Tag: tips

Why Homeownership Is A Good Hedge Against Inflation

Real estate has long been considered one of the least risky investments. The market always has its ups and downs, but this is also true of any other investment, and real estate never disappears entirely. As with any investment, it’s best if you know what you’re doing. However, even if you don’t make the best investment possible, investing in real estate rarely becomes disastrous except in the event of economic conditions that reach multiple markets and negatively affect large segments of the population. A mediocre real estate purchase generally just means you may have to wait longer than anticipated to profit off your investment.

With some other investments, bottoming out may mean the product is all but dead and it’s pointless to invest, so it’s better to wait until the prices are increasing, but still low. Not the case with real estate, given its cyclical nature. This gives you a lot more leeway in term of when to invest in real estate. Part of the reason for this is that homes tend to appreciate over time, rather than depreciate as many other products do. If inflation is high, while it may not be the best time to invest in general, diversifying into real estate is a solid option. This is especially true if you purchase a rental property, as rent prices also go up with inflation.

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How To Evaluate Homeowners Insurance Options

Homeowner’s insurance is not one-size-fits-all. Each insurance plan typically includes different coverage for different aspects of your home. It may include dwelling coverage, personal property coverage, liability coverage, or additional living expenses coverage. Not every plans covers each of this categories equally, so it’s important to know which plan best suits your situation, not just whichever is cheapest.

This means you should estimate the value of your personal belongings, evaluate your home’s risk factor for injury, and assess the likelihood of your home being temporarily unavailable. Doing this will help you figure out whether you need personal property coverage, liability coverage, or additional living expenses coverage, respectively. But don’t forget that the first step is actually determining the value of your home itself. That’s likely what’s going to be the most valuable, so you want to make sure you have suitable coverage for it. In order to do that, you also need to look at the insurance plan’s deductible. If the plan has relatively low insurance premiums, that could mean it has a high deductible, meaning you’d be paying quite a bit out of pocket before the insurance kicks in at all. If the cost of a total replacement is relatively low, though, a low premium plan could be right for you.

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How To Do Curb Appeal The Right Way

Plenty of people will tell you that curb appeal is important when making a first impression on buyers. Less commonly does anyone explain what you can do to achieve good curb appeal. Cleaning, yard maintenance, and repainting are still solid steps, but at this stage, everyone knows that — it’s not going to make your home stand out. You need to focus on the smaller details as well.

As already stated, repainting is great. But don’t just put on a fresh coat of the same color, unless it’s already a good color. Many homeowners save paint cans for just this purpose; however, it’s better to select colors strategically. Even on the exterior of the home, it should give an indication of the home’s character on the inside. If the exterior is painted a vibrant red or orange, for example, buyers will be expecting a colorful interior. If the exterior paint is a neutral shade, buyers will expect more subdued interior colors as well. You should also pay attention to the environment around the home, and pick colors that accentuate your home while not clashing with the environment.

One thing that makes this easier is that you do have some control over the home’s immediate environment. You can trim or remove trees on your property or transplant new ones. You can choose plants that can survive all year round, pick a variety of different plants, or replant as the seasons change. Even if you don’t have a yard, you can add window boxes. New, strategically placed lighting fixtures can also help with this by highlighting specific areas. Other elements that are technically not part of the structure of the home but can be updated or replaced are your house numbers and mailbox.

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Best Cities For Recent College Graduates

Did you graduate from college recently, or do you know someone who has? Looking for a city with good employment opportunities? So are most other recent college graduates. In order to determine the ideal cities for this segment of the population, Zillow has analyzed many US cities looking at four factors: rent-to-income ratio, average salary for recent college graduates, job openings, and share of population in their 20s. They’ve found that the top ten cities for recent grads are Colorado Springs, CO; Spokane, WA; Des Moines, IA; Phoenix, AZ; Buffalo, AZ; Albuquerque, NM; Bakersfield, CA; Albany, NY; Portland, OR; and Little Rock, AR.

Of course, this analysis isn’t an exact science, so you should take it with a grain of salt. There are far more cities in the US than Zillow could ever hope to analyze, so they’re only looking at the largest metros. Their analysis also only looks at rentals, not purchases. While this may simply be a realistic approach, it actually doesn’t bode well for recent grads if renting is their best option — especially in a rather inexpensive place like Little Rock. Job openings also may not be the best statistic to look at, since the jobs may be open because they simply aren’t good jobs.

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More: https://www.nbcbayarea.com/news/business/money-report/the-10-best-u-s-cities-for-new-college-grads-based-on-job-prospects-average-income-and-more/3236829/

Pros And Cons Of Buying Versus Building

Purchasing a home is a tough decision. You’re probably going to live there around eight to ten years, on average, so you want to make sure it’s somewhere you want to live. The good thing about building new is that you can make sure the home itself is right for you. But it’s really not that simple. There are pros and cons to both buying and building.

The most obvious advantage to buying an existing home is the reduced hassle. You don’t need to oversee the design and construction, making sure everything is to your specifications. You don’t need to wait for construction to finish before moving in, and while delays are still possible, there are fewer opportunities for delays. Another is that purchasing a home may be less expensive. This depends on the area, but construction costs are still high. Moreover, existing homes have almost immediate resale value, which can mean greater equity when you go to sell it. A less apparent advantage of buying an existing home is location. You might imagine that when you’re building new, you can pick anywhere to build as well, but the fact of the matter is that there are far more existing homes than empty lots, so you don’t get as much choice of where to build unless you’re planning to bulldoze an existing home.

The primary benefit to building new is customization. Whether you’re buying or building, you should have a good idea of what you need or want in a home. By building new, you ensure that you get those things, as long as they’re within your budget and no complications occur. A new home also means fewer issues, at least once the construction is finished. Any major structural issues would be the fault of the builders and not age. The property will use the latest building technologies, which are generally safer and more energy efficient. Building new is also a safer investment, albeit not necessarily a highly profitable one. It may take longer for a newly constructed home to accrue equity, but it’s extremely unlikely to go negative by the time you sell.

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Do Your Research Before Buying Vacant Land

There are certain factors that are always important when buying a home. Everyone knows to look within their budget and find a good location, even if they need the help of an agent to figure out what those are. The same is true of buying land for the construction of a new property; however, there are additional considerations that you need to keep in mind.

When you’re buying an existing property, you can be fairly certain that the property is located within the boundaries of the lot and the soil has suitable conditions for building. If either of these isn’t the case, you certainly should be notified. But if you’re buying land with the intent to build, you need to know the property lines, topography, and soil conditions before you can determine whether or not it’s the right lot for you. You should also make sure that any utilities you want are readily available. Not every home needs to have access to every utility, but if you want one that isn’t currently available, that could mean the lot isn’t right for you or may just require additional expenditures. Another factor is zoning. If a property exists there, the area is probably zoned for such a property, else it’s grandfathered in somehow, or there’s a chance some work was done on it without a permit. If there is no property, you need to know what types of properties can be legally built there.

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Tips For Balancing Your Budget

If you’re having trouble balancing your budget, one possibility is that you haven’t considered exactly what your budget looks like. Of course, it may be that you’re having financial struggles that you can’t fix with simple budgeting, but you won’t truly know until you examine the numbers.

The first thing to do is assess all your current debts. This includes not just outstanding balances, but also interest payments and minimum monthly payments. Don’t just lump them all together, though — clearly delineate your debts and prioritize them by importance or due date. Next, look at all other expenses that aren’t categorized as debts. Categorize them by essential and nonessential expenses. If you’ve ever itemized on your tax return, you should be familiar with this, though the categories may differ. Then allocate funds as necessary to pay debts and essential expenses before looking at nonessential expenses. You should also set up an emergency fund and allocate funds for that.

Once you’ve allocated funds, if things don’t look good for you, consider the options to either fix the budget or reduce the negative impact of an imbalanced budget. If you can allocate enough funds for debts and essential payments, it could be as simple as choosing which nonessential expenses you’re willing to give up. Or maybe you actually have the money, and are just saving more than you need to. One way to reduce negative impact is by deciding how you want to prioritize debts. One option is to pay extra towards high-interest debts to keep the payments manageable. The other is to focus on the debts with the lowest balance to eventually eliminate them entirely. Sometimes these could be the same debt, which is great, but other times you’ll need to pick which is best for you. If just reprioritizing payments isn’t going to fix your budget, some possible options are negotiating with your creditors, consolidating debts, or refinancing at a lower interest rate.

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Misleading Buzzwords Used In Home Listings

Real estate listings are meant to draw people in. This inevitably results in vague wording to obscure potential issues, and over time agents have developed specific buzzwords for this purpose. This isn’t necessarily a malicious trick; it’s no different than any other attempt at salespersonship. Not all of these necessarily mean there’s something wrong with the property, but what it does mean is that you should be aware that you may not be getting what you expect.

Several of these attempt to put a positive or neutral spin on something that isn’t desirable. These include terms such as “vintage” or “old world charm” or even “comfy,” that often just mean it’s worn out and out of date. Phrases like “one of a kind” and “transports you” actually mean that there’s nothing compelling about the property, so no one wants to copy it and residents prefer to think about being elsewhere. A listing stating “backs up to a green belt” may be entirely truthful, but since a green belt just means construction is prohibited, there are a lot of things that are legally categorized as green belts that aren’t particularly green — like a section devoted to power lines. Similar is the term “updated,” which doesn’t necessarily imply the updates are recent. Other common adjectives are too vague or subjective to be meaningful: a neighborhood described as “vibrant,” “quiet,” or simply “good.”

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More: https://www.huffpost.com/entry/misleading-words-in-home-listings_n_5bb24ea2e4b0c7575967d657

Getting A Loan With Irregular Income

Freelance workers and some self-employed people typically don’t have a consistent income. This leads some to doubt whether or not they qualify for a mortgage loan. Lenders will never blanket deny everyone with an irregular income, but it certainly could be more difficult to get a loan. As long as your credit history and debt-to-income ratio are good, it shouldn’t be too much of an issue — you simply may need more documentation to prove that you’re good for it. While lenders will always look at recent income, in the case of irregular income, they may also consider whether or not you’re likely to have clients in the near future based on your occupation.

If you get rejected outright, it’s likely that now isn’t a good time for you to buy in the first place. As long as you aren’t getting rejected, the worst case scenario is a non-qualified mortgage loan, or non-QM loan. Non-QM loans don’t meet the Consumer Financial Protection Bureau guidelines that are designed to ensure borrowers are able to repay their loans, and not all lenders offer them. They may be used for self-employed people, people with irregular income, people with low credit scores, or non-traditional types of properties. Because non-QM loans are riskier for the lender, they do have a drawback for the borrower. They typically have higher interest rates, larger down payment minimums, and/or shorter repayment periods.

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How To Write A Convincing Counteroffer

It can be a difficult decision for a seller whether or not to write a counteroffer. In addition to there being two other options, accept the offer as is or reject it and wait for a better offer, the counteroffer has the potential to push away the buyer and possibly force you to wait for another offer. But this decision can be made easier by learning how to write a good counteroffer.

The worst thing you can do when making a counteroffer is not communicating. Usually this is done through agents and not directly with the buyer, but that’s better than nothing. Try to learn what the buyer’s goals and motivations are, and craft a counteroffer that provides what they want in exchange for something else that you want. A counteroffer that attempts to assert the seller’s position is a bad counteroffer. A counteroffer that recognizes what a fair deal is in the current market conditions is a good counteroffer. In addition, don’t try to confuse buyers into accepting a bad deal with tricky wording. If the buyer can’t understand the counteroffer, they won’t accept it.

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Checklist For Hiring Contractors

If you’re planning to hire a contractor, chances are it’s because you don’t know how to do the work yourself. Because of this, it’s common to believe that the contractor knows what they’re doing and you don’t need to get involved or ask questions. But that couldn’t be further from the truth. Communication is very important when dealing with contractors to make sure the job that’s being done is the job you wanted. It may require a bit of research, but you should learn how to ask the right questions to get the right contractor for your job.

The specifics will depend on the particular job you want done, but there are some things you should be doing prior to choosing a contractor regardless of the job. When looking for a contractor, get quotes from multiple people and verify all of their credentials, licenses, and certifications, as well as experience. Make sure the contractor you pick has liability insurance and worker’s compensation insurance. The next part is what may require some additional research, and that is defining the scope of the job and setting a timeline. If you don’t know exactly what you’re looking to be done, the contractor won’t either, even if they know how to do it. When you get the contract, make sure it contains all the necessary elements before signing. A proper contract contains all the terms and conditions, payment information, warranties, and dispute resolution procedures.

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How To Eliminate Existing Private Mortgage Insurance

Private Mortgage Insurance, or PMI, is a type of insurance that many lenders require for any mortgage with a down payment less than 20%. This is the main reason a minimum 20% down payment is so widely suggested. But if you aren’t able to put 20% down and are forced to take PMI, you needn’t worry too much. It’s also possible to get rid of existing PMI in certain circumstances.

One method that doesn’t require any specific action on your part is to simply wait until automatic termination of PMI, which occurs when you reach 22% equity and are current on your mortgage payments. However, it’s possible to request to terminate it earlier as long as your equity is at least 20%. There are a few ways to do this faster. The simplest option is to pay more than the required mortgage payment. This allows you to reach 20% equity faster while also reducing your PMI costs along the way. Another way you could potentially reduce payments to speed up equity gain is to refinance to a lower interest rate. Depending on your circumstances, this may or may not increase your total mortgage cost excluding PMI, but could eliminate PMI faster. There’s one more possibility: Reappraising your home. It’s possible that your home has accrued enough value that determining the new value of your home reveals that you actually do have at least 20% equity. If you do, you can request to remove PMI.

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Investing In Real Estate Without The Fuss Of Management

Real estate is almost always a solid investment. The two major barriers are the high initial investment required and the necessity to manage the property. The former can’t really be fixed, but there are things you can do about the latter. While there is always the option to hire a property manager, this increases the investment required and can make the profits less attractive. Fortunately, there are some other options for real estate investment without being involved in management, which is termed passive real estate investment.

The other options are real estate investment trusts (REITs), real estate crowdfunding, private real estate funds, and exchange-traded funds (ETFs). In all of these cases, you are investing only a portion of the funds. This also reduces the barrier to entry, but at the cost of lower profits. REITs are trusts that own and manage income properties. Investors can purchase shares of REITs that pay dividends. Similar to REITs, ETFs are publicly traded; however, ETFs are traded on the stock market rather than purchased as shares of a company. Real estate crowdfunding and private real estate funds both involve a group of investors pooling money for an investment project. Crowdfunding gives each investor more choice about which projects they’re interested in, which is better for an investor who knows what they’re doing while still not putting the onus of management on them. Private real estate funds are the option for investors who just want to throw money at an investment and not be involved at all, as they are managed by professionals that choose the projects.

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When Is A Bridge Loan Right For You?

A bridge loan is a type of loan that uses equity in your current home to finance the purchase of a new home. Like nearly any loan, a bridge loan has interest and is paid off in installments. Unlike a traditional loan, though, the balance is paid off when your current home is sold. While you don’t technically need to sell your current home to pay off a bridge loan, it’s most useful in situations in which you want to both buy and sell.

Some seller-buyers will sell first, then use the sale proceeds to purchase a new home. However, this comes with potential uncertainties about how long you will be left without a home, especially if you make offers and aren’t successful. You may be staying in hotels or renting for longer than anticipated. Another option is to buy a home first using a traditional loan, then sell. If bridge loans weren’t a thing, there wouldn’t be anything inherently wrong with this. But they are a thing, and this is exactly the situation they’re designed for. While bridge loans do come with a higher interest rate than traditional loans, the length of the loan is typically much shorter. After all, most traditional loans are 15 or 30 years, and no one is going to be waiting that long for a sale to finalize. One caveat of bridge loans is that since they are based on the equity in your current home, if your equity is low, the loan amount will also be low.

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The Features That Translate To Higher Home Values

If you want to make the most of a partial remodel, look no further than the kitchen. Unless no one in the family knows how to cook, people will spend quite a bit of time there. Kitchen remodels are a great investment if you know what’s trending. Right now, that means terrazzo floors, soapstone, and quartz. Marble and granite are old standbys that won’t generate additional interest. Additionally, more avid chefs are definitely looking for less common kitchen amenities. These include steam ovens, pizza ovens, and professional-grade appliances.

Getting all new furniture may not seem like a solid investment, but it certainly can be. You probably do want to if your current furniture is noticeably old or beaten up. And while you’re at it, you should choose the leading trend, which remains the modern farmhouse style. This style is typified by comfort, neutral color schemes, reclaimed materials, and vintage accessories, while at the same time using modern clean lines. Nearly all modern farmhouse style homes use reclaimed wood and have large, comfortable furniture. Many display rustic-looking, but still modern, wrought iron accents as well as antiques.

Having a shed somewhere on the property will also bring in more money. In addition, accessory dwelling units (ADUs) are still popular. Combining the two also works great. Buyers are paying more for properties with sheds converted into living space. Notably, this actually doesn’t translate to a quicker sale – for one reason or another, homes with sheds stay on the market longer, despite selling for more. If you do want to sell quickly, some inexpensive upgrades that will accomplish just that are doorbell cameras, heat pumps, and fenced backyards.

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More: https://www.realsimple.com/features-that-boost-home-values-2023-7375268

How To Identify And Take Advantage Of A Seller’s Market

Real estate agents and experts will frequently declare that the market is either a seller’s market or a buyer’s market. There isn’t some esoteric industry secret formula, though. Figuring out whether it’s a buyer’s or seller’s market is actually fairly straightforward, as long as you have access to relevant data. There are three indicators of a seller’s market: low inventory, high demand, and low construction.

Of course, these statistics are interrelated. If construction has been consistently low, there will be fewer homes on the market. If inventory is low, buyers will be more competitive, driving up demand. But it’s actually low demand and high inventory that reduces construction rates in the first place, resulting in a cyclical effect. Moreover, each of them are affected differently by factors external to the cycle. So, in order for there to be a seller’s market, all three factors are probably true.

So what should you do if you find yourself under the conditions of a seller’s market? Well, if you’re a seller, everything is great — you’ll probably find a buyer, and be able to sell at a high price, as well. However, even if you’re a buyer, you can work the seller’s market to your advantage. Be aware that prices will be higher in a seller’s market, so a home that looks overpriced may actually be perfectly priced in a seller’s market. If you see something that fits the criteria you’re looking for, be ready to make an offer. It’s likely that multiple buyers are looking at the same thing you are. Make sure to get a pre-approval so that sellers know your offer is serious. In a high demand climate, sellers may get so many offers that they won’t even look at offers that don’t seem genuine.

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Buying A Fixer? Here’s A Good Loan Option

For people who don’t necessarily have a lot of cash on hand but are willing to invest over longer periods, buying a home in need of repairs is often what they look to. This may be in to live in or to resell the home later, but in either case, you may need to finance the repairs, the purchase itself, or even both if you’re low on ready cash. Fortunately, there are loans that are designed specifically for this situation. One such loan is the FHA 203(k) rehab loan.

The FHA 203(k) rehab loan can be used to finance both a purchase and repairs simultaneously, preventing the need for multiple loans, credit usage, or a line of credit. This can definitely save you money in the long run, especially if you are able to qualify for a low interest rate. There are two types of FHA 203(k) rehab loans: a standard loan and a streamline loan. The standard loan is designed for long-term, larger projects, such as renovating entire rooms. This type has no limit on the portion of the loan used for repairs, unlike the streamline loan, which has a limit of $35,000. It’s quicker and easier to access funds from a streamline loan, which makes it more suitable for smaller projects, like installing an HVAC or repairing plumbing.

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Be Sure Early Lease Terminations Are Legally Proper

Transitioning from renting to buying a home can be exciting. However, make sure not to get too excited too early before you’ve terminated the lease. It’s not at all uncommon for a renter to not want to deal with their landlord any longer than they have to, and simply leave. But that could actually be costing you money or leaving you open for a lawsuit.

Lease agreements will always have an early termination policy. It may look like ignoring the policy and ditching is just a way to skip the fees, but it’s actually not. You’re still on the hook for rent payments until the lease is actually terminated, and the early termination fee could be significantly lower. There may not even be a termination fee — the rules vary widely by region and by property manager. Don’t be afraid to talk to your landlord, either. They’re much more likely to be sympathetic to your situation if they’re aware of it. If you tell your landlord you’re terminating the lease early, the worst they can legally do is charge a termination fee.

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Don’t Skimp On Preparing Your Home For Sale This Spring

Spring is already halfway over, so if you’re planning to sell your home this season, you should get on it quickly. Especially since you may need to do some sprucing up to get a good deal. If you bought your home during or shortly before the pandemic, this may be your last chance to benefit from the spike in prices. But buyers aren’t simply snatching up any home they see, like they were during the pandemic. They’re being more deliberate, so you need your home to be appealing.

This means all the standard procedures for increasing your home’s appeal apply. These include things such as repairs, upgrades, repainting, curb appeal, and staging. In some markets, you can get away with not doing these things, or only doing some of them, because the buyers are happy to purchase a cheaper home and perform the upgrades themselves. Not the case this spring. The seller will have to make the investment, which hopefully translates to a higher price as well.

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More: https://www.realtor.com/advice/sell/what-first-time-home-sellers-need-to-know-to-be-successful-this-spring/

When You Should And Shouldn’t Put 20% Down

Having a 20% down payment used to be a requirement for nearly all loans. That hasn’t been the case for quite some time, but it’s still touted as the conventional wisdom. In many cases, that may be true, but it’s not always the best idea. There are both advantages and disadvantages to putting 20% down.

If you have the money available already, it’s quite likely that the benefits heavily outweigh the drawbacks. Even though 20% down is no longer a requirement to get a loan, it is still a requirement to avoid mortgage insurance fees. Putting 19% down, for example, simply makes no financial sense at all, regardless of your financial situation. It’s also good to put down as much as you feasibly can in order to reduce the loan amount, thereby reducing your payments. The 20% mark is important if you can reach it.

If you still need to save money in order to achieve a 20% down payment, you’re going to need to crunch some numbers and also make some predictions in order to arrive at the correct solution. If you’re close to being able to put down 20%, it may be in your best interest to continue saving up to avoid mortgage insurance fees. But if you aren’t close, it may be best to simply forget about it. Even if you are definitely able to save money, by the time you get to the point that you can put down whatever 20% is now, home prices are likely to be significantly higher. In that case, it may be better not to wait. You also need to consider other costs and where you’re getting the money. If you need to take out a loan or draw on investments to reach 20%, this is probably not a good investment, unless it’s the only way you can viably make a home purchase.

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