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Why You Should Look at Properties With Asking Prices Below What You Can Afford

If you’re searching for a new home, you have probably already gotten pre-approved for a mortgage. Many people think that the amount they were pre-approved for is the amount they should spend, but a lender may not consider savings for retirement and college, daycare and healthcare costs, and other expenses. The amount you can actually afford may be much lower than the amount in your pre-approval letter.

Once you have figured out how much you’re comfortable spending on a home, it’s a good idea to look at properties below that range. Doing so will give you flexibility and breathing room in several ways.

Room to Negotiate
If two or more parties are interested in the same house, they may become involved in a bidding war. If you know that you can afford to go above the asking price, you may be able to make a higher bid than the other prospective buyer and get the property you want.

Lower Closing Costs
If you buy a house at a lower price point, you will pay less in closing costs. The money you save up front can go toward other purposes, such as new furniture and appliances or a fund for home maintenance, repairs, or renovations. 

Financial Flexibility
The amount you finance will directly impact your monthly mortgage payments. If you buy a house that costs less than what you can afford, you will be able to take out a smaller mortgage and enjoy lower monthly housing costs. That will give you room in your budget to fund other priorities, such as saving for retirement, your children’s college education, a family vacation, or a new car. Lower housing payments will also make it easier for you to build an emergency fund in case you lose your job or suffer an accident or illness.

If your goal is to pay off a mortgage before you retire, buying a less expensive home can help you do that. You may be able to take out a loan with a shorter term or make extra payments to pay off the mortgage early so you won’t have to worry about monthly housing payments when you retire on a fixed income.

Lower Costs for Other Housing Expenses
Purchasing a less expensive house may help you save a bundle when it comes to other costs of homeownership. Houses that cost more are generally larger than less expensive properties. Larger houses typically cost more to heat and cool, have higher electricity bills and cost more to insure. Maintenance and repairs also generally cost more for larger properties. 

Be Careful Not to Become ‘House Poor’
It may be in your best interest to look for a house that costs less than the amount you can afford so you will have room in your budget to cover your other priorities. That way, you won’t be forced to do without things that are important to your family in order to cover your mortgage payments and other housing costs.

5 Things to Consider When Buying a Second Home

Purchasing a second residence is always a significant decision, especially if you intend to use it as a vacation home. Of course, there are many considerations to take into account beforehand, not the least of which is accounting for the associated costs of owning multiple properties for personal use. When you feel fully prepared to start looking for a second home, here are several additional factors to consider.

Cater to Your Lifestyle
While your primary residence likely caters to essential aspects of your daily life, such as proximity to schools and jobs, luxury buyers often seek a second home that supports their personal interests and provides access to a coveted lifestyle. Whether that means living in a golf community, in the mountains, or along the coast, this home should provide you and your family with a place to make special memories.

Are you willing to hop on a plane every time you go to your vacation property? Or is it essential that it be a car ride away? It’s important to consider how, and how often, you plan to use this home. If you anticipate it being used for extended stays, perhaps you’re willing to travel a bit further, whereas you’ll probably want a weekend destination to be closer to your main residence. 

Seasonal or Year-Round
For some buyers, a deciding factor when choosing between two locations can be the amount of usage that they’ll get out of the home. While some properties can only be enjoyed for part of the year, one that has year-round appeal will allow you to get the most out of it. 

Long Term Goals
Be sure to discuss how this property aligns with your long term goals with your financial planner. Whether you see it as a short-term investment or a place where you can retire someday, a second home is a significant asset that can help you to achieve your financial goals.

Work With a Local Specialist
Make sure that your real estate agent has proven experience in the area. Second home markets can be significantly different from a primary market, even if they are just a car ride away, which is why it’s always recommended to work with a professional who has an intimate understanding of the location that you’re looking in. 

Published with permission from RISMedia.

How to Decide on the Ideal Home Size for Your Family

Making the choice to purchase a new home is a major decision for anyone. Once you’ve settled on the idea that you do want to buy a home, there are many more options you’ll have to face; one of the most important is the ideal size of a home to best fit your family and lifestyle. Here are some tips so that you can choose the right size home to meet your needs:

Realize That Bigger Isn’t Always Better
You may initially start your home search thinking that size doesn’t really matter. As long as it seems big enough to live in, you don’t care how large it actually ends up being. The truth is that bigger isn’t always better. A large home requires more money—and time—to maintain. Unless you’re using the space, you could just end up wasting your money on maintaining a big house for no reason.
Know Your Maintenance Budget
A crucial aspect of your home purchase decision is to determine what your budget is going to be for home maintenance. A bigger home requires more time and money to take care of, particularly if you’re looking at homes with substantial front and backyards. As for the interior, there are cleaning, repair and energy costs for heating and cooling. Discuss your budget with your partner and your real estate agent to decide the square footage you can realistically handle.
Identify the Number of Rooms You’ll Need
If you really don’t know what amount of space is ideal for your family, then you need to start simple. This means counting the number of rooms that you’ll need. Consider your main rooms like your kitchen and living room, and then move on to counting the number of bedrooms and bathrooms that you need. This will give you a good starting point to identifying how much space your family will require. Keep in mind if you plan on expanding your family, if you frequently have guests visit and if you may need to have a family member, like an aging parent, live with you in the future.
Tour Different Homes in Varying Sizes
Once you get an idea of the size range that will fit your needs, it’s time to take some tours. Search for homes that are in the appropriate size range that you determined. This isn’t so much about evaluating potential purchases as it is about determining if that size range will fit what you have in mind. Home tours will give you a better idea of what you want the square footage of your home to be and how you want those square feet distributed throughout the bedrooms, common areas and exterior.
Determining the right size home for your family may be challenging at first. Start by breaking down your budget versus what you think you’ll need and begin looking at sample homes from there. After all the work, you’ll be able to choose the perfect home size for you and your family!
Anica Oaks is a freelance writer who hails from San Francisco. When she’s not writing, she’s enjoying her time outside with her dogs. Keep up with her on Twitter @anicaoaks.

This article first appeared on RISMedia’s blog, Housecall.

Five Tips for a Hassle-Free Moving Day

Moving vans are criss-crossing the nation in great numbers these days, as consumers take advantage of historically low mortgage rates to upgrade their living space and grab their piece of the American Dream.

The New York Times reported recently that moving companies are so busy, they are turning people away, and in most areas of the country, movers need to be booked way in advance of your moving day.

But the big day will arrive sooner than you think and you’ll want it to go as smoothly as possible. Moving professionals offer five tips for ensuring that it does:

  • List last-minute chores. You’ve spent weeks sorting, packing and preparing for your move, but certain tasks cannot be accomplished in advance, like emptying and/or cleaning out the fridge and freezer, getting kids or pets to scheduled sitters, or taking out the last of the trash. Making a list will make it easier for you to check off last-minute needs.
  • Prepare a go-bag. Pack a box or suitcase with stuff you’ll need on moving day or the day after, as well as documents and valuables you don’t want to load onto the moving truck, such as phone chargers, toiletries, medications and an extra set of clothes for each family member. For a long journey, you may also want to fill a small cooler with water and healthy snacks or pre-made sandwiches.
  • Leave out basic cleaning supplies. You’ve likely done a thorough house cleaning by now, but once the furniture and packed cartons are gone, you may see dirty areas you didn’t notice earlier. Keep rags or paper towels and a few basic cleansers handy for tackling dust bunnies behind the now-gone sofa, or grime where the fridge once stood.
  • Do one last walk-through. Anything left behind may be difficult to retrieve later, so open all kitchen and bathroom drawers and cabinets, bedroom closets, coat closets and any other built-in areas where items may have escaped notice. 
  • Have some cash on hand. While a credit card can cover unexpected stops for lunch or other purchases, you may want to have cash to tip your professional movers. Such tips are not mandatory, but if they’ve done a good job, consider tipping $20 per helper.

Ten Tips for Reducing Your Electric Bill

The coldest weather of the year is upon us, and if you are like most Americans, you are looking for ways to keep your energy costs low. Following these simple tips will help you reduce energy consumption and lower your bill:

  • Use a programmable thermostat. It will save you money because it can set the temperature to the most cost-effective levels during periods in which no one is home or when you’re asleep. 
  • Replace the air filter. That will keep your unit in proper working order, which is key to energy-efficient central air and heating systems. 
  • Lower the temp on your water heater. Lowering the temperature a few degrees will shave some money off your electric bill. The ideal temperature for water heaters is 120 degrees Fahrenheit. 
  • Use the right lights. LED bulbs are the most energy efficient lighting option, using 75 percent less electricity than incandescent bulbs. They have no mercury and last about 25 times longer than traditional incandescent bulbs.
  • Turn off the lights. Even LED bulbs use electricity. The simple act of turning off the lights when you leave a room can save power and money.
  • Check doors and windows for air leaks. Caulking, weatherstripping or replacing seals on your windows and doors will keep cold air from coming in and warm air from escaping. This will save you dollars and improve the comfort of your home.
  • Manage hot water use. Wash only full loads of clothes and dishwashers, and use cold water washes when appropriate.   
  • Dress for the weather. It’s a lot cheaper to put on a sweater or sit under a toasty blanket in the evening than to turn on an electric heater.
  • Shut down your computer. Computers are big energy users. Turn your monitor off at night and ditch the screensaver. Opting to shut down over using a screensaver does not affect your computer’s lifespan.
  • Unplug idle electronics. Devices like televisions, microwaves, scanners and printers use standby power, even when off. Unplug them when not in use.

Traditional vs. Open Floor Plans: Which One Is Right for You?

For years, open concepts have been touted as more conducive to modern living, yet traditional floor plans certainly have their own benefits, particularly for those who are spending lots of time at home. If you’re trying to determine which is right for you, read on to find out what each one has to offer.

Open Floor Plans
Great for Entertaining.
One of the main arguments for an open layout is that it’s ideal for hosting small get-togethers with friends and family. Combining your cooking, living and dining areas makes it easy to communicate and interact with everyone.

Provide Versatility. Often centered around a large, multi-purpose area, open concept homes offer a lot of flexibility. You can create different spaces, such as a workstation, a reading area and even a media room, all in the center of the home. 

More Natural Light. With fewer walls, sunlight is able to flood your home from all angles. If you want a living space that feels bright and airy, an open floor plan will most likely have the edge in this department.

Traditional Floor Plans
Distinct Spaces
. The way that we use our living space is always changing. These days, many luxury buyers are looking for a home where they can work remotely and their kids can learn virtually. If you want separate rooms that are free of distractions and can be used for distinct purposes, a traditional floor plan may be the better fit.

More Privacy. Rather than having one main space where the family congregates, this layout provides more privacy throughout the home. For those who like to have their alone time, this is certainly a benefit. Additionally, it can make your home quieter because there are more walls to absorb noise.

Easier to Decorate. Decorating a multi-purpose space can be a challenge when it comes to getting the flow right and might even require having furniture custom made. Rooms that have a specific purpose, however, are much easier to furnish because the space is more defined. 

How to Figure Out if You’re Ready to Buy Your First Home

Don’t rush into buying a home unless you’re sure that you’re ready. Here are some things you should do to prepare.

Get Your Finances in Order
Your debt-to-income ratio can affect your ability to qualify for a mortgage. Credit card debt and auto or student loans can also make it difficult to afford monthly mortgage payments. You don’t necessarily have to be debt-free before you buy a house, but you don’t want to get in over your head. It may be a good idea to wait a year, or two, or five to pay down your other debts so you can buy a house you can comfortably afford.

Your credit score will affect your ability to qualify for a mortgage and the interest rate on the loan. If your score is low or marginal, raise it by making payments on time and reducing your credit card balances.

Save Enough for a Down Payment and Other Costs
You may be able to get a house with a low down payment, but you will have to pay for private mortgage insurance if you put down less than 20 percent. That may add hundreds of dollars per month to your overall cost of homeownership. A larger down payment can help you avoid PMI and lower your monthly mortgage payments.

You will need money for closing costs, moving expenses, furniture and appliances. Be sure to have funds set aside for maintenance and repairs.

Figure Out How Much You Can Really Afford
The amount a lender preapproved you for is not the amount you should spend. That estimate may not consider all the costs of homeownership or some of your other expenses, such as childcare, or your savings for retirement and for your children’s college education. 

Think About How Your Life May Change
Consider how secure your job is and whether you have a large enough emergency fund. Think about possible changes that may occur in the coming years. For example, you may have one or more children, your kids may go to college or you may start a new job. Those changes may cause your monthly expenses to rise significantly. Ask yourself if you would still be able to afford a mortgage.

Consider How Long You Plan to Stay Put
Think of a home as a long-term investment. You don’t have to stay there forever, but it may not make sense to buy a house if you don’t plan to live there for at least five years or so. If you sell too quickly, you may barely make enough to cover the amount you paid on closing costs and break even. You may even lose money.

Are You Ready to Be a Homeowner?
Many people feel pressure to buy a house to fit in with their family and friends, but rushing into homeownership unprepared can lead to serious financial and emotional stress. You should only buy a home when the time is right for you. 

How to Find the Right Waterfront Property for You

Investing in a waterfront property is a way to ensure a maximum return while also providing you with a unique opportunity to enjoy a luxurious and exclusive view. If you’re thinking of purchasing a waterfront property, here are a few things to keep in mind to prevent overspending and to ensure your investment is sound.

Set a Budget
Have a budget in place before you begin researching and comparing different waterfront properties near you or on your preferred lake or other body of water. Without a set budget in place, you may find yourself wasting time or feeling let down after discovering a property you desire but cannot afford.
Research Property History
Research the history of the waterfront properties you’re most interested in and their previous owners. Compare listing and sale prices from previous owners and timeframes, as well as property taxes and fees, that were required from the homeowner at the time of sale or ownership.
Learn About Different Types of Water

Choosing to purchase a waterfront property is a way to instantly gain access to a body of water, which is why it’s wise to familiarize yourself with the different types of water your preferred waterfront properties are on. When you are shopping around for waterfront property, consider what type of water you’re interested in. Saltwater and freshwater both provide different environments and opportunities, which is why it is important to choose a property near the type of water that’s right for you and your family.
Research Weather and the Potential for Natural Disasters
If you’re making a waterfront property investment near the ocean, or even near a gulf, it’s a good idea to research the area for potential natural disasters, as well as disaster history. While some waterfront locations may be more protected and secluded than others, many waterfront properties that are located on oceans pose an inherent risk and danger compared to waterfront properties that are located on a freshwater source, such as a traditional beach or lake.
Taking the time to research local waterfront homes, as well as taxes and other property fees you may encounter, is essential for anyone in the market for waterfront property. With the right research and an understanding of your own budget and needs, you can find a waterfront property that is truly ideal for you.
This article first appeared on RISMedia’s blog, Housecall.

5 Ways to Protect Your Plumbing in Winter

For those of us who live in a climate where temperatures dip below freezing during winter, special attention needs to be given to protecting our homes against harsh temperatures. Pipes, in particular, are prone to damage from freezing then bursting, leading to potential flooding and costly repairs.

house in winter – heating system concept and cold snowy weather with model of a house wearing a knitted cap

As with most home emergencies, preparedness is your best defence. From Oklahoma’s Champion Plumbing, here are some important steps to take to help prevent a plumbing nightmare this winter.

Prepare water heaters. Making sure your water heater is in good working condition is essential during the winter months. Insulate exposed water heater pipes to make sure your water remains hot and to prevent the pipes from freezing.

Seal any cracks around pipes. Pipes often run along the floor and behind walls, leaving them more exposed to cold weather. That’s why it’s important to seal up any holes on the interior and exterior portion of the wall using caulk or spray.

Flush water heaters. Flushing the water heater helps remove any built-up sediment in the unit. Eliminating the sediment will help extend the life of the unit while also preventing rust and clogs in the drain valve.

Keep your home warm. Making sure your home is well-heated during winter will help keep interior pipes warm. Keep interior doors open to allow the heat to warm the pipes as well as increase circulation in the home. Open cabinet doors on especially cold days to bring extra warmth to pipes located under sinks.

Add extra insulation. Increasing insulation inside of a home will help increase and maintain heat. Consider adding extra insulation in attics, crawl spaces and basements.

The Best Homebuying Strategy

You don’t want to throw money away on rent anymore, do you? Instead, you can build an asset that can grow large if you handle your money wisely. Your best strategy? Prepare financially—now.

Down-payments. Small down-payments spell risk for lenders. You’ll pay a higher interest rate and you’ll have to get private mortgage insurance, about 0.5 to 1.0 percent of your mortgage. That’s about $2,000 a year on a $200,000 mortgage, which will add about $167 to your monthly bills.   

While 20 percent down is ideal, paying PMI allows you to get into a home faster with less money down. You’ll benefit in a desirable housing market where home equity is rising.

The costs of homeownership. According to The Motley Fool, you should prepare to pay about two to five percent of the transaction in closing costs. Afterwards, expect to pay for maintenance and repairs, which average about one percent of your home’s annual value. 

Property taxes can be reassessed annually by multiplying your home’s value by the mill rate (percentage) for your county. Prepare for utilities to rise in winter and summer.

Debt management. Money guru Dave Ramsey says buying a home when you’re in debt is like running a marathon with weights chained to your legs.

Rutgers University economists suggest your monthly consumer debt service should be no higher than 10 percent of your net income. At 20 percent or more, you’re in the danger zone. Divide your monthly consumer debt payments by your total net income to find your percentage.