Updated: Monday, May 16, 2022

What’s Homesteading?

Youve likely heard the term homesteading. Its something thats growing in popularity not only among normal people but there are plenty of social media influencers touting their off-the-grid life>

So what does it mean, and how does one become a homesteader?

The Homesteading Philosophy

While everyone might vary in how they approach homesteading, the general idea is that youre committed to being more self-sufficient. Depending on your goals, your home and living environment, and whether youre in a country or urban area, this can take on a lot of meanings.

If you live in a rural area, maybe you go as far as providing your electricity using water, wind, or solar power. If youre just getting started with becoming more self-sufficient, you might have a small garden and preserve some of your food.

Some homesteaders go completely toward the life>

Urban and suburban homesteads are offshoots of the concept, which well discuss more below.

The idea is that youre becoming more self-sufficient wherever you live. It doesnt necessarily mean you dont use any modern technology or that you dont have certain conveniences. You can do whatever works for you.

So why do people do it?

There is a diverse range of reasons.

Some people might simply like the idea. For other people, it can feel like theyre prepared for anything, and some people do it because theyre interested in a more sustainable and eco-friendly life.

Some people get involved in this way of life to dig out of debt, avoid new debt, and build their savings. A goal of people who are homesteading primarily for financial reasons might do so because they want to stop spending money needlessly on things they could do without.

From a health perspective, you can eat more locally-grown food when you homestead, including things you grow yourself. nbsp;

It can also be a good way for families with kids to have them get involved in household chores.

How Can You Be a Suburban Homesteader?

The term homestead comes with connotations of having a sprawling farm-like property, but that doesnt have to be the case.

You can homestead in the suburbs by making choices to be more self-sufficient.

Some people who participate in suburban homesteads find other people nearby who are interested so that they can form new friendships.

If youre thinking about adding livestock into the mix, you have to figure out what your municipal code says about this.

What About Urban Homesteaders?

Because of your job or other commitments, you might not be able to move out of the city where you live, but you could still make some of your homestead dreams come true even in an urban area.

You can start by taking a minimalist approach to life. Maybe you declutter your home and focus on the essentials. Go shopping at stores only when you have to, and spend less time consuming media that might encourage you toward consumerism.

If you dont have a lot of space to grow your own food, you can still have a container garden or grow your own herbs. You can learn how to make certain foods from scratch, like bread.

Urban homesteaders can make cleaners that arent toxic and hang their clothes to dry instead of using the machine.

Whatever your interests and goals, you can make the homesteading life>
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What To Do When An Appraisal Comes in Low

When someone is buying a home and theyre going to use financing in the form of a mortgage, they need an appraisal to cement the deal. Before a bank is going to extend credit, they want to make sure theyre not giving someone a loan thats more than the fair market value of the house.

Thats where an appraiser will enter the scene. An appraiser will give their unbiased opinion on the value of the home.

If the appraisal is less than what your offer is, then you may feel frustrated and even a little devastated.

This isnt an uncommon situation, however. One of the big reasons for contingency issues is the appraisal.

An appraisal goes over the condition of a property, and they have to be certified in the state where theyre working. Appraisers look at a wide variety of features like the year the home was built, zoning details for the neighborhood, construction details like the type of foundation, and the utilities and amenities.

An appraiser will come up with a report for the lender in around a week or so, but for VA and FHA loans, the appraisal report can take longer to finish because it has to be more detailed.

There are a lot of reasons an appraisal can come in low. A lack of comps can be one reason. For example, the market might be moving faster than appraisers, so home values in a hot market could be going up rapidly, but appraisals might not be matching that pace. Theres also an issue if for example there have been a lot of remodels in a neighborhood to bring the overall value of the comps up.

So what if your appraisal comes in low? What can you do?

Cover the Difference in Cash

If youre worried a pending sale wont go through, both a buyer and a seller have options.

The buyer might be able to make up for the difference in the appraised value and the sale price using cash.

The reason a lender even cares about the appraisal value is that it impacts the loan-to-value ratio.

In some instances, a lender wont let a buyer make up the difference in cash, so there could be another option here which is a buyer covering some of the closing costs on the sellers end.

Price Reduction

The simplest solution, when possible, is to reduce the price if it was priced too high. The lender will be happy, and so will the buyer and then the deal can go through. You have to think that if you let one buyer walk away over the issue, that theres certainly a high likelihood the next buyers lender could have the same issue.

Dispute the Appraisal

You dont have to accept an initial appraisal. That doesnt mean that your lender wont go with the first one, but its worth a shot to dispute it or to ask for a second one.

You should always ask for a copy of the appraisal report as a seller, so you can go over it and make sure there are no glaring mistakes.

Only a lender can technically demand another appraisal, and they may or may do that, but its worth trying.

Get Comps

You can ask the real estate agents who are working on the deal to create a list of comps that would highlight the justification for the sale price thats been agreed on. Once thats compiled, you can give it to an underwriter and ask them to review the appraisal.

Finally, aside from flat-out canceling the transaction, you might be able to negotiate and come to an agreed-upon middle point. For example, a seller might agree to pay some of the difference between the sale price and the appraisal.

There are options, but you have to find whats going to work for you, and if youre working with a good agent, they should be able to help you find a solution if an appraisal comes in low.

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Ask the HOA Expert: New Management Company VS Becoming Self-managed

Question: Our property manager does not do his job. He frantically sends violation letters and discusses the repair progress with the maintenance committee just prior to the monthly meeting. He claims to visit the property two or three times per week, however, no one seems to see him there. We are entertaining ideas of a new management company or of becoming self-managed. What do you think?

Answer: While you may have better options for management, I do not recommend self management unless your HOA has minimal financial, administrative and maintenance responsibilities. HOA managers typically are on call for emergencies, something volunteer owners are ra>

Self managed HOAs frequently have problems keeping accurate and timely books. Finances are the foundation of a homeowner association and should be treated seriously. If you decide to self manage, do yourself a favor and at least hire an independent bookkeeper to keep finances rolling smoothly.

Question: We record our board meetings and make them available to members. Some say we shouldnt. Any advice?

Answer: In general, recording isnt recommended because the speakers cant always be heard clearly or identified. Also, body language can totally change the context of what is being said. While many comments wouldnt or shouldnt find their way into written minutes, an audio recording picks up the good, the bad and the ugly and can cause unnecessary problems. Instead of taping, take accurate written minutes that reflect the business discussed and make them available to owners. All board meetings should be open to the owners that want to attend. This means holding the meetings in visitor friendly places to encourage attendance.

Question: What should a homeowner association expect to pay for a professional management company and what services does that include? Answer: The cost of professional management is based on the size and complexity of the property and the scope of work. For example, a 100 unit condominium with pool and clubhouse is more labor intensive than one without them.nbsp;

Question: Our property manager told the board at the last meeting that no more than two of us can meet at a given time. If three of us get together, we have to post the meeting because we have a quorum...Your input?

Answer: If the board is gathering to discuss and make decisions on HOA business, it qualifies as a board meeting and should be noticed to the homeowners. Emergency meetings sometimes need to be called. Lack of planning does qualify as an emergency. Hold meetings in a visitor friendly location to encourage participation. Open meetings and frequent communication promote trust.

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What to Know About Earnest Money

Earnest money is just one of the many terms to know when it comes to buying a home. Its something you might initially overlook, but not understanding earnest money can create roadblocks in your process to buy a home once youre ready to make an offer.

The Basics of Earnest Money

In simple terms, the earnest money is a deposit that you put down to show that youre serious about buying a house. You want to show the seller that you really do want the home, and earnest money might be anywhere from 1 to 5 of the total purchase price.

It helps sweeten your offer to a seller and shows them that you want to take the necessary next steps to buy their home.

Then, in exchange for the earnest money, the seller will take their home off the market. Theyll start to work to arrange things like inspections.

Earnest money goes into an escrow account while you wait on your closing. The escrow account is with either the sellers broker or title company, or an escrow company.

Theyre essentially secu>

How Much Earnest Money Should You Offer?

Again, earnest money is typically anywhere between 1 and 5 of the price you agree on with the seller to buy the house. Theres a lot of variance in this, though. For example, in some locations, you might do a fixed amount and in others you could pay a percentage.

In very popular housing markets, you can see very high earnest money deposits. Your real estate agent will help you know whats in line with your area.

Earnest Money Is Not a Down Payment

This can be an area of confusion for some buyersearnest money is not a down payment. Your down payment is fully separate from earnest money and is anywhere from 10-20 of your homes purchase price.

You need to make sure that when youre thinking about how much a house will be, youre adding up your earnest money and your down payment. Your earnest money is due when you make an offer, while your down payment and closing costs are due later.

Is It Refundable?

When you enter into a purchase agreement, it will outline contingencies. These are situations that are agreed upon where you can walk away from a deal and still get your earnest money back.

For example, you might have an appraisal contingency in case the appraisal is lower than the sale price.

Your real estate agent will help you decide the contingencies to put in your contract.

If youre in a highly competitive market, you might agree to nonrefundable earnest money. Thats very risky because if your sale falls through, the seller gets to keep your money.

If you break the terms of whatever your purchase agreement is or you decide you dont want to buy a house anymore, then the seller can keep your earnest money.

This is why its important to work with a qualified real estate agent. Theyll help you understand what you need to know before you sign anything because otherwise, you could end up giving up a lot of money that you potentially cant afford.

As a final note, earnest money isnt required. If youre buying in a market thats not very competitive, you may not need to worry about it. Its instead a good way to beef up an offer, especially if youre worried there could be multiple offers on the house you want.

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April Real Estate Roundup

Freddie Macs results of its Primary Mortgage Market Survey shows that "The combination of swift home price growth and the fastest mortgage rate increase in over forty years is finally affecting purchase demand. homebuyers navigating the current environment are coping in a variety of ways, including switching to adjustable-rate mortgages, moving away from expensive coastal cities, and looking to more affordable suburbs. We expect the decline in demand to soften home price growth to a more sustainable pace later this year."

30-year fixed-rate mortgage FRM averaged 5.1 percent with an average 0.8 points for the week ending April 28, 2022, up from last month when it averaged 4.42 percent. A year ago, at this time, the 30-year FRM averaged 2.98 percent.

15-year FRM this week averaged 4.4 percent with an average 0.9 points, up from last month when it averaged 3.63 percent. A year ago, at this time, the 15-year FRM averaged 2.31 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage ARM averaged 3.78 percent this week with an average 0.3 points, up from last month when it averaged 3.36 percent. A year ago, at this time, the 5-year ARM averaged 2.64 percent.

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Saving for a Down Payment When You Live Paycheck-to-Paycheck

A down payment is an important component of taking a step toward homeownership. Saving for a down payment is also the biggest obstacle that you probably face when you want to buy a home.

A down payment is the cash you pay upfront when youre going to make a large purchase. If you were going to buy a 350,000 home with a 10 down payment, youd need to have 35,000 in cash.

Then, your mortgage lender provides the rest of the money to buy the home, and you pay your lender back over time. There are a few exceptions to lenders requiring a down payment, such as VA loans, but generally, it is required.

Its recommended that you put at least 20 down if youre going to buy a house, but that can be a lot of money.

How do you save if youre living paycheck-to-paycheck? It is possible, but you also might have to make some changes.

Take the First Step

Even though you might feel overwhelmed about the prospect of saving money when youre ba>

One good first step is to open a savings account where youll deposit money thats specifically meant to go toward your down payment.

You might want a savings account that pays a bit of interest as well.

Create a Budget

You may be in a cycle of living paycheck-to-paycheck that you dont necessarily have to be in.

If you can drill down into whats going out versus whats coming in, you might find that there are some ways you can save money even on your current income.

Really taking an honest look at your income versus your spending can be challenging and overwhelming because you may not realize how much youre spending on things that you dont need to be. Doing it is rewarding and valuable, though.

When you create a budget, include in it money that youre going to set aside every week or month that will go toward your down payment.

Even small contributions do add up over time if youre consistent and patient.

If youre not sure where to start with your budget, a lot of financial professionals recommend following whats called the 50/30/20 rule. This means that 50 of your income goes toward your essentials, such as your rent. Thirty percent goes toward life>

Cut Out Subscriptions

One of the best things you can do for your finances is to regularly evaluate what subscription fees youre paying and cut them out. It sounds simple, but the reality is if youre like the average American, you might be spending 237 a month on subscriptions. Thats a lot of money that could go elsewhere.

Go Over Every Bill Carefully

When youre working with a >

There are a few reasons for this.

First, you want to make sure there arent mistakes youre paying for. You might also find ways to pay less. For example, you could ask for a lower rate on your credit cards if you have a history of on-time payments, or you might be able to talk to your car insurance company about good driver discounts.

There are a lot of opportunities to save money on your bills, if you know where to look at youre willing to ask.

Add Income

Finally, once your budget is in order, its a good idea to add extra income to your life. There are so many ways to do this. When youre not working your full-time job, maybe you deliver groceries or work for a rideshare service.

It doesnt matter what it is, but when you add another stream of income, it puts you that much closer to your down payment.

Everything you earn from your secondary income source should go directly into your down payment savings account, so you arent tempted to use it on anything else.

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Should You Use a HELOC for a Renovation?

A lot of people are thinking about home renovations right now. You have different options to pay for these projects if youre not going to pay in cash. One option is a Home Equity Line of Credit or HELOC.

A HELOC is a way to borrow against your homes equity, and it provides flexibility. With that being said, because of that flexibility, you need to be careful to stay on budget when you use funds.

The following are some things to know about a HELOC, particularly if youre thinking about using it for a renovation.

How Does a HELOC Work?

With a HELOC, youre spending in a way thats similar to a credit card. You borrow up to a certain limit as defined by your lender. Then, you pay back whatever you borrow with interest. You can withdraw and make payments on whatever basis works best for you.

A lender gives you a draw period, which is the time you can withdraw money. When your draw period is ended, you may be able to renew the credit line.

If you dont or cant renew, you pay the outstanding balance either all at one time, or you do so over a repayment period.

HELOC lengths can run as long as 30 years.

The benefits of a HELOC and flexible repayment include the fact that you only borrow what you need, and many have no fees. The interest on a HELOC might be deductible if you use your funds for home improvements.

What Are the Risks?

While HELOCs can work well for funding a renovation, there are possible risks to be aware of before you borrow.

Since your home is your collateral, if you dont make the payments, you could lose your home. Typically a lender will try to protect against this by limiting borrowing amounts, but its still a big consideration.

A lender can also freeze a credit line or reduce it. Youll only see this usually if you havent made your payments or your homes equity changes, but its something to think about.

The interest rates on a HELOC are variable, and theyre tied to the prime rate. If there are changes in the market, you may end up paying more so that uncertainty may not be ideal.

How Does a HELOC Compare to a Home Equity Loan?

A home equity loan is another financial product often used to fund renovations and home projects.

A home equity loan also involves borrowing against the equity in your home, which is used as collateral. A home equity loan differs from a HELOC because its a lump-sum loan rather than a revolving line of credit. You pay the loan back over its life plus interest, and you make those payments based on a set schedule. Most home equity loans have a fixed interest rate, which alleviates the worry of fluctuating market conditions impacting interest rates.

When is a HELOC the Right Choice?

If youre deciding between a HELOC and a home equity loan, the loan might be better if youre certain of the cost of your project. If youre comfortable with a fixed monthly payment, a home equity loan could be the better option.

On the other hand, a HELOC might be right if you want a lot of flexibility in how much you borrow. Maybe youre not sure about the scope of your project or what your budget will be.

The biggest differentiators between the two will come down to first, flexibility, and second, certainty. If you want flexibility, consider a HELOC. If you want certainty, think about a home equity loan.

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Why You Should Replace Your Roof Before Selling Your Home

Are you thinking about putting your home on the market for sale? It doesnt matter if youve been living there for 50 years or five. You want to do everything you can to get the most from your initial investment. Find out why a residential roof replacement is one thing to consider to help get the most out of your house thats for sale.

New roof installation will help with the selling of your home for several reasons. You can increase the asking price, prevent potential buyers from trying to bargain with you, sell your home faster by improving the overall appearance, and avoid negotiation issues with lending companies.

Increase Your Asking Price After a Roof Replacement

You might have a price point in mind for your home based on what you paid for it, the work youve done already, and what its worth to you. That number can be increased significantly if you add a roof replacement to the work you do before you put a for sale sign out in front of your property.

Even though youre going to be spending the money initially on what a complete residential roof replacement costs, you will get all of that back. You can even add on extra because you took the time to have it completed. As soon as you mention "new roof" on the features your home has in the realtor sales listing, people will automatically be more attracted to it. Its one of the top factors that potential home buyers look at when deciding what house they want to settle on as their permanent residence.nbsp;

If you have ever looked at buying a new home yourself, you know that when you see houses that have roofs that are ten years or older, you arent going to be willing to pay top dollar. Anyone that has done their research knows that the age of the roof has a huge impact on the price a seller can put on their property. A new roof allows you to keep the price point a bit higher so you can get the most out of your investment.nbsp;

Save Time on Dealing With Roof Repair Negotiations from Buyers

Its human nature to try and get something for less than the asking price, especially when it comes time to purchase a new home. Its not just a couple of hundred dollars that buyers bid below what they see listed either.nbsp;

They will often look for features of the home like the age of the roof and try to take thousands off the asking price.nbsp; You put the value on your home, taking into consideration the age of the roof, but thats not how outsiders view it. A new roof installation is a big job and a significant investment. Buyers know when they are looking at buying a home with a roof that is ten years or older, they have some work ahead of them. That additional effort they will have to put in allows for a bit of wiggle room. You put the value on your home, taking into consideration the age of the roof, but thats not how outsiders view it.

Taking the time and spending the money to put a brand new roof on your home for sale is going to save a lot of time and headache.nbsp; The people looking at your home wont be able to use the age of the roof as a reason for you to lower what you want when the sale is final. If youre in a hurry to get your home sold as quickly as possible, asphalt roof installation will shave a decent amount of time off the whole process.

Speed Up the Sale Process with a Beautiful New Roof

There isnt much need to look at your roof on a routine basis and inspecting it for damages only happens a couple of times a year. However, when people are considering the purchase of their dream home, the roof is one of the first features that gets investigated. Nobody wants to move in and discover that there are holes or leaks in what they thought was their ideal forever home.

If a person sees an older roof, they are more likely to skip over the house as an option. People dont want to have to put major improvements into a home theyre just moving into. For most, new homeowners want to be able to pull the moving truck up, unload their things, and sit and enjoy everything they just committed to with the purchase of a house.

With a brand new residential roof installation in your area, the people that are simply driving by are going to see that you took the time to have the work done. They will slow down and want to take a closer look because youve taken care of the exterior. Inquiring minds will want to see the interior. The more that people are stopping to explore your property, the quicker youre going to get the final offer settled.

Keep Lending Companies Satisfied with Adequate Roof Repairs

You might not care about the age of your roof when you have your house up for sale. Youre ultimately not going to be living there anymore, so why worry about it. You may even get lucky and find a DIY buyer that has no issue with doing their own roof repairs. That all sounds great until you get to the point in the home buying process when the bank or mortgage company comes to do their own inspection of the property.nbsp; This is especially true in colder climates where often hail damage has a huge impact on roof degradation. For example, this last winter, there were record numbers of roof repairs in Fort Collins, CO due to consistent hail storms and the damage thereafter.nbsp;

When they see that residential roof repairs are required, they might refuse to approve the loan enti>

Instead of trying to sell your home as-is, consider the plethora of benefits that come along with doing a complete roof replacement or at least the necessary roof repairs before putting your "For Sale" sign out front. Youre chances of getting more money increase. You wont waste time dealing with negotiations from the buyers or requirements from the lending company. All in all, everything will go much more quickly because of the updated and gorgeous appearance a new roof gives your property.

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James Elliot and his team of expert roofing contractors at Fort Collins Roofing Company have been helping homeowners through the consistent hail damage plaguing the area for over 4 years. His expertise is in their streamlined process of helping homeowners through insurance claims processes so that they can get a new roof as soon as they need it.

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Some Are, Some Aren't

When your lender sends you what the industry refers to as a good-bye letter, it means your loan is being sold. More specifically, the servicing rights are being sold. Servicing rights simply means who collects your mortgage payment on behalf of the owner of your home loan. Lenders need to be able to sell loans so they can regenerate cash in order to make more loans. Makes sense, right?nbsp;

If a mortgage company didnt have the ability to sell loans, theyd soon run out of money. So the act of selling a mortgage keeps the mortgage market healthy and liquid. But lenders must first follow certain rules when makingnbsp; a home loan in order for the loan to be in a position to be sold.

Some of those loan requirements are steadfast and some give the lender a bit of flexibility. For example, lets consider debt ratios. Lenders are required to prove affordability to make sure someone isnt borrowing more than they can handle. This is done primarily through the use of debt ratios. Most loan programs have two debt ratios, a housing ratio, or front,nbsp; and a total debt ratio, or back.nbsp;

A common front ratio is 31 for a particular loan program. This means the housing payment, including taxes and insurance, needs to be 31 of gross monthly income. A back ratio might be 38. But lets say the total mortgage payment comes out to a 35 ratio and the back at 42. What happens? Does the borrower have to pull back and borrow less or maybe pay discount points to lower the rate? Not necessarily.

The underwriter at the mortgage company, the person that approves the loan file, can make a personal judgment allowing the mortgage to ultimately be approved even though the front, the back or even both ratios are above the standard. When doing so, the underwriter looks at other positive factors within the file. A solid credit score might help an underwriter push the loan through or perhaps a well-estabished employment history. These compensating factors can be used to approve a loan even when the debt ratios are in fact a little high.

On the other hand, some guidelines are hard and fast. There is no leeway and the guideline must be followed or else the loan is stopped in its tracks. What sort of guideline might this be? One is occupancy. Lets say a couple is buying their first home. But they first want to buy a rental property. Sorry, but this cant be done.nbsp; it has to be an owner-occupied unit in this scenario. The lender has no authority to override such a requirement.

If, in such a situation the loan gets stopped, the loan officer will then work with the applicants and explain what needs to happen to get the loan application past the goal line. The applicants will be told what can be ignored and still get the loan approved and what has to happen before the loan can go any further.

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Should You Do Colored Cabinets in Your Kitchen?

One of the biggest trends in home design right now are painted or colored cabinets. Typically, kitchen cabinets are white or natural wood color. Now, however, a lot of designers and homeowners are moving out of the confines of these traditional cabinet color palettes.

If youre considering painting your cabinets, the following are some things to keep in mind and some trends to consider.

Take Into Account the Rest of the Room

Before you paint your cabinets, consider the rest of your kitchen, and if its an open-concept space, the living and dining room as well. If youre completely remodeling your kitchen, this isnt as much of a concern because you can build your color palette and design around the color of the cabinets.

If youre just doing a cabinet refresh, you do want to keep the rest of the design in mind.

For example, if youre going with a dark cabinet color, is it going to make the rest of the space too dark, or is there enough natural light to balance it out?

Sometimes a fun color can also work as a neutral, such as a shade of gray.

Dont Go Too Trendy

While the idea of having a fun kitchen cabinet color is appealing, be honest with yourself before you jump in. If youre someone who gets sick of things easily, you need to be careful. That mint green shade might seem perfect now, but will you still feel that way in a few months?

Its best if you choose a color that you can work around in other ways if you want a refresh in the future.

New Neutrals

As was touched on, you can still have a unique kitchen and cabinets that are a beautiful color while maintaining a neutral color palette. When it comes to cabinets, maybe you go for greige, which is a combination of gray and beige. Its chic and unexpected, but its still a neutral that gives you a lot of wiggle room if you want to change your design in the future.

Navy is also a beautiful color for cabinets that still is versatile enough to be used in different designs. Navy is a >

Even doing a warmer white as opposed to bright white gives your kitchen cabinets a distinct feel but keeps you in a zone thats easy to work around with the rest of your design.

Dark Colors

If you have enough natural light in your kitchen and you want something bold and dramatic, there are a lot of beautiful dark colors that are on-trend right now. For example, dark greens, dark grays, and even black are popular cabinet color options.

Theres a lot of depth and emotion thats created when your cabinets are dark.

The beauty of dark cabinets is also that they hide stains and spills, so if your kitchen gets a lot of use, dark cabinets can be low-maintenance.

Finally, if you want to go with something even more unique and colorful, like a bright green, balance it with neutrals elsewhere. For example, maybe you have an all-white kitchen, but your cabinets are your primary pop of color. You can also do a contrasting island thats a more unusual color, while the perimeter cabinets or white or neutral.

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Eight Signs It's Time To Move Up

The starter home. It was so cute and quaint and sweet when you bought it, right? But, that was before kids and dogs and overnight quests and holiday dinners that require mathematician-level logistics to finding everyone a seat in a dining room that bursts at six people.

Lets face it: Its probably time to move up. Lack of space is the No. 1 reason people start looking for a larger home. Families expand, life>

But running out of room not the only reason to consider moving up.

Youve got the equity

You may have had to scrimp and save for the down payment on your first home, but, if your home has appreciated, you may be in a completely different financial position this time around. If youre the type who envisions paying off your home and being free and clear, moving up may not be on your mind. But, for the rest of us, having equity in our current home means greater buying power to buy something bigger or get into a neighborhood we covet.

Youre at each others throats

Feeling cramped and living in clutter and hating that you dont have a space of your own or even a minute to yourself? That can create stress and leave you feeling anxious and overwhelmed. And, it goes against the general principle of homeownership since your home is supposed to be your sanctuary Having some extra room to spread out and yard for the kids and dogs to play in can make a real difference in the way your family functions.

Ask yourself if "your quality of life is suffering," said Unpakt. "This category can include many things: your ever-growing pack of dogs or cats who are driving you crazy. Your cascading piles of fabrics that you use for quilting, but just cant keep organized in your current space. The lack of a guest room means that when family visits, youre stuck on the couch. Whatever it might be, if your quality of life has taken a nosedive because your house is too small, well, the answer is pretty clear."nbsp;

The neighborhood is changingand not for the better

One of the reasons you may want to start looking at a new house is because your neighborhood is starting to evolve. Maybe there are new restaurants and bars that have attracted a different crowd or plans for a huge mixed-use project that, while great for the economic potential in the area, could mean more traffic than you want in your quiet little town. Even something like a change in the flight patterns from the local airport can get you thinking about that next home.

Remodeling is price prohibitive

A good real estate agent should be able to give you an idea of what necessary or wanted renovations would cost to your existing home. It could be that the amount of work you would need to do on your home to get it where you want it - or get it into tip-top shape for a sale - is beyond what you want to spend. In that case, it might make better financial sense to make small improvements, put it up for sale, and put your money into a new home that better suits your needs.

You dont want to over-improve for the neighborhood

The other important factor to consider when deciding whether to move or improve your home is how the redone home would sit in your neighborhood. You dont want to run the risk of doing a bunch of expensive renovations only to have the home sit on the market because its overdone and considered overpriced.

"Weighing against renovation is the risk youll over-improve your home comparednbsp;with others on the block," said Bankrate. "When you are in a neighborhood that has starter homes and smaller homes, adding a large addition or doing an extensive renovation may not yield the return one would expect."

Everyone else has moved on

So, your kids were young and bicycles and basketball nets lined the street when you first fell in love with your home. At the time, it was everything you were looking for. But now, so many of those families have moved on, and the lively street you loved has turned rather sleepy. If youre still holding on to the memories of what your neighborhood once was, maybe its time to find one that better meets your life>

Youve crunched the numbers

Presumably, a move-up home is going to be more expensive. Beyond the equity you can use to make the purchase doable, you have to consider the monthly expenses, too. "Its not just the sticker price on the house; its thenbsp;long-term costs associated with it," said Realtor.com. "When you go up in square footage, you get higher property taxes, higher utilities, and more maintenance." And acquiring more rooms means shelling out for more furniture, too.

You can make sure you can afford a move-up home without becoming "house poor" by "using onlinenbsp;affordability calculatorsnbsp;to figure out how far you can stretch your dollar.

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Ask the HOA Expert - Special Assessment Notices

Question: I am a real estate agent who represents condo buyers. As part of an offer, we negotiated with a seller to pay an outstanding special assessment to repair the decks. After my client closed the deal and moved in she was told the repair was only for the penthouse decks and not for her unit. Should I have gotten a copy of the special assessment notice? What can be done now?

Answer: Yes, you should have gotten a copy of the actual special assessment notice. Its not uncommon for special assessments to be used for selected areas of a building like you describe. It is a lesson in condominium ownership which is, while you may buy a unit in terrific condition, you also are buying a share of the entire condominium, some of which may be in terrible condition.

However, the bigger concern is why there was a special assessment at all. Special assessments are usually the product of poor planning. Most major repairs and replacements the HOA does are predictable. A reserve study done by a knowledgeable professional identifies all of common components that have a 2 to 30 year useful life, measures each, assesses each for condition, estimates the remaining useful life and the current cost for performing the repair or replacement of each when that useful life is used up. Further, the reserve study provides a Funding Plan which, if followed, systematically collects money usually monthly from all owners so that special assessments will never be needed.

So, does this homeowner association have such a reserve study? If so, is adequate money being collected to pay for future reserve expenses? If not, your client is in for a series of special assessments that will fall at unpredictable times. Welcome to the world of mismanaged homeowner associations. For more on this topic, see the Reserve Planning section of www.Regenesis.net

Question: Is it necessary for the board to divulge the name of a homeowner making a complaint about a rule violation to the homeowner who is in violation?

Answer: No, its not necessary and need not be included unless its >

Question: Many of our annual meetings do not have the required quorum to hold the meeting. Is it allowable for someone to make a motion to suspend the rule on quorum so that the meeting can take place?

Answer: Quorum requirements are dictated by the governing documents. Only an amendment to those documents by an appropriate vote of owner can change them. This amendment cannot be done "on the fly" at a meeting to circumvent the requirement.

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Can a Mortgage Be Denied After Pre-Approval?

When youre ready to buy a home, pre-approval is an important part of the process. You talk to a lender who will go over your situation and then give you a pre-approval letter. The letter helps determine your budget and how much of a monthly payment you can afford.

Lenders will look at some major factors before giving you a mortgage pre-approval, which include:

Debt-to-income ratio DTI
Loan-to-value LTV ratio
FICO score
Credit history
Employment history
Income

A pre-qualification isnt the same as a pre-approval, even though theyre sometimes mistakenly used interchangeably.

With a pre-qualification, you give a lender a general overview of your financial situation, primarily focusing on your income and debts. A lender then provides you with an estimated loan amount.

The lender doesnt verify the information you provide. Having a pre-qualification might help you personally to know what you can spend and get you started as you look for houses, but it doesnt carry any weight when you make an offer.

Below, we discuss what happens after a pre-approval and whether you can still be denied.

Information is Verified During a Pre-Approval

As mentioned, you provide a lender with your financial information to pre-qualify, but youre actually going to fill out your mortgage application for a pre-approval.

You provide your Social Security number, and your lender does a hard credit check. The lender will ask you to list your assets, debts, employment and income history, and bank account information.

A lenders primary goal during the pre-approval process is to ensure you can repay a loan.

The lender uses the information collected to calculate your LTV and DTI ratios during this time. These are part of how theyll determine the best type of loan for you and the interest rate.

Your final loan approval will come after an appraisal is done and the loan is applied to a property.

If youre pre-approved, your loan file goes to an underwriter. The underwriter also verifies your documentation compared to your application. They will make sure youre going to meet borrower guidelines for a loan program.

The Underwriting Process

Underwriting again is when your lender is verifying your home loan eligibility. The underwriter also works to make sure a property is going to meet the loan standards. Underwriters are the ultimate decision-makers, and they do have to follow strict guidelines, but they have some leeway in certain areas.

Underwriting timelines can vary, but initial underwriting approval can typically happen within 72 hours of a file being submitted. In rare cases, underwriting can take as long as a month.

Underwriters take a deep look at your financial situation. Once they review your file, theyll issue conditional approval. If youre conditionally approved, the underwriter says they think your loan will close even though you still may need to provide more information.

The last step for the lender is final approval, meaning you can close.

Can Your Mortgage Be Denied In Underwriting?

Although its fairly rare, a mortgage can be denied in underwriting.

There are a lot of reasons that an underwriter could deny a loan, including having too much debt compared to your earnings, a low credit score, or the appraised value of the home doesnt support the sales price.

Your loan officer should tell you why if youre turned down in underwriting. You can try to overturn their denial, and its not official until you receive a denial letter.

If you are turned down in underwriting, you can check with other lenders. Having one lender turn you down doesnt mean they all will give you the same answer. For example, some lenders have manual underwriting options to approve loans when other lenders cant.

To avoid being denied in underwriting, generally cleaning up your finances and making sure you arent trying to borrow more than you can afford helps. You can also make sure your loan application is complete and accurate. You want the lender to have a full picture of everything they need to decide, so there arent any surprises in underwriting.

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Just How Accurate Are Those Online Home Value Estimates?

If youve ever gone online to check out the value of your home or to make comparisons, you arent alone. Online home value estimators can be a handy tool in some cases, but you have to understand their limitations.

Zillows Zestimate is perhaps the most well-known estimator, but Redfin has one too.

Below, we talk about what you should know about home valuation tools, also known as automated valuation models or AVM.

What is an Automated Valuation Model?

AVMs are computer-driven algorithms and formulas that use basic property features paired with pricing trends and local market information to create a value range or an estimated value for a home.

There are some cases where a lender might use an AVM to quickly get a potential estimate of the value of a property.

All the AVMs use their own formulas and may pull data from different databases. As you might imagine, the estimates >

There are a lot of underlying assumptions made with an automated model.

For example, AVMs work on the assumption that all properties are in a similar condition to one another. Theres no way for these automated algorithms to consider if a home is in poor condition or if upgrades have been made.

Due to the fluctuations in the figures AVMs come to, lenders will set policies on whether theyll use them and, if so, which theyll use.

How Do Zillow Zestimates Work?

Zillows well-known Zestimates are based on what the company says is a proprietary algorithm. Zillow reports the estimates include data from public records and data users submit.

The company doesnt claim that theyre 100 accurate. If all the properties within a small radius are similar, the prices are more accurate because there are less likely to be major variances throwing off the algorithm.

If the estimates come from a neighborhood with older homes, theyre likely to be less accurate. Some homes will have been improved and maintained over the years, and others wont have been.

The accuracy of a valuation is measured using an error rate. An error rate calculates how often the algorithm is wrong. More specifically, how often the value of a property as measured by the AVM is very different from the sales price of a home.

The Zestimate gets within 5 of a homes actual sales price more than 82 of the time. Its within 10 of sales price more than 95 of the time and within 20 nearly 99 of the time.

That can sound pretty accurate at first, but its less impressive when you figure out how many tens of thousands of dollars these variances can represent.

The Zestimate median error rate goes up to nearly 7 for off-market homes. If a home hasnt been sold lately, theres not much data that an AVM can pull on it.

Over time, the algorithms tend to get more accurate. Zillow says that it will make offers to buy homes at their Zestimate price in some markets, or at least it did when Zillow Offers was operational, which it recently announced was closing down.

Realtor.com Offers Three Figures

Realtor.com takes a different approach when it offers online users home value estimates. The company pulls estimates from data provided by different companies it partners with. There are three estimates so that people can see the picture of how much their home is worth is more variable than what they might get from just one figure.

Redfin vs. Zillow

Redfin and Zillow are two competing tools for estimating the value of a home. They can sometimes give different figures for the same property.

Overall, Zillows Zestimate seems to be more accurate. The median error rate is a little lower than whats calculated for Redfin, including both on-market and off-market properties.

Redfin is very transparent, though, which is an advantage it has. Redfin provides a lot of information on how they get their figures.

You have to remember that while these tools might give you a general idea of how much a home is worth, theyre not the same as an appraiser.

Before a lender signs off on a home loan, they require an appraisal. Appraisers do a walk-through and then write a report. They will also include market data and comparable properties, so this will be much more accurate than what you see online.

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Should You Do Your Own Plumbing And Electrical?

With so many people working from home and spending their free time there as well, its no surprise that home improvement numbers are up. Do it Yourself renovations are more popular than ever, as homeowners look to make updates for their personal enjoyment and/or to improve the value of their home.

But while many of these homeowners had DIY skills long before the pandemic hit, or have improved upon and expanded those skills with more time to focus on home, there are still plumbing and electrical, most people say you should leave those jobs to the experts.

Gauging the danger

You could fall off a ladder while painting or put a nail through your thumb from a hammering mishap. But the potential danger >

An electrical malfunction is listed by the U.S. Fire Administration as one of thenbsp;top causes of house fires, said Hiller Plumbing, Heating, Cooling amp; Electrical.nbsp;

When you attempt to complete electrical rewires on your own you put your health, the health of others, and your property at risk. Completing electrical work is dangerous business. When completing electrical rewires electrocution, shock and fires could result. Items in your home also have higher voltages. The higher the voltage, the more dangerous the project.

Faulty wiring can also cause firesa particularly dangerous situation since they can also go undetected for years leaving the homeowner to feel like it was a DIY job well done until a fire occurs. In the U.S. alonenbsp;51,000 house firesnbsp;are caused by electrical components and systems. These fires cost a total of 1.3 billion dollars in property damage per year.

While you might be able to learn how to lay flooring or tile a backsplash by watching a video, a licensed electrician is required to complete 600 hours of instruction covering safety, electrical circuits, and blueprint reading, followed by supervised, on-the-job training.

Similar problems can arise from DIY plumbing situations.

One of the biggest risks of doing your own plumbing repairs is the possibility of compounding the problem and making the problem much worse, said Marietta, GA-based Plumb Doctor. Even simple repairs done incorrectly can cause serious problems. The problem may be something minor like a leaking pipe that eventually causes water damage to your home, or it could be something more serious like a burst pipe. Either way, you run the risk of not only failing to take care of the original plumbing issue, but causing more problems that youre unable to address properly.nbsp;

Is it legal?

If you do want to tackle your plumbing or electrical, youll want to make sure you know whats required first. In both cases, you may need to obtain a permit.nbsp;

The legality of do-it-yourselfnbsp;electrical worknbsp;varies from state to state, and from one municipality to another, said The Spruce. Always call your local permit office for the answer that pertains to you.

While it may seem tempting to skip the permit process to save time and money"Some municipalities charge 1 of the total construction costs to issue the permit and may take up to six weeks to complete the inspections, said Investopediadoing so could backfire.nbsp;

For the do-it-yourself remodeler, obtaining permits is expensive, time-consuming, and sometimes frustrating, but for many home renovations its necessary and required. Many homeowners sidestep the permit process as a result. According to thenbsp;National Association of Realtors, failing to obtain the proper permits may complicate or cancel the sale of your home. During thenbsp;home inspectionnbsp;or appraisal process, homeowners may have to show that the proper permits are on file. If the lending bank learns that remodeling work was done without securing permits, it will likely not make the loan.

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An Insider’s Look at the Reality of Home Staging

When it comes to home staging, there are typically two buyer camps: The first thinks its a waste of money and doesnt want to pay more to potentially make their home more attractive to buyerseven if their real estate agent says theyll make it up and then some; The second realizes the value and is willing to make that smart investment.

But just how do those two contingents break down? The National Association of Realtors NAR 2019 Profile of Home Staging provides some insight. The study separated the study into three categories: Buyers Agent Perspective, Sellers Agent Perspective, and Buyer Expectations. Were taking a closer look at the key points.

Home Staging: Buyers Agent Perspective

According to the study, 40 percent of buyers agents cited that home staging had an effect on most buyers view of the home and 83 percent of buyers agents said staging a home made it easier for a buyer to visualize the property as a future home. Buyers agents also noted that, Staging the living room was found to be most important for buyers 47 percent, followed by staging the master bedroom 42 percent, and staging the kitchen 35 percent.

Home Staging: Sellers Agent Perspective

Per the study, 28 percent of sellers agents said they staged all sellers homes prior to listing them for sale, and 13 percent noted that they only staged homes that are difficult to sell. The living room 93 percent, kitchen 84 percent, master bedroom 78 percent, and the dining room 72 percent were the most commonly staged rooms.

Sellers agents offered to do the staging 26 percent of the time, and, The median dollar value spent on home staging was 400.

Buyer Expectations

Call it the HGTV effect: A median of 10 percent of respondents cited that buyers felt homes should look the way they were staged on TV shows, while 38 percent of respondents said that TV shows which displayed the buying process impacted their business.

The real effect of staging

Now that we have the buyers agent, sellers agent, and buyers perspective, lets look at some real data about staged homes. According to the NAR study, 22 percent of sellers agents reported an increase of one percent to five percent of the dollar value offered by buyers, in comparison to similar homes, and 17 percent of respondents stated that staging a home increased the dollar value of the home between six and 10 percent. 28 percent of sellers agents stated that there were slight decreases in the time on the market when the home is staged, while 25 percent reported that staging a home greatly decreased the amount of time the home was on the market.

Of course, time on market and sales prices can range depending on a number of factors, like age of home, location, square footage, and price point. The Real Estate Staging Association has found, overall, that staged homes sell 73 faster, on average, than their non-staged counterparts, said The Mortgage Reports.

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Is a Bigger Down Payment Always Better?

When youre buying something major with a loan, namely a house, you likely need a down payment. A down payment covers part of the purchase price.

Your down payment plays a role in whether you are approved for a mortgage at all. Down payments also impact your interest rate and the borrowing costs throughout the life of your loan.

Your down payment usually comes from your savings. The down payment should be a percentage of the total purchase price, and then you pay off the rest of the loan by making installment payments.

If youre buying a house for 200,000 and want to make a 20 down payment, its 40,000. You would pay that when you close on your home loan. Then, youre actually only borrowing 160,000.

There are arguments to be made both for and against making the biggest down payment possible. There are also pros and cons of a larger down payment.

The Pros of a Bigger Down Payment

If you save the cash and want to make a bigger down payment, one big benefit is reducing how much youre borrowing. When you have a smaller loan, youre going to pay less in total interest over the life of your loan.

Youll also get lower payments each month.

You can use a loan calculator to see how much a larger down payment has the potential to affect your payments.

With a bigger down payment, you may qualify for lower interest rates. A lender likes a bigger down payment because theyre taking less risk on you. If you default on your loan, they see that theyll be able to get more of their money back.

If you can manage to make a down payment of at least 20, you can avoid paying private mortgage insurance.

Since down payments that are larger mean a smaller monthly payment, youll have less stress in this area.

There are opportunities to borrow against assets such as your home. The home is an asset that serves as collateral. The larger your down payment is, the sooner you build equity in your home. Then, you can borrow against that equity.

Why Would You Make a Smaller Down Payment?

While theres a significant upside to maxing out how much you put down on a home, its not always the right situation. We tend to see a bigger down payment as always being better. In reality, it depends.

One reason to go with a smaller down payment is that it can take a long time to save that much cash. You may not want to wait so long to buy a house.

Even if you do save enough money for a large down payment, it can create stress to think about putting the money into a house. If you were to face an unexpected situation and had less of an emergency reserve, it could create problems.

Another reason a lower down payment could make sense for you is if you want to make any repairs or potential upgrades to the home after you buy it.

Most lenders will set a minimum down payment required, and you can always pay more than that.

Down payments will show a lender youre serious and that youre putting yourself on the line as far as taking a risk but think about your personal financial situation before

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Comparing a Pre-Approval and Pre-Underwriting

When youre shopping for a new home, there are a lot of steps in what can be an overwhelming and frustrating process.

Much of that frustration comes from getting mortgage financing.

Before you start to look for a home, you might decide to get pre-qualified or pre-approved. Theres also the option to go through pre-underwriting. When the housing market remains competitive and bidding wars are common, there are some benefits to pre-underwriting, which we detail below.

What is Pre-Qualification?

Pre-qualifying for a loan is a single step on your way to a pre-approval. Pre-qualifying is part of a process when you work with a lender, and they decide the type of guarantee they will give you.

Then, once you get pre-qualified, you would move on to get pre-approved or pre-underwritten.

You dont have to pre-qualify to do either of the next possible steps, but some people like to do it as their first step because they learn more about what they can afford.

Its a soft pull when you do a pre-qualification before your pre-approval. The pre-qualification wont hurt your credit score, which is important for your interest rate and whether youre approved at all.

A lender needs a few basic things for a pre-qualificationyour monthly income, estimated monthly debts, and the down payment you can make.

The figure a lender gives you as a pre-qualification amount is estimated and based on assumptions of your financial situation. The number indicates a figure that a lender might be willing to give you, but its not definite.

Youll probably need an actual pre-approval letter to start working with a real estate agent.

Getting a Pre-Approval

While a pre-qualification is a figure the lender would likely lend you, a pre-approval has the terms detailed for their theoretical offer. The details in a pre-approval will include your allowable purchase price, interest rate, and lending fees.

It would be best if you went into the process to shop for a mortgage with a pre-approval in hand. This is what a real estate agent wants to see to work with you to ensure youre not wasting anyones time.

The pre-approval letter is a tentative amount of money that a lender says they would loan to you.

A pre-approval will require a hard pull.

Your lender will probably ask for quite a bit when doing a loan pre-approval. Theyll want to see all your financial information, including your tax returns and bank statements for at least the past 60 days. Theyll want retirement and brokerage statements for the past 60 days, totals for your monthly debt payments, and documents >

Then, Theres Underwriting

Underwriting is the last step to actually getting financing to buy a home. After submitting everything to get approved for a loan, your loan goes through underwriting. This is a time when the lender will closely assess all of your finances to determine their risk level in extending you a mortgage.

This is where youll probably run into most of the delays.

Pre-underwriting is when you can go through this step before youre under contract for a house. An underwriter can do everything on their end that would otherwise come after your offer is accepted before you start looking at properties.

With pre-underwriting, sellers know youre someone they can have confidence in. Youre showing them there are limited opportunities for surprises or things to go wrong.

In a competitive market, pre-underwriting can be a tool that makes you a very strong candidate, and it can help you win a bidding war, even more so than offering more money.

Pre-underwriting is a somewhat new option, so your lender may not offer it, but if so, it can take some of the stress off of you and make it more likely you will get the home of your dreams.

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