Income is a big factor in determining whether or not to issue you a loan. Loan calculations take into consideration your total debt, housing debt and the ratio of these numbers to your gross income. If your numbers look too high, you can always look for ways to lift your income in order to qualify for the mortgage for your dream home.


Qualifying income varies


Many people don’t have a single, steady source of income. In many households, people have multiple sources of income, and these sources may fluctuate. For example, waiters and waitresses may have trouble proving a steady income, because tips vary so much. People who hold down a part-time job may find that their income fluctuates depending on how many hours they’ve worked. Even regular, full-time employees may have fluctuating income due to overtime, bonuses or commissions.


Showing a history goes a long way toward establishing that income is steady


One of the first things that lenders look at when evaluating your income is your income history especially if you are self-employed or on a commission pay structure. Lenders will look at your last two years of tax returns if you fall into either of the last two categories. They’ll normally average out the last two years unless your most recent year is much worse than the prior year. If that’s the case, they will most likely use the most recent year only.


If you’re salaried, they like to see a history of employment for at least the last two years. So if you’ve been unemployed or chosen not to work for an extended period of time, plan on being at your current job for at least 30 days and then be prepared to provide a written explanation for the previous unemployed time. The exception to this rule would be if you’ve just graduated from school. Any bonuses, overtime or commission you receive at your job would usually be counted as long as you have a track record going back 2 years minimum.


Explain your income, in writing, if in doubt


If you’ve got special circumstances, explain it to your lender, in writing. If you can provide evidence to back a less conservative income estimate, your lender may be willing to consider it if it is on paper. Make sure you explain thoroughly, and enlist the help of your accountant if you have special income circumstances that require a more detailed explanation.

In order to be valid, a purchase agreement must be untainted by fraud or misrepresentation. When you sign a P&S and agree to buy a home, you have a right to reasonably expect that the seller’s statements regarding the property are true. If a contract is based on fraud or misrepresentation, courts may render it unenforceable and you may be legally able to pull out of the agreement. Fraud and misrepresentation typically renders a contract unenforceable, which means you may pull out of the purchase agreement before buying or may be eligible to receive damages if you’ve already closed on the home.


Sellers Must Speak the Truth


Sellers often speak nicely of their houses in an attempt to sell their homes to potential buyers. Especially in a buyer’s market, sellers want to make their properties seem as attractive as possible, and may emphasize positive selling points and minimize the negatives in an attempt to woo buyers. As a buyer, though, you have a right to expect that statements that the sellers make about their homes are true.


If the sellers tell you, for example: “We’ve never had any problems with the roof” or “Oh, yes, this addition to the house meets all the building and safety codes,” you have a right to expect that these statements are true. If you discover that these statements aren’t true, and you relied on them in your decision to purchase the house, you may legally refuse to fulfill the agreement.


If you’ve already closed on the property, you may be eligible to sue the home buyer to recover damages or rescind the contract. Generally, courts won’t hold you to agreements based on fraud and misrepresentation, and you may be able to reverse the home sale or receive damages if the sellers have made a substantial misrepresentation.

An important part of the home purchase process is the earnest money or good faith deposit. An earnest money deposit shows the sellers that you’re serious about buying their home. A larger deposit can often pave the way to a smooth closing, when a small deposit could prompt argumentative or unhappy sellers, or even lead to the rejection of your offer. Make sure you handle the earnest deposit in a way that protects your interests and still entices the buyers, and know what’s legally required and what is safe for your money.


No Earnest Deposit is Legally Required


Contrary to popular belief or what sellers would try to tell you, no earnest money deposit is required to cement a home purchase. All you really need to do is make an offer that the seller accepts, and get a signed purchase and sale agreement. But many sellers want an earnest deposit, so while it’s not legally required, your offer may be rejected if you don’t offer a good faith deposit. An earnest money deposit may range from one half a percent to 10 percent of the total purchase price.


Don’t Give the Sellers Your Deposit


In most home closings, you should never give the sellers your earnest deposit. The deposit should be held in trust or escrow by an impartial third party; typically the title agent, an escrow agent or a lawyer. If the deal falls through, you should be able to get your deposit back.


What Happens to the Money?


If your sale goes forward and proceeds smoothly, your earnest deposit will go toward your down payment and settlement costs. If the deal falls through in spite of good faith efforts to negotiate, you may be entitled to receive your deposit back. If the sellers refuse to sign a release for you to receive your deposit, you and the seller must agree on a form of dispute resolution to resolve the fight for the money.

Another important element of your property description is fixtures. When you buy a home, you assume that certain elements are being included in the property. In many cases, it’s understood that things like fireplaces, bannisters and crown moulding are being sold along with the home, as these are permanent fixtures that are attached to the house itself. But fixtures may not always be as permanent as they appear, and some homeowners have even been known to unbolt fixtures to take them when they sell a home. Make sure you include a thorough description of all property fixtures so you can ensure that everything is there when you move into your new home.


Fixtures Include Permanent Attachments


Generally speaking, fixtures include anything that is permanently attached to the home. Things like light fixtures, chandeliers, sinks, cabinetry, mail-boxes, ceiling fans, garage door openers, built-in window or wall AC units, wall-to-wall carpeting and storm windows all fall under the fixture category. If you don’t specify every fixture that is included in your home purchase, there’s nothing to stop the seller from taking these fixtures with them. And sometimes the things that seem to be permanently attached aren’t really as permanent as they look.


Sometimes Permanent Attachments – Aren’t


Some petty-minded sellers take everything; light bulbs, mini-blinds, curtain rods. (Yes, I can hear you questioning now: Seriously??? Yes it is indeed true!) In other cases, fixtures may be worth a substantial amount of money or may represent a substantial investment, and the sellers understandably want those particular fixtures to go with them. If a seller has room for a $10,000 chandelier in their new home, he or she would almost seem silly not to take it. So it’s important to define what is permanently attached and going to be sold with the home, and what the sellers can take with them when they move out. This way there can be no confusion as to the ownership of the fixtures with the home ownership transfer.

Saving is one of the most important financial considerations for the aspiring homebuyer. Saving money helps you put together cash for your down payment, but it also prepares you for potentially expensive home repairs and expenses. Likewise, saving now gets you into the habit of saving later; a habit you’ll need to continue even after buying a home in order to meet retirement needs and other goals.


How much to save


Most people have no idea how much money they should be saving. While conventional wisdom says to put 5% of your income into savings, that may not be a realistic goal depending on your income, expenses and needs. Unfortunately, only you can determine how much you need to be saving, and whether or not you’re meeting that goal. Do this by putting together a budget, and developing a long-term plan for your goals.


When creating a plan, consider all your goals


Many aspiring homeowners focus only on saving a down payment for buying a home, and forget to think about all the other potential financial drains that lie ahead. You can’t just save to buy a home; you should save for home repairs, and in the event that a member of the household loses a job. You should save for emergencies. If you have kids, you need to save for education. Finally, you need to save for retirement.


Put together a saving plan that will meet all your future needs; not just your needs in the next few years. Think about your long-term goals when you buy a house. You may not want to buy all the house you can afford, because it might be a good idea to put some of that money toward retirement savings or other goals.


Bottom line: you can’t make an intelligent decision about how much you should be saving and how much home you can afford until you’ve outlined your goals, budget, income and expenses.

Buying a home in Iowa, or anywhere else around the country, is a big decision. You’ve got a lot to consider, balance and weigh when you select a home. You want a certain amount of space, and certain features in your home, all for a certain budget. However, when you’re shopping for a home, you can’t just consider the features that the house boasts; you must also take logistics into account.


Location, location, location.


It’s a well-known fact that prime locations cost more money. Locations near shopping centers and other amenities cost more, because they’re valued more highly. Likewise, locations near easy transportation, such as public transit or highway and interstate access, are more expensive. Therefore, many people who are budget-conscious eschew these locations for areas where they can get more for their money.


Unfortunately, this strategy can be a double-edged sword. Sure, if you buy further out, you can get more space and better home amenities for the same price. However, if you buy a home that requires you to commute for an hour to work every morning and night; 10 hours per week; 40 hours per month; you’re going to learn to hate your location that you picked very quickly.


Don’t just look at your budget and desires for your home features when you’re selecting a home. Consider logistics. Do you need easy highway access? Shop for a home convenient to highways. Do you want to be able to take public transportation to work, or walk to a local coffee shop? Look for locations that offer these amenities.


Compromise is key.


Just as you won’t be happy if you have a third of the space you feel you need in a home, you also won’t be happy in a bad or poor location. Consider all of these factors when you’re selecting a home. You may need to compromise somewhere; less space for a better location, or vice versa. Evaluate logistics, not just the home itself, when you’re making a final decision and you will be far better off in the long run with peace of mind that you m

Once you’ve created a budget, you have a detailed tool that can help you figure out where to spend and where you can cut back. Some expenses are normal and may even be necessary, but most families have plenty of areas where they can cut back and free up cash in their budget.


Reduce or eliminate consumer debt.


Consumer debt isn’t inherently a bad thing, but it costs you a lot of money. Three credit cards, a personal loan and an auto loan can cost you hundreds of dollars every month, and that’s money you could be spending elsewhere – or better yet, saving. Rearrange your finances to reduce consumer debt, and you’ll ultimately free up money you can use elsewhere.


If you’ve got money in savings you can use to reduce consumer debt, do it. You may earn 1% on your money in savings, if you’re lucky, while consumer debt typically costs anywhere from 7%-25% every month. The math is simple; you’re not making enough money by keeping it in savings to offset the amount of money you’re spending on interest on your consumer debt. Don’t deplete savings to the point that you don’t have an emergency fund, but if you are fortunate enough to have excess money in savings, use it to pay down or reduce consumer debt.


Determine which items are necessary and which items are luxury.


Food is a necessity. However, dining out every night is a luxury. While it’s unreasonable to expect yourself to curb your dining out habits entirely, look for ways you can cut this expense. Likewise for other unnecessary expenses.


While complete deprivation of all your basic wants and desires in life isn’t sustainable long-term, look for ways you can alter your spending habits to keep more money in your pocket. Use generic items instead of name-brand, cut back on your cable service and replace Starbucks with a coffee from home. These are just some of the many ideas


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