Replace It Anyway

If it’s not broken, why would a homeowner consider replacing something as expensive as a toilet when there may be other things in the home to replace that provide more aesthetic appeal. Don’t be too quick to ignore the functionality and the reliability of this basic convenience.toilet.jpg

The first rationalization might take place at the economic level. A water-saving model could easily pay for itself in a few years and then, there is the good feeling of participating in the conservation of our natural resources.

Having to plunge a toilet more than once a week could motivate a homeowner to spend money on a replacement especially, if having made repairs to the flapper and fill valve didn’t solve the issue.

Maybe your existing toilet has ugly scratches that make it difficult to clean. Maybe there are cracks in the tank or bowl that you’re concerned will develop into a leak at the worst possible time.

The average cost to replace a toilet is around $400 with models ranging more and less based on the features and brands. Round toilet bowls tend to take up less room, are less expensive and better suited for children. Elongated bowls generally take more room, have more powerful flushing action, more comfortable, more stylish and cost more.

Replacing the shut-off valve for the toilet could be a good thing to do while you’re replacing the toilet. Generally, it is as old as the toilet and having a reliable valve that works could be very convenient in a future repair or emergency.

There are a variety of videos on YouTube that could give you the confidence to do it yourself or simply, to have a better understanding of the scope of the project

What Does It Mean That A Home Is Available For Short Sale And Should You Buy Such A Home?

Ever run across a home listed for sale and the words in the marketing remarks mention short sale? Often times there is no room to explain what a short sale is or what it involves so homebuyers may be left confused by the term and unsure if they should consider buying a short sale home or not.  This article explores what a short sale home exactly is and discusses whether homebuyers should consider purchasing a home that is being sold as a short sale.

What Does Short Sale Mean With Regards To Selling A Home?

A short sale is the process whereby the mortgage lender agrees to allow the homeowner to sell their home for less than the amount that is owed on the mortgage.  A mortgage lender does not have to agree to any sale of home unless they are getting paid in full everything owed to them. Mortgage lenders generally have a first position lien (generally the highest priority in rank unless taxes are involved) meaning they must be paid off first with the proceeds from any sale.

A homes value may be less than the amount of the mortgage due to factors such as a decline in the overall value in a neighborhood, the homeowner owing more than the home is worth (this is not as common as it was in the past when lenders allowed 125% mortgages but can happen with multiple loans like a regular mortgage and home equity loan), a condition issue with the home or land,  lack of upkeep or something else.  Where the homeowner plans up making up the difference between a boarded up househome’s sale price and the amount of the mortgage by paying out of pocket there is no short sale situation and the lender will not care so long as they get the full amount of money owed on the mortgage back.

The homeowner may be selling for any number of reasons such as they have to move for a job change, they cannot afford the mortgage payments, or the condition of the home makes it unlivable for them.  A lender may agree to allow a home to be sold via short sale as the alternative of foreclosure could be a longer, more drawn out process where the homeowner has little incentive to cooperate with the lender and could cause further damage to the home out of spite.  By allowing a short sale the lender in theory may be able to get back more money than through a foreclosure.

The home seller who needs to sell their home short should consider whether their loan or state laws provide that the loan is recourse or non-recourse.  In a non-recourse loan or state the bank has to accept whatever cash the home for sale gets and cannot go after the homeowner for the difference. In recourse loans or states with recourse laws the lender can sue the homeowner after the sale to try and get back any amount of shortfall between the actual loan amount still owed and the value of the home.  Whether the lender will be successful in getting that difference back is another story and the cost of suing to get the money back sometimes may be more than the amount of money they would expect to get back.  Of course in recourse or non-recourse loans the homeowner can expect a big hit to their credit scores since the lender will note on their credit files that the homeowner needed to sell their home via short sale and could not pay back the full amount of the mortgage.

Should You Consider Buying A Short Sale Home?

As mentioned above a home being sold short may not necessarily be in the best shape nor be presented the best as the owner has little incentive to invest more money into getting the home ready for sale.  If the homeowner is selling because they no longer can afford the home then their budget has already taken a hit from past mortgage payments.  Even so on the other hand if it is more a matter that the neighborhood value has declined there is still not much incentive for the seller to put a lot of money into making the home look nice when the price they get will be less than the mortgage payoff amount and they could be liable to make up the difference down the line.

Especially homes with condition issues like a bad foundation, roof problems, water damage, don’t expect the home seller to be able to address those issues.  As a buyer it will often be the case of what you see is what you get.  You can have the home inspected in order to make sure there are no major hidden issues but outside of trying to ask the lender to accept an even lower offer amount don’t expect much in the way of negotiation either from the seller or from the lender.  Some lenders may not even entertain further reductions in price due to condition and then your option as a buyer is to take or leave the property as is.  So the best bet is to approach a short sale property as you would any other property and make sure all inspections are done to have a full understanding of what you are truly getting when you purchase the home.

Also a short sale will not be a fast process where the homebuyer and seller agree to a price and then are able to close in thirty days or less.  In the past before lenders had proper systems and/or departments in place to handle short sales it could take a lender 6-12 months to even look at a short sale offer and get back to the buyer.  The last housing crisis forced a lot of lenders to learn how to better handle short sales so for many it will not take that long currently.  But do expect to wait a couple of time is moneyweeks prior to the lender providing a yes or no answer to an offer.

When the real estate market is hot as it has been recently with sales happening rapidly and multiple offers being common you should fully expect the lender to wait to collect as many offers as possible and then ask for final and highest offers before they make a decision.  After all the lenders are trying to get the maximum amount possible for the home in order to collect as much money as they can towards paying off the mortgage. Once the lender accepts an offer then begins the process of inspections, appraisal (for purchases being made with a mortgage), and more which can add another 30 days to the wait.  Meanwhile the seller may only be minimally taking care of the home to the extent it is livable for them.

Bottom Line

A short sale is the process whereby a homeowner wants to sell their home for less than the amount of the mortgage on the home due to some reason.  The mortgage lender who lent money to the homeowner for that home must approve any short sale offer.  An offer to purchase a short sale home is not a quick process and can take many weeks or months before the buyers can call the home their own.

Before You Leave Town…

Along with all the planning of what you’re going to do and where you’re going to stay, consider this checklist to make you feel more comfortable while you’re away from home.

  • Ask a trusted friend to pick up your mail, newspaper and keep yard picked up to avoid an appearance of not being at home.
  • Stop your mail (USPS Hold Mail Service) and your newspaper.29938746-250.jpg
  • Don’t post about your trip on Facebook and other social media until you return; some burglars look for this type of announcement to schedule their activities.
  • Do notify police or neighborhood watch – especially if you’re going to be gone for more than just a few days. Let your monitoring service know when you’ll be gone and if someone will be checking on your home for you.
  • Light timers make it look like someone is home. Set multiple timers for various times to better simulate someone at home. There are plug-in modules for lights and appliances that would allow you to control them from your phone while your out of town.
  • Do unplug certain appliances – TV, computers, toaster ovens that use electricity even when they’re off and to protect them from power surges.
  • Don’t hide a key; burglars know exactly where to look for your key and it only takes them a moment to check under the mat, above the door, in the flower pot or in a fake rock.

These easy-to-handle suggestions may protect your belongings while you’re gone while adding a level of serenity to your trip.

8 Signs Your House Is Holding You Back

Owning a home can be a powerful thing. It can bring happiness and security to you and your family, and it’s often a wise financial decision. But sometimes, your house can be a problem.

Many of us fall for the temptation to purchase a home that is ultimately too costly for us to sustain. We pursue our “dream home” only to find that the costs of ownership and maintenance are actually preventing us from achieving other goals. Let’s examine the signs that your house may be holding you back.

1. It is costing you more than 30 percent of your income

It’s fine to budget a certain amount of your income to housing costs, but at a certain point, that share becomes too much. The federal government advises spending no more than 30 percent of your income on housing. This is not a requirement — very wealthy people may be able to afford more — but it’s a good rule of thumb. For most people, once you pass that 30 percent threshold, you may find it hard to make your housing payments and cover other expenses in your life.

2. You’re barely making a dent in the loan principal

One of the major advantages of owning a home versus renting is that you have the opportunity to build equity over time. This can be a major part of building net worth. But, a large mortgage loan with unfavorable terms could mean that you are paying mostly interest and very little principal.

With most home loans, homeowners can build equity over time — if they’re patient, they can pay off the interest and begin chipping away at the principal. But some mortgage loans (such as interest-only or negative amortization loans) can leave a homeowner with little to no equity and may even leave them owing more than the home is worth. This is a hard situation to get out of, but if you can find a way to refinance your mortgage into a fixed-rate loan, the house will be less of a financial burden over time.

3. You are taking on other debt

It’s OK to have some mortgage debt, but when you find yourself borrowing to pay for other things, that’s problematic. Have you been forced to finance your cars instead of pay for them outright? Are you taking on credit card debt? Your house may be responsible for an ever-increasing debt load that could eventually destroy your financial dreams.

4. You’re struggling to hold onto it

When that mortgage bill is due each month, are you scrambling to get the funds together? Have you been late on payments or skipped them altogether? Is the bank threatening to take your home away? This is a horrendous way to live. Chances are, you’ve taken on too much house. That home, which is supposed to provide your family with shelter, security, and comfort, is now something you can barely afford to keep. It may be time to devise an exit strategy.

5. You’ve come to resent the house

A home should be a source of pride. It’s the place where you watch your kids grow up, grow vegetables in the backyard, and host Thanksgiving. Your home should be your refuge and a place of happiness.

Have you instead found yourself simply hating the place? Have you ever said, “Gosh, I can’t stand this house?” Maybe it’s because the house is haunted or backs up to the city dump. Or it could be that the costs of owning and maintaining the house stresses you out. If your house is a source of strain rather than joy, it could be that it’s too much of a financial burden.

6. Your life has shrunk

OK, so you have your house. You go to work every morning. What else are you doing with your time? What dreams are you pursuing?

Sometimes, our housing costs impose such a burden that we find ourselves unable to really “live” life in a meaningful way. Taking time to travel? Forget it. Going back to school? No way. Starting a business? Not a chance. Even going out to eat with friends and family may be out of the question.

You may feel “rich” living in a large, expensive house. But how rich is your life, in the final analysis?

7. Investing seems impossible

Your employer offers a 401(k) plan, but you haven’t even thought about contributing. You’ve heard about things like IRAs and mutual funds, but can’t bother to research what it all means. The notion of putting money aside for retirement seems almost ridiculous, because you’re barely treading financial water.

There’s no question that investing can be difficult when you have other living costs to consider, but you need to budget for the future in the same way that you budget for groceries and other costs. If you find it hard to set aside even a small amount, it could be that your house is eating up too much of your income.

Reducing your housing costs and freeing up even $50 to $100 per month could represent tens of thousands of dollars in savings over time. If you can further reduce your housing costs by thousands and invest toward retirement instead, you’ll be sitting pretty.

8. You feel stuck in your job

Maybe you’re not satisfied with your career path, or aren’t getting along with your boss. Perhaps you can’t stand your commute. Ideally, you can simply leave your job and find a new one. But sometimes, we stay at jobs because the pay and other benefits are simply too good to pass up. How many of us have said, “I can’t leave this job because I’ve got a mortgage to pay?”

If this sounds like you, think about how your house is actually forcing you to stick with a job you hate. While we all must earn income to live, we also all deserve the right to pursue careers based on reasons other than money. Moreover, we should ideally be able to take time off work — or endure a job loss — without it resulting in immediate financial disaster. If you feel trapped in a job you don’t like, are your housing costs to blame?

 

8 Signs Your House Is Holding You Back

 
 

 

 

5 Benefits if Mortgage Rates Rise to 6% in 2019

This year we’ve seen and heard the buzz about “high” mortgage rates and how they’re continuing to climb, but right now rates are still at historic lows. Qualified home buyers are constantly outbid by competing offers and facing a market with high demand but low housing supply. There are benefits to rates increasing: a leveled out housing market, reduced risk of another housing bubble, still historically low rates, and new mortgage products from investors. 1.      Balancing Housing Supply                                                                         Right now, the housing market is incredibly hot. This competition is preventing more and more families from getting into their dream home. If mortgage rates were to increase to 6% in 2019, we could see the housing market start to balance out, allowing more people to achieve their dreams of home ownership. In some areas around the country, there are up to 10 families bidding on a single home. The last time the economy was this hot was the mid-1990’s. Mortgage rates were around 8% and right now they are less than 5%. If we see rates rise to 6% again, that’s still a historically low rate. This will help qualified buyers start to see less competition in the market and with this balance, we should see the number of transactions climb by 30-40%. Families would be achieving their dreams of home ownership without as much stress and competition for the same home. 2.      Reducing the Risk of a Housing Market Bubble Home prices can’t continue to increase at 8-10% a year because it just isn’t sustainable. The annual increase in prices should be closer to 3-5%. A steady incline of prices is healthier for the economy long-term rather than drastic jumps and changes. Interest rates climbing to 6% will naturally help bring that home price appreciation back down to a more stable level year-over-year. 3.      Mortgage Rates at 6% are Historically Very Low   Rates at 6% are still historically low. The unemployment rate is at all-time lows, and GDP growth was at 4% last quarter – overall the economy is in the range of the late 90’s. At that time, mortgage rates were at 8%. An economy this strong combined with 6% rates would be highly attractive for home ownership.  4.      Stronger Returns on Investments If rates go up, investors could receive a 6% return on their investment. Mortgages have performed at high levels, even higher than real estate trusts from a low-risk standpoint. Real estate trusts and other safe investments typically yield approximately 5%. Therefore, a 6% yield in a lower risk instrument would attract a lot of demand from investors. Conventional mortgages compared to government-backed mortgages could add value for home owners.   5.      New Products from Investors An increase in rates would also mean an increase in products from investors. Down payment is the biggest hurdle for most potential home buyers, but with a mortgage rate increase, we would likely see investors create down payment options – assuming strong credit. This would be a huge bonus for families who would have to save for years to buy a home, for instance, teachers and firefighters. Fannie Mae and Freddie Mac charge higher rates for low down payments for investors, second home transactions, and low FICO scores. Those types of borrowers could see more opportunities from investors who wouldn’t charge as much for those buckets. Investors would also have increased interest in Jumbo Loans. Overall, at a rate of 6%, we would see an increase in transactions, balanced inventory levels, reduced risk of a housing bubble, a better return on investments, and more products from investors. All of these factors would create a healthy, robust, and long-term strong housing market.  Have a great day!

More Investors Plan to Cash in on Short-Term Rental Trend

Vacationers with suitcases grab keys on kitchen counter

More vacation and investment property owners intend to rent out their homes as short-term rentals this year, according to research from the National Association of REALTORS®.

Twenty-five percent of those with vacation properties and 24 percent with investment properties rented their home as a short-term rental in 2017—30 and 32 percent, respectively, plan to do so in 2018, according to NAR.

Forty-five percent of investment buyers say they purchased their properties to generate income through renting. That was the top motivator for their purchase, ahead of flipping or seeking price appreciation, according to NAR’s research.

Many second-home owners are seeing immediate profits. Forty-two percent of investors and 39 percent of vacation home buyers paid in all cash for their properties, according to NAR.

Common Expenses New Homeowners Need To Plan For After Buying A Home

Many first time homebuyers in the excitement of getting their first home may not be aware of some common expenses they can expect with the purchase of a home and could neglect to budget for that.  Some of those expenses like closing costs are an absolute requirement that must be paid otherwise the homebuyer will not be able to close on their home and move into it. Other expenses may vary but do need to be considered by the homebuyer so that they have the money ready to do certain things when the time comes.

Closing Costs

One major expense of purchasing a home, and that is usually due right up front upon the final transfer of a home, are closing costs.  Closing costs represent the fees associated with getting a mortgage and registering the new house in the buyer’s name.  If the buyer is using a low down payment or zero down payment mortgage they may be in for a surprise if they don’t have enough money to pay for closing costs.  Even with a zero down payment mortgage (VA, USDA) the homebuyer may be required to bring a check to the closing table in order to pay for the closing costs.  If the buyer cannot pay for the closing costs they cannot complete the sale for the home.

The money used to pay for closing costs also generally must come from income sources of the homebuyer and cannot come from credit cards or other forms of loans.  Gifts of money from parents or other relatives can be used to pay closing costs but the lender will generally want to trace the source of the funds well before closing date so it is always wise to mention the gift money to your lender well before the date of closing.  Once the lender has verified the source of gift money the homebuyer can use that money to pay for closing costs and put any remainder towards down payment if they wish.

Homebuyers can ask for the seller to pay for closing costs so that the buyer has to pay nothing out of pocket.  Through this process the homebuyer during their offer asks the seller to pay a certain amount towards closing costs.  Generally sellers do not have to agree to pay closing costs and sometimes may raise the purchase price of the home on the offer in order to cover the closing costs. Through this method the homebuyers are essentially financing the closing costs into their mortgage.

Moving Expenses

Unless you live a life where you have low to no furnishings there will be moving expenses associated with going into your new home.  The costs for moving can be cheaper if you are able to rent a truck and ask a few friends to help you move your household belongings to your new home.  The cost of a rental truck, boxes, and other moving and packing supplies should not run you that much.

On the other hand if you have numerous large pieces of furniture, appliances and boxes to move it may make more sense to hire professional movers who will help you disassemble your furniture and move itpeople with head in box to your new home placing it exactly where it needs to go and assembling everything they disassembled.  Hiring professional movers will cost more and it is wise to hire reputable movers who are insured so you don’t get scammed while moving between locations.  Movers cannot only help you move your belongings they can also help you pack and unpack if you need them to and pay for their full service move.

Property Taxes

Depending on how your mortgage is setup, whether insurance and taxes are escrowed or paid directly by you, property taxes paid to the government will be owed by you.  Most of the time taxes are prorated so the seller will pay for the portion of taxes for the time they were still living in the property and the buyer will be responsible for the part during which they take ownership of the home and going forward.  Sometimes part of the closing costs and money brought to closing by the homebuyer includes some of the pro-rated tax amounts or includes amounts that will be put into an escrow account which is described below.

If you are paying taxes directly and there is no escrow account setup with the mortgage then the property tax bill will sent directly to you for payment.  Depending on the state or county you live in your taxes may be due in twice a year installments or some other time frame.  Your local property taxes will be based on the value of the home you live in and can increase or decrease based on what the local government is needing to provide services.  Prior to even making an offer on a house homebuyers should be inquiring about how much the annual property taxes are.

Escrow Account

An escrow account is an account setup with the mortgage company where by extra monthly payments are collected from the homeowner and used to pay the annual insurance bill as well as property tax payments.  The escrow account can catch buyers by surprise since they are usually quoted a mortgage payment based on mortgage principal and interest payments and the monthly escrow amounts collected will vary based on the amount of insurance needed for the home as well as the property taxes which are based on the value of a home.  Homebuyers expecting to pay a certain amount per month to the mortgage company maybe be quite surprised to find their payment is a couple of hundred (or more) dollars more per month in order to fund the escrow.

Especially as home prices rise compared to the prior value of the home the escrow collection can jump even further if the local tax authorities raise the value of the home upon which the tax is based upon.  In order to make sure both the tax payment and the insurance premium for the year are able to be fully paid with the money in the escrow account the mortgage company can either increase the monthly payment requirement or ask for a one time up-front payment.  Generally the amount of times the escrow payment can change is limited to one change per year to prevent the homeowner from having an uncertain payment amount with their mortgage payment.

Utilities

Depending if you were paying utilities before buying your new home (living at home or living in a dorm) some or all utilities will need to be paid for on a monthly basis. Electric, water, internet, phone bills, trash and maybe more all become the responsibility of the homeowner. Some utility companies will require a deposit for those with less than established credit records in order to start service in your name.  man holding light bulbDepending on your location some services like water and trash may already be included in your property tax bill and therefore you should not be getting a separate bill for those.

Furnishings

If you have grown in square footage from living with parents or living in an apartment/dorm the added space in a home means added furniture.  Especially if you will be having friends over that means getting sofas, bedding and more to fill your home.  You can save money by purchasing dual use furniture such as sofa beds, wall beds, futons and more.  Certain additional appliances may be needed as well such as washer/dryer units, microwaves, and other small household appliances (vacuums, toasters, etc) to help around the house.

Landscaping

Unless you are living in a condo complex that provides for landscaping services you will also be responsible for maintaining your yard.  Yard maintenance will require a lawn mower and other lawn tools to make sure the outside looks good.  You could also contract out the landscape maintenance to a service for a regular monthly fee.

Bottom Line

Buying a new home can be fun and exciting, but it can also lead to budget shock if you are not prepared for the new expenses you will be expected to pay.  By understanding the expenses you will pay as a new homeowner you can better plan your budget ahead to time to make sure everything is done properly and on time as needed.

A Word Homeowners Need to Understand

Acquisition Debt is the amount of money borrowed used to buy, build or improve a principal residence or second home. Under the new tax law, mortgages taken after 12/14/17 are limited to a combination of $750,000 on the first and second homes. The mortgage interest on this debt is tax deductible when itemizing deductions.12844696-250.jpg

It is a dynamic number that is reduced with each payment as the unpaid balance goes down. The only way to increase acquisition debt is to borrow money to make capital improvements.

Prior to the new law, homeowners could additionally borrow up to $100,000 of home equity debt for any purpose and deduct the interest when itemizing deductions. Mortgage interest on home equity debt is no longer deductible unless it is for capital improvements.

Acquisition debt cannot be increased by refinancing. Some confusion occurs because mortgage lenders are concerned in making home loans that will be repaid according the terms of the note and using the home as collateral. That does not include making a tax-deductible mortgage.

Another thing that adds confusion to the issue is that the lenders will annually report how much interest was paid in a year but only the amount that is attributable to acquisition debt is deductible.

Even if the interest on the cash-out refinance is not deductible, it may be advantageous to pay off higher interest debt such as credit card debt and replacing it with lower mortgage debt.

It is the responsibility of the taxpayer to know what part of their mortgage debt is deductible. The challenge becomes more difficult after a cash-out refinance. Homeowners should keep records of all financing and capital improvements and consult with their tax professional.

disadvantages to renting:

If you’re a Millennial—or have a son or daughter who is a Millennial—you’ve probably had a discussion about renting or buying a home. It can be a hard question to answer, especially with the steadily-rising prices of houses.
However, there are clear disadvantages to renting:
  • Someone else controls all the rules, not you (such as whether you can have a pet).
  • You’ll see a steady increase in rent over time.
  • Zero tax advantages.
  • You have no say if your landlord wants to move into your place or sell to someone else.
The biggest disadvantage: You give away your money. Renting means you never will have the chance to build equity in a home. Instead, you give that opportunity to your landlord.

When and How Much Should You Water Your Lawn?

Watering your lawn

© Chris Clor – Blend Images/Getty Images

For green, vibrant grass, it is essential for homeowners to learn about aerating, seeding, and watering their lawns to keep the curb appeal intact, according to realtor.com®’s Lawn Lover’s Guide.

 

“When you don’t give your lawn enough water, it grows with shallow roots,” says Don Botts, the president of Quality All-Care Services in Bonner Springs, Kan. “This can stunt the growth of your grass and make it harder for your lawn to survive severe temperatures or disease.”

So when is the ideal time to water a lawn? Many may assume it’s at night, but experts say that’s wrong. Instead, the best time to water a lawn is in the morning, between 4 a.m. and 10 a.m., Botts says.

“There are a lot of people who are surprised to find out that watering your lawn at the wrong time of day can have such an impact,” Botts told realtor.com®. “Watering at night often means that water will sit on your grass overnight, which can lead to disease.”

Also, lawn experts say it’s important not to water during the hottest part of the day. The heat will cause the water to evaporate quickly before the water has a chance to penetrate the roots of the grass.

It’s important to make sure grass gets enough water, but not too much either. For homeowners who have underground sprinklers, Chris Bartells, owner of Green Mountain Turf Sprinkler Repair in Lakewood, Colo., recommends placing empty cans near sprinkler heads and checking to see how much water the sprinklers emit in a span of 15 to 20 minutes.

“Then measure how many inches of water is in each can, using a ruler,” Bartells suggests. “Average that by the amount of time you ran your system, and you should end up with a pretty good estimate of how long your lawn needs to be watered to get the full inch or two of water that it needs [per week].”