Little Decorator Details That Can Hinder Your Home Sale

Little Decorator Details That Can Hinder Your Home SaleWe get it … you want your home to be uniquely you … you want it to express your personality … you want colors that make you happy! But wait!  Now you want to sell this home and move on to a new canvass on which to express yourself. Which of your personal touches will add to your home’s resale value and which ones might distract lookers or detract from its appeal to buyers?

  • Funky exterior colors: Unless your home is a Victorian with historic paint combinations or a unique custom home in the country, most buyers prefer colors that match or blend with the neighborhood. While they want the home to stand out for its design, they don’t want a home perceived to be out of step with its peers. If you want your home to stand out, make sure its curb appeal is based on well-cared-for landscaping, a color that blends, but is perhaps deeper or lighter than neighboring homes, and beautifully contrasting trim.
  • Trendy exterior décor: Fountains, statues, gazing balls, bird baths, gnomes and outdoor wall and patio hangings certainly may express your personality and make your home stand out from its neighbors, but buyers want to put their own stamp on the place. Once you put your home on the market, consider removing these personal touches. One place you can let your individuality show is with the color of the front door. Choose a color that makes you happy … but follow your agent’s advice when getting ready to sell, and change out your preferred color for one that attracts buyers.
  • Poor landscape decisions: If, in the early days of your home’s life, you plant trees whose roots may grow under the foundation or buckle the walkways, a buyer will be concerned about costly foundation repairs. Similarly, vines growing on brick walls may look beautiful, but if they’ve been there for a very long time a savvy purchaser will suspect damage to the masonry. Similarly, that koi pond may have seemed like a great idea when you installed it, but a buyer may be concerned about expensive maintenance and upkeep.
  • Complicated interior wall coverings: Wallpaper trends come and go and are the most quickly outdated of interior designs. Flocked damask quickly becomes yesterday’s decorator trend for formal spaces and that border you loved in the kitchens is so last year. Removing well-hung wallpaper, trims and boarders is a messy, time-consuming project that risks damage to the walls underneath. If you know that you’re going to sell your home in a few years, consider using paint to express yourself instead of wallpaper. You can create a border with a stencil, use a faux process on a wall or simply use a variety of colors. Then, when time comes to sell, just paint over your creativity with a beautiful neutral color.
  • Mismatched fixtures: During your tenure in your home you may replace single doorknobs, switch plates, faucets and light fixtures for trendy ones that do not match each other without thinking much of it. For example, you may have a Disney-themed switch plate and light fixture in your daughter’s bedroom. When you get ready to sell, however, consider replacing them all with matching neutral fixtures.

Other mistakes buyers don’t like:

  • Painted brick: Both indoors and outdoors, buyers prefer exposed natural brick. If your brick is already paint, of course, you don’t need to sandblast it, just make sure it is a neutral color. But, if your brick is not painted, leave it alone.
  • Along the same line, buyers prefer neutral mortar colors—in both brick and tile—overly bright or wildly contrasting colors.
  • Poorly maintained pools and hot tubs: Whether in-ground or aboveground, pools and hot tubs are an iffy investment when it comes to selling your home. Buyers typically worry about the ongoing cost of their care and maintenance, and damage any leaks or cracks could cause to foundations, landscaping. Additionally, a home with a pool may be less appealing to families with small children. If you do have a pool or hot tub, be sure to keep it well maintained, and install protective fencing that meets safety guidelines.

If you have questions about the resale implications of décor in your home, contact us and we’ll guide you on the best practices for your home’s future sale.

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Is Seller Financing a Good Idea?

Is Seller Financing a Good Idea?In this current market, with home prices trending up, but access to financing is more difficult post housing bubble. So, if you want to sell your home, is it a good idea to offer seller financing?

What does seller-financing mean?

Unlike a traditional bank mortgage where a lump sum is given to the buyer to purchase the home, seller-financing means that the seller allows the buyer to make payments directly back to the seller. Most often, the homebuyer signs a promissory note with the seller that outlines the selling price, the interest rate, repayment schedule and even the consequences if the buyer defaults.

In most cases, a seller-financed note is short-term. Since most sellers don’t want to carry a note for 15 to 30 years, the typical note is for around five years with a balloon payment at the end where the buyer secures a standard loan for the remaining balance.

Is it good for the seller?

Sellers may choose to offer financing for any number of reasons, but some include:

  • Being able to sell “as is.” If your home requires costly repairs, selling through owner financing may allow you to pass those costs on to the buyer instead.
  • Potential investment income. Buyers looking for owner financing may be willing to pay a higher interest rate to you than you would receive through any other type of investment. Typically, you must own the home free and clear, and the buyer takes on taxes, insurance and any association dues so all income from the payments goes to the seller.
  • Opening up the purchase to additional buyers. Potential homeowners that were hit with difficulty during the housing bubble may not be able to get traditional financing even though they are now able to make mortgage payments. Self-employed or contractor may not be able to get favorable loans due to tighter underwriting requirements and may desire purchasing through seller financing.

Some possible pitfalls include what happens if the buyer defaults. If the promissory note is executed correctly, the seller gets the home back along with all of the monies paid to date. At that time the seller is free to sell the home again, but the “buyers” may leave behind damage and the need for costly repairs.

Some things to consider

If you are new to owner financing, make sure to work with a real estate attorney and a professional real estate agent to make sure the sales contract and promissory note fully protect you. There may be tax ramifications to seller financing, so be sure to contact your CPA or tax professional.

Since it is in your interest for your buyer to be able to refinance at the end of the note, offer to report the payments to credit reporting agencies to help build your buyer’s credit score. While individuals typically cannot report directly to these agencies—they have strict lender guidelines—services like Virgin Money can manage and report payments for you to alternative credit reporting companies such as PRBC, that many mainstream lenders now refer to for information on potential mortgagees.

If you’re considering selling your home, and wonder about seller financing, talk to us. We can help connect you with professionals to guide you through the process while we market your home.

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When to Get Pre-Approval for a Mortgage

When to Get Pre-Approval for a MortgageIf you’re even considering purchasing a home in the next year, the time to start the pre-approval process is now. Why so early? Here’s some advice to get you on track to a smooth purchase transaction. While you don’t want to actually apply for the loan until your are ready to make an offer on a home, working on the pre-approval process allows you to address any concerns that crop up on your credit report, save for extra downpayment, and know how much you can afford before you fall in love with that out-of-reach house.

Shop smart

House hunting without knowing how much mortgage you can be approved for is like a novice making a cake without following a recipe. It might turn out okay, but more likely it will be a disaster.

In a competitive market, you might find the perfect house, but can’t make an offer on it because you don’t know if it’s even in the ballpark of what you can afford. That house could slip through your fingers because other—more prepared—buyers know what fits their budget or overall financial situation, and can make the offer at once. Many sellers, or their agents, reject offers from potential buyers that do not have a preapproval letter from their bank. When the buyer has a preapproval letter, the lender has already verified the borrower’s information, documentation, employment history, income and credit. Even though the preapproval is not an actual loan commitment, it is farther along than without it, and can shorten the underwriting process and loan approval process.

Know yourself

Just because a friend, co-worker or family member got approved for a certain amount, that doesn’t mean you’ll qualify for the same amount, even with a similar credit profile. In fact a survey by NeighborWorks America discovered that while 40 percent of new homebuyers seek advice from family, friends and acquaintances, only about 16 percent seek advice from a real estate professional early in the process.

Fix errors

Going through the preapproval process allows you to take a look at all the potential impediments to getting approved for the loan you need for the home you want. Here are some potential pitfalls to getting approved:

  • Past credit history — a prior bankruptcy, foreclosure or short sale will hamper your new purchase. If you disclose this information to your lender up front, they can direct you toward special loan types, information or instructions that can improve your chances.
  • Shopping for additional credit — applying for a vehicle loan, credit card or other form of credit can lower your credit score by adding so-called “hard inquiries.” Actually obtaining credit after you have received a pre-approval letter is unwise as well, since lenders often check your credit again prior to the actual loan approval. Adding new debt count against you qualifying for a mortgage.
  • Undocumented deposits — since part of the approval process involves 60 to 90 days of bank statements, any large, out of the ordinary deposits made into your bank accounts must be accounted for. This means that a family member cannot “temporarily loan” you money to give the appearance that you have more money on hand in order to get a loan approval. If your family intends to “gift” you with money toward your down-payment, they will need to provide a letter as affidavit that the funds are a gift and not a loan that will have to be repaid.
  • Changes in employment — changing positions, employers, compensation structures (from hourly to commission, for example), or other situations can affect final approval for a loan. Make sure to keep your lender in the loop if your boss offers you a different position, or an invitation to your dream job comes at the same time you’re shopping for a new home.
  • Any other changes to your finances can affect your mortgage approval either positively or negatively. The one that affects it the most, however, is being less than truthful with the lender. If they discover the untruth — and most likely they will — your chances of getting a loan plunge drastically.

Seek professional advice

As your real estate professional, we can steer you in the right direction before you get too far in the process of home shopping. We know lenders that can meet your needs and give you direction on which types of loans might work for your situation. Call us to get started today.

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Energy Conserving Landscaping Tips

Energy Conserving Landscaping TipsAs you plan your landscaping for your new home, remember the green you plant outside affects the green you have left inside your pocketbook. Trees and shrubs can reduce the amount of electricity your home requires. Try these tips to keep some green in you wallet and beautify your green space too.

Trees

Careful choices in the location of trees can shade your windows when they’re saplings and shade your roof when they mature. If you plant leafy green trees on the southern, eastern and western sides of your home, they’ll keep your home shaded during the hot summer months, but allow warmth in during the winter when their leaves have fallen. If you plant them in front of windows they’ll reduce the radiant heat to the reaches the inside of your home. Start with six to eight-foot trees that will grow to 20 or 30-foot shade trees.

Planting evergreen trees on the northern side as a windbreak and reduce that cold air blast from a chill winter storm. A windbreak protects and area as much as eight to 10 times as far away as its height, so a 20-foot windbreak could shield a 200-foot wide area. If the foliage is dense, it can cut wind speeds by more than 80 percent. If you have the space, plant the trees in two rows, or even three for the best windbreak effect.

The estimated savings to your heat and cooling bills can be as much as 25 to 50 percent or more with well-placed trees.

Bushes and shrubs

Shading your air conditioner’s condensing unit allows it to cool air more efficiently. In fact, some estimates are that it gives you’re A/C system a 10 percent boost in efficiency. Be sure to keep plants and shrubs at least three feet away from the outside of the condensing unit. Make sure that the unit has proper airflow. Trim any trailing vines or branches near the equipment or vents so that they don’t get clogged.

Lawn and groundcover

Open green spaces, particularly on the south side of your home, create snow fields … places for snow to accumulate that can reflect light back onto your home and increase the radiant heat effect. In the summer, open fields allow cooling breezes to reach your home.

Light-reflecting stone or concrete reflects light and heat toward your home, causing it to be warmer (or hotter) in the daytime. Darker stone, wood chips, mulch or green groundcover absorbs the daytime heat, slowly releasing it throughout the evening and nighttime. This keeps your home cooler in the daytime but gives some warmth to patios in the evening.

Other elements

If you don’t have room for trees to shade your windows, consider a trellis and an annual vine. Berms, planters, stone walls, fences and other raised elements should be at near, but not attached to, your home to create dead air space. The space acts as insulation and keeps your home warmer in the winter and cooler in the summer by controlling how much indoor heat escapes from your home during cold weather and how much outdoor heat reaches your home in the hot seasons.

Plant for water conservation

Reduce your electric bills and conserve water even more by planting drought-tolerant trees and shrubs that grow well in your climate.

When searching for the perfect new home, let us know about your concerns for energy efficiency and landscape effects that contribute to lowering your energy bills. We can help you find the perfect home to put your ideas in to practice.

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Tax Tips for New Homeowners

Tax Tips for New HomeownersCongratulations on your new home!

Whether a condominium, cooperative apartment, single-family home, townhouse or mobile home, your home-sweet-home affects your tax status. If this is the first year you’ll be filing your taxes as a homeowner, there are a few things you need to know to take the most advantage of your new status. Before filing your taxes, be sure to discuss each of these with your tax professional.

File a Schedule A

If you’ve been used to using the EZ forms to file your taxes, you’ll need to remember to use the 1040 Schedule A instead. It is more complicated than taking the standard deduction, but you’ll be able to itemize costs like mortgage interest, property taxes, the points you paid to get your loan, and mortgage insurance.

  • Mortgage interest: By far the biggest tax break, your mortgage interest is the biggest expense reflected in your house payment. In fact, most of what you pay in your monthly mortgage payment often is interest. In fact, unless your loan is for more than $1 million, you may be able to deduct all of that interest.
  • Home equity line of credit: In general, equity debts up to $100,000* are fully deductible.
  • Points: If you paid points in order to get a more favorable interest rate on your home purchase, the IRS lets you deduct them in the year that you paid them under certain qualifications. Those qualifications include, among other things, that you used the loan to purchase or build your main residence, and are an established practice in your locality. Points paid on a loan for a second home typically must be amortized over the life of the loan.

In addition to the items connected directly with your home, the Schedule A also allows you to itemize personal property tax, state withholding and local taxes. If you donated furniture, clothing, appliances, and other items to charity when you moved, you’ll be able to itemize your charitable deductions as well.

Know your exemptions

When you file a W-4 with your employer, you choose the exemptions you are allowed to claim. When you own a home, you may be able to claim more exemptions on our paycheck. Carefully balancing your exemptions allows you to take home more money in your paycheck during the year, giving you more cash in hand to pay on your mortgage.

Conclusion

If you don’t know the questions to ask, or if you want to purchase a home so that you can take advantage of tax breaks for next year, contact us. We are your real estate professionals and we can keep you up to date on the latest information on the benefits of homeownership.

*Some exceptions apply.

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Create a Timeless Kitchen with the 4 Cs of Kitchen Design

Create a Timeless Kitchen with the 4 Cs of Kitchen DesignNothing says “dated” like a kitchen trend from a decade ago. Consider giving your kitchen a makeover using timeless elements that are always in style. That way, no matter when you sell, your home is always ready.

Color

The simplest and most marketable hue for a kitchen is a clean, bright white. Look in any kitchen design magazine and you’ll see a white theme throughout its slick pages. White reflects light and can make even a small kitchen appear larger.  Of course, there are dozens of shades of white that evoke differing moods from cool and crisp to warm and comforting. You can even mix whites to give your kitchen depth and dimension.

No matter what your price point, all standard kitchen elements from appliances to finishes come in shades of white. If you DIY, you can find white tiles, paints, appliances, trims, sinks and cabinets.

Cabinets

Speaking of cabinets—the most timeless cabinet design is the Shaker style. A true Shaker style is a flat panel door with a square frame known as rail and stile construction. You’ll find Shaker style cabinets in country cottages, contemporary lofts and classic homes. If made from fine wood, a simple polyurethane finish will display the wood’s beauty, but as in the section above, a white cabinet paint or finish will keep your kitchen beautiful for years to come.

Shaker-style cabinets span all price ranges and quality levels. You can remodel your entire kitchen or simply replace the doors and drawer faces. In fact, if your kitchen has odd-sized custom cabinets or door and drawer sizes from another era, and you’re handy with tools and looking for a budget-friendly solution, you can even make your own.

Counters

The third “C” is the countertops. From Formica to granite, countertops are the most used part of the kitchen. While Formica definitely shouts, “dated,” to most buyers, granite is beginning to be cliché as well.

The most timeless surfaces for your countertop include:

  • White/black marble
  • Soapstone
  • Slate
  • Natural tile
  • Butcher-block
  • Concrete

Solid-surface materials such as Okite, Silestone or Corian in designs that mimic marble, stone or lighter granites and neutral colors promote an enduring look. Better for your pocketbook are butcher-block and concrete surfaces.

Cookspace

Classic kitchen layouts make moving from countertop to cooktop, refrigerator to sink or cutting board to oven simple. The most classic are: I, G, C or L configurations.

  • I — The “I” kitchen is a simple, single-sided galley and works great for small spaces such as lofts and smaller apartments. In an open space it only requires one wall, and adding an island opposite can create a full galley.
  • G — The “G” is a full galley kitchen with workspace on two opposing sides. The best arrangement has a prep area equidistant from both the sink and the cooking space.
  • C — A “C” (also called “U”) kitchen has cabinets on three sides. In an open design one side would be a peninsula. Busy bakers and cooks like the C or U shape for its large amount of counter space and classic work triangle.
  • L — An “L” kitchen has cabinets against two perpendicular walls and often has a center island. Popular in open floorplans, the L-shape has plenty of space and two walls of cabinets. Typically, the sink is on an exterior wall with a window to let in light.

If your kitchen is not one of these classic layouts, consider moving some things around to mimic these designs.

If you’re thinking of selling your home, let us give you a professional evaluation of your current kitchen before you spend to redesign it. We can help you determine which changes will give you the best return on your investment.

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Loan Options with Low Downpayments

Loan Options with Low Downpayments

U.S. economists expect 2015 to be a strong year for housing. What this means to you is that more homes are selling and the supply of available homes is decreasing. This also means that prices likely will increase.

If you’ve been thinking of buying a home, now might be the time even if you haven’t saved up that full 20% downpayment yet.

Low mortgage rates

Mortgages rates have been at their lowest since 2013, with APRs in the three and four percent rates. With VA and FHA loans beating out conventional rates, even homebuyers with less money saved up can get into a home.

Misconceptions about the “twenty percent down” rule:

  • Many potential homebuyers believe that 20% down is required to get any mortgage. They will delay buying a home because they haven’t been able to save up enough for that large of a downpayment.
  • They may believe that with 20% down they are guaranteed a loan. Potential first-time buyers sometimes get the idea that once they have that large of a downpayment it will cover over any blemishes in their credit report or past credit history.
  • They believe they will get a better rate with 20% down.

What 20% down does:

  • Improves the chance you will get a conventional mortgage. Regular lenders ask for a 20% downpayment because it improves their ability to sell your loan.
  • When the downpayment is as high as 20% it meets some of the rules issued by the Consumer Financial Protection Bureau. In addition, the homebuyer will need to meet a 43% debt-to-income ratio, so it doesn’t necessarily mean you can get a bigger loan.
  • When you pay 20% or more down, you are not required to buy private mortgage insurance (PMI). This reduces your monthly outgo and saves you a bundle.

Options with less than 20% down:

You don’t have that twenty percent saved up. So can you still get into a home? Yes! Being able to afford a home is not about how much money you can put down; it is about whether or not you can make the monthly payments. Larger downpayments mean that your monthly outgo is lower. But there are other options:

  • FHA Mortgage: A FHA insured mortgage requires just 3.5% downpayment. FHA loan guidelines have a liberal approach to both downpayments and credit scores. In fact, borrowers with a lower FICO score can still get an FHA loan if there is a reasonable explanation for why their score is lower.
  • Conventional 97: Available from Fannie Mae and Freddie Mac, the Conventional 97 is a fixed-rate loan that requires just three percent down, and the downpayment can come completely from gifts by blood-related or marriage-related donors. A Conventional 97 loan cannot be greater than $417,000 and can only be used on a single-unit dwelling.
  • VA Loans: Members of the active duty and honorably discharged U.S. Military and surviving spouses are eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans offer a zero downpayment and in higher cost of living areas can be made for up to $1,094,625.
  • USDA Mortgage: This no-money-down, 100% financing option is available to non-military borrowers and is offered through the U.S. Department of Agriculture. Known as the Rural Housing Loan, it is also available to buyers in suburban neighborhoods as well. Often, the USDA loans are the lowest cost option for borrowers.

Qualifying

Not everyone will qualify for a lower cost or low downpayment loan because that was a big contributor to the housing bubble, but if you are interested in home ownership, one of these options may be for you.

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House or Condo?

House or Condo?One of the big decisions facing homebuyers is whether to purchase a home, or to buy a condominium. Just to be clear, as used here, a condominium is a type of housing where a buyer owns a specific part of shared property. Typically, ownership is of the individual unit and a percentage interest of the community space. So, a patio home that is freestanding but that shares community property, a clubhouse, etc. can be deemed a condominium if the land under the home belongs to the association, while a freestanding home that may share an association pool or community park is not.

Risk

Some homebuyers believe that owning a condominium is less risky than owning a house. This is not necessarily the case. During the economic downturn, condo owners were hit just as hard as single homeowners. The risk is based on your mortgage and your ability to make your payments, so in either case, if you lose your job your home is equally at risk.

Investment

Sometimes it makes more sense to buy a condo if you plan to live in it for a while and then turn it into a rental. Be careful to make sure the association you purchase in allows you to rent the property later. FHA requires that a certain percentage of condominium units be owner-occupied, so make sure that your purchase fits into that criteria.

Maintenance

Single-family homes typically require the owner to handle all of the maintenance from the yard work to replacing the roof or leaking water heater. Not only can this costly, if you are unable to do the work yourself, you have to pay the going rate for contractors. In many condominium complexes, the exterior work—and even some interior repairs—are done by the association. Funds for pay for the work come from your regular monthly association dues. Landscaping, masonry, exterior paint and other costly maintenance items are scheduled on a routine basis so you can come and go, have weekends free of yard work and even be away for an extended period without worrying about things getting done.

Dues

One potential challenge with condominium ownership is that the association dues can continue to rise as inflation, cost of repairs, et cetera, rise. Sometimes an association will require a special assessment to cover damage from storms (usually insured, but the deductibles need to be covered), or for upgrades that were not planned into the long-term maintenance.

Which should you buy?

Whether you want a condo, patio home, unit in a high-rise or a single-family home, there are risks and rewards to both. Your real estate professional can help you determine which is the best option for your situation, so give us a call and we’ll show you what is available to you.

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