6 Low or No Down Payment Mortgage Options for 2016

6 Low or No Down Payment Mortgage Options for 2016

100% financing and low-downpayment loans for today's mortgage borrowers

No Down Payment Mortgage

A no down payment mortgage allows first-time home buyers and repeat home buyers to purchase property with no monies required at closing. Other options, including the FHA loan, the HomeReady™ mortgage and the Conventional 97 loan offer low down payment options with a little as 3% down. Mortgage insurance premiums typically accompany low and no down payment mortgages, but not always.

Is A No Down Payment Mortgage Right For You?

It’s a terrific time to buy a home.

Sales are rising, supply is dropping, and prices have increased in many cities and neighborhoods. As compared to next year, today’s market may look like a bargain.

Furthermore, mortgage rates are down.

Rates for 30-year loans, 15-year loans, and 5-year ARMs are cheap, which has lowered the monthly cost of owning a home.

However, it’s not the monthly payment that scares off new buyers these days — it’s the prospect of having to put 20% down.

Buyers are earning good incomes, but few have much saved in the bank.

The good news is that there are a bevy of mortgage programs requiring little or no money down and they’re available to the general public — no hoops required.

Want to buy a home with little or nothing down? You can.

Click to see today’s rates (May 25th, 2016)

Home Buyers Don’t Need to Put 20% Down

In today’s U.S. housing market, home buyers don’t need to make a 20 percent down payment. Many believe that they do, however (despite the obvious risks).

It’s a common misconception that “20 Percent Down” is required to buy a home. And, while that may have true at some point in history, it hasn’t been so since the advent of the FHA loan, which occurred in 1934.

The likely reason why buyers believe a 20% down payment is required is because, with one specific mortgage type — the conventional mortgage — putting twenty percent down means private mortgage insurance (PMI) is not required.

Paying PMI is neither good nor bad, but consumers seem to abhor it.

The purpose of private mortgage insurance is to protect the lender in the event of foreclosure — that’s all it’s for. However, because it costs money, private mortgage insurance gets a bad rap.

It shouldn’t.

Because of private mortgage insurance, home buyers can get mortgage-approved with less than 20 percent to put down and, eventually, private mortgage insurance can get removed.

At the rate at which today’s homes are increasing in value, a buyer putting 3% down would pay PMI for fewer than four years.

That’s not long at all. Yet, many buyers — especially first-timers — will put off a purchase because they want to save a larger downstroke.

Meanwhile, home values are climbing.

For today’s home buyers, making a down payment should be consideration, but it shouldn’t be the only consideration.

This is because home affordability is not about the size of your down payment — it’s about whether you can manage the monthly payments and still have cash left over for “life”.

A large down payment will lower your borrowed amount and, therefore, will give you a smaller monthly payment to make each month. However, if you’ve depleted your life savings in order to make that large down payment, you’ve put yourself at risk.

When the majority of your money is tied up in a home, financial experts refer to it as being “house-poor”.

When you’re house-poor, you have plenty of money “on-paper”, but little of it available for the everyday emergencies of life.

And, as every homeowner will tell you, emergencies happen.

Roofs collapse, water heaters break, you become ill and cannot work. Insurance can help you with these issues sometimes, but not always.

That’s why you being house-poor can be so dangerous.

Many people believe it’s financially-conservative to put 20% down on a home. If that 20 percent is everything you have, though, putting twenty percent down is the opposite of being financially-conservative.

The true financially-conservative option is to make a small down payment.

Being house-poor is no way to live.

Click to see today’s rates (May 25th, 2016)

VA Loans : No Money Down (100% Financing)

The VA loan is a no-money-down program available to members of the U.S. military and surviving spouses.

Guaranteed by the U.S. Department of Veteran Affairs, VA loans are similar to FHA loans in that the agency guarantees repayment to lenders making loans which means VA mortgage guidelines.

VA loan qualification are straight-forward.

VA loan qualifications are available to active duty and honorably discharged service personnel are eligible for the VA program. In addition, home buyers who have spent at least 6 years in the Reserves or National Guard are eligible, as are spouses of service members killed in the line of duty.

Some key benefits of the VA loan are :

  • You may use intermittent occupancy
  • Bankruptcy and other derogatory credit do not immediately disqualify you
  • No mortgage insurance is required

VA loans also allow for loan sizes of up to $1,094,625 in high-cost areas. This can be helpful in areas such as San Francisco, California; and Honolulu, Hawaii which are home to U.S. military bases.

Click to see today’s rates (May 25th, 2016)

USDA Loans : No Money Down (100% Financing)

No Money Down options exist for non-military borrowers, too. The U.S. Department of Agriculture offers a 100% mortgage. The program is formally known as a Section 502 mortgage, but, more commonly, it’s called a Rural Housing Loan.

The good news about the USDA Rural Housing Loan is that it’s not just a “rural loan” — it’s available to buyers in suburban neighborhoods, too. The USDA’s goal is to reach “low-to-moderate income homebuyers”, wherever they may be.

Many borrowers using the USDA Single Family Housing Guaranteed Loan Program make a good living and reside in neighborhoods which don’t meet the traditional definition of rural.

For example, college towns including Christiansburg, Virginia; State College, Pennsylvania; and even suburbs of Columbus, Ohio meet USDA eligibility standards. So do the less-populated suburbs of some major U.S. cities.

Some key benefits of the USDA loan are :

  • You may include eligible home repairs and improvements in your loan size
  • There is maximum home purchase price
  • Guarantee fee added to loan balance at closing; mortgage insurance collected monthly

Another key benefit is that USDA mortgage rates are often lower than rates for comparable, low- or no-down payment mortgages. Financing a home via the USDA can be the lowest cost means of homeownership.

FHA Loans : 3.5% Downpayment

The FHA mortgage is somewhat of a misnomer because the FHA doesn’t actually make loans. Rather, the FHA is an insurer of loans.

The FHA publishes a series of standards for the loans it will insure. When a bank underwrites and funds a loan which meets these specific guidelines, the FHA agrees to insure that loan against loss.

FHA mortgage guidelines are famous for their liberal approach to credit scores and down payments. The FHA will typically insure a home loan for borrowers with low credit scores so long as there’s a reasonable explanation for the low FICO.

The FHA allows a down payment of just 3.5 percent in all U.S. markets, with the exception of a few FHA approved condos.

Other benefits of an FHA loan are :

  • Your down payment may consist entirely from “gift funds”
  • Your credit score requirement is 500
  • Mortgage insurance premiums are paid upfront at closing, and monthly thereafter

Furthermore, the FHA supports homeowners who have experienced recent short sales, foreclosures or bankruptcies through the agency’s Back to Work program.

The FHA insures loan sizes up to $625,500 in designated “high-cost” areas nationwide. High-cost areas include Orange County, California; the Washington D.C. metro area; and, New York City’s 5 boroughs.

Click to see today’s rates (May 25th, 2016)

The HomeReady™ Mortgage : 3% Downpayment

The HomeReady™ mortgage is special among today’s low- and no-downpayment mortgages.

Backed by Fannie Mae and available from nearly every U.S. lender, the HomeReady™ mortgage offers below market mortgage rates, reduced mortgage insurance costs, and the most innovative underwriting idea on more than a decade.

Via HomeReady™, the income of everybody living in the home can be used to get mortgage-qualified and approved.

For example, if you are a homeowner living with your parents, and your parents earn an income, you can use their income to help you qualify.

Similarly, if you have children who work and contribute to household expenses, those incomes can be used for qualification purposes, too.

Furthermore, via HomeReady™, you can use boarder income to help qualify; and, you can use income from a  non-zoned rental unit, too — even if you’re paid in cash.

HomeReady™ home loans were designed to help multi-generational households get approved for mortgage financing. However, the program can be used by anyone in a qualifying area; or who meets household income requirements.

Read this complete HomeReady™ Q&A for more on the program.

Conventional Loan 97: 3% Downpayment

Editor’s Note : The Conventional 97 program was originally discontinued in December 2013. It was later reinstated by the Federal Home Finance Agency in late-2014. This section has been updated to reflect the new product’s guidelines.

The Conventional 97 program is available from Fannie Mae and Freddie Mac. It’s a 3 percent downpayment program and, for many home buyers, it’s a less-expensive option as compared to an FHA loan.

Furthermore, the Conventional 97 mortgage allows for its entire three percent downpayment to come from gifted funds, so long as the gifter is related by blood or marriage; or via legal guardianship or domestic partnership; or is a fiance/fiancee.

The Conventional 97 basic qualification standards are :

  • Loan size may not exceed $417,000, even if the home is in a high-cost market.
  • The subject property must be a single-unit dwelling. No multi-unit homes are allowed.
  • The mortgage must be a fixed rate mortgage. No ARMs via the Conventional 97.

The Conventional 97 program does not enforce a specific minimum credit score beyond those for a typical conventional home loan. The program can be used to refinance a home loan, too.

Editor’s Note : The Conventional 97 program was originally discontinued in December 2013. It was later reinstated by the Federal Home Finance Agency in late-2014. This section has been updated to reflect the new product’s guidelines.

The “Piggyback Loan” : 80/10/10

The “piggyback loan” program is typically reserved for buyers with above-average credit scores. It’s actually two loans, meant to give home buyers added flexibility and lower overall payments.

The beauty of the 80/10/10 is its structure.

With an 80/10/10 loan, buyers bring a ten percent down payment to closing. This leaves ninety percent of the home sale price for the mortgage. But, instead of giving one mortgage for the 90%, the buyer splits the loan into parts.

The first part of the 80/10/10 is the “80”.

The “80” represents the first mortgage and is a loan for 80% of the home’s purchase price. This loan is typically a conventional loan via Fannie Mae or Freddie Mac; and it’s offered at current market mortgage rates.

The first “10” represents the second mortgage and is a loan for 10% of the home’s purchase price. This loan is typically a home equity loan (HELOAN) or home equity line of credit (HELOC).

Home equity loans are fixed-rate loans. Home equity line of credits are adjustable-rate loans. Buyers can choose from either option. HELOCs are more common because of the flexibility they offer over the long-term.

And that leaves the last “10”, which represents the buyer’s down payment amount — ten percent of the purchase price. This amount is paid as cash at closing.

80/10/10 loans are sometimes called piggyback mortgages because a second loan “piggybacks” on the first one to increase the total amount borrowed.

80/10/10 loans are meant to give buyers access to the best pricing available, so lenders may sometimes recommend an alternate structure. For example, for buyers of condos, a 75/15/10 is advised because condo mortgages get better rates with LTVs of 75% or less.

As another example, interest rates on HELOCs are sometimes better at larger loan sizes. Your lender may recommend that you increase the size of your HELOC, then, to lower your overall loan costs. The choice of your loan’s structure, though, remains yours.

You can’t be forced into borrowing more money on your second mortgage than makes you comfortable.

Mortgage Down Payment FAQ

How can I buy a house with no money down?

In order to buy a house with no money down, you’ll just need to apply for no-money-down mortgage. If you don’t which mortgage loan is your best zero money down option, that’s okay. A mortgage lender can help steer you in the right direction. There are multiple 100 percent mortgages available for today’s home buyers.

Can cash gifts be used as a down payment?

Yes, cash gifts can be used for a down payment on a home.  However, when you’re receiving a cash gift, you’ll want to make sure you follow a few procedures.

For example, make sure the gift is made using a personal check, a cashier’s check, or a wire; and keep paper records of the gift, including photocopies of the checks and of your deposit to the bank. Also, make sure that your deposit matches the amount of the gift exactly.

Your lender will also want to verify that the gift is actually a gift and not a loan-in-disguise. Cash gifts do not require repayment.

What are the FHA down payment assistance programs?

FHA down payment assistance programs are available to home buyers and 87% of U.S. single-family homes potentially qualify. Programs will vary by state, so be sure to ask your mortgage lender for which programs you may be eligible. The average home buyer using down payment assistance receives $11,565.

Are there any home buyer grants?

Home buyer grants are available to U.S. home buyers and all are eligible to apply, which are also known as down payment assistance (DPA) programs. DPA programs are widely-available but seldom used — 87% of single-family homes potentially qualify, but less than 10% of buyers think to apply. Your mortgage lender can help you determine which DPAs are best for you.

What are the FHA loan requirements?

The FHA loan requirements are; 1.) You must have a credit score of at least 500; 2.) Income which can be verified using W-2 statements and paystubs, or federal tax returns;3.) No history of bankruptcy, foreclosure, or short sale within the last 12 months. 4.) You must  not be delinquent on your federal taxes, your federal student loans, or any other federal debt.

What are the benefits to putting more money down?

Just as there are benefits to low and 0 money down mortgages, there are benefits to putting more money down on a purchase. For example, when you put more money down on a home, the amount you need to mortgage is less, which reduces your monthly mortgage payment. Additionally, if your mortgage requires mortgage insurance, with more money down, your mortgage insurance will “cancel” in fewer years.

If I make a low down payment, do I pay mortgage insurance?

When you make a low down payment, you’re more likely to pay mortgage insurance (MI), but not necessarily. For example, the VA Home Loan Guaranty program doesn’t require mortgage insurance, so if you use a VA loan, making a low downpayment won’t matter. Conversely, FHA and USDA loans always require mortgage insurance so even with large down payments, you’ll have a monthly MI charge.

The only loan for which your down payment affects your mortgage insurance is the conventional mortgage. The smaller your down payment, the higher your monthly PMI. However, once your home has twenty percent equity, you’ll eligible to have your PMI removed.

If I make a low down payment, what are my lender fees?

The size of your down payment doesn’t relate to your lender fees. No matter how large or how small your down payment, your lender fees should remain equal. This is because mortgage lenders are prohibited from charging higher fees based on the size of your down payment . It should be noted, however, that different loan types may require different services (e.g.; home inspection, roof inspection, home appraisal), and this may affect your total loan closing costs.

What is the minimum down payment for a mortgage?

The minimum down payment for a mortgage are:

  • VA loan: 0% down payment
  • USDA loan: 0% down payment
  • Conventional 97 mortgage: 3% down payment
  • HomeReady™ mortgage: 3% down payment
  • FHA loan: 3.5% down payment

In addition to the above programs, down payment assistance programs are often available and provide, on average, more than $11,000 to today’s buyers of homes.

How can I fund a down payment?

A down payment can be funded multiple ways, and your lender will often be flexible. Some of the more common ways to fund a down payment is to use your savings or checking account; or, for repeat buyers, the proceeds from the sale of your existing home.

However, there are other ways to fund a down payment, too. For example, home buyers can receive a cash gift for their down payment or can borrow from their 401k or IRA (although that’s not always wise).

Down payment assistance programs can fund a down payment, too. Typically, down payment assistance programs grants money to home buyers with the stipulation that they live in the home for a certain number of years — often 5 years or fewer.

Regardless of from where you fund your down payment, though, make sure to keep a paper trail. Without a clear account of the source of your down payment, a mortgage lender may not allow its use.

How much home can I afford?

The answer to the question of “How much home can I afford?” is a personal one, and one which should not be left to your mortgage lender.

The best way to answer the question of how much can you afford for a home is to start with your monthly budget and determine what you can comfortably pay for a home each month. Then, using your desired payment as the starting point, use a mortgage calculator to work backwards in order to find your maximum home purchase price.

Note that today’s mortgage rates will affect your mortgage calculations so be sure to use current mortgage rates when you’re doing your calculations. When mortgage rates change, so does home affordability.

Zero Down Mortgage Loans

Zero down mortgages are 100% financed loan types offered by the U.S. Department of Agriculture (USDA loan or “Rural Housing Loans”) and the Department of Veteran Affairs (VA loan).  Additionally there are several low down payment options like the FHA loan (3.5% down), the conventional 97% (3% down) and the HomeReady mortgage (3% down).

87% of Properties Qualify For Down Payment Assistance!

87% of properties qualify for down payment assistance

The biggest obstacle for first-time homebuyers?

February 4, 2015
white house and dollar

A joint analysis by RealtyTrac and Down Payment Resource shows that 87% of homes and condos would qualify for down payment assistance.

For the report, RealtyTrac looked at 2,290 down payment programs from Down Payment Resource’s Homeownership Program Index and found out of more than 78 million U.S. single family homes and condos, more than 68 million would qualify for a down payment program available in the county where they are located based on the maximum price requirements for those programs and the estimated value of the properties.

The average amount of down payment assistance across all counties is $11,565.

“Many homebuyers, especially millennials, haven’t fully investigated their home financing options because are pessimistic about qualifying for a mortgage. Our Homeownership Program Index highlights the wide range and availability of down payment programs available to today’s homebuyers. In fact, 91 percent of the 2,290 programs in our registry have funds available to lend to eligible buyers. Plus, income limits vary depending on the market and programs extend beyond just first-time homebuyers,” said Rob Chrane, president and CEO of Down Payment Resource. “It’s important for buyers to research down payment programs as part of their loan shopping process.”

At least one down payment program is available in all 3,143 U.S. counties, and more than 2,000 counties have more than 10 down payment programs available to prospective homebuyers.

More than half of programs, 54%, are Community Seconds, a second mortgage issued by one of the Housing Financing Agencies or nonprofit organization with a very low or no interest rate. The payment on the second mortgage may be deferred or forgiven incrementally for each year the buyer remains in the home.

In a typical scenario this could reduce the amount of cash needed to close from $20,000 to $200.

“Historically low homeownership rates across nearly every age demographic have led to a public policy push to lower the barrier to homeownership through down payments as low as 3 percent, but the fact is that the barrier to homeownership is often much lower than even that 3 percent for borrowers who take advantage of one of the myriad down payment help programs available across the country,” said Daren Blomquist, vice president at RealtyTrac. “Prospective buyers — or their agents — willing to put in a few minutes of time to find out what programs are available to them will put themselves in a much better position to successfully purchase a home.”

Getting Married? Skip the Fancy Plates and Ask for a Down Payment Instead

They already have the high-powered blender, the 800-thread-count sheets, and the stemless wineglasses. And while they could always register for even more kitchen gadgetry and overstuffed throw pillows, some modern couples have their eyes on a different kind of wedding gift. What many of them want more than anything else is a house—or, more specifically (and reasonably), the down payment that will unlock the front door.

A growing number of altar-bound lovebirds are rethinking the traditional retail-based wedding registry (or registries, in many cases). Some are nudging their wedding guests toward online crowdfunding-style registries, designed to accept contributions to a couple’s down payment goals. Others are quietly suggesting “money for the house” when asked about their preferred present. Either way, plenty of couples are reconsidering altogether this gift-receiving opportunity in light of what they truly need.

A range of factors is at play here, the most obvious of which is the higher average marrying age—27 and 29 for women and men, respectively—than in past generations. It’s hardly a secret that many 20- and 30-somethings are temporarily sidestepping marriage while they establish careers, travel the world, hit up trivia night guilt-free, and, well, search for the right someone to marry.

Then again, even some younger couples seem to think that receiving a mountain of swanky home accessories before owning a home is putting the cart before the horse. After all, you can’t feather a nest if you don’t have a nest to begin with.

Twenty-five-year-old Daniel Barros and his fiancée, Traci Whiting, 24, of Plano, TX, are getting married in October. When they started thinking about setting up a gift registry, they were struck by the reality of their living situation.

“We live in an 800-square-foot apartment,” Barros said. “Even if we wanted a bunch of wedding presents, we wouldn’t have anywhere to put them. Getting that down payment together is our top priority, and we’re grateful for any amount our friends and family are willing to give to make that happen.”

To help achieve their goal of $5,500, Barros and Whiting set up a registry at a Florida-based crowdfunding site that allows “nesters” to register for anything from contributions toward a down payment to funds for home improvement projects.

How to crowdfund your dream home

Don’t be sheepish. Wedding registries of any variety are simply a series of gift ideas for wedding guests who are already planning to buy a present. A down payment registry is no different—it’s just a suggestion.

Spread the word. Share the specifics of your down payment registry on your wedding website, on any wedding shower invitations, and when friends and family ask where you’re registered.

Be grateful. In addition to the thank-you notes that you’ll send promptly after the wedding, consider sharing periodic updates about your home-buying adventures with the people who helped make it possible. It’s just another way to show your gratitude.

Leave a paper trail. When applying for a home loan, you’ll need to verify that your down payment is yours, free and clear, and not the result of another loan. Most down payment crowdfunding sites will document the nature of the monetary gift.
Heather Donahoe

Heather Donahoe is a reporter, editor, and cookbook author in Nashville. Heather enjoys traveling, shopping for vintage items, eating breakfast burritos, and walking her dog, Loretta Mae.

Follow @heatherdonahoe

Wedding Registries for Home Down Payments?

Forget the toasters and champagne flutes: More engaged couples are doing a different type of wedding registry that allows them to collect cash for a down payment on a home, according to a recent article in The Washington Times.

Dana Ostomel, founder of Deposit a Gift in New York City, says that about 15 percent of their registries are to raise down-payment funds for a home and another 15 percent are for home-improvement funds to pay for upgrades like a new roof or furniture.

“Given that 75 percent of today’s engaged couples already live together and are older, very often they are already established with the household basics that you find on a traditional registry,” Ostomel said. “What they want is the gift of big-ticket items and longer term goals, like the gift of home ownership.”

The FHA permits gifts from a wedding to be used as a down payment, but lenders are required to document that the funds are gifts. About 27 percent of first-time home buyers use gift money from relatives and friends for a down payment, according to a 2010 National Association of REALTORS® Profile of Home Buyers and Sellers survey.

Source: “Registries Raise Cash Gifts, Avoid Etiquette No-No,” The Washington Times (Oct. 20, 2011)

Bank of Mom, Dad Growing More Important

Younger home buyers looking for a down payment on a home are turning to their parents for help.

The use of loans and gifts from family and friends to help purchase a home rose significantly during the recession – from 8 percent of homes bought in 2007 to 21 percent of homes bought in 2009, according to data from the Federal Reserve Board’s 2014 Survey of Household Economics and Decision-making.

The numbers have moved even higher since: 27 percent of first-time home buyers in 2013 received a cash gift from relatives or friends for a down payment, according to the National Association of REALTORS®. That’s up from 24 percent in 2012, and it also marks the highest share since NAR began tracking such data in 2009.

Read more: What’s an Average Down Payment?

The “Bank of Mom and Dad” was particularly important for home buyers during the worst years of the recession and has continued to become a critical way many first-time home buyers are funding their home purchase, particularly as credit availability remains tight and the ability to save for a down payment is challenged by high rents and high student loan debt, the Fed’s study suggests.

An analysis of the study by Zillow found that more first-time buyers are relying on down payment assistance from social networks today than a decade ago. Among presumed first-time buyers pre-recession, 11 percent received down payment assistance from their network of family or friends compared to 22 percent post-recession. First-time buyers are also more likely to now rely on personal savings and less on second mortgages than they did during the recession.

Reliance on down payment assistance from social networks appears to be the most important to middle-income households, Hispanics, and Asians, according to Zillow’s analysis.

Assistance on down payments from parents seems to be more common among some races than others. For example, the study showed that those identified as “other, non-Hispanic” group—presumably mostly Asians–in the SHED data received the most help buying a home from their social networks over the past decade with 23 percent of these buyers receiving a loan or gift from family or friends between 2005 and 2014. Hispanics also were more likely to get down payment assistance from family and friends, at 17 percent over the same time period. Non-Hispanic blacks were the least likely to receive assistance at 7 percent.

Source: “Homeownership Help: The Growing Importance of the Bank of Mom and Dad,” RISMedia (Oct. 25, 2015)

Three Home Projects That Get You Top Dollar For Your Home

Selling your home can be stressful as well as exciting. You want your home to sell
quickly and for the maximum amount the market will bear. The best way achieve this is
to make sure your home is clean and updated, but how do you decide where to spend
your time and money?

It might not be realistic to renovate your entire home, but even just a few upgrades can
lead to a much higher selling price for your property. In a competitive market, standing
out from the other homes in your neighborhood is paramount. Below are three important
projects to focus on before selling your home that are guaranteed to add that added dose
of special sauce buyers are looking for.

Kitchen

To many, the kitchen is the most important part of the home – this idea is echoed in an
old saying: people talk business in the living room, but friends hang out in the kitchen.
The kitchen is where families spend time together preparing meals and talking about the
day. It is where friends laugh over a glass of wine and platters of cheese and crackers. It
is the nucleus of every house, and it is what a majority of buyers admit is one of their
make or break items when comparing multiple listings.

Buyers like to see clean and new appliances. If your budget allows, consider getting
stainless steel appliances, ideally in a fingerprint-free finish. If there is no money freed up
for this kind of an upgrade, a good, thorough washing can do wonders, and don’t forget
to tidy the magnets and photos on your refrigerator while you’re at it.

Next, consider replacing worn or outdated countertops. Granite or butcher block are
always in demand, but any high-quality, durable countertop in a neutral tone would be a
great addition to your kitchen.

Be sure to take into consideration what is appropriate for your property’s listing price
when starting to update your kitchen or any area of your home, for that matter. For
example, putting marble floors and granite counter tops in a lower priced property would
be a bad investment as the chances of recouping that money in equity down the road
might not be as great as you had envisioned.

It’s wise to consult with your realtor before diving into home improvement projects so
you can get a comparative market analysis. This will give you an idea of what your home
will sell for, allowing you to budget appropriately for your renovation projects.

Many homebuyers are intimidated about taking on large renovation projects, preferring
instead to get into a home that is “move in ready.” This is especially true of first time
homebuyers, as they may not have the initial budget to put up a down payment and then
dive headfirst into upgrading or renovating their new home. By presenting potential
buyers with a kitchen that is updated and clean, you make it that much easier for them to
fall in love with your house and sign on the dotted line.

Tip: Burn a softly scented candle in the kitchen to diffuse any lingering cooking odors if
your realtor calls with a last minute showing.

Paint

Giving your home a fresh coat of paint is an easy and cost effective project that will give
buyers a great first impression. Many people choose to do this project themselves to save
money – even hiring professionals to do the job for you can be a great value if they can
get the work done quickly and with great quality.

Color selection is key to a successful paint job; your kids might love the neon green paint
in their rooms, but strong colors can definitely turn buyers off. Paint the doors and
moldings a slightly lighter color then the walls. “It’s a subtle shift in color but it really
brings your eye to the detail.” Says Sheri Thompson, director of color marketing and
design for Sherwin-Williams.

Years of wear and tear can leave your walls with scratches and scuff marks. So even if
painting isn’t in the cards for you, taking the time to wash your walls will brighten up
your existing paint in no time.

Tip: Pay special attention to the interior lighting of your home. Darkly painted rooms
can feel depressing and uncomfortable, but a carefully placed lamp can make all the
difference.

Lighting

Adding proper lighting is a simple and effective way to make your home feel more warm
and inviting. Interior designer Melanie Freundlich offers up some excellent tips for using
interior lighting in your home:

  • A beautifully lit living room is accomplished through variety: variety in height,
    locations, and even bulb color.
  • Use light to feature something you love, like a favorite painting, a statue, or a wall with a
    decorative finish.
  • The cheapest, quickest solution for upgrading your home lighting: swapping out your
    switch plates to a fun metal finish or even a bold color to compliment your wall paint.

Landscaping

Doing all of these fantastic interior home improvement projects is wasted time if
potential buyers never make it past your front door. When potential buyers drive up to
your property they should see a clean and neat exterior at the very least, and – if possible
– it is wise to invest in landscape features even if that just means a beautiful birdbath or
window boxes filled with freshly planted flowers. It should also go without saying that
your lawn should be mowed and any fallen leaves are removed. Also be sure to pick up
trash or debris that can easily collect near fence lines or under trees. As an added touch,
add a bright exterior light so that potential buyers can see clearly if they drive by your
home after dark.

Tony Rigby, a well-known financial planner puts it this way: “Buyers are often sold on a
home before they take a step inside, so it pays to make your property appealing from the
outside.”

Tip: Have your home professionally pressure washed or rent your own machine if you
are feeling ambitious.

These three simple home projects will definitely make your property stand out without
costing you an arm and a leg in the process.

Important Considerations for Young Condo Buyers

Condos are very popular home choices for first time homebuyers, and for good reasons!
Purchasing a condo can give you all the convenience of living in an apartment while also
receiving all of the benefits of being a property owner.

Many young professionals in their 20’s and 30’s choose to purchase a condo instead of a
home because they simply don’t want to deal with maintaining the exterior of a larger,
stand-alone home. Mowing the lawn, raking leaves, and shoveling snow are some of the
many responsibilities that come along with home ownership. Choosing a condo instead of
a house eliminates these worries and guarantees that the exterior of the property
investment you have made will be well cared for no matter what.

If you are considering a condo for your first (or second or eighth) home, let’s go over
some of the most important considerations you should pay attention to before purchasing
a condo.

Is your family growing?

One of the most common reasons people sell their first property is because they need
more space. Starter homes can quickly lose their appeal and livability once a baby enters
the picture, and the same is true of the picturesque single-bedroom condo that warmed
your heart with its cozy atmosphere and grown up décor.

It’s best to plan ahead if you anticipate your family growing in the near future. Often you
can find properties that have several rooms and maybe even a second bathroom, which
will be a necessary luxury once you and your partner expand your brood. Larger units
typically can command a higher resale price as well, leaving you in great shape to turn a
profit if the time does come to seek out a new home down the road.

Do you own pets?

Are you currently a pet owner? Or do you plan on owning a pet in the near future? Many
condominium complexes have strict rules regarding pets, and the last thing you want is to
be forced into parting with your beloved puppy or cat because the building that you just
signed papers for will not let them through the door.

Pat Gregory, a Realtor with Re/Max, explains why it’s so important to read the
condominium bylaws.

“Every condominium complex has covenants and bylaws that govern permitted use of the
units and surrounding common areas. For instance, some complexes will only allow pets
under a certain size and weight.”

If you have always dreamed of rescuing a cute puppy down at the local animal shelter, or
if you are on a waiting list for one of the kittens your friend’s cat just had, you may want
to reconsider your condo plan. At the very least, be up front with the property manager or
realtor that is in charge of the property listing and ask hard questions about what pet
scenarios would or would not be allowed.

Another thing to consider if you find a condo for sale that welcomes pets is whether or
not the outdoor space available to you and your furry friend will be enough for them to
receive ample exercise.

Do you mind paying association fees?

For some, condos are easy and convenient because all of the exterior maintenance is
handled by the association. However, this easy lifestyle comes at a price. These are called
home owners association fees, or HOA fees.

Fees can be minimal or they can reach upwards of several hundred dollars every month
adding up to thousands of dollars every year. These fees are in addition to your mortgage,
taxes, insurance, and utilities and they cover the condominium complexes expenses such
as trash, lawn maintenance, and daily up keep of the common areas. If you are looking at
a unit that has access to a community pool, gym, or recreation area, expect to be on the
high end of the fee scale.

June Fletcher of the Wall Street Journal cautions potential homebuyers, saying: “Buyers
need to question the association board about dues payments, and have their inspectors
examine common elements before committing to a purchase. It’s also important to review
the financial documents that every buyer has a right to inspect before closing.”

At the end of the day, many young homebuyers love that all of the condo’s exterior
maintenance is taken care of by the association, while others view HOA fees as an
unnecessary expense and they don’t mind doing basic home maintenance themselves.
Both points of view are valid, just be sure to evaluate your lifestyle to determine what is
right for you.

What are your hobbies?

Do you like working on cars? Racing dirt bikes? Gardening? Depending on your areas of
interest, the condo life will either be a dream come true or a dream killer. Your neighbors
might not react too kindly if you and your friends are parked outside working on your hot
rods at all hours of the night, or if your collection of garden gnomes begins working its
way into their territory. On the other hand, many condo dwellers love to garden and may
even share in a community plot.

Take stock of your interests and determine whether or not the condo you are interested in
will allow those hobbies to flourish. If so, you can move ahead in confidence knowing
that your friends and neighbors will be encouraging you in your endeavors. If not…well,
you might want to keep on searching for a home that will be a perfect fit for you.

Do you value privacy?

A few of the downsides to communal living are shared walls, tight parking spaces, and
community yard space. If you yearn for wide-open spaces and the freedom to live in
solitude, you may find your neighbors grating on your nerves before long.

Condominium life is best suited for people who love interacting with others and relish the
thought of minimal upkeep paired with a great opportunity to build owner equity. These
properties offer the ultimate convenience for young professionals that are just getting
started in their careers, as well as for tight-knit families on the go that are looking for a
fun, relaxed lifestyle.

Get out of the “Renting Rut”

Three Excellent Reasons to Buy a Home So You Can Get out of the “Renting Rut”

Renting a home is a good option for some, but buying a home just might be the best thing for you. When you rent a home, you send money to someone else every month in exchange for knowing that you can call on your landlord when the roof leaks, an appliance stops working or your bathroom faucet breaks. There are some big advantages to buying a house that will help you get out of your renting rut and focus more on your future.

Build Equity

Did you know that when you rent a home, you help someone else build equity? Any changes that you make with your landlord’s approval puts money back in his or her pocket. Keeping the yard clean and taking care of routine maintenance builds equity in that property. When you buy a home of your own, you have the chance to build equity of your own, which you can use to obtain a loan later.

Save On Your Taxes

When you rent a house, you cannot deduct the money you spend on your taxes. Though some states will let you make a small deduction based on the total amount you spend in rent each month, you cannot make any deductions on your federal taxes. When you buy a home, you can save with a few different types of deductions.

The federal government lets you make a deduction if your home is worth more than what you currently owe on your taxes. If you purchased your first home, you can make a deduction in regards to your property taxes. You can also deduct money that you spend on some renovations and energy saving appliances.

Put Your Personal Touch On Things

As long as you continue renting, you live in a home that belongs to someone else. Your landlord has final say over what you do and do not do. This often means that you cannot make repairs or significant changes without seeking approval first.

Renting a home lets you put your personal touch on things. You can paint the walls any colors you want, rip out the carpet to add hardwood flooring or even make significant changes outside to turn your new home into your dream home.

Now that you know more about the benefits of buying a home and how that purchase can get you out of the rental rut you’re in currently, turn to a real estate professional for assistance.

Have You Outgrown Your Current Home?

Here Are Five Easy Ways to Tell if It’s Time to Upgrade

Your home is your castle, your own little piece of the American dream. But lately, your little corner of the world has been feeling cramped and you find yourself eyeing those larger homes. Is it time to pull up stakes and move on from your starter home?

Growing Family

If you’ve added to your family in recent years, you may have more bodies than bedrooms. A two-bedroom home may have been a great idea when it was just you and your spouse, but with two kids, you’re starting to have turf wars over the play area.

Overflowing With Stuff

From an overflowing toy chest to closets packed so tightly with shoes and coats you risk an avalanche every time you open the door, your home just doesn’t have the space to keep all your things. You may have even had to move some things off-site, spending money to rent storage space to keep that antique dresser your grandmother left you or the set of state spoons you carefully collected during your college years.

No Rest For The Weary

You’d love to spend an afternoon soaking in the tub, but before the warmth of the water can take you away, there’s a banging on the door of the only bathroom in the house and a chorus of “hurry up!” invading your quiet time. And the man cave you dreamed of? Those visions of a big screen television were shattered by the realization you needed somewhere for the kids to sleep.

No Room For Extras

When you first moved in, the two-car garage doubled as your woodworking shop. Now, the equipment has been sent to storage to make room for the family’s second car. You’d love to take up organic gardening, but your tiny yard barely has room for a grill and a lawn chair. You’d love to host your friends visiting from out of state, but there is hardly room for their luggage, much less them.

Changes In Career

You may have opted for a starter home when you first entered the market because you had a smaller income. Now, thanks to changes in careers or promotions at work, you can afford a home with greater square footage and room for your growing family that will provide the space you need for many years of happy memories.

Home prices across the country are starting to rise. Contact your trusted real estate agent today and take advantage of the opportunity to give your family the most space at the best price now.

Are You A Freelancer?

Freelancing? Three Tips for How to Secure a Mortgage if You’re a Self-employed Entrepreneur

If you are self-employed, either as a freelancer or as the owner of your own business, your income can fluctuate greatly from year to year. That can make it difficult to get approved for a mortgage, although there are some things you can do to improve your chances. Here are three tips for securing a mortgage if you are self-employed.

Make Sure Your Credit Score Is In Good Shape

While your ability to pay back a mortgage is the most important factor in approval, your credit score is a close second, and that goes for every borrower, not just those who are self-employed. If you have a credit score in the high range — something above 750 or 760 — it will help you get approved for a mortgage. To boost your score, make sure you pay all bills on time, pay down your debt levels and don’t make any new big purchases or apply for new credit soon before you apply for a mortgage.

Have a Large Down Payment

The more money a bank lends you to buy a house, the more risk it is taking on that the money won’t be paid back. If you are self-employed and considered a higher risk to begin with, one way you can alleviate some of that risk is to be able to put down a large amount of money. Putting down 20 percent is standard for a conventional loan, and you should be willing to contribute at least that much. Putting down at least 20 percent also will save you money in the long run, because you won’t have to pay for mortgage insurance and you will pay less in finance charges over the life of the loan.

Have Significant Assets

One way to put a lender at ease about your ability to pay for a mortgage is to have significant reserves in the form of assets. If you have large amounts of money in regular savings, brokerage and retirement accounts, it offers a reserve for you to tap should your income take a dive. Other forms of property, such as personal and business property that’s paid off and has value, also help.