Repairs

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One of the monthly expenses many of us forget to include in our budgets is car repair and maintenance. Sure, we put down the price of gas, and maybe an oil change every two or three months, but we forget about most of the ongoing maintenance costs. Cars need regular maintenance over their useful lives, and most of us will pay through the nose to get it performed. But it doesn’t have to be that way. With parts bought online, some simple tools, and a little basic knowledge, many car repairs can be done without visiting a mechanic.

I talked to Richard Reina, the Training Director at CARiD, about some of the easiest car repairs you can do at home. You can find most of the replacement parts at CARiD or similar sites, plus many instructional videos and fact sheets that will ensure you have the help you need every step of the way. I also talked to several mechanics, including a family member who has had over 20 years of experience fixing cars. He, like many other experts, was adamant that with preparation, you can save a lot of time and money on repairs.

1. Change Your Own Brake Pads

When I first heard that, my reaction was “No way, I’m not messing with my brakes!” But as Reina points out, it’s a very simple and inexpensive procedure that mechanics and specialty brake shops will charge hundreds of dollars to do. The industry wants you to think it’s hard, because they make a lot of profit from a very simple procedure, but pads are way easier to replace than old fashioned drum brake “shoes.”

All you need is a wheel lug wrench, some basic wrenches, pliers, and of course a jack and set of jack stands (never get under a car unless it is on jack stands; you cannot rely on the jack as it may fail).

A set of new brake pads will set you back just $20–$40, depending on the car and pad material. Compare that to the industry average of $250 per axle, and you can see how much this DIY job will save you. The procedure is basic. Take off the wheel, remove the hardware, pull out the worn pads, push in the caliper piston, install the new pads, and reinstall the hardware. You should be able to do all four wheels in under an hour, even if this is your first time doing the job. The new pads will last between 30,000–50,000 miles, and you should check them every 10,000 miles. When the pad thickness falls below 2mm–3mm, it’s time for another replacement set.

2. Change the Battery

It amazes me how many people will get a shop to replace the battery, since this is by far the easiest of all DIY repairs. A battery will last 4–6 years, so you should be able to figure out when your current battery is ready to be changed. (Almost every battery will have a date stamped on it, so look for this if you want to be sure.) You do not want to wait until you start having problems. If you do, you could be stranded with a dead battery, and that’s dangerous for many reasons.

The average price of a new battery is around $80, although you can spend more or less depending on the make and model. A dealer will charge upwards of $200 to replace it.

To do the swap, you just need a basic set of wrenches. The biggest warning here, Reina says, is the order in which you remove the replace the cables. Remove the NEGATIVE (black) cable FIRST, and when you have installed the new battery, replace the NEGATIVE cable LAST. If you don’t do it this way, you could short circuit the positive (red) terminal to a grounded part of the car.

3. Do Your Own Oil Change

A typical quick lube place could charge anywhere from $30 to $70 for an oil change. Some can go as high as $90–$100, especially if you own an expensive import. But then you see signs like $15 oil change and think, “Well I’d pay that for the oil and filter anyway, so why not let them do it for me?”

Here’s why. First, there is always an asterisk on those oil changes. They come with conditions, and may not include the correct amount of oil required for your engine (this happens a lot when you bring in an SUV or truck). You will also be given a low-grade oil, rather than a full synthetic or even a synthetic blend. And most importantly, the cheap oil change is a loss leader.

The loss-leader oil change is a great way to get you to hand over your car to the garage so that they can get under the hood and see if it has problems. A reputable place won’t find any unless there are genuine problems. Others, well, let’s just say they find problems that don’t need attention.

Suddenly, the $15 oil change has become thousands in major repairs. Poor establishments will use high-pressure tactics to get you to sign up for the work, and you may not even get the chance to get a second opinion.

So, do it yourself. Buy a good quality oil filter and the best oil you can afford from your local supplier (it can be an auto specialist or a retail store). Other than jack stands and a jack, you’ll need an oil filter wrenchand a drain pan. These only have to be purchased once and will last you decades (my father-in-law has been using the same drain pan for 20 years). You can find videos online walking you through oil changes on a variety of different vehicles.

And one final note. As Richard Reina points out, the days of the “every 3,000 miles” oil changes are long gone. Vehicles these days can often go 10,000 miles between oil changes. Check your manual.

4. Change Your Spark Plugs

There is an episode of the iconic TV series Frasier that shows Niles and Frasier Crane attending an automotive workshop. The very first lesson is how to change spark plugs. It’s one of the easiest home repairs you can do, although these days it is very rare you’ll even have to perform this service. On modern cars, extended-life spark plugs can maintain a precise gap for 100,000 miles. However, it is still wise to check them every 30,000-40,000 miles, just to make sure.

When the time does come to replace your spark plugs, along with your regular set of tools you will need a spark plug wrench. Again, this is a “buy once, use for a lifetime” kind of purchase, and it’s not very expensive (under $10 in most cases). (WikiHow has a great instructional piece here.) And the savings…let’s just say it’s significant. You can pay over $300 for spark plugs to be changed, and spark plugs themselves are rarely more than $30 for a set.

5. Replace a Headlight or Taillight

If you are a good car owner, you will perform a regular walk around of your vehicle. It’s important to do this for many reasons, but one of the biggest is to check that all the lights are working. Not only are lights essential for clear vision, and alerting drivers to your intentions, but you can also incur traffic tickets if they aren’t working. So, try and do this at least once a month (you’ll need someone to help you check the taillights).

If one (or more) isn’t working, it’s time to buy a replacement and do it yourself. With the average hourly repair rate of a garage being $100, you could easily spend $25–$50 per bulb, especially if the shop has a minimum charge.

One of the most important things to do is bring the old bulb with you to the store. You want to make sure you are getting like for like. And, when it comes time to change it out, never touch the bulb glass with your bare hands. The grease from your fingers can cause the bulb to burn out early.

6. Replace Your Windshield Wipers

Some people go to a garage or dealership to have their windshield wipers replaced. This is, without a doubt, a massive waste of your time and money. A set of wipers will run you between $20 and $40 on average, plus the dealer will charge you one hour of labor (that’s about $100). Don’t throw your money away. It takes minutes to replace the wipers on your vehicle yourself, and all of the instructions are provided in the replacement wipers you buy.

When you go to a store — say Walmart or Target — they’ll have a reference manual (these days it’s often a small electronic terminal) which will tell you which wiper sizes you need to ensure a correct fit. In most cases, the old wipers slide out, and the new ones slide in. The last time I changed my wipers, it took two minutes for both…and most of that time was spent trying to hack open the vacuum-sealed plastic package!

7. Replace Your Air Filter

Richard Reina pointed out another simple fix that mechanics and dealerships will heavily mark up with labor costs and parts. And yet, it is a very quick fix (in most cases…if you happen to own a German import, you may have a few extra parts to remove to access the filter). On average, you’ll pay over $100 in labor costs, and $50 for the filter.

The typical cost of an air filter from a retail store is between $15–$20, but again, this can be higher depending on the make and model of your car. In most cases, you will simply have to open up the hood of the car, turn a few screws, open the air filter housing, swap out the old for the news, and replace the screws. It really is that simple, and you can save a ton of money doing it yourself.

8. Fix a Chipped Windshield

I recently had to do this one myself, and I can tell you…it’s so simple. I had a small rock chip in the windshield. I was tempted to go by one of those “fix it free” places that hang out near malls, but they operate through your insurance company, and I wasn’t keen on going through all that for a simple rock chip.

On Amazon or eBay, you can find windshield repair kits for under $15. Some run as low as $8. When you get it, all you need to do is dig out any loose glass with the pin provided, and then thoroughly clean it, and the surrounding area. You will have to stick a small device to the windshield that forms a seal around the rock chip, and then a vacuum contraption will work to apply the resin into the crack. It’s an operation that takes less than one hour, from opening the package to the finished result, and most of that is simply waiting time. Stop that crack from spreading, before you need to replace the entire windshield. That can be costly.

This article first ran on Wisebread.com, a community of bloggers here to help you live large on a small budget. Read more from Wisebread:

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The American dream for many people may be to become a homeowner, but it doesn’t always make sense to buy. There are times when it makes more sense to rent. After graduating college, I was still single (but dating my future wife to be) and I had the opportunity to buy a house with some buddies of mine. Having the mentality that it’s always better to buy than rent I almost nearly pulled the trigger. Luckily, “sense” kicked in (or should I say my future wife 🙂 ) and I opted to not buy it. Primarily, because we had no idea what the future held and it made more sense to just rent and leave our options open. In our case it didn’t make sense to buy, but that could be different for your situation. If you’re thinking about buying a house, here are some tips to know when renting makes more sense:

Your Credit Is Less Than Great

While it’s often possible to obtain a mortgage with a less-than-perfect credit score, the lower your credit score the higher your interest rate will be. A FICO score that’s below 620 will pretty much guarantee the only mortgage lender you qualify for will be a “predatory lender”. Until you’re able to improve your credit score, people with low credit scores might want to consider renting instead of buying a home.

Although young, this did not affect us. We had excellent credit scores at the time and that proved to be vital when it was time to buy our first home.

Frequent Job Relocation or Employment Instability

Does your job require you to relocate often, or is there a chance you will have to relocate sometime within the next few years? If you have to sell a home, it needs to appreciate a minimum of 10% in order to cover the expenses associated with selling. If your home doesn’t have time to appreciate in value, you’ll lose money when you sell it. One common example is if you are in the military where you’re always on the move. Unless you are quite certain you aren’t relocating any time soon, renting is probably a better solution.

While there is no such thing as job security, you probably have a reasonable idea whether or not you have a chance of being laid off or fired. Keep in mind that compensation during unemployment is rarely (if ever) enough to replace your lost income; and during tough economic times you can’t assume you’d be able to run out tomorrow and find a new job. If there is a good possibility you could be laid off or fired, renting makes more sense. When you rent a home, you may have to downgrade to a lower-rent apartment; but if you own a home and can’t keep up with the mortgage payments, you’ll go into foreclosure and damage your credit.

Unable to Afford Home Maintenance and Repairs

When you buy a home, you need to consider more than just the mortgage and taxes associated with the home. Experts predict that homeowners need about 5% of the home’s purchase price available to maintain the home or make repairs. I know that I’m no “Jack Handy”, so if something breaks; I’m calling the repair man to fix it. After paying the routine expenses of owning a home, will you have additional funds available for maintaining and repairing it? If not, renting is a better option since the landlord or management company is responsible for maintenance and repairs of the property.

When Renting Costs Less

Finally, one of the most obvious reasons for choosing to rent instead of buying a home is when renting simply costs less. If you can rent a property for $2,000 a month and it would cost you $6,000 a month to own a similar property – does becoming a homeowner make financial sense? Some people argue that the tax deductions available for homeowners actually make home owning more attractive than renting, but the deductibles rarely add up to the additional expenses paid.

If you’re still not sure that’s why it always makes sense to to talk with qualified financial planner or tax professional to help analyze your situation. I’ve seen too many cases where young people were so eager to “live the American Dream” and get their first home that they didn’t realize all the little things that come along with being a homeowner. Slow down and do your homework before you take the plunge. Remember the friends that ended up buying the house we were living in? They still own itand have been trying to sell it for over two years.

Source: goodfinancialcents.com

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Table of Contents

FAQ

What is the VA Loan Limit?

2021 VA Home Loan Limit: $0 down payment up to $5,000,000* (subject to lender limits) /2 open VA loans at one time $548,250 (Call 877-432-5626 for details).

How to Apply for a VA Home Loan?

This is a quick look at how to apply for a VA home loan in Sutter county. For a more detailed overview of the VA home loan process, check out our complete guide on how to apply for a VA home loan. Here, we’ll go over the general steps to getting a VA home loan and point out some things to pay attention to in Sutter County. If you have any questions, you can call us at VA HLC and we’ll help you get started.

  1. Get your Certificate of Eligibility (COE)
    • Give us a call at (877) 432-5626 and we’ll get your COE for you.
  2. Are you applying for a refinance loan? Check out our complete guide to VA Refinancing.
  3. Get pre-approved, to get pre-approved for a loan, you’ll need:
    • Previous two years of W2s
    • Most recent 30 days paystubs or LES (active duty)
    • Most recent 60 days bank statements
    • Landlord and HR/Payroll Department contact info
  4. Find a home
    • We can help you check whether the home is in one of the Sutter County flood zones
  5. Get the necessary inspections
    • Termite inspection: required
    • Well or septic inspections needed, if applicable
  6. Get the home appraised
    • We can help you find a VA-Certified appraiser in Sutter County and schedule the process
    • Construction loan note: Construction permit/appraisal info
      1. Building permit
      2. Elevation certificate
  7. Lock in your interest rates
    • Pro tip: Wait until the appraisal lock in your loan rates. If it turns out you need to make repairs, it can push your closing back. Then you can get stuck paying rate extension fees.
  8. Close the deal and get packing!
    • You’re ready to go.

What is the Median Home Price?

As of March 31st, 2021, the median home value for Sutter County is $361,352. In addition, the median household income for residents of the county is $59,050.

How much are the VA Appraisal Fees?

  • Single-Family: $600.
  • Individual Condo: $600.
  • Manufactured Homes: $600.
  • 2-4 Unit Multi-Family: $850.
  • Appraisal Turnaround Times: 10 days.

Do I need Flood Insurance?

  • The VA requires properties are required to have flood insurance if they are in a Special Flood Hazard Area.
  • About half of Sutter County is considered a flood hazard area. Mostly due to irrigation of its farmlands.

How do I learn about Property Taxes?

  • Todd Retzloff is the Sutter county tax assessor. His office can be reached at 1190 Civic Center Blvd. Tuba City, California 95993. In addition, his office can also be reached by calling (530) 822-7160.
  • The state of California offers various incentive programs that expand statewide for new, growing, and relocating businesses. Two of these programs are California Competes Tax Credit which offers qualifying businesses tax credit and the New employment Credit program which offers a tax credit for taxpayers who hire full-time employees. These and many other programs help in further diversifying the state’s economy.

What is the Population?

  • As of 2019, Sutter County’s population is 96,971 which includes about 6,129 Moreover, demographically speaking, 45% of the population is White, with 31% Hispanic, and 17% Asian.
  • Most county residents are between 18 and 65 years old, with 25% under 18 years old and 15% older than 65.
  • In total, the county has about 32,360 households, with an average of three people per household.

What are the major cities?

The county has two cities, including Yuba city which serves as the county seat, and Live Oak.

About Sutter County

Originally home to the Maidu Indians, the county is one of the original counties in California having been created in 1850. In addition, Sutter County was named after John Augustus Sutter, one of the first people to recognize the Sacramento Valleys’ potential as an agricultural empire.

Today, the county is home to the largest dried fruit processing plant in the world. In addition, the county is home to employment industries like healthcare, retail trade, and agriculture. Therefore, the most common occupations in the county are in the office, sales, and management sections.

Educationally speaking, the county is home to eight school districts which range from pre-k to senior year in high school. In addition, the county has higher education opportunities like Cambridge Junior College-Yuba City and Sutter Beauty College.

In addition to its workforce and educational institutions, the county is also home to several artistic and cultural institutions like Community Memorial Museum. In addition, the county is home to several recreational facilities like Live Oak Park which is open for camping with picnic tables, firepits, and barbeque.

Finally, the county is also host to annual celebration events like the Sikh Parade, which stretches for 4.5 miles, and the California Swan festival. The county is a great place to live in and raise a family.

Veteran Information

The county is currently home to 6,129 veterans.

  • County Veteran Assistance Information
    • Ube-Sutter Counties Veteran Service Office – 5730 Packard Ave. #300, Marysville, CA 95901.

VA Home Loan Information

  • For more information about VA Home Loans and how to apply, click here.
  • If you meet the VA’s eligibility requirements, you will be able to enjoy some of the best government-guaranteed home loans available.  
  • VA loans can finance the construction of a property. However, the property must be owned and prepared for construction as the VA cannot ensure vacant land loans.

VA Approved Condos

There are currently no VA-approved condos available within Sutter County. However, it is still possible to get a condo through the approval process. Call us at (877) 432-5626 and we will assist you through the process.

Source: vahomeloancenters.org

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What Is an Investment Property Loan? – SmartAsset

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Real estate can be a great addition to your portfolio if you’re hoping to diversify and create passive income. And investment property loans can make it easier to purchase property if you’re interested in owning real estate directly. However, qualifying for an investment property loan is a little different from getting a mortgage to buy a home that you plan to live in. It helps to know what to expect and what’s required before wading in. Here’s what you need to know.

You can also talk to a financial advisor about the pros and cons of borrowing to purchase an investment property.

Understanding Investment Property Loans

Investment property loans are loans that you can use to buy a property that you plan to generate income from. You would do that by leasing it to one or more tenants who pay rent back to you on a monthly basis.

Generally speaking, you can use an investment property loan to buy a property that has between one and four units. The types of properties you may be able to buy include:

  • Single-family homes
  • Multi-family homes, such as a duplex or triplex
  • Condominiums or townhomes
  • Manufactured homes

There are also investment property loans for investors interested in flipping real estate. Rather than generating a steady stream of passive income, flippers aim to purchase a property at a low price and renovate it, then resell it at a higher price to turn a profit.

Investment Property Loan Requirements

Is it easier to get an investment property loan versus a mortgage to buy a primary home? Not necessarily, as lenders typically impose more requirements for investment property loans.

Compared to a traditional purchase loan for a home, loans for investment properties may require you to have:

  • Higher credit scores
  • More cash in reserves
  • A larger down payment
  • Evidence of past experience with managing investment properties

You may also need to provide additional details about the property itself. This includes information about the neighborhood where it’s located, how much rental income it’s currently generating and estimates of how much income you expect it to produce once you own it.

Why is getting a loan for an investment property more challenging? One simple reason: These loans can pose a greater risk to lenders.

Let’s say that you have a main home that you live in, which has a mortgage. And you have a second home as an investment property. If your renters don’t pay up or you can’t keep the second home rented long-term, that could put you in the position of having to stop making the mortgage payment in order to keep up with the loan on your primary home.

Once the loan goes unpaid long enough, it goes into default which can lead to other consequences, including foreclosure. Lenders don’t want borrowers to default on investment property loans, which is why they can make it harder to qualify.

Types of Investment Property Loans

If you’re interested in getting a loan to buy an investment property, you have more than one option. Banks, credit unions and online lenders can offer investment property loans.

The range of loans you have to choose from can depend on the lender, while the loan terms that you’re able to qualify for can hinge largely on your credit score, income and the specifics of the property.

The main types of investment property loans include:

Conventional Loans

A conventional loan may be your first choice if you’re planning to buy a single-family home as an investment property. Conventional loans can offer fixed rates and longer loan terms, but you’ll likely need a higher credit score to get the lowest rates.

FHA Loans

The Federal Housing Administration (FHA) allows you to use FHA loans to buy investment properties with multi-family homes with up to four units. There is one requirement: You’ll need to live in one of the units for at least 12 months to qualify.

VA Loans

Veterans and military service members can use the VA loan program to purchase investment properties with as many as seven units, with no money down. Similar to FHA loans, borrowers must live in one of the units to qualify.

Owner Financing

A less traditional option for buying an investment property is owner financing. With this type of arrangement, you borrow from the seller and make payments back on a set schedule. This type of loan agreement may require you to make one large balloon payment at the end of the term.

Home Equity Loans

If you own a home and have a significant amount of equity, you could borrow against it to buy an investment property. A home equity loan provides you with a lump of money that you might use to buy a second home to rent out. Similar to first mortgage loans, home equity loans can offer fixed rates and lengthy terms.

Hard Money Loans

Hard money loans or bridge loans are more commonly used to purchase fix and flip properties. With these loans, you can get the money you need to buy the property and renovate it, but you typically have to pay it back within 12 to 18 months.

When searching for an investment property loan, it’s important to check the minimum qualification requirements first. That can help you weed out loan options that aren’t a good fit. Once you’ve narrowed down the list, you can take a second look to compare interest rates, down payment requirements, fees and loan terms.

How to Get an Investment Property Loan

Getting an investment property loan is something of a process and you may need a little patience to get through it. Here are the main steps involved in getting loans for investment property:

Find a Lender

The first thing you’ll need to do is find a lender that offers investment property loans. You can start with your bank. Then branch out to other banks, credit unions and online lenders to see what options are available.

Apply for a Loan

Next, you’ll need to apply for the type of loan you’re interested in getting to purchase an investment property. At a minimum, you’ll need to provide your personal information along with some details about the type of property you want to buy and the loan amount you’re seeking.

Provide Documentation

Any time you’re applying for a mortgage, the lender will ask for certain financial documents, including tax returns and bank statements. You’ll also need to share any information you have on the property, including its current rental income if available.

Get the Property Appraised

The appraisal determines how much an investment property is worth. A thorough appraisal should also provide you with details of comparable rental properties in the area and the income they generate.

Close on the Loan

Assuming that you’ve checked off all the lender’s boxes, the final step is closing on the loan. At this stage, you’ll need to review and sign the loan paperwork, transfer your down payment to the lender and pay any closing costs due.

Bottom Line

Investment property loans can help you get a step closer to your financial goals if they include owning real estate for passive income. Before applying for a loan, it’s important to understand what’s required to qualify, as well as what you might pay in interest and fees.

Investing Tips

  • Real estate can be a great investment though owning rental property isn’t necessarily right for everyone. Talking to your financial advisor can help you weigh the pros and cons if you’re unsure whether property ownership is a good move. If you don’t have a financial advisor yet, finding one doesn’t have to be difficult. SmartAsset’s financial advisor matching tool makes it easy to connect with professional advisors in your local area. You can get personalized advisor recommendations just by answering a few simple questions. Get started now.
  • While the upfront cost might be your main focus when getting an investment property loan, it’s important to consider the longer-term cost of owning rental property. In addition to mortgage payments, you’ll be responsible for maintenance and upkeep, repairs, property taxes and insurance. All of those things can affect your profits when renting property, so remember to look at the bigger financial picture before you buy.

Photo credit: ©iStock.com/xijian, ©iStock.com/venuestock, ©iStock.com/rkankaro

Rebecca Lake, CEPF®
Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.

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What is your home worth? What should you pay for your new home? While you can check your estimated value on a bunch of different websites for free, we recommend you tap the expertise of someone who can give you a more definitive answer of your home’s value based on similar properties in the market. That person is called an appraiser. Now let’s learn more about the appraisal process!

Who is an Appraiser?

An appraiser is someone who is certified in doing research and determining the fair value of homes. They determine a home’s value based on square footage, lot size, features, finishes, and other unique things about it. In addition to what makes up the home, the appraiser looks at the surrounding area. That includes school districts, the city, and other outside influences. An appraiser is a key player in the purchase or sale of a home.

A buyer’s lender typically requires that an appraiser comes to confirm the contract value of the home. This is all done to make sure that the buyer isn’t overpaying for the property and the lender has adequate value to cover the loan amount.

Sellers sometimes bring in appraisers to help them price their home right, but it is not necessary and many real estate agents help seller’s price their home. Some brokers even have dedicated pricing specialists to do the important work of determining the right list price.

What Happens During an Appraisal?

The appraiser evaluates the home in question by reviewing all the important stuff, as listed above. If housing prices were stable over time, the job would be done at that.

The reality is, the housing market fluctuates. To assess the strength of the housing market in the home’s specific area, the appraiser will research the prices of homes sold recently in nearby neighborhoods. They will look at the homes comparatively based on what they had to offer buyers.

How Much Does an Appraisal Cost?

Home appraisals typically cost between $400 and $500.

Appraisals are usually requested by the lender after the home is under contract. However, if you’re selling and are not sure where to price your home, you can purchase one early. A good option for this is the economical desktop appraisal.

Sellers who use Homie are provided with a value report, which is like a desktop appraisal. This service is performed by a dedicated pricing specialist who uses comparable home sales and local market knowledge to determine the value of your home. Unlike a full appraisal, a value report does not include a visit to your home and does not replace a full appraisal for a buyer who is planning on taking out a home loan.

Do I Need to Get a Home Appraisal?

Federal regulations require lenders to hire an independent appraiser for each new loan, which means that buyers must have the home appraised even if the seller has already had it appraised.

Home inspections are often confused with appraisals, but they are separate and performed by different licensed companies. A home inspection is conducted by an inspector who checks the build of the home to make sure everything is in good working order. They look over everything from roofing to plumbing and door jams to light switches.

They don’t assess the value of the home. An appraiser for example, may use the condition of the home to determine the value but the inspector will tell you exactly what’s broken and needs repair.

What to Do for an Appraisal

If you’re selling your home, you want to sell for the highest amount possible. This means when it’s time for the lender appraisal, you want to show the home at its best.

On the day of the home appraisal, be your home’s best advocate. Jot down a list of any improvements you’ve made to the home, like upgraded counters or a new water softener. Leave this list for the appraiser.

Make sure the lawn is mowed, the house smells sweet, the blinds are open and the surfaces aren’t cluttered. Theoretically, little details like this shouldn’t affect the price of a home, but you want to make a good impression. Don’t worry about a large renovation like finishing a basement but if you were going to repair something anyway now would be the perfect time. Most often large renovations or repairs don’t increase the value of your home by as much as they cost to complete. Instead, focus on showing off what’s already there and making sure that every part of your home is clean and in good repair.

What Happens After I Get an Appraisal?

Good question. Once the appraisal is complete, it is sent to the buyer’s lender or bank. In cases where the buyer is putting a relatively small down payment on the home (less than 20%), banks will approve loans only when the estimated appraisal value is the same or greater than the sale price of the home.

Sound confusing? Let’s talk about it.

Imagine a house gets an offer of $300,000 but only appraises for only $250,000 and the buyer is only putting 10% down (in this case $30,000)The bank may not fund a loan for the home at the higher asking price. It will not lend $300,000 for a house that, in the case of a default, might only sell for $250,000 because that would leave the bank short on its investment.

If you are in the process of purchasing a home and the home appraisal comes back lower than the negotiated sale price, you have some options.

What happens if you really want the house? Many buyers will try to renegotiate the sale price if the appraisal comes in low. If the seller is unwilling to lower the price, buyers can walk away. If the buyer is still absolutely in love with a home they can choose to increase the down payment amount so the lender approves the mortgage. Adding to the down payment decreases the amount the bank has to fund for the home.

If the appraisal comes in low, you should consult with your real estate agent about your options.

Got a Home You Want to Sell?

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Source: homie.com

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You probably already know that homeowners insurance covers your house and everything in it, but there’s actually a lot more to your policy. Depending on the circumstances, your homeowners insurance could also pay for a hotel stay, a suitcase stolen on vacation or even a lawyer to defend you in a lawsuit. Here’s a peek at a few useful features that might be available in your policy.

1. Living expenses if your home is damaged

Say an electrical fire leaves your home unsafe to live in. You don’t have to pay out of pocket for a hotel or crash on a friend’s couch for months on end while waiting for repairs.

Instead, turn to your loss of use coverage. This part of your policy can help you “maintain your normal standard of living,” says Justin Skipton, a vice president for the National Association of Public Insurance Adjusters.

For example, your policy could pay for an extended-stay hotel or a rental apartment where you can have a full kitchen plus space for kids and pets, Skipton says. You can also get reimbursed for things like extra transportation costs if your rental home is farther away from work or school.

Your insurer will often cap your expenses at a certain percentage of your dwelling coverage limit, says Alaina Hixson, director of sales and operations at The Churchill Agency in Brentwood, Tennessee.

So if you have $200,000 of insurance on the structure of your house and your loss of use coverage is 20%, you’d have up to $40,000 to put toward living expenses while you’re away from home. Time limits may apply, such as 12 or 24 months.

Note that your costs should be reasonable. “If your $150,000 house burns down, you’re not going to be able to stay at The Ritz-Carlton or some high-end hotel for a year while you rebuild,” says Rich Johnson, director of communications for the Insurance Council of Texas.

2. Your belongings away from home

If someone breaks into your hotel room and steals your stuff while you’re on vacation, your homeowners insurance may pay to replace the lost items.

“Most insurance policies give you coverage for your personal property anywhere in the world,” Skipton says. “But sometimes they’ll limit the amount of that coverage.”

For instance, your coverage amount for items outside your home may be 10% of your total limit for personal property coverage. If your belongings are insured for $100,000, you’ll have $10,000 worth of coverage for items outside your home.

In addition to travel, this coverage could be useful if you have stuff in a storage unit or a child living in a college dorm. Check with your agent or read your policy to see what limitations apply.

Note that personal property coverage generally comes with a deductible, an amount subtracted from your claim payout. So if someone steals your $500 laptop from a cafe but you have a $1,000 deductible, you won’t get any benefit from filing a claim.

3. Lawsuits and liability claims

Few homeowners expect to be sued — but if you are, your insurance company might have your back.

The personal liability section of your policy covers you if a member of your household is responsible for someone else’s injury or property damage. That could include scenarios like your dog biting someone at the park or a delivery person slipping on your icy front steps. Your policy can cover medical expenses as well as lost wages if the injured person has to miss work, Johnson says.

If the other person sues you instead of just filing a claim, your insurance company will generally pay to defend you in court, Hixson says. It will also cover legal damages up to your policy limit.

Note that some companies won’t insure dog breeds they consider aggressive, such as pit bulls, Johnson says. And liability coverage covers accidents or negligence — not crimes or intentional harm to others.

4. Unusual losses

Homeowners insurance also covers a few oddities, including space debris and burial plots in cemeteries.

“If a satellite falls on your home, you’re covered,” Johnson says. That’s because standard homeowners insurance pays for damage from falling objects. Meteors and asteroids could also fall into this category.

In addition, your policy may cover headstones, mausoleums and other grave markers that you’re responsible for, Skipton says. For example, if you purchased a memorial for your deceased spouse and someone vandalized it, your policy could pay for repairs.

Your own homeowners policy may hold even more surprises. To discover them — and to make sure you have the coverage that’s most important to you — reach out to your agent, Hixson says. “Make sure you’re asking questions.”

Source: nerdwallet.com

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Ready? Set? The time to prepare for your home sale is NOW!

Start now and you’ll be set to list during the peak home-selling season, ensuring you get top-dollar for your house. 

Spring is almost here. Bears leave hibernation and people get moving. Literally.

That’s right. Spring and summer consistently see a greater volume of home sales than fall and winter. Why? Are you kidding? Who needs more reason than a simple aversion to moving in cold, dark weather? Besides that, moving in the winter interrupts the school year for those folks who have kids. Plus, homes show better when flowers are blooming and grass is green. You and the rest of the nation are probably dreaming of flowers this very February minute. It’s not a secret. Spring and summer pretty much rock for home sales.

Not only do houses typically move faster during the on-season, they sell for more money. This is probably due to the high demand for houses and a sense of “time running out” as autumn, and the school year, approach. An influx of buyers can create a situation called a bidding war, when more than one buyer offers on a house. This sometimes causes the house to sell for higher than the asking price as buyers compete.

How do you get in on this fast-selling, high-price season?

Imagine it. You wait until the weather is nice and buyers are already shopping. You start thinking about how you want to sell. Then you trip on the broken grate of your fireplace which you didn’t see because of the missing lightbulb overhead. You realize that fixing up the flaws in your home is 1) the only way to get the best price for it, and 2) a time-consuming process. Buyers are already touring the homes they will buy and you’re not on the race track. You’re not ready to list and you won’t be anytime soon, potentially for months.

Now imagine instead that you look February in the eye and declare that it’s no match for you. That’s right.

You prep your home now.

Start with these six steps and come back to our blog often. Over the weeks, we will dish out tips on what you can do to get your home sold at a good price.

  1. Shop Homie and other websites as if you are a buyer looking for a home in your neighborhood. Learning a market is best done over time, not in a cram-session. For the next month, search new listings daily to get a sense of what sells quickly and where prices are at. This will help you know how to price and show your home.
  2. List problem areas of your home. Walk the home and property. This might require a jacket, but it’s worth it. Write down everything that doesn’t function properly or is unsightly.
  3. Prioritize your repairs and upgrades. Organize your list of problem areas from the most to the least important. Think small-to-large and front-to-back. In other words, now is not the time to tackle large renovations, which do not always give a full return on investment. List first the small things that will repair quickly and inexpensively, with an extra focus on items that will be seen first by potential buyers. So, the front of the house, the front rooms, and the kitchen. You may not get to all items.
  4. Get estimates for the repairs you hope to make and set aside money for them. Putting money into the house during this phase of home-selling is a wise investment, as serious buyers often walk away from homes that need too much work. Other buyers will give low-ball offers because they sense that the seller is not truly prepared to show the home well.
  5. Set a deadline for when you hope to put your house up for sale. You can always bump it back, but having a goal helps to organize your repair personnel and your own time. There will be bumps along the way. Don’t lose hope! The housing market is strong and by starting early, you have more time on your hands than most.
  6. Contact Homie. When it comes to selling homes, Homie’s got your back. Homie quickly and painlessly walks you through the first steps to the last without the traditional 6% commission fees. Some of the steps to selling a home can even be done with the touch of a button on your phone! So relax. Selling a home has never been cheaper—or easier. Sign up to sell with Homie today.

Note: This post is the first of our Home-Sellers’ Journey series, where we walk you through every step of selling a home during peak season. For more details on selling your home, visit our post How Homie Helps You Sell Your Home and be sure to check back soon for our next post in the series, Tips for Staging Your Home.

Source: homie.com

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How to Refinance a Home Equity Loan

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Taking out a home equity loan could make sense if you need cash for home improvements, repairs or other expenses. You might be wondering if you can refinance home equity loan debt to get a lower interest rate or change your payment terms. The short answer is yes, refinancing a home equity loan is possible, though there are some requirements you’ll need to meet to qualify.

Talking to your financial advisor can help you decide if home equity loan refinancing makes sense.

Understanding Home Equity Loan Refinancing

Home equity loans allow you to tap into your equity value for cash. A home equity loan is a type of second mortgage that you repay with interest, in addition to your primary mortgage loan. Home equity loans typically have fixed interest rates and repayment terms can extend up to 30 years.

Refinancing a home equity loan means taking out a new loan to pay off the old one. You’d then make payments to the new loan at the terms set by the lender. And you’d still be responsible for making payments to your primary mortgage as well.

Reasons for Refinancing Home Equity Loan

There are several scenarios when refinancing a home equity loan or any type of mortgage could make sense:

  • Changing your rate. First, you might refinance if it would allow you to get a lower interest rate. Reducing your interest rate could save you money on the loan and it may result in a lower monthly payment as well.
  • Getting different loan terms. For example, say that your original home equity loan has a 20-year term, but you’d like to extend it. You could refinance it into a 30-year loan instead. You can also do the reverse and refinance a longer loan for a shorter term, though that can mean a higher monthly payment.
  • Switching loan types. If you have a variable rate home equity loan you might refinance to a fixed rate. Doing so could give you some predictability where your payments are concerned since you don’t have to worry about interest rate fluctuations affecting what you pay.
  • Taking out more equity. If your equity has increased since you took out a home equity loan, you might refinance it to draw out more cash. Just keep in mind that doing so means you’ll have a larger mortgage debt to repay.

Advantages of Home Equity Loan Refinancing

Refinancing a home equity loan can offer some benefits to homeowners. Here are the main pros to know about home equity loan refinancing.

  • Refinancing a home equity loan could save you money if you’re able to get a lower interest rate.
  • You might be able to lower your monthly payment, either by reducing the interest rate or changing the loan terms.
  • Choosing a shorter repayment term could help you pay off a home equity loan faster, freeing up money for other financial goals.

It’s helpful to understand what you hope to get out of refinancing home equity loan debt before making a move. That can also help you decide what kind of loan terms make the most sense.

Disadvantages of Home Equity Loan Refinancing

While there are some good reasons to refinance home equity loan balances, there are a few cons to know.

  • Refinancing may save you money on interest but you’re essentially just shuffling debt around.
  • Your lender may expect you to pay closing costs on the refinance loan and there may be a prepayment penalty if you decide to pay it off early.
  • Qualifying for home equity loan refinancing might be difficult if you don’t have sufficient equity or meet the lender’s minimum credit score and income requirements.

It’s important to note that refinancing into a longer loan term may not save much money, even if you’re getting a lower interest rate. The longer you pay on the loan, the more you’re paying in interest overall.

Using an online mortgage refinancing calculator can help you estimate your savings with different loan terms.

How to Refinance a Home Equity Loan

If you’d like to refinance your home equity loan, a good first step is calculating how much equity you have in the property to determine how much you might be able to borrow. Lenders will look at your loan-to-value (LTV) ratio, which is the loan amount divided by the property value. Generally speaking, a good LTV for mortgage refinancing is 80% or less.

Once you’ve done that, you can move on to the next phase which includes:

  • Shopping around to find the right lender to work with.
  • Applying for a refinance loan and submitting the required documentation
  • Completing the appraisal if the lender requires one.
  • Reviewing the loan disclosures to make sure you understand them.
  • Closing on the loan and paying any costs due.

When comparing lenders, it’s helpful to look at the minimum requirements to qualify for a home equity loan refinance, including LTV and credit score requirements. It’s also a good idea to check the costs. For example, will you need to pay closing costs out of pocket or are they rolled into the loan? Will you be charged a prepayment penalty if you pay the refinance loan off early?

In terms of documentation, the lender may ask for the same things that were required to get your first mortgage loan. The list can include tax returns, W-2s, bank statements and investment account statements. The more documentation you have to demonstrate your ability to pay, the better.

If the lender gives you the option to roll closing costs into the refinance loan, consider the pros and cons before agreeing. On the one hand, you won’t have to pay any money out of pocket to complete the refinance process. However, you’re still going to pay those closing costs over time and with interest since they’re included in the loan.

The Bottom Line

Refinancing a home equity loan is something you might consider if you’re ready to make changes to your existing loan or want to draw more equity out of your home. Estimating the costs and the potential long-term savings is a good starting point. And of course, keep in mind that your new payments need to fit your budget, so you don’t run the risk of falling behind.

Mortgage Tips

  • When you’re not sure whether refinancing a home equity loan is ideal, talking to your financial advisor can help. Your advisor can help you evaluate the pros and cons of refinancing and what kind of terms might work best. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Your bank might offer home equity loan refinancing options, but you may consider working with an online lender instead. An online lender may be able to offer lower interest rates for a home equity loan refinance, charge fewer fees or close on the loan in a shorter time frame. You may also be able to get pre-approved for a home equity refinance loan online, without affecting your credit scores. Keep in mind, however, that a hard credit check might be required if you decide to go ahead with submitting a full loan application.

Photo credit: ©iStock.com/actual_size, ©iStock.com/bymuratdeniz, ©iStock.com/Wasan Tita

Rebecca Lake, CEPF®
Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.

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Source: smartasset.com

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What was your first reaction when you saw “salvage title” in the headline? Cringe and shudder? Outrage, that anybody could seriously suggest something so risky on a respectable site like this? In mixed company, no less? Step away from the ledge, slowly, exhale, and then hear me out.

I used to feel the same way … until my friend Peter showed me his “new” 4Runner. Peter is a super-frugalista, and he saw the surprise in my eyes. He laughed, “Hey, it’s a salvage title — I got it real cheap.”

He bought his son one of those, seven years back, and that car has run problem-free all that time. So he thought, “Why not get one for myself?”

Why not, indeed?

What is a Salvage Title?

It begins with what people sometimes refer to as a car being “totaled” or “written off.” “Total” is simply shorthand for “total loss,” meaning the amount an insurance company pays out for the car’s full insured value. Most often, it’s a collision that causes a car to be totaled; but they can also be totaled after a fire, flood, hail, or even theft. (If a car is stolen and not recovered for three to four weeks, depending on the jurisdiction, the insurance companies have to pay the insured, which, of course, turns the theft into a total loss.)

Insurance companies typically total a car damaged by accident, fire, hail or flood when that damage is greater than its value. They naturally want to pay the smallest amount possible and, if that’s the value of the car, then that’s what they pay. When they do that, they effectively buy the car and its title passes to them. If they subsequently sell it, they are required to sell it with what’s called a salvage title.

Why Even Consider a Salvage Title?

A car only gets a salvage title when something bad happened to it. Buying a used car is such a crap shoot to begin with, why compound that by even thinking about buying one with a salvage title?

One word, the word we associate most with Get Rich Slowly — “money.”

A fully repaired car with a salvage title typically sells for 30 to 40 percent less than one with a clean title. If you were eyeing that $15,000 used minivan, a comparable (i.e., fully repaired) one with a salvage title would typically go for $9,000. That’s a savings of $6,000.

That’s a pretty compelling number if you’re interested to save money.

I don’t know if you heard, but someone just paid more than $30 million for a used Ferrari at the Pebble Beach auctions last week. The car was in a major wreck, but it was restored. The point is: a wreck doesn’t necessarily mean the utter demise of a car. Any car can be repaired or restored to mint condition. The trick, of course, is not to overspend —and to know it was done right.

Does a Salvage Title Make Sense for You?

The first thing you need to do is find out if your state allows vehicles with a salvage title on the road. Colorado, where I live, does. (That’s how I found out about it.) So, if your state allows it, you could potentially save a lot of money on your next car if you are one of the following kinds of people:

1. You drive your cars for many years. A salvage title stays with the car for the rest of its life. If you bought it for 60 percent of its normal value, you will only be able to get 60 percent of its normal value when you sell it. The longer you drive the car, the smaller the penalty at the time of selling. The net result is that you save a lot when you keep it for a long time. However, if you sell your car every two or three years, your savings at the time of buying will be negated at the time of selling, when you’ll have a harder time trying to sell it and you’ll have to take less. (In most states, sellers have to disclose a salvage title at the time of sale.)

Also keep in mind that most dealers will not take a car with a salvage title as a trade-in.

None of those issues present a problem if you plan to drive the car into the ground and then give it to your son going off to college in thirty five years’ time. 🙂

2. You usually buy older cars to begin with. The cost to repair a new car is not much different than repairing an older car. That means it will take pretty extensive damage to a fairly new car to get it totaled, because it’s still quite valuable. On the other hand, an older car is worth much less, even if it’s in good condition, and it doesn’t take much in the way of damage to get the insurance company to total it. In fact, a fender bender will often do it.

What that means is you can save 30 to 40 percent on an older car with a salvage title that has suffered only minor damage. (It’s a good general rule to stay away from salvage-title cars less than three or four years old.)

3. You’re not afraid to do some repair work yourself. If you know your way around a junk yard and you’re not averse toscraping your knuckles a bit, you can save even more than the 30 to 40 percent by buying a salvage-title car that hasn’t been fully repaired yet. If you can figure the cost of the repairs still needed, you deduct that from the 60 to 70 percent before you make your offer. Then you add some weekend and evening sweat equity to add that value back to the car —and you know the quality of the work that’s been done.

Buying a car with a salvage title is obviously not appropriate for everyone, and this post doesn’t try to make that point. All I hope to do is spotlight an option you may not have considered before but which might work for you.

Tips for Buying a Salvage-Title Car

As the saying goes, there’s no free lunch. In order to capture the gain of having a serviceable car at a 30 to 40 percent discount, you have to put in some time you wouldn’t ordinarily spend. Remember your first reaction above when you first heard the term “salvage title”? Everyone you deal with will have the same reaction. And because they’re not getting a big discount on their purchase, they don’t have any incentive to stray outside the box to accommodate you. That means more work for you.

1. Negotiate. Sellers will try to slide by with a discount of, like, 15 to 20 percent on the normal price, hoping buyers won’t know the appropriate discount from normal. Salvage-title vehicles is a buyer’s market; be sure to pursue the maximum advantage.

2. Financing: You should be able to get financing for a car with a salvage title, but it won’t be nearly as easy as for one with a regular title. The bank’s problem is the resale value of the car, which is much less than that of a comparable car with no title problems. If you are paying a lot less for the car to begin with, this isn’t that much of a problem. Expect to do more shopping, though. Personally, I think cash is the best way to buy a salvage-titled car, especially because of the next point.

3. Insurance: Insurance companies, for the most part, won’t offer the comprehensive insurance lenders require. They will offer collision and liability coverage; but, again, expect some push-back and more time shopping around for insurance. If you buy an older car for cheap, your insurance requirements aren’t that much, and you can get what you need. Most insurance companies will insure salvage titles cars just fine. Just be mindful that for them there’s not much difference in repair costs; so don’t expect any price break, even though your car was a lot cheaper than a comparable “regular” car.

4. History: Before you even make an offer on a car with a salvage title, you would be well advised to spend the time necessary to track the entire history of the car’s title. In particular, it’s important to find out (not from the person trying to sell you the car) what happened: what type of crash and the extent of the damage. CARFAX is a good starting point, but expect to do more digging.

Also included in the history research is the seller. Some businesses who sell salvage-title cars are reputable; others are not. Be sure to check with the Better Business Bureau to see if this seller has had issues.

5. Inspection: It is good practice to have a professional inspect any used car you’re interested in buying. Although it may cost a hundred or two, I look at that as insurance: It’s much better to find out about any defects before you plonk down your money. If it’s a good idea for all used cars, it’s essential for a salvage titled car. In particular, you need to have someone check out the wheel alignment. In the old days, they used to talk about frame damage, but most of today’s cars don’t have frames any more — the entire body acts as the frame. If the axles get twisted out of alignment, the car is a pain to drive and it will double your tire wear. A body shop inspection will quickly reveal if that’s a problem or not.

6. Pre-registration: Some states require a police inspection and a certificate from the police before they will register a car with a salvage title. This is aimed at making it difficult for stolen cars to get back into circulation. You will need to do your homework on this issue before making your purchase as well.

In Conclusion

Good wisdom says even if you buy a clean-titled, used car you should do most of these things (e.g., have someone check out the car and research the title history) so the additional legwork might not be that much for you.

My wife and I tend to buy used cars and then keep them till they’re seriously long in the tooth, and then we give them away. Given the success my friend had with his salvage-title car, I’m seriously going to consider going that route next time we buy. The key, I believe, is to be very careful and to be prepared to kiss many frogs before finding the salvage-title prince.

Like many things in life, there’s a reward for risk and/or hard work. If you’re prepared to consider buying your next car with a salvage title, you may be able to pocket a significant savings. It’s not for everyone, obviously, but it’s nice to know an option like this exists.

Source: getrichslowly.org