How a Down Payment on a New Home Makes a Molehill Out of a Mountain!

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Believe me, your down payment on a new home affects nearly everything you can think of in the buying process - the loan programs you're able to qualify for, the size of the interest rate, the amount of closing costs, etc.

The basic rule is this: the more you have to put down on a down payment for a home, the more options you have!

This rule is true because, like all lenders, mortgage lenders dislike risk. They're in the business of making money by lending money. So, the more money you put down, the lower the risk, and the more lenders like your deal.

And, that's not all. If you have enough cash for a large down payment, then more choices open up to you! You can choose conventional fixed rate loans, adjustable rate mortgages, VA, FHA, graduated payment mortgages and all the variations of each of these programs.

By the way, when you combine a good-to-excellent credit score with a large down payment, you'll definitely get positive attention from loan officers!

Acceptable Sources for Down Payment Monies

In general, lenders want to see adequate funds available for a period of at least sixty (60) days in your account. The usual methods of proof of these funds are either a Verification of Deposit form or two months' worth of your most recent bank account statements.

So, if you're person who keeps money "under the mattress" or somewhere in your home, this isn't acceptable. It has to be deposited in an account (bank or investment) for at least two months (preferably longer).

In technical terms, this is called "seasoning." And the reason behind it is this: First, by having money in an account, it shows you have to ability and discipline to save money and, thus, are a good risk from the lender's point of view. Second, it demonstrates that the money is likely yours and not a personal loan from a family member or a friend. Lastly, and obviously, it shows you have enough money on hand for a down payment.

In general, here are sources you can use for a down payment:

• Checking account
• Savings account
• 401k account
• IRA account (have to meet specific guidelines)
• Money market account
• Stocks
• Bonds
• Mutual funds
• Certificates of deposit and other liquid assets.
• Sale of an asset, etc.

Frankly, in this New Age of Frugality, the safest method is to simply save the money for a down payment. This teaches you financial discipline which is good for all aspects of your life, and it means you don't have to rob other assets to pay the down payment.

I'd be happy to discuss and suggest many different ways of obtaining down payment money. Contact me today.

Understanding the Difference Between Online Resources and a Realtor When Pricing Your Home

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The Internet can be a great resource for a host of things centered on buying or selling your home, but in some cases, the most you can expect to gain is a basic understanding of things. For something as serious and important as pricing your home, relying on the Internet can only go so far. Here we’ve outlined some key differences between the figures you will yield from online sources versus those that have been compiled by your local Realtor.

ACCURACY IS VITAL

In today’s market especially, accurately pricing your home to sell is essential. With it being a buyers’ market, you will have to gain a solid understanding of all factors that contribute to your property’s value. There can be negative repercussions of pricing a home either too low or too high. One such scenario is if there is a seasoned buyer who has taken the time to research homes. That buyer’s knowing what to expect in the local market and seeing your overpriced home could result in a turn-off and you could lose the sale. By the same token, you stand to get the shorter end of the stick in the case of not knowing what you could have charged. Spending a little more time and/or expense can make a huge difference in the end outcome.

ONLINE TOOLS AND CALCULATORS

There are more than several websites where anyone can log on, put in their zip code and be given an instant “analysis” of their real estate value. The figures that appear as results from searches made through online resources stem from a conglomeration of several weeks and sometimes months of data collected from a particular region.

Websites such as www.zillow.com, www.realtytrac.com orwww.trulia.com offer a great way to get a generic idea of what homes in your region are going for or have gone for recently. As an added resource to other services offered on these sites, the goal is not to assist homeowners in assigning a selling price to their property based on the data, but rather to offer a snapshot on sales and pricing data for the area. In fact, for many people it is the perfect tool to add an extra edge when determining the fair market value of your home, along with other factors.

PROFESSIONAL COMPARABLE MARKET ANALYSIS

While online real estate tools are a great way to get a preliminary idea, they are only going to yield a figure that shows you where to start. To get an accurate assessment, you will need to avail the professional services of a Realtor. The only way to get an accurate “reading” of what market rates are for homes in your vicinity and your neighborhood in particular, is to have a comparative market analysis conducted by a Realtor who understands your neighborhood. There is a good chance that they have dealt with properties in the area on a first-hand basis, regularly interact with the agencies and organizations that deal with the very homes in your neighborhood and are familiar with the people in various facets that you will end up needing to interact with yourself, as the seller of your home.

Realtors conduct a detailed Comparable Market Analysis (sometimes also called Competitive Market Analysis) using data compiled of area homes and properties, considering factors such as the amount of land, the square footage and number of bedrooms or typical amenities in the neighborhood. Realtors factor in market trends, and often can extrapolate which comparable are most relevant to a particular home. Homeowners also have the option of hiring an independent appraiser to delve into accurate detail about their property’s value.
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When you are pricing your home to sell, it is vital that you use all available resources. At first, it makes sense to “shop around” and get to know the generalities before you head for the specifics. And as with most transactions dealing with your real estate world, it is always best to rely on your Realtor for quality, effective and accurate information that is relevant to you and YOUR market.

Four reasons to sell NOW. (And a few on why not to sell, too.) You decide.

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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 average, 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. Buyers have been shuffling money from their savings only to fund their properties – and they just don’t want to tap into their secondary resources like their 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 safer.  So the equation here is lower risk=lower return; they don’t want to take any chances and they’d rather sell to be on the safe side.

3. Homeowners feel they might as well cut their losses while they’re still ahead, instead of waiting 5-7-even 10 years for the market to turn around.  They are simply of tired of paying the negative cash flow month after month after month.

4. With interest rates as low as they are, buyers have a TOTAL advantage in this market, so naturally if you want to sell – DO it. There’s a good chance it’d be a successful sale.

Of course, there are many people sitting tight with their pocketbooks clamped shut and their doors locked, just waiting for the right time.  Here are a few things to know on why some people are NOT going to be selling anytime soon.

1. Some homeowners are banking on the fact that the market will make a speedy recovery, their equity will return and all will return back to normal soon enough.  Who knows?  It could happen.

2. Owners of multiple properties are 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.  So even though they are experiencing losses every month, the price is worth the enjoyment.

3. Properties that generate a decent amount of rental income only need a little extra to top off the negative expenses and owners are willing to take the chance and wait the time out till 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.  Actually, the trend for the past several months, is that buyers are doing up contracts as we speak.  Contrary to popular belief, foreclosures are currently on the decline and not on the rise like most believe to be the truth.  In fact, short sales are on the rise.  When you factor in that aggressively priced properties are selling super fast and sellers are getting multiple offers on them, you can see that there definitely is activity in the real estate arena these days.

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.