How to Finance Your Home Renovation

 

Outdated kitchen. Overrun backyard. Unusable basement space. If you have a home renovation project in mind, the first thing you must consider is how you’re going to finance it. Here are the most common options for completing your home renovation.

Cash. Paying in cash is the most straightforward financing option, just save until you have enough money to cover the expenses. This will help eliminate spending outside your budget; however, it can also extend your timeline.

Mortgage Refinance. If you’ve been making payments on your home for a few years and your interest rate is higher than current market rates, you may be eligible for a mortgage refinance, reducing your payments and freeing up some money.

Cash-Out Refinance. You can tap into your home equity and borrow up to 80 percent of your home’s value to pay off your current mortgage, plus take out more cash to cover the renovations. This option is encouraged only when you’re making improvements that will increase the value of your home, as it can add a lot of interest and fees.

Home Equity. Getting a home equity line of credit allows you to borrow money against the value of your home. You receive usually up to 80 percent ( in some cases you can go up to 90 percent) of your home’s value, minus the amount of your loan.

Retirement Funds. Homeowners can consider pulling money from a 401K or IRA account, even though they aren’t specifically meant to cover a home renovation. This option might incur additional penalties or tax payments but may be worth it when making improvements that will benefit them financially in the long run.

The Importance of a Good Mattress

I am a sleeper; when it is time to get in the bed, I am laser-focused about getting there! My mattress plays a huge part in the quality of sleep I get and as I have gotten older, the type of mattress I need recently changed.
You’ve got more options than ever when mattress shopping these days with no shortage of brick-and-mortar and online-only retailers to choose from. Here are the factors you should consider when you’re shopping for a perfect night’s sleep.

Mattress construction: The most popular mattress types are innerspring mattresses, memory foam mattresses, and adjustable air mattresses. Each has pros and cons when it comes to durability and comfort customization.
Firmness: Mattress firmness plays a huge role in the quality of your sleep. Mattresses that are too firm or too soft can cause aches and pains, so it‘s recommended that you test a mattress for 10- to 15 minutes at the store before making a purchase.
Sleeping position: Your mattress should match your sleeping style (side, back, face-down, etc.). You want a mattress that keeps your spine in proper alignment. For example, some mattresses are better for side sleepers, while others are better for back sleepers.
Size: It’s not quite as simple as choosing between a king and a queen mattress. You should also consider your height, as some mattresses are a better fit for shorter people while tall people will want a longer mattress, so their limbs aren’t hanging over the edge of the bed.
Stability: For couples, you should consider how the mattress reacts when one person moves, so the other person’s sleep isn’t disturbed in the middle of the night. Particularly if one of you is a sleeper (me) and one is not (my husband).

Must Have Tools for Homeowners

 

 

When you own your home, things are going to break and, unless you want to spend your money on visits from a neighborhood handyman, you’re going to need to fix them yourself.

Luckily, you don’t need an arsenal of tools to handle most home maintenance fixes. These five tools will cover most of your basic projects.

1. Cordless drill. A cordless drill is a must-have for installing cabinets, drawer pulls, hinges, picture frames, shelves and hooks, and more. Whether it’s for do-it-yourself projects or repairs, you’ll use your cordless drill just about every month.

2. Drain cleaners. Shower and bathroom sink drains are susceptible to clogs because of the daily buildup of hair and whisker clippings. You can use chemical clog removers like Drano, but they’re expensive and the lingering chemical scent is unpleasant. Instead, buy some plastic drain cleaners that can reach into the drain to pull out the clog of hair and gunk. You can purchase them on Amazon or at a local hardware store for a low price.

3. Shop-vac. No matter how careful you are, spills and accidents will happen and there are some tasks that just can’t be handled with paper towels or a standard vacuum, like pet messes or broken glass.

4. Loppers. Even the minimum amount of care for your landscaping will require some loppers to remove damaged branches, vines, thick weeds, and any other unruly plants in your yard.

5. Flashlight. You’re going to want something a little more powerful than your iPhone flashlight when you’re in the crawlspace!

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Consider This: When To Refinance Your Home

 

Refinancing your mortgage is something most homeowners consider at least once throughout the lifespan of their home loan. It allows you to pay off your previous loan by applying for a new one that has better financial advantages. While there are many good reasons to refinance, here are five common ones.

  • Scoring a lower interest rate. The number one reason homeowners decide to refinance is to secure a lower interest rate on their mortgage. Not only does this save you money in the long run and decrease your monthly payment, but you can start building equity in your home sooner.
  • Using an improved credit score. Even if interest rates have not dropped in the market, if you’ve improved your credit score over the last few years, you may be able to reduce your mortgage rate.
  • Shortening the loan’s term. If interest rates are decreasing, there is a chance you may be able to get a shorter loan term with little to no change in your monthly payment, allowing you to pay off your loan sooner.
  • Switching from an adjustable rate to a fixed rate. If you chose an adjustable-rate mortgage with great introductory rates when you initially financed your home, that rate may increase significantly over the years. By switching to a fixed rate while interest rates are low, you can protect yourself from future increases.
  • Cashing out home equity. If there is a big purchase or payment on the horizon, such as funding a wedding or going back to school, your best option may be to use the equity you’ve built in your home to borrow money at a lower cost.

 

How to Prepare for a Mortgage Loan?

Unless you are independently wealthy, using the financing to buy a home is the option for most consumers.  Mortgage lending has changed drastically due to the housing crash in 2007. The market did not immediately recover which resulted in stricter lending standards.  But, don’t let this preclude you from buying a home. There are many programs available for everyone, and there are many factors you must consider if you are interested in a mortgage loan. Here are the top 4 things you should consider when shopping for a mortgage.

 

Select a Mortgage Suitable for your Financial Situation

One of the major benefits of buying a home is the tax deductions that you can realize once you are a homeowner. In addition, you must choose the correct mortgage product suitable for your financial situation. For example, a fixed-rate mortgage will give you a higher starting rate, but your principal and interest payments stay the same. While an adjustable rate mortgage’s interest rate tends to be lower, it has periodic adjustments throughout the life of the loan affecting your monthly payment.  Be mindful of the entirety of the mortgage you are selecting. It is important that you do a personal accounting of your finances and consults a great mortgage loan officer.

Reduce your Debt-to-Income Ratio

If you are applying for a mortgage, lenders always look closely at your debt-to-income ratio. Debt-to-income ratio is the ratio of your monthly debt payment divided by your gross monthly income. It is one way for the lender to measure a person’s ability to manage their monthly payments and debts and their capacity to repay the loan.

Minimize Your Borrowing

More often than not, applying for new credit can have a huge effect on your credit report, which in turn impacts your eligibility when applying for a mortgage. If you know you will be applying for a mortgage in the near future, be sure to suspend any further inquiries on your credit until after your home closes. Inquiries and new accounts can and will affect your credit score and debt to income.

Educate Yourself

Knowledge is power. When dealing with a mortgage, you must be fully aware of your financial capacity, what you need, what you can afford, and what type of mortgage is perfect for you. You can conduct your own research regarding mortgages or consult your real estate broker regarding a good referral.

 

Homeownership is a dream for most but does not have to be difficult to achieve. If you are prepared prior to shop for your home, it makes the process that much smoother. Buying your home is the single largest investment most American’s will make, so the best thing to do is to assess your preparedness and give us at Bascomb Real Estate Group a call!

How to Calculate Your Home Equity?


One of the many questions I receive from homeowners is, how do I find out how much equity I have in my home? This is a very important question, as it is the one factor that can determine whether you can or should sell your home, or even refinance it for a better rate; or to take out some cash for debt consolidation, home repairs or the like.

Knowing how much equate you have in your home also provides you with a better financial picture. Home Equity is simply the value of the ownership stake in your home. It is the difference between its current market value and the total sum of debts or liens (mainly but not exclusive to your primary mortgage) you have against your home.

First, you can figure out the equity in your home by subtracting the amount you owe on all your loans secured by your house from its appraised or market value. For example, Nicole owns a house recently appraised at $500,000. Nicole subsequently owes ABC Lender $150,000 as a mortgage on her home. We can calculate Nicole’s home equity in the figure below:

(Current Appraised/Market Value) – (Mortgage Balance/Loan Balance) = (Home Equity Value)
$500,000 – $150,000 = $350,000

If you are interested in calculating your home equity percentage, you can do so by dividing your home equity value with the current appraised/market value of your house.
(Home Equity Value) ÷ (Current Appraised Value) = Home Equity percentage
$350,000 ÷ $500,000 = $0.7%

Loan-to-Value Formula

Another method of calculating the equity in your home is through the loan-to-value formula or (LTV formula). Lenders use this method in all case when you are discussing encumbering your home with a loan. If you are interested in applying for a mortgage, Loan-to-Value Formula will compare the amount of the loan you are seeking against the current market or appraised value of your home.

To calculate your LTV, divide your current loan balance(s) with the current appraised or market value of your home. After that, the answer will be multiplied by 100 to find the percentage.
In the example given above, the $150,000 loan balance, will be divided by the $500,000 appraised value of your house. This will result in 0.3 multiplied by 100 equals to 30% LTV for your home.

Take note that LTV can affect if you must pay Private Mortgage Insurance(PMI) or if you qualify to refinance, 80% LTV is the max you can borrower to avoid paying PMI. Nonetheless, these are easy ways to calculate your home equity. Remember that Both LTV and home equity values will be subject to fluctuations depending on the market value of your home.

If you are a homeowner and interested in finding out the value of your home visit or website at www.bascombrealestate.com and visit the ‘What’s Your Home Worth’ tab, or email us at customerservice@bascombrealestate.com, we are looking forward to hearing from you!

Home Upgrades on a Dime

We hope our series on credit was helpful during Open Forum Wednesday, as always do not hesitate to reach out and ask any questions regarding the series and your credit. Now in this article, we will talk about home upgrades.

This week we are focusing on homeowners and providing a few tips for upgrading your home on a budget.  When you have been in your home for some time, and even if you are a new homeowner, there may be some changes you want to make but you feel like you can’t afford it.  For those of us who can’t quite pull off a $50K upgraded kitchen yet, there are other options that are surprisingly cheap and easy to do.  When I first purchased my recent home, I switched out all the hardware on the cabinets and drawers in my kitchen to flow with the new appliances I had installed.  It gave my kitchen a fresher look and cost me less than $100.

If you are good with paint, or have friends who enjoy it, throw a paint party and give a room a face lift, or paint the trims and doors throughout the house.  Window coverings can also be changed on a budget, a curtain rod and some new curtains can liven up any room and can be purchased for a few hundred dollars depending on the number of windows.  The list goes on, but we want to hear from you!  Gives us and the community some ideas for easy/inexpensive home upgrades.Visit our Facebook Page to interact more with us.

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Purposeful in providing the most personal of services, our firm is small in size by design in order to enhance the exceptional service we provide.  We are a firm that prides ourselves in offering superior knowledge and skill making us the only choice for your real estate needs.