Article: How much will it really cost if I choose a fixer-upper?

This article lays out some questions to ask yourself when you are thinking of taking on a home that is a fixer upper:

1. Decide what you can do yourself

TV remodeling shows make home improvement work look like a snap. In the real world, attempting a difficult remodeling job that you don’t know how to do will take longer than you think and can lead to less-than-professional results that won’t increase the value of your fixer-upper house.

• Do you really have the skills to do it? Some tasks, like stripping wallpaper and painting, are relatively easy. Others, like electrical work, can be dangerous when done by amateurs.

• Do you really have the time and desire to do it? Can you take time off work to renovate your fixer-upper house? If not, will you be stressed out by living in a work zone for months while you complete projects on the weekends?

2. Price the cost of repairs and remodeling before you make an offer

• Get your contractor into the house to do a walk-through, so he can give you a written cost estimate on the tasks he’s going to do.

• If you’re doing the work yourself, price the supplies.

• Either way, tack on 10% to 20% to cover unforeseen problems that often arise with a fixer-upper house.

3. Check permit costs

• Ask local officials if the work you’re going to do requires a permit and how much that permit costs. Doing work without a permit may save money, but it’ll cause problems when you resell your home.

• Decide if you want to get the permits yourself or have the contractor arrange for them. Getting permits can be time-consuming and frustrating. Inspectors may force you to do additional work, or change the way you want to do a project, before they give you the permit.

• Factor the time and aggravation of permits into your plans.

4. Doublecheck pricing on structural work

If your fixer-upper home needs major structural work, hire a structural engineer for $500 to $700 to inspect the home before you put in an offer so you can be confident you’ve uncovered and conservatively budgeted for the full extent of the problems.

Get written estimates for repairs before you commit to buying a home with structural issues.

Don’t purchase a home that needs major structural work unless:

• You’re getting it at a steep discount

• You’re sure you’ve uncovered the extent of the problem

• You know the problem can be fixed

• You have a binding written estimate for the repairs

5. Check the cost of financing

Be sure you have enough money for a downpayment, closing costs, and repairs without draining your savings.

If you’re planning to fund the repairs with a home equity or home improvement loan:

• Get yourself pre-approved for both loans before you make an offer.

• Make the deal contingent on getting both the purchase money loan and the renovation money loan, so you’re not forced to close the sale when you have no loan to fix the house.

• Consider the Federal Housing Administration’s Section 203(k) program, which is designed to help home owners who are purchasing or refinancing a home that needs rehabilitation. The program wraps the purchase/refinance and rehabilitation costs into a single mortgage. To qualify for the loan, the total value of the property must fall within the FHA mortgage limit for your area, as with other FHA loans. A streamlined 203(k) program provides an additional amount for rehabilitation, up to $35,000, on top of an existing mortgage. It’s a simpler process than obtaining the standard 203(k).

6. Calculate your fair purchase offer

Take the fair market value of the property (what it would be worth if it were in good condition and remodeled to current tastes) and subtract the upgrade and repair costs.

For example: Your target fixer-upper house has a 1960s kitchen, metallic wallpaper, shag carpet, and high levels of radon in the basement.

Your comparison house, in the same subdivision, sold last month for $200,000. That house had a newer kitchen, no wallpaper, was recently recarpeted, and has a radon mitigation system in its basement.

The cost to remodel the kitchen, remove the wallpaper, carpet the house, and put in a radon mitigation system is $40,000. Your bid for the house should be $160,000.

Ask your real estate agent if it’s a good idea to share your cost estimates with the sellers, to prove your offer is fair.

7. Include inspection contingencies in your offer

Don’t rely on your friends or your contractor to eyeball your fixer-upper house. Hire pros to do common inspections like:

• Home inspection. This is key in a fixer-upper assessment. The home inspector will uncover hidden issues in need of replacement or repair. You may know you want to replace those 1970s kitchen cabinets, but the home inspector has a meter that will detect the water leak behind them.

• Radon, mold, lead-based paint

• Septic and well

• Pest

Most home inspection contingencies let you go back to the sellers and ask them to do the repairs, or give you cash at closing to pay for the repairs. The seller can also opt to simply back out of the deal, as can you, if the inspection turns up something you don’t want to deal with.

If that happens, this isn’t the right fixer-upper house for you. Go back to the top of this list and start again.

More from HouseLogic

What you need to know about foundation repairs

Budgeting for a home remodel

Tips on hiring a contractor

Other web resources

This Old House remodeling cost estimates

G.M. Filisko is an attorney and award-winning writer whose parents bought and renovated a fixer-upper when she was a teen. A regular contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics

 

By: G. M. Filisko

Published: August 24, 2010

Article from: http://members.houselogic.com/articles/how-assess-real-cost-fixer-upper-house/preview/#ixzz34XYKEwFF

Article: Interest Rates

Interest Rates on Home Loans

The interest rates we are seeing have not been this low in over 50 years! I wish I could tell you how long they will stay this low but my crystal ball is in the shop. What we do know is that interest rates tend to go up much faster than they come down and they won’t stay this low forever.

This is not meant to rush you into buying a home, that is a decision you need to make after getting educated and talking with your Mortgage Professional, but if the time is right for you, you’ll be able to get an interest rate that’s near an all time low.

You typically cannot get the rates advertised online or in advertisements because of the many variable factors we’re discussing.

Your loan payment interest rate will vary depending on what type of loan you use.  See Types of Loans: FHA, VA, USDA… OMG! Your down payment amount will also directly affect your rate. Less than a 20% down payment has the greatest effect on rate.

A great rate on the wrong loan can be disastrous. Have an experienced Mortgage Pro help you choose the right mortgage.

Your location can also affect your rate if it’s in an area that’s deemed to be a “declining market” regarding home values.

Rates move up and down daily for most loan types but you can get a “rate lock” that guarantees you a specific rate.  Once you have an accepted offer, ask your Mortgage Professional if it’s the right time to lock in your interest rate.

Interest rates on home loans rise and fall along with the stock market – as it drops, so do interest rates.

– Article posted from: http://fearlesshomebuyer.com/lesson/interest-rates-and-how-they-work/#sthash.8CfioWD6.dpuf

Article: 6 Things I Wish I Knew When I Bought My First House

6 Things I Wish I Knew When I Bought My First House

New homebuyers have made every mistake in the book – I even made a few myself when I bought my first home. They’ve overpaid, overspent, and bought homes they just could not afford. And most of the time, these critical missteps happen simply because buyers aren’t informed or don’t ask the right questions. It’s painful to watch, especially when a huge percentage of buying blunders can been avoided.

Here are 6 of the most common missteps buyers wish they knew to avoid the first time around:

I wish I hadn’t borrowed the full amount the bank told me I could afford
Just because you’re approved for it doesn’t mean you should buy the most expensive house you can. As a general rule, it’s wise to take 20% less than what the bank will lend you. Let’s say you go to a bank or a mortgage broker, and after evaluating your finances, income, and savings, you qualify for a $400,000 mortgage. Though it may be tempting to take the full amount, knocking a fifth off the loan amount – which comes to $320,000 instead – will automatically get you into a house that’s more affordable, safeguarding your family and your financial security.

I wish I hadn’t been suckered in the by the extra-low short-term adjustable rate mortgage
Always go with a traditional 30- or 15-year fixed loan – and skip adjustable, creative financing, balloon payments, and teaser loans. You never know what life may bring, so having consistent mortgage payments for the entire length of the loan allows you to better predict your ability to pay each month. A fixed mortgage offers confidence that the payment you have today will be the same ten or fifteen years from now, no matter how the market, interest rate, or the economy changes over time.

I wish I hadn’t used up all my cash to buy the house 
Your home purchasing costs don’t stop with the down payment. You have to factor in closing costs, appraisal fees, buyer’s broker fees, loan application fees, loan broker fees, structural inspection fees, and so on. The down payment and the closing are what I call the “up-front costs.” After that, you’ve got “ongoing costs,” which primarily consist of property taxes, homeowners insurance, hazard insurance, condo, co-op, or HOA fees, and moving expenses. Don’t be left with a zero balance in your checking account by the time you get the keys; factor in these additional costs ahead of time.

I wish I hadn’t wasted my time hunting down those foreclosures and short sales, only to miss some really good deals
Just because it’s a distressed property doesn’t mean it’s a good deal; foreclosures aren’t a guaranteed bargain. If you looking to get a steal (and you want it in a timely manner), avoid short sales, and even some foreclosures. These deals can drag on for months and generally have higher interest rates. And even if the distressed home you’re looking at is well-priced, the hoops you’ll have to jump through may just have an opportunity cost high enough to offset your monetary cost savings.

I wish I knew the one essential question to ask before I had bought my condo 
There’s one question that can save you thousands of dollars and help you avoid a condo building (or community with a homeowners association) that will become a money pit: Has there been any discussion of possible future improvements, changes, renovations, or maintenance or any financial difficulties that would result in an assessment or charges to be leveraged against all condo/home owners? Make sure to get the answer in writing. This question is critical because the condo association board must answer honestly or it could be held liable. All condo meetings must provide notes that can be subpoenaed, so any discussion of assessments, current or future, could be proven.

I really wish I had talked to the neighbors before I bought the houseA few years back, I bought a wonderful home in the Hollywood Hills. Unfortunately for me, I did not follow my own advice and mingle with the neighbors to learn about potential problems ahead of time. And it caused me many sleepless nights – literally. My first night in the house, I woke to the sounds of two barking, yelping dogs that howled and bellowed until morning. I couldn’t believe it. The next night the same thing happened. I later found out that the seller had been fighting with the neighbor over the barking dogs for six months. The surrounding neighbors had also been complaining, but the awful, miserable owners of the dogs just didn’t care. It took me more than a year of working with L.A. Animal Control before the owners agreed to take responsibility for the problem. I was unable to put the house on the market for an entire year, because I would have had to disclose the problem, and I would have had to take a steep discount prior to resolving the issue. Otherwise, I would have been liable for not disclosing, just as the man who sold the house to me without disclosing it was. Had I chatted up neighbors, I would have been much less tired all year long!

Michael Corbett is Trulia’s real estate and lifestyle expert. He hosts NBC’s EXTRA’s Mansions and Millionaires. In additional to his regular segments on ABC’s The View and Fox News, he is a national best selling author with three critically acclaimed real estate books: Find It, Fix It, FLIP IT!; Ready, Set, SOLD! and Before You BUY! Follow him @1MichaelCorbett. 

Money Saving Tips In Your Home

 

Top 10 Tips to Save Money in Your Home

1. Programmable Thermostats
Utility bills can be daunting. In the summertime, the cold air needs to be on full blast and in the winter, everyone wants to feel warm and cozy. Programmable or “smart” thermostats are an efficient and inexpensive way to save hundreds of dollars on yearly electricity bills. An energy-saving smart thermostat, available for about $50-$100, can help decrease the cost of heating or cooling your home. It takes the guesswork out of trying to coordinate your home’s temperature with the temperature outside, as well as provides the convenience to set different temperatures at different times, seven days a week. Some models even come equipped with Wi-Fi so you can control the temperature of your house even when you are not home.

2. Go Low-Flow in the Shower
Wasted water during baths and showers is like washing money down the drain. Replacing old and outdated showerheads with new low-flow models is a great way to tackle the monthly utility bill and increase the efficiency of your hot water consumption. Plus it’s a great solution for renters! New spray shower heads use no more than two and a half gallons per minute and provide excellent water pressure. This simple switch could reduce your annual water bill by upwards of $100, depending on frequency. An added bonus is that low-flow showerheads help the environment by conserving fresh water.

3. Make an Extra Payment
An easy tip that can save thousands of dollars in the long run is to make an extra mortgage payment annually. Over the course of a 30-year loan, one additional mortgage payment per year can save a considerable amount of money on annual interest payments.

4. Unplug Your Appliances
This may come as a surprise, but turning off electronics does not mean that you are eliminating their draw from the electric grid. Many electronic gadgets and appliances, especially computer monitors, consume power even when they’re turned off, but still plugged into an outlet. This phenomenon is known as “phantom power” and can cost you hundreds of dollars annually. By unplugging your appliances, or using a smart power strip, you can save an estimated five to ten percent on your monthly electric bill.

5. Use House Plants to Purify Air
With air pollution levels steadily increasing, trying to improve the quality of air inside the home has become a trend across the country. Some homeowners spend hundreds of dollars on air purifiers to reduce allergens in air. An alternative to this costly investment is placing houseplants around the home. Not only do they remove toxins from the air, but they also add a little extra color to a room and make it feel more warm and comfortable. Perfectly placed houseplants can help improve air quality and aesthetics throughout the entire house. Houseplants are a great addition for renters because they add so much, cost so little, and can be easily moved to the next location.

6. Dodge the Draft
Even though homes have doors and windows to keep out the elements, as a house ages, the hot and cold air from outside often creeps in, creating drafts and gusts. Weatherproofing a home is an inexpensive and simple task that can save up to 15 percent on heating and cooling costs. For about $15, you can purchase some of the supplies you need to weatherproof doors and windows. There are a variety of weatherproofing products, including v strip, felt, and foam tape, so make sure to do some research ahead of time to see what your specific home will need. You can also get a home energy audit to discover ways to improve your home’s interior quality.

7. Do It Yourself
Redecorating a home or apartment is a great way to make a home feel new again. Professional decorators and painters often come with a very hefty price. With so many resources available around the web, including the Homes.com Idea Gallery and the ForRent.com Apartment Living blog, jumping on the DIY bandwagon is easy, inexpensive, and fun. There are many DIY workshops located at local hardware stores like Home Depot and Lowe’s. Projects around the house, such as painting, can save hundreds of dollars while transforming your space. Projects can also provide hours of fun and entertainment.

8. Install Ceiling Fans
Cooling a home is traditionally the most expensive part of running a home during the hot summer months. An air conditioner uses 3,500 watts of energy, while a ceiling fan only uses 60 watts of energy. A new ceiling fan costs anywhere from $50 to $200 and, on average, costs seven dollars per month to run. Decreasing the use of an air conditioner and increasing the use of a ceiling fan can save money and keep a family just as comfortable. Ceiling fans can even be useful during the winter months by setting the fan to run in a clockwise direction. The reverse motion pushes warm air down from the ceiling, keeping everyone warm.

9. Shop Your Home
Everyone loves to spruce up their space by buying bright new pillows and brand new artwork. Before you buy new accessories, take a walk around the house and see if there are small budget-friendly tweaks you can make. Rearranging furniture and lighting is a quick and free way to recreate an entire room. Move a desk in front of a window or position a sofa toward the fireplace instead of the television during the winter to change the feel of any space. Switching decorations between rooms is another free way to make two spaces feel new and different. Shopping your home before heading to the store can save you a lot of money!

10. Cut Back on Washing and Drying
With the average family doing 300 loads of laundry per year, maximizing how laundry is done at home can save time and money. Consider washing most clothes (except towels and linens) in cold water to save on heating costs. Make sure to use the dryer efficiently by filling up the machine without overfilling it. The next time you’re in the market for a new washer and dryer, do some research up front and see if a new washer and dryer will qualify your family for an additional tax credit. Energy-efficient appliances can save a family time and money.
Excerpt taken from http://www.digitaljournal.com/pr/1927259

Article: First Time Home Buyer Tips

1

As a first time homebuyer, it’s important to take the time to research and plan every step of the home buying process. From confirming that you are financially ready down to making the final offer, here are a few things to keep in mind that may help you along the way.

1. Get (and Stay) Organized

You’ll need to gather your financial information to get started. Collect pay stubs, bank statements, W-2s, and any other financial information for the past two years. This will allow for your financial statements to be readily available when you meet with your lending officer. It’s also a good idea to organize your statements monthly to help stay organized in the years to come.

2. Check Your Credit Score

…and get in the habit of doing so at least once a year. In case you didn’t know, you can access your credit report for free, once a year, through annualcreditreport.com. Your credit report can make or break the final decision on your home loan so be aware and be sure to fix any errors that may appear. You can also receive your FICO score, which will cost you a small fee.

3. Figure Out What You Can Afford

You can start by tracking your daily expenses over the course of a month to see exactly where and how much money you’re spending. Also be sure to track your savings since you may want to start sacrificing the daily stops to your local coffee shop and transfer those expenses into your savings to add a little more cushion to your down payment ability.

4. Use a Mortgage Calculator

Many can be found online and can tell you exactly what your expenses will be. They may not always account for every single penny, but they give you a pretty good idea of what your monthly payment will be. Keep in mind, depending on your home market, your mortgage payment will increase once your taxes and insurance escrow are added.

5. Be Realistic

Before you sign on the dotted line, be sure that you can easily make the monthly mortgage payments. Chances are that if you’re losing sleep about being able to pay your mortgage on top of your current expenses, you’ll need to reconsider the amount you want to borrow. 

6. Your Sales Associate Can Help with Lenders

Whether you’re building a home or buying a resale, your sales associate may have existing relationships with preferred lenders to help get you pre-approved for a mortgage. If not, you might want to check your bank or credit union.

7. Do Your Research

We all have our dream homes, but in most cases, our first home may not be the dream home you pictured. When you’re putting together your home wish list, focus less on the marble countertops and extravagant chandeliers and focus more on functionality. Do you need lots of storage? Perhaps walk-in closets and a two car garage should be on your list. Start your home search by researching homes recently sold and homes currently on the market.

8. Get Pre-Approved

You can compare several loans before making the final decision. Be sure to compare and figure out pros and cons. Keep in mind that you should ask about up-front costs as some lenders will charge for pre-approval. Once approved, you’ll receive a letter from the bank explaining how much they have decided to lend you.

9. Not Approved? Look into FHA Loans

The Federal Housing Administration has a lending program specifically for first-time home buyers and only requires 3% to 3.5% for the down payment. Banks recommend spending up to 28% of your gross monthly income on your mortgage, taxes and homeowners’ insurance premium. If you move forward with an FHA loan, you can go even higher to 50% percent of your gross monthly income but keep in mind that just because you are eligible for a larger loan; it’s not necessarily a smart financial move to take it. Remember that 50% will have a larger effect on your income especially if you are enrolled in a 401k savings plan.

10. Don’t Rush

…but keep in mind that you are on a deadline. Typically, pre-approvals are only good for 60 to 90 days. If you don’t find your home within that period, you may need to re-qualify with your lender. While you shouldn’t settle or buy the first home you see, doing some research and only seeing the homes that are in your budget can save a lot of time and make room for more visits to homes that will be a better fit for you and your family.

***This article was written by Stephen Katz

http://www.firsthomefirstloan.com/smart-tips-for-first-time-homebuyers/?om_rid=AAJ$oe&om_mid=_BTdTjoB86ECVhZ&om_ntype=REBACHSWeekly

. Get (and Stay) Organized