Why Should You Control Spending...

The desire to spend money is handed down from generation to generation.

It starts with going out to restaurants, to purchasing the all new X-Box 360, and the most favorite, the desire to buy our “dream car”.

After spending, the focus is then changed to the “American Dream”…Home Ownership.

One major challenge: “Often times the challenge is when expenses exceed income…” So we challenge you to  prepare now for you financial future by controlling spending and change spending to investing

Contact 3DS® to get pre-qualified! First, state the amount you would like to invest and the amount of your down payment. Next, provide your income information and all other necessary documents to qualify for the loan. 3DS® will “Help You Make a Decision You Can Live With.”

Debt Ratios

When determining your ability to qualify for a mortgage, a lender looks at what is called your “debt-to-income” ratio. A debt-to-income ratio is the percentage of your gross monthly income, before taxes, that you spend on debt. This consist of your monthly housing cost, including principle, interest, taxes, insurance, and homeowner’s association fees, if applicable. It will also include your monthly consumer debt, along with credit cards, student loans, installment debt, etc…

How Debt Reduces Your Purchase Price

Payoff as much debt as you can even if you feel you can afford the extra payments. Take the time to get pre-qualified for a loan.

If you have not already bought a car or any other major purchase other than your new home, always think ahead as investing. The primary thing to do is buy the home first. Buying a home is a much more important purchase when considering your financial future well being. Buy a home first, then enjoy all of the other added benefits that come along with it.

Determining Your Offer Price

When an offer to purchase a home is made, we already know the seller’s asking price. As a buyer we want to know what is the best offer we can make? and why:
Determining your offer price is a process.

First, we must look at recent sales of similar properties in the same geographical location to come up with a solid offer regardless of what the asking price is. Next, examine the condition of the home, improvements made to the property, current market conditions, and the circumstances of the seller. These all play a major part.

Lastly, 3DS will negotiate on your behalf for a fair price and also present what you have decided your offer will be.

Comparable Sales

The first step in determining the price you are willing to offer is to look at the recent sales of similar homes. These are called “comparable sales”. Comparable sales are recent sales of homes that compare closely to the one you are looking to purchase.

There are three main sources on comparable sales. All of which are easily accessed by 3DS.

Conditions Affecting Your Offer Price

When evaluating a home’s condition, a few details must be reviewed. Structural condition is most important (walls, ceilings, floors, doors, and windows). Next you must examine the paint, carpet, and floor coverings. Replacing carpet of painting are surface issues which can be resolved immediately with little cost. However, structural concerns can become more expensive to bring up to code.

We are particularly concerned with plumbing and electricity. Also look at the fixtures, such as light switches, doorknobs, and drawer handles.

If you do not have an interest to do this yourself, do not worry. You will be protected when a professional home inspector performs a full report. Then you can compare this report to your own report you completed.

How Home Improvements Affect Your Offer Price

Note, whether the previous owners may have made any improvements of significant value. Major improvements should be taken into account. Most important would be room additions, especially bedrooms and bathrooms.

How Financing Details Affect Your Offer

Oftentimes buyers do not have enough cash available to buy a home. So a mortgage is obtained to finance the purchase. Since the majority of buyers make their purchase contingent upon obtaining a mortgage, the seller has the right to be informed of any financing plans in order to review the offer. That is one of the reasons that financing the details are included in your offer to purchase a property.

Down Payment

As part of your offer you will need to disclose the amount of your down payment. Once again, this allows the seller to evaluate your likelihood of obtaining a home loan. It is easier to get approved for a mortgage when you make a larger down payment. The underwriting guidelines are less strict. However, there are many programs that allow 100% financing.

Asking for Closing Cost and Financing Incentives

There may be times, as part of your offer, when you request the seller to pay all or portion of your closing cost, or provide some other financial incentive. One common request is asking the seller to provide funds to temporarily buy down your interest rate the first year or two. Such incentives can be especially effective if a buyer is tight on money or pushing their qualifying ratios to the limit.

Seller Financing

Another occasional request is to have the seller “carry back” a second mortgage to help facilitate your purchase of their home.

If such a carry-back is part of your offer, you should include the terms you wish to pay on such a second mortgage. Keep in mind that your first trust deed lender needs to know this information so they can underwrite your loan and also so they will have certain minimum requirements.

Cash Offers

If you are one of those rare individuals making a cash offer to buy a home, it makes sense to provide some documentation with your offer that shows you have the funds available. A bank statement would be fine. If you have to liquidate stock or some other asset, your offer should give a timetable on when you will provide full proof you have converted the asset to cash.

Things Not to Do Before Purchasing a Home

No Major Purchase of Any Kind

Do Not Move Money Around

When a lender reviews your loan package for approval one of the things they are concerned about is the source of funds for your down payment and closing cost. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposits, stock statements, and mutual funds. And even your company 401K and retirement accounts.

So leave your money where it is until you talk to a loan officer.

Should you change Jobs?

For most people, changing employers will not really affect your ability to qualify for a mortgage loan, especially if you are going to be earning more money. However, for some homebuyers, the effects of changing jobs can be disastrous to your loan.

Why Buying a Home is a Good Idea

The Best Investment

As a fairly general rule, homes appreciate about four or five percent a year. Some years will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region.

Supply and Demand

When the supply of available houses is greater than the supply of buyers, appreciation may slow and prices may even fall, as happened in the early eighties and the early to mid-nineties