Tips to consider when it’s time to purchase homeowners insurance

If you won’t be paying cash for your home the lender will require that you purchase a homeowners insurance policy. This will assure the lender that the home won’t be lost to fire, acts of God and other events. These policies also benefit the homeowner, so shop carefully.

What does a homeowners insurance policy cover?

America has learned a lot about the ins and outs of insurance policies over the past few years with the ushering in of mandatory health insurance. While some services are covered in everyone’s health insurance policy, we’ve learned that not all policies are alike in other aspects and that our coverage may be quite different from our neighbor’s. Homeowners insurance policies too have similarities and differences.

Most homeowners insurance policies cover the loss of the structure, its major systems, items inside the home and damage or destruction of other structures on the property (sheds, etc.).

Types of homeowners insurance policies

The insurance industry offers eight different policies from which to choose, known as HO-1 to HO-8 (there is no HO-7). HO-3 (known as the “open perils” policy) is the one most homeowners choose. With this, you will be covered for damage to the home and other structures on the property. The perils typically listed in the policy include:

  • Windstorm damage
  • Damage from hail
  • Explosion
  • Fire
  • Lightning

If you’re purchasing a condo you will be required to purchase the HO-6 policy and, for vintage home-buyers the HO-8 policy may be best.

Shop for a company that doesn’t require a 4-point inspection if the home hasn’t been updated.

How much coverage should I buy?

The lender, will of course, have a certain minimum amount of coverage required and after that, it’s up to you. Your insurance agent may counsel you, however, that it’s smart to get coverage that provides for 100 percent of the cost to rebuild the home, and we agree.

To determine how much coverage you’ll need for the home’s content requires a thorough inventory of everything in the home. The Insurance Information Institute’s website provides a tutorial on how to take such an inventory. You’ll find it by clicking here.

Don’t leave your insurance agent out of the loop. He or she is an expert who deals with these matters on a daily basis so seek your agent’s counsel.

Then there the additional policies for items not covered in your primary policy to consider. For instance, if you live in a flood plain you may need additional insurance coverage.

How to shop smart for homeowners insurance

The first insurance company to call for a quote should be the one that covers your vehicle. Then, use the quote to compare to others. Get at least three quotes, although we think five is better.

How much does homeowners insurance cost?

The average cost, nationwide, for homeowners insurance is $1,096, according to the National Association of Insurance Commissioners (NAIC). Remember, this is an average so yours may be more or less.

What is a home insurance binder?

If the company you choose has yet to issue your actual policy by closing, your lender may request that you bring a binder to closing. This is, simply, a one-page document that contains the insurance company’s commitment to insure the home. It acts as proof-of-insurance in most instances.

If you continue to have questions regarding homeowners insurance, consult with your insurance agent – your best resource in this instance.

Navigating the offer to purchase a home

That feeling of accomplishment when you’ve finally found the home you want to purchase is well-deserved. Whether you looked at 10 homes or 50 in your quest to find the right one, you are one step closer to holding those keys in your hand.

The offer to purchase is one of the most significant documents you’ll ever put your signature to, so it’s important to think about it strategically before doing so. Here are a few things to think about.

  • Your house payment won’t be the only money you’ll spend on this home every month. Ask the seller for a ballpark figure of how much he or she pays for utility bills every month. If it’s significantly higher than what you’re accustomed to, it may push your monthly housing budget over your limit.
  • Don’t forget to take into account the homeowner association’s monthly fee, if you’ll be buying in a managed community.
  • Ask your insurance agent if the home is located in a floodplain. If so, you may be required to purchase flood insurance to protect the lender’s interest in the home. The average flood insurance premium is about $700 per year, or $58 per month, according to the National Flood Insurance Program (NFIP).
  • Finally, ensure that the home is priced appropriately for the area and for the type of market we’re in. We are happy to run an analysis to provide you with the home’s current market value.

Now, back to the Offer to Purchase

There is much to consider when filling out the offer to purchase, but here are the most important things for you to think about.

How much should you offer?

If we were currently in a buyer’s market, where there are many homes for sale but few buyers in the market, you would have more leverage in negotiations with the seller.

Alas, it’s a seller’s market (few homes for sale and lots of buyers clamoring for them), so you’ll need to sweeten your offer, either by meeting the asking price or softening the contract’s terms.

One of the things we will help you with is determining if the home is priced right. An important question to ask is what percentage of the asking price are area sellers realizing?

The condition of the home is important to its market value as well. A well-maintained, clean home in move-in condition should sell close to asking price (if it’s priced at market value).

Rundown homes, or those that need substantial work, should be priced accordingly. If not, then you have some negotiating power.

Anatomy of the Offer to Purchase

Earnest money deposit

This is money that you’ll submit to the seller either with the offer to purchase or shortly after it is accepted. This is not the down payment (which is a lender requirement), but a good-faith offer to show you’re serious about buying the home.

The amount of money you’ll be asked for depends on a number of factors. The good news is that this money eventually goes toward the purchase and will reduce your closing costs.

Personal property

The home and land are considered real property and anything that isn’t attached to the home or land is considered personal property.

Sellers often include (and buyers often ask for) personal property in the purchase of the home.  This includes:

  • Gardening equipment: Snow blowers, lawn mowers, cultivators and tools.
  • Appliances that aren’t built in: This includes the washer, dryer, refrigerator, stove and microwave, if they aren’t built-in.
  • Furniture and window coverings: If you want either or both, we’ll need to ask for them in the offer to purchase if it isn’t stated in the listing that they remain in the home.

When do you want to close?

This may seem like a straightforward question until you understand the different strategies. If you close toward the end of the month you’ll save money because your prorated interest payment at closing will be smaller.

If you’re crunched for cash, however, you may want to close earlier in the month. Yes, the pre-paid interest amount will be higher but, because it’s paid in arrears, you won’t owe your first mortgage payment for two months. Speak with your lender about which scenario fits your financial circumstances.

If you are purchasing the home near the fall and winter holidays either set the closing date well before or after. Real estate professionals, including lenders, title folks and real estate agents tend to take time off during the holidays and, naturally, work slows down.

The home inspection contingency

Never waive it ― even if you’re buying a newly-constructed home.

As the ink dries on your offer to purchase, a flurry of activity begins taking place behind the scenes. I’ll get together with the listing agent to make arrangements for the seller to receive your offer.

The seller will accept it, submit a counter offer with a different price, terms or both, or reject it.  If the offer is accepted, escrow opens, the clock starts ticking and time is of the essence.

Questions? Feel free to reach out; we are happy to answer them.

Easy ways to update your kitchen and wow homebuyers

Home décor and design trends come and go from one year to the next. It’s a challenge to keep up with them, especially when you’re considering selling your home. You want to appeal to the broadest audience possible but the audience (the homebuyer) is fickle.

Which is why we trust builders and designers to give us the straight scoop on what home features are most in demand right now.

Since the kitchen is one of the more popular rooms among buyers, we decided to break down some of the trends to help you get yours in shape so that the home will sell quickly and for top dollar.

Decide on a color scheme for your kitchen

Designers are rejoicing over the death of the all-white kitchen, calling it too “sterile.” Kevin Isbell, owner of Kevin Isbell Interiors tells Lucia Tonelli of that he sees more clients moving “… towards more personality and color in their homes,” and that includes the kitchen.

From wall color to the color of your kitchen cabinets, it’s time to get creative.

And, since the cabinets are the focal point of the kitchen, it’s a good idea to start the color selection there. Some of the most in-demand cabinet colors, at least according to designers, include:

  • Dark blue
  • Deep green
  • Charcoal

“We’re seeing a move toward colors that are darker and moodier, but also grounded in nature,” Sherwin William’s Sue Waddin tells Monique Valeris at

When choosing a color scheme, take a tip from designers. “… the way designers incorporate color follows a certain pattern. Big colors in small quantities, with small colors as the base,” according to Scott Hochuli at

Hochuli goes on to explain that you’ll need to coordinate the color of your cabinets with your countertops.

“For example,” he says, “if you are looking to install Calacatta [sic] marble countertops with those amazing veins of gold running through, you will need cabinetry that coordinates with gold. Navy blue or even black might be the perfect hue to provide a balance against that pale warmth.

Shop for new hardware (drawers and pulls) to go with your newly-painted cabinets to pull it all together.

Painting your cabinets is time consuming, but it adds an instant update to a dated kitchen. For tips to get you started, check out Lowe’s video at

How are those countertops?

Nothing dates a kitchen more than old countertops.

Countertops, however, are homebuyer bait so if you can afford to replace them, check out the latest trends.

“Granite countertops are a thing of the past,” designer Lonni Paul tells’s Lucia Tonelli and Kelley Carter.

Quartz is the new granite, “… because of its durability and ease of maintenance,” according to Paul.

For the budget-minded, consider faux marble countertops, “porcelains and man-made materials,” according to designer Hilary Matt.

While faux marble countertops are listed as “in” on Elle Décor’s 2020 list, real marble countertops are “out.”

“No one wants to worry about staining or etching which is inevitable,” Matt said. “There are many fake marbles on the market that look so real that no one would ever know it’s a reproduction.”

New countertops can get pricey but changing yours isn’t out of the question if you’re on a budget.

Check out Rust-Oleum Countertop Transformations for a DIY solution. Reviewers claim that although it’s time consuming, the process is quite easy. Check out this YouTube walk-through.

Sure, you won’t end up with a natural stone countertop, but the solution is ideal for the low-to-mid priced home.

Consider replacing that above-the-range microwave oven

It’s convenient to have the microwave over the range; you’ll get no argument from us on that. But consider this:

“Why would you want to install a microwave in a space that is one of the main focal points in your kitchen? Find a space for your microwave that is tucked away, but still accessible,” designer Darla Bankston suggests to the folks at

Homebuyers are craving the aesthetics of decorative range hoods, according to builders and designers. It’s the perfect replacement for that not-so-attractive microwave oven.

Take a trip to the local big box home improvement stores to see the various styles and finishes. Best of all, they come in a range of prices (we saw one at Home Depot for only $138).

Homeowners on a budget may want to read the Wirecutter reviews at And you’ll find tips on how to shop for a range hood at

Remember, the kitchen is the most important room in the home to most homebuyers. Even on a tight budget you can whip yours into shape and get it on the market.

Reach out to us if you have any questions – we’re happy to answer them!




Curb appeal—it’s what sells a home

Marketing is vitally important to getting your home sold quickly. Without effective marketing not only may it take longer to sell, but you may get less money at the closing table as well.

The more folks that come through your front door, the better your chances of getting it sold, sooner. If your agent is slacking on the marketing of your home, get rid of him or her and hire someone who will market your home for all its worth.

You have a part to play in this as well. After all, it’s not your agent who will clean and de-clutter the inside of the home or work on the exterior to make it more appealing.

Curb appeal is one of the most important marketing factors in home sales.

Take an hour or so this weekend and drive around your general area. Check out the other homes on the market. Pay close attention to each home’s curb appeal, or lack thereof.

Then, take a few minutes to create a what-can-I-do-to-better-market-my-home list. You’ll be glad you did.

What is curb appeal?

Curb appeal is simply how your house looks from the street. It either has it, or it doesn’t. If your home is among the latter, you should consider fixing that.

Real estate buyer’s agents can tell you just how common it is to drive up to a home, with a buyer in the car, and have that buyer refuse to get out of the car. Based purely on how the home looked from the outside, they made their decision to not bother looking at the inside.

Of course, it’s not right to judge a book by its cover; we all learned that in kindergarten. But home buyers do. And that’s a fact.

How to give your home more curb appeal

Let’s take a look at a few common items that can ruin a home’s curb appeal:

Landscaping. How’s yours? Could the front yard use a little sprucing up? Start by picking up the branches, dead leaves and trash.

Rake around shrubbery and in beds. Consider adding a layer of fresh mulch to planting beds. It doesn’t cost all that much and it looks really great.

If you’re going to sell in winter, the landscaping is a bit more challenging to freshen up.

Pops of color are a welcome respite from the dreariness of winter. Choose some of the pansies we’ve seen on sale, pot them up in pretty pots and set them on the front porch. Or line the walkway with them.

Don’t think that buyers won’t notice that your window screens have holes in them or are hanging off their frames. They will; maybe not consciously, but it will give the house a general run-down and shabby sort of look. This is another relatively inexpensive fix that will pay off.

Could the front door use a new coat of paint? Sometimes just that one change can brighten the entire exterior of a house. If it coordinates with the home’s exterior paint color, consider a “… black or charcoal gray front door,” according to a survey by a major real estate website. Why?

“Homes that feature charcoal gray or black doors typically sell for $6,271 more than expected,” they said. Whatever you choose, don’t pick yellow. Homes with yellow front doors actually sell for less, according to the survey.

Before you paint the door, though, look up. That’s right UP. See the cobwebs hanging from the eaves? They kind of match the ones hanging from the porch light.

While they may have looked festive last Halloween, when the house is on the market, they look awful. Sweep or power wash them away before you paint the door.

How about some little things? New house numbers and a new mailbox will lend a fresh feeling to the home from the curb. Washing the exterior of the windows will make it look like the owner of the home really cares about it. That’s attractive to a buyer.

Overall, the effect you want to give to anyone looking at your house from the street is: “Mr. and/or Mrs. Clean live in this house.”

Even if you are more like Mr. and Mrs. Piggy. . .fake it ’til you make it, as the old saying goes.

On the fence about selling your home? The time to jump is NOW!

Yes, the economy is in the midst of a bit of a crisis, and for obvious reasons. There is, however, one bright spot and that is the housing market.

Traffic on a large real estate company’s website “… is up about 40 percent, and the National Association of Realtors announced that pending home sales are up 15 percent from last month,” according to NPR’s Stacey Vanek Smith and Cardiff Garcia.

A wide swath of American homebuyers is being propelled out of urban areas to suburbs and rural regions by “… conditions related to coronavirus, and the understanding that the way … that some of us work — has fundamentally changed,” Smith and Garcia wrote.

Then, there are others who dropped out of the market at the outset of the pandemic and have decided to re-enter.

If you’ve toyed with the idea of selling your home, now is the perfect time. Read on to learn why you should not let this opportunity pass you by.

Home equity at record highs

Do you have any idea how much equity you have in your home? Many homeowners haven’t a clue, but it’s worth finding out.

Mortgage data firm Black Knight found that “Americans’ home equity reached a record high earlier this year, according to Jeff Ostrowski, senior mortgage reporter for

With mortgage rates so low (see below) and your hefty equity, that dream home may just become a reality.

Mortgage rates are oh, so low and may go lower

Mortgage rates are mercurial and almost impossible to predict. However, “… many experts foresee rates falling below 3 percent in the next six months to a year,” Ostrowski claims.

He goes on to say that while the current low rates may not compel you to sell your home to buy another, “… a 2.75 percent rate probably would.”

If you’re waiting for a specific mortgage interest rate to occur, let us know. We’ll keep an eye on rates for you and let you know if and when it happens.

Home prices are amazing for sellers

Those low mortgage rates are encouraging homebuyers to jump into the market. That, in turn, increases demand and, subsequently, home prices.

“In July, the [national] median home price shot up 8.5% year over year, to hit a new all-time high of $349,000,” according to Clare Trapasso, citing the most recent® data.

Homes are flying off the market

The average number of days a home remains on the market, nationwide, is 24 days. This news is especially welcome for home sellers who need to move quickly.

If you don’t have forbearance, sell the home

If you don’t have a federally-backed mortgage, you didn’t qualify for mortgage forbearance under the federal Cares Act.

Many lenders of non-federally backed mortgages decided that they, too, would offer forbearance, but not all of them, and not on all loans.

If you didn’t qualify either way, and you’re delinquent on your mortgage, consider selling the home.

The sooner you do it, the less you will owe the lender at closing. If you wait, you’ll face foreclosure.

The real estate market has always been a moving target and that hasn’t changed. One day mortgage rates are down, the next day they rise. Likewise, nobody can predict the duration of what is currently an amazing seller’s market.

The time to sell your home, if you been considering doing so, is right now.

Frequently Asked Questions about USDA Home Loans (ZERO down payment!)

The dream of homeownership dies hard. Regardless of credit history and/or a lack of financial resources aside from a good job with a steady paycheck, many who share this dream persist against what seems like overwhelming, hopeless odds.

They’re the fortunate, those who chose the right real estate agent and the right lender to advise and guide them through the process.

Buying a home isn’t the futile pursuit the media makes it out to be. There are plenty of mortgage programs out there for low-income, cash-poor and credit-challenged Americans. Those provided by the United States Department of Agriculture (USDA) are among the best on the market.

There’s a lot to know about the USDA Rural Development home loan programs. So let’s dive into the answers to some of the most commonly asked questions we field.

Is there a minimum credit score to be eligible for a USDA loan?

Homebuyers don’t need perfect credit to buy a home. Those with higher credit scores, however, obtain the best mortgage rates. Since the interest on the loan is part of your monthly house payment, a higher score will help you have a lower mortgage payment.

That said, many lenders won’t approve buyers with a credit score lower than 640. If you have extenuating circumstances (and who doesn’t in the age of COVID-19?), and can document them, you may still qualify for the USDA direct loan, with a credit score as low as 620.

Still don’t fit the bill? Raising your credit score quickly isn’t as challenging as some say. We’re happy to explore your options with you.

How do I check if the home I want to buy is eligible for a USDA Loan?

The USDA insists that homes must be in “rural areas.” The agency further defines the term by stating that the area must have fewer than 20,000 residents.

Many larger cities across the country are within easily commutable distances to such communities, so don’t let the word “rural” scare you off.

We’re happy to check to see if the home you want to purchase is in an eligible area.

How much will I need for the down payment and the closing costs?

The USDA loan has no down payment requirement. Closing costs depend on the lender, your location and the size of the loan. With the Direct Loan, closing costs can be quite reasonable.

What is the maximum amount I can borrow with a USDA loan?

That depends on your income – most specifically, your debt-to-income ratio (DTI). The USDA looks for a minimum ratio of 41 percent for borrowers whose credit score is lower than 660.

Your DTI is easy to calculate. Learn how at

Do I have to be a first-time homebuyer to use a USDA loan?

Nope. The programs are open to repeat buyers as well.

Can I use the home I purchase with a USDA loan as a rental?

No, the loan requires that the borrower live in the home as her or his primary residence.

Does the USDA loan require private mortgage insurance?

No, there is no PMI requirement for the USDA loan. There is, however, a 0.4 percent annual fee in lieu of PMI.

Does the USDA guarantee 100 percent of the loan amount?

No. The USDA guarantees 90 percent and you will be required to pay the difference should you default on the loan.

Does the USDA allow me to use gift money to pay for closing costs? How about seller-paid closing costs?

Yes, to both questions. You will need a gift letter to accompany your loan application. The lender will supply you with this.

Can the self-employed qualify for the USDA home loan program?

Yes, they can. They will need to provide two years of tax returns to verify their income from self-employment.

Still have questions? Answers are FREE, so don’t hesitate to contact us!


Confused about the home appraisal process?

There are two steps in the home sale process that we frequently see our clients get the jitters over: the home inspection and the home appraisal. Both processes are performed by a disinterested third party, yet homeowners tend to treat the results as a judgment of their homes.

Then, there are those who don’t understand that the home inspection and the appraisal aren’t the same.

So, let’s clear up the confusion. Knowledge is power, and the more you understand a process, the more you’ll be able to relax into it.

Appraisal vs. home inspection

The home appraisal and the home inspection are both of value to the homebuyer. The buyer’s lender will hire the appraiser and the buyer will hire the inspector.

The home inspector’s aim is to determine if there are any “major defects that will cost the buyer a lot of money above the purchase price to repair,” according to the pros at

The inspector will only “inspect readily accessible, visually observable, installed systems and components.” In other words, he or she will not be able to ascertain what is happening behind the home’s drywall or under the floorboards.

The home appraisal, on the other hand, is a process that lenders insist on before loaning the buyer the money to purchase the home.

The appraiser is an unbiased third party who will determine the home’s value on the current market.

While this person is hired by the lender, “the Appraisal Independence Requirements, or AIR, prohibits a lender’s loan production staff from having direct contact with—or influence upon—any appraisers,” according to Kristin Demshki at

The buyer typically pays for the services of both professionals and owns the home inspection report. The lender owns the appraisal but is required to supply a copy upon written request.

Other common misunderstandings about the home appraisal

As mentioned previously, the biggest misconception about home appraisals is that they accomplish the same thing as the home inspection. But, that’s not all that confuses real estate consumers.

Myth: The market value of my home is the same as the tax assessor’s value

Reality: As you know, your property taxes are based on the assessor’s value estimation. value. Assessors use a process similar to that of a professional appraiser, using many of the same public records.

Because the assessor isn’t privy to the particulars of each home (whether the home in question has been updated, for example), his or her estimation of market value may not be the home’s true market value.

At any rate, the assessor multiplies his or her estimation of the home’s value by the county or municipality’s pre-determined “assessment rate, typically 80 to 90 percent.

Here’s an example: The assessor determines that a home is worth $300,000 and the assessment rate is 90 percent. While $300,000 is the market value, the assessed value for tax purposes is $270,000.

Myth: The appraisal is always accurate

Reality: Appraisers are people and, like all of us, they make mistakes on occasion. Most buyers and sellers are satisfied if the lender is satisfied.

Typically, the only time a buyer and seller are interested in viewing the appraisal is when the suggested value is lower than what the buyer has agreed to pay. And, for good reason: the lender won’t move forward if the home is worth less than the amount borrowed.

Again, appraisal reports can contain errors and the buyers are within their rights to request a new appraisal.

When does the appraisal happen?

While time frames vary, FHA borrowers can expect the appraisal to take place shortly after the seller has accepted the buyer’s offer.

What Happens During a Home Appraisal?

Much of the appraiser’s work involves research, back at his or her office. This typically occurs after a visit to the home.

During the visit, he or she will measure the home’s exterior and take interior and exterior photographs. This visit is also necessary to ascertain any conditions that impact the home’s value, both positively and negatively.

The research aspect of the appraiser’s job involves seeking out comparable properties that have recently sold and comparing the subject home to them. He or she will compare the following (and more):

  • Age of the home
  • Condition of the home
  • Number of bedrooms and bathrooms
  • Square footage
  • Amenities
  • Updates

Again, this is a partial list, but it will give you an idea of how the appraiser comes up with a value for the home.

The most important thing for homeowners to do before the appraiser arrives is to ensure he or she has access to crawl spaces, attics, cellars and all the rooms within the home.

While some appraisers claim that the tidiness of a home isn’t considered, the condition is, and a tidy home appears better cared-for.

Don’t make these 3 home selling mistakes

It’s not hard to make home selling mistakes. After all, selling a home isn’t something you do every day. So, learn from others’ mistakes. Take a look at three of the biggies we see in our real estate practice.

1. Don’t disregard the value of curb appeal

There aren’t a lot of studies on just how much or how little value “curb appeal” adds to a home. The most widely-read is a decade old, published by professor Alex X. Niemiera with the School of Plant and Environmental Sciences at Virginia Tech.

What his study found is that landscaping can boost the value of home in various ways. The sophistication of the design gives the most bang for the homeowner’s buck–up to 42 percent in additional value.

Larger plants add up to 36 percent to the value and a diversity of “plant material type” is worth 22 percent.

Another study during that time period found that large plants were the hot button with homebuyers, rather than sophisticated landscaping.

The fact is, curb appeal does add perceived value to the home. Not only that, it is the sole determining factor to getting people out of their cars and into the home.

So, in that way, it may determine how quickly the home sells as well. If your landscaping can use a makeover, go online for inspiration. offers amazing before and after photos and we can always rely on Pinterest for inspirational photos. Go to and enter “curb appeal” in the search box.

2. Don’t make expensive improvements for the wrong reason

Naturally you’ll want to make the repairs necessary to get top dollar for your home. The mistake we frequently see, however, is homeowners who feel they need to make expensive cosmetic upgrades to justify a higher selling price.

“A good rule of thumb for improvements is if it costs you $2,500 to update your bathroom, you should see a market gain of $10,000 to justify the improvement,” claims Michelle LeBow at

You simply will not see that large of a market gain from an updated bathroom. Let the new owners do the updates and price the home accordingly.

3. Don’t hire the first real estate agent you speak with

According to National Association of REALTORS studies, most real estate consumers employ the services of the first real estate agent they speak with. Americans apparently spend more time researching their purchases or on deciding where to have dinner on date night.

It’s amazing when one considers that a home is many people’s largest financial asset.

Not all real estate agents are alike. Just as some hair stylists, attorneys and plumbers are more experienced, more skilled and offer better services, so do real estate agents.

It’s important that you interview at least three agents before hiring one to help you sell your home.

Selling your home? 3 things you need to do during the week leading up to closing

The week before your home sale closes will be packed with activity. Not only will you be finishing up your preparation for the move, but you’ll also need to get the home ready for the buyer.

Here are the three most important things you’ll need to do to ensure that the closing isn’t held up.

1. Gather important documents and other materials for the buyer

The day Martha stepped through the threshold of her first home was exciting, to say the least. As she toured it through new homeowner eyes, however, it didn’t seem the same as when she toured it through starry, house-hunter eyes.

But, there on the kitchen counter was a lone garage door opener and a key. She assumed the key would fit into one of the boxes in the community’s bank of them down the street.

But, which one? It took several back-and-forth phone calls, over the course of about a week, to finally determine that her mailbox was number 5. And her mail had stacked up considerably during that time.

So, the moral of that story is to yes, leave the mailbox key but leave a note describing which mailbox the key fits.

Other items to remember to leave for the buyer include:

  • Garage door openers
  • Landscape irrigation system instructions
  • Pool/spa operating manual
  • Security system instructions

2. Complete all of the buyer’s requests

If any non-fixtures were included in the sale, set them aside so that they aren’t accidentally packed for your move. In fact, put a note on the item or items so that movers and family members understand that the items are to remain in the home or garage.

Often, buyers request that the seller remove certain items from the home. This may include things you have stored on the side of the house, an above-ground pool and appliances.

Ensure that these items and any other personal property are removed from the home before you begin cleaning.

3. Time to clean

Buyers are told to expect the home to be “broom clean” and most sellers haven’t a clue as to what this means.

At minimum, you should:

  • Wipe down the insides of cupboards
  • Sweep and wash the floors
  • Vacuum carpets
  • Remove trash from the property (even if this means making a dump run)

Some buyers expect the oven and the interior of the refrigerator to be clean as well.

Finally, plan on leaving the utilities in your name until the sale is finalized. The buyer will perform a final walk-though of the home just before closing and will want to ensure that the major systems are working.

What you need to know before you buy a vacation home

A vacation is in order right about now, don’t you agree? And wouldn’t it be amazing to have your own little place, tucked away at the lake, by the sea or in the mountains to get away from the rest of the world and the craziness we’ve been enduring?

If you’re thinking of buying a vacation home, there are a few things you should know and maybe even run by your financial planner.

Can your budget handle two mortgages?

Unless you are fortunate enough to be considered wealthy, making two mortgage payments every month may be challenging.

Before letting the dream of a vacation home carry you away, keep this in mind. Ensure that you can make those two payments and still live comfortably.

PNC Investments senior vice president, Jay Mastilak, suggests that “The basic rule of thumb is that your housing costs – including those for your primary home – should be a third of your overall income.”

Housing costs, as we all know, include more than a mortgage payment. Take a look at the following costs to consider when thinking about buying a vacation home.

Upfront costs

Remember when you bought your current home? You paid a lot of lender fees, which are probably a blur at this point. Here’s a short list of the most common:

·         recording fees

·         loan origination fees

·         credit report fee

·         title insurance premium

·         private mortgage insurance

·         points

·         homeowner’s insurance

·         escrow deposits

·         miscellaneous fees

Naturally, if you pay cash for your vacation home, you’ll avoid all the aforementioned fees.

Ongoing Expenses

In addition to your mortgage payment, consider these additional ongoing fees:

  • Insurance coverage for anything not included in your homeowners insurance. Flood coverage is just one example.
  • HOA fees if the home is located in a managed community.
  • The cost of maintaining the home
  • Utilities
  • Security if you won’t be renting out the home in the off-season.
  • The cost of travel to the home.

Remember that older homes and those that are larger than normal, will most likely have higher maintenance fees than newer, smaller homes.

Will you rent it out?

One way to help pay for all of this is to rent the home out while you’re not using it.

A part of the rental income may be subject to federal and state income tax, so you’ll want to run this by your accountant before making a decision.

You’ll also want to take into account that the home will experience more wear and tear if it’s lived in for a good portion of the year. And, if you’ll be hiring a management company to help locate tenants and collect the rent, there will be a fee involved for that as well.

Your accountant can help you calculate how long you’ll need to rent out the home to cover the costs of owning it.

“If your monthly mortgage payment is less than or equal to one peak week rental, and you rent approximately 17 weeks per year, you should have break-even cash flow on your vacation home,” according to Christine Hrib Karpinski, author of “How to Rent Vacation Properties by Owner.”

Again, we aren’t accountants or financial professionals, so run this by yours when making the decision as to whether or not you can swing buying a vacation home.