Ask Emily

Tax Credit Timing

Emily M Cross — Mon, 01 Feb 2010 14:17:00 GMT

Dear Emily,

I really want to take advantage of the Tax Credit. What should my first step be?

Answer:

Well, it depends! If you are a first time home buyer, then you need to start by meeting with a lender...And Soon! There are less than 90 days left to find a home and be eligible for the tax credit. Once the lender gives you approval and helps you establish a budget and type of loan, then you need to contact your Realtor and start shopping. This is the fun part! You need to be under contract by April 30th and close by June 30th to be eligible. The amount of the tax-credit that you qualify for will depend both on your income and the price of the house. Once you close on the home, you can file for your refund - you do not need to wait!

If you are not a first time home buyer but would like to take advantage of the $6500 credit, you need to determine your eligibility (income, years lived in principle residence - at least 5) and then meet with a lender. If you have to sell your current home prior to purchasing a new one, you need to get it on the market ASAP (your current home would have to be sold and the new one under contract by April 30). If you can afford to purchase a new home without selling your current home, then start shopping - the clock is ticking! (Note that for tax credit eligibility, your current home doesn't need to be sold prior to purchasing the new one...The new one just needs to be your primary residence.)The time lines for this purchase are the same as those described above.

There are, of course, many minutia and varying scenarios in both of these. This is a general overview.

Cheers!

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How To Prepare Your Home For Sale

Emily M Cross — Wed, 14 Oct 2009 14:05:00 GMT

Question: Emily, I'm considering putting my home on the market but am concerned it won't sell. What should I do?

Answer: Thanks for this question. It is a common concern, especially in today's market. There are several steps a home owner can take to make their home more appealing to buyers, thus increasing the likelihood for a quick sale at a fair price. Plain and simple, you want to be better than your competition! Specifically:

1. PRICE IT RIGHT!!! I cannot over-emphasize this. Buyers KNOW the market! The market is tough - there is a lot of competition! When homes are priced right, they sell quickly and for more money. This is the number one most important tool to utilize well.

2. STAGE IT! Make the home look GREAT! Remember, less is more and don't be afraid of color (tasteful color, that is:)). I tell my sellers "Pottery Barn It" - you know what I mean - declutter, warm it up, modernize it, make it look comfortable...Staging does not need to be expensive at all! Usually, just removing stuff and taking down photos works wonders. Paint is your best friend - nothing like a nice warm, natural color to give a face lift to your home. Each space needs to be used with it's intended purpose (in other words, bedrooms should have beds and dining rooms should have tables...). A well merchandized house not only shows well, but presents much better on-line because the photographs draw buyers in...and that takes me to point number three.

3. PROFESSIONAL PHOTOGRAPHER!!! The numbers vary but around 90% of home buyers are on line looking for homes - IF YOUR HOME DOESN'T LOOK INTERESTING ON LINE, THEY WON'T COME SEE IT IN PERSON...IF THEY DON'T COME SEE IT IN PERSON, THEY WON'T BUY IT!!!! And not just the nice 15 photos on line but why not a 50-photo slide show?! Let buyers see how awesome your home is! You see, it all fits together - price, presentation/merchandizing/staging, and photography...But that doesn't do you any good unless people can find the home! So, that's #4...

4. MARKET, MARKET, MARKET, MARKET ON THE WEB, WEB, WEB, WEB! I'll say it again - around 90% of home buyers are on line looking for homes. They have to be able to FIND IT! Make sure your home is in the MLS (of course) but also syndicated all around the internet - Trulia, Craigslist, Housepad etc. etc. etc. etc. etc. The next most effective marketing tool is THE SIGN! Yes, we do still sell homes when someone is walking by, they grab a NICE flyer (with COLOR photographs) and like what they see. The sign and flyer are important. Your home needs exposure to the audience most interested likely to buy it!

Utilizing these strategies as part of an entire marketing plan specific to your home will give you all of the tools necessary to sell your house now and for the most money the market will bare. Hope that helps!

Til Next Time,

Emily

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How To Choose A Lender...

Emily M Cross — Wed, 16 Sep 2009 07:24:00 GMT

Question: I am a first time home buyer and have heard horror stories about the lending process. What can I do to make it smooth?

Answer: Great Question! The loan process is, indeed, vital to a successful transaction. There are many lenders to choose from and the lending industry has seen a plethora of changes over the last year (rightfully so)! So, below find a list of questions to ask and why they are important! It's really a great idea to interview at least three lenders.

How many days is it taking to close loans right now? During the peak refinance period this summer, loans were taking around 45 days simply because it took so long to get the appraisal completed (everyone was backed up). However, now, it should take 30 days. If a lender tells you it could take longer investigate because 30 days is plenty of time.

Does your institution fund the loan or do you have to find the actual lender after I make application? This is one of the most important questions to ask!!! When you are working with an actual lender (not a broker) you are speaking with the institution that is providing the money. Because of new appraisal laws, this is even more important now. The new law requires that the appraisal be ordered by the lender. If the lender has not been identified and secured, the buyer risks paying for multiple appraisals for absolutely no reason (other than the broker shopping for a lender). Remember, a broker is a front for lenders they are not an actual lender and do not provide the funds to close.
How often do your underwriters require additional information/documentation prior to funding the loan? A good loan officer rarely, very rarely, has a file sent back to them needing more information. Someone who is proficient and detailed and educated in their field knows what their underwriters need to approve the loan.
How often has MDIA affected the closing date on your file? This is also a VERY important question to ask. The Mortgage Disclosure Improvement Act (MDIA) was enacted to protect buyers from the following scenario: Buyer gets Good Faith Estimates from varying lenders (this is how you shop for loans). Based on these disclosures (which are supposed to be in good faith and disclose all fees which affect the APR which is the actual cost of the loan), buyer chooses mortgage person A. Buyer navigates the purchase process and is getting ready to sign closing documents when they realize that the actual loan is much more expensive (usually with upfront fees) than their GFE revealed. Before MDIA, the buyer would simply be surprised at the closing table. Now, if the APR changes by more than 1/8%, mortgage person A now has to give the buyer Three days to view in person or SIX days if mailed the updated GFE's and TIL showing theupdated fees. Sounds reasonable, right? It is! But, the problem? At this point, buyer may a) no longer be protected by the Financing Contingency in the purchase and sale agreement, b) will not be able to secure a better loan due to time constraints and c) possibly fall out of contract with the seller which could be detrimental to a successful closing. If your lender is not having issues with delayed closings, you can bet that their GFE's DO disclose all fees and that MDIA is not affecting their transactions (remember it's only triggered when the APR changes by more than 1/8%).
What are your fees? This is somewhat addressed in the above question but make sure you compare all fees points, transaction fees, recording fees, origination fees etc. etc. Each lender is different and rates change daily. Discuss whether or not, in your situation, it makes sense to buy down the interest rate (more cash out-of-pocket) or have a higher interest rate and fewer upfront costs.
Do you continue to service the loan after closing? While it's common for banks to sell your loan on the secondary market, there are local banks that continue to service their own mortgages. There is no right or wrong answer with this answer but some people like knowing that they will have their mortgage with the institution of their choice (I'm one of these people:))!
What kind of loan do you think is right for me? Ask each lender that get their opinion whether it's FHA, VA, Conventional 15 or 30, or even an ARM (yes these still exist and yes, there are a limited number of circumstances where they make sense).
Are all of your appraisers local? Oh my goodness is this an important one!!!! As part of the new consumer protection legislation that has been enacted, HVCC (Home Valuation Code of Conduct), lenders themselves no longer order the appraisal they go through a clearing house of sorts. However, each lender has an approved pool of appraisers. Some lenders have a pool that extends way out of our area (like Tacoma). The problem? THEY DON'T KNOW OUR MARKETS and are causing multiple headaches right now! I can't tell you how many people I've heard complain about out of area appraisers severely undervaluing property (thus killing a deal unnecessarily). Make sure, who ever you go with, has a pool of LOCAL appraisers only!
Of course, make sure you discuss with all of the lenders your personal circumstances gift money, job changes, etc. etc. etc. In order for you to get an accurate picture of what each mortgage person can offer you, make sure you are frank about your circumstances..

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