Perfect credit scores, historical bankruptcy or foreclosure, and “reality TV.” Paul Jamison and Sandy Dickenson of Summit Lending discuss facts, myths, and buying and selling statistics in Mecklenburg County.
We have some interesting statistics regarding factors that make homes more appealing to buyers on different levels of home values. Top tier and entry-level home buyers have differences in what they like to see in homes that they are interested in buying, likely based on the ages of the buyers.
Would you like to see any of these in your new home?
- 40% of entry-level home buyers prefer solar panels versus 13% in top tier home buyers.
- 30% of entry-level home buyers prefer a farmhouse sink versus 26% of top tier home buyers.
- 25% of entry-level home buyers prefer a pergola versus 4% of top tier home buyers.
- 24% of entry-level home buyers prefer a mudroom versus 13% of top tier home buyers.
- 25% of entry-level home buyers prefer radiant floors versus 24% of top tier home buyers.
- 23% of entry-level home buyers prefer exposed brick versus 2% of top tier home buyers.
- 21% of entry-level home buyers prefer a Jacuzzi tub versus 2% of top tier home buyers.
- 21% of entry-level home buyers prefer a picket fence versus 0% of top tier home buyers.
- 20% of entry-level home buyers prefer a butcher block versus 6% of top tier home buyers.
Let’s talk about facts and myths.
TRUE OR FALSE: PREQUALIFICATION AND PREAPPROVAL ARE THE SAME THING.
FALSE: A prequalification is a cursory check that states that a home buyer appears to meet parameters for a certain amount of money. Preapproval is an actual loan application that is run through an automated underwriting portal, which carries more weight in final loan approval than a prequalification does.
TRUE OR FALSE: A PREAPPROVAL LETTER GUARANTEES A LOAN.
FALSE: Even though a preapproval is more thorough than a prequalification, it still does not guarantee the loan. Final approval requires a complete assessment of the four components of a loan by an underwriter: cash, credit, income, and property.
Fact: Listing your home for sale on a Wednesday will earn you an average of $2,023 more on the sale of your home.
TRUE OR FALSE: INVESTING AND HOME FLIPPING ARE MUCH LIKE WE SEE ON TV.
FALSE: There are similar aspects in the actual process of investing, upgrading, and flipping. However, “as seen on TV” budgets, timelines, and the work involved are portrayed very unrealistically. You can’t upgrade an entire home with $15K, as might be shown on one of these “reality” shows. $15K can be spent on appliances alone!
TRUE OR FALSE: PREVIOUS BANKRUPTCY OR FORECLOSURE DISQUALIFIES YOU FOR A LOAN.
FALSE: If documentation can be presented to support a catastrophic event, such as a medical issue, or other extreme one-time hardship, a case can be made that the occurrence of bankruptcy or foreclosure was an unforeseen, unavoidable event, and the applicant has recovered from the hardship.
TRUE OR FALSE: DIVORCE IS A REASONABLE HARDSHIP.
FALSE: Unamicable divorces can cause disputes about who is responsible for mortgages, car payments, and credit card payments, where neither party takes responsibility. This will work to both parties’ disadvantage in seeking loans in the future, and will not be seen as a reasonable hardship by lenders. Amicable or no, parties to the divorce must agree to keep payments made during the break-up.
TRUE OR FALSE: 20% DOWN IS ALWAYS THE REQUIREMENT ON THE PURCHASE OF A HOME.
FALSE: Loans can be as low as 3% or 5% down. Investment loans can go as low as 15% down for 30 years but will require mortgage insurance and give you a higher interest rate.
TRUE OR FALSE: PERFECT CREDIT GUARANTEES YOUR LOAN APPROVAL.
FALSE: Issues like job stability, income, and debt owed can disqualify you for a loan, even with a credit score of 800. If your debt to income ratio is too high, you will not be qualified.
TRUE OR FALSE: IT’S ALWAYS BEST TO APPLY FOR A 30-YEAR FIXED MORTGAGE.
FALSE: Applicants, who relocate often, will benefit from a 5, 7, or 10-year intermediate ARM. A 10 or 15-year fixed loan is a great option if you want to pay your loan off faster, with less interest.
Fact: Listing your home for sale on a Thursday will sell your home faster.
TRUE OR FALSE: YOU NEED A LOT OF CASH TO PURCHASE AN INVESTMENT PROPERTY.
FALSE: While it does take some money to begin, as a rule of thumb, 20% down, to begin investing, it does not take a fortune of savings to get started. In addition to the down payment on the loan, it is recommended to have savings to pay the mortgage on the home if it goes un-rented for a month or two.
TRUE OR FALSE: IF YOU INCREASE THE RENT ON YOUR INVESTMENT PROPERTY, YOU WILL FORCE YOUR RENTER TO LEAVE.
FALSE: While it is not recommended to raise the rent in one large, lump sum, it is advisable and acceptable to increase the rent on a yearly basis in smaller increments, such as $25/$75/$100. Rental increases will be based on local market increases.
Fact: The worst day to list your home for sale is Sunday
Do you have additional questions about real estate or lending myths?
If you’re looking at buying or selling a home, give me a call and let’s work together! I invite you to tune in to my Saturday afternoon radio show every week on WBT. I look forward to hearing from you soon because Opportunity is Knocking!
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