How to Calculate Your True Cost of Living and Determine How Much of a Home You Can Afford

How to Calculate Your True Cost of Living and Determine How Much Mortgage You Can AffordA monthly mortgage can seem like enough of a financial responsibility on its own, but there are many factors involved in home ownership that affect its fiscal feasibility. If you’re in the market for a house and are wondering how your income will stack up against the rest of your expenses, here’s how to determine a home cost that’s reasonable for you.

Determine Your Down Payment

Before you start with anything else, you’ll want to determine the amount of money you can put down so you can estimate your monthly payments. The traditional amount for a down payment is 20% of the home’s purchase price, so if you don’t have anything close to this amount it might be worth waiting a little longer so you can minimize your payments and the amount of interest or mortgage insurance you’ll be paying in the long run. Each person’s situation is different, and there may be programs available with less than 20% down. This is an excellent question to pose to your trusted mortgage advisor.

Calculate Your Monthly Budget

If your mortgage cost already seems high, it will definitely be worth carefully calculating your monthly expenditures. Instead of a wild guess, take the time to sit down and calculate what your costs are including food, utilities, transportation and any other monthly necessities. Once you do this, it’s also very important to add any debt repayments you’re making to the mix. The total amount of your estimated mortgage costs, debt payments and living expenses should give you a pretty good sense of if your mortgage is viable in the long term.

Don’t Forget About The Extras

When it comes to purchasing a home, many people envision that they will be eating and sleeping their new home so don’t pay attention to all of the additional costs that can arise with living life. A new home is certainly an exciting, worthwhile financial venture, but ensure you’re realistic about what it entails. If you’re planning to go back to school or have children in the future, you’ll want to add a little bit of extra cushion in your budget so that you don’t have to put your other dreams on hold for the sake of your ideal home.

It can be very exciting to find a home you feel good about, but it’s important before making an offer to realize the amount of house you can afford so you don’t find yourself in a hole down the road. If you’re currently on the market for a new home, contact your trusted mortgage professional for a personal consultation.

Spring is Almost Here: Planning a Massive Spring Cleaning in Just 4 Easy Steps

Spring is Almost Here: Planning a Massive Spring Cleaning in Just 4 Easy StepsIt may seem like the holiday season has just passed, but it won’t be too long before the flowers begin to bloom and spring peeks out from around the corner. While the tradition of spring cleaning that comes with the season may not be as common as it once was, it can actually be a great way to revive and refresh and prepare for the summer ahead.

Begin With The Bedroom

Start with your bed by washing all of the sheets and linens, and then move on to dusting, making sure that all of the spots missed throughout the year are wiped clean. Since you may find yourself purchasing some extra items in the summer months, take an hour or two to look through your closet and donate or discard any pieces you haven’t worn for two years.

Liven Up The Living Room

As one of the most lived-in rooms, your living room will likely need some extra time with the vacuum or mop, so once you’ve dusted the baseboards and vacuumed the couch, give the floor your undivided attention. Once it’s thoroughly cleaned, dust everything and sort through any books or papers that have been left about so they won’t sit around for another year.

Clear Away The Kitchen Grease

The kitchen can be one of the easiest to spots to sully, so clear out the fridge and wipe down the shelves rigorously, ensuring any food that has expired is composted. Give the floor a good scrub and pull the refrigerator and stove back from the wall so you can get rid of any dust or accumulated grime underneath. Last but not least, wipe the countertops with an all-purpose cleaner for a fresh scent.

Bargain With The Bathroom

If you’ve already cleared away the dirty towels, clean out the drawers and cabinets and ensure any toiletries you no longer use are thrown out. Wipe the mirror clean with a glass cleaner and give the toilet a good scrub. It may also be a good opportunity to get down on your hands and knees and scrub the floor for a clean feel it may not get for a while.

The arrival of spring after the long months of winter is always a welcome occurrence, but it can also be the perfect opportunity to clear away the dust of last year. If you’re cleaning up your house for a possible springtime sale, you may want to contact one of our local real estate professionals for more information.

3 Quick Painting Tips That Will Help Take Your Walls from Tacky to Tasteful

3 Quick Painting Tips That Will Help Take Your Walls from Tacky to TastefulWhether you happen to be a painting pro or you’ve never dared to pick up a roller, there are a few tricks of the trade that professionals use to make a paint job look its best. If you want to take an old, outdated paint job and turn it into something you can be proud of, here are a few tips from those who know best.

Start With A Perfectly Smooth Surface

If you’re trying to rush through it, sanding might seem like an unnecessary step in re-covering your walls, but it’s very important in order to level out the spackle paste and ensure that no ridges will appear in the paint around the nails. According to one professional painter, you should start by sanding from the baseboard to the ceiling with a fine grit sandpaper, and then move on to a horizontal sand that will make for a smooth wall finish.

Forget About The Plastic

The proper floor coverage while painting is just as important as the paint when it comes to getting the job done properly, so opt for a large canvas cloth instead of linens or plastic. Paint on linen can sink through to your floor and stain it, while paint on plastic takes a long time to dry and may end up smearing all over other things. A canvas cloth will keep any paint splotches away from your floor and ensure they aren’t tracked throughout the home after they fall.

Stick To One Wall

It can be tempting to get done the rudimentary step of completing the corners and trim before you move on to painting, but this can actually make for a less smooth finish. Instead of finishing one task at a time, complete the corners and trim on one wall and immediately reach for the roller. This is something professional painters do to ensure that the brushed and rolled paint will blend together more seamlessly.

There are a few simple steps you can follow when painting a room that will make it look like a professional did the job. By using a canvas cloth to cover your surfaces and sticking with one wall until the job is done, you should have a smooth new surface you can be proud of. If you’re currently painting your home and preparing to sell, you may want to contact one of our local real estate agents for information about your options on the market.

Buying a New Home? Learn How the ‘Conforming Loan Limit’ Might Affect Your Purchase

Buying a New Home? Learn How the 'Conforming Loan Limit' Might Affect Your PurchaseFrom mortgage to equity to debt-to-income ratio, there are many terms associated with home ownership that can be quite confusing if you’ve never been on the market for a home before. ‘Conforming loan limit’ may be a less familiar real estate term than the rest, but here are some things you’ll need to know about it and what it could mean for your biggest investment.

What Is The ‘Conforming Loan Limit’?

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are legally required to provide loans for balances below a specific amount, and this amount is what is known as the ‘conforming loan limit’. While the loan amount is determined by credit history and income amount, these conforming loans that are less than the specific amount are considered lower risk. If a loan amount is above the conforming loan limit, it is known as a jumbo loan and usually comes with higher rates.

How The ‘Conforming Loan Limit’ Is Determined

The Federal Home Financing Agency determines any adjustments made to conforming loan limits and the decided-upon amount is based on the home prices from October to October for the previous year. This amount is released annually in November and is enforced the following January. While this limit was $417,000 up to 2008, the amount for regions like Alaska, Guam, Hawaii and the United States Virgin Islands is 50% higher than the standard amount due to the cost of housing.

Going Above The ‘Limit’ And Combination Loans

While jumbo loans carry more risk, there are ways to avoid going above the conforming loan limit. There is the option of acquiring a conforming loan for $417,000, the amount established for 2014, and then utilizing a second mortgage for the remaining amount that will ensure you do not have to take out a jumbo loan; however, the rates for a second loan will likely be higher. In the event that you would like to avoid jumbo loans or a combination loan, you may want to consider putting more money down on your initial down payment.

The conforming loan limit changes each year, but it may have a significant impact on your home purchase if it falls below a certain amount. If you are curious about real estate terms because you’re considering a home purchase in the near future, you may want to contact one of our local real estate professionals for more information.

New Home Construction Seen As A Possible Solution To Pent Up Demand For Homes

New Home Construction Seen As A Possible Solution To Pent Up Demand For HomesBuilder confidence in markets for new homes fell three points in February to a reading of 58. January’s reading was revised upward to 61. Builders have repeatedly expressed concerns shortages of labor and lots for development, but continue to express confidence in future sales conditions.

David Crowe, National Association of Home Builder’s (NAHB) chief economist, said that builders are watching slowing economic trends, but also cited low mortgage rates, improving labor markets and pent-up demand for homes as factors for strong U.S. housing markets. The NAHB notes that any reading over 50 indicates that more builders were confident than those who were not.

HMI Components Readings

The three readings used to calculate the NAHB Housing Market Index (HMI) were also lower. The reading for current sales conditions fell by three points to 65; the reading for sales conditions over the next six months fell by one point to 65. Home builders were less confident in buyer traffic in new home developments; the February reading dropped by five points to 39. Although the buyer traffic gauge was its lowest in nine months, it hasn’t topped the benchmark of 50 since the peak of the housing bubble ten years ago.

Three month rolling averages for the four regions charted by NAHB also dropped. The Northeastern region was 2 points lower at 47; the Southern region also lost two points for a reading of 59. The Midwestern region lost one point for a reading of 57 and the Western region dropped three points for a reading of 72.

Building New Homes Seen as Solution to Pent Up Demand for Homes

Analysts responded to February’s HMI with mixed views. Some analysts said that buyer demand for homes would override concerns over building costs. This view makes sense in view of pent-up demand driving up home prices. At some point, affordability and buyers ability to qualify for mortgage loans are likely slow the rate of increasing home prices.

Less pent-up demand could also help first-time and moderate income buyers compete for homes as buyer demand eases. First-time and moderate income buyers are essential in driving home sales, as their purchases of pre-owned homes allow homeowners to buy larger homes or relocate.

Reports on Housing Starts and Building Permits scheduled this week will shed additional light on home builder activity.

3 Reasons You Might Decide to Retire to a Tiny Home – and Why You’ll Love It!

3 Reasons You Might Decide to Retire to a Tiny Home - and Why You'll Love ItMany people romanticize the idea of paying off their home mortgage early so they can enjoy their home in retirement, but when it comes to the later years of life, a big house can actually be too much to handle. If you’ve started to consider a smaller home and are wondering why it might be a good decision for you and yours, here are a few things you may want to consider.

It’s Much Easier To Maintain

It is often the idea of the palatial estate with a pool that homeowners get excited about, but when it comes to reality, the larger the home, the harder it is going to be to take care of and maintain. If you don’t have a maid or a butler, a smaller home will enable you to spend a lot more of your free time doing things that you love instead of being bound to a house that is full of repairs and maintenance that needs to be completed.

Save On The Big Home Bills

One of the worries associated with getting older is having the ability to maintain your lifestyle in old age, and a smaller home can actually alleviate many of the high costs that go along with having an oversized home. A smaller home will not only minimize your insurance and taxes, it can also positively impact the amount you pay each month for heating and electricity, so you’ll notice the savings right off the bat.

The Freedom Of A Downsized Lifestyle

One of the best things about downsizing to a smaller home is the huge sense of responsibility that can be left in the dust. Instead of being held back by all of the stuff required to fill a big house, a small home means there is less to worry about. This may mean you’ll have the option to go on longer vacations or can even relocate to a hot climate for the summer months, and you’ll only need someone to come by and water the plants every once in a while!

There are plenty of people that decide to downsize later in life since it can actually be a great way to save money and have a lot more freedom. If you’re considering your smaller home options and are curious about what’s available on the market, you may want to contact one of our real estate professionals for more information.

Understanding How Home Equity Works and Why Buying a Home Can Be Your Best Investment

Understanding How Home Equity Works and Why Buying a Home Can Be Your Best InvestmentWhen delving into the world of real estate and investment property, there are many terms that will come up that require further explanation. Whether you’ve never heard the phrase ‘home equity’ before or you have a little familiarity, here are the ins and out of what it means and how this asset can help your financial outlook.

All About Home Equity

Essentially, home equity refers to your portion of the value of your home, and the amount of this figure is important because it is included among your assets when determining your net worth. If this sounds confusing, think of it this way: if you have completely paid off the cost of your home, the value of your home equity is this total amount. Of course, because most people seek a lender to borrow money from when they purchase a home, their home equity would consist of their down payment and whatever amount they’ve paid down on the mortgage since purchase.

An Example Of Home Equity

To provide further clarification, let’s use the example of a house that has been purchased for $300,000. In the case that a down payment of 20% has been provided at the time of purchase, the equity in the home would be $60,000. Since this amount is the percentage and cost of the house that’s been paid down, this is the amount of the house that is actually owned and this will be figured among an individual’s assets.

How Home Equity Works

As you pay the amount that you owe on your home each month, you are paying off your total debt and thereby increasing your equity. Since this amount of money is considered an asset that belongs to you, it can be used down the road to buy another home or invest in other important things like education or retirement. While paying off the amount owed on a home is a considerable investment, if the value of your home increases, this means that you’ll still owe the same on it but your home equity will have automatically increased.

As an asset that is part of your financial net worth and can be used down the road to fund other investments, home equity is a very useful term to know when it comes to purchasing a home. If you’re on the market for a home and are considering your options, you may want to contact one of our local real estate professionals for more information.

Struggling to Get Approved Because of Your Income? 5 Reasons to Consider a FHA Loan

Struggling to Get Approved Because of Your Income? 5 Reasons to Consider a FHA LoanBuying a home isn’t cheap. But if you’re determined to become a homeowner, the FHA home loan program can help. This loan program, ideal for first-time buyers with low incomes, can help you to build your credit and make home ownership a reality.

So why should you consider an FHA loan? Here are just a few ways you’ll benefit from these government-backed mortgages.

You Can Get Approved With Just 3.5% Down

Traditional mortgage lenders typically require you to pay 20% down on your mortgage, or 5% if you have good credit and agree to pay mortgage insurance premiums. But for a lot of younger people with lots of debt and low incomes, even a 5% down payment is an unrealistic burden. With an FHA loan, you can be approved for a mortgage with a down payment as low as 3.5% – which means a $200,000 home can be yours for as little as $7,000 down.

You Can Get A Loan Even With A High Debt-To-Income Ratio

Standard mortgages are difficult to get if you have a high debt-to-income ratio. Typically, lenders will want to see that your mortgage costs will consume no more than 28% of your income, and your total payments toward debts from all sources will be no more than 36% of your income. But with an FHA loan, you can get a mortgage with a 29/41 ratio.

You Can Qualify With A Low Credit Score

If you have a credit score under 700, you’ll pay higher interest rates on typical mortgages – and if it’s below 660, you may not get approved at all. But with an FHA mortgage, you can get approved for a 3.5% down payment with a credit score as low as 580 – or lower, if you agree to a 10% down payment.

FHA Closing Cost Regulations Are Better For Low-Income Buyers

FHA loans have different closing cost regulations than traditional mortgages. With an FHA loan, you can bundle closing costs into the mortgage or even use gift funds for 100% of the closing costs. That means home ownership is more accessible for people with lower incomes.

An FHA Loan Can Help You Find A Good Home

With most mortgages, you’re free to buy any home you wish as long as you stay within a set price range. But with an FHA loan, any home you buy must be habitable, sanitary, and safe – otherwise the FHA won’t approve your loan. That means using an FHA loan will ensure you get a good home.

Buying a home with an FHA loan is a great way to become a homeowner if a traditional mortgage isn’t an option for you.

Thinking About Selling in the Spring? You Should Be Renovating Now. Here’s Why

Thinking About Selling in the Spring? You Should Be Renovating Now. Here's WhyThe cooler months of winter might seem like the perfect time to hibernate into the house, but it’s actually a great time to consider ramping up your home for improvements. If you’re thinking of selling come the spring, here’s why winter is the perfect time to get started on home renovations.

Flexible Scheduling And Availability

Many people are not interested in renovating their home during the winter months, so it can actually be an ideal time of year to make plans with a contractor to do some work. Since many renovations that occur on the outside of the home are likely to take place during spring or summer, it can be easier to schedule renovations for your home’s interior when it’s colder.

Pre-Planning Your Project

Since contractors can have more free time in the winter months, it’s a good time to contact them to discuss, decide and plan exactly what needs to be done in your home. With the workload of many contractors ramping up in the springtime, there’s a good chance their meeting schedule may be congested and the planning and renovation implementation will take much longer.

Get Ahead of Higher Prices

With the holiday season in swing, there are many sales on common home items from appliances to windows and cabinets. Since manufacturers will be trying to get excess stock off the floor before year’s end, it can be a great time to purchase products for instant money savings. With the new stock filling the stores in spring, there will be a higher premium to pay for all of the newly marketed products.

A Good Time For The Market

Spring is one of the most popular times of year to put a home on the market. With so many people considering a home purchase among their yearly plans, the milder season is an ideal time to get out and go house shopping. In order to have your home ready to show for the spring, you’ll need to have the renovations complete so your house will be market ready when the potential buyers are out.

If you’re readying your house for the springtime real estate market, it’s a good idea to get started on renovations now so you can save money on materials and schedule ample time with your contractor. If you happen to be considering your options for spring sale, you may want to contact your local real estate agent for more information.

A Guide to Financing Home Improvements and How Mortgage Refinancing Can Help

A Guide to Financing Home Improvements and How Mortgage Refinancing Can HelpIf you’re planning to remodel or renovate your home in the near future – whether to provide a better living environment or as part of a house flip – you’ll need to find a way to pay for your home improvements. There are several different possible sources of renovation money, each with their own advantages and disadvantages. One option that is gaining popularity is mortgage refinancing.

How does mortgage refinancing work, and how does it compare to other renovation financing options? How can you use a mortgage refinance to get the most out of your renovation? Here’s what you need to know.

Home Improvement Investments: Which Renovations Generate The Best Returns?

If you’re considering a mortgage refinance in order to fund your home improvements, you’ll want to concentrate on doing renovations that increase your home’s value. Otherwise, you’ll be taking on more debt without gaining anything in return.

If you want to max out your return on investment, re-finishing your kitchen is your best strategy. Remodeling Magazine’s annual cost-to-value renovation analysis shows that new appliances, a new coat of paint, and new surface finishes in the kitchen generate the biggest returns. Meanwhile, swimming pools and home offices tend to generate the lowest returns because they appeal only to a select group of buyers.

Your Options For Financing Home Improvement Projects

Financing for a home improvement project is a critical consideration. Unless you can afford to pay $20,000 out of pocket for a remodeling project, you’ll need to secure financing of some sort.

Your options for home improvement financing include home equity lines of credit, renovation mortgages, and refinancing. A HELOC may not be an ideal solution, as repayment requires discipline, while a renovation mortgage (or home renovation loan) is typically used only for foreclosures and other properties requiring major renovation work.

Mortgage Refinancing: A Smart Option For Savvy Borrowers

If you’re looking to simply make improvements to your existing home, a mortgage refinance is likely your best option. A straight refinance gives you a lump sum of cash that you can use to pay for renovations upfront.

There’s also a “refinance plus improvements” arrangement, which can provide you with extra capital as you need it. Under this model, you can get up to 80% of your home’s post-renovation appraisal value – however, you’ll only get the money as the renovations are completed and inspected. With a straight refinance, you’re not out of pocket for any length of time.

Making smart home improvements is a great way to boost your home’s value and improve your living conditions. An experienced mortgage professional can help you to find financing for those renovations without a hassle. Contact your local mortgage advisor to learn more.