The 5 Biggest Challenges of Buying A Home When You Have Student Loans

What’s the biggest barrier to purchasing a home that requires a mortgage? For millions of college graduates — both older and younger millennials — it isn’t their credit card debt. Rather, it’s their student loans that are preventing them from fulfilling their dream of homeownership.

To explain it further, here’s the summary of the latest student loan debt statistics:

Statistics from personal finance site Make Lemonade reported that over 44 million people carry a collective debt of $1.5 trillion.

  • According to Student Loan Debt and Housing Report 2017: When Debt Holds You Back by the National Association of Realtors (NAR), 17% of borrowers owe more than $100,000 in student loans.

  • More than 7 in 10 student loan borrowers believe their debt has impacted their ability to purchase a home.

  • Student loan debt has now become the second highest consumer debt category - second only to mortgages.

Moreover, paying off their student loans isn’t the only challenge they encounter when qualifying for a mortgage.

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Nonetheless, if you’re a student loan borrower, there are steps you can take to overcome these hurdles. Homeownership doesn’t happen overnight, but anyone can make it happen with ample planning and preparation.

Challenge #1: Debt-to-income ratio (DTI)

According to the NAR report, 52% of younger millennials don’t qualify for mortgages due to their debt-to-income ratios, which includes student loan debt. It’s one of the main things that delays a home purchase.

Your DTI ratio is simply what you owe compared to how much you make or the amount of recurring debt you have versus your monthly income. Most of the time, lenders focus on this ratio, more than your credit score, or even how much you have set aside for a down payment. They assess whether you can still balance your living expenses while paying off your debt obligations. As a rule of thumb, they want to see a low DTI, with a ratio, ideally, falling below 36%.

Your lender will also calculate both your front-end and back-end DTI to determine if you qualify for a mortgage loan. The front-end DTI is known as the housing ratio, which is the amount of monthly gross income spent on housing expenses. On the other hand, the back-end ratio includes all of your debt obligations, such as student debt, car payments, and credit card bills.

Pro tip: Control and reduce your DTI.

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Before house-hunting, try to reduce your DTI by paying existing debt and/or increasing your income. If you have credit card debt, remember that most lenders will use the minimum payment balance when calculating your ratio. With that said, it’s ideal to pay off your debt every month to reduce the amount of money paid in interest.


Challenge #2: Credit score

While a high percentage of student loan borrowers are denied mortgages because of steep DTI ratios, your credit score plays a role as well. Your ranking affects whether you get a low mortgage interest rate, although only 8% of millennials were denied because of a low credit score.

The average FICO credit score is 700. A credit score of 750 or higher is considered excellent while a score of 649 below is considered poor.

Pro tip: Build up your credit score—the higher, the better!

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If you’re hoping to get a mortgage, paying your debts on time will help boost your credit score. Keep your score healthy by not skipping or missing any of your payments. Check your credit report every year and if you find any errors, take the necessary steps to resolve them.


Challenge #3: Establishing a good record of paying bills on time

The most important factor in your credit score is your payment history. It must show that you are not only financially capable but also responsible when making payments. Lenders prefer to lend their money to a borrower who has a solid financial reputation.

Pro tip: Avoid skipping any payments and always pay on time.

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To avoid being late, you can set up auto-pay for all your accounts to ensure you’ll make full and on-time payments. If you have a delinquent payment, pay the balance so you don’t damage your credit score and can start to build a good payment history.


Challenge #4: Credit utilization

Aside from your credit score and DTI, lenders will also evaluate your credit card utilization. It is your monthly credit card spending as a percentage of your credit limit, which should be less than 30%.

Pro tip: Keep it low.

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The ideal way to manage your credit utilization is by using as little of your available credit as possible. For example, if you have a $3,000 credit limit and you spent $1,000 in one month, your credit utilization is 30%. It’s even better if you can keep your utilization at less than 10%. You can set up automatic balance alerts to monitor your credit utilization and pay off your balance multiple times a month to reduce it.


Challenge #5: Saving for a down payment

Whether you’re a student loan borrower or not, it’s understandable that the biggest challenge of purchasing a home is saving for a down payment. At least 85% of non-homeowners say their inability to save for a down payment has delayed their ability to buy a home.

Pro tip: Look for down payment assistance and other ways of saving.

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Look out for government assistance programs available to first-time buyers and student loan borrowers. Federal programs, such as the FHA or USDA loans, will allow you to purchase a home with less than 3.5% down. Likewise, there are existing local programs where you might qualify. Don’t be afraid to check out their eligibility requirements or talk to a mortgage lender to help you understand the process.

Another thing you can do is to look for creative ways to save for a down payment. Even if that means delaying your dream of homeownership for a few years, try saving all “found” money that comes down your way. To achieve this, you can save any money you got from bonuses, overtime pay, and cash gifts from relatives and friends or even allocate income tax refunds to be used specifically for your down payment and closing costs when it comes time for you to buy a home.


Bottom Line

To get a lower monthly payment so you can manage your finances better, see if you can refinance or consolidate your student loans. However, it still depends on your circumstances and if you’re confident in handling your monthly payments. Before you start house-hunting, just remember to set a realistic budget and focus on your financial goals to finally achieve the American Dream.

Don’t Make These 7 Mistakes When You Buy Your First Home

It’s easy to fall in love with your dream house (and the idea of finally buying one)! However, your judgment may be easily clouded when you are enamored with an amazing home and feeling the pressure to pull the trigger. Stakes are high when you’re purchasing a house, so here’s a list of major mistakes you should avoid at all costs:

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1. Underestimating (or forgetting) the added costs.


Buying a house entails many additional expenses on top of the price of the house itself. There are loan application costs, mortgage insurance, and closing costs, just to name a few. You may also need to spend on renovations once you move in. One tip: a quarter (or better, half) of the price of the house should be stashed in your account in order to cover for these expenses.


2. Not getting a buyer’s agent.


Securing your own buyer’s agent allows for a critical eye over deals and transactions. Negotiating solely with a seller’s agent who’s legally obligated to work for their client’s interests can be a mistake.


3. Falling prey to “too good to be true” home values.


These advertised low rates are all over the internet, and online home valuation sites can set unrealistic payment expectations. It’s good to have an experienced real estate agent explain the rationale on market prices by conducting a comparative market analysis based on internal industry data.


4. Not doing research on the neighborhood.


You might have found the house of your dreams, but, it doesn’t exist in a bubble. It’s best to know about the status of the location of the house in terms of the ease of transport around the area, crime levels, the presence of earthquake fault lines, proximity to schools, hospitals, and police stations, etc. After all, location is key.


5. Going house hunting without a pre-approved mortgage.


Getting pre-approved for a mortgage plan requires a professional evaluation of your credit report and credit score. This can help you evaluate your finances—how much can you borrow and how much can you realistically afford to pay.


6. Skipping a home inspection.


A house may look like it’s in top shape, but there may be hidden defects lurking out of sight. A certified home inspector with a trained eye can easily spot problems which you may have missed, like termite infestations and gas leaks. If significant issues are detected, you may be able to negotiate with the buyer to lower the price.


7. Failing to see it as a long-term investment.


It may be appealing to you to own a great house, but there are a lot of things to consider. Ask yourself: can I live and work around this location for more than 3 years? Can my family live a peaceful and thriving life in this neighborhood? If the answer is no, you may want to reconsider, as homes need time to appreciate in value and you may be throwing away your hard-earned money if you need to move too quickly after purchase.

Notice Of Intent to Foreclose: Know Your Options

As a homeowner, there’s an f-word that is avoided as much as possible. Even though we don’t want to say it we have to talk about it. Why? Because like most problems, that’s how it’s handled. So say it with us, foreclosure.

Most of the time, when people find out that their dream house is facing foreclosure, their world stops. No one buys a house and puts in all the effort into making it a home only to one day realize that it will be taken away from them. Getting a Notice of Foreclosure is something that people dread, and even ignore in the hopes that the problem will go away.

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Ignoring Your Foreclosure Notice


What happens if you don’t respond to the notice of intent for foreclosure?

When you receive a notice of foreclosure, the best thing to do is take charge. Getting a notice of foreclosure doesn’t mean that the world has stopped because there are many options for you!

Even when you get the notice, you can still avoid having foreclosure and bankruptcy on your record. So, to answer the question, ignoring your foreclosure notice will only limit your options and ultimately lead to losing your home.

If you’re reading this, and you still haven’t received a notice of foreclosure—in which case you’re at the stage of dreading it—what can you do?


Foreclosure Avoidance Plan


Banks offer Foreclosure Avoidance Plans for those who want to be extra-sure about their home loans.

Always consult with your lender about this first. It will seem like a fair deal, but don’t forget that this is actually an additional loan. So now, you’re paying for your mortgage and an additional foreclosure plan.

If this is something you can handle, then by all means, go for it!  If you’d rather work on your primary loan before adding another one into the equation, it’s also okay not to enter into a foreclosure plan.


Filing for Bankruptcy


What if you just totally forget the foreclosure of your house, and file for bankruptcy instead?

The good news is, yes, you can do that. Your foreclosure will be curbed if you do this. What happens when you file for bankruptcy is that your lender will not be able to collect the debt from you. The bad news is, courts cannot discharge secured debts that include mortgage payments.

What happens here is that since you are filing for bankruptcy, you don’t have to pay for your mortgages yet.  However, as soon as your bankruptcy process is complete, your lenders will definitely be back for your debt.

In cases like this, homeowners usually struggle with paying for their mortgages after filing in the courts. The worst part is that, most times, these homeowners end up with not just a bankruptcy but also a foreclosure on their record.


Your Financial Status


Let’s say you don’t go with bankruptcy and are looking at simply foreclosing your home. How does this affect your financial status?

Your foreclosure report will be on your record for seven years.  Not only that, after those seven years, you may also have to write a report to three major credit agencies to have the foreclosure removed from your record.

Although lenders have been more lenient over recent years, those who are approved for new loans, and even credit lines, have to pay higher interest rates. You can’t really blame them, though. They see those who have a record of foreclosure, with or without bankruptcy, as more of a liability than those who have a clean record.


You’re Not Alone

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Yes, getting a Foreclosure Notice is something you might have never thought would happen to you. It has been found that this has actually become more common recently.

A 2013 study found that over 4.1 million foreclosures were completed in the United States during September 2008-December 2012. This is quite a big number and does not even include those who avoided foreclosure through some of the methods mentioned above, those who opted to sell their homes, or those who found ways to work things out with their lenders.

5 Ways To Look For A Great School District When Buying A Home

Proximity to good quality schools is one of the most important factors considered when purchasing a home, especially for young families or young couples who are planning to have children. Homes that are located near top-quality school districts generally have higher property values and huge resale potential. Many home buyers are willing to forgo certain home amenities just to have access to quality schools.

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Here are some things you can do to choose a good school district when searching for a home:

1. Create a checklist of the qualities and values that are important to you and your child’s education.

If you consider a good school district as one of the major factors in your home-buying decision, contemplating what values matter to you most when it comes to your child’s education is also relevant. A school will be your child’s second home, so you need to be clear about your preferences. Do you want a traditional or an alternative style of learning? How important are extracurricular and skill enhancement activities to you and your child’s development? What are your child’s skills, strengths, and weaknesses, and how can these be improved? What sort of contributions are you willing to make to improve your child’s learning? These are just some of the questions you have to ask yourself when deciding what type of school you would like your children to attend.


2. Do your online research.

Most schools and school districts have respective websites where anyone can get extensive information. Spend some time checking the sites of each school you’re considering and read local reviews. Also, check out other resources that provide valuable information, such as, NeighborhoodScout, and the National Center for Education Statistics, among others. Take time reading downloadable school newsletters and calendars to familiarize yourself with local news and events. It is also worth looking at some of the following information:

  • Standardized test scores

  • The offered curriculum

  • The latest rate of students attending higher education

  • Awards and certifications the school has recently received

  • Student-to-teacher ratio

  • The educational qualifications of most teachers

  • Languages offered

  • Any specialized programs for gifted students or students who need extra assistance


3. Consult your local real estate agent.

The next best resource for neighborhood and nearby school knowledge is your local real estate agent. They have a good understanding of the local school districts and can provide you with an objective opinion. Consider their tips and recommendations, as in many cases, data and rankings may not properly guide you to the school that’s truly the right fit for you and your child.


4. Learn from other parents whose children already attend the school system.

You may have done your online research about particular schools and their reputation, but hearing about the personal experience of local parents whose children already attend the school system is more valuable. Speak to them or read reviews so you can get a general understanding of what a specific school is really like to attend. This way, you may also learn whether their children attend any amazing after-school programs or individualized education programs that could also be great for your children.


5. Get the real picture by actually visiting the school.

Once you’ve narrowed down your choices, actually visit the school so you can see how it operates and how interactions are taking place. Is the school generally clean and orderly? Are you confident about campus security? Learn more about the school’s culture and values by observing its people and surroundings. How well does the front office interact with the kids? How are the students’ works and achievements being displayed? Is the school secretary good-natured and professional? And don’t forget to ask enough questions to make sure you’re comfortable about the school you choose. Just make sure to call first and ask permission before visiting as some schools may have certain visitor restrictions.

7 Reasons You’ll Love Selling Your Home in the Spring

Ah, spring! When the trees blossom, the lovely tulips and daffodils bloom, and everyone’s mood brightens. But aside from our daily dose of sunshine during spring, we also see the high season for real estate. As the temperature rises, the housing market starts to heat up.  Even in areas where the weather is great all year long, spring remains the most active time for house buyers and sellers alike.

While there are plenty of reasons to consider selling in the spring, here’s a few examples as to why it’s so worthwhile:


1. You can show a better-looking home.

Unlike selling in the colder months, which can be stressful because of the snow and harsh weather, you can go to greater lengths in spring to prepare your home for sale. If you list your home in the spring, you can take advantage of the warmer weather and elevate your home’s curb appeal.

Show your home at its best to draw the attention of potential buyers. Maximize your curb appeal by cleaning the walkways, strategically placing colorful plants and flower boxes, maintaining the lawn, and making it as green and lush as possible. Allowing the natural sunshine to stream through the windows of your home helps showcase it in its best light. Additionally, don’t forget to address parts of your home that are in need of repair or upkeep, especially if you haven’t done annual maintenance yet.


2. The longer days and better weather make it easier for buyers to go looking for homes.

When the clocks sprang forward in March, the days became longer. More daylight hours means more potential buyers can view your home. Likewise, the good weather gives people a boost to go outside and search for the picture-perfect home just like yours. Unlike home shopping in winter, where buyers need to drive through crappy weather in their soggy boots just to visit an open house, springtime brings in a fresh pool of potential buyers who’ve done their homework and want to use the longer days wisely. This improves your odds of landing a desirable offer for your home.


3. It’s a perfect time for families who want to move before the new school year.

Many home buyers with families are looking to move before the summer and the start of a new school year. This way, their children will still have a couple of months to get settled in their new neighborhood. If you put your home on the market early enough in the spring, your pool of buyers won’t have the same sense of urgency seen in summer or winter sales. Parents who buy in the spring can move during the summer, avoiding juggling their time between school pickup and packing up their stuff to get ready for their new home.


4. The buyer’s demand is higher and could spark bidding wars.

It’s no surprise that the months of March, April, and May are the best months for sellers to list their homes as many people are ready to enter the housing market to purchase. More buyers means more potential offers. Sellers can even expect to receive multiple offers, often sparking bidding wars. Buyers will always be competing for homes, especially if the home is in a good location and is listed at a reasonable price. If a bidding war occurs, the cost of the house is most likely to increase, putting the seller in a stronger position to receive more money for the home.

In those months, there’s also a greater chance that you’ll encounter an all-cash offer. This could speed up the entire home selling process. A cash buyer won’t have to rely on mortgage financing or on the sale of their current home, the so-called contingencies, in order to close the deal.


5. Higher home valuation

Since prices tend to be higher and more homes are being sold this season, the data for comparable homes that were recently sold in your neighborhood can also work in your favor. Your agent will have access to more of these comps when setting a price for your home. Likewise, when your home’s value is assessed by an appraiser, he or she will look at these comps, so your house is more likely to pass the appraisal if you’re selling it at fair market value.


6. You can be a bit more selective about who you sell your home to.

With more people getting into the market, you can afford to choose who you sell your home to. You don’t have to sell your house to the first buyer that gives you an offer, and you can stay firm on your price. The increase in demand affords you the opportunity to receive your asking price and close on the offer with which you are most comfortable. You can also decide whether to sell to an individual owner, joint owners, or even corporate buyers.


7. It’s also easier for you to move.

Even though your primary goal is to sell your home, chances are you are also planning to buy and move to a new home yourself. Since entering a real estate transaction can be stressful (not to mention chaotic), it’s another good reason why spring is the best time for you to sell. The weather is more convenient, you can take advantage of the longer days to accommodate home showings and also do your own house-hunting. There’s a greater chance you can sell your home quickly and for a higher price due to the higher demand in the spring.

How To Find The Best Agent For A Short Sale

A short sale transaction is different from the usual home buying process. It involves more waiting time, and more leg work for your agent. Due to the rise of short sale properties on the market, training companies see it as an opportunity to train agents specifically in this area, giving them certification upon completion. Although it’s a plus to have your agent be trained in short sales, it’s better that they have actual experience doing the work. Here are some pointers on short sales, and the qualities you should seek when hiring an agent for this transaction.

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What is a short sale?

If you’ve come across properties that are priced below the usual market value, those properties are most likely a short sale. A short sale is when a property is sold for less than its unsettled mortgage. The value of the properties put up for a short sale has usually dropped by 20% or more.

How does a short sale work?


If a homeowner is in financial strife and there is not enough equity in the home to pay off the mortgage after paying for the costs of sale, they may consider a short sale. A short sale allows homeowners to avoid incurring a bad record of foreclosure on their credit rating. To do so, they must present documents that support their claim of inability to pay off their remaining mortgage balance to their lender. These documents are subject to the approval of the lender before the house can officially be put up for sale.

A prospective buyer will have to make an offer to the seller, and also to the lender, and wait for their short sale approval letter.


As a home buyer, what are the advantages and disadvantages of buying a short sale?


  • It’s cheaper than the usual house prices in the market - The last thing that the bank/lender and the homeowner want is for the house to remain for too long on the market, so they price it low to attract buyers.

  • Less competition with fellow buyers – Most buyers are not prepared to wait, and since the process of buying a short sale can take time, this trims down the number of prospective buyers that can make an offer on the property.



  • The process is long – Processing the escrow is a long haul, and the approval of your offer is passed on from the seller to the lender.

  • You may need to pay costs that are not included in the selling price – Included in these costs are the closing costs, which the lender will not agree to split. There may be additional costs as well.

  • You buy the house as is – Contrary to the norm of buying a property and asking for a decrease in price based on necessary repairs, price reductions for a short sale will usually be declined.. You can counteract this by including contingencies on home damage and repair on your purchase contract.

  • You may need to pay part of the agent’s commission – It’s the lender who calls the shots on commissions for the agents in a short sale transaction. They typically pay more to the seller’s agent. Buyer’s agents know this is the case, and may request a higher commission be included in the buyer’s brokerage agreement.


What agent qualities should I look for when deciding to buy a short sale home?

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  • They’ve handled short sales before - And to be exact, an agent who’s not only handled but closed a short sale. If they’ve closed a handful, that would be even more ideal because that means they know the necessary (and tedious!) legwork short sale transactions require. They could also acquaint you with lawyers to aid you in the negotiation process.

  • Ability to explain the whole process of a short sale to you in a comprehensible manner – Have them explain to you all the legwork and necessary measures involved in a short sale transaction. That way, you are able to prepare what needs to be done, and ascertain whether they have enough knowledge to handle the transaction.

  • They have a trained eye for spotting red flags – An agent with a good amount of experience in short sales can easily detect if there are possible legal or tax consequences. Once they spot something fishy in the transaction, they can direct you to consult with your hired attorney on how to address the issue.

  • They’re knowledgeable on lenders and banks –The lengthy part of the short sale process is really at the bank, and the agent will need to call for regular updates. An agent who has closed a lot of short sales will know how the lenders/banks fare in the process. This can shorten the process significantly, as there would be no guessing game on your side of the equation. Your agent would already know how to strategize in order to expedite the process and make it as smooth as possible.

Forget A Cash Offer: Here Are 5 Creative Ways To Help You Win A Bidding War

Ugh, bidding wars. They can be nasty, nerve-wracking, and even heart-breaking. Nowadays, most real estate markets present buyers with huge challenges, due to high demand coupled with low housing inventory. Oftentimes, bidding wars become the rule, especially in a seller’s market.

Buyers who run into competing offers need to up their ante if they want to win the home they love. If you don’t have enough cash to go above the asking price or give an all-cash offer, remember that hope is not lost. There are many ways to get creative when giving your offer. You just have to analyze which strategies you can apply to find the right approach, in order to get the upper hand.

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Here are five ways you can compete in a bidding war and land your dream home without giving an all-cash offer:

1. Craft a thoughtful offer letter.

One simple but surefire way to pull on the heartstrings of the seller is to write a personal offer letter. Remember that sellers are attached to their homes—which are often filled with memories of their children and family growing up and countless holiday celebrations. By writing a thoughtful offer letter, you can create an emotional connection to the owners.

Get ahead of the other buyers by putting a little heart and soul into it. Be genuine in expressing why you want the house and how the community is an ideal place for your family. One trick is to include photos of your family and pets. It can help the seller visualize the people they’ll be passing their precious nest to. However, be extra careful about the things you say in your letter because there are some things to avoid. For example, it’s a terrible idea to include your plans to tear down part of the home and renovate it to your liking. You can consult your realtor and get help from a trusted friend or relative if you need help crafting your message.

2. Provide a sweet gesture.

Want a good way to sweeten the deal and get the home you want? Make a nice gesture that the seller would surely love. No, it isn’t cheating. Rather, it’s acknowledging the fact that selling a home is just as stressful as buying one, so you want to help the seller get through it.

During home showings, take a hint from the homeowner’s decor and displays to get an idea of what they love. Then use it to your advantage. If they’re an avid sports fan, then tickets to a game they like may help. Or, if you know they love sweets or baked goods, and you are an amazing baker yourself, why not whip up a batch of cookies or pies for them? Either way, these gestures can help you establish rapport with the sellers, which in turn, can make a big difference in whether they will accept your offer to purchase the home.

3. Waive the mortgage contingency.

An alternative to giving an all-cash offer is waiving the mortgage contingency. The mortgage or financing contingency means the deal is contingent on your loan being approved by the lender. Waiving it is a good strategy if you’re confident enough and know that securing a mortgage won’t be a problem. It will assure the seller that the deal won’t fall apart and you’ll be approved for a loan.  While it cannot completely outweigh an all-cash offer, it can be just as effective. The last thing the seller wants is a potential buyer walking away from the deal with a heartbreaking “Sorry” because they failed to secure a mortgage.

Be confident that you’ll secure a loan by getting a fully-underwritten loan pre-approval from a lender. Also, avoid making big mortgage mistakes like opening a new credit line, increasing your debt, or changing job in the middle of the transaction.

4. Keep the inspection time frame short.

Waiving the home inspection can be a big risk especially when your biggest financial investment is at stake. So assuage the seller of a potential hurdle by keeping the home inspection time frame short— a week, if possible. That way, the seller doesn’t have to wait anxiously for an extended period before the inspection can go through.

Likewise, make sure that the contingency time periods you’ve stated in your initial offer remain the same in the “purchase and sale agreement,” which includes your detailed offer.

5. Determine the seller’s target closing date and give it to them.

The best way to complement the strategies mentioned above is to make your offer solid and submit it in a reasonable time frame. Remember that sellers have a deadline for accepting offers and want to meet their desired closing date. For some, their target close date can be a critical factor in their decision-making process. Conforming to the homeowner’s preferred deadline can help your offer stand out and land your dream home.

Tips On Setting A Home Renovation Budget

When a homeowner starts to consider a home renovation, it’s easy to grow overwhelmed, because it seems like such a monumental task. Perhaps this comes from the notion that all makeovers have to big, bold, and new. Think shows like “Extreme Makeover” and “House Flippers”. Most think the only allowable ending to a renovation is that you walk into your new living room and start sobbing with joy beholding your stunning, beautiful new life.

Does it really have to be that grand, though? You want to do a good job, sure-- but is it really necessary to spend obscene amounts of money?

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Let’s put a realistic budget on your needed and/or wanted home renovation. Whether it’s simply a kitchen revamp, a bathroom remodel, or a complete overhaul of your property, we have the perfect tips to keep you from breaking the bank.


1. Estimate Scientifically.


Even in home renovations, there’s a rule of thumb—don’t spend more on the area you’re renovating than its ultimate potential value.

An area in your home accounts for a certain percentage of your entire property. A kitchen, for example, may be considered 10-15% the house’s market value.

Make sure to compute for this first, and try to calibrate it with your budget.


2. Reality, not Fantasy.


One of the most common mistakes homeowners make while budgeting for a renovation is underestimating the amount of money needed to finish the job. Ideally, you want to renovate your property at the lowest cost possible, but will that budget fit your list of needs and wants?

Make realistic estimates (which often means purposely adding a bit of a buffer on every expense) to avoid under-budgeting.


3. Get Quotes from Contractors.


Talk to contractors. They do this for a living. Even if you don’t intend to actually use one.

Contractors will quote you based on your ideal plan, and how they would make it a reality—from manpower to materials needed. Tell them you’re expected budget and see if they can work with it.


4. Be Specific!


As you gather quotes from contractors, make sure you communicate exactly what you want done. Contractors should know exactly what they’re doing, but if the homeowner doesn’t really know what is to be done on the property, your quote will be vague and likely include many purposeful upsells.


5. Stick to the Plan.

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To stick to the budget! Make it your priority to stick to your financial plan—your realistic, scientifically estimated, and specific dollar amount. Changing plans mid-renovation has ‘eventually, horribly over-budget’ written all over it!

Resist any urge to add a little side project along the way. If there’s a little extra money left over, then do that desired side-project after the initially planned renovation is completed.


6. Start Planning Early On.


As mentioned, any mid-work alteration in the plan inevitably means an instant budget change. Don’t leave anything until the last-minute! If you can, plan even the smallest detail with your contractor early in the process.

You can also start lurking through the aisles of hardware stores paying particular mind to the prices of items relevant to your renovation. If you’re renovating your bathroom, for example, you might want to check out new sinks. Mark down some prices. Get a sense of cost. Make a spreadsheet and keep track of everything you find.


7. Plan for the Unexpected.


Account for hidden costs! Make sure you have some wiggle room.  If a maintenance issue is uncovered, construction takes a turn because of the weather, or if your vision changes midway, you will avoid undue stress by budgeting flexibly.

Allot a buffer of around 15-20% on top of your budget for emergency circumstances.


8. Consider Home Remodeling Options.


You may be able to get a loan to finally make that dream renovation happen!

There are a few options you can consider—refinancing, cash-out refinance, HELOC (home equity line of credit), and a home equity loan. Make sure to study all your options before you finally take the plunge.

Just be sure to keep your long-term financial health in mind. You don’t want to sacrifice your future at the expense of the present.

8 Home Buyer Practices That Your Agent Wants you to Change

In the process of finding a new home, your real estate agent should become your new best friend. For a few weeks or longer, you will probably talk to them more than anyone else you know!

So how do you make sure you’re doing your part to build a good relationship with your agent?

We’ve listed eight things that you should avoid doing if you want to keep your agent happy throughout the home buying process. Remember that your agent has your best interest in mind, so modifying these behaviors is ultimately about making your home buying journey a success!


What to avoid:

1. Not Doing Your Own Research

So you finally have a budget and want to buy a house. Great! Now what? You call a real estate agent. Should that be the end of your work? Definitely not!

Yes, agents know all about houses, but don’t depend on your agent to guess on the specifics of what you’re looking for. Do you want a bungalow, or maybe a duplex? What areas are you interested in? Are you particular about having a nice view? These are things you should know for yourself--and don’t forget to inform your agent!

Make sure you know what you want before calling an agent. That said, if you need help determining what you’re looking for, ask your realtor what factors you should be considering and they will be happy to guide you. That’s where their expertise can really help!

2. Calling the Listing Agent On Your Own

This is what you have a realtor for, so why would you do more work than you have to? That is their job: to do the calling for you.

Most importantly, your agent knows how to position your inquiry and negotiate on your behalf. Keeping some distance between you and the listing agent is essential to a successful transaction.  

3. Depending On Listing Syndication Websites More Than Your Agent

The Internet is a wonderful place, with lots of information available at your fingertips. True as this is, a computer will not be as reliable as a trusted agent. There is no harm in poking around various home search sites, but when you want more information on a property it’s best to call your agent. Licensed agents have information available to them that the public can’t access. Who wouldn’t want the inside scoop?

4. Waiting Too Long

When you find the perfect house, make your offer. There is nothing worse than dragging your feet and missing out on the home of your dreams. Yes, this is a big decision. But if you’ve done your research ahead of time and know what you want in a home, when you find that house, it’s time to pull the trigger.  Being decisive will help you get what you want.

5. Lowballing

“This offer may be ridiculous, but could you check if they’d take it?” Buying real estate should involve a negotiation, within reason. You want to make an offer that will start a conversation, not one that will result in a definitive “no”, or worse, no response at all. So if you really like the home, why would you risk making an offer that will go ignored? If you have built a strong relationship with your agent, you should be comfortable asking them for their feedback on your offer, and listen to their advice.

6. Asking your Agent to Show Properties Without Being Pre-Approved

Your agent knows that this is the most important first-step in the home buying process. Yes it’s tempting to put this off until you’ve found your dream home, but waiting that long can lead to missed opportunities. If you’re scrambling to get pre-approval when you’re ready to make an offer, you may miss out on the house. Worse, you could fall in love with a home only to find out later that you don’t qualify to buy it. Save yourself the heartache of losing out on the home of your dreams and make sure you get pre-approved before you start looking!

7. Negotiating on Visible Problems After the Inspection

Problems that you notice about the home when you first view it--peeling paint, cracked tiles--should be factored into your initial offer on the home. The point of the inspection is to call your attention to problems that aren’t visible to the average person. When you come back to the seller to negotiate after the inspection, limiting your requests to those items only discovered through the inspection will help keep your deal on track. Asking for a credit on peeling paint at that point may cause unnecessary tension between you and the seller or worse, cause the deal to fall apart.

8. Looking at Homes Outside of Your Price Point

Insisting on looking at homes outside your price point is really just a gateway to disappointment. Most of the time, when people look at something they cannot afford, they then think they have found the perfect house. But if it’s outside your budget it’s outside your budget, and there is not much you can do about that.

It is best to simply not look at homes that you cannot afford, or risk more heartache and a more difficult home buying experience overall.  

Before You Buy A Fixer-Upper, Answer These Questions First!

Just like buying a move-in ready home, a fixer-upper has its fair share of advantages and disadvantages. Buying a fixer-upper can be a great way to own a home you really love once you put some work into it, but it can also quickly swallow up your savings if you aren’t prepared. Just remember to do a reality check before plunging into this bargain.

7 Questions To Answer Before Buying A Fixer-Upper.png

To figure out if you can and are ready to own a fixer-upper, here are seven questions to help determine whether the fixer-upper you’re eyeing is right for you.

1. Is the home’s location worth it?


Before you get infatuated with a fixer-upper house and all its potential, first learn about the neighborhood. Experts recommend buying “the worst house on the best block.” Why? Because there’s no denying that homes located in a sought-after neighborhood will positively influence the price of the “ugly duckling” that you are interested in. Well, once it has been renovated, anyway.

Most buyers choose fixer-upper homes because they loved the area first and saw the potential of a thriving neighborhood. Unlike other home buyers, they can see past the external imperfections of the house, such as peeling paint or an unkempt yard, and realize that it is in an area with sustainable growth. So to choose wisely, do your research and love the neighborhood first. Is it close to public transit for easy commutes? Are there any parks and local attractions nearby? Is it in a good school district? If you answer “yes” to one or more of these questions, it might be worth it to get your hands dirty for that bargain.


2. What kinds of problems need to be fixed?


Problems in houses can be divided into two categories: structural and cosmetic. Real estate agents warn against buying a house with structural damage, especially if there are major flaws in the foundation, septic/sewage system, roofing, siding, or other issues that affect the way a house works. You should think twice if the house has termite damage, water damage, needs serious upgrades to the electrical systems, or if there is a mold manifestation.

If you find problems like these after a home inspection, experts say it’s probably best to walk away. These flaws can actually make the house dangerous to live in. They are very expensive to fix and they have to be taken care of by a licensed contractor. Likewise, environmental problems such as termite damage or radon can be mitigated, but treatments may not always be successful.

On the contrary, they say the perfect fixer-uppers are the ones that only need cosmetic upgrades. Many home buyers would scoff at these houses and simply walk away. They don’t know that problems like cracked tiles, peeling paint, smelly odors, and unkempt lawns are only skin-deep and just make the house aesthetically and architecturally unappealing.

Cosmetic changes are generally less costly and can even add value to the home, especially for projects like kitchen and bathroom renovation, wallpaper removal, floor refinishing, and new lighting installation. Experts refer to fixer-uppers like these as “ugly homes”—they only need some freshening up before they’re transformed into a home that anyone would want. The best advantage to purchasing this type of fixer-upper: you can choose your preferred colors, furnishings, and fixtures to make the home perfectly suited to your own taste.


3. Does it have a desirable configuration and layout?


After identifying how big the problems are, determine whether the home’s layout and interior specifications are desirable—both to you and future buyers. If the house has a bad layout, just as with structural damage, it can be expensive or impractical to demolish walls and build new ones.

If it’s located in a neighborhood where most of the homes only have two bedrooms, having an extra bedroom can give your home a huge advantage. A kitchen with more than one entrance is more likable, while the concept of an open floor plan is gaining popularity, especially among many millennial buyers. Those features can help make the home appealing to a large pool of potential buyers and thus can be more profitable when it’s time for you to sell.


4. Can your budget handle the total costs?


There are three major things you need to include in your budget before doing any repairs: renovation costs (also include labor costs), supplies, and permits. Even before hiring a home inspector or a licensed structural engineer to evaluate the home, create a reference sheet or estimates for the costs of major repairs such as a new roof, HVAC, windows, or foundation. This way, you’ll be able to tell whether fixing the home will really fall within your budget.

For cosmetic upgrades and repairs you are planning to DIY, determine the materials you’ll need and how much they cost. You can get a rough estimate by checking home improvements stores and websites, such as Home Depot or Lowe’s.

You also need to factor in the cost of securing permits from your town or local municipality. Permits come with corresponding fees and can be pricey depending on the town. On the other hand, moving forward with your home renovations without securing the proper permits can have many negative consequences. Check first with local officials and see which of the repair jobs require a permit, and how much they cost.


5. Can you deal with the disruption?


Do you have the time? Or, are you willing to devote a lot of time to this project? Compared to buying a move-in ready home, you have to commit a huge amount of your time to do all the work to make a fixer-upper your ideal home. For instance, the required licenses and permits may sometimes take a lot longer than expected. You also have to prepare for every aspect of the project to take longer than initially anticipated and build in as much extra time as possible in case things get delayed. Don’t forget to assess your patience and emotional energy as well. Each repair project may come with unexpected issues and delays that will really test your patience and endurance.


6. Aside from hiring professionals and/or contractors, can you also DIY?


Before thinking of buying a fixer-upper, you need to consider your skills and willingness to tackle such a home. There are projects that you have to leave to the professionals and contractors—say, anything related to electricity, wiring, and plumbing. But there are minor cosmetic upgrades you can also learn and do on your own to help you save substantially on labor costs. If you’re skilled enough as a DIYer, you may put on a fresh coat of paint, change the lighting fixtures, lay the tile, fix the toilet, or tear down wallpaper all by yourself.  

A fixer-upper works best for those who would happily spend their time replacing cabinets and refinishing floors, and would want to get their hands dirty to make their home more habitable and profitable. Experts also call this concept “sweat equity.” By doing some part of the work yourself, you’re improving your home’s value and even adding greater value to your home. Likewise, the more you can do on your own (just as long as it’s still safe enough for an amateur), the less you need to spend on labor cost and instead allocate a part of your budget in buying high-quality materials.


7. Can you tap into any home improvement loans or programs?


Financing a fixer-upper can be extremely difficult. But if you’re really interested in buying and restoring a house, do your research and see if you can qualify for any home improvement loans. Your most popular choices are the FHA 203(k) loan, the Fannie Mae HomeStyle loan, and the Section 504 Home Repair program. Just remember that all loans have their own strict standards and eligibility requirements.

For example, a 203(k) loan is backed by the Federal Housing Administration, which means you can put as little as a 3.5% down. Lenders can also accept lower interest rates than what a typical home renovation loan would require. Moreover, it is also open to borrowers who have a less-than-stellar credit rating and can cover big-ticket issues such as structural damage and plumbing replacement.

Before getting a renovation loan, make sure you’ve explored all your options and understand the pros and cons of each program. Also, keep in mind that you generally need to be pre-approved with these loans before you can make an offer on a house.

The work that it takes to renovate a fixer-upper should not be underestimated. A project like this can eat away at your time, effort, money, patience, and even your sanity.  And once you close on a fixer-upper, there is no turning back. The only way forward is to put in the necessary effort to transform it. For the right buyer, though, turning an “ugly duckling” into a beautiful swan—a beautiful home—is a challenge well worth the effort and can mean living in your dream home...making a significant profit when you sell.