Your House and Elections

Your House and ElectionsWith the national elections ramping up, many voters already have voter fatigue (also called voter apathy). That is, we’re already so tired of hearing about the elections that we don’t bother to vote at all. In fact, voter apathy is quite high in the United States: Somewhere between a third to a half of eligible voters do not vote in national elections and even fewer vote in local elections.

But, “the likelihood that a homeowner will vote in a local election is 65%, compared to 54% for renters” and they are 3% more likely to vote in national elections than renters.

Here’s why not voting is a bad idea:

Local elections can affect the marketability of your home

The value of your home is determined by a variety of factors, one of which is the rating of the local schools and another is the infrastructure of the community (the age and condition of the bridges, roads, drainage, street lights and other municipal projects). When a municipal bond issue comes up for vote, the outcome can affect both your bottom line through property and sales taxes, and the community desirability via new roads, better schools and protection from flooding (for example).

National elections can affect home prices

The affect on home sales prices is not because of the specific outcome of the elections, but because consumers become more nervous about the economy during election years. When larger blocks of homeowners vote, they are placing their trust in the economy and the expectation that home values will rise.

Direct effect on property taxes

Some propositions have direct effect on your property taxes and the sharing or distribution of municipal expenses. For instance, in an upcoming election in Texas, directly changes the amount that a homeowner is able to exempt from property taxes (the homestead exemption) and makes that change a constitutional amendment … meaning that it takes another vote of the State’s entire electorate to change it. You might think that this would raise marketability to non-child families and lower marketability to families with children, but proponents believe that instead, it will increase home values across the board, thereby increasing tax revenue to schools.

One aspect of participating in local elections is that the homeowner gets to know what is important to other people in their community. Being part of a community is one of the benefits of homeownership. Connecting with your neighbors to improve your schools, streets and bridges can bring a sense of civic pride and camaraderie to your neighborhood.

Your local real estate professional can indicate which areas in your neighborhood adversely affect the market value of your home. If you can help improve those things now, you should, so that when you’re ready to sell, your home’s value is at its highest.

Compliments of Virtual Results

Spooky or Spectacular?

Spooky or Spectacular? Best neighborhoods to liveSometimes, a neighborhood appears awesome…but might be hiding some spooky, ghostly elements!

You can’t know, for instance, how welcoming some neighborhoods are to families with small children unless you see small children there.

If you’ve only visited the neighborhood during the workday, you won’t know if the streets fill with bicycles and skateboards at 3:00 PM when school lets out. If you’ve never been there on a Saturday, you don’t know if neighbors chat while doing outdoor chores, or if they hide indoors and hire landscapers to take care of their yard work. Your dream neighborhood might look like Mayberry RFD, but looks can be deceptive.

Before you say Boo!

Take the time to check out potential new neighborhoods at times when children might be visible before you buy that house!

In fact, Halloween is the perfect time to visit a potential new neighborhood!

Here’s what to look for in kid-friendly communities:

  • Decorations: Drive through the streets of your potential new neighborhood and check out the number of homes sporting Halloween decorations. These can range from giant blow-up black cats to “spider-webs” covering hedges and fences. Note that straw and pumpkin decorations do not necessarily indicate a child-friendly area since these decorative elements also might be in honor of “harvest” and “fall” rather than just Halloween.
  • Signage: Okay, some neighborhoods have signs all the time that indicate the presence of children. These include playground signs, slower speed limit signs, images of children crossing streets or playing, and even random speed bumps. Some neighborhoods, however, anticipate additional children in the area by posting temporary speed limits for Halloween. Others, knowing that their neighborhood might be inundated with extra children during Trick-or-Treating will post special parking rules during that time.
  • Community Activities: Some child-friendly communities offer more protective activities in the common areas, especially for smaller children, during the afternoon and up through early evening. The goal with these programs is to keep smaller children off the street and out of danger while still enjoying trick-or-treating activities.

If the neighborhood is older and laid out in regular grid streets, you might not find a common area for holiday activities. That doesn’t mean that neighborhood is not kid-friendly, it just means you need to look for other clues. Of course, you’ll always be able to see decorations on individual homes and in private yards, but if these are just hit-or-miss, you’ll want to do more thorough investigating.

One way to do that is to drive through the neighborhood on Halloween. (Note: For investigative purposes, you probably don’t want your children along because they may be disappointed.) Look for homes with porch lights ON. The traditional indication of a home participating in Halloween trick-or-treating is to have the porch light on. Of course, some homes have automatic exterior lights, so also look for the presence of someone in the home … lights visible through window coverings, too.

Observe the number and age of children moving through the neighborhood from home to home.

If there are few lights, little-to-no decorations and only small numbers of children, that may not be the neighborhood for you if you’re wanting lots of family activity.

Also, check the community pages for fun-and-friendly neighborhoods. Many municipalities list the best neighborhoods for trick-or-treating with kids of various ages.

Your real estate professional can help you determine the suitability of a neighborhood for your family’s needs and help you find the home of your dreams.

Compliments of Virtual Results

Keeping It In Balance: Knowing Your Credit-to-Debt Ratio

shutterstock_183978059Many potential new homebuyers find themselves unable to secure a loan, confined to a smaller home ? or at least to a smaller loan ? because they don’t understand the ins and outs of their credit score.

First of all, your FICO (Fair Isaac Corporation) credit score does not tell you how much you can afford, how much you have saved for a downpayment, how well you budget or the balance of any of your bank accounts.

What it does tell you (and your lender) is how you handled credit over time. Although the algorithm FICO uses to determine your score is a closely-guarded industry secret, the primary factors negatively affecting your credit score are late payments and your debt-to-credit ratio.

You know what to do about late payments. Pay. On. Time.

If you have late payments in your payment history, the best thing you can do about them is to not have any more late payments. The older the late payments are, the more your on-time payments can offset them.

Debt-to-Credit Ratio

Your debt-to-credit ratio is entirely different. You are in control of this aspect of your credit score, so you need to know what it’s all about.

On your credit report you’ll see a category called “amounts owed” that, rather than actually reflecting the amount of money you owe, speaks to the relationship between how much you owe to the total of your available credit. That is, the credit limit of your credit cards. Also called your credit utilization, your debt-to-credit ratio can raise or lower your FICO credit score.

That means that — all other things being equal — while both you and your twin brother may OWE $2000 on credit cards, your brother’s credit score could be lower or higher than yours based on the ratio between what you owe and the amount you have available.

Say you have a credit card with $5000 available credit and you owe $2000 on that card. You are using two-fifths of the available credit or a .40 ratio (40% utilization). Your twin has a card with $3500 available credit. He also owes $2000. He has utilized four-sevenths or .57 ration (57% utilization) so his credit score will be lower than yours even though you both owe $2000.

The higher the ratio of utilization, the greater the possibility of a red flag on your credit report that you may be overextended financially. Although your twin may well be able to afford the payments he has, should an emergency occur, he do not have as much margin available and could slip into difficulty in meeting financial obligations.

The amounts owed category also reflects:

  • how many accounts you have open,
  • how recently they were opened,
  • how many of those have maxed out balances,
  • other loans you may have (such as a car payment), and
  • the relationship of how much you currently owe to the original amount.

What’s the goal amount?

Most financial planners suggest keeping your utilization no higher than 30% at any given time among all your credit accounts.

There are a couple things you can do about your ratio:

  • Do not close old accounts.

When you’re trying to reduce your debt-to-credit ratio, you may be tempted to close old accounts that you have paid down to zero. If you do, however, that credit is no longer counted in the “available” category. In the scenario above, say that the $2000 you owe is spread between two credit cards: card one with a limit of $1000 at 100% utilization ($1000) and one with a limit of $4000 at 25% utilization ($1000). If you paid off the $1000 limit card brining that credit card to zero, but leaving it open, would give you a credit ratio of .20 (or 20%). If you close the account, your available credit drops to $4000 so your utilization bumps up to 25% or a debt-to-credit ratio of .25.

  • Pay down as much as you can

When you are seeking a mortgage, do more than just pay the minimums. Try to pay as much down on your credit accounts as possible, as soon as possible ahead of applying for a mortgage loan.

  • Be careful opening new accounts

It might seem logical to open more credit accounts to increase your available credit and lower the ratio, but another factor in your FICO score is how recent new accounts are relative to your loan application. Since the exact impact this can have on your score is not available, err on the side of caution.

If you have questions about how to improve your credit score, your real estate professional may be able to direct you to more resources.

Compliments of Virtual Results

Counting Chickens

Counting Chickens

If your house has been on the market for any length of time, or if you need to sell because of an out-of-town job change, you may be tempted to accept a contingency offer on your home, or anticipate the completion of the sale.

You’ve already picked out the new house, planned the move, chosen paint colors in your head and mentally decorated for the holidays.

This is when that old saying, “Don’t count your chicken’s before they hatch” holds true.

No one wants to accept an offer on their current home and then be disappointed that the sale falls through. You want it to be a solid deal from the get go.

Before you jump at an offer, take the time to consider and anticipate why a sale may fall apart and take steps to mitigate your exposure. Your real estate professional is prepared for this, so listen to their advice when making decisions on accepting offers.

Here are some areas to watch for, any one of which can become a deal-breaker:

  1. Disappointing appraisals: 

    Sometimes, the appraisal can come in lower than expected. If it is lower than the list price it can delay the sale. A buyer’s lender will only lend up to the property’s value, so unless the buyer is willing to make up the difference in cash, or you’re willing to lower your price, the deal may fall through. To protect yourself from a low appraisal, have your real estate professional give you a fair market value (FMV) quote that anticipates differences in the local market.If there is considerable difference between your FMV and the buyer’s appraisal, you can request that the buyer get a second appraisal. Sometimes appraisers just miss stuff. But, sometime we believe our property is worth more that the market actually will bear.

  2. Lower than expected comparable home sales: 

    It is possible that your home is an exception. That means that there are no truly comparable homes within a specified distance of your home. In particular, this may be true of homes in rural developments, larger estates or completely remodeled and upgraded homes in older neighborhoods.In this case, ask for comparable home sales to include homes further away or with more similar upgrades and amenities.

  3. Documentation errors: 

    Misspelled names, transposed address numbers and a host of other potential errors can derail closing documents. Take the time to review each and every document as you see it the first time. Request corrections immediately and then review the new documents.

  4. Title insurance glitches: 

    If you inherited your home, have suffered a divorce, or bought the home through less than conventional means—a wrap-around loan or lease-option, for example—the title of your home may not correctly reflect your ownership.From the moment you begin considering selling your home, take the time to check on your title and any other paperwork, past loans, former liens, other possible glitches to a clear title. Be proactive so that you aren’t surprised on closing day.

  5. Buyer financing problems: 

    It all comes down to money. As much as a buyer may love your home and want to buy it, if they don’t have the financial means, they can’t do it.Before agreeing to an offer, make sure the buyer is pre-qualified and pre-approved for the loan in the amount required to buy your home. You don’t want to learn at the last minute that they buyer’s loan is for $10,000 less than you’re asking. If you’ve already made an offer or bought another home, you’ll be tempted to take the lower amount, potentially losing thousands of dollars.

  6. Contingency offers: 

    When a buyer also has a home to sell, no amount of preparation on your part can save the sale of your home from imploding if the buyer’s contingency falls through.If you need to sell your home quickly, DO NOT accept a contingency offer. On the other hand, if you have plenty of time to sell your home, locking in a buyer with a contingency might be the right call (if prices might appear to be falling, for example). Work with your real estate professional to determine if a contingency offer is right for your situation.

  7. Last-minute lender requests: 

    Sometimes it comes down to paperwork and sometimes it comes down to the lender wanting just one more piece of reassurance that the buyer can handle the mortgage. This may particularly be true of FHA, USDA and other government backed loans. Since the real estate bubble and banking collapse, the rules for certain loans have tightened.Refer back to #6. Make sure your buyer is pre-qualified and pre-approved, has the downpayment in the bank and is prepared to close in a timely manner. Let your agent work with their agent to make certain everything is in place before locking in that offer.

Your real estate advisor can help you navigate the process and inform you of possible pitfalls in accepting an offer with the potential to fall through.

Compliments of Virtual Results