Tag Archive for Tips for Buyers

How to Calculate Your Debt-to-Income Ratio


Before you embark on your home search, your first consideration should be how much you can afford to pay. You need to establish what your monthly payments should be and that means understanding how your usable income is calculated.

The starting point of any income calculation begins with gross, or before-tax, income. Regardless of what you take home each month, your lender will always want to know your salary before any withholdings.

Debt-to-Income “DTI” Ratio

After your gross income is calculated, monthly debt is subtracted. This debt includes rent or mortgage payments, car payments, credit card debt, student loans and other kinds of loans. Many people ask if debt includes other monthly expenses such as utility bills or gas for the car, and the answer is no – these are not included in your ratios.

While your mortgage professional will give you the exact numbers you will use to qualify, a good rule of thumb is to keep your payments between 40% and 45% of your gross income, less expenses.

For example, if your gross income is $3,000 a month and you have car payments and credit card balances for a total debt of $500 a month, your usable income is $3,000 minus $500, or $2,500 a month. Taking $2,500 x 40% and 45%, you arrive at a total mortgage payment between $1,000 and $1,125 per month.

If you keep these figures front and center during your home search, you won’t fall for a home that’s beyond your means. We understand that the home-buying experience may seem daunting, that is why our Guidance Realty Homes real estate agents are here to help you embark on this journey and  even help you calculate your affordability. Also, if you use our preferred home financing provider, Guidance Residential, you’re eligible for more discounts and savings.


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Thinking of Buying a Fixer-Upper? How to Do It Right


With proper due diligence and the right real estate agent, buying a fixer-upper can be a satisfying and lucrative experience. Buying a bad one, though, can lead to disaster. Here are some tips to help you avoid problems:

Location: A bad house in a desirable neighborhood is almost guaranteed to pay big dividends for the savvy buyer. Here’s where a good real estate agent – as a specialist in local neighborhoods – can be worth his or her weight in gold.

Mass Appeal: You’ll want to look for a home that appeals to the largest number of buyers. That means three or more bedrooms and more than one bathroom.

Sensible Layout: Look past the current floor plan and figure out how the home will work. Today’s buyers look for openness and rooms that flow seamlessly.

Bang for Buck: Avoid costly makeovers like shoring up sagging foundations. Instead, think cosmetic fixes. Plaster and paint, new bathroom fixtures, and even a new roof and energy-saving windows are relatively inexpensive and can turn your ugly duckling into a beautiful swan.

Potential Problems: An investment in a good home inspector can save you thousands of dollars in the long run. You can try requesting a home inspection and a roof certification as part of the deal. Ask your real estate agent about any nearby landfills, reports of contamination and other conditions that could affect resale value. You may even want a structural engineer to examine the property as a condition of sale.

Now that you’ve gathered more information, how do you begin?  Let Guidance Realty Homes guide you toward finding the latest information about neighborhoods. Our real estate agents are valuable sources of information that can help you decide between two neighborhoods that on the surface, may seem very similar. Finding the right neighborhood definitely requires some homework, but it definitely will be worth it. If your future home happens to be in Orlando, FL, NY Metro area, Northern Virginia, Maryland or Chicago, Guidance Realty Homes can help. Guidance Realty Homes’ buyers receive a commission rebate of the purchase price by using our agents. Plus, buyers can also receive an additional $350 appraisal credit when financing online with Guidance Residential.

Buying Investment Property? What You Need to Know

Investment property

With home prices competitive and interest rates at historical lows, now is the ideal time to consider purchasing an investment property.

Whatever your intent, your best bet is to start by doing two things. First, sit down and figure out what your goals are in purchasing a property, both short and long term. Second, figure out if it makes sense on paper.

A good real estate agent or appraiser should be able to help in determining property values in a given location, with specific attributes such as neighborhood desirability, square footage and number of bedrooms. They can also advise you regarding how much rent the properties could bear in a rental market.

Looking at foreclosures, short sales and bank-owned real estate is a good place to start looking for properties, as they are often below market value. Keep in mind that they may need a bit of remodeling or repairing.

Financing an investment property is similar to financing a primary residence, but the rates are higher as are the reserve requirements. Also, investment properties are financed primarily by conventional loans, as the Federal Housing Administration lends only on homes where the buyer intends to live, with the exception of multi-unit properties where the buyer plans on living in one of the units.

Plan on putting 25% to 30% down, and have six months worth of assets in the bank with which to make the payments. This is a bit steep, but lenders want to know that you are committed to making it work.

Guidance Realty Homes professional agents are valuable sources of information regarding purchasing investment properties.  If your future property is in Orlando, FL, NY Metro area, Northern Virginia, Maryland or Chicago, Guidance Realty Homes can help. Guidance Realty Homes’ buyers receive a commission rebate of the purchase price by using our agents. Plus, buyers can also receive an additional $350 appraisal credit when financing online with Guidance Residential.


What’s the Difference between Foreclosures and Short Sales?


With all the talk about foreclosures these days, a basic overview of some of the terminology might be helpful.

When a property is in foreclosure, it means that the lender has started legal proceedings to take back the property from the borrower.

A borrower is considered to be in default when he or she misses even one payment, but lenders typically start proceedings after three missed payments. Depending on the state where the property is located, the court system may be involved.

The period of time from when the borrower misses the first payment to when the lender starts the foreclosure proceedings is called the pre-foreclosure period. A number of things can happen at this point. The borrower and the lender can sit down and come up with some type of loan modification agreement, by which the terms of the loan can be altered, at least for a certain period of time, to allow the borrower to get into a better financial position.

If the borrower can find someone who wants to, and is able to, buy the property, he or she can sell. If the amount the person wants to pay is less than the borrower owes and the lender will take that amount, it is called a short sale. Once the foreclosure proceedings have started, however, the lender will be the only one that is able to sell the property.

If the borrower and lender agree that the borrower will turn the property back over to the lender, then walk away – without going through the foreclosure process, a deed in lieu of foreclosure takes place.

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Real Estate Resolutions: Tips for Homebuyers


Planning to buy in 2016? Preparation is the key to getting the best deal when shopping for a new home. Following are some tips to help you get started:

Define Needs Versus Wants: Make a list of your needs versus wants in the new home. For example, if you have a large and growing family then four bedrooms might be a necessity, while a pool might be negotiable.

Select a Location: Spend some time driving around town, researching schools and local amenities, crime rates, and other safety considerations. Select three to five areas to focus your search on.

Get Pre-Qualified: Find out how much you will be eligible to borrow and begin the paperwork so you are prepared to move quickly should a great deal arise.

Contact an Agent: Ask family and friends, perform a search for real estate agents that specialize in your target area, or consider using the services of a buyer’s agent. Let them know the price range you have been approved for, the type of home and zip codes of interest.

Read, Set and Search: Sign up for automatic listing notifications and begin viewing prospective properties online. Ask your agent for additional photos, virtual tour links and a Comprehensive Loss Underwriting Exchange report, if available, which gives the insurance claim and loss history for residential properties. Once you find a property of interest, take a few minutes to google it before actually driving out in person. It’s often easy to see areas of concern from an aerial view as opposed to in person.


If the areas that you are looking to purchase your dream home is within Greater Orlando, NY-metro and Northern Virginia area, start the step now at Guidance Realty Homes. Our agents will be able to help you prepare to become a home owner in 2016!


How to Leap Those First-Time Buyer’s Hurdles


First-time home buyers have plenty of obstacles to overcome. There is an intricate maze of details that need to be carefully navigated.

Following are 5 obstacles that first-time buyers have to overcome when looking to buy a home:

Down Payment:

Saving enough for the down payment is not sufficient. Closing costs must also be considered. Closing costs are additional fees such as the lawyer’s fees, escrow charges, appraisal fees, financing fees and utility adjustments. A good rule of thumb is 2% of the purchase price will cover the closing costs. So for a $200,000 home with a 5% down payment, you would require $14,000 to cover both the down payment and closing costs.

Mortgage Pre-approval:

Many first-time home buyers overlook the pre-approval process. This mistake can cost you your dream home. Visit a mortgage professional to see what kind of mortgage you qualify for and closely examine the actual cost of the money you must borrow to purchase a home.

Use a Real Estate Agent:

Some home buyers think they can go it alone. Buying a home is a complex legal process, and buyer representatives have the knowledge and know-how to make your home-buying experience a happy one.

Know the Difference Between What You Need and What You Want:

It is fine to dream big, but the home-buying process can be very frustrating when you have a $200,000 budget and $500,000 taste. It is essential to the buying process to identify what your home must have and what you would like it to have.

Believe in Yourself:

It seems that when you are buying your first home, everyone has an opinion about the purchase. This can be confusing because unsolicited advice clouds your decision. Believe in your ability to assimilate the facts, look at the property and decide what to buy.

We know that the home buying process can seem daunting and we are here to simplify it. Guidance Realty Homes is your complete solution for buying or selling a home. Plus you can earn a rebate off the sales price when using our agents.


2 Vital Terms Every Homebuyer Must Know


Pre-qualified and pre-approved are two common terms you hear when it comes to getting a mortgage.

But it’s important to know they are very different things.



A prequalification takes 15 to 30 minutes and involves a few quick questions usually.

You typically do this before you look for a home.

At this point, the lender takes your word that everything you state is correct and will verify it at a later date.

A credit check is run, then all the information provided is put through an automated underwriting system, which will provide a preliminary status.

At the end of the process you’ll have an idea of how much money you can borrow, and often you will be issued a prequalification letter that states that a credit check has been run and, based on the information provided but not yet verified, you qualified for a specific dollar amount.

Real estate agents will often ask for prequalification letters in the same amount of an offer they intend to submit on a property.

Sellers, knowing that a buyer can afford much more than they are asking for a property, will be less likely to negotiate downward or offer concessions.


You can also Pre-qualify in 10 minutes with Guidance Residential, the preferred financing provider for Guidance Realty Homes. Simply go here to start the process of home ownership: GuidanceResidential.com/prequalify



A preapproval letter is much more involved.

It will only be issued after all the paperwork is received by the lender.  This includes so much more than income and assets, such as the sales contract, the title to the property and an appraisal, most of which are sought after a contract is submitted and accepted by the sellers.

Lenders issue a conditional commitment letter between the contract date and the closing date. This basically says that the lender intends to lend money to the borrower but is verifying information before issuing a full approval.

Telltale Signs That Make a Home a Great Buy

If you’re looking for the perfect house in a good neighborhood at a great price, you may have to compromise to get what you want. Following are some things to consider:

Décor: You may cringe at the ’60s shag rugs, flocked wallpaper and lime green living room, but cosmetic changes cost very little and can transform the total look of a home.

Appliances and Fixtures: The avocado-colored appliances and brown bathroom fixtures may cost more to replace, but if this is your dream house it’s a sound investment. An addition will also boost the value of your property while making it more livable for you and your family.

However, there could be unseen problems to be concerned with, like mold, critters or cracked foundations so make sure you have a professional carefully assess your potential purchase.

Following are some things to look for before you sign on the dotted line:

  • Signs of water damage
  • Out-of-date fuse boxes
  • Recent – and badly done – wall or ceiling patching jobs (inside and out)
  • Signs of neglect such as cracked walkways and sagging decks
  • Sagging roofs, shingle loss or chimneys with bricks missing. In the attic there may be traces of animal life, damp patches or recent stains.
  • Ill-fitting windows, outside walls that feel icy in winter and other possible signs of insulation problems

A professional real estate agent can help you throughout the process of finding your home and guide you through a home inspection. For knowledgeable agents in Orlando, FL, NY-Metro, Northern Virginia, Maryland or Chicago, call a Guidance Realty Homes agent today. Guidance Realty Homes agents can help you navigate the waters and can show you a variety of choices that fit your unique needs. Buyers who use our agents receive a commission rebate off the purchase price plus an additional $350 appraisal credit when financing online with our affiliate Guidance Residential.

Budgeting Basics for First-time Buyers


Buying your first home is a lot of fun but there is more to it than meets the eye when it comes to budgeting. Most new home owners are financially savvy enough to calculate the basics such as taxes, insurance payments, etc. but tend to forget less obvious expenses. Here to help are a few budgeting basics for first time home buyers:

Moving Expenses: Truck rentals, time off of work and, of course….gasoline. The act of moving is an expense whether you do it yourself or pay others to do it for you so plan accordingly.

Maintenance: From lawn care to fixing a door knob, owning your own home involves maintenance. Few first time home buyers remember the expense of maintaining a yard until they move in. Don’t be caught by surprise because this is one area where expenses can add up fast. Set aside funds for a lawn service and pool maintenance, or plan to purchase the tools required to do it yourself, including lawnmowers, garden and hand tools plus other general maintenance items.

Utilities & Communication: New home buyers are frequently surprised by the cost of utilities in their new home. Set aside enough funds for deposits and the first payment for utilities, phone, cable and other necessities. Don’t forget to find out if your cell phone, cable, and other services are available in the new area otherwise, you may be forced to break a contract to obtain services.

If you’re using a Guidance Realty Homes agent, remember that you’ll receive some extra spending money through Guidance Realty Homes’ commission rebate program which is half a percent (½ %) off the purchase priceThat’s $1,500 on a $300,000 home for you to use however you like. And although this can help you offset some expenses early on, you’ll still need to budget wisely for future expenses. Helping home buyers is our passion so call one of our professionals today!

Buying That First Home? Here’s What You Should Know

First Buyer New House

Taking that initial step towards becoming a homeowner can be an exciting experience. This is probably one of the biggest purchases you’ll ever make and also likely to be one of the best long-term investments. It also signifies change and a new beginning. However, there are some things that first-time homebuyers should keep in mind.

Contact a home financing provider to find out what you can afford before you start to look. Being realistic from the beginning of the process will enable you to set expectations appropriately.  An experienced real estate agent will be able to put you in touch with them – some of whom will even provide you with a $350 appraisal credit, such as Guidance Residential.

Plan on putting down between 3.5 and 5% of the purchase price. This can come from either your own funds or be in the form of a gift from a close relative. You should also be prepared for other up-front expenses such as closing costs. Two ways you can potentially offset some of these upfront costs is to first inquire with your local city government about any first-time home buyer credits that may apply.  Second, talk with a Guidance Realty Homes agent about commission rebates that are offered to buyers and sellers.

If you’re looking at either foreclosures or short sales, allow extra time to complete the process, as these sales need to be approved by the holders of the mortgages on the properties. These lenders are undoubtedly overwhelmed at this point in time, so they might take several weeks or more just to respond to an offer submitted on a property.

Getting those keys to your first home can be exciting but make sure that you are prepared before you dive in. If you’re a first-time home buyer, be realistic and know that you won’t find your perfect dream home, but if it’s 80% of what you imagined, you have a winner. When you’re ready to take that first step, reach out to us here at Guidance Realty Homes to help you pick out the place that shouts, “Home Sweet Home” to you.