The home you’ve cared for and loved might seem incomparable to you, but when you sell (or get a home equity loan), someone is going to have to find a comparison.
In the language of real estate and mortgage that is called comps.
Comps help answer the biggest question on your mind and a lender’s mind when you look to sell your house: What’s my home worth?
The answer? It depends.
It’s important to note that home values boil down to educated — and sometimes uneducated — guesses. They are merely opinions, with the one that truly matters being the bank’s. Toward the end of the process, the buyer’s bank needs to approve of the purchase price in order for the loan to be approved.
Before then, however, you have a few ways of gathering information. The best is to consult with a real estate professional who can provide you with a figure based on “comps” — comparative sales. The agent will conduct a comparative market analysis, or CMA, and give you their professional opinion on your home’s potential sales value. This is generally a far better option than relying on your neighbor’s or your uncle’s opinion, as the agent is trained and experienced at comps.
What goes into a CMA? The agent will find recent sales of similar properties in your location; the best comps are within 90 days or less, though if you live in an area that’s less populated, you’ll likely use comps from six months back and sometimes longer.
If your home is ranch style, it should be compared to sales of other ranch homes. A cape or a contemporary is different. Comps also take into consideration the number of bedrooms and bathrooms, the acreage, whether there’s a garage and a basement, and things like central air and the type of heating.
The key is to work with someone who understands your specific market and who has a track record of accurately providing figures. Top-selling agents (not necessarily top listing agents) are generally the ones who do best at this. As a seller’s agent, they know how to price your home to move while also getting you a fair price; as a buyer’s agent, they typically understand how to negotiate well.
A vacation home may be just the ticket if you love to visit sunny climes, the forest, beach, or mountainside.
These days, thanks in part to the sharing economy, more people than ever can afford a second home.
Today you can buy a home at relatively low interest rates, then rent that home out when you are not there.
Homeowners have successfully covered their mortgages and leases by renting out as little as one room thanks to sites like AirBnB.
According to John Banczak, executive chairman of TurnKey Vacation Rentals, for every $100,000 you spend to purchase a vacation home, you should expect yearly rental income of $12,000 to $14,000.
Vacation homes are appealing to owner and vacationer alike. The rate is often less than or equivalent to a hotel, but with the option to spread out more and eat meals in. For locations with popular attractions, owners can visit when they like and rent when they aren’t there.
In 2017, about 12 percent of home buyers purchased vacation homes. According to Economist Outlook, buyers wanted a second home for vacations (42 percent), for future retirement (18 percent), or because real estate prices offered good deals (12 percent). The median household income in 2016 for vacation home buyers was $89,900.
If you’re considering a vacation property, make sure to find a trusted local real estate agent to help you navigate the purchase. The agent will know the area and any local and state contract laws.
It’s also important to find a local person to keep an eye on the property, whether it’s your housekeeper, the agent, or a contractor. If you rent the property regularly, your housekeeper can be your second set of eyes, letting you know how the latest guests treated the property as well as how everything looks overall.
As part of your due diligence, factor in a higher insurance rate for a second home.
Consider installing a home security system for yet another set of eyes as well as a way to make sure the heat has stayed on.
Although homeowner’s insurance is a necessary expense, there are several ways to reduce these costs with or without spending money on improvements, according to Nerd Wallet.
Some of the simplest reductions, such as bundling the home insurance with auto insurance through the same company or improving your credit score, won’t cost a penny and will likely only require a short phone call. Similarly, raising the amount of the deductible on a policy or lowering the maximum payout for possessions can reduce the rate without any upfront cost. According to Bankrate, you can also receive discounts between 1-20 percent for being a nonsmoker, over the age of 55, part of a homeowner’s association, and not having filed a claim in many years.
For those looking to spend money on home upgrades and renovations, there may be discounts available to help offset some of that spending if the changes make the home safer or more durable.
Many older homes, for instance, have older wiring that poses a much more significant risk of catching fire and causing property damage that insurance companies will often grant a 10 percent reduction in premiums to avoid the potential payoff. In fact, home electrical fires cause an average of $659 million in losses each year while a wiring-related issue causes more than half of those reported. Meanwhile, wind and hail caused by powerful weather can wreak havoc on an unprepared or deteriorated roof, and discounts of 5-10 percent can be had for installing newer, impact-resistant roofing material.
Many times, people get home insurance when they first move into a home and forget about it. However, it may be a good time to update your insurance, especially as we get into the winter months in Cypress, TX. It’s important to review your policy when you make changes to your home and your lifestyle, and if you aren’t making a lot of changes, at least review it once a year. If it’s been a while since you reviewed and have made these changes, take out your policy and contact an agent at InsureUS to make sure you are adequately covered.
Home Remodeling: Major remodeling can increase the value of your home, which would mean that you need more coverage.
Big Ticket Items: If you have big-ticket items, such as artwork, electronics, or jewelry, they may not be covered under your insurance. You want to make sure you have enough insurance to cover those items should anything happen.
You Have Stopped Smoking: Smoking can raise your premiums because the chance of a fire is greater. If you have stopped smoking, you may be able to get a break on insurance premiums.
You Have Retired: Retirement might come with an insurance discount because retirees spend more time at home and can spot the signs of a fire more quickly. Retirees also are less likely to be burglarized and can spend more time maintaining their homes.
You Have Installed an Alarm System: An alarm can make it less likely a thief will break in, which may lower your premium.
You Have a New Pet: It’s not good to keep your pet a secret, even if you are worried that your rates may go up, because you want to make sure you are covered if your dog bites someone on the property.
You Have Added a Swimming Pool: A swimming pool can increase your liability risk, so it’s necessary to make sure that you are covered and maybe add some additional insurance.
Contact InsureUS, serving Cypress, TX, to get a quote on homeowners insurance.
If you are thinking about refinancing your home, but concerned about your credit card debt, know that you do have options, but your situation needs to be clarified.
You’ll need to qualify for the new mortgage and that means your credit should be in order. You’ll have to document your income, assets and debts and prove you can make the payments on the new loan.
You must have enough equity in your house to refinance your mortgage and cover your outstanding credit card debt.
If you have owned your home for some years, you might have some happy news about your home value. Home prices have been rising in many locales and homeowners often find they have more equity than they thought.
If you have sufficient equity, then you could do a cash-out refinance. That means you refinance your mortgage for more than you owe and take the difference in cash.
You’ll need at least 20 percent equity to do a cash-out refinance.
It is likely that your new interest rate on a cash-out refinance will be higher than your current one, since interest rates are rising. If that is the case, then you might consider a home equity loan or a Home Equity Line of Credit (HELOC).
A home equity loan has a fixed interest rate on a lump sum of cash.
A HELOC works like a credit card secured by your house. Like a credit card, you have a credit limit that you can spend up to. The interest rate on a HELOC moves up and down with the prime rate.
Most experts agree that for short-term purposes, such as paying off credit cards, a home equity loan or HELOC can be better. That’s because you will pay off those loans faster and not be locked into a higher interest rate for 20 years (or whatever the life of your mortgage is).
You take good care of your home and when you are ready to sell, why have it inspected? After all, the buyer will have an inspection before the deal.
Should you save the $350 to $500 it costs to have an inspection and hope for the best?
Maybe not. It might well pay for a seller have a home inspection before they list.
Sellers who have owned a home for some years might not recognize problems that have cropped up. If they were to keep their home, they would eventually discover and fix these issues. But, during the sale process, home issues can be a nasty surprise and delay or even kill a deal.
The business of selling a home and buying a new one is tricky enough but when a good offer is on the table, at just the time they are buying a new home, sellers don’t want the deal to fall through. Since most deals are contingent on inspection, a potential buyer can always opt out if their own inspection uncovers issues. That starts the sale process over in a big way, with the seller being forced to address problems and the buyer potentially moving on.
Inspectors take a close look at the home’s inner health in 10 areas: Interior and exterior, structure, roofing, plumbing, electrical, heating, air conditioning, ventilation, and fireplaces.
These detailed evaluations can identify the kind of problems that are easily fixed, but might cost the seller money and delays after the buyer’s inspection.
On roofs, for example, inspectors study shingles, flashings, roof drainage, skylights and chimneys. A seller might not want to put on a new roof, but repairing the flashings and roof gutters puts your house in a solid light. Buyers might not expect a new roof, but they don’t want to find leaks.
There are a variety of specific things that a home inspection can look for, depending on individual concerns. For example, a radon inspection checks a home for levels of radioactive gas and takes between two and seven days to complete. Termite inspection looks for damage to the wood structures of a home. With homes that have a well for water, well water testing is another option; for homes with a septic or oil tank, examination of those structures may be part of an inspection as well.
A general inspection should consider the condition of the roof, the water pressure and plumbing, electrical outlets and switches, and the crawl space and attic, according to HGTV.
The rate on a mortgage loan is often the most significant factor in how much an owner will ultimately pay for their home. Monetary policy, market inflation, and the overall economy all play apart in determining when it rises and falls, according to Nerd Wallet. Currently, the United States is experiencing remarkably low rates by historical standards, below five percent in most cases, that contrast harshly with those in the high teens during the early 1980’s. In this country, the Federal Reserve is the foundation of most of the traditional lending system due to their setting of the federal funds rate – the interest rate that banks must charge each other for short-term loans. This base rate then influences longer-term rates between banks, businesses, and personal borrowers like those looking for a 30-year mortgage. During times of expected inflation, the Federal Reserve is likely to raise these rates to protect the value of the dollar by keeping prices in check at the expense of increasing the cost of borrowing money for everyone. These rates can have a compounding ripple effect throughout the economy as well, as businesses will be less likely to want to borrow money for investment when their interest payments become larger than the potential payoff. Slowing business can mean layoffs, suspended raises, and make potential home purchasers less sure about their financial future and ability to afford payments. Often, the housing market and overall economy will move through cycles of low-to-high interest rates that can be impacted by political changes, global events, and natural scarcity of resources. Anyone in the market for a new home should be paying attention to the current mortgage rates as even a fraction of a percentage point can have a dramatic impact on how much they will pay over the life of the loan. Using a 30-year, $300,000 loan as an example, someone with a four percent interest rate will pay a total of $515,609 while someone with a five percent loan will pay $579,767.
Selling a house has hidden costs, but planning ahead can eliminate last minute worries.
According to a new study by real estate research firm Zillow and Thumbtack, an online site matching local professionals to customers, the average cost of covering basic projects – painting, staging your home, carpet cleaning, lawn care and gardening, and local moving costs – was $4,985 for sellers who hire professional help.
The analysis showed a range of an average high of $6,580 in San Jose and a low of $3,720 in Dallas, according to USA Today.
Before you spend money on updating the look of a home, review the foundational elements that make or break a house to see how much you really need to spend.
First look at smaller things. The faucets shouldn’t drip, and all fixtures should be in working order. Windows should not be broken or cracked. Fans should not wobble or make noise.
Next, look at higher price items. The heating and air conditioning should work. Walls and ceilings should be presentable. Appliances should all work. If you can, gather information about the age and repair history of these items.
Then there is the roof. In some hot markets, real estate agents say properties can sell sight unseen. Yet, the roof condition is crucial to getting the best price. Problem is that a new roof is expensive.
If it costs $10,000 to put on a new roof, it could be money well spent. If a buyer has options for similar houses at a similar price with a good roof, it’s unlikely they’ll choose a house they have to re-roof. Even if the house sells with three layers of shingles, chances are the selling price could take a hit for more than the cost of the roof. To your list of repairs, add the cost of decluttering.
Plan yard sales and eBay sales for items of value. These sales might add some cash to your sales budget, but as for bulk clutter removal, they often won’t do much good.
For serious bulk removal, call a trash hauling company. You can usually hire a man and a truck who will take every last item out of a storage area.
Naturally, you will need to pick out the items that you genuinely want to move. You could repair those three old string trimmers. You could use those 2x4s somewhere, but the question is do you really want to move them?
A decluttered property and outbuildings are crucial to a good sales price.
Experts usually recommend neutral paint throughout the inside, although many homeowners ignore this expense.
Carpet cleaning can often suffice, in lieu of replacement, but be sure to add the cost to your estimate.
Don’t overlook yard work and house cleaners, both of which put your house in a good light.
Landscape and lighting go hand in hand when you are trying to beautify, as well as protect, your home. In Cypress, TX, the agents of InsureUs are constantly working with their clients to make sure they understand the many ways they can minimize their potential risk and improve their home security.
Landscape designers use ambient lighting to spotlight focal points. In the process of illuminating your landscaping, it also sheds enough light to be able to identify possible intruders that may be lurking around your property. When landscaping is placed directly beneath or adjacent to windows or other entryways, the additional lighting is a deterrent for potential criminals who may be looking for a way into your home. The lighting doesn’t have to be overpowering to be effective and can be set up to turn on and off through the use of a motion sensor.
The type of materials and foliage you include in your landscaping can also make it difficult for intruders to gain access to your home. Trellises, thorny bushes or prickly succulents are ideal if you want an added layer of protection. When coupled with the benefits of ambient lighting, both can be extremely effective at turning away intruders. Landscape designers work to help homeowners create beautiful, landscaped areas that double as protective barriers against both human and animal intruders.
If you live in the Cypress, TX area and are interested in learning about more about ways to increase your home security, call the agents of InsureUS. They can help you to identify different ways that you can use to protect your home and family from financial loss. Call their office today to schedule an insurance evaluation.
Buying a new house is easy: Dive into some websites. Pick a house you like. Press “Add to Cart” and 10 minutes later you’re picking new furniture.
…Nah. Doesn’t work that way.
Like all pivotal decisions in life, the fun part is rarely the most important.
The best way to buy a home is to start answering the dull questions first.
Start by building a basic financial profile about yourself: First, pull your credit report and get your credit score. You can do this at freecreditreport.com or at other sites, such as creditkarma.com. If your score is under 620, you’ve got some work to do on your credit. Start by making absolutely sure every account is paid on time, every time, not one day late. During your credit building period, make sure you don’t apply for loans on cars or anything else. Do everything you can to pay off any loans or credit cards you may have.
With a credit score of at least 620 in hand, start gathering documents that show how much money you make and what your expenses are. You’ll need pay stubs and a list of your bills.
You will also need cash.
A good rule to remember: The more cash you have, the better the terms of any deal you make. You’ll have more flexibility and loans will cost you less, especially if you also have a high credit score.
But how much is enough? Down payments vary depending on the type of loan. With an FHA loan, for example, you might need no more than 3.5 percent of the selling price. But you’ll also need some cash available for closing costs — maybe up to 2.5 percent or more.
One of the best places to start the process is with a lender. Gather your financial information and chat with your bank or credit union to find out how much house you could possibly afford. They will tell you how much cash you will need. Once you have the cash, get a pre-approval from your lender. Then the fun part begins. Visit some websites and find your best home.
Good idea: Start small with a home, buying one that is easy to afford with a short mortgage. Then, add some elbow grease to fix it up to increase its value, while paying off the mortgage. Soon, you’ll have value in the house and you can sell with more money to put down on your next house. This is the way wealth is built over time.