When delving into the world of real estate and investment property, there are many terms that will come up that require further explanation. Whether you’ve never heard the phrase ‘home equity’ before or you have a little familiarity, here are the ins and out of what it means and how this asset can help your financial outlook.

All About Home Equity

Essentially, home equity refers to your portion of the value of your home, and the amount of this figure is important because it is included among your assets when determining your net worth. If this sounds confusing, think of it this way: if you have completely paid off the cost of your home, the value of your home equity is this total amount. Of course, because most people seek a lender to borrow money from when they purchase a home, their home equity would consist of their down payment and whatever amount they’ve paid down on the mortgage since purchase.

An Example Of Home Equity

To provide further clarification, let’s use the example of a house that has been purchased for $300,000. In the case that a down payment of 20% has been provided at the time of purchase, the equity in the home would be $60,000. Since this amount is the percentage and cost of the house that’s been paid down, this is the amount of the house that is actually owned and this will be figured among an individual’s assets.

How Home Equity Works

As you pay the amount that you owe on your home each month, you are paying off your total debt and thereby increasing your equity. Since this amount of money is considered an asset that belongs to you, it can be used down the road to buy another home or invest in other important things like education or retirement. While paying off the amount owed on a home is a considerable investment, if the value of your home increases, this means that you’ll still owe the same on it but your home equity will have automatically increased.

As an asset that is part of your financial net worth and can be used down the road to fund other investments, home equity is a very useful term to know when it comes to purchasing a home. If you’re on the market for a home and are considering your options, you may want to contact one of our local real estate professionals for more information.

Filed under: Mortgage Tips by Julie Woodward
Comments Off on Understanding How Home Equity Works and Why Buying a Home Can Be Your Best Investment

It’s not uncommon for homebuyers to recount horror stories about properties that appeared to be fine at first glance, but were actually hiding very expensive problems. If you fail to do your due diligence, you might find your dream house turning into a nightmare. The next time you walk through a house, pay attention for these five signs that the property might be hiding a unfortounate secret or two.

Mold, Water Spots and Water Damage

Older and newer homes alike may develop a leaky pipe or another similar plumbing issue from time to time, but any type of water issue can result in mold growth inside the walls. Water spots and warped wood indicate that the property has had a water issue in the past, and this means that the property should be more thoroughly inspected for mold growth before you make a purchase.

Doors and Windows That Stick

One of the most common signs of a foundation issue is doors and windows that stick or that are difficult to open and close. As you walk through the home, open and close the doors at leisure to identify if they are not in the frame properly. The issue should be reviewed by a structural home inspector or foundation contractor.

Small Cracks in the Walls

Some cracks in both interior and exterior walls can indicate that the home’s foundation has shifted and is no longer flat and level. Significant issues may be indicated by molding or door frames that appear to have shifted after installation.

Fresh Paint on a Small Area of the Wall

Many property sellers will apply fresh paint to walls before listing a home for sale, and this is not necessarily a sign of damage to the home. However, when fresh paint is applied on one area of the wall alone, this may be a sign that the homeowner is attempting to conceal water damage or other related issues with the property. Further inspection of the property is in order.

Floors That Slant

Any time a floor slants to a level that you feel as though you are walking up or down across the home, this is a significant indicator that the foundation has shifted. Foundation issues result in the movement of the foundation that the entire home rests on, and this can result in an uneven feeling when you walk across the floor. If you notice that the floors in a property slant, you should schedule an inspection of the foundation.

These small signs are symptoms of large problems, and they should concern you. If you notice any of these problems on a walkthrough, walk away from the home and contact a real estate professional for assistance.

Filed under: Home Buyer Tips by Julie Woodward
Comments Off on House Hunting: Watch for These Five Small Signs That Can Indicate Much Bigger Problems with a Home

Whether you’re just out of college, recently married or simply haven’t jumped into the market yet, buying your first home is an exciting prospect. It can also be an expensive one, which is why most people will take out a mortgage to help finance the cost.

If you are planning on engaging with a mortgage lender, you’ll need to have your finances in order. In today’s post, we’ll share a few key reasons why you’ll want to check your credit score well in advance of buying your first home.

Your Credit Score Is A Signal For Lenders

As you know, mortgage lenders have a responsibility to lend to those individuals and families who are at a low risk of default. So when a mortgage lender starts to dig into your financial background, they are looking at your credit history and credit score to help them assess that risk.

Note that having a low score doesn’t necessarily mean you have bad credit. If you’re still in your 20s and have only had a credit card, your score might be low even though you are fully capable of managing a mortgage.

Your Score Impacts Your Mortgage Interest Rate

As mentioned above, your credit score helps to signify your risk. If your credit score is in a lower range, perhaps a 640 or 660, you’re presenting a greater risk than someone with a score of 760 or 800. Because of this, the interest rate that you pay on your mortgage will in part be determined by your credit score. Those individuals who present a higher risk pay a higher rate to compensate. And vice versa, if your credit is spotless you can expect to pay a lower interest rate.

You’ll Need Time To Challenge Any Issues

Finally, you’ll need to give yourself some lead time to challenge any irregularities with your credit report. The credit reporting agencies aren’t perfect and they do make mistakes. There may be some old, retired credit card or other debt sitting on your report which is holding the score down. Even worse, there may be some incorrect delinquency or other error which ends up as a big red flag for potential mortgage lenders.

As you can see, it’s worth spending the time to check your credit score. You get to check it for free once per year, so take advantage of the opportunity. And when you’re ready to discuss buying your first home, contact your trusted mortgage professional. We’ll share how to navigate the credit score and mortgage process so you can land the home of your dreams.

Filed under: Home Buyer Tips by Julie Woodward
Comments Off on Ready to Buy Your First Home? Don’t Forget to Check Your Credit Score – Here’s Why

Purchasing a home is one of the most significant financial decisions many individuals make in their lifetime. It involves a substantial investment of money and requires careful consideration to ensure long-term financial stability. To navigate the complexities of the home-buying process, it’s essential to be well-informed about the various financial considerations involved. In this blog post, we will explore key factors to consider when buying a home to help you make informed decisions and achieve financial success.

Establishing a Realistic Budget:

Before diving into the home-buying process, it’s crucial to establish a realistic budget based on your financial situation. Consider factors such as your income, existing debts, credit score, and other financial obligations.

Saving for a Down Payment:

Saving for a down payment is a significant aspect of buying a home. Lenders typically require a down payment, which is a percentage of the home’s purchase price. Saving for a substantial down payment not only reduces the overall loan amount but also helps secure better mortgage terms, such as lower interest rates. Aim for a down payment of at least 20% to avoid private mortgage insurance (PMI) and decrease your monthly payments.

Understanding Mortgage Options:

Explore different mortgage options to find the one that suits your financial goals and circumstances. Common types of mortgages include fixed-rate mortgages, adjustable-rate mortgages (ARMs), and government-insured loans. It’s essential to carefully evaluate interest rates, terms, and potential risks associated with each type before deciding.

Considering Closing Costs and Additional Fees:

In addition to the down payment, be prepared for closing costs and other fees associated with purchasing a home. Closing costs typically include expenses like appraisal fees, loan origination fees, title insurance, and attorney fees.

Evaluating Long-Term Affordability:

While you may be able to afford the monthly mortgage payment currently, it’s essential to consider long-term affordability. Consider potential changes in your income, lifestyle, and expenses. Ensure that you have a realistic understanding of how your finances may evolve over time, accounting for future goals like starting a family, education expenses, and retirement planning.

Assessing Property Taxes and Insurance:

Property taxes and homeowners’ insurance are ongoing expenses that come with homeownership. Research the property tax rates in the area where you plan to buy a home and include them in your budget.

Maintaining an Emergency Fund:

Owning a home comes with unforeseen expenses, such as repairs, maintenance, and unexpected emergencies. Aim to have three to six months’ worth of living expenses set aside in an easily accessible savings account.

Getting Pre-Approved for a Mortgage:

Before house hunting, consider getting pre-approved for a mortgage. This process involves a lender reviewing your financial situation and creditworthiness to determine the amount they are willing to lend you. Pre-approval provides a clear understanding of your budget, strengthens your bargaining position with sellers, and speeds up the closing process once you find your dream home.

When buying a home, making well-informed financial decisions is crucial for your long-term financial well-being. Remember to evaluate long-term affordability and maintain a financial cushion to handle unexpected costs. By following these financial considerations, you’ll be better prepared to embark on your homeownership journey and achieve financial success in the long run.

Filed under: Real Estate Tips by Julie Woodward
Comments Off on Financial Considerations When Buying a Home

One of the stresses of moving to a new area is giving up the familiarity that you have with your old neighbors and starting from scratch. Whether you’ve just moved to a different locale or you’re planning to relocate in the near future, there are some easy ways that you can make a home of your new neighborhood right from the start.

Stand Up and Smile

While there are neighborhoods where people are definitely friendlier than others, by making your presence positively known you can make an instant impression on those that live around you. When you’re walking around the neighborhood, make sure you use it as an opportunity to engage with your fellow dwellers by throwing a smile in their direction, saying “Good Morning!” or paying attention to their children or their pet. It may not start a conversation right away, but if you see each other a few more times you might soon have a new fast-friend in the neighborhood.

Become a Community Member

If you happen to have a community center specific to your area, it will be even easier to meet the people who live in your neighborhood and make friends with some of them. Look into the offerings of your local center and find some classes or events that appeal to you. Whether it happens to be a craft festival or a fitness class that interests you, this will not only help you meet new people, but will ensure that their interests are aligned with your own so you’ll have some new pals to pursue old hobbies with.

Knock on the Door!

This is definitely the most assertive of options, and seems a throwback to another era, but instead of leaving meeting people up to chance, bake a cake or a batch of cookies and take them over to your new neighbor as a gesture of friendship and kindness. Your neighbors will probably love the baked goods, but this can also be the first step in forming a relationship with them that will come to be one you can both rely on.

When it comes to a new neighborhood, forming new attachments can seem all-but impossible, but there are things you can do to begin a bond right from the start.

Filed under: Home Buyer Tips by Julie Woodward
Comments Off on Buying in a New Community: How to Meet and Make Friends with Your New Neighbors

Are you thinking of buying a new home this spring or summer? If so, you’re not alone. Many thousands of individuals and families alike will become homeowners this year. Whether you’re a first-time buyer or a seasoned veteran of the housing market, you probably know there are significant choices to make. One of the big decisions you will have to ponder is how much you want to invest in your down payment.

With that in mind, let’s try to answer the question of whether or not it is worth it to put more than 20 percent of the home’s price in your down payment.

Ask Yourself: How Liquid Are You?

Before you can decide how much to put down, you first need to determine how liquid your finances are. That is, how much cash do you have access to? For example, if you are considering a $300,000 home, a 20 percent down payment is $60,000. If you have more than $60,000, fantastic. However, if you have less than that, you might have to do a bit of work to save up the remainder.

Even if you do have enough available cash now, you won’t have access to it once you take possession of the home. It is important to leave yourself with some cash in case of emergencies or for other uses.

Higher Down Payment, Lower Interest Rate

If you do choose to invest more than 20 percent in your down payment, it’s possible that you will gain access to a lower interest rate for your mortgage. Many lenders look favorably on homebuyers that are investing more of their own money and borrowing less. Be sure to check with your mortgage advisor to find out if you qualify for lower rates.

Lower Monthly Payments Await

Finally, choosing a down payment higher than 20 percent means that you will have lower monthly mortgage payments in the future. You are borrowing less so you will owe less. This can provide a nice boost to your monthly budget moving forward as you will have more free cash flow each month.

Try to keep in mind that there is no perfect answer to the question of how big your down payment should be. Choosing the best course of action means taking a good, long look at your current financial situation and deciding what your goals are. When you’re ready to discuss buying a new home contact us. Our professional mortgage team is happy to share our experience!

Filed under: Home Buyer Tips by Julie Woodward
Comments Off on Is It Worth It to Put More Than 20 Percent Down?

If you are thinking of buying a condominium or a home that is part of a planned community, you have likely come across the term “homeowners’ association” or HOA. In short, the HOA is a coalition of local homeowners who have banded together to manage the needs of the local community. Let’s explore the concept of the homeowners’ association, why they charge fees and what you can expect from your HOA if you buy a home that is part of one.

HOA Fees Are Meant To Make Things Easier

HOA fees are meant to make your life easier. Common sense dictates that all homeowners won’t be able to commit to investing some of their time in community upkeep. So the HOA charges a monthly fee to everyone to cover the costs of keeping everything in order. Of course, some HOAs can make mistakes or foolish investments that don’t benefit all equally. But most are well-intended and do positive work.

What Do HOA Fees Cover?

Your HOA fees will be used to pay for needs that benefit all homeowners’ in the community. If you live in a building, this will be everything from elevator maintenance to keeping the doors in good order. If you live in a townhouse complex or planned community, this includes landscaping, gardening, road maintenance and more. As long as your HOA leaders are doing their job, they will use fees to maintain and improve the community for everyone.

Some Pros And Cons Of HOA Fees

The main benefit of paying HOA fees is that you are offloading your share of the responsibility for building or community upkeep. In essence, you are trading a monthly payment so that you don’t have to vacuum the common areas, change the light bulbs or worry about repairing the gate when it breaks. The main downside to paying HOA fees is that you only have a single vote as to how they are spent and you may disagree with other homeowners about the HOA’s priorities.

All things considered, whether or not you have a favorable view of your HOA generally comes down to you. If you are the type that likes to share their opinion and is willing to commit the time to improve your local community, you may want to join your HOA. However, if you are less interested in having someone spend your money, you might disagree with their approach. Whatever the case, when you are ready to buy or sell your next home, contact a professional to help you find the right home – HOA or not and mortgage.

Filed under: Home Buyer Tips by Julie Woodward
Comments Off on Curious About Homeowners’ Association (HOA) Fees? Here’s What You Need to Know

Are you starting to grow bored of watching your money go nowhere sitting in a bank account? With today’s interest rates doing little to encourage saving, many individuals are looking elsewhere for new investment opportunities. In today’s blog post we’ll share four essential tips for buying a profitable rental property. Let’s get started.

Buy A Property With Year-Round Potential

Many real estate investors agree that the best rental properties are those that generate income every day of the year. The most straightforward situation to manage is one where you have stable, long-term tenants in place that aren’t going to move or change often. Browse local property listings around schools, colleges, and large employers to see if there are any suitable homes for sale.

Once you gain experience and invest in other properties, consider branching out into vacation or short-term stay homes. But to get started, aim for stability.

Predict Your Income And Expenses

Next, you will want to craft a budget. Have a look through rental listings in your target communities to see what renters are currently paying. This will give you some idea of your potential rental income for a similar-sized home. You can then compare this to your estimated monthly mortgage payment, taxes, utility costs, and repairs. It is impossible to predict precisely how much you will need, but this exercise can quickly prove whether this area is likely to be profitable.

Treat Your Rental Properties Like A Business

Since you have already taken the first steps with a budget, you might as well continue down the path to a full business structure. Most real estate investors set their portfolio up in an incorporated or limited-liability company, which reduces personal exposure. It can also be an efficient way to manage any legal issues that arise as your investments grow. Also, there will be significant tax advantages, including being able to write-off expenses such as repairs, contractor work, and renovations.

Work With Experienced Professionals

Speaking of contractors, it’s worth reminding to only work with experienced professionals who are licensed, certified and have references. Paying for quality work up-front ensures that you won’t have to deal with hefty repair bills due to shoddy workmanship.

When you are ready to invest in rental properties, give us a call. Our professional real estate team is happy to share listings that are perfect for investment and rental income generation.

Filed under: Home Buyer Tips by Julie Woodward
Comments Off on Buying a Rental Property? These 4 Key Tips Will Ensure You Buy One That Turns a Profit

Are you interested in purchasing a house? If so, you probably know that the market is more competitive today than it has ever been in the past. There are a lot of people who are interested in purchasing a home, and you need to take a few extra steps if you want to make your offer as competitive as possible. What do you need to do if you want to maximize the chances of having your offer accepted?

Make An Offer Early

If you want to increase your chances of getting your offer accepted, you need to make an offer as early as possible. If you know there is a property coming on the market that you are interested in, you should try to get your offer in on the first day. There is a chance that the seller is going to be drowned in offers, and they might not even accept your offer if they already have too many. Get your offer in as early as possible.

Cover Closing Costs

If you want the seller to take your offer seriously, offer to cover closing expenses. It is true that closing costs can be expensive, but it is a way for you to separate yourself from the other offers on the table. If the seller knows that they can save some money by picking your offer, you increase your chances of getting your offer accepted.

Pay With Cash 

Finally, there is a chance that the seller wants to get to the closing table as quickly as possible. Therefore, if you can do so, consider making an offer that is entirely cash. If you provide the seller with a cash offer, you can save the seller a significant amount of time and money, so they might decide to pick your offer over the others.

Get Your Offer Accepted

These are a few of the most important tips you need to follow if you would like to increase your chances of having your offer accepted. Even though the market has gotten exceedingly competitive, there are ways for you to get your offer to stand out from the crowd. Consider reaching out to an expert who can help you make a competitive offer right off the bat.

Filed under: Real Estate by Julie Woodward
Comments Off on The Top Tips For Making A Successful Offer

Did you recently receive your annual notice that the rent is going up? If so, you’re not alone. Millions of renters are seeing more and more of their income drained away due to higher rents. To make matters worse, every dollar in rent is one that you are not saving, investing or using to build your net worth. If you’re feeling the pinch of higher rents, it might be time to buy your first starter home.

Comparing Rent With A Mortgage

Have you ever done the math to understand how close your monthly rent might be to a mortgage payment? Here’s a quick and easy exercise. Multiply your monthly rent by twelve, and then multiply that number by 25. For example, if your rent is $1000 per month, that is $12,000 per year and $300,000 over 25 years. So if nothing changed from today, you could afford a $300,000 mortgage.

Homes Are More Affordable Than You Think

Many first-time home buyers are convinced that they can’t afford to enter the market, but that is not the case. There are homes available that fit almost every budget or price range. In fact, it is less important to worry about the total cost and more important to worry about location, size and local amenities like schools and parks.

Remember, when you buy a house you aren’t just locking yourself into a rental contract. You are investing in a home and property have the potential to gain in value over time.

A Few Other Considerations

Of course, there are some considerations that you will need to make as you start down the path to homeownership. The first is that your mortgage is unlikely to be your only monthly expense. You will also encounter property and other taxes, utility fees and if you buy a condominium or apartment, homeowners’ association fees. You will also be responsible for maintenance and upkeep since you own the home. But that also means that you are free to customize and renovate as you see fit.

Keep in mind that it is never too late to escape the rental trap. When you’re ready to start building your future by investing in your first home, contact us. Our experienced real estate team is happy to share beautiful local home options that will suit your needs and budget.

Filed under: Home Buyer Tips by Julie Woodward
Comments Off on Landlord Squeezing You for yet Another Rent Increase? It’s Time to Buy a Starter Home