Three Ways to Get Your Finances in Shape

You want to buy a home, but first you need to get your finances squared away. You’ll need money for a down payment, for moving and for other costs. How can you get more money in just a few months? Here are three ways that work together as nicely as compound interest.

1. Slow down your spending.

Like counting calories on a diet, tracking your spending can be an eye-opener. You’ll identify “spending leaks” that can be easily plugged, like eating out less often or only buying items at the grocery store that aren’t on your shopping list. You’ll see that small changes make a big difference to your bottom line.

2. Save more.

Like spending less, setting money aside is important, too. Look at your monthly expenses and determine how much you can save, then have that money debited from your checking account and put into a savings account, a short-term CD or other vehicle with every paycheck. This account should be considered separate from your retirement savings.

3. Pay off revolving debts.

If you can’t pay cash (or debit) for something, don’t buy it. Focus on reducing credit card balances. Pay off the card with the highest interest rate first, make payments on time, and pay much more than the minimum payment.  As you eliminate each debt, double down on the remaining cards.

Keep your goal to buy a home top of mind always, and you’ll be pleasantly surprised at how quickly you can make your dream happen.

For more home tips, follow us on Facebook. Looking for a new home in the Kansas City area? Visit us at BHHSKCRealty.com!

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Slowing Market Good for Both Buyers and Sellers

Experts are predicting that the housing market will slow down in 2019. But, that’s not such a bad thing. A slower market is more stable and offers advantages for both buyers and sellers.

The 30-year fixed-rate mortgage averaged 4.45% in mid-January 2019, according to Freddie Mac. While rates were nearly half a point higher than they were a year ago, they’ve since pulled back, making homes a little more affordable for homebuyers heading into spring.

Existing home sales in December 2018 were the lowest since November 2015, more than 10% lower than year-ago levels, reflecting sensitivity to rising interest rates and prices, according to The National Association of REALTORS. NAR chief chief economist Lawrence Yun explained that softer December sales reflected homes under contract at higher mortgage interest rates.

NAR also reported that the median sales price was $253,600, 2.9% higher than a year ago. While gains have been higher in previous years, prices are still rising – a benefit to home sellers.

Realtor.com economist Danielle Hale told Forbes.com that 2019 will bring less competition for homebuyers as the inventory of homes increases on the market. The Forbes.com forecast for 2019 is a 2% decline in home sales volume and a 2.2% rise in home prices from 2018.

These statistics are national averages, and market conditions could be very different in your area. Your BHHS KC Realty agent can share important local data with you that will improve your ability to buy or sell a home.

For more home tips, follow us on Facebook. Looking for a new home in the Kansas City area? Visit us at BHHSKCRealty.com!

Is Love Co-signing Your Child’s Mortgage Loan?

Young homebuyers have a rough time compared to their parents when they were first-time homebuyers. They have more student debt, slower wage growth and are building wealth later in life than their parents did at the same age.

With so many hurdles to cross, parents like you may be thinking of co-signing so your son or daughter may have a home of their own. This would be a true act of love, but it doesn’t come without risk.

According to The Lenders Network, a co-signer can only help if the principal borrower’s income-to-debt ratio is too low, or has a shallow credit history. And if your child has a poor credit history, co-signing won’t help at all, as lenders will use the lower credit score to make their lending decision.

Adding your income will improve the ratio, but you will be as liable for the loan as your child without having any ownership or equity in the home because your name won’t be on the title and deed, unless you structure the purchase that way. Sharing this debt will also raise your debt-to-income ratio, which may make it more difficult or expensive for you to obtain other loans. And, in the worst case, you’ll have to make any monthly payments your child misses.

So what are the advantages? Making the payments on time and in full will improve your child’s credit scores. Once your child’s financial situation improves, he or she may refinance the mortgage loan to their name only.

For more home tips, follow us on Facebook. Looking for a new home in the Kansas City area? Visit us at BHHSKCRealty.com!

Mortgage Applications for the Military

If you’re active military or an armed services veteran who’s ready to buy a home, a Veterans Benefits Administration (VA) home loan allows you to transact with no down-payment, no minimum credit score, and a better interest rate than you’d otherwise qualify for because the VA is guaranteeing the loan for the mortgage lender.

You’ll need a Certificate of Eligibility that you can acquire online or through your lender, along with social security numbers, pay stubs and debt obligations to give the lender.

Your loan approval requires an appraisal provided by a VA qualified appraiser. VA and FHA loans have stricter housing guidelines, so if the appraiser notes a health or safety issue that has to be repaired, installed or remedied, and the seller agrees to the scope of work, a follow-up compliance inspection will be necessary to insure the work has been completed.

You’ll have to order your own property inspection to ascertain the working order of the home’s operating systems and installations not obvious to the naked eye, which is a different focus from the appraisal.

Your lender will explain which fees are paid at closing as you’ll be responsible for any fees that aren’t VA-approved. Expect to pay about one percent of the loan as a loan origination fee, plus “reasonable and customary fees” such as hazard insurance, credit reports and other items.

Your VA home loan benefit is not a one-time thing; you can use it to refinance or buy your next home.

For more home tips, follow us on Facebook. Looking for a new home in the Kansas City area? Visit us at BHHSKCRealty.com!

Fall in Love With the Right Home

You’re ready to fall in love with your first home. As you write your wish list, you may find that it grows longer than you’d imagined. You want more living space, a place to do your art and crafts, enough bedrooms to expand your family or accommodate relatives and friends, a separate master suite, and an entertaining area that will impress. All in the best neighborhood, of course!

Welcome to the first lesson of homebuying – you won’t find the perfect home, but you’ll find one that’s perfect for you right now, and that may mean doing without a swimming pool or hilltop view. Choose three essentials to begin your search, so your BHHS KC Realty agent can show you homes that best match your needs.

  1. Price range – Your lender will prequalify you and tell you how much you can afford, based on your down-payment, credit history and debt-to-income ratio. If your limit is $300,000, it won’t benefit you to look at homes that are $400,000.
  2. Neighborhood preference – Choose neighborhoods based on a radius of where you want to be, whether it’s in a certain school district, close to work, or near family and friends.
  3. Bedroom and bath requirements. Start with three bedrooms and two baths, typical for a starter home.

By sticking to basics, you’ll find you have plenty of homes to consider. You’ll narrow your selection more quickly if you’re not distracted by showy or unnecessary features, and ultimately, you’ll be more satisfied with your new home.

For more home tips, follow us on Facebook. Looking for a new home in the Kansas City area? Visit us at BHHSKCRealty.com!

Co-borrowers and Mortgages

First-time homebuyers may face challenges when it comes to securing a mortgage loan. They may not have a long enough credit or work history, and they are often paying off student loans, among other reasons. Many turn to co-borrowers to make their dream homes come true.

Co-borrowers can be anyone, including a spouse, who is willing to be co-liable for repaying the mortgage loan. According to The Lenders Network, a co-borrower’s income, assets, and better debt-to-income ratio (DTI) can be equally considered with the main borrower’s, improving the chances of getting loan approval for more money and with a lower interest rate. Lenders will consider the credit scores of both the main borrower and co-borrower, but will use the lower of the two.

A co-borrower is equally liable on the loan documents regarding repayment, but they may not have ownership interest in the home. In this case, the co-borrower is called a co-signer and is not on the title of the property, meaning the co-signer can’t borrow against the home as an asset.

If the home is sold, the co-borrowers split the proceeds, while a co-signer is not entitled to split any profit. Because the co-borrower or co-signer risks their own DTI ratio and potentially their credit score, as well as liability for loan payments should the main borrower default, why would they participate?

It’s a matter of love, trust and the expectation that once the main borrower’s financial situation improves, they’ll refinance the home into their name only.

For more home tips, follow us on Facebook. Looking for a new home in the Kansas City area? Visit us at BHHSKCRealty.com!

Why You Only Need One Real Estate Professional

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When you’re searching for a home, it makes sense to put all available resources to work for you. That’s why it’s tempting for some buyers to communicate with more than one real estate professional. But, using multiple professionals in the same area could work against you.

Real estate professionals are state-licensed and most choose to specialize in their own cities or their own neighborhoods. They have access to the same multiple listing data as others. If you’re working with multiple agents, sooner or later they’ll find out, and you may miss being the first to see new listings coming onto the market. They’ll show those to dedicated buyers before notifying you.

Your Berkshire Hathaway Homeservices agent has all the information, contacts, and experience you need to find a home, plus the backing of one of the most respected names in the real estate industry. He or she will network with other professionals to help you meet your goals. With such a strong support system, you’ll be quickly apprised of relevant homes for sale as well as those coming on the market.

The best course is to be honest about your goals and preferences. If you’re interested in more than one community, say so and ask for a referral to a specialist in the other area. Both professionals will help you with enthusiasm.

What you don’t want to do is keep your intentions secret. No professional can meet your expectations if they don’t know what you really want.

For more home tips, follow us on Facebook. Looking for a new home in the Kansas City area? Visit us at BHHSKCRealty.com!