Buying a home? Know your financial situation

What’s the first and most crucial step when considering buying a home? According to a recent article on Trulia.com, it’s understanding your finances.
Want to really stand out to sellers? Sit down with a lender and get pre-approved for a mortgage. This puts you in a strong position and will make your offer stand out.
Other financial tips include:
  • Know your credit score. Your credit score helps a lender determine your ability to pay your loan every month. While a low credit score doesn’t necessarily mean you’ll be denied for a loan, it will impact the quality of loan you’re offered.
  • Cash is king. The ability to offer a strong down payment improves your buying power. A downpayment of 20 percent or more can eliminate the need for private mortgage insurance and allow you to negotiate a lower interest rate.
  • What’s your debt-to-income ratio? Your lender will want to know because they want to be certain that you’ll be able to pay your mortgage in addition to all other outstanding debts.
  • Organize your assets. Your lender will ask you to provide documentation of assets showing where money for the downpayment is coming from and what your current savings and investments look like. The bigger your cushion, the more likely lenders will think you can afford all mortgage costs and fees, and all other home-related financial obligations.

Understanding the role of the executor

A recent article on Forbes.com discussed the role and responsibilities of an executor. The article was packed with helpful information, so we’ll break it down and present some of the highlights in bullet points format for a quick and easy read.

  • The executor typically offers the will for probate, takes action to protect the assets of the estate, makes distributions of property to beneficiaries and pays the debts and taxes of the estate.
  • If an executor mismanages the estate, he or she can be found personally liable.
  • An executor will need to examine the will and trust documents. It’s typically the executor’s responsibility to offer the will for probate, and funds cannot be disbursed without the approval of a probate judge.
  • One responsibility of an executor is to use the estate’s funds to pay for funeral and burial expenses. The funeral home will provide copies of the death certificate, which are needed for closing financial accounts, canceling federal benefit payments, filing the final tax return, etc.
  • It’s the executor’s job to locate, manage and disburse the assets of the estate and determine the value of property such as real estate, artwork and antiques. In many cases, property will need to be liquidated to pay the estate’s debts.
  • The debts of the deceased become the debts of the estate, and they must be paid before gifts may be disbursed to beneficiaries. If the debts outweigh the value of the estate, the heirs are not responsible for them.
  • Finally, the executor must care for the estate’s assets until they can be distributed, by ensuring that property is cared for and that funds are invested prudently.

If you need help fulfilling the duties of executor, remember to consult an experienced and knowledgeable estate planning attorney for assistance.

It’s a sellers market… should I downsize?

It’s a sellers market… should I downsize?

Our friends at Keeping Current Matters recently published an article on downsizing now, in a seller’s market. According to the article, a reported 33 percent of homeowners contemplating selling their homes in the near future are planning to scale down. With that in mind, here are a few reasons why this might be the right time to make the move while the country is experiencing a seller’s market.

Potential financial advantages to downsizing include:

  • A smaller house means less space, and less money spent on upkeep.
  • Less spending on your monthly mortgage payment means more cash in the bank for your retirement years.
  • Use the proceeds from selling your current home to pay cash for a smaller one. If you can’t pay cash for the entire amount, aim for a short-term fixed-rate mortgage to make up the difference.

It’s also important to ask yourself what type of lifestyle you desire after you right-size. Decide what you want to achieve from your move, which will help narrow down your possible housing options.

Finally, determine if you have built up enough equity in your current home to make a nice profit when selling. For most homeowners, the answer should be yes, and it will help you put a large down payment on your next home.

For more information, visit How to Plan Your Move and learn more about a simple, step by step approach The Olear Team uses to help people who are preparing for a downsizing move.

How much mortgage can I afford?

How much mortgage can I afford?

In the real estate business, it’s a question we hear quite often: How much mortgage can I afford? A lender will provide you with a maximum amount, but that doesn’t mean you should spend to the limit. In fact, a recent article on Forbes.com tackled this issue, and following is a brief recap of the story.

  1. Calculate your monthly cost. A good place to start is with Trulia’s mortgage calculator (click on the “advanced” feature). This will ask for important information such as insurance costs, property taxes, private mortgage insurance, etc., and will provide you with a true monthly cost estimate.
  2. Know your legal limits. By law, lenders can’t approve mortgages that would require more than 35 percent of your monthly income. Most lenders, however, enforce stricter requirements, limiting a mortgage payment to 28 percent of a borrower’s monthly income.
  3. Use 28 percent of your monthly income as your rule of thumb when preparing your budget for buying a home. Quick math: Multiply your monthly income by 28, then divide that by 100. The answer is 28 percent of your monthly income. According to the article, the median income in the U.S. is $55,775. If this were your income, you’d make about $4,648 per month, and 28 percent of that monthly income comes out to about $1,300. That means you could spend $1,300 on a mortgage, maximum. But, paying less means a smaller strain on your budget.

Some people don’t mind working for their home, while others like to keep a little more cash in their pocket for things like entertainment and travel. The decision is yours. Choose wisely!

The top duties of an executor

We recently came across an interesting article on Legalzoom that discussed, in detail, the top 10 duties of an executor. Today we’ll summarize those duties, in bullet format, for a quick and easy read.

  • Get a copy of the will and file it in probate court. You should also read and understand the will, and determine who inherits property and belongings.
  • Notify banks, credit card companies and government agencies of the individual’s death. Regarding government agencies, start with the Social Security Administration.
  • Prepare for incoming funds and outgoing bills. If the deceased is owed money, set up a bank account to hold these funds. Bills, such as the mortgage payment and utilities, still need to be paid during probate.
  • File an inventory of assets with the court. This should be a detailed list of all belongings.
  • Decide what kind of probate is necessary. Inheritance laws differ by state, and probate is not always necessary in some cases. Consult an estate attorney for direction.
  • Maintain property. One of the most important roles of the executor is to secure and maintain all property and belongings until distributed or sold.
  • Pay debts and taxes. The executor must notify creditors, file income tax returns for the deceased and, if the estate is large enough, pay federal estate taxes.
  • Distribute all assets as expressed in the will. If there is no will, state laws will apply.
  • Dispose of remaining property. The executor is responsible for disposing of any property that remains after the distribution to heirs and payment of all estate debts.
  • Represent the estate in court, if necessary.

Keep in mind that this is just a quick summary of the many responsibilities of an executor. Remember, laws pertaining to executors vary from state to state. When in doubt, it’s best to consult an estate attorney or an experienced Realtor for sound advice.