Divorce and Your Home

Divorce: What You Need to Know About Your House, Your Mortgage, and Taxes   How to Avoid Costly Housing Mistakes in the Midst of a Divorce Divorce is a tough situation which opens up many emotional and financial issues to be solved. One of the most important decisions is what to do about the house. In the midst of the heavy emotional and financial turmoil, what you need most is some non-emotional, straightforward, specific answers. Once you know how a divorce affects your home, your mortgage and taxes, critical decisions are easier. Neutral, third party information can help you make logical, rather than emotional decisions. Probably the first decision is whether you want to continue living in the house. Will the familiar surroundings bring you comfort and emotional security, or unpleasant memories? Do you want to minimize change by staying where you are, or sell your home and move to a new place that offers a new start? Only you can answer these questions, but there will almost certainly be some financial repercussions to your decision process. What can you afford? Can you manage the old house on your new budget? Is refinancing possible? Or is it better to sell and buy? How much house can you buy on your new budget? The purpose of this report is to help you ask the right questions so you can make informed decisions that will be right for your situation. 4 Options You have 4 basic housing options when in the midst of a divorce: Sell the house now and divide up the proceeds. Buy out your spouse. Have your spouse buy you out. Retain your ownership. It’s important for you to understand the financial implications of each of these scenarios. 1. Sell the House Now and Divide Up the Proceeds Your primary consideration under these circumstances is to maximize your home’s selling price. We can help you avoid the common mistakes most homeowners make which compromise this outcome. As you work to get your financial affairs in order, make sure you understand what your net proceeds will be - i.e. after selling expenses, and after determining what your split of the proceeds will be. Note that the split may not be 50/50, but rather may depend on the divorce settlement, the source of the original downpayment, and the legislative property laws in your area. 2. Buy Out Your Spouse If you intend to keep the house yourself, you’ll have to determine how you’ll continue to meet your monthly financial obligations, if you now only have one salary. If you used two incomes to qualify for the old loan, refinancing on your own might be a challenge. 3. Have Your Spouse Buy You Out If you are the one who is leaving, you have the opportunity to start again in new surroundings with cash in your pocket. However, be aware that if the old home loan is not refinanced, most lenders will consider both you and your spouse as original co-signers to be liable for the mortgage. This liability may make qualifying for a new mortgage difficult for you if you decide to purchase a home, even though you won’t have legal ownership. 4. Retain Joint Ownership Some divorcing couples postpone a financial decision with respect to the home and retain joint ownership for a period of time even though only one spouse lives there. While this temporary situation means you have no immediate worries in this regard, keep your eye on tax considerations which may change from the time of your divorce to the time of the ultimate sale. When You Decide to Sell If you and your spouse decide to sell your home, it will be important to work together through a professional to maximize your return. Differences aside, you both should be present when a listing contract is put together. Both of you should understand and sign this contract, and both should be active in the ultimate negotiations. When You Buy Your Next Home Use the proceeds from your previous home or buy-out to determine an affordable price range for your next home. Maintain a clear focus on getting the right home to suit your new situation. You may wish to review with an agent who offers a house-hunting service to help find a home that matches your new home-buying criteria.

Save Thousands

HOMEBUYERS: How To Save Thousands of Dollars When You Buy   How Sellers Set Their Asking Price For you to understand how much to offer for a home you ’re interested in, it ’s important for you to know how sellers price their homes. Here are 4 common strategies you’ll start to recognize when you begin to view homes: 1. Clearly Overpriced: Every seller wants to realize the most amount of money they can for their home, and real estate agents know this. If more than one agent is competing for the listing, an easy way to win the battle is to quote the seller an overinflated price. This is done far too often, with many homes that are priced 10- 20% over their true market value. Unfortunately, this is not in the seller’s best interest, because in most cases the market won’t be fooled. As a result, the home could languish on the market for months, leaving the seller with a couple of important drawbacks: The home is likely to be labeled as a “troubled” house by other agents, leading to a lower than fair market price when an offer is finally made. The seller has been greatly inconvenienced with having to constantly have their home in “showing” condition... for nothing. 2. Somewhat Overpriced: About 3/4 of the homes on the market are 5-10% overpriced. These homes will also sit on the market longer than they should. There is usually one of two factors at play here: Either the seller believes in their heart of hearts that their home is really worth this much despite what the market has indicated (after all, there’s a lot of emotion caught up in this issue), OR They’ve left some room for negotiating. Either way, this strategy will cost the seller both in terms of time on the market and ultimate price received. 3. Priced Correctly at Market Value Some sellers understand that real estate is part of the capitalistic system of supply and demand and will carefully and realistically price their homes based on a thorough analysis of other homes on the market. These competitively priced homes usually sell within a reasonable time-frame and very close to the asking price. 4. Priced Below the Fair Market Value Some sellers are motivated by a quick sale. These homes attract multiple offers and sell fast - usually in a few days - at, or above, the asking price. How to Save Thousands of Dollars When You Buy a Home If you’re like most homebuyers, you have two primary considerations in mind when you start looking for a home. First, you want to find a home that perfectly meets your needs and desires, and secondly, you want to purchase this home for the lowest possible price. When you analyze those successful homebuyers who have been able to purchase the home they want for thousands of dollars below a seller’s asking price, some common denominators emerge. Although your agents negotiating skills are important, there are three additional key factors that must come into play long before you ever submit an offer. These Steps Will Help You Save Thousands When You Buy a Home 1. Make sure you know what you want... As simple as this sounds, many homebuyers don’t have a firm idea in their heads before they go out searching for a home. In fact, when you go shopping for a place to live, there are actually two homes competing for your attention: the one that meets your needs, and the one that fulfills your desires. Obviously, your goal is to find one home that does both. But in the real world, this situation doesn’t always occur. When you’re looking at homes, you’ll find that you fall in love with one or another home for entirely different reasons: Is it better to buy the 4-bedroom home with room for your family to grow, or the one with the big eat-in kitchen that romances you with thoughts of big weekend family brunches? What’s more important: a big backyard, or proximity to your child’s school? Far too often people buy a home for the wrong reasons, and then regret their decision when the home doesn’t meet their needs. 2. Don’t shop with stars in your eyes: Satisfy your needs first. If you’re lucky, you’ll find a home that does this and also fulfills your desires. The important thing is to understand the difference before you get caught up in the excitement of looking. 3. Find out if your agent offers a “Buyer Profile System” or “Househunting Service,” which takes the guesswork out of finding just the right home that matches your needs This type of program will cross-match your criteria with ALL available homes on the market and supply you with information on new listings that match your criteria on an ongoing basis. To help you develop your homebuying strategy, use this form: What do I absolutely NEED in my next home: _______________________________ _______________________________ _______________________________ _______________________________ _______________________________ What would I absolutely LOVE in my next home: _______________________________ _______________________________ _______________________________ _______________________________ _______________________________

9 Common Buyer Traps

9 Buyer Traps and How to Avoid Them   Buyer Beware   No matter which way you look at it buying a home is a major investment But for many homebuyers, it can be an even more expensive process than it needs to be because many fall prey to at least a few of the many common and costly mistakes which trap them into either: paying too much for the home they want, or losing their dream home to another buyer or, (worse) buying the wrong home for their needs. A systemized approach to the homebuying process can help you steer clear of these common traps, allowing you to not only cut costs, but also secure the home that’s best for you. This important report discusses the 9 most common and costly of these homebuyer traps, how to identify them, and what you can do to avoid them. Find out if your agent offers a Buyer Profile System or “House-hunting Service,” which takes the guesswork out of finding just the right home that matches your needs. This type of program will crossmatch your criteria with ALL available homes on the market and supply you with printed information on an on-going basis. A program like this can help you to affordably, move into the home of your dreams. 9 Buyer Traps 1. Bidding Blind What price should you offer when you bid on a home? Is the seller’s asking price too high, or does it represent a great deal. If you fail to research the market in order to understand what comparable homes are selling for, making your offer would be like bidding blind. Without this knowledge of market value, you could easily bid too much, or fail to make a competitive offer at all on an excellent value. 2. Buying the Wrong Home What are you looking for in a home? A simple enough question, but the answer can be quite complex. More than one buyer has been swept up in the emotion and excitement of the buying process only to find themselves the owner of a home that is either too big or too small. Maybe they’re stuck with a longer than desired commute to work, or a dozen more fix-ups than they really want to deal with now that the excitement has died down. Take the time upfront to clearly define your wants and needs. Put it in writing and then use it as a yard stick with which to measure every home you look at. 3. Unclear Title Make sure very early on in the negotiation that you will own your new home free and clear by having a title search completed. The last thing you want to discover when you’re in the back stretch of a transaction is that there are encumbrances on the property such as tax liens, undisclosed owners, easements, leases or the like. 4. Inaccurate Survey As part of your offer to purchase, make sure you request an updated property survey which clearly marks your boundaries. If the survey is not current, you may find that there are structural changes that are not shown (e.g. additions to the house, a new swimming pool, a neighbor’s new fence which is extending a boundary line, etc.). Be very clear on these issues. 5. Undisclosed Fix-ups Don’t expect every seller to own up to every physical detail that will need to be attended to. Both you and the seller are out to maximize your investment. Ensure that you conduct a thorough inspection of the home early in the process. Consider hiring an independent inspector to objectively view the home inside and out, and make the final contract contingent upon this inspector’s report. This inspector should be able to give you a report of any item that needs to be fixed with associated, approximate cost. 6. Not Getting Mortgage Preapproval Preapproval is fast, easy and free. When you have a preapproved mortgage, you can shop for your home with a greater sense of freedom and security, knowing that the money will be there when you find the home of your dreams. 7. Contract Misses If a seller fails to comply to the letter of the contract by neglecting to attend to some repair issues, or changing the spirit of the agreement in some way, this could delay the final closing and settlement. Agree ahead of time on a dollar amount for an escrow fund to cover items that the seller fails to follow through on. Prepare a list of agreed issues, walk through them, and check them off one by one. 8. Hidden Costs Make sure you identify and uncover all costs - large and small - far enough ahead of time. When a transaction closes, you will sometimes find fees for this or that sneaking through after the “sub”- total - fees such as loan disbursement charges, underwriting fees etc. Understand these in advance by having your lender project total charges for you in writing. 9. Rushing the Closing Take your time during this critical part of the process, and insist on seeing all paperwork the day before you sign. Make sure this documentation perfectly reflects your understanding of the transaction, and that nothing has been added or subtracted. Is the interest rate right? Is everything covered? If you rush this process on the day of closing, you may run into a last minute snag that you can’t fix without compromising the terms of the deal, the financing, or even the sale itself.