Smart Home-buying in a Buyers Market

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If you are in the market for a new home, now is both the worst of times and the best of times for home buyers. It is ideal because there is an oversupply of homes on the market, the national median home price is declining and there are plenty of motivated homeowners and builders. It is at the same time a difficult buying market as there is a shrinking pool of available financing for mortgage borrowers, especially those with less than perfect credit. If you are able to qualify for home loan funding, there are still a few things you should do in order to make the most of the current buyers’ market.

Pick a Solid Market

Home prices are declining nationally, but different areas are declining for different reasons. You will find falling prices in California and Florida because home prices grew too fast for incomes during the housing boom. The prices are falling as the housing market corrects itself, coming back into balance. Markets like Detroit and some other Midwest cities are experiencing price declines as the local economy fails and people attempt to vacate the area. While looking for a good deal, it is important to make sure the low price is not indicative of doomed housing market. Try choosing markets in or around stable, prosperous cities in order to find a suitable, appropriately-priced home.

Use Your Bargaining Power

Because it is a buyers’ market, you have immense bargaining power to negotiate for a great deal. If you are working with a builder, you have the power to ask for both a lower sale price as well as some included upgrades. You may even be able to score something like no mortgage payments or taxes for six months, with the builder paying for you.

If you are dealing with a homeowner, you can bargain for a lower home price, or you can require the seller to pay for your closing costs or your mortgage points, or similar fees. This can be a huge help if you need all your saved-up cash to go towards a down payment.

Shop Around for Mortgage Funding

Finally, even if you do qualify for home loan financing, it is still a good idea to shop around among lenders and make them compete for your business. Get quotes from several lenders and compare the offers. (Make sure you are basing your comparisons on the annual percentage rate and not only on the interest rate alone.) Let each lender know the best rate you have been offered and ask if he or she can do better.

If you have trouble qualifying for mortgage funding right now because of poor credit or insufficient income or savings, now is a great time to work on improving your financial resume. If you take a year or so to improve your credit and save up this can really help you in the long run.

Do You Know the Rewards AND Risks of Buying a Home?

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Every financial decision you make in your life has its rewards and its risks. Home-buying is no different. The key, of course, is to maximize the rewards and minimize the risks. That calls for objectivity on your part. So, to help you make an objective decision, I've provided a list of both rewards and risks below. Review the list to see if you're a good prospect for owning a home!

Rewards

The "intangible" reward of buying a home is, of course, the joy of owning it and creating a home for your family. Nearly everyone desires this reward! However, there are also several concrete financial rewards that can be earned through home ownership.

The first financial reward is appreciation. In spite the recent "mortgage meltdown" and price declines, it's a fact that, on a historical basis, your home is worth more when you sell it than when you bought it. A home purchase is a great long-term financial investment.

Financial flexibility is the second benefit and is derived from appreciation. When your home appreciates, you can sell it at a higher price. You can then use the profit to buy a bigger and better home…tap into the equity (what your home would sell for minus what you owe on the mortgage)…pay college tuition for the kids…use it to fund your retirement…or any other goals you have in mind.

The third goal is leverage. Buying a home allows you to use borrowed money (the mortgage) to profit on later price increases (appreciation) on property you haven't paid for.

The fourth and final benefit is that of tax breaks! You can deduct property taxes and mortgage interest and keep up to $500,000 of capital gains!

So, as you can see, home ownership is a wise investment in your future!

Risks

As I stated earlier, every financial decision has its risks as well as rewards. Therefore, it's wise to know what those risks are upfront, so you can decide how you want to deal with them. Review the following risks to make sure you're ready for the responsibility of home ownership.

The first risk is a decline in value. We've seen this risk come true in the recent "mortgage meltdown." The value of homes declined from 2006-2009.

Although, historically, this doesn't happen often (and prices are on the rebound), it still tells you there's no guarantee that the value of your home will appreciate.

Over the long-term, however, home prices do tend to appreciate, and, believe me, home ownership is far less risky than the stock market!

The second risk is maintenance costs. It takes money to maintain a home - roofing, heating, cooling, siding, paint, etc. This fact means that you must have the income to pay for routine maintenance costs as well as the inevitable big-ticket items (water heaters, furnaces, etc.) that come with long-term home ownership.
The third risk is the loss of other investment opportunities. In the short-term, alternative investments (stocks, bonds, etc.) may give you a greater return in less time if their value rises faster than that of the homes in your neighborhood.

In such an event, you might do better as a renter or investor. However, keep in mind that, as stated above, this is a short-term strategy.

The fourth risk is lack of flexibility. Purchase of a home ties you down to a specific neighborhood and city. Many people like this fact because it allows them to "set roots" in a community. However, if you're a person who prefers to be "foot loose and fancy free," then home ownership may not be for you.

For example, home ownership doesn't make it easy for you to take a new job elsewhere or move to a different location. And, if you have to put the home on the market in a hurry due to a divorce, job loss, etc., then you can take a heavy financial hit.

The final risk lies in the fact that if you have a large mortgage payment, it can make it hard to invest money elsewhere (savings, investments, vacations, etc.).

So, there you have it - a complete list of the rewards and risks of home ownership. If you'd like help in analyzing how these factors apply to your specific situation, contact me at today!

Get Debt FREE and Raise Your Credit Score!

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  Pay Off  YOUR Debt,  NOW!

The only way to raise a credit score is to pay off your debt or at least reduce it to an acceptable level! I recommend paying off high interest rate  credit card debt first.They can suck the life out of your finances! As for those, "magic cure" credit repair commercials you hear and see promising a quick fix, their scam is even greater than high interest rate scam your credit card company is charging you!

What steps do you need to take to build your credit score to the highest level possible? How can you secure a mortgage with a lower interest rate? Use my common sense guidelines provided below to get rid of the debts that have reeked havoc on your chances for a lower-interest mortgage on your dream home.

1.) Pay Your Bills on Time – All the Time!
I know, I know – this isn’t always easy. But, lenders of all kinds look for reliability on your part. Since loaning money is a risk for them, they look for signs that you have a reliable income and the discipline to pay your bills over time. When they see those signs, they say to themselves, “Hmmm, this person looks like a good risk to me; therefore, he or she deserves a lower interest rate.”

2.)  Do Not – I Repeat! – Do Not Open Unnecessary Credit Cards!
People sometimes open credit card accounts in order to increase their available credit. Absolutely avoid this temptation! It’s simply too darned easy to charge for items you don’t really need, and, before you know it, you’re back in debt or have increased it to an unreasonable degree.

3.) Budget, Budget, Budget!
Financially, this is possibly the most “unsexy” task there is, and yet it’s the most vital and important one you can possibly undertake! YOU need to figure out where you stand financially. Budgeting will allow you to get rid of debt, improve your credit score, and shape a low interest rate financial future for you!

4.) How Much Debt is Too Much?
Here’s the first question to ask yourself in terms of budgeting: How much debt is too much?
Actually, there’s a standard financial formula that allows you to answer that question. This formula is called the debt to income ratio, and what it does is measure your net monthly income against your debt.

Here’s an example:
"George” has a net monthly income of $2000 and his monthly debt payments are $500.
So, to get his debt-to-income ratio, George divides $500 by $2000 and gets this ratio:
500÷2000 =.25 (25%)
  
Is this a good ratio?
Well, financial experts generally agree that debt expenses should be 25% or less of your income. George’s ratio is reasonable but could be better.So, what’s the ratio of your debt to your income? Figure that out by taking the next step.

5.) Calculate Your Debt-to-Income Ratio
You can answer that question by completing the following tasks:

Task 1: Analyze your bills from the last month. Add up all the fixed expense items (rent, mortgage, car payments, child support, loan payments, etc.)

Task 2: Review your credit card bills and add up the minimum payments owed on each card.

Task 3: Figure out your monthly take-home pay (net salary).

Task 4: Divide your monthly fixed expenses by your monthly income to get your debt-to-income ratio.

What percentage did you get? If it’s 25% or greater, then it’s definitely time to budget in order to reduce or eliminate your debt.

 I’d be happy to discuss some more in-depth  budgeting tips and provide you with information on mortgages at the same time!

Four reasons that you may want to sell NOW. (And a few on why you may not want to.)

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Even though the country is sitting still waiting for the recession to recede, homeowners and prospective homeowners are practically pacing back and forth during this nail-biting period when no one’s sure of anything.  You might think that there is absolutely no good reason to sell right now – but then, again, you may think it’s a perfectly good time.  No matter which side of the coin you’re on, there are valid arguments on both.  Here, we’ve assembled a list of tips on both ends of the spectrum and hope it’ll help you come to some sort of consensus on your real estate marketplace.

Yes, there has been activity in the real estate marketplace in general.  Don’t be surprised to hear that a good number of homeowners are opting to buy new properties, others are selling theirs and of course, others still are waiting it out, even if it means their property is currently suffering a loss.  Even though some of the sales are taking a bit longer than in the past, the sales are definitely there.

Now, if you’re like most people, you are just plain not sure what to do next.  So as you hang out with your friends and the conversation turns to real estate, you don’t know what to answer to the question that comes up, “Why would anyone sell at a time like this?”  Well.  We’ve got a few reasons to share with you.

1. You may have been shuffling money from your savings only to fund your properties – and you just don’t want to tap into your secondary resources like your retirement fund anymore.  Add negative cash flow to inflated expenses versus rental income – and you have a recipe that calls for SELLING.

2. People with no mortgage and some equity want to get that cash out of the property FAST and put it somewhere else.  There may be other investments or even other properties that you are interesting in purchasing. The savings that you gain from buyer a bigger home or a home in a different market can often time outweigh your short term loss.

3. You may feel that you might as well cut your losses while you’re still ahead, instead of waiting 5-7-even 10 years for the market to turn around.  The negative cash flow month after month coupled with declining values can be a good reason to get out now!

4. With interest rates as low as they are, there are legitimate buyers looks for property. If you work with a great realtor, your property can sell!

Of course, it may not be the right time to sell for some people. Here are a few reasons why
some people are NOT going to be selling anytime soon.

1. You may be content in your home and able to wait out the real estate recovery. If you can wait out the market, and are not buying someplace new to take advantage of a lower price on the new home, it may be in your best interest to wait.

2. You may be getting great use of their vacation or second home – and figure that the enjoyment gained from the use of these places, far outweigh the negative cost to run those properties.

3. Properties that generate a decent amount of rental income only need a little extra to top off the negative expenses and you may be willing to take the chance and wait the until the market gets better.

The bottom line is, you have to decide what your situation is, what your priorities are and as you head toward a real estate goal, where you want to end up.  There’s a misconception that the real estate market is practically stalled right now. This is so far from the truth. Properties are selling every single day.  When you factor in that aggressively priced properties are selling extremely quickly and the fact that sellers are getting multiple offers on them, you can see that there definitely is activity in the real estate arena these days. We’d be happy to share market statistics with you-simply ask!

Obviously, the choice is yours and we hope we’ve effectively shared with you that you DO have choices in this market – and we’re here to help make sure you make the right ones for you.

Maximize Your Space; Putting All That Stuff in Its Place!

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Everyone loves a ton of space. Whether in your closet, garage or anyplace else in your home, there always seems to be the need for more room. So what happens with all that stuff we’ve accumulated over the years? It keeps getting piled up, adding clutter and making our space much more uninhabitable than it really needs to be. The easiest way to circumvent the problem of very tight spaces is to open it up. How, you ask? Simple. Play around with creative storage solutions, use any and all unused space around you – and things will start falling into place, literally.

Imagine yourself walking into your home office, only to be greeted by stacks of paper, unruly computer and technology equipment and wires, storage boxes, books and more. It’s not that your obsessive-compulsive next door neighbor with the perfect home office has less stuff. It’s just that he knows how to work with the space he has to utilize it to the best of his needs. With these few simple steps, you can be on the road to being able to focus on the things that really matter, leaving those that don’t to be sitting somewhere safe where it belongs.

Double-Decking and Triple Stacking

Closets

The most obvious place we see a ton of wasted opportunity is the closet. On the one hand, a closet is designed to store and maintain our most personal of possessions. But if you take a closer look, nine times out of ten, the closet space just isn’t very functional. Yes, there is some hanging space. Yes, some shoes can be stored on the floor and for most people there is at least one shelf above all this, to put items like folded sweaters and handbags on. Unless you’re one of the very lucky people who have a walk-in closet the size of most homeowners’ master bedroom, chances are you are lacking in sufficient closet space.

By installing simple and easily affordable stacked storage units, the dead space that is typically from the top of your shelf to the ceiling, and also that which is from the floor to hanging clothes – can be utilized. Set up your hanging areas in a way that double-deck your pants storage and other shorter items. The shelf space overhead is a great place to keep seasonal items that rarely need to be accessed.

Stairs and Landings

There is always room under or over staircases. Whether it’s your basement stairs that leave a wide-open opportunity to keep things under wraps or the gaping section overhead where there is a staircase and foyer area – the prospects are limitless. Consider using the basement gaps to house your washer and dryer units. Large, cumbersome appliances are never aesthetically pleasing. So to be able to keep them semi-hidden and devote that extra room to recreation or an entertainment space is very useful to homeowners.

Kitchens

If you’re not careful, over the years the amount of kitchen that can be accumulated is tremendous. One method used to keep homes within reason in terms of stuff is to purge and purchase. Many people employ a policy of donating or selling old items before bringing in the new; a great way to maintain balance. But for the rest of us, that is just not practical. One great way to use extra space in the kitchen is to hang a pot rack. Not only does it add character to your kitchen, it also frees up a ton of kitchen cabinet area.

Staying Together in Groups

Families know only all too well the need for space, space and more space. The larger the family, the more stuff keeps coming in – and there’s a good chance these people are not among those who purge and purchase. So what is the solution opportunity here? Organize, stack, store and keep together items that are similar. If your six-year-old insists on owning every single Matchbox car that ever was, you will need to find a viable and practical solution to store his collection. Keeping all his cars in one large bin is a great way to maintain his room, yet provide him the much-needed accessibility to his possessions. This basic rule of thumb applies to all areas around the house. Grouping kitchen utensils, stationery or a million little hair doodads owned by your very particular, up and coming teenager is the way to maintain available space and use up the dead variety.

Deep Down Under

EVERYONE knows that monsters live under the bed. Ok, well maybe not. But if you install a couple of under bed storage drawers and make that the place where all art supplies are stored, you will be doing your child a huge favor. Not only will it free up her desk but it will also keep her room neat and provide more area for her to hang out.

It’s NOT Always What’s on the Inside

The garage is the single best opportunity to maximize wasted space. You can hang peg board on the walls, put up tools, small bins and other clever storage knick-knacks. Avid cyclists often hang their bicycles overhead in the garage. Floor-to-ceiling garage cabinetry is another way to replace clutter for the cars in your space.

Who says you have to move into a five-thousand square foot expanse? With just a little bit of creativity, an open-minded attitude, some innovative methods and the will to implement, you CAN change the entire look of your smaller home – almost “doubling” it in appearance and tastefully maximize every last bit of space available. The only thing you may find challenging is knowing about and finding all that “hidden” dead space in your home so you can work at making it useful!

10 Helpful Tips for an (Almost) Stress-Free Moving Day!

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Oh, moving day is exciting, isn’t it? And, sometimes, it’s too darned exciting! After all, you have so many things to remember…worry that the mover will show up on time…fret that things may be lost or get broken…and on and on. But, really, that day doesn’t need to be so stressful!

If you follow the tips below, you can make the day as painless and as enjoyable as possible. The key underlying each of these tips is, of course, proper planning!

Tip 1: Start early!

There are two reasons for starting early. One is psychological. When you start early, you can break the moving task down into smaller steps; that is, you can pack a little at a time. Psychologically, this gives you a great boost because you’re not overwhelming yourself by trying to do everything at once. The second reason relates to the first: packing is harder and more difficult than you think! So, by starting early, you have time to think things through and pack logically and economically!


Tip 2: Weed Out the Unused or Useless!

As I’m sure you know, you’ll be amazed at how much stuff you’ve accumulated that’s either never used or seldom used. So, why take it with you? Sort through everything and get rid of any item you haven’t used for a year or so. Donate it to a charity organization or, if appropriate, throw it into the trash or recycling. Remember, long distance movers charge by weight! So, the equation is simple: less weight = less money out of your bank account! Local movers charge by time! So, less time = less money! Plan on making a couple of passes through your belongings. If possible, take a break of a day or more between passes. That allows you to take a more objective look at everything.

Tip 3: Label Everything in Sight!

This is a real time-saver and stress-reducer. On each box, write down the contents as specifically as possible. At the same time, avoid overdoing the “Miscellaneous” label. If you end up with several boxes with that same label, you won’t have a clue as to what they contain!

Tip 4: Do One Room at a Time!

There’s always the temptation to take items from several rooms and put them in one box. This is a good way to end up with too many “miscellaneous” boxes. Instead, pack one room fully at a time and then move to the next room.

Tip 5: Consolidate!

Since it’s easy for small boxes to get lost or damaged, place smaller items in small boxes and then put those put small boxes into a bigger box.

Tip 6: Take Important Documents with You!

Never pack any personal financial information and important papers and put them on a moving truck. Identify theft is possible, but, equally important, if those documents are lost, it could take you many, many hours to replace such important items as bank statements, passports.

Tip 7: Take Your Valuables with You!

Use common sense and take jewelry, artwork, rare book collections, etc. with you. You don’t want it on a moving truck, and, to be blunt, most moving companies don’t want to ship it for obvious liability reasons. If you absolutely have to ship valuables, get expanded moving insurance through the carrier or a third party.

Tip 8: Plan for Essentials!

Keep a box separate for all the essentials you’ll need in your new home and make sure it’s loaded last onto the truck so you can get at it easily upon arrival. Depending on your needs, “essentials” could include: soap, towels, toilet paper, sheets, coffee maker, drinking cups, paper plates, eating utensils, pencils and paper, etc.

Tip 9: Inventory Everything That Goes on the Van!

List every box or item that goes on the moving van and take the list with you. Once you arrive at your new home, have a family member tick off the boxes and items as they come off the truck. This is vitally important if your belongings are transferred from the truck to storage before being delivered. If a box is missing, lost or left behind, it could be months before you realize it’s gone.

Tip 10: Save Money!

Packing boxes can be expensive. If there are items that will go into plastic storage bins and/or large trash bags (stuffed animals, towels, etc.), then buy the inexpensive bins or bags. This will also save you the time and trouble of unpacking the boxes in your new home.

If you are looking for a local mover, call us because we have recommendations!