Stephen Dewitt

A Guide to Help Your Loved One Downsize

by

The move to assisted living can be a big adjustment for seniors, though it is often necessary for their health and well-being. Once your loved one has made the decision to move to assisted living, they will most likely need to downsize for their move. Helping them sort through their furniture and belongings will make the transition to assisted living that much easier. Bringing personal items that they love can help make their new space feel like home. Making a move to assisted living can include some challenging tasks, such as sorting through sentimental belongings and getting rid of furniture. But with your help, your loved one can feel good about their move and make their new space feel like home right away. This article will explore several tips for helping your loved one downsize for the transition to assisted living, including:

  • Make a plan.
  • Make a list of important possessions.
  • Visit the new home often.
  • Consider the essentials they should keep.
  • Be open with the dialogue.
  • Start with the easy, unsentimental items.
  • Make an “undecided” pile, so they don’t have to make hard choices right away.
  • Emphasize the positive changes.
  • Keep memorabilia and family keepsakes stored safely.

Helping Your Loved One Downsize

Once you have determined that assisted living is a good choice for your loved one, the next step is to find a community they will enjoy and help them downsize for their move. New Perspective’s assisted living communities offer your loved ones the freedom they deserve and services tailored to their personal needs. We offer daily organized activities, community-focused facilities, and amenities with 24/7 access. Assisted living gives residents their own living space, with the option to socialize with their neighbors and dine together whenever they want. They will also be able to cook for themselves and live independently, like they would at home. Chances are, their apartment will be smaller than their current living quarters, which makes downsizing such a crucial step in the transition to assisted living. With these tips, you will be able to help your loved one downsize in a way that’s empathetic and helpful while encouraging them about the positive changes they are about to make. Listed below are some great tips on helping your loved one downsize for the move to assisted living.

Make a Plan

It’s always helpful to have a plan when moving. Downsizing can be a lengthy process depending on your loved one’s current living situation, so it’s crucial to set aside at least a few days on your calendars to focus on packing. Start by defining your goals together so that you’re on the same page about what downsizing entails, and enlist help from other loved ones on days that you might need their involvement. Having everyone looped in on a plan will make the process of downsizing for assisted living that much easier for your loved one, and they’ll know they are supported during this big life change.

Make a List 

Besides having a plan, making a list of possessions that will need to be packed or moved can be very helpful. You might even consider making a list of essential possessions or family heirlooms so that they don’t get lost in the shuffle. Having a “moving checklist” will make the whole process easier and ensure you don’t forget any crucial steps or items. It might even be helpful to walk through your loved one’s home together and list the items they want to bring with them. Having someone to help make these decisions will make the process a lot easier and less stressful.

Visit the New Home 

Transitioning a senior parent to assisted living can come with some uncertainty. One thing that will help your loved one is to visit their new community and help them visualize themselves in their new space. It will help your loved one decide what possessions they want to bring with them and what they can leave behind. Visiting their new home with you can make the process much easier, and they will feel more comfortable about the move overall. Assisting them in asking questions at the assisted living community will also put them at ease and help them feel good about the decision to move.

Consider the Essentials 

Aside from the apparent items needed to live comfortably, there are some essential things that you will want to make sure your loved one has when they move to assisted living. This includes photos and other memorabilia, as well as home furnishings they are familiar with. Having their own pillows, bedspread, and other home items will help make the transition easier because they will be surrounded by items they’re comfortable with. If your loved one wants you to store some items for them in your home, offer to do that for them so they don’t have to worry about keeping things like Christmas decorations, seasonal clothes, and other items they won’t need year-round in their apartment. Their assisted living apartment should feel homey, comfortable, and tailored to them.

Start with Less Sentimental Items

It will be easier to help your loved one start the downsizing process if you start with easy items. Being able to easily make a decision on early, less sentimental items will open the door and make it easier to process more sentimental items as you progress.

Make an Undecided Pile

Along with starting with the easy items, it can be helpful to give your loved one the option to make an “undecided” pile. Sorting through sentimental items can be emotionally draining, so it’s a good idea to have a pile of things they can come back to later after more thought.

Store Keepsakes Safely

It might be best to take care of storing any family keepsakes or important memorabilia in your or a relative’s home so that your loved one doesn’t have to bring them with their new apartment. They may not have the space for it in assisted living or they may not want to have to store certain items. Offer to keep them safe for your loved one so that the move is a little easier on them.

Be Open and Positive

Throughout the process of moving to assisted living, it’s crucial to keep an open dialogue and a positive mindset for your loved one. They will enjoy a social community at New Perspective and have amenities they likely don’t have access to right now. This move can be an excellent thing for many seniors, and ensuring your loved one feels supported and excited about the change is essential to their success.

Moving to Assisted Living

While there may not be the perfect checklist for moving elderly parents into assisted living, these tips will help you get started. There are so many reasons why we should take care of our parents and elderly loved ones. Helping them downsize to make the move to assisted living is crucial to them having a positive experience moving into their new community.

18 Most Common Home Inspection Issues Found in the Report

by

Buying a home has lots of steps. Once a home buyer is “under contract” on a property, it’s common for them to hire a professional home inspector as the next step. This contingency allows the home buyer to determine whether anything is wrong with the property before purchasing it.

A home inspection typically takes 2 to 4 hours and can reveal plenty of problems with a home. This article covers the 18 most common issues found during a home inspection.

 

  1. HVAC Needs Servicing

Your HVAC system uses almost half of the energy in your home. It works hard every year to keep your home climate-controlled. Therefore, it tends to need servicing quite often. Unfortunately, many people do not service their HVAC systems yearly, which results in issues during the home inspection.

The average home inspector will not do an in-depth job of inspecting the furnace and AC. If you purchase a home with an HVAC system over ten years old, hiring an HVAC specialist to perform a complete system check is wise. This step will help you determine the remaining life of the unit and project future repair costs.

Some common HVAC issues include:

  • Dirty Filters (most common issue)
  • Improper Flue Installation
  • Dirty Coils
  • Unlevel Pad
  • Cracked Heat Exchanger
  • Broken Condenser

  1. Water Intrusion

Water damage can be tricky to identify. Thankfully, inspectors are fully trained to find this issue and recommend repairs.

Your roof will often be the first spot for water to leak and will travel downwards. Inspectors will usually start in the attic when looking for water damage from the top of the house. Some of the signs of water damage include the following:

  • Cracks and holes– Cracks or holes on the exterior walls are prime spots for water to enter your home.
  • Warped floors and damp carpets
  • Stained walls and ceilings– Even if the stain results from an old leak that has been repaired, inspectors will still check for mold buildup.
  • Peeling paint and wallpaper– This issue may indicate a leak behind the walls.
  • Musty odors– This problem can indicate mold buildup, often caused by leaks.

Some water intrusion may result from small leaks, but your inspection report will include details on the breadth of the problem. In addition, it will explain the steps to take to remediate the situation if needed.

  1. Roof Problems

Your roof will be one of the critical components an inspector will pay attention to during a home inspection, as it’s one of the essential parts of your home. If the roof leaks, there will be a list of other issues that will follow, which will cause some buyers to back out of a deal. It can be a costly fix on their part.

The condition of your roof will be affected by many factors, some of the main ones being the weather. If you live in an area with a harsh climate, your roof will require more attention than one in a mild climate.

Here are some of the everyday things an inspector will look for during a roof inspection:

  • Sagging– This problem occurs when the joists of your home are weakened and cannot properly hold the roof in place. This issue can be exacerbated by large amounts of snow or poor drainage from your roof.
  • Overall condition of the roof sheathing– Particularly in areas around chimneys or other roof penetrations and valleys of the roof.
  • Soft spots that indicate leaks– These can be further identified by a deeper look in your home’s attic.

An inspector will assess your roof in two different ways. First, if the weather allows and the environment is safe, they will walk the roof to understand its condition.

Second, they will enter your attic. Working in the attic allows them to see areas where current or past leaks have occurred. They will also see signs of roof sagging, spreading, and twisting of the rafters.

  1. Electrical Wiring Issues

Every year, it is estimated that 51,000 of the fires in homes are due to electrical wiring problems. So, the electrical system is another critical component of a home’s inspection. Most newly built homes will not have electrical issues. However, older homes with outdated wiring areas are susceptible to fires.

Some of the most common electrical issues an inspector will find are as follows:

  • Exposed wiring and fraying
  • Painted outlets– which can cause overheating. Common in properties once used as rentals.
  • Reversed polarity– This means that the plugs’ hot, neutral, and ground slots have somehow been mixed up.
  • Aluminum wiring– Aluminum was considered more cost-effective than copper wiring in the late ’60s and early ’70s, but it can contribute to the potential for a fire in your home.
  • Improper modification of electrical panels– This issue can cause intermittent flickering of lights or your switches and outlets not working correctly.
  • Missing knockouts– or rectangular shapes missing in a panel

An inspector will check the condition of your electrical panels and outlets, your light fixtures, and the type of wiring in the home. They will include this suggestion in your report if they feel a system needs to be updated. However, if they think a specific area is vital to be fixed upon move-in, they will flag it.

Some electrical fixes will be of relatively low cost. For example, if the entire home needs to be re-wired, it can cost up to $30,000+.

  1. Poor Ventilation

While you likely will not run into issues with the ventilation in newer builds, older homes usually have ventilation problems. Poor ventilation will lead to moisture buildup, wood rot, termite infestations, mold development, and foundation issues. Home inspectors will trek into your attic to determine the state of your home’s ventilation.

Why is ventilation important? Poor ventilation can result in much more work for your HVAC system to keep your home cool and comfortable.

If there is not enough ventilation within your home, a large amount of heat will build up in your attic, raising the overall temperature of your home and sending your cooling system into overdrive. Proper ventilation equals more energy efficiency.

  1. Poor Drainage and Grading

What is the importance of grading regarding your home’s foundation? Grading refers to the slope present in the area surrounding your home’s foundation. Ideally, you want the slope to face away from your house. Therefore, the water will flow away from the structure rather than towards it.

The insufficient slope will result in water pooling towards your home’s foundation. This problem can result in a flooded basement, damp crawl spaces, cracks in the foundation, and even shifting in your home’s foundation. Structural issues can be very costly.

In an ideal world, the grading surrounding your home is anywhere from three to five percent slope away from the property. In other words, for every two or three feet you step out from your property, the land should drop by two or three inches.

How can you tell if your home might have some issues with the grading on your lawn? Here are some signs to look for:

  • Windows that are not square or that look off-kilter
  • Interior doors with significant, uneven gaps at the top when closed
  • Interior doors that visibly swing to one side or the other when left ajar
  • Floors that visibly slope to one side or the other

Correcting grading around your home can be pretty costly. However, depending on who you hire to help with the issues, they may re-grade the land. This step will involve adding fill near your home’s foundation and tamping it down.

The inspector may also recommend installing a French Drain at a low point in your yard. Water is directed into the drain and out to a different part of your yard that can handle it.

Grading your yard is a tough job. Although it can be costly to fix, you will face an even heftier price tag if it is left unattended and damages your home’s foundation.

  1. Plumbing Issues

Plumbing issues within a home can be pretty common and very costly. Unfortunately, homeowners may not even realize an issue until inspection, as most plumbing issues present as low water pressure or a slow drain.

The majority of the time, an inspector will pay attention to the following when inspecting your plumbing:

  • Whether or not water flows from your taps effectively
  • Whether or not your drains work properly
  • And whether or not your toilets flush

A home inspector will not be as detailed in their plumbing inspection as a professional plumber; however, they can give you an overview of the issues that need to be addressed upon move-in, if any.

They will likely recommend a professional plumbing inspection if they think there may be a more significant issue outside their expertise. However, rest easy knowing that most plumbing issues found during a home inspection are minor.

  1. Foundation Flaws

Foundation problems are perhaps one of the most problematic areas of a home inspection for most buyers. Your home’s foundation is one of the most critical components of its overall structure, so finding an issue here can be very stressful and costly to resolve.

The following factors can cause foundation issues:

  • Drainage problems – If your yard is sloping or grading is off, water can settle near your home’s foundation, leading to damage.
  • Missing or inadequate steel reinforcement in the foundation
  • Intrusive tree roots
  • Installation of a second story without reinforcing the original footings
  • Natural occurrences like earthquakes, sinkholes, or landslides.

How can you tell if your home may have foundation issues? One of the most significant signs will be cracks in the interior or exterior walls of the house. Some minor signs include tile cracks, bowed walls, siding separation, or uneven floor.

In a perfect world, the seller will have done their best to uncover any foundation issues before listing their home, as not doing so could result in costly negotiations. However, some sellers will wait to see what the market will offer for their home and not worry about fixing an issue that could cost them thousands of dollars.

Therefore, thoroughly inspecting your foundation is a good idea when buying a house.

  1. Blocked Gutters or Downspouts

Many people do not stop to consider the importance of gutter conditions. When inspecting your gutters, the inspector will look for the following:

  • the guttering system is adequately sized for your home to protect against runoff,
  • that the channels are free of rust, cracks, and holes that will cause leaking and
  • that the downspouts divert water away from the home’s foundation

Why is it so important to look at your gutters during a home inspection? Because they play a massive role in keeping your home safe from water intrusion.

If your gutters are blocked, cracked, or not diverting the water far from your home, it will settle near your home’s foundation. Over time, erosion will occur, and you will likely develop cracks in your home’s foundation, the perfect environment for water to enter your home.

In addition to the toll it will take on your home’s foundation, water inside your home can find its way into wooden joists, etc. This problem will encourage the development of mold, wood rot, and termite infestation.

Although maintaining your gutters may be annoying, the payoff is excellent. But, of course, you’ll want to deal with any water issue up front before moving into the home.

  1. Mold

This component of the home inspection is heavily tied to issues with your plumbing and ventilation systems. For example, if a leak is present, you live in a humidity-heavy climate, or the ventilation systems in your home are outdated, you will be at high risk for developing mold within your home.

Contrary to popular belief, mold will not always be visible to the naked eye. However, you can usually smell mildew in the air when it is present. Mold is prevalent around windows and doors, but it is also a frequent visitor in your bathroom and kitchen. When looking over your home, inspectors will be on the lookout for the following signs:

  • A musty, mildew smell
  • Signs of warping or cracking around materials such as tile, caulk, etc.
  • Moisture buildup in areas with low light or visibility (prime spots for mold)
  • Visible mold that will lighten upon application of bleach

Why is it essential to identify whether or not there is mold in your home?

The first obvious answer is that it can lead to health issues like trouble breathing, itchy eyes, sore throat, and coughing. But mold can also indicate a leak inside or outside your home, which you will want to find before it becomes a more significant issue.

If mold is found in the home, there are many ways in which you could try to remove it on your own. However, if the problem is too severe, hiring a professional for mold remediation in your home is always recommended.

  1. Termite Damage

Termite inspections are one of the most recommended portions of a home inspection following a purchase. Why is this the case? Because you often cannot see their damage from the outside.

Termites are small insects that feed on the cellulose found in plants, wood, dead leaves, and soil. They often become more active in the spring, feeding on wood from the inside out.

Most of the time, once you notice termite damage with your naked eye, it is too late to resolve the problem just by tinting the home. In addition, replacing portions of the wood in your home’s walls, roof, or foundation will be a very costly.

What are some of the signs of termite damage your inspector will be looking for?

  • Buckling floors
  • Dry rot in wood floor joists
  • Wood rot in door and window frames
  • Soft/damp wood
  • The presence of mud tubes bored into the soil near the foundation or directly into the home.
  • Swarms around indoor or outdoor lights
  • Small mounds of what looks like sawdust

Where will your inspector look for termite damage? One of the first areas they will look at will likely be in your crawlspace or basement. These areas are often the first to show signs of moisture, creating the perfect environment for these wood-destroying organisms. Other areas include the following:

  • Wall cavities
  • Firewood stacked against the side of a home
  • Mulch or other landscaping materials near your home’s walls and foundation
  • Siding
  • Flooring
  • Window Frames

A pest control contractor will likely be brought in for proper assessment and treatment if termite damage is noted during the inspection.

  1. Wood Damage

This component of a home inspection is very closely tied to termite inspections. During this portion, exposed wood will be what inspectors will focus on the most.

In nature, wood rot is a vital part of the life cycle, but it is not something you want to have present in the house you plan on making your home. Wood rot can lead to the following problems:

  • Deterioration of support posts and beams
  • Rotted floors and ceiling joists
  • Destroyed roofs
  • Unstable porches and decks

What causes wood rot? The most common culprit is a combination of moisture and fungi coming together to make a tiny home within the wood. There are three types of wood rot that an inspector will be keeping an eye out for:

  • Brown Rot– AKA “dry rot.” The surface of the wood will appear dry, but upon further inspection of its interior, you will find its cellulose has been targeted, breaking into small, cube-like bits.
  • White Rot– Noted in wood that takes on a white color and spongy feel.
  • Soft Rot– Noted by its honeycomb-like appearance after it breaks down cellulose in the wood. This rot is not commonly found in houses but can be.

If present, repairing wood rot can cost an individual upwards of $20,000.

  1. Appliance Issues

Home inspectors examine the appliances within a home to make sure they are in good working order.

Here are some of the typical ones an inspector will look over:

  • Your stove range and oven
  • The cooktop
  • Oven and cooktop vents
  • Dishwashers
  • Garbage disposals
  • Built-in microwaves that convey with the sale of the home

Keep in mind that inspectors are not experts on these appliances. Therefore, they will be unable to fix them themselves if an issue is noted. However, it is their job to ensure that they are working correctly and do not pose any safety hazards to you and your family when you move in.

They often perform tests and checks on the appliances and note any issues in the report. Some of the most common problems include the following:

  • Range controls or burners not turning on or heating properly
  • Ovens not warming to the proper temperature. Temperature lights not working
  • Range hoods not working or being vented into the attic
  • Dishwashers not running through an adequate cycle
  • Garbage disposal blades not working or not turning on at all.

  1. Radon

A radon inspection is usually performed as part of a home inspection. However, sometimes, a buyer may have to request this portion of the inspection specifically.

Why is a radon test recommended? Radon is a colorless, odorless gas that occurs when uranium in soil breaks down. Radon gas is released as a byproduct of that breakdown and can cause many health problems, such as lung cancer.

Although radon is not dangerous in small amounts, it is potentially unsafe when it builds up in your home. In addition, symptoms can take years to present themselves, so it’s essential to consider a radon test during the inspection.

There are a few factors that will indicate a higher risk of radon exposure:

  • Location– Areas such as the Appalachian Mountains and upper Midwest have higher amounts of radon present, as sheetrock and wood are frequently used building materials in these areas.
  • Foundation Type– Homes built with dirt floors in basements or crawl spaces have nothing to protect against the rise of radon from the soil.
  • Foundation Cracks– Cracks provide a perfect spot for the gas to seep into your home.
  • Well Water– Groundwater can have radon present in it. Therefore, it is essential to have these levels checked regularly in wells.

What happens if radon is found to be present during the inspection? A professional radon mitigator will be recommended to you. This step can cost anywhere from $800-$1500 to resolve. It is costly, but the effect radon can have on your family’s health may be worse.

  1. Building Code Violations

All homeowners would go through the proper channels when building additions onto their homes in a perfect world. Unfortunately, the reality is different.

Adding onto your home can exponentially increase the home’s value, which is why people do it. But, unfortunately, when they realize how much work is involved, they are also tempted to cut corners.

Building codes vary from place to place, but there are some put into place that is nationwide. So, what are some of the most common nationwide building code violations your inspector will be on the lookout for?

  • Missing or defective GCFIs– GCFI stands for Ground-fault circuit interrupter. They are required for outlets in the kitchen, bathroom, garage, and all outdoor circuits. Simply put, they protect against electrical shocks.
  • Handrails along staircases without returns– Handrails are supposed to be installed with a “return,” a small wooden piece that ends into the wall.
  • Misplaced smoke alarms and carbon monoxide detectors– Codes require a smoke alarm on each level of the house and outside every bedroom.
  • Deck flashings– Flashing needs to be installed between the deck ledger board and the house, and the ledger needs to be firmly attached. In a lot of DIY decks, ledgers will pull loose from the structure. As a result, these decks can collapse, especially when loaded with people.
  • Basement bedrooms with no window for egress– Each bedroom in a home should have a window present to allow for escape if an emergency occurs.
  • Bad electrical work– This electrical problem is often a telltale sign of a DIY project and can result in significant fire hazards.
  • Bathroom vents leaking into the attic– These vents should always vent outside of the home

If any of these issues are present, it’s possible that a homeowner performed the work. While inspectors are not code experts, they can generally tell you when a room in your home will not pass major code laws.

  1. Asbestos

You have probably heard the legal commercials for this one. “If you or a loved one has been exposed to asbestos, you could be at risk for developing lung cancer or mesothelioma.”

Asbestos is a mineral fiber found in rocks and soil found in building materials before 1981. It was a popular product due to its resistance to heat, chemicals, and electricity. Some items that include asbestos are the following:

  • Vinyl Flooring
  • Siding
  • Shingles
  • Blankets for hot water pipes

While it is not dangerous when exposed to it in small amounts, your inspector will look for areas that indicate the asbestos has been disturbed. It can crumble and become airborne. This issue may pose a threat to you and your family.

One of the most common fixes for asbestos is encapsulation, a process in which the material will be treated with a sealant that either binds the asbestos fibers together or coats them so they cannot be released.

  1. Windows Not Sealing Correctly

Much like poor insulation, windows can lead to poor energy efficiency and high electric bills in your home. They can also cause security threats, as unsealed windows or ones that do not close properly will be a prime target for an unwanted person to enter your home.

Some things that an inspector will look for on your windows include the following:

  • Condensation in the window
  • White, powdery substance around the windows
  • Shower-like scum buildup inside the windows

These are all prime signs that your windows are not sealing correctly. Therefore, it is recommended that you replace the seals in your windows every five years.

In addition to energy considerations and safety concerns, if window seals are not up to par and you are experiencing condensation buildup, this could lead to mold development.

  1. Water Heater Issues

In addition to the HVAC, water heaters are one of the potential buyers’ most considerable areas of concern. So, what do home inspectors look for in regards to your water heater?

  • Sediment buildup– Sediment buildup within your water heater will result in a smaller water volume than the tank can hold. Your water heater may have to work overtime to heat the water, driving up your energy bill. Most sediment issues can be resolved by draining and flushing the tank.
  • Noise– Popping sounds in the tank can indicate sediment buildup and mean that your internal heating system is overheating.
  • If there is hot water or not– Usually, this is a sign that the heating element is faulty. They’re relatively easy to replace
  • Any water that accumulates underneath the heater– Sometimes, this can just be the result of condensation. Still, after your inspector rules that out, there may be a bigger problem to address.
  • Tripped circuit breakers– If your water heater causes your breaker to trip, this is an indicator of a bad heating element or faulty wiring.

Your water heater is the most expensive portion of your entire plumbing system. So this portion of your home inspection will be significant.

Final Thoughts

A home inspection is a vital part of buying a home. Ask your real estate agent for a list of good inspectors in your area. When you have found one that you like, book them to get your inspection scheduled.

Your inspector will look at many different components during the home inspection process. Then, they will write a detailed report about what areas were flagged and which ones are in good condition. This blog post will help prepare you for the common things that fail a home inspection.

You may be able to enter into negotiations with the sellers to help fund some of the fixes found during the inspection before closing on the home. However, if you live in a hot market where homes are sold as-is, the likelihood of a seller putting any capital towards fixes is very slim.

Even if this is the case where you live, home inspections are still recommended. You will know what needs to be fixed upon moving into your home, and you can begin planning for the work that needs to be done. In addition, home inspections are a great way to ensure that you move into your next home with realistic expectations.

How To Sell My Home Fast

by

Why Selling a Home Quickly is Important

Why Selling a Home Quickly is Important

Selling a home can be a daunting and time-consuming process. From prepping the house for showings to negotiating with potential buyers, there are many steps involved in selling a home. However, one factor that often gets overlooked is the importance of selling a home quickly.

We will discuss why selling your home as fast as possible should be a top priority when listing your property. We’ll cover various reasons ranging from financial benefits to emotional well-being that demonstrate the significance of selling your home quickly.

Preparing Your Home For Sale

Preparing your home for sale is an essential step in the process of selling your home quickly. To attract potential buyers and stand out in a competitive market, it is important to make your home as appealing as possible. Here are some tips on preparing your home for sale and making it irresistible to potential buyers.

1. Declutter and Depersonalize: The first step in preparing your home for sale is to declutter and depersonalize the space. Buyers want to be able to envision themselves living in the house, so it’s important that they can see beyond your personal belongings. Start by getting rid of any unnecessary clutter, such as old toys, clothes, or furniture. Then, remove personal items such as family photos or memorabilia that may distract potential buyers.

2. Clean and Repair: A clean and well-maintained house will always appeal more than a dirty or neglected one. Take the time to thoroughly clean every room in your home, paying special attention to kitchens and bathrooms which tend to be major selling points for buyers. Fix any minor repairs such as leaky faucets, cracked tiles, or chipped paint on walls.

3. Stage Your Home: Staging involves arranging furniture and decor in a way that makes the space look its best while also highlighting its features. It can help potential buyers visualize how they could utilize the space and create an emotional connection with the property. Consider hiring a professional stager or doing some research online for staging tips if you’re not sure where to start.

4. Boost Curb Appeal: The exterior of your home is the first thing potential buyers will see, so it’s important to make a good first impression. Make sure your lawn is well-maintained, add some potted plants or flowers, and consider giving your front door a fresh coat of paint. You want your home to look inviting and well-cared for from the moment buyers pull up.

5. Neutralize Colors and Decor: While you may love bold colors or unique decor, it’s best to keep things neutral when preparing your home for sale. This allows potential buyers to imagine their style in the space without being distracted by yours. Consider repainting walls in neutral tones and removing any controversial decor items.

6. Let in Natural Light: Bright and airy spaces tend to be more appealing to buyers than dark and dreary ones. Make sure to open curtains or blinds and turn on all lights before any showings or open houses. If natural light is limited, consider adding some extra lighting such as lamps or accent lights.

Working With A Real Estate Agent

Selling a home can be a daunting and challenging task, especially if you are trying to do it quickly. Many homeowners often consider selling their homes without the help of a real estate agent in hopes of saving money on commission fees. However, working with a professional real estate agent can offer many benefits and increase the chances of selling your home quickly.

1. Knowledge of the local market: One of the primary benefits of working with a real estate agent is their deep knowledge and understanding of the local housing market. They have access to data on recent sales, current trends, and upcoming developments in your area. This allows them to accurately price your home based on its value and demand in the market.

2. Professional marketing strategies: A real estate agent will have extensive experience in marketing properties effectively. They will use various techniques such as professional photography, virtual tours, social media advertising, open houses, and more to showcase your home to potential buyers. This can attract more interested buyers and increase the chances of selling your home quickly.

3. Wide network of potential buyers: Real estate agents work with an extensive network of other agents and clients looking for homes in your area. This provides them with access to a large pool of potential buyers who may be interested in purchasing your property.

4. Negotiation skills: Negotiating is a crucial aspect of selling a home, and it requires strategic thinking and excellent communication skills. Real estate agents are trained in the art of negotiation and can help you get the best deal for your home.

5. Legal expertise: Selling a home involves a lot of legalities, paperwork, and contracts. A real estate agent will have the necessary knowledge and experience to handle these aspects efficiently, ensuring everything is done correctly.

Understanding the Market and Setting a Competitive Price

One of the most important factors in selling your home quickly is pricing it right. Setting a competitive price can help attract potential buyers and increase interest in your property. However, understanding the market and finding the perfect balance between getting a good price for your home and attracting buyers can be challenging. In this section, we will discuss some key points to remember when pricing your home to sell.

Selling a home can be a daunting and overwhelming process, especially if you are looking to sell it quickly. However, there are many reasons why selling your home fast is important.  We have created a page for Sellers to learn more.

US is unprepared to provide housing and care for millions of older adults

by

The US population 65 and over soared by 34 percent in the last decade, from 43 million in 2012 to 58 million in 2022. In the coming decade, the fastest growth will occur among those over 80, when people are more likely to need accessible housing as well as services and support at home. The US, however, is not ready to provide housing and care for this surging population, according to our new Housing America’s Older Adults 2023 report.

The Dual Challenge of Housing and Services in Later Life
Older adults, whose incomes are often fixed or declining, increasingly face the twin challenges of securing affordable housing and the services they need to remain in the home of their choice. In 2021, an all-time high of nearly 11.2 million older adults were cost-burdened, meaning they spent more than 30 percent of their income on housing. Cost burdens are particularly high for renters, homeowners with mortgages, and households age 80 and over.  Accessible housing is also in short supply; fewer than 4 percent of US homes offered the three key features of accessible housing—single-floor living, no-step entries, and wide hallways and doorways—at last measure.

The Cost of Long-Term Care Is Out of Reach for Most Older Adults
The costs of long-term care (LTC) services are also high, averaging over $100 per day nationwide. The majority of older adults will need these services and those with very low incomes, who are most likely to require them, have the fewest resources to pay for them. When LTC services are added to housing costs, only 14 percent of single people 75 and over can afford a daily visit from a paid caregiver, and just 13 percent can afford to move to assisted living.

Government Assistance Is Insufficient to Meet the Growing Need
Government-funded rental assistance provides crucial support to older adults with very low incomes, but demand dramatically outstrips supply, and with homelessness on the rise among this population, assistance is more important than ever. Those with slightly higher incomes also struggle to qualify for assistance; 29 percent of people living alone who are 75 and over have incomes above 50 percent of area median income, but cannot afford the cost of assisted living. Just 8 percent of this group could afford a daily visit from a home health aide.

Renters and Homeowners of Color Face Steeper Burdens
While some older adults have home equity that can be tapped to pay for care or services, many do not. This is not only because of the increasing number of older adults but because of widening wealth and income inequality. Older renters have only 2 percent of the net wealth of older homeowners and there are steep inequalities among owners as well; older Black homeowners have the lowest housing equity at $123,000, compared to $251,000 for older white homeowners, $200,000 for older Hispanic owners, and $270,000 for older owners who are Asian, multiracial, or another race.

Mortgage Debt Among Older Adults Is Rising
Between 1989 and 2022, the share of homeowners 65 to 79 with a mortgage increased from 24 to 41 percent and the median mortgage debt shot up over 400 percent, from $21,000 in 1989 to $110,000. Over 30 percent of homeowners age 80 and over are also carrying mortgages, up from just three percent three decades ago. Borrowing is often a way for older homeowners to access cash for basic needs or care. Given the importance of housing equity later in life there is a real need for safe and affordable mortgage products that work for older owners with limited incomes. Financing incentives could provide better opportunities for those who wish to remain in their communities but in more suitable homes; this would be particularly welcome in rural and other low-density areas where the choices are especially limited.

The Growing Threat of Climate Change
Some states long favored by older adults because of their warmer weather are increasingly experiencing extreme heat and harsh storms. In addition to health risks, property damage is a rising concern, particularly for the increasing number of older people without insurance. Severe storms in Florida caused $228 billion in property damage from February 2020 through April 2023, a state that is home to 8.3 percent of the nation’s older population.

The Outlook
As the US population ages, more older adults will struggle to afford either the home of their choice or the care they need. With subsidies for housing and LTC services scarce, many older adults will have to forgo needed care or rely on family and friends for assistance. More funding would be needed, but there is a tremendous need for creative alternatives to existing models of care and housing to better support the country’s rapidly aging population.

 

Purchasing a Home in a Homeowner’s Association

by

In recent years, homeowners associations (HOAs) have become increasingly popular among

In recent years, homeowners associations (HOAs) have become increasingly popular among homebuyers. According to a study by the Community Associations Institute, approximately 26% of Americans now live in some form of community association, with HOAs being the most common type. So what exactly is an HOA and why are more people choosing to live in one?

What is a Homeowner’s Association? 

A Homeowner’s Association (HOA) is a governing body that manages and maintains a residential community or neighborhood. This organization is typically created when a developer builds a new housing development, such as a condominium complex or planned community. The purpose of an HOA is to ensure the smooth running and upkeep of the neighborhood for the benefit of all its residents.

The function of an HOA is to enforce rules and regulations, collect fees, and manage common areas within the community. These rules and regulations are outlined in the HOA’s governing documents, which include articles of incorporation, bylaws, and covenants, conditions, and restrictions (CC&Rs). These documents are legally binding for all homeowners within the association.

One of the main functions of an HOA is to maintain property values within the community. This is achieved by enforcing architectural guidelines that ensure consistency in design and appearance among homes in the neighborhood. By maintaining a certain standard of aesthetics, homeowners can feel confident that their property values will not be negatively affected by neighbors who do not properly maintain their homes.

Another important role of an HOA is to manage common areas within the community. These may include parks, playgrounds, clubhouses, swimming pools, or other shared amenities. The cost of maintaining these areas typically comes from fees collected from homeowners. This ensures that everyone in the community has access to well-maintained facilities and services without having to individually pay for them.

The Importance of Thoroughly Reviewing the HOA

Purchasing a home in a homeowner’s association (HOA) comes with a lot of responsibilities and commitments. One crucial aspect that prospective buyers need to carefully consider before making such a purchase is reviewing the HOA contract. This document outlines all the rules, regulations, and bylaws that govern life within the community and can have a significant impact on your homeownership experience.

In this section, we will discuss why it is essential to thoroughly review the HOA contract before purchasing a home in an HOA.

1. Know What You’re Getting Into

The primary reason for reviewing an HOA contract is to understand what you are getting into as a homeowner. The contract will provide you with information on what services and amenities are included in your fees, how much those fees will be, and how often they may increase. It also outlines any restrictions or limitations on using common areas or modifying your property.

By thoroughly reviewing the HOA contract, you can gain insight into what type of community you are joining and whether it aligns with your lifestyle preferences.

2. Understand Your Financial Obligations

As mentioned earlier, the HOA contract includes details about fees and their potential increase over time. As a prospective buyer, it is crucial to understand these financial obligations fully. In addition to regular monthly or annual dues, some associations may also charge special assessments for unexpected expenses or capital improvements.

Thoroughly reviewing these details will help you budget accordingly and avoid any surprises down the road.

3. Familiarize Yourself with Rules and Regulations

HOA contracts also include rules and regulations that dictate how homeowners should conduct themselves within the community. These rules can range from pet restrictions to parking guidelines to noise regulations. By thoroughly reviewing these rules, you can ensure that you are comfortable living within the community and are willing to comply with all regulations.

4. Identify Any Potential Issues

Reviewing an HOA contract may also help identify any potential issues or red flags within the community. For example, if there is a history of frequent fee increases or disputes between the HOA and homeowners, it may be a sign of poor management or financial instability.

Thoroughly reviewing the contract can help you make an informed decision about whether this is a community you want to be a part of.

5. Seek Legal Advice

In some cases, an HOA contract may contain complex legal language or provisions that are difficult for the average person to understand. In such situations, it may be wise to seek legal advice before signing off on the contract.

An experienced real estate attorney can review the document and explain any terms or clauses that may not be clear to you. This can help prevent any misunderstandings or legal issues in the future.

In conclusion, thoroughly reviewing an HOA contract is crucial for any prospective buyer considering purchasing a home in an HOA. It helps to ensure that you have a complete understanding of your financial obligations, community rules and regulations, and potential issues within the community. Seeking legal advice may also be beneficial in navigating complex contract language.

Benefits of Living in an HOA

There are several benefits to living in an HOA that make it an attractive option for many homebuyers. One major advantage is the added sense of security and safety that comes with living in a regulated community. Most HOAs have rules and regulations in place that help maintain the overall appearance and cleanliness of the neighborhood, creating a more desirable living environment for residents.

Another benefit is access to shared amenities that may not be available in non-HOA neighborhoods. These can include things like community centers, fitness facilities, playgrounds, or even private beach access. In addition to these amenities, many homeowners also appreciate the convenience of having someone else take care of maintenance tasks such as lawn care or snow removal.

Final Thought

An HOA is a legal entity formed by a real estate developer to manage and maintain a residential community. When purchasing a home within an HOA, residents are automatically members and are required to pay dues or fees towards the maintenance and upkeep of shared amenities such as parks, pools, or landscaping.

Conforming loan limits are increasing early for buyers

by

New conforming loan limits likely to top $700K

In 2022, the conforming loan limit for a single-family home is $647,200 in most of the U.S. But that number is expected to change on November 30 when the FHFA announces new conforming loan limits for 2023. The new “baseline” limit is likely to be over $700,000 across most of the U.S. And in high-cost markets, loan limits should be over $1 million.

Increasing loan limits will help buyers get better mortgage rates and make smaller down payments on loan amounts over $647,200. And some buyers won’t have to wait until 2023 for those benefits. Select mortgage lenders are already offering higher loan limits in anticipation of the FHFA’s official change.

Expected conforming loan limits for 2023

Each year, the FHFA adjusts conforming loan limits for mortgages backed by Fannie Mae and Freddie Mac. Loan limits for the next year reflect average U.S. home prices for the third quarter of the current year. So if home prices have risen, loan limits will be increased by a similar margin.

Although the third quarter of 2022 has yet to end, the national median sales price for the second quarter increased nearly 18% from the previous year. That means 2023 loan limits should see a sizeable increase, too. And some mortgage lenders are getting a head start by increasing their loan limits before the end of the year.

If you’re buying a home with a mortgage above the current loan limit, you don’t need to wait until next year. Start shopping around for lenders today that have already increased their loan limits.

Last week, Rocket Mortgage and United Wholesale Mortgage (UWM) both announced they were increasing their loan limits to $715,000. They were quickly followed by PennyMac and Finance of America.

While some experts predict new conforming limits could be higher — near the mid-$700,000s — other lenders are likely to follow suit by increasing their limits to $715,000 before the end of the year.

By raising their conforming loan limits early, these lenders are essentially offering a discount for purchase, refinance, or cash-out refinance loans between $647,201 and $715,000. Doing so gives them an edge over their competition ahead of the FHFA announcement for all lenders in November.

How conforming loan limits are set

The calculation for conforming loan limits is based on average U.S. home price increases for the previous year in the FHFA House Price Index.

Looking at the latest figures from FHFA, another double-digit jump in the loan limit appears to be coming. If we use second-quarter numbers as an estimate, the conforming loan limit ceiling would rise 12%, to nearly $725,000. In high-cost areas, that ceiling would pass the million-dollar benchmark.

The Housing and Economic Recovery Act of 2008 established a formula that required any increase to conforming loan limits could only happen after home prices returned to pre-recession levels. That condition was met eight years later in 2016 when the FHFA increased the conforming limits for the first time in 10 years.

What about FHA and VA loan limits for 2023?

Technically, there are no loan limits for VA loans, meaning lenders can lend any amount for which the borrower qualifies. There are only limits to how much the VA will guarantee. VA loan limits are typically defined as the amount you can borrow without having to make a down payment.

Where loan limits apply, VA loans often utilize conforming loan limits. That means, if conforming loans are increased to $715,000, eligible VA mortgage borrowers will likely be able to borrow up to $715,000 without having to make a down payment.

FHA loans do enforce specific loan limits, which are lower than conforming loan limits. But they are calculated based on FHFA’s guidelines and should increase next year in tandem with conforming loans. As such, there’s a good chance the standard FHA loan limit will be over $520,000 in 2023.

What do higher mortgage loan limits mean for you

The loan limit is a key benchmark for mortgage borrowers as well as lenders. It is the maximum dollar amount on mortgages that can be acquired by government-sponsored enterprises Fannie Mae and Freddie Mac.

Anything over the conforming loan limit is considered a jumbo loan, which typically means higher interest rates and bigger down payment requirements. Loans within the conforming mortgage limit get to enjoy low down payments and competitive interest rates thanks to their backing from Fannie and Freddie.

According to Brett DePriest, Sr. Vice President of Acopia Home Loans, “Home buyers won’t need 10-20% down, or have to take out equity lines for higher priced homes. The ability to purchase a $759,000 home with just 5% down should make buying a home in this price point more affordable, opening the market to more buyers.”

More lenders are expected to follow suit by increasing their conforming limits ahead of the FHFA announcement on Nov. 30. If you’re buying a home and your loan amount falls in this range, you don’t need to wait until next year. Start shopping around for lenders today that have already increased their loan limits.

Renovation loan options for 2022

by

Which loan is best for home renovations?

The best loan for home renovations depends on your situation. If you want to buy and renovate a fixer-upper, options like the HomeStyle loan, CHOICERenovation loan, or FHA 203k rehab loan could be ideal. If you already own your home and want to make improvements, tapping your equity with a cash-out refinance, home equity loan, or HELOC could be better.

It’s important to choose the right renovation loan based on your project and your finances. Here’s what you should know about your options.

What is a renovation loan?

Typically, a home renovation loan is a single mortgage that lets you both finance a home and renovate it. Renovation loans can be used either when buying a home or refinancing one you already own. By financing the home and the renovations together, you can consolidate your renovation costs into one low-rate mortgage rather than taking out separate loans to buy the property and pay for repairs.

How does a renovation loan work?

Renovation loans are unique because they let you borrow more than the home’s current value. Typically, the maximum loan amount is your home’s estimated future value after renovations are complete.

You’ll need detailed construction plans and cost estimates to qualify for a renovation loan. Having inspected the property and reviewed your plans and contractor quotes, the home appraiser will give an “as improved” valuation. Assuming the project is viable, you get the mortgage portion of your loan right away so you can complete the purchase or refinance.

Renovation funds are then released in stages (“draws”) as your project reaches pre-agreed milestones. You’ll need a contractor that’s happy working on that basis. It typically helps to find a contractor who has worked with renovation loan programs in the past and understands how the process should go.

Renovation loans to buy and fix up a home

Most mainstream mortgage programs have a renovation loan option. Conforming loan programs including Fannie Mae’s HomeStyle Renovation and Freddie Mac’s CHOICERenovation. Government-backed renovation loans include the FHA 203k mortgage, the VA renovation loan, and the USDA renovation loan. Note that the VA and USDA renovation options are less common and it may be hard to find a participating lender.

Let’s dig into each renovation loan in a little more detail.

Fannie Mae HomeStyle renovation loan

Fannie Mae’s HomeStyle renovation loan is fairly easy to qualify for. You need at least a 3% down payment, a reasonable debt-to-income ratio, and a minimum credit score of 620 (although this can vary by lender).

HomeStyle can be used to buy and renovate a new home or refinance and upgrade a home you currently own. There are few restrictions on how the funds can be used, although you are not allowed to knock down the existing property and build a new one (for that, you’d need a new construction loan).

Freddie Mac CHOICERenovation loan

Like Fannie Mae’s HomeStyle loan, Freddie Mac’s ChoiceRENOVATION loan is a conforming mortgage. And the two loan programs are almost identical. To qualify, you need a 3-5% down payment and a credit score of 620-660 or higher, depending on your mortgage lender. Like the HomeStyle program, CHOICERenovation allows you to either buy a home or refinance one you already own.

However, there is one important difference. The CHOICERenovation mortgage lets you finance improvements to your home’s resilience (think disaster proofing) while HomeStyle does not.

The big advantage of a HomeStyle or CHOICERenovation loan over an FHA 203k loan concerns mortgage insurance. FHA loans typically have permanent mortgage insurance that you can only get out of by paying off your mortgage, refinancing, or selling. But, with Fannie and Freddie loans, you can remove PMI payments when your equity reaches 20% of the home’s value. That can lead to big savings over the long term.

FHA 203k loan

The FHA 203k rehabilitation loan is a government-backed renovation mortgage. It can be great for those with slightly lower credit because most lenders require only a 580 FICO score to qualify for an FHA loan. The “Limited” FHA 203k loan allows up to $35,000 in renovation costs while the “Standard” FHA 203k allows you to borrow up to local FHA loan limits. Keep in mind that these loans cannot be used for luxury amenities like swimming pools.

The FHA 203k rehab loan comes with two main disadvantages compared to conforming loans:

  • Its minimum down payment is 3.5%, versus 3% for a HomeStyle or CHOICERenovation loan
  • FHA mortgage insurance typically lasts the life of the loan, while conventional private mortgage insurance (PMI) can be removed later on

If your credit score is high enough for a Fannie Mae or Freddie Mac renovation loan, it’s worth looking into these options first as you could save money on interest rates and mortgage insurance.

VA renovation loan

The VA renovation loan is only available to qualified service members, veterans, and select military-related groups. But it can offer real benefits to those who are eligible, including:

  • No down payment required
  • No ongoing mortgage insurance payments (just a one-time VA funding fee)
  • VA mortgage rates are usually lower than conforming and FHA loan rates

If you’re eligible for a VA loan, these are typically the best mortgages. However, not all lenders offer VA renovation loans, so be prepared to put in some effort to track one down.

USDA renovation loan

The USDA renovation loan is available only to those purchasing a home in an area designated as “rural” by the U.S. Department of Agriculture. However, that definition is broader than many expect. You don’t need to work in agriculture or use the land for farming purposes and roughly 97% of America’s land mass is eligible.

The big advantage of USDA loans is that you don’t need a down payment. But you will need a low-to-average income to qualify. Other benefits include below-market mortgage rates and reduced mortgage insurance rates.

Like the VA renovation loan, however, USDA renovation loans are hard to come by. So you should expect to do some research if you want to find a lender offering this program.

Renovation loans for a home you already own

If you already own your home, a “true” renovation loan is not your only option. In fact, it may be easier and cheaper to borrow from your equity using a cash-out refinance, home equity loan, or home equity line of credit (HELOC).

These loans provide cash that you can use for any purpose, meaning you don’t need to have detailed construction plans and contractor quotes in order to qualify. You only need to qualify for the loan based on your credit, income, and available equity; then you can use the money for any type of renovation you want.

Also, the interest you pay on a cash-out refinance or home equity loan may be tax-deductible if you spend the money on home improvements. But you should check with a tax professional to see whether that applies to you and how much interest would be deductible.

Cash-out refinance

With a cash-out refinance, you get a whole new mortgage that replaces your existing home loan. Your new loan balance will be higher than your old balance, and you’ll receive the difference (minus closing costs) as your cash-back. Conforming and FHA loans typically let you borrow up to 80% of your home’s value using a cash-out refinance, while VA loans allow you to borrow 100% of your equity. USDA loans don’t allow cash-out refinancing.

When mortgage rates are low, a cash-out refinance is the go-to solution for many homeowners. It can allow you to cash out equity and secure a better interest rate on your home loan at the same time. But mortgage rates are now higher than they were a couple of years ago, and you should always think twice before refinancing to a higher rate. Run the figures carefully before you decide.

In addition, a cash-out refinance can come with high closing costs. Your lender may offer to cover some or all those costs, but you’ll almost invariably pay a higher mortgage rate if it does.

Home equity loan or HELOC

With a home equity loan, you get a second mortgage and leave your existing one in place. You’ll receive a lump sum at closing, which you repay in equal installments over the “term” (duration) of the loan. Usually, these loans come with fixed interest rates. Home equity loan rates are typically higher compared to a cash-out refinance, but your closing costs should be way lower.

A home equity line of credit (HELOC) is another form of a second mortgage. But it acts more like a credit card: You can borrow from the line, repay it, and reborrow as often as you want up to your credit limit. And you pay interest only on your balance. After a draw period during which you can borrow from the HELOC, you’ll enter a repayment period when you can no longer borrow and must repay your outstanding loan balance in full.

That could make a HELOC ideal if you have a drawn-out renovation project (or multiple projects) that will happen over an extended period of time. You can borrow funds as needed and you won’t pay interest on the money you’re not actively using. But HELOCs can be complicated. To learn more about HELOC’s pros and cons and explore all your options before applying.

How do I finance home renovations without equity?

All the loan options above — including renovation loans, cash-out refinancing, and home equity loans — allow you to finance home improvements using your home’s value (your equity) as security. This is often a good option because financing secured by your home is cheaper than other forms of borrowing. But there are risks, too. You’re putting your home on the line if things go badly wrong. Ultimately, if you default on a loan secured on your home, you could face foreclosure.

Depending on your circumstances, you might prefer to avoid that risk. And you may be willing to pay a higher interest rate to do so, especially if your renovations have a relatively modest budget.

Your main choices then are getting a personal loan or using your credit cards.

You may see personal loans advertised at rates that rival or even undercut those for home equity loans and HELOCs. But be aware that few applicants are approved at those rates. You’d need an exceptional credit score and very sound finances to qualify. If that’s not you, expect to pay an appreciably higher rate than on secured loans.

Credit cards usually have much higher interest rates than secured loans. So you wouldn’t want to finance extensive home renovations using plastic. One possibility is using a card with a 0% rate for an introductory period that often lasts 18 or 21 months. Then you could pay off the card or transfer its balance before you begin to pay interest. But, if you’re buying a home, don’t apply before you close or you could risk hurting your credit score and your chances of mortgage approval. And never apply for more than one card within a short period of time.

Renovation loan FAQ

Can you renovate a house with a loan?

Yes! There are a variety of loan options that can be used for home renovations. Those buying a fixer-upper home might consider the Fannie Mae HomeStyle loan, Freddie Mac CHOICERenovation loan, or FHA 203k rehabilitation loan. Current homeowners often finance renovations using a cash-out refinance, home equity loan, or HELOC. And if you don’t want to touch your home’s equity (or don’t qualify for the mortgage), a personal loan could be an option.

Do renovation loans have higher interest rates?

Yes, most renovation loans have slightly higher rates. From a lender’s point of view, these loans carry a little more risk. However, rates for these tend to be only slightly higher than those for purchase-only mortgages. You’ll see the difference when you start to compare shop for your loan.

What is an FHA 203k loan?

The FHA 203k rehab loan is a government-backed renovation loan. It allows you to buy or refinance a property and includes the cost of renovations in your loan amount. The FHA 203k program can be a great choice for those with credit scores of 580-620. But you may find other alternatives more attractive if you have a strong credit score.

What documents are required for a renovation loan? 

Renovation loans involve more documentation than purchase-only mortgages In addition to the standard application paperwork (like bank statements and income documentation), expect to provide construction plans, contractor quotes and specifications, work schedules, local authority permits, and anything else the appraiser needs to ensure your project is viable.

What is the maximum renovation loan amount?

That varies between programs, lenders, and projects. If you’re using a renovation loan to buy and fix up a property, you can often borrow up to the home’s future value — its estimated cost after renovations are completed. But your loan amount will have to fall with local conforming or FHA loan limits. Those using a cash-out refinance, home equity loan or HELOC can often borrow up to 80 or 85 percent of their property value, minus their current mortgage amount.

How do I get a renovation loan? 

Most renovation loans are offered through mortgage lenders, just like standard home buying and refinance loans. But the process is different. To apply, you’ll need detailed renovation plans and cost estimates in addition to the usual financial documentation. Once you decide on a loan program, reach out to a mortgage lender to find out exactly how the process works and what documentation you should prepare.

Which renovation loan is best for you?

As you can see, there’s a wide variety of renovation loans available. The best program for you depends on a number of factors, like whether you’re buying a fixer-upper or renovating a home you currently own, and what kind of shape your finances are in. Your best bet is to connect with a lender and discuss options. Your mortgage loan officer can help evaluate your plans and financial situation to determine which renovation loan is best.

What is a home appraisal?

by

Home appraisals are important (and required)

A home appraisal determines the fair market value of a property and helps ensure you don’t overpay for it. Appraisals protect both the buyer and the mortgage lender, and most loan programs require one when you purchase a new home.

Most borrowers pay between $300 and $425 for a home appraisal, which is included in their closing costs. But, if you meet certain guidelines, you may not need one when refinancing a home you already own.

Keep reading to learn more about appraisal costs, what to expect from the process, and why it’s important for your home-buying journey.

What is a home appraisal?

A home appraisal is used to determine a property’s “true” value. Professional real estate appraisers inspect a home’s condition and features, then compare it to recently sold homes in the nearby housing market. The appraiser will judge how different factors — like plot, location, upgrades, amenities, and square footage — impact your home’s value when compared to other similar properties (called “comps”). Ultimately, appraisers come up with a fair market value for the home.

Why are home appraisals required?

Lenders usually require an appraisal because they want to be certain the home is worth its purchase price and could be sold to cover losses if you default on your mortgage. Mortgage lenders will not give you a mortgage loan above the appraised home value because that would put them at risk of financial loss in the event of a foreclosure.

Your lender will order the home appraisal during the mortgage approval process, but won’t ultimately pay for it. It’s typically the home buyer who pays the appraisal fee. However, in some areas, the seller traditionally picks up the tab.

Are a home appraisal and home inspection the same thing?

First-time home buyers may confuse a home appraisal with a home inspection. Both occur before a home purchase and give a buyer the opportunity to back out of the sale or renegotiate. However, the two are inherently different.

A home inspection is an in-depth examination of a property’s HVAC, plumbing, foundation, and other systems, rather than an estimation of a home’s value. Inspections are meant to turn up any structural or functional issues with a home prior to the sale, giving buyers a chance to renegotiate the purchase price or ask the seller to make repairs. In addition, a home appraisal is almost always required by mortgage lenders whereas an inspection is optional (but highly recommended).

How much does a home appraisal cost?

A typical appraisal for a single-family home costs around $350, with average prices ranging between $313 and $421, according to research conducted by HomeAdvisor. But prices vary by location. For example, California home buyers can expect their home appraisals to cost anywhere from $600 to $800. In addition, variables such as the time of year and size of the property can affect home appraisal fees. Indeed, a multifamily home appraisal can cost upwards of $1,500.

Typically, you’ll be lucky to pay less than $300 for an appraisal and unlucky to pay more than $450. However, if you require a particularly detailed report on an exceptionally large home with complex valuation issues, you could easily end up paying four figures.

How appraisals help buyers

Many buyers see appraisals as undesirable. At best, they’re yet another charge on a long list that makes up closing costs. At worst, a low appraisal can torpedo a deal, snatching a dream home from a keen buyer.

However, there’s another way of looking at home appraisals. They stop you from paying too much for a property. And why would you want to pay over the fair market value for your next home?

As importantly, many home buyers use a low appraisal to renegotiate the purchase price. That can equal savings greater than the appraiser’s fee. On the other hand, a higher appraised value can give buyers more home equity and a good deal on the property.

What does an appraiser look for?

Many real estate appraisers use the Fannie Mae Uniform Residential Appraisal Report to assess the condition of a property. Here are some of the things appraisers consider when comparing a home’s asking price to its true value:

  • The living condition of the home: An appraiser will evaluate the general condition of the property. They’ll count the number of bedrooms and bathrooms, assess the floor plan’s functionality, look at home amenities, and confirm the square footage
  • Home improvements: The appraiser will consider any home renovations or other upgrades to the property that may improve the value of your home. They’ll also appraise any improvements made outside of the home, such as new landscaping, a pool, or a renovated garage
  • Nearby home values: A licensed appraiser will also evaluate comparable properties, or “comps,” in the nearby housing market. They’ll look at the sale price of other homes and their current property values to determine the appraised value of your new home

Once the appraiser completes their evaluation, they’ll issue a final valuation of the property in an appraisal report that is submitted to your mortgage lender.

What’s included in an appraisal report?

Typically, a home appraisal report includes:

  • Explanation of the valuation: Appraisers show their work so you know how they arrived at the home’s final value
  • A brief overview of local housing market trends: Are prices currently going up or down? If so, how quickly?
  • Summary of the home’s characteristics: Its condition, size, and any improvements that have been carried out
  • Other considerations: Has anything else about the home or its neighborhood affected the valuation?
  • Structural problems and defects: Any issues that the appraiser noticed that affected their valuation

It’s important to recognize that home appraisers are not home inspectors. Don’t rely on their expertise to uncover structural problems because they won’t always discover those. In any event, it’s not their job to look for these types of issues.

Appraisers typically value your property in several ways. The most common is the “comparables” valuation detailed above, which finds a value by comparing the subject property to other nearby sales. The “replacement cost” is what it would take to replace the home on the same lot. And the “rental schedule” arrives at the value by considering rental income.

What sellers provide during the home appraisal process

The National Association of Realtors recommends that real estate agents and sellers should prepare a package of documents and make it available to appraisers when they arrive for the inspection. The NAR suggests that the package should contain copies of as many as possible of the following:

  • Detailed maps of the near neighborhood plats
  • Surveys
  • Deeds
  • Covenants
  • HOA documents
  • Floor plans
  • Specifications
  • Inspection reports
  • Neighborhood Details
  • Recent comparable sales
  • Detailed list and dates of upgrades, home improvements, and costs, with invoices where possible
  • Energy-efficient green features
  • Purchase agreement

The more of those a seller and real estate agent provide, the more accurate the appraisal might be.

Cash buyers don’t need a home appraisal

Not all real estate transactions require a home appraisal. People buying a home with their own cash aren’t obliged to have one.

Also, professional developers rarely bother. They reckon they know as much as any appraiser. And, anyway, what’s the point of establishing the market value of a home if you’re going to tear it down and build a new one? You just need to know the going rate for development land.

Refinancing doesn’t always require an appraisal

Mainstream mortgage lenders typically require a property appraisal when you’re buying a home. But they sometimes won’t insist on one when you’re refinancing. “If you have 20% down, then you do not always need an appraisal — even for some home purchases,” says Jon Meyer, The Mortgage Reports loan expert and licensed MLO.

It’s up to your lender. However, the general rule is that appraisals aren’t always needed when the total amount of the loan being refinanced is $250,000 or less.

Homeowners with an FHA loan can refinance without a home appraisal using the FHA Streamline Refinance program. Similarly, borrowers with a VA loan can use the Interest Rate Reduction Refinance Loan (IRRRL) without an appraisal.

Lenders are least likely to require an appraisal for a conventional mortgage loan when you want a “rate-and-term” refinance. That means you pay your closing costs out of pocket and improve on your mortgage terms without increasing the balance. If you wrap the refinance costs into a new loan, it’s called a “limited cash-out” home loan.

Lenders are most likely to require an appraisal when your loan-to-value ratio (LTV) exceeds 80% or when you apply for a cash-out refinance.

Dos and don’ts on home appraisal day

Sellers and agents may attend the home appraisal. However, they should only answer questions and provide information. Trying to influence the appraisal outcome in any way is illegal.

The appraiser is not allowed to divulge anything confidential at this point. You may, however, ask to check the appraiser’s credentials and satisfy yourself that they have the requisite local knowledge to reach a fair valuation. That’s important, because some appraisers jump at any opportunity to grab a job, even if they do not know the area.

So it’s a good idea to check the office address and make sure it isn’t in the next county. If you have well-founded doubts about either the appraiser’s knowledge or credentials, you can ask the lender to send someone else.

Such situations are relatively rare. Most appraisers strive to deliver exactly what they’re paid for: a valuation that reflects the fair market value of the home.

Home appraisal FAQ

What’s the purpose of a home appraisal?

The purpose of a home appraisal is to establish the fair market value of a home. It confirms for both you and your mortgage lender that the agreed price of the property is reasonable. An appraisal also ensures that a borrower is within loan-to-value guidelines. When an appraisal comes in low, the buyer may need to increase their down payment to qualify for the home loan. Furthermore, in some states, home appraisals may be used to calculate property taxes.

What will fail a home appraisal?

A home appraisal fails when it issues an appraised value that is less than the home purchase price. Several factors can fail a home appraisal, including sluggish housing market conditions, bad comps, and inexperienced appraisers who don’t possess adequate local market knowledge. Messy and blighted homes can also fail an appraisal. This is why sellers are encouraged to clean up their properties beforehand and give the exteriors a bit of curb appeal.

How long does a home appraisal take?

The in-person home appraisal usually takes just a couple of hours to complete. But the whole appraisal process can take a few days to a week or longer, depending on the property and the appraiser’s schedule. In addition to a site visit, a licensed appraiser will research local market conditions, look at recent comparable sales, and evaluate property values in the area. They will also complete a written valuation report that is submitted to your mortgage lender.

What happens after a home appraisal?

After a home appraisal, an official appraised value is issued, and the home buying process continues. The lender will begin underwriting the mortgage loan, and, if approved, the buyer continues to the closing table where they present a cashier’s check or wire transfer for the down payment and other closing costs. If there is an issue with the appraisal, then the buyer and seller have an opportunity to renegotiate or terminate the purchase agreement.

 

What counts as income for a mortgage loan?

by

What income is considered when applying for a mortgage?

Home buyers often have multiple income streams. Some have two part-time jobs, a full-time job, and a side hustle, contract work, gig work, or income from investment accounts. Others bring in cash from bonuses, commissions, or government-issued benefits.

Fortunately, mortgage lenders are happy to accept most income sources on your loan application, helping boost your qualifying income and your home-buying budget. But each income source will need to be verifiable and steady to qualify. Here’s what you should know before you apply.

Types of income that count towards a mortgage loan

There’s no definitive list of the income streams that qualify for a home loan. Each mortgage lender and loan program has its own requirements — including the types of income that qualify and the length of time you must have earned that income to be able to use it. Keep in mind that lenders are required by law to “make a reasonable, good faith determination of a consumer’s ability to repay” the mortgage loan.

To give you a good idea of the types of income that can commonly be used on a mortgage, we looked at Fannie Mae’s rulebook. Fannie Mae sets guidelines for conforming mortgages, which are the most popular type of home loan. So these requirements will apply to many home buyers.

Eligible income sources for a mortgage loan

  • Employee wages and salary income: Full-time employment is the most common type of income for home buyers. Expect to use documentation like recent pay stubs and one to two years of income tax returns to verify
  • Self-employed, freelance, and gig work income: Income in exchange for services that are outside of a traditional employment scenario. Anticipate needing at least two years of documentable history and tax returns
  • Part-time income: Similar to the requirements for full-time employment, but often two years of income history are needed
  • Tips: You’ll need to account for tip income with two years worth of documentation from either W2s or Form 4137
  • Bonuses and commissions: Your lender will likely use your average bonus or commission income over the last two years
  • Interest and dividend income: While generally eligible, there are some restrictions for investment income received for six months or less
  • Retirement, government, and pension income: Income from IRAs, 401K plans, pensions, and other retirement accounts are typically allowed
  • Social Security income: Lenders will often allow monthly payments to adults and children with low income or disabilities, as well as older adults age 65 and over
  • Disability payments: Unless benefits expire in the next three years, disability income is almost always eligible
  • Leave payments: Employer payments for paternity and maternity leave are usually permitted with a letter of explanation that details plan to return to work
  • Foster care payments: Usually allowed, but there are some documentation hurdles. Ask your lender about its requirements
  • Alimony and child support: These types of payments can often be included when they are regular and can be anticipated for three or more years to come
  • Trust income: Usually allowed when the applicant can show that payments will continue for several years after closing
  • Unemployment benefits: Although not typically eligible, seasonal workers who regularly claim benefits between seasons may be permitted
  • Rental or investment income: In some cases, proceeds from real estate investment property can be used with specialty lenders or some loan programs, like HomeReady
  • VA benefits: Similar to trust income, VA benefits are generally allowed provided that applicants can prove benefits will continue for the next several years
  • Military income: Allowances for housing and food, while either on base or deployed, can often be included as income

“In short, all income that is verifiable on your taxes”

Self-employment income

Self-employed mortgage borrowers typically need a two-year track record of successful earnings to apply for a mortgage. Lenders average the income if it’s going up, and take the lower figure (or worse) if it’s going down. You’ll also only be able to count your taxable income (after deductions), with a few exceptions for depreciation, depletion, and expenses that won’t recur.

Plan on providing your tax returns if you’re self-employed. And probably your latest financial statements and business license.

Bonuses and commissions

Generally, both bonuses and sales commissions can be taken into account by lenders. They typically consider bonus and commission income earned over the last two years. Lenders look at this income conservatively — if numbers are going up, they’ll average the income. If they are going down, however, the lender may use the lower figure. And if the industry you’re in is failing, lenders may discount income even more.

Part-time jobs

To count the income from an extra or part-time job, you’ll have to have been at it for at least one to two years. This also goes for seasonal work. For example, teaching skiing in the winter and golf in the summer would count if there’s a two-year history.

If you have a part-time job and a full-time job, you’re lender will likely want to see that you’ve worked both simultaneously for a year or two before applying. That’s because working two jobs can be strenuous, and lenders want to be certain you can manage the workload — and keep earning the extra income — consistently for years to come.

Tips

Your tips will be applicable to your lender’s income calculations as long as you’ve been getting them for two years. And you’ll have to back up your claims with documentation, including your last two IRS W-2 forms if your employer reports allocated tips, or Form 4137 if you report them yourself.

Investment Income

You should be able to count investment income — including interest and dividends — in full on your mortgage application However, the amount you can use as income for mortgage purposes will be an average of your last two years’ receipts. If you plan to liquidate any of those assets for your down payment or closing costs, you can expect your lender to deduct their income.

Retirement, government, annuity, and pension income

If your retirement includes savings in an IRA, 401(k), or other retirement accounts, you can use it as income to qualify for a mortgage.

Underwriters start with 70% of your retirement balances to account for fluctuations in the values of stocks and bonds (cash deposits are not subject to this). They then divide your total by the number of months in your mortgage. So if you take a 30-year loan, they divide by 360. If you want a 15-year loan, they divide by 180. That number is your income for the month from what lenders call “asset depletion.”

Social Security income

If you’re getting Social Security income from the government, including retirement or long-term disability benefits, it should normally be accepted as income for mortgage purposes. It’s a bit more complicated when you’re receiving benefits on behalf of a family member. Then, you’ll have to show the income will continue for at least the next three years.

Maternity and paternity leave

Provided you write to your lender, confirming that you will return to work on a particular date, you’ll typically be fine. Your normal employment income will usually continue to apply, even if you’re on a reduced salary or will be unpaid at closing. However, you’ll need a pile of paperwork, including correspondence from your employer confirming your return-to-work date.

Disability benefits

If you receive disability income, it can typically be used on your mortgage application. Long-term disability benefits from sources other than the Social Security Administration almost always count. Short-term disability benefits may also count, depending on how close their expiration date is. If you’re going to transition from short-term to long-term within the next three years, expect only the long-term benefits to be included in your lender’s calculations.

Foster care

Fannie Mae likes you to have been receiving income from fostering for two years. However, it may accept one year, providing the relevant income is 30% or less of your total gross income.

Alimony and child support

Alimony and child support payments can count as income for a mortgage, but only if the payments are consistent. If your ex-spouse doesn’t make regular alimony or child support payments, you may not be able to count that income. Not even if you have a watertight court order or separation agreement. Because you’ll have to show you’ve received “full, regular and timely” payments going back at least six months.

Also, lenders will look at how long you can expect to receive child support. Suppose your child is 16 years old. And that your child support’s going to end when they’re 18. You can’t count that support toward your income for mortgage purposes, because qualifying income must continue for at least three years. Of course, if you have younger kids who will be supported for three or more years, their child support will still count.

Trust income

If you’re the beneficiary of a trust, that money should be applicable income for mortgage purposes. You’ll have to show that you’ll receive it for at least three years. And the lender will need a copy of the trust documents confirming the frequency, amount, and duration of the payments.

Unemployment benefits

You’re unlikely to get a mortgage on unemployment income because unemployment benefits are intended to be temporary by nature. But unemployment income may count if you’re a seasonal worker who regularly claims those benefits between jobs. Your lender will want to see that you’ve been getting benefits and working in this way for a couple of years. And it will verify that you can reasonably expect the pattern to continue.

VA benefits

VA benefits should normally count for a mortgage. All you have to do is prove you’re getting them and show they’ll last for at least the next three years. You won’t have to provide that verification if you’re receiving your benefits owing to retirement or long-term disabilities.

Rental income

Rent from boarders generally counts as income for mortgage purposes only with some specialty programs, such as Fannie’s HomeReady loan. However, there is an exception. That’s when you have disabilities and your personal assistant lives in and pays you (or maybe Medicare Waiver funds pay you) for their accommodation. Still, you can only count 30% of that rent as income.

“Grossing up” income

Some kinds of income are not subject to taxes. For example, child support and disability. In that case, lenders are allowed to count that income as worth more. Usually, non-taxable income is worth 25% more for mortgage qualifying. So, $1,000 a month in child support counts as $1,250 a month. They call this practice “grossing up” income because you’ll actually have more after-tax income. “This is most often done with retirement income, such as Social Security,” adds Meyer.

Why mortgage companies care about income sources

Many first-time home buyers won’t have to worry much about multiple income sources. Chances are, you have pretty straightforward finances. Indeed, for many, a single income stream from one employer is all they have — and all they need.

But others have multiple streams from different sources. Or one stream made up of different elements. In this case, approval can be a little more complicated. That’s because the lender has to verify each income stream individually to ensure you’ll continue at the same total income level for years to come. Remember that a mortgage lender’s ultimate goal is to make sure you can afford your home loan payments for many years into the future.

Ability to repay

All lenders have a legal obligation to “make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling.” In other words, they must examine your finances in detail. Because they must make sure you can comfortably afford your monthly mortgage payments, home equity loan, or home equity line of credit (HELOC).

This is called the “ability to repay” provision. It protects against predatory lending to people who have little chance of repaying their mortgages.

Income rules and rule makers

Mortgage lenders all have the same legal obligation to ensure your ability to repay. But some interpret that duty differently. So if you’re turned down by one lender, it may be worth trying others.

If you want a government-backed home loan, the rules on income for mortgage qualification are written pretty tightly. Those government-backed mortgages include Federal Housing Administration (FHA) loans, Department of Veterans Affairs (VA) loans, and U.S. Department of Agriculture (USDA) loans.

Fannie Mae and Freddie Mac also closely specify the income streams they’re prepared to accept for conventional loans. However, those aren’t chiseled in stone. Conventional mortgages may be more flexible when it comes to income qualifying than government-backed mortgages.

Rules may vary by lender and loan program

In very exceptional circumstances, lenders may bend some income rules for favored borrowers. For example, suppose you’ve been with a local institution for decades. If it knows you have an unblemished payment record and a stellar credit score, it may be willing to bend policy a little.

Equally, Fannie and Freddie write their rules for particular mortgage products. For example, Fannie usually excludes rental income from a mortgage application. But it makes an exception for its HomeReady mortgage. If you apply for one of those, Fannie can count all the income you receive from boarders and renters, provided they’ve lived with you for at least a year prior to buying the home.

What counts as income for a mortgage refinance loan?

If you’re a homeowner looking to refinance your current mortgage, you face the same income requirements as home buyers. You can use a wide variety of income sources to qualify but you must show a steady history of receiving that income. And lenders must be able to ensure it will continue in the future. You will have to prove any income sources using tax forms, bank and investment account statements, pay stubs, and other standard documentation.

Other factors that matter when qualifying for a mortgage

You’ll need more than qualifying income to get approved for a mortgage application. Lenders look at a variety of factors. These include:

  • Debt-to-income ratio (DTI): Lenders use your DTI ratio to compare your total monthly debt to your gross monthly income. This shows the economic burden on your household finances. Debt can include payments on car loans, student loans, and credit card payments, to name a few. The lower your DTI ratio, the better your chances of mortgage approval
  • Credit score: You’ll generally need a credit score of 620 or higher to qualify for a conventional loan, but some first-time home buyers can qualify for an FHA loan with scores as low as 580
  • Down payment: Most borrowers will need at least 3% down for conventional mortgages and 3.5% down for FHA loans. Keep in mind that you’ll pay private mortgage insurance (PMI) without 20% down on a conventional loan. And mortgage insurance premiums (MIP) is required on an FHA loan, regardless of the down payment amount. Both USDA and VA loans require no down payment whatsoever
  • Asset and cash reserves: Many lenders and loan programs want buyers to have adequate cash reserves or emergency funds after closing on a new home. This shows that you’ll be able to make your monthly mortgage payments in the event that your income ceases

Today’s mortgage rates

The above examples are a broad overview of what can count as income for mortgage purposes. There’s a whole lot more detail, so talk to your lender about what rules apply.

Remember that there is a legal obligation on lenders to ensure your home loan will be affordable. They’re going to vet every income source thoroughly. So begin getting together your paperwork early.

In the meantime, you can review your current home-buying options using the link below. It’s free to compare interest rates from multiple lenders, and you are under no obligation to act.

Mortgage interest rate predictions: Will rates go down in September 2022?

by

Mortgage rate forecast for next week (Sept. 26-30)

Mortgage rates grew for the fourth week in a row and broke 6% for the first time since 2008.

The average 30-year fixed interest rate rose from 5.89% on Sept. 8 to 6.02% on Sept. 15, according to Freddie Mac.

With another week of growth, the lending market continues to make adjustments for the large Federal Reserve hike likely coming at the end of the month. The Fed keeps signaling aggressive policy actions in order to bring inflation down to normal levels.

 

Will mortgage rates go down in September?

Mortgage rates fluctuated greatly so far in the third quarter of 2022, with the average 30-year fixed rate dipping as low as 4.99% on Aug. 4 to a high-water mark of 6.02% on Sept. 15, according to Freddie Mac.

This followed 248 basis points (2.48%) of growth in the year’s first half. Rates varied from one week to the next as the Fed wrestled with inflation. Mortgage rates experienced the largest weekly jump since 1987, surging 55 basis points (0.55%) the day after the Federal Reserve’s June hike.

With the pandemic’s declining economic impact, decades-high inflation, and the Fed planning three more aggressive hikes, interest rates could continue trending upward this year.

However, concerns over an impending recession have caused rate drops and could cause more on any given week.

Experts from Attom Data Solutions, CoreLogic, Realtor.com and other industry leaders are split on whether 30-year mortgage rates will keep climbing in September or level off.

“If fears of recession outweigh fears of inflation, mortgage rates may come down.”

–Odeta Kushi, deputy chief economist at First American

Expert mortgage rate predictions for September

Paul Buege, chief executive officer and president at Inlanta Mortgage

Prediction: Rates will rise

“I think we’re going to be range-bound and we’ll see rates stay at this level, maybe a little bit higher. The market is responding to the Fed’s two significant rate increases and the economy is cooling. What you’re seeing right now is the initial response: a recession and people aren’t buying as much.

But always lurking in the background is going to be some economic news showing that things haven’t cooled to the level that you might think. That’s why I think you’re gonna have these little rate bumps up and down. If you wanted to work with a really broad range, probably 6% would be the high and 5% might be the low. That’s what we’re using as we manage our book of business as a company.”

Danielle Hale, chief economist at Realtor.com

Prediction: Rates will moderate

“There isn’t a Fed meeting [in August] but there is the annual economic policy symposium in Jackson Hole that a lot of the Fed decision makers participate in. Investors will look to that symposium to get an updated sense of how the Fed is thinking about monetary policy and we may see mortgage rates react to whatever is discussed.

Even though the Fed is still tightening policy, inflation is moving back in the direction that we want to see. I think that means we’re going to see a bit more volatility in mortgage rates in the next year. The fact they’ve come down from 5.8% suggests that investors believe the Fed may not have to increase short-term rates as high as they thought two months ago. Watching those inflation numbers is key to getting an idea of where mortgage rates might go moving forward.”

Selma Hepp, deputy chief economist at Corelogic

Prediction: Rates will moderate

“Mortgage rates will likely remain around 5.5% in September. While the highly-anticipated Fed meeting will take place in September, the mortgage market has likely already accounted for all of the expected increase in the funds rate in 2022 prior to the June meeting, when mortgage rates jumped to 6%. The decrease in rates since then reflects the adjustment to slowing home buying demand and widening economic uncertainty.

Borrowers should be in a better position to get a more favorable rate than in June. Also, borrowers have increasingly turned to adjustable-rate mortgages which provide some relief with monthly mortgage expenditures. Borrowers in a position to do so could help lower their rates by coming up with larger down payments.”

Odeta Kushi, deputy chief economist at First American

Prediction: Rates will moderate

“Ongoing concerns about the economy and the Federal Reserve’s fight against inflation may prompt mortgage rates to follow a seesaw trend in September. While some agree that inflation may have peaked, it remains uncomfortably high, which puts the Fed in a position to continue interest rate hikes.

Going forward, if fears of recession outweigh fears of inflation, mortgage rates may come down. However, if inflation surprises to the upside, the Fed will likely take more aggressive action and mortgage rates will climb faster as a result. Ultimately, how the market interprets incoming data leading up to the September Federal Open Market Committee (FOMC) meeting will have a strong impact on how mortgage rates respond in September.”

Jessica Lautz, VP of demographics and behavioral insights at National Association of Realtors

Prediction: Rates will moderate

“There seems to currently be some leveling off of the recent rise in mortgage interest rates. Inflation plays the key role in what happens next, but it’s possible we are at a plateau for mortgage interest rates.

Consumers should talk to a few mortgage brokers. Different brokers may be familiar with home loan products that help buyers with their first home loan.”

Rick Sharga, EVP of market intelligence at Attom Data Solutions

Prediction: Rates will moderate

“It appears that the market has already “baked in” rate hikes from the Federal Reserve — that may have something to do with the sudden jump in rates even before we saw the Fed dramatically raise Fed Funds rates.

I don’t expect September mortgage rates to behave much differently than what we’re seeing right now — we’ll probably continue to see rates on 30-year fixed-rate loans ranging between 5% and 5.50% over the course of the month, unless we get any unexpectedly negative economic news.

Another thing to consider is home sales have dropped significantly as mortgage rates have risen — 15% in June, which marked the sixth consecutive month of decreasing sales. We may be seeing some rate competition among lenders in an attempt to make home purchases slightly more affordable for buyers and to generate more purchase loan activity. While lenders certainly can’t control interest rates, they can nibble at the margins, perhaps sacrificing some profit in order to secure more volume.”

Mortgage interest rates forecast next 90 days

The Federal Reserve made an aggressive policy plan to bring inflation down. While that would normally lead to mortgage rate growth, the lending market may have already accounted for the Fed’s rate hikes.

Because of this, many experts currently believe mortgage interest rates will move within a tighter range in the fall compared to the big weekly swings we saw throughout the year.

Of course, the Russian-Ukrainian war or a new wave of Covid-19 could create economic uncertainty and cause more rate volatility in the coming months.

Mortgage rate predictions for 2022

The average 30-year fixed-rate mortgage ended the second quarter of 2022 at 5.7%, according to Freddie Mac.

Five of the six major housing authorities we gathered project the average for the third quarter to drop below that.

Fannie Mae and the National Association of Home Builders sit at the low end of the group, estimating the average 30-year fixed interest rate will settle below 5.2% by the end of Q3. Meanwhile, Freddie Mac and the National Association of Realtors had the highest predictions, with forecasts of 5.5% and 5.8%, respectively, by the end of September.

Housing Authority 30-Year Mortgage Rate Forecast (Q3 2022)
Fannie Mae 5.10%
National Association of Home Builders 5.19%
Mortgage Bankers Association 5.20%
Wells Fargo 5.20%
Freddie Mac 5.50%
National Association of Realtors 5.80%
Average Prediction 5.33%

 

With the September Fed meeting approaching and another big hike expected, average mortgage rates climbed for the fourth week in a row.

The average 30-year fixed rate shot up from 5.89% to 6.02% for the seven days ending Sept. 15, according to Freddie Mac’s weekly rate survey.

Similarly, the 15-year fixed rate rose from 5.16% to 5.21%, and the average rate for a 5/1 ARM jumped from 4.64% to 4.93%.

Month Average 30-Year Fixed Rate
August 2021 2.84%
September 2021 2.90%
October 2021 3.07%
November 2021 3.07%
December 2021 3.10%
January 2022 3.45%
February 2022 3.76%
March 2022 4.17%
April 2022 4.98%
May 2022 5.23%
June 2022 5.52%
July 2022 5.41%

Source: Freddie Mac

Mortgage rates moved on from the record–low territory seen in 2020 and 2021 but are still below average from a historical perspective.

Dating back to April 1971, the fixed 30–year interest rate averaged around 7.8%, according to Freddie Mac. So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a great deal, historically speaking — especially if you’re a borrower with strong credit.

Just make sure you shop around to find the best lender and lowest rate for your unique situation.

Many mortgage shoppers don’t realize there are different types of rates in today’s mortgage market. But this knowledge can help home buyers and refinancing households find the best value for their situation.

Following are 3-month mortgage rate trends for the most popular types of home loans: conventional, FHA, VA, and jumbo.

July 2022 June 2022 May 2022
Conforming Loan Rates 5.30% 5.79% 5.34%
FHA Loan Rates 5.27% 5.59% 5.25%
VA Loan Rates 5.00% 5.34% 4.95%
Jumbo Loan Rates 5.02% 5.34% 4.92%

Source: Black Knight Originations Market Monitor Report

Which mortgage loan is best?

The best mortgage for you depends on your financial situation and your goals.

For instance, if you want to buy a high–priced home and you have great credit, a jumbo loan is your best bet. Jumbo mortgages allow loan amounts above conforming loan limits, which max out at $647,200 in most parts of the U.S.

On the other hand, if you’re a veteran or service member, a VA loan is almost always the right choice. VA loans are backed by the U.S. Department of Veterans Affairs. They provide ultra-low rates and never charge private mortgage insurance (PMI). But you need an eligible service history to qualify.

Conforming loans and FHA loans (those backed by the Federal Housing Administration) are great low–down–payment options.

Conforming loans allow as little as 3% down with FICO scores starting at 620. FHA loans are even more lenient about credit; home buyers can often qualify with a score of 580 or higher, and a less–than–perfect credit history might not disqualify you.

Finally, consider a USDA loan if you want to buy or refinance real estate in a rural area. USDA loans have below-market rates — similar to VA — and reduced mortgage insurance costs. The catch? You need to live in a ‘rural’ area and have moderate or low income to be USDA–eligible.

Mortgage rate strategies for September 2022

Mortgage rates grew fast and furiously to open in 2022. The pace slowed in the second quarter, then interest rates shot up after the Fed’s 0.75% federal funds rate hike in mid-June. The central bank said it anticipates multiple similar hikes in 2022. Mortgage rates could climb throughout the rest of the year as a means to offset inflation. However, opportunities to lock in a low-interest rate do still exist for home buyers and refinancing homeowners.

Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.

Have a plan — and stick to it

“Don’t doom scroll, don’t get too seduced by the headlines. It can be tough for the first-time home buyer, but it also doesn’t have to be if you have a plan.”

-Paul Buege, chief executive officer and president at Inlanta Mortgage

Between ballooning prices and a lack of listings, home buying in 2022 has been tough and likely even frustrating for many borrowers. However, conditions are beginning to ease.

With listings sitting on the market longer and interest rates possibly peaked, now’s not the time to give up or be erratic with your money. Much like playing at a blackjack table, your best bet at winning — or in this case, buying a home — comes with sticking to a consistent strategy and patience.

“Don’t doom scroll, don’t get too seduced by the headlines. It can be tough for the first-time home buyer, but it also doesn’t have to be if you have a plan,” Buege said. “If someone wants to buy a home, you can, it just might be at a different time than what you’re hoping. But I think things are cooling down. We really try to advise everyone to respect the market. Virtually everything that’s going on out there is outside all of our control.”

So figure out when you want to buy a home, prepare yourself, and know all the borrower requirements. While affordability took a hit over the last few years, you can still get creative and find ways to save money.

Work for a lower interest rate

One of the biggest parts of home buying is the mortgage rate you’re able to lock into. Everyone wants the lowest possible interest rate they can get but that’s mostly determined by what the lending market offers on a given day. Unfortunately, timing isn’t always in every borrower’s favor.

That’s where mortgage discount points come in. It’s a lever borrowers can pull to decrease their monthly mortgage costs and paying down your rate could save thousands of dollars over the life of your home loan.

“Rather than asking the seller to drop their price, a buyer can leverage a seller concession to buy down their mortgage rate via points,” said Taylor Marr, deputy chief economist at Redfin. “This will have a much greater impact on lowering their monthly mortgage payment than a lower [home purchase] price would.”

Although, paying for mortgage points adds more upfront costs at closing, which could be a barrier to entry for some borrowers. Shopping your rate around by contacting multiple lenders to see if they can offer a lower one only requires time and effort. Given how lenders differ and how volatile interest rates tend to be, taking your first offer could be a mistake.

How to shop for interest rates

Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with perfect credit and who can put a down payment of 20% or more.

The rate lenders actually offer depends on:

  • Your credit score and credit history
  • Your personal finances
  • Your down payment (if buying a home)
  • Your home equity (if refinancing)
  • Your loan-to-value ratio (LTV)
  • Your debt-to-income ratio (DTI)

To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.

You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.

This might sound like a lot of work. But you can shop for mortgage rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousands.

Mortgage interest rate FAQ

What are current mortgage rates?

Current mortgage rates are averaging 6.02% for a 30–year fixed–rate loan, 5.21% for a 15–year fixed–rate loan, and 4.93% for a 5/1 adjustable–rate mortgage, according to Freddie Mac’s latest weekly rate survey. Your individual rate could be higher or lower than the average depending on your credit score, down payment, and the lender you choose to work with, among other factors.

Will mortgage rates go down next week?

Mortgage rates could decrease next week (Sept. 26-30, 2022) if the mortgage market takes a cautious approach to a possible recession. However, rates could rise if lenders continue to account for the Federal Reserve taking more aggressive measures to counteract the high inflation of 2022.

Will mortgage interest rates go down in 2022?

It’s unlikely mortgage rates will go down in 2022. Inflation has been climbing at a record rate over the last few months. And the Fed is planning to raise interest rates after each of its scheduled FOMC meetings. Both these factors should lead to significantly higher mortgage rates in 2022.

Will mortgage interest rates go up in 2022?

Yes, it’s very likely mortgage rates will increase in 2022. High inflation, a strong housing market, and policy changes by the Federal Reserve should all push rates higher in 2022. The only thing likely to push rates down would be a major resurgence in serious Covid cases and further economic shutdowns. But, while it could help mortgage rates, no one is hoping for that outcome.

What is the lowest mortgage rate right now? 

Freddie Mac is now citing average 30-year rates in the 5 percent range. If you can find a rate in the 4s, you’re in a very good position. Remember that rates vary a lot by borrower. Those with perfect credit and large down payments may get below-average interest rates, while poor-credit borrowers and those with non-QM loans could see much higher rates. You’ll need to get pre-approved for a mortgage to know your exact rate.

Will there be a housing crash in 2022? 

For the most part, industry experts do not expect the housing market to crash in 2022. Yes, home prices are over-inflated. But many of the risk factors that led to the 2008 crash are not present in today’s market. Low inventory and massive buyer demand should keep the market propped up next year. Plus, mortgage lending practices are much safer than they used to be. That means there’s not a subprime mortgage crisis waiting in the wings.

What is the lowest mortgage rate ever?

At the time of this writing, the lowest 30-year mortgage rate ever was 2.65 percent. That’s according to Freddie Mac’s Primary Mortgage Market Survey, the most widely used benchmark for current mortgage interest rates.

Should I lock my rate now or wait?

Locking your rate is a personal decision. You should do what’s right for your situation rather than trying to time the market. If you’re buying a home, the right time to lock a rate is after you’ve secured a purchase agreement and shopped for your best mortgage deal. If you’re refinancing, you should make sure you compare offers from at least three to five lenders before locking a rate. That said, rates are rising. So the sooner you can lock in today’s market, the better.

Is now a good time to refinance? 

That depends on your situation. It’s a good time to refinance if your current mortgage rate is above market rates and you could lower your monthly mortgage payment. It might also be good to refinance if you can switch from an adjustable-rate mortgage to a low fixed-rate mortgage; refinance to get rid of FHA mortgage insurance; or switch to a short-term 10- or 15-year mortgage to pay off your loan early.

Is it worth refinancing for 1 percent? 

It’s often worth refinancing for 1 percentage point, as this can yield significant savings on your mortgage payments and total interest payments. Just make sure your refinance savings justify your closing costs. You can use a mortgage calculator or speak with a loan officer to crunch the numbers.

How do I shop for mortgage rates? 

Start by choosing a list of three to five mortgage lenders that you’re interested in. Look for lenders with low advertised rates, great customer service scores, and recommendations from friends, family, or a real estate agent. Then get pre-approved by those lenders to see what rates and fees they can offer you. Compare your offers (Loan Estimates) to find the best overall deal for the loan type you want.

What are today’s mortgage rates?

Mortgage rates are rising, but borrowers can usually find a better deal by shopping around. Connect with a mortgage lender to find out exactly what rate you qualify for.

We are a leading real estate team in a senior marketplace dedicated to empowering our clients with data, inspiration, and knowledge about the place they call HOME.

Each office is independently owned and operated

Get In Touch

Facebook-f Youtube Instagram

Quick Links

Real Estate Website by Stephen De Witt. All Rights Reserved.