Make home repairs before listing your home for sale
Real estate experts generally recommend that you make repairs or add strategic upgrades to your home before selling it. Items such as a leaky roof, a malfunctioning furnace, air conditioner or water heater, or damage to any part of the home can significantly lower your house's value and the attractiveness of your home to potential buyers. In addition, even once your house is under contract, these items complicate the completion of the home sale when it comes time for the buyer's inspection .Click here for your free guide!
A wise real estate investor once referred to dirty, broken or ugly things in a home as "conversation pieces," meaning that those items spurred a conversation later, such as - "Did you see that huge stain on the carpet? Whoa!" "The furnace in that house sure made a funny noise. I wonder what that was all about?" You want to make sure there are no negative "conversation pieces" in your house - just the kind that make people say "Wow!"
Get a second opinion from a real estate consultant
You can get a more objective opinion from a real estate consultant . A consultant can provide you with a comprehensive report for around a hundred bucks. They are familiar with homes in your neighborhood; every day they walk through other homes for sale and know the 'good and bad' about each. A real estate agent or consultant can really help you determine how your home stacks up, before you even decide to sellyour home. HomePoint.com can help you connect with a consultant in your neighborhood.
Get a home inspection report
You can also order an inspection report from a professional home inspector. These reports range in price from about $200-$400, and are generally quite comprehensive. The advantage of having an inspection report is that you can provide it to potential buyers as they are looking at your house. The report will either show that your home needs no work, or you can show how you completed the repairs recommended by the inspector. Either way, any buyer will feel that you are being proactive and that yourhome is in good condition. This "peace of mind" to the buyer is worth thousands of dollars (of higher sales price) in your pocket. For more detailed information about the home inspection process , see Section # 20 of this report.
Should I remodel my home or move to a new house?
The age-old question is "Should I move to a new home or remodel my current house?" Depending on the situation, you may be better off financially to stay in your current home! You should carefully consider the pros and cons of each option - both financially and psychologically. Purchasing a home can be a stressful experience. You must qualify for a home loan, pack up your belongings, move, then unpack and get settled into the new house and perhaps learn your way around a new area.
Moving costs
Costs to move to a new home can really add up. Not only is there the physical cost of moving (including things like packing, boxes, moving trucks, perhaps taking time off work, etc.), but also other items like making repairs or changing landscaping, buying new window coverings, painting, changing locks, updating your address with all your accounts and more. Getting a moving kit or moving boxes from a site such as www.uboxes.com or www.uhaul.com/boxes can cost $300-$400 for a 3-bedroom house!
Home remodeling costs
Remodeling costs vary around the U.S. and depend on factors such as demand (for both labor and construction materials). The chart below shows also some average remodeling costs, and the amount typically recovered when you sell your home.Remodeling can be less expensive than purchasing a new home. You must consider the remodeling cost, how it will be financed, and how that affects your overall monthly house payment. If you need more space or want newer finishes in your home, you could finance a remodeling project with a second mortgage. Compare the combined first and second mortgage payments to the payment on a new home that has the space and finishes you want.
When you sell your house, consider the return on your investment. On average, remodeling does not increase your home sale price by as much as you spend to remodel. The chart below, courtesy of Hanley Wood and Remodeling Online , shows typical remodeling costs and estimates the percentage of those costs recovered at time of home sale.
| Cost vs Value (2005 National Averages) | ||||||
| Project | Job Cost | Value at sale | % Cost Recovered | 2005 Rank | 2004 Rank | 2003 Rank |
| Siding Replacement - Upscale |
$10,393 | $10,771 | 103.60% | 1 | n/a | n/a |
| Bathroom Remodel
- Mid-Range |
$10,499 | $10,727 | 102.20% | 2 | 5 | 6 |
| Minor Kitch. Remodel
- Mid-Range |
$14,913 | $14,691 | 98.50% | 3 | 2 | n/a |
| Siding Replacement
- Mid-Range |
$7,239 | $6,914 | 95.50% | 4 | 3 | 2 |
| Two-Story Addition
- Mid-Range |
$80,133 | $75,831 | 94.60% | 5 | n/a | n/a |
| Attic Bedroom
- Mid-Range |
$39,188 | $36,649 | 93.50% | 6 | 9 | 4 |
| Bathroom Remodel
- Upscale |
$26,052 | $24,286 | 93.20% | 7 | 6 | 5 |
| Major Kitchen Remodel - Mid-Range |
$43,862 | $39,920 | 91.00% | 8 | 15 | 15 |
| Deck - Mid-Range |
$11,294 | $10,196 | 90.30% | 9 | 1 | 1 |
| Basement Remodel
- Mid-Range |
$51,051 | $46,010 | 90.10% | 10 | 17 | 12 |
| Window Replacement - Mid-Range |
$9,684 | $8,681 | 89.60% | 11 | 7 | 8 |
| Window Replacement - Upscale |
$16,096 | $14,259 | 88.60% | 12 | 8 | 7 |
| Bathroom Addition - Mid-Range |
$22,977 | $19,850 | 86.40% | 13 | 4 | 3 |
| Roofing Replacement - Upscale |
$16,453 | $14,141 | 85.90% | 14 | n/a | n/a |
| Bathroom Addition
- Upscale |
$47,212 | $40,488 | 85.80% | 15 | 10 | 9 |
| Major Kitchen Remod. - Upscale |
$81,552 | $69,194 | 84.80% | 16 | 13 | 11 |
| Roofing Replacement - Mid-Range |
$11,164 | $9,456 | 84.70% | 17 | 11 | n/a |
| Family Room
- Mid-Range |
$54,773 | $45,458 | 83.00% | 18 | 12 | 10 |
| Master Suite
- Mid-Range |
$73,370 | $60,460 | 82.40% | 19 | 16 | 13 |
| Master Suite
- Upscale |
$137,891 | $110,512 | 80.10% | 20 | 14 | 14 |
| Sunroom
- Mid-Range |
$31,736 | $23,643 | 74.50% | 21 | 18 | n/a |
| Home Office Remodel
- Mid-Range |
$13,143 | $9,569 | 72.80% | 22 | n/a | n/a |
Home financing costs: How much will it cost me each month?
Whether you decide to move or remodel, obtaining a new second mortgage, refinancing your first mortgage, or getting a mortgage on a new home all come with financing costs. Title insurance, loan origination fees, closing fees, an appraisal, document fees, recording fees and credit report fees, amongst others, can add up to thousands of dollars.
How are home lenders or mortgage brokers paid?
While we're on the subject, it is important to understand how a lender or mortgage broker makes money. The loan originator (the person who takes your loan application) can be either an employee of the lender (like a Bank of America) or a mortgage broker (like "XYZ Mortgage") who works with Bank of America but is not a direct employee. The loan originator earns an origination fee (usually around 1% of the loan amount) either from you (the borrower) or directly from the lender. So, the person youare dealing with (the "originator") may or may not work for the company who is actually providing the money to you.
What about these "no closing costs" options?
Many lenders/mortgage brokers offer loans with no closing costs. As you know, there is no such thing as a "free lunch". The "no closing cost" lender must increase the interest rate on your loan, and then use the premium paid by the investor (who buys the loan from the lender or loan broker in what is referred to as the "secondary mortgage market") and that premium paid by the investor to acquire your "above market" interest rate loan to pay the closing costs. For example:
Let's say you want a $300,000 mortgage. Let's also say that the average market interest rate ("par") for a 30-year fixed-rate loan is 6.00%. That loan likely has an origination fee of 1% of the loan amount ($3,000 in this case). This might be your estimated closing costs:
| $ | 3000 | - Origination Fee |
| $ | 350 | - Appraisal Fee |
| $ | 700 | - Title Insurance |
| $ | 100 | - Closing Fee |
| $ | 250 | - Document Preparation Fee |
| $ | 100 | - Recording and Filing Fees |
| $ | 25 | - Flood Certificate |
| $ | 25 | - Credit Report |
| $ | 4,550 | - TOTAL |
You can get these closing costs paid
So, you will need to bring $4,550 to closing to cover the closing costs. And the above example is for a lender who is not ripping you off! Don't want to spend almost $5,000 for your new loan? For that, the loan originator can raise your interest rate to 6.375% (.375% above "par"). On a 30-year loan, this higher rate will net the lender almost $30,000 in additional interest. Because of that, the lender will pay the loan originator (a mortgage broker or the lender's own employee) a premium of about$5,000 for selling you a higher-rate loan. The lender may also include a pre-payment penalty (see section # 4) which accomplishes the same thing.
That loan originator can take the extra $5,000 and use it to pay your closing costs - thus, a "no closing costs" loan. Note that the loan originator is still earning an origination fee. Make sure you understand your loan rate and closing costs before you agree to any loan. Shop around, but look out for those "bait and switch" lenders that promise no fees and low rates, but then change something prior to closing. You generally can't go wrong working with a reputable, well-known lender.
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