Learn how to navigate the deals and come out on top.
Why pay full price for something if you can get what you want, plus another item, at a discount? This is called bundling, and researchers have been studying the pros and cons of it for decades.
Although many consumers think of bundling as a modern concept — it’s often used to combine TV, internet, and phone services, for example — the practice has been around for years in a variety of forms.
As a homeowner or renter, navigating the benefits and pitfalls of bundling household services means using a little common sense and a bit of economic reasoning. It also requires being aware of when and how products are bundled.
What is bundling?
Everything from fast-food combo meals to items in a two-for-one deal could be considered bundled, especially if sold at a lower price than the separate parts.
For households, bundling might mean purchasing home and car insurance together at a slightly lower rate — the average American, for example, saves 16 percent when bundling the two policies, according to the latest data from InsuranceQuotes.com.
The possibilities for bundling household services abound, according to Andrew Schrage, co-owner of Money Crashers Personal Finance: “You might find someone on Craigslist who can help with electrical, plumbing, and air-conditioning/heating needs. You’ll likely get a discount, because you’ll be bringing that person more work.”
Mixed versus pure bundling
There are several types of bundling, each with varying levels of consumer benefit, according to George John, a professor at the University of Minnesota’s Carlson School of Management. As a homeowner, you’ll most likely encounter these two types:
In such a scenario, consumers are worse off, because the seller increases its profit by requiring such a deal. The company can get away with it “because they have a very strong market position,” John says.
Understanding your needs is key
Why are so many services offered in bundles? “This is somewhat controversial, but it turns out that companies make more money when they offer you discounts on those bundles, because consumers get tempted into buying it,” John says.
To win at the bundling game, keep your needs in mind, and stay strong in the face of alluring deals. Bundles are a true victory for consumers only if they genuinely need all parts included in it.
When consumers fail to shop around for the other items in the bundle and go for the packaged deal instead, they often walk away with products they don’t want or need — and sometimes pick up lesser-quality goods along the way.
Finally, the touted time-saving advantage of combining bills, which service providers sometimes use as a selling point, may not economize that much time, especially if a consumer would be signing up for automatic bill payments anyway.
Service providers “want to take your attention away from the fact that it’s actually a price move. They want to tell you that you’re getting a better experience if you bundle,” John says.
Consumers triumph when they control what’s in the bundle. Have a nanny who you pay a little extra to make dinner each night? That’s a bundle. “It’s totally a good deal, because you know the benefit that comes from having the same person watch your child and cook for you. You’ve made the judgment,” John says.
At the end of the day, discipline is key. Saying no to unnecessary items, looking for other options instead of pure bundling, and refusing to be duped by false benefits will ensure you win the bundling game.
On Point Homevestments
Your parents' rite of passage may not make sense for you
When the Baby Boomer generation was venturing into adulthood, it was common to buy a “starter home” — a modest, small dwelling. As their families grew and careers advanced, they moved into bigger or better homes.
Now, many people struggle to come up with the down payment for a first home. They may wonder if it’s smarter to wait and save more money so they can buy a home that makes more long-term sense, or go the other route, buying a starter home and planning to stay in it for more years.
It’s a personal, practical and financial decision, but here are some pros and cons of buying a starter home.
Pro: Build stability quicker
Lots of lessons come from homeownership. It exposes you to a new set of decisions and circumstances.
One surprise benefit that strikes most people is the stability they feel when they become homeowners. They might feel more grounded, and a part of a larger community.
After making a few cosmetic changes to make a home “theirs,” many new homeowners find they enjoy nesting at home, having friends over, and enjoying their own space.
Con: Buying twice means moving twice
Think you’ll be ready to upgrade in just a few years? It might be more cost-effective to save and stretch for the larger house, so you can stay in it longer.
Although mortgage rates are low, there are costs associated with buying and selling a home: title insurance, inspections, brokerage commission, along with a handful of loan fees.
Plus packing up and moving twice can be expensive and exhausting. Some prefer to pick one house for the long haul. While staying put and continuing to rent may seem wasteful in the short term, it might be a more strategic move.
Pro: Build equity sooner
Although not the guarantee it was a generation ago, odds are good that when you get into your first home, you can realize some equity. If you can commit to at least five to seven years, there’s a chance you can come out well ahead.
By making improvements that add value, you can take the equity you’ve built and apply it as a down payment on the next home. In essence, the starter home might help you purchase your dream home.
Con: You may spend more than you planned
There are soft costs to home ownership. Property taxes and mortgage payments aren’t the only expenses to owning. You’ll need to furnish your new home, purchase window coverings, and pay for landscaping improvements.
You’ll likely want to paint, refinish the floors, or change the carpet before moving in. And, you’ll surely make mistakes along the way by hiring the wrong contractor, making a poor landscaping decision, or mistakenly waiting to install the new AC condenser.
Some parts of homeownership are trial and error. It adds up. You might be better off avoiding those expenses by renting and saving for your long-term home.
Pro: Start realizing the tax benefits
When you own a home, the interest portion of your monthly mortgage payment can be written off, dollar for dollar against your income. If you spend $1,000 per month on mortgage interest, at the end of the year, you can deduct $12,000 off your taxes.
When you pay rent, the money goes to your landlord, and that’s it. The sooner you own, in theory, the faster you can save some money — perhaps toward your next home.
Con: Homeownership isn’t a sure thing
The world moves at a faster pace today, and that affects home values. Just a generation ago, people stayed closer to home, got married earlier, stayed married forever, and kept the same job through retirement.
Today, people choose to stay single longer, and may even purchase their starter home solo. Divorce rates are higher, the global economy moves people all over the world for work, and we prefer to stay more mobile.
That means homeownership may not be part of the equation. What happens if you buy your starter home and then get a job transfer, divorce, or the opportunity of a lifetime to live abroad? You might be stuck being an accidental landlord or selling your home at a loss.
It’s up to you
If you play your cards right, you can get into the starter home sooner rather than later and make a smart financial decision. If you buy the right first house, are open to building sweat equity, and plan to hang out there for five to seven years, there’s a good chance that you’ll have made a smart move.
This decision will enable you to get into a larger home, in a better neighborhood or school district, or maybe just your dream home.
Homeownership is a personal choice, and there is no one path to take. Stick within your comfort zone, and always go with your gut
On Point Homevestments
Everything you need to know about buying a home — on one index card.
A home is often the biggest financial investment you’ll make in your lifetime. In fact, a recent Zillow analysis reports that the typical American homeowner has 40 percent of their wealth tied up in their home.
1. Buy for the long run
A home is a significant investment, not to mention a linchpin of stability. According to the Zillow Group Consumer Housing Trends Report 2017, the majority of Americans who sold their homes last year had lived in their home for at least a decade before selling.
Some are even staying for the long haul. Almost half (46 percent) of all homeowners are living in the first home ever purchased. In short: Buy a home you want to live in for at least five years — one equipped (or ready to be equipped) with the features and space you need, both now and in the future.
2. Buy to improve your life, not speculate with money
Your home is more than a financial investment; it’s where you sleep, eat, host friends, raise your children — it’s where your life happens.
The housing market is too unpredictable to buy a (primary) home purely because you think it will net a big short-term financial return. You will most likely be living in this home for several years, regardless of how it appreciates, so your first priority should be finding a home that will meet your needs and help you build the life you want.
3. Focus on what’s important to you
Today’s housing market is short on inventory, with 10 percent fewer homes on the market in November 2017 than November 2016.
So, focus on finding a home you can afford that meets your needs — but don’t get distracted by shiny features that might break your budget. Nice-to-have features often drive up the price tag for things you don’t particularly value once the initial enjoyment wears off.
Make a list of your basic needs, both for your desired home and for your desired neighborhood. Stick to finding a home that meets these needs, without buying extra stuff that adds up.
4. Set a budget and stick to it
It’s important to set a budget early — ideally before you even start looking at homes. In today’s market, especially in the more competitive markets, it’s incredibly easy to go over budget — 29 percent of buyers who purchased last year did.
The most common culprit? Location. Zillow’s data indicates that urban buyers are significantly more likely to go over budget (42 percent) than suburban (25 percent) or rural (20 percent) buyers.
There’s nothing inherently wrong with that. Local schools matter, and psychologists tell us that a short commute improves your life. But be realistic about your local market and about yourself. Know what you’re willing to compromise on — be it less square footage, home repairs or a different neighborhood.
5. Aim for a 20 percent down payment
If you can afford it, a 20 percent down payment is ideal for three reasons:
6. Keep a six-month strategic reserve
While a down payment is a significant expense, it’s also important to build up a strategic reserve and keep it separate from your normal bank account.
This reserve should cover six months of living expenses in case you get sick, face an unexpected expense or lose your job. A strategic reserve will not only save you from financial hardship in an emergency but also provide peace of mind.
When we accumulated a strategic reserve, my wife and I finally felt ready to build for our future. Without it, we were living from paycheck to paycheck, anxiously managing our cash flow rather than saving or budgeting.
7. Get pre-approved, and stick with a fixed-rate mortgage
The pre-approval process requires organizing all your paperwork; documenting your income, debt and credit; and understanding all the loan options available to you. It’s a bit of a pain, but it saves time later. Getting pre-approved also shows sellers that you’re a reliable buyer with a strong financial footing. Most importantly, it helps you understand what you can afford.
There are a variety of mortgage types, and it’s important to evaluate all of them to see which is best for your family and financial situation. Those boring 30- and 15-year mortgages offer big advantages.
The biggest is locking in your mortgage rate. In short: A 30-year fixed mortgage has a specific fixed rate of interest that doesn’t change for 30 years. A 15-year fixed mortgage does the same.
These typically have lower rates but higher monthly payments, since you must pay it off in half the time. Conventional fixed-rate mortgages help you manage your household budgeting because you know precisely how much you’ll be paying every month for many years. They’re simple to understand, and current rates are low.
One final advantage is that they don’t tempt you with a low initial payment to buy more house than you can afford.
8. Comparison shop to get the best mortgage
Though a home is the biggest purchase many of us will ever make, most home buyers don’t shop around for a mortgage (52 percent consider only a single lender).
The difference of half a percentage point in your mortgage rate can add up to thousands of dollars over the lifetime of the loan. It’s important to evaluate all the available options to make sure you’re going with the lender who meets your needs — not just the first one you contact.
The three most important factors are that the lender offers a loan program that caters to their specific needs (76 percent), has the most competitive rates (74 percent) and has a history of closing on time (63 percent).
9. Spend no more than a third of your after-tax income
It’s better to regret spending too little on your home than spending too much. One-third of your after-tax income is a manageable amount. This isn’t always possible if you live in a place like San Francisco or New York, but it’s still a good yardstick for where to be.
10. Be willing to walk away
Buying a home is a time-consuming, stressful but ultimately rewarding endeavor — if you end up closing on a home that meets your needs. But it’s important to manage your expectations in case you don’t immediately find a home you can afford with the features you need.
Always be prepared to walk away if the sellers don’t accept your offer, the home doesn’t pass a rigorous inspection or the timing isn’t right. Hold fast to your list of must-haves, stick to what you can afford and don’t overreach or settle.
It’s no tragedy to miss out on any particular house. Remember that you’re playing the long game. You want to be happy 10 years from now.
On Point Homevestments
Do your homework to get the best deal on a brand-new home.
If you’re in the market for a brand-new home, you’ve got a ton of options. Sales of new homes surged to an eight-year high in 2015, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, and single-family production is estimated to reach 840,000 units in 2016, an 18 percent increase over 2015, according to the National Association of Home Builders (NAHB).
Unfortunately for home buyers, new residential construction is coming at a steeper price: Last year the average price of a new home jumped to $351,000, up $100,000 from 2009, reports the NAHB.
Nonetheless, there are still ways you can save when buying a new home. It’s like shopping for a new car: You need the right strategy to nab the best deal.
Ask prospective builders these six questions in order to find the right home at the right price.
“What financial incentives do you offer for using your preferred lender and title company?”
The bad news: Production builders are often reluctant to set a precedent for negotiating sales prices. (Custom builders tend to be more flexible.)
“If a new home is listed for $370,000 and it sells for $360,000, the next buyer in the development is going to want to pay that lower amount,” says Craig Reger, a real estate broker at Keller Williams Realty in Portland, OR. However, many offer handsome incentives to buyers who use their preferred lender and title company.
Some may even knock off up to $10,000 in closing costs, says Peggy Yee, a supervising broker at Frankly Real Estate in Vienna, VA. Others will sweeten the deal by negotiating prices on finishes, such as upgrading carpet to hardwood floors.
You should still shop around and get quotes from at least two other lenders before making your decision. But don’t just pay attention to the interest rates. “You need to compare each loan estimate’s terms to make sure you’re getting an apples-to-apples comparison,” says Chris Dossman, a real estate agent with Century 21 Scheetz in Indianapolis.
“Which are the standard finishes?”
When you tour a development’s model home, keep in mind that you’re previewing a high-end version of the standard home. “The model has all the bells and whistles,” says Dossman. Therefore, you need to find out from the builder which options are standard, which options are upgrades, and what each upgrade costs.
One way to cut costs: Move into the home without an upgrade, then hire a contractor to do the work. “Builders charge a huge markup on certain finishes and products,” says Reger. “The builder might charge $4,000 to $6,000 for a high-performance air conditioner, but you may be able to get another company to install that same unit for as low as $2,500.”
Granted, opting for the latter means you’ll probably need to pay the contractor in cash. “For some people, the benefit of paying the builder to do upgrades is that they can roll the costs into their loan amount,” Reger points out.
“What are your long-term plans for the community?”
Depending on the size of the land, the builder might be planning several subdivisions. This could impact your decision to buy.
For example, let’s assume that only a few homes have been built and sold. If the developer plans to construct an additional 50 homes and you’re one of the first people to move into the neighborhood, you may have to deal with loud construction crews for several months.
There’s also the risk that the builder loses funding and another company takes over the development. Dossman advises proceeding with caution: “If the builder changes and a lower-quality builder takes over, that could affect the value of your home.”
“What are the homeowners association rules and regulations?”
Each homeowners association (HOA) has its own Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and bylaws. Get these from the builder and review them carefully.
“I’ve seen HOAs that don’t allow storage sheds in the backyard, solar panels, or private fences,” says Reger.
In most cases, the HOA can assess a homeowner penalties for infractions, and some associations are more restrictive than others.
Also, look into when you’re required to start paying HOA dues. Many builders cover the costs until at least 50 percent of the homes in the development are sold, says Yee.
“What warranties do you provide?”
Most builders offer a one-year workmanship warranty and a 10-year structural warranty, says Reger. Make sure the warranties you receive explicitly state what is and isn’t covered, and what the limitations are for damages.
You should also receive manufacturer’s warranties on the washer and dryer, hot water heater, air conditioner, kitchen appliances, and roof.
“Can you connect me with some of your past clients?”
Always check references when vetting home builders, says Dossman. Ask past clients questions such as, “How responsive was the developer when you expressed concerns?” and “Would you use the builder again?”
Caveat: Most builders will only provide glowing references, so you should still scout out some past customers on your own. You can find these people through reviews on Angie’s List, or knock on doors of homes in the neighborhood that have already been built.
Wondering if new construction is right for you? Search new construction listings, and get more home-buying tips and resources to help you decide.
On Point Homevestments
When you've got to buy a house from across the country, start with a winning strategy
Searching for a house locally is not without its difficulties. Add hundreds or even thousands of miles to the equation, and it becomes infinitely more complicated.
Though long-distance house hunting has its unique challenges, it’s not impossible. In fact, with the right agent and the convenience of modern technology, it’s never been easier to buy a house remotely.
Here are a few critical factors to keep in mind when you find yourself in a home search from afar.
Do your homework
When it comes to long-distance home shopping, “the Internet is your friend,” remarks Meghann Shike of Synergy Realty in Nashville. “You know the neighborhoods you live around, but you know nothing about your new one. You don’t know where the mall is, the [grocery store], or the schools.”
Though nothing can substitute checking out the neighborhood in person, Shike recommends looking up commute times to work, crime rates in the area, and, most importantly, how the schools rank. Even if you don’t have children or don’t plan to have children, it’s still good to know the quality of the schools for resale purposes.
One of the biggest pieces of the long-distance house-hunting puzzle, however, is to make sure you’re researching who the best local real estate agents are. It’s always crucial to hire an agent you trust, but with a long-distance search the agent can make or break the experience.
“You’re going to want someone local on the ground — someone who is very familiar with the city, neighborhood, and prices,” Shike says. “You need to get a feel for how that person operates. Are they available to talk to you? You’re going to have more questions than you realize, and your agent is going to need to be there to answer them.”
Have a travel budget
When Kyle and Samantha Steele found out they were going to be moving from Oklahoma City to Columbus, OH for Kyle’s new job, the couple looked at listings online, got in touch with real estate agents, and picked an upcoming weekend to house hunt in person.
The Steeles’ agent showed them multiple houses, but nothing was quite right. Then they found out that many of the older neighborhoods in the area didn’t have great access to high-speed Internet. That’s when they decided to build.
Their agent was instrumental in guiding them on their short house-hunting weekend, and in finding a builder. “[Our agent] basically helped us with everything, every step of the way,” Kyle states. “When we couldn’t find anything, she helped us find model homes in the area we’re building in, and showed us three different model homes. She answered questions, and helped us find the building company. She even helped us find a hotel for the weekend.”
Inevitably, unexpected appointments came up during the building process that required one of the Steeles to be present. “We had to make an appointment to meet with the design studio to pick out the floors and the carpet,” Samantha remarks. “So far, I’ve been to Ohio twice.”
The couple advises long-distance house hunters to prepare and plan ahead, especially for last-minute travel. “Be flexible,” Kyle says. “Make sure you have a few thousand dollars in reserve that you can spend on plane tickets and a hotel — because you will have to go back and forth.”
From the agent perspective, Shike recommends planning a house-hunting trip that’s at least four to five days long, so you’re not cramming in tons of showings that you won’t remember at the end of the day.
Know what you want
When you’re in the market for a home, you should always have a running list of features you want, but it’s especially crucial when you’re buying from a distance.
“I like to tell my clients to do a ‘top five.'” Shike says. “What’s your non-negotiable? Is it being able to step out the front door to walk your dogs? Do you want to walk your kids to school?”
Knowing exactly what you want out of a house and location allows your agent to help you narrow down neighborhoods and homes more easily, and assist you in making an offer quickly, which is especially important in a fast-moving market.
“Buyers need to get over the fear of writing an offer when they haven’t seen the house in person,” remarks Shike. “I can video chat our way through the house, but I can’t get you on a plane [to get here] in the same time the local people can who are shopping.”
Overcome remote home-buyer jitters
For those buyers who are nervous about making an offer sight unseen, Shike says there is the possibility of adding a clause in the contract that the sale is contingent on the buyer seeing it.
Of course, there is also always the option of renting first before you take the plunge. “You could rent for the short term or get a six-month lease, which is enough time to get settled in your job or routine,” recommends Shike. “That can be nice for buyers who are a little more anxious about the process — to relieve that anxiety.”
Overall, buying a house from a distance shouldn’t necessarily be looked at as a negative experience. In fact, Shike believes it can give many shoppers new opportunities, and buyers are often more excited when purchasing long distance.
“It can be a nice change of pace for people,” Shike adds. “Another benefit to moving long distance is a fresh start: a new neighborhood, new culture, new people, and new experiences everywhere.”
On Point Homevestments
Find out if teaming up to buy a second home is right for you and your pals
Given the current strength of the dollar abroad and the fast-moving real estate market at home, you may be thinking about buying a second home at your family’s tried-and-true vacation spot, on a sunny beach, or near your favorite ski destination. But what can your budget realistically get you?
If what your vacation-home fund allows is more fixer-upper than dream home, going in on a purchase with friends or family could be a great way to get much more home for your money. If you’re considering going this route, here’s how to get started.
1. Decide if it’s right for you
“The number-one reason to consider buying a house with friends is that it lowers your investment amount,” advises Bryant McClain, director of sales and marketing at Itz’ana Resort & Residences. “Unlike timeshares or fractional ownership opportunities, when people go in together and buy a property at market price, they enjoy the equity gains of the traditional real estate market.”
McClain also points out that the best candidates for shared property are those who want to use the home a few weeks a year, then rent out the home the rest of the time. (Just be sure you’re correctly set up to do so.)
Owners also have to be comfortable sharing ongoing expenses, like property management fees, utilities, insurance, and repairs.
2. Lay the legal groundwork
To protect all owners when the unexpected happens, and to avoid hurt feelings and strained friendships, McClain recommends hiring an attorney to set up an LLC, then purchasing the home through that company.
“Owning a property with friends or family is all fun and exciting on the front end, but what happens three years later when somebody wants out?” says Bryant.
Your attorney can draft an operating agreement that clears up expectations on everything from how utilities are shared to how a buyout would work if one owner wanted to sell and the others didn’t.
3. Start searching
Keep in mind that the vacation-home market moves quickly, and with multiple stakeholders needing to agree that a property is the one, it’s best to decide on your shared criteria before you start looking.
This is especially important if you’re searching from afar or if one person will be doing most of the home touring on behalf of the group. That way, when you find the right home, you can put an offer together quickly.
“Treat the whole transaction like a business,” suggests Bryant. “Make a spreadsheet with potential homes, list pros and cons, and ask everyone to vote — that’s where having an odd number of owners comes in handy.”
You should also enlist a local real estate professional with expertise in the destination where you’d like to buy. That person is best qualified to help you identify homes that are a good value, that will perform well in the local vacation rental market, and that are in locations likely to appreciate.
There’s plenty of legwork between “Hey, maybe we should buy a home together” and signing on the dotted line, but if you find the right people to partner with, approach it like a business transaction, and act quickly when you find the perfect home, you’ll be sitting back and enjoying your dream home before you know it.
On Point Homevestments
Save some room in your budget for expenses after move-in
By the time you get the keys to your new construction home, you might feel stretched thin in the finance department. From earnest money and design center upgrades, to closing costs and moving expenses, buying a brand-new home is never cheap.
As you take a look at the costs on the horizon, it’s wise to look a little past your closing date. There are a few post-closing costs that are unique to brand-new homes and some that are familiar to all new homeowners.
Set aside a little money for these expenses now, and it’ll be smooth sailing once the “sold” sign is out front.
Unless you’ve negotiated a washer and dryer into the price of the home with your builder, your new laundry room will likely be a big empty space when you move in — no washer and dryer to be found.
Many builders don’t include a refrigerator either, opting instead to let homeowners choose a style that suits their needs.
Here’s a tip to ease your wallet woes: Start shopping appliance sales once you know your approximate close date. Many appliance stores will let you purchase ahead of time to take advantage of a good price, then delay your delivery until you move in.
If you’re upgrading to a larger home, your utilities will likely increase, especially heating and cooling. And if you’re moving to a new city or a location with a different utility company, you may have to pay a deposit to start service.
If you’re interested in services like cable, satellite TV, or Internet, you may have to install some equipment that would already be installed if you were buying a pre-owned home.
Look at all those big, beautiful windows in your new home! And then notice that they’re bare — no blinds or curtains in sight.
Most new homes do not come with window coverings, and they’re definitely something you’ll want to quickly look into when you move in. There are better ways to introduce yourselves to the neighborhood than through wide-open windows — or bed sheets pinned up for privacy.
There’s nothing more exciting than picking up some great new furnishings and decor for a brand-new space. You may have pieces that worked well in your old space but don’t fit your new home’s layout.
Or maybe you have a new guestroom to furnish, a deck that is begging for patio furniture, or beautiful hardwood floors that need area rugs. Set aside some money now so you can start decorating right after move-in day.
Did you know that some builders only landscape the front yard, leaving the backyard unfinished and unfenced? And, if your new neighborhood has a homeowner’s association, the rules may require you to finish your yard within a certain time period.
That means you foot the bill for landscaping your new home’s yard, and whether you do it yourself or hire a professional, it’s still an expense you shouldn’t overlook.
Setting foot in your brand-new, just-finished home is an exhilarating experience, and something you won’t soon forget. With just a little planning and saving in advance, you can spend more time making your new house a home, and less time stressing over how you’re going to pay for it all.
On Point Homevestments
Throughout the approval process, push yourself to maintain your credit while lenders pull it.
Navigating the purchase of a home can be overwhelming for first-time buyers. Lenders require documentation of seemingly every detail of your life before granting a loan. And of course, they will require a credit check.
A question many buyers have is whether a lender pulls your credit more than once during the purchase process. The answer is yes. Lenders pull borrowers’ credit in the beginning of the approval process, and then again just prior to closing.
Initial credit check for preapproval
In the first phase of acquiring a loan, pre-qualification, you’ll self-report financial information. Lenders want to know details such as your credit score, social security number, marital status, history of your residence, employment and income, account balances, debt payments and balances, confirmation of any foreclosures or bankruptcies in the last seven years and sourcing of a down payment. This is only a portion of the total information needed for your mortgage application.
Once you’re ready to get preapproved for a loan, lenders will verify your financial information. During this phase, lenders require documentation to confirm the information in your application and pull your credit history for the first time. You may be required to submit a letter of explanation for each credit inquiry in recent years, such as opening a new credit card, and for any derogatory information in your history, like a missed payment.
Once you find a home within budget and make an offer, additional or updated documentation may be required. Underwriters then analyze the risk of offering you a loan based on the information in your application, credit history and the property’s value.
Second credit check at closing
It can take time for your offer to be accepted, and for your loan to pass underwriting. During this period from the initial credit check to closing, new credit incidents may occur on your history. Many lenders pull borrowers’ credit a second time just prior to closing to verify your credit score remains the same, and therefore the risk to the lender hasn’t changed. If you were late on a payment and were sent to collections, it can affect your loan. Or, if you acquired any new loans or lines of credit and used those credit lines, your debt-to-income ratio would change, which can also affect your loan eligibility.
If the second credit check results match the first, closing should occur on schedule. If the new report is lower or concerning to the lender, you could lose the loan. Alternatively, the lender may send your application back through underwriting for a second review.
It’s important for buyers to be aware that most lenders run a final credit check before closing, so the home-buying window is a time to prudently mind your credit.
On Point Homevestments
Transform your standard-issue rental kitchen with these tips.
Is there some kind of law that requires rental apartments to supply no more than a single square of kitchen counter space to each unit?
Between the white walls, scarce and often outdated cabinets, and a lack of amenities, it’s rare to find a solid kitchen in the world of yearlong leases.
But no good makeover starts with a beautiful subject, right?
All you need to transform that bleak little kitchen into a well-designed, functional space is a bit of imagination, some basic home maintenance skills, and a few solid pieces.
Here’s where to begin.
Before moving into your new space, make sure to get rid of all those things you don’t need anymore.
Have you actually used that discounted bundt pan in the past year or two? If not, donate to your favorite local charity shop. Someone else might get use out of it, and you’ll be saving yourself from more clutter in your new home.
Vertical storage is a tried-and-true method of using space, and the kitchen holds some unique opportunities for making the most of it.
Hanging pot racks, magnetic knife strips, mounted dish-drying racks installed above the sink, and rods with hooks for towels, aprons, small tools and oven mitts are all excellent ways to keep clutter in its place — and keep the surfaces and lower area of the room free.
Find beautiful cleaning tools
The ugly truth is that a lot of everyday items just make sense to keep out — but that doesn’t mean they have to be such an eyesore.
Skip the plastic and get yourself a classic wooden broom, natural fiber dish brush and a glass soap dispenser. These items don’t cost much, but they add a softer look while also getting the job done.
Tap into change
Just because your place didn’t come equipped with a dishwasher doesn’t mean you have to suffer. Installing a quality faucet with a pull-down sprayer can make your chores less of a chore (and, as long as you swap it back before you move out, it shouldn’t violate your rental agreement).
Have space and the budget for something more? Portable dishwashers are a massive timesaver. From small countertop models to wheeled butcher-block-top options, there are sizes that fit into almost any space and require nothing more than your standard sink to function.
Live the island life
A kitchen island is a versatile tool for almost any space — even the tiniest micro apartments!
Whether you choose a larger center-of-the-room-style piece or a small butcher-block number, these additions create more counter space and storage, all in one piece.
Bonus: If your island has wheels, it can serve as a portable bar for your next party. (Hey, if we can call bingeing our favorite shows with a few of our closest friends a “party,” so can you.)
Light it up
Another timeless tip: Good lighting is everything.
If your kitchen is dedicated to getting things done and starting your day, invest in cool lighting — the kind that washes everything in a bright, sunlit glow. A refreshing, cooler light wakes us up and creates an invigorating feeling.
If you’re more of a romantic and enjoy taking your time in the kitchen, keep relaxing, warm lighting around so that you can let the day melt away as you sip your merlot.
For those who prefer a bit of both, app-enabled bulbs can customize the mood for any occasion, and some even use every color of the rainbow.
Think (temporarily) BIG
If there’s one common complaint about renting, it’s the stark white walls. Removable wallpaper adds a touch of personalization and won’t break the bank — or at least, it doesn’t have to.
To keep costs low, stick to one accent wall. Finding a large-scale print will make the space feel larger, and layering a sizable mirror on top will maximize the look and any light.
Curate unique displays
One of the best ways to keep an assortment of oddly shaped kitchen items is to dedicate either one section of the room (think: the top 12 inches of the walls) or one wall to showing them off.
Whether it’s your grandmother’s antique creamer collection or the jumble of cookie cutters that won’t fit into your drawers, making them into a vignette adds a layer of personalization to your space while also providing covert storage in plain sight. Easy-to-install hooks or some simple shelves are great ways to achieve this solution.
Keep it alive
Every room deserves a plant. Not only do they look good, but they also improve the quality of the air around them. If you don’t have the floor or counter space to spare, a hanging plant will do the trick.
No natural light in your kitchen? Or perhaps you’re better at killing plants than keeping them green? No matter — there are plenty of realistic artificial plants these days, which means everyone can benefit from the organic shapes of ferns, succulents and the ever-popular fiddle-leaf figs.
Have pets? Make sure to check the toxicity of your plants before choosing their placement.
No matter how uniquely challenging your space might be, there are solutions waiting for you to find them.
On Point Homevestments
Home buying hurdles exist — but research, creativity and flexibility will help you clear them.
Home buyers today face tough challenges — housing prices have soared, a dollar doesn’t go as far as it once did and rent is more expensive than the past.
How are people today making such a large purchase despite these hurdles? With more flexibility and a bit of financing creativity, today’s buyers are finding ways to achieve homeownership.
Know your options (and credit score)
To even begin the home buying process, it’s important to know what resources are available.
According to a 2017 Fannie Mae working paper, many Americans don’t have a strong, or even basic, understanding of what it takes financially to buy a home, nor if they meet the criteria.
The first step to knowing if you can afford a home is figuring out what financing options are available to you, including what mortgages you’re eligible for and how much you need/can afford to put down upfront.
Fannie Mae discovered that most buyers don’t know the minimum FICO score required by lenders and that 49 percent of buyers don’t even know what their credit score is.
Home shoppers also aren’t sure how much they have to put down on a home, and about 40 percent are unsure of the lender-required minimum down payment. Plus, three-quarters of buyers don’t know about programs available to help with down payments, like FHA loans.
Before buyers even start thinking about saving for a home, they should know what their financial resources are and if they’re eligible to buy.
Make enough money to save
With fewer resources to pull from than their older, wealthier counterparts, renters wanting to buy face tough financial headwinds.
According to the Consumer Housing Trends Report 2017, renter households typically earn a median income of $37,500 annually, which is $50,000 less than the median household income netted by households who recently bought a home (of whom the median household income is $87,500 annually).
While there are ways to enter into homeownership without making $87,500 in household income, it’s hard to afford to buy if you make significantly less. “If you’re making $37,500 per year, it’s probably not feasible for you to buy in almost any market,” says Chief Economist Dr. Svenja Gudell.
Only 29 percent of Americans make $87,500 or more, per U.S. Census Bureau data. For perspective, only one of the top 10 most common jobs in the United States carries a salary above $37,500, meaning the jobs that the majority of Americans hold bring in less money than the median renter household.
While households purchasing homes are more likely to have two incomes than renter households (and thus a higher median household income combined), even two-income households struggle to afford to buy in competitive markets.
Save enough cash (but not as much as you think)
One of the most daunting parts of home buying? The down payment. In fact, two-thirds of renters cite saving for a down payment as the biggest hurdle to buying a home, according to the Housing Aspirations Report.
Per findings from the Consumer Housing Trends Report 2017, almost one-third (29 percent) of buyers active in the market express difficulty saving for the down payment.
For people buying the national median home valued at $201,900, with the traditional 20 percent down payment, that’s $40,380 upfront — just to move in.
“The down payment remains a hurdle for a lot of people,” says Gudell. “But they should know they don’t have to put 20 percent down.”
Although putting down less than 20 percent means additional considerations, such as the cost for private mortgage insurance (PMI), some find it worth the hassle. In fact, only one-quarter of buyers (24 percent) put 20 percent down, and just over half of buyers (55 percent) put less than the traditional 20 percent down.
Buyers are also getting creative about piecing together a down payment from multiple sources. According to the report findings, nearly 1 in 4 buyers (24 percent) build a down payment from two or more sources, including saving, gifts, loans, the sale of a previous home, stocks, retirement funds and other resources.
Know your deal breakers, but be flexible
To get into a home — even if it’s not the home of their dreams — some of today’s buyers are considering homes and locations outside of their initial wish list and getting increasingly flexible when it comes to neighborhood, house condition and even home type.
Although single-family homes remain a dream for most home seekers, buyers today consider and buy condos and townhouses to secure a home in their ideal location. Buyers with household incomes under $50,000 are more likely to consider homes outside of the traditional single-family residence (40 percent), compared to those with incomes of $50,000 or above (24 percent).
“I do think people get discouraged when they look in their target neighborhood and they see homes around $170,000 when they’re looking for a $110,000 home,” Gudell says.
Affordably priced homes do, in fact, exist. But in popular areas, where people most often want to live, it’s going to be harder to find that cheaper home, Gudell says.
“If you’re willing to take a longer commute and make a couple trade-offs, you might be able to find a home that is farther out that might be cheaper,” Gudell explains. “You have to leave the paved path before you can find cheaper choices.”
On Point Homevestments
Staging, curb appeal updates, and closing costs add up.
Selling a home not only takes time, but also costs money. To help with budgeting, Zillow and Thumbtack identified several common — but often overlooked — seller expenses.
From closing costs to home prep projects like carpet cleaning, U.S. homeowners can expect to spend more than $15,000 on these extra or hidden costs to sell the median home, according to Zillow and Thumbtack’s Hidden Costs of Selling Analysis.
The two largest closing costs are agent commissions and, in most states, sales or transfer taxes.
Nationally, sellers spend $12,532 for both closing costs on the median home. Sellers should also prepare for a variety of other smaller closing costs, including title insurance and escrow fees.
Home prep costs
Most sellers will complete at least one home improvement project before listing.
While some sellers prefer to complete these projects themselves, those who outsource can expect to spend more than $2,650 nationally to cover staging, carpet cleaning, interior painting, lawn care and house cleaning — five of the most popular seller home prep projects.
Location, location, location
As with all things real estate, these extra costs can vary significantly by region.
In San Francisco, homeowners can pay more than $55,000 on the median home to cover these combined closing costs and maintenance expenses — the highest among the markets analyzed.
Compare that to Cleveland, OH where home sellers pay just over $10,000 for the same costs.
Even though selling a home costs money, most (73 percent) of sellers are still satisfied with the transaction, according to the Zillow Group Report on Consumer Housing Trends.
To estimate potential profit, sellers who have claimed their home on Zillow can use Zillow’s Sale Proceeds Calculator. It factors in the home’s sale price, mortgage balance and agent commissions, along with other common seller fees.
On Point Homevestments