You only get one shot, when you are selling a home, at making that first impression and get top dollar for it. When your home has a small living room, bedroom, and bathroom how do you make these spaces bigger and more attractive? Before listing your small home keep in mind that it’s going to be seen as a commodity on the market. You need to take steps to make it stand out from the crowd.
It needs to be spruced up to compete with other homes listed in your neighborhood. That’s when home staging helps! Many sellers believe that staging is the process of simply decluttering the home and getting rid of the extra trash, but there’s more to it.
The purpose of home staging is to make your home feel cozier, comfortable, colorful and inviting so here are some tips to get you started.
Staging The Living Room
Staging the living room of a small home is relatively easy owing to the fact that it is generally bigger than other spaces in a home. Pick a corner in the living room and set something in place that will scream attention such as a piece of art or even a lamp.
Ensure your window coverings are pulled back or better yet made of sheer material to let in more light. Well-lit rooms make spaces look bigger, and you can apply this same formula to other areas of the home.
Get rid of any unwanted furniture such as oversized sofas, especially if they’re blocking walkways, and scale the remaining furniture to fit the area. Home-staging experts recommend that you remove personal photos, and have no more than three small items on the coffee table
Enlarging Your Dining Room And Kitchen
If you have dining room furniture such as cabinets, make sure they are not stuffed to the brim. It is also a good idea to take all the leaves out of the dining table to make it as small as possible, then positioning the chairs accordingly. Don’t stress too much on setting the table, as that’s not what you’re trying to sell.
Remember your kitchen is the heart of the home and must not only be spotless, but updated to reflect modern décor. Consider getting rid of the coffee maker, and replacing it with simple decorations such as cookbooks. If your kitchen is appointed with wooden cabinets, clean them thoroughly with degreasers and apply lemon oil for a brand new look.
Home Staging The Bedrooms And Bathrooms
We all do it, place a TV in the bedrooms that is, and however comforting and convenient it may be, it’s doesn’t exemplify a romantic, relaxing and cozy feel. Furthermore, it takes up valuable space whether on a stand or on the wall. Just like the coffee table, keep minimal items on the bathroom counter and add some decorative candles, fresh flowers or even a colorful soap dish.
Bathroom curtains are a necessity for any bathroom, but it is important that they be pulled back to display the entire tub area. Speaking of bathroom curtains, make sure all other items of daily life are stored away such as clothes on chairs, laundry baskets and ironing boards.
These are just a few simple tips to make your small house seem bigger, and ultimately you just need to put its best face forward to ensure it stands out among the rest.
Purchasing a new home together can be a wonderful way to start a new journey of togetherness for newlyweds. This new home will be an abode in which to share beautiful memories and happiness.
Buying a new home involves a huge investment; you need to be quite cautious at every step of buying a new home. There are many lenders seeking newlywed mortgage customers; finance companies understand that this is the time to sell home loans.
Buying A Home Is Better Than Renting
The most important aspect for most newly wedded couples is to stay together happily; it hardly matters whether it’s a new home or a renting one. But it is that special point at which a new family is defined and the market would love to hear from you just as you wed.
Home buying is expensive but remember you will be gaining personal and financial security that a rented home can never provide completely. Moreover, you can enjoy more living space than the limited portion of a rented house. So if you can arrange suitable terms, using a newlywed mortgage to purchase a new home is a golden opportunity.
Challenges Involving Newlyweds Mortgage Finance
Prior to buying a new home, you work out your budgets and estimate your monthly expenses, one misstep can snowball into foreclosure or arguments and domestic misery and heartbreak.
In order to purchase a home, the newly married couple faces the challenge of finding a down payment. There are programs such as FHA that can help newlyweds to buy that first home, when the financial resources aren’t available for a conventional loan.
They also faces challenges due to their credit histories. Factors such as these mean that It’s quite possible to have difficulties in arranging a large financial commitment immediately after their wedding
Tips and Advices for Newly Married Home Buyers
The process of finding a home and closing it is difficult enough without the additional stresses of qualifying for a loan and dealing with a wedding. The first step in buying your first home is always to get pre-qualified by a lender. This is something so important to home buying; sellers and their brokers are not going to take you seriously until you do it.
Hopefully, at some point before the decision to buy a home and getting married it is always wise to know what you are getting into. You should know where your partner stands on credit and the value they place on home ownership before you apply for a newlywed mortgage.
If either partner in the marriage is bringing assets such as a previous home to the partnership it can be a great source of a down payment or security. In these turbulent times, if the relationship is particularly unbalanced financially it might be smart for the wealthier partner to arrange a prenuptial agreement.
If conventional loans are like square pegs for square holes, FHA loans have government backing that square’s the circle and helps put the round peg in that same square hole. There is a cost to this, so logically you don’t want to pay any more than you have to. FHA and similar government backed home loans are really only for people who require the extra help.
There is a best practice in borrowing money for your home as much as for anything else. Regardless of the options upfront you should always select the one that costs you the least in the long run and gives you the best terms. If money were no object there would be no need for mortgage lending of any kind.
Conventional Mortgages Leverage Equity
The cost of purchasing a home is a significant expenditure for even the most affluent. The tax code and simple economics make for trade-offs that depend on buyer needs and ability to pay. The risk in real estate is two-fold, first that you will be unable to pay and fall victim to foreclosure.
The second and recently a more common one is that the value of your home could go down instead of up. This was almost unheard of prior to 2008 but in the last few years it has caused a terrifying ride for homeowners. Many who refinanced or bought based on inflated appraisals then watched the value of their homes drop by even half and more, almost overnight.
Conventional mortgages are the optimum choice and will give the best terms to the buyer because you essentially pay cash to cover the risk. Your down payment of twenty to twenty five percent will give the kind of buffer of equity that assures lenders of loan repayment, one way or another. In economic terms this is the best practice for both residential and commercial real estate investment.
FHA Mortgages Make More Home Loans Happen
Loans sponsored by the FHA and other government institutions provide opportunity to those who cannot qualify for conventional financing. This might be because of a poor credit history or lack of cash for the down payment. The FHA has helped individuals as well as the nation to achieve greater stability and prosperity for the last eighty years.
There is a price for this support; the added risk of enabling homeownership for those in marginal circumstances has to be protected. That is the role of mortgage insurance, which FHA borrowers must pay to insure the balance of the loan as long as it is eighty percent of the principal or more.
Optimum Versus Necessary Borrowing
As a rule in life you don’t want to spend any more on purchases than you must. So, the time that you need a government backed home is when you can’t get a conventional loan on better terms.
If you require a loan that has a small down payment or a down payment that’s a gift from friends or family, then your only option might be an FHA mortgage. For everyone else, a conventional mortgage will work out better almost every time.
Avoiding foreclosure on your home, after a huge investment of your money and time, is the number one priority of the new homeowner. But you can’t have what you want just by dreaming, you need to continue to budget your spending according to what you can afford. You will need to carefully judge the affordability for any large purchase you make and carefully watch your annual income and your ability to make monthly payments.
Buying a new home can be a dream or a nightmare. Failure in paying regular monthly payments can lead to foreclosure of your home, which can be extremely stressful and upsetting. So avoiding foreclosure is something you need to have in the back of your mind when deciding how much home you can afford.
What is foreclosure?
In general terms, foreclosure is definitely a legal process in the eyes of law. The lender takes physical possession of the home against which the delinquent loan is secured and selling it to recover the original investment.
Methods for Avoiding Foreclosure
Having full knowledge of foreclosure, you must deliberately as well as desperately look after ways to get rid of such a dreadful phenomenon. Obama Administration has attempted to mitigate the impact of foreclosures by implementing programs for avoiding foreclosure.
These are structured in ways that provide assistance to the desperate homeowners who are at the verge of foreclosure or those persons who are struggling to keep head above water and make their monthly mortgage payments.
These programs are being provided by the Treasury Department of the US and HUD.
The general principle behind these programs is to help through forbearance and payment reduction. They will require that you have some sort of income and show that you are willing to reduce your spending and create a realistic budget.
Programs to Help You Side Step Foreclosure
Are you really doing everything that you can for avoiding foreclosure? If you are haunted by the threat of foreclosure, the best course of action is to talk to your lender about foreclosure prevention method steps you can take. At the end of the day, lenders are seeking an investment; they get the best results by working with struggling borrowers and taking a long-term view. In return you will need to find a way to cut your costs and increase your income, which is easier said than done when you’ve been stretched for a long time.
If you are concerned about your finances and avoiding foreclosure you are not alone. The past decade has seen a roller-coaster ride of over exuberance and terror. Many people across the United States borrowed against the hope that the value of their homes would always continue to increase. Encouraged by lenders, they over borrowed and so now the market is still facing foreclosures for years to come. This is depressing but the up side, if there is one, is that it means that lenders as well as borrowers are extra keen on avoiding foreclosure.
It sounds a little strange doesn’t it that companies would come up with the name “balloon” to describe a mortgage. However, it makes more sense when you understand what a balloon mortgage is. It allows you to borrow a larger amount, paying only on a percentage of what is borrowed, and then making one “balloon” payment at the end of the term.
There are several risks to using this type of loan because you do need to make sure that upon the date the final balloon payment is due, there are sufficient funds available to do that. Given over a shorter period of time, the balloon mortgage is a quick way of releasing optimal funds. So, in circumstances where money needs to be released on an investment, which can pay off short term, this is ideal.
When It Makes Sense
If you were to invest in a development property and needed more cash in your hand to develop the property, this system of loan does that. You borrow a larger amount and pay back smaller installments.
These easier terms will give you valuable cash, to develop or refurbish the property. It makes sense for property development if there is a certainty that it can be developed and sold on or remortgaged when the balloon payment is due.
Astute property investors can use this system of mortgage to free up cash flow but there are risks.
The Risks Of A Balloon Mortgage
If the property investment turned stale and the property could not be sold at the anticipated profit, there may not be sufficient money in the pot to pay off the balloon payment. Additional financing would be needed to pay this, although no one can anticipate that far in advance how much the lending rate would be. This may be unacceptable and make the balloon mortgage more costly than anticipated.
Is It Risky For The Lender?
It certainly is a risk that lenders have to take into account, although financial institutions find themselves in a win-win situation by encouraging a balloon mortgage. Short term, they are putting money into a state of flux, or borrowed without payment being made short term for the balloon payment.
For example, if the mortgage is for $700,000 and the balloon payment is $300,000, then the bank only get payment on a monthly basis for $400,000. How can this be advantageous? It’s advantageous for the bank because they are betting on a certainty.
The mortgage rate will be set as will the balloon payment and will cost the consumer more than the amount borrowed. If the consumer then has to take out further finance to pay the balloon, the bank gain even more than originally anticipated.
So Is A Balloon Mortgage Worthwhile?
Yes, a balloon mortgage is worthwhile if you know that finance will be readily available on the balloon payment date. That’s where strategy comes into the picture. However, if there is any doubt, then another form of mortgage may be a better option.
When you decide to go into the market to buy a home you may have a slight shock at the costs that it takes to get you there. All too often buyers find that the funds that they thought would cover the down payment are rapidly depleted by the cost of getting to the purchase with nothing left for the down payment.
This is an issue as old as homeownership itself and there have been many creative ways devised to come up with that crucial lump of cash that gets you into the front door of your purchase.
Down Payment Funding Sources
- Borrow it from your retirement plan
- Savings set aside specifically for down payment funding
- Pay off other higher interest rate debt
- A gift from your family
- Accept a higher interest home loan for negative points Sell other investments
- Get a government backed low down payment loan
The ways to find down payment funding sources are based as diverse as the imagination will allow. However, it comes down to three areas generally: Help yourself with hard work and thrift, get help from people, or work out terms creatively.
Real Estate Thrift
If you have a 401K or an IRA you may be able to borrow funding from it to make the down payment. Any time you have built up a history of saving you will be much better placed to make the big investment.
If you do not have these funds available, there is no time like the present to start. Earn some extra cash and pay off your credit card debts or start saving up to build your down payment funding.
Gifts And Legacies
Your closest family is the most likely source of gifts as funding. Your parents may consider it for a tax break or just because they want you to establish a new branch of the family.
Talk to your bank officer or other loan professional, they make a living finding ways to make new business happen. Your home loan might even fund your cost or down payment by having no point or negative points that give cash at closing. Another alternative from lenders is to take out a smaller second loan that pays part of the down payment.
The final institution is the government, through programs such as FHA and the Veterans administration. These types of loans, for those who qualify can be low cost and low down payment, The VA even allows for terms with no down payment.
Will Cashing In Retirement Savings Prove Smart Long Term?
If you want to get the optimal home loan of 80% LTV, you need to come up with some cash! Retirement savings is a very tempting source of such funds because buying your own home is such a great investment. However, you may not feel so happy come retirement time. Instead of taking the cash, you might consider borrowing a second loan with your 401K as collateral.
If you are considering the purchase of a home you may either be feeling good about your savings habits or you may not. Although it might not be prudent to cash in your retirement fund, it could be one of the potential sources by which to extend your collateral and get that down payment funding that you need.
How much home can I afford? That has got to be the question in every potential homebuyer’s mind. Regardless of your savings, credit history or monthly budget, when it comes to home loan financing, it can be tricky to guess at home much home you can afford.
Home Loan Financing Gets You Into The Market
The first place to look any time you are intending to buy a home is to the market for home loan financing. This is an important step because getting pre-qualified for a home loan will let you know where you stand and also show realtors that you are serious about finding a home to buy.
Having your bank or finance company look at your finances and decide where you stand objectively is quite simple. The fact is, they are as curious as you are! However, they will not be looking at any real estate to establish this number. They will be interested in your numbers much more, specifically your debt to income (DTI) ratios.
The Debt To Income Approach Is All About You
There are two ways to calculate both; consider them different perspectives, if you will. The front-end ratio measures your total pre-tax income against your total home-related payments of loan, insurance, tax and any homeowner’s association fees.
The back-end ratio measures your home-related payments as above plus all other significant financial obligations. The front-end ratio should ideally be around a quarter of your income and the back-end ratio should be around 36% or less.
There may be some circumstances that permit you to have higher DTI ratios but these numbers will give you an indication of what will be considered.
Work Out Your Own Budget
Sit down and work out how much you spend each month and don’t forget to add in a twelfth of your annual expenses also. If your calculations show financial obligations approaching half of your pre-tax income you are going to need to either pay off some debts or set your sights lower.
The upper limit that banks are known to use, as a hard cutoff, is 45% DTI.
Once you know your payment abilities only then can you consider how much home that will buy. This is determined by the terms of your mortgage. You can get a rough estimate from Internet loan calculators on sites such as Zillow.com but get pre-qualified with your bank for an official estimate.
There will be some variations that change because of your particular situation and because of the economy and interest rates. If you have savings that you can invest at closing then it will alter the home you might be able to purchase. Alternatively you might want to use your cash to clear out some personal debt, as that could potential be just as effective.
When it comes to home loan financing every borrower’s situation is unique. And you are going to be under the microscope with any lender that considers your application for a mortgage. Knowing your DTI ratios and your personal monthly budget before you start house hunting. First step to figure out what you can afford and get pre-approved before you hang your hopes on one particular house or condominium.
Reasons To Consider Mortgage Refinancing
Refinancing in mortgage lending is when a homeowner, who has existing financing on their home returns to the market and replaces the existing mortgage, hopefully on better rates and terms than the original.
There are many good reasons to consider refinancing your home but it might require a careful examination of your specific circumstances to determine whether it is justified. Any time that you apply for financing you have to go through the entire application process; refinancing is no exception.
The Traditional Mortgage Refinance
For homeowners that want to reduce their outstanding balance, term or payments, bringing cash-in at closing can create a real advantage. Homeowners, for whom it is an option to bring cash to closing, can use mortgage refinancing as a great way to take advantage of the situation.
For example, on a conforming loan, by contributing cash at closing a homeowner could reduce the balance to below 80% LTV, enhancing the savings by eliminating the need for private mortgage insurance.
In some circumstances it might be desirable to receive cash-out at closing. This type of cash-in-hand at closing increases the balance of the loan although the interest rate might be lower or the term may be shorter. The rule is that a cash-out refinance is one that gives you more than $2,000 at closing.
Finally, the rate-and-term refinance is just an adjustment of rate or term or both. There need not be any additional cash either way at closing, although there will be fees that will likely be added to the balance of the loan.
Applying For Mortgage Refinance
There are three things that lenders will consider when you apply for mortgage refinancing. In the same process as when you are seeking finance to purchase a home, your application will be evaluated for your credit score and payment history, cash and assets that you own, and your employment history and income.
In addition to the paperwork the home will require an appraisal to accurately determine the current market value. As long as the property and the borrower are acceptable under current mortgage guidelines, the new loan will replace and pay off the existing loan.
Special Streamline Refinancing Programs
In addition to the traditional mortgage refinance available on the home loan market there are several simplified or streamlined refinancing programs. Homeowners with existing government-backed loans have options to refinance where the guidelines are less stringent. Programs such as the Home Affordable Refinance Program (HARP) provide streamlined refinancing for existing loans held by Fannie Mae or Freddie Mac loans. The Veterans Administration Interest Rate Reduction Refinancing Loan (IRRRL) provides improved terms for borrowers with VA loans.
The process of mortgage refinance is repeatable as often as the homeowner chooses. However, the costs associated with it mean that it is best done sparingly and at strategic times, such as when home values have increased significantly or when the homeowner has had a significant windfall that improves the payments or term of the loan.
When your agent does a market analysis or a certified appraiser provides an appraisal for your home, the most important indicator of the local market and the market value of your home, comes from what other similar and comparable homes in the market have previously fetched on the market.
Comparable Sales Roles In Appraisal
Looking at the real estate listings for a neighborhood can be deceptive because the asking price is not the same as the sale price. Usually there is some negotiation that goes on to set the actual sales price. You need to have some more information. There are important factors in correctly pricing real estate. Prices change with time and they can vary significantly by location. They are also determined by the size and other characteristics of the property.
The pricing mechanism of residential real estate in most regions of the United States is simply an open market value that is determined by supply and demand in the marketplace. There are limits because real estate has some restricting factors.
First it is not very liquid; a perfect free market has no delays or resistance in the exchange process. The items for sale should be commoditized or all uniform. Also in a perfect market the cost of sales and exchange should not be prohibitively high.
As anyone who has had anything to do with buying a home knows, this is definitely not the case with real estate sales. There are delays and obstacles in the process that make it expensive and slow. No two buildings or locations are exactly alike. Finance fees, broker fees, stamp duties and state sales taxes can add much expense.
Putting The Open In Open Market
In spite of all of this the real estate market has some things going for it. The most important is freedom of information; because real estate transactions are a matter of public record information is widely available about sales.
The number of sales in a region helps to provide comparable sales figures. This is augmented by the use by agents of multiple listing services to share information that would otherwise be hard to find. Information is an important equalizer in the open market.
The only appraisal you get is from a certified appraiser, when your realtor calculates a price it is termed a market analysis. Only the appraisal will be allowed as the formal valuation when you are applying for a home loan as a buyer. In either case the value of the property is calculated by a careful comparison with similar properties by size and location.
The appraiser or realtor will take into other factors such as how rapidly market values are changing but it all comes down to having information about similar homes in similar areas, those prices at which those similar properties sold is what is meant by comparable.
There are many ways that you could structure a home loan payment but there are some that are more popular and well known than others. Overall, they fall into one of two main categories defined by the terms of the interest payment: Fixed interest rates throughout the term of the loan and adjustable rate mortgages (ARMs).
Each side has benefits and disadvantages and so it is a matter of establishing the one that is best suited to your needs as a homeowner.
Fixed Rate Mortgage Financing
Fixed rate mortgages are very popular because of the certainty that interest rates will not suddenly go up, putting the homeowners under water with extortionate payments. The United States has not had exceptionally high interest rates in a generation and yet the pain that they can cause seems so real to many borrowers.
There tend to be two popular terms of conforming (suitable for government backing) fixed rate loans, either thirty-year or fifteen-year terms. The interest rate of a fixed rate loan is fixed at the start of the loan. Even if your fixed rate loan seems like a real bargain you can be sure that there is a part of your interest that is added in to account for the risk to your lender that they are losing out on extra income from some possible future interest rate hike.
ARM Caps and Indexes
Adjustable rate mortgages tend to be slightly cheaper than fixed rates because, if interest rates go up in the future they will be able to raise your interest payments. There is usually a limit called a cap on how much the lender can increase the rates when it is time to adjust them.
For example, if you have a 3/2/6 ARM it means that you rate will stay at the initial rate for three years, then it can adjust by as much as 2% once a year but only up to a maximum of 6% above the initial interest rate.
So, the term adjustable is pretty mild and the adjustments are only on rigid terms. The amounts by which they adjust are determined by a predetermined financial index that will be named in the terms of your loan.
The sort of index will be something like the London Interbank Exchange Rate (LIBOR) or similar. Indexes like the LIBOR are used because they have a connection to the inner financial condition of the economy and tend correlate to the prime-lending rate, along with other basic factors.
Fixed Rate Vs Adjustable Rate Mortgages In Summary
Fixed rate mortgages give you the certainty of knowing your rate cannot change. However you are paying for that privilege with a little extra interest on your loan. ARMs start out at more competitive rate and adjust after a fixed period.
This should be clearly stated and controlled rigidly within the terms of the loan, with only limited periodic reviews based on fundamental market indexes. There will also be caps on the amount by which your ARM can adjust at a given time and in total. So, although the risk is real, it is limited to a narrow range of changes.
Along with other terms of your home loan fixed and adjustable rate give you choice in the market for a home loan that meets your own personal needs. Neither category is going to be onerous, as long as you have read the terms and considered the risks and consequences you should be able to find the mortgage that is best for you.