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An Overview of Filial Responsibility Laws

An Overview of Filial Responsibility Laws – SmartAsset

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Taking care of aging parents is something you may need to plan for, especially if you think one or both of them might need long-term care. One thing you may not know is that some states have filial responsibility laws that require adult children to help financially with the cost of nursing home care. Whether these laws affect you or not depends largely on where you live and what financial resources your parents have to cover long-term care. But it’s important to understand how these laws work to avoid any financial surprises as your parents age.

Filial Responsibility Laws, Definition

Filial responsibility laws are legal rules that hold adult children financially responsible for their parents’ medical care when parents are unable to pay. More than half of U.S. states have some type of filial support or responsibility law, including:

  • Alaska
  • Arkansas
  • California
  • Connecticut
  • Delaware
  • Georgia
  • Indiana
  • Iowa
  • Kentucky
  • Louisiana
  • Massachusetts
  • Mississippi
  • Montana
  • Nevada
  • New Jersey
  • North Carolina
  • North Dakota
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Dakota
  • Tennessee
  • Utah
  • Vermont
  • Virginia
  • West Virginia

Puerto Rico also has laws regarding filial responsibility. Broadly speaking, these laws require adult children to help pay for things like medical care and basic needs when a parent is impoverished. But the way the laws are applied can vary from state to state. For example, some states may include mental health treatment as a situation requiring children to pay while others don’t. States can also place time limitations on how long adult children are required to pay.

When Do Filial Responsibility Laws Apply?

If you live in a state that has filial responsibility guidelines on the books, it’s important to understand when those laws can be applied.

Generally, you may have an obligation to pay for your parents’ medical care if all of the following apply:

  • One or both parents are receiving some type of state government-sponsored financial support to help pay for food, housing, utilities or other expenses
  • One or both parents has nursing home bills they can’t pay
  • One or both parents qualifies for indigent status, which means their Social Security benefits don’t cover their expenses
  • One or both parents are ineligible for Medicaid help to pay for long-term care
  • It’s established that you have the ability to pay outstanding nursing home bills

If you live in a state with filial responsibility laws, it’s possible that the nursing home providing care to one or both of your parents could come after you personally to collect on any outstanding bills owed. This means the nursing home would have to sue you in small claims court.

If the lawsuit is successful, the nursing home would then be able to take additional collection actions against you. That might include garnishing your wages or levying your bank account, depending on what your state allows.

Whether you’re actually subject to any of those actions or a lawsuit depends on whether the nursing home or care provider believes that you have the ability to pay. If you’re sued by a nursing home, you may be able to avoid further collection actions if you can show that because of your income, liabilities or other circumstances, you’re not able to pay any medical bills owed by your parents.

Filial Responsibility Laws and Medicaid

While Medicare does not pay for long-term care expenses, Medicaid can. Medicaid eligibility guidelines vary from state to state but generally, aging seniors need to be income- and asset-eligible to qualify. If your aging parents are able to get Medicaid to help pay for long-term care, then filial responsibility laws don’t apply. Instead, Medicaid can paid for long-term care costs.

There is, however, a potential wrinkle to be aware of. Medicaid estate recovery laws allow nursing homes and long-term care providers to seek reimbursement for long-term care costs from the deceased person’s estate. Specifically, if your parents transferred assets to a trust then your state’s Medicaid program may be able to recover funds from the trust.

You wouldn’t have to worry about being sued personally in that case. But if your parents used a trust as part of their estate plan, any Medicaid recovery efforts could shrink the pool of assets you stand to inherit.

Talk to Your Parents About Estate Planning and Long-Term Care

If you live in a state with filial responsibility laws (or even if you don’t), it’s important to have an ongoing conversation with your parents about estate planning, end-of-life care and where that fits into your financial plans.

You can start with the basics and discuss what kind of care your parents expect to need and who they want to provide it. For example, they may want or expect you to care for them in your home or be allowed to stay in their own home with the help of a nursing aide. If that’s the case, it’s important to discuss whether that’s feasible financially.

If you believe that a nursing home stay is likely then you may want to talk to them about purchasing long-term care insurance or a hybrid life insurance policy that includes long-term care coverage. A hybrid policy can help pay for long-term care if needed and leave a death benefit for you (and your siblings if you have them) if your parents don’t require nursing home care.

Speaking of siblings, you may also want to discuss shared responsibility for caregiving, financial or otherwise, if you have brothers and sisters. This can help prevent resentment from arising later if one of you is taking on more of the financial or emotional burdens associated with caring for aging parents.

If your parents took out a reverse mortgage to provide income in retirement, it’s also important to discuss the implications of moving to a nursing home. Reverse mortgages generally must be repaid in full if long-term care means moving out of the home. In that instance, you may have to sell the home to repay a reverse mortgage.

The Bottom Line

Filial responsibility laws could hold you responsible for your parents’ medical bills if they’re unable to pay what’s owed. If you live in a state that has these laws, it’s important to know when you may be subject to them. Helping your parents to plan ahead financially for long-term needs can help reduce the possibility of you being on the hook for nursing care costs unexpectedly.

Tips for Estate Planning

  • Consider talking to a financial advisor about what filial responsibility laws could mean for you if you live in a state that enforces them. If you don’t have a financial advisor yet, finding one doesn’t have to be a complicated process. SmartAsset’s financial advisor matching tool can help you connect, in just minutes, with professional advisors in your local area. If you’re ready, get started now.
  • When discussing financial planning with your parents, there are other things you may want to cover in addition to long-term care. For example, you might ask whether they’ve drafted a will yet or if they think they may need a trust for Medicaid planning. Helping them to draft an advance healthcare directive and a power of attorney can ensure that you or another family member has the authority to make medical and financial decisions on your parents’ behalf if they’re unable to do so.

Photo credit: ©iStock.com/Halfpoint, ©iStock.com/byryo, ©iStock.com/Halfpoint

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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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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The Average Salary of a Surgeon

The Average Salary of a Surgeon – SmartAsset

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Surgery is a prestigious field that requires a high degree of skill, dedication and hard work of its members. Not surprisingly, surgeons’ compensation reflects this fact, as the average salary of a surgeon was $255,110 in 2018. This figure can vary slightly depending on where you live and the type of institution at which you work. Moreover, the path to becoming a surgeon is long and involves a substantial amount of schooling, which might result in student loan debt.

Average Salary of a Surgeon: The Basics

According to the Bureau of Labor Statistics (BLS), the average salary of a surgeon was $255,110 per year in 2018. That comes out to an hourly wage of $122.65 per hour assuming a 40-hour work week – though the typical surgeon works longer hours than that. Even the lowest-paid 10% of surgeons earn $94,960 per year, so the chances are high that becoming a surgeon will result in a six-figure salary. The average salary of a surgeon is higher than the average salary of other doctors, with the exception of anesthesiologists, who earn roughly as much as surgeons.

The top-paying state for surgeons is Nebraska, with a mean annual salary of $287,890. Following Nebraska is Maine, New Jersey, Maryland and Kansas. Top-paying metro area for surgeons include Cincinnati, OH-KY-IN; Winchester, WV-VA; Albany-Schenectady-Troy, NY; New Orleans-Metairie, LA; and Bowling Green, KY.

Where Surgeons Work

According to BLS data, most of the surgeons in the U.S. work in physicians’ offices, where the mean annual wage for surgeons is $265,920. Second to physicians’ offices for the highest concentration of surgeons are General Medical and Surgical Hospitals, where the mean annual wage for surgeons is $225,700. Colleges, universities and professional schools are next up. There, surgeons earn an annual mean wage of $175,410. A smaller number of surgeons are employed in outpatient Care Centers, where the mean annual wage for surgeons is $277,670. Last up are special hospitals. There, the mean annual wage for surgeons is $235,770.

Becoming a Surgeon

You may have heard that the cost of becoming a doctor, including the cost of medical school and other expenses, has soared. Aspiring surgeons must first get a bachelor’s degree from an accredited college, preferably in a scientific field like biology.

Then comes the Medical College Acceptance Test (MCAT) and applications to medical schools. The application process can get expensive quickly, as many schools require in-person interviews without reimbursing applicants for travel expenses.

If accepted, you’ll then spend four years in medical school earning your M.D. Once you’ve accomplished that, you’ll almost certainly enter a residency program at a hospital. According to a 2018 survey by Medscape, the average medical resident earns a salary of $59,300, up $2,100 from the previous year. General surgery residents earned slightly less ($58,800), but more specialized residents like those practicing neurological surgery earned more ($61,800).

According to the American College of Surgeons, surgical residency programs last five years for general surgery. But some residency programs are longer than five years. For example, thoracic surgery and pediatric surgery both require residents to complete the five-year general surgery residency, plus two additional years of field-specific surgical residency.

Surgeons must also be licensed and certified. The fees for the licensing exam are the same regardless as specialty, but the application and exam fees for board certification vary by specialty. Maintenance of certification is also required. It’s not a set-it-and-forget-it qualification. The American Board of Surgery requires continuing education, as well as an exam at 10-year intervals.

Bottom Line

Surgeons earn some of the highest salaries in the country. However, the costs associated with becoming a surgeon are high, and student debt may eat into surgeons’ high salaries for years. The costs of maintaining certification and professional insurance are significant ongoing costs associated with being a surgeon.

Tips for Forging a Career Path

  • Your salary dictates a lot of your financial life, such as how much you can afford to pay in rent and the slice of your paycheck that goes to taxes. However, there are some principles that apply no matter your income bracket, like the importance of an emergency fund and a well-funded retirement account.
  • Whether you’re earning a six-figure surgeon’s salary or living on a more modest income, it’s smart to work with a financial advisor to manage your money. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.

Photo credit: ©iStock.com/megaflopp, ©iStock.com/XiXinXing, ©iStock.com/shapecharge

Amelia Josephson Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia’s work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.
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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

The Homebuying Journey with Love and Renovations

Hello, Homes.com! My name is Amanda Hendrix and I blog with my husband, Corey, at Love & Renovations about DIY, home decor, and how we make our builder-grade house in the suburbs of Austin feel like home. We are embarking on the process of selling our second home and moving into what will (hopefully) be our forever home, and we’re so excited to be sharing the journey here with you.

The House Hunt

We have always loved fixing up homes that need a little love, so when we began the process of searching for our third home we knew we wanted something that wasn’t updated and needed some work. We’ve always lived in homes that were a bit on the ugly side when we moved in because there’s nothing more satisfying than totally transforming it!

exterior of a gray and white homeexterior of a gray and white home

We were so confident in our plans that as we began browsing for a home we hid “new construction homes” in our Homes.com searches because there was no way we’d be buying a brand new build. We need an older house with character, ugly tile to demo, and old laminate counters that are so bad you have to shield your eyes when you walk in the room! I mean, what good is an “after” without a really bad “before”, right?! 

But then (there’s always a “but then,” isn’t there?), we decided to go scout some neighborhoods in our area on a whim one afternoon because we were antsy to look at houses. We pulled up to a gorgeous neighborhood with brand new homes and I cringed a little in my soul. However, I started to cringe a little less as we drove past the gorgeous pool and splash pad at the amenity center, the gym for the residents, and the walking trails throughout the neighborhood. I had never seen an older neighborhood in our area with all of this exciting stuff so I have to admit I was intrigued.

We love houses (obviously), and the kids were getting antsy so we decided to pop into the model home. Just for fun! We DEFINITELY weren’t going to actually buy a new construction home.

You’re sensing the foreshadowing, right?

We got to chatting with the saleswoman and found out they just so happened to be building a home in our exact budget, in the size we want, and that it would be finished right in time for us to close at our planned mid-November deadline. Oh, and did I mention it had pretty much all of the bells and whistles we could want? Upgraded flooring, a covered patio, a sprinkler system and two-story ceilings in the living room… I’m a sucker for two-story ceilings.

home under construction home under construction

I feel like the rest of the story tells itself – we drove out to a nearby neighborhood that had our layout as the model home, and I got teary-eyed standing in the living room because it just felt so right. All of the pieces fell into place exactly as they should and a couple of days later we found ourselves signing a contract for the new construction home we always swore we’d never buy.

And then the chaos began.

New Construction vs. An Older Home

We quickly learned that buying a new construction home is worlds different than buying a home that’s been previously owned. For starters, the builder requires you to have your home on the market within two weeks (ideally less) of signing your contract. If you aren’t under contract at least a couple of weeks after that then they start to get nervous. We had originally thought we would have a full six weeks to prepare our house before putting it on the market, but we were suddenly looking at a mere six days to get everything done that we wanted to do (photography, marketing, etc) – and that list was long, my friends.

I went on a DIY spree in my house and managed to get the entire list crossed off just in the nick of time, but there were definitely a few stressful moments!

Another big difference when building a new home is all of the choices! When you’re buying a home that’s already been lived in, it comes as it is (unless there are issues to be fixed), but when you’re buying new construction – even a spec home like ours – you get to have some input in the design process. About a week after we signed our contract we got to go out to the design center for our builder and change out some of the finishes that had been decided on for the home. Our house was far enough along in the process that we were only able to change the flooring, but that was the big thing we wanted to change, anyway! If you get in on the process earlier, you’ll have way more options – it’s staggering how many decisions go into building a new construction home!

construction of a new homeconstruction of a new home

Finally, the other big difference we’ve noticed so far comes during the inspection process. When you’re buying a previously-owned home, you generally have one inspection sometime during the option period. With new construction, however, you get to have a few different walkthroughs of the home throughout the building process and you can (and should!) bring an inspector to all of them!

The builder will likely tell you that they have an inspector they work with, but you should always hire an independent inspector to come with you to each of your walkthroughs to check things out. The builder must fix anything that the inspector finds isn’t up to code, so you are guaranteed to walk into a home that has zero issues – which, let’s be real, is a huge perk over buying an older home! It’s a little more expensive to have multiple inspections, but it’s well worth the peace of mind to know that your home is in tip-top shape.

We’ve still got a long way to go on our home buying, and selling, journey, and I am so excited to be able to share the details with you here on Homes.com! If you want some more insight on new construction and the potential benefits, check out this post about the pros and cons of new construction and this post that talks about what new construction upgrades are worth the splurge


Amanda and Corey Hendrix

Amanda & Corey Hendrix bought their first home in 2011 and love to share their renovation and decorating adventures on their blog, Love & Renovations. They love to encourage homeowners to have the confidence to make their house a home, and believe that anyone can tackle DIY projects in their home. You can follow their adventures at loveandrenovations.comInstagramFacebook, or Pinterest.

Source: homes.com

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What to Look for When Buying a House

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While everybody knows that buyers shop based on price range, there are many additional considerations to make when looking for a home. And, most buyers end up refining their criteria once they start touring homes. Ultimately, your home criteria should depend on your personal lifestyle and needs. Regardless of what you’re looking for, here are some general rules you should follow to make sure you’ll be happy with the home you buy for the foreseeable future.

What are the top features buyers look for in a home?

Today’s buyers are juggling many different priorities when it comes to buying a home, but according to the Zillow Group Consumer Housing Trends Report 2019, here are the features that rank as very important or extremely important to most buyers.

Neighborhood wants and needs for buyers

  • Safety: 82% say a neighborhood that feels safe is very or extremely important
  • Walkability: 60% say it’s very or extremely important
  • Preferred neighborhood: 56% say it’s very or extremely important
  • Proximity to shopping, services and/or leisure activities: 53% say it’s very or extremely important
  • Optimal commute to work or school: 52% say it’s very or extremely important
  • Offers a sense of community or belonging: 48% say it’s very or extremely important
  • Close to family and friends: 46% say it’s very or extremely important
  • In preferred school district: 43% say it’s very or extremely important

Home features buyers want

  • Within initial budget: 83% say it’s very or extremely important
  • Air conditioning: 78% of buyers say it’s very or extremely important
  • Preferred number of bedrooms: 76% of buyers say it’s very or extremely important
  • Preferred number of bathrooms: 67% of buyers say it’s very or extremely important
  • Private outdoor space: 67% of buyers say it’s very or extremely important
  • Preferred size/square footage: 67% of buyers say it’s very or extremely important
  • Floor plan/layout that fits preferences: 67% of buyers say it’s very or extremely important

28% of buyers look for a home to rent out, 27% looked for smart homes, 58% of buyers looked for assigned parking

1. Search for the right price

Price will ultimately dictate what you can or cannot buy. While looking at homes above your price range can be fun, it’s not a good use of time — and it can lead to heartbreak when you realize it’s not financially feasible. Despite this, Zillow research found that in 2019, just 55% of buyers stayed on budget, while 26% went over their initial budget.

How to set your home buying budget

Use Zillow’s Affordability Calculator: This handy tool gives you an initial budget range based on your income, existing monthly bills, and down payment amount. Once you have that range, you can set up Zillow alerts for homes on the market that fit your price range, along with other criteria.

Get pre-approved: Once you’re ready to really start your home search, you’ll want to get pre-approved by the lender of your choice. They’ll approve you for a loan up to a specific amount, based on your income, debt and credit history.

Forecast your mortgage payment: Even if you are pre-approved for a large loan from your lender, you should make sure you’re comfortable with your estimated monthly housing payment. When you use Zillow’s mortgage calculator to estimate your monthly payments, be sure the taxes, insurance, and HOA fees are accurate — those items can make a big difference in your monthly costs.

2. Prioritize the location

Next to budget, location is one of the most important things to consider when buying a house. The 2019 report uncovered that 24% of buyers found it difficult or extremely difficult to find a home in their desired location. If you can’t find or afford a home in your ideal neighborhood, you’ll want to ask yourself a few questions (and enlist the help of your agent) to find a location that fits your lifestyle, needs and budget. Remember — your home’s location can’t be changed, so take the time to really identify a neighborhood where you’ll be happy live.

Proximity to downtown

Unsurprisingly, homes closer to core downtown areas have better resale value, thanks to their shorter commutes. According to Zillow research, in 29 of the country’s 33 largest metro areas included in the analysis, buyers should expect to pay more per square foot for a home within a 15-minute rush-hour drive to the downtown core. That may be why 15% of buyers who compromise to stay within their budget add time to their commute.

Community attributes

If you like being able to walk to restaurants and shops, try walking the distance to town to see if it’s doable. Spend some time exploring the area, checking out nearby parks and figuring out what kinds of attractions are nearby.

Alternatively, if you’re someone who likes a more solitary life and doesn’t mind driving, you might prioritize a home that offers more privacy, perhaps in a location that’s off the beaten path.

School district quality

If you have kids (or are planning on having kids in the future), you want them to get the best education possible. Checking out the school district ratings is a starting point, but you should visit the local schools to gather your assessment of the education and programs. Even if you don’t have children, the school district that your home is in can impact your future resale value.

Flood zone status

Homes located in flood zones require additional insurance, and buying a home in a flood-prone area means you need to be prepared if a flood actually happens.

3. Think long term

According to the Zillow Group Report, the typical homeowner stays in their home for 14 years before selling. When shopping for a home, don’t just think of your immediate needs. Make sure the home you select will meet your long-term goals, so you won’t have to move again in the near future.

Bedrooms and bathrooms

If you plan to expand your family in the near future, make sure the new home can accommodate your plans, whether it’s an extra room for a new baby, an in-law suite for parents, or a guest bedroom if you’re moving out of state and anticipate lots of visitors. The same goes if you are planning to downsize or you have grown children who will be moving out soon.

Outdoor space

As mentioned above, most buyers rank outdoor space as important. If you have a dog (or plan to get one), have kids who need a safe place to play or are an avid gardener, you’ll want to make sure the home’s outdoor space meets your needs.

Potential to personalize

Many buyers look for a home that’s move-in ready, so they can avoid costly repairs and updates (especially right after moving in). But at the same time, it’s nice to be able to add some personal flair to make a house feel like home. If you’d like to add some of your own style, be sure to steer clear of homes that you won’t be able to change enough to fit your preferences.

Lifestyle amenities

Ideally, your new home should enhance your current lifestyle — and you’ve probably already envisioned what your life in a new home will look like. As you evaluate houses, consider your hobbies and what makes you happy. For example, if you love spending time outdoors, you probably want a home with a nice yard. If you love to cook, maybe a nice, big kitchen is on your wish list. And, think about your current living situation: What things do you wish were different?

4. Assess property condition

TV makes home renovations look easy, but in reality, they’re anything but. If you’re a first-time buyer who has never undergone a renovation, you may want to steer clear of a home in serious disrepair. The costs can add up quickly, and if the home needs structural work, it could delay your move-in, causing unnecessary stress. Here are the three major categories of property condition.

Move-in ready

A move-in ready home is new, close to new, or has been recently renovated. Zillow-owned homes are move-in ready homes that have been recently renovated by a licensed contractor, and are ready for new owners to start their lives.

Minor updates

A home that needs minor updates might have cosmetic issues you’d like to change, or have some dated mechanical systems that could be updated for energy savings. Learn more about minor cosmetic details below.

Major renovation

A home that needs major repairs is usually priced lower due to the work that needs to be done. One upside to a major renovation is the opportunity to personalize the home to your tastes. Keep in mind that the return on investment for a major renovation isn’t 100%, and you risk a delayed move-in if the repairs are more extensive than anticipated.

Check condition of costly systems

No matter the condition of the home you’re buying, make sure your inspector checks to make sure major systems and mechanicals in the home are functioning properly. If issues are uncovered, you’ll want to ask the seller to either repair them before closing or offer a credit so you can fix them yourself. Look out for the following costly issues:

  • Damaged roof
  • Older furnace or HVAC system
  • Flooding, water damage or mold
  • Old insulation
  • Plumbing issues
  • Exterior cracks
  • Uneven floors

5. Don’t focus on minor cosmetic details

No house is perfect, so try not to get hung up on little imperfections. For example, don’t eliminate a home from your list just because you don’t like the interior paint color. Cosmetic changes are fairly easy and affordable to make. Don’t let the following minor issues keep you from buying a house you would otherwise love:

  • Paint
  • Hardware
  • Furnishings
  • Landscaping

When you attend showings and open houses, or even when you’re just browsing through pictures online, it’s easy to get distracted by clutter. Try not to pay too much attention to the seller’s stuff — it’ll all be removed by the time you move in. Put in the effort to picture the house as a blank canvas for all of your belongings.

6. Stick with your must-haves

There’s a big difference between wants and needs, so create two different lists when searching for a home. For instance, a shorter commute may be a must-have, but smart home features are a nice-to-have. Practicality and functionality should always take priority over the bells and whistles.

Things to consider when buying a house: needs vs. wants

For example, your list of needs might look like this.

  • Need: shorter commute
  • Need: specific number of bedrooms and bathrooms
  • Need: parking

Other items might fall to your list of wants, like these.

  • Want: updated kitchen
  • Want: upstairs washer and dryer
  • Want: smart home features

Source: zillow.com

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My home buying story: How VA loans helped this service member buy a home

Name: Chris V.

Year: 2004

City: Kapolei

Occupation: Army

Age: 21

Salary: $20,000 + $1,300 a month housing allowance

Home Price: $160,000

Chris and his wife, Nichole, had only been married for a couple of years when they bought their first home in 2004. Like most young couples, they didn’t have enough income for a giant mortgage or pile of cash for the down payment. To make matters worse, Chris and Nichole were house hunting in Hawaii, the most expensive housing market in the nation.

The median housing price in Hawaii then was $460,000, a big number for a couple of 21-year-olds living on an Army salary. But Chris and Nichole had an edge: a Veterans Administration loan, or VA Loan. This is a type of home financing guaranteed by the federal government that helps current and former military families buy a home or pay for home improvements.

Here’s how a VA loan helped them reach their homeownership goals.

It got them into the market with no down payment.

Chris and Nichole made a home-buying budget work for one reason: they didn’t have to pay a dime for a down payment. One of, if not the best thing about a VA home loan is that it allows veterans to buy without putting any money down. As anyone who has bought a home knows, you can spend half your life saving enough cash for some mortgages. Chris and Nichole would have needed $32,000 for a 20% down payment on a $160,000 mortgage—more than his entire salary for 18 months.

But with zero down, they were able to budget for a $160,000 home. Chris was stationed at Schofield Barracks outside Honolulu, so he looked at housing in nearby Kapolei, a planned community developed in the 1950s. They looked at condos because a single-family home was not in their budget. He and Nichole ended up buying a 660-square-foot condo home.

A couple stand outside of a condo near Honolulu

Chris and Nichole in front of their first home—a condo outside Honolulu.

It earned them great terms.

Plenty of young home buyers know they can be trusted with a mortgage, but lenders don’t take people’s word for it. You know whose word they do trust? The government’s. While many first-time home buyers end up paying extra fees and interest until they can prove themselves super credit-worthy, VA loans help veterans and active service members get into homeownership without those extra costs.

Since VA loans are backed by the government, lenders consider them to be less risky and grant favorable terms to buyers with a good credit score and the ability to repay the loan. Chris and Nichole got a competitive interest rate and didn’t have to pay closing costs or get PMI (private mortgage insurance). “We got cash back at closing,” Chris says. “And not having PMI knocked quite a bit off our monthly payment compared to a traditional loan.”

VA loans helped them grow—even during the recession.

Fast forward to 2009. Chris was a Bronze Star recipient back from a tour of duty in Iraq. He has left the Army and is working for a software firm in Hawaii. Nichole is pregnant with their first child, so it was time for them to look for a bigger place to live.

There was one problem. The Great Recession had hit two years earlier, and housing prices had collapsed. It wasn’t a great time to sell, so they wanted to hang on to their condo and rent it out, but they weren’t in a position to both keep it and make a down payment. Once again, a VA loan saved the day, even though Chris was now a civilian. Veterans can get VA loans after they leave the service. It’s a benefit they keep for the rest of their lives.

They bought a 1,400-square-foot house in Waipahu, an area of Honolulu, for $575,000, with no money down. And instead of selling the condo and taking a loss, they refinanced it with a traditional lender and turned it into a rental property. “We had to refinance with a regular lender to stay under the VA lending limit with the house,” he says.

Chris and Nichole celebrate their second home with their first child on the way.

Two years later, in 2011, his job took him to the East Coast, where they decided to rent. They also rented out their house in Hawaii, along with their condo because it still wasn’t a good market for sellers.

“We owed $25,000 more for the house than we could sell it for, and we would have agent fees on top of that,” Chris says. “We definitely didn’t have the cash at that point to make up the difference.”

A third VA loan allowed them to arrive at their ideal home.

In 2013, Chris took a job as a software engineer in the San Francisco Bay Area with Trulia. Nichole was pregnant with baby number three, and she sent Chris off to California with clear instructions. “She told me ‘Buy me a fricking house,’” Chris says. “She did not want to live in a hotel.”

It took him just three weeks. “I looked at thousands of places online, but only a dozen in person,” he says. He ended up buying a 2,336-square-foot house in Pleasant Hill for $700,000—a great deal in a town with a median sale price of $813,500. Again, he bought with a VA loan.

The neighborhood, Gregory Gardens, is vibrant and full of trees. “You felt like you were in the forest, even though you were in a neighborhood,” Chris says. There’s a Bay Area Rapid Transit station nearby for easy commuting. His three kids have a big yard and plenty of neighborhood children to pal around with.

Between Chris’s career taking his family through some of the priciest housing markets in the country and the housing market crash nearly derailing their finances, VA loans truly came to the rescue for Chris and Nichole—an appropriate benefit for the veterans, active service members, and their families who come to their nation’s rescue all the time.

“(VA loans are) one of the best military benefits,” Chris says. “We couldn’t have bought our first home without it, and we wouldn’t be where we are now without them.”

Wondering what homes you might be able to buy with a VA loan? See what’s available now on Trulia.

Source: trulia.com

The Counteroffer: Negotiating a Real Estate Deal

A lot can happen between an initial offer and closing day. Meet the counteroffer …

Buying a home is rarely as simple as making an offer and paying that offer out. Negotiations can go back and forth for weeks before the seller and buyer are both satisfied.

The vehicle for this negotiation is the counteroffer — a vital and complex rejection and counter to an offer made by either party. Counteroffers are typically handled between real estate agents and are time sensitive.

Selling or buying a home is more of a process than a transaction, so it’s important to understand counteroffers before you make your first offer.

Why was I countered?

As a home buyer, if you make an offer below list price, the seller may choose to reject, accept or simply let the offer expire. If there are multiple offers, the listing agent will lay out the options for their client and then notify all buyers’ agents of the choices.

Sellers may also counter your proposed closing date. If they need to move out quickly, they may want to push it earlier. They may also ask to rent the property for a time after the settlement.

Price and closing date negotiations are common from both parties, but there are even more reasons sellers can potentially get countered.

The condition of the home is likely the biggest factor here. As home buyers conduct ongoing research into the home, any problems with the condition of the house can result in a counteroffer.

If you’ve chosen to take appliances with you when you move, buyers may also look to negotiate for those.

Appraisals are another reason for counteroffers. If an appraisal comes in below the agreed-upon sale price, it will affect the amount the mortgage company will lend to the buyer.

Negotiation power

When reviewing a counteroffer, it’s important to have an experienced real estate agent who can capitalize on your advantages in a negotiation. Both sellers and buyers can take steps to put themselves in an advantageous position through planning and smart counteroffers.

Knowledge is power in negotiations, so try to glean as much information about the seller or buyer as you can. Your agent will also seek information from the other agent on your behalf.

Sometimes sellers use the pending sale of their home to finance another, meaning they have a truncated timeline and could be more eager to make a deal. Similarly, buyers who have terminated a lease may be desperate for a place to live and more willing to negotiate.

If you’re selling a home with known issues, anticipate how these problems may put you at a disadvantage during negotiations. A leaky roof may not be discovered until after buyers order a home inspection. Depending on the cost, they may ask the seller to either fix the roof or deduct the cost of a new roof from the sale price.

These types of issues put sellers at a distinct disadvantage because they have to either pay for repairs, lower the selling price, or reject the counteroffer and hope the next buyer doesn’t notice or care about repairs.

This is why it’s worth the money (around $500) to pay for an inspection before listing a house. Preparation can save you headaches and money down the road.

Responding to a counteroffer

If you’ve received a counteroffer as a buyer or a seller, carefully review every aspect. Real estate agents, apart from yours, are under no obligation to ensure you read the full contract. So make sure you read everything carefully before you sign.

With each individual counteroffer, consider every aspect of the sale, including old and new information. If you made an offer above the list price, there is always the possibility for an appraisal to come in low.

If you are responding to a counteroffer before an appraisal or inspection, keep those at the forefront of your mind. Prepare yourself for future counteroffers once they are completed.

Whether you’re selling or buying a home, establish a baseline for when you will walk away from a sale. As a buyer, you don’t want to spend so much on a home that you move in with no cash for improvements and repairs. And as a seller, you should know how much you want to make off the sale.

With a measured and informed approach, counteroffers can be your friend. Communicate often with your agent to let them know what you want from the sale, and never be afraid to walk away if things go south.

Top featured photo from Shutterstock.

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Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Originally published October 25, 2016.

Source: zillow.com

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