Shopping for a Home This Spring? Get a Credit Checkup

Spring may bring thoughts of your dream home – and what better time for a home search than now?

By the time summer comes you could be happily ensconced in your new home. Think outdoor living and a relaxed intro to a new neighborhood.

But before the dream turns into a full-fledged home search, there are several things to consider. One of the most important is your credit score and what that score may mean as far as your mortgage options.

To advance to the search phase, you’ll need to know what your credit score looks like now and where it ultimately needs to be for you to be in a position to purchase a home. So now is an ideal time to contact your mortgage professional to review your credit.

Indeed, you can pull your own credit, but what you need is a way to interpret what’s on the report and how it will impact you throughout the lending process. Many things that you may see as minor on your report may actually make a significant difference in accessing the programs and interest rates you want.

For example, if you carry a lot of credit card debt or if one card has a higher balance than most lenders feel is appropriate, that’s a negative. But if your mortgage advisor draws this to your attention, you’ll have time to pay off or reduce your balance before you start to search.

And the sooner you start, the sooner you can be in your dream home.

How to Set the Stage for Home Buyers

In a hot market, selling your home may be easy. Selling it for top dollar takes a little more work. To achieve this, staging is the way to go. This is the process of beautifying your home to appeal to as many potential buyers as possible.

Many people can’t visualize the possibilities within a room, so staging helps the buyers as they view your home. The goal of staging is to transform your home into an environment so inviting that buyers can imagine themselves living in your space.

Creating this buyer-ready environment takes talent, and it can be a critical step for a fast sale.

What does a stager do?

A good stager improves the interior and sharpens curb appeal as well. Today, most buyers see pictures online before choosing which homes to tour. Staging ensures that yours is seen in the best possible light. It makes your listing stand out from the competition.

While some people actually replace all the furniture, smart staging may mean anything from stripping your home of personal photographs and knick-knacks to cleaning the rugs or polishing floors. You may need to deep-clean bathrooms or clear kitchen counters. The stager may suggest painting everything a warm and inviting – but always neutral – color.

How much does staging cost?

The cost of staging ranges from a few hundred to many thousands of dollars, depending on the reputation of the stager, the size of the property, and the quality and quantity of fixes required. The final results can be well worth the investment. If you live in a neighborhood where several homes are listed, staging may mean a quicker sale at a better price.

Can I stage my home myself?

Of course, you can try to stage your home yourself, but it’s hard to be objective about your own things. A fresh pair of eyes can make all the difference – which translates into dollars.

Should You Consider Investing in Real Estate?

Real estate is becoming an investment of choice, and many investors are either abandoning the more traditional vehicles such as stocks and bonds or using real estate to diversify their portfolios.

A recent RISMedia article pointed to a survey recently undertaken by Better Homes and Gardens Real Estate, which found that “(n)early all (96%) of U.S. investors surveyed who have invested in real estate believe their decision has helped them achieve some form of financial success.”

The interest in investing in real estate may be driven by our largest demographic-the millennials, who, according to the survey, show a greater interest in making a real estate investment than do boomers. Millennials in particular are more interested in personal real estate purchases (homes) than in buying commercial properties; the survey noted that “79% of investor respondents feel it is important to invest in a property that they could use for themselves or a family member at some point.”

There are various ways even a small investor can participate in real estate investments, such as a self-directed or real estate IRA. However, many fear they aren’t sufficiently knowledgeable about real estate investing. As the RISMedia article points out: “Unlike many other investments that can be made with the click of a button, real estate investments are often complex and require careful consideration.”

To ensure that your investment will be a good one, it’s important to consult with a financial professional who is familiar with real estate investing, as well as an investment-savvy real estate agent.

Location, Location … the Good, Bad and Ugly

We all know that living near a good school increases the value of your home. But who knew a neighboring cemetery can adversely affect your property value? Or that proximity to a hospital isn’t a good thing?

In fact, we now know – or should know – that nothing is more important when selling your home than your neighborhood. So if you’re buying, think ahead; purchase your dream home in the wrong location and you may be buying into a nightmare. Here are some location no-nos:

  • Realtor.com research has found that living near a cemetery will lower your property value by 12.3% and having a hospital nearby means when you sell you can expect an impact on your sale price of 3.2%. Also note: make sure you move near a “good” school; a “bad” school will reduce your home’s value by 22.2%.
  • An article in the Journal of Transport Economics and Policy indicates that having an airport nearby can discount the value of your home. The greater the noise level, the greater the negative impact.

Among the amenities to look for in your neighborhood-to-be:

  • Proximity to transit. According to a Transit-Oriented Development in America survey, 55% of Americans would pay more to live near good transit options. The study, conducted by consultant HNTB Corporation, found that 57% of respondents liked not having to depend on cars to “work, live, and play.”
  • A neighborhood on its way up-not down. In transitional neighborhoods, you get a lot of value for your home-buying buck. Your real estate agent is the best source of information and will also know if there are any planned roads or developments that may impact the neighborhood-positively or negatively.
  • Water, parks, and green spaces. A nearby waterfront can add up to 25% to the value of your home. A fabulous view is also a moneymaker when it comes time to sell.

Home Shopping? Look beyond the WOWs!

When shopping for a new home, it’s easy to fall in love. You can find yourself dazzled by the sprawling backyard, trendy kitchen, or sky-high ceilings, and want to make an offer right then and there.

But it’s important to take a step back and take the time to evaluate the perhaps less-exciting details. These often overlooked details may ultimately lead to significant, costly issues. Here’s what to look for and how to get beyond the WOWs:

  • Windows: Does every window open? For emergency reasons, every room needs a window that can be opened. Do they close and lock securely? Is the glass intact? Is there a tight thermal seal (which is important to regulate temperature)?
  • Flooring: Look for cracks, stains, holes, and warping. Ask if there’s another layer of flooring under carpet, tile, or laminate. Is the floor level? If not, it might be an indication of water, or worse, structural problems.
  • Basement: That beautifully finished basement could be hiding a plethora of problems, from leaks to mold to holes to critter infestations. Use a powerful flashlight to carefully examine corners and walls and look behind and under finishings.
  • Roof: Roof replacements are costly. Find out when the roof was last addressed, and whether it was a patch or a replacement. Look for signs of damage from the street.
  • Neighborhood: Look beyond the obvious into the details: Is local traffic a nightmare in rush hour? Is there reliable transit nearby? Is the home near green space, schools, and recreational facilities?
  • Parking: If the house doesn’t have a garage, will the driveway accommodate your vehicles? Is there good on-street visitors’ parking?

Even after you’ve checked the details, make your offer contingent on a home inspection. A reliable home inspector can dig deeper into the details. Isn’t your peace of mind worth it?

The Surprising Upsides to Holiday Home Shopping

With so much other shopping to do, should you add shopping for a new home to your list? It’s such a busy time of year. Maybe you should simply wait until spring. Or maybe not. Buying a home during the holidays offers several advantages over other times of the year.

Everyone else is at the mall. With other potential home buyers busy with holiday festivities, you’ll find you have less competition for your dream home. Plus, sellers have fewer buyers to choose from, meaning you might get a better deal.

Tax gifts from the treasurer. Buying a home at the end of the year may offer tax advantages, so it could be beneficial for you to close before January 1. There are additional factors at play here, such as potential conflicts with other deductions you hope to take, so if this is a key reason for buying now, be sure to talk to your tax professional first.

Holiday sales on interest rates. Often interest rates are lower during the holidays, thanks to a decline in demand during this time. Securing a loan now might save you a bundle in the long run.

Resolutions for a quick close. Finally, for buyers seeking a quick closing, this can be a prime time to shop. Typically, all parties involved in a year-end transaction are motivated to complete the sale before the start of 2017: sellers want to get resettled, and so do buyers, particularly if the kids will be switching schools and need adjustment time.

New Home, Old Home – What’s Best for You?

Prospective home buyers looking at areas where new neighborhoods are being developed have a decision to make that’s affected by price, availability, features, and style: Do I buy a new build or a resale property? Here are some thinking points when you’re considering which to buy:

New build

Purchasing a preconstruction house or condominium unit gives buyers a chance to personalize it to their needs and their style. The buyer can select layout, finishes, and fixtures. New homes also include the latest technology, which means lots of “smart” and “green” features.

The downsides? A new subdivision will likely still be a construction zone when owners move in, and there won’t be any mature trees or green space. Personality may be lacking, both outside and indoors; a resale home often has unique features that add warmth and style, whereas a new build may feel austere. And then there’s the waiting game. Particularly with new condos, buyers may have to wait for some time before the building is finally ready for occupation.

Resale home

A previously lived in home has two advantages that new builds find it hard to compete with: location and charm. The neighborhood is likely more developed; there will be mature greenery, a sense of community and culture, and an absence of the dirt, dust, and noise that accompany a new-build site. A resale home may also have unique features that make it feel special for the right buyer, such as an amazing backyard, a fireplace, crown moldings, or built-ins.

However, a resale home may also be dated and require costly repairs and renovations to make it suitable for a new owner. Because it wasn’t built with the latest materials and practices, it also may be less efficient.

New or old-both have their advantages. But make it all about you and your family, and your decision will be the right one.

Changes to FHA Rules Are Good News for Condo Buyers

One of the biggest changes in the Housing Opportunity Through Modernization Act, passed earlier this year by the US Senate, concerned condominium financing. It’s good news, not just to the National Association of Realtors (NAR), which had supported the changes for some time, but also to condominium owners and buyers.

Condominiums have always represented an affordable option for many buyers. But before the bill was passed, it was difficult for worthy borrowers to access the financing they need to purchase a condominium. Community and housing groups complained that FHA rules and requirements were both unfair and onerous – including the minimum owner-occupancy ratio of 50%, which made it impossible for buildings with lower ratios to qualify for FHA financing.

According to NAR, the bill will “make FHA’s recertification process substantially less burdensome, while lowering the FHA’s current owner-occupancy requirement from 50% to 35%.”

Also affected is the FHA policy around condo unit transfer fees. The bill requires the FHA to adopt the more flexible model used by the Federal Housing Finance Agency.

It is hoped the changes in legislation will open up FHA financing opportunities to more prospective condo buyers across the country, and there’s every chance it will.

In response to the bill, Tom Salomone, current president of NAR, noted: “Tight inventory and rising home prices are a reality of today’s market, and mortgage credit is hard to come by. We should take every opportunity to clear the path for well-qualified borrowers to purchase a home when they’re ready, and this legislation does just that.”

A Home Buyer’s Guide to Making It in a Competitive Market

In hot real estate markets, buying a property may feel like a nearly impossible feat. Skyrocketing prices, low inventory, and bidding wars can make a prospective buyer feel dejected.

But becoming a homeowner in hot cities can happen, if you employ the right techniques. A recent article in RISMedia outlines tactics for buyers to use when shopping for a home. For example:

Don’t be naive. Understand the market realities. Instead of obsessing over prices, value, and comparables in the area you’re considering, focus directly on what it will take to get the home you want.

Work with someone you trust. It may pay to find an agent who is sufficiently skilled to develop a rapport with sellers and their listing agents. Or you may need a superior number-cruncher to get you the best deal. But whatever the agent’s strengths, ensure he or she is a person you feel comfortable working with; the journey to finding a home can be long and arduous. You’ll need a friend.

Be realistic. Be very realistic. If you’ve only seen one home in your desired market that fits your budget, then that market probably isn’t in your price range. Accept that and either pick another area or be prepared to boost your budget.

Finally, try to relax. Expect that all will not necessarily run smoothly, particularly in a highly competitive market. Don’t get worn down by the process. You can become a homeowner if you relax and go with the flow!

Decorating For Today: If it Works for You…it Works

From the shag carpets of the 70s to the neons of the 80s, each era brings its own styles and designs. But today’s trend is actually a non-trend: It’s a celebration of the beauty (and functionality) inherent in personal taste: if it works for you; it works.

Decorating today is about expressing your personality in your home. If you like those shag carpets from the 70s, get one. If Pantone’s pastel colors of the year leave you cold, warm up with lemon yellow or tangerine orange.

While coming to terms with your own decorating personality is liberating, it can also be scary. Here are some ideas; make them yours:

Remember “flower power?” – If you love flowers, you’ll find floral prints on pillows, rugs, drapes and furniture. You can be subtle – add a floral cushion or two – or create an all-out garden in your space.

Oversized art – Fill a focus wall with a big painting or print that you love to look at. Large, bold pieces look great and don’t have to cost the earth. Some people are opting for stick-on photo art murals instead of wallpaper to give your room that very personal feel.

Make it shine – Today’s metal accents are subtle (think brushed brass, copper or soft rose-gold) – but if it’s glitzy you want, there are still lots of shiny things around.

Go bohemian…in a modern way – The modern boho trend encourages you to break all the rules. Combine vintage finds, antiques, personal accessories and modern furniture to create a style that shouts – ME!

These Hacks Cut Noise in Open Concept Spaces

There’s no question that open concept living is still the way to go for designers and their decorista clients. And why not? It can make a space feel large and airy, provide the room-to-room flow that supports today’s relaxed lifestyles, plus it’s so in now that alternatives look dated.

But with the open concept lifestyle comes a problem: no walls means no sound barriers, which can raise noise issues for families with competing priorities. Fortunately, there are hacks to deal with all that racket:

Pad it, literally

If your open living area is a hardscape, without soft materials to absorb sound, fabric can help. Thick, high-quality floor coverings are a great first step. You don’t have to install wall-to-wall carpeting (although that would work wonders); instead, consider adding an area rug to anchor your living room furniture.

If well chosen for their sound-absorbing properties, fabric window coverings also make sense. Eschew sheers or other similar-weight fabrics, as they haven’t the chops to do the job.

Allow for options

Create ways to divide your space at will, including popular reclaimed wood sliding doors; pocket doors that disappear when not in use, and even movable sound-absorbing panels like those dividing office cubicles. There are also elegant screens on the market today that demarcate and reduce sound while keeping that open feeling.

Switch up your flooring

Hardwood, stone, and tile floors may look lovely, but they’re part of the problem, not the solution. Cork is a wonderful option, and it comes in all sorts of styles and colors these days. And like wood, cork is soft and comfortable to walk on. While concrete may also absorb sound (and look great), don’t install it in locations where you’ll be standing for any period of time, like the kitchen. Your legs and feet will notice.

With these and other hacks, decoristas can have it all.

Solo Home Buyers Face Unique Challenges

Recent reports have noted a marked increase in the number of female home buyers across the United States. In fact, it’s not only young couples and families who are eagerly entering the real estate game; young, single women are buying in droves.

The most recent available data from the National Association of Realtors (NAR) notes that single women have been purchasing homes at almost twice the frequency of their male counterparts.

“More women than men think buying a home is a good financial investment,” Jessica Lautz, NAR’s manager of member and consumer survey research, told Reuters. “Many of them are thinking of the pure desire to own a home and to settle and make roots.”

That said, single females don’t differ significantly from their male counterparts in the challenges they’re facing. There are two things both need to bear in mind when taking the plunge:

Affordability. A couple or family may have two incomes to contribute to a down payment and subsequent mortgage payments. If you’re making a big purchase on your own, knowing what you can comfortably afford becomes all the more crucial.

Despite what your mortgage approval says, make sure that you’ll be able to make payments without feeling stretched. And remember to factor in the costs of upkeep, repairs, and unforeseen circumstances; unexpected emergencies could cost you thousands of dollars – a cost that you’ll bear entirely on your own.

Protection. Just because you purchased your home on your own doesn’t mean you’ll always live in it alone. It’s important to remember that your home is probably your biggest investment, and you need to protect it. That may mean signing a prenuptial contract or another type of agreement in case you and a partner divorce/break up.

Insurance. Last, but certainly not least, be sure to properly insure your home against a wide variety of potential hazards. That includes purchasing homeowners, life, and, depending on the circumstances, disability insurance.

Buyer Beware: There Are Downsides to Buying a FSBO

Purchasing a property for sale by owner (FSBO) may make sense to many; because the seller doesn’t pay real estate agent commissions, the price should be lower. However, buyer beware. There are downsides to purchasing an FSBO. According to research conducted by the National Association of Realtors┬«, fewer than 10 percent of FSBOs are actually sold.

Why? There are any number of reasons, ranging from sellers not knowing how to price the property to potential problems with the condition of the house.

For example, without the advice of a real estate agent, the seller could overprice the home. So when your lender has the property appraised (which you will pay for), you may find that the appraisal comes in lower than the seller’s asking price. And because the lender is only prepared to lend against this appraisal value, not against the price the seller is asking, you may come up short.

A home inspection is always advisable, but with an FSBO, it’s essential. Even with an inspection, the seller may refuse to fix the items identified in the inspection and the deal may fall through.

In purchasing an FSBO, you will need your own real estate agent to represent your interests-even if you pay his or her commission yourself. Your buyer’s agent will evaluate the property in the light of current local market conditions, negotiate on your behalf, ensure that the transaction closes seamlessly, and more.

Your home is the purchase of a lifetime; if it’s an FSBO, make sure it’s done right.

Make Potential Buyers Happy with a Home Warranty

For a few hundred dollars a year, a home warranty offers protection and peace of mind. As a seller, you can increase your chances of selling quickly and at close to asking price by purchasing a home warranty. And your buyers will feel more comfortable knowing they’re protected if an essential part breaks down, particularly if yours is an older home.

Sometimes called a home protection plan, a home warranty is an annual contract that provides for repair or replacement of major items, such as the heating, air-conditioning, plumbing, and electrical systems. Some warranties also cover major appliances such as refrigerators, washers and dryers, and even swimming pools.

When an item that is covered by the home warranty breaks down, the warranty company will dispatch a service provider to assess the problem. If the needed repair or replacement is covered by the warranty, the provider completes the work. Best of all, the homeowner pays only a modest service call fee (typically around $60).

The cost of a home warranty varies depending on the type of property, the kind of plan (basic or extended), and the warranty company, but it can be a bargain compared to the cost of repairing or replacing an essential component out of the homeowner’s own pocket.

Note that a home warranty usually doesn’t cover items that have not been properly maintained, so the homeowner may have to prove regular maintenance. And it’s most important to ensure the home warranty company is reputable and will pay for covered repairs without hassles.

Is There a Cost to Not Purchasing a Home Now?

The New Oxford American Dictionary defines opportunity cost as “the loss of potential gain from other alternatives when one alternative is chosen.”

With interest rates and home prices expected to rise in the near future, the opportunity cost of not purchasing a home in today’s market may grow, according to the Opportunity Cost Report issued by realtor.com. The site provides online real estate information and services through the National Association of Realtors.

The realtor.com report examines various factors by market, including the property appreciation gain renters forego when they hold off on buying, as well as other financial benefits of homeownership.

According to Jonathan Smoke, chief economist for realtor.com, “Current market conditions give buyers an opportunity to build substantial wealth in the long term, compared with renters and later buyers, in advance of the projected increase in mortgage rates and continuing price appreciation.” He notes that the “analysis looks solely at the financial reasons to buy a home, based on assumptions about rising mortgage rates and changes in home values.” It doesn’t consider other reasons to buy or not buy.

In buyer-friendly markets, homeowners generally make more money over the life of their ownership than in balanced or sellers’ markets. However in virtually all markets, homeowners see significant financial benefits over lifetime renters. In 88% of U.S. Metropolitan Statistical Areas (MSAs), buying a home produced a financial benefit of at least $100,000 in 30 years. In buyers’ markets, that benefit will rise to, on average, $217,726 over a 30-year period.

It’s important to realize that opportunity costs are not just financial or lost monetary gains. Opportunity costs can include things like lost time or other delayed or foregone benefits. In the case of home ownership, tax benefits, the ability to access area schools and amenities – and the satisfaction of being a homeowner and realizing the American dream – should all be considered.

Become a Savvy Homeowner Before You Buy

With housing prices flat or increasing modestly in many markets, and mortgage rates at record lows, many consumers are finding it a good time to think about buying a home. But home ownership is a big financial commitment that requires a stable budget and a clear understanding of the costs and responsibilities involved.

This fact may be one reason why in 2014 more than 73,000 people-the largest number in five years-signed up for housing counseling workshops given by member agencies of the National Foundation for Credit Counseling (NFCC).

Housing counseling provides consumers with advice, education, technical assistance, and resources related to the home-buying process. It covers a variety of topics such as prebuying, how to avoid default and foreclosure, credit issues, and reverse mortgages.

Savvy homeowners: HUD sponsors housing counseling through approved third parties, and many real estate agents are also encouraging clients to enroll in counseling workshops. These workshops not only help homebuyers navigate the home-buying process, but they also encourage them to become savvy mortgage shoppers. According to the NFCC, individuals and couples who participate in housing counseling sessions are inclined to review multiple mortgage offers, unlike those who have not been counseled.

Many first-time buyers, who have not worked with mortgage professionals before, might feel too intimidated to discuss loan rates and fees. Because these vary significantly from lender to lender, people who take the time to educate themselves and shop the mortgage market often save more.

The key, particularly for first-time home buyers, is to be realistic about their financial situations. Those who are realistic and know the questions to ask throughout the home-buying process will be less likely to run into debt problems as homeowners. Would you benefit from housing counseling? Many have, and the education is paying off; they’ve become realistic buyers before they buy and savvy homeowners after.

Your Home Buyers Now Look Beyond Bling to Basic

If you want to recoup your renovation dollars when you sell, be sure to repair that leaky roof before springing for a fabulous new kitchen. While a new kitchen may sound seductive, simply upgrading it is likely all you’ll need to do to attract prospective buyers. Today’s buyers are purchasing the basics, and they want them in good shape.

According to Barbara Pronin in a recent RIS Media’s Housecall blog, there are eight home remodeling projects that will pay you back. Mind you, Pronin doesn’t claim you’ll recover your total investment, but she does suggest you’ll recoup 80 percent or better, quite simply because “they increase the value of the property.” Pronin lists the following as the key payback projects:

  • New garage doors
  • A wood deck
  • Exterior siding
  • Attic conversions
  • Kitchen updates
  • New energy-efficient windows
  • Basement remodel
  • Backup power generator.

Kathy McCleary agrees. In HGTV’s online Remodeling magazine, McCleary writes, “Basic maintenance, such as the roof and exterior painting, are frequently more important than an awesome kitchen.” She quotes Sal Alfano, Remodeling’s editorial director. “Buyers want to take the basic systems for granted…Maintenance can chew up a lot of cash quickly, and people are afraid of that.”

Hot urban markets may be the exception. Says McCleary, “In the hottest housing markets, springing for a kitchen or bath remodel is a surefire investment, often returning more than 100 percent of the cost.”

Buy and Fix – All with the Same Mortgage Loan

It’s hard to deny the remodeling movement is gaining momentum. It seems as though everyone from your neighbor to your local politician is remodeling his or her home, and the guy at the hardware store or the contractor across town is everybody’s new best friend.

Countless TV shows depict eager home buyers purchasing charming, character-filled fixer-uppers-and fixing them. The ending is always happy. But what those shows don’t talk about is how much real home owners can pay to make a remodeler’s nightmare into a dream home. Without the benefit of TV.

Thankfully, there’s a mortgage loan that appeals to the dreamer in all of us, and it reduces the fear factor of purchasing a place that needs work.

First-time home buyers are generally familiar with Federal Housing Authority (FHA) loans, but they may not be aware that there’s a branch of FHA loans perfect for those ready to take on fixer-uppers-FHA 203k mortgage loans.

For homeowners with vision, a 203k mortgage provides funds not only to buy a home, but also for necessary remodeling. For those who find the remodeling nightmare is worse than they feared, most 203k loans come with a 10 percent to 20 percent contingency reserve to protect against the unexpected, like shaky foundations or mold. But these mortgages come with specific stipulations.

For example, borrowers must provide estimates for their desired upgrades and renovations, including labor expenses-something that isn’t always easy to do.

Lower down payments and less stringent credit requirements make 203k loans a great option for home buyers with can-do spirits.

However, it is also necessary to meet specific criteria-not all properties or repairs qualify, and you need to determine whether you can do the work yourself.

Talk to your real estate agent about the proper procedures, eligibility, and potential problems. If you’re up for the challenge, it’s great to get help turning your fixer-upper into your dream home.

This Financial Decision Is as Unique as You Are

In order to make mortgage loans available to more low-income and first-time homebuyers, Fannie Mae and Freddie Mac have started backing mortgages with down payments as low as 3 percent of the home’s price. These so-called low-down mortgages have both pluses and minuses, and may or may not fit your unique situation.

On one hand, putting the customary 20 percent down enables a borrower to avoid paying mortgage insurance (PMI) and may reduce the mortgage interest rate. On the other hand, mortgage interest rates are already at historically low levels, so it might be advantageous to use down-payment cash to pay off high-interest credit cards or personal debt.

Considerations

Before deciding, you should calculate how much you’d actually save by paying off higher interest debt, and the impact a higher mortgage rate and PMI would have on your monthly mortgage payments. Also consider factors such as how much debt you have, the interest rate on your existing debt, and how large a mortgage you want to qualify for.

Based on this information, your other assets, your credit history, and your down payment, the bank or broker will determine how large a mortgage they can offer you and at what rate.

Generally, it makes sense to pay down existing debt if you want to max out your mortgage loan. It’s almost always better to trade high-interest debt for low-interest debt. Moreover, you can deduct mortgage interest on your taxes and thereby further reduce the effective rate you pay on your home loan.

Are You Agreeable? Time to Sign on the Dotted Line

Here’s an interesting take on buyers and sellers, courtesy of a recent article in The Wall Street Journal. What you look for, what you buy, and why you make the real estate decisions you do may reflect your personality traits. In fact, you may want to look at more than your credit scores and mortgage rates when you’re making that all-important decision: to buy or not to buy. You may want to think of the kind of person you are before signing on the dotted line.

According to a study published in the Journal of Behavioral and Experimental Economics, common personality traits can be linked to the kinds of decisions you make about mortgages, home ownership, and investments.

Researchers at Tel Aviv University and Technion-Israel Institute of Technology asked participants to take a standard personality quiz focused on qualities like openness, conscientiousness, agreeableness, extroversion, and neuroticism.

Participants were then asked five questions about real estate, including their preferences for the type and length of a mortgage, whether they were more likely to rent or buy, and whether they were more likely to invest in stocks or in real estate. The controlled study adjusted for variables such as age, gender, and income level.

Agreeable and extroverted people- those who get along well with others-were more likely to invest in real estate than in stocks. Neurotic people were more likely to buy than rent. Those who scored high on openness preferred smaller mortgages. And conscientious test-takers were more likely to have fixed-rate mortgages.

How does it work in real life? One blogger, Patrick.net, felt that the correlation between personality traits and real estate decisions worked for him: “Seems accurate for me: conscientious, not neurotic, open, not extrovert, and tend to prefer fixed, no rush to buy, prefer small loan over big house, prefer stocks over real estate (because stocks have better return).”