Category: Real Estate

Why a Weaker Economy Shouldn’t Scare You | Realtor Magazine

A disappointing jobs report last week revealed that new jobs hit a five-year low in May. While that’s no reason for celebration, there is a silver-lining for the housing market.

It’s likely that the Federal Reserve will not raise interest rates later this month. In fact, the Fed may not raise rates for a while now, which could be a boon for home shoppers looking to lock in historically low mortgage rates.

“The real beneficiaries are people who are in the process of buying a home this spring or summer,” says Jonathan Smoke, realtor.com®’s chief economist. “They can buy more of a home with the same amount of payment, or they have an easier time qualifying” for a loan.

As of Friday, the 30-year fixed-rate mortgage averaged 3.7 percent, according to realtor.com® data. After the jobs report on Friday, lenders started coming in with much lower rates – in some cases, about an eighth of a point lower, says Matt Graham, CEO of MBS live.

Every percentage counts in mortgage rates. For example, just half a percentage point off the interest rate of a 30-year fixed-rate mortgage on a $200,000 home could equal a $56 per month savings, Graham says. Over 30 years – the lifetime of the loan – that savings could equate to thousands.

Don Frommeyer, CEO of the National Association of Mortgage Brokers, told realtor.com® that he doesn’t expect lower mortgage rates to translate into more loan applications, however. That said, more of those applications likely will be approved if mortgage rates continue to fall because interest rates influence how much borrowers have to pay each month to pay back their loans. The smaller the payments, the lower their debt-to-income ratios will be.

Selling Home With Kids | POPSUGAR Moms

Everyone knows that moving is about the most stressful thing you can do (as someone who lived in four cities and 10 apartments in my 20s, I can certainly confirm it). But add little kids to the mix, and the whole scenario goes from tough to downright terrible. About four months ago, my husband and I decided our family was ready for a new house. We weren’t looking to move far, just to the neighboring town a couple of miles away, where many of our friends live and where our daughter could start kindergarten in the Fall with her preschool pals. Even if we are so-so about our current location, we absolutely love our old house, and the search for new one that could beat it was rough. Seriously, why is it that house hunting always sounds fun in theory but totally sucks in reality? And why aren’t Chip and Joanna Gaines available to help us all?

Eventually, after viewing dozens of duds and going under contract on our dream fixer-upper that we found out also came with 800 square feet of black mold (um, no thank you), we found one that checked off most of the must haves on our list and came with an huge, brand-new kitchen that had me at six burners and a hood. We were ready and excited to move on to the new house and say goodbye to our old one. Then we realized we had to sell our cherished first family home, and the panic set in. If anything is more stressful than finding a new house with two small children (ours are 2 and 5), it’s got to be trying to sell the old one, which your kids, if they’re anything like mine, seem to have been plotting to slowly destroy since birth.

Our house went on the market a few days ago and, fingers crossed, we’re hoping it sells (very) soon. Seriously, feel free to make us an offer. I’ve learned a lot in the process, so here are some tips to survive the awful process of getting your house ready for market without making your kids sleep in a tent out back and bathe with a hose, two things I totally considered, by the way.

1. Start decluttering early. The minute you decide you want to start looking for a new home should also be the minute you start getting your old one ready to sell. It took us three months to find a new house, so I had plenty of time to turn our pit of a basement into a cute playroom (which my kids refuse to use, of course), clean out every closet, and make about 17 trips to drop off carloads of stuff at Goodwill. Pick an area to declutter each week and make yourself do it.
2. Keep the kids, lose (some of) their stuff. Buyers understand that a house with kids is going to include toys, but no one wants to see kid clutter all over. If you have a dedicated playroom or basement, stash the toys there, not in a main-level family or living room, both of which should be kept kid-clutter-free. If your kid stuff has grown past the point of containment, consider renting a storage unit and moving everything there. Buyers without kids will be more likely to picture themselves living in your home if they’re not tripping over minitrampolines or giant dollhouses.
3. Hire help. We usually clean our house and maintain our yard by ourselves, but we hired a maid service to come in to do a deep clean and a yard service to do a Spring cleanup outside, and I’m so glad we did. Starting with everything looking great will hopefully help our house sell quickly, and it gave us a good baseline we can maintain with just a little work each day.
4. Close your kitchen as much as possible. Kitchens sell homes, so keeping yours looking spotless and clutter-free is super important. Unfortunately, your family will work against this by deciding they still need to eat. Selfish, sure, but you can counter their ever-present need for nourishment with one simple strategy: eat out as much as possible. This can be at a restaurant or, when weather permits, literally outside. Grill some hot dogs, have a picnic served on paper plates, and everyone’s happy.
5. Stay on top of cleanup. Last-minute showings can be a total pain, but you can make it easier on yourself by adding a few steps to your morning routine. Store leftover plastic bags upstairs to remove any trash every morning, line your main garbage cans with smaller plastic or paper bags to force yourself to take out the trash more often, and make sure to run your dishwasher every night.
6. Vacate the premises. Keeping a house where small kids live clean can feel like swimming upstream, so if possible, hit the road, at least for the first couple of weekends your house is listed. If you can park yourselves at grandma’s, leaving your clean and tidy house behind, everyone wins. If you have to stay home, tell yourself you have to be out of the house 15 minutes before any showing and that you can’t return until 15 minutes after it’s over. You want potential buyers to picture themselves living in your home and seeing you force a toddler into a car seat in the driveway or circle the block waiting to get back in for naptime doesn’t paint the picture of “welcome home.”

8 Mortgage Misunderstandings That Could Cost You — The Motley Fool

It’s an exciting time when you set out to buy a new home. Don’t assume you know all you need to know about mortgages, though; there are many mortgage misunderstandings that could cost you a lot.

Here are eight misunderstandings to help set you straight:

1. Ignoring your credit score. Your credit score has a major influence on the interest rate that lenders will offer you. If you don’t have a good one, consider spending some time beefing it up before starting to buy a home. You might increase your score by fixing errors in your credit record, by paying bills on time, and by reducing your overall debt load. To understand the kind of difference your credit score makes in the interest rates you’re offered, consider sample rates listed at MyFICO.com. When I checked it recently, it showed that if you were borrowing $200,000 via a 30-year fixed-rate mortgage, and you had a top FICO score in the 760 to 850 range, you might get an interest rate of 3.3%, with a monthly payment of $880, and total interest paid over the 30 years of $116,717. If your score was 630, though, your rate would be 4.9%, with a monthly payment of $1,064, and total interest of $183,174. That’s $184 more per month — $2,208 per year — and a whopping $66,457 more in interest.
2. Thinking it’s not worth shopping around for a mortgage. Don’t assume that you’ll be offered pretty much the same deal wherever you go. Different lenders use different calculations when they assess you and offer you interest rates. Go ahead and check with your own bank(s) first, as they may give you a bit of a discount on the interest rate because you’re a customer. But check with other banks, too — and with credit unions, which often sport lower interest rates. You might also consult a mortgage broker. They often offer a wide range of loans, and can be especially helpful if you have an underwhelming credit record. Visit Bankrate.com, too, where you can look up the best rates in your area and beyond. 
3. Getting a bigger mortgage than you can really afford. When you’re house hunting, it will be tempting to look a bit beyond your price range. Don’t buy a home that will be expensive enough to have you stretched thin financially. Some suggest spending no more than 25% to 30% of your gross monthly income on housing — including property taxes and insurance — but instead of relying on that broad guideline, take the time to figure out just what you can afford. Take into consideration your regular household expenses, such as food, utilities, transportation, insurance, travel, entertainment, auto maintenance, debt payments, contributions to savings accounts, and so on, and factor in other expenses, too, such as medical or automotive emergencies and the cost of prepping your old home for sale and setting up your new one. Buying less home than you can afford will give you a margin of safety, and help you be able to save.
4. Getting pre-qualified, not pre-approved. Once you know what loan you want and from which lender, don’t wait until you find the home of your dreams to start the paperwork. Get pre-approved for the loan before you go shopping. This has several advantages. First, through the process of working with a loan officer, you can determine just how much home you can afford to buy. Second, it will make you a more credible buyer, should you end up bidding against any other buyers for a home. Pre-approval means that the lender will have looked at your credit score, your employment, your financial health, and perhaps some tax returns — and found you creditworthy.
5. Getting the wrong kind of mortgage. Don’t assume that a standard 30-year fixed-rate mortgage will serve you best. It might, but consider alternatives, too. For example, you need to decide between a 15-year or 30-year loan (other time frames are also available), and between a fixed-rate mortgage or adjustable-rate mortgage (ARM). Longer terms will give you lower payments, but you’ll pay much more in interest over the life of the loan. If you’re not comfortable with a 15-year mortgage’s steeper payments, consider getting a 30-year loan that permits prepayments, and then aim to pay significantly more than you need to each month, in order to shorten the life of the loan. If you’re not planning to be in the home long, an ARM could serve you best in today’s low-interest-rate environment, as it can lock in low rates for a few years. If you think you’ll be in the home for decades, though, it can be better to lock in a low rate for the expected long life of the loan — especially because interest rates have started inching up.
6. Making a small down payment. Putting less than 20% down on a new home means you’ll have to take on an extra loan in the form of private mortgage insurance (PMI), which will increase your monthly payment. A low down payment might also result in a higher interest rate. It’s particularly bad if home values drop during your ownership period, leaving you with an “underwater” mortgage, when you owe more than the home is worth. That can make it hard to sell the home.
7. Paying off your mortgage early. It can be good to pay off your mortgage early, and not have a big loan on your shoulders — especially as you enter retirement. But paying off your mortgage early is not always the best thing to do. If you don’t have an emergency fund, for example, you’re better off establishing and funding one with that extra money. That money could also go into retirement accounts. You will also give up mortgage interest deductions by paying off the loan early. If you’re carrying any high-interest rate debt, such as credit card debt, paying that debt off early should be your priority.
8. Thinking it’s not worth refinancing. Finally, once you have a mortgage, don’t assume that it’s not worth refinancing. If the interest rate you might get on a new loan is about a percentage point lower than your current rate, it may well be worth refinancing. Crunch other numbers, though, and consider your big picture. If you don’t plan to stay in the home long, refinancing will make less sense.

Spend a little time learning more about mortgages, and you might be able to save hundreds, if not thousands, of dollars.

30-Year Mortgage Rates Push Upward | Realtor Magazine

Averages on fixed-rate mortgages rose this week, but remain near three-year lows, Freddie Mac reports in its weekly mortgage market survey.

“Since jumping 11 basis points on May 18th, the 10-year Treasury yield has leveled-off around 1.85 percent,” says Sean Becketti, Freddie Mac’s chief economist. “Mortgage rates continue to adjust to this new level with the 30-year fixed rate inching up another 2 basis points this week to 3.66 percent. Recent statements by the Fed appear to have persuaded the market that a rate hike may come sooner than later. However, the market is fickle, and Friday’s employment report has the potential to swing opinion 180 degrees in the other direction.”

Freddie Mac reports the following national averages with mortgage rates for the week ending June 2:

• 30-year fixed-rate mortgages: averaged 3.66 percent, with an average 0.5 point, rising from last week’s 3.64 percent average. A year ago, 30-year rates averaged 3.87 percent.
• 15-year fixed-rate mortgages: averaged 2.92 percent, with an average 0.5 point, increasing from last week’s 2.89 percent average. A year ago, 15-year rates averaged 3.08 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.88 percent, with an average 0.5 point, increasing from last week’s 2.87 percent average. A year ago, 5-year ARMs averaged 2.96 percent.

How Much House Can You Afford? Try This to Find Out | Total Mortgage Underwritings Blog

If you’re shopping around for your first home, congratulations! Few things in life are more exhilarating than strolling through houses and imagining yourself living in a new neighborhood as a bona fide homeowner.

To prepare for serious real estate hunting, though, you should be armed with a firm price range in mind. How much house can your really afford? Most experts recommend that your monthly mortgage payment not exceed 28 percent of your monthly pre-tax income.

For example, if you bring home $3,600 per month in wages, your mortgage payment should be no more than $1,008 per month. Any more than that, and you’re likely to have trouble making your payments at some point.

Can You Really Afford the Payment?

The 28 percent figure sounds great on paper, but will it work in your life? The best way to find out is by conducting a financial experiment while you shop for a house and get pre-approved for a loan. Follow these steps to see if you’re ready to take on a mortgage payment.

1. Choose a Fantasy House to Buy

No, you’re not (necessarily) going to buy this house, but go online to a real estate site like Zillow or Redfin and find one you like for a price you think you can afford. Make note of the total price as well as the yearly property taxes.

2. Research Mortgage and Insurance Rates

If you’ve already started the pre-approval process for a home loan, you may already have an idea of the interest rates available to you. If not, go online to find your local bank’s current mortgage rates. If you have good credit, use the rate you see advertised. If your credit is shaky, add a percentage point to the rate to be more realistic about the type of mortgage you’ll be able to get.

You also can go online for an insurance quote for your fantasy house. Just type in the address and answer the questions about the property based on the information you found on Zillow or Redfin. Most new home buyers pay for their insurance through their lender’s escrow accounts, so this is important in calculating an accurate monthly mortgage payment.

3. Use an Online Mortgage Calculator to Find Your Monthly Payment

Using your research about the home price, taxes, mortgage rates and insurance costs, type the values into an online mortgage calculator to find out your monthly payment. If the calculator doesn’t ask for insurance or taxes, you’ll need to add those values together yourself, divided by 12, and add that number to the monthly mortgage payment to be sure you’re covering everything.

4. Live With Your Fantasy Mortgage for at Least Three Months

Test out life with a mortgage by paying yourself each month. To do this, subtract your rent payment from the total of your fantasy mortgage payment. This amount is the money you’ll be transferring into a savings account each time you pay the rent.

After three months of living with your fantasy mortgage, assess how well you did. Were you able to make payments easily, or did you have to bail on the experiment? Did life go on as planned, or were you stuck with ramen noodles for dinner? If an emergency came up, could you handle it?

If you could live comfortably with your fantasy mortgage, you can afford the house you “bought” and should feel comfortable shopping for a real house in that price range. If not, you can try again with a lower mortgage amount. Either way, the beauty of this experiment is that you are able to build up an additional nest egg of savings by paying yourself, and that’s something that will only help you with your eventual down payment on your dream house.

5 Problems Uncovered in Home Inspections | Realtor Magazine

Even a house that seems perfect may not be so when it comes to a home inspection, which is meant to discover potential problems with the home’s systems, appliances, and structure.

“Depending on the age, location, and type of house, the potential for problems will vary,” according to an article by the Ferris Property Group. “It’s also important to note that all houses — even brand new ones — will have issues show up on the inspection. Certain issues may be a deal breaker, like a collapsing foundation, but many other issues can and should be repaired after negotiation with the seller.”

Here are some of the most common problems inspectors say they uncover:

• Defective plumbing: Leaky faucets or problems with the efficiency of pipes can greatly affect the cost of a home’s utilities.
• Water damage: This can be caused by any number of issues, such as erosion of external grading material that has caused a slow leak into a basement. Water leaks also can lead to damage in a foundation or mold growth.
• Faulty roofing materials: Variable temperatures can cause cracks in some roofing materials, while other materials may be prone to rots or leaks.
• Cracked foundation: Foundation problems can surface from any number of issues, such as water damage, termites, rotting, or structural inadequacy.
• Over-worked electricity system: This also can represent a big safety issue. Inspectors say when they find an overcrowded wiring system it’s typically due to previous owners making adjustments to the electrical wiring.

Yellen: Rate Hike May Soon Be Appropriate – Market Update – ZING Blog by Quicken Loans | ZING Blog by Quicken Loans

Headline News

New Home Sales: New home sales projections were up 89,000 or 16.6%, to a seasonally adjusted annual rate of 619,000 in April. This is the highest new home sales projection since January 2008. There was also an upward revision of 39,000 for February and March. Prices of new homes were also up 7.8% for the month to $321,100. This is 9.7% on the year. The surge in sales did have a big effect on the number of homes available in the market as supply fell to 4.7 months from 5.5 months. Turning to regional data, there was a more than 50% increase in sales in the Northeast, which is the nation’s smallest housing region. There also are very few sales in the Midwest overall, but they’re down 4.8% for April. In contrast, sales were up 15.8% in the South and 23.6% in the West.

MBA Mortgage Applications: Purchase applications were up 5.0% and refinances were up 0.4% despite rates that were a little bit higher. The average rate for a 30-year-conforming mortgage was up three basis points to 3.85%.

International Trade in Goods: The trade deficit rose $1.9 billion in April to $57.5 billion when looking at goods. However, demand for goods across the globe was also up as exports rose 1.8%, not quite keeping pace with a 2.3% rise in imports. Exports of industrial supplies were up 5.1% due to higher prices for oil. Exports of cars and trucks were also up 4.5%. Exports of consumer goods were up 1% and foods were up 4.4%. Capital goods were a little weak, up only 0.3%. On the imports side, capital goods were up 4.3%. Industrial supplies jumped 4% due to higher gas prices. Imports of automobiles were up 1.9%, while consumer goods were up 0.9%.

FHFA House Price Index: Home prices were up 0.7% in March and they’re up 6.1% for the year. The Pacific and Mountain regions continue to lead the way in terms of year-on-year price appreciation, in the high single digits. Meanwhile, growth is much slower in New England and the Mid-Atlantic, which bring up the rear.

Durable Goods Orders: New orders were up 3.4% in the month of April. This is an outsized gain over consensus expectations. The big reason for this was a 2.9% gain in orders for vehicles. That’s where a little bit of the air comes out of this balloon. If you take out transportation, orders were only up 0.4% on the month and are down 1.4% for the year. Core capital goods orders were also down 0.8% in April and they’re down 5.0% for the year. This points to weakness in business investment. Still, overall orders are up 1.9% on the year, so we’ll see where this goes.

Jobless Claims: New claims are down 10,000 this week to 268,000. The four-week average rose, up 2,750 to 278,500. Continuing claims, on the other hand, were up 10,000, coming in at 2.163 million. The four-week average was up 8,000 at 2.151 million.

Pending Home Sales Index: Pending home sales were up 5.1% to 116.3 in April. This is a good sign that more homes are under contract. The West was up 11.4% on the strength of existing home sales. In the South, pending sales are up 5.1%.

GDP: In their second revision, GDP numbers for the first quarter came in at 0.8%. This is up 0.3% from the initial estimate, but still failed to meet consensus expectations. There were positive provisions for both residential investment and exports. In a negative, there was an upward revision to inventories. Non-residential investment is still showing only weak gains. Personal consumption was only up 1.9%. Final demand only came in 0.1% higher to 1.2%. Inflation metrics were down 0.1% to 0.6% quarter to quarter.

Consumer Sentiment: Consumer sentiment came in down 1.1 points to 94.7 in its final reading of May. This is still up five points over April and the best since last year. The expectations, however, are up 7.3 point from April, landing at 84.9. This is due to a strong jobs outlook. Current conditions rose 3.2 points from April to 109.9. One-year inflation expectations are down despite higher gas prices, falling 0.1% to 2.4%. Five-year expectations are also down 0.1% at 2.5%, unchanged from April.

Mortgage News

Mortgage rates saw hikes across the board last week.

Thirty-year fixed-rate mortgages (FRMs) averaged 3.64% with an average 0.5 point for the week ending May 26, 2016, up from last week when they averaged 3.58%. A year ago at this time, 30-year FRMs averaged 3.87%.

Fifteen-year FRMs this week averaged 2.89% with an average 0.5 point, up from last week when they averaged 2.81%. A year ago at this time, 15-year FRMs averaged 3.11%.

Five-year Treasury-indexed hybrid adjustable rate mortgage (ARMs) averaged 2.87% this week with an average 0.5 point, up from last week when they averaged 2.80%. A year ago, 5-year ARMs averaged 2.90%.

Stock Market

Markets really like certainty and a sense of direction. Therefore, when Federal Reserve chairwoman Janet Yellen speaks and says an interest rate hike might be appropriate in the coming months, they’re actually pretty happy. It gives them guidance as to what to expect. These were the market conditions heading into the long weekend. All the stock indexes showed major gains.

The Dow Jones Industrial Average was up 44.93 points on Friday and 2.13% for the week, reaching 17,873.22. Meanwhile, the S&P 500 rose 8.96 points to finish at 2,099.06. This was a 2.28% weekly gain. The NASDAQ was up exactly 25 points to 4,926, a 3.44% gain since last Friday.

The Week Ahead

Tuesday, May 31

Personal Income and Outlays (8:30 a.m. ET) – This measures all possible income sources as well as expenditures of the public.

S&P Case-Shiller HPI (9:00 a.m. ET) – The S&P Case-Shiller home pricing index tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S.

Consumer Confidence (10:00 a.m. ET) – The Conference Board compiles a survey of consumer attitudes on the economy. The headline Consumer Confidence Index is based on consumer perceptions of current business and employment conditions, as well as their expectations when considering business conditions, employment and income.

Wednesday, June 1

MBA Mortgage Applications (7:00 a.m. ET) – The mortgage applications index measures applications to mortgage lenders. This is a leading indicator for single-family home sales and housing construction.

ISM Manufacturing Index (10:00 a.m.) – This index measures the general direction of manufacturing within the U.S. The qualitative survey of purchasing managers looks at production, new orders, order backlogs, inventories and supplier deliveries, among other factors.

Thursday, June 2

Jobless Claims (8:30 a.m. ET) – New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing trend suggests a deteriorating labor market. The four-week moving average of new claims smooths out weekly volatility.

Friday, June 3

Employment Situation (8:30 a.m. ET) – The employment situation report measures unemployment in the labor force as well as the sentiments of workers about the job market.

International Trade (8:30 a.m. ET) – International trade is composed of merchandise (tangible goods) and services. It’s available by export, import and trade balance for six principal end-use commodity categories and for more than 100 principal Standard International Trade Classification system commodity groupings.

The employment situation report always has the potential to make the bond markets move one way or the other, so if you see a rate you like this week, now would be a good time to lock it in just in case rates go up.

So we know the important data that’s coming next week, but before you think we’re all mortgages and economics, we’ve got enough home, money and life content to keep you going all week long. Subscribe to the Zing Blog below and never miss another post.

Home Remodeling | Improvements to Increase Home Value | HouseLogic

Dreaming of stainless this and marble that, with a dash of hip color? Sloooow down. See what your wallet has to say first. Some projects will protect your dollars more than others, especially if you’re planning to sell in a few years.

How do we know? Since 2002, a trade magazine for contractors and builders called “Remodeling” has been tracking common home improvement projects and how much of the cost of each project is recouped when the home sells.

We sifted through years of past results and aggregated the numbers to get an idea of what projects made the most of your dollars year after year. Then we overlayed that background with the data from the NATIONAL ASSOCIATION OF REALTORS®’ “2015 Remodeling Impact Report” to determine current project costs and the cost recovery percentage, and to get some other fun facts, such as how satisfied homeowners are with the projects when finished.

They also have a few things in common. The projects are:

• Low-maintenance

• Good — but not necessarily the highest — quality

• Energy-efficient

• Not too costly

These projects are the best long-term remodeling investments you can make:

1.  Replacing Your Front Door

Your faithful front door works tirelessly — day in and day out — to usher in you and your guests, and to seal your house up tight. But when Old Faithful gets tired and worn out, don’t hesitate to call in a replacement. Year in and year out, replacing your old front door with a new steel door is a project that kicks up curb appeal and yields the best payback.

“It gives you the best bang for your buck in terms of transforming the look and feel of your home,” says Brandon Erdmann, president of the remodeling firm HomeSealed Exteriors in Milwaukee. “Plus, old exterior doors can be a huge source of energy loss. So you’re improving the look of your house, improving energy efficiency, and you’re able to do it without breaking the bank.”

It’s also a relatively low-cost project. According to the “2015 Remodeling Impact Report,” a new steel front entry door has a national median cost of $2,000 installed, and can recover 75% of that cost at resale.

2.  New Siding

Old, worn siding, along with generally sad curb appeal, can contribute to a loss of up to 10% of your home’s value, according to some appraisers. New siding, on the other hand, practically screams “my owner takes care of me.” 

What to choose? Both vinyl and fiber-cement siding are good replacement options.

Vinyl siding is low-cost, durable, and easy to install, and it hits all the right notes when it comes to getting a return on your home improvement dollars. Best of all: It’s a low-maintenance feature that frees up your time.

Today’s vinyl siding includes fade-resistant finishes and transferrable lifetime warranties that are much better than the 10-year guarantees of just two decades ago. There’s good payback, too. According to the “2015 Remodeling Impact Report,” the $12,000 national median cost of a vinyl siding replacement job returns a solid 83% if you should decide to sell your home.

Fiber-cement siding also shows a strong payback of 79% in the “2015 Remodeling Impact Report.” Although its national median cost of $19,100 makes it the pricier option, it has one thing vinyl still lacks — the perception of quality.

And quality matters. In a survey from the National Association of Home Builders (NAHB), “quality” was the one of the most important traits that home buyers focused on when shopping for a house. A final word: 100% of homeowners responding to the “Report” said they were happy or satisfied with the result of their fiber-cement siding replacement project.

3.  Kitchen Upgrade

We’re not talking about the dream kitchen remodels that are plastered on Pinterest and Houzz. But a minor kitchen remodel — one that keeps a lid on costs by refacing instead of replacing cabinets, and includes new flooring, countertops, and modestly priced appliances — is an ever-popular project. 

“People are always willing to update their kitchens,” says Dale Contant, 2016 president of the National Association of the Remodeling Industry (NARI) and owner of Atlanta Build and Design. “It’s the hub of the home.”

Although the ROI on a kitchen update is relatively modest — the “2015 Remodeling Impact Report” says you can expect a return of 67% on the $30,000 national median cost of a kitchen upgrade — you’ll get lasting satisfaction. Eighty-two percent of homeowners said their updated kitchen gave them a greater desire to be at home, and 95% were happy or satisfied with the result.

4.  Deck and Patio Additions

Like alfresco living? You’re in good company. According to a 2014 Home Trends Survey from the American Institute of Architects, our love of outdoor living spaces — especially decks and patios — is on the rise.

One big reason is that decks and patios are a sweet way to expand living space at a low cost of $8 to $35 per square foot — a bargain compared to the $150-and-up per-square-foot cost of a new addition.

5.  Turning an Attic into a Bedroom

When it comes to romantic rooms, a bedroom retreat is hard to beat. But a treetop boudoir is much more than a daydream — it’s a good investment. You’ll gain living space without having to add on to your home’s footprint — the walls, floor, and ceiling already exist. That helps keep remodeling costs under control.

There are code restrictions you’ll have to navigate when converting an attic to a bedroom, but if your house qualifies and you can cover the cost (about $65,000 says the “2015 Remodeling Impact Report”), chances are you won’t regret your decision. Some 94% of homeowners responding to the “Report” said they were happy or satisfied with their new attic space.

6.  New Garage Door

No surprise that a garage door replacement project made it onto our list of all-time winners — a new garage door provides a big boost for your home’s curb appeal at a relatively modest cost. That’s especially good news if you’re thinking about selling your house.

A project that replaces an older, two-car, embossed steel door has a current cost of about $2,300, according to the “2015 Remodeling Impact Report.” If you sell, you can expect a healthy ROI of 87% on your investment.

There are options galore, too. A host of factory-finish colors, wood-look embossed steel, and glass window insets are just some of the possibilities that’ll give your doors bankable personality.

Debt-to-Income Ratio Matters When You’re Buying a House

Your debt-to-income ratio plays a large role in whether you’re ready and able to qualify for a mortgage. This figure, the percentage of your income that goes toward paying your monthly debts, helps lenders figure out how big a monthly mortgage payment you can handle. It’s as important as your credit score and job stability, if not more so.

Lenders calculate your debt-to-income ratio by dividing your monthly debt obligations by your pretax, or gross, income. Most lenders look for a ratio of 36% or less, though there are exceptions, which we’ll get into below.

This ratio, known in the mortgage industry as a DTI, helps you answer the question, “How much house can I afford?” and is a useful guide for mortgage lenders trying to figure out how much you can borrow. But your DTI is not the whole story — it leaves out unavoidable monthly expenses such as food, utilities, transportation costs and health insurance, among others. It’s important to keep those obligations in mind as you evaluate your ability to afford a home.

Here’s how DTIs work.

Two types of ratios

There are two kinds of debt-to-income ratio:

• The front-end ratio, also known as a household ratio, is the dollar amount of your home-related expenses — your proposed monthly mortgage, property tax, insurance and homeowners association fees — divided by your monthly gross income.
• The back-end ratio includes all the other debts you pay each month — such as credit cards, student loans, personal loans and car loans — in addition to proposed household expenses. Back-end ratios tend to be slightly higher, since they take into account all of your monthly debt obligations.

Which one matters more?

While mortgage lenders typically look at both types of DTI, the back-end ratio often holds more sway because it takes into account your entire debt load.

Lenders tend to focus on the back-end ratio for conventional mortgages, loans that are offered by banks or online mortgage lenders rather than a government program. If your front-end DTI is below 28%, that’s great. If your back-end DTI is below 36%, that’s even better.

When you’re applying for a nonconventional mortgage, like an FHA loan, lenders will look at both ratios and will consider DTIs that are higher than those required for a conventional mortgage: up to 31% for the front end and 43% for the back end. Sometimes lenders will even allow the ratios to go slightly higher.

Ideally, though, you’ll want DTIs that are as low as possible, regardless of the lender’s limits. A lower DTI will help your credit score, which will in turn allow you to get a lower mortgage interest rate.

Think beyond your DTIs

Although DTIs are important in getting a mortgage, they’re not enough when it comes to helping you figure out what you can afford, says Ira Rheingold, executive director of the National Association of Consumer Advocates.

“You can have these general guidelines around debt-to-income ratio,” he says, “but the bigger question is, will you, once you have that mortgage payment, have sufficient money to make ends meet?”

Since DTIs don’t take into account expenses such as food, health insurance, utilities, gasoline and entertainment, you’ll want to budget beyond what your DTI labels “affordable.” Aiming below the 36% back-end target is ideal.

This is especially important since your DTIs count your income before taxes, not what you actually take home each month.

How to lower your DTI

The higher your DTI, the more likely you are to struggle to make your monthly mortgage payments. You’ll want to lower your DTI not just to qualify for a mortgage and buy the home you want, but also to ensure you’re able to pay all your debts and live comfortably at the same time.

There are several ways to lower your debt-to-income ratio:

• Avoid taking on more debt.
• Don’t make any big purchases on credit before you buy a home.
• Try to pay off as much of your current debt as possible before you apply for a mortgage.

“The best thing homebuyers can do is pay down or pay off high-interest credit card and consumer debt,” says Chris Hiestand, director of marketing at Lenda, an online lending company. “Doing this will improve the back-end ratio and will also boost their credit score. DTI ratios actually don’t impact the mortgage interest rate, but credit scores have a big impact on interest rates.”

While a pay raise at work is another way to lower your DTI, it’s not safe to rely on something that might not happen. That’s why it’s better to avoid taking on more debt and work on whittling down the debt you have.

In most cases, lenders won’t include installment debts like car or student loan payments as part of your DTI if you have just a few months left to pay them off.

One last point

If your debt-to-income ratio is exceptionally high — say 50% or more — you probably should wait on a home purchase.

“There’s nothing wrong with saying, ‘I need to wait another year before I buy a house,’” Rheingold says. He suggests getting your finances in order first so that you present yourself as someone with good credit and not a lot of overhanging debt.

Before you sit down with a lender, using a home loan calculator is one way to figure out how much house you can afford.

The lower your debt-to-income ratio, the safer you are to lenders — and the better your finances will be.

Why buy apartments when you can buy two single family like units on an independent lot with spacious yards? Excellent rental return with potential for continuous upside in Fremont’s high demand I-880-Decoto-CA84 commuter friendly corridor. Located in Union City.

2 spacious units in a duplex with lots of Natural Lights and Storage:

1. Unit 1: 2BR/1BA (~1200 sq. ft.) Independent Unit with Attached Garage and Yard; Current Rent: $2480
2. Unit 2: 2BR/1BA (~1000 sq. ft.) Independent Unit with Attached Garage and Yard; Current Rent: $2250

Additional features: Washer/dryer, cooking range and refrigerator in both units

Great location for commuters whether you take BART, work in Fremont or drive to Palo Alto, Mountain View, Sunnyvale, San Mateo, San Jose, etc.

1. 14 mins walk to the Union City BART station
2. 5 mins to 880
3. 5 mins to 84-W (Dumbarton)
4. 5 mins to 84-E Niles Canyon Road to Dublin/Pleasanton/San Ramon
5. 10 mins walk to Safeway and Marina anchored shopping complex, and lot of great restaurants
6. 5 mins from Quarry Lake Regional Park
• http://www.ebparks.org/parks/quarry_lakes http://www.niles.org/ http://www.ncry.org/
7. 10 mins from both Newpark Mall and Union Landing Shopping and Cinemas
8. 5 mins to Fremont’s Historic Niles Town (Charlie Chaplin Studio and Niles Railway)
• www.ncry.org/
• http://nilesfilmmuseum.org/
• Restaurants – http://www.yelp.com/biz/the-vine-fremont; http://www.yelp.com/biz/devout-coffee-fremont

Off Market, Offered at $889,000.

Contact me for more pictures, address and questions. Please pass it to any potential buyers.

Yajnesh Rai, Real Estate Consultant

Keller Williams Realty – Silicon Valley

408-547-7845

YRai@KW.com