PRE-QUALIFICATION / PRE-APPROVAL

I often get calls from folks wanting to buy a home. I always ask if they have been to a bank to be pre-qualified.  Let me explain why this MUST be your FIRST STEP in finding a home. Getting pre-qualified is very easy – and FREE! If you want to take it a step further, ask to be pre-approved – that’s when the bank runs a credit check (small fee involved – like the cost of 2 lunches?).

Getting pre-qualified – or even better, pre-approved – allows you to know exactly how much home you can truly afford to purchase. So, if the bank tells you that you’re pre-qualified at $325,000, you know exactly what homes to search.

Very often, prospective buyers tell me that they are already paying $1200 per month in rent. They use this number as what they can afford to pay toward a home loan. But, this is not how a bank calculates how loan they will give you.

Lenders use the 28/36 method for conventional loans (not the 100% financing loans).  What this means is that the TOTAL of all your debt obligations for a month cannot exceed 36 percent of your income. These debt obligations will include car loan, child support, student loan, personal loans, credit card payments – anything that will show up on your credit report.  (No, it does not include that loan you got from mom or dad.)  ALL OF THESE DEBTS ADDED UP MUST NOT EXCEED 36 PERCENT OF YOUR INCOME.

I mentioned “28/26” – this means that your monthly home loan payment is not to exceed 28 percent of your monthly income.

The balance – 64% – is what you use for rent, utilities, private schooling, college, eating out, living expenses.

Garages are becoming more and more commonplace on Guam these days. A good percentage of newer homes on Guam now include a garage in the floor plan. Makes excellent sense where tropical storms and typhoons are part of Guam’s DNA.

Whether you park your vehicle inside the garage or just use it as storage, there is plenty you can do to improve – and add to – the use of this huge space. So, let’s consider how we can turbocharge your garage.

1. Coat the floor:  Garage floors are, very often, just bare concrete. Coat the floor with an epoxy finish. It will make the floors easier to clean (remember that oil patch from your vehicle?) and longer-lasting.
2. Add to the storage space:  Yes, you can! Hang the bicycles, tricycles, paddleboards, kayaks, etc. up. Install hooks and racks on the walls and the ceiling. Install shelves on the walls and from the ceiling. Free up some floor space and be clutter-free!
3. Create a work station for your hobby: Avid carpenter? Love to fix vehicles? Into gardening? Well, a work station will help keep everything together, making it easily accessible and organized.

So, there you go. Another easy weekend task that can involve the whole family.

The Boy Scouts’ motto is “Be Prepared” (taken from the initials of the founder, Baden Powell).  This week’s blog is about being ready, being prepared, getting all the ducks lined up.

Guam’s real estate market has shown consistent upward mobility in both activity (number of properties sold) and value (prices of the properties) since 2015 after years of slum or slow growth. This is a good sign of an improving economy. For the buyer, it means we have a shrinking inventory of properties for sale.

So, how can you position yourself to win a home in this market? It means you need to start planning sooner rather than later.  You want to Be Prepared.

Here are some tips:

1. Visit a bank and be pre-qualified. A lender can teach so much about the ins-and-outs of mortgage loans and how to be financially prepared when you find the right house. A pre-qualification lets you know how much loan you can get now. If that amount is not going to get you the type of house you want, you’ll know you have to work on improving your income and savings.
2. Start searching now – even if you’re not a “serious” buyer yet. Surfing real estate websites (like www.guamrealestate.deals) will help educate you on what’s available, where it’s available, the pricing. You’ll learn to know what you can get for the amount the bank has pre-qualified you.
3. Start budgeting. Because the pre-qualified amount is not all that you’ll need. That is just what the bank will lend you. There are other costs involved – the loan application fee, home insurance, the new furniture and appliances you’ll want to buy.
4. When you are ready, work with a REALTOR. A seasoned and experienced REALTOR can be of a lot of help in helping guide you through the process of defining your dreams and turning them into reality. Your REALTOR can help you position your offer to make it strong and outdo the competing buyers. Don’t be afraid to interview a few REALTORs to select the one that you trust to know the market, the loan process and has your best interest at heart.

First-time home buyers have always played a huge role in the real estate market to REALTORs.  We love the enthusiasm and determination of the first-time home buyer.  And, REALTORs truly get “job satisfaction” from helping first-time home buyers move into their first home.

The first-time home buyer will, quite naturally, lack experience and knowledge (property conditions, survey issues, financing options, financing requirements, etc.).  But here’s where a true professional REALTOR can help guide you.  Find yourself a REALTOR that returns your phone calls, who replies to your emails and text messages.  Find yourself a REALTOR that shares your excitement and determination – and your nervousness!  A good REALTOR will also help you with finding a home with resale value.  (Yes, resale – read my June 10, 2017 blog on “Forever” homes?”)

I never get bored with the “job satisfaction” I receive from helping a family move into their first home.  I’m always up for some gardening, back-filling, landscaping, painting – and even busting down walls!

This week’s blog is a contribution from Kim Anderson Young, President of Security Title Inc., Guam’s premier title and escrow company.  Kim Young has over 30 years of experience in the real estate industry.  Her contacts are below her article.

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“So you have finally taken the big step and formed a trust in order to avoid your heir having to probate your estate and pay excess inheritance taxes when you move on to greener pastures.  Good for you!

The next important step is to transfer all of your assets into your trust. This is called “funding” the trust. Without taking this step, all your hard work and good intentions may be wasted.

Your trust attorney and/or tax accountant may recommend that you contact Security Title to conduct a title search of any property that you own; if you own multiple properties, we can even perform an asset search to make sure no property is left out. The title report will reveal the current exact ownership and legal description of your property and, will provide accuracy for the transfer from the current ownership into the ownership of your trust.

If you own property in your name (or as community property), transferring title to your trust is an easy step involving just a simple quitclaim deed or deed of gift. Your trust attorney and accountant will walk you through this step, providing the necessary documentation.

To ensure that your title insurance remains in full force and effect, Security Title can assist in the process. We will take care of recording the deeds and will provide an inexpensive endorsement to your title insurance policy that will extend the coverage from your individual names to your trust.

Trusts are becoming a very common estate-planning tool – and not just for the very wealthy. Not only do they minimize inheritance taxes and avoid probate, they can be used to care for the health, education and welfare of minor children, or incapacitated family members when you are no longer there to care for them.

Remember, though, a trust is not a stagnant entity – the care and feeding of it is your responsibility.  It needs to be continuously updated and properly managed to ensure it is the tool it is designed to be.”

Kim Anderson Young at kim@securitytitle.net or 1-671-647-8100

Not all home improvements cost a whole paycheck or take up days – or require you to hire a contractor.  There are many small jobs that are easily do-it-yourself.  And, these small jobs can translate into HUGE aesthetic and capital improvements.  Try one or some of these over the weekends:

1.  Walkway improvement.  Lay bricks or paving stones leading to the front door.  You’ll need to trench a little to set the bricks or stones.  Lay the bricks or stones about 1.5 to 2.0 inches higher than ground level so you will not have to walk on water when the rains come.  Make the walkway wide – a comfortable width so that you won’t have to walk like a circus tightrope artist.
2. Living room.  This room is the first room you and your guests see.  “WOW!” it with a fresh coat of paint.  It can be so refreshing.
3. Front door facelift.  So, it is said that the front door is a home’s “smile.”  Give it a new coat of paint or stain.  It’ll do wonders for curb appeal.
4. Laundry area.  Always lacking in storage space and always grungy looking?  Easy fix!  Install some shelves on the wall.  Or, if you are more ambitious, hang some wall cabinets.  Change to a brighter light bulb.  Install a tension rod for hanging delicate items of clothing.

Make it a family event!

Easily 90 percent of sellers are hopeful for a quick sale when they first put the house on the market.  Then, as the months pass and the house remain on the market, you begin to worry and wonder why you have not received any offer – or any real offer.  Let’s examine the various possible reasons and take corrective steps to fix the problem and, finally move on.

1.  You overvalued your property – you overpriced it.  Too often, sellers have sentimental values about their property and they tack this sentimental value to the selling price of the property.  Unfortunately, sentimental values have no dollar value.
2. You’ve added on the cost of renovation to the value of the house.  Not every renovation adds value to a house.  A house with renovations that are too customized may actually reduce the dollar value of the house.
3. You are always present at showings.  This makes the prospective buyers uncomfortable.  Give the prospective buyers and their REALTOR space.  Give them the privacy to make comments and discuss.  Give the prospective buyers the chance to visually move into the house.
4. You have not bothered to clean your home.   First impressions are important.
5. You have too much clutter.  Even if you’ve cleaned, your home may still be too cluttered.  Removing the unnecessary furniture or picture can make a room larger and more spacious.
6. There are just too many repairs needed.  Prospective buyers are generally prepared to make some repairs to suit their individual style and taste. However, a house that shows too many needed repairs can turn buyers off.  Buyers will then wonder what other repairs are needed that they cannot see.  A well-maintained home shows to prospective buyers that you care for your home.
7. You chose the wrong REALTOR.  The REALTOR has not bothered to market your house positively.  The REALTOR has not bothered to post attractive photos of the best features of your home.

Our grandparents (sometimes also, our parents) buy a home, raise a family and live in the same house until they die. We are then left with the decision to keep or sell the old family home.  Yes, the “forever” home.  The “family home” where so many memories live.

Well, say goodbye to the concept of the “forever” home.

For years now, surveys conducted by the National Association of REALTORs and other research companies show that the average homeowner will move every 7 to 10 years.  A recent survey conducted by the Taylor Morrison group revealed that at least 58% of millennials consider the concept of the “forever” home to be dead!

Today’s homeowners move from one home to the next as their lives evolve and change.  Better income, new job.  A growing family (size and age), schooling, college.  Lifestyle changes.  Aging considerations.  All these factors play a role with today’s mobile homeowner.

Does this mean that we are now a generation where the “family home” no longer holds value in our lives?  Absolutely not.  It simply means that now we have a greater variety and stock of exciting memories.  Afterall, home is where the heart is, right?

You’ve likely been hearing this lately about the real estate market on Guam – that it’s a “seller’s market” out there.  For homebuyers, this is a real struggle:  the lack of inventory.

Hardly any new homes are being built lately.  The severe shortage of skilled labor for the construction industry has put a screeching halt to many builders’ plans.  This shortage – or lack – of new homes for sale has led to a rush from buyers to select from the inventory of existing homes.  Yes, we are “re-cycling” homes on Guam.

But there’s absolutely nothing wrong with purchasing an “existing” home.  Many of the older homes are solidly built with poured-in-place concrete as opposed to new homes that are built from concrete blocks.  I’ve seen from my years of selling homes on Guam that the poured-in-place concrete homes of old withstand the earthquakes so much better.  Take a look, after an earthquake, at the newer homes built from concrete blocks and you’ll, more than likely, see fine lines of cracks in the plaster.  These lines do not, however, mean that there are structural cracks.  These plaster cracks are easily fixable.