Applying for a mortgage can be a lengthy and difficult process. Lenders want to know that they are going to get a return on their investment.
To ensure that they’ll see that positive return they will take a number of things into consideration, such as your income, credit score, employment history, and financial capital.
First-time homeowners often struggle when it comes to these prerequisites since they have fewer years of numbers for lenders to consider. If you’re one of those people, don’t worry--you can still purchase a home.
First-time homeowner loans, which are guaranteed by the U.S. government, and a number of private loans enable people to borrow money for a home without paying a huge down payment or having a vast credit history.
One downfall of said loans is private mortgage insurance, or “PMI.”
In this article, we’re going to talk about what private mortgage insurance is, how to avoid it, and how to get rid of it.
What is PMI?
If you make a down payment on a mortgage that is less than 20% of the loan amount, you will most likely have to pay private mortgage insurance.
PMI exists as a way for lenders to help guarantee they won’t lose money off of your loan. If you make a down payment of 20% or more, then lenders are typically satisfied that they won’t lose money from doing business with you.
PMI is not to be confused with home insurance, which protects you against damage and theft. Rather, it is an additional fee you’ll pay to your lender each month that is added to your mortgage payment.
PMI is calculated based on a few considerations. Lenders will take into account your down payment amount, the value of the mortgage, and your credit score.
In terms of costs, PMI typically costs between .5 and 1% of the total mortgage amount each year.
Naturally, it’s best to avoid paying private mortgage insurance altogether. Private mortgage insurance has no future value for you and your family since it doesn’t count towards building equity and doesn’t protect you from any potential financial harm (your lender is the sole beneficiary of PMI).
Saving for a down payment can take time, and sometimes you’ll need to rent or cut costs while you save. However, if you do take on a loan with PMI, you can still cancel it at a later point.
Canceling your private mortgage insurance
The first thing you should know about canceling PMI is that it usually isn’t easy. You’ll need pay off at least 20% of the home, write a letter to your lender, and wait for an appraisal of the home. Once you’ve done this, you still have to wait while your lender considers your request. In all, this process could take months--months that you’re still required to pay PMI.
Once common way to get out of PMI is to refinance. If the value of your home has increased since the time of you taking on the loan, the new lender likely won’t require PMI. However, you’ll want to make sure that refinancing will get you a lower interest rate and cover the costs of refinancing.
If you have a list of home contractors that you use and are satisfied with, consider your yourself lucky!
Many homeowners find themselves in the unenviable position of having to blindly search online for reputable contractors, sort their way through dozens of miscellaneous reviews, and then hopefully find a handful of promising candidates to interview.
Even after all that, there's no guarantee you'll be 100% satisfied with your choice!
Although picking a contractor may sometimes feel like a gamble, there are strategies for lowering your risk factor.
A personal recommendation from someone you know and trust is usually the most reliable method of finding the right person for the job. If a relative or friend has had a positive experience with a roofer, bathroom remodeler, or plumber, then there's a good chance, you'll be satisfied with them, too. It's still a good idea to get two or three contractor estimates, but a good starting point is to have at least one recommendation from someone who has your best interest at heart.
Do Online Reviews Help?
Online review sites can also provide helpful information and feedback, but they're not always the "unvarnished truth". In spite of efforts by review sites to discourage biased reviews, some are probably going to slip through. For example: Have you ever read a review that sounded like it was an advertisement for the contractor? Sometimes when the praise sounds just a little too glowing and over the top, you can't help but wonder if those reviews are genuine and unbiased. Although the majority of online reviews are probably legit, the best way to view them is with a healthy dose of skepticism.
When it comes to the occasional scathing review by a disgruntled customer, one has to put it in context and look at "the big picture." There are some customers who are literally impossible to satisfy and will always find something to complain about. However, if a contractor has more than one or two negative reviews online, and they're not offset by a couple dozen positive ones, then that could be a potential red flag. Since you don't know the reviewers personally, and the reviews are often posted anonymously, the credibility factor is much lower than if you got a recommendation from one of your parents, a close friend, a next-door neighbor, a sibling, business associate, or your real estate agent.
The point at which you should be able to separate the "wheat from the chaff" is during your face-to-face meetings. If a contractor gives every you indication of being professional, honest, knowledgeable, experienced, ethical, and customer-service oriented, then they're probably a good prospect for the job. Other factors include the price they quote, their Better Business Bureau rating, and their willingness to provide references, proof of insurance coverage (such as general liability and Workers' Comp, if applicable) and direct answers to all your questions
If you recently sold your house, there may be only a few weeks before you need to relocate to a new address. As such, you'll likely face a time crunch to pack up your belongings and get rid of excess items, including various home appliances.
Although your refrigerator, washer, dryer and other home appliances have served you well for many years, there is no time like the present to sell these items. That way, you can earn extra cash and avoid the hassle of moving these big, heavy items from your current address to your new one.
For home sellers who have only a short amount of time to sell their appliances, there's no need to worry. In fact, there are many quick, easy ways to sell your appliances and maximize their value.
Now, let's take a look at three tips to help you sell your appliances before moving day.
1. List Your Appliances Online
Create an online listing for each of your home appliances, and you should have no trouble stirring up plenty of interest in these items.
When you craft an online listing, it is important to include as much information as possible. Therefore, you should provide details about a home appliance's age and condition, along with photos. This will make it easy for a home appliance shopper to determine whether a particular appliance is the right choice.
Also, share your online listing with family members and friends. And if you post your online listing on social networks, you may be able to generate significant interest in an appliance in no time at all.
2. Host a Yard Sale
A yard sale offers a great opportunity to sell home appliances and other items before you move.
Host a yard sale on a Saturday or Sunday and start your yard sale in the morning. By doing so, you can improve your chances of attracting a wide range of yard sale shoppers.
In addition, be open to negotiating with yard sale shoppers. If you maintain flexibility on the price of a home appliance, you can boost your chances of a quick sale.
3. Post Flyers in Your Community
Craft flyers that include information about your appliances and post them in your community. This will allow you to generate interest from local buyers.
Flyers should be clear, concise and informative. They can include information about an appliance, along with contact information that enables buyers to reach you via phone or email.
Lastly, if you need to sell appliances prior to moving day, it often pays to consult with a real estate agent.
In many instances, a real estate agent can offer recommendations and suggestions to help you streamline the moving process. As a result, this housing market professional can make it easy for you to sell home appliances and other items before you move.
Ready to sell your home appliances? Use the aforementioned tips, and you can promote your appliances to the right groups of buyers.
The process of closing on a home can seem lengthy and complex if it’s your first time buying or selling a house. There are several costs and fees required to close on a home, and while it’s up to the individuals to decide who covers what costs, there are some conventions to follow.
In this article, we’re going to talk about closing costs for selling a house and signing on a mortgage. We’ll discuss who pays what, and whether there is room for negotiation within the various fees and expenses.
But first, let’s talk a little bit about what closing costs are and what to expect when you start the process of buying or selling a home.
Closing costs, simplified
If you’re just now entering the real estate market, the good news is you can often estimate your closing costs based on the value of the property in question. You can ask your real estate agent relatively early on in the process for a ballpark figure of your costs.
Closing costs will vary depending on the circumstances of your sale and the area you live in. In some cases, closing costs can be bundled into your mortgage, such as in “No Closing Cost Mortgages.” However, avoiding having to deal with closing costs often comes at the expense of a slightly higher interest rate.
If you are planning to buy a house and have recently applied for a mortgage, laws require that your lender sends you an estimate of your closing costs within a few days of your application.
Now that we know how closing costs work, let’s take a look at who plays what.
Buyer closing costs
In terms of the sheer number of closing costs, buyers tend to have the most to deal with. Fortunately, your real estate agent will help you navigate these costs and simplify the process.
They can range from two to five percent of the cost of the sale price of the home. However, be sure to check with your lender for the closest estimate of your closing costs. It’s a good idea to shop around for mortgage lenders based on interest rates as well as closing costs charged by the lender.
Here are some of the costs you might be asked to pay as a home buyer:
Prepaid interest or discount points
Home inspection fee
Insurance and Escrow deposits
Seller Closing Costs
While the seller pays a larger amount of closing costs, sellers still have obligations at closing that can be just as expensive. The biggest expense for sellers is to pay the real estate commission. Commission usually falls in the vicinity of 6% of the sale price of the home. This covers the commission of both the seller’s and the buyer’s real estate agents.
The main takeaway? Buyers and sellers both share the burden of closing costs. While the buyer has more expenses to take care of, the seller pays for the largest costs.
Two of the most important ingredients in a successful house-marketing campaign are competitive pricing and making a great first impression on prospective buyers. Although your real estate agent can assist in achieving both of those goals, keeping your home in "show ready" condition will be up to you and your family.
When your home is actively being shown, the process is not unlike a job interview. The main similarity is that you don't get a second chance to make a good first impression. Potential buyers have a mindset that's similar to that of a hiring manager: They are intensely focused on making the right decision. Since the last thing they want to do is make the wrong choice (or a less-than-optimal choice) it's up to you -- the home seller-- to present your home in its best possible light.
Other than keeping your home squeaky clean and your lawn looking as manicured as possible, it's also to your benefit to reduce clutter. A house that's filled with clutter will definitely send the wrong message to prospective buyers searching for their next home. Clutter takes many forms, so it often requires a concerted effort to identify and remedy it. Here are a few key areas to focus on:
Furniture clutter: Having too much furniture in a room or entryway can give visitors the impression that your home is cramped, too small, or disorganized. If you've had a tendency to add furniture to your home, over time -- without putting some pieces in storage -- then you may have inadvertently created a cluttered "look and feel" to your living space
Surface clutter: Have you ever noticed how things that belong in drawers, cabinets, and recycling bins often end up on tables, counter tops, and bookshelves? If that's taking place in your home, rest assured you're not alone! However, if you're preparing to put your home on the market, you'll make a much better impression on potential buyers if you remove as much surface clutter as possible.
Storage-area clutter: Although there's a lot of truth to the saying "Out of sight, out of mind," that usually doesn't apply to preparing your home for the real estate market! Serious house hunters are pretty thorough, and are generally going to glance in closets, basements, attics, and garages. So if you simply move your clutter to another part of the house, it will still be noticed! Granted, your clutter will be less prominent in storage areas, but it will still have a detracting effect on the overall impression your home makes. The solution involves a combination of strategies, including selling or donating unwanted belongings. In some cases, you might even consider renting a dumpster or calling a reasonably priced junk-hauling service to get rid of things you don't want and can't donate, sell, or give away.
It's not always easy to be objective when staging your home or evaluating its marketability, so an experienced real estate agent can provide you with invaluable guidance, advice, negotiating help, and marketing assistance