Mortgages Made Easy for the Self-Employed

By Lynne Eliopoulos On May 20, 2012 · Leave a Comment

Getting a mortgage these days can be tough and it is even tougher for small-business owners. Potential self-employed borrowers usually have variability in their income streams. Today, banks are requiring more financial documentation from all buyers, and self-employed borrowers tend to face more scrutiny.

Small-business owners may have a smaller income because they are typically knowledgeable about tax deductions and credits. This often reduces the amount of taxable income they have. Reducing the amount of taxable income on your tax returns means to the lender there is less income to qualify for a loan.

There are ways self-employed borrowers can increase their chances of getting a home loan, however. Here are a few tips:

What is the lenders history?

Find out if the lender has a history of working with self-employed borrowers. Self-employed borrowers should focus more on finding a lender that will understand their situation rather than shop the loan rate. There are individual loan officers who will be able to think out of the box or come up with solutions. The lender you choose is key.

Consider portfolio lenders.

Portfolio lenders have more flexibility in originating loans because they don’t have to sell the loan to Freddie Mac or Fannie Mae. Portfolio lenders hold their own loans. That makes a big difference in their ability to loan. Another option may to consider credit unions. Many credit unions also keep a good portion of loans on their books.

Boost your income.

Show you make as much money as possible on your tax return. You might need to amend your tax returns. Some lenders will look at a loan application again if they have sent in amended returns to the government. Sometimes by rethinking deductions and credits on income taxes, a borrower can increase his qualifying income. Of course, with this strategy, the borrower would also face a new tax bill.

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What NOT to Do When Selling your Home

By Lynne Eliopoulos On May 13, 2012 · Leave a Comment

Seems these days everyone is telling you what to DO, but where is the DO NOT list when selling your home? Here are three easy tips on what not to do in the sale of your home.

1. Do not get emotional

That is easier said than done -this is your home after all. The more you think of the sale as a business transaction the better and thinking with your heart is not always the best route to take when negotiating a deal.

Buyers will not place the same value on your home as you do. You will have to put your emotional attachment aside. A house is worth what a buyer is willing to pay. Much to the seller’s chagrin, this means that buyers set the market. In most cases, there is a going fee for homes. The price is typically is determined by location, house style, number of bedrooms, bathrooms, lot size, and condition to name a few. What is not taken into consideration are the memories and the love you put into taking care of your home.

2. Don’t go it alone

Real estate professionals are skilled to showcase home selling qualities. They are also skilled negotiators who know how to get you the best deal. According to the 2010 National Association of REALTORS® Profile of Home Buyers and Sellers, homeowners that sold on their own property typically received $59,000 less for their home than an agent-assisted home sale.

It can be very difficult for a seller to show and close the deal on their own home. It is usually very awkward for buyers viewing a home while homeowners are still there. It may discourage them from commenting, criticizing things, or even looking as thoroughly as they normally would. A buyer is leery about trusting and working directly with the seller. Negotiations typically break down without the real estate professional’s expertise.

3. Don’t choose the agent who gives you the highest price

Many sellers get caught up in what an agent will say the house is worth. Refer back to number one on this list. The house is worth what the market will bear. Often times an agent may entice you with a higher list price to get the listing, only to drive down the ultimate selling price of your home because it has sat on the market for too many days. Choose an agent based on their reputation, marketing strategy, and one you can trust. You may want to even throw in a gut feeling on the choice. Remember you will have to work with this person so a good relationship is important.

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Why Buy a Home this Year

By Lynne Eliopoulos On May 6, 2012 · Leave a Comment

If you think the dream of homeownership is lost; think again! The American dream of homeownership is quickly becoming more and more feasible in  2012.

There are many benefits of owning a home.  Due to negative press about the real estate market, buyers are skeptical of purchasing with the uncertainty surrounding the housing market. Here are 12 reasons to buy a home in 2012.

1. Rents are at an All Time High- Due to the influx of foreclosures and fewer people making a decision to buy a home, the demand for rentals the past few years has increased. All prices are based on supply and demand and that is pushing up rental prices.

2. The Worst is Over-From the market peak in 2006, the S&P/Case-Shiller index of 20 housing markets is down 32 percent. What does that mean? The housing market could be at a turning point. Signs are showing we are moving from steeply falling home prices to an extended period of stabilizing prices.  You can’t predict the market and you won’t know when low prices are over until they start to go up. Stability is your first clue.

3. Historically Low Mortgage Rates-Long-term mortgage rates fell to new lows in January. According to FreddieMac, a 30-year fixed-rate mortgage averaged 3.89 percent in the week ending Jan. 12, falling from 3.91 percent last week and marking the lowest since Freddie Mac began keeping track. A 15-year fix fell to a record low 3.16 percent.

4. Mortgage Rates Won’t Stay Low-Just like you can’t predict when housing prices will rise; you also cannot predict the mortgage market. It is however unlikely that mortgage rates will remain low for long. This is especially true if demand starts rising and prices stabilize.

5.  Less competition-The slow sales pace is proof that there are fewer buyers out there. That is good news for a serious buyer; they will be less likely to end up in a bidding war. It doesn’t mean that homes that are priced aggressively to sell will not end up with lots of offers. Wait too long to jump in the buyer pool and there may be more competition. The market is showing signals of recovery, meaning demand will pick up. Being a little ahead of the curve gives buyers more elbow room.

6.  Appreciation-Odds are that buying a home at the current rates can almost ensure your home’s appreciation in the future.  With the double advantage of low prices and low mortgage rates the perfect storm for home appreciation is brewing.

7. Build Equity-Your home can actually work as a wealth building or even savings plan for you. Some homeowners are now adding money to their monthly payment to decrease the principal balance of their loans at a much faster pace.  This is called equity building. Because home equity is the largest single source of household wealth for most Americans it is a smart move to ensure financial stability.

8. Tax Deductions-If you are looking to save more money on your taxes than buying might just be the answer. Real estate property taxes for a vacation home and first home are fully deductible.  The IRS Publication 530 provides detailed tax information for first-time buyers that may answer many questions about what deductions homeowners are eligible for.

9. Homes are More Affordable- According to Kiplinger, the percent of family income consumed by a mortgage payment is at record lows. The average family pays only 12% of their monthly income to pay for today’s mortgage. Affordability has not been that low since 1971. Additionally, the Fed’s financial obligation ratio for mortgage holders have fallen to levels not seen since 2003.

10. Moving Up is More Affordable-If you are thinking about buying a bigger or more expensive home this is a great opportunity to save money. Homes in a lower prices range have not lost as much as higher-end homes. For example, if your home in 2006 was worth $125,000 it may now be worth $100,000. The home you may be looking to buy in 2006 was priced at $350,000 but now is under $300,000. You have made a gain of $25,000 in your upward move.

11. Buy Low, Sell High-The uncertainty surrounding the housing market will wane. When the housing market rebounds prices will go up.  Owning a home may eventually be more than just a pride issue, it could also become a profit through a home sale.

12. Pride of Ownership-There are more benefits than just financial gain in homeownership. Some of those benefits may be painting the walls the color of your choice, or landscaping the yard, or having a pet. No matter the reason; homeownership will give you pride.

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How to Clean Hardwood Floors

By Lynne Eliopoulos On April 29, 2012 · Leave a Comment
It seems everyone has an opinion on the best way to wash hardwood floors. Some say soap and water, others polish, or wax. It can all be very confusing.
These tips from iVillage take the guesswork out of cleaning wood floors and go from dull and grimy to gleaming and gorgeous in a few easy steps.

First Things First—Determine the Finish
Before you grab a bucket of water and a mop, it’s best to find out how your wood floor is sealed—if at all. Why? The finish, not the wood type, determines how you clean and care for the floor.

Surface-sealed floors: Most new wood floors are sealed with urethane, polyurethane or polyacrylic. Surface-sealed floors are stain and water-damage resistant and easiest to care for and clean: Sweep, mop and you’re done!

Penetrating-seal-treated and oil-treated floors: Also common, a penetrating seal or oil finish soaks into the wood grain and hardens. This type of floor must be pampered and protected with liquid or paste wax.

Lacquered, varnished, shellacked and untreated floors: Although technically surface finishes, lacquers, varnishes and shellacs are not as resistant to moisture, spills and wear as the other sealants mentioned. Treat floors with these finishes and floors with no finish as you would penetrating-seal-treated and oil-treated floors.

Not sure what kind of finish you have? To tell the difference in a pinch, just rub your finger across the floor. If no smudge appears, the floor is surface sealed. If you do create a smudge, the floor has been treated with a penetrating seal, oil finish, shellac, varnish or lacquer, and then waxed.

Cleaning Surface-Sealed Floors

Product Do’s and Don’ts

Don’t use oils, waxes or furniture sprays. Oil leaves a residue, furniture spray creates a slippery surface (think ice-skating rink!) and wax takes time to apply and makes recoating (see Tackling Simple Wood Floor Problems) difficult.

Don’t use straight ammonia, alkaline products or abrasive cleaners. They’ll dull or scratch the finish.

Do use a floor-cleaning product recommended by the floor finisher or opt for plain soap and water. If the recommended product is hard to find or costly, and other floor cleaners contain ingredients that violate your floor’s warranty, try soap and water. I add a quarter cup of mild or pH-neutral soap (like liquid dishwashing soap) or Murphy Oil Soap (despite the name, it doesn’t contain oil) to a bucket of water.

Don’t rely on water alone or a vinegar and water solution to clean hardwood floors. Mopping with water will result in dingy-looking floors and won’t-budge dirt buildup. Vinegar and water is not as effective as soapy water and—some suggest—may dull floors sooner. (Eventual dullness and the need to recoat are inevitable no matter what you use. See Tackling Simple Wood Floor Problems.)

Routine Cleaning

In high-traffic areas, like the dining room and kitchen, you should sweep daily, if possible, and mop once or twice a week.

Mop less-trafficked areas once a month or once a season.

Mopping Technique

Remember: Water is wood’s worst enemy (even on sealed floors!), so use a damp mop rather than a soaking wet one.

Dip the mop into the bucket of prepared cleaning solution, wring it out completely, mop in the direction of the wood grain and repeat. When the water gets dirty, empty the bucket, mix a new batch of cleaning solution and continue mopping.

When finished, go back over the entire surface with clean water to rinse.

Don’t be afraid to get on your hands and knees if necessary. When a floor needs serious attention, I clean it with a cloth. (It’s better than a sponge because you can “feel” the dirt as you wipe!)

Tackling Simple Wood Floor Problems

Scuff marks getting you down? A bit of baking soda on a damp sponge will erase them.

Noticed a stubborn food, water or grease stain on your surface-sealed floor? Always use a commercial cleaner to treat this problem.

Hairline cracks in the floor? Don’t panic and attempt to fill them. Dry heat during the winter months causes wood floors to shrink and crack. Cracks should close up during the summer (though using a humidifier can also help).

Finish looking dull? Sand the floor lightly and recoat with an additional layer or two. Recoating is necessary about every five to seven years.

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