Category: Real Estate

How bank stocks could weather a rate hike from the Federal Reserve

The fate of U.S. bank stocks took an interesting twist Friday, when the market plunged 2.5%, its worst one-day dive since late June. While analysts say a Fed rate hike and higher rates overall would be welcome news for banks’ battered bottom lines. USA TODAY

The fate of U.S. bank stocks took an interesting twist Friday, when the market plunged 2.5%, its worst one-day dive since late June. Sparking the market’s distress, after a long stretch of  summer calm, was a speech from Federal Reserve Bank of Boston president Eric Rosengren that suggested the nation’s central bank could hike interest rates soon.

While analysts say a Fed rate hike and higher rates overall would be welcome news for banks’ battered bottom lines, the specter of of higher borrowing costs slowing economic activity was viewed as trouble for most sectors.

But barring a broad stock market decline, bank stocks could perform better than the Standard & Poor’s 500 index as they did last month. In August, the KBW Nasdaq Bank Index, made up of 24 big banks, including Bank of America, Citigroup, JPMorgan and Wells Fargo — gained nearly 7%, vs. a fractional loss for the broad market gauge.  The bank index, however, is down 2.1% in 2016, vs. a 4.1% gain for the S&P 500.

Here are a few things working in bank stocks’ favor:

* Higher rates, bigger profits. Banks do better when interest rates are higher, and fare best when the “spread” between short-term rates and long-term rates widens.

If a bank pays out a miserly 0% interest on checking account deposits, but short-term rates set by the Fed are zero, the bank makes no money. But if a bank charges a home buyer 4% for a 30-year mortgage and pays out 0% in interest to depositors it pockets the 4 percentage point spread. If long-term rates rise further, and the bank can charge, say, 5% for a mortgage, its spread — or profit — grows to 5 percentage points.

“Any increase in rates from the Fed would boost earnings estimates for banks,” says Fred Cannon,  director of research at Keefe, Bruyette & Woods.

* Lower P-Es, better value. Many Wall Street pros say the U.S. stock market is overvalued by a common metric: the price-to-earnings ratio, or PE. But bank stocks are cheaper relative to the market. After Friday’s stock selloff, the S&P 500 was trading at 18 times its 2016 estimated earnings, compared to an earnings multiple of less than 14 for the KBW Nasdaq Bank Index, Cannon noted.

“When you look at other segments of the market, the banks are certainly in the cheaper tranche,” says Chris Verrone, a partner at Strategas Research Partners. Bank stocks could see fresh, sizable cash flows into the sector if the rally continues. Last month, $1.2 billion flowed into financial funds, the most in 10 months, Bank of America Merrill Lynch says.

* Past laggard, future leader. Investors are also emboldened when they see bank stocks fare better than the S&P 500 on a big down day like Friday. While the broad market fell 2.5%, the KBW Nasdaq Bank Index fell just 1%. On top of that, 94% of bank stocks have posted better returns than the S&P 500 over the past 30 days, says Verrone.

Improve Your Credit Score: Avoid These 6 Credit Card Mistakes — Money Matters — Trulia Blog

Maintain a healthy score by avoiding these common credit pitfalls.

Whether you’re looking to rent an apartment or start a cellphone contract, your credit score matters. Lenders and third parties look to your score to indicate if you’re a risky borrower, and it can determine whether you’re able to get application approval for that Nashville, TN, apartment — or whether you’ll be living in Mom and Dad’s basement for another year.

Clearly, your credit score is an important component of your financial health — and your credit card habits and history are major contributors to this score. But the average credit score is a lukewarm 667, according to a recent Experian study. If you’re looking to improve your credit score — or simply maintain the score you have — make sure to avoid these six credit card pitfalls.

1. Racking up a high credit card balance

Even if you’re paying off your credit card bills in full each month, you may still be hurting your score by how much you’re spending. Your debt-to-credit utilization ratio — how much debt you’ve accumulated on your credit cards divided by the credit limit on the sum of your accounts — comprises 30% of your credit score. If you want a good credit score, you need to keep your credit utilization ratio relatively low. A good rule of thumb: “Shoot to keep your balance to no more than 10% of your credit limits,” says independent credit expert John Ulzheimer.

2. Developing a habit of making late payments

Payment history comprises a whopping 35% of your score. Translation: Even missing just one credit card payment can substantially hurt you. Fortunately, there are some steps you can take to prevent this. One option is to set up automatic bill pay by linking your credit card to a checking account. Alternatively, you can set up text message or email alerts to remind you when a payment is due. Still paying by snail mail? “Allow plenty of time for the bill to get there,” says Bill Hardekopf, CEO at LowCards.com. “Problems with mail delivery are not an acceptable excuse to an issuer for your late payment.”

3. Not checking your credit report

Every 12 months, you’re entitled to a free copy of your credit report from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Because errors can appear on your report for reasons outside your control — such as someone sharing the same name as you and the bureaus mixing up your accounts — you need to vet each report. In fact, one in four Americans has spotted errors on their credit reports, according to a 2013 Federal Trade Commission survey. Because it can take time to get errors removed, you’ll want to be proactive and contact the credit bureau immediately if you notice an issue. Take note: Your credit report includes only your credit history — not your numerical credit score. (You can use myFICO.com’s free score estimator to get a rough idea of your score.)

4. Opening too many credit cards at one time

Every time you apply for a credit card, you trigger a “hard inquiry” on your credit report, which dings your credit score by up to five points. Although a slight ding may not seem like a big deal, opening multiple cards back to back could significantly damage your score. Also, each time you open a new credit card, you shorten the average age of your credit accounts; this can hurt your length of credit history, which constitutes 15% of your score.

5. Closing old credit card accounts

If you close an account, it reduces the average age of your accounts and lowers your available credit limit — a double blow to your score. Make sure you charge a purchase to each credit card at least once per quarter; if you don’t, the credit card company could perceive the account as inactive and potentially close it without giving you advance notice, says Beverly Harzog, a consumer credit expert and author of The Debt Escape Plan.

6. Carrying a balance

OK, this tip doesn’t boost your credit score, but it will save you money, so we feel compelled to mention it. Carrying a balance from month to month could mean you’re effectively wiping out any points or cash back you earn — even on a rewards card. “[Carrying a balance] doesn’t seem like a big deal when the debt is small, but compound interest on the balance can make your debt go from small to huge before you know what’s happening,” says Harzog.

The moral: Pay off your credit card balances in full and on time each month. “Credit cards are a tool to help build credit,” says Harzog. “They should not be used as a substitute for a personal loan.”

1. Racking up a high credit card balance

Even if you’re paying off your credit card bills in full each month, you may still be hurting your score by how much you’re spending. Your debt-to-credit utilization ratio — how much debt you’ve accumulated on your credit cards divided by the credit limit on the sum of your accounts — comprises 30% of your credit score. If you want a good credit score, you need to keep your credit utilization ratio relatively low. A good rule of thumb: “Shoot to keep your balance to no more than 10% of your credit limits,” says independent credit expert John Ulzheimer.

2. Developing a habit of making late payments

Payment history comprises a whopping 35% of your score. Translation: Even missing just one credit card payment can substantially hurt you. Fortunately, there are some steps you can take to prevent this. One option is to set up automatic bill pay by linking your credit card to a checking account. Alternatively, you can set up text message or email alerts to remind you when a payment is due. Still paying by snail mail? “Allow plenty of time for the bill to get there,” says Bill Hardekopf, CEO at LowCards.com. “Problems with mail delivery are not an acceptable excuse to an issuer for your late payment.”

3. Not checking your credit report

Every 12 months, you’re entitled to a free copy of your credit report from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Because errors can appear on your report for reasons outside your control — such as someone sharing the same name as you and the bureaus mixing up your accounts — you need to vet each report. In fact, one in four Americans has spotted errors on their credit reports, according to a 2013 Federal Trade Commission survey. Because it can take time to get errors removed, you’ll want to be proactive and contact the credit bureau immediately if you notice an issue. Take note: Your credit report includes only your credit history — not your numerical credit score. (You can use myFICO.com’s free score estimator to get a rough idea of your score.)

4. Opening too many credit cards at one time

Every time you apply for a credit card, you trigger a “hard inquiry” on your credit report, which dings your credit score by up to five points. Although a slight ding may not seem like a big deal, opening multiple cards back to back could significantly damage your score. Also, each time you open a new credit card, you shorten the average age of your credit accounts; this can hurt your length of credit history, which constitutes 15% of your score.

5. Closing old credit card accounts

If you close an account, it reduces the average age of your accounts and lowers your available credit limit — a double blow to your score. Make sure you charge a purchase to each credit card at least once per quarter; if you don’t, the credit card company could perceive the account as inactive and potentially close it without giving you advance notice, says Beverly Harzog, a consumer credit expert and author of The Debt Escape Plan.

6. Carrying a balance

OK, this tip doesn’t boost your credit score, but it will save you money, so we feel compelled to mention it. Carrying a balance from month to month could mean you’re effectively wiping out any points or cash back you earn — even on a rewards card. “[Carrying a balance] doesn’t seem like a big deal when the debt is small, but compound interest on the balance can make your debt go from small to huge before you know what’s happening,” says Harzog.

The moral: Pay off your credit card balances in full and on time each month. “Credit cards are a tool to help build credit,” says Harzog. “They should not be used as a substitute for a personal loan.”

– See more at: http://www.trulia.com/blog/improve-your-credit-score-avoid-credit-card-mistakes/?cid=soc|twitter|evergreen|truliablog_bmkt&linkId=28603620#sthash.htvC4PU3.dpuf

 

1. Racking up a high credit card balance

Even if you’re paying off your credit card bills in full each month, you may still be hurting your score by how much you’re spending. Your debt-to-credit utilization ratio — how much debt you’ve accumulated on your credit cards divided by the credit limit on the sum of your accounts — comprises 30% of your credit score. If you want a good credit score, you need to keep your credit utilization ratio relatively low. A good rule of thumb: “Shoot to keep your balance to no more than 10% of your credit limits,” says independent credit expert John Ulzheimer.

2. Developing a habit of making late payments

Payment history comprises a whopping 35% of your score. Translation: Even missing just one credit card payment can substantially hurt you. Fortunately, there are some steps you can take to prevent this. One option is to set up automatic bill pay by linking your credit card to a checking account. Alternatively, you can set up text message or email alerts to remind you when a payment is due. Still paying by snail mail? “Allow plenty of time for the bill to get there,” says Bill Hardekopf, CEO at LowCards.com. “Problems with mail delivery are not an acceptable excuse to an issuer for your late payment.”

3. Not checking your credit report

Every 12 months, you’re entitled to a free copy of your credit report from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Because errors can appear on your report for reasons outside your control — such as someone sharing the same name as you and the bureaus mixing up your accounts — you need to vet each report. In fact, one in four Americans has spotted errors on their credit reports, according to a 2013 Federal Trade Commission survey. Because it can take time to get errors removed, you’ll want to be proactive and contact the credit bureau immediately if you notice an issue. Take note: Your credit report includes only your credit history — not your numerical credit score. (You can use myFICO.com’s free score estimator to get a rough idea of your score.)

4. Opening too many credit cards at one time

Every time you apply for a credit card, you trigger a “hard inquiry” on your credit report, which dings your credit score by up to five points. Although a slight ding may not seem like a big deal, opening multiple cards back to back could significantly damage your score. Also, each time you open a new credit card, you shorten the average age of your credit accounts; this can hurt your length of credit history, which constitutes 15% of your score.

5. Closing old credit card accounts

If you close an account, it reduces the average age of your accounts and lowers your available credit limit — a double blow to your score. Make sure you charge a purchase to each credit card at least once per quarter; if you don’t, the credit card company could perceive the account as inactive and potentially close it without giving you advance notice, says Beverly Harzog, a consumer credit expert and author of The Debt Escape Plan.

6. Carrying a balance

OK, this tip doesn’t boost your credit score, but it will save you money, so we feel compelled to mention it. Carrying a balance from month to month could mean you’re effectively wiping out any points or cash back you earn — even on a rewards card. “[Carrying a balance] doesn’t seem like a big deal when the debt is small, but compound interest on the balance can make your debt go from small to huge before you know what’s happening,” says Harzog.

The moral: Pay off your credit card balances in full and on time each month. “Credit cards are a tool to help build credit,” says Harzog. “They should not be used as a substitute for a personal loan.”

– See more at: http://www.trulia.com/blog/improve-your-credit-score-avoid-credit-card-mistakes/?cid=soc|twitter|evergreen|truliablog_bmkt&linkId=28603620#sthash.htvC4PU3.dpuf

1. Racking up a high credit card balance

Even if you’re paying off your credit card bills in full each month, you may still be hurting your score by how much you’re spending. Your debt-to-credit utilization ratio — how much debt you’ve accumulated on your credit cards divided by the credit limit on the sum of your accounts — comprises 30% of your credit score. If you want a good credit score, you need to keep your credit utilization ratio relatively low. A good rule of thumb: “Shoot to keep your balance to no more than 10% of your credit limits,” says independent credit expert John Ulzheimer.

2. Developing a habit of making late payments

Payment history comprises a whopping 35% of your score. Translation: Even missing just one credit card payment can substantially hurt you. Fortunately, there are some steps you can take to prevent this. One option is to set up automatic bill pay by linking your credit card to a checking account. Alternatively, you can set up text message or email alerts to remind you when a payment is due. Still paying by snail mail? “Allow plenty of time for the bill to get there,” says Bill Hardekopf, CEO at LowCards.com. “Problems with mail delivery are not an acceptable excuse to an issuer for your late payment.”

3. Not checking your credit report

Every 12 months, you’re entitled to a free copy of your credit report from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Because errors can appear on your report for reasons outside your control — such as someone sharing the same name as you and the bureaus mixing up your accounts — you need to vet each report. In fact, one in four Americans has spotted errors on their credit reports, according to a 2013 Federal Trade Commission survey. Because it can take time to get errors removed, you’ll want to be proactive and contact the credit bureau immediately if you notice an issue. Take note: Your credit report includes only your credit history — not your numerical credit score. (You can use myFICO.com’s free score estimator to get a rough idea of your score.)

4. Opening too many credit cards at one time

Every time you apply for a credit card, you trigger a “hard inquiry” on your credit report, which dings your credit score by up to five points. Although a slight ding may not seem like a big deal, opening multiple cards back to back could significantly damage your score. Also, each time you open a new credit card, you shorten the average age of your credit accounts; this can hurt your length of credit history, which constitutes 15% of your score.

5. Closing old credit card accounts

If you close an account, it reduces the average age of your accounts and lowers your available credit limit — a double blow to your score. Make sure you charge a purchase to each credit card at least once per quarter; if you don’t, the credit card company could perceive the account as inactive and potentially close it without giving you advance notice, says Beverly Harzog, a consumer credit expert and author of The Debt Escape Plan.

6. Carrying a balance

OK, this tip doesn’t boost your credit score, but it will save you money, so we feel compelled to mention it. Carrying a balance from month to month could mean you’re effectively wiping out any points or cash back you earn — even on a rewards card. “[Carrying a balance] doesn’t seem like a big deal when the debt is small, but compound interest on the balance can make your debt go from small to huge before you know what’s happening,” says Harzog.

The moral: Pay off your credit card balances in full and on time each month. “Credit cards are a tool to help build credit,” says Harzog. “They should not be used as a substitute for a personal loan.”

– See more at: http://www.trulia.com/blog/improve-your-credit-score-avoid-credit-card-mistakes/?cid=soc|twitter|evergreen|truliablog_bmkt&linkId=28603620#sthash.htvC4PU3.dpuf

Simple, Inexpensive Upgrades You Can Make Before Selling Your Home

When you’re trying to sell your home, you want to squeeze as much value out of it as you can. Some upgrades, like a kitchen remodel, can maximize your value, but they’re also time-consuming and expensive. Here are a few simpler, cheaper upgrades you can make.

Over at Credit.com, writer Sheiresa Ngo lists a number of inexpensive ways to boost your home’s value. Doorknobs, for example, are easy enough to swap out and they can make a big difference (it’s one of the first things I swapped out when I bought my home). That goes for cabinet and drawer handles, too. Ngo offers a suggestion for picking out the right knobs:

Home renovation expert Brittany Cramer said one thing you should keep in mind when updating door knobs is the home’s era. “One of my favorite pieces of advice to give folks is to consider the era of the home before purchasing and installing accessories. You might be a lover of that wrought iron, Tuscan look, but will that style suit your home?” said Cramer.

Lighting is another area that can make a huge difference, and while light fixtures can get pricey, the payoff might be worth it if your current fixtures are really outdated. Paint, of course, can completely change a room, too. You do, however, want to make sure to pick the right colors.

Home Owners Rush to Lock in Lower Rates | Realtor Magazine

The latest drop in fixed-rate mortgages this week is spurring a boom in refinancing activity among home owners.

“The 30-year fixed-rate mortgage fell 2 basis points to 3.44 percent this week,” says Sean Becketti, Freddie Mac’s chief economist. “As mortgage rates continue to range between 3.41 and 3.48 percent, many are taking advantage of the historically low rates by refinancing. Since the Brexit vote, the refinance share of mortgage activity has remained above 60 percent.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 8:

• 30-year fixed-rate mortgages: averaged 3.44 percent, with an average 0.6 point, falling from last week’s 3.46 percent average. A year ago, 30-year rates averaged 3.90 percent.
• 15-year fixed-rate mortgages: averaged 2.76 percent, with an average 0.5 point, dropping from last week’s 2.77 percent average. Last year at this time, 15-year rates averaged 3.10 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.81 percent, with an average 0.4 point, falling from last week’s 2.83 percent average. A year ago, 5-year ARMs averaged 2.91 percent.

First Time Homebuyers: The Road to Buying a Home

Buying your first home will be one of the most exciting times in your life, but it can also be a very confusing process. The entire home buying process is far more complicated than just searching for the perfect house in your area. These are the five steps that you must follow on the road to buying your first home.

Review Your Financials

Buying a home is a huge investment, so you need to be absolutely sure that you can afford to make such a large purchase. Adding up all of your expected expenses after moving into a new house is the best way to see if you can fit everything in your budget. It is also a good idea to make sure you have extra room in the budget for savings and emergency expenses.

Get Pre-approved for a Mortgage

You need to get pre-approved for a mortgage before shopping for a new home. The concrete budget set by a pre-approved mortgage makes it much easier to narrow down your choices. You also do not have to worry about having your loan application denied after falling in love with a house. Getting multiple mortgage rate quotes from companies like Premium Mortgage Corp will let you get the best deal possible.

Hire an Experienced Realtor

Buying a house by yourself is going to be overwhelming, so you need to hire an experienced realtor. They will be able to handle all of the paperwork, find the best homes in your area and negotiate the purchase price. You do not have to worry about paying an expensive commission because it will be paid by the seller of your new house.

Request Utility Bills on Home

Failing to properly account for utility bills can completely destroy your monthly budget. Every house is different, so you need to request copies of recent utility bills from the utility companies. You do not want to get into a new house only to learn that you can’t afford the electricity and heating bills each month.

Don’t Forget the Home Inspection

Even if the house looks brand new, you should always request an inspection before finishing all of the paperwork. An inspection will let you know if there are any major problems that need to be addressed. Force the seller to pay for repairs or lower the price if there any problems found in the inspection.

Buying a house is going to be the biggest financial decision of your life, so you need to make sure everything goes smoothly. If you follow these five tips, then you will have nothing to worry about during the home buying process.

5 Home Buying Myths: Set Your Clients Straight | Realtor Magazine

Home buyers get a lot of advice from friends and family – some good, some bad. A lot of myths can pop up and negatively guide their home purchasing experience. Make sure your clients don’t fall for one of these common buying falsehoods.

1. The only upfront cost is the down payment.

Buyers need to be prepared for several expenses – everything from fees, taxes, costs for inspections, credit reports, insurance, and others. Closing costs can be anywhere from 3 percent to 6 percent of the purchase price. Those costs can fluctuate greatly depending on the state you live in too.

2. Just looking for a house casually is not a big deal.

Some people may want to just start looking at homes to get a feel for the area, before they even sit down with a REALTOR®. But they could be setting themselves up for major heartbreak. “A buyer might be viewing homes that are in a higher or lower price range than what they are qualified for,” Connie Antoniou, a broker associate in Barrington, Ill., told realtor.com®. Home shoppers – even at the earliest stages – should get pre-approved for a mortgage so they know their budget from the get-go and don’t waste time looking at homes that are out of their price range.

3. You must have a 20 percent down payment.

A 20 percent down payment will help a buyer avoid paying private mortgage insurance. But 20 percent down isn’t required. Many lenders will still qualify a buyer for home loans with 10 percent or 5 percent down. Some buyers can even qualify for only 3.5 percent down with a Federal Housing Administration loan. There are many options for down payment assistance that lenders can explore with a buyer who has a limited amount to put down.

4. Schools shouldn’t matter if you don’t have kids.

“The neighborhood you choose matters – both now and later when you might consider selling,” notes the realtor.com® article. “Even if you don’t have children, good schools are a sign of a good neighborhood.” Buyers should explore all factors with their REALTOR® on items that could influence their homes appreciation and desirability so they don’t run into trouble later on one day when they try to sell.

5. You don’t need a home inspection.

When the housing market is extremely competitive, some home shoppers may be willing to waive the home inspection in order to get the home they want. “But beware: sellers are banking on your skipping this crucial step,” the realtor.com® article notes. “It means you’ll get the home as is, including any and all problems that come with it. And sometimes those problems aren’t exactly visible.”

Home equity lines of credit on the rise

Home loans in the U.S. are down from this quarter last year, according to data out Thursday from the firm ATTOM Data Solutions (also known as RealtyTrac). That decline is mostly driven by a steep decrease in refinancing, but the numbers are offset by another area of lending that’s on the rise: the home equity line of credit.

 

 

The concept is simple: A homeowner in need of cash opens up a line of credit with the house as collateral.

 

 

“It’s the home as piggy bank,” said Andrea Lee Negroni, a professor at the Washington College of Law at American University. She said home equity lines of credit make sense for some people. Banks right now are offering very low interest rates (although the rates on these loans are floating), and home values are on the rise.

 

 

“Their house is worth more than they owe on it, they need a source of money to buy something else,” she said.

 

 

As home prices have climbed back up in the U.S., banks and lenders have been pushing this form of loan more aggressively. A recent TV ad for a home equity line of credit suggested using the money for remodeling, college tuition or even vacation.

 

 

But Negroni also warned we saw the same effect over a decade ago, when home values were sky-high. When sketchy lending practices crashed the economy and home values tanked, people who had borrowed money for that special vacation or college tuition ended up losing their homes.

 

 

Daren Blomquist with ATTOM said now, home equity lines of credit are making a steady comeback.

 

 

“This has been a long-term trend really over the past four years,” he said.

 

 

The hottest areas for growth are anywhere with exploding home values, with Dallas, Denver and Seattle among the leaders. He said people who bought houses at the low point a few years ago are often the ones who have access to these loans, because their houses have appreciated so much.

 

 

“Those buyers are sitting pretty,” he said.

 

 

Even so, this type of lending still isn’t half what it was 10 years ago, perhaps because there’s still some nervousness — and, when it comes to lending practices, there’s also a lot more stringent regulation.

4 Important Property Buying Tips

Stay Within Your Budget – Don’t make impulse decisions

One mistake many potential property owners make is signing a deal for property that is beyond the sum of money they had set aside. Don’t do this. If you’re out and about searching for land or a house to buy and you come across one that has more features than the one you had planned and it’s “slightly” overpriced don’t give in and make a decision in the heat of the moment. Many new property owners are victims to spontaneous decision making and have ended up buying property worth more than their savings only to be threatened with foreclosure since they can’t afford to pay the full costs. Stay within your budget and you’ll have no regrets.

Clean Up Your Credit

This is for individuals who can’t afford to make full cash payments. You’re going to need a mortgage if you plan on buying a house. Some financial institutions may not grant you one if you have a shady credit history. The best thing to do before you go out property hunting is to acquire your credit report and clean it up as best as you can. Pay any outstanding balances and make sure you know all the facts on your report. There are companies you can hire to fix any credit problems that might deter banks and other institutions from granting you a mortgage plan. When push comes to shove, hire these specialists to smoothen the process for you.

Hire an inspector

I’m not talking about the police here. I’m talking about home appraisal specialists. More often than not people tend to accept property prices blindly and as a result they often end up overpaying. To avoid making unnecessary expenditures take the initiative to hire a home inspector to inspect the home or land and provide you with an accurate estimate of the property’s value. On top of determining a property’s true worth, inspectors can also point out areas in the property that might require repairs and maintenance with time. You can use this information to ask for a much lower price for the property in question.

Consider the future.

What will be the value of the property in two years? What about five years? Is it going up or is it going down? There might be nothing wrong with the home or land you plan on purchasing but you can’t really predict the future. What if you decide to relocate and have to sell it. Will you make a profit or a loss? To avoid losing money make sure you buy property in a location that is highly developed or has great development potential. This way, you’re guaranteed to get more money than what you paid for should you decide to flip your property

Bad Habits That May Ruin a Home | Realtor Magazine

Certain home owner habits could actually be harming the home, and can lead to major home improvement projects later on. This Old House recently featured a list of several bad home owner habits to avoid, including:

Slamming the front door

Slamming the heavy front door can push it out of alignment. Eventually, the door may get really tough to open and even have a gap between the trim and jamb that could allow moisture and cold air to seep in.

Fix: Replace the existing hinges of the door with self-closing ones so that the door can softly close without slamming.

Never lifting up outdoor rugs.

Outdoor rugs with rubber or vinyl backings shouldn’t be left in place. They can trap water and lead to mold and mildew.

Fix: Select an open-weave rug that allows rainwater to evaporate and air to circulate. Also, rinse the rug with a hose occasionally and then hang it out to dry.

Failing to clean the gutters.

Fallen leaves, pine needles, branches, and even the neighbor’s tennis ball can end up clogging your gutter and prevent water from properly flowing through. Water could then either back up or dump along the foundation and seep into cracks and crevices.

Fix: Clean your gutters before the spring rains. Check them in the winter for any ice or snow damage. Consider mesh gutter guards to help prevent clogs.

Flushing “flushable wipes.”

Pre-moistened, flushable wipes may not be so good to flush down your toilet after all. Flushing them could cause a plumbing problem, according to This Old House. The nonwoven fabric from the wipes may collect with grease and other materials and lead to a clog.

Fix: Place a covered trash bin in the bathroom to dispose of the wipes instead. Stick to traditional toilet paper.

Closing vents.

Shutting vents to try to push air to other rooms to cool or heat may end up doing more harm than good. You could cause “a pressure imbalance in the ducts that can make the furnace work harder or the cooling coil freeze over,” according to This Old House article.

Fix: An HVAC contractor can install branch dampers in the main areas of your ductwork to force cooler air to the second floor in the summer and warmer air to the ground floor in the winter.

Using too much drain cleaner.

Clog-dissolving liquids or crystals may help unclog a septic system. But too much of it may lead to less of the essential bacteria needed to break down the waste continually.

Fix: When you first get a clog, pour some boiling water in and flush. For more pesky clogs, try a mechanical cleaning with a closet auger snake – which according to the article is less damaging than drain-clearing chemicals. If you do use drain cleaner, use them sparingly.

5 Tax Benefits of Owning a Second Home | Realtor.com®

There are tons of benefits that come with owning a second home: novelty and adventure, a place to escape and unwind, an opportunity to create memories that last a lifetime, a valuable tool to make vacation-craving friends like you a whole lot (for better or for worse).

But there’s another benefit that’s often overlooked: the tax breaks.

You already know that owning a home usually offers some tax deductions. But what if you own two? Or three? What if you’re a regular Donald Trump (back in his real estate, meat magnate heyday, of course)?

Since we know you won’t mind a little extra cash to spend while soaking in your surroundings during your next getaway, we thought we’d tell you how to reap the fruits of your second-home purchase.

1. Mortgage interest—yes, again

When it comes to owning a second home, the interest on your mortgage is deductible. The same rules that come with writing off mortgage interest for your first home apply to your second.

In fact, you can write off as much as 100% of the interest you pay on up to $1 million of debt, which includes total debt taken on to pay for both homes, as well as money spent on improving the properties. (That’s not up to $1 million for each property—just up to $1 million in total.)

2. Home improvements

Is your second home a fixer-upper? If you want to spend the off-season making improvements to your hideaway, you can deduct the interest on a home equity loan or line of credit.

But there are a couple of exceptions.

For starters, there will be a limit on the amount you can deduct if the home equity loan on your main or second home is more than $50,000 if filing single or $100,000 if married or filing jointly.

Second, the amount you can deduct has a limit if the mortgage is more than the fair market value of the home, says Gil Charney, director of The Tax Institute at H&R Block.

For example, let’s say a taxpayer has a mortgage of $220,000 and takes out a home equity loan of $65,000. The property’s fair market value is $275,000. Since the difference between the fair market value and the mortgage is $55,000, then $55,000 of the home equity loan can be deducted, not the full $65,000.

3. Property taxes

You can also deduct your second home’s property taxes, which are based on the assessed value of the home. That’s good news. Even better news? Unlike the mortgage interest tax deduction, there’s no dollar limit on the amount of real estate taxes that can be deducted on any number of homes owned by the taxpayer.

But beware: Taxpayers who can afford two homes are likely to land in a higher tax bracket—which means slimmer pickings for tax savings. For example, in 2016, a married couple whose gross income exceeds $311,300 would have limits on the types of itemized deductions they could take.

4. Renting out your home

 

If you rent out your second home for 14 days or less over the course of a year, that rental income is tax-free—and there’s no limit to what you can charge per day or week. Score!

But if you’re hoping to put your secondary digs on Airbnb or another rental site for more than 14 days during the year, be prepared to do some heavy math come tax time.

 

You’ll want to figure out the number of days you rent your home and divide that by the total number of days your home was used—whether it was you or a renter staying there. (The total number of days that the home was vacant doesn’t fall into this equation.)

For instance, let’s say you rented out your vacation home for 30 days within a year, and vacationed in your home for 90 days.

We’ll divide 30 (the days you rented it out) by 120 (the total number of days the home was used). The result: 25% of your rental-related expenses—which could range from utilities to the cost of a property manager—can be deducted. Now, if your home is losing value, that same percentage (in this example, 25%) of depreciation costs can also be deducted.

Here’s the caveat, Charney explains: Depreciation costs can be deducted only if there is rental income remaining after taking into account other deductions, such as mortgage interest, property taxes, and direct expenses tied to renting your home—like agent fees or advertising.

5. When it’s time to sell

Maybe you bought a far-off hideaway that you’re lucky to visit a couple of times a year. Or perhaps your vacation home is just a quick drive away, and you spend every possible moment there.

If it’s the latter—and you don’t already know which of your homes is your primary residence and which is the second home—now’s the time to figure it out. Distinguishing between the two can have big tax implications when it comes time to sell.

That’s because a capital gain of up to $250,000 (or $500,000 for taxpayers who are married/joint filers) on the sale of the principal residence may be excluded from taxable income.

Your principal—or primary—residence is the home you used most during the five years prior to the sale. But other factors—such as your job’s location, voter registration address, and banking location—could also come into play. Among other requirements, you must own and use that principal residence for at least two of the five years before the home is sold.

We know—that’s a lot of heavy stuff to take in. But you knew your second home would pay off in more ways than one, right? Now, hurry up and file your tax return—so you can escape to your happy place and forget about burdensome things. Like taxes.