Real Estate and Housing

5 Things to Know Before Adding Someone to the Deed

Denise Hill — Mon, 22 Mar 2021 09:00:10 +0000

Sharing is caring — at least that's what has been drilled into our minds. And for the most part, it's true.

However, if you're contemplating making the ultimate step in sharing — adding someone to the deed on your home — it's a good idea to consider the consequences. It's important to understand that when you add someone to your deed, you are entitling them to the same "bundle of rights" — control, enjoyment, possession, exclusion and disposition — that you have as a property owner. Before adding a loved one to your deed, it's important that you speak to an estate attorney and your mortgage lender to ensure you understand your rights, and to determine if this is the right move for you.

Here are five things you should consider before adding someone to your deed.

1. You can't take it back

When you add someone to the deed, all or a portion of your ownership is transferred to that person. Once it's done, you can't take it back unless the person you've added provides consent to be removed from the deed. He or she can take out a loan on the property, tear it down, or even sell their share of the property. And in some cases, there's nothing you can do about it.

Even if you transfer only a portion of your interest in the property, that person will have full control of their portion and may be able to force a sale of the property. If you want to refinance or sell your home, you must get permission from the individual you've added. This can lead to time consuming and costly legal battles that can tie up the property for years. Make sure you fully understand the implications and consequences before you sign on the dotted line.

2. You need permission from the lender

The law doesn't forbid adding people to a deed on a home with an outstanding mortgage. Mortgage lenders are familiar and frequently work with deed changes and transfers. Most lenders incorporate a loan "due-on-sale clause," which gives them the ability to call in the loan if the deed is transferred or if the home is sold. When you "deed" your home to someone, you've effectively transferred part ownership, which could activate the "due-on-sale" clause.

It is imperative that you understand the rules governing your particular situation. And you should obtain permission from your mortgage lender before adding someone to the deed. (See also: Why You Should Call Your Mortgage Lender Every Year)

3. Exposure to additional liability

Let's say you decide to add your brother to the deed. If he fails to pay taxes and incurs a tax lien, has problems with creditors, or goes through a nasty divorce, the IRS, his creditors, or his ex-spouse can lay claim to your home, or at least to his portion. In that situation, the entity owed can place a lien on your property and attempt to force a sale to collect the debt or tie up the property and prevent you from selling.

Adding someone to the deed of your home can also generate income tax liabilities when the residence is sold in the future.

4. IRS gift taxes may apply

When you add someone to your deed, the IRS sees it as a gift. That person becomes subject to IRS regulations concerning gifts. As of 2018, the IRS allowable gift limit is $15,000 annually, per person. Gifts that exceed this amount are subject to the gift tax.

The important take away here is that you should ensure you consult a tax attorney or Certified Public Accountant (CPA) before you add someone to your deed to ensure that you understand all of the implications and don't run into any surprises down the road. Your good intentions can be costly if not accompanied by due diligence. (See also: 4 Things You Need to Know About Gift Tax)

5. It can get complicated

There are so many hidden risks and pitfalls to adding someone to the deed. Remember, you become a joint owner rather than the exclusive owner. This change can impact your eligibility to sell or refinance. And for older homeowners near retirement age, transferring assets can adversely affect Medicaid eligibility.

Another thing to consider is that adding someone to the deed does not make them responsible for the debt. Unless the original loan agreement is modified, you are still solely responsible for repayment and the other person has ownership rights.

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This article is from Denise Hill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Renovations That Don't Increase Your Resale Value

Emily Guy Birken — Sat, 07 Nov 2020 22:45:56 +0000

The first major home renovation my husband and I ever undertook was insulating the walls of a 1921 Craftsman bungalow we shared in Columbus, Ohio. This project made the house a great deal more comfortable in the winter and the summer, since the existing insulation was the least expensive option available in the 1920s — making it completely inadequate for maintaining heat in the winter or coolness in the summer.

Unfortunately, despite the undeniable improvement to our comfort, we found that our new insulation did nothing for our resale value. Even though we had put nearly $5,000 worth of work and materials into this renovation, we didn't see that money and effort reflected in our sale price when we had to move several years later.

Not all renovations are going to increase your resale value. That doesn't necessarily mean you should forgo working on your home if you won't see the value when it's time to sell. For instance, I would definitely insulate that house again, even knowing that the money is only going to improve my comfort.

But there are some home renovation projects that you just can't expect to recoup your investment on. Knowing that, you should consider how long you intend to live in your house and whether you're renovating just to increase your home's value before jumping into any of these home improvement projects.

1. Invisible improvements

Insulating our bungalow was the kind of invisible improvement that had to be done, but didn't appear to change the house. Unlike "sexier" improvements like updating a kitchen or bath, or even putting on a new roof, invisible improvements don't change the look of the house. These are things like re-grading the yard to keep water from getting into the basement, updating the HVAC system, tuck-pointing bricks and chimneys, and replacing gutters.

While these improvements often have to be done to protect your house, the downside is that you may not recoup the cost of these improvements when it comes time to sell. It can be helpful to think of these renovation expenses as a way of protecting your home's current value, rather than as a way to increase your future resale value.

2. Swimming pool

While homeowners in Arizona, Florida, Hawaii, and Southern California may find that having a swimming pool is a big selling point for their homes, this isn't going to be the case nationwide. According to HomeAdvisor, the average cost to install a pool is over $27,000. That doesn't include the annual maintenance costs, ranging between $500 and $4,000. It's these maintenance costs, plus the work that homeowners will have to either do themselves or contract out in order to keep their pool sparkling clean that will turn off many potential buyers. Add in the additional insurance requirements that homeowners with pools will need to purchase, and it should be clear why many prospective buyers would rather not invest in a home that comes with a pool.

This is why you should only commit to the cost of installing a pool if you truly want to use it yourself and expect to stay in your home for at least five years. Otherwise, it might make more sense to invest in a membership to your local pool.

3. Bathroom and kitchen upgrades

Remodeling your bathroom and/or kitchen is an excellent way to increase your home's value, right? Yes and no. While replacing dingy tiling and updating old appliances will definitely help your home shine for potential buyers, there's such a thing as going overboard with your bathroom or kitchen upgrades.

Specifically, if you add granite countertops, custom-made cabinets, stainless steel appliances, and ceramic tiles to your kitchen and bathroom, but the rest of the home is still an ordinary suburban home, potential buyers will see the house as a work-in-progress, rather than a home that feels move-in ready. Over-improving the bath and kitchen could make buyers think that it's not worth the effort to try to get the rest of the house to match. (See also: 9 Home Improvements You Should Always Negotiate)

4. Built-in high-end electronics

We may all dream of living in a George Jetson house — where every possible electronic need you have is already built in — but committing to this kind of renovation may hurt your resale value.

There are a couple of reasons for this. First, while your personal movie theater (with remote-controlled state-of-the-art projector) may be exactly what you want from your home, a potential buyer may just see a room that will need to be torn out and remodeled as soon as they move in. Plus, technology advances at a breakneck speed, so your cutting-edge electronics will soon look as dated as shag carpeting and harvest gold refrigerators.

If you need or want built-in high-end electronics in your home, make sure you're installing them for your own pleasure and comfort, because it's unlikely a buyer will appreciate them too.

5. Extravagant landscaping

Making improvements to your landscaping requires a gentle touch. On the one hand, landscaping is often touted as an important aspect of curb appeal, and making sure your yard and garden look attractive and welcoming is certainly a great way to draw in potential buyers.

On the other hand, an elaborate landscaping remodel can turn off buyers. Those with black thumbs might look at your vast flowering garden with sculpted shrubs and pond and decide they are not up for the challenge of keeping it up, and those who do love to garden might not like your vision and want to start over.

If recreating the gardens of Versailles is how you make your house feel like a home, then there's nothing wrong with investing in this kind of renovation. But make sure you're doing this kind of work for yourself, and not because you hope to make back the money you spent once you're ready to sell. (See also: 14 Ways to Make Your Yard Look Awesome for Under $100)

Renovate for the right reasons

While many experts focus on resale value as the deciding factor on whether to take on a home improvement project, the important thing to remember is that you live in your house now. Deciding which home renovations to work on based on what someone else might like is the way madness lies.

When you make improvements to your home, make sure you take your own comfort, your plans for living in the home, and the potential resale value into consideration. They all matter.

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

9 Smart Home-Buying Tips From Real Estate Experts

Mikey Rox — Thu, 08 Oct 2020 17:32:44 +0000

There are right ways and wrong ways to buy a home. The latter of which will cost you a lot of unnecessary money, stress, and frustration. Use best practices, however — as offered by real estate experts below — and you'll walk away a winner with a smile on your face and cash still in your bank account.

1. Research agents before choosing one

Selecting the right real estate agent can make all the difference when it comes to finding your dream home and negotiating the best price. Carlos Miramontez, vice president of mortgage lending at a California credit union, offers a few pointers on narrowing down the agent pool.

"Doing your research upfront can help you make a wise decision and choose a well-qualified real estate agent who's right for your needs," he writes on the company blog. "Remember that you're creating a business relationship. It's important that you work well together, as it could be several months before the entire buying or selling process is complete. Enjoy a cup a coffee with a few agents before you make the decision on which partner is right for you."

There also are specific questions you should be asking your agent, such as:

How often will you send me listings?
Will you show me homes when I'm available (e.g., after work or on the weekends)?
How long have you worked in real estate?
What type of property do you specialize in (e.g., condos, single-family, or town homes)?
Have you worked with other clients in my desired area and price range?

2. Search social media for local real estate groups

Social media is a great resource for connecting with real estate agents in an unfamiliar area, says Brady Hanna, president of Mill Creek Home Buyers in Kansas City, who has been buying, renting, and flipping houses for over a decade.

"Search on Facebook for real estate groups in your local area," he says. "You will be surprised to find that there will probably be 10 or more. Join all of them, including investor and wholesaler groups. Then post across all of these groups that you are looking to buy a house in ABC area, what your criteria is, and if they have any off-market properties to send your way, and include your email address. You would be amazed at how many people will send you off-market properties using this technique. I have bought six properties in the last few months just from local Facebook groups." (See also: 5 Things Your Real Estate Agent Wishes You Knew)

3. Add a personal touch when there are multiple offers

How do you stand out in a pool of potential buyers? Send a personal note to the seller with a creative story about yourself, why you're the best buyer for the house, and your plan to make it a home.

"If you talk about your family in the letter, you will pull at the heartstrings of the seller and have a much better chance of being selected if you have a similar offer than another buyer," Hanna says. "I have experienced this personally when selling houses and every time I picked the buyer that wrote the personal note when I had multiple similar offers."(See also: 4 Times a Handwritten Letter Can Save You Big Bucks)

4. Don't automatically settle on city living

Life in the city is attractive and convenient for a lot of people, especially if you're the type that likes to have necessities within walking distance. But even though life's essentials are easily accessible, the financial picture over time may rob you of a certain quality of life.

"Be sure to check out properties in the 'burbs and take the cost and time of your commute into consideration," suggests Shane Lee, data analyst for RealtyHop. "While the city life is always amazing, you might find a way better deal in the burbs. You can even find a fixer upper and make it your dream house with the money you save on the purchase."

5. Run through all costs before starting the home-buying process

Most first-time home-buyers concentrate on the down payment — the largest of all the out-of-pocket expenses — but there are plenty of other fees required for a property purchase that you should be aware of before starting the process.

"Budget for down payment, closing costs, and other costs as early as possible," Lee advises. "In addition to the 20 percent down payment (some lenders require less), origination fees are usually between 2 and 5 percent of the total loan amount, and it is crucial that you start saving early on, so you have enough cash to cover all mortgage-related payments, legal fees, as well as broker's commission by the time you are ready to close the deal."

Don't forget about the often-overlooked hidden costs that'll pop up before you know it, like property taxes, insurance premiums, and any Homeowners Association (HOA) dues. Taxes and HOA dues vary, so be sure to ask for details. Obtain an insurance premium estimate from your insurance agent.

It's important to figure all this out before committing to a property to ensure you can afford the entire scope of fees associated with it.

6. Investigate the HOA to make sure you're compatible

Homeowners Associations can be great for many communities because they provide a set of standards to ensure that all residents are living in a place that values beautification and resale value. On the other hand, some folks find the HOA to be too involved, and the decisions of the board may not always be best for everyone. (See also: What You Need to Know About Homeowners' Associations)

Robert Nordlund, founder and CEO of Association Reserves, explains.

"'Location' is certainly one of the most influential factors in the value of a real estate transaction, but when it comes to buying a home in one of the 350,000 association-governed communities (AGCs) in the United States, home-buyers face two additional circumstances," he says. "First, getting a good value on the front end will be influenced by largely unpublicized financial factors unique to that AGC. Second, the long-term fate of their investment will be permanently hitched to the decisions or whims of a group of volunteer board members. The vetting process is not complicated, but it does take time and should be completed before any offer is on the table."

To help you find the right HOA for you, consider these tips:

Attend a board meeting.
If the association is professionally managed, meet with the manager.
Check the association's annual budget and make sure it's accurate and balanced.
Ask for a copy of the Reserve Study and take the time to understand it.
Check the curb appeal closely in daylight and in the evening.
Make note of any obvious deferred maintenance.
Ask about the history of special assessments.
Evaluate the transparency of the board and manager.
Read the association's rules and standards.

7. Buy a home below your means

Real estate expert, Julie Gurner, makes a case for spending the least amount possible on a home that meets your needs and makes you happy — even when you have plenty more to spend on it.

"While your friends might struggle to pay for something at the top of their budget, shoot for a home that is 75 percent or less of what you're approved for to be able to save more effectively for retirement, emergency repairs, travel, and generally enjoy your life far more without the fiscal burden," she says.

How can you do that? Look for the most outdated home in the most desirable neighborhood.

"Look for a home where the style is outdated — it might need a new kitchen, there's likely old wallpaper or carpets — but it's well tended to and all the bones are solid," Gurner adds. "With time and a bit of effort, the ugliest home on the block can almost always become your dream home. With so many people expecting move-in-ready homes, the outdated homes are often overlooked gems that can save you a fortune and put you in a position to build sweat equity from day one."

8. Invest remotely in high-yielding real estate markets

For home-buyers in New York City, San Francisco, Los Angeles, and many other coastal markets, purchasing affordable single-family rental (SFR) homes out-of-state is a great way to get started buying real estate and building long-term wealth.

"Buyers in these coastal areas can find higher yields and lower median home prices than they can in their own backyards," says Zach Evanish, who leads sales efforts at investment-property resource Roofstock. "Some prime examples include Memphis, Cleveland, Indianapolis, Atlanta, Dallas, Phoenix, Pittsburgh, and other metros across the Southeast, Midwest, and Southwest. Buying SFRs remotely can also be a stepping stone to amassing an investment real estate empire with ample positive monthly cash flow, and to eventually buying an owner-occupied home in one's own hometown, thanks to this stable stream of monthly rental income."

9. Ask for reductions after inspection

One of my own personal tactics for saving money on the homes I've purchased is taking advantage of an inspection that reveals interior or exterior issues. If the seller is in a depressed market or needs to sell quickly because of other circumstances, you have a great chance of making post-inspection deals.

"Home sellers often describe their property's condition as much better than it is. A good inspection often reveals unanticipated defects," explains Lucas Machado, president of House Heroes, a real estate investment company. "Don't be afraid to ask for a reduction. Buyers sometimes hesitate to request a lower price due to fear of losing the house. In reality, sellers give plenty of reductions upon request — even tens of thousands below the initial offer. There is no downside to asking — and you can still proceed if they say no."

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Pitfalls of Down Payment Assistance Programs

Dan Rafter — Thu, 04 Apr 2019 20:13:03 +0000

What's the most difficult part of buying a home? For most, it's coming up with enough money for the down payment. The good news is that there are plenty of down payment assistance programs available to help buyers overcome this financial hurdle. Most of these programs are run by state or local governments, and they usually provide grants or forgivable loans for buyers who need help scraping together the thousands of dollars for a down payment.

There is a catch, though. These programs often come with strict requirements. Some, for instance, are only available to first-time homebuyers. Some aren't available to buyers who make too much money each year, and others require that buyers live in a home for up to five years after buying it. (See also: 6 Ways to Get Financially Fit for Homebuying Season)

Down payments are expensive

It's no secret why down payments are such a burden for so many homebuyers — they're costly. Consider that a 5 percent down payment on a home costing $200,000 comes out to $10,000. That's a lot of money for buyers to scrape together, especially first-time buyers who don't already have a home to sell.

If your FICO credit score is 580 or better, you can qualify for a loan insured by the Federal Housing Administration, better known as an FHA loan, for a down payment of just 3.5 percent of your home's final purchase price. The Fannie Mae-guaranteed HomeReady program allows you to qualify for a mortgage with a down payment of just 3 percent. And if even that 3 percent down is too much of a financial struggle? That's where down payment assistance programs can come in.

How down payment assistance programs work

Down payment assistance programs can work in several ways. Some will provide you with funds at closing that you can use to pay for your down payment or closing costs. Others will provide you with an interest-free forgivable loan that you can use to cover the same costs.

The Homebuyer Assistance Program run by the city of Chicago, for instance, provides buyers with a grant for up to 7 percent of buyers' total loan amount, based on income. Buyers can use this grant to cover the down payment or closing costs.

The Low Income Purchase Assistance Program from the city of Los Angeles is a bit more complicated. It provides a loan of up to $90,000 for down payment, closing, and acquisition costs. The loan is deferred, meaning that homeowners don't have to make any monthly payments on it. They only have to pay it back when they sell their home, pay off their mortgage loan, or transfer the title of their home. If none of this happens, they will have to pay back their loan in 30 years.

The city of San Antonio's Homeownership Incentive Program loans $1,000 to $12,000 at 0 percent interest in the form of a no-payment second loan. Buyers can use this loan to cover down payments or closing costs. The city says that 75 percent of this loan will be forgiven over a 10-year period.

So, yes, down payment assistance programs can help you get into a home. But remember, there are potential drawbacks that come with them. (See also: 4 Easy Ways to Start Saving for a Down Payment on a Home)

1. Some have income requirements

Most down payment assistance programs are only available to residents whose incomes fall under certain levels. In Chicago, for instance, buyers can have an annual income that is no higher than $131,775.

2. Most have residence restrictions

Other programs will only allow buyers to purchase homes in certain areas. The city of San Antonio's program, for instance, only allows buyers to purchase homes within city limits. The same is true in most other cities across the country.

3. You may need to take classes

Programs usually require that participants complete homebuyer education programs. In Los Angeles, for example, applicants must complete an eight-hour, in-person homebuyer education class given by an approved provider.

4. Be prepared to stay put

Many programs require that buyers live in the homes they purchase for a set number of years. In Houston, the city's Homebuyer Assistance Program requires that buyers live in their new homes for at least five years. If you sell your home before the set number of years, you'll have to pay back the assistance you received on a prorated basis.

5. You might have to be a first-time homebuyer

Many programs are only available to participants who meet the criteria of "first-time" buyer. There is some leeway here, though. You might be considered a first-time buyer even if you've owned a home before. Some programs define a first-time buyer as someone who has not owned a home in the last three to five years.

6. There might be home price limits

Many programs also limit the price of the new home you can buy. In San Antonio, for instance, you can only purchase an existing home costing up to $170,000. New-construction homes can only cost $228,000.

If you're struggling with down payment funds, consider assistance programs. Just remember that these programs do come with requirements that could limit the home you buy, where you buy, and how long you must live in that residence.

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Pick the Best Home Offer

Denise Hill — Tue, 12 Mar 2019 09:00:09 +0000

You've decided to sell your home. You've done your due diligence in preparing to put it on the market. You've meticulously staged it and strategically scheduled open houses. You've given the listing agent the green light to list it. And amazingly, your very first showing generates multiple offers. Sounds like a homeowner's dream problem, right?

In today's real estate climate, bidding wars are something more and more home sellers are having to navigate. While this is a great problem to have, multiple offers could muddy the waters and confuse the process of accepting an offer and closing the deal. Making the wrong choice could cost you time, stress, and thousands of dollars in lost profits.

Sifting through multiple competing offers that all seem similar can be a daunting process. However, with the right perspective and the ability to detect small differences in each offer, you can make the right decision and quickly close on your home. Here are four things that will help you sift through multiple offers and pick the best one. (See also: How to Sell Your Home in a Seller's Market)

Understand the process

It's important that you understand the homebuying process from a seller's perspective. Sure, you've been through the process, but it was as a buyer and not a seller. Changing your perspective and understanding the potential roadblocks at each stage is crucial.

If you're using an agent or broker to assist with the sale of your home, it's still your responsibility to understand and actively participate in the process. While agents are great advisors and have a wealth of knowledge, the decision on which offer to select is ultimately yours. It's also important to understand that the real estate agent is not an objective source of information. He or she benefits from your profit — which can work for or against you. Make sure to ask questions throughout the process. (See also: 6 Questions to Ask Before Selling Your House)

Prioritize your needs

Before listing your home, you should know what your priorities are for selling. While getting the most money may seem like it should be the ultimate end goal, the highest offer may not be the best offer. For example, if you're looking to purchase another home once your current home is sold, the closing date becomes a much bigger priority. This is especially true if you've already found a home you want to make an offer on. Or, you may be trying to stave off foreclosing or avoid a short sale. In that case, the bottom line becomes extremely important.

Another example may be that you were offered your dream job in another location and you've decided to sell instead of renting your current place. The closing process becomes extremely important. Certain types of financing and mortgages can dramatically lengthen the time it takes to close, and they can also add additional contingencies that don't accompany conventional loan financing.

Establishing non-negotiables is another thing you should do before putting your house on the market. Keep in mind though, at some point everything becomes negotiable. However, you do want to ensure your agent understands your needs and the things you are unwilling to compromise on. Having a list of priorities can help you eliminate certain offers immediately and will allow the best offers to organically rise to the surface. (See also: How to Sell a Home Without a Traditional Agent)

Create a uniform review process

Creating a process for reviewing and assessing offers will save you so much time and energy. Once you've established your priorities and non-negotiables, it's easy to set parameters on the types of financing, time to close, and contingencies you're willing to consider. It's also smart to set a deadline for accepting offers. You can set a hard date cutoff when you reach a certain number of offers. Once you've gotten those things established, the process gets much easier and it'll help you not feel overwhelmed by it all.

From there, you may want to establish criteria for assessing offers and a ranking system that will help you further narrow things down. For example, you may want to assign a lower priority rating or eliminate offers from those who are merely prequalified versus those who are pre-approved for finances. Other factors you may want to use to vet offers are loan types (conventional versus VA, FHA, etc.), request for assistance with closing costs, down payment (or lack of), and if the offer is contingent upon the sale of another property. A good rule of thumb when sifting through offers is: the fewer contingencies, the better. (See also: 8 Unexpected Costs of Selling a Home)

Do the math

While you're in the process of categorizing, reviewing, and assessing offers, it's important to calculate your total net profit for each serious offer. For example, if a potential buyer is offering the full asking price but has no down payment, is asking for $3,000 in closing costs, and requests a closing date three months from the date of contract, you definitely want to pause and do the math. If you have another buyer who offers $1,500 less than the asking price, but doesn't request any closing costs and can close in 45 days, that deal is far more profitable than the first.

Ensuring that you do the math and find the offer that is not only the most profitable, but the most beneficial to you is key. Finding a buyer who is flexible enough to close quickly but allows you to stay in the house and pay them rent for two months while you find another place is so much more valuable than an extra $2,000 profit. Make sure you take time to pause and view each offer from multiple perspectives.

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This article is from Denise Hill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

3 Things You Should Consider Before Selling Your House for Cash

Toni Husbands — Wed, 20 Feb 2019 09:00:11 +0000

In August of 2017, an investor called us and offered to buy our condo for cash. We didn't have it listed for sale. The condo was in great condition, the rent we charged covered expenses, and it was in a very nice area that consistently attracted stable tenants. My husband and I took about five minutes to confer before deciding to accept the offer.

The offer was cash. We estimated it was about $10,000 less than we might have made through a traditional sale. After accounting for realtor commissions, taxes, and the time required to sell our condo; we felt the convenience of an as-is cash sale was worth it. The closing took less than two weeks. By the end of August, we had an extra $35,000 in the bank.

Selling your house for cash can be a dream come true. In these cases, investors are looking for a quick transaction. They aren't generally concerned with repairs. Real estate agents are not involved, so the cost of a broker's commission is waived. In my case, the inspection walkthrough was merely a formality. The as-is cash closing was also a piece of cake. (See also: How to Sell Your Home When You're Underwater on Your Mortgage)

The investors who contacted us were the building's property managers. They already owned other rental units in the building, so we were able to verify their legitimacy quickly. However, all that glitters is not gold. This industry is rife with scammers looking to swindle you, and you should be careful working with people who advertise a service to buy houses for cash on traditional media sources, online, or even street corners (we've all seen the signs nailed to light posts).

If you're considering selling your house for cash to an investor, make sure you do your homework, and back away if you detect any of the following red flags.

It's a foreign investor

People who contact you from foreign countries offering to buy your house sight unseen should set off alarm bells. In some cases, scammers submit legal-looking documents or send you to websites that look professional. They might say they're moving to another country for work. However, these people are either never available to speak in person or don't have a local representative to work with directly. In some cases, the scam artists will send a foreign check with a mistaken overpayment. They ask unsuspecting homeowners to refund the overpayment only to find that the check doesn't clear. This will leave the homeowner on the hook for whatever monies were transferred out.

Be wary of dealing with buyers in foreign countries who aren't readily available by phone or video conference. And never take any action with funds deposited until you've waited the requisite time for a check to clear. (See also: How to Protect Elderly Loved Ones From Financial Scams)

They only communicate via email

Investors may contact you through a variety of methods. However, once a deal is reached, someone should want to inspect the property in person. If you're dealing with a potential investor who only wants to communicate via email, you might be dealing with a scammer. Legitimate buyers have no problem showing up and walking through a property they intend to purchase.

The investor doesn't negotiate

As-is cash home buyers are in this market to find deals. They aren't interested in paying the market rate for any property. The investors will negotiate the price down to account for any repairs needed so they can sell the home again for a profit. Homeowners willing to sell to an as-is cash buyer must be willing to accept a significant reduction in their asking price.

If you're communicating with a potential buyer who requires no repairs and is willing to pay top dollar for your home, run. Anyone offering full price for a house without requiring any work on your end is likely trying to rip you off.

How to avoid a scam

There are plenty of legitimate investors or buyers who are willing to pay cash for your home as-is. This type of transaction works well for those who don't have the money to make repairs or renovations needed. You may also like the idea of a fast, hassle-free closing. Maybe you've become an accidental landlord after relocating, or you've inherited a house from a family member and you want out of the arrangement.

There are plenty of good reasons to approach a quick-buy investor, and homeowners can still make smart choices in pursuing this type of transaction. Here's how to do it right.

Google the investor

Always do a Google search and look for independent reviews online. Angry people who are swindled out of money tend to leave a trail in cyberspace. Start with a quick search on the company's or investor's name. You should also check to see if they're members of the Better Business Bureau, or if there are any complaints with the State Attorney's office.

Hire a lawyer

While not required, hiring an attorney can help ensure that the process is followed correctly and legally. Legitimate investors will welcome this process.

Check references

Follow up with their references. Legitimate investors will have worked with other homeowners who can share their experience — good or bad.

Pay attention to how they present themselves

Keep an eye on their professionalism. If their correspondence is laden with typos, or their forms of advertising are sketchy (illegal posters nailed to light posts, for example), you should avoid them. If an investor doesn't present professionally and you want to sell your home for as-is for cash, find someone who does.

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A New Lender Took Over My Mortgage — Now What?

Kat Tretina — Tue, 05 Feb 2019 18:40:18 +0000

When you were going through the home-buying process, choosing a mortgage company was a big part of that. You likely did painstaking research on each company and carefully considered loan offers before deciding on one.

Despite all that hard work, your mortgage servicer — the company that collects your monthly payments — can change. And there's not much you can do about it. If you receive a notice that your mortgage has been sold to a new servicer, here's what you need to know about the transition.

Why mortgages sometimes change hands

It's quite common for mortgages to be sold. One day, you might find a letter in the mailbox from your mortgage servicer stating that your mortgage has been sold. Mortgages servicers sell loans for several different reasons, including:

To raise capital: Because mortgages are often repaid over the course of decades, loan servicers would be strapped for cash if they tried to manage every mortgage themselves. Instead, they bundle a group of them together and sell them to other servicers or investment companies to raise capital.
The company is closing: Some loan servicers close, or merge with other servicers. To complete the transition, they sell the current mortgages to other servicers.
They're switching their focus: When a company decides to focus on another area of business, such as commercial real estate, they'll sell off their existing portfolio.

If your loan servicer sells your mortgage, it's nothing personal against you. It doesn't say anything about you or the home you bought. It's simply a business decision.

How to handle the transition

Here's how to handle your mortgage being sold to a new servicer.

1. Pay attention to notices

Many people don't pay enough attention to their mail. They'll skim through it and toss letters or notices from companies they don't recognize. However, that's a big mistake. If you have any type of debt, including mortgages or student loans, your loan servicer will typically communicate solely through the mail. If you're not careful, you could miss out on important notifications.

Get in the habit of opening every piece of mail that arrives to ensure you have the latest information on your mortgage and other financial accounts.

2. Check your credit report

It's possible to miss a notice. You could accidentally toss a letter from your loan servicer, or it could even be lost in the mail.

That's why it's so important to check your credit report on a regular basis. Your credit report lists all of your current and past debt, including your mortgage. It lists who you currently owe money to, as well. By checking it every four months — you can access a free credit report from each of the three credit bureaus every year — you can see if your loan servicer changed. Check your credit report for free at AnnualCreditReport.com. (See also: 2-Minute Read: What You Need to Know About Credit Reports)

If you see that your loan servicer changed, call the loan servicer and ask for more information, such as payment details and when the transition officially begins.

3. Confirm with your original servicer

Unfortunately, mortgage scams are common. If you get a notice saying that your mortgage has been sold to a new loan servicer, check with your original servicer by calling them directly before sending in payments to the new one. By double-checking, you can eliminate the risk of getting scammed and giving a fraudulent company your money. (See also: Why You Should Call Your Mortgage Lender Every Year)

4. Keep up with your payments

Your notice should detail when the transition is finalized and who you need to make payments to going forward. During the transition, it's important to keep making payments to your old servicer until the loans officially transfer over, or your credit score could drop. If you're unsure about who to make payments to, contact your new loan servicer. (See also: How to Boost Your Credit Score in Just 30 Days)

5. Maintain excellent records

Loan transitions can be overwhelming, so keep receipts of all your payments. And if you speak to a representative from your loan servicer, keep notes on the date, time, and the name of the person you spoke with in case there are any problems.

What to expect from the new company

Although your loan can be sold at any time without your consent, a sale doesn't change the terms of your loan. Your new company can't reduce your repayment term, for instance, or adjust your monthly payment. The only difference you'll notice is the name of the company you write on your checks.

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How Buying a House Impacts Your Career

Denise Hill — Thu, 24 Jan 2019 09:00:08 +0000

Buying a home has been a status symbol for a long time. However, shifts in cultural norms and value systems are challenging the notion that owning a home means you've "arrived." Don't get it twisted, consumerism in America is at an all-time high, but more people are evaluating what really makes them happy. And the more they search, the more they are finding that happiness isn't necessarily found in the house with the white picket fence.

Buying a home can be a great investment if done strategically. It's also a huge commitment, and can financially ruin you if things go sideways. Deciding if buying a home is the right move for you can be tricky. There are a lot of unknowns, but one of the most important factors to consider is your career. Here's how buying a house could affect your career path.

Your job options are more limited

When you buy a home, you put down roots. Detaching from a rental is so much easier than trying to get out from under a home you've purchased. Most rental agreements build in an early exit component. Leaving before your lease is up is expensive, but it's a lot cheaper and easier than defaulting on a mortgage. Once you pay the fee for breaking the lease — you're done. There are very few repercussions as long as you honor the agreement.

It's hard to be ambitious and chase your dreams when you are tied to a home in a particular area — especially if that home is in a rural location far from the city. If you're career-focused and driven, home ownership may not be right for you at this moment.

Job transfers get trickier

If you don't like the neighborhood in which you rent a home or apartment, if you're interested in changing jobs within the same area, or just want a shorter commute, you can remedy these issues easily as a renter. Most rental agreements range from six months to two years, versus the typical 30-year home mortgage. This is especially important in today's job climate. Large companies are downsizing from large corporate headquarters to smaller satellite offices in multiple areas. If you are transferred to a different area — depending on the new location — you are faced with having to decide between a longer commute, frequent travel, relocating, or finding a new job. Handling a job transfer is difficult as it is, but adding a home to the mix really muddies the water.

Relocating can turn into a nightmare

The internet has revolutionized how we find employment. Let's say you're looking for a position and you find your dream job using a virtual job board. You meet all the job requirements. You have the necessary experience and expertise to fill the role. The pay is decent. And it's the perfect next step in your career. You interview for the position and you're offered a job running a division in Albany, New York. However, you live in Yuma, Arizona. Working remotely is not an option. And you purchased your first home 18 months ago. What do you do?

If you're in a profession that is transient by nature, you want to think long and hard before purchasing a home. Buying a home is all about timing. Just because you can afford a home doesn't mean you should buy it. The hassle of buying and selling can wreak havoc on your finances if you aren't careful.

Investing the down payment could pay off more

Many people still consider homeownership to be a good long-term investment. However, the 2008 housing crisis showed the ugly side of homeownership as an investment. Owning a home can be a great way to invest some of your money — but it shouldn't necessarily be viewed as a solid long-term investment. (See also: Stop Thinking of Your House as an Investment)

A lot of factors causing a home's value to either appreciate or depreciate are out of the hands of the buyer. Just because a house is cute, has great curb appeal, and an open floor plan doesn't guarantee that it will hold its value and appreciate over time. You have to consider the neighborhood, natural disasters, city construction, future development plans, the presence and strength of a homeowner's association (HOA), and a host of other factors.

Consider taking the money you intend to use as a down payment and investing it in stocks or mutual funds. The first rule of investing is to diversify, and spreading the money over several solid traditional investments may be a better bet long-term than sinking it all into a personal property. Also, traditional investments don't negatively impact your career. If you move, change careers, or go into business for yourself, you continue earning interest on what you've invested.

It can make you too comfortable

Home ownership is more mental and emotional than it is financial, and how you think and process your feelings directly impacts your career and financial decisions. Once you establish roots via homeownership, it can become very hard to uproot. For many, a home becomes a symbol of safety, security, and love, and it provides a sense of belonging. Everyone wants those things.

Owning a home can kill your drive and make you stay in a dead-end job longer than you should. Rather than chasing other opportunities, you may find yourself becoming more and more risk adverse, because the home gives you a reason to stay put. You'll slowly begin to lose that hunger and tenacity that makes you strive for success. Being able to take calculated career risks, such as quitting a dead-end job, starting your own business, or relocating to take a better job are what keeps your career alive and thriving. (See also: 4 Worst Reasons to Buy a House)

If owning a home is something you've dreamed of and fits your goals and values — go for it! But do your homework, and consider the timing of your purchase. Understand that every decision has consequences. Buying a home could impact your career goals, coax you into compromising your professional vision, and slow or hinder your success. Proceed with caution.

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How to Sell Your Home When You're Underwater on Your Mortgage

Dan Rafter — Mon, 31 Dec 2018 09:00:10 +0000

It's no fun selling a home when you're underwater on your mortgage. Being "underwater" is when you owe more on your mortgage loan than your home is worth.

Unfortunately, there are times when homeowners have no choice. Your employer might transfer you to a new job across the country. Or your home might be too small for a growing family. If you're in this situation, the odds are high that you'll have to write a check to your lender once your home sale closes. But you might be able to reduce the amount you owe by setting the right asking price and staging your home so that it looks its very best. Here's how to sell your home when you're underwater on your mortgage. (See also: Why You Should Call Your Mortgage Lender Every Year)

The challenge

Why is selling a home with negative equity such a financial hit? Instead of making money on your home sale, you'll lose it.

Say you owe $200,000 on your mortgage, but your home is worth only $180,000. You'll struggle to sell your home for more than that $180,000 value. And even if you do sell at that figure, you'll still owe your lender $20,000 after you close your sale. This means you'll have to write your lender a check for $20,000 at closing. That's not the outcome any home seller wants.

Wait to sell

What if you are underwater on your mortgage? The best advice is to hold off on selling your home, if possible. That way, you can hope that your home gains value — hopefully enough so you no longer have negative equity.

You can also wait until you make enough monthly mortgage payments so you no longer owe more on your home loan than it's worth. If you can send extra money to your lender to be applied directly to reducing your loan's principal balance, you might be able to build equity at a faster pace.

It's becoming less and less common

The good news is that the number of homeowners who are underwater on their mortgages is falling, compared to what it was a few years ago. CoreLogic reported that in the first quarter of 2018, the number of homes with negative equity had fallen 3 percent to under 2.5 million, which represents 4.7 percent of all properties with a mortgage.

How to set the right asking price

If you have no choice but to sell, the key is to set the right asking price for your property. If you're underwater, you might want to set an asking price that's higher than what the market says your home is worth. Resist this temptation.

Buyers know what a home is worth today. If you set your asking price too high, most will pass your home by, looking at other properties instead. You can't force buyers to pay more for your home because you're underwater, because buyers don't care what you originally paid for your home.

You need to set an asking price that's fair, but also the highest possible amount you can sell it for. The best way to find this price is to work with a real estate agent who is familiar with your neighborhood. They can help you set an asking price that draws the biggest number of potential buyers, increasing your odds of selling your home for the highest price. (See also: How to Build Equity in Your Home)

Staging your home

If you're underwater and plan to sell, you'll want to spend the least amount of money possible to sell your home. But investing in a home stager can pay off. A stager will rearrange your furniture and home décor so that your home looks more spacious, bright, and airy. This will help your home make a strong first impression on buyers. You want buyers to be excited about your home and to make offers that are close to your listing price. (See also: Need to Sell Your House? Here's How to Let Go)

Make all necessary repairs

In order to sell your home, you'll have to repair any broken appliances, torn carpets, dinged walls, or stuck windows. You can't list your home with any defects if you expect buyers to pay top dollar for it. (See also: 9 Modern Home Improvements That Add Thousands to Your Listing)

Don't forget the outside

Spend time on your home's exterior, too. Make sure the lawn is neatly trimmed, all weeds are pulled, and you add pops of color with some bright plants. You want buyers to be excited when they pull up. If they see a well-maintained and inviting exterior, they'll be more eager to tour the inside of your home.

The key here is to squeeze the highest possible offer out of buyers. To do that, your home must be in top condition, both inside and out.

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11 Things You Can't Hide When Selling Your Home

Paul Michael — Tue, 20 Nov 2018 09:00:14 +0000

If you're getting ready to sell your home, or have already put it on the market, it can be tempting to gloss over a few of the negatives. After all, does the buyer really need to know about that ant problem you get in the summer months, or the fight you're having with your cranky neighbor?

Well, yes, they do. Hiding any kind of problem that will cost the new owners time and money to fix, or make them regret buying the house, could land you in hot water. You may even be sued for substantial damages. Here are some of the biggest offenders. (See also: 6 Things Buyers Will Hate About Your House)

1. A horrific human tragedy

There is a certain stigma that attaches to a property after something terrible happens, and that stigma can affect the home's value. Any events deemed "psychologically damaging" — such as a high-profile murder — may legally need to be disclosed when selling a home. The specifics will depend largely on your state's laws.

In California, for example, any kind of death that happened in the home, with the exception of AIDS-related death, must be disclosed if it happened within three years of the sale date. And should the buyer ask if there was a death, suicide, or violent crime at the property, in most states you are legally required to answer truthfully.

2. Any asbestos in the structure

Once upon a time, asbestos was a staple in home construction. Its fire retardant properties, combined with excellent sound absorption and insulation, made it a useful material. This was until, of course, it was discovered that airborne asbestos particles can cause lung cancer, mesothelioma, and asbestosis.

Asbestos is costly and dangerous to remove, and as a seller, you typically have two choices: get rid of it through a specialized firm, or disclose it and tell the new owners it's their problem. No doubt they will want to reduce their offer so that they can pay to have it removed safely. They may just back out of the sale, too. But if you know about it and don't disclose it, depending on where you live, you can be sued.

3. Pest problems

Rats. Bed bugs. Cockroaches. If your home is plagued with pests, most states require you to disclose the issue to the buyers. Even if you have things under control with an exterminator, you'll still need to tell the new owners that there's a pest problem they need to stay on top of.

In some cases, the pests may not even come from the home, but from a neighboring property (this happens a lot in apartments in New York City). If you have bugs or mice coming in from another property, still let the buyers know. It's only fair. (See also: 6 Cheap Ways to Get Rid of Household Pests)

4. Ghosts (yes, ghosts)

The idea that a house could be haunted is somewhat far-fetched to say the least. However, some people believe in the paranormal. If you, as the owner, genuinely believe your home has an issue with a ghostly presence, some states require that you warn the new owners about it. If you've had an exorcism done, that should be disclosed as well.

5. Lead paint

Lead paint was once used throughout homes because it dried faster, kept its fresh color longer, and resisted mold. It also had a sweet taste, which caused children to eat lead chips, and had the nasty side effect of kidney damage, nervous system issues, and stunted growth.

Any home built before 1978 must have a disclosure form stating whether lead paint is present in the home or not. Hiding this can set you up for a lawsuit. If you genuinely don't believe there is lead paint in the home, you don't have to disclose it or investigate the presence of lead paint.

6. Bad neighbors

A bad neighbor can turn a beautiful home into a nightmare. And while it's not exactly legally required to disclose nuisance neighbors (except in California), it's in your best interest as a seller to tell any potential buyer about the problem.

For example, the neighbor might throw loud parties until 2 a.m. every weekend. To some people, that's no big deal. To others, it can be a cause of such frustration and turmoil that they find themselves caught in a war, with the police often getting involved. Just be upfront about the issues. If the neighbor is a registered sex offender, you'll want to disclose that information, too.

7. Water damage

Whether the damage was caused by a leaky roof, an overflowing bathtub, a flood, or any other kind of water-related incident, you must disclose this kind of past issue. You may think that because you fixed the leak in the roof or painted over the stain on the ceiling that you're all good. That's not the case. There could be damage that you cannot see, especially in the case of a basement flood or leaking ceiling.

The golden rule here is if water has entered the structure and caused any kind of damage, you have to let the new owners know. And if the water has created a mold problem that you have covered up with paint or wallpaper, you have to disclose that as well.

8. Any natural disasters that affect the home

If you're unlucky enough to live in an area that occasionally gets hit by an earthquake, hurricane, tornado, wildfire, flood, or any other kind of natural hazard, depending on the state laws, you may have to let the new buyers know. This also goes for a home that is near a cliff erosion. You can't just assume they know the home is located in tornado alley, or that the local river floods every spring. (See laso: What You Need to Know About Filing an Insurance Claim After a Natural Disaster)

9. Foundation problems

The foundation of a home is a big deal, so if there are problems with it, you have to fix them, or let prospective owners know what the issue is and an estimate of what it will cost to repair. According to Home Advisor, the average cost to repair foundation issues comes in at over $4,000, although it can go as high as $11,000 for a serious repair. That's a big chunk of change that the new owners will have to fork over, and they won't want to find out after they've moved in.

You would probably be better off getting it repaired yourself before putting the home on the market, as any sentence including "foundation problem" and "home for sale" is going to put a lot of people off. They may even think it's going to cost way more to fix than it actually does.

10. Termite damage

Most lenders require a separate termite inspection anyway, so trying to conceal it will only come back to bite you. But if you have termite damage and the pesky little critters are still eating away at the structure, the buyer's lender can back out of the loan. If you had termite damage and had the problem taken care of, make sure you show the new buyers evidence of this. Termite damage is very expensive to repair, so you need to prove that you dealt with it.

11. Any significant repairs or improvements

If you did anything to the property that required a permit to be pulled, you should tell any prospective buyers about that project. If it required a permit and you didn't get one, it's even more important to come clean about it. Any large scale projects including a remodel, new roof, major plumbing or electrical work, an extension, and even heating and air conditioning should be disclosed in full.

With repairs, it's just as important to let the new owner know. It's possible the issue could return, or that it did some damage that they need to know about. (See also: 9 Easy Home Improvements That Add Thousands to Your Listing)

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8 Questions to Ask Before Hiring a Home Inspector

Dr Penny Pincher — Wed, 14 Nov 2018 08:00:11 +0000

It's important to get a home inspection when buying a house. There are many hidden issues that can emerge after you buy a property that are expensive to correct. Spending a few hundred dollars to have a professional home inspection beforehand is a good way to avoid costly surprises with your new property — but only if you get a reliable home inspector who will carefully check out your house and identify these issues.

This year, I discovered that an inadequate home inspection cost me over $10,000. My roof started leaking, causing damage inside. When a roofing contractor checked it out, he had me come up on a ladder and showed me that there were three layers of shingles on most of the roof. The new shingles on the top layer were covering up all kinds of problems underneath. The roofer was surprised that my home inspector didn't let me know about the poor condition of the roof. It turns out that my home inspector never even went up on the roof during his inspection. The inspection report had a photo of the roof taken from the ground, but it looked okay since it had new shingles on top. (See also: Thinking of Skipping the Home Inspection? Here's What It Will Cost You)

Had I known that the roof was failing, I could have negotiated a new roof as part of the purchase agreement, or I could have replaced the roof before it started leaking and saved myself a lot of stress. I could have avoided getting an inadequate home inspection by asking the right questions.

Here are some questions to ask before hiring a home inspector for your future home.

1. Who is recommending this home inspector?

Be wary of home inspectors who are recommended by your banker or by your real estate agent. These parties are motivated to have a home inspection that goes smoothly and results in a deal that closes so that they get paid. They will tend to recommend "easy" home inspectors that are not as likely to point out issues that could derail the sale.

2. What are your qualifications to be a home inspector?

Good qualifications for a home inspector would include experience working in the home construction or home repair industry and training to become a home inspector. But there are online courses that almost anyone can take and become a home inspector. I would be more comfortable hiring a home inspector who has background that goes beyond basic home inspection training.

3. How much experience do you have as a home inspector?

You can learn a lot by asking home inspector candidates how many homes they've inspected. A high number indicates that they're focused on home inspections and have likely learned from experience. A low number indicates that they're a newly minted home inspector, or that home inspections are just a side job and not their main focus.

4. What is included (and not included) in the inspection?

Your home inspection may not include everything you're expecting, so it's worth reviewing what's actually included. Home inspections may not include coverage for pests or hazardous materials such as lead and asbestos, radon, or mold. Inspection of structures not attached to the house such as yard sheds or other buildings and swimming pools may not be included.

Based on my recent experience, it's also worth asking if the inspector checks all parts of the roof for roofing issues. (See also: 5 Homebuying Questions You're Embarrassed to Ask)

5. Could you provide a sample home inspection report?

Some home inspection reports I've received over the years have a lot of "boilerplate" text and checklists that are not very informative. These reports rely heavily on automatically generated text about things that might be issues in general, but are not actually comments from the home inspector about the property. Reports that have a lot of photos from the inspection and comments from the home inspector with specific recommendations are the most valuable. Some inspection reports even have rough estimates for how much it would cost to resolve issues. Compare some sample reports and pick one that has information that'll be useful to you.

6. How much does a home inspection cost?

The buyer of a house normally pays for the home inspection, which typically runs in the range of a few hundred dollars. Compared to the price of a house, the cost of a home inspection is small, but you don't want to be surprised by a much bigger-than-expected home inspection bill.

7. When would you be able to complete the home inspection?

If you have signed a purchase agreement for a property, there may be a date by which the home inspection must be completed and accepted by the buyer. You need to get the home inspection report in time to use it to negotiate repairs from the seller, or even to be able to walk away from the deal if there are major issues. Find out if the home inspector you're dealing with has a huge backlog of work that would prevent him or her from meeting your schedule.

8. Can you walk through the house with me?

Walking through the property with the home inspector at the end of the inspection may be the most valuable part of the home inspection. This is an opportunity to ask questions and learn more about any issues that were discovered, and about the house in general. While you have access to the space, you can also take measurements and plan for where your big items will go when you move in.

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How a Sale and Lease-Back Can Help a Homeowner Avoid Foreclosure

Toni Husbands — Mon, 29 Oct 2018 08:00:12 +0000

George Arnold bought his Chicago bungalow in 2009. This fixer-upper needed a lot of TLC, but was in a good neighborhood. He'd found a diamond in the rough. Arnold set to work bringing the home back to life through a series of major renovation projects. Soon after, his mother's health took a turn for the worse.

"I kept my mother out of the nursing home for two years before she passed away," he recalls. His devotion to his mother is admirable — but it caused him to fall behind on bills.

To avoid losing the home and all the money he'd invested, Arnold agreed to sell his home to an investor. He'll rent it from that investor for two years with the option to purchase the home again at a fair market price.

Losing your home to a foreclosure or tax sale is not the only option for struggling homeowners. A short sale lease-back allows a homeowner to sell their home and lease it back from the new buyer, forming a landlord-tenant relationship that lasts for the term of the lease.

There are several ways to get a short sale lease-back on your home. We'll discuss three below.

Investor short sale lease-back

Struggling homeowners might be able to save their homes by selling the home to an investor before the foreclosure. Investors looking for rental property profit from the steady income and potential discounted purchase price. The short sale will have to be approved through your lending institution. Once approved, the homeowner can avoid a credit-crushing foreclosure, rebuild their credit in the ensuing years, and stay in the home.

At some point in the future, the previous homeowner and investor can negotiate a fair sale price. This allows the homeowner to recover their property and the investor profits on the sale.

Lender short sale lease-back

Homeowners can also check on lease-backs available with their mortgage lenders. Some lenders or mortgage holders will accept a lease-back arrangement in lieu of foreclosure by handing over your deed. In this situation as well, a suitable purchase arrangement can be worked out in the future once the homeowner has been able to recover financially and can qualify for a loan on the original home.

Nonprofit short sale lease-back

Homeowners can also turn to nonprofits that are approved by the Department of Housing and Urban Development. These HUD-approved nonprofits have been given the green light to conduct lease-back transactions after a 2011 change in the Making Home Affordable program.

Homeowners may be required to attend financial management training as a requirement for participating in a short sale lease-back program through HUD-approved nonprofit organizations.

Sellers beware

Homeowners facing foreclosure can be particularly susceptible to mortgage rescue scams or people who will take undue advantage of a homeowner's distress. Sellers attempting to avoid foreclosure must be diligent to ensure they are dealing with reputable people or businesses.

Do your research

Check with your state attorney's office, the Better Business Bureau, or the local Chamber of Commerce to find information about anyone before conducting the transaction. As with predatory lending, unscrupulous investment companies are quick to prey on people in a desperate, high-emotion situation where they fear losing their home. A quick Google search may return reviews about the company on various message boards that you can use to help make a decision. Try to locate individuals who've had a personal dealing with the investors to ascertain whether the company is reputable or not. (See also: How to Protect Yourself From Predatory Lending)

Seek legal counsel

Shawn Kunkler, Realtor with Paragon Real Estate Group and author of the Insider's Guide to Home Buying, San Francisco Edition, advises homeowners to work with a real estate attorney to set up a proper lease-back agreement. "This is not difficult to include, but does need to follow the correct protocol," he says. Each state may have specific requirements that need to be followed. It's best to work with a real estate attorney who has experience with short sale lease-back transactions. Contact the Bar Association for your state for referrals.

Keep your word

Homeowners fall behind for many reasons. If you're able to avoid a foreclosure with a short sale lease-back agreement, resolve to keep this new agreement. Make that a priority. Kunkler notes that if an agreement is going to fail, it's most often because the leasing party fails to honor the agreement.

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11 Open House Etiquette Rules Everyone Should Follow

Mikey Rox — Thu, 11 Oct 2018 08:00:10 +0000

Shopping for a new home? Before you start pounding the pavement, you should know that open houses aren't an excuse to show up whenever you want and act however you want. Brush up on the rules of open-house etiquette before you hit the first showing. Here are some of the big ones.

1. Be on time

If an open house is scheduled from 1 to 4 p.m., don’t show up at 12:30 p.m. and barge right in. The sellers still may be preparing their property, and they’re entitled to that time. Arriving late isn’t acceptable, either. If the time is 1 to 4 p.m., respect it; if that doesn’t fit into your schedule, pursue other arrangements, like scheduling a private walk-through on another day.

“I have had a few occasions where I spent 30 minutes turning off the lights and locking things up, only to have a person stop their car while I was out picking up the open house signs several blocks away, asking if I will go back and let them in,” says John Austin, associate broker for Realtypath South Valley in Riverton, Utah. “Of course I always do, but that adds an additional hour or so to an already long day. If you are going to be late, please call the agent's cellphone in advance to ask if they will stay late. They almost always will be glad to.”

2. Wipe your feet before walking in

It’s common courtesy to wipe your feet before entering someone’s home. If there’s inclement weather, you might even be polite enough to remove your wet shoes and leave them by the door. If this is an established rule of the homeowner — to remove shoes, that is, regardless of the weather — you either need to follow it or leave. Respect is key here. You wouldn’t want someone dragging mud, leaves, and other gunk through your nice clean house, so you should expect to extend that courtesy to others.

3. Register your name when you walk in

Signing in might seem like a way for a realtor to get your information (and it is), but it also serves a more important purpose: security.

“When we hold open houses for homes that are still furnished, we demand that guests sign in or they cannot preview the house," explains Kevin Gunn, director of general brokerage at the real estate search engine Real Living. "We take every precaution to make sure valuables are locked up; however, the agent cannot be everywhere in the house at one time. So, please understand that signing in protects the owner of the property. Should something happen, we need a log of who was there.”

4. Let the host realtor know if you already have an agent

If you come to an open house alone, but you already have an agent, tell the agent at the open house that you are there to view it and already have representation. That way the agent will leave you alone to view the property while he or she spends time talking to buyers who are not already represented.

“In my open house events, I average 125 to 175 people through the five-hour period; that’s a lot of people to talk to and divide my time,” Austin says. “It happens at every open house: I ask people if they have an agent, they say no, and I spend five or 10 minutes talking to them before they admit they have an agent, or worse — they are an agent. If you have an agent, I want to respect that relationship." (See also: 20+ Questions to Ask During an Open House)

5. Mind your children

If you’re bringing your children to an open house — which, in my opinion, should be a last-resort scenario — it is your parental responsibility to keep those kids by your side at all times. If you don’t think your children will behave in someone’s home while you’re viewing it, don’t bring them. Have your partner mind them outside while you view the property alone, then switch.

Vincent DePalo, part of the Andre Rouach Team at Douglas Elliman Real Estate, recalls a situation where a broker brought his kids to an open house where they all sat down and ate a free lunch and made a mess. He details another awkward incident during a well-attended open house:

“I once had a family of 11 people come to an open house, including the couple that was looking, both in-laws, a sibling, and three young and energetic kids ages six to 10,” he explains. “They were running around touching and opening things, climbing on window sills, and scuff-marking the walls. I could not give much of a presentation because I was so worried that either a kid would get hurt or damage the apartment.”

6. Give other guests their space

If there are other visitors at the open house while you’re viewing the property, give them equal space. Don’t crowd into rooms. Wait your turn so everyone has a chance to see what they came to see. If there’s a couple upstairs, start downstairs or outside. If they’re taking longer than you’d like, be the bigger person and exhibit patience; everyone will get through the house eventually.

7. Don’t nose through people’s personal belongings

When you go into someone's home for an open house and you’re compelled to touch something, you really only need to ask yourself one question: Is this mine? If this answer is no — and it is — don’t touch it. Don’t go through drawers or medicine cabinets or appliances. Everything you need to see right now is in plain view for you. A more thorough inspection of the property will be provided to you if you become a serious prospective buyer.

8. Keep your design ideas to yourself

You probably have plenty of ideas on how you’ll change the home once you’re in it, and that’s very exciting — for you. Remember, this is someone’s home, and they may be leaving it reluctantly, so the open house isn’t the right time or place to detail outloud how you’re going to gut the place.

“It’s fine to talk about how you might knock down a wall, but do not share your design opinions about the kitchen’s state of disrepair,” adds Jennifer Porter, owner of Seattle-based Satsuma Designs. “It kills me to see all the home-show touristers bad-mouthing other peoples’ design choices.”

Depending on whether a home is staged or still includes the personal effects of the owner, you may also find personal items on display. Porter suggests that you keep walking, reserve judgment, and never discuss the room and items publicly.

“It’s simply good manners,” she says. “Even if you’re ready to put in the winning offer, it’s not your house yet.”

9. Schedule a second showing for plumbing concerns

Listen, we all understand that when nature calls, nature calls — but, please, try to do your business before going to the open house. And don’t go through the house turning on faucets and flushing toilets just to see if they’re working. If you’re that interested in the plumbing situation, schedule a separate appointment with the realtor, who will be happy to give you a more comprehensive tour. (See also: 12 Crucial Things Homebuyers Overlook at Open Houses)

10. Ask permission to open closets or to take photos

Closet space is a selling point for many buyers, but before you go swinging doors open, ask. It’s just the polite thing to do. Same goes for snapping photos; it’s likely nobody will mind, but ask first.

11. Get in and out efficiently

Walk through the house, ask a few questions, and gather the materials and information you need. An open house is not an invitation to linger, loiter, and fill up on wine and snacks. Take one cookie and a drink if you’d like, and go. Better yet, plan to have a meal in the neighborhood so you can get a better idea of what it’s like, which is especially important if the house you just viewed is still among your prospects. (See also: How to Research a Home's Location Before You Buy)

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Need to Sell Your House? Here's How to Let Go

Sarah Winfrey — Tue, 02 Oct 2018 08:00:12 +0000

When it's time to sell your home, whether due to financial necessity or another reason, it can be hard to let go. This is especially true if you have lived in a place for a long time and have a lot of memories tied to it. Maybe you brought your first child home there or it was the first house you bought with your significant other.

It's completely normal to feel sad about leaving a home that you have loved, particularly if you aren't leaving willingly. If you are selling because you need the money, because you're getting divorced, or because you have a new job in another location, this can make it even harder to let the old house go. Fortunately, there are ways to make the process easier on yourself. (See also: 5 Signs You're Ready to Sell Your House)

Focus on what you gain

Start by remembering what you stand to gain from selling your home. If you need the money, think about the debt you can pay off by selling the house. If you're struggling to pay the mortgage, consider what your life will be like without that stress every month. Consider the freedom you'll have, the better pay or office environment waiting at your new job, or the way you'll be better able to focus on other goals and values.

This may feel forced at the beginning, but make yourself list these things out. It will help to write them down where you can see them. Then, when you start to feel down about moving, look at your list and remember why you chose to sell in the first place. (See also: 8 Signs You're Paying Too Much for Your Mortgage)

Redefine "home"

You may find that your real home is wherever the people you love are. This may be your spouse, your parents, your kids, or friends who are like family. When you think of home in terms of people rather than in terms of a place, it can make it easier to leave a house that you have loved.

Neutralize the home early

Most realtors suggest making your home less personal so that it will appeal to potential buyers. This means removing family portraits, framed diplomas, and anything else personalized that screams you. While their intent is to make it easier for potential buyers to see themselves and their own things in your home, it can also help you let go, too.

Sure, it's hard to take your memories down off the wall. Once you're used to not seeing them there, though, you'll find yourself beginning to detach emotionally from the home. Slowly, you'll realize that you carry your memories within yourself — they don't require the house. If you're really struggling to let go of your home, it may be a good idea to do this earlier rather than later. That will give you more time to detach and will help you see your home as a product to be sold.

Say goodbye

Give yourself the time and space you need to say goodbye to your home in your own way. This will look different for everyone. You may want to throw one last big party at your house. On the other hand, you may want to kick everyone else out and spend time alone in each room, remembering the things that happened there and why you hold those memories so dear.

Some people find that it helps to go through some sort of goodbye ritual. They may want to burn sage in every room, or say a prayer or blessing. The important thing is that you find something you feel is right in helping you make peace with saying goodbye and moving forward.

Let yourself grieve

Grief is not a process you can complete overnight. Even if you effectively say goodbye to your house, you may find yourself thinking of it and feeling sad for a long time after your move. Instead of pushing these feelings away and telling yourself that they aren't helpful, let yourself feel them. You may experience more than sadness, as grief can take make forms; anger, confusion, frustration, and more. Acknowledge these feelings, recognize that you won't feel this way forever, and give yourself proper time to get over your loss.

It can be hard to leave a house you loved, but with time, your heart will heal and move on. Remember that one chapter closing means another is opening, so try to take an optimistic point of view in embracing the next adventure. You'll have a new place to call home, which means you get to make new memories there with the people you love. Eventually, you'll look back on your old home with a fondness that comes without sadness.

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This article is from Sarah Winfrey of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Should You Finance a Tiny Home With a Credit Card?

Holly Johnson — Mon, 24 Sep 2018 08:00:12 +0000

While homebuyers of the early 2000s seemed to want enormous starter castles with every amenity imaginable, the last few years have brought on a renaissance in home building. Simplistic, efficient homes are becoming more popular as homeowners realize they need less space and want less responsibility.

Some homeowners have even taken their quest for less to the extreme by buying or building "tiny homes," or homes with less than 500 square feet of living space. Not only do these tiny dwellings offer less maintenance and upkeep for the homeowner, but they can make your life simpler, too.

Tiny home costs

The Tiny Life founder, Ryan Mitchell, says that, in addition to the simplicity aspect, tiny homes come with financial benefits that are hard to deny. Mitchell says that he's been in his tiny home for almost five years and pays only $15 per month in utilities. His "all in" cost of living is around $575 per month, including food, gas, insurance, phone, and other living expenses.

Of course, part of the allure of tiny homes is the fairly low upfront cost. According to The Tiny Life, building a tiny home with raw materials can cost as little as $23,000. Prebuilt or used tiny homes run the gamut from $5,000 to up to $75,000, on average, but they still cost considerably less than the national median home value of $218,000.

Financing options

The relatively low cost of tiny home living opens the door to a world of possibilities when it comes to financing, but the type of loan you'll need depends on the tiny home you buy. (See also: 9 Things to Consider Before Retiring to a Tiny Home or RV)

Mortgage

According to Fred Glick, CEO of U.S. Loans Mortgage Inc., homeowners who want to buy a small home that is permanently affixed to a foundation and sold with a lot will need to apply for a traditional mortgage for their tiny home unless they have the cash to pay for it outright. The mortgage application and closing processes would be exactly the same as if they were buying any other home in this case, with the only difference being the size of the home.

One big benefit of this strategy is that, with a traditional mortgage, tiny home dwellers may be able to qualify for a lower interest rate than they could get with other financial products.

Personal loan

Personal loans are also popular when it comes to financing tiny homes. Since most personal loans are usually available in amounts up to $35,000, they are often enough to cover the cost of a tiny home altogether. And since personal loans come with fixed interest rates, fixed monthly payments, and a fixed repayment schedule, these loans can mimic a traditional fixed rate mortgage. However, interest rates are often higher on personal loans since they are unsecured.

Cash

Mitchell says that many people also choose to build in stages and save up to pay in cash as they go. This way, they pay for their tiny home over a period of time and finish the project debt-free. This is exactly what Mitchell did when he built his own tiny home for around $35,000. Once he moved in, he says he was able to recoup the amount of money he had been paying in rent in less than two years.

RV loan

Another option to consider is an RV loan, says Brian B. Simmons, CEO of Ask a Lender. Since many tiny homes are on wheels, an RV loan for recreational vehicles is an obvious choice. Simmons notes that not all lenders offer RV loans, and that even those that do may not extend a loan to a tiny home. Still, you can always ask your bank or credit union.

Tiny home loan

There are also a handful of online lenders that offer loans specifically for tiny homes, including LightStream. LightStream claims to offer low interest, fixed-rate loans with no fees and repayment terms of 24 to 84 months for applicants with excellent credit.

What about paying with a credit card?

While there are several financing methods for tiny homes, Mitchell notes that some consumers who build or buy a tiny home seek out credit cards that offer 0% APR on purchases — at least for a limited time. With a card that offers zero interest, you may be able to pay for a tiny home to be built without any interest for 12 months or longer. If you can space your payments out and pay off your tiny home within the card's introductory offer period, you could cover the costs of a tiny home without any interest at all.

Some homeowners may also opt to pay for their tiny home with a rewards card that doles out cash-back or travel rewards. The rewards these cards offer provide a big incentive to use credit as payment, but there are risks that come with using this payment method, too.

Risks of financing with a credit card

One of the biggest downsides to using a credit card to pay for a tiny home is the very obvious potential for debt. Mitchell says that the majority of people who opt to live in a tiny home don't want debt in their lives, so using a credit card might work against their goals, unless they had a very specific plan to pay it off.

Since the average credit card interest rate is now around 17%, you'll also pay a lot of interest if you finance a tiny home with a regular credit card and pay it off over time.

Another downside of using a credit card is that, due to the sticker price of tiny homes, charging one to a card could hurt your credit. Barry Paperno, the former consumer affairs manager for FICO and the blogger behind Speaking of Credit, says that how much you charge to your credit cards is important — even if you have the credit limits available to cover the cost of a tiny home or any other large purchase. Since your credit utilization makes up 30% of your FICO score, charging a large sum can skew your utilization and cause your score to plummet.

This may not seem fair, but that's just how it works. Imagine you have a single credit card with a credit limit of $30,000 and you charge a tiny home with a purchase price of $27,000. Practically overnight, your credit utilization would go from 0% (provided you had no other debts) to 90%. With your utilization determining so much of your score, this is practically credit suicide.

Paperno says that you should strive to keep your credit utilization between 1% and 10% if you want to keep your credit score in tiptop shape. Anything more than that can hurt your score and your chances at getting a loan with the best interest rate and terms.

If you're entirely debt-free and only need to finance a tiny home, however, you may not care too much about your credit score in the short-term. Charging your tiny home to a credit card can make sense, but it's still smart to stay informed and understand the consequences.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: