homeowners http://www.wisebread.com/taxonomy/term/11986/all en-US These Are the 7 Features Home Buyers Want Most http://www.wisebread.com/these-are-the-7-features-home-buyers-want-most <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/these-are-the-7-features-home-buyers-want-most" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_new_house_62152676.jpg" alt="Couple learning features homebuyers want most" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Interested in buying a new home? It's a good idea to be aware of what new homebuyers are looking for. I interviewed Markus Brown, a Realtor in Orange County, California, about what he sees buyers looking for in potential new homes. The following features are currently generating a lot of demand, which may potentially translate to higher home values.</p> <h2>1. An Open Floor Plan</h2> <p>The days of compartmentalized rooms all separated by walls and doors are gone, and the era of <a href="https://www.newhomesource.com/resourcecenter/articles/top-10-features-home-buyers-want">connected living</a> continues to be one of top new home trends. Specifically, buyers &quot;want the kitchen to be open to the family room, which creates the &quot;great room&quot; as it's most typically defined,&quot; says Brown. Homebuyers are also looking for an open floor plan kitchen, as it allows people to flow to and from the heart of the home during gatherings.</p> <h2>2. Hardwood Floors</h2> <p>Forget the wall-to-wall carpet, today's homebuyers are looking for <a href="http://eyeonhousing.org/2016/03/housing-preferences-across-generations-part-i/">hardwood floors</a> on the main floor of the home, according to the National Association of Home Builders. Hardwood flooring looks especially beautiful when flowing throughout an open floor plan.</p> <h2>3. A Modern Kitchen</h2> <p>New homebuyers are looking not just for an updated kitchen, but a <a href="http://www.inman.com/2016/02/16/10-key-design-trends-buyers-want-sellers-need-2016/">modern kitchen design</a> that hits the latest trends. Granite continues to trend, but the pattern in the granite tends to be characterized by more &quot;movement and flow,&quot; according to Brown, as opposed to a busy, speckled look. Quartz aggregates are a popular alternative for countertops. Floor tile has been growing in size, with large rectangular tiles (and fewer grout lines) leading the trends. Keeping hardwood flooring flowing throughout the kitchen and living spaces is also very popular.</p> <p>The trendiest kitchens have a large island that doubles as an eating space, combining cooking and eating/entertaining in one feature. Open shelving has seen a resurgence in interest, but it can be a polarizing feature that some love and some don't.</p> <p>Brown points out that modern backsplash finishes are important, and he has seen a trend toward the &quot;subway tile patterns that were popular in the 20s and 30s.&quot;&nbsp;Pullout shelves and self-closing doors in the kitchen are also a plus.</p> <h2>4. Plenty of Storage</h2> <p>Along with an open floor plan comes a need for ample storage to keep those open spaces clutter free. New homebuyers are looking for pantries, linen closets, and storage areas such as a separate laundry room, mudroom, and cabinetry in the garage to help them stay organized and to keep the clutter out of sight. In fact, the most recent survey by the <a href="http://eyeonhousing.org/2016/03/housing-preferences-across-generations-part-i/">National Association of Home Builders</a> (NAHB) reports that 92% of buyers want a laundry room, making it the most desired feature of a new home.</p> <h2>5. Multi-Generational Living</h2> <p>Many new homebuyers appreciate the possibility to house an older parent or family member, if not full-time, at least part-time with comfortable guest quarters. A guest room on the ground floor with a full bathroom is one of the features that makes multigenerational living more comfortable for everyone.</p> <h2>6. Multi-Functional Space</h2> <p>Something many new homebuyers are looking for is a &quot;homework loft,&quot; &quot;gaming loft,&quot; or some kind of multifunctional space within the home. This could be a desk located on a second floor loft outside the bedrooms, or an area off the living room or kitchen which can be used for various needs. &quot;The loft and great room are mutually dependent in many ways,&quot; says Brown, because along with greater open space comes a need for a place for kids to hang out separately from adults.</p> <h2>7. Indoor-Outdoor Living</h2> <p>Today's homebuyers are looking for ways to incorporate the outdoors into their daily lives. Millennials and younger buyers, in particular, are <a href="http://eyeonhousing.org/2016/03/housing-preferences-across-generations-part-i/">increasingly demanding a patio</a> and multiple outdoor areas. Outdoor living space also increases the functional square footage of a home. Having an outdoor kitchen and entertaining space can be very attractive to new homebuyers. Sliding doors or French doors leading to a large patio that encourages flow between indoors and outdoors are often coveted features.</p> <p>The &quot;California room&quot; or &quot;outdoor living room&quot; is an increasingly popular concept, according to Brown. A California room is a space that seamlessly blends indoor and outdoor living, usually comprised of a covered patio or sunroom, comfortable furnishings, and easy access to both inside and outside.</p> <h2>8. Energy Efficiency and Eco-Conscious Living</h2> <p>Energy efficiency is a feature that is becoming increasingly important. Energy Star rated appliances, windows, and an Energy Star rated whole home were desired by <a href="http://eyeonhousing.org/2016/03/housing-preferences-across-generations-part-i/">over 80%</a> of new homebuyers. Features like a whole house fan, solar &quot;readiness&quot; (infrastructure in place for solar panels), solar water heater, heat pump heater/air conditioner, and &quot;smart&quot; thermostats can all appeal to the eco-conscious buyer. &quot;In certain areas of the country,&quot; notes Brown, &quot;drought-tolerant and low-maintenance landscaping are also important.&quot;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/camilla-cheung">Camilla Cheung</a> of <a href="http://www.wisebread.com/these-are-the-7-features-home-buyers-want-most">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-sneaky-home-money-pits-that-sap-your-savings">9 Sneaky Home Money Pits That Sap Your Savings</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-dumb-ways-to-scare-off-potential-homebuyers">10 Dumb Ways to Scare Off Potential Homebuyers</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-most-expensive-zip-codes-in-the-country">10 Most Expensive Zip Codes in the Country</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-buy-a-house-without-a-mortgage">4 Ways to Buy a House Without a Mortgage</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/everybodys-wrong-about-how-much-house-you-can-afford">Everybody&#039;s Wrong About How Much House You Can Afford</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Home Real Estate and Housing appliances features floor plans homebuyers homeowners housing market interior design modern new house Thu, 29 Sep 2016 09:00:07 +0000 Camilla Cheung 1800745 at http://www.wisebread.com 5 Reasons You Shouldn't Buy a House (Yet) http://www.wisebread.com/5-reasons-you-shouldnt-buy-a-house-yet <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-reasons-you-shouldnt-buy-a-house-yet" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_new_house_62322290.jpg" alt="Woman learning reasons she shouldn&#039;t buy a house yet" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You hate sending that rent check to your landlord every month. The neighbors living above you have a newborn baby that cries all night long. And you dream of planting your own vegetable garden.</p> <p>In short, you're tired of renting and you want to buy your first home. But wanting to buy a home and being ready to do so are two different things. Are you financially ready for the burden of a monthly mortgage payment?</p> <p>Here are five signs that you're not ready to buy a house just yet. But don't fret; even if you are struggling with these financial issues, you can still become a homeowner. You'll just need a bit of patience and improved financial skills.</p> <h2>Sign 1: You Have No Savings</h2> <p>Buying a home is expensive. You'll need money for a down payment. For most mortgage loans, you'll need at least 5% of the home's purchase price. For a home costing $200,000, that comes out to $10,000. If you are buying a home insured by the Federal Housing Administration, better known as an FHA loan, you'll need a down payment of 3.5% of your home's final purchase price, depending on your credit score. For a $200,000 home, that still comes out to a down payment of $7,000.</p> <p>Then there are closing costs, the fees that mortgage lenders, title insurers, and others charge you to originate your mortgage loan. Real estate website Zillow says that these costs can run from 2% to 5% of your total mortgage loan. If you are borrowing $180,000, then your closing costs can run from $3,600 to $9,000.</p> <p>It's true that you can get help with some of these costs. You can use gift money from relatives, for example, to pay for all or part of your down payment. You might be able to convince a home's seller to pay for all or part of the closing costs. But if you don't have any savings built up, lenders might hesitate to lend you mortgage money. They want to make sure that you have reserve funds on hand to cover your mortgage payment for at least two to three months if you should suddenly run into a financial crisis such as a job loss.</p> <h3>What to Do</h3> <p>It's best to start searching for a home only <em>after </em>you've saved enough money to cover a down payment and your estimated closing costs. Most lenders will also want to see enough money in your savings after you've paid closing costs and your down payment to cover at least two months of mortgage payments.</p> <h2>Sign 2: Your Credit Score Is Bad</h2> <p>Your credit score is a key number when you're applying for a mortgage. Lenders pass out their lowest interest rates to borrowers who have FICO credit scores of 740 or higher. But the lower your score, the higher your interest rate &mdash; and your monthly mortgage payment &mdash; will be. If your score is too low, say under 640, you'll struggle to qualify for a loan at all.</p> <h3>What to Do</h3> <p>First, order at least one of your three credit reports from AnnualCreditReport.com. You are entitled to one free copy of each of your three credit reports &mdash; maintained by the national credit bureaus of Experian, Equifax, and TransUnion &mdash; once every year. Once you get your report, read it carefully. It will list how much you owe on your credit cards and how much you owe on student loans and car loans. It will also list whether you have any late or missed payments during the last seven years. Those late or missed payments will send your credit score tumbling.</p> <p>Next, order your FICO credit score. You can do this from the credit bureaus, too, but you'll have to pay about $15 to do so. If your score is low, and there are negative marks on your credit report, it's time to start a new history of paying all your bills on time. You also need to pay down as much of your credit card debt as possible. Both of these actions will steadily increase your credit score, though it could take months or even more than a year before your score recovers enough to make you a good candidate for a mortgage loan.</p> <p>Be patient and wait to apply for that mortgage until your FICO score is over 700.</p> <h2>Sign 3: You Have a Mountain of Credit Card Debt</h2> <p>Your debt-to-income ratio is another key number when it comes to buying a home. Lenders want your total monthly debts, including your estimated new mortgage payment, to equal no more than 43% of your gross monthly income. If your debt-to-income ratio is too high, you'll struggle to earn approval for a mortgage. (See also: <a href="http://www.wisebread.com/5-day-debt-reduction-plan-stop-waiting-for-tomorrow?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=article">5 Day Debt Reduction Plan</a>)</p> <p>For many potential homebuyers, large amounts of credit card debt are what shoot that debt-to-income levels past 43%.</p> <h3>What to Do</h3> <p>Pay off that credit card debt. Always make more than your minimum monthly required payment. And wait until you've substantially reduced that debt before you add a monthly mortgage payment to your financial responsibilities.</p> <p>See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?utm_source=wisebread&amp;utm_medium=seealso2&amp;utm_campaign=article">This Is The Fastest Way to Pay Off Your Credit Card Debt</a></p> <h2>Sign 4: You Routinely Miss Your Monthly Payments</h2> <p>Maybe you have more than enough money each month to pay all your bills on time &mdash; you just routinely forget to pay them. Making late payments, or missing payments completely, is a sure sign that you're not ready for the financial responsibility of owning a home.</p> <p>If you miss a mortgage payment by more than 30 days, your credit score will fall by 100 points or more. If you miss enough, you could lose your home to foreclosure.</p> <h3>What to Do</h3> <p>Learn better financial habits before you apply for a mortgage. Set up reminders on your phone or computer alerting you when bills are due. Or pay those bills as soon as they arrive to make sure you don't forget them. It might makes sense to set up automatic payments through your bank. But don't apply for a mortgage until you've broken the habit of regularly missing your monthly payment due dates.</p> <h2>Sign 5: You Don't Have a Stable Job</h2> <p>You'll need a steady, reliable stream of income if you use a mortgage to finance the purchase of a home. If you're worried that you'll lose your job, or if your income is sky-high one month thanks to overtime and then low the next, you might not be ready to buy a home.</p> <p>Your monthly mortgage payment will become the biggest financial responsibility you have. What happens if you lose your job? What happens if your company goes through a dry spell in which they reduce your income for several months? Would you still be able to afford that monthly payment?</p> <h3>What to Do</h3> <p>Find a job that is reliable and that pays you a stable income each month. Don't take the risk that everything will work out. You don't want missed mortgage payments on your credit reports. And if your job is unstable? You'll greatly increase the risk of these black marks.</p> <p><em>Are you ready to buy a home? What steps are you taking to make it happen?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-reasons-you-shouldnt-buy-a-house-yet">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/everything-a-first-time-home-buyer-needs-to-buy-a-house">Everything a First-Time Home Buyer Needs to Buy a House</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-pay-your-mortgage-off-early">Should You Pay Your Mortgage Off Early?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra">What&#039;s Faster for Mortgage Payoff: $100/Month Extra or 1 Payment/Year Extra?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-youre-too-old-or-too-young-for-a-mortgage-loan">4 Reasons Why You&#039;re Too Old — Or Too Young — For a Mortgage Loan</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing credit score debt debt to income ratio down payments fha loans homeowners mortgages new home Fri, 17 Jun 2016 10:00:11 +0000 Dan Rafter 1732054 at http://www.wisebread.com The Only 5 Rules of Home Buying You Need to Know http://www.wisebread.com/the-only-5-rules-of-home-buying-you-need-to-know <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-only-5-rules-of-home-buying-you-need-to-know" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/family_new_house_000090470299.jpg" alt="Family learning only rules of home buying they need to know" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Buying a home can be stressful and complicated. But if you follow just five basic rules, you'll make the challenge of buying a home a bit less intimidating.</p> <h2>1. Meet With a Mortgage Lender Before Touring Homes</h2> <p>Touring homes is the fun part of buying. But before you start looking at properties, you need to meet with a mortgage lender.</p> <p>That's because a lender can pre-approve you for a mortgage loan. To do this, your lender will run your credit. You'll have to provide copies of such documents as your last two paycheck stubs, bank-account statements, W2s, and tax returns. Your lender will take this information and determine if you qualify for a mortgage loan, and how large that loan can be.</p> <p>This is important for house hunters. Once you know that a lender will approve you for a mortgage loan of $200,000, you won't waste time looking at homes that cost $300,000.</p> <p>Make sure, though, that you get <em>pre-approved</em> and not <em>pre-qualified</em>. A pre-qualification is when a lender takes down your information by phone and tells you how large of a mortgage loan you can afford. But in a pre-qualification, lenders don't actually verify your financial health as they do when pre-approving you.</p> <h2>2. Review Your Credit Reports</h2> <p>You have three credit reports, one each maintained by the credit bureaus of TransUnion, Experian, and Equifax. These reports list how much you owe on your credit cards and any other loans. They also list if you've missed any payments or paid any bills late. They'll list, too, any negative judgments such as recent foreclosures and bankruptcies.</p> <p>You can order one free copy of each of your three credit reports every year from AnnualCreditReport.com. Once you do, study the reports to make sure that the information contained in it is accurate. If it's not, it could cause your credit score to fall.</p> <h2>3. Order at Least One of Your Credit Scores Before You Start House Hunting</h2> <p>Speaking of credit scores, this three-digit number is critical to anyone buying a home. Lenders rely on <a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you" target="_blank">your credit score</a> to determine how much of a risk you are. If your score is low, say under 640 on the FICO scale, you'll struggle to get a mortgage loan without paying an exorbitantly high interest rate. If your score is above 740, though, you'll generally qualify for the widest variety of mortgage loans and the lowest interest rates on these loans.</p> <p>To determine how strong your credit score is, you'll have to order at least one of your three reports, one each maintained by the credit bureaus again. You can order your score from Experian, Equifax, or TransUnion for about $15.</p> <h2>4. Reduce Your Debt</h2> <p>There's another number that lenders look at when you apply for a mortgage loan &mdash; your debt-to-income ratio. This ratio compares your monthly debt obligations with your gross monthly income. If this ratio is too high, you'll struggle to qualify for a mortgage.</p> <p>Lenders prefer that your total monthly debts, including your estimated new monthly mortgage payment, equals no more than 43% of your gross monthly income. If your debt-to-income ratio is too high, cut down as much of your debt as possible &mdash; maybe starting with credit card debt &mdash; before you start looking for a new home.</p> <h2>5. Interview to Find the Right Real Estate Agent</h2> <p>When you're buying a home, you get to work with a real estate agent for free. When you find and buy a home, your agent is paid by the seller, who uses part of the profit of the home sale to provide your agent with a commission. Because of this, there's no reason not to work with a real estate agent when you're buying a home.</p> <p>But you do want to work with the <em>right</em> agent, so schedule interviews with several. When you're speaking with agents, ask them some key questions: How long have they worked as real estate agents? Do they work often in the neighborhoods that you're targeting? How much of a home's asking price do they shave off on average for their buyers? Do they represent both buyers and sellers or are they exclusively buyers' agents?</p> <p>Be sure, too, to ask agents for referrals from past customers. You'll want to talk to some of these past customers to determine how responsive and effective an agent was for them.</p> <p><em>Is our list of rules too short? What other rules should home-buyers heed?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/the-only-5-rules-of-home-buying-you-need-to-know">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-house-hunt-without-leaving-your-couch">How to House Hunt Without Leaving Your Couch</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-money-moves-to-make-for-tomorrows-mortgage">6 Money Moves to Make for Tomorrow&#039;s Mortgage</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/watch-out-for-these-5-last-minute-home-buying-costs">Watch Out for These 5 Last Minute Home Buying Costs</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-buy-a-house-without-a-mortgage">4 Ways to Buy a House Without a Mortgage</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra">What&#039;s Faster for Mortgage Payoff: $100/Month Extra or 1 Payment/Year Extra?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing credit reports home buying homeowners house hunting lenders mortgages real estate agents Thu, 19 May 2016 09:30:24 +0000 Dan Rafter 1712868 at http://www.wisebread.com Be a Smarter Home Buyer by Avoiding These 12 House Hunter Cliches http://www.wisebread.com/be-a-smarter-home-buyer-by-avoiding-these-12-house-hunter-cliches <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/be-a-smarter-home-buyer-by-avoiding-these-12-house-hunter-cliches" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_dream_home_000044030686.jpg" alt="Couple being smarter than people on HGTV&#039;s House Hunters" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>HGTV is like brain candy for anyone who's thinking about buying a house, and no show is as riveting at this stage of life as <em>House Hunters</em>. Too bad the people featured on <em>House Hunters</em> usually appear clueless about how to select the right home.</p> <p>Go ahead and enjoy the virtual tours of homes in different parts of the country &mdash; just don't use the featured families as role models for your own house hunt. Too many of the comments uttered on the program are shortsighted, severely unimaginative, or simply ridiculous.</p> <h2>1. &quot;I could live with any commute for this house.&quot;</h2> <p>The biggest misconception <em>House Hunters</em> creates is that searching for a house is all about the house itself, not about the neighborhood, the schools, or the distance from your job. Those other things might not make good TV, but there's a reason the phrase &quot;location, location, location&quot; has never disappeared from the real estate conversation. For one thing, a long commute can <a href="http://www.wisebread.com/3-ways-your-commute-is-killing-you-and-what-to-do-about-it">literally kill you</a>. For another, if you have children and the local public school doesn't work for you, you'll end up spending as much or more as your mortgage payments on private school tuition.</p> <h2>2. &quot;The appliances/wall colors/bathroom fixtures are deal breakers.&quot;</h2> <p>When you view a house, focus on the features that would be very expensive or impossible to change, such as the number of bathrooms or the square footage. You can change a room's color for a few hundred dollars &mdash; less if you paint it yourself. It's not a factor.</p> <h2>3. &quot;We absolutely need a master suite.&quot;</h2> <p>Although a large bedroom with its own bathroom and living area has become <em>de rigeur</em> in high-end and even mid-range houses, <a href="http://newsroom.ucla.edu/releases/trouble-in-paradise-new-ucla-book">these spaces are hardly used</a>, according to UCLA's Center on Everyday Lives of Families. Researchers recorded where family members really spent their time, and found that people spend the most time in the kitchen and family room. So a spacious kitchen should be a higher priority when house hunting than a master suite.</p> <h2>4. &quot;How can we both get ready in the morning without his-and-hers sinks?&quot;</h2> <p>An unscientific survey of couples I know revealed that barely any of their schedules have them both brushing their teeth at the same time in the morning. While I can see the attraction of not having to use a sink that someone else left toothpaste gobs in, it's not as if a partner who doesn't wash a shared sink is going to wash a private sink.</p> <p>One realistic friend put it like this: &quot;Who needs to clean toothpaste off of two sinks?&quot;</p> <h2>5. &quot;I don't want to do any work on the house at all.&quot;</h2> <p>It's true that remodeling is a pain. But keep in mind that a home with a brand new kitchen and other up-to-the-minute updates will all be done with someone else's taste in mind &mdash; and you won't want to spend money changing a perfectly good kitchen just because you would have preferred a different style of sink or a different countertop.</p> <p>There is no time more convenient to make changes than before moving in, so why not keep an open mind and look at houses that need some updating?</p> <h2>6. &quot;We need a big yard for the dog/kids.&quot;</h2> <p>There's no doubting that a lot of outdoor space can be a plus, but don't ever imagine that pets and children can't live without it. In the city of San Francisco, where most residents don't have yards, <a href="http://www.sfgate.com/news/article/S-F-S-BEST-FRIEND-Where-pooches-outnumber-2555688.php">there are 120,000 dogs</a> (more dogs than kids, as a matter of fact). These dogs seem perfectly happy taking advantage of dog parks and city strolls.</p> <p>As for children, the Center on Everyday Lives of Families found that even in temperate LA, neither kids nor their parents spent much time in the yard &mdash; even those that had been expensively upgraded.</p> <h2>7. &quot;We really want a private pool!&quot;</h2> <p>When the target is a vacation home, shoppers favor houses with their own swimming areas over those with shared community pools. But private pools come with responsibilities and risks. You rarely hear families on the show include the cost of pool cleaning, replacing parts, or liability insurance in their cost comparisons.</p> <h2>8. &quot;I want vintage charm and an open floor plan.&quot;</h2> <p>Whether they are naive or just inventing conflicts to make the show interesting, the many <em>House Hunters</em> families who wish for these two things together are living in a fantasy world. Older homes weren't built with kitchens that open up into family rooms; the kitchen was the domain of servants. Sure, you may find a vintage home that has been remodeled to feature an open floor plan, but chances are that plenty of those charming details were lost in the process.</p> <h2>9. &quot;It doesn't have enough storage space for all our stuff.&quot;</h2> <p>If your possessions take precedence over your family's needs in choosing living space, isn't it time to pare down?</p> <h2>10. &quot;We can (or can't) afford this house based on the listing price.&quot;</h2> <p>It's so silly that couples on the show pretend to have serious financial discussions based on the asking price, a number that in many markets bears little relation to what the house will actually sell for. This reality is revealed at the end of many episodes, when the realtor is able to negotiate a supposedly unaffordable house into the buyer's price range. On the other hand, where I live in the San Francisco Bay area, everyone knows that a home's final price will be as much as $100,000 above asking.</p> <h2>11. &quot;The washing machine is in the kitchen? Weird!&quot;</h2> <p>This is said on almost every episode of <em>House Hunters International</em>. It's not weird. It's the norm in most parts of the world. If you're going to live abroad, accept that your washing machine may well be in your kitchen and move on.</p> <h2>12. &quot;I want to soak up the culture of Italy with the amenities we had in Texas.&quot;</h2> <p>Another gem from the international version of the show. If you are not willing to let go of having an &quot;American-sized fridge&quot; or a big yard, you're probably not going to end up steps from a piazza with a charming cafè. And if maintaining your American lifestyle is the most important thing, tell me again why you're moving abroad?</p> <p><em>What comments on House Hunters have irked you?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/be-a-smarter-home-buyer-by-avoiding-these-12-house-hunter-cliches">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-only-5-rules-of-home-buying-you-need-to-know">The Only 5 Rules of Home Buying You Need to Know</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/watch-out-for-these-5-last-minute-home-buying-costs">Watch Out for These 5 Last Minute Home Buying Costs</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-most-expensive-zip-codes-in-the-country">10 Most Expensive Zip Codes in the Country</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-pros-and-cons-of-paying-cash-for-a-house">The Pros and Cons of Paying Cash for a House</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra">What&#039;s Faster for Mortgage Payoff: $100/Month Extra or 1 Payment/Year Extra?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Clueless deal breakers hgtv home buying homeowners house hunters Fri, 29 Jan 2016 16:00:04 +0000 Carrie Kirby 1646403 at http://www.wisebread.com 9 Surprising Things Your Homeowners Insurance Doesn't Cover http://www.wisebread.com/9-surprising-things-your-homeowners-insurance-doesnt-cover <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-surprising-things-your-homeowners-insurance-doesnt-cover" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/kids_swimming_pool_000020952491.jpg" alt="Learning surprising things homeowners insurance doesn&#039;t cover" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you've never read the entirety of your homeowners insurance policy, you might believe you're protected against any kind of problem with your home or property. But the truth is, many things are specifically excluded from most policies. Most of us know flooding and water damage is not generally covered by standard policies. The rest, though, may surprise you.</p> <p>Does your homeowner's policy cover any of these 10 items? If not, consider getting special endorsements or riders to make sure you have the proper level of coverage.</p> <h2>1. Pools</h2> <p>You might think the liability insurance tied to your policy will suffice, but it's probably not high enough to protect you against many pool-related injuries. A typical homeowners policy covers about $100,000 in liability insurance &mdash; but if you have a pool, you'll probably need greater protection. The Insurance Information Institute recommends bumping your liability insurance to $300,000 or even $500,000.</p> <h2>2. Termites</h2> <p>Pests can pose a big threat to your home, but don't assume damage from the little critters is covered. That's because most insurance companies consider damage from termites and other pests to be preventable. Pay attention to moisture around your home, and closely examine any wood for possible pest damage. Also be sure to keep plants and wood piles a good distance from your house.</p> <h2>3. Tree Houses</h2> <p>Many insurance companies place treehouses in the &quot;high-risk&quot; category along with trampolines. Check your policy for exclusions before constructing that clubhouse in the old oak tree.</p> <h2>4. Earthquakes</h2> <p>What's interesting here is that damage from a volcanic eruption usually <em>is</em> covered by most homeowners policies. Earthquakes are a different story, and that also goes for earth tremors, landslides, and mudslides. If you live in an earthquake-prone area &mdash; Californians, I am talking to you &mdash; consider buying extra earthquake insurance.</p> <h2>5. Trees Damaged by Wind</h2> <p>If a tree gets knocked down during a storm and damages your house, the repairs to your home are covered. But <a href="http://www.wisebread.com/6-times-when-its-okay-to-drop-insurance">insurance won't cover</a> the actual removal or replacement of the tree itself. This goes for any other shrubs and plants. In general, homeowners insurance only covers damage to plants and trees caused by fire, theft, lightning, and car crashes. So if a car crashes into a tree, you're covered (up to $500.) But if the wind knocks the tree over, tough luck.</p> <h2>6. Expensive Jewelry or Other Personal Property</h2> <p>You may think your wedding ring is covered under your homeowners policy, but unless your hubby bought you a cubic zirconia, it's probably not. Most policies cover personal artifacts up to $1,000 or so. After that, you'll need a separate rider. But don't worry, such riders usually cost less than $100 a year.</p> <h2>7. Your Home Business</h2> <p>It's logical to assume that if you're running a business from your house, that business is covered under your homeowners policy. But that's not necessarily true. If you run a catering business from inside the home and someone gets food poisoning, you're not covered. If you are giving an art lesson and a student breaks a toe, you're not covered. This is especially true if your home business is located on your property, but in a separate structure from your home.</p> <h2>8. War</h2> <p>What's worse than having your house blown up by the enemy? Knowing that insurance won't cover the repairs. Most policies will not pay you back for damage caused by war, terrorism, or nuclear dangers. However, civil unrest, riots, and vandalism may be covered.</p> <h2>9. Many Popular Dog Breeds</h2> <p>Most dogs are covered under your homeowners policy, but only if they are not considered &quot;aggressive&quot; or &quot;risky.&quot; And you'd be surprised how many breeds of dogs are basically uninsurable. The American Veterinary Medical Association lists the dogs most likely to bite humans, and appearing on that list is often a black mark for insurance companies. Blacklisted breeds include Pit Bull Terriers, Doberman Pinschers, Akitas, Rottweilers, and even Chow Chows.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/9-surprising-things-your-homeowners-insurance-doesnt-cover">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-you-definitely-need-renters-insurance">5 Reasons You Definitely Need Renters&#039; Insurance</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-surprising-facts-about-flooding-and-your-home">10 Surprising Facts About Flooding and Your Home</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-things-you-need-to-know-about-disability-insurance">4 Things You Need to Know About Disability Insurance</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/watch-out-for-these-5-last-minute-home-buying-costs">Watch Out for These 5 Last Minute Home Buying Costs</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/rent-your-home-or-buy-heres-how-to-decide">Rent Your Home or Buy? Here&#039;s How to Decide</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Insurance dogs earthquakes flooding homeowners homeownership liability pests pools Tue, 29 Dec 2015 14:00:03 +0000 Tim Lemke 1626816 at http://www.wisebread.com How to Winterize Your Home for Maximum Savings http://www.wisebread.com/how-to-winterize-your-home-for-maximum-savings <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-winterize-your-home-for-maximum-savings" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/winter home.jpg" alt="winter home" title="winter home" class="imagecache imagecache-250w" width="240" height="180" /></a> </div> </div> </div> <p>The heat of summer is fading fast and fall temps may be prompting some around the country to start turning up the thermostat. With the rising costs of living already hampering many families, the added costs of heating oil and electricity will prove to be a real burden over the long, cold winter months.</p> <p>In order to save money on winter heating costs, it is essential you start preparing your home to battle to cold before it takes hold. Most of the winterizing steps you need to take are relatively easy, do-it-yourself tasks that will not cost you as much as heating your home will. With initiative and some time, you can ensure big savings.</p> <h2>Low Cost/Simple Tasks</h2> <p>Here are some cheap and easy tips for winterizing against Old Man Winter:</p> <h3>Check windows and doors</h3> <p>Check the weather-stripping around all of your doors and windows, including those in the basement and attic, as they may deteriorate over time and due to the elements. Replacements are not expensive and can make a big difference in your heating bills. Make a draft catcher pillow out of old clothing or keep a rolled blanket at the base of all doors.</p> <h3>Check pipes and utility holes</h3> <p>Any areas where piping or cable leads to the outside of your home should be checked for drafts. Use a color-coordinated caulking or expandable foam insulation spray to fill in holes and gaps.</p> <h3>Cover permanent AC units</h3> <p>If you have a window unit air conditioner mounted into the wall, purchase a specialized cover or use a quality tarp to cover the outside of the unit. Inside the home, the air conditioner frame should be sealed off with foam insulation.</p> <h3>Inspect storm windows</h3> <p>When the weather is no longer warm enough to keep the windows open, check all glass storm windows for cracks or other damage and make sure they are tightly closed.</p> <h3>Shut off unused rooms</h3> <p>If you can control heat in rooms you do not use, turn heat on low and make sure all doors remain shut to prevent wasting heat.</p> <h3>Adjust the thermometer</h3> <p>During the day when no one is in and the sun is heating the exterior of your home, keep the thermostat low; only turn it up during the evening hours to keep the dampness and chill out of the air. Wear layered clothing and use blankets when hanging out at home. Leave blinds and curtains open during the sunlight hours and close them tight at night.</p> <h3>Hire professional cleaning</h3> <p>Having your furnace checked by a professional is not optional. For the safety of your family, you need to check your heating system before the start of each fall/winter season. Also have chimneys, fireplaces, and other supplemental heat sources checked for problems. A professional cleaning will cost a few hundred dollars but if you take the initiative to learn how to do it yourself, you can save the cash for something else. Ask a relative who is handy with home repairs or hang out with the pro on the next visit and learn what you have to do. Home improvement stores like Lowe's often sponsor <a href="http://www.wisebread.com/diy-home-improvement-10-free-options-for-training-and-advice">classes in home improvement</a>, so check in with your local store to find out more.</p> <h2>Bigger Jobs to Start Saving For</h2> <p>You may not have the cash to do a total home makeover before winter hits, but it is smart to be aware of the bigger jobs that need attention and start saving now. Over time, homes will all need more attention and simple tasks will no longer be enough to make your home heat efficient.</p> <p>Here are some of the bigger things you need to consider:</p> <h3>Replace drafty windows</h3> <p>If most of your home's windows are old and drafty, it would be smart to invest the cash to replace them all at the same time. If you can't afford to redo all windows, start with those located in the most frequently used rooms like bedrooms, living room, and kitchen. Check with your local government offices and ask if there are any rebate programs or assistance for replacing windows and making your home more energy efficient. Also, check in with the IRS to learn more about <a href="http://www.irs.gov/newsroom/article/0,,id=214873,00.html">energy-efficient tax credits</a>.</p> <h3>Upgrade insulation</h3> <p>If you have an older home, you may have some insulation but not enough to sufficiently keep the heat inside. Fully insulating your home will not only save you money over the long haul, it will also improve the value of your home if you choose to sell down the road. Contact several home improvement contractors now and request a free estimate. Compare prices and work being completed. You'll have a financial goal to work towards during the next year and it will help you make the work a priority.</p> <h3>Invest in solar panels</h3> <p>Go a little green by investing in some solar panels which uses the sun as a heat source. Find a reputable contractor that works with solar panels and request free estimates so you'll know if it's financially an option for your home.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tisha-tolar">Tisha Tolar</a> of <a href="http://www.wisebread.com/how-to-winterize-your-home-for-maximum-savings">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/19-frugal-and-easy-ways-to-update-an-old-home">19 Frugal (And Easy) Ways to Update an Old Home</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-diy-tips-to-winterize-your-home-for-cheap">7 DIY Tips to Winterize Your Home for Cheap</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/like-diy-avoid-these-ten-costly-mistakes">Like DIY? Avoid These 10 Costly Mistakes</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-really-easy-ways-to-unclog-drains">10 Really Easy Ways to Unclog Drains</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-household-fixes-you-should-stop-paying-others-for">5 Household Fixes You Should Stop Paying Others For</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Home home improvement home maintenence Home repair homeowners winter cleaning winterizing a home Mon, 11 Oct 2010 13:00:13 +0000 Tisha Tolar 258591 at http://www.wisebread.com The Pros and Cons of Paying Cash for a House http://www.wisebread.com/the-pros-and-cons-of-paying-cash-for-a-house <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-pros-and-cons-of-paying-cash-for-a-house" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/5804302023_e157384fda_z.jpg" alt="homeowners" title="homeowners" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>My husband said that when we do buy a house, he wants to just buy it with cash so we can own it outright and in our way say &quot;screw you&quot; to the banks. I like that idea, but just like any financial decision, there are pros and cons to doing this.</p> <h2>Pros</h2> <p><strong>No Credit History Needed</strong></p> <p>A long time ago I read a story of a guy who avoided credit cards and loans like the plague so he did not have a credit history, but he had considerable savings. When he wanted to buy a house no one would give him a loan, so he bought a house outright with his savings. In situations where you do not have the ability to get a reasonable loan, then paying cash might be the best option. (See also: <a title="Building a Credit History" href="http://www.wisebread.com/building-a-credit-history">Building a Credit History</a>)</p> <p><strong>Risk Free Savings</strong></p> <p>If a mortgage costs 7% and you pay cash, you would essentially be saving 7% in interest risk free. So in the case where mortgage interest rates are higher than what you can get on your investments, you would come out ahead by paying in cash.</p> <p><strong>You Actually Own Your House</strong></p> <p>I think psychologically there is a big benefit in knowing that you own your house free and clear. You also free up quite a bit of income because you will have no rent or mortgage.</p> <p><strong>You Are Not Leveraged</strong></p> <p>Buying a house with cash means that if the value of the home goes down by 10% then the money you put in also goes down by 10%. The most you can lose is the amount of money you put in. In the case of a 20% down mortgage, if the house's value goes down 10% then you lose 50% of the money you put in because of leverage.</p> <p><strong>Negotiate a Better Deal</strong></p> <p>When you have the cash to pay for the full amount of a house, it means that there will be no contingencies on getting a loan and the amount of time needed to close a deal is shorter. This generally gives you the buyer more <a title="7 Laws of Negotiation" href="http://www.wisebread.com/the-7-laws-of-negotiation">negotiating power</a> for a discount on the price of the home.</p> <h2>Cons</h2> <p><strong>Less liquidity</strong></p> <p>Having a mortgage lets you free up your cash for other investments. It is also not wise to put all your liquid assets into buying a house with cash because it is harder to free up that money in case you need to use it. If you buy a house with cash, any new mortgages would be considered refinances and carry a higher rate than a first mortgage.</p> <p><strong>You Are Not Leveraged</strong></p> <p>Leverage goes both ways, so if the value of the home goes up, then the percentage gain of an all cash buyer would be comparably lower than the person who purchased with a mortgage.</p> <p><strong>No Tax Advantage</strong></p> <p>Mortgage interest is deductible on income taxes in the United States. If you are in a high tax bracket that benefit lessens the bite of the interest by quite a bit. In contrast, buying a home with cash does not give you any tax deductions.</p> <h2>Conclusion</h2> <p>Generally, I think it makes sense to pay for a house with cash if the following conditions apply to you:</p> <ol> <li>The amount of cash you spend does not consist of a significant portion of your liquid assets.</li> <li>The interest rate on a mortgage is higher than what you can earn on your other investments.</li> <li>The amount of savings you get from an all cash deal versus a loan deal is significant.</li> <li>You do not want to deal with a credit agency in any manner.</li> </ol> <p>Currently, I think mortgage rates are still low enough for mortgages to be worthwhile, but as banks raise their lending rates and housing prices fall further it may make more sense to buy a home with cash in the near future.</p> <p><em>Have you ever purchased real estate without financing? Tell us about it!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/xin-lu">Xin Lu</a> of <a href="http://www.wisebread.com/the-pros-and-cons-of-paying-cash-for-a-house">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra">What&#039;s Faster for Mortgage Payoff: $100/Month Extra or 1 Payment/Year Extra?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-are-the-7-features-home-buyers-want-most">These Are the 7 Features Home Buyers Want Most</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-you-shouldnt-buy-a-house-yet">5 Reasons You Shouldn&#039;t Buy a House (Yet)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/low-interest-rates-do-not-make-homes-affordable">Low Interest Rates Do Not Make Homes Affordable</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-only-5-rules-of-home-buying-you-need-to-know">The Only 5 Rules of Home Buying You Need to Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buying a home homeowners Thu, 17 Jul 2008 20:56:32 +0000 Xin Lu 2246 at http://www.wisebread.com What's Faster for Mortgage Payoff: $100/Month Extra or 1 Payment/Year Extra? http://www.wisebread.com/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house-414159-small.jpg" alt="homeowners" title="homeowners" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Recently, a reader with a 15-year mortgage and an interest in accelerated mortgage payoff asked if it was better to pay $100 per month extra ($1,200 per year) or make an extra payment at the end of each year? The short answer: it depends on your loan balance and interest rate, though generally the higher extra payment is going to result in a faster payoff. <em>There's more, but I'll go ahead and put my disclaimer here and say that I am responding to an inquiry not necessarily recommending that you pay extra on your mortgage.</em> (See also: <a href="http://www.wisebread.com/6-great-reasons-for-paying-off-the-mortgage-on-your-home">6 Great Reasons for Paying off the Mortgage on Your Home</a>)</p> <p><strong>Here are the detailed calculations:</strong></p> <p>As with any financial calculation, you have to make assumptions so I've created these: $200,000 loan balance, 15-year fixed rate mortgage, and 5.93% interest rate (which was bankrate.com's average rate when I first starting researching this question on August 3, 2007). So, your monthly payment (principal and interest not including escrow amounts) is $1,680.16.</p> <p>Add $100 to the monthly payment and you will pay off the loan in 165 months (13.75 years); or add an extra payment at the end of each year and you'll pay off the loan in 160 months (13.33 years). Just for fun, I did calculations on balances from $100,000 to $400,000 at the 5.93% rate and, if you make the one extra payment every year, you will always pay off the loan in 160 months. However, if the loan balance is $100,000 and you pay $100 extra each month, then you will pay off the loan in 152 months (12.67 years); if your loan balance is $400,000, the payoff is at 172 months (14.33 years). (See also: <a href="http://www.wisebread.com/fixed-or-adjustable-choosing-the-right-mortgage-loan">Fixed or Adjustable? Choosing the Right Mortgage Loan</a>)</p> <p><strong><em>Now you may be wondering if there is any advantage in making extra monthly payments throughout the year rather than waiting until the end of the year.</em></strong> There is a slight advantage. For example, if you took that extra payment amount ($1,680.16), divvied it into 12 equal payments ($140), and then paid $140 extra each month, then you would pay off the loan in 159 months (rather than 160 months if you paid the $1,680.16 at the end of the year, every year).</p> <p><strong>Also, why would you want a 15-year mortgage?</strong></p> <p>Generally, 15-year mortgages will offer a lower interest rate. So, over the life of the loan, you will pay substantially less interest as compared to a 30-year loan because 1) you are paying more principal earlier in the life of the loan, and 2) you have a lower interest rate.</p> <p>Here are some differences between the 15-year and 30-year fixed rate mortgage, given a $200,000 balance and a 6.26% rate on the 30-year, fixed rate mortgage.</p> <p>15-year mortgage</p> <ul> <li>Monthly payment: $1,680.16</li> <li>Total Payment: $302,428.68</li> </ul> <p>30-year mortgage</p> <ul> <li>Monthly payment: $1,232.74</li> <li>Total Payment: $443,784.77</li> </ul> <p>Differences between 15-year and 30-year fixed rate mortgage</p> <ul> <li>Monthly payment: $447.42 more for the 15-year mortgage</li> <li>Total Payment: $141,356.08 more for the 30-year mortgage</li> </ul> <p>You could take that extra $447.42 and invest it rather than put it toward your mortgage; if you earned more than 6.26%, you'd come out ahead (not considering tax implications). (See also: <a href="http://www.wisebread.com/top-10-real-estate-tax-write-offs">Top 10 Real Estate Write-Offs</a>)</p> <p>Still, there is something attractive about paying off a mortgage in 15 years. Here are some scenarios where the shorter, lower rate mortgage makes sense:</p> <ul> <li>You want to save as much in interest as possible and you want to be debt-free as quickly as possible.<br /> &nbsp;</li> <li>You are fully investing in your 401(k) and any other nontaxable accounts for which you are eligible.<br /> &nbsp;</li> <li>You are saving and investing regularly.<br /> &nbsp;</li> <li>You don't want to think about accelerating your mortgage payoff anymore. (To me, the 15-year mortgage offers a built-in acceleration.)<br /> &nbsp;</li> <li>You and/or family members like the way that the shorter-term mortgage helps you stick to a budget. (That is, you may be likely to spend the extra $400+ per month rather than invest it if you don't opt for the longer-term loan.)</li> </ul> <p>If anyone is clamoring for a spreadsheet to do your own calculations on a 15-year fixed rate mortgage, let me know and I'll upload one. Or check out my 30-year mortgage schedules at <a href="http://www.wisebread.com/diy-mortgage-acceleration">DIY Mortgage Acceleration</a>.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-youre-too-old-or-too-young-for-a-mortgage-loan">4 Reasons Why You&#039;re Too Old — Or Too Young — For a Mortgage Loan</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-it-makes-sense-to-apply-for-a-mortgage-loan-without-your-spouse">When It Makes Sense to Apply for a Mortgage Loan Without Your Spouse</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-lenders-look-for-in-a-loan-application">5 Things Lenders Look For in a Loan Application</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-you-shouldnt-buy-a-house-yet">5 Reasons You Shouldn&#039;t Buy a House (Yet)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing homeowners loans mortgages Fri, 10 Aug 2007 21:20:44 +0000 Julie Rains 974 at http://www.wisebread.com