Moving From a Home With 2 Bedrooms to 3 Costs an Extra $450 a Month
Thinking about moving this year? Whether your family is growing or you’re just looking for more space, upgrading to a home with an extra bed or bath comes with a premium in most metros.
To help buyers better understand their options this home-shopping season, identified how much extra “move-up” buyers could expect to spend on their mortgage if they were to upgrade to a similar home, but with just one extra bed or bath.
Nationally, families moving from a 2-bedroom to a 3-bedroom home can expect to pay $447 more on their monthly mortgage, according to Cost of Moving Up Report. That equates to a 50 percent increase in their monthly mortgage payment.
In many coastal markets, the cost is higher, around $500 extra each month — and in hot markets like San Francisco and San Jose, families can expect to nearly double their monthly mortgage payment, with the premium for moving up exceeding $1,600.
Buyers in the Midwest will see their dollars stretch much further. Families in Chicago, Cincinnati and St. Louis can expect to spend just $150 more on their mortgage when upgrading from a 2-bedroom to a 3-bedroom home. Cleveland offers the lowest premium out of all the metros analyzed, with move-up buyers paying just $74 extra a month to upgrade to a 3-bedroom.
“While deciding whether to move is a personal choice, understanding how certain characteristics like size, location or number of beds and baths can impact a home’s price can be hugely important when determining if a particular home is the right fit for you and your family,” says Dr. Svenja Gudell, chief economist. “Even though many families may be prepared to spend extra for a larger home, just how much more may come as a surprise, especially for those living in coastal markets.”
Bathroom count can also impact a home’s price. Nationally, upgrading to a house with the same number of bedrooms, but with one extra bathroom can cost buyers between $386 and $838 extra a month, depending on the home size. Given this premium, adding an extra bathroom to an existing home may be a cost-effective option for some families.
It never hurts to ask -- or does it? Here's what you need to know about how credit checks can affect your mortgage rate.
Almost all home buyers know that higher credit scores mean lower mortgage rates, so it’s no surprise that one of the top questions home buyers ask is: will shopping for mortgage rates lower my credit scores?
The short answer is “No.” But only if you manage your mortgage shopping process correctly. Here’s how to preserve your credit score while shopping for the best rates.
Is it safe to have multiple lenders run my credit?
Three bureaus generate your credit scores: Equifax, TransUnion and Experian. Lenders report your monthly activities on student loans, credit cards, auto loans and mortgages to these bureaus, who then score you on an ongoing basis. Your credit scores change constantly each month based on factors like:
When it comes to that last factor, credit card inquiries hit your score harder than car and mortgage inquiries. For example, if you’re out shopping at three department stores and allow all three stores to process new credit cards for you, the bureaus’ scoring models are coded to lower your score for each individual inquiry.
Each inquiry would lower your score by up to five points, or more if you have just a few accounts and/or a short credit history. The inquiries would stay on your credit report for 24 months, and your score wouldn’t recover for about 12 months — until you demonstrated strong payment history and balance-to-limit control on those new cards.
Car and mortgage inquiries make less of an impact because the bureaus know consumers shop for these big-ticket items. The bureaus’ scoring models are coded to “de-duplicate” multiple mortgage inquiries, since the end result of those inquiries would be one mortgage.
For example, if you were shopping for a mortgage with three lenders, and all three ran your credit one week, the three inquiries would show on your report, but would be scored as only one, so your shopping process would cause your score to shift by up to five points instead of up to 15.
How long can I shop for mortgages without damaging my credit?
Equifax, TransUnion and Experian are constantly changing scoring models. The newer the model, the longer a consumer can shop for mortgages with multiple lenders and have all inquiries scored as one. There’s no law requiring lenders to upgrade to the latest model, and it’s impossible to know which model is being used by which lender at any given time.
The oldest scoring models still being used by lenders de-duplicate multiple mortgage inquiries posted on your credit report in the past 14 days. The newest models de-duplicate multiple mortgage inquiries posted on your credit report in the past 45 days.
Obviously, the newer models allow for more shopping time, but since you won’t know which credit scoring model your various lenders are using, it’s safest to get your mortgage shopping done (including having lenders run your credit) within 14 days.
Will lenders take a credit report I ran myself?
You’re reminded constantly by the media and advertisements that you should check your credit regularly, but before you do anything, you must understand the following critical points:
No matter which side of the transaction you're on, you don't want to give up more than you have to.
After months of searching for the perfect home, making some offers, and maybe even competing with other buyers, you finally have a deal on your dream home. It took some negotiations, but you and the seller have come to terms.
Or have you?
Too often, getting a signed contract and putting your money into escrow is the beginning of what can become yet another round of negotiations. Here are five things every home buyer and seller should know about last-minute negotiations or credits.
Buyers may ask for credits based on property inspections.
Usually, a real estate contract either provides for a property inspection, or buyers inspect before signing. Depending on the property and the issues, a buyer might also have a particular type of inspection for the sewer line, septic, pool or roof.
These inspections can bring to light issues that the buyer couldn’t possibly have known about before making an offer. Once inspected, the buyer may still be interested in pursuing the sale. But given the needed repairs they will probably want to re-negotiate the price by asking for credits or a reduction in the purchase price.
Sellers should consider having a property inspection before listing.
The goal is to avoid negotiations once you’re under contract, because they’re not going to be in your favor. If you know the roof is near the end of its life or the furnace breaks from time to time, let it be known upfront, because rarely can you “sneak” something past the buyer.
You might even go as far as having your property inspected before listing the home. This way, you can address any issues, and make the inspection report available to buyers. They can come up with their best offer upfront, knowing what they’re getting.
If you have an inspection report or are otherwise assured your property is in great shape, you could even ask for an “as-is” clause in the contract. Although it’s not necessarily enforceable, it will send a strong message to the buyers that you aren’t open to more negotiation.
Sellers may try to avoid giving credits by having work done before escrow closes.
After inspections, the seller might agree to have work done before the closing. Or the seller may require that a payment is given directly to a contractor for the purpose of performing the specific, required work and nothing else.
These agreements help protect the seller, because buyers sometimes ask for credits just to help offset the closing costs — and never intends to do the repair work.
It also protects the seller if initial estimates for needed work turn out to have been overstated.
Buyers who ask for credits just to get the price down may be taking a chance.
Sometimes the buyer concedes on the purchase price thinking they can come back after the property inspection and ask for an additional concession.
The buyer may even feel empowered now that they’ve completed a series of inspections and are just weeks away from closing. The seller isn’t going to go back to the drawing board with a new buyer over a few more dollars, right?
Actually, they might. If it’s a strong buyer’s market, there’s a good chance the buyer can pull it off, but if it’s more of a neutral or a seller’s market, the seller may call your bluff. They’re assuming that you’re the one who, having invested all this time and money on inspections and an appraisal, isn’t going to walk away over a few dollars.
Buyers nearly always ask for credits, so sellers should give themselves some cushion.
You should also leave some additional room for negotiation when you’re in escrow. Always assume the buyer will ask for minor repair work — they nearly always do, even if there are no major issues. If you leave some cushion for yourself, you’ll feel better about the deal, and you’ll have protected yourself against the inevitable.
Conversely, the last thing you want is to be blindsided by a buyer asking for a few thousand dollars credit — just when you think the deal is finally done.
Whether you've lived in your home for a day or a decade, buckle up — homeownership can be a wild ride
You may live in your home for two years, or you may hunker down for two decades. But no matter how long you call it yours, you’ll likely experience these four key stages of homeownership — from the day you get your keys to the day you hand them off to your home’s new owner.
Read on to learn more about what to expect from each phase.
Phase 1: Starting out
The “sold” sign is posted, your belongings are packed, and the day finally arrives — you get the keys to your new home. You open the front door, and possibilities abound. How will you decorate? Where will that new couch go? Which rooms will the kids choose?
This first phase is all about unpacking, settling in, and getting to know your new home. If you’ve upsized from a smaller home, you may be tempted to jump in and start filling all that extra space.
And while you may be eager to make your mark on your new home’s interior (or exterior), Diana Bohn, a Seattle-based agent with Windermere Real Estate, warns against making extensive changes to a home right after moving in.
“It’s always good to be in your home for a year or so before knocking down any walls,” she explains. “Get your furniture in there, unpack, and see how the home lives. It’s hard to know how the space is going to feel until you’ve been there for a while. Go through all the seasons at least once.”
Phase 2: Settling in
It may take you a few months to move into the second phase — or even a few years (we won’t judge if you still have packed boxes gathering dust after a year or two). But this phase is when your house becomes a home, and you start enjoying your everyday life in the space.
You’ve figured out where all your belongings should go, you’ve done the bulk of your decorating, and you’re getting to know your neighbors and a few local hangouts. You’ve likely celebrated the holidays in your home a time or two, welcomed out-of-town guests, and gotten to know (and love?) your home’s unique quirks.
Phase 3: Fixing up
If the housing market continues its current upward trend, it’s likely that, after even a few years in your home, you’re sitting on some equity. So what should you do with it? Phase 3 is often the time when homeowners can take advantage of equity they’ve gained.
First, if you bought an older home, it may be time to update some of your home’s major systems — think furnace, roof, or windows. Portland, OR-based mortgage broker Lauren Green of Green Family Mortgage recommends researching two options for financing home improvements: home equity lines of credit (HELOC) and cash-out refinances.
“Many people have no idea they can access their home’s equity,” Green says. “They think the only way to take advantage of their home’s increased value is to sell it, but in reality, there are some great ways to access the equity in your home while still living in it.”
Second, after living in your home for a few years, you probably have a better idea of the renovations that would really make your home work for your lifestyle.
“There are lots of reasons why someone may decide to remodel instead of sell and look for a new home,” says Tyler Coke, project manager and business development manager at Marrone & Marrone, a custom home builder and remodeler in the Bay Area. “One thing that appeals to many homeowners is the custom aspect of it. You can design and create exactly the type of space that fits your lifestyle and speaks to how you use your home.”
Phase 4: Moving on
When will you know it’s time to move on? And what will prompt you to move somewhere new?
“Usually, it’s some kind of transition that causes people to sell,” says Bohn. “A new job, a growing family, or downsizing once the kids move out. In big cities, we’re also seeing people moving from more centrally located neighborhoods to farther-flung suburbs, where their money will get them more.”
Whatever your reason for putting your home on the market, the day you sign on the dotted line and close your front door for the last time is likely to be a bittersweet moment. But change can be good, and the next time you buy a home, you’ll be well-versed in all four phases and know just what you’re looking for.
It's essential to have the right marketing plan, pricing strategy and real estate agent.
When shopping for a home, it’s not uncommon to come across one that truly stands out. It’s not because the home is an old fixer-upper or that it’s a newly renovated home with a designer kitchen. It’s a home that’s architecturally significant or in some way conveys a “different” attribute. For instance, it might be a castle, a church or even a fire station that has been converted into one or more living spaces.
With an unusual home, pricing and marketing can be a challenge. Here are three things to keep in mind when either buying or selling a truly unique property.
1. Buyers should be cautious
As crazy as it sounds, a would-be buyer may want to reconsider purchasing an offbeat home. While it may be a home you love, it is also an investment. A home with a unique, unchangeable structural feature will likely alienate a large portion of the market.
If you’re faced with the opportunity to purchase a unique home, don’t get caught up in the excitement of it all. Think long term. Understand that when it comes time to sell, it may be a burden, particularly if you try to sell in a slow market.
2. When selling, don’t assume buyers will love what you love
As the owner of an interesting or different home who is considering a sale, be aware that not everyone will have the same feeling about the home as you did when you bought the place. While you’re likely to get lots of activity, showings and excitement over your property, a lot of that may simply be curious buyers, nosy neighbors or tire kickers.
Time after time, sellers with unique homes believe that since they fell head over heels, another buyer who might feel the same. But that person could be hard to find.
3. Hire the right agent and have a serious marketing/pricing discussion
A unique home requires a unique marketing plan and pricing strategy as well as a good agent. The buyer may not even live in your local market, and instead might be an opportunist buyer open to a unique property. So you should consider advertising outside the mainstream circles. Media and press can help get the special home the attention it may need.
The buyer may not want to live in your town but is fascinated by an old church or castle. The more you get this out there, the better your options for finding the specific buyer.
If you get lots of action but few offers, you may need to drop the price below the comparable sales to generate interest, particularly if you really need to sell. Just like a home with a funky floor plan, on a busy intersection or with a tiny backyard, the market for your unique home is simply smaller.
With online home listings, blogging and real estate television shows, unique homes stand out and get more exposure than ever. But selling a distinctive or offbeat property requires out-of-the-box thinking early on, and with a top agent. You only have one chance to make a first impression. Be certain to price the home right, expose it to the masses and have a strategic plan in right from the start.
Dwell shares insider tips after consulting architects, DIY home builders and shipping container experts from around the world.
You’ve decided to join the shipping container revolution. Your plans are drawn up, your site is prepared and your welding torch is ready to transform a discarded steel box into the durable, stylish and sustainable home of your dreams. Now what?
To help you get started, we asked architects, DIY home builders and shipping container experts from around the world for their insider tips on bringing home the best possible container for your building needs.
The first step, they agree, is to find a reputable distributor. “Shipping companies don’t want people calling them for one or 10 containers. They prefer to sell to dealers,” says Barry Naef, director of the ISBU Association (ISBU stands for intermodal steel building units, the term for containers used specifically for construction).
He recommends checking the extensive international list of dealers on the Eco Green Sources website. And don’t despair if you live far from the ocean. Thanks to a network of inland distribution hubs, says Naef, “there are as many [containers] in the mid-U.S. and Canada as there are at the ports, at nearly the same prices.” A dealer can help arrange for overland transport of your container via 18-wheeler truck.
Other sourcing options exist, too. In Zambia, a local NGO supplied Tokyo-based architect Mikiko Endo with old containers it had used to transport donations (she transformed them into maternity clinic housing). In Israel, architect Galit Golany purchased a refurbished container from a prefab construction company, then fixed up the turnkey unit with timber cladding, roofing, a deck and stone base.
Stephen Shoup, founder of Oakland’s building Lab, agrees that looking for a distributor that will do some basic modifications prior to sale is a good idea.
“It’s tons of fun to be standing there with a plasma cutter and a welder and be hacking into these things and pasting them back together, but if you’re encountering engineering issues, then you’re going to need licensed welders. That cost is much more controllable when done at the fabrication shop or shipyard,” says Shoup.
Another option is to purchase a container manufactured specifically for building, like the ones from Toronto-based MEKA or Silhouette Spice in Tokyo. These can be cheaply transported using existing global shipping networks, but are tailor-made to meet building codes (Japan’s are especially strict).
If you do decide to purchase a genuine seafaring container, you’ll need to keep a number of factors in mind. First is size. Although dimensions are generally standardized, your safest bet for projects that join multiple units is to purchase a single brand (perhaps one whose logo you fancy). Houston-based architect Christopher Robertson, who has designed both upscale residential and disaster-relief housing using containers, recommends choosing “high cubes” (HQ), which are about a foot taller than standard, because the smaller size can feel claustrophobic after installing insulation. Lengths vary from 8 to 53 feet, with 20 feet and 40 feet being the most common.
Whichever you choose, Robertson cautions that the costs of transportation and modification quickly add up. “There’s a real misconception that building with containers is absurdly inexpensive. Unfortunately, that’s not true at all,” he says.
Assuming you’re still hooked on the many other benefits of container construction, you’ll need to think about age and condition. Options range from virtually unscathed “one-trippers” to eight-to-10-year-old retired containers, with varying degrees of rust, dents and warping. Your choice depends on your design goals.
For Brook van der Linde, an artist who built a DIY container home with her husband in Asheville, cost and sustainability were more important than perfect condition. “Our goal was to use materials that were headed for the landfill. Our containers were constructed in 2005 so they had a good long life going to China and back,” she says.
Robertson, on the other hand, sought out one-trippers for his residential project. “They’re a little more expensive but they look a lot better,” he explains. “If they start having a lot of dings and rusts, you lose the aesthetic pleasure.”
Although a container’s history is trackable via its serial number, the best way to assess its condition is through a visual once-over prior to purchase. Arrive at the lot armed with a level to check for excessive warping and a checklist of potential problems, such as holes, dents, damaged door seals, and corrosion (a little rust is par for the course). Don’t forget to use your nose, as well. The wood flooring of most containers is treated with toxic pesticides, which you’ll need to seal or remove, and others may have been used to transport unpleasantly odiferous contents.
Finally, once you’ve made your choice, take a deep breath. The toughest — and most enjoyable — phase of building your container home is still to come.
Five good reasons to have a pro on your side throughout the process.
Buying new construction seems simple, right? Just pick out the floor plan you want, choose the perfect lot, and watch it go up. No sellers to deal with, no unexpected repairs that come up during inspection, no drawn-out negotiations. Right?
Not so fast. In any real estate transaction, it’s important to have a professional on your side, even if the process seems straightforward.
“Having your own agent provides a sense of security,” says Seattle-area homeowner Kristy Weaver, who has bought two new construction homes from two different builders. “It gives you some peace of mind, knowing that someone is looking out for your best interest.”
Peace of mind is just one benefit of having an experienced agent along for the ride. Read on for five more reasons you’ll want a local real estate agent by your side when buying a new construction home.
1. Help you find a reputable builder
“Your agent can rely on their own experience and that of their colleagues to help you find a builder you can trust,” says Portland, OR-based real estate agent Kim Ainge Payne of the Realty Trust Group. “What’s the quality of the workmanship? What kind of warranty do they offer? What’s their track record of resolving issues? Getting a clear understanding in the beginning can alleviate serious headaches down the road.”
2. Go to bat for you
The timeline for purchasing new construction is typically quite a bit longer than buying an existing home. From the first time you visit the sales center, to choosing your layout, construction, inspections, and finally closing, there are ample opportunities for things to go sideways — think construction delays, permit issues, and financing concerns. An experienced buyer’s agent can help you navigate all of these sticky situations.
3. Help you review your contract
Even if you’ve purchased a home before, the contract for new construction is a whole different animal, and an experienced agent can help you make sure you understand everything, from floor plans to earnest money requirements, deadlines for requesting changes, and timelines for completion.
“It’s crucial to have a third party who represents your interests in the transaction,” says Dmitry Yusim, a Seattle-area agent who has represented new construction buyers. “A good agent can add the proper addendums to protect you if something falls through.”
4. Assist with negotiations
Buyers’ agents know the areas where you’ll find the most wiggle room when it comes to negotiations.
“Builders are trying to keep their sales price up so that the next buyers through the door see the higher closing price,” explains agent Britt Wibmer of Windermere Real Estate in Seattle. “They’d much rather throw in closing costs or additional upgrade credits.”
5. Point you toward smart upgrade choices
Builders will offer you endless options for finishes and upgrades, and it’s easy to get overwhelmed. A seasoned real estate agent can recommend the upgrades that will get you the most bang for your buck in resale value, suggest finishes that might be cheaper to do on your own, and help you avoid over-improving, which can jeopardize your appraisal before closing.
Even though a friendly sales representative will greet you with a smile the moment you walk through the door of the sales center, don’t forget that they work for the builder. Bring your own agent with you starting with your first visit — in fact, many builders require your agent to register with them from the very beginning in order for them to be involved in the process and receive their commission.
With a professional you trust by your side, you’ll rest easy knowing someone is there to protect your money, your time, and your new home.
Wondering if new construction is right for you? Search new construction listings, and get more home-buying tips and resources to help you decide.
Know which financial weaknesses stand out to lenders so you can strengthen your chances of loan approval.
Trained to spot financial mismanagement, mortgage lenders take careful time to review your finances before approving or denying you for a home loan. The role of the lender in approving a loan is to make sure you have enough money for a down payment and closing costs, and to assess whether you’re able to regularly make your monthly payments. Part of how they do that is by reviewing your bank statements. That’s why it’s important to make sure all your documents and records are sorted and straightforward.
Bank statement warning signs
Lenders typically include your last two months of bank statements in their evaluation of your finances. Having a long list of overdraft charges in your account isn’t the best indicator that you’ll be a good borrower. No matter the circumstances, having a history of overdrafts or insufficient funds noted on your statement shows the lender that you might struggle at managing your finances.
Another red flag to lenders is when a bank statement has irregular or lump-sum deposits. This can be seen as iffy because it could appear that those funds are coming from an illegal or unacceptable source. Unless you can provide an acceptable explanation for your large deposit, it’s likely the lender will disregard those funds and apply your remaining dollars to their assessment of whether you qualify for a loan.
Signs of the bank of mom and dad
One way to help ensure that your bank statement won’t raise any red flags with lenders is by having consistent, tracked payments. If, for instance, you have automatic monthly payments to an individual rather than to a bank, lenders could see that as a non-disclosed credit account. This would be the case if you were to take out a loan from your parents and make car payments to them rather than an actual bank, for example.
How to reduce bank statement scrutiny
Take extra care of your transactions for at least a few months before applying for a mortgage. Lenders want to know that the money in your account has been there for some time, not just recently deposited. One or two big deposits into your account right before applying could indicate to lenders that the money you claim to have isn’t actually yours or isn’t a “seasoned” asset, meaning the money hasn’t been in your account for at least two months.
At the end of the day, it’s best to start the process of organizing your bank activity and statements prior to applying for a loan. When you start looking for a home, it’s best to have your financial information sorted in case your dream home hits the market and you have to move fast.
If you keep your bank statements top of mind in the initial search phases, you may have an easier time applying for a loan and ultimately securing it. Remember: Underwriters review your accounts once more, just prior to closing. So, be sure to maintain healthy finances throughout the closing process too.
Your partner’s credit history can influence your future interest rate.
Whether you’re a seasoned or first-time home buyer, be prepared to know your FICO score and have a firm understanding of your credit history. And if you’re buying with another person, their credit history can affect your joint home purchase.
What is a FICO score?
First things first — what’s a FICO score and why does it matter? FICO is an acronym for the Fair Isaac Corporation, the company that developed the most commonly used credit scoring system. Everyone is assigned a number ranging from 300 to 850. The number assesses your credit worthiness through previous payment history, current debt, length of credit history, types of credit and new credit. For the purpose of buying a home or obtaining a loan, it’s the score most commonly used by lenders to determine the borrower’s level of risk. Many people simply refer to the FICO score as “credit score,” so we’ll do that moving forward.
Which score do lenders look at?
Typically, your lender will look at three credit scores reported from each of the three credit bureaus — Experian, TransUnion and Equifax — and then take the median score of the three for your application. Borrowers should hope for at least a 680, which is generally the minimum score for getting approved for conventional loans. For borrowers with lower credit scores, FHA loans allow a 580 score, or even as low as 500 if a 10 percent down payment is made. In any case, the higher the score, the better interest rate you’ll be offered.
Should I apply with my spouse or alone?
Deciding whether or not to include a spouse or a co-borrower on a mortgage application often comes down to whether it makes the most financial sense.
There’s not a ton of wiggle room when it comes to qualifying for a loan. You typically qualify or you don’t. If the only way you can qualify for the loan is by applying jointly to include the total income of both borrowers, then that might be your only option. But even if your credit and income are good enough to qualify for a loan on your own, applying together still might be a better option, as each scenario has its tradeoffs.
My partner has bad credit
When applying jointly, lenders use the lowest credit score of the two borrowers. So, if your median score is a 780 but your partner’s is a 620, lenders will base interest rates off that lower score. This is when it might make more sense to apply on your own.
The downside in applying alone, however, limits you to just your income and not the combined amount from you and your partner. While your credit score might be better, having a lender evaluate you on only your income could lower the total loan amount you qualify for.
If having your name on the home is a big deal, don’t worry. You can still be on the title of the home, just not on the mortgage.
Don't let anyone slip through the cracks.
When you’re preoccupied with important relocation-related tasks, it’s easy to forget about informing relevant people and institutions of your upcoming residential move and subsequent change of address.
But notifying specific organizations and individuals of your relocation is essential for ensuring a smooth moving process and preventing various hassles and troubles with your mail and accounts.
Here’s a checklist of the people and institutions you need to contact when moving.
Family and friends
Naturally, your relatives and close friends should be the first to know that you are about to move house. Informing them of your imminent relocation as early as possible will not only give you the chance to ask them help you move, but, if you’re moving far away, will also provide you with enough time to say a proper goodbye and plan for different ways to stay in touch despite the distance between you.
Unless you’re relocating to a different branch of your current company, you should inform your employer about your decision to move and leave your job as early as a month in advance.
This way, the company will have time to find a new person for your position, and you will be able to put all the relevant paperwork in order without any hassle.
Remember that your old boss will need your new address to send you tax documents and insurance information at the end of the year.
If you live in a rental home, you should carefully review your tenant rights and responsibilities contained in the lease agreement. You will probably be required to notify your landlord of your intentions to move out at least 30 days in advance.
You need to prepare a written notice that clearly states your move-out date and your future address. It is also a good idea to include a brief statement about the excellent condition of the rented property and to request your security deposit back.
Changing your address with the United States Postal Service should be among your top priorities when moving to a new house, as it will help you avoid many troubles and inconveniences.
To have your mail forwarded to your new place before you’ve updated your address with individual organizations and companies, you only need to fill out a change of address request at your local post office or at the USPS official website.
Online services such as 1StopMove can also help you complete this process.
To prevent service lapses and past-due bills you need to inform your service providers about your relocation plans. Arrange for the utilities at your old home to be disconnected on moving day, and have them reconnected at your new residence by the time you move in.
The utility companies you should contact when moving include electricity, gas, water, telephone, cable, Internet, domestic waste collection and other municipal services you may need.
When you move out of state, you’ll have to transfer your driver’s license and update your vehicle’s registration and insurance within quite a short time frame (10 to 30 days, depending on your new state).
It’s a good idea to visit the local office of the Department of Motor Vehicles at the earliest opportunity, inform them of your new address, and request all the relevant information about putting the required paperwork in order.
A number of government agencies should be notified when you’re moving to another state. Be sure to update your address with the local office of the Social Security Administration, the electoral register, and other relevant institutions.
The Internal Revenue Service will need your actual home address to mail your tax return, fiscal notes, and other documents. All you need to do is print out and mail in the IRS’ Change of Address form soon after your relocation.
To keep your finances in order, you must update your bank accounts and inform credit card companies, stockbrokers, and other relevant financial institutions of your new address either shortly prior to or immediately after your move.
The insurance agencies that provide your life, health, and homeowners insurance policies should have your current address on file, as should any other organizations and individuals (such as your family attorney) who have dealings with you and your family.
Medical and educational facilities
When moving to a new state, you will have to enroll your children in a new school, find a new family physician, and transfer all your academic records, medical records, and prescription medicines. To successfully complete these important tasks you need to tell your doctors, dentists, vets and other healthcare providers, as well as the educational facilities your kids are attending, about your relocation and your new address.
Subscription services and clubs
Last but not least, you need to update your address with any sports, professional, or social clubs you are involved with. You should also notify the subscriber services department of any magazines or newspapers you want to receive at your new home.
You may have to personally visit some companies or institutions to notify them of your relocation, but in most cases you will be able to change your mailing address online or with a simple phone call. Postcards, e-mails, text messages, and social network announcements are also viable methods to inform people of your new address.
Wait! Don't sign that lease just yet — a quick landlord check may change your mind
You’ve found the perfect new apartment or rental house. You love the neighborhood. Your application has been approved. You’re ready to sign on the dotted line, right?
Not so fast. How much do you know about your soon-to-be landlord, property manager or property management company?
There are lots of reasons why you should take the time to ask yourself, “Who is my landlord?” before you commit. Your rent payment is likely one of your biggest monthly expenses, and if you’re signing a lengthy lease, you should find out as much as you can about the person who owns and operates the place you’ll call home.
Check out these five easy ways to check your landlord’s reputation before signing your lease.
1. Make Google your friend
The internet has a way of quickly uncovering all kinds of misdeeds, so start with a simple Google search of your landlord’s name or property management company, as well as the property address.
Hell hath no fury like a renter scorned, so you’ll also want to peruse some of the many apartment and landlord review sites online that let tenants anonymously review their apartment complex, landlord or property management company.
2. Search public records
There’s a wealth of information about properties and landlords available via your local government agencies, and you’re usually able to check your landlord for free. Consider it your landlord background check!
Your county courthouse should have ownership records searchable by address, so you can find out the legal name of the person or company that owns the property — it may not be your landlord directly.
You can also search for code violations, foreclosure proceedings, evictions and small claims court settlements, all of which should be red flags for renters.
3. Get to know your (future) neighbors
If you’re moving into an apartment complex with multiple units, take a few minutes to walk around the grounds out of earshot of the landlord.
If you see any tenants out and about, strike up a conversation about what it’s like to live there. Ask how long they’ve lived there — renewed leases are a good sign of a positive landlord-tenant relationship. Get a few pros and cons, ask how complaints are handled, and find out if they have any gripes about management.
If you’re moving into a single-family home, ask the landlord if they’d mind you having a conversation with the current tenants.
If you don’t have access to any other tenants, find a neighborhood-specific blog or Facebook group to join. Tell people you’re thinking of moving into the area, and ask if they know anything about the property manager. In these hyperlocal groups, you’re likely to gain some invaluable insights for your landlord check.
4. Be the interviewer
Landlords ask you questions when you apply to live in their property, so why shouldn’t you ask them questions too?
Ask them how they handle repair requests. Find out if the landlord lives on-site, nearby or even in a different state. Ask how the move-in and move-out process goes. Learn more about their process for requesting entry to your unit.
They should be able to easily, clearly answer your questions and address all of your concerns.
5. Go with your gut
When in doubt, trust your instincts. If you experience any of the following:
Think twice — and keep looking.
With these key tasks on your to-do list, your move can be a light lift.
When Barry Blanton moved with his wife from Eugene, OR into a rented unit in a high-rise residential tower in downtown Seattle, he thought he had his bases covered.
He had measured the size of his new living room, and knew that his furniture would fit perfectly. Once the movers got his couch through the new entryway, however, they faced an insurmountable problem: The couch was too big to maneuver past two curves in the hallway.
“It sat in the hallway for a week before my wife rented a van to move it,” says Blanton. “We had to crawl over it to get into the bathroom.”
The fact that Blanton is the principal at Seattle-based property management and development consulting firm Blanton Turner — and has worked in the industry for most of his adult life — only underscores how easy it is for renters to make mistakes when moving.
Measure — then measure again
Despite best planning efforts, such logistical issues are surprisingly common when people are moving familiar belongings into an unfamiliar space, says Blanton.
Knowing the dimensions of a room and the things being moved into it isn’t enough. “Think about the bottlenecks,” Blanton advises. “Not just where something’s going to go, but how it’s going to get there.”
He recalls a situation in which a young man moving into an apartment was able to get his loaded moving truck into a building’s garage, but found that once all his furniture was unloaded, the now-lighter truck was too tall to get back out without hitting overhead ductwork and sprinkler heads (more on this later).
The man and his friends spent hours filling the truck with weights from the property’s exercise room just to lower it enough to safely exit.
When moving into any multi-story building — especially one in a crowded downtown neighborhood — it’s important to make arrangements ahead of time with the building’s management team. More than likely, you’ll need to reserve the elevator.
“This isn’t something you tell them that morning,” warns Blanton. “If you’re moving on a Saturday at the end of the month, there could be four or five other people moving that day.” (Don’t forget to schedule use of the elevator at the building you’re moving from, as well.)
And if you’re bringing a moving pod or parking a moving truck on the street, make sure you have the proper permits. Most multi-family properties will be able to help with this, as will moving companies. “Moving companies do earn their money, especially in an urban environment,” says Blanton.
Document your environment
In the age of ubiquitous technology, it’s easier than ever to take photos of any pre-existing damage in your rental.
Before you get settled, pull out your phone and snap pictures of any damage such as scuffed floors, chipped countertops or bent window blinds — then send the photos to yourself so they’re date-stamped.
It’s easier to refer to the photos at move-out than argue with the building manager about who cracked the Formica and when.
Prepare to clean
When it’s time to move, few renters look forward to the deep cleaning that’s required upon vacating a unit. If you plan to use a cleaning service, Blanton suggest hiring the same company that your building uses — that way there won’t be a gap in expectations.
“There’s nothing worse than spending the entire day cleaning your apartment, then having someone come in and point out all the things you missed,” notes Blanton.
If you want to save money and do it yourself, keep in mind some of the things renters often forget to clean: window tracks, underneath the stovetop burner pans, beneath the crisper drawers in the fridge, the rim around the dishwasher door, and behind the toilet.
Most renters know that protecting their property with renters insurance is important, but many forget to update their policy when they move to a new residence.
Renters insurance doesn’t just protect your belongings, it also covers damage you may inadvertently do to the building itself.
Remember that overhead sprinkler mentioned earlier? Accidentally breaking that off with a moving truck could cause flooding — and a great deal of damage. Depending on the building’s insurance policy — and temperament of the manager — you could be on the hook for the building’s insurance deductible, if not more.
Contact your insurance company before you move. It’s an easy call to make, and it could help you avoid costly penalties later.
Map out everything you need to do, week by week, until the big day.
When it comes to moving, proper organization is the defining difference between ultimate success and complete failure.
Even if you’re already an excellent organizer, you might still feel overwhelmed by the number of relocation-related tasks you have to complete before moving day — unless you find a way to bring order to the chaos.
Here’s a moving timeline that will do the trick. It will help you organize your time, prioritize your tasks, track your progress, and reduce moving stress. What’s more, you’ll never forget anything important, because your week-by-week moving checklist will remind you of what to do every single day until moving day.
Eight weeks before moving day
Organizing a safe, efficient, and trouble-free relocation requires about two months of careful planning and hard work. So, start your moving preparations about eight weeks before the big day:
Six weeks before moving day
Four weeks before moving day
Two weeks before moving day
One week before moving day
Two days before moving day
Even though most moving tasks are common for all residential moves, you can modify them to meet your personal needs and requirements. Certain aspects of your move will be unique and will require a different approach, so personalize this moving timeline checklist and make it work perfectly for you.
If you own a home, chances are this repair and maintenance safety net could come in handy.
First-time homeowners may be in for a shock when their water heater breaks on a cold winter morning, or their dishwasher starts to leak all over the new hardwood floors in the kitchen. The instinctive call to the landlord won’t work this time around. Welcome to the joys of homeownership. So, when this happens, what do you do?
Many homeowners aren’t equipped to perform even small repairs, particularly when they come at inopportune times. For some, a handy family member nearby could do the trick. Or a new home buyer may know a plumber or an electrician — but they likely won’t have a lot of time to get bids and figure out the cause of the problem, much less get it repaired.
What’s the next best thing to a landlord for a new homeowner? A home warranty.
What is a home warranty?
Much like insurance or the extended warranty you buy for your smartphone or flat screen television, a home warranty covers the costs of repairing or replacing almost any malfunctioning system in your home. It typically costs between $300 and $900 a year.
If you had a home warranty, you wouldn’t have to call around to get estimates for repairs when a problem occurs. You wouldn’t have to pay out of pocket to get the problem fixed or have equipment replaced, either.
Instead, you would just call your home warranty provider or submit a ticket online. The warranty company would call the appropriate tradespeople with whom it has made arrangements, and send someone to fix the problem, if possible, or replace the malfunctioning appliance with a brand new one. Your home warranty premium will cover the costs — though you’d probably be responsible for a co-pay of about $50 per incident.
Who should buy a home warranty?
Home warranties are particularly great for first-time Gen X/Y and Millennial home buyers who’ve been renters until now. They’re used to calling the landlord whenever there’s a problem, and a home warranty company takes over that role.
These homeowners are often working long hours, and might not have the time or energy to call around to find a plumber or an electrician to get quotes or bids, let alone wait through the noon-to-4 p.m. window for the repair person to show up.
Sometimes, it takes just one costly and unexpected system repair — and the drama associated with it — to realize the savings of a one-year home warranty.
But home warranties aren’t limited to Gen X, Gen Y or other first-time home buyers. Any owners of any age home can purchase a home warranty at any time.
If you had your home inspected, you’ll know the condition and life expectancy of many of your systems. If some systems are on the outs, you will welcome the home warranty. Many appliances and systems start to break down after 15 or 20 years, and you don’t want to deal with multiple systems falling apart at the same time.
Real estate agents often purchase a home warranty for their clients as a closing gift. If not, you can buy one on your own. Be sure to shop around to compare premiums and coverage. The older the home, the more coverage you will want.
Home warranties are also great for investors or “accidental landlords,” who don’t necessarily want to be in the business of fielding repair calls from their tenants. If you’re not an experienced real estate investor and don’t have a network of repair folks, it might be easier to pay for the home warranty. The last thing you want is a tenant without hot water calling you all day long. If you have a home warranty, you can cut right to the chase, keep tenants happy, and minimize stress.
Home warranties can save home buyers a lot of time and money — particularly in the first year of ownership, when they are short on both.
This helpful document contains a wealth of information.
Among the dozens of records that serve to inform or disclose to the buyer significant knowledge about the property, the title report is one of the most important. It documents ownership, vesting, and detail regarding anything recorded against the home, such as liens, encroachments, or easements.
The title company compiles the report from a search of county records to issue title insurance, and any liens against the property are listed as “exceptions” to a title policy.
Here are three important pieces of the title report you should review carefully.
The legal description
The legal description is everything you won’t see in any real estate agent marketing or advertising. It’s the written description of the property’s location and the boundaries of the property in relation to the nearby streets and intersections.
In the case of a condominium or planned unit development (PUD), the legal description will include the property’s interest in any common areas, exclusive or non-exclusive easements, and details on any parking or storage that conveys with the property.
Here’s an example of a legal description from a preliminary title report of a property:
“Beginning at a point on the Westerly line of Fifth Avenue, distant thereon 250 feet Southerly from the Southerly line of Balboa Street; running thence Southerly along the Westerly line of Fifth Avenue 25 feet; thence at a right angle Westerly 120 feet,” and so on.
Legalese? Absolutely. But it’s precise, and necessary.
Property taxes always show up as the primary “lien” on a title report. A property cannot be transferred to a new owner with outstanding property taxes due.
As the top lien, the report will indicate whether taxes are due or paid in full. Taxes must be settled before any debt holder gets paid.
Mortgage liens are generally listed directly below property taxes, and they’re always ordered first, second, and third. The largest lien holder generally takes first position.
When a sale closes, the liens must be paid in the order that they appear on the title report. In the case of a short sale, there are not enough proceeds from the sale to pay off the property taxes and all of the lien holders. So one or more lenders will get “shorted” by the amount they’re owed. In order for the sale to close, the lender must agree to the short payoff.
Though this list is in no way exclusive, there are a variety of other items that could show up on a title report outside of taxes and loans.
Easements. If another property owner has access to the property via an easement, it would be recorded on the title report. This stays on the report until both parties agree to remove it. The title company can pull the original easement agreement for review.
CC&Rs. In the case of a condo or PUD, there are Covenants, Conditions and Restrictions (CC&Rs), recorded against the property. Any new buyer purchases subject to the rules and regulations documented in the CC&Rs. This is why it’s important for potential buyers to pull these from the report and review them. Once you’re the owner, you’re subject to those rules.
Restrictions, historic oversights, planning requirements. From time to time, there will be items on the preliminary title report that aren’t run of the mill. If the home is located in a historic district and therefore subject to the rules and restrictions of that community, it will show up on the title. In this case, if there are restrictions about changing the facade of a house or requirements that facade alterations comply with a local historical oversight committee led by the local planning department, a potential buyer needs to know this.
The last word
As a potential buyer, you and your agent or real estate attorney should scrutinize the preliminary title report. You want the title to be delivered as clean as possible.
If the property is subject to special items, or there are issues on the title that would affect your home-ownership, you need to know and understand them thoroughly before you close.
Relocating for a new job can be a challenge to navigate, especially when juggling a mortgage. Review the details that matter to your lender.
It’s true that changing jobs can affect your loan approval, but, like most mortgage-related questions, the devil is in the details. So long as you are moving from one position to one with equal or higher income, and you are able to provide documentation of your work and income history, any changes to your loan approval chances should be minimal. The most important thing for lenders and their underwriters is ensuring you can repay the loan, and the best indicators of that are your income and history of employment.
Lenders want to know you have reliable, steady income that is ongoing, for at least the next three years.
If you’re thinking about accepting a new job or recently moved positions, consider the ways it may hinder your mortgage acquisition.
What to expect when changing jobs before getting a mortgage
If your new job is within the same industry as your last, and if the transition earns better pay, then lenders likely will not have a concern. Promotions are looked at favorably. Even lateral moves to stronger companies offering increased salary or improved benefits are sensible business decisions that shouldn’t impede loan acquisition.
Your lender likely will want to ensure the longevity of your new role and confirm your new salary. Full-time positions with long-term contracts are ideal. Expect to work in your new role for at least 30 days before earning loan approval. Typically, you’ll need to provide your first pay stub from the new company and disclose your offer letter confirming your salary. Be prepared for lenders to omit commission earnings from your total salary since your commission is unproven in the new role, which could affect your total loan amount.
How to get a mortgage with a new job
Avoid transitioning to a job that doesn’t make financial sense, such as a lateral move for less pay, a change from full-time employee to contractor or a major industry change. Employment history showing frequent career moves could be a red flag for lenders that you may not be able to maintain steady income.
Another red flag for lenders is an extended gap in employment history. Chances of acquiring a mortgage may be stronger if your period of unemployment was less than six months. However, some exemptions include military service members returning from deployment or full-time students transitioning into the workforce; these paths are viewed as forms of employment.
How to get a home loan when relocating
If your new job requires you to move, you’ll need to solidify living arrangements before relocating. If you don’t mind renting in your new location for at least 30 days to provide lenders with your first pay stub, it’s likely the least stressful solution. Extended-stay hotels are popular options while familiarizing yourself with the surrounding community and local real estate market. On condition that you’re sticking to the same industry and the new role offers a financial or career advantage, the new job should not restrict quick loan acquisition in a new city.
Alternatively, you could attempt purchasing and closing on a home in the new location before giving notice to your current job for a smooth, one-time move. If you’re moving fast, understand a purchase offer takes 30-45 days to close, on average. Lenders verify employment during loan application and then again just prior to closing, so be sure to maintain employment until the sale closes.
If you’re a homeowner and need to sell while shopping for a new home, and possibly live in a rental simultaneously, finances can become demanding. Selling your current property before buying can provide cash from closing to help fund your down payment, which could boost your loan eligibility. But if you can afford carrying two mortgages for a period of time, you can purchase a home in the new location, move in directly and then work to sell the initial property remotely. Again, you’ll be limited to the speed of the purchase agreement or expect to disclose your new role to the lender.
Can relocation packages help with home purchases?
Often, companies offer relocation packages that range in coverage from paying for a moving service to a generous Guaranteed Buy Out (GBO). A GBO is when the company buys your home for an average appraisal value if it does not sell in a fair timeframe. Other relocation packages might help with closing costs of your home sale or pay the real estate commission fees. If you’re underwater on your home, your new employer might cover the loan difference at resale.
Some relocation packages assist their new employees purchase a local home within a year of moving, they may buy down your interest rate or contribute to a down payment.
Whether buying a house out of necessity or preference, acquiring a new job within the same industry for better pay likely won’t prevent loan approval, but it may slow the process down by a month.
When you purchase a condominium, townhouse or another type of property in a planned development such as a leased land property or a gated community, you are obligated to join that community's homeowners' association (HOA) and pay monthly or annual HOA fees for the upkeep of common areas and the building. If you are considering purchasing one of these types of properties, you should be aware of the following nine things about homeowners' associations and how they work before you buy.
First, let's take a look at what HOAs are all about. HOA fees often range from $200 to $400 per month. The more upscale the building and the more amenities it has, the higher the homeowners' association fees are likely to be. In addition to monthly fees, if a major expense such as a new roof or a new elevator comes up and there aren't enough funds in the HOA's reserves to pay for it, the association may charge an extra assessment that can run into thousands of dollars.
Because multiple parties live in the same building or complex, all residents of condominiums and townhomes must be equally responsible for maintaining the common areas such as landscaping, elevators, swimming pools, clubhouses, parking garages, fitness rooms, sidewalks, security gates, roofing and building exteriors. Many of these types of common areas, such as pools and tennis courts, also exist in subdivisions of single family homes. Regardless of whether the HOA governs a building, such as a condo or townhome structure, or a neighborhood of individual houses, HOA fees help maintain the quality of life for the community's residents and protect property values for all owners.
In addition to maintaining common areas, HOAs also set out certain rules that all residents must follow called covenants, conditions and restrictions (CC&Rs). In a common building, rules may include what color front door you may have, whether you are allowed to line dry your laundry outside, whether you can have a satellite dish, the size and type of pets permitted, and so on. In many ways, these rules are similar to the kinds of rules apartment dwellers must follow.
In a subdivision with individual homes, regulations may include what color you can paint your home, the exterior landscaping you can do, the types of vehicles you can park on the street or in your driveway (no RVs, for example), permissible type and height of fences, and restrictions on window coverings for windows facing the street. If you want to do anything that differs from these rules, you will have to convince the HOA to grant you a variance, which is probably unlikely.
No matter where you live, you are likely to be subject to city ordinances and restrictions related to the use of your property. HOAs add yet another layer of restrictions, and because their members are more likely to know what you're up to, the HOA is more likely to enforce the rules. Below, we'll take a look at some of the rules and regulations you need to know about before you decide to join one of these communities.
What You Need To Know
While there are laws governing the behavior of HOAs, these associations can still have a powerful impact on your rights as a homeowner. Before buying a property in a community that has an HOA you should:
1. Learn the HOA's rules.
You may be able to find an HOA's CC&Rs online as well as information about what happens if you violate a rule. Make sure any online information is current. If you cannot find this information online, ask your real estate agent to acquire these documents for you or contact the HOA yourself.
Pay particular attention to rules regarding fines and whether the HOA can foreclose on your property for nonpayment of HOA dues or fines resulting from CC&R violations. Also, learn about the process for changing or adding rules, and whether HOA meetings are held at a time you will be able to attend if you wish to do so. If the rules are too restrictive, consider buying elsewhere.
2. Make sure the home you want to buy is not already out of compliance with HOA rules.
Buying into an existing problem can be a headache, so find out what the rules are and whether you would have to make changes to the home to comply.
3. Assess environmental practices.
If environmentally friendly living is important to you, be aware that some HOAs may dictate that you use fertilizers, pesticides, sprinkler systems and whatever else it takes to keep your lawn picture-perfect. They may not allow xeriscaping (an environmentally friendly form of landscaping) and may limit the size of gardens, ban compost piles and prevent you from installing solar panels. So make sure you check the fine print first.
4. Consider your temperament.
Are you the type of person who hates being told what to do? If so, living in a community with an HOA may be a very frustrating experience for you. One of the major benefits of homeownership is the ability to customize and alter the property to suit your needs, but HOA rules can really interfere with this.
5. Find out about fees.
Fees will differ for each community. Because of this, you should make sure to ask your HOA the following questions:
Compare dues for the complex or neighborhood you are considering to the average dues in the area. Keep in mind that you will have to pay for recreational facilities whether you use them or not. Find out the hours for amenities like pools and tennis courts. Will you be around during those hours, or will you be paying for facilities you'll never be able to use? Be aware that the HOA may have rules about how many guests can use common facilities. If guest restrictions are severe, forget about that housewarming pool party you envisioned.
6. Try to get a copy of minutes from the last meeting or sit in on an HOA meeting before you buy.
The meeting minutes can be very telling about the policies of the HOA. Some questions to ask are:
Be alert for potential drama. Power trips and petty politics can be an issue in some HOAs. Talk to some of the building's current owners, if possible – preferably ones who are not on the HOA board and who have lived in the building for several years. Talk to the HOA president and get a sense for whether you want this person making decisions about what you can do with your property. If a private company manages the HOA, investigate it before you buy. Some HOAs are professionally managed, but it is common for associations to be managed by building residents who hold their positions as volunteers. Even if you like the current HOA board or management company, it can change after you move in and you may end up getting something totally different than what you expected.
7. Watch for under-management.
Not all HOAs are over-managed. The opposite problem may be an HOA where no one really cares and where no one is interested in maintaining the building, making repairs, hearing resident grievances or being on the board. Residents may simply take turns serving as HOA president or randomly appoint someone, so be prepared to serve in this role whether you want to or not if that is the case with your community's HOA.
This would also be a good time to check into any restrictions preventing you from renting out your property or that make it difficult for you to do so. If your property is being under-managed you might not have an issue, but if you've got a hyperactive manager it could be a totally different story.
8. Find out what kind of catastrophe insurance the HOA has on the building.
This is particularly important if you're considering a condo or townhouse purchase and you live in an area that is prone to floods, earthquakes, blizzards, fires, tornadoes, hurricanes or any other type of potential natural disaster – and that is virtually anywhere.
9. Consider the impact of HOA fees on your short- and long-term finances.
A condo with high HOA fees might end up costing you as much as the house you don't think you can afford.
The Bottom Line
Homeowners' associations can be your best friend when they prevent your neighbor from painting her house neon pink, but your worst enemy when they expect you to perform expensive maintenance on your home that you don't think is necessary or impose rules that you find too restrictive. Before you purchase a property subject to HOA rules and fees, make sure you know exactly what you are getting into. Then, once you've found your dream community, use a resource like a mortgage calculator to secure a favorable mortgage.
Thinking about buying? Be sure to include these five items in your calculations.
Homeownership may be a goal for some, but it’s not the right fit for many.
Renters account for 37 percent of all households in America — or just over 43.7 million homes, up more than 6.9 million since 2005. Even still, more than half of millennial and Gen Z renters consider buying, with 18 percent seriously considering it.
Both lifestyles afford their fair share of pros and cons. So before you meet with a real estate agent, consider these five costs homeowners pay that renters don’t — they could make you reconsider buying altogether.
1. Property taxes
As long as you own a home, you’ll pay property taxes. The typical U.S. homeowner pays $2,110 per year in property taxes, meaning they’re a significant — and ongoing — chunk of your budget.
Factor this expense into the equation from the get-go to avoid surprises down the road. The property tax rates vary among states, so try a mortgage calculator to estimate costs in your area.
2. Homeowners insurance
Homeowners insurance protects you against losses and damage to your home caused by perils such as fires, storms or burglary. It also covers legal costs if someone is injured in your home or on your property.
Homeowners insurance is almost always required in order to get a home loan. It costs an average of $35 per month for every $100,000 of your home’s value.
If you intend to purchase a condo, you’ll need a condo insurance policy — separate from traditional homeowner’s insurance — which costs an average of $100 to $400 a year.
3. Maintenance and repairs
Don’t forget about those small repairs that you won’t be calling your landlord about anymore. Notice a tear in your window screen? Can’t get your toilet to stop running? What about those burned out light bulbs in your hallway? You get the idea.
Maintenance costs can add an additional $3,021 to the typical U.S. homeowner’s annual bill. Of course, this amount increases as your home ages.
And don’t forget about repairs. Conventional water heaters last about a decade, with a new one costing you between $500 to $1,500 on average. Air conditioning units don’t typically last much longer than 15 years, and an asphalt shingle roof won’t serve you too well after 20 years.
4. HOA fees
Sure, that monthly mortgage payment seems affordable, but don’t forget to take homeowners association (HOA) fees into account.
On average, HOA fees cost anywhere from $200 to $400 per month. They usually fund perks like your fitness center, neighborhood landscaping, community pool and other common areas.
Such amenities are usually covered as a renter, but when you own your home, you’re paying for these luxuries on top of your mortgage payment.
When you’re renting, it’s common for your apartment or landlord to cover some costs. When you own your home, you’re in charge of covering it all — water, electric, gas, internet and cable.
While many factors determine how much you’ll pay for utilities — like the size of your home and the climate you live in — the typical U.S. homeowner pays $2,953 in utility costs every year.
Ultimately, renting might be more cost-effective in the end, depending on your lifestyle, location and financial situation. As long as you crunch the numbers and factor in these costs, you’ll make the right choice for your needs.
Do you need one? Do they pocket the whole commission? Let’s set the facts straight.
Buyers and sellers often enter the market with misconceptions about real estate agents — how we work, how the process works and what the agency relationship is all about.
It’s helpful to point out, without getting too far into the weeds, that in any one real estate transaction, there are most likely two agents: one for the buyer and one for the seller.
Here are five myths (and five truths) about working with both buyer’s and seller’s agents.
1. Agents get a 6 percent commission, no matter what
Most people assume that their agent is pocketing the entire commission. That would be nice, but it’s just not accurate.
First, it’s helpful to know that the seller pays the commission, and they split it four ways: between the two brokerages and the two agents.
Finally, the brokerage commission isn’t fixed or set in stone, and sellers can sometimes negotiate it.
2. Once you start with an agent, you’re stuck with them
If you’re a seller, you sign a contract with the real estate agent and their brokerage. That contract includes a term — typically six months to a year. Once you sign the agreement, you could, in fact, be “stuck” with their agent through the term. But that’s not always the case.
If things aren’t working out, it’s possible to ask the agent or the brokerage manager to release you from the agreement early.
Buyers are rarely under a contract. In fact, buyer’s agents work for free until their clients find a home. It can be as quick as a month, or it can take up to a year or more. And sometimes a buyer never purchases a house, and the agent doesn’t get paid.
Before jumping into an agent’s car and asking them to play tour guide, consider a sit-down consultation or a call, and read their online reviews to see if they’re the right fit.
Otherwise, start slow, and if you don’t feel comfortable, let them know early on — it’s more difficult to break up with your agent if too much time passes.
3. It’s OK for buyers to use the home’s selling agent
Today’s buyers get most things on demand, from food to a ride to the airport. When it comes to real estate, buyers now assume they need only their smartphone to purchase a home, since most property listings live online.
First-time buyers or buyers new to an area don’t know what they don’t know, and they need an advocate.
The listing agent represents the seller’s interests and has a fiduciary responsibility to negotiate the best price and terms for the seller. So, working directly with the selling agent presents a conflict of interest — in favor of the seller.
An excellent buyer’s agent lives and breathes their local market. They’ve likely been inside and know the history of dozens of homes nearby. They’re connected to the community, and they know the best inspectors, lenders, architects and attorneys.
They’ve facilitated many transactions, which means they know all the red flags and can tell you when to run away from (or toward) a home.
4. One agent is just as good as the next
Many people think of “agent” as a generic term and that all agents are created equal.
A great local agent can make an incredible difference, so never settle. The right agent can save you time and money, keep you out of trouble and protect you.
Consider an agent who has lived and worked in the same town for ten years. They know the streets like the back of their hand. They have deep relationships with the other local agents. They have the inside track on upcoming deals and past transactions that can’t be explained by looking at data online.
Compare that agent to one who’s visiting an area for the first time and needs their GPS to get around. Some agents aren’t forthright and might be more interested in making a sale. Many others care more about building a long-term relationship with you, because their business is based off referrals.
5. You can’t buy a for sale by owner (FSBO) home if you have an agent
In a previous generation, sellers who wouldn’t deal with any agents tried to sell their home directly to a buyer to save the commission.
Smart sellers understand that real estate is complicated and that most buyers have separate representation. And many FSBO sellers will offer payment to a buyer’s agent as an incentive to bring their buyer clients to the home.
If you see an FSBO, don’t be afraid to ask your agent to step in. Most of the time the seller will compensate them, and you can benefit from their knowledge and experience.
Millennial veterans and military members are helping fuel the resurgence of the historic VA loan program. Last year’s 700,000-plus loans were more than double the agency’s total from five years ago.
Younger buyers in particular have flocked to these government-backed mortgages during a time of tight credit and flatlining wage growth. The VA says millennials accounted for about a third of all VA loans last year.
These low-interest loans offer qualified buyers a wealth of benefits. That’s especially true for millennial borrowers, who often have dented credit or minimal savings. This $0 down payment loan program was created to help level the playing field for those who serve our country, and it’s still doing so today.
“VA loans offer an extraordinary opportunity for veterans because of lower interest rates, lower monthly payments, no or low down payments, and no private mortgage insurance,” said Jeff London, director of the VA home loan program.
Here’s a closer look at three of the big benefits that make VA loans such a good match for millennial home buyers.
1. No down payment requirement
This renowned benefit of VA loans helps veterans purchase without having to spend years saving for a down payment. When determining affordability, qualified buyers in most of the country should know that they can purchase a home for up to $424,100 before having to factor in a down payment. That ceiling is even higher in costlier housing markets.
The average VA loan last year was for about $253,000. Getting a conventional loan for that amount often requires a down payment of at least $12,000. FHA loans require at least 3.5% down. That’s no small sum in either case, particularly for younger veterans and military families.
2. No mortgage insuranceVA buyers also don’t have to pay extra each month for mortgage insurance, a common feature of low-down-payment loans. Conventional buyers typically need to pay for private mortgage insurance unless they can put down 20%. FHA loans come with both upfront and annual mortgage insurance premiums.
For example, FHA buyers shell out an additional $140 per month for mortgage insurance on a typical $200,000 loan. That extra outlay can limit your purchasing power, as well as put a hole in your monthly budget.
Most VA buyers encounter a funding fee that goes straight to the Department of Veterans Affairs. Veterans and military members can finance this cost over the life of their loan. Borrowers who receive compensation for a service-connected disability don’t pay it at all.
3. Flexible credit guidelinesVA loans were created to boost access to homeownership for veteran and military families. They’re naturally more flexible and forgiving when it comes to credit underwriting.
Lenders typically have lower credit score benchmarks for VA loans than for conventional mortgages. The average FICO score on a VA purchase last year was 50 points lower than the average conventional score, according to Ellie Mae.
Compared with conventional borrowers, qualified VA buyers can also bounce back faster after a bankruptcy, foreclosure, or short sale.
Despite their flexibility, VA loans have had the lowest foreclosure rate on the market for most of the past nine years. That’s due in large part to the VA’s commitment to helping veterans keep their homes.
Loan program officials can advocate on behalf of veteran homeowners and encourage lenders and mortgage servicers to offer alternatives to foreclosure.
“VA is even there to assist veterans who encounter difficulty making payments,” London said. “Last year, VA and servicers helped over 97,000 veterans avoid foreclosure. Using the VA program is a win for veterans, lenders, and taxpayers.”
More than seven decades after their introduction, VA loans are still making a big difference for veterans, military members, and their families.
“A home and its equity becomes the bedrock of their economic future,” said Curtis L. Coy, deputy undersecretary for economic opportunity at the Department of Veterans Affairs. “Money that would have typically been used for the down payment is now money in their pocket—money that can be the beginning of their savings or can be used to fix up their home. It is a win-win for the veteran and the community where they spend that money.”
This article was written by Chris Birk, director of education at Veterans United Home Loans and author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.”
This article was written by Chris Birk, director of education at Veterans United Home Loans and author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.”
NMLS 1907 (www.nmlsconsumeraccess.org) Veterans United Home Loans is not endorsed or sponsored by the Department of Veterans Affairs or any government agency; does not reflect DOD endorsements. Equal Opportunity Lender. 1400 Veterans United Drive, Columbia, MO, 65203.
Buying your first home is an unforgettable experience as a first-time homebuyer, and one you’ll always cherish. But the problem facing many first-time buyers today is home affordability. It’s become a major concern for first-time homebuyers entering the real estate market, especially for millennials, as rising median home prices combined with lower inventory levels across the nation are making home affordability a thing of the past. According to the National Association of Realtors, one of the major hindrance for many first-time homebuyers is student debt.
“It’s becoming very evident from this survey and our research released last month that the financial and emotional impact of repaying student debt is contributing to a delay in purchasing a home for many would-be buyers,” said Lawrence Yun, chief economist for the National Association of Realtors.
“At a time of quickly rising rents, mortgage rates at all-time lows and increasing housing wealth, a lot of young adults in their prime buying years are struggling to enter the market and are ultimately missing out on the stability and wealth accumulation that owning a home can provide.”
Another factor hurting first-time homebuyers is credit score — which are lowest among young adults ages 18-29 year olds. A TransUnion survey revealed that nearly a third of millennials — ages 18 to 34 — would like to purchase a home within the year, but can’t because of low credit scores.
Despite the hurdles, first-time homebuyers are still making up a large portion of sales. The month of May saw first-time homebuyers making up 33 percent of existing-home sales. In the first six months of 2016, first-time homebuyers have represented on average 31 percent of existing-home sales, while a mere 11 percent of sales were investors, the lowest since 2009.
With that said, personal-finance website WalletHub has ranked the top 300 U.S. cities in terms of their attractiveness for first-time homebuyers.
Best U.S. Cities For First-Time Homebuyers
To determine the attractiveness for first-time homebuyers, WalletHub based their rankings on three key dimensions: 1.) Affordability, 2.) Real-Estate Market, and 3.) Quality of Life. The three dimensions were then evaluated using 19 relevant metrics — each metric graded on a scale of 0 to 100, with 100 representing the most favorable conditions for first-time home buyers. Metric included Foreclosure rates for the real estate market ranking; housing affordability and cost of living for the affordability ranking; and weather and crime rate for the quality of life ranking. In addition, WalletHub used data from U.S. Census Bureau, the Council for Community and Economic Research, Zillow, the FBI, the Insurance Information Institute for their rankings.
The following real estate trends list provides the top 10 cities ideal for first-time homebuyers along with their overall scores and rankings in affordability, real estate market, and quality of life:
10. Lexington, Kentucky
Total Score: 62.84
Affordability Rank: 45
Real-Estate Market Rank: 57
Quality of Life Rank: 36
9. Centennial, Colorado
Total Score: 62.98
Affordability Rank: 122
Real-Estate Market Rank: 33
Quality of Life Rank: 7
8. Lincoln, Nebraska
Total Score: 63.55
Affordability Rank: 70
Real-Estate Market Rank: 43
Quality of Life Rank: 21
7. Boise, Idaho
Total Score: 63.73
Affordability Rank: 3
Real-Estate Market Rank: 87
Quality of Life Rank: 91
6. Longmont, Colorado
Total Score: 64.11
Affordability Rank: 145
Real-Estate Market Rank: 16
Quality of Life Rank: 2
5. Westminster, Colorado
Total Score: 64.31
Affordability Rank: 127
Real-Estate Market Rank: 14
Quality of Life Rank: 8
4. Cedar Rapids, Iowa
Total Score: 64.44
Affordability Rank: 17
Real-Estate Market Rank: 82
Quality of Life Rank: 47
3. Thornton, Colorado
Total Score: 65.42
Affordability Rank: 125
Real-Estate Market Rank: 22
Quality of Life Rank: 3
2. Greeley, Colorado
Total Score: 65.46
Affordability Rank: 112
Real-Estate Market Rank: 9
Quality of Life Rank: 5
1. Overland Park, Kansas
Total Score: 68.49
Affordability Rank: 58
Real-Estate Market Rank: 29
Quality of Life Rank: 11
The upward trend of our economic status has fueled drastic changes within the housing sector. Inventory shortages have resulted in escalating home values and bidding wars between investors and house hunters. Of particular interest, however, are the changes seen in subsequent rental rates. Several cities throughout the United States have experienced increased rental rates, some of which have doubled in price.
While increased rental rates have burdened tenants, investors of all types have become eager to acquire buy and hold properties. Recent activity has facilitated the development of new projects and made everything from apartment buildings to existing single-family homes a hot commodity. Increased rental rates have even caused some homeowners to move out and rent their property for additional cash yields.
According to MPF Research, San Francisco has experienced the largest surge in rental rates. As such, the Northern California city was placed atop a list with the 50 metropolitan areas that experienced the highest rent growth during the second quarter of this year. San Francisco rents increased by 7.8 percent, according to preliminary estimates by MPF Research market-research firm based in Carrollton, Texas. The following is a comprehensive list of the cities that experienced the highest increase in rental rates:
Increased rental rates have therefore made buying rental properties the latest investment trend. Opportunities for passive income have never presented themselves with such promise. Further supporting the idea of acquiring a rental property are statistics released by Trulia that acknowledged owning a home may be 44 percent cheaper than renting one.
With incentives for owning more promising than ever, now is the time to buy. However, keep an eye on local rental markets while attempting to do so. It is likely not worth the hassle, or price, to have to move from one rental property to another before buying. Increased rental rates may therefore drive many towards ownership. Investors, in particular, are searching for optimal rental properties to take advantage of the increasing rates.
The prospect of an all-cash transaction is one in which homeowners welcome with open arms. It may serve as the difference between an acceptable offer and rejection. All-cash offers may even facilitate the sale of a property that was not originally on the market. For these reasons, and several more, the acquisition of hard money transcends the lengthy process that typically accompanies a traditional sale.
Investors with the capability to provide immediate capital are therefore at an advantage over the typical homebuyer. By comparison, the saturation of our market with all-cash offers has made it increasingly difficult for those without the necessary means to compete. Potential homeowners, unable to make an all-cash offer, are being squeezed out.
According to the National Association of Realtor’s (NAR’s) Confidence Report, all-cash offers account for 33 percent of home sales. International purchases account for the greatest amount of all-cash offers in the United States. Furthermore, 87 percent of the Realtors involved in the report acknowledge that they are witnessing a continuous trend of increasing home prices. Homebuyers, particularly those in the market for the first time, are already battling low inventory and rising home prices. The added pressure of all-cash offers is therefore an unwelcome one.
According to William Delwiche, an investment strategist at Baird Research & Insights, cash transactions have been supported by investor pools acquiring real estate, not by individuals looking to live in the home. “These are investment pools paying cash for houses to hopefully get returns,” he says. “It’s not necessarily a trend among individual homeowners because most people going to buy houses don’t have that kind of cash sitting around.”
According to Patrick Newport, an economist with HIS Global Insights, sellers prefer all-cash offers to those of the traditional approach. Having the money up front removes the complications typically associated with selling a home. “If you own a home and are selling yourself, it’s probably easier if someone pays you cash — it cuts out the messiness and having the homebuyer get approved for a loan.”
Continuation of this recent trend will likely reinforce the momentum the housing sector is currently exhibiting. However, it will have a resounding impact on first-time homeowners. Karen Dynan, vice president and co-director of economic studies at the Brookings Institute, says “it just makes the housing market less affordable. It’s good for the overall economy, but not for every person in the economy.”
Concurring with Dynan, Delwiche acknowledges that all-cash offers may prevent more people from entering the market. “Home prices go up and it affects housing affordability,” Delwiche says. “You can’t have first-time homeowners who are seeds for long-term growth, because they are then crowded out of the market. So short term it’s something of a positive, but is a headwind for first-time homeowners.”
While first-time homeowners are at a significant disadvantage, it is hard to argue with the prospect of all-cash offers. Those using cash have a greater negotiating power than those requiring a loan. Sellers, recognizing the increased ease of sale, are most likely going to chose the suitor providing cash and are often willing to reduce the house’s price on their behalf.
Transactions consisting of nothing but cash carry a much lower cost. Mortgage rates alone can serve to double or triple the cost of a property. Furthermore, closing costs are significantly lowered when purchases are made with cash. Aside from saving money, all-cash offers save buyers valuable time. There is no need to locate the best lender and significantly fewer documents to sign. So, while it may be difficult, first-time homebuyers are advised to take part in this trend. The following tips may make the prospect of an all-cash purchase a little easier:
The home inspection portion of the homebuying process is a crucial step toward determining whether you want to own that house. While you can’t “test-live” a home beyond buying it the same way you test drive a car, you can use this opportunity to get a feel for the place and determine if it suits your needs. Plus, perhaps most importantly, a home inspection is when you can identify any potential problems with the structure that might impact how much you’re willing to pay, or even if you decide to move on to a different location.
Partner with the right inspector
Like every other portion of the homebuying process, you should conduct research and vet the best possible choice for a home inspector. Ask for sample reports from previous clients. Make sure these are extensive and provide detailed recommendations and pictures. If you get single-page reports with vague language and no clear directions, move along to the next inspector.
In addition, locate a home inspector who has been certified. Fortune Builders noted that most reputable inspectors will be a member of one of the following:
You should attend the home inspection to familiarize yourself with your potential new property.
Even though you’re not the person who will be conducting the inspection, you will definitely want to attend it. Two sets of eyes are always better than one, and you might be able to spot something the inspector might have overlooked. Plus, this provides you the opportunity to ask any questions of the inspector on what you might need to fix. The inspection also gives you the chance to become more familiar with your potential new home as you’ll be exploring every nook and cranny in the place.
Although home inspection guidelines vary from one state to the next, the ASHI provides a “Standards of Practice” that outlines the minimum foundation of what to inspect. It’s the inspector’s job to accurately and adequately describe the basic current physical condition of the home. The point is to identify any repairs, replacement or remodeling that might be necessary.
What to keep an eye on
As you’ll be also be there, you should know what the inspector will examine. He or she will be scrutinizing both the interior and exterior components of the home, including the condition of:
Since the inspector is only examining the physical aspects of the home’s structures, there are certain things that he or she will not look into, including:
Working with a qualified home inspector can save you time and money in the long run, but it will also ensure you close the homebuying process with a thorough understanding of what you’re about to purchase.
When it comes time for you to decide on how long you want your mortgage to last, you have several options to choose from, each with their own pros and cons. Since no two people or families are exactly alike, each homebuyer will have his or her own specific financial capabilities and goals.
To accommodate these differences, you can obtain different terms for your mortgage depending on how long you want to pay it back. With 30-, 20- and 15-year terms available, you can choose the option that best suits your short- and long-term financial priorities.
Let's take a look at what these different options mean for you:
While three decades might seem like a long time to pay off a mortgage, the 30-year term is actually standard for a majority of homebuyers. According to Freddie Mac, 2016 saw approximately 90 percent of homebuyers opt for the 30-year fixed-rate mortgage. Its popularity stems from the length of the mortgage, which allows for lower monthly payments for the homeowner.
"The 30-year note allows for lower monthly payments for the homeowner."
Having to make smaller monthly payments makes a lot of financial sense for new homeowners who might not have the ability to make larger payments. However, it should be noted that 30-year terms often come with a higher interest rate than shorter mortgages.
Keep in mind that you can still make additional payments on the loan principal, which shortens the term length. This can help you speed up the repayment process and save money on interest.
After the 30-year, a 15-year note is also fairly common mortgage term. While not nearly as popular as the former, Freddie Mac noted that about 6 percent of homebuyers decided to go this route.
Since you'll pay off this loan in half the time as the 30-year one, it means you'll end up with a larger payment each month. Although you'll have a higher payment, the shortened term reduces the amount of interest that accumulates on the loan.
This is a great option if you want to finish your mortgage quickly and save money since you won't have to pay as much interest.
However, if your financial situation drastically changes, it could make it difficult to make these higher payments, so be sure you have a strong sense of your ability to pay off this mortgage.
In addition to the 15- and the 30-year terms, you can also implement a 20-year mortgage. This option typically has a repayment and interest rate that falls in between the other two options.
Homebuyers who have just started a new family or are planning on doing so shortly, a 20-year option makes for a great choice as you will have paid it off by the time the kids are ready to go to college.
The bottom line
With any major life decision that carries a long-term financial impact, it's crucial that you evaluate the different mortgage options and decide which one most closely aligns with your current and future situation. Talk with your First Centennial Mortgage loan officer to find out which term option works best for you and your financial situation.