Yes, You Can Get a Mortgage if You’re Self-Employed

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The so-called “gig” economy means more people than ever are self-employed, receiving 1099 tax forms as independent contractors. A study by Intuit predicted that by 2020, 40 percent of American workers would be independent contractors.  In the world of the self-employed, the idea of securing a mortgage can seem like a fantasy. Unlike the traditionally employed, the self-employed entrepreneur is seen as a greater risk. Despite making a good living, some self-employed workers never even apply for a mortgage, believing the dream of home ownership is cut off by slim chances for approval.

This isn’t necessarily true! Don’t give up on home ownership just because you’re self-employed. Instead, take the steps to boost your status in the eyes of lenders. Here are some tips to put you on the path towards pre-approval:

  1. Lower your debt. Debt is what haunts almost all new buyers seeking a loan. If you’re self-employed and debt-free, or have a low income-to-debt ratio, you look much more appealing to lenders.
  1. Keep your personal and business accounts separate. Professionals draw a line between business income and expenses and personal income and expenses. Demonstrating this level of maturity is a plus.
  1. Deduct less on your taxes. The self-employed are almost always guilty of taking tax deductions which cast a little shade on their mortgage application. Take honest, documented deductions, and don’t make it look like you’re desperate to cook the books!
  1. Register and pay yourself like a pro. Make sure your business is licensed and registered and, if possible, setup your business structure to pay you on a W-2 form rather than declaring your income as 100% 1099.
  1. Document everything. Make no claim without paper (or verifiable digital records) to back it up. Check stubs from clients, proof of income, expenses… everything. The more thorough and organized your documentation, the better you look to the lender reviewing your file.

It can also be useful to make a larger down payment than most, but lenders understand this can be difficult. You may be eligible to use your IRA or even an old 401(k) to boost your down payment, but talk to your tax professional before you make any moves.

Don’t let self-employment cloud your view of securing that mortgage. It is possible! I’d be happy to put you in touch with lenders when the time comes!


2015 Remodeling Cost vs. Value Report: Less is More

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Are you considering selling in 2015?  It’s important to know which home improvement projects will bring you the most return on your investment. Visit the 2015 Cost vs Value Report (see Dallas specific info here) which compares the 36 most popular remodeling projects and the value those projects retain at resale.  If you’re making updates or just thinking about selling, let’s talk about how it will affect the value of your home!

The Cost vs. Value report is an annual collaboration between Remodeling magazine and REALTOR® Magazine, which breaks down the estimated cost of various remodeling projects and the estimated return on investment for those projects by region and by city, as well as by midrange and upscale projects. In general, the 2015 report boasts that “less is more”.  It’s the smaller improvements that will give you the most bang for your buck.

 

 

According to the January 2015 issue of REALTOR® Magazine:

As a general rule:

  • Simpler, lower-cost projects tend to return greater value. The national average cost for a steel door replacement was $1,230, for example. That’s the least expensive project on the list, and it ranks highest on the payback scale, returning 101.8 percent nationally on average. In fact, in 43 of the 102 markets surveyed, REALTORS® said the new door would recoup more than 100 percent of its cost. Other projects expected to top 100 percent payback in multiple markets: the midrange garage door replacement, the upscale garage door replacement, the midrange wood window replacement, and the minor kitchen remodel. Notice a pattern? With the exception of the kitchen job, they’re all replacement projects. In general, replacements cost less and provide a bigger payback than remodels or additions.
  • First impressions are important. The replacements that offer the greatest payback are the ones that are most obvious to buyers when they first view a house in person or online, such as new door or garage door. Siding replacement also provides great value at resale—particularly this year’s one new project, manufactured stone veneer,  which is expected to recoup 92.2 percent of its cost nationally on average.
  • Kitchens still offer the most remodeling bang for the buck. The only remodeling job breaking into the top 10 in terms of payback is the minor kitchen remodel with a national average cost of $19,226 and a national average payback of 79.3 percent.

Top 5 projects nationally in terms of cost recouped:

1. Entry door replacement (101.8%)
2. Manufactured stone veneer (92.2%)
3. Garage door replacement (88.5%)
4. Siding replacement, fiber cement (84.3%)
5. Garage door replacement (82.5%)

Click here for the full article from REALTOR® Magazine.

 

From the January 12, 2015 article in Remodeling magazine:

It’s no surprise that replacement jobs—such as door, window, and siding projects—generated a higher return than remodeling projects. That’s been the case since at least 2003. But the gap between the two categories widened by 3.8 percentage points this year even as both declined in value: Replacement projects showed an average return of 73.2% in this year’s report, just a smidgen below its 73.7% last year, while the cost-value ratio of remodeling projects sank to 60.8% in this year’s report from 65.1% last year.

When grouped by job type, siding jobs fared better than most, perhaps because of a rising perception nationwide of the value of curb appeal. Midrange vinyl siding replacement jobs were one of only five projects to rise in value, to 80.7% from 78.2%. A replacement job involving foam-backed siding slipped just half a point in value, to 77.6%, while the cost-value ratio for a fiber-cement replacement job dipped to 84.3% from 87.0%. Similarly, window jobs were no more than 2.1 points lower this year than in the 2014 report, and they ranked between ninth and 16th in overall payback.

In contrast, kitchen remodels declined as much as 6.6 percentage points, while the drop for bathroom additions and remodels was more modest, slipping 3.8 points or less.

As a general rule, the simpler and lower-cost the project, the bigger its cost-value ratio. Three of the four projects that cost less than $5,000 for a pro to do were ranked in the top five for cost recouped, and the other two were in the $5,000-to-$25,000 price range. No project costing more than $25,000 ranked better than 14th.

Click here for the full article from Remodeling Magazine.


5 Reasons to Hire a Real Estate Professional

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Whether you are buying or selling a home, you need an experienced Real Estate Professional to lead you toward your ultimate goal. In this world of instant gratification and Internet searches, many sellers think that they can For Sale by Owner or FSBO.

The 5 Reasons You NEED a Real Estate Professional in your corner haven’t changed, but rather have been strengthened in recent months due to rising interest rates & home prices as the market recovers.

1. What do you do with all this paperwork?

Each state has different regulations regarding the contracts required for a successful sale, and these regulations are constantly changing. A true Real Estate Professional is an expert in their market and can guide you through the stacks of paperwork necessary to make your dream a reality.

2. Ok, so you found your dream house, now what?

According to the Orlando Regional REALTOR Association, there are over 230 possible actions that need to take place during every successful real estate transaction. Don’t you want someone who has been there before, who knows what these actions are to make sure that you acquire your dream?

3. Are you a good negotiator?

So maybe you’re not convinced that you need an agent to sell your home. However, after looking at the list of parties that you need to be prepared to negotiate with, you’ll realize the value in selecting a Real Estate Professional. From the buyer (who wants the best deal possible), to the home inspection companies, to the appraiser, there are at least 11 different people that you will have to be knowledgeable with and answer to, during the process.

4. What is the home you’re buying/selling really worth?

Not only is it important for your home to be priced correctly from the start, to attract the right buyers and shorten the time that it’s on the market, but you also need someone who is not emotionally connected to your home, to give you the truth as to your home’s value.

According to the National Association of REALTORS, “the typical FSBO home sold for $184,000 compared to $230,000 among agent-assisted home sales.”

Get the most out of your transaction by hiring a professional.

5. Do you know what’s really going on in the market?

There is so much information out there on the news and the Internet about home sales, prices, mortgage rates; how do you know what’s going on specifically in your area? Who do you turn to, to tell you how to competitively price your home correctly at the beginning of the selling process? How do you know what to offer on your dream home without paying too much, or offending the seller with a low-ball offer?

“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.” – Dave Ramsey

Hiring an agent who has their finger on the pulse of the market will make your buying/selling experience an educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.

Bottom Line:

You wouldn’t hike up Kilimanjaro without a Sherpa, or replace the engine in your car without a trusted mechanic, why would you make one of your most important financial decisions of your life without hiring a Real Estate Professional?


New renderings show future Cowboys site, multiuse stadium in Frisco

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FRISCO — Renderings released Tuesday offer the first glimpse of what the new Dallas Cowboys headquarters and multiuse event center in Frisco will look like.

The city is moving forward on the publicly funded portion of the project. That includes a 12,000-seat stadium, an outdoor plaza spanning nearly 2 acres, a six-story team headquarters building and two private practice fields. A 1,500-space parking garage will be constructed below the headquarters.

The site plan for the northwest corner of Warren and Dallas parkways will be on the May 27 agenda for the Planning and Zoning Commission.

The remainder of the 91-acre site will be privately developed with retail, restaurants, offices and possibly a hotel.

Among the details discussed at Tuesday’s Frisco City Council work session: One area will hold 30-plus school buses to accommodate Frisco ISD events. Behind the stadium is space for up to six 18-wheelers to load and unload equipment. The stadium will have a green room for VIPs, two 100-person locker rooms that can be converted into four 50-person locker rooms and a locker room/shower area for referees or others.

“We have lots of space to be able to handle lots of uses,” Frisco Assistant City Manager Ron Patterson told the council. He is part of the team of architects, builders, developers, school officials and the Dallas Cowboys working to get the project completed for the 2016 football season.

One of the unique features: the 25-foot fire lane required near the stadium will be covered in green turf that’s been tested and approved by the Fire Department.

The stadium will be about 18 feet below ground with a split-level bowl that allows people entering the stadium at ground level to go up or down to the various seating areas.

The Cowboys’ two outdoor practice fields will also be below ground level with screening to ensure privacy. No public viewing is allowed.

The dirt removed from the below-ground areas will be spread around the remainder of the site, eliminating the need to truck in extra fill dirt. That will save about $10 million, Patterson said.

Contracts are starting to go out for bid. Price and schedule are the key factors, Patterson said. Officials hope to break ground on the site this summer.


Moving-Up? Do it NOW not Later

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A recent study revealed that the number of existing home owners planning to buy a home this year is about to increase dramatically. Some are moving up, some are downsizing and others are making a lateral move. Another study shows that over 75% of these buyers will, in fact, be in that first category: a move-up buyer. We want to address this group of buyers in today’s blog post.

There is no way for us to predict the future but we can look at what happened over the last year. Let’s look at buyers that considered moving up last year but decided to wait instead.

Assume they had a home worth $300,000 and were looking at a home for $400,000 (putting 10% down they would get a mortgage of $360,000). By waiting, their house appreciated by 13.8% over the last year (national average based on the Case Shiller Pricing Index). Their home would now be worth $341,400. But, the $400,000 home would now be worth $455,200 (requiring a mortgage of $409,680).

Here is a table showing what additional monthly cost would be incurred by waiting:

Move-Up-Cost-of-Waiting-2


Make an Offer That Sellers Can’t Refuse

With shrinking inventories, many home buyers are finding only competitive offers will win them the house they want. A recent article by Kiplinger’s Personal Finance highlighted several ways that home buyers can make more competitive “irresistible” offers.

1. Be preapproved: About three or four months before home buyers even shop for a home, they should review their credit reports to make sure they’re accurate and take short-term steps to improve their credit score, says Michael Corbett, author of Before You Buy! Corbett says buyers then should get a bank’s preapproval. While that won’t guarantee they’ll get the loan, it shows sellers that a lender has verified the buyer’s income and credit score to determine that she can afford payments on a mortgage for a certain amount.

2. Don’t lowball: Buyers may only get one chance to get the home they want in a competitive market. They may not get a second try to sweeten the deal later, so a lowball offer the first time around could cause them to lose out. Buyers should use sales prices of comparable properties in the neighborhood to submit their best offer the first time around.

3. Consider an escalator clause: These purchase contract clauses are becoming more popular again. This is when the buyer agrees to increase their offer if there’s a higher bid from another buyer.

4. Add earnest money: The extra deposit can show sellers how serious the buyer is. Some buyers may even double the amount that the seller requests to show their commitment in purchasing the home.

5. Keep contingencies to a minimum: Sellers prefer no contingencies, but buyers want to protect their interests too. “Offset a financing contingency with preapproval and a strong earnest money deposit,” Kiplinger’s Personal Finance reports. “If you have enough cash, temper an appraisal contingency by assuring sellers that if the appraisal comes in lower than the purchase price, you’ll pay the difference or split it with them (up to a certain amount).”

6. Write a letter: Personal love letters about the home addressed to the sellers are winning over some hearts lately. The letters tell the seller about the buyer (e.g. “We’re relocating from …”) and what drew the buyer to the home (e.g. “We especially love …”).

Source: “Making an irresistible home offer,” Kiplinger’s Personal Finance (May 31, 2013)


Area Home Sales

Home sales in the Dallas area rose about 9-10% in 2013. Are you curious about the statistics for your area of town? Click on the link below to see an interactive map of the North Texas area year over year home sales data for all four quarters of 2013. Some areas lost value and some gained value more than others.

Just click on your area for the data.

http://www.dallasnews.com/business/databases/20140122-area-home-sales.ece