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Easy ways to build home equity
Home equity is defined by the difference between your home’s value and the amount you still owe on the home. Equity
allows you to move forward with other properties and sell your current home.
As you pay down your mortgage, your home equity increases. Luckily, there are a few ways you can increase your equity
and reap the benefits.
Pay towards the principal
The first few years of homeownership, your regular mortgage payments will be mostly towards the interest rather than
the principal value of the loan. The quicker you pay down your home loan principal, the faster you’ll increase the
equity of your home. Check with your lender to see if they offer options for paying against the principal directly.
Complete home improvement projects
There are many home improvement projects you can complete in your home for significant return on both equity and
resale value. Some of the best home improvement projects to add value to your home include:
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- Complete kitchen remodel.
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- Installing new appliances.
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- Replacing garage doors.
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- Bathroom remodel.
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- Landscaping renovations.
Go for a bigger down payment
Did you know you can increase the value of a home before you even buy it? If you offer the traditional 20% down
payment on a house, you’ll build equity a bit faster than if you put down a lower amount, such as 3% or
5%.
If you’ve already purchased your home, you can ask your lender about a cash-in refinance. During this process, the
homeowner makes a large payment on their home loan. Their old mortgage is replaced with one having a lower principal
balance.
These are the main ways to increase your equity without breaking the bank. With a high down payment, careful monthly
payments and home improvement projects, you’ll build equity quickly and be able to experience all the benefits.
Top homebuying tips to add to your home purchasing plan
If you’ve decided to purchase a home, you may feel overwhelmed with all the moving parts of the real estate market.
However, going into the world of real estate with the goal of purchasing a home becomes much smoother when you build
a plan first.
Identify your home needs
A recent study has found around 70 percent of new homebuyers experience feeling some sort of buyer’s remorse. One of
the top reasons for this regret is the location of the property.
Before purchasing a home, think about the sort of area you’d like to live in. If you’re aiming for a quiet
neighborhood, buying a home near popular bars and restaurants may not be for the best as these areas are high
traffic and noisy.
Another top reason for buyers remorse is the amount of space in the home. This is why it’s crucial to not only
consider the number of bedrooms needed for each individual in your household, but also the amount of storage space
you’ll need.
Pre-qualify for a home loan
Over 60 percent of homeowners purchased their property with a mortgage loan. By pre-qualifying for a mortgage loan,
you get a good estimate of the budget you have to work with to purchase a home.
A pre-qualification letter also signals to homebuyers your seriousness and capability to purchase their property,
which can put you ahead of the competition.
Pump up your savings for a down payment
In addition to outside financing, it’s highly beneficial to have savings set aside for a home down payment. In fact,
many mortgage lenders take into consideration the amount you’ve saved up when deciding to lend you money. So, the
more saved up the better.
To grow your finances more quickly, consider housing your money in a certified deposit, often known as a CD account.
This account provides a payable fixed interest rate. This is a great way to earn extra cash without the volatility
you may find in the stock market.
By taking time to focus on building your finances and identifying your home needs, you can start your home buying
journey off right.
A beginners guide to delinquent property taxes
Homeownership comes with many responsibilities, one of these being the payment of property taxes. Property taxes are due each year and are used by local governments to pay for public resources such as parks, schools, public safety workers, and more.
If you don’t pay these taxes and allow them to pile up, you’ll be noted by the government as a delinquent taxpayer. This is why it’s crucial to understand what it means to be a delinquent taxpayer and how to remove the status if you’re unable to pay.
When are homeowners considered “delinquent taxpayers?”
Every state has guidelines on when taxes are due and at what point after nonpayment they are considered delinquent.
Local governments typically operate off the fiscal year, which runs from July 1st to June 30th. Most states have a due date at the beginning of the year for taxes to be paid, and anything after this date is considered to be delinquent.
How do homeowners remove themselves from the delinquent taxpayer list?
If there are tax liens against your home, and you’ve been listed on the delinquent taxpayer list, good news – there are ways to be removed from the record.
The first and most common way is through a payment agreement where you pay off the amount due over a give time frame.
You can also get rid of a delinquent status by utilizing property tax aid provided by your state if you qualify for tax relief.
Property taxes can be intimidating at times. However, your local government division provides online and in-person resources to help you understand your tax payment options.
Mortgage applications & your credit score
The mortgage application process can be stressful. One cause of stress is uncertainty about how multiple mortgage
applications will affect your credit score. Luckily, the differences between prequalification and preapproval mean
your mortgage shopping may not have the effects you expect.
Prequalification & preapproval
Mortgage prequalification and preapproval affect your credit in different ways. Prequalification involves a simple
review of your finances with self-reported or soft credit inquiry.
Preapproval involves a more detailed evaluation of your financial profile. This requires official documentation,
including income statements and information about assets. It also includes a “hard inquiry” credit check.
Why do hard inquiries lower your credit score?
Creditors want to know you’re a safe investment. To determine this, they check out how frequently you pay your bills
on time and how much you owe to other creditors.
When you make multiple hard inquiries in a short period of time, it can be a red flag to lenders that you might be in
some sort of financial trouble. Your score will drop a few points each time you get a hard inquiry, but only for a
period of one or two months.
Mortgage applications are different
Sometimes a borrower may apply with multiple lenders to compare rates. Luckily, credit bureaus pay attention to the
source of the inquiries and don’t count multiple mortgage applications against your credit. This means your score
won’t reflect multiple hard inquiries in a short period of time, as long as you’re clearly shopping for a home
loan.
Knowing the details of how mortgage applications affect your credit score will help you make more confident decisions
in your home search. Keep these credit basics in mind and inquire with your lender if you have more questions.
3 Ways to pay off your mortgage early
Paying off a mortgage early is a dream of many homeowners. However, economic factors can make it seem like an
unattainable goal. With some careful planning and initiative, however, there are ways to pay off your home loan
before your term limit.
1. Refinance your mortgage
If you’re considering making larger payments on your mortgage, it might make sense to investigate your refinancing
options. If you can afford to increase your mortgage payments significantly each month, you could refinance a
30-year to a 15-year mortgage. This will cut the number of interest payments in half and likely also give you a
lower rate.
2. Make extra payments
Another option is to simply increase your monthly payments. Depending on your mortgage lender, you may be able to
double your auto-pay amounts each month, streamlining the process. Otherwise, it’s possible to set up bill-pay with
most banks to automatically transfer funds to your lender.
3. Bi-weekly payments or one extra payment per year
Making bi-weekly instead of monthly payments is an option that many homeowners use to pay off their mortgages early.
Bi-weekly payments work by paying half of your monthly payment once every two weeks.
By switching from 12 monthly to 26 bi-weekly payments, you can effectively make 13 full monthly payments in a year
without seeing too much of a difference in your daily budget. Over 30 years of an extra monthly payment, you could
save nearly thousands of dollars on interest and pay off your mortgage several years early.
These are only a few options for homeowners interested in paying off their mortgage early. For more information,
speak with your mortgage lender for guidance on your specific situation.
Saving for a new home purchase
Preparing to purchase a home? It’s time to get your finances in order. Saving for your home will prepare you for a
down payment and other costs of homebuying, but also any unexpected expenses along the way. Here are a few tips for
saving for your new home:
Budget
Creating a monthly budget will help you see what you spend money on and where you can cut unnecessary expenses out.
If you have a budget already, consider revisiting it to readjust for your new goals.
Stash your savings
Saving money in a separate account is helpful, as there will be less temptation to spend it in the meantime. Whatever
you save should go into the proverbial lockbox until it’s time to buy a home.
Automate it
Your savings should automatically come out of your paycheck or withdraw from your checking account. By doing this,
you can trust your savings is growing, even if you forget to contribute yourself.
By adopting new savings and spending habits, you’ll put yourself in the position to get your home sooner than later.
A basic guide to real estate investing
While real estate investing can be a lucrative opportunity, if you don’t know what you’re facing, things can quickly
get out of hand.
To help you get started, here are some ways you can get into real estate investing:
Real estate investment trusts (REITs)
Consider these like mutual funds, but they are companies that own commercial real estate. A common investment in
retirement, these usually pay high dividends. One of the safest bets is investing in publicly traded REITs through a
brokerage firm.
Rental properties
Buying property and leasing it out to tenants is a classic investment method. You can use either single detached
homes or multi-unit properties for rental income. Occupying the property yourself can help you with financing.
Flipping properties
Flipping means to purchase a property in need of repairs, fixing it and selling it quickly for a profit. This can be
an excellent investment strategy, but requires significant cash on hand to get started. You’ll also need a keen
understanding of the local market trends and a solid network of real estate professionals.
These are just a few of the ways you can get started investing in real estate. As long as you consider your options
carefully – including possible risks – you’ll find the perfect fit for your financial goals.
A basic guide to lowering your homeowners insurance cost
Among the many expenses associated with homeownership, homeowners insurance is one of the most significant. Insurance rates and premiums vary depending on your location, provider and the type of home you have, but there are almost always ways you can save money. Here are some tips for lowering your insurance costs:
Choose a higher deductible
Increasing your insurance deductible can lower your monthly premium. A deductible is the amount you pay out of pocket for repairs before insurance kicks in.
For example, your homeowners insurance policy may state you have to pay $2,000 for damages before coverage activates. Increasing this amount to $3,000 may decrease your monthly payment. You’ll save money every month, but you’ll have to pay more for if you ever need to make a claim.
Bundle your insurance plans
Many insurance companies offer different types of insurance packages. You can often save money by bundling your homeowners insurance with other insurance options.
Discounts and special deals vary, but some homeowners can save up to 25% on their premiums when they bundle policies. You can bundle your homeowners insurance with car insurance, boat insurance and other types of coverage.
Shop around for homeowners insurance
Know your options when it comes to homeowners insurance. All policies are different both in offerings and prices. Two policies can offer similar coverage, but one may be more affordable depending on other factors.
Comparison shop for homeowners insurance by getting quotes from multiple providers. With some extra research, you might find an excellent deal.
Consider excluding land value from your policy
Some homeowners insurance policies cover the contents within the home, the structure of the home and the land surrounding the property. Excluding land value from your insurance policy can decrease your monthly premium.
However, before making this change, it’s good to weigh out the pros and cons. Speaking with a homeowners insurance provider can help you decide if this is the right decision.
Homeowners insurance is essential to protect your property. Luckily, you can still save money on premiums without forgoing important coverage. Speaking with your local insurance provider can help you find the perfect deal on your next policy.
What is an FHA loan & how does it work?
If you’re a first-time homebuyer or simply searching for a mortgage loan to fit your financial standing, an FHA loan may be for you. With moderate requirements and longer loan terms, this mortgage type opens the door to homeownership for those who may be just beginning their financial journey.
How does getting a FHA loan work?
A FHA loan is special, as it’s backed by the Federal Housing Administration, which falls under the umbrella of the U.S. Department of Housing and Urban Development.
To qualify for this loan, you have to meet at least the minimum qualifications, including a down payment of at least 3.5 percent of the total cost of the home and a credit score of 580 or higher. If you have a lower credit score, you may still qualify but may need a higher down payment.
What is the downside of an FHA loan?
Even though FHA loans may be ideal for some first time buyers, there are some drawbacks to be aware of before taking on the loan. A down payment of less than 20 percent often means having to pay for mortgage insurance in addition to your mortgage payment to protect the investment of the lender.
An FHA mortgage usually comes with limited loan term options, so for those with unique situations, a 15 or 30-year mortgage term may not fit what they are searching for.
What is the benefit of getting an FHA loan?
Even though there are a few drawbacks to this loan type, there are many benefits as well. Lenders of FHA loans are often lenient on credit history, opening the door to borrowers with lower credit scores.
In general, interest rates are often fixed and come with better conditions in comparison to conventional loans.
If you’re interested in an FHA loan, consider speaking with a lender to explore your options to find the best deal for your next home purchase.
4 Things to sell prior to listing your home
When you start the process of selling your home, there may seem like there’s an enormous amount of things that need
to get done. However, by selling old and unused items, you can save time on packing things away and make some extra
money in the meantime.
Furniture
Moving large items in general it’s typically no light work, let alone furniture that may be older, and not in
pristine condition. Selling older furniture gives you the chance to make room for newer items that may better fit
the aesthetic of your new space after you sell your old home.
Exercise equipment
Do you have an old treadmill or dumbbells that are no longer being put to use? These items can be heavy and take up a
great deal of space. A treadmill alone can range from 60 to 250 pounds on average – making it not the most ideal
item to move and travel with.
By selling these underused items you can make some extra cash, save time and the hassle of packing them up and
away.
Extra linens
One or two linens on their own don’t take up too much space, but over the years as you purchase more for those in
your household, guests and different rooms many can amount over time.
If you would like to get rid of any extra linens to decrease the amount of stuff you’ll need to move, consider
selling your old linens online. If they are vintage, you may find that they’ll sell for even more cash.
Old toys
If you have kids or pets such as dogs and cats, no doubt toys can accumulate quickly throughout the years. A stuffed
elephant here, a robo car there and before you know it there can be multiple bins worth of toys.
You may find there are toys your kids no longer use or are interested in, meaning it may be time to let these items
go. You can sell them or donate them to local charities who will redistribute the toys to kids within the
community.
By taking the time to comb through old pieces of furniture, toys, linens and other items – you can sort out high
priority items and things no longer of value to simplify one step in the home selling process.
