Tammy Behnam and the Youth Business Alliance

Last week, our CEO and president, Tammy Behnam, visited Animo HS in Venice, CA as a guest speaker for the Youth Business Alliance.

She spent time with students and spoke about her life journey and career, followed by a Q+A session.

FICO reveals behaviors behind sterling credit scores

Tight mortgage lending standards have dashed the hopes of many would-be home buyers, but the developers of the most-popular credit risk score has revealed some habits and behaviors of "high achievers" with FICO scores above 785.

More than 50 million people -- about a quarter of all people with credit scores -- are considered high achievers and tend to have "strikingly similar" credit habits regardless of background or life experience, San Jose, Calif.-based Fair Isaac Corp. said.

Some of these habits are fairly predictable: They keep low revolving balances relative to their available credit, don't max out their credit cards, and consistently make payments on time.

But high achievers are not debt-free. They have an average of seven credit cards, including open and closed accounts, and carry balances on an average of four credit cards or loans. One-third have balances of more $8,500 on nonmortgage accounts.

Nevertheless, almost none -- less than 1 percent -- have an account past due. The overwhelming majority, 96 percent, have no missed payments on their credit report. Those who do have long since mended their ways -- their last missed payment happened an average of four years ago.

The FICO score ranges from 300 to 850, and is used by virtually all lenders to gauge credit risk and the likelihood a borrower will repay a loan. The credit score can affect how much money a lender will offer and at what terms; higher credit scores mean borrowers can potentially save thousands of dollars over the life of a loan, FICO said.

Ellie Mae Inc., which provides mortgage origination software to lenders, reports that the average FICO score for mortgages approved in September was 750, with borrowers making down payments averaging 22 percent, having front-end debt-to-income ratios of 23 percent and back-end DTIs of 34 percent.

Those whose applications were denied had an average FICO score of 704, with borrowers willing to make down payments averaging 12 percent. The average front-end debt-to-income ratio was 27 percent; the average back-end DTI was 44 percent.

The average FICO scores for purchase mortgages eligible for purchase and guaranteed by Fannie Mae and Freddie Mac was 762 (compared with 729 for denied applications), while FICO scores on FHA-backed purchase loans averaged 701 (compared with 665 for denied applications).

Because payment history makes up the biggest chunk of how a person's FICO score is calculated -- 35 percent -- managing credit responsibly over time plays a large part towards improving one's credit score, FICO said. This includes paying at least the minimum amount on all credit cards every month, the company added.

"Missing payments will lower a person's FICO score, but if that happens, establishing or re-establishing a good track record of making payments on time will generally improve a person's score," said Anthony Sprauve, credit score adviser for myFICO, the company's consumer division, in a statement.

By law, most negative information, including missed payments, is removed from credit reports after seven years. This does not apply to tax liens or Chapter 7 bankruptcy. About 1 in 100 high achievers had a collection on their credit report, and about 1 in 9,000 had a tax lien or bankruptcy.

"While people with a high FICO score are not perfect, their consistently responsible financial behavior usually pays off over time," Sprauve said. "In a challenging economic period, the fact that we all have a chance to be high achievers is very good news. The lesson from these high achievers is that it's never too late to rebuild and score high."

FICO high achievers typically have long, well-established credit histories and rarely open new accounts, FICO said. They opened their oldest credit account 25 years ago, on average, and their most recent credit account more than two years (28 months) ago. In general, their average credit account is 11 years old.

Their balances are often low and they use only an average of 7 percent of their available revolving credit, i.e., $70 on a credit card with a $1,000 maximum.

FICO considers both positive and negative credit report information within five general categories, the company said: payment history, amounts owed, length of credit history, new credit, and types of credit used.

The FICO score does not take into account attributes such as race, gender, age, marital status, salary, employment history or address, the company said. FICO's consumer website, myFICO.com, offers tips and tools to help people make decisions about their credit.

"Because a high FICO score is typically achieved over time and takes into account dozens of variables, there are no 'quick fixes' for rapidly improving scores or repairing bad credit," Sprauve said.

"Practicing good credit behavior consistently over time and regularly checking your credit report for errors can be instrumental for achieving a high credit score, which can lead to better loan terms and lower interest rates. Achieving good credit health is a long-distance event, not a sprint."

Three homeowner rights that are often underutilized

In the real estate realm, it's easy to feel like almost everything about the market, your mortgage and the value of your home is out of your control. But the truth is that there are many real estate rights that go unrecognized and, thus, unexercised:

1. The right to control your own utility bills. 

Many a homeowner feels slightly held hostage by their utility companies. Who else can you buy electricity, gas, or water from, they wonder briefly, before waving a mental white flag when they sign the check for their monthly payment?

In truth, there is much a homeowner can do to control both the amount and the provider of his utility services. You can go solar, whether by buying panels yourself or working with a solar power service that owns the panels and charges you a reduced, preset rate for energy over 20 years.

And there are many other investments you can make -- at many levels -- in improving your home's efficiency and, thus, reducing your utility bills. Things like installing dual-paned windows, improving your insulation, installing tankless or solar-powered water heaters, and converting every faucet to a low-flow fixture are among them.

On a less conventional side of things, installing graywater tanks that use wasted sink water for toilet flushing and landscaping, and replacing swathes of green lawn with low-water-consuming native landscaping or food gardens are some more work-intensive -- but more rewarding -- ways to put you back in control over your household's energy and water consumption (and expenses).

2. The right to fire your mortgage lender. 

Most people find their mortgages to be burdensome, to say the least. Even those who aren't among the 28 percent of homeowners with mortgages that are still underwater are almost always positioned such that their mortgage is their largest monthly expense and a looming financial obligation. Paying it off seems remote and hard to imagine; further, many homeowners will take out equity lines or refinance their mortgages over time, simply restarting the already long countdown to payoff.

But here's a shocker: Roughly one-third of American homes are owned outright by their owners, free and clear of a mortgage. Truth is, there are many ways to get your home unmortgaged, and not simply by asking your lender to forgive it.

You can exercise your right to live and own your home mortgage-free by pulling one or both of two basic levers: (1) you can cut your existing monthly spending and redirect your savings to paying down the principal balance of your home loan, (2) you can bring more income in, using that to pay your mortgage off earlier than planned, or (3) you can do both!

This might seem impossible, but if this is a right you'd like to exercise, calendar a few quiet hours to really review last month's bank statements. What you face is a decision about values and priorities: What's really important to you?

Some financial experts advise that lunches and dinners out, coffee shop stops, and cable TV are common categories of budget leaks -- these seemingly small expenses add up. But don't go extreme and try to deprive yourself of every night out or coffee chat with your friends; it's not sustainable, and you'll end up turning these moments of happiness into moments of guilt. Instead, cut back where you feel you want to and also cast an eye at larger expenses that can be eliminated.

Some homeowners have found hundreds of dollars a month they could redirect away from cable TV packages they didn't really watch and payments for cars and other big toys (motorcycles, boats, etc.) they didn't really drive.

In the same vein, it can be relatively painless to turn your hobbies or passions into small-scale side businesses, generating some early mortgage payoff funds. I personally know folks doing this through part-time bookkeeping, getting a stand at the local farmers market or even doing some cake decorating on the side. As well, an increasing number of homeowners are using their own homes to generate side income, either renting out rooms or floors on an ongoing basis, or just for a couple of nights here and there on sites like Airbnb and VRBO.

3. The right to HOA sanity. 

While the vast majority of homeowner associations (HOAs) are functional and smooth, the fact is that many have at least the occasional personality or financial drama. Rapidly rising dues, inane restrictions on minutiae like the color of your window coverings, and scary "surprise" special assessments for unbudgeted property repairs have made many a home buyer simply refuse to even look at properties that belong to HOAs.

It would be naive and inaccurate to suggest that you can 100 percent bulletproof your HOA experience from these sorts of potential potholes, but there are a number of rights you can exercise to minimize their likelihood of happening.

First, exercise the right -- really, the responsibility -- to spot red flags of impending HOA dramas before you even close escrow, by truly reading all the HOA disclosures you receive, no matter how mind-numbingly long and boring they might seem. If you see that many homeowners are behind on their dues or that the HOA's budgets don't seem to include plans for reroofing buildings, replacing windows, or making similar repairs to the common areas over time, be concerned.

And don't forget the seemingly fluffy newsletters or the seemingly boilerplate board meeting minutes: That's often where talk of neighbor disputes and proposed dues hikes and special assessments pop up first.

Once you're part of the HOA, you have even more of a duty-slash-power to participate in it, if you want to do your part to avoid problems. Attending board meetings or even becoming a member of the board is not overkill if you want to have a hand in choosing the accountants, building managers, and contractors who will have such a huge impact on your experience as a member of an HOA.

6 Things Homebuyers Should Avoid Once They are Preapproved for a Mortgage

You have done the hard part in the home-buying process and chosen a lender and a real estate agent to work with. You have also gone out and found the home of your dreams! Best of all, your team has done a great job of negotiating the best deal for you.

Now, as a buyer, all you have to do is sit back and wait for your loan to close … right? Wrong!!

Getting a home loan these days is a very interactive process. I am always amazed by how many clients I work with who come to me unaware of all the pitfalls they face during the loan process. To help avoid any surprises while waiting for final approval, I provide my clients with a short list of "do's and don'ts" to follow.

Let's start with the "do's" ...

1. Do keep the process moving by responding to your loan officers' requests for documentation as soon as possible.
2. Do make decisions as soon as is reasonably possible.
3. Do convey questions or concerns you
4. Do continue to make all of your rent or mortgage payments on time.
5. Do stay current on all other existing accounts.
6. Do continue to work your normal work schedule with no unplanned time off.
7. Do continue to use your credit as normal.
8. Do be prepared to explain any large deposits in your bank accounts.
9. Do enjoy purchasing your home but remain objective throughout the process to help make decisions that are best for you.

After you have been preapproved for your mortgage you will want to refrain from the following...

1. Do not make any major purchases (car, boat, jewelry, furniture, appliances, etc.).
2. Do not apply for any new credit (even if it says you are preapproved or "xxx days same as cash").
3. Do not pay off charges or collections (unless directed by your loan officer to do so).
4. Do not make any changes to your credit profile.
5. Do not change bank accounts.
6. Do not make unusual deposits into your bank accounts or move money around from one account to another.

Follow these simple rules and you will help to make your loan closing as smooth and hassle-free as possible! Good luck! 

CONDO for sale in Henderson, Nevada:

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Call me to schedule a viewing: 310-266-1102

Buyers pay premium for move-in-ready homes

First impressions are lasting. Home buyers and real estate agents remember what they see, not what you say your home will look like after you reduce the clutter, paint, and replace outdated floor coverings and light fixtures.

Most people don't have the ability to visualize how a home will look spruced up. If you show your home to prospective buyers or their agents before it's ready to show, you could lose out on a possible offer because they're turned off by the lack of appeal. It's often difficult to get someone back for a second look after you've made improvements.

One couple who'd been looking for a home that was big enough for their family heard that one of the largest homes in the neighborhood was coming on the market. They contacted the sellers and asked if they could look at the house before it went on the market. If they liked it, they could save the sellers the expense of preparing the house for sale.

The sellers agreed. The prospective buyers looked at the house but turned it down. They couldn't see past the dated décor.

The house went on the market months later. The interior was painted in decorator colors; old carpet was removed and the hardwood floors underneath were refinished; the overgrown yard was pruned and a new lawn was installed; and all the seller's belongings were moved out and the house was staged.

The house looked fabulous. It received multiple offers and sold for well above the asking price. Ironically, the couple who had seen the house before it was fixed up and passed on the opportunity were encouraged by a friend who attended the open house to take another look.

They did and ended up making an offer in competition. Unfortunately, another buyer made a better offer. The couple who first saw it lost out on an opportunity because they couldn't visualize the property's potential. This worked to the sellers' advantage because they netted much more on the sale than they would have if they'd sold it to the first buyers for the list price.

HOUSE HUNTING TIP: Many sellers resist the notion of fixing their house up for someone else. Although it's not a good idea to make major renovations just before selling a home, cost-effective cosmetic improvements can make your home more salable and could increase the amount you recoup when you sell.

Most sellers find the decluttering process tedious. The bonus of weeding out what you no longer want or need is that you don't have to pay to move these items. And, you're making your home easier to sell.

Some agents don't want to take time to help sellers prepare their home for a more profitable sale even though buyers pay more for a home that's in move-in condition. Ask your real estate agent how much your home might sell for in both its "as is" condition and after making cosmetic improvements. If you decide to prepare your home for an advantageous sale, use an agent who will assist you with this by prioritizing what should be done and helping you find people to complete the work.

It's not always possible for sellers to cosmetically update their homes before selling. The trade-off will be a lower sale price.

THE CLOSING: Make sure if you are going to spruce up your home for sale that you don't show it before the work is done.

4 Affordable Improvements to Make to Your Home Now

Now's a perfect time of year to create a plan for how you can tweak and hack your home to be a happier place. Here are a few inexpensive suggestions:

1. Paint like a scientist. 

Studies show that painting rooms colors that are consistent with their purpose actually makes a home's residents happier than they were before the paint job. 

Spending a weekend shifting to crisp and clean green bathrooms, soothing blue or cream bedrooms, and warm browns, golds, oranges, and reds for dining and living areas turns out to be one of the least expensive ways you can use your home to give your family an emotional boost.

2. Fix (or toss) what's broken. If your coffee machine has been sitting on the counter for four months waiting on a trip to the repair shop, you have drawers that don't close all the way, your dining table wobbles or your shower needs regrouting, you are incurring a little drain of energy, getting a little injection of frustration every single time you look at or try to use these items. Throw out or repair items that don't work -- stat. Just let them go.

Then, create a little inventory for home projects that need to happen, and get a handyman or the appropriate contractors on the horn and get bids so you can budget and plan for getting them done.

If someone in your home is a big do-it-yourselfer, negotiate an agreement that she will have X items fixed by Y date or you will call out a repairperson.

In any event, at least get the bids on the repairs; you might be surprised at how quickly and inexpensively they can get five or 10 little repairs done on a weekend, and your in-house do-it-yourselfer might decide that her time is more precious than the repair costs.

Same goes for situational setups that are simply not working for your life and your activities: If your office space or your kids' rooms are overflowing with clutter, after you purge (see No. 4, below), explore the many built-in and off-the-shelf storage solutions that are affordable and can render this space much more functional.

Generally, get aggressive about setting up each of your home's rooms to help your family optimally experience whatever purpose that room is designed for: Research how you can maximize your bedroom's restfulness, your living room's conversationality, your office's efficiency, and your dining area's coziness.

3. Trick out your trims. If you've ever done a soup-to-nuts remodel of your home's exterior and/or landscaping, you know that there's nothing like the feeling of driving up to your house at the end of the workday and simply loving the way it looks. But what if you don't have a ton of cash to drop on a complete curb appeal overhaul? I believe one of the most underestimated ways to change the way your home looks is to focus on the trims:

•Get a new door or just paint the door and get a new knocker, handle or kickplate.

•Refresh with new house numbers.

•Install exterior shutters, or paint existing shutters an entirely new color.

•Get new outside lights.

•Paint all the eaves and trims in a bold new color scheme.

You'll be amazed; painting a home's front door, eaves, shutters, and trims can make the entire home look like it's had a fresh paint job.

4. Purge. Books, papers, clothing -- these things accumulate as if through their own volition, and can create clutter and claustrophobia, the feeling that you have much less space than you truly do and the feeling of being trapped under a daunting pile of stuff you rarely, if ever, use.

If you crave to purge your stuff and simply seem to never get started make a game of it. Last year, I decided to get rid of 100 things in one month. The number 100 is uber-accessible, and if you give yourself a full month to do it, that can also help you feel confident that this is a mountain you can tackle.

Ultimately, I stopped counting at right around 250 items. The feeling of clearing and the sensory rest all that empty space in your home will create are both addictive sensations -- once you get started, I believe you'll find it easy and even exciting to get rid of things you no longer use or need.

5 Credit Habits to Break in 2015

Ready to win your financial resolutions? Find out how to succeed in 2015.

If you’re identifying 2015 — or even 2016 — as the year you make a major housing change, you’ll want to confirm that your credit behaviors are at their best. 



Buying a house is probably the biggest expense most of us ever take on in life. Your credit plays an important role in affording you access to the best terms available from your lender.

If credit is on your list of things to improve next year, there are many options to tune up the ways you think about and interact with your credit. Knowing the smart solutions to improve your credit habits can take you far in the new year — especially with a big purchase ahead.

1. Being disconnected

Habit to break: Not checking your credit report

Resolution to make: Check your credit report regularly to know where your credit stands, and to make sure you’re prepared when it comes time to buy a home. Consider your credit report the road map to all your credit behaviors: It’s important to know how your report will look to lenders and others when they see it for the first time.

2. Overspending

Habit to break: Running up or maxing out your credit cards

Resolution to make: To show others you’re using credit responsibly, keep your spending under control and in accordance with the budget you’ve set. Keeping tabs on your spending now will also help you benchmark how changes to your budgeting will affect how you spend after your home purchase.

3. Managing balances

Habit to break: Just paying the minimum balances due on your accounts

Resolution to make: Bring down the balances you’re carrying by upping your payment amounts above the minimum — this can also save you interest over the long term. You’ll want to keep that extra money in your pocket (and hopefully earning some interest) while you look for that dream property.

4. Seeking too much

Habit to break: Applying for credit indiscriminately

Resolution to make: Seek out and accept new credit sparingly, so your credit-utilization rate won’t be seen as too high when applying for credit during your homebuying process. Lenders can be wary of applicants they feel might be trying to amass excessive credit and overspend.

5. Getting behind

Habit to break: Making late payments on your accounts

Resolution to make: Stay on top of your accounts to keep all your payments on time, every month — it’s even more important in the months you’re considering a big purchase like a home. It may be the most basic but most important way to show you’re consistently being responsible with your credit obligations.

Challenging yourself by making it your New Year’s resolution allows you to take advantage of the months before your new home search begins to kick bad credit habits to the curb for good. You’ll want the peace of mind of knowing that when you discover that perfect listing, your credit is already in tiptop shape. 

Hidden Backyard Deal Breakers that are Lurking On Your Property

Every time a prospective home buyer walks onto your property, there are a few things that they will absolutely not put up with. These deal breakers can be anywhere in the home, but there is one area that we often forget about: the backyard.The backyard is very important to family life. After all, this is the place where children will enjoy their childhood and play in a safe and secured environment. Most home buyers prefer single-family dwellings solely because of the usable outdoor space! Take some time to focus on your backyard. After all, there are ways that you can update your backyard without spending money.

Pool in the Backyard

To many buyers, a pool can be seen as an expensive maintenance fee that they will have to pay for on top of the mortgage. Once they see a pool, they're going to start doing some calculations in their head thinking, "Now how much is this going to cost me?" Whether it's above or below ground, a pool can raise a flood of concerns over child safety.

Size of the Lot

The appraisal of your home is typically made in two elements, the lot size and the actual value of the physical home. That said, the size of your yard comes into play so you want to make sure that you spend a generous amount of time prepping your backyard for visitors. Getting rid of clutter and opening up the yard to make your lot feel larger will help you when it comes time to sell.

Pet Products

Hide dishes, play toys, and photos of your pets as this may make the buyer feel like the home is dirty, especially for a homeowner that doesn't like the idea of having pets inside the house. This will be a deal breaker if the buyer is allergic to cats and/or dogs.

Landscaping

With the price of water rising rapidly and droughts in California, grass isn't as appealing as it once was. When frugal buyers see grass, they see a sky-high water bill that will eventually lead to a dead yard and a new project to be undertaken. Think about landscaping trends like xeric landscaping, native plants, and artificial turf to make your home more appealing to all home buyers.

Leaving Backyard Photos Out of your Listing

This is a rookie mistake. If you leave out photos of your backyard, home buyers will think that you have something to hide. If you have a gorgeous yard, why wouldn't you want to showcase it in your listing? Are you hiding any skeletons in the closet?

Noisy Neighbors

Now this may be seen as something outside of your realm, but it may be worth a knock on the door to let your neighbors know that you will be showing your house at a given time. Rowdy neighbors can be an instant turn off to potential buyers. Make sure your neighbors' parties are held on a different day than your open house to give buyers a better peace of mind. After all, they will share a fence with these neighbors for an indefinite period of time.

So What Are Home Buyers Looking For?

A survey conducted by the National Association of Homebuilders found that new home buyers are looking for exterior lighting, lots of trees, a deck or patio, and a fenced in yard. Beyond the basics, an outdoor amenity that is rapidly gaining in popularity is the outdoor fireplace/fire pit, outdoor kitchens, and the outdoor living room.

Investing in the backyard can net you some of the highest returns. Knowing what real estate appraisers (and home buyers) are looking for will help you sell your property faster. That said, the exterior of your home is just as important as the interior of your home. Many people assume that the front and backyard aren't crucial to the buying process so they overlook these pitfalls. Make sure that your backyard does not have any hidden deal breakers that could steer away new bids!

How to Help Your Appliances Last Longer

Is it just me or does it seem that appliances don’t last as long as they’re supposed to?

Our dryer died after 11 years (two years before a typical dryer’s lifespan is up), and we repaired our refrigerator three times before it reached its 12th birthday (it’s supposed to live for 13 years).

Full disclosure: I wouldn’t give myself an A in appliance care. But in the future, I vow to keep up on regular maintenance that’ll keep my new dryer running longer than my last one.

Rob Carpenter, owner of a Mr. Handyman franchise in Maryland, shares some insider tips about how to extend the life of home appliances.

Refrigerators That Last

Refrigerators break down when doors don’t close tightly, forcing motors to work overtime to keep food cold. To test your door seal, close the door on a dollar bill: If the bill slips, you’ve got a problem that requires refrigerator maintenance.

Magnetic strips embedded in gaskets around refrigerator doors make doors close snugly, but they routinely wear out and should be replaced or re-magnetized every couple of years. If you’re handy, re-magnetizing is a DIY job — just run a powerful magnet along each side of the gasket, in the same direction, about 50 times.

If messing around with the refrigerator door is beyond your pay grade, call a professional. Pros typically charge around $242 to repair door problems.

Washing Machine Endurance

Loose change banging around your washer drum can cause dents, chipped paint, and rust, so make sure to empty pockets before washing clothes.

Also, maintain your washing machine by regularly cleaning or replacing filters that trap water sediment before it enters your machine. Filters, which look like thimbles, are located in the back where supply hoses attach to the machine. Remove hoses and either poke out debris with a tip of a flathead screwdriver, then remove and wash the filter, or replace it.

Dryers That Keep on Drying

In addition to regularly cleaning out your dryer’s lint trap and exhaust hose, inspect the exterior vent — hot air must escape your house unimpeded.

Make sure the hinged exterior vent pops open when the dryer runs. If it doesn’t, open the cover and scrape out lint with the end of a hanger or dryer vent brush ($13). If your vent is louvered, clean slats with an old toothbrush.

Dishwasher Extenders

Here are ways to keep your dishwasher stress-free and long-lasting:

• Prime your dishwasher by running the hot water in your sink before you begin the cycle. This will clean your dishes with hot water from the very start of the cycle.

• Once a week, run your dishwasher empty except for a cup of vinegar, which will keep it shining and smelling fresh.

• Clean out food traps regularly.

• Wipe clean the seals around dishwasher doors.


Toaster Thoughts

Darkly toasted bread will burn out your toaster two years earlier than lightly toasted bread. So if you can live with lightly crisp rather than almost burnt, you’ll get a few more years out of your toaster. 

Checklist for First-Time Buyers

Here’s your step-by-step guide to getting all your ducks in a row so that you’re ready to make a winning offer on the home of your dreams.


Step 1: Make sure you’re (really) ready


Homeownership is a big commitment. Before you leap, make sure you can answer “yes” to the following questions:

Is your job stable?

Do you see yourself living in this town for the next five to 10 years?

Are you prepared for all the extra work that comes with homeownership, such as repairs and maintenance, yardwork, pest control, and attending HOA meetings?


Step 2: Create a list of “musts”


Homebuying is like dating: If you’re expecting absolute perfection, you’ll be disappointed. Few people find a home that’s 100 percent ideal. It’s important to know which issues you’re willing to compromise on and which are deal breakers.


Maybe you’re willing to buy a fixer-upper if it’s in a great location. Maybe square footage matters most to you, and location is secondary. Maybe you’re willing to get a home that requires a major makeover as long as the “bones” underneath are solid.


Check out different neighborhoods, home styles, and listings online to get a feel for what’s most important to you.


Step 3: Figure out what you can afford


Your mortgage payments aren’t the only cost you’ll need to consider.


First, you’ll need a down payment. Ideally, you’ll want to put down at least 20 percent of a home’s purchase price to avoid paying private mortgage insurance (PMI), an additional charge tacked onto your mortgage payment.


You’ll also want to make sure you’re financially secure enough to handle any maintenance or repair costs that can (and will) crop up. If the plumbing bursts or the roof needs replacing in a few years, do you have enough of an emergency fund on hand to cover it?


As a rule of thumb, you should set aside 1 percent of the purchase price of the home, each year, in your “house emergency fund.” That’s $83 per month for every $100,000 of home value.


Step 4: Gather documents


The loan approval process is a test of how much paperwork you’re willing to endure. It’s time to spend a weekend organizing your files.


Collect your proof of employment, such as pay stubs and copies of the past two years of W2 forms (or 1040 tax returns if you’re self-employed). Print out bank and investment account statements from the past 30 days, canceled checks from the past 12 months showing that you’ve paid rent on time, and contact information for your landlords for the past two years.


Step 5: Get prequalified or preapproved


You don’t want to lose out on your dream home because you haven’t gotten pre-approved for a mortgage. (It’s happened.)


Before you visit a single house, gather that documentation from Step 3 and get prequalified for a loan. The prequalification process is relatively quick and easy — you’ll simply provide information about your income and debts. Many sellers won’t even consider a bid unless you’re prequalified for a loan.


For extra credit, take the next step and obtain a preapproval letter. This step is more time-intensive and requires a through credit and background check, but it can make you a stronger candidate in a seller’s eyes.


Step 6: Assemble your support team


You’re new to the homebuying game, so you’ll need the right people on your side to help you navigate it. Find a real estate agent you trust and communicate well with, and don’t hesitate to enlist a friend or family member for a second opinion. 

Selling Your Home: Safety First