How to Entertain Multiple Offers on Your Home

It’s a seller’s dream getting multiple offers pouring in all at the same time. However, when it comes time to evaluate these offers and pick the best one, suddenly things become a lot more challenging.

Here are some guidelines to evaluating multiple offers so you wind up with the best one.

Which Buyers Are Pre-Approved?

When it comes to choosing from multiple offers on your house, the highest bidder isn’t necessarily the best choice. While you might see dollar signs when an extremely high bid comes in, this doesn’t mean that the deal will go through. Maybe the buyer will get cold feet and bail on you at the last minute before you have a chance to counter offer, or maybe they just don’t have the financial backing to support such a high offer.

The last thing you want to do is go with the highest bidder only to have to put your home back on the market because their financing fell through. By accepting an offer from a pre-approved buyer, you’ll be reassured that a mortgage lender has already agreed to cover the mortgage. Of course, a pre-approval isn’t necessarily a guarantee, but it places a lot more confidence in a buyer’s ability to secure a loan versus a buyer with no pre-approval.

If none of the bidders are pre-approved, you should get more detailed information about their finances, and set a time limit for them to apply for a loan before finalizing the purchase agreement.

Who’s Got the Biggest Deposit and Down Payment?

There are a bunch of factors to look at when evaluating the best offer. Of course, the offer price is a biggie. But there are also other things to look at, such as the size of the deposit and down payment. When it comes to the deposit, the bigger the better (obviously!). Buyers who put a fat deposit up front are showing that they’re serious about the house, and showing up with a deposit in the form of a certified check at the time of offer presentation is even more impressive. If they are unable to follow through with the agreement after your home has been sold firm, you keep that deposit amount.

A sizable down payment also shows the seriousness of the buyer. Anything from 20% and up signifies the real deal. At the end of the day, what you’re looking for are liquid assets; that is, those that are readily available, such as cash in the bank. This is much more attractive than ‘frozen’ assets which are funds that are tied up in investments and stocks, and not readily accessible.

Which Closing Date Jives With Your Needs?

Agreeing on a closing date that suits your needs is an important factor that goes into determining which offer to choose. Let’s say you’ve already bought a house, and you take possession of it next month. Ideally, you’d like a closing date in or around the date your new mortgage comes into effect. You might get an offer with a very attractive price, deposit and downpayment, but if they can’t close until four or five months down the road, you’ll have two mortgages to carry for a few months, which can be really costly.

On the other hand, let’s say you haven’t bought a house yet, or haven’t even started looking. An offer with a tight closing date won’t give you nearly enough time to find the right home, and take possession of it.

If the closing date comes before you’re ready to move out of your home, identify what the lender’s rent-back policy might be. A rent-back is the amount of time you’re allowed to remain in your house after the close of escrow. These time frames are usually 30 days, although some lenders might permit up to 60 days.

Use the Terms of Other Offers to Negotiate With Your Best Buyer

If you’ve got a few offers to look at, the prices might range from low-ballers to well over-asking. Obviously, the more offers you get, the more you have to work with. Once you’ve gone through all the terms of each offer and identified the ones that stand out above the rest, your real estate agent can go back to the buyers’ agents and tell them how many offers have been registered, and will let the top two buyers know that they are in the running to win the bidding war.

This will potentially make these buyers want the house even more, after which you could realistically squeeze a little more money out of them. If you’ve got a low-priced offer that has a quick closing and zero contingencies, your agent can leverage these terms with the higher-priced buyers. Taking all prices and terms of each offer and trying to get one buyer to give you the best of each can have you walking away with a very attractive deal.

A multiple offer scenario is a desirable spot to be in when you’re selling your home, but it can be a complicated one if you don’t have an experienced real estate agent helping you call the shots. A good Realtor who is familiar with all of these issues and can help you evaluate and pick the very best offer out of the bunch. When you’ve got more than one interested buyer coming in at the same time, you’re more likely to get the most favorable terms and conditions for a successful sale.




New Home Buyer? 5 Mistakes to Avoid

Buying a house is a huge financial step, and is one you need to take with careful consideration. It’s the quintessential American dream, but can quickly turn into a nightmare if you don’t do your due diligence. Typically, it’s new home buyers that tend to experience the worst nightmares because they simply overlook the fine print.

Understanding the mistakes that can be made during the buying process can help you build financial security without getting sunk into a money pit.

Here are 5 common mistakes new home buyers make that you should be aware of and avoid.

1. Skipping the Mortgage Pre-Approval

One of the first mistakes newbie home buyers do is fail to get pre-approved for a mortgage. First of all, getting pre-approved will give you a ballpark figure of what you can comfortably afford. There’s no sense in pounding the pavement in search of your dream home if you can’t afford the one you decide to buy. You’d be unpleasantly surprised to put an offer in on a house, only to be turned down by the bank because your finances won’t cover the costs of the home.

Not only that, but consider the seller’s point of view in the whole scenario. Let’s say the seller’s got a few bids on the property, and is in a position to sift through and compare them all. How will your offer stack up? If you tell the seller that you’ve been pre-approved for a mortgage, you might be a safer bet. If you don’t, you might be a risky bidder. Some sellers might even refuse to consider your offer at all unless you’ve got a pre-approval document from your lender. Even if the seller picks your offer, you might not be able to get as much financing as you would have hoped when you actually go through the loan application process.

At the end of the day, a pre-approval will paint you in a better picture to a seller. During this process, your lender will verify your finances and credit to see how much the bank is willing to loan you.

2. Foregoing the Home Inspection

When you’re putting up a lot of money to buy a house, you can’t just rely 100% on what the sellers and their realtor tell you about the home. Sure, they’re liable for providing you with a disclosure of everything they know that might be wrong, but even the sellers themselves might be in the dark about problems that are lurking behind the walls.

For this reason, you absolutely need to get the home inspected before you close the deal. If you skip this important step, you leave yourself vulnerable to being stuck with a home with foundation problems, mold, plumbing issues, asbestos, and hoards of other potential issues. As much as you might be attracted to the home, it could turn into a liability when everything is said and done.

Make sure that your offer is conditional upon a home inspection being conducted and passed. Make sure that you agree on what will be checked, which can (and should) include the foundation and structure, plumbing, electrical, heating and air conditioning, and mold or pest infestation.

You’d be wise to make sure the inspector is licensed and reputable. While the inspector might not necessarily be able to detect every major problem with the home, it’s definitely your first line of defense against getting stuck with a home that will cost you tons of money in repairs.

3. Getting Emotionally Attached to a House

Being in love can be an amazing thing, but it can also be a bad one, especially when your emotions are vested in the wrong thing. If you happen to stumble upon your dream house, you need to use extra caution.

First of all, if you happen to set your eyes on a home that other buyers have on their radar, you may be competing with them. If you find yourself in the middle of a bidding war, you could wind up losing out on the home altogether, or you could be snuffed out by someone else who has more money and all the right criteria that the seller expecting. You’ll be left heartbroken when you don’t walk away with the keys.

On the other hand, you just might be the one to sign on that dotted line of a purchase agreement. There are many times when the house you think is the one for you is actually one you should have walked away from. No matter how many times friends or family warned you about the place, you still might end up going ahead and sinking your teeth into it.

Think about how you’ll feel about the house after the ‘honeymoon’ period has come and gone. You might decide to overlook a property’s quirks now, but there’s a good chance you could suffer buyer’s remorse after the deal is sealed and you’re stuck with a super-small kitchen or no backyard.

When you’re in the market to buy a house, make sure you do your best to keep a cool head during the entire process so you do the thinking and decision-making with your logic instead of your emotions.

4. Not Thinking About Resale Value

You’re in the market to buy a house, not sell, so why would you even think about selling in the future? Simple. You just never know what the future holds, and don’t want to feel like you’re stuck in your home just because you won’t recoup much money after you sell.

You might get a job transfer, marry someone from the opposite end of the country, or simply can’t afford to keep up with your current mortgage payments. Whatever the case may be, you want to be able to ensure that your house can sell for a decent amount that you can then put towards another home.

This isn’t just a place where you live – it’s an investment. You’d be mistaken not to consider the resale value of the property. Consider the preferences of other home buyers. Maybe this means buying a home that has 3 bedrooms, a decent backyard, or a 2-car garage. It also helps to know if there are loud train tracks close by, or if developers plan on improving the neighborhood in the near future, which could boost the property’s value soon after purchasing.

5. Not Using a Real Estate Agent

If you’re serious about buying a home, do yourself a favor and hire an experienced real estate agent. These experts can give you invaluable advice about buying property, and can keep you from making a huge mistake. They can help steer you in the right direction about where to find the right property, and will use their sharp negotiating skills to help get you the best price possible and ensure you never overpay.

Realtors will help you navigate the complicated waters of purchase agreements, and will make sure you’re fully protected before you sign on the dotted line. All the services they provide come without the price – it’s generally the seller that flips the bill for both the seller and buyer agent.

A lot of first-time home buyers think they’re making all the right moves, but they still aren’t familiar with what can be a complex home buying process. Rather than taking a chance, use your better judgement and get acquainted with a real estate agent who can help you migrate through the buying process and avoid some seriously costly mistakes.

The Real Benefits of Home Ownership

It’s the classic American Dream – home ownership. Of course, deciding between renting or owning has been a controversial topic ever since the mortgage crisis. Some people have sworn off owning real estate for good, while others are convinced that now is as good a time as ever to buy property. Regardless of one’s opinion, there are loads of financial benefits that you can realize simply by having your name on the title.

Build Wealth Over the Long Run

There’s probably no better way to develop wealth over time than to invest in real estate. We’ve always been taught by generations past that owning property is not just the ‘American Dream,’ it’s also a great way to strengthen one’s financial profile.

However, it’s important that homebuyers buy only what they can afford, and keep interest rates in mind. During the real estate shake-up over the past few years, plenty of homeowners found themselves in foreclosure, scaring them off from buying real estate in the foreseeable future. Maxing out on a mortgage can be a dangerous place to be, especially if interest rates skyrocket in the near future.

These days, mortgage rates are really low – 3.22% for a 15-year mortgage as of May 13 – making home ownership a much safer bet compared to the 80’s when interest rates spiked as high as 18.45% in late 1981. The idea of sticking only to homes you can comfortably afford to build wealth over time is a rule that stands the test of time.

Build Equity in Your Home Every Time You Make a Mortgage Payment

The equity in your home is equal to the amount of money that you’d be able to sell it for, subtracting what’s still owed on it. Each time you make a payment towards your mortgage, the principal portion is tacked on to your equity, reducing the amount you owe.

This continued reduction of your mortgage gradually increases your equity in the home. Mortgage payments work by slightly increasing the principle portion each month. Your very first payment will consist of the lowest proportion of principle, and highest on the last. So as the years go by, your equity continues to grow.

Hedge Against Inflation

One often-overlooked benefit of owning a home is that it’s a safe hedge against inflation. Think about it: if you’ve got a fixed-rate mortgage, whatever price you pay on your mortgage payments won’t change, even if interest rates fluctuate or the economy goes erratic.

The cost of your property is locked in over the term of your mortgage loan, whether it’s 15, 25, or 30 years. But if you’re renting and inflation kicks in, the price of goods and services shoots up, inevitably causing rent prices to go up. When you make the comparison, owning a home can be a lot more affordable when inflation creeps up.

Save Money on Taxes

There are tax deduction benefits associated with owning a home. The tax code lets homeowners deduct mortgage interest off their tax payments. For a lot of homeowners, this translates into massive savings, considering the fact that interest payments are usually a huge part of a mortgage payment during the early stages of homeownership.

There are also deductions that can be made against closing costs. During the first year of owning property, you can claim the origination fees on your mortgage, regardless of whether or not you or the seller pays for them. Considering origination fees of 1% and above are typical, the savings can be significant. And don’t forget about property tax deductions, which are fully deductible against your income tax.

Save From Capital Gains Exclusion

When you buy a property that’s considered your primary residence for over two years, you can qualify for a capital gains exclusion. This means you can keep your profits up to a maximum of $250,000 if you sell (if you’re single – double that amount if you’re married). And if you bought your home before 2003 when the housing crash started, odds are that it has appreciated in value quite a bit, making this tax benefit even more advantageous.

There’s obviously a lot to consider before buying a home – it’s not a cheap expenditure, and could put you in a bad financial position if you don’t do your due diligence beforehand. However, the benefits could be astronomical if you’re savvy about your decision and the long-term financial benefits of buying a home really add up.

Team up with a mortgage specialist and a real estate agent, and you can reap the rewards of home ownership like millions of others before you have already done.

Why Sellers Are Much Better Off Using a Real Estate Agent

Plenty of sellers believe they could potentially save themselves a few bucks by going it alone without the help of a real estate agent. Unfortunately, trying to sell a house without a real estate agent can actually cost sellers more money than the commission they might have saved. Agents are experts in marketing properties and negotiating fair prices, are educated in the sales process, and understand the ins and outs of valuing a property.

Here are some solid reasons why you should never take a real estate agent out of the home selling equation.

Setting the Right Listing Price is Tricky

List prices for homes for sale on the market aren’t just picked out of thin air. Determining a selling price is an art form, and needs to be done with careful consideration. Under- or over-pricing a home can cost you a ton of money.

The best opportunity to sell a house is when it first comes out on the market, particularly in a seller’s market. Buyers are waiting for the right property to be listed, so it’s crucial that the home is priced properly right from the get-go.

If you over-price your home, buyers might not even look at your listing. The property will likely wind up sitting on the market for weeks – or longer – until you have no choice but to lower the price to gain more attention. By then, the listing has gone stale, causing buyers to wonder if there’s something wrong with the property.

The longer a house sits around on the market, the more stigmatized they become. Even if you lower the price to the right value after a while, the property still might not sell for what it could have if you had priced it right from the start. And during all that time the house sat around waiting to be snatched up, you’ve been spending hundreds or even thousands of dollars in carrying costs.

Under-pricing your home can have financial consequences too. While you could sell your house really quickly, there’s a big chance you’ll leave a lot of money on the table, and sell it for a lot less than what it’s worth.

Many sellers may want to stir up a multiple offer scenario where a number of buyers are bidding for your property. While this could drive the price up a little, this scenario might only attract buyers who just want a great deal. Even if you wind up with a selling price that’s over the listing price, chances are you could have actually gotten even more money if you had you priced the home correctly.

The majority of buyers will base their offers on the listing price, and not necessarily on what the property is worth. They’ll just assume that you’re asking fair market value for the home. Pricing the property accurately based on fair market value will almost always help you sell for the most money.

Accurately valuing a home is one of the most important aspects of selling. Without experience, knowledge and MLS access, properly valuing a home is near impossible. It’s hard to get information on recently sold properties, which shows how much similar properties in your neighborhood sold for in the recent past. Active listings can give you a rough idea about the value of homes, but what if they’re over-priced? Real estate agents are experts at determining property values, which can take years to understand.

Real Estate Agents Know How to Market Your Home

Selling a house involves a lot more than just planting a ‘For Sale’ sign on the front lawn and adding a few pictures to your Facebook page. Marketing a property is complex undertaking, and one that requires the right tools and a little know-how.

A real estate agent will know how to take the best photographs and virtual tours to advertise. He or she will know the best websites and magazines to use, and typically have a lot of contacts to communicate your listing to. A lot of times these agents already have buyers waiting for a house just like the one you’re selling.

Agents also have access to the most powerful marketing tool in the world of real estate – the MLS. This platform allows agents to advertise listings to other real estate agents and their clients.

While there are some companies out there that offer low-fee MLS services, there are a lot of issues associated with them. For starters, the service might never even see your home in person, and possibly enter inaccurate information about it with no photos. As the seller, you’ll be responsible for taking calls and setting up viewings.

If you find a buyer that’s being represented by a real estate agent, you’ll still have to pay the buyer’s agent if your home was entered in the MLS. After you’ve paid the MLS listing company, and buyer’s agent, how much are you really saving at the end of the day? Top that off with the disadvantage of not having a professional represent you and assist you with contracts, negotiations, appraisals, and so forth.

Negotiating Can be a Challenge

Wheeling and dealing directly with a buyer can be an awkward scenario at best. While many might assume that there’s more transparency through direct negotiations between buyers and sellers, this is usually a tough relationship. An experienced real estate agent knows exactly how to navigate the waters of negotiating a fair price for your home. As a messenger, your real estate agent is typically in a better position to negotiate a higher without scaring off the buyers.

Realtors can also act as a buffer between you and the buyer, and prevent any potential bad blood from killing the deal. An agent can speak on your behalf in tough transactions and prevent the talks from getting too personal. Having a hard-nosed estate agent in your corner will represent your best interests without turning off buyers who want to nickel and dime you.

The Bottom Line

Sellers don’t save as much as they think by trying to unload a property on their own. In fact, many times they wind up spending more. The majority of buyers work with real estate agents; if you have little to offer the buyer agent, you basically eliminate most of the buyers in your market. This will do nothing more than reduce your selling price and cost you money.

And if the buyer is represented by a Realtor and you’re not, you’ll suffer during the negotiating process. The buyer’s agent has the best interests of the buyer in mind; you’re on your own. At the end of the day, working with a real estate agent can save you a lot of effort, headaches, and money.




4 Cool Tech Products That Will Let You Control Your Home Through Your Smartphone

For a while, consumers have heard about the future of the tech-connected home. Everything from toaster ovens to security systems will connect to the cloud, providing information and automating processes. Imagine a future in which your refrigerator will automatically order milk when you run out.

While refrigerators aren’t quite that advanced, they are becoming increasingly more sophisticated. They are joined by many other features in a person’s home, which now have the ability to communicate with homeowners and other appliances within the house. What’s the best news of all? A homeowner now doesn’t have to pay a home automation company tens of thousands of dollars to make this happen. Many features of a smart home are available online or in your local hardware store for very affordable prices. Here are a few of the most notable.

Nest Learning Thermostat

There’s a reason Google bought Nest, the company’s learning thermostats are considered leaders in home automation. Many other smart technologies use Nest as a communication hub, extending their capabilities and creating a home that works harmoniously through smartphone apps. Once it’s put in place, Nest starts working for a family, learning its daily habits and automatically adjusting its settings accordingly. The company says it can lower a household’s heating and cooling bills by as much as 20 percent.

Ring Video Doorbell

When your doorbell rings, what do you do? Do you creep over and look out the peephole? Try to find a window to peer out? Ring Video Doorbell takes the guesswork out of the process. When your doorbell rings, you’re notified on your smartphone, with video of the person on your doorstep displaying on your screen. If you accept the call, you can speak to the person, whether you’re at home or on the other side of the country, allowing you to communicate with the person without having to answer the door.

LiftMaster Garage Door

If you’ve ever accidentally left home without closing your garage door, you know what a frightening feeling it can be. LiftMaster garage door owners can access the MyQ® Connected Home, which sends an alert to a homeowner’s smartphone if a garage door suddenly opens. Homeowners can also check the status of their garage doors through the app and open or close it remotely.

Belkin WeMo

By now you’ve likely heard of the smartphone-connected slow cooker or iron. The ability to control appliances remotely holds a great deal of value for homeowners. With Belkin’s WeMo Switch, homeowners have access to an adaptor that can be used with any appliance in a home or office, including lights, heaters, fans, and kitchen appliances. Once connected, you can shut power to connected appliances on and off using your smartphone.

Technology is moving at lightning speed, enabling you to access some of the most exciting products on the market. Now you can set your home up to connect to your smartphone without spending a fortune. Over time, you’ll be able to add on to these items and build a truly connected home.

3 Things to Consider Before Switching Your Carpet for Hardwood

In many homes, hardwood has replaced carpet as the primary flooring type, especially in rooms like living rooms and kitchens. New homebuilders are aware of the trend and have shifted their design choices accordingly. However, many older homes still have carpeting throughout, leaving homeowners with a dilemma. Should they remove the carpet and replace it with hardwood or leave it as it is?


Hardwood flooring has several benefits over carpeting, but there are some disadvantages, as well. Before making the decision to replace carpeting throughout your house, there are three questions you should ask yourself.

Will You Be Selling Soon?

Today’s home shoppers are likely viewing a large number of homes with beautiful hardwood floors throughout. This has upped the game for sellers of older homes, who are now required to compete with brand new homes in the same price range. While hardwood flooring is the top request of homebuyers, this may not translate to every room. Some consumers have stated a preference for carpeting in bedrooms, which allows them to step onto a soft surface when they get out of bed in the morning. Hardwoods in areas like kitchens and bathrooms can also turn some buyers away, since these areas are prone to spills and moisture. For that reason, some homeowners choose instead to install tile or laminate flooring in these rooms.


Do You Have Allergies?

Carpet has gotten a bad rap for its supposed contribution to allergies and asthma. However, a 15-year study in Sweden determined no correlation between the two. In fact, the study pointed out that when carpet use declined in the country, allergies increased by 30 percent. Some postulate that carpet acts as a filter, trapping allergens that might have otherwise been floating freely in the air. If carpet is cleaned regularly, it may be a better option for families that are concerned about air quality. When handled by a qualified professional, even the most deeply-embedded particles can be removed, keeping the home free of allergens.


Are You Prepared for Maintenance?

Whether you find hardwood maintenance easier than carpet depends largely on your preference for sweeping versus vacuuming. Carpets should be cleaned at least once every one to two years—more frequently if your household has pets. Hardwood flooring removes the need for this type of cleaning, but don’t assume wood-based flooring doesn’t have its own maintenance requirements. At least once a year, homeowners should use a wood-cleaning product to deep clean floors and remove any dirt and grime that builds up. Many experts recommend also using area rugs throughout the home to reduce dirt and protect wood from furniture marks. Just like carpet, these area rugs will need to be vacuumed and deep cleaned on a regular basis to remove embedded dirt.

Hardwood floors can up your home’s value by meeting customer demand. But consider the maintenance requirements of this type of flooring before making the commitment. If you don’t plan to sell your home soon, it may be best to leave the carpet in place until you prepare to sell, especially if you enjoy the feeling of carpet beneath your feet.

5 Problems Your Home Inspector Might Not Catch

You’ve found your dream home, put in an offer that the seller couldn’t refuse, and sealed the deal. But before you head out to buy new furniture, there’s still one little task that needs to be completed: the home inspection.

Realtors will typically advise their clients to include this clause in a purchase agreement in order to help uncover any problems with the home that they might not have noticed when they first saw it. Yet as helpful as home inspections are, there are a number of things that might not necessarily be revealed during a standard inspection.

It’s important to understand that a few things might not be caught, including the following.


1. Structural Problems

A skilled home inspector should easily be able to tell if the roof on a home is sagging. He or she may also be able to spot cracks in the foundation in an unfinished basement. Just about every roof will have its inconsistencies, and many concrete foundations will have minor, insignificant cracks. But when it comes to identifying the extent of potential problems, as well as the potential cost of repair, this is where the home inspector’s job ends.

Home inspectors are trained to spot issues that the average home owner might not be able to spot. They’ll crawl into attics and stick their fingers into wall insulation to uncover any issues. But they’re not licensed structural engineers. If there is something outside of the home inspector’s scope, they’ll refer you to someone else.


2. Electrical Issues

Think of a home inspection as nothing more than a ‘visual inspection’ when it comes to possible electrical problems. As far as electrical wiring goes, home inspectors aren’t always able to identify the exact source of the issue should a problem be suspected. Sure, they’ll be able to spot something if it looks off, such as a receptacle not having a proper ground, but they won’t exactly be able to determine what is causing the problem, or where. An electrician will have to come into the picture in order to take over where the home inspector left off in this case.


3. Blocked Sewers

Not every problem with a home is going to rear its ugly head during a home inspection. Issues may not even show up until well after you’ve moved into the house. A blocked or damaged sewer line is unfortunately one of these issues that can be placed under this category.

A home inspector will do things such as run water through the sinks, tubs and toilets, but they’re only there for a couple of hours. This short time period might not be enough for the issue to be exposed.

Inspectors can skillfully estimate the age of pipes and drains, and even make sure there are no trees in the line of the sewer pipe that might cause a problem. But when it comes to in-depth sewer pipe scoping, that nasty job is left to sewer line expert.


4. Leaks

Leaks can seemingly show up out of the blue. They might not be there one day, but then show up the next. This is why leaks are a toughie for home inspectors. Many times vacant homes have plumbing that hasn’t been used in a while. If there were leaks, they would have all dried up by the time a home inspection was conducted. A couple of days after you move it and start using the taps, all of a sudden these leaks become apparent. Even the most experienced inspector may miss a potential leakage spot while conducting an inspection.


5. Faulty HVAC Equipment

Just like sewer lines and leaks, problems with the HVAC equipment may not be there one day then show up the next. When an inspector checks out the air conditioner and finds that the temperatures are within acceptable ranges, the system can seem like it’s functioning fine. But once the summer hits and the temperatures go through the roof, the A/C will be under a lot of pressure to work hard, which is usually the time for it to fail if it’s faulty.

If the inspector has a hint that there may be a problem with the HVAC equipment, a specialized contractor can look into the job. It typically costs anywhere from $3,000 to $5,000 to hire these contractors, who will need a few days to complete their inspection.


The Bottom Line

Having a home inspected before you finalize a deal is important to help uncover any possible issues with the home that’ll wind up costing you a lot of money and plenty of headaches. But at the end of the day, inspectors are not miracle workers. There are a bunch of things that homeowners think they can do, but can’t. It’s important to be realistic about what the entire scope of home inspector’s job is, and at what point a specialist will need to be called in.


You CAN You Afford to Renovate Your Kitchen! Here’s How…

Your kitchen cabinets are totally outdated, and the peeling vinyl countertops are nothing but an eye-sore. It’s time for a kitchen overhaul, but how exactly are you going to come up with the funds to pay for it?


Instead of dreaming about a new kitchen, make it happen with these financing strategies.

Tap Into Your Home Equity

Probably one of the easiest and cheapest ways to finance a kitchen remodel is to use the equity you’ve already built in your home. A home equity loan gives you the total amount of money up front to pay for the work that needs to be done all in one shot. After the money is taken out, it’s paid back in monthly installments.

This type of loan is not unlike a regular credit card: just take out the amount of cash you need, and pay back what you’ve used. The only difference is that the interest charged on a home equity loan is much lower than that of a typical credit card.

A new kitchen usually adds value to your home, which means you’ll actually be putting more equity into it my improving it. Depending on the extent of work being done, you could boost your home’s value up to 75% of the amount of money spent on the job.


Use Contractor Financing

Many contractors offer financing for work that they do. After an initial deposit is put down, the remainder of the money is paid back in installments over a specified length of time. Ideally, the contractor should be giving you a detailed invoice a number of times throughout the renovation process.

Never pay a contractor in full up front for work that hasn’t been done yet. While the contractor is most likely an honest person, there are still shady people out there who have no problems scamming their unsuspecting clients and bailing in the middle of the job after they’ve gotten their money. This makes paying in installments an ideal alternative to paying for the work up front in cash.

Take Out a Second Mortgage

In addition to your first mortgage, you could take out a second loan registered against your home, and pay both of them back simultaneously. You’re allowed to borrow up to 80% of what your house is appraised at, minus whatever is left to pay back from your first mortgage. While this is a viable option, you should only consider it if you are certain that the added value to the home is more than the cost of the renovation.


Borrow From Pre-Paid Mortgage Payments

Some lenders might let you borrow any money that you’ve already prepaid on your mortgage. For instance, many homeowners may ‘double up’ their monthly mortgage payments when they’ve got a little extra cash to put towards their home loan. Similarly, they may put a lump sum towards the principal at the end of each year if there’s a surplus of money to do so. This money is then added to the principal on your mortgage, which you may be able to borrow against to help fund a renovation.

Take Advantage of a Title I Loan

There’s a program available through the U.S. Department of Housing and Urban Development that insures lenders who offer home improvement loans, and is known as the ‘Title I’ program. With this arrangement, you have to pay 1% of the loan amount, up to a maximum of $25,000.

Homeowners who don’t have enough equity built up in their homes can take advantage of a Title I loan, which features payment plans and interest rates that are usually affordable for most. Many kitchen renovations would qualify for this kind of loan, but you should still check with a local Title I lender to verify if your particular project does.

The Bottom Line

There are plenty of ways to get your hands on the cash you need to pay for your kitchen renovation. And if the job is done right, you can actually add value to your home, which essentially pays for the work itself. Talk with a trusted realtor to get some pointers about where to focus your renovation to get the most bang for your buck, and boost your ROI.

Maximize Your Homeowner Tax Deductions Next Year

Many consumers tend to wait until the last minute to file their taxes. In the rush of meeting the deadline, some deductions may get missed, including homeowner tax deductions. If you missed out on maxing out your tax deductions this year, you can start planing now to take advantage of these savings before next year’s tax deadline.

What exactly is considered tax deductible?

Mortgage Interest

Within certain limits, you can write off the interest portion of your mortgage payments. You can deduct all of the interest on a maximum of $1 million in mortgage debt on your first or second home. If you’re married and are filing your taxes separately, the maximums are halved. Just keep in mind that this tax deduction is only allowed on a mortgage property – you can deduct any interest if your home was paid in cash.

You may also be able to deduct the interest portion of your private mortgage insurance (PMI) if you took your mortgage out after 2006. But the amount you deduct will depend on your income – deductions will start weaning above the $100,000 mark. If you bring in $109,000 in one year, you get no deduction at all.


Property Taxes

It stings to pay property taxes on your home, but the good news is you can get a little bit of this money back come tax time. If you’ve got an escrow account, keep in mind that any money being held in this account to put towards property taxes can’t be deducted until you actually use the money towards this payment.

Home Equity Loan

You might be able to write off some of the interest you pay on a home equity loan, within limits. The IRS will allow this tax deduction as long as the total is the lesser of $100,000, or the total of your property’s market value, minus other debts against your home.


Interest on Your Home Improvement Loan

Many homeowners take out a loan to pay for significant improvements on their home if they don’t have the liquid cash to pay for them up front. Any interest paid on these loans can be deducted, as long the work is considered to be a “capital improvement” – that is, they increase the value of the home, extend its life, or alter it for new uses – as opposed to typical repairs.

Examples of capital improvements include building a deck, insulting the attic, adding a new roof, landscaping the yard, changing the HVAC system, and so forth. Fixing small leaks, patching up cracked tiles, and repainting don’t qualify as capital improvements. Any loans taken out to pay for such work wouldn’t be considered tax deductible.

Home Office Expenses

If you work from home, or perform at least a part of your work from your house, you can write off a percentage of certain expenses related to running your business. These costs may include home insurance, utilities, repair costs, and home value depreciation.


Selling Expenses

In the event that you sell your home, you can deduct your selling expenses. Realtor commissions, legal costs, advertising expenses, title insurance, and inspection fees are all classified as selling costs.

These expenses can be deducted from your gain, which is the selling price of your home, minus deductible closing costs and your tax basis (the original purchase price, plus capital improvement costs, minus home value depreciation).

Paying taxes is never fun, but at least you can get some of your hard-earned cash back when it’s time to file them. Team up with a good accountant who can fill you in on all the little ways you can trickle some funds back into your account. Every little bit counts.