homeowners http://www.wisebread.com/taxonomy/term/11986/all en-US 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-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/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-2 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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/growin-home-how-much-house-do-you-really-need">Growin&#039; Home: How Much House Do You Really Need?</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-8-worst-home-sale-horror-stories">The 8 Worst Home Sale Horror Stories</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-signs-the-house-you-want-to-buy-is-a-money-pit">5 Signs the House You Want to Buy Is a Money Pit</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-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/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/ask-yourself-these-5-questions-before-buying-a-home">Ask Yourself These 5 Questions Before Buying a Home</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/be-a-smarter-home-buyer-by-avoiding-these-12-house-hunter-cliches">Be a Smarter Home Buyer by Avoiding These 12 House Hunter Cliches</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-pros-and-cons-of-paying-cash-for-a-house">The Pros and Cons of Paying Cash for a House</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-13"> <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/like-diy-avoid-these-ten-costly-mistakes">Like DIY? Avoid These 10 Costly Mistakes</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/10-really-easy-ways-to-unclog-drains">10 Really Easy Ways to Unclog Drains</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-frugal-ways-to-keep-your-home-warm-this-winter">10 Frugal Ways to Keep Your Home Warm This Winter</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/diy-home-improvement-10-free-options-for-training-and-advice">DIY Home Improvement: 10 Free Options for Training and Advice</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-14"> <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/be-a-smarter-home-buyer-by-avoiding-these-12-house-hunter-cliches">Be a Smarter Home Buyer by Avoiding These 12 House Hunter Cliches</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/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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-sell-your-house-in-24-hours">How to Sell Your House in 24 Hours</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/when-you-should-and-shouldnt-rent">When You Should and Shouldn&#039;t Rent</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/10-surprising-things-that-lower-the-value-of-a-home">10 Surprising Things That Lower the Value of a Home</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-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/6-times-its-actually-okay-to-be-underwater-on-your-home">6 Times It&#039;s Actually Okay to Be Underwater on Your 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/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-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-4 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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-millennials-can-do-to-buy-a-house-within-the-next-decade">5 Things Millennials Can Do to Buy a House Within the Next Decade</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