The scenario is this -- you're a buyer and you're ready to look for a house. You've met with a lender, who has told you that you can get a loan for $350,000. You even have a lender letter that says you are pre-approved for that loan amount. Now you're ready to look for a house, right?

But lenders don't approve buyers for loan amounts, they really approve them for a monthly payment. Why is this so important to understand?  This is because there are things that can change -- two big ones, in fact. The first is the interest rate, which can change at any moment up until the time you lock your rate with the lender. The second is the property tax, which varies by house and neighborhood.

So, the lender says you are approved for a monthly payment of $2,550, assuming an interest rate of 5.75% and property taxes of $5000 per year (and you're putting down 20% to avoid that mortgage insurance). This works out to a loan amount of $350,000 -- with 20% down, that's a $437,500 house! Not bad! But let's assume that while you're looking for a house, the interest rates go up half a percent to 6.25%. Remember, you're still only qualified for a monthly payment of $2,550. The increase in interest rate translates to a loan amount of $331,700. 

That means that, with a 20% downpayment, you just went from looking at $437,500 house to a $414,600 house -- an $22,900 loss in buying power!

The same thing happens with changes in property taxes -- the property taxes are a huge factor in how much house you qualify for. I recently saw a lender letter approving a buyer for a house, but the taxes that the lender used were almost $4000 less per year than the houses we were looking at! It makes a huge difference.

So make sure you know what these numbers mean to you. If you're not sure, give me a call -- I can help you work out the numbers.

(C) Susan Pruden.

The pleasure in receving an award dims quickly when the realization hits -- now what? What am I going to do with it? The first couple were exciting and went right up on the wall over my desk. I would occasionally gaze up at them, proud of my accomplishments. My own little Ego Wall.

Over the next several years, I would hang the plaques after the awards ceremony, but mostly because it seemed that that was what you did with plaques -- you put them up. Then around 2002 or 2003, it looks like I just dropped out of real estate, because after that, the plaques went straight into a box.

I remember all my Dad's trophies and plaques for golf and bowling, mostly because it was my job to dust them every weekend. I loved his five hole-in-one trophies. I hated dusting them. I suspect they all went into the trash can during one of his moves.

I hate the idea of filling the landfill with these things, but I just don't want them anymore. And in asking around, I find that there a lots of other people - in lots of fields, not just real estate - who would love to find a place to donate their plaques.

A search online found a company that was willing to take them, but the posting was 9 months old. Sure enough, when I went to the website, there was an announcement:

We would like to thank everyone that donated trophies. We are currently over stocked and can no longer take any more. We may start again in the future. Please keep checking back here for more information on donating trophies.

However, here is one of the plaques that they make, which seems easy enough. Looks like decoupage to me. So if there are any organizations out there who want my old plaques for a little DIY, they're here for the taking. And I'm sure I can get you more if you like.

(C) Susan Pruden.