7 Tips to Stage Your House for Selling

On March 23, 2014   /   Tips for Selling your House, Uncategorized  
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7 tipse for selling your home

7 Tips to Stage Your House for Selling

By: HouseLogic

The first step to getting buyers to make an offer on your home is to impress them with its appearance so they begin to envision themselves living there. Here are seven tips for making your home look bigger, brighter, and more desirable.

Time allotted: 2-3 weekends

 1. Start with a clean slate.

Before you can worry about where to place furniture and which wall hanging should go where, each room in your home must be spotless. Do a thorough cleaning right down to the nitpicky details like wiping down light switch covers. Deep clean and deodorize carpets and window coverings.

2. Stow away your clutter.

It’s harder for buyers to picture themselves in your home when they’re looking at your family photos, collectibles, and knickknacks. Pack up all your personal decorations. However, don’t make spaces like mantles and coffee and end tables barren. Leave three items of varying heights on each surface, suggests Barb Schwarz of Staged Homes in Concord, Pa. For example, place a lamp, a small plant, and a book on an end table.

3. Scale back on your furniture.

When a room is packed with furniture, it looks smaller, which will make buyers think your home is less valuable than it is. Make sure buyers appreciate the size of each room by removing one or two pieces of furniture. If you have an eat-in dining area, using a small table and chair set makes the area seem bigger.

4. Rethink your furniture placement.

Highlight the flow of your rooms by arranging the furniture to guide buyers from one room to another. In each room, create a focal point on the farthest wall from the doorway and arrange the other pieces of furniture in a triangle around the focal point, advises Schwarz. In the bedroom, the bed should be the focal point. In the living room, it may be the fireplace, and your couch and sofa can form the triangle in front of it.

5. Add color to brighten your rooms.

Brush on a fresh coat of warm, neutral-color paint in each room. Ask your real estate agent for help choosing the right shade. Then accessorize. Adding a vibrant afghan, throw, or accent pillows for the couch will jazz up a muted living room, as will a healthy plant or a bright vase on your mantle. High-wattage bulbs in your light fixtures will also brighten up rooms and basements.

6. Set the scene.

Lay logs in the fireplace, and set your dining room table with dishes and a centerpiece of fresh fruit or flowers. Create other vignettes throughout the home — such as a chess game in progress — to help buyers envision living there. Replace heavy curtains with sheer ones that let in more light.

Make your bathrooms feel luxurious by adding a new shower curtain, towels, and fancy guest soaps (after you put all your personal toiletry items are out of sight). Judiciously add subtle potpourri, scented candles, or boil water with a bit of vanilla mixed in. If you have pets, clean bedding frequently and spray an odor remover before each showing.

7. Make the entrance grand.

Mow your lawn and trim your hedges, and turn on the sprinklers for 30 minutes before showings to make your lawn sparkle. If flowers or plants don’t surround your home’s entrance, add a pot of bright flowers. Top it all off by buying a new doormat and adding a seasonal wreath to your front door.

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Student Loans Can Affect a Mortgage Approval

On March 20, 2014   /   Mortgage, Real Estate News  
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Student Loans Can Affect a Mortgage Approval

By: Michele Lerner at Realtor.com

Student loans are not necessarily an obstacle to homeownership, but your payments will be taken into consideration when you apply for a mortgage.

The decision of a lender to offer you financing when you apply for a mortgage is based on a variety of factors that are used to evaluate your likelihood to repay the loan. While your credit score, income, assets and job history are all elements of your credit profile, lenders must also check that your debt-to-income ratio falls within their loan programs’ guidelines.

Student Loan Repayment

If you have student loans and want to buy a home, you will need to be vigilant about making your loan payments on time. A delinquency on a student loan will not only damage your credit score, it could also stop you from qualifying for a home loan. This is particularly true if you have a government-backed student loan and apply for a loan from the Federal Housing Administration, Veterans Affairs, or the U.S. Department of Agriculture Rural Development, because your lender will check the federal Credit Alert Verification Reporting System database to make sure you are not in default on any government obligations.

If you can consolidate your student loans or refinance them into a longer repayment term, you may be able to reduce the size of your monthly payments, which will make it easier to qualify for a mortgage. Better yet, pay off your student loan as quickly as possible by reducing other expenses and paying more than the minimum payment.

Mortgage Qualifications and Student Loans

Many young people lack a long credit history, so on-time student loan payments can actually add to a positive credit report. On the other hand, student loan payments are part of the debt-to-income ratio, which compares all recurring minimum monthly payments to your gross income. Most lenders require a maximum debt-to-income ratio of 43%, although FHA lenders are sometimes a little more flexible if you have compensating factors such as a high credit score, a solid job history or additional assets in the bank. For example, if your monthly income is $4,000 and you have a monthly student loan payment of $400, your other monthly bills, including a car payment, credit card payment and mortgage payment including principal, interest, property taxes, homeowners insurance and a condo or homeowners association fee must be less than $1,320 to stay within the 43% debt-to-income ratio.

If your ratio is too high, you will either have to reduce your debt or increase your income or, ideally, do both. It may be possible to pay off your credit card debt or your car loan or negotiate with your student loan provider for a lower monthly payment. Remember, though, that if you reduce your loan payment, you will be paying more in interest over the life of the loan.

Other options to consider include bringing in a co-signer on your home loan or finding a way to make a bigger down payment to reduce the amount of money you need to borrow to finance your home.

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How a Short Sale Can Impact Your Credit Score

On March 9, 2014   /   Home Finance  
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short sale

How a Short Sale Can Impact Your Credit Score

While the United States housing market improved in 2013, at the end of the year 19% of homeowners with a mortgage owed more on their mortgage than the value of their home.

For homeowners with no plans to move and who can comfortably afford their mortgage payments, being underwater certainly can be frustrating. However, those homeowners have the option of waiting until the combination of rising home values and their continued loan repayment brings them back “above water.”

Homeowners who are struggling financially and can’t make their payments or who must relocate for employment face a bigger issue if they’re underwater on their home loan because they cannot sell their home for a profit and move. Some of these homeowners can qualify for a government refinance program or a loan modification from their lender, but others face a choice between letting the mortgage lender take their home in a foreclosure and negotiating a short sale.

A short sale simply refers to the situation when a borrower asks the lender to accept a loan repayment for less than the full amount. The amount offered depends on the sales price negotiated between the lender, the seller and a buyer. You’ll have to provide proof of a hardship such as a change in your finances that makes the payment unaffordable or mandatory job relocation.

If you’re able to get your lender to agree to a short sale, you may or may not be responsible in the future for the gap between the balance you owe and the amount actually repaid. This depends on the state where you live and your lender’s decision about seeking recourse.

Short Sales and Your Credit

Many homeowners prefer a short sale to a foreclosure because they believe there’s less of a stigma attached to a short sale and that it won’t necessarily damage their credit as much. However, both a foreclosure and a short sale can lower your credit score and will stay on your credit report for seven years. Over time, though, you can improve your credit score through credit rebuilding techniques such as paying all your bills on time, reducing your debt, and, if necessary getting a secured credit card and making regular payments.

The impact of a short sale on your credit depends on several factors, including the way your lender reports the short sale to the credit bureaus. Most lenders will use the term “settled” for a short sale, which indicates that less than the full debt was repaid. If you can negotiate with your lender to use the word “paid” your credit won’t be as badly damaged, but lenders rarely agree to that.

Your credit score could drop by anywhere from 85 to 200 points depending on whether you have been paying your mortgage on time and your previous credit score. If, for example, you had good credit of 700 or above, your score might drop even more than someone who already had a low credit score of 620 or so because of a short sale is an indication of potential future defaults on other credit, especially if the borrower with low score had been making on-time mortgage payments. If you had months of non-payment, partial payments or late payments on your mortgage, your credit score will also be lower because of the combination of the short sale and a bad mortgage history.

In spite of the impact on your credit, a short sale may be the best option if you can’t stay in your home because you can move on from your current situation and begin to rebuild your credit for the future.

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Pay Off Credit Card Debt before Buying a Home: Maybe Not

On March 2, 2014   /   Real Estate News  
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credit cards

Pay Off Credit Card Debt before Buying a Home: Maybe Not

By: Michele Lerner

While getting your financial house in order before you try to purchase a home is an excellent plan, paying off all your credit card debt may not be the best move.

Ironically, some of the steps you take that are great financially (such as reducing debt and canceling your credit cards) are not always helpful when you are applying for a home loan. Reducing your debt will impact your credit score, your debt-to-income ratio and the cash you have in the bank, so consider all three aspects carefully before you make a final decision about your credit card balance.

Cash Reserves and Credit Card Debt

If you are thinking of buying a home, you have likely implemented a robust savings plan to build a fund for your down payment and closing costs. Think hard before you dip into that fund to pay off your debt.

The median price of a home in the United States in 2014 is around $200,000, so you will need at least $7,000 for a down payment for an FHA loan that requires 3.5% down; or $10,000 for a 5% down payment, the minimum required for most conventional loans. In addition, you will need 3% to 5% for closing costs, which comes to another $6,000 to $10,000. So far, you will need between $13,000 and $20,000 in cash to buy a home.

You will also need money for moving expenses and for cash reserves in case of an emergency. Not all lenders require cash reserves, but to be safe you should plan on having at least two months of mortgage payments on hand.

Once you have estimated all these costs and determined that you can cover them and still have cash available, paying off your credit card debt would be smart financially.

Debt-to-Income Ratio

In order to qualify for a conventional mortgage, your monthly minimum payments on all debt must be a maximum of 43% of your monthly gross income. Some lenders require lower debt-to-income ratios, particularly for borrowers with a low credit score or few cash reserves. If your credit card debt is too high, you may not be able to qualify for a mortgage. FHA loans have looser guidelines, so some lenders may allow a higher debt-to-income ratio under special circumstances, but for your own comfort level with your budget it’s best to have a lower debt-to-income ratio.

Credit Score Issues

Lenders rely heavily on consumer credit scores, not only for a loan approval but also to determine the interest rate you will pay for a conventional loan. If your credit score is under 700 or 680, you may want to pay off some or all of your debt to improve your score. If your score is 640 or lower, you may qualify for an FHA loan depending on the rest of your credit profile.

If you decide to reduce your debt, be careful not to consolidate all your debt on one credit card. Doing that can hurt your credit score more than having a low balance on several cards. Even more important, don’t close any credit card accounts. This will reduce your overall credit availability and shorten your credit history, both of which will lower your score.

One of the best ways to make the decision about your individual financial situation is to consult with a mortgage lender who can advise you about the best way to qualify for a loan that’s affordable and fits your money management plans.

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8 Costly Home Seller Mistakes

On February 23, 2014   /   Real Estate News  
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8 Costly Home Seller Mistakes

By: Anne Miller at Realtor.com

Homeowners who want to sell their home know they need to get the place spruced up for marketing, but a tougher challenge for some sellers is to get mentally prepared for putting their residence on the market.

After all, if you’ve been happily living in your home for years, it can be emotionally hard to detach yourself from your memories and look at the place as a commodity you’re selling.

For a smoother sales transaction that garners the most possible profit from your sale, avoid these common, yet costly, seller mistakes:

1. Skipping a home inspection. Depending on the age of your home, scheduling a pre-listing home inspection could save you a lot of time and aggravation. You can address issues on your own time and budget before negotiating with a buyer to fix problems.

2. Skimping on your sales prep. While you may be tempted to ?test the waters? and put your home on the market without painting it or making minor repairs, your home is likely to languish on the market and get a reputation for having a major problem. A thorough, professional-level cleaning should be your bare minimum seller prep. Your eventual sales price is likely to be lower if you don’t sell within the first few weeks after you list your home.

3. Choosing the wrong REALTOR®. Instead of picking a REALTOR® who’s a friend of a friend, a relative or perhaps someone who’s great at working with buyers, take the time to pick a REALTOR® with an excellent reputation for listing homes. Your payoff will be much larger if you list your home with a REALTOR® with local market knowledge and sales expertise.

4. Neglecting to ramp up your curb appeal. If you polish and primp inside your home but neglect to pull weeds or paint your front door, you run the risk of potential buyers leaving without ever entering your home.

5. Withholding information from buyers. If you hope that the buyers or their inspector won’t find out about the leak under your bathroom sink or the fact that your basement gets flooded every winter, you run the risk of a nasty negotiating period, or  worse, a lawsuit after the settlement.

6. Overpricing your home. If you’ve hired the right REALTOR®, someone who can give you a strong market analysis and help you determine a reasonable price for your home, then you can avoid overpricing your home. If you don’t listen to your REALTOR® and base your listing price on an inflated view of your home’s value, you’re likely to end up selling after multiple price drops for less than you would have if you priced it right the first time.

7. Being unprepared for your next step. Whether you should buy your next home or sell your current home first is only one part of the preparation you need to make to move. You need a back-up plan in case your transaction on either end takes longer or shorter than you think, and you need to understand your mortgage payoff and the closing costs you must pay.

8. Letting your pets and kids spoil a sale. Part of your emotional detachment from your home is recognizing that while you love Fluffy and your darling twins, buyers want to visualize themselves and their own family in your home. Bribe your kids if you have to, but make sure the house is neat and as neutral-looking and smelling as possible. Take the kids and your pets out (or lock up your pets) when prospective buyers are visiting ? you never know if someone who is terrified of dogs or cats will be turned off from making an offer because of your adorable pet.

Selling a home can be challenging, but with the help of a reliable REALTOR® you can avoid making mistakes and reap the rewards of your sale.

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