9 Mortgage Mistakes to Avoid

The mortgage process is a potentially complicated one. During the underwriting process, a number of obstacles can get in the way of your approval. And considering the huge commitment, it’s crucial that you make sure the mortgage you get into is one you can live comfortably with. 

There are plenty of potential mistakes throughout the mortgage process that can prove costly, which is why you want to avoid them.

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1. Not Checking Your Credit First

If your credit score is seriously lacking, you’d be better off taking a few months to improve it before applying for a mortgage. If it’s anywhere under 560, odds of getting approved are slim. Even if approval is granted, you’ll likely be stuck with a super high interest rate that will only make the mortgage more expensive over the long haul.

2. Making Major Purchases on Credit

If you’re applying for a mortgage, the last thing you want to do is add more debt to the books. Your debt-to-income ratio will play a key role in your lender’s decision about whether or not to approve your application – the higher you make that number through expensive purchases on credit, the lower the odds of a rejected application.

3. Not Looking at All the Costs Associated With Homeownership

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Obviously, you’ll need to be able to afford your mortgage payments. But on top of that, you’ll need to make sure you adequately budget for a variety of other costs that come with paying down your principal, including property taxes, property insurance, and mortgage insurance.

4. Making a Major Career Change

Your employment and income are important factors that your lender will look at. They’ll want to be certain that you are able to comfortably afford your monthly mortgage payments into the foreseeable future. But if you suddenly decide to change jobs or quit your current job in favor of self-employment, it could throw a wrench into the mortgage underwriting process. If you’re thinking of making a change in your field of employment, wait until you’ve sealed the mortgage deal first.

5. Not Paying Attention to APR

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Many buyers will be attracted to low posted interest rates, but may fail to recognize that many of these deals often come with high fees attached. It’s important to look at the yearly percentage rates from Truth-in-Lending disclosure forms to figure out which mortgage package actually costs less. A mortgage with a slightly higher rate and lower fees may actually be the more affordable option, so it’s wise to compare mortgages side-by-side to identify which one will cost you the least amount.

6. Putting Forth a Minimal Down Payment

There are mortgage options out there that allow borrowers to put a small down payment towards their purchase. But the less money you put towards the purchase price, the larger your loan amount will be, obviously. Along with a larger loan amount comes a lot more money paid towards interest, which can translate into tens of thousands of dollars by the end of life of the mortgage. And any down payments less than 20% means you’ll be stuck paying Private Mortgage Insurance (PMI), which will cost you an extra 0.2% to 1.5% of your loan balance every year.

7. Not Scrutinizing Your Loan Documents

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You’ve got the right and the responsibility to look over your mortgage documents with a fine-tooth comb before you sign on the dotted line. It might be a nuisance to have to look through the documents in detail, but it can save you a lot of headaches in the long run. At the very least, thanks to the Truth in Lending Act (TILA), you’ve even got three days to rescind the contract if there is something you don’t like without losing a dime.

8. Not Taking Advantage of Specialized Loans

Depending on your specific situation, you may be eligible to apply for specialized loan programs. For instance, first-time homebuyers with a less-than-stellar credit score may be able to obtain an FHA home loan that’s backed by the Federal Housing Administration. With the FHA guaranteeing a portion of the loan by the FHA, borrowers may be able to more easily qualify for mortgages. And if you’re a service member of the military, you might also be eligible for a VA loan that’s backed by the Department of Veterans Affairs, which often requires no down payment or mortgage insurance.

9. Not Locking in at a Super Low Rate

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While there are adjustable-rate mortgages available, you might be better off with a fixed-rate mortgage if the current rate is very low. And with today’s mortgage rates as low as they are, it might be a good idea to lock a good rate before they start to rise. All those rates that you might be quoted really don’t mean anything until you’ve got it in writing, so if you like the rate, lock it in.

6 Important Features Your Small Space Needs

Who says you need tons of square footage to live comfortably? In fact, smaller-scale homes are appealing to many home buyers, particularly millennials who are looking for comfort without having to dedicate all their free time to maintaining a larger property. Whether opting for a smaller space is a matter of affordability or simply a lifestyle choice, living in small quarters doesn’t mean you have to sacrifice style and comfort.

Here are 6 things your small space needs it as comfortable and functional as possible.

1. Lots of Natural Light

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Homes that are short in square footage absolutely need maximum light exposure. It’s no secret that light helps to make a space feel larger and brighter, which is exactly what tiny homes need. The more natural light you can let in, the better. Adorn your windows with sheer coverings so you can still get some level of privacy without shading the light, and make sure you leave objects out of the way to avoid blocking all that precious light your small space needs.

2. Plenty of Mirrors

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You don’t just need a mirror in your bathroom vanity to check your makeup and fix your hair. Mirrors have an amazing ability to open up a space and give it a much larger, grander feel to it. Dedicate a wall to a variety of mirrors in different sizes, shapes and frames to both create a stylish feature while visually expanding the space. If possible, hang mirrors directly across from windows to reflect the natural light and maximize its presence.

3. Storage Solutions

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Nowhere is smart storage more important than in a small home. Of course, recycling your belongings is always a recommended option to avoid piling on the clutter and becoming a borderline-hoarder. But the things you’ve still got will need a proper place to call home, which can be a huge challenge.

That’s where using a little imagination and creativity comes into play when you’re working with limited space. Consider simple storage solutions, such as customized linen drawers to tuck under the bed, hanging pots and pans above the kitchen counter, or using every vertical inch of wall space to store books and toys.

Home builders are getting quite savvy in their mission to improve storage in small houses by placing built-in drawers in toe-kick areas of kitchens, and collapsible drawers in bedrooms.

4. Multi-Functional Furniture

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Whether you want your home office to turn into a bedroom, or you just need extra storage space in your living room, furniture that serves more than one purpose allows you to improve the usability of your home. You’ve got plenty of options in this realm, from beds that fold into the wall, to ottomans that open up into storage space, to end tables that even transform into chairs!

These days, furniture designers are getting really creative with their designs, many of which are catered specifically to those living in tight, cramped spaces. 

5. Room Dividers

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You don’t have to sacrifice privacy or the illusion of a number of spaces just because size isn’t on your side. With a decorative room divider or two, you can easily and quickly create the look of multiple areas to ”separate” spaces.

6. Shelves, Hooks & Pegboards

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When you live in a small space, there’s inevitably going to have to be things put on display, no matter how smart your storage is. Making use of all your wall space for hooks, pegboards, and shelves can help keep all those frequently-used items conveniently close by, yet out of the way.

Tiny spaces can work really well – it’s just a matter of ensuring that every square inch of the place is put to good use. While smaller homes may be a more of a design challenge than larger homes, incorporating these features can help make small-space living a lot more comfortable without sacrificing style.

How Do Sky-High Property Values Impact Homebuyers?

The housing market across the US is on its way to a full recovery, with 26% of the country’s markets surpassing previous records in property values since the peak of the housing bubble.

This may come as no surprise in many markets, including California and New York. The median price of homes in the San Francisco Bay area hit $702,150, a 15.2% increase from the same time last year. Southern California saw a hefty boost in property values, with the median home price reaching $453,910, a 7.9% increase from last January.

A similar effect is being seen in many other parts of the country too. Median property values in Nashville, TN increased 9.5% to a median price of $189,100, while those in Phoenix, AZ spiked 8.1% to $218,300. Boston, MA median home prices increased 5.9% to $387,400, and Seattle, WA now boasts a median home price of $373,000, up 9.4%.

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Homebuyers Are Left With Limited Options

Many factors are responsible for driving the prices of properties up, but perhaps one of the most critical is housing supply. The spike in property values in many markets across the US is the direct result of tight inventory, which means the number of listings is a lot less compared to a few months ago.

With an inventory squeeze and a spike in property values, buyers are being left with fewer options when it comes to relocating or getting into the market at all. Even with a decent down payment and healthy credit, finding the right home can be a real challenge.

San Fernando Valley’s housing inventory dropped 13% since the same time last year, and Portland, OR inventory is dipped 28%. And it’s the same story in many other markets across the US.   

With limited options, multiple offers and bidding wars are imminent. And nothing drives sale prices higher than a handful of eager buyers doing their best to outbid each other. Many are coming in with all-cash offers to ensure they’re the winning bidder, making it tough for younger first-time homebuyers to compete.

Rent isn’t exactly cheap either, making it hard to save up to get into an expensive market.

How Much Higher Can Prices Go?

“Housing bubble” has been a really popular buzzword in the world of real estate these days, and for good reason. Many are concerned that a new housing bubble is closer than initially anticipated, especially in red-hot markets all over the state of California. Many centers have been experiencing double-digit increases in home prices for a few months now, sparking the question about how much longer such a rapid pace can last before losing steam and succumbing to a bubble. 

Despite the labor market showing strength overall, it’s still incredibly difficult to realistically afford certain prices based on income, igniting a housing affordability issue in many centers across the country. 

With a heightened level of competition for properties in markets like San Francisco, Seattle and Phoenix, the combination of limited inventory and high property prices can be a dire one for homebuyer hopefuls looking to get into the market.

The Brighter Side: Rising Equity

While homebuyers might be negatively affected by spikes in home prices, many who already own homes are enjoying sizeable equity in their properties. More homeowners owe less on their mortgages that what their properties are worth compared to last year, which means they’ve got the advantage of more equity.

Once they’ve built up a certain level of equity, they can make a handsome profit on the sale of their properties, and open up inventory at the same time. 

Another bright side to the story is that the overall housing market in the US is not playing catch-up anymore as it had been since the recession eight years ago.

But in the meantime, buyers have to deal with a shortage of inventory and an affordability issue that will likely continue well into the near future until the bubble finally bursts.

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How to Deal With Significant Issues Discovered in a Home Inspection

Finding the perfect place to call home can be a real time-consuming and laborious endeavor, especially if you’re in a market where inventory is a little tight. But even when you find the right property, the deal isn’t done yet until a home inspection has been conducted to make sure you’re not buying into a money pit.

It’s pretty common for a few minor issues to be uncovered during these inspections, such as leaky faucets or slight air leaks in the window sills. But what happens when major problems are discovered that can both compromise the integrity of the structure and be super expensive to repair?

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What Types of Issues Could Compromise a Sealed Deal?

It’s one thing to discover a few cracks in the bathroom tiles or a shaky handrail on the stairs leading to the backyard. These are minor issues that cost very little to fix or replace. But the following issues are a lot more significant, and definitely warrant a subsequent chat with the sellers before you decide to sign off on your home inspection contingency.

Faulty electrical wiring – This is one of the more common issues discovered in home inspections, and is definitely something that needs attention. Electrical panels that aren’t equipped to handle all the electrical appliances in the home, or overfused wiring that isn’t terminated in a proper electric box are all hazards that can lead to a fire.

Mold – Breathing in mold on a daily basis over a long period of time can lead to serious allergic reactions, asthma, and even permanent lung damage. Many times, you wouldn’t even know that mold is growing in a home just based on a few visits. Even the neatest and cleanest homes may have mold lurking. 

Leaky roof – Tiny leaks in a roof that are not dealt with right away can turn into messy problems, especially when it starts to cause water damage on the home’s components.

Cracks in the foundation – Small cracks in the foundation of the home are usually nothing to be concerned about. But large, gaping cracks can compromise the structural integrity of the home, and invite water and termites in to cause further damage to the home.

There are obviously more issues that could be grounds for a reduced purchase price or a scrapped deal altogether. Thanks to home inspection contingencies, you’re protected in the event that certain issues arise that are potential deal-breakers. If your home inspector brings a few major problems to your attention, you’ve got options.

Renegotiate the Sale Price

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If certain repairs are going to have to be made before you move in, they’re obviously going to come at a price. Since your initial accepted offer was based on the condition that you perceived the home to be in, it’s only fair to go back to the table and renegotiate on a lower price to compensate for the additional funds needed to make these repairs. That’s part of what a home inspection clause is for.

Basically, what you’re really asking the seller for is credit for the work that needs to be done. Whether the money comes in the form of a lower purchase price or a closing cost credit, you’ve got the option to ask.

Most likely, the sellers are not going to want to take on extra work of rectifying any problems with the home themselves. They’ve likely got much of their belongings already packed, and are ready to move on to their next abode. Not only that, but sellers likely won’t want to put themselves in a position to do the work on their own, only to have the buyers express their dissatisfaction with the results.

The majority of real estate agents typically recommend that their buyer clients ask for the cash value of the repairs needed instead of asking the sellers to complete the repairs before the move-in date.

Of course, the sellers can flat-out reject your request for an extension of credit to cover the cost of repairs. At that point, it’s up to you whether you’re fine with moving ahead with the deal anyway and absorbing the costs yourself.

Gauge the Situation Before Making Demands

Before you approach the negotiating table again, make sure to assess the situation first. For starters, consider whether or not the issues found by the home inspector were already priced into the deal. Sometimes sellers will take repairs into account before coming up with a listing price, or specify that the home is being sold “as is.” Of course, unknown and undisclosed issues that are significant in nature can change all that, but it’s important to understand how the sellers came up with their price nonetheless.

Walk Away From the Deal

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Sometimes a meeting of the minds is impossible, or the issues are just too much to accept. If the sellers won’t budge on the price, and you’re not willing to accept the house as is without some form of monetary compensation, you’ve got the option to bail on the contract altogether. Of course, that’s a last resort if all else fails, but it’s your right if your contract is protected with a home inspection contingency.

The Bottom Line

Before you stress out after hearing about a few major problems with the home you just agreed to buy, make sure you take a step back to get a good look at the big picture. A home inspection is an important component when it comes to protecting yourself, but you should be realistic and reasonable in your approach to your home inspection negotiations. If it’s a great house at a decent price, and you’re not taking on too much risk, it still might be worth salvaging a deal. An experienced real estate agent and home inspector can help you get through it all.

Landscaping Ideas For Corner Lots

Corner lots are often the largest on their streets, offering homeowners wide open spaces that are perfect for the kids to play around or for entertaining. But they also pose certain challenges – namely, privacy.

Properties on corner lots are much more exposed to the street than others on the block, making usable outdoor living space tough to define. They also often act as a way for passersby to cut through from one sidewalk to the other, which can make your grass and other greenery vulnerable to damage.

While coming up with a landscaping scheme for your corner lot may be a little more involved and intricate compared to typical lots in your neighborhood, there are still plenty of ways to define it in a highly decorative and functional way while offering privacy at the same time.

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Section Off Your Lot With a Border

There are a plethora of ways that you can create a border around your lot to section it off. Not only will you be defining the space, you’ll also effectively prevent people from using your property as a shortcut, and protect the kids and pets from running onto the street. 

The most common way to create a border is through the use of hedges. They can act as a fence while adding an extra element of greenery to the open space. Placing hedges along the edge of the property rather than against the house also helps to visually expand the property. You might also want to place a row of slow-growing plants or a border of smaller shrubs along the property’s edge if you don’t want to completely close off your yard.

Just be sure to check with your local zoning codes to find out if there is a limit on the height.

You may even want to look into installing a fence around the perimeter of your yard if you’re really looking to create privacy and ward off pedestrians. Again, you’ll need to verify with the local zoning laws regarding the permitted heights of fences on front lawns in your area, as well as whether or not you’re allowed to install them at all.

To keep things a little more open, consider installing a border of gravel or river stones lined with spaced-out plants. It’ll have the same defining effect as a fence or hedged while not necessarily closing the space off completely.

Establish a Focal Point

You can effectively define your landscape by establishing a focal point somewhere on your lawn. One spot that works well for these focal points is near the front door to attract all eyes on your well-manicured entryway. You might also want to place your focal point right in the center of the lawn to break up an expansive lot.

There are tons of ways to create a focal point: topiary shrubs, ornamental trees, landscaping stones, flower beds, fountains, and lawn statues are all effective elements to add to this spotlighted area of your front lawn.

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Add a Landscaping Feature on the Corner

If you’re looking to cut down on traffic across the corner of your lot while adding a some curb appeal, you can kill two birds with one stone by adding a decorative feature in the corner where the two streets meet.

You can add the same types of landscaping elements as you might use to create a focal point as described above to effectively cut down on traffic across the corner while softening the space up at the same time. Whether it’s a colorful rock garden, circular bed of flowers, or a round of small bushes, you can give your lawn a more balanced look while boosting curb appeal.

Add a Walkway

While you might want to discourage trespassers, you still need to provide a means to get to your front door as well across the property. Rather than having family and friends stomp all over your well-manicured grass to access various parts of the property, you might want to consider installing a walkway that leads from the sidewalk to the front door, as well as some paths across the lawn as you see fit. The extent of these walkways will all depend on how you use the area.

For instance, adding a walkway from the front door along the side of the house to the back will make it easy to access the rear yard. Add a walkway extending from the driveway to the front door, especially if the distance between the two is pretty far. Interlocking stone pavers and patterned concrete work quite well, as do stepping stones to create a more natural look.

Make the most of the expansive size of your corner lot with these tips to add balance, infuse esthetic appeal, and create privacy.