handshake over a work desk

What Your Brokerage Can Do For You: Buyers

Every real estate brokerage is pretty much the same — right? Even though this seems like common knowledge among buyers, the truth is that the real estate brokerage where your agent hangs their shingle can have a pretty big influence on your home buying experience. Some brokerages excel at holding buyers’ hands while others really leave you to your own devices and depending on which style you’d prefer, you can find a brokerage that caters specifically to what you need. Here are a few things that an average buyer can expect from their real estate brokerage.

Provide financial resources

Buying a house can feel daunting, especially for first-time buyers who haven’t jumped through all the financial hoops and might not know how they’ll ever be able to afford the mortgage. If that sounds like you, then seek out some financial preparation and education classes through your local real estate brokerages. These are sometimes hosted at the brokerages’ offices or in libraries or other community spaces, and you can learn about government grants and loans, different types of mortgages available, the average price of a home in your area, the costs associated with buying a home that you might not have considered, and much more.

Connect you with a mortgage broker

Real estate brokerages have likely had contact with most (if not all) of the mortgage brokers in your area, and they are intimately familiar with which brokers are best qualified to work on which mortgages, which ones are most responsive (and least responsive) and which ones will stretch above and beyond to close a deal and make sure a buyer gets a fighting chance at putting an offer on a home and getting everything arranged for the closing table. When you reach the point in your home purchase process where you’re ready to talk to a mortgage broker, a real estate brokerage can help point you toward the very best person for the job.

Provide information about neighborhoods, schools, and more

Many buyers have a general idea of where they’d like to live, but they have some flexibility around the precise neighborhood, block, and street. There are probably some suitable places for your future home that you’ve never seen or encountered, and real estate brokerages excel at providing information about the neighborhoods where you might want to live. Many brokerages offer detailed data and even guides for schools, crime, activities, and more, and they can help guide you toward the one neighborhood among many that will suit you and your household to a tee.

Access listings early

A lot of preparation goes into putting a house on the market, from deep cleaning and staging to photographs and writing the listing description, all before the house is ever listed for sale. Brokerages are keenly aware of all of those homes because their agents are working on the listings, and some brokerages offer a “pocket listing” service that can connect buyers with homes before those homes are ever listed for sale. In an exceptionally hot market, this can be a huge resource for buyers because they might not have to compete with as many other people to get under contract.

Provide convenient open house events

Going around to physically look at homes can be one of the most fun parts of shopping for a house, but it can also feel physically exhausting, especially if you’re doing it every weekend. Some brokerages offer convenient open house events, where you can walk through several homes in the same neighborhood or even on the same block, or will book shuttles between homes for buyers, or virtual tours where you can sit in a room inside the brokerage and digitally walk through homes before deciding to visit them in person.

Educate your agent

Though there are plenty of seasoned agents who prefer to work exclusively with buyers, they tend to be the exception; many agents who work with buyers tend to be in the early stages of their real estate careers. How do you know that your agent knows everything they need to know? The real estate brokerage where your agent works is responsible for making sure that the agent understands the implications of recent legislative changes or market shifts, and this can make a huge difference to the buyers who are working with those agents. When you’re interviewing agents, it’s not a bad idea to ask them what kind of continuing education their brokerage offers and whether they have ever taken advantage of those offerings.

Streamline the transaction process

There are a ton of details involved in buying a house, and those multiple tiny tasks can feel overwhelming for first-time buyers especially. Some brokerages leave it up to individual agents to manage the transaction processes, in which case your experience as a buyer will be very much contingent on that single agent’s level of skill and organization. Others have standards and procedures that they expect agents to follow throughout the transaction, including keeping you updated as to the current status and what’s next. There is even administrative staff at some brokerages that solely manage the transaction portion of the real estate business, providing a continuous point person for you who will always know exactly what’s going on and what you still need to do.

Suggest appraisers and inspectors

It’s usually the buyer’s responsibility to handle the appraisal and inspection — because the mortgage lender is the entity that requires those things, and the mortgage loan is between the buyer and the lender. You might not know the first place to start when it comes to hiring an inspector or an appraiser, but your real estate agent will definitely know some qualified professionals through their brokerage. Just like mortgage brokers, most real estate brokerages have had contact with the majority of inspectors and appraisers in your area, so they have a good idea of what to expect and can help prepare you accordingly, too.

Help you move in

Nobody really enjoys moving, and some brokerages recognize this pain point and do their best to alleviate it with services, vouchers, or other perks that make things a little bit smoother. Full-service concierge brokerages will arrange for your utility transfers and change of address with the post office, arrange for movers to pack your things and shlep them to your destination, hire someone to come over after you’ve been there a week or two and make any minor repairs you might not have noticed until you were living under the roof, and more. Even if your brokerage isn’t a full-service concierge business model, brokerages often have strong ties to movers and have heard all the horror stories in the area, so they can point you the best option for you.

Host neighborhood events

Real estate brokers probably know a lot of people in your neighborhood because they helped those people buy their homes. Many brokerages celebrate their communities and help connect their clients to one another by hosting regular events, usually once or twice a year, where people can casually drop in and out. You can meet the neighbors, have a drink or a bite to eat, enjoy the entertainment, and take advantage of your brokerage’s network in the nicest possible way.

Hook you up with contractors

It’s not always easy to find a contractor under the best of circumstances, and of course, emergencies happen in the very worst of circumstances, when you don’t have time to research and vet the electrician or plumber you’ve summoned to your house. Ask your real estate brokerage for a list of trusted professionals they refer to clients so that you’ve at least got a jumping-off point if something happens after hours in your new home and you have no idea what to do about it. And real estate brokerages can also be good resources for other projects, like adding a room to your house or building a deck outback.

Is every real estate brokerage the same? Not remotely; they all prioritize different facets of the business and provide different services for both buyers and sellers. It’s not a bad idea to ask your agent about why they chose their brokerage and whether there are any buyer resources you should know about as you’re interviewing real estate agents, both to learn more about your agent and to know what benefits are available to you from the brokerage.
Living Room

25 Home Decorating Trends That Haven’t Aged Well

Style is as individual as human beings are, but we can generally agree that there are some style trends that should be left in the past — some in the very recent past, others long ago — because they make your rooms look, well, terrible. And dated. Before you jump on the latest home decorating bandwagon, consider how these super-popular decor trends have fared and imagine whether you’re still going to think your latest design obsession looks cutting-edge in a year or three.

Clutter

We’re not saying that it was ever a good look to resemble a hoarder, but there was a time where just the “right amount” of clutter was a decorative goal. That eclectic, bohemian look involving lots of different items and patterns and … stuff … just all over the place is officially over. And thank goodness, too, because keeping all those tchotchkes dusted and the surfaces cleaned is tough.

… And too much minimalism

Just as bad as too much clutter is the bland, too-neutral hotel-room look. Hey, clean lines and white or neutral everything is awesome in moderation, but when they are all over your house with no color or pops of interest to draw your eye, it can make your place feel soulless and flat.

Matching everything

Pop quiz: What smells do you associate with a room with curtains or valances that precisely match the furniture upholstery? If “musty” and “mildewed” made your list, congratulations — you passed! When everything is matchy-matchy, it makes your house look like it was decorated decades ago and then inhabited by someone with no intention of changing anything ever.

Edison bulbs

Look, these were cool for a little while, in that whole minimalist-industrial kind of way — but the light they emit is harsh, and there are so many better light fixtures (and bulbs) that will make your home shine. Pack the Edison bulbs away, please.

Fake plants instead of real

Some silk plants are very well made and impossible to differentiate from real plants at a glance … but those are few and far between. Most of them age quickly, getting dusty and ragged around the leaf edges, and when there are so many houseplants you could be nourishing suited for every light level and size of the room, why go fake?

Obsessions with monochrome

Just like matched patterns, homes that are done all in a single color only help to date that home, depending on the color. People are going to associate the all-gray look heavily with 2017 and 2018, for example, and you can probably think of other instances of color taking over a dwelling.

Appliances and bathroom fixtures with color

Another color that’s going to be forever associated with an era is avocado green with the 1970s when you saw fridges, stoves, bathtubs and sinks and showers and more in the shade. The cherry-red KitchenAid stand mixer on your counter is one thing, but please reconsider before opting for fixtures with color.

Macrame

Maybe it seems like we’re picking in the 1970s, but decorators tend to agree this was a distinctly awful era in home decoration, so this won’t be the last time a trend from that decade appears on this list. Macrame everywhere is another easy way to make your house look immediately dated.

Plastic furniture covers

Sure, they protect your furniture — but at what price? They’re not comfortable to sit on and they look awful. It’s a good way to make everyone who sits down in your living room feel like they aren’t at home.

Vertical blinds

These don’t generally do a great job of blocking the light, are a pain to open and close, and don’t look all that nice when they’re either open or closed.

Inflatable furniture

This has been around since the 1960s, but it was suddenly revitalized in the ’90s and so you still see it here and there from time to time. It’s impossible to sit on with bare skin (especially in the heat) and it’s not all that comfortable, either, so there’s no sense in indulging in the inflatable trend if it comes back again.

Linoleum anything

Linoleum was really popular when it came out in the middle of the 20th century, and it’s easy to understand why it was a hit: Easier to clean than other flooring options and offered in bright, inviting patterns. But it doesn’t wear well, shows damage prominently, and will end up making your kitchen or bathroom look shabby or sad in a few years.

Industrial style

There’s no reason to eliminate all the exposed brick and metal aesthetic from your life, but the industrial look is another one that’s going to be specifically pinned to an era before much longer. Softening up those industrial-driven spaces with more traditional furniture and fixtures can go a long way toward giving your decor longevity.

Shag carpet

This is another trend firmly linked to the 1970s, and there’s a good reason why it really hasn’t experienced a revival since then — it’s incredibly inconvenient. It gets dirty at the drop of a hat and is impossible to clean; even vacuuming it can be problematic. Maybe at some point in the future, new advances in microfibers will make shag carpeting both stain-proof and self-cleaning, but until that day comes, opt for a style that has more staying power.

Wood-paneled walls

Wood has a lovely texture and looks in nature, but too much wood in one place is overwhelming and can make rooms feel cavernous and uncomfortable. This includes veneers and shiplap! Use wood to accent your rooms and in your furniture — or even on the ceiling — but walls and walls and walls of wood could be too much.

Wallpaper borders

These were all the rage for a time in the 1980s and 1990s, either applied where the wall meets the ceiling or at about waist height to divide walls around a room. With so many better options in paint and wallpaper available today, there’s no reason to use a border.

Animal prints

Some people absolutely love animal prints everywhere, and many of them are adolescent girls who throw them all over their rooms because they simply don’t know any better. It might be unfair, but that’s why a home entirely decorated in animal prints seems a little immature.

Animal remnants

Whether or not you hunt is beside the point, which is this: Your home is not a hunting lodge (most likely), and animal heads and skins or other parts used to decorate your house should be used in strict moderation, if at all. Many who eat meat still experience discomfort in a room full of hunting trophies, and they might not feel welcome in your home.

Tile countertops

These look fine, but cleaning them is a pain (especially the grout) and they’re associated with a particular period in kitchen and bathroom decor. A single slab of marble or granite will serve you much better than tile.

Glass block walls

For a while, homes were being built with those blurred glass blocks to allow light to pass through walls while still physically delineating boundaries. You can get more light with skylights, fixtures, or even a bulb upgrade in this day and age, and considering you can still kind of see through the glass, it makes sense to eschew these blocks in favor of something else.

Pine everywhere

We’ve already established that wood paneling is too much wood, and homes decorated in that trend where all the furniture and cabinets are pine tend to suffer from that same feeling of overwhelm.

Popcorn ceilings

These are much maligned in decorating circles, and for good reason. For a while they were ubiquitous, but thankfully they’ve been phased out in favor of other ceiling styles, and now they’re not only ugly but dated.

Words on walls

The decals made them so easy, and everybody else was doing it, but we’ve all seen the homes where someone went just that edge overboard with the inspirational quotes and words on walls. Instead of plastering your house with word decals, choose decorative items that are meaningful in a similar way but that spark a conversation instead of trumpeting your viewpoint.

Elaborate window treatments

Valances and swags have come in and out of style, but if you want your window treatments to seem timeless, opt for something simple and classic over an elaborate, trendy mess. Simple curtains or even wooden blinds that fit the window correctly and cover the entire window can go a long way toward helping your house look constantly up to date.

Carpet in the bathroom

Here’s the thing: Yes, at one point it was trendy, and we all know it feels nice to step out of the shower or bath and onto something that isn’t a hard tile floor, but that’s what bath mats are for. There is no earthly reason to cover a room intended for human waste disposal with a material that’s impossible to sterilize. Just don’t.
Neighborhood Houses

How To Pick A Neighborhood

If you’ve always rented before, then you might not have put too much thought into which neighborhood you were planting your (temporary) roots. After all, most leases are up after a year, so you can change your mind in a matter of months. Buying a house, however, is a different story: if you don’t want to pay capital gains taxes, then you’ll have to stay there for at least two years, and depending on which concessions you made when you bought the place, the neighborhood can affect everything from the home’s appreciation to how easy it is to sell.

Before deciding where exactly you want to buy a house, you’ll want to consider the following questions. Once you’ve outlined the criteria you require in a home, start taking to agents about which neighborhoods meet your needs better than others — and remember that many of the best agents focus on very specific neighborhoods, so you might want to talk to several agents to get the widest scope for your home search.

What do you like about where you live?

If you already live in or around the area where you want to buy a house, then you’ve got a big advantage already because you have some idea of what the neighborhoods are alike, and you’ve had some experience living there yourself. One good way to start narrowing down the neighborhoods where you want to shop is to consider what you like about your current neighborhood and other areas where you’ve lived. Make a list of the features and amenities that you most appreciate and that you’d like to experience again as a homeowner.

What do you wish was different?

On a similar note, think about the quirks in the different neighborhoods where you’ve lived that you were happy to leave when your lease was up. Maybe you didn’t realize that the sewage plant was right down the road, or perhaps the weekend bar and restaurant traffic in another neighborhood was simply too much to deal with. The previous list might have felt like a bit of a love letter to your former living situations — consider this your opportunity to level the playing field and remind yourself of the dealbreakers in those neighborhood relationships.

How important are each of these factors to you?

You’ll be adding to this list as you go, but it’s time to start ranking all of the different items, both your favorite neighborhood features and the ones that you would prefer to live without if you have your choice. As you add more items to the list, try to place them in the proper order so that you have a sense of how to rank neighborhoods once you get to that stage of the process.

What’s your budget?

Depending on where you live, this might not be as important as you think (or fear) — there are often opportunities to get your foot in the door with entry-level-priced homes in upscale neighborhoods, but you will need to have a good sense of how much you can comfortably spend and what price range is more of a stretch for you and your budget. To maximize your purchasing power, you’ll want to save up as big a down payment as you can and get your credit into as good as shape as you can. If you haven’t already started getting financially fit for your home purchase, it’s a good time to start.

Do you have kids? Pets? Will you in the next 5 to 10 years?

One big mistake that buyers make is shopping for the neighborhood that fits the lifestyle you currently have, not one that you’ll grow into as you become a homeowner. You never know exactly what life is going to throw at you, so planning (for example) to move into a better school district in a few years when the kids are older might not be a smart idea. What will you do if you lose your job or your household takes some kind of pay cut and you actually can’t trade up into a better school district when you planned? Try to think about where you want to be as a household and family, in your career, and in your social life in the next few years, and that includes the non-human members of your household.

Are you in a committed relationship? Do you date? How will that affect your choice?

A studio apartment in the neighborhood with the most vibrant nightlife in the city might seem like a great entry-level housing choice — but if you think your future plans might involve moving in with a significant other, then it might be better to opt for a place that has enough space for your significant other’s things. On a similar note, if you want to date, then perhaps moving to an area known mostly for its population of families might not be your best move.

What type of home do you want?

If you have a dog or kids — or a penchant for gardening — then you probably would prefer a single-family home or even a duplex over a condo. Consider how you’re going to clean and maintain the space if you’re going to be upgrading the house you live in: Are you willing to do it yourself, or do you have the budget to hire help? Think about the types of homes that fit your lifestyle the best and then consider which neighborhoods have a good supply of those types of homes. When the time comes to start searching, it’ll be less frustrating because you’ll know exactly what will work (and what won’t).

How far are you willing to commute?

Some people find a certain zen in driving while others prefer public transportation, and there are even those who would rather not deal with vehicles at all, walking or biking or working remotely. Your preferred method of getting to work is going to dictate (at least to some extent) which neighborhoods will be a good fit for you and which ones you might love except for the big, hairy commute, a dealbreaker for most people. While you’re thinking about your traveling-to-work needs, it also helps to consider other companies in proximity to the neighborhood that might be good future fits for you so that you don’t feel stuck in place. And of course, if you’re used to working remotely, you’ll need to vet the neighborhood for good home internet and plenty of libraries, coffee shops, coworking spaces, or other areas where you can establish your office away from the office.

Where will you get groceries?

Food deserts in urban areas are a real thing, but there are also places where your main options for grocery shopping might be upscale specialty stores, which could be a problem if you’re used to subsisting on canned soup and spaghetti. When you start narrowing down your list of possible neighborhoods, look at the grocery options and consider where you’ll shop if you were to buy a house there. After all, there’s no sense in establishing wealth as a homeowner if you’re going to start spending all your discretionary income on takeout because getting groceries is too onerous where you live.

How important is walkability?

Not every neighborhood is all that walkable, but walkability also isn’t all that important to everybody. If you didn’t include walkability in your list of things you like (or dislike) about where you currently live, now is the time to think about it: Do you enjoy walking to parks or trails, breweries or wineries or bars or restaurants, coffee shops, and so on? If walkability is a big part of your life, or if you’d like it to be a bigger part, then factor that into your home shopping process.

What kind of crime are you willing to deal with?

Nobody wants to live in an area that’s considered “high crime,” but depending on your personal circumstances, you might be willing or able to tolerate more crime while maintaining your own safety. One thing to keep in mind about crime maps and statistics around different neighborhoods is that they typically map reported crime, and they also usually measure crime as a percentile within the county. So in counties that have very low levels of crime, a neighborhood with one or two incidents might be labeled as “high-crime.” If you’re doing research around crime, keep in mind the overall crime levels of the county or reporting area, and also look at tools that can differentiate between violent crime and other types of crime.

What parks or recreational facilities are nearby? Tourist attractions?

Parks and recreational facilities are nice things to have near your home, but many people have mixed feelings about living near tourist attractions, such as concert venues, national landmarks, sports arenas, cultural facilities, and so on. If you’re thinking about moving to a neighborhood that has a noted attraction, it’s a good idea to talk to some of the locals about the pros and cons, and maybe try renting in the area for a little bit before you commit to buying a house there. And research where the parks and recreational facilities are, down to which streets have the best access, so you can be fully educated about the best sales opportunities in the neighborhood.

Is there an HOA? What are the rules?

When you start narrowing your search down to a handful of neighborhoods, it’s wise to look into the homeowner’s associations (HOAs), if there are any. You’ll need to follow the rules and regulations while you live there or face fines that are sometimes hefty. So if there are any rules that you don’t think you can follow or that raise a red flag for you, it’s a good time to consider eliminating that neighborhood from your options.

Is there a new development planned?

New development is one of those factors that can be wonderful or terrible. If a new high-rise or strip mall is about to block a neighborhood’s or street’s view from a natural feature, then residents tend to think it’s terrible, but if the development includes a hot new restaurant or a public pool, then they might feel differently about it. You can go to the city or county office for neighborhoods where you’re looking and ask to look at the new development permits or talk to some of the locals about the big project breaking ground on the main corner of a neighborhood you’re considering.

What’s the market like?

Even though a home is an investment, this probably isn’t the first consideration on your list — nor should it be. But you do need to consider how a neighborhood’s market is doing in comparison to others; there might be two very comparable neighborhoods in all other respects, but home prices appreciate much faster in one than in another. In that case, you might want to look a little bit harder in the higher-value neighborhood so you have more equity to use when you trade up in a few years.

How does it trigger your five senses?

Humans tend to prioritize sight over our other senses, but it’s always a mistake to discount how a neighborhood sounds, smells, and even feels when you’re shopping around. Take a walk through the areas that are on your shortlist at different times of the day and pay attention to how you feel and why. For example, newer neighborhoods with fewer old-growth trees might feel unbearably hot in the summertime at high noon; maybe the wind blows the odors from the sewer plant toward the neighborhood every evening; perhaps there are trains or airplanes that disturb your sleep.

Are there any red flags?

By this point, you’ve probably accumulated a list of things you like about at least one neighborhood — but don’t discount any red flags or things that you might seriously dislike about the areas under consideration. It’s easy to get rose-colored glasses on when you’re doing something fun like browsing neighborhoods, but you’ll kick yourself later if you don’t take those concerns seriously now. Make a list of things you don’t like about any neighborhoods on your list, and do a little digging into each item to see whether it’s a real dealbreaker or whether you can live with it.

What do the locals think?

The people who actually live in the neighborhood are one of the best sources of information about what it’s really like to live there. Tap into those resources if at all possible: talk to the servers at the diner, the librarians or city, and county clerks, the retail store employees, people you meet walking around at the park or just on the street. If you’re a parent, take your kids to a local playground and strike up conversations with some of the other moms and dads about what they like and dislike about the area. You might not learn anything new, but the locals might give you some real food for thought.

Can you stay for a while?

Now that you’ve thought about all of these different factors of choosing the right neighborhood, spend some time there and see if it really is a good fit for you. A local brokerage can help you find a rental if you can take your time making a decision, which is the perfect way to learn everything about a neighborhood and understand whether you’d enjoy living there. They can also help you find a vacation rental or another short-term option if you can’t rent long-term but still want to check out the neighborhoods in advance.

Choosing the right neighborhood is the most critical decision when it comes to buying a house — apart from which house to buy. When you know which neighborhood is a good fit for you, then you’ll find the home search experience much less challenging and frustrating. One of the best resources for educating yourself about neighborhoods is a local real estate brokerage, which typically has agents who specialize in many different neighborhoods and can provide you with the details you need to pick the right neighborhood for your next home purchase.
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9 Types Of Mortgage Loans To Consider

If you’ve never bought a home before, the sheer number of mortgage loan options can be overwhelming. What’s the difference between a conventional loan and a government loan, and should you go with an adjustable-rate or fixed-rate mortgage? Even if you have bought a home before, if it’s been several years, then you might not remember everything you’ll want to know before making a decision about which loan type is going to be best for your situation.

There’s good news, though: It won’t take long to get a handle on the different types of loans available to you and figure out which one best fits your circumstances. Some online calculators can give you some ballpark numbers on what it might cost to go with one loan instead of another, but to be sure you’re not missing anything critical, talk to a mortgage broker who can walk you through the options.

Conventional loan

A conventional mortgage loan is perhaps best defined by what it’s not instead of what it is: Conventional loans are not guaranteed or insured by the federal government. (There are three federal agencies that insure mortgage loans, the Veterans Administration, the Federal Housing Administration, and the United States Department of Agriculture — more on those later.) And because they aren’t federally insured or guaranteed, these loans tend to have higher standards for buyers than loans that are backed by the government.

To qualify for a conventional loan, most buyers need to have a credit score of at least 620; buyers with higher credit scores can get a lower mortgage interest rate, which means they’ll spend less money over time on the same house as a buyer with a lower credit score. The minimum credit score to qualify for a better mortgage interest rate with a conventional loan is 740.

Most lenders offer conventional loans in 15-year, 20-year, and 30-year options, which refers to how long it will take to pay off the loan. A 15-year loan will usually offer a better mortgage interest rate than a 30-year loan, but the monthly payments will be higher. Traditionally, buyers needed to put down at least 20% of the home’s total price to secure a conventional mortgage loan (this amount of money is also referred to as the down payment), but conventional loans are now available for buyers who have as little as 3% of the home’s total price in the form of a down payment. Buyers with down payments that are smaller than 20% may have to pay mortgage insurance on the loan, however, which is an additional monthly cost to take into consideration.

Conventional loans offer two additional options, conforming or non-conforming loans. A conforming mortgage loan conforms to the loan standards set forth by Fannie Mae and Freddie Mac, government-sponsored enterprises (GSEs) that help facilitate and manage the secondary mortgage market — they buy and hold mortgages from lenders or package groups of mortgages into securities and sell them. Those loan standards encompass a number of variables, including loans for borrowers with poor credit or borrowers who have declared bankruptcies, loans with low down payments and therefore high loan-to-value ratios, and the size of the loan. If the loan is higher than $484,350 in most of the U.S. — or higher than $726,525 in high-cost areas — then it’s considered non-conforming, and is also known as a jumbo loan (see below for more on jumbo loans).

VA loan

A VA loan may be offered by a traditional lender, but there are some big differences between a conventional loan and a VA loan. Because VA loans are backed by the Veterans Administration, they are much more flexible and usually offer more benefits to buyers than a conventional loan. As you might have guessed, VA loans are only available to veterans, with different guidelines for eligibility depending on when the veteran served and how long the veteran was in the armed services. Spouses of deceased veterans might also be eligible for VA loans.

Some advantages of a VA loan include less stringent credit requirements for borrowers — the government backing gives lenders more flexibility when it comes to credit scores and other factors that are taken into consideration when a mortgage loan is issued. A borrower can also obtain a VA loan with no down payment whatsoever (although down payments will decrease the monthly mortgage payment by reducing the loan amount from the beginning of the loan). And because the VA loan is backed by the government and is considered a benefit for veterans, there’s no private mortgage insurance required for borrowers who have down payments smaller than 20%. Interest rates on VA loans are also competitive with conventional loans, and borrowers typically also have some choice in terms of whether they want a 15-year or 30-year mortgage. In short, they are an excellent option for qualified veteran borrowers to consider.

There are, however, some drawbacks to a VA loan. If your heart is set on a fixer-upper, be aware that it can be difficult to buy one through the VA. The VA requires that homes be in good shape, which is assessed using a VA-assigned appraiser who will determine whether the property meets minimum requirements outlined by the VA.

FHA loan

If you haven’t served in the military before, and your credit history isn’t quite good enough to get your desired rate (or to qualify at all) for a conventional mortgage loan, then an FHA loan might be a good option for you. Like VA loans, FHA loans are backed by a government agency — the Federal Housing Administration. So requirements for borrowers are less stringent for an FHA loan than for a conventional loan — if you have a down payment of 10% or larger, you can qualify for an FHA loan with a credit score of 500, and if your down payment is 3.5% (the lowest allowed by the FHA for these loans), then your credit score needs to be 580 or higher.

However, the lower your credit score, the higher your interest rate, and borrowers putting less than 20% down on a home will need to pay monthly private mortgage insurance on the loan, which will increase the monthly payment amount. There is also an upfront mortgage insurance cost for FHA borrowers (1.75% of the total home loan) that can either be paid at closing or wrapped into the monthly mortgage payment.

The FHA does place some additional requirements on borrowers, such as a steady employment history, certain debt-to-income ratios to ensure you aren’t overextending yourself, and minimum property standards set on appraisals, to name a handful. You can set your own loan length (15-year or 30-year and so on), and the FHA also offers both fixed-rate and adjustable-rate mortgage loans.

USDA loan

USDA loans are also backed by a government agency; this time, the United States Department of Agriculture. Like VA loans, you can obtain a USDA loan with no down payment, which might be an advantage over an FHA loan — but unlike FHA loans, you can’t get a USDA loan for properties located just anywhere. The home you’re buying has to be in a rural or suburban area as defined by the USDA to qualify for a USDA loan. And like FHA loans, if you don’t have a down payment at all or are only planning to put down a small amount of the property’s total value, you will have to pay mortgage insurance on the loan.

The USDA offers three types of loans. One is a loan guarantee, which is similar to how the VA or FHA operate — a lender provides the money for the loan, which is guaranteed or backed by the government agency, in this case the USDA. A direct USDA loan is another option, but only low-income applicants are eligible for these loans; the definition for “low-income” varies according to where you live and where the home is located. These direct loans come with subsidies and very low interest rates, a definite advantage for low-income borrowers. And the USDA also offers home improvement loans — and even home improvement grants, which you don’t have to pay back.

Urban areas are excluded from USDA loan eligibility, and there is limited availability in suburbs, but rural areas are always eligible. Similar to an FHA loan, there are standards around employment and debt-to-income ratios for borrowers, but the USDA is more flexible; you can still qualify for a USDA loan with no credit score or a limited credit score.

Adjustable-rate loans

An adjustable-rate mortgage loan has, well, an adjustable mortgage interest rate. Borrowers pay interest on a loan — defined as a percentage of the loan; you’re probably at least somewhat familiar with interest rates if you have a credit card, for example. An adjustable-rate loan means that the interest rate changes over time. It’s updated periodically based on an index that is tied to the cost of lenders borrowing on the credit markets. This can get complicated, and because it’s impossible to predict whether mortgage rates will stay stable or move up or down over the span of the loan, they can sometimes be a great deal and sometimes present a real risk to the borrower.

The important thing to remember if you’re considering an adjustable-rate mortgage loan is that your monthly payment will change over time — lately, rates have been creeping up from their near-historic lows, where they’ve hovered for years; they could also move back down in time. If the thought of changing monthly payments (including potentially higher monthly payments) makes you nervous, it might be best to consider a fixed-rate loan instead.

Fixed-rate loans

With a fixed-rate mortgage loan, your loan interest rate will stay the same throughout the lifetime of the loan, whether that’s 15 years, 20 years, or 30 years. This can be a big advantage if you locked in your rate during a period of low rates, but if you didn’t, then you might be tempted to refinance your loan if rates drop — which is an option after you’ve been paying your loan for a certain number of months.

A fixed-rate loan also means that your monthly mortgage payment will be more stable over time. Your property taxes and your homeowners insurance costs may go up over time — in fact, they probably will if home values increase while you are in your residence — but you can rest assured that your mortgage premium and your mortgage interest rates will remain the same as long as you’re paying your loan, which can help with budgeting and managing your money over time.

Jumbo loans

A jumbo loan is simply a loan that doesn’t conform to the GSE’s standards for mortgage loans because the loan amount exceeds certain values set by the GSEs. These values vary; in most of the United States, if your loan amount is higher than $484,350, it’s considered a jumbo loan, but in high-cost areas (such as Hawaii, for example), your loan won’t be considered a jumbo loan until it’s higher than $726,525. Take note: These amounts only refer to the loan amount, not the value of the home itself — if you have a sizable down payment on a $500,000 home in most of the U.S. or a million-dollar home in Hawaii, you might be able to get a conforming conventional loan instead of a non-conforming jumbo loan.

The standards for qualifying for a jumbo loan are, probably understandably, higher than for a conventional loan. Typically, your credit score should be higher than 700, and preferably above 720. And your income also needs to be healthy enough to ensure an appropriate debt-to-income ratio for the loan, which will vary from lender to lender.

Equity loans

Home equity loans are only available to homeowners who already own real estate — sorry, first-time homebuyers! The amount of equity that you own in a home includes both the down payment you made when you bought the home (assuming you made a down payment at all) and the increased value of the home since you bought it. Because real estate typically increases in value over time, even if you’ve only owned your home for a handful of years and haven’t paid down much of your mortgage loan, you still could be eligible for a home equity loan if home values have increased in your area — including the value of your own home.

Homeowners take out home equity loans for a number of reasons, including making improvements to the home or paying for higher education, to name just a couple. It’s important to be careful with equity loans, though: If the value of your home decreases after you’ve taken out a home equity loan, then you could find yourself underwater — owing more money on the home than it’s actually worth.

Bridge loans

When you own your home but would like to buy a different residence and move, you might be faced with a dilemma — most homeowners can’t realistically afford to pay two mortgage loans at once, and if you find your perfect new home before your current home sells, then you might want to think about a bridge loan, which can help you bridge the gap between one property and another.

Although bridge loans might sound like the answer to your prayers, you should think carefully before securing one. They work best in markets where you’re likely to sell your current home quickly because their interest rates are higher and the terms are stricter than most other types of mortgage loans. If you’re confident that your home will sell, or your old house is scheduled to close after you take possession of your new house, those are some scenarios where a bridge loan can help you close the financial gaps and get everything you want or need in one fell swoop.

House on the water

19 Things To Consider When Buying A Vacation Home

Taking a vacation somewhere you love can make you wonder what it would be like to own a vacation home there. It’s only natural to dream about having an easily accessible dwelling that you can tap whenever you want to come back to your favorite vacation spot, and owning a vacation home can in fact be a very rewarding and even lucrative experience — if you plan it well in advance and know what you’re doing.

Of course, it’s difficult to know exactly what you’re doing if you’ve never bought a vacation home before. What do you need to consider before you take the plunge and decide to invest in a house that you’ll only be visiting part-time? Make sure you’re thinking about all of the factors on this list below and taking them into account, and your vacation home purchase will be a success that yields dividends both in memories and income for years to come.

Understand your reasons for wanting a vacation home

Many people decide they want a vacation home for a number of reasons, so you don’t need to figure out just one — but it is important to determine why you’re interested in purchasing a vacation home so that you can choose one that maximizes the benefits and minimizes the costs for you, personally.

Do you want a guaranteed place to stay when you or your family goes on vacation to your favorite getaway area? Are you hoping to get a head start on a retirement home that’s perfect for you and your household? Is this a long-term investment strategy to help you build wealth? There are no wrong answers, but deciding what’s important to you will help ensure that your vacation home experience is a good one.

Don’t go over-budget

Budgets are created for a reason, and that reason is to ensure that you don’t overextend yourself financially because you let your heart run away with your pocketbook. If you haven’t talked to a financial planner about whether you can afford a vacation home — and, specifically, how much vacation home you can afford — then find one you trust and sit down one-on-one to show them your assets and income, then get their opinion about how much you can spend on a monthly or annual basis.

Even if you’re planning on renting out the vacation home to help cover the costs of ownership, this isn’t always a sure thing. Sometimes properties are vacant for weeks or months; sometimes there are emergencies that might require you to make some significant repairs (or pay for those repairs to be made). Life is full of surprises, not always pleasant ones, so you’ll want to be certain that your bottom line can handle the vacation home without causing a major financial disaster.

Consider the added costs to a vacation home

Vacation homes have many of the same expenses as a traditional home, but you might not be considering that when you’re dreaming about buying one. In addition to the mortgage payment, the taxes, the homeowners’ insurance, and other loan-related expenses, you might also want to think about whether you need additional insurance on the property. Earthquake and flood insurance aren’t always required by a mortgage lender, but if your vacation home will be located in a geographic area that experiences those natural disasters with a fair amount of frequency, then it will probably be in your best interests to at least consider purchasing additional insurance policies.

If you’re renting out the vacation home long-term, then maybe the tenant can take care of utility costs, and you can package HOA fees into the rent … but if you’re planning on turning it into a short-term rental on Airbnb so that you can come and visit at a moment’s notice, then you’ll also need to factor in the cost of electricity, gas, and water, and possibly also internet or even TV service, if that’s something you’ll want to enjoy while you’re there. It’s a lot better to overestimate your additional costs than to underestimate them so that you can be sure you’re including that money in your budget and aren’t encountering any surprises when it comes to finances.

Go for an existing home over a plot of land

Many of us dream about buying that perfect plot of land and building a home to your exact specifications, and this can be one way to spend your money. But if you’re going to do it, it’s usually better to err on the side of making that built-to-order home your primary residence instead of a vacation home.

As anyone who’s built a home soup-to-nuts can tell you, there’s a lot that can go wrong in the process, from contractors mysteriously becoming unavailable to permitting nightmares that hang you up for weeks or even months. That can be tough to handle even when you’re consistently available to help tackle those challenges; it’s quite logistically problematic when you live several hours or even states away and have to try to deal with everything remotely.

Hire a local agent

Unless your real estate agent happens to have a great deal of expertise in the area where you want to buy, it’s usually better to find an agent local to the vacation location where you want to stake your claim. Those agents know the local market and inventory like the backs of their hands, and they can also help you find homes that will meet your specific needs, especially if they’ve worked with out-of-town buyers regularly.

Additionally, local agents can be an incredible resource after the sale closes, whether you need a contractor to fix a leak or are seeking a property management company to help you with the minutiae of your investment. It’s wise to find one you can trust so that you can establish a long-term working relationship and really utilize their local knowledge to the fullest.

Understand the rules and regulations where you’re buying

When you’re planning to rent your home on Airbnb, there’s nothing more discouraging than realizing that local regulations forbid short-term rentals. Don’t lay this trap for yourself; spend plenty of time learning about the rules and regulations that exist where you’re buying your vacation home. Not every community is alike — that’s why we go on vacation! — and you want to make sure that your planned use of the property aligns with what you’re allowed to do.

If you’re not sure where to start here, a local real estate agent can be a fantastic resource; they are typically a wealth of knowledge on local housing regulations and can help you navigate what you can and can’t do with your vacation home before you sink a down payment into the place.

Single-family isn’t the only option

When most people think about a vacation home, they’re imagining a single-family unit — and if that’s what you’re absolutely sold on owning, more power to you. But before you decide on one option over another, it helps to be aware that there are multiple possibilities when it comes to purchasing a vacation home, and one might suit your purposes better than another.

For example, maybe a condo would be just as useful for you and your vacation-home plan as a single-family home; yes, there are usually HOA fees involved, but on the flip side, you won’t need to spend money on keeping up with the landscaping, and many condos have amenities that single-family homes don’t offer, such as an onsite gym or private pool.

If you have the ability to buy a multifamily property, it might make an even better arrangement for you than a single-family home; you’ll have more units to rent either long-term or short-term, and you can always leave one open for your own use without impacting your investment bottom line nearly as much. If you’re not sure what would work best for your needs, talk to your local real estate agent about your options.

Think twice about timeshares

A timeshare might seem like a dream investment, but if you think about how much you’re really spending for just a few days a year in your vacation area of choice, it might not break down to a good strategy for you. After all, there’s a reason why most timeshare sales involve an incentive to sit down and listen to the sales pitch. Between blackout dates, the advance booking, upfront costs, annual fees, and other factors, if you really want to own a vacation property, it’s usually better to go all-in and buy one yourself than putting your money into a timeshare.

Know how often you’d visit — and when

It’s easy to imagine that you’d spend all your long weekends and paid time off at your vacation home, and maybe that’s really the case! But it’s best to make a plan for how often you’d be visiting your vacation home and when so that you can truly understand whether it’s a good deal for you … or a sour one. If the slow time at work comes during the rainy season at your vacation home, then you might want to consider an alternate location or figure out how you can take some time during peak season. On the other hand, if you plan on spending all of the peak season at your vacation home, be aware that this decision is going to affect how much money you can make from the home as a short-term or monthly rental when you aren’t there.

Talk to the other members of your household or your family to come up with a realistic estimate of how much time you’d spend at your vacation home and whether anyone else would be interested in using it when you’re not around so that you can make a solid plan for how you’ll be managing the property.

Keep the market in mind

Some vacation home-buyers who are hoping to create ongoing wealth and build a legacy might purchase a vacation home thinking that the real estate market is going to continue to go up … and up … and up, no matter what. But the reality is that real estate markets, like most economic markets, are cyclical in nature, and no market grows consistently and continually forever without eventually plateauing or even declining.

If your long-term wealth strategy is to invest in a home that will appreciate in value by double digits every year before selling it in five years, think again — you can’t predict the future, and you don’t want to wind up holding an empty bag because you counted on something that was much less than guaranteed. By that same token, shopping for a vacation home during the “down” months of the market might mean there’s less inventory to pick from, but you’ll find better deals. Whatever your strategy, do your best to be realistic about the market and not count on increasing returns indefinitely; that’s a bad strategy.

Location matters …

Perhaps the main attraction of this vacation area is its local body of water — whether that’s an ocean, river, or lakefront. If that’s the case, is it really a good idea to buy a house that’s miles and miles away from the water, even if it’s a great deal? The old adage “location, location, location” applies equally to vacation homes as to your primary residence, and you don’t want to sacrifice your vacation home dreams on the altar of location.

Some vacation locations are more forgiving than others in terms of prime location, all that said, so if you can talk to a local agent about the best places to buy (and what fits with your budget), they might be the best source of advice on which locations will work and which ones really won’t.

… And so do the seasons

Not every vacation area is popular year-round; sometimes it gets too hot in the summertime, sometimes too cold in the winter. Seasonality is hugely important for people who live in vacation locations, and as a potential homeowner in one of those spots, it will become hugely important for you, too — especially when it comes to tasks like winterizing your home, and also if you’re planning on renting the home out to vacation-goers in order to make yourself some ongoing money from the property. You might have to reduce the price during the off-season or even resign yourself to the fact that you just aren’t going to see any renters at all.

If you haven’t visited the community where you want to buy a vacation rental in all four seasons, make a point to do so, which will help you understand the opportunities and challenges that exist for a homeowner. Your local real estate agent can also be a great resource for information about how to work with the seasons instead of against them.

Stay in the U.S. if possible

Sure, the thought of owning a beach home overseas is enticing, but especially if this is your first vacation home, it might be a bigger risk than you’re imagining. Buying a home in a different country is incredibly complicated to begin with, and depending on which country you’re targeting, there could also be potential political upheaval or regulatory changes that you’re not anticipating or are perhaps completely unaware of — and that can really come back to bite you in a big way. If you do think that buying a home overseas is worth it, make sure you’re discussing all the pros and cons with a local agent, and getting a second opinion is probably worth the time it will take, especially if you can track down another U.S. citizen who owns a vacation home in the area.

Teaming up with family doesn’t always work

It’s always nice to think about how a vacation home strategy with your entire family might work out — perhaps you have siblings who also love the area and might be willing to go in on a vacation home, or perhaps your parents or adult children would be good candidates for sharing the financial burden of a vacation home. If this is part of your plan, proceed with extreme caution.

When you aren’t all on the same page about how often the home will be open for family use instead of rented out, whether family friends can use it (and how often, and for how much compensation, if any), what the split in equity will be when you sell it, and how it will be maintained, problems arise, and family rifts have taken place over much less money than the tens of thousands (or hundreds of thousands) of dollars you could be out if things go sour.

Make plans for emergencies

Depending on your vacation location, there may be natural disasters or even regular run-of-the-mill home disasters that you aren’t considering during the purchase process, and you’ll definitely want to make some plans just in case. What happens if there’s an earthquake or a hurricane and it hits your home? Are you prepared financially or otherwise? And what if the roof caves in or the foundation starts to leak — do you have a notification system (via a property manager, renter, or friendly neighbor who routinely checks your house) that can inform you of what’s happening in a timely manner, in addition to a budget for fixing any issues?

As most of us know, Murphy’s Law states that anything that can go wrong, will go wrong, so if you plan for everything that can go wrong, at the very least you’ll have some peace of mind about how safe your vacation home is — and at best, you’ll be able to leap into action if the worst really does take place.

Plan for vacancies, too

Even if you don’t plan to rent your vacation home at all and finances aren’t a factor, there are always risks involved with leaving a home unoccupied for long stretches of time. Pipes could burst, pests could move in, or you could be burglarized by people who know the home is empty and think they can find a better use for your television or even your copper wiring. And if you are renting the home and plan on using the money you get in rent to pay off the mortgage on the house, what will you do if the current long-term tenants leave or if you have a gap of several weeks or months when short-term tenants are in scarce supply?

Talk to the local real estate experts about what you can expect in terms of occupation and vacancy, then make a plan for how to handle it. Maybe that plan involves a property management firm, or maybe your real estate agent lives close enough to do a pop-by every couple of weeks to make sure things are still running well. Whatever the case, having the plan in place will give you greater peace of mind and help you understand what went wrong in case a vacancy does lead to a worst-case scenario.

Consider the future

Retiring in your vacation home once your working days are through might be a nice thought that comforts you when you’re stuck under the fluorescent lights in your cubicle at the office, but before you let your imagination run away with you, think about the implications of this plan. For example, if you’ve got a medical condition that’s going to require more attention with age, then buying a vacation home that’s hundreds of miles from the closest specialist is going to be a brand-new problem to face once retirement rolls around. Or if your joints are already causing problems when you try to climb stairs, don’t assume that’s going to go away when you retire and that your three-story vacation home is a good idea. Understanding what your future holds and planning around it is just common sense, so make sure you apply that understanding to your vacation home, too.

Be realistic

There’s always a certain amount of fantasy involved in purchasing a vacation home, so do your best to rein yourself in and bring reality back when it’s important. Realism is critical when you’re making a budget for your vacation home as well as many other decisions you’re going to be making — how much time you’ll spend enjoying the vacation home, how to plan for emergencies and vacancies, how much money you’ll make from renting the home, and so on.

You also need to be realistic about any partnerships you’re considering for the vacation home; maybe your brother really wants to team up and buy a place, but if you know he’s terrible with money, then you probably don’t want to go there. Being realistic now will lead to a better experience later on.

It’s not all about the money

Even though a budget is critical when it comes to purchasing a vacation home, sometimes we need a little reminder that this decision might not be all about finances and return. Will you be making some lifelong family memories at this location? Are you planning to go back again and again whether or not you own a home there? How will it make your life better in small and intangible ways in addition to the obvious ones, like lining your pocket with a little extra cash?

Consider all of the pros (and cons) to owning your vacation home, and don’t leave out factors like convenience and the joy you’ll reap from sitting on the porch watching the sun set.

When you’re seriously thinking about buying a vacation home, you’ll need to take a comprehensive look at what it would mean for your budget, your life experience, and much more. If you can consider everything on this list and understand what you’re getting into, the odds that you’ll have an enjoyable, rich experience are much higher — and you can start shopping with confidence.

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