Rent Affordability

Check out this article from Yahoo about Rent Affordability in the next 2 years

Door Installation tips from the Expert

A Contractor’s Tips for Open-and-

Shut Door Installation

Front Door Installation

Real estate agents call it curb appeal. It’s how a house looks to visitors as they arrive by car. Curb appeal was, is, and will be important to homeowners, whether or not they’re planning to sell. And while factors ranging from landscaping to paint color influence curb appeal, there’s no more immediate facade facelift than a new front door. Thanks to the advent of pre-hung doors, installation has only gotten easier. But according to contractor, author, and old house expert Scott Sidler, owner of Austin Home Restorations, the job still comes with some complexities. Here, Scott shares what to keep in mind.

Front Door Installation - Curb Appeal

Most entry doors that you can pick up at The Home Depot—they’re pre-hung, right? What is a pre-hung door, anyway?

Scott: A pre-hung door comes with the jamb, the hinges, and the door itself. It’s a fully functional door; it’s just not installed. If it were not pre-hung, you would have to cut out hinge mortises and fit that door into an existing jamb. But with a pre-hung, you just order the doors you need, you set it in the rough opening—the framing between the studs, with the header above it. Then the door gets leveled, plumbed, shimmed, and fastened into place, and finally the trim goes over. Unless it’s a custom situation, pre-hung doors are used almost exclusively. It’s been a big step forward, I think. Everything is already assembled, and you just install it into the building.

If pre-hung doors have made entry door installation so much more forgiving, what’s the most difficult part now?

Scott: When you’re installing a door, you’re working with three planes: The door needs to be plumb, it needs to be level, and it needs to be square. It’s easy to miss some of the alignment issues. If you shim it a little too much on one side, you may put the jamb out of square, and as a consequence, the door may not close properly. But in new construction—if your framer did a good job, and you’ve got a well-framed opening—it’s fairly easy, so long as you take your measurements properly. With remodeling, it’s another world. In an older house that may have settled a bit, you need to make adjustments to account for any sagging. If the level, plumb, and square are not perfect, the door isn’t going to perform as it should. It’s not going to stay open when it’s open. It’s not going to to stay closed when it’s closed.

Front Door Installation - Interior View

You live and work in the South. Are there any regional considerations you take into account when installing a door?

Scott: If we’re installing a pre-hung—or even if we’re building a jamb on-site—I like there to be plenty of space in the jamb. That’s why I use larger shims. They allow me to make sure there’s extra space in there, and that’s important because we get so much sun. Winters here, the temperature ranges from the 30s to 50s, so the wood contracts quite a bit. And in the summer, when it’s 95 degrees and 100% humidity, and it’s raining, that wood is going to swell. You want to make sure that there’s a little extra gap around the door that you can fill with weatherstripping, which can take that large expansion and contraction we get here. I think that’s fairly common in a lot of the country, but with wood doors here, the effect is extreme. You don’t have those issues with fiberglass or steel doors.

Do you think that’s a reason other contractors should think about shying away from wood doors in the South?

Scott: In new construction down here, and also in standard remodels, it sure feels like most of the exterior doors are fiberglass or steel, except on the high end, where the clients want something really special. In the South, fiberglass and steel tend to hold up better than wood. We also run across rotten jamb bottoms. The legs of the jamb start to rot out, because no matter what material the door is, you’ve likely still got a wooden jamb. With all the rain we get, that wood is going to rot out eventually. That’s why some jambs today have PVC bottoms. Just that bottom foot and a half or so being PVC… it makes a huge difference.

Front Door Installation - Lites

A new door ought to suit the style of the house. How do you go about choosing the right door for a project you’re working on?

Scott: It really depends on what the client wants. A lot of our clients say, “I want something that’s true to the style of the house,” what was there originally. So we can do a little research and see if we can find out. But usually we choose based on the home’s architectural style. Colonial-style doors are going to be the standard four- or six-panel doors. Mission-style doors are typically composed of thick, vertical boards tied together under an arched top, with a peek hole and wrought iron hardware. It’s about staying true to the architectural style of the house, whether this is an 1800 Queen Anne Victorian or a newer house in the local vernacular. Just try and stay true to that, so it doesn’t look terribly anachronistic and way out of place. Choose for the scale and style of the building.

Editor’s note: If you need help selecting a door, don’t hesitate to check out the Masonite Max configurator offered jointly by The Home Depot and Masonite. Easy and actually quite fun to use, the Masonite Max tool guides you through the process of designing and purchasing the perfect door for your project. Based in Tampa, Florida, Masonite has continually operated since its founding in 1925. Today, the company manufactures steel, wood, and fiberglass doors in an array of styles to suit any preference. Plus, at The Home Depot, Masonite fiberglass and steel doors carry a limited lifetime warranty!

Front Door Installation - Back

This post has been brought to you by Masonite. Its facts and opinions are those of BobVila.com.

First-Time Homebuyers Need to Know these Terms

10 Terms First-Time Homebuyers

Should Know

From USNews 2/23/15

 

In about a month, it won’t just be spring. It’ll be home selling and buying season, and you’ll start seeing  “For Sale” signs posted in yards as well as online advertisements beckoning prospective homebuyers.But before you allow yourself to be beckoned, it would behoove you to familiarize yourself with the following 10 terms — especially if this is your first time making one of the biggest purchases of your life.

1. Fixed-rate mortgage. This means the interest rate you pay on your home loan won’t change. Over the years, your mortgage payment will likely change some — property taxes will likely rise, your homeowners insurance might climb or fall, or you might shed your PMI (a term we’ll come back to). But generally, if you have a fixed-rate mortgage, your monthly mortgage payment won’t change much over the years.

2. Adjustable-rate mortgage. Also known as an ARM, this is essentially the opposite of a fixed-rate mortgage. You’ll have a fixed rate for several years, maybe five or 10, and then the interest rate adjusts according to the fully indexed interest rate, often the prime rate, which is what banks charge their most creditworthy customers. So while your interest rate and payments will likely be lower in the beginning than those of the homeowner with the fixed-rate mortgage, hope that interest rates remain low throughout the life of your loan. As interest rates climb, so too will your own interest rate and monthly payments.

3. Prequalified. This can be a confusing term, mostly because homebuyers tend to mix it up with preapproved, says Rick Hogle, chief strategic officer at Supreme Lending, a mortgage company in Dallas.

If your lender tells you that you’re prequalified for a house, that’s a good start — but you’re still a long way from being a homeowner. “Prequalification requires less documentation,” Hogle says. “It provides a general idea of the loan amount in which a homebuyer might qualify.” This way, you can start looking a home and have a sense of what type of house you can afford.

Preapprovals are a much bigger deal, Hogle says. These require the submission of many more documents, such as pay stubs, bank statements and tax returns.

Preapprovals are really for homeowners who are ready to commit to buying a house. If you’re preapproved, you’ve basically been told that the bank will lend you money for a house, provided you don’t blow things in the meantime, while you’re house hunting, like missing a bunch of payments or racking up credit card debt before you’re actually approved.

4. Conventional loans. These are the typical loans that many people, but not all, apply for when they want a mortgage.

“Those with low credit scores usually won’t qualify for conventional loans,” says Passard Dean, associate professor of accounting at Saint Leo University in Saint Leo, Florida. “In the past, you were also required to put a down payment of at least 5 percent. However, with the new guidelines from Fannie Mae and Freddie Mac, you can now put a down payment as low as 3 percent. These loans generally require a credit score of above 650.

5. Federal Housing Administration loan . Have poor credit? You’ll probably get one of these, also known as FHA loans.

“These are excellent for first-time homebuyers with subprime credit scores,” Dean says. “In addition to more relaxed credit scores and lower upfront costs, the down payment can be as low as 3 percent.”

6. Appraisal. This is an estimate that determines what your property is worth. Banks need homes to be appraised, in part, so they don’t lend you, say, $300,000 for a house that’s only worth $175,000. After all, if you can’t pay the loan, the bank will send you packing and will sell the home. But most people won’t buy a $175,000 home for $300,000, and knowing that, the bank doesn’t want to lend you more than your house is worth.

7. Private mortgage insurance. This is a monthly insurance payment you’ll have to pay if the down payment on your house is less than 20 percent of the appraised value or sale price. If you don’t want to pay the PMI fee — which often ranges from .03 to 1.15 percent of the original loan, divided into 12 monthly payments — you’ll have to fork over a bigger down payment or buy a cheaper house. Usually, PMI insurance isn’t something you pay forever (it just seems like it, if you have a small down payment.) Typically, after your payments reach 20 percent of the value of your home, you stop paying PMI.

8. Closing costs. These are fees related to buying a house that your lender charges you, or you rack up from various third parties, such as a home inspector. According to the online real estate database Zillow.com, expect your closing costs to be 2 to 5 percent of the purchase price of your home. That may sound like a lot, but there are many costs involved in closing the deal, from buying title insurance to paying for points and attorney and surveyor fees.

9. Points. One point is a charge equal to 1 percent of the loan amount. So if you’re buying a $200,000 house, and a lender is charging you 2 points, that’s $4,000. Three points, $6,000. And why do you care? Because points are prepaid interest. The more points you pay, the lower your interest rate will be. If you’re planning to live in your house a few years, you could make a good argument for not paying points, but if you believe you’ll go the distance with a 30-year mortgage, it generally makes financial sense to pay as many points as you can afford to snag that lower interest rate, which, in the long run, should save you money. Ask your lender to do the math.

10. Escrow. When you hear your real estate agent throw this word around, you’ll know you’re probably near the end of the homebuying process. The word can be used in a few different ways, but when you think escrow, think of a third, neutral party. For instance, you may have looked at a house, loved it, made an offer and offered a deposit — which would then be put in escrow.

That is, it’ll be put in a third-party account, probably set up by your real estate agent. This way you aren’t giving the homeowner your deposit, also sometimes called earnest money. Usually you can’t recoup these deposits if you back out of the contract, but if the seller decides to sell the home to somebody else, you most certainly would get your deposit back. The escrow account keeps your deposit safe so the homeowners don’t inadvertently spend your money and put you through the hassle of having to get them to repay you.

You might also hear your lender talking about an escrow account where your property taxes and homeowners insurance go until they’re paid.

Of course, you can buy a house without truly understanding real estate and lender speak. Those professionals will walk you through everything, and you can likely nod your way through it all. But that doesn’t mean you should. After all, some would argue that’s how many homeowners got themselves in trouble before the 2007 recession, making decisions they shouldn’t have, and buying homes they didn’t realize they really couldn’t afford.

Unclog a Drain tips

7 Brilliant Ways to Unclog a Drain

(Photos)

We’ve all experienced the warning signs: water pooling at your feet in the shower; sink water draining just a tad bit slower. And then slower, and slower still. Until one day you can’t ignore it any longer, you’ve got to unclog the drain. It’s always best to take preventative measures, but we’re all human so that doesn’t always happen.

There’s also different severities of clogs, and just as many ways to treat them. But don’t feel overwhelmed, here’s a list that will guide you through the rising tide in your bathroom.

Baking Soda and Vinegar

7 Brilliant Ways to Unclog a Drain (Photos)

This method probably won’t work on your toughest clogs. But if you’ve got less than 100% blockage, this is a safe and effective technique that also spares you from having to physically fish the clog monster out of your drain and meeting it face-to-face.

1. Boil a pot of water and then slowly pour it down the drain. Leave one cup of the boiled water in the pot for later.
2. Immediately dump in 1/3 cup of baking soda and let it sit for five minutes.
3. In the pot, mix a cup of vinegar into the hot water. Pour the mixture into the drain. Watch it fizz! Let it sit for 20 minutes.
4. Flush the mixture down with an additional pot of boiling water.

The Wire Hanger

image

It doesn’t get more simple than this. And for simple clogs, it also doesn’t get more effective than this.

First, unwind the neck of the hanger. Then straighten out the two elbows as much as you can. But leave the hook! That’s the part that’s going to do the dirty work.

At the end opposite of the hook, bend the last three inches to give yourself a handle. If the hook can’t fit through the drain’s cover, you’ll first have to remove the cover. Lower the wire down until you feel some resistance down there. Now, push down and pull up about five times. Then pull the wire all the way out of the drain, and hopefully you’ll be saying, “Gross.” Because that means you’ve successfully pulled the nasty clog out from its lair.

The Millipede

image

This little guy can really work wonders. Disgusting wonders. Just uncoil it and stick the grasping end down your drain. Now crank it a few times, then pull up!

The Zip-It

image

This option is effective and costs next to nothing. All it is is a single-use plastic stick with some upward-facing barbs on it, but it works. Especially for hair clogs. Just stick it down your drain, pull it right back up, and you’re done.

The Wet/Dry Vacuum

image

If you’ve got a particularly stubborn clog or just have a hankering for really showing your drain who’s boss, then look no further than the trusty wet/dry vac. There are even clog cleaning attachments available.

Since there are many variations of these vacuums, you’ll need to follow the specific instructions of your particular model for this job. But suffice it to say, these vacuums have a good deal of power and barring a clog made of set concrete, you’ll have full drain clearance in no time.

The Toilet Bomb

image

This technique is just for your toilet, but it’s too cool not to mention.

Here’s what you’ll need:

  • 2 cups baking soda
  • 1/4 cup Epsom salt
  • 9 tablespoons liquid dish detergent
  • Muffin tin
  • Muffin liners

First, put your muffin liners into the tin. Mix together baking soda and Epsom salt. Then slowly stir in the detergent, just a tablespoon or so at a time. Now scoop the mixture into the liners and dry overnight (at least eight hours) at room temperature.

Remove one of the bombs from its liner and put it in your toilet. Then pour five cups of hot water in after it. Now wait at four hours. Then flush! Voila.

This is a really effective, cheap and actually kinda fun way to unclog your toilet that doesn’t involve harsh chemicals like sodium hypochlorite or hydrochloric acid. And you know have extra pre-made bombs for your next backup.

The Bellows Plunger

image

These mini plungers can exert some pretty impressive force that’ll get your clog moving right along. The bellows design builds up pressure behind the clog and after a few pumps shoots the clog right down your drain. This is another no-mess option that’s both cheap, effective and chemical-free.

One final note: When it comes to clogs, many people will go straight for a bottle of Drano. Well, this should be avoided. If you’ve got plastic pipes, it’ll eat away at them pretty quickly. And if you’ve got metal piping, it can corrode those, too. Also, they’re quite toxic for humans and the environment. To top it off, they’re often not that effective on the type of clogs you see most often in the sink or shower. Now that you’re familiar with so many perfectly effective alternatives, there’s no real reason to resort to resort to harsh chemicals.

Amazing Painted Floors

Walk on the Wild Side: 6 Amazing

Painted Floors

From Bob Villa 2/22/15

Why replace your floors when you can paint them? Whether they’re wood, concrete, or linoleum your floors are a good candidates for a paint makeover. If you’re taking on this project, keep a few things in mind before you start. First, consider color: While a light color on a floor may brighten up a dark space, if it’s in a high traffic area, it will show dirt more easily. Pattern is another important decision. It’s faster and easier to apply one all-over floor color, but a repeating pattern or central painted design can be striking and dynamic.

1. Squared Away

Walk on the Wild Side: 6 Amazing Painted FloorsPhoto: sunnygoode.com

The painted floor of this bright and airy bedroom is a delightful surprise, bringing a burst of color. The strip hardwood was first painted a solid apple green and then topped with bold white squares.

 

2. Painted Exterior Rug

Photo: studionico.net

A rug can make an outdoor space feel more like a room. Like this gorgeous painted rug, which warms up a gray wooden deck with a stenciled pattern in red, gold, and blue. To replicate your own, pick up a stencil pattern at your local hardware store.

 

3. Splattered and Splendid

Photo: remodelista.com

If you want one-of-a-kind textured floors, a paint-splattered floor could be your answer. Select a pleasing base color for your floor, then grab a can of a complementary color and a bag of plastic forks from the dollar store. Dip the fork tines in the paint, then simply flick them across the floor in random patterns. Beautiful!

 

4. No-Slip Runner

Photo: fabulousonabudget.com

Bet you looked twice at this painted floor runner! It almost looks like a carpeted stair runner but requires almost no maintenance and costs a fraction. Plus, a fresh coat of paint does wonders to camouflage the wear and tear on the middle of each step.

 

5. Colorful Camouflage 

Photo: glauce.com

The owners of this home camouflaged beat-up wooden floors with a delightful pattern of unevenly placed squares, which mimic a entryway hall runner.

 

6. Don’t Forget the Basement!

Photo: simplystonehaven.blogspot.ca

If you’re unhappy with an unsightly concrete floor, paint it! Faux-finished to look like multi-hued tile, this floor was meticulously taped, painted, then “grouted” with white paint.

Get a home loan easier this year

It’s easier to get a mortgage in

2015

 

Mortgage rates are hovering at levels unimaginable a generation ago. But for many would-be home buyers, a low-rate loan had been tantalizingly out of reach, denied by tight-fisted lenders still skittish from the housing bust.That’s finally changing. Now, thanks to rising home prices, less-stringent down-payment requirements and new rules that limit lenders’ liability when loans that meet certain criteria go bad, borrowers should encounter fewer obstacles getting a mortgage. No one wants to go back to the days of too-easy credit. But a little loosening will provide a shot in the arm for the sluggish housing market as it opens the door to buyers who have been shut out of the market and provides more options for all borrowers.

It’s still true that whether you’re buying your first home or trading up, the stronger your qualifications, the lower the interest rate you’ll be able to lock in. Borrowers with a credit score of 740 or more and a down payment (or equity, in a refinance) of at least 25% will get the best rates. You don’t have to meet those benchmarks, but if you don’t, you could see—in the worst case—as much as 3.25 percentage points tacked on to your rate.

The down-payment hurdle

First-time home buyers usually find that accumulating a down payment is their toughest challenge. The same goes for many current homeowners who lost most of their equity in the housing bust. A popular misconception is that you must put down at least 20%. Usually, you’ll need much less. For a loan of $417,000 or less that is backed by Fannie Mae or Freddie Mac (called a conforming loan), you’ll need just 5% for a fixed-rate mortgage or 10% for an adjustable-rate loan. For “high balance,” or “conforming jumbo,” loans of up to $625,500 in high-cost markets, you must ante up at least 10% and meet slightly higher credit-score requirements.

Non-conforming jumbo loans of more than $625,500 are more widely available than before, with lenders offering them at rates comparable to conforming loans, says Guy Cecala, publisher of Inside Mortgage Finance. Because lenders keep these mortgages on their own books rather than sell them to Fannie Mae or Freddie Mac, the loans require higher credit scores than for conforming mortgages and at least a 10% to 15% down payment, says Ramez Fahmy, a branch manager with Caliber Home Loans, in Bethesda, Md.

After home prices tumbled, your only option for a low-down-payment loan was an FHA mortgage, which requires just 3.5% down (and a minimum credit score of 580). But borrowers must pay for FHA mortgage insurance—an up-front premium of 1.75% of the loan amount and an annual premium of 0.85% of the loan. (

Fannie Mae and Freddie Mac recently resurrected loan programs that allow just 3% down on a fixed-rate mortgage. For Fannie Mae’s program, at least one borrower must be a first-time home buyer. Fannie’s program launched in December 2014, and Freddie’s will be available to borrowers whose loans settle on or after March 23, 2015. Big banks aren’t rushing to offer the program, while smaller, nonbank mortgage lenders seem eager to sign on, says Cecala. Borrowers who qualify will save money on interest and mortgage insurance compared with FHA loans.

If you do put down less than 20%, you must pay for private mortgage insurance (PMI), which protects the lender if you default. The more you put down and the higher your credit score, the less coverage you’ll need and the lower the cost of PMI. The annual cost for a 5%-down loan runs from 0.54% to 1.52% of the loan balance, according to a recent report by Wallet Hub, a financial information site. When your equity reaches 20%, you can ask the lender to cancel the PMI; at 22%, the lender must automatically cancel it.

You can reduce the down payment and avoid PMI with a so-called piggyback loan—an 80% first mortgage, a 15% second mortgage and 5% down. This kind of loan is especially useful if you haven’t yet sold your previous home but you have enough cash to put 5% down and you can afford to pay the mortgage on both homes temporarily. You can pay off the second mortgage (and pay down your new loan) when your previous home sells.

You won’t need a down payment (or mortgage insurance) if you’re a vet who qualifies for a Veterans Affairs home loan, but you will have to pay an up-front “funding fee” of up to 3.3% of the loan amount. Rural Development Guaranteed Loans from the U.S. Department of Agriculture also allow qualified, low-income borrowers in selected areas to buy with nothing down, although they will pay an up-front guarantee fee (rolled into the loan amount) and an annual fee.

The ARM alternative

Over the past several years, most borrowers gladly locked in low fixed rates. But you can trim your rate further with an adjustable-rate mortgage. If you do, choose a hybrid ARM, which features an initial fixed-rate period followed by adjustments after set periods of time. Match the fixed-rate period to the time you expect to own your home and you won’t have to worry about the rate adjustments. You’ll find hybrid ARMs with fixed-rate periods of three, five, seven and 10 years. In early January, the average rate on a 5/1 ARM was 3.1% and the rate on a 10/1 ARM was 3.5%, compared with the 30-year fixed rate of 3.9%, according to HSH.com, which tracks rates. Some versions adjust every five years or even every 15 years.

Today’s ARMs have built-in safeguards that protect borrowers against features that fueled the mortgage meltdown—such as exploding rates at the first adjustment and minimum-payment options that allowed the loan principal to grow. Lenders must inform you up front what your new payment will be after the first adjustment if your rate rises to the loan’s cap (which should be no more than two percentage points). If the ARM has a fixed rate for five or fewer years, lenders must qualify you for the loan based on the payment amount that would result if the interest rate rose to the cap on the first adjustment.

Shop smart

About six months before you want to buy a home, pull your credit score, review your credit report and dispute any errors in it. You can also use the time to pay down debt, beef up savings and gather documents. “The last thing you want is to find your dream home and not qualify for a large-enough mortgage,” says Bob Walters, chief economist for Quicken Loans. To get an idea of what you can afford, use Bankrate.com’s “How much money can I borrow for a mortgage?” calculator.

Before you tour homes, get preapproved for a mortgage by a local lender that sellers and their agents will recognize (your agent can recommend one). A preapproval letter printed on the lender’s letterhead and submitted with your purchase offer assures sellers that your finances are up to snuff and you can close the deal. If there are multiple offers, that may help lift yours above the others.

As soon as you have a ratified purchase contract (if not before), track down the best rate. Try different types of lenders, including the one that preapproved your mortgage, your bank and your credit union (check membership qualifications if you don’t already belong to one). Or contact a mortgage broker, who represents multiple lenders (to locate one, visit the National Association of Mortgage Brokers website). You may get the best rate from a nonbank mortgage lender, whether it’s a brick-and-mortar operation or an online lender such as Quicken Loans. You can get rate quotes anonymously at Mortgage Marvel and apply with lenders that offer the lowest rates. If one lender turns you down—say, because you have a ding on your credit history, a small down payment or you’re buying a fixer-upper—another one may welcome your business. (Read more on Kiplinger.com: 10 cheapest cities you’ll want to live in)

To compare apples to apples, ask lenders for their “par rate,” with no fees or points (a point is prepaid interest that “buys down” the interest rate by about one-eighth to one-fourth of a percentage point), plus an estimate of closing costs. Or tell the lender the amount you have budgeted for closing costs and ask what the corresponding rate will be, says Walters. Lenders can estimate the interest rate for which you’ll qualify only until you have a contract for a home and you file a loan application. After that, they’ll issue a formal good-faith estimate.

The national average cost to close on a $200,000 mortgage in 2014 was $2,539, including the cost of an appraisal, according to Bankrate.com. Costs have risen for the past two years as lenders ramp up to meet new regulations.

Which is better—a lower rate or lower closing costs? It depends on how long you plan to keep the loan. If you expect to be transferred to another city by your employer within, say, five years, then a no-cost loan with a higher interest rate is a great loan, says Josh Moffitt, president of Silverton Mortgage, in Atlanta, because you may not have time to offset higher up-front closing costs with lower mortgage payments.

Try to get a sense of whether a lender will provide the handholding you need, especially if you’re a first-time buyer. Ask the lenders on your short list whether they can close within the time demanded by your purchase contract. “Is chasing that eighth of a percentage point worth it when you go to a lender no one has heard of and 30 days later you’re paying fees to delay the closing date, or you lose the house because you can’t close on time?” asks Walters. Some lenders, including Discover Home Loans, advertise a “closing guarantee.” If they fail to close on time, they’ll pay you from $500 to $1,000.

You may not have to deal with paper until you close on the loan, which most states require to be done in person. However, the process can be as personal as you want it to be. “We have loan officers who will go to a person’s home and take an application over dinner,” says Moffitt.

Vetting the deal

Before a lender can approve your loan, it must document the amount and source of your down payment, closing costs, income, assets and more. At the very least, a lender will request two pay stubs, two months of bank statements and two years of W-2 forms.

The list will be longer if you have income that doesn’t show up on a W-2—say, from self-employment or alimony—or income that’s inconsistent, such as commissions or bonuses. In that case, a lender may ask you for several months of bank- and investment-account statements to verify your assets, two years of tax-return transcripts from the IRS, or a year-to-date profit-and-loss statement and balance sheet prepared and signed by your accountant.

As a lender scrutinizes your file, it may ask for more documentation, especially to explain any gaps in employment or inconsistent income. For gift money, you may need to provide documentation for the source of the funds for the gift—perhaps a copy of the gifter’s bank statement. (Loan programs may have different rules about the percentage of your own money versus gift money allowed.) To do your part to get to closing on time, don’t do anything that would change your credit profile, such as taking on new debt or paying a bill late.

The lender will hire a real estate appraiser to determine whether the purchase price on which you and the seller have agreed is supported by recent sales of comparable homes in the area. If the appraised value is less than the sum of your loan amount and down payment, someone—you or the seller—must make up the difference with more money.

You or your lender can rebut a valuation that comes in lower than the purchase price—say, if it appears that a relevant comparable sale has been overlooked. After the housing bust, deals often fell through because the appraised value fell short of the purchase price, but recent appraisals ordered by Quicken Loans have come in higher, on average, than homeowners thought they would.

You could still save on a refi

If you have equity in your home and haven’t bothered to refinance at today’s low rates, it’s not too late to save. You don’t necessarily have to reduce your rate a lot. The question is whether you will stay in your home long enough to recoup the closing costs with savings on your monthly payments (run the numbers using the refi calculators at the Mortgage Professor site).

To refinance an existing mortgage with a conforming loan backed by Fannie Mae or Freddie Mac (and roll your closing costs into the loan), you’ll need a minimum of 5% equity for a fixed rate and 10% equity for an ARM. With a maximum debt-to-income ratio of 36%, lenders may require a minimum credit score of 660 if you have less than 25% equity.

If you’re still underwater on your loan—that is, you owe more on your mortgage than the market value of your home—see the federal Making Home Affordable website for options.

Down Payment Help

From MainSt 2/18/15

87% of homes qualify for help on

mortgage down payment

 

Here’s some good news for would-be homeowners who are coming up short on cash: 87% of all U.S. homes qualify for mortgage down payment help.RealtyTrac found that 68 million Americans in 78 million single-family homes are eligible for mortgage down payment programs in their home county, based on price requirements and the potential value of their properties.

The aid could unlock a door into the residential real estate market for people previously locked out because they didn’t have enough money saved for a down payment.

“Many homebuyers, especially Millennials, haven’t fully investigated their home financing options because they are pessimistic about qualifying for a mortgage,” says Rob Chrane, chief executive at Down Payment Resource, which tracks the mortgage down payment assistance market. “In fact, 91% of the 2,290 programs in our registry have funds available to lend to eligible buyers.” (Related on MainStreet.com: There’s a Flaw in All That Good News About Real Estate So Far in 2015)

Finding that cash may not be as hard as you think; RealtyTrac says only a “few minutes of your time” can uncover multiple paths to down payment help.

Start with Freddie Mac’s invaluable “Sources of Down Payments and Closing Costs Assistance,” a guide to how housing finance agencies and state, local and municipal agencies can help with your new home mortgage.

Where you live has a big influence on how much help you can get. Tim Lucas, editor at MyMortgageInsider.com, points out that in Orlando, Fla., down payment assistance of up to $42,000 is available to low- to moderate-income buyers. In Seattle, buyers can qualify for up to $45,000 in down payment assistance at a 3% interest rate, with payments deferred for 30 years. (Related on MainStreet.com: To Mortgage Applicants, Increasingly It’s Go Digital or Go Home)

In addition, NeighborWorks America is available in 235 areas across the country, Lucas says. It offers down payment help to 14,000 families each year, while Fannie Mae, Freddie Mac and FHA guidelines permit the buyer to get a down payment gift from an employer or relative. “Nonprofits can also cover the buyer’s entire down payment and closing costs, helping the borrower to get into a home with zero out of their own pocket,” he adds.

The bank right down the street is a good bet, too, even as sub-prime and no-document or stated income loans remain a thing of the past.

“Reach out to your local bank’s loan officer and ask what types of down payment assistance programs are available,” says Kurt Westfield, managing director at WC Equity Group, a Tampa, Fla., real estate management and services firm. Chances are there are many options, especially for first-time homeowners or veterans, Westfield says.