Misconceptions Than Can End Up Cost You Part Two

If you saw my last article, you learned that there were quite a few misconceptions about homeownership that could actually end up costing you quite a bit of money and time. Whether you are buying a house with my help or maintaining the one you already have, I want to make sure that you have all the information necessary to keep your home up to the standards you want.

So, let’s take a look at some more myths that you want to avoid.

A Recommendation Isn’t Always Enough to Hire a Contractor

While recommendations from friends help you find friendly people who do great work, they aren’t always enough when you want to hire a contractor. This is because they don’t only need to look like they’ve done a good job, but the work has to be stable enough to last for years, follow all necessary code, and they need to be reliable.

After you get a recommendation from a friend, check sites to see if you can find an online presence for them with reviews to see how others’ experience with them was.

If you are undertaking a large project and want to be certain that your contractor will do everything as they should, talk to a local building inspector to see if your potential contractor has met code on past properties that they’ve worked on.

Other questions you can ask before hiring your contractor is for some past clients you can talk to and how often they do projects like yours. If you think of this as a job interview, it makes more sense. After all, if you’re spending a lot of money on a large, time-consuming project, you want to make sure that it’s done correctly.

Turning Off Your AC Might Not Be the Best Choice

You want to save money on your air conditioning bill while helping the environment at the same time, but turning off your air conditioning might not be the best choice. In fact, this could end up costing you more money.

In the summertime, if you turn off your air completely, the house can dramatically heat up. This means that when you come home and turn it back on, it has to work overtime to cool the entire house.

However, this doesn’t mean that you should leave the temperature very low in the summer months when you’re not home. Instead, turn it up 5-10 degrees when you’re gone so that it saves you money while you’re gone, but still only has to adjust to a smaller change when you get back to your house.

If you want to take the high-tech options, you can install a programmable thermostat that changes temperatures at different times of the day, many of which you can change directly from your smartphone.

Duct Tape Does Not Actually Work to Seal Ductwork

Even though the names sound familiar, you shouldn’t try to fix your HVAC’s ductwork with duct tape. Duct tape does not seal leaks well because the hot air from the HVAC system degrades the glue. This means that it deteriorates over just a few years, meaning that air conditioning will escape before cooling off your house.

So, what should you do instead? You can use duct mastic to seal metal and flexible ductwork. This is a gooey substance that dries after it is applied. Combine it with a layer of fiberglass mesh if the gap is bigger than 1/16 of an inch wide.

Bleach is Not Enough to Get Rid of Mold

Well, sometimes it is. Bleach can actually destroy the mold on non-porous surfaces. However, it doesn’t work well on absorbent materials, such as grout, drywall, caulk, carpet, and insulation, according to the Centers for Disease Control and Prevention.

Although the bleach seems to remove the mold, it only takes away the color so it isn’t visible anymore. Additionally, if you attempt to use bleach combined with water to clean it, this could actually create more mold because the surface could absorb the water.

Instead, buy an anti-fungal product that kills the mold from its roots. If you need to get rid of mold that is larger than about 10 square feet, you should hire a professional who can get rid of it safely and permanently.

You Should Never Put Dryer Sheets in Air Vents

Someone had the idea that putting a dryer sheet in your air vent will help your house smell good at all times, and it was widely circulated throughout social media. However, this is extremely unsafe.

It blocks the flow of air in the air vents, meaning that not only do you have to pay more for the extra energy the HVAC system has to use, but this could also pose a fire risk in the winter.

All you have to do to is buy candles, scented plug-ins, sprays, or any other number of options to make your house smell great without the extra energy expenditure or risk of fire.

An additional misconception about air vents that we hear a lot is that you have to change them every single month. This isn’t actually true. While it’s best if you check them every month, they typically need to be changed about every three months (sometimes sooner, but never later).

While you won’t save a lot of money on this one, it could save you about $100/year and your time.

Now that you understand the misconceptions that can cost you time, safety, and money, you can be sure to avoid them and keep your home nice for your whole family.

Michele Karl is the Owner/Broker of Priority Real Estate. She can be reached at her email at [email protected] or give her a call at her office at 865-577-6600.

Misconceptions That Can End Up Costing You

Today, misconceptions about your home are being spread faster than ever. From viral posts shared on Facebook to the popularity of TV programs that discuss buying, selling, or flipping homes, more misinformation is out there than ever before.

Let’s take a look at some of these myths to make sure you avoid them.

How careful are you with your stone countertop?

Unless your countertop is made of incredibly tough diamond, it can be damaged. Many people proport the popular myth that countertops made of marble, quartz, travertine, soapstone, and limestone can’t be stained, but this is false. In fact, all of these can be stained.

Your marble countertops might have cost you a pretty penny, but it can be scratched and stained easily. Not only this, but any type of acidic beverage like soda or coffee creates a cloudy spot in marble. This process is known as etching. This means that you should immediately clean any acidic beverage, including wine or lemon juice, to avoid any problems.

However, typical household cleaners can dull the surface of any type of stone countertop, so be sure to buy a cleaner that is specifically made for your countertop stone type.

Another issue that can come up is discoloration of stone countertops. This happens under direct heat, so make sure you don’t put a hot pan directly on the surface.

If you’d like to not worry about your countertops so much, your best bet is granite because it doesn’t stain or scratch like the other options.

Does your smoke detector really work?

This one isn’t as much of a misconception as it is a simple and understandable mistake. First of all, if you check your smoke detector like you should twice a year by using the test button, you deserve a gold star.

Although some of us accidentally ‘test’ our smoke detectors by not being the best chefs, this is an incredibly important aspect of your safety that you shouldn’t disregard.

However, even if you’re using the test button twice a year, you still might not be doing what you should. Essentially, this check will only alert you to whether your alarm sound works or not. Well, what else do you need to know? Even if your alarm sound works, the actual sensor that detects the smoke might not.

This means that you should actually regularly test the detector with smoke. The easiest way to do this is to blow out a match directly under the unit. From here, you can see if both the alarm and sensor are working.

Do you really have to clean gutter guards too?

Most people think that cleaning their gutters is all that’s necessary and buy gutter guards to lighten up the work they need to do outside of the house. However, believe it or not, you have to clean gutter guards as well.

Of course, leaves shouldn’t be able to fit into gutter guards, but this doesn’t stop all of the small debris from clogging it up. Seeds, flower buds, and more, can get through them, meaning that while you’ll have a lot less work than without gutter guards, you’ll still need to keep an eye on them and clean them when necessary.

Can a lemon help you clean your garbage disposal?

Unfortunately, no. Of course, this natural way to clean would be better for the environment, it isn’t better for your pipes because of the lemon’s acidic properties. In fact, it eventually would corrode any metal in your disposal.

Others claim to use coffee grounds, instead, to clean it, but this isn’t the best decision either. While they can clean the blades, the coffee then clogs the pipes, leaving you in a worse mess than what you started with.

Your best natural disposal cleaning option is actually baking soda. It cleans the blades well because of its slight abrasiveness, but won’t damage the metal, so you’ve got the best of both worlds.

How short should you really mow your lawn?

Many people seem to say that if you cut your grass very short, you won’t have to mow it as often. This piece of misinformation is actually slightly based in fact because if you cut your grass too short, it will actually die.

Technically, then, this is true because you would have to mow less, but no one wants a lawn with grass that’s completely dead.

If you cut your grass too short, this plant won’t have the energy to fight off weeds, pests, or the heat of the sun’s rays. While you might have to mow a little more often if you don’t cut your grass super short, your lawn will look much, much better.

Should I redo my kitchen before I sell my house?

I’ve actually written an article before about which remodels will increase the value of your home and which won’t. After TV show after TV show came out showing people the fun and value of remodeling their homes (especially the kitchen), this became extremely popular.

Unfortunately, remodeling your kitchen with decorative pieces and trendy cabinets won’t increase the value. This is because trends change, sometimes quickly. For example, remember how popular wallpaper used to be? Now, almost no new homes have this touch.

In addition to this, everyone has different tastes, so you don’t want to design your home flashy way someone else wouldn’t like. If you do redo your kitchen or other parts of your home, aim for neutral styles and colors. One thing that could truly help your home sell is a fresh coat of neutral paint.

Save your money from these misconceptions

Now that you know some of the most common misconceptions that homeowners believe, you can easily avoid them, saving yourself money and problems in the long run.

Michele Karl is the Owner/Broker of Priority Real Estate. She can be reached at her email at [email protected] or give her a call at her office at 865-577-6600.

 

How to prepare to move with kids

Moving can be hard. With kids, things can be even more difficult. Will you be in your new home before school starts? Will your gets get emotional leaving their home and neighbors? What about scheduling around nap time (especially if you’re looking in a different time zone)?

 

Otherwise, learn how to make age-appropriate plans so you can find the perfect home for you and your family with the least amount of stress.

Infants

The age of your child or children matters quite a bit when you’re planning how to schedule showings and deal with the emotional response to moving.

 

Luckily, if you have an infant, you don’t have to worry about your child wanting to stay in the same neighborhood or fighting you when you ask them to pack up their toys. If they’re very young, they can just be brought along with no problem, hopefully sleeping most of the time.

Make sure you bring all supplies for feeding and changing and try to not linger in the homes so you can get your baby back in their normal schedule as soon as possible.

If you’re driving a long way to see the homes, this can be more difficult, but make sure to plan some breaks into your day.

Toddlers

Toddlers are, of course, more difficult than infants when it comes to looking at houses and moving. Anyone with a child this age knows that they don’t have a very long attention span and can get bored pretty quickly.

If you don’t have a babysitter for the day, make sure you bring some distractions for your toddler. Bring more than one toy in case they get bored or restless because sometimes things can take longer than you plan for, with things like traffic and other potential buyers viewing the same house.

You don’t have to overthink it; just bring some things you know your toddler will enjoy, like their favorite toy and game. If you are busy the entire day looking at homes, maybe even pack some new surprises that will be sure to hold their attention when the normal toys have become boring.

One thing to keep in mind, though, is that it is probably better to avoid open houses with children this age. There are a couple reasons for this.

First, you might feel like you can’t spend as much time as you would like really looking at all the nooks and crannies in the home because of all the other people around. Additionally, you might feel pressured to rush because you can’t help keep your children entertained with a toy or game if there are many other people in the house.

Over age 6

Of course, you should still keep your children occupied while shopping for homes by bringing games and toys. Depending on their age, you can also bring an iPad or tablet pre-loaded with many different age-appropriate apps to keep them busy for hours.

Beyond this, though, it’s time to start focusing on the more emotional aspect of moving, not just making sure they don’t get too bored. Kids should start to be mentally prepared for an upcoming move as soon as the details about when and what city are definite. If you as an adult need time to mentally adjust to a move, your child does, too.

Moves can either be a time of great happiness or excitement, like your family is expecting another child and wants to upgrade, or less so like a parent got laid off from a job and now the family is downsizing. Whether out of happiness or not, moving can be very emotional.

Sometimes, you need to be more gentle about preparing your kids for the move than others. For example, if the child perceives the move as coming from something negative, like their parents getting divorced, they should be given more time to adjust.

How can you help them get ready for this change?

Help them see the new life they’ll have in their new home

After you’ve decided on a particular area, drive your child around and show them what could grow to be their new favorite places.

Take them to the community soccer field or swimming pool and grab some ice cream at a local shop. Make sure they know that just because they’re moving, their favorite activities can continue.

Once you’ve decided on a house, make a list of the things your child wants in it to make it feel like more of a home. Help them envision themselves living there by asking exactly where they want to put their bed or their prized rock collection. For a bit more fun, maybe you can make plans build a treehouse in the backyard, too.

Are the kids involved in the decision?

Families have many different opinions on this, and there’s certainly not one right answer, and it greatly depends on the age of your child.

With some families, the opinion of the child is immensely important. If they truly dislike the house, yard, or neighborhood, the parents might not buy it. The older the child is, the more likely this is going to happen.

However, some parents, especially if they are moving because of a divorce or loss of a job, find the child’s opinion distracting and don’t ask for it.

Of course, sometimes children can’t understand that the price of the home they want might be out of the family’s budget. If you don’t take their opinion into consideration because of budgeting concerns, try explaining this in age-appropriate terms. While they might not immediately forgive you, they’ll understand in time.

Don’t forget that it doesn’t have to be all-or-nothing, though. Maybe you can narrow down the houses in your budget to your top three favorites, then ask your child’s opinion from there. This leaves everyone happy with the choice.

Then, don’t forget to let your young kids help so they feel like they are really a part of the move. If they aren’t old enough to actually pack, give them stickers to ‘label’ the boxes so they feel like they’re helping.

Enjoy your new home

Taking a few tips and tricks into account will make shopping for a house and moving into your new home much easier so you can enjoy the exciting process of buying a new home!

Michele Karl is the Owner/Broker of Priority Real Estate. She can be reached at her email at [email protected] or her office at 865-577-6600.

 

How to Find a Good Home Inspector

Home inspections can be a very important and potentially revealing part of your home buying experience. If you aren’t buying something that you know is a fixer-upper, it’s important that you have all the facts about the home and its potential problems.

If you’re unlucky, you can find yourself with a home inspector who just wants to get the job done, not caring about inspecting very well. Or perhaps you find a home inspector at the other end of the spectrum–one who writes down every single tiny issue, scaring the buyers away from buying what was actually a great house.

However, if you find yourself a good inspector, he or she can save you time, money, and problems that could be much bigger in the future.

What do most home inspections cover?

Typically, home inspections will check out the structural integrity of the house, different cosmetic features, and any important mechanical systems. This includes heating and cooling systems, electrical, plumbing, built-in appliances, the foundation, insulation, ventilation, and more.

A thorough inspection looks for all of the basics in addition to leaks, typical insect infestation, unsafe wiring, mold and mildew, and any type of safety hazard.

It’s important that you get someone who is knowledgeable because home inspectors have to cover quite a bit of ground and have a lot of expertise. While it’s impossible to expect them to find every single potential problem, we can help you find the best possible inspector.

One thing to keep in mind is that, if you choose to check for termites, you’ll typically have to hire a different type of inspector who specializes in this.

The time and complexity of a home inspection is completely dependent on the house. Sometimes a home inspector can be in and out in a couple hours, whereas other times it can take half the day. For typical homes, they’ll usually cost from $300 to $800, but this can range depending on the structure and age of the house.

While this range is very wide and it is important to shop around to find the best price, make sure that you don’t sacrifice quality in this regard. Your home is likely the most expensive purchase in your lifetime. This means that if you need to spend an extra $100 for the home inspector with 10 more years of experience who comes highly recommended, you’re likely getting more bang for your buck.

After they’ve completed the job, the home inspector will give you a written report with photographs and descriptions of any issues they found. This way, you’ll be able to understand the damage and get repair estimates much easier.

Make sure that your home inspector offers a real, written report about the inspection with details specific about your home, not a simple one-size-fits-all checklist. The report will have a detailed picture of the house on the day they performed the inspection, itemizing each major component and its condition.

Then, it’ll include all items that are in need of typical maintenance or attention, making it so you can be proactive in your approach to home maintenance. After this, it’ll show you each item that needs major repairs. Oftentimes, the seller will pay for these items to be repaired.

How to find your home inspector

If you’re in East Tennessee, we at Priority Real Estate can give you great recommendations for expert home inspectors in our area.

Otherwise, you can check out a list of your local inspectors on the American Society of Home Inspectors website at www.ashi.org. Make sure you check for someone that isn’t just a specialist like a plumber but instead has a background in home inspections. If they have a background in building, this is a big plus.

Ask how long they’ve been in the business and if they can provide you with any references, and make sure to double check that they have a verified license with the state agency (if your state regulates inspectors).

If your state doesn’t regulate inspectors, try to see if they are on the ASHI’s website. Some other respectable organizations include the National Association of Home Inspectors (NAHI) or International Conference of Building Officials (ICBO).

Of course, they don’t need to be a part of these organizations, but if they are, it can help you have some insight into their background and involvement.

Sometimes, inspectors can get certifications obtained through just a couple weeks of studying or even buy a certificate through trade organizations. That’s why it’s very important to learn about your inspector’s experience. There’s really no equivalent to years of experience inspecting homes.

Your inspector should have errors and omissions insurance and double check that their schedule can work with when you’d like to close on your house.

Another thing that you might want to take into consideration is the tools that your potential home inspector is planning on using. While it might be common for talented and experienced inspectors to bring almost nothing more than a flashlight, paper, and pencil to a home, there are many new technologies available today that can help them stay ahead of the curve.

Taking advantage of the best testing equipment available today means that they are likely dedicated to providing you with the best possible services, even if sometimes that can mean an investment in new technology.

This equipment can be anything from electronic carbon monoxide analyzers to moisture meters to electrical circuit analyzers. These tools are often necessary for making sure that your home is up to the standards that it should be reaching.

Finding a home inspector can be a daunting task. After all, they do need to know a lot about your future home. If you follow these tips, you’ll be on your path to finding the best possible specialist for your home. Instead, if you’re in East Tennessee, give us a call at 865-577-6600 for the best recommendations.

Michele Karl is the Owner/Broker of Priority Real Estate. She can be reached at her email at [email protected] or give her a call at her office at 865-577-6600.

When should you lock in your mortgage rate?

What does it mean to lock in an interest rate?

First things first, there’s no point in wondering when to lock in your mortgage rate if you don’t even fully understand what that means.

Every mortgage comes with an interest rate. This varies on many different things that you can control, such as your credit score. However, it also deals with a lot of things completely beyond your control.

For example, because Donald Trump was not expected by many to become president, his presidency is slightly unpredictable, which means that the interest rates could be too. When our neighbors across the ocean voted yes to “Brexit,” interest rates went way down by .125% or 125 points.

So, with this new presidency, rates could go way up, way down, or stay relatively the same. Right now, they’re at an almost one-year high from the presidency, but that isn’t to say they couldn’t go down again.

Basically, it’s mostly guesswork. There are financial experts that spend every day, all day attempting to understand what the interest rates will do, and they still get it wrong sometimes.

Because the interest rate is unpredictable, “locking in” a rate means that the bank promises to lend you the money at the rate during the time when you locked it in, not the rate on the day of closing on your new house.

For example, let’s say that interest rates are 3.75% when you lock in your rate. 30 days later when you sign the paperwork to close on your house, the rate becomes 3.8%. You only have to pay the 3.75%!

Sounds great, right? Unfortunately, this can work the other way as well and you could end up locking in a higher interest rate. This leads many people to ask the question: when is the right time to lock in an interest rate?

Is there a perfect time?

First, it’s important to know how far in advance should you lock in your interest rate if you choose to do so. You are able to lock it in any time after you are pre-approved up to a certain amount. But does that mean that you should?

Almost all experts agree that you should wait until you have a signed contract on a house first. Don’t get preapproved and lock in a rate before your realtor has even shown you all of your options. While we all hope to find the perfect house on the first day of looking, it could possibly take months.

Why does that matter, you ask? Locking in the rate costs more for the longer amount of time if the bank allows you to do it. If you want to lock it in for 120 days instead of an average 30-60, you’re going to have to pay a lot. Typically, it isn’t worth it and my advice would be to wait.

Okay, so now you’ve got a signed contract and you’re going to almost certainly purchase a house. Congrats! Is there a perfect hour, like Tuesday afternoon is said to be best for booking airline flights? Unfortunately, no.

As said before, interest rates are relatively unpredictable. As much as everyone would love to know when the best time is, it’s hard to know. That’s doesn’t mean it’s completely hopeless, though.

One day to keep your eye on to see if rates go up or down is the first Friday of every month when the jobs report is released by the U.S. Bureau of Labor Statistics. This report typically has an effect on interest rates.

Another good day to keep in mind is when the Federal Reserve holds its two-day policy meetings and releases its statement. The dates for these meetings can be found on their website and are almost sure to influence the rates.

So, is it smarter to lock it in or wait?

Unfortunately, a lot of this is chance. So, you have to ask what your family, specifically, can afford to do. If you wait and rates go up, will you have problems affording the house long-term? If so, the safest bet is to lock in your rates right away.

While it is true that you could lose a bit if they go down, it’s much smarter than risking losing the ability to comfortably purchase the house if they go up.

You do have one more option, called a “float down” provision. As you might suspect from the name, this means that if the interest rates go up, you will not be affected at all, but if they go down, you will get the new, lower rate (or “float down” to the lower rate).

Well, why didn’t I say that from the very beginning, right? Clearly, this is the best option that everyone would like to choose.

Banks realize this as well, so they charge quite large amounts to add this float down provision to your mortgage. While this depends on the specific bank and their rates, as well as your financial situation, the extra cost is usually not advisable. As the bank has to make money too, they usually factor out this cost so that they won’t lose much money if the interest rate does go down.

However, sometimes this could be the smartest move for your new mortgage. Talk about this in depth to your lender, real estate professional, and family, making sure you understand both the long and short-term costs of all decisions.

When making the decision to lock in your mortgage rate or not, the main question, as stated before, is just to ask yourself: what will I lose if the interest rate goes up versus down? Can I afford the risk of waiting? If not, and the initial rate you’re offered is fair, lock it in!

Will my property rise in value?

You might have heard that buying a home is always a smart investment because the value always rises over time, but is this really true?

Well, certainly home prices go up because of inflation, but you have to look at some more context to understand if your home’s value can rise over the rate of inflation.

If you’re buying your house as a primary place to live, it’s almost always a good decision. However, if you’re thinking about buying an extra investment home, read on to understand if it will rise in value.

The physical structure will depreciate

When investors talk about the home’s value appreciating they are usually referring to the land. The home itself will have more problems the older it gets, such as leaky drains, potential structural issues, and more.

The house requires average maintenance, design updates to keep it in style, and more. In fact, the Internal Revenue Service (IRS) knows that homes depreciate and allows you to note the depreciation for tax purposes.

However, the land won’t have these same problems. Focusing on the land and its location is what is going to get you a solid, smart investment with the highest rate of return.

Of course, this isn’t to say that the property doesn’t matter at all. If you’re looking at selling an investment home, it needs to be in good condition and look well kept-up. And, of course, as the price of the land in the area rises, so will the price of your home.

However, when choosing an investment home, location is typically more important than the house itself.

The land will appreciate

Have you ever heard of an investor buying a degraded home, tearing it down, building a new one, and still making a profit when they sell it? That’s because the land and location were more important than the actual physical structure on it when purchasing an investment property.

Of course, you need to crunch the numbers to be certain that the cost of buying the home, property, and repairs will still be able to give you a profit when selling, but the bottom line is that the location matters more. That is why a beautiful house in an unpopular area might cost hundreds of thousands less than a destroyed property in a popular zone.

Land follows the normal rules of supply and demand. Because demand continues to increase with the population and there’s no way to produce more supply, land in a good area is often a stable investment.

As we know that the value will increase, we just need to understand by how much. To understand if where your potential investment home will go up in value, you need to look at the location and the future potential in this area.

Location, location, location

If you’re buying your investment to live in, it can be hard to give up the perfect house in exchange for a smaller or less beautiful home in a different area. However, if you want to maximize the investment opportunity of being a homeowner, this is the best decision.

Force yourself to look past many of the physical aspects of the home when deciding on which to purchase, and instead zone in on how the location will affect your return.

I do want to stress, though, that you should hire a contractor or someone knowledgeable in the field to understand exactly how much the repairs will cost. Even if the home is in a good area, it’s not a smart buy if you can’t afford the necessary repairs.

If the home is structurally sound and just has a few beauty problems, many of these can be fixed on your own, especially with all the DIY help out there today. Location is the most important aspect, but make sure you consider all the costs before committing to a home that needs work.

What to look for in the location

The home’s location within a home’s neighborhood matters. For example, if your potential investment property is located on a cul-de-sac or dead end, this location is more desirable within neighborhoods with others. This is because there is less traffic and is typically safer for children.

Don’t forget that smaller or less attractive homes can potentially get you much greater returns on your investment. Don’t be fooled by that beautiful looking home for a great price, and take a look at the prices of homes around it as well.

Another tip is that you should look at the area’s future development plans before buying an investment property there. Is a nice, new shopping mall moving in close by? That’s great. Some other structures, though, could decrease the area’s potential value.

It’s also important to look at its proximity to other amenities, such as grocery stores and more. If your investment property is located near a great school system, the value will probably continue to climb.

How to choose?

Essentially, it’s very important to look past how beautiful a home is. If it’s in the wrong location, it likely won’t rise in value beyond inflation. However, if it’s in an area that is near many amenities, good schools, and has new stores and shops opening up left and right (or planned for the near future), it’s likely a good investment decision.

Make sure you understand the full costs before buying and don’t get any investment properties that are too costly or difficult to repair, or else you might not be able to keep your property long enough to see it appreciate.

The most important things to remember are that the physical structure will depreciate in value, but the land will not. So, as long as the numbers work out, choosing a less attractive home in a better location is always the smarter decision.

If you want to track housing appreciation in your area to get a better understanding, you can visit the site of the Federal Housing Finance Agency (FHFA). After you’ve found the area you want to buy an investment property in, Priority Real Estate can help you find the perfect home.

Michele Karl is the Owner/Broker of Priority Real Estate. She can be reached at her email at [email protected] or give her a call at her office at 865-577-6600.

 

How to get a mortgage without a regular job

Today, many workers are employed in the “gig economy” such as Uber drivers or TaskRabbit workers. Additionally, there are a rising number of employees who work short-term contracts, jumping around from job to job, or freelance work, rather than having a steady, contracted job.

This means that even if those who make good money could find it more difficult to get a mortgage for a new home. Right now, lenders typically look at credit score, history of employment, and the likelihood of continued employment. In today’s changing economy, it’s getting less possible to check every necessary box.

Here are some tips to help make sure you have a better chance of getting that loan for your dream home, even if you don’t have a full-time, regular job.

Paperwork, paperwork, paperwork

You’ll need to make sure you have paperwork with each of your clients, even if it was just for a short amount of time. This includes proof of employment and income, phone numbers and email addresses of references, any previous employers, landlords and more.

It’s also helpful to know what your credit score is. I recommend CreditKarma for this because it’s free, although you could use any reputable site.

If you have all of your records, information, and documents of previous or ongoing clients, your lender will have more confidence in your ability to pay because they can see exactly how much money you have and where it’s coming from.

Explain your industry

Your lender might be a little behind on the times and need to better understand exactly what you do so they can feel comfortable knowing this work will still exist in the future. For example, if you are a freelance writer for magazines, the lender probably understands what this is as this job has been around for a while.

However, if you perform chores for people around your area on one of the numerous task apps, you might need to show the lender exactly what it is and how it works. Essentially, even though you don’t have a typical job with a contract, you can show that it’s likely that these jobs will continue at a steady rate for years to come.

Show that you have been performing your job regularly, even if it was with many different short-term clients, and the lender will better understand.

Careful with your deductions

Most self-employed people write off the expenses tied to their job when they report their income tax. You have to keep in mind, though, that these deductions, including things like your Internet service, travel bills, dinner bills and more, show your lower net income.

This net income then is used to help decide if you qualify for a mortgage. So, it might balance out in your favor to take off a little bit fewer deductions that you legally can in order to get the mortgage you’re after.

Talk to someone who knows

You can first talk to a mortgage lender, tell him about how much you’re planning to spend on a house, and see if that is possible given your line of work and income. They will then be able to tell if this is feasible and if not how much more you’ll need to make.

You’ll also learn what you are able to qualify now to potentially look for homes in that price range. Before you start looking at homes, it’s the best advice for everyone, but particularly self-employed individuals, to get pre-qualified for a certain amount by a trusted lender.

After this, you can either take on more clients to make more in the given year or find a home in your current budget.

If you need help finding a good lender, contact Priority Real Estate for local advice. We work with many great lenders in the area and will give you at least three people who you can call.

Have as little debt as possible

This one is important for everyone looking to buy a home but especially important for those who don’t have a regular job. The lender is going to be looking at each piece of your puzzle a little differently than they’d look at someone with a steady paycheck because there’s less security that you will pay your loan back.

Because you’re riskier, you want to prove that you handle your money well. That means that you want to make sure all debt you have is as close to zero as possible and your credit score is in great standing.

Unfortunately, you can’t get past the fact that you are held to a higher standard than other buyers. But, your risk greatly lowers as your debt does.

Ask about a ‘Bank Statement’ Mortgage

Some lenders are allowing the self-employed or gig economy workers to use a “bank statement” mortgage program. This works by reviewing 12 to 24 months’ worth of deposits to your bank account, as well as a profit and loss statement for your business.

Using this instead, you may not have to show two years of tax returns, W-2s, and payroll checks. This is geared specifically for those employees working in the new gig economy that don’t fit into the typical boxes created by mortgage lenders.

Just ask

Overall, if you don’t have a typical full-time job, the sad fact is that you will have a more difficult time getting a mortgage. However, following these tips can still help you get the house you’re after.

The top recommendation, after you pay down your debt and make sure your credit score is as high as you can get it, is to go talk to a good lender. They can help you understand all the ins-and-outs of this potentially difficult process.

After you know what price range you’ve been approved for, give me at Priority Real Estate a call and we’ll help you find the perfect home.

Michele Karl is the Owner/Broker of Priority Real Estate. She can be reached at her email at [email protected] or give her a call at her office at 865-577-6600.

Have you considered your commute?

When hunting for homes, it’s easy to feel overwhelmed sometimes. One house might be absolutely perfect but a 20-minute drive to the closest grocery store, while another has all of its bedrooms on the second floor.

While all of these considerations will certainly be thought about and taken into account when you’re looking at a home, one thing you might not always consider with as much importance as it requires is your commute time.

Surveys show that in the 50 largest U.S. cities, commute times have been steadily growing since 2009 with no sign that they’ll be slowing down anytime soon. Also, the U.S. Census Bureau shows that almost 11 million people drive at least an hour to work each way!

The reason behind this could be an article in itself, including factors such as the rising costs of living inside of a major city or the desire to have a larger home regardless of a long commute.

Regardless of your particular needs when home buying, considering your commute should rank at the top of your checklist.

Test out the drive

The very first thing you should do when you find a house you would really like to buy is put the address of your home and your office into a map for directions.

Before you hit “Go” change the time that you will be leaving (for example, 8:30 am and 5:00 pm). This part is particularly important because traffic is, of course, much busier at these times than, say, 2 am.

See how long the map calculates it’ll take you. Then, if possible, go ahead and test it out yourself. If you can’t go during the normal time you’d be driving to work, try to factor in the extra minutes traffic will add.

After you’ve successfully completed the commute, decide if it’s too much for you or not. Don’t forget to do this for both spouses if you are buying a house with your partner who has a job that isn’t located near yours.

Will you still have family and friend time?

If you have an exceptionally long commute, consider what you’re missing out on. Maybe buying a house farther from the city will help you afford that pool in your backyard that you’ve always wanted, but would your long drive make you too tired to do anything besides eating and sleeping when you finally arrive at home?

Of course, there’s always the weekends, though! Deciding on a commute is really a personal choice. You truly have to consider if the positive of living in the suburbs, closer to family, or whatever your reason, outweighs the negative of driving for a long time and being away from home more.

One thing that most people often don’t think about is their own emotions. After sitting in traffic for an hour (or more) one-way, will you arrive both at work and home in a terrible mood? Make sure to think it through before making this decision.

If you are someone who hates traffic so much you start to see red, ask your employer if they can offer flexibility when you arrive and leave to skip that hectic rush hour.

Does your family need room to grow?

If you have children and are planning on having more, a commute might not be the worst thing in your mind. Living in a nice neighborhood with a great school system could make those extra minutes of driving worth it.

Additionally, it’s typical that you can buy a bigger home in the suburbs for the same price as a smaller home in the city. This means that you have room for that extra bedroom if a little one is in your future plans.

If your family and job are changing a lot at this stage in your life, it is not a good idea to plan a home purchase around your job, either. Before taking time to consider the commute, make sure that you will be working at this job, or at least in the same area, for quite a while.

Do the costs balance out?

If you buy a less expensive home farther from your job, you will save money on your monthly mortgage payments, of course. But will those savings be worth it?

It’s important not to forget all the extra costs of a long commute. This includes gas, tolls, parking, extra hours of daycare (if necessary), and anything else that might be related to your commute.

In addition, don’t forget to consider the emotional cost that I noted above of extra hours away from home sitting in traffic. You might enjoy the alone time to catch up on your podcasts or listen to your favorite songs, but make sure to think about the psychological costs of a long commute before you make your decision.

Can you find a different route?

If your drive is littered with non-stop traffic, slow-driving tourists, or way too many stoplights, try to find a different route. Maps typically automatically route you to the shortest option, but the traffic could make this “short” route way too long.

Tell your map to find alternative routes and try them out to see if your travel time can be shortened. Also, consider going to a gym or grocery shopping nearby after work to avoid this rush hour. You will end up getting home a little later, but that time would have mostly been spent being productive rather than waiting in traffic.

How can you choose?

This personal decision is best made by determining exactly how long your commute will being during the time you need to go and leave work, understanding how much you will spend with the added driving time, then considering the emotional cost.

Determining if a long commute is acceptable is really up to you. Do you love the personal time when you can listen to your favorite audiobook in peace? Or would you prefer more time enjoying your brand new home and neighborhood?

Following these tips will help you make this important decision more simply.

Michele Karl is the Owner/Broker of Priority Real Estate. She can be reached at her email at [email protected] or give her a call at her office at 865-577-6600.

How to tell if your agent is right for you

I hate to say it, but you need to know the truth: all agents aren’t created equally. Some truly enjoy helping you buy the home of your dreams or sell your house and start a new phase in your life, while others simply don’t.

Additionally, certain agents are just more experienced or have better negotiation skills. So, how do you find the right real estate agent who will fight for you while you’re navigating the complicated (and expensive) streets of home buying and selling?

Ask previous clients

One simple way to discover if your agent will be great for you is to talk to his or her previous clients. First, you should ask your agent if there are any particular people they’ve worked with recently that will be disappointed. Then, give your agent a chance to explain themselves.

Agents aren’t perfect, but sometimes they’re expected to be and are blamed for circumstances that are out of their control. For example, if an appraisal comes back very low or high and the sale is unable to close at the accepted price, this could be something completely unpredictable.

After you’ve asked about exceptions, you can get a list of past clients and their contact information (as long as the previous clients agree to be called). This will generally help you understand how the agent has performed in the past.

If you don’t want to give anybody a call, there are often review sites online that you can look at, such as your agent’s Facebook page. It’s important to keep in mind that you should disregard the few exceptionally low or high reviews and instead choose to focus on the average.

How long have they been in the business?

This one isn’t always a great way to tell if the agent will be right for you, but it can usually help.

It is true that new agents are still learning and won’t know as much as an experienced agent. However, this could mean that they will bend over backward for you to prove themselves and help you as much as possible.

Another thing to consider is that every agent has a more experienced broker they must work under who they can usually go to for questions. If the business is smaller and the agent can go to the broker for every question they have, you might not even realize they’re new. However, there is the risk that the broker will not be able to help on a regular basis, leaving you with an agent who doesn’t know much about the market or the business.

This comes down to you. If you trust the new agent to work extra hard to compensate or you know through previous customers that agent’s lack of experience doesn’t affect the process, hire them. Otherwise, search for a more experienced agent in your area.

Ask about their previous listings

This accomplishes a couple different things if you’re looking to sell your house. First, you should look at how long the listings were on the market.

If it’s a very slow market period, it isn’t the agent’s fault if they don’t sell quickly. If you’re unsure about the current market, you can see how long it took similar houses during the same time to sell.

Additionally, sometimes people will not lower the price of their home or stage it how the realtor recommends, so nothing can be done to help the house sell.

However, if there is a constant pattern of houses taking an extensive amount of time to sell, there is probably a reason for this. Perhaps your agent doesn’t advertise the home well, doesn’t answer or return phone calls, or doesn’t know the market well enough to help choose a good price for the home.

Another reason for checking their previous listings is to see if they are similar to yours. If you’re looking to buy or sell a piece of land in the country, but the agent only has experience buying and selling apartments in the city center, they might not be the right agent for you.

They communicate well

Does the agent you’re considering answer the phone (within reasonable hours) and return missed calls quickly? Do they always call you or send you an email when they say they’re going to? Are they on time for your showing appointments or meetings? If not, consider not hiring this agent.

If they aren’t communicating with you in the beginning when they are attempting to sell your house or help you find one to buy, they certainly won’t communicate better later.

For example, if an agent wants to list your house but doesn’t communicate well with you, it is almost a guarantee that they will not answer the phone or regularly return missed calls when future agents or potential home-buyers call them. This means that your only chance of selling your house is if the buyer’s agent is determined for his or her clients.

Of course, agents do not have to be on-call 24/7. They are human beings with personal lives as well. However, being an agent usually does mean taking calls on the weekends and after the typical 5 pm (or setting up an answering service if the agent wishes).

If an agent never answers their phone or returns phone calls, it is extremely frustrating both for you and the person on the other end of this process. It’s a simple fact that along with being a realtor comes regular communication. So, make sure you only choose an agent who takes this into consideration.

How to choose?

There are some incredible real estate agents who love helping you find a new home or sell your existing one. However, there are also agents who don’t do as much as they could for their clients.

Following this list will help you recognize if your potential agent will be the former or the later because everyone deserves someone who cares when going through such an expensive and emotional process.

Michele Karl is the Owner/Broker of Priority Real Estate. She can be reached at her email at [email protected] or give her a call at her office at 865-577-6600.

 

How to increase your credit score

Perhaps you’ve just started learning how to budget properly or may have been unlucky in the past. Now, your credit score is not where you want it to be. While you can’t get a loan very a very low number, having a high credit score is not a necessity in buying a house. Yet, it certainly helps.

Lower interest rates are something everyone wants. Regardless of the reason that your credit score is lower than you would like, check out these tips for increasing it so you can better afford your new home.

First, pull your credit report. If your score is above 760, don’t worry about trying to get it any higher. You already have a great score. Otherwise, read on.

Follow three simple rules

Jeffrey Scott, a spokesman for FICO, claimed that all you have to do to raise your score is “Pay all your bills on time, every time, keep your credit card balances low, and only open new credit when you need it.”

While this advice seems obvious and you might not have been successful in the past, starting right now is important. Don’t lament about what happened before; start immediately paying your upcoming bills on time. This will greatly improve your credit score.

Also, if you can afford to, pay more than the required minimum payment each month to increase your number more quickly. A history of minimum-only payments can be a detriment to those viewing your report. Even if you’re only paying a little bit over the minimum, it will help (as well as save you money on interest).

Understand (and fix) your credit ratio

The way that your FICO score works is by comparing the amount of debt you have to your available credit. This means that some people’s advice of closing out your credit cards after they’re paid off is not a good idea.

Closing the credit card would mean that the amount of available credit you have will greatly fall. If you consider the credit ratio, you’ll see that this will negatively affect your FICO score, which is clearly the opposite effect of what you want.

If you don’t trust yourself not to overspend with the credit card, lock it away or give it to someone you can rely on.

While you should not only pay off your credit card bill as quickly as possible, you should also ask for a limit increase. Raising this will help improve your debt-to-credit ratio, helping your FICO score. The smaller percentage of debt will help you get closer to the interest rates you really want.

Don’t open new cards

When you understand credit ratio, you might think it will be a good idea to open numerous, new credit cards. Well, this type of behavior appears very risky to lenders and can hurt your score.

If you’re looking for one new credit card, this is acceptable. Just make sure you don’t open multiple accounts hoping for a better number.

On this note, older cards are actually better for your credit score. The length of your credit history factors in, so a long-term credit card account is better than a brand new one.

If the interest rate on your oldest card is very high or you don’t like the rewards it comes with, just put it in a drawer and don’t use it. This is a much smarter option than canceling it when it comes to thinking about your credit score.

Pay outstanding debt ASAP

Paying off any late accounts does not make them disappear from your record, but it does help. The longer these outstanding debts have been paid off, the more your credit score will grow.

It can be quite difficult to pay all current balances while also focusing on outstanding debt, but to improve your credit score, it’s a must.

Any errors in your report?

Do you feel like you should have a higher credit score than you do? Errors are not that uncommon. Check your report with a fine-toothed comb for things like balances that seem off or accounts that you didn’t create. Also, double check that every lender has accurately reported your credit limits.

It might seem crazy, but according to Forbes, “a whopping 25% of people who get declined for a mortgage had errors in their credit report.” These inaccuracies must be spotted and fixed by you by following the instructions on any of the credit bureau websites or your report.

Make sure you keep a record of everything involving your dispute. You can expect a response within thirty to sixty days of making the claim.

Don’t make any big purchases

This one is extremely important, especially if your credit has already been pre-approved and you’re waiting to close on a new house. Making any large purchase will affect your ability to get a loan.

If you’re trying to buy a car, take a nice vacation, or even purchase some appliances for your potential new house, just wait. These decisions can have very detrimental consequences, leaving you without a loan for your dream home.

Big purchases can also greatly impact your credit score because of the ratio explained above. Simply put, if you have more debt, your number will be lower.

Short and long-term changes

A fairly immediate change to your credit report will happen if you found any irregularities or errors in it. As soon as these are corrected, you should see your score go up.

It could take weeks or months of paying down balances to see a difference in your score. This entirely depends on you. For example, if you continue making minimum payments that are always on time, this will gradually help you score.

Instead, if you regularly make very large payments to the point where you have no or almost no debt left, your score will increase more quickly.

Paying off those outstanding debts could help you negotiate with lenders. However, you have to be patient about your credit score changes with this tactic as it takes from months to years to see large differences.

Follow the tips outlined above and your credit score will undoubtedly increase, potentially saving you tens of thousands of dollars in interest on your loan.

Michele Karl is the Owner/Broker of Priority Real Estate. She can be reached at her email at [email protected] or give her a call at her office at 865-577-6600.