Homeowner Savings

How to Easily Save Money as a New Homeowner

Just bought a home? Here are 4 money saving every new homeowner should know: from spring maintenance items to DIY home improvements.

Keep an eye on that spending! Whether you’re a homeowner for the first time or you’ve just moved into a larger home, there is a strong tendency to overspend at the outset. Here are some tips to help you avoid this common pitfall of new homeownership.

1. Get down and dirty with DIY

Speaking of decorating, here’s some golden advice for new homeowners: The possibilities are endless — and much less costly — if you’re willing to do a little bit of the hard work yourself. DIY home improvement projects such as painting and switching out hardware can make a huge difference in the look and feel of your new home without sending you spiraling into debt.

Note: Don’t spend time and money on projects that you aren’t qualified to do. Doing a project incorrectly can end up costing you quite a bit more time and money to fix. Play it safe. Stick to fairly simple projects until you get a better grasp of your home improvement skillset.

2. Get the boring stuff out of the way first

You’ve just shelled out for a down payment, closing costs and moving expenses. Your savings account is pretty drained, right? So what would be the worst thing that could happen right now to your home? A costly and unexpected issue — especially one that could have been avoided with some simple maintenance. Unfortunately, it’s not up to a landlord to handle these issues now.

Sure, your home inspector took a thorough look at the house before you purchased it, but that doesn’t mean that you shouldn’t make your own rounds. Before you even consider picking out that new sectional or king-size bed, perform some new homeowner maintenance, including getting a head start on simple spring maintenance items. Then, make sure your budget stays protected by taking advantage of a home warranty — the rest-easy solution to those inevitable system and appliance breakdowns.

Bonus Tip: Was your new home vacant for a while before you moved in? Were some appliances missing, causing you to have to install new ones? Since you’re officially living there now, take a minute to ensure everything is hooked up and functioning correctly throughout the house. Any strange noises or smells? Water leaks? Have them checked out by a professional right away!

3. Get comfortable

Ask yourself: What absolutely must be done now, and what can wait? As exciting as this new lifestyle is, it will take some getting used to. Think about all the new expenses you have now, versus before. And the fact that you didn’t just want to get into the new house — you plan on staying there for a while. The best way to ensure that is to be smart with your money and take your time making this new place your home. Upgrading your master bathroom can wait until you’ve saved up for it. And adding on that deck doesn’t have to be something you do this year. Simply ensure you’re comfortable in your new home. The extra projects will happen. The new items will come. And they’ll be that much more exciting when you can easily afford them.

4. Get thrifty with your décor

Now that you’ve gotten the boring stuff out of the way, it’s time to get excited about adding your personal touch to the home. But how can you do that when your funds are running low? Open your mind to the idea that not everything has to be brand new — just new to you. Have your in-laws been talking about switching out their dining room chandelier? Tell them you’ll take it off their hands! Have your friends been talking about getting together for a group garage sale when the weather gets warmer? See if you can get a sneak peek of the items that they’re wanting to part with. And don’t hesitate to take advantage of all those resale groups online. You can find some incredible items in excellent condition at a fraction of the retail cost. No one will ever know the difference!

How to Easily Maintain Your Home

Whether you are going to be selling your home shortly or years down the road, making sure you keep up with the maintenance of your property is important. A home that does not have proper maintenance will undoubtedly suffer when it does become time to sell.

When you talk to people that are successful in the sale of their homes both quickly and for a good price, you will usually discover that their success was a result of forethought.

They may have been lucky to make as good of a deal as they did, but they likely spent a significant amount of time preparing for that lucky moment as well. Making a home appealing to buyers takes work – much of which occurs before the house ever goes on the market.

There are some home maintenance items that most people do not always think about. Many of the things that make a house stand out are the result of regular maintenance, tasks that may seem a little mundane, but that do a lot to keep up the functioning and appearance of a home.

These little jobs, when performed on a periodic basis, can help you avoid paying costly replacement or repair fees in the months leading up to putting your home on the market. Unless you are planning on selling your home for a bargain to shoppers searching for a fixer-upper, keeping up with the little things is worth the effort.

These home maintenance tips can go a long way in helping that your sale goes smoothly and does not end up going south due to a failing home inspection. Keep in mind that a skilled home inspector can tell when a homeowner has not been keeping up with regular home maintenance items.

You can bet your bottom dollar that while the home inspection is taking place, they will be pointing this out to the buyer. Whether you are selling now or not, use these nine maintenance tips to keep your home running like a well-oiled machine! If you are going to be selling by following this advice, you will keep your negotiating after the home inspection to a minimum.

Vacuum Refrigerator Condenser Coils

Most people do not think of inspecting their refrigerators. They seem like self-contained units, and there is not a lot the average person can do to maintenance them. However, the condenser coils on the back of your fridge will collect dust, and this dust can inhibit its operation.

Pulling the fridge out and cleaning off the dust can help your fridge work more efficiently, and will give you the opportunity to clean behind and underneath it as well.

More than likely if you clean your coils the refrigerator will work noticeably better. Refrigerators are expensive to replace so this is an important maintenance tip for homeowners not to forget.

Change Batteries For Smoke/Carbon Monoxide Detectors

While changing the batteries is a small maintenance item. making sure that you smoke and carbon monoxide detectors are working is not. In fact, your families safety depends on it!

The last thing you ever want to go through is having your home destroyed by fire when it could have easily been avoided. Having working smoke and carbon monoxide detectors is critical.

In some states including mine (Massachusetts), they are a requirement for sale. This is a great law that is designed to reduce casualties from two potentially hazardous situations.

You don’t need to be selling your home to realize that keeping up with your local smoke and carbon monoxide detector regulations can be the difference in saving lives!

Inspect and Clean Your Furnace or Boiler

Heating and cooling systems push a lot of dust along with temperature controlled air, and this dust and possibly condensation can lead to degradation of your unit and the ducts it uses. An annual inspection by a certified service professional is always a good idea.

The service person can clean up any accumulated debris, and can verify that your system is functioning as it should. When you have a forced hot water heating system that is serviced by oil, the maintenance requirements are little more stringent.

Oil, unfortunately, does not burn as clean as gas and therefore can cause a system to be cleaned on a more regular basis. Most heating companies recommend an Oil fired heating system be tuned up once a year where gas can typically be done every two years.

Keep in mind that staying up with maintenance on your heating system can extend the lifespan by years. Also, consider that if a buyer sees you have not been maintaining the system, they may take into account offering less for your home thinking they may need to replace it sooner than expected.

Keeping up with your heating system is a maintenance tip you should never neglect as it is one of the most costly items in your home to replace.

Check Your Water Heater

Your water heater may heat thousands of gallons of water a year, and like every appliance, it can only perform well for so long.

A yearly maintenance check is recommended for any water heater, even one you just purchased.

Seals have a way of failing, and drains can clog – especially if you have hard water. If you notice even minor leaks or severe scale build up, consider contacting a plumber or water heater installation company to take a look.

It is far better to catch a failing water heater before it goes out completely than to come home to a flooded room or basement. Water heaters are an area that home inspectors will pay particular attention to. Making sure that you do not have any pipe fittings that are leaking or corroded is important.

At home inspections leaking fittings are quite common because most homeowners do not pay attention to a maintenance item like this until it becomes a bigger problem.

Maintain Your Filters

One of the more important maintenance tips for homeowners is making sure you keep up with changing your heating and cooling filters. Your central heating and air conditioning unit work hard to push air throughout your house. By changing your filters on a regular basis, you help the unit operate efficiently and effectively.

It already requires a significant amount of energy to run air through the various vents – failing to install a clean filter makes this process much more challenging, and can put unnecessary strain on your central air unit. Make sure you pay particular attention to the rating of the filter you are using.

Some filters need to be changed monthly while others are “rated” to last much longer. A quality filter can usually be bought for your system that is designed to be modified far less frequently.

Check Your Toilets and Faucets

Home inspectors and appraisers notice everything, and they are sure to see if you have any problems with your toilets or your sinks. Take a moment every six months or so to inspect your basic plumbing fixtures. Water will find any available avenue to escape, especially when under pressure, and you can guarantee that sooner or later one of these fixtures will begin leaking.

If you are handy, replace the faulty seal. If not, bring in a plumber to tackle the problem before it becomes much bigger.

An Ounce Of Prevention

Taking the time to do these things now, before you ever put your home up for sale, will make the whole selling process easier when you finally begin it in earnest. You and your family will also enjoy the benefits of a cleaner, more livable home right now.

While the above-mentioned home maintenance items are mostly considered small potatoes, there are always other common home selling issues that could derail your sale far more quickly. Things like a failed septic system, not taking out required permits for work, and appraisal issues are potential road blocks.

When selling a home, it is important to stay out ahead of the curve and pay particular attention to all the potential issues that could get in the way. A prepared home seller enjoys the benefit of not having to face those unfortunate things that can surface in a Real Estate transaction!

Spruce Up Your Front Door

It may seem trivial, but your front door is usually the first close look anyone gets at your home and is worth sprucing up on a yearly basis because of this. If you have a hardwood door with a natural look, take the time to clean and polish it. If it is painted, consider touching it up or repainting it as necessary.

Buyers like a welcoming, well-maintained front door. Have an old door handle that is very weathered? Consider upgrading to something that will be visually appealing while also offering good home security.

Keep in mind that maintaining the curb appeal of your home will pay you back when it comes time to sell.

Clean Your Exhaust Hood

Cooks working in professional kitchens are required to clean vent hoods on a regular basis. It is a dirty job, typically involving caked on grease and dust. Your kitchen vent may not be as dirty as one used in a professional setting, but it still poses a fire hazard and is unsightly when not cleaned regularly.

Take a few minutes to wash off any accumulated grime and to replace the filter if there is one. Exhaust hoods are a simple maintenance item that will stick out like a sore thumb if you do not deal with it.

Maintain Your Garage Door

Your garage door and opener also require regular maintenance to operate as intended. The chain on your opener must be lubricated, along with any exposed metal joints, and you should check to make certain the door runs smoothly in its tracks.

Most inspectors will pay close attention to a garage door because of the potential for significant injury to a child or pet. Most newer garage door systems have electronic eyes at the bottom that sense movement. These need to be checked regularly to make sure they are functioning as intended.

Homeowner Tax Benefits

Indeed, there’s no place like home.

Let’s examine how homeownership makes “cents” – from the tax benefits, to good old fashioned financial stability. The financial benefits of homeownership are evident year round, but particularly around tax time – they seem to jump off the page!

1. You Build Equity Every Month

Your equity in your home is the amount of money you can sell it for minus what you still owe on it. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. That reduction of your mortgage every month increases your equity. That is especially true now with the elimination of risky mortgages like negative amortized and interest-only loans – thanks to the new “Qualified Mortgage” rules. The way mortgages work is that the principal portion of your payment increases slightly every month year after year. It’s lowest on your first payment and highest on your last payment. Thus, as the months and years go by, your equity grows!

2. Homeownership Builds Wealth Over Time

We were always taught growing up that owning a home is a financially savvy move. Our parents knew it, and their parents knew it. But this past decade of real estate turbulence has shaken everyone’s confidence in homeownership. That is why it’s so important that we discuss this again now that we’re in a ‘new market.’ Homeownership can be a very savvy financial move – but only if people buy homes they can actually afford. In 2014, this idea of sticking to a home you can afford to gradually build wealth is a “rule” that just happens to be new and old at the same time.

3. You Reap Mortgage Tax Deduction Benefits

Mortgage deduction: The tax code allows homeowners to deduct the mortgage interest from their tax obligations. For many people this is a huge deduction, since interest payments can be the largest component of your mortgage payment in the early years of owning a home.
Some closing cost deductions: The first year you buy your home, you are able to claim the points (also called origination fees) on your loan, no matter whether they are paid by you or the seller. And because origination fees of 1 percent or more are common, the savings are considerable.
Property tax is deductible: Real estate property taxes paid on your primary residence and a vacation home are fully deductible for income tax purposes.

4. Long Term, Buying Is Cheaper than Renting

In the first few years, it may be cheaper to rent. But over time, as the interest portion of your mortgage payment decreases, the interest that you pay will eventually be lower than the rent you would have been paying. But more importantly, you are not throwing away all that money on rent. You gotta live someplace, so instead of paying off your landlord’s home or building, pay off your own!

5. Tax Deductions on Home Equity Lines

In addition to your mortgage interest, you can deduct the interest you pay on a home equity loan (or line of credit). This allows you to shift your credit card debts to your home equity loan, pay a lower interest rate than the horrendously exorbitant credit card interest rates, and get a deduction on the interest as well.

6. A Mortgage Is Like a Forced Savings Plan

Paying that mortgage every month and reducing the amount of your principal is like a forced savings plan. Each month you are building up more valuable equity in your home. In a sense, you are being forced to save—and that’s a good thing.

7. You Get a Capital Gains Exclusion

If you buy a home to live in as your primary residence for more than two years then you will qualify. When you sell, you can keep profits up to $250,000 if you are single, or $500,000 if you are married, and not owe any capital gains taxes. Now, it may sound ridiculous that your house could be worth more than when you purchased it after these past several years of falling house prices. However, if you purchased your home anytime prior to 2003, chances are it has appreciated in value and this tax benefit will come in very handy.

Home Ownership: Financial Benefits to Think About

Home is where the heart is. It’s also where a big chunk of your financial responsibility lies. Home ownership is a pillar of the American dream, and while many of those in younger generations either can’t afford to or actively choose not to pursue it, those who buy in to the housing market often see major financial benefits.

There is no doubt that becoming a homeowner is one of the biggest financial decisions you will make in your entire life. It’s also undeniable that simply getting to that point requires a certain degree of financial success. You need to come up with a down payment and closing costs (generally about 3 percent to 4 percent of the total home purchase price for buyers) before you can even turn the key in the door. But among those who take on the big task of home ownership, many see financial benefits that far outweigh their initial investment, especially during tax season. Here are 5 of them.

Positive perks

Home ownership has other financial benefits that may come in handy for you someday. For example, a mortgage is considered “good debt,” and as such, it is likely to increase your credit score, provided you always make your payments on time. It also proves your credit-worthiness for other things you may want to consider, like a business loan or a new line of credit. It can even lower your monthly car insurance payments. While perks like these should certainly not be deciding factors when determining whether or not you should purchase a home, they do add up as additional benefits if you choose to opt in to the housing market.
Home ownership tax deductions

You get a number of tax breaks for owning a home, most notably a deduction for the interest and property tax portion of your mortgage. This deduction is particularly useful for off-setting the initial financial blow that comes with purchasing your property, since in the first years of owning your home you’re mostly just paying off the interest on your mortgage, as opposed to the principal. The first year you buy your home you are also able to write off any mortgage points on your loan, which can lead to pretty considerable savings depending on how many points you claimed. And if you ever decide to refinance your home after building sufficient equity in it, you also have the option of taking out a home equity line of credit, which is itself tax deductible.

Do keep in mind: the Tax Cuts and Jobs Act, passed in 2017, limits mortgage interest deductions to $750,000 of your total mortgage debt, including any home equity credit you take out. Previously, the limit was $1,000,000 in mortgage interest deductions plus a $100,000 for home equity credit.
Build up a stronger financial future

The recent recession threw a wrench into the idea that home ownership always builds wealth over time. But the fact remains that owning a home is one of the fundamental means of accumulating wealth as we age. The caveat: you have to buy a house that you can actually afford.
Asset-wealth is a much more secure predictor of future financial stability than income, which can—and often does, in today’s evolving economy—change from year to year. In a strong economy, home values generally increase by 3 percent to 4 percent every year, thanks to inflation and natural population growth. From 2011 to 2016, as the housing market has recovered from the bubble that contributed to the recession, home values have been increasing even higher at an average rate of 6.3 percent a year. Putting money into home ownership versus a rental is akin to the difference between putting money into an investment account versus a no-interest checking account, with the latter being only as valuable as it is in the moment while the former increases over time.
Amass equity

Every single month that you pay your mortgage you own just a bit more of your home. This is a big benefit over renting, where you’re paying comparable monthly fees without any comparable stakes. The equity in your home builds in two ways and often concurrently: (1) equity builds as the value of your home increases, and (2) equity builds as you pay off more of your loan. These two factors mean that after the first couple of years (when, again, you’re mostly just paying mortgage interest), every month you pay money toward your loan you are building up your financial resources for the future. It’s why some people refer to mortgage payments as “forced savings.”

Want to build equity even faster? Take steps to pay off your debt quicker (like financing with a shorter term loan or paying more than you owe every month) or increase your property value (think home improvements and a focus on routine maintenance).
More control over day-to-day housing-related costs

Unless you change the terms of your mortgage, you know the base cost that you’re going to be spending to live in your home every month, both now and in the future. This affords more stability than rent, which is variable and can (and often does) change over time. And control over costs goes even further than that. As a renter, you don’t have a say over whether your landlord supplies you with energy-efficient appliances that can save you hundreds of dollars every year, but you do have to pay the utility bill either way. As a homeowner, you can make better short and long-term financial decisions that are geared specifically toward your own financial goals and abilities. While this isn’t likely going to help you save for your future in the same way building equity does, it should bring you peace of mind to know that you’re saving money everywhere that you can.

But what about the financial risks?…

Owning a home isn’t all equity building and cost cutting. Aside from the significant payments that have to be made in order to own a home in the first place, there are also some financial risks that all potential and current homeowners need to keep in mind when trying to balance their budgets.

The biggest financial risks for homeowners are in terms of maintenance costs. There’s no landlord to put the responsibility on if the roof starts leaking or the heating system goes out in the middle of winter. While you’re unlikely to face major repairs like this all of the time, they do occasionally come up and it’s important for all homeowners to have savings set aside to deal with them when they happen.

Then there’s the risk of home depreciation. Ultimately, it’s your home’s land that appreciates in value over time, barring any major negative changes in your area like a natural disaster or a school or major business closing. The structure of your home, however, tends to depreciate in value as things get worn out and lived in. While you don’t have a lot of control over what goes on in your neighborhood that may negatively impact the price of your land, you do, fortunately, have some control over maintaining and increasing value on your home’s structure by keeping up with maintenance and putting in certain home improvements. Don’t let your home’s value be something that you just tacitly accept—work toward making sure your home, and not just the land it sits on, is appreciating as the years go on.

Tax Benefits for Homeowners

We asked ourselves: What tax benefits do you exactly have by owning a house? That’s why we put together a little overview for every houseowner who wants to save tax money!

The main tax benefit of owning a house is that the imputed rental income homeowners receive is not taxed. Although that income is not taxed, homeowners still may deduct mortgage interest and property tax payments, as well as certain other expenses from their federal taxable income. Additionally, homeowners may exclude, up to a limit, the capital gain they realize from the sale of a home.

OVERVIEW

The tax code provides several benefits for people who own their homes. The main benefit is that the owners do not pay taxes on the imputed rental income from their own homes. They do not have to count the rental value of their homes as taxable income, even though that value is just as much a return on investment as are stock dividends or interest on a savings account. It is a form of income that is not taxed.

Homeowners may deduct both mortgage interest and property tax payments as well as certain other expenses from their federal income tax. In a well-functioning income tax, all income would be taxable and all costs of earning that income would be deductible. Thus, in a well-functioning income tax, there should be deductions for mortgage interest and property taxes. However, our current system does not tax the imputed rental income that homeowners receive, so the justification for giving a deduction for the costs of earning that income is not clear.

Finally, homeowners may exclude, up to a limit, the capital gain they realize from the sale of a home. All of these benefits are worth more to taxpayers in higher-income tax brackets than to those in lower brackets.

MORTGAGE INTEREST DEDUCTION

Homeowners who itemize deductions may reduce their taxable income by deducting interest paid on a home mortgage. Taxpayers who do not own their homes have no comparable ability to deduct interest paid on debt incurred to purchase goods and services.

The Tax Cuts and Jobs Act (TCJA) trimmed this important tax break for homeowners. Prior to TCJA, the deduction was limited to interest paid on up to $1 million of debt incurred to purchase or substantially rehabilitate a home. Homeowners also could deduct interest paid on up to $100,000 of home equity debt, regardless of how they used the borrowed funds. TCJA limited the deduction to interest on up to $750,000 of mortgage debt incurred after December 14, 2017, to buy or improve a first or second home. It also generally eliminated the deduction for home equity debt.

The congressional Joint Committee on Taxation (JCT) estimated that the cost of the mortgage interest deduction will shrink from $72 billion to $41 billion in fiscal year 2018, because of the lower cap on deductible mortgage interest and because other provisions of TCJA will result in many fewer taxpayers itemizing their deductions. The Urban-Brookings Tax Policy Center estimates that the share of tax units that benefit from the deduction in 2018 will shrink from 21 percent to 9 percent because of TCJA.

PROPERTY TAX DEDUCTION

Homeowners who itemize deductions may also reduce their taxable income by deducting property taxes they pay on their homes. That deduction is effectively a transfer of federal funds to jurisdictions that impose a property tax (mostly local but also some state governments), allowing them to raise property tax revenue at a lower cost to their constituents. The JCT estimated that the deduction saved millions of homeowners a total of $33 billion in income tax in fiscal year 2017. The cost of that deduction will also go down because of TCJA, as many fewer homeowners will itemize and because TCJA puts an overall cap of $10,000 on the state and local taxes that taxpayers can deduct.

EFFECT OF DEDUCTIONS AND EXCLUSIONS

The deductions and exclusions available to homeowners are worth more to taxpayers in higher tax brackets than to those in lower brackets. For example, deducting $2,000 for property taxes paid saves a taxpayer in the 37 percent top tax bracket $740, but saves a taxpayer in the 22 percent bracket only $440. Additionally, even though they only represent about 20 percent of all tax units, those with more than $100,000 in income received over 85 percent of the mortgage interest deduction tax benefits in 2017. That difference results largely from three factors: compared with lower-income homeowners, those with higher incomes face higher marginal tax rates, typically pay more mortgage interest and property tax, and are more likely to itemize deductions on their tax returns.

PROFITS FROM HOME SALES

Taxpayers who sell assets must generally pay capital gains tax on any profits made on the sale. But homeowners may exclude from taxable income up to $250,000 ($500,000 for joint filers) of capital gains on the sale of their homes if they satisfy certain criteria: they must have maintained the home as their principal residence in two out of the preceding five years, and they generally may not have claimed the capital gains exclusion for the sale of another home during the previous two years. The JCT estimated that the exclusion provision saved homeowners $32 billion in income tax in fiscal 2017.

IMPUTED RENT

Buying a home is an investment, part of the returns being the opportunity to live in the home rent free. Unlike returns from other investments, the return on homeownership—what economists call “imputed rent”—is excluded from taxable income. In contrast, landlords must count as income the rent they receive, and renters may not deduct the rent they pay. A homeowner is effectively both landlord and renter, but the tax code treats homeowners the same as renters while ignoring their simultaneous role as their own landlords. The Office of Management and Budget estimates that the exclusion of imputed rent reduced federal revenue by nearly $110 billion in fiscal year 2017.

Home Value: How to Improve Your Home’s Worth

With prices for housing surging to new highs this year in many parts of the United States, you may be toying around with the idea of selling your home. After all, you could sell for top dollar and pocket the difference, then move somewhere cheaper with a lower cost of living.

Or maybe you plan to stay exactly where you are, in the home you know and love. Regardless of how much your home is worth, sometimes it’s easier to just stay put — even if your home isn’t exactly what you want.

Some improvements can make your house easier on the eyes. Others can increase your home’s utility, make it bigger or make it more comfortable for your growing family.

Whether you want to build equity or sell for top dollar, plenty of home improvement projects are worth considering. The real estate experts we spoke to said the following projects may provide the most bang for your buck.

1. Upgrade exterior doors

When it comes to adding value to your home, replacing an old front door can also work wonders, Wiedman says. He says in the late ’90s, he and his wife replaced an old, ugly door with a solid mahogany door with a frosted, oval piece of lead glass. He stained the door himself to save money, and the result was “simply stunning,” he says.

Randy Oliver, president of Hollywood-Crawford Garage Door Co., also says to remember your garage door when it comes to curb appeal.

“The front of the home is the first thing you, your neighbors and prospective buyers will see,” he says. “Garage doors often take up the most amount of space on the front of your home, so installing a modern glass panel door or a rustic wood door will dramatically improve your home’s appearance.”

2. Spruce it up with fresh paint and flooring

Paint is magic, and that’s true whether you’re upgrading the paint inside or outside your home. A fresh coat of paint can make even dated exteriors and interiors look fresh and new, and it’s not that expensive, either.

Timothy Wiedman, a former college professor and personal finance expert who has flipped homes over his career, says you should start by painting any rooms with an “odd” color scheme.

For example, did you let your then-11-year-old daughter paint her bedroom “hot pink” 16 years ago? If so, that’s a good place to start.

Rob Fountain, a real estate agent with Keller Williams Partners in Colorado Springs, Colorado, says that “everyone loves newer carpet and fresh paint.”

Very few homebuyers, he says, are looking for a fixer-upper. Instead, they hope to move right in.

“Moving and buying a house is stressful enough,” Fountain says. “They don’t want to have to touch up paint and rip out carpet before they move in.”

3. Clean and declutter

According to a 2019 survey from HomeLight, deep cleaning and decluttering can add more than $4,000 to a home’s resale value, on average. If you don’t plan to move, you can also benefit from making better use of your space, getting more organized, and having less clutter to stress over.

Cleaning and decluttering is inexpensive, but it still requires a lot of work. Go through cabinets and closets so you can make a donation pile. Clean out drawers and other storage areas of your home as well, making sure you’re not keeping anything you don’t need or want.

A deep clean and subsequent cleanings for upkeep can also make your home more attractive and more livable. And when you go to sell, buyers prefer a clean, pristine home with almost no exceptions.

4. Make your home more efficient

There are many ways to improve your home’s efficiency, and they don’t all involve tens of thousands of dollars in upgrades. Scott Ewald of Trane, an HVAC company, says installing a smart thermostat is a great way to improve efficiency and save money, for example.

“The right smart thermostat will allow a homeowner to control their home’s climate from anywhere, giving them the power to manage energy costs regardless of whether they are sitting on the couch or away on vacation,” he says. “Such investments in home tech – particularly when connected to the HVAC which is the largest mechanical system in the home – provides a strong selling point and highlights the home’s overall comfort, functionality, energy efficiency and convenience.”

Other ways to improve your home’s efficiency and value include replacing old, leaky windows, buying energy-efficient home appliances and adding insulation to your home.

5. Add usable square footage

Adding more usable space to an existing home can make a lot of financial sense, and that’s especially true in areas with limited available real estate where land and space may be finite.

Benjamin Ross, a Realtor in Corpus Christi, Texas, says that homes are valued and priced by the livable square feet they contain, and the more livable square feet, the better. As a result, adding a bathroom, a great room or another needed space to a home can increase function and add value.

Adding a separate mother-in-law suite is also a great idea, Ross says. “Most homes do not have this feature, so adding one sets you apart from the competition when it is time to sell.”

6. Work on your curb appeal

HomeLight’s second-quarter 2019 survey of real estate agents found that the exterior of your home may play a bigger role in your home’s value than you think. The survey showed that 76 percent of top real estate agents nationwide agreed that improving curb appeal is the No. 1 step a homeowner can take to boost their home’s marketability.

According to their figures, basic lawn care like cutting the grass, fertilization treatments and weed control can add $1,000 on its own. If you’re wondering how to increase the value of your home, these low-cost measures can be a good starting point.

Joe Raboine, director of residential hardscapes with Belgard, says there are plenty of other ways to boost your curb appeal. An overall landscape upgrade can go a long way, for example.

“Installing a front walkway of pavers along with stone planters, shrubs and mulching will cost an estimated $6,000, and the NAR (National Association of Realtors) estimates you’ll recover $5,000,” he says.

A new paver patio or outdoor kitchen can also add to your home’s value and make your property a lot more enjoyable when the weather is nice.

Easy & Cheap Ways to Improve Your Home

Home improvement can be a great way to feel more comfortable and happier in your home, or to be more comfortable having guests pop by. Home improvement can also help if you have been trying to sell your house, but you still haven’t been able to sell. While some home improvements require a lot of saving up (such as a complete bathroom or kitchen remodel), there are many more affordable ways to improve your home without spending a lot of money.

It’s also true that some home improvements also give homeowners a better return than others, but in the end unless you are trying to sell your home, you also need to factor in what changes will make you the happiest while you live in your house. Of course, you also need to consider the time frame that you have to make changes. Here are five cheap improvements to consider.

1. Improve curb appeal

Improving your outdoor space takes time, but you can do it for very little money (or even for free) if you are willing to put the hours in. Giving your home better curb appeal will make your home look better overall, and impress potential buyers. According to the DIY Network, painting the front door, trim, or shutters is a great way to up your curb appeal. Upgrading your mailbox, improving your lighting, and adding flower boxes can also help. It’s also a good idea to trim shrubs and unruly trees and regularly mow your grass.

Once you have your curb appeal up to par, then you can focus on your backyard. Mowing and trimming is still important, but you also need to consider the placement of flower and vegetable gardens; your best bet will be to keep both yards looking well manicured.

There are so many ways you can improve your home without spending a lot of money. In addition to painting your kitchen cabinets, if you have the time to paint other rooms in the house, this is a great way to give your home a facelift. Decorating your home in a coordinated or clear style can also quickly make your home more presentable and comfortable. You just have to choose which direction you want to go in, and you need to determine how much time you have.

2. Organize as much as you can

Some people don’t consider organization to be a home improvement, but appropriately organizing your space can make a huge difference to potential buyers, and can also make you more comfortable in your own home. Organizing your home can be affordable, and it can also be a quick job (unless your home looks like a house from the television show Hoarders). Start by organizing the space you spend the most time in, and you can move on to the rest of your home when you have time. You can purchase shelves or organizing buckets if you want, but start by completing free organizing tasks first.

Find a permanent home for things that are on several different surfaces (for example, end tables and counters). Organizing your shoes, clothes, and even your refrigerator and pantry can help. Organizing is a lot like cleaning: It’s hard to start, but when you finish you will be surprised by how much better you feel.

3. Coordinate and update your kitchen

If you can’t afford new appliances, flooring, or cabinets, there are several less expensive kitchen improvements you can complete to make your space look better. You can paint cabinet doors to give them a fresh look, and you can also replace old hardware. Be sure to properly prepare if you are going to paint: It’s important to consider the scope of the job, to remember to remove hardware and doors, clean the surfaces, sand, and apply primer-sealer before painting.

Improving your kitchen lighting will also make your kitchen feel and look more comfortable (and more efficient lighting will save you money). Although replacing kitchen floors can be expensive, a deep cleaning or refinishing can help tremendously and cost less if you do it yourself.

4. Attic insulation

According to Remodeling magazine’s “key trends” in the 2016 Cost vs. Value Report, a fiberglass attic insulation project gives homeowners a large return on their investment (100% return in 60% of markets). Although this particular renovation isn’t as glamorous as some other possible renovations, it can help you whether you are planning to stay in your home or sell it because you can cut bills. According to Realtor.com, it will cost you about $1,268, and the resale value could be $1,482 (116.9 percent cost recouped). A manufactured stone veneer, garage door replacement, steel entry door replacement, and a minor kitchen remodel are some of the other improvements with high recoup rates.

5. Update your bedroom

Your bedroom should be a sanctuary: If you plan to live in your home for a while, it is imperative that your bedroom be a place that you enjoy being in. If you’re planning to sell your home, then you will want to wow potential buyers when they walk into the master bedroom. If your bedroom is small, then proper decorating is key: It’s important to consider the size and placement of your furniture, and to have the proper flooring (wood floors can be ideal, and radiant floor heating can be a plus); decorative mirrors can also make the room look bigger, and wall cabinets can save space.

Regardless of the size of your room, it’s important that it feels inviting. Also be sure to choose paint colors that will make you feel comfortable (or appeal to buyers), try to have a cohesive theme or color, and be sure to keep your room clean.

First-Time House Buyers: Essential Tips

Buying a home can be nerve-racking, especially if you’re a first-time home buyer.

These tips will help you navigate the process, save money and avoid common mistakes.

Mortgage down payment tips

1. Research state and local assistance programs

In addition to federal programs, many states offer assistance programs for first-time home buyers with perks such as down payment assistance, closing cost assistance, tax credits and discounted interest rates. Your county or municipality may also have first-time home buyer programs.

2. Explore your down payment and mortgage options

There are lots of mortgage options out there, each with its own combination of pros and cons. If you’re struggling to come up with a down payment, check out these loans:

VA loans Loans guaranteed by the Department of Veterans Affairs sometimes require no down payment at all.

Conventional mortgages They conform to standards set by the government-sponsored entities Fannie Mae and Freddie Mac, and require as little as 3% down.
FHA loans Loans insured by the Federal Housing Administration permit down payments as low as 3.5%.

Making a higher down payment will mean having a lower monthly mortgage payment.

If you want the smallest mortgage payment possible, opt for a 30-year fixed mortgage. But if you can afford larger monthly payments, you can get a lower interest rate with a 20-year or 15-year fixed loan. Use our calculator to determine whether a 15-year or 30-year fixed mortgage is a better fit for you. Or you may prefer an adjustable-rate mortgage, which is riskier but guarantees a low interest rate for the first few years of your mortgage.

3. Start saving for a down payment early

It’s common to put 20% down, but many lenders now permit much less, and first-time home buyer programs allow as little as 3% down. But putting down less than 20% may mean higher costs and paying for mortgage insurance, and even a small down payment can still be hefty. For example, a 5% down payment on a $200,000 home is $10,000.

Some tips for saving for a down payment include setting aside tax refunds and work bonuses, setting up an automatic savings plan and using an app to track your progress.

Mortgage application tips

4. Compare mortgage rates

Many home buyers get a rate quote from only one lender, but this often leaves money on the table. Comparing mortgage rates from at least three lenders can save you more than $3,500 over the first five years of your loan, according to the Consumer Financial Protection Bureau. Get at least three quotes and compare both rates and fees.

As you’re comparing quotes, ask whether any of the lenders would allow you to buy discount points, which means you’d prepay interest up front to secure a lower interest rate on your loan. How long you plan to stay in the home and whether you have money on-hand to purchase the points are two key factors in determining whether buying points makes sense.

5. Determine how much home you can afford

Before you start looking for your dream home, you need to know what’s actually within your price range.

6. Get a preapproval letter

You can get pre-qualified for a mortgage, which simply gives you an estimate of how much a lender may be willing to lend based on your income and debts. But as you get closer to buying a home, it’s smart to get a preapproval, where the lender thoroughly examines your finances and confirms in writing how much it’s willing to lend you, and under what terms. Having a preapproval letter in hand makes you look much more serious to a seller and can give you an upper hand over buyers who haven’t taken this step.

7. Check your credit and pause any new activity

When applying for a mortgage loan, your credit will be one of the key factors in whether you’re approved, and it will help determine your interest rate and possibly the loan terms.

So check your credit before you begin the homebuying process. Dispute any errors that could be dragging down your credit score and look for opportunities to improve your credit, such as making a dent in any outstanding debts.

To keep your score from dipping after you apply for a mortgage, avoid opening any new credit accounts, like a credit card or auto loan, until your home loan closes.

House shopping tips

8. Pick the right type of house and neighborhood

You may assume you’ll buy a single-family home, and that could be ideal if you want a big yard or a lot of room. But if you’re willing to sacrifice space for less maintenance and extra amenities, and you don’t mind paying a homeowners association fee, a condo or townhouse could be a better fit.

But even if the home is right, the neighborhood could be all wrong. So be sure to:

Drive through the neighborhood on various days and at different times to check out traffic, noise and activity levels.

Look at local safety and crime statistics.

Research nearby schools, even if you don’t have kids, since they affect home value.
Map the nearest hospital, pharmacy, grocery store and other amenities you’ll use.

9. Make the most of open houses

When you’re touring homes during open houses, pay close attention to the home’s overall condition, and be aware of any smells, stains or items in disrepair. Ask a lot of questions about the home, such as when it was built, when items were last replaced and how old key systems like the air conditioning and the heating are.

If other potential buyers are viewing the home at the same time as you, don’t hesitate to schedule a second or third visit to get a closer look and ask questions privately.

10. Stick to your budget

Look at properties that cost less than the amount you were approved for. Although you can technically afford your preapproval amount, it’s the ceiling — and it doesn’t account for other monthly expenses or problems like a broken dishwasher that arise during homeownership, especially right after you buy. Shopping with a firm budget in mind will also help when it comes time to make an offer.

In a competitive real estate market with limited inventory, it’s likely you’ll bid on houses that get multiple offers. When you find a home you love, it’s tempting to make a high-priced offer that’s sure to win. But don’t let your emotions take over. Shopping below your preapproval amount creates some wiggle room for bidding. Stick to your budget to avoid a mortgage payment you can’t afford.

11. Hire the right buyer’s agent

You’ll be working closely with your real estate agent, so it’s essential that you find someone you get along with well. The right buyer’s agent should be highly skilled, motivated and knowledgeable about the area.

First-time home buyer mistakes to avoid

With so much to think about, it’s unsurprising that some first-time home buyers make mistakes they later regret. Here are a few of the most common pitfalls, along with tips to help you avoid a similar fate.

12. Not buying adequate homeowners insurance

Before you close on your new house, your lender will require you to buy homeowners insurance. Shop around and compare insurance rates to find the best price. Look closely at what’s covered in the policies; going with a less-expensive policy usually means fewer protections and more out-of-pocket expenses if you file a claim. Also, flood damage isn’t covered by homeowners insurance, so if your new home is in a flood-prone area, you may need to buy separate flood insurance.

13. Not saving enough for after move-in expenses

Once you’ve saved for your down payment and budgeted for closing costs, you should also set aside a buffer to pay for what will go inside the house. This includes furnishings, appliances, rugs, updated fixtures, new paint and any improvements you may want to make after moving in.

14. Passing up the chance to negotiate

A lot can be up for negotiation in the homebuying process, which can result in major savings. Are there any major repairs you can get the seller to cover, either by fully handling them or by giving you a credit adjustment at closing? Is the seller willing to pay for any of the closing costs? If you’re in a buyer’s market, you may find the seller will bargain with you to get the house off the market.

15. Buying a home for today instead of tomorrow

It’s easy to look at properties that meet your current needs. But if you plan to start or expand your family, it may be preferable to buy a larger home now that you can grow into. Consider your future needs and wants and whether the home you’re considering will suit them.

16. Not budgeting for closing costs

In addition to saving for a down payment, you’ll need to budget for the money required to close your mortgage, which can be significant. Closing costs generally run between 2% and 5% of your loan amount. You can shop around and compare prices for certain closing expenses, such as homeowners insurance, home inspections and title searches. You can also defray costs by asking the seller to pay for a portion of your closing costs or negotiating your real estate agent’s commission. Calculate your expected closing costs to help you set your budget.

17. Not knowing the limits of a home inspection

After your offer is accepted, you’ll pay for a home inspection to examine the property’s condition inside and out, but the results will only tell you so much.

Don’t be afraid to ask your inspector to take a look — or a closer look — at something. And ask questions. No inspector will answer the question, “Should I buy this house?” so you’ll have to make this decision after reviewing the reports and seeing what the seller is willing to fix.

Make sure the inspector can access every part of the home, such as the roof and any crawl spaces.
Attend the inspection and pay close attention.
- Not all inspections test for things like radon, mold or pests, so be sure you know what’s included.

A Guide to Owner Financing

Asking a seller to help you buy their home is not something most homeowners, or even their listing agents, usually consider. However, for a seller whose home isn’t selling or for a buyer having trouble with traditional lender guidelines, owner financing is definitely a viable option. Also known as seller financing, it’s especially popular if the local real estate scene is a buyer’s market.

What Is Owner Financing?

Owner or seller financing means that the current homeowner puts up part or all of the money required to buy a property. In other words, instead of taking out a mortgage with a commercial lender, the buyer is borrowing the money from the seller. Buyers can completely finance a purchase in this way, or combine a loan from the seller with one from the bank.

For the financed portion, the buyer and seller agree upon an interest rate, monthly payment amount and schedule, and other details of the loan, and the buyer gives the seller a promissory note agreeing to these terms. The promissory note is generally entered in the public records, thus protecting both parties.

It doesn’t matter if the property has an existing mortgage on it, although the homeowner’s lender might accelerate the loan upon sale due to an alienation clause. Generally, the seller retains the title to the home until the buyer has repaid the loan in full.

Sellers and buyers are free to negotiate the terms of owner financing, subject to state-specific usury laws and other local regulations; some state laws, for example, prohibit balloon payments.

While not required, many sellers do expect the buyer to provide some sort of downpayment on the property. Their rationale is similar to any mortgage lender’s: They assume that buyers who have some equity in a home are less likely to default on the payments and let it go into foreclosure.

Owner financing can take several forms. Some variations include the following.

Land Contracts

Land contracts do not pass the full legal title of the property to the buyer but give them an equitable title. The buyer makes payments to the seller for a certain period. Upon final payment or a refinance, the buyer receives the deed.

Sellers can carry the mortgage for the entire balance of the purchase price⁠—less the down payment, which may include an underlying loan. This type of financing is called an all-inclusive mortgage or all-inclusive trust deed (AITD), also known as a wrap-around mortgage. The seller receives an override of interest on the underlying loan. A seller may also carry a junior mortgage, in which case the buyer would take title subject to the existing loan or obtain a new first mortgage. The buyer receives a deed and gives the seller a second mortgage for the balance of the purchase price, less the down payment and the first mortgage amount.

A lease-purchase agreement, also known as rent to own, means the seller is leasing the property to the buyer, giving them an equitable title to it. Upon fulfillment of the lease-purchase agreement, the buyer receives the full title and typically obtains a loan to pay the seller, after receiving credit for all or part of the rental payments toward the purchase price.

Owner-Financing Benefits for Buyers

Buyers who opt for seller financing can enjoy several advantages.

Quicker Sale

Offering owner financing is one way to stand out from the sea of inventory, attracting a different set of buyers and moving an otherwise hard-to-sell property.

Little or No Qualifying

The seller’s interpretation of buyer qualifications is typically less stringent and more flexible than those imposed by conventional lenders.

Down Payment Flexibility

Down payments are negotiable. If a seller wants a larger down payment than the buyer possesses, sometimes sellers will let a buyer make periodic lump-sum payments toward a down payment.

Higher Interest Rate

The owner-financed loan can carry a higher rate of interest than a seller might receive in a money market account or other low-risk types of investments.

Faster Possession

Because buyers and sellers aren’t waiting for a lender to process the financing, buyers can close faster and get possession of the property sooner than with a conventional loan transaction.

Lower Closing Costs

Without an institutional lender, there are no loan or discount points, and no origination fees, processing fees, administration fees, or any of the other assorted miscellaneous fees that lenders routinely charge, which automatically saves money on buyer closing costs.

Owner-Financing Benefits for Sellers

A variety of advantages for sellers arise in owner-financing situations as well.

Higher Sales Price

Because the seller is offering the financing, they may be in a position to command full list price or higher.

Tax Breaks

The seller might pay less in taxes on an installment sale, reporting only the income received in each calendar year.

Monthly Income

Payments from a buyer increase the seller’s monthly cash flow, resulting in a spendable income.

Tailored Financing

Unlike conventional loans, sellers and buyers can choose from a variety of loan repayment options, such as interest-only, fixed-rate amortization, less-than-interest, or a balloon payment⁠—if the state allows it—or even a combination of these. Interest rates can adjust periodically or remain at one rate for the term of the loan.

Advantageous as it can be, owner financing is a complex process. Neither buyer nor seller should rely just on their respective real estate agents but instead should engage real estate lawyers to help them negotiate the transaction, ensuring that their agreement conforms to all state laws, covers every contingency, and protects both parties equally.

How to Get the Best Homeowners Insurance

Owning a home has long been a cornerstone of the American dream. Even frequently relocating military members can appreciate the satisfaction of building equity while painting the walls any color they choose. But buying a home – whether it’s your first or your fifteenth – also means you’ll need to purchase homeowners insurance, so it’s wise to consider your insurance options as you search for the perfect place to call your own.

Homeowners insurance premiums are determined by a number of factors, many of which are under your control. Making a few smart decisions will give you the coverage you need and could save you hundreds of dollars each year. Consider the following tips, which can go a long way toward protecting your home and your peace of mind.

Pick a good partner. Doing business with an insurance company you trust is important. Before purchasing insurance, review the company’s complaints record and rankings on customer satisfaction and financial security. Your state’s department of insurance Web site, and industry analyst companies such as J.D. Power or A.M. Best Company, are unbiased sources of information.

Know how much is enough. Studies from construction-cost estimator Marshall & Swift/Boeckh suggest that more than 60 percent of homeowners in the United States are underinsured, primarily because they don’t insure their homes to “replacement value.” Replacement value is what it would cost today to rebuild a home from the foundation up. Replacement value can differ substantially from market value, which represents what a willing buyer would pay for a home.

Since the cost of building materials has risen in recent years, it may cost more than market value to rebuild an older home. And if you’ve remodeled or renovated your house, your insurance coverage should be updated to reflect the home’s likely increase in replacement cost. Of course, increasing your insurance coverage will raise your monthly premiums, but it could save thousands of dollars in the long run if a major claim is necessary.

Float your way to complete coverage. While a standard homeowners policy will cover the structure of your home and some of your personal belongings, it may not provide full coverage for high-value possessions, such as coin collections and jewelry.

If you have specific items for which the value exceeds your policy limits, you may elect to add a “personal articles floater” to your coverage. Though rates will vary by state and for the actual item insured, you may be able to purchase a personal articles floater for as little as $30 a year to insure your most valuable possessions for their current purchase price or recent appraised value. Often used to fully insure engagement rings or electronics, “floaters” have no deductible and usually cover a broader range of claims, such as theft or loss away from the home.

Protect your financial assets. Repairing or replacing your property is only part of the homeowners insurance equation. Your policy can go much farther to protect your financial well-being through liability coverage.

As an example, if a visitor to your home falls down the stairs and is seriously injured, the visitor’s insurance company could hold you responsible for thousands of dollars in medical bills. In this type of situation, your homeowners policy would likely cover the costs up to a specified limit, and in certain cases it may even cover legal fees that arise.

But while standard policies typically offer $100,000 in liability protection, most insurance experts recommend $300,000 of coverage or more. Increased liability coverage is especially important for homeowners with potential safety hazards, such as a swimming pool.

Consider your comfort level. As you establish your homeowners insurance coverage, you’re able to choose your deductible level, which is the amount you will pay out of your pocket when you have a claim. Opting for a higher deductible, such as $1,000 instead of $500, can lower your monthly premiums significantly. Conversely, you may be more comfortable paying a higher premium each month for greater peace of mind should disaster strike. The choice is yours to make. Your insurance company can provide a variety of premium/deductible scenarios that will best suit your needs.

Save money through safety. You may be able to save on insurance premiums by looking into safety and prevention features that often merit a discount. Consider purchasing monitored security alarms, and take precautions such as installing deadbolt locks, both of which can ward away thieves and prevent a costly (not to mention frightening) break-in. Easily accessible fire extinguishers are another good addition to the home, reducing the risk of severe flame and smoke damage.

Keep your records current.If the unthinkable should occur and you have to file a major insurance claim, having up-to-date records of your home’s contents and structural condition can be invaluable during the claims process. First, if you’ve made any significant renovations to the home itself after moving in, be sure to inform your insurance company, since it may affect the replacement cost of the home.

Next, take an inventory of your belongings, including how much you paid for each item and its current value. Make a record of your possessions, with pictures or a video camera, and store the records outside of your home so they are less likely to be destroyed in a disaster. The record can help you determine your coverage needs, and it also can serve as your proof of ownership if a loss occurs, helping the insurance company to estimate your payment.

Be aware of geography. Regardless of the homebuilding materials used, where you live can have a significant effect on your insurance premiums and coverage availability. Homeowners likely will pay more for insurance in areas prone to severe weather and natural disasters, such as tornadoes, hurricanes, earthquakes or wildfires. According to the Insurance Information Institute, the states paying the most for homeowners insurance in recent years have been Texas, Louisiana and Florida, all coastal states with above-average claims for water and wind damage.

Your rates also may be affected by the neighborhood you choose. For example, homes in close proximity to a fire department may cost less to insure. And while seclusion can have its advantages, it won’t lower your insurance rates if emergency vehicles may have difficulty reaching your home.

Get the facts. When you find a house, gather as much information as you can to determine its potential insurance costs. The age of electrical, plumbing and other systems within the home, as well as construction materials used to build the house, can affect your premiums. For example, masonry homes or less flammable roofing material can provide an insurance price break, especially in dry areas of the country that are most susceptible to fire damage. On the other hand, masonry homes could be much more expensive to insure against earthquake damage. Homeowners and potential buyers can review current building codes and materials recommendations at www.disastersafety.org/, the Web site for the Institute for Business and Home Safety.

Embrace preventive maintenance. Remember that a homeowners insurance policy is designed to repair or replace your property in the event of an unexpected major loss, and individuals who repeatedly file claims for minor problems may face higher premiums and could jeopardize their insurability. Conducting preventive maintenance on your home and repairing small problems quickly can help avert more substantial losses down the road. A number of providers offer home warranty coverages more suitable for maintenance needs involving appliances, plumbing or the like.