Better Homes and Gardens Real Estate Life

Category: Home Buying

  • Homebuying 101: Mortgage Approval

    Getting mortgage approval is inevitable for most homebuyers unless you pay cash. A mortgage pre-approval letter is a powerful way to get an edge in a bidding war. Plus, mortgage pre-qualification lets buyers know how much house they can afford. Discover how to get through a successful mortgage approval, one of the most crucial steps in the homebuying process.

    Consult with a Mortgage Lender First

    Eager homebuyers may feel tempted to attend open houses before obtaining a mortgage. However, most sellers expect qualified buyers to receive a lender pre-approval letter. Therefore, the first step to housing success is meeting with a mortgage lender. Your real estate agent can often refer you to reliable resources based on your unique circumstances. Always be honest, so you have the groundwork for turning your situation into approval.

    Pre-Qualification vs. Pre-Approval

    Often buyers use online loan calculators to see how much money can borrow. While these are helpful tools, they are meant to provide information rather than approval. Usually, a soft credit check is required for pre-qualification, while a hard credit check is necessary for pre-approval. Many factors, such as your current credit score and time at employment, play a role in the approval process. Only a formal letter from your lender stating the mortgage approval amount proves you’re a qualified buyer.

    Time to Shop Around

    Once you understand the differences between pre-qualification and pre-approval, it’s time to shop around for the best lender. Some lenders may offer better rates and terms than others, depending on your creditworthiness and resources. If you don’t get immediate approval or the rates are high, work with your real estate agent and financial advisor to find a viable lender who works with buyers in your circumstances. Additionally, some borrowers get pre-approval with conditions that must be met before qualifying for a mortgage loan.

    Start With a Budget

    While mortgage qualification and approval indicate how much house you can afford, budgeting is crucial to maintaining this asset. A home is often the most significant investment of a lifetime. Though you may qualify to buy a house up to a specific amount, consider expenses such as taxes, homeowners’ insurance, mortgage insurance, and home maintenance. Then think about your monthly budget and how much you want to pay for a monthly mortgage. Some buyers decide to get a lower-priced home to ensure they can afford it. Ideally, your housing payment should be about 25 percent of your monthly income.

    What Should I Expect for Mortgage Pre-Approval?

    A mortgage pre-approval requires a hard credit check, and borrowers often must provide documentation to prove certain financial information. For example, lenders typically look at your credit history, income, employment history, and FICO score. Also, lenders consider your debt-to-income (DTI) ratio and the loan-to-value (LTV) ratio on a potential home for sale. As a result, an appraisal is ordered on the house you want to buy to ensure you don’t pay more for the home than it is worth. Finally, the lender also considers the home’s condition and works with a title company to confirm ownership of the house and verify there are no claims or liens against it before issuing a formal mortgage pre-approval letter.

    How Do I Get Mortgage Pre-Approval?

    Lenders will look at your finances and expect the documentation to prove the numbers, such as:

    • Employment verification
    • Personal identification
    • Proof of income, including child support, disability, and other payments
    • Credit history, often a score of 600 or higher is required, with some exceptions
    • Proof of assets, including bank accounts, property, and vehicle
    • Debt-to-income ratio (DTI) to show you have the income to cover all financial obligations
    • Bank statements for the past sixty days
    • Recent pay stubs
    • W-2 statements
    • Social security number
    • Tax returns and Schedule K-1 (Form 1065) for the previous two years, especially for those who are self-employed, who may also need to supply a profit and loss statement
    • Divorce papers, if applicable
    • Death certificate, if applicable, such as a widowed spouse applying for a VA mortgage
    • A gift letter, if all or part of the downpayment is a gift

    Once you submit this evidence to the lender, it takes up to three business days to get your loan estimate and determine whether you are pre-approved for a mortgage. Depending on the mortgage loan, the downpayment may be between zero and twenty percent of the property price. Usually, a pre-approval lasts for one to six months, which gives you enough time to find your dream home. Always check the expiration date to avoid going through this process again.

    What if I Don’t Get Pre-Approval?

    Some borrowers may be declined by several lenders. Instead of getting frustrated, use the process to determine if financial areas need improvement. For example, paying down debt and saving for a larger down payment could mean the difference between mortgage approval and denial. Determined buyers often change their circumstances within months or a year to get into the right situation to purchase a house.

    What is the Difference Between Pre-Approval and Final Mortgage Approval?

    A pre-approval letter proves to sellers you are a qualified buyer. A pre-approval can put you ahead of other buyers making an offer in a hectic housing market. Once you make an offer on a home, the formal mortgage approval process begins. First, a home inspection is scheduled to ensure the house is in the proper condition to qualify for a mortgage loan. An appraisal is also done to verify that the house is worth your price. Then the underwriting process begins when your lender verifies your income, debts, and assets to qualify for a loan. If the lender contacts you for more information or documents, respond quickly to ensure you close the deal. Once the formal mortgage approval is issued, you’re ready to schedule a closing.

    The homebuying process starts with a dream and mortgage approval. Knowing how much house you can afford makes it easier to shop around and make an offer. With some financial planning, you’ll soon enjoy the advantages of homeownership!

  • Homebuying 101: Goal Setting and Budgeting

    A home is often the most significant asset people own in a lifetime. The homebuying process brings together people from every background and budget. Homeownership builds wealth when you make the right decisions to avoid financial loss. Discover how goal setting and budgeting are huge in selecting the ideal dream property to suit your unique needs.

    Define Your Goals

    The first step to future success is defining your goals and memorializing them. Whether you write on a notepad or maintain a Google document, goal setting means seeing what you need to do to make it happen. Next, answer meaningful questions to establish goals, such as do you want the pride of homeownership? Are you looking to build generational wealth?

    Then consider your current job status and whether you intend to stay with the company long-term. For example, military homebuyers who move frequently have different needs than those employed at an office in the city. With home equity at a steady rise, buying is house makes sense for those who can afford it. Changing jobs or getting a flexible side gig, such as DoorDash, can help renters become buyers.

    What Does Your Budget Look Like Today?

    Now that you know why you want home ownership, it’s time to determine how much house you can afford. A mortgage pre-approval gives homebuyers financial guidelines and purchasing power. Generally, the mortgage payment should be 25 percent or less of gross income, including property taxes, mortgage insurance, and homeowner’s insurance. Plus, many homeowners need a down payment, varying from zero to twenty percent, based on the type of loan. For example, some first-time home buyers may qualify for a three percent down loan, while veterans could require a zero percent down payment. Also, credit score plays a role in the down payment necessary to get a mortgage loan.

    Find out your credit scores a year before qualifying for a mortgage to see where you stand with Equifax, TransUnion, and Experion – the three major credit bureaus. Your credit score should be at least 500 to consider applying for a loan. The better your credit score, the lower your interest rate and down payment. In addition, consider a service such as Credit Karma or Lexington Law to address past debt and dispute inconsistencies on your credit report. Plus, these services give you ongoing updates to help you track and improve your score.

    Get Rid of Debt

    Homeownership brings unexpected expenses, such as repairs and renovations. When you own the house, you need to fix everything – there’s no landlord to call! As a result, it is crucial to eliminate debt to afford a home. Also, mortgage lenders prefer candidates with a low debt-to-income ratio, offering them the best rates and terms.

    Start paying down debt ahead to ensure you’re ready to prequalify for a mortgage. Consider working with debt relief or consolidation services if you’re struggling to eliminate past bills. Another option is consulting with an accountant or financial advisor to find the proper steps to resolve debt and move forward financially.

    Save Money Everywhere

    When you’re ready to buy a house, it’s time to save money on every aspect of your life. At this point, every dollar matters – once you close escrow, you can enjoy the little luxuries again! Consider areas where you can save, such as:

    • Make breakfast and lunch at home, rather than buying out – treat yourself once a week to avoid deprivation lapses!
    • Eliminate extra services, such as cable television or a landline, and take advantage of smart devices to remain connected and informed
    • Cut coupons, find discount days at local retailers, join savings clubs, download apps, and search for discount codes online to save money everywhere and anywhere you go.
    • Dine out less frequently and start eating down the food in your freezer so you’re ready to move when the time comes.
    • Eliminate services you don’t use, such as movie sites, gaming costs, and gym memberships that could be costing more than you think – apps such as Truebill.com help
    • Look for essential items like paper towels and soap at dollar stores to save a few dollars.
    • Clean out your closets to prepare for a move, and start wearing some of your favorite old clothes rather than buying new ones – you can shop again after you own a house!

    Increase Your Income

    Overall gross income is never more critical than before qualifying for a mortgage. The higher your gross income, the more you can spend on a house. However, you want stable employment, so you can cover the mortgage once you move in. Avoid going over your head, as you can lose the asset you worked so hard to get.

    One way to increase your income is to ask your employer for a raise or promotion. Another is changing jobs, but you must show employment for at least one year before qualifying for most mortgages. Also, side gigs are an excellent way to increase your cash flow to pay down debt and save for a down payment. Sites such as Indeed.com post jobs and provide resume tools, while apps like Wonolo offer various short-term paid gigs in your area.

    Stay Focused on the Prize

    Working hard, saving money, and improving your credit score becomes tiring. After a long day at work, skipping your side gig and going out with friends is tempting – spending money you should save! Instead, stay focused on the prize to remain motivated and avoid temptation.

    Consider creating a vision board to help you stay on track. Visualizing your fantastic future as a homeowner encourages your best efforts to make it happen. For example, post photos of the types of homes you prefer to keep you moving toward the ultimate prize – owning a home.

    Give Yourself a Break

    While ongoing focus and motivation are critical to success, you also need to give yourself a break sometimes. There are many free and affordable ways to have a good time that won’t take away from your down payment savings fund. For example, the local library, community centers, and houses of worship often have low-cost entertainment to help you unwind after a long day.

    Also, you are only human and likely to make a few missteps along the way. So instead of faulting yourself for the double latte yesterday morning, forgive yourself and make coffee in a to-go cup for the rest of the week.

    Be Accountable

    Accountability is essential to determine where your money goes every day, week, month, and year. Keeping a ledger helps you track expenses. Also, services such as Mint.com can help you stay on top of your spending to make necessary adjustments.

    If you’re saving with a partner, work together to eliminate debt, increase income, and save money. Often teamwork is dream work because you encourage each other to do your best, so you can own a home soon and start building equity.

    What Do You Really Need in a Home?

    Once you feel comfortable about your goals and budget, it’s time to consider the house and neighborhood where you want to live. Often compromise is inevitable, as most buyers are unlikely to get everything they want. Also, this is the time to differentiate between necessities and luxuries.

    For example, necessities might be a three-bedroom home to accommodate a growing family. On the other hand, an inground swimming pool would be fun but would raise the house’s price and require ongoing maintenance. Make sure you can afford to keep up with luxury features in a home and stay focused on what is necessary to live comfortably.

    Work With a Dream Team for Success

    Finally, it takes a village to buy a house, and you should have the ultimate team for success. Include professionals such as a real estate agent, insurance broker, mortgage loan specialist, accountant, attorney, inspector, handyman, and cleaning crew.

    Often a respected real estate agent can refer you to a team that already works well together for the best possible outcomes. Make sure you feel comfortable with all your team members and have ongoing communication to ensure a seamless transition into your new home.

    Home buying is one of the most exciting and stressful times in your life. As you make one of the most significant decisions and investments of a lifetime, focusing on goal setting and budgeting helps you stay on track – and exceed your housing expectations!

  • Focus the Hunt

    Finding the right place is the most difficult step in the home buying process. Keep these things in mind to help hone your search.

    NEW (NOT FOREVER) HOME

    First-time buyers might want to look for a starter home (length of stay: three to five years) instead of their dream home, so they can save money and build equity.

    SQUARE FOOTAGE (NOT ROOM COUNT)

    In the past, counting bedrooms and bathrooms would help you get a sense of how big a home is. But today’s construction methods and fix-and-flips allow builders and remodelers to be creative with tight spaces. “Think about how spacious you want your home to feel,” says Joseph Magsaysay of Better Homes and Gardens Real Estate Preferred Properties in St. Louis. “Usable square footage is a better indicator of roominess and comfort level than bedroom and bath counts alone.”

    LOCATION (SHORT AND LONG TERM)

    If you plan to stay in your home for longer than five years, think beyond nearby coffee shops and proximity to work. Also look at long-term needs like schools and hospitals that become more important as you age.

    SOURCE: BETTER HOMES & GARDENS® MAY 2022 ISSUE

  • Let’s Talk Money

    Best Mortgage Practices

    Before you start comparing houses, find a lender who can work with your financial situation and offer the most mortgage options. Five things to keep in mind:

    PREQUALIFIED VS. PREAPPROVED
    Mortgage prequalification gives buyers a sense of how much home they can afford. Preapproval requires documentation of the buyers’ financial stability and credit history. Being preapproved lets sellers know you’re serious and ready to buy.

    COMPARE AND SAVE
    Many assume their local bank will deliver the best mortgage rates and terms. But online banks can also have competitive rates. Websites like bankrate.com and nerdwallet.com use your ZIP code, credit score, and other loan factors to see a list of competitive and licensed lenders.

    MORTGAGES ARE NOT ONE-SIZE-FITS-ALL
    Ask your lender to explain the different mortgage options—such as fixed rate and adjustable rate—and help you determine the best financial fit.

    NO-MORTGAGE OPTIONS
    In 2021, 30 percent of home purchases were all cash buys. Some buyers are independently wealthy or investors. Others stockpile savings for years, choose to take out loans against retirement funds, or cash out stock options.

    MORTGAGE SAVINGS
    It can feel like a mortgage goes on forever. The simple step of making two extra payments a year—by paying half the monthly payment every two weeks instead—can shave years off your mortgage and save you thousands of dollars in interest over the lifetime of the loan. Check with your lender first to make sure it’s a viable option for you.

    Ways to Save on Home Insurance

    These tips can save money for first-time buyers and current homeowners.

    SHOP AROUND
    Like mortgages, it saves to shop around. Check out sites like hippo.com and policygenius.com to find the best coverage for the lowest cost in your area.

    BUNDLE UP
    Insurance companies offer discounts when you combine services. Auto and homeowners insurance are likely pairings, but recreational vehicles (ATVs and boats) and life insurance can also be combined.

    ADD SAFETY AND SECURITY FEATURES
    Putting in an alarm system, security cameras or installing an overhead sprinkler system, rather than just a smoke detector, may get you better rates.

    GET THE COVERAGE YOU ACTUALLY NEED
    Tragic stories exist of people being underinsured, but many people are overinsured and don’t realize it. Did you opt for a fine jewelry rider, forgetting that you have since gifted the family heirlooms? Did you mistakenly add earthquake insurance, although there hasn’t been one in your area in known history? The insurance you purchase needs to mesh with the reality of your risks and estimated losses. Look up weather risks, appraise any jewelry and art, and consider whether it is worthwhile to opt in or out of riders and additional coverage.

     

    Other Costs to Note

    EARNEST MONEY
    Also known as good faith money or deposit. It’s a portion of the down payment buyers include with their purchase offer.

    HOME INSPECTION
    A report conducted by a licensed inspector that gives buyers a better understanding of the condition of the home and what should be fixed.

    CLOSING COSTS
    Fees and processing expenses for obtaining a loan, usually around 3–5 percent of the home purchase price.

    MONTHLY FEES
    Property taxes, association dues, and utilities (could include garbage removal).

     

    The Key to Success in a Competitive Market
    “Home buyers should be preapproved and flexible on closing and possession dates.”
    —Katie Butler of Better Homes and Gardens Real Estate Reliance Partners in Sacramento, Yolo, and Placer counties

     

    CAUTION: DON’T WAIVE CONTINGENCIES
    Last year, some people felt compelled to waive contingencies (for financing, inspections, appraisals, and more) to make their offer look more desirable to a seller. Contingencies are safeguards for the buyer, so waiving them absolves the agent and seller from any responsibility.

     

    SOURCE: BETTER HOMES & GARDENS® MAY 2022 ISSUE

  • Checklists for Buying and Selling a Home

    Moving into or out of a home can be chaotic. Make sure these tasks are on your “don‘t-forget“ list.

    Before You Move In

    Line up insurance
    Lock in your insurance provider and plan so you’ll have coverage the day you officially take ownership.

    Contact utilities
    Have electric, gas, water, and internet services placed in your name and new address.

    Forward mail
    Stop by the post office to forward your mail to your new address or do it online at USPS.com (it ’s free). It’s best to allow two weeks’ notice.

    Arrange moving help
    Hire a moving company, rent a truck, or gather boxes for a moving party with friends (free pizza and beer always help). Keep in mind rental vans and trucks are busiest on the first and last of the month when most leases and rental periods end.

    Meet the neighbors
    Introduce yourself and give neighbors your number before you move in—in case they have questions about people coming and going. The Nextdoor app lets you connect with neighbors and find lost pets.

    Before You Sell

    Toss and donate
    If you haven’t used it in a year, it’s not worth packing up and moving to a new place or paying for storage. Websites like caringtransitions.com help older adults and their families with downsizing, estate sales, online auctions, and relocating.

    Think like a buyer
    Real estate agents agree: It ’s all about making rooms look larger and livable. “Less is more,” says Scott Vaillancourt of Better Homes and Gardens Real Estate The Masiello Group in Bedford, NH. “Try to depersonalize and declutter so that prospective buyers can envision their families moving in.”

    Do an inspection
    Have a friend walk through your home with fresh eyes and give honest advice for fix-ups. Another option: Pay for your own home inspection (around $400) and get a heads-up on the repairs potential buyers may ask to have done.

    Not sure about selling? Consider renting your home
    Keeping your home as a rental (short- or long-term) might be a good option if you don’t need to sell it to buy another. Ask your real estate agent if it makes sense in your area.

     

    SOURCE: BETTER HOMES & GARDENS® MAY 2022 ISSUE

  • 12 Things to Know About Real Estate Agents

    Working with a licensed pro to compare homes, negotiate an offer, and navigate myriad specifics and paperwork will save you time and ease your mind. Consider these points.

    1 The best source for finding one? Friends who just bought or sold a house.

    2 Who’s a REALTOR®? A real estate pro who is a member of the National Association of Realtors and commits to the organization’s code of ethics

    3 Your agent can recommend other team members, such as the lender, inspector, and title company.

    4 They’re trained to compare homes, communicate promptly, and keep up with financing options.

    5 Your agent can handle the arrangements if you find a “for sale by owner” home.

    6 Agents have access to a proprietary database of homes for sale known as a multiple listing service (MLS).

    7 Agents know the pros and cons of your neighborhood

    8 Moving out of town? A real estate agent where you live now can connect you with an agent in your new city.

    9 You might be able to hire your agent as a property manager if you choose to rent rather than sell your house.

    10 Bonus: your agent might also be a notary—handy for future business paperwork.

    11They can recommend contractors and other home improvement pros.

    12 The agent you choose looks out for your best interests.

     

    SOURCE: BETTER HOMES & GARDENS® MAY 2022 ISSUE

  • First Time Home Buyer? Ten Facts Nobody Tells You

    Buying your first home can feel like both the best of times and the worst of times. Here are 10 facts nobody tells you when you’re buying your first home.

    1. Something will go wrong

    No move is ever perfect. Something will get broken or there will be something you’ve forgotten to bring or do. With any luck, the setback will be minor, and you can chalk it up to the old adage, “things happen.”

    2. Some of your conditions might not be met

    One of the least enforceable clauses in offers to purchase is one for cleaning requests. You can stipulate that carpets, refrigerators and ovens be cleaned. However, if they haven’t been, there is often very little that you can do about it.

    If a major repair hasn’t been completed as promised, one of two things will happen: you either won’t take possession of the property on the day you planned or your funds will have to be placed in escrow pending resolution of the issue.

    3. If you don’t have the closing fees, you don’t get your new home

    Legal fees are due on closing, and your funds won’t be released to the seller unless your lawyer is paid. Closing costs usually range from two to five percent of the purchase price, but be sure to verify this information before arriving on closing day. This money is in addition to your down payment.

    4. Good schools increase a home’s value

    You’ll pay more for a house in a good school district. Of course, the good news is you’ll get more for it when you decide to sell. If the home you’re planning to buy is your “forever” home and you don’t have, or plan to have children, this may not matter. Still, it’s something to think about.

    5. Your neighborhood may be about to change drastically

    The municipality may be planning a park, a school, or a playground for your area. Depending on your lifestyle, that can mean profound changes in a short period of time. Check with local administration and the area’s local representative. The first can tell you what the plan is. The latter will have a far better grasp of whether outlined timelines are accurate or not. You can base your decision on the information they provide.

    6. You need to read all the documents yourself

    It’s tempting when you’re paying a lawyer to review HOA or condo documents to simply delegate this task. However, a close reading of the minutes of meetings will teach you a lot about your neighbors-to-be and help you avoid nasty surprises, like planned increases in fees or devolving renovations that used to be the condo board, or HOA’s responsibility to individual owners.

    7. Don’t apply for other credit while mortgage shopping

    Applying for a loan or another credit card may seem like a good idea when you’re about to take the home ownership plunge and know you’re going to need to buy things like garden tools, a gazebo, and a grill. Don’t do it unless absolutely necessary. It can negatively affect not only the amount of your pre-approved mortgage, but it can also mean you don’t get pre-approval. Wait until after you’ve bought your home to apply for more credit.

    8. You’re going to need “earnest” money

    Also known as a deposit, you’ll likely need about $1000 per $100,000 worth of house available when you make an offer. This money is required as a show of good faith and will be held in escrow. You’ll get it back if your offer isn’t accepted, or it may be applied to your down payment. You may forfeit this money, though, if you’re the one who withdraws from the deal.

    9. Your neighbors-to-be may be your best source of information

    Walk around the area you where you want to live. If you see people out gardening or mowing their lawns, talk to them. Strike up a conversation and explain that you’re thinking of buying. Ask receptive individuals what the neighborhood is like, how long they’ve lived there, and how long they’re planning to stay. If you learn that your new home is located next door to some party animals who blast music every single summer evening, you may not enjoy your own backyard, so you may want to reconsider.

    10. Check for rebates you may be entitled to

    You may qualify for first-time homeowner rebates. There may be other municipal, state, or utility-provider rebates available, too. Start investigating early. It may make more sense to invest in attic insulation than an air conditioner if you’re going to get a rebate that covers some or all the cost of the insulation. Some areas offer rebates on newer, more energy-efficient appliances. You won’t know that unless you do your homework.

    A good real estate agent can talk you through the buying process. Now you’re already ahead of the game with these ten facts nobody tells you, and you’ll be able to focus on offer strategy rather than the fundamentals.

  • Discover the Perfect Time for Buying a Vacation Home

    If you’re lucky enough to have reached the time in your life when you can seriously contemplate buying a vacation home, there’s much to be excited about. According to the National Association of Realtors, one in eight homeowners are thinking of buying a second home. While summer may be the time of year you start to think longingly about sun, sea and sand, it may not be the best time to buy a cottage.

    Here are some things to consider when you’re buying a vacation home.

    Peak of season is seldom a good idea

    Avoiding peak seasons makes sense in supply and demand terms. Peak season, whether you have your eye on a Vail ski chalet or a Cape Cod sea shanty, is when the area in which you’re looking is at its finest. Since vacation homes can be sentimental investments, many who’ve inherited them rent them out as additional sources of income so they can hang onto a property. They may be sharing it with siblings or have had to buy them out. They also may be part-time vacation home investment owners who got in early on a new resort but need to ensure 100 percent occupancy during peak season to make their investment pay off.

    Aim for the final weeks of the high season to make your offer or hold off until just after peak season ends. If you’re looking for a summer vacation home, the time between Labor Day and Thanksgiving is the perfect window of opportunity. You’ll still take possession early enough in the year to be able to get a glimpse of what future summers can hold, and you’ll also have a chance to do any needed repairs before winter sets in. Then you can spend the winter planning what you need to do to make the place your own the following summer.

    If you’re looking at a winter vacation home, spring is the best time to make an offer. While diehards may still be renting or occupying their vacation homes, hoping to get one or two more days of spring skiing or boarding in, most will have placed their properties on the market. Just be careful not to leave your offer for too late in the year if the area you’re interested in is remote. Some owners board up their properties for the off season, making it harder to get viewings. Also, don’t forget the power of spring mud. Properties accessible through three seasons may become harder to access during spring thawing and flooding.

    Be sure the time is right

    Before buying a vacation home, you need to think long and hard about a whole host of considerations. First and foremost is whether you will be able to use it enough to make it worthwhile for you financially. Even if you buy a vacation home and plan to rent it out to defray expenses, that means your time there will be limited. While you may love a cottage on a lake in fall, not everyone else does. If you can’t afford to spend the 4th of July at your own cottage, this may not be the time to buy.

    Second, have you considered all the duplicate expenses involved? Whether you want your vacation home to mirror your principal residence in all ways, you can’t escape the fact that you’re going to need two of everything now. Unless, that is, you want to treat every weekend you spend at your vacation home like a camping trip (which may well be the case). You’re not going to want to haul lawn mowers and leaf blowers to the cottage every summer weekend. That goes double for appliances, linens and furniture. You’ll also have a second set of bills for property taxes, insurance, yard maintenance, internet and cleaning costs. In addition, there may be HOA fees, too.

    Third, what are your vacation goals? If you want to visit every continent and are running out of time to tackle Asia and Africa, does a vacation property make sense? If you find you’re drawn to experiential vacations like hiking the Appalachian Trail, swimming with the dolphins or building someone else a home with Habitat for Humanity, a vacation home may be an anchor you don’t need.

    On the other hand, if you know you can afford to invest in a second property and have a long-term plan to use it as a home base while you globetrot in retirement, or if you want your family to have the freedom of the great outdoors while they’re growing up, it might just be time to seize the day.

  • Seven Ways to Simplify the Process of Buying a House

    Whether it’s your first house or what you hope will be your last, buying a house is often a very stressful process. Until the moment you take possession of your home, there’s always a chance something could go wrong. Here are seven ways to simplify the process of buying a house.

    1. Get your paperwork in order

    Start getting your paperwork in order before you even start looking at properties online. If you’re applying for a loan, you’ll need your last two years’ worth of tax returns, current pay stubs, bank statements for the last three months, cancelled rent checks, or copies of your lease. You may also need your divorce decree and bankruptcy paperwork if either of those situations apply. Remember that getting money out of a 401k or a trust for your down payment or outright purchase can take longer than you anticipate, so find out how long it’s going to take and what’s involved if that’s a route you’re considering.

    2. Find a real estate agent you can trust

    Before you start the mortgage or loan application process, finding out what’s going on in the market is vital. Interview at least three real estate agents, and listen to what they say about what you’re likely to get for the house you’re selling. In addition, speak with them about what you’ll likely pay for your new one.

    Once you’ve heard the same price ranges three times (assuming all the agents you meet with agree, which they should), choose the agent with the best track record of sales in your area, the best online or personal recommendations, and the one you like best. Staging, keeping a home show-ready, and listening to tactfully delivered feedback from people who’ve viewed your home means you’re going to be interacting with your agent a lot.

    3. Start researching banks, credit unions, and loan officers

    While it might seem simpler to use a bank or credit union that offers home buyers one-stop shopping, what the term really means is the bank has a vested interest in the sale through controlled business arrangements with realtors, attorneys, and possibly even home inspectors, and may receive a portion of the commissions. That’s no way to guarantee objectivity. To check a loan officer’s record, ask for their ID number and take a look at NMLS Consumer Access. If you’re using a mortgage broker, check their credentials with the Better Business Bureau.

    4. Get your financing in order

    Once you’ve chosen your loan officer, bank, credit union, or mortgage broker, get pre-approved for a loan or mortgage and get a pre-approval letter. This will not only help you figure out what you can afford before you start looking, it tells realtors and sellers you’re serious. Depending on how long your search takes, you may need to renew your pre-approval—they’re usually only valid for 60 to 90 days.

    5. Find a home inspector you can trust

    If you’re looking at older homes, a good home inspector will be able to warn you of areas where there are problems with termites, water seepage, or shoddy construction. Do your due diligence. One of the best ways to find a good home inspector is to talk to a tradesperson you’ve used in the past, one who takes pride in their work and wants everyone in the industry to do the same. Try to find a home inspector who’ll let you accompany them when they make their inspection so you can ask questions on the spot.

    6. Consider investing in title insurance

    While it may seem like an unnecessary expense, making sure there are no liens against the property you’re buying is important. The last thing anyone needs is to find out the home they just bought is owned by someone other than its previous occupant. It costs between $1,000 and $3,000 on average, or .05 percent of the purchase price. You can sometimes get a reissued title insurance policy if the seller went through this process. That can save you some money. Get your real estate agent to ask the seller’s realtor about this. Additionally, some banks may require you obtain title insurance if you’re getting a mortgage, so be sure to inquire with your lending officer.

    7. Get your tradespeople lined up

    If you’re already a homeowner and have been through renovations or repairs,  you may have a plumber, an electrician, a roofer, a flooring person and a general carpenter you know and trust. If you’re moving to a new city or you’re a first-time homebuyer, you’re going to have to rely on in-person and online recommendations.

    One of the best places to find good tradespeople is an independent home supplier. They know who’s sloppy and who’s not, and they’ll often have business cards for tradespeople behind the counter. Here’s hoping these seven ways to simplify the process of buying a house make the experience a little less stressful. Happy hunting!

  • Finding Fixer Upper Homes for Sale: Can You Afford the Renovations?

    When considering the purchase of a fixer upper home, it’s important to evaluate how much time and money you will have to spend on renovations. It’s often the case that houses needing a lot of TLC are available at rock bottom prices. However, this can mean excessive costs when it’s time for renovations. Here are a few things to consider before taking the leap.

    How much work can you do?

    Determine how much of the work you are willing and able to do. If you’re a master at hanging drywall and your significant other has a knack for plumbing, it’s very possible to save big. This could be the difference between an inexpensive property that needs a great deal of work, but is ultimately within your budget after renovations, and one that is not.

    Keep in mind when deciding which work you’ll do yourself that safety is key. Anything that you don’t truly know how to do, especially things like electrical work, plumbing or jobs involving power equipment, should be left to a professional.

    Consider how much time you realistically have. If you work, take care of your family or otherwise have engagements that occupy most of the day, don’t take on huge DIY renovations.

    Choose contractors wisely

    Before closing on your fixer upper, speak with a few contractors to get an estimate of the work you plan on handing off to a professional. Without knowing how much you’ll need to spend to make the house look the way you want, you can’t know what the real cost of ownership will be. Once you have quotes from several contractors, work with your real estate agent to come up with an offer that considers how much you’ll be spending to get your new home in top shape. Your agent might suggest putting a clause in the contract to have some of the worst problems repaired by the current owners before the closing.

    Before settling on a specific contractor, talk to friends, family and neighbors to get a sense of the quality of work you can expect from each candidate. Reviews go a long way when choosing the best company for specific needs.

    Hire a home inspector

    In most situations that involve a mortgage or other loan from a bank, you will be required to have the house inspected before the loan is approved. Even if this isn’t the case, hiring a qualified home inspector is a critical aspect of ensuring you know what you’re getting yourself into with a fixer upper. For instance, you might be able to tell that the floors in the kitchen will need to be replaced, but only a skilled professional can say for certain whether the foundation is solid or if asbestos is in the attic.

    When it comes to real estate, knowledge is power. Take any information provided by a home inspector and consult your agent about how to proceed. They might recommend working part of the cost into negotiations.

    Add a cushion

    After you’ve decided which portion of the fixer upper’s remodeling you’ll be able to complete, consulted several contractors and had the home inspected, you may be anxious to close. However, there’s another critical step to ensure you’ll be able to afford the renovations.

    Unforeseen circumstances often arise during the process of remodeling. It is essential to account for these when determining what you can afford. A general rule of thumb is to add between five and 10 percent to the anticipated costs, just in case your contractor discovers pipes that need to be moved or if the price of the materials you choose increases. By adding a cushion to your financial projections, you should be in a great position to realistically determine whether a fixer upper home will truly be worthwhile.