Debt-to-Income Ratio...Is that kinda like the sleep number???

If you have ever applied for a home loan, you probably remember the loan officer talking about your 'debt-to-income ratio' or your 'ratios'. I bet you thought to yourself...'blah, blah, blah' and tuned out until he/she got down to the basics...the important stuff...'How much home can I afford, and how much will my monthly payment be?'

A Debt-to-Income Ratio (DTI) is the percentage of a consumer's monthly gross income that goes toward paying debts. In addition to debt, the DTI can also cover other recurring expenses such as taxes, fees and insurance. To make things even more complicated, there are two different kinds of DTI...the front ratio and the back ratio.

The front ratio is the percentage of your monthly gross income that is used to pay your housing costs, including principal, interest, taxes, insurance, mortgage insurance (when applicable) and homeowners association fees (when applicable). For a renter, the front ratio is the monthly rent. For a home owner, the front ratio is the PITI (Principle, Interest, Taxes & Insurance)...and mortgage insurance and home owner association dues, if applicable.

The back ratio is a combination of all of the expenses included in the front ratio, along with your monthly consumer debt. Consumer debt can be car payments, credit card debt, installment loans and similar expenses such as student loan payments, child support payments, alimony payments and legal judgments.. (Auto and life insurance are not categorized as debt.)

You are probaby asking yourself right now...'How can I find out my DTI?' Unlike the 'sleep number', the DTI Ratio has nothing to do with your comfort...it is all about the bank's comfort level with regard to your ability to pay your mortgage payment.

Typically, qualifying ratios for conventional loans is 28/36. This means that no more than 28% of your gross income may be used to pay your total housing expenses, and no more than 36% may be used to pay your total housing expenses plus recurring debt.

Debt to Income Example:

Yearly Gross Income = $60,000 / Divided by 12 = $5,000 per month income
$5,000 Monthly Income x .28 = $1,400 allowed for housing expense
$5,000 Monthly Income x .36 = $1,800 allowed for housing expense plus recurring debt.

Qualifying ratios vary depending on loan type and the credit worthiness of the buyer. For instance, FHA Loans have a slightly higher qualifying ratio of 29/41.

In an earlier post, I discussed the importance of being pre-approved before you begin your home search. Your DTI is only one aspect of your credit picture that your loan officer will examine in order to determine your qualification for a mortgage.

In my next post, I'll discuss 'good' debt versus 'bad' debt. (Can't you just hear the music from the old western movies??) Smile...

If you, or someone you know, is planning to buy or sale...I'd love to help! Please contact me, Elizabeth Nieves, Broker, REALTOR® The Elizabeth Nieves Realty Group @ Keller Williams(919)749-3749 or Elizabeth@ElizabethNieves.com

To search EVERY HOME FOR SALE IN THE MLS...visit my website @ http://www.elizabethnieves.com/.

What are buyers looking for in a home...How does your home measure up???

The National Association of Realtors® (NAR) just released its 2007 Profile of Buyers’ Home Feature Preferences. Their survey measures national trends in buyer preferences.

By understanding what buyers want most in their new home, you can better determine your home's appeal to today's buyers.

Let's look at the questions NAR asked and the answers to those questions...

1. What single home feature do buyers say they want most in a new home? (Central air conditioning)

2. What’s the median size of homes purchased between late 2005 and early 2007? (1,840 square feet)

3. Repeat buyers tend to be choosier than first-time buyers. In particular, repeat buyers place much more emphasis on these home features: (Oversized garages and master bedroom walk-in closets)

4. Within three months after buying their new home, nearly half of all buyers remodeled or made improvements to which part of the house? (Kitchen)

5. Which home feature saw the biggest jump in buyer popularity since 2004, when NAR conducted its previous buyer preference survey? (Oversized garage)

6. What three features did buyers say they’d be most willing to pay extra for in a home? (Central air conditioning, walk-in closets, and hardwood floors)

7. A home’s energy efficiency is most important to which segment of buyers? (New-home buyers)

8. Where do first-time home buyers tend to purchase a home? (Suburb or subdivision)

9. What’s the most common type of home purchased? (Single level)

10. What did new-home buyers most wish their home had more of? (Storage)

Now that you know what buyers are looking for...
perhaps, you are asking yourself..."What if my home doesn't have what they want?"

No worries! One thing I've learned is that there IS a buyer for every home. However, as a REALTOR®, I can tell you that it is much easier to market and sell a home that fits the needs and desires of the majority of buyers. A 'unique' home will appeal to a small pool of potential buyers. Although it only takes one buyer to buy your home, it is easier to find that 'one' buyer if you have a large buyer pool in which to fish!

By knowing what 'they' (the buyers) want...you can better evaluate how your home measures up. Once you recognize your home's strengths and weaknesses, you can decide what you need to do to increase your home's appeal. Often...small changes make huge differences.

Even if you choose to do nothing, you will be making your decision from an informed perspective.


If you, or someone you know, is planning to buy or sale...I'd love to help!
Please contact me, Elizabeth Nieves, Broker, REALTOR®
The Elizabeth Nieves Realty Group @ Keller Williams
(919)749-3749 or Elizabeth@ElizabethNieves.com


To search EVERY HOME FOR SALE IN THE MLS...visit my website @ www.ElizabethNieves.com.

Black Horse Run -- Durham's Premier Equestrian Community

Located just 10 miles north of the heart of Durham, NC...Black Horse Run is a a little piece of country heaven! IF you are a horse owner seeking a new home for both you and your horse, Black Horse Run is the perfect place for YOU. IF you are a nature lover, Black Horse Run is the perfect neighorhood for YOU. IF you are seeking a peaceful retreat from the traffic and noise of the city, Black Horse Run is perfect for YOU.


More Black Horse Run facts:

• Year Built: 1980's to Present


• Average Home Size: 3348 Sq.Ft.


• Range of Lot Sizes: 1-4 Acres


• Schools: Mangum Elementary, Chewning Middle & Northern High


• Average Price for HOMES SOLD IN 2007: $339,727


• Located 15 miles from Duke University


• Lots also available for sale!

To search every home for sale in Black Horse Run or Durham, NC...visit my website at http://www.elizabethnieves.com/

If you, or someone you know, is thinking about buying or selling...I know a GREAT REALTOR®. I'd love to introduce you to her!

Contact: Elizabeth Nieves, Broker, REALTOR® - (919)749-3749
The Elizabeth Nieves Realty Group @ Keller Williams
Elizabeth@ElizabethNieves.com

The Elizabeth Nieves Realty Group joins Keller Williams Preferred Realty!!!

I am so excited to announce that my little company, The Elizabeth Nieves Realty Group, is now part of the Keller Williams Family!

My husband, Diego, and I opened The Elizabeth Nieves Realty Group in August 2005 with one purpose in mind...to serve the WHOLE community with the highest level of integrity and excellence! We had a dream of making a positive impact on our community by increasing home ownership and helping families to plant roots in their community. We also had a vision of 'evening the playing field' in our market...by overcoming language and cultural barriers.

For the past two years, we have assisted hundreds of families in the Triangle area and beyond to achieve their dreams of home ownership. Many of these were first-time home buyers who had never imagined that they would one day be opening the doors to their own, new home. The greatest reward is watching a child, who has never had a room of their own, run into their new home and light up with joy when they see their very own bedroom for the first time.

Although we had previously worked for a larger, internationally franchised company, we felt that we could better serve our clients, our community and our vision by opening our own company. We have always been different. Part of what sets us apart from our competition is that we truly understand that our clients are the heart and soul of our business. Without them, we have no purpose.

Keller Williams was founded on the same principle of service and integrity. When I was introduced to KW and had the opportunity to observe their business model in action, I immediately realized that we were not the only ones 'doing it right' in this business.

Joining Keller Williams was not a difficult decision for Diego and me. KW shares our values and our vision. It is a win-win proposition for both of our companies. However, I truly believe that the biggest winner is the community!

IF you, or someone you know, is planning to buy or sell...I know a GREAT REALTOR®! I'd love to introduce you to her.

Contact:

Elizabeth Nieves - Broker, REALTOR®

The Elizabeth Nieves Realty Group @ Keller Williams

Elizabeth@ElizabethNieves.com

To search EVERY HOME FOR SALE IN THE TRIANGLE AREA...visit my website at ElizabethNieves.com

Pre-Qualification or Pre-Approval...What's the Difference Anyway???

Since I am asked this question so often...I have decided that THIS is a very timely and appropriate subject...especially given the recent changes in the mortgage lending world. So...what is the difference, and why does it matter?

In the real estate world, it is common to hear an agent ask...'Does your buyer have a pre-qualification or a pre-approval?' IF the answer is, 'He has a pre-qualification', the agent will probably reply, 'Well...you know that pre-qualification isn't worth the paper it is written on!' WHY would he say such a thing??

The answer to this question can best be answered by answering the previous question...'What is the difference, and why does it matter?'

The difference is very simple. A pre-qualification is an opinion...an educated opinion...but still an opinion. It is usually given by a loan officer after a conversation with the prospective buyer, based on the prospective buyers' answers to some basic questions. In most cases, the loan officer will issue the pre-qualification without verifying that the information he has received is accurate. Therefore, regardless of how qualified and legitimate the loan officer may be, a pre-qualification based on information that has not been verified is not reliable.

In contrast, a pre-approval is a loan commitment based on verified data, documentation and credit worthiness. A pre-approval indicates that the lender has submitted the prospective buyers' application and documentation to underwriting, and the loan is approved subject to the following conditions: the buyer entering into a sales contract for a specific property, the buyer performing inspections and negotiating the repairs for the property and the appraisal of that property. The lender will also require clear title and hazard insurance prior to closing.

IF you are still unsure of the difference, this example will clarify everything for you!

IMAGINE you are experiencing some strange health symptoms and decide to see a doctor. The first doctor talks to you and asks you to describe your symptoms. Without examining you physically...without any blood tests...without any investigation of any kind...he announces to you that you have a rare disease and must have emergency surgery immediately. The second doctor asks you the same questions, then he examines you physically. Before he pronounces his judgement, he also orders a full blood panel and other necessary tests. After receiving the results, he assures you that you have a virus that will pass in seven days. IN WHICH DOCTOR WOULD YOU HAVE MORE CONFIDENCE?

IF YOU ARE THINKING OF BUYING A HOME, THERE ARE FOUR VERY IMPORTANT REASONS TO SEEK A PRE-APPROVAL BEFORE BEGINNING YOUR HOME SEARCH...

1. Once you find a home you wish to purchase, your offer will be much stronger and more favorable if you have a pre-approval. The reason is that the seller can place his confidence in your offer making it to closing. IF there are multiple offers, the seller may even choose yours over another buyer just because you are pre-approved.

2. You may be able to obtain the home for a lower price because you are pre-approved. With a pre-approval, a large portion of the loan process is complete. Therefore, you could submit an offer with a shorter contract period. In the real estate world...time on market is dollars lost. A quick closing is worth money to the seller.

3. With a pre-approval, you can be sure that you do not waste time looking for homes that are outside of your price range. There is nothing more discouraging than finding a home you absolutely love and later realizing that it is above your price range.

4. With a pre-approval, you will not spend money on inspections and appraisals only to learn that the loan officer was 'off' by $10,000 when he pre-qualified you!!! Of all the reasons...this is the one that makes the most sense to me. You work hard to earn your money. By taking a week or two extra to obtain pre-approval, you will ensure that you do not waste your time and money on the wrong home.

I hope you have enjoyed this article and learned something in the process!

If you, or someone you know, is planning to buy or sell a home...I know a GREAT REALTOR®. I'd love to introduce you to her.

Contact:

Elizabeth Nieves - Broker, REALTOR®

Elizabeth@ElizabethNieves.com

HOW TO NOT SELL YOUR HOME...top ten tips...MONEY BACK GUARANTEE!

I've often written about how to sell your home quickly and for the best price. And,I am aware that IF YOU NEED TO SELL YOUR HOME...YOU PROBABLY WANT TO KNOW WHAT TO DO TO ENSURE THAT YOU SELL YOUR HOME FOR THE HIGHEST POSSIBLE PRICE IN THE SHORTEST POSSIBLE TIME. However, it is just as important for you to know what NOT TO DO.

So...today...I'm going to share with you my Top ten list of things sellers should do to NOT SELL THEIR HOME! (Disclaimer: Every example is based on real experiences and actual homes for sale.)

1. Don't worry about the lawn. (I mean...they (the buyers) only care about what's inside the house...RIGHT? And, besides, the 'natural look' is in!)

2. Don't move that old car sitting up on blocks out of the driveway. (I know...you are going to 'fix it' one day. Even better...you can use the scattered car parts as lawn ornaments!)

3. Leave your pitt bull chained up in the backyard. (Everyone loves pets! Just be sure to post a 'Beware of Pooch' sign.)

4. Leave your old, broken-down appliances out on the deck. Even better...you can use them to hang out your laundry. (This one speaks for itself!)

5. Don't clean dirty walls and trim! (They (the buyers) will get warm fuzzies when they see little Johnny's fingerprints going all the way up the stairs. Just don't try to pass it off for a custom faux finish.)

6. Don't clean the bathrooms! (This one is guaranteed to get the intended reaction! However, be sure to keep the exit route free and clear of debris. You don't want anyone to get hurt as they are running out of your home.)

7. Don't do the dishes! (Related to #6...this one is particularly effective in distracting the potential buyers from noticing the beautiful hardwoods and lovely cabinets.)

8. Don't sweep, mop or vacuum! (IF the dirty dishes did not distract them from the beautiful flooring...this will certainly seal the deal!)

9. Don't clean the cat's litterbox OR take out the dirty diapers! (Oh...if I could only tell you how many times I've seen potential buyers make that funny 'Ooooooh what's that smell' face when they walk into a home!!! Bad smells...especially animal or baby poop...are especially offensive. Do this and you can be sure that they (the buyers) will ask to see the next home before they've taken a good look at yours!)

10. Don't put your cash, jewelry and weapons away!!! (This is my personal favorite. In fact, this one is so great that I just have to tell you THE STORY!)

A few years ago, I was showing an out-of-state prospect townhomes in the Durham area. We were accompanied by her daughter and two young granddaughters. We arrived at a townhome in a nice community. I had scheduled the appointment the day before, and no one was supposed to be home. As we entered, I just felt that something was 'not right'. My clients were already looking around the home when I noticed that there was a wallet with a large amount of cash on the kitchen counter. I then thought that I heard footsteps upstairs. Just then, I walked a little further into the townhome and saw what appeared to be a loaded pistol on the coffee table. I immediately told my clients that we needed to go and began to usher them to the front door...staying behind them to lock up. As they were walking out, I heard more steps and a voice from upstairs. I yelled out, 'Thanks, we are leaving!' As I was closing the door, the owner appeared at the top of the stairs...wearing nothing but a towel ( a very short and loosely wrapped towel!) and a smile.

If you are planning to BUY or SELL...I know a great REALTOR®! I'd love to introduce you to her!!!

Contact:

Elizabeth Nieves - Broker, REALTOR®

(919)749-3749 or Elizabeth@ElizabethNieves.com

To see every home for sale in the MLS...please visit my incredible website @ http://www.elizabethnieves.com/.

I look forward to hearing from you!!!

REAL ESTATE MARKET IN TROUBLE??? Part Two for SELLERS!

Welcome back for Part Two!

In my column yesterday, I talked about the current market condition and how it can be a blessing to buyers. I also promised that I would discuss the impact of this market on sellers.

LET'S FACE IT...IF YOU NEED TO SELL...REALLY NEED TO SELL...YOU NEED TO KNOW HOW YOU CAN MAKE THE BEST OF A NOT SO PERFECT REAL ESTATE MARKET. AND, YOU NEED TO KNOW RIGHT NOW!!!

It is undeniably a buyers' market, and you should be prepared for what you can expect if you need to sell your home in a buyers' market. However, you need not be afraid. AS LONG AS IT IS A BUYERS' MARKET, THERE WILL EXIST READY, WILLING AND ABLE BUYERS. THE KEY IS TO GET THOSE BUYERS INTO YOUR HOME...AND STACKING THE ODDS THAT THEY WILL CHOOSE TO PURCHASE YOUR HOME.

There are three secret keys to making your home stand out from the crowd (and getting a buyer to buy it) in a buyers' market.

1. Your home must be in the top 30% of the market in terms of condition. In other words, if there were 10 homes for sale in your neighborhood...all in the same price range...your home must be in better condition than 70% -- or -- 7 out of the 10 homes. In many areas, it is not uncommon for there to be 20 or more homes for sale in the same neighborhood. I know of one neighborhood in my market that has 46 homes for sale, as of 6 pm today.

2. Your home must be priced lower than 25-30% of the homes on the market. (Don't read that incorrectly. Your home does not have to be priced 25-30% lower than other homes.) Let's apply this rule to the same example I used in #1. If there were 10 homes for sale in your neighborhood, your home should be priced below 2-3 of them.

BEST CONDITION...BUT NOT THE HIGHEST PRICE! In a sellers' market, you could expect to receive the highest price for the best condition. In a buyers' market, being in the best condition ensures that you will sell your home while your neighbor's home sits on the market month after month.

3. Hire a pro! You are probably thinking...'Of course she'd say that...she's a REALTOR®!' Yes...I am...and a really good one! However, I'm not just being self-serving. In a challenging market...even more than ever...you need an experienced and successful REALTOR® working for you. You need exposure...lots of exposure. You need an edge over the competition. You need an agent who is aware of daily changes in the their market, so that they can advise you correctly. You need every advantage that a successful REALTOR® can offer you. You need me! (Okay...that was self-serving!!!)

You now have the knowledge you need to face the oh-so-feared BUYERS' MARKET. KNOWLEDGE IS POWER; THEREFORE, YOU ARE EMPOWERED TO SUCCEED.

IF YOU ARE THINKING ABOUT BUYING OR SELLING...OR KNOW SOMEONE WHO IS...I KNOW A GREAT REALTOR®!!! I'D LOVE TO INTRODUCE YOU TO HER!

CONTACT:

Elizabeth Nieves, Broker REALTOR®

(919)749-3749

Elizabeth@ElizabethNieves.com

To search every home for sale in the MLS...visit my amazing website at http://www.elizabethnieves.com/.

REAL ESTATE MARKET IN TROUBLE??? It's just a matter of perspective!

Last Sunday, I was sitting in church listening to my pastor teach about how we should respond to trouble in our lives. He outlined 3 responses to trouble...REJOICE...REQUEST... RELAX. (You may be wondering how this relates to the real estate market. IF SO...give me a second, and I'll connect the dots!)

As I was listening intently (SEE...PASTOR DON...I DO LISTEN TO YOU!)...I could not help but think about how his message could be applied to the troubled times we are now facing in the world of real estate. These days, it seems that everyone is talking about interest rates and home values. You cannot leave your home without overhearing a conversation about how bad our market is now...about the latest bank or mortgage company that went out of business...about how hard it is get financing for a new home. People are worried...really worried...really, really worried.

Truthfully, the professionals in this industry are really worried also. I have close friends who are leaving the real estate business after ten successful years in business. I have another friend and business associate who was the top loan officer in his company last year. A few weeks ago, he walked into work one morning and learned that the company had gone under...without even a hint of warning. In one day, he went from the top of his profession to unemployed.

IS THE REAL ESTATE MARKET IN TROUBLE?

HOW WILL THIS TROUBLE IMPACT YOUR LIFE?

Isn't that really what you want to know..."HOW WILL THIS TROUBLE IMPACT ME?"

I'm so glad you asked!!!

The real estate market cycles...it always has...it always will. It has ups and downs...good times and bad. Right now...we are coming out of one of the strongest markets in history. In other words, we've had a 'good run of it'. In fact, it has been so good for so long that many of us have forgotten that what goes up must also come down. It is time for the market to adjust itself.

In my title, I say that 'It's just a matter of perspective!' (Back to Pastor Don's message...) Think about it...when the market is strong (as it has been for years now), the sellers are the ones who have the advantage. So...if a strong market is advantagious for sellers...it must be disadvantagious for buyers...RIGHT? IF that is true...then it must mean that a weaker market is advantagious for buyers.

IF YOU NEED TO BUY A HOME...THIS IS YOUR TIME! This is a buyers' market, and there is plenty of inventory from which to choose. Let me share a perfect example...

I have a client with whom I've been working for a long time. She is a first time home buyer utilizing some of the many financing options and assistance available exclusively to first time home buyers. We have been under contract for a townhome since the end of July. It was scheduled to close at the end of August, but the bank denied her loan. Instead of giving up, we sought another lender and learned that she was qualified...but for $9500 less than the contract price of the townhome. Knowing how much she wanted that townhome, I presented her situation to the listing agent and asked if the seller would be willing to accept $9500 less for the home. Miraculously, he agreed. We are now back on track to close in a few weeks. She will have $9500 instant equity at closing!!! For this client...THIS IS A GREAT TIME TO BUY A HOME!!!

Pastor Don ended his message with these words..."Problems in life are inevitable. Misery is optional. It is a matter of perspective." James 1:2 says, "...when troubles come, consider it an opportunity for great joy."

IF YOU ARE THINKING ABOUT SELLING YOUR HOME...THE NEWS IS NOT ALL BAD FOR YOU EITHER. COME BACK TOMORROW FOR PART TWO...FOR SELLERS ONLY!!!

OF COURSE, IF YOU ARE PLANNING TO BUY OR SELL...OR KNOW SOMEONE WHO IS...I KNOW A GREAT REALTOR®!!!

Contact:

Elizabeth Nieves, Broker REALTOR®

(919)749-3749

You can also visit my website at http://www.ElizabethNieves.com.

I'd love to hear your thoughts about my new search tools!