How to Develop a Fire Escape Plan For Your Home

In light of the horrific fires that ravaged parts of California, it makes sense that all households should have a sound fire escape plan that can get all residents out of danger quickly and safely.

Once a fire escape plan has been drafted up, it should be practiced a few times and on a regular basis in order to make sure that everyone in the home knows exactly what to do in the event of an emergency.

It goes without saying that a fire escape plan is important, but how do you go about creating one? Follow this guide to help keep you and your family out of harm’s way.

Install Smoke Detectors

If your home doesn’t already have smoke detectors installed, now is the time to install them. Smoke detectors save lives. If you’re not alerted to smoke filling your home – particularly at night when everyone’s asleep – you lose valuable time that could have been used to escape.

If your home has smoke detectors installed, make sure to test them on a regular basis to make sure they’re working properly.

Place Ladders Near Second Story Windows

If possible, place escape ladders in or near windows to make escaping easier if accessing the main level is not possible. Make sure to go over the manufacturer’s instructions in great detail in order to use them safely.

Map Out Your Home’s Layout

Draw out a simple plan of your home’s layout, including all rooms, doorways, and windows. Be sure to include all floors, as well as the location of all smoke detectors and fire extinguishers. Try your best to draw the map to scale to ensure greater accuracy.

Choose a Meeting Place

Whether it’s a tree, the end of the driveway, or a street light, establishing a meeting place is crucial to help ensure that all family members are aware of each other’s whereabouts. Knowing where everyone is and quickly locating each other will inform everyone whether everyone is safe or whether someone is still inside and needs help.

The location you choose for your meeting spot should be far enough from the house so everyone is out of danger of the fire, yet close enough so that everyone can get to each other as fast as possible.

Establish and Highlight All Possible Escape Exits and Routes

With your map in hand, identify all exits from your home, as well as the routes to take to get out of the home and arrive at your family’s meeting spot. Doorways are ideal escape routes and should be made primary escape routes, but windows should also be used if doorways are blocked from fire.

Keep Exits Clear of Obstacles

Make sure that each exit can be easily accessed and not blocked by any obstacles that could impede the ability to get out quickly.

Review the Escape Plan With Everyone on a Regular Basis

Once you’ve established your escape plan, be sure to go over it in great detail with all members of your family. From there, be sure to revisit the escape plan every so often so it is fresh on everyone’s minds.

Be sure that all children understand the escape routes, as they may need a little more coaching. Further, instruct children never to hide in the event of a fire, and instead to find an adult nearby or get out as quickly as possible to find the meeting place.

Come Up With a Plan For Those With Disabilities

If anyone in the home has a disability, be sure to make arrangements so they are able to get out quickly and safely.

Practice Escaping the House

Ideally, you should all practice escaping your home a few times. Doing so can make it easier for everyone to be prepared and act on instinct in the event of a real emergency.

Assign Specific Duties to Each Family Member

With the exception of young children, everyone in the home should have a certain assigned task in the event of a fire. For instance, tasks can include calling the fire department, gathering up the children, waking those who are still asleep, ensuring any seniors or those with mobility issues are safe, collecting all pets, and accessing the fire extinguisher for smaller fires.

The Bottom Line

Taking the time to establish a fire escape plan and practicing the drills can seem like a nuisance. But doing so can literally mean the difference between life and death. Considering how devastating the recent fires in California have been, it’s worth every second to come up with a plan and make sure everyone in the family is on board.

Mortgage Versus Rent: What’s the Real Difference?

Whether you rent or own, you still have monthly expenses to pay in exchange for a place to live. That said, there are clear differences between paying a mortgage versus paying rent every month. But while rent may often be the more affordable and easier option for paying for a home, mortgages can sometimes be the better route to take.

There are definitely perks to each, and one may be better than the other for different people. The decision between one and the other comes down to a number of factors, such as your financial situation, your lifestyle, and the market where you live.

If you’re currently trying to decide whether to rent or buy, consider the following differences between a mortgage and rent.

Ability to Remain on Site For the Long Haul

If you’re paying a mortgage, you’re in charge. You own the place, and as such, it’s completely up to you whether or not you decide to stay put for the long term or choose to sell and move at your discretion.

If you rent, however, you’re always at the mercy of your landlord. Of course, your lease is a legal document that does not permit your landlord to force you to move out with little notice before the expiry date arrives, unless you have breached the contract.

But once your 12 months are over, your landlord has the right to request that you move out if they follow the landlord-tenant rules in your jurisdiction. That means you could find yourself looking for a new place to live, even though you may have enjoyed where you were living.

Freedom to Move at Will

On the flip side to what was just discussed, renting provides you with much more freedom and flexibility when it comes to moving. While you still have to honor the 12-month lease stipulation (unless you have a valid reason to move out sooner), vacating a rental unit and moving to another is a lot easier and filled with less red tape compared to having to sell a home and buy a new one.

If your lifestyle is rather transient or you’re simply not the type to be tied down to any particular place, then renting might be a better option. Of course, that doesn’t mean that you can’t sell whenever you’d like to. But renting certainly makes these transitions much easier.

Tax Deductions

While part of each mortgage payment goes towards paying down the principal portion of the mortgage, a big chunk also goes towards interest. That can add up to a lot of money being dished out to the lender by the time the loan is fully paid off.

But as frustrating as it can be to pay interest every month, homeowners can take advantage of certain tax breaks that come with homeownership, and one of these perks is deducting the interest portion of their mortgage payments. This can help to reduce the overall cost at the end of the year. In the majority of cases, rent is not tax deductible, which means you could owe a lot more in taxes compared to having a mortgage.

Credit Boost

Having a mortgage – and being responsible with it – can help to improve your credit score and keep it up there. As long as you make your mortgage payments on time every month, your credit score will be affected positively. Lenders report mortgage payments to the major credit bureaus that will then note your activity on your credit report.

While paying rent on time every month could potentially help with your credit score, this will only be the case if your landlord reports your activity to the credit bureaus, which they’re not obligated to do.

Upfront Expenses

There are very few up-front costs to renting, aside from providing first and last months’ rent and buying a few pieces of furniture. But buying a home requires a lot more in out-of-pocket expenses in comparison.

Taking out a mortgage typically requires any of the following:

  • Down payment
  • Appraisal fees
  • Underwriting fees
  • Lender fees
  • Title insurance
  • Home inspection
  • Private mortgage insurance (PMI)

Generally speaking, you can expect to pay anywhere between 2% to 5% of the purchase price of your home when you buy. These are costs you won’t have to worry about with rent.

Increase in Monthly Payments

Both renting and paying a mortgage can come with the risk of an increase in monthly payments. If you rent, your landlord can increase the rent every year, as long as they follow the protocol for rent increases in your jurisdiction.

But mortgages can also increase. If you take out an adjustable-rate mortgage, your payments can fluctuate based on changes in the interest rate. That said, if you have a fixed-rate mortgage, the payments will remain the same until the mortgage is renewed.

Additional Costs

In addition to mortgage payments, there are a number of other costs associated with owning that you wouldn’t have to worry about with renting. For instance, maintenance, repairs, property insurance, and property taxes are costs that you have to deal with that renters typically don’t pay.

Equity Accumulation

A mortgage payment gives you the opportunity to build equity in your home. Equity is the difference between the value of the home and what you owe on the mortgage. With each payment you make, the equity in the home builds, as long as the property doesn’t depreciate in value. You can then use that equity (once a certain amount is built up) to be used to cover the cost of home improvements, consolidate debt, or for other major expenses.

Rent does not provide such an opportunity. You need to keep on paying rent month after month without seeing any fruits of your labor. On the plus side, however, you can use whatever money you save from not having to pay for ongoing costs associated with homeownership to invest in other vehicles that can help you build wealth over time.

The Bottom Line

While mortgage payments or rent payments are necessary to cover the cost of living, they’re certainly not the same. Both come with their own benefits and drawbacks, and the decision you make between paying rent versus a mortgage will depend on a number of things, including your financial position and your desire from freedom versus stability.

Should You Move From the City to the Suburbs?

City living comes with a certain level of excitement and convenience that you’d be hard-pressed to find outside of the downtown area. The bright lights, the close proximity to work and entertainment, and the vibrant community that usually characterizes urban living can’t be denied.

But sometimes the need for a little tranquility and space drives people to make a move from the city to the suburbs.

If you’re considering making a move, should you look for another unit in the city? Or is it time for a completely different change in scenery in the form of suburban living? Here are some things to consider before making your final decision.

Commute to Work

If you work in the city, then obviously the proximity from your home to your place of work will be a lot closer than it would be if you lived in the ‘burbs. Commuting is one of the more important factors to consider when moving.

Congestion and traffic can really extend the amount of time it takes to get to work if you’re coming from way outside the city, let alone the stress that comes along with commuting. And if there are no convenient and efficient public transportation options available, the commute can be even more daunting.

If you plan to keep your job in the city, you’ll want to seriously consider your commute. If you’re dedicated to moving out of the city, try to find a suburb that’s as close to the city as possible without compromising all the conveniences that come with suburban living.

Schools

If you’ve got school-aged children, then scoping out the school ratings in the area you plan to move to is important. You’ll want your kids to attend a school that’s safe, has a decent student body, and is rated well for academics. In fact, schools are one of the biggest driving factors for people with kids who are considering moving.

Even if you don’t have any kids, you might have some in the future. And even if children are not part of the plan, communities with highly-rated school districts tend to be valued higher compared to those with schools that are low on the list. If anything, choose an area with desirable schools simply to protect your investment.

Amenities

Urbanites tend to have a slew of amenities available to them at their fingertips. City centers are often filled with all the conveniences of daily life within a short distance from each other, which is one of the conveniences of living in the city.

Whether you need to pick up some groceries, want to hit up a yoga studio, or want to make grabbing your morning cup of joe from a local cafe much quicker, all of these amenities – and more – can usually be found within a short distance from each other in the city.

Generally speaking, amenities in the suburbs tend to be spread out a little more. That usually entails having to drive to do your groceries, meet up with friends, or go to the gym.

That said, there may be certain suburbs that take the urban lifestyle into consideration. City planners are increasingly trying to blend the conveniences of both suburban and city living in order to give residents the best of both worlds. If possible, try to find a suburb that has its own “downtown” that offers a myriad of amenities all within a short distance from one another.

Lifestyle

Perhaps the biggest difference between living in the city versus living in the suburbs is the lifestyle. Sure, the commute and the amenities are important considerations to make. But in addition to these, the lifestyle differences are worth noting.

Living in the city is often characterized by convenient and energetic. You can walk to amenities, places are typically open later than they are in the suburbs, and there are usually more options for entertainment. City life is usually more vibrant and exciting, offering a slew of opportunities, both for employment and entertainment. Further, the city is usually much more multicultural in nature.

But living in the suburbs has its own distinct lifestyle that may be more attractive to many buyers. Generally speaking, the suburbs offer a lot more space to enjoy. The neighborhoods are usually quieter without the constant noise of traffic, honking horns, and police sirens. The suburbs are usually considered safer, which is often why parents tend to move outside of the city. Further, the pollution is not as thick as it usually is downtown, giving residents fresher air to breathe in.

Depending on what you’re looking for in a lifestyle, this may sway your decision to make a move to the suburbs or stay put in the city.

Housing Types

City centers are usually characterized by condominiums, apartment buildings, and townhomes. Considering the density of housing and the cost per square foot to be close to all the action, square footage is usually on the skimpy side in downtown cores. As such, you’re usually stuck with living in no more than a few hundred square feet of space. If that’s OK with you, then perhaps staying in the city is not a bad idea.

But if you’re looking for more space to grow, then perhaps a move to the suburbs might be warranted. There are plenty of opportunities to buy a spacious home with a lot of outdoor space at an affordable price in the suburbs, which is typically not something you’ll be able to take advantage of in the city.

In fact, the opportunity to buy a larger home with a big yard for approximately the same price as a much smaller condo downtown is one of the biggest reasons why urban families end up moving outside of the city once they start having kids. If you’re looking for a lot more space, then suburban living might be the right way to go.

The Bottom Line

Everyone has different needs, wants, and aspirations for how they want to live their lives. Depending on exactly what you’re looking for, both the city and the suburbs each have their own set of unique traits for you to take advantage of. Carefully consider what you’re looking for in a lifestyle, both inside your home and in the community, before making the decision to either stay put in the city or make a move to the suburbs.

What’s the Difference Between a Home Equity Loan and a HELOC?

If you own a home and are in need of a loan, you might be able to use the equity that’s built up in your property to be put towards a large expense.

Home equity loans and home equity lines of credit (HELOCs) allow homeowners with a certain amount of equity in their homes to use some of that equity as a loan. If you have some sort of pressing expense that requires a lump sum of money to cover, one of these two loan options may be able to help.

If you make regular mortgage payments or if your property increases in value over time, your home equity will increase. If you have a certain amount of home equity amount built up, you may qualify for a home equity loan or HELOC. In both of these situations, the amount of equity that you borrow will be added to the existing mortgage debt.

But while both of these loan products involve pulling out equity from your home to be used towards a large expense, they’re not exactly the same. Let’s go over what a home equity loan and a HELOC are and compare them to see how they’re similar to each other, as well as how they differ.

Home Equity Loans Explained

A home equity loan is similar to other types of loans in that you’re given a lump sum of money after your loan application is approved. You’ll be given a specific time frame within which to pay back the loan in full by making regular loan payments. Like other types of loans, you’ll also be charged an interest rate which will determine how much you’ll have to repay in total.

This type of loan allows the borrower to use the equity of the home as collateral. The funds borrowed will depend on the value of the home, which will be determined by an appraiser appointed by the lender. Since the loaned funds are secured by your home, a home equity loan can be easier to qualify for compared to other loan types.

Home Equity Lines of Credit (HELOCs) Explained

A HELOC allows you to borrow against the equity in your home, as is the case with a home equity loan. But rather than serving as a traditional type of loan, this type of financing works similarly to a credit card.

The lender will allow a maximum amount to be borrowed within an agreed-upon time frame referred to as the “term.” Within this term, you can borrow as much or as little of that credit limit as you like – much like a credit card – as long as you don’t withdraw more than the maximum amount allotted.

You can make your principal payments any time you like and will only be charged interest on the amount withdrawn rather than the entire credit limit amount. If you don’t borrow anything against the credit limit, you won’t have any interest to pay. Only when funds are withdrawn will you be charged interest.

To repay the funds, you can choose to make regular monthly payments or transfer funds from your bank account whenever you have extra money to put towards your HELOC. You can either choose an “interest-only” draw period whereby you only pay interest on the funds withdrawn or a principal-and-interest draw period to help you pay your loan off faster.

When you pay back the amount that you withdrew, you’re free to use it over again as your credit revolves. When the end date of your line of credit hits, you then enter the repayment period that can last for years. Any outstanding balance borrowed will have to be repaid along with any interest owed. You can then renew your credit line if you need to, as long as your lender agrees.

How Can You Qualify For a Home Equity Loan or HELOC?

In order to qualify for a home equity loan or a HELOC, your lender will want to make sure you’re financially sound, similar to when applying for your first mortgage. But not only that, your lender will want to make sure that you’ve got enough equity built up in your home.

Generally speaking, homeowners must own at least 20% of the home – including after the additional equity has been withdrawn – before being eligible for either one of these two loan options. That means your mortgage can’t be any more than 80% of the value of your home.

The Bottom Line

Both a home equity loan and a HELOC can come in handy when you need money to cover any one of life’s big expenses. But which one is best for you?

If you need a lump sum of money for a one-time expense and have no plans to borrow any time in the near future after that, then a home equity loan might be best. But if you think you’ll need access to cash a few times over the next little while, then a HELOC might be more convenient for you. Just make sure you’ve got the finances needed to make payments in order to protect your collateral.

9 Tips For Throwing a Housewarming Party

Buying a new home is incredibly exciting. So exciting, in fact, that it’s hard not to share your excitement with the world. A housewarming party is a perfect opportunity to invite your friends and family members over to celebrate this endeavor together.

To make sure that your get-together is a success, consider the following tips.

1. Wait a Few Weeks After You’ve Moved in

Moving into a new home can be overwhelming, so you don’t want to make things even more stressful by adding an extra event into the mix so soon after getting the keys to your new place. Ideally, you should be given the chance to move everything in, put everything in its place, and enjoy what life is like in a new home first. Once the dust has settled, then call in the troops and enjoy entertaining in your new crib.

2. Send Your Invites Out Well in Advance

Give your guests a chance to make sure their schedule is clear for your housewarming party. That means giving plenty of notice and not throwing a last-minute shindig. At least a week or two would be nice to give everyone on your guest list a heads up about your housewarming party. Besides, knowing how many people will be attending in advance will also give you a chance to get enough food and beverages and prep for the upcoming gathering.

3. Provide Detailed Directions

Since you’ve got a completely new address, many of your friends and family members might not know where you now live. As such, you’ll want to make sure that your invitations provide detailed and easy-to-follow directions.

4. Plan Out Parking

Depending on how many people you plan to invite, there’s a good chance that your driveway (if you even have one) won’t be able to accommodate all the cars that will need to be parked. For this reason, you’ll want to plan out where guests can park. This is especially important if your new home is a townhome or condo that has minimal guest parking. Once you have that all planned out, be sure to include these details in your invitations.

5. Treat it Like an Open House

Unless you have no problem with having guests lingering all day long, be sure to stipulate the time frame that the party will be held. For example, from 2 pm to 6 pm would provide enough of a window to get all your guests in to visit. They can show up whenever they like and leave at the time of their choosing, as long as it falls within the stipulated time frame.

This is especially helpful if your new home isn’t large enough to house everyone on your guest list. By specifying a time frame, people can drop in and out at different times, rather them all showing up at the same time.

6. Invite the Neighbors

You might be new to the area and don’t know anyone in your neighborhood, but now is a great time to get to know your neighbors. A housewarming party may be the perfect opportunity to get to know the people who you’ll be living in close proximity to. So invite them over – you might just strike up new friendships!

7. Be Prepared to Give Tours

Most people who visit your housewarming party will probably want to check out your new abode. It’s almost a given considering the nature of the gathering. So be prepared to take time out of serving food and mingling with guests to give a few guided tours of your home. Considering the fact that people will most likely see all parts of your home, make sure everything is prepped accordingly.

8. Have Food and Drinks Handy

While you don’t necessarily have to serve a full meal, having some appetizers and beverages handy during your housewarming is warranted. But when you choose your menu list, go for items that don’t require a lot of prep time and upkeep. You don’t want to be slaving over a hot stove while you should be getting to know the neighbors and showing off your new home.

At the same time, be sure to take different tastes and potential food sensitivities into consideration. Offer a few options so that everyone is covered.

9. Send Out Thank You Notes

After a successful housewarming party, take the time out to send out thank you cards to show your appreciation to all who came out. Most people will likely show up with some sort of housewarming gift, so you’ll want to thank them for their generosity as well. Rather than spending money on postage, however, consider having them ready-made to hand out with a party favor (if you so choose) as each guest leaves.

The Bottom Line

A housewarming party is a fun and exciting time for new homeowners. It’s a wonderful way to share your excitement with others and satisfy the curiosity that your friends and neighbors might have about what your new home is like. And following the above guidelines will help ensure a successful festivity.

Strange Home Features That Could Throw Buyers Off

The quirky and unique features of a home might accurately showcase a homeowner’s personality, but they might not necessarily be very good at impressing buyers. Some features could actually throw buyers off and even confuse them to the point that making an offer is off the table.

Personalizing a home is great, as it can make family members more comfortable. But when it comes time to sell, such features can work against homeowners.

Here are a few odd features that could throw buyers off and potentially derail a sale.

Converted Garages

Some homeowners who find themselves short on space may turn to their garages to provide them with the extra room required. Whether it’s to house a fitness area or a man cave, the extra space of a garage can certainly come in handy.

But many buyers who actually want a garage that serves its original purpose might not appreciate garage conversions. One of the rules of home staging is to showcase every room in the home with its intended purpose.

A dining room should be outfitted as a dining room, for example. This will help show buyers what each space is supposed to be used for without any confusion.

Bidets

Not something you’ll see in the average home, bidets are typically located next to the toilet and are designed to wash certain private areas of the body. Buyers will definitely wonder what they are and might be confused as to what their purpose may be. And perhaps they might not want to know, after all.

Oversized Statues

Whether it’s in the middle of the front yard or the center of the foyer, a massive statue might be of significance to the homeowner but might be overwhelming for buyers. And if the statue has some sort of political or religious affiliation, that can be even more off-putting.

Getting rid of these statues can also be a major endeavor, so any buyers who may be interested in a particular home may wonder what type of effort and cost would be involved in removing them, which could add to the costs of making the purchase.

Pet Rooms

A rising trend among homeowners with pets is installing a mudroom specifically for furry friends. These include shower stalls that make it ultra convenient to wash messy pets that have just come from a frolick in the mud before they’re allowed to trot around inside the home. But for buyers who might not be pet lovers, these rooms might be considered a bit of a waste of space.

Strange Looking Plants in the Yard

Landscaping plays a huge role in the aesthetics of a home and is a key component to curb appeal. Sellers should certainly maximize their curb appeal in order to attract the masses of buyers. But certain types of plants could actually raise an eyebrow or two among buyers.

Some plants are not conducive to a healthy garden and can actually compromise the health of surrounding greenery. Other plants might even be dangerous, both to pets and humans. Others still might be so invasive that they can compromise the integrity of a home’s foundation if planted too close to the home.

Oddly Placed Bathrooms

Some homes have such strange layouts that really make buyers wonder what the original builder was thinking. One such layout incorporates bathrooms that are positioned adjacent to kitchens. If there are two rooms in a house that should never be mixed, it’s these two. After all, the thought of a bathroom being anywhere near where people would dine is certainly not a pleasant one.

Unfortunately, this isn’t exactly an easy fix and would require a bit of in-depth work to build a completely new bathroom in a more appropriate spot.

Inadequate Access to Rooms

Piggybacking off of the previous issue, some older homes may have layouts that require occupants to have to go through one room in order to access another. While that might be fine with living rooms or kitchens, it can be pretty awkward when the space being invaded is a bedroom. It’s pretty inconvenient to have to pass through a bedroom – which is supposed to be a private space – to access another room in the home.

Compartmentalized Rooms

The going trend over the past few years in home design is open concepts. More and more homeowners like the idea of having a wide open space where they can interact with others regardless of whether they’re in the kitchen or living room. Open concept layouts also make a home seem larger and brighter, which is why they’ve become so popular.

But some homeowners still like the idea of having separate rooms for separate purposes and intentionally compartmentalize their rooms in order to achieve that goal. While that may work for some homeowners, it’s not exactly a layout that buyers necessarily appreciate.

The Bottom Line

Selling a home is already a challenge, but trying to sell a home with awkward features like the ones just mentioned can make the job even harder. When dealing with odd features and layouts, it’s best to work with a home stager who will have sound suggestions about how to counteract the effects of such traits in order to attract buyers and end up with a quick sale.

Buyers: 9 Smart Tips For Negotiating a Home Purchase

All homebuyers are looking for a deal, which is why the negotiating process in a real estate transaction is so important. But getting the home you have your eye on at the price you’re looking to pay can be a challenge if you don’t go into the negotiations with a little flair.

You certainly need to employ a few tactics to help get the price down to what you’re willing to pay, and the following tips can help you land the best deal on a home.

1. Get Pre-Approved

Sellers prefer to deal with qualified buyers instead of tire kickers who might express an interest in buying a home but aren’t actually financially capable of handling a mortgage. Being pre-approved for a mortgage is always a good step in the homebuying process and makes you more competitive against other buyers and more attractive in the eyes of the seller.

Besides, a mortgage pre-approval will help you determine how much you can afford. That way you can focus only on homes that are within your price range.

2. Have Your Deposit Check in Hand

Not only will a pre-approval letter help show the seller that you’re qualified and serious about buying, attaching a deposit check with your offer will further seal the deal. Just make sure the deposit amount is enough to intrigue the seller and is in line with what deposit amounts are going for in your market.

3. Study the Market

The value of a home is directly influenced by the market that it is immersed in. Is it a buyer’s or seller’s market? Are homes appreciating in value, or are they stagnant at the moment? What is the supply versus demand profile like?

Identifying the temperature of the market you’re dealing with will help direct which way your negotiations should go and will help you stay in line with what the home you’re putting an offer on is really worth.

4. Go in With Comparables

You’ll have a better understanding of the market and will go in with more negotiating power if you understand how much similar homes in the area have recently sold for. Your offer should ideally be based on what the home is actually worth, and not necessarily what the seller listed it at.

Sellers can essentially list for whatever they like, but that doesn’t mean the listing price is an accurate reflection of what the property is worth based on the current market.

Based on the information you compile from the comparables, you’ll be able to make a sound and fair offer on the home. If the home is listed at market value, there is probably little wiggle room in the negotiation process. But if it’s listed above market value, you may be able to go in with a lower offer and use your research to back up your offer.

5. Find Out the Seller’s Motivation

If possible, find out why the seller is moving. Many sellers are not highly motivated to move, while others are. In the case of the latter, you might be dealing with someone who is eager to get the home off their hands. Whether they’re closing on another home soon or are in need to get out of town to start a new job, you might have a motivated seller on your hands who may be more open to negotiations.

6. Keep Your Contingencies to a Minimum

While you don’t necessarily want to completely expose yourself to vulnerability, you also don’t want to bombard sellers with a list of contingencies that will just complicate the offer. Too many contingencies will make the closing process more complex and time-consuming, which is never a good thing for sellers.

Contingencies play a key role in offers, so consider keeping them clean. The fewer the number of contingencies, the higher the odds of landing the house at the price point you want.

7. Separate Yourself From Emotions

It’s not uncommon for negotiations to get heated. After all, we’re talking about hundreds of thousands of dollars in a single purchase, so you want to make sure you get this right. Not only that, but sellers tend to be very protective of their homes and are not typically willing to hand them over at a price that they may deem to be unfit.

What sellers do is out of your control. But in your case, try your best to keep your cool and remove emotions from the equation. If you don’t end up getting the house, just remember that there will always be another one out there for you to put an offer on. 

8. Accompany a Personal Letter With Your Offer

Sellers are understandably attached to their homes and don’t want to see it get into the wrong hands. Sometimes submitting a personal letter along with your offer explaining why you love the house and how you would turn it into a family home can be just enough to tip the odds in your favor and convince the sellers that you’re the right buyer for the home.

9. Use an Agent

Your best friend in a negotiation situation is a real estate agent. While you can learn everything there is to know about handling negotiations to land a great deal, letting a professional take the reigns can provide you with the best outcome.

Real estate agents are trained and experienced at handling negotiations. They’ll be able to help you find the right property and handle the entire negotiation process on your behalf.

The Bottom Line

When it comes to real estate transactions, negotiating is part and parcel of the process. But how you handle the negotiations can make all the difference in the final outcome. Get familiar with some savvy negotiating tactics that you can employ and team up with a seasoned buyer agent who can help you land the home of your dreams at a price point you can be happy with.

Tax Perks of Buying a Home

It might not quite be time to file your taxes just yet, but it’s important to understand all the ways that you can take advantage of the tax perks available to homeowners.

In fact, buying a home comes with a number of tax breaks to be taken advantage of that can help potentially save you hundreds of dollars – or more – thanks to the following.

Mortgage Interest Deductions

The principal portion of your mortgage payments is one major expense that you have to pay when you purchase a home, but the interest portion that’s tacked onto to it can be an equally hefty expense. That’s especially true during the first few years of your mortgage where a bigger chunk of your payments is dedicated to interest.

Luckily, you may be able to deduct your mortgage interest come tax time. In fact, this is one of the biggest tax deduction advantages of buying and owning a home. The cap for deducting mortgage interest is $750,000.

Property Tax Deductions

Property taxes are just another annoying tax to have to pay as a homeowner, but they can be deducted. There are rules to this deduction, however. According to the Tax Cuts and Jobs Act (TCJA), property taxes are no longer deducted separately, but rather are included with state and local income taxes. The cap for these deductions is set at $10,000 for married couples who file their taxes jointly.

Private Mortgage Insurance Deductions

Saving up for a down payment can be tough, which is why there are plenty of mortgage products and programs available that make it easier for homebuyers to be eligible for a mortgage without a massive down payment amount. But if you put down less than 20% of the purchase price on a conventional mortgage, you’ll be subject to Private Mortgage Insurance (PMI) premiums.

These extra fees will be tacked on to your mortgage payments, and you’ll have to continue paying them until your loan amount dips to 78% of the value of your home. Until then, you’ll have to continue paying these added insurance premiums.

The good news is that private mortgage insurance premiums can be deducted. That said, this deduction is no longer a separate deduction, which means homeowners can choose one deduction that also includes property taxes as well as state and local income taxes. Single taxpayers are eligible for the deduction if they have an adjusted gross income of less than $50,000, and married taxpayers filing jointly who have a combined income of less than $100,0000 are also eligible.

HELOC Deductions

If you have a home equity line of credit (HELOC) or home equity loan, you may be eligible to deduct the interest paid. However, there are exceptions. According to the IRS, interest paid on HELOCs and home equity loans may still be deducted, as long as the loan funds are put towards buying, constructing, or improving the home that is being used to back the loan.

For example, you wouldn’t be able to deduct the interest of your HELOC if you used the money to buy a car or pay for an extended vacation. On the other hand, of the money was used to renovate your kitchen or bathroom, then such deductions can be made.

Home Improvement Deductions

Renovating your home and adding value to it is a good thing. But not every home improvement project that you take on will be eligible for a tax deduction. If you plan to live in your home for the long haul – including throughout retirement and beyond – then any improvements that you make to your home that will make it possible to live in it throughout your Golden Years may qualify.

For example, wheelchair ramps, stair lifts, or widened shower stalls with handrails can make living easier for the elderly. In these cases, the cost associated with these upgrades may be able to be written off. Just keep in mind that such improvements will have to be deemed a medical necessity to take advantage of the tax breaks.

Energy-Efficiency Upgrade Deductions

Homeowners who make their homes energy efficient in some way can take advantage of several opportunities to save some money. The local, state and federal government offer incentives for homeowners to make improvements to their homes that will save energy, and that includes tax breaks.

The Residential Energy Efficient Property Credit offers a couple of tax incentives for installing energy-efficient upgrades in a home, including solar electric and solar water heaters. Up until the end of 2019, homeowners can deduct 30% of the expenses associated with these upgrades.

Home Sale Exclusions

While you might not be thinking about selling so soon after buying, you should know that homeowners can get a tax break when they sell as well, as long as they meet certain criteria. Generally speaking, anyone who sells real estate and realizes a profit may be subject to capital gains taxes on the proceeds of the sale if they fall outside of certain requirements.

In order to avoid paying capital gains taxes, the home must have been used as the primary residence for a minimum of two of the past five years before selling. Further, up to $250,000 of gains can be free of capital gains taxes for single tax filers, or $500,000 for married couples filing jointly.

The Bottom Line

Everyone loves saving a few bucks when filing their taxes, and homeowners have a distinct advantage to do so. The above-mentioned incentives might be applicable to you, helping you save quite a bit of money on your next tax filing. Be sure to consult with a tax professional to find out exactly what you may be eligible to claim in order to maximize your savings.