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  • How to Find a Real Estate Agent: Where to Look, What to Ask

    Before putting your home on the market or setting out to buy a new one, you should identify real estate agents in your community who can assist with the sale. More than two million people nationwide have licenses to sell real estate, and it’s their job to be an expert on the properties in their community. They track real estate trends and are in the business of helping others buy and sell homes. If you’re in the market for a new home, it’s wise to know how to find a real estate agent.

    Whether you’re a first-time seller or someone who is looking to buy your first home, there are several ways to find a local real estate agent:

    • Use the “Find a Realtor” tool on realtor.com to find individuals who actively sell in your community.
    • Get recommendations from friends and family members who have bought or sold their properties recently.
    • Look for real estate agent signs in your community.
    • Attend open houses and see if you connect with a real estate agent.
    • Call your neighborhood real estate brokerages.

     

    Questions to ask a real estate agent

    Buyers and sellers have different needs, and certain real estate agents might specialize in selling over buying and vice versa. Whatever your preference, there will be a number of questions you will want to ask a real estate agent before they start helping you with your home search:

    • What services do you offer?
    • What type of representation do you provide? There are various forms of representation in different states. Some brokers represent buyers, some represent sellers, some facilitate transactions as a neutral party, and in some cases different salespeople in a single firm may represent different parties within a transaction.
    • What experience do you have in my immediate area?
    • How long are homes in this neighborhood typically on the market? Be aware that because all homes are unique, some will sell faster than others. Several factors can impact the amount of time a home remains on the market, including list price, changing interest rates and local economic trends.
    • How would you price my home? Ask about recent home sales and comparable properties currently on the market. If you speak with several real estate agents and their price estimates differ, that’s alright—but be sure to ask how their price opinions were determined and why they think your home would sell for a given value. Request a written Comparative Market Analysis (CMA), as well.
    • How will you market my home?
      • At listing presentations, brokers will provide a detailed summary of how they market homes, what marketing strategies have worked in the past and which marketing efforts may be effective for your home.
    • What is your fee?
      • Brokerage fees are established in the marketplace and not set by law or regulation. The commission is the agent’s rate for handling your transaction. Ask if there are other fees you will have to pay such as a early cancellation fee, marketing fee, MLS fee or any other cost that is not included in the commission rate.
    • What disclosures should you receive?
      • State rules require brokers to provide extensive agency disclosure information, usually at the first sit-down meeting with an owner or buyer.

       

      What should you expect when working with a real estate agent?

      Once your home is listed with a real estate agent, he or she will immediately begin to market your home according to the most appropriate conventions for your community. A real estate agent keeps you informed as the marketing process unfolds and as expressions of interest are received.

      Be sure to specify how you would like to communicate. Some clients prefer emails while others only want to be called or have in-person meetings. Whatever your preference, it is best to outline those expectations upfront so everyone is working with clearly-defined objectives.
      The same is true for buyers. Because buyers are constantly meeting with their agent to see properties and give feedback on the properties they’ve already seen, communication is important. If you like to communicate via text message, let your agent know. All forms of communication are not acceptable to everyone. Make sure you have an agent who communicates with you in a way you find acceptable.

      Every client should expect professionalism. That means a real estate agent will always expect you to be on-time, and you should expect the same from a real estate agent.

      Remember, the real estate agent is your advocate in the transaction, whether you are buying or selling. Once you have signed up with an agent to represent you, he or she is your face, your voice, and your defense against all involved in the multi-layered home buying or home selling process.


     

  • 7 INTERIOR TRENDS THAT ARE "OUT" FOR 2017

    Whether you're renovating to sell your home or just for your personal pleasure, you always want to make sure your place is in style. And as trends come and go, it's important to pay attention to the features, finishes and items that will keep your house nicely updated. Not only will this keep you feeling like you have a modern space, but it will also be appealing to buyers should you choose to move.

    So if you've currently got a few of these things that are "out" for 2017 in your home or were thinking about adding them, well, you might want reconsider.

     Barn doors were born out of necessity, acting as a solution for those with limited space where a traditional door might not be so practical. They were an answer for those who wanted to squeeze a powder room into an inhospitable space or create better flow without a door swinging in the hallway from a laundry room, for example.

    But we've reached maximum barnage, and, even when they're not super rustic, the trendiness has outweighed the practicality for most spaces. If you have a real need for pocket doors because of the way your space functions (or not), by all means, go for it. For everyone else, it's probably best to steer clear.

    Marble

    Is marble really out? Not exactly. The luxury material isn't going anywhere permanently. But, it is starting to be surpassed by faux versions that look like Carrera marble, with all the elegant veining but without the maintenance horrors. Marble stains and scratches and burns and is completely impractical for a space that gets a lot of use, where there are children, and basically anywhere without a 24-7 kitchen staff cleaning and maintaining and making sure nothing touches the surface.

     The good news is that advancements in man-made materials, namely Quartz, have made it possible to deck out your kitchen and use it to actually cook, too. In some cases, it's hard to tell what's man-made and what's the real deal today.

    Chevron

    We declared this out last year, but now, Elle Décor want to make really sure it's gone from your home. "Designers are turning away from the zigzag pattern, they said, adding that this is especially true when only a few colors are involved.

    So what should you look to instead? "Say goodbye to soft, gentle curves—funky geometric patterns will rule the roost in 2017," said Realtor.com. "Embrace your memories of high school math with geometric throw pillows, wallpaper, and quirky planters."

    Shiplap

    There was a time for paneled walls, and then that time was gone. Same with shiplap. While HGTV's "Fixer Upper" has made the material a favorite of French Country aficionados, there is such a thing as too much.

    "Sorry, Joanna Gaines: After four shiplap-crazy seasons, the trend has to go. If you've ever wondered what 2016's version of tacky wood paneling would be, look no further than this trend that seems to have overtaken TV design shows," said Realtor.com. "Slapped on every wall - regardless of the home's style - shiplap has long passed ‘quirky and quaint' and set down anchor at ‘overused.'

    If your home is a real, live farmhouse, shiplap "is historically accurate and still attractive, if used in moderation," they said. "But it makes no sense in a Colonial or Tudor - and it's a pain to tear out."

    Subway tile

    Like marble, subway tile may never be officially out. The classic material has been around for more than a century, but the last decade or so has seen such a preponderance of the material, especially in white, that if you add it to your home now, you risk it looking cookie-cutter. If you want your space to look modern and stand out from the crowd, consider something like Moroccan cement tiles or fish scales.

    All one style

    Is your house all mid-century modern? Did you go crazy with the industrial look? Whatever prevailing style you now find in your home, it might be time to change it up. 

     Eclectic spaces done right have an interesting, collected look that allows you to mix and match different styles from different eras, layer pattern, texture, and color, and create a look that is elegant, inviting, and interesting. "Sticking to one style in your living room is one way to decorate. But for some, the ideal way to fill a room is with an eclectic mix of furnishings that fit together to create a space that's wholly unique," said Apartment Therapy.

    Apartment Therapy has a few tips for accomplishing this look. Among them: Create a strong focal point and "commit to a vibe."

    Metal everything

    If mixed metals, or metals in one strong hue, have overtaken your home, it's time to tone it down. Mix in some wood accents to be on trend for 2017.

    "We're moving away from metal and back to an earthier feel," Erika Dalager of home design startup roOomy told Realtor.com "Wood accents will be everywhere in 2017."

     

  • SELLING YOUR HOME THIS YEAR? 6 REASONS TO RENOVATE NOW!

    Face it. Your home's not perfect. You may keep up with general maintenance, and perhaps you're meticulously clean. But how old is your kitchen? Do your paint colors reflect current trends? Could your living room use some updating?

    When it comes to selling your home today, it's got to be perfect, or buyers will simply move on to the next option. Doing some renovations, whether that means overhauling areas that are long overdue for a facelift or making some simple changes that freshen up the place, is typical. But if you're thinking they can wait until you're ready to list your home, these 6 reasons may make you rethink that plan.

     1. You get to enjoy the new stuff

    "A worthy update can either serve to reduce your cost of living while you remain in the home or add significant value to the home's sale price when you decide to put it on the market," said Scott McGillivray, a real estate investor and host of the HGTV show Income Property to US News.

    But if you're going to spend some cash on updating and renovating your place, you should at least be able to get some enjoyment out of the updates before turning the house over to someone else, right? If you've been waiting for 10 years for new appliances, it would be a shame to not have the opportunity to at least cook a few meals and throw a dinner party or two.

     2. They always take longer than expected

    It's a fact of renovation. If your timeline is six weeks, it'll take 12. At least. Giving yourself plenty of time before you're ready to list your home will help you avoid a stressful scramble at the end when you're trying to get it on the market.

    3. There may be issues you're unaware of

    Your Realtor will point out areas that need to be addressed and recommend changes to make your home more saleable. But, getting your home ready to sell might be harder than you expect if problems like mold or termites are uncovered. Getting a jump on any big issues or anything that goes beyond the cosmetic will give you the time you need to fix the problems and hold onto your sanity.

    4. They don't have to be huge

    No one said you have to take your home down to the studs. Sometimes, a light touch is all that is needed. "Start by thinking small," said Realtor.com. "Minor cosmetic upgrades go a long way in getting more buyers through the door for a quicker sale - and time on market is key to determining what you'll net at closing."

     5. You're going to need them

    You may not love the idea of having to do anything to - or spend any money on - your home, especially if you already have your eyes on a new one. But, most every home needs a little upgrading, updating, or, at least staging. You don't want to have the one place in the neighborhood that won't sell because potential homebuyers see a project house, without the project price.

    6. You'll get a return on your investment...if you renovate smart

    Speaking of price…updated homes typically sell faster and for more money, if the updates have been done well and they're the ones buyers are looking for. If you're not sure which renovations to consider, take your cues from the Cost vs. Value Report, which tracks the "average cost for 29 popular remodeling projects with the value those projects retain at resale in 99 U.S. markets." It's a great way to look at national trends but also break down what's trending in individual areas. "How much work you'll need depends on your home's value, your market, and the comps in your neighborhood," said Realtor.com.

    US News also has a great list of "popular updates that are worth the money," including adding a backsplash in the kitchen and updating bathroom vanities.

     

  • STAGING VS. DECORATING: WHAT'S THE DIFFERENCE?

    Selling your home means selling a lifestyle, but not necessarily your own. In home staging, you're striving for a look that is fresh and welcoming yet not really taste specific. People with varying tastes need to feel that they can make the home their own if they purchase it.

    This is the distinction between decorating your home and staging it to sell. It can be hard to understand at first, but if you don't know the difference, you might not sell your house as quickly as you like.

     Although everyone has different tastes in decor and furnishings, most people want a home that is welcoming, functional, peaceful and organized. Tailor your house so that buyers will describe it in those terms rather than by your style of decorating. Getting rid of clutter and having fewer but larger accessories is a great place to start.

    Making sure your home isn't taste specific doesn't mean your rooms should be devoid of color. Instead, keep color schemes simple and dose them with an on-trend neutral, like a clean tan, a soft gray or a warm white.

     If you have a distinctive decorating style — whether it's Tuscan, shabby chic or modern — you're going to need to scale it back a bit. If you don't, your home will appeal to the small percentage of potential buyers who love your chosen style. Staging is about strategic editing and depersonalizing, rather than decorating and personalizing.

     Dated is dreary. Strive to stage your space with a current and fresh feel. Use updated neutrals on the walls and furnishings that are clean-lined and simple. Punches of color are great; just use them sparingly. A room arranged symmetrically and centered on the architecture reads as peaceful — one of those important aesthetics every buyer is drawn to.

     This guest bedroom is full of great staging ideas. It has lots of on-trend design details, but it's sparse on accessories and other distractions. The color palette is simple, easy on the eyes and would be attractive to both men and women. Most potential buyers would remember this appealing room long after leaving the house.

     

    This clever arrangement draws attention to the unique architecture in the space and illustrates a smart use for the area under the stairs: an office nook. This area is nicely decorated, not staged.

    If I were staging this area, I would keep the desk, chair and lamp, remove overly personal items such as family photos, and leave a few pieces of art and an attractive notebook and pen. Simple accessories can help draw attention to a functional space.

    If you are updating a kitchen or bath before putting your home on the market, keep the finishes neutral and classic. This is not the time to show off your personal style. You want to broaden your buying audience by appealing to a wide variety of tastes and preferences. This bathroom would definitely appeal to buyers with either traditional or contemporary taste, and could later be personalized with the new homeowner's preferences for color and accessories.

     Sure, this may not be what normally sits on your countertop, but doesn't it look better than the usual bills and coupons? Remember, you are selling an idealized lifestyle, not your reality.

    The bottom line is that you have to get outside your head and inside the mind of a potential home buyer. It's very difficult to be objective about your own home, but it's crucial if you want to sell it.

     

       
  • A Legal Introduction to Easements

    If you own land, a house, or commercial property and have external utility service, such as electricity, water, or gas, there is frequently an easement on your property, at least to the meter. If there is a driveway or road from a public road crossing your land to a house or field behind your land, this access may be an easement. This comment provides an incomplete educational introduction to easements. Always consult an experienced attorney in all easement, access, and real estate situations.

    An easement is a real estate ownership right (an "encumbrance on the title") granted to an individual or entity to make a limited, but typically indefinite, use of the land of another. It is not a right of occupancy as such or a right to profit from the land. It is legally considered an "incorporeal" (not physical) right. An easement that benefits adjoining property, such as a driveway, is termed an "appurtenant easement." An easement that does not benefit a particular tract of land, such as a gas transmission pipeline, is termed an "easement in gross." A "license" is a form of limited revocable permission to use property (for example, enter a theater and view a film) that does not impact the title to the property. A "lease" allows a tenant a temporary exclusive right of occupancy (for example, an apartment).

    An easement may be recorded in the public real estate records or other regulatory agency records; however, an easement may exist without recordation. Consequently, it is necessary to carefully physically inspect the land in question to determine if there are easements. A significant legal issue in sales and usage questions is whether or not the landowner knew or should have known of the existence of the easement. This may be critical in real estate development and construction projects.

    Easement owners have a legal right to maintain the easement and have a legal right of access across the easement. An easement owner's removal of trees, limbs, and fences may be controversial, but these actions are typically lawful. However, one should always review the original documents that granted the easement since there may be special provisions.

    If the "easement" is created by a document, does this document convey title (ownership) to the land in question or only a right to use the land? Railroads, for example, typically acquired title to the strip of land where tracks were located. Sometimes, an easement may be implied, as the right of a landowner to have ground access to a public road by crossing the land that in the history of conveyances (sales) cut the owner off from access to the road. If one sells acreage that will not have a border adjoining a public road, it is desirable to survey and describe in a document an easement accessing the public road. This will prevent litigation.

    If a landowner is selling the right to an easement, such as the right to build a pipeline, the precise wording of a proposed document should be reviewed by an experienced real estate attorney. Fundamentally, is the document a deed or an easement? Does the document suggest multiple construction projects many occur, for example, by stating "pipeline or pipelines" or "fiber optic cables," or "any lawful use?" Does the document extinguish the easement and revert (automatically transfer) all rights back to the landowner if actual construction is not undertaken within a specified time period? May the easement be transferred to a third party without the landowner's consent? Is a surveyed location incorporated into the document or is it a blanket grant? In my opinion, appropriate reversionary language, anti-transfer or anti-assignment without consent language, and a surveyed legal description are critical landowner provisions.

    If is very important that a professionally surveyed specific location legal description, with a precise width and possibly height or depth, be incorporated into the document. Otherwise, the easement could potentially be located anywhere on the tract of land that it crosses. Location vagueness will, as a practical matter, prevent future residential or commercial construction on the land until the easement's location is precisely specified. A mortgage lender will not finance a project when there is a possibility that the preexisting easement owner might construct a pipeline, for example, through a proposed building. Even if a regulatory agency might not allow such construction, lenders fear uncertainty and open-ended potential expenses. Lenders will likely condition any loan on corrective action. Correcting easement location problems may be expensive and time consuming when undertaken after the fact.

    Depending on state court decisions, irrevocable easements in the nature of a public right of way may be created by long-term public use (adverse possession), such as may occur with access to a river or lake. The time period is determined by state statute and may range from 5 to 25 years, depending upon the state. Ten years is a common time. If one does not want an individual crossing one's land to later claim an absolute legal right to do so, it is important to obtain a signed document in which the individual acknowledges that she is receiving from the owner a limited revocable license to make this use, claims no ownership rights, and acknowledges that the use many be terminated at any time, for any reason, without prior notice from the owner. Consult an experienced attorney.

    A proposed subdivision map or plat that shows incomplete streets or easements might be relied upon by potential purchasers of building lots. When there is, for example, a verbal representation by the sellers to potential buyers that the mapped improvements will be constructed, there may be an "easement by estoppel" created. The seller is "stopped" from denying the truthfulness of her representations in the interest of justice when the buyer justifiably relied upon the representations. An easement by estoppel may exist even if the map or plat was never officially dedicated to public use or recorded in the public records.

    When purchasing, be cautious concerning promises by developers to construct community infrastructure such as roads, parking lots, nature trails, lakes, and recreational facilities. Lots may be sold with fraudulent promises. Even an honest developer may experience financial distress or bankruptcy and be unable to complete the promised facilities. May these promises be bonded or otherwise collateralized? If constructed, how will they be maintained and maintenance expenses paid? Consult an experienced attorney before purchasing.

    Private subdivision roads may or may not be public roads. Frequently they are not officially dedicated to public use. Some states allow an implied dedication to public use and others do not. Intent to dedicate a road to public use depends upon the total factual circumstances. For example, a gated road with limited access would appear to be private. However, soliciting and utilizing public road maintenance suggests public dedication. Does the road appear on official maps of public roads? Does a statute create a public road after a time period of public use and public maintenance? Investigate with due diligence.

    Many states have statutes allowing public access to beaches and rivers for recreation purposes. Local government may have the statutory authority to create easements across otherwise private property to allow the public to reach the beach or river. These actions are frequently controversial with landowners who attempt to assert, usually unsuccessfully, that an unlawful taking of private property has occurred.
    There are several ways to legally terminate an easement and this brief comment does not list them all. Abandonment may occur by the action of a public authority or private owner. Public street closings always attract controversy, even if all the adjoining landowners desire the closure. It is difficult to prove, in the absence of a documented abandonment, that a private easement has been abandoned. Adverse possession (ownership created by unchallenged usage) of an easement may occur when items such as buildings or fences are constructed on the easement and are unchallenged for a statutorily specified period of time, for example, ten years.

    Most states require that the seller of undeveloped land notify potential buyers of the existence of pipelines that cross the property. Many statutes give the purchaser a limited cancellation right if the notice is not properly given. In like manner, statutes may prohibit locating buildings or undertaking any construction over a pipeline easement. Deteriorating or improperly maintained pipelines may create serious public safety issues and may be subject to dual state and federal regulatory authority. For example, the federal "Pipeline and Hazardous Materials Safety Administration" (PHMSA) is one such agency.

    While this comment has focused on traditional surface easements, creative air and light easements may be established, either for high-rise construction or for aesthetic purposes. An old English common law legal doctrine, "ancient lights," is occasionally applied to prevent the shading of property by adjoining construction or the erection of "spite fences" intended to block air, light, or views.

    Many states have legislation allowing private parties to contractually create solar easements. These statutes frequently require written and publicly recorded documents and may additionally restrict common law remedies. A few states have legislation allowing the government to restrict construction that would block sunlight from reaching preexisting solar panels. This is a kind of "negative easement" since it restricts the rights of an adjoining landowner.

    Drones are creating a new set of legal issues. Traditionally, airplanes are allowed to fly at a "reasonable" altitude over private property without obtaining landowner permission or purchasing an easement. Drones typically fly much lower. Is this trespassing? What governmental regulation, if any, is appropriate? This is unfolding and, like any new technology, requires new ways of legal thinking.

    This comment provides a brief and incomplete educational overview of a complex topic and is not intended to provide legal advice. Always consult an experienced real estate attorney in specific easement situations.

      by Brad Reid, Senior Scholar, Dean Institute for Corporate Governance and Integrity, Libscom University 

  • MAKE YOURSELF AT HOME: 5 TIPS FOR HOMEBUYERS IN 2017

    Buying a home can be both an exciting and stressful time for families. Most homebuyers spend a significant amount of time researching real estate information and looking at properties. If you will be looking for a new home in 2017, keep these tips in mind to help you get the most out of your home purchasing dollar.

     

    MAKE SURE YOUR CREDIT SCORE IS GOOD

    Financial institutions offer the best mortgage rates to borrowers with a credit score of 740 or higher. If your credit score is 620 or below, you will have fewer options for a mortgage. Get a copy of your credit score, and make sure the information is up to date. If you have any problems on your credit record, make sure they are resolved and that the corrected information is updated. Also, avoid making any large credit card purchases or take on any new loans while you are applying for a mortgage.

     

    CHOOSE AN AFFORDABLE HOME

    Homebuyers tend to stretch a bit to purchase their first home, but you should always avoid buying more house than you can reasonably pay for on a month-to-month basis. The difficulty of coming up with a large mortgage payment each month can put uncomfortable pressure on a family’s financial resources. Keep your expectations in line with reality. If your income increases significantly in the future, you can always trade up to a larger home.

     

    LOOK FOR NO-CLOSING-COST MORTGAGES

    Financial institutions are competing aggressively for mortgage holders’ money and are offering benefits like no-closing-cost loans to draw in homebuyers. Look for these specials, which can save new homeowners thousands of dollars on their loans.

     

    BE A GOOD NEGOTIATOR

    Many homeowners have held off putting their properties on the market during the bad years of the real estate crisis. Many are now eager to upsize or downsize and will be open to negotiating the price or certain amenities in order to get the deal completed. If you are reasonable, you are likely to get a good reception for your offer.

     

    KEEP THE COST OF PROPERTY TAXES IN MIND

    Homebuyers are always advised to look for a home in an area with good schools, transportation options and other amenities. However, you should also look at the amount of property taxes you will pay each year. Property taxes add a significant amount to your monthly payment, so make sure you know how much taxes will add to your mortgage obligation.

     

    Interest rates are beginning to rise, which means you should make your move to purchase a house now rather than wait for a later date. If you have any questions, consult a realtor. These tips will help to ensure the best home purchase possible, so you can enjoy the experience of having a place of your own.

  • MOST IMPORTANT THINGS TO KNOW/DO BEFORE CLOSING ON A HOUSE

    The contract is finalized and signed, the mortgage approval is received and the movers are ready to pack up your stuff and move it to the new house any moment now. Looks like you did everything you had to in order to prepare to close on your home.

     But, there’re numerous situations that often happen in the real estate world and tiny details an overly excited buyer desperate to finally seal the deal and move in into his new home may forget about, but strongly regret on the closing day or after he obtains the full rights to the property. In an ideal world, the home closing procedure is nothing but pure formality and the happy moment of receiving the keys to the house that, from now, belongs to the new owner. But, when the real life kicks in with its bumps on the way, it’s easy to go off road and fail the entire deal.

    These house closing tips should help you prevent an enormous disaster, prepare for the process and conduct a smooth painless closing.

    THINGS TO KNOW/DO BEFORE THE HOUSE CLOSING

    COME EDUCATED

    Obviously, you won’t be the only one facing the seller and signing all the papers. Your legal representative, as well as real estate agent and most likely a closing agent will be by your side during that day. However, it’s still necessary to learn as much as you possibly can about the peculiarities of the house closing to know what to expect from the day, how to prepare for it and which parts of the process are completely obligatory. This way, all parties involved will come well-educated and prepared for the deal closure, which means that fewer mistakes will be made.

    So, do your research online and don’t be ashamed to ask your attorney or real estate agent what house closing actually means, what papers have to be brought and signed, which fees have to be paid, how much time it will take and at which point there would be no way to retreat and withdraw from the deal.

    MAKE SURE THAT EVERYONE AND EVERYTHING IS READY

    First of all, check in with your house closing lawyer and make the list of papers you need to bring to seal the deal. Don’t rely on other parties when it comes to gathering the paperwork and ensure that those documents are physically present on your own.

    Even though in most real estate deals, which are carried out with the escrow company’s assistance, the latter provides the clients (the buyers) with an inclusive packet of papers that conclude the deal. But, you’re going to be the one who’s responsible for the deal and who bears its consequences. Thus, protect yourself and go through the papers with your attorney, insurance and real estate agent to make sure that you understand the peculiarities of the purchase.

    Most importantly, find the mortgage approval letter and review the conditions of the loan agreement while you still have time to make all its provisions clear, come to the complete understanding of your financial obligations and liability and possibly change some of the contract’s clauses to make them more straightforward or favorable for you.

    Finally, I suggest putting together a folder of documents and arranging the time of the house clothing gathering in advance so that everybody who needs to be present at the house closing is able to clear out the schedule and show up on time.

    HAVE SOMEONE TO TAKE CARE OF YOUR KIDS AND PETS

    Closing a house and moving is a huge responsibility on its own. It would be just impossible to tackle the kids or pets while signing the final documents and dealing with moving arrangements. Hire a babysitter or ask your family members to look after your kids and pets to be able to pay all the attention to the house closing process and not to overwhelm your children with a new, empty house with no beds to sleep or food to eat.

    LEARN EVERYTHING ABOUT THE PROPERTY

    By the closing day, you should have carried out a couple of inspections to make sure that the value of the house you’re about to buy is worth the money you’re paying for it and that there’re no unpleasant surprises to discover after the purchase, which are now wisely concealed by the current owner.

    But, in addition to that, you need to make sure that everything on that property will exclusively belong to you after the purchase. Has the seller given a legal permission (recorded easement) to the neighbors to use the driveway you fell in love with? Are there any recorded restrictions on your property you need to know about? Maybe, the owner of that particular property has to keep his trees and shrubs below the certain height not to disturb the neighbors, or he can’t build the fence, or there’s a height limit imposed on the new construction. Those are the kinds of things you have to make clear.

    TRANSFER THE SERVICES AND SWITCH THE UTILITIES

    It’s important to have all the utilities and services available at your new property the day you move into it. And, it’s easy to forget about this detail amidst the moving and home buying hustle. So, make the necessary calls a week or so in advance to switch the gas, electricity, water, and cable, as well as to let the home maintenance providers, whose services you use, (weekly house cleaning, Internet, lawn mowing, pool cleaning) about your new address.

    BOOK REMODELING CONTRACTORS

    Wouldn’t it be nice to start working on your new home the moment you become its lawful owner and get it finished as fast as possible? For that matter, don’t wait till you receive the keys to the property to call remodeling, paining, flooring, plumbing and other contractors, whose assistance you need to renew your home and make it appropriate for living. Don’t forget to call a locksmith to change the locks the day you move in, as well as take care of the security system installation.

    I would even invite them over to the property and ask them to give the estimates regarding the remodels I’d like to carry out to be able to budget the renovation and schedule the remodeling dates to whenever I need, so that the contractors don’t get overbooked and unavailable by the time they’re able to start working on my house.

     


  • MAINTAINING YOUR PROPERTY

    One of the most important aspects of selling or renting property is keeping up with the maintenance. Are the appliances up to date and in good working condition? Is everything clean and aesthetically pleasing? As a real estate agent, property manager, landlord, and prospective buyer and/or tenant, there are certain technicalities that require keen attention to detail. Maintaining properties can be quite costly, but taking care of these items will help the home/apartment look great, keep utility bills low, and prevent future repairs.  

    Foundation- The foundation of the property might not be something that comes to mind when looking to buy or rent. It's easy to assume that since the property is on the market it must be in good condition. However, there might be an issue that the owner did not notice, and it is always better to be safe than sorry. Be sure to check for moisture and cracks that may be a potential hazard in the future.  

    Roof- The roof can be inspected from both the outside and inside of the property. It may be hard to notice, but try to look for loose tiles or shingles that need to be replaced. Once inside the property, check the ceiling for any bubbles or wet marks. This is an indication that there is a leak that needs to be handled before it gets any worse.  

    Paint- Interior painting is usually touched up before the showing of the property. If not, it will be handled before the move in date.  For rental properties, it is important to make note of any scuff marks, holes, or other damages in order to ensure the new tenant will not be charged.  

    Chimney- If the property has a chimney it would be wise to hire a chimney sweep to clean it out before selling or renting. The point of this is to remove the buildup of flammable substances in order to reduce the risk of a hazardous chimney fire.  

    Water heater- Water heaters tend to create some pesky maintenance issues. Typical water heater issues include leaking tanks, no hot water, strange noises in the tank, and discolored or funky smelling water. To avoid having these issues make sure to have the temperature and pressure relief value tested regularly.  

    Air Conditioning/Heat- Air conditioning and heat may not be of utmost importance depending on the climate of where the property is located, but it is reliant upon the residents' preference. It is best to make sure that all of the filters are clean in case the unit will be used so the property is considered to have habitable living conditions.  

    Washer/Dryer- Some rental properties come equipped with a washer and dryer in the unit. Others simply have a laundry facility on site. Whatever the case, be sure the machines are functioning properly. Also, make sure the exhaust duct line is clean and all hoses are in good condition.  Most properties that are for sale do not come equipped with a washer and dryer. Before buying these appliances, double check if there is a gas or electric hook up in the house so you buy the appropriate machines.  

    Refrigerator- Refrigerators can cause quite a few different problems. They can leak, completely shut down, make obnoxious sounds, etc. Each of these issues can be avoided by simply taking care of the appliance. Make sure the temperature gauge and compressor are working consistently. Also, try to keep the coil as clean as possible. This will increase energy efficiency, which will in turn keep the utility cost low.  

    Garbage disposal- Garbage disposals are fairly easy to maintain. However, if they are not operated properly, a garbage disposal can very easily break down or clog. Be aware of the basic garbage disposal do's and don'ts. Do: keep it clean (hot water and baking soda), run it regularly, grind food with a strong flow of cold water. Don't: grind glass, plastic, or metal, grind large pieces of food, pour grease/oil down the drain. Using cold water will cause any grease/oils that do happen to get down the drain to solidify, making them easier to chop up before reaching the trap.  

    Doors/Windows- Doors and windows are a huge part of the security of a property. Hinges and locks needs to be in good working condition to ensure residents' safety. Woodwork around doors and windows needs to be installed properly in order to prevent leaks. Leaks can cause wood rot. New windows or doors cannot be properly installed if this occurs.  

    Flooring- Before renting a property it should have been professionally cleaned. This is referred to as "vacancy cleaning/deep clean". This will include carpet/floor cleaning in order to sanitize the property from anything that happened while the previous tenants were living there. This is sometimes the case when it comes to buying, but depending on the situation, the cleaning is usually the responsibility of the new owners.  

    Smoke alarms/Carbon monoxide detectors- Smoke alarms and carbon monoxide detectors are very important for the safety of future residents. Be sure all alarms and detectors throughout the property have working batteries. There are about thirty-seven states that require carbon monoxide detectors in residential properties. Even if it is not a state requirement where the property is located, it is wise to have these devices in good working condition to prevent a potential tragedy 

    Although this may seem like a simple list, keeping these items updated and in good working condition will improve the quality of the property, which will help it sell or rent out quicker. It's common sense: if appliances are taken care of properly they will be less likely to cause any problems. Maintaining these items will also ensure happier residents, lower monthly bills, and less costly and less problematic future repairs. 


  • IS NOW THE BEST TIME EVER TO BUY YOUR FIRST HOME?

    If you've been thinking about buying your first home, talk of rising mortgage rates may have you worried. But, the reality is that this may be one of the best opportunities for first-time buyers in recent memory. Conditions were already good for first-timers with new, super-low down payment loans. But the FHA's announcement that they would be cutting mortgage-insurance premiums makes buying even more advantageous.

     "The annual fees the Federal Housing Administration charges to guarantee mortgages it backs are being cut by a quarter of a percentage point," said Bloomberg of a statement released by the Department of Housing and Urban Development (HUD). "With the reduction, the annual cost for most borrowers will be 0.60 percent of the loan balance."

    According to HUD, "The fee cut would save new FHA-insured homeowners an average of $500 this year. The cut would take effect on Jan. 27."

    What other factors should you be paying attention to if you're looking to buy your first home?

     Yes, rates are up from their lowest point. But the average 30-year fixed-mortgage rate right now is 4 percent, down a bit this week and waaaaaay down from decades ago when they were in the teens. You'll pay a few bucks more per month now than you would have at this time last year, but, if you're getting an FHA loan, those new mortgage interest cuts will help.

     More than anything, it's important to be realistic. We're not anywhere near gloom-and-doom time, despite some of the more hysterical talk out there. In fact, today's rates are still near historic lows, which make buying a home more affordable than rent in many cities.

    But, if you need to find a way to lower your monthly payment on your future home, and you're not eager to search for less expensive homes, remember that your credit helps determine your mortgage-worthiness, and the better it is, the better your interest rate. If you're not being offered the best rate out there, it's time to…

    Get your credit in order

    Have great credit? Great! Your lender will be pleased and, presumably, you will be, too. But many of us need some help in this area, and even a small bump in your score can make a big difference not just to the rate you get but also whether you will qualify for a loan at all.

    "The homebuyer's credit score is among the most important factors when it comes to qualifying for a loan these days," said Bankrate. Your lender will be able to give you tips for improving your score, which can range from checking your report for errors to paying off old delinquent accounts.

    It's also important to keep in mind that what you consider to be responsible credit management may not necessarily be seen as a positive when you go to qualify for a loan. "Just because you pay everything on time every month doesn't mean your credit is stellar," they said. "The amount of credit you're using relative to your available credit limit, or your credit utilization ratio, can sink a credit score. The lower the utilization rate, the higher your score will be. Ideally, first-time homebuyers would have a lot of credit available, with less than a third of it used."

     Low down payment loans

    For many first-time buyers, the down payment is the largest barrier to homeownership. But new loans with lower down payment requirements are helping to eliminate it.

    The most popular loan for first-time homebuyers continues to be through the FHA, for a number of reasons: Because this loan is government-backed and because it requires only 3.5 percent down if you meet their credit and income requirements, and a minimum of a 620 credit score.

    The new Affordable Loan Solution Mortgage from Bank of America gets those down payments even lower—to three percent—and without Private Mortgage Insurance (PMI). But, there are restrictions related to income that "could rule out a lot of potential borrowers," said The Street.

    "The program, a partnership between Bank of America, Freddie Mac, and non-profit Self-Help Ventures Fund, is targeted towards low - and moderate - income borrowers. To qualify, borrowers can't make more than the HUD area median income and must have a credit score of 660 or higher. As an example, for 2016, New York City-based borrowers with a household of one would need an income below $65,200 to qualify for the program."

    SoFi, an online lender that started out focusing on student loan refinancing, has also gotten into the mortgage game, offering a loan that has a higher down payment at 10 percent, but without PMI.

    Investigate situation-specific loans

    Are you a veteran, a police officer, or a firefighter? There may be a special loan for you with conditions that can make purchasing a home easier and more affordable. There are also specific loans for those who are buying a home that has (or needs) energy-efficient features, one that can be bundled with home improvement funds, and another from the USDA that can save those who are moving to a rural area money.

    "This one may surprise you," said nerdwallet. "The U.S. Department of Agriculture has a homebuyers assistance program. And no, you don't have to live on a farm. The program targets rural areas and allows 100% financing by offering lenders mortgage guarantees. There are income limitations, which vary by region."

     

  • 7 BATHROOM FLOOR TRENDS IN 2017

    The bathroom floor doesn’t get the attention it deserves when it comes to remodeling, and yet it is a critical point of any décor. Paying attention to this much underrated piece of your home’s décor could transform not just your bathroom but the space around it as well. When it comes to choosing bathroom floor styles, it is much easier to go with what’s working for others instead of inventing a whole new style that might backfire. If you’re looking to remodel your bathroom floor, here are 7 trends that will come in handy when it comes to inspiration.

    Ceramic tiles

    This is one of the styles you can never go wrong with. It’s timeless and appealing and very easy to maintain. Installing ceramic tiles is easy and fairly priced, and it goes with just about any décor that you choose for the rest of the house. If by some bad fortune the tiles break within the period of use, replacing or repairing the same will not cause a dent in your pocket.

    Stone tiles

    Stone tiles are distinct and have some sort of understated elegance and Victorian royalty about them, especially when well maintained. These work with particular décor themes, require regular and oft-costly maintenance and are costly to install. Therefore be sure of the commitment you’ll be making before choosing this type of tiles.

    Porcelain tiles

    Porcelain tiles are a good choice if you are looking for something durable that’s easy to clean. While you might pay extra for porcelain tiles, they are made to last and you will not need to constantly replace them. The color of porcelain runs down through the tile and even as the years go by and the tiles wear, the color persists.

    Heated tile floors

    Over the years, the cost of heated floors has gone down, allowing homeowners this luxury that is very convenient for the cold winter months. You have two options to consider when it comes to choosing heated tile floors, and that is electric and hydronic heating. For the former, there are electric coils that run underneath the floors while hydronic heating relies on tubes that are connected to the boiler system in the house.

    Laminate and faux-wood tiles

    If you want that wooden look in your bathroom, go for laminate tiles. These tiles are versatile, reasonably priced and easy to maintain. The downside to this choice is that if any of the tiles gets damaged you’ll need to replace it-it cannot be repaired.

    Vinyl

    This low cost option comes with very many designs and is low maintenance. It works well for high traffic bathrooms and you can choose between sheets, tiles and plank. Vinyl tiles are easy to install and you can choose a design that mimics ceramic or stone tiles. As such you get an almost similar effect on your décor, but at a much cheaper cost.

    Patterns and textures

    Patterns and textures are in, so if you are looking to remodel your bathroom floor do not be afraid to go bold. Whether you are looking to add some color to your bathroom or step away from the usual squares, then patterns, textures and designs are what you should be looking into.

     

    And there you have it, with so many options, there is no reason why your bathroom floor should be boring. 


  • REVERSE MORTGAGES: 5 IMPORTANT CHANGES FOR 2017

    From its birth in 1961 to the present day, reverse mortgage loans for senior homeowners have evolved significantly and continue to undergo changes. Increased government regulations for lenders and protections for borrowers are the most recent developments. For the real estate industry, here are the major changes and things to consider going into 2017:

    1. Increased loan limits:
    In 2017, the loan limit for HECM reverse mortgage loans is increasing from $625,500 to $636,150. This is the first time the HECM lending limit has been raised since President Barack Obama signed into law the American Recovery and Reinvestment Act in 2009. Announced by the FHA on December 1, 2016, it went into effect on January 1, 2017 and will continue through December 31, 2017. The increase is 150% of the national conforming limit of $424,100 and is due to rising home prices.

    2. Interest Rates Likely To Rise
    December 2016 saw the Federal Reserve raise interest rates for the first time since 2009. Reuters reports that policymakers signaled they expect to raise rates three more times in 2017. While this is an indicator of a healthy economy, the downside is that higher rates can significantly decrease the amount seniors can borrow from their reverse mortgages in 2017. Reverse mortgage calculators that require no personal information are available from the NRMLA and AAG.

    3. Housing Prices: 
    Adjusted for inflation, home values in many markets are almost as high as they were prior to the 2006 housing crash. Rising interest rates however may dampen home prices as people cannot borrow as much money for purchasing. 

    4. Potential Cuts in Social Security and Medicare: 
    While President-elect Trump has vowed not to change these programs, there are increasing murmurs that they may experience cuts. If either of these programs are modified to the detriment of seniors, expect reverse mortgage to become a more desirable product. 

    5. The Impact of the Trump Administration: 
    Neither President Elect Donald Trump, nor Secretary of Housing and Urban Development, Dr. Ben Carson, have addressed reverse mortgages specifically yet so it is unclear what changes, if any, will be implemented in 2017.


  • 4 money tips for new homeowners

    More than 60% of Americans own their homes, and while there are certain benefits to ownership, there's also a downside: the cost.

    You may have thought that coming up with a down payment was the greatest financial hurdle you'd face, but as you'll soon come to learn, there are numerous expenses associated with owning a home. Here's how to handle them.


    1. Create a new budget

    Given that your monthly mortgage payment is bound to differ from your previous rent payment, it might seem like a no-brainer that you'll need to adjust your budget accordingly. But there's more to it than that, because you may find that other costs change by virtue of your new home. For example, if you move from a two-room apaSimilarly, if you suddenly have a lawn to maintain, you can expect to spend more than you would renting an apartment.

    Rather than just substituting your new mortgage payment for your previous rent payment, spend a few months tracking all of your expenses and update your budget to reflect the actual costs of living in your new home. You may come to find that you're spending more than expected, in which case you'll need to adjust your flexible expense categories, like leisure, to compensate.

    2. Prepare to spend money on repairs and maintenance

    You're probably aware that you'll spend some money on maintenance and repairs for your home, but you may not realize just how much you may end up parting with. Most homeowners spend 1% to 4% of their homes' value each year on repairs and maintenance.

    So if your home is worth $300,000, expect to shell out anywhere from $3,000 to $12,000 a year on upkeep. And if you need to do something major, like replace a faulty heating system or roof, your costs could climb even higher.

    You should therefore aim to pad your emergency savings so that you have funds to tap if a significant repair pops up unexpectedly. Most people need at least three months' worth of living expenses in an emergency fund, but as a homeowner, you should aim for six months' worth of expenses or more.

    3. Expect your property taxes to go up

    Your property taxes are based on the assessed value of your home coupled with local tax rates. When you buy a new home, you'll be advised of your current property tax liability -- but don't get too comfortable with that number.

    Property taxes have a tendency to rise, even when home values drop. Back in 2000, localities across the U.S. collected an estimated $247 billion in property taxes, but by 2010, that number almost doubled to $476 billion despite the decline in home prices from the infamous housing bubble implosion.

    Additionally, some localities require property reassessments at certain intervals (such as every year, every other year, or every three years). If your home is reassessed at a higher amount, you could see an instant hike in taxes.

    To protect yourself, leave some wiggle room in your budget. This way, if you're hit with a significant property tax increase from one year to the next, you won't be scrambling as much to make those payments.

    4. Don't get caught off guard when big payments come due

    Some people roll their homeowners' insurance and property taxes into their mortgage payments via an escrow system. The way this works is that a lender will charge a set amount each month above your mortgage payment alone, put that excess money in an escrow account, and use it to pay your property taxes and homeowners' insurance for you. But not all mortgages work this way. Many just have you make your exact mortgage payment and remain responsible for paying your homeowners' insurance and property taxes on your own.

    If you fall into the latter category, you'll need to budget accordingly so you're not caught off guard when these larger payments roll around.

    The average U.S. household spends $2,127 on property taxes each year, but in many states, that number is much higher. Take New Jersey, for example, whose average annual property taxes exceed $7,000 and, in some counties, can easily top the $15,000 mark.

    Most homeowners pay property taxes quarterly, and if yours are $4,000 a year, that's an extra $1,000 check you'll need to write every three months. Rather than scramble to come up with that money, be sure to budget $333 a month for property taxes. Along these lines, the average annual homeowners' insurance premium in the U.S. is $952. If you're required to make that payment all at once, you'll need to set aside money each month in anticipation to a 2,000-square-foot house, you can bet on your heating and electricity costs going up.

     

  • 6 Reasons You Should Never Buy or Sell a Home Without an Agent

    It’s a slow Sunday morning. You’ve just brewed your Nespresso and popped open your laptop to check out the latest home listings before you hit the road for a day of open houses.

    You’re DIYing this real estate thing, and you think you’re doing pretty well—after all, any info you might need is at your fingertips online, right? That and your own sterling judgment.

    Oh, dear home buyer (or seller!)—we know you can do it on your own. But you really, really shouldn’t. This is likely the biggest financial decision of your entire life, and you need a Realtor® if you want to do it right. Here’s why.

     

    1. They have loads of expertise

    Want to check the MLS for a 4B/2B with an EIK and a W/DReal estate has its own language, full of acronyms and semi-arcane jargon, and your Realtor is trained to speak that language fluently.

    Plus, buying or selling a home usually requires dozens of forms, reports, disclosures, and other technical documents. Realtors have the expertise to help you prepare a killer deal—while avoiding delays or costly mistakes that can seriously mess you up.

     

    2. They have turbocharged searching power

    The Internet is awesome. You can find almost anything—anything! And with online real estate listing sites such as yours truly, you can find up-to-date home listings on your own, any time you want. But guess what? Realtors have access to even more listings. Sometimes properties are available but not actively advertised. A Realtor can help you find those hidden gems.

    Plus, a good local Realtor is going to know the search area way better than you ever could. Have your eye on a particular neighborhood, but it’s just out of your price range? Your Realtor is equipped to know the ins and outs of every neighborhood, so she can direct you toward a home in your price range that you may have overlooked.

    3. They have bullish negotiating chops

    Any time you buy or sell a home, you’re going to encounter negotiations—and as today’s housing market heats up, those negotiations are more likely than ever to get a little heated.

    You can expect lots of competition, cutthroat tactics, all-cash offers, and bidding wars. Don’t you want a savvy and professional negotiator on your side to seal the best deal for you?

    And it’s not just about how much money you end up spending or netting. A Realtor will help draw up a purchase agreement that allows enough time for inspections, contingencies, and anything else that’s crucial to your particular needs.

    4. They’re connected to everyone

    Realtors might not know everything, but they make it their mission to know just about everyone who can possibly help in the process of buying or selling a home. Mortgage brokers, real estate attorneys, home inspectors, home stagers, interior designers—the list goes on—and they’re all in your Realtor’s network. Use them.

    5. They adhere to a strict code of ethics

    Not every real estate agent is a Realtor, who is a licensed real estate salesperson who belongs to the National Association of Realtors®, the largest trade group in the country.

    What difference does it make? Realtors are held to a higher ethical standard than licensed agents and must adhere to a Code of Ethics.

    6. They’re your sage parent/data analyst/therapist—all rolled into one

    The thing about Realtors: They wear a lot of different hats. Sure, they’re salespeople, but they actually do a whole heck of a lot to earn their commission. They’re constantly driving around, checking out listings for you. They spend their own money on marketing your home (if you’re selling). They’re researching comps to make sure you’re getting the best deal.

    And, of course, they’re working for you at nearly all hours of the day and night—whether you need more info on a home or just someone to talk to in order to feel at ease with the offer you just put in. This is the biggest financial (and possibly emotional) decision of your life, and guiding you through it isn’t a responsibility Realtors take lightly.

     

  • Should I Sell My House? How to Tell If the Time Is Right

    No matter how many fond memories you’ve accumulated in your home, there may come a time when you start wondering: Should I sell my place? Maybe it’s because your local real estate market is booming and you stand to score a sweet payout. Maybe you’re relocating. Or your expanding family has outgrown your space. Or you’re just looking for a change of scenery. But questioning is easy; deciding to put your house on the market is tough.

    Here are some steps to help you pinpoint when the time is right.

    How to calculate your home equity

    A key variable in the decision on whether to sell your home is how much equity you’ve built up over the years. Home equity is the amount of money tied up in your house—what you’d receive if you sold it, minus what you owe on your mortgage.

     So how do you calculate your home equity? You’ll need two numbers: the remaining balance on your mortgage and what your home is currently worth. You can get a ballpark of the latter by typing your address into realtor.com®’s home value estimator. For a more in-depth assessment, ask your real estate agent, who will do an analysis by checking comparables, or comps (the prices of recently sold, similar homes in your area), as well as other aspects of your home.

    Here’s how this calculation looks with actual numbers: Let’s say you purchased your home for $300,000, but its market value has risen to $325,000. Let’s also assume that you’ve whittled down your mortgage over the years so that all you owe is $75,000. To get your home equity, subtract $75,000 from $325,000 and you have $250,000 in home equity, which is pretty sweet!

    Of course, the more you owe on your mortgage and/or the more your home’s price has plummeted, the less home equity you have. If that number is much smaller or even negative (which can happen if housing prices plummet), consider holding off on selling until conditions improve.

    Is it a seller’s or buyer’s market? Here’s how to tell

    Another factor in deciding if it’s time to sell is whether you’re in a seller’s market. This essentially means that the demand for homes is outpacing the supply, which gives sellers more leverage during negotiations. To figure out if you’re in a seller’s market, browse through some listings and look for these two signs: houses are selling for over asking price, and homes aren’t sitting on the market for long (generally less than six months). If that describes your area, then it’s a great time to sell. (Just don’t forget that if you sell, you may also have to buy, which may present problems unless you’re leaving the area.)

    On the other hand, if homes in your area are selling for under asking price and sitting over six months, that means you’re in a buyer’s market and that market forces aren’t working in your favor. This means if you want top dollar you may want to wait.

    What’s up with interest rates on mortgages?

    If you’re planning to sell your home and buy a new one, you should definitely consider interest rates on mortgages. Fortunately, right now, interest rates are at historic lows, hovering around 4%. That’s an astounding deal! In the ’80s, they were a whopping 17.48%—and while they probably won’t shoot up quite as high in the near future, we’re expecting them to move up by next year. Homeowners eager to upgrade to their dream home might want to grab them while they can.

    Have your housing needs changed?

    Market forces and interest rates aren’t the only things to keep in mind when deciding if you should sell your home. A lot has to do with you, and whether the house suits your space requirements. For instance: Is your current place too small now that you’ve been joined by a couple of kids—or is it too big now that your grown children have moved out on their own? Both scenarios are fine reasons to find a home that better suits your needs, so be sure to consider all of these factors in weighing whether the time is right to sell.

     

  • Fannie Mae Taking a Closer Look at Applicants’ Credit Card Payments

    If you feel like you’ve been managing your debt just fine, making the minimum payment on your credit cards on time every month, you might want to change your ways before applying for a home loan.

    Fannie Mae, which offers government-backed loans to more than a quarter of mortgage applicants nationwide, has just revised its risk assessment software to factor in more details about how borrowers pay off their debts.

    Historically, the credit report generated by Fannie Mae—and scrutinized by lenders—mainly showed how much of your available credit you’d used and whether you’d made your monthly payments on time. But the newest version of Fannie’s Desktop Underwriter software (used by about 2,000 lenders and more than 10,000 mortgage brokers) kicks things up a notch. Now, it also details just how much you coughed up each month over the past two years—whether you’re parting with only the minimum, laying out the full monty, or hovering somewhere in between.

     Fannie officials say these new details, known as “trended credit data,” can help lenders better assess how well people manage their debts—and, consequently, how well they’ll manage their mortgage payments.

    “Generally, the new underwriting model gives weight to how borrowers pay off their credit debt,” explains David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School. “While it is not clear how finely tuned the new system is, there is clearly a move toward a more granular approach to debt repayment.”

     

    How this news affects your prospects of a home loan

    So far, FICO and other credit score measures aren’t factoring in this extra info, so your score won’t get dinged. But your application could be affected in another way.

    “If you compare two people with exactly the same credit profiles except that one pays more than the minimum amount due or the entire balance, that person would be considered to be a lower credit risk by Fannie Mae,” says Reiss. “As a result, that person would be more likely to be approved for a mortgage.”

    But you might not have to pay much more than the minimum to boost your chances of getting that loan.

    “At this time it’s unclear what impact to mortgage scoring and automated underwriting the payment history will have, but we believe anyone that is paying 30% or more of their balance monthly will see improvement,” says San Diego loan officer Michael Rosenbaum at CrossCountry Mortgage.

    Of course, people who pay off the whole balance every month will be favored even more, and with good reason.

    “Research has indicated that borrowers who paid off their credit card debt every month are 60% less likely to become delinquent than borrowers who make only the monthly minimum payment,” Rosenbaum adds.

    And while this might sound ominous, it could actually be helpful if you had some credit blemishes in your past.

    “Fannie has also indicated that paying more than the minimum due will particularly help borrowers with delinquencies on their credit report, because it will allow borrowers to ‘demonstrate that a late payment was not deeply reflective of their general debt repayment ability and behavior,'” Reiss notes.

    Will this change affect your interest rate?

    All that said, if all you can afford is your minimum monthly debt payments, you don’t necessarily have to kiss your home-buying dreams goodbye.

    “Since loan pricing is mostly based on credit scores, this new information shouldn’t have an immediate impact on your interest rates,” says G. Brian Davis, director of education at SparkRental.com. “If this pilot program takes off, though, more lenders may start adjusting rates based on this extra credit card history information.”

    So brace yourself, and start allocating your acorns accordingly. Because after all, do you really want to be seen by lenders as a “bare minimum” type of borrower, or one who goes above and beyond?

     

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