If you are getting ready to purchase a home, you probably have heard the terms prequalified and preapproved. Many buyers think these terms are the same thing, but they are quite different.
Getting prequalified consists of a discussion between you and a loan officer. A loan officer collects information regarding your income, monthly debts, credit history, and assets. Based on that information, the loan officer then calculates an estimated mortgage amount for which you qualify. Getting prequalified is basically receiving an estimate of what you can afford.
Getting preapproved, on the other hand, is a more comprehensive approach, providing an actual decision on a home loan. This is actual credit approval, and it includes some considerable benefits.
As a buyer, you will have a greatly improved negotiating position when you are preapproved for a mortgage. Sellers are more apt to negotiate with someone who already has a mortgage approval in hand. The preapproval letter lets the seller know you are a serious buyer. As a preapproved buyer, you also can close on a property more quickly, which is another major consideration for a motivated seller.
While Americans rated their home safety at an average of 85 out of 100, just 30 percent of those who owned a security system actually have it on at all times, and only six out of 10 own a carbon monoxide detectors.
Two-thirds of Americans (65%) say they are more likely to have a paper shredder in their home than a security system, despite the fact that 56% of them are concerned about the security of their possessions and 72% are concerned about the safety of their children.
More than two-thirds of homeowners trust their neighbors to keep an eye on their home while they are away. However, most home burglaries occur during the day (53%), when most people are at work or school, compared with 27% at night.
Door locks aren’t always used. Even though locking windows and doors is an obvious security measure, many homeowners don’t lock their windows and doors when they are away. Home monitoring systems allow homeowners to check on their residence and remotely lock doors.
If you’re wondering where all your money goes, you’re not alone. Financial services company along with credit card management advisors surveyed more than 1,300 working people on their spending habits during the summer of 2012. Here’s some of what they discovered:
Rent/mortgage payments were cited by 83% of men and women as one of their top three monthly expenses. (Homeownership is also the single largest source of wealth for most Americans.) Credit card debt was a major expenditure as well, named by 28% of men and women. Car payments, on the other hand, weren’t in the top three lists of either males or females.
Only 38% of participants in the survey said they follow a monthly budget. Less than half said they didn’t know how much money they have available each month for discretionary spending. Among those who could name a figure, men tended to have more discretionary cash than women: $1,180 per month for men and $631 for women.
1. If you’ve owned and lived in your home for two of the five years prior to selling, you can generally exclude up to $250,000. of the gain from your income ($500,000. on a joint return, in most cases).
2. You are not eligible for this exclusion if you sold another principal residence within the past two years and excluded the allowable gain from your income.
3. If you can exlude ALL of the gain from the sale of your primary residence, you don’t need to reort the sale on your tax return.
4. If you have a gain on your principal residence that exceeds the allowable deduction, it is taxable.
5. You can’t deduct a loss from the sale of your primary residence.
6. Special rules may apply when you sell a home for which you’ve received the first-time home buyer credit. (see IRS publication 523, “selling you home” for details)
Home insurance premiums rose 19% in 2011. In an analysis of 15,000 policies sold in the US in 2011, homeowners paid an average of $810 for their monthly home insurance premium in December 2011, up from an average of $682 in January 2011. On average, homeowners nationwide paid $128 more per year for new homeowners’ insurance than they did at the begining of 2011. However, some individual states fared worse. In Mississippi, Montana and New Mexico, new insurance policies in December 2011 had premiums that were 29% to 39% higher than those sold in January 2011. Consumers may be able to reduce premiums by shopping around and asking their insurance agent if they are eligible for discounts, such as a home-auto insurance package, which can provide substantial savings.
The National Association of Home Builders has launched a new website, www.ProtectHomeownership.com, to inform consumers about the various tax, legislative and regulatory policies under consideration by Congress that could change the structure of homeownership and inspire the public to take action to protect it. The site also documents homeownership’s importance to individual households and to local, state and national governments by providing various economic reports and data, poll questions and frequently asked questions. It offers multiple ways for consumers to help protect this aspect of American life, including signing an online petition urging policy makers to keep housing a national priority, participating in local community rallies, and getting involved in social media communities on Facebook and Twitter that are focused on protecting home ownership.
The stigma attached to buying a foreclosure seems to be fading. According to a new survey released by Realtor.com, nearly two-thirds of homebuyers (64.9 percent) say they are likely to buy a foreclosure compared to 25.3 percent who said the same in October 2009. A majority of buyers (92.1 percent) say they plan to live in these properties rather than use them as investments. Realtor.com attributes the increased demand for foreclosure properties to reduced supply of homes on the market, expectations of rising home prices and changing attitudes toward foreclosures.
However, many Americans remain concerned about the large number of foreclosures on the market. More than half (55.7 percent) worry that the 1.5 million backlogged foreclosures expected to be released by major lenders will drive down home values in their local markets. Midwesterners (62.2 percent) are more concerned than residents in the nation’s other three regions.
Foreclosure data varies considerably from one study to the next, but according to Realtor.com, foreclosures have declined 34 percent nationwide in the past 12 months. Still, most Americans say they have not seen improvement in foreclosure activity in their local markets. Nearly half of those surveyed believe the foreclosure situation is about the same today compared to a year ago. While 34.9 percent of Americans are concerned that they or someone they know will lose their home to foreclosure within the next year, that figure is far below March 2009 when 52.5 percent of Americans expressed this same concern
Despite the ups and downs of the housing market and the decline in home values, most homeowners, including those who are underwater on their mortgages, don’t regret owning a home. In a recent survey by the National Assoication of Home Builders, three out of four Americans believe that owning a home is the best long-term investment and is worth the risk of a sometimes-volatile housing market. Approximately 95 percent say they are happy with the decision to own a home.
The sentiment is also strong among homeowners who are underwater on their mortgages. Nearly two-thirds believe owning a home is worth the risk, and 83% say they are happy with their decision to own a home.
Four out of five (80%) say they would advise a friend or family member to buy a home, while slightly fewer underwater (78%) would do the same. Only 19% of homeowners who are underwater believe homeownership is too risky.