Self Employed and want to buy a home???

Since the real estate shift of 2007 which caused lenders to re-examine the criteria and types of loans they offer to potential borrowers, the self-employed seemed to have gotten the short end of the stick with 'no-doc' and 'stated' loans all but vanishing for a while. With good reason, during the previous ramp up in the industry, these loans were used to inflate a borrowers' incomes to allow them to qualify for more house. The result is what we have now. While this wasn't the only cause of the meltdown, these loans were the most popular for fraud.

To obatin a loan being self-employed in this current market, documentation is the key! I polled all the loan officers on my FaceBook Page to see what their thoughts were, being on the inside and seeing the underwriter's objections and preferences on a daily basis. I'll post the results at a later date. Being an independent contractor myself, I can relate to the extra hurdles you have to go through to obtain a mortgage on personal and investment property.

Here are the best five tips that I've found online to make yourself an attractive candidate to a lender when you are self-employed:

Max Out Your Credit Score
In any type of borrowing situation, a higher credit score will make you a more attractive candidate to get the loan in the first place and to qualify for lower interest rates if you're approved.

Offer a Large Down Payment
The higher your stake in the home, the less likely you are to walk away from it in times of financial strain. Therefore, the bank will see you as less of a risk if you put lots of cash into your purchase up front.

Have Significant Cash Reserves
In addition to a large down payment, having plenty of money in reserves shows lenders that even if your business takes a nosedive, you'll be able to keep making your monthly payments.

Pay Down Your Consumer Debt
The fewer monthly debt payments you have going into the mortgage process, the easier it will be for you to make your mortgage payments. If you pay off your credit cards and car loans, you may even qualify for a higher loan amount because you'll have more cash flow.

Have an Established Track Record of Self-Employment
If you can show that you know how to play the self-employment game and win, lenders will be more willing to take a chance on you. Some advice suggests that you should have at least two years of self-employment history; other advice, however, says that when rates are low, you should try to get a mortgage as soon as you're ready, even if you don't have a long history of successful self-employment.

Be Willing to Provide Documentation
Being willing to fully document your income through previous years' tax returns, profit and loss statements, balance sheets and the like will increase your chances of qualifying for a loan.

You can contact me directly at rousereo@gmail.com to put you in contact with a loan officer to discuss what options you have to purchase a home when you are self-employed.

Gwinnett still GREAT?

Even though the water towers started coming down, residents still believe that "Gwinnett is Great" and that "Success Lives Here." The AJC had a write up on the demo of the iconic towers and it made me start to wonder if just because the visible proclamation would be removed from I-85, would the ideology still remain? The answer is an astounding YES!



As a resident of Gwinnett County since 2002, the main drive for my relocation was to purchase a home in a good high school district. I knew that chasing good elementary and middle schools was not the route to go to maintain stability for my kids and sanity for myself. Being a Realtor, giving people a reason to move is something I put into action for others everyday, but I don't like doing it myself! Sure enough Gwinnett has stayed atop the ranks for public schools and Brookwood High School was ranked in Newsweek's top high schools in the nation! You can read my blog with full details on that accomplishment AND search BROOKWOOD HIGH SCHOOL REAL ESTATE. There are numerous schools (Archer High School being the most anticipated) being built as I type to accommodate the new and existing residents of Gwinnett.

The second reason I consider Gwinnett to still be one of the top counties to live in is because of the retail establishments. With 3 shopping malls and numerous retail centers like The Avenue Webb Ginn in Snellville, you don't have to venture out to get what you want to spend your money on. On top of the booming retail there are attractions that are only rivaled by Fulton County like the Gwinnett Arena (Phillips Arena), the new Gwinnett Braves Stadium (Turner Field), and Town Center Park in Suwanee (Centennial Olympic Park).

The third reason is interstate / highway expansion and road conditions. With the completion of the I-85 and SR-316 interchange two years ago being the most prominent, expansions of major roadways are combating the notorious traffic unlike other counties (who shall forever remain nameless) that have had the same issues for years. On a side note, cheers to Dekalb for finally finishing the Wesley Chapel and Memorial Drive bridges--good stuff.

The last reason is crime! According to the GBI stats from 2009, even with the second highest population of all of the counties in Georgia, Gwinnett is lower than a couple of neighboring Atlanta counties. Check out the stats for yourself!

What makes a house a BAD buy

In this current real estate market the abundance of homes has left some homeowners and banks wondering why they are not getting ANY activity when the home that they have for sale is priced right for the market. The answer is simple. Certain characteristics of a home will make it unfavorable or even obsolete in comparison to other homes on the market. These hindrances don't only apply to older homes either.

A home with only one full bath room is probably the number one no-no for buyers in this current market due to the options they have with two or the more favorable 2.5 bathroom homes. Guest bathrooms are almost mandatory in buyer's minds now. The only exception to this characteristic being a problem ITP (inside the perimeter of I-285. However, even in the city, the home must be in an area is VERY exclusive, has no competition with 2 bathroom options, or in an area where 2 bath homes literally don't exist--think Cabbagetown under $200K! A home with a shared master bathroom is a HUGE obstacle as well. Even apartments have a master bathroom so buyers are used to not having to share their personal bathroom with guests. Even the 60's style homes with a shared master bath are a hard sell. Last on the bathroom list are those with only a shower in the master bathroom. This can be overcome, however, if the shower is large or has enough space to be replaced with a tub/shower combo.

No central air conditioning is the second largest hurdle on resale. Atlanta has very high levels of humidity so its not like California where a/c is optional! Just driving up to a home with A/C units in the window makes buyers quiver. Just the though of baking in a house, being at the mercy of window units, or the thought of paying for a new A/C system will definitely deter them from inquiring further.

Homes with no garage or carport are only a hurdle the further outside of the city you get. In the city, driveway or even street parking is custom so garages are golden. In the suburbs a garage is almost mandatory and with most suburb house hunters owning at least two-vehicles a one car garage is very unfavorable---but not a deal breaker. A saving grace would be a generously long driveway or the garage being enclosed to make a additional, true bedroom or game room.

If you are a buyer, these are items that you should think twice about purchasing a home like any of these because when you go to re-sell it, you may end up with a hard sell on your hands.

If you are a seller with a home with these obstacles, don't fret! You can sell your home with some aggressive pricing, good staging, great marketing, and a little bit of luck!!!

BUYING A CONDO?

You've found your dream condo, and you're ready to relax under the city lights of Atlanta and kiss your commute goodbye. Hold everything. To keep from getting stuck with a lemon, you've got to do some homework. Here are the seven most important questions you need to ask before buying a condo.

1. "What's the Beef?"
Take a look at the minutes of the condo association board meetings to see what the owners have been griping about. If everyone was complaining about the faulty plumbing or the gardener's absence, you know that the complex is having management difficulties. Even if there aren't any complaints, reading the minutes will reveal the sorts of projects that are under way at the complex -- projects the seller may have neglected to mention.

2. "Who's Been Naughty and Who's Been Nice?"
Find out the delinquency rates of present owners. If people aren't paying their association dues on time, that is either a sign of discontent or an indication that the association might be underfunded.

3. "How Much Is In the Repair Fund?"
Ask if the community has done a reserve-fund review in the past five years. Lester Giese, the author of The 99 Best Residential & Recreational Communities in America, recommends the following formula: If the complex is one to 10 years old, the reserve fund should have 10% of the cost of replaceable items (roofs, roads, tennis courts, etc.). Between 10 and 20 years old, the repair fund should be at 25% to 30%. At 20 years, that amount should be 50% or above. Residents who brag that they don't pay much in maintenance may be in a complex that either is not being kept up well or is living beyond its means.

4. "Can You Cover Me?"
If you look at nothing else, get a copy of the certificate of insurance, which is a summary of the association's policy. First see if the replacement costs covered by the policy are an accurate estimate of the cost of rebuilding. Then make sure that the policy has a building-ordinance clause, which means that the insurance will cover the cost of bringing the building up to code if there is any rebuilding to be done. On older buildings, there may have been many code upgrades since the time of construction. Finally, make sure that you understand exactly what the association policy covers and what you are responsible for. The smart condo owner will insure his or her personal belongings, along with any other items within the unit that are not covered by the association's policy. If you have trouble understanding the insurance lingo, take the insurance certificate to an agent whom you trust and who understands the state laws.

5. "Does the Association Present Any Legal Problems?"
Buying a single-family home without a lawyer is no big deal for many people. But with a condo, there's so much more involved. Contact a local real estate lawyer and have him or her go over the bylaws of the association. Do they make sense? Are they consistent with the state laws? Giese, the author, once found that the association bylaws of a large garden-style condo complex had been lifted from the books of a high-rise condo, leaving confused tenants with rules about shared hallway space and the correct use of garbage chutes. Benny Kass, a Washington real estate attorney, recommends that you also have your lawyer screen the association at the local courthouse, to see if any owners have filed suit against it.

6. "Is the Complex Renter-Friendly?"
If the renter population is over 10%, there should be clear rental policies, either listed in the bylaws or tacked on as an amendment. Does the management company find renters for you? If so, do they get enough good renters? Ask other tenants about their experience. In addition, ask to see the association's rental lease, and have a real estate lawyer look it over. Keep one thing in mind, though: An association can change its bylaws to prohibit or restrict renting at any time. The more owners who rent, the less chance that will happen.

7. "Am I My Community's Keeper?"
Watch out for a condo whose owners manage the place themselves. Although many are operated efficiently, self-management can lead to more hassles for owners -- especially those who live thousands of miles away. If the complex is professionally managed, check out the management company as thoroughly as you check out the association. Ask other owners. Ask people in nearby buildings. And be sure to interview the day-to-day manager directly. If you hook up with a bad manager, you can be sure of this: Your dream condo will keep you up at night under those city lights!

• RISMEDIA, May 21, 2010

When a lowball offer TOO low???

Often times in frantic real estate markets where there are more properties for sale than buyers (a.k.a a buyer's market) buyers will automatically get very aggressive on initial offers and even go as far as submitting offers on multiple properties at a time! A practice usually common among investors, is now common among all types of home buyers. The reasoning may be anticipating a desperate seller, testing the waters, or no knowledge (or clue) of the fair market value of a home. But to understand or find logic in the low ball offer you have to look at it from both sides.

On the buying side, before even presenting an offer you and your real estate agent (you thought I'd tell you to go it alone? Ha!) need to determine fair market value of the home in it's current condition. Next you need to determine the bottom line you think a seller will take for a property by taking into account numerous things (payoff, commissions, seller's anticipated profit, taxes, etc.) and then see if the number you are thinking of makes sense. One thing I've learned over the past year is not to let the seller's payoff deter you because some sellers actually have the ability to satisfy second mortgages or shortages on the primary loan in order to close WITHOUT doing a short sale. The most important thing about a 'low ball' offer is that it has to make sense and be well put together. A realtor or the seller will not take an offer seriously if they don't see the basis of your offer; especially if its incomplete, missing docs, contains misspellings, etc.

On the selling side, you should anticipate low ball offers and not be offended when you receive one. The proper response is to either reject the offer or my favorite is countering the offer at full price. Many buyers will submit low ball offers because 'they just had to try', but are still serious about purchasing. Cash buyers are usually always aggressive, but analyzing your bottom line against the offer and factoring in carrying costs, some all cash offers are not bad at all! Always be open-minded and look for ways to structure the deal to make it work. When selling a home, leave the emotions on the table and let the buyers deal with that! On the selling side it's about making the numbers work!!!

The Federal Tax Credit Deadline Has Passed--------NOW WHAT???

Now that April 30th is here and gone it alleviates any questions (so far) if the tax credit will be extended. I personally think that it will be re-introduced after the housing numbers are out detailing the inevitable increase in homebuying and hopefully a slight stabilization if not slight increase in home sales. While April 30th was the deadline to be under contract, June 30th is the deadline to close to be eligible. I hope that an amendment to the program is added to include ANYONE who closed before June 30th.

To agents and to actively seeking homebuyer's credit, it was NOT the ideal market to make a deadline in. From the high number of buyers using FHA and the low number of FHA eligible homes it cause bidding wars that I haven't seen since 2006. Also with the high number of foreclosure and short sale properties, forcing a bank to understand the need to expedite the negotiation process in order to get binding contracts in time was almost futile in every way. I started April with 10 buyers 8 of which were eligible for the tax credit. Seven went under contract in time (two were ON the 30th!) After gaining more buyers, through referrals, I now start May with 10 buyers again with 4 who were unable to secure a property in time.

The market I anticipate this month is going to be more of the same. I think less than 5% of buyers who were actively looking will stop looking because of the expiration of the tax credit. Once people are emotionally invested, money becomes less of a motivator. I think that sellers will take note and still remain motivated to sell. Banks may begin to see the importance of sprucing up these foreclosures a bit to expedite the sale. I also think a positive result of the bidding wars will be better comps (comparable properties used in appraisals) to help increase property values. Which EVERYONE will be happy about.

Cash needed BEFORE closing

Often times you often hear of the down payment to buy a house or the cash needed to close. However, there are expenses that require additional funds prior to closing and in addition to the funds needed to close. Here is a quick breakdown:


Earnest Money
While your earnest money is technically credited back to you at closing, you will often need to deposit certified funds into the escrow account of either the brokers involved or the closing attorney. While this is deducted from your cash to close, you will need these funds available prior to closing. Earnest money is typically $1,000 for every $100K being purchased. On all cash offers, this can be as much as 10% of the sales price. I'll be creating a blog strictly about earnest money as there are a TON of misconceptions about what it is and how it works.

Home Inspection
A home inspection is optional but recommended on any home you purchase even if it's new construction! The cost of the inspection is usually based on the sales price and size of the home. They can range from $250 to $500 on homes under $500K. With inspetions you definitely get what you pay for so don't skimp here, get someone that is every thorough with a detailed inspection report. It can only help you!!!

Termite Inspection
Termite inspections are also optional and also recommended on any home you buy even if it is 4-sided brick. They usually cost $45-$75. Termites are very common in the southeast so having an active infestation is not the end of the world. As long as the termites haven't penetrated the home into the studs, a treatment can run under $1,000 on a home under $500K.

Appraisal
This is a mandatory part of a purchase requiring a loan to purchase. The only exception are HUD homes in which your lender will use HUD's appraisal saving your some cash! In the past some lenders would include your appraisal in what they called an application fee or even rolled the cost into the closing costs; however with recent federal guideline changes, the appraisal is paid outside of closing by the buyer. An appraisal can range from $350-$450.