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While many people think that borrowing against your home’s equity might negatively affect it, we’re here to tell you that’s false. In fact, borrowing against it can actually help you to build equity.
There are two ways in which you can borrow against your home’s equity: loans and lines of credit. A home equity loan offers you a lump sum of money for a duration of up to 30-40 years, whereas a home equity line of credit gives you a lump sum for a shorter term of 15 years. During this timeframe you can borrow as much or as little as you want (given the amount of the loan) with lower interest rates. In some cases, a certain amount of you home equity loan or line of credit may even be tax deductible.
So why wouldn’t people want to borrow against it?
Though it is a much more cost affordable option for borrowing compared to a traditional credit card, a home equity loan/line does secure your home as collateral. This form of borrowing isn’t for everyone. However, given the flexibility it provides you, the benefits can outweigh the disadvantages.
How much can you get?
Typically, a lender will give you up to 75% of the equity in your home, given you have good credit and other favorable lending criteria. As with any loan, a lender will look at your FICO score, your debt-to-income ratio, the equity in your home, and other factors.
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Buying a home is huge investment and an exciting purchase. Many buyers are so swept off their feet once they find the right home, they tend to jump the gun and make the purchase without doing some preliminary research. Before you commit, take the time to ask these essential questions.

1. What’s the sales history? When did the home last sell and what did it sell for? Knowing the purchase history of the home will help to educate you on what the seller may be expecting for an offer.
2. Were there any major renovations or additions made? Ask for receipts of the work that’s been done so you can gage what the seller is looking to gain from this sale. A kitchen remodel or extension to the house may add a fair amount to the value of the home. Keep in mind, generally, “home renovations reap a 64% return on investment” (Mandell, L.J., Realtor.com).
3. How much are the property taxes? This can be quite a significant added expense that you will want to account for. Understanding what the property taxes are in relation to the purchase price is very important.
4. What are the monthly maintenance/utilities costs? Ask the seller what monthly utilities bills look like for a property that size. Is there an HOA? What other overhead costs should you be aware of?
5. Has there ever been a broken pipe or sewage issue?  “According to the insurance information institute, broken pipes account for an estimated 22% of home insurance losses,” so hire a good home inspector (Mandell, L.J., Realtor.com).
6. What is the age of the roof? Replacing a roof can be costly. Ask the seller how old the roof is so you can anticipate how long it should last and if you’ll be needing to replace it.
7. Have there been any pest infestations? Always obtain copies of the pest work that has been done and be sure to have any current pest issues treated prior to move-in. Though the sellers may have had pest work done in the past, this does not guarantee that the home is pest-free.
8. Are there any warranties on appliances? You should also obtain copies of any warranties on appliances. This can save you thousands of dollars in unexpected repairs or replacement costs.
9. What are the parking restrictions? Where can you and your guests park and do you need some form of permit? Nobody wants a parking ticket or their guest’s car towed.
10. Is there any unusual history of the house? Aside from death or crime, which, in most states, should be legally disclosed, ask the seller if the house has ever had any other uncommon uses like TV filming. This could cause some unordinary foot traffic to your home.
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Every seller wants to get the highest price possible for their house. Even when the market is hot, obtaining offers above the asking price can be a tricky task when selling your home. If you have spent the time to thoroughly research the comps and price your house fairly, follow these tips to help spark a bidding war.

1. Set a deadline for offers. People don’t like missing out. Create a sense of urgency by posting in the MLS that you’re receiving multiple offers and interested buyers should submit their highest and best offers by a certain day and time.
2. Spice up your listing photography. Most listings have the same, bland photos. Straight shots don’t do anything for your property. Explore different angles and lenses to market the property in the best way possible. Not every buyer is going to look through all 30 to 40 pictures of your home so make sure the first few images will captivate your audience.
3. Fuel interest ahead of time. Take the time to market your property online before the first open house or even entering it into the MLS. Use mediums such as social media, email, and sites like Zillow, Trulia, and Craigslist to announce your listing and upcoming open house days/times.
4. Stage a top-notch open house. Put up as many open house signs as possible and prep your home. Good food and entertainment generally bring a crowd so invest a little extra to make your open house the event to attend.
If you price your home right and follow these steps, you can incite a bidding war and potentially sell your home for more than the asking price. Take advantage of the market while it’s strong and buyers are hungry. Turn your property into an opportunity buyers don’t want to miss out on.
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There has been a lot of buzz leading up to the new year about home buying and, now that 2017 is here, our predictions are looking pretty good. Beginning January, the FHA is loosening some of its limits that are currently restricting consumers from entering the market. Now insuring higher loan limits with lower down payments and greater flexibility, the FHA is providing much more borrowing power and 2017 looks to be the year for all those renters hoping to buy a home.

Both FHA and Conforming loan balances are now higher in nearly every county across the nation, signaling a healthy and growing economy and making homeownership much more attainable. Some of these changes include:
– Debt-to-income ratios as high as 55%
– Credit scores as low as 580 for loans up to $424,100 and as lows as 640 for loans exceeding this amount
– 3-year waiting period on previous short sale
– 3-year waiting period on previous foreclosure
– 2-year waiting period for Chapter 7 bankruptcy
– Allows a borrower to refinance a second mortgage with LTV (loan-to-value) up to 95.6%
For buyers in Southern California, meeting the down payment requirement has been a great barrier to entry. However, with these new FHA limits in effect, this could be a very favorable vehicle to help consumers fulfill their home-buying dreams.
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The new year is quickly approaching and, if you’ve read our last few blogs, we know that 2017 is going to be the year for many potential homebuyers. If you’re one of them, you should begin planning for the home buying process now…even if you are months away from making a purchase.

1. Automate your savings for a down payment. The 20 percent required for a down payment is a huge chunk of cash. If you’re buying in Orange County where the median home price is over $600K, you’re going to need upwards of $100K down. Saving regularly can be difficult because you have to hold yourself accountable, even when other expenses arise that you could put your money towards. If you’re serious about buying a home, the simplest and most effective way to do this is to automate your checking account to set aside a portion of your monthly payments.
2. Clean-up your credit. Your credit is the single most important factor in determining how much a creditor is willing to lend you and how high your interest rate will be. If you have a credit score below 620 (an A grade), the more difficult it will be for you to qualify and/or receive approval for loan. Build your credit by paying off your credit cards and making consistent and timely payments on other loans.
3. Live on a budget. Since you’re looking to buy in 2017, now is the time to start being conservative. Compare buying vs. renting in the area. Weigh your options so you can determine what makes the most sense for you financially. Anything you can cut back on now can go towards a down payment, moving, and closing costs.
4. Get your handy on. If you were renting, you were probably used to a landlord doing all of the maintenance repairs for you. Becoming a homeowner means that you are now responsible for any and all needed repairs like leaky faucets or electrical shorts. Brush up on your handyman skills and save money by fixing it yourself.
5. Prepare yourself to make an offer. Keep abreast of what’s on the market in the area and price range that you’re looking. Educate yourself on what you can afford and what would be a fair asking price. You don’t want to go into the home buying process with unrealistic expectations.
You can never start preparing too soon. Begin developing and practicing these habits now. When it comes time to buy, you’ll be happy you did.
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