Bid To Buy Auction & Realty

732 Tennessee Avenue
Etowah, TN 37331

John Bohannon 
| Broker
423-263-4243
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Articles

Here is a collection of some helpful and very informative articles that have been put together to help you in buying or selling your property.

Buyers

Where do You Start? Start with Your Credit!

Information for Buyers

When you look for a mortgage, lenders will review your credit report. Your credit report is a history of how you have managed your finances and repaid debt. It provides information on money you have borrowed and a history of your payments.

Your credit history is pulled together into a credit report by three private companies: Equifax, Experian and Trans Union. These companies sell your credit report to banks and other creditors so they can review mortgage and loan applications.

Your credit report includes:

  • A list of debts, such as credit cards and car loans, and a history of how you have paid them.
  • Any bills that have been referred to a collection agency. This can include items like phone and medical bills.
  • Public record information, such as tax liens or bankruptcies, even if these have happened several years ago.
  • Inquiries made about your creditworthiness. An inquiry is made when you request credit. Many times your report will also show if you were given credit based on the inquiry.

Most of the information in your credit report is deleted after 7 years (a bankruptcy is deleted after 10 years) and is continuously updated to reflect the latest information.

It's important that you look at your credit reports from each of the three companies to make sure they are correct. Your credit report may vary from one company to the other.

Your Credit Score

When you apply for a mortgage, the lender may request a credit score as well as a credit report. A credit score is a computer-generated number that indicates your ability and willingness to repay a debt based on your credit record.

Your credit score is part of the mortgage information that will decide if your application is approved. Your credit score may also be used to determine the mortgage interest rate.

Start Building Your Credit

Building good credit doesn't have to be difficult. Follow these tips and you're on your way:

  • Pay Your Bills on Time. How you've paid your bills in the past can indicate how you'll pay in the future. Credit scores emphasize your most recent payment record so if you've been late, start paying on time!
  • Pay at Least the Minimum Amount Required. You can always pay more, but you should never pay less.
  • Keep Credit Card Balances Low. Don't "max out" your credit cards.
  • Don't Apply for Too Many Loans or New Accounts. Requesting a lot of credit in a short time span may concern lenders that you won't manage your debt well.
  • Establish Credit if You Have None. 
  • Apply for one or two credit cards. Use the cards carefully and pay them off each month.

Make a Budget and Live Within It!

A budget will help you meet your monthly bills, and therefore help your credit. It also can help increase your savings for things like a down payment on a house.

Demonstrating your ability to save and having funds on hand will help you in the mortgage approval process. Your personal savings should be sufficient to last several months should you lose your job or source of income.


Can You Afford to Buy a House?

Information for Buyers

While everyone would like to live the American Dream of buying and owning a Home, it is important to understand all the costs involved in buying and owning a home.

Many potential buyers sometimes forget to factor in the down payment, homeowners insurance and the possibility of depreciation, as well as the costs associated with closing the transaction, moving, purchasing major appliances, and home, landscape, and pool maintenance, not to mention furnishings and design accessories once you move in.

For a general idea of your buying power, multiply your gross annual income by 2.5. For example, if you had a household income of $50,000, you might be able to qualify for a $125,000 home. The actual number may be more or less, depending on your individual situation, debts and credit history.

Housing Expense Ratio

As a general guide, your monthly mortgage payment should be less than or equal to a percentage of your income, usually about a quarter of your gross monthly income. The percentage can change depending on the type of mortgage you choose. However, there are mortgage products available that focus solely on the debt-to-income ratio. Your lender can provide more information on these types of mortgage products.

Debt-to-Income

Your buying power can be affected by factors such as your income, debt and credit history. Your debt, such as credit card bills and car loans, and other expenses such as housing expenses, alimony and child support, should not be more than about 30-40% of your gross income.

How Much Money Do I Need to Buy a Home?

You'll need money for:

1.) A down payment 
2.) Closing costs 
3.) Other housing-related costs - mortgage payments, maintenance and repair costs

Your Down Payment

The down payment is a percentage of the value of the property. What percentage that is will be determined by the type of mortgage you select. Down payments usually, range from 3 to 20% of the property value.

You may be required to have Private Mortgage Insurance (PMI or MI) if your down payment is less than 20%.

Closing Costs

Closing costs include points, taxes, title insurance, financing costs and items that must be prepaid or escrowed and other settlement costs. These costs generally range between 2-7% of the property value. You will receive an estimate of these costs from your lender after you apply for a mortgage.

While it may seem that it can take a lot to actually buy your home, you may be closer than you think.


Why Should You Own a Home?

Information for Buyers

Some people like the flexibility that comes with renting. When you rent, you can live in a neighborhood for as little or as long as you want. You're also free of most maintenance responsibilities – your landlord usually handles repairs.

Of course, there are many other reasons owning a home can be beneficial. These are just a few....

Build Equity

In the early years of most mortgages, the majority of your monthly mortgage payments go towards interest on your loan. Over time, an increasing amount of the monthly payment goes toward reducing mortgage balance, or "principal".

As you make payments, you reduce the principal and increase your share, or equity, in your home's value. If your home increases in value through appreciation, your equity will build even faster.

Building equity or savings in your home is necessary. For many people, it lets them plan for retirement and other future goals.

Gain Tax Advantages

You are allowed to deduct mortgage interest and property taxes from your federal income tax and some states' income tax. These deductions can mean significant tax savings, especially in the early years of the mortgage when interest makes up most of the monthly payment.

After calculating your taxes, you may find that it's cheaper for you to buy than to rent.

Rely on Payment Stability

If you select a fixed-rate mortgage, you will pay the same monthly principal and interest payment for the term of your loan. Unlike renting, this type of payment will remain the same month after month, even when inflation leads to higher prices. However, your total monthly housing expense could vary if tax and/or insurance expenses change.


When Buying a Home Determine Your Needs...

Information for Buyers

Before you begin house hunting, create a realistic "shopping list" to narrow your search. Looking for a home can take time, especially if you have not focused on what is most important.

Create a "wish list" and a "must have" list. Many people focus more on "wants" than "needs." As a result, they sometimes reject homes that perfectly meet their needs in search of homes that meet their wants, which in many cases can be out of your budget and unaffordable.

That's not to say that you shouldn't try to get what you want - you should just be able to tell the difference between what you really need and what you would like to have.


Sellers

Showing Your Home

Information for Sellers

Be Ready to Show at All Times

Sellers should be aware that same-day and even last-minute requests for showings are common. You should always be ready for a showing, so keep your home organized and clean. Tell the kids to put their toys away when they are done playing and make sure you don't let those dishes pile up in the sink.

Keep it Flexible

Most agents do try to arrive within the scheduled showing time, but sometimes it isn't possible. They may get stuck in traffic, or the house they saw prior to your showing took longer than expected. It happens, and sometimes it happens too late to be fixed by a phone call.

If this happens you may want to stay away from home a little longer than you think is necessary, just to make sure you don't interrupt a showing.

Pets Must Be Controlled

Pets should be out of the house during showings, especially large dogs, since many people are afraid of them. A gruff bark coming from inside the house is enough to make some home buyers turn around at the front door.

Because most people are not aware of odors in their own home, such as those from a pet, you may want to keep the pets outside or in a controlled area, or maybe just use an air purifier or freshener. You don't want buyers to remember the home as the house that smells.


Should You Stay or Should You Go?

Information for Sellers

When agents are showing your home to a prospective buyer, sellers often wonder should they stay or should they go? Some reasons sellers want to stay are because they think agents and buyers won't be able to find everything, that they must be there to point out important features. Truthfully, most just want to be present to see buyer reaction firsthand.

Perhaps You Should Go...

Sellers should be aware that at the very least buyers feel uncomfortable when they are present, and that it can actually kill a sale. Buyers often won't even open closet or cabinet doors when the seller is home, and when they cannot view a house comfortably, they'll hurry up and move on to the next one.

Sellers want to talk, and not just about the house. You never know when a buyer will be turned off by the mood of the seller, or by a statement the seller makes. Buyers are there to look at the house, not chit chat about hobbies or the weather or worse--politics and other controversial topics.

If you (the seller) must be home during a showing, perhaps just go outside, take the dog for a walk or stay put in one location, do not wander around with the agent and buyers.


A Good First Impression Helps Sell Your House

Information for Sellers

It can't be overstated; when it comes to buying a house, the first impression is everything. If you're selling or getting ready to sell in the coming months, one of the easiest and most dramatic ways to enhance that first impression is through paint.

Fresh paint makes your house look clean, bright, and inviting.

Painting your house's exterior and interior before you put it on the market give the biggest bang for your fix-up buck.

Agents agree that sellers shouldn't take curb appeal lightly, especially when so many buyers are doing their homework and looking at the exterior of houses before they even contact an agent.

If nothing else, paint at least the door, door frame, and foyer or first room the would-be buyers will see.

  • Use fresh, neutral colors. If you're painting the exterior, make sure the color blends in with the neighborhood. Opt for whites, creams or neutrals. The PQI says these colors appeal to the greatest number of people.
  • Whether you paint yourself or hire someone, make sure all the prep work is done, washing all dirt away, and patching and repairing any necessary areas on the surface before it is painted.
  • Paint railings, window frames, trim, and other accents to freshen up the exterior.
  • Promote any recent painting in your ads, flyers and online descriptions of your house. Homeowners and buyers place a high value on the painted appearance of a home. Include the date the paint job was completed and the quality of paint that was used.

Mortgage

Fixed or Adjustable?

Information for Sellers

Choosing between a fixed rate or adjustable rate loans is the single most important nail-biter of a decision you'll ever make when choosing a mortgage. The mortgage formula -- the method used to determine how much you pay based on your interest rate -- is the same for both types of mortgages.

What differs is the very good chance that your monthly payment amount will change through the life of the loan.

How willing and able are you to take on financial risk?

Consider an adjustable-rate mortgage only if you're financially secure enough to handle the maximum possible payments over an extended period. You must also be emotionally secure enough to handle volatile rates. Don't take an ARM because the initially lower interest rates allow you to afford the property you want to buy (unless you're absolutely certain that your income will rise to meet future payment increases). Try setting your sights on a property that you can afford, with a fixed rate mortgage.

How long do you plan to keep the mortgage?

A mortgage lender takes extra risk in committing to a constant interest rate for 15 to 30 years. Lenders don't know any better than you or I what may happen in the intervening years, so they charge you a premium for their risk. If you aren't going to keep your mortgage more than five to seven years, you're probably paying unnecessary interest costs to carry a fixed-rate mortgage.

Savings on most adjustable rates are usually guaranteed in the first two or three years. An adjustable-rate mortgage starts at a lower interest rate than a fixed one. When the adjustable does what it does best, it adjusts. It's almost always limited or capped in the amount of each interest-rate change. If rates rise, you can end up giving back or losing the savings you achieve in the early years of the mortgage.

If you are pretty sure that you'll hang onto a property for less than five years, you should come out ahead with an adjustable.

Which way are interest rates going?

Some people ask "shouldn't the likelihood of interest rates going up or down determine whether I take a fixed-rate or adjustable rate mortgage?" (The logic goes that if rates are on their way up, then you're better off locking in a fixed-rate mortgage before it goes any higher.)

Forget it. You can't predict the future course of interest rates. If you could, you could make a fortune investing in bonds and interest-rate futures and options. Even the pros on Wall Street can't make these predictions with any consistent accuracy.


Bid To Buy Auction Realty
Etowah, TN
423-506-3996: C
423-263-4243: Ofc
bidtobuyauction@gmail.com

Testimonials

John helped us through the bidding process as we had not ever been to a land auction.What a beautiful property we purchased,thanks again John for all your advice.Dave and Patricia Norman
 
Patricia Norman
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