Category Archives: For Homeowners

3 Tips to Attain a Higher Home Appraisal

Somewhere between applying for a home loan and the close of escrow comes a most crucial step: the home appraisal. Since the transaction that got you to this point is one in which a buyer and seller agreed on a price, an actual market dynamic, the appraisal is likely to match the purchase price.

In fluctuating markets however, especially those going up after being down for some time, low appraisals frequently occur. For instance, as the nation climbed out from under the explosion of distressed sales, it took some time for home appraisals to even out. The gap was understandable, given that appraisers were basing market values on many homes that had foreclosed or sold via short sale.

Although there is nothing a homeowner can do about nearby properties that affect the market value of all homes in the area, there are things he or she can do to help achieve a higher figure at appraisal. Here are three ways to increase your home appraisal.

1. Arm the Appraiser With Accurate Info

“The reality is that the appraiser is only there for 30 minutes at most,” Brian Coester, chief executive of appraisal management company CoesterVMS, toldReuters. Thirty minutes to make a good first impression is a tall order.

Put together an information packet that the appraiser can take when she heads back to the office to crunch the numbers. Here are some items to include in the packet:

The facts – Make a list of facts about your home, including the street address, number of bedrooms and bathrooms, and the year it was built. Yes, the appraiser has access to these details, but verification from you can’t hurt.

A list of recent sales – The appraiser has access to area home sale prices, but there is always the possibility of an error or two. Ask your real estate agent to print out a list of comparable homes in the area that have recently sold for prices that help justify your price.

Inside information – Include any information you may have that the appraiser can’t possibly be aware of, such as the fact that your next-door neighbor sold his home at a drastically reduced price to be able to quickly relocate for a new job out of town.

Improvements – Let the appraiser know about any improvements you’ve made to the home, the date they were made and the contact information of the contractor who performed the work. Include info about new floors, windows, countertops or a new roof. If you finished the basement, list that. Any work on or replacement of major systems should go on the list, too.

2. Spiff Up Your Home

While you don’t need to stage your home for the appraiser’s visit, you do want to show that the house has been well maintained.

“Things like overgrown landscaping, soiled carpeting, marks on walls — those do affect value and are part of the property’s overall condition rating,” Dean Zibas of Zibas Appraisal in San Clemente, Calif., told the Wall Street Journal.

Certified residential appraiser Ralph J. Vaccari of Marblehead, Mass., agrees. “It’s important to realize that a dirty or unkempt home can increase its appearance of wear and tear beyond normal, and that condition can, in fact, affect value.”

So get busy cleaning up the landscaping and sprucing up the interior of the home in advance of the appraisal appointment.

3. Make Repairs

The appraiser will assign an “effective age” to the home, which is based on the condition of the home and any updates performed.

“Say you have a cracked window, thread-bare carpet, some tiles falling off the shower surround, vinyl torn in the laundry room, and the dog ate the corner of the fireplace hearth. These items could still add up to an overall average condition rating as the home is still habitable, however your effective age will be higher, resulting in comparables being utilized which will have the same effective age, and resulting in lower value,” Doreen Zimmerman, an author and appraiser in Paradise, Calif., told the Journal.

Make any repairs that, if not made, would age the home in the eyes of the appraiser. Some of these may be as simple as replacing torn window screens, while others may be more substantial.

While the sale prices of comparable properties are relied upon heavily to ascertain the subject property’s value, appraisers do not solely depend upon them. All pertinent data, including some intangible aspects, will help determine the closest estimate of the value of a property. And these are often the aspects of the appraisal process that you can have an influence on.

Article courtesy of KW Market Insider Tips


Is it Worth Paying Points On a Mortgage?

When financing a home purchase or refinancing a current home, you have to make a number of decisions. You will have to choose from among a half dozen different mortgage types available to you. Regardless of which type of mortgage you choose, you’ll be faced with another question: should I pay points?

Points, or discount points, are a cash payment that you make to the bank (or your mortgage lender) to get a lower interest rate on your loan. A lower interest rate means a lower monthly payment and savings to you, the homebuyer. The lender also benefits by getting some cash up front, so points can be a win for both parties. However, paying points for a reduction in your interest rate isn’t always worth it. Let’s look at some simple scenarios to answer the question, “Should I pay points on my refinance or new mortgage?”

Let’s assume you are borrowing $250,000. You are quoted an interest rate of 5 percent on a 30-year fixed rate mortgage. This means that every month you’ll be paying $1,342.05 in interest and principle for your mortgage. By the way, you don’t need to be a math wizard to calculate these numbers, your mortgage broker or bank loan officer will provide this information to you, and there are great mortgage calculators online that make doing the math a snap.

Here’s how buying points works: on this same type of loan you might see that paying 1 point lowers the rate to 4.675 percent. Each point equals 1 percent of your total loan amount. So, with our $250,000 loan, 1 point costs $2,500. The math looks like this:

[points] / 100 x [loan amount] = [cost of the discount]

1 / 100 x $250,000 = $2,500.

Also, points may appear on mortgage rate tables a few different ways – as number or a percent, and sometimes under the heading “points” or “discount.” Despite these stylistic differences, the numbers are always the same.

So, we know that to reduce this mortgage interest rate from 5 percent to 4.675 percent will cost $2,500. Now let’s figure out if it’s worth it. The new monthly payment at this lower rate is $1,292.84. This is $49.21 less than the payment for the loan at 5 percent. By spending $2,500 we save nearly $50 a month. Since our 30-year mortgage will last 360 months, that’s a savings of almost $18,000.

It sounds good, saving $18,000 by paying $2,500. But keep this in mind, you only get your $18,000 in savings if you stay in the house for 30 years. With a savings of $49.21 per month it will take you over four years to break even. Here’s the math:

[cost of the discount] / [monthly savings] = [number of months to break even]

$2,500 / $49.21 = 50.8 months (or 4 years and 3 months)

If all these savings sounds great, conventional wisdom actually tells us this is not a great deal. Most experts agree that it is not worth paying points on a mortgage if you won’t break even in less than four years.

This is true for a few reasons. Most likely you won’t be in your house for 30 years, so you never realize the full value of the savings. Second, your cash has value today. In the above scenario, if you spend $2,500, you break even in four years and three months, and double your money in eight years and six months. Could you make better use of this cash? When you pay points, you’ve spent the money, so it can be redeemed no matter how long you’re in the house. For it to make sense, in the above scenario, you’d ideally like to be saving about $60/month not $50.

Deciding whether it is worth paying points on a mortgage can be confusing because it’s difficult to know exactly how long you’ll be in a house and how your financial situation might change over time. If you’re faced with the dilemma of whether you should pay points during a refinance or home purchase, the simple formulas and guideline above can help you through the process.

Can I Make Money Renting a Room in My House?

If you have more space than you have cash, renting a room in your house can be a good way to make ends meet.

Should you get a Roommate to Help Make Extra Money?

If you’re a homeowner with extra space in your place and you don’t mind a roommate digging around in your fridge late at night, renting a room in your house can be a super way to raise some cash. Renting a room can also help to cover the costs of home ownership such as maintenance and utilities. Sounds fantastic, right? Just follow these tips to keep your roommate situation safe and satisfying.

Marketing Your Room for Rent

Craigslist offers free classifieds that allow you to make custom postings for roommates, as do many newspaper websites. For clues on how to price your rental, visit the site for your metro area and select “rooms/shared housing” from the menu. You can use existing postings to figure out how to price and market your rental. Take note of how landlords use photos and details to market their rooms for rent.

Finding a Good Roommate to Rent a Room in Your House

Think about the kind of person with whom you’d like to share your home and write ads that reflect your lifestyle and requirements. If you’re a vegetarian household, be clear about that. If you dislike noise after 9 p.m., be clear about that also. You should specify what percentage of the utilities the person will pay in addition to rent and how you plan to manage food sharing and preparation.

Be meticulous in identifying how household responsibilities will be split and all charges that are associated with the room rental such as a weekly cleaning fee, pool service, Internet access or other general household expenses. Be sure to articulate your house rules with regard to guests visiting and spending the night. If you’re not careful, you can end up with two roommates for the price of one.

Background & Credit Checks

Never, ever rent a room without first doing background research. Before you invite someone to live with you, be sure to order criminal, sex offender and credit checks. There are affordable and simple online services that are designed for landlords – some as low as $25 or $50. As a part of the application process, you can ask the tenant to pay a non-refundable credit check fee to cover the cost. This will deter tenants with bad credit problems or criminal histories from pursuing your rental. If someone isn’t able to pay for a credit check, swallow the cost or tack it on to their rent.

Interviewing Roommates Prior to Renting a Room in Your House

Take some time to identify what is important to you from a lifestyle perspective before interviewing prospective roommates. Whether you are a quiet, contemplative person who spends a lot of time at home or a very social, active person who likes to have friends over, you should ask questions that identify a good fit for you:

  • Do you wear headphones when you listen to music?
  • How much time do you spend at home?
  • Do you have lots of friends or do you tend to keep to yourself?
  • Do you like to entertain friends at your home?

Make a list of questions and details that are important to you, then take the time to learn whether or not your potential tenant is really a good fit. This exercise may also reveal that you really don’t want a roommate. If you’re very sensitive and particular, it could be that you’re better off finding a different way to bring in extra cash.

Crafting a Lease

Before renting a room in your house, or even marketing your property, determine the type of lease that best suits your situation. If you don’t mind the ebb and flow of new tenants, a month-to-month lease or shorter period lease (such as three or six months) can be a good way to start. Since you have to share common space with the tenant, you will want to carefully consider the type of commitment that you’re willing to make – just in case the tenant turns out to be less than wonderful.

It is never wise to rent a room without a lease. Though it seems easier, it can be difficult to remove a problematic tenant or to recoup rent costs if you do not have some legal documentation to support your arrangement. Make the effort upfront to protect yourself and your property from ill-intentioned renters.

You can Make Money Renting a Room in Your House

If you can tolerate a roommate situation and are clear about your household rules along with the financial responsibilities of the tenant, you can definitely make some money renting a room in your house. However, before committing to a roommate, ask yourself if you’re willing to do the work to ensure that your tenant is a safe bet who will honor a lease agreement. If not, you should consider alternative ways of enhancing your income.


New Houses vs. Old: How Do You Know Which is Right for You?

Finding your perfect home is not always as easy process. With the surplus of homes for sale in most cities, buyers may find there are many properties –both new and old – that meet their search criteria. Choosing whether to renovate an old house or buy a new one can be a tricky decision for some.

ImageShould I Completely Renovate an Old House or Buy a New House?

When deciding on which type of house is right for you, it’s important to take into consideration the following factors:

Style – For many, the allure of an older home is its character and uniqueness. Many of the homes being built today are tract houses that lack personality and quality of construction. An older home will have the charm that many buyers are looking for, rather than being a “cookie cutter” model that someone else has. However, they require a lot of TLC that many buyers aren’t cut out for. Knowing whether to choose an old house or buy a new one largely depends on your style preferences. Do you prefer clean lines, open concepts and a modern look, or are you into a more traditional floor plan with closed rooms, built-ins and nooks?

Lifestyle – Think about how you like to spend your free time. Do you enjoy working on projects, building or creating things at home? Or would you rather spend the evenings and weekends outside of the house, traveling, hiking or shopping? If you answered the latter, an old house may not make sense for you in the long-term as they typically require more maintenance and care.

Resources – Aside from the funds needed to purchase the home, do you have the budget and resources to update and maintain an old house? Even an older home that has been updated can be expensive to maintain due to scarce availability of certain building materials and original fixtures. Many buyers become “house poor” after making their down payment and buying a house. With no savings they have little budget left over for these house updates. If you don’t have the resources to dedicate to updating and maintaining the home, it may be a better choice to buy a new house. Newer houses typically need no initial repairs, no additional budget and are move-in ready.

Patience – Old houses have character, but maintaining that sense of charm doesn’t come easy. Unless they were recently updated, older homes require time and energy to restore. Because they were built in a different time period, older houses may require custom or hard-to-fit materials, appliances and fixtures that many contractors are not skilled in using. These material and construction delays can greatly extend your project deadlines.

Knowledge – Are you knowledgeable about construction and home improvement? Knowing how long restoration and maintenance projects will take and how much they will cost is a major prerequisite for purchasing an older home, especially if you’re planning to completely renovate an old home. If you’re tight on budget and resources, are you able and willing to do some of the work yourself?

An older home can be a quality investment with long-term potential and timeless style. A newer home can be a no-hassle, peaceful retreat that doesn’t require extra money or time to move in. If you do the right planning and homework ahead of time, you’ll be able to find the house that fits your needs, budget and lifestyle and relax, knowing you made the best decision in choosing your new home.


Should I Sell or Rent My Home? A Quiz to Help You Decide

To sell or to rent. It’s a tricky question, especially in a down market. If you are relocating or just ready to move on from your ball and chain of a house, renting might make more sense than selling. Here is a quiz to help you decide whether you should sell or rent your home.

Can You Afford to Sell Your Home?

Here’s an example of a situation where a couple had to examine how affordable it was for them to sell their house. The couple knew they wanted to move to a new home, but they live in an area of Florida where houses have halved in value since the peak in 2006 – the same year their house was purchased. As they debated whether to sell their home, they realized that if they chose to sell, they would be forced to take a $150,000 cash loss, not including closing costs. They looked at the numbers and decided they could not afford to sell their home. For them, it made more sense to rent their home and purchase a second home that then became their primary residence. When you rent, you may take a loss on a monthly basis, but you do not have to come up with the cash to satisfy the loan immediately upon sale. If you sell at a loss, then there is no tax benefit.

Can You Afford to Rent Your Home?

Research the going rents in your market using tools like the MLS listings and Look for comparable properties in your neighborhood or similar neighborhoods to get sense for what your home might bring in as a rental. It is important to take features like square footage, number of rooms and upgrades such as granite kitchen counter tops, location and proximity to desirable schools into consideration while looking for comps. You can also talk to real estate agents and property managers to get their take on pricing. If it turns out that you can’t cover your mortgage with the projected rent, then calculate how much of a loss you can take to still be able to afford to rent the house.

Do You Need Tax Deductions?

You can often take losses and costs from rental properties as tax deductions. In addition to deducting the cost of your mortgage beyond the rental income, landlords can often deduct all expenses associated with the rental, including property management and maintenance fees. Consult your accountant to ensure that you know what the costs and benefits will be from a tax perspective before you make the decision to rent rather than sell your home.

Can Your Credit Take the Hit of a Short Sale?

If you don’t mind sacrificing your credit score for a few years, you can’t afford to rent and you really need to get out of your house, then a short sale is always an option. A short sale is a real estate transaction in which the bank agrees to accept less than the amount owed on the mortgage to release the owner from their financial obligation. For example, if the mortgage on a home is $200,000 and a buyer makes an offer for $150,000, the bank may accept this offer and forgive the additional debt. Besides mucking up your credit, a short sale can also contribute to your tax bill. Often, the forgiven amount (in this case, $50,000) can be added to your tax bill as taxable income. It is important to consult a lawyer or accountant so that you know the details of how a short sale will impact your taxes and your credit before you move ahead.

Should You Sell or Rent Your Home?

Depending on your immediate financial situation and long-term outlook, it can make more sense to rent rather than sell. In some cases, a short sale is the best remedy for escaping an underwater property and moving on with your life. Before you make any decision about renting or selling, be sure to consult a lawyer or accountant for customized consultation so that you fully understand the tax ramifications and benefits given your unique situation.


It’s the Law!

Are you aware that you’re required by law to have a carbon monoxide alarm in your home? The Carbon Monoxide Poisoning Prevention Act was passed by the State Legislature in May 2010 making approved carbon monoxide alarms (CO alarms) mandatory for all California residents.

As of July 1, 2011, all single-family dwelling units with an attached garage or a gas heater should have installed a Carbon Monoxide alarm within the home and all other dwelling units have until January 1, 2013 to comply. What is the definition of a dwelling unit? Generally, a dwelling unit is where you sleep! It is a single-family dwelling, duplex, lodging house, dormitory, or dwelling unit in a multiple-unit dwelling unit building meaning any place where people live is covered under the law.

What is Carbon Monoxide (CO)? Known as the “silent killer”, this colorless, odorless, and poisonous gas kills approximately 500 people and sends nearly 20,000 more to the hospital each year. CO is naturally produced from heaters, fireplaces, furnaces, and many types of appliances and cooking devices when fuels burn incompletely,  which is why proper ventilation is imperative when using these devices. Carbon Monoxide poisoning is avoidable and preventable if each home takes the necessary procedures and remembers these keys to safety: Inspect, protect, and detect.

  • Inspect your fuel-burning appliances at home such as furnaces, hot water heaters, and stoves that require yearly maintenance.
  • Protect your family by obeying the law and purchasing an approved Carbon Monoxide alarm. Alarms that are approved by the State Fire Marshal can be found at:
  • Detect! If your alarm detects any sign of Carbon Monoxide immediately escape outside with your family and dial 9-1-1.

Carbon Monoxide alarms should be installed outside the sleeping area in a dwelling to alert occupants in an emergency. Smoke alarms/detectors and Carbon Monoxide devices are required by law and should be inspected regularly.

For more information regarding the new Carbon Monoxide Poisoning Prevention Act, visit the State Fire Marshal’s website, or contact the Corona Fire Department at (951) 736-2220. Take steps to avoid the “silent killer” and ensure the safety of your family by installing a carbon monoxide alarm today.

For Your Information
With lots of rich foliage and tiny white flowers, the spider plant is easy to grow as well as benefiting its owner with its ability to absorb benzene, formaldehyde, carbon monoxide and xylene.