Determine How Much Mortgage You Can Afford – Tips

By knowing how much mortgage you can afford, you can ensure that home ownership will fit in your budget and meet your long term goals.

1. Factor in Your Down Payment

How much cash do you have for a down payment on DFW real estate? The higher the down payment you can come up with the lower your monthly payments will be. If you put down at least 20% of the home's cost, you may not be required to get private mortgage insurance which costs hundreds each month. This leaves more money for you to put towards your mortgage payment. The lower your down payment, the higher the interest rate, loan amount you will need to qualify for and the higher your monthly mortgage payment will be.

 

2. Consider Your Total Debt

When it comes to buying Plano real estate most mortgage lenders generally follow the 28/41 rule. Your monthly mortgage payments covering your home loan principal, interest, taxes, and insurance shouldn't total more than 28% of your gross annual income. Your overall monthly payments for your mortgage plus all your other bills, like auto loans and credit cards, shouldn't exceed 41% of your gross annual income. Here's how that works. If your gross annual income is $50,000, multiply by 28% and then divide by 12 months to arrive at a monthly mortgage payment of $1,167 or less. Next, check the total of all your monthly bills including your potential mortgage and make sure they don't go above 41%, or $1,708 in our example.

 

3. Use Your Rent Amount as a Guide

The tax benefits of homeownership usually help you to afford a mortgage payment of about one third more than your current rent payment. You can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment. Here's an example. If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership. If you're struggling to keep up with your rent however, consider what amount would be comfortable and use that for the calculation instead. Also consider whether or not you will itemize your tax deductions. If you take the standard tax deduction, you cannot deduct mortgage interest payments. Find a Dallas real estate blog that has tools on them to help you calculate these numbers.

 

4. The general rule of mortgage affordability

A good rule of thumb; you can typically afford a home priced about two to three times your gross income. If you earn $50,000, you can typically afford a home between $150,000 and $200,000. To understand how that rule applies to your particular financial situation, prepare a family budget and list all the costs of homeownership, like property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care costs. This takes a little bit of brain power and effort but it is paramount before you go start looking for that perfect home.

Tips For Becoming a DFW Real Estate Agent

The easiest part of becoming a DFW real estate agent is getting the license. While many would be stress out over studying and the test for becoming a real estate agent, their focus is not where it needs to be. Pay attention to the items that follow, as you will pass the test if you try, but you're likely to be in the large group who fail to make it in the real estate business if you don't plan ahead.

Get a successful mentor or choose a broker with a good training program:

If you intend to have a successful Dallas real estate career a mentor is paramount to that success. The test isn't what you need for success when becoming a real estate agent. You need it to get your license, but you need a lot more to make your business a success. Get a successful agent or broker for a mentor, or offer to assist them in their transactions. There is a lot to learn about the process, it's not all about "selling. You will need to understand and explain title insurance, surveys, liens, encumbrances, deeds, and much more. You'll feel much more capable if you've at least seen these documents in the course of a few real estate deals.

 

Have a backup income source:

Either have some money saved up to make it for five to six months or more without a commission, or if possible keep your day job for a while. While becoming a real estate agent part time may not have been your plan, you need to have the ability to pay your bills while you get started. Unless you have some family members or friends ready to buy a home, you can go for many months without an income when becoming a real estate agent. If you are considering being an agent for a We Buy Houses companies or a company that specializes in Dallas foreclosures you should be able to cut down on this time by a month or two.

 

Start building your "book of business":

Some call it working your "sphere of influence." Becoming a real estate agent is just the very first step in a long (you hope) career of working with buyers, sellers, investors, appraisers, loan officers, mortgage brokers, inspectors, title companies and others. Start out right by finding a good contact management system in which you'll enter all of these contacts and prospects. You'll want to follow up over time, and you'll need an efficient way in which to locate information you've filed away on prospects and contacts.

 

Start out right with the internet and technology:

No matter what some of the old timer agents may tell you, you absolutely need the Internet to do business in today's real estate climate. Some with many years in the business can continue to succeed to referrals over the years; you will need to use your website and social networking to get a foothold with today's buyers and sellers. You should budget for a good web presence, however, it doesn't need not be expensive.

 

Becoming a Real Estate Agent Isn't Just Getting a License:

For most would be real estate agents, the courses and the test for licensing turn out to be less fearful than they expected. The rude awakening comes later when they don't find that easy income in the first couple or three months. They thought they had a family member or friend all lined up, but they are taking their time, not buying or listing when the new agent thought they would.

 

Learn from peers, your mentor or your broker about all of the important documents involved. Try to avoid being asked basic buyer or seller questions you can't answer, as it could cost you the prospect. Either ask for past transaction folders and study the documents, or ask to assist an experienced agent in their next transaction. There's no substitute for actual deal experience.

 

The real estate business can be fun, exciting and a very satisfying career. However, you have to make it through that first year or two to make it all happen down the road. Have a plan, build a database of prospects, and work hard to find the keys to success at becoming a real estate agent.

Buyers Clueless or Liars?

This article is about real estate buyers and their agent's status. If your buyers aren't really telling you the truth about what type of home they want or can afford, it could be because they don't trust their agent with the knowledge. Unfortunately, it's true in many cases. If the buyers aren't convinced that you will work in their best interests with full knowledge of their situation, then they won't tell you everything, everything you need to know. Before any homes are shown, your goal should be to build a high level of trust with them that will allow them to be open and honest with you and give you all of the information you need to help them. This isn't always possible, as there are a lot of people out there who don't trust anybody. But, it's best for you and your buyers to get to the highest level of trust possible.

 

Here is an example from a agent selling Collin County Homes who came into the market after being a tire kicker, subscriber and searcher on his website for years. At last, the timing seemed right, but the buyer was in the lowball offer mood, and there was a lot of difficulty in getting him to see the problem unrealistic offers present, even after two had already resulted in hard feelings and burned bridges with sellers. You would think that now this agents blog site was a good one, holding this buyer on his list for more than two years. This agent did a lot of market statistics and commentary that illustrated a great deal of market knowledge. So, what is the problem?

• It took several failed offers before the buyer finally decided that the time wasn't right to buy and he left.
• This buyer had previous poor experience with buyer's agents in other areas.
• He held a belief that all real estate buyers agents were after the commission first, and serving his needs second.
• The market was slow and the real estate buyer refused to believe that this area wasn't full of motivated sellers ready for any offer.
• The buyer's broker tried to gently lead the buyer to the knowledge that would help them to see their interests were at the top of this agent's list.

Was there no real desire for this buyer to buy because he was also interested in Tarrant County homes and Denton County homes as well? This wasn't the case, as it was a long drive to get to this area, and the buyers did some intensive online studying before making the trip out there. It was only because this buyer believed that the agent couldn't be trusted when he was telling them to raise their offers and posting higher earnest money deposits that they would need, and other facts about that specific market and homes that would help them to actually successfully make a purchase. Work on trust first, and you may find it a pleasure to work with buyers who respect your opinion and truly consider your advice. The clueless part isn't just as regards the first time home buyer. Many experienced buyers who have done multiple transactions in their lives will still not have market specific knowledge that can hurt them in their search for a home.

• Even specific knowledge of how certain listing brokers handle their negotiations on behalf of their sellers
• Local custom as to earnest money and offer presentation.
• Market conditions, absorption rates, and local market trends.
• Specific area knowledge that dictates very different home prices in areas not that far apart geographically.
• Quality information as related to specific builders or subdivisions.

Owning a Home - Cheaper Than Renting?

Across the country, at today's sales and rent prices, buying is cheaper than renting until the 30 year fixed rate reaches 10.5%. The recent rise in interest rates has made buying a home a little more expensive. The recent increase in the 30 year fixed rate raised the monthly payment on a $200k mortgage by $56, or 6%. However, because mortgage rates are still near historic lows, and because values fell so much after the housing bubble burst and remain low relative to rents, owning a home is still much cheaper than renting one. What this means that the recent jump in interest rates doesn't change the rent versus buy calculations very much.

Mortgage rates may keep rising, but how far must rates rise before buying DFW homes start to get expensive relative to renting? Answer; take the latest asking prices and rents from April, May, and June 2013. Following the standard approach calculating the cost of buying and renting for similar sets of homes, including insurance, insurance, taxes, closing costs, down payment, sales proceeds, and, the monthly mortgage payment on a 30 year fixed rate mortgage with 20% down and monthly rent. Most folks will stay in their Plano homes for 7 years, deduct their mortgage interest and property taxes at the 30% tax bracket, and get modest appreciation.

 

 

Buying Dallas real estate remains cheaper than renting as long as interest rates stay below 10.5%. At 3.9%, the current 30 year fixed rate according to Freddie Mac, buying is 41% cheaper than renting across the U.S. at a 5% interest rate, buying is still 34% cheaper than renting. Mortgage rates would have to rise a great amount, all the way to 10.5% to change this to make renting more favorable than owning. Rates were about that high through most of the 1980s, but have been consistently below 10.5% since May 1990. Each market area has its own mortgage rate tipping point where renting becomes cheaper than owning a home. At 3.9%, buying is cheaper than renting in all of the 100 largest metros areas, which means the tipping point is above 3.9% everywhere.

The tipping point also depends on how long you plan to stay in your next home and whether you itemize your tax deductions or not. If you don't itemize, or if the mortgage interest and property tax deductions were eliminated entirely, buying would still be 29% cheaper than renting at an interest rate of 3.9%, and the tipping point when renting becomes cheaper than buying would be at a 7.5% rate. Just because buying is cheaper than renting, it doesn't mean you can buy. Many folks who want to buy don't have enough down payment or have poor credit.

 

 

If the recent increase in interest rates doesn't change the rent versus buy equation substantially, why does it matter? The main effect is reducing refinancing demand. Unlike home buying, refinancing is a relatively straightforward financial decision: although refinancing has costs associated with it, refinancing doesn't require someone to find a home or move. Since rates have been low for so long, many people who were able to refinance, already have done so. For folks who haven't refinanced yet and for people looking to buy a home, rising rates do make housing more expensive. Rates are on the rise and are may keep rising, thanks to the strengthening economy. But it will take big rate increases to turn off prospective home buyers. At today's prices and rents, rates would have to rise to levels we haven't seen in 20 years before renting is cheaper than owning a home on average across the country.

4 Ridiculous Real Estate Seller Sayings

Volatile emotions give rise to a few seller sayings that seem simply silly when seen in the right light. Here are some examples, along with insights to help you ensure you don't let them confuse your home selling decisions.

1. We need to find buyers who understand our tastes. There are certainly occasions where there is truly a narrow niche of buyers that will have to find, understand and appreciate a particular house. In cases like this, with acreage, converted garages, horse properties, etc, this saying is not ridiculous at all. But this saying is absolutely ridiculous when it is said by the homeowner with potentially wide appeal as a reason for not staging or preparing their home for sale, or in the effort to avoid neutralizing highly and de-personalizing their design and decor choices. When it comes to buying Dallas foreclosure property, however, these things are not an issue because you get what you get when looking for a great value in a home.

If your home has been sitting on the market while the others are selling and your agent has suggested that you tone down the bright orange paint job or delete the forest mural on your dining room wall, think about how much time and money your decision to wait for the buyer who understands these design choices is really costing you.

2. But I spent a lot or years or a lot of money on that. The ability to customize your home to your personal tastes and your family's wants and needs is one of the biggest benefits of home ownership. Owners are encouraged to make changes to their homes that will improve their quality of life while they live there, rather than focusing on whether they will be able to recoup their investment when they sell it 15 years down the road. Not only were they not willing to pay a premium for it, they planned to rip it out and replace it with low-maintenance, low maintenance landscaping.

Give it up. When it comes to selling DFW real estate understand that other than the kitchen, bathroom, amenity and decor upgrades that appeal to many home buyers, if you have invested your time and money in customizations and upgrades for your personal enjoyment, then your enjoyment is the return on your investment. If your home's eventual buyer also happens to love them, fantastic! But don't approach the home selling process expecting every buyer to share your value system and pay through the nose for them. If you do, in just a few month you may find yourself selling your house to one of those I buy houses companies and selling at a discount.

3. I want to price it high, so I have room to negotiates and come down. When the market is slow enough that buyers are routinely paying below asking for homes, pricing your home above market value is actually dangerous. You run the risk of causing no one to even come look at your home as a good enough value to see it in the first place.

If other home sellers are pricing appropriately and yours is priced too high over many buyers won't even bother trying to negotiate you down. They will simply go find one of the homes on the market with a more realistic price, they'll wait until you lower the price or they'll wait until your home has been lagging so long they sense you might be a motivated seller. Even in a strong market like we are in today the aggressively priced homes get the most buyer traffic and get the most offers. This causes bidding wars and drives the sales price higher. Overpricing it might actually sabotage your success.

4. That offer is an insult - I will just reject it. Your home is very personal to you. It represents a large investment of your money, time, memories and dreams. But once it's on the market, grow some thick skin and decide not to take anything personally, it's just business at this point. If a buyer offers to pay so many thousands of dollars for your home, it's not an insult, even if the offer is far lower from what you are willing to sell the house for. They might be uneducated or misguided and not yet experienced enough in the market to know that their offer was unreasonable. Or they might just love your home and be going all out to get it, even though it's really outside of their scope of affordability. Also, they may be just trying to get you to come down some on the price.

You should always respond to any offer made by a qualified buyer. If you have another offer or offers that are more realistic, just respond with a nice decline to accept. If you have no other offers, respond with what you and your agent agree is an appropriate counter. You might be surprised at how even a very low offer can come together with a respectful, reality based counteroffer and a little negotiating.

How Much Money Should You Budget To Buy a Home?

You have made the decision to buy a home. Have you truly budgeted to actually afford a new home and have the money to move? When you meet with a loan officer, they will determine how much you can afford based on your credit worthiness. Just because you are approved for a certain dollar amount, does not mean you should buy at the top of your price range. The strategy to determine how much you can afford is to work backwards. Start with things you like to do and start tallying up daily expenses you occur and figure out what you can live without. Then work the other direction from your income and determine what you would be comfortable spending on housing. If you rent now, you are probably comfortable with that monthly expense. Usually home ownership will cost $500 more per month because you will have new expenses that you probably don't have now like taxes and additional insurance. Also factor in new purchases like a refrigerator, washer, dryer, and lawn mower.

 

When you think about purchasing a new home, we often forget about expenses it takes to actually purchase the home. Be prepared to get out your checkbook and write out 5 checks once you have an executed contract.

1. The title/escrow company for the earnest deposit

2. The seller for the option money

3. The inspector

4. The appraiser

5. Cashier's check for the remaining balance of down-payment prior to closing

 

When it comes to buying either Denton County real estate or the much sought after Collin County real estate the first 2 checks you will write will be for the earnest money and the option money. The earnest money is the money you deposit into an escrow account with the title company when you have found the home you want to purchase. The amount of the earnest money is usually around 1% of the purchase price. Treat earnest money as showing good faith to the seller that you have the money to purchase their house. The next check you will have to write is to the seller for an option period. It's usually anywhere from $100-$250 depending on the price of the home. That is the money given to the seller for them to take the house off the market while you get the home inspected. During the option period you decide if you want the home based on the inspections and remember, you can walk away if you don't like the house any reason; the seller keeps the option money.

 

As a buyer of Tarrant County Real Estate treat that money like your down-payment. Your loan officer will tell you how much money to bring to closing. The next check will be for the inspector. The inspector will inspect the house inside and out telling you if there are any major defects with the house. The cost of the inspection can vary based on the size of the house and costs around $400. The next check is for the appraiser. The appraiser works for the bank and will determine if the house is worth what you are purchasing the house for and costs about $400. Lastly, once you have determined you are moving forward with the purchase, you loan officer will tell you the amount of money you will need to bring to closing to make the actual purchase of your home.

Buying a house is exciting, but also scary when it's something new. Your real estate agent will guide you through the process, but it's nice to know ahead of time what to expect and how much you will have to pay during the process, so you can budget and be less stressed during the home buying experience.

~ Jennifer Clark VIP Realty Platinum

Ways to Get Found by Home Sellers

The year is more than halfway over, but there’s enough heat left in the market to make this the year that you take your real estate business to the next level. To do so, you will need to provide great client service and a great lead plan. Before you can put either of those into action, you need to make sure you are getting found by the seller clients that mean the most. A serious seller prospect is one of the most sought after commodities there is. Here are some strategies that can help land you your next listing. Even if you are just looking at DFW real estate careers you will find these ideas helpful in any business.

1. Get Vocal:

Potential home sellers aren’t just looking for signs that you are in the business. They want to know you are an expert in the business. Only having a profile, license, or website is not enough. Sellers want to see your expertise in action. Every day prospects are posing real estate questions that signal they’re serious sellers asking real questions like “Who is a Good Realtor?“.” and “How much should we spend renovating?“ That’s why you should study the neighborhoods you want to grow your business in.

2. Get Focused:

Sellers want to work with the agent they know who knows their market and the places where consumers realize they need an agent are many. Many times it’s an offline experience that makes them go online to find an agent. The reality for agents is that you have to live on multiple platforms. But, multiple platforms certainly doesn’t mean you should have multiple personalities. Having a focused presence online can give the same effect as the 25 yard signs and a billboard offline. I am talking about multiple placements, but only one personality. A good would be those We Buy Houses companies. Here are some target areas to make sure stay consistent everywhere you market:

Specialties – We know you can do it all, but show prospects the ones that reflect the business you’re after.

•             Service Areas – Make sure these are where you actually want to work. Whether it is selling Tarrant County homes or otherwise, you will end up with leads and prospects that ultimately need another agent, one that has expertise in their area.

•             Your Message – If you truly want to take over a neighborhood or niche, being repetitive is the best way to go about it. Research shows that people only retain about 10 percent of what they read and about 30 percent of what they hear. Say it, say it again, and then say it to the same audience some other way.

3. Real Information:

You should never just send a bunch of numbers out and assume your perspective clients will know how to interpret them. The right formula is to offer important data points and helpful analysis. While sharing, marketing, and creating information to generate new business, remember to add some color for your sellers. Don’t just add market data. Think about the key data points that provide key insights that are really going to motivate your sellers to list with you, like

·         Do your listings sell for more than other listings?

•             Do you sell homes faster than other agents?

•             How many transactions have you closed with similar homes?

4. Provide Proof:

Sellers are searchers of information and what they find will make or break your opportunity to list their house. Dollar figures, awards, and client accolades are great resume builders, but the key indicator that matters most to the one client looking for help with that one transaction is: “Can you close my transaction?” You can answer the question before you have your first client meeting.