GOOD NEWS FOR ATLANTA HOUSING MARKET

Article via
Kevin Rowson
11alive.com

http://www.11alive.com/video/default.aspx?bctid=2341951827001

ATLANTA, Ga -- There is more good news for the housing market in Atlanta. According to the S&P/Case-Shiller home prices report, Atlanta in February had its highest year-to-year growth since 1992.

Home values were up 16.5 percent this February compared to February 2012. David Mills, a real estate broker from Better Homes and Gardens Real Estate said the growth is a win for both sellers and buyers.

"For the seller the opportunity is that they are now getting more than they used to," Mills said. "The prices are still great for buyers and the interest rates are still great for buyers too."

Mills said buyers have to be quick and bid high because inventory is low. He said banks are still sitting on foreclosed properties and potential sellers are waiting for prices to go higher. "It used to be measured in months now the time on the market is usually measured in days," he said.

Tomas and Jeniffer Portilla are first time buyers who decided to jump into the market now. "The prices are really good and the interest rates are awesome right now so we're taking advantage of the situation that's going on right now," Tomas said.

"We jumped on it because we were in the market six months ago and the difference from then to now, we see it," Jeniffer said. "We don't want to keep waiting."

Mills said it's also a good time for owners who are looking to move up in home value because it's easier to sell and they can get a good price on the higher level home.

According to the S&P report Phoenix, San Francisco, Las Vegas and Atlanta were the four cities with the highest year-over-year price increases

HOW DO I KNOW IF I CAN QUALIFY FOR A MORTGAGE?

"How do I go about getting approved for a mortgage?" "I would love to purchase a home but I know I have some things on my credit that I need to clear up first. Who do I talk to?" As a REALTOR I hear these questions all the time from potential buyers, especially first time buyers. The best way to get a sure answer is to contact a loan officer or mortgage specialist for pre-approval. If you still have some things to clear up they can also guide you in determining what items you need to focus on in your credit report.

If you need to speak to a loan specialist contact me via email at adam.lane@coldwellbankeratlanta.com 

While the best way to find out where you stand is to speak with a specialist, there are some general conditions you can use that can give you an idea as to whether or not you can qualify based on your current situation. REMEMBER...being ready to purchase a home does not end with having a good credit score and steady income. The number one reason buyers are struggling to close is CASH! You must remember that you will need anywhere from 3.5 to 5 percent of the sale price for a down payment AND cash for closing cost. We are going further into a sellers market so buyers must be prepared to take on the bulk of closing cost in addition to their down payment.

Of course the first factor is your credit score. The magic number in our current market is 640. This is the number most lenders are looking at as a starting point. As with most rules, there are exceptions. Depending on the type of financing the minimum credit score requirement may be higher or lower than 640. The other two most important areas are income/employment history and debt to income ratio.


Below is an example scenario based on current FHA requirements for loan approval.

1) MORTGAGE PAYMENT EXPENSE TO EFFECTIVE INCOME

Addup the total mortgage payment (principal and interest, escrow deposits fortaxes, hazard insurance, mortgage insurance premium, homeowners' dues, etc.).Then, take that amount and divide it by the gross monthly income (income before taxes). The maximumratio to qualify is 31%. Seethe following example:

	Total amount of new house payment:	$750
	Borrower's gross monthly income (including spouse, if married):	$2,850
	Divide total house payment by gross monthly income:	$750/$2,850
	Debt to income ratio:	26.32%

 

2) TOTAL FIXED PAYMENT TO EFFECTIVE INCOME

Addup the total mortgage payment (principal and interest, escrow deposits fortaxes, hazard insurance, mortgage insurance premium, homeowners' dues, etc.)and all recurring monthly revolving and installment debt (car loans, personalloans, student loans, credit cards, etc.). Then, take that amount and divide itby the gross monthly income(income before taxes). The maximum ratio to qualify is 43%. See the following example:

	Total amount of new house payment:	$750
	Total amount of monthly recurring debt:	$400
	Total amount of monthly debt:	$1,150
	Borrower's gross monthly income (including spouse, if married):	$2,850
	Divide total monthly debt by gross monthly income:	$1,150/$2,850
	Debt to income ratio:	40.35%

SALEABLE VS VALUABLE: WHAT MAKES MY HOME WORTH MORE?

So the time has come for you to sell your home. For just about any seller the first thing to figure out is how much can I get for my home in today's market. Part of this depends on the seller's individual situation. Some sellers may not be in a hurry to sell, in which case they can afford to seek a higher price for their home and wait for the right buyer. On the other hand a seller may have an urgent need to sell their home within a specific period of time. They are often referred to as a "motivated seller" and because of this they are typically much more flexible in terms of their pricing expectations.

As a seller no matter your situation, it is important to understand how to price your home. If you are working with a REALTOR or a real estate agent, they should provide you with a detailed market analysis. This will explain exactly what price range in which your home can be expected to sell based on current market conditions.

Many sellers are unclear or have a misunderstanding as to what makes their home more valuable as opposed to things that simply make the home more saleable. As a homeowner of course you are going to constantly make changes and improvements to your property that are in line with your needs and desires. However this may or may not equate to a larger price tag when its time to sell.

So....how do you know the difference?

I tell my clients to think about the last time they got rid of a vehicle. When you go to trade in your car for a new one, the dealer is not going to care about the fact that you paid to have the windows tinted, added a custom CD player and that you put those expensive special performance tires on the car a month ago. All they are primarily concerned with is the age of the car and the mileage. In a lot of ways the market views your home the same way a dealer views that used car. Whenever you make an improvement or "upgrade" to your home it is either going to be an investment or a personal touch. Investments equal a return. A personal touch is just that, it is for your enjoyment during your time in the home. While they may be great selling points do not anticipate getting your money back when determining a selling price for your home. 

Generally speaking anything that adds usable space or functionality to your home adds value to the bottom line. Examples include an addition to the home, finishing a basement, or converting an area of unused space into a small bedroom or bathroom. However, I'm sorry to tell you but the in ground swimming pool, having the living room wired for surround sound, and those heated floors in the bathroom are not necessarily going to get buyers through the door if the house down the street with the same floor plan is listed for twenty thousand dollars less.

To sum it up. If you plan to make your home the most expensive in the neighborhood by way of features and upgrades then plan on being there for a while!