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Home Equity Basics

admin — Sun, 02 May 2010 09:23:42 +0000

What is Home Equity?

Purchasing a home is a huge life event. It’s an investment that, over time, could yield a significant increase in value. As the years progress, the value of your home could increase. If and when the time comes to sell, hopefully you’ll find that you can get more money for your home than what you originally paid for it; yielding you a profit.

But the resale value, or even the appraised value before a sale, of your home is not the only value your home contains. When you purchase a home and make payments on your home mortgage, you start building what is called home equity. Home equity is the difference between the current value of a home and the amount still owed on the mortgage. As the principal of the mortgage amount decreases as a result of monthly mortgage payments, the home equity increases – even if the home doesn’t increase in value. So, you can build home equity from an increase in the potential sale price of a home and from paying down the mortgage debt that you owe on your home.

What is the Value of Home Equity?

Home equity is money in the bank. Homeowners can borrow against their home’s equity to pay for home repairs and renovations, school tuition, costly medical expenses, and even pay off debt. Your home provides you with financial opportunities not many lenders can provide. Home equity is a significant advantage to purchasing a home and a great financial resource to have. You never know what life will throw at you. It’s always good to have a “nest egg” of readily available built up capital to turn to if you’re faced with a financial crisis.

How do I use My Home Equity?

If you want to use your home’s equity for home repairs, college tuition, etc. , you first need to get a home equity loan. A home equity loan is a loan based on your home equity. There are two types of home equity loans:

1) A second mortgage (a.k.a. traditional home equity loan); and

2) A home equity line of credit loan.

A second mortgage is a loan where the lender lends you a lump sum, based on your home’s equity, and interest starts accumulating once the loan is issued. A home equity line of credit loan, however, is a loan where the lender presents you with a credit card or checkbook that you can use to make purchases. Just like a second mortgage, the amount you can spend is based on your home’s equity. But unlike a second mortgage, interest on a home equity line of credit loan doesn’t start accumulating until you make your first purchase with the card/checkbook.

Both home equity loan types are feasible means to utilizing your home’s equity.

Which type of loan you choose is up to you and your specific financial needs. Both loan types are primarily low interest loans and, for most home equity loans, the interest you pay is tax deductible.

However, it is important to know that when you take out a home equity loan, it means the lender can reposes your home if you default on your payments. In other words, if you don’t pay your home equity loan in full or default on too many payments, the bank or lender can take away your home and use its current value to pay for what’s owed. So it’s crucial that you maintain your loan payments. A home equity loan is a great financial resource, but if you don’t pay it back, it could end up costing you your home.

Purchasing a home is a venture worth taking. The appreciation of your home’s value and the equity you can build make your home a profitable investment that can’t easily be matched.

For more articles and suggestions, visit http://www.bills.com/home-equity-basics-article/

Seven Home Staging Basics

admin — Sun, 24 Jan 2010 17:59:27 +0000

Home staging is a mixed bag because there is so much you can do that knowing where to start, especially if you are doing it yourself, is almost as important as the staging itself. In a down real estate market (or any market) you could find yourself spending thousands of dollars to make your home stand out from the rest of the competition. But will you recoup your costs? How do you know where to start? Read on to see the top seven home staging basics that will save you money and still get buyers to swoon over your home every time.

1. Check your bulbs twice. – Home lighting is quite possibly the most effective way to sell your home. When a buyer looks through your home for the first time it’s an exploration and as such they are trying to see every detail during their first trip (and impression) of your home. If a buyer spots a burned out bulb or is unable to see all the space in a closet because the lights don’t work then they deduct the perceived loss of square footage and needed maintenance from your asking price. Stop this top objection in its tracks by replacing all of your burned out bulbs before putting your home on the market.

2. Clean the gutters. – How your home looks on the outside is 50% of the buyer’s first impression. If the buyer walks up to the front door and sees gutters weighed down by leaves and other debris it triggers thoughts of deferred maintenance and future home structure problems. A home buyer does not want to inherit a home seller’s problems so cleaning the gutters and ensuring they are not sagging will clear the path to a successful home tour.

3. Pack your family photos and awards before putting your home on the market. – Your home is your home. It’s a very personal space but once you have decided to put your home on the market you have to take into consideration that home buyers are trying to see this as being their next home. Family photos and awards, all great things to have, should be packed before you put your home on the market to avoid creating visual breakers when a buyer tours your home.

4. Clear the counter space. – There are two types of real estate a buyer considers when looking at your home. The first is the home and property the home resides on and the second is usefulness of the interior space of your home. Kitchens are the heart of the home and as such the buyers want to know that there will always be room to grow in that space. Clear away non-essential counter appliances and kitchen accessories to give off the impression of more space for the buyer’s dollar.

5. Get the carpets cleaned professionally. – Carpets are beautiful and make for great floor surfaces but if you haven’t had them cleaned since you moved in then you should have it done before putting your home on the market. Dogs, kids and the elements of nature all make their mark on carpeting over the years and the last thing buyers want to do when buying a home is take on a large project like carpet replacement after they move in.

6. Paint high traffic spaces. – High traffic spaces are the best places to find dings and marks on the walls which look like deferred maintenance but are in reality the consequence of daily wear and tear. Patch and paint the walls in high traffic spaces.

7. Define your rooms! -Buyers have imaginations but not when they are looking at homes. When selling your home the dining room can no longer be the home office and the living room cannot be the catch-all play area and living space. Clearly interpret what your home has to offer to buyers so they don’t deduct points (and dollars) when writing an offer for your home.

Home staging is as much about putting your home’s best foot forward as it is whisking away the most obvious home buyer objectives before the buyers have a chance to come up with them. By following these seven home staging basics you will be able to command the right price for your home in any market and increase the chances of selling your home quickly.

Home Warranty Protection Plans for Vacation Homes and Vacation Rentals

admin — Wed, 02 Dec 2009 19:08:26 +0000

Vacation or second homes can be one of life’s many joys, but it’s not always cheap. Probably the last thing a vacation property owner wants to do after closing on their vacation home is dish out even more money on appliances or systems that unexpectedly break or malfunction, especially when your vacation home is located hundreds of miles away. It’s a normal part of being a vacation home owner, though, and purchasing a home warranty protection plan is one way you can achieve some peace of mind.

A home warranty is an especially good idea if you’re a absentee owner with no experience in maintaining a home or property. A home warranty plan is also cheaper than hiring a property management company to make the same calls you can make yourself. Homeowners insurance does not cover breakdown of a home’s major systems or appliances, but a home warranty protection plan can help with repair costs such as an air conditioning system that breaks down in the middle of the night, or your refrigerator suddenly stops running.

Who pays for a home warranty plan?

Normally, the vacation home owner will pay for a warranty plan, but depending on where you live, it could depend on local traditions. Some sellers opt to pay for the coverage because it’s a seller benefit. You can ask your agent in the offer to request the seller pay, and they may agree. The National Home Warranty Association says homes with protection plans sell about 50% faster than unprotected homes. Many real estate agents will also give buyers a home warranty as a gift at closing.

How does a home warranty work?

With most plans, you will pay an annual premium for coverage. When a repair is needed you call the plan’s service provider, which normally operates 24 hours a day, 7 days a week, and they send an authorized service contractor to your home. A small service fee is required – typically in ranging from $35 to $50, and usually less than $100 – and the contractor makes the repairs or recommends the appliance be replaced.

Policies usually last for one year, costing an average of $395 per year for a moderate sized home.

What does a home warranty protection plan cover?

Home warranty protection plans may offer different levels of coverage. Most standard plans offer repair or replacement coverage for a home’s heating system and ductwork, plumbing, and electrical systems. Other major appliances that can be added include the dishwasher, the water heater, stove, clothes washer and dryer, even swimming pool equipment.

If you are expecting your appliances or systems to break down sooner than later, you can also consider increasing your deductible in order to make a guaranteed replacement provision more affordable. Increasing your deductible from $500 to $1,000 can often reduce your premiums.

The majority of plans do not require an inspection of a home’s systems or appliances. Because coverage’s will vary from state to state and from policy to policy, ask to see a copy of the policy before you commit.

What does a home warranty not cover?

Pre-existing conditions are typically not covered. For example, if the water heater hasn’t worked properly for some time, it probably won’t be covered in the buyer’s home warranty plan. Also, there may be limitations on coverage, which cover costs only up to a certain dollar amount. Items typically not covered include: sprinklers, faucet repairs, and permit fees.

Your Travel Buddy Recomends Zurvita Home Guard

Zurvita Home Guard provides protection against unexpected expensive repairs or replacement of existing home appliances and home systems. Zurvita Home Guard covers a wide variety of appliances and equipment normally used in our everyday life. Your monthly membership covers household systems and appliances in your home regardless of age, make or model.

All you pay is a small service call fee of $35.00 for each occurrence, regardless of the actual cost to the repair or replacement of the broken item.

·                            No more searching in the Phone Book

·                            No more “How much will this cost?”

·                            No more hassles trying to find a repairman

·                            No more searching for a reputable service company

Peace of mind for your vacation home or vacation rental business is just $37.95 per month, a great way to budget for unexpected repairs. Get your Zurvita Home Guard vacation home protection plan, before that next expensive call.

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