Closing on your house

If you are selling your house, you may have to jump through a few hoops between the time you and the buyer reach an agreement and the time the money and deed change hands. The structural inspector usually finds a few things that need to be repaired or replaced, and the termite inspection may reveal the presence of unwanted pests. Most buyers will also have a list of items that they want the seller to fix.

The ideal is to have your home as perfect condition as possible in time for the walk-through inspection prior to closing. If you have agreed to complete repairs on your home, it is a good idea to get an early start on the work so there will be plenty of time to correct any "surprises" that may be found. Call several companies to get competitive bids for the work that needs to be done or ask your real estate agent for recommendations.

Presenting the buyers with a clean, well-maintained home will make the process a lot easier for them, especially if they get a case of last-minute jitters.

Lending on Real Estate has changed

As a result of the bursting housing bubble, financial industry meltdown and current foreclosure disasters, lenders have returned to a far more conservative approach to mortgage lending. We are already seeing mortgage lenders requiring larger down payments of 20 percent or more. Credit scores in the 600s are no longer enough to qualify for favorable loans. Loan officers are rigidly enforcing rules on documentation of employment, assets and income. Lenders' underwriters are applying the traditional mortgage debt-to-income ratios of 28/36. What this means is that no more than 28 percent of your gross income should be spent on your mortgage principal, interest, taxes, insurance (known as PITI) and condo or homeowners' association fees if applicable. No more than 36 percent of your gross income should be spent on PITI plus all other debt, including car payments, student loans and the like.

If your debt-to-income ratios do not work for a particular home, and you cannot afford to increase your down payment, you will not qualify to buy that home.

Anyone facing a real estate decision today should carefully analyze their buy/sell/refinance decisions, keeping in mind the possible impact of these proposed changes on the deduction of mortgage interest and real property taxes and the capital gains treatment on any future appreciation. There are many online mortgage calculators that can assist you in determining how much you can really afford.