June 8, 2018
With 1,177,000 new construction homes going up in 2017, it’s likely a question on many people’s minds: “Is building a new house the route that I should be taking?” It’s a decision that many Americans will decide is the right option for themselves and/or their families. There is, however, another option that may seem more appealing to those who are ready for a different type of challenge.
While the new construction path is certainly not for the faint of heart, it could be argued that fixing up a home takes even a stronger one. Rehabbing a home can certainly have it’s pros and cons. But, if you are up for the task, it can certainly reap some hefty rewards! That of which being some serious equity in a home if it’s bought below market value to begin your process. So, which path is for you? Let’s take a look at a list of some negatives and positives of each option.
Building New Construction Pros:
- Everything is brand new. This means you will have less problems in the foreseeable future when it comes to plumbing, electrical, etc.
- You pick everything! This is especially important if you find yourself to be a somewhat particular person when it comes to the home that you live in. If you are up for the challenge of making the 1,000’s of decisions that comes with building a new home then possibly this is the option for you. However, if the thought of making decisions about light switch covers and trim height makes you want to fall asleep, then you might consider an ulterior path.
- Location. You pick it. Mostly… depending on where you can find ground available to build that is. This is an especially important element when you consider the resale value of your property.
Building New Construction Cons:
- Cost. It can be quite costly to build a home this day in age. Especially if you are wanting a decent amount of square footage. If you are needing a lot of space in your home, then building that space will certainly cost you to acquire that.
- You’ll have to do quite a bit of homework. You have to scope out builders, contractors, prices of lumber, etc. to ensure that you are getting the very best not only financially, but also in quality.
Rehabbing a Home Pros:
- With this option you will most likely have a lot of choices for location. Why? Because there are homes everywhere! With people in your corner like those at Real Estate Pros, you’ll have a buyer’s advantage because of all of the tools and wealth of knowledge they bring to the table whenever you are ready to purchase your fixer upper.
- Are you a handy person? You will be able to cut quite a few costs with rehabbing a home if you have done your fair share of hammer and saw wielding. Fixing up a home takes a wealth of knowledge, and if you have that knowledge along with some skills, then this may be the route for you financially. If you don’t feel like you know much about renovation, however, that’s alright. You can either take time to learn a lot about it, or have it hired out.
- Options. You still get to make a lot of choices when rehabbing a home. Depending on the scale of your rehab, you could have just as many options as a new build would bring!
Rehabbing a Home Cons:
- If you are not a handy person, and truly do not enjoy anything to do with fixing up a home, then this option may not be for you. If it’s difficult to see the vision and big picture that fixing up a home often requires, then you might want to consider a different path for your home journey.
- You are often dealing with an older home, which can bring unwanted surprises when retrofitting a home to your standards and preferences. Be prepared for this mentally, as well as financially.
In the end, the decision truly is yours to make. There are wonderful aspects of each no matter which road you may end up taking. For professional advice and further knowledge on your home journey, don’t hesitate to contact us at Real Estate Pros. We are just one source, with unlimited solutions for your every need.
May 25, 2018
While making what is likely the biggest investment of your life in a home purchase will be an exciting endeavor, it also can be a stressful time.
If it’s your first home, you’re sure to be excited about choosing color schemes, finding new pieces of furniture to suit your style, picking out the perfect place for Grandma’s antique hutch (or the most out-of-the-way place for your husband’s ratty recliner). You’re probably also a little apprehensive about some of the new responsibilities that come with your new home: maintaining furnace and air conditioning, understanding plumbing repairs, dealing with a clogged dishwasher, etc.
One way to ease those apprehensions is to consider a home warranty at the time you purchase your home, which can give you peace of mind about those dreaded maintenance issues. Consider these five awesome advantages of a home warranty:
Different Than Homeowners Insurance
A home warranty differs from a homeowners insurance plan, which covers only catastrophic damage to your home. A home warranty covers service, repair and sometimes even replacement of features of your home that wear out from everyday use.
A home warranty covers such items as appliances (refrigerator, washer-dryer, dishwasher, etc.) to internal systems in your home (air conditioning, heater, hot water heater, electrical, plumbing). Some policies will even be written to cover such large items as a swimming pool.
You Choose Your Plan
Home warranties are crafted to meet your needs. If all your kitchen appliances are brand new and still under manufacturers’ warranty, you don’t need to cover them. But a few years down the road when those warranties expire, you can add them to your home warranty.
Or say you buy a new washer and dryer when you move in and pay with your credit card. Many credit cards offer extended warranties on your purchased items, so you don’t need to include that purchase for double the life of the manufacturer’s warranty.
You Enjoy the Convenience
Besides the peace of mind you enjoy when knowing your home is covered with a warranty, the best part of the warranty is the convenient service. When something does need repair, you need to make one phone call, to the warranty company.
The warranty company will access its array of service providers to quickly schedule your service, assess the problem and advise you on whether the needed repair is covered.
You just avoided half a day of calling around town to find someone who services your particular appliance, has a technician available and in the end will send you a bill for the service.
You Save Money
Most home warranty plans cost between $300 and $600 per year, depending upon how many items in your home are covered. One furnace or air conditioner repair likely will cost you more than your annual premium, even after you cover your deductible and small service call fee.
A plumbing or electrical issue in your home could run into thousands of dollars in repairs, a savings equal to two, three, four, 10 years of warranty costs.
You May Not Have to Pay
If your home is new construction, the builder probably will pay a home warranty that covers not just construction defects, but also electrical, plumbing, AC-heating and even appliances, likely for varying lengths of time.
Also, many real estate agents offer a home warranty for the first year as an incentive for you to purchase the home.
In these types of cases, you can pick up the coverage as it’s due to expire once you realize the convenience and peace of mind you’ve come to enjoy with your home warranty.
When you work with a real estate company like RealEstatePros.com, you’ll also enjoy the peace of mind that come with our home inspection service so you understand the conditions of your home and its working parts even before you move in. The added assurance of a home warranty will allow you to enjoy the fun parts of home ownership with less stress about the responsibilities.
Contact us today to begin the adventure of finding your dream home and learn more about how to protect it with a home warranty.
May 11, 2018
After assisting in the buying and selling of thousands of homes, we’ve learned to appreciate certain takeaways we’d never really thought much about before. One of these is home warranties, and why homeowners should consider having one despite what there is to not like about them.
Let’s start with the negative issues some have. “Historically, home warranty service companies have been one of the ‘worst graded’ categories on Angie’s List,” says company blogger Staci Giordullo. Complaints center around misunderstandings of what warranties cover and the quality of the work performed under them. A significant number of homeowners complain that appliances and systems needing replacement are instead repaired. Moreover, the work is sub-par and the contractors are, well, a bit on the scary side.
There’s a cost factor. A home warranty costs several hundred dollars, depending on what’s warranted. Obviously, the thinking goes, because warranty companies are selling them for that price, they must be profitable, and if they’re profitable, they must not pay out very often. And their contractors levy a per-call service charge to boot.
But there’s another side.
First, consider that builders routinely offer one-year warranties on new homes. Why would a new home need its appliances and systems warranted? There are a host of things that can go wrong, such as hurried window installation, poorly-connected light fixtures, overlooked bare spots needing paint, and so on. It just happens.
Or does it? Brand new appliances and systems can become stressed when used for the first time. Maybe the kitchen lights worked just fine when installed, but maybe not so well when every light in the house got turned on. Builders know it happens and perform repair work, as well expedite contact with subcontractors and appliance manufacturers.
If a new home experiences breaking in issues upon occupancy, what about existing homes? In fact, they do. People’s habits over a period of years tend to be consistent. They arise at the same time, shower at the same time, cook at the same time, and so on. The furnace and air conditioner get used to going on at the same time year in and year out. But when new owners move into the home, their habits will be quite different from the previous ones.
That’s why appliances and building systems in homes tend to fail, if they do, in the first year of new ownership. Take the automatic garage door, for example. The big spring tensioning the door’s open-and-close has a finite number of cycles before it pops, and new owners have no way of knowing how many cycles have occurred. Another example is a furnace, with an average life cycle of 10 to 20 years. The number of times it’s turned on and off determines the stress on the heat exchanger. New owners might exacerbate that stress with their on-off times and find themselves with a cracked heat exchanger, and therefore a new furnace, through no fault of their own.
So many of the problems people report with home warranties are rooted in poor communications. Let’s begin with the name of the product itself. They’re warranties, not insurance policies. As General Motors won’t pay for a replacement automobile if your new car’s transmission goes out and repairs it instead, so will a home warranty company repair your pricey heat pump, if possible. Repair or replace is an area ripe for misunderstanding, as is owner maintenance responsibility, and owners should walk through the wording with one of our real estate professionals to become clear.
Many home buyers don’t have a lot of extra cash laying around after down payment and closing costs, and a bill for a big repair is the last thing they need. A few hundred dollars for a several hundred thousand dollar home is probably a worthy investment offering not just peace of mind, but extra value for the home. Contact us if you’d like to know more.
April 27, 2018
Whether you are building new, renovating an existing home, fixing up investment properties, or simply staying put, there is one thing that a lot of houses have in common: a driveway. Often times a driveway is an essential part of a home so that you can have easy access to the home’s entrance. While a driveway may seem like a simple part of a home, there are actually quite a few options that you will need to consider when putting one in. One of them being the type of driveway you will install.
Depending on where you live and the climate that you deal with most often could help you determine which will be best suited for your specific needs. Four of the common types of driveways available are blacktop, cement, pavers, and gravel. You’ll need to weigh each option out and see which one fits your budget, fits the look of the home, and fits into your schedule to maintain. Since some driveways require more maintenance than others, it’s important to realize this so that you can properly be equipped before installing one.
Below, let’s discuss four of the different types of driveways that we mentioned previously and how to best care for each one of them.
Gravel Driveway Care:
Adding new gravel. Over time, the gravel gets pressed into the ground, spread around, carried away, and dispersed.
If you happen to live in an area where you find it to be particularly wet with a lot of moisture, then a gravel driveway might be the route for you. This type of driveway typically drains water the best. But, with the draining also comes areas where the stone will become washed away. Grating and evening out the stone could become a common chore for gravel driveway owners.
Spraying for weeds. Because of the great drainage aspects of a gravel driveway, it also means that there are lots of spaces for weeds and unwanted green life to sprout their way through to the surface. You will have to spray weed killer for these pesky plants to keep them at bay.
Blacktop Driveway Care:
Sealing the driveway. Often times, a blacktop driveway will become cracked from wear and tear, weather, and use. You will need to either seal the entire top layer of the driveway every so often, or fill in the cracks so they do not get worse.
Edging. With grass meeting the very edge of blacktop driveways it is very important to keep it edged so that the grass doesn’t start growing into the driveway and damaging it. This is a relatively simple landscaping job, but is necessary to prolong the life of your driveway.
Cement Driveway Care:
Sealing the driveway. This type of driveway also requires a sealing procedure. You can choose a “wet look” sealer, or a “dry look” sealer. You begin by typically power washing the surface of the cement to remove any stains that may have set into the surface. Then you apply the sealer to further protect the driveway from damage.
Regular shoveling. The worst thing for a cement driveway is water seeping down inside during freezing temperatures. This is typically what causes cracking in cement.
Paver Driveway Care:
Regular sweeping. Because pavers will have crevices and cracks where each paver meets, it will be easy for debris to collect and gather. To maintain that clean and crisp look, simply regular sweeping will help achieve this.
Apply a sealant. Surprise, surprise! Sealing your paver driveway is also an important way to keep it protected from the elements. Upon sealing and hardening, this will also make it easier to sweep as it hardens the surface allowing for a more even sweep.
Replace pavers. A wonderful thing about a paver driveway is that if one stone is cracked, it’s not a big deal! No need to replace the whole driveway. Within an hour or two you can easily have it replaced and looking as good as new.
There are plenty of options for driveway materials out on the market, so please do not hesitate to contact us at Real Estate Pros to discuss these options in further detail. Or, hop on over to our website or blog for further information on the best ways you can care for your driveway!
April 13, 2018
When most people think about home improvement projects, they focus on the inside of the house. Repainting the walls, retiling the bathrooms, or replacing the light fixtures. However, whether you love to lounge in a beautiful yard, are an enthusiastic gardener, or you just want to improve the appearance of your home, there are also tons of things you can do with your front and back yards as well, even on a budget. For the avid DIY homeowner looking for some beautifully inexpensive projects to improve your yard space, we have three fantastic ideas to get you started that, hopefully, will turn into a series of enjoyable projects.
Create New Flower Beds
Flower beds are a home’s number one way to change the shape and impression of a yard. Most homes come with something like a modest strip near the foundation, partly as a way to keep the foundation accessible and easy to check. However, you can put flower beds anywhere you want (and in any shape you want) with a few simple steps. All you need is cleared ground, soil, and a general idea of what you want to plant.
Deep Flower Bed
Step 1: Clear the grass where you want your flower bed to be with a flat shovel.
Step 2: Spread 3 inches of organic matter (manure or compost).
Step 3: Till the soil and organic matter down to about eight inches, loosening and mixing.
Add water if necessary to soften the soil.
Sep 4: Add a decorative border.
Raised Flower Bed
Step 1: Mow the grass very short where you want your flower bed to be.
Step 2: Lay cardboard to smother the grass roots.
Step 3: If you’re going to use a portable box, set it in place.
Step 4: Spread 8-12 inches of organic matter or triple mix (loam, manure, peat), and level.
Step 5: Wait 1 season (3 months), then plant.
Build a Tree Bench
If you have a large tree in your front or back yard with plenty of room around it, this isn’t just a decorative oxygen producer, it’s an opportunity. Trees are great for affordable DIY landscaping because they are inherently beautiful, sturdy, and self-maintaining. They can hold swings, lights, and decorative little doors but one of the most classic and elegant options is a wrap-around tree bench.
Step 1: Build a 6-sided bench frame and legs on your porch out of smooth wood planks
Center should be 12 inches wider than the tree’s approximate diameter
Step 2: Set up the legs around the tree
Step 3: Attach the seat boards.
Step 4: Add the apron and backrest.
Stepping Stone Pathways
Stepping stones are a beautiful way to reshape the appearance and even the functionality of your yard but they’re also something that many homeowners tend to overlook. You can use them to shore up a soft or uneven part of the yard, define a pathway, or even just to decorate and accent other landscaping features. The best part is that stepping stones are incredibly easy to set up and look amazing when you’re done.
Step 1: Choose a collection of wide, flat-topped rocks.
Step 2: Decorate or leave natural.
Step 3: Arrange on the ground.
These are only three out of dozens of possible affordable DIY landscaping ideas you can try out. If you like to refurbish old things, you can raid local garage sales for stuff you can turn into trellises, benches, and potting tables. You can plant trees, build zen gardens, and even ‘upgrade’ your trees into reinforced living jungle gyms. What you do with your yard should depend entirely on your preferences, time, and DIY proficiency. For more great tips and tricks for homeowners, contact us today!
March 30, 2018
With press reports and social media abuzz over the hot real estate market with its ever-increasing prices and multiple backup offers, some sellers speculate about selling their homes without the help of a real estate agent. It seems so easy, and who doesn’t want to try and save a few bucks wherever they can?
Let’s acknowledge our bias, in that Real Estate Pros are professional real estate agents earning a living through sales commissions. But it’s just as important to remind homeowners that their homes are probably the biggest financial asset they own, and are therefore deserving of professional oversight. A lot of money is at risk, and real estate agents’ training and experience with technical, financial, and legal issues makes them uniquely able to anticipate both routine and unanticipated contingencies and pitfalls.
A real estate professional protects the sellers’ interests. Agents vet potential buyers, that is, separate those people who are interested in a home and qualified to buy one from perfect strangers with unknown motives. Some self-described buyers may come to the sellers’ table with little but professed goodwill, whereas an agent will insist that a buyer be not just pre-qualified by a legitimate lender, but pre-approved. The difference between the two is huge, with pre-qualification being little more than a nice letter with no lender commitment. A real estate agent will spot the difference between a pre-approval and a pre-qualification letter immediately.
Agents are not lawyers, but a residential real estate sales agreement is a multi-page document developed and improved by a host of real estate lawyers over many years for agents’ use in protecting their clients. One of the first provisions deals with earnest money. A seller’s agent can recommend an amount that will both indicate buyer seriousness–how “earnest” they are–but also compensate the seller in the event the buyer defaults. After all, the seller’s property will be virtually off the market while the terms of the earnest money agreement run their course, and if the buyer unreasonably walks, the seller is entitled to something.
Since buyer-seller disputes can be open to interpretation, terminology dealing with earnest money and contingencies of financing, home repairs, close of escrow, date of possession, and others, must be concise and crystal clear. For example, what if a buyer simply changes their mind and says they don’t like the house after all, even though negotiations have been ongoing for weeks? Is the earnest money forfeit? That depends on the quality of negotiations and how the language reflects the parties’ intentions.
Sales contracts are full of contingencies, and none are routine. The first is financing. Is a ready, willing, and able buyer able to obtain financing, and how do they demonstrate their ability to do so? Does the lender have a unique underwriting process the seller needs to be aware of? What if underwriting requirements delay closing past the agreed date–is the agreement still valid?
Repairs are another contingency consuming time and causing anxiety. Do repairs have to be made by a licensed professional? What if the seller performs the repairs and the buyer claims not to like the work? What if the appraiser notes an obscure item such as spacing between stair rails as an FHA violation and derails the mortgage loan?
Close of escrow and date of possession nearly always require negotiations back and forth. What if the buyer has to be out of their rental unit a day or so before the closing date? Should the seller allow early possession (the answer is no)? Usually, everyone’s needs can be met. However, these issues can become contentious, and real estate agents are used to solving them through negotiation.
The last issue, here, is likely the one most important to sellers: How do you maximize the price of the home and close the sale in the fastest possible time? Pricing is always part art and part science, but in today’s market, artfulness and market experience is more important than ever. Comparative sales are a guide, but they reflect yesterday’s market conditions. The goal in pricing is setting it so that the property competes while taking advantage of demand, but at the same time generates enough buyer interest to induce multiple offers.
Retaining a real estate agent to sell a home will not only increase sellers’ net proceeds and close the sale quickly, but it will minimize seller anxiety. Do you have questions about your home we can answer? Contact us.
Looking for a new home is an exciting if slightly harrowing experience. Every time you go online to search for new homes or drive around your target neighborhood looking for homes with a ‘For Sale’ sign out front, you get that fantastic feeling, the tingle in the base of your spine and everything seems a little brighter. However, time and time again new buyers ask to look more closely at a home that seems like a good opportunity only to discover that it doesn’t have enough bedrooms, a big enough yard, or the kitchen is downright unfriendly to cook in.
As most home-seeking buyers discover, house hunting is harder than it looks. Finding a nice selection of homes that all meet your minimum criteria for a new house is surprisingly challenging, especially if you don’t already understand the industry and the right tools to search with. The fact of the matter is that there’s a reason that buyers tend to eventually hire a real estate agent to help them find a home and then get all the way through the negotiations.
Real Estate Agents Know How to Look
The real estate industry is a lot more complicated than it seems on the surface because people are buying and selling property all the time, but not always on the popular online platforms like Zillow. There are even private sales of homes that are only open to buyer recommendations made by the seller’s real estate agent and the only way to find these opportunities is to work with an industry professional.
In fact, real estate agents have had a private sub-culture of opportunity sharing since the 1800s and the tradition has continued with access to what is currently called the MLS or Multiple Listing Service. This is a platform where real estate agents can list the properties they’re managing and trying to sell in order to share opportunities with others who may have the perfect buyers ready. In other words, the MLS is how real estate agents network to find perfect deals that aren’t necessarily on the public market.
How a Real Estate Agent can Find Your Perfect House
House hunting is a skill which means that you get better at it the more you do it and no one gets the opportunity to practice like a real estate agent while buyers usually only get a chance to house hunt once or twice in a lifetime. Working with a real estate agent grants you all the benefits of their connections and house hunting experience while removing a great deal of the hassle and false-starts with homes that don’t quite suit your needs.
Once you choose a real estate agent to work with, they will ask you what you’re really looking for in a home. This should be defined in about three parts: What you absolutely must have, what you don’t want, and the lifestyle you’re looking to build. Everyone has different priorities for a home so be very clear about yours.
Equipped with your desires, often written into a set of lists, your real estate agent will start searching the MLS, sending emails, and making phone calls. Because this is their job, they can dedicate more time and energy to confirming that each house they investigate fits with what you’re looking for. After a long investigative search through both public and private listings, they will put together a portfolio for you of several home options they think you will like best.
Choosing from a Perfect Selection
The portfolio your real estate agent creates is the missing piece of the puzzle for most home buyers. By looking at a selection of homes that all fit your requirements, you can refine what you really want. If you don’t fall in love with one property right away, or if you love more than one of them, it’s time to take your short list on a few home tours. When you realize that your real estate agent has, indeed, found you the perfect home, it’s clear why the industry is so strong. Because it’s built on working together to create happy endings for home buyers.
For more information on what a real estate agent can do for you as a home buyer or seller, please contact us today!
Selling your home can be stressful, especially because it usually comes in the midst of a big move, and big moves = clutter and chaos. But how important is it to keep that clutter at bay when buyers are looking at your home, both in photos and in person?
We know clutter can’t actually talk, but believe it or not, potential homebuyers can hear it loud and clear, and you’d do well to listen to it because it has a lot to say about your home!
1. “This house is so full, it’s bursting at the seams! There’s just not enough storage space!”
It’s a logical conclusion: if stuff isn’t tucked away in cabinets and closets, then those cabinets and closets must just be too full to handle any more. While it’s likely this isn’t the case, the problem of a perception of “overflow” can definitely deter buyers from your property.
When prepping your home for photos and walk-throughs, think about what any additional storage furniture might say to buyers as well. It’s one thing to have a bookshelf or two in the living room; it’s something else to have plastic carts with drawers lining the walls of your bathrooms. These not only add visual clutter, they also scream, “There’s no more room!” to buyers.
As you prepare, also consider not only the clutter outside of the storage spaces, but the clutter inside them as well. Buyers will definitely open doors and drawers, and having your belongings neatly stored within the storage spaces gives off the impression that they function just right for your needs.
2. “There’s so much stuff everywhere. You’d think these homeowners would have been responsible enough to put it away or get rid of it by now. You know what else they probably haven’t bothered to do? Maintenance on this place! It’s bound to have lots of problems.”
It feels like a harsh judgment, but as much as it hurts, it makes sense. One imagines that a responsible person lives in a tidy, clean, clutter-free environment. Anything less than that invites doubts and concerns about an homeowner’s ability to take care of necessary day-to-day tasks, and that includes fixing leaky pipes and faulty wiring.
Tidying up can be hard, but it’s a great opportunity to lighten your load (literally and figuratively!) and give off the impression of someone who has it all together.
3. “Clutter, clutter! Look at the clutter! Just don’t look behind it…you might not like what you’ll find…”
You know how it goes- you accidentally gouge your wood floors, so rather than go through the hassle and expense of refinishing them, you just buy an area rug to cover up the damaged spot. Problem solved!
Well, maybe it doesn’t go like that for you, but it’s a buyer’s job to be suspicious, and if there’s enough clutter around, they may start to suspect that you’re trying to hide something.
When selling your home, it’s best to get naked- don’t worry, not you- your home. Be cautious with the placement of rugs, furniture, and other large odds and ends. As much as possible, give your buyers a clear picture of your home’s “bones” so they feel confident that they know exactly what they’re buying.
4. “Look at how much stuff there is everywhere! You know what that means- our homeowner has lived here FOREVER. This house is SO old.”
Like most purchases, when it comes to purchasing a home, “newer” almost always translates to “better.” It’s possible you haven’t lived in your home long, you just like to surround yourself with your favorite things, and you like that lived-in look. While that’s great for living in the home, it’s not great for selling it, because it gives off the impression that the house is old. And, of course, old homes often have problems that newer homes don’t- problems that homebuyers want to avoid.
So have a little see-you-later party for some of those treasured items and send them off to storage while your house is on the market. Your home will feel larger, cleaner, and be much more appealing to buyers.
5. “Ha, the listing said ‘spacious kitchen.’ That was before we- the conspicuous clutter- moved in! Doesn’t seem so spacious now, does it?”
Next to updated kitchens and bathrooms, everyone loves some extra square footage. But if that square footage is being taken up by your clutter, your home will feel significantly smaller and more cramped.
Don’t let the clutter steal valuable square footage- and valuable dollars- from your home! Clear out that bulky furniture that’s blocking the traffic flow and eating up floor space and replace it with something lower profile. It will make your home feel bigger and airier, giving potential buyers room to breathe- and to make you an offer.
If your clutter is talking a little more loudly to potential buyers than you’d like, send it packing! Contact us to find out more about how to clear the clutter and get your home open-house-ready in no time.
February 16, 2018
A lot of factors will go into your decision as you shop for a home – neighborhood, number of bedrooms, square feet, kitchen size and amenities, yard size, pool or no pool. This list will go on and on.
One important factor you’re probably not thinking about but that your lender definitely will is your debt to income ratio. This will make a big effect on how much you can borrow for your mortgage, so it’s a good idea to understand that number as you start your housing search.
What Is Debt to Income Ratio?
Simply put, your debt to income ratio is how much you pay monthly on all of your debts divided by your gross monthly income. This number will include the expected monthly payment on your mortgage, plus all other debts, such as a car loan, student loan payments, credit card debt, health insurance, etc. Your gross monthly income is what you make before taxes and other deductions are taken out.
For example, if your mortgage payment would be $1,500 and you have a auto loan for $100 and another $400 in other monthly debt payments, your total debt figure would be $2,000 ($1,500+$100+$400=$2,000). If your monthly gross income is $6,000, you would end up with a debt to income ratio of 33% (2,000÷6,000=33.33).
There is a magic number (43%) you need to meet before a lender can give you a qualified mortgage. That means, under our previous example, you could have monthly debt payments up to $2,580, thereby boosting your mortgage payment up to $2,080 and still being eligible for a qualified mortgage.
What Is a Qualified Mortgage?
Of course, that begs the next question: What is a qualified mortgage?
A qualified mortgage is a category of loan that has more stable features that ensures you’ll be better able to make your monthly payments and be protected from some riskier loan features.
After the housing crisis hit in 2008, rules tightened on lenders to ensure nearly all home mortgages fell into the qualified mortgage category. Some smaller lenders have a little wiggle room on the 43% figure, but in general all lenders must adhere to the rule in order to protect consumers, banks and the government from having to launch another bailout program.
Besides the debt to income ratio limit, qualified mortgages cannot feature interest-only payments, negative amortizations, balloon payments or mortgages longer than 30 years. They also limit points and fees lenders can charge consumers, and offer lenders extra legal protection.
How Can You Improve Your Debt to Income Ratio?
Assuming your employer is not going to offer you a raise so you can afford a more expensive home, the best way to improve your ratio is to pay off unnecessary debt.
The first and best place to improve your ratio is to pay off credit card debts as these also carry the highest interest rates. If your auto loan is nearly complete, pay it off early to erase that monthly debt. Pay off outstanding medical bills. Think about other monthly expenses you might address, such as a gym membership or movie streaming service you never or rarely use.
The amount of money you can pay down on your house or pay up front to reduce points, and whether you will need mortgage insurance, are all factors that can reduce your monthly mortgage payment, freeing up a little more room for a little more house.
As you sit down to make all of these calculations, the agents at Real Estate Pros would be glad of offer you advice on the best way to get the most home in the best neighborhood, based upon your current financial situation. Contact us today to get started on the adventure that will put you in your dream home as quickly as possible.
February 2, 2018
Young and old, homeowners and renters, parents and single professionals, we all have to pay the bills. One of the few things that can unite the vast majority of independent adults is the need to cover the cost of living. Even if housing were completely free, there is still a cost to keep the lights on, the water hot, and the appliances running. While most people simply accept that their power bill is an unchangeable fact of life, there are really dozens of ways to easily lower your monthly utilities costs simply by making your home more energy efficient.
While there are plenty of expensive ways to remodel your home to make it more energy efficient, you can get started with a variety of quick and easy DIY techniques. All you need to do is follow the basic principles: appliance maintenance, reducing waste, and keeping the hot or cold inside your house.
Switch to LED Light Bulbs
There are many upgrades you can make to your electronics and appliances but by far the easiest, most affordable, and most universally useful is the LED bulb. LEDs not only use less electricity than incandescent filament bulbs, they also don’t get so dangerously hot, last longer, and come in a lot more fun colors.
Change Your HVAC Filters
If your heater or AC is blowing through clogged filters, it’s having to work extra hard which expends more energy. Make life easier for your HVAC (heating, vents, and air conditioning) system by remembering to change out the filters. If you want a serious DIY task, try cleaning out the ducts as well.
Clear Out Dryer Lint
The dryer is one of the primary power eaters in your home right next to the fridge and the AC. The longer it runs, the more electricity it uses. However, when your dryer is clogged up with lint, hot air can’t flow freely and your clothes take twice as long (and twice as much power) to dry. The simple solution is to remember to clear the lint trap along with the lint trap housing. You may also want to check on the vent that comes out the back of your dryer, as it can also get clogged with lint and hinder air flow.
Weatherstripping on Doors and Windows
When hot or cold escapes from your home or the outside temperature gets in, your HVAC system has to work harder to compensate. You can save a lot of energy simply by improving how well your home is sealed. Putty up any cracks in the walls, keep your windows shut, and consider replacing the weather stripping on all doors and windows to improve your seal.
Insulate Your Pipes and Ducts
Along the same lines as weatherstripping, insulation is a great way to improve the energy efficiency of your home. While attic and wall insulation is useful, a great DIY solution is to insulate any pipes and ducts you can reach. For pipes, this keeps your hot water hot as it travels with a similar effect for hot or cold air in your ducts.
Craft Draft Stoppers
Draft stoppers are a great way to deal with a home in which the rooms are often different temperatures. The simplest draft stopper is simply a towel stuffed under the door crack but you can also hand-make a variety of delightful or utilitarian draft stoppers with a little cloth and stuffing.
Hang Thick Curtains
As our final note, you may be surprised how much cold can enter your home through the windows, even with double-paned glass. Fortunately, you can stop that cold at the window itself with thick thermal curtains. If your home tends toward cold and drafts, you can also hang curtains along the walls as well to provide additional insulation. This is actually one of the many reasons castles used to hang tapestries.
Making your home more energy efficient is no longer something that is just for the ‘green’ crowd. From light bulbs to curtains, these are simple and practical ways to reduce your monthly utility costs and, incidentally, make your home more pleasant to live in at the same time. For more great tips, contact us today!