6 Ways to Get Your Finances In Order

By: G.M. Filisko

Homeownership should make you feel safe and secure, and that includes financially. Be sure you can afford your home by calculating how much of a mortgage you can safely fit into your budget.

Why not just take out the biggest mortgage a lender says you can have? Because your lender bases that number on a formula that doesn?t consider your current and future financial and personal goals.

Think ahead to major life events and consider how those might influence your budget. Do you want to return to school for an advanced degree? Will a new child add day care to your monthly expenses? Does a relative plan to eventually live with you and contribute to the mortgage?

Consider those lifestyle issues as you check out these four methods for estimating the amount of mortgage you can afford.
1. Prepare a Detailed Budget

The oldest rule of thumb says you can typically afford a home priced two to three times your gross income. So, if you earn $100,000, you can typically afford a home between $200,000 and $300,000.

But that?s not the best method because it doesn?t take into account your monthly expenses and debts. Those costs greatly influence how much you can afford. Let?s say you earn $100,000 a year but have $1,000 in monthly payments for student debt, car loans, and credit card minimum payments. You don?t have as much money to pay your mortgage as someone earning the same income with no debts.

Better option: Prepare a family budget that tallies your ongoing monthly bills for everything ? credit cards, car and student loans, lunch at work, day care, date night, vacations, and savings.

See what?s left over to spend on homeownership costs, like your mortgage, property taxes, insurance, maintenance, utilities, and community association fees, if applicable.

2. Factor in Your Downpayment

How much money do you have for a downpayment? The higher your downpayment, the lower your monthly payments will be. If you put down at least 20% of the home?s cost, you may not have to get private mortgage insurance, which protects the lender if you default and costs hundreds each month. That leaves more money for your mortgage payment.

The lower your downpayment, the higher the loan amount you?ll need to qualify for and the higher your monthly mortgage payment.

But, if interest rates and/or home prices are rising and you wait to buy until you accumulate a bigger downpayment, you may end up paying more for your home.

3. Consider Your Overall Debt

Lenders generally follow the 43% rule. Your monthly mortgage payments covering your home loan principal, interest, taxes and insurance, plus all your other bills, like car loans, utilities, and credit cards, shouldn?t exceed 43% of your gross annual income.

Here?s an example of how the 43% calculation works for a homebuyer making $100,000 a year before taxes:

1. Your gross annual income is $100,000.

2. Multiply $100,000 by 43% to get $43,000 in annual income.

3. Divide $43,000 by 12 months to convert the annual 43% limit into a monthly upper limit of $3,583.

4. All your monthly bills including your potential mortgage can?t go above $3,583 per month.

You might find a lender willing to give you a mortgage with a payment that goes above the 43% line, but consider carefully before you take it. Evidence from studies of mortgage loans suggest that borrowers who go over the limit are more likely to run into trouble making monthly payments, the Consumer Financial Protection Bureau warns.

4. Use Your Rent as a Mortgage Guide

The tax benefits of homeownership generally allow you to afford a mortgage payment ? including taxes and insurance ? of about one-third more than your current rent payment without changing your lifestyle. So you can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment.

Here?s an example: If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership.

However, if you?re struggling to keep up with your rent, buy a home that will give you the same payment rather than going up to a higher monthly payment. You?ll have additional costs for homeownership that your landlord now covers, like property taxes and repairs. If there?s no room in your budget for those extras, you could become financially stressed.

Also consider whether or not you?ll itemize your deductions. If you take the standard deduction, you can?t also deduct mortgage interest payments. Talking to a tax adviser, or using a tax software program to do a ?what if? tax return, can help you see your tax situation more clearly.

More on Mortgages from HouseLogic

G.M. Filisko is an attorney and award-winning writer who?s owned her own home for more than 20 years. A frequent contributor to many national publications including Bankrate.com, REALTOR? Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Houselogic.com “4-tips-determine-how-much-mortgage-you-can-afford”

West Allis Updated School District Boundaries

The West Allis-West Milwaukee School District would like to inform all Realtors in the West
Allis and West Milwaukee area that we have recently reinstituted defined High School
attendance boundary areas for all students attending either Central or Nathan Hale High
Schools. We are no longer offering free-choice for high school students.
There are defined attendance areas for all Elementary, Intermediate and High Schools. It is
important for potential home owners in the West Allis-West Milwaukee School District to
have this information. You will want to remind homeowners that our District also is
comprised of a small portion of the City of Greenfield, and the southeast corner of the City of
New Berlin. In fact, Hoover Elementary Schools is located within the city limits of New
This spring the West Allis-West Milwaukee School District?s School Board is putting together
a committee to review all attendance areas.
For information on the different attendance boundaries at each level please go to:
http://www.wawm.k12.wi.us then click on:
? District Information in the top tool bar menu
? District Information in the drop down menu
? Boundaries in the second drop down menu

West Allis School District Boundaries

Home Sales and Median Prices Grow Substantially in March

Wisconsin Realtor’s Association
WRA Chairman of the Board Dan Kruse and WRA President & CEO Michael Theo

Press Release
MADISON, Wis. ? The Wisconsin housing market grew substantially in March, with both home sales and median prices increasing at a robust pace over the past year. Home sales increased 16.1 percent in March 2015 over March 2014, and median prices rose 8.8 percent to $149,000 over that same period.

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10 tips most first-time home buyers don?t consider

Written by Suba Iyer

It?s been exactly one year since my husband and I purchased our first home. As one might expect, we?ve learned a number of valuable lessons this past year. There are plenty of articles full of useful tips for first-time home buyers. I am not going to repeat them. Instead, I will list the lessons I personally learned that I didn?t find covered anywhere else.

1) Think long-term and think re-sale:
Are you planning to have kids? Will you be taking care of elderly relatives? You might be planning to live in your first home for only a few years. In that case, who is your target audience when it comes time to sell the house? If you buy a house in a very bad school district or a house on a very busy street, when you are ready to sell the house, most families with children will be out of your list of potential buyers.

2) Make a list of items to check:
Home-buying is an emotional process. Ideally, you should set aside all your emotions when evaluating a house. Practically, that is impossible. Instead, make a checklist of your must-haves, nice-to-haves and other essentials. Then print copies of this checklist. Every time you visit a house, take the checklist along with you; take photographs so you can cross each item off your list. If you fall in love with the house and your checklist shows that the house has none of your must-haves, it will at least make you pause and think.

3) Look at ALL the expenses when you are budgeting for the house:
When budgeting for the house, don?t stop with principal, interest, taxes and insurance; add in utilities, cost of commuting and upgrades. Call the utility companies that service the house you are considering and ask for an estimate of what the cost will be, whether there are any budget plans available, etc. Will the gas budget for your car go up if you are moving further away from the places you frequently visit? Budget all of these expenses and see if you can still afford the house.

4) Ask for the homeowners association contract before you make a decision:
Our long term plan is to rent out the house, if and when we move away. With this in mind, once we identified the neighborhood we found most desirable, I asked for a copy of the HOA contract after going to an open house in the area. It turned out that none of the houses in that neighborhood could be rented out. If you are buying a house that is part of an HOA, it is absolutely essential to read the HOA contract before you do anything else.

5) Research grants and other sources of funding:
When I was researching our mortgage options, I came across so many grants and funding sources I have never heard of before. I always thought the income limit for qualifying for these types of funding would be very low, but I was pleasantly surprised by the generous income limit on many of the options. There are many different options based on profession (grants for teachers, farmers, etc.) as well as the area of the potential house (whether it?s in a rural area, high-poverty area, etc.) Research all the grants and funding options you are eligible for before you automatically decide you won?t qualify for anything.

6) Be sure to read your contract before you sign it:
A house is probably the largest purchase you will ever make in your life, so make sure you understand the terms of your contract. If you don?t understand any of the terms, ask your mortgage broker and your real estate agent. If they won?t explain the terms clearly to you, fire them; there are enough people who will be more than happy to help you and work for your business.

7) Learn about the neighborhood demographics:
If you are buying a house in a neighborhood full of renters, it only takes a few bad renters or bad landlords to drive the neighborhood down fast. If the neighborhood is full of single people, will you be happy there if you have very young kids?

8) If you like the view, buy it:
Buy the view, not the house. A set of people in our neighborhood are at war with the county for approving a new development next to ours. The reason? There was a wetland and a nice wooded area with a view of snow-peaked mountains from their homes. They bought their homes for that view. Now, within a year of moving in, their view is gone. Unless you own the land between your house and the view, don?t buy a house for the view.

9) Look beyond the staging:
I read about staging while I was researching buying a home, but I never expected the amount of staging a house goes through. The psychology does work; staged houses look far better than houses that are still being occupied. One house we went to had nightstands with lamps on it next to the bed that really increased the appeal of the room. In reality, though, there were no plug points anywhere near the lights. So practically that setup would not have been possible without remodeling. When you are considering a house, mentally try to remove the staging. Pay more attention to the layout of the house and the structure itself. Ugly wallpaper and paint can be easily fixed later.

10) All the old advice about buying your first home is true.
Some examples ? have an emergency fund, save for a down payment of 20 percent, get your credit into a better shape and don?t buy more than you can afford. If you need a refresher, here are some good articles: Roadmap for a Successful Relocation, Should You Buy a Home Now?, 11 Tips for First-Time Homebuyers, Renting vs. Buying: The Realities of Home-Ownership, Pay Off Mortgage Early or Invest?
Do you have any tips to offer first-time homebuyers? Are there any specific things to consider in the current housing market?

Original Article

Milwaukee Metro Existing Home Sales Slip in August

Milwaukee Journal Sentinel (09/11/14) Gores, Paul

A report by the Greater Milwaukee Association of REALTORS? (GMAR) found that sales of existing homes in the Milwaukee metropolitan area fell 2.2 percent in August, continuing a slower year for the local housing market. The report shows 1,821 homes were sold last month, down from 1,862 in August of 2013. GMAR President Mike Ruzicka said residential real estate professionals are not alarmed by the trend of lower sales because other market characteristics are improving. Ruzicka pointed to a lower number of foreclosures and distressed properties and a higher percentage of traditional buyers. Court records show that foreclosure filings in southeastern Wisconsin are down 22.5 percent this year than in the first eight months of 2013.

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FHA Borrowing Just Got Better

National Association of Realtors

FHA Borrowing Just Got Better

Real estate consumers scored a big win this month when the Federal Housing Administration announced it would eliminate prepayment penalties for borrowers. Learn why NAR fought for the change. That, plus important guidance on copyright law and more on “The Voice for Real Estate.”

Watch now

About That FHA Prepayment Penalty . . .Posted in Breaking News, Economics, Law & Policy, Politics & Government, by Robert Freedman on September 11, 2014

News that FHA will eliminate a prepayment penalty starting next year has been widely reported. It?s a move NAR has been seeking for some time because it will relieve borrowers of a financial hit that?s entirely out of their control and also bring the agency?s policies in line with other federal agencies that backstop mortgages. Perhaps most importantly, it will align the agency?s policies with the qualified mortgage rule (QRM), which defines what the federal government considers a safe home mortgage loan.

What?s being eliminated is an interest-rate charge. For FHA borrowers that pay off their mortgage before the end of the month, the lender is allowed to charge to the borrower the interest rate costs on the loan from the day the loan is retired until the last day of the month. So, if a borrower paid off the loan on Sept. 10, the penalty would be 20 days of interest payments. That can be hundreds of dollars. Once the change takes effect, on Jan. 21, 2015, lenders will no longer be able to apply that interest charge to the borrower.

NAR continues to work with FHA on other matters. A big point right now is getting some improvement in FHA?s policies on condominium financing. It?s too difficult for many condo projects to get the stamp of approval that?s needed for people who want to buy a unit in the project to get FHA financing.

In any case, you can learn more about what NAR is doing on FHA and in other legislative, regulatory, and legal areas in the latest video in The Voice for Real Estate news series.

Debt Cancellation, FHA Prepayment – VIDEO

May, 2014 WRA Real Estate Market Report

May Existing Home Sales Decline Even as Median Prices Rise

The WRA is happy to provide you with a monthly home sales report and in-depth market data. For an overview of the report, see below. For a more detailed look, view the full version at the link below. If you have questions or need additional information, please let us know.

Steve Lane, WRA Chairman of the Board, and Michael Theo, WRA President and CEO

Press Release

MADISON, Wis. – Existing home sales continued to lag behind 2013 levels but median prices rose by a solid margin in Wisconsin. May home sales dropped 6.9 percent compared to the May 2013 volume of sales. In contrast, median prices increased over the same period, rising 3.8 percent to $150,000.

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Click Here to View The 2014 May Home Sales Report

6 Horrible House Hunting Pitfalls to Help Buyers Avoid house-hunting

Trulia Staff
June 5th, 2014

Sometimes it?s not the market or their agent (we know, we know) that stops buyers from snagging their dream home. And despite their good intentions, sometimes buyers unknowingly self-sabotage their home search. Which got us thinking: As agents, what can we tell buyers from the get-go that can help them avoid some of the worst house hunting pitfalls?

We reached out to Arron Sweeney, founder of Your Berkeley and realtor at King Realty Group in San Francisco, as well as Lance King, broker and owner of King Realty Group. They shared six home buying hang-ups and what agents can say to clients to help them avoid these common missteps.

Love these tips? Get the printable handout to share with current and prospective clients!

1. Missing out on the perfect place.
Hundreds of new homes hit the market every day, and buyers who are not using all of the house hunting tools available, could let their dream home could slip by unnoticed ?or worse, someone else might snatch it up before they even know that it?s for sale. One of the toughest lessons for a first-time (and, yes, even a second-time) buyer is that in this market, passive house hunting simply will not cut it. No matter what we agents do?and no matter how many e-mails we send showcasing a just listed property that agents would love to show our clients?if the buyer doesn?t make house hunting a top priority, it?s going to be a painful process.

What Agents Can Do:
As soon as you secure your newest buyer clients, set up a time to discuss your house hunting strategy. Ask them what their preferred method of contact is when there is a home that just can?t wait to be seen. Leverage smart free tools like Trulia?s Nearby Home Alerts come in handy. Buyers get an instant notification on their mobile device when new listings near their current location come on the market. Setting up such a strategy will let buyers stress less and think more about window treatments than missing their window of opportunity.

2. Choosing the wrong lender.
Few things are more frustrating (for buyers and agents alike!) than finding the perfect property only to find out that the loan isn?t coming through.

What Agents Can Do:
?We always tell our clients to use our preferred lenders because they?ll get great rates, the VIP treatment, and if there?s a problem they?ll find out on the front end,? says Sweeney. Remind clients that preferred lenders earn their preferred status only after they?ve consistently delivered loan closings. Provide them with a list of preferred lenders, and provide clients with educational materials to help them get their loan situation in order before they hit on their must-have property.

3. Fixating on price per square foot.
Buyers who search by price per square foot may be prime for some major disappointment.

What Agents Can Do:
King suggests reiterating to clients that if they are using this as one of their search criteria, they might want to think again. Measurements, as agents know, are not guaranteed to be accurate, and mis-measurements can place appropriately priced homes outside of a client?s search parameters.

4. Desperation.
When prices are on the rise, buyers get antsy and sellers get greedy. ?Many buyers have been outbid on numerous properties and have just become tired of looking,? says Sweeney. ?As a result, they are placing ridiculously high offers on properties that just aren?t worth it?just to get into a home this minute.?

What Agents Can Do:
Tell buyers to avoid the temptation and work with them to build up a backup plan. Suggest neighborhood or areas that may actually have the right home at the right price that the buyer potentially crossed-off the list due to superficial reasons. Make it a gentle conversation. ?Why don?t we just spend an afternoon looking at a few properties to see what?s out there? You don?t have to commit to changing your home search, and you?re not tied into anything. This is just a little bit of an exploration.? And, if all else fails, recommend short-term or corporate rentals options, so they?ll have a soft place to land while they wait for their dream home to appear on the market. When that happens, you?ll be the agent they come running back to.

5. Foregoing inspections.
In a perfect world, sellers would disclose every single issue to the prospective buyers. Since that?s not the case, inspections are a great idea; yet one that Sweeney sees clients skipping too often.

What Agents Can Do:
?I have a strong knowledge of construction and always advise my clients to pony up and have both an independent pest and contractor inspection,? says Sweeney. Inspections identify red flags and can address the general state of a property. Plus, they can provide leverage when it comes time to negotiate. Discuss these issues in details with your clients, and remind them of how much neglecting inspections may cost them in the long run.

6. Buying a ?project.?
The unwritten rule of renovating states that it will take more time and money than expected. So it?s important for buyers to know their threshold for renovations before buying a fixer-upper.
What Agents Can Do:
Be prepared to share referrals to general contractors and specialty tradesmen. It doesn?t hurt to schedule a showing with one of these pros in tow either. It?s better for clients to know what they?re getting into before they find themselves in over their head. Plus, a happy new homeowner is the source of a great recommendation and referral clients for years to come.

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Setting the Record Straight: Top Home Buying Myths

The Real Estate Book
Original Post by Courtney Soinski

Whether you?re a real estate professional or first-time home buyer, the home buying process and real estate transactions can be stressful. There tends to be some common misconceptions in this process, so it?s very important that you?re well informed of what is fact and what is fiction. We?re here to set the record straight.

Whether you?re a real estate professional or first-time home buyer, the home buying process and real estate transactions can be stressful. There tends to be some common misconceptions in this process, so it?s very important that you?re well informed of what is fact and what is fiction. We?re here to set the record straight.

Myth #1: You don?t need a REALTOR?.
Before you bravely take on one of the biggest purchases or sales of your life, remember this: it?s not as easy as it looks. REALTORS? know all the ins and outs of the local area as well as the market in which you?re looking to buy or sell. Picking up the phone and calling a REALTOR? may be one of the best decisions you?ll make.

Myth #2: The bigger the downpayment, the better off you?ll be.
Buyers? immediate reflex is to put as much cash down as they can when buying a new home because they?ll borrow less, lower the monthly mortgage payments, and won?t need to buy mortgage insurance. However, putting 20% down is not a requirement and it?s not for everyone.
Thanks to Federal Housing Administration Loans (FHA Loans), you can put as little as 3.5% down. With this method, you?ll potentially have a lower interest rate, giving you more flexibility. Your money is not all tied up in your house like in a traditional down payment that can leave you with little or no extra cash to spend on home care, improvements, or any other unforeseen circumstances.

Myth #3: Appraisers set the value of a home.
The role of the appraiser is to produce a credible opinion of value that reflects the current market. Appraisers are not responsible for setting the value of the home and they also do not confirm a home?s sale price. According to David S. Bunton, President of The Appraisal Foundation, ?Appraisers provide an analysis of the collateral, so that lenders understand the value of a property when making the loan decision.?

Myth #4: You need perfect credit.
Most people assume that you must have absolutely golden credit in order to get a loan, but that just simply isn?t the case. If buyers have less than perfect credit, lenders are often willing to work with them to get the best possible loan.
Credit is not the only thing that lenders look at when deciding to approve a loan, but your score will have an effect on the interest rate on your mortgage. Make sure you review your credit report and if any errors are found, they should be reported to the credit reporting bureaus before applying for a mortgage.

Looking to buy? Best cities for first-time home buyers

Reality Check
Edited by Diana Olic | @diana_olick

In the rush to get in on the bargains of the housing crash, first-time home buyers were largely left out. Investors swarmed the most distressed markets, spreading their cash like fertilizer and pushing home prices up far faster than most expected. In less distressed markets, first-time buyers were still hampered, as the pendulum swung hard from loose lending to too-tight credit.

Now, as the spring season brings more listings to the national market and as investors seem to be pulling back a bit, first-time buyers are testing the water again. Some markets, like San Francisco, will likely be cost-prohibitive, while others, like Philadelphia, could offer easier entry to home ownership.

“First-time home buyers were put at a disadvantage against all-cash buyers, but with interest rates still staying low, with the marketplaces having risen fairly decently, you’re seeing the opportunity where it’s less of an investment for investors but a good opportunity for first-time home buyers,” said Steve Berkowitz, CEO of Move Inc. operator of Realtor.com.

Houses are about to get really, really smart

Realtor.com ranked the top 10 markets for first-time buyers, using five factors to judge the best: market popularity, prices, inventory, time on market and employment. Pittsburgh, Tampa, Fla., and Philadelphia, ranked highest, mostly because their prices have not spiked much and their unemployment rates are lower than the national average.

Interestingly, Phoenix also made the top 10. Phoenix was one of the hardest hit housing markets during the crash, with prices literally falling by more than half from peak to trough. Investors targeted the market early, buying thousands of distressed properties at deep discounts and driving prices up by double-digits very quickly. Still, Berkowitz said it’s a great place for first-time buyers now.

How we will live: More green, more urban, more efficient

“Investors are looking for a certain level of return,” he said, and they’re not getting it in Phoenix anymore. Large-scale investors have moved on to other markets, like Atlanta and Chicago, where discounts are better.

Click to View Video “Hey First Time Buyers, Here are the Best Housing Markets”

Realtor.com released a list of the top markets for the first time home buyer. CNBC’s Diana Olick reports this is a crucial segment of the industry.

Click to View the Video “Where First Time Homebuyers Are” Video

Top 10 Markets for First-Time Home Buyers by Rank

realtor com best places to live 2014