Wednesday, May 15, 2019

Taking The Emotion Out Of Buying A Home Is Good Business Sense


There is a good deal of emotion wrapped up in buying a home. Determining where we will spend the most intimate as well as memorable moments of our lives is no small decision. And it is no doubt one of the biggest investments most of us will ever make.
Removing emotion is no easy task. But if we make an attempt to screw our heads on as investors and looked at buying home the way we might buy a stock or mutual fund, education is the key — asking what considerations are necessary in order to have a knowledge base before acting.

If you’ve been a renter, you know there are advantages to it as well as freedom. But what about the future, and permanency? The idea of buying goes beyond renting, since you are pouring your money into a single bucket all your own — not someone else’s. Even before that final mortgage payment is made, you will have been living in your investment as physical shelter, which is why buying a home is still considered one of the safest investments around. It’s not just a piece of paper, an account number or a line on a graph.
Look at this as a business proposition first and foremost by scrutinizing the proximity and access to basic services regarding health, supply, security, and transport. That house way up on a hill may make your heart flutter, but if minimum requirements such as electricity and gas systems, lighting, waste collection, and sewer services are a concern, your little slice of heaven can soon turn into a nightmare. It’s also a good idea to inquire about infrastructural projects in the area that have the potential to increase or decrease the value of the property. Can that golf course eventually get sold to developers for more housing? Will those abandoned railroad tracks get used for future transit? Either you or your Realtor can visit the local city planning offices and pose these questions or just take a look at plans for the area.

What about your personal needs? Will local regulations or the governing entity of the neighborhood allow you to build on to the existing structure or renovate the exterior? Speaking of exteriors, building materials are not meant to last forever. Whether the home you are considering is stucco or siding, think about painting and repairs down the road. If most of the interior is carpeted, what kinds of expenses would you be subject to when you replace it all with hardwood?

It’s always recommended that you accompany the individual doing the physical inspection of the house you are considering. Try out the water pressure, check the electric meter and boards, and hold your hand up to the AC vents. If a breaker trips in the middle of the night in a snowstorm, where will you have to traipse to re-set it? This is also when you can educate yourself as to the structural system of the house, including how to access some areas you don’t need on a daily basis. Your home becomes a living, breathing entity when you think of it as a vessel that needs care, maintenance, and an occasional face-lift.

Even though a home can be staged for sale beautifully with furniture and accessories, it’s important to visually remove the temporary fluff and consider whether your own furniture will fit if you don’t intend to buy all new items. A few overstuffed chairs facing a fireplace do not equal a family of four facing a big screen TV over that same fireplace. How much room would be left over for an adequately sized sofa or sectional? And when looking at bedroom space, has the stager used mostly twin beds in secondary bedrooms? Can you turn around in the laundry room when someone opens the door to the garage?

While a home’s listing should give you most of the financial information you’ll need, it may not tell it all. The costs of things like homeowners association fees (if any) should be a concern — how well is the association managed, are there any liens or lawsuits pending against it, how often has the fee gone up and what does it cover? Does the neighborhood have supplemental taxes levied against it for expenses normal property taxes don’t cover, such as lighting and landscape corridors? Some of these extra taxes last up to 25 years from the time a home is built, and not all are write-offs on taxes.
Of course, your knowledge of the market surrounding the house you are considering is key as well. What homes have sold recently, what was included in the price and how long did they take to sell? How does this house compare to any of them, and why might it be worth more or less? It may seem like overreach, but ringing a few doorbells in the surrounding neighborhood and asking a few questions is not a bad idea when you are considering such a large investment.
And lastly, know your rights as a consumer buying real estate, whether you have professional representation or not. Read up about them online or buy a few books so that you are at least armed with a slew of questions. You’ll be glad you did a little prep work, took some of the emotion out of the equation, and looked at this as an important personal business investment.

Thank you for visiting my blog, I encourage you to leave a comment or questions. Let me know if my blog has helped you. I would love to hear your thoughts and any ideas for future posts.

Roxy Redenbaugh

ACMC Loan Consultant
Mortgage Coach
Branch Manager
NMLS #269926

Source: TBWS

Wednesday, May 8, 2019

How Gifted Funds Can Be Your Down Payment

Down payments are a bugger for first-time homebuyers. It seems that the initial financial stab at home ownership is among the greatest roadblocks of owning a home, especially in high-cost urban housing markets, for which it may take a couple a decade or more to transition from renter to homeowner or to vacate their parents’ basement as they save up.
Family members willing to pitch in financially are a boon to getting into a home sooner than it would happen otherwise. In fact, 25 percent of first-time homebuyers used cash they received as a gift for a down payment, according to a 2017 by the National Association of Realtors. But before you make a beeline to the bank with a check from Mom and Dad, it’s important to observe the proper guidelines of using gift money as part of your down payment.
Your mortgage application will be scrutinized up one side and down the other, noting every detail of your finances, including credit scores as well as the history and consistency of your income and employment. Why? Because lenders like to hedge their bets, making sure you appear capable of paying the loan back. That scrutiny includes considering where your down payment came from, putting it under a microscope before extending your loan approval.
The good news is the help you get from family members is not limited to parents only. Anyone in your family (including stepparents grandparents, aunts and uncles) may give you the money for a down payment. How about close friends? Lenders are less inclined to allow you to use financial gifts from non-relatives unless it’s a fiancĂ©. All those funds you raised as wedding gifts in lieu of china and crystal? Chances are good that you won’t be able to use it toward a house unless it’s to buy some furniture after you close escrow.
Others who can’t help out are those who have any financial interest in the sale of the home, such as the seller, the agent or the broker, with underwriters going through your down payment sources to make sure there is additional documentation guaranteeing transaction-related parties aren’t involved in the gift. Your Realtor, the developer or other interested parties also can’t funnel money to a family member who then makes it a gift.
Speaking of gifts, remember the definition of that word. What you receive should not be considered a loan or some kind of barter deal. If the money is actually a loan and you play it off as a gift, you’ll be committing loan fraud. If, however, you’re taking out a conventional government-backed mortgage (through Freddie Mac or Fannie Mae), the entire down payment (in many cases) may be a gift if you put down 20 percent or more. In this case, you also have the added benefit of not having to pay private mortgage insurance, which indemnifies lenders against default if there is less of your skin in the game. Putting down less than that must be primarily your own (traceable) funds. How much is allowed to come from a gift depends on the loan type.
Using gift funds and applying them toward your loan should be done as soon into the loan process as possible, giving the lender plenty of time for verifications of the entire paper trail of your down payment. How extensive that trail needs to be depends on the lender, but it all starts with a gift letter. This document makes it clear to your lender that the money is truly a gift and not a loan, so don’t leave the wording of it up to your mom to think up, with sentimental verbiage about how much she wants to help provide a home for future grandchildren.
Include the full name, address and phone number of the person giving you the money as well as your relationship to that person, the precise dollar amount of the gift, the address of the property you’re buying, the date the money was transferred to you, account information for where the funds were pulled from, a statement from the donor that repayment is not expected, and the donor’s signature. There are plenty of templates for this online that can serve as guides. In addition to the gift letter, your lender will need to see documentation of the gift exchanging hands, typically in the form of bank statements. 
Of course, your donor has to be legit too, demonstrating that he or she actually has the assets to give. Statements should should show the donor’s withdrawal as well as how your deposit and the gift amounts match up. As we said earlier, don’t wait to do all this at the 11th hour, wiring funds just before close of escrow. It should all take place well ahead of loan approval, and your loan officer will advise you on how this all should work to get that happy result.
A final caveat: remember the IRS. Gift money for a home down payment is treated like any other financial gift by them, and there are limits to how much gift money may change hands in a given year without any tax repercussions. As with anything tax related, contact your tax account for tax advice.

Stay in touch or subscribe to my blog so you don’t miss my next post.
Thank you for visiting my blog, I encourage you to leave a comment or questions. Let me know if my blog has helped you. I would love to hear your thoughts and any ideas for future posts.


Roxy Redenbaugh
ACMC Loan Consultant
Mortgage Coach
Branch Manager
NMLS #269926




Saturday, April 27, 2019

Growing Population of Self-Employed Need To Think Ahead Before Buying A Home

There is something life-affirming about a ten-second commute. Walking from your master bedroom to your home office every morning, you don’t have to deal with traffic, standing in line at Starbucks for that cup ‘o joe, or dressing for success. If you have a separate storefront or office, you can arrive and work with pride knowing you have created your own work environment. But there are drawbacks to being self-employed, especially when it comes to qualifying for a mortgage. Why? Because lenders have a tougher time assessing your income.

In a 2018 New York Post article, writer Gregory Bresiger quotes FreshBooks second annual Self-Employment Report. “Those nontraditional workers — who will approach 33 percent of the workforce in coming years — want more control over how and why they work, according to the report. Most won’t return to an organization, it said, adding that the self-employment movement will explode over the next two years.”
Self-employed individuals who plan to buy a home are wise to strategize several years in advance. If you understand how lenders consider mortgage applications and self-employment income, you can take steps to make yourself more appealing. Let’s look at some general guidelines for making you look attractive to that entity who would make it possible for you to become a homeowner.

Lenders are all about the risk they will be taking on when they look at your mortgage application. They want to make sure they'll be able to get back the money they lend you, so it's important that you show enough income to cover the mortgage payments easily. This isn't that hard when you have a regular job to go to and steady paycheck showing a pattern of healthy income. For a self-employed individual, however, income can fluctuate. One month may find you in the pink, making more investments in your business, and the next might see you struggling to pay your bills.
The MotleyFool’s Kailey Fralick puts it this way: “You may also have to provide a list of your existing debts and assets. Business owners may have to provide profit and loss statements from the last couple of years.”

It’s also important to know that lenders consider your income after deductions, which means you must be extra careful with write-offs, such as phone and internet services, office supplies, business trips, etc. While taking those deductions may help to lower your taxes, it also lowers your usable income in the eyes of mortgage lenders which, in turn, raises your debt-to-income ratio. That ratio is a measure of how much money you have coming in and going out each month. Guidelines for those ratios vary from institution to institution and it’s a great idea to sit down with your CPA or mortgage lender to determine how many deductions might be feasible when you are preparing yourself to qualify for a mortgage.
And don’t forget about that pesky credit score. It’s a measure of how responsible you've been with borrowed money in the past, and it’s of great importance to lenders. They may hesitate to lend to you if you have a number of late payments or they determine that you use credit too often. It's vital to keep your credit score as high as possible if you want to give yourself the best chance of getting approved.

For more information please contact me at 808-457-2455.

Thank you for visiting my blog, I encourage you to leave a comment or questions. Let me know if my blog has helped you. I would love to hear your thoughts and any ideas for future posts.

Roxy Redenbaugh
ACMC Loan Consultant
Mortgage Coach
Branch Manager
NMLS #269926
Source: TheMotleyFool, FreshBooks, TBWS

Monday, April 22, 2019

Getting Kids Off On The Right Credit Score Foot!

There is so much to worry about when you’re a parent. But one thing you may not think much about is your child’s credit score. Like grades at school, that magic number has a lot of influence on their future, reflecting their spending habits and financial accountability. So how soon is too soon to start helping your child build credit?
While one must be at least 18 years old to take on a credit card or loan, you can make your child an authorized user on your credit card. Does the thought make you shudder? Fear not — it’s not as scary as you’d think. You don’t even have to tell them you’re doing it! All it means is that while you use your credit card responsibly, your child will benefit from what you have already established for them without him or her being responsible for any of the charges. It won’t have the same credit-building power as being the primary user on an account, but it’s a start.
If that idea doesn’t appeal to you, there are other opportunities to help when your child is a little older. For instance, you can co-sign on his or her first credit card, which may be a necessity if your child is a full-time college student at the age of 18. You could also co-sign a car loan or student loan, monitoring their commitment to making timely payments (or the promise of them). Co-signing means your child is the primary borrower, which will help build his or her score. Of course, there are risks if they don’t understand how credit and credit cards work or your child tends not to take things too seriously. You’ll be responsible for paying if your child doesn’t, so be sure you’re comfortable with this possibility before moving forward.
All this means, of course, that means education is key. Evidence suggests that educating kids about money will pay off in higher credit scores later on. A 2014 study by the Federal Reserve showed people in states that had mandated personal financial education in schools have higher average credit scores as adults than people in states without this requirement. Unfortunately, only 17 states require it, according to a 2014 survey by the Council for Economic Education. If you’re in one of them without it, it means you’ll likely have to take the lead in making sure your kids know how to manage money and use credit wisely. Even if your kids learn it in school, however, you are still their best teacher and example of how to handle finances and credit.

Most experts agree it’s wise to explain the basics of earning, saving and spending before your children become teenagers. Preteens are likely to understand the concept of borrowing and repaying debts, so that’s a good age to start explaining the concept of credit. And a serious talk about responsibility is definitely in order here. If words fail you, have one of the many books written about the topic on hand, such as The Complete Guide to Personal Finance: For Teenagers by Tamsen Butler
How can you tell your child is credit-ready? Most parents know their children’s strengths and limitations and have gut feelings about when it’s feasible for them to handle money and credit on their own. It may be when they start driving or when they get their first part-time job, enabling them to pay for something in an emergency. For others, this comes as late as college, when co-signing for a credit product makes more sense.

If your child demonstrates an interest in building credit, seems to grasp the idea of building a budget, and saves and spends money wisely, chances are it’s a good risk to go ahead and help them establish credit. Look for his or her degree of honesty regarding money and a willingness to ask questions about something they don’t understand. Impulse spending (an inability to delay gratification) is a red flag telling you the time is not yet right.
Just because you can do all this doesn’t mean you should. Educate your kids about money first, then consider helping them get on the path to a good score when the time is right. And who knows? With all those healthy financial habits under their belts, they may someday find they can get approved for a loan to buy a home of their own at an earlier age than you ever thought possible.
Thank you for visiting my blog, I encourage you to leave a comment or questions. Let me know if my blog has helped you. I would love to hear your thoughts and any ideas for future posts.

Roxy Redenbaugh
ACMC Loan Consultant


Mortgage Coach

Branch Manager

NMLS #269926

Source: TBWS

Saturday, April 13, 2019

Using Real Estate As A Vehicle For Wealth

For many of us, our most significant investment and largest profits in life are due to having bought a house — something that acts as a de facto bank account, grows in equity and provides shelter all at once. But what if we want to use real estate as a money-making opportunity instead?
Real estate has, of course, made many millionaires. The Wall Street Journal recently reported how more than 80% of borrowers who refinanced in the third quarter chose the “cash out” option, withdrawing $14.6B in equity out of their homes, according to government-sponsored mortgage corporation Freddie Mac. Now, many are finding their homes to be a tappable source of wealth. “Home equity is the big pot of gold,” said Sam Khater, the chief economist at Freddie Mac.
It’s not hard to see why many have successfully made money buying and selling real estate because of the diverse ways to grow wealth with real estate investments. Forbes writer David Greene talks about having become a student of creating wealth through real estate and has compiled a list of some of the traits he sees as common among the most successful investors, whether they’re house flippers, residential home landlords, or large apartment complex owners.
Knowledge is, of course, key. Real estate investors always seem to know more than those around them — what drives markets, how to time market cycles, and which things to watch out for. “They are much more likely to recognize shifting markets before others do and are prepared to take advantage of these opportunities when they present themselves,” says Greene.
“The very best never stop learning, and real estate is no exception,” says Greene. Apart from websites where investors can learn, network, and find solutions to their problems, some also collect books written on how to invest in real estate, reading them over and over again. Greene recommends developing the ability to analyze a property for cash flow as well as recognizing an under-valued property when you see one. Then develop a basic understanding for estimating rehab costs along with the various pieces at play when it comes to owning rental property.
“The more you know about real estate investing, the less fear you’ll have,” he says. “Overcoming fear is one of the best things you can learn to do if you want to carve out a successful career for yourself in real estate.”
Patience is also a virtue. Greene agrees that it may sound simple, but that’s not always the case. “When it comes to real estate investing, there is a lot of pressure on you to move and move fast. The best deals go quick, and allowing projects to run past the agreed upon timeline can be expensive. Investors are constantly facing pressures to do more, do it faster, and do it cheaper.”
He goes on to say how the best investors know when they need to run fast and when they need to stop and wait to see how things develop. “Patience can take several forms when it comes to real estate investing,” he says. “Learning to recognize areas where you’ll need to practice it can save you from a lot of expensive mistakes.”
Understanding market cycles are also of vital importance. “Top investors zig when everyone else zags. They are fearful when others are greedy and greedy when others are fearful. Waiting for the market to slow down, or crash even, can require more intestinal fortitude but it is also a much better time to be picking up assets.”
To study advice Greene offers regarding how to transform a property, how to be efficient, and how to be keenly focused and how to develop important relationships, he encourages you to go to BiggerPockets.com, where you can get tips like this for free. “In a hot market, you don’t just find good deals,” he says. “You make good deals. Top notch investors see ways to add value to properties without spending more money than they have to. For those with the vision to bring it about, there can be big rewards for those who buy the ugly duckling and turn it into the beautiful swan.”
Stay in touch or subscribe to my blog so you don’t miss my next post.
Thank you for visiting my blog, I encourage you to leave a comment or questions. Let me know if my blog has helped you. I would love to hear your thoughts and any ideas for future posts.

Source: Wall Street Journal, Forbes, TBWS

Roxy Redenbaugh

ACMC Loan Consultant
Mortgage Coach
Branch Manager
NMLS #269926



Saturday, March 2, 2019

Tips On Preparing Your Home To Sell



Spring is right around the corner, spring is the start to buying season in many states. If you plan to sell this year you will need to start preparing soon.

It’s important to know how to prepare you home before you list it with a real estate agent. You will want to make sure it is show-ready on the first day you list it. Here are some tips on how to prepare your home to be show-ready.

It will be important for you to know if any repairs are going to be needed, hiring a general home inspector and having a termite inspection will give you some insight on what needs to be done. Most buyers will order their own inspections however, if you already have the reports and have made repairs chances are you won’t scare off any buyers with extensive repairs. They may still want their own independent reports and that is ok, you can still offer them your inspection reports with a list of repairs and anything you may have replaced like a new AC or hot water heater. By doing this pre-inspection you will greatly reduce the chances of a deal falling apart.

Next you can make some minor low-cost repairs and updates to your home. First thing is to declutter your home. Pay close attention to your kitchen and bathrooms, make sure your counters are basically clear of all items, leave a couple decorative items. Clean off the frig of all personal items, like pics, notes etc. Remove bulletin boards and family pictures from your home. You want your buyers to be able to see themselves in your home, not you and your family so depersonalize your home. . Now that you have removed all your clutter, don’t worry we all have clutter. Next paint and color of paint is very important. Some buyers just can’t see past bold colors. If you have bold colors or you haven’t painted in a couple years. A fresh coat of paint will go a long way. Use neutral or lite colors, like tan, off white or shades of gray. :)

Having your carpet, floors and windows/screens professional cleaned is another way to make a great first impression.

If you have an older home updating light fixtures and cabinet hardware. This update will go a long way and help your home stand out.

Staging your home can increase the chances of getting your home sold faster, most top Realtors can refer you to a professional. This works nicely if you have already moved out. But even if you still live in your home, they can help you get your home show-ready. Yes it will cost you some money, however research shows a staged home will often get offers at list price or above.

If you are a pet owner do your best to hide all signs of your pets. Sorry, we all love our fur babies and I know it's not easy but do your best, be aware of pet hair an odor.  Big mistake is to have your pets in a room unkennel or in your back yard. This prevents buyers from having full access to your home. During any showings make sure you kennel your pets and if you have an open house remove pets from the home.
 

One more suggestion for anyone living in the Northwest of any wet climate, check your roof, if you have moss growing on the roof, like so many homes in the NW, get it removed and treated. Moss on a roof can delay closing if the lender or insurance company require removal/treatment before they will fund or insure your home. Take care of this prior to listing. A mossy roof is a deferred maintenance issue and is likely to scare off buyers.



Stay in touch or subscribe to my blog so you don’t miss my next post.

Thank you for visiting my blog, I encourage you to leave a comment or questions. Let me know if my blog has helped you. I would love to hear your thoughts and any ideas for future posts.



Roxy Redenbaugh

ACMC Loan Consultant
Mortgage Coach
Branch Manager
NMLS #269926