Author: Shannon

It happens to the best of us – one day you’re gainfully employed and the next day you’re not. Despite the fact that the nation’s unemployment rate is at a 17-year low and job growth is strong, layoffs are still occurring.

While unemployment rates have fallen in many other cities across the nation, in a dozen or so states they have actually gone up. From public schools laying off teachers to states laying off workers, if you work for someone else there is no guarantee that you won’t find yourself unemployed.

If you find yourself among the jobless, now is not the time to panic. Read on for some tips to keep in mind while you make a plan on the next steps to take.

Get some advice

The U.S. Department of Housing and Urban Development (HUD) offers no-cost housing counselors to help walk you through your options. You can find one in your area on HUD’s website.

If you’ve waited too long and you’re facing foreclosure, contact an attorney. If you are income-qualified, you may be entitled to free legal services. Find out by contacting your state’s legal aid department. You’ll find the contact information for each state’s legal aid office, here.

Be upfront

The first step is to know exactly where you stand financially. Go over all of your monthly bills to determine how much you owe and to figure out ways to cut your budget.

Next, determine whether your situation is temporary or if there’s a chance that your unemployment may be long-term. With this information, you are ready to call your mortgage servicer.

Don’t put this one off. Yes, it’s uncomfortable. It may even be embarrassing, but one of the worst things you can do is crawl into that hole of procrastination that is beckoning. Be proactive.

If you expect to be back at work in the near future, ask the servicer for a forbearance. This is an agreement wherein the lender promises not to exercise the legal right to collect the debt or to foreclose due to non-payment. You will need to agree to the servicer’s plan on how you will get current on the loan and you’ll typically be given a time limit.

In a two-worker household, you may be able to make smaller payments. If this is the case, ask the servicer for a loan extension. While the advantage of this scenario is obvious (your payments will be reduced), the loan will end up costing you more in the long run.

Some servicers will allow the borrower to pay only the interest on the mortgage until he or she is back in the money.

Not all servicers are willing to make these concessions, but they are, by law, required to discuss your situation with you and the earlier you notify them, the more amenable they may be to your proposals.

Get help from the government

Although the Home Affordable Modification Program (HAMP) expired last year, the Home Affordability Refinance Program (HARP) is still in effect, but only until the end of September, 2017. You may be eligible for this program if the following applies:

You are up-to-date on your mortgage payments and have no late payments (30 days or longer) within the past six months and have no more than one within the past year.

• Your loan is owned by Freddie Mac or Fannie Mae.
• You obtained your mortgage before May 31, 2009.
• Your loan-to-value ratio is greater than 80 percent.

You can find out if your loan is owned by Fannie Mae, here and click here to find out if Freddie Mac owns your loan. Then, calculate your loan-to-value ratio using Fannie Mae’s calculator.

Fannie Mae and Freddie Max will offer the new Flex Modification foreclosure prevention program, which kicks into effect on October 1 of this year.

The program will provide a 20 percent reduction in mortgage payments to those who qualify. You may qualify even if you’re 60 days delinquent on your loan but it is also an option for those who are current.

Again, this program is limited to loans owned by Freddie and Fannie.

Although asking for help may be uncomfortable, losing your home is worse. Seek help right away if you find yourself unemployed and unable to make your house payments.

Want to make an extra $1,500 on the sale of your home? Paint the front door dark gray or navy blue, according to a study by Zillow. Nab another $1,500 by painting the home’s exterior greige (a mix of beige and gray).

Or, you can leave that taupe or medium brown paint alone and take a chance on losing nearly $2,000 on the home’s sale. Just as color can impact us positively, some colors can be the kiss of death.

It’s all about the curb appeal

Never underestimate the power of curb appeal – it’s your home’s first impression and it can make you a bundle of money or cost you dearly.

In fact, according to a Texas Tech University study, projects that improve a home’s curb appeal can bump the home’s value as much as 17 percent.

Landscaping is the first curb appeal project most homeowners take on, neglecting the exterior condition of the home. It’s a bit like putting lipstick on a pig, however, because your lovely landscaping isn’t the first thing potential buyers will notice.

It’s a well-known fact that homebuyers choose which homes to visit in person by viewing them first on the internet. Ninety percent of these buyers will base their initial judgement on the color of the home, according to a study entitled “Impact of Color on Marketing,” (Satyendra Singh, Department of Administrative Studies, University of Winnipeg in Canada).

So, while spiffing up the front yard, walkway, driveway and porch are all important to the home’s overall curb appeal, peeling paint on the home’s trim or the wrong color on the exterior walls may doom the homeowner to a mediocre final sale price.

Consider your home’s architecture

Sure, you can navigate to the nearest “What Color Should I Paint my Home” advice column on the web, but few of these “experts” remind readers that color choices should take into consideration the home’s architecture as well as other caveats.

Have a Cape Cod? Go for deep blue colors. Farmhouse-style homes take well to white paint and designer Amy Hendel chose Benjamin Moore’s Cloud White for one of her recent farmhouse projects.

Victorian homes are called “Painted Ladies” for a reason, and they practically scream out for colors chosen from a precise palette, while owners of tract homes can play it safer. In fact, gray with white trim is a big seller, according to Bob Villa, host of TV’s This Old House.

On his website, Villa features a slide show entitled “8 Exterior Paint Colors to Help Sell Your House,” and one home in particular resonated with readers. Built by a Minnesota developer, the home’s photo ended up on Houzz.com and the builder said he received thousands of requests from folks wanting to know the paint colors.

For the record, he was happy to oblige: Benjamin Moore Copley Gray (which actually looks rather brown, at least in the swatch), trimmed with Benjamin Moore Elephant Tusk.

Accentuate the positive

Accenting the negatives is one of the biggest mistakes homeowners make when painting the exterior of their homes, according to the color experts at Sherwin-Williams. “Unattractive elements such as gutters, downspouts, a protruding garage door, air conditioning units, unevenly placed windows” are all things that need to be downplayed.

The experts advise homeowners to accentuate “interesting architectural detailing; it can often sparkle with a contrasting or accent color.”

Tips for choosing color

Naturally you want your home to stand out among all the others, but choose a color that doesn’t clash, but harmonizes with surrounding homes. A darker or lighter shade will still make your home stand out.

The Sherwin-Williams experts suggest that you take color samples home with you and look at them outdoors, during different times of the day and at different angles. When you’ve finally narrowed the choices down but still can’t decide between several colors, buy them each, in small quantities, and find an out-of-the way spot on the home to test them out.

Need more tips? You’ll find them at Houzz.com, BobVila.com, bhg.com or try the nifty color selector tool at Valspar Paints.

Color gives you an opportunity to create psychological connections with potential buyers and optical illusions that will help direct their vision where you want it to go. A fresh coat of paint is an inexpensive and easy way to create a positive impact when selling your home.

Even if you aren’t considering selling your home in the near future, a finished basement offers more living space – something most homeowners dream about.

If you are considering selling, you’ll recoup 70 percent of the cost of the remodel, according to Remodeling Magazine’s 2017 Cost vs. Value Report. Furthermore, keeping your basement-finish budget to no more than 10 percent of your home’s appraised value makes it a smart investment, Lending Tree Home Pros’ Neil Salvage tells HGTV.

And, you won’t be alone. The National Association of Home Builders places the project as the third most requested, behind kitchen and bath remodels and additions.

The nationwide average cost of a basement remodel is between $10,583 and $27,103, according to HomeAdvisor. But, some homeowners pay as little as $4,800.

You don’t necessarily have to go full-blown remodel to whip that basement into shape. Use a few of these DIY ideas to turn it into a livable area that will add value to the home.

Wet basements aren’t livable

More than 60 percent of homes with a basement have leaks, according to the American Society of Home Inspectors. Furthermore, 38 percent of those homes run the risk of developing basement mold. So, before you tackle the decorating and design aspects of your unfinished basement, undertake the repairs necessary to set a good, healthy foundation for all of your hard work.

You’ll need to find the source of the leak, which is easier said than done in many cases. The most obvious place to look is the area of the wall where pipes enter. Also check that the landscaping outside the basement slopes away from the home and that the gutters on the home aren’t clogged with debris and that they extend at least 4 feet away from the structure.

Fixing leaks may sound intimidating but many repairs are inexpensive and easy. Filling in cracks with epoxy, installing additional downspouts, re-sloping the landscaping (the University of Minnesota recommends a slope of one inch per foot for at least six feet away from the foundation wall), and installing flashing are DIY projects that won’t break the bank.

Consider purchasing a dehumidifier for the basement as well. Then, seal the walls. Tom Silva at thisoldhouse.com suggests applying waterproof masonry cement to walls.

Start at the top and work your way down

Sure, you’ll want to paint the ceiling but what else is up there, hanging from it, that can ruin the comfy vibe you’re aiming for? Pipes, air ducts and more can be painted to match the ceiling, in the hopes of making them blend in.

Or, look for products like coffered ceilings or wood planks that add style and the results are easier to achieve than most people think.

Then, of course, there is always the option of using drywall or large, removable tiles (to allow access to all that “stuff” hanging from the ceiling). Get more ideas on ways to camouflage ceiling “junk” at houselogic.com.

What will you walk on?

Naturally, carpeting is the flooring of choice for most basements, according to research by the National Association of Home Builders. But, factoring in the cost of moisture-resistant padding and carpet can be a bit pricey.

If you’re on a tight budget, consider vinyl. Some of the new wood-look luxury vinyl floor planks add a surprisingly realistic wood-look to a room, they’re inexpensive and can be easily installed by homeowners.

If you fear water leaks, tile may be a better choice. Since basements are notoriously moist, however, shop for tiles with anti-slip finishes, such as glazed ceramic tile. Or, consider leaving the concrete floor exposed and acid-staining it. With lots of area rugs scattered about, feet will stay warm.

 Create a warm ambience

Proper lighting is crucial in a basement that you plan to use frequently. Choose ceiling fixtures, such as track lighting or pot lights and then add table lamps around the room.

The effects of a low ceiling and lack of natural light in most basements can be thwarted by choosing light-colored accessories, such as upholstery fabrics, rugs, pillows and artwork.

Choose soft rugs, thick blankets and fluffy pillows to seal the warm ambience of your newly-finished basement.

Finishing a basement is a big project but not only will it give you more living space, it will help sell the home in the future. Tackle as many DIY project you can to keep costs down.

Writers have a target audience in mind as they peck away on the keyboard. Radio DJs are admonished to hold a mental image of their audience (one person of a certain age group, by the way) every time they open the mic. And, the key to success for professional marketers is to “know your audience.”

The latter uses market research to determine from what pool of consumers will come their potential customers. When a home is the product, however, we don’t need expensive research or a crystal ball to determine who will be most interested in it.

Thankfully, the National Association of REALTORS and others have done the legwork for us, so we have a pretty good idea of which demographics drool over which types of homes. Naturally, there are the basic needs that seem to cut across all demographics, but some homes appeal to certain folks.

Once you have a clear picture of your likely buyer, we can better focus our marketing efforts.

The luxury home buyer

High-end home prices soared in the first quarter of 2017 to an average of $1.65 million. Is this a trend? Only time will tell. What we do know, however, is that if you own a high-end (meaning high-priced) home, your most likely buyer will be a woman and a member of the baby boom generation. This group of Americans, by the way, controls a large share (51.3 percent) of the country’s wealth and that percentage is expected to grow.

According to CBS News Money Watch, “America’s most affluent women are typically in their 50s and 60s,” and a recent survey of real estate agents finds that 62 percent of their luxury home buying clients are between the ages of 45 and 54.

Another survey reveals that most homebuyers who purchase at the top of the luxury home market – in the $10 million and more price range – are entrepreneurs. Finally, most of the people that will tour your home are local to the area.

By the way, today’s luxury home buyer doesn’t necessarily view the purchase as an investment, as was the case before the recession. Instead, it’s more of a lifestyle choice –  a home in which to raise a family and build memories.

This information helps us, as your listing agents, narrow our marketing focus (sophisticated and laser-targeted) to appeal to these buyers.

The condo/townhome buyer

When it comes to condos vs. single-family detached homes, the owners of the latter will have a better chance of selling. Now, this isn’t to say that condo owners can’t sell their homes. On the contrary.

Your buyer will likely be a retiree, seeking to downsize. This is especially true if the condo is located in a walkable area that offers plenty of recreational opportunities.

Urban condos are attractive to young, single professionals who are seeking a home in close proximity to work and to social opportunities. The bonus for them is that condos are generally less expensive than single-family homes and require far less maintenance.

Then, there are the young couples who aren’t planning to start a family right away. Naturally, the location of your condo and the amenities the community offers will help us narrow down your ideal buyer pool.

The single-family, detached home buyer

The single-family, detached home category represents a broad range of homes, from small, starter homes to luxury homes and even ranches on multiple acreage. The most popular single-family home, according to NAR, is one that was built in 1991 and has 3 bedrooms, 2 bathrooms and 1,900 square feet of living space.

Now, most real estate agents will tell you that the home needs to be in move-in condition to sell quickly but recent studies show that millennials actually want a home that needs a little work if it means they don’t have to buy a cookie-cutter home.

What they don’t want are old appliances, dinky master bedrooms and a one-car (or no-car) garage. Fix those problems and we can market your home to this demographic.

If your home is large, more than 2,000 square feet, and in a quality school district, your buyer will most likely be a Gen Xer.

“Buyers 37 to 51 are in their peak earning years and thus their incomes are the highest among all generations of buyer types at $106,600. They are both the generation most likely to be married and most likely to have children under the age of 18 in their home,” according to the National Association of Realtors 2017 Home Buyer and Seller Generational Trends Report.

Why does it matter?

Earlier, we mentioned that knowing who your likely buyer is will help us hone our marketing efforts. While we won’t exclude other possible buyers, if your home fits perfectly a certain demographic’s wants and needs, it only makes sense to stage the home and craft marketing pieces to attract them.

As you’ve probably guessed, marketing a home for sale entails so much more than entering the details into the MLS database and pounding a sign into the front yard. We’re happy to discuss our marketing plan with you when you’re ready to sell your home.

 

What on earth are you doing with all that stuff? You do know that you can make money by selling it, right? One man’s (or woman’s) trash is another’s treasure and a garage sale is the perfect way to feed that guy’s treasure craving.

The most successful garage sales are planned and prepared meticulously. So, let’s look at some tips to help you do both.

Planning the garage sale

Don’t be the guy or gal that throws the party that nobody comes to. If your sole concentration is on the actual garage sale, and you put little effort into getting people to show up, your sale will be a flop.

Businesses call it “marketing” and you can apply their same strategies, but on a smaller scale.

Start your planning session by figuring out when you’ll hold the sale. Check with the largest businesses in town to find out when they pay their employees and choose the weekend after that date for the sale, suggests the Yard Sale Queen.

But, there’s more to choosing a date than hoping for customers flush with cash. If something else competes for their attention, they’ll take their money elsewhere.

It’s summer, which means festivals and other outdoor community events, backyard barbecues and vacations. Check your community’s online events calendars to ensure the date you have in mind isn’t one on which the biggest community event of the year is being held. Check which sporting events are being held in the area. Your aim is to have as little competition as possible.

Finally, call everyone that you hope will assist you on the day of the sale and run the date by them to ensure they’re free.

So, now you know when the big sale will happen. It’s time to plan the actual event.

What will you sell?

Though many of us have boxes and bins full of items we hope to sell or donate some day, there are sellable items lurking in every room of your home. Garage sale experts suggest that you go through your entire home, room-by-room, evaluating your belongings. When you find an item, you want to include in the sale, slap a price sticker on it and place it in a box.

Don’t forget to go through the pockets of all garments, check handbags you’ll be selling and search large items in which something may be hidden. The last thing you need is to sell that dresser where Grandpa stashed his life savings.

By the end of the process you’ll have a good idea of what you’re selling and in what amount. This is important information you’ll need when setting up the sales floor.

Advertising the sale

There are several ways to let folks know about your world’s best garage sale. The most effective is online advertising, so create an ad, with lots of compelling photos, and post it on craigslist.org, yardsales.net, yardsalesearch.com and garagesalefinder.com.

Check with your HOA and the city or county to ensure you don’t violate any signage rules and then create signs that you’ll place at a main thoroughfare and around the neighborhood. Über-successful garage sale-holder Cassie, at wholefully.com, suggests large, 20″ x 30″ signs for the for the former and smaller ones for the latter.

Prepare the sales area

Make a list of each item you’ll be selling and its price. The easiest way to do this is as you set them out on the sales floor. Cross the items off the list as they are sold.

Make a floor plan for the garage, yard, driveway or wherever you’ll be setting up shop. Sketch it out on a piece of paper, drawing tables and making notations of which types of items will go on which tables. Ensure that folks will have room to maneuver around and between your displays.

There are a number of floor plans you can adopt for your sale. Find then online:

Bestgaragesaletips.com

Thespruce.com

Pinterest.com

Lifehacker.com

Most garage and yard sale experts agree that large items you think will be most popular should be located closest to the entrance, where they will be easy to see from the street, and locate smaller, easy-to-pocket items in an area where a helper will be stationed.

Two final notes: Locate electrical items near an outlet, or have an extension cord handy so that customers can test them. Then, determine how you’ll bag the customers’ purchases. Plastic grocery bags are ideal and boxes are suitable for larger items.

The day before the sale

• Check in with your helpers to ensure they’ll be there, and on time.

 

• The experts suggest that you have at least $100 on-hand to make change. Depending on how you price the items, you’ll need quarters and at least 20 $1 bills and 10 $5 bills.

 

• Determine how you’ll deal with the cash during the sale. Keeping it on your body is safest – a “fanny pack” is ideal as it’s easier to access and holds more than a wallet.

 

• Go over all sale items to ensure they have price stickers.

 

• Let neighbors know about the sale.

 

• Buy batteries so that buyers can test out battery-operated items.

Garage Sale Day

By now, you should be so organized and ready for the sale that all you’ll need to do is set up the sales floor, remembering to leave room for folks to maneuver and placing the most desirable items out front where they can be seen from the street.

Then, place the signs and you’re ready to open for business.

Things to consider

Be alert and keep these common garage sale scams in mind:

• The customer claims you gave him the wrong change – Keep the customer’s cash visible during the entire transaction (either hold it in your hand or place it under a paper weight). This way he can’t claim to have given you a larger bill.

 

• Don’t be distracted by large groups arriving at the same time – this is where your helpers come in handy. Ensure that you aren’t all watching the same area at the same time. There are people who will deliberately try to distract your attention.

 

• That advice we gave you earlier about going through pockets and drawers before selling an item? Do it again when someone purchases something with hiding places. It’s not uncommon for the unscrupulous to stuff smaller items into larger ones.

 

• Never allow anyone into your home. If they need to use the restroom, give them directions to the nearest public facility.

Two final tips

Impulse buying is a reality, so display some small but fun, inexpensive items at the checkout area.

If you have no intention of opening the sale for early birds, say so in your ads. The folks at getrichslowly.org suggest a simple “early birds pay double” will suffice.

There are few things in life more frustrating than that longing to own your own home combined with the very real fact that your bank account is a bit on the skimpy side. The media is full of stories about shrinking home inventories and multiple-offer situations so there are obviously others who have found a way to swing the dream of home ownership. “What’s wrong with me?” you may wonder.

Sixty-nine percent of Americans have less than $1,000 in a savings account, according to a GO BankingRates study. Sadly, 34 percent have nothing saved. So, to answer your question, nothing is wrong with you. You are among the millions of Americans who, for one reason or another, haven’t saved for the future.

Of course, that’s little consolation when all you want is to wave goodbye to your landlord and get settled in your own home. If it’s consolation you want, however, it’s consolation we’ll give. There are a number of ways to get your hands on that chunk of money you’ll need at closing when you buy a home. From second loans to outright grants, government programs abound.

If you’ve tried those with no luck, consider using the funds in your retirement account.

Mixed advice from financial professionals

Yes, many financial pros will say that we’re crazy for recommending this strategy which is why we always remind you that we aren’t financial experts and you should speak with yours before seriously entertaining using your retirement funds to buy a house.

That said, there are those who wholeheartedly agree with the concept. “Right now, affordable prices and low interest rates offer an unusual opportunity to buy a home, so we do sometimes recommend that our clients borrow against their retirement. Owning a home is an important way to build financial security,” Ben Barzideh, a wealth adviser at Piershale Financial Group Inc. in Illinois tells bankrate.com’s Michele Lerner.

Most agree, however, that the strategy works best for younger homebuyers who have many, many years to rebuild their retirement nest eggs.

Using your 401(k)

Retirement plans are not required to allow loans, but 80 percent of employer-sponsored 401(k) plans do allow their participants to borrow against their savings, according to the Employee Benefit Research Institute. It’s important to determine if your plan is among those that do.

Then, learn what restrictions the employer places on these loans. “Employers can limit the amount that can be borrowed and they can have their own rules around loans,” Hattie Greenan, director of research and communications for Plan Sponsor Council of America tells the Washington Post’s Jill Chodorov Kaminsky.

“They can limit the number of loans per year, put a percentage of assets cap on it, as well as set the interest rates,” Greenan continues.

The beauty of borrowing against your 401(k) is that there is no bank involved, so therefore no credit check, making it quicker to get your hands on your cash. Your lender will like this as well – a credit pull will ding your credit score.

One of the biggest downsides to using funds from your 401(k) happens if you find you can’t repay the loan according to the terms you agreed to. The outstanding balance will be reported to the IRS as a distribution and you’ll have to report it as income. “You must include this amount in your gross income in the year in which the distribution occurs,” Kaminsky cautions. You may also be taxed an additional amount, depending upon your age.

Be aware as well that most employers will demand repayment either immediately or within 60 days of a separation – whether you voluntarily quit or are fired or laid off.

Raid your IRA

Funds in both the traditional and Roth IRA can be used to help you purchase a home. This strategy differs from using the 401(k) in that the IRS forbids loans from an IRA – you must take a disbursement.

The good news is that even if you haven’t reached the golden age of 59 ½ years of age, you can still avoid the IRA 10 percent early withdrawal penalty. The bad news is that you may still be dinged for taxes on the withdrawal if you have a traditional IRA. You already paid taxes on your Roth IRA funds, so that disbursement won’t trigger the IRS’ itchy fingers, as long as the account has been open for at least five years.

It’s a bit more complicated than this, however. With a Roth IRA, for instance, you’ll need to be careful to use only contribution money, not earnings.

Again, there’s a lot to learn about using your IRA to fund your down payment and closing costs and only a financial professional can adequately counsel you.

The United States is home to more than 350,000 homeowner associations (HOA). This represents more than half of all owner-occupied homes in the country, according to HOA-USA. This means that the chances are good that the home you will fall in love with will be in a managed community (governed by an HOA).

While not all HOAs are the evil, dictatorial entities we hear about in the media, their involvement in a home purchase adds another layer of difficulty to the process – an increase in the chances that something may go wrong and the deal will fall apart.

Remember, the HOA is just one entity with its fingers in your home-buying pie. Your lender is always there, in the background, scrutinizing every last slip of paper that floats its way. And, when it comes to homes in managed communities, lenders require lots of scraps of paper.

There are three common ways a HOA can mess up your real estate purchase and they all have to do with loan denial. They are all out of your control as well, but we believe that knowledge is your most effective weapon, and that if you know what to look for, you can avoid dealing with certain HOAs.

What is an HOA?

A homeowner association is a governing body of a community. Not all communities have a HOA, but homeowners in those that do are obligated to abide by the rules and regulations set forth by the HOA.

“Many HOAs are corporations; that is, legal entities that can enforce contracts with their homeowners,” according to Ilona Bray at lawyers.com.

Membership in the HOA is compulsory and automatic when you purchase a home in a managed community.

The association is governed by a board, populated with volunteers from among the community’s homeowners or elected by homeowners.

The HOA board members make decisions on how to enforce the rules (known as “covenants, conditions and restrictions,” or CCRs) and the penalties for violations. They also manage the organization’s budget, ensure fees or dues are paid, maintain the common areas and decide when special assessments are required and in what amounts.

They dropped a lien on it

If the owner of that home you have your eye on is in arrears on his HOA dues, the HOA may have no choice but to slap a lien on him. Yes, they do have that power. In fact, liens are often attached automatically to the property when a homeowner becomes delinquent on payments of dues or assessments.

The cost to remedy the lien can sometimes be exorbitant, with late charges, collection costs, interest and fines added to the amount originally owed. If the debt remains unpaid, the HOA can begin foreclosure proceedings and seize the property.

But those are the homeowner’s problems. Yours is that you want this home but there’s a lien against it. You’ll be unable to get title insurance until the lien is lifted and without title insurance your loan will be denied.

The only way to save this deal is for the seller to pay what he owes and request that the HOA release the lien.

Pending litigation

If the HOA is involved in litigation, either against it or if the board is suing someone, it may be almost impossible to get a loan to buy a home in the community.

Common HOA litigation cases include:

• Failure to perform maintenance – If the HOA fails to repair roof problems and the roof leaks, damaging the home’s contents, the homeowner may initiate a lawsuit against the HOA. An injury on the property that occurred because of shoddy maintenance practices may also spur litigation against the HOA
• Violations of the rules – Yes, the HOA can violate its own rules and homeowners can, and will, sue.
• Building defects – An example of this is the HOA suing a roofing contractor for substandard work.

Homes in communities involved in pending or ongoing litigation are known in the finance industry as “non-warrantable,” and most lenders will deny a mortgage application for them. Yes, there are some who will, but they typically charge far more than you’ll pay for a conventional, 30-year mortgage.

You’ll find information about litigation in the HOA documents that will be supplied to you by the homeowner. If it’s a condo you’re after, and you’ll be using an FHA-backed mortgage, check HUD’s database to ensure that the community is FHA-approved. You’ll find that database online at hud.gov.

The importance of the HOAs finances

Earlier, we reminded you that an HOA introduces one more finger in the homebuying pie and, when it comes to finances, it isn’t just yours that the lender will scrutinize. It will also take a hard look at how the HOA deals with its money.

If you’ll be using an FHA-backed mortgage, determining whether or not a community’s HOA is fiscally responsible is easy; visit the aforementioned FHA database online to determine if the community is approved.

With conventional loans, Fannie Mae and Freddie Mac guidelines prevail. They have a list of conditions a community must meet before a loan will be approved. Those involving the HOA’s financial health include:

• 10 percent of HOA dues must be set aside in the reserves fund.
• No more than 15 percent of homeowners are delinquent in their dues or fees.
• The property’s insurance must meet Fannie Mae and Freddie Mac guidelines.

Any financial problems, regardless of how small, may slow down the loan process, but they may result in a denial of your application.

Protect yourself 

As soon as you know for certain that you’ve found a home you want to buy and it’s located in a governed community, begin your research. Use the online FHA database for condos. Ask your listing agent to make inquiries to determine if there is ongoing litigation.

When you receive the HOA document package, run them by your attorney. These are legal documents, full of important information but littered with complex terminology. You are expected to understand them all and sign off that you accept the terms outlined within them. It’s worth the money you’ll spend for an attorney to help you understand the contents of these documents.

Once you sign off on them, you are obligated to adhere to the terms.

That moment when you just can’t stand writing one more check to your landlord so that he can pay his mortgage payment. That is the moment you are emotionally ready to buy your own home, at least according to investment experts.

We’d like to extend that list of moments to include the longing to get the kids a dog, drooling over the weird paint color you’d love to use to adorn the bedroom walls and the green thumb, itching to dig in its own backyard.

Now starts the sometimes-long road to home ownership that millennials just like you have traveled. Yup, others have paved the way for you, so if you follow their example, at least the examples of those who’ve been successful, you’ll soon be picking up dog poop in your very own backyard.

Cold, hard cash

Houses cost money. Big money. At least initially. And, according to a recent apartmentlist.com survey, of the 80 percent of millennials who want to buy a home, only 68 percent of them have managed to save less than $1,000 and a sad 44 percent of that group have nothing saved.

“Based on their current rate of monthly savings, our survey found that millennials in many of the nation’s large metros will need at least a decade to save enough money for a 20 percent down payment on a condo,” claim the site’s   Andrew Woo and Chris Salviati.

They go on to say that millennials in the pricier large metros, such as San Francisco, San Diego and San Jose have a waiting time of “almost 24 years.” Buyers armed with a 10 percent down payment can shorten the wait to five years or less, according to the study.

Which means that those who choose an FHA-backed loan, a Fannie or Freddie or USDA loan, with an even lower down payment requirement, are sitting pretty. Then, there are the many local, regional, state and national down payment assistance programs. See? Every cloud has its silver lining.

The moral of the story is to start saving now. Yes, you have student loan debt and, yes, you need to pay rent and all of the other typical life expenses. But paying yourself first should be your priority if you want to buy a home.

Your debt

The word “millennial” is so often followed by “student loan debt,” in the media one would think it’s the generation’s middle name. While it’s true that this debt is at an all-time high, and some millennials are on the hook to repay up to $53,000, it’s not the impediment to home ownership that some make it out to be.

The simplistic will advise you to boost your income and eliminate your debt when considering purchasing a home. While sage advice, it’s unrealistic to tell someone who longs to purchase a home to wait the aforementioned 24 years.

And, there is relief for many with two recent announcements by Fannie Mae.

Currently, lenders look at a borrower’s debt-to-income ratio (how much you owe vs. how much you earn, known as DTI) and require that it be no higher than 36 percent. After July 29 of this year, however, that ratio can be as high as 50 percent, under certain conditions.

Then, in April, Fannie Mae announced a new policy specifically aimed at millennial homebuyers who have student loan debt. Basically, it excludes any debt that isn’t mortgage-related (auto loans, credit cards and, yes, student loans) from the borrower’s DTI, as long as these debts are paid by someone else (such as a parent).

Curious about your debt-to-income ratio? Use the online calculator at nerdwallet.com.

If your DTI is still too high, despite the new solutions from Fannie Mae, get busy increasing your income and decreasing your debt. The College Investor offers a brilliant list of 10 “Easy” Ways to Earn $100 per Month and also see 8 Ways to Eliminate your Student Loan Debt.

Credit history

So, what if it’s not necessarily student loan debt but a lousy credit history standing between you and homeownership? There’s good news on that front as well.

The so-called “Big Three” credit reporting agencies, Experian, Equifax and TransUnion recently announced that most tax liens and civil judgments will no longer end up on credit reports, provided the information in the creditors’ report isn’t complete.

“Specifically, the data [submitted to the credit reporting agency] must include the person’s name, address, and either date of birth or Social Security number,” according to Diana Olick at cnbc.com.

Apparently, errors like this are common, impacting a large number of loan applicants. “With these hits to their credit removed, their scores could go up by as much as 20 points,” Olick claims.

Even if you don’t have judgments or liens on your credit record, it’s always a good idea to order all three reports and pore over them for other mistakes. The Federal Trade Commission claims that about 20 percent of American consumers have a mistake on their reports. Ridding your report of errors is one of the easiest ways to increase your credit score.

In fact, the FTC study found that “ . . . about 20 percent of consumers who identified errors on one of their three major credit reports experienced an increase in their credit score that resulted in a decrease in their credit risk tier . . .”

The FTC offers advice on not only how to get free copies of your credit reports but how to dispute erroneous information as well.

If you truly want to buy a home, stop listening to the naysayers in the media. The millennial generation currently makes up the largest group of first-time homebuyers, so obviously, not all is the gloom and doom they say it is. Especially with the new programs and relaxed requirements, buying a home is easier than you think.