LAS VEGAS HOME LOAN CANDIDATES DIAGNOSED WITH DTIS
It might sound shocking, but our Las Vegas’s homeowners—present and future—have DTIs! Although the press has been largely silent, it’s important that the public is fully educated on the subject. But before anyone calls an emergency meeting to see what can be done… The good news is that, despite how dire it may sound, having DTIs isn’t a health menace (even though it is true that Las Vegas homeowners have both front-end and back-end DTIs). In fact, they’re not only not a problem, the truth is that without DTIs, it’s doubtful any of us could qualify for even the simplest Las Vegas home loan. You needn’t bother Googling “DTIs”—they are Debt-To-Income ratios. So everyone with debts and an income has them. They are quite useful when it comes to predicting the maximum home loan amount that can be handled comfortably. Knowing your DTI will clue you in on how many homes you can easily afford. It will also tell the bank or other mortgage lender the same thing—once they verify from your credit history that you are an established bill-paying good citizen. DTI computations are wonderfully simple. In fact, even without formally knowing how they are calculated, most Las Vegas residents have a feel for what they measure—it comes with paying the bills every month. The front-end ratio is easy to arrive at. By taking a home loan payment (all-in: principal, interest, taxes and insurance) and dividing it by the monthly before-tax income, you come up with a percentage. A $2,000 mortgage payment with an $8,000 income yields 2000/8000, or 20%. Most lenders would smile on that number, but a maximum of 28% is considered standard for the front-end ratio (although no debt ratio rule is carved in stone). The back-end ratio is broader. It’s what’s usually meant when “DTI” is cited. Among the bills included are those for credit card and car loan payments, alimony and/or child support, student loans, personal installment loans and payments for co-signed loans (even if the co-signee is paying them). NOT included are other monthly expenses like utility bills, health insurance payments, cell phone and cable bills. To finish calculating the back-end ratio, just take those debt payments, add them to the home loan payment, then divide that total by income: the resulting ratio comes out as a percentage. An income of $6,000 with debts of $2,500 would yield a DTI of 41.67%, which is within the federal “qualified mortgage rule.” Forty-three percent is the top number officially allowed. So, a rule-of-thumb like “no more than 28% of debt should go toward servicing a home loan” actually just restates the front-end DTI guideline. Other factors—like credit history and liquid assets available for a down payment—go into the banks’ decision-making, but as soon as you familiarize yourself with your DTIs, you’re talking the lenders’ language! Call me when it’s time to buy or sell, and we’ll soon be talking all of the dialects that make up the Las Vegas’s real estate language!
RECENT DEVELOPMENTS IMPACT THE LAS VEGAS REAL ESTATE SCENE
A couple of recent developments made the news recently that promised to impact our Las Vegas’s real estate scene either now or in the future. The one that got most of the attention last Wednesday came from a familiar source: Federal Reserve Chair Janet Yellen. Her news conference’s less-than-stirring pronouncement (“Caution is appropriate”) made headlines nonetheless because of the accompanying action (actually, inaction): no increase in interest rates. Las Vegas real estate watchers will remember that when the Fed increased their Fed Funds target rate by a quarter of a point last December, they nudged it upward from zero to .25%. It was the first move in nine years, and was accompanied by a statement that they anticipated making three or four similar small increases throughout 2016. Thus it was expected that another quarter of a percentage point would be announced by now, so the news marked a mildly surprising turn—one that will be welcome to anyone contemplating buying or selling real estate in Las Vegas. The continuation of a miniscule Fed Funds rate translates into significant savings for everyone, particularly when measured against the historical norm of 2%-5%. Soooo: as for the first development, ring the bell: good news! The other development had come earlier. It was one that might turn out to benefit real estate activity—but it could conceivably have the opposite effect. It, too, dealt with government and finance, this time in the realm of real estate taxation: a bill introduced in Congress. H.R. 4494, the Renters Fairness and Equality Act, would amend the IRS Code to give renters a federal tax break. It would put renters on a footing similar to that which allows Las Vegas homeowners to deduct mortgage interest and property taxes. As in all things Washingtonian, the proposed details are complicated. The total amount of rent paid would become federally deductible, but only for some (tenants in very expensive Las Vegass wouldn’t qualify). The way such proposals become law, the final rules could differ—and in any case, there is faint likelihood of swift enactment. The legislation had been introduced by a lone Democrat, and was now sitting in the Republican-led House Committee on Ways and Means, where it was predicted to evoke continuous and profound inactivity. But even if that turns out to be its fate, H.R. 4494’s introduction was an interesting development—an idea that might someday catch on. Around here, it raised the question of whether this would be good news for Las Vegashome values. The federal tax break is a major inducement prompting renters to buy, so a number of prospective buyers might go missing. On the other hand, many renters who have been priced out of the market because they’ve been unable to save for a down payment would get meaningful relief. Additionally, the prospects for Las Vegas investment real estate could benefit greatly if consumer demand for rental accommodations were to expand—as groups promoting affordable housing projected. The promise that mortgage rates will continue to provide a welcoming backdrop for this spring’s selling season comes as unambiguously exhilarating news for Las Vegas’s real estate market. To investigate further, do give me a call!
SPECIALIZED TERMS THAT APPLY TO ANY LAS VEGAS HOUSE FOR SALE
You will find that most advice about preparing your Las Vegas house for sale features a couple of indispensable terms: de-clutter, clean, and de-clutter. That’s not a typo: you can’t say ‘de-clutter’ often enough. It has to be emphasized that “clutter” doesn’t necessarily refer to shabby or threadbare items—it means literally everything that doesn’t advance the look and feel of a spacious, ready-to-move-into dwelling. That’s why this specialized definition of “clutter” might include a good-looking leather ottoman that perfectly matches its recliner (but which leaves too little space for walking from the den into the kitchen) … or the wide-shaded authentic Tiffany standing lamp with the stunning dragonfly motif that doesn’t match anything else in the house…or the chest in the hall that holds all the winter stuff. Even if our Las Vegas’s winter hadn’t ended last Sunday, that chest and the winter gear ought to find a temporary home in a less obtrusive housing. In other words, when you have a house for sale in Las Vegas, clearing away non-essentials to emphasize spaciousness is a high priority—even if it might mean sacrificing some degree of livability. Yes, you DO have to continue to live in your house, so the de-cluttering has to be within reason. Likewise, the cleaning. Now; about the cleaning. There is cleaning—the kind we do all the time—but then there is also “deep cleaning.” Like “de-cluttering,” “deep cleaning” is a real estate watchword invoked by everyone writing about preparing a house for sale. The phrase would seem to be clear, but it needs to be pointed out that professionals usually do a better job of it than we civilians can. They simply see dirt that normal householders don’t (and also somehow manage to get rid of it a lot quicker than we can). The finer points of deep cleaning include being in possession of an assortment cleaning tools and substances that aren’t found in every closet. But in addition to those, it takes a dirt detective’s eye to recognize the many Las Vegas that are easily overlooked: Light bulbs. Trash cans. Drawer organizers. Bed skirts. Dishwasher and washing machine seals. Undersides of cushions. Ceiling fan blades (all right; you probably knew they were dusty, but keep putting off figuring out how to get the vacuum up a stepladder to do anything about it). Beneath the range, beneath the refrigerator, behind the toilet…etc. You get the best results when your Las Vegas house for sale is presented in a way that invites prospective buyers to easily envision living there. Open spaces that are uncluttered and clean invite them to do just that. I’m here, too, to help with ideas and suggestions that will have proved to make the entire process as easy as possible. Why not give me a call?
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