Buying

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By late spring, homebuying season is in full swing. And right when all the good listings start popping up, so does summer wanderlust — especially if you were cooped up all winter.

House hunting can be exhausting, especially in today’s competitive market. So if you need a vacation, are you throwing away your shot at success?

Karen Wilder, a real estate agent with Mott & Chace Sotheby’s International Realty in Charlestown, Rhode Island, doesn’t think so.

“Sometimes, it can be the best thing for your search for you to just take a little time off,” she says.

If you want to travel and house-hunt at the same time, you have to plan ahead and consider your short- and long-term goals. Here’s how to balance the homebuying process with a much-needed summer getaway.

Weigh your priorities

First, gut-check your travel plans against FOMO: the fear of missing out. In a hot market, home shoppers need to act fast when a great house gets listed. Maybe you have a truly can’t-miss trip — say, your bestie’s destination wedding or a major work conference. But if you have the option to schedule your travel later, it might be worth it to wait.

To help you decide, consider how you’d feel if “the” house came along while you were out of town. Would you regret not being there for an in-person walkthrough? Would you rather be on the beach than on the phone with your buyer’s agent?

“Everybody needs to consider their own comfort level with shopping remotely — their own sort of FOMO when it comes to going away and unplugging,” Wilder says.

The homebuying process is less familiar for first-time home buyers, who might prefer to handle things in person. In her experience, Wilder notes that seasoned real estate buyers or investors are often more comfortable with overseeing a transaction from a distance.

Find a proxy

Krystal Stearns, branch manager at Valor Home Loans in Colorado Springs, Colorado, is one of those seasoned pros. She has purchased six properties across three states without seeing any of them in person first. Digital tools like virtual walk-throughs and listing videos can help, but nothing beats a boots-on-the-ground perspective, she says.

Before you travel, ask an experienced buyer’s agent, trusted friend or family member to attend walk-throughs or open houses on your behalf. When Stearns bought her Florida vacation home sight unseen, she knew she could trust her buyer’s agent to give candid feedback on the place.

“You really need someone who is going to be honest with you, that’s going to look out for you and your family and understand your goals,” she says.

If any must-see listings arise while you’re away, your proxy can walk through the house with you in real time on a video call. They might notice things the listing photos can’t fully capture, from a breathtaking view to a troublesome odor.

“You cannot scratch and sniff online,” Wilder says.

Stay plugged in

Unless you can accommodate a complete pause on your homebuying journey, it’s wise to remain somewhat connected during your travels.

“It might not be the time to climb Mount Everest or, you know, go somewhere completely off the grid,” Wilder says.

Heading on a cruise or long flight? Buy the Wi-Fi. Going camping? Bring a portable power bank to charge your devices (and make sure its battery is full before you leave). Share your travel plans with your buyer’s agent and mortgage team so they know the best way to reach you and how quickly you’re able to respond.

If you’re under contract, your homebuying squad can explain which time-sensitive requests to expect and who will be sending them. For example, if your loan is in underwriting, you might have to submit recent bank statements or pay stubs. Following a home inspection, you’ll want to review the inspection report and negotiate any requests for repairs.

“A closing is, you know, three to four weeks,” Stearns says. “A lot happens in that time period.”

Before you reply to any urgent-sounding emails, check the sender’s address to make sure the request is legit. If something looks off, it could be a mortgage closing scam. Identity criminals can send convincing lookalike emails that attempt to steal your money or personal information.

Watch your spending

A home is one of the biggest purchases you’ll ever make, so now isn’t the time to drain your savings. Before you leave, make a travel budget and stick to it. That’ll save you the stress (or regret) of wondering if you can afford something while you’re in vacation mode.

After mortgage preapproval, lenders keep a close watch on your finances. While you’re traveling, avoid making any unexpected large purchases or opening new lines of credit (like signing up for that airline credit card offer after too many tiny bottles of wine on the plane). Doing so could affect your credit score or debt-to-income ratio, potentially putting your loan approval at risk.

Ultimately, buying a house while enjoying summer travel is possible if you plan ahead and remain reachable by phone or email. It all depends on how you prefer to spend your time.

“Life is short, so live your life as much as you possibly can,” Stearns says. “Don’t let a vacation stop you from buying a house, and don’t let buying a house stop you from going on vacation. Just know it’s going to be a little bit of extra work.”

Source: nerdwallet.com

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One of the best things about spring cleaning is all the room it frees up for redecorating! Out with the old, in the new, as they say. We made a list of the 11 best home decor items at Target that will not only add a little extra flair and character to a space, but also won’t cost you hundreds of dollars. Check out our list below.

The 125 Best New Beauty Launches Of 2023

Target

1. Brass Wall Clock

While smart phones provide the time with a simple glance, we mustn’t forget the charm of an analog clock. This 14-inch Pleated Brass Round Analog Wall Clock with a gorgeous Antique Finish from Heart & Hand is the perfect addition to a wall that just needs a little something extra. Plus, it’s on sale for $27.99! Hang it in a bedroom, living room kitchen, even a bathroom to add some character and dimension to the room.

Target

2. Woven Storage Baskets

Some of the best home decor items are functional too. Like these Banana Leaf Storage Baskets from the brand Olivia & May. Settle these into a cozy corner in the living room and fill them with extra blankets, tuck them under an entry-way table and fill them with shoes, or use them in the bedroom as hampers. With tons of different ways to use these baskets, they’ll not only upgrade your decor, but the functionality of your home, too. You can get a three pack of these stunning baskets for $100—grab them while they’re still in stock!

Target

3. Fun Candles

Everyone loves a candle—part of elevating a space is certainly elevating the smell of the space. While it’s easy to pick a candle based off the scent, it’s also easy to spend a little extra time picking out a candle that’s visually appealing too. Like this funky blue candle from Opalhouse, which is only $10, or this ceramic sage green candle from Threshold, if that’s more your vibe. Make your house smell good, and look good!

Target

4. Plant Propagation Set

For anyone with a green thumb, this plant propagation set is the perfect item to add a little greenery to a space. Even if you struggle to keep house plants alive, don’t be scared of this wall-hanging set, because you don’t need to water these! Simply fill up the vials with water and place clippings of your favorite plants and watch them grow. You can get these propagation set from Magnolia for only $23.99! With gorgeous gold accents, it adds so much to a space!

Target

5. Funky Throw Pillow

Sometimes all a room needs is a pop of color, and one way to do that is with funky throw pillows like this one! This Textured Tufted Square Throw Pillow by Opalhouse, designed with Jungalow, comes in two colors—rust and blue. Each has tons of fun textures and colors, and simply by tossing them on your couch or chair, the room gets an added layer of character. On sale for $25 right now, this is a great addition to any home.

Target

6. Ceramic Lamp

Lamps provide crucial lighting for a space, but it’s just as crucial to make sure the design of the lamp adds to the space, too. This 23-inch Farmhouse Ceramic Urn Pot Table Lamp is 40% off right now, and comes in six different colors, distressed black, distressed grey, earth brown, terracotta, light blue, and beige. The textured look of the base adds just as much depth to a room as it does light. Bring yours home today—or even get a matching set!

Target

7. Statement Wallpaper

If you’re feeling bold, go for an accent wall or bathroom with fun and colorful wall paper! Beige and neutral is out, and fun, vibrant, colors are in! Like this peel-and-stick Tropical Green wall paper from Opalhouse. Splash it on one wall in a bedroom or living area for a fun accent wall, or dedicate a whole bathroom or laundry room too it to really add some color to your life. Go big or go home, right? You can get a set of this wall paper for only $34, a much cheaper alternative to having it professionally done!

Target

8. Woven Placemats

Instead of leaving your kitchen table clear of anything, set out some decorative placemats to make the whole room look more homey. Plus, it’ll encourage you—and hopefully your family—to let less clutter gather there, making it easy to keep clean. These boho-chic woven placemats come in a set of 2 for only $10, and add so much character to a space. You can even take it one step further and set up a whole table-scape!

Target

9. Floral-Printed Rug

Another way to add some depth and color to a room is with a colorful or printed rug. This Floral Block Printed Blue Rug from Threshold comes in three different sizes, 2′ x 3′, 5′ x 7′, and 7′ x 10′ depending on how big your space is. If you’re more of a neutral furniture and decor kind of person, but are still looking for a pop of color, this rug could be the answer! The smallest size is only $25—budget friendly and stunning!

Target

10. Unique Vases

Flower vases don’t have to be clear! Try out a unique vase to hold your next bouquet of flowers, adding in a little extra pizazz to a space. Like this gold ribbed one from Threshold, which is only $25, or this modern and funky blue one, which is only $30. It could be your pop of color or a tie in to a color you’ve already picked for the room. Either way, it’s a great deal, and it’s an easy way to add a little character to any space.

Target

11. Coffee Table Books

Home decor can be personalized, too! While these can sometimes be a little pricey if you think about them as a book, if you think of it more as a piece of art or decor, paying a little extra for a coffee table book about a topic that interests you is really worth the money. Like this stunning black-and-white Tom Ford book, which is currently 44% off. Whether it’s the best beaches in America, foods from all over the world, or even a personalized, homemade coffee table book documenting your favorite memories, these are the perfect addition to your coffee- or end-table.

Target

12. Full Length Mirror

The final item on our list is another functional decor moment: the Wooden Mirror with Ladder from Threshold. With this item, you’re fulfilling the need for a mirror—which can really open up a space, btw—and making it easier to store your throw blankets, rather than leaving them a crumpled mess on the couch. This mirror and ladder combo is on sale for $60, so grab yours while it’s still in stock!

Source: shefinds.com

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If you are shopping for a new home right now, you already know interest rates have skyrocketed to an average of 7.36%. What would you say if we told you that you could get a mortgage for a rate of 3%? There is a way. Investigative reporter Bill Spencer shows us how, with the help from a husband and wife who just used an assumable mortgage to buy a home.

House hunting for their very first home has been anything but easy for Terry and Sarah Diamond.

KPRC 2’s Bill Spencer explains how you can save money buying a new home by using an assumable mortgage. (Copyright 2024 by KPRC Click2Houston – All rights reserved.)

This couple from the Dallas area toured no less than 10 different homes, but with mortgage rates now hovering around 7% and even higher, they just could’nt find the kind of house they wanted at a price they could afford.

And then, something of a miracle happened.

Suddenly Terry and Sarah found their dream home, with 4 bedrooms, a huge family room, 3 full baths, a huge kitchen and a massive backyard, all sitting on a full acre of land.

Sarah still remembers the day they closed the deal.

“It was incredible. We were out to dinner and we got the call, and I just started crying. Yeah, I was so excited. It was like a thousand pound weight off our backs,” Sarah said.

Yes, the Diamonds are a hard-working family with 2 young children, who never dreamed they could afford a house like this.

Especially right now, when so many Americans just can’t afford these astronomical home mortgage interest rates.

“It’s just ridiculous. The economy has made it where the average, you know, average American can’t afford a house anymore. You can’t buy somewhere to grow your kids up,” Terry said.

That’s when the Diamonds met real estate agent Chasatee Carbaugh with Regal Realtors in North Texas, who found them a beautiful, roughly 6-year-old home in Sanger, Texas with a 3.1% mortgage rate.

When I ask Terry what his friends think of the mortgage rate he was able to get Terry says, they are in disbelief.

“They think I’m lying. They say how did you do that? And, I’m like, an assumable mortgage and they’re like, what is that? They are stunned,” Terry said.

Yes, an assumable mortgage. What is an assumable mortgage?

If you’ve never heard of one you are not alone.

Simply put, an assumable mortgage is where the home buyer takes over the home seller’s mortgage, with the same interest rate. In this case 3.1%. Whatever the seller has already paid-down on the house, becomes the buyer’s down payment. In doing this story, we have seen assumable mortgage rates as low as 2.9% all the way up to 4.5%.

“I mean, you think back to like 2018 and 2019 when real estate was good, even some in the 2021 when there were some popping rates, and I have several clients that had rates of 2.99%, Chasatee Carbaugh said.

So, let’s take a closer look at Terry and Sarah’s assumable mortgage deal.

It works out like this, the house they bought cost $455,000. The woman they bought it from had 63,000 dollars in equity, that she had already paid-down on the home, so the diamonds down payment became $63,000. Now that’s high, about double what the Diamonds expected to pay, but with that 3.1% mortgage rate, their monthly payment became just 2,300 dollars.

KPRC 2’s Bill Spencer explains how you can save money buying a new home by using an assumable mortgage. (Copyright 2024 by KPRC Click2Houston – All rights reserved.)

With a normal 7% mortgage rate, they would have been paying more than double that amount, about 4,500 dollars a month.

All of which means, Terry and Sarah are saving more than 2,000 dollars a month.

But even more startling is that over the lifetime of their loan Terry and Sarah will be saving over 400,000 dollars.

When Sarah first heard what their monthly mortgage payment was going to be, she couldn’t believe it.

“Absolutely not. No, I didn’t believe it, I just didn’t think it was possible,” Sarah said.

“Yeah, so we were able to get this big house. This big lot. You know, out here in the suburbs and it’s great,” Terry said.

Now it’s important to know, most conventional mortgages can’t be assumed, except in very rare cases. To get an assumable mortgage, it must be a government-backed mortgage, like a V.A., F.H.A. or U.S.D.A loan. And remember, your down payment is likely to be much higher than with a traditional mortgage.

So how can you make that down payment as low as possible?

Chasatee has the answer.

“You can do it. I would look for homes that were possibly built or purchased in maybe the range from 2017, 2018, 2019 to 2021, because the owners don’t have that much equity in it for the buyers to have to assume. That means your down payment only has to cover the small amount of equity they have in that home.

As for Terry and Sarah and their two young children, they’re sitting pretty with a screaming low mortgage rate they can actually afford.

In other words, they were able to buy a home in 2024 with a 2018 mortgage rate.

“Our monthly mortgage, with it being so low, we’re not in a monthly bind. You know, we’re able to fix the flat tire. We’re able to pay the medical bills as they come. We’re able to plan a little vacation. It’s just nice to not feel financially strapped every month,” Sarah said.

RELATED: Web exclusive explains how an assumable mortgage works and what it can mean for you

Need help buying a home in Houston?

If you are a first-time home buyer, there may be help available for you. From grants to assistance with funding – there are some options you might not have thought about for financing a home. And in the Houston area right now, there are a lot more homes out there for you to check out. Bill Spencer found help for first time home buyers in the Houston area.

Source: click2houston.com

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Obtaining a mortgage with a reduced interest rate is a crucial objective for many prospective homeowners. Getting a good interest rate can save borrowers thousands of dollars over the course of a loan and have a big impact on your financial health.

It takes research and preparation to navigate the complicated world of mortgage rates, but making the effort can pay off with lower monthly payments and significant long-term savings.

What Is the Best Way to Get a Lower Mortgage Rate?

Although there’s no one-size-fits-all approach that will help homebuyers qualify for a mortgage at a reduced mortgage rate, there are a few crucial steps one can take. These include carefully tending your credit score and diligently comparing lenders and financing choices.

This may be especially daunting to first-time homebuyers, but borrowers who learn how to lower their mortgage interest rate can better their chances of long-term financial stability and successful homeownership.

💡 Quick Tip: SoFi’s award-winning mortgage loan experience means a simple application — we even offer an on-time close guarantee. We’ve made $7.5 billion in home loans so we know a thing or two about what makes homebuyers happy.‡

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Pros and Cons of a Lower Mortgage Rate as a Home Buyer

As a prospective homeowner, getting a reduced mortgage rate could offer many benefits, though there are a few potential challenges as well.

Pros:

•   Decreased monthly payments: A lower interest rate usually results in a lower monthly mortgage payment, giving you more money for investments or other expenses.

•   Long-term savings: Depending on the loan amount and term, even a small interest rate reduction can save a significant amount of money over the course of the loan — possibly tens of thousands of dollars. Experiment with a mortgage calculator to see how the interest rate and loan term impact the total interest paid over the life of the loan.

•   Building equity faster: As a result of lower interest rates, a larger portion of your monthly payment is applied toward paying off the loan, hastening the process of building equity in your house.

Cons:

•   Qualification requirements: Borrowers with a strong credit rating, steady income, and a sizable down payment are frequently eligible for the lowest rates offered by lenders. Achieving these requirements may prove difficult for some buyers.

•   Higher upfront costs: Securing a lower interest rate may require paying higher upfront costs, such as points or a big down payment.

•   Limited availability: Some purchasers may find that the lowest advertised rates are only accessible to customers who qualify for certain loan types under particular circumstances.

•   Market volatility: Interest rates can change over time for an array of economic reasons. An adjustable-rate mortgage may offer a borrower a low initial interest rate, but savings could be outweighed by rate hikes in the future.

Recommended: The Best Affordable Places to Live in the U.S.

Ways to Get a Lower Mortgage Rate

If you’re wondering how to get a lower interest rate on a mortgage, here are tactics you’ll want to take a look at:

Shop for Mortgage Rates

Finding the best loan terms for a house purchase requires doing your research on mortgage interest rates. Get quotes first from a variety of lenders, such as banks, credit unions, and online lenders. Consider whether you are eligible for a loan guaranteed by the government, such as a VA loan (from the U.S. Department of Veterans Affairs) or an FHA loan, backed by the Federal Housing Administration. Don’t accept the first mortgage deal you run across; shop around and compare rates offered by different lenders.

To evaluate rates, fees, and terms side by side, make use of online comparison tools. Never be afraid to ask a lender if they can match a competitor’s rate or give better conditions. Other considerations, like closing expenses and the caliber of the customer service, may influence your choice of mortgage, and the lowest rate that is advertised may not always be the best one. Make sure you have researched your selection and that it is in line with your long-term financial objectives.

Nurture Your Credit Score

Borrowers with better credit scores usually receive reduced rates from lenders. A better rate might result from paying your bills on time, cutting overall debt, fixing any inaccuracies on your credit report — or all three. Get a copy of your credit report from each of the big credit reporting agencies, check it for accuracy, and quickly request fixes for any inaccuracies. Next, focus on paying off current debts on time, maintaining modest credit card balances, and refraining from creating new credit lines unnecessarily.

Choose Your Loan Term Carefully

Investigate different types of mortgage loans, including fixed-rate and adjustable-rate mortgages (ARMs). Each type has a different interest rate structure and set of requirements. Shorter loan terms of 15 or 20 years usually have cheaper interest rates than 30-year mortgages, which results in significant savings over the course of the loan. They also typically have larger monthly payments.

Longer loans spread out payments over an extended period of time, which lowers the monthly payment but comes with higher overall interest charges. When choosing a loan term, take your cash flow, long-term objectives, and financial status into account. While a longer term could offer more flexibility with lower monthly payments, choosing a shorter term can help save money and allow you to pay off the mortgage sooner.

Make a Larger Down Payment

Increasing your down payment is one of the best ways to get a lower mortgage rate. For borrowers who are able to make a substantial down payment — typically 20% or more of the purchase price of the home — lenders frequently offer lower interest rates. A higher down payment shows financial responsibility and lowers the lender’s risk, which makes for a more desirable borrower. Borrowers can also eliminate private mortgage insurance (PMI) with a sizable down payment, which further reduces your monthly payment. Although stowing away a down payment takes time and discipline, there could be significant interest savings over the course of the loan.

Buy Mortgage Points

Purchasing discount points, sometimes referred to as mortgage points, can be a calculated move to obtain a cheaper mortgage rate. Each point costs 1% of the total loan amount and lowers the interest rate by a specific amount, usually 0.25% per point. Although purchasing points necessitates a one-time payment, it might provide substantial savings during the loan term. Before you purchase points, make sure you set aside cash reserves for emergencies. And ask yourself if you plan to stay in the house past the breakeven point (the point at which the monthly savings from a lower payment equal the initial cost of purchasing points).

Lock in Your Mortgage Rate

Once you’ve found a good rate and gone through the mortgage preapproval process, locking in your rate is a crucial step in protecting against potential rate increases during the closing process. When a rate is locked in, the lender agrees to guarantee the agreed-upon interest rate for a predetermined amount of time — usually 30 to 60 days — while the loan application is being processed. This guarantees that the rate won’t change during this time, even if market rates rise. If rates drop, though, one might not be able to benefit from the lower rates unless the lender has a float-down option.

Refinance Your Mortgage

If mortgage rates drop significantly (or your financial profile improves markedly) after you purchase your home, refinancing your mortgage can cut monthly payments and total loan costs. But it’s crucial to take into account refinancing charges, like appraisal and closing costs, and balance these against the possible savings from a lower rate. Homebuyers should think about long-term financial objectives and how refinancing fits within their total budget. Working with a reliable lender and thoroughly weighing options can help one decide if refinancing is the best course of action.

💡 Quick Tip: Have you improved your credit score since you made your home purchase? Home loan refinancing with SoFi could get you a competitive interest rate with lower payments.

Searching for Mortgage Rate Tips

Start by keeping an eye on market developments and learning how the economy affects mortgage rates. To be eligible for reduced rates, carefully manage your credit score. You can also get reasonable rates and better conditions by shopping around and comparing offers from different lenders. To optimize savings, think about the advantages of increasing your down payment, buying discount points, and selecting the ideal loan term. Lock in a cheaper rate while the market is favorable.

Recommended: Home Loan Help Center

The Takeaway

Prospective homeowners can improve their chances of obtaining a favorable rate and ultimately save a large amount of money over the course of their loan by raising their credit score, shopping around for the best rates, and negotiating with lenders. Market conditions, lender competition, and your individual financial situation will factor into your mortgage terms. Greater financial stability can be achieved from taking proactive measures to achieve a cheaper mortgage rate, whether through buying discount points or increasing the down payment.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Can you ask your mortgage company to lower your interest rate?

Yes, you can negotiate with your mortgage company to potentially lower your interest rate before you sign on for a loan. After you have a mortgage, you could ask your lender about a mortgage recast or a refinance.

What makes mortgage interest rates go down?

Mortgage interest rates can decrease due to factors such as economic downturns, changes in federal monetary policy, and market competition among lenders.

Can you negotiate a lower interest rate on a mortgage?

Yes, you can use variables like your creditworthiness, the state of the market, and lender competition to negotiate a lower interest rate on a mortgage.

Photo credit: iStock/Delmaine Donson
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

‡SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will give you a credit toward closing costs or additional expenses caused by the delay in closing of up to $10,000.^ The following terms and conditions apply. This Guarantee is available only for loan applications submitted after 04/01/2024. Please discuss terms of this Guarantee with your loan officer. The mortgage must be a purchase transaction that is approved and funded by SoFi. This Guarantee does not apply to loans to purchase bank-owned properties or short-sale transactions. To qualify for the Guarantee, you must: (1) Sign up for access to SoFi’s online portal and upload all requested documents, (2) Submit documents requested by SoFi within 5 business days of the initial request and all additional doc requests within 2 business days (3) Submit an executed purchase contract on an eligible property with the closing date at least 25 calendar days from the receipt of executed Intent to Proceed and receipt of credit card deposit for an appraisal (30 days for VA loans; 40 days for Jumbo loans), (4) Lock your loan rate and satisfy all loan requirements and conditions at least 5 business days prior to your closing date as confirmed with your loan officer, and (5) Pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. This Guarantee will not be paid if any delays to closing are attributable to: a) the borrower(s), a third party, the seller or any other factors outside of SoFi control; b) if the information provided by the borrower(s) on the loan application could not be verified or was inaccurate or insufficient; c) attempting to fulfill federal/state regulatory requirements and/or agency guidelines; d) or the closing date is missed due to acts of God outside the control of SoFi. SoFi may change or terminate this offer at any time without notice to you. *To redeem the Guarantee if conditions met, see documentation provided by loan officer.​​
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.

†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

SOHL-Q224-1841870-V1

Source: sofi.com

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Fewer things are more comforting than a crackling fire on a chilly day, but what happens when your chimney needs a little TLC? Repairs generally cost between $160 to $750, with an average repair running around $455, according to HomeAdvisor. But the amount you end up paying will depend on several factors such as the type of repair needed, your chimney’s materials, and labor costs.

Even if you only light your fireplace for part of the year, you’ll want to fix any chimney problems as soon as you can. A damaged chimney could increase the risk of a fire or prevent toxic gasses from passing safely into the air outside.

Here’s a closer look at common chimney repair costs so you can plan accordingly.

Factors That Impact Chimney Repair Cost

If a chimney is well maintained, you can expect it to last for 50 to 100 years. Still, it’s a good idea to carve out space in your household budget for occasional maintenance and repairs. When you’re planning how to pay for the fixes, keep in mind that several different factors can impact your chimney repair costs.

Type of Repair

The type of repair can impact the overall cost of a project. For example, capping repair usually involves replacing the very top cap on your chimney. This type of project typically costs between $150 to $300, according to HomeAdvisor.

Another common repair is fixing the mortar and bricks in a chimney. The job might entail tuckpointing, which incorporates two different mortar colors to make the chimney look newer. Masonry chimney repair costs usually cost between $300 and $1,500, while prefab chimneys cost less because they have fewer components. The job typically costs between $250 and $1,200.

Lining repair involves fixing the chimney liner, which, when cracked, can pose a fire risk. Chimney liners cost between $625 to $7,000, with a national average of $2,500.

Recommended: What Are the Most Common Home Repair Costs?

Type of Chimney

Chimney types vary by material, and this can impact how much a repair costs. Four common types of chimneys include brick, stucco, metal, and prefabricated.

Depending on how much damage there is, brick chimneys cost $175 to $1,000 on average to repair, though you can expect to pay more for more significant work. If you’re fixing a metal and prefabricated chimney, plan on paying in the neighborhood of $200 to $1,200, depending on how extensive the damage is.

Have a stucco chimney? You’ll likely need to pay more to have it repaired. Projects typically run between $570 to $1,920, though bigger jobs can run as high as $4,200.

Labor

Professional chimney repairs usually cost between $50 and $200 per hour. That said, the more damage there is, the harder the damaged area is to reach, and the more time a project requires, the more you may end up paying in labor costs.
💡 Quick Tip: With home renovations, surprises are inevitable. Not so with SoFi home improvement loans. There are no fees required, and no surprises.

Additional Costs

A repair may not be the only cost you encounter. Chances are, you might also pay for routine chimney inspections, chimney cleaning, ongoing maintenance, and permits.

Chimney Inspection

Whether you’re buying a fixer upper or renovating your current home, you should plan on having your chimney inspected by a professional once a year. The condition a chimney is in determines the type of inspection it needs. There are three levels of inspection:

•   Level one inspection: A level one inspection is an annual routine inspection and typically costs between $100 and $950.

•   Level two inspection: A level two inspection goes a step further to include a more extensive investigation into potential structural issues caused by recent damage. It costs between $200 and $1,000.

•   Level three inspection: A level three inspection looks at every part of a chimney, inside and outside, which may require taking out walls or portions of the chimney. It costs between $500 and $5,000.

Chimney Cleaning

Cleaning a chimney typically runs between $120 and $390, or an average of $250. If your chimney has not been maintained well, there may be heavy creosote buildup or other damage. This could lead to a higher clean-up bill of up to $5,000.

Ongoing Chimney Maintenance

All chimneys need regular maintenance. Depending on the type of upkeep required, you may pay for a simple cleaning (an average cost of $250). But if a chimney repair contractor finds that your chimney restoration needs more attention, you could pay more.

Permits and Related Fees

Once you find a contractor and finalize your plans, work can begin. Keep in mind that before constructing or changing the outside dimensions of a structure, your contractor will need to secure a building permit. A building permit generally costs $50 to $300 for small jobs.

Types of Chimney Repairs

From the crown to the flashing, we’ll look at the various parts of the chimney and what it might cost to fix each one.

Stack Repair

The chimney stack is the part of the chimney that appears above the roof. Chunks of missing masonry, crumbling brickwork, and visible cracks can signal that your chimney stack needs to be repaired.

Mortar Repair

Mortar acts as a buffer between the bricks in a chimney. But that buffer can crack and deteriorate from movement and pressure, so pay attention to how your mortar looks from year to year.

Repair could involve repointing and/or tuckpointing. Repointing means removing and replacing damaged mortar joints, while tuckpointing uses two different colors of mortar to make the mortar joints look different.

Crown Repair

The crown is the top part of the chimney and prevents rainwater from getting into your chimney. Typically made of concrete, the crown should be checked for visible cracks, deterioration, wall damage, and pooling water.

Cap Repair

Chimney caps, usually made of steel or copper mesh, sit on the crown at the very top of the chimney. The cap covers the flue, or the duct that allows smoke to leave the chimney. Caps also keep rainwater, animals, and debris from entering the chimney. Missing tops, rusted screens, creosote accumulation, and screen holes can all indicate that your chimney cap needs attention.

Foundation Repair

Chimneys often have their own foundations, but they sometimes settle. This could allow moisture, critters, and other items to enter your home. Look for a crumbling foundation, which might also present fire hazards and falling bricks and mortar.

Liner Repair

A chimney liner, or flue liner, is the vertical passage located inside your chimney that carries fumes to the outdoors. Similar to an exhaust pipe, the flue keeps wasteful gasses from spreading into your chimney cavity.

There are some signs that yours may need a replacement, including finding broken shards and flakes of parts of your chimney and smoke in your home. It’s a good idea to consider replacing your chimney liner if it’s older. Less-expensive models should last up to five years, while a well-constructed liner can usually be counted on for up to 20 years.

Wood Rot Repair

Wood rot can compromise your home’s structural integrity and affect any part of the chimney that has wood in it: the crown, cap, or flue liner. Indications of wood rot might include discoloration or staining, a musty smell, cracks in the wood, and evidence of pests.

Smoke Chamber Repair

The smoke chamber refers to the part of the chimney located just above the damper and connects the firebox to the flue. It guides smoke from a fire up into the flue and out of your home. Since many smoke chambers contain steps, gaps, and holes, they can contain flammable creosote and soot buildup.

Flashing Repair

The flashing of a chimney joins the roof to the chimney and is made of aluminum, steel, copper, vinyl, or PVC. The flashing should last 30 years. But if there’s damage, you could end up with leaks in the roof due to rusting and corrosion, animals, loose caulk and gaps, and wear and tear.

Flue Repair

A flue is any open, vertical part of the chimney that lets smoke escape. (Don’t confuse this with the chimney liner, which lines the flue.) Signs the flue needs attention may include broken shards and flaking and smoke in your home.

Cricket Repair

A chimney cricket, also called a roof cricket, sits behind your chimney and looks like a tiny peaked roof. It juts off the main roof and sits directly against the backside of the chimney to divert water from the masonry. Water stains on the ceilings or walls, rafters near a chimney or damaged mortar and bricks or rotten wood can identify whether the chimney cricket is working or not — or if you need a chimney cricket and don’t have one. (Tip: Chimneys that are 30 inches or larger need a cricket.)

Brick Replacement

Brick replacement may involve replacing just a few bricks — or redoing the entire chimney. Note that if the bricks are in areas that are hard to reach, a professional may charge more for the job.

Siding Repair

If you have a chimney made of siding, it can be at risk for rotting, swelling, and deterioration. Even if it looks good from the ground, a “diseased” chimney could be rotten and cause water to enter your home through the roof or ceiling.

Repairing vs Replacing a Chimney

The extent of your chimney’s damage determines whether you should have it replaced or simply repaired. However, there are some clear signs that indicate you may need to completely replace your chimney:

•   Large cracks in the bricks

•   White streaks on the bricks

•   Spalling bricks (bricks falling down)

•   Tilting

Even if some of those indications are present, it’s a good idea to consult with a professional to know exactly what to do next about your fireplace chimney repair.

Signs You Need a Chimney Repair

Indications you need a chimney repair include cracks that appear, smoke blowback, leaks, leaning, or spalling bricks. Let’s walk through what these might mean.

Cracks

Cracks in the chimney’s masonry can signal that it needs attention. Cracks can lead to gas seeping into your home, which can increase the risk of carbon monoxide poisoning. Excess moisture, earthquakes, or other weather events; hail; acidic decay; wind; and hot or cold temperatures usually cause cracks to appear.

Smoke Blowback

Smoke blowback creates a safety and health hazard. Not only could your house sustain a fire, but you could also face carbon monoxide, volatile organic compounds, polycyclic aromatic hydrocarbons, and other pollutants in your home. There are several causes for smoke blowback, including a blockage in the chimney or even a home that’s too well insulated.

Leaks

Chimney leaks are a common problem. When your chimney drips water or you see moisture in the fireplace or surrounding walls, you may also see attic and wall damage. The chimney itself may have a leak, or the roof may leak. For example, the chimney cap or crown may be damaged, bricks or mortar may have issues, the flashing may not be working properly, or condensation may have built up in the chimney.

Leaning

Exposure to all sorts of weather can cause the mortar joints in a chimney to decay. This causes bricks to loosen and the chimney to lean. Other reasons for leaning include a lack of footings and shifting soil. A leaning chimney doesn’t just look bad — it can also pose a safety risk and may even collapse.

Spalling Bricks

Spalling brick refers to bricks that flake, pit, or crumble and fall away from the masonry. Small cracks usually start and grow larger until the brick completely deteriorates. Improper mortar, weather, improper insulation, non-breathable masonry sealants, cleaning with a pressure washer, and impact to the bricks can all cause spall. Spalling poses a safety risk — there’s a possibility the structure collapses and damages the rest of the roof.

Shaling Tiles

Have you noticed pieces of flue tiles accumulating at the bottom of your chimney? This may be the result of shaling, which is a sign that your flue tiling is damaged. A professional can use special equipment to confirm whether there’s an issue, identify the problem spot,and offer potential solutions.
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Can I Repair My Chimney Myself?

Depending on the issue, fixing a chimney can take a big bite out of a homeowner’s budget, but there are several ways to finance the cost of chimney repair. For instance, you may decide to dip into emergency savings, use a credit card, take out a personal loan, or turn to your homeowners insurance.

Or, depending on your situation, it might make sense to explore a cash-out refinance, a home equity line of credit (HELOC), or consider emergency home repair financing options. As you make your decision, it’s a good idea to compare the interest rates and the pros and cons of each type of financing.

You may also be tempted to attempt to tackle the work yourself and save some money in the process. Though many home improvement projects may be appropriate for the DIY-er, chimney work is not one of them. You assume serious risks when completing a chimney repair yourself — the same kinds of risks you’d face repairing a roof. Even if you can overcome those risks, you’ll still have to know how to repair the chimney. And certain tasks, such as a complete chimney replacement, require advanced knowledge of the mechanics of a chimney.

Recommended: How to Pay for Emergency Home Repairs, So You Can Move on ASAP

The Takeaway

A well-maintained chimney is designed to last for decades, but that doesn’t mean it won’t require the occasional repair or maintenance. Repairs typically cost between $160 to $750, though that price depends on a range of factors, including the type of chimney you have, the work being done, and labor costs. But chimney upkeep is an important line item to include in the budget because there are potential safety risks involved when repairs aren’t made.

When it comes to financing chimney repairs, homeowners have several options, including homeowners insurance, dipping into an emergency fund, and taking out a personal loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

When should I replace my chimney?

You may never need to replace your chimney as long as you live in your home, since chimneys can “live” up to 100 years. However, if you live in an old home or can see issues with your chimney, consult a chimney repair contractor, who can determine whether it needs to be replaced.

How often should I clean my chimney?

The National Fire Protection Association (NFPA) suggests having your chimney cleaned and inspected once per year by a chimney sweep. You should also have your chimney swept at least once per year. A professional can ensure that everything is in working order.

What qualifications should I look for in a chimney repair contractor?

Hiring a professional with the right credentials is important, so look for certifications by the National Fireplace Institute (NFI), Chimney Safety Institute of America (CSIA), and Certified Chimney Professionals (CCP). Check a chimney repair contractor’s Better Business Bureau (BBB) rating. Ask for a portfolio and recommendations, and confirm that the company is insured.

How do I compare quotes from different chimney repair contractors?

Get several quotes from various contractors in your area and compare them apples to apples. The cheapest one may not be the best fit for the job. For example, one contractor may offer a more thorough repair than another for, say, brick chimney repair costs. Ask for a list of services and a detailed list of the costs involved before you decide on the contractor. It also doesn’t hurt to ask friends and neighbors for recommendations.

Are there any permits or inspections required for chimney repairs, and how much do they cost?

A building permit typically costs $50 to $300 for small jobs, though it may depend on where you live. Once you find a contractor, they should be able to answer your questions about the costs of a building permit.

Will my homeowner’s insurance cover the cost of chimney repairs?

If your home is damaged by a covered loss, your insurance will cover the cost of chimney repairs. For example, your insurance will likely provide coverage if lightning strikes your chimney and ruins the brick and mortar. However, if your chimney has been neglected and causes a fire in your living room, your homeowner’s insurance may not cover the damage. Ask your insurance carrier for more information about your specific situation.

How can I finance the cost of chimney repairs?

Consider a variety of different types of financing, from using your credit card to taking out a personal loan from a lender (such as your mortgage lender). Also consider emergency home repair financing options, a cash-out refinance or a home equity line of credit (HELOC). Compare the interest rates, pros and cons of each type of financing, to determine which type of financing works best for you. For example, if you know you will have a repointing chimney cost on your hands, consult with at least five contractors and get prices, then ask your bank or credit union for more information about financing options.

Are there any tax breaks available for chimney repairs?

Generally, home repairs, such as fixing a broken chimney, are not tax deductible. However, a home improvement, such as adding a chimney to your house, may be tax deductible. Check with an accountant for more information.

How can I ensure my chimney repair project stays within budget?

Put together a budget so you know exactly how much you can afford to spend on your chimney repair. Keep in mind that the chimney repairs cost could run you between $160 to $750, with an average repair cost of $450, to fix your chimney. Chimney rebuild costs will likely cost the most. Check with an experienced contractor in your area to learn about your project’s costs, and be sure to get a list of costs ahead of time.

What are the risks of not repairing my chimney?

Leaving chimney issues unchecked can result in a number of safety hazards, including fatal fires, carbon monoxide poisoning, and other toxic chemicals. To help you spot and address problems early on, consider getting an annual inspection recommended by the NFPA. A professional chimney inspection could uncover a chimney repair problem you can’t see from your living room or from the ground.

Photo credit: iStock/arak7

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Source: sofi.com

Apache is functioning normally

The standard narrative of buying a house involves a real estate agent. The Realtor acts as your tour guide, guiding you not only through available homes, but also through the complicated process of becoming a homeowner.

However, some independent sellers prefer to sell their home without a real estate agent’s services. As a prospective buyer, you would interact with the homeowner instead of a Realtor.

This process, known as a sale by owner or FSBO sale, offers potential buyers the opportunity to bypass some traditional real estate transactions, which may save money on agent’s commission fees. FSBO sellers handle every aspect of the sale, including setting the listing price, marketing the house for sale, and negotiating the purchase price.

FSBO sales differ from a typical sale, as they require the home buyer to assume tasks that a real estate agent would usually handle. This includes finding FSBO listings, validating property details, and negotiating the sales price with the FSBO seller directly.

Key Takeaways

  • A For Sale By Owner (FSBO) transaction allows buyers to negotiate directly with sellers, potentially bypassing real estate agent commissions but requiring extra due diligence.
  • Buyers should secure mortgage preapproval, verify property details through CLUE reports and title checks, and consider hiring a real estate attorney or title company to manage legalities.
  • Closing a FSBO sale involves setting up an escrow account, preparing extensive paperwork, and understanding post-closing steps like utility setup and managing property taxes and insurance.

An Overview of the FSBO Process

A FSBO sale, where an owner sells their house without a real estate agent or a listing agent, differs from a typical sale. Understanding the intricacies of these real estate transactions can be vital to a smooth closing. FSBO sellers handle everything from setting the listing price, marketing, negotiating, and closing, offering more room for direct communication and price negotiation.

However, an FSBO transaction requires the buyer to take on tasks typically handled by a real estate agent. Unless you are working with a buyer’s agent, closing can be complex. You may be on your own for a home inspection. Getting an appraisal and negotiating a selling price will be up to you. Completing the title search and other tasks usually falls to the seller’s agent.

Prepare for the Purchase

Buying a home is exciting, but it’s also a venture that requires substantial financial planning and understanding. Preparing for the financial aspect of your purchase can increase your chances of a successful transaction and make the overall home buying experience less stressful.

Determining how much house you can afford is the first step. Getting pre-approved for a mortgage is essential. You’ll also need funds for a down payment and closing costs. Buying a FSBO home is similar to purchasing through a real estate agency.

Assess Your Credit Score

Your credit score is a key player in this process. It has a significant impact on your ability to secure a home loan, dictating your interest rates and loan terms. Before you start shopping for an FSBO house, check your credit score and, if necessary, take steps to improve it. This may involve paying down debts or correcting any errors on your credit report.

Secure Loan Preapproval

Once your credit is in check, securing preapproval for a home loan can give you a head start. This process involves a lender checking your financial history and assessing whether you’re a viable candidate for a loan.

Upon preapproval, you’ll know the maximum amount you can borrow, which helps you set a realistic budget for your house hunting. A mortgage broker, with their extensive knowledge and resources, can guide you through this process and help you choose the best loan for your needs.

Set Aside Savings

Additionally, it’s essential to have savings set aside for a down payment and closing costs. Down payments typically range from 3.5% to 20% of the home’s purchase price. Closing costs, on the other hand, usually amount to 2% to 5% of the loan amount. These costs can add up, so preparing for them can prevent financial surprises down the road.

Ensure a Mortgage Contingency

Lastly, when setting the terms of the purchase contract, ensure it includes a mortgage contingency. This clause protects you if your final home loan approval falls through, allowing you to back out of the deal without financial repercussions.

Research the Property

Buying an FSBO home requires thorough due diligence and understanding your local market’s dynamics.

Familiarize Yourself with the Market

Familiarize yourself with FSBO listings in your desired area. Assess the features of various properties, their listing prices, and how long they’ve been on the market. This exercise can help you gauge a fair price for the property you’re interested in.

Verify Property Details

In FSBO sales, buyers need to take extra care when verifying property details. These include, but are not limited to, ownership history, physical condition, and any past insurance claims related to the house for sale.

  • CLUE Report: A good starting point for property research is the Comprehensive Loss Underwriting Exchange, also known as CLUE. This database contains up to seven years of insurance claims history for properties. Requesting a CLUE report can provide insight into any past damages or issues that have led to insurance claims. This information helps when assessing the overall condition of the home and can play a role in price negotiations.
  • Check the Title: Another important element in property research is checking the home’s title. The title outlines the history of property ownership, and any issues, like liens or disputes, could complicate the transaction. You might want to consider hiring a title company or a real estate attorney to ensure a clear title, further securing your investment.

Conducting extensive research on the property not only aids in making an informed decision but can also arm you with valuable information during price negotiations.

Understand the Legalities

Buying a house is not just a financial commitment, it’s a legal one too. Understanding the legal aspects of real estate transactions can protect you from potential complications, particularly in a FSBO sale, where you might not have a real estate agent guiding you through the process.

Hire a Real Estate Attorney or a Title Company

In a traditional real estate transaction, a buyer’s agent handles the legal paperwork. However, in a FSBO sale, buyers often need to manage these tasks themselves. This is where a real estate attorney or a title company can help. These professionals can assist with the legal aspects of the transaction, including:

  • Ensuring the house is a separate legal entity operated correctly, free from liens, and without any outstanding claims.
  • Conducting title searches to confirm the legitimacy of the property’s ownership.
  • Assisting with the closing process, ensuring all necessary documents are correctly filled out and filed.

Review the Purchase Agreement

The purchase agreement is a binding legal contract between the buyer and the seller. It outlines the final purchase price, terms of the home sale, and any conditions that must be met before the sale can be finalized.

Given its importance, it’s recommended to have a lawyer review the purchase agreement before the buyer and seller sign it. This review can ensure that all the stipulations are in your best interest and that there are no potential loopholes that could cause problems later.

Pricing and Negotiations

FSBO sales often provide room for more negotiation when it comes to the home’s asking price. This flexibility can result in a lower purchase price, potentially saving you money.

Home Appraisal

A home appraisal can be an essential tool during these negotiations. An appraiser evaluates the property and provides an estimated market value. This estimate is based on various factors, including the home’s condition, location, and comparable homes in the area.

With an appraisal in hand, you have a foundation for negotiating the home’s price with the seller directly. It gives you a benchmark, helping to ensure you don’t pay more than the property is worth.

Handling a Low Appraisal

A FSBO transaction can become complicated if the appraisal is lower than the agreed-upon purchase price. In this scenario, you have a few options:

  • Request a price reduction: If the appraisal comes in lower than the agreed-upon price, you can ask the seller to reduce the price. They may be willing to do this to keep the sale on track.
  • Challenge the appraisal: If you believe the appraisal was inaccurate, you can challenge it. You’ll need to provide compelling evidence, such as recent sales of comparable homes that were not included in the original appraisal.

Handling these situations tactfully can keep your home purchase on track while ensuring you get a fair deal. Remember, every real estate transaction is unique, and dealing with these challenges may require professional guidance from a real estate attorney or a buyer’s agent.

Home Inspections

Investing in a home inspection is a prudent step in the homebuying process. A comprehensive inspection can reveal potential problems or necessary repairs that may not be immediately apparent. This is especially critical when buying a FSBO property, as there might not be a real estate agent involved to facilitate this step.

Choosing a Home Inspector

Finding a qualified and experienced home inspector is paramount. Look for inspectors who are certified by a national association and who have a good reputation in your local market. Your home inspector should evaluate the following:

  • Structural elements: walls, ceilings, floors, roof, and foundation.
  • Systems: plumbing, electrical, and HVAC.
  • Other components: insulation, ventilation, windows, and doors.
  • Outside: drainage, driveways, fences, sidewalks, and any potential safety hazards.

After the Home Inspection

Once the home inspection is complete, you will receive an inspection report outlining any identified issues. Depending on the findings, you may:

  • Request repairs: If the inspector identifies any issues, you can ask the seller to make necessary repairs before closing.
  • Renegotiate the asking price: If there are significant issues that the seller is not willing to fix, you might renegotiate the price to account for the repair costs.
  • Walk away: In the case of severe problems, such as foundational issues or extensive water damage, it might be in your best interest to walk away from the sale.

Securing Financing

Once you’ve agreed on a sales price and completed the home inspection, the next step is to finalize your home loan. This stage requires careful consideration as it can significantly impact your personal finance situation.

Compare Mortgage Options

Start by comparing different mortgage options. Each loan type has its advantages and drawbacks, and the best one for you depends on your individual circumstances. A mortgage broker can be a valuable resource during this process, helping you understand the nuances of each option and finding the best fit for your financial situation.

Review the Loan Estimate

Mortgage lenders are required to provide a loan estimate within three days of receiving your application. This document outlines the specifics of your loan, including:

  • Loan amount: The total amount that you’ll borrow.
  • Interest rate: The cost you’ll pay each year to borrow the money, expressed as a percentage.
  • Closing costs: The expenses you’ll need to pay to finalize your mortgage, which can include origination fees, appraisal fees, and title insurance.

It’s essential to review the loan estimate thoroughly and make sure you understand all the costs involved. If something seems off, don’t hesitate to ask your lender for clarification. After all, this is a significant financial commitment, and you want to be sure you’re making an informed decision.

Closing the Sale

Closing a FSBO sale involves several key steps that vary slightly from a typical sale involving real estate agents. However, the primary goal remains the same: to legally transfer ownership of the property from the seller to you, the buyer.

Setting Up an Escrow Account

In real estate transactions, an escrow account is used to safeguard the earnest money — the deposit you make to show the seller you’re serious about buying the house. This account is managed by a separate legal entity, such as a title company or escrow company, ensuring the funds are protected until the sale is finalized.

Preparing the Paperwork

The closing paperwork can be quite extensive and typically includes:

  • The deed: This transfers ownership from the seller to the buyer.
  • The bill of sale: This outlines the terms and conditions of the sale.
  • The affidavit of title (or seller’s affidavit): This document states the seller owns the property and there are no liens against it.

It’s best to have a real estate attorney or a title company prepare these documents to avoid any mistakes.

Title Insurance and Closing

Your lender may require you to purchase title insurance. This protects both you and the lender in case any undisclosed liens or ownership disputes arise after the sale.

On the closing day, you and the seller will sign all closing documents. The funds held in the escrow account, including your down payment and closing costs, will be appropriately distributed, and the property’s ownership is legally transferred to you.

Post-Closing Steps: What Comes Next?

After the exhilarating process of buying a house, there are a few additional steps to take post-closing.

Utility Setup and Address Change

Ensure utilities are set up in your name, including water, electricity, gas, and internet. You should also update your address for any subscriptions, credit cards, bank accounts, and identification documents.

Understand Property Taxes and Home Insurance

As a new homeowner, it’s important to understand your obligations regarding property taxes and home insurance. Familiarize yourself with due dates and payment procedures to avoid late fees or potential complications.

Dealing with Potential Problems

If any problems arise with the home past closing, consult your home inspection report before paying for repairs out of pocket. If you’ve received a home warranty as part of the sale (which is different from home insurance), it may cover some of these post-closing issues.

Remember, buying a FSBO home might be more complicated than a typical sale, but the potential benefits, such as saving on the agent’s commission, make it an attractive option for many home buyers. With careful planning, research, and professional guidance, you can manage the FSBO homebuying process with confidence.

Conclusion

Though a FSBO transaction can be intimidating, with research and preparation, potential buyers can make the process go smoothly. Buying a house for sale by owner can offer significant savings and more room for price negotiation, as you bypass the real estate agent’s commission.

However, you need to remain diligent and informed throughout the process. Understand the local market, conduct a thorough home inspection, and engage professionals like a real estate attorney or title companies for a smooth real estate transaction. The homebuying process may be a marathon rather than a sprint, but with patience and perseverance, you’ll cross the finish line to your new home.

Source: crediful.com

Apache is functioning normally

For most Americans, having a car is a necessity. We need it to get to work, school, the grocery, the doctor, and all our weekly errands. Unfortunately, both new and used cars are expensive — and auto loan rates are on the rise as well.

So when buying a car, does it ever make sense to use a personal loan instead of traditional financing? We’ll break down the difference between personal loans and car loans and when you might want to use the former to buy a new set of wheels.

Personal Loan vs Auto Loan: An Overview

You can use a personal loan for almost anything, including buying a car. But why would you use a personal loan to purchase a vehicle when there are very specific loans — auto loans — to finance this purchase?

As we’ll see, personal loans can offer some benefits over car loans, including less buyer risk, no down payment needed, better negotiating power, and potential savings on car insurance. But car loans still have their place and may be cheaper in the long run.

Personal Loans

A personal loan allows you to borrow money from a bank, credit union, or lender to fund nearly any kind of purchase. People commonly use personal loans for debt consolidation, home renovations, weddings, vacations, and even new and used car purchases.

Personal loans can be unsecured (no collateral required) or secured (collateral required). For the sake of our personal loan vs. auto loan comparison, we’ll be looking at unsecured personal loans, as they’re more common.

Recommended: Types of Personal Loans

How Interest Rates Work on Personal Loans

Because unsecured personal loans aren’t backed by any collateral, interest rates tend to be higher than what you’d get for a car loan. Average personal loan interest rates vary depending on your credit score and the loan terms, but typically, they max out at 36%.

Most personal loans come with fixed rates, meaning your interest rate will stay the same over the life of the loan. It is possible, however, to get a variable-rate personal loan. Check out our guide to fixed vs. variable rate loans to figure out which is right for you.

Terms for Personal Loans

Personal loan terms vary by lender, but you can typically take out a loan with a repayment term of one to seven years. The faster you pay it off, the less you’ll pay in interest — but your monthly payments will be much larger.
💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

Car Loans

When buying a new or used car through a dealership, the dealer’s finance department can help you find a loan through a bank or credit union. Alternatively — or when buying from a private seller — you can shop around for a car loan from various banks and credit unions on your own.

Auto loans are usually secured loans, meaning the car you’re buying serves as collateral. This means, if you fall behind on payments, the lender can repossess your car. (It’s possible, but less common and more expensive, to get a car loan without putting the car up as collateral.)

How Interest Rates Work on Car Loans

The collateral on the car loan reduces the risk to the lender, which usually results in a lower interest rate. Still, auto loan interest rates depend on your credit score.

Car loan rates for both new and used cars have increased in recent years, but they’re still typically lower than the average personal loan rate. Notably, car loan refinancing rates are lower than regular financing rates.

Terms for Car Loans

Like personal loans, car loans might stretch 84 months (that’s seven years), but some are as short as 24 months (two years). Also like personal loans, it’s common to repay your car loan over three to five years.
💡 Quick Tip: In a climate where interest rates are rising, you’re likely better off with a fixed interest rate than a variable rate, even though the variable rate is initially lower. On the flip side, if rates are falling, you may be better off with a variable interest rate.

Can You Use a Personal Loan to Buy a Car?

Yes, you can use a personal loan to buy a car. In fact, you can use a personal loan for (almost) anything. However, it often makes more sense to get traditional vehicle financing when buying a car.

Recommended: Personal Loan Calculator

Is It Better to Get a Personal Loan to Buy a Car?

In some ways, it can be better to buy a car with a personal loan. You don’t have to stress about saving up for a down payment, there’s no risk of your car being repossessed, and you might even have more negotiating power at the dealership.

However, many buyers prefer the structure of an auto loan. These loans tend to be cheaper in the long run because of the lower interest rates. And they’re easier to get — both because of lower credit score requirements for car loans and because dealerships can help you find the best car loan for you.

Pros & Cons: Car Loan vs Personal Loan

Buying a car with a personal loan instead of an auto loan has its share of advantages, but there are also drawbacks to consider.

Pros

•   Less risk: When you take out a car loan, the car itself serves as collateral for the loan. If you miss enough payments, the lender could repossess your vehicle. With an unsecured personal loan, you don’t face that risk, though there are still consequences if you default on a personal loan.

•   More negotiating power: When you don’t have to go through the hassle of securing financing, the car buying process is much easier and faster for you and the dealer. That means you might be able to negotiate a better deal, like a discount for paying in full.

•   Lower insurance costs: When financing a car, the lender may require you to carry comprehensive, collision, and gap insurance. But when you pay for the vehicle outright with the funds from your personal loan, no one can require you to carry those car insurance coverages.

•   No need to save for a down payment: Personal loans don’t require a down payment. Though some have origination fees, you might even be able to roll those into the cost of the loan. That means you could use a personal loan to get a car with no money down.

Cons

•   Higher cost: Interest rates are typically higher for personal loans, which means you’ll end up spending more money on your car in the long run than you would if you got traditional auto financing. Origination fees for personal loans may also be higher than they are for car loans.

•   Higher credit score requirements: Because auto loans are secured by the vehicle being financed, lenders are a little more willing to work with lower credit scores. The credit score you need for a personal loan is typically higher (around 670), though this varies by lender.

•   More insurance risk: There may not be an auto lender requiring you to carry comprehensive, collision, or gap insurance, but declining those coverages just because your personal loan lender doesn’t mandate them could open you up to a lot of risk. If your car is totaled and you don’t have the proper coverage to get reimbursed, you’ll still be on the hook for making your personal loan payments — so think carefully before minimizing your car insurance coverage.

The Takeaway

Both auto loans and personal loans can help you get behind the wheel of a new (or used) daily driver. Determining which type of loan is right for you comes down to your needs and preferences.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Is it easier to get a personal loan or car loan?

Getting a car loan is usually easier than getting a personal loan. That’s because car loans are secured by the vehicle you’re buying. That means less risk to the lender, who will be willing to accept lower credit scores.

Should I take out a personal loan to buy a car?

While you can get an auto loan through a bank, credit union, or the dealership, you can also pay for a car with a personal loan. Personal loans reduce your risk — there’s no chance of your car being repossessed — and they may give you more negotiating power. However, personal loans typically cost more in the long run.

Am I allowed to use a personal loan to buy a car?

Yes, you can use a personal loan to buy a new or used car. In fact, you can use personal loans for just about anything. Just read the fine print of any loan agreement to make sure.

Photo credit: iStock/skynesher

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com