Here’s the thing…are you looking for a house or a home?

If all you need is a roof over your head, there are plenty (and I mean plenty) of rental options out there. Lots of home sellers that grew frustrated with the slow market have decided to rent their homes instead of waiting for a buyer.

But a home…well that’s a different story.

A home is where you mark the kids’ growth on the door jambs.  A home is where you reminisce about that terrible paint color the living room used to be.  A home is where you put your personal stamp on each and every room and then stand back and allow yourself that moment of pride in what is truly yours.

When my husband and I were first married, we lived in an apartment.  White walls, white tile, white baseboards, cheap cabinets, beige carpet.  No matter what we did, how we tried to decorate it on our limited budget, it looked like an apartment.  Not to mention that we had to park in the lot and schlep our groceries up the stairs.  Or that we could hear the neighbors through the walls if they raised their voices just a little or turned the stereo up past 2 on the volume control.  It was just an apartment.

Later in our married life, we had the chance to rent a house.  It had a yard, but we weren’t allowed to add a gate for easier access.  It had pink carpet that we couldn’t change.  It had hideous floral wallpaper that I just had to live with.  It was a house, but it still wasn’t our home.

When we were first able to buy a home of our own, it was in the 1980s. Rates were outrageously high, but we either didn’t know or didn’t care.  All we knew was that we wanted a home of our own to raise our daughter in.  A place where we could choose to paint a wall at whim – or even just knock the darn thing down if we wanted to.  It had nothing to do with a return on our investment, it had nothing to do with resale value, it had nothing to do with a long term plan.  It was nothing more than the desire to give our family the same thing we had grown up with.  A real home.

Over the years, we’ve owned a couple more places. Each time we moved, we left a piece of ourselves behind.  Whether in a garden that we toiled in or in a basketball goal cemented next to a driveway, there were traces of the fact that we lived and loved and laughed and played within the walls of those properties.  Our current home (dubbed the money pit when we started renovations years ago) has a collection of memories that bond the family together, even the older children who have since moved out and onto their own.  Each year, the Christmas tree gets placed in the same spot, the Easter eggs get hidden in the same irises in the garden, the grill gets pulled out to the same spot for summer BBQs and the orange tree in the back corner of the yard provides sweet fruit.  We look back and laugh and remember all of the good times we’ve had here and look forward to the memories yet to be made.

So, are you looking for a house or a home?

Yeah, I know…we’ve said this before. But the difference is that this time we haven’t heard even a peep about the possibility of an extension.  It looks like this is really the end of Uncle Sam handing out rewards for home purchases and those buyers who are sitting back and taking their time in finding a home may end up leaving $8,000 on the table that could have been in their pockets.

Take into account low rates, a large selection of West Bank homes for sale and the tax credit and I can’t remember a time that it’s been more advantageous to be a home buyer.

Of course, you should still decide whether you are really ready to be a home owner before making a such a large purchase. If you are, and you want to take advantage of the tax credit, then you truly don’t have any time to waste.

Need a little help getting started with that home search? Tell us what you are looking for and we’ll get a free list of homes that match your wants, needs and budget to you right away.

In keeping with the spirit of the season between Mardi Gras and Easter, here are a few suggestions for what home buyers and sellers on the West Bank of New Orleans might want to give up this year:

Home Seller Suggestions

Give up making your home hard to show.  We’ve talked about this before, but when you are selling your home  it is critical to make it easy for agents to get their buyers in.  Have a plan for what to do with your pets during showings, for keeping the house neat and tidy for those last minute appointments and allow a lockbox to be installed for ease of access.

Give up overpricing. Take a fresh look at the comparable sales in your neighborhood and make adjustments as needed.  I know you love your house…..but buyers are looking at the numbers and if you don’t fit within them, their response will be “Next!”

Give up thinking that you shouldn’t help with buyer closing costs.  A large percentage of the homes sold on the West Bank last year included seller contributions towards closing costs.  It is no longer an anomaly to receive a request for assistance in an offer, and if you are not willing to keep your eye on the bottom line, you may be spending a much longer time on the market.

Home Buyer Suggestions

Give up working with several different real estate agents.  Choose one professional to assist you in finding the right home.  It’s no secret that we all have access to the MLS and the listings that meet your needs.  Truthfully, if most agents find out that you are working with others, you may find yourself without an agent at all.

Give up making extremely low offers.  While the market has changed in the last few years, most home sellers are not desperate and some of them are insulted by offers that are pennies on the dollar.  The exception to this rule is dealing with bank owned properties, because banks don’t get insulted….but they do compare multiple offers and accept or counter the highest and best.  If you are just fishing for a bargain, you might be losing out on some terrific deals because you felt you had to offer far below what might be a realistic asking price.  Ask your agent for comparable sale information before you decide on an offer price.

Give up asking for the sun, the moon and the stars after a home inspection.  No house is perfect.  Louisiana purchase agreements even state that offers are made based on the apparent condition of a property.  A home inspection is to allow you to uncover hidden problems with a home, not to provide a basis for beating up a seller who may just tell you to take a hike.

More home buying tips

More home selling tips

The upfront Mortgage Insurance Premium (MIP) will be increased from 1.75% to 2.25% of the loan

This cost is typically rolled into a home buyer’s loan, increasing the monthly payment.  The additional half percent MIP charge will result in negligible changes in payment amounts for most borrowers.  This change is expected to go into effect in the spring.

New borrowers will now be required to have a minimum 580 FICO (credit) score in order to take advantage of the 3.5% down payment program

This is change is unlikely to impact very many buyers simply because the majority of lenders have been requiring a minimum 620 FICO for some time now.  If, however, a lender is making loans to borrowers with credit scores of less than 580, the down payment requirement will be increased to 10%.  These changes are expected to be put into place this summer.

A reduction in the allowable amount of seller assistance to FHA borrowers

Currently, the maximum seller contribution towards closing costs and pre-paids is capped by FHA at 6% of the purchase price.  The new guidelines will reduce this amount to 3% of the purchase price.  This change is also expected to be put into place this summer.

Of the three changes, the reduction in the amount of seller assistance is most likely to impact buyers in the New Orleans area.  FHA loans made up 43% of the single family home sales on the West Bank of New Orleans in 2009.  53% of the FHA borrowers received some type of seller assistance with their purchase.  Of buyers receiving seller contributions in 2009, a whopping 64% received in excess of 3%.

Now, this does not mean that none of the sales would have taken place under the new guidelines.  There were many that were just over the 3% threshold that I’m sure would have still closed if the new rules were in place.  However, there were a substantial number of buyers who appeared to get almost all of the money needed to close (except the down payment) in the form of seller assistance.  These are the buyers that may be pushed out of the market in 2010 as they will be forced to save longer and have more of their own cash invested in their home purchase.  Don’t get me wrong…I don’t think that having more of a financial stake in a home purchase is a bad thing, as it tends to result in buyers who are truly ready to be home owners.

What’s the possible impact on West Bank home sales?

For buyers, this means you will need more cash on hand for your FHA home purchase.  Not only do you need the 3.5% down payment, but the cap on seller contributions towards your closing costs and prepaids (taxes, hazard insurance, flood insurance, lender fees, etc) means that you must have a larger amount of money saved before attempting to purchase a home.  For some people, this will result in a longer waiting time until you can buy.

For sellers, this could possibly mean a decrease in the number of qualified buyers for your home. A smaller pool of buyers equates to a reduction in demand.  A reduction in demand usually equates to lower selling prices.

If you have been waiting to put your home on the market until later in 2010, my recommendation is to do it as soon as possible – before these changes go into effect, since we do not know what the fall out might be.  This advice only applies to those sellers that fall within the current FHA loan limits.

• For more details, read the entire HUD release here

As always, your lender is the best source of detailed mortgage advice for your particular situation.  If you need a referral to a local FHA lender, please contact the West Bank Living Team and we would be happy to help you.

For more information about home buying or selling on the West Bank of New Orleans, or relocating to or from NAS JRB New Orleans, please contact the West Bank Living Team.

It would be our pleasure to have the opportunity to assist you with any of your real estate needs and have a little fun while doing it!

Unfortunately, this happens all too often.

Before you begin your West Bank home search, here are a few dos and don’ts to remember when visiting:

DO

Try to schedule appointments ahead of time.  “Honey, stop the car!” usually doesn’t work.  As a matter of fact, I counsel all of my sellers to turn away people who just show up at the door, instructing them to call and schedule an appointment at a time that works for everyone.

Take off your shoes if they are wet or muddy.  I’ve been on the receiving end of the wrath of an owner who came home to mud tracked all across their freshly cleaned carpets.  If your shoes are wet or dirty, please take a moment and remove them before entering someone’s home, just as you would want them to do in yours.

Remember that you are a guest in someone’s home and respect their belongings. While they may have the most beautiful collection of ______ (whatever it is that caught your eye), take a look but don’t touch approach when touring.

Keep an eye on the kids.  Better yet, leave them at home if possible.  House hunting is pretty boring when you are a child and the temptation to play with toys or explore a new space is almost more than they can resist.

DON’T

Make yourself at home on the furniture.  It’s not included in the sale and some owners are funny about strangers coming in and lounging on the sofa that they painstakingly fluffed the pillows on before your visit.

Eat or drink while touring a home.  Leave the food and drinks in the car.  Spills happen and I really, really don’t want to be the one calling your agent to tell them they owe me for having the carpet or upholstery cleaned due to an accident.

Bring your pets with you to a showing.  If you can’t possibly travel without Fifi, please be prepared to leave her in the car while you look.  Not everyone is a pet lover and some folks are highly allergic to the hair and dander that is left behind.

Use the bathroom facilities without permission.  In some vacant homes, not all of the utilities may be on and the time to find that out that there is no running water is not after someone has already taken a potty break.

Related Articles:

Home buying tips

Here are the highlights of the program:

• 30 year fixed rate mortgage at 5.35%
• 4% assistance to the home buyer
• You do NOT need to be a first time home buyer to take advantage of the program
• FHA, VA and Rural Development loans all qualify

With only $25 million in loan proceeds available on a first come, first served basis, now is the time to take advantage of this program if you are considering purchasing a home in Gretna, Terrytown, Harvey LA, Marrero, Westwego, Avondale or Bridge City.  You are free to work with any of the approved lenders, who can provide more details about loan limits and income requirements and determine your eligibility.

Approved Lenders

Iberia Bank, Hancock Bank, Liberty Bank & Trust, Parish National Bank, Iberia Bank Mortgage Co., Whitney Bank, Eustis Mortgage, Regions Bank, Dryades Mortgage, Bank of America, Standard Mortgage, Wells Fargo Bank, IndyMac Bank, Bank of New Orleans, Deep South Mortgage Co., Gulf Coast Bank & Trust, Capital One Home Loans, NOLA Lending Group and Fidelity Homestead Savings Bank.

Already Approved?

Once approved, don’t waste any time finding your perfect home.  Contact the West Bank Living Team to start your home search today!

What do you do next?  Go shopping for furniture and curtains and towels and paint, right?  WRONG.

I know you are excited about the prospect of decorating your new home and making it reflect you, you, you.  But all of that shopping could backfire on you when your lender verifies your credit information before the closing.

Why would your lender check your credit again?

Well, before they are willing to finance your home purchase, your lender has gone to the trouble of making sure that you are gainfully employed, verified your income and that you can afford to make the monthly payments.  After all, they want to be repaid and the only way they can reasonably assume that will happen is to qualify you.  They use many different formulas for determining what type and how much of a mortgage you can afford, including what is called a debt to income ratio.  Basically, it’s a formula that calculates the maximum amount of monthly mortgage debt you are allowed to have in relation to your income.

From Wikipedia:

Two main kinds of DTI

The two main kinds of DTI are expressed as a pair using the notation x/y (for example, 28/36).

1. The first DTI, known as the front ratio, indicates the percentage of income that goes toward housing costs, which for renters is the rent amount and for homeowners is PITI (PITI includes mortgage principal and interest, mortgage insurance premium [when applicable], hazard insurance premium, property taxes, and homeowners’ association dues [when applicable]).
2. The second DTI, known as the back ratio, indicates the percentage of income that goes toward paying all recurring debt payments, including those covered by the first DTI, and other debts such as credit card payments, car loan payments, student loan payments, child support payments, alimony payments, and legal judgments.^[1]

Example

In order to qualify for a mortgage for which the lender requires a debt-to-income ratio of 28/36:

• Yearly Gross Income = $45,000 / Divided by 12 = $3,750 per month income.
  • $3,750 Monthly Income x .28 = $1,050 allowed for housing expense.
  • $3,750 Monthly Income x .36 = $1,350 allowed for housing expense plus recurring debt.

Your lender calculates your debit to income when you apply for a loan, but what many people don’t realize is that most of them run an updated debit to income calculation in the days leading up to your closing.

Now, suppose you ran out and charged a new sofa here and some new linens there and ordered the new blinds from that cute shop around the corner.  If you were close to the maximum DTI allowed by your lender, you may have just disqualified yourself from buying the very home those new things were supposed to be used in.

To avoid any problems, it’s better to wait until you have the keys in your hand before you go on that new home shopping spree.  Even then, it’s smart to keep your monthly budget in mind.  No one wants to be house poor, spending all of their time working to pay a mortgage. 

Maybe Aunt Martha’s floral sofa will fit quite nicely against that wall after all.

For more information about buying a home in New Orleans or on the West Bank, feel free to contact the West Bank Living Team.  We live, work and play here and would love to welcome you to our community.

• Home buying tips
• Home selling tips
• Search New Orleans homes for sale
  

The one thing that stood out to me when house hunting was that most of the homes were pretty much the same from neighborhood to neighborhood.  There seemed to be about a half dozen floor plans that all looked the same from the outside and were all finished the same on the inside.   I mean, really, how many times can you look at the same old, same old and get excited about the thought of putting your roots down there?  I even asked the agent who was helping us “where are the houses that have some character?”

If you are looking for a home that goes beyond the traditional subdivision and isn’t part of the McMansion set that seems to be the rage in new construction, consider expanding your search to a home in one of the historic neighborhoods on the West Bank of New Orleans.

There are certainly pockets of older homes sprinkled across the area, but the biggest concentration of historic housing on the West Bank is in Algiers Point and the City of Gretna.  Homes with beautiful wood floors and original pocket doors.  Homes with fancy trim and brackets and columns framing front porches that are made for sitting and people watching.  Homes that were built with pride by craftsmen, not by a construction crew waiting for the whistle to blow and end the day.

Owning an older home certainly comes with its own challenges.  If you can’t stand the thought of a drafty window or can’t live without a double car detached garage, then you might not be happy with a house that is living, breathing, and needs to be loved and maintained.  If, on the other hand, you swoon over transoms and fireplace mantles and gingerbread trim…a historic property might be just the right place for you to call home.

Are you relocating to or from the New Orleans area or NAS JRB New Orleans?  The West Bank Living Team would love to assist you with any of your real estate needs.  Different by design, we offer the services of both buyer and seller specialists who are dedicated to representing you and only you during your purchase or sale.  Contact us for more information about homes for sale on the West Bank or for a free, confidential market analysis of your home.

While making my own list of resolutions, I put together some suggestions for home buyers and sellers that might help your real estate goals for 2010 come true.

Home Seller Resolutions

Make your home the best value in the neighborhood

Your home may be the most beautiful, with the most updates, but if it’s not priced to attract the buyers looking in your area, then you’ll be starting the year out disappointed.  Ask your agent to provide a new list of competing listings and recent sales and review them carefully.  Be sure that you know what the successful sellers in your neighborhood did and follow their lead. Did they provide closing cost assistance to the buyer? Did they offer a home warranty? Did they allow the purchaser to assume their flood insurance? These are all incentives for a buyer to choose your home over the one right down the street.  A good place to start your research is with a free online report of listings and sales in your neighborhood.

Be prepared for all showings

Beyond the common sense advice of keeping the beds made, the dishes out of the sink and the toys picked up and put away, there is more to being prepared for buyers.  Have you cleaned out your closets and made them appear as roomy as possible, or will those old tennis rackets fall out and hit someone in the head?  Did you clear out the garage to showcase the storage space or is it jammed to the rafters with 20 years of stuff that you can’t bear to part with?  Do you have seasonal plants in the garden or is it overgrown with the leftovers from summer?  From the moment a buyer pulls up in front of your house, you want them to feel at home.  Read Home Staging Tips for more advice on preparing your home for sale.

Make your house easy to show

When an agent is scheduling appointments to show homes to potential buyers, don’t give them a reason to skip over yours because it’s difficult for them to get in.  With the large number of competing homes in most neighborhoods on the West Bank, it’s important to be flexible and not turn down appointments.  If your showing instructions read something like “All appointments must be scheduled 10 days in advance of the new moon”, you are going to be in for the long haul trying to sell your home.  Have your agent install an electronic lockbox and get those buyers through the door at their convenience.

Home Buyer Resolutions

Save, save and save some more

The guidelines for mortgages are becoming more and more stringent, with higher down payments than we have seen in several years being required.  It’s important to save as much as possible before you starting house hunting.  Not only will you need cash for a down payment and closing costs, but you don’t want to move into a home without the resources to furnish and maintain it properly.  Read Are You Ready to Be a Home Owner?

Don’t buy more house than you can comfortably afford

While lenders are getting stricter, they will still qualify you for the maximum mortgage that fits their lending model.  This may not be the same amount that you are comfortable spending each month.  It’s tempting to want to buy more house than fits your budget’s comfort zone, but don’t do it!  You’ll soon find yourself dipping into your savings for an unexpected home repair only to find that there is no more savings because you are stretched too thin.

Be realistic about your wants and needs based on your budget

When you decide to buy a home, your agent will ask you a lot of questions about your wants and needs.  This is the time to make a list of the things you absolutely cannot live without and those that are just nice-to-haves.  Space for everyone to sleep is a need; a 3 car garage is a want.  A functional kitchen is a need; an in-ground pool is a want.  Bells and whistles are nice to have, but staying within your budget is more important than those granite counter tops that you can always put in later.

Search New Orleans West Bank Homes for Sale

The West Bank Living Team provides professional real estate services to home buyers and sellers on the West Bank of New Orleans.  Contact us for assistance with any of your real estate needs.  It would be our pleasure to help you!

Here are details on the new credit, courtesy of the National Association of Realtors:

Who Qualifies for the Extended Credit?

• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer’s Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors:

1. The price of the home.
2. The buyer’s income.

Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009,  single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount of the credit will be recouped on the sale.

More Tax Credit Information from the National Association of REALTORS:

The Basics: Extended Home Buyer Tax Credit

How to Get: Extended Home Buyer Tax Credit

2009 First-Time Home Buyer Tax Credit

How to Get: 2009 First-Time Home Buyer Tax Credit

Timeline

Getting the Credit

How to Get the Extended Home Buyer Tax Credit

Applying the Credit to Your 2009 or 2010 Return

Determining Your Credit Amount: Form 5405

Bridge Loans: How to Get the Credit Upfront

NAR Tax Credit Resources

Tax Credit Comparison Chart (PDF: 455K)

Home Buyer Tax Credit FAQ (PDF: 596K)

President’s Podcast: Tax Credit Expanded and Extended

Please note that I am not a tax professional.  If you need more specific information about how the tax credit can benefit you or how to file for your credit, please contact your personal tax professional or the Internal Revenue Service.

If you are considering buying a home on the West Bank of New Orleans, please contact the West Bank Living Team and let us tell you how we are different by design, with dedicated buyer and seller agents who work for YOU.  It would be our pleasure to assist you with any of your real estate needs.