Small Space, Big Style: Living Room


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Many of us struggle with living rooms that are smaller than we’d like. Do you dream of big style in a tiny space? With a little creativity and some smart choices, your small space can have a much larger feel.

Paint. Choose a light color to make your room appear larger. Most designers recommend white or a similar light color to expand a room. You aren’t stuck with white, however. A deep color used the right way can work, too. Paint the walls, the trim, and the ceiling all the same color, making the boundaries of the room practically disappear.

Scale your furniture. Choose furniture that is the right size for your room.  Think slimmer pieces, with low-profiles. Low or even backless seating helps create the illusion of more space. Clear pieces, such as glass or acrylic coffee tables or consoles accomplish the same thing. Another way to save space with your furniture: Pick pieces that serve multiple purposes, like storage ottomans or bookshelves working as consoles.

Arrange your space. Resist the urge to overfill the room. Make sure that you address both flow and function. Float furniture and place a console behind a sofa. Angling furniture is another way to keep a space from feeling too boxed in.

Design trickery. Designers always have a few tricks up their sleeves to maximize a tight space. Using a mirror not only reflects light, but makes a room appear larger. Add some height. Hanging drapes close to the ceiling makes a room seem taller. Tall floor lamps can do this, too. Another trick is to keep your decor simple. From your color scheme to your floor coverings, the fewer visual interruptions, the bigger the space will seem.

Make it interesting. Add interest with art and objects that don’t take up much space. Wall finishes, such as wainscoting, shiplap, and beadboard, provide interest. Keep your art big but limit the number of pieces.

Brush Up on Your Legal Terminology to Secure Your Property Rights


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When you buy a home you may expect that you have complete freedom to do what you want with the property, that’s likely not the case. You will probably discover an encumbrance, or limitation, legally imposed upon you regarding its use.
In other words, an encumbrance is any claim or interest held by someone other than the legal owner of the property. Here are the legal terms you need to know to ensure your property rights.

Restrictive covenants. When you buy a home in a subdivision, restrictive covenants are typically a way of life. The covenants or restrictions may address the minimum and maximum size of the home, the distance the house must be from property lines, whether out buildings are allowed, and how much of the house must have masonry. While most of these are settled in the building phase, other restrictions will affect homeowners as they build additions, add landscaping and paint the exterior of their homes.

Most commonly, covenants are enforced by a homeowners association or HOA, which is charged with maintaining the quality of the neighborhood and home values. When homeowners buy into the neighborhood, they must accept the association’s covenants as a condition of sale. Each homeowner must pay monthly or annual dues for the maintenance of common areas, another requirement of the covenants. Although homeowners may chafe under the rules of covenants, they are meant to be for the overall good of the community.

Easements. If a property has any utility lines or public roads that pass through or over it, it is known as an easement. It means the land can be used in a limited way by someone other than the owner. Thus, a power line that spans a piece of land has a utility easement. If the utility company needs to do maintenance on the line, they have the legal right to be on the property. If another landowner can only access his property via a road that runs through your property, he is said to have an easement giving him that right. When properly recorded, easements transfer with the property in a purchase.

Encroachments. Someone who builds on a piece of property that crosses onto a neighbor’s land, or which hangs over it, is encroaching on that neighboring property. This is why, in restrictive covenants, there are often “setbacks” meaning a minimum distance that a structure must be from property lines. An accidental encroachment can often be dealt with via an amicable conversation between owners. A willful disregard for encroachment can end up in court and can cause an issue with conveyance of title to the affected properties until resolved.

Liens. Part of the search that a title company does in a real estate transaction is to find any liens attached to the property. A lien is a legal financial right to the property that must be satisfied before it can be sold. Examples include tax liens filed by government authorities for back taxes, mechanic’s liens filed by contractors who did work on a property and were never paid, and second mortgages or home equity loans.

All of the above encumbrances are typically searched by the title company handling the sale and closing of a piece of property. A title insurance policy is issued to the new owner and lender assuring them that any encumbrances, or imperfections to the title, have been discovered and resolved.

How Neighbors Can Help (or Hurt) Your Home’s Value


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Recent home sales in your neighborhood are a good predictor of the price your home might fetch, but your neighbors — good and bad — are also likely to play a major role. Here are four examples of how the neighbors and the area surrounding your neighborhood may help or hurt your home’s value.

Neatness counts. When prospective buyers drive through your neighborhood and see well-maintained homes with freshly cut, clutter-free yards, it creates a favorable impression. On the other hand, peeling paint, leaning fences, yard clutter and overgrown landscapes are unattractive and can affect your sales prospects.

A friendly, sociable neighborhood. If you live in a neighborhood where people know each other, have a neighborhood Facebook page and hold social gatherings, let prospective buyers know. Mention it in your home’s flyer and online ads.

Nearby features and attractions. If you have parks, play areas, schools and access to local transportation near your home, be sure to highlight those features in flyers and advertisements. Present them as selling features. Conversely, if your home is near a landfill, a noisy business district or train tracks, be prepared to talk to your real estate agent about making concessions or offering creative solutions such as planting tall shrubs or trees as sound barriers.

Homeowners Associations.  If you live in a neighborhood governed by a homeowners’ group, use it as a selling feature. Many buyers view the existence of an association as an insurance policy against deteriorating homes and unkempt yards.

Reverse Mortgages: What Are They and How Do They Work?


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You may have heard the term “reverse mortgage,” but have you ever investigated how they work? Here’s a tutorial to help you understand if a reverse mortgage is right for you.

What is a reverse mortgage? A reverse mortgage, also known as a Home Equity Conversion Mortgage, is a tool typically used by an older adult to tap into the equity in the home to supplement retirement. In financial terms, a reverse mortgage converts the illiquid asset of equity in the home into the liquid asset of cash available for use. The money is not paid back until the home is sold or the last person named on the mortgage dies.

How does it work? First, you must meet certain qualifications: You must be 62 or older, own the home and live in it as your primary residence. The home must be no larger than a four-family residence, the home must be in good condition, and you must have substantial equity in it. Qualifying homeowners may apply for an amount up to the amount of equity in the home. For example: A homeowner with $300,000 in equity in a home valued at $350,000, could qualify for a reverse mortgage of up to $300,000. However, you must continue to live in the home. Expect several thousand dollars in lending fees to be subtracted from your equity. Homeowners may take the money in several ways: as a lump sum, as a monthly annuity for the time that you live in the house (called a tenure annuity), as an annuity for a set period of time (term annuity), or as a line of credit to be used at your discretion.  Or you can chose a combination of these options. You do not make payments on the amount borrowed. The loan is paid back from the proceeds when the house is sold or when the last person on the mortgage dies and it is sold. If the house is worth more upon sale than the amount of the mortgage, then the heirs receive the additional amount. Reverse mortgages are guaranteed by the Federal Housing Administration or FHA. You are borrowing from a private lender, and FHA guarantees that the lender will make the payments owed to you. FHA also covers the difference if the amount owed to the lender exceeds the value of the home.

When does a reverse mortgage make sense? A reverse mortgage makes the most sense when you are well past the age threshold of 62 and have substantial equity or own your home outright and need to tap into that equity to supplement a fixed income. It doesn’t make as much sense if you don’t have a large amount of home equity, are in your early 60s, have enough retirement income, or if you desire to pass the home onto your heirs.

What are the downsides? The fees associated with a reverse mortgage can be high and the interest rate is higher than traditional mortgages. You must maintain the condition of the home and if you fall behind on your existing mortgage, homeowner’s association dues, homeowners insurance or taxes, you would be at risk of defaulting on the loan. For these reasons, alternatives, such as refinancing an existing mortgage, downsizing or borrowing privately, should be considered.

A reverse mortgage can be confusing, even to some financial experts. But for the right homeowner, in the right circumstances, it may be a good choice. Consult with your financial adviser and tax adviser before making a commitment.

Quick Tips for Last-Minute Showings


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Your house is on the market and your agent just called with great news. Buyers are interested in seeing your home. The not-so-great news? They want to come in less than half an hour and your house is a mess. Don’t miss out on a chance to sell your home. Use this quick and easy checklist to prepare.

Outside. A great first impression starts before a potential buyer opens your front door, so it’s important to tidy the outside of your home before a showing.

  • Quickly sweep the porch and use the broom to remove any cobwebs.
  • Shake off the doormat.
  • If your front door has a window, clean the glass.

Inside your home. Move systematically from room to room, completing these basic tasks to make your home look its best. Enlist family members’ help.

  • Turn on all lights, put up shades, and open blinds and curtains.
  • Pick up clutter and hide it. Tip: A plastic storage tote or laundry basket works well for this job.
  • Vacuum or dust-mop high-traffic areas.
  • Light mildly fragrant candles; vanilla is subtle and is universally appealing. Make sure you extinguish the candle before departing.
  • Close all closet doors.

Main living areas. Living and family rooms make a big impression on potential buyers. Make sure yours are clean and clutter free.

  • Tidy up pillows and seat cushions.
  • Stash remotes and other electronics.
  • If time permits, straighten accent items and books.

Kitchen. For a kitchen to wow buyers, it needs to sparkle and smell good.

  • Put dirty dishes in the dishwasher.
  • Wipe counters, sink, and appliances with a disposable multi-surface wipe.
  • Empty the trash and put in a new trash bag.
  • Toss some cut-up citrus and ice cubes into the garbage disposal and run it to eliminate sink odors.

Bathrooms. These spaces can get dirty with everyday use. Follow these steps to make them shine.

  • Give toilets a quick scrub with a brush and toilet cleaner.
  • Wipe off counters, sinks, and hardware using a disposable wipe or damp towel.
  • Use the same towel to quickly clean the floor, if needed.
  • Set out new towels, washcloths, soaps, and toilet paper rolls.
  • Empty the trash.

Bedrooms. Buyers expect bedrooms to be tidy, but generally don’t spend as much time looking at them as other living spaces.

  • Make the beds.
  • Pick up any laundry and store it out of sight.
  • Straighten items on nightstands.
  • If you have time, wipe horizontal surfaces to remove visible dust. Tip: An inside-out sock works well for this. Just toss
  • it in the laundry when you’re done.

Pets. Eliminating evidence of pets is a must since they are potential turn-offs.

  • If possible, remove pets from the home. At the very least, make sure they are secured.
  • Stash pet items, such as beds and toys, out of sight.
  • Move litter boxes out of the house.

Primary and Secondary Mortgage Markets: What’s the Difference?


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When you buy a home, your mortgage is sold to you by a banker or broker on the primary mortgage market. When that first lender sells your mortgage to another firm, your mortgage enters the secondary market. Does it make any difference to you as a consumer?

Primary mortgage market.  When you decide to buy a house and apply for a mortgage through a broker or banker, your mortgage will be a new loan, so the lender is said to be “originating” your mortgage. The transaction takes place on the primary market, because it is where new loans are created.

You borrowed from the bank or broker, but they have borrowed the money also, from a “warehouse lender” that loans to mortgage banks. At some point after you take on your mortgage, it gets sold to another company. This is where the secondary market comes into play.

That surprise letter in the mail.  Most homeowners with a mortgage will receive a letter telling them that their mortgage has been sold to a new lender or servicer. When that happens, you‘ve just gotten a glimpse of the secondary mortgage market.

The mortgage originator borrowed money to loan it to you. Once you have your loan, the lender will sell your mortgage to another lender or to an investment firm. Your lender then pays back the warehouse lender and borrows money again to originate another loan. This cycle is repeated over and over. The originator makes its money on the fees it charges to borrowers like you.

Didn’t know your loan could be sold?  Most consumers don’t read the fine type on their mortgage agreements that allow the loans to be sold.

The vast majority of the time, it makes no difference to you as a consumer. The terms of your loan do not change. The law requires the existing lender to notify you at least 15 days in advance of the transfer date of your loan to the new servicer, and the new company must notify you, too. When you get the letter from the new company, you should study the figures to make sure they have all of your information correct.

Mortgage companies will also sell bundles of many mortgages to be “securitized,” or turned into investment commodities to be bought and sold. Government-backed companies such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) facilitate this process as a means to free up money for future lending. The government-owned company called the Government National Mortgage Association (Ginnie Mae) stands as the guarantor of federal mortgage loans, such as those from FHA and the VA, bundled into investment securities.

All of this transpires on a massive scale. Except for extraordinary events such as the mortgage securities meltdown that happened in 2008, the public goes about life without any idea of the massive market in mortgages operating around them.

Prime Time to Buy and Sell a Home


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The conventional wisdom is true — home sales are cyclical. Listings surge in the spring and buyers more actively shop for new houses between March and August. The weather is nicer and families with children prefer to move before the start of a new school year. But is it the best time of year to buy or sell?

Prime season. For sellers, the seasonal demand drives up housing prices. And as more houses sell, the comparable prices rise driving prices even higher throughout the selling season. Higher comps also help when the buyer’s lender orders an appraisal to determine the approved loan value. Since the weather is nicer and the days are longer, customers are more apt to be out house shopping.

On the downside, more houses mean a greater supply and more choices for buyers. Therefore, if you are selling, you have more competition. If you are the buyer, the same thing applies. More people are shopping and the house you like may have other interested buyers.

Off season. Fall and winter are traditionally considered the slow season in home sales. Even though activity slows, that doesn’t mean opportunities don’t exist. In early fall, sellers will still benefit from the higher sales prices from the summer months.  Plus, there are fewer competing homes listed, and some of the leftover listings may be left over for a reason. If you are selling a condo or townhome, your prime buyer is most likely a single person or empty nester, not pressured by the need to complete a deal before the start of school.

On the negative side, fewer buyers are shopping and they may try to negotiate harder, thinking the seller wants a fast sale. Another potential negative: Competing homes may be distressed in some way with sellers motivated to sell quickly at a lower price.

Finding a Military Friendly Real Estate Agent


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Veterans and active-duty military require special help when buying and selling real estate. From frequent moves to special government loans, members of the military need a specially trained real estate agent who knows the ins and outs of military life.

Agents with knowledge and experience.  When looking for a good real estate agent, ask other veterans for referrals. When contacting a brokerage firm, ask for a veteran friendly agent. You want to find an agent who is knowledgeable about VA loans and about the special circumstances you may have.

Agents must be ready to deal with sudden and frequent moves. Sometimes it seems like you’ve barely unpacked the boxes from your last move when you get notice of a change of duty station. You may have a short time to sell and a short time to look for and buy a new home at your new station. Ten-day leaves are common.

Your agent should be willing to step in and help a spouse who may have to deal with most of the process. You may get called away at times that force your spouse to deal with the process of buying or selling a house alone.

Veterans Administration loans. This is one of the most important benefits available to veterans, but it requires an agent and mortgage lender skilled in the requirements to make it happen for you.

Let’s zero in on two of these topics: the VA loan process and housing for disabled vets.

VA loans. Veterans Administration loans are offered through private lenders, but backed by the U.S. government. You may be eligible for a VA loan if you meet one or more of the following:

  • You served 90 consecutive days active duty in wartime
  • You served 181 days active duty in peacetime
  • You have six years or more in the National Guard
  • You are the spouse of a service member killed in the line of duty or from a service-related disability.

VA loans have more flexible underwriting requirements than conventional loans. You can finance up to 100 percent of the purchase price of a property. The costs of a VA loan are lower than conventional loans, but there is a service fee that can be rolled into the loan amount. You must show income and ability to repay and private lenders will want to see a credit score of 620 or better.  However, you will not have to pay for private mortgage insurance (PMI) for financing more than 80 percent, as with conventional and FHA loans. You should be aware that the VA does have a set of property requirements for the house you choose. If you have difficulty repaying, the VA has specialists who help you work with the lender on a repayment plan.

Disabled veteran housing needs. If you are a disabled vet with special needs, look for an agent aware of physical accommodations to help you. If you are in a wheelchair you will need doors 30 inches wide, lipless thresholds for exterior doors and the shower and grab bars in the bathroom. Lowered light switches, single-lever handled faucets and many other features are also available for the disabled. An agent already attuned to these needs can greatly ease the shopping process. Other features may be needed for the sight or hearing impaired.

Making Your Home Shine for Showings


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It goes without saying that you want your home to shine when prospective buyers view your home. Yet you’d be surprised how many sellers skimp on this important step in the home-selling process. Here are six keys to unlocking maximum appeal.

Clean house inside and out. Not only should the regular mopping and dusting be done, but the outside of the house must be sparkling, too. Either hire a professional or rent the proper tools to get the job done. Sidewalks, fencing and masonry should be powerwashed. Windows must be cleaned inside and out so you can throw open the curtains and pull up the blinds to let in all that natural light. Remove window screens and store them in the garage for an even brighter look. Don’t forget to do a thorough cleaning of everything, especially the kitchens and baths.

Manicure the lawn and flowerbeds. Keep the yard mowed and trimmed, the weeds pulled and bushes trimmed. Make sure to keep up the regular lawn maintenance until the time of closing.

Fix what’s broken.  Don’t let an overall appearance of indifference to repairs cloud your buyer’s thinking. They may wonder what expensive major components may need fixing as well. Obvious repairs that have been neglected are also distracting and unattractive. Even something as simple as a burned out light bulb should be replaced.  A buyer may think it is a sign of an underlying electrical problem.

Paint.  Peeling paint is an eyesore, especially outside. Either hire it out or do it yourself. One focal point is the front door. You’ve heard of “drive-up appeal?” There’s also “walk-up appeal,” meaning the buyer’s first impression at the front door.  A well-painted or stained entry door is warm and inviting. Flowers in a planter by the door add color.

Declutter. Systematically go through each room in your home and remove extra furniture, decor and belongings. Sell, donate or trash what you don’t regularly use or need.  If your home is still too crowded to effectively show, box up and store those items you’ll need for your new place.

Have the house “staged.” A professional stager will rearrange your furniture, accessories and artwork to create a comfortable space that appeals to homebuyers looking in your price range. Most stagers will work with your existing belongings, adding (and subtracting) pieces as necessary. Remember, a more appealing house commands a better price.

Don’t Be Surprised By Private Mortgage Insurance


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Buyers who put less than 20 percent down on a home might find themselves with a higher-than-expected monthly payment. The extra money, which often takes first-time homebuyers by surprise, is for private mortgage insurance.  What is PMI and why does the lender require it?

Lender’s risk.  When a borrower puts down less than 20 percent on a home loan, the lender is taking on a greater risk of the buyer walking away from the loan and the house during a personal financial crisis. The lender is, in effect, insuring itself against that potential loss and requiring the borrowers to foot the monthly premiums for the policy.

The policy. The borrower pays a monthly insurance premium to the mortgage company, along with principal and interest, plus taxes and homeowners insurance, if these are being held in escrow. If your loan is through government loan programs, they each have a government version of mortgage insurance. With any of these, the insurance pays the mortgage company the remaining balance of the loan in the event of default.

Equity. Borrowers are eligible to stop paying PMI once they have at least 20 percent equity in their homes, based on the original price of the home. At closing, the lender must provide you with that information. Once borrowers make the request to halt PMI, the lender is required by law to drop it once borrowers achieve 22 percent equity. Government mortgage insurance on FHA, VA and USDA loans remains — no matter the amount of equity.

Add to principal. Speed up the process of dropping PMI by paying extra money against principal in your monthly house payment. Your monthly mortgage payment slip or your online payment form should have a space to include extra money toward principal. Even $50 per month extra toward principal will accelerate your equity at a surprising pace.

Appreciation. If your home’s value appreciates significantly, that higher value in combination with your payments to principal could help you cross the 20 percent threshold more quickly. The mortgage company likely will require a professional appraisal of the home to establish the new value. The company may insist on using its own appraiser to ensure it isn’t taking on any unnecessary risk.

Savings strategy. At the point you are able to drop PMI, a good strategy is to convert that amount into more money against the principal of the loan, thus accelerating equity in the home and saving you thousands in loan interest.