Tips Archives | Balner & Co.Balner & Co.

Category: Tips (4)

Mar

Do I Need to Sell Before I Buy?

Although every situation is unique, it is not uncommon for homebuyers to qualify for a mortgage on a new home while still living in their primary residence.

Perhaps you are outgrowing your current house, or have been forced to relocate due to a job transfer? Regardless of the motivation for keeping one property while purchasing another, let’s address this question with the mortgage approval in mind:

So, Do I Need to Sell Before I Buy?

Yes. No. Maybe. It depends.

Welcome to the wonderful world of mortgage lending. Only in this industry can one simple question elicit four answers…. and all of them may be right for the right situation.

If you are in a financial position where you qualify to afford both your current residence and the proposed payment on your new house, then the simple answer is NO!

Qualifying based on your Debt-to-Income (DTI) Ratio is one thing, but remember to budget for the additional expenses of maintaining multiple properties. Everything from mortgage payments, increased property taxes and hazard insurance to unexpected repairs should be factored into your final decision.

What If I Rent My Current Property?

This situation presents the “maybe” and the “it depends” answers to the question.

If you’re not quite qualified to carry both mortgages and housing expenses, you may have to rent the other property in order to offset the mortgage payment.

In that scenario, the lender will typically only count 75% of the monthly gross rent you are proposing to receive. So if you are going to receive $1000 a month in rent and your current payment is $100, the lender is going to factor in an additional $750 of monthly debt in your overall Debt-to-Income Ratios.

If you would like more information on whether you need to sell before you buy, please contact us today!

Mar

Updates to Conventional Financing

In the world of conventional financing, specifically, Freddie Mac, there are a number of policies changes relating to income requirements. Below are the changes pertaining to loans submitted to underwriting on or after March 6, 2017:

Employment Income
- Pay stubs are no longer required to reflect at least 30 days of earnings. A pay stub documenting all YTD earnings for the most recent calendar year is now acceptable.
Commission Income
- Commission income that is less than 25% of the borrower’s total income will not require 1040s and will not need un-reimbursed expenses to be deducted.
Dividend or Interest Income
- Year-end asset account statements for the most recent two years reflecting the dividends/interest paid out may now be used in lieu of tax returns.
Self-Employment Verification
- If a business is in existence five or more years, one year of tax returns must be provided. If less than five years, the two most recent years of tax returns must be provided – regardless of Streamline or Standard documentation feedback.
- A Verification of Business (VOB) can now be dated 120 days prior to the Note Date.

If you have any questions regarding your qualifications for a home loan, please contact me today. Balner and Co can provide resources to get your questions answered!

Mar

If You Really Love That Home…

DON’T LOSE THE BID

In this housing market, the best deal doesn’t always come with the lowest price.

Price vs Payments – If you’re financing your purchase, you’ll probably never come close to paying the actual price. You’re making a comparatively small down payment and then paying interest on the loan until you refinance or sell. Yes, you will have a higher payment if you pay more for the home, but an extra $10,000 of mortgage money can add less than $50 per month on a low-rate, 30 year loan.

Relative Prices – Our natural tendency to pay as little as possible is not as meaningful for an investment, such as a home, as it is for a consumer product. In this case, what you pay now can affect your sales price later. There may be little difference in total earnings if you pay less or pay more and sell for more.

Influencing Value – For appraisers, the last sale or “comp” in an area sets the value for similar home. Whatever you pay helps establish what your home and comparable properties are considered to be worth.

Setting the Trend – If you pay less for your home than was paid for the last similar home, you may be contributing to a downward price trend, which can be difficult to reverse. Conversely, helping to maintain a trend of price appreciation can end up paying you back many times over.

One Chance – No two homes are ever exactly the same. Even when structure matches, your land, your view, your address and your immediate neighbors will always be different. You truly may have only one chance at the right house. Industry professionals have all seen buyers lose out on what they really wanted. We don”t want that to happen to you. Nor do we want you to pay more tomorrow for something less than what you could have had today as a result of increasing prices and rates.

Reach out, and we’ll be happy to help you weigh your options for the home you really love to own today.

Feb

TIPS FOR FILING TAXES

Check out these tips for smooth filing:

File online. Homeowners earning $64,000 or less per year may file for free using an online system like the IRS FreeFile.

Claim credits. If you earned $53,930 or less in 2016, you may be eligible for an earned income tax credit of up to $6,318.

Ask for help. For federal tax help, use the IRS self-help resources. For help with your state taxes, live chat with a representative from the Franchise Tax Board.

File anyway. File your taxes even if you can’t make the full payment on time. Penalties for late payments may cost you up to 0.5% of your overdue tax bill every month past the deadline.

Apply for extension. Submit a tax extension form (IRS Form 4868) to the IRS by mail or online. Note: Your payment will still be due on April 15, although you may receive up to six months’ extension for filing.

Double-check. Review your documents for incorrect information or mathematical errors. Common mistakes include incorrect Social Security numbers and calculations.

Looking to buy or sell a home? Call me today!