Friday, January 5, 2018

How Much Home Can You Afford?

One of the most common questions a first-time home buyer will ask is "How much home can I afford?"
The answer, as a mortgage lender will tell you, is that "it depends".
There are no concrete rules for how much home you can afford, or how big your mortgage can be.
In part, this is because mortgage lenders determine your maximum home purchase price differently from how you might calculate it yourself via a mortgage calculator.
Both methods, though, take today's mortgage rates into account.
Let's examine them.
Verify your home buying eligibility (Jan 5th, 2018)

Method 1: Let The Bank Use DTI To Determine Your Maximum Purchase Price

When you ask a bank to calculate your maximum home purchase price, the bank will give very little consideration to your existing home hunt, or any properties on which you've considered making an offer.
Rather than using a specific sales price, the bank will consider your annual income and your annual debts only.
It will use that data to find the largest mortgage payment you could make without raising your debt-to-income (DTI) ratio above allowable maximums.
Most conventional loans enforce a maximum DTI of 45%, with the exception of the HomeReady™ program, which allows up to 50% DTI.
FHA, VA, and USDA mortgage loans also enforce a maximum DTI near 45%. Jumbo mortgages stop around 40% DTI.
Now, once the bank has found your maximum mortgage payment, it uses current mortgage rates to "back in" to a loan size, which tells you how much you can borrow.
This method of determining how much home you can afford is effective, but dangerous. It's based on borrowing the absolute maximum for which you can get approved, which is often not advisable.
Banks can't tell you what you should pay for a home -- they can only show you what you could pay for a home.
Your debt-to-income is considered in two parts -- the front-end ratio and the back-end ratio.

Debt-to-Income : Front-End Ratio

The first component of the debt-to-income ratio is the "front-end ratio".
Front-end ratio compares the expected monthly housing payment to a buyer's monthly income, where "housing payment" includes all of the following obligations :
  • Monthly principal + interest payments
  • Monthly real estate taxes due
  • Monthly homeowners insurance due
  • Monthly dues due to an association
There is no maximum limit for a front-end ratio, but lenders prefer to see front-end DTI of 28% or less. This means that banks prefer that 28% or less of your total monthly income be allocated to your housing payments.
You can still be approved with a front-end ratio above 28%, but it's a little less usual.

Debt-to-Income : Back-End Ratio

The second component of debt-to-income ratio is the "back-end ratio".
Back-end ratio compares not the monthly housing payments against a buyer's monthly income, and all other monthly payments, too.
Back-end ratio accounts for all of the following monthly obligations a home buyer may have :
  • Monthly housing payment(s)
  • Monthly minimum credit card payments
  • Monthly child support or alimony
  • Monthly car payments for a car loan or lease
  • Monthly payments to an installment loan such as a timeshare
In general, banks want to see a back-end ratio of 36% or less, however, having a DTI over 36% will not disqualify your loan application automatically.
Verify your home buying eligibility (Jan 5th, 2018)

Method 2 : Make Your Own Monthly Household Budget

As a home buyer, you can rely on a bank to tell you how much home you can afford, or you can figure it out on your own.
In many cases, your bank will approve you for a more expensive home than you want to purchase. This is because banks will approve you to your maximum home price, which can generate more fees.
When you purchase at your maximum upper-limit, though, it doesn't leave you with much cash for saving, investing or living -- let alone paying taxes.
Therefore, consider a more personal approach to "How much home can I afford?".
To do this, first, determine the maximum monthly payment you'd like to make each month. This will require thought and attention to your household budget.
Then, using using a mortgage calculator, plug in your desired payment and today's mortgage rates to find the loan size that kind of payment will afford.
For example, if you budget for a monthly housing payment of $2,500 with two percent annually going to taxes and insurance, assuming the current 30-year mortgage rate is 4%, the math "worked backwards" reveals a maximum home purchase price of $385,000.
This method is better at holding you "on budget" as compared to letting a bank set your maximum purchase price.

What Are Today's Mortgage Rates?

To answer "How much home can I afford?", ultimately, requires a buyer to know today's mortgage rates. Mortgage rates affect monthly payments which, in turn, affect your budget.
Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.
Show Me Today's Rates (Jan 5th, 2018)

Tuesday, January 2, 2018

Your Ultimate Moving Checklist – Simplification and Peace of Mind During The Moving Process:




Moving is ranked as one of the most stressful experiences you’ll ever go through, and most of us go through it once every four to five years or so. It’s an onerous process, requiring that you uproot your life, your family, and leave the familiar behind. Even relatively short moves can be difficult to achieve correctly. The key to getting through the moving process is to have a plan, and to be organized from the get-go. This checklist was developed to help simplify an all-too complex process, and to provide you with the peace of mind that comes from knowing you’ve got all your bases covered.

Eight Weeks Prior to the Move

Your preparations should begin well in advance of moving day. In fact, you should start preparing for the move at least two months ahead of time. Granted, this won’t be possible for unexpected moves, but you’ll still find essential steps in this section.
___ Eliminate unnecessary possessions, junk and other items that you don’t need. You can opt to store these in a storage rental, or you can choose to sell them in a yard sale (yard sales give you vital cash to help cover moving expenses).
___ Get estimates if you’re hiring a moving company. Ideally, you’ll contact at least three moving companies to provide you with quotes on getting your belongings from your old home to the new one. If you’re working with a real estate agent, he or she can give you recommendations.
___ Get organized. Make a folder (physical or on your computer, but physical is better since your computer will eventually be packed up). Store quotes, receipts and other essential information here.
___ If you know the new address, submit your change of address form with the Post Office. If you don’t know the new address, keep the form on hand until you do and submit it as soon as possible.
___ Contact the schools in your new area to determine what records and information they’ll need to enroll your children once the move is completed. Ideally, they’ll be enrolled and ready to begin shortly after your arrival.
___ Create a moving budget. You’ll need the cost of the moving company (if you’re going that route), packing supplies (tape, boxes, bubble wrap, packing paper) and more. You’ll also need to budget for gas, for meals on the road, and any hotel stays during the move.
___ Contact your children’s schools to request records and have them delivered to the new school.
___ Plan your layout in the new place. A floor plan of the new house will help you lay out your furniture and accurately label boxes during packing.
___ If you’re selling your existing home, you need to get it on the market. In reality, this should be done earlier than eight weeks before the move depending on your local real estate market. Contact a realtor well ahead of time and discuss the market, and listen to his or her advice.
___ Get boxes and begin packing. If you leave packing everything until the last minute, you’ll forget items, and find yourself in a rush. Start packing nonessential items now. Box them up and store them out of the way for moving day.
Moving Checklist
All Over Movers is ready to help you with your move.

 Seven Weeks Prior to the Move

Several things should be taken care of this week, all of which will help to make your move simpler and less stressful.
___ Gather all your pertinent information (personal records, medical information, insurance papers, etc.) and put it in one place ahead of the move.
___ Begin canceling or transferring memberships with organizations (fitness clubs/gyms, etc.).
___ Ask your healthcare provider for recommendations in your new area, or check with your insurance company for covered healthcare providers.
___ Get all pet records from your local vet or arrange to have them transferred to a new vet. Find out if there are any different required vaccinations for your pet in your new area and have those taken care of now.
___ Verify any needed changes with all insurers (health, auto, etc.). Speak with an insurer about a homeowner’s policy on your new home if the insurance isn’t rolled into your new mortgage.
___ Use foods in your refrigerator, freezer, pantry and cabinets. Avoid stocking up too much at the grocery store ahead of your move.
___ Verify that your email address isn’t tied to your local Internet service provider. If it is, consider creating a Gmail, Yahoo or Microsoft Live email (these are free and not tied to a service provider).
__ If you have your new address (and by this point, you should), make sure your friends and family have it on file.

Five Weeks Prior to the Move

Time’s getting shorter now, and you still have things that must be done before the big day arrives. Now’s the time to:
___ If you’re going to use a mover, reserve their services now. Make sure you know your moving date. You may also need to pay a deposit depending on the moving company. If you’re moving yourself, make sure you have all the boxes you’ll need, as well as packing supplies.
___ Arrange for utilities to be turned on at a specific date for your new location (and off at your old home). These should include your:
  • Telephone
  • Internet Service
  • Cable/Satellite TV
  • Water/Sewer
  • Trash Service
  • Electricity
  • Gas
You may also need to consider changing cell phone carriers, although if you’re with a national provider (AT&T, Sprint, Verizon, etc.), you will just need to arrange for a local number.
___ Make travel/moving arrangements for your pets. This is particularly important if you’ll be flying, but shouldn’t be neglected even if you’re moving yourself.
___ Arrange for newspaper and magazine delivery to your new location (if you’re not moving locally, you’ll need to cancel your newspaper subscriptions).
___ Directly notify important companies of your change of address (don’t rely on the change of address form). You’ll need to notify any creditors (auto loan, credit cards, etc.), as well as insurance companies.
___ Let the IRS know you’re moving (submit an IRS change of address form).
___ Any furniture or belongings that either won’t fit in the new house, or you no longer need but don’t want to part with should be put into storage now.

Four Weeks Prior to the Move

It’s getting close to crunch time, and you need to make sure you’ve dotted all your I’s and crossed all your T’s.
___ Make a list of the items in every room that must be packed.
___ Take any last minute items you’ve decided against keeping to your local Goodwill or a similar location (if you have enough items, you could have another yard sale).
___ Alert the alarm company of your move out date (if you have one).

Three Weeks Prior to the Move

There are still a few odds and ends that must be taken care of, and now is the time to do just that.
___ Open a bank account in your new location. Find recommendations from locals in that area (your realtor might be a good source of information, or you can dig through online reviews).
___ Double check the attic and basement for any items not already moved out, put in storage or inventoried.
___ If you’re moving within the state, let the DMV know about your change of address.

Two Weeks Prior to the Move

Time’s getting short now, and you need to double-check to ensure that everything’s on track for moving day.
___ Double check that you have notified all pertinent companies and organizations about your move and your new address (if applicable). Verify that you’ve notified all government offices of your move (tax assessor, DMV, Social Security, etc.). Notify all professional service providers of your move as well, including your attorney, dentist, financial planner, insurance agent and more.
___ Plan your meals for the remainder of your time in the old house. Try to minimize or avoid buying groceries. Focus on using up the last of the food on hand.
___ Find friends to help you pack. Offer to feed them in exchange for any help. More hands will make the process much easier.
___ Pack a “First Night” box. Chances are good that your unpacking time will be limited the first day/night after moving in. Make things easier by packing a box with items for that first night. Bed sheets, soap, shampoo, toothpaste, deodorant, washcloths and a towel or two are all good ideas.
___ Inspect your home. If you’re selling it, you may need to make some last minute repairs, but you might also find items you’ve forgotten, particularly outdoors (grilles, lawn equipment, gardening tools, etc.).
___ Confirm any travel arrangements, including those for your pet. Verify plane tickets if you’re flying, room reservations and more.
___ If you’re moving yourself, start packing clothing, dishes, silverware and other items that won’t necessarily be needed during your remaining time in the house. Label every box accurately using a permanent marker and/or labels.

One Week Prior to the Move

It’s your last week in your old place, and now is the time to get packing.
___ Wash all laundry and plan out your family’s wardrobe for the remainder of your time in the house. Pack any and all nonessential clothing, as well as other items.
___ Begin packing anything that won’t be handled by the moving company. If you’re moving yourself, you should have started this process during the prior week. Packing all at once is never a good idea – it stresses you and your family, and it virtually ensures damaged or forgotten items.
___ If you’re using a moving company, confirm the move date with them. Also confirm the truck size, any items included (furniture pads, blankets, etc.), and what they will/will not be moving.
___ If you’ve arranged for friends to help pack, now’s the time to have that last get together/packing party. Pizza for everyone!
___ Double check all packed boxes and make sure they’re correctly labeled. If any are not labeled, open them, verify the contents and add a label. Consider packing boxes by room and labeling them thus (i.e. living room, dining room, kitchen, kids’ bathroom, etc.).
___ Back up your computer hard drives and pack any workstations/laptops that won’t be needed until you reach your new house.
___ Empty your safety deposit box and close your account.
___ Plan the order of packing (if you’re moving yourself). Stage boxes and furnishings 24 hours prior to the move so you can pack in the correct order.

The Big Day

Moving day’s here! Get ready, get set – go!
___ Pick up the truck, dollies, lift straps and any other equipment if you’ll be moving yourself.
___ If you’re moving yourself, begin loading the truck according to your preset plan.
___ Conduct one last inspection of the home. Check every room, including the basement, laundry room, garage, attic, storage rooms/buildings and more. Make sure nothing is forgotten.
___ Make copies of all your receipts and records related to moving (moving company invoices, rental contracts, etc.) and store them in your document folder.
___ Check the back door, garage door, and all windows to ensure they’re closed and locked. Close and lock the front door after everything (and everyone) is out of the house. Give your keys to the appropriate person (real estate agent, for instance).
___ Take a deep breath and hit the road, bound for your new home and your new life.
Following the steps above will help alleviate that impending sense of panic, keep you in control, and ensure your move goes off without a hitch.


And of course, if you’re looking for a moving company, contact All Over Movers today for a free moving quote.