Your income is one of the major factors lenders use in determining whether you qualify for a mortgage. Which is why omitting, hiding, manipulating or not showing income may put you in a decidedly gray area with your mortgage company.
When you apply for a home loan, lenders require specific income documentation to fund a mortgage, including:
• Income tax returns for the two most recent years, with accompanying W-2s
• Corporate tax returns for the two most recent years if self-employed
• 30-day pay stub history
One exception to this rule is when completing a government loan streamline refinance or a HARP 2 refinance. For those, no income documentation may be required.
But there are some circumstances in which you might decide to omit your income from your mortgage application. Here are a few scenarios where you can get into sticky territory.
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The Self-Employed Borrower
There is no getting around the lending requirement to show two years of tax returns -- including corporate returns when applicable. Today’s federal lending requirements prevent a lender from cherry-picking which income years to use for qualifying. For example, if your 2013 income year was strong, but 2012 income year was very low, the lender cannot simply just ignore the 2012 income, as they must calculate a 24-month average of your income. So the lower income will, of course, lower your average.
Furthermore, if you are an employee of your own company, you're still considered self-employed. Why? You control and set your own income, unlike a traditional employee who does not have an ownership interest in the company. In this case, you’ll still need to submit all the required documentation.
Non-Disclosed Income
The first question a prudent lender would ask is: Why are you trying to hide your income? Most of the time when the situation arises, it is because showing full income will make the lending scenario worse in trying to qualify. For example, if you’re receiving income you don’t disclose on your tax returns and you don’t pay taxes on, but you’re otherwise obligated to do so, you have bigger problems (as the IRS is particularly on the lookout for tax fraud). Simply put, it’s best to give your lender all material information regarding your income. Doing so allows them to help you get a mortgage.
Side Jobs & Cash Deposits
If you're putting cash deposits independent of your normal income into your bank account and you don’t document it with your application, you could throw a big wrench in your mortgage process. This is true whether it’s a regular side income or not. If you’re applying for government financing, all cash deposits must be documented and sourced, meaning you'll need to explain the origin of the funds. For conventional loan financing, lenders must source and document cash deposits that are 20% or more of your monthly income.
If two people apply for a mortgage, there may be a consideration made for whichever borrower has a stronger chance of qualifying. That applicant is usually the one most suited for the lender to review for loan approval. For a conventional mortgage loan, if one borrower’s financial information is not as strong as the other’s, the stronger borrower's credit, debt, income and asset history can be used on its own. This is not the case, however, for a government loan such as an FHA, VA or USDA loan where the debt of the spouse negatively impacts the primary borrower, whose income can't be used on the loan if their credit score is not high enough.
USDA Quirk
There is a special consideration with a USDA loan. Unlike a conventional or an FHA loan, where you can cherry-pick which borrowers are included on the loan application, the USDA reviews total household income. For example, if one borrower generates $70,000 in annual income, and the spouse not on the loan generates another $40,000 in income, the total household income is $110,000 -- exceeding USDA's income threshold (which varies per county). This means the lender must count the other $40,000 income, whether this person is on the application or not.
Ultimately, lenders want to make loans to borrowers who can fully support the proposed mortgage payment. Most mortgage companies will want your mortgage payment and other debt to be no more than 43% of your income, though in some cases they may allow up to 55%. So it’s important to be upfront with your lender about all sources of income from the beginning so they can help you navigate the mortgage process and become a homeowner.
It's possible that you've heard or used this term before but unless you're a veteran using your home loan benefit to buy a home; it's not a term you'll run across during your daily routine. The VA home loan benefit is a special government-backed mortgage used to finance a primary residence and does not require a down payment from the borrower along with reduced closing costs and relaxed approval guidelines compared to conventional loans. What is a VA no-no?
No Money Down
The first "no" represents no money down from the borrower. As part of the original G.I. bill crafted in 1944, this special entitlement was provided to returning service members to help them assimilate to civilian life once again and get a fresh start in the working world as a new homeowner.
Back then, home loans required a down payment. A sizable one in many instances with some banks offering mortgages only to those with a down payment of 20 to 30 percent or more. That left home ownership to those well off, leaving much of the working class out of the picture.
The G.I. bill recognized that while our soldiers were fighting and protecting our freedom, they didn't exactly have time to set up a savings plan. Even if they did pull some time off, there was little to save. Providing a veteran an opportunity of home ownership and waiving the down payment requirement is the shining feature of the VA mortgage program.
The Second No
The next part of our "no-no" equation refers to closing costs. As in, not having any. A VA no-no is the nickname given to a VA loan where the veteran doesn't have to pay any closing costs along with no down payment requirement.
Not a bad deal and only reserved for VA mortgages.
But the second "no" doesn't mean there are no closing costs, it's just that the veteran doesn't have to pay them. There certainly are closing costs including appraisals, a credit report and origination fees among a host of others.
The borrower also has to have homeowners insurance on the property and property taxes must be settled as well. So how does the veteran get away with no closing costs? There are a couple of ways.
The Seller Contribution
Seller contributions refer to amounts paid for on the buyer's behalf by others. These contributions, called "concessions" are limited to 4.00 percent of the sales price of the home. That means if a home is selling for $300,000 then the seller is allowed to contribute up to 4.00 percent of $300,000, or $12,000 in closing fees. Anything beyond that is prohibited.
Yet that's quite an amount. Closing costs on a traditional VA loan on a $300,000 home might be closer to $6,000, not $12,000.
How does the buyer get the seller to pay the closing costs? The buyer asks. When making an offer on a home, the sales contract can read: "Seller to pay closing costs on behalf of the buyer not to exceed 4.00 percent of the sales price."
The seller can agree or disagree. Or counter with a specific offer of "Seller will pay up to $3,000 of the buyer's closing costs." But what if the seller doesn't agree to cover certain fees or pay any of the buyer's costs whatsoever?
Another method of paying for closing costs comes from the VA lender directly. A VA lender can offer a lender credit that can be applied to the buyer's closing costs by adjusting the interest rate on the mortgage. How so?
It's common knowledge that borrowers can reduce the interest rate on their loan by paying a discount point to lower the rate. For instance, if a 30 year fixed rate is at 4.00 percent today without any points, the lender might also offer a lower rate of 3.75 percent with one point. On a $300,000 loan, that's $3,000.
Conversely, a lender can increase an interest rate and provide a credit to the borrower in exchange for the higher rate. Using this example, a lender might offer a 4.25 percent rate, one-quarter higher than the 4.00 rate with no points, and offer a one point credit to the borrower. In this example, applying $3,000 towards the borrowers costs.
That's a VA no-no. It takes some preparation as well as negotiation and the seller as well as the lender can both contribute to the cause. No money down and no closing costs is financial music to a veteran's ears.
Looking to get your foot in the door (of your new home)? If you’re a renter who’s tired of paying someone else’s mortgage, now may be the time to pursue the American dream of homeownership. In fact, the days of needing a 20% down payment are long gone. While you can always elect to put down the full 20% or more, there are now many alternatives available. Here’s what you want to know if buying a house is in your future.
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In the mortgage industry, 20% down is considered the benchmark down payment for looking strong on paper as a home buyer. While this a general standard for financial strength, it is by no means a requirement, nor is it necessarily expected.
However, keep in mind that your purchase offer amount – your buying power — drives negotiation. How strong you are on paper does help, but when you make an offer to buy a home, the seller of the property has no idea of your financial strength other than what your real estate agent tells them and The price dictates whether you’re in the game for the house, or whether you’ll continue to be on the search.
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Down Payment Options
So let’s say you don’t have 20% down for a home. While there are many benefits to having more equity in the home you’re buying, that doesn’t mean you’re out of the running for becoming a homeowner. There are options for lower down payments.
3.5% Down
For an FHA loan, the minimum down payment you would need to buy a home is 3.5% down. Most lenders can lend up to $417,000 with the exception of Alaska, Hawaii and Guam. An FHA loan comes with a monthly mortgage insurance payment, which can make it more expensive than a conventional mortgage.
In some more affluent markets, the higher loan amounts (per county) allow someone with strong income and less cash to still get into the market. 5% Down
Another popular choice for buyers is using a conventional loan with 5% down. There are loan size amounts up to $417,000 (with the exception of Alaska, Hawaii and Guam) going as high as $417,000 with as little as 5% down. An alternative to the higher-priced FHA loan, the conventional loan allows for getting rid of the PMI after accumulating 20% equity after a minimum of 24 months. 0% Down
Two options exist for 0% down financing, one being through the U.S. Department of Veterans Affairs. The program allows a veteran to buy for literally no money down. Yep, the purchase price and loan amount are equal.
The caveat? Actually, there are two and the home must pass a clear pest report. This option could be optimal for brand-new construction or for property where any pest damage can be fixed in time for closing.
An alternative to this program is a loan guaranteed by the U.S. Department of Agriculture, USDA. You need not be a veteran for this particular loan, however in some areas, you may not be eligible to use the program due tighter qualifying income-to-payment ratios and location. The program also only works for homes designated rural by USDA. Additional income limitations also apply. For example: For a family of four, a household income cannot exceed $96,400 per year.
All of these options allow for the use of gift funds. Family members, cousins, relatives – these are all excellent sources to tap for possible down payment or closing costs (usually about 2% of the home price). Even if you already own a home and are looking to upgrade, all of these programs could present a viable option to bridging the gap between buying a home for the right price in the right area of vs. continuing to be on the search. Boost Your Buying Power Mortgage Tip: If you qualify for a smaller loan size, it could be more challenging to actually close escrow on your first home. Buying power is important, especially when negotiating in competitive markets. Pure and simple, the bigger the loan you qualify for, the more opportunity. Conventional conforming loan — With conventional loans, you can get 95% financing up to $417,000. In counties where the maximum conforming loan limit is higher than $417,000, you can have up to 90% financing. For example: In Sonoma County, Calif., the maximum high-balance loan limit is $520,950. A loan exceeding $417,000, and up to $520,950, would require a 10% down payment. VA loan – This type of loan allows for 100% financing all the way through the maximum conforming loan limit in the county in which the property is located. In fact, this type of loan can allow for even higher than the maximum conforming loan limit if you do have a down payment.
Here’s how: The buyer would need a 25% down payment only on the amount greater the conforming loan limit. For example, with a $520,950 loan (the maximum loan limit for Sonoma County) with a purchase price of $700,000. The difference is $179,050 – and the buyer would need to put down 25% of that difference — $44,763 – in order to get the additional VA loan financing. USDA loan – These loans allow for financing up to $417,000, but here’s the kicker: A buyer would need an income of $95,000 to qualify for a $417,000 loan — which is getting very close to the USDA loan maximum income limitation of $96,400. More importantly, lending qualifying ratios are more stringent for this program than any other. To qualify for this loan, your proposed house payment before debts cannot be more than 29% of your gross monthly income, and the house payment plus other debts cannot be more than 31% of your gross monthly income. FHA loans – An FHA loan will allow for as low as a 3.5% down payment up to the maximum conforming loan limit in the county in which the property is located.
Qualify Now!! http://pbsd.primemortgageloans.net Jumbos loans – These loans usually can go as high as $750,000 with as little as 10% down.
Remember: When you’re putting less than 20% down on a home, your monthly property taxes and fire insurance terms are required to be built into your monthly mortgage payment, and you’ll likely too. Some lenders might offer an alternative option called lender-paid mortgage insurance — where the lender actually pays the monthly PMI, despite not using 20% down to purchase a home. Make sure to do your homework, and talk to your lender so you know what your options are.
Of course, it’s always important to have your credit in the best shape possible. Before you start your home search, give yourself time to work on your credit so that you can qualify for better rates. Check or any problems that could be hurting your credit that you can work on in order to raise your scores — and you also get two free credit scores updated monthly, which can help you track your progress
This is an article from Yahoo
Ty Laffoon
Prime Mortgage Loans
Business Development Manager
Following these tips can help you reduce the length of your mortgage and save you thousands of dollars.
Below is an article that will show you a few ways to shorten or maintain the advantage on your mortgage. Here are a couple ways that I believe they should have included. These two tips may not be for everyone.
A) Bi-Weekly Payments: Pay your mortgage twice a month not at the beginning . You pay interest on the funds you have borrowed. So if you pay half up front every 2 weeks you will be paying what seems the same but will be adding a couple payments a year . Plus when you pay half up front you will not be pay interest on that amount for the next 2 weeks. This will Knock Off years from your mortgage. Make sure your financially ready for this
B) Add $100 to each payment . If you add this to every payment on the Bi-Weekly you will Knock Off additional years from the mortgage.
Do you hate having your monthly mortgage payments hanging over your head? Then read on to discover simple ways to pay down your mortgage more quickly.
As silly as it sounds, the acronym "KISS" - for "Keep it simple, stupid" - is a good strategy for homeowners who want to pay off their mortgage faster.
How so? Simple tactics are easier to execute than any strategy that's too complicated. And homeowners hear all kinds of advice when they are looking to save on their mortgages, so it's easy to get confused, says Houtan Hormozian, treasurer of the Los Angeles Metro Chapter of California Association of Mortgage Professionals.
To help take the confusion out of saving on home loans, we've gathered five simple recommendations from industry professionals that could help borrowers "k.i.s.s." their mortgages goodbye. Keep reading to find out which of these solutions could work for you.
Simple Solution #1 - Track Your Home's Fair Market Value
Do you know your home's current fair market value? If you don't, you could miss taking advantage of cost-cutting measures such as refinancing, says Frank Williams, president of the Los Angeles Chapter of the California Association of Mortgage Professionals.
"A lot of people make their payments and forget about it," Williams says. But if your home has dramatically appreciated in market value, you should consider refinancing your mortgage to take advantage of the increased equity in your home. For instance, by refinancing, you could use your equity to pay off credit card debt or fund your children's college education.
And tracking your home's value can be as easy as using a value estimator on a real estate website or on an app for your phone. You can plug in your address to get the fair market value of your home based on comparable homes in your neighborhood and sales records.
For example, Freddie Mac, the government-backed mortgage loan enterprise, has its own estimator called the Home Value Explorer (HVE), which can generate an estimate of property value in all 50 states and more than 3,100 counties with a database of about 81 million property records.
Borrowers interested in keeping up with their home's value also might want to consider a professional appraisal of their home, which might offer a more accurate figure than online home value estimators. According to Federal Reserve Board, appraisal fees range from about $300 to $700.
Simple Solution #2 - Follow the Status of Mortgage Insurance
If you put little down on your home, another simple money-saving measure is to keep up with the status of your mortgage insurance.
Mortgage insurance is "a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan," according to the U.S. Department of Housing and Urban Development (HUD). Typically, this type of insurance is required for borrowers who make down payments that are less than 20 percent of the home's purchase price.
In order to pay down your mortgage, you'll need to get rid of monthly mortgage insurance premiums (MIP) as quickly as possible, says Williams. This move saves people a lot of money, puts them in a better financial position, and secures them for the future, he explains. So how exactly do you squash this expense?
First, you need to know when your home's loan-to-value ratio (LTV) goes below 80 percent, says Williams. Mortgage insurance is kept on conventional loans until the outstanding amount on the loan drops to less than 80 percent of the value of the house.
So you need to keep an eye on your LTV to make sure your mortgage insurance premium is dropped in a timely manner. Another tip: If you make extra payments toward your mortgage, you'll reach the requisite LTV and be able to drop your mortgage insurance sooner.
For FHA loans, however, mortgage insurance remains for the life of the loan, since these government-backed loans only require 3.5 percent down. But once the LTV reaches 80 percent on this type of loan, you can consider refinancing to a conventional loan and drop your mortgage insurance as a result.
So how much could you save by dropping your mortgage insurance? Williams says mortgage insurance premiums generally cost homeowners about 1.5 percent of their homes value, meaning the MIP for a $200,000 home would be $250 on top of mortgage payments.
"Mortgage insurance is like paying double your property taxes," Williams says. "How long do you want to pay double property taxes? Get it dropped as soon as you can."
Simple Solution #3 - Schedule an Annual Meeting with Your Mortgage Professional
Did you know a calendar can be a simple, but very useful tool for helping you save money on your home loan? But mortgage due dates aren't the only events you should note on your schedule.
As a homeowner, you should meet annually with your mortgage professionals, says Fred Kreger, a branch manager at American Family Funding and a past state president of the California Association of Mortgage Professionals.
"Meeting with them every year is like getting a physical. It's a mortgage wellness plan," he explains.
Scheduling an annual meeting with your mortgage banker, broker, or lender could alert you to changes that could influence your ability to save on your home loan, Kreger says. Among those changes could be new mortgage laws, rising property values, dropping interest rates, or different loan products that could better suit your financial needs.
For example, meeting with a mortgage broker could help you determine if you should switch from a fixed-rate to an adjustable-rate mortgage.
According to HUD, an adjustable-rate mortgage is a home loan that does not have a fixed interest rate. Instead, the loan is subject to changes in interest rates, which may increase or decrease monthly payments at intervals determined by the lender.
In some cases, sticking with a fix-rate mortgage year after year could be a missed opportunity if you never consider other options that could offer lower interest rates or monthly payments, says Kreger.
"Some people just pay on a mortgage for 30 years and forget about it," Kreger says, referring to the most popular loan term for a fixed-rate mortgage. "But use an anniversary date or tax season to meet with a mortgage professional. The beginning of March is good time."
Simple Solution #4 - Monitor When Lower Interest Rates Can Save You Money
Some homeowners are obsessed with refinancing to get the lowest interest rate possible on their mortgage. But they should also figure out when refinancing to a lower interest rate is a financially sound decision.
It's true - a lower interest rate means less paid to the bank, but homeowners need to assess more than that, Hormozian says. In some cases, refinancing to a lower interest rate could actually cost you more money.
For example, lower interest rates can be negated by the refinance charges required to set up the new loan. The Federal Reserve Board's "A Consumer's Guide to Mortgage Refinancings" spells out a laundry list of potential charges and fees associated with obtaining a new loan, which a borrower might have paid the first time the mortgage was purchased.
Refinance charges such as an application fee, points, appraisal fee, inspection fee, closing fee, and title insurance (to name a few) could cost between 3 and 6 percent of a home's purchase price, according to the Federal Reserve Board. Ty Laffoon
Unless the new interest rate offers substantial savings over the course of the loan, refinancing might not be what it's cracked up to be, according to Kreger.
So how do you know if a refi is worth the cost?
According to Kreger, you should follow the "1 percent rule." Refinancing typically makes good financial sense when the new interest rate is at least one percent lower than the old one, he says.
Consider the following comparison: A 30-year fixed mortgage of $275,000 with an interest rate of 5.5 percent would translate into $287,110 in interest over the life of the loan. But with an interest rate of 4.5 percent, the total interest would amount to $226,618. Ty Laffoon
As you can see, lowering the interest rate on this mortgage by one point means saving more than $67,000.
If you got a 30-year loan five to 10 years ago, refinancing to another 30-year loan wouldn't make sense, because you have already paid down a substantial amount of your principal. Instead, it would be better to think about shortening the loan term, says Kreger.
Your best chance at paying down your mortgage is to understand the importance of saving.
"Every nickel helps," Kreger says. "You can pay off your loan quicker and lower your interest rate without refinancing by putting extra money toward the principal on your mortgage whenever you can. I'm talking about creating a habit."
One simple way to do this is to make bi-weekly payments on your mortgage to effectively knock years off a 30-year loan, according to Las Vegas-based loan officer Brian Cook.
On a traditional mortgage payment plan, it's 12 payments a year, Cook says. With a bi-weekly plan, it's 13 payments a year, which basically adds one payment a year that goes directly to the principal.
To see for yourself how much you could save with this tactic, check out this example provided by Cook. On a 30-year fixed mortgage of $250,000 with an interest rate of 4.25 percent, you could knock your loan term down to 25 years and save more than $32,000 by making one extra annual payment.
Cook says the simple act of making payments every two weeks helps instill an attitude of saving money in borrowers who might be prone to living from paycheck to paycheck.
"The wealthy stay wealthy by paying less interest," Cook says. "It takes more discipline, but they are budgeting better and building equity in their home faster."
If you’ve ever had a debt collector call you, Thursday’s announcement from credit scoring company FICO may be good news for you.
FICO just released the newest edition of its general credit scoring model, FICO Score 9. The big changes come in the area of debt collection: The score will not include paid collection accounts, and it differentiates medical collection accounts from non-medical debt.
These are significant changes for a few reasons: First, medical debt is often beyond the consumer’s control, because unlike an unpaid rent check or utility bill, the consumer may have no way of anticipating healthcare needs or medical bills and, as a result, may not accurately reflect a consumer’s typical payment practices.
In addition, by removing paid collection accounts from the formula, consumers are, in a way, rewarded for meeting their debt obligations. In other scoring formulas, including FICO’s older score versions, collection accounts have a negative impact on a consumer’s score, paid or unpaid.
As is the goal with all credit scoring models, the purpose behind the changes to the FICO score is to better assess the risk consumers present to potential lenders. However, it’s up to lenders which scores they use, and it’s difficult to estimate how quickly the industry will adopt the new model.
The changes in considering collections accounts are similar to a formula currently in use: VantageScore 3.0. That model has grown in popularity, but FICO maintains about a 90% share in the credit scoring market.
Ty Laffoon
“FICO’s announcement today appears to be a competitive response to the traction that VantageScore 3.0 has garnered amongst the largest lenders in the country, and changes to the new FICO model apparently try to remedy many lender and consumer challenges already addressed by VantageScore,” said Barrett Burns, CEO of VantageScore, in a statement to Credit.com.
Whatever the reason, formula changes could be very good for consumers. As score providers aim to design the most predictive models, ideally scores will become increasingly accurate reflections of a consumer’s credit risk, theoretically making it easier for consumers to change their scores through their financial behaviors.
New-score adoption is typically not a rapid process. Lenders tend to test a new model to make sure it serves their purposes better than the model in place, at which point they update their risk-assessment processes to include a new score.
“The advances in FICO Score 9 provide significant incentives for lenders to upgrade from earlier versions of the FICO Score,” said Jim Wehmann, executive vice president for Scores at FICO, in a news release announcing the update. “U.S. lenders can more consistently and precisely assess new applicants and existing accounts with a more robust credit score built on the most current credit data available, while minimizing operational hurdles associated with adoption and compliance. We stand ready to help lenders make that upgrade as smoothly and quickly as possible.
As a consumer, you never really know what credit scoring model a potential creditor will use when reviewing your application, so it makes the most sense to focus on the fundamentals of good credit and increase your chances of receiving a good credit score, regardless of model. An easy way to do this is to review the same credit score over time (checking the same score gives you an apples-to-apples comparison), and as your score changes, you can understand how your behavior impacts your creditworthiness.
WASHINGTON — The Justice Department and Bank of America have reached a record settlement in principle in which the bank will pay just under $17 billion to resolve allegations related to fraudulent marketing of mortgage-backed securities that helped cause the nation's economic crisis, an official with knowledge of the negotiations said Wednesday.
The tentative deal, reached last Wednesday night during a telephone conversation between Attorney General Eric Holder and Brian Moynihan, the bank's chief executive, surpasses a similar $13 billion settlement with JPMorgan last November, said the official who is not authorized to comment publicly.
Last week's telephone call, the official said, came as Justice officials in New Jersey were preparing to file a complaint against Merrill Lynch, a part of Bank of America. The official said the bank then requested the call and later raised its offer to reach a tentative settlement.
Although there is an agreement in principle on the value of the deal, the official said other issues have yet to be resolved, and it could be days before there is any public announcement.
A second government official briefed on the negotiations said the settlement is expected to include "hundreds of millions" of dollars in consumer relief to help struggling homeowners in several states cope with their mortgages. The official was also not authorized to speak publicly because the negotiations are confidential.
A critic of past settlements between banks and the Justice Department questioned whether this one will go far enough.
"The DOJ can be counted on to brag that the settlement dollar amount with Bank of America sets yet another record and claim, again, that this shows DOJ is tough on Wall Street," said Dennis Kelleher, president and CEO of Better Markets, a financial watchdog group. "But, unlike other recent settlements, will DOJ provide the public with the key information on investor losses, Bank of America profits, the names of involved executives, specific laws broken and the actual systemic illegal schemes and activities? In short, is DOJ willing to actually inform the American people about such important and grave matters?"
The best ways to buy a home with a low down payment
Even with a low down payment or flawed credit, you might still be able to buy a home.
Are you an aspiring homeowner with bad credit or little savings? Well, that doesn't have to stop you from buying …
Let's say you've found the perfect house with a big backyard for your dog and a great patio for amazing summer barbecue parties. And you've managed to save a low down payment to help you buy it.
But what mortgage would be best for you at this point? Well, the answer has changed over the past few years. In the past, lenders probably would have pointed you toward a loan from the Federal Housing Administration (FHA), which is part of the government's Department of Housing and Development (HUD). In fact, the HUD website says FHA loans have been around since 1934 to help those with low down payments, low closing costs, and easy credit qualifying.
But that's just not the reality anymore, said Sonia Garrison, research manager at Evolution Finance, which launched the social network last year to help people with personal finance issues.
Garrison authored the 2013 Mortgage Insurance Report for WalletHub and discovered that FHA mortgage insurance premiums have doubled since 2008, making an FHA loan hard to afford for many people, she says.
However, she explains that other types of loans offer a cheaper insurance option known as private mortgage insurance (PMI) for borrowers with a low down payment or less-than-ideal credit.
PMI, bought through a private insurance company, is required on every mortgage with less than a 20 percent down payment. On the other hand, FHA mortgage premium insurance is backed by the government. Both protect the lender in case the borrower defaults on the loan. So how's an aspiring homebuyer supposed to know which to go with? If you have less than 20 percent down saved, keep reading to find out which loan might be the best option for you.
FHA loans used to be the most affordable mortgage choice, especially for first-time homebuyers or homebuyers with flawed credit history or not much money saved for a down payment,
But because FHA mortgage insurance jumped from .55 percent to 1.35 percent in 2013, he says that many people aren't able to afford the monthly mortgage and insurance.
For instance, on a $200,000 conventional loan, the private mortgage insurance would be about $103 per month. If that same mortgage was drawn up by FHA, the mortgage insurance would be $225 each month,
Why did FHA mortgage premium insurance jump so high, so quickly?
Two years ago, 70 percent of the loans he wrote were for government-backed loans, most of which were FHA loans.
"But FHA was never designed to be 70 percent of the market share. It was designed to help certain people. But it was serving all the people," he says. "By increasing the insurance, FHA has corrected and repositioned itself to be that 18 to 20 percent of the market that they meant to be in the first place. This is a good thing. There are still those who will fit preferably into the FHA bucket."
When Garrison began doing her study, she knew there was going to be a difference in what people paid for PMI and FHA insurance. But it was very surprising, she says, how quickly a large difference accumulated over a period of three to five years for a homeowner.
Take this example: With 5 percent down and a 659 credit score, someone can save $5,000 for five years or $1,000 a year by having a conventional loan with private mortgage insurance instead of an FHA loan, the study shows.
When you're looking for a mortgage, it's really easy to just focus on the interest rate of the mortgage itself, she says. But if you want the best deal, ask mortgage lenders to compare what you'd pay for FHA mortgage insurance and private mortgage insurance.
It's possible that one lender might go through some extra steps to get you approved with a conventional loan with less monthly mortgage insurance, Garrison explains.
Ask for a quote: http://pbsd.primemortgageloans.net
Who Should Still Look Into An FHA Loan?
Even with rising insurance premiums, are there still people who can benefit from an FHA loan?
Of course, For example, those who only have down payment assistance from a gift might be better off with an FHA loan, because most conventional loans don't allow for 100 percent of the down payment to be a gift from a family member or friend, he explains.
Or if you have a credit score under 660 or have a high debt-to-income ratio (DTI), you're more likely to get approved for an FHA loan than a conventional loan, He explains that FHA loans are a little more flexible when it comes to those qualifications.
According to the HUD website, you don't have to have a perfect credit score to qualify for an FHA mortgage. In fact, even if you've had credit issues, such as a bankruptcy, it's easier for you to qualify for an FHA loan than a conventional loan.
Also, homeowners might choose to take out an FHA loan if they already own one home and want to buy another one, says Conventional loans require six months of mortgage payments reserved for their current home, and a two months reserve for the new house they are buying. This is an added security measure in case the homeowner defaults on either one of the loans they are carrying. Alternatively, an FHA loan doesn't require any reserves.
For example, if you have a monthly mortgage payment of $1,000 on your current home and a payment of $1,500 on your second home, the bank issuing the second conventional loan would want to see $6,000 in a savings account for the first house and $3,000 more for the second. That's $9,000 in reserves before they would even consider giving you a conventional loan,
Other Loans Available With A Low Down Payment
The traditional down payment of 20 percent of the purchase price seems impossible to many folks. That would mean saving $40,000 for the down payment on a $200,000 home. That could be a tall order, especially for first-time home buyers, those who have gone through some financial burden like a divorce, or young college graduates who have high student loans, .
And now that FHA loans have become quite expensive with their increased mortgage insurance, lenders have to be quite creative to help borrowers who don't have that magical 20 percent, Garrison says.
So check out some loan options that might be the perfect fit for your financial situation: Conventional Loan: You will need a credit score of 700 or more and at least a 10 percent down payment saved up, . Comparatively, an FHA loan only requires a bare minimum of 3.5 percent down. "If you have a 660 credit score, it will be a coin toss of what loan will suit you best - an FHA or a conventional. The pricing in terms of monthly payments will probably be the same," http://pbsd.primemortgageloans.net The Veterans Administration (VA) Loan: This can provide an amazing mortgage loan to military veterans and their families with low or zero down payment, Neef says. The government gives 100 percent of the financing, although there's a .4 percent mortgage insurance that is added on. USDA Loan: Another government-backed loan is the USDA loan, which, like the VA loan, offers 100 percent financing, Neef says. Plus, the mortgage insurance premium called a "guarantee fee" is lower than that of FHA mortgage insurance or PMI. However, USDA loans do have stricter requirements, such as falling below a certain level of income. "For instance, in my Portland, Oregon area, if you have five people in your household, you cannot earn more than $100,000," he says. State-Sponsored Loan Programs: On a state-by-state level, there are some programs to encourage first-time homebuyers to buy in areas that were hit hard by foreclosures. You could try calling several loan officers to see if any of those special lending programs are available where you want to buy a home, suggests Bill Redfern, CEO and founder of A Buyer's Choice Home Inspections in Pompano Beach, Florida. These state-sponsored programs enable some borrowers to take out a conventional loan and get down payment assistance. For instance, New York State's Homes and Community Renewal program offers a conventional loan with options of 3 to 5 percent down, plus competitive fixed interest rates for 30 years.
A combination of market factors may make you think you're getting priced out of the home market. But one observer believes first-time homebuyers might want to consider making a move.
"I know it's hard to face rising interest rates and rising home prices at the same time," says Glink "The good news is there's still plenty of runway if you want to buy a house this year."
believes first-time homebuyers should consider these five good reasons to buy a house before the end of the year:
Ty Laffoon Pre Qualify Now ... http://pbsd.primemortgageloans.net Home prices are still off their highs
Yes, home prices are rising from the lows seen during the housing crash of 2008, but they're still nearly 20% off their mid-2006 peak. According to the S&P/Case-Shiller Home Price Index, average U.S. home prices are currently at summer 2004 levels. In markets that are still recovering, first-time homebuyers could see significant appreciation over the next few years, if they buy now. Ty Laffoon
Interest rates are expected to keep rising
Interest rates are slowly climbing, and as the Federal Reserve concludes its economic stimulus plan, rates are expected to continue to rise. Some experts believe mortgage interest rates could hit 5% by the end of 2014 or the first quarter of 2015, according to Glink. And even a small bump in interest rates can mean a significant jump in your monthly note.
"If you're offered a 4.2% interest rate on a $400,000 mortgage, for example, your monthly payment will be $1,961, and you'll pay more than $300,000 in interest over the loan's 30-year term," Glink says. "If your interest rate were 4.9%, your monthly payment would jump to $2,115, and the total interest paid over the life of the loan would exceed $360,000."
Rental rates are rising
There is always an argument to be made regarding whether to buy or rent. It's all a matter of your particular situation – as well as the status of your local housing market. If you need to be mobile -- prepared for job transfers or out-of-state promotions -- or are continuing to search for "the perfect place," renting is probably right for you.
However, if you would like to put down some roots, and rents are high in your hometown – it might be cheaper to buy.
"Divide the list price of the home you're interested in by the annual rental rate of a comparable property to determine the price-rent ratio," Glink advises. "If it's below 20, chances are it's a good time to buy."
Of course, buying a home means more than a mortgage. Remember to consider the other built-in expenses: maintenance, insurance, taxes and utilities. Pre Qualify Now ... http://pbsd.primemortgageloans.net
Consider your buying power
Americans have been steadily reducing their debt load. Maybe you have, too. The lower your debt, the higher your buying power. Creditors will consider your debt-to-income ratio – how much debt you have, compared to your gross (before-tax) income.
"Experts generally agree that you can spend between 28% and 36% of your gross income in total debt service -- that's your housing expenses plus your other debt payments," says Glink. With lower debt comes a higher score
As you pay off student loans, credit cards and consumer debt, your credit scorewill improve. And that's one of the biggest factors mortgage lenders consider when determining the interest rate and terms of your loan.
"You should definitely consider buying this year, because it's unlikely the housing market will look much rosier next year, when interest rates and home prices could be even higher," Glink says.
Did you recently change jobs or receive a promotion? Despite what you might have heard, it is still possible to qualify for a mortgage to buy or refinance a home using your new income. The lending atmosphere is rife with misconceptions about job gaps, job changes and occupational changes within the course of an employment time frame. You can get a mortgage if you switched jobs or even changed industries , you just have to approach it the right way to seal the deal.
When determining your ability to pay (and therefore determining how much house you can afford), a lender will calculate your average income based on your pay from the past 24 months. It’s pretty straightforward if you’ve had the same job and same income and pay structure, but if any of those things changed in the past two years — or will change soon, you may face challenges when trying to get a mortgage.
In the past, lenders were ready to strike down loan applications in which there was a job or an industry change. Even real estate professionals will tell you not to change jobs before applying for a home loan. While that very well may be the case for most situations, it is not necessarily so black-and-white.Ty Laffoon
If you have had a job change, no matter what, a lender is going to need the following things from you — and your employer — in order to close on a mortgage: an offer letter, a role change letter if you have a title change and commensurate compensation package change, and the most recent pay stub and verification of employment. Ty Laffoon
How Lenders View Hourly Employees
Hourly employees are under the tightest microscope when it comes to getting a mortgage. Why? An hourly employee may have a set full-time schedule, which is ideal for lending purposes. However, if you work slightly less than a full-time schedule, with hours that fluctuate from week to week, this can muddy the waters. They will use a Verification of Employment that will state the average work week.
Here’s what you’ll need from your employer: a current pay sub and a Verification of Employment. These items could get you an exception due to relocation or an alternative circumstance. In either capacity, a most recent verification of employment can bridge the gap between how many hours worked in the year to date, supporting the new federal ability-to-repay requirements.
How Lenders View Salaried Employees
Lenders love salaried employees the most because a set salary streamlines the income calculation in the qualifying process. If you’re changing from one salaried role to another salaried role, despite a job gap, this should be no problem for qualifying for a mortgage so long as you can explain any gaps in the most recent 24 months.
Each job you’ve held in the past 24 months — even if you’ve held multiple jobs — all have to be detailed and itemized with dates so there is no gap in employment. If there is a gap in employment, the lender will need a written explanation detailing the transition. If you have changed jobs from one salaried role to another salaried role, with a different title and a different position — even within a different industry — that still should be fine for your lender as long as you are paid the same way — a flat salaried income. What If You’re Salaried With Overtime, Commissions or Bonuses?
Have a new job? Or a new salaried role with big commissions, overtime or bonuses? If you do not have a history of this additional add-on income, it cannot be counted for use when qualifying for a new loan.
Here’s an example of a transition that a lender will find acceptable when calculating average income: A police officer has earned overtime plus salary for the past 24 months, and decides to change jobs to become firefighter with overtime potential. In this case, the overtime will be included in the 24-month average. The overtime, bonuses or commissions must be consistent during that time period for that type of income to be included in the average. A borrower can’t have a history of overtime, then change jobs and now have add-on commission income and expect the lender to include the add-on income in the 24-month average when there is no prior history of it. Changing From Salary to Hourly Pay
If you are moving from a salary role to an hourly role, the lender is going to have to use your hourly income supported with a pay stub and verification of employment. As long as the change is within the same field and your title and role are similar, you should be in the clear. Future Promotion or Raise On Deck
Congratulations, you’ve been offered a promotion! But first: Has it actually occurred yet? If not, you will be hard-pressed to get the lender to use the projected income, even if it is guaranteed.
If you cannot provide a pay stub with year-to-date income (usually a 30-day pay stub depending on your specific lender requirement), along with a letter detailing the change, you won’t get approved for the loan. Let’s say, for example, you are searching for the house and you know in the next four months your income is going to increase to $6,000 per month because you’ll have a new role within your company. In order for that $6,000 per month income to be used in the calculation, you’d have to get the details of the raise, including the role change letter and at least one pay stub.
So if you are thinking about getting a mortgage, even if it is further down the road, consider opening a dialogue with a lender now so you can be guided through any income bumps the past or future may hold. It is especially critical for you to get pre approved with a lender upfront prior to house-hunting. This process includes allowing a lender to review your credit, debt, income and assets to assess your ability to qualify.
This is also a good time to start looking over your credit reports and checking your credit scores so you can address any problems in advance of applying for a mortgage.
Can you spare a minute of your
time this afternoon for the release of the minutes of last month’s Federal
Reserve meeting? It will likely be time well spent — especially if you’re
wondering what Fed members were saying behind closed doors at the June 17-18
meeting about when they’ll start to hike short-term interest rates.
The minutes will be released at 2
p.m. ET. Ahead of the open on Wall Street, stock futures were pointing to a
slightly higher open, after two days of losses. The Dow Jones industrial average
is up 0.1% in pre-market trading.
The timing of interest rate
increases is a hot topic on Wall Street, as low rates have been a major
propellant of stock prices since the bull market began in March 2009. The start
of the next Fed “tightening” cycle is viewed by many investors as an eventual
headwind for a market that, many skeptics say, has become addicted to the Fed’s
easy-money policies.
“Wall Street will be looking for
clues to a timeline for when the Fed could potentially raise interest rates,”
Since the Fed’s last meeting,
which included a dovish, or market-friendly, rate outlook from Fed Chair Janet
Yellen, financial markets have been reacting to a June jobs report that was a
lot stronger than anticipated. The 288,000 new jobs, well above the 215,000
economists’ forecast, and the drop in the unemployment rate to 6.1%, has
intensified the rate-hike debate.
After the strong jobs report, a
number of Wall Street firms have revised their forecasts for the Fed’s first
rate hike, pushing the initial increase forward to the first quarter of 2015,
sooner than the prior midyear 2015 prediction. Markets will be seeking clues
signaling a sooner-rather-than-later Fed hike. “We will be looking for any signs
of a more hawkish tilt.
Ty Laffoon Business Development Manager Prime Mortgage Loans
If you find the perfect house and you're ready to get a mortgage, your financial history may be more important than you think.
"There are so many components of your financial life that impact your ability to secure loans," says , New York. "Whenever you apply for loans, be sure to educate yourself on all your options, and know what's required."
Massachusetts, agrees. "It's important for borrowers to know what type of activities can lead lenders to view borrowers as high-risk applicants," since this designation can lead to higher interest rates and fees, and may even result in the application being rejected.
Worried your finances will slow down your home buying process? Keep reading to find out which nagging financial issues can come back to haunt you.
#1 - Low (or No) Down Payment
You can pay now or pay later: If you fail to save up a sufficient down payment, it's going to raise the amount of your monthly payments.
"Mortgage loans are generally based on an 80 percent loan-to-value (LTV) ratio, which means that financial institutions will lend 80 percent of the property value/price," according PhD, department chair and professor of finance and real estate
Wall says that lenders prefer for the home buyer to have at least 20 percent equity, or a 20 percent down payment. He refers to this as having "some skin in the game." In other words, a homeowner who has put at least 20 percent into the cost of the home is less likely to walk away or default on the property.
On the other hand, "the lower the down payment, the higher the risk of default and the higher the interest rate charged to the homeowner," explains Waller.
In addition to a higher interest rate, borrowers will also be charged private mortgage insurance (PMI). "On a conventional loan, anything less than a 20 percent down payment will require the homeowner to pay private mortgage insurance (PMI)." If the homeowner defaults, PMI helps lenders to offset the cost of default mortgages.
So how much is your PMI and how long will you be required to have it?
"You are typically required to carry private mortgage insurance until you reach 20 percent equity in your home," says David Bakke, personal finance expert at the consumer-savings website, moneycrashers. com."Private mortgage insurance usually costs around 1 percent of your outstanding balance. So if your current balance is $200,000, you'll pay about $2000 per year."
As a result, Bakke concludes that it definitely behooves you to save for a substantial down payment.
Pre-Qualify at
http://pbsd.primemortgageloans.net
#2 - Low Credit Score
"Your credit score is the single most important snapshot of your credit health, and represents all the information on your credit report - including your credit accounts and payment history," says Ken Lin, chief consumer advocate at Credit Karma, Inc.
A low credit score sends the wrong signal to potential lenders, one that may even prevent you for being approved for a loan.
"A low credit score says that you're not a reliable borrower and it may be difficult to get approved at all," warns Lin. "If you are approved, your lender will use your score as one of the primary factors in determining your interest rate."
So what's considered a good or a bad score? "Anything above 760 is normally the top tier of credit, so an 800 score and a 761 will get the same interest rate pricing, says, Michael Metz, mortgage broker at V.I.P Mortgage in Scottsdale, Arizona. "Below 760, every 20 point increment (740, 720, etc.) will cause an additional "hit" to the pricing, resulting in a higher interest rate available to the buyer."
"Bankruptcies and foreclosures are serious business," says Koss. "If your credit profile and finances have ever dropped so low that you were not able to bail yourself out, it is hard for lenders to think you won't do the same to them."
After declaring bankruptcy or being foreclosed on, the requirements vary for different loan types. For example, "the Federal Housing Authority (FHA) requires you to wait three years after a foreclosure before you can get a home loan - unless there are "extenuating circumstances," like illness or relocation that led to the event," says Joe Parsons, senior loan officer with the mortgage lender, PFS Funding, in Dublin, California.
Also, if a borrower filed a chapter 13 bankruptcy - which means they paid their creditors through the court - the Trustee of the Bankruptcy Court must approve the purchase and the borrower must have made timely payments on the Chapter 13 repayment plan for at least one year, says Parsons.
For Chapter 7 - which means that all debts are discharged, and the borrower is no longer legally liable for them - Parsons says there is a two-year waiting period after the discharge date before a borrower can get another loan.
"For a conventional loan, the waiting period after foreclosure is two years if the buyer makes a down payment of at least 20 percent," Parsons explains. "If they can prove extenuating circumstances, the down payment requirement could be lowered to 10 percent."
Waller adds that getting a home loan after foreclosure is difficult, but not impossible. "Many times, individuals can get another mortgage soon after a foreclosure if they have a significant down payment, like 30 percent to 40 percent of the total cost of the mortgage."
"When lenders check a borrower's credit, late payments will show up on the report, and it may sound harsh, but one or more late payments show an inability to handle current or past debts," warns Koss.
He explains that a borrower who has a number of late payments on his or her credit report raises a red flag for lenders. "And to offset the risk of loaning money to these borrowers, the lender will charge a higher rate, or turn down the loan request altogether."
Michael Garden, a realtor with the Garden Collaborative in Philadelphia, Pennsylvania, says home loans, car loans, credit cards and many other types of loans will show on your report - as will any late payments.
What's more, if the borrower currently has a mortgage or has had one in the past, the payment history on the mortgage will also be considered. "If a borrower has made more than two mortgage payments more than 30 days late in the past year to two years, it is unlikely that borrower will be approved for another mortgage," warns Garden.
However, all is not lost - especially if you've made strides to maintain on time payments. "As you get further from the late payment, the credit score will improve," says Metz. To speed up the credit score recovery process, he advises consumers not to close late accounts, so there's a visible payment history.
Pre-Qualify at http://pbsd.primemortgageloans.net
#5 - Debt
"High levels of debt are an indication of risk. Too much debt is a signal to lenders that the borrower may be in trouble or heading toward trouble financially," says Waller.
As a result, "if all of your debts totaled up are more than 36 percent of your gross income, you likely won't qualify for a mortgage, or at least it'll be a lot more difficult," according to Bakke, who says that this percentage will vary depending upon the lending institution.
That may seem like a low number, but Bakke says that according to the Ability-To-Repay rule recently passed by the federal government, your debts can't exceed 43 percent of your income. And some banks don't want to come close to that ceiling, so Bakke says their limit may be as low as 36 percent.
And if an applicant's debt-to-income ratio exceeds the government's 43 percent limit, Garden says it is unlikely that the applicant will be approved for a mortgage loan.
So how is your debt load determined? According to Parsons, "[The lender will] calculate this by adding to the total house payment (principal, interest, taxes and insurance) any debt that will last for more than 10 months. This would include student loans, car payments, credit card payments, alimony or child support, etc."
Parsons explains that the sum, "total debt," is then expressed as a percentage of the gross monthly income.
However, if your DTI exceeds the maximum amount, you may be able to enlist the aid of a family member to be a "non-occupant co-borrower." According to Parsons, "The income and debts (including housing expense) for the co-borrower are blended with those of the occupant borrower. This will often bring the DTI to an acceptable level."
Buying a home might seem like a huge expense, so it's easy to convince yourself that you'll be stuck renting for the rest of your life. But in many cases, getting a mortgage can turn out to be a lot cheaper than what you would spend paying rent month after month.
In fact, a recent study by real estate site, Trulia, shows that "homeownership remains cheaper than renting nationally and in all of the 100 largest metro areas." In fact, buying a home is about 38 percent cheaper than renting, according to the study.
That was certainly the case for homeowner Cary H, who says she always knew she wanted to buy a home sooner rather than later.
"I realized early on after graduating from college that paying rent was basically the same as throwing my money away," she explains. "After 10 years, you've paid your landlord the equivalent to a massive down payment for your own place, and I always thought that was crazy."
H admits that there are cons to owning your own place, such as maintenance and repairs. She also adds that buying a home takes away your mobility. "When you're a renter, you can just pack up and move at any time." But for her, the benefits of homeownership outweighed the drawbacks.
H, who is 35, earns a $43,000 salary as an elementary school teacher in Fort Lauderdale, FL. "I did wonder whether my salary would be enough to qualify for a mortgage, but in the end it worked out fine," she says.
One reason Hqualified is because she has a decent credit score of 670. "I'm aware [my credit score] could be better, and I'm working towards paying off my student loans and improving my score so I can eventually refinance and get a lower interest rate."
Before H bought her current apartment, she rented a one-bedroom, one-bathroom condo for $1,060 per month. "Prices in Fort Lauderdale are ridiculous," she says. "My apartment was very cute and well-located, but it was a lot of money to be paying for something that would never be mine."
Ty Laffoon
Pre-Qualify at http://pbsd.primemortgageloans.net
Saving for a Down Payment
Even though her rent was high, Henderson says she worked on saving as much money as possible for five years before she made the jump into buying her own home.
"Some months it was just a few hundred dollars. Some months it was close to $1,000," she explains. "I cut corners in so many ways - I now laugh about it when I remember."
For example, Henderson says that for an entire year, she only bought clothes at thrift stores or garage sales. She also planted a tiny herbal garden (including mint, rosemary and basil) in her balcony so she didn't have to buy condiments and would regularly buy food from the discounted section of her local supermarket.
"Those were the foods set to expire within a day or two, so I would just go home and freeze them," she explains. "Sometimes I saved as much as 70 percent off the original price by shopping that way."
H also took odd jobs here and there, such as walking her neighbors' dogs on evenings or weekends or tutoring students in math after work, earning anywhere from $15 to $35 an hour - and saved every penny.
"After five years, I had almost $34,000 in savings, and I was ready to buy," she explains.
Pre-Qualify at http://pbsd.primemortgageloans.net
Finding Her First Home
It didn't take long before she found the right place, thanks to the help of a local realtor. "Apartments are expensive in Fort Lauderdale, so I thought it would take a while before I got something, but within two weeks, my realtor had found four condo apartments for under $200,000, which was the amount I was pre-approved for."
As for location, all four properties were within 15 minutes walking distance of where she used to rent. "I told my realtor anywhere within 30 minutes of my old apartment would work, so she did great," H explains.
She eventually chose a two-bedroom, one-bath 790 square foot apartment for $169,000 and signed the papers in April 2012. The apartment is part of a small complex and comes with amenities such as a heated swimming pool and a small gym.
"Plus, the condo was being sold completely furnished, so I didn't have to spend any extra money to move in," H says. Pre-Qualify at http://pbsd.primemortgageloans.net
Saving Money through Homeownership
Putting down every last penny of the $34,000 she had saved, H had to get a loan for $136,000 to cover the apartment. To cover her $2,000 closing costs for the loan, she borrowed money from her brother and was able to pay him back within four months.
"I chose a 30-year fixed loan, because I liked the lower monthly payments," she says. At an interest rate of 4.31 percent, her monthly payments (which include $42 in homeowner's insurance and $141 in property taxes) comes out to $858 per month. "That's $202 less than I used to pay in rent every month," Henderson says.
So what is H doing with the $200 difference between her old rent and her current mortgage? She's investing it in stocks.
"My brother works as a stockbroker and has been trying for years to get me to invest," H explains. "My plan is to do that for the next few years and then see where I stand." Depending on how well she's doing, H says she might consider continuing to invest or she might take some of that money and put it towards paying off her mortgage.
No. 1: Hovering
As a seller, your job is to get out of the way. Let your agent and their team interact with the buyers. Nothing scares off buyers faster than getting cornered by a desperate seller. "Buyers don't like it when they are hovered over. Give the buyer some information and let them look through the home on their own."Pre-Qualify at http://pbsd.primemortgageloans.net No. 2: Half-baked staging
If you are going to professionally stage your home, stage the whole house, or at least one entire floor. Nothing is more jarring than two elegantly appointed rooms followed by an empty dining room or den,
"Nothing done halfway is ever any good," she says. And unless your agent is a professionally trained stager or interior designer, hire someone who knows what they are doing to handle this sensitive job. Don't let your agent start bringing in his or her furniture for the open house -- it happens more than you would think and it can backfire badly, .Pre-Qualify at http://pbsd.primemortgageloans.net No. 3: Rookie agent on duty
Your agent may not be the one to actually show your house. But make sure you are confident your Realtor has a capable and well-trained team, While you don't want the agent at your open house to bombard potential buyers with information, you want to make sure whoever is there is available to answer any and all questions and is not more concerned with texting or reading a book.
Pre-Qualify at http://pbsd.primemortgageloans.net No. 4: Music
You don't need music to sell a house.
At worst, buyers will get suspicious that there is more road noise, or mechanical noise or neighbor noise that you are covering up." No. 5: Failure to provide marketing materials
All buyers who walk through your house should be able to pick up an info packet to take with them, says W. There's no excuse for running out of copies. Otherwise it's out of sight, out of mind.
Pre-Qualify at http://pbsd.primemortgageloans.net No. 6: Smells
Forget heavy air fresheners. Like other attempts to spice up the atmosphere, at best it's a distraction and at worst it may raise questions about what you are hiding.
And yes, while pristine cleaning is paramount, the night before your open house is not the time to plaster your abode with industrial cleaners. The stench of bleach -- and the immediate questions it will raise in a buyer's mind -- will do more damage to your chances than that tiny patch of mold in the corner of the shower.
Skip the cookies baking in the oven as well. Maybe it worked in the 90s, but buyers figured that one out a long time ago,
"You only get one opportunity to make a first impression and if the impression is an overwhelming smell, you lose," she says. "Whether it cookies or disinfectant, if it is noticeable -- and not merely background -- buyers will notice."
Pre-Qualify at http://pbsd.primemortgageloans.net No. 7: Leaving jewelry, valuables about
From gawkers to serious buyers, quite a crowd will tramp through your house. Don't tempt anyone's honesty. Besides losing something precious, you could also poison the deal with needless suspicion when something goes missing and everyone is suddenly is a suspect, No. 8: Pets
Letting your beloved pets hang around on open house day could prove costly. Not only should you put your dog or cat in a kennel for the open house, you need to remove all signs of your beloved animal friends. That means litter boxes as well -- a number one turnoff for sellers.
"The kitty-litter box has no place at an open house," No. 9: The wrong temperature
This one's simple: Your house should be warm but not hot in the winter and cool but not cold in the summer. Don't blow it by playing games with the thermostat.
Pre-Qualify at http://pbsd.primemortgageloans.net No. 10: Bad photos
If the online photos of your house are dim, blurry, taken at odd angles or of odd rooms, don't be surprised if no one shows up. Bad photos prevent potential buyers from ever showing up in the first place.
