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Ask Our Broker Don’t let debt
doom your
dream home
Controlling your credit
is key to earning your
I’m Planning to Sell My lender’s trust
Rental Home to My Tenants.
BY CHARLES SCUTT
Do I Need an Attorney? CTW Features

Q: I’ve got a rental house that I’m WHEN YOU’VE MADE UP YOUR
planning to sell next year. I have good mind that it’s time to start the
long-term tenants who love the house house-hunting process, don’t
and want to buy it. I’m planning an as- fall into the trap of putting the
cart before the horse, say the
is sale. I will not be using a real estate experts. Getting your finances
broker because I already have a buyer. I in order and managing your
will use a title company to handle clos- debt before you start shopping
ing. Since this is an as-is sale, do I need inspections? for homes and mortgage
Do I need a lawyer for the paperwork? lenders can put you on a faster
track to home ownership.
Why is it important to get a
A: You have a good situation in the sense of ready buyers handle on your debt early in
who know the property.At the same time, regardless of the process? Because “the mort-
who is buying, you need to follow the necessary standards gage lender will be reviewing
in your jurisdiction for disclosure and contract require- how well the prospective
ments. For this reason you should have assistance from a home purchaser manages pay-
real estate attorney. ing their bills on time,” says
Richard Schram, a manager for
Inspections may seem Consumer Credit Counseling
unnecessary, however that’s
a choice for the buyers to
Regardless of Service of Central Florida & the
Florida Gulf Coast, Inc.,
make. If they elect not to who’s buying, you Orlando.“A history of payments
have inspections, then to to other creditors is an indica-
prevent future (if unlikely)
need to follow the tion of how the purchaser will
make their payments to the
claims it would be a good selling standards mortgage lender.”
idea to have them sign a
form stating that they were for your jurisdiction “Mortgage lenders are not
interested in foreclosing on real
offered the opportunity for estate and then having to sell it
an home inspection but declined. to get back their money,” says
By any chance, did a broker find your tenants? If so, Mike Sumney, co-author of
“Weekend Millionaire Mindset:
review your agreement with the broker to see if there is How Ordinary People Can
Keep it simple: A single vase on the table and a few dinnerware on display gives your home a clean, appealing look.
any provision relating to a sale. Achieve Extraordinary Success”
As to a title company, check with your attorney; it’s the (McGraw-Hill, 2005).“They
buyers who typically select the title provider.
Out of Sight, Out of Buyers’ Minds want to make loans to people
who have demonstrated that
Q: I live on a parcel that allows me to add a sec- they can handle their obliga-
ond unit as a rental. I’m interested in exploring the Make your home look professionals also have jumped in
to help with a list of do’s and
Acevedo, a member Staged
Homes, a staging organization.
tions in a timely fashion and
not overextend themselves.”
idea, but I want to make sure it’s a feasible and wise
decision financially. I’m considering adding a modu-
spectacular when it’s don’ts. Some describe themselves
as professional organizers; others
Her fees – and those of most
stagers and organizers – vary
According to Brad Stroh, co-
CEO of Bills.com, the amount
lar home. I live on a wooded lot, so there would be a time to sell call themselves stagers. Both depending on the size of the of debt prospective homebuy-
lot of land prep involved. How do I start? groups share the same goal that house and scope of the project. ers carry affects the three pri-
the practitioners do: make your Acevedo’s consultation fee is mary variables that determine
BY BARBARA BALLINGER house look so divine that buyers $225, but she charges extra for interest rates on loans they will
A: What you’re describing is often called an auxiliary- CTW Features won’t be able to resist making a doing any physical work or buy- be offered:
dwelling unit. Since you already have the land, the addition bid. ing or renting furnishings. • Your credit score, which
of a second living unit can be relatively cheap. However,

T
here is a fine line between But the process is more art The good news is that there’s ranges from 300 to 850, with
there are a few questions you need to ask: Does local zon- de-cluttering your house so than science, says Jaynee a payback.According to a Staged higher numbers indicating a
ing permit a separate unit on your property? If allowed, can that homebuyers can pic- Acevedo, founder of Capital Style Homes survey, houses that sat on greater likelihood of repaying
the unit be rented? If you have a separate unit, must you ture themselves living there with Home Staging, Kensington, Md. the market for more than five debt.The median U.S. credit
their own possessions and leaving She tries to have each room tell a months sold within two weeks score is approximately 725.
also add a parking space? Sewage? Are there architectural some things about so they know story. In one house, she recently after being staged. Houses that • Loan-to-value ratio, which
requirements? How much will your property taxes go up? someone else has lived in and had some of the six bedrooms were staged before going on the refers to how much of the
Next, speak with local builders.What would they charge loved the house. “tell” that they could be used for market sold in less than two home’s value is being financed
While most real estate practi- other purposes than sleeping. weeks. Staging also boosts equity by the loan versus how much is
See ASK OUR BROKER, Page 2 tioners can offer you tips on One became an office, one a
what to keep and remove, other nursery and one a playroom, says See SIGHT Page 2 See DEBT Page 2

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SIGHT space with better flow.“In a mas-
ter bedroom, you need to see the
and co-author of “The Complete
Idiot’s Guide to Staging Your
rent magazine issues. For a
kitchen island, put out a nice Ask Our Broker
Stage to sell bed and want the room to be a
sanctuary without chaos,” Konsky
Home” (Alpha Books, 2007):
• Go through your front door
bowl with fruit.
• Remove religious and politi-
CONTINUED FROM PAGE 1
says. as a buyer might. Check curb cal items. Now is not the time to
CONTINUED FROM PAGE 1 • Re-assess. Clean-sweep the appeal from the street, then enter get embroiled in a heavy discus- to construct the unit you want?
nearly 6 percent, the organization contents of your home. Decide your house to make sure it offers sion.“You want to welcome Lastly, speak with local real estate brokers. Is there a
says. Of course, this is not going what to keep, sell or discard. In a a great first impression. rather than offend buyers,” Dana
ready rental market for the unit you propose to build? What
to be the case in every market, $1.5 million house in suburban • Remove or bundle wires. says.
but it shows that staging does St. Louis, the women gently told Keep cords and wires neat and • Eliminate what’s passé. rental range is reasonable? If you sell the property, would
have an impact. the owner her photos had to go. tidy, particularly those coming Wallpaper patterns and color the additional unit add enough value so that you could re-
So, how do you begin? Before “She acted like we had stuck a out of TVs and computers. De-tan- fade in and out of favor, so coup your investment?
you call a stager or organizer, try knife in her,” Konsky says.“We gle messy ones and bundle them remove it, especially floral paper
to look at your house through the told her to box them up and using cord organizers.This sends that makes many men uncomfort- Q: My daughter and her husband are in the middle
eyes of a buyer who has never open them up in her new home a message that your house is well- able, she says.
of a divorce. They purchased a home 18 months ago
seen your home, say Kelly Boyd like presents,” Konsky says. cared-for. • Discreetly display a few
and Terrie Konsky, co-owners of • Re-accessorize.Add hipper • Display only the latest appli- homey touches. Place patio furni- and owe $97,000. Her husband is insisting that
Hometenders Network, St. Louis. accessories, arrangements and ances.A bulky computer monitor ture outdoors; put a few place- either the house is sold or that my daughter buy out
The partners offer five key R’s: colors. One house recently staged may look dated; displaying a neat mats and plates on the dining his interest.
• Re-organize. Simplify each required changing artwork since notebook shows you stay up to room table, and set out a bouquet My daughter makes $20,000 a year, and I make
room, remove clutter and col- the frames were too light and date. People will transfer that of flowers. $78,000. The lender who financed my home for
lectibles, store excess “stuff” and dated, Konsky says. message to your home, Dana says. • Incorporate sound and light-
$100,000 says my daughter has to qualify for a loan
furniture, and box up anything • Re-act. Many put off the task Remember the rule of three. ing. Play soft music from your
that doesn’t enhance the room. until the market is better or the When it comes to small appli- area’s favorite radio station.Turn with her income – mine cannot be included in the
“How you live and how you mar- weather improves.“There’s never ances, only leave out your three lights on in every room. calculations. What can I do?
ket your home to sell are two dif- a good time, so do it!” Konsky favorite ones. •Clean, clean, clean. Location,
ferent issues,” says Konsky.“In my says. • Keep shelves half full. Clear location, location may be the A: Check with other lenders to see what other financing
own living room, I have two sofas To compensate for fees spent, shelves and closets so there are most important real estate is available and ask about co-signing.Also, meet with a
because we like to lay on them, which they say average between plenty of room, particularly on mantra, but clean, clean, clean is
divorce attorney.Ask if the existing loan can simply be con-
but if I listed it, I’d want to make $2,000 and $3,000, they recom- closet floors.“Buyers want to right behind.
the room look bigger and might mend adding those dollars to the know they’ll have room to put tinued by your daughter under the Garn-St. Germain Act.
replace a sofa with two chairs. listing price. their things since many move © CTW Features Some cautions:When you co-sign a loan, you are responsi-
Most people have too much fur- In addition to the initial steps from smaller homes,” she says. ble for the entire debt – not just part. If the loan on your
niture,” she says. offered above, consider the fol- • Clear coffee tables.Again, go daughter’s home is not paid the property can be fore-
• Re-arrange. Moving furniture lowing 10 points provided by for the de-cluttered look. Replace closed.Although it may be a difficult option, you need to
helps you find new, appealing Julie Dana, an accredited stager objects with a few high-end, cur-
consider whether your daughter is better served selling the
property, getting her share of the profit and then perhaps
moving in with you.
DEBT to be paid from your salary, with
the exception of home mortgage
Are any of your typical living
expenses being paid by credit
include incorrect information.
Furthermore, what one credit
If the property must be sold, can everyone wait and sell
after two years? That way the residential capital-gains write-
Score the best loan debt,“is an indication that you are card, and are you making only report includes, another may off will shelter profits for both your daughter and her hus-
living above your means,” he says. minimum payments on those omit.Verifying that all data is cor-
CONTINUED FROM PAGE 1
band? Also, if you co-sign the loan, will you need to be on
“All credit-card debt, car loans, credit cards? If so, those cards will rect and current builds consisten-
boat loans, department-store debt, never be paid off.” cy among all credit reports.” the title to take an interest write-off? Speak with a tax pro-
paid for in the down payment. etc., represent commitments of Diane Weklar, director of mar- Under the Fair and Accurate fessional for details.
• Debt-to-income ratio, which your future income to pay for keting for CreditXpert, a Towson, Credit Transactions Act of 2003, As this is written, a $100,000 fixed-rate loan at 6.25 per-
is the percentage of the borrow- something you’ve already pur- Md.-based credit software compa- all Americans are entitled to a free cent will cost $615 a month for principal and interest over
er’s income that goes to pay fixed chased.This negatively affects ny, says there are many things a copy of their credit report once 30 years. In addition, there will be property taxes and insur-
monthly debts, which includes your future ability to pay a mort- prospective borrower can do to every 12 months from each of the
ance expenses.You can have a lower monthly mortgage
credit-card debt, auto payments, gage loan.” clean up a credit problem and three major credit-reporting agen-
student loans, etc.The higher the Additionally, Schram says, give lenders a good impression. cies: Experian, Equifax and Trans cost with an interest-only loan or option adjustable-rate
debt, the more risk and the less lenders evaluate your capability For starters,“paying bills on time Union.You can obtain your com- mortgage, but low “start” payments ultimately will be
ability to obtain a lower interest of obtaining a loan by exploring a proves responsibility.Also, keep- plimentary report by visiting replaced with fully amortizing payments, which in some
rate.A debt-to-income ratio of variety of indicators, including ing credit debt at or below 50 www.annualcreditreport.com, cases can double introductory monthly costs. Unless you
higher than 55 percent is your monthly income, occupation percent of the credit limit and/or which is the only authorized, offi- are readily able to pay the higher potential expenses, these
frowned upon by lenders, while a and length of time with your loan amount on each account cial site for consumers to access
loans cannot be recommended.
ratio below 35 percent is consid- employer (two or more years is generally improves a consumer’s their credit report online for free,
ered excellent. ideal), homeownership status and credit standing.” or you can request it by phone at
“Typically, the monthly mini- history, and how often you’ve Utilizing credit to make pur- 877.322.8228. © CTW Features
mum consumer debt payments of moved. chases and then making on-time With either method, you’ll be
a borrower should not exceed 10 Before initiating the home- payments “demonstrates responsi- able to order reports from all Need real estate advice? Peter G. Miller, author of “The
percent of their gross monthly shopping process, borrowers ble financial behavior,”Weklar three credit bureaus at the same Common-Sense Mortgage,” would love to hear from you. Send your
income,” says Ron Cahalan, a “should track all their spending says.“After all, if a consumer with time, which offers the advantage questions to peter@ctwfeatures.com
Gilbert,Ariz.-based mortgage-lend- for at least a three-month period,” credit account never uses them, of comparing the reports all at
ing analyst.“The borrower must Cahalan says.“Ask yourself if you lenders lack sufficient credit his- once, or at different times
have a grasp of their debt-to- can cut any of those disposable tory to judge his or her ability to throughout the year.
income ratio, along with what expenses for luxury or entertain- manage credit.” Any account that has been you have accounts like this on can repay on a credit card.
kind of house payments they are ment, or is that a part of your Likewise, it’s crucial to review placed in collection is a red flag your credit report, you would be “Only charge what you can
comfortable with making.” lifestyle that you enjoy [and] your credit report carefully and to lenders that should be resolved wise to focus on clearing them up pay off when the bill will be due,”
Sumney says the No. 1 type of don’t wish to change? If so, it fix any errors or omissions you prior to applying for a mortgage. before even applying.” she says.
debt that lenders scrutinize is should be a factor in your budget- spot, says Weklar.“Credit reports “[It] can doom your chances of Lastly,Weklar recommends © CTW Features
consumer debt.Any debt that has ing decision on a home payment. may lack essential information or getting a loan,” says Sumney.“If never charging more than you

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