Should I Sell My House Now?

Q: Is 2021 a good time to sell my home?

A: While it appears to be a seller’s market, and the perfect time to put your home up for sale, there are many variables to consider before going forward. Below, we’ve outlined important points to know about today’s market so you can make an informed decision about selling your home in 2021. 

Is it a seller’s market now?

According to Realtor.com, the current supply of homes on the market is at an all-time low, the likes of which hasn’t been seen in more than two decades. This can be attributed to the federal moratorium on foreclosures, as well as the months-long halt on new construction.

At the same time, demand for homes is up, as many millennials are entering their peak homebuying years, mortgage rates hit record lows and more people are working from home than ever before. In fact, in 2020, more homes were sold than in any year since 2006, according to data from the National Association of Realtors.

Naturally, when demand exceeds supply, prices will go up. Let’s take a look at some of the current trends driving this market, as shared by Realtor.com and Redfin.com:

  • Home sales are up by 44% from a year ago. 
  • The median home price for all listings increased by 12.2% over last year for the week ending June 19, 2021.
  • The national median home price for all housing types in May 2021 was $380,000.
  • Homes are on the market for 33 fewer days than last year. 
  • In May 2021, the average home sold in just 16 days.
  • 54% of homes sold in May 2021, sold above their list price

Clearly, it is a seller’s market.

Will the market conditions last throughout 2021?

Most experts are doubtful that the current seller’s market will remain through the rest of the year. They cite several reasons for their prediction. 

First, while demand for homes is currently strong, the rising prices of homes across the country are driving many buyers out of the market, thereby slowly decreasing demand. At the same time, more sellers are putting their homes up for sale to take advantage of favorable market conditions, increasing supply. Also, with the federal moratorium on foreclosures and evictions ending on July 31, more homes are expected to enter the market. Finally, mortgage rates have already started to climb upward: according to Bankrate’s most recent survey of the nation’s largest mortgage lenders. As of June 27, the average 30-year fixed mortgage rate is 3.10%, up two basis points from the previous week. All of these factors combine for a likely market cooldown over the next few months, with demand for new homes decreasing as supply increases, until the two are a lot closer than they are now. 

If you do want to sell your home this year, it’s best to act as soon as possible to take advantage of favorable market conditions. 

Why might it be a bad idea to sell my home now?

Under certain conditions, it may not be in your best interest to sell your home now. 

First, a real estate market that favors sellers works both ways: You will be on the wrong side of the aisle when buying a new home. If you are upsizing, you will likely need to pay a lot more for your new home than you would when the market settles down. With moving costs, home repairs and improvements you may need to make when putting your home on the market, and the realtor’s commission, you can end up losing money from the sale, even with the higher price you may get for your old home. 

Also, with the demand for new homes currently outpacing supply, you’ll have slim pickings when searching for a new home. You may need to settle for a home that doesn’t meet your wants, or even your needs, simply due to the lack of a better choice. 

However, if you are downsizing or moving to an area that is not as in-demand as your current neighborhood, this can be a great time to get top dollar for your home and walk away with a nice profit. Before you put your home on the market, though, it’s a good idea to do some research to ensure you can find and easily afford a new place to live. 

It’s a seller’s market right now, but that doesn’t mean you should rush to put your house on the market. Research the current market conditions carefully and read the points outlined above so you can make an informed and responsible decision. 

Your Turn: Have you decided to sell your home in 2021? Tell us about your decision in the comments. 

All You Need to Know About HELOCs

If you’re a homeowner in need of a bundle of cash, look no further than your own home. By tapping into your home’s equity, you’re eligible for a loan with a, generally, lower interest rate and easier eligibility requirements. One way to do this is by opening up a home equity line of credit, or a HELOC. Let’s take a closer look at HELOCs and why they can be an excellent option for cash-strapped homeowners. 

What is a HELOC?

A HELOC is a revolving credit line that allows homeowners to borrow money against the equity of their home, as needed. The HELOC is like a second mortgage on a home; if the borrower owns the entire home, the HELOC is a primary mortgage. Since it is backed by a valuable asset (the borrower’s home), the HELOC is secured debt and will generally have a lower interest rate than unsecured debt, like credit cards. You will need to pay closing costs for the line of credit, which are generally equal to 2-5% of the total value of the loan.

How much money can I borrow through a HELOC?

The amount of money you can take out through a HELOC will depend on your home’s total value, the percentage of that value the lender allows you to borrow against and how much you currently owe on your home. 

Many lenders will only offer homeowners a HELOC that allows the borrower to maintain a loan-to-value (LTV) ratio of 80% or lower. 

A quick way to find a good estimate of the maximum amount you can borrow with a HELOC is to multiply your home’s value by the highest LTV the lender allows. For example, continuing with the above example, if your home is valued at $250,000 and your lender allows you to borrow up to 80% of your home’s value, multiply 250,000 by 0.80. This will give you $200,000. Subtract the amount you still owe on your mortgage (let’s assume $100,000) and you’ll have the maximum amount you can borrow using a HELOC: $100,000. 

Is every homeowner eligible for a HELOC?

Like every loan and line of credit, HELOCs have eligibility requirements. Exact criteria will vary, but most lenders will only approve the line of credit for homeowners who have a debt-to-income ratio of 40% or less, a credit score of 620 or higher and a home with an appraised value that is at minimum 15% more than what is owed on the home. 

How does a HELOC work?

A HELOC works similarly to a credit card. Once you’ve been approved, you can borrow as much or as little as needed, and whenever you’d like during a period of time known as the draw period. The draw period generally lasts five to 10 years. Once the draw period ends, the borrower has the choice to begin repaying the loan, or to refinance to a new loan. 

How do I repay my HELOC?

The repayment schedule for a HELOC can take one of three forms:  

Some lenders allow borrowers to make payments toward the interest of the loan during the draw period. When the draw period ends, the borrower will make monthly payments toward the principal of the loan in addition to the interest payments. 

For many borrowers, though, repayment only begins when the draw period ends. At this point, the HELOC generally enters its repayment phase, which can last up to 20 years. During the repayment phase, the homeowner will make monthly payments toward the lHELOC’s interest and principal. 

In lieu of an extended repayment phase, some lenders require homeowners to repay the entire balance in one lump sum when the draw period ends. This is also known as a balloon payment. 

How can I use the funds in my HELOC?

There are no restrictions on how you use the money in your HELOC. However, it’s generally not a good idea to use a HELOC to fund a vacation, pay off credit card debt or to help you make a large purchase. If you default on your repayments, you risk losing your home, so it’s best to use a HELOC to pay for something that has lasting value, such as a home improvement project. 

How is a home equity line of credit different from a home equity loan?

A home equity loan is a loan in which the borrower uses the equity of their home as collateral. Like a HELOC, the homeowner risks losing their home if they default on it. Here, too, the exact amount the homeowner can borrow will depend on their LTV ratio, credit score and debt-to-income ratio.

However, there are several important distinctions between the two. Primarily, in a home equity loan, the borrower receives all the funds in one lump sum. A HELOC, on the other hand, offers more freedom and flexibility as the borrower can take out funds, as needed, throughout the draw period. Repayment for home equity loans also works differently; the borrower will make steady monthly payments toward the loan’s interest and principal over the fixed term of the loan. 

A home equity loan can be the right choice for borrowers who know exactly how much they need to borrow and would prefer to receive the funds up front. Budgeting for repayments is also simpler and can be easier on the wallet since they are spread over the entire loan term. Some borrowers, however, would rather have the flexibility of a HELOC. They may also anticipate being in a better financial place when the repayment phase begins, so they don’t mind the uneven payments. 

Your Turn: Have you taken out a HELOC? Tell us about it in the comments.

Learn More:
creditkarma.com
marketwatch.com
thepennyhoarder.com
investopedia.com

Essential Tools for Every New Homeowner

As a new homeowner, you likely have a long list of items you need or want to purchase for your new digs. From welcome mats to plungers and wall hangings, there’s lots to buy in the first weeks after moving day. As you browse through window treatments and home decor, don’t forget to stock up on the basic tools every new homeowner needs.

A well-stocked toolbox is essential for every homeowner, but choosing which tools to pack inside that kit can be confusing. What do you really need, and what’s just an extra? Can you get by with only one screwdriver, or do you have to spring for the whole set? So many questions — and we’ve got answers! We’ve compiled a guide to stocking a homeowner’s toolbox at every skill level. Happy fixing!

Basic tools

If you’ve never pretended to be a handyman, but you’d like to have basic tools in the house in case something needs minor repair, here’s what belongs in your toolbox:

  • Claw hammer. From hanging up pictures to securing loose railings, a hammer is your go-to tool for most basic jobs around the house. Consider also getting a lightweight pin hammer for smaller jobs.
  • Screwdriver set. It’s worthwhile to invest in a set of screwdrivers so you have various sized flat-heads and Phillips-heads handy for any kind of job. You can pick up a set of 10 screwdrivers at your local home improvement or hardware store, or order one from Amazon.
  • Pliers set. Here too, a set of different sizes and types is your best bet. Look for pliers with a good grip and that are sized well for your hands.
  • Adjustable wrench. A wrench will enable you to tighten or loosen virtually anything.
  • Allen wrench set. A universal allen wrench set will set you back just $10. You’ll use these wrenches anytime you order a piece of furniture that requires assembly.
  • Handsaw. A handsaw is great for trimming lumber and cutting through drywall, fiberglass and other thin materials.
  • Extension cord. Every house should have, at minimum, one indoor extension cord and another outdoor cord for jobs requiring electric tools.
  • Utility knife. Use this handy cutter to open boxes, hard plastic packages, shave wood and more.
  • Tape measure. A retractable 25-foot tape measure will come in handy when you need to measure space for new furniture or decor items. You may want to get a pocket-sized tape measure as well so you can bring it with you when you measure items at a store.
  • Hardware. Keep a generous selection of screws and nails on hand in case you need one in a hurry.
  • Level. A simple floating-bubble model will help keep your wall pictures and shelving straight.
  • Flashlight. It’s always a good idea to have a source of battery-powered light in case of an outage. Also consider a rechargeable flashlight that can be recharged by hand so you are never without a source of light.

The next step

Once you’ve filled your toolbox with the basics, and you become more skilled at around-the-house repairs, consider adding these more advanced tools to your collection:

  • C-clamp. When working on a woodworking project, a clamp will help you hold the wood in place.
  • Stud finder. This ingenious tool will keep you from creating unnecessary holes or drilling where nails already exist.
  • Cordless drill. A cordless drill has dozens of household uses, especially if you get into woodworking or light construction around the house.
  • Hacksaw. These are great for cutting through plastic and metal pipes, tubing, conduit and wood.
  • Safety gear. You’ll need safety goggles, ear protection and dust masks when using power tools.
  • Putty knife. Designed for applying spackle, you can also use your putty knife to remove old paint and to apply grout to tile floors and backsplashes.
  • Wire stripper. Perfect for cutting materials like aluminium, copper, brass, iron and steel, wire strippers are essential for the committed DIYer.

Advanced tools

If you’re exceptionally handy, consider adding these to your toolbox:

  • Sanders. Put the finishing touches on your woodworking projects with a power sander. For best results, you may want to invest in several types of sanders and use each one when it fits the job best. For example, a random orbital sander may be best for simple  home projects, while a belt sander is great for sanding rough surfaces and a rotary sander is your go-to choice for edge work.
  • Carpenter’s square. Made up of a metal ruler and interchangeable heads, a carpenter’s square is used to measure level, right angles, the center of a circle and to check depth. It can be an incredibly useful tool in complicated woodworking, metal and masonry projects.
  • Table saw. This power tool, also known as a saw-bench, is a mounted woodworking tool that is considered the workhorse of any well-equipped woodshop. A table saw can rip,
    cross-cut, miter-cut, square, rabbet and apply shapes to edges of wood stock.

Your toolbox is all set! Now you’ll be fully prepared for anything that needs fixing in your home.

Your Turn: What do you have inside your toolbox? Tell us about it in the comments.

Learn More:
thisoldhouse.com
movement.com
homedepot.com
hgtv.com
butlerheating.com
washingtonpost.com

When Should I Do It Myself and When Should I Leave it to the Pros?

Q: Which home improvement projects can I tackle myself, and which should I leave to the pros?

A: In today’s world, when you can look up how to do practically any project online, it’s tempting to want to do everything yourself, but it isn’t always the best choice. Attempting to do a project on your own can sometimes end up costing more time, money and mess than it’s worth. Here’s how to know when to do it yourself, and when to leave it to the pros.

Home improvement projects you can probably do on your own

While everyone’s level of skill and dexterity is different, these home improvement projects are simple enough for nearly everyone:

  • Cosmetic improvements. This includes painting, wallpapering, wood staining, installing adhesive carpet tiles and replacing the hardware on cabinets and drawers. Before you start, check out tutorials on YouTube for useful tips and tricks.
  • Minor plumbing jobs. Almost anyone can snake a clogged toilet, and most people can handle fixing a minor faucet leak, changing a shower head and even installing a toilet. Again,  when it comes to DIY projects, YouTube is a wonderful plumbing mentor.
  • Minor electrical work. Don’t try to rewire your home on your own (unless you’re a licensed electrician), but you can probably successfully install new light fixtures and change your light switch plates.
  • Install tiles. Think a new backsplash for your kitchen, new tiles for your bathroom floors and walls and new floors for your kitchen and foyer. You’ll need to research exactly how to lay tiles, using a notched trowel to spread your tile adhesive in horizontal strokes. If you’re not comfortable with the installation of your new tiles, you can still save a buck by removing your old tiles with a hammer and chisel before calling in the experts to lay your new ones.

Six questions to ask before tackling a project on your own

  1. Have I done a project like this before? If this isn’t your first time doing a project like this, you can probably handle it now. If it is your first time attempting this kind of project, you may still be able to do it, as long as you’re prepared for the extra work and focus it will involve.
  2. Do I have a reliable resource to turn to with any questions that may arise? It’s best to be prepared in case you run into trouble mid-project. Get that contractor friend on speed dial!
  3. Will this project involve any structural framing? It’s best not to tackle projects that involve cutting through walls, as you run the risk of cutting through engineered lumber and trusses, which can then lose their weight-carrying capacity. If your project fits into this category, have a pro do the job or ask them for guidance before you begin.
  4. Will this job involve any electrical, plumbing or HVAC work? Here, too, you run the risk of messing up structural elements of your home. If your project involves cutting through pipes and wires, it’s probably best to leave it to the pros.
  5. Do I have the resources to complete this job? Many homeowners are eager to start a project on their own and save on pro prices, but they neglect to consider how much time and money the job will take. It’s best to make an estimation of how much the supplies and tools for the job will run you, and how many hours of work you can expect it to consume. You may find the DIY route is not as desirable as you believed it to be.
  6. Will this job risk personal injury? Don’t risk your safety on a project that should really be left to the pros.

Paying for a home improvement project

Whether you decide to DIY, or you’re going to call in the experts, a home improvement project can cost a pretty bundle. Consider tapping into your home’s equity through a home equity loan or a home equity line of credit through Advantage One Credit Union to help you pay for the project. Increasing the value of your home is one of the best ways you can use your home’s equity.

Your Turn: Are you an avid DIYer? Share your best success stories with us in the comments.

Learn More:
lifehacker.com
plygem.com
homeisd.com
usatoday.com

Saving on Landscaping

For the green-thumbed homeowner, there are few things as pleasurable as running fingers through soft, moist earth, catching sight of the first flowering buds of spring and inhaling the scent of freshly cut grass.

Tending to a lawn and garden can get expensive. Between seeds, fertilizer and gardening supplies, costs can be high enough to take the pleasure out of lawn care.

Here are 10 creative ways to save on landscaping, so you can have your well-tended lawn and your budget, too.

1. Plant perennials

Go green with your garden by choosing plants that flower year after year. You’ll have to pay more out of pocket when you first plant these blooms, but the cost-free plants you’ll have each year will more than make it worth the price.

2. Make your own compost

Mulch and other soil products may keep your garden healthy, but they’re not as kind on your wallet. Save money by going the DIY route with compost. All you need is a designated outdoor bin to collect your old fruit and veggie peels, plant clippings and dead leaves. After a few weeks, you should have a pile of nutrient-rich soil ready to give your garden the boost it needs to grow and glow.

3. Grow and trade

For a colorful variety of flowers, plant perennials that grow and multiply quickly, like hostas or daylilies. Within a few years, you should have more of these flowers and plants than you need. Then, you can trade them with friends and neighbors for new and interesting plants.

4. Propagate your plants

Grow your garden by helping your plants propagate. You can do this by separating an already growing plant into two and replanting; rooting a leaf or rooting a small stem with leaves. You can propagate new plants in soil or in water. Find out more about propagating here.

5. Choose plants that are natural to your region

For lower-maintenance plants, choose species that grow naturally in your area of the country. You’ll save on extra watering, soil correction and special plant food.

6. Shop the end-of-season sales

The plants in the nursery and home improvement store won’t look too attractive in the fall, but that doesn’t mean they’re useless. Plants that look wilted now can grow beautifully in the spring, as long as the roots are alive and well. Best of all, you can score these healthy plants at bargain prices.

While you’re shopping during the fall sales, you can pick up discounted potted plants, planters, gardening tools, lawn chairs and more.

7. Leave your grass clippings

Looking for an easy and cost-free way to improve your lawn? You already have one! Just leave your grass clippings on the lawn after mowing instead of cleaning them up. The clippings will break down quickly, adding organic matter and nutrients to your grass.

8. Don’t cut your lawn too short

Shorter grass attracts more weeds and will need more herbicides. Higher grass will shade out those pesky weeds while also developing a deeper root system, thus requiring less watering. Keep your grass at 2- 2 ½ inches for best results.

9. Pay attention to pH

It’s important to measure and control the pH level of your lawn. If the ground is too acidic or alkaline, your plants and grass won’t absorb nutrients, no matter how much fertilizer you feed them. Ideally, pH levels on lawns should be between 6.5 and 7. If your lawn’s pH level is too high or too low, you can add lime or sulfur to correct it.

10. Save extra flower seeds

Bought too many seeds to plant this year? No worries; you can save them for another year! Most flower seeds will keep well if stored in a cool and dry place. You can even buy seeds in bulk with plans to save the extra for a more cost-effective purchase.

Gardening is fun and rewarding — and it doesn’t need to cost a lot of money. Use our tips to cut back on landscaping costs without compromising on the health of your lawn.

Your Turn: How do you save on landscaping costs? Share your best tips and tricks in the comments.

Learn More:
bhg.com
houzz.com
www.policygenius.com

Am I Really Ready to Buy a House?

Young black couple signs paperwork with agentQ: I’ve saved a down payment, narrowed my choices of neighborhoods and drawn up a wish list of what I’m looking for in a home, but I’m getting cold feet. How do I know if I’m really ready to buy a house?

A: It’s perfectly normal to feel hesitant about going through with what may be the biggest purchase of your life. To help put you at ease and to make sure you’re really prepared for this purchase, we’ve compiled a list of questions to ask yourself before buying a new home.

Can I afford to buy a house?
Before viewing properties, remember that purchasing a new home will cost more than just the down payment. Buyers also need to cover closing costs, which typically run at 2-4 percent of the total purchase, as well as moving costs, and possibly new furniture and renovations for their new home.

Can I afford the monthly mortgage payments?
Most lending companies will grant a loan to a home buyer if the monthly mortgage payments do not push the buyer’s debt-to-income (DTI) ratio above the recommended 43 percent. This means that the total monthly debt the buyer carries, including their mortgage, credit card, loan, and car payments, do not exceed 43 percent of their monthly income. You may want to work out the total for your pre-mortgage debt before applying for a loan so you have an idea of how much house you can afford.

When determining whether you can actually afford your monthly payments, though, remember that there’s more to home ownership than a monthly mortgage payment. Be sure to include calculations for taxes, insurance and a possible increase in utility bills. A mortgage lender should be able to provide some of these numbers for you.

Am I ready to settle down?
The average length of time that homeowners in the U.S. live in a house is only seven years. Buyers who don’t plan on staying in their homes long-term may end up incurring a loss. Consider factors like your career, family planning, changing demographics of a neighborhood and more when trying to answer this question. Experts advise buyers to only purchase homes they plan on living in for a minimum of five years.

Does buying a house in my neighborhood make financial sense?
Many Americans view home ownership as a rite of passage into adulthood, but that doesn’t mean purchasing a home always makes financial sense. In some neighborhoods, rentals are relatively cheap while houses sell for far more than they are actually worth. In these neighborhoods, buying a home may not be the logical choice, even if the buyer can easily afford the purchase.

Is my credit score high enough?
A fairly decent credit score is necessary to qualify for a home loan. Most lenders will only grant a home loan to borrowers with a credit score of 650 or higher. A score that doesn’t make the cut can be increased by being super-careful about paying all bills on time, not opening new credit cards in the months leading up to the home loan application, paying credit card bills in full each month and keeping credit utilization low.

Do I have a plan in place for repairs?
When a renter has a leaky faucet, they call the landlord and the problem becomes theirs. When a homeowner has a leaky faucet, it’s their own problem. They can either fix it or hire someone to do the job, but it’s a good idea to have a plan in place before the first thing in a new home needs fixing. If you’re handy enough to handle repairs on your own, you’ll need to be ready and willing to give up some of your free time on weekends to tend to things around the house. Otherwise, it’s best to have a tidy sum put away to pay for necessary repairs before purchasing a home.

Sometimes, an appliance or a system in the house will be broken beyond repair and will need replacing. Homeowners need to have enough money stashed away in their emergency fund or rainy-day account to cover these purchases, too.

Buying a first home is an exciting milestone that only happens once in a lifetime. If you think you’re ready to take this step, first make sure this purchase is the right choice for you at this time on a financial and practical level.

If you’re ready to get started on your home loan application, click or call to hear about our fantastic home loan options.

Your Turn:
How did you know you were ready to buy a house? Share your thoughts with us in the comments.

Learn More:
investopedia.com
thebalance.com
rubyhome.com
creditsesame.com
moneyunder30.com