The one cost of purchasing a home that often shocks first-time buyers

closing costs can be a shock

Ok, so you know you need a big chunk of cash to pay the lender for a down payment on that house you want to buy. You may even know about the earnest money deposit; that smaller chunk of money that your real estate agent told you about. And, sure, somewhere along the line the words “closing costs” may have been mentioned but when you see the amount necessary to close the loan, printed in black and white, it’s a whole other story for many homebuyers.

Wow!

As a rule of thumb, closing costs run 2 to 5 percent of the loan amount, so if you’re using an FHA-backed loan, your closing costs may be comparable to your down payment.

So, if you are obtaining a loan for $175,000 and you qualify for an FHA 5 percent down payment loan, you will be required to pay $8,750 for a down payment and perhaps even that much for closing costs. Did anyone tell you it may cost you $17,500 IN CASH to buy a house?

The truth is, many first-time buyers spend years saving up to pay for the down payment while closing costs come as a complete surprise.

What are closing costs?

When you pay your closing costs you’re basically paying for all of the services you received during the transaction. The seller, pays as well, such as for the real estate broker’s services. In fact, who pays for what at closing varies widely across the country but some items are standard. Some of the more common fees that buyers pay include:

  • A fee for pulling your credit report
  • Appraisal
  • Down payment
  • Escrow impounds (money kept in escrow to pay for your homeowners insurance and property taxes)
  • FHA Up-Front Mortgage Insurance Premium
  • Home inspection (if not paid at the time of service)
  • Loan origination fee
  • Notary fees
  • Origination fee (this is the lender’s fee for granting you the loan)
  • Points, or loan discount fees, if you’ve decided to purchase them
  • Prepaid interest
  • Private mortgage insurance premium
  • Recording the deed
  • Title insurance

Lender disclosure requirements when it comes to closing costs

By law, lenders must disclose an estimate of loan costs within three days of the submission of a completed loan application. Then, three days before closing, the lender supplies the borrower with a Closing Disclosure. While the fees listed on the Loan Estimate may increase or decrease before closing, the Closing Disclosure is the final word.

It’s important to compare the two documents and look for changes. If you have any questions or concerns, call the lender immediately.

How to pay less at closing

Many sellers are amenable to paying the buyer’s closing costs, or at least part of them. If you’re cash-crunched, let your agent know so he or she can negotiate on your behalf on the closing costs.

If you’re purchasing a home using the Veteran’s Administration (VA) mortgage, there are certain closing costs that you are not allowed to pay. Some of these include:

  • Attorney fee
  • Document
  • Escrow
  • Processing
  • Tax Service
  • Underwriting

Plus, there is no cap on how much of the closing costs a seller is allowed to pay. So, whether the seller pays them or the lender offers a credit to help pay for them, this is yet another money-saving feature of the VA loan.

The Consumer Financial Protection Bureau’s website has lots of helpful information about the closing process, including a copy of the Closing Disclosure Form and an explanation of how to compare it to the estimate, and a closing checklist.

Be Safe This Holiday Season With These Handy Tips

Holiday safety tips

The winter holidays – love them or not – are a time to celebrate. With celebration, however, often comes complacency. It’s a time of year when we are more prone to relax and let our guard down, all in the spirit of the season.

As wonderful as the holidays are, there is danger lurking behind some of the more common aspects of our celebrations. But there doesn’t have to be. With a little forethought, preparation and knowledge, the winter holidays can be safe and worry-free.

Keep the kids safe

This is the time to remind children of the family’s basic rules, such as not speaking with strangers. Here are a few safety reminders to keep in mind when shopping with young children:

  • Select a meeting place in the event you become separated.
  • Teach your children how to identify mall security personnel and how to ask for help. If they can’t find security, let them know they should seek help from a store clerk.
  • Remind them to never leave the mall without a parent.

Safety at home includes hanging ornament, lights and other decorations out of the reach of little ones, keep the menorah out of reach and don’t forget that mistletoe and holly berries are toxic and dreidel and other game pieces are choking hazards.

Holiday shopping safety

Unfortunately, crime rates tick upward during the holidays. “We call it good cheer,” says News 3 Las Vegas. “Criminals call it complacency.”

Here are some tips to keep you out of harm’s way while shopping:

  • If shopping late in the day, park in an area that will be well-lit after dark.
  • Try not to shop alone. Thieves tend to target loners.
  • Walk with a purpose, paying attention to what’s going on around you.
  • Your car keys serve a number of safety purposes: carry them with the end of the keys pointing out to be used as a weapon. Sound the car’s alarm if anyone suspicious approaches you.
  • Check the backseat and under the car before entering it.
  • Don’t leave previous purchases, cell phones or other valuables on the seats, in plain sight. Lock everything of value in the trunk.

Fire Prevention

According to the National Fire Protection Association (NFPA), fire departments respond to an average of 230 Christmas tree fires each year. These fires caused an average of 22 injuries, 6 deaths and more than $18 million in property damage.

A fresh tree is less likely to burn than a dried-out tree so water yours daily. Additional holiday tree safety tips include:

  • Keep the tree at least three feet away from a fireplace and heat sources.
  • Before putting lights on the tree, inspect each string for exposed wires, frayed wires and broken sockets. If you have pets that like to chew on wires, inspect the strands frequently throughout the season.
  • If you need to use an extension cord, don’t overload it and don’t run it under a rug.

Candles also play a prominent role in our holiday celebrations, especially Hanukkah. The NFPA estimates that each year, candles are responsible for 11,640 home fires. Candle safety includes not leaving them unattended while they are burning. Additional tips include:

  • Don’t use candles to decorate the tree or wreath. Use battery-operated candles instead.
  • Keep candles away from curtains.
  • Ensure that lit candles are out of the reach of children and pets.

Speaking of pets

The holidays bring with them some special dangers for your pets. The ASPCA offers additional pet safety tips to keep in mind during the holidays:

  • Poinsettias, holly, pine needles and mistletoe are poisonous to pets.
  • Tinsel, swallowed, means a trip to the emergency vet.
  • Don’t allow the dog or cat to drink from the tree stand. It may contain fertilizers and bacteria.
  • Secure the tree to ensure it doesn’t topple over when the kitty decides to take a hike up the trunk.
  • Dogs love chocolate. Chocolate doesn’t love dogs. Place the chocolate coins in their foil wrapping and net bags out of Fido’s reach.

Keep these tips in mind and, before you know it, the holidays will be a happy memory, everyone will be safe and life will get back to normal.

4 Important Aspects of the Luxury Home Search

how to buy a luxury home

From urban penthouses with amazing views to rural equestrian estates, luxury home settings can be beyond spectacular. Right now, the luxury market in our state is full of homes with prices that start just under $1 million to more than $24 million. Prices at the high end of the market, by the way, are rising only half as fast as those in the lower ranges according to a new study, published at Inman.com.

This only makes sense when one takes into account the law of supply and demand. Lower priced homes are at a premium right now and demand is still high. Those shopping for luxury homes can take their time, which is great news. Sure, it may sound trite, but it’s definitely true that now is the time to jump into the luxury home market.

If you’re considering purchasing a high-end home, consider the following:

1.You’ll need to develop a solid plan

Understand what you want in your new home before touring properties. If it’s a view you crave, looking at homes on the flats will be a waste of your time. If you have a particular architectural style in mind, let your agent know so he or she can search strategically. Knowing what you want is half the battle, so get clear on your needs and wants and we can take it from there.

2. Give yourself enough time

Evaluating high-end property isn’t something that should be rushed. Expect to take at least an hour or two to fully tour each home. You’ll want to pay attention to architectural aspects, amenities and, of course, the location.

Take a look at the disclosures about any homes that you’re interested in. Have your agent compile a market analysis, comparing the property you like to others that have sold recently. This way, you’ll know how to structure your offer to purchase and how much to offer.

If you won’t be paying cash for the home, understand that the lending process (see below) is more time consuming than you experienced when you purchased lower priced homes and the home inspection will take longer than it does for more conventional homes.

3. Cash or credit?

If you won’t be paying cash for the home you’ll most likely need to obtain a jumbo loan. Everything about these loans, from the application to the appraisal, takes longer than a standard loan. Be prepared to put down at least 35 and as much as 50 percent of the loan amount as a down payment, hand over volumes of financial paperwork and then “hurry up and wait.”

4. Don’t skip the home inspection

Regardless of how well-maintained the home appears you must have it professionally inspected. While one can never know what lurks behind the walls in a home (without opening them up!) the peace of mind that a professional inspector can provide is priceless.

Home inspections for luxury homes typically take longer and may cost more than a standard inspection. The most obvious reason for this is that high-end homes are larger, with more rooms and more systems. Consider just the HVAC system in a luxury home, for instance. They typically contain numerous systems with multiple zone controls that are quite complex.

A final word of advice: You may start your luxury home search on the Internet, as the majority of home buyers do, but keep in mind that not all luxury homeowners list their homes in the MLS. In fact, many don’t, for a variety of reasons.

We typically have access to even those properties that aren’t formally listed in the MLS, so contact us if there is something particular you have in mind.

 

 

Ready to Ditch the Carpet? Consider These Alternatives

Wood floors

It’s a brave homebuyer who decides to go through with the purchase of a home, despite an ugly, torn, tattered and/or dirty carpet. Floor covering can be pricey, especially if you pine for what many homebuyers do – hardwood floors.

Some of today’s flooring alternatives, while just as attractive as hardwood, aren’t quite as expensive and, depending on your circumstances, there’s one that may be ideal for you.

Concrete

If you think concrete floors are suited only to lofts or industrial décor schemes, think again. New products on the market include ways to make your concrete floor look like hardwood, travertine, marble and more. Or, if you prefer, add a colored stain and shine it to a high gloss.

Advantages to concrete floors include that they are a snap to keep clean and, when sealed properly, they resist moisture. Finishing the floor has become a popular DIY project and far less expensive than installing other floor covering choices.

Finally, concrete is eco-friendly. It doesn’t “deplete natural resources, requires less energy than other floor types to produce, and is made (poured) locally,” according to HGTV’s Kim Hildenbrand. Indoor air quality with concrete floors is far superior to that in homes with carpet as concrete doesn’t mold, doesn’t hold allergens and contains no volatile organic compounds (VOC).

Check out gorgeous examples of acid stained concrete floors online at HGTV, concretenetwork.com and Pinterest.

Cork

As chameleon-like as concrete is for flooring, so is cork, a relative newcomer to the flooring market. “Cutting-edge technology has allowed manufacturers to offer flooring with the amazing look of hardwood or marble, while keeping all the benefits of cork,” claims Marie Proeller on BobVila.com.

Fans of cork floors say that what convinced them to go with the option is how soft the surface feels underfoot. So, if you do a lot of standing, say, in the kitchen, cork may just be your ideal choice. They also like that, since cork is a natural insulator, they spend less on heating and cooling their homes.

Cork — the bark of a tree that renews after its been removed – is also an eco-friendly material.

If, on the other hand, you have pets, kids or just a very busy household, cork may not be a good choice. Because it’s such a soft material, it is easily scratched by pet nails and damaged by anything dropped onto it. Even furniture may cause permanent dents in the flooring.

View images of cork floors on Pinterest and HGTV.

Laminate

Laminate is one of the most popular flooring choices in the U.S. mostly because it provides the look of hardwood without the cost. It is the ideal flooring material for low-traffic homes without children or pets.

Laminate is basically a photograph of wood, bonded to particle board. It comes in a wide array of colors and widths.

One of the biggest complaints about laminate is that, despite manufacturers claims to the contrary, it is a bit high maintenance. Sweeping the floor is not recommended as the dirt and dust may scratch the surface. You’ll need to vacuum it to get it clean and then mop, carefully. Although laminate resists stains, it is not waterproof. Spills that aren’t cleaned immediately will soak into the material, causing it to warp and pull away from adjoining planks.

Linoleum

Linoleum is one of the oldest flooring materials still in use. First manufactured in the mid-1800s, as ship deck covering, it quickly gained popularity as it was installed in large commercial buildings.

Homeowners that have linoleum floors love it for its durability; it’s not at all unusual for one of these floors to last up to 40 years. It is also like cork in that it tends to be soft underfoot and it’s an eco-friendly option (made from linseed oil) and it’s biodegradable once removed from the home. Finally, linoleum doesn’t emit VOCs.

The downside to these floors is that, again, like cork, the material is soft and has a tendency to tear and scratch easily. Also, if it’s not sealed, you’ll need to polish and buff it, making it a bit high maintenance for many homeowners.

Tile

The tile category of flooring includes a number of different materials, including stone, ceramic and porcelain.

Stone floors are ideal for homes in warm climates as they remain cool, regardless of air temperature Stone is nonporous and won’t harbor allergens, so it’s easier on those prone to allergies than carpet and even hardwood. They are also worth considering if you have a busy household with pets and children as they hold up against even the harshest abuse.

Stone floors are expensive to purchase and even more expensive to install. They are also cold, slippery when wet and, because it’s such a hard surface, dangerous to anyone that actually falls on them.

Ceramic, marble and porcelain tile flooring options have come a long way in the past decade. You can now purchase tile wood-look planks as well as tile that resembles stone. Tile flooring, if done right, may add to the value of the home, according to Realtor.com

Tile is ideal for families and pets as it generally doesn’t scratch (although ceramic is a bit more fragile than porcelain) and it requires little maintenance. Homeowners often complain, however, that the surface is cold and hard and, if the tile is glazed, it may become slippery when wet.

Vinyl

Of all the flooring choices available, vinyl, known as a “synthetic cousin of linoleum,” has the worst reputation for emitting VOCs, at least immediately after it’s installed. Today, however, you’ll find vinyl manufacturers who use products that have achieved Indoor Air Quality Certification (Naturcor is one).

Luxury vinyl plank flooring, especially in a faux wood pattern, is one of the biggest sellers over the past few years, according to flooring specialists. Homeowners love their vinyl floors for being water and stain resistant, easy to clean and durable.

Vinyl flooring comes in sheet, tile and, as mentioned, plank styles that are either glued down or snapped together, making installation the ideal DIY project for a handy homeowner.

How to buy a home after bankruptcy

for-bk-piece

 

Remember when declaring bankruptcy was kept a dirty little secret? The social stigma was bad enough, but the impacts of bankruptcy included employers who refused to hire anyone that went through the process and, of course, the ruinous end result of a credit score in the gutter.

The bankrupt were seen as irresponsible spendthrifts and offered little sympathy. The Great Recession changed these perceptions, thereby softening the stigma attached to those who are forced to take their debt to court to have it discharged.

If you’re among the estimated 800,000 Americans who file bankruptcy each year and dream of buying a home in the near future, read on for everything you’ll need to know about buying a home after bankruptcy.

Which type of bankruptcy is easier to recover from?

The two most common personal bankruptcy proceedings in the U.S. are known as Chapter 13 and Chapter 7. The latter will, with a few exceptions, eliminate all of your debt while the former (Chapter 13) leaves you on the hook to repay your debts over a certain period of time (typically three to five years).

If you hope to purchase a home in the near future, a Chapter 7 proceeding is your best bet. Not only is it quicker, but because all of your debt is wiped out, your debt-to-income ratio is lowered and you now have a decent foundation on which to build the credit you’ll need to get a mortgage.

Your credit and your debt

Debt is a fact of life for many Americans, with an average of $29,093 per consumer, according to credit bureau Experian’s State of Credit study.

From outstanding student loan balances to credit card bills, a big chunk of our monthly income goes to pay this debt. And, although you no longer have to pay those discharged in a Chapter 7 proceeding, your former debt will be listed on your credit report as discharged through bankruptcy.

And, of course, the bankruptcy will put a huge dent in your credit score. In fact, plan on having a score around 604, the average for Americans who have claimed bankruptcy, according to the Experian National Score Index. For comparison sake, the average score for an American that hasn’t discharged debt through bankruptcy is 677.

The fact is that you are now considered a subprime borrower and will face higher interest rate offers from lenders than you would had you not claimed bankruptcy.

To prove to lenders that you’ve learned your lesson and can now use credit responsibly requires actually doing just that. As soon as possible, obtain a credit card, keep the balance below one-third of your credit limit and make all payments on time. This is the first step toward rebuilding your credit and it won’t happen overnight.

How long does it take to buy a house after bankruptcy?

There is some confusion among consumers about when the clock starts ticking for the waiting period to buy a home after bankruptcy. Lenders look at the discharge date, not the filing date. Once the process is complete, file the discharge paperwork in a safe, accessible place because your lender will ask for it  when you finally apply for a mortgage.

While the waiting period to get a mortgage after bankruptcy varies, plan on taking at least 18 to 24 months after the discharge. This may seem like a terribly long time, but not if you use the time wisely – to work on raising your credit score.

If you hope to obtain a Rural Development mortgage through the USDA, you will need to wait three years after the Chapter 7 bankruptcy is discharged and only one year if you filed Chapter 13 and can show that you’ve successfully stuck to the payment plan set forth by the court.

FHA and the Veterans Administration programs require a two-year wait after a discharge of bankruptcy and you may have to wait up to four years to obtain a conventional loan.

If your home was included in the bankruptcy proceedings you may have to wait significantly longer, so speak with a lender to find out the specifics to your situation.

 

House Hunting? Don’t Compromise on Storage Space

adequate storage in new house

Compromise is good, especially when deciding what you want in a home as opposed to what other family members want. There are certain criteria, however, that you should think long and hard about giving up and adequate storage space should be at the top of the list.

The average American home contains 300,000 items, according to Los Angeles Times’ Mary MacVean. Realtor Magazine claims that not having enough storage space for all this “stuff” leads to buyer’s remorse for 80 percent of homebuyers.

Furthermore, one of every 10 households in the U.S. rents a storage unit, according to the Self  Storage Association. If you are among them and you plan on moving all of your belongings from the unit to the new house, it’s wise to ensure there’s enough room for it all before signing the purchase contract.

To keep yourself from becoming distracted by other, more sexy features of a home, print off a copy of the U.S. Department of Housing and Urban Development’s (HUD) “Home Buying Checklist.” Look at number six on the list – in fact, burn it into your memory.

Bedroom storage needs

In the real estate industry, a room isn’t really a bedroom (and can’t be called one) unless it contains a closet. If you’re looking at a four-bedroom home and one of the bedrooms lacks a closet, you are, in reality, looking at a three-bedroom home. Why is this important? Because an appraiser will not evaluate this home as a four-bedroom home. And you shouldn’t either.

That said, when you’re touring a home, take a good look at the closets in the bedrooms. Don’t worry about being nosy; this is important stuff here, so swing open that closet door and take a good, long look inside.

First, the basics: is there enough room for the clothing that needs to be stored within? A tip-off that it might not be is if the closet is stuffed to overflowing with the current homeowner’s clothes.

Is there adequate shelving in the closet or, at least, room to add shelves? If you enjoy closet built-ins in your current home, ensure that there is enough room in the closets for those as well.

Bathroom storage

Don’t be surprised if you find most of the bathrooms you view to be sorely lacking in storage options. Tract homes, especially, offer little other than a few drawers and a cupboard or two beneath the vanity.

Consider a linen closet in the bathroom a bonus because you can store towels, toiletries and other items that are usually strewn across the counters because of a lack of storage space.

What about your kitchen stuff?

Most of the 80 percent of aforementioned home-buyers who claim to have “one major regret,”  claim that if they had to do it again they would choose a home with more storage space. In the kitchen, adequate storage is a must.

If the kitchen in the home you’re considering lacks a pantry, guess where all those food items will have to be kept? That’s right, in the cupboards, taking valuable storage space for pots and pans, dishes, glassware and small appliances.

Don’t let the lack of a formal pantry spoil the chances of getting a home that you really want, however. If there is room to add one, you can have one built or even buy one of the clever storage solutions on the market today. Ikea has a number of items that make attractive and roomy pantries.

The rest of the story

Where will you store your linens, coats, gardening implements, home cleaning supplies and hobby items? What about the laundry room? Is there room for detergent, fabric softener and the other items you use?

Then, there’s the mudroom, which often ends up as the repository for items for which there is no storage space. Nasty dirty shoes and clothes, big, bulky winter recreation items and more all take up residence in the mudroom. Thankfully, if there is enough space here, a mudroom is the ideal area for built-ins in which you can store the overflow from the rest of the house, if need be.

Many home buyers underestimate how much space they’ll need for storage, so take a good look at your current situation before heading out to look at homes. In fact, take measurements at the current home and the new home so that you can make accurate comparisons. Like test driving a car, you are completely within your rights to inspect and measure areas of every home you tour to ensure that it meets your needs.

 

How Safe is The Air in That Home You Have Your Eye on?

radon gas in homes

Have you made your list of must-haves for your new house? Like any shopping trip, a list of what you need and want makes the project a lot easier. Aside from the gourmet kitchen or the extra bathroom, consider putting “safe indoor air” on that list.

According to the U.S. Environmental Protection Agency (EPA), because the average American spends more time indoors than out, “the risks to health may be greater due to exposure to air pollution indoors than outdoors.” This is especially important to note if you have very young children, as their lungs are still developing.

Indoor air pollution comes from a number of sources, including:

  • Pollen and mold
  • Cigarette smoke
  • Pesticides, cleaners and other household products
  • Building and furniture materials that contain formaldehyde, lead and asbestos
  • Gases, such as carbon monoxide and radon

Radon gas dangers

Radon, a radioactive gas, has been found in homes nationwide. Insidious, it can be neither seen nor smelled. It is formed by the breakdown of rocks that emit radium and uranium and seeps into the home through cracks in the foundation. Exposure to radon gas, for prolonged periods, causes lung cancer. In fact, according to the National Cancer Institute, radon gas exposure is the second leading cause of lung cancer in the United States.

Radon test kits and home buying

It doesn’t matter that a neighbor’s house tested negative for radon, as houses on the same street may have vastly different radon levels. It doesn’t matter if the house is old or newly-built. The only way to determine if a house you are interested in purchasing has high radon levels is to test the air.
Some sellers perform radon tests prior to putting their homes on the market. This way, if there are problems, they have a chance to address radon gas dangers before selling. While this is commendable, check the seller’s radon test for:

  • The date the test was performed
  • Who performed the test
  • The part of the house that was tested

Determine what, if any, changes have been made to the house since testing. Replacement or repair of heating and air conditioning systems may affect radon levels in the home.

While home testing kits are available to the public, and recommended as effective by the United States Environmental Protection Agency (EPA), many potential purchasers feel more comfortable with tests performed by professional testing companies. As a purchaser, you need to make up your own mind in regards to this.

If a house has not undergone a radon test, you may want to request one of the seller and have your agent insert a radon testing contingency into the purchase agreement. If the test doesn’t meet with your approval, or the seller refuses to fix the radon levels in the home, you can legally walk away from the contract.

Fixing radon gas issues

The EPA considers any home with radon levels of 4 picocuries per liter (pCi/L) or higher to be a problem, and suggests taking action to reduce the levels. Mitigation costs vary, depending on the age of the house and how it was constructed. The EPA has a list of approved testing professionals and radon mitigation services, by state, on their website.

Radon reduction typically involves a combination of techniques, such as sealing foundation cracks along with the installation of a vent pipe and fan, known as sub-slab depressurization.

The EPA recommends that you open windows and doors in the home to increase ventilation and to allow the radon to escape. The only problem with this natural solution is that, once windows and doors are closed, radon levels return to their previous levels within 12 hours. Which is exactly why winter is the best time to test the air in a home.

What is an escrow or impound account?

impound account pays taxes

To many first-time homebuyers, one of the most confusing parts of the process is sitting across from the closing agent, who is tossing them pieces of paper from a huge stack, quickly explaining what each one means and asking for signatures. From real estate transfer documents to loan documents to title documents there are, what seem to the newbie at least, hundreds of pages to sign.

Who can retain all of that information? So, at some point during the ensuing weeks and months, when everything settles down, don’t be surprised if you wonder when your property taxes are due. After all, you’ve just laid down a huge chunk of money to buy the house and you naturally want to make sure you can pay the taxes.

Think back to that closing agent and recall the words “impound” or “escrow” account. Then, breathe a huge sigh of relief because the tax bill has been paid, and will be paid in the future, through the impound account held by your lender. If you have one, that is.

What is an escrow account?

Your lender may refer to this account as an “escrow account,” “impound account,” or even an “escrow impound account.” Whatever it’s called, it’s an account the lender sets up to ensure that certain expenses for the property are paid, and on time.

These expenses include homeowners insurance and, yes, property taxes. Basically, any bill that, if not paid might result in the forfeiture of the home to an entity other than the lender, will be paid from the impound account.

Do I have to have an impound or escrow account?

The great majority of lenders will require that these bills be paid using an escrow or impound account. Although this set-up benefits the lender financially, there is a huge advantage for the homeowner (not having to worry about and budgeting for the monthly payments for these items) as well.

In fact, many financial advisors recommend that homeowners who don’t have impound accounts with their lenders request one.

How an escrow account works

Your mortgage payment consists of a set of smaller, individual payments, known as PITI. These include:

  • Principal – The part of your check each month that goes to paying down the loan’s balance (the principal). This part of the payment starts out small (painfully so) and increases over time.
  • Interest – This is the payment to the lender for lending you money. Because you pay this off before the principal is fully paid, less of your payment will go toward interest and more toward the principal as time goes on.
  • Taxes – Property taxes are typically, but not always, included in the impound account. If they’re not, it’s up to you to make these payments. Check with your lender or servicer if you’re unsure. If you have a government-backed loan, however, you most likely have funds for tax payments included in your impound account.
  • Insurance – Hazard insurance is a lender requirement and since the lender wants to ensure the safety of its investment, the payment for the policy will be included in your monthly mortgage payment.
  • Mortgage Insurance – If you have a government-backed loan, the mortgage insurance premium (similar to PMI) will be included in your payment.

Here’s an example

Suppose that your property tax bill is $1,000 per year — $83.33 of your monthly mortgage payment is dedicated to pay that bill. If your homeowners insurance premium is $1,034 (the average premium across the United States, according to the National Association of Insurance Commissioners), then an additional $86.17 a month is tacked on to your mortgage payment. So, your mortgage payment will include payment for these two items, plus interest on the loan and on the loan’s balance.

Check your mortgage statements every month to see the balance of the escrow account. Federal law requires that your lender or servicer review your account annually to ensure that you’re paying the right amount. If you’re paying too much, you are owed a refund. By the same token, if you aren’t paying enough, you’ll be required to pay more.

If your lender didn’t require an escrow impound account, you can ask for one to be established. Especially if you’re on a tight budget or find it challenging to save for future expenses, an impound account acts as a forced savings account out of which very important bills are paid.

Tips to Remain Sane While Your Home is For Sale

keep your house clean while its for sale

In a perfect world, the entire family pitches in every morning to clean last night’s clutter and mess before heading out to work/school. In the real world? Not so much. But when your home is on the market, it’s important that you strive to get as close to that perfect world as possible. A hassle? Oh, yes. Crazy making? Indeed. But we have some tips to help you retain some of your sanity until the house sells.

Start with a clean slate

A deep, deep clean, fresh paint – you’ve no doubt heard it all before. Whether it’s to set the foundation for staging or just to make the home presentable for the market, there’s no getting around the fact that to get what you want for the home, it must be incredibly clean. If you can’t get the job done by yourself, or with help from friends and family, hire someone to do it for you – it’s that important.

The next step in the process of readying the home for the market is, again, a familiar one: depersonalize and declutter. This is the ideal time to pre-pack for the move after the home sells, which, in turn, gives the family less “stuff” to have to pick up before showings.

One of the best places to start is in the children’s room. Pack up some of their toys, especially those with a lot of pieces (LEGO® sets come to mind). You don’t necessarily need to seal those boxes. In fact, if you don’t, you can rotate toys as they tire of the current inventory.

Go through the house with a mission: seek and remove anything you don’t use on a consistent basis. Box it up and move it out.

Keep it clean without losing your mind

The home is clean and it’s free from clutter. Showings will be a piece of cake, right? Not so fast – you still need to live in the home and, if you have a family, they do to. This means you’ll need to keep on top of the ongoing messes that living in a house creates.

Sure, it sounds easier said than done, but if you create a plan, it will be a lot easier than if you don’t. Each family member should have routine tasks that they perform every morning before they head out for the day. This includes making their beds, picking up any messes they made the night before, ensuring dirty laundry is in the proper place, wiping down the counters in the bathroom after their morning showers and loading the dishwasher.

Evening chores may include sorting and putting away mail and other clutter that has accumulated since day’s end.

The big jobs, such as mopping and vacuuming the floors, cleaning sinks and toilets and folding laundry can be assigned to family members on alternating days. If everyone knows what they’re supposed to do, they’re far more likely to buy into the plan.

Last-minute minute showings

So, what happens if you get a request for a showing between those times that you clean? You know, when you are actually using the home to live in? Ah, homeowners are a crafty bunch and we’ve collected some tips from our clients that are not only rather funny but realistic as well.

“With four kids in the house we go through a lot of laundry,” a client tells us. “There’s usually piles of it scattered through the bedrooms and in the laundry room. I just race through the house, grab it and dump it in the washer and dryer where nobody will see it.”

Others have told us they use laundry baskets or boxes to grab clutter and then put it in the trunk of their car. Yes, even dirty dishes.

When a potential buyer is within an hour of being on your doorstep, prioritize your cleaning tasks, because some are more important than others.

  • Pick up clutter. If you don’t have time to put it away, take it with you.
  • Wash dishes or load them into the dishwasher.
  • Empty all the trash receptacles in the home.
  • Ensure that bathroom counters are free of toiletries and wipe them down. Hang fresh towels and close the shower curtain and lower the lid on the toilet.
  • Vacuum
  • Straighten the linens on the beds.
  • Straighten the sofa cushions and pillows.
  • Open all window coverings to let the sunshine in.
  • Turn on all the lights in the home, even in the closets.

 

Should your home look perfect when buyers come calling? Sure it should, but there may be times, such as with last-minute showings, that it won’t be. Don’t stress about it. As long as it is pristinely clean and relatively tidy, you’ll be fine.

4 ways to furnish your new home for less

furnish your home for less

 

Between the down payment and the closing costs for the mortgage, homebuyers aren’t left with a whole lot of money. Yet, there are still movers to pay and, quite possibly, appliances to purchase and minor fixes to perform.

So, how will you furnish the new digs – especially if you can’t stand the thought of dragging your mismatched furniture from your rental to your new, yes-indeed-I-own-this home? Many of our first-time buying clients aim for something between buying new and keeping the old, so decide what’s worth keeping and then list what you’ll need to purchase.

And, lucky you, we’ve put together a list of places to help you furnish your new home for less.

“Used” means you’ll save money

“Used” doesn’t necessarily mean “nasty.” Especially if you’re a fan of DIY anything, how a piece looks when you first see it may have no resemblance to what it will look like after you work your magic.

If you’re not particularly handy, you may find it more of a challenge to envision a piece of furniture’s possibilities. Before you go shopping, take a stroll through online sites that deal with DIY furniture makeovers – Pinterest is an ideal place to start. The photos alone will open your eyes to the possibilities, whether you do it yourself or hire a professional.

A good rule of thumb is to focus your attention of the furniture’s style, instead of the torn or dated upholstery. Of course anything from a smoker’s home or with pet odors should be passed by – some odors are impossible to remove. Here are 4 tips to get you started shopping for your new home, on the cheap.

1. Estate and garage sales

Both garage and estate sales offer bargains when it comes to purchasing used home goods. Estate sale prices are typically higher than those you’ll find at garage sales, but the merchandise is often more high-end and well maintained.

Check Craigslist for listings of garage and estate sales near you. You may also see signs posted around the neighborhood.

2. Consignment stores

Consignment stores are the middle men (or women) between the owner of the goods and the buyer. Sort of a for-sale-by-owner situation with the benefit of the consignment store owner offering a showroom and taking on the drudgery of the sales process. Yes, the store owner receives a portion of the sale proceeds, so bargains are often hard to find in these stores.

Do a Google search for consignment stores in your ZIP code and pay them a visit. You can find the occasional bargain so don’t count them out in your search for “new” furniture and home goods.

3. Thrift shops

Thrift stores can be hit or miss on the quality of merchandise offered. The good news is that prices are quite low at thrift stores such as Goodwill Industries, Salvation Army and Habitat for Humanity’s ReStore.

An alternative to thrift shops, especially if you’re looking for something unique to apply your DIY skills to, are salvage yards. Again, Google is your friend when seeking these out.

4. Online shopping

Craigslist is the granddaddy of inexpensive home furnishings and, the best part is that it’s local. You’ll find home goods scattered throughout the many categories on Craigslist, but start in the “For Sale” section. From there, drill down to the “Free” link. You never know what kind of interesting bargains someone is willing to part with for free.

Below the free section you’ll find a link to the site’s furniture listings. Dealer merchandise is lumped in with consumer items but you can select whether or not to show those by using the information on the left side of the page. You can also search by item name so you don’t have to scroll through listings for everything but headboards, or whatever it is you’re looking for.

Other sections to check include the Antique and Household sections, further down the list.

eBay offers furniture and other household goods but, unless the seller is local, the shipping charges may take an otherwise bargain-priced item out of the running. Thankfully, the site has a way to filter your search by miles from your ZIP code. For instance, type “headboards” into eBay’s search box and scroll down the page until you find “Item Location.” You can also limit your search to those items with free shipping.

Etsy is a fun site that sells a lot of interesting handmade items, especially home accessories. Using our headboard example again, type “headboard” into Etsy’s search box. Then, on the left side of the page, under “Refine your Search,” you’ll find the option to “Shop Location,” and a “Choose a Custom Location” link to refine the search even more.

Sure, we’d all love to furnish our new homes with furniture and accessories from the high-end stores, but new houses frequently zap our reserve funds. Shopping frugally allows you to make big, dramatic changes to your new home’s décor without breaking the bank.