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When striking a deal to sell a home, Be sure you are perfectly clear about what you are taking with you and what you are leaving behind.
“Real” property: The general rule is that if something is attached to the structure or the ground, it stays with the house. If removing the item would ruin or disfigure the walls or you need tools to remove it, it generally stays. Legally, these are called fixtures, which include everything permanently attached to the property such as a fence, built-in appliances, ceiling fans, flowerbeds and shrubs.
“Personal” property: If you can disconnect, unhook or detach it with bare hands, it’s free to leave when you do and shouldn’t be assumed as part of the sale. This could be furniture, potted plants, free-standing appliances, outdoor grill, etc.
It’s a good idea to not show your home with anything you’re planning to take. It’s better to replace them. Every agent has a story about a deal falling through due to an argument about what a buyer thought was staying. Walk in each room with your agent and make a list of things that you’ll be taking with you.
However, if you decide to leave curtains, chandeliers or are open to giving up outdoor furniture, it may just help with a sale. Buyers appreciate getting something for free. A savvy agent will hint that fixtures and furnishings are negotiable. Unless they are really important, let them go with the home. Use them to get the price you want and then replace the items in your new home.
By itemizing and discussing items, there will be no miscommunication on closing day.
Lenders dissect the entire credit history of a potential client with strict attention to income, credit, collateral and assets. Of the four, assets are perhaps the least discussed, yet may be the most important in securing credit and buying a home.
Assets include the amount of money needed for the down payment plus closing costs, pre-paid costs (e.g., insurance and taxes, escrow fees and funds that would be available in case of an emergency).
Assets could be considered a reflection of a one’s fiscal strength. Savings and budgeting could be a significant factor in assessing paying habits.
What are assets? Common considerations for a loan include stocks, bonds, mutual funds, 401Ks, retirement accounts, life insurance, cars, boats, antiques, jewelry and other real estate.
The source and timing of assets is also critical as restrictions have tightened. When borrowers are paying off credit cards to get their ratios in line, lenders want to know where the money came from. If it can’t be determined when a direct deposit is made from your employer or a transfer from one account to the next, a letter of explanation and a showing of proof of where it came from is likely to be required. It may not be advisable to make cash deposits or take any monies from someone personally unless it is a gift from a relative.
Large and recent savings deposits raise underwriter concerns as they can indicate loans that have yet to appear on borrowers’ credit reports. Borrowing from relatives to boost savings and credit worthiness also doesn’t help. If funds aren’t reflected on income statements and tax returns, they can’t be used to qualify for mortgages.
Make sure your assets are in order with proper documentation. Your preparation can speed you on the road to homeownership.