Category: Real Estate News & Tips

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What Are Discount Points and Lender Credits?

Getting a Mortgage

A home purchase is one of the most significant financial decisions most people will ever make. Unless you’re paying for a home entirely in cash, which isn’t typical, it’s sensible to meet with your lender to discuss ways to reduce costs. Two methods of reducing how much you pay for your home are lender credit and discount points. But what is lender credit, and what are discount points?

Lender credits and discount points can have benefits, but it’s important to understand the difference between the two. To help you make an informed decision and prepare for a healthy financial future, here’s an explanation of how points and lender credits work.

What Is Lender Credit and What Are Discount Points?

As a starting point, imagine two homebuyer scenarios.

Scenario 1: A young couple decides to purchase a home where they plan to raise their growing family. Their parents are helping with the down payment, and they have sufficient funds for closing. Both individuals work full-time and have promising careers. They’re comfortable, but they’re aware of the expense of raising a family over time, and they’re concerned about their financial future.

Scenario 2: A single parent with two children in college decides to purchase a small home near the city where her children plan to live and work. Her available cash is currently limited, but with her children soon on their own, her expenses will go down. In addition, she anticipates rental income from her current home, although she may decide to sell later.

In one scenario, discount points might be a good choice, while in the other, lender credit might be the better option. Which homebuyer should choose points, and which should choose lender credit? Or neither?

Keep in mind that you’re not required to accept discount points or lender credits when applying for a mortgage but choosing to do so could help you in the short term or over time.

  • Discount points lower the interest rate of your loan by paying a certain amount upfront.
  • Lender credits allow you to lower your upfront costs by getting closing cost credits in exchange for a higher interest rate on your loan.

Among other considerations, your future plans should weigh heavily in your decision to take advantage of discount points or lender credit. Do you anticipate living in your home for the life of the loan or most of it? Is selling possible or likely in a few years? Other possibilities include refinancing later or paying the mortgage off early, both of which can make discount points less impactful.

Choosing between credits and points isn’t complicated when you understand the differences and evaluate your plans or potential lifestyle changes in the future. There is no one-size-fits-all answer, but with careful evaluation, you’ll have the information you need to make a decision.

Understanding Lender Language

In the process of searching for your new home, no doubt you’ve come across unfamiliar real estate terms. Words like pre-qual, contingencies, seller concessions, backup offers, and many others require close attention. In the same way, people who work at banks, mortgage loan companies, and other lending institutions have their own terminology. And those terms can be used in various ways.

With that in mind, mortgage lenders may seem to use points, discounts, and credit inconsistently. While specific programs are referred to with these terms, a lender may also use them in other ways.

For example, a mortgage lender might use the term “points” when talking about both discount points and lender credits. That’s because a “point” can refer to a specific amount of money: one percent of the loan amount.

Likewise, lenders also use terms like credit to talk about some form of compensation or bonus they may offer you, but that credit might not be related specifically to lender credits. For instance, if there is an error during the loan process, they may offer a “credit” to help make up for it. A mortgage lender might also offer a credit or incentive if someone referred you or the lending institution has a promotional offer, but these generally don’t impact your interest rate in the long term.

If a mortgage lender mentions terms like credits or points, don’t hesitate to ask for clarification. You’ll want to be sure of the facts and be able to make a sound decision that sets you up for success in the long term.

What Are Discount Points and How Do They Work?

Discount points allow you to pay more upfront to receive a lower interest rate. That lower interest rate could decrease your monthly mortgage payment or reduce how many payments you need to make before your home is paid off. If you don’t plan on refinancing or paying your mortgage off early, buying points could be a good option.

If you’re interested in buying points, remember that one point is equal to one percent of the loan amount. It’s not one percent of the interest rate, although it’s sometimes confused.

Let’s return to the young couple buying their first home, where they plan to raise their family.

If they take out a $100,000 loan, one point would represent 1% of that amount, or $1,000. They can also buy partial points, so a half-point would be $500, and one-and-a-quarter points would be $1,250.

If they choose to purchase points, the dollar amount will be due at closing, which will raise their total closing costs. However, the points purchased will lower the interest rate on their loan, which means they will have lower monthly payments. How much the interest rate is lowered depends on the lender.

Before deciding, they will need to ask their lender for specifics on how buying points will impact their interest rate and monthly payments. The more points they purchase, the lower their rate will be.

Your loan amount might not be as simple to work with as an even $100,000. However, your lender will make calculations appropriate to your situation and provide a Loan Estimate within three business days of you completing a loan application.  The Loan Estimate lists details such as the type of loan, the loan amount, discount points, insurance, projected monthly mortgage payments, and estimated closing costs. It’s a good idea to carefully review the Loan Estimate to ensure it fits your expectations.

Keep in mind that a Loan Estimate isn’t an approval or denial of your application, and it does not mean you can’t change the details. It’s intended only as information about the loan package you discussed with your real estate agent. You can also use it to compare other offers side by side.

If approved, and you accept, the specific information relating to discount points you may have purchased will be listed in a Closing Disclosure, which your lender will provide at least three business days before closing. This document provides the finalized details and terms of the loan including lender fees, your monthly payments, and all expenses due at closing.

The exact amount you’ll save per point depends on the type of loan, the current market, your lender, and other factors.

What Is Lender Credit and How Does It Work?

Although not completely accurate, it’s helpful to think of a lender credit as the opposite of points. When you buy discount points, your closing costs go up. However, if you accept lender credit, your closing costs go down. On the other hand, by agreeing to pay points at closing you can get a lower interest rate over the life of the loan, which means your monthly payments will be lower over the term of the loan.

The single parent mentioned earlier, who plans to buy a small house in the city where her two adult children live, might want to understand what lender is? This may be a good option for her, as she currently has limited cash, but no concerns about future income or expenses. In addition, she has uncertain plans and may decide to move to a warmer climate in five or ten years.

By selling the home she plans to purchase, she will pay off the mortgage early. That makes the higher interest rate and higher monthly payment that accompanies a lender credit less impactful over time.

Lender credits are calculated in much the same way as points, and your lender might even call them “negative points.”

Lender credits are listed in your Loan Estimate and Closing Disclosure, just as discount points are. The more credits you choose to take, the higher your interest rate will be. However, other factors such as current interest rates and type of loan can affect the actual number.

Should I Use Discount Points or Credits?

Points may seem the most appealing option for many homebuyers, as even a small increase in the interest rate can add up over a 15- or 30-year mortgage. However, the situation isn’t always so straightforward.

The decision process needs to consider how much the purchase of points lowers your interest rate and monthly payments. What’s more, if you intend to refinance later or pay off the mortgage early, then buying points may not be a wise decision.

On the other hand, opting for lender credit in exchange for higher interest rates may seem unappealing at first. However, the money you save immediately may benefit you more than higher monthly payments will stress your budget in the future.

If you add all expenses incurred during your homebuying experience, including home inspections, appraisal fees, attorney fees, pro-rated property taxes, and lender fees, among others, home buyers need a lot of cash readily available in addition to a down payment. Saving on closing costs can help pay for moving expenses, home improvement, furnishings, and other necessities.

Understanding the differences between discount points and lender credits will help you make the right decision. Evaluating the pros and cons of each according to your own situation is essential.

Pros and Cons of Discount Points

Discount points allow you to reduce your interest rate by paying a certain amount upfront. The cost of a point is equal to one percent of the loan balance, so a point is equal to $1,000 with a $100,000 loan, $2,000 with a $200,000 loan, and so on.

Pros

  • Paying for several points upfront could mean saving much more over the life of the loan.
  • Points may be worthwhile when they help you lock in a lower interest rate if mortgage rates are expected to climb.
  • A lower interest rate can mean a lower monthly payment.

Cons

  • The upfront cost may not prove worthwhile
  • The cost might not be feasible, especially considering other costs associated with homebuying and moving.
  • If you plan to refinance or pay off your mortgage early, you likely won’t see the savings you expected.

Pros and Cons of Lender Credits

Lender credits allow you to reduce upfront costs by accepting a higher interest rate

Pros

  • Lender credit saves money upfront, which is helpful if your available cash is low, or you have other immediate expenses.
  • Choosing to invest the savings into your home could help you build equity or make your home more livable from the start.
  • If you plan to sell or refinance your mortgage in the coming years, the increased interest rate may not have a substantial effect on you and may justify the initial savings.

Cons

  • A higher interest rate could add up to tens of thousands of dollars over the life of your loan, especially if you’ve chosen a 30-year term.
  • If you don’t refinance or pay off your mortgage early, you’re almost guaranteed to pay more interest than the upfront savings you gained.

Comparing Your Options

Understanding what lender credit is and how discount credits work, it’s important to evaluate your options, given your specific loan type, term, and rate. If you’re considering points or credits, you should ask your lender to help you visualize a few scenarios.

  • Request a side-by-side comparison of your loan as-is, with a chart showing the interest rate and total paid minus one point and another that’s plus one credit.
  • Ask for the same comparison, this time with the number of points or credits you’re considering (make sure they’re equal).
  • Evaluate the same comparison again, but this time using the length of time you expect to keep the loan, rather than the full loan term.

These comparisons will take some time, but it’s essential that you fully understand your options before moving forward. Remember, you can also choose to take neither points nor credits and accept your loan as-is, which may be the best choice for you.

Reducing Your Interest Rate in Other Ways

When you’re almost ready to finalize your loan, buying points is a chance to lower your interest rate. However, If you’re only considering purchasing a home, and you want to be certain you get the best possible rate, it’s important to consider the following.

  • Your debt-to-income (DTI) ratio is directly representative of the risk the lender is taking when approving you for a mortgage. Paying down debt is the fastest way to improve your credit score and reduce the risk the lender perceives, thereby lowering your interest rate.
  • Your credit score is a major factor in the interest rate you’ll qualify for. You can raise your credit score by requesting negative items you don’t recognize (i.e., late payments) to be removed from your report, paying your credit cards on time, reducing balances, avoiding new inquiries, and avoiding new account openings or closures in the year leading up to your mortgage application.
  • Your chosen loan amount will also impact your interest rate and monthly payment, as well as your “front-end DTI.” This reflects the percentage of your income required for housing costs. Choosing a loan for a lesser amount by choosing a more affordable home or making a larger down payment can reduce the lender’s risk and, therefore, reduce your rate.
  • Your down payment amount generally must be a minimum percent of the home’s sale price, which helps the lender reduce their risk because you’re staking your own cash. It also reduces the loan balance.

Get Informed and Take the Next Steps

With this information in your arsenal, you’ll no longer wonder what lender credit is. Knowledge is power, especially when it comes to saving money on your home purchase. Now you’re equipped to confidently decide which avenue is best for your financial future.

Source: capitalbankmd.com ~ Image: Canva Pro

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Do These 11 Things Before Putting Your Home on the Market

Home Staging

Not sure how to get your house ready to sell? Fortunately, you can take steps before putting your home on the market to increase your chances of receiving a solid offer from a buyer. From cleaning and staging to repainting and depersonalizing, here are 11 things you can do to get a house ready to sell.

  1. Research your local housing market

    First and foremost, do your homework on the value of your home. Start by researching the local housing market through Realtor.com. Take a look at comparable sales in your neighborhood to figure out your appropriate listing price. Pay attention to the various comps’ square footage, features and location, and think about how they compare to your home. For example, your neighbor’s home may have sold for $1 million, but if your home is considerably smaller, you’ll most likely need to list your house for less. Of course, a reputable realtor should be able to assist with finding comps and determining a listing price for your home.

  2. Find a listing agent

    Speaking of realtors, we highly recommend enlisting a professional real estate agent to list your home. You should be able to find a realtor through Realtor.com and word-of-mouth recommendations. When interviewing a listing agent, ask about their experience in your neighborhood, connections to potential buyers and social media expertise. The realtor should be able to give you a thoroughly laid out plan for how they are going to sell your home.

  3. Buy more light bulbs

    Go ahead and stock up on light bulbs. When showing your house to potential buyers, all light fixtures and lamps must be turned on. For this reason, it’s important that all lights in your home have working light bulbs.

  4. Give your house a deep clean

    First impressions mean a lot. So, don’t let foul smells, dirty floors or dusty surfaces make a bad one on a potential buyer. Before listing your home (and throughout the selling process), give your home a deep clean. This means cleaning toilets, wiping surfaces, mopping floors, cleaning rugs and scrubbing bathrooms. Consider calling in the professionals (think: Stanley Steamer and a housekeeper) to ensure that your place is in pristine condition.

  5. Declutter the home

    Decluttering and organizing your space will go a long way in appealing to potential buyers. When a home is clutter-free, buyers can focus on the actual home instead of the excess junk, accessories and overflowing closets.

  6. Call a handyman

    When getting a house ready to sell, you should have your handyman on speed dial. Make sure anything and everything that needs to be fixed (think: locks, hardware, leaky faucets, running toilets, cracks in the walls, broken appliances, squeaky doors, etc.) is fixed before listing a home. Otherwise, buyers may think your home hasn’t been well taken care of, which can be a turnoff for many. Here’s why you should hire a handyman before and after your move.

  7. Paint the walls

    Now’s the time to repaint your home. Start by painting over those bright orange and green walls with neutral colors. Stick to whites, light grays, light beiges and “greige” wall colors. These shades will make your home appear bigger, brighter and more welcoming. Adding a fresh coat of paint to your home will also help cover the wall’s imperfections and convey a blank slate to potential buyers.

  8. Stage your home

    According to multiple studies, staging a home really can help it sell faster and for more money. Fortunately, staging your home’s interior can be easy and affordable. Don’t forget to also spruce up your home’s curb appeal when staging the home. After all, the outside of the home is the first thing potential buyers will see when they arrive for a showing. So, make sure that the grass is cut, the yard is landscaped, and the knick-knacks are gone (think gnomes and children’s toys). If your home looks a bit rundown, you should also consider adding a fresh coat of paint to the exterior walls. Here’s our ultimate guide to home staging.

  9. Hire a professional photographer

    Given that many potential buyers search for homes online, it’s crucial to include high-quality, professional photos in your online listing. Without excellent high-resolution images, potential buyers may (sadly) overlook your home. So, before putting it on the market, go ahead and hire a professional photographer to snap photos of your clean and staged abode. Keep in mind that a realtor should be able to help with finding a photographer, so be sure to ask who they use when interviewing real estate agents for the job.

  10. Rent a storage unit

    When getting a house ready to sell, it’s important to declutter and purge your belongings to clear the house of excess belongings. If you’re willing to rent a temporary storage unit before selling a home, this will give you a safe and secure place to store all of your extra stuff when staging and showing the house.

  11. Depersonalize your home

    When selling a home, you want to strike the perfect balance between depersonalization and the appearance of a warm, welcoming home. This means putting away most framed photos, bulletin boards and personal items (think photo albums, magazines, toys, awards, etc.) throughout the home. Leave a few nice, framed photos around the house to make the home more inviting.

Tips for selling your house quickly and efficiently

Now that your home is ready to hit the market, here are a few tips for getting it sold quickly and efficiently.

  • Invest in good listing photos – First impressions matter, so make sure your home’s listing photos highlight the home’s best features. Invest in a professional photographer who has experience with real estate photography. Your realtor should be able to help you enlist a qualified photographer so that you don’t have to search for one. Remember: You don’t need photos of every single room and closet in the home. Photos showcasing the home’s best features and selling points are a great way to entice buyers to schedule a showing.
  • Plan an open house – If you’re willing, host an open house with your realtor to create buzz around the new listing. Open houses are a great way to attract all sorts of buyers and buyer’s agents. If you end up with multiple bids – or even one great offer – in one day, you might not have to show your home over the course of multiple weeks.
  • Be flexible with showings – Showing a home to buyers is never convenient. But if you want to sell quickly and maximize your selling price, it’s important to remain flexible and accommodating when showing a house to qualified buyers. We recommend keeping your house as clean as possible and having a place where you can quickly dump clutter when needed, such as a car, outdoor shed or portable storage unit.
  • Market your home effectively – In today’s housing market, your realtor must have a good deal of marketing know-how, such as using social media channels, emails, mailers and events to stir up interest in your home. A good realtor should be able to harness different marketing strategies to find potential buyers.
  • Avoid over-improving your home – While it’s important to get your house in top condition when listing it, you shouldn’t tackle costly additions and improvements – especially if you want to sell the home quickly. Renovations can take months to finish. To sell quickly and efficiently, try simple improvements, such as decluttering, repainting, and fixing obvious issues, such as holes in the wall.

Putting your house on the market FAQs

Keep reading to find answers to the most ask questions about putting your house on the market.

What should you do to your house before you sell it?

What you do to your home before you sell it depends on its current condition, any necessary improvements that need to be made, and your chosen listing price. For instance, if you wish to list your home for a high price, you may need to make certain improvements to get your price. On the other hand, if you wish to sell a home as-is and not make improvements, then you may need to compromise on the price. We recommend asking your listing agent for guidance on both price and preparation for listing your home. You can also follow our checklist above to get your house ready to sell.

What should you not do before selling your house?

Most realtors advise not undergoing costly renovations or long, time-consuming changes to your home unless it’s necessary. You also do not want to choose the wrong real estate agent to list your home. Be sure to interview multiple agents and consider their pitches before choosing a realtor for the job. Choosing the right realtor will set your home sale up for success.

Don’t forget to also assess the local housing market to get a sense of your competition and your home’s value. The last thing you want to do is list your home too high or too low. The wrong listing price is probably the biggest mistake you can make when selling a home.

Finally, it’s important to declutter and clean when selling a home. Many sellers overlook the importance of a clutter-free home when showing a house. Don’t let your things (and mess) distract buyers from the house itself.

How long does it take to sell a house?

According to the National Association of Realtors (NAR), it takes an average of 18 days for a home to go under contract from the time of listing. Of course, the amount of time a home sits on the market depends on a number of factors, including location. According to Realtor.com, homes located in the top 10 hottest zip codes of 2021 were under contract within three to nine days from the listing day.

When is the best time to sell a house?

In general, the best time to sell a house is considered the month of May, when homes tend to sell faster and for more money. Of course, the best time for you depends on a number of different factors. Your location, life circumstances and the overall economic climate all affect whether it’s a good time to sell a house. Before you list your home, make sure you’re really ready to sell it and go through the process of showing it to strangers.

How do I get a messy house ready to sell?

Cleaning a home before showing it to potential buyers is a no-brainer. First impressions matter and a dirty home may be a deal-breaker for many. To get your house ready to sell, we recommend first decluttering and purging items you don’t need. Whether you’re throwing it away, donating it or storing it, get as much clutter out of your house as possible. Once you’ve decluttered, you should be able to organize and straighten up your house more easily. You may also want to give your home a deep clean (or, at the very least, a light clean) to put your best foot forward.

How do I make my house look good enough to sell?

Besides decluttering, organizing and cleaning, it’s important that you stage your home with furniture and accessories. Not only does staging a home make it look more appealing, but it also helps buyers picture themselves living inside your home. The “2021 Profile of Home Staging” by the National Association of Realtors states that 82 percent of buyers’ agents claimed that staging a home helped buyers visualize the property as their own. By staging a home, you’re increasing the likelihood that it will sell faster and for more money.

How do I decide on my price?

Pricing your home right is the most important thing you can do when selling a home. If you overprice the home, it could sit on the market for a long time. If you underprice the home, you’ll leave money on the table. A seasoned real estate agent should be able to give you expert price guidance. If you want to price and sell the home yourself, take a look at comparable sales (comps) in your town and neighborhood. When comparing your home to other listings, pay attention to the square footage, location, features and amenities that it offers. You’ll need to look at a wide range of comps to determine a fair asking price for your home.

Ready to move?

So, you’ve spruced up your home, put it on the market and sold it. Congrats! Now it’s time to start planning your move. To find a reliable and trustworthy moving company, check our extensive network of movers. We make it easy to compare quotes from hundreds of long-distance movers and local movers near you – free of cost. All relocation companies in our network are licensed and insured, so you can rest assured that your move will be in good hands. Best of luck and happy moving!

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How Is Your Credit Score Calculated and Why Is It Important?

Your credit score affects whether you can get a credit card, rent an apartment, buy a house, start a business, or even get a cell phone contract.

You know credit scores exist. You might even know what yours is. But do you know how it’s calculated and why it’s important?

Your credit score affects whether you can get a credit card, rent an apartment, buy a house, start a business, or even get a cell phone contract.

A low credit score can limit your choice of loans or determine if you can get one at all — and if you can, it might have a high-interest rate.

“There’s a huge cost to having a low credit score that happens to people, an actual true financial cost to them, and it’s a shame that people don’t learn about this or know about it or pay attention to it until usually it’s too late,” said Colleen McCreary, consumer financial advocate at Credit Karma.

Here’s a look at how you can create healthy habits to avoid having a low credit score:

WHAT IS A CREDIT SCORE?

A credit score is a mathematical formula that helps lenders determine how likely you are to pay back a loan. Credit scores are based on your credit history and range from 300 to 850.

“It’s a score that is going to determine how comfortable people are to lend you money,” McCreary said.

If your credit score is high, you can borrow more money. But if it’s low, you can borrow less or no money, or borrow money with a high interest rate, which can then create more debt.

Banks, landlords and insurance companies look at your credit score to determine the type of credit card that you can get approved for, whether you are the right fit for an apartment, and your insurance rate, among other things.

“Essentially, the bank will say ‘Hey, you don’t have a great credit score. Instead of a 2% interest rate, we’re going to give you a 3% interest rate,'” said Kristin Myers, editor-in-chief of The Balance, a personal finance website. “It might mean that you’re paying out more money over the lifetime of a loan every single month.”

HOW IS MY CREDIT SCORE CALCULATED?

While the idea of credit scores is simple, the way they’re determined is more complicated.

Credit scores can come from several credit reporting agencies. The three most used are Experian, Equifax and TransUnion. Each has its own model to calculate credit scores.

While we know generally what factors into credit scores, the agencies don’t share their specific formulas with the public. But each produces a slightly different score.

“One is scoring like a basketball game, one is like a football game and one is scoring like a hockey game,” said McCreary, who added that you shouldn’t worry if one agency gives you a few points less than others.

Since you don’t know which agency your lender is going to use to check your credit score, McCreary also recommends that you check all three of them before requesting a large amount of credit.

Here are the factors that are frequently used to calculate your credit score:

— Bill payment history

— Length of credit history

— Current unpaid debt

— How much of your available credit you’re using

— New credit requests

— If you have had debt sent to collection, foreclosure, or a bankruptcy

One thing that doesn’t affect your credit score is how much money you make, said McCreary. But you still need to take care to only borrow the amount you can afford to pay back.

Other aspects that don’t affect your credit score include your age, where you live and your demographic information such as race, ethnicity, and gender, according to Experian.

HOW DO I FIND OUT MY CREDIT SCORE FOR FREE?

There are several ways that you can check your credit score for free. A great place to start is to check if your bank offers this service for its customers. Additionally, each of the three credit reporting agencies allows you to check your credit score for free.

Everyone is entitled to one free credit report a year from the three agencies at annualcreditreport.com, according to the federal government.

Other companies such as NerdWallet, Credit Karma and WalletHub also offer this service for free.

WHAT IS A GOOD CREDIT SCORE?

You are considered to have a good credit score if it’s 670 or higher. If your credit score is over 750, you’re considered to have a great credit score, said McCreary.

“There is this sort of dream scenario of having an over 800 credit score, that is a very high credit score and very few people get there,” said McCreary.

“Fair” credit scores are considered to be in the 580-669 range, a credit score below 580 is considered a poor credit score.

HOW CAN I IMPROVE MY CREDIT SCORE?

The journey to improve your credit score is different for everyone. But some steps that can help you tackle credit card debt include paying at least the minimum monthly payment and, if you can, paying just a bit more over the minimum so you pay less interest over time.

Additionally, McCreary recommends that you try to keep a balance between your credit or loans and the amount you can afford to pay back.

You can read more experts’ recommendations on how to increase your credit score here.

DOES CHECKING MY CREDIT SCORE LOWER IT?

Checking your credit score does not lower it unless you are making a “ hard inquiry,” which is only done when requesting a line of credit.

Soft inquiries, where you want to know your credit score, do not affect your score and it’s a good habit to check your credit often to make sure it’s accurate.

On the other hand, lenders make hard inquiries when you apply for credit like a mortgage or a car loan, and those do show up on your credit report.

McCreary recommends not making several requests for credit at the same time since this could hurt your credit score. It’s best to know beforehand what your credit score is and then apply when you are confident that your loan will get approved.

HOW CAN I CREATE HEALTHY HABITS WITH MY CREDIT SCORE?

The first step is to check at least once a year to make sure you are comfortable with your current credit score.

If you are planning to request a large credit line, you want to check your score a few months prior and see how you can start improving it. If you are currently trying to increase your credit score, it’s recommended that you check it often to see if your actions are making a difference.

If you feel you need help from a professional to improve your credit score, a good place to start is the National Association of Personal Financial Advisors ‘ search engine for registered advisors. If you notice a mistake in your credit report, you can dispute it by contacting the respective credit reporting agencies.

Being aware of your credit score and maintaining healthy habits around it is crucial to having a good credit history. However, it is important for people to know that their financial worth shouldn’t be attached to their credit score, Myers said.

“It doesn’t mean that you’re a bad person or terrible with money and that you need to constantly beat yourself up,” she said.

Source: usnews.com ~ By: ADRIANA MORGA, Associated Press ~ Image: Canva Pro

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What Are Federal Fair Housing Laws?

Find out who is protected by the federal Fair Housing Act of 1968, how to spot housing discrimination and ways to report it.

In many situations, laws regarding property, housing, and the process for people moving into and out of a home are left to states, counties, and individual cities to determine. However, the federal government regulates housing most notably when it comes to discrimination, and is aimed at protecting groups who would otherwise face higher prices, lower valuations or even outright denial of housing. This protection at the federal level is known as the Fair Housing Act.

Despite federal protections against housing discrimination, as well as state and local laws that echo and even elaborate on the federal law, housing discrimination still occurs. Here’s a breakdown of how you’re protected, who enforces federal fair housing laws and how to tell if you may be facing housing discrimination.

  • What is the federal Fair Housing Act?
  • Who is protected by the federal Fair Housing Act?
  • Forms of discrimination that violate the Fair Housing Act.
  • Who enforces the federal Fair Housing Act?
  • How to avoid being a victim of housing discrimination.

What Is the Federal Fair Housing Act?

Originally enacted in 1968, the Fair Housing Act protects against housing-based discrimination, whether that’s buying or selling a home, getting a mortgage, renting a home or seeking housing assistance. In the years since, the Fair Housing Act has been amended to widen the protections people receive, in particular which qualifications are considered a protected class.

Who Is Protected by the Federal Fair Housing Act?

The federal Fair Housing Act protects against housing discrimination on the basis of:

  • Race.
  • Color.
  • National origin.
  • Religion.
  • Sex, including gender identity or sexual orientation.
  • Familial status.
  • Disability.

The law protects against discrimination from landlords, real estate companies, real estate agents, cities or other governing bodies, banks or other lending institutions and related businesses, like homeowners insurance companies.

States often have fair housing laws to further enforce such laws at the state level, and in some cases the protections go even further than the federal law. According to the Poverty & Race Research Action Council, 20 states and the District of Columbia have state laws protecting against source-of-income discrimination, which in most cases protect tenants who receive Social Security, housing vouchers or other forms of government income assistance.

Forms of Housing Discrimination That Violate the Fair Housing Act

Housing discrimination can come in many forms, and some are more obvious than others. Setting a higher rent for an individual with a disability, for example, would be a fairly blatant violation of the Fair Housing Act.

However, it’s not always easy to tell if a person’s treatment or the outcome of a deal has motives based on discrimination. Especially in cases when there are multiple people placing an offer on a house, it’s hard to tell if the decision factored in details protected in fair housing laws. Here are a few forms of housing discrimination that occur, and how they may play out:

  • Redlining. Redlining is a systemic discriminatory practice that effectively segregates parts of a city or county and undervalues property owned by a targeted group – most often racial or ethnic minorities. The practice of redlining – of which there is historical evidence in the U.S. in lending institutions, government and many other facets of the real estate industry – stunts the growth of generational wealth. While this practice was once rampant as official company policy throughout the industry, it still occurs today. A recent example of modern-day redlining was first published in The New York Times on Aug. 18 when two Johns Hopkins University professors, who are both Black, received an appraisal for their home of $472,000, which was shockingly low compared to what they were expecting. Months after that first appraisal, the couple applied for another refinance loan, removed family photos and had a white male colleague – another Johns Hopkins professor – stand in for them. The second appraiser valued the house at $750,000. The couple is now suing the original appraisal company, the appraiser and the lending institution that hired the appraisal company for racial discrimination.
  • Steering. Steering occurs when a person or company tries to influence a buyer, renter or seller’s decision because of their connection to any of the protected classes. For example, if a real estate agent were to only show a Hispanic family houses in a predominantly Hispanic neighborhood despite houses in the family’s budget located in other neighborhoods, and without them having expressed interest in that specific neighborhood, it would be considered steering. The family shopping for a home would be led to believe that neighborhood was the only option for them. More subtle forms of steering may occur when an agent discusses crime in the neighborhood, which can be coded language for racial makeup of the area, regardless of actual crime statistics and whether they would put a resident at risk of becoming victim to a crime.
  • Blockbusting. This practice, done by real estate agents and housing developers, is most often race-related. Blockbusting includes encouraging minority families to begin moving into a predominantly white neighborhood, while simultaneously working to scare white residents to move out based on the presence of the new, more diverse neighbors. The intended effect is to lower the value of properties in the neighborhood.
  • Different or More Discouraging Application Processes. A landlord, mortgage lender or even title insurance company must have the same application and due diligence process for all applicants. A different process for different applicants may be linked to discouraging members of a protected class from purchasing a home, or the separate process may make it easier to deny a loan or lease. The Federal Reserve’s Federal Fair Lending Regulations and Statutes compliance handbook lays out the details of this situation, among others, as a practice that is explicitly prohibited by fair housing laws.

Who Enforces the Federal Fair Housing Act?

The U.S. Department of Housing and Urban Development investigates claims of fair housing violations, with information about reporting via phone or online on its website. HUD will investigate the claim and if there is sufficient evidence of a fair housing violation, will try to resolve the issue and may take legal action, if deemed appropriate.

You may also report the claim to your state to investigate as well under state fair housing laws, which may be able to move through the intake and investigation process faster.

To determine if your situation is one worth pursuing in court separate from the government investigation, contact an attorney that specializes in fair housing. “If a person feels that their home appraisal or mortgage application is undervalued, the first course of action may be to gather their comps that support that feeling and contact an attorney in fair housing to review their claim,” wrote Portia M. Wood, a generational wealth planning attorney operating in the District of Columbia, Maryland, Virginia and California, in an email.

You may find that there is enough evidence to file a discrimination case that stands alone, or your attorney may have information about other victims from the same company or individual that could lead to a class action lawsuit.

How to Avoid Being a Victim of Housing Discrimination

Discrimination not only makes it harder to find a home to own or rent, but also makes it more expensive, and can ultimately diminish an individual’s ability to grow wealth over the course of his or her lifetime. Fair housing laws exist because discriminatory practices lead to sweeping and devastating results that last generations, whether that discrimination is unintended, blatant, subtle or even covert.

The best way to fight for truly fair housing opportunities and end discriminatory practices is to both report them when spotted and be armed with the right information to better identify something that could be discrimination, whether that’s shopping around for mortgage programs and interest rates, researching available homes in a variety of neighborhoods or finding comparable home prices before an appraisal.

“We have to know our numbers. It is not putting the responsibility or the onus on the individual alone to solve systemic racism – that is something that can only be done at the system and governmental levels,” Wood says. “However individuals need to arm themselves with as much information about the market as possible, including whatever comparable homes recently sold for and how are those sales compared to their appraisal, so that they are well-versed and able to counter a redline appraisal. Without knowledge you have no power.”

Source: realestate.usnews.com ~ By:  Devon Thorsby ~
Image: Canva Pro

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End of Summer Sees Continued Slowdown of Home Showing Activity

Slowdown of Home Showing Activity

Sept. 30, 2022 – This year’s decline in home showing traffic began leveling off in August, according to the latest data from the ShowingTime Showing Index®.[1]

Home showing traffic is returning to earth in line with the market’s rebalancing from the record-breaking highs brought on by the pandemic. Obstacles to affordability have meant less competition and more homes for sale, giving home shoppers more time and options.

The West and Northeast regions experienced slight pickups in showing activity with the first month-over-month increases since January and April, respectively. The South and Midwest regions each saw small monthly decreases in August.

A majority of listings averaged between four and nine showings. Burlington, Vermont, again led all markets in showings per listing with an average of 12.2 and was the only market to crack double digits. More than 70 markets analyzed saw year-over-year increases in the ratio of showings per listing, compared to only four markets in July.

“The more moderate pace at which home showings are slowing down and the increase in markets that saw more showings per listing this month are signs that the market may be starting to find a new balance,” said Mike Lane, vice president of sales and industry for ShowingTime+. “Buyers will continue to see less competition for homes and have more time to tour homes they like and consider their options.”

Metropolitan Area Ratio of Showings to Listings[2] Year-Over-Year Change[3] Month-Over-Month Change[4]
Atlanta, GA 6.24 -33% -4%
Austin, TX 4.19 -45% -3%
Boston, MA 7.53 -11% 1%
Burlington, VT 12.16 5% 0%
Chicago, IL 7.04 -6% -2%
Cincinnati, OH 7.73 0% 1%
Columbus, OH 7.85 -9% 0%
Denver, CO 7.59 -40% 3%
Houston, TX 6.66 -22% -4%
Kansas City, MO/KS 8.09 -13% -6%
Las Vegas, NV 2.98 -36% -2%
Los Angeles, CA 4.40 -33% 3%
Memphis, TN 6.96 -36% -6%
Miami–Fort Lauderdale, FL 7.77 -32% -1%
Minneapolis–St. Paul, MN 6.75 -14% -2%
Nashville, TN 6.48 -33% -3%
Philadelphia, PA 7.91 -12% -3%
Phoenix, AZ 5.35 -43% 3%
Portland, OR 6.55% -29% 2%
Raleigh, NC 6.80 -33% -1%
St. Louis, MO 7.64 1% -1%
San Francisco, CA 3.28 -27% 12%
Seattle, WA 8.15 -40% 7%
Virginia Beach, VA 8.06 -15% -7%
Washington, DC 8.18 -15% -2%

Source: showingtime.com ~ Image: showingtime.com

[1] The ShowingTime Showing Index is compiled using data from more than 6 million property showings scheduled across the country each month on listings using ShowingTime products and services. It tracks the average number of appointments received on active listings during the month, then reports the numbers by region and nationally.

[2] Calculated using the average number of buyer showings per active listing on a monthly basis. July 2022.

[3] August 2021 – August 2022

[4] July 2022 – August 2022

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How Are Mortgage Rates Determined?

Mortgage Rates

Mortgage rates are determined by credit score, loan-to-value ratio, inflation, and more.

What factors determine mortgage rates?

Your mortgage rate is determined by many factors. Some are within your control and some aren’t. With awareness of these factors, you can feel more confident about getting a competitive interest rate when you choose a mortgage lender.

Mortgage rate factors that you control

Lenders adjust mortgage rates depending on how risky they judge the loan to be. A riskier loan has a higher interest rate.

When judging risk, the lender considers how likely you are to fall behind on payments (or stop making payments altogether), and how much money the lender could lose if the loan goes bad. The major factors are credit score and the loan-to-value ratio.

Credit score

The lowest mortgage rates go to borrowers with credit scores of 740 or higher. These borrowers have the broadest choice of loan products.

Interest rates tend to be a little higher for borrowers with credit scores of 700 to 739. For borrowers with credit scores from 620 to 699, mortgage rates are even higher. These borrowers might find it difficult or impossible to get high-amount jumbo loans.

With a credit score below 620, the interest rates are even higher, and options are fewer. Most of the loans available at this level are insured or guaranteed by the government.

The loan-to-value ratio measures the mortgage amount compared with the home’s price or value. Let’s say you make a $20,000 down payment on a $100,000 house. The mortgage will be $80,000. You’re borrowing 80% of the home’s value, so your loan-to-value ratio is 80%.

A bigger down payment gives you a smaller loan-to-value ratio, and a smaller down payment gives you a bigger loan-to-value ratio.

If your loan-to-value ratio is greater than 80%, it’s considered high, and it puts the lender at greater risk. This may result in a higher mortgage rate, especially when combined with a lower credit score. The loan will usually require mortgage insurance, too.

Other factors

Lenders may charge more for cash-out refinances, adjustable-rate mortgages and loans on manufactured homes, condominiums, second homes, and investment properties because those loans are deemed riskier.

Mortgage rate factors beyond your control

The overall level of mortgage rates is set by market forces. Mortgage rates move up and down daily, based on the current and expected rates of inflation, unemployment and other economic indicators.

Overall economy

Mortgage rates tend to rise when the outlook is for fast economic growth, higher inflation and a low unemployment rate. Mortgage rates tend to fall when the economy is slowing down, inflation is falling and the unemployment rate is rising.

Inflation

Rising inflation is often accompanied by rising interest rates because when prices go up, the dollar loses buying power. Lenders demand higher interest rates as compensation.

Ten years of low inflation contributed to low mortgage rates. But as inflation accelerated in early 2022, mortgage rates rose dramatically.

Job growth

When the COVID-19 pandemic led to stay-at-home orders in the spring of 2020, the resulting layoffs and furloughs caused a recession. Mortgage rates already were low, and they fell even further — just as one would expect to happen in a recession.

Other economic indicators

Mortgage investors pay attention to many economic trends besides inflation and employment — including retail sales, home sales, housing starts, corporate earnings, and stock prices.

Federal Reserve

The Federal Reserve doesn’t set mortgage rates. The Fed raises and cuts short-term interest rates in reaction to broad movements in the economy. Mortgage rates rise and fall according to those same economic forces. Mortgage rates and Fed rates move independently of each other, but usually in the same direction.

Are mortgage rates the same for all lenders?

Mortgage rates vary from lender to lender because lenders have different appetites for risk and different overhead costs.

When a lender reaches its capacity of loan applications its employees can process, it might keep rates slightly higher than necessary to keep from being overwhelmed; when business is slow, the lender might charge slightly lower rates to drum up business.

Shop with confidence

Because lenders’ mortgage rates vary, it’s smart to shop for a mortgage from several lenders because you could save thousands of dollars over the life of the loan.

And now that you understand how mortgage rates are determined, you’re more equipped to ask smart mortgage questions when shopping for lenders.

Source: nerdwallet.com ~ By: Holden Lewis ~ Image: Canva Pro

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Tips for Selling Your Home in the Fall and Winter

I’m not going to sugarcoat it — buying and selling spikes in spring and summer.
 
However, it isn’t impossible to sell your home during fall and winter. You can do a lot to help your home feel welcoming and bright to a potential buyer. What’s important to remember when you’re looking to sell during the cold weather months? Keep on reading to get a list of tips, including pro recommendations that’ll put a new perspective on the buyer experience.

Show Buyers What It Looks Like During the Spring and Summer

Showcase what your home has to offer by giving potential buyers the opportunity to see the home during other months of the year. Michelle Caracci Corsi from Howard Hanna Real Estate Services suggests you “include a photo album or digital slideshow of the exterior in the summer, spring, and fall. Highlight garden beds, and patios or decks with furniture so the buyer can envision the home year-round.”
She also adds, “Consider using a realtor who can provide a digital 3-D tour that shows the home in the daylight. Folks who work during the day usually tour homes in the evening when it’s dark. Less natural light makes the home feel smaller, and it’s hard to picture the outdoor space.”

Get 5-Star Curb Appeal to Enhance the Outdoor Experience

Leaf- and snow-covered sidewalks can make a perfectly nice home look sloppy and poorly maintained. Use a leaf blower daily to keep leaves, branches, and outdoor dirt off the walkways, and do your best to keep the yard clear of leaves, too.
Add fresh mulch to garden beds so they look their best.
Rinse loose dirt from your home’s siding one last time before the temperature drops.
“Another challenge for buyers in the fall and winter is that everything usually looks dull and drab,” adds Michelle. The lot lines are not as visible covered with snow and leaves, so it’s difficult to get a sense of the outdoor space unless it is clearly defined. Define property boundaries with brightly-colored flags tied to stakes, and place them at the four corners of your property.
If it’s snowy, keep the deck shoveled and salted so buyers can walk outside to experience the space. If the climate allows, keep outdoor furniture on your patio so they can get a better feel for the outdoor living space.

Let There Be Light

Retract blinds, and widen curtains, so there’s minimal window coverage. The windows will look bigger, and it’ll encourage daylight to flow into your space.
Experiment with your lightbulbs to find the most flattering hues for your space. A bathroom looks great with daylight bulbs (5,000-6,500K) and living spaces, such as bedrooms and living rooms, look best with soft white bulbs (2,700K). In general, your home’s design and color palette will play a part in what looks most appealing. Go for cozy and bright. If you’re upgrading bulbs in hard-wired fixtures, consider going all LED. Let the buyers know you’re leaving the bulbs for them.
Use hardwoods to your advantage. In my experience, nothing shows off a home better than daylight bouncing off beautiful hardwood floors. Remove unnecessary area rugs to maximize the effect.
Bring in extra floor lamps. Add them to rooms with dark corners to create a warmer setting.
Consider investing in landscape lighting, since visitors touring during the late afternoon or evening will have a much different experience than visitors who tour a home earlier in the day. Outdoor lighting accessories will amplify your home’s appeal, so consider solar lights lining a walkway, motion-activated spotlights, and landscape spotlights.
Remove screens from the windows to allow more natural light to flow into your home, and clean the windows. Be sure to let potential buyers know you will replace the screens.

Spend Time on Basic Home Maintenance

Check window seals and doors for drafts. A drafty window is most noticeable on a cold day, so take extra effort to weather seal and insulate around windows and doors.
Have the furnace or boiler maintained prior to putting your house on the market On a cold day, buyers will make sure the systems are in good shape. Be a step ahead by having your maintenance team leave a sticker or magnet marking the date of the last inspection to add peace of mind for buyers.
Swap out the HVAC filter to help reduce any odors or fall allergens in the home.
Check for spiderwebs – everywhere.

Deep Clean: A Few Places You Might Forget About

Clean inside the cabinet beneath your sink. It’s likely they’ll glance at the plumbing, and they’ll notice if the plumbing and inside of the cabinet are dirty. Clean it well, consider adding a new piece of shelf liner on the bottom, and install slide-out drawers or extra utility that’ll be appealing.
Make shower heads look like new.
Dust ceiling fan blades and the inside of your dishwasher and washing machine. Don’t forget all the nooks and crannies in the kitchen.

Paint? Maybe.

Contrary to many pro recommendations, I’m not a huge fan of painting walls neutral colors to make a home more salable. A light-colored interior will reflect more light than a dark one, and that may make all the difference on a gloomy, cool day.
If the walls look dingy or dated, refresh the look of a room with a $25 can of satin or eggshell.

Embrace Hygge

That’s to say, make your home as cozy and inviting as possible, so potential buyers can easily envision it as a friendly, welcoming space for family and friends.
Accessorize the main living area with neutral-but-coordinated throws and pillows and unscented candles for ambiance.
Make an impression with your gas or electric fireplace. Leave a note with the remote, prompting the potential buyers to turn it on, so they can enjoy the ambiance. Include a reference sheet that cites the maintenance schedule you followed and the increased utility costs you experience in running the fireplace.
Remove the TV in the living room if you can live without it. Yep, big black screens are an eyesore, especially if they’re blocking light or detracting from a beautiful mantel.
Take another look at how the furniture is positioned now that the TV isn’t there. Consider rearranging to maximize the functionality of the space. It might not be how your family used the room, but it’ll present really well.

Be Sensitive to Seasonal Decor

Both in your listing photos and in real life during showings, keep the seasonal decor at bay while you’re trying to sell. No one expects a home to completely lack holiday decorations during these months, but simplicity is appealing. Opt for modest, neutral accessories — think white string lights or a Christmas tree that truly flatters the space.
Do you have vaulted ceilings? You’re green-lighted to get a big tree, so buyers can appreciate the spectacular height of the ceilings.
One snowy weather accessory that wins us over? A classic snowman in the front yard.
Resist the urge to add too many scents to your home – it’ll look like you’re hiding something. An unlit pine candle in a bathroom will appeal to the senses.
Have holiday music playing low on the radio during December. During an open house, offer freshly-baked cookies, pumpkin muffins, or hot cocoa for visitors.

Maintain Cleanliness Between Showings

Dry mop to remove dust and dirt that you track every evening. Vacuum area rugs and entryway mats daily, and keep toys at bay.
Keep a focus on curb appeal. Continue to sweep or snowplow sidewalks, driveways, decks, and patio spaces.

Source: hgtv.com ~ By:  Emily Fazio ~ Image: Canva Pro

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When Will Interest Rates Go Down?

Mortgage rates have been consistently on the rise as the Fed struggles to battle inflation.

With a recession looming in the distance, you might ask yourself: “Is now the right time to buy a house?”

It’s an understandable question considering how inflation has soared, house prices are high, and mortgage rates keep rising in response. No one wants to make a wrong financial decision.

But it might not be a bad financial decision to buy a house right now. Let’s talk through mortgage rates, how they work, and whether or not today is the right time to buy a home, given the state of the market.

Forecasting mortgage interest rates explained

Mortgage interest rates are changing daily.

It used to be that banks would set the mortgage rates for the day, and then change them the next day, or week, or month, depending on the climate at the time.

Unfortunately, it doesn’t work like that anymore. Wall Street is heavily involved in setting mortgage rates because people buy and sell mortgage-backed securities.

When these securities go up, the mortgage rates go down, and conversely, when the securities go down, mortgage rates go up.

The Fed steps in to help regulate this by buying a portion of the securities and helping to set the rates.

What are the experts saying about mortgage rates now?

According to both Morningstar and Kiplinger, mortgage rates are nearing their peak.

While the rates are still increasing steeply, both reporting agencies believe that since the feds are selling their mortgage-backed securities, they will begin to come down.

Not every expert is sure, however.

Len Kiefer, the deputy chief economist at Freddie Mac, said with the market as volatile as it is, “It is difficult to foresee how future expectations may shift in response to events, so the direction and magnitude of impact are impossible to predict.”

He doesn’t want us to get our hopes up about changing rates.

No one indeed expected the pandemic, and it drastically changed everyone’s financial situation—primarily where the housing market is concerned. Experts are now hesitant to make any sort of a prediction in response.

Are rates expected to go down before the end of the year?

Unfortunately, rates are not likely to go down by the end of the year.

The Fed’s main priority right now is curbing inflation. They do this by hiking reserves. With three more meetings this year, it’s likely that the feds will hike the reserves more steeply again.

These hikes negatively impact low-interest rates. We’re likely to see mortgage rates trend upwards throughout the end of 2022.

Will interest rates go down in 2023?

The Feds are now focusing on lowering the mortgage rate to two percent. They’re expected to hit that number sometime in 2023.

After that, we’ll likely see mortgage rates decrease and continue to fall in 2024 and 2025 as we reach economic stability.

Should I buy a home now or wait?

While interest rates might be high, the real estate market is slowing down.

House-bidding wars are becoming less common than they were, even a few months ago, and houses are staying on the market longer. When the real estate market slows down, it’s usually a better time to buy.

Experts suggest continuing to look for a home but only bidding on the asking price and locking into a reasonable mortgage rate.

You can always refinance down the line if mortgage rates drop to historical lows again. But you’re locked into a better rate if they continue to rise.

If you wait to see if the mortgage rates fall, you might find yourself looking at higher home prices than we currently have. It’s a tradeoff, but there are never going to be perfect market conditions in which to buy a home.

What do these rates mean for refinancing?

This answer will vary by the homeowner and depend on how high your current mortgage is.

Experts often say it’s best to refinance your home when you can reduce interest by at least .75 points to make the refinance worth it. If you can’t, you may find that you’ll pay more in fees than you would save with a new rate.

If mortgage rates are around 5.50% and your mortgage is above 6.25%, refinance is a good idea. If it’s lower than that, you should hold off and see if interest rates will go down in 2023.

Don’t just consider 30-year mortgages. Look into 15-year mortgages as well. These tend to have lower interest rates. The tradeoff is that you might end up with a higher payment. But the money saved could be worth it in the long term.

Home.com can help you navigate the market

Buying a home might be the right decision for you and your family.

Sometimes it’s about finding the right property to fit your needs, instead of looking around at the optimal financial decisions.

The bottom line is that it’s not a bad time to purchase or refinance.

Keep an eye on Home.com’s mortgage rates page to help you decide if it’s the right time to make a move. We also have excellent calculators to help you determine your mortgage costs or calculate a refinance.

When you’re ready to take the next step in purchasing or refinancing, reach out to the experienced loan officers at Homefinity. They’ve been through every market condition and can help guide you to the right decisions for your financial situation.

Source: home.com ~ By:

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How to Build Out Your Smart Home

smart home

The possibilities are endless when it comes to building out a smart home, which can make decisions overwhelming. Tech expert Brandon Doyle breaks down how to get started.

I’ve tested hundreds of smart-home products over the years and provided written and video comparisons in each product category. Along the way, I’ve learned a lot about what’s needed and what’s not, what the top brands are, and where to get started.

(And big thanks to my wife for her unending patience as I tinkered with, traded, installed, and uninstalled, and upgraded our various smart-home features.)

Opt for Quality Over Price

The options are endless when it comes to smart-home features, but that doesn’t necessarily mean a cheaper product will be better. In many cases, the cheaper off-brand products you might find may not perform as well and can lead to headaches down the line. I recommend watching for package deals and deep discounts from trusted brands on popular sale days like Prime Day and Black Friday.

Pick Your Ecosystem

You’ve probably heard of Amazon’s Alexa, Google’s Home, Nest and Assistant, and Samsung’s SmartThings. These ecosystems act as the brain that ties all of your products together and creates automation. There are a lot of other options out there, from advanced do-it-yourself platforms that are perfect for the tinkering types to professionally installed systems that are typically found in luxury homes.

Great content that focuses on DIY systems such as the Home Assistant control system is abundant on YouTube. However, proceed with caution. I’ve found that unless smart-home tech is your hobby, DIY isn’t always the best choice if you’re looking to save time. And while systems like Crestron, Control4, Savant and Elan have incredible capabilities, setup does require a professional, which can start at around $20,000.

Most people opt to build a system themselves using an already established system like Alexa, Assistant or Apple’s HomeKit. The good news is that no matter the platform you choose, they’re all great. I invested in the Amazon ecosystem and tend to purchase devices that work well with that platform; however, I do have experience using Google’s, including its Nest products—in fact, I use a Samsung phone, so I had to borrow my wife’s iPhone anytime we tested products that use HomeKit.

The key to a synced ecosystem is to ensure you choose products that work well with the brand. Some products, such as Lutron’s Caseta dimmer switches, will work well across all platforms. Other product categories, however—particularly security cameras and doorbells—won’t integrate properly or will lack features if used across platforms.

I love that video from my Ring doorbell automatically displays on my Amazon Echo Show devices and Fire TVs, but unfortunately, it doesn’t do so on a Google Home Hub, Chromecast or Apple TV. Those who are all-in on Google or Apple use a single app to access all the features of a product, whereas, with my Amazon setup, I control some products through the Alexa app but require additional apps for lighting and shades and for the thermostat, doorbell, security system and locks.

Once you’ve determined which platform you’re going to use, it is best to try to work within that ecosystem.

Choose a Robust Home Network

When I first got into smart-home technology, I mainly purchased devices that connected directly to my Wi-Fi network, but I quickly realized that my router couldn’t handle that many devices at once. I routinely had problems like light switches dropping off the network. I ended up spending more money to upgrade the router, and when my wife and I moved, I decided to add a hub and bridge for certain devices such as switches, lightbulbs, and sensors.

If you’re just getting set up in your home or you’re planning to add several devices, it is important to start with a strong network. If you’re still using a router provided by your internet service provider, consider replacing it. I recommend using a mesh system router such as Eero or Google Wi-Fi. You might spend a few hundred dollars upfront, but you’ll save by not having to rent a similar system from your ISP.

Start Small to Avoid Being Overwhelmed

I’m often messaged by new-home buyers who are super excited to add smart features to their homes, but they don’t know where to start or lack the funds to buy everything they want. I advise them that building a smart home doesn’t have to break the bank. Homeowners can get started for around $200, which could get you a smart speaker with a voice assistant and a switch, lightbulb, thermostat or smart lock.

I recommend starting small and then adding room by room as the budget allows. Smart thermostats will pay for themselves with reduced energy costs, while smart locks and doorbells add security and peace of mind. An average smart home can cost around $2,000. That price point buys hubs, voice assistants, security, lighting, comfort, convenience and entertainment products. Companies like Wyze and Eufy often offer affordable systems. You might also opt to focus on a specific aspect of your home—safety features or lighting, for instance—to invest in first.

Security Features

One of the biggest reasons homeowners purchase smart-home products is to monitor their homes remotely, using devices such as smart locks, video doorbells, security cameras and systems. With interconnected devices and an internet connection, you can view and control your home from anywhere in the world on your smartphone.

Smart Lighting

My favorite category of smart-home technology is lighting. The variety is vast. Smart switches, bulbs and light strips can be controlled remotely, by voice, or in automation. The average smart switch costs around $50, and bulbs range from $10 to $60 each, so this is an area that can add up if you decide to do your entire home, but I find it’s well worth the cost.

Robot Vacuums

Robot vacuums have come a long way since the original Roomba was introduced in 2002. They can now intelligently map your home, mop as they go, and even empty their own bins. I’m a big fan of the Roborock lineup; we’ve got a Corgi at home that sheds quite a bit, so it’s nice having the vacuum run on a schedule. Wyze offers a robot vacuum with lidar, which uses a sensor to avoid collisions, for only $250, and Roborock’s Q5+ starts at $700.

Smart Speakers

I love having smart speakers all around our house. We use them to control the lights, check the weather, settle debates by asking them questions, and, of course, listen to ’80s rock, the greatest music of all time. When I’m in my office or watching TV and the doorbell rings, I can see who it is and decide if I need to sign for a package or hide from a door-to-door salesperson—that is, unless they’ve got Girl Scout cookies.

Without my smart speakers, I’d be forced to pull out my phone (that wasn’t already in my hand) and look at the doorbell app, or—God forbid—get up and answer the door without knowing who it is first.

Overall, building out a smart home takes a little research, some time, and a bit of money, but the upgrades, safety, and convenience make it all worthwhile, as I’ve found through my years of testing. I hope you’ve found these experiences helpful, and if you want to learn more, be sure to check out the rest of the Ultimate Smart Home series.

Source: magazine.realtor ~ by Brandon Doyle ~ Image: Canva Pro

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Buying An Old House Vs. A New House: The Pros And Cons

old vs new home

When you decide to buy a home, there are many questions you must ask yourself regarding the size, location and amenities you’re looking for. Detailing what you want and need from a home is an important step in the home buying process, as it will aid you in choosing the right house for you.

On top of any must-haves, there are also probably some nice-to-haves on your list. Balancing these wishes is no easy feat – but analyzing all the potential pros and cons of a property can help you protect your investment and ensure there are no costly surprises down the road.

The age of the home is just one factor to consider, but it can be a rather important one, as there are a few distinct differences between old and new homes when it comes to their cost, safety and upkeep.

Defining New Homes Vs. Old Homes

The quality of home construction has evolved and improved over the years, partly due to the ever-changing availability of building materials and partly due to updated building codes. For example, in 1978, the federal government banned the use of lead-based paint, which was previously used regularly during construction. Further developments in the form of updated technology, modern insulation and more affordable materials have permanently altered the way homes are built today as compared to 100 or even 50 years ago.

At the extreme end of the scale are historical homes, which are recognized and monitored by the National Park Service. Buying a historic home comes with its own unique advantages and disadvantages – but just because the home was built a long time ago doesn’t necessarily mean its historic. For a property to be considered a historic home, it must meet specific criteria relating to its connection to historical people or events. This means there are many older homes available that provide a sense of old-world comfort without the strings attached to owning historical property.

On the opposite side of the spectrum, there are newly built houses. These new homes are typically larger and provide all the benefits of modern convenience. But with such a wide range of homes available – what defines an old house vs. a new house? In this article, we consider homes to be old when they are at least 50 years but no more than 100 years of age, while new homes have been constructed within the last few years.

Pros Of Buying An Old House

Despite the progress in home construction over the last few decades, there are many homeowners who continue to prefer old houses for their charm and personality. But there are several other advantages to homes that were built 50-100 years ago, including the following:

Architecture

With cookie-cutter homes popping up across the nation, old houses stand out for their commitment to architectural individuality. Victorians, Colonials and Tudors are just three of the many architectural styles that are not often replicated today. The craftsmanship and attention to detail that went into building these structures can be hard to find in modern homes, so if architectural character is near the top of your list, an older home might be a good fit.

Mature Landscaping

Because land used to be more affordable, older homes frequently come with larger yards. This land was often filled with extravagant landscaping, including trees and bushes that have now been cared for over several generations. This type of mature landscaping has been proven to raise the value of a home and can make its homeowners more comfortable due to the emotional benefits of being in a home with more surrounding greenery.

Long Purchase History

There’s also great power in knowing your home’s purchase history, which can indicate the property’s appreciation value over time. Although the past doesn’t guarantee the future, this paper trail can indicate whether the home you’re purchasing is a good long-term investment. With newer homes, there is little to no information to use to make an educated decision.

Established Neighborhood

Looking beyond the home itself, buying property also involves considering the surrounding neighborhood. Older homes tend to be more centrally located, closer to downtown and in stronger communities, making them less likely to undergo zoning changes.

Lower Cost

Although you may pay for their charm and individuality, these old homes still cost significantly less upfront than their newer counterparts. The price of a newly built home is often higher than that of an older home by a staggering 30% or more.

Cons Of Buying An Old House

Buying any property, old or new, is a big decision. With every benefit, there’s also a potential drawback that must be considered. This means when you’re analyzing your home options, it’s important to remember that there’s no right answer – only what is right for you. If you think an old house might be a good fit, be sure to consider the following downsides.

Maintenance Costs

Older homes are made of older materials, so it follows that the aging construction in these homes would come with a need for frequent maintenance. From faulty plumbing to sloping floors, there’s no shortage of projects to do in existing homes – and these projects don’t come cheap.

But smart home buyers can capitalize on the lower upfront costs of these homes to supplement future maintenance costs. With less money needed for a down payment, staggering savings can help you to cover many of these costs down the road.

Smaller Floor Plan

Modern society supersizes everything. This means modern homes will often come with larger, open floor plans, while older homes feature smaller, separate spaces.

It’s important to remember the differences in day-to-day life between now and when these homes were constructed. In earlier times, people didn’t have nearly as many physical possessions as they do now – so you can expect smaller closets, lower ceilings and less room for appliances in old homes.

Utility Costs

As building codes have improved, so have the materials used during home construction. Newer homes benefit from these changes, as increased insulation has allowed the homes to better retain heat or air depending on the season.

The same cannot be said with older homes. According to the U.S. Census Bureau’s American Housing Survey, homeowners in old homes spend 17% more on electricity and 38% more on gas per year.

Fewer Safety Regulations

Construction standards have changed over time, which means older homes may not be built to code to withstand natural disasters, prioritize electrical safety and protect from the dangers of plumbing failures. The lack of inherent safety in these homes makes the home inspection that much more important.

Pros Of Buying A New House

Fresh paint, modern floor plans and updated appliances: These are just a few of the benefits of buying a new house. But there’s also something to be said for the emotional perks of stepping into a brand-new home. When you’re the first person to live in a residence, the home is what you make it – so let’s take a look at some of the advantages of new construction.

Delayed Major Maintenance Costs

New homes are built to last, so homeowners who purchase newly built properties often face lower monthly maintenance costs. Based on the American Housing Survey, 26% of homeowners spent $100 or more per month on maintenance costs. But that number is significantly lower in homeowners who purchased homes built within the last 4 years. In fact, 73% of these homeowners spent less than $25 per month on these costs. This lower need for upkeep also makes it easier for new homeowners to get a home warranty.

Energy Efficiency

Energy efficiency has become increasingly important over the years, so in most cases, the newer the home, the easier it is on the environment. New homes better retain heat in the winter and air in the summer due to their thicker, dual-pane windows and insulated walls, ceilings and floors.

Depending on the home design, there’s also potential for an even stronger focus on efficiency, as some modern homes come with built-in home solar panel system and other renewable energy sources.

Safety Stamp Of Approval

Homes that are up to code come with many benefits on top of the physical safety of your family. Because new construction requires compliance with stricter safety regulations, newer homes require less maintenance and receive the safety stamp of approval – which typically results in lower insurance costs and higher resale value.

Larger Living Spaces

New homes aren’t always larger than old homes – but as flowing, open floor plans have grown in popularity, we’ve seen these trends reflected in newer home construction. This has led to a greater average square footage, more storage space and plenty of open spaces for entertaining.

Cons Of Buying A New House

Unwrapping a brand-new house is exciting for many reasons, but compared to existing homes, there are also a few drawbacks. Whether the home is new within the last few years or a freshly constructed residence, you must remember that nothing stays brand new for very long. With that in mind, consider the following disadvantages to buying new property.

Likely Less Centralized

City centers tend to be filled with older properties, so newer homes are often less centralized and frequently located in the suburbs. This distance from the downtown area often means longer commutes for both work and play and may be less than ideal for some prospective home buyers.

Smaller Outdoor Spaces

As land grows scarce, home builders have learned to sacrifice yard space to maximize the square footage of the house, which has led to close quarter living.

These smaller outdoor spaces also feature less mature vegetation. While the landscaping surrounding older homes has had decades to grow, the vegetation near newer homes has had significantly less time, which means new homes often feature basic landscaping. Immature landscaping can ultimately lead to less curb appeal, which may make it more difficult to sell the property in the future.

Higher Upfront Costs

As previously mentioned, newly built homes cost on average 30% more than existing homes. Paying more upfront may be worth it for the lower maintenance and utility costs these homes incur over time – but if high upfront costs won’t work in your financial situation, you may be better suited for an older house, as they usually require less money upfront and will allow you to stagger home maintenance costs throughout the life of the property.

The Bottom Line: Age Is Just A Number

Deciding which home is right for you is a long process of give and take. Home buyers must have a clear understanding of what they want and need out of a home – and the age of the property is just one variable to consider.

For homeowners who put heavy stock in individuality – and are willing to put forth the necessary time, energy and money to maintain and protect that uniqueness – older homes may be a great fit. With the right care, these old houses can age gracefully and remind their owners of a simpler time. But if modern convenience is your top priority, you may be better suited for a newer home.

If you’re ready to pursue your dream home, a good starting point is finding out how much to spend on a house. Compile a list of your hopes and dreams and don’t compromise on your deal breakers – because rest assured, there is a home out there for every buyer.

Source: rocketmortgage.com ~ By: Katie Ziraldo ~ Image: Canva Pro

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