Cut Refinancing Expenses

iStock_000016148905XSmall(er).jpgEvery single day, homeowners who are excited about lowering their rate have a tendency to ignore the refinancing costs because they’re being rolled back into the new mortgage. If the payment is lower than what they’re currently paying and there’s no money out of pocket, it seems like a good deal.

Refinancing your home because a lower rate is available is one thing but the closing costs associated with that new loan could add several thousand dollars to your mortgage balance. By following some of the suggestions listed below, you may be able to reduce the expense to refinance.

• Tell the lender up-front that you want to have the loan quoted with minimal closing costs.
• Check with your existing lender to see if the rate and closing costs might be cheaper.
• If you’re refinancing a FHA or VA loan, consider the streamline refinance.
• Shop around with other lenders and compare rate and closing costs.
• Credit unions may have lower closing costs because they are generally loaning deposits and their cost of funds is less.
• Reducing the loan-to-value so that mortgage insurance is not required will reduce expenses.
• Ask if the lender can use an AVM, automated valuation model, instead of an appraisal.
• You may not need a new survey if no changes have been made.
• There may be a discount on the mortgagee’s title policy available on a refinance.
• Points on refinancing, unlike purchase, are ratably deductible over the life of the loan.
• Consider a 15 year loan. If you can afford the higher payments, you can expect a lower interest rate than a 30 year loan and obviously, it will build equity faster and pay off in half the time.

A lender must provide you a list of the fees involved with making the loan within 3 days of making a loan application in the form of a Good Faith Estimate. Every dollar counts and they belong to you.

How to Use Light to Increase a Home’s Value

 

If you are getting ready to stage your home for selling you’re probably already thinking of ways to maximize the value of your home and make it as appealing as possible to your potential buyers. Making effective use of light fixtures and lighting schemes will help you reach that goal.

The easiest way to use light in your home is to take advantage of natural sunlight. Rooms with big windows and a lot of sun exposure lend themselves to this easiest of all.

The case may be, however, that not every room in your home is easily illuminated with sunlight.  If this is the case, then open windows and doors fully to allow sunlight to reach greater depth in your home.

Carefully placed mirrors also can help in redirecting sunlight throughout the home.

Photo courtesy LightingSale.com

When staging your home you want to highlight the best features of your home and your décor while simultaneously downplaying the negative.

Using a targeted lighting scheme is a perfect way to highlight your favorite décor accents. Track lighting is ideal for this task as they can easily be directed to focus their light on a particular part of your room.

If your budget allows for it, consider updating the lighting designs in some of your house’s rooms, such as in your kitchen.

Recessed lighting installed under-cabinet is a popular trend in contemporary kitchen design. The installation is fairly simple and gives a sleek and professional look to your kitchen.

Photo courtesy LightingSale.com

In your living room and dining room consider changing out an old hanging lamp and replacing it with an elegant looking chandelier.  Remember to choose one that helps to accent your room and doesn’t overpower it.

When preparing your home, don’t overlook the simple advantages that light can bring to your home. Accent the positive with lights and downplay the negative by taking the focus away from it. Show off what made you fall in love with your home and you’ll hopefully help a buyer find that same attachment.

One Thing You May be Overlooking in Your Home Presentations!

Smartphones have become a standard tool for a majority of people. When presenting a home to a potential customer, we must now consider an extra home presentation factor: signal strength.

Lead Paint

According to the EPA, “most homes built before 1960 contain heavily leaded paint”. While lead paint was banned in 1977, home owners are encouraged to not remove any lead paint that is in good condition. Lead paint is known to cause electromagnetic interference that will affect signal strength. Walk through different rooms and see if you experience any dramatic loss of signal. If you suspect lead paint may be causing an issue, I suggest hiring a professional to remove it.

Construction Materials

If you notice a decrease in cellular signal strength when you enter a home, the materials used in the construction of the home may be the culprits. Older homes tend to have more of an issue with affecting cellular signals. Metal bolts, pipes, tools, and bars can contribute to a loss in cellular signal. While there is not much we can do when presenting a home with this issue, consider either purchasing a signal strength booster or suggesting such a device if the customer addresses the issue.

Other Devices

If you are staging a home and have included: microwaves, cordless phones, baby monitors, bluetooth devices, etc., be aware that these devices can affect signal strength and could possibly deter a customer. Many of these devices operate on a similar wave frequency. Having a large number will interfere with signal strength and Wi-Fi networks.

These are just a few items that may interfere with signal strength. With the popularity and access to smart phones, you may want to consider the signal strength more when presenting a home.

Shifting Debt to Tax Deductible

shift debt.pngThe Mortgage Interest Deduction is available to homeowners for up to $1,000,000 of acquisition debt on the combination of their first and second home. They can also deduct interest on up to an additional $100,000 of Home Equity debt.

While Acquisition Debt is used to buy, build or improve a principal residence, the Home Equity Debt can be used for any purpose. It can be used for educational or medical expenses, to purchase a personal car or boat, consolidate debts or pay off credit cards.

A homeowner with $15,000 of credit card debt at 19% and sufficient equity in their home could replace it with a home equity loan at much lower interest rate. Not only would the interest rate on the home equity loan be about 1/3 of the rate paid on the credit card, it’s would now be tax deductible.

If the taxpayer was in the 28% bracket, the net interest on a 6.5% loan would be 4.68% after tax benefits are considered.
Shifting personal debt to Home Equity debt can result in an interest deduction and probably, a lower interest rate. For more information see IRS Publication 936 page 10 and consult your tax professional.

When to Sell the Temporary Rental

Temporary Rental2.pngSome homeowners, who were not able to sell during the recession, chose to rent their homes instead. In some cases, they didn’t need to sell their home at the depressed prices and opted to rent it until the market recovered.

It’s a valid strategy but there are time restrictions that could have serious tax implications for some homeowners.

The section 121 exclusion for gain in a principal residence requires that the home is owned and used as a main home for at least two years during the five year period ending on the date of the sale. This allows a homeowner to rent their home for up to three years and still have some part of the exclusion available.

The sale of a home with a $200,000 gain that qualifies as a principal residence would result in no tax being paid by the owner. Comparably, a rental property with the same gain could have a $30,000 or higher tax liability depending on the length of ownership and tax brackets of the investor.

The housing market has dramatically improved in the last year. If you have a gain in a home that has been your principal residence and it has been rented less than three years, you might want to consider selling it while you qualify for the exclusion.

If you are considering a sale on your principal residence that has been rented, consult with your tax professional for advice on your specific situation. For additional information, see IRS Publication 523.

Boomerang Buyers

Waiting periods.pngIt’s estimated that 10% of the homes sold in 2013 will be to buyers who lost a home in the past five years. Approximately 500,000 buyers who may have thought they wouldn’t own a home anytime in the near future will be homeowners again.

It’s estimated that several million of these previous homeowners will purchase again in the next eight years. This kind of activity will contribute significantly to the housing recovery.

Some people thought that the housing crisis would cause a shift in values placed on owning a home but the boomerang buyers definitely don’t support that theory. Having a home of your own, where you can raise your family, share with your friends and feel safe and secure is still part of the American Dream.

The rising rents, increasing prices and low, low mortgage rates are also influencing buyers into the market. In many cases, it is cheaper to own that to rent.

All new buyers, including those who have experienced foreclosures or bankruptcies, must have good credit history and the ability to repay the loan. It just may not take as long to reestablish the credit as some would-be buyers might have thought.

Read more about Bidding Wars This Spring, Spring’s Wild Card and Boomerang Buyers.

18 Ways to Prep Your Home’s Exterior for the Spring Market

Spring is in the air in some parts of Canada and the U.S.  This is the time of year when thoughts turn to spring cleaning; whether or not you’re selling your home. Of course, if you are listing anytime soon, you’ll want to be even more meticulous.

The busy spring market will be upon us before you know it, so here are some tips for getting the exterior of your home shipshape:

1. Remove glass from light fixtures and take out any little critters that may have found a home over the winter.  Be sure to use glass cleaner on the panes before replacing them in your fixtures.

2. Clean your mailbox.  If it hasn’t weathered well over the winter, it’s probably time to replace it.

3. Clean and polish, if necessary, your front door’s hardware. Replace it as well if necessary.

4. Check your house numbers.  Are they still in good shape and visible from the street?  If not, replace them.

5. Wash down your front door and garage door.  If you find that the previous summer’s sun has faded the paint, consider repainting.  (Your garage door should be painted a color that blends in with the brick or vinyl siding on your home.) Before painting, check with the paint manufacturer to see what the optimal outdoor temperature should be. You don’t want to paint when it’s still too cold outside.

6. Wash the windows.  If this isn’t your strong suit, hire a professional.

7. Hose down the porch and driveway.

8. Sweep the porch, driveway and patio to get rid of any rogue leaves etc.

9. Check your porch, driveway, and patio for any cracking or lifting of patio stones that may have taken place.

10. Check your roof to make sure no shingles are missing or were damaged during the winter.

11. Remove debris from your gutters and drain spouts.

12. Rake the lawn.  However, before doing that it’s very important to check with your local garden center first to be sure it’s not too early.  If raked too soon before the ground thoroughly dries, you could potentially damage your lawn.

13.  For a burst of color, plant spring flowers.

14. Tidy up your gardens in preparation for planting season.

15. Organize the garage.

16. If you don’t use your barbeque year round, it’s time to bring it out.  If it’s a built-in unit that will be staying with the house, be sure to clean the grills and wash down the lid.  If you have a cover for it, replace it if it’s worn.

17.  clean your pool.

18. Bring out your patio furniture and set it up.   you want potential buyers to see your outdoor living space’s potential.

These are some suggestions to get your started.