Financial Wounds Heal with Planning, Discipline, Determination

Financial Wounds Heal with Planning, Discipline, Determination

"Discipline is the basic set of tools we require to solve life's problems. Without discipline we can solve nothing. With only some discipline we can solve only some problems, with total discipline we can solve all problems."-- M. Scott Peck, M.D., The Road Less Traveled

If you're like the majority of would-be homeowners today grappling with financial difficulties, take heart. The American Dream of owning a home is within your reach.

No matter how bad your financial situation is today, there are steps you can take to improve your ability to buy a home. According to the National Association of Realtors (NAR) 2009 Housing Opportunity Pulse Survey, down payment and closing costs are among the greatest obstacles to buying a home. Home prices are down and while it's a buyers' market, the current economic climate is tough right now. People are concerned about job security. High prices are taking huge bites out of tight budgets.

Fight the frustration with the best weapons of all, planning, discipline and determination.

In his book, The Road Less Traveled, M. Scott Peck, M.D. said, "Discipline is the basic set of tools we require to solve life's problems. Without discipline we can solve nothing. With only some discipline we can solve only some problems, with total discipline we can solve all problems."

The desire to own a home is only the first step. It's a good step, but it's one that requires careful consideration. How badly to you want to own a home? To what lengths will you go to achieve your dream? It's okay to brainstorm - dream even - about the home you will one day own. Dreaming is never enough. Action is required. There's no better time than right now to get started.

1. Write it down.

Get your dreams out of your head and onto a piece of paper. Ask yourself some tough questions and write down the answers. Here are some examples of questions you might ask. If you have a partner, include that partner in the conversation:

Why do I want to buy a home?

When can I realistically expect to be able to buy a home?

When will I buy a home?

What kind of a home will I buy?

Where will my new home be located?

What are the most important considerations in searching for my home?

How much should I expect to pay for a home?

How much money will I need to make a down payment on my home?

How much should I expect to pay for closing costs?

How long will I remain in my first home?

2. Examine obstacles.

This step requires total honesty. What is keeping you from achieving your dream? Systematically examine every obstacle. Evaluate reasons for the existence of each obstacle and identify multiple solutions.

3. Set goals.

Start from the end. Imagine where you will be in one year, two years or five years. Draw a road map if you have to and label the path you will take to get to where you want to be. Be sure to include the hurdles you will have to jump over and hoops you will have to jump through. There will be mountains to climb and rivers to cross. Now that you have identified the obstacles, you can deliberately eliminate them one at a time.

Some obstacles on your list might be:

• Overspending


• High debt-to-income ratio


• Poor credit score


• Lack of savings


• Not enough income

Some possible solutions on your list might be:

Overspending

Track spending for two weeks to see where money leaks occur in your budget. Create a strict budget. Separate wants from needs. Find ways to cut back such as packing a home lunch instead of eating out, carpooling to save gas, renting movies to watch at home instead of going to a theater.

High debt-to-income ratio

Make a list of creditors. List them in order based on the amount you owe each. Concentrate on paying off the smallest bills first. When one bill is paid, take the monthly amount of money you spent on that bill and apply it to the next. Make a commitment to avoid taking on any additional unnecessary debt.

Poor credit score

Now that you're accepting responsibility for your finances you can begin to improve your credit score today. Get a copy of your credit report. Federal law entitles you to one free credit report in a 12-month period from each major credit reporting agency. You can easily obtain your free report at http://www.annualcreditreport.com/. Dispute any errors. You can also call the three major nationwide consumer credit reporting companies for your free report:

• Equifax: 1-877-576-5734; http://www.equifax.com/


• Experian: 1-888-397-3742; www.experian.com/fraud


• TransUnion: 1-800-680-7289; http://www.transunion.com/

Do whatever you have to do to get in good standing with your creditors. Call them, negotiate with them, keep the promises you make to them. Show a sincere effort to rebuild your credit and you will find debtors are willing to help you achieve your goals. Pay your bills on time.

Lack of savings

Pay your bills, but pay yourself first. The loss of a job, illness, emergency repairs, travel and other unplanned expenses will throw your carefully-planned budget into chaos if you're not prepared. Identify a certain percentage of your income - start small if you have to - and put it away in an emergency fund. Eventually your emergency fund will grow and you will start a new savings account for your down payment!

Not enough income

If your expenses are higher than your income and you have shaved as many frills as possible from your spending, it may be time to take on a second job. Also, consider selling personal items you no longer need and are willing to part with in order to live your dream of owning a home. Look for higher-paying promotion opportunities at work.

4. Design your plan.

Your plan will include specific dates, goals and road markers on your map to success. Create a timeline and monitor it carefully. Review your plan each night before you go to bed. Identify milestones and celebrate when you reach those milestones. These can include paying off a bill, acquiring a certain amount of savings, reaching a goal income level and more.

5. Visualize yourself in your new home.

Can you see it? Can you feel the warmth of your new home around you? Can you actually imagine yourself living the American dream? Do it often. Close your eyes and feel the satisfaction of achieving your goal - a goal that once seemed impossible. Talk openly about the day you will move into your new house. Stay positive, focused and committed.

Troy Batson ~ Broker @ Duke Warner Realty 1033 NW Newport Ave Bend, Oregon 97701 541.678.3725 or 541.382.8262 troybatson@dukewarner.com troybatson.com

FHA Mistakes to Avoid

When buying your first home, there are many mistakes that can cost you thousands and hinder the process to get you into the home that is right for you.

One long-standing program that has assisted millions of first-time homebuyers is the FHA (Federal Housing Administration) mortgage program. An FHA loan is a loan the government agency insures against default. Approved lenders can issue these loans, which tend to be less restrictive to borrowers facing economic hardship.

Here are a few common mistakes to avoid when considering an FHA loan for your first home:

Failing to consider an FHA loan. If you are thinking of purchasing a new home, considering an FHA mortgage could be a vital step. The FHA program allows lenders to offer home loans to borrowers with limited or less-than-perfect credit histories. While FHA mortgages require that you pay a mortgage insurance premium, FHA mortgage rates could be lower than you would get otherwise.

Making a major credit purchase immediately prior to applying for a loan. Your debt-to-income ratio is a major determining factor in whether or not a lender will approve your loan application. Your debt-to-income calculation is based on your current debts and the percentage of that debt against your income. Major credit purchases will seriously alter that ratio sometimes enough to significantly hurt your chances for obtaining an FHA loan. You can also improve your debt-to-income ratio by paying off credit card balances or other outstanding loans.

Not reviewing your credit report. An FHA-loan approved lender will always look at your credit report and credit score. Your credit report gives the lender an idea of your debt, your ability to pay your bills on time, and your overall credit reliability. Before you apply for an FHA loan, review your credit report and score. It could contain errors that could affect your ability to purchase a home. Once you’ve carefully reviewed your credit report and are confident in your credit history and score, you should initiate the preapproval process.

Neglecting to save enough money upfront. While an FHA loan generally requires a lower down payment than other loan types, there are still upfront costs involved in an FHA mortgage. Ensure that you’ve budgeted carefully and saved enough for the necessary down payment. There are also fees and expenses due at closing for things such as mortgage processing, insurance, home inspection, and lawyers. Make sure you have a generous amount of savings above and beyond your down payment to cover any closing costs and upfront expenses.

FHA loans have helped countless homeowners in the past. An FHA mortgage may be a good fit for you as long as you avoid these common mistakes.

Troy Batson ~ Broker Duke Warner Realty 1033 NW Newport Ave Bend, Oregon 97701 541.678.3725 or 541.382.8262 troybatson@dukewarner.com troybatson.com

2011 Home Buyers Resolutions

Happy New Year! It's time to get out your pen, paper, and nearest napkin to write down your resolutions for 2011. Some of the most popular resolutions include: losing weight, eating healthy, drinking less, managing debt, managing stress, saving money, and resolving to stop making resolutions.

If one of your goals for 2011 is to become a homebuyer, here are 5 tips that will help you actually achieve your New Year's resolution to buy a home this year.

1. Determine exactly what you will be able to afford before even starting the buying process, and set a budget.

Utilize a mortgage calculator to help you determine what you can afford. The amount you're preapproved for isn't necessarily the amount you can afford. When you've analyzed your income and savings, stick to your budget. Don't even look at homes that are out of your price range. Resolve to live within your means so you're not in jeopardy down the road of losing a home you couldn't afford in the first place.

2. Save for a significant down payment.

No-money down loans are hard to obtain and extremely risky. With an FHA loan, you'll need at least a 3.5% down payment. However, a 5%-10% down payment for a conventional mortgage is a smart goal to set.

3. Clean up your credit before applying for a mortgage.

Ideally, to get the best interest rate, you want your FICO credit score to be 700 or higher. If you haven't pulled your credit report in the last 6 months, plan on going to annualcreditreport.com to pull your free credit report. You will not receive a free credit score from this report, but you can purchase your credit score here. By reviewing your credit report prior to applying for a home loan, you can determine what shape your credit is in, start working to improve your score, and dispute any errors that may be erroneously listed on your credit report.

4. Shop around for the best home loan.

Make sure you talk to at least three or four lenders before you sign your application. Try to include a "big box" lender, a small local lender, a credit union, and a mortgage broker. Use the information you collect from each lender to negotiate the best loan for you.

5. Hire a professional real estate agent.

As a first-time homebuyer, the best resolution you can make when deciding to buy a home is to consult a trusted, professional real estate agent to assist you with the process. Professional agents have access to properties in your desired area, market comparisons for homes available for sale, and the expertise to draw up an offer to present to a home seller. Find an agent that you connect with and trust to have your best interest in mind.

If you're currently renting but want to become a homeowner by the end of 2011, following these tips will help you succeed in achieving your New Year's resolution to buy a home.

Troy Batson ~ Broker
Duke Warner Realty
1033 NW Newport Ave
Bend, Oregon 97701
541.678.3725 or 541.382.8262
troybatson@dukewarner.com
troybatson.com

NAR's Positive Outlook for 2011

The National Association of Realtors (NAR) is optimistic about home sales in 2011. Pending homes sales in November increased 3.5 percent, which indicates a gradual recovery for this upcoming year.

NAR chief economist Laurence Yun said, "All the indicator trends are pointing to a gradual housing recovery. Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers."

Low mortgage rates, high housing affordability, and a little economic growth are pushing the housing market toward a slight recovery. The high number of foreclosures is still keeping the market from recovering more quickly, however.

Other NAR projections for 2011 include:

- New home sales are estimated to rise 24 percent;
- Existing-home sales are projected to rise about 8 percent;
- Housing starts are expected to rise 21 percent;
- The unemployment rate is expected to drop in 2011.

We should expect some peaks and valleys, but it's important not to panic. In general, the trend is expected to be an increase over the next few years.

Troy Batson is a licensed broker in the State of Oregon ~ troybatson.com ~ Duke Warner Realty ~ 1033 NW Newport Ave. Bend, OR 97701 ~ (541)382-8262

Cash, Conventional or FHA?

Some people want to know whether they should apply for an FHA loan or Conventional loan. Some people ask if cash buyers have more power.

Well to put it simply, without really having to say it, CASH WINS!...most of the time. Obviously if the FHA or Conventional buyer has a much higher offer, that bank or homeowner is more likely to entertain it. But not always.

When a buyer comes in with cash it shows that they have the funds to close and will not have many condititions to meet before they can close.

A Conventional loan buyer has more power than an FHA buyer because he/she is putting down 20% of the sales price. So a seller knows that the buyer has more interest in the property and is perhaps a more solid buyer. They are less likely to fall out of escrow.

FHA is the hardest due to the fact that FHA buyers have to go through a rigorous, and I mean rigorous, process to get qualified. Sometimes a buyer is not always honest about their financial situation when qualifying for a loan. So when they receive their prequalification it may be on false terms, the loan will not be approved and the buyer will lose that property. Unfortunately this costs everyone time and money, including the buyer.

So if you are going to apply for a loan always be completely honest to the loan officer because they will find out everything about your financial situation.

Conventional is stronger and remember, CASH WINS.

Troy Batson ~ Broker
Duke Warner Realty
1033 NW Newport Ave
Bend, Oregon 97701
541.678.3725 or 541.382.8262
troybatson@dukewarner.com
troybatson.com

Go Green, save money!

Solar Homes are Lighter on the Pocketbook

There's a huge push in Central Oregon to conserve energy and cut related costs. Homes with energy-saving features are likely to be much more marketable today and in the future. Whether you're building a new home or remodeling a home, let the sun shine in to heat and (get this) cool your home.

Homeowners can start today by designing homes that take advantage of the earth's natural and renewable energy resources. Solar homes meet the basic criteria for energy efficiency and environmental responsibility.

Passive Solar Homes Save Energy, Money

Passive solar homes use heat from the sun to heat and cool homes. A home might be entirely or partially warmed by the sun depending on the home's design and the stage at which solar design is incorporated.

Large windows serve as heat collectors. Heat absorption is maximized with the perfect angle. An absorber in an indoor wall, or on the floor in direct sunlight collects and stores the sun's energy. The energy is moved through the home via a distribution system that relies on radiation, conduction and convection alone. It is possible to eliminate a heating bill with solar energy. Passive solar energy incorporates many natural elements including wind and trees. Design elements like landscape features, overhangs, and careful landscaping also come into play.

An active solar system uses fans and blowers to help distribute the heat. This usually requires photovoltaic panels to collect solar energy. The energy is then turned into electricity.

It might seem like an oxymoron to suggest you cool your home with the sun, but there is a wide variety of systems available to cool homes including, but certainly not limited to the use of a coolant that absorbs and actually dissipates heat from a structure.

Even if you're not building a new home and don't want to remodel a home entirely, you can take advantage of easy-to-install features to conserve energy including trees, insulation and window dressings that allow you to let the sun shine in when you seek warmth and block it out when you're trying to cool you home.

If you're looking for an energy efficient home, contact us today. If you have a green home you're ready to sell, let us guide you through the selling process.

Troy Batson ~ Broker
Duke Warner Realty
1033 NW Newport Ave
Bend, Oregon 97701
541.678.3725 or 541.382.8262
troybatson@dukewarner.com
troybatson.com

Remodeling doesn't always add up

According to Remodeling magazine's 2010 Remodeling Cost vs. Value Survey, done in partnership with the National Association of Realtors (NAR), most people planning a home remodeling project will pay a lot more for the job than they will get back in return when they sell. The report claims that on average, only 60% of remodeling costs in 2010 would be recouped by homeowners.

The report acknowledges that curb appeal continues to "play a strong role in a home's resale value." Because of this, the most lucrative of the remodeling projects was replacing the garage door. The report claims this is because garage doors "improve curb appeal in a way that can affect a potential buyer's first impression and, consequently, a home's resale value." According to Lawrence Yun, chief economist for NAR, curb appeal is essential if you want to sell your home. He stated, "In today's buyers market, given the large inventory, where people have so much selection, it's important to have the exterior catch the eye so they're willing to step inside."

Aside from replacing the garage door and a few other exterior projects, most remodel jobs returned a lower percentage of their costs in added home value than they did in 2009.

According to the survey, these remodeling projects will get you the most bang for your buck:

Project	Cost	Resale Value	Cost Recouped
Steel Entry Door Replacement	$1,218	$1,243	102.1%
Garage Door Replacement	$1,291	$1,083	83.9%
Fiber Cement Siding Replacement	$13,382	$10,707	80.0%

All other remodeling projects in 2010 recouped national averages below 80%, with home office remodeling and sunroom additions offering the lowest returns.

Two jobs tied for the best return on a midrange remodeling investment costing more than $10,000. Adding a wood deck or doing a minor kitchen remodel (which involves replacing cabinet doors and counters, buying new appliances, sinks and faucets and repainting walls and trim) each recouped 72.8% of their costs. Remodeling your basement or adding an attic bedroom can get you a higher return (approximately 70%) than adding a wing to your house.

Despite the falling percentages of returns on remodeling projects in 2010, it's important to remember that renovations can also improve the livability and enjoyment of your home. If you love your neighborhood and community, but your home is older or needs minor improvements, it's likely to cost you much less to remodel your current home rather than buying a new one. Replacing old, inefficient products and appliances with highly efficient ones may get you a decent return when you sell and, in the meantime, save you money on your utility bills.

If you chose to remodel, find ways to reduce the cost of your remodeling projects. Otherwise, getting a significant return will be much harder.

Troy Batson ~ Broker
Duke Warner Realty
1033 NW Newport Ave
Bend, Oregon 97701
541.678.3725 or 541.382.8262
troybatson@dukewarner.com
troybatson.com