Dear Michael: I am being told that the real estate market has had a recent surge. Are you seeing any signs that this is the case?
Answer: The real estate market has picked up steam within the last year. Properties, which are priced competitively, are now selling, in some cases over asking and in multiple offers.
The principal attributes causing this surge are record low interest rates, economic recovery, bank easing lending regulations and a lack of inventory. If you are looking to purchase a home, now is a good time to buy.
All signs indicate that we are rebounding from the “bottom” of the curve with full steam ahead. It is very difficult to time a market. My advice is that if you are ready and able to purchase a home, this is a very good time.
Dear Michael: How does a lender decide the maximum loan amount that I can afford?
Answer: The lender considers your debt-to-income ratio, which is a comparison of your gross (pretax) income to housing and non-housing expenses.
Non-housing expenses include such long-term debts as car or student loan payments, alimony or child support.
According to the FHA, monthly mortgage payments should be no more than 30 percent of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41 percent of income. T
he lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.
Dear Michael: We are closing escrow on our new home. At closing does the seller or buyer pay the property taxes?
Answer: Taxes are typically pro-rated to the date of closing – that is, the seller pays the days that he or she owned the house, and the buyer pays any remaining days left for the current bill (property tax bill is from July 1 until June 31) as well as any bill that is due within 60 days of the closing.
Because there is a delay before a buyer’s first payment is due, the money for the upcoming bill is collected at the closing to be certain that it is paid on time. I
n some areas, this practice may be different – and there may be more taxes then “property tax” – there may be county, school or other taxes as well.
All taxes may be negotiated as part of the purchase agreement – if the seller’s agreement to pay the upcoming tax bill is enough to make a price agreeable to both parties, there is nothing stopping the parties from making this agreement before a purchase contract is executed and finalized.
Michael Kayem is a Realtor with Re/max /Execs serving Culver City and the Westside since 2001. You can contact Michael with your questions at 310-390-3337 or email them to him at: homes@agentmichael.com