Is It Time to Stop Renting?

Is It Time to Stop Renting?It’s not your imagination that rent keeps going up. In fact, across the United States, from the end of summer 2013 to the end of summer 2014 rents increased over six percent … and in some housing markets rents increased by as much as 10%. Perhaps now is the time to make the move to home ownership.

Calculating the cost

There are different costs and benefits associated with owning versus renting, so a simple comparison of monthly payments might lead you to believe one is better over the other. To calculate the real differences, and therefore the real cost or benefit, you need to dig a little deeper. For instance, in this New York Times article, they used a $250,000 home as their example with a 9-year tenure, a 30-year fixed 4.34% loan with a 20% down payment. In addition to these basic costs, they factored in taxes, maintenance and fees (including estimated closing costs). Using the resulting monthly cost of $961, you can determine if buying or renting is better if you can rent a similar home for less than $961 (assuming the rent remains static for the nine years.

You can change the amounts in the calculator by moving the sliders so you can put in your own numbers. Remember, however, that there are extra fees associated with renting too: broker fees, security deposits, renters’ insurance and pet fees, among others. Additionally is the potential for rent increases at the end of each lease period.

One benefit of home ownership not taken into account in this model is the potential to reduce your income tax burden. A portion of your mortgage interest may be deductible as well as some of the points and property taxes.

Budgeting for hidden costs

Before buying, talk to us about the additional costs of home ownership. We can help you estimate maintenance expenses such as a new roof or heating and air-conditioning system. When we help you budget for your new house, we can factor in what you’ll need to set aside to cover these expenses.

Tax increases, levies for schools, roads and community improvements and other municipal costs can increase even in your first year of home ownership so when calculating what you can afford, add in a little extra for taxes too.

If you purchase a condominium or a home that is part of an association, you can expect association dues to rise annually unless the bylaws stipulate otherwise. Since one of the factors affecting association costs is insurance, expect your dues to increase, or to have a special assessment if your community suffers storm damage or liability costs. In addition, speaking of insurance, your premiums tend to go up each year as well. Consider these extra items as part of your overall housing cost.

Other expenses to figure into your budget:

  • Lawn and garden care—including extra water costs if you have large grass and flower areas, equipment and fuel or landscaping services, new plants, mulch and fertilizer
  • Insurance deductibles—if a hailstorm damages your roof, your insurance will replace it, but you’ll have to come up with the deductible to get the job done
  • Liability insurance—as the homeowner, if someone is injured on your property you’re responsible. You’ll need to make sure your homeowners’ insurance includes liability.

We want you to be prepared

Buying a home is a long-term commitment. We want to partner with you to make sure you’re able to both keep and enjoy that commitment. Call us today and we’ll help you prepare for that move from renting to owning … eyes wide open, so that your purchase remains a lifelong joy.

Compliments of Virtual Results

Professionals Answer: "How Do I Increase My Home's Value?" (Part 1 of 3)

Professionals Answer: "How Do I Increase My Home's Value?"When preparing to sell their home, a common question pops up. Homeowners want to know what they can do to get the maximum selling price on their home. Of course, the answer to “What can I do to increase my home’s value or get a better selling price?” is difficult to answer because each home has it’s own set of improvements, renovations or upgrades that might make the difference for it’s specific market. In general, however, potential improvements can be broken out by the amount the homeowner has available to spend and the return on investment, or R.O.I.

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Low cost improvements make a big difference when your home is structurally sound, but appears a little lived-in. Number one and two on this list are:

  1. Clean, clean and then clean some more. A home that is not clean gives buyers the impression that your home also is not cared for. Dirt and grime on the surface makes them wonder about hidden mold, termites or other less visible problems. Wash walls, scrub bathrooms, make those windows sparkle, deep clean or at least spot clean the carpet. Be sure to dust ceiling fans and light fixtures, clear out cobwebs from corners and polish wood railings and floors.
  2. De-clutter, remove and store. Buyers typically look for space, extra room and plenty of storage. Many potential purchasers do not have the ability to “feel” the size of a room when it is overfilled with furniture, toys, stacks of books or magazines and other collections of items common to an occupied home. They need you to remove as much clutter as possible so that they can visualize their own furniture fitting in that area.
  3. De-personalize. Along with de-cluttering, removing family photos, children’s art, trophies, taxidermy, golf ball collections and other personal or less ordinary items gives your home the opportunity to appeal to a wider group of buyers. When your home appears to be a bachelor pad, a family or couple may be less inclined to see themselves in it, and when a house appears only family oriented, it may have less appeal to a work-from-home entrepreneur looking for extra office space.
  4. Clear the yard. Remove any junk, broken patio furniture, play equipment and other debris from the exterior. You don’t know if a buyer is looking for a house or is looking for a yard for their children to play in, or a place for outdoor entertaining. A cluttered yard gives a first impression that is difficult to overcome, no matter how much you do to the interior.
  5. Fix broken things. Broken outlet covers, screens and other items give buyers the notion that your home may need too much work. Simply fixing that leaky faucet or running toilet, replacing a broken tile or piece of wood trim or otherwise repairing simple items boosts your home’s appeal.

Call us …

Give us a call and we’ll walk through your home with you to give you ideas on the simple things you can do to improve your home’s value.

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Planning Appropriately for a Renovation

Planning Appropriately for a RenovationYou walk into a home that potentially has the perfect layout, although the kitchen is dated, the floors need upgrading, the bathrooms are awkward … but the price is right and you’ve always wanted to customize a home … so you buy it with renovation in mind. How hard could it be? After all, those television shows remodel an entire home over the course of a weekend. You can live in the mess for a couple weeks, right?

Adjust your timeline

If you’ve never lived through a renovation, you’ll be tempted to underestimate how long it will take. It is a mistake to think of renovation time in terms of how much labor you think it requires. For many projects, labor time is the least amount of time spent on the project.

Say what?

That’s right, a large number of projects require far more non-physical-labor time than the actual construction work. There are approvals, plans, permits, shipping time for materials, weather delays, insurance certificates and myriad other preparations required far in advance of taking a hammer to the wall.

Hidden delays

Once you have all your plans and approvals in place, the next potential delay may come sooner than you think. Especially in kitchen and bath renovations, the possibility that plumbing or mold problems may upset your timeline increases. No matter how old the home, broken pipes or seepage can cause massive problems that lay hidden behind the walls, fixtures and cabinets. Once you’ve opened them up, they must be repaired. Older homes may need new wiring and other electrical upgrades to bring the renovations up to code.

Don’t skimp on these areas just to hurry up the process. When the inspector reviews the work, you may end up with more delays having work torn out and redone to meet code. If your home’s renovations do not meet code requirements, you will find it difficult to sell your home later.

Depending on the age of your home, your renovations may expose lead or asbestos. The cleanup for either requires special certification in asbestos abatement and lead paint removal. Disposal requirements for either element may increase your bottom line as well, so plan for that contingency.

Stay or go

Homeowners sometimes fail to fully consider the ramifications of not having a bathroom or kitchen for weeks at a time. No only does it affect everyday life, it can pose a danger for children and pets. Not only can exposed asbestos or lead cause illness, but displaced tools, nails and other sharp objects may injure unsuspecting family members. During construction, expect a considerable amount of dust and debris. Clothing, dishware and other personal items may collect drywall dust. Breathing in dust, mold, and other detritus from construction can trigger respiratory illnesses.

You may need to plan for temporary shelter to keep family life running smoothly.

Hidden costs and other options

All of these delays can affect your bottom line. In fact, underestimating and not planning for contingencies can derail your renovation before it’s completed. In fact, underestimating construction costs is such a common problem that many contractors routinely factor in an additional 20% to 30% to protect their ability to realize a profit. If you’re doing the work yourself, these additional costs and delays can strain both your bank account and your patience.

If we know what you want, we may be able to find a home where someone else has done the renovating, or we can suggest contractors that will be helpful in working your way through potential upgrades and renovations before you move in.

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Planning a Fall Open House

Planning a Fall Open HouseYour home is newly on the market this and you want to have an open house, but you don’t know how to show it best in the shorter autumn days. As the weather turns toward fall and winter, consider these ideas for making your open house bright, warm and welcoming.

Curb appeal

In the spring and summer, it’s easy to make the exterior of your home appealing by keeping the lawn green and trim, adding showy blooms to your flower beds and trimming the hedge. If your lawn is the type that goes dormant in the winter, you know it won’t look its best, but you can make sure it receives a final trim and has clean edges. Keep the leaves raked and bagged, and add fresh mulch to your flowerbeds and the bases of your trees.

To bring some color to your exterior, add some potted chrysanthemums—they come in a multitude of beautiful colors that can display your architecturally interesting porch, fill in blank spaces in your planters or hide pruned bushes. You can even add a little lawn decoration with hay bales, pumpkins, squash or gourds, mums and marigolds, and brightly colored foliage such as crotons. Avoid gaudy or garish decorations, however, as they can be a distraction.

Prepare for inclement weather

All the meteorologists in the world cannot predict with complete accuracy what the weather above your home will be on the day of your open house, so you need to plan for multiple contingencies. That means protecting your entryway from the mud and leaves that an unobservant guest may track in, having places for coats or umbrellas and other weatherproof gear. Here are some options to help:

  • Place a welcome mat outside both the front and back doors especially designed to remove dirt from shoes and boots like this one from LLBean.
  • Designate a place for wet outerwear. When potential buyers arrive during a downpour, it is important to let them know you have planned for them. Have empty hooks, or an empty coat closet available for their wet coats, scarves and hats.
  • Place an umbrella stand just inside the door. If you have room, you can use a combination coat rack and umbrella stand. This decorative rack from the Home Depot has room for both in a stylish but heavy-duty construction.
  • Once winter weather sets in, make sure your sidewalks are swept or shoveled, and that you have removed any ice from pathways and steps.

Create a warm and cheery environment

When it is cooler outside, buyers want to know that the furnace or radiators function. Avoid overheating your home, which can make it uncomfortable for buyers that keep their coats on. Aim for about 70°F. Be sure that windows are caulked and that there are no obvious drafts. If you have a gas fireplace, consider turning it on to add a cheery glow, but if your fireplace is wood-burning, consider using candles inside the fireplace instead since some buyers may be allergic to wood-smoke.

Finally, make sure your windows are clean and sparkling. Open drapes so buyers can see the view, and turn on lights in every room to chase away any dark shadows. You can add seasonal interest with a pretty wreath on the door and pumpkin or spice scents throughout the home.

We can help

When preparing your home for a fall open house, we can help you determine the best way to display your home’s special features.

Compliments of Virtual Results

Apple Watch and other Smart New Home Products

Apple Watch and other Smart New Home ProductsNot just relegated to the workspace or entertainment, home technology products focus on every room in your house. Check out these smart-home products geared to make your life easier:

Apple Watch useful apps for home

In addition to your social media apps, maps and schedules, apps for Apple’s new smart watch include one from Honeywell that allows you to change your home’s temperature from your wrist (rivaling the Android Wear with Nest thermostat control), and another from Lutron offering light control. If you own one of BMW’s electric vehicles, your Apple watch will monitor its charge level and even remind you where you parked it. If your daily commute uses public transportation, the City Mapper app will keep you up to date on times and the right stops to get to your destination.

Next-generation cooling

Technology company Quirky joined forces with GE to make a smarter air conditioning system. Called Aros, the wall unit connects to a smartphone app allowing you to set the temperature in anticipation of your arrival home. Using information from your schedule, budget, location and current usage, it learns your preferred temperature and devises economical ways to keep your home there. It evens learns the temperature you appreciate most upon waking.

An innovative air-flow design pushes cool air up, increasing circulation and it’s three fan speeds, flatter design and sleek LED display add to its discreet designer appearance.

Home safety

Canary wireless home security packs a complete system into one small device designed to adapt to your home and activities over time and use. It sends notifications and HD video to your smartphone and monitors activity, noise levels, air quality and temperature and even humidity. When something is out of the ordinary, it lets you know. Best of all, it doesn’t require installation. Simply set the device in a central area of your home.

Easy entry

German company KISI Systems offers a keyless entry solution for homes or offices with revocable access. If you travel and have house-sitters or a neighbor that comes in to water your plants, or you use pet-walking or cleaning services when you’re at work or away from the house, or just want more control of who enters your home, this device is for you.

The KISI system allows you to limit entry during certain hours or certain days with the click of a smartphone app. You can track activity and know who comes and goes, and when they were there. The KISI key is linked to their specific phone and you can instantly delete or cancel it remotely it if they lose their phone or you want to restrict access.

Upgrade your home

We can help you upgrade your home just in time for the 2015 release of the Apple watch. We’ll search for the perfect home for you while developers are busy creating the apps that will run your new house more efficiently and other technology giants advance more products for home use.

Compliments of Virtual Results

How to Make Your Living Room Flow

How to Make Your Living Room FlowOne of the first decisions you make in your new house is where to place your furniture. In the living areas, furniture placement can make or break your home’s “flow” or ease of movement. A sofa placed just two feet one way or the other, a side table too far out of reach or a rug that catches in the doorway can make a magazine worthy design a frustrating living experience.

Know your limitations

Beautiful magazine designs inspire us to try to work the same magic in our own space. Sometimes, however, achieving that beautiful look results in awkward movement and less than ideal daily use. Remember that the camera angle hides parts of that lovely layout meaning that it might not work the way you want in your space.

Note your room’s dimensions, and the location and orientation of windows, doors and doorways, fireplaces and other immovable architectural details. Draw a rough sketch of your room’s layout. Using a scale of one inch to one foot, or for larger rooms a half-inch to one foot makes your layout simpler. If you use metric measures then use a scale in multiples of 10 for simplicity.

Now, imagine the most efficient ways to enter and leave the room, reach switches, outlets and windows, or view the fireplace. Shade in a pathway to those places with at least 24 inches of walk space. If you end up with too much shaded area, you’ll have to decide which pathways are most important.

Take measurements of your furniture. Be sure to use the longest and widest parts. Create cutouts for them that you can move around on your sketch to find possible locations. Make note of all the options that might work. This simple activity saves on back pain and stressing out those friends that offered to help you move.

If sketching isn’t your forté, try this living room layout infographic for help.

Note these considerations

As you try various arrangements, ask yourself these questions:

  • Can I see the television from the most comfortable seating?
  • Does the height of this piece block the windows or switches?
  • Can I reach a side table or coffee table from each seat?
  • Do my lamps and other lights offer correct light to each space?
  • Can I enter and leave the room without having to move more than 90 degrees around furniture?
  • Is my seating too near/far from the fireplace/air conditioning/radiator?

Try it on for size

Choose the layout that appears to satisfy the most possibilities for keeping your room flowing in a natural way. Move your larger pieces of furniture into place and try sitting in them, walking around them and moving in and out of the room and surrounding areas. Adjust these pieces until you’re satisfied before moving in all of the smaller pieces. If you have to change or replace an item to make it fit your new space, you want it to be the smaller or lesser expensive pieces.

We can help

If you have specific furnishings that need to fit in your new home, let us know ahead of time. We’ll show you homes that will fit your furnishings.

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Getting a Mortgage for Self-Employed

Getting a Mortgage for Self-EmployedPrior to the new banking regulations, getting a home mortgage if you owned a business, worked freelance, on contract or were otherwise self-employed was possible, if complicated, using stated income, bank statements and other alternatives to W2 income statements. New regulations on so-called stated income loans, however, make getting that mortgage a bit trickier for self-employed, Schedule C taxpayers.

For typical W2 employees, the requirement for proving income for both conventional home loans and FHA loans is a copy of two year’s tax returns. Lenders take the net adjusted gross income for the two years and average it, or if the most current year is lower than the preceding year, they use that number.

Since many self-employed folk take exemptions for home offices, vehicle use and other legitimate business expenses that reduce their tax load, their adjusted gross income typically is somewhat lower than their usable income. Different lenders in this new banking era require different documents and proof of income in order to verify usable income for mortgage purposes.

Here are some ways you can improve how lenders see you

  • Find a mortgage professional experienced in self-employed mortgage qualifications. An experienced and knowledgeable loan officer can show you how to increase the amount of your income that qualifies by adding back depreciation on vehicles, properties or equipment, depletion, business use of home and salaries or owner draws that the business paid to you.
  • Know how to qualify for an FHA loan (see below).
  • Some alternative loan programs still accept bank statements and proof of deposited amounts to verify income instead of tax returns. These programs work well for buyers that have cash-based businesses, haven’t yet filed their last year’s tax returns or that have minimized their tax liabilities. Alternative loan programs are note available at market rates, however, so what you save in taxes may go to higher interest rates.
  • Make sure your credit score is above 700 and your current credit usage is low. So, if you’re using credit in order to increase your credit score, make sure you are paying the cards on time and that the available credit remains high compared to usage.
  • Prepare a comprehensive profit and loss statement year-to-date for your business. Providing a third-party validation — outside bookkeeper or accountant—of your income or that the use of business funds for your home down payment will not affect the business’s future viability minimizes the potential concerns a lender might have about your down payment sources.
  • Be prepared to pay a higher down payment. If a lender knows you’ve been able to save up a higher down payment based on your current expenses, they’ll look more favorably at your ability to make your mortgage payments.

You can qualify for an FHA loan

According to FHA.com, the self-employed can qualify for an FHA home loan. They advise self-employed applicants to plan ahead (about a year in advance) in order to make sure they can meet the qualifications. Showing reliable income over two years, keeping accurate records of income, expenses, taxes, issues requiring credit repair or dealing with disputes on credit reports takes time. If you do these things, however, you’re more likely to qualify for an FHA loan.

So, is it easy? No. Is it impossible? No. Can it be done? Yes! You just need to be able to prove that you’re a good risk.

When looking for a home, be sure to advise us if you are self-employed. We can help you get started on the pre-qualification and pre-approval process so that you are far down the road when we find the home of your dreams.

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Downsize to Upgrade

Downsize to UpgradeWhatever your reason for wanting a smaller home—empty nest, tired of cleaning, less mobile, closer to grandkids, moving from the suburbs to be nearer to work, single again—downsizing does not mean downgrading. In fact, when moving into less space, make it an upgrade at the same time.

Compact is the new supersized

If you’re moving from an older large home, you may have a big kitchen, but is it truly workable for you? Does the storage space work for that modern blender-mixer-food processer you’d love to own? Can you reach your workspace and the sink in one smooth motion? A smaller kitchen, designed around the way you use it, may feel enormous to you.

Just browse the Ikea showroom or the latest design images at Houzz to see what designers have come up with to make the most of smaller spaces. Functionality is the key!

Enlarge usable space

Is your larger home divided up by hallways, staircases, closets, nooks and crannies? Your new space might utilize an open floor plan with rooms connecting off the main room. Houses with open layouts and combined spaces make your home seem more expansive.

Divide your kitchen area from your living area with a counter-height eating space. It opens up both rooms making them warm and inviting.

Create multi-tasking rooms

All of that formerly unusable square footage now adds extra spaciousness and versatility for entertaining when added to your main living areas. Adjoining living and kitchen areas makes interaction with your guests while cooking a snap. Turn into a superhero that can be in two places at once: bake cookies in the kitchen and watch the grandkids play games in the living room at the same time.

Other multi-use ideas:

  • For those occasional overnight guests, consider making the living area double as the guest room.
  • Create a cozy office in the corner of the kitchen or bedroom.
  • Combine a convenient stacking laundry area with your walk-in closet or bath.
  • Utilize outdoor patio space with French doors off the living room or kitchen

Go tall for illusion

High ceilings give the illusion of space. Vaulted ceilings in a smaller single-story home make it seem sweeping, light and airy. Taller walls allow room for your art collection all in one place, while upscale floor-to-ceiling glass tiles in the bath area evoke a spa-like atmosphere.

Make sure storage utilizes the full height in your space. Remove false soffits and install cabinets that reach the ceiling. Consider putting glass doors in the upper areas to display artwork and remove precious keepsakes from busy little fingers.

Shop for amenities

Community access to pools, clubhouses, golf courses and playgrounds expands the usefulness of smaller homes. If you’re downsizing to avoid yard work or exterior maintenance, consider a condominium community or patio home. When seeking easier access to shopping, socializing, public transportation and other services make sure your real estate professional knows what’s important to you.

Make less more

So, when looking for that new smaller space, let us help you find an affordable home you can customize into the smaller space of your dreams.

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