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What's After the Tax Credit?
The $8,000 tax credit is over if you didn't go under contract on a home, by the April 30th deadline. So, what incentives do first-time home buyers have to purchase their own home? How does up to $70,000 in grant funds sound to you? There are several new home subdivisions that offer substantial grant funds to first-time home buyers. A prospective buyer is considered a first-time home buyer if the buyer has not owned his or her primary residence in the past three years. We recently helped a single mom of two children purchase a new 4-bedroom, 2 bathroom home priced at $171,701, with $57,010 in down payment and closing cost assistance. The down payment assistance helped to bring her loan amount to about $115,000 and, with a below market interest rate, her payment was less than $800/month.
Chances are, the government will not be providing another home buyer tax credit any time soon, but there are so many other cost saving opportunities for home buyers in today's marketplace. To take advantage of grant funds, your household income generally needs to fall within certain income guidelines, which may be higher than you'd think.
Chances are, the government will not be providing another home buyer tax credit any time soon, but there are so many other cost saving opportunities for home buyers in today's marketplace. To take advantage of grant funds, your household income generally needs to fall within certain income guidelines, which may be higher than you'd think.
Before Making an Offer on a Home - Get a CLUE!
Have you found a home that you'd love to own? Before making an offer on your dream home, get a CLUE - that is, a Comprehensive Loss Underwriting Exchange. CLUE is a claims history database that was created by ChoicePoint, to enable insurance companies to access consumer claims information when they are underwriting or rating an insurance policy. The CLUE report contains consumer information and, if applicable, property information, such as the number and type of claims filed and the payment on each claim. This database contains up to 7 years of personal property claims history. All insurance companies may not subscribe to this service, but have other ways of accessing similar information to determine whether or not to insure a person and/or property and the rate to apply.
So, how does this report impact you? If you're about to purchase a home and the current owner has filed lots of claims on it, chances are, you may have a difficult time finding an insurance company who's willing to insure it or the insurance amount may be substantially higher than what's common for that area. If there's a particular monthly payment that you'd like to stay at or below, it'd be to your advantage to get insurance quotes before making an offer on a home. Although you cannot access the current owner's CLUE report, you can request that the owner provide you with a copy of his or her CLUE report in your offer and make your offer contingent upon your insurance quote not exceeding a certain amount. Insurance companies that are members of this claims history database would also have access to the CLUE report.
So, how does this report impact you? If you're about to purchase a home and the current owner has filed lots of claims on it, chances are, you may have a difficult time finding an insurance company who's willing to insure it or the insurance amount may be substantially higher than what's common for that area. If there's a particular monthly payment that you'd like to stay at or below, it'd be to your advantage to get insurance quotes before making an offer on a home. Although you cannot access the current owner's CLUE report, you can request that the owner provide you with a copy of his or her CLUE report in your offer and make your offer contingent upon your insurance quote not exceeding a certain amount. Insurance companies that are members of this claims history database would also have access to the CLUE report.
Attitude is Everything
When selecting a REALTOR to represent you in the purchase or sale of your home, the attitude - of your agent - is everything! Sometimes, in the home buying and selling process, it's so easy for either side to lose sight of what's most important. Buyers and sellers both have goals they'd like to achieve and it's up to their respective agent to negotiate the deal on their behalf. By asking thought provoking questions, your agent should know what's most important to you in the purchase or sale of your home and, whether you realize it or not, it's not always about money.
Your success in negotiating the best terms for the purchase or sale of your home is in direct proportion to your agent's attitude. To ensure that you have optimum results in the home buying or selling process, your agent needs to remain level headed and open minded. If your real estate agent gets hot tempered, negotiations can fall apart. To negotiate effectively, your agent will need to remain open to hearing the other side's point of view and unveiling the other person's most pressing issues, while keeping your concerns in mind. Your agent's willingness to remain open to all viewpoints, will allow him or her to objectively convey the issues to you and brainstorm on ways to create a win-win for both parties.
If your agent is unwilling to hear what the other party has to say, then negotiations become blocked and relationships can become strained and tensed. If you're a doubting Thomas, think about a time when you were stressed and angry. How likely were you to come up with solutions to your problem? And, in that state of anger and frustration, did you actually hear the other person's concerns or were you plagued mostly with your feelings, opinions, and need to be right? It's hard to take in information, when you think your way of doing things is right. So, when choosing an agent to represent you in the purchase or sale of a home, make sure your agent is even-tempered and well-skilled in the art of negotiations.
Your success in negotiating the best terms for the purchase or sale of your home is in direct proportion to your agent's attitude. To ensure that you have optimum results in the home buying or selling process, your agent needs to remain level headed and open minded. If your real estate agent gets hot tempered, negotiations can fall apart. To negotiate effectively, your agent will need to remain open to hearing the other side's point of view and unveiling the other person's most pressing issues, while keeping your concerns in mind. Your agent's willingness to remain open to all viewpoints, will allow him or her to objectively convey the issues to you and brainstorm on ways to create a win-win for both parties.
If your agent is unwilling to hear what the other party has to say, then negotiations become blocked and relationships can become strained and tensed. If you're a doubting Thomas, think about a time when you were stressed and angry. How likely were you to come up with solutions to your problem? And, in that state of anger and frustration, did you actually hear the other person's concerns or were you plagued mostly with your feelings, opinions, and need to be right? It's hard to take in information, when you think your way of doing things is right. So, when choosing an agent to represent you in the purchase or sale of a home, make sure your agent is even-tempered and well-skilled in the art of negotiations.
Your Agent Could Be Your Best Advocate
A loan officer once referred me to a client who was interested in selling her home and buying a bigger one. Unfortunately, my client couldn't qualify for the home of her dream and if she couldn't buy that home, she didn't want to sell. As much as I questioned her loan officer about possible options, she repeatedly told me that nothing could be done to assist her in qualifying for a higher priced home. I spoke with my client and asked her to give me a breakdown of her bills and the monthly minimum payment and remaining balance for each bill. I found out that her car payment was preventing her from qualifying for her dream home, but the remaining balance was about $12,000. Since my client was going to get about $45,000 in net proceeds from the sale of her home, I asked her if she'd be willing to pay off her car, so she could qualify for a higher amount. She said she was already planning to do just that. When I asked her loan officer what she'd qualify for without the car payment, it was around the exact amount she needed to have her dream home built.
This particular loan officer is really great at what she does. But, sometimes, we're so close to a situation, that it's hard for us to pinpoint other options. In situations such as this, your real estate agent could be your best advocate. So, choose an agent who's knowledgeable of financing and isn't afraid to ask probing questions. Having a well-rounded real estate agent, will arm you with more tools and resources, which could be the difference in you qualifying for your dream home or settling for your current place or another home.
This particular loan officer is really great at what she does. But, sometimes, we're so close to a situation, that it's hard for us to pinpoint other options. In situations such as this, your real estate agent could be your best advocate. So, choose an agent who's knowledgeable of financing and isn't afraid to ask probing questions. Having a well-rounded real estate agent, will arm you with more tools and resources, which could be the difference in you qualifying for your dream home or settling for your current place or another home.
Your Dream Home Could Be In Jeopardy!
When you've got your eye on a home that's the right fit for you and your family, the last thing you want to hear is that you can't qualify for it. Within the past year, lenders have become especially critical of what buyers deduct on their tax returns. So, if you usually claim unreimbursed job expenses on your tax return, chances are, you may not qualify for as much home as you'd like. For example, if you earn $80,000/year and report on your taxes that you have $10,000 in unreimbursed job expenses, the lender will base your qualifying ratios on a $70,000/year income ($80,000 - $10,000 in job-related expenses). To avoid being shocked by news that you don't qualify for a home you've contracted to purchase, make sure you submit all of your financial documents to your lender prior to making any offers on a home. If you know you have unreimbursed job expenses, make sure you point it out to your loan officer so he/she can determine what you'd really qualify for. And, if you don't qualify for as much as you'd like, ask your loan officer whether there are other loan programs that would help you to qualify for the type of home you'd like to purchase. Knowing what you qualify for upfront, can help you to tailor your home search to what you can actually afford and avoid the disappointment of having to be released from a contract on a home that you've fallen in love with.
Lions, Tigers, and Bears - Oh, My!
If you're thinking about purchasing your first home, the home buying process can appear to be a bit overwhelming. What path should you take first on your journey to homeownership? Who should you trust? What should you do to ensure you're making the best decision for you and your family? And, what pitfalls should you avoid? Any unchartered road initially appears intimidating, because we tend to be creatures of habit. In general, we believe we must tread lightly, trust few, and question everything. But if you've ever seen The Wizard of Oz - one of my favorite movies - you'll recall that Dorothy thought she was in mortal danger, only to realize that she was always safe. The mazes, the danger, the confusion, and the battles were all just an appearance, just an illusion, just a dream.
I strongly recommend that you do not approach your home buying process from a fear-based perspective. What you think about, you bring about. Fear, a negative energy, attracts more of itself. The first question you should ask yourself in your quest for homeownership should not be who can I trust, but how can I empower myself to make the best possible choices for me and my family. The next step should be to interview several agents. Ideally, you'll want to select an agent who will help you to achieve more clarity on your goal, listen attentively to your needs, and educate you on the process so you can have enough information to make the best decisions. Your real estate agent should be able to refer you to a loan officer who can assist you in finding the right loan. Your real estate agent and loan officer are a part of YOUR team, so treat them as such. If any issues arise, you'll want team members who can work well together and are willing to brainstorm on possible solutions. I've heard it said that you know when you're dreaming big, because your dream will involve more people than just you. Buying a home is a big dream and you can't do it alone. So, choose team members who are eager to work with you, empower you, and motivate you to transform your dream into a reality.
I strongly recommend that you do not approach your home buying process from a fear-based perspective. What you think about, you bring about. Fear, a negative energy, attracts more of itself. The first question you should ask yourself in your quest for homeownership should not be who can I trust, but how can I empower myself to make the best possible choices for me and my family. The next step should be to interview several agents. Ideally, you'll want to select an agent who will help you to achieve more clarity on your goal, listen attentively to your needs, and educate you on the process so you can have enough information to make the best decisions. Your real estate agent should be able to refer you to a loan officer who can assist you in finding the right loan. Your real estate agent and loan officer are a part of YOUR team, so treat them as such. If any issues arise, you'll want team members who can work well together and are willing to brainstorm on possible solutions. I've heard it said that you know when you're dreaming big, because your dream will involve more people than just you. Buying a home is a big dream and you can't do it alone. So, choose team members who are eager to work with you, empower you, and motivate you to transform your dream into a reality.
Buyer's Beware! This Could Stop You from Qualifying for Your Dream Home
Buyer's watch out! If you're taking this deduction on your taxes, it could stop you from purchasing your dream home. For just about any loan product available now, buyers are required to provide their lender with a copy of their tax returns for the past two to three years. The lender will also request a copy of your tax returns from the IRS, to make sure the returns are the same. If your loan officer overlooks this deduction - unreimbursed job expenses - chances are, the underwriter will not. An unreimbursed job expense can include items such as uniforms, teaching supplies, meals, or any other expense related to your job that is not reimbursed by your employer.
Some deals have fallen apart, because buyers decided to claim unreimbursed job expenses on their tax return. When you do this, lenders will deduct the unreimbursed job expenses from your yearly income. Depending upon the size of the unreimbursed job expenses, it can dramatically impact what you qualify for and what you definitely will not qualify for. One buyer recently qualified for a $96,000 townhome. After the loan officer noticed that she deducted almost $7,500 on her tax return for unreimbursed job expenses, she now only qualifies for a $50,000 home! Proceed with caution before claiming an unreimbursed job expense, as it could prevent you from owning your dream home!
Some deals have fallen apart, because buyers decided to claim unreimbursed job expenses on their tax return. When you do this, lenders will deduct the unreimbursed job expenses from your yearly income. Depending upon the size of the unreimbursed job expenses, it can dramatically impact what you qualify for and what you definitely will not qualify for. One buyer recently qualified for a $96,000 townhome. After the loan officer noticed that she deducted almost $7,500 on her tax return for unreimbursed job expenses, she now only qualifies for a $50,000 home! Proceed with caution before claiming an unreimbursed job expense, as it could prevent you from owning your dream home!
Don't Give Up!
I've run across many buyers who believe if they don't find a home in the first or two tries, it wasn't meant to be. If you don't immediately see a home that you love, don't get discouraged. Buying a home is a goal and, as with any goal that you set, there can be little stumbling blocks, hurdles, and obstacles along the way. Your attitude is paramount in determining whether you'll succeed or fail in your mission. Positive thoughts attract positive experiences and negative thoughts attract negative experiences.
If you're not finding the home of your dreams right away, take the time to assess where you are right now and where you'd like to be. To obtain optimum results in your home search, connect with a real estate agent who isn't afraid to ask you thought provoking questions, to help you get clarity on what's really important to you in your home buying process. Take the time to evaluate your home search criteria. Is it too limiting or restrictive? Does it capture what's really important to you and your family? You may also need to closely examine your loan options with your lender. There may be other loan products and terms available that will help you to get the home that you desire, while keeping your payments well within your comfort zone. Or, you may need to change your focus. If you're unable to afford your dream home now, perhaps, the best course of action is to find a home that's likely to increase in equity, so you can sell it in a few years and apply the equity towards your next home purchase. Sometimes, to stay on course towards your destination, you need to take pitstops to evaluate your action plan, make any necessary revisions, and reaffirm to yourself that anything you can envision for yourself is achievable.
If you're not finding the home of your dreams right away, take the time to assess where you are right now and where you'd like to be. To obtain optimum results in your home search, connect with a real estate agent who isn't afraid to ask you thought provoking questions, to help you get clarity on what's really important to you in your home buying process. Take the time to evaluate your home search criteria. Is it too limiting or restrictive? Does it capture what's really important to you and your family? You may also need to closely examine your loan options with your lender. There may be other loan products and terms available that will help you to get the home that you desire, while keeping your payments well within your comfort zone. Or, you may need to change your focus. If you're unable to afford your dream home now, perhaps, the best course of action is to find a home that's likely to increase in equity, so you can sell it in a few years and apply the equity towards your next home purchase. Sometimes, to stay on course towards your destination, you need to take pitstops to evaluate your action plan, make any necessary revisions, and reaffirm to yourself that anything you can envision for yourself is achievable.
It's a Great Time to Buy a Home
Now is a great time to buy a home. Homes are not just for sale, they are ON SALE! We helped a buyer to purchase a beautiful, three-level Colonial style home through a short sale for $195,000. The sellers had purchased the home over two years earlier for a little over $300,000. She now has instant equity in her home. The best time to buy a home is when the market is low. Millionaires are made in markets such as this. The Robert Kiyosakis and Donald Trumps of the world make their millions in markets like this, because they know what goes up, must come down, and what goes down, must inevitably go up. And, when you purchase a home when the value is low, it's a nice and profitable ride to take when values start soaring upwards! If my buyer wants to purchase an even bigger home in a few years, she'll have a nice-sized down payment she can make towards her next home purchase.
Seller's Agent vs. Buyer's Agent
The other day, I was thinking about some clients that my partner, Scott, and I worked with well over 7 years ago. Our clients said they didn't feel comfortable paying over $1,000 per month and, unfortunately during that time, there wasn't a big selection of homes that they liked in their preferred price range. Imagine our surprise, several weeks later, when they contacted us, rather excitedly, because they'd gone under contract on a home with the listing or seller's agent. They had driven by a home over the weekend that was having an Open House, decided to walk through it, and fell in love with it. The home was priced over $20,000 more than where they told us to do their searches, which was going to take their mortgage payment to $1,200 per month or more. Our former clients, all of a sudden, were more than prepared to handle this higher mortgage payment. So, what happened? The seller's agent did what he was supposed to do - he sold our buyers on his listing.
With the real estate climate being the way it is, I've often wondered how well our former clients were able to handle extending themselves $200 beyond what they said they felt comfortable paying per month. Most buyers decide to purchase a home for emotional reasons - they love the layout of the house, the price, the neighborhood, the amenities, and/or the location. Then, they apply logic to help backup their emotional response. A buyer's agent represents the buyer's best interest, even when a buyer is ready to abandon their own best interest. A buyer's agent is there to remind a buyer of what they said they feel comfortable paying per month, before commiting them to something that can eventually lead to foreclosure. A seller's agent represents the seller's best interest and has been hired to get the home sold as quickly as possible, for the highest amount of money. A buyer's agent researches homes currently for sale, under contract, and sold in the buyer's preferred neighborhood, so the buyer can have the necessary tools at their disposal before deciding on their offering price and terms. A buyer's agent includes contingencies in a contract, such as a home inspection or appraisal, so their client isn't tied down to a home that looked good initially, but isn't as economically feasible later. A seller's agent has ties to the seller and includes or excludes contingencies that best serve their client. In most instances, the seller is funding the cost of their agent and a buyer's agent, so, if you're a buyer, it's to your advantage to have a knowledgeable and experienced agent to represent your needs. It's easy to get swept away when you find your dream home, but that dream state evaporates rather quickly when pitfalls begin to surface and you have no representation.
With the real estate climate being the way it is, I've often wondered how well our former clients were able to handle extending themselves $200 beyond what they said they felt comfortable paying per month. Most buyers decide to purchase a home for emotional reasons - they love the layout of the house, the price, the neighborhood, the amenities, and/or the location. Then, they apply logic to help backup their emotional response. A buyer's agent represents the buyer's best interest, even when a buyer is ready to abandon their own best interest. A buyer's agent is there to remind a buyer of what they said they feel comfortable paying per month, before commiting them to something that can eventually lead to foreclosure. A seller's agent represents the seller's best interest and has been hired to get the home sold as quickly as possible, for the highest amount of money. A buyer's agent researches homes currently for sale, under contract, and sold in the buyer's preferred neighborhood, so the buyer can have the necessary tools at their disposal before deciding on their offering price and terms. A buyer's agent includes contingencies in a contract, such as a home inspection or appraisal, so their client isn't tied down to a home that looked good initially, but isn't as economically feasible later. A seller's agent has ties to the seller and includes or excludes contingencies that best serve their client. In most instances, the seller is funding the cost of their agent and a buyer's agent, so, if you're a buyer, it's to your advantage to have a knowledgeable and experienced agent to represent your needs. It's easy to get swept away when you find your dream home, but that dream state evaporates rather quickly when pitfalls begin to surface and you have no representation.
