This year, Evergreen Real Estate Services is thankful for our awesome clients and a great year thus far.
We’d like to wish all of you a wonderful holiday with your families and loved ones!
*And remember- if you plan on deep-frying that turkey, do it outside!
Just because a lender approves you for a mortgage doesn’t mean you can comfortably afford it.It doesn’t matter if you’re searching homes for sale in Fort Lauderdale, FL, or Philadelphia, PA. Type “how much house can I afford” into a Google search and you’ll come up with a number of online tools and mortgage calculators to help you figure the answer to your query. You might also see rules of thumb that state things like “your mortgage payment shouldn’t take up more than 35% of your monthly income.”
But it’s important to make sure you understand how the pieces all fit together, and that you take your personal financial situation into account. Here’s why.
Financial rules of thumb may not apply to you
Every person’s finances are just as individual as they are. So while it may be a good reference point to know that your mortgage payment shouldn’t be more than 35% of your monthly income, that figure could vary a lot depending on things such as debt and other monthly payment obligations, not to mention how much you’ve saved for a down payment.
Online mortgage calculators such as this one from Trulia are great at giving you a clearer starting point for mortgage shopping. You’ll get a much better sense of what your price range might be instead of a blanket rule of thumb. But they’re only as accurate as the information you provide, so if you forget to add regular budget line items such as food, day care, or gas costs, you won’t get a complete picture.
Your lender may approve you for more than you can realistically afford
Lenders are now legally required to ensure borrowers can “reasonably afford” to repay a loan before they approve a new mortgage. But there’s a difference between being able to reasonably afford something and being able to realistically afford something.
When looking at what’s reasonable, lenders can account for your income and any current debts that you need to repay each month. If you make $5,000 per month after taxes and need to pay $500 toward your car loan each month, a mortgage payment of $1,500 may seem perfectly reasonable.
In this (extremely simplified) example, you’d have about $3,000 per month left over to handle all your other expenses. And perhaps you can afford your living expenses on this budget. But what about the other goals you want to achieve? What about saving for retirement or investing for your future?
If you commit to a large monthly mortgage payment, you may find yourself squeezed to make your remaining money cover your living expenses, plus monthly bills and loan repayments. While a lender can give you a mortgage you can reasonably afford, it comes with the consequence of not being able to handle other financial priorities. In short: Even though you may qualify for a large mortgage, that doesn’t mean you should max out your house budget.
You’re the only one who can determine what’s comfortable
Only you can examine your life and your values to determine what you might be willing to give up to make room in your budget for a mortgage — and what you’re not.
You might be perfectly happy to take on a larger monthly mortgage payment in exchange for reducing meals out, cutting back on luxury vacations, or sticking with your old phone instead of going for the upgrades just because you can. Or you may decide that renting makes more sense for you because you can mitigate costs, take on less financial responsibility, and enjoy more flexibility.
Either way, you need to determine what you feel comfortable with. You need to decide what works within both your budget and your long-term plans to reach goals that matter to you.
Consider these factors to decide how much house you can really afford
Once you set your financial priorities, here’s where you’ll need to do the math:
Now you can factor a mortgage into all of the above, and see how much you can really afford. When doing so, don’t forget to count both the mortgage principal and interest — along with property taxes, homeowners’ insurance, and other extras such as HOA fees.
Article by: Kali Hawlk, Trulia
Sticking to an affordable budget is clearly the most important factor when you’re house hunting. The location of your new investment can be just as important as the purchase price. Other factors to consider are access to major roads, your favorite shops, and commute to work.
Location
Some of us need direct access to major highways. In Central Florida’s case, many of us prefer to be within a reasonable distance from Interstate 4, State Road’s 417, 408 & 528. In areas up north, many will benefit from being within walking distance from public transportation. Others prefer the tranquility of few neighbors and no nearby traffic. What does this tell you? Location is probably the second most important deciding factor when choosing your new place.
Nearby Entertainment & Recreation
Where’s the fun in living in your dream home, when your favorite hot-spots and shops are far away? You may have pets like me and frequent a local dog park, which is can be important when moving. Others may like the opportunity to walk to nearby establishments and meet up with friends or clients for dinner and drinks.
Neighborhood Appeal
Curb appeal is always a plus, but not when your neighbor has a forest growing in his/her front yard. Choose a neighborhood that is well-kept, with neighbors’ who show pride in owning their homes. An orderly neighborhood is almost certain to maintain its value in a good market.
Employment
Lastly, and certainly not least, being close(r) to work will save you more than a lot of stress. There’s nothing worse than having to sit in traffic for 45 minutes on your way home from work, while hungry especially! The extra time spent with family, friend and pets is priceless.
As Rachel Wilber puts it, “People usually have several reasons they choose a new home or apartment. They often want to be in a premier location or an exceptional school district. Sometimes, the community atmosphere and the access to new jobs are the driving force behind a decision. One thing is for sure; money is not the only reason people choose a residence.”
Source: Realty Times
Freddie Mac recently put out a warning to hogmebuyersabout scams geared toward those looking to raise their credit scores. These scammers promise to help raise your credit score in exchange for money.
It’s an easy to trap to fall into, as most of us want higher credit scores. As Freddie Mac states on their website “Who doesn’t want the highest credit score possible to garner the most-favored terms?”
“Schemes that falsely raise credit scores will land borrowers in scalding hot water – as well as cost you time and money combating both origination- and servicing-related fraud.”
Freddie Mac points out 3 fraudulent schemes for homebuyers looking to raise their scores:
1. Disputing credit with credit bureaus
A new program with FICO – called FICO Score Open Access for Credit & Financial Counseling – was created to help borrowers who have credit management problems by providing FICO Scores along with credit education material to help consumers understand credit scoring and learn more about financial management. However, some fraudsters are using the program in a scam.
“(Scammers) may direct a borrower to contact credit repositories repeatedly to dispute previously defaulted debt,” Freddie Mac warns. “The fraudster hopes the creditor will miss responding to one of the disputes and the defaulted debt will disappear temporarily, triggering a jump in the borrower’s credit score. The borrower may qualify for – and close on – a new mortgage before the credit report correctly reflects the defaulted debt and the borrower’s true credit score.”
2. Claiming identity theft falsely
Some companies encourage buyers to falsely claim identity theft on their loan application in order to have debt removed from their credit report.
“Some borrowers who falsely claimed identify theft have gone as far as providing affidavits of identity theft and police reports,” Freddie Mac writes. “Of course, lenders take these claims seriously and investigate. In some instances, they discover that the ‘police report’ is fake, never actually filed, or from a police department that doesn’t exist.”
3. Misusing credit protection numbers
Using a credit privacy number – an alternative for a Social Security number most commonly used by celebrities and politicians to hide previous credit issues – can be a dangerous move.
“Some consumers with poor credit acquire a CPN with the intent of creating a new, clean – and misleading – credit profile,” Freddie Mac notes. “CPNs were not created for this purpose, and mortgage loans originated using a CPN are ineligible for sale to Freddie Mac. Borrowers who use a CPN with the hope of leaving their bad credit histories in the rear view mirror are in for a rude awakening.”
As the Federal Trade Commission bluntly points out, “By using a stolen number as your own, the con artists have involved you in identity theft,’ for which you may face legal trouble.”
Source: “Freddie Mac Issues Credit-Scam Warning to Potential Home Owners,” HousingWire (Nov. 6, 2015)
Shopping on vacation is usually a given (when else do you have an excuse to buy tchotchkes such as magnets and coffee mugs?). But house shopping? It just might make perfect sense.
Maybe you’ve been dreaming of vacation homes and you’ve fallen in love with your temporary locale — it can’t hurt to look at prices and get a sense of the market. Or maybe you’re looking for an investment home for sale in Sarasota, FL. Or, if your new vacation spot is a place you’re hoping to move to permanently, a little time to check out the market might be the perfect, no-pressure way to help you make a big decision.
“When you think of going on vacation, you probably don’t think, ‘What a great time to buy a home!’” says Ross Anthony, a real estate agent with Willis Allen Real Estate in San Diego. “The relaxation, the shopping, the food — it’s certainly not a conventional idea.”
So just what are the benefits to house-hunting during your vacation? Here’s a rundown to help you decide if signing on the dotted line while on vacay is right for you.
You have more time
Life, simply put, gets in the way. Oil changes, soccer practices for the kids, dinner, your day job. But when you’re on vacation, island time is a real thing — and one you should embrace, especially if you’re house-hunting.
“Most people feel rushed due to time constraints to get through properties quickly when they’re at home with their busy schedules,” explains Justin Udy, a real estate agent with Century 21 Everest Realty Group in Midvale, UT. “Shopping this time of year allows you to really take the time necessary to look and evaluate properties thoroughly.”
You get more attention
So your holiday travels didn’t bring you to a beach but rather your in-laws’ three-bedroom ranch. But said three-bedroom ranch is in a town next to the one you’ve always wanted to move to. Which means you can escape the obligatory chitchat with family for a day and house-hunt. The best part? You’ll probably get real estate agents’ undivided attention.
“Real estate professionals typically see slower times during holiday seasons, and many are eager to work,” says Udy. “This may be a great time to reach out to someone and find out their expertise and if they will be a good fit as you consider buying.”
You get to test the waters
Want to know what a home looks like at night? What the traffic is like? The advantage to house hunting on vacation is that you have the leisure to picture yourself living there and see if it is a good fit.
“Pay attention to the weather, traffic, people, proximity to shopping,” says Ross Anthony. “These are factors that can’t be truly appreciated without spending any significant amount of time in an area. Even a week of vacationing can be an important learning experience that may bring to light unexpected factors, both positive and negative.”
You get more access
You’re not the only one on vacation this time of year. “So many homeowners take time off or away from home this time of year that scheduling showings is easy,” explains Udy. Which means you can line up a pretty big schedule of showings without having to worry about homeowners’ and real estate agents’ schedules interfering with your plans for the day.
Homes will look better
It may seem odd, but sometimes a home looks better gussied up with holiday decorations. “If you’re considering buying a second property, it’s nice to see how others are decorating during the holidays since you will likely be using the home the same times of year and during holidays,” Udy says. Bonus: You can see whether your 10-foot faux Christmas tree will squeeze into that family room before you buy the home.
You will have time to relax
House hunting is tiring. And what better way to unwind after a day of touring vacation homes than by relaxing beside a fire with a glass of wine or sprawling out on a lounge chair in the sun? On vacation, you have the luxury of doing just that.
Source: Trulia
The Evergreen RES team would like to congratulate Jo Ann Ignacio and family on the closing of their very first home!
Ms. Ignacio is a native of the Philippines and came to us to help her find her first home here in the States. After a few months of searching, we were able to find her the right one. This cozy three bedroom, two bathroom home in Kissimmee fit the Ignacio family like a glove. The home was owned and cared for by the same couple for 34 years, who purchased it from the builder in 1981. Lucky for Jo Ann, the home was sold with a brand new roof, custom concrete work and shiny new tile floors. Originally listed for $138,900 and after only 3 days on the market, Ms. Ignacio was one of the first to view the home and purchased for $135,000.
If you or someone you know is looking to buy or sell, feel free to reach out to us!
Evergreen Real Estate Services 