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Matt Demorest, President

5 Things You Must Know about Buying a House

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If you are preparing to buy a house, you’ve probably researched the home-buying process and what you can expect. But there may be a few tips you might have missed. Here are the five things that you should absolutely know before buying a home:

  1. You are not going to get the baseline rate set by the Federal Reserve. This is a baseline, remember. Many buyers will watch the fluctuations of this baseline and buy only when they think that rate is favorable. Here’s why this is an issue: your rate is based on a range of different variables (your credit score, for instance).  The Federal Reserve baseline is another of those variables.
  2. You probably do not need as much for your down payment as you think. In the past, you might have needed 20% of the house’s total price as your down payment. Today, you could pay as little as 3%, depending on what type of loan you choose and what your lender expects.
  3. Set aside your down payment as early as possible. Even if the seller is not particularly motivated to sell, once they accept your offer, they are probably going to want their deposit as quickly as possible. This will usually come out of your down payment. You want to have this money on hand so that when the seller accepts, you can make the payment without delay.
  4. Get an inspection, even if it is not required. Many buyers will skip the home inspection if it is not absolutely required by law or regulations. Get one anyway. This will make sure that the seller has left the home in the condition that you expected. It also gives them the opportunity to fix any issues that should be remedied before you move in.
  5. Ask about seller concessions. If a seller is being stubborn about their price, there are ways that you can get them to compromise. If you are willing to meet their price, even if it is higher than what you wanted to pay originally, ask the seller if they are willing to pay your prepaid interest points or your insurance fees.

5 Tax Breaks Available to Homeowners

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5 Tax Breaks Available to Homeowners

Owning a home has a wide variety of advantages:

(1) no longer being under the thumb of a landlord

(2) often paying less in housing costs month to month than renting

(3) having more control over your living space.

Because the government wants individuals to buy homes, there are a number of tax breaks available. While not all tax breaks are available to all homeowners, here are five of the most common:

1. Interest on your mortgage – This tax break allows you to deduct any and all mortgage interest payments. If you have a second mortgage, those interest payments are deductible as well. Even if you live there for more than thirteen days a year, or the property is rented for more than ten percent of the year, that interest is still deductible.

2. Mortgage insurance Not everyone will be able to take advantage of this tax break. It requires that you earn less than $109,000 (as of 2015), and your policy has to be newer than 2006. If you meet these standards, however, you should be able to deduct premiums paid on mortgage insurance.

3. Property taxes We all have to pay them, but luckily, most of us can deduct these property taxes from our other taxes.  Save your payment statements to prove that you have paid these taxes.

4. Your home office Do you have a room or a part of a room dedicated specifically to working at home? If you have devices or furniture that you use specifically as your home office, you can deduct the cost of those spaces from your taxes, as long as your home is the primary place for your business and the space is used only for doing work.

5. Energy efficiency If you took steps to make your home more energy efficient, you probably can write these off as a tax deduction, up to $500. Items that count towards these deductions include new doors, new windows, better insulation, better heating or cooling systems, etc. If you use solar power, you could write off even more!

How to Handle Disputes with Your Neighbors

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canstockphoto4401316Even with property lines, fences, and hedges to divide up yards, you might find yourself getting into fights with your neighbors. Little problems can quickly escalate into big arguments, which can make living in your neighborhood not just awkward, but even downright scary. Disputes happen—here’s how to handle them without turning your neighbors into enemies:

Prevention

Preventing the dispute before it happens is one of the best ways to make sure that you are never in a long, protracted battle with a neighbor. Trees and their branches draping over fences and into other’s yards are some of the most common reasons that neighbors fight.

If there is a small tree near the property line that is likely to grow until it crosses the line, it is a good idea to talk to your neighbor about the tree before it is an issue to ensure that both of you understand who owns the tree and what should be done about it when its branches start crossing property lines. If either owner is unsure where the property line is, they should have a survey done to establish the line.

Don’t Guess

Another common dispute neighbors have is about fences. We’ve all heard that fences make good neighbors, if you put up a fence without being absolutely sure where the boundary is between your yard and the next, you might actually be building a fence on someone else’s property. The best course of action is to never guess about where you can build and to always have a surveyor come out and tell you where your fence can be before you put any poles in the ground.

What to Do If a Fight Escalates

In general, most neighbors are congenial and won’t take you to court because a branch of your pine tree is growing into their yard. At the very most, they may ask you to cut that branch off so that it doesn’t drop pine needles or pinecones into their yard. If a fight does escalate and one party decides to take legal action, it is important to make sure you are getting the best information from the most relevant sources. Ask county surveyors to provide definitive information about the property lines and consider hiring a property rights lawyer to aid in the dispute.

How to Stage a Home to Entice More Buyers

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canstockphoto1159557How successful your home is going to be on the market has a lot to do with the staging. Your realtor may help with the staging, but they may also just do a simple walkthrough of the house with you, pointing out the stuff that you should probably remove and put in boxes. Giving your home the right look can make or break the selling process. So, if you are trying to sell your home so you can buy a new one, here are some tips that are sure to make your home more attractive to buyers:

  • Know who you are going to be selling to. Asking your realtor about the kinds of buyers that are likely to come look at your home is a good way to get an idea of who you are going to be selling to. He or she should know what the typical buyer in the area looks like. Is it a family? A young professional? A retired couple? Knowing this information can help you tailor the look and feel of your home to that audience.
  • Put away the personal photos. It’s true, some buyers do want to see family pictures in a space because they think it makes the home looked lived in. The truth is, however, that what most buyers really want is a blank slate. They want to be able to envision themselves in that home. Coming into a home and seeing someone else’s family pictures can make that person feel like they are actually setting foot into someone else’s home, not a home that they could potential buy.
  • Don’t be afraid to get trendy. That bright blue wall might not be fashionable in a few years, but you aren’t looking for someone to buy your home in a few years, you’re looking for someone to buy your home today. Pick a trendy color that is sure to be buyer friendly.
  • Make the space look like someone lives there. You don’t want to make the house look like you live there, you want it to look like someone lives there. Get rid of the personal clutter, but leave a few lived-in touches like an extra blanket on the bed and a book on the nightstand.

7 Things to Throw Out Before You Move

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canstockphoto2726271Moving is stressful. When you are moving away from a place where you’ve made a lot of memories, it can be tempting to wax nostalgic and to try to bring everything with you. Let’s face it, when you live in a house, you accumulate stuff you don’t really need. Here are seven things you should throw out before you move into your new home:

Food – Eating out can be tempting during this stressful time, but that can leave you with a lot of leftover groceries at home that you’ll have to pack over to your next place. It’s better to just eat it and then throw out whatever will spoil.

Cheap furniture – These are probably some of the biggest things you have to move. Cheap furniture is very likely to be chipped, stained, scratched or even broken in the process. Sell it off or give it to someone who needs it.

Clothing – Before moving is the perfect time to go through your closet and throw out clothes that you just don’t wear anymore. If you haven’t worn it in the last fours seasons and it doesn’t hold immense sentimental value (read: wedding dress), it’s time to throw it out.

Personal and beauty products – If you haven’t used that nail polish in the last year, throw it out. Don’t tote along a bunch of hair products and makeup that you don’t actually use and never really intend to use.

Alcohol – Rather than move the alcohol to your new place, why not host a party and drink whatever is left over with your friends to celebrate the move.

Kids’ toys – This can be a hard one, especially if your child is irrationally attached to toys he hasn’t played with for years. The truth is, however, that if he hasn’t played with it for years, he probably isn’t going to play with it, so why bother moving it? Donate it or give it away to someone who wants it.

Sheets and towels – If you’ve been using the same set of sheets and towels for the last five years, now is a great opportunity to throw them out and to get new ones for your new home!

Get rid of these seven things and your moving experience is sure to be much smoother and those boxes will be much lighter!

How to Start Saving to Buy a House

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canstockphoto26071831Buying a home, even if you are going to get a mortgage, requires a little bit of cash. The more cash you have on hand that you can put down for that home, the less you are going to have to pay for the home over the years of the mortgage. You can even get your interest rate knocked down a few percentage points by placing a larger down payment. If you want to start saving to buy a house, here are a few tips to get you started:

Rein in your spending. Spending money is fun. It costs money to go to the movies, to buy some cool new clothes, to eat some tasty food, etc. Cutting down on your monthly spending and putting all of that excess money into a savings account can put your leaps and bounds ahead of someone who continues with their spending habits and still wants to buy a house.

Decide how large of a down payment you want to make. 20% of the house’s total price is a worthy goal, but even just 10% can make a big difference. Deciding how much you want to put down gives you a good goal to work towards while you’re saving money. As you are standing in a store, considering whether or not you really want that $50 shirt, having that goal in your head will remind you that you are trying to save money for something big and substantial.

Pay down your debts. This might sound like it is taking money away from your home fund, but in reality, having a lower debt to credit ratio will make you more attractive to lenders. If you can get rid of some of your other debts (student loan, credit cards, car payments) before you buy a home, you’ll have more money to actually pay for that home when the time comes.

Make a commitment to save more each month. If you don’t already have a line in your budget for your savings account, it’s time to add one (or make a budget if you don’t have one yet). Then, make a commitment to put at least a hundred dollars into this savings account each month, specifically for buying your home. Most people can manage to scrounge a hundred dollars!

Mortgage Secrets: What You Should Do Before Buying a Home

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Mortgages

Mortgages

If you are starting the home buying process, you are probably already encountering a lot of terminology and jargon that you don’t completely understand. Even if you are up with all of the terms and even if you’ve purchased a home before, there still might be things that you don’t know about buying a home. Here are five things that you should always do before buying a home that you might not have heard of before:

Improve your credit score. While you by no means have to have a perfect credit score in order to be approved for a mortgage, the better your credit score is, the better your interest rate is bound to be, and therefore, the less you’re going to pay over your home loan’s term. You can take steps right now to improve your credit score, like paying down your loans and having any mistakes or incorrect information removed.

Determine how much home you can afford. A very general guideline for figuring out how much home you can afford is to pick a house whose monthly payment will be less than 28-31% of your monthly income. This is generally a good ratio to use when factoring in all your other monthly expenses.

Factor in your closing costs and down payment. Too often, buyers only think about the final cost of the home and don’t realize that they will need to make a significant down payment and pay closing costs when it is finally time to actually buy the home. Factoring in these costs into the total cost of buying a home will give you a more realistic picture of what you can afford.

Make sure your savings account is robust. Lenders like Home Sure Lending will look at your savings account as an indicator of your overall financial health. A robust savings account gives you money to fall back on should you ever lose your monthly income and need to find another job or have some other emergency that would otherwise jeopardize your financial state.

Get a preapproval. Being preapproved isn’t always necessary when buying a home, but it can instill confidence in a seller if you have already passed through the first stage of getting your home loan and are therefore more likely to actually be approved when it comes time to get your mortgage.

Is Buying a Home Still the American Dream?

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canstockphoto17639734My parents bought their first house only six months after they were married. That was six months into my father’s Ph.D. program, and without the help of either of their sets of parents. When their children started to graduate college, home ownership was the farthest thing from our minds. We came of age during one of the worst economic recessions in recent history and, like those raised during the Great Depression, had learned to be money hoarders, rather than money spenders.

Say what you will about Millennials, but their debt is not housed in the housing market—it’s in the education market. Fewer and fewer young people are still holding on to the dream of home ownership—at least, in the near future. The recession is partially to blame. Many young people watched their neighborhoods proverbially crumble around them, as neighbors began to default on their loans and were forced out of their homes. They watched their own parents struggle to stay on top of mortgage payments. They watched their college funds, often stashed in money market accounts, tumble away into worthlessness.

A recent study conducted by Hart Research Associates found that most young people believe renting to be a better option than buying and that renters are less likely to have financial troubles than those who buy a house. During the first part of this year, homeownership rates have dropped to twenty-year lows, largely due to this attitude.

So, is owning a home still part of the American Dream? Surveys conducted by Merrill Lynch show that over 80% of Millennials still consider homeownership to be an important aspect of the American Dream. So are young people just turning away from that dream altogether?

Not entirely. In recent months, more and more young people have begun to show interest in home ownership. Though 70% of the population still believes that we are in the midst of a financial crisis, more and more people are reverting back to buying homes and are abandoning the cycle of renting. When young people realize that making the investment right now allows them to live more stable financial futures, and that there are unlikely to be interest rates this low for generations to come, it makes sense that home buying is again on the rise, even among the generation who had previously shunned it.

What Are Closing Costs When Getting a Mortgage?

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canstockphoto5161850Buying a home usually means learning a lot of new jargon and absorbing a lot of new information. “Closing costs” are just part of that new set of jargon that you will have to learn. With so much else to learn and an assurance that closing costs will just be rolled into the cost of the mortgage, many people will just ignore these expenses until the very end of the home-buying process. The truth is, closing costs can make or break a home purchase and knowing what these costs are and why they are included is important. Here are some of the most common closing costs with a mortgage:

Mortgage application fees – While these fees might be paid before closing, they are often included in the closing costs. This is the fee charged by the lender for reviewing and processing the original mortgage application.

Fees for inspections – Having your future home inspected before you actually purchase it is extremely important. It does, however, cost money for all involved parties. The inspector has to be paid for his time, and while this fee, too, is sometimes paid before closing on a mortgage, it is most often rolled into the closing costs.

Fees for appraisal – Having a house appraised is just as important as having that house inspected. This ensures that you are not paying an outlandish price for a house that is actually worth much less. Like an inspector, having an appraiser come out to the property to survey it costs money, and someone has to pay for that time. It is usually the person buying the home. This cost, like the others, is often part of the closing costs.

Title search, recording, and surveying – If the property you want to purchase has had any of these services before you actually make the purchase, the cost of having these services done, like the others, will be rolled into the closing costs.

Commission for your real estate agent – Your real estate agent is usually paid on commission, and that payment is most often made when the mortgage closes.

While closing costs can seem steep, they are often the price that a buyer has to pay to actually purchase the home. They cover a range of important services and can often be mitigated by having the costs rolled into the mortgage itself.

How to Find a Home You Can Afford

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canstockphoto12926992If you are just setting out on the journey of buying a home, finding one that is in your price range may feel overwhelming. House hunting can be a long and drawn out process, and if you’ve only ever lived on rental properties, it can be difficult to figure out just how much home you can afford.

When you look for rental properties, the costs are very definite and clear cut. You will probably know exactly what your monthly payments will be and often, those monthly payments include the cost of utilities. When you apply for a mortgage, your costs are going to be vastly different, and making sure you can afford the monthly payments is a little more difficult. Here are some tips to help you make sure you are looking at homes inside your price range.

A Little Bit of Quick Math

Look at your gross income from the last year. Multiple that number by 2.5 or three. This is, in general, a very rough estimate of how much home you can afford. So, for example, if you make $50,000 a year, your price range will be in between $125,000 and $150,000.

It is important to remember that this is a very general rule of thumb and does not always apply to your situation. There are a lot of factors that are left out of this estimate, including insurance, taxes, HOA fees, etc.

Use a Mortgage Calculator

You can find a mortgage calculator just about anywhere online. These will allow you to enter more specific information about your income and financial state, which will then present you with a more definite monthly payment, based on the price of a home you want to purchase. Enter a variety of different home prices to find the range that you can actually afford. Start on the high end and work your way down until you get to the maximum you would want to pay each month in mortgage payments—that home price will be your upper limit.

Talk to a Professional

The best way to really know your price range is to talk to a financial expert. When you contact HomeSure Lending for a mortgage, we can help you look at your finances and your income to determine feasible monthly payments, and therefore feasible house prices for your unique situation.