Do you welcome a new home with any of these traditions or superstitions?

Written by Anne Reagan for
October 20, 2015

It can be very stressful to find a new home, pack up belongings and coordinate a move to a new location. Despite the stress of a move, many of us take the time to ensure that our new home is ready for our family. Maybe you’ve lit a candle on the first night in a new home or said a prayer or blessing. Whether you call them traditions, rituals or superstitions, let’s take a look at some common, and perhaps not-so-common, ways people welcome themselves into a new home.

Paint Your Porch Haint Blue
If you grew up in the American south you may be familiar with these words. But if you didn’t here’s the scoop: haint blue is the color of paint applied to the ceiling of a front porch. Why? “Haint,” another word for haunt, has its roots steeped in old Gullah traditions (the Gullah were descendants of African slaves and lived in the Lowcountry regions of South Carolina and Georgia). Tradition holds that haint spirits cannot cross water, so painting a home with blue is a symbolic way to keep away bad spirits. Originally, this paint was created by hand mixing pigment with lime to create a paint. Some theorize that the blue color also tricks mosquitos into leaving, as the color looks like the sky. However it was more likely that the lime in the paint actually deterred insects, not the color. It’s not uncommon in the South to see homes painted blue not only on the porch ceiling but around the doors, windows and other details like interior walls and shutters. Is there one particularly color of haint blue? No, it’s more of a range of blues and you can find porches and homes painted with any blue from indigo to sea glass green.

Light A Candle On Your First Night
A candle can be a great housewarming gift. It is believed that lighting a candle helps ward off evil spirits by adding light into the home and symbolically casting out darkness. In many religions it’s common to light a candle when saying a prayer or as part of an offering. A house “warming” can also mean lighting a fire in the fireplace, which was also an old tradition that has it’s roots in medieval life. Fire is a very strong symbolism for strength, purity, and represents good. Similarly, lighting a candle on the first night in a new home can help bless the home and bring light into a dark space.

Bring Bread & Salt
Possibly derived from Russian Jewish origins, bread and salt represent two very important symbols of hospitality. Some believe that the very first items brought inside a home should be a loaf of bread (so that the inhabitants never know hunger) and salt (to always have a life full of flavor). Bread, a staple at nearly every meal, was a sign of hospitality not just in Jewish tradition but in European tradition as well. Salt, once so valuable it was used as currency, is another important sign of hospitality and wealth.

Ring A Bell
For practicing feng shui homeowners, auspicious rituals and traditions like ringing a Tibetan space clearing bell can help clear each room in the new home of stagnant of or dying chi (si chi). Opening up windows, turning on fans, and letting in the sunlight are other ways to welcome in auspicious feng shui chi, which is what you want in your new home.

Tie A Holy Thread
Traditional moving-in and Buddhist housewarming rituals are plenty and are generally thought to bring good luck and blessings upon the home. In Thai culture, an odd number of monks are invited to the house (even numbers of monks are considered bad luck) for a house blessing, or Khuan Ban Mai ceremony. Presenting gifts and special foods are a usual part of the ceremony, as is tying Sai Seen (holy thread or string) around the wrists of the family members and around the home’s statue of Buddha.

Burn Sage
Sage smudging, or the burning of dried sage, is a traditional method of clearing out negative energy in a space. Directing the smoke into the corners of a room can clear energy and add protection from negativity. This practice is thought to be derived from Native American traditions (where Salvia apiana, or white sage, is plentiful). According to some practitioners, it’s important to light the sage, gently blow out the flame, and then let it smoke on its own (do not snuff out the lit sage). Place it in a fire safe bowl or container. Aboriginal traditions also encourage covering up mirrors, windows and turning off electronics when performing a sage smudging ceremony in a space.

Boil Milk & Rice
According to Vasthu Sastra Indian tradition, milk and rice are boiled until it overflows the pot, symbolizing purity and long life. There are many Indian housewarming traditions, including bringing a cow inside the home and placing a garland around its neck. In fact, moving into a new home (either rented or purchased) is considered only second in ceremonial importance to that of a wedding, and many acts are performed to bless the home and ward off evil spirits.

Prepare A Housewarming Meal
In old French speaking countries, the changing of the chimney hook (pendaison de crémaillère) signified the start of the housewarming thank-you meal, served to those who helped build the home. The cooking pot would hang from a hook inside the chimney over the fire, and it was the last piece to be put into place when a home was built.


Thai Housewarming Traditions

Vasthu Sastra Indian Housewarming Traditions

Feng Shui Moving In

Sage Smudging Ceremonies

What You Need to Know about Real Estate Appraisals

Posted in Selling and Buying by Tara Sharp

Appraised value vs. market value

Appraisals are designed to protect buyers, sellers, and lending institutions. They provide a reliable, independent valuation of a tract of land and the structure on it, whether it’s a house or a skyscraper. Below, you will find information about the appraisal process, what goes into them, their benefits and some tips on how to help make an appraisal go smoothly and efficiently.

The appraised value of a property is what the bank thinks it’s worth, and that amount is determined by a professional, third-party appraiser. The appraiser’s valuation is based on a combination of comparative market sales and inspection of the property.

Market value, on the other hand, is what a buyer is willing to pay for a home or what homes of comparable value are selling for. A home’s appraised value and its market value are typically not the same. In fact, sometimes the appraised value is very different. An appraisal provides you with an invaluable reality check.

If you are in the process of setting the price of your home, you can gain some peace-of-mind by consulting an independent appraiser. Show him comparative values for your neighborhood, relevant documents, and give him a tour of your home, just as you would show it to a prospective buyer.

What information goes into an appraisal?

Professional appraisers consult a range of information sources, including multiple listing services, county tax assessor records, county courthouse records, and appraisal data records, in addition to talking to local real estate professionals.

They also conduct an inspection. Typically an appraiser’s inspection focuses on:
•The condition of the property and home, inside and out
•The home’s layout and features
•Home updates
•Overall quality of construction
•Estimate of the home’s square footage (the gross living area “GLA”; garages and unfinished basements are estimated separately)
•Permanent fixtures (for example, in-ground pools, as opposed to above-ground pools)

After considering all such information, the appraiser arrives at three different dollar amounts – one for the value of the land, one for the value of the structure, and one for their combined value. In many cases, the land will be worth more than the structure.

One thing to bear in mind is that an appraisal is not a substitute for a home inspection. An appraiser does a cursory assessment of a house and property. For a more detailed inspection, consult with a home inspector and/or a specialist in the area of concern.

Who pays and how long does it take?

The buyer usually pays for the appraisal unless they have negotiated otherwise. Depending on the lender, the appraisal may be paid in advance or incorporated into the application fee; some are due on delivery and some are billed at closing. Typical costs range from $275-$600, but this can vary from region to region.

An inspection usually takes anywhere from 15 minutes to several hours, depending on the size and complexity of your property. In addition, the appraiser spends time pulling up county records for values of the houses around you. A full report comes to your loan officer, a real estate agent or lender within about a week.

If you are the seller, you won’t get a copy of an appraisal ordered by a buyer. Under the Equal Credit Opportunity Act, however, the buyer has the right to get a copy of the appraisal, but they must request it. Typically the requested appraisal is provided at closing.

What if the appraisal is too low?

If you appraisal comes in too low it can be a problem. Usually the seller’s and the buyer’s real estate agents respond by looking for recent and pending sales of comparable homes. Sometimes this can influence the appraisal. If the final appraisal is well below what you have agreed to pay, you can renegotiate the contract or cancel it.

Where do you find a qualified appraiser?

Your bank or lending institution will find and hire an appraiser; Federal regulatory guidelines do not allow borrowers to order and provide an appraisal to a bank for lending purposes. If you want an appraisal for your own personal reasons, and not to secure a mortgage or buy a homeowner’s insurance policy, you can do the hiring yourself. You can contact your lending institution and they can recommend qualified appraisers and you can choose one yourself or you can call your localWindermere Real Estate agent and they can make a recommendation for you. Once you have the name of some appraisers you can verify their status on the Federal Appraisal Subcommittee website:

Tips for hassle-free appraisals:
•What can you do to make the appraisal process as smooth and efficient as possible? Make sure you provide your appraiser with the information he or she needs to get the job done. Get out your important documents and start checking off a list that includes the following:
•A brief explanation of why you’re getting an appraisal
•The date you’d like your appraisal to be completed
•A copy of your deed, survey, purchase agreement, or other papers that pertain to the property
•If you have a mortgage, your lender, the year you got your mortgage, the amount, the type of mortgage (FHA, VA, etc.), your interest rate, and any additional financing you have
•A copy of your current real estate tax bill, statement of special assessments, balance owing and on what (for example, sewer, water)
•Tell your appraiser if your property is listed for sale and if so, your asking price and listing agency
•Any personal property that is included
•If you’re selling an income-producing property, a breakdown of income and expenses for the last year or two and a copy of leases
•A copy of the original house plans and specifications
•A list of recent improvements and their costs
•Any other information you feel may be relevant

By doing your homework, compiling the information your appraiser needs, and providing it at the beginning of the process, you can minimize unnecessary phone calls and delays.

Buying a Second Home First


Some New York City renters are skipping the typical first rung on the urban homeownership ladder: Instead of investing in an apartment, they are buying a country house. Disappointed by what their budget will buy in the city, they are still living the American dream of having a place of their own, if only on the weekends, in the Catskills, at the Jersey Shore or in Connecticut.

For less than $350,000 — an amount that barely buys a studio in brownstone Brooklyn these days — they are finding that they can afford homes with three bedrooms or more on several acres of land, sometimes on lakefront property, or with a pool. For those with as much as $2 million to spend, the options range from turn-of-the century mansions to sprawling estates.

Graeme Sibirsky and China Aroh Sibirsky are both artists and educators who live in a three-bedroom apartment they rent in Clinton Hill, Brooklyn. With a $600,000 budget, they initially searched for a house of a similar size to buy deeper in Brooklyn, looking as far as Mill Basin, Canarsie and East New York. But within their budget, they found that the places they could afford were smaller than their current apartment. “If we are spending hundreds of thousands of dollars, we need to feel we upgraded, not downgraded, our living space,” Mr. Sibirsky said.

Switching gears, they cut their budget in half and began searching for vacation houses upstate, in Sullivan County and Orange County, N.Y., and the Poconos in Pennsylvania. “We wanted to start investing in real estate, so we decided to start with a vacation home that was more affordable, can be rented on Airbnb and would be fun to enjoy ourselves, and with family and friends,” he said.

Searching on their own and with Carol Malek, principal broker at Malek Properties in White Lake, N.Y., the couple has homed in on three houses ranging from $225,000 to $325,000 — a three-bedroom with a pool; a smaller house on a lake; and a five-bedroom that needs renovation. While each has its trade-offs, Mr. Sibirsky said, “overall, you can get a nice vacation-weekend-summer place for a smaller amount of money.”

No one tracks the number of second-home buyers who continue to rent in the city. But real estate agents in weekend destinations throughout the Hudson Valley and other second-home markets within an easy drive of New York City, including Bucks County, Pa., Litchfield County, Conn., and the Jersey Shore, report an uptick in sales from urbanites eager to get into the market while interest rates remain low.

“We’re seeing this now more than ever before because prices are historically high in the city,” said Kathy Braddock, a managing director of the New York City office of William Raveis, which also has offices in Connecticut, Massachusetts, Rhode Island, New Hampshire, New Jersey, Maine and Vermont. While there always have been New York City renters looking to buy weekend homes, she noted, demand has been so strong that the company is introducing a new division this month called Raveis Escapes, to cater to New Yorkers shopping for their second home first. “A lot of hard-working young people can’t amass a down payment that’s substantial enough” to purchase something in the city, she said, noting that many co-op boards require sizable liquid assets in addition to hefty down payments and closing costs. “But they still want the benefits of homeownership.”

Gary DiMauro’s real estate agency upstate caters to city dwellers in search of a bucolic escape, with offices in Tivoli, Hudson, Catskill and Rhinebeck. “The city has boom-and-bust periods in which people feel locked out,” he said. This time around, he said, the heated New York City market is sending not only first-time home buyers with tight budgets his way; it is also sending people who can afford multimillion-dollar apartments in the city but are simply discouraged by their options.

One client that he works with “could spend $3 or $4 million for an apartment in the city,” he said. But for what he and his family need, “they would have to spend $6 or $7 million.” Instead, they are renting in the city and looking for a second home upstate in the $2 million range.

“I asked him, ‘Do you have any reservations about buying a second home first instead of making what would traditionally be the typical purchase of your primary residence first and then look to a second home?’ ” Mr. DiMauro said. “He said, ‘If I feel that I find what I want up here, at a price that is fair market value, I’m fine with the math.’ ”

Last year, Chris and Aileen Bruner, who rent a three-bedroom on the Upper West Side but had previously owned homes when they lived in other cities, decided to buy a weekend house in the village of Tuxedo Park, N.Y., a gated community. Less than 40 miles from Midtown in a rural corner of Orange County, it has houses ranging from $550,000 five-bedrooms to multimillion-dollar mansions situated around three lakes, according to Robert Silvay, a salesman at Tuxedo Park Fine Homes.

In Manhattan, said Mr. Bruner, who works in the financial industry, “We can afford the cash outlay to rent a nice apartment but not necessarily the capital and long-term commitment to buy a similar-sized apartment.” The couple bought a $1.75 million lakefront three-bedroom on nearly two and a half acres that came with an electric-powered boat. Now, on weekends and summer breaks, they kayak, swim and play tennis or golf with their 10-year-old son at the local country club. “Buying there has been a great value from a lifestyle perspective,” Mr. Bruner said.

Mr. Silvay of Tuxedo Park Fine Homes said he is seeing a lot more people like the Bruners coming up to shop for weekend homes. “Half of them are renters, which is more than we’ve seen before,” Mr. Silvay said. “Most people are in the market to find a place to take the kids away from their two-bedroom apartment in Manhattan.”

Down at the Jersey Shore, Diane Turton Realtors, with offices up and down the coast, reports a 10 percent increase in New York City buyers this season. “These are folks who are renters in Manhattan and are buying at the Jersey Shore for weekend getaways,” said Perry Beneduce, the firm’s marketing director. “They find it easier to get to than the Hamptons, and more affordable. They want to be able to jump in their cars at a moment’s notice and get to the beach in an hour.”

Part of the reason first-time home buyers are considering second homes is that rising rents have made it difficult for first-time buyers to save enough for the hefty down payments required to buy in New York City. The median sales price in the second quarter was $980,000 in Manhattan and $605,000 in Brooklyn, according to reports from Douglas Elliman. Moreover, too few listings are pushing up the price of starter apartments.

“You have many consumers that really have a drive to purchase their primary residence, but it seems so far away,” said Jonathan J. Miller, the author of Douglas Elliman’s market reports and the president of the appraisal firm Miller Samuel. Even though plenty of urban professionals are making good money, he said, “they’re relegated to their lot in housing life for the moment, because they can’t necessarily compete with more affluent consumers.”

Outside the city, these renters are finding not only that their budgets will go a lot farther, but also that less cash is required upfront, and there is less pressure to rush into a purchase. And though real estate prices in some second-home markets have risen, they are still a relative bargain compared to the city.

“It sounds crazy; you don’t own but you’re already planning a vacation house,” said Adam Friedman, 35, who sells medical devices and has rented in Manhattan for 12 years. “But let’s be honest. What I can afford in the city would be through a co-op, and the requirements are tough. They want more liquidity than I have right now.”

Mr. Friedman decided to begin searching for a weekend home after visiting some friends upstate who had made a similar move. Recently, he has been eyeing property along Connecticut’s southeastern coast. “Eight rooms. Four-bed, two-and-a-half-bath ranch-style, with a one-car garage, for a whopping $309,000,” he said, reading from a listing in Groton, Conn., he had jotted down recently. “Come on. Where’s my checkbook?” For that price in Manhattan, he said, you would be lucky to get two parking spots.

It helps, of course, if your rent is manageable. Though they’ve been together for more than a decade, Stefan Weisman and his partner, Sean Mills, both college professors who teach in Queens, have each held onto their separate rent-stabilized apartments in the city. “It’s totally a New York story,” said Mr. Mills, who has lived in the same Cobble Hill duplex for 22 years that he rents for approximately $2,070 a month. “It’s the kind of thing that you don’t give up without a really good reason,” he said, acknowledging, “you would think that a strong and solid and consistent relationship would be the best reason of all.” Mr. Weisman pays about $1,500 for his two-bedroom in Hell’s Kitchen.

They had all but given up on the idea of formally moving in together when Mr. Mills visited a friend near Woodstock, N.Y., and persuaded Mr. Weisman to start looking for a home to buy upstate. “When we found out interest rates were really low and the Catskills was a good deal, I kind of pushed forth and we went for it,” said Mr. Mills. In February, the couple bought a $188,000 two-bedroom, log-sided cabin on eight wooded acres in Big Indian, N.Y.

Inside the Tuxedo Park house. Credit Preston Schlebusch for The New York Times
There are fruit trees in the front yard and a creek in the back. Nearby are a lake for swimming and boating in the summer, and a ski area for the winter. When they are not there, the couple said, they rent the cabin out on Airbnb, which helps them cover the mortgage. “It was the solution to our stalemate about moving in together,” said Mr. Mills. “He loves Hell’s Kitchen. I love Brooklyn. We both love our house in the Catskills even more.”

First-time home buyers shopping for a weekend getaway need to consider repairs and general upkeep, including keeping the lawn cut during the summer and the driveway cleared when it snows in the winter. “When you rent, or have been in an apartment, for years, there’s that ‘Oh my gosh’ wake-up call,” said Anne Loftus, an executive recruiter based in Manhattan. “ ‘Where’s my super?’ ”

Ms. Loftus and her husband, Michael, an investment professional, both in their early 50s, sold their Upper East Side two-bedroom of 14 years in 2007, downsizing to a one-bedroom rental. Five years ago they bought a four-bedroom with a pool and privet hedges on an acre in Bridgehampton, N.Y., for less than $2 million. Though it wasn’t the first time they owned a home, maintaining a weekend house was an adjustment after years of apartment living. “The first couple of years, if the alarm went off, I’d drive out there,” said Ms. Loftus. But over the years, they’ve developed ties with neighbors who keep an eye on the house for them during the workweek, as well as a list of contractors they can call if something goes awry.

City folk should also be prepared for up-close encounters with country creatures. A few weeks ago, after a meteor shower lit up the sky with trails of light, Mr. Weisman heard a commotion outside the sun porch in the Catskills.

“I turned on the light and it was a big black bear pulling at the bird feeder,” he said. “It was scary. I had not seen a bear in my life. I was literally two or three feet away from it.”

After spotting evidence around the fruit trees in the front yard that the bear had been back, he decided to call the town hall and ask for advice. “The lady basically laughed at me. She said, ‘It’s the Catskills, everybody has bears in their front yard.’

Should You Buy or Rent?

Do you dream of owning your own home? Or are you happy to rent a place where a landlord takes care of all your home issues? There are pros and cons of both renting and owning your home. Here are some issues to consider if you are on the fence:

Now Just May Be The Right Time To Buy That Second Home

Tax Breaks For Second-Home Owners
By Jean Folger | Updated May 06, 2015 AAA |

Many homeowners look forward to purchasing a second home that can be used for vacations, rental income, investment purposes or as a primary residence during retirement. Current tax laws offer several tax breaks that can help make second-home ownership more affordable. If you already own, or are thinking about purchasing a second home, it will be in your best interest to understand the tax breaks and how they work. Different tax rules apply depending on how you use the property, for either personal or rental use, or a combination of the two.

Personal Use

As long as you use the property as a second home – and not as a rental – you can deduct mortgage interest the same way you would for your primary home. You can deduct up to 100% of the interest you pay on up to $1.1 million of debt that is secured by your first and second homes (that’s the total amount – it’s not $1.1 million for each home). You can also deduct property taxes on your second home and, for that matter, as many properties as you own. Like a primary residence, however, you generally can’t write off any of the costs associated with utilities, upkeep or insurance (there are exceptions to this; for example, you may be able to claim a home office deduction if part of your home is used for business purposes).

Rental Use – The 14-Day or 10% Rule

The tax rules are quite a bit more complicated if you rent out the property. Different rules apply, depending on how many days a year you use the home for personal versus rental use. There are three categories into which you may fall:

1. You rent out the property for 14 days or less.

Your second home can be rented to another party for up to two weeks (14 nights) each year without that income begin reported to the IRS. Even if you rent it out for $10,000 a night, you don’t have to report the rental income as long as the home was not rented out for more than 14 days. The house is still considered a personal residence, so you can deduct mortgage interest and property taxes under the standard second-home rules.

2. You rent out the property for 15 days or more, and use it for less than 14 days or 10% of days the home was rented.

This property is considered a rental property, and the rental activities are viewed as a business. If your second home is rented out for more than 14 days, all rental income must be reported to the IRS. You can deduct rental expenses (including mortgage interest, property taxes, insurance premiums, fees paid to property managers, utilities, and 50% of depreciation), but you have to factor in the amount of time the property is used for personal use versus rental use. And, as a rental property, up to $25,000 in losses might be deductible each year. Fix-up days don’t count as personal use, so you can spend more than 14 days at the property as long as it is for maintenance purposes. You should be able to document the maintenance activities, however, with receipts to prove you weren’t using the property for leisure purposes on those days.

3. You use the property for more than 14 days or 10% of the total days the home was rented.

If you use the property for more than 14 days, or more than 10% of the number of days it is rented (whichever is greater), the property is considered a personal residence and the rental loss cannot be deducted. If a member of your family uses the property (including your spouse, siblings, parents, grandparents, children, and grandchildren), those days count as personal days unless you are collecting a fair rental price.

Selling Your Second Home

Tax laws allow you to take up to $500,000 profit ($250,000 if you are unmarried) tax free on the sale of your primary residence. This primary-home sale exclusion does not apply if you sell your second home: If you sell a house that is not your primary residence, you may have to pay the usual capital gains tax. If you make the second home your primary residence for at least two years before you sell it, however, you may be able to reap some tax benefits, but it’s not as easy as it used to be.

Prior to Jan. 1, 2009, you could move into your second home, make it your primary residence for two years, sell it, and take advantage of the primary-home sale exclusion. Now, as a result of new laws associated with the Housing and Economic Recovery Act of 2008, you can still make your second home a primary home before you sell it, but you’ll owe taxes for the period of time that the property was a second home after Jan. 1, 2009. The IRS now uses a ratio of the years you occupied the home as a primary residence versus the years the home was used as a rental (or other-than primary residence) to calculate the amount of capital gain that will be excluded from the sale.

For example, the Smiths purchased a second home in 2004. They continued to use it as a rental home during 2009 and 2010, and then used the home as a primary residence during 2011 and 2012. Only 50% of the capital gains from the sale of the home will be tax free (up to the $500,000 exclusion) since the home was a primary residence for only 50% of the time after Jan. 1 2009.

1031 Exchanges

A 1031 exchange, also known as a like-kind exchange or tax-deferred exchange, is a transaction where a seller swaps a rental or investment property for another rental or investment property of equal or greater value, on a tax-deferred basis. The advantage is that the seller may be able to avoid paying capital gains tax on the exchange. A property must be considered a rental property (and not a personal residence) to qualify for a 1031 exchange. This means that you must rent out the property for 15 days or more, and use it for less than 14 days or 10% of days the home was rented.

The Bottom Line

If it’s financially feasible, owning a second home can be an excellent investment for vacation or rental purposes, or to use as a primary home during retirement. Because owning any home carries a significant financial burden – from mortgage and taxes, to maintenance and repairs – it is in your best interest to understand the tax implications of second-home ownership. Since tax laws are complicated and do change, owners and potential buyers should consult with a qualified real-estate tax specialist to gain a full understanding of tax implications and laws, and to determine the most favorable ownership strategy.

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Are we on the verge of another housing “Bubble” bursting?

Posted August 10 2015, 9:05 AM PDT by Matthew Gardner

August Perspectives

Posted in Perspective by Matthew Gardner

Every year there’s some aspect of the real estate market that becomes a focal point for the media. A few years ago it was whether or not housing would ever recover from the Great Recession. Then it was historically low interest rates and inventory levels. And more recently, it’s whether or not this hyper-paced, multiple-offer real estate market is heading towards another housing bubble. To explore this further, we’d like to introduce Windermere’s new Chief Economist, Matthew Gardner, who doesn’t believe there’s a cause for concern, for now.

I’m often asked if we are on the verge of another “bubble” bursting due to an overheated housing market. My response is no, and here are the reasons why:

Fewer flippers: Foreclosures are the preferred property type for home flippers because they offer significantly higher margins. But with the continued drop in foreclosures, we’ve seen a marked slowdown in flipping. Nationally, the percentage of flipped homes has decreased from 6.7% in 2014 to 4% today, and this share is expected to keep declining, signifying a more normalized market.

Lending standards remain stringent: Banks actually learned a lesson from the collapse of the housing market and have made qualifying for a mortgage quite difficult. Even low down payment programs like FHA, that have less stringent FICO requirements, have significantly tightened their standards, thus lowering the risk of lending to borrowers who cannot handle their mortgage obligations.

Home prices are up, but not to pre-bubble levels: Data provided by the S&P/CaseShiller Home Price Indices tells us that in the Seattle area, the bursting of the housing bubble led to a 33 percent drop in the index. The index has certainly recovered significantly, but is still 7% below the prior peak.

Interest rates will (eventually) rise: Some fear that rising rates will take some steam out of the market, but growth in employment, and the subsequent drop in the unemployment rate, will lead to wage growth and increasing incomes, which will take some of the sting out of any rate increase.

As you can see, the housing market and economic climate of today are very different from the conditions that led to the housing bubble in 2007. Nobody can predict what’s going to happen with 100% certainty, but given the current state of things, I don’t believe there is a risk of history repeating itself in the foreseeable future.

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.

Mortgage Financing

Mortgage Financing – How Much Can I Afford?

Thursday, March 7, 2013, by Sean Keeley

[Illustration by Eric Lebofsky]

Curbed University delivers insider tips and non-boring advice on how to buy, sell, or rent a house or apartment. Additional questions welcomed Today, Residential Mortgage Advisor Dan Keller walks us through the process of determining how much you can afford when it comes to mortgage financing.

“How much can I afford” is one of the most common questions that home buyers ask. I look at the affordability process a little different than some mortgage brokers that simply use an online affordability calculator. I prefer the long-hand approach and start with one main question:

“How much do you WANT to afford?Meaning, what level of mortgage payment are you comfortable making each month?

I start with evaluating the borrower’s current rent, income, debt and lifestyle, and then from there, establish affordability ranges. This approach leads to a lower default rate in my office and helps prepare the borrower for the responsibilities of home ownership, while at the same time, using their mortgage as a financial tool.

So What’s Next?

After an initial mortgage budget is determined, I like to find out how much money the borrower plans to use for a down payment. At this point, I am now ready to solve for a sales price and present mortgage options through a mortgage planning analysis (see the video below for an example of a mortgage planning analysis by Dan Keller).

Determining the Best Loan Program – After reviewing the mortgage planning analysis, you should have total clarity in regards to how much money is required for your down payment, what your total monthly payment will be, the closing costs associated with the loan, as well as the details surrounding the loan program such as the Private Mortgage requirements and qualifying guidelines.

Qualifying For the Mortgage Program You Select

Over the years, I’ve documented exactly what it takes to Ace Your Mortgage Application, and in my office, we call it the Perfect Mortgage Approval Process. If you follow the information below, should breeze through the mortgage process and right into your new home!Know Your Credit Score – Most banks today require a 640 credit score to qualify for a home loan. Our bank for example, will go as low as 620, and will make case-by-case exceptions down to 580. It’s important to understand that the interest rate you get is directly related to your credit score. If you have missed the mark on your credit score, I highly recommend getting started with a credit restoration program (I can refer you to a company that I use).

Documenting Your Employment History – As a first time home buyer, your approval will be based on your ability to prove your employment history. Banks require a 2-year consistent work history. If there are gaps in employment, they will need to be addressed and supported. In most cases, a bank will need to see that you have been back to work for 6-months to date. Another common question asked pertains to job transfers. It’s ok to transfer employers, in that case, you will need to provide a job offering letter, written verification of employment and in most cases, at least one pay stub helps.

Supporting Your Income – This is where most trains get derailed in the mortgage approval process. Just because you “made” $82,000 last year per your tax returns, doesn’t mean that your qualifying income is $82,000. Overtime, bonuses, and write-offs are all factored into the qualifying income matrix. In my office, we order a written verification of employment as we review your tax returns and pay stubs upfront so that we are 100% correct in determining your qualifying income. I like to say, “We think like underwriters”.

Verifying Your Down Payment – This is a process of reviewing your bank statements, 401k accounts, or any investment accounts that may be leveraged to provide down payment funds. In many cases, Gift Funds are allowed for a down payment, however, you need to understand how to properly source your gift funds when applying for a mortgage.

Choosing the Right Real Estate Agent – Now you are ready to purchase! It’s crucial, now that you’ve done everything that you need to do in getting your financing in order, you need to find the right agent that is qualified to serve you and your home buying needs. I recommend a couple of things in selecting a real estate agent in your community:

(1) Go to Google and search. Get detailed in your search – “Wallingford Seattle Real Estate Agents” or if you are looking at specific homes, I’d search, “Craftsman Homes for Sale in Wallingford Seattle”. You have a better chance of selecting a specialist versus a “jack of all trades” real estate agent.

(2) Visit open houses. This is a no-obligation opportunity to interview agents. Plus – if you were to sale your home some day, you’d want an agent that has a listing inventory and actually works their open houses.

The Secret Sauce – Know Before You Owe

Everything that you need to know about getting approved for a mortgage and buying a home can be found right here in our Mortgage Concierge Packet. Also – you can visit my Perfect Mortgage Approval Process and preview a 4-part short video series on How To Ace Your Mortgage Application.

As always, I love helping my readers, so please do not hesitate to contact me directly at (425) 350-7136 if you have any questions!

One last thing, if you liked this video and post, please feel free to share it for me. Thank you!