What you need to know about buying a home during a recession

In 2008, the media was almost singularly focused on the Great Recession. From the housing market downturn and bank bailouts to job losses and a massive increase in the poverty rate, it’s a time most of us hoped to forget.

The “R” word is back in the news, however, and Americans appear to tightening their belts.

Will we have a recession, or won’t we? Expert opinions vary as to not only whether or not we will, but when it will happen and how long it may last.

There really is no clear course, no crystal ball to let us know, at least not right now. Everybody is sort of playing it by ear, or by gut.

What happens to mortgage interest rates during a recession?

“The inflation rate doesn’t directly affect mortgage rates, but the two tend to move in tandem,” according to Michael Flannelly at sofi.com.

Unfortunately, many homebuyers are finding out the hard way how inflation can impact mortgage rates. As consumer prices began heating up, the Federal Reserve stepped in to try to cool them off. The did so by raising the cost of borrowing money, which in turn trickled down to the mortgage market.

If inflation can’t be tamed, we may enter the recession everyone is dreading.

The Mortgage Bankers Association (MBA) is predicting that recession will hit in 2023 and that by the end of the year, mortgage rates will sit around 5.4%.

What about home prices?

The truth is, not all recessions are alike and not everyone is impacted the same. For instance, aside from the Great Recession when home prices hit rock bottom and interest rates were the lowest they’d been in a very long time, home prices often increase during a recession.

During the 1981 recession, for example, home prices increased 4.5%.

This time around, however, the market has already begun to transition before anyone mentioned the “R” word..

At this writing, home prices are falling. In October, “… almost one-quarter (23.9%) of homes for sale experienced a price drop, double the rate of a year earlier,” according to Business Wire.

How to know when it’s the right time to buy a home

A good place to start when making the decision is to consider how stable your job is and, of course, your budget. Do you have an emergency fund?

Regardless of market conditions, buyers should consider their budget, income stability and emergency funds before they buy a home in the current housing market.

Next, consider how long you plan on living in the home. Short-term ownership (five years or less) could set you up to possibly lose money if the market continues a downturn well into the time you plan on selling.

Then, there is the temptation to attempt to time the market. When considering buying a home, “… many potential homebuyers attempt to predict if home values are rising or falling while also paying attention to mortgage rates,” said Dan Moskowitz at Investopedia.com.

Trying to predict the future housing market is never wise, as “… you could end up pricing yourself out of the market,” according to Natalie Campisi at forbes.com.

The bottom line, however, is that the best time to buy a house is when you can afford to do so.

3 things you must know about buying a newly-built home

That new car smell can’t hold a candle to that of a brand-new house. No lingering, nasty cooking odors, no doggy or baby smells and no third-hand smoke odors.

A new house is pristine and that’s what attracts many to new home developments – the ability to impose one’s own style on a clean canvas.

Before you get into the car to visit your local model homes, take a minute to bone up on the differences between buying new and existing homes and heed the following advice.

1. The Greeter

That nice person you meet when you walk into the builder’s on-site office isn’t an official greeter; he or she is the builder’s real estate agent. Her job is to get you excited about the project, help you tour the model homes and sign you up to purchase one.

During the time you spend with the agent you may be pressured to use his or her services in the purchase of the home.

A word of caution: don’t do it.

Sure, it seems more convenient. After all, this person is right in front of you and can help you purchase the home you just fell in love with and can do so now – as in, no waiting.

Although it may be legal in your state for this agent to represent both the builder and you, it isn’t wise to do so, and here’s why: Fiduciary duty.

A real estate agent has a legal obligation to perform certain tasks for his or her client. One of the agent’s fiduciary duties is loyalty – the obligation to act solely in the best interests of his or her client. The agent must do everything he or she can do to gain her client an advantage.

How does this work when the agent represents both sides, a situation that is known as “dual agency?” Although agents in states where dual agency is legal claim that it works, the situation flies in the face of an agent’s fiduciary duty.

In layperson’s terms, imagine your divorce lawyer claiming that it’s perfectly fine for her to represent both you and your soon-to-be-former spouse. Dual agency is dual agency, whether it’s an attorney doing it (which is illegal) or a real estate agent.

So, above all else, remember that this agent’s primary obligation is to the builder, not you.

Take the time to secure the services of your own real estate agent before viewing homes in the new development. When you arrive at the builder’s on-site office and sign in, there should be a space to list your agent’s name, so don’t neglect to do so.

Once the on-site agent sees that you’re working with another agent, the pressure will be off to sign with him.

2. The In-House Lender

Many new home developments are one-stop shops. It’s like being in a casino in Las Vegas. The whole place is set up so that you don’t have to leave for any reason – everything you need is right there.

The builder will most likely have an in-house or “preferred” lender and you may be pressured to use this lender. You may even be subtly given the impression that you must use this particular lender if you want to buy the home.

Don’t give into the pressure and don’t be deceived. You have every right to secure your own lending, independent of the builder.

In fact, you owe it to yourself to shop a number of lenders, in addition to the builder’s. Ask the builder’s lender for Loan Estimate. This form will list all the fees and costs of the loan being offered.

Since Loan Estimate was standardized a few years ago it’s much easier to use it to compare offers. If you have any questions when comparing the lenders’ Loan Estimates, ask your real estate agent or attorney for help.

You can find a copy of the Loan Estimate and an explanation on how to use it when shopping for a lender, on the Consumer Financial Protection Bureau’s website.

3. The Builder

Homeowners that defer maintenance of their homes are more common than we like to think.

Putting off repairs only allows problems to fester, and many of them do so in areas we can’t see, such as behind walls or beneath foundations. It can be frightening to the novice homebuyer to think of all the things that may go wrong after the sale is final.

A new home, they surmise, won’t have these problems. And, they are correct in this assumption – there are no deferred maintenance nightmares awaiting them.

There may be other problems, though, that a homebuyer should consider and guard against. Builders and subcontractors frequently take shortcuts, causing the very nightmare conditions the new homebuyer is hoping to avoid.

While your loan application is being processed, take some time to check the builder’s reputation. It’s a simple process but one that may save you from throwing your money away on a home with major problems.

  • Start your research by checking the builder’s status with your local Better Business Bureau.
  • Check public records at your county courthouse. Look for lawsuits against the builder.
  • The experts at the National Association of Realtors suggest that you walk around the development if there are homeowners living there. Knock on some doors and ask the occupants if they’ve experienced any problems with the new home.

Finally, do have a professional inspect the home. It’s well known in the industry that even newly constructed houses can have problems.

 

Is this a good time to sell your home?

If you’re confused by what you read or hear in the news regarding the housing market, you are not alone. While one headline blasts that mortgage rates will continue to rise, another claims that they’ll even out in 2023, somewhere around 5%.

Opinions also vary on whether home prices will continue to rise and by how much. Then, there are the truly off-the-rails folks who describe the current market as a ‘housing bubble.’

Although there is no widespread consensus (as of this writing) on which direction everything will go, we can tell you with certainty that we are not in a housing bubble akin to the 2008 collapse. That was fueled by inexpensive credit and relaxed lending standards, neither of which exist today.

Yes, the market appears to be shifting, but it’s sporadic, and not yet consistent nationwide.

Let’s take a look at why now may be a good time to sell and why, if you need to sell, you shouldn’t wait.

Prices are still on the rise

Despite the doom-and-gloom housing market promoted in the media, “… from June through July of this year… prices still rose in 98% of US markets,” according to CNN.com’s Anna Bahney, citing a National Association of Realtors study.

In fact, according to that study, the median price, nationwide, for a single-family home increased “… 8.6% in the third quarter, reaching $398,500.”

And, although the number of home sales is dwindling, prices are still on the rise.

“The median price of an existing home sold in October was $379,100, an increase of 6.6% from the year before,” according to Diana Olick (citing research from National Association of Realtors) at cnbc.com.

Surprised?

So, yes, home prices are still appreciating, just not as quickly as we’ve become accustomed to. Eventually, they will fall. Aimee Picchi with cbsnews.com cites the Dallas Fed’s claims that the drop could be “… as much as 20%.”

If you need to sell you might want to consider doing so as soon as possible. You’ll still be able to get your home sold for more than you would have realized before the hot sellers’ market.

  • Check with your real estate agent on the status of the local market.
  • Are homes still selling for over the asking price?
  • If the market is still favoring sellers, don’t be afraid to jump in!
  • Are there cash investors in the market for homes like yours?
  • Are there still low levels of housing inventory? This situation limits a home seller’s competition.

The supply of homes available is still quite low

The number of homes available represents the ‘supply’ side of supply-and-demand in the housing market. Also known as ‘inventory,” it remains stubbornly low, “… which is why some homes for sale are still receiving multiple offers,” claims Lawrence Yun, the chief economist at the NAR.

He goes on to say that, in October, nearly one-fourth of homes for sale sold for more than the asking price.

Buyer demand is waning

In an effort to cool inflation, the Fed has begun raising interest rates. When this trickles down to the mortgage market, a certain number of homebuyers will no longer be able to afford a home and drop out of the market.

If you own a ‘starter home,’ this is something to consider when deciding whether or not to sell it. A starter home, by the way is one with less square footage than average for the area and priced at the lower end of the spectrum.

If, on the other hand, you’ll be selling a larger or even a luxury home, you’ll still find many buyers in the market. At least for now, so time is of the essence. If rates continue to rise, more buyers may decide to put their home purchases on hold.

Your real estate agent is your best source of information at this time. Thankfully, that information is free. Reach out to us today.

3 things you must know before selling your home

Making the decision to sell your home may be easy. Then again, for some, it’s wrenching. After all, whether it’s a condo in the heart of the city, or a suburban tract home, our homes are full of memories and provide sanctuary at the end of a grueling day.

Once you’ve made up your mind to sell, however, you’ll be faced with a lengthy list of additional decisions. So, take the time, right now, to understand three very important aspects to the successful sale of a home.

1. Understand market value

The list price of a home represents what the seller thinks, or hopes, the home will bring.

But, it’s the sales price of recently sold homes that largely sets market value. To determine market value requires looking into the recent past for homes that have sold that are similar to yours. It’s how appraisers will value the home and it plays a big part in how we come up with a list price suggestion.

Setting the right price right out of the gate is key to getting your home sold quickly.

2. Hit the ground running

Your home’s presentation has a huge influence on whether you’ll actually receive the price you’re hoping for. Remember when you were house hunting? We’re willing to bet that some were in such horrid condition you didn’t even want to leave the car.

Then there were the pristine homes – those that appeared ready to move right in.

Naturally the owners of the pristine homes got more money from the sale than their slovenly neighbors.

Ensure you’re a member of the high money-making group by amping up your home’s presentation. Make cosmetic repairs and clean the home until it’s impeccable.

Get inspiration online at HGTV.com and snag some handy decluttering tips from Molly Maid.

3. Don’t lose money by trying to sell it yourself

Seems rather self-serving for a real estate agent to warn you not to sell the home without the services of an agent. So, I won’t. What I will share are some statistics:

  • Nine percent of home sellers attempt to sell without an agent. Nearly half of these homeowners were selling to someone they knew. So, in reality, only 4.5 percent go the For-Sale-by-Owner route in a standard sale.
  • Homebuyers think that FSBO homes are easy to pick up for a bargain price.
  • Homebuyers expect the seller to kick back some of the money saved by not using an agent.
  • Homes sold with agent representation sell for more than those sold by owner.

In fact, “… the median selling price for all FSBO homes [in 2018] was $190,000 … When the buyer knew the seller in FSBO sales, the number plunges to the median selling price of $160,300,” according to Amanda Riggs, research survey analyst for the National Association of REALTORS®.

“For homes sold with the assistance of an agent, the median selling price was $250,000 ̶ that’s $60,000-90,000 more for the typical home sale,” Riggs concludes.

It’s important to know the basics before listing your home for sale. We’re happy to walk you through the rest of the process with no hard-sell and no obligation to use our services. Feel free to contact us.

 

Hey homeowner: Are you ready to downsize?

Jack and Betty Ayers fixed it up, raised their kids in it, and still cherished the many memories it held. But the couple knew they no longer needed their two-story, 3,000-square-foot Colonial.

Those three empty bedrooms still needed routine dusting and window-washing, the extra one and one-half bathrooms sat unused and the 3-car garage had transformed into a giant junk drawer.

The couple dreamed of traveling more and keeping up on the house and yard less. Plus, Jack’s arthritis was making climbing the stairs increasingly difficult.

They sold their home of 27 years and found a more manageable two-bedroom, 1,400-square-foot ranch. They still have space for entertaining and a spare bedroom for when their kids visit, but they love living on one floor and maintaining less space.

The Ayers aren’t alone. Only 7 percent of retirees surveyed said they had moved into age-restricted retirement communities, according to a Merrill Lynch/Age Wave study. That study also found that 51 percent of retirees had moved into smaller homes.

Sixty-four percent said they had downsized to lower their housing costs. With the proceeds from the sale of their home, the mortgage on which had almost been paid off, the Ayers were able to pay cash for the new home. They took what was left and invested it in their retirement portfolio.

Downsizing: It’s not just for retirees

Downsizing isn’t just for big corporations like GM, nor is it something unique to empty nesters. The urge to minimalize can happen at any age and at any stage in life.

Sure, leaving behind a home in which you may have built decades of memories is gut-wrenching; but moving to a smaller home does offer some exciting advantages. Smaller homes cost less to maintain and to heat and cool. Going petite also may mean a lower property tax bill, cheaper insurance and lower house payments.

Things went smoothly for the Ayers, but like any major life transition, there are some important things to consider when making this move. Here are four things to think about when downsizing.

  1. Increase your leverage – Consider selling your home and temporarily renting, putting your things in storage, until you buy your new home. Without pressure to buy quickly, you’ll be in a better position to negotiate a lower price.
  2. House or condo – Do you want your next home to be a house or condo? Condos usually cost less and you don’t have to worry about mowing grass or cleaning out the roof’s gutters–the ideal solution for those who dream of traveling. But condo associations can charge sizeable monthly fees, sometimes higher than buyers expect. If you find a condo development you like, we’ll be happy to find out the current HOA dues.
  3. Find something special. Leaving a home that holds so many memories, having to shed some belongings such as heirloom furniture, and saying good-bye to neighbors you love can be emotionally difficult.

In choosing your new home, try to find one that has a quality that is special enough to help ease that pain. It might be that newly remodeled kitchen you’ve always wanted, or an attractive fireplace.

  1. Get rid of furniture. Too many people try to take all of their furniture to their new, smaller home. Technically, yes, they can make it all fit, but too often, doing so gives the new home a cramped feeling, making it seem even smaller than it is.

Make it easy on yourself

Downsizing doesn’t have to be a marathon event. Start slow by tackling one room, or even one part of a room, at a time. Different variations of this theme include starting with your DVD collection, paperwork or beginning in a room that doesn’t hold items of sentimental value, such as the kitchen – the junk drawer specifically.

One of the initial steps to getting a home ready to sell involves de-cluttering, which may require making some tough decisions.

Think of the first steps in downsizing as de-cluttering on steroids and yourself as a multi-tasking ace as you start this process.

First, make decisions about what you will take with you to the new home and what you’ll part with. Items in the latter category require additional decisions: will you give them away, sell them or trash them?

To effectively use the following tips requires having a good idea of how much space you’ll have in the new home. Try to compare the size of the rooms in your current home with those in a substantially smaller home to make it easier to determine how much of your current furniture can make the move with you.

Use large boxes, bins or even designated floor space to separate your belongings in each room according to the decisions you’ve made about them. The giveaway items will need to be further categorized as to whom they will go, for instance “kids,” “charity,” and “friends.”

When handling an item, ask yourself first, how important it is to you. If it’s a “must keep,” then you’re finished with that item and you can pack it. If not, ask yourself how it fits with your new lifestyle. “If you don’t entertain anymore, don’t bring a ton of serving platters to your new home,” Ann Bass, a senior-move manager in Asheville, N.C. tells the Wall Street Journal.

There’s a lot to like about a more minimalist lifestyle. For some, the pursuit is liberating, for others it’s terrifying. If the thought of ditching your belongings and moving into a smaller space makes your heart beat quicken and your palms moist, don’t think of it as “downsizing,” suggests the National Association of Senior Move Managers. Instead, consider it “rightsizing.”

We hope you have found these tips for downsizing helpful, and we eagerly look forward to helping you enter the next exciting phase of your life.

 

Interested in buying a maintenance-free home?

“Seventy-four million people in the United States (27% of the population)” live in condominiums, according to Sa El at SimplyInsurance.com. Many of these homeowners downsized because of the heavy maintenance needs of single-family houses.

While there is no such thing as a completely maintenance-free home, condos come mighty close. If you’re tired of keeping up the yard and cleaning out the rain gutters, read on for how to live a maintenance-light lifestyle.

Oh, those homeowner associations

There are roughly 358,000 homeowner associations in the U.S., according to the Community Associations Institute.

While we frequently hear the horror stories about homeowner associations (HOAs), we seldom hear about the perks of living in a community managed by one.

Whether your aim is to buy a townhome, co-op or a condo, life in a common interest development (CID) means that you own not only your home, but also an interest in the common areas (community pool, etc.). You also share in the costs of maintaining the community, typically including the exterior of the buildings.

So, you can have a pool but not have to pay to keep it clean and ensure the chemicals are balanced. You can have irrigated and maintained landscaping without paying a gardener.

Maintenance isn’t actually “free”

While you won’t be doing the maintenance, someone will and that someone needs to get paid. Enter, the HOA monthly dues or fees. “Some studies suggest that you can expect to pay HOA monthly fees between $200 and $300. But the real answer is: It depends,” claims Javier Simon, CEPF®, at SmartAsset.com.

“Some HOA fees can drop to $100 a month and some can climb to more than $6,000,” he concludes.

A rule of thumb is to plan on paying from 1.5 percent to 1.8 percent of the value of your home per year.

Part of that money goes into the HOA’s reserve fund to help pay for big problems, such as roofing or pool repairs. Many associations are underfunded for any number of reasons so if reserves are low and an emergency pops up, you may be assessed an additional fee.

This is why it’s so important to read every word of the HOA documents before purchasing a home in a managed community.

Tricking out a single-family home instead

If you just can’t stand the thought of living in a condo or townhome and have your heart set on buying a single-family home there are ways to ensure that it isn’t a constant maintenance headache.

It will never be maintenance-free, but these tips go a long way toward making a house maintenance-light.

  • Fiber-cement siding: House Logic’s John Riha claims that fiber-cement siding is not only “the curb appeal champ,” but it doesn’t age, like wood. It requires re-painting every 15 years and has an average life expectancy of at least 50 years.
  • Metal roofing: Tough and maintenance-free, Riha says that most come with a 40- or 50-year warranty. He suggests that you “look for baked-on enamel finishes with rust-proof undercoating.”
  • Quartz countertops: Homebuyers haven’t quite caught on yet that quartz is a far better choice than granite for the kitchen countertops. They don’t require sealing, they resist scratching and staining and they last about 30 years.
  • Ditch the carpet and opt for hardwood or vinyl plank flooring.
  • Replace your current gutters with LeafGuard gutters, recommended at BobVilla.com.
  • Go low-maintenance with the landscaping by adding more hardscaping in place of high-maintenance plants. Get ideas online at Gardenista.com.

While none of these “fixes” will allow you to get rid of the lawn mower, they will help avoid some of the more common single-family home maintenance headaches.

Thinking of buying a home? This is the perfect time to work on your credit score

The most important step to take before you begin searching for a home is to get your financing in order. Depending on your credit, this may be just a matter of seeing a lender for a mortgage pre-approval letter, or it may entail a longer process: correcting issues with your credit to raise your credit score.

Understanding how your credit score is compiled is an important aspect of learning how to raise it. The Fair Isaac Corporation (FICO®) is the company that compiles our three-digit credit scores and underwriters at lending institutions then use the score to determine our credit worthiness.

Consumers with low scores are considered to be at a higher risk for non-payment than those with high FICO scores. The scoring range is from 300 to 850. Generally, a score below 620 is considered low, while anything above 720 is considered high and if your score is above 800 you have an excellent FICO score. An 850 score is considered ‘perfect.’

Don’t feel bad if your score isn’t perfect. According to Kailey Hagan at NASDAQ, citing a report from Experian, “… just 1.2% of Americans have a perfect 850 score.”

How does FICO compile our credit scores?

The corporation tends to keep their formula a secret, but they are forthcoming with certain elements of the process.

When determining your credit score FICO looks at your payment history, how much you owe and the highest amount owed, the type of credit you use (installment loans, credit cards, etc.) and the length of your credit history.

In fact, 35% of your FICO score is based on payment history – late payments are a significant drag on your score. Recent late payments count against you more than older late payments.

Open account balances make up 30 percent of your FICO score. Balances that are within 30 to 40 percent of your credit limit work in your favor, while those that are at or over the limit count against you.

While lenders have tightened credit requirements, it is still possible to obtain a mortgage loan with a less-than-perfect FICO score. However, you will pay more for the loan, with a higher interest rate.

How do I find out my FICO score?

Before seeing a mortgage broker or bank about a loan, check your scores from all three major credit reporting agencies. These are:

  • Experian
  • Trans Union
  • Equifax

Every American is entitled, by law, to a free report from each agency every 365 days. “Only one website — AnnualCreditReport.com — is authorized to fill orders for the free annual credit report you are entitled to under law,” according to the U.S. Federal Trade Commission.

How to raise your FICO credit score

Sometimes, making just a few easy changes can have a big impact on raising your score:

  • The experts at FannieMae.com recommend that if you don’t yet have credit, open a credit card account. Use the card and pay the balance off every month.
  • Lowering your credit card balances – not paying them off, but lowering them to within 30 percent of your credit limit – is a quick way to realize an increase in your FICO score.
  • Making timely payments for six or more months before applying for a mortgage may also raise your score a few points.

Determining your credit score is an important first step toward purchasing a home. Repairing damaged credit may be time-consuming but will pay off in the end when you receive an amazing interest rate on your mortgage.

Company coming? 4 must-do easy home improvements to get done now

The countdown to the late-fall through the new year festivities is on. If airline ticket prices remain as high as they are currently, traveling to gramma’s house will be a challenge.

In fact, according to a recent NerdWallet survey, 37% of Americans are choosing to drive instead of fly during the holidays. With gas prices so high, however, that, too, can be challenging.

Where family and friends can save money is by staying with friends and family instead of a hotel and, according to the aforementioned survey, 36% of them plan on doing just that.

If your home will be host to friends and family this holiday season, we suggest you get busy on preparing with the following tips.

1. Are the grandparents coming?

While the majority of grandparents in the U.S. are still relatively young and mobile, if your guest list includes an elderly relative who doesn’t get around very well, start your preparation by ensuring there are no accidents in your home.

  • Consider adding motion-activated nightlights to light the path to the bathroom.
  • Install better lighting in areas of the home that are currently a bit dim.
  • If your floors are hard, such as hardwood, laminate, tile or vinyl, consider purchasing non-skid throw rugs. If you currently use rugs, purchase non-skid backing material for them. You can purchase them online at Amazon.com and HomeDepot.com.
  • Add a non-slip mat in the bathtub.
  • Give up the downstairs bedroom for Gramma so she won’t have to deal with the stairs. In the bathroom, “… clear out your or your family’s toothbrushes and other bathroom items and relocate them,” suggests the pros at Neighborly.com.
  • Place extra blankets on the guest bed and drape one on a comfy chair in the living area to be used while watching TV and chatting with the family.

2. Make the home warm and cozy

When was the last time you changed the HVAC system’s filters? Not only will the system work harder with dirty filters but this added work raises your heating bills.

In addition, “If a filter isn’t working properly, dust and allergens can circulate throughout your home and cause allergies and respiratory illnesses,” cautions the reviews team at ThisOldHouse.com. HVAC specialists recommend that filters should be changed once a month, especially during the heating season.

Another way to ensure the home remains warm and cozy is to fill any gaps or cracks around the doors and windows. You may want to consider replacing worn caulk instead of filling what is already there.

3. Transform the guest room into an oasis of comfort

When thinking of readying the guest bedroom, think of a swanky five-star resort. Check out these photos for inspiration. A lot of this can be done even on a tight budget, using items you have on hand.

Start with the bed, adorning it with crisp linens and two blankets—one light and one heavy.

If you depend solely on an overhead fixture for light, consider adding more, such as a reading lamp next to the bed or wall sconce fixtures on either side of the bed.

Your guests will rave about your hospitality when they want for nothing in the guest quarters. And, again, fulfilling this won’t cost you an arm and a leg. Head to the department store and stock up on travel sizes of the following products:

  • A notepad and pen
  • A small flashlight (for power outages)
  • Band-Aids
  • Disposable razors
  • Feminine hygiene products
  • Hair spray
  • If kids will be sharing the room, stock some coloring books, crayons and small but fun toys and games.
  • Pain medications, such as aspirin and acetaminophen
  • Shampoo and conditioner
  • Shower cap
  • Toothbrushes
  • Toothpaste

Write a note to be left in the room that tells your guests how to access the Wi-FI, disable/arm the security system and any other particulars they need to know about your home.

4. The most important thing to ready the home for holiday guests

Cleaning. Yeah, not very many of us like to do it. Cleaning for guests should be the deep kind of cleaning, especially in the guest bedroom and areas in which the family congregates.

If you need inspiration on how to get your guest room ready for the holidays, you’ll find plenty online. Pinterest has lots of brilliant ideas as does HGTV and Elle Décor .

Uh-oh – not the foundation! What to look for, who to call and what you’ll pay

“The support upon which something rests,” is how Merriam Webster Dictionary defines ‘foundation.’ Think about that for a minute. Your home rests on its foundation, which, when functioning properly, provides structural stability, safety and value to the home.

If it’s not in peak condition, you may end up paying a fortune to repair it and/or the damage to the home that has occurred because of it.

So, how do you know if there might be a problem with the foundation of your home? Read on and we’ll share with you what we learned from the experts.

Cracks in the foundation

Not all cracks indicate a foundation problem. The following types of cracks may be signs of trouble:

  • A crack that is one-quarter of an inch or more
  • Cracks that resemble stair steps located between cement blocks
  • Cracks that run horizontally
  • A crack that runs diagonally at a 30 to 75-degree angle. Although it may be thin, it “… will likely be wider at one end than the other,” according to the experts at EdenStructural.com.

Windows and doors may indicate a foundation problem

Check your windows and doors for any cracks that may be above them. Check the upper corners of these areas for cracks that start there and extend upward to the ceiling. While these cracks may just indicate settling, it they measure more than one-quarter of an inch wide, they might indicate problems with the foundation.

Sticking windows or door is often caused by humidity. A shifting foundation, however, may be the culprit.

If the problem occurs in only one door or window there is likely no cause for concern. If, on the other hand, you’ve found other signs of a foundation problem, seek help from a professional as soon as possible.

What are the walls saying?

Warped, bowing and bending basement walls are signs of dangerous structural issues. “Everything else in the home is resting- directly or indirectly- on top of your basement walls.  If one of them weakens, it compromises the stability of your entire structure,” according to the pros at Acculevel.com.

Who to call for help with foundation problems

Foundation repair or even the diagnosis of a problem isn’t a DIY project. While a structural engineer can certainly help with the problem, you might also look into interviewing foundation repair contractors.

“… look for one who is certified, has glowing reviews, and offers a great warranty,” cautions D.P. Taylor at Angi.com.

Ask the repair person if he or she is certified by the National Foundation Repair Association and “… the International Code Council Evaluation Services (ICC-ES), a nonprofit organization,” according to Taylor.

In fact, the pros at Foundation Repair Network caution consumers to not “… do business with a contractor that does not have their foundation repair methods evaluated by ICC-ES.” This ensures that the building materials used “…meet code compliance.”

To round up contractors to interview, ask your colleagues, neighbors, family and friends who they would recommend. Check Nextdoor.com and Yelp.com in your area for reviews and consult the Better Business Bureau to learn of any complaints against the contractors and/or engineers. Ensure that whomever you hire is licensed and insured and, ask for references. Then, finally, check those references.

How much does foundation repair cost?

“The cost of foundation repair ultimately depends on the type of foundation used, the size of the home, soil stability, and more,” according to Nick P. Cellucci at Angi.com (formerly Angi’s List).

The site estimates a national average cost of $4,913, and a range of between $2,154 to $7,737. They offer a calculator to find the cost of foundation repair in many areas across the country. Just enter your ZIP code at Angi.com.

Katie Flannery and Evelyn Auer at BobVila.com state that “Foundation repair cost ranges from $2,010 to $7,717, with the national average at $4,714.”

You may also want to visit the Foundation Repair Network’s website for their ballpark estimate of costs.

Whatever you do, if you suspect a problem, don’t put off hiring a pro to inspect the foundation.

 

Here’s what you need to know about private mortgage insurance (PMI)

Most American homebuyers at the turn of the 20th century were forced to pony up 50 percent of the home’s appraised value to get a mortgage. Needless to say, most low- and middle-income folks’ version of the American Dream didn’t include homeownership.

Today, it’s not at all uncommon for cash-strapped homebuyers to put down far less than the “standard” 20 percent of the home’s appraised value – but the privilege comes with a price in the form of monthly private mortgage insurance (PMI) premiums.

What is PMI?

PMI (or MIP, short for “mortgage insurance premium,” when dealing with an FHA loan) is a policy that covers the lender if the borrower defaults on the loan. Although the borrower derives no direct benefit from the policy (other than that low down payment), he or she pays the premium.

Since borrowers with less than 20 percent equity in the home are considered high risk, PMI is mandatory, according to Fannie Mae and Freddy Mac.

The price you’ll pay

“The average cost of private mortgage insurance, or PMI, for a conventional home loan ranges from 0.58% to 1.86% of the original loan amount per year,” according to the editors at NerdWallet.com, citing Genworth Mortgage Insurance, Ginnie Mae and the Urban Institute.

With an FHA loan, the borrower on a 30-year loan, with a 10 percent down payment is required to pay an upfront fee of 1.75 percent of the loan amount and then between 1.3 percent and 1.55 percent of the loan amount annually.

Most lenders allow the annual fee to be paid monthly, and it’s tacked on to your mortgage payment.

When can I cancel PMI? 

If you took out a conventional loan after July 29, 1999, you can request a cancellation of PMI once your loan-to-value ratio (LTV) reaches 80 percent.

By law, however, the lender must cancel PMI when the ratio is scheduled to reach 78 percent, according to the original amortization schedule, or when the loan reaches its midpoint, regardless of LTV.

So, how do you know when you’ve reached any of the aforementioned milestones? Divide your current loan balance by the current appraised value of the home. If you suspect that your home’s value has increased or you’ve paid the principle down significantly it may be worth it to pay to have the home appraised.

Can I cancel MIP on a FHA loan?

The Federal Housing Administration (FHA) calls its mortgage insurance MIP, for Mortgage Insurance Premium.

Ridding yourself of the MIP payment on a FHA-backed loan is a bit tougher than it is with a conventional loan. If you put 10 percent to 19 percent down on the home you must wait 11 years to be relieved of the MIP requirement.

If you pay less than 10 percent down, the MIP payment remains for the life of the loan.

Now, this only applies to borrowers with FHA-backed loans granted after June 3, 2013. If you have an earlier loan, the MIP termination requirements are different.

With a 15-year FHA-backed loan, you can get rid of MIP when the loan reaches 78 percent LTV. With a 30-year mortgage MIP will also terminate when the LTV reaches 78 percent if you’ve been paying the premium for at least 60 months.

By the way, FHA bases the home’s value on their last appraisal, not its current market value. Typically, the value used to calculate LTV will be what the home was worth when you purchased it.

Additional ways to ditch mortgage insurance 

Change your LTV ratio

Changing either side of the LTV ratio may result in the cancellation of mortgage insurance. Either make extra payments, or a lump sum payment to bring down the “loan” portion of the ratio or make improvements to the home or wait for area values to rise to increase the “value” side of the ratio.

The home improvement projects that add the most value to the home are, unfortunately, the most expensive. A minor kitchen remodel will get you the most bang for your buck according to Remodeling magazine’s Cost vs. Value Survey.

Although the national average cost for this project is $28,279, it will add $20,125 in home value.

Yes, that’s a big chunk of change, but if you make this improvement you may raise the value of the home enough to be rid of the PMI payment every month. As a bonus, when you sell the home you’ll make more money than you would have otherwise, and recoup 71.2 percent of the cost of the addition.

Refinance

If the above seems too costly or time consuming, consider refinancing the home. This option isn’t ideal for all borrowers so have your financial advisor crunch the numbers for you.

Keep in mind that a new loan will require closing costs, so your financial advisor will need to take those into account as well.

While it may seem unfair to be forced to pay for an insurance policy that only benefits someone else, PMI does provide an advantage to the cash-poor borrower—the ability to qualify for a home loan.