Whether you’re a crazy cat lady with a house full of felines or you prefer the company of just one kitty, if you watch closely you can learn a lot about successful house hunting.

Of course, you never want to rub up against a homeowner’s couch or destroy the roll of toilet paper in their bathroom, but there are three cat characteristics in particular that you might put to good use when searching for a home.

1. Be a hunter

Cats are serious hunters. Even when the prey is a stuffed mouse, they practice their stealth and hunting prowess.

Watching a cat hunt is a lesson for home buyers. If a cat were house hunting instead of mouse hunting, she would stalk the latest MLS listings tenaciously, pouncing immediately on those that look tasty.

Don’t give up the hunt because it seems too challenging. Crouch, crawl, stare hard and then twist, curl and pounce when that perfect home is within striking distance.

Ok, so you don’t need to go through the physical gyrations that cats do when you’re on the hunt for the perfect house, but you do need to use that same laser-focus, remain flexible and be oh-so-tenacious.

Keep in mind that the absolute perfect home for any one person probably doesn’t exist, unless it’s custom-built. Decide what your priorities are and aim for fulfilling at least three of them.

Then, be flexible enough to compromise on the others if they conflict with your partner’s priorities.

2. Don’t be distracted by shiny objects

Staged homes are attractive, there’s no doubt about it. Especially if the staging was performed by a professional, it’s so easy to see yourself living there.

Homes with features you’ve been dreaming of (a fireplace in the master bedroom, that to-die for Wolf® range or the perfectly-perfect-for-entertaining backyard can blind you to other, perhaps undesirable aspects of the home.

Don’t be like your cat – easily distracted by shiny objects.

But do be like kitty in that you should be curious. Look beyond the sexy paint colors and amazing décor to the bare bones of the home. Don’t be distracted – be curious.

3. Remain aloof

Many cats are mysterious, somewhat aloof and can keep you guessing about why they even allow you in their presence.

Once you find a home that you’re excited about, don’t EVER show it — at least not around the homeowner or the homeowner’s agent (or the homeowner’s Nest Cam).

Maintain that cat-like aura of coolness, disinterest or, at the very least, neutrality.

The worst thing you can do is gush over the home, expressing your love for it and your overwhelming desire to own it – at any cost.

Nope, this is the time to be very cat-like and back off, as aloof as possible. When how you feel about the home is inscrutable to the homeowner, you’re in a stronger negotiating position.

Oh, one other thing your cat can teach you – when we win the battle for the home of your dreams you are allowed to purr in contentment

 

For the self-employed, April 15 holds no particular significance, income is often erratic (killing it one month to eating ramen for dinner the next), nobody sends them W-2s at year’s end and their shoebox filing system contains zero paycheck stubs.

If you make a living by driving people around in your personal car, delivering restaurant food, grocery shopping for others, renting out rooms or an entire home to vacationers, delivering packages or freelancing online, you are self-employed.

You are an independent contractor in what is commonly known as the “gig economy.”

While the freedom these vocations offer is amazing, they do come with some drawbacks. One of those you’ll meet up with is when you try to get a mortgage to buy a home.

The mortgage challenge for the self-employed

One of the large real estate portals reported that self-employed workers:

• Earn more than employees
• Have more cash on hand
• As a group, receive 40 percent fewer mortgage quotes than other homebuyers
• Apply for homes that cost 12 percent more, on average, than other borrowers
• Are “twice as likely as other borrowers to report a score of less than 680.”

While none of these factors either automatically qualify or disqualify gig economy workers hoping to get a mortgage, the low credit scores and lack of income documentation do present a challenge.

Deal with the credit score first

Regardless of how well you can document your income, a poor credit score will be your biggest obstacle in obtaining a mortgage.

The simplest way to raise your score is by paying your bills on time and by not applying for new credit. Then, consider the following:

• Pay down your debt (on credit cards, personal loans, etc.)
• Don’t close unused credit cards (they count in your favor)
• Dispute inaccuracies on your credit reports
• Keep credit card balances to 30 percent (or less) of your credit limit

Visit the Federal Trade Commission’s website to learn how to order your free credit report.

Gather up the necessary documentation

While your accountant may tolerate that shoebox full of records, your lender will not. Documentation requirements vary, but you’ll typically need to provide the lender with the following:

• The past two years’ tax returns (with all schedules)
• A profit and loss statement (yes, even gig economy workers will need to supply one). Wells Fargo and Chase offer fill-in PDF profit and loss statements online and Dummies.com offers one that you can download and print.
• Bank statements (your lender will tell you how many are required. Submit all pages, including those that are blank).

These are the basic documents required; your lender may ask for additional information. Also, Fannie Mae guidelines are a bit different and you may be able to qualify with only the most recent tax return.

Additional considerations

Tax deductions are the holy grail for the self-employed because they reduce income and, thus, the amount of taxes owed.

This presents a conundrum when it is time to apply for a mortgage because the opposite is true: you want to show as high an income as possible.

If all else fails:

• Put off buying a home for the next two years and, during that time, cut back on the number of business expenses you write off.
• Save up a large down payment. This will lower the amount of the loan you’ll need to qualify for.
• Consider purchasing a less expensive home that will be easier to qualify for.

Sen. Mark R. Warner (D-Va.), co-sponsor of the Self-Employed Mortgage Access Act, claims that “as many as 42 million Americans — roughly 30 percent of the workforce — are self-employed or in the gig economy,” according to the staff at Bankrate.com.

Thankfully, the mortgage industry is waking up to this fact and easing requirements for some loans.

By the way, we aren’t mortgage or tax experts and urge you to consult with yours if you have any questions.

Naturally, the price of a home is top-of-mind when we talk about negotiating in a real estate deal. And, for some homebuyers, these negotiations are critical.

But, did you know that there are other ways to bargain with a home seller other than on price? The purchase agreement is full of haggling opportunities. Let’s take a look at five of them we deal with most often.

1. Repairs

Negotiating home repairs is something we are quite familiar with. After the home inspection, when the homebuyer receives the inspector’s report, negotiations often begin anew.

Understand, however, that no home is perfect; even newly-constructed homes can have problems. Don’t sweat the small stuff – save the negotiations for anything major that needs repair or replacement.

This is especially true if the problems are in one or more of the home’s major systems, such as HVAC, electrical, plumbing or with the roof or foundation.

We can negotiate for a price reduction, closing costs credit or for the repair work to be performed by the seller before closing. The first two options (price reduction or credit towards closing costs) are preferable, as they won’t typically delay the closing.

Plus, there is no way to guarantee the repair work, if performed by the seller’s contractor, will meet your standards.

2. Closing costs

With a mortgage comes a requirement to pay a down payment and closing costs. The latter includes all the costs of obtaining the loan, such as lender fees, notary fees and more.

While sellers are under no obligation to do so, many buyers negotiate with the seller to pay all or part of their closing costs.

It’s an easier pill for the seller to swallow if:

• Your offer for the home is at full asking price
• You intend to keep your request for repairs to a minimum. If the seller has to pay for a laundry list of requested repairs, he or she may not be amenable (or have the funds) to assist with your closing costs.
• You put some skin in the game as well, by paying for a portion of your closing costs

3. Personal property

Anything that isn’t permanently affixed to the home or land (real property) is considered the personal property of the homeowner. Personal property that we commonly negotiate over for our homebuying clients include:

• Appliances, such as refrigerator, washer, dryer
• Window coverings
• Chandeliers
• Portable out-buildings

Buyers, however, have negotiated for furniture, pool tables, artwork and even the family pet.

4. Closing date

The closing date – the day on which the home becomes yours – is negotiable. This is important to know for several reasons:

• If you are trying to time the closing of your current home to be simultaneous with the new home’s closing.
• You need more time to find another home
• You are relocating and need to be in your new city by a certain date

If your schedule doesn’t conflict with the seller’s this is often a successful negotiation.

5. Home warranty

Real estate agents have a love-hate relationship with home warranties. Some consider them useless while others love them for the peace-of-mind they offer homebuyers.

If a home warranty is something that you desire, it’s possible to ask the seller to provide you with one – at least for the first year of home ownership.

Basic coverage varies by region and company, but commonly includes coverage for:

• HVAC systems
• Kitchen appliances
• Plumbing
• Electrical
• Roof leaks

While the above is only a partial list of commonly negotiated items in a home purchase, it outlines the ones we see most often.

Feel free to reach out to us if you have questions on this or any aspect of the home purchase process.

Keeping your nose to the grindstone, using credit wisely and responsibly and paying your bills on time every month have their rewards, no matter how much or how little money you make.

One reward is how much easier it is to realize your piece of the American Dream – the opportunity to purchase your own home. A bonus for the low-income earner is a government-backed loan with no down payment.

The United States Department of Agriculture (USDA) Rural Development Single Family Housing programs may just be the best option for low-income folks with good credit and a steady job to buy a house.

Two types of loans for homebuyers

The two most popular USDA home loan programs are the Homeownership Direct Loan Program and the Guaranteed Loan.

Both of these programs aim to help low-to-moderate-income people purchase homes in rural areas. Both have no down payment requirement.

The key differences between the direct loan and the guaranteed loan are as follows:

• Direct loans are intended for low and very-low income purchasers that have been unable to obtain a conventional or FHA loan. Guaranteed loans are intended for those with moderate incomes.

• Income levels for guaranteed loan borrowers are capped at 115 percent of the area’s median income, while those for direct loan borrowers are capped at 80 percent.

• The guaranteed loan is made by a conventional lender but guaranteed by the government. The U.S. government acts as the lender for the direct loan

• Direct loan applicants with inadequate incomes may use a co-signer. This is not possible with the guaranteed loan.

Guaranteed Loan Benefits

Remember, the guaranteed loan is for the moderate-income borrower. It is much like the FHA loan in that the government gives the lender a guarantee of repayment in the event the borrower defaults on the loan.

The biggest difference between the USDA loans and FHA is that USDA requires no down payment. Here are some basic benefits of the guaranteed loan:

• No down payment required and 100 percent financing available.

• Certain repairs and closing costs may be rolled into the loan up to the appraised value of the home.

• The upfront guarantee fee may be rolled into the loan amount above the appraised value.

• The loan can be used to purchase existing or newly constructed homes and planned unit developments. Some condos are eligible.

• Interest rates are fixed and the loan has no prepayment penalties.

• Non-traditional credit histories may be considered.

• Down payment assistance programs, seller concessions, gifts and grants from city and county housing development programs may be considered.

Direct Loan Benefits

This is the loan for you if you are low income but have decent credit and a steady job. You will borrow for the home directly from the U.S. government. Here are just a handful of the benefits of the USDA Direct Loan program:

• No down payment required.

• Payment assistance is available that may reduce the monthly payment.

• Some closing costs may be included in the loan.

• No private mortgage insurance required.

Eligibility

To use either loan, the borrower must be purchasing a home in a rural area. The USDA defines “rural” as any town with a population of “25,000 or less that is not adjacent to a large city or that is not part of a continuous urban area.”

The home must be “modest” in size. The average USDA home is 1,200 square feet. Homes with swimming pools are ineligible. The loan cannot be used to purchase income producing property, furniture or other personal property, an existing manufactured home or for a home with non-essential buildings and land.

To determine if a particular property is eligible, visit the USDA Rural Development Property Eligibility website.

For a borrower to be eligible for the USDA Guaranteed or Direct Loan program you must:

• Be a U.S. citizen or be admitted as a permanent resident.

• Be unable to secure a comparable loan without a government guarantee.      

• Not currently own a home within commute distance of the home you are buying.

• Have a dependable income.

• Have a credit history that proves you meet your financial obligations on time.

• Occupy the home as your primary residence.

• Direct loan applicants must prove that they do not currently own safe and sanitary housing.  

• Direct loan applicants must be very low income (income that is between 50 and 80 percent of the area’s AMI). Guaranteed loan applicants must be moderate income, making 80 to 115 percent of AMI.               

An easy way to determine your income eligibility is by visiting the USDA Single Family Housing Income Eligibility website.

Will this be the year you buy a brand-new home? Don’t be discouraged by news reports claiming that “U.S. home building fell,” or “housing starts dropped.”

The scary-sounding numbers are due to a drop in multi-family home building, not single-family.

In fact, the single-family home construction market across the country is set to be just fine, with a surge in new building permits late this summer.

Moving into a newly-built home is a lot like the first time you sit behind the wheel of a new car, but on steroids. No stinky smells from whatever it was the previous occupant was cooking, no greasy range hood and walls, no dinged-up baseboards – everything is new and pristine.

While these aspects may make you starry-eyed, there’s reality to contend with as well. Today we share with you some things to watch for when taking on the purchase of a brand-new home.

The builder’s real estate agent

When you drive up to the new home community you’ll notice quickly how you’re directed first to the builder’s office before you get to the model homes. That guy or gal sitting in the office isn’t a receptionist, but the builder’s real estate agent.

She or he will show you a map of the buildable lots available, talk to you about the community’s amenities and, naturally, the homes, before sending you on your way to view the models.

If you fall in love with one, which is every builder’s goal, you’ll want to get the purchase process underway quickly.

Hey, I don’t blame you, this is exciting stuff! And, what better and easier way to do it than to allow the builder’s agent to get the ball rolling?

Ok, that’s the third time I’ve said it: “the builder’s real estate agent.” Sure, legally this agent can represent both you and the builder, but is it a wise move?

Think about this: if it were legal, would you use your about-to-be former spouse’s attorney in your divorce proceedings? Why do you suppose that isn’t common practice?

Here’s why: it is almost impossible for the builder’s agent to protect both the builder’s interests and yours in the same transaction.

Since the seller pays for the buyers’ real estate agent at closing, it only makes sense that you have your own agent who will look out for nobody else but you.

Avoid this problem by letting the builder’s agent know, upfront, that you have an agent.

The builder’s lender

Hey, this is a one-stop shop, right? Of course!

Home builders understand that they need to hook the buyer when he or she is most excited so they offer all the services one might need to get the process started. This includes an “in-house” or “preferred” lender.

Now, unlike using the builder’s agent, there’s nothing wrong with using his or her lender, as long as you’ve shopped around and know that you’re getting a good deal.

Never feel that you have to use this lender, however, because you don’t.

The builder

Check out the builder’s reputation if you aren’t familiar with him or her. Start with the Better Business Bureau and then scour the city’s public records for lawsuits against the builder.

Buying a newly constructed home in Billings is a lot more involved than buying an existing home, but the end result is well-worth the steps it takes to get there.