EASY LANDSCAPING DIY PROJECTS

Ever get the itch to do a DIY project? Whenever we do, our favorites involve getting outdoors and mixing up our landscaping features. Whether it’s as simple as installing some lighting or a little more time-consuming like re-plotting plants, a fresh look for the lawn always gives your home a fresh look as well. Here are our top five easy landscaping projects!

Create a pathway

To guide you and visitors throughout your yard and link different areas together, install a pathway. You can use materials from a variety of materials, including reclaimed pallet wood, flagstones, gravel, and more to add texture and color.

Add a wall or border

Installing a flagstone, rock, or brick wall around flower beds or trees adds a sleek, clean look to your landscaping and helps separate different sections of your yard.

Install a water feature

Nothing says zen quite like the sound of trickling water as you relax in your backyard. You can start simple with by purchasing and installing a small feature powered by a solar panel or create a larger focal point in your yard by installing a waterfall wall or small pond.

Light your way

An easy way to transform your yard is to strategically use lighting. Place cool-colored lights high in trees to recreate a moonlight feel, use pathway lights to naturally guide the eye, or highlight objects or plants.

Plant upwards

Expand your yard space by drawing the eye to the sky with a trellis fence or screen made of wood or metal. Once you install your trellis, select your climbing plants and vines and get to planting!

Should You Test For Radon in Your Home?

Imagine something dangerous lurking in your home that you can’t see, smell, touch, or taste. That’s what radon gas is, and it can be hazardous to your health and that of your family. But it’s virtually impossible to detect without the proper tools. 

Breathing in air with radon present might not necessarily cause any symptoms right away, which is yet another reason why a home should be tested for the gas. 

If no one in the house experiences any medical issues, there’s little reason to believe there’s anything wrong. But continued exposure to radon can increase the risk of the development of lung cancer.

In fact, according to the US Environmental Protection Agency (EPA), exposure to radon causes approximately 21,000 cancer deaths every year. That’s why it’s so important for homes to be tested for this dangerous gas.

What is Radon?

Radon is an odorless radioactive gas that can be found in homes all over the country. In fact, it’s estimated that almost 1 out of 15 homes in the US has high radon levels.

Radon stems from the breakdown of soil, rock, and water and can make its way into a home through the ground or through cracks in the foundation and circulate through the air. 

Once radon enters the home, it gets trapped, leaving it to be inhaled by all occupants of the home. While having a home that is well-sealed and insulated is great for energy efficiency and lower utility bills, such efficiency can actually make things worse by not allowing radon to escape.  

How to Test For Radon

The only way to know for sure if there is radon in your home is to have it tested by professionals. Since you can’t see or smell it, there’s no other way of knowing whether or not radon is lurking in your home. 

All floors under the third level (if applicable) of a home should be tested. That’s because radon can rise into the air and make its way as high up as the second level of a home. That said, radon will likely be more concentrated on the lowest level, so that’s typically the first place that should be tested for the gas. 

Testing for radon is rather straightforward and isn’t overly complicated. In fact, many homeowners test themselves using kits that can be purchased at hardware or home improvement stores or ordered online. 

That said, it’s generally recommended that radon is tested by a professional to ensure an accurate reading. 

What Constitutes High Radon Levels?

After the home has been properly and effectively tested, the levels of radon – if detected – should be less than 4 picocuries per liter (pCi/L). If it’s at that level – or higher – steps need to be taken to remove radon from the home and identify the source of the radon making its way into the home.

Even if the levels detected are under this mark, it can still pose a risk. Ideally, there should be no radon detected at all. Since radon levels can change over time, it’s best to have a long-term test conducted to find out what the radon level is over time.

If dangerous radon levels are detected, take action to fix the home by hiring a qualified radon professional.

Buying or Selling? Have the Home Tested For Radon First

If you’re selling your home some time soon, consider having it tested for radon. While it’s not mandatory to do so, it can actually strengthen your listing. 

Being able to show buyers that the home has been tested and is free of radon can be a strong selling point. Even if radon was detected, taking steps to eradicate it can be something to boast about to prospective buyers. 

If you do have the home tested or have any issues with radon resolved, be sure to keep all the associated documentation to have ready to show buyers.

If you’re buying a home, on the other hand, ask the seller if they have any paperwork regarding radon testing. If a test has been done in the past, consider when it was done, as tests conducted far back may no longer be accurate to reflect what may be in the home today. 

Also, make sure to find out who conducted the test, which levels of the home the test was conducted, and if any significant improvements or renovations have been done since the test that could have affected radon levels.

If the home has not been tested, ask to have it tested. Or else, consider having a radon test conducted as part of your home inspection before the deal is sealed. 

The Bottom Line

Whether you’re a seller, buyer, or a homeowner who plans to stick around for the long haul, having the home tested for the presence of radon is important. While there may not be any acute symptoms of radon poisoning that you may notice, the long-term effects of exposure to this gas can be detrimental. 

Should Sellers Bother Staging a Vacant Home?

There’s a lot to do when it comes to getting a home ready for sale, and staging it is one of them. 

Obviously, a home that’s properly furnished with pieces that are appropriate for the size of all rooms and decorated with tasteful accessories and neutral colors will show a lot better than a home that looks disheveled. 

Buyers are more inclined to put in an offer on a home that they can envision themselves living in and suits their lifestyle, but sellers need to work to help buyers visualize the space as such.

But while it makes sense to stage a home that’s not furnished appropriately or that’s decked out in loud colors, is it necessary to stage a home that’s vacant?

Absolutely. Staging a vacant home is just as important – if not more important – than staging a home that’s already furnished. Here are some reasons why. 

Make Rooms Appear Larger

If your home is lacking in square footage, you’ll want to do what you can to make principal rooms appear larger than what they really are. But rooms that are vacant will actually seem smaller, which is the complete opposite effect of what you want to achieve. 

Further, without adding furniture, buyers may not think that their furniture will fit properly if there’s nothing in the home to show them that the space is large enough to accommodate. Even the slightest doubt about a home can scare buyers away. 

Instead, furnish your vacant home with pieces that will show buyers how a full set of furniture can fit nicely in the space. 

Help Buyers Visualize the Purpose of a Space

The majority of buyers are unable to visualize what a space can look like if it’s not furnished and decorated for them. Not only that, but an empty house seems cold and unwelcoming, which will do little to help buyers develop an emotional connection to it. 

As a seller, you’d be doing yourself a favor by outfitting your vacant home with furniture and accessories that will help show buyers exactly what the home can look like when it’s all decked out. Proper staging can also help make the home seem warmer and more inviting, which can go a long way at helping buyers develop an emotional attachment to the home and entice them to put in an offer. 

Make Online Images More Appealing

Most buyers start their search for a new home on the internet, and they’re usually enticed to book a showing based on the images they see online. A home that is effectively staged will show much better in photos compared to a vacant property. 

Many buyers might not even bother scheduling a visit if they’re not impressed with a listing’s images. The last thing you want to do is lose out on a potential buyer before they even visit your home. And to make sure you get as many eyes on your house, make sure not to leave it vacant.

Draw Attention Away From Flaws and Onto Positive Features

No home is entirely perfect, including brand new properties. There are always flaws to be found, but you don’t necessarily want them to be highlighted. Yet that’s exactly what you’ll be doing if you leave your home empty.

Vacant spaces have a way of magnifying flaws, yet well-furnished rooms tend to do the opposite. Not only that, but staged and furnished rooms can also highlight the positive features in your home, which is exactly what you want to do to impress buyers. Proper home staging can help showcase the characteristics of the home that you want to show off while downplaying imperfections. 

Create a Lifestyle

Home staging isn’t necessarily all about decorating a home, but it’s also about creating a lifestyle that buyers are looking for. They want to find a home that caters to the lifestyle they want. Home stagers know exactly what the buyer demographic is in your area and will cater specifically to them with their furniture and decor choices. 

But vacant houses lack the ability to showcase a specific lifestyle. As already mentioned, buyers need a little help envisioning how a space can look and how they can use it. But if the home is vacant, there’s nothing to interest them or help them visualize how the home can give them the lifestyle they might not even know they want.  

Sell Faster

It’s been shown time and again that homes that are professionally staged sell faster than homes that are not. If selling quickly is on your agenda, then staging it might be something worth trying. 

The longer your home sits on the market waiting for a willing buyer, the more money you’ll be dishing out in carrying costs. Plus, your listing will be at an increased risk of becoming stale, which can eventually lead to the need for a price reduction.

Sell For More Money

Not only can a staged home sell faster, but it can sell for more money too. While it might cost a little bit of money to pay a professional to have your home staged, you can easily recoup all of that money spent – and then some – when you sell at a higher price point. 

The Bottom Line

You’d be doing yourself a disservice by leaving your home vacant when selling. You’ll lose out on the chance to help buyers develop an emotional connection to the home and help them envision what life can be like living there. Most importantly, a vacant home can take longer to sell and may even cause you to leave money on the table. 

By investing a little money and effort up front, you can turn your vacant home into one that will impress buyers and encourage them to put in a good offer sooner rather than later.

Are You Subject to Paying Capital Gains Taxes When You Sell Your Home?

There are so many perks to homeownership, including certain tax breaks. For instance, if you own a home, you may be eligible to deduct interest expenses on up to $750,000 of mortgage debt, which can save you some cash come tax time.

But there may be certain taxes that you may actually have to dish out when you sell real estate, depending on your particular situation.

They’re called capital gains taxes, and they may be payable when a piece of property changes ownership.

If you turn a profit when you sell your property, you’re said to have realized “capital gains,” which basically refers to the profit made on the sale of your home. For instance, if you bought your home for $500,000 seven years ago and sell it for $750,000 today, you’ll have profited $250,000.

If you sell for more than what you paid for it, you’re obligated to report these gain to the IRS, who will then tax you on those capital gains. Depending on your situation and the status of your home, there may be taxes to be paid on that profit, or “capital gains taxes.”

But as pesky as capital gains may sound, they might not necessarily be applicable to you, as long as you and your property meet specific criteria. But how do you know if you’re subject to these taxes when you sell your home for more than what you paid for it?

Capital Gains Tax Exemptions

Luckily, there are certain situations in which you may be able to get away without having to pay capital gains taxes on any profit you make on the sale of your home.

The first $250,000 is exempt, with exceptions. You don’t have to pay any capital gains taxes on the first $250,000 that you profit from the sale of your home if you’re single, or $500,000 if you’re married. However, you and your home will have to meet the following requirements.

You owned your home for at least two years. If you’re an investor who fixes and flips properties for a profit, you’ll find that you’ll be subject to capital gains taxes on any gains you make.

That’s because the home must have been in your possession for at least two years. So, if you fix and flip the property only a few months after buying it, short-term capital gains taxes will be applicable.

You lived in the home for at least two years. Not only does your name have to have been on title for at least two years, you must have called the home your primary residence for at least two years as well.

You don’t necessarily have to have lived there for two consecutive years, but the place must have been considered your primary home in order to be exempt from paying capital gains taxes. More specifically, you must have lived there for at least two of the past five years.

You haven’t claimed exemption within the past two years. You’re only allowed to take advantage of capital gains tax exemption once every two years. However, you can take advantage of this exemption over and over again without limit, as long as it’s not repeated any more often than every couple of years.

A Word About 1031 Exchanges

If you’re a real estate investor and are concerned about the prospect of having to dish out a lot of money on capital gains taxes on your profits, you might have a way to avoid having to pay capital gains taxes thanks to something called a “1031 exchange.”

As per IRC Section 1031, a 1031 exchange allows investors to sell a property and reinvest the proceeds of the sale to purchase another property. While this is a simplified explanation of what a 1031 exchange is, it’s a great way for investors to hold onto their gains and use them to continue investing in real estate and grow their wealth without having to constantly pay up every time a property is sold at a profit.

Short- Vs Long-Term Capital Gains

If you are required to pay capital gains, you will want to know if you’ll be subject to short- or long-term gains, as this will affect how you’re actually taxed.

Short-term gains apply to homes that are owned for less than one year. In this case, the rate is equivalent to your tax bracket. Long-term gains apply to homes that are owned for at least one year. And while long-term gains are typically taxed lower than short-term gains, the exact amount of taxes you have to pay will depend on your income.

People with higher incomes could pay as much as 15% to 20%, while those with a more limited income might not owe anything at all.

The Bottom Line

No one likes to pay taxes, but if you get familiar with how the IRS taxes home sellers and play your cards right, you may be able to avoid paying capital gains taxes when you sell. Be sure to discuss your particular situation with a tax specialist to find out where you stand as far as capital gains taxes are concerned.

How to Ensure a Vacation Home Purchase is a Good Investment

If you’ve been thinking about investing in real estate and buying a property to rent out over the long haul, you might want to consider a somewhat unique investment opportunity: vacation rentals.

In fact, renting out vacation properties has become all the rage lately thanks to sites like Airbnb, VRBO, and HomeAway. Travelers have become savvy in their choice of accommodations abroad, choosing places that mimic home rather than defaulting to tiny hotel rooms with very few amenities.

If you invest in the right vacation property, you can realize a full calendar of bookings throughout the year. But it’s important that you play your cards right in order to make sure that the property you invest in will make it easy for you to turn a profit.

Here are some things you should consider before investing in a vacation home.

Identify a Market For Vacation Rentals

As with any other type of real estate investment, choosing the right location of your vacation home is crucial. Find out what the market is like in the area you’re looking at to see how in-demand it is for travelers and those looking for accommodations.

Make sure the property is located in a place that vacationers would want to spend their holidays. The right location can make marketing and renting your vacation property so much easier. The more desirable it is, the more frequent bookings you can enjoy.

There are so many potential scenarios you may want to think about when choosing a location. A quiet waterfront cottage, a condo close to entertainment and shopping, a beach property, or a townhouse in a ski resort are all great examples of the types of vacation homes you may want to consider that vacationers would flock to, as long as there’s demand.

Determine How Much You Can Rent For

There are obvious costs associated with buying and operating a piece of property. And when it comes to vacation rentals, you want to make sure that the rent you charge can at least cover all associated expenses. Ideally, you’ll want to turn a profit, which is the whole idea behind buying and renting out a vacation home.

But in order to make sure you’re profitable, you’ll want to know how much you can realistically rent the place out for. You can always scope out vacation rental websites to find out what similar properties in the area are going for.

Or, you might get a more accurate idea by having a real estate agent conduct a thorough analysis of the area and what vacation rentals fetch in short-term rent.

Get Yourself Enough Insurance Coverage

Homeowners insurance is a must for anyone who owns real estate. But with vacation properties that you’ll be renting out to complete strangers on a regular basis, you might want to get yourself more comprehensive coverage that will protect you.

In addition to buying a policy that covers the cost of completely replacing the property should disaster strike, it’s also important to consider taking out a personal liability policy that will deal directly with the ownership and rental of the property, including all assets inside the unit.

Look into policies that will also protect you while your property is vacant between tenants. And if there are any heightened risks in the area that you’re looking at buying into – such as earthquakes, forest fires, or floods – take out a policy that covers that, too.

Factor in All Costs

It goes without saying that you’ll need to assess the prices of the properties you’re looking at and make sure you can afford them. But the mortgage is only one part of the mathematical equation when it comes to vacation rental investments.

After you’ve determined that you can afford the place and are able to secure a mortgage, you’ll need to take a detailed look at all the costs that will be associated with operating the property. This includes, but is not limited to, the following:

  • Property taxes
  • Maintenance
  • Repairs
  • Utility bills
  • Insurance
  • Cleaning fees (if you hire an outside cleaning company)
  • Property management fees (if applicable)
  • Marketing

Don’t make a purchasing decision without first having figured out what it’s going to cost you to keep the property running. And don’t forget to consider times when your unit is vacant, as you won’t have any rental income coming in to cover your carrying costs.

Make Sure You Have Adequate Cash Reserves

The last thing you want is to be strapped for cash one month because you don’t have a financial cushion to carry you through slower times when your property is not rented out.

As such, it’s wise to have adequate cash reserves before you invest in a vacation property. Besides, your lender will likely require you to have a certain amount of money before approving your mortgage.

The Bottom Line

There are plenty of opportunities to make a great income and build wealth in the realm of vacation properties. And with vacation rental sites like Airbnb and VRBO exploding, now might be a great time to take advantage of such a lucrative opportunity. Just make sure you’ve dotted your i’s and crossed your t’s before you dip your toes into this type of investment.

Should You Buy the Best House in the Neighborhood?

A gorgeous house in a great neighborhood is definitely something that will catch buyers’ attention. And the best house on the block will certainly stand out from the rest.

But is purchasing the best house in the neighborhood a sound investment?

It’s safe to say that many buyers want a home that’s move-in ready. A home that’s already all decked out in fine finishes and updated with modern materials is something that a good chunk of buyers are looking for.

With nothing to do to upgrade a home, buyers can simply move their belongings in and start enjoying their new home. And who doesn’t love a great house? And more specifically, who wouldn’t want to own the best house on the street?

There may be some situations where it might make sense for you to invest in what’s arguably the best house in the area. Maybe the home has certain unique features that you want that you can’t find in any other home you’ve visited. Or maybe you have no desire nor inclination to update the home yourself.

If your finances can justify the purchase and you’re planning to stick around for the long haul, perhaps it might make sense to snag the place, even if there’s no wiggle room to add value to the place yourself.

But in most other cases, buying the best home in the neighborhood isn’t a sound investment decision. Here are some drawbacks to such an investment.

The Rate of Appreciation Won’t Be as Fast as Other Homes on the Block

One of the great things about owning real estate is the increase in value that you can realize if you hang onto the property for the long haul. While property values may dip from time to time, such fluctuations are temporary. Over time, the value of real estate goes up.

But if you buy a house that’s already improved, there’s little room to make any improvements on your own that will have a decent impact on the value of the property.

Instead, a home that could use a little improvement will give you the opportunity to add value. Compared to the worst house on the block, the rate of increase in the value of the best home will be a lot slower.

Further, you’ll also miss out on the opportunity to take advantage of an increase in value that tends to come from the sale of other homes in the neighborhood. With the highest-valued home on the block, the sale of other homes in the area won’t have as much of a positive effect on boosting your property’s value.

The worst home on the block will have the distinct opportunity to increase in value when they’re surrounded by higher-value homes.

For instance, a home that’s worth $500,000 can increase in value faster if it is surrounded by homes that are worth $700,000. But if your home is the highest-valued property on the street, you won’t be able to benefit from this effect.

The Value of Your Home Could Be Pulled Down By Other Lesser-Valued Homes

While low- to mid-grade homes can take advantage of increased value thanks to nicer surrounding properties, the value of the best home on the street can actually be pulled lower if it’s surrounded by properties that are less expensive.

This is a significant factor that needs to be considered and is typically one of the more important reasons why buyers are encouraged to steer clear of buying the best home on the block.

Future Resale Might Prove Challenging

Since you’re in the buying phase of the real estate game right now, you’re probably not even thinking about selling in the future. But it’s always important for buyers to keep resale in mind when they’re looking to buy. Even if your intentions are to stick around for a long time, the potential to sell at some point in the future are very real.

And if you buy the best home in the neighborhood, you might find it tough to sell if or when the time comes. More expensive homes usually have a smaller pool of buyers compared to mid-range homes, which means it will likely take longer to find the right buyer for the home.

Plus, if your home is surrounded by less-than-attractive homes, people who may be able to afford your home might prefer to be in an area with higher-value properties. And if you’re looking to make a decent profit on the sale of your home, you might find it difficult if the rate of appreciation move’s at turtle speed, as already explained.

The Bottom Line

Finding a beautiful home that has all the bells and whistles might draw you in and entice you to put in an offer, but pay close attention to the neighborhood at large. Compare the subject properties to those around it and assess the health of the neighborhood before you buy.

While it might make sense to snag the house in some cases, in most other situations, it might not be the smartest investment decision. Be sure to discuss your options with your real estate agent.

These Home Improvements Could Hurt Your Home’s Value When You Sell

Every seller wants to snag the highest possible price for their home when they sell, which is why certain measures should be taken to prep a home and craft a solid listing for buyers to see. And one of the recommended things that sellers should consider is making improvements that will help garner more attention from buyers.

Certainly, a home that’s in great condition and has been modernized and upgraded with high-quality finishes and conveniences will be perceived as more valuable and attractive to buyers. It’s why sellers spend time and money fixing up their homes just before they hit the market.

But while there are plenty of improvements that can help sellers fetch higher sale prices, other improvements don’t bring in us a great ROI.

If you’re considering improving your home before selling, great. But make sure to pick and choose wisely. The following are some improvements that might not bring you the returns you would have hoped.

Over-the-Top Kitchen Renovations

The kitchen is easily the most important room in a home and serves as the central hub. It’s not just where you prepare and enjoy your meals, but it’s also a place of gathering and entertaining, whether on a quiet evening at home with the family or when guests come to visit. Homeowners often place a lot of emphasis on this part of the house, and for good reason.

Outdated, tired-looking kitchens don’t really do well for listings. They tend to be an eyesore and do little to add value to a home. But the opposite is also true: when a kitchen is modernized with high-quality materials and finishes, it can add tremendous value to a home.

But be careful how far you go when sprucing up your kitchen. While certain upgrades are fantastic – such as new granite counters, refaced cabinetry, and new stainless steel appliances – going overboard with in-depth renovations and gut-jobs likely won’t let you recoup the money spent on such an endeavor.

The trick is to get the biggest bang for your buck. You want your upgrades to make a big difference in the look of your kitchen, but not at the expense of spending too much. Be careful how far you go with your kitchen renovation.

Pay attention to what other homes in the area have and try to stay somewhere along those lines. “Over-improving” can negatively affect the value of your home relative to how much you spend on upgrades.

Major Bathroom Gut-Jobs

Like the kitchen, it’s easy to do a little too much with your bathroom renovation. The thing is, your bathroom is a big selling point of your home, despite its small size and seemingly insignificant contribution to the home. Bathrooms that are elegantly finished and offer modern conveniences can add value to a home.

If your bathroom could use a facelift before you sell, go for it. But, just as with your kitchen improvement, be wary of the types of improvements that you should focus on versus those that are just too much. The average buyer isn’t likely going to be willing to dish out more money to pay for a luxury renovation.

When it comes to improving your bathroom before selling, consider smaller, less expensive tasks that still pack a punch. Things like refacing the vanity, adding a new countertop, retiling the floors or walls, adding a new light fixture, or replacing the faucet can all go a long way at ramping up your bathroom and impressing buyers.

Sacrificing a Bedroom to Create a Larger One

It’s nice to have a spacious master bedroom with its own private ensuite bathroom. But many homes don’t have the square footage to accommodate such a luxury. That is, unless you convert an adjacent bedroom to be used to enlarge the bedroom and add a bathroom.

But as nice as this sounds, not only will this be a big, expensive job, it will also cost you a bedroom. When it comes to property values, the number of bedrooms plays a significant role. A 2-bedroom home will likely be valued higher than a 2-bedroom home on the same block, for instance.

By sacrificing a bedroom, you could be inadvertently lowering the value of your home.

Home Theaters

Having a space that is solely dedicated to screening movies and comes with all the bells and whistles that you’d see at a movie theater can be great. But unless you build a home theater for you and your family to enjoy for years to come, investing so much money in such a home improvement job makes little sense if you’re planning to sell some time soon.

Again, the majority of buyers aren’t going to want to pay more for your home just to have this added luxury. Whatever amount you end up spending on this type of space, don’t expect to get it all back.

Garage Conversions

If the square footage of your home is a little on the short side, you may have looked at different parts of your home to add more living space. And one of these potential spaces is the garage.

Maybe you want to include a home office, fitness room, or “man cave,” but no other place in the house can accommodate. In this case, a garage may be a potential spot to create the space you’re looking for.

But while this might suit you while you live in the home, it might not necessarily please buyers who would otherwise have preferred the garage to remain a place for them to park their car or store their tools and equipment.

Many buyers might not even consider buying a house that doesn’t have a usable garage, so you could really be hurting your listing with a garage conversion.

The Bottom Line

Taking on a home improvement project with the intention of adding perceived value to your home and attracting buyers is always a noble act. But how you spend your improvement dollars matters a great deal. Do your homework and carefully consider where you should be spending your time and money improving your home, and steer clear of improvement projects that will end up costing you more than you recoup.

Should You Refinance Your Home?

If you own a home and have some equity built up in it, you may have the opportunity to refinance your current mortgage. And there may be some good reasons why may want to consider refinancing, depending on your situation.

What does it mean to refinance your mortgage?

Refinancing involves replacing your current mortgage on your home with a new mortgage, usually with different terms than the original one, including a different interest rate.

The funds that you get from refinancing will allow you to pay off your original mortgage and free up money to be used for other purposes since the interest rate is lower.

Sound confusing?  Let’s illustrate.

Let’s say you have a mortgage for $300,000 with your current lender at a rate of 6%. If you’re able to get a mortgage for the same amount at a lower rate of 4%, you can use the original $300,000 to pay off the first mortgage at 6%.

That initial mortgage will then be considered to have been paid in full, and your obligations now lie with paying off your new mortgage at 4%.

Refinancing can be used to pay off your original mortgage as well as any other debts you may have, as long as you have enough equity in your home. In this scenario, refinancing can be seen as a type of debt consolidation.

In another situation, let’s say you have a mortgage of $300,000 at a 6% interest rate as well as $50,000 in various debts. If you can get a new mortgage for $350,000 at a rate of 4%, you can use that money to pay off your original mortgage and use the leftover funds to pay off your $50,000 debt.

So, should you refinance your mortgage? Here are some situations where that might make sense.

Secure a Lower Rate

The interest rate that you’re charged on your mortgage makes a huge difference in how expensive your overall mortgage will be by the time you pay it off in full. Even one percent can mean the difference between thousands of dollars over the life of the loan.

For example, a rate of 6% on a $300,000 would translate into $275,826 in total interest payments for a 25-year amortization period. In contrast, a rate of 5% on the same loan amount and time frame would amount to a total of $223,446 in interest paid. That’s a savings of $52,380.

One of the best reasons to choose a refinance is to take advantage of a lower interest rate. Lowering your rate will not only help you save some cash, but it can also help you build equity in your home faster. If you have the opportunity to refinance at a lower rate, it might be worth it to do.

Pay Down Your Mortgage Faster

If you can land a lower rate on your home loan, you can shorten the amount of time it takes to repay the loan amount in full. Even though your monthly payments might not change, the interest portion will decrease and your principal portion will increase. You can effectively slash the loan term by a few years, allowing you to achieve financial freedom faster.

Pay Off Debts

As illustrated earlier, refinancing might give you the opportunity to pay off some of your debts. This can be highly advantageous if you are struggling to pay down some high-interest debt, such as credit card debt.

By refinancing and freeing up some funds at a lower interest rate, you can pay off that high-interest debt and end up with a more affordable loan. Even though you still owe the same amount, you’ll have to pay a lower rate on the debt amount, making your payments cheaper.

Rates Are on the Rise and You Have an Adjustable-Rate Mortgage

If mortgage interest rates expected to increase and you have an adjustable-rate mortgage (ARM) on your home, you’ll be stuck with a higher rate when the adjustment period comes.

If that’s the case, refinancing may give you the chance to convert to a fixed-rate mortgage and lock in at a lower rate. This is especially true if the rate for fixed-rate mortgages is lower than what you’d end up paying when your ARM adjusts.

Factors to Consider Before Refinancing

Although refinancing might make sense in many situations, it’s important to take a few things into consideration first before deciding if this makes sense for you.

Do the math to make sure you’re actually saving money

There are costs associated with refinancing, so you’ll want to make sure you’re actually saving some money at the end of the day. Add up the costs of refinancing – which typically include loan origination fees, appraisal fees, and application fees – and determine whether or not it makes financial sense to refinance before you take this route.

Take the new term into consideration

Once you refinance, you’re basically starting your mortgage term all over. That means if you take out a 25-year term, you’ll be on the hook to pay your new mortgage for 25 years. As such, it might make more sense to refinance while you’re still earlier in your mortgage term.

Consider your credit score

Your credit score will play a role not only in your ability to get approved for a refinance, but it will also impact the interest rate you can get. If your score could use a little improvement, you might want to take measures to increase it before you apply for a refinance.

The Bottom Line

There’s a lot to consider before choosing a mortgage refinance. This loan product offers plenty of perks, as long as everything lines up. Take all factors into consideration to make sure this is the right step to pursue.

Short-Term or Long-Term Amortization Periods: Which One is Best For a Mortgage?

There are a number of factors to consider when choosing a particular mortgage product. While the interest rate and fees associated with a home loan are certainly important factors to consider, so is the amortization period.

Basically, the amortization period refers to the length of time that you have to fully repay your home loan. There are different amortization period lengths to choose from, depending on what you’re most comfortable with and what your lender is able to offer you.

But generally speaking, you can choose between either a long-term or short-term amortization period. Both have their perks and drawbacks, which you’ll need to sift through to determine which avenue is best for you.

Pros and Cons of Short-Term Amortization Periods

If you choose a short-term amortization – such as 5 or 10 years – you’ll have a shorter amount of time to pay off your mortgage. Let’s go over some of the benefits and drawbacks of this time frame.

Pros:

Pay off your mortgage sooner – Since the life of the loan is much shorter in comparison to long-term amortization periods, your mortgage can be paid off a lot sooner. Once that loan term expiry date comes and goes (assuming you’ve been diligent with your installment payments), your mortgage will be fully paid off, allowing you to achieve financial freedom sooner rather than later.

Save money in interest – Since you’ll be on the hook for paying your mortgage for a shorter period of time, you’ll spend less time paying into the interest option of your home loan. If you spend more time paying your mortgage, you’ll also be spending more on interest to the lender.

But the opposite is also true: the less time to spend paying the mortgage, the less interest will be paid to the lender, which can save you a bundle at the end of the day.

Interest rates are usually slightly lower – Many lenders reward borrowers for choosing a shorter amortization period with a slightly lower interest rate compared to longer-term time frames. As such, you may be able to save quite a bit of money in interest over the life of your loan.

Cons:

Monthly mortgage payments are much higher – If you have less time to pay off your loan amount, your monthly mortgage payments will be higher. As such, shorter-amortizations often translate into mortgage payments that are not affordable for many borrowers.

Pros and Cons of Long-Term Amortization Periods

Choosing a mortgage with a longer amortization- like 20 or 25 years – also comes with its own set of advantages and disadvantages, which we’ll take a look at.

Pros:

Make smaller monthly mortgage payments – Perhaps the biggest advantage of a long-term amortization period is the fact that the monthly mortgage payments are cheaper. Because you have a lot more time to pay off the same loan amount, each installment payment will be less compared to repaying your loan within a shorter time frame.

As such, long-term amortization periods can make mortgages a lot more affordable for many borrowers who may not otherwise have the budget to accommodate larger monthly payments. This is the main reason why long-term amortization periods tend to be a lot more popular and common among homebuyers, especially first-timers.

Cons:

Takes longer to pay off – The farther out the end date of the loan term, the longer it will take to pay off the mortgage. As such, you’ll be stuck with your mortgage for a much longer amount of time than you would if you chose a shorter-term mortgage. And the longer it takes you to pay off your mortgage in full, the longer you’ll have to be committed to these payments.

More interest is paid over the life of the loan – With every year added to a mortgage term comes more interest paid over the life of the loan. The more time your lender gives you to pay off your mortgage, the more they’ll earn in interest payments from you. This can mean tens of thousands of dollars more spent in interest over the life of the loan compared to a shorter-term amortization period.

To illustrate, let’s compare a $200,000 mortgage with a 4.5% interest rate at a 15-year term versus a 25-year term. Over a 15-year term, the total interest paid would be $65,694, whereas the amount would be $115,612 for a 25-year term. That’s quite a difference in interest paid for the same loan amount, though the monthly payments would obviously be higher for the shorter-term mortgage to compensate.

The Bottom Line

When it comes to short- versus long-term amortization periods, one isn’t necessarily better than the other. It all comes down to what’s more appropriate and convenient for you.

If you’re able to afford larger monthly payments and are working towards financial freedom sooner rather than later, then a short-term amortization might be best. But if you need something that will fit better within your tight budget, perhaps it’s best to go with something more long-term. Discuss your options with your lender to help you make your final decision.

8 Best Paint Colors For Your Front Door

Curb appeal speaks volumes. It not only creates a welcoming vibe to your home, but it also plays a key role in its value, too. Given this, it’s important to keep up with your home’s curb appeal and spruce it up if need be.

And while plenty of things come into play that influences your home’s curb appeal, your front door is an important component. A tired, drab, worn-out front door that’s seen better days can really pull down the look and feel of your home’s exterior. But the opposite is also true: a front door that’s in great shape can make your home seem more inviting and can even help increase the perceived value of your property.

If your front door could use a little extra pep, all it might take is a fresh coat of paint. With a small investment and a little elbow grease, you can almost instantly take your front door from drab to fab. The question is, what’s the best paint color for your front door?

Here are a few suggestions.

1. Fire Engine Red

While not a standard color for a front door, red is still a somewhat popular choice among homeowners who are looking to add a pop of color to their home’s exterior. Red doors work well paired with just about any exterior materials, including stucco, siding, and brick. And with contrasting trim, the color can really make your front entrance stand out in a good way.

2. Orange-Red

Just as vibrant as simple red, tones with a mix of orange are still fiery and playful and go quite well with warm tones on surrounding surfaces.

3. Burgundy

If you’re a little sheepish about going bright with red, then consider a toned-down version of the same hue, like burgundy. It’s a great option for homeowners who love the idea of color but don’t necessarily want to be overly bold. Burgundy is reminiscent of brick red with brown undertones and still offers plenty of pizzazz compared to brighter hues.

4. Lime Green

A non-conventional choice for a front door is lime green, though it’s not just a hue that needs to be reserved for your fruit bowl or flower beds. Instead, lime green has a savvy way of instantly cheering up any surface, and what better spot to do the cheering than with the front door! In fact, any neutral-toned home would do quite well with the addition of a bright and non-traditional color like lime green.

5. Pine Green

You can’t go wrong with green, no matter where you are on the color spectrum. And another shade of green that works quite well on front doors is a deeper pine green. This cool hue pairs really nicely with white, light gray, and navy blue accents.

6. Teal

A vibrant color no matter where you put it, teal works quite well on a front door. If you’re tired of the average browns and taupes on these surfaces, consider trying something completely different with teal.

7. Black

Black has a way of making any home look grand and rich. And painting trim and shutters in the same ebony hue can make your home’s exterior look even more stately.

8. White

Not exactly a color, stark white is a neutral that goes with everything. And while not the most exciting shade, sometimes white works best, especially if all other surfaces are busy in color. On the other hand, even an all-white exterior may pair well with a white front door, particularly when accented by contrasting dark tones.

The Bottom Line

The inside of your home could be amazingly decked out, but there’s little reason not to give your home’s exterior just as much attention. And if you’re planning to sell some time in the near future, then sprucing up your curb appeal should be on the agenda. And one of the best ways to enhance the exterior of your home is to give your front door a face lift. Consider any one of the above colors to instantly brighten your home’s exterior.