Updates From The Cindy Banks Team

What Sellers Should Know About Pets And Showings

Buyers and their agents need to feel welcome to look at the property at their leisure without danger or distractions. So while you adore your sweet-tempered pit bull rescue, he could turn territorial, barking and growling at potential homebuyers. And it could cost you the opportunity to sell your home.

Think of buyers as guests and work to make them feel comfortable as they consider your home for purchase. If you have a protective dog or one that isn’t well-trained, drop her off at doggie day care when you know your home is going to be shown. Or call a pet sitter on call who can take your pet for a long walk while your home is being shown.

If you must leave the dog at home, don’t expect real estate professionals to handle your dog. They are not dog trainers and should not be expected to risk a dog bite to show your home to buyers. This is where crate-training can be a huge advantage. At least your dog is secured and more inclined to relax while your home is being shown.

What you should not do is leave your dog loose in the backyard. Not only does the buyer not have access to part of the property, but your dog could bark so much that the din drives the buyer out of the house. Also, don’t leave your dog at the neighbor’s. It’s just as bad if the buyer believes a noisy dog lives next door.

Housecats can also repel buyers. Most homes aren’t designed with a convenient place for the litter box, so cat owners do the best they can. Owners get used to the smells of catboxes and fishy foods, which could be offensive to buyers who don’t have cats.

Exotic pets can be showing-stoppers, too. Birds are gorgeous, but a puffed-up screeching cockatoo can be intimidating and dangerous. Imagine a buyer bringing small children who can’t resist sticking their fingers in the cage and quickly get rewarded with a nasty bite from a very strong beak.

When you’re selling a home, keep in mind that the first two weeks on the market are crucial. That’s the time you want your home to be pristine and move-in ready. You don’t want any noise, smells or stains that could put buyers off.

Putting Zeal In Your Curb Appeal

Curb appeal, the first impression your home conveys to prospective buyers, should create an emotional desire to own the home and enjoy the lifestyle and status it represents.

Putting the best face on your home also should give a lasting impression that motivates buyers to cross the threshold and take that first step toward closing the deal.

Experts advise, more like a home improvement or exterior staging job than a cosmetic makeover, curb appeal that sings is particularly crucial now that more and more buyers are calling the shots.

Give your house model home level curb appeal for that “new” look and feel and buyers will beat a path to your door. That’s because there’s nothing like moving into a home that’s ready to go, free of the need for initial touch ups and free of the ghosts of owners past.

So how do you put a new face on your old home? With lots of attention to detail, in not one, but all the components that make your home stand out on the block.

New paint. There’s nothing like a fresh coat of paint to begin to give your home that “newly built” look, provided you don’t rush the job. Choose a contemporary color scheme that doesn’t clash with the neighborhood, but sets your home apart.

Don’t just slather on a new coat over the old. Remove built up layers of paint before applying a new one. If you don’t need to remove existing paint, you do need to prepare the surface.

Exterior surfaces attract dirt and grime from dust and pollutants in the air and that will prevent new layers from adhering properly and cause peeling.

New landscaping. Well-manicured landscaping is the frame for your home’s curb appeal. The approach should be tidy, simple, healthy landscaping that’s proportional to your home. Know how your landscaping will appear once its matured. From a practical sense, the plants and trees provide shade and passive cooling as they control erosion and pollution. They also provide privacy, especially if it’s a single-level home adjacent to two-story houses.

New roof. Some real estate agents advise against adding a new roof when sales are brisk, but topping off a complete curb appeal remodeling job, mandates a new roof, gutters and downspouts.

Today’s roofs can add contrasting color and textures to your home’s look. Affordability comes with multi-dimensional composition asphalt shingles in decorator colors. For something cheaper than the real thing, but just as unique, try simulated slate shingles to turn a bland tract home into a more appealing abode.

New paving. New sidewalks, driveways and other non-landscaped surfaces help pave the way to curb appeal. The choices are endless and inexpensive — concrete stamped with the impressions of cobblestones, interlocking concrete paving bricks, and more.

What Does ‘Prior To Fund’ Mean

In general, ‘prior to fund’ means your loan approval is almost at the goal post. When lenders issue an initial decision, there will still be things needed to complete even though you’ve submitted everything your lender asked for. There are stages in the loan approval process and even though you probably realize it, lenders have given these stages different names.

When you receive your initial approval, there will still be some items needed. Usually these items are simply nothing more than getting your loan file in compliance. There are items in your file referred to as credit documents, things such as your paycheck stubs and W2s. These need to be within a 30 day window and many times if your loan application goes beyond 30 days, you’ll be asked to update a few things. This is common, especially so when a loan is submitted for a preapproval before a property is even located. You submit your documentation and begin shopping for a home. In all likelihood your credit documents will be more than 30 days old before you close.

Now, let’s get back to those stages. Upon an initial approval, the additional things needed are called ‘loan conditions’ or simply ‘conditions.’ There are ‘prior to doc’ conditions and ‘prior to fund.’ Prior to doc means certain things are needed before loan documents can be printed. This stage means you’ve received an initial approval but there are things needed before the loan can continue through the approval process. The lender won’t do anything with your application until you’ve provided the requested items. After you do provide those items, the lender will review them to make sure they’re what was being asked for and once that determination is made, your loan papers are transmitted to the settlement agent.

You go to your settlement, sign a bunch of paperwork and provide the needed cash to close for your down payment and closing costs. You sign, provide the funds. But you’re not exactly finished. There is a ‘prior to fund’ condition outstanding. You’ve been asked to provide an updated paycheck stub and bank statement. A prior to fund condition is a minor issue but an issue nonetheless. Prior to fund conditions are typically the easiest to comply with.

How To Start A Home Renovation

Adding on to your house is a very popular decorating idea nowadays. Whether you’ve always wanted a new addition or just think it’s time to spruce up your home you need to have a plan to make the process go smoothly. From hiring a contracting company to figuring out exactly how to pay for the additions you want, it can be easy to get overwhelmed.

Making A Plan

The first thing you have to do is figure out what kind of addition you’re looking to get onto your home and what you’ll need to get started. There are multiple options for adding new features to your home or backyard. You can create an entertainment room in your family room, add a fire pit to your yard, add an entirely new room to your house, and so on. Each of these kinds of projects will take a different amount of time and determination to complete, but they’ll be great once you’re done with them. It can transform your house and make it a more friendly and open atmosphere, or just give you something new to enjoy.

So if you’ve got one of the smaller jobs such as the entertainment room or the fire pit, you don’t necessarily need a contractor. However, before you start breaking down walls for a new room or adding a pool on your own, you might want to start checking some local contracting options to make sure that the addition is possible and that you have the proper funds for it.

Costs

Before you can actually start the build, you’ll have to figure out how much to set aside for the project. If you’re working on it yourself, then obviously you’re going to have to buy the materials yourself. This is usually cheaper, although you’ll have a lot more work to do on your own. If you’re hiring a contractor, then you should get in touch with them and see how they’re willing to accept payments: half up front, half when it’s finished, paid periodically as the build is happening, or paying in installments after the fact. Especially since different options could cost you more or less.

For example, there are several different kinds of pools that could cost you differently depending on which one you choose. They come in different sizes and shapes as well as building materials. For example, a vinyl pool won’t cost as much but it also won’t last as long as a sturdier material like concrete. It all depends on what you think you want and what will work with your house. However, don’t be discouraged if you think that you can’t afford that dream pool. There are multiple kinds of pool financing options including pool loans or installment options. And the same goes for the other building projects as well. For those larger home renovations, you can take out loans so that you know you can make the payments. Once you’ve figured out how you’re going to make the payments or cover the costs for your project, then you’re ready to get started.

Starting The Build

How Can You Get a Mortgage If You’re a Freelancer?

Being a freelancer, contract worker, gig worker, or anyone self-employed is more common and popular than ever right now. There are downsides, such as the lack of benefits like health insurance. At the same time, there are more upsides for many professionals who choose to work this way.

Upsides include freedom and flexibility to make your own schedule, unlimited earning potential, and the ability to have the work-life balance that allows you to create your own lifestyle.  

There is an issue that can arise if you’re a freelancer or contractor, though.

How do you get a mortgage?

When you apply for a mortgage as a traditional employee, you’ll probably show your proof of income through your job, but it can be a bit trickier if you don’t have a traditional employer. You’re also going to face more scrutiny from lenders.

Keep Up with Relevant Documents

Over the years, it’s easy to be disorganized as far as how you keep up with your earnings and expenditures, but come time to apply for a mortgage that can be problematic.

As a freelancer or anyone who’s self-employed, it’s normal that your income is going to fluctuate, and you’ll have up and down periods.

What you want to be able to show a lender is your long-term earning average.

You should be able to calm the fears of your lender by showing them at least several years’ worth of documents highlighting your earnings.

You need to be able to demonstrate a pattern of earning. If you aren’t able to do that just yet, you might have to hold off on buying a home.

Even better than showing steady earnings is being able to show upward trends.

Another note—if you’re self-employed, you likely try to write off as many of your business expenses as you can at tax time. This is understandable, but you also want to show as high an income as possible, so if you’re thinking about buying a home anytime in the future, keep that in mind with your deductions.

Be prepared to show at least two years of tax returns, which will likely be your 1099s instead of your W2s.

Beyond your tax returns, you may want to be able to show your bank statements, and any profit and loss statements. You can also provide letters from clients showing that you have a stable relationship.

Income Calculation

Your income is calculated differently if you’re a freelancer. Your lender will calculate an average monthly income by dividing the past two years of your adjusted gross income by 24.

Save As Much As You Can

You should aim to save at least 20% of the purchase price of a home because this will let you avoid paying for private mortgage insurance. You also want to be able to show your reliability as a borrower, so with that in mind, the bigger the downpayment you can make, the better.

Clean Up Your Finances

You can face more headwinds if you’re trying to buy a home and you’re self-employed in any capacity. You are inevitably going to be held to a higher financial standard, so prepare yourself for that.

You should aim to get your credit score up to at least 740, and the higher, the better.

Start working toward paying off debt, including your credit cards. Credit utilization is a big component of your score and also the willingness of a lender to offer you a mortgage. Try to have the amount of credit you’re using below 30%.

Before you ever start trying to apply for a home loan, look at your credit report.

This will allow you to see where you need to make improvements, and also spot any potential errors. There are errors on credit reports more often than we think.

Don’t open any new accounts or lines of credit before you’re going to start applying for home loans, because that’s going to impact your credit score negatively.

Finally, before you start the mortgage application process, separate your business and personal bank accounts. You shouldn’t use a personal bank account for anything related to your business.

Buying a Home? Don’t Forget to Ask These Questions!

Buying a home comes with a lot of responsibilities and liabilities. When you buy a home, you are stuck with it until after you sell it successfully. Because of this, you must take extra precaution and try to ask as many important questions as possible before you close a deal with the seller or broker. Below are the questions you shouldn’t forget to ask when buying a home.

Can You Have a Copy of the Home’s Sales History?

It is important to know about how many times the home has changed hands over the years as well as for much the home sold for each time. This will let you know about your prospective property’s value fluctuations which can help you sell the home and negotiate fairly in the future.

 What is the Cost of Monthly and Annual Utility and Maintenance?

No one wants a home that racks up utility bills as though the owners are made of money. The water, power, and gas bills should be disclosed as well as annual maintenance cost for you to gauge if you can truly afford the home.

How Much is the Property Tax?

Although the home’s value is the primary determinant of the property tax, knowing how much the current owners are paying is a good way to determine future expenses on the property.

Does the House Have an Unusual History or Has It Been Involved in Any Crime?

Any history of suicide, murder, or death should be disclosed by the broker or seller. Unusual history like appearing in a magazine, commercial, or movie should be disclosed as well. A home appearing in public media may mean a future privacy breach and a negative history can make a home difficult to sell in the future.

When was the Roof Last Fixed or Replaced?

A roof replacement can cost upwards of $10,000. The future homeowner should know when a huge expense like this may be due.

Does the Area Around the Property Come with Parking Restrictions?

Whether or not the home has a garage, it is possible that future visitors may need to park outside of the property. When this happens, the last thing you want is for your guests’ vehicles to get towed away.

Are There On-Going Warranties for the Kitchen Appliances, Garage Door, the HVAC System, and More?

Replacing any of the above can easily cost thousands of dollars. Having the warranties can save a lot of money down the road.

Are There Renovations or Additions Made by Past and Current Owners?

Upgrades can cost a lot. It is best to know which contractors worked in the house before and what they did more so if planning future additions or renovations.

Are There Any Issues with Sewage or Broken Pipes?

Although you can hire a home inspector, it is best to know these issues beforehand more so that the cost of repairs for issues like this can be equivalent to a sizable amount.

Are There Past or Current Pest Infestations?

Why Do Lenders Use Your Gross Pay

This might seem kinda curious that lenders don’t count how much money you take home each month when determining affordability. Seems counterintuitive, does it not? I mean, after all, you pay your bills with the money you take home, not with the gross pay shown on your paycheck stub. And while it does seem a bit odd that lenders don’t look at your net pay each month, there are definite reasons for it.

For most every loan program available today, lenders must determine affordability. This is accomplished by comparing your monthly income with your monthly bills plus the new payments associated with a new mortgage. The monthly bills that count each month are things such as a car payment or installment loans. It does not consider everyday expenses like food or utilities. For your mortgage payment, lenders add up the principal and interest payment along with  monthly allotment for property taxes, hazard insurance and mortgage insurance (when needed.)

These comparisons are referred to as debt ratios and they look at the amount of monthly expenses compared to gross monthly income. When you add the housing payments into the mix, you now have two debt ratios, one is referred to as the ‘front’ ratio which is your total mortgage payment and then the ‘back’ ratio which is all these expenses added together.

Okay, so why do lenders use gross income and not take home pay?

Because there are too many variables to consider. With ‘take home’ pay, one person might have more deductions compared to someone else. Lenders can’t go down the list and verify and validate all your deductions before making a determination of affordability. There can also be areas where there are monthly expenses required where in other areas they are not. 

To make up for these potential discrepancies, lenders simplify matters by using the gross monthly income and not ‘take home’ pay. Yes, there are sometimes requirements for lenders to look at monthly funds available each month after all expenses are accounted for, but these funds, called ‘cash reserves’ aren’t really expenses but ‘set aside’ money lenders like to see after the closing has taken place.

How to Tell How Much You Can Borrow

How much can you afford to borrow when getting ready to buy a home? That depends upon several factors, some more important than others. Affordability is generally determined by your monthly payment. Your monthly payment is affected by current market rates and the size of your home loan. In addition, the length of your loan will also affect the monthly payment. Shorter term loans for example may have a slightly lower rate but because the loan is squished into a 10 year term compared to the more common 30 year loan, the payment will be higher.

So let’s start. Generally speaking, the mortgage payment should be around one-third of your gross monthly income. When lenders evaluate affordability, they look at not just the mortgage payment but also an amount for monthly property taxes and insurance. That’s the number they use, not just your principal and interest payment. If the gross monthly income of all borrowers on the note amount to $9,000, then lenders like to see your total payment around $3,000.

But what about all your other bills, are they factored into that one-third amount? No. Other payments that would appear on a credit report are included. This includes both installment and revolving debt. Installment debts are those such as an auto loan that has fixed payments every month. Over time, the car is eventually paid off. The car payment is figured into this amouint, but only if there are more than 10 payments remaining. Revolving debt is like your credit card. The balance can change every month and so will the payments. Everyday bills such as utilities, food, etc won’t count. For this payment lenders like to see these bills be around 40-43% of gross monthly income.

However, how much you can borrow can also depend upon your credit scores. Borrowers with high credit scores might be able to borrow more than someone with less than stellar credit. Your loan officer will help you out with these numbers if you need some assistance early on.

Are Home Improvements Tax Deductible?

There are tax implications of making home improvements, but only in specific situations. When it comes to your taxes, a home improvement might include any work done that increases the value of your home substantially, improves the useful life of the property, or creates new uses.

We’ll get more into what that means specifically below.

Home Improvements vs. Repairs

First, the money you spend on your home in terms of taxes can be divided into improvements and repairs.

The cost of capital improvements can be added to your tax basis in your house. Tax basis is what’s subtracted from the sales price to figure out how much your profit is. With that in mind, you can only take advantage of this if you’re selling your home.

A capital improvement in this context is what was mentioned above—anything that adds value, adapts a home to new uses, or prolongs its life. Something that you could include as a capital improvement might be a new roof or central air-conditioning.

Capital improvements don’t have to be big purchases either—something like storm windows counts or a home security system.

Repairs can’t be added to your basis. Repairs might include painting your home or fixing your gutters.

If you make improvements to your home, make sure you keep records of everything so you’ll have them if you do sell.

Tax Deductions for a Home Office

One way you could save on your taxes and improve your home at the same time is to build a home office. You get a small deduction on improvements you make to your home if you’re using one of the rooms exclusively as your work area, which many people are doing now.

Any repairs benefiting your home can also be deducted, based on the percentage amount of your home used as an office.

Similarly, if you rent out a part of your home, you might be able to deduct what you make in improvements to that area. If you were to, just to give you an example, add a bathroom to the area of your home you rent, you might be able to write that off in its entirety.

Medical Modifications

If a health care provider suggests modifications to your home to help you or to allow you to provide care for your family member, such as an aging parent, the expenses of these updates may be deductible. Examples include adding a wheelchair ramp or modifying your doorways. If the improvement adds value to your home, on the other hand, it’s not deductible.

Upgraded Energy Systems

The IRS has residential energy-efficient property credits. Qualifying properties according to their guidelines updated in April 2021 include solar electric, solar water heaters, fuel cell property and small wind turbines. Also included are geothermal heat pumps.

What Does It Mean to Build Equity?

If you own a home, one of the benefits compared to renting is that each month you’re making mortgage payments, so you’re building an asset which is equity. Equity refers to the amount of your home that you truly own after you take into account the debt you owe.

To calculate your current equity, you should subtract your loan balance from your home’s market value. 

If the number is negative, then your home is worth less than what you owe on it. That means you have upside-down equity.

This is obviously not the goal. The goal is to grow your equity over time as you pay your loan. Until you pay off your mortgage, even though you’re considered a homeowner, your lender still has an interest in your property.

You own your home, but it’s collateral for your loan.

How Does Equity Work?

If you bought a home for $200,000 and you put down $40,000, which would be a 20% down payment, you would then have a home equity interest of 20% of your home’s value. You own the $40,000 of your home right off the bat because of your down payment.

If your home value goes up over time, then while your loan balance could stay the same, your equity could go up. If you bought your home and the market spiked, so your home was worth $400,000, you’d still owe only $160,000, meaning you’d have gone from owning 20% of the home to 60%.

How Can You Build Equity?

The primary way you increase your equity is by paying off your loan.

If you have a standard amortizing loan, that means you’re making equal monthly payments. Those payments in this scenario go toward the interest and principal. Over time the amount that’s going toward your principal goes up. Each year that you own your home and pay your mortgage means you’re gradually paying it off faster.

You can also grow your equity by working to increase the value of your home. Home prices do tend to rise in a healthy economy on their own as long as the real estate market is doing well, and you can speed that up based on the work you do to your home.

You can also make accelerated payments on your mortgage. Most of the time as a homeowner, you’ll make 12 payments a year. If you split a payment into two equal amounts and send it every two weeks, you end up making 26 payments a year. That ends up being the same as having paid 13 monthly payments, so you’re taking some interest off the total life of your loan.

You’ll be able to pay your mortgage faster and build equity more quickly too.

Using Home Equity

The equity you have in your home is an important asset, and it’s calculated as part of your net worth. You can use your equity in different ways.

If you sell your home, then you’re taking the equity you have in your home from the sale.

You can also get a loan against your equity. This is known as a home equity loan or second mortgage.

Fixed Loan? Hybrid? What’s the Difference?

It’s pretty much a fact that there are more home loan choices than you might think. Yeah, there are two basic types of mortgages, a fixed and an adjustable, but the choosing only starts there. With a fixed rate loan, it’s fairly easy to understand. The rate stays fixed throughout the life of the loan. The only differences in fixed rates are the loan terms. Most borrowers who select the fixed route take the 30 year term. But there are other terms as well.

The second most popular loan term is the 15 year loan. In fact, when you peruse various web sites providing rate quotes, you’ll typically just see a 30 and 15 year option. But there are other terms and all lenders offer them, you just have to ask. Lenders can also offer a 25, 20 and a 10 year term. You need to run the numbers with your loan officer to figure out which is best for you, but generally speaking, the shorter the term, the higher the payment. And as a result of the higher payment, there is less interest paid with a shorter term loan.

The next choice is an adjustable rate mortgage, or an ARM. As the name implies, the rate can adjust, or change, at various points in the future under specific terms. When a consumer explores ARM choices, the most popular one in this category is the 5/1 ARM. There are other choices such as a 10/1, 7/1 and a 3/1. These programs are also referred to as ‘hybrid’ loans because they act like both a fixed and an ARM.

For example, with a 5/1 ARM. The loan is fixed for five years before turning into an ARM that can adjust one time per year. A 10/1 is fixed for 10 years before turning into a one-year ARM, for example. Why would someone choose a hybrid? Because the fixed portion of the ARM has a rate that is a bit lower than a straight 30 year fixed rate mortgage.

If for instance a 30 year rate is at 8.00%, you might be able to find a 5/1 rate around 6.75%. Borrowers who select this type of hybrid get to enjoy a lower rate for five years compared to a 30 year loan. Yes, turning into an ARM after five years does pose some additional risk in terms of higher rates, but remember there’s always the possibility of a refinance.

A Guide to the Mortgage Interest Deduction

When you have a mortgage, there’s a deduction you can take on your taxes for the interest you pay on your first $1 million of debt. If you’re a homeowner who bought your home after December 15, 2017, you can deduct interest on the first $750,000 of your mortgage. If you are going to claim a mortgage interest deduction, you have to itemize your tax return.

The following is a guide to what to know about the mortgage interest deduction and how it works.

The Basics

The mortgage interest deduction lets you reduce taxable income by the amount you pay on the interest of your mortgage during the year. If you have a mortgage and keep up your records, you can lower your tax bill. Generally, as mentioned, you can deduct the interest paid on the initial $1 million of your mortgage for a primary or second home. For buyers who purchased after December 15, 2017, you can deduct what you paid on the first $750,000.

What Qualifies?

If you’re deducting mortgage interest for your primary home, typically, the following will count:

•  Your property can be a mobile home, house, apartment, condo, co-op, house trailer, or even a houseboat •  Your home has to be the loan’s collateral. •  The home needs to have sleeping, toilet, and cooking facilities. •  If you get a housing allowance from the military or through the ministry that’s not taxable, you can still deduct the interest for a mortgage. •  A mortgage you get to buy out the other half of your home in a divorce also counts.

If you have a mortgage on a second home, the following will qualify you:

•  You don’t need to use the home throughout the year •  The house has to be the loan’s collateral •  If you rent out your second home, you need to be there for the longer of at least 14 days or over 10% of the number of days you rented it out

Points are prepaid interest you can get on a loan. You can deduct your points gradually through the life of your loan, or if you meet certain requirements, you can deduct them at the same time. The eight requirements you have to meet to deduct your points all at once include:

•  The mortgage has to be for your primary home •  It’s an established practice to pay points in your area •  Your points can’t be abnormally high •  Your points aren’t for closing costs •  The down payment you make is higher than your points •  The points are calculated as a percentage of your loan •  The points are on your settlement statement •  You use a cash method of accounting on your taxes

If you have a late payment charge that wasn’t for a specific service done in relation to your mortgage loan, you can deduct that. If you pay your mortgage early, you might have a prepayment penalty. You can deduct that penalty as interest.

You can deduct the interest if you have a home equity loan and use it to buy, substantially improve, or build a home. If you use the money for something not related to your home, it’s not deductible.

What’s Not Deductible?

Finally, the things that aren’t deductible include extra principal payments you make on your mortgage, homeowners’ insurance, title insurance, and settlement costs for the most part. Down payments, earnest money, or deposits you forfeit aren’t deductible or interest on a reverse mortgage.

To claim a mortgage interest deduction, start by looking for your Form 1098, which your lender sends in January or the start of February. Form 1098 outlines how much you paid in interest and points during the year. Your lender will send a copy to the IRS as well. If you paid at least $600 in mortgage interest, which includes points, you’d get a 1098.

You’ll need to itemize your taxes rather than taking the standard deduction when you complete your taxes.

How to Destress Downsizing

There are a lot of reasons you might feel like it’s time to downsize and move into a smaller home.

If you’re now an empty-nester, that’s one good reason. Even families who still have children at home often opt to downsize to save money on their mortgage and to have less upkeep and maintenance.

If you spend all of your free time maintaining a larger home than what you need, you have less time to enjoy your life.

When you downsize to a smaller home, you can declutter and enjoy lower utility bills.

Living in a smaller home requires you to think about your priorities and get rid of things that aren’t needed.

If you plan to downsize, decluttering and preparing can be intimidating, and the following are some tips to take some of the stress out of it.

Be Strategic

You’ll probably start thinking about the big items in your current home first, as you plan to downsize.

With furniture and large items, don’t waste your time trying to guess what will fit and what won’t.

Instead, create a floor chart of your new home, and then you can map out a grid of your furnishings to figure out what will fit and how it will fit.

There are apps that you can use that will make it incredibly easy to do this.

You’ll feel more confident in your decisions as far as what you keep and throw away if you measure first.

If there are rooms in your current home that you won’t have at all in your new home, get rid of everything from those if you can. For example, if you’re not going to have a guestroom, start eliminating the items in your current guestroom first.

Take Inventory

If you’re moving to a smaller home, you’re inevitably going to have to get rid of things. This is one of the benefits of downsizing—reducing clutter and simplifying your living space.

Start by taking inventory of what you have versus what you need.

You can begin weeding out the things you’re certain you want to get rid of, such as duplicate items.

Start Small

Create a downsizing plan, and start small. Don’t overwhelm yourself with the most challenging parts of your house first.

For example, begin with your laundry room or perhaps a small closet. Don’t start with your garage or your basement first—those can be the biggest projects to take on.

Start Clearing Things Out

Once you have a general idea of how much space you have in your new home and your possessions, begin the process of clearing things out.

Create four piles. There should be no maybe pile—don’t give yourself the option.

The first pile will be giveaways. These are the things you’re going to give to family and friends but don’t save too many items in these piles. You may be overestimating how useful or valuable loved ones might find many of the things you plan to give them.

The next pile will be donations. If something is in bad shape, don’t put it in the donate pile because it probably won’t be accepted.

Your third pile can be more valuable items that you plan to sell.

Finally, your fourth pile heads to the dump.

Find Help

You should look for someone to help you with the process who doesn’t have the emotional attachment to the things that you do. You have to take the emotionality out of downsizing, and a third-party can guide you in that direction.

If you’re struggling with getting rid of things, perhaps you should have someone help you. If so, resist the urge to micromanage what they give away or throw away.

Finally, try to make downsizing as fast a process as you can. You don’t want to give yourself too much time to think on things because you might come up with some reason for keeping items that you really shouldn’t.

Get it done and move the items out as soon as possible.

Should You Buy a Home Warranty?

We’re buying a house. Should we buy a home warranty?” Seems like a relatively tame question, right? But post it on Facebook or Nextdoor and watch the impassioned responses roll in. You might as well ask, “What political party should I belong to.

Who knew people were so fervent about home warranties! Everyone has their own experience; expect to hear a few people call them “a scam” or at the very least a waste of money. Others will regale you with their tale of how having a warranty saved them from a freezing winter because they couldn’t afford to fix their furnace without it.

In the end, the decision is personal and largely based on how comfortable you are coming out of pocket if one of the more expensive items in your home, like the air conditioning unit or hot water heater, should malfunction and need to be replaced. We’re breaking down three important particulars so you can make an educated decision.

Know the cost

“A basic home warranty costs about $350 to $500 a year or more,” said Money Talks News. “A warranty typically covers kitchen appliances, plumbing, water heater, heating and electrical system components, sump pump, whirlpool tub, and ceiling and exhaust fans, according to Angie’s List. “‘Enhanced’ plans, purchased for another $100 to $300, provide added coverage for such things as a washer and dryer, air conditioning system, refrigerator and garage door opener. Optional coverage can be added, including for pools and septic systems.”

You can typically break down the annual cost into monthly payments if that’s more comfortable for you, but the cost of the warranty itself isn't the only thing you’re responsible for paying. Service calls will typically also cost you; put in a work order for a broken microwave or a tub that won’t drain and you’ll be responsible for paying for the privilege of having a professional come check it out, and—hopefully—fix it.

“Home warranty deductible, or service call fees, is an important concept to master if you want to understand how to find the cheapest home warranty plans for your needs,” said Review Home Warranties. With most home warranties, a deductible or service call fee will be required, “with an industry average of approximately $75 per visit. Some companies, like American Home Shield or TotalProtect Home Warranty, let their customers choose the amount of a deductible, which depends on the amount of premium. The higher the premium, the lower the deductible.”

Consider your peace of mind

Many homeowners opt for a home warranty for major “just-in-case” scenarios. Just in case the air conditioning unit crashes and burns. Just in case the hot water heater dies. Just in case there’s some other expensive repair that pops up, without the ability to comfortably pay for it. With the cost of some of these items running into the thousands—the average for a new air conditioning unit and installation, per HomeAdvisor, is $5,967!—the peace of mind factor is huge.

“For a homeowner who doesn't have an emergency fund or who wants to protect their emergency fund, a home warranty can act as a buffer,” said Investopedia. “Home warranties also make sense for people who aren't handy or who don't want to worry about tracking down a contractor when they have a problem. Warranties can also make sense for people with expensive taste in appliances.”

But…understand that not everything is covered

There’s always a chance that the item you need repaired is not covered under your warranty for one reason or another. “Having a home warranty doesn't mean the homeowner will never have to spend a penny on home repairs,” said Investopedia. “Some problems won't be covered by the warranty, whether because the homeowner didn't purchase coverage for that item or because the warranty company doesn't offer coverage for that item. Also, home warranties usually don't cover components that haven't been properly maintained. Furthermore, if the warranty company denies a claim, the homeowner will still have to pay the service fee and will also be responsible for repair costs.”

Decorating Tricks for Hiding Kids’ Messes While Selling Your Home

Keeping the house together during the selling process is a challenge. Making sure everything is just right for showings and open houses can be exhausting and overwhelming. Throw kids into the mix, and things can get downright chaotic. Fortunately, a few small decor choices can help conceal kid clutter—changing your “for sale” sign to “sold.”

Hide in Plain Sight

With overflowing toy boxes and tea-party set-ups overtaking the living room, it may be unrealistic to banish all kid stuff to other rooms. Instead, make use of your furniture’s built-in compartments and drawers. Have a storage ottoman next to the sofa? Fill it with everything from action figures and dolls to coloring books, art supplies, stuffed animals and more. Divide the credenza in the family room so that your little ones can store toys behind its closed doors. Accent the open shelves with ceramic vases, family photos, decorative carafes and other appealing decor items.

If your built-in storage is already in use, opt for two or three woven baskets with lids instead. Place them wherever you want, whether it’s next to the loveseat or on the bottom shelf of a console table. Buyers will be too busy appreciating your home’s cleanliness and open floor space to think about what’s inside.

Hide Within Reach

Families in smaller living spaces might consider another strategy—underbed and attic storage. While the underside of your child’s bed may already be home to all sorts of tchotchkes, encourage kids to neaten it up with rolling plastic or rattan storage bins. Discreetly stow away everything from dress-up clothes to seasonal clothing in multiple containers. Slide them out of sight, then help your little one make the bed with an oversized quilt that conceals what’s hidden below. The best part? These containers can still be used after moving into the new bedroom or playroom.

For toys that are too big to fit in this space, such as kids’ teepees and play tents, consider collapsing them and stowing behind a dresser. If the dresser has legs that makes it easy to spot what’s behind it, opt for a chest instead.

Rotate Toys in Longer-Term Storage

Consider storing bins of toys longer-term and swapping them out every few weeks. In addition to the attic and basement, the back corner of a deep closet is a great place to stack storage tubs filled with everything from building blocks and board games to miniature cars and pull toys. Strategically hide them behind long coats so a quick peek inside the closet doesn’t give anything away. Better yet, switch out the storage tubs for suitcases. Rotate the toys in storage every few weeks--kids will have renewed interest when they come out of hiding.

Minimize and Add Some Style

Rather than attempting to conceal every toy, consider downsizing. Prior to the first showing, help your little one sort through toys, determining what still gets played with and what doesn’t. Sort into “keep,” “donate,” and “throw away.” This streamlines the cleanup process and makes it easier to stow away what remains. Bonus? You’ll have less to move when the time comes. For every item your children give up, consider rewarding them with small change or a trip to a favorite restaurant or ice cream shop.

For kids’ areas like bedrooms and playrooms, embrace the playful nature and just add a little style. Choose bookcases and desks with useful cubbies and shelves, and dress up the space with vibrant and unique artwork. Inspire imagination in potential buyers (and keep the space useful while your home is on the market) by choosing a few colorful supplies and knick-knacks to display.

When You Want To Renovate Everything, How Do You Choose What To Do First?

New fence. Covered patio. Expanded bathroom. Painted kitchen cabinets. They all cost about $3,000 (give or take a couple bucks). So when you want to renovate everything, how do you chose? What comes first, and what shouldn't you bother with at all? It's all so confusing.

That's the conundrum many people face when they go to renovate, or they're simply trying to make a plan of action that doesn't include having to sell their house because they've gone broke fixing it up. Moving forward can be tricky, and the renovation process can be anxiety-producing. Taking the time to properly research, set your budget, and determine the return on investment of individual projects - if that's even important to you - are the keys to success. Follow these tips before you swing that hammer.

Ask yourself why you're doing it

"It is vital that you know the objective of the renovation before you start as this will help you keep on track and make the appropriate decisions once the work has started," said Your Investment Property. "The objective may be any one of the following: increase rental return; improve capital value; own enjoyment; keep up with the next door neighbors; provide an income when property is flipped (ie: purchased, renovated and then sold in a short period of time); or something else that is important to you."

Prioritize

This one can be hard when what you really want is a top-to-bottom overhaul, and it may require you to have a few tough conversations with yourself. You may love the idea of a covered patio, but will you get real use out of it? If you're a person who doesn't much like to go outside (or if the covered patio would only be the beginning of the expense because you'll now need to add an outdoor fan and a heater and drapes and mosquito netting and new outdoor furniture and a waterproof television once you have the patio cover), perhaps your dollars are better spent elsewhere. When you have limited funds, taking care of renovations on items that are more frequently used, or that you can at least look at and appreciate on a more regular basis, might be a better bet.

Consider your budget

About that budget…some renovations obviously cost more than others. And some might be more important to you than others. Some of us have instant gratification issues (umm, guilty!). Perhaps it would be best to knock out a few small items that will make you feel good about your progress. Or, perhaps what you really need is a couple months of serious money-saving so you can put in those countertops you've been dreaming of.

Ask around

You might be able to slash your hard costs by finding a skilled handyman to do your flooring installation instead of going with a flooring company. Or, you may be able to take advantage of a special from a big box store that cuts down on costs. Signing up for daily emails from Home Depot and Lowes is another way to take advantage of limited-time specials that can save you money. Both have "Daily Deals" they send out in their emails, which are good for that day (and until they're all sold out) only.

Consider the ROI

If you can't rule out one or the other based on how much use you think you'll get from the areas you're looking to renovate, look at the potential value. One might provide a much better return on investment than the other. The Cost vs. Value Report, which "compares average cost for 21 popular remodeling projects in 149 markets with the value those projects retain at resale in 100 U.S. markets," is our Bible when it comes to determining ROI.

Assess Your House

You might have a lot of "wants" related to renovating, like updating your master bath and re-facing your fireplace. But there may be more pressing issues that need to be addressed before you get to the pretty stuff. "Hire a licensed home inspector to check your house from top to bottom," said Home Guides. "He'll climb into the attic to check for dampness, scour the basement looking for leaks, test the heating and air conditioning systems, examine the roof, the plumbing and electrical panels." Evaluate the results before deciding on a plan of action. 

Think about everyday costs

6 Ways You Can Protect Your New Home

When you purchase a new home, you want to take care of it as well as you can. There are a lot of different ways you can protect your home. They range from security to preparing for expected expenses. These six tips will help you ensure your home is always as protected as possible.

Insure It Fully

Your insurance is an important tool for ensuring that your home is protected against the unforeseen. It is a way to protect yourself against the costs of damages and personal liabilities. However, not all homeowner’s insurance is equal. Understanding home insurance will help you make better decisions for your home.

While not everyone needs every form of insurance, being prepared for the unforeseen is important. For example, if you live in Arizona, you likely don’t need flood insurance, but you probably do in Florida.

Get a Warranty

Homeowners insurance won’t cover all the possible expenses you experience. For example, it won’t cover damage to major appliances and systems due to wear and tear. A home warranty, on the other hand, will help with these costs.

It is a simple way to extend your protection, so you aren’t caught unprepared. Your home needs to be maintained and repaired from time to time. A warranty and insurance will help you do that.

Buy a Security System

Of course, damage and wear and tear aren’t the only issues you need to contend with. Finding the right  home security system will help you protect against unwanted entrants. Even a basic system can make a huge difference in your security. Burglars and other unauthorized people generally target homes that are easy to access.

Many systems also monitor for smoke and other hazards. The right monitoring subscription can protect you against many threats.

Trim Back Vegetation

Vegetation growing up against your house can be a risk for two reasons. First, it is a way for burglars to get close to your home without being easily seen. Second, branches and debris can damage your home.

Keeping your vegetation well-trimmed and maintained can help keep your home safe. Better yet, it is easy to do and will make your home look a lot nicer. It is a smart practice and much easier if you keep up with regular groundskeeping.

Keep Up With Maintenance

Similarly, regular maintenance will help protect your home against minor issues causing bigger ones. A little cracking paint may not seem like a big issue. However, paint protects the structure underneath it. Fixing the issue early involves a little sanding and painting. Waiting may mean mold, rot or other issues.

Again, it is significantly cheaper and easier to address problems promptly. This is one area that the right warranty and insurance can come in handy. For example, if your air conditioning is making a strange sound, you can use your warranty to get it checked and fixed rather than just waiting. That could save you from having to replace the whole system in the near future.

Meet Your Neighbors

Your neighbors are one of your best protections against issues such as unwanted entrants, fire and other similar problems. The people who live around you can e your eyes and ears when you aren’t home. While not every neighbor is interested in looking out for you, getting to know the people around you can never hurt.

Plus, this has the added benefit of enjoying your local community. It is often nicer to live in a neighborhood when you are friends with those around you. So, get out there and get to know people, at least the ones on either side of your house.