DISPELLING REFINANCING MYTHS

“Refinancing” is a scary word for many people, but that shouldn’t be the case for you. For many homeowners, refinancing can not only lower your monthly payments and help with your monthly budget, but it can save you thousands of dollars in the long run.

YOU’RE NOT TOO LATE. For years now, we’ve been hearing that interest rates will be on the rise, and although there have been some small increases, you’re still in a great position to drastically lower your interest rate. The general rule is if your mortgage interest rate is more than one percent above the current market rate, you should consider refinancing.

IT’S NOT TOO TIME CONSUMING. Don’t brush off refinancing just because it seems like a long and daunting process. An informational call with a lender to see how rates compare will only take a few minutes. There are also some programs for streamlining the application process. And besides, isn’t the amount of money you could save worth the time and effort?

ARMS CAN BE REFINANCED, TOO. Seeing your Adjustable Rate Mortgage (ARM) increase after the introductory period can be incredibly stressful and place a squeeze on your budget. Many people assume they’re stuck, but ARMs can be refinanced, just like fixed-rate mortgages. You can even switch to a shorter term fixed-rate mortgage, such as 15 or 23 years. The longer you’re planning to stay in the home, the more sense it makes to look into refinancing.

SHORT SALE AND FORECLOSURE: HOW ARE THEY DIFFERENT?

As unfortunate as it can be when homeowners fall behind on mortgage payments and must face the possibility of losing their homes, short sales and foreclosures provide them options for moving on financially. The terms are often used interchangeably, but they’re actually quite different, with varying timelines and financial impact on the homeowner. Here’s a brief overview.

A short sale comes into play when a homeowner needs to sell their home but the home is worth less than the remaining balance that they owe. The lender can allow the homeowner to sell the home for less than the amount owed, freeing the homeowner from the financial predicament.

On the buyer side, short sales typically take three to four months to complete and many of the closing and repair costs are shifted from the seller to the lender.

On the other hand, a foreclosure occurs when a homeowner can no longer make payments on their home so the bank begins the process of repossessing it. A foreclosure usually moves much faster than a short sale and is more financially damaging to the homeowner.

After foreclosure the bank can sell the home in a foreclosure auction. For buyers, foreclosures are riskier than short sales, because homes are often bought sight unseen, with no inspection or warranty.

PRIORITY TASKS FOR YOUR MOVE IN

Moving into a new home is an exciting time, and you’re probably daydreaming about decor and paint schemes and new furniture. But before you get into the fun stuff, there are some basics you should cover first.

Change the locks Even if you’re promised that new locks have been installed in your home, you can never be too careful. It’s worth the money to have the peace of mind that comes with knowing that no one else has the keys to your home. Changing the locks can be a DIY project, or you can call in a locksmith for a little extra money.

Steam clean the carpets It’s good to get a fresh start with your floors before you start decorating. The previous owners may have had pets, young children, or just some plain old clumsiness. Take the time to steam clean the carpets so that your floors are free of stains and allergens. It’s pretty easy and affordable to rent a steam cleaner—your local grocery store may have them available.

Call an exterminator Prior to move-in, you probably haven’t spent enough time in the house to get a view of any pests that may be lurking. Call an exterminator to take care of any mice, insects, and other critters that may be hiding in your home.

Clean out the kitchen If the previous occupants wanted to skip on some of their cleaning duties when they moved out, the kitchen is where they probably cut corners. Wipe down the inside of cabinets, clean out the refrigerator, clean the oven, and clean in the nooks and crannies underneath the appliances.

5 NEGOTIATING TACTICS THAT KILL A SALE

Negotiation is a subtle art in real estate, but skilled negotiators can usually find some common ground that satisfies all parties. On the other hand, using the wrong negotiation tactics can sink a deal pretty quickly. Here are some negotiation tactics buyers (and real estate professionals) should avoid:

  1. Lowball offers: Going far below market value when you make an offer damages your credibility as a buyer and can be insulting to the seller. The seller has a range in mind that they’ll accept, and if you’re not even approaching the low end of that range, they won’t even consider the offer.
  2. Incremental negotiations: Don’t continue to go back to the seller with small increases in your offer ($1,000 or less). The constant back-and-forth can grow tiresome and lead the seller to consider other opportunities.
  3. “Take it or leave it”: Try not to draw a line in the sand with your initial offer. The seller can get defensive and consider other offers if you immediately show that you’re unwilling to budge. Even if it’s true, don’t make a show of it.
  4. Nitpicking after inspection: Obviously if inspection reveals a major issue, it should be factored into the final sale price. But insisting on a lower price for every minor repair can put negotiations in a stalemate.
  5. Asking for more, more, more: Some buyers will request that the sellers throw in add-ons like furniture or appliances that weren’t included in the listing. Try to avoid giving the seller a reason to build up resentment and think that you’re being greedy.

WHICH DOWN PAYMENT STRATEGY IS RIGHT FOR YOU?

You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a home. The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders.

But there can actually be financial benefits to putting down a small down payment—as low as three percent—rather than parting with so much cash up front, even if you have the money available.

THE DOWNSIDE The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search.

THE UPSIDE The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE HAPPY MEDIUM Of course, your home payment options aren’t binary. Most borrowers can find some common ground between the security of a traditional 20 percent and an investment-focused, small down payment. Your trusted real estate professional can provide some answers as you explore your financing options.

Cold Weather Prep

Fall and winter are just around the corner. Cold temperatures and weather changes can greatly impact your home, and as a homeowner, you need to be prepared. Here are a few components of your home to think about when preparing for the shift in seasons:

Gutters and downspouts. Homeowners need to consistently keep their gutters clean to prevent buildup of leaves and other debris. Make sure water doesn’t pool at the bottom of the spout. Standing water can damage your driveway, sidewalk or even the home’s foundation.

Chimneys and fireplaces. If you regularly use a fireplace in the colder months, call a professional to clean and inspect your chimney to ensure there are no blockages. Make sure to test the flue in your fireplace as well, as a tight seal is best to prevent moisture and debris from entering your home.

Windows and doors. Swap all of your door and window screens that you use in the warmer months for more protective storm windows. Installing weather stripping or caulking around your doorframes and windows is also a good idea to help lower heating bills.

Landscaping. Trim tree limbs that are close to your roof or any power lines. Snow and ice storms can wreak havoc and cause debris to damage your home. Also, grass roots are growing deep into the ground to prepare for winter, so consider fertilizing or reseeding your lawn before it gets cold.

TARGETED STAGING

When selling a home, it can be difficult to find a perfect sweet spot of how to market your property to every single buyer demographic, but you can stage extra bedrooms of your home to appeal to certain types of people. When getting your home ready for viewings, consider these three target groups:

Young couples. Many first-time homebuyers are young people with the idea of starting a family. Consider taking a spare room and converting it into a child’s bedroom. This helps the buyer visualize the possibility of raising kids in the space.

Single professionals. Young professionals today are increasingly working from home. Having an office space in your home with good lighting for long hours spent on the job is a great idea. Think about furnishing the office with a pullout couch, showing the young buyer that while the space is made for working, it can also double as a place to house weekend guests.

Large families. Big families need a lot of space. Converting spare storage rooms or offices into enough bedrooms for a full family is a must. You can even take offices on your main floor or in the basement and show potential buyers that there is plenty of room for not only the children they have now, but also for future family expansions. Also consider mocking up these bedrooms for a wide variety of ages: a room for an infant with a crib; a room for an elementary schooler with toys; and a more refined room for a child in high school or college.

Fall Appeal

While it’s true that most homes tend to sell in spring or summer, this shouldn’t discourage potential sellers from listing a home in fall. Think about these tips and tricks to make your home more appealing to buyers as the leaves start to turn.

Show off the home’s potential. Give buyers an idea of how the home would look during warmer months. If you’re planning on selling later in the calendar year, consider taking photos of your home in the spring or summer and have them on display during open houses or showings. Giving potential buyers a glimpse into the future may get them to sign on the dotted line.

Take care of exterior aesthetics. Piles of leaves or mounds of snow can make the exterior of your property look messy. Colder months tend to make most outdoor areas look dull or dreary, but remember to keep things clean for any photos taken of your home or for any viewings. Consider using markers to clearly define the edges of your property, as weather elements may make things fuzzy to buyers.

Brighten up the place. Colder months can feel dreary. To take advantage of available natural light, keep your blinds and curtains wide open for showings. The more natural light shining into your home, the more attractive it will look. Also, think about using different types of light bulbs to add extra brightness to your living spaces. And don’t forget about outdoor lighting! With the sun setting earlier, a well-lit exterior is a must for viewing your home in the afternoon or evening.

THE bigger PICTURE

While the price of a home might seem to be in your budget at face value, forgotten costs of the buying and moving process could potentially put you over budget in the long run. Here are six costs that are often overlooked, courtesy of Redfin:

Improvements. Even if the home you buy isn’t a fixer-upper, there may be things you want to change or add to make it your own, such as new flooring, paint or counter tops, which can add up to be a large expense.

Moving. Moving costs money, and the price goes up the more stuff you have and the farther you’re moving.

Furnishings. You may want to buy furnishings for your new home, since the furniture and accessories you own now may not be enough or fit in with a new aesthetic.

Maintenance. This is an expense that catches renters especially off guard, because maintenance is usually taken care of by the building owners. You can expect to repair or replace a variety of things during the life of a home, so be sure to include maintenance costs in your budget.

Utilities. While you may already be paying for utilities at your current residence, the costs could be higher in your new home depending on the size and area. There are also some utilities that are included in rent that homeowners have to pay for, like garbage collection.

Time. You will meet with several people to sign documents, set up utilities and prepare your move—time you might take off from work. This is fine if you’re able to use vacation days, but if not, you may need to take unpaid leave.

KITCHEN CONFIDENTIAL

Each year brings about new home design trends, and one of the most popular rooms to study is the kitchen. Looking at trend studies can provide inspiration for homeowners considering updating or remodeling their kitchens, so check out these findings from the latest Houzz report:

Organization and decluttering are top priorities. Seventy-five percent of homeowners want clutter-free countertops, and 63 percent said adequate storage was the most important feature in a kitchen. Custom storage options have become popular, especially pullout waste and recycling bins, utensil and dish organizers, and wine/bar cabinets.

Countertops are getting a new look. Countertops are the most commonly upgraded feature in the kitchen (94 percent), as well as the one homeowners are most willing to splurge on. Engineered quartz has also gained popularity over granite.

Open layouts are in. Half of renovating homeowners open their kitchen to other interior spaces, with a completely open transition or double doors being the most common. One in 5 homeowners made their kitchen more open to the outdoors, usually by installing exterior doors.

Design is transitional. Iconic styles such as modern and traditional are falling out of favor as homeowners lean toward transitional, contemporary and farmhouse styles. And they are choosing shaker-style and flatpanel cabinets over raised-panel.

But what about color? White is a predominant color chosen for cabinets, countertops, walls and backsplashes, while wood is the top choice for floors. Natural wood continues to be most popular, but is on the decline as homeowners are choosing engineered wood or laminate flooring

KILL THE clutter

There’s a reason REALTORS® always advise home sellers to remove all clutter when selling their homes: The difference is remarkable. The clutter-free home often looks like a new one entirely, and homeowners even wonder how their home could look that good.

You don’t have to wait to sell your home to make it look better. Plus, clutter can physically and mentally stress us out. By breaking your decluttering down into five-minute sessions, you can slowly conquer your clutter.

Leo Babauta of Zen Habits offers some ways to start:

Designate a spot for incoming papers, and don’t put them anywhere but that spot until you can sort and file them.

Clear one area and designate it your “no-clutter” zone. There is one rule for that area: Nothing can be placed there that’s not actually in use. Everything must be put way. Once you have that, expand to more areas.

Pick up five things and find places for them. These should be things you actually use, but which don’t have a good spot to live.

Pull everything out of a drawer, evaluate it and sort it into three piles: stuff that really goes in the drawer, stuff that belongs elsewhere and stuff to ditch.

Create a “maybe” box. When you’re organizing, you often know exactly which items you want to keep and which you can trash or donate. But sometimes there are items you can’t trash, and yet you’re not sure what to do with them. Put them in the “maybe” box and pull it out every six months to re-evaluate.

Keep it going: After you’ve decluttered, don’t get tempted to buy new things. Instead, create a 30-day list and put any non-essential items you want to buy on it along with the date. If an item has sat on the list for 30 days and you still want to buy it, you can.

THE pre-listing LIST

Completing some quick and easy tasks before listing a home for sale can help reduce stress and save time during the home-selling process.

Clean the House. An important part of selling a home is keeping it clean in anticipation of a showing. Cleaning the home will convey that it’s been well cared for and that the house is less susceptible to any issues caused by neglect.

Finish the Honey-Do List. Some areas of the home, although not typically thought of as areas that would affect a home’s appeal, may be displayed as safety concerns on a home inspection report. Help yourself by replacing burnt-out light bulbs, testing smoke detectors, replacing air filters and unclogging drains.

Check All Outlets. A sampling of electrical outlets will be tested as part of the home inspection to make sure they’re in good working order. Take note of which outlets are not functioning and replace them, or consider hiring an electrician to make sure all outlets and the electrical box are updated and in proper working condition.

Clear Areas for Easy Access. Home inspectors will be looking at the major systems of the home, including the foundation, HVAC systems, electrical systems, plumbing and even the water heater. Making sure they can easily access these areas, including the basement and attic, will save time during the inspection process.

Consider a Pre-Listing Inspection. Hiring experienced and professional home inspectors can save a lot of headaches during the selling process. They will thoroughly go through the home and notify you of any potential issues ahead of listing the property