It’s About to Get Easier to Qualify for a Mortgage

Adapted from an article authored by Clare Trapasso | Realtor.com

We’re living in expensive times, but aspiring homeowners might soon get a break as it becomes a little easier for those with student, credit card, and car loan debt to qualify for a mortgage.

Fannie Mae plans to increase its allowable debt-to-income ratio from 45% to 50% on July 29. This means that more borrowers on the cusp of getting a loan (e.g., millennial, first-time, and lower- to moderate-income borrowers carrying more debt) could potentially qualify for a mortgage backed by Fannie.

The debt-to-income ratio is calculated by taking a potential borrower’s monthly gross income and dividing it by the borrower’s recurring debts such as monthly car payments. Lenders use this ratio to figure out if borrowers can afford to make their mortgage payments each month.

Fannie made the change after analyzing years of data that looked at the ability of borrowers to make their monthly payments. It determined that increasing the ratio will enable more qualified borrowers to get a mortgage loan.

Fannie, which purchases and guarantees mortgages, was already granting ratios of up to 50% with certain conditions—such as if the borrowers had deeper cash reserves, underwent financial counseling, or had higher incomes. The new change opens the door to borrowers with more debt who can’t meet those conditions.

However, not everyone will be benefit from the change. Fannie Mae insures mortgages, but it’s still banks, credit unions, and other financial entities that make the loans—and those lenders have their own criteria for debt-to-income ratios. But the increased debt allowance could encourage more lenders to make changes to their ratios.

A higher debt ratio isn’t a silver bullet for loan seekers, though. If you don’t have a good credit score or a sufficiently large down payment, it won’t change the outcome of your application.

Buyers who can’t qualify, even with the higher ratios, should consider other alternatives. The most logical answer is to look for homes in the lower end of their budget, find a trustworthy co-signer, or simply come up with more down payment money.

I assist my clients to secure mortgage financing and work with several lenders who are experienced in getting clients approved.  If you or someone you know is looking to buy or sell a home, this is an excellent time to be active in the market.  Call me at 682.551.0336 to discuss your housing requirements, or check out my website here:  http://www.homearlingtonmansfield.com/


Can’t Make That 20% Down Payment?

Adapted from an article authored by Carla Fried  | CNBC  

 

Many potential homeowners are unable to buy a home because they can’t come up with the 20% down payment. The National Association of Realtors reports the medium price tag of $236,000 in our current market, which equates to more than $47,000 required for the down payment.  That’s a hurdle too high for many buyers, especially first time home buyers.

If a buyer purchases a home with less than 20% down, then mortgage insurance enters the picture. Adding the insurance premium to the monthly mortgage payment places a higher burden on the homeowner and limits his buying power.

Purchasing mortgage insurance presents several scenarios:

If you have a good credit score, PMI (private mortgage insurance) on a conventional mortgage may be your best option. Once you have the 20% equity, your lender is required to drop the insurance.

If you’re considering a FHA loan, it may have a lower monthly payment, but the mortgage insurance is permanent—you will pay the premium for the life of the loan or until you refinance the loan once you hit the 20% equity mark.

If you’re a military veteran, it is recommended you work with a lender experienced in mortgages backed by the Department of Veterans Affairs. The 0% down payment required for a VA-backed loan is hard to beat, although there is an upfront fee of 2.15% or 3.3% of the loan amount, that fee be rolled into the mortgage.

Another option available to borrowers to avoid the 20% requirement is an 80-10-10 loan. This allows the buyer to make a 10% down payment and requires taking out two mortgages.  The primary mortgage covers 80% of the loan value; a 2nd mortgage, often called a piggyback loan, covers 10%; and the other 10% is the down payment.  It eliminates the need to buy mortgage insurance.

It’s a bit more hassle, in that there are two loans that need to close. The lender handling the primary mortgage will coordinate getting the piggyback, which may come from a different lender. You may pay a few hundred dollars to open the piggyback but shouldn’t be charged again for the appraisal, title insurance and other requirements you’ve covered with the primary. Piggybacks are typically home equity lines of credit (HELOC), which are variable rate loans and subject to increasing interest rates.

I love helping my clients purchase the home of their dreams and I know the in’s-and-out’s of home buying.  I’m experienced in creating the right conditions for buyers to purchase that home.  If you or someone you know needs help in the home buying process, call me at 682.551.0336.  I’ve helped 100’s of clients work toward successful closings and home ownership.


5 Tips to Boost Your Credit Score FAST

Adapted from an article by Angela Colley | REALTOR.com

Lower your credit score fast

So you want to buy a house but you don’t think your credit score is going to get you approved by a mortgage lender. Here are some tips to improve that score in record time!

1. Pay down your balances like a ninja

Credit utilization (or the amount you can borrow versus the amount of debt you’re carrying) accounts for 30% of your credit score. The more available credit you have, the better.

Estimated time for improvement: One month

2. Get your bills current

Paying bills on time is the single most important factor in a credit score. When paid on time, your credit score will improve in one to two months.  If you’re less than 30 days late and you can make the payment today, do it! Creditors don’t typically report until after the 30-day mark.

Estimated time for improvement: One to two months

3. Open a new account

Opening a new credit account will increase your total outstanding credit line (the amount you have available on that card).

Secondly, if you have only one type of credit card, opening another type of credit account can help your “credit mix,” a term the credit bureaus use to indicate whether a person can handle different kinds of accounts.

Be careful though – do NOT apply for a credit card when you shop, where the store offers a discount off your purchase. If you do, you’ll take a hit on the number of recent credit inquiries, and those are negative points to your score.

Estimated time for improvement: One to six weeks, based on processing and reporting your new account

4. Become an authorized user

Have a responsible partner or family member? Becoming an authorized user on one of their accounts will let you piggyback onto their good credit history. Just make sure the person you choose actually pays his bills on time and keeps the debts low.

Estimated time for improvement: Immediately

5. Don’t bother with additional payment histories

Asking your wireless provider or utility company to report your credit history has very little impact on your overall score, so it’s probably not worth the trouble.

So, if you really want that new house, buckle down and get busy. By implementing these tips, you can bring up your credit score in a relatively short amount of time.

When you are ready to buy, speak with Laura Van Meter. She will assist you in your new home search, from the very first step all the way thru your closing, when you walk away with the keys to your new home!

To see homes listed in the MLS, click here.

Click here to get a current estimate of your home’s market value.  The value estimate I prepare for you is much more accurate, relevant and current that those instant estimates you get on the national real estate sites.


 

Don’t Overprice Your Home! And Here’s Why…..

5 Common (but Terrible) Reasons for Overpricing Your Home
Adapted from author Craig Donofrio | Realtor.com
CLICK HERE to find out what your home is worth

We know, we know—you love your house and you know all its special fine points. And of course, you want to list your treasured home at a price that reflects all those good points that you’re sure potential buyers will recognize as truly outstanding.

Perhaps you’ve seen the comps for your neighborhood, but you just know your home is worth more, so you’re going to list it at a higher price.

The following list are reasons sellers overprice their home, and none of them is smart. If you price your home too high, it’ll take longer to sell, raising doubts in buyers’ minds about whether there’s something wrong with it, and you’ll probably have to drop the price eventually anyway. So don’t fall for any of these five common justifications sellers use to inflate the price of their beloved property.

1. You have the Midas touch in decor (you think)

The reason that interiors are often painted white or neutral colors before a sale is because it allows potential buyers to envision their own decorating. Your quirky or colorful touches might not be for everyone, and can actually devalue your house.

Alexandra Axsen, owner and managing broker of Lake Okanagan Realty in British Columbia, Canada, listed a home whose bathrooms were all sorts of strange colors—olive-green toilets, a purple bathtub, and a pink sink. When Axsen recommended to the seller a price that factored in the cost of necessary updates, things got a little heated.

“He got very upset and argued with me that his colorful fixtures added value, because people are tired of the all-white, stale hospital look,” Axsen explains.

So they tried the seller’s way first, listing it for his desired price. It didn’t sell, and buyers gave feedback that the home was overpriced. After weeks on the market, the seller finally agreed to lower the price. It sold within a month.

2. You’re nitpicking comps

Comps (or comparable market analysis) are valuable reference points that allow your Realtor to compare your home to similar nearby homes in order to price it to sell. But some homeowners place too much value on ultimately negligible differences between their home and the comps.

An agent in Atlanta has heard sellers make these statements: “My home has a 60-gallon hot water heater; every other home has 40. My deck is 60 feet larger. My den has real barn wood paneling.”

Small features like this might be worth pointing out to potential buyers, but they’re not going to make or break a deal—and trying to price your home based on the size of your deck is a setup for disappointment. Plus, you might not see the flaws in your home—your deck might be big, but it might also need work.

Your Realtor looks at all the features of your home from an objective point of view, primarily based upon how potential buyers may view it, and by a careful analysis of comps for homes similar to yours. Your idea of the ideal listing price will be based on emotion; an experienced Realtor will deliver a realistic, market-based suggested listing price.  Rely on his/her knowledge!

3. You’re too focused on your ROI

A house is an investment, and everyone wants a return on their investment. Couple that with emotional attachment, and you’re primed to mark up your home’s value.

“Sellers think that their house is worth what they want or need to sell it for, but the harsh reality is that a home is worth whatever a buyer is ready, willing, and able to pay for it,” states another real estate agent.

Even in a seller’s market, there’s no guarantee that you’ll make money on your house. And just because you need $450,000 to buy that house on Greener Pastures Lane doesn’t mean you can sell your house for the same amount.

4. You built it yourself, so you’re emotionally invested

Speaking of emotional attachments, if you built your home yourself, you might have some serious issues with overpricing your property.

Case in point: Ariel Dagan, an associate broker in New York City, co-listed a property for a woman who priced a townhouse she built herself at $18.5 million. Dagan’s team tried to get the woman to lower her price, but she was adamant about sticking with the high price tag and ultimately dropped Dagan and his team from the property.

“Shortly after we were dropped from the listing, the price dropped from $18.5 million to $16.9 million,” Dagan says. “Eight months later, the listing sold for $15.5 million—or 19.35% less than the original asking price.”

So, why does that happen? Dagan calls it the “Ikea effect.”

“Most people who buy furniture from Ikea and assemble it themselves think it’s more valuable than it really is, because they built it,” he explains. “Same thing happens in today’s real estate market.”

5. You’re imagining you’ll haggle

Perhaps the most common reason people overprice their home is because they’re looking to negotiate so they want to price their house 10% higher than it’s market value, fully expecting a buyer to offer a lowball offer which will net them the price they wanted all along.

It doesn’t work like that in today’s real estate market.  It’s better and smarter to price it right and create interest and demand where buyers are chasing you, versus you chasing the market backward [and] searching for the demand. Don’t be afraid to price your home fairly, or even underprice it—which is likely to attract buyers and boost the price to where it should be.  Every home sells when it’s priced right.

If you’re thinking of selling,  CLICK HERE TO LEARN YOUR SUGGESTED LISTING PRICE.   Your home may be worth more than you think, and I will provide you with an accurate estimate of your ideal listing price. Above all, do NOT rely on the generalized pricing estimates provided in the national real estate sites (Zillow, Trulia, etc.).


Top 5 Home Staging Mistakes

Top 5 Home Staging Mistakes

Joanna Gaines of HGTV’s ‘Fixer Upper’ Reveals 5 Top Home-Staging Mistakes
Adaptation of original article authored by Judy Dutton| Realtor.com

Few home renovation reality show hosts are as enjoyable to watch as Chip and Joanna Gaines from HGTV’s “Fixer Upper.” As the show’s before-and-after pics make clear, they are an effective combo when it comes to transforming standard (read “blah”!) houses into gorgeous homes!

One of the keys to a successful home sale, says Jo, is home staging, where you arrange your furniture and décor in a way that entices buyers to make an offer. However, home staging is a highly misunderstood practice, one where home sellers can easily make missteps that can undermine these efforts.

Here, Jo reveals the top five home-staging mistakes she’s seen, so you’ll know to avoid them when selling your home.

Mistake No. 1: Purging all your family photos

“You’ll hear staging experts say to take down your family photos, kids’ artwork, and anything personal, so that a potential buyer can picture their family in your home, rather than seeing yours everywhere,” says Jo. “Personally, I love knowing that a house is well-loved, and seeing those personal touches displayed reminds me that my family would be happy there, too.”

Mistake No. 2: Including too much furniture

“Trying to put too much furniture in one space makes it look smaller than it really is,” Jo explains. “Try to stick with three large pieces at most per room to keep the house feeling big and open.”

BTW, the above photo features a basically lovely room, but crammed with furniture.  This room SCREAMS “Please stage me!”. It could easily be transformed into a stunning room!

Mistake No. 3: Not cleaning up

“It’s true that leaving your house a mess can keep a potential buyer from seeing how beautiful your space really is, so a quick cleaning blitz before a showing can do a lot of good,” says Jo. “When the house is clean, buyers can see you love your house—and know they will, too.”

Mistake No. 4: Stuffing clutter into closets

On the other hand, “if you’re scrambling to clean up when a real estate agent schedules a last-minute showing, don’t stuff your closets full of laundry, toys, odds, and ends,” says Jo. “Potential buyers will definitely want to know how much storage space your home has, so no closet will be safe for concealing messes. If you’re in a pinch, a last-ditch effort to hide a mess is under a bed.”

Mistake No. 5: Ignoring your home’s exterior


“Simple touches like making sure the lawn is freshly cut, power-washing the driveway, or putting a few freshly potted plants on the front porch can make a big impact,” says Jo. “It’s all about reminding them that your house is cared for, so they won’t worry that you’re also ignoring what they can’t see.

Call me if you’re thinking of selling your home this year and buying a new home.  I have many tips to assist you on both transactions and make the purchase and sale pleasant and rewarding!  You deserve a home that fits your lifestyle!


8 Easy Ways to Start A Neighborhood Crime Watch Program

Courtesy of Realtor.com | Adapted from an article by Kimberly Dawn Neumann

Everyone wants to live in a safe community and a great way to foster safety is to start a neighborhood watch program.

“Neighborhood watch programs are one of the most effective crime-prevention programs in the country,” says Justin Lavelle, a safety expert for BeenVerified, an online background check platform.

With that in mind, here are some tips for starting your own neighborhood watch.

1.  Get to know your neighbors

Next door and down the block, it’s good to become acquainted with your neighbors. Get outdoors and walk through your neighborhood.  Be friendly and greet others you meet.


Welcome new neighbors and organize an annual or semi-annual block party—it’s a great way to interact with and get to know your neighbors and build a solid community.

2.  Compile a neighborhood list

“We hold a party twice a year where we have an opt-in neighborhood list with email addresses and phone numbers,” says Andy Weisser of Woodland Hills, CA. “There are about 70 families, and people can post things like lost dogs, LAPD neighborhood watch summaries, and road resurfacing details.” Having an email chain is a great way to spread the word of any news that affects the neighborhood as a whole.

3.  Create a neighborhood safe-watch Facebook page

“Choose a social media–savvy neighbor to serve as the Facebook page moderator and ask residents to post any criminal incidences (such as home or car break-ins),” says Lavelle. Make the group private so personal information isn’t visible to those outside the neighborhood.

Once you create your official neighborhood watch Facebook page, it’s time to get the word out. “Canvass your neighborhood door to door, and invite everyone to follow the page to stay up to date on meetings and events,” says Lavelle. A simple postcard or flyer will help let everyone know your intentions for the program.

4.  Be on the lookout for out-of-the-ordinary occurrences

“Members of a community are in the best position to notice variances in the environment,” says psychologist Thomas Boyce, founder of the Center for Behavioral Safety in San Carlos, CA. “That is, neighbors typically know neighbors, and other people or things that look out of place can be addressed before they become problems.”

5.  Hold regular neighborhood watch meetings

Getting all of your neighbors together can be tricky due to scheduling, but it’s also one of the best ways to keep communication open.

“Plan meetings well in advance (e.g., monthly or quarterly) at a neighbor’s home or the local library, and offer a baby sitter—it will boost attendance,” suggests Lavelle. “These gatherings will keep everyone in the loop on current problems, plan strategies to combat criminal activities, and help residents get to know each other.

6.  Establish ‘safe homes’

Designate a handful of safe homes that children playing or walking home in your neighborhood can come to in case of an emergency.

It is ideal if the safe house belongs to someone who is retired or works from home. Make stickers for the front door or window, and make sure the kids in your neighborhood know which homes are safe zones.

7.  Limit door-to-door solicitation

Discourage door-to-door salespeople and other strangers from soliciting in your neighborhood. Lavelle notes that many burglars will use this method to case properties. This could be a good topic to bring up at a neighborhood meeting. Ask residents to put a small sign on their door that says “No Solicitation” to make it crystal-clear.

8.  Distribute a safety reminder sheet

People get busy and sometimes forget basic home safety practices. It’s a good idea to create and distribute a flyer with safety reminders like turning on exterior lights at night (a well-lit neighborhood makes crime less likely), locking cars that are parked on the street, and systematically checking that all your doors and windows are locked. And don’t forget to lock your garage doors at night.

I love to share important information for homeowners, and neighborhood safety is a top priority.  If you’re considering buying or selling a home, give me a call.  I have all the information you need on neighborhoods and values within these neighborhoods.


Got Pets? Tips for Selling Your Home for Pet Owners

Adapted from RE/MAX Blog

Lingering animal smells and fur can be a turn-off for potential buyers. Be sure to remove all signs of your furry friends before showings. Here are some tips:

  1. Holey backyard

Does your dog bury bones in the backyard?  Search the yard to find your pup’s landscaping efforts and fill them in.

  1. Scoop the poop

One misstep can ruin a buyer’s impression of your yard (and possibly home). Make sure your property is clear of any pet-related landmines.

  1. Mend fences

Check your fencing, deck, porch and exterior doors for any marks from scratching or chewing. Most can be erased with elbow grease and a bit of sandpaper, stain and paint.

  1. Stash the evidence

Collect your pet’s toys, bowls, beds and litter boxes and keep them out of sight.

  1. De-scents-itize

Ask your Realtor to sniff out any animal scents you may have become accustomed to. Light candles, use room fragrance plug-ins and hire a professional carpet cleaning crew to deodorize your home.

  1. Need a buffer?

If claws have scratched up your lovely hardwood floors, professional resurfacing is a good idea.

  1. Don’t leave pets home during showings

Not only is there a chance they may bolt through an open door when strangers stroll around, there’s also a liability issue. Find a neighbor who will petsit for an hour or so, or take your pet for a car ride to the ice cream shop!

If you’re looking for a home with a bigger yard for Fido, call me at 682.551.0336.  I can help you find homes with the features all members of your family will love.