One questions many „for sale by owner“ sellers ask is „how can I determine if a potential buyer can afford to buy my house?“ In the real estate industry this is referred to as „pre-qualifying“ a buyer. You might think this is a complex process but in reality it is actually quite simple and only involves a little math. Before we get to the math there are a few terms you should understand. The first is PITI which is nothing more than an abbreviation for „principal, interest, taxes and insurance. This figure represents the MONTHLY cost of the mortgage payment of principal and interest plus the monthly cost of property taxes and homeowners insurance. The second term is „RATIO“. The ratio is a number that most banks use as an indicator of how much of a buyers monthly GROSS income they could afford to spend on PITI. Still with me? Most banks use a ratio of 28% without considering any other debts (credit cards, car payments etc.). This ratio is sometimes referred to as the „front end ratio“. When you take into consideration other monthly debt, a ratio of 36-40% is considered acceptable. This is referred to as the „back end ratio“.
Now for the formulas:
The front-end ratio is calculated simply by dividing PITI by the gross monthly income. Back end ratio is calculated by dividing PITI+DEBT by the gross monthly income.
Let see the formula in action:
Fred wants to buy your house. Fred earns $50,000.00 per year. We need to know Fred’s gross MONTHLY income so we divide $50,000.00 by 12 and we get $4,166.66. If we know that Fred can safely afford 28% of this figure we multiply $4,166.66 X .28 to get $1,166.66. That’s it! Now we know how much Fred can afford to pay per month for PITI.
At this point we have half of the information we need to determine whether or not Fred can buy our house. Next we need to know just how much the PITI payment is going to be for our house.
We need four pieces of information to determine PITI:
1) Sales Price (Our example is 100,000.00)
From the sales price we subtract the down payment to determine how much Fred needs to borrow. This result brings us to another term you might run across. Loan to Value Ratio or LTV. Eg: Sale price $100,000 and down payment of 5% = LTV ration of 95%. Said another way, the loan is 95% of the value of the property.
2) Mortgage amount (principal + interest).
The mortgage amount is generally the sales price less the down payment. There are three factors in determining how much the PI& interest) portion of the payment will be. You need to know 1) loan amount; 2) interest rate; 3) Term of the loan in years. With these three figures you can find a mortgage payment calculator just about anywhere on the internet to calculate the mortgage payment, but remember you still need to add in the monthly portion of annual property taxes and the monthly portion of hazard insurance (property insurance). For our example, with 5% down Fred would need to borrow $95,000.00. We will use an interest rate of 6% and a term of 30 years.
3) Annual taxes (Our example is $2,400.00)/12=$200.00 per month
Divide the annual taxes by 12 to come up with the monthly portion of the property taxes.
4) Annual hazard insurance (Our example is $600.00)/12=$50.00 per month
Divide the annual hazard insurance by 12 to come up with the monthly portion of the property insurance.
Now, let’s put it all together. A mortgage of $95,000 at 6% for 30 years would produce a monthly PI
Putting it all together
From our calculations above we know that our buyer Fred can afford PITI up to $1,166.66 per month. We know that the PITI needed to purchase our house is $819.57. With this information we now know that Fred DOES qualify to purchase our house!
Of course, there are other requirements to qualify for a loan including a good credit rating and a job with at least two years consecutive employment. More about that is our next issue.Immobilienmakler Heidelberg Makler Heidelberg
You can trace this word back to early England royalty where the term referred to a home that was kept „in town“ when the primary home was in the country. Today, in the United States, it is a single-family home with at least two floors. The house shares a wall with another townhouse. Although they are like a duplex, there is one difference. Townhouses are owned by an individual and duplexes are not. You can find townhomes for sale in areas where property prices are high and land is in short supply. Many times people will look at both condominiums and townhomes for sale because they think they are the same. There is a difference though. Yes, some townhouses are sold under the listing condominium but the difference is the form of ownership. If you purchase a condominium or a townhouse that is listed as a condominium, you will just own the inside of the building. You may own the property outside as well if you purchase it as a townhouse. It depends on the rules of the homeowner’s association.
• Living in a townhouse you are flanked on either side with other homes can give you lower heating bill since only two of the townhouse have outdoor exposure directly
• If it is part of a homeowners association you have little responsibility in regards to maintaining the outside, which can mean less maintenance costs
• Townhomes for sale are less expensive to buy than a freestanding house, which is good when money is tight.
• Being two floors there is less noise below or above and more privacy
• They are lower in value and if you sell your townhouse there is less profit to be made.
• If you have to sell your townhouse in a depressed market you could lose money
• You may be disturbed by your neighbor noise
• Have little space to garden and a small backyard
• You have less say about what the exterior appearance of your townhouse
• Because there are two sides, three if you live at the end of the row can have windows so there is less light in your townhouse.
• In certain real estate markets, buying townhomes for sale can be financially risky
• There may be homeowner association fees you have to pay, and they can be high
If there seems to be more disadvantages than advantages to buying townhomes for sale there are many people who enjoy living in a townhouse and will put up with the disadvantages. They like the close proximity of their neighbors. They are glad they do not have to be responsible for the upkeep of the exterior property, even if they have to pay homeowner association fees.Immobilienmakler Heidelberg Makler Heidelberg
Every year, thousands of homeowners opt to avoid real estate commissions by listing their homes themselves without a Realtor®. It makes a lot of sense, why pay 6% of the sales price if you don’t have to (especially in a down market like today)? There is nothing wrong with this thought process or the decision to sell for sale by owner. However, the decision to go to a hardware store and buy a cheap white and red For Sale By Owner sign with a place to write in your number with a black marker, actually is a mistake that should be avoided.
Rather than use a For Sale By Owner sign, you should do one of two things. First you can design a custom sign that does not say For Sale By Owner and looks like a real estate company sign, but with your contact information. It does not have to say Realty, Properties, Real Estate or anything like that. It just should not say For Sale By Owner, By Owner, or anything of that nature. It needs to look like a real estate broker sign even if the subdivision name or something else is in the spot where you would normally have the real estate broker name. The second option is, if you are using a flat fee listing company to gain MLS entry, use that broker’s sign with your contact information on it (as long as it doesn’t have the same type of ‚for sale by owner‘ slogans or URL’s the cheap signs from the hardware store have). You will benefit from the professional look with the Realtor® logos, while still getting all the drive-by phone calls that any For Sale By Owner using a cheap sign would receive.
Almost any sign company including several real estate sign companies on the Internet can assist you in designing and printing a For Sale sign. It might have a house on it, a snow scene if you live in the mountains or just be professional-looking with stylized fonts in 2 or more colors. You should place an Equal Housing Opportunity logo on it. Make sure it is the standard size metal sign that you see in your area, such as 2′ by 3′, and if possible, have it installed on a wood post or H-frame. Many major cities have sign installation companies that install and remove posts and signs for real estate agents; again this adds to the professional look and feel of the sign.
When your sign ceases to look like a cheap For Sale By Owner sign, you will cease to receive as many agents hassling you about listing your property with them. They are more likely to think you are already listed by an agent since your sign looks like a professional sign. (It is an ethical violation to approach the seller unsolicited and attempt to get a seller to cancel their listing and switch listing agents). Unrepresented buyers are less likely to realize right away that there are no agents involved and ask for a discount based on avoiding commissions. You are also less likely to be approached by scammers who attempt to prey on unrepresented sellers with various schemes like kicking back illegal payments to shill 3rd party companies. Finally, the professional -looking sign will tell prospective buyers that you are serious about selling; you did not just throw a cheap sign up on an overpriced property to see if anyone would pay your above market price.Immobilienmakler Heidelberg Makler Heidelberg
Denkt man an Karlsruhe, dann denkt man an rote Roben, ernste Juristenmienen und Berichterstattungen aus dem Bundesverfassungsgericht. Hinter der Beamtenstadt-Fassade verbirgt sich allerdings ein anspruchsvolles Kulturleben in einer jungen Stadt. Verlässt man die mit Zirkel und Winkelmesser vom Markgrafen streng geplanten Hauptadern Karlsruhes, kann man ganz eigenwillige Ecken und faszinierende Kanten entdecken. Es lebt sich wunderbar zwischen Rhein und Nordschwarzwald, gespickt mit Natur, Streuobst und mit Badegelegenheiten in jeder Himmelsrichtung. Die badische Sonne und die hervorragende Küche runden die hohe Lebensqualität ab. Dieses Buch wird Ihnen Lust auf Karlsruhe machen!
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