Posted in Buying a Condo, Buying a home, Investment property, Market update, Misc, Preapproval, Real Estate, Selling a home, Uncategorized

These Improvements Enhance Your Comfort and May Attract Buyers

New trends in home technology not only make your home ‘smarter’ and more comfortable, they may also attract potential buyers if you plan to sell.

A water filtration system purifies your tap water so you don’t have to rely on a bulky filtering pitcher or purchase bottled water. Not only is it useful now, it may pay off when you sell.

A programmable thermostat keeps your home at a comfortable temperature and may help you save money on your heating and cooling bill long term.  Potential buyers may also see it as an additional perk.

A smart doorbell has a camera that allows you to see and speak to people at the door without having to open it.  It’s not only more convenient, it’s also a safety feature.  Additionally, more than 80 percent of sellers replace the doorbell when they list because it doesn’t work anymore!

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Posted in Market update, Real Estate, Selling a home, Uncategorized

Home Improvements That Pay Off

It’s no secret that certain rooms and features of your home have more sales appeal to prospective buyers.  In especially competitive markets, a remodeled kitchen, modernized bathroom, energy efficient windows or new floors can help a home stand out.  If you plan to sell your home in the next 5 years, consider these remodels to attract potential buyers.

A Kitchen Upgrade may recoup 60 to 120 percent of your costs; just be sure the updated design complements the style of the rest of your home.  Although the kitchen is often the room that helps sell a home, avoid investing in high-end appliances and features.  Paint the walls white or another light, neutral color to brighten the room.  If you upgrade the appliances, choose energy-efficient models.

A Bathroom Addition may recoup 80 to 130 percent of your costs, especially if you only have 1 bathroom.  Many buyers prefer homes with at least 2 bathrooms. If your home is a few decades old, adding a half or full bathroom may make it more attractive to buyers.  If you’re wondering where to fit a new bathroom, consider underutilized spaces in your home, such as closets, extra rooms, etc.

A Reinvented Space such as a finished basement, converted attic or small apartment over your garage may recoup 50 to 83 percent of your costs.  However, think about how the potential buyers will use the space before you change the footprint of the room or invest money in the renovation.

Add a Deck.  People enjoy spending time outside and entertaining family and friends in the summer. Adding a deck may help you recoup 65 to 90 percent of your costs.  Keep in mind, this figure varies by the size of the deck, the materials used and other customized features.

Install Energy-Efficient Windows and you may recoup 60 to 90 percent of your costs. Many homebuyers, especially younger buyers, look for energy efficient features in a home.  If your windows are single-paned, upgrade to modern models that will help you save money and energy.

Make Small Updates Around the House such as: fixing leaks, replacing rotten wood, repainting the interior and exterior and addressing mold and maintenance issues.  The better condition your home is in, the more you may be able to sell it for.

 

 

 

 

 

 

Posted in Buying a Condo, Buying a home, Financing info, Preapproval, Real Estate, Uncategorized

Getting Prepared for the Lender Meeting

Question: I am meeting with a loan officer about buying a home. Any tips or things I should be aware of?

 

First, you should have your necessary paperwork together:

  • Two years tax returns
  • Two years W2s
  • Current month’s pay stubs
  • One month bank statements for any accounts where you have money that will be used for the transaction

That should be enough to get started. You’ll update bank statements and pay stubs once you’re actually in contract to buy a specific house.

There are some potential pitfalls you should keep in mind. First, be aware that you’re going to have to document and paper-trail all money that shows up in the transaction. You’ll do this by giving the lender two month’s bank statements. If there are any “large” deposits (generally understood to be more than 10% of your gross monthly income), you’ll have to document and explain them. This would include transfers from other accounts; you’ll have to provide statements for those accounts as well.

You should avoid moving money around or transferring between accounts while you are actually in the middle of the loan process. I had a client once, an attorney, who said he totally understood the idea of documenting all the money. “It’s like the chain of custody!” he said. When the closing day came, he showed up with a cashier’s check for $150,000—drawn on a bank account I had not seen before. I asked him about it. He said, “Oh, that’s just another account I keep some money in.” He gave me the statements on that account, and I discovered there were large deposits and transfers there. Some were “gifts from relatives,” so we had to get gift letters from those generous donors. It was a paperwork nightmare, and it delayed the closing by over a week. Be warned.

You’ll also have to write letters of explanation for certain aspects of your loan file—like gaps in employment and inquiries to your credit report. Your loan officer can advise you what you’ll need. It is far better to include those necessary items in your file at the time the loan officer submits it to the underwriter than to react to the request later.

The lender will qualify you for your loan based on the Debt To Income ratio (DTI). They’ll calculate this by adding up all your monthly debt payments (credit cards, car loans, student loans, etc.), then your total proposed house payment. That number is the “total debt.” The total debt is then expressed as a percentage of your gross monthly income (before taxes). The maximum is typically 45%. Thus, if your gross income is $6,000, and you have a $200 car payment, your maximum house payment (including taxes and insurance) would be $2,500.

Don’t eliminate the possibility of making a smaller down payment to preserve liquid cash and paying mortgage insurance for a while. Once your loan is just 80% of your home’s value, the lender will let you drop the mortgage insurance. If you made a 10% down payment, you’d have the 20% equity needed in 24 months if the home appreciated at 5% per year.  Just something to think about.

Hope that helps!