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#LexHaveFun – AUGUST EVENTS
Author: RHRNews
Understanding your housing expenses
When a lender reviews your loan application, their main job is to verify that you are a low-risk candidate who will be able to cover your monthly housing expenses for the full life of the loan. To do this, they will first calculate your monthly PITI:
- Principal of the loan
- Interest on the loan
- Taxes (estimated from annual payment)
- Insurance (estimated from annual payment)
While every lender is different, and every loan application is reviewed independently, the general rule of thumb is that your monthly PITI should be between 28-35 percent of your monthly income before taxes. This number is known as your front-end debt-to-income ratio.
Understanding your debt obligations
Of course, you may have other long-term loans or debt obligations that you pay each month. Lenders will also take these debts into consideration as they review your loan application.
The easiest way to think of a debt obligation is to consider who you are paying back. Common debt obligations include:
- Student loans
- Car payments
- Child support payments
- Credit card minimum payments (if you have a long-term balance you are paying off)
- Medical or hospital bills
To calculate your back-end debt-to-income ratio, the lender will add up your monthly debt obligations, including your hypothetical monthly PITI. They will divide that by your total monthly income before taxes.
Typically, lenders are looking for a back-end debt-to-income ratio of 35-45 percent. But again, every lender varies and your personal financial history and income history will also be factored in.
What about other expenses?
You have daily, weekly and monthly expenses that won’t necessarily be taken into account by a lender — but that doesn’t mean you shouldn’t think about them as you begin the path to home ownership.
Before you apply for a mortgage, take stock of your monthly expenses, including:
- Groceries
- Gas or transportation costs
- Restaurants, coffee shops and gas station pit-stops
- Mobile phone plans, cable television plans and streaming services
- Shopping and gifts
It’s likely that you could tighten up one or two of your spending categories without too much effort. Your lender may not notice, but you’ll find it easier to afford your monthly PITI and debt obligations when you minimize your other expenses.
How can I calculate my buying power?
If you’re looking for an easy-to-use tool that takes into account your front-end and back-end debt-to-income ratios, check out these great calculators from Home Services Lending.
Our local housing market – and how to compete
It’s been a strong real estate market so far in 2018!
Be sure to check out our exclusive Market Report — with all the latest information on the local real estate market – compiled by the experts at Rector Hayden Realtors!
Wondering how to sell your home in less time and for more money?
Don’t believe everything you see on HGTV.
Here are four common seller myths that we’ve debunked for you.
#1) Don’t renovate everything
In today’s market, sellers have the upper hand and buyers are competing over a shortage of inventory. While it’s advantageous for your home to stand out, you can likely get a great offer by making smart, minimal repairs. Work with your Rector Hayden Agent to determine what changes they’d recommend and see if they agree that you could focus on low-cost upgrades like new light fixtures, fresh paint, replaced hardware, and some fresh spring landscaping.
#2) Don’t “list high”
Some sellers, especially those who aren’t in a hurry to move, fight to list their home at a price higher than the fair market value. Their idea is that by listing high, they may snag a high-bidding buyer — and if they don’t, they can simply lower the price later on.
This is a dangerous plan for a few reasons:
- Buyers and their agents are unlikely to overbid on a home that’s being sold for much more than the one down the block.
- Homes get the most attention in their first two weeks on the market. When a buyer sees that a home has been on the market for a long time, they will either think that there is something wrong with the home or that it is listed for too high a price.
#3) Don’t sell on your own
The most common reason to sell a home “For Sale by Owner,” or FSBO, is to avoid paying a commission for a real estate agent. While we understand that it can be tough to part with any money from your hard-earned home sale, the reality is that sellers who use a Realtor end up earning more on their home sale, even when the commission is considered.
In 2017, the median selling price of a FSBO home in the U.S. was $185,000, while the median selling price of an agent-assisted home was $245,000. This large gap may be why the National Association of REALTORS® reports that FSBO sellers have dwindled to their lowest number in more than 35 years. Last year, just 8 percent of home sales were FSBOs.
In short, the act of listing a home for a fair price is best handled by a true market expert who has deep insights on your community, recent sales, housing trends and more.
#4) Don’t sell using a “retail price” model
It’s interesting to see that homes priced at a round number price point — like $150,000 or $400,000 — often sell faster than homes listed at $149,000 or $399,000.
Why? It’s really a matter of buyer exposure to online listings. Today’s home-buyers mostly shop online, and they enter in search parameters based on price. If you list your home at $299,000 instead of $300,000, buyers who are searching between $300,000-$350,000 won’t end up seeing your property.
That small pricing change can make a massive difference when it comes to online exposure. Homes with round number pricing showed up in search results 58 percent more than those that were listed at a “discount” price.
What more tips for buying and selling in the Central Kentucky Market? Get in touch with your Rector Hayden Realtor or join our eNewsletter mailing list!
Naturally, home buyers are always especially eager to get the lowest mortgage rate possible. Here are three insights you can use as you work to secure a mortgage loan in Lexington and Central Kentucky.
Be an ideal borrower
In order to take advantage of today’s low interest rates, it’s important to demonstrate that you have the ability to repay your mortgage. When looking over your loan application, your lender will closely review your credit score and history, income history, savings and other financial factors.
Typically, the ideal borrower needs proof of stable income, preferably a tenure of two or more years at the same employer, a high FICO score and a verifiable down payment — plus cash reserves.
If you don’t fit the above description (and many borrowers don’t), it’s still possible to secure a loan that fits you and your financial goals. There are options for first-time buyers or those who don’t meet the ideal borrower standards.
Be cautious with your down payment and mortgage loan total
Mortgage loans can be approved with as little as 3 percent down, but borrowers who put down more than the requirement may secure a lower interest rate. Similarly, if a borrower is approved for a $300,000 loan, but only takes out a loan for $250,000, they may receive a lower interest rate.
Why is this? When a buyer voluntarily takes out less than what they qualify for — either because they increase their down payment or select a less expensive home — it shows they are very serious about their financial responsibility. When your lender sees that you are doing everything you can to minimize your borrowing risk, they may offer a lower rate.
Wait to shop for loans until you’re ready
If you plan to shop for loans to get the best rate, wait until you’re ready to buy. When you apply for a mortgage, each lender will inquire about your credit. If these inquiries continue over a long period of time, your credit score could temporarily be lowered, impacting your interest rate once you do finalize a loan application. Experts recommend confining your mortgage shopping to less than 14 days to protect against this.
Even though our current housing market remains very strong, the period from list-to-close can be many weeks.
How can sellers protect their valuable equity in the home during that time? With a home warranty!
A warranty placed during the listing period can eliminate many out-of-pocket expenses sellers often experience from unexpected breakdowns and repairs to mechanical systems and appliances.
Seller coverage is free to the seller for up to six months when they commit to purchase coverage for the buyer at closing. If the property never closes, the seller owes nothing, even if claims were paid.
Seller benefits:
Coverage while your home is on the market. Mechanical system failures are covered during the listing period for up to six months. This means if something goes wrong, you can continue to concentrate your efforts on selling your home instead of worrying about repairs.
A powerful marketing tool. Research shows that 8 out of 10 buyers prefer to buy a warranted home. It’s added incentive that gives you the edge and sets your home apart from the competition.
Help prevent post-sale disputes. If an unexpected failure occurs in the home after the sale, the buyer will turn to the warranty company — not you — to solve the problem.
Avoid the worry and inconvenience of dealing with unexpected home repairs!
With a home warranty provided by Rector Hayden Realtors, you get reliable protection backed by great service. Want more information about our Home Warranty partner, HMS? See more on our website at: www.rhr.com/homewarrantyprogram
Will our hot local housing market continue into summer? See all the latest info and trends, in our exclusive Monthly Market Report!
Categories
#LexHaveFun – JULY EVENTS
Local events we LOVE this month
Here comes summer — with SO much to enjoy, see and do!
CLICK HERE for some of the events and activities we love during the month of July, happening in Lexington and all around Central Kentucky!
Cyber-criminals — people who commit theft using the internet, email and other technology — will look anywhere for money to be stolen. And that includes real estate transactions. But if you’re careful, you can avoid falling prey to these schemes.
Across the country, the real estate industry has seen a significant increase in the efforts of cyber-criminals to steal money out of real estate transactions. These scams are ever-changing, but here are the general elements of the most common fraud attempts we have seen recently:
1) A fraudster will send a malicious email that seeks to trick the recipient into providing personal information (often a username and password) or clicking on a link or an attachment that contains a virus, infecting the recipient’s computer.
2) The goal of the email is to gain access to computer systems of someone involved in a real estate transaction (like a buyer, seller, real estate agent, or closer). Once the access is given, criminals can log in to learn details of that upcoming transaction.
3) With those details, the criminal can create an email that appears to be from a legitimate source. Typically, this email asks the buyer or a closer to wire funds into an illegitimate bank account.
How to protect yourself against cyber-crime
That may sound a bit scary, but there are precautions you can take to protect your money. These rules can be applied to every technological aspect of your daily life, not just if you are involved in a real estate transaction:
- Never send money to anyone who requests it by email without first personally contacting someone you know (like the title closer or your real estate agent) to confirm the request is legitimate.
- When confirming the request, don’t rely on the phone number that was provided in the email; the criminals often put their own phone number in the email. Use a phone number that you know or look up the number on the internet.
- Use care in dealing with emails. If you receive an email from someone you don’t know with a link or attachment, don’t click on it without verifying that it’s legitimate. And never provide important private information like your username, passwords, bank accounts, pin numbers or other items that might allow criminals to take advantage of you.
article curated by Keith Rector
With consumer confidence high and mortgage rates low, our local home-buying market is hot! Here are some essential tips to get prepared and stay ahead of the pack as multiple offers and quick sales will rule the summer.
Get pre-approved
The first step in the home-buying process is getting pre-approved with a top lender. That way, you’ll be all set to make a strong, serious offer when you find the right property. Contact HomeServices Lending for great rates and service!
Be the first to know
With homes selling quickly, you’ll want to be the first to know about new listings as they hit the market. Rector Hayden’s top local home search website – RectorHayden.com – is updated at the top of every hour, as is our mobile home-search app. You can save searches and receive alerts for homes that match your criteria!
Do smart searches
It’s easy to do your home search, no matter where you are or how you like to get your information. Download the Rector Hayden Home Search app for iPhone, iPad and Android to get access to every home for sale on our Central Kentucky MLS. Our mobile app allows you to search based on plenty of different criteria. Use our app and find homes that fit within two different commute times (ex: close to work and close to school!).
Get to know your ideal location
As you narrow things down, visit your preferred neighborhoods and talk with neighbors and local businesses. To learn more about current issues and any concerns, contact the local neighborhood association.
Open House season is upon us
It’s an exciting time of year to explore your options. Check out our upcoming Open House list anytime at RectorHayden.com.
Make your first offer your best offer
It’s a seller’s market. You’ll want to discuss with your Rector Hayden Agent how to tailor your offer to appeal best to a seller. An experienced agent can make all the difference in your negotiations!
curated by Keith Rector