Yajnesh Rai

Factor in size and location.

• State or County: Even your place of residence can affect your rate.
• Local Mortgage Lenders: Shop around. Interest rates can vary from company to company even if they’re located in the same town.
• Loan Size: The size of your home can also impact your interest rate. The bigger the loan, the higher your interest rate will be if you’re not putting more money down.
• Down Payment Size: Your mortgage interest rate may also depend on how much you’re putting down and if your loan includes closing costs and private mortgage insurance (PMI). Putting down less than 20 percent can increase your risk factor and may require PMI, but your interest rate may be lower depending on the loan.
  

Not all loans are created equal.

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Loan Length: Your loan terms play a bigger role in interest rate calculations than you think. Have you decided whether you want to pay off your loan in 15 or 30 years? You may pay more per month with a shorter term, but you’ll be paying less interest over the life of your loan. Short-term loans may also have a smaller interest rate.

Fixed or Adjustable: You’ll also have to consider whether a fixed- or adjustable-rate loan is right for you. Your interest rate can change over time if you choose an adjustable-rate loan. It may start off low or fixed, but can increase over time depending on market conditions. Fixed-rate loans, however, will have a higher interest rate attached to them.

Loan Type: Interest rates can also vary according to your loan type. Choosing a loan can be overwhelming, but a local lender should be able to provide you with the best options. Some of the more popular loans are conventional, FHA and VA loans. While FHA loans have less down payment restrictions and a smaller interest rate, your monthly payment can be more expensive due to the required PMI added on. VA loans can have smaller interest rates and don’t require PMI like FHA does. Conventional loans are widely accepted in the real estate industry as dependable, but your interest rate may be higher.

5 Sneaky Things That Can Ruin Your Credit Score

Don’t let these little-known mistakes damage your credit.

No matter if you’re renting in San Jose, CA, or Austin, TX—your credit score will matter. There’s no getting around the fact that landlords and apartment property managers can put a lot of weight on that one number when determining whether you can handle making your monthly rent.

But you may not know why your credit score is so dismal, especially when you’re trying to play it safe and maintain credit worthiness by paying your bills on time and in full. Aside from forgetting to pay bills, what can ruin your credit? If you’re on top of payments, why is your score still lacking?

If you’ve checked your credit score only to find yourself shocked and dismayed by the result, your score may be suffering from one of these sneaky things that can ruin it.

5 Credit Score Pitfalls to Avoid

 

 

1. 1. Generating too many inquiries

   Shopping around before choosing an institution for a car loan can help you find the best rate—and that can translate into thousands of dollars in savings (if not more!) over your loan’s lifetime. But while you may be saving, it’s best to use moderation. Here’s why.

   When you receive a quote on interest rates, lenders pull a hard inquiry that shows up on your credit report. If you request these inquiries over a period longer than 14 days, each quote shows up individually. When you’re comparison shopping for a loan, gather your quotes in a short period (ideally within two weeks). That way, your credit will take less of a hit.

2. 2. The little things can add up

   Unpaid bills from a variety of sources can cause your credit score to plummet if they’re unresolved. Think that library late fee or medical invoice from 15 years ago doesn’t matter anymore? It could, if the library system turns that account over to collections or marks it as “delinquent.”

   In most cases, this is an easy fix and just a matter of settling the outstanding payment. To check for these issues, pull a credit report—you can get one for free each year from the three credit-reporting agencies (Experian, TransUnion, and Equifax).

3. 3. Incorrect information

   Let’s get real: You’ll probably want to pull your credit report for more than to see if you owe your librarian a few bucks. Errors occur and businesses make mistakes. If your credit report is harboring incorrect information about your financial records, this could drag down your credit score. If your report has an error, call the credit bureau that issued the report and file a claim. Correcting errors can be long and arduous, but it’s worth the effort.

4. 4. Using your credit a little too much

   If you use your credit cards for everyday spending and pay off your balances—on time and in full each month—you may be wondering why your credit score is still suffering. Even if you’re paying it off responsibly, maxing out your credit card can harm your score more than you might think. What matters here is how much credit you have and how much credit you’re using. For example, if you have a $1,000 line of credit and you charge $999 each month, you’ll earn a black mark on your credit score even if you pay off every dime when the bill comes due. This balance of limit versus spending is known as a credit utilization ratio. Maintaining a high credit utilization ratio will hurt your score. If possible, try to keep balances low on your lines of credit.

5. 5. Not using credit at all

   The silent way to ruin credit is by not using it at all. If you’re afraid of tripping up and getting into a financial mess, or if you’ve been scared off the idea of using credit by financial “gurus,” you may negatively impact your score. With no credit history, there’s nothing to show that you’re a responsible user of credit who can manage balances and payments. Inactive accounts may even default to closed over time, and that too can ding your score. It might not be fair, but the fact remains that those looking to rent an apartment need to develop and maintain strong credit scores. If you want to secure the best apartments out there, be wary of these credit score pitfalls that can hurt your score.

 

Which Home Upgrades Will You Lose Money On? – Trulia’s Blog – Life at Home

Just because you upgrade doesn’t mean you’ll profit when it comes time to sell.

If you’re hoping to increase your home’s value (above and beyond the cost of an upgrade itself), you should know that the upgrades you value might not be valuable to potential buyers. In fact, you may never recoup the full cost of some home improvements, and the primary offenders might surprise you!

Five common upgrades with the worst return on investment

1. Adding a pool
   Pools can be hit-or-miss when it comes to added value. If you’re selling Orlando, FL, real estate, or you live in a warm climate where people are inclined to use a pool year-round, you’re more likely to get a favorable response from buyers. Often, however, the return is not enough to pay for the pool itself. Don’t forget to budget a large chunk of change to operate and maintain the pool. Ultimately, your likelihood of recouping the money you spent on maintenance, in addition to the installation costs, is fairly low.
   Adding a pool to your home could be a major turnoff to some buyers. Buyers with small children may be concerned about safety risks, those looking for a low-maintenance yard won’t want to deal with the hassle and upkeep of cleaning a pool, and buyers who are on a tight budget may not have the extra cash to deal with the added expense.
2. Highly custom designs
   Unless you plan to stay in your house for many years to come, think twice about renovations that are too personalized. Installing a kitchen backsplash? The specific type of tile might not matter to buyers — they could be just as happy with a simple ceramic tile as they would with an expensive Calacatta marble tile. Similarly, choosing a beveled countertop edge that’s complex and ornate, rather than a basic beveled edge, could off buyers whose tastes don’t align with yours.
   In fact, these custom features may wind up costing you come listing time, as many buyers will factor in the money they’ll need to spend to change the house to suit their own tastes. If you’re going to upgrade your kitchen just for the sake of selling, stick with neutral, builder-grade design decisions.
3. Room conversions
   Buyers look to check certain boxes when they tour your home: For example, three bedrooms, two bathrooms, and a garage. Getting rid of these expected spaces (or altering them into something unusual) may harm your resale value. Bedrooms are coveted spaces that can bump your listing up into the next bracket. Buyers are looking for a specific number of bedrooms, and may not appreciate the work it took to take a wall down for a secondary master suite, or the soundproof foam to convert into  a recording studio.
4. Incremental square footage gains
   Sizable square footage gains — like finishing your dingy basement so it becomes an additional livable floor — can be a boon in buyers’ minds. But tiny, insignificant changes may not give you much of a return on your investment. You may love your new sunroom, but it’s not likely to drastically increase your home’s overall value. Adding square footage in a way that doesn’t flow well with the floor plan can also backfire. Sure, a half bath on the first floor would be useful, but if buyers have to pass through the kitchen to get to it, the half bath loses some of its appeal.
5. Over-improving

   When your upgrades feel overboard for your neighborhood, you alienate buyers on two fronts: buyers who are drawn to your neighborhood won’t be able to afford your home, and buyers who can afford a home of your caliber will prefer to be in a ritzier area. Keep the “base level” of your neighborhood in mind. Tour some open houses on your block to see how your neighbors’ kitchens look before you invest a small fortune in granite countertops and high-end fixtures. Being a little nicer than the other houses around you can be a selling point, but being vastly more luxurious is not.
   Pursue these home upgrades for your own enjoyment — but don’t trick yourself into believing you’ll more than recoup the cost of the improvement in the form of a much larger listing price when it comes time to sell. You can always opt for the projects that have the best potential to draw in a buyer instead!

Childless Buyers Buoy Condo Market | Realtor Magazine

Home shoppers without children are a growing segment in the housing market, and they tend to desire smaller houses than previous generations.

The fertility rate among women 15 to 44 years old is at its lowest level since the CDC began recording such rates 108 years ago. As more couples delay having kids or opt to have fewer children, their needs in the housing market are very different than previous generations who tended to have bigger families.

Fewer than eight in 10 childless buyers purchased a detached single-family home between July 2015 and June 2016, according to the National Association of REALTORS®. Condos and townhomes are becoming a popular option among those who do not have children.

“Buyers may value smaller/attached homes in the future,” The Mortgage Reports notes in a recent article. “Increased demand for these types of homes could amp up your resale value.”

In general, detached homes have been known to appreciate faster and hold their value longer than attached homes, according to Tamara Dorris, adjunct real estate professor at American River College in Sacramento, Calif. But that could change.

“We’re seeing more and more people not having children by choice or purchasing homes as singles,” Dorris says. “These people tend to live in urban areas and have homes with less maintenance—such as attached homes.”

Could the rise of childless couples lead to less demand for detached single-family homes?

“If others fit the mold of not having children, there could be a decline in buyers who might have an interest in your detached home,” Mark Lee Levine, professor at the Burns School of Real Estate and Construction Management at the University of Denver, told The Mortgage Reports. “But there is no right or wrong answer as to whether it’s better to buy attached or not attached. Buyers need to consider many issues that will impact the potential interest in their home and when they become sellers.”

7 Secrets for Adding a Finishing Touch to Your Staging

When staging a home for an open house, you can transform a space from an unimpressive, run-of-the-mill property to one with a “wow” factor. But without a little extra attention to detail, even the most professionally staged homes can leave something to be desired. Don’t let staging efforts go to waste—advise your clients to put the finishing touches on their staged homes, and boost their chances of selling. Here is a list of seven often overlooked finishing touches that can make a home shine.

1. Switch the lights.

It may seem like a big project, but switching out ceiling light fixtures is actually quite simple. Replacing old or broken fixtures can add a polished look and make a home feel updated. Remember that during showings and open houses, all lights will be on, so buyers’ eyes will be drawn to them. Choose something timeless that will go with any décor. And don’t forget the switch plates – dingy or yellowed light switches can make a staged room feel incomplete.

2. Consider window treatments.

Your clients may hesitate to replace blinds or shades before they move, because they can’t take them when they go. But remind them that custom window treatments can add significant value to the sale price. The right treatments can add privacy, style, and even energy efficiency to the home. They’re also the perfect way to frame a professionally-staged room. During your showing, treatments should allow as much natural light into the home as possible. Natural light balances any overly yellow lightbulbs and provides a blank canvas for the buyers to see clearly.

3. Touch-up the paint.

A professionally staged home will have impeccable furnishings and accessories. But chipped baseboards or scuffed walls can undo that polished look in an instant. Advise your clients to go through the home with touch-up paint and get rid of the most obvious offenses. It’s a simple way to hide the home’s age, and keep potential buyers focused on the its best attributes.

4. Give the floors some attention.

Stagers may add area rugs, but their not to hide scratched hardwoods or stained carpeting. Recommend that your clients make the investment into buffing and deep cleaning the flooring, so the rest of the staging looks at home in the pristine environment.

5. Add a little life.

Staging companies may add artificial plants as décor, but the living variety are even more appealing. Fresh flowers and houseplants brighten dining rooms, entryways, and bedside tables. Go neutral white or use this as an opportunity to add a pop of color. Also, try bowls of fruit, hanging ferns, or a small window herb garden to avoid having to put fresh flowers out every week. Don’t forget to look outside and freshen up the flower bed with new blooms and/or add a few potted plants around the front door.

6. Remove personal items.

Another final touch to making sure the staging looks natural is to remove any overly personal distractions. Remove family photos and memorabilia. If your sellers want to leave the frames on the wall to hide nail holes, have them consider putting a nice landscape print or piece of scrapbook paper in that spot instead. This goes for art, too. Your potential buyers might not share your enthusiasm for turn of the century pop-art, so the best choice is to swap it out for something classic, or remove completely.

7. Don’t forget storage areas.

Stagers will give special attention to the main living areas, but storage spaces like garages, closets, and basements are also vital selling points that need attention. Potential buyers look for roomy areas where they’ll be able to fit all their stuff. If basements and garages are overcrowded, it might send the signal that the home isn’t big enough for the buyers’ needs. Sellers may benefit from renting a storage space to help declutter and make every inch of the home irresistible.

Self-made millionaire: Buy a home

While opponents of homeownership claim it’s “the American nightmare,” self-made millionaire David Bach is doubling down on his faith in real estate.

He thinks that not prioritizing homeownership is “the single biggest mistake millennials are making.”

Buying a home is “an escalator to wealth,” he tells CNBC.

 

Young adults in particular aren’t hopping on this escalator, and it’s a costly mistake, Bach warns: “If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter.”

The self-made millionaire is quick to say that the smartest investments he’s ever made have been the three homes he’s purchased. He tells CNBC: “I first bought a home in San Francisco. It skyrocketed in price. I moved to New York and bought another home. It skyrocketed in price. My net worth has gone up millions and millions of dollars, simply because I’ve lived.”

 

Courtesy of David Bach

Self-made millionaire and bestselling author David Bach

Bach argues that you have to live somewhere for the rest of your life, so you might as well invest in a home that you could own permanently.

As he writes in “The Automatic Millionaire,” “As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!”

If you want to get in the game of homeownership, start by crunching the numbers, Bach says: “Actually do the math. Look and see what things costs, starting with the smallest options. This way, you’re really clear on your goals and you won’t just say to yourself, ‘I’ll never afford this.'”

A good rule of thumb is to make sure your total monthly housing payment doesn’t consume more than 30 percent of your take-home pay. He also recommends having a down payment of at least 10 percent, though more is always better. Finally, recognize that “oftentimes, buying your first home means you’re not buying your dream home,” Bach tells CNBC. “You’re just getting into the market.”

A lucrative market, that is. “The fact is, you aren’t really in the game of building wealth until you own some real estate,” Bach writes.

 

How To Know When It’s Time To Buy A Home

Buying a home is a major financial commitment. According to the U.S. Census Bureau, 63.7% of Americans own their homes. That’s down from 69% in 2004. There’s no magic alarm that alerts you when it’s the right time for you and your family to buy a home. No matter how many times you crunch the numbers or visit open houses, it can be difficult to make the leap. And here’s the thing: being a homeowner might never be for you. Still, there are some indications that you might be ready to buy a home and they have less to do with the overall housing market and more to do with your personal financial situation.

You Have the Savings

Before you buy a home, you’ll have to prove to lenders you have the ability – and discipline – to save. If you can’t pony up a down payment of at least 10% (and ideally 20%) of a home’s worth, you aren’t ready to buy that home. The more you put down at the onset, the smaller your mortgage and the less you’ll have to fork over in interest. If you have less than 20%, be prepared to pay private mortgage insurance as well.

Beyond the property, owning a home comes with additional costs that first-time homebuyers may not think about. It’s important to inquire about and account for closing costs, property taxes and homeowner’s insurance, as well as regular maintenance and repairs. You may have to factor in homeowners association fees as well.

 

Buying a home allows you to build equity in a valuable asset that can be sold for cash, used to fund other purchases or borrowed against. But don’t forget: all of this spending shouldn’t compromise your regular budgeting, including saving for retirement and keeping a separate emergency fund.

Parents Helping Kids Compete in Bidding Wars | Realtor Magazine

To help their adult children, more parents are reportedly taking out equity in their own home so their child can buy a home of their own.

Parents are refinancing and then sharing some of the equity in their own home to help fund some or all of the costs of a home for their adult child. When the sale closes, the child then refinances their new home and pays back the parents, The Wall Street Journal reports.

More parents are finding that their adult children need the extra financial footing in order to compete in areas where bidding wars have become commonplace. The additional funds are helping adult children avoid making a deal contingent on financing and also helping to make their offers more attractive to sellers.

Parents have several options for tapping the equity in their homes, such as cash-out refinances or a home equity loan.

Kas Divband, a real estate practitioner with Redfin in Washington, D.C., told The Wall Street Journal that he has worked on six deals where buyers have relied on a parent’s mortgage in order to make an all-cash offer.

Even millennials with high-paying jobs and sizable down payments have been losing out in some bidding wars due to high competition, particularly in markets like Washington, Boston, and Seattle, says Nela Richardson, Redfin’s chief economist. By having a parent take out a home equity line of credit to give their child a full purchase price, some millennials are better positioned to then win against multiple bids.

Parents also may step in during transactions where home prices are bid above the list price and then the appraisal comes in under the contracted price. If sellers refuse to lower their price, buyers must come up with the extra funds or walk away. Lenders won’t often increase the borrowing price if an appraisal comes up short.

Many parents may not find these arrangements practical. Parents will need to have enough equity in their own home to make a refinance worth it. Also, the child needs to be able to qualify for a loan. Divband says it’s important to let a lender know the plans beforehand.

Parents will want to factor in the extra costs: A purchase mortgage or refinance typically costs about 2 percent of the loan value. Gift rules need to still be followed, too; the IRS says gifts of more than $14,000 per person per year are subject to federal gift taxes for the giver. Both parties will likely want to consult a tax professional.

The Impact of Property Taxes on Home Buying Decisions – ZING Blog by Quicken Loans | ZING Blog by Quicken Loans

No matter where you live, taxes are one of the few sureties of life. Most of us are familiar with federal and state taxes, as well as sales tax. Depending on where you live and work, there may be local income tax in your city or town as well.

When you own a home, you pay property tax. Your home has a value that goes up or down depending on market conditions. Over the last several years, we’ve been in a cycle where property values are on the rise from year to year. Your home is taxed on its value like any other asset you have.

Property taxes pay for local city services and special projects voted for by local residents, as well as the operations of any local public school district. You may choose to buy a home in an area with higher taxes because you find the city services provided be worth it. It’s up to you.

We’ll look at how to get an idea of what local property taxes will be for the purposes of comparison. In addition, we’ll go over why there may be differences in property tax bills from one owner to the next.

Calculating Property Taxes

Property tax rates are calculated based on something called the mill levy. One mill is equal to $1 for every $1,000 of assessed taxable value.

Here’s an example. If your county had $300 million worth of assessed taxable value, it might decide it needed $3 million to run county operations and services. If you do the math, that comes out to 1% of local property tax. If the local school district decided it needed $6 million for operations, that would be another 2%, and if you could run city services for $1.5 million, that would be another 0.5% for a total tax rate of 3.5% in your area.

We’ll get into how properties are valued for tax purposes below, but for the purposes of this example, let’s say your taxable assessed value was $200,000 on your home. At a tax rate of 3.5%, your tax bill would be $7,000 annually.

It’s important to note that if you have a mortgage, you most likely have an escrow account. The idea here is to spread out the cost of your tax bill over 12 months so you don’t have to cut one big check at the beginning of every year.

If your house is paid off, you may be able to get on a payment plan with your local taxing authority.

Understanding Assessment

Now that we’ve talked about how you get your tax rates and figure out a basic tax bill, let’s go over how they actually calculate the value you’ll be taxed on. This could be the actual appraised value of your home, but most of the time, that’s actually not the case.

Your actual assessment is affected by a variety of factors including:

• State law – In many cases, states limit the assessed value of your property to a percentage of your actual property value. If your state has a 75% assessed value limit, the taxable value of a $200,000 property is actually $150,000.
• Area values – Although your taxable value may be reassessed periodically, it’s impractical for your taxing authority to send an appraiser out to every house every year. Therefore, value in your area may be more about the average value.
• Limits – States may impose limits on how much your taxable value can go up. So even if your property value went up 10% and increased your assessed value by the same percentage, your state could conceivably have a limit of 2% for increases.

It’s also worth noting that not all states or municipalities reassess taxable value every year. They may only do it every third year or every fifth year. Still others only reassess value when the house changes hands.

Differences in Property Tax Bills

If you know the property tax bill of the previous owner of your home, you may assume that your property tax bill will be the same, at least until your house is reassessed. While that may be true, it isn’t necessarily the case.

You and the previous owner may qualify for different exemptions. One common tax break is what’s known as the homestead exemption. You qualify for this in many states if you use the property as your primary residence. It doesn’t apply to vacation homes or investment properties.

In some states, you may also qualify for exemptions if you have a disability or have veteran status.

If you’re uncertain of potential exemptions, be sure to contact a tax expert in order to make sure you’re claiming every exemption you qualify for.

You can also deduct the amount of your local property taxes from your yearly federal tax bill.