6 Don't After You Apply for a Mortgage

I learned a long time ago that "common sense is NOT common practice“. This is especially the case during the emotional time that surrounds buying a home, when people tend to do some non-commonsensical things. Here are a few that I’ve seen over the years that have delayed (and even killed) deals:


1. Don't deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Small, explainable deposits are fine, but getting $10,000 from your parents as a gift in cash is not. Discuss the proper way to track your assets with your loan officer.

2. Don't make any large purchases like a new car or a bunch of new furniture. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher ratios…higher ratios make for riskier loans…and sometimes qualified borrowers are no longer qualifying.

3. Don't co-sign other loans for anyone. When you co-sign, you are obligated. With that obligation comes higher ratios, as well. Even if you swear you won't be making the payments, the lender will be counting the payment against you.

4. Don’t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is a consistency of accounts. Frankly, before you even transfer money between accounts, talk to your loan officer.5.Don't apply for new credit. It doesn't matter whether it's a new credit card or a new car, when you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.

6. Don't close any credit accounts. Many clients have erroneously believed that having less available credit makes them less risky and more approvable. Wrong. A major component of your score is your length and depth credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your score.

Yes.....we've had it happen. A first time home buyer was so excited about her first time purchase that she went out and bought all new appliances for the kitchen on her credit card BEFORE the closing took place. When the lender pulled her credit again before closing and saw that there was now another $3000 in debt she no longer qualified. Don't let this be you.

The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. Any blip in income, assets, or credit should be reviewed and executed in a way to keep your application in the most positive light.




 
KCM Blog - Steve Harney

As you can see, Georgia is #4 in the nation for short sales!

If you're a buyer, there's a lot you need to know and understand before placing an offer on a short sale. If you're a seller, there's also a big process for completing a succesful short sale transaction. If you're in the market to buy or sell real estate, you'll encounter the term short sale in some capacity. We're happy to talk with you about it. Don't hesitate to call, email, or text for more info.



Graphic courtesy of KCM Blog - Steve Harney

Where Did All of the Houses Go!?!?

What happened to all of the houses for sale?! Just a few months ago we had more properties than we could possibly sell. Now, we're scrambling to find good inventory for our buyers who are anxious to find a home and tired of looking at the leftovers - you know, the stale inventory... the properties that are still available for a reason (overpriced, horrible condition, etc).

When a good property hits the market it seems as if it instantly goes to a multiple offer situation/"highest and best." In the past two months, I've had one buyer who has participated in three multiple offer situations, offered much more than the asking price ($15k, $30k, etc) and still wasn't the best offer. The competition is crazy out there right now and can be very discouraging for buyers.

Realtor.com just released statistics that show that the Atlanta market is #8 in the country in terms of metro markets that have experienced the greatest drop in "for sale" inventory and boy does it show! Here's the complete list:

1. Oakland, CA
2. Bakersfield, CA
3. Phoenix-Mesa, AZ
4. Fresno, CA
5. Miami, FL
6. Fort Lauderdale, FL
7. Seattle-Bellevue-Everett, WA
8. Atlanta, GA (-39.62% decline)
9. Orlando, FL
10. Portland-Vancouver, OR-WA

So what does this mean? Hopefully it's a positive sign for an improving market. If you're thinking of selling your property, now might just be the time. Buyer's have less to choose from so if you get your house in tip-top shape and price it aggressively, chances are, you're going to be successful in selling it! If you're a buyer, it means that you better be aggressive with your home search. If a house hits the market and you think you might be interested, don't wait a week to go check it out. By the time you go view it, it will likely be under contract! If you fall in love with a house that just hit the market, there's probably 4 other buyers who love it just as much. If you'd be heartbroken if you missed it, then it's probably not the time to lowball!

If you're looking to buy or sell in this crazy market, please call or email us! We would love help you!

How much money do I need to buy a house?

If you're thinking of buying a house, you may have taken the first step which is to get prequalified for a mortgage; however, there are some other factors to consider ... like how much money/cash you may need upfront. From contract to close, there are a few numbers you should know about and be prepared for:

• Down payment: ...the obvious! Depending on what type of loan you're pursuing, you may need a down payment anywhere from zero (yes, you read that right - think USDA loan), $100 (FHA loan on a HUD property), 3.5% of the purchase price (FHA loan) to 5-20+% of the purchase price for conventional products. This is due at closing but typically must be available in your account a few days/weeks prior to closing so that the lender can confirm that you have the cash needed to close. The good news is that some loan products (FHA) allow gift funds but check with your lender for the specific requirements on this.
• Earnest Money:  In the local market, earnest money is typically anywhere from $500-$1000 for majority of properties but can be higher depending on the purchase price. Typically the rule of thumb is "the higher the purchase price, the higher the earnest money". This is totally negotiable and can vary greatly. What is earnest money? Earnest money is a deposit to show that you're serious about buying the house (if there was no such thing as earnest money and buyers didn't have any monetary interest, you can imagine that contracts would be broken all the time!). The good news is that earnest money is your money and it comes back to you at closing in the form of a credit towards your closing costs, down payment, or credit to the sales price so long as you follow the terms of the contract and close as scheduled. If you default or terminate after due diligence/inspection periods/contingency periods, etc, then you risk losing your earnest money. In some unique situations, it can be negotiated that earnest money is non-refundable or is paid to the seller - be sure you understand your contract! Prepare to write an earnest money check when you write the offer, although sometimes it can be negotiated to be paid upon a binding agreement or within so many days of the binding agreement date.
• Closing Costs & Prepaids: If you're obtaining financing for the purchase of a property, you will incur several fees/costs/etc. that are collectively known as "closing costs" and "prepaids." These fees include things such as the lender's origination fee, attorney's fees, credit report fees, initial deposits into escrow to cover hazard insurance and taxes, etc. In the current market, it is typical that the seller contribute towards buyer's closing costs; however, this contribution doesn't always cover 100% of the costs. It just depends on how the deal is negotiated. When shopping for a mortgage, be sure that the lender provides an estimate of how much cash is needed to close. This should include your down payment, closing costs, and prepaids. Some lenders try to sneak by by just telling the client about the down payment amount and never mentioning the closing costs amount upfront. Be sure you know how much you will need to close the deal so that you can prepare ahead of time!
• Home Inspection: While a home inspection is optional, it is HIGHLY (notice the capitalization, bold, italics, underline ... you get how we feel about this, right?) recommended. Home inspections in this area typically run anywhere from $250-450 depending on the size of the house and what all the inspection includes. Some inspectors can also do termite, radon, mold inspections, etc. Either way, you'll want to budget for this ahead of time. You'll need to pay for the home inspection at the time of the service - just depends on when you have your home inspection, but be sure to do it during your inspection/due diligence period.
• Appraisal: Majority of lenders these days collect this fee upon contracting on a property while others may collect it at closing as part of the closing costs. Go ahead and budget for this as an upfront fee. Typically it's around $400-500 in this area.

These are the main items that you will need money for; however, there are always optional items like home warranties. Many first time home buyers have limitied cash reserves and don't know exactly what to expect when it comes to purchasing a home. You may be prequalified to purchase a home, but be sure that you have the funds to move forward if you're considering making an offer!

...now, to cover our rear ends, please know that the information above is specific to our location (perhaps in many areas, earnest money needed is much more!). Every situation is different and should be discussed with the Realtor or lender that you are working with. Some of this information is subject to change ... like the $100 down payment that HUD offers buyers pursuing an FHA loan - this is a current promotion that could end at anytime. Questions? please call or email us!

Real Estate in Numbers: Butts, Clayton, Fayette, & Henry Counties

Here's the scoop on real estate for the first quarter of 2012 in the South Metro Atlanta Area (Butts, Clayton, Fayette, and Henry Counties). Reviewing the numbers is always interesting.

How to Increase Curb Appeal!

The weather was absolutely beautiful here in Atlanta this weekend!! It was so beautiful that it made me want to do some "spring cleaning" projects outside so that I could soak up some sunshine! While my husband prepped our yard for spring landscaping, I took on a project that I never completed last summer .... I gave our front door and trim a facelift. It was in need of a good scrubbing and a fresh coat of paint! We always recommend that anyone looking to sell their home take on these simple projects to increase curb appeal before putting the home on the market. I'm not looking to sell my home anytime soon, but as I sang along with my iPod (my poor neighbors!!) and worked away, I realized what a suprisingly easy task this was and it made such a difference! Check out the following examples of before and after photos to see what a few hours can do in terms of increasing curb appeal which is oh, so important!!!!

Inspired? I hope so! Sprucing up the entry way can be a very easy and low cost job. Remember that buyers' form opinions about properties before they ever go inside. We've pulled up to some houses in which the buyers didn't even want to go inside of based on what they saw on the outside. Give buyers something to get excited about!!