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Thursday, January 21, 2021
What Are the Best Ways to Use Your Home’s Equity?
Your home equity can be a valuable resource to you, depending on your financial situation. Your equity is the interest you have in your home, as the owner. Your equity increases over time in two ways. Equity increases if your property value goes up or if you work toward paying down the balance of your mortgage loan.
Equity is the part of your home that you truly own if you borrowed money to buy it. If you did get a mortgage, the lender has an interest in your property until you pay it off, despite you being considered the homeowner.
The equity you have in your home is considered one of the most valuable assets you have.
Since it is an asset, you can use it. There are three main ways people use the asset of their equity. One is to sell your home. If you decide to move, you receive your equity from the proceeds of the sale. You can also borrow against the equity, and you can use a reverse mortgage to fund your retirement.
If you sell your home, you can put the equity aside, or you can use it to buy a new home.
If you have, lets say 70,000 in equity in your home, then youll have a profit after closing. That profit can then be used for your down payment on your next home.
The bigger the down payment, the more expensive the home you may be able to afford. Your mortgage payments may be lower with a bigger down payment as well.
Another way to use equity is to borrow against it. There are three primary ways to do thisa home equity loan, a home equity line of credit, or a cash-out refinance.
When you use your homes equity as a way to borrow money, youll get a lower interest rate than you likely would with something like a credit card or personal loan.
Theres a downside too. If you dont make your payments, a lender could foreclose on your home. This wouldnt be the case if you were to use credit cards, for example.
A home equity loan is somewhat like a second mortgage. You can use the proceeds of a home equity loan however you want, and you pay it back in monthly installments with interest added. It works very much like a traditional mortgage.
A home equity line of credit is structured more like a credit card in that a lender gives you a credit limit based on your equity. You borrow as you need with a HELOC and also pay it back as you borrow.
A cash-out refinance lets you refinance for more than whats owed on your mortgage, and you get the extra money as cash that you can use.
Since equity is a valuable asset that gives you financial flexibility and options, building it is an important goal.
One of the fastest ways someone builds equity is by coming up with as large a down payment as possible. The bigger your down payment, the more equity youll have right away.
If you already have a mortgage, make every effort to pay it off. When you first start paying a mortgage, smaller amounts go toward your principal, and more goes toward your interest. However, the longer youve had your mortgage, the more goes toward your principal, helping you build equity.
If you ever have opportunities to pay more than the minimum on your mortgage payment, do it. Some people make an extra payment each year, or they make biweekly payments. Even paying just a little more each month can help you reduce your principal balance and increase your equity faster.
If you stay in your home longer, you build more equity, particularly if it increases in value.
Finally, certain renovations that add value can also help you build equity. For example, adding a bathroom or doing a kitchen remodel can improve your homes value, increasing your equity.
"CCamp;Rs" is an acronym commonly used in the homeowner association industry. It means "Covenants, Conditions amp; Restrictions." It is used generically for any HOA rule or policy. But its more complicated than that. In the HOA environment, there may be policies, procedures, rules, regulations and resolutions. All are necessary to do the HOA business properly. But what exactly are policies, procedures, rules, regulations and resolutions?
A policy is a standard adopted by the Board that sets out the beliefs, values and objectives that causes the homeowner association to act. such as a collection policy, an enforcement policy, or a conduct of meetings policy. A homeowner associations policies communicate, organize, and focus the resources of the homeowner association.
A procedure is the process that accomplishes a particular objective. For example, the homeowner association should have a clear and defined policy regarding assessment collection. The detailed steps of how this policy is achieved comprises the procedure of collecting assessments.
A homeowner associations board of directors adopts rules, regulations or guidelines to define desired behaviors and to set limits on allowable uses of the common elements and homes or units, architectural changes and the behavior of residents and guests. Some typical examples of rules include pets, parking, noise and use of HOA facilities.
A resolution is a method of formalizing a decision made by an homeowner associations board of directors. Resolutions are used to adopt policies, procedures, rules and regulations or to clarify ambiguous terms in the governing documents. Resolutions should include four components:
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Authority. The section of the governing documents that gives the board authority to adopt resolutions;
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Purpose. Why the resolution is needed or being adopted;
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Scope and Intent. Who will be affected, the reach, range and extent
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Specifications. A clear and complete statement on what those bound by the rule are expected to do.
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So there you have it. Now you can speak like an HOA authority. CCamp;Rs arent just for acronymizing anymore.
There are different scenarios where you might be interested in the feasibility of managing an Airbnb remotely.
Maybe you have a second home or are considering one that when you arent using it, youd like to rent on Airbnb. This is common. Another scenario might be if you want to travel the world for a while or take a sabbatical, and you want to rent out your primary residence while you do so.
How possible is it to manage an Airbnb remotely?
Theres going to be no way to manage your Airbnb remotely unless you have a good local team of people you can count on.
First and foremost, choose the right housekeeper. The cleanliness and how well maintained your Airbnb is are important to your ratings and the amount of money you can make. Your housekeeper can make or break you when it comes to Airbnb.
Your housekeeper will be more than someone who cleans your property and gets it ready for the next guests. Theyre also going to let you know your propertys condition regularly and whether something is damaged or needs to be repaired. They can alert you if one of your guests breaks or steals something so you can deal with it in a timely way.
Along with your housekeeper, youll also need a >
While you might need them less often, have a plumber, electrician, and HVAC professional in mind who you can call as needed.
Along with your housekeeper, you might also hire someone who serves as a property manager. All of these people will cost money, but if youre going to make money remotely, youll need them.
A property manager should keep a running list of everything the house should always be stocked with and should replace items or let you know when theyre needed.
In some cases, your housekeeper may be able to do this, but it needs to be someone you trust to do a thorough job.
You dont necessarily need someone to be present during check-in, and a lot of guests prefer self-check-in.
You can use a lockbox, such as a smart lock.
There are services you can use to send access instructions to your guests automatically. You can also manage entry remotely. If guests are having a hard time, many of these services will send you an alert.
If youre going to manage your Airbnb remotely and youre not working with a management company, youre going to need a detailed guestbook. The book should include any and everything that your guests might need to know.
This includes local restaurants and attractions, how to work appliances and house features, transportation information, what to do if the power goes out, and how to access Wi-Fi. You should also include phone numbers and contact information for your service providers such as your plumber and electrician. Provide your phone number and give your guests the option to FaceTime you if they need help with something.
If you arent sure where to start with your guestbook, consider spending a few days in the home as a guest would. Go through your day-to-day routines and think about what you might have questions about if you were a guest at the property.
If you arent going to greet your guests personally, you can make them feel welcome with gifts. Have your housekeeper leave something personalized for each new set of guests. Before they check-in, ask if theyre celebrating anything special.
Maybe you leave a bottle of wine, or perhaps some snacks.
Your guests will appreciate the personal touch, even if you arent there to personally deliver the gifts.
Overall, it is possible to manage an Airbnb remotely, particularly with technology and a dedicated team of people on the ground who you trust. Finding people to trust is perhaps the most critical part of managing your rental business from afar.
You also need to make time to regularly check in on the property in person and ensure that everything looks good and nothing needs repairs or updating.
If you dont already, 2021 should be the year that as a real estate agent, you focus on building your email list.
Every agent should collect an email list and maintain it. Its one of the best marketing tools you have available. Email lists and marketing can help you stay in contact with your current clients, build new >
With that being said, if you dont have an extensive list of email addresses, it doesnt matter how good your actual marketing is within the emails you send. The more people on your email list, the more potential views and the likelihood you convert readers to clients.
If you have a website, one of the easiest ways to start getting new subscribers for your email list is to create an opt-in popup.
With this, youre asking your website visitors to sign up to receive emails from you.
When youre creating the popup, keep it simple but visually appealing. Ask only for the most needed contact informationtypically name and email address. Include a call-to-action thats clear to site visitors, so they know what youre asking for. You might also want a brief sentence about what you plan to use their email for.
Another good way to get new email subscribers is through social media. You can use paid ads to generate leads. For example, you can create ads that link to your landing page. Once someone arrives at your landing page, you might have an opt-in form.
When youre creating different landing pages and opt-ins, make sure that your call-to-action is customized to each, based on who your audience is most likely to be.
Getting someones email address is valuable, and most discerning people are going to realize that. They might not be willing to give you their email address unless theyre going to get something in exchange for it.
There are many ways to offer value in exchange for someone opting into your emails, and one popular route is to create an e-book. The e-book doesnt have to be long. It can be a guide to anything that youre an expert on, such as finding the perfect home for a family, buying a fixer-upper, or investing in property. Think about what is most likely to resonate with your targeted audience.
Then, when they sign up for your emails, they automatically get the e-book.
This offers the added benefit of positioning you as an authority in your field.
As a real estate agent, one unique way you can get emails that people in other industries cant is by collecting them at events.
If you have an open house for example, have attendees leave their email addresses.
This will not just help you build out your list, but youre likely to have more quality leads if youre getting emails from people who are actively attending real estate events.
Finally, once you start collecting emails, its important to segment them. This means that youre breaking it into groups based on the needs and interests of the audience and demographic factors. This is important because you want to send your subscribers only the most >
When youre just starting to build your list, your segmentation can simply be people most interested in buying and then another group for potential sellers. As your list grows, so can your segmented groups. The more tailored you can be in your messaging, the more likely it will resonate and convert.
Over time as you build it and refine it, your email list can become one of the most important assets in your real estate business.
When first thinking about buying a home, the type of mortgage you should consider is a bit lower on the priority bar. The first decision is whether or not to buy the home in the first place. Once that decision is made, its time to get your preapproval letter from your mortgage company. Most agents today wont even let you into their car without having first spoken with a lender. Further, when making offers, the sellers and the sellers agent want to see that not only have you spoken with a lender but have been preapproved, meaning your income, credit and assets have been reviewed and verified. Next, youll need to find out which mortgage is best for your situation.
You might be surprised at the various options available when financing a home. Youll need to decide if you want a fixed rate loan or a variable one. You will also need to select a loan term. The most popular loan term is 30 years but there are certainly others. Your loan officer will help you with this. Your loan officer will also review your situation and provide different options from which to choose. In general, though, there are some factors to consider when selecting the type of mortgage which is right for you.
The most popular mortgage is the standard conforming conventional loan. When you see 30 year mortgage rates advertised, its very likely the lender is referring to this type of loan. Most every single lender offers this product creating a more competitive arena. Lenders will compete on rates and terms but also service. The service portion is extremely important but often not considered. A mortgage company might offer the lowest rates on the planet but after you submit an application you cant get a return phone call. You want competitive terms but also stellar customer service.
Regarding the loan term, just remember the longer the term of the loan the lower the monthly payment but youll pay more in interest over time. A shorter loan term will result in higher monthly payments, but less interest is paid over the life of the loan. Speak to your loan officer and see what your principal balance would be five years into the loan with a 30 year term compared to a 15 year. You might be surprised.
Are you VA eligible? VA loans are the ideal choice for those who are eligible. VA loans do not require any sort of down payment, the buyers are limited from paying certain types of closing costs and rates are extremely competitive. In addition, there is no monthly mortgage payment required compared to other low-down payment mortgages. If youve served in the Armed Forces, active duty or served in the National Guard or Armed Forces Reserves this is probably the ideal choice for those wanting to come to the settlement table with as little cash as possible while still getting a very competitive program. VA loans also come with a government-backed guarantee should the loan every go into default.
FHA loans are another option. FHA loans are very popular with first time buyers because the minimum down payment is just 3.5 of the sales price. FHA loans also have a government-backed guarantee. These guarantees make it a bit easier to qualify as lenders are compensated for any loss should the loan default.
If youre buying in a rural area and also want to come to the settlement table with as little cash as possible, the USDA program is likely your choice. USDA loans also a zero-down option. Many loan programs dont like financing a home in a rural area as there are very few recent sales of similar homes in the area.
As you can tell, there are probably more choices than first imagined. But dont let that confuse you. Your loan officer will help decide which program best fits your financing requirements.nbsp;
Ever wonder why some homes sell and others dont? There is no magical fairy dust that can turn a loser of a house into a palace. And, in fact, if there were such a think as magical fairy dust, sprinkling it in your home would make a big mess, and thats a big no-no if you want to sell.
Getting your home sold is not all that hard if you stick to the basics. But if youve got some of the problems below, you may just be sitting on that unsellable home for a while.
Yes, your home is ugly. If your Realtor didnt tell you that, let us go ahead and say what he should have. And just so were clear, "ugly" can also stand in for:
Cluttered
Outdated
Dirty
Messy
Tacky
Very few people - investors looking for a deal aside - can walk into an untidy mess of a house and see the potential. If youre not willing to clean it up, clean it out, and maybe make a few overdue updates, you may not get it sold. That goes double for over-personalization that is so in your face buyers cant see past it.
"Everybodys taste is different, so less is more when it comes to decor at sale time. Loud patterns and bold colors can be big distractions," said MSN.
Solution:
You need to de-ugly-fy that house but quick. Pretty places around you are selling. If you have similar plans, similar features, similar lots and theyre selling while youre sitting, its not hard to figure out why.
Take a good long look. If you dont see anything wrong, bring in a few friends for their opinions. But only the ones who might actually tell you the truth.
This is the No. 1 most common problem with homes that are not selling, says MSN. "If youre guilty of having "a what the heck are they thinking? price tag," they say, you can expect to sit on the market for a while.
"Price is usually the overriding factor in any home that doesnt sell. Whatever its problem, it can usually be rectified by adjusting the price."
Adds U.S. News: "Without question, the No. 1 reason a home doesnt sell is price. Sellers have an emotional attachment to their homes and tend not to be objective about the true value."
Solution:
If it is an emotional attachment thats getting in the way, take the emotion out of the equation and think of it simply as a business transaction. Many times the issue is a seller owes more than the home is worth or simply wants a higher price. But its the market that sets the price. And if its telling you your price is too high, its probably best to listen.
When all else fails, listen to your agent, who should have provided you with comparables that spell out recent sales and market trends. Also See: Its The Price That Sells a Home
Maybe youve made the decision to sell and you just dont want to put any money into a house thats no longer going to be yours. But a house that looks like its going to take too much work - or too much money - to fix up is a turnoff.
"If a home looks as if its going to cost half as much to repair or renovate as it does to purchase, its going to take a long time to move," said MSN. "Todays buyer is a lot more >
The Solution:
"Fix it, or prepare to lop a large amount off the price," said MSN.
This is also the No. 1 reason houses end up overpriced. Uncooperative sellers also tend to ignore other advice from their agent, about keeping the home tidy see No. 1, being available when needed, being open to price reductions, being able to make the house available for open houses, and agreeing to terms when there is a contract discussion.
"No offense, but maybe you arent showing your house off enough? If you arent using a real estate agent and work away from your home, your time might be limited, of course. But you should try to make your house as accessible and available as possible for a Realtor and a potential homebuyer to easily drop by and take a tour which means having the place clean, too," said U.S. News. "Having your home be shown only by appointment or only at designated times will seve>
The Solution:
Get in or get out. Or get in to get out. You have to commit yourself to a process that, quite frankly, can be inconvenient and a hassle in order to get your home sold, especially in more competitive markets. Being agreeable and available, however painful, for this finite amount of time, will pay off in the end.
For those of you who like to have a week of dinners planned out ahead of time, you know how much time grocery shopping for those items takes. You walk into the store with a list of groceries and you wander around the store from one aisle to the next picking up things here and there. It can take an hour or two just finding the ingredients. By looking into a food delivery to do the shopping for you, youll be able to have an extra couples hours every week that you could use to rearrange your home.
How many hours a week do you spend cleaning? A study done by the Australian Institute of Family Studies showed that women spend anywhere from 16 hours a week to 25 hours a week doing household chores. That means that every week, women are spending up to an entire day cleaning the house and cooking the food. You can assign your kids chores to alleviate some of the time that you spend on chores. Everyday assign each kid a set of easy chores and assign one of them to help with dinner for that night. Chores will get done faster and you gain an extra 5-6 hours every week. While youre at it, you could even enlist your children to help you with the remodeling since youve saved enough time to start.
You might be overly busy because when someone asks you to do something, you cant say no. You spend hours every week going out and having lunches and dinners with friends or helping people move but you need to remember that its okay to have some you-time. Next time you feel overwhelmed by your plans, know that its okay to say to the next person who asks you to do something. Its important to take advantage of your time and use it in the way that you want to.
Its tempting to set goals that seem easy but are actually completely unattainable. Then you spend hours and hours trying to reach it only to come out frustrated that youll never be able to finish it. Instead, set small goals that you can easily reach one at a time. Youll be able to save time because you wont be frustrated as often and you wont be spending time on things that you wont be able to accomplish.
Social Media is where you get ideas for creative DIYs and cute remodeling ideas. It also can take up hours and hours on end. Try taking a social media fast for a few days every week where you dont allow yourself to go on Facebook or Instagram. Be strict with yourself and tell yourself that no matter what, you are not allowed to open up the app on your phone. Instead, focus on other aspects of things that you need to do. If youre feeling bored and youre tempted to go on social media then focus your attention instead on the projects that youve been meaning to do around the house. There isnt a reason why you should be bored.
By cutting time from other less-important aspects of life, youll find that you have a plethora amount of time available for you. Youll be able to put that time into the other things that you have been hoping to accomplish. So, take a break and allow yourself the time that you need to make your home into the home that you want.
Question: Our HOA has a resident that interferes with vendors. Our landscaper has threatened to quit due to the harassment. The resident has been advised in writing to cease and desist but it continues. Suggestions?
Answer: Its not uncommon for certain residents to engage contractors in conversation, usually trying to be sociable or helpful. This is particularly true of landscape contractors. Most landscapers know this and should be instructed not to respond or instruct the resident to "talk to the Board."
If this has been done without success, I suggest someone on the Board meet with this person and discuss the reasons for his interference. Some of his concerns may be legitimate. If so, address them in writing with the landscaper and send the owner a copy of the letter. But if the interference is unjustified and just meddling, other tactics need to be used.
Try one more letter stating that the previous courtesy letter has been ignored so the landscaper will bill for additional time in dealing with him if he continues to slow them down. Add that if the HOA is billed, he will be charged for it. Then, ask the landscaper to monitor the situation and to journal when interference happens. If it does, ask him to submit a bill to the HOA for the time at his normal rate. Bill the owner. This usually stops the meddling. If not, have the landscaper submit another bill and charge him again. Make sure to enforce collection if it goes unpaid. Some folks can be pretty stubborn but most come around.
Question: Our townhomes each have a rear deck. Two adjacent owners submitted a request to add a brick patio in between their two decks. Besides the fact that there is a utility easement buried cable where they want to install the bricks, it seems inappropriate to allow this installation since future owners might not be so neighborly. Thoughts?
Answer: This was probably a cost sharing scheme to develop additional patio space for half the cost. There are several approaches to responding to the request. If the expansion area is common area, the Board has no authority to permit individual owners using it for private space. Case closed. If the space is limited common area, the utility line easement access would be compromised. Case closed. Your observation about how this would impact future owners of this property is also valid. Again, case closed.
Question: I recently ran for and got elected to the board. I was reading the bylaws and it occurred to me that we didnt have a quorum so the election was illegal. I did further research and discovered that weve never had a quorum in the three years that the HOA was turned over from the developer. Im concerned that since none of the board members were legally elected, their acts have not been legal either. I believe all the liens, contracts and other approved actions should be redone. Our property manager believes Im overreacting, stating that most of the annual meetings she coordinates lack a quorum for elections. Am I making too much of this?
Answer: Your concerns about the quorum are valid. While its true that many owners dont choose to attend the annual meeting, using apathy as the reason to run roughshod over quorum requirements is a lame excuse. The Board is responsible for proper and advance promotion of the annual meeting. There are a number of ways to attract greater numbers and accomplish a quorum. Holding a potluck following the meeting often attracts greater numbers and ensures the meeting doesnt drag on.
One essential component of holding an annual meeting is issuing proxies to all members. A proxy is a form which authorizes another person to act on behalf of the proxy giver. All owners should complete and return one before the meeting to guarantee a quorum. Any member that attends the meeting me>
Your concern about redoing past Board actions is unrealistic and would be a nightmare to accomplish. Opening up this Pandoras Box would allow challenge to anything and everything the Board has done. While its possible a member may raise the issue to justify violating some policy or rule, its unlikely. Its better to let sleeping dogs lie and strictly adhere to proper quorum requirements in the future.
Most of us were more than happy to say goodbye to 2020, but we could still be spending a fair amount of time at home early on in 2021.
With that in mind, the following is a roundup of some of the dcor and design trends that are popular right now.
2020 was a year when most of us spent more time at home possibly than ever before. We were not just spending our free time at home, but perhaps cooking more at home, working from home, and working out from home.
That made comfort and functionality top priorities in home design.
Instead of the unused guest room or formal living room, the focus of home design right now is on creating spaces that work for our life>
Think about the overstuffed furniture >
There is likely to be a move toward softer and more traditional dcor >
For a lot of us, home design right now is also about utilizing all of the spaces in our home and maximizing what were able to do from home. That might mean revamping your home office or adding a gym. nbsp;
If youre thinking about buying new furniture or installing new floors, lighter wood will be popular in 2021. Think about blonde and light oak woods. They can keep a space still feeling airy and modern, even if the furniture is more traditional.
Light wood can open up a space and make a small room appear much larger.
The term grandmillennial is one being used by some designers. What it means is that you might see a move toward those traditional >
There are elements of history and nostalgia in these >
Whats great is that you can also buy antiques or use pieces handed down through your family, which is valuable from a sustainability standpoint.
Everything old is new again, and 2021 is the year the 80s dcor >
Bar>
Another way the 80s is inching back into home design?
Wicker and rattan furniture.
Made from woven twigs and palm stems, this furniture is chic, lightweight, and versatile.
What about those trends that we might say goodbye to in 2021?
Shiplap may be one.
For years, shiplap was the go-to wall trend made popular by Joanna Gaines.
It was everywhere, and it did offer an easy way to incorporate texture into a space, but for many of us, were feeling a bit tired of shiplap.
Shiplap might take barn doors with it as it exits.
To continue with texture, shiplap could be replaced with plaster walls, which are once again growing in popularity.
Finally, in kitchens for years gray cabinets were coveted. Now, we may see a move away from that and instead we could see green cabinets becoming popular. Indigo blue is another bold choice that could become increasingly utilized in 2021.
Where do you go from here?
Interest rates are at all-time lows.
Pivoting into a new life and life>
Working from anywhere, including home, is a viable and valued career option.
Home is the new headquarters, representing security and freedom.
Life used to be super busy, hyper accelerated. We navigated a continuous stream of must dos, deadlines, and responsibilities. Eating out was where the money went.
Now weve adjusted to a less frantic pace of life with time to think and to sleep. Cooking-in has saved us a lot of money. What really matters has become clearer to many people.
Marketing pitches will rev up again and lead us back into that spending-buying frenzy unless we take this rare opportunity to consider where wed like to end up and how we can reach a new, valued destination.
In the midst of this awakening of new possibilities, success may be linked to the way you think about home. Which of the following perspectives on home are >
The pandemic proved home can be a partner: A safe haven, a workplace, a school, an entertainment center, a technology hub, shelter from a virus. Stop thinking of your home as a nest egg to look after passively until you cash it in to retire to a rocking chair. That type of retirement is long gone. Hurrah
Home has many different roles to play. Treat home as a partner and look for ways to put it to work for you and your family.
When it comes to home and money, most people are their own worst enemy. The fact that home buyers automatically expect to be poor when they buy a home is the root of the problem. Buyers often buy more house than they need or can comfortably afford. They overlook the importance of location to value, buy in peak markets and sell in slumps, and overlook real estates tax and investment advantages.
Having home and money too involves adopting a money-management attitude, not a get-rich-quick philosophy or a passive caretaker role. This may include managing built-in apartments, rental out-buildings, or short-term holiday rentals to generate income seasonally or annually. Operating a business from home has many financial and life>
The life cycle of home ownership for a newly-married couple traditionally started with a small bungalow. They later moved into a larger home when children arrived and then eventually into an even larger home, with amenities like a pool, where each teenager had their own room. The ownership cycle ended for the original owners when they retired and moved into a small rental. Their house was often taken over by one of their adult children and their family as the ownership cycle began for them.
Variations on this cycle included a divorce at some stage when the home was sold to buy two or a renovation to accommodate adult children moving back home, perhaps with their young children.
Now, the traditional family has changed dramatically and, along with it, the cycle of home ownership. Now, a rental unit may be added to help pay off the mortgage and removed when children arrive.
Homes are often dramatically renovated to accommodate a growing family rather than up-rooting school-age children in a move. A preferred life>
Home is seen as a flexible environment which can be renovated to fit the current and every-changing needs of owners.nbsp;nbsp;nbsp; nbsp;
Growing concern for the environment increasingly sees many buyers searching for more compact, environmentally-friendly housing instead of massive energy-hog houses that reflect keeping-up-with-the-Jones life>
At the other extreme, moveable, compact tiny homes have become popular with home buyers who want adventure and a cost-effective life>
Condominium units exist in a range of sizes from a few hundred square feet to multiple floors, enabling buyers to purchase as many square feet as they need or can easily afford.
Rising sea levels and raging wildfires are two common natural disasters attributed to climate change. Are climate change and environmental degradation, like contaminated drinking water or poor air quality, factors to take into account when buying?
The search for my forever home is now a common one. A building and land that are so beloved and sustainable that the owners will not want or need to move again is a high priority for many buyers. Unique properties like farms and waterfront homes and amazing urban or rural locations often lead buyers into long-term attachments.
Real estate prices have risen dramatically in many areas. Pooling resources with friends, >
Wealthy families are not the only ones who can own multiple properties. Those with more modest incomes can become savvy real estate buyers and build a portfolio of income-earning residential or commercial properties:
Individuals can partner with friends, family, or colleagues to share two or three properties around the world.
When businesses are involved, owning properties in several locations may be financially feasible and even necessary.
Buy multiples in one location for life>
Where do you want to live? What do you want to have access to? What climate do you >
Let go of the past and reach out to explore the variety of housing options and life>
With all this flexibility, theres no end to what you can achieve, even on a modest income. Technology is going to open up more and more options. What variations on home ownership can you add to the list above?
During research for one of my books, Have Your Home and Money Too no longer in print so skip Google, I was dazzled by the amazing ingenuity of home owners from all walks of life and income levels. Now, weve settled into a follow-the-leader pattern of home buying and ownership which may not provide all the life>
Are you ready to think way outside the box of home ownership in a year that already has us thinking way out there about so many things?
Lets make 2021 a year celebrated for the return of safe hugs
One may or may not be familiar with the term government backed but it might be a bit confusing at first. First, what its not, isnt a guarantee someone is going to get a mortgage because its backed by the federal government. These types of mortgages are differentiated from so-called conventional mortgages. A conventional mortgage is one where the individual lender assumes all the risk of issuing a particular home loan. A government backed mortgage has degree of a guarantee should the loan ever go into default.
Most conventional loans issued today are those underwritten to Fannie Mae or Freddie Mac standards. When a lender makes a loan based upon these guidelines, the loan is typically sold to either Fannie or Freddie individually or in bulk. Most conforming conventional loans make up nearly two-thirds of home loans issued today. The rest fall into the government backed category while a still smaller percentage are called portfolio loans where the lender has no intention of selling the mortgage but instead keeps it in-house.
There are three prominent types of government backed mortgages and they are those underwritten to standards issued by the VA, FHA and USDA. But while these loans do carry some sort of guarantee, the guarantee is issued to the individual lender, not the borrower. This is where some get confused thinking a guarantee is a promise to issue a home loan. Instead, the guarantee compensates the lender for part or all of the loss sustained during the instance of a default.
VA loans are guaranteed at 25 of the loss. If a VA loan goes into default and the loan amount is 200,000, the guarantee to the lender would then be 50,000. This guarantee is financed with the VAs Funding Fee. This is in essence an insurance policy with the lender as the payee. The funding fee can vary based upon the number of times the borrower has used the VA program to buy a home. Currently, the funding fee is 2.30 of the initial loan amount but is not paid for out of pocket but instead rolled into the final loan amount.
The Federal Housing Administrations FHA home loan program also carries a guarantee but instead of partial compensation to the lender the lender is compensated for the outstanding loan balance. There are two such fees for the FHA program, an upfront fee and an annual fee paid in monthly instalments along with the regular mortgage payment. The upfront premium is 1.75 of the base loan amount and the annual premium is based upon the original down payment amount and the actual term of the loan. Each year, as the mortgage balance is paid down, the annual premium is recalculated for the coming year.
The last of the three is one developed by the United States Department of Agriculture, or USDA. The USDA loan also provides full compensation to the lender in the instance of default and like the FHA program has two separate fees. The upfront fee is based upon 1.00 of the initial loan amount and the annual premium is 0.35 of the outstanding loan balance.
What was once written off as a short-term trend has proven to have staying power. And, tiny homes are no longer being associated primarily with millennials, either. There are plenty of stories of families choosing to live leaner. Tiny homes are now increasingly the choice of seniors, as well.
Tiny houses can be an attractive option for retirees who want to downsize after the kids leave the nest, said TODAY. For one thing, they can come with major financial advantages. One retired woman TODAY profiled paid 65,000 for her tiny house, an incredible bargain compared to Portlands median home sale price of 394,100."
But that doesnt make tiny living a breezeespecially for those who are used to more space. Here were breaking down the pros and cons.
The price is right for tiny homes regardless of location.
A tiny house costs a lot less to build than a full-sized one. According to The Tiny Life, its possible to build a tiny house for 23,000 on average. The average price for a full-sized house, by contrast, is 272,000more than 10 times as much, said Money Crashers. Cutting back on housing expenses enables tiny house owners to put more money toward luxuries such as travel, save for retirement, or simply work less.
A tiny home also often means no mortgage, which, if the buyer can swing it, means they dont have to pay interest and can own their home outright. The Tiny Life reports that 68 of tiny house owners own their homes free and clear, as compared to just 29 of all homeowners.
Technically, this could also be a pro for those keen on tightening up their footprint, but, for most people, the idea of living in 100 to 400 square feet the average size of a tiny home, is a deal-breaker.
Living in a tiny home means youll have to do a lot of sacrificing in order to downsize, said Little House of Four. More often than not youll have to give up your private office, art studio or home gym. Your washer and dryer will more than likely end up in your bathroom or kitchen and youll have to do some serious compromising when it comes to what you bring into the home. There are ways to remedy these sacrifices, but youll still be giving up your privacy and downsizing no matter how creative you get with storage.
If you buy a traditional house, youre not likely going to load it up on a truck and move it somewhere else when you desire a change of scenery. But, with a tiny home, thats part of the allure. A tiny house can easily be fitted on a flatbed truck, which makes delivering them to buyers, as well as future resettling really easy, said Millennial Magazine. Whether they are stuck with a bout of wanderlust, seeking new job opportunities, or just want to spend a season living close to a beachmillennials are sure to appreciate the fact that they can simply pack-up their house and go on their way.
Forget about that man cave or even a she shed. If you need a little space to yourself, thats going to be hard to achieve in a tiny home. Living in a tiny home by yourself might be easy, but sharing a small space with one or more people can be a challenge, said Little House of Four. Theres no personal space to spend time alone or even roll out an exercise mat and get in a workout. Those of you that are extroverts may have no problem being in tight quarters with others, but introvertsmay miss the alone time that a larger house can offer.
You think you have some smart storage solutions in your home? Imagine what youd need to fashion if you lived in 200 square feet There are tons of great ideas out there. Were digging the smart storage under the stairs here nbsp;and the cabinet walls here.
No matter how many witty ideas you come up with, youre never going to have an ample walk-in closet and tons of kitchen cabinetsboth of which are ingrained in the typical vision of the American dream.
Tiny homes are, by their very essence, more environmentally friendly simply because, Their size means that they require substantially fewer building materials to construct, which makes it viable to use more expensive, eco-friendly components and still keep costs down overall, said Millennial Magazine. Plus, >
Although a tiny house doesnt require much land, many towns make it difficult to build one, said Money Crashers. Zoning laws often include a minimum size for dwellings, and a 200-square-foot tiny house isnt usually big enough to make the cut. To get around these rules, some tiny house owners buy a full-sized house, rent it out, and then park their tiny houses in the backyard as either outbuildings or vehicles. Trailer parks can also provide a home for a tiny house.
Whether moving across town or across the country, packing up and moving can be stressful, costly and full of surprises. From shady movers and inaccurate price quotes, to overpacking or not allowing enough time to get the move set up, every step of a move has the potential for mistakes that can make a move a nightmare.
These tips will help anyone preparing for a move, whether they currently live in a house, an apartment, a dorm, with friends or with mom and dad.
Weve all heard horror stories about moving scams, and perhaps maybe youve been the victim of a moving scam yourself. You can steer clear of a less-than-upstanding mover by doing your homework. The Better Business Bureau, Angies List, your state transportation regulator and the U.S. Department of Transportation -- and even your >
If youve done your research and still arent confident in the movers youve come across, you always can go the DIY route -- just be sure youre up for the task.
If you hire a mover, you should be able to have someone from that company come to your place for an in-home moving estimate. If a moving company wont do an in-home estimate, you should think about shopping around for another mover.
Along those lines, dont >
Do you really need those old boxes of baby clothes that you havent laid eyes on since your 6-year-old was in diapers? Before you move, you need to "edit" your belongings. Think about whether you can trash some of your possessions, donate them to charity, or give them away to friends and >
During the summer months, good moving companies are booked up quickly. Rather than waiting till the last minute, make sure your move is scheduled weeks -- or, better yet, months -- in advance. You dont want to be scrambling to find a mover the day before youre supposed to head out. Moving already is stressful enough without adding that frustration.
Youll find very few people wholl say that packing is fun. In fact, a survey commissioned by SpareFoot found that people whod moved in the past year identified packing and unpacking as the biggest hassle in the process.
You can lessen the load by beginning to pack well before moving day comes along. Start by boxing up stuff that you wont need right away -- for instance, if youre moving in the summer, pack up your winter clothes so that theyre out of the way. Also, be sure to carve out time in your schedule to check items off your packing to-do list.
If you get down to the wire and need help with packing, enlist friends, neighbors, >
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Vacancy Factors Explained
When the rental income from a prospective unit is 2,000 but the lender tells you they can only use 1,500 of thatwhat gives? That is if youve been a landlord before with at least two years of experience. First time real estate investors can expect to have the new mortgage on the unit be counted 100 against their debt ratios even though theres 2,000 worth of rent coming in each month. That can be a challenge for first time investors but when it comes to the second rental, lenders will in fact use the income from the rental to help qualify. Lenders want to see you can properly manage and maintain the rental unit for two years. With two years experience, the income can be used. But not all of it for qualifying.
If you think about it that does make sense, but maybe not in the way youre thinking. One of the lenders qualifying guidelines is there be at least two years experience of being a landlord. Once that milestone has occurred, it becomes much easier to qualify as in most cases the income from the rental outpaces the costs of ownership including the principal and interest amount, taxes and insurance. A positive cash flow is needed, otherwise its an expense, not income.nbsp;
Yet the 25 discount lenders apply when qualifying means that a 2,000 rent means 1,500 in usable income. The difference is that yes, there will be maintenance involved. Carpet needs to be replaced, a water heater goes out or the stove in the kitchen goes on the blink. These expenses must be borne by the landlord in most cases, anyway and not the tenants. These expenses help account for part of the 25 discount.
The other, and the primary explanation for the discount, is the unit wont be rented 100 of the time. Every month for the entire year with no exceptions. It doesnt happen. Yes, even in a hot rental market where rental units simply dont stay on the market for very long there will be times when its not occupied with cash paying tenants.nbsp;
There can be lag times to list the property on the local MLS for rent. The property is listed, and it takes a couple of months to find the right tenant. Thats two months worth of no income from the unit. No 1,500 much less 2,000. Thats common. Whats uncommon and really doesnt happen very often is someone moving in the day after the old tenants have moved out. Yes, that can happen but in all practicality it doesnt.
When tenants move out the landlord will need to update and repair the unit before the next set of tenants. Even things such as new coats of paint and shampooing the carpets take some time. Fresh paint, polished appliances and brand new flooring is appealing to potential tenants. Making these changes takes some time, albeit >
Both listing the unit and preparing to put the unit on the market takes time. But the rental income will be discounted from the actual amount when it comes to time head to the lender for financing.
When youre planning to sell your house, timing is important. You want the most people to see it and be interested, and you, of course, want it to go for the highest possible price. So when is the right timing? When is the worst time to sell a house, alternatively?
We often think about seasonal trends when determining the best time to sell a house, and those are >
While there are national trends, real estate is often much more localized. For example, following the coronavirus pandemic, many big urban markets are dealing with stagnant or declining real estate sales. New York and San Francisco are examples. However, suburban markets are thriving.
You do need to think about the local condition where your home is, and also even more specific factors, such as what the appreciation for homes in your neighborhood looks like and how this compares to where youll buy.
June tends to be the best time to sell a house. The summer months in general are often more favorable for sellers, from May to August. These months make up 40 of annual home sales volume according to the National Association of Realtors. With that being said, that then makes summer the worst time to buy. In the summer, theres a sellers premium, so you have to think about how that will balance out if youre planning to both buy and sell.
Summer is a popular time in real estate because of the good weather and daylight savings time and the longer days. Its somewhat simple when you think about itthere are more daylight hours, meaning more potential exposure for your home. A lot of families with children look in the summer months so they can get their kids enrolled in school by the fall.
December tends to be the worst month to sell a home. Theres not a lot of inventory, and buying activity is limited. Again, this is logical. People are thinking about the holidays and theyre traveling. Plus, the days are shorter and the weather isnt great.
Some general pros of selling a home in spring include:
Many people get their tax refunds in the early spring so they can make renovations or repairs as-needed during this time.
Theres more curb appeal when your lawn is in full bloom.
If you plan ahead during the spring, youre more likely to be well-timed for the summer rush.
The big con is that there will be more competition in spring and heading into summer, and buyers will have more choices.
Pros of selling in summer include:
Theres more flexibility for both you and potential buyers if school is out.
Buyers tend to feel an urgency to get their kids settled before school.
If buyers feel urgency, they may make a more competitive offer.
The cons are similar to selling in spring. Namely, theres more competition.
If you have to sell your home in the fall, theres typically less competition and inventory. Also, buyers may be more serious if theyre looking in fall because they may be up against a certain deadline, such as needing to >
If you need to make repairs, professionals are less likely to be busier and may be cheaper than they would be during the busy spring and summer.
In the West and the South, temperatures stay milder in the winter, so there may be less of a dip in home buying and selling activity in the winter. In the Midwest and the northeast, where there are extreme winters, theres a more pronounced seasonal difference in the real estate market.
Theres no perfect time to sell a home, but there are considerations to keep in mind.
When it comes Board elections or need for a committee member, are volunteers scarcer than snowballs in hell? This is a common frustration in homeowner associations where the same few good women or men seem to shoulder the responsibility for life. So, how do you get others to raise their hand and step forward? Some suggestions:
Uninformed owners are uninvolved owners. If you dont tell them whats going on and give them a reason to get involved, they wont. A newsletter and flyer distribution box is an inexpensive and convenient way to get the word out.
Most people love recognition. Turn a "thankless" job into a position of honor. Hand out kudos and certificates, praise and congratulations. Do this at every opportunity ... at meetings, in newsletters. Volunteers are attracted to uplifting environments.
People like helping people they know but easily dodge commitment to strangers. The HOA should sponsor several socials each year to break the ice. Consider a spring clean-up party, pool party or just plain old potlucks. It will help create a real sense of "community" and desire to join in.
Volunteers need to know they are doing the right thing. Remember to build them up and ask if they need help. Value their opinions.
Remember as a kid waiving your hand wildly to be recognized by the teacher? Age tempers that need to stand up and stand out. It takes someone to get the ball rolling. Pick me, pick ME
When youre buying or selling a home, you are likely going to face a home appraisal contingency. It can be anxiety-inducing on either end of the situation. Knowing what to expect can prepare you and reduce a bit of that anxiety.
During an appraisal, someone who is licensed to conduct appraisals will do an inspection of a home to determine its actual worth. This is not always the same as the listing price. An appraiser will create a report of their findings, and then theyll generate the appraised value of the home.
If youre a buyer and youre making a purchase with a loan, your lender will likely order the appraisal.
The lender doesnt want to give more money than what a property is worth. Lenders often require buyers to include appraisal contingencies if they make an offer.
The appraisal usually happens after you sign a purchase agreement and before your lender approves your loan.
The appraiser is someone who is a neutral third-party and who is unbiased. They dont represent a buyer or a seller.
Appraisals can cost hundreds of dollars. If its for a loan, a buyer or seller cant order one directly from the company they choose. Rather, the lender goes through a third-party appraisal management company. The buyer pays for the assessment. The lender sets the fee, not the appraiser.
There are a few main reasons a home might fail to appraise. The first is simply that the contract price is higher than market value. This situation is especially common in hot markets, where buyers might be competing for the same house.
There may be an issued identified during an appraisal that could affect its value. For example, maybe a room was added to a home without the proper permits.
There can also be problems on the part of the appraiser. The appraiser might not know the area well, for example.
Most appraisers use a universal form called the Uniform Residential Appraisal Report. It includes questions about housing trends in the area, demographics, property condition, utilities and how the house is a fit within the neighborhood.
An appraiser is unlikely to put a lot of stock in upgrades. Their entire objective is to create a comparison of the home to similar properties nearby.
As a seller, the most important thing you can do to prepare for an appraisal is to keep your home in great shape. You want it to look clean, clutter-free and well-maintained. Anything otherwise is going to give off the impression you havent taken care of the home, and thats going to lower the appraisal which can derail your deal.
The report from an appraiser will include a valuation. The report will outline the methodology used by the appraiser and will include the photos they take. You and your lender receive a copy.
Then, one of three things could happen.
If the appraisers valuation matches the price agreed upon by you and the seller, then your lender can proceed with underwriting your loan. A match with the appraisal and the price is the last step of getting a loan.
If the appraiser gives you a valuation higher than what youre paying for the house, then you have instant equity. This isnt common, however.
Then, theres the third thing that can happen. The appraisal is less than what youve agreed to pay. Your lender wont give you a loan for more than the appraised value. At that point, there are a few different ways you can proceed. Your agent should be able to help you figure out the best path.
The best option tends to be convincing the seller to lower the sales price or perhaps to split the difference with you.
You can also appeal the appraisal or ask for a second one. You can also pay cash for the difference yourself, but that might be from a buyers standpoint one of the worst options.
If you want to take none of those options or they dont work out, then an appraisal contingency gives you the chance to walk away from the deal and still get your earnest money deposit.
A home equity line of credit is a type of financing that pulls value from your home.
Youre accessing your equity, and some of the reasons you might tap into it include:
Home improvements
Debt consolidation
Long-term investments
Emergency expenses
Business expenses
Home improvement is largely the main reason people get HELOCs. You can upgrade your home or make it more functional for your needs. You might use your home equity to finance a large, value-increasing home project like a kitchen remodel. Strategically the idea is using your homes value to boost its value.
A home equity line of credit is like a credit card. You have a certain limit up to which you can borrow. Then, you take it as you need it, and you only pay interest on what you draw.
This is compared to a home equity loan. With a home equity loan, youre still borrowing against your equity, but youre getting a sum of money all at once. You pay it back in fixed, regular payments.
So, what are the pros and cons of a HELOC?
Some of the upsides of a home equity line of credit include:
There are no closing costs if your credit is good. That means you dont have to pay application fees or appraisal costs either. You typically have to pay those with most standard home equity loans.
There are no fees for a cash draw. If you were going to use a credit card for a project, as an example, you would have to pay a fee for a cash advance.
HELOCs offer very low interest rates. Theyre secured by the equity in your home, which is one reason that lenders offer competitively low rates. Theyre adjustable-rate loans, which may also help you get a lower initial rate, but this can go up over time.
Some HELOCs include the option to convert to a fixed-rate loan if you want locked-in rates. If youre in the repayment phase of a loan, it may happen automatically.
You have flexibility in how you repay your HELOC balance.
A HELOC is a type of mortgage, meaning your interest is tax-deductible.
There arent restrictions on how you can use the funds with a HELOC. Youre getting a line of credit with significant flexibility. You dont have to have your lender approve changes either.
What about the downsides of a HELOC?
With a HELOC, since your home is your collateral, youre putting it at risk if you default. You could lose your home if you become unable to make your payments on-time.
There may be various penalties or fees to be aware of, such as annual fees or inactivity fees.
Any new loan you get is added to your total amount owed on your home. When you have more equity, you also have more options. If you dont have equity and the value goes down, you might have to keep your property until theres a change.
Perhaps one of the biggest downsides of a HELOC is the fact that they are adjustable-rate loans. This means that while your rate could go down, it can also go up. With that being said, as was mentioned, some lenders will convert a HELOC to a fixed-rate loan eventually.
There are pros and cons of any loan, and deciding which is best for you is based on your personal financial situation and what you want to finance. Overall a HELOC provides flexibility but also risks since your home is your collateral and rates are adjustable.
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