What’s the Difference Between a Promissory Note and a Mortgage?

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You’ve likely heard of a mortgage, but are you familiar with something called a “promissory note?” When you take out a home loan, not only will you need to sign a mortgage, you will also need to sign a document known as a promissory note. The question is, what exactly is this? Isn’t it really the same thing as a mortgage?

What is a Promissory Note?

There is a difference between a promissory note and a mortgage. Essentially, a promissory note is a legal document that you must you sign that serves as your written promise to pay your lender back the loan that is extended to you to help you fund your home purchase. They’re standard documents and are typical components of the overall mortgage process.

These documents include a variety of important information, including:

  • Your name
  • Your lender’s name
  • Property address
  • Loan amount
  • Terms of repayment
  • Interest rate (fixed or adjustable)
  • Prepayment penalty (if there is one)
  • Late charge penalty
  • Term

You want to make sure that you’re not stuck with a mortgage that you are not comfortable with, which is why it’s critical for you to take the time to go through the promissory note to ensure everything is as it should be. It’s important that you’re clear about what the promissory note is, and the components that it covers.

The Difference Between a Promissory Note and a Mortgage

It’s easy to see why borrowers would confuse these two documents, considering the fact that some of the same data are included in both, such as the loan amount due and the date of the note. However, other items like the exact interest rate and the amount you are required to pay each month aren’t detailed on your mortgage. Instead, the mortgage contains information including the following:

  • Your name
  • Property address
  • Legal description of the property

While it’s not uncommon to confuse these two documents, it’s important that this distinction is made. After all, you’re making a written promise to repay the loan amount in full at the agreed-upon interest rate, so you need to be entirely certain that you are comfortable with the terms outlined. This is NOT what the mortgage document is – instead, it’s the promissory note that is your promise to make good on your loan.

The mortgage is the actual contract that comes into play if you default on your mortgage. This contract mortgage basically stipulates that your property will serve as collateral if you default on your mortgage. If you come up short on your mortgage payments, your lender can repossess your home and sell it as a foreclosure (after appropriate notice is given) in order to get back the money lost on the loan that was extended to you.

The two documents also differ in their life span. While the promissory note is held by your lender until you’ve fully paid off your home loan, the mortgage stays with the county records for good. After your mortgage is paid off in full, the promissory note will be marked as such and given back to you.

The Bottom Line

Simply put, the promissory note is the document that includes your written promise that you will pay back the mortgage, while the mortgage is the document that outlines what happens if you fail to keep your promise. Be sure that you’re clear on what you’re signing, and ask your real estate professional or mortgage specialist to help you understand both documents before you pen your autograph on them.

Common Restrictive Covenants in an HOA

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If you’ve decided to buy a home in a planned community that’s governed by a homeowners’ association (HOA), then you’re probably already familiar with the fact that there are certain rules that need to be followed in order to live there.

Known as “restrictive covenants,” these rules can cover a wide variety of factors that can put a limit on what you can and can’t do with your unit and the surrounding property.   

What Are Restrictive Covenants?

Basically, restrictive covenants are the regulations that you and all other homeowners will need to abide by. They’re established by the HOA or other local entity in order to uphold a certain level of esthetics and to ensure peaceful and safe enjoyment of the property for all residents. They’re also meant to ensure that the value of the property is maintained. 

If these covenants are violated, you could be faced with some form of penalty, such as fines, liens, suspended right to use common facilities, and other consequences.

Here are some of the more common restrictive covenants that you may come across on your house hunt that you should be aware of.

Specific Colors on the Exterior of Your Home

If you live in a home in a planned subdivision, you might not necessarily have the freedom to paint your front door, garage, or exterior walls the color that you want. If you’re in a condo, the only exterior that you can fiddle with is the front door, which also cannot be painted or changed without permission from the HOA.

The idea behind this type of rule is to have some level of uniformity throughout the community without allowing one unit to stick out like a sore thumb and compromise the overall esthetics of the community.

Type of Fencing

Not only will there be restrictions on the color of your fence that divides you and your neighbor’s property, you will also be limited to the type of material, style, and height. And that’s if a face is even permitted. There are various planned communities that don’t even allow fencing on properties.

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Landscaping Standards

Before you start planning out the landscaping on your front yard, you’ll need to have your landscape design approved by the HOA. The majority of associations will require that landscape designs must compliment the residence and not interfere with the views of other residences. There might also be a certain proportion of the front yard that needs to consist of grass, with rocks and gravel not allowed in certain spots, or even at all.

The type of greenery that is planted cannot be a nuisance – certain types of vegetation may drop an excessive amount of leaves, harbor unwelcome animals, or give off foul odors. In addition, you may be required to cut your lawn on a scheduled basis, and will likely have a limit to the amount of water that can be used to irrigate the yard (or at least be restricted to the day/time that you can water your lawn).

Types of Vehicles You Can Park in the Driveway

Most people own a car, so it’s expected that there will be at least one vehicle parked in the driveway. However, there may be rules about the number of cars, or the type of vehicle that’s parked out front. For instance, any extra-large vehicles – such as RVs, boats, or pick-up trucks – may not be allowed to be parked in the driveway.

Types of Sporting Equipment at the Front of the House

In an effort to minimize clutter and avoid obstructing other residents’ views, there many be rules governing the type of sporting equipment that may or may not be permitted in the front driveway, such as a basketball hoop or large hockey net.

Type of Mailbox

Again, it all comes down to uniformity. You may be restricted to the size and color of the mailbox you have planted at the end of your driveway or hung at the entrance of your home.

Types of Window Treatments

You might be instructed to hang only specific kinds of window blinds or shades that the HOA deems acceptable.

Type of Pets, if Permitted

If your HOA allows pets to live on the premises, be prepared for specific restrictions on the breed and weight of your pet, as well as how many you’re allowed to have. You will also be given instructions on where pets are allowed to frequent, and will be reminded to clean up after them.

Barbecues

Condominium buildings often do not allow barbecues on balconies. Not only is it considered a fire hazard, it’s also a nuisance to neighbors who are typically very close by.

The Bottom Line

This list is by no means exhaustive. Every HOA can come up with their own set of restrictive covenants that residents must abide by in order to remain compliant. If you’re in the market to buy a home in a planned community, read over what the specific HOA rules are before you buy to make sure they won’t impede with your enjoyment of the property.

What’s the Difference Between Staging Your Home and Decorating it?

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When it comes to interior decorating and home staging, it all comes down to who you’re trying to impress: yourself (the current homeowner) or the buyer (the future homeowner). When you’ve got your home on the market for sale, you need to create a space that speaks to the tastes, needs, and wants of prospective buyers that will be looking at it.

Essentially, you want to create a lifestyle for buyers and help them visualize themselves living in the home and building an emotional connection to it. The way the home is staged might not necessarily be appealing to you and your tastes, but it’s really not about you: it’s about the buyer.

This is the fundamental difference between home staging and interior decorating. You might find it odd to revamp your home in such a way that doesn’t meet your tastes, but the sooner you understand the difference between these two realms, the more successful you will be at selling your home. 

Everyone wants a home that’s esthetically attractive, functional, organized, and comfortable. This is exactly how you want buyers to feel about your home when they walk in, and is essentially what will help them make that critical connection.

Decorating is All About the Homeowner

The goal of an interior decorating job is to create an ideal space that the current homeowner – you – feels comfortable in. It’s about bringing in colors, materials, and finishes that you find appealing.

Decorating also has to do with determining exactly how each family member uses the rooms in the home, and how they actually live in the space every day. An interior can be completely transformed into an amazing space that you would probably see in a magazine, but that doesn’t necessarily mean it’s functional for you or your family. Any efforts to stylishly decorate are essentially wasted if the result is an impractical space.

Even if the interior is functional and decorated in a very sophisticated manner, it’s important to ensure that you are comfortable with living with the new space, instead of feeling like you’re living in a home that’s not yours.

Professional interior decorators will take the time to listen to your tastes, needs, and lifestyle, and will work around these critical factors to come up with a space you can be proud to call yours.

Home Staging: Decorating a Home For the Market

You might have an affinity for shag carpeting or bright-colored walls, but you’ll likely find it tough to successfully market such decor to the general pool of buyers out there. Certain quirky tastes are better left for the home you plan to move into. If your home is going to hit the market soon, you’d be a lot better off decorating your home in a way that will attract as many buyers as possible.

As such, a neutral palette is generally best. You would be more likely to find more people who would rather see beige on the walls instead of fuchsia. Remember – it’s about the buyers, so the sooner you put your own personal tastes aside, the better. If you don’t, your home will basically be appealing only to a small proportion of buyers who might actually like your particular style. Home staging is about modifying and depersonalizing a space, which is the opposite of what decorating is all about.

Generally speaking, using neutral colors on walls and surfaces – such as beige, white, or grey – are best. But ensuring that your home is not specific to any particular taste doesn’t mean that your home has to be bland and lack any color. Instead, it should still involve some level of style and excitement. You still want to impress potential buyers and prompt them to remember your home after they’ve seen others. Just try to keep any bold color schemes minimized and simple while being supported by a neutral palette.

By the same token, depersonalizing your home is another step that should be taken if you want to help prospective buyers see the home as their own. It will be a lot more difficult for them to picture themselves living there if your home is covered in family photos, political posters, and religious artifacts. You might be very proud of your personal collections, but their presence will only stand in the way of helping buyers visualize the home as their own.

Having an understanding of the target buyer and what they’re looking for will make the home staging process a lot easier. The goal of home staging is to determine what would be considered the most appealing to the area’s targeted home buyer to warrant a quick sale for top dollar. 

The Bottom Line

When staging your home to sell, you need to think the way a home buyer in your neighborhood would think rather than focus on what you might like. If the buyers in your area are young professionals with a penchant for sleek style, then stage your home accordingly. The closer you’re able to style your home according to what home buyers expect, the higher the odds of you finding a buyer sooner, and attracting a handsome offer.

Areas in Your Home That Are Not Included in the Overall Square Footage

Not every space in your home is counted towards the overall square footage. From an appraisal perspective, there are certain areas that are ignored when calculating the overall size of the home. The American National Standards Institute (ANSI) offers a standard for appraisers to measure single-family homes.

Whether you’re buying or selling, it’s important to understand how the square footage of a home is determined and which spaces in a home are not counted.

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What is Included?

Before we go into what is not included in a home’s square footage, it’s helpful to understand what is. Basically, the square footage of a home is based on all interior spaces that are heated and/or cooled. This includes bedrooms, bathrooms, the kitchen, living rooms, closets, entryways, and utility rooms. Any additions to the home will also be included, as long as they have been constructed with an equal finish to the original structure and have a comparable heating and cooling system installed.

What is Not Included?

While the above-mentioned spaces are included in the measurement of a home’s square footage, the following are not.

Attics

These spaces are not included in the calculation of a home’s size, unless they are finished and conform to the original finishes and systems of the rest of the home. You can’t just throw in an area rug and plug in a fan and call it an additional living space.

More specifically, at least half of the finished square footage of the attic needs to be at least 7 feet where the ceiling slopes. Any finished areas less than 5 feet aren’t included in the home’s finished area.

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Screened-In Porches

Enclosed porches are great for extending the living space of a home, and can certainly add a great deal of value to a property. However, they don’t contribute to the home’s square footage. The only way that an appraiser will count this space is if the quality of its construction closely matches that of the main residence, is equipped with a relevant HVAC system, and is considered suitable for year-round occupancy.

Garages

Whether you use your garage to park your vehicle, as storage space, or as a work area, it isn’t including in the overall size of your home. The only time it will be counted is if it has been completely converted into a living space that’s totally finished and has the appropriate systems installed.

What about apartment spaces over the garage? Maybe you have an adult child still living at home or in-laws that have moved in, and want to give them their own private, separate living quarters. However, this space may not be given full consideration in an appraisal – even if it’s finished – unless the appropriate access has been given to it.

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Sheds

Just like your garage, your shed won’t be calculated in your home’s overall square footage. In essence, any detached living spaces on your property are excluded unless they meet the criteria for a year-round living space.

Unfinished Areas

Even if a space is part of your home’s overall structure, it won’t be included if it is unfinished and therefore not suitable for year-round occupancy. This applies regardless of what level the area happens to be on.

The Bottom Line

If you’re listing your home for sale, you’ll want to give full credit to the size of your home on your listing. However, you need to be honest and accurate about this number before advertising it. If you’re buying a home, you’ll want to know exactly how much square footage you’re paying for. An appraisal will typically be done if you’re taking out a mortgage, which will provide you with insight on the exact square footage of the home you’re buying.

Either way, understanding how a home’s square footage is calculated and what’s included and not included is important during the buying and selling process.

New California Bill Makes it Easier to Add Second Units in Homes

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It’s no secret that there’s a housing shortage across California, in some markets more than others. The squeeze in inventory has led to an affordability crisis which has made it harder for buyers to get into the market.

But perhaps the housing shortage in California can be alleviated somewhat by allowing homeowners to build second units or ‘granny suites’ – officially recognized as ‘accessory dwelling units’ (ADUs) – on their properties.

Governor Jerry Brown recently signed a bill – AB 2299 – that was authored by assembly member Richard Bloom. The new law would encourage homeowners to develop accessory dwelling units on their properties as a means to boost the housing supply. Basically, an ADU is a second dwelling unit that’s either attached to a single-family home, or is a stand-alone unit on the same lot as the main home.

This unique type of housing provides a more affordable option for many would-be buyers throughout the Golden State, and will help boost the housing inventory by eliminating obstacles to the construction of such units.

Homeowners who have wanted to build ADUs in their backyard have traditionally been met with many barriers from local regulations. With this bill, homeowners should have a much easier time thanks to the local adoption of less stringent ADU ordinances.

However, ADU’s do need to meet certain requirements in order to comply with the terms of AB 2299:

  • The unit can’t be sold separately from the primary residence on the lot.
  • The unit can’t be rented.
  • The lot needs to be zoned for residential housing.
  • The unit needs to be either:

~Attached to the home

~Located within the living area of the home

~Detached from the main home but located on the same lot.

  • The floor area of the unit can’t exceed 50% of the existing living space.
  • The unit can’t be bigger than 1,200 square feet.

Such a bill proposal has been prompted by a combination of high housing costs, the heightened demand for various housing types, and demographic changes in certain markets with an aging population, which have enticed cities across the state to find ways to increase their respective housing inventories. ADUs represent an important foundation of affordable housing, and the new bill requires cities to look at different ways to boost the construction of such units.

Whether used by elderly parents, college students, disabled individuals, or anyone else who needs to live close to their families, these second units can help slightly alleviate the growing issue of a lack of affordable housing in California.

9 Ways to Make Your Cookie-Cutter Home More Unique

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Living in the suburbs offers plenty of benefits to homeowners, including more space, newer home features, and access to family-friendly amenities. But there are also some downsides, including the fact that many of the homes in these communities look almost identical to each other inside and out.

How can you combat this “cookie cutter” syndrome and make your home stand out? Here are some tips to make your home more unique.

1. Paint the Front Door

Painting your front door in a bold, stand-out color is a fabulous way to make a big statement and differentiate your home from the others on the block with little money and effort. While you’re at it, consider painting your garage door too. If your budget permits, consider changing the door altogether to get maximum impact on the exterior of your home.

2. Add Shutters to Your Windows

Exterior window shutters are fast and easy to install, and can quickly add curb appeal while setting your home apart from the others. Install shutters in a vibrant color that’s in stark contrast to the exterior walls of your home for maximum visual effect.

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3. Bring Your Landscaping to Life With Flowers, Shrubs, and Stonework

Perhaps the best way to make the exterior of your home truly unique is with lush landscaping. Beautifying your outdoor greenery can make a significant impact and improvement to your home’s outdoor space. Even if your home is exactly the same as all the others in your neighborhood, a stand-out landscaping job chock full of trees, bushes, plants, ornamental grass, stone walkways, and in-ground lighting can make it look as if your home was custom made just for you.

4. Flank Your Ceilings With Faux Wood Beams

Wood beams aren’t features that you would typically see in subdivision homes, which makes them the perfect addition to help differentiate your place from your neighbors’. While you can always use solid wood, you can make the job a whole lot easier (and cheaper) by opting for faux wood instead. They look completely authentic and make a huge difference to your home’s ceilings, and the entire interior as a whole. 

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5. Add a Stone Accent Wall

Create visual interest and texture on a particular wall in your home by covering it in the stone of your choice. While this might sound like a tough, complex job, it doesn’t have to be thanks to modern materials available that mimic the look of real stone, but with a fraction of the effort required.

Some types of manufactured stone are mounted on sheets, stacked on the wall, and fastened with a flange, while others involve adding building paper and a couple of coats of mortar to secure the stonework. Either way, it’s a relatively simple process to bring an accent wall to life and put you one step further away from the dreaded “cookie cutter” syndrome.

6. Paint Your Kitchen Cabinets

If you don’t want to get rid of all that builder-grade cabinetry, you can still completely change the look of it with a sanding and staining/painting job. If you don’t mind the grain of the wood, stain will work quite well. On the other hand, if the grain is something you’d like completely eliminated from your cabinetry, then paint is the way to go.  These days, kitchens come in all different types of bold colors, so don’t be afraid to try something out-of-the-box.

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7. Change Up the Light Fixtures

If you walk into your neighbor’s house soon after the subdivision goes up, you’ll quickly notice that their light fixtures (among other things) are a spitting image of yours. Luckily, you don’t have to stick with these light fixtures, and can swap them for models of your choice. It’s amazing what a difference light fixtures can make to an interior. From chandeliers, to pendant lamps, to wall sconces and beyond, the lighting in your home can often be an underestimated feature, yet packs a big punch.

8. Install Crown Molding

Newer homes may have modern finishes, but they often lack the character that comes with the details of older homes. Crown molding, in particular, is one architectural feature that you can add at the junction of your walls and ceilings to help merge modern with classic characteristics in your home.

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9. Spruce Up Your Walls With Wainscoting and Trimming

If your walls are covered in plain painted drywall, you can bring a dramatic element to this surface with some wainscoting or trimming. Flat-turned-sculpted walls bring an elegant and sophisticated ‘old-world’ charm to an interior space, and can even give you the opportunity to cover up any existing scuff marks or scratches!

The Bottom Line

Your home may have the same design, layout, and finishes as your neighbors, but there are plenty of features that you can add to it to make it look like truly unique. Give any one (or all!) of these suggestions a try and transform the status of your home from “cookie cutter” to “one-of-a-kind”!

7 Decor and Design Predictions For the New Year

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2017 is here, and what better way to start the new year than to revamp your home’s interior. Whether subtle in nature or an all-out overhaul, there are plenty of fabulous new interior design trends on the horizon that you might want to consider implementing into your home. While style is certainly a key component to interior design this year, the trends we look forward to also incorporate comfort, function, and a tribute to yesteryear.

Without further ado, here are the top 7 trends in interior design that you can expect in 2017.

1. Mixed Metals

There’s no hard-fast rule that says you need to stick with just one metal in a space. Instead, 2017 is going to see many more interior spaces that combine a variety of metal colors, including silver, gold, nickel, copper, and brass. However, it’s best to make one metal the dominant tone and set others as secondary tones to provide the room with some visual structure.

For instance, many items in a space may have a variety of brass tones, reserving just a few pieces in nickel. Each tone should also be spread throughout the room, instead of being clumped in one spot.

2. Grey Hardwood Floors

While various shades of brown are still widely popular on hardwood flooring, grey is making a huge splash on the scene. This wonderful neutral hue provides a more relaxed, comfortable feel in a space. Whether you go with wide planks, parquet, or a herringbone pattern, grey really is the hottest neutral for hardwood flooring in 2017.

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3. Matte-Finished Appliances

Stainless steel has been a staple in modern kitchens for years now, and will continue to be extremely popular in the new year. However, 2017 is expected to see more and more kitchens being outfitted with sleek, matte-finish appliances in dramatically dark shades, creating a more striking look to a space.

4. Bars

You don’t have to be in a daytime soap opera to have your own easily-accessible bar in your home. In 2017, you’ll discover an increasing number of homeowners adding bars to their homes, no matter how small or large. More specifically, these bars will come in the form of consoles or carts, rather than fixed pieces. Whether you house your favorite bottles of liquor or even your fine china and teapots, bar consoles and carts will become a pretty hot commodity in 2017.

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5. Marble

It seems like it’s been eons since granite has taken over kitchen and bathroom counters. Granted, this natural stone has helped make a dramatic improvement in these spaces as opposed to their laminate counterparts, and has become much more affordable over the years. However, granite might need to move over for another classic natural stone that’s emerging as the go-to material for these surfaces: marble. Pay close attention and you’ll start noticing a lot more marble popping up in homes everywhere, as well as on tabletops in your favorite cafes or eateries.

6. Mural-Inspired Wallpaper

Wallpaper has certainly made a huge comeback over the past couple of years, but in addition to the typical bold patterns we’ve been seeing, 2017 will bring more ‘art’ to these traditional wall coverings. Stripes, florals, and geometrics will still be popular, but the new wallpaper of 2017 will be decorated with large-scale mural-type art work. The sky’s the limit on the type of imagery you’ll see on wallpaper, with limits that reach as far as the imagination.

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7. Nailhead Details on Accent Pieces

Nailhead details aren’t exactly something new, but they haven’t exactly been in-trend since the 70s. Now, you can expect to see a number of accent pieces – such as credenzas, chairs, and chests – adorned in nailhead details to bring an added level of visual interest. They aren’t just reserved for edging either. With your imagination, you can create just about any pattern you desire with this unexpected trend.

Given these anticipated trends, it looks like 2017 will turn out to be a very interesting year for interior design and decor. Whether you incorporate one or all, your home will certainly be on point this year!