Getting a Legitimate Lender and Getting Pre-Approved

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It used to be that buyers could go house shopping and when they have found their dream home, then they go to get pre-approved. However, in today’s market, that has proven to be one of the least effective methods in landing a dream home.

Most lenders can pre-qualify you for a mortgage over the phone. Based on general questions about your income, debt, assets, and credit history, lenders can estimate how much mortgage you qualify for. However, being pre-qualified and pre-approved are different things. Pre-approval means that you have applied for a mortgage; you have filled out the mortgage application, received your credit report, and verified your employment, assets, etc. When you are pre-approved, you know exactly what the maximum loan amount will be.

A pre-qualified letter is not verified and in essence, does not count for much if you are competing with other buyers who are pre-approved. When you are pre-approved, you and the seller know exactly how much house you can afford. It gives you credibility as an interested buyer and lets the seller know immediately that you will qualify for a loan to buy their property. Image result for pre approved

In addition to being pre-approved, it’s important to be pre-approved with a legitimate lender. Legitimate lenders include: banks, mortgage bankers, credit unions, savings and loan associations, mortgage brokers, and online lenders.

Some lenders to avoid: those who lose a form or misplace a file, those who gather information from you in an unorganized manner, those who are not informed about interest rates, points or costs, and those who cannot provide you with the right information.

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Home Seller Tips: Ask Yourself, Why Are You Selling?

 

If you know exactly why you are selling then it is easier for you to follow the right plan of action for getting what you want.

If you are a seller who needs to close a sale as quickly as possible, then you should know that getting the highest price possible is not one of your priorities. It does not mean that you won’t or cannot get the highest price, but it means that the price is not the deciding factor. A buyer who can give you a quick closing time will appeal much more to you than a buyer who can offer you more money but the negotiation and closing time drag on.

Image result for home offersIt’s always good to know how low you will go in terms of selling price. This will help to eliminate some of the offers that you find simply offensive or ridiculous. Even though you should consider all offers seriously and take into consideration the terms of each offer, sometimes, if you know the bottom line and are strict about it, you can save yourself time.

Once you know what your limits and reasons are, discuss them with your agent so that they can help you set your goals realistically. If you decide to list your home on your own, make sure you do research on the current market, and you get the proper advice you need in terms of legal issues, etc. The key is to be realistic and know what your goals are so they can be met.

One Thing To Do Before Putting Your Home on the Market That Can Help Sell Your Home Faster!

You’ve lived in your home for years and haven’t exactly been on top of regular maintenance tasks. Now, your ceiling seems to be leaking, and those shrubs you planted to conceal a few small cracks in the foundation just aren’t cutting it anymore.

Hey, we’re not judging! But if you’re ready to put your home up for sale, know this: Buyers and their agents are going to zero in on all those things that need doing—as well as some things you hadn’t even noticed yourself.

So why not get ahead of the curve by hiring a licensed home inspector who can pinpoint what needs fixing?

Of course, most sellers don’t get their homes inspected before listing them, because the buyer usually orders an inspection during escrow. And who wants to pay for something they don’t have to?

So what are the some of the reasons why a pre-listing inspection makes sense? Let’s take a look.

It can save you if you’ve neglected home maintenance

If you have a busy life—or maybe even if you don’t—chances are that obsessing over regular home maintenance might not be your No. 1 priority during downtime. Trouble is, letting painting, roof repairs, and other routine chores slide can lead to bigger issues down the road.

In a lot of cases, people think, ‘I’ve been here for 30 years; the house is fine. There’s nothing wrong with it. But they’re looking at it with rose-colored glasses.

Instead of worrying what a buyer’s inspector will uncover—and which could potentially kill the sale—be proactive with a pre-listing inspection. This way, rather than being blindsided, you can then decide whether to make the necessary repairs or to account for that deferred maintenance by reducing the list price. Which leads us to…

You can make a bigger profit on your sale

Sure, a home inspection that you don’t have to do is going to cost money. (An inspection for a 1,200- to 1,500-square-foot house in an average market, for instance, will cost between $350 and $600.) But as the saying goes: Sometimes you have to spend money to make money.

After all, if you invest a little more to repair and spruce up anything the pre-inspection reveals, you can justify listing your home at a higher price. Plus, in most states, home improvement repairs you carry out before selling your house are deductible from the profit you make from the sale.

Sometimes, just knowing that a pro has given the house a proper once-over can persuade a buyer to make a bid (assuming that you actually follow the inspector’s recommendations).

It minimizes surprises for a buyer, and can give a buyer more confidence in the property.

You won’t have to scramble to fix things at the last minute

Once a buyer’s inspector submits a report, sellers are usually faced with two choices: If problems are found with the house, they can then either slash money from the sale price, or opt to carry out repairs before the closing date. That often leaves sellers in the lurch, having to get work done pronto—and sometimes paying a premium for the rush work.

After a pre-listing inspection, sellers can research contractors and make the necessary repairs within a time frame of their choosing, so that everything is ready before potential buyers even visit the property.

It’ll minimize back-and-forth negotiation

Buyers often use their home inspection as leverage, asking the seller (that’s you!) for steep discounts based on what their inspector’s report reveals. Not surprisingly, the buyer’s inspection is often where the deal falls apart.

If you’ve already uncovered the issues and addressed them, you can raise the price of your home accordingly. That gives the buyer less leverage in the request for repair process.

Also, in red-hot markets where multiple bids come fast and furious, there’s always a chance that buyers might accept your pre-listing inspection without insisting on doing their own. This can make for a quicker sale.

But make sure a pre-inspection doesn’t work against you

As advantageous as a pre-inspection can be, don’t forget that the inspector’s report could be a double-edged sword: Once you know about a problem, you can’t ignore it.

Sellers are legally obligated to disclose any problems that a home inspection unearths.

For sellers unwilling to do repairs, their own inspection could be used as leverage to negotiate on price and in the request-for-repair process.

Before committing to a pre-inspection, find out what other sellers in your area are doing. Your agent can help guide you on whether it’s necessary to sell for more, or if there’s a better—and more affordable—strategy for getting your home sold.

The Biweekly Mortgage – Who Needs It?

Have you received an advertisement offering to save you thousands of dollars on your thirty-year mortgage and cut years off your payments? With email spam becoming more pervasive as everyone tries to get rich quick on the Internet, these ads are popping up with troublesome regularity.

The ads promote a Biweekly Mortgage and for the most part, do not come from a mortgage lender. Exclamation points punctuate practically every claim:

  • No closing costs!
  • No refinancing!
  • No points!
  • No credit check!
  • No appraisal!
  • Save thousands!
  • Cut years off your mortgage!

To achieve these wonderful savings all you have to do is allow half of your mortgage payment to be deducted from your checking account every two weeks. It’s easy. Of course, there is a small set-up fee and usually a transaction fee with every automatic deduction.

Essentially, the ads are truthful in almost every respect.

They just want to charge you money for something you can do on your own for free.

The Basics:

Normally, you make twelve mortgage payments a year. Since there are fifty-two weeks in a year, a biweekly mortgage equals 26 half-payments a year. The equivalent would be making thirteen mortgage payments a year instead of twelve. By applying that extra payment directly to the loan balance as a principal reduction, your loan amortizes more quickly, requiring fewer payments.

You save money. The ads are true.

How it Actually Works:

You cannot simply mail in half a payment every two weeks to your mortgage lender. Since they do not accept partial payments for legal and accounting reasons, the mortgage company would just mail your half-payment back to you.

Instead, the biweekly mortgage company is an intermediary between you and your mortgage lender. They automatically debit your checking account every two weeks for half of your mortgage payment then place your funds into a trust account. Basically, this is just a holding account for your money. In another two weeks, there is another automatic deduction from your checking account, and so on. When your mortgage payment is due, your funds are withdrawn from the trust account and forwarded to your mortgage lender.

Since you are placing funds into the trust account faster than your mortgage payments are due, you eventually accumulate enough money to make an extra payment. The way the cycle works, this occurs once a year. he extra payment is applied directly to your principal balance, which causes your loan to amortize faster, pay off more quickly and save you thousands of dollars.

Potential Problems with the Trust Account

Because your funds are held in the trust account until your mortgage payment is due, there are potential dangers. Not only are your funds held in this account, but so are the funds of everyone else enrolled in the biweekly program. That is a lot of money.

Most likely, there will be no problems.

However, if there are accounting errors, mismanagement, or even fraud, your mortgage payment might not get made. The first hint of a problem will probably be a phone call or letter from your mortgage lender, but not until after your payment is already late. Since responsibility for making the payment rests with you and not the biweekly payment company, you may find yourself digging into your personal savings to make the payment directly — even though the biweekly payment company has already collected your funds.

Later you can work out the trust account problem with your biweekly payment company.

The Cost of the Biweekly Mortgage

There is usually a set-up fee that runs between $195 and $350, depending on how much sales commission is paid to the individual or company setting up the account for you. You also pay a transaction fee each time there is an automatic deduction from your checking account and sometimes also when the payment is made to your mortgage lender. There may also be a periodic maintenance fee.

Meanwhile, whoever controls the trust account is earning interest on your money.

Savings of the Biweekly Mortgage

By making principal reductions using the biweekly mortgage program, your mortgage will amortize more quickly, saving you money. How quickly your loan pays off depends on your interest rate and when you begin making the biweekly payments.

On a $100,000 loan at an interest rate of eight percent, your first principal reduction would probably be a year from now. Assuming the principal reduction is equal to one monthly payment ($733.76), you would save $43,852 over the life of the loan and pay it off almost seven years early.

However, you have to deduct from those savings any amounts you paid in set-up, transaction, and maintenance fees.

No-Cost Alternatives to the Biweekly Mortgage

Instead of hiring a company to manage your biweekly payment, you could accomplish essentially the same thing on your own for free. Just take your monthly payment, divide it by twelve, and add that amount to your monthly mortgage payment. Be sure to earmark it as a principal reduction.

The first way you save is that you do not have to pay any fees to anyone. It’s free.

In addition to not paying fees — using the same example as above — your total savings on the mortgage would be $45,904. Plus the loan would be paid off three months quicker than with the biweekly mortgage. The reason you save more is because you are making a principal reduction each month, instead of waiting for funds to accumulate so that you can make one principal reduction a year.

Self-Discipline?

The biweekly mortgage companies claim that homeowners are not disciplined enough to follow through with principal reduction plans on their own. They suggest the reason for setting up the biweekly mortgage enforces discipline upon you, and by doing so, they save you money.

However, in this technologically advanced age, banking online and automatic deductions are readily available. You can set up your own automatic deductions including the additional principal reduction and have it go directly to your mortgage lender. Since the deduction occurs automatically, just like with the biweekly mortgages, self-discipline is not a problem. Once again, you don’t have to pay anyone to do it for you and you save even more money.

Conclusion

The biweekly mortgage plans do not really do anything except move your money around and charge you for it. Plus, even though the danger is negligible, you must trust someone else to hold your money for you. If you can do the very same thing for free, plus save yourself even more money by doing it on your own, why pay someone else?

The biweekly mortgage plan – who needs it?

If your goal is principal reduction and saving money, then it is a good plan. If you do it on your own instead of paying someone else to do it for you, then it is a great plan.

Should I Sell My House? 6 Signs It’s Time to Move On

Ten years. That’s the average amount of time a homeowner stays in a house before a sale.

Think that sounds shockingly short? Or way too long? The fact is, people’s reasons for selling their homes are different, as are their time frames.

Still, there are some common reasons—financial and emotional—that lead us to sell our current home and move on to the next one. And you don’t always see the reasons coming.

Read on for some telltale signs it’s time to start looking for the next home and packing your bags (and when you should settle in for the long haul).

1. You know the seller’s market is booming and you want in

Let’s start with one of the most obvious reasons to sell: You’re eager to make a profit on your property.

You need to gauge the key indicators of a strong real estate market.

A few signals: The price per square foot for real estate in your area is increasing, the amount of time properties stay on the market is decreasing, and you’ve noticed an uptick in brokerage activity in your neighborhood. (If you’re situated in an especially hot neighborhood, you might even get a letter or a knock on the door from a listing agent who wants to help you get in on the action.)

If any of these are true in your area, think about selling up.

2. Because your neighbors just got what for their house?

Check online real estate listings in your neighborhood, and pay attention to the “recently sold” flyers in your mailbox to keep track of comparable home prices in your area.

If other houses on your street with the same bedroom/bathroom count [as yours] are selling for a price that you’d be more than satisfied with, it might be time to move on.

Another sign of a hot home sales market is the relationship of asking prices to sale prices. If home buyers are making offers fast—for as much or more than sellers are asking—it’s a seller’s market. A buyer may offer you a sales price you can’t refuse, too.

3. You’re sick of feeling financially stressed

Not everyone sells their real estate in order to pad their bank account. Some homeowners underestimated their ongoing housing costs and simply sell to ease their mortgage burden, or to cash in their equity and use it for other purposes.

If your property taxes or mortgage payments have become unmanageable, the best recourse may be to sell and find another home that’s more affordable. Selling your home is better than struggling with a big mortgage loan, and possibly risking foreclosure.

To breathe easy, your monthly housing costs, including your mortgage interest, principal, property taxes, homeowners insurance, and HOA or condo fees if applicable, shouldn’t exceed 28% of your gross monthly income.

Before you sell your home to reduce your monthly living expenses, make sure you can find another home to rent or buy in your price range, and that you can qualify for a loan at current interest rates when you do.

4. You’ve grown—but your home hasn’t

The starter home you moved into when you were expecting your first child isn’t necessarily the house you need now that you have three preteens and a capybara. It’s bittersweet to give up the memories you’ve made in your home, but if your living quarters are causing you stress rather than comfort, take the leap and sell up.

Death, serious illness, divorce—these are all emotionally wrought experiences that may warrant a need for change. Relocation is another factor. But let’s not overthink things.

Maybe you’re just tired of the same old, same old, and it’s time for a change of scenery.

5. You’re over ‘high maintenance’

The average homeowner shells out $2,000 a year for maintenance services, according to a recent report. Not repairs, mind you, but scheduled services such as landscaping, snow removal, septic service, private trash and recycling, and housecleaning.

Sick of watching these payments steadily drip out of your bank account? You could sell, and buy some lower-maintenance real estate such as a condo or a new-build property. You might even want to try renting, and let a landlord worry about leaky pipes and other property hassles.

6. You’ve put at least 5 years into the relationship

If you sell too soon—assuming you have a mortgage—you haven’t really built up any equity in the home beyond the down payment. In the beginning, your mortgage payments are almost completely interest payments.

In fact, unless the housing market is seriously booming (see above), you might lose money when you sell. You might even owe more than you can get from your house after closing costs.

Remember: Selling isn’t free: You’ll have to shell out to cover all of the costs associated with hiring a real estate agent, closing, and, of course, purchasing another home.

That’s why we recommend staying put for at least five years, unless you have an urgent need to move. In addition to everything else, moving too quickly sends potential buyers a bad message.

Buyers don’t feel good when it appears you are selling too soon. What was wrong with the house? Why are you leaving so fast? Are the basement walls about to collapse? Are the neighbors selling drugs and shooting fireworks at your house? Buyers can dream up all kinds of negative scenarios when a seller hasn’t owned the home for very long.

Another reason you may not want to sell is if you don’t meet the qualifications to avoid paying capital gains tax on your profit from a home sale. Generally, you can exclude the gain from the sale of your home if you owned and lived in the home for two of the past five years. A sale before the two-year mark, if you don’t meet any of the exceptions, could be a costly mistake. By the time you pay capital gains tax, you won’t have as much equity left as you’d planned.

But beware of snap decisions

Of course, there are no promises that selling will be better for you in the long run. Take your time deciding if you should sell, and then study the local home sales market, with the help of your real estate agent, before you price your home. If you underprice your home, a buyer may snatch it up too cheaply. If you overprice it, the right buyer may pass it by.

Selling your home is, above all, a personal decision. Do what will help you live—if not happily ever after—happily for now.

How to Make Your Home Your Stress-Free Sanctuary

By Laurie Larson

As you know, home is where the heart is, but it should also be where you find peace of mind. Your home should be a refuge from stressors, like from work, school, and other commitments. You should be able to come home and relax in an environment that functions as a haven and a sanctuary.

Having a stress-free sanctuary is important to your family as well as your individual health and sense of well-being. See the following tips on how to make your home what it needs to be for you and your family.

 

  1. Optimize your bedroom

Make your bedroom your cocoon. You can transform your bedroom into being the haven for rest and relaxation you need it to be through straightforward, simple measures. First of all, you should make your bedroom for one thing only: sleep.

This means no television, work desk, or exercise equipment that can distract you or deter you from getting quality sleep. Second of all, you want a comfortable sleep structure. Invest in plush, soft blankets, a new high thread count sheet set, and consider whether you need a new mattress. Since we spend one-third of our lives asleep, investing on what you sleep upon is essential for optimum physical and mental wellness.

 

  1. Go Green

Nothing appeals to our senses in a way that leads to serenity like nature, whether it be through plants, flowers, lit candles, essential oils or natural light. Adding natural accents to your home not only promotes mental well-being, but it is good for your health as well.

Did you know that plants elevate mood, reduce your anxiety, and can even improve cognitive function? Not only that, plants are both the least expensive and most effective way to rid your house of indoor toxins. See most effective plants. Also, consider an essential oil diffuser for your home to get rid of any odor, plus choose a signature scent for your home that appeals to the senses.

Fresh flowers are a nice touch too, to help remind you of nature’s beauty right inside your home. And by all means, open your curtains and blinds – exposure to natural light is paramount for elevating mood, overall health, and anxiety levels – plus it freshens up your household surroundings.

 

  1. Eliminate Visible Stressors

We carry so much stress on your shoulders, with reminders circulating in our heads about errands, obligations, deadlines and bills, so much less do we need physical reminders of them as well.

Consider donating your wall clocks in your house, especially since you already have clocks on your microwave, stove, alarm clock, and more. Also, make your refrigerator a place only for children’s art and special mementos, not for bills and other notices.

 

  1. Clear the Clutter

Above all, the number one thing you can do to reduce stress in your home is to declutter it, creating room, peace, simplicity, and tranquility. Try reducing each room to the bare necessities in terms of at least what is visible.

Create hidden storage areas for everything else. As simplicity decreases stress, remember that purging is an essential means of decluttering. If you haven’t used something or worn something in two years, then donate it!

Purging helps you prioritize and simplify, helping you carefully consider what you keep and what you discard, as well as what you choose to purchase.

Remember that managing stress is important but that it is also a process. Through time and developing routine habits, you have the power and ability to make your house the stress-free sanctuary it needs to be. While renovating your home to be stress-free, consider some home decor inspiration as well!

Image by Pexels

Common Ways of Holding Title

How Should I Take Ownership of the Property I am Buying?

Real property can be incredibly valuable and the question of how parties can take ownership of their property is important. The form of ownership taken — the vesting of title — will determine who may sign various documents involving the property and future rights of the parties to the transaction. These rights involve such matters as: real property taxes, income taxes, inheritance and gift taxes, transferability of title and exposure to creditor’s claims. Also, how title is vested can have significant probate implications in the event of death.

The Land Title Association (LTA) advises those purchasing real property to give careful consideration to the manner in which title will be held. Buyers may wish to consult legal counsel to determine the most advantageous form of ownership for their particular situation, especially in cases of multiple owners of a single property.

The LTA has provided the following definitions of common vesting as an informational overview. Consumers should not rely on these as legal definitions. The Association urges real property purchasers to carefully consider their titling decision prior to closing, and to seek counsel should they be unfamiliar with the most suitable ownership choice for their particular situation.

Common Methods of Holding Title

SOLE OWNERSHIP

Sole ownership may be described as ownership by an individual or other entity capable of acquiring title. Examples of common vesting in cases of sole ownership are:

  1. A Single Man/Woman:A man or woman who has not been legally married. For example: Bruce Buyer, a single man.
  2. An Unmarried Man/Woman:A man or woman who was previously married and is now legally divorced. For example: Sally Seller, an unmarried woman.
  3. A Married Man/Woman as His/Her Sole and Separate Property:A married man or woman who wishes to acquire title in his or her name alone.The title company insuring title will require the spouse of the married man or woman acquiring title to specifically disclaim or relinquish his or her right, title and interest to the property. This establishes that it is the desire of both spouses that title to the property be granted to one spouse as that spouse’s sole and separate property. For example: Bruce Buyer, a married man, as his sole and separate property.

CO-OWNERSHIP

Title to property owned by two or more persons may be vested in the following forms:

  1. Community Property:A form of vesting title to property owned by husband and wife during their marriage, which they intend to own together. Community property is distinguished from separate property, which is property acquired before marriage, by separate gift or bequest, after legal separation, or which is agreed to be owned only by one spouse.Real property conveyed to a married man or woman is presumed to be community property, unless otherwise stated. Since all such property is owned equally, husband and wife must sign all agreements and documents of transfer. Under community property, either spouse has the right to dispose of one half of the community property, including transfers by will. For example: Bruce Buyer and Barbara Buyer, husband and wife as community property.
  2. Joint TenancyA form of vesting title to property owned by two or more persons, who may or may not be married, in equal interest, subject to the right of survivorship in the surviving joint tenant(s). Title must have been acquired at the same time, by the same conveyance, and the document must expressly declare the intention to create a joint tenancy estate. When a joint tenant dies, title to the property is automatically conveyed by operation of law to the surviving joint tenant(s). Therefore, joint tenancy property is not subject to disposition by will. For example: Bruce Buyer and Barbara Buyer, husband and wife as joint tenants.
  3. Tenancy in Common:A form of vesting title to property owned by any two or more individuals in undivided fractional interests. These fractional interests may be unequal in quantity or duration and may arise at different times. Each tenant in common owns a share of the property, is entitled to a comparable portion of the income from the property and must bear an equivalent share of expenses. Each co-tenant may sell, lease or will to his/her heir that share of the property belonging to him/her. For example: Bruce Buyer, a single man, as to an undivided 3/4 interest and Penny Purchaser, a single woman, as to an undivided 1/4 interest, as tenants in common.

Other ways of vesting title include:

  1. A Corporation*:A corporation is a legal entity, created under state law, consisting of one or more shareholders but regarded under law as having an existence and personality separate from such shareholders.
  2. A Partnership*:A partnership is an association of two or more persons who can carry on business for profit as co-owners, as governed by the Uniform Partnership Act. A partnership may hold title to real property in the name of the partnership.
  3. As Trustees of A Trust*:A trust is an arrangement whereby legal title to a property is transferred by the grantor to a person called a trustee, to be held and managed by that person for the benefit of the people specified in the trust agreement, called the beneficiaries.
  4. Limited Liability Companies (L.L.C.)This form of ownership is a legal entity and is similar to both the corporation and the partnership. The operating agreement will determine how the L.L.C. functions and is taxed. Like the corporation its existence is separate from its owners.

*In cases of corporate, partnership, L.L.C. or trust ownership – required documents may include corporate articles and bylaws, partnership agreements, L.L.C. operating agreement and trust agreements and/or certificates.

Remember:

How title is vested has important legal consequences. You may wish to consult an attorney to determine the most advantageous form of ownership for your particular situation.