home buyers - http://www.prudentialhomesale.com/find-a-home/buyer-resources

Should you buy a home over the holidays?

Quick Tips for Selling Quickly

Sell-your-house-fast-nutleyPatience is a virtue for just about any circumstance including selling your home. Yet sometimes you must sell quickly when a job opportunity arises or you face an abrupt lifestyle change. Assuming your home is in good condition and free of liens, here are several tips to help expedite a sale.

1. Price your house correctly: Working with your agent, choose a price that’s somewhat lower than what you’re seeing in the market, but not too low that it will send up red flags. Let your agent establish a price he or she feels will make your house the buzz of the neighborhood. The amount may not be what you had envisioned—remember, the market has changed substantially over the last five years—yet when priced slightly below comparable sales you should attract serious buyers.
Many Prudential Homesale agents use the Prudential Value Range Marketing SM as an additional pricing resource. Instead of setting a specific price, a value range is selected enabling sellers to entertain offers in a defined range.

2. Be flexible, compromise: know your basement price and don’t be offended by offers within those parameters. Consider negotiating housewares and fixtures that may appeal to prospective buyers, such as those expensive new drapes you just installed, the dining-room chandelier or that slick, washer-drier combo. Conduct a complete inventory of household features to determine what you can and can’t live without.

3. Remove the clutter from your home: This must be done regardless of time frame. Throw away anything you won’t be taking with you and pack in storage items that you won’t miss during the sale process. Consider renting a storage pod that can be picked up and eventually moved to your new home.

4. Offer incentives: One popular incentive for a fast closing is to share or pay for your buyer’s closing costs. You may also offer higher commissions for a fast sale, which may lead to even more showings.

5. Rent to buy: If there’s interest in your home but no one is willing to step up to meet your timeline, offer prospective buyers the chance to rent your property with the right to buy it in six months or a year. Both parties win, as buyers can experience the home and neighborhood firsthand while you transition with cash flow to cover expenses.
Indeed, home-selling requires time and patience yet there are several things you can do to help expedite the process, if necessary. With flexibility and creativity, you can increase your chances of a quick sale.

Quick Tips for Selling Quickly