Pros and Cons of Purchasing a Starter Home

starter home

Millennials take up the biggest share of the first-time home buyer market. To buy a home right away, consumers will take a look into buying a “Starter Home” – a small, modest, and affordable home. When they buy their starter home, they may want to start to grow their families and advance in their careers. As they do so, they may want to sell and move into bigger and better homes, transferring the equity from that one place to another. However, some might stop and think if it’s worth buying a starter home, or if they should save by renting to prepare for the big transaction. What are the pros and cons of starter homes?

Pro: Build stability in your life quicker – When consumer’s purchase their first or second home, they feel more stable and on the right path of life. Mentally, they think they are settled down and can make their parents and family proud by starting to settle down early. Not to mention, if you are the first one in your group of friends to buy property, you’d have bragging rights to them that you are the first of the group to make a large purchase!

Con: Buying twice = packing and moving twice and paying the fees twice – One of the reasons why people would hold off is because they don’t feel like paying the closing costs twice or any other fee twice. Also, lots don’t want to pack, move, unpack, and organize where everything goes more than once. Raise your hand if you enjoy spending all day packing your items, labeling them where they go, hire the movers to move your items and let them know where each item goes, unpack and plan on where everything else goes. Yea… we didn’t think so.

Pro: Get a quick start on building your equity and discover the tax benefits – If you make improvements onto the house, the equity you’ve gained you can use towards the purchase of your next home (don’t forget that a renovation loan may work in this instance!). Also, when you pay your mortgage, the interest portion of your payment can be written off against your income tax. When you’re renting, you might be giving your landlord the tax benefit and equity instead of yourself.

Con: You might spend more than you’ve originally planned – Once you’ve become tenant to owner, you might come to realize that you are responsible financially wise for more than the mortgage payments and taxes. If you want to hire a contractor to redo the floors or upgrade certain appliances, the costs could add up in the end. It might make you think, “is it really wort it in the long run?”

Just like the stock market, there is always risk vs reward in any kind of major transaction anyone can make, especially in purchasing a home. Is the reward in obtaining a start home at first worth the risk? As you can see above, if you are planning staying put for a couple of years or more, then yes: it is worth it on your equity and tax benefits alone. If you want to stay put in the same home/neighborhood for a while, why should you give your landlord the extra benefits that you can obtain yourself? Isn’t it time to reap in the benefits and rewards?

How to go from tenant to home owner- 3 questions you must ask yourself right now

go from tenant to homeownerAre you ready to be come a first time home owner?

Everyone dreams about buying a house one day and calling themselves “home owners” instead of “tenants”. This is especially true for millennials who are buying up a bigger share of the market. Many tenants who pay their monthly rent payments could be thinking in the back of their minds, “Man, this monthly payment I’m making could go towards me owning my own home that can build value for me instead of paying for someone else’s investment!” So after saving some money on the side, taking the time to raise your credit and get your ducks in a row, ask yourself these questions to see if you are ready to go from “tenant” to first time home buyer”:

  1. Do you know and understand the full cost of owning a home? – When you were renting, you are used to one monthly price for the rent and then other monthly costs of utilities like electricity, gas, oil, and cable/internet service. However when you jump into owning a home, you will have more monthly fees you will be responsible for. While a monthly rent check just covers for the place, the monthly mortgage payments will be calculated by four factors: principal, interest, taxes, and insurance. The principal and taxes can comprise your payment, with the principal paying your loan balance each month and the interest being the fee for borrowing the money for every month. Then there are the property taxes. Taxes can vary by the county and town you live in and can average between 1-2% of your home value each year. Finally your mortgage payment will include insurance. Mortgage insurance, being required, will cover the cost of rebuilding the home if it’s ruined by fire or any other disaster. If you desire to buy a condo or townhome, your monthly fees will also include homeowner’s association dues (HOA). HOA fees generally cover common area maintenance, landscaping, and a reserve for other stuff like roofing and exterior painting. HOA fees can range from $100 to $1,000 depending on what it covers and area.
  2. Did you do the math on rent-vs.-buy? – What we said up there can be a lot for any first time home buyer. However don’t panic! Compare your monthly rent payment to your monthly mortgage payment side by side. If you are renting, odds are you are already paying their portion of taxes, interest, and insurance. Landlords are also known to add some extra money on your rent so they can put it in the bank prepare for costs to fix and replace items in the house. Also, if you put a large down payment down on your first home, your mortgage payments will more than likely be less than the amount you pay for rent.
  3. There’s more than one type of mortgage? Which one is right for me? – Yes, just like clothing sizes, there are many types out there to fit YOUR needs and wants. Are you a veteran? There’s a loan made just for you. Are you looking in a rural area and didn’t save up for your down payment? Think about a USDA Are you interested in a home that’s asking for $600k? Then you would want to apply for a jumbo loan. As you can see, there are many different types of loans out there for everyone and there is a loan program that will fit everyone’s need. Most loans do not require the typical 20% down; some only require as little as 3% down! However, keep in mind if your down payment is lower than 20%, you will more than likely have to pay mortgage insurance as well, which will be about .85 percent of your loan and that is not tax deductible. So take a look at all the types of mortgages that are available, and see which one fits not only your budget, but your timeline as well too.

When someone goes from tenant to homeowner, it can be a major move and financial commitment for anyone in general. However, if you know about the overall benefits of owning a home, but not too sure if you are ready to make the jump yet, take a look and ask yourselves these simple questions. With today rates being historically low compared to the past, that might have been the drive that convinces you to make that jump to begin with? And yes, it is totally normal to be scared through the process, but a well-trained realtor and loan officer will be able to answer all of your questions and hold your hand through this major step of your life.

Avoid Buying a Money Pit – Save The Stress!

money pit

Will your next purchase cost you more than you’ve predicted?

As a first time home buyer, you found the perfect house! This house is everything you dreamed of, it’s in the best neighborhood you could ask for. But guess what the best part could be? You can afford the asking price; it’s a steal! Okay, it’s not in perfect condition, but you could make it your very own dream home with a bit of TLC. However, before you make an offer on the place, think about how many repairs are going to be needed. Is it possible the home you are interested in could possibly be a money pit? If you see any of the following warning signs, it may cost you more than you want to purchase and fix the house up:

  • Basement – Majority of the homes that are out there have basements. When you visit the basement, your mind should go beyond thinking about how much storage you will be getting. Instead of thinking about potential space you will obtain, take a look at the quality of the materials and the quality of the work that was built into the area. Does the basement look like it is built properly and can hold on? Not only do you want to take a look at the cosmetics of the room itself, but take a look at the HVAC, plumbing, and electrical systems. If they are not in good shape, it will cost a lot to repair those simple, but necessary items for the home itself.
  • Foundation – The purpose of the foundation for the house is to keeping the structure leveled. Poor stability in the structure often leads to major problems that will be very costly in the long run. What you can do on your own is check any hard-surfaced floors or in the dry wall for any kind of cracks or gaps. Also take a look outside. If you have any large trees near the house, keep in mind the roots can cause the foundation to crack and break over time. You can do those simple tricks on your own, but it could also show up during the inspection as well.
  • Water Damage – Are you one of those who think to themselves, “Wow, I have too much money to myself! I want to find something on my house that will make my bill go insane!” If you are, then water damage will be one of the ways you can expect to pay a fortune to fix. Property with water damage will often leave you a hefty bill to repair them. From the look, to even the damage it can cause in the long run, it’s obvious why water damage needs to be tackled. If you also happen to find mold and mildew on the property, not only will the bill be hefty, but not fixing it properly can cause serious health issues in the long run. Yum!
  • Make a visit when the weather is not-so-perfect – Yes, the house you are looking at might be all sunshine and perfect where the birds and the local critters helps you with your household chores like Snow White while singing, but what is the house like when it’s not sunny or the weather is not in the most perfect condition? Plan to visit the place when it’s raining or thunderstorm to see how the house holds up. If it holds up without any issues from a bad day on behalf of Mother Nature, then the house is in great condition for you in the future. And if you happen to get those critters to help you with your chores, please send them out way. We have a bunch of dishes and laundry that is piled up and could use some help.

Every property that is being sold can’t be perfect over all. Yes, we know that every place has their flaws here and there, but some could cost more than expected. So homebuyers, when you are house shopping keep all of this in mind if you want to avoid spending hundreds of thousands of dollars on your new place that could lead you broke in the end. Not to mention help save you the time and your mental status going through these issues. Let us help you avoid throwing money into the money pit!

Title Insurance: Why It Is Important!

title insurance

Yes, title insurance is VERY important in the home buying process

If you are first time home buyer, there will be many hidden costs that will be presented to you that you might feel overwhelmed somewhat. Besides the obvious down-payment, some newbies are confused about the other costs like your typical closing costs or fees like inspection and such. And it doesn’t matter if you apply for any type of loan from VA loan to FHA, you will have closing costs. However, part of the closing costs and fees will require you to obtain title insurance. Say what? Yes, you heard us right, title insurance. However let’s go over what it is actually, why lenders make this a requirement and other options of title insurance you can obtain to protect yourself in the long run.

Let’s start off that title insurance is very necessary like auto insurance and health insurance. This not another one of those “sales tactics” where people are making you purchase useless insurance like “Volcano Insurance New York City” or “Cloud Insurance”. When you hold a title insurance policy, it insures that you and your mortgage lender are protected against any financial loss or title issues due to liens, disputes between owners who inherited the property through wills, clerical problems in courthouse documents, or fraudulent claims against property or forged signatures.  In other words, title insurance ensures you that the previous owners cannot go after you financially for their property. So now that you understand what title insurance is and why it’s required by your lender to obtain one, let’s go over the different types of them.

Just like auto insurance, there are two types of insurance. There is your typical basic package that protects you if you get into an auto accident with someone where you are responsible for the damages and bills for the accident. That basic auto package is considered the lender’s title insurance in the mortgage world, where it protect the lender or bank from any type of costs that could come up if a title dispute happens to pop up after closing. Then, there is owner’s title insurance, which is just like collision protection for your automobile. Just like collision, owner’s title insurance is optional for consumers like you. However you might want to think twice before you forfeit the owner’s insurance. If your lender’s insurance loses a battle over the legal title, they can go after you. However, if you want to continue to fight for your home and title, you will have to pay to continue. This legal battle can cost you thousands and sometimes hundreds of thousands of dollars to continue the fight. So think of owner’s title insurance as a way to protect you financially in the long run.

So now that you know what title insurance is, and why lenders require this, you can see why this is not your typical “Cloud Insurance” just in case the clouds come down from the sky and attack the earth. Title insurance is beneficial for anyone who owns their own home. The information provided can be overwhelming, especially first time home buyers. Yet the more you know, the more you will see why you are paying extra for each individual item and why we recommend it or why it is required as well.

Looking to Use a 203K Loan to Buy A Foreclosure Home? Here Are Some Tips!

Sometimes it might take more than a little spick and span to make it right.

Some consumers carry a very vivid imagination and can picture what their future home will look like to the final touch and detail. In that case, they apply for a 203K loan to help renovate a fixer-upper into their picture-perfect dream house. One of the types of properties consumers might take a look at is a home that’s under foreclosure. What is a foreclosure? Foreclosure normally takes place when the current homeowner is not able to pay their monthly mortgage payments and they are forced to forfeit their home to the bank.

First, let’s start that there are different types of foreclosures that are on the market.

  1. Pre-foreclosure – A pre-foreclosure, or short sale, occurs when the homeowner is currently the owner of property and are close on their home being foreclosed.
  2. Post-foreclosure – After the property is foreclosed and is taken away from the home owner, the bank or lender now owns the property and then becomes a real estate owned property (REO). If the borrower failed to make their payments towards their VA or USDA loan, then the property will be known as government-owned foreclosure. In this part of the foreclosure, the bank will hire a local real estate agent to put it on the market by putting the property on the market or put the house on auction for consumers to bid on it.

Foreclosed properties, especially short sale properties, will be on a tight deadline and the process to get clearance for closure on it can be lengthy and not appealing to the homeowner or banks. However, things like that shouldn’t set you back on obtaining and creating the perfect dream house to make your friends go “wow” and be the one that everyone envies in the neighborhood. If you want to use your 203K loan on a foreclosure, make sure you have your ducks in a row by doing the following:

  1. Check your credit report and get a pre-approval – We know, we are beating a dead horse by saying those two, but they are important enough that we need to mention these two, again. Know what your credit score is before you enter the game, fix it if it needs a tune up, and getting pre-approval will be one of the most important steps you can make when you obtain a 203K loan, or in fact any kind of loan in general!
  2. Use a Real Estate Agent who specializes in purchasing foreclosures – As we’ve mentioned before, every real estate agent in the world has their strong points and specialties. There are some who specialize in foreclosure properties, and some will be more familiar with the process the banks will want when you decide to buy it from a certain bank. Your agent can also discuss the possible challenges, laws, and regulations that can occur when it comes to foreclosures and help you make the right choices on what to purchase and help steer you away from being dragged into a money pit.
  3. Get an Inspection – This part is a no-brainer, especially since foreclosed properties are being bought as-is. Foreclosed homes also are known to have little-to-no room for negotiation. For that reason, it is important to get that inspection from a certified inspector. They will check for any signs of mold or varmints and check other major appliances as well too like the water heater, or the plumbing in the home, or the furnace, and the list could go on and on. It is also a great idea to check with the local building departments to find out if there can be any issues post-closing. Here, you should expect to hear the worse and get the numbers on how much it will take to bring it up to code.
  4. Making the offer – So you’ve gotten the inspection report and you are willing to fix it up to your liking. Congrats! First, which is obvious, is letting your real estate agent know you are interested in the property. If you are interested in purchasing a home with a short sale, your agent will present the offer to the individual who still owns the property and try to make the deal. When you are interested in purchasing a REO foreclosure, your agent will present your offer to the listen agent that was hired by the bank. The buyer’s agent never has direct contact with the bank themselves. When you purchase the foreclosure, you will receive a different kind of deed than a normal deed known as the sheriff’s deed. It will not come with the same assurances or warranty that a normal deed normally carries. Also at the time of purchase, you will need to obtain a title insurance that provides an owner’s policy to ensure that no one will be coming back from the past and try to claim the home.

Keep in mind that even though the price tag is low on a foreclosed home, it might not be worth the trouble in the long run. Some foreclosed properties can be more of a hassle than others.

So if you are ready to use your 203K loan to buy a fixer-upper that might need more TLC than normal, take a look at foreclosures to see if one will be the right fit for you and your family needs. Like they say, never judge a book by its cover, but it doesn’t hurt to do some research on the inside of the property to make sure it’s not going to be more of a hassle than it’s worth.

Would You Like To Save Thousands On Your Mortgage Payments?

When Americans talk about the “American Dream”, they often talk about purchasing a house to provide a sturdy and secure place to live for themselves and others. However, to achieve this dream, many consumers take out a loan and have thousands of dollars of debt held over their heads for the next 15 to 30 years.  And one of the downfalls on obtaining a mortgage is paying extra money towards your loan we call your interest rate. Yes, the extra we have to pay in interest is a hefty price we pay for home ownership. However, what if we told you about a trick that could help you pay your mortgage off faster and at the same time, save you thousands of dollars on your interest?

We pay our mortgage 12 times a year, one payment each month. What if we split it in half and pay our mortgage bi-weekly? No, we’re not saying you should go broke by paying your full mortgage payment twice in one month. We are talking about a simple solution: split your monthly payment in half and pay it every two weeks. For example, if your monthly mortgage payments are $1,400 a month, pay $700 one week, and two weeks later pay the other $700. Now why should we do that? When we do the calculation, there are 52 weeks in the year. Divide each individual by two to make it bi-weekly, and you will get 26. If you pay twice a month, you will be making 24 payments. If you pay bi-weekly, you would be making one extra payment to your mortgage without thinking twice. Not only would you be paying your mortgage of quicker, but you will be saving thousands of interest in the long run as well.

However, before you dive right into the bi-weekly payment plan, be sure you ask your mortgage/lender company what they will do with the extra payments they receive. If they will apply it to your mortgage as soon as possible, then you are good to go. However, if they save it as one large lump sum at the end of the year to apply it, then the bi-payment plan will not be a good option for you in the long run. If you decide to do the bi-weekly payment plan, keep in mind many lenders will charge a fee for this service and payment plan.

So let’s go over the benefits of bi-weekly payments. The best reason why to look into this plan is the fact that you are making an extra payment a year without thinking twice about it. And when you make that extra payment, you are paying your mortgage off sooner than later. The benefit of that is that it can reduce your mortgage term by an average of 6 to 8 years and can also save you money on your interest as well. Bi-weekly mortgage payments are worth it in the long run financially and loan term wise.

Is Upgrading Appliances Worth The Bang For the Buck?

“Out with the old and in with the new” or “if it ain’t broke, don’t fix it”?

Today’s technology is consistently changing and continues to find ways to upgrading our lives in some way, shape, or form. Being human, many of us want to stay up to date with the changes by upgrading our televisions with its picture looking life-like or buying a new vehicle that can parallel park for us in a couple of seconds. On top of that, our appliances are getting major upgrades as well. One of the newest claims is that they help the average consumer save energy and money compared to their old appliance. That sounds like a great deal: saving money while we channel our “Captain Plane Planeteers” by saving the planet at the same time. However claims like can make some people skeptic, considering the cost of a new appliance. Yes, we all want to save money and we considered it an extra bonus when we save the Earth from global warming and such at the same time, but will this simple swap make a significant difference in money and energy? Here are some every day appliances worth taking a look into.

  • Refrigerator – A new Energy Star certified fridge can cost you around $1000. If your fridge is still in working condition, is it worth replacing your old fridge? The verdict: perhaps. If your fridge is older than when you purchased Nsync’s new CD, times have changed and the savings are significant enough to make up for the purchase. However, if it was purchased within a 20 years span, then the savings will not add up to the new fridge’s lifetime. An exception to this rule is if you have 2 fridges in your place, you can upgrade to a super-size fridge and leave one fridge that’s running, and we are talking about working fridge, not the running you hear about in prank phone calls.
  • Washing Machines – For the average price of $750, you can buy a brand new Energy Star washing machine. So is it worth replacing that washing machine that came with the house back in the 1980’s? Yes, especially if you are switching from an average washing machine to a front loader or a high efficiency model. . Not only did the washing machine get an upgrade on saving energy, but many washers are now HE to help save water consumption. So not only will you be saving on your energy bill, but you would be saving water and money on your water bill as well.
  • Dryers – Yes, we put them in a separate category for one reason. To get straight to the point: upgrading your dryer is not worth the money overall. Dryers use heated air to dry your clothes and upgrading to a newer model will not decrees the need of temperature and time that is required. There is no “magic” dryer that’ll consume less energy to accumulate this heat. Our recommendation is to keep your dryer and if you want to save some money on drying your clothes, hang them on a clothes line and let them air dry.
  • Air Conditioners – With summer coming just around the corner, many consumers are preparing for the hot, sticky summer months by dusting off their a/c window units and getting their central air maintained. Plus, air conditioning is one of those household appliances that consume the most wattage per hour, which makes our bills higher as well. Before you drag old yella up from the basement, would you save even more money and energy by buying an energy efficient unit? This one is a toss-up. Some experts say if your unit is still working and your energy bills are low enough as it is, then you shouldn’t invest in a new unit. However, some experts say if your unit is over 10 years old, replacing it would be worth it since you would be saving an average of 20% overall. Also, many HVAC experts recommend replacing a/c units if they are over the age of 15, since the average lifespan of the unit can be up to 15 years in general. Take these factors into consideration the next time you decide to get your unit maintained or put it in the window.

So, as you can see, there are some upgrades you can make in your home that is worth the money spent on overall, and there are some that might not be worth it unless you want to keep up with the times and the technology. However, as you can see, some upgrades can help everyday people, like upgrading a phone that works or a washer that consumes less water, and there are some upgrades that every day people might not want or need, like the self-parking car for those who know how to parallel park or if our dryer is still continuing to work. However, just like food products, when the label claims to be “Fat Free” but it isn’t necessary healthy for you to eat, appliances are worth getting a deeper look into the “Energy Star Certified” label. Is it worth it for YOU?

Common Landscaping Mishaps

Don’t have a green thumb? Don’t worry about it!

Landscaping is a great way to increase your curb appeal and a wonderful first impression for anyone who enters your home. Since landscaping and gardening are not as simple as they look, a lot of first timers might make mistakes that can make them frustrated overall.  So to avoid the mess-up look or the frustration, take some tips from us.

  • Using the wrong plants with the wrong soil – If you are a beginner, take a look at native plants since they require less maintains. Native plants happen to occur naturally in a certain area or region and don’t need human intervention to maintain its life. That’s simple now isn’t it? However, make sure if you the right soil for the right plants. Certain soil might need more moisture than others or some require different kind of soils like acidic and alkaline.
  • Planting the wrong type of trees – Who would have thought we would make a category for the wrong type of trees? Yes, there is a difference from one tree to the other. Many first timers like to plant fast growing trees to get quicker results. However those types of trees are often short-lived which can be frustrating near the end. When you are planting trees, remember patience is a virtue and plant trees like oak and maple, the kind of trees that can live for hundreds of years. Also, think about the type of trees that can control the natural light in your area. During the winter months, deciduous trees let in more sunlight into your place compared to evergreen trees which can add more natural heat to your home.
  • Not considering seasonal changes – Do you know the difference between summer and winter? Besides temperature, every season is different between the amounts of natural sunlight to the amount of rain that falls in a cycle. So keep Mother Nature in mind year round when you decide on what to plant. Also, since Mother Nature can have rough times with winds and storm, we also recommend planting your trees away from your home to avoid branches falling and hitting your house.
  • Go low maintenance – When you can, try to use low maintenance materials like your stone, composite blocks, and gravel whenever possible. This is your first time landscaping and gardening, do you want to make your first time long and frustrating?
  • Less is more – Just like your interior designs, remember less is more. Avoid any kind of chaotic clutter in your landscape to make it look like a hot mess.

Landscaping and gardening outdoors should be a fun project you taken up on, not one where you are frustrated and give you anxiety every time you think about maintaining your outside space. And remember, curb appeal is great on giving your home a great first impression. Make it count!

How to Financially Survive Living With Roommates While Raising Your Credit

One of the main reasons why many individuals choose to live with roommates is to cut the cost of individual living down. Roommates and shared living are very popular financially to millennials and other generations who are planning on their financial future and want to save for a down payment or closing costs on a home purchase.  The average renter can save an average of 13% of their income by having a house mate. You could be looking for a place to rent with your friends or classmates, living with complete strangers you’ve met on the internet or roommate forums, or respond to a “room for rent” ad to find a companion. One thing we search for in terms of an ideal roommate is if one is “compatible” when it comes to personality, household chores and work schedule. But it’s a whole other search when it comes to compatibility with finances, especially when your finances are included in the mix as well. There are small things about your roommate’s personality you can ignore or deal with, but when it comes to sharing finances, it can get hard to ignore the elephant in the room. A lot of time at the end we tend to say to ourselves, “I’ve should have done x, y, and z to protect my credit and finances.” Even if you are moving in with your B.F.F. who could “never screw you” take these financial steps into consideration.

  1. Create and sign individual leases – Besides the lease agreement you have with the place you are renting from, create individual leases with your fellow roommates. Are you splitting the utilities, even the month your one roommate spends most of the time at their significant other’s place? If your roommate have their boyfriend or girlfriend all the time, are you ok with them being over all the time? If your roommate fails to pair their fair share, you can bring up the lease you created with them that they are responsible no matter what.
  2. Keep detailed receipts of payments – When it comes to rent, utilities, and other kind of payments, there will be one account holder for the account you will have to pay into. When you are paying your portion of the monthly bills, make sure it’s trace-able by using an old fashion check or you can use free apps on your smartphone like Venmo or Google Wallet and caption what type of payment it is. If you and your roommate are paying one landlord the security deposit, keep a log of how much you contributed to the security deposit, especially if the security deposit has only one name on it, and it’s not yours! If you prefer to pay cash, make sure you get a receipt for each cash transaction. It’s always better to be safe than sorry.
  3. Try not to be the sole account holder – If you are splitting a place with your friends or future roommates, try to put the utilities account in each name. Remember, your name on the account means it’s YOUR legal responsibility. The cable company doesn’t care if you have your half and your roommate spent their half at the club – they just want to get paid the full amount by the date and legally, it’s on the person whose name it’s on. Plus, if they fail to pay the utilities and it goes into collections, it will only be reflected on their credit, not yours in the long run.

You’ve worked hard to get to where you are now. You pay your bills on-time and slowly starting to build your credit history and score so you can buy your own place and save up money for a down payment! Unfortunately, when it comes to sharing resources, you can’t report the credit bureaus for “poor roommate skills” to lower their credit. However, to protect yourself in the long run, follow these simple tips to protect your finances. If they fail to pay for any reasons, you can take a look into small claims court to get your portion back, and avoid making the same mistake with the same person!

Home Improvements With the Biggest Payoff

Over time, people change their sense of style and want to make their home look like they are up to date. One of the main reasons why people remodel their homes beside to fit their taste is to add more value to their property. Not only can someone try to save money to pay for the renovations themselves, but one of the most popular ways to finance their home project is to use a 203k loan. However, which projects will be worth it in the long run? What do people mainly like to see on a “renovated” home?

  1. Major Home Maintenance – When homeowners want to do some upgrades and construction on their homes, the most overthought but necessary items that should be on their list should be the overall maintenance of their home. We are talking about maintenance that needs to be done to make the home in a livable condition like the roof or moldy leaky pipes. Think about this: would your house still be livable if you remodeled your kitchen but let the plumbing go that causes leaks and flooding in the home? Home Maintenance is a very common make-it-or-break-it factor on the value of the home as well as the price tag if you decide to sell the place. If you watch those shows on HGTV, you hear more people being concerned moving into a house that wasn’t well maintained than a house with the wrong color top of a stove or cabinets.
  2. Kitchen – If you want an investment that can generate a return 100% or more, start with the kitchen. The kitchen is one of the areas where people spend time in their homes. When it comes to first impressions on a good home, the kitchen is the one area where anyone can see if the money is well spent or not. So what kind or remodel makes everyone go “wow”? When it comes to your kitchen, think very traditionally. Nothing says traditional more than having all-wood cabinets, flooring made out of natural wood or stone, stone counter tops like marble or granite, and modern appliances that have that commercial grade look. Even if you aren’t a huge cook, having an updated, traditional kitchen will put the wow factor in your property and bring the value up.
  3. Curb Appeal – Growing up, our adult peers always told us, “don’t judge a book by its cover”. While that may be true for people, that is rarely the case when it comes to the housing market. If people aren’t impressed by what you have on the outside or it looks like it can use some TLC, most likely they will have a negative reaction of your place or not even step foot inside. You want to convey the sense of welcome to not only prospect buyers in the future, but for your family and friends as well too!
  4. Additions – When you add more room and space to a property, you can almost guarantee a good return value overall. Bathroom additions are known to have the highest return value with an average of 86.4% Think about this: if you have a 4 bedroom, one bathroom house, that can be very chaotic for multiple people, especially if it’s a full house. Even a half bathroom can pay off in the end as well. Any other additions like attics, bedrooms, even family and sun rooms returned from 70 to 80 percent of the money spent. You also don’t have to think about gearing the additions for a growing family. Some people want more room and space to store their hobbies or have a home office.

One of the benefits why people go from renting to buying is to have the ability to remodel their home to their look, style, and taste. Not only does a remodel update the look of the area, but remodels in general are known to raise the value of the home overall. If you are trying to remodeling your home specifically to up the property value of your home, take a look at the list above and see which one you would like in general.  Either you are using cash up front or a 203k loan, some renovations are worth the overall process and some don’t pay off as much as one thinks. When it comes raising your property value, think about these common remodels.