There’s a big difference between a buyer being pre-qualified and a buyer who has a pre-approved mortgage. Anybody can get pre-qualified for a loan. Getting pre-approved means a lender has looked at all of your financial information and they’ve let you know how much you can afford and how much they will lend you. Being pre-approved will save you a lot of time and energy so you are not running around looking at houses you can’t afford. It also gives you the opportunity to shop around for the best deal and the best interest rates. Do your research: Learn about junk fees, processing fees or points and make sure there aren’t any hidden costs in the loan.
An overhaul in how several major credit reporting agencies factor in negative credit information is prompting millions of consumers’ credit scores to rise. Collection events were struck from 8 million consumers’ credit reports in the 12 months ending in June. The New York Federal Reserve reported Tuesday that consumers who had at least one collections account removed from their credit reports are seeing an 11-point increase to their scores.
Critics have long claimed such dings to scores are prone to errors or that they’ve unfairly kept many out of the borrowing market. Equifax, Experian PLC, and TransUnion have all agreed to revamp reports, which stems from a 2015 settlement with state attorneys general on the matter. In the settlement, the firms agreed to remove some non-loan related items that were sent to collection firms, such as gym memberships, library fines, and traffic tickets. They also agreed to strike medical-debt collections that have been paid by a patient’s insurance company.
The majority of consumers who benefited from the recent changes are those who had credit scores below 660 before the collection events were removed, according to the New York Fed.
This could be good news for potential home buyers, as better credit scores are a big factor lenders use in granting cheaper rates for mortgages. And relatively small shifts in scores can make a big difference on loan affordability. A recent study from LendingTree showed that consumers who can raise their credit scores from “fair” (580-669) to “very good” (740-799) could potentially save $29,106 in mortgage costs.
Source: “Overhaul Boosts Credit Scores of Millions of U.S. Consumers,” The Wall Street Journal (Aug. 15, 2018)
One of the most important things about selling your home is to make it feel inviting to buyers. You want them to come in and feel welcome and want them to stay to look around. You can do this by making sure your home is clutter free, always remember less is more! Local Home Staging Resources will help you see what needs to be done to give you the maximum exposure you need to get your home sold!
With the help of professional advice, you may be able to:
• Obtain the best possible price for your home.
• Negotiate the most favorable terms.
• Secure a buyer in the shortest period of time.
• Relieve you of the stress and inconvenience that can occur when selling a home.
• First impressions go a long way
• Flowers, fresh bark dust
• Swept driveways & walkways
• Yard maintained
• De-clutter (less is more)
• Take down family photos (you want buyers looking at the home)
• Paint soft neutral colors (if needed)
• Make home light & bright (turn lights)
• Make sure curtains are open
• Carpets (if needed)
• Counters, Refrigerator, stove, ovens
• Empty garbage daily
• All Beds made
• Dirty clothes picked up and put away
• Dishes put away (do not leave dishes in sink)
• Remove pets (during showings if possible)
Article Source: realestate.columbian.com
1. IMPROVE YOUR CREDIT SCORE
A high credit score snags you the best deals. Below 660 or 680, you’re either going to have to pay sizable fees or a high down payment. 700-720 will get you a good deal and 750 and above will garner the best rates.
2. FIGURE OUT WHAT YOU CAN AFFORD
FHA loan – Your monthly payment can’t exceed 31% of your monthly income. Conventional home loan monthly payment should not exceed 28% of monthly income.
3. SAVE FOR DOWN PAYMENT, CLOSING COSTS
You’ll need to save between 3%-20% of the house price for a down payment.
4. BUILD A HEALTHY SAVINGS ACCOUNT
Your lender wants to know that you’re not living paycheck to paycheck.
5. GET PREAPPROVED FOR A MORTGAGE
This is the #1 thing you should have in order. How do you know what you can afford if you aren’t preapproved?
Article Source: bankrate.com
Five money-saving green upgrades
Going green is great for the environment, but that’s not the only benefit. When you make green upgrades in your home, it can also lead to some major savings.
- Solar panels: The upfront cost is big, but the long-term savings are huge. Solar panels will cost several thousand dollars to install, but ongoing maintenance costs are very low, and a typical system could save you hundreds of dollars per year. You can even sell your surplus electricity.
- Wood furnace: Wood-burning furnaces are relatively inexpensive, and though the yearly savings aren’t as dramatic (about 10% on heating bills), it adds up over the long run.
- Insulation: There’s a good chance your insulation isn’t very efficient, especially in older homes. Look into installing floor, cavity, wall, and loft insulation to reduce your heating bills.
- Rain barrels: Rain barrels are extremely inexpensive, and provide gallons of free water to use when you wash your car or water your garden.
- Geothermal system: OK, so the price tag is scary at first. A geothermal system uses the earth’s temperature to heat and cool your home, but can cost $30,000 to install. But tax credits allow you to get a lot of that money back, and the energy savings average about $1,900 per year. If you plan to be in your home for a decade or two, it’s a great investment.
Some the features that increase property values are obvious—like a remodeled bathroom, a modern kitchen, or a sought-after neighborhood. But here are a few features and circumstances you have not have realized can affect property values.
- The neighbors: Not every neighborhood or community has an HOA that can keep the neighbors from going overboard with decorations or neglecting to care for their home. Homes adjacent to crazy neighbors can potentially be undervalued.
- Trendy groceries and coffee: Recent statistics suggest that if your home is a short walk from popular grocery stores like Whole Foods or coffee chains like Starbucks, it can actually appreciate faster than the national average.
- Mature trees: A big beautiful tree in the front yard is enviable, and it’s not something that can be easily added to any home. Homes with mature trees tend to get a little boost in value.
- Parking: This isn’t too much of an issue if you live in the suburbs or in a rural area, but residents in dense cities can have real problems with parking, and homeowners might need to rent a spot just to guarantee a place to park each night. That’s why having guaranteed parking in urban areas will raise property values.
- The front entrance: First impressions matter to buyers—many will cross a home off their list within 10 seconds of stepping through the front door. An appealing front door, a friendly entryway, and a functioning doorbell are all necessities for getting top dollar.
From summer vacations to winter holidays, it seems each season offers the perfect excuse to put off our to-do list. But be careful, homeowners: neglecting your home’s maintenance could put your personal safety—and one of your largest financial investments—at serious risk.
In no time at all, small problems can lead to extensive and expensive repairs. And even if you avoid a catastrophe, those minor issues can still have a big impact. Properties that are not well maintained can lose 10 percent (or more) of their appraised value.1
The good news is, by dedicating a few hours each season to properly maintaining your home, you can ensure a safe living environment for you and your family … and actually increase the value of your home by one percent annually!1 You just need to know where and how to spend your time.
Use the following checklist as a guide to maintaining your home and lawn throughout the year. It’s applicable for all climates, so please share it with friends and family members who you think could benefit, no matter where their home is located.
After a long, cold winter, many of us look forward to a fresh start in the spring. Wash away the winter grime, open the windows, and prepare your home for warmer weather and backyard barbecues.
- Conduct Annual Spring Cleaning
Be sure to tackle those areas that may have gone neglected—such as your blinds, baseboards and fan blades—as well as appliances, including your refrigerator, dishwasher, oven and range hood. Clear out clutter and clothes you no longer wear, and toss old and expired food and medications.
- Shut Down Heating System
Depending on the type of heating system you have, you may need to shut your system down when not in use. Check the manufacturer’s instructions for proper procedures.
- Tune Up A/C
If your home has central air conditioning, schedule an annual tune-up with your HVAC technician. If you have a portable or window unit, be sure to follow the manufacturer’s instructions for proper maintenance.2
- Check Plumbing
It’s a good idea to periodically check your plumbing to spot any leaks or maintenance issues. Look for evidence of leaks—such as water stains on the ceiling—and check for dripping faucets or running toilets that need to be addressed. Inspect your hot water heater for sediment build up. Check your sump pump (if you have one) to ensure it’s working properly.3
- Inspect Smoke Alarm and Carbon Monoxide Detectors
Check that your smoke and carbon monoxide detectors are functioning properly. Batteries should be replaced every six months, so change them now and again in the fall. Follow the manufacturer’s instructions to test your individual devices. And even properly functioning devices should be replaced at least every 10 years, or per the manufacturer’s recommendation.4
- Inspect Perimeter of Home
Walk around your house and look for any signs of damage or wear and tear that should be addressed. Are there cracks in the foundation? Peeling paint? Loose or missing roof shingles? Make a plan to make needed repairs yourself or hire a contractor.
- Clean Home’s Exterior
Wash windows and clean and replace screens if they were removed during the winter months. For the home’s facade, it’s generally advisable to use the gentlest method that is effective. A simple garden hose will work in most cases.5
- Clean Gutters and Downspouts
Gutters and downspouts should be cleaned at least twice a year. Neglected gutters can cause water damage to a home, so make sure yours are clean and free of debris. If your gutters have screens, you may be able to decrease the frequency of cleanings, but they should still be checked periodically.6
- Rake Leaves
Gently rake your lawn to remove leaves and debris. Too many leaves can cause an excessive layer of thatch, which can damage the roots of your lawn. They can also harbor disease-causing organisms and insects.7 However, take care because overly vigorous raking can damage new grass shoots.
- Seed or Sod Lawn
If you have bare spots, spring is a good time to seed or lay new sod so you can enjoy a beautiful lawn throughout the remainder of the year. The peak summer heat can be too harsh for a new lawn. If you miss this window, early fall is another good time to plant.8
- Apply a Pre-Emergent Herbicide
While a healthy lawn is the best deterrent for weeds, some homeowners choose to use a pre-emergent herbicide in the spring to minimize weeds. When applied at the right time, it can be effective in preventing weeds from germinating. However, a pre-emergent herbicide will also prevent grass seeds from germinating, so only use it if you don’t plan to seed or sod in the spring.
- Plant Flowers
After a long winter, planting annuals and spring perennials is a great way to brighten up your garden. It’s also a good time to prune existing flowers and shrubs and remove and compost any dead plants.
- Mulch Beds
A layer of fresh mulch helps to suppress weeds, retain moisture and moderate soil temperature. However, be sure to strip away old mulch at least every three years to prevent excessive buildup.9
- Fertilize Lawn
Depending on your grass type, an application of fertilizer in the spring may help promote new leaf and root growth, keep your lawn healthy, and reduce weeds.10
- Tune Up Lawn Mower
Send your lawn mower out for a professional tune-up and to have the blades sharpened before the mowing season starts.11
- Inspect Sprinkler System
If you have a sprinkler system, check that it’s working properly and make repairs as needed
- Check the Deck
If you have a deck or patio, inspect it for signs of damage or deterioration that may have occurred over the winter. Then clean it thoroughly and apply a fresh coat of stain if needed.
- Prepare Pool
If you own a pool, warmer weather signals the start of pool season. Be sure to follow best practices for your particular pool to ensure proper maintenance and safety.
Summer is generally the time to relax and enjoy your home, but a little time devoted to maintenance will help ensure it looks great and runs efficiently throughout the season.
- Adjust Ceiling Fans
Make sure they are set to run counter-clockwise in the summer to push air down and create a cooling breeze. Utilizing fans instead of your air conditioner, when possible, will help minimize your utility bills.
- Clean A/C Filters
Be sure to clean or replace your filters monthly, particularly if you’re running your air conditioner often.
- Clear Dryer Vent
Help cut down on summer utility bills by cleaning your laundry dryer vent at least once a year. Not only will it help cut down on drying times, a neglected dryer poses a serious fire hazard.
- Check Weather Stripping
If you’re running your air conditioner in the summer, you’ll want to keep the cold air inside and hot air outside. Check weather stripping around doors and windows to ensure a good seal.
- Mow Lawn Regularly
Your lawn will probably need regular mowing in the summer. Adjust your mower height to the highest setting, as taller grass helps shade the soil to prevent drought and weeds.
- Water Early in the Morning
Ensure your lawn and garden get plenty of water during the hot summer months. Experts generally recommend watering in the early morning to minimize evaporation, but be mindful of any watering restrictions in your area, which may limit the time and/or days you are allowed to water.
- Weed Weekly
To prevent weeds from taking over your garden and ruining your home’s valuable curb appeal, make a habit of pulling weeds at least once per week.
- Exterminate Pests
Remove any standing water and piles of leaves and debris. Inspect your lawn and perimeter of your home for signs of an invasion. If necessary, call a professional exterminator for assistance.
Fall ushers in another busy season of home maintenance as you prepare your home for the winter weather ahead.
- Have Heater Serviced
To ensure safety and efficiency, it’s a good idea to have your heating system serviced and inspected before you run it for the first time.
- Shut Down A/C for the Winter
If you have central air conditioning, you can have it serviced at the same time as your furnace. If you have a portable or window unit, ensure it’s properly sealed or remove it and store it for the winter.
- Inspect Chimney
Fire safety experts recommend that you have your chimney inspected annually and cleaned periodically. Complete this task before you start using your fireplace or furnace.
- Seal Windows and Doors
Check windows and doors for drafts and caulk or add weatherstripping where necessary.
- Check Smoke Alarm and Carbon Monoxide Detectors
If you checked your smoke and carbon monoxide detectors in the spring, they are due for another inspection. Batteries should be replaced every six months, so it’s time to replace them again. Follow the manufacturer’s instructions to test your individual devices. And even properly functioning devices should be replaced at least every 10 years, or per the manufacturer’s recommendation.3
- Plant Fall Flowers, Grass and Shrubs
Fall is a great time to plant perennials, trees, shrubs, cool-season vegetables and bulbs that will bloom in the spring.12 It’s also a good time to reseed or sod your lawn.
- Rake or Mow Leaves
Once the leaves start falling, it’s time to pull out your rake. A thick layer of leaves left on your grass can lead to an unhealthy lawn. Or, rather than raking, use a mulching mower to create a natural fertilizer for your lawn.
- Apply Fall Fertilizer
If you choose not to use a mulching mower, a fall fertilizer is usually recommended. For best results, aerate your lawn before applying the fertilizer.13
- Inspect Gutters and Roof
Inspect your gutters and downspouts and make needed repairs. Check the roof for any broken or loose tiles. Remove fallen leaves and debris.
- Shut Down Sprinkler System
If you have a sprinkler system, drain any remaining water and shut it down to prevent damage from freezing temperatures over the winter.
- Close Pool
If you have a pool, it’s time to clean and close it up before the winter.
While it can be tempting to ignore home maintenance issues in the winter, snow and freezing temperatures can do major damage if left untreated. Follow these steps to ensure your house survives the winter months.
- Maintain Heating System
Check and change filters on your heating system, per the manufacturer’s instructions. If you have a boiler, monitor the water level.
- Tune Up Generator
If you own a portable generator, follow the manufacturer’s instructions for proper maintenance. Make sure it’s working before you need it, and stock up on supplies like fuel, oil and filters.
- Prevent Frozen Pipes
Make sure pipes are well insulated, and keep your heat set to a minimum of 55 degrees when you’re away. If pipes are prone to freezing, leave faucets dripping slightly overnight or when away from home. You may also want to open cabinet doors beneath sinks to let in heat.
- Drain and Shut Off Outdoor Faucets
Before the first freeze, drain and shut off outdoor faucets. Place an insulated cover over exposed faucets, and store hoses for the winter.
- Remove Window Screens
Removing screens from your windows allows more light in to brighten and warm your home during the dark, cold winter months. Snow can also get trapped between screens and windows, causing damage to window frames and sills.
- Service Snowblower
Don’t wait until the first snowstorm of the season to make sure your snowblower is in good working order. Check the manufacturer’s instructions for maintenance or have it serviced by a professional.
- Stock Up on Ice Melt
Keep plenty of ice melt, or rock salt, on hand in preparation for winter weather. Look for brands that will keep kids and pets safe without doing damage to your walkway or yard.
- Watch Out for Ice Dams
Ice dams are thick ridges of solid ice that can build up along the eaves of your house. They can do major damage to gutters, shingles and siding. Heated cables installed prior to the first winter storm can help.14
- Check for Snow Buildup on Trees
Snow can cause tree limbs to break, which can be especially dangerous if they are near your home. Use a broom to periodically remove excess snow.15
While this checklist should not be considered a complete list of your home’s maintenance needs, it can serve as a general seasonal guide. Systems, structures and fixtures will need to be repaired and replaced from time-to-time, as well. The good news is, the investment you make in maintaining your home now will pay off dividends over time.
Keep a record of all your maintenance, repairs and upgrades for future reference, along with receipts. Not only will it help jog your memory, it can make a big impact on buyers when it comes time to sell your home … and potentially result in a higher selling price.
Are you looking for help with home maintenance or repairs? We have an extensive network of trusted contractors and service providers and are happy to provide referrals! Call or email us, and we can connect you with one of our preferred vendors.
- HouseLogic.com https://www.houselogic.com/organize-maintain/home-maintenance-tips/value-home-maintenance/
- Home Advisor https://www.homeadvisor.com/r/servicing-your-air-conditioner/
- Keyes & Sons Plumbing and Heating http://keyes-plumbing.com/things-to-check-in-spring/
- Allstate Insurance Blog https://blog.allstate.com/test-smoke-detectors/
- Houzz https://www.houzz.com/ideabooks/17268616/list/how-to-wash-your-house
- Angie’s List https://www.angieslist.com/articles/why-gutter-cleaning-so-important.htm
- Angie’s List https://www.angieslist.com/articles/what-thatch-and-how-does-it-impact-my-lawn.htm
- HGTV http://www.hgtv.com/design/outdoor-design/landscaping-and-hardscaping/lawns/top-spring-lawn-care-tips-pictures
- This Old House https://www.thisoldhouse.com/more/may-mulching
- Lowes https://www.lowes.com/projects/lawn-and-garden/fertilize-your-lawn/project
- The New York Times https://www.nytimes.com/guides/realestate/home-maintenance-checklist
- Better Homes and Gardens Magazine https://www.bhg.com/gardening/yard/garden-care/what-to-plant-in-the-fall/
- The Spruce https://www.thespruce.com/late-fall-fertilizing-2152976
- This Old House https://www.thisoldhouse.com/how-to/how-to-get-rid-ice-dams14
- Houzz https://www.houzz.com/ideabooks/55572864/list/your-winter-home-maintenance-checklist
Don’t wait until you’re ready to move to start preparing financially to buy a home.
If you’re like the vast majority of home buyers, you will choose to finance your purchase with a mortgage loan. By preparing in advance, you can avoid the common delays and roadblocks many buyers face when applying for a mortgage.
The requirements to secure a mortgage may seem overwhelming, especially if you’re a first-time buyer. But we’ve outlined three simple steps to get you started on your path to homeownership.
Even if you’re a current homeowner, it’s a good idea to prepare in advance so you don’t encounter any surprises along the way. Lending requirements have become more rigorous in recent years, and changes to your credit history, debt levels, job type and other factors could impact your chances of approval.
It’s never too early to start preparing to buy a home. Follow these three steps to begin laying the foundation for your future home purchase today!
STEP 1: CHECK YOUR CREDIT SCORE
Your credit score is one of the first things a lender will check to see if you qualify for a loan. It’s a good idea to review your credit report and score yourself before you’re ready to apply for a mortgage. If you have a low score, you will need time to raise it. And sometimes fraudulent activity or erroneous information will appear on your report, which can take months to correct.
The credit score most lenders use is your FICO score, a weighted score developed by the Fair Isaac Corporation that takes into account your payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and credit mix (10%).1
Base FICO scores range from 300 to 850. A higher FICO score will help you qualify for a lower mortgage interest rate, which will save you money.2
By federal law, you are entitled to one free copy of your credit report every 12 months from each of the three major credit bureaus (Equifax, Experian and Transunion). Request your free credit report at https://www.annualcreditreport.com.
Minimum Score Requirements
To qualify for the lowest interest rates available, you will usually need a FICO score of 760 or higher. Most lenders require a score of at least 620 to qualify for a conventional mortgage.3
If your FICO score is less than 620, you may be able to qualify for a non-conventional mortgage. However, you should expect to pay higher interest rates and fees. For example, you may be able to secure an FHA loan (one issued by a private lender but insured by the Federal Housing Administration) with a credit score as low as 580 if you can make a 3.5 percent down payment. And FHA loans are available to applicants with credit scores as low as 500 with a 10 percent down payment.4
Increase Your Credit Score
There’s no quick fix for a low credit score, but the following steps will help you increase it over time.5
- Make Payments on Time
At 35 percent, your payment history accounts for the largest portion of your credit score. Therefore, it’s crucial to get caught up on any late payments and make all of your future payments on time.
- Avoid Applying for New Credit You Don’t Need
New accounts will lower your average account age, which could negatively impact your length of credit history. Also, each time you apply for credit, it can result in a small decrease in your credit score.
The exception to this rule? If you don’t have any credit cards—or any credit accounts at all—you should open an account to establish a credit history. Just be sure to use it responsibly and pay it off in full each month.
If you need to shop for a new credit account, for example, a car loan, be sure to complete your loan applications within a short period of time. FICO attempts to distinguish between a search for a single loan and applications to open several new lines of credit by the window of time during which inquiries occur.
- Pay Down Credit Cards
When you pay off your credit cards and other revolving credit, you lower your amounts owed, or credit utilization ratio (ratio of account balances to credit limits). Some experts recommend starting with your highest-interest debt and paying it off first. Others suggest paying off your lowest balance first and then rolling that payment into your next-lowest balance to create momentum.
Whichever method you choose, the first step is to make a list of all of your credit card balances and then start tackling them one by one. Make the minimum payments on all of your cards except one. Pay as much as possible on that card until it’s paid in full, then cross it off your list and move on to the next card.
|Debt||Interest Rate||Total Payoff||Minimum Payment|
|Credit Card 1||12.5%||$460||$18.40|
|Credit Card 2||18.9%||$1,012||$40.48|
|Credit Card 3||3.11%||$6,300||$252|
- Avoid Closing Old Accounts
Closing an old account will not remove it from your credit report. In fact, it can hurt your score, as it can raise your credit utilization ratio—since you’ll have less available credit—and decrease your average length of credit history.
Similarly, paying off a collection account will not remove it from your report. It remains on your credit report for seven years, however, the negative impact on your score will decrease over time.
- Correct Errors on Your Report
Mistakes or fraudulent activity can negatively impact your credit score. That’s why it’s a good idea to check your credit report at least once per year. The Federal Trade Commission has instructions on their website for disputing errors on your report.
While it may seem like a lot of effort to raise your credit score, your hard work will pay off in the long run. Not only will it help you qualify for a mortgage, a high credit score can help you secure a lower interest rate on car loans and credit cards, as well. You may even qualify for lower rates on insurance premiums.6
STEP 2: SAVE UP FOR A DOWN PAYMENT AND CLOSING COSTS
The next step in preparing for your home purchase is to save up for a down payment and closing costs.
When you purchase a home, you typically pay for a portion of it in cash (down payment) and take out a loan to cover the remaining balance (mortgage).
Many first-time buyers wonder: How much do I need to save for a down payment? The answer is … it depends.
Generally speaking, the higher your down payment, the more money you will save on interest and fees. For example, you will qualify for a lower interest rate and avoid paying for mortgage insurance if your down payment is at least 20 percent of the property’s purchase price. But what if you can’t afford to put down 20 percent?
On a conventional loan, you will be required to purchase private mortgage insurance (PMI) if your down payment is less than 20 percent. PMI is insurance that compensates your lender if you default on your loan.7
PMI will cost you between 0.3 to 1.5 percent of the overall mortgage amount each year.8 So, on a $100,000 loan, you can expect to pay between $300 and $1500 per year for PMI until your mortgage balance falls below 80 percent of the appraised value.9 For a conventional mortgage with PMI, most lenders will accept a minimum down payment of five percent of the purchase price.7
If a five-percent down payment is still too high, an FHA-insured loan may be an option for you. Because they are guaranteed by the Federal Housing Administration, FHA loans only require a 3.5 percent down payment if your credit score is 580 or higher.7
The downside of getting an FHA loan? You’ll be required to pay an upfront mortgage insurance premium (MIP) of 1.75 percent of the total loan amount, as well as an annual MIP of between 0.80 and 1.05 percent of your loan balance on a 30-year note. There are also certain limitations on the types of loans and properties that qualify.10
There are a variety of other government-sponsored programs created to assist home buyers, as well. For example, veterans and current members of the Armed Forces may qualify for a VA-backed loan requiring a $0 down payment.7 Consult a mortgage lender about what options are available to you.
|TYPE||MINIMUM DOWN||ADDITIONAL FEES|
|Conventional Loan||20%||Qualify for the best rates and no mortgage insurance required|
|Conventional Loan||5%||Must purchase private mortgage insurance costing 0.3 – 1.5% of mortgage annually|
|FHA Loan||3.5%||Upfront mortgage insurance premium of 1.75% of loan amount and annual fee of 0.8 – 1.05%|
If you’re a current homeowner, you may have equity in your home that you can use toward your down payment on a new home. We can help you estimate your expected return after you sell your current home and pay back your existing mortgage. Contact us for a free evaluation!
Closing costs should also be factored into your savings plan. These may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys and other fees associated with the purchase of your home. Closing costs vary but typically range between two to five percent of the purchase price.11
If you don’t have the funds to pay these outright at closing, you can often add them to your mortgage balance and pay them over time. However, this means you’ll have a higher monthly payment and pay more over the long term because you’ll pay interest on the fees.
STEP 3: ESTIMATE YOUR HOME PURCHASING POWER
Once you have the required credit score, savings for a down payment and a list of all your outstanding debt obligations via your credit report, you can assess whether you are ready and able to purchase a home.
It’s important to have a sense of how much you can reasonably afford—and how much you’ll be able to borrow—to see if homeownership is within reach.
Your debt-to-income (DTI) ratio is one of the main factors mortgage companies use to determine how much they are willing to lend you, and it can help you gauge whether or not your home purchasing goals are realistic given your current financial situation.
Your DTI ratio is essentially a comparison of your housing expenses and other debt versus your income. There are two different DTI ratios that lenders consider:
Also called the housing ratio, this is the percentage of your income that would go toward housing expenses each month, including your mortgage payment, private mortgage insurance, property taxes, homeowner’s insurance and association dues.12
To calculate your front-end DTI ratio, a lender will add up your expected housing expenses and divide it by your gross monthly income (income before taxes). The maximum front-end DTI ratio for most mortgages is 28 percent. For an FHA-backed loan, this ratio must not exceed 31 percent.13
The back-end ratio takes into account all of your monthly debt obligations: your expected housing expenses PLUS credit card bills, car payments, child support or alimony, student loans and any other debt that shows up on your credit report.12
To calculate your back-end ratio, a lender will tabulate your expected housing expenses and other monthly debt payments and divide it by your gross monthly income (income before taxes). The maximum back-end DTI ratio for most mortgages is 36 percent. For an FHA-backed loan, this ratio must not exceed 41 percent.13
Home Affordability Calculator
To get a sense of how much home you can afford, visit the National Association of Realtors’ free Home Affordability Calculator at https://www.realtor.com/mortgage/tools/affordability-calculator.
This handy tool will help you determine your home purchasing power depending on your location, annual income, monthly debt and down payment. It also offers a monthly mortgage breakdown that projects what you would pay each month in principal and interest, property taxes, and home insurance.
The Home Affordability Calculator defaults to a back-end DTI ratio of 36 percent. If the monthly cost estimate at that ratio is significantly higher than what you’re currently paying for housing, you need to consider whether or not you can make up the difference each month in your budget.
If not, you may want to lower your target purchase price to a more conservative DTI ratio. The tool enables you to scroll through higher and lower price points to see the impact on your monthly payments so you can identify your ideal price point.
(Note: This tool only provides an estimate of your purchasing power. You will need to secure pre-approval from a mortgage lender to know your true mortgage approval amount and monthly payment projections.)
Can I Afford to Buy My Dream Home?
Once you have a sense of your purchasing power, it’s time to find out which neighborhoods and types of homes you can afford. The best way to determine this is to contact a licensed real estate agent. We help homeowners like you every day and can send you a comprehensive list of homes within your budget that meet your specific needs.
If there are homes within your price range and target neighborhoods that meet your criteria—congratulations! It’s time to begin your home search.
f not, you may need to continue saving up for a larger down payment … or adjust your search parameters to find homes that do fit within your budget. We can help you determine the right course for you.
START LAYING YOUR FOUNDATION TODAY
It’s never too early to start preparing financially for a home purchase. These three steps will set you on the path toward homeownership … and a secure financial future!
And if you are ready to buy now but don’t have a perfect credit score or a big down payment, don’t get discouraged. There are resources and options available that might make it possible for you to buy a home sooner than you think. We can help.
Want to find out if you’re ready to buy a house? Give us a call! We’ll help you review your options, connect you with one of our trusted mortgage lenders, and help you determine the ideal time to begin your new home search.
The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.
- Quicken Loans Blog – https://www.quickenloans.com/blog/how-does-your-credit-score-affect-your-mortgage-eligibility
- myFICO – https://www.myfico.com/credit-education/credit-report-credit-score-articles/
- Bankrate – https://www.bankrate.com/mortgages/what-is-a-good-credit-score-to-buy-a-house/
- Bankrate – https://www.bankrate.com/finance/mortgages/7-crucial-facts-about-fha-loans-1.aspx
- myFICO – https://www.myfico.com/credit-education/improve-your-credit-score/
- The Balance – https://www.thebalance.com/having-good-credit-score-960528
- Bankrate – https://www.bankrate.com/mortgages/how-much-is-a-down-payment-on-a-house/
- Bankrate – https://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx
- Bankrate – https://www.bankrate.com/finance/mortgages/removing-private-mortgage-insurance.aspx
- The Balance – https://www.thebalance.com/fha-home-loan-pitfalls-315673
- Investopedia – https://www.investopedia.com/terms/c/closingcosts.asp
- Bankrate – https://www.bankrate.com/finance/mortgages/why-debt-to-income-matters-in-mortgages-1.aspx
- The Lenders Network – https://thelendersnetwork.com/fha-debt-to-income-ratio/
An evacuation plan is a necessity for every home, especially if you live in an area where fires, earthquakes, hurricanes, flooding, and other disasters are a possibility. Many homeowners create evacuation plans for their homes and practice them with their kids, but far fewer have considered one for their pets. Take these steps to add your pets to your evacuation plan.
Assign pet evacuation to an adult. Everyone should know how to act during an evacuation, and that includes assigning one parent or adult to the pets. This allows the other parent and the children to focus on their part of the evacuation plan, so there’s no confusion during a high-stress moment when time is of the essence.
Keep evacuation maps and pet carriers readily accessible. If you need to evacuate, you should know exactly where every important item is. If you pets require carriers, keep them in a place that you can access easily.
Practice your plan. Include your pets in your home evacuation drills. It’ll help you see how they will respond and make changes to your plan if necessary. Getting your dog out of a window may not be as simple as you think!
Looking for the perfect present for a loved one this holiday season? We’ve rounded up 20 of our favorite gift ideas. And since we work in real estate, we focused on items that add enjoyment, comfort and, in some cases, major value to your home.
From music lovers to home chefs, we’ve got something for everyone. And we’ve included a range of price points to suit any budget, from under $50 to major splurge … in case you’re feeling extra generous this year. We hope you find this list useful in identifying gifts your friends and family will love. And maybe some of these items will make your wish list this year, too!
Approximate Price Ranges
$ – under $50
$$ – $51 to $200
$$$ – $201 to $500
$$$$ – Splurge
LET IT SNOW
Heat things up this holiday season! Keep your loved ones cozy all winter with these gifts that add warmth and a touch of luxury.
Tabletop Fireplace – $
On cold nights, nothing beats the comfort and glow of a fire. Whether you’re looking to cozy up on the couch with a good book, or enjoy a relaxing night in the backyard with family and friends, a tabletop fireplace is an easy way to light up your evening. The Regal Flame Black Utopia Tabletop Fireplace can be used indoors or outdoors, no vent required. It runs on ethanol, which can be mixed with citronella to double as a mosquito repellent for outdoor use.
Towel Warmer – $$
Who wouldn’t love to wrap themselves in a warm towel when they step out of the shower on a cold morning? While heated towel racks are available in a variety of styles and price points, the Anzzi Glow 4-Bar Electric Towel Warmer in Polished Chrome is an entry level version that gets good reviews. Modern and elegant, this model plugs into a nearby outlet for easy installation and is made of rust-resistant stainless steel. Turn your daily shower into a spa-like experience!
Smart Thermostat – $$$
Now you can wake up to a warm house, even if you like it cool while you sleep. After using the Nest Learning Thermostat for a week, it will start to recognize your patterns and adjust the temperature automatically to your preferences. In its third-generation, Nest claims to pay for itself over time in energy savings. It uses sensors and your phone’s location to check if you’ve left the house, then sets itself to an Eco Temperature. And this smart-thermostat knows when you typically get home from work and can heat things up before you return. If your schedule changes, you can even adjust the temperature remotely from your smartphone.
Radiant Floor Heating – $$$$
Radiant heating has been a popular alternative in new construction to traditional forced-air heating systems. And new technology has made it easier and less expensive to retrofit existing homes with radiant heating. According to BobVila.com, “radiant floors are heated either with electric resistance cables or hot water flowing inside tubing” beneath the floor. It’s energy-efficient, effective, and doesn’t blow dust and allergens around the way forced-air systems do. Not only will you love stepping onto a heated floor on a cool morning, you’ll be adding value to your home, as this is an appealing upgrade to buyers when it comes time to sell.
ROCK AROUND THE TREE
It’s holiday music time! Music lovers are sure to appreciate these gifts guaranteed to enhance their listening experience throughout the home.
Showerhead Speaker – $
Whether you enjoy singing in the shower, or listening to your favorite podcast, the H2oVibe Rain Showerhead Jet with Wireless Bluetooth Speaker syncs with any bluetooth-enabled device so you can stream your favorite music or other audio directly into the shower. The waterproof speaker easily detaches from the showerhead so you can bring it with you from room to room while you get dressed. And the showerhead itself features jets with three times more spray power than the average showerhead, creating a spa-like experience.
Voice Controlled Smart Speaker – $$
Smart speakers like Amazon Echo and Google Home not only stream music on demand via voice control, they can also serve as a central hub for numerous other smart-home devices. Now you can change the channel on your TV, make a phone call, turn on your lights, set your thermostat and lock your front door, all without lifting a finger.
High-End Wireless Speaker – $$$
If you prefer a premium speaker, the Sonos Play:3 is the mid-range option in the brand’s line of wireless speakers. It delivers rich and robust sound with a sleek design that can placed horizontally or vertically to fit almost any space. Sonos speakers sync with Amazon Echo and Alexa, which enable you to control the speaker with voice commands. And you can easily add additional speakers from the Sonos line for an enhanced, surround-sound experience.
Whole Home Audio System – $$$$
The sky’s the limit when it comes to whole-home audio systems, and for a premium sound system you can expect to make a significant investment. Companies like Yamaha offer a wide variety of components, all designed to work in conjunction to give you a customized whole-home audio and home theater system to suit your needs.
ADD SOME SIZZLE TO THE SEASON
Home chefs will love these gifts, perfect for holiday entertaining and home cooking all year long. Not only will they bring excitement to the recipient, everyone in the family will benefit from the delicious dishes these gifts are sure to inspire!
Bread Maker – $
Warm, fresh bread can make any meal feel special. With a bread machine like this one from Hamilton Beach, you can enjoy fresh rolls, pizza dough, cakes, jams, flatbreads and croissants with minimal effort. Plus, there’s a gluten-free setting, which makes this a perfect gift for anyone avoiding gluten in their diet.
Electric Smoker – $$
If you love to barbecue, the Char-Broil Deluxe Digital Electric Smoker gives you the tenderness and flavor of smoking meat, without the hassle. The integrated meat probe alerts you when the meat reaches a predetermined internal temperature, and when it’s done cooking the “warming” feature keeps your food hot until it’s ready to be served.
Smart Sous-Vide Machine – $$$
Sous vide is a method of cooking in which food is vacuum-sealed in a plastic pouch and then placed in a water bath to cook at a precise temperature. The new Mellow Smart Sous Vide Appliance hits the market this holiday season and promises to make sous vide as easy and foolproof as a slow cooker. Its built-in cooling system keeps your food cold until it’s ready to be cooked … so you can stick a piece of salmon in before you leave for work, choose the time you want it to be ready, and dinner will be done when you get home.
High-End Oven Range – $$$$
To really heat things up in the kitchen, any home chef would love a new high-end range, like this 36” Dual Fuel Range with Six Burners from Sub-Zero Wolf. With ten custom cooking modes—including one for proofing dough and one for dehydrating—and a temperature probe alert, this oven makes cooking almost foolproof. And the timeless stainless steel design will enhance the beauty of any kitchen. Investing in a high-end range not only adds enjoyment to meal preparation, it’s highly-desired by home buyers … something to consider if you plan to list your home within the next few years.
SPARKLE AND SHINE
Holiday lights aren’t the only way to make a home sparkle. These cleaning gadgets and appliances will keep your home clean and shiny all year long … and hopefully bring some joy to the cleaning process!
Portable Deep Carpet Cleaner – $
Anyone who has pets or young children will love the convenience of a cordless and portable spot cleaner like the BISSELL SpotLifter 2X Portable Deep Carpet Cleaner. Its cleaning brush agitates soiled spots while simultaneously sucking up debris. Use it to remove small spills and stains from carpet, furniture, rugs, drapes, car seats, and other upholstered items.
Robotic Vacuum Cleaner – $$
Robotic vacuum cleaners have been around for years, but new technology has made them more effective and lowered the cost significantly. The ECOVACS DEEBOT N79 Robotic Vacuum Cleaner provides a good mix of features and value. It offers several cleaning modes and moves easily from rugs to tile to carpet. You can also control it with your smartphone using the ECOVACS App.
Dishwasher – $$$
While a high-end dishwasher with all the bells and whistles can certainly be a good investment, there are some great values on the market for those with a more modest budget. For example, the Maytag Front Control Dishwasher gets consistently great reviews for its powerful motor that disintegrates bits of food to deliver sparkling clean dishes, even without rinsing. And its elegant exterior will upgrade the look of your kitchen … all without breaking the bank.
New Washer/Dryer – $$$$
If anything can make laundry exciting, it’s a new washer and dryer with smart-technology like the Kenmore Elite Smart Washer and Dryer. Now you can start a load of laundry remotely from your smartphone to time it with your arrival home. You can also customize washer and dryer cycles and receive an alert when a cycle is complete. And with the Express cycle, you can wash and dry a small load in 45 minutes, saving you time and energy.
KEEP THE GRINCH AWAY
Nothing is more important than the safety of you and your family. Protect your loved ones—and deter intruders—with gifts that keep you and your home safe and secure.
Smart Light Bulbs – $
The Philips Hue White Smart Bulb Starter Kit is a good entry-level investment in smart lighting technology. Now you can automate your lighting and control your lights from your smartphone using the Philips Hue App. Deter burglars by making it look like someone’s home when you turn your lights on remotely. And stay safer by never entering a dark house again. Plus, it has several options to enhance the look and ambiance of your home lighting.
Video Doorbell – $$
Watch over your home and greet visitors from your computer or smartphone with a video-enabled doorbell, like the Ring Video Doorbell 2. Adjustable motion sensors alert you when someone is approaching your door, and live video and audio allow you to see and talk to visitors without opening the door, even if you’re away from home. The best part is, they’ll never know you’re not home if you don’t tell them.
Smart Lock – $$$
Control and monitor your locks from anywhere with a smart lock like the August Smart Lock Pro + Connect. Now there’s no need to leave a key under the doormat or give a copy to the housekeeper. You can activate keyless access remotely, and even lock up when they leave, all from your computer or smartphone. And no more fumbling around for your keys in the dark. Similar to keyless entry for your car, Smart Lock Pro automatically unlocks your door when you approach.
Security System – $$$$
An in-home security system is still one of the best ways to protect your home and family from intruders and alert you to the presence of smoke or carbon monoxide. Some companies, like Vivint, can integrate your security system with video monitoring, a doorbell camera, smart locks, garage doors and even your thermostat. Prices vary depending on the options you select, and a monthly monitoring service is required, but a home security system can bring peace of mind knowing your family and home are protected.
WE’RE HERE TO HELP
As real estate professionals, we get to visit people’s homes every day and talk to buyers and sellers about their favorite features. So we have a unique insight into the elements that truly make a house special, bring joy to homeowners and add value to a home. Did we miss your favorite home-related gift? If so, we’d love to hear about it. Please share in the comments below!
If you do decide to “splurge” on a home upgrade, contact us for recommendations on the best options for your particular home. Buyer expectations and preferences vary depending on price point, style of home and neighborhood. We can run a comparative market analysis to find out how the upgrade you’re considering will impact the value of your home, before you make the investment.