I have recently had clients that have run into problems while trying to buy a home so hopefully this article will save the potential home buyer a lot of headaches along the way. Below are things to consider before making a change in employment if you are thinking about buying a home....Changing employers will not really affect your ability to qualify for a mortgage loan for most people. For some home buyers, however, the effects of changing jobs can be disastrous to your loan application. Below are tips on avoiding problems in the loan process...


Salaried Employees

If you are a salaried employee who does not earn additional income from commissions, bonuses, or over-time, switching employers should not create a problem. Just make sure to remain in the same line of work. Hopefully, you will be earning a higher salary, which will help you better qualify for a mortgage.
Hourly Employees

If your income is based on hourly wages and you work a straight forty hours a week without over-time, changing jobs should not create any problems.
Commissioned Employees

If a substantial portion of your income is derived from commissions, you should not change jobs before buying a home. This has to do with how mortgage lenders calculate your income. They average your commissions over the last two years.

Changing employers creates an uncertainty about your future earnings from commissions. There is no track record from which to produce an average. Even if you are selling the same type of product with essentially the same commission structure, the underwriter cannot be certain that past earnings will accurately reflect future earnings.

Changing jobs would negatively impact your ability to buy a home.
Bonuses

If a substantial portion of your income on the new job will come from bonuses, you may want to consider delaying an employment change. Mortgage lenders will rarely consider future bonuses as income unless you have been on the same job for two years and have a track record of receiving those bonuses. Then they will average your bonuses over the last two years in calculating your income.

Changing employers means that you do not have the two-year track record necessary to count bonuses as income.

Part-Time Employees

If you earn an hourly income but rarely work forty hours a week, you should not change jobs. There would be no way to tell how many hours you will work each week on the new job, so no way to accurately calculate your income. If you remain on the old job, the lender can just average your earnings.
Over-Time

Since all employers award overtime hours differently, your overtime income cannot be determined if you change jobs. If you stay on your present job, your lender will give you credit for overtime income. They will determine your overtime earnings over the last two years, then calculate a monthly average.

Self-Employment

If you are considering a change to self-employment before buying a new home, don’t do it. Buy the home first.

Lenders like to see a two-year track record of self-employment income when approving a loan. Plus, self-employed individuals tend to include a lot of expenses on the Schedule C of their tax returns, especially in the early years of self-employment. While this minimizes your tax obligation to the IRS, it also minimizes your income to qualify for a home loan.

If you are considering changing your business from a sole proprietorship to a partnership or corporation, you should also delay that until you purchase your new home.

by Darryl Brasseur REALTOR, Tiger Town Realty BATON ROUGE LOUISIANA

The American dream of home ownership in BATON ROUGE LOUISIANA is still attainable, only the rules have changed and buyers need to be made aware of them. Exactly one year after the collapse of the housing market triggered the financial meltdown, most lenders are requiring more money up front along with higher credit scores and proof of income. I just recently had a buyer in BATON ROUGE LOUISIANA that was turned down for a $215,000 mortgage. This young, hardworking couple was applying for a VA loan and had $47,000 in cash for the downpayment & closing costs along with a FICA score of 750. Problem was, he is a 4th generation store owner in BATON ROUGE LOUISIANA and their income was hard to prove. The lender said they could not consider his wife's income because she was working in a field that she did not major in. Isn't that CRAZY! My suggestion to any buyer is to make sure all paperwork is in order. Patience and persistence is required. And NEVER ask about a sub-prime mortgage.

We are having to work by a totally new set of rules from a decade ago when home prices soared and mortgages were easy to come by. For people that are trying to sell their homes, the rules have also changed. Be patient and maybe even lower your asking price because the balance of power has swung towards buyers. Housing bubbles have happened before and experts warn that it could happen again. Already, home sales and prices in the BATON ROUGE LOUISIANA area are rising slowly, being helped by tax incentives for first time home buyers. Hopefully it will continue to rise

Ascension Parish Real Estate Market Report

Through August 2009

The following analysis is based upon data extracted from the Greater Baton Rouge Association of Realtors MLS database. Only data for detached single family (DSF) dwellings were considered.

Two thirds of the way through 2009, the market for homes in Ascension parish is quite healthy. My own experience and conversations with other real estate professionals point to finance as the biggest obstacle in the way of further market expansion. That said, our market is, for the most part, vibrant and has weathered the national economic downturn quite well.

The first four charts below present unit sales information in a variety of ways. The first chart plots unit sales of new homes and previously owned homes on a monthly basis since January 1, 2004. The light green line shows overall monthly sales while the heavy green line shows the six month moving average.

The next chart aggregates the data by year and, for 2009, the a simple linear projection is made of what 2009 year-end sales will be. Year-to-date sales through August were calculated then divided by 8 months to get the monthly average and then multiplied by 12 to project year-end unit sales. This chart shows that, overall, 2009 should outperform 2008 with 1217 sales versus 1116 in 2008. New construction sales are responsible for the increase with a projected 491 sales versus 359 in 2008. Sales of previously owned homes are projected to be a bit less in 2009, 726 in 2009 versus 757 in 2008.

The next two charts illustrate monthly sales. The first shows new construction and we see that, as has been typical throughout the year, sales of new construction in 2009 has outperformed the same month in 2008.

The next two charts illustrate the absorption of homes in Ascension Parish by price range and compares absorption rates to current inventory to project the months supply of inventory. A market with 5.5 to 6.5 months supply is generally considered a neutral market... The supply and demand are reasonably balanced. A market with less than 5.5 months supply is generally considered to be a Seller's Market while a market with more than 6.5 months supply is said to be a Buyer's Market.

The first chart shows the absorption statistics for new construction. Overall, we have a Seller's Market condition with only 3.4 month supply. In fact, only homes priced over $350K are experiencing a Buyer's Market. The highest velocity of new home sales is for homes priced between $150K and $200K. Forty percent of all new homes sold in the parish during 2009 have been in this price range.

In the previously owned market segment, there is overall a 6.7 month supply... just slightly in Buyer's Market territory. Upon closer examination, however, we can see that this is due to an oversupply of more expensive homes. Homes priced over $300K account for 34% of the inventory but only 14% of home sales. Homes priced below $300K are generally moving well with respect to inventory.

As always comments and/or suggestions for improvements are welcomed.

©2009 by Don Stern - All Rights Reserved

(225)413-3634 phone (225)313-3698 fax

don@thehomevendor.com - email

www.TheHomeVendor.com www.DonAndAlishaStern.com www.LiveAscension.com www.PelicanPointHomes.com www.WaterfrontPropertyLA.com

Ascension Parish - Spanish Lake

An article in the August 10th issue of the Baton Rouge Businees Report discussed the competing interests of the owners of Alligator Bayou Tours and companies that sell wetland mitigation credits to support development. The article goes on to tell of two pending lawsuits in the parish regarding the basin.

I've taken my grandchildren on the Alligator Bayou tour have thoroughly enjoyed the experience. As a Realtor®, I have also benefited from development so I have mixed emotions over the controversy.

Spanish Lake, Ascension Parish

Alligator Bayou Resident

©2009 by Don Stern - All Rights Reserved

(225)413-3634 phone (225)313-3698 fax

don@thehomevendor.com - email

www.TheHomeVendor.com www.DonAndAlishaStern.com www.LiveAscension.com www.PelicanPointHomes.com www.WaterfrontPropertyLA.com