Should You Sell Your Home to Knock Out Debt?

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Experiencing debt can be among the hardest things anyone has to deal with in their daily lives. It can contribute hugely to stress, depression and anxiety, especially for those with wider responsibilities such as a family who depend on them for their own survival. There is hope for dealing with debt though – and ideally, it’s best to do so before things get too out of control. A little bit of debt can easily snowball into something bigger if you’re not careful.

Consider your options

Before making any big decisions that could affect certain aspects of your life, take a step back for at least a few moments. Considering options is crucial in any decision-making process, but it’s even more important to remember when you’re under extra stress due to your situation. There are multiple ways to alleviate the effects of debt that may depend on different factors, and there’s no “one size fits all” solution.

Understanding different types of debt

Your decision-making will likely depend on the type of debt you’ve accrued. Not all types are inherently bad for your credit rating and though they can be as stressful to deal with as any other kind, there are clear paths out of them. Students, for example, are notoriously known to be in debt or constantly ‘poor’ both figuratively and literally in terms of the large student loan they may have taken out to enable their studies. But there is no immediate pressure to pay this off afterwards, and repayments are perfectly manageable once one finds themselves in a decent job.

Having a mortgage, meanwhile, is similarly a kind of manageable debt that one can pay off in sustainable fashion. It still presents an element of stress in daily life, but with a stable income is something easily paid off in the long run. Furthermore, the value of your property is very likely to increase exponentially over time, meaning from a certain point of view you’ll have made a profit on your initial debt.

All of which is to say, there’s no need to panic with certain kinds of debt. Many are paid off over longer periods of time and don’t require large scale selling of assets to solve. But other kinds of debt are more negative – specifically, those that decrease in value over time, such as payday loans and (the big one for many people) credit cards. The longer you take to pay them off, the worse it might be. This may be the type of situation in which you start to consider what sort of lifestyle changes are necessary to get yourself out of a negative spiral of debt, and it’s where selling your home may start to become a serious consideration.

Is selling your home a viable option?

This starts with a simple question: does your home’s value outweigh the amount you owe? Some may be fortunate enough to have a valuable home they acquired in better days before getting into serious debt and selling it may therefore be a straight answer for solving money troubles. Others might have a bit of math to do before deciding whether to go forward. If you’re currently paying a mortgage, you can work out the value of your home by subtracting your remaining balance from the property’s current market value. Consider other factors as well, such as whether your financial problems are long or short term, and how important it is for you to stay on the property market.

Should you decide this is the best option for you though, you’ll want to get the ball rolling quickly. No need to delay once you’re sure this is the right decision for your circumstance. Here’s how you can sell your home fast.

Different ways of selling

At first people tend to think they need to go through estate agents or online portals to start the home selling process; it can seem like it might be a long and arduous process, even perhaps an overwhelming one. It doesn’t have to be this way. Some companies have recognized these common obstacles for home sellers and instead specialize in helping them achieve fast sales.

Getting market value in a fraction of time

Typically going through the estate agent process can take at least six months, so that may not be a viable solution when you’re looking to sell specifically to knock out your debt. By going the alternate route of a company that guarantees to sell your home fast you’ll instead get a free quote within 24 hours and could find your house sold near market value within the following 7 days, with no extra agent or solicitor fees to pay.

As this presents such a quick turnaround, it’s even more reason to be sure this is the right option for you. But if it is, and you’re in desperate need of selling fast, then it’s time to get the ball rolling today.

TOP TIPS FOR HOME BUYERS DURING A PANDEMIC

This is your year. You’ve prepped and planned for 2020 to be the year you finally invest in a home, only to have a pandemic turn things upside down. However, there’s good news; you can still find your dream home. You just may not be able to settle on it until the fall, depending on where you live. So, let’s take a look at some tips for those of you looking to purchase a home during quarantine.

The internet is your greatest tool

Your ability to purchase a home right now hinges on whether or not your local government has allowed real estate services to continue. Regardless of local regulations, you should begin your home search on the internet, sifting through listings, and narrowing down choices. 

In those areas where you can continue with a home sale, take advantage of a virtual home tour while social distancing measures are in place. The beauty of the virtual home tour is that you cut out travel time between properties. You’re also able to narrow down your top choices to make an appointment for an in-person, socially-distanced tour. 

Those wishing to reduce their risk further can make an offer on a property or plan to tour once restrictions are lifted. It’s worth noting that the available inventory in Alabama remains low. And with new home construction at a virtual standstill, inventory levels aren’t likely to increase soon. So, if you like a home, you want to act.

Secure financing ASAP

If you’re financing your home purchase, realize that mortgage rates are all over the place. Get started with your mortgage paperwork as soon as possible so that you can lock in your rate when you feel confident. You also want to get a head start on tackling all of the lender requirements, especially since the entire process, from application to the appraisal, is taking more time than usual. 

Embrace virtual showings

Technology is keeping things going in what would otherwise be a barren time for home sales. To be sure, however, it’s a strange time to buy a home. There are several ways agents are presenting homes to buyers right now.

Buying a home during coronavirus means your real estate agent is your greatest tool in the process. Find an agent who is available and offering virtual tours, so that you can limit exposure and adhere to social distancing rules. 

With a live virtual tour, agents can explore areas as directed, and answer questions on-demand about aspects of the home. And if there’s an area of particular interest, you’re able to have the agent return to give you another view.

Apart from in-person tours, which are highly regulated for safety, virtual tours are where it’s at right now. 

Be patient

Again, this is a strange time for all aspects of the housing market. Selling, buying, touring, inspections, appraisals—every area of the process is suffering the effects of a global pandemic. Because brokers, agents, loan officers, appraisers, and inspectors are having to get creative to get things accomplished under social distancing and shelter-in-place mandates. As such, settling on a home is, understandably, taking longer than usual. 

Prepare yourself for things to hit speed bumps and roadblocks in the buying process, and you’ll be better able to adjust to wait times and workarounds. The light at the end of the proverbial tunnel is your new home; you just have to be patient getting there.

For more on COVID-19 and the real estate comeback, check out HomeLight’s Top Agent Insight Survey from Q2. 

Things to Consider Before Purchasing a House

Buying a home for you and your family is one of the hardest and most important decisions that you will probably make in your life. This is a one-time investment that is supposed to enable you to live with a peaceful state of mind in the years to come. You should invest a lot of time and research before purchasing one and it is extremely important not to rush the process.

There are many things that you should consider before buying a home and the list goes on and on. Since we cannot cover all topics in this article, we decided to stick to some of the basic stuff. Let’s check out what should be at the top of your list before you start working on the details.

Credit Score

Unless you are on a million-dollar paycheck each month, then you’ll have to apply for a loan to buy yourself a house. As you know, they cost a lot of money and it will take you years before you pay it off. The first thing that lenders check before approving your loan is your credit score.

The credit score expresses your creditworthiness by doing an analysis and expressing it in numbers. The score is primarily based on a credit report. The better you are at handling your finances, the higher and better your credit score will be. When buying a house, you must make sure that your score is perfect. Reading what credit score is needed to buy a house is important and very informative.

Several things influence your credit score. If you paid off previous loans on time if you pay all of your bills on time, how much do you owe at the moment, etc. It’s worth noting that the credit score is not universal and each country has its system of calculating.

Schools and Neighbourhood

Choosing the perfect location is a necessity. The first thing that you should check out is the neighbourhood. You must make sure that your surroundings are peaceful and quiet. No one wants to live in an area where the crime rate is very present and the odds of an incident happening are surprisingly high.

Is also good to see if there are schools and markets nearby. Houses that are close to schools usually cost a lot more, so you will have to compromise with the budget that you have. Never settle with something that you are not happy with. What is the point of spending all that money on a house that you are not even willing to live in?

Hire Estate Agents

Estate agents can be very helpful with the process, especially if it’s the first time you deal with something that serious. You should choose agents that have local knowledge and are extremely familiar with the current market.

Of course, many people decide to go in the process alone as a way to save as much money as they can and that is also okay. If you have the time and resources, we advise you to hire them to gain leverage over the process of negotiating.

These are some of the basic things that you should take into consideration when buying a house. Some of the other things include distance to work, mortgages, the size of the house, how big should the rooms be, etc. It is a complicated process, but if you do it with a plan, you will end up living in a good and happy place with nothing to worry about.

Beginner’s Guide To Purchasing a Home

So you live in L.A. and are looking to purchase your first house. Where do you start? While you’ll certainly need to look for a hard money loan Los Angeles eventually, there are a few things you need to get out of the way first. Purchasing a home is a huge commitment and you need to be prepared for any challenges that may arise. To ensure you get a house with the best deal, you should follow these five steps.

1. Take Stock of Your Finances

As any homeowner will tell you, buying a house involves a lot of paperwork. Lenders want to know as much as possible about your ability to repay, so they’ll want to have documentation of the following:

  • Income
  • Credit history
  • Debt-to-income ratio

You should review all of this information before you even submit an application. This allows you to spot problems before there’s a hard hit on your credit. For example, if you have a lot of debt, you may need to dedicate some time to paying it down before you apply for a mortgage.

2. Know What You Want

You should come up with a list of wants and needs before you start your house search. If you and a partner are buying property together, make sure you have a consensus on what takes priority.

While you may not be able to get exactly what you want, having a list of musts can steer you in the right direction. If you have a limited budget, a prioritized list can help you balance your needs and financial means.

3. Shop Around for Loans

It’s always a good idea to look at several hard money direct lenders before signing anything. Different companies may offer promotions or specials that better fit your needs, so it’s in your interest to compare offers.

You may also want to get prequalified or preapproved for a loan before you start looking at properties. This gives you an idea of your price range and means you won’t have to scramble to get funding once you decide on a place.

4. Find a Real Estate Agent

Real estate agents are invaluable resources, especially if you’ve never bought a home before. While many people go it alone, having an agent gives you several advantages:

  • Familiarity with the current market
  • Network of other realtors showing houses for sale
  • Experience negotiating

Perhaps most helpful, realtors know the various strategies people use during negotiation. They can help you know what kind of bid to make.

5. Don’t Settle

Most importantly, don’t settle for something you’re not happy with. While you may need to make compromises here and there, this is ultimately your home and you should enjoy the space. Don’t be pressured to make any choice you’re not sure of; with an investment this large, you should take as much time as you need.Need funding? Direct lenders are a great way to quickly get the cash you need. Most companies offer a variety of financing products, including probate estate loans, commercial real estate loans and trust loans. With the right hard money lender, you can close on a deal within days

Saving for a House While Paying off Debt

Whether it is paying off for a student or credit card loan, paying off debt is the norm rather than the exception these days. Regardless of what type of debt it is, being in debt can throw a monkey wrench in the works, as far as savings plan are concerned. However, with proper planning and if you are willing to line up your ducks, it is possible to save for a house while paying off debt. Before doing so, the first order of the day is to sit down and ask yourself some questions. If need be, take a pad and pencil and start jotting down what exactly needs to be done. Obviously, this question and answer session will differ from person to person. In general, the questions you need to ask yourself about down payments should look something like this:

  • The average mortgage payment per month is around $750. Is this affordable?
  • Down payments are expected by most lenders and the average amount is 20% of the houses total value, depending on the area
  • What is the current property value in the area where you are looking for a house?
  • Don’t forget the maintenance of the house. Will you be able to afford expected and unexpected repair costs? A good number to use when figuring out maintenance cost is 1% of the home’s value
  •  How does your credit score look? Interest rates are directly influenced by credit scores. If it’s on the low side work on bringing it up before thinking about purchasing a house
  • Last but not least, how long are you planning on staying at the new house? Most industry watchers recommend you stay at least 5 years to make it financially worthwhile

Time to Start Thinking About DTI

Once you have done your due diligence and have decided that you may be able to save enough and buy a house at the same time, the next step is to approach the banks. Finding out whether you qualify for a mortgage is the first big step. Once you sit down with the fiancé department, they will be able to look at your income, credit score and any other key factors, to decide what you can afford. One of the first things they will look at is your DTI score. DTI stands for the debt-to-income ratio. If you score well in this rating, then you have a higher chance of getting a loan. Apart from loan approval, the DTI will also influence interest rates.

Keep in mind that there are two types of DTI; the front-end and back-end ratio. The Front-end ratio is also known by another name which is the housing ratio. The housing ratio shows how much of your income can be taken for housing-related expenses. These expenses include insurance, HOA fees, mortgage, and taxes. The back-end ratio includes the non-housing related expenses, but mostly debt-related costs. This could be car loans, credit card debt, student loans, child support, etc.

DTI by the Numbers

So, what is a good number to have when calculating DTI? Ideally, your DTI number should be at or below 42%. In fact, many lenders put the maximum at 43% before they will even look at anything else. You can calculate your DTI if you want, just to get an idea of where you stand. The way it is done is by adding up all your current monthly payments and then dividing that number by your monthly salary. If you get a number at or below 0.4, then you are good to go.

To Purchase or Not to Purchase

If you are still on the fence regarding buying a house, then keep in mind that there are benefits to saving up and buying a house. If you are currently renting a place to live, especially in an area where rates are high, it can make more sense to buy a house. In some areas, rent payments can be equal to or higher than a mortgage payment. Once you buy your new home, think of it as an investment. If the neighborhood is showing a general trend towards growth, then your home will be worth more as the years go by. Due to rising property value, you may also be able to tap into this equity by refinancing mortgage payments, which in turn means refinancing other debt payments.

Best Ways to Power Your Home

When you own a home there is one thing for certain, you need a source of power to run it. Below we explore the different options you may have when it comes to powering your home.

Standard Providers

When you buy a house and become a homeowner, the natural thing to do is get all of the utilities turned on in your name. Among cable, water, internet and gas there is also electric. Most major cities have a standard or big box provider that provides electricity to the masses. It is most common that someone turning on electricity in their would give these companies a call.

Non Traditional

Some people are unaware that there are multiple suppliers available for you to use. You have the right to shop around for electricity providers. You can do this by calling or by searching through their website. Each provider may provide different rates or promotions so it may be worth your while in order to save some money for your family. 

Eco Friendly

Besides the monetary cost of electricity, there is also the cost or impact it has on our environment. While there are many parts of this world that don’t have electricity of any form but the science behind the idea of alternative eco friendly alternatives is making it feasible for many. This has been a major focus and this has lead to many options for families to look into. One major industry that is on the rise are solar panels that provide solar energy for your home. They take the sun’s rays and turn them into energy. Other forms of energy are wind energy (provided by wind turbines) and hydro power (provided by moving water). There are companies putting a lot of money into researching this area. Tesla for example has come out with a product that is a rechargeable battery that powers your home. They are known for their innovative products that may be the next big thing.

Whatever your main concern may be when it comes to powering your home, there are options that allow you to cover all of your bases. Be sure to explore them to know what will be best for you and your family.

You Can Still Get a Mortgage With a Poor Credit Score

Do you think if you have a poor to no credit score you cannot get approved for a mortgage? While with certain conventional loans this is true, other options will allow you to have a minimal credit score.

One of those options is a USDA loan.

When applying for a mortgage, there are many things the lender takes into consideration. What you make every month, what your debt total is, and if your payments are less than what your income is. Your credit score is only a part of the many factors that contribute to whether or not you get approved for your mortgage.

Your credit score for a USDA loan matters, but there is another way of getting this mortgage. Let’s take a look at what a USDA loan is and how you could get one even if you have no credit.

The Basics of a USDA Loan

A USDA loan is a rural housing loan backed by the United States Department of Agriculture. The government created this program to help boost the housing market, especially in rural and suburban parts of the country. Not only that, the loan helps make housing more affordable for low-to-middle income families.

The USDA loan has some of the lowest interest rates when it comes to mortgages across the country. That is one of the major appeals to this program. On top of that, there is a low mortgage insurance rate, and 100 percent financing (you are not required to make a down payment, another significant factor).

One of the hardest parts about getting approval for a USDA loan is the location of the property. Although there is a common misconception that you must live on a farm to qualify, rather, you can live in a rural or suburban community that is only miles away from a major city. The way the country defines rural and suburban, open up many opportunities to use this program to purchase a property.

Qualifications for the Loan

There are qualifications you must meet to get approval for this loan besides the location. There is an income limit of about $82,000 for a household with up to four family members, and just under $110,000 limit for families with five to eight members. The application takes into consideration the overall income of the household and not the individual applying for the mortgage.

Other qualifications include having an acceptable debt-to-income ratio, with the maximum being 41 percent. The property must also be in decent condition.

Credit Score Requirement

As mentioned earlier, you can apply and get approval for this loan with little to no credit score. However, most lenders do have a minimum of a 640 score. Your credit score shows how reliable you are with paying back loans and credit cards.

If your credit score is under 640, there is still a chance, although much more difficult. The lender must underwrite your loan.

If this is the case, you’ll need more information for the lender. He or she will want to see how long you’ve been at your current job, if you are a good homeowner, your on-time payment history over the last year, and what your bank accounts look like (including savings and retirement accounts).

Don’t let your credit score deter you away from the possibility of getting a mortgage. See if you qualify for a USDA loan.