house

8 Biggest Regrets of New Homeowners

Tim Lemke — Tue, 06 Jun 2017 09:00:09 +0000

Buying a home is a big decision. When you buy your first home, it can turn out to be one of the happiest moments of your life, and set you and your family up for years of comfort. But there are also countless decisions to make during the buying process, and it's easy to make one you'll regret later.

It helps to know common traps others have learned from. Try to avoid these mistakes that many new homebuyers have made. (See also: What You Need to Know Before Buying Your First Home)

1. You bought more house than you can afford

It's easy to purchase a home that may be out of your price range. Banks are known to approve homebuyers for loans that are way beyond what should be sensibly budgeted. It's also tempting to buy a more costly home than you need, based on the assumption that you will earn more in the future.

A good rule of thumb is to avoid paying more than 30 percent of your gross income on housing. Anything more than that, and you may find yourself financially handcuffed. When searching for homes, be sure to have a budget in mind, and do your best to stick to that budget even if it means walking away from homes you like. (See also: How to Make Ends Meet When You're House Poor)

2. You did not put enough money down

Making a big down payment can make things much easier for a homeowner in the long run. If you are able to save up enough to put down at least 20 percent, there's a good chance you'll avoid paying private mortgage insurance (PMI), which can add thousands of dollars in overall costs. Plus, a bigger down payment will help you qualify for a more favorable loan, and will reduce the amount you need to borrow.

Homeowners who can't make a sizable down payment often find themselves struggling financially because the mortgage costs are onerous. The more money you put down, the more money you'll save — and the better off you'll be.

3. You did not get the right kind of mortgage

There are many different mortgage products out there. Loans with fixed interest rates or adjustable rates, interest-only loans, 30-year loans, and 15-year loans. It can be bewildering and hard to find the right mortgage for you. The key is to understand what kind of homebuyer you are.

Generally speaking, if you want to build equity in your home and plan to stay a while, you will want a fixed-rate mortgage. A 30-year term is most common and often allows for manageable monthly payments, but shorter terms can make sense if you want to pay off your loan sooner and you can afford to pay more each month.

Adjustable rate mortgages, which often start with low interest rates that can change after a certain time period, make sense for those who think they may only stay in the home for a few years.

Interest-only loans, in which you begin paying interest before any principal, tend to be riskier and don't help you build equity. But they might be right for people who want very low payments to start and think they can refinance or handle higher payments later.

Do you plan to stay in the house a long time or move within a few years? What is your budget, both in terms of down payment and monthly payments? These are hard decisions, but it is important to research your mortgage loan options thoroughly before locking one in.

4. You didn't reduce debt and improve your credit before buying

The interest rate on your mortgage is based on a variety of factors, most importantly your current debt level and credit score. If you already have a high debt load and your credit score is mediocre or poor, you may end up with a higher interest rate. This could add thousands of dollars to the overall cost of your home.

You may be eager to buy that first house, but you should first take time to pay off any current debts and improve your overall credit picture.

5. You should have continued renting

There is a lot of pressure on people to buy instead of rent, because it can be a path to long-term financial security. But there are many cases where it's perfectly fine — and perhaps wiser — to continue renting.

If your income is inconsistent or your job security is in question, renting is a better option. If you expect you may need to move within a short period of time, renting makes sense. If you don't have enough money for a sizable down payment yet, continuing to rent is fine. Renting offers flexibility and is often cheaper, so there should be no rush to buy if you're not comfortable doing so. (See also: Rent Your Home or Buy? Here's How to Decide)

6. You bought a home that needed work

A so-called "fixer upper" can be a great bargain for those willing to invest the time, sweat, and money on making necessary repairs. But this type of home isn't for everyone.

Purchasing a home that requires heavy renovation can be a source of stress, and if you're not handy enough to fix things yourself, it may be more expensive for you in the long run.

7. You waived the inspection

During the housing boom a decade ago, competition for homes was so fierce that buyers were willing to forgo a routine inspection in order to close a deal. In fact, some sellers saw a demand for an inspection as a deal-breaker. Today, this is a recipe for potential disaster.

An inspection should be an essential part of the homebuying process, allowing you to learn about any problems before you make a financial commitment. No homeowner should find themselves stuck with a house full of problems simply because they waived their right to inspect the property beforehand. (See also: Thinking of Skipping the Home Inspection? Here's What It Will Cost You)

8. You researched the house, but not the area

It's a beautiful house and you got it for a great price. But after moving in, you realize that your commute to work just doubled. Or maybe you learned that the school system is not well-regarded. Or that the neighborhood has a high crime rate. Or the home backs up to the wastewater treatment plant.

Remember that when you buy a home, you're not just buying a property. You're selecting a place to live and possibly raise your family. There's more to home than just the structure and the yard. If you don't do the research on your new neighborhood, you could end up sorely disappointed. (See also: How to Evaluate a Neighborhood Before You Buy)

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

Get Your Home Cleaner Than a Pro Can — And Save Big

Ashley Marcin — Tue, 03 May 2016 09:00:10 +0000

Want to cut $200 or more from your budget this month? Consider parting ways your cleaning service. Sure, it's not the most glamorous task to take on yourself — but keeping your house sparkling clean doesn't have to be intimidating or even take too much time. In 2014, Angie's List polled its members and discovered that most were spending between $100 and $150 on bi-weekly house cleanings. Put that money back in your pocket with these tips.

Collect Your Tools

One of the most annoying things about cleaning your house yourself is having to round up all your equipment and cleaners. Make it easy by creating a bucket you can carry around you home and then store in one convenient place.

What should go in the bucket? Clean Mama suggests items from the following categories:

Dusting tools (feather duster, hand duster, ceiling fan duster, extender pole)
Window wipers (squeegee, etc.)
General cleaning cloths (cotton, microfiber, and paper towels)
Cleaners (all-purpose, stainless, disinfectant, wipes, and scrub)

Simplify Your Routine

Better yet, save some cash you've been spending on cleaning supplies and make your own using natural ingredients. I clean my home using mostly vinegar, baking soda, and lemon juice with a few drops of essential oil mixed in. If you make your own natural cleaning supplies, you'll need just one or two bottles to do the tasks of what used to take many more.

And a good bar rag will outlast many paper towels as you make your way from room to room. When you're done, just toss it in the wash to reuse on your next deep clean. (See also: 9 Greener, Cheaper Alternatives to Paper Cleaning Products)

Make a List

To help yourself stay on task, it's helpful to create a checklist. What goes on your checklist will depend on your unique needs, so take some time to think about the areas that get the most dirt in your home. You can even distribute a list to family members and divvy up the tasks to make the cleaning go faster. (See also: 9 Things in Your House You're Forgetting to Clean)

Of course you'll want to give your kitchen and bathrooms a good scrub. Your living areas and bedrooms will need to be tidied and get special attention too (don't forget to wash your pillows!). Otherwise, thinking of the rest might feel daunting. Martha Stewart shares that the following areas should definitely get some attention:

Walls and ceilings: Wipe them down to get rid of dust and grime, especially in kitchens.
Grout lines: Those pesky lines between your tiles can look amazing again with a little scrubbing and some sealer.
Carpets and rugs: Vacuum all of them. If you have the extra time, try periodically shampooing them. (Note: Rugs that don't have waterproof backings will need the help of a professional.)
Shelves and furniture: Dust every nook and cranny. A crevice tool is helpful here. And don't forget to dust the books while you're at it.
Cushions, etc.: Take upholstered furnishings outdoors to beat off dust. Vacuum the rest.
Wooden furniture: First wipe your wooden surfaces clean and then let dry. Apply wax to condition and buff once it dries.
Curtains, etc.: When's the last time you washed your drapes? If they're machine washable, stick them in your next load. Then dust and clean your blinds, interior shutters, or shades while you wait.
Window screens: Especially in the spring, it's good to give your screens some love. Take them out and wash with dish soap, rinse, and re-hang.
Floors: For vinyl or linoleum, you'll want to use a wax or other cleaning agent specifically made for those materials. Otherwise, the surface may lose shine over time.

Bonus: Cleaning your home from top to bottom is also a great time to ensure fire safety. Check and replace batteries on your smoke and carbon monoxide detectors.

Break It Up

Yes, it's more gratifying to have your entire house cleaned in one fell swoop. If you don't have that sort of time to devote, try breaking up the bigger parts over the course of a few days to a week. After doing an initial big clean, my family decided on a rough schedule to tackle tasks on the regular before things ever get too gunky.

We clean the kitchen, tidy the living spaces, and clear out junk mail on the daily. We vacuum the floors and do the laundry and recycling every other day. Then once a week, the focus moves to the bathrooms, bedrooms, and trash collection. Things we do less often? Washing windows, deep cleaning floors, dusting everything, and wiping down furniture. Those tasks happen maybe once or twice a month. It's a system that works for us — and our house looks and feels fresh.

How you break up everything will depend on what gets dirty the fastest and what's most important to you. (See also: 25 Cheap and Easy Fixes That Make Your House Look Amazing)

Move Things Around

Since a lot of these tips are general, I thought I'd share my biggest secret for getting your house as clean as the pros do. You need to move your stuff around and clean above, underneath, behind, etc. Dust and grime loves to accumulate in crevices and corners, so don't let it hide out for months or years at a time. The next time you set out to clean your spaces, pull that rug up and vacuum underneath or shift that love seat and find what's lurking in the darkness.

Moving things around means moving your body, too. Stand on a chair or get on the floor to find those places you're missing, like the tops of your ceiling fan or your baseboards.

Do you use a cleaning service? If you do it yourself, what's your biggest tip for getting your home sparkling clean on a budget?

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

Best Money Tips: Make Your House Look Awesome for $50 or Less

Ashley Jacobs — Mon, 08 Sep 2014 19:00:05 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some great articles on making your house look awesome for $50 or less, ways to save $1,000 for holiday shopping, and cash-back websites for online shoppers.

Best Money Tips: Steps to Make Sure You Buy the Right House

Ashley Jacobs — Wed, 27 Aug 2014 19:00:04 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some amazing articles on making sure you are buying the right house, maximizing your dollar at Subway, and creating work/life balance when your kids return to school.

Best Money Tips: Have a Clean Place Without Cleaning

Ashley Jacobs — Tue, 26 Feb 2013 10:48:34 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some great articles on having a clean place without cleaning, giving memorable gifts without going into debt, and spending your tax refund wisely.

Best Money Tips: Mistakes to Avoid When Selling Your Home

Ashley Jacobs — Fri, 11 Jan 2013 11:00:31 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some great articles on mistakes to avoid when selling your home, changing your life for the better, and revitalizing your finances.

Best Money Tips: Ways to Save Money for a House

Ashley Jacobs — Fri, 07 Dec 2012 10:48:36 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some fantastic articles on ways to save money for a house, steps to take before a job interview, and how to protect your stuff.

Best Money Tips: Steps to Buying a House

Ashley Jacobs — Wed, 24 Oct 2012 07:59:00 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some awesome articles on steps to buying a house, reasons you need a spending plan, and Black Friday myths exposed.

Best Money Tips: Items Every Home Needs

Ashley Jacobs — Thu, 11 Oct 2012 10:24:40 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some stellar articles on handy items every home needs, how not to handle sudden wealth, and how to reduce student debt.

Best Money Tips: Inexpensive Ways to Boost House Value

Ashley Jacobs — Fri, 16 Mar 2012 10:00:19 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some great articles on inexpensive ways to boost house value, counterfeit vs. real goods, and tax tips for the unemployed.

News & Events

Radio Show on Mom 2 Mom Sales — Be sure to check out Monroe on a Budget on My 98.3 at 7:40 a.m. EST Friday March 16 as she discusses the Mom 2 Mom Sale.

Be sure to check out our News & Events Calendar to see all the awesome upcoming events in the personal finance world!

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

Best Money Tips: Hidden Costs of Buying a House

Ashley Jacobs — Thu, 24 Nov 2011 11:00:43 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some awesome articles on the hidden costs of buying a house, vacations to take when your budget is low, and alternatives to traditional gift-wrapping.

News & Events

Wise Bread Tweetchat (#WBChat) — Don't miss our weekly tweetchat at 12pm PST! We will be giving away prizes and talking about Thanksgiving and Black Friday!

Be sure to check out our News & Events Calendar to see all the awesome upcoming events in the personal finance world!

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

What Does Frugal Living Mean to You?

David Ning — Mon, 28 Jun 2010 14:46:58 +0000

Let me ask you this. If your friend recently bought a $1 million dollar house, is that an act of frugality? What if she could actually buy a house worth $10 million but decided to spend only 1/10 of what she could really afford? Does that change your answer? A $500,000 house is VERY expensive amongst many social circles, but Warren Buffett, the billionaire investor, is always praised about his lack of desire to spend on luxury because he is still living in his house thought to be worth about $500,000.

When you are the second richest person in the world, are you frugal if you opted for a million dollar home instead of buying a multimillion dollar mansion? I mean, a million dollars to Warren Buffett is like the cost of dinner to most of the general public! Shouldn't he be using a different scale when it comes to what is deemed frugal?

Frugality Is Relative

Most of the time, we judge others' financial habits by what we can see from the outside — the clothes they wear, the cars they drive, and the house they buy. We never realize how much money they make, and never compare what they spend as it relates to what they can actually afford. Keeping up with the Joneses? What if Mr. Jones is a billionaire?

As you can see, the meaning of frugality is relative. What frugal living means to you may be totally different than what it means for someone else. Your neighbor could buy a $1,000 purse and she could still be frugal, while a $100 pair of shoes from another neighbor could mean that he spent too lavishly. So how can you compare? Your coworkers may have a large inheritance, your friends could have married rich, and your neighbors might be fortunate enough to run a successful business. You don't know other people's situation, and more importantly, why does it matter anyway?

Does your neighbor's BMW help you get to a comfortable retirement faster?
Does your coworker's lavish vacation make your retirement more relaxing?
Does your friend's purse hold more secrets to your financial independence?

Take frugal living personally. In other words, stop minding other people's business like trying to keep up with the Joneses and be happy that you are frugal and that you are working towards your financial independence. In your own way of course.

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

Best Tips for First Time Home Buyers: Learn to Trust

Elizabeth Lang — Thu, 26 Mar 2009 18:44:08 +0000

We have just finished buying our first home. It's a great feeling, but has been a long process with a steep learning curve. Over the next few weeks I'm going to be sharing tips and stories in an occasional series about buying your first home.

As chronic information gatherer I started out the home buying process by scouring the internet for information and hitting up the local library. I read everything I possibly could about buying a house.

I read 8 or 9 books, countless blogs and websites, reread book chapters, and still couldn't fully understand the home buying process. I talked to friends and family who own homes. After all of this information hunting I concluded: there is too much to know about the ins and outs of buying a house to learn it all yourself.

Thus, I learned to trust. There is a reason people specialize in real estate careers. Just like most people don't represent themselves in major court cases, most people don't buy a house without assistance.

Here are the best tips for starting the home buying process.

Find People You Can Trust and Trust Them

Because you can't know everything about buying a home, you need to surround yourself with people who know more than you. And these people need to be people that you trust. Here at the key trustworthy people you need on your side:

Realtor

Find a realtor who will tell you if a home is a good value for the neighborhood (and if the neighborhood itself is any good).

Mortgage Broker

Find a mortgage broker who answers your questions honestly and truthfully and does so in a patient and professional manner.

House Inspector

Find a home inspector who is certified and will take the time to walk you through your house and point out all its faults.

Friend or Family Member

Find a friend or family member who can give you a second opinion on a house you like to point out qualities about the house that fit with your likes and dislikes. (Perhaps the kitchen is too small, but your favorite activity is cooking.)

I'll discuss in future posts more specific questions to ask these people, the qualities suggested above are a starting point. The critical piece is that they are people you can trust.

Ultimately Trust Your Gut

While it's critical to find people you can trust, ultimately you have to live in the house you buy, with the mortgage rate you lock-in, and with the house's quirks and problems. So, if your gut is tells you something is off, do more research.

Moreover, no one will have more invested in your home than you will. Realtors and mortgage brokers earn commission based on the cost of the house/mortgage you buy. So, the more expensive your house and mortgage, the more money they earn. (There are exceptions, but this is the general rule.) So, while you should trust these people, do some homework and remember their biases.

Ask Questions

I asked hundreds of questions while house hunting. The people we surrounded ourselves with provided sometimes brutally honest answers, but these answers were critical to having a good experience.

Buying a home is an enormous endeavor. But by finding people you trust, the process will run a little more smoothly.

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

Think you can afford more house in the exurbs? Think again.

Philip Brewer — Fri, 15 Aug 2008 10:37:49 +0000

Many people who live in the far-out suburbs move there because they can buy more house for the money than they can in town. As an example from where I live, a house in Champaign-Urbana would cost about $60,000 more than a comparable house in one of the nearby towns or villages. If you do the math, though, $60,000 is a pretty small sum, compared to the cost of owning one extra car.

According to the American Public Transportation Association, replacing one car with a combination of walking and public transportation saves a household $8059 per year in reduced spending on fuel, maintenance, insurance, registration, depreciation, finance charges, etc. (Even after adding back in the cost of public transit.)

So, if you bought a house in town--close enough to work that one member of the household who currently drives to work could give up a car and instead get around by mass transit and walking--you'd free up enough cash to boost your mortgage payment by $672 a month. At current rates on a 30-year mortgage (6.52%, according to the St. Louis Fed), that much extra per month would let you buy $106,097 more house.

Of course, having an extra car is handy for other things besides just getting to work--there's also transporting the kids, running errands, getting to doctors and dentists, and so on. But, it's really not that hard to get by with one less car--the person who keeps the car takes on those errands that simply can't be run without a car; the person who gives up the car takes on those errands that can be run by bus or on-foot. Transporting kids arguably gets easier once you give up a car, because kids can start taking public transport on their own at a younger age than they can start driving. (I was riding local buses on my own when I was in 4th grade.)

The original idea for this post came from a radio interview with Christopher B. Leinberger that ran two days ago on my local NPR station. Leinberger is the author of a fascinating-sounding new book on walkable communities called The Option of Urbanism.

I was a bit dubious about the American Public Transportation Association numbers. (They are, after all, an advocacy group for public transit.) So I did my own back-of-an-envelope calculation and came up with these figures:

Fuel 15,000 miles in a car that gets 30 mph burning $4/gallon fuel = $2000
Maintenance (including oil and tires) wild guess = $600
Insurance = $900
Registration, inspections, etc. = $100
Depreciation ($20,000 car that lasts 7 years) = $3600

That totals up to $7200, so I'd say $8059 is in the right ballpark. Of course, it gets way cheaper if you buy a cheaper car, drive it less, and make it last for more than 100,000 miles. If you live in the exurbs, though, you're probably driving it more, not less.

Two notes on the math:

$20,000 divided by 7 is just $2857, but you either have to borrow the $20,000 and pay interest on the loan, or else you have to pay cash for the car and lose out on the investment return the money could have earned you. Either way, I figure you're out about $3600 a year over the lifetime of the car.
Remember that those car-ownership costs are after-tax expenses--you'd probably have to gross an extra $11,000 or $12,000 a year to have that much money available for spending. Many home-ownership costs, though, are tax-advantaged, meaning that it's more tax efficient to buy housing than it is to buy car transportation.

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

How Big of a House Do You Really Need?

Xin Lu — Tue, 06 May 2008 23:32:30 +0000

For my entire life, I have never lived in a place bigger than 1400 square feet. The smallest dwelling I had was a studio less than 400 square feet which I shared with my parents. Because of my experience of living in small homes I think of anything over 2000 square feet as excessive for two to three residents. Today I want to highlight some of the reasons why I prefer smaller abodes.

A small house or apartment has several advantages over giant McMansions. First, it takes a lot less time to clean and maintain so you could have more time to do other things. Second, it uses a lot less energy to heat or cool so you could save money on utility bills and leave less of a carbon footprint. Third, it encourages you to declutter and get rid of your junk because you do not have enough space for it. Finally, the cost of a smaller home is usually less than a large McMansion so you will save money on taxes and insurance. The bottom line is that a smaller home saves you quite a bit of money over an extremely large living space and also wastes less energy.

The challenge of living in a small house is that you really need to simplify your lifestyle. You probably do not have room for a giant sectional, but you could make do with a beanbag. A sprawling gourmet kitchen probably would not fit, but a basic set of stove and oven should suffice for everyday cooking. Having a small abode encourages people to use space efficiently, and thus live more effectively. Myscha wrote a great article about how to do this on Wise Bread.

So how small of a house would you be comfortable with? Personally I feel that I have way more than enough space in a condo of a little over 1000 square feet which I share with my husband. Sometimes I feel that it is too big because there is space that we barely use. I am not sure if I would be fine with living in a 75 square feet house manufactured by a company in California called the Tumbleweed Tiny House Company, but I think I would do fine in a place half the size of our current place.

I am curious, do you have too much space in your house? Could you unclutter and downgrade into a smaller living space?

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

house

8 Biggest Regrets of New Homeowners

1. You bought more house than you can afford

2. You did not put enough money down

3. You did not get the right kind of mortgage

4. You didn't reduce debt and improve your credit before buying

5. You should have continued renting

6. You bought a home that needed work

7. You waived the inspection

8. You researched the house, but not the area

Get Your Home Cleaner Than a Pro Can — And Save Big

Collect Your Tools

Simplify Your Routine

Make a List

Break It Up

Move Things Around

Like this article? Pin it!

Best Money Tips: Make Your House Look Awesome for $50 or Less

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News & Events

Best Money Tips: Hidden Costs of Buying a House

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What Does Frugal Living Mean to You?

Frugality Is Relative

Best Tips for First Time Home Buyers: Learn to Trust

Find People You Can Trust and Trust Them

Ultimately Trust Your Gut

Ask Questions

Think you can afford more house in the exurbs? Think again.

How Big of a House Do You Really Need?