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Can Adding a Pool Increase Your Home Value?

On scorching hot days, there’s nothing like taking a dip in a swimming pool. In some areas of the country, a swimming pool is close to a necessity. In fact, there are 10.6 million swimming pools across the U.S., with 3,000,000 of those in California alone. From in-ground to above-ground, chlorine to saltwater, there are numerous styles, sizes, and prices of swimming pools. And while having a swimming pool just steps from your back door may sound appealing, is it really a good economical choice and does it increase your home’s value? There are a lot of factors to consider before adding a swimming pool, or even before buying a home with an existing swimming pool.

installing a pool at homeinstalling a pool at home

The Cost To Install

While having a pool sounds like a great way to be the life of the party when hosting friends and family during warm months, it can be pricey. And as with most large purchases many people finance the addition. The average cost to build an inground swimming pool is $35,000, with most spending between $28,000 to $55,000 for the initial investment. Of course, the amount of site work, soil type, and additional finishes can greatly impact the cost of a swimming pool. For many, the equivalent of a new car is worth the enjoyment a swimming pool would bring.

The Cost To Maintain

The costs associated with maintaining a swimming vary based on location, size, and type. According to Michelle Sbabo, co-owner of Northwest Arkansas Pool and Spa, homeowners can “expect to spend a minimum of $500 per summer on chemicals and supplies – plus at least a couple of hours a week testing water, adjusting chemicals, brushing, vacuuming, cleaning filters, netting, and emptying skimmer and filter baskets.” Depending on the type of swimming pool, average annual maintenance costs can vary from $375 to over $2,750. When choosing the type of swimming pool, it’s important to inquire with a local pool maintenance company what to reasonably expect in annual maintenance costs.

Read: Tips for Selecting Above-ground Pool Equipment

The Cost To Open and Close A Pool

For some parts of the country, swimming pools can remain open year-round; however, in colder climates, homeowners must close swimming pools to prevent damage from cold weather. According to Sbabo, “Closing a pool will run $200-300 for a standard pool, more with complex equipment and plumbing. Opening a pool is roughly the same cost as closing – unless the pool is extremely green or dirty and requires more time and chemicals to clean up.”

pool at housepool at house

How Your Geographic Location Affects Your Investment

Michelle Sbabo of Northwest Arkansas Pool and Spa also explains that “The contents of source water also affect pool water care. In many parts of the country, for example, the water is very high in calcium and other minerals. This can cause scaling on pool surfaces and inside equipment, and water must be treated appropriately to minimize scale damage. Additionally, weather and environment greatly impact pool care. Pools in areas with a lot of rain or wind may need a greater range of chemicals to address contaminants that enter the pool. And certain plants and trees can cause maintenance issues.”

Read: Tips for Landscaping Around a Pool

How A Swimming Pool Affects Homeowner’s Insurance

Once a swimming pool is on a property, the chance for injury or death increases which is why homeowner’s insurance increases with a pool. According to Zack’s Investment Research, insurance companies typically require an increased liability coverage, sometimes up to half a million dollars, and some even encourage additional umbrella policies. There are ways to keep premiums at a reasonable rate by installing a locking gate around the pool, keeping the pool covered with a safety tarp, adding motion sensors to the pool, and even cameras surrounding the pool.

…But Will A Pool Add To Your Home’s Value?

One of the important things to remember: swimming pools aren’t for everyone. So just by the mere fact that a pool is on the property, there will be a group of potential home buyers that will not be interested. However, the bottom-line answer is: it depends. For some geographic areas (like Southern Florida or California), a swimming pool can certainly increase appeal- and value. However, in areas like Michigan or Northern states, they may have less desirability and the pool could appraise for less than the install price. However, a recent study by LendingTree shows that homes with a pool are valued at 54% higher than those without one.

Tips From The Expert

Michelle Sbabo, co-owner of Northwest Arkansas Pool and Spa offers a few tips for those thinking of adding a pool or buying a home with an existing pool.

  • Most home inspections don’t include the pool. If the buyer is new to pools, it’s a good idea to hire a pool pro to check the equipment and understand any potential expenses.
  • Contact a local pool maintenance company to teach you how to care for a pool. Many new pool owners greatly benefit from a “private pool lesson”.
  • Check into a Home Warranty that covers pool equipment. We have seen major equipment expenses covered by good warranty programs with only a small deductible out of pocket.


See more posts by this author

Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

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Buying A Second Home? 8 Things To Consider

Buying a second home is a major expense. You might have several reasons for wanting to buy a second house. Perhaps, you’re buying a second home for vacations or weekend getaways. Or, it might be that you want to use it as a rental property for rental income. However, there are things to consider before buying a second home.

The benefits of buying a second home

If you’re buying a second home for rental income, you’ll benefit from many perks, especially tax advantages.

For example, you will be able to deduct interest, property taxes, homeowners insurance and other expenses against the property’s income.

Even if the value of the property declines, you will still be able to deduct depreciation from your taxes.

While these benefits are great, the mortgage requirements for a second home are much stricter than for a mortgage on your primary residence. So, make sure you can afford it.

8 Things To Consider When Buying A Second Home

1. Financing options: When you bought your first home, you had available to you what’s called an FHA loan – a government loan program.

FHA loans are an appealing and favorite choice among first time home buyers due to their relatively low down payment requirement.

FHA loans require a 3.5% down payment and a relatively low credit score of 580. However, FHA loans are not available to second home buyers.

That is because FHA requires the home to be the borrower’s primary residence. So, if you’re thinking of buying a second home, you will need to either use a conventional loan or financing it with your own cash.

2. A larger down payment: If you’re using a conventional loan for your second home, you will need to come up with a larger down payment.

Lenders for a conventional loan usually requires a 20% down payment of the home purchase price.

But for a second home which will be used as a rental property or vacation home, expect lenders to ask for 30% or even 35%.

3. A higher credit score. For an FHA loan, you only need a credit score of 580 to qualify. But for a conventional loan on a second home, you will need much higher credit score — usually 750 or higher.

4. Expect a Higher Interest Rate: Lenders will likely charge you a higher interest rate on your second home than your primary residence.

The reason is because they see a second home — be it a vacation home or a rental property — as riskier. They feel that you are more likely to default on a mortgage on your second home than on your primary residence.

5. Do your research: Just as you did your homework when you bought your place to live in, buying a second home is no different.

In fact, you’ll need to spend more time researching rental property. That means researching the neighborhood you will want to invest in, knowing the zoning laws for a particular area, the sales price for the homes in the area.

You will need to know if the area has adequate public transportation, schools, grocery shopping, etc,– things that potential tenants will need.

6. Be prepared to be a landlord: if you’re buying a second home to rent, be prepared to be a landlord.

And be prepared to deal with all of the headaches that come with being a landlord. Do you have sufficient time? Can you deal with problems?

Owning a rental property and being a landlord is time consuming. It is also hard hard work and you have to do your due diligence.

You can hire a property manager to run the property for you. But if that is not feasible, you’ll have to do it yourself.

That means, screening new tenants, collecting rent, dealing with delinquent tenants, fixing problems in the property, such as a broken pipe.

So before buying a second home, make sure you have sufficient time and make sure you can deal with the day-to-day headaches that come with being a landlord.

7. Do you have a stable income? Dealing with a second mortgage on your second home is doable.

While you may be able to afford upfront costs, if you don’t have a stable income, you may have to think twice about whether it is a good idea.

Plus, you still have to consider the additional expenses of owning a second home such as insurance, property taxes, maintenance, repairs, property management fees, etc.

8. Are you out of credit card debt? If you have paid off outstanding and high interest credit card debts, then purchasing a second home may make sense.

But if you’re still struggling to pay your debt, you may need to put buying a second home on hold. 

The bottom line

If you’re thinking about buying a second home, whether it is for investment or vacation, be prepared to save some money, budget for expenses, and come up with a bigger down payment.

More importantly, spend as much time, if not more, researching for the home just as you did when your purchased your primary home.

Speak with the Right Financial Advisor

  • If you have questions about your finances, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc).
  • Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

Source: growthrapidly.com

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How Long Does It Take to Close On A House?

In this article:

The closing process on a home purchase can take anywhere from a week to 60 days, depending on the property type, whether or not you’re buying with a mortgage and what type of loan you’re taking out. The closing process includes two distinct periods:

Escrow is the period of time between when you and the seller sign the contract and the day you close.

Closing day is the day you sign all the paperwork, get the keys and become the official owner of a home.

How long does it take to close on a house with cash?

Part of what makes closings take so long is the financing requirements, so buying with cash can expedite the process. If you’re buying with cash, you can close as few as seven days after contract execution, assuming you’re willing to waive contingencies. However, only 23% of buyers purchase their homes with all cash, according to the Zillow Group Consumer Housing Trends Report 2018.

How long does it take to close on a house with a mortgage?

Buyers who use conventional financing to purchase a home can expect to close 30-45 days after the contract is signed. Special loans, such as first-time home buyer programs, VA and FHA loans can take longer to close because the requirements are stricter.

The escrow process timeline

After you’ve made an offer on a home and both you and the seller have agreed on terms (including price and closing date) and executed the contract, you’re officially in escrow. These are the steps that are usually part of the escrow process, and how long each step typically takes. Keep in mind that the escrow process and timeline can vary based on your market, lender, property type, financing type and the overall complexity of the transaction. You should also note that some of the steps below happen concurrently.

  1. Execute the contract and confirm closing date
  2. Open the escrow account (a few days)
  3. Complete inspection and repair requests (1-2 weeks)
  4. Mortgage application and underwriting (5-20 days)
  5. Appraisal (1-2 weeks)
  6. Acquire homeowner’s insurance and title insurance (1 day)
  7. Get loan approval, commonly called “Clear to close” (1 day)
  8. Do a final walk through (1 day)
  9. Attend your closing appointment and close on your new home (1 days)

According to Zillow Consumer Housing Trends Report 2019, 57% of buyers who attained a mortgage said one of their concerns was being unclear on how the mortgage process works. To make sure you fully understand the steps, stay in close contact with your real estate agent, real estate attorney (if you have/need one) and lender. They’ll be able to answer any questions you have and provide documents you need to sign, so be available to turn those requests around as quickly as possible.

The process of buying a house with cash

If you’re buying a home with all cash and still including common contingencies (like a home inspection contingency), your process will be the same, except you won’t have to do a mortgage application or wait for loan underwriting and approval. Some cash buyers opt to waive contingencies, which can speed up the process.

How long after the appraisal can you close?

Assuming there are no issues with your appraisal, the lender will send the “clear to close” about a week before the agreed-upon closing date. If you’ve requested a longer escrow period and a later closing date, you may get your “clear to close” well in advance of your closing date.

What causes delays when closing on a house?

Your closing date will usually be agreed upon with the seller during offer negotiations. But, your closing date could get pushed back a few days (or even a few weeks) based on unexpected setbacks. Here are some of the common issues that can lead to a delayed closing.

Buyer financing

Most of the time, delayed closings are related to finalizing your mortgage. This can be anything from appraisal concerns to missing financial documentation to an inexperienced loan officer.

Changes to your creditworthiness

If you’ve made large purchases, taken out another loan that negatively impacted your debt-to-income ratio or had a significant change in your income between the time you were pre-approved and closing, your lender may need to re-evaluate your credit profile, which can take time.

Low appraisal

If your appraisal comes in at or above the contracted sale price, it should be smooth sailing. But, a low appraisal could leave you needing to renegotiate with the seller or come up with enough cash to cover the difference between the home’s appraised value and the sale price.

Title issues

If the seller has any unresolved liens or judgments on the home, or if any other ownership disputes are uncovered during the escrow process, the closing can be delayed while these issues are resolved.

Homeowner’s insurance

In order to close, you must have proof that you’ve secured a homeowner’s insurance policy on the property you’re buying. If you miss this step or don’t have the correct documentation, your closing could be delayed.

Home sale contingency

If your contract says you can’t close until your previous home sells, your closing could be delayed if it takes longer than expected.

Slow repair requests

If you’re going back and forth with the seller on repairs needed based on the home inspection report, both the negotiations and the repairs themselves can slow down your closing timeline.

Unsatisfactory walk-through

Right before closing, you’ll do a final walk-through of the property. If the home isn’t in the same condition (or a better condition, if you negotiated repairs) than when you made your offer, you may delay closing until issues can be resolved.

Tips for staying on your closing timeline

Even if you’re buying with a mortgage (and you’ll be among the 77% of all buyers who are), you can help expedite the closing process by being prepared, responsive, diligent and decisive both before and during the escrow period.

Get pre-approved

Before you even start searching for homes, take the time to get pre-approved so you’ll know ahead of time that you’re eligible for a loan in the amount you need. Not only will it help you prevent delays during the escrow period, but it will make any offers you submit look more legitimate in the eyes of sellers, since they know you can pay for the home.

For a pre-approval, you’ll need documents that verify your income, like paystubs, bank statements and tax returns. You’ll also want to make sure your credit report is error free, as your lender will run your credit as part of your pre-approval.

Schedule the inspection as soon as possible

As soon as your offer is accepted and the contract is executed, schedule your home inspection. In some states, you are required to schedule the inspection within 7-10 days. After you receive the inspection report, you will have a few days to review and request repairs or credits from the seller. Keep in mind, the seller will have a few days to respond as well.

Buyers of Zillow-owned homes can have peace of mind that the home has been recently updated by licensed contractors. Of course, you’re still able to do your own independent home inspection.

Have a backup plan in case of a low appraisal

Appraisal reports can vary, and very rarely do two professional appraisers value a home exactly the same. If the home you’re buying appraises for less than the sale price, your lender won’t let you finance the home using the full sale price. If your appraisal comes back low, you have two options: either make up the difference in cash, or renegotiate the sale price with the seller. If you’re in a hot market where sellers have their pick of multiple offers, you shouldn’t expect the seller to lower their price to accommodate a low appraisal.

Hire an experienced lender

Find an experienced lender that is familiar with the intricacies and requirements of your market for a seamless and transparent closing process. Opt for an online lender to further optimize your experience. In fact, 15% of buyers who used a mortgage to finance a home in 2019 obtained their mortgage through an online lender. Though, younger buyers are more likely to choose an online lender option.

Be quick to respond to documentation requests

It’s likely that your lender will need updated financial documents, signed disclosures and other information as they prepare your loan for closing. Your title or escrow company may need you to complete certain tasks, too. Respond to all requests as quickly as possible to keep the escrow process moving forward.

How long does closing day take?

Closing day — that is, the day you go to the closing agent and sign your final paperwork to buy the home — typically takes between 1.5-2 hours if everything goes smoothly, but you’ll want to leave ample time in your schedule in case it takes longer.

During your closing appointment you’ll sign documents (a list of typical documents is below) and pay your down payment. Your lender will also wire the balance of the sale price at this time. The title or escrow agent will facilitate the closing appointment, but you’ll want your agent and/or attorney to be present as well. In closing attorney states, the attorney may facilitate the closing appointment. Be sure to bring your ID, a cashier’s check, proof of insurance and your purchase and sale contract.

Buyers usually must attend this meeting in person, whereas sellers can sometimes sign their paperwork ahead of time.

What documents do buyers usually sign?

  • Promissory note
  • Mortgage/deed of trust
  • Escrow disclosure
  • Signature affidavit
  • Initial mortgage payment
  • Appraisal acknowledgement
  • HOA documents (if applicable)
  • Certificate of occupancy (new construction only)
  • Equal Credit Opportunity Act disclosure
  • Truth-in-Lending disclosure
  • Mortgage fraud statements

Source: zillow.com

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How Much Home Insurance Do I Need? A Guide for Buyers

If you’re buying a home, choosing the right amount of homeowners insurance for your property is key. Buy too much, and you’re wasting cash on coverage you’ll never use.

Buy too little, and if a hurricane, hailstorm, or other disaster strikes your home, your insurance might not cover the costs to fix the damage—which means you’ll be paying out of your own pocket.

So how much home insurance is enough? In this latest installment of our Home Buyer’s Guide to Home Insurance, we’ll outline all you need to know to get the right amount and type of insurance to suit your circumstances perfectly.

How much homeowners insurance do I need?

The goal of your homeowner insurance policy is to ensure you’re covered not only for minor damage that you’d like financial help fixing, but more importantly, in case your home is completely destroyed (in a tornado, fire, or otherwise) and needs to be rebuilt from scratch. This is known as “actual total loss” or “total loss.”

Total loss coverage varies from area to area as well as from home to home, but basically boils down to an estimate of how much it would cost to rebuild your home. That could cost more than you paid for your house, or less—it all depends on construction costs in your area.

“Size, materials, quality of finish, and a number of other factors will influence that rebuilding cost,” says Stefan Tirschler, product and underwriting manager at Square One Insurance Services.

To determine the total loss coverage for your property, you’ll want to talk to a home insurance company or agent (who probably represents various insurance companies), who can determine the best amount of coverage based on your home’s square footage, the local construction market, and, of course, the current market value of the house.

“When you shop for home insurance, your insurance provider will likely have access to electronic reconstruction cost-estimating tools to help provide a sense of how much coverage you need,” Tirschler explains.

If you have a mortgage on your home, your lender will probably require your coverage to equal 100% of the replacement cost of the home. And even if your home is paid off—or no requirement is in place—it’s still a good idea to buy enough coverage to cover the complete replacement cost.

Even if the odds are slim that you’ll ever need to use it, the peace of mind it can provide in the event of a disaster is priceless.

Does home insurance cover what’s inside the house?

Another factor to consider is not only the replacement cost of your house, but what’s inside as well—in other words, your belongings. After all, if your home is destroyed by fire or damaged by a hurricane, it’s not just the roof and walls that take the hit.

Most home insurance policies will cover interior items, but that doesn’t mean everything inside your home is safe. For instance, a “named perils policy” typically covers only a specific, narrow list of causes of loss, and depending on why you place the claim, you may find your insurance company won’t pay up!

If you want to ensure your valuables are fully protected, Tirschler suggests looking for an insurance provider that offers an “open perils” (or “all-risk”) policy.

“Open perils policies provide the strongest protection, because they cover all possible causes of loss except for those that are specifically excluded,” he notes.

Is basic home insurance enough?

As you shop for home insurance and compare quotes, you should know that most insurance providers won’t give you just one quote—rather, they may offer several. This is because companies often offer different levels of insurance—like “basic” and “enhanced”—each with their own price, pros, and cons. Here are some factors to consider:

  • Deductible. A deductible is the amount you’ll need to pay out of pocket before your insurance kicks in. Generally speaking, the higher the deductible, the cheaper the monthly insurance premiums. Why? Because with a high deductible, you’ll have to pay more before your insurance company has to pitch in. Deductibles often range from $1,000 up to $5,000.
  • Coverage limits. A coverage limit is the maximum amount your insurer will pay when something goes wrong and you file a claim—everything above this amount, you’ll have to pay out of pocket. For instance, a more affordable, basic plan might pay the medical bills if a guest is injured at your house at up to $1,000 per person, whereas a more expensive, enhanced plan might cover up to $5,000 per person.

You can choose between these various insurance levels based on your personal comfort level, tolerance for risk, and how much money you have in the bank in case of emergencies.

If your circumstances or outlook change, most companies will allow you to increase or decrease your coverage. For instance, if you could only afford a basic, bare-bones plan originally but want pricier/better coverage after getting a promotion at work, most insurance companies will happily adjust your plan to suit your new circumstances.

Do you need additional home insurance riders?

Your insurer will also likely offer you some additional, optional coverage. Got expensive jewelry or artwork in your home? You may want to purchase additional coverage. You’ll pay more now, but if your valuables are damaged or destroyed, your insurance company will help you pay to replace them, which could save you money in the long run.

“If you have any high-value items, such as jewelry or expensive art, these will require a different policy to truly cover their actual worth,” says Ralph DiBugnara, president of Home Qualified.

Remember, too, that you may need to purchase a separate insurance policy for things that are not covered in your plan. For instance, floods and earthquakes are typically not covered in basic insurance plans, so if you want it, you’ll have to buy this insurance separately.

In our next installment of this series, we’ll dive in more depth into what home insurance covers—and what it doesn’t.

Source: realtor.com

How to Save Money For Your First Home

It’s often said you’ll never forget your first home — and we couldn’t agree more! For most, a home is one of the biggest financial investments you’ll make. While this can seem scary, there are plenty of tips and helpful hints to help you save money for your first home. Our first-time buyer’s guide has everything you need to know from choosing the right down payment option, to how COVID-19 has changed the real estate market. Besides taking your home buying journey through Homes.com, here are a few key things you can be doing to save:

A budget is your best friend

There’s no such thing as “saving too early” — every home buying journey should begin by determining your target price range that pairs with all the must-haves and nice-to-haves you’re looking for. Then, decide what your down payment estimate will be. Your down payment depends on the type of mortgage you decide on and its lender. And if you need private mortgage insurance, your down payment will be smaller. Some loan options will require as little as 3% — but it’s better to go ahead and pay the largest amount possible. The more you pay in the beginning, the less you’ll need to borrow and the less you’ll have to pay over time. This will also lower your interest rate! You’ll also want to factor in closing costs, agent fees and taxes into this budget plan. States also offer first-time buyer assistance programs — check out a complete list here.

(Read More: 5 Things Homeowners Should Know About Creating A Budget)

Make extra debt payments

Lenders look at your debt amount vs. your monthly income to determine if you’re able to afford your dream home. While it seems overwhelming to spend more money while you’re trying to save, this investment will continue to help you down the road. Even if you’re only tackling a small amount, you’re decreasing the amount of overall payments and timeline of your debt. 

woman budgeting for her first homewoman budgeting for her first home

Start “paying” your mortgage now

Think of this as a practice round — every month, after paying your current rent, put the difference between your assumed future mortgage into your savings. The key here is to do this before your other monthly expenses add up. If this is your “last” priority at the end of the month, you’ll constantly make excuses and put your money elsewhere. Don’t get trapped by this idea; save money for your first home before you have to!

(Read More: So You Want to Start Saving for a Down Payment? – Now What?)

Reduce your monthly expenses

This seems like a “no-brainer” and a “no way” all at once. If you’re living paycheck to paycheck, there are still ways to save money for your first home! Examine your monthly expenses and find small ways to cut costs. Whether that’s limiting your eating out expenses or cutting down your grocery bill, setting a small amount into your savings will continue to add up. 

Put your retirement on hold

This seems scary, especially if you’re already contributing to your retirement plan. It’s important to note this isn’t meant to be a permanent fix, but can make a huge difference while you’re saving. An easy way to contribute, but only if you’re not anticipating your retirement any time soon!

Ready to put these tips into practice? We’ll be waiting for you at Homes.com to guide you through your first home buying process. 


Andrea is a recent college graduate who loves writing, social media and coffee! She loves covering celebrity home listings, keeping up with the latest style trends and working with the Homes.com team!

Source: homes.com

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A Guide To Everything You Need To Know About Home Ownership Costs [Free Download]

Along with the excitement of purchasing a new home, comes the additional costs that you will be expected to pay as a homeowner. Apart from covering the mortgage of your home, you’ll have additional expenses – such as home insurance – that you will be expected to cover. If you’re looking to budget for a home purchase, it’s important that you consider these costs as they can add up to thousands of dollars each year.

To help you make educated decisions when budgeting, we’ve compiled a list of the major home ownership costs in one free, downloadable guide. Get the Home Ownership Costs to Consider guide here.

Home Insurance

Home insurance policies help protect against serious damage and destruction, like fires, leaks, floods, or break-ins. It also protects a homeowner from personal liability. Some banks may offer home insurance products, although you can typically purchase a home insurance policy through a home insurance agent or broker. 

Tip: You may get better rates if you use a broker or agent. It’s also important to keep in mind that policies typically renew on an annual basis.

Condo Fees

The cost of maintenance fees should be taken into account when you’re buying a condo. This recurring cost is in addition to your mortgage and impacts how much home you can afford. 

Your mandatory monthly fee will vary by your building and square footage. It typically covers:

  • Utilities (such as water and garbage collection)
  • Building insurance
  • Maintenance of common areas (such as the gym, pool, front desk, hallways, landscaping)
  • Building reserve fund (covers emergencies and long-term maintenance projects such as a new roof or elevators repairs)

What Are Status Certificates?

If you’re looking to purchase a condo, you’ll want to look into obtaining a status certificate so that you have as much information about the building and your unit as possible before buying. A status certificate provides valuable information about the condo corporation and its financial

situation. It includes details on the budget, legal issues, the reserve fund, maintenance fees, and any fee increases expected in the future. 

Tip: You’ll want to carefully review your status certificate with your lawyer before making a purchase.

Property Tax

Property taxes are paid annually by homeowners to their municipality. These taxes are ongoing and are separate from your mortgage. Your annual property tax can often be paid in installments.

Tip: It’s important to remember that this cost is not due at closing, but is a recurring cost.

How Are Property Taxes Calculated?

Your property tax rate will vary depending on the value of your property as assessed by your provincial assessment authority. This is then multiplied by a rate that falls between 0.5% to 2.5%.

How Do You Pay Property Taxes?

You can pay your property taxes either through your mortgage provider or directly to your municipality. 

Your Utility Bills

When you purchase a home, you’ll have to set up or transfer your utility bills to your new home. If you live in a condo, these costs may be included in your monthly maintenance fee. Your utility bill will include:

  • Hydro (electricity)
  • Heat
  • Water and Garbage
  • Internet, Phone, Cable

For the full details on the home buyer’s journey including examples, advice, pictures and sample calculations, download a copy of our free Home Ownership Costs to Consider Guide here.

Source: zoocasa.com

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How to Set Financial Goals: A Simple, Step-By-Step Guide

Saving money is all well and good in theory.

It’s pretty hard to argue against having more money in the bank.

But what are you saving for? If you don’t have solid financial goals, all those hoarded pennies might end up in limbo when they could be put to good use.

Figuring out where your money should go might seem daunting, but it’s actually a lot of fun.

You get to analyze your own priorities and decide exactly what to do with your hard-earned cash.

But to make the most of your money, follow a few best practices while setting your goals.

After all, even if something seems like exactly what you want right now, it might not be in future-you’s best interest. And you’re playing the long game… that’s why they’re called goals!

What to Do Before You Start Writing Your Financial Goals

To help keep you from financial goals like “buy the coolest toys and cars,” which could easily get you deeply into debt while you watch your credit score plummet, we’ve compiled this guide.

It’ll help you set goals and create smart priorities for your money. That way, however you decide to spend your truly discretionary income, you won’t leave the 10-years-from-now version of you in the lurch.

First Thing’s First: How Much Money Do You Have?

You can’t decide on your short- or long-term financial goals if you don’t know how much money you have or where it’s going.

And if you’re operating without a budget, it can be easy to run out of money well before you run out of expenses — even if you know exactly how much is in your paycheck.

So sit down and take a good, hard look at all of your financial info.

A ton of great digital apps can help you do this — here are our favorite budgeting apps — but it can be as simple as a spreadsheet or even a good, old-fashioned piece of paper. It just takes two steps:

  1. Figure out how much money you have. It might be in checking or savings accounts, including long-term accounts like IRAs. Or, it might be wrapped up in investments or physical assets, like your paid-off car.

  2. Assess any debts you have. Do you keep a revolving credit card balance? Do you pay a mortgage each month? Are your student loans still hanging around?

Take the full amount of money you owe and subtract it from the total amount you have, which you discovered in step one. The difference between the two is your net worth. That’s the total amount of money you have to your name.

If it seems like a lot, cool. Hang tight and don’t let it burn a hole in your pocket. We’re not done yet.

If it seems like… not a lot, well, you can fix that. Keep reading.

A woman creates a monthly budget while sitting on her bed. The sheets are white with a floral pattern on them. This story is about how to set up financial goals.
Aileen Perilla/The Penny Hoarder

Create a Budget

Once you’ve learned your net worth, you need to start thinking about a working budget.

This will essentially be a document with your total monthly income at the top and a list of all the expenses you need to pay for every month.

And I do mean all of the expenses — even that $4.99 recurring monthly payment for your student-discounted Spotify account definitely counts.

Your expenses probably include rent, electricity, cable or internet, a cell phone plan, various insurance policies, groceries, gas and transportation. It also includes categories like charitable giving, entertainment and travel.

Pro Tip

Print out the last two or three months of statements from your credit and debit cards and categorize every expense. You can often find ways to save by discovering patterns in your spending habits.

It’ll depend on your individual case — for instance, I totally have “wine” as a budget line item.

See? It’s all about priorities.

Start by listing how much you actually spent in each category last month. Subtract your total expenses from your total income. The difference should be equal to the amount of money left sitting in your bank account at month’s end.

It’s also the money you can use toward your long-term financial goals.

Want the number to be bigger? Go back through your budget and figure out where you can afford to make cuts. Maybe you can ditch the cable bill and decide between Netflix or Hulu, or replace a takeout lunch with a packed one.

You don’t need to abandon the idea of having a life (and enjoying it), but there are ways to make budgetary adjustments that work for you.

Set the numbers you’re willing to spend in each category, and stick to them.

Congratulations. You’re in control of your money.

Now you can figure out exactly what you want to do with it.

Setting Financial Goals

Before you run off to the cool-expensive-stuff store, hold on a second.

Your financial goals should be (mostly) in this order:

  1. Build an emergency fund.

  2. Pay down debt.

  3. Plan for retirement.

  4. Set short-term and long-term financial goals.

We say “mostly” because it’s ultimately up to you to decide in which order you want to accomplish them.

Many experts suggest making sure you have an emergency fund in place before aggressively going after your debt.

But if you’re hemorrhaging money on sky-high interest charges, you might not have much expendable cash to put toward savings.

That means you’ll pay the interest for a lot longer — and pay a lot more of it — if you wait to pay it down until you have a solid emergency fund saved up.

1. Build an Emergency Fund

Finding money to sock away each month can be tough, but just starting with $10 or $25 of each paycheck can help.

You can make the process a lot easier by automating your savings. Or you can have money from each paycheck automatically sent to a separate account you won’t touch.

You also get to decide the size of your emergency fund, but a good rule of thumb is to accumulate three to six times the total of your monthly living expenses. Good thing your budget is already set up so you know exactly what that number is, right?

You might try to get away with a smaller emergency fund — even $1,000 is a better cushion than nothing. But if you lose your job, you still need to be able to eat and make rent.

2. Pay Down Debt

Now, let’s move on to repaying debt. Why’s it so important, anyway?

Because you’re wasting money on interest charges you could be applying toward your goals instead.

So even though becoming debt-free seems like a big sacrifice right now, you’re doing yourself a huge financial favor in the long run.

There’s lots of great information out there about how to pay off debt, but it’s really a pretty simple operation: You need to put every single penny you can spare toward your debts until they disappear.

One method is known as the debt avalanche method, which involves paying off debt with the highest interest rates first, thereby reducing the overall amount you’ll shell out for interest.

For example, if you have a $1,500 revolving balance on a credit card with a 20% APR, it gets priority over your $14,000, 5%-interest car loan — even though the second number is so much bigger.

Pro Tip

If you’re motivated by quick wins, the debt snowball method may be a good fit for you. It involves paying off one loan balance at a time, starting with the smallest balance first.

Make a list of your debts and (ideally) don’t spend any of your spare money on anything but paying them off until the number after every account reads “$0.” Trust me, the day when you become debt-free will be well worth the effort.

As a bonus, if your credit score could be better, repaying revolving debt will also help you repair it — just in case some of your goals (like buying a home) depend upon your credit report not sucking.

A retired woman floats in a circular floating device in a swimming pool.
Getty Images

3. Plan for Retirement

All right, you’re all set in case of an emergency and you’re living debt-free.

Congratulations! We’re almost done with the hard part, I promise.

But there’s one more very important long-term financial goal you most definitely want to keep in mind: retirement.

Did you know almost half of Americans have absolutely nothing saved so they can one day clock out for the very last time?

And the trouble isn’t brand-new: We’ve been bad enough at saving for retirement over the past few decades that millions of today’s seniors can’t afford to retire.

If you ever want to stop working, you need to save up the money you’ll use for your living expenses.

And you need to start now, while compound interest is still on your side. The younger you are, the more time you have to watch those pennies grow, but don’t fret if you got a late start — here’s how to save for retirement in your 20s, 30s, 40s and 50s.

If your job offers a 401(k) plan, take advantage of it — especially if your employer will match your contributions! Trust me, the sting of losing a percentage of your paycheck will hurt way less than having to work into your golden years.

Ideally, you’ll want to find other ways to save for retirement, too. Look into individual retirement arrangements (IRAs) and figure out how much you need to contribute to meet your retirement goals.

Future you will thank you. Heartily. From a hammock.

4. Set Short-Term and Long-Term Financial Goals (the Fun Part!)

Is everything in order? Amazing!

You’re in awesome financial shape — and you’ve made it to the fun part of this post.

Consider the funds you have left — and those you’ll continue to earn — after taking care of all the financial goals above. Now think: What do you want to do with your money?

What experiences or things can your money buy to significantly increase your quality of life and happiness?

You might plan to travel more, take time off work to spend with family or drive the hottest new Porsche.

Maybe you want to have a six-course meal at the finest restaurant in the world or work your way through an extensive list of exotic and expensive wines. (OK, I’ll stop projecting.)

No matter your goals, it’s helpful to categorize them by how long they’ll take to save for.

Make a list of the goals you want to achieve with your money and which category they fall into. Then you can figure out how to prioritize your savings for each objective.

For example, some of my goals have included:

By writing down my short- and long-term financial goals and approximately how long I expect it will take to achieve each, I can figure out what to research and how aggressively I need to plan for each goal.

It also offers me the opportunity to see what I prioritize — and to revise those priorities if I see fit.

Jamie Cattanach (@jamiecattanach) is a contributor to The Penny Hoarder.

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Source: thepennyhoarder.com

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Buying a Home in 2021? 11 Tips to Get It Done!

If you’ve yet to enter the housing market, but are thinking of buying a home in 2021, there’s a lot you need to know.

As I once pointed out, this isn’t your older sibling’s housing market. Not just anyone can get a mortgage these days. You actually have to qualify. But we’ll get to that in a minute.

Let’s start by talking about home prices, which have soared in recent years. The good news is mortgage rates remain very low, and may even break new record lows this year, which can keep affordability within reach.

1. Prepare for More Sticker Shock

Yes, if you’re prepping to buy a home in 2021, expect to be shocked, and not in a good way. At this point in the cycle, home prices have eclipsed old all-time highs in many parts of the country.

And even if they haven’t yet, there’s a good chance you’ll be paying more than the Zestimate or Redfin Estimate for the property in question due to limited inventory and strong home buyer demand.

The bad news for renters is home prices are expected to rise another 10% this year, so things are just getting more and more expensive.

In short, expect to shell out a lot of dough if you want a home in 2021, and that could often mean paying over asking price, even if the original list price seems high.

2. Get Pre-Approved for a Home Loan Early

Speaking of that home being out of your price range, you may want to get pre-approved with a bank or mortgage lender ASAP.

First off, real estate agents won’t give you the time of day without one, especially in a red-hot market.

And secondly, if you don’t know how much house you can afford, you’re basically wasting your time by perusing listings and going to open houses.

This is especially true if the homes you’ve got your eye on are consistently going above asking since you’ll need even more purchasing power.

It’s not hard or all that time consuming to get a mortgage pre-approval, and it’ll give you more confidence and perhaps make you more serious about finally making the move.

Tip: Look for an online mortgage lender that lets you generate a pre-approval on the fly in minutes (and know you don’t have to use them if and when you proceed with a purchase!).

3. Check Your Credit Scores and Put Away Your Credit Cards

While you’re at it, you should check your credit scores (all 3 of them) and determine if anything needs to be addressed.

As I always say, credit scoring changes can take time, so give yourself plenty of it. Don’t wait until the last minute to fix any errors or issues.

And while you’re addressing anything that needs more attention, do yourself a favor and put the credit cards in the freezer (or somewhere else out of reach).

Lots of spending, even if you pay it back, can ding your scores, even if just momentarily. It can also increase your DTI ratio and limit your purchasing power. Ultimately, bad timing can create big headaches.

Additionally, pumping the brakes on spending might give you a nice buffer for closing costs, down payment funds, moving costs, and renovation expenses once you do buy.

4. Housing Inventory Will Be…Limited

It’s the same story in 2021 as it was in 2020, 2019, 2018, and heck, even as far back as 2012. There’s really been a lack of inventory since the housing market bottomed because homes were never for sale en masse.

During the prior housing crisis, borrowers got foreclosed on or deployed real estate short sales to move on, and banks made sure all that inventory never flooded the market.

Now we’ve got would-be sellers with nowhere to go, thanks to the massive price increases realized in the past few years. It’s hard to move up or downsize, so a lot of folks are staying put. That means less choice for you.

While we saw an uptick in inventory in 2019, it appeared to be short-lived and now housing supply is at an all-time low!

With near-record low interest rates and lots of Americans hitting the ripe first-time buyer age of 34, expect competition to intensify.

Again, this supports the argument of being prepared early so you’re ready to make an offer at a moment’s notice!

5. That Home Might Be a Fixer

You probably don’t have the same skill set as Joanna and Chip Gaines, but you might still wind up with a fixer-upper thanks to those inventory constraints. And that’s totally okay.

What I’ve learned from buying real estate is that you’ll typically never be content with the upgrades previous owners or developers make, even if they were super expensive and high quality. So why pay extra for it?

There’s a good chance you’ll want to make the home yours, with special touches and changes that distance yourself from the previous owner.

Don’t be afraid to go down that road, but also know the difference between superficial blemishes and design challenges, and even worse, major problems.

Especially this year, watch out for money pits that sellers can finally unload because real estate is just so very hot.

Those properties that could never sell may finally find a buyer, and you might not want that buyer to be you.

6. You May Have to Fight for It

What’s even more annoying is that you may have to fight to get your hands on the few properties that are out there, depending on the housing market in question.

In popular metros, bidding wars will still take place, and they even become the norm again as they were in previous years.

If the property is popular, there will always be someone willing to outbid you for that home they just must have. This is another reason why the fixer can be a winner, the hidden gem if you will.

That being said, it’s okay to pay more than asking (or even the fully appraised value), just keep in mind that there are plenty of fish in the sea.

Well, perhaps not plenty right now, but there’s always another opportunity around the corner.

Stay poised and don’t let your emotions get the best of you. Like anything else, it’s okay to walk away. Trust your gut.

7. Still Negotiate with the Seller

Just because 2021 will be a seller’s market once again, at least in popular markets, doesn’t mean you can’t negotiate. You can still get into a bidding war, win the thing, and then inspect the heck out of the house.

Inspections are key to determining what will need to be addressed once the home changes hands, and what the seller will need to do to compensate you for those issues.

If you don’t get a quality inspection (or two), you will have a difficult time asking for credits for closing costs or even a lower purchase price. Take it very seriously, the return on investment can be staggering.

Also know that in some markets, buyers may have the upper hand in 2021. Not all real estate markets are red-hot anymore, so you might be able to bid below asking and still get money for repairs.

8. Do Your Mortgage Homework

While you might have your hands full with an overzealous real estate agent, it’s important not to neglect your mortgage homework.

Mortgages are often just mailed in, with little attention given to where they are originated.

Your real estate agent will have their preferred lender that you “really should consider using because they’re the best,” but you don’t have to use them or even speak to them.

I’ll typically say get a quote from them as a courtesy to keep things amicable, and to appease your agent, but also shop around with other banks, credit unions, lenders, and mortgage brokers.

At the same time, think about how you want to structure the mortgage, including down payment, loan type (FHA or conventional), and loan program.

The 30-year fixed isn’t always a no-brainer, though right now it’s a tough argument to go against it.

There are other loan programs that can make sense too, such as the 5/1 ARM, which often get swept under the rug. Make the choice yourself.

9. Expect a Very Good Mortgage Rate

If you’ve done your homework and are in good financial shape, you should be able to get your hands on a very low mortgage rate in 2021.

In fact, mortgage interest rates are historically amazing at the moment and could even reach new depths depending on what transpires this year.

Once again, the 2021 mortgage rate forecast looks excellent, so they may stay put for awhile longer or even hit new all-time lows.

In terms of financing, it’s still a great time to buy a home. Consider that the silver lining to an otherwise pricey and competitive housing market.

Of course, with home prices creeping higher and higher, even a low interest rate may not be enough to offset that growing monthly payment.

So always make time to shop to ensure you get the best rate and the lowest fees, even if financing is on sale.

Just because rates are cheap doesn’t mean you should just accept what’s thrown in front of you. Still complain, still negotiate, still ask for more!

10. The Best Time to Buy Might Be Later in the Year

Before you get too excited, or worried that time is running out, it might actually be in your favor to slow play this one.

Per Zillow, the best time to buy a home may be in late summer, including the months of August and September.

Basically, you’ve got the slow, cold months at the start of the year where there isn’t much inventory, followed by the strong spring housing market where everyone and their mother wants to buy.

Then you get a lull and perhaps even a dip in home prices during summer, which could be an attractive entry point.

You might even get lucky and snag a price cut with a lot less competition while other prospective buyers are on vacation.

That being said, get pre-approved NOW and set up your alerts for new listings ASAP and just be ready to pounce whenever.

11. Are You Sure You Want to Buy a Home?

Lastly, take a moment to ensure you actually want to buy a home as opposed to continuing to rent.

I constantly hear the old “throwing away money on rent” line and it never gets old. Then I proceed to fantasize about renting with not a care in the world.

Are you sure you’re throwing away money on rent? Renting can be pretty awesome.

You don’t pay property taxes, homeowners insurance, HOA dues, PMI, or mortgage interest. And you can leave whenever you want. That sounds like a sweet deal too.

Oh, and if anything goes wrong, you can just call your landlord or property management company.

With a home, the problem is yours, and yours alone to deal with. Broken water heater? You’re paying thousands out of pocket, not the landlord.

Consider the Effects of COVID-19

One extra thing to consider given the ongoing COVID-19 pandemic that reared its head last year.

As you might expect, it’s making the home buying and selling process a bit more complicated than usual, despite companies learning to adapt.

For example, home sellers are more reluctant to hold open houses or let anyone in their home, and prospective buyers are probably also a bit apprehensive entering a stranger’s house.

But it’s still very important to get a good look at a property you’re considering buying. The same goes for the home inspection and the home appraisal.

Both should still be taken very seriously, even if more difficult to complete.

A home purchase doesn’t necessarily have to be put on hold due to COVID-19, but it might require more thought given the increased uncertainty with the economy, demographic shifts (city vs. suburban living), and so on.

Also, think before you make a complete lifestyle change like moving out of the city and into the country, just because it’s on-trend. You might look back in a year or two and say what was I thinking?!

Ultimately, you should always give a home purchase a ton of thought though, so for me not much has changed.

Read more: When to look for a house to buy.

Don't let today's rates get away.

Source: thetruthaboutmortgage.com

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2021 Conforming Loan Limit Rises to $548,250

Thanks to another year of stellar home price appreciation, the 2021 conforming loan limit will increase to $548,250, per the Federal Housing Finance Agency (FHFA).

This is the maximum loan amount for mortgages that can be acquired by Fannie Mae or Freddie Mac, known as conforming mortgages.

The figure is up from $510,400 for mortgages closed in 2020, and represents the 7.42% rise in home prices over the past four quarters.

The FHFA determines the conforming loan limit each year by looking at the FHFA House Price Index (FHFA HPI) report.

The seasonally adjusted, expanded-data FHFA HPI rose 7.42%, on average, between the third quarters of 2019 and 2020.

That pushed the baseline maximum conforming loan limit up by the same amount, from $510,400 to $548,250, which becomes effective on January 1st, 2021.

Individual banks and mortgage lenders may accept the new, higher loan limits almost immediately as it takes a month or longer for a mortgage to actually fund.

While there were certainly times where it looked like the conforming loan limit could have remained at its 2020 level, thanks to the COVID-19 pandemic, real estate took off after a brief slowdown in spring.

Fun fact – conforming loan limits do not decrease, even if home values have declined. Instead, loan limits remain the same as the prior year, not that this has been an issue for nearly a decade.

In summary, this is more good news for existing homeowners wanting to refi and those looking to purchase a home, as conforming mortgages are generally easier to get approved for, and tend to come with lower mortgage rates.

2021 Conforming Loan Limits by Property Type

  • One-unit property: $548,250
  • Two-unit property: $702,000
  • Three-unit property: $848,500
  • Four-unit property: $1,054,500

While $548,250 will be the maximum baseline CLL for a one-unit property, it’ll be even higher for those financing a multi-unit property, such as a duplex, triplex, or fourplex.

In fact, those taking out a mortgage on a fourplex will now be able to stay at/below the CLL while still getting a $1 million+ loan amount, which tells you just how expensive homes have become.

There are even higher loan limits in place for Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where the baseline loan limit will be $822,375 for one-unit properties in 2021. That’s 50% higher than the baseline.

And for those financing multi-unit properties in those states and territories, the loan limits exceed $1.5 million.

2021 Conforming Loan Limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands

  • One-unit property: $822,375
  • Two-unit property: $1,053,000
  • Three-unit property: $1,272,750
  • Four-unit property: $1581,750

If you reside in Alaska, Hawaii, Guam, or the U.S. Virgin Islands, the baseline loan limit for is 150 percent of the national baseline.

This means it’s possible to get a loan amount as high as $822,375 on a one-unit property and have it still be considered conforming.

This is important for those unable to obtain jumbo home loan financing, or those looking for the lowest possible mortgage rate.

As noted, mortgage rates are typically lower on conforming mortgages because loans backed by Fannie Mae and Freddie Mac are more liquid on the secondary market, especially with the Fed as a buyer of agency mortgage-backed securities (MBS).

2021 High Cost Loan Limits (LA, NYC, etc.)

  • One-unit property: $822,375
  • Two-unit property: $1,053,000
  • Three-unit property: $1,272,750
  • Four-unit property: $1581,750

But wait, there’s more. What about conforming loan limits in high-cost regions of the country, such as New York City and San Francisco?

Well, those also enjoy higher loan limits, assuming 115 percent of the local median home value exceeds the baseline CLL.

In these expensive regions of the country, the maximum loan limit will be a multiple of the area median home value, with a “ceiling” of 150 percent of the baseline loan limit.

There are more than 3,000 counties or county-equivalent jurisdictions in the United States, and about 150 to 200 of them qualify for these high-cost limits that exceed the baseline limit.

This means the new ceiling loan limit for one-unit properties in many high-cost areas will be $822,375, which is 150 percent of the baseline $548,250.

For example, homeowners with a one-unit property will be able to refinance a $822,375 mortgage in San Francisco, or take out a home purchase loan in New York City for the same amount, with backing by Fannie or Freddie.

However, so-called conforming jumbo loans tend to come with slightly higher mortgage rates than pure conforming loan amounts.

The FHFA said the maximum CLL will be higher in all but 18 counties or county equivalents nationwide in 2021 thanks to rising property values.

2021 FHA Loan Limits

Lastly, let’s discuss the 2021 FHA loan limits, which are related to the national conforming loan limit but not the same.

The maximum FHA loan limit can actually be quite a bit lower in many low-cost regions of the United States because they calculate the “floor” at 65 percent of the national conforming limit.

In other words, if you’re buying a home or refinancing a home loan in a less expensive area, it may be as low as $356,362, which is still up from $331,760 in 2020.

I believe Phoenix, Arizona has a FHA loan limit set at the floor.

Meanwhile, the ceiling is the same 150 percent of the national conforming limit enjoyed in high cost regions, so up to $822,375 for a one-unit property in places like Los Angeles.

And even higher for multi-unit properties in those regions.

The new FHA loan limit goes into effect for case numbers assigned on or after January 1st, 2021.

Don't let today's rates get away.

Source: thetruthaboutmortgage.com

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