How Your Mortgage Limit Is Decided

Buying a home can require a huge capital investment, financially and emotionally.  People may use all their savings and most parts of their income to land their dream home. After all, this is what everyone cherishes in life, the American dream per-say. However, a person planning to buy a house has to ask himself; “how much house can I afford?”.  The individual’s ability to afford a house is decided, not by the prospective home buyer but it is the job of the mortgage lender to decipher one’s mortgage limit and buying capabilities. There are several factors that determine home affordability. Some of them are given below.

Determining the factors of home affordability:

Qualification ratios are one of the primary factors of determining the mortgage limit. Here is how the factors break down for approving the real estate loan limit for a person.

Backend Ratio: AKA your ‘Debt-to-income ratio’.   Banks and mortgage lenders will need to determine how much of your income is being allocated to repay your other debts like existing mortgages, credit card bills, medical expenses, car payments, etc….   Banks are looking for a debt-to-income ratio that does not exceed the 36% range. So if you need to get a quick idea of your ratios then you can make use of several free online debt-to-income tools, calculators and similar widgets.  This will give you a general idea about your home affordability.

Front End Ratio: This is also known as your housing expense ratio.  This will be used by your creditors to determine the amount of money you will spend towards making the actual mortgage payments.  The amount paid will encompass what is referred to in the industry as PITI, which stands for ‘Principle, Interest, Taxes & Insurance’ and any other obligatory charges.  A suitable home expense ratio should not exceed 28% of what you earn.

Credit Rating: Banks and Mortgage lenders will review your credit report before they approve your loan. Credit history and credit score play a vital role in deciding whether or not you are eligible for a loan. Based on your credit score and history, your prospective mortgage lender can evaluate the loan limit.

Financial Duties: Besides the above factors, mortgage lenders will verify whether or not you are regular in paying your taxes and other financial obligations such as child support or alimony if applicable. You will have to provide your tax returns to verify your income and establish your source of income.

Getting a mortgage isn’t that daunting but it is not always that easy either, especially if it is a second mortgage, but that is another article. So contact your Mortgage Lender today to discover “how much home you can you afford”, this will give you a sound idea about what and where you can start looking to buy your next house.
Disclaimer; This is solely an informative guest post by Peter Harper on the ‘Idaho Real Estate Blog’ and not an endorsement of services.

Is the Real Estate Market Shaping Up? Read the Realtors® Confidence Index Report and Market Outlook

Where is the housing market now and where will it go?  Read the comprehensive market forecast report by the Realtors® Association for the remaining 2012 and upcoming 2013 year.  It covers home sales, increases and decreases, distressed property reporting and buyer and seller confidence rankings.  Then it considers the current issues at hand.  

National Real Estate trends that may be indicators of things coming.

It’s always interesting to watch regional trends as they can be indications of what will happen here in Idaho.  A colleague of mine in South Florida, Jeff Lichtenstein reports good news from the sunshine state.  Florida was the epicenter of speculation.  There still is a 3 year backlog of foreclosures and plenty of short sells still to go but the worst is past.  Jeff also can tell you a lot of the red tape of short sales since he experiences them first hand in Florida. Check out his blog to read all about it!

To learn more about what the area Jeff covers has to offer in amenities check out the Palm Beach Post

Jeff  specializes in luxury real estate in Abacoa  and  Jupiter real estate in South Florida.  His website is at www.JeffRealty.com

Wilderness Ranch 2011 Annual Real Estate Report

Annual review of real estate sales in Wilderness Ranch for 2011 and forecast for 2012.

The city of Boise and the Treasure Valley area was a mixed bag.  We actually saw a price increase of about 3% in homes under $150,000 mostly due to low interest rates, affordability and bank owned opportunities.  Many were multiple bid situations.  East Boise County always seems to lag the Valley in the curve.

So how did Wilderness Ranch fair for 2011 in the real estate market.  Sales and values were below average but considering the market and economic climate there were some pros and cons.

For starters in 2011 there were no sales in all of East Boise County over $230,000 which was extremely uncommon. I expect that trend to break this spring.

We had a total of 14 sales in Wilderness Ranch and two in Hidden Bowl, our close neighbors.  Of which I was party to 11 of the transactions in Wilderness Ranch, four of which were land sales.   I also moved two homes in Hidden Bowl off Daggett Creek.  Land sales were dismal as most people were taking advantage of  the competitive pre-owned homes market.

There were a total of 22 Home listings in WR for 2011 with 10 home sales; that makes a 45% absorption rate from list to sale which is phenomenal when compared to the rest of E. Boise County.  Our number of home listings were pretty average and much lower than the last three years as we have sold a lot of the excess inventory that was held over from the 2008 and 2009 market.

East Boise County in all had 134 Home listings (not including WR) and 43 Home sales; which was basically a 32% absorption rate.  So WR has consecutively outsold the County in general year over year. Proving that WR is a good place to buy with.

I currently have four homes pending sale in WR, two are short sale and two are non distressed.

Now for the nitty-gritty of it;  Of those WR sales there were seven that were distressed property; i.e. bank owned and/or short sale.  However I expect to see less distressed property in 2012 which I will cover in our forecast.

To summarize;

• 22 Homes listed in all
• 10 home sales
• 4 land sales
• 45% Absorption rate on homes sales (odds of your home selling) which was above the 2010 average.
• Average Days on market was 85,
• Average list price was $152,
• Average sold price was $137,74
• Average price per sq foot was $71.71
• Highest price per square foot was $100 per sq foot
• Lowest sales price per square foot was $41 per sq ft.
• There are 2 non distressed pending sales
• There are 2 short sale pending sales

The overall average was skewed by a few smaller lower quality and bank owned properties, but I would determine the average value of a well cared for home in WR at around $85 to $103 per sq foot depending on quality of finish, views, acreage and other amenities.

So how did we compare to the rest of  East Boise County?  There were 59 home and land Sales in total (not including WR), of which we had;

• 134 Homes listed in all (not including WR)
• 43  Home Sales
• 16 land sales
• 32% absorption rate for home sales
• 98 Average days on market
• $111,457 Average list price
• $103,802 Average sold price
• $57.64 Average price per sq ft

2012 REAL ESTATE FORECAST;

The Federal Reserve has alluded that it will maintain its current interest rates through 2012.  Which I had anticipated since they want everyone focused on the elections.

As we all know we’re not out of the woods yet; but barring any unforeseen economic crises (holds breath) I do believe we are past the bell curve on the foreclosure market. We will yet see many more homes complete the foreclosure process and banks still have a back flow to list.  However as the year progresses we should start to see a gradual decline.  I suspect another 18 months before this market really becomes a part of our past.

I don’t foresee too much activity in land sales for 2012, though it more than likely will be an improvement over the last two years.

My anticipation is we will see a few more home listings this year than last year and as long as pricing is right and interest rates stay low, my goal is to increase our absorption rates by at least 10%.  If you have not had a chance please visit http://www.wildernessranchhomes.com and if your on Facebook send us a like and feel free to post a comment or a picture.

I look forward to assisting each one of you.  please feel free to call or write if you have a question.  Always glad to help.  You may email me at buyboise@gmail.com or phone me at 208 794-8175 Mobile or 208 344-5700 Office

Sincerely,

Paul Heim

New View team

http://www.paulsidahohomes.com

Idaho Real Estate Housing Trends

DECEMBER-2010 Newsletter Housing Trends eNewsletter

Welcome to the most current Housing Trends eNewsletter. This eNewsletter is specially designed for you, with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general.

The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau and Realtor.org reports, videos, key market indicators and real estate sales statistics, a video message by a nationally recognized economist, maps, mortgage rates and calculators, consumer articles, plus local neighborhood information and more.

Please click here to view the DECEMBER-2010 Newsletter Housing Trends eNewsletter.

If you are interested in determining the value of your home, click the Home Evaluator link for a free evaluation report.

Ten easy ways to improve the ALLURE of your home for sale.

They say people buy on emotion.  Indeed, buying the right home is a very personal endeavor. It has to have the right feel for the right buyer; it needs to feel like home.  Popeye used to say ‘I am what I am.’  Likewise our dilemma when selling our home is often; ‘it is what it is’ and that may not be as pretty as we would like.  So if we have a limited budget and want to make our home more alluring without breaking the bank, what options do we have?

Let’s discuss ten ways that you can improve the allure of your home without breaking the bank.  The first way to save money is by doing the work yourself.  As you often hear  ‘kids don’t try this at home’,  but hey we’re all adults here, so with a little homework and a little sweat we can be on our way to a successful sale.  Here are my top TEN SUGGESTIONS!

1) Staging can be costly but one great suggestion is to hire a staging consultant to come review your home for improvement suggestions.  I have found this to be very beneficial.  For about a hundred bucks, you can have a home stage professional/decorator walk through your residence and give you many practical suggestions about furniture and picture placement and color schemes.  They will write out their plan, then all you need to do is go to work on it.  You may not opt to do everything they recommend, but they will indeed help you get an outside perspective that will appeal to the general buyer.  Sadly, staging your home appropriately is often under rated by sellers but does offer a lot of value.

2) If your willing to put in that little sweat equity, then the first and most common cost effective upgrade I would recommend would be painting.  Don’t go with what suits your fancy, your not selling it to yourself. Stay with a neutral base color scheme.  What is acceptable or considered the norm may vary from area to area and your home type. If your not sure how to color coördinate then ask a friend who does, don’t guess.

3) New carpet is nice but not always cost effective, but what about what is under that carpet?  When it comes to what’s chic, wood is always in and always looks classy.  Refinishing your hardwood can add a ton of appeal to your home.  Even if all you are doing is adding a new coat of shine to it.  A good site to review hardwoods and finishes is A-Max Hardwood.

4) Still have linoleum in your kitchen and bathrooms?  My experience has been that most people associate linoleum with cheap.  Surprisingly tile isn’t all that expensive and not that hard to install.  You can even rent a tile saw pretty cheap for a couple days.  If your really trying to keep the budget down then look for discontinued product.

5) Are your counter tops in good shape?  Do they match with your kitchen and cabinets?  Replacing your counter tops isn’t very expensive if you stay away from granite or corian.  Home Depot or Lowes are both good if you want a quick quote.

6) Nothing dates your home quicker than your lighting.  Buyers will often stereo type a homes quality by the modernes of your lighting fixtures.  Don’t get me wrong, you can spend the farm on lighting, but you can find decent updated fixtures (often on clearance), at a nominal cost.  I replaced nine fixtures in my home for less than $200 bucks.

7) Are your faucets crusty?  Have lime coated toilets and tub? Rickety old toilet seat?  Nothing turns a buyer off more than someone else’s crud. Their crud is OK to them, but not a strangers.  Make sure all your sink fixtures SPARKLE, if that’s impossible with yours then you may want to consider replacing them.  Don’t forget to clean those toilets and tubs good enough to grab a glass of water from them.

8) An easy one we all know is to clean your carpets.  Whether you do it your self or hire someone, it is a low cost item with good return. The clean fresh smell it adds and the new shine is definitely worth the price.

9) Nobody says it better than Shakespeare so I quote “O! my offence is rank, it smells to heaven.”  If you smoke inside your house, STOP!  Take it outside while you are trying to sell. In my experience, the two BIGGEST turn offs to a buyer is a home that smells of cigarette smoke and one that smells of animals, but any bad smell is a no no. While a person may not remember the details of every house they viewed, they will NEVER forget the ones that smelled bad.  That isn’t the impression you want to leave. Many times I have had buyers walk back out the door without even viewing the home.  Buy a fragrance for your home but beware, many people have allergies or are sensitive to smells, so don’t buy the cheapest on the shelf or splatter Old Spice around the house.  I have found that if you stick with a botanical or a better quality fragrance, it is more smoothing and seldom a problem.

10)  Have you ever seen what window treatments can cost?  Oh my gosh, you could buy a second car. But that doesn’t have to be true. I have staged a number of homes and have found quality awesome matching sets of window treatments in stores such as TJ Maxx, Ross, Marshalls, etc… to name a few.  You may need to do some driving.  I once had to visit three Ross stores to find six of the same matching curtains but hey, at $8 to $15 a curtain panel, it was worth the drive.

I hope these tips assist you on your way to a successful home sale, please feel free to comment on any cost affordable tips you have come across so I and others can benefit.

Paul Heim Boise Idaho Real Estate Sales

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