Apply Separately or Together? The Dos and Don’ts for Couples Buying a Home

You’re in love, you’re planning on spending the rest of your life together, and you’re looking to buy the dream home in which you will enjoy at least a part of that life. You’re buying the house together, so why wouldn’t you apply for the loan together as well?

In many cases you would. Applying jointly allows you to combine your incomes to qualify for a larger loan amount which makes it easier to afford the house you really want. If both of you have good (or even decent) credit history the chances of being approved are increased. And then there is the peace of mind of knowing you’re really in it together, all the way.

Of course, this question isn’t just of importance to married couples. You don’t have to be legally married to apply for a mortgage together. But there are other variables that will determine the best approach for you to take.

What’s Your Score?

If both of you have good to great credit — or at least similar credit scores — then applying together probably makes sense. But keep in mind that your qualification and rate will be based on the lower of the two credit scores. So unless the partner with the lower score also contributes most of the income, if your scores are widely disparate chances are you’ll be be more likely to be approved and get a better lending rate if the partner with the higher score applies as an individual.

There are ways to build a credit score, so if you’d like to apply jointly to take advantage of combined income to lower the required down payment and increase amount you’ll qualify for then talk to us about boosting the credit score that needs help.

What’s Your Balance?

The same thing applies if one partner is carrying a heavier debt load than the other. Down payment requirements and lending limitations are based to some extent on the ratio of outstanding debt to reportable income. So if one of you is making the same or less as far as income but is carrying a student loan or other debt that is not in both your names, then not having that partner on the mortgage application might make for a more favorable income to debt ratio.

Again, this is something that our Licensed Loan Officers can help you strategize. Maybe it’s moving some funds around to pay down one line of credit, maybe it’s working with your tax adviser to more accurately represent self employed income, let us look at these options with you.

What is Your Tax Situation?

Of course you know that we aren’t tax accountants and we don’t know your particular situation. But one of the big advantages to financing your dream home is that the interest is tax deductible. But it is only tax deductible if your name is on the mortgage. That might be a good thing for you, it might not, depending on how the two of you file. But it is definitely something to talk to your tax adviser about before you make a decision about whose name(s) go on the application.

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We’re here if you need to close on your dream home fast (we are, after all, the “home of the 8 Day Close”) and we can help you get the right mortgage for you even when your credit isn’t great. Call your local office, or fill out our easy on-line form, to get one of our licensed loan officers working on the right financing to get you into the home of your dreams!

Missouri: 314.839.9999
Kansas: 913.344.9999
Colorado: 303.740.9999
Illinois: 618.839.9999
California: 866.774.8999

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When You’re Shopping for Your Dream Home Don’t Forget the Outdoor Living Space

‘Tis the season for house shopping. Spring is when the most homes go on the market and if you’re looking for your dream home you’re probably embarking on a circuit of Open Houses in the neighborhoods where you’d like to live. If you haven’t read our articles on How to Get the Most Out of Open House Season and the 5 Questions to Ask When You Go to an Open House, you might want to do that before you go to the next Open House.

You know when you look at a potential home, whether it’s at an open house or private tour, you need to size up the house. You know what you’re looking for—is it structurally sound? Does it fit your ideal lifestyle? And is it generally worth your investment in terms of price, locations and schools?

But don’t forget, you’re buying the yard too.

How will you use your outdoor space?

Do you need space for outdoor buildings to store larger equipment like a riding lawnmower (or just anything you want to keep away from the main residence?) Do you need a place for an outdoor patio, quiet shaded hammock spot, or a pool if there isn’t one?

Will you have pets or children outside? What kind of fence will it take to contain them and keep them safe? If you or your guests are older, or have physical challenges, there may be some kinds of surfaces or terracing that would make it difficult for them to enjoy the outdoor spaces.

How much privacy do you want to have?

Do you value your privacy and personal space? If so make sure there is ample space to chill without the threat of a nosy neighbor. Check the neighborhood or municipality guidelines to see if you would be allowed to install a privacy fence if the one that is there isn’t adequate.

Do you want to try out your green thumb?

If your dream home needs to have a plot to grow vegetables, or you have specific landscaping preferences, or if you’ll be bringing transplanted specimens with you when you move in, do your research to see if this yard will support the growth of your garden. Soil is important, but it can be changed to suit. You’re mostly stuck with the shade and sun patterns, however.

Trust us, it’s better to ask the granular “what-if’s” now before you commit. Don’t get lost in the romance of the home, thinking “Oh, it’ll be fine” or “I can put up with it, really.” Not having the outside possibilities that are important to you can cause just as much stress as a kitchen that is too small or a dining room that is too dark.

So take time now to honestly evaluate the outdoor living space during your next open house. You’ll thank us this summer and for many seasons to come.

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We’re here if you need to close on your dream home fast (we are, after all, the “home of the 8 Day Close”) and we can help you get the right mortgage for you even when your credit isn’t great. Call your local office, or fill out our easy on-line form, to get one of our licensed loan officers working on the right financing to get you into the home of your dreams!

Missouri: 314.839.9999
Kansas: 913.344.9999
Colorado: 303.740.9999
Illinois: 618.839.9999
California: 866.774.8999

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Overcoming the Obstacles to Getting a Mortgage When You’re Self-Employed

by Keith Vollmar, CPA, CFP®

Getting a home loan doesn’t have to be as arduous or as intimidating as many people expect. If you’re working with a loan officer who has your back, you’ll probably be pleasantly surprised at how painless the process can be. But if there is any group of people who do jump through a few extra hoops in order to get financing on a home, it’s entrepreneurs.

That’s because self-employment income looks different on paper and a lot of bank loan officers, and even some certified mortgage loan officers, don’t know how to properly assess ability to pay based on the type of financial reporting business owners are required to do.

It’s in the business owner’s best interests to show as little income as possible for tax purposes. So if you’re self-employed your accountant’s job, under normal circumstances, is to identify every legally-deductible expense and show that as a deduction from your business income. However, if you’re preparing to buy your dream home, it’s important that your ratio of income to other expenses show an ability to pay your new mortgage and that your finances indicate an upward trend to your bottom line.

That’s why you need to let your accountant in on your plans so that they can partner with you in making the loan process smooth and easy. They may advise you to be a little less aggressive about writing off expenses on your vehicle, on meals and entertainment, or phone and internet. They’ll look at areas where you’d personally pay those expenses anyway, but can legally deduct them from the business.

Your accountant may also be able to break your expenses down in more detail so that your loan officer can more easily adjust for line items that are one-time expenses or which are personal items that are shared by the business.

Your accountant may also traditionally make adjustments to your tax return that are appropriate under tax code, but which are not reflected on your financial statement. You’ll need to ask that your returns and financials be reconciled before presenting them to your loan officer.

Depending on your business structure you’ll also need to be sure that any corporate distributions are reflected in your earnings.

Most importantly, partner with a loan officer you trust and help them understand how you keep your financial records. You’ll need to be prepared to bring in two years of tax returns and financial statements (balance sheet and profit and loss). You want those records to show stability or upward trends in your bottom line as well as enough earnings to meet the required ratio of income to mortgage payment. Talking with your loan officer before you begin to gather that information will help you and your accountant put your financial reports in the most favorable light.

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We’re here if you need to close on your dream home fast (we are, after all, the “home of the 8 Day Close”) and we can help you get the right mortgage for you even when your credit isn’t great. Call your local office, or fill out our easy on-line form, to get one of our licensed loan officers working on the right financing to get you into the home of your dreams!

Missouri: 314.839.9999
Kansas: 913.344.9999
Colorado: 303.740.9999
Illinois: 618.839.9999
California: 866.774.8999

About Keith Vollmar, CPA, CFP®

Keith Vollmar -profile

For more than 10 years, Keith Vollmar has worked with the owners and staff of small and mid-sized businesses to identify and meet their long term business and financial goals and objectives.

His specialties include acting as an “outsource CFO” for businesses who do not need an internal Financial Manager; advising on key decisions regarding business plan projections, cash flow management, and growth plans. He and his team also provide a full range of Accounting and Tax Preparation.

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5 Questions to Ask When You Go to an Open House

Open house season is upon us. For those new to the home buying/selling market, spring is when many houses go on the market and, logically, when many realtors hold open houses. The wealth of options, as well as the beautiful weather, makes now the perfect time to brush up on your open house how-to’s.

We’ve already talked about the many great reasons for attending open houses. Now that you’ve (hopefully) decided to take advantage of open house season, here are a few must-ask questions to get the most out of your visit.

#1– What is the neighborhood like?

Is living in a kid friendly or pet friendly neighborhood important to you? Then you should definitely ask some questions about your potential new neighborhood. You’ll likely get a generic response if you simply ask “is it a good neighborhood,” but if you ask specific questions you’ll get a much better picture of the atmosphere.  Some good questions to ask include:

  • Is there a dog park/playground nearby?
  • What’s the local nightlife like? (i.e. Is it loud and rowdy at night or more of a glass of wine after work kind of scene?)
  • What’s the noise curfew?
  • Are the district schools good quality?
  • Also take note of whether people leave things on their porch, and bikes on the lawn, or is everything locked up for safe keeping?

#2– What recent maintenance has been done?

Have the current owners recently replaced the roof? Is the wiring original or has it been updated? Has there been any floor or fire damage that’s been fixed? The answers to these questions will help you determine how much money you can expect to put into the home over the coming years, what kind insurance costs to budget, as well as give you a feel for how likely the owners are to negotiate the price.

#3– Are there any neighborhood or homeowners association fees?

Understanding the additional costs that will come with owning a home in a particular neighborhood is vital to being able to make an informed and financially sound choice. If you are moving in from a different city, county, or state, you will also want to ask about property taxes and the state of the utility systems.

#4– What are the utility bill estimates?

There’s nothing more frustrating than buying a home well within your budget, only to find out when winter rolls around that you can expect a $1000 heating bill four months out of the year. If the realtor doesn’t have this information on hand, they should be willing to follow up with you after checking with the homeowners. Don’t feel awkward asking — these are important questions to ask if you are seriously considering how a home fits in your budget.

#5– How long has the house been on the market?

Are homes in this neighborhood hard to sell? Or do they tend to sell within a few weeks of going on the market? If there is a chance that this isn’t your forever home, you want to be confident that you can resell the home in a reasonable amount of time and get your money back that you put into it.

Have the homeowners already purchased a new home? Are they moving out of state? These answers will help you gauge just how motivated the owners are to sell and how flexible their likely to be on the price.

Hopefully these tips will help you feel like a pro walking into your first open house, and will keep you focused and ready to shop!

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We’re here if you need to close on your dream home fast (we are, after all, the “home of the 8 Day Close”) and we can help you get the right mortgage for you even when your credit isn’t great. Call your local office, or fill out our easy on-line form, to get one of our licensed loan officers working on the right financing to get you into the home of your dreams!

Missouri: 314.839.9999
Kansas: 913.344.9999
Colorado: 303.740.9999
Illinois: 618.839.9999
California: 866.774.8999

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How to Get the Most Out of Open House Season

Attending open houses is a great way to prepare for home buying. One of the big mistakes people make is waiting until they are ready to buy before getting to know the homes in their preferred neighborhoods. By attending open houses early in your house hunting journey, you will be able to develop a good feel for comparable houses in your price range between neighborhoods. Here are a few tips to help you get the most out of the open houses you attend.

#1– Be Confident

Many people go into an open house feeling self-conscious. If you feel like you don’t belong because you aren’t ready to sign a check on the spot, don’t worry. Real estate agents know that they are going to be showing the house to 15-100 individuals or couples, and there is still a chance that they won’t get an offer out of it. Most of the people who will be attending the open house are likely seriously looking, but no more ready to buy than you are, so let go of any insecurities or worries and enjoy the experience. Remember, this is your chance to gather information on homes that are comparable to what you’re looking to buy.

#2– Be Nosy (within reason)

One of the perks of an open house is that you typically get to roam on your own for at least part of the tour. Because there are likely more visitors than realtors, this is your chance to look under the sink, size up how many clothes could actually fit in that closet, and determine the extent to which you might need to child proof. This free reign also means you can take your time, go back into rooms multiple times, and get a feel for what it’s like to actually spend time in the home and move around the space.

#3– Ask Questions

Approach open houses as your chance to gather data for your future home purchase. Even if you don’t think a particular home is going to be the right fit, go see it anyway. Viewing homes that are outside your normal home choice has many perks. First of all, you will find that new questions pop up when you view different styles of homes and this will give you a good chance to get more information about the neighborhood, the home styles, and ask general questions that you tend to forget when you’re walking through a home you love. And there is always the chance that something will surprise you and you’ll walk away with a change of heart regarding a certain style or feature.

#4– Take Pictures

Ask first, but chances are good that you’ll be allowed to take photos while touring the home. Make it a habit to take the same pictures in the homes you visit. Pictures of the closets, kitchen cabinets, bathroom storage, appliances, and basement/garage space are things that you’ll be glad to have later. While pictures of the main rooms are likely available online, you’ll probably have to rely on your own photos for remembering if the storage is comparable, better, or worse to your current space. And while these things aren’t always the biggest selling points, they are the things that most often become annoyances after moving in.

#5– Be Efficient

If you have a couple different neighborhoods in mind for your home search, try to attend open houses that are close to each other on the same day. Touring two or three homes is a great way to spend a Saturday spring morning, and will be a good opportunity for immediate comparisons of size, atmosphere, and comfort. If you only know of one open house, try to arrive early and walk or drive through the area to spot other ones you may have missed and can attend later.

#6– Keep Track

While having good visual memories of the different properties is great, what’s really helpful is tracking the details of each visit. Keep a spreadsheet that includes the basics, such as address, neighborhood, number of rooms, price, any homeowner’s fees, utility averages, etc. And if you’re really feeling ambitious you can even include how long it stays on the market before selling, as well as the selling price. Trust us, you’ll feel much more confident putting in an offer on your dream home if you have a dozen other houses in that price range to compare it to.

If you’re going to take full advantage of the spring open house season, don’t forget to dress comfortably, have fun, and enjoy a walk through the neighborhood to get the full experience. Happy hunting!

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We’re here if you need to close on your dream home fast (we are, after all, the “home of the 8 Day Close”) and we can help you get the right mortgage for you even when your credit isn’t great. Call your local office, or fill out our easy on-line form, to get one of our licensed loan officers working on the right financing to get you into the home of your dreams!

Missouri: 314.839.9999
Kansas: 913.344.9999
Colorado: 303.740.9999
Illinois: 618.839.9999
California: 866.774.8999

Read More

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