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Should You Lock or Float Your Interest Rate?

Interest rates can go up or down on a daily basis. If you’re planning to buy a home or refinance your mortgage, locking or floating the interest rate may help you save money over the term of the loan.

Rate Lock
Locking an interest rate can protect you from market fluctuations. If you choose a rate lock, your lender will honor the current interest rate for a period of time, usually 30 or 60 days. 

If interest rates go up during that time, in most cases, you will still be eligible for your locked-in rate. If you lock in a rate and the rates drop, you will most likely be stuck with the rate you locked in. If you decide to apply for a different type of mortgage than you initially chose, if your credit score changes or if the house appraises for more or less than you expected, that may affect the rate lock. 

Locking in an interest rate does not mean that you are required to take out a mortgage through that lender. You can walk away if you find a lower rate elsewhere, but you may have to forfeit any fees you paid to lock in the rate.

A float-down option can be included in a rate lock so you can be eligible for a lower interest rate if rates fall between now and when you close on your mortgage. A lender may charge a higher fee for a float-down than for a standard rate lock.

Lenders typically offer several interest rates for borrowers with different credit scores. Before you choose a float-down, make sure you know how the lender will decide which rate you are eligible for. 

With a float-down, you may only qualify for a lower interest rate if it is a specific amount below your original rate. If rates will have to fall substantially for you to have a shot at a lower rate, you may decide that it’s not worth it to pay the extra fee. If you choose a float-down and lock in a lower rate, you won’t be able to get an even lower rate if interest rates drop again before you close on your mortgage.

Floating an Interest Rate
Floating an interest rate means not locking it in. If you decide to float the interest rate, you may wind up with a rate that is higher or lower than the one that was available when you applied for a loan. That may be risky since interest rates can be volatile. 

Which Option Should You Choose?
Choosing a float-down may be a smart move if you think interest rates may go down significantly. Floating the interest rate may make sense if rates are following a general downward trend. The fees associated with each option may vary from one lender to another. 

Tips for Saving for Your First House

Buying your first home is an exciting transition, but a home will be one of the largest financial investments you will make. Making sure that you are as prepared as possible is key. Saving for your home may feel like a big undertaking, but there are a few tricks you can use to make it easier.

Determine Your Budget
No good financial decisions can be made without a proper budget. Assess your most vital expenses and go from there. Ensure that you have a dedicated savings account for emergencies (experts recommend that you have at least three months of your income saved) and a separate savings for your future downpayment. Check with a financial planner to help you make the most of your budget long-term.

Address Your Debt
Debt can prevent you from achieving your house-buying dreams in two ways. First, and most obviously, bills for excess debt detract from your monthly budget. Secondly, if your debt-to-income ratio is unfavorable, you will be prevented from getting a mortgage or a reasonable rate when you go to buy a home. Address your debt selectively. You may be tempted to pay everything off before buying a home, but closing accounts can have a negative effect on your credit as well. Keeping lines of credit open, but with low balances, can be an excellent way to ensure a high credit score and a low monthly bill.

Do Your Homework
Saving for a home is a great goal, but you must be specific. Do your homework and check your area’s housing market. Additionally, find out what assistance you may qualify for. Between grants and FHA loan options, you may find you don’t need to save a standard 20 percent for a downpayment. Shop around and be sure you find a broker that will go the extra mile to find you the best deal.

A little research and some great planning can guarantee that you will be holding the keys to your dream home before you know it.

New Considerations in Home Design: Privacy and Space

According to a recent report from Zillow, home builders are predicting that there will be a move away from open floor plans as homeowners seek out increased privacy, as well as an increased demand for more space.

Growing in popularity for decades, open floor plans have also been touted by popular home-design programs in recent years. In fact, Zillow research found that the share of for-sale listings mentioning open concept layouts more than doubled since 2015.

However, in the wake of the coronavirus, homeowners are discovering that the lack of privacy involved in an open design concept can often be a detriment. In a recent survey by Zillow and The Harris Poll, 27 percent of those surveyed said they would consider moving to have a home with more rooms—one of the top reasons for considering a move—after spending more time at home because of coronavirus orders.

Homebuilders agree. The experts at Berks Homes believe that homes built post-coronavirus will have more doors for privacy, dedicated home-office space, better insulation for noise control and separate spaces for kids. The pros at Pyatt Builders believe that open concepts won’t disappear, but will be approached differently, highlighted by features like barn doors, which preserve the feel of openness yet allow for private, multi-use space.

Other emerging home trends will include germ-preventing features, such as mudrooms, allowing family members to remove shoes and wash hands before entering the house, and smart home technology like touchless faucets and self-cleaning toilets.

According to Zillow research, home shoppers are clearly interested in starting from scratch when it comes to home design—searches for new construction homes are up 73 percent from 2019.

10 Ways to Help Rein in Spending

If, like many Americans, you find your money runs out before the month does, it may be because you don’t keep track of your spending. Budgeting helps, financial advisors assure us, but budget or no budget, there are ways to rein in your spending that may be less painful than you think:

  1. Plan meals ahead and shop with a list. Planning out your meals for the week and shopping with a list can rein in food costs big time. As tempting as store displays may be, resist the urge to splurge.
  2. Stop buying brand name products. When shopping, you may automatically reach for the branded products you know. But many generic brand products work just as well as their branded counterparts and cost considerably less. 
  3. Don’t buy bottled water. It’s a $20 billion industry that is costing you money. Buy a water filter, if you need to, and carry a reusable water bottle.
  4. Make your own coffee. Americans love their coffee, but if you’re spending $10 to $25 a week at the corner shop, you are spending $500 to more than $1,000 a year. Make your coffee at home, carry a reusable cup and save your cash.
  5. Consider buying used. Whether it’s a car, household goods or even furniture, you can often find great buys on gently used items and save big bucks.
  6. Check your 401(k) fees. Congratulations if you’re stocking away funds for retirement, but paying high fees can reduce your savings. Check to see how much is being taken off the top and make changes as needed. 
  7. Consolidate student loans. If you’re paying down multiple loans, consolidating them may save you money and/or extend the repayment period.
  8. Don’t pay unnecessary bank fees. If you’re paying monthly fees, shop around for cheaper banking services. Don’t use an ATM out of your network, and be sure you have fee-free checking.
  9. Turn down the thermostat. Save on heating costs. Put on a sweater and turn down the thermostat a few degrees, especially during the day and early evening. 
  10. Check your tires. According to the Department of Energy, you can save as much as 3 percent a year on gas when your tires are properly inflated. 

Five Tips for a Hassle-Free Moving Day

Moving vans are criss-crossing the nation in great numbers these days, as consumers take advantage of historically low mortgage rates to upgrade their living space and grab their piece of the American Dream.

The New York Times reported recently that moving companies are so busy, they are turning people away, and in most areas of the country, movers need to be booked way in advance of your moving day.

But the big day will arrive sooner than you think and you’ll want it to go as smoothly as possible. Moving professionals offer five tips for ensuring that it does:

List last-minute chores. You’ve spent weeks sorting, packing and preparing for your move, but certain tasks cannot be accomplished in advance, like emptying and/or cleaning out the fridge and freezer, getting kids or pets to scheduled sitters, or taking out the last of the trash. Making a list will make it easier for you to check off last-minute needs.

Prepare a go-bag. Pack a box or suitcase with stuff you’ll need on moving day or the day after, as well as documents and valuables you don’t want to load onto the moving truck, such as phone chargers, toiletries, medications and an extra set of clothes for each family member. For a long journey, you may also want to fill a small cooler with water and healthy snacks or pre-made sandwiches.

Leave out basic cleaning supplies. You’ve likely done a thorough house cleaning by now, but once the furniture and packed cartons are gone, you may see dirty areas you didn’t notice earlier. Keep rags or paper towels and a few basic cleansers handy for tackling dust bunnies behind the now-gone sofa, or grime where the fridge once stood.

Do one last walk-through. Anything left behind may be difficult to retrieve later, so open all kitchen and bathroom drawers and cabinets, bedroom closets, coat closets and any other built-in areas where items may have escaped notice. 

Have some cash on hand. While a credit card can cover unexpected stops for lunch or other purchases, you may want to have cash to tip your professional movers. Such tips are not mandatory, but if they’ve done a good job, consider tipping $20 per helper.

4 Things to Ignore When Viewing a For-Sale Home

Though it is common to stage a home for in-person showings and listing pictures, there may be a house you visit or view that has some unique, even borderline odd features from the current residents. Agents will always suggest that homeowners looking to sell should clean and declutter their homes, however, this is not required. Unfortunately, these things can become distracting, especially when you love the layout, location and style of the home itself. Here are a few strange, ugly and even unsightly things you should ignore when considering making an offer on your next home.

Uncommon Uses for Rooms
Many homeowners will turn spare bedrooms into offices or dining rooms into gyms. Some may even use these spaces in stranger ways. But just because they use these rooms for strange or unusual reasons doesn’t mean you have to. If you come across a home you like, but the current homeowner utilizes space in a different way, try and remember that you can make it into anything you desire once it’s yours. 

Off-Putting Wallpaper or Paint Color
Though many buyers, especially millennials, prefer a turnkey or move-in ready home, the reality is, that is not guaranteed. This is especially true when viewing an older home or one that the current homeowners have lived in for many years, even generations. It is important to look past the outdated floral wallpaper or an unusual paint color. These are things that can always be tackled later on. Painting or replacing wallpaper doesn’t have to be time-consuming or expensive, and can be done before moving in.

Dirty Floors and Carpets
Similar to the walls, floors can have a prominent effect on a buyer’s view of a home. If a wall-to-wall carpet is excessively dirty or stained, this may steer you away. Same goes for a hardwood or tile floor that may be old and outdated. However, these are easy changes. New flooring and carpeting or a deep clean may be the answer to making this space exactly what you want. Consider speaking with the sellers about replacing a damaged or stained carpet, or lower your offer as a contingency for purchasing the home. Just be sure to not let this steer you away.

Obvious Personal Presence
It can be difficult to imagine you and your family living in a home where there are multiple family portraits and other personal belongings strewn across a home. However, if the seller decides not to remove these items, buyers may need to look past them in order to obtain their dream home. The same thing can be said for messes, as many buyers may not feel comfortable getting into closets and cabinets surrounded by the seller’s clutter. Do your best to ignore the things you can change later on and decide whether or not you can make this house your home. 

What Structural Repairs to Consider Before Buying or Selling Any Old Home

You have an old home to sell or buy? Perhaps you’re moving, upgrading, downgrading or selling off property. Either way, you want to attract the most buyers to ensure you get a quick sale. Here are four things you should work on before listing an older home:

colorful, coastal florida victorian style home

Old or Leaky Roofs
You can replace old shingles, seal up the chimney and ensure the fascia and soffits are free of holes from pests or rot. If you have leaks, then it might be necessary for a roofing contractor to come and look at the problem. There might be issues you cannot see like warps in the underlayers or mold. A roof replacement might be necessary if you have too much damage to repair in a small area.
Saggy Walls and Sticky Cabinets
Having these problems in your home may indicate an issue with your foundation. If it’s been over 10 years since you had a foundation inspection, then you might want to talk to someone about checking out the slab under the home. Cracks, shifting soil and erosion can remove pockets of dirt, allowing the slab to move out of level.
When your doors and windows are hard to open and stick, then buyers will wonder if there are hidden foundation issues that they should avoid. You may lose bids if you don’t fix this problem before putting your home on the market. Plus, anything that shows up in the home inspection will be a surprise and most buyers will ask for concessions, taking money out of your pocket.
Uneven Floors
This problem might be because of the foundation, but it can also be because of old flooring. If there are areas where your feet sink in the middle of the floor, then there is a possibility that this part of your floor is rotting or experiencing water damage. Termites can invade a home and eat away the wood supports if the homeowner doesn’t catch the problem soon enough. Pipe leaks can cause water damage that’ll worsen over time. Leaks in the wall and condensation issues can also cause rot.
Fixing up an old home is often cheaper if you do the work before listing. If you don’t, the buyer may back out altogether,or opt for the most expensive company to do the work, and you have to foot the bill. Fixing electric, roofing, HVAC, flooring and foundation issues before you sell an old home may save you money in the end.
Meghan Belnap is a freelance writer who enjoys spending time with her family. She finds happiness in researching new topics that help expand her horizons. For more information on replacing your roof, please visit Otero & Sons Roofing.
This article first appeared on RISMedia’s blog, Housecall.

7 Steps to Prepare Your Home for Winter

All seasons affect your home, but perhaps no other season impacts it more than winter. The cold temperatures, wind, snow and freezing rain combine to make it a season not to be ignored.

To ensure you do not have any unnecessary repair costs this winter, follow these seven simple steps while preparing for winter. They are short and sweet—and can save you money in the long run.

How to Prepare Your Home for Winter Weather

Preparing a home for the winter can sound overwhelming, but these tips can usually be done within a weekend, and you will be better prepared for whatever weather comes your way.

1. Clean Your Gutters
You should do this every season, but right before winter might be the most critical time. If your area gets a lot of snow, your home will have to bear that additional weight. If your gutters get too much weight on them, they could be pulled from your home.

But perhaps the most important reason is that if you don’t clean your gutters, your home could get water damage. As snow and ice melts and refreezes overnight, the devastation inflicted on your home could cost thousands of dollars. Make sure the water has somewhere to go when it melts so it is kept well away from your house.

2. Recaulk Your Windows and Doors
Recaulk your windows and doors each year to prevent water damage and heat loss. A caulk gun and tube exterior caulk will cost you around $20, and you can easily do it in an afternoon.

To be clear, you should only caulk the outside perimeter of your windows and doors’ molding. Use exterior silicone caulk because it is less affected by extreme temperatures—meaning it won’t shrink and expand as the seasons change.

To caulk your windows and doors, cut the exterior caulking tube at a small angle using your caulk gun (most caulking guns have an internal blade for this). Insert the tube into the gun and crank the handle until the circular pad is pressed tightly to the tube.  Caulking should start to come out of the hole you cut once enough force is applied.

Next, apply a thin line of caulk across the window or door molding to your house. Using a latex-gloved finger, lightly press down on the caulk to spread it out so it fills all of the tiny cracks and crevices until it is smooth.

3. Get Your Roof Inspected
This step is probably the most ignored yet most important step when preparing a house for winter. If you are unable to access your home’s roof, you can get it inspected by a contractor to look for loose or broken shingles.

Any contractor you hire to do an inspection should also be able to do any minor repairs in an afternoon (replacing shingles is usually a quick process). It might cost you more than you would like to spend, but neglecting it for an entire winter could easily lead to even more repair bills down the road.

Summer rainstorms are notorious for wreaking havoc on a roof, so it’s important you repair any damage before your roof gets its toughest test: packed snow.

4. Reverse Your Ceiling Fans
As you learned in high school, warm air rises. Reversing the direction of each of your fans will create an updraft, which in turn will push down any heated air pressed against your room’s ceiling. By keeping warm air circulating, you’ll use heat more efficiently, which should cut down on energy costs. Even if you don’t have any rooms with high ceilings, do this one as soon as the weather turns.

To reverse your fan’s direction, make sure the fan is off, then click the switch above the blades. If you have a remote-controlled fan, you should see an option for reversing the fan’s direction on the remote.

5. Get Your Chimney Inspected
To keep your family and home safe, get your chimney inspected and cleaned before each burning season—even if wood is not your primary source of heat, and you only use your fireplace for aesthetic reasons.

When you burn wood, deposits of creosote build up on the inside of your chimney. Creosote is cancerous and highly flammable. When enough of it builds up in your chimney, the smoke from a fire can cause it to ignite, which in turn can cause a chimney fire. Many home fires are caused by chimneys.

If you want to go the extra mile, consider installing a steel liner, which will help protect your home in the event of a chimney fire.

6. Drain the Fuel From Your Small Gas-Powered Engines
Gasoline doesn’t last forever; in fact, it decomposes quickly. When this happens in a small engine (such as a lawn mower or weed eater), it can cause the engine’s carburetor to gunk up, which means you may not be able to get it started again when winter is over.

To prevent this, you can either add a fuel stabilizer or let the machine burn through all of the gas by using it one last time in late summer/early fall and letting it run until it turns off. If you do this, your machines will last longer and start much more easily in the spring.

7. Check Your Insurance Coverage
Right before winter is a good time to check your insurance coverage. If you have done any renovations over the summer that could add value to your home, make sure the added value is covered by your policy in case anything happens in the winter. You should also check what your provider offers for things like roof and ice damage to see if you may want to add additional coverage.

The Bottom Line
Preparing a home for winter isn’t a marathon, but it does take a little bit of forethought. However, if you take the seven simple steps above, you will likely spend far less on maintenance than you used to.

Published with permission from RISMedia.

Can You Get Approved for a Mortgage if You Have Student Loan Debt?

A large percentage of recent college graduates have student loan debt, often totaling tens of thousands of dollars. While having significant balances might make it harder to become a homeowner, you may still be able to qualify for a mortgage.

Factors That are Important to Lenders
A lender will look at your overall financial picture to decide whether to approve your mortgage application. Each company has its own requirements, but all lenders look at several key criteria to make decisions.

An applicant’s payment history is one of the most important factors. If you have consistently paid your student loans and other bills on time, that demonstrates that you manage your finances responsibly and may increase your chance of qualifying for a mortgage with a competitive interest rate. 

Mortgage lenders also consider an applicant’s debt-to-income ratio or the percentage of monthly income that goes toward paying down debts. Lenders don’t want borrowers to have a DTI ratio above a specific percentage.

An applicant’s credit score is also important. A high score could help you get approved for a mortgage with a competitive interest rate.

Improve Your Finances
If your current student loan payments would make it difficult for you to qualify for a mortgage, you might be able to switch to an extended repayment plan or an income-driven repayment plan to reduce your monthly payments and DTI ratio. If you have multiple student loans, you might be able to consolidate them and reduce your monthly payment. Don’t request a forbearance or deferment to lower your debt-to-income ratio. That could make a lender think you’re in financial trouble and could hurt your chance of qualifying for a mortgage. 

Pay all your bills on time. Focus on reducing your DTI ratio and your credit utilization ratio, or the percentage of your available credit you are using. Once you pay off a credit card, you should keep the account open since the length of your credit history affects your credit score. Avoid applying for new credit cards because hard credit inquiries could lower your score. 

Look for Other Sources of Help
If you can’t qualify for a mortgage on your own and someone close to you is also interested in buying a house, you might want to consider purchasing a home together. You could have a better chance of qualifying with a co-borrower since the lender would consider both your incomes and savings.

Another option is to ask someone to cosign a mortgage. That person’s income and credit score could help you qualify, but the cosigner would not have an ownership stake in the house.

Large student loan payments can make it difficult to save for a down payment. You may qualify for assistance through a program offered by the federal government or by your state government. You may also be eligible for a mortgage for first-time homebuyers with a low down payment or none at all.

Pros and Cons of Buying a House With a Fireplace

Many people love the idea of relaxing in front of a fireplace on a cold winter night. The sight, smell and sound of a fire can create a relaxing ambience. While the idea of having a home with a fireplace may be appealing, the reality does not always live up to people’s expectations. The amount of heat given off, the amount of work required and the cost depends on the type of fireplace.

Wood Fireplace
A wood fireplace can create a cozy atmosphere. If the power goes out, a wood fireplace can continue to heat your home. It can also provide light and a way to cook during a power outage.

Since most of the heat produced by burning wood escapes through the chimney, a wood fireplace is not very energy efficient. A fireplace insert can increase the amount of heat that stays in the house. If the damper doesn’t close enough, the house may have drafts, which can result in high utility bills.

Embers from a fire can spread and cause nearby objects to catch fire. Curious children and pets can be seriously injured if they get too close. If you buy a house with a wood fireplace, you will need to stay close by to prevent accidents.

Smoke from a wood fireplace can release pollutants into the atmosphere. A fireplace can also release carbon monoxide and other dangerous gases inside the house.

Because of the risks and the amount of work involved, many people who buy a house with a wood fireplace only use it occasionally. The costs of cleaning, maintenance and wood may not make owning a house with a wood fireplace cost effective. 

Gas Fireplace
With a gas fireplace, you can simply press a button and instantly enjoy a cozy fire. If the house has more than one gas fireplace, you can heat only the room where you are, rather than the entire house, to save money. The fireplace can provide heat even if you lose power. 

A gas fireplace won’t produce the aroma and crackling sounds of a wood fire. On the other hand, gas fireplaces are easier to maintain than wood-burning ones. There is no ash or soot to clean, but the fireplace should still be inspected every year. 

Electric Fireplace
An electric fireplace can provide heat and light and can be used even in a small space. It can be expensive to use, however, and it won’t work during a power outage. An electric fireplace also does not look realistic.

Should You Buy a House With a Fireplace?
Many people search for a new home with a fireplace, then find that they don’t use it as much as they thought they would and realize that they spent a lot more than they expected to maintain it. If you’re thinking about buying a house with a fireplace, be realistic about how much you would use it and consider the costs and safety issues to decide whether it would be worth it.

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