1. Do not make any major purchases that create debt of any kind. None. This includes cars, jewelry, vacations, weddings, electronic toys, appliances, rocket ships, etc.
2. Don’t shuffle money between accounts or between banks. When your loan package goes in for approval, the lender is going to examine your source of funds and ask for financial statements for the past few months. It’s very likely that the mortgage underwriter will ask for a paper trail of all the withdrawals and deposits which will include deposit receipts, cancelled checks, proof of transactions, etc. This is additional homework that can be quite time-consuming.
3. Change jobs. (If you are a salaried employee with no commissions or bonuses, then this does NOT apply to you. Or if you are an hourly employee and work without overtime, this shouldn’t affect you either.) Here’s why you don’t want to change jobs if you fall into one of these categories:
Bonuses: Much like commissions, bonuses are averaged from the past two years when calculating your income. If you are switching jobs, they mortgage lender has no basis in which to forecast your future bonus with a new employer.
Commissions: mortgage lenders calculate your income by averaging your commission over the past two years. If you change jobs, it eliminates this history from that employer and the underwriter cannot say with confidence that your commissions will be equivalent.
Part-time and over-time: Much like with bonuses and commissions, the loan officer can average your earnings based on your job history if you are a part-time employee, or if you utilize a lot of over-time pay.
Self-employment: Because many self-employed individuals tend to expense many of their business costs, they are able to minimize their tax obligation to the IRS by showing very little income. While that may seem like a benefit, it also reduces their ability to qualify for a home loan. If you are a business owner and decide to change your company structure from say a sole proprietor to a partnership or a LLC for example, buy the house first.
As realtors, we hear this a lot…Maybe from a young couple looking for their first home, thinking it’s just going to be a starter home and then they’ll sell it and move up to a bigger, better house once they begin their a family. It’s a common situation and if it’s your reality, or maybe you’re in transition and just looking for a house to get you by for a bit, we hear your plight and we have some suggestions for you as you are shopping for that temporary “home sweet home.” When resale is of near future concern, keep these tips in mind:
Pick the smallest house in the neighborhood – The old adage sticks that you want to purchase the littler house in the neighborhood. The larger homes in your area will help pull the value of your home up – instead of vice-versa.
Beware the over-manicured lawn – Sure, most real estate value is on the building, but the lot is important too. Resale value will be influenced by the looks and the shape of the property. No one wants an awkwardly shaped lot, or if there are any steep inclines that make mowing difficult, or an itty bitty postage stamp lot, etc. Older homes tend to have larger lots which are most often sought-after. And keep in mind what’s actually on the lot. One that is completely consumed by a backyard oasis may have a somewhat limited “pool” of buyers (ha, ha) once you go to sell it. Or one that is uber-landscaped may not only scare away you as a buyer (think of the upkeep!), but will likely not bring dollar-per-dollar investment back to the owner of the property. Curb your inner gardener from going overboard with the rose bush maze you sketched out for the front walkway.
Dive on in – In the past, pools added value to homes but not so much anymore. Safety issues with young families and the sheer maintenance of them have made pools a polarizing feature for home buyers these days. If you like to have a pool, then buy a home with one for your own enjoyment and don’t be concerned about future value. Keep in mind though that, much like over-landscaping, installing a pool rarely brings you a dollar-per-dollar return on your investment.
Room with a view – Let’s face it. Homes with a great view can command a higher price than those without. But don’t put all your eggs in that basket. Buyers may have a different idea of what a pleasant view is, or you never know… that view could change. You may have to adjust your price to average closer to other home prices in your neighborhood when you do sell. So, if you are buying a home with a view, pay as little a premium for it as possible.
Got to have the essentials - When it comes to resale, three and four bedroom houses will be the most marketable, especially if they have a minimum of two and a half bathrooms.
Stashing your stuff – Master bedrooms should have walk-in closets, and the bathrooms should have room for towels and linens. The rest of the house should have respectable closet space. Garages should have at least room for two cars, and the laundry area should be in an inconspicuous area.
Kiss the cook – The heartbeat of the home is in the kitchen so make it a big one and outfitted with modern appliances. Naturally the kitchen should have arteries to the family room and the doors to the garage and backyard too. No one wants to be hauling groceries or barbeque meat across the house…
Chestnuts roasting… - In our neck of the woods, a fireplace is a definite plus and it should be in the family room. A living room fireplace is nice too but doesn’t add much in the way of value since reality is that it is rarely used.
These are all good things to keep in mind but to sum it up, whether you are looking for your forever home or your home for right now, find a house that feels like home, and that you envision yourself in. If all the houses were perfect for everyone, then they would all look the same and that wouldn’t be any fun at all. If you fell in love with a particular house, chances are good that someone else will as well.
Visit our website at www.TheParrettGroup.com to see our great homes for sale.
