Managing Your Money, Together

To learn more about how our Minters are achieving their financial goals, we reached out to everyday Mint users, just like you, to hear their stories. Whether it’s paying off student loans, or working toward buying a home, we’re so inspired by the dedication this community has shown in working toward your goals and dreams.

One of the Minters we connected with is Jordan. He shared with us how he’s used Mint to reach a number of his financial goals. Check out his #EmpowerMint story:

My wife and I have been interested in getting out of debt ever since the day we took on student loans. With the desire to pay those loans off, we strived to learn more about budgeting and personal finance.

As we grew in our journey, there were many financial things we questioned that felt ‘normal.’ We heard so many messages that emphasized the need to have the newest toys to be happy, that having debt is normal, and that most people live paycheck to paycheck. We realized that we didn’t feel comfortable with any of that, and that we found satisfaction in being content with what we have. 

Knowing that money issues were often a problem area for couples, my wife and I started using Mint shortly after we got married in 2010 to ensure transparency and partnership from the beginning. We found Mint to be a terrific tool for us to have a complete picture of our financial situation. During this time, I was working full-time and my wife was finishing up her last year in nursing school. Mint was an immediate help in keeping track of where our money was going and in starting budget discussions that have proved to be invaluable in our marriage. It also helped initiate discussions on both near-term and long-term goals, which have been so key in helping us plan both strategically and aspirationally. 

As time went on, Mint was instrumental in helping us achieve so many of our goals including:

  • Paying off student loans
  • Paying for grad school with cash
  • Preparing for kids
  • Starting a 529
  • Saving for a down payment
  • Buying a home

Our current goal is to complete our 15-year mortgage in under 5 years. A combination of Mint, aggressive savings, overtime shifts, and side hustles have helped put us in a position to achieve this goal within the next 12 months. Once that goal is complete, we’re excited to have a little fun and celebrate this accomplishment, and then prepare for the next chapter in our financial journey. 

In addition to this goal, we also have various net worth milestones we would like to achieve in the next 1-, 5-, and 10-year periods. We are very excited about the concept of financial independence, and would like to be in a position where we have the opportunity to focus our attention on things outside of work, such as further investing in our family and causes that are important to us. With Mint, we can see how the choices we’re making are helping move us closer to achieving these goals. 

Today, we check Mint on a daily basis in order to stay on top of our expenses and monitor for any fraudulent activity. Years ago, Mint helped me identify a fraudulent charge almost immediately, enabling me to notify our bank and get the issue resolved. Reviewing our expenses enables us to stay within our budget, catch fraudulent activity, and follow the ‘every dollar’ budgeting rules that have been so helpful for us. In addition, linking our accounts has automated what would otherwise be a very manual and time-intensive process. 

I have also loved using the trends feature to have full visibility into exactly how our money is being spent and to help ensure we’re always partnering as we work towards our financial goals, rather than feeling like one person is pulling the other along. We can budget with transparency and not feel any need to hide transactions for personal expenses and rewards or small splurges. 

The trends feature has also allowed us to get a sense of what our typical spending has been in different categories. We periodically review our budget, and being able to easily see our historical spending in different categories has helped us set realistic targets, as well as track our progress when we are attempting to change habits. Lastly, being able to see changes in our net worth over the years has been inspiring, as we have been able to see in real-time how decisions to save or forego immediate gratification can have long-term benefits.

Beyond that, we have found a great deal of joy in doing things ourselves, whether it is cooking meals for the week, doing our own car maintenance, or trying to fix something ourselves before calling someone. Additionally, the satisfaction has compounded as we’ve seen that making these choices has helped us not only learn new things, but also in achieving our goals. 

Knowing what we know now, we’re really excited to pass these values on to our kids, and we’re happy to discuss them with anyone who asks. Additionally, I can see a ‘life’ after work that involves volunteering in some form in the personal finance field, whether that is teaching folks about budgeting or just encouraging them in their financial journey.

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Source: mint.intuit.com

5 Tips for Approaching the Open House

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For decades, sellers and their agents have been using open houses to help generate interest in their listings. Open houses give the general public the chance to view a home without scheduling a private showing. While open houses do get a lot of curious neighbors and casual browsers, they can be a good opportunity for serious buyers to decide if a home is worth pursuing further, or a way to get a better grasp on neighborhood home values. 

In fact, 59% of home buyers attended an open house during their shopping process last year and 43% of buyers said attending the open house was very or extremely important to determining if the home was right for them.* On average, home buyers attended 2.6 open houses before buying.

Whether you’re a sincere buyer or simply curious about the inside of a home, you should know how open houses work and understand how you can be a good open house attendee. 

Note: If open houses are restricted or unavailable due to public health concerns, work with your agent to arrange a private tour or video tour. All Zillow-owned homes include a self-tour option — just use our app to unlock the door and tour at your convenience.

What is an open house?

An open house is an event during which potential buyers can tour a home that’s on the market. It’s usually hosted by the seller’s listing agent, or by the seller themselves, in case of a for-sale-by-owner (FSBO) listing. Open houses usually take place on weekends, during a set range of hours typically midday.

Open house benefits for buyers

No scheduling required: Unlike a private showing, you don’t need to set up a specific appointment to see a home. Simply show up during the open house hours and view the home at your own pace. 

Scope out the competition: If you’re interested in a home, attending the open house can help you gauge interest from other buyers. This can be helpful when determining how quickly you need to submit an offer and how much you should offer. 

Understand current home values: Seeing what homes are selling for in your area and what you can buy at a particular price point can be helpful if you’re just starting your search. 

Redefine your nonnegotiable home features: Checking out homes in person can help you redefine your list of must-haves: Do you really need that extra bedroom? What does a backyard of this size really look like?

How do open houses work?

Not every seller or listing agent will hold one, but here’s the typical process for sellers setting up an open house:

  1. The seller and their agent determine a day and time for the open house.
  2. The agent lists the open house on the local MLS.
  3. The agent advertises the open house on social media, online and with print ads or flyers. 
  4. The agent prepares for the open house — purchasing refreshments, printing flyers, setting up signs and adding little touches to make the home feel welcoming to buyers. (Yes, as a shopper, you can eat the cookies.)
  5. The agent hosts the event, greeting buyers and answering questions about the property and community.
  6. Buyers remove their shoes, tour the home, take pictures and video (if allowed) and jot down important notes. 
  7. Any buyer who liked the house will contact their own agent. They’ll then set up a private showing to see the home again or they’ll submit an offer right away — the latter is common in fast-moving real estate markets.

Who hosts an open house?

The person hosting an open house could be any one of the following: 

  • Listing agent: As the person hired to sell the home, the listing agent should be an expert on the property. 
  • Listing agent’s team member or associate: A busy listing agent may also send another agent in their place — either someone on their team or another agent in their office. They should be experts in the local market, but may not be as familiar with the individual home. 
  • Homeowner: If a home is for sale by owner (FSBO), the homeowner will be hosting their own open house. They’re undoubtedly the expert on the home, but their local market expertise may be limited. 

How to prepare for an open house

There are times when you might just stumble upon an open house while you’re on a walk or running errands. But if you’re intentionally looking for open houses as part of your home-buying strategy, try these tips.

Seek out relevant open houses

If you plan to visit multiple open houses in one day, make sure you’re focusing on listings that fit your criteria for budget and location. It’s not worth wasting time looking at homes outside your budget or those that are too far from your work or school. 

Tip: With Zillow’s home search tool, buyers can filter by homes with upcoming open houses (this filter can be applied in addition to other search filters like price, bedrooms, bathrooms, square footage and location). When you use the open houses filter in conjunction with filters for your other criteria, you can easily find the right open houses for your search.

A map of home listings on Zillow.

You can also tour most Zillow-owned homes any time between 6 a.m. to 8 p.m., any day of the week — just select the tour option on the listing. Although the listing agent will not be present, you can avoid a busy open house and rest assured the property is in move-in ready condition.

Do research on the market beforehand

With help from your agent or on your own, find out how each home you’re planning to visit stacks up against others nearby. Is the price in line with similar listings in the area? Are there any defects? Has it gone under contract recently and then returned to the market? Are there a lot of other interested buyers? Has it been sitting on the market for a long time? (“Days on market” is an indicator of a stale listing, but the standard number of days on market can vary based on where you live.)

Stay open-minded

If you’re searching on a tight budget in a hot neighborhood, there’s a good chance that the home that fits the bill will need some TLC. Fortunately, attending an open house can give you a better idea of the home’s condition and potential, while also giving you the opportunity to ask renovation-related questions — e.g., the location of load bearing walls and the details of local regulations. 

How to attend an open house

Now that you’ve done your research and are prepared to add some open houses to your home search, here’s what you should do once the day arrives. 

Ask questions

An open house is your best opportunity to ask the listing agent (or their associate) your questions — don’t be shy. Ask questions that you wouldn’t be able to answer just by reading a home’s listing description, such as:

  • What are the HOA restrictions?
  • Has the seller done a property tax appeal?
  • Have there been any recent renovations or repairs?

Tip: If you’re not currently working with an agent and you ultimately decide you aren’t interested in a particular home you tour, the open house could help you see if the listing agent might be the right person to represent you — many agents represent both buyers and sellers. 

Be honest

If anyone other than the listing agent or the homeowner is hosting the open house, they’re likely an agent hoping to find potential buyer clients. If you’re already working with an agent (or if you have no real interest in buying), be honest.

Check for damage and disrepair

Professional or edited photos can make a home look a lot better online than it is in person. At an open house, take the opportunity to closely evaluate a home’s condition and take note of any potential defects that would factor into your offer price. 

Assess the windows: Look for flaking paint, misaligned sashes and condensation due to air leaks. These could be signs of windows that need replacement. 

Check for water damage: Look for warped baseboards, ceiling stains and musty smells. 

Make note of cracks: Noticeable cracks in the ceiling or drywall could indicate foundation issues. 

Test functions: Open cabinets, doors and drawers. Run the faucets. Check the water pressure. An open house is a good opportunity to make sure every part of the home is in good working order. 

Gauge potential renovation needs: Home improvements can really add up. As you walk through a home, keep an eye out for urgent renovation needs like floors, fixtures or large repainting projects.

Open house tips for buyers

Whenever you attend an open house, put yourself in the seller’s shoes — you’re letting a bunch of strangers walk through your home while you’re not there. While every seller wants their open house to net a buyer, they also want to keep their home safe and their furnishings free of damage.

Do

  • Take off your shoes or wear booties if requested.
  • Greet the host and provide your name.
  • Sign in if necessary or requested (this is a safety issue for the seller and their agent).
  • Take notes on your phone about your likes, dislikes and follow-up questions.
  • Ask if you can capture a video (if the listing doesn’t already include a video).
  • Respect other buyers and guests. 
  • Wait for others to exit a room before you enter.
  • Provide feedback if requested.
  • Thank the person hosting the event.

Don’t

  • Refuse to comply with an agent or homeowner’s house rules.
  • Criticize the home or the owner’s style.
  • Listen in on other visitors’ conversations.
  • Touch the owner’s belongings.
  • Let kids run around without supervision.
  • Bring food or beverages in (except water).
  • Reveal information that would compromise your negotiating power, like your budget or level of interest in the home.
  • Bring pets.

*Zillow Group Consumer Housing Trends Report 2019 survey data

Source: zillow.com

What Are Comps? Understanding a Key Real Estate Tool

Whether you’re buying or selling a home, comparing similar homes can yield a wealth of helpful information.

“Comps,” or comparable sales, is a term anyone on either side of a real estate transaction should know well. It refers to homes located in the same area and very similar in size, condition and features as the home you are trying to buy or sell.

Buyers look at comps when deciding what price to offer on a home, and sellers use comps to figure out how to best price their home for the market. Real estate agents look at comps all day long as a way to keep on top of their local market. If you are a buyer or seller, it’s helpful to have a strategy to analyze comps, because all comps aren’t created equal.

Location is the highest priority

If you are trying to price a home or figure out its value, you need to look nearby. The market is based on location, so keeping as close to the subject property as possible — meaning, within the same neighborhood — is the most effective approach.

If you can’t get enough comps nearby, it’s fine to keep expanding out. But there will always be a boundary, like a school district, that you need to stay within.

Timeframe matters

The best comps are homes that are currently “pending.” Why? Because a pending home is a piece of live market data. A pending home means that a buyer and seller made a deal, and that deal will reflect the most up-to-the-minute stats on the market.

A good local real estate agent, leveraging her network, can get a fairly accurate idea what the ultimate sale price or range is for a pending deal. Try to stick with sales in the past three months, and never go more than six months, because older data is not reflective of the current market.

Factor in home features

Once you have location and timeframe, it is key to look for homes with similar features that have sold, as opposed to comparing price per square feet. While the latter is helpful, it won’t consider factors like views, a new designer kitchen or a finished basement vs. unfinished.

If you have all three bedrooms on the top floor, look for something similar. Try to compare your subject property to like properties when it comes to traits like total size, the number of bedrooms and bathrooms, and the size of the lot. You can make adjustments once you have found similar homes.

Don’t overanalyze the comps

Putting your trust in a good local agent will keep you from agonizing over the petty details of each comparable home. Your agent is likely familiar with some of the recent sales, and can help shed light on why one comp fares better than another. You may not know that one home was next to a fire station or across from a parking lot, or that another didn’t have a real backyard, but your agent will. These small nuances will affect the home’s value.

Find your home on Zillow to see your Zestimate® home value with your comps.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Source: zillow.com

How to Find Your Dream Home

Ready to start searching listings and hitting open houses? Save yourself some time by first identifying exactly what you need and want in a home.

You’ve been pre-approved and know what you can afford, so it’s time to start home shopping. But the hunt for your dream home will stall rapidly if you don’t know what that “dream” looks like.

It’s easy to talk in generalities about wanting a “big” house or an “older” home. But in order to better target your real estate search, you must think specifically about your dream dwelling. Will your “big” house be 2,400 square feet or 5,000? When you say “older” home, do you mean one built pre-1900, or pre-1980?

Before you visit another open house, sit down and make a list of your needs and wants — and yes, those are two different things. You may want a pool, but you probably could live without it. (Plus, it’s worth considering that having a pool could raise your home insurance costs.)

Understand that your requirements list will likely change as you learn more about your housing options. Proximity to the beach may start as a priority, for example, but once you see the size of ocean-front homes you can get in your price range, you may decide a short drive to the water is quite bearable. Unless you have an unlimited budget, it’s likely you’ll need to make compromises along the way.

Use these questions to help make your very own list of housing requirements.

Find-Your-Dream-Home-Blog-r2

You should also take time to rank specific home features as “Must Have,” “Like to Have” or “Don’t Care” using this printable checklist. Identifying your priorities will help you find the perfect property.

Once you know what you’re looking for in a home, you’ll be ready to find the right agent to partner with for your search.

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Source: zillow.com

What is Tax Assessed Value, Tax Appraised Value, and Market Assessed Value?

What is the value of your home? It depends on what you mean by “value.”

Tax assessed value

This figure varies throughout the U.S. since it is determined by the taxing authority of the city, county, or state where you live. Sometimes it is the same as the market assessed value and other times counties will multiply the market value by an assessment ratio to get the tax assessed value, which is often lower than the market assessed value.

For example, suppose where you live, homes are assessed at 100 percent of market value. If you have a home that has a market value of $150,000, your home will be assessed at $150,000. However, if your taxing authority assesses homes at 70 percent of value, your $150,000 market value home will have a tax assessed value of $105,000.

Tax appraised value

This is the value of real or personal property based on the valuation established by a government tax assessor.

Market assessed value

This is the price the government tax assessor estimates the property would sell for on the open market as of the effective date for the assessed value for the year in question. The assessor’s market assessed value is based on actual historical sales of similar properties for a specified study period.
For example, a market assessed value with an effective date of January 1 may have been determined considering comparable sales during the previous 12 months ending September 30 of the previous year. Sales study periods vary by assessment jurisdiction. Because historical sales are used, assessed values are typically less than current market values.

Related:

Source: zillow.com

6 Home-Shopping Red Flags Even an Inspector Could Miss

The home inspection should catch any deal breakers, right? Not so fast.

Bill Loden, president of the American Society of Home Inspectors (ASHI), has been inspecting homes for the past 20 years. But he says some home headaches simply don’t reveal themselves during a standard inspection — and some are outside an inspector’s scope.

“There are things homeowners think we can do, but we can’t,” he explained. “And honestly, most people don’t want to pay for [a specialist].”

To get the most value from your home inspection, it’s important to know a few things even professionals might miss.

1. Partially blocked or damaged sewer lines

Some house problems don’t show up overnight, and a partially blocked or damaged sewer line often falls in this camp.

“We’ll run water through the fixtures, but we’re there for a limited time,” Loden explained. “Two to four hours might not be long enough for the problem to reveal itself.”

Inspectors will likely determine the type of drain pipe used and estimate its age. They may also look for trees or stumps near the sewer pipe that could cause damage. However, sewer-pipe scoping (sending a camera down the line) isn’t typically included in a standard inspection.

2. Failing HVAC equipment

Similar to damaged sewer lines, HVAC equipment can be fine one day and stop working the next.

“If I check an air conditioner when temperatures are moderate, it can seem fine,” Loden explained. “But under stress, when temperatures shoot up, it can fail.”

Loden says inspectors can bring an HVAC contractor with them for the inspection, but typically it’s not worth the investment when you compare the cost of buying a new unit.

“It will cost anywhere from $3,000 to $5,000 [to hire a contractor] and could take two to three days to complete,” he said.

3. Cracked heat exchanger

An area where you may want to pay for an HVAC contractor: an old furnace.

“In my area in Alabama, we have a lot of package units [furnace/air conditioner combined] that sit outside. It’s not part of the standard inspection to examine the heat exchanger, but a lot of them develop cracks that can allow the indoor air to mix with combustion air that has carbon monoxide,” he explained. “You don’t want that in the house.”

Loden recommends having an HVAC contractor examine the heat exchanger if a furnace is more than 10 years old.

“If the HVAC contractor does find such a crack, by law they have to replace it before the furnace can be used again,” he said.

4. Electrical problems

Loden says the best way to think about a standard home inspection is a “visual inspection,” because when it comes to electrical issues, inspectors can’t always determine the problem’s source.

“If I find a receptacle that doesn’t have ground, I know it’s disconnected somewhere, but I don’t know where,” he said. “You’re going to have to have an electrician find the disconnect in the system.”

5. Structural issues

Is the roof sagging, or is it part of your new home’s architectural style? Luckily, a home inspector should be able to tell.

“All roofs — at least wood roofs — have some inconsistencies. A home inspector knows what’s normal and what’s not,” Loden said.

However, when it comes to identifying how bad a problem is or how much it’s going to cost to repair, an inspector isn’t the right person to ask.

“Because we’re not licensed structural engineers, we’ll refer homeowners to one,” Loden said.

6. Leaks

Leaks may not be there one day and show up the next. For this reason, inspectors might not initially detect them.

“A lot of times we go into vacated homes,” Loden explained. “With the plumbing system not being used on a daily basis, any leaks may have dried up. And it may take a couple days after the water is turned on for the leaks to make themselves visible.”

Loden recalls his own home inspection when it was pouring rain. “The roof was not leaking when I moved in, but six weeks later it was,” he said. “A home inspection is not a guarantee that the house won’t have problems in the future.”

He says that the best thing you can do is carefully check the drains in cabinets before and during your move.

“A lot of times homeowners place belongings under there. Sometimes they’ll pack them up after the inspection and bump the drain traps, causing them to start leaking. The same thing can happen when you move in.”

At the end of the day, the key is to take precautions and make sure you find a certified inspector who has been inspecting in your area for a long time.

“They learn where failures are likely to occur,” Loden said.

Top featured image from Shutterstock.

Related:

Originally published September 5, 2014.

Source: zillow.com

Want to Rent Your Vacation Home? Beware These Lender Rules

When it comes to financing your vacation home, not all loans are created equal — so choose wisely.

Ready to buy that ski cabin or lake house? Renting it out while you’re not using it is a great way to make it happen — but not so fast. Lender rules may not allow it, so here’s what you need to know.

Different loans have different rules

The first step to financing your vacation home is understanding what mortgages are available and their rules about renting:

  • Primary residence loans. These loans are the most favorable, and you’ll get the lowest possible mortgage rates. These loans require you to move into the home within 60 days of closing and live in it for at least one year. After that, you’re free to rent out the home.
  • Second-home loans. These loans have the same rates as primary residences, so your rate will be the lowest it can be, but down payments must be larger — most lenders require 20 percent down. You qualify for the loan using your full primary residence housing cost plus your full second home cost. You can use the home for family and friends, but lenders won’t let you rent the home.
  • Non-owner occupied loans. Also called rental property loans, these loans offer rates .25 percent to .375 percent higher than primary-residence or second-home rates, and down payment requirements typically start at 30 percent. Your lender will let you know if you can use the rental income to qualify. These loans allow you to rent the home and use it when it’s not rented.

Second-home loans come with restrictions

The best thing about a second-home mortgage is that the rates are the same as a primary residence mortgage. The worst thing is that you can’t rent the home.

This is an often overlooked provision of second-home loans, but it’s the most important, because if you ever rent your vacation getaway, you’ll violate the loan’s terms.

When you get a loan, there’s a document called the note, which spells out the loan’s amount, rate, payments and fixed versus adjustable periods. Depending on what state you live in, you’ll also have either a mortgage or a deed of trust in addition to your note, which spells out additional loan requirements. (See which states use mortgages versus deeds of trust.)

At first glance, a second-home mortgage or deed of trust seems like it has the same requirements as a primary residence. Provision 6 says you must move in within 60 days and live there for at least one year — then you’re free to rent it out. Here’s a sample:

secondhomeoccupancyHowever, there’s an addendum — called a rider — in mortgages and deeds of trust that replaces this friendly requirement with a new, much more strict requirement saying that you can’t rent out the home. Here’s a sample:

secondhomeoccupancyaddendum

This language, though hidden deep in the loan documents you’ll sign before closing, makes two critical points:

  • You can’t rent the home.
  • If you applied for a second-home loan and rent it out, your entire loan balance could be called due and payable by your lender.

So, if you plan to afford a vacation home by renting it out, you can’t finance it with a second-home loan. But you’ll need to review non-owner-occupied loan options with your lender to meet the objective of using and renting a home that’s not your primary residence.

As noted above, this means you’ll need to put down a larger down payment, and your rate will be slightly higher. But it’s a small price to pay for the flexibility of earning income from a home that you also use for your own enjoyment.

Top photo from Shutterstock.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Originally published October 4, 2016.

Source: zillow.com

Piggyback Loan Is Another Home Financing Option

Shopping around for a home loan? Then you’re probably trying to figure out how to strike the best balance between your down payment and monthly mortgage expenses. Understanding just how much house you can afford is tricky, which is why it helps to know all of your options in advance.

Piggyback loans are just one more financing option you have at your fingertips for purchasing the home of your dreams — even without that 20% down payment. These loans involve taking out two rather than one mortgage, but can save you thousands of dollars on private mortgage insurance for borrowers who can’t afford a large down payment. Ready to learn more about piggyback home loans and if borrowing one is the right choice for you? Keep reading.

What Is a Piggyback Loan?

A piggyback loan, true to its name, is a set of two loans — with one piggybacking off the other. These loans are also sometimes referred to 80/10/10 loans, where the first loan is equal to 80% of your home’s purchase price, and the second loan is equal to 10% of the purchase price. This type of financing structure assumes you have at least 10% of the home’s purchase price to put toward a down payment.

Since many lenders require private mortgage insurance (PMI) on mortgages with less than a 20% down payment, this financing structure can help bridge that gap (for borrowers who don’t have the full 20% saved up) and ensure that you avoid paying extra PMI fees— which definitely don’t come cheap.

Let’s crunch some numbers as an example. Say you want to buy a home for $300k. Using a piggyback loan, your financing plan would look something like this:

1st loan (80%) $240k
2nd loan (10%) $30k
Down payment (10%) $30k

As you can see, using this financing structure will save you roughly half the sum of your down payment, allowing you to focus on saving up $30k rather than a whopping $60k in order to buy your home.

Benefits of piggyback loan

The biggest benefit of a piggyback loan is the savings you get from not having to take out a PMI policy. These insurance policies, which are required by most banks for borrowers putting less than 20% down on their homes, typically cost anywhere from 0.5% to 1% of your total loan amount per year. Some experts claim this number can even go up to 1.86% per year. This might sound insignificant, but let’s crunch some numbers to really see what it might actually cost you.

Using the same example as before, let’s say you were to take out a conventional loan for a house with a $300k listing price, and put 10% as a down payment. This would put your loan amount at roughly $270k. Here’s what various PMI payments might look like on a loan this size.

PMI rate (as % of your loan) Annual payment due Monthly payment due
0.5% $13,500 $1,125
1% $27,000 $2,250
1.86% $50,220 $4,185

As the numbers will show, PMI is clearly nothing to scoff at. In fact, PMI is so expensive that it could easily cost you a monthly mortgage payment many times over— in addition to actually having to pay your mortgage each month as well.

Things To Keep in Mind

Now that you know a bit more about piggyback loans, and all the savings they can provide, let’s talk about some of the downsides. After all, if piggyback mortgages are so convenient, why don’t more people get them?

The biggest downside of piggyback loans (and the reason more people don’t have them) is because they’re actually pretty hard to get. Think about it: Instead of going through the loan approval process once, you have to go through it twice. You’ll also be borrowing two separate loans at once, which is seen as a higher risk to many lenders.

These loans require higher credit scores, and you might even need to apply through a special lender who is accustomed to dealing with these types of financing packages. There’s also repayment to consider. Although refinancing a mortgage is typically seen as a relatively simple move for borrowers interested in securing lower interest rates— refinancing will be a lot harder when you have two loans instead of one. You’ll also be responsible for paying the closing costs on two separate loans (typically 2% to 5% of the loan amount) as well as any loan origination fees the lender may charge.

How To Apply

According to the credit experts at Experian, you’ll need a “very good to exceptional” credit score in order to qualify for a piggyback loan. Meaning, your score will need to be at least 700, although you’re more likely to qualify with a score of 740 or higher.

You should also plan on having enough saved up for as much of a down payment as you can afford, plus some extra funds for closing costs and other fees associated with buying your home. Finally, you’ll want to make sure your debt-to-income ratio is within a reasonable range before approaching lenders. While all of these things are pretty standard for anyone on the market to buy a home, the requirements are even more strict when applying for a piggyback loan— making it that much more important to have your financial ducks in a row.

Final Word

Piggyback loans might not be the most straight-forward financing package out there, but for the right home buyer— they can make all the difference in the world. Sit down and take a good hard look at your finances to decide if borrowing a piggyback loan might be able to help you reach your financial goals. And if the answer is no, don’t worry— there are a lot of other options that can help you afford your dream home.

Contributor Larissa Runkle specializes in finance, real estate and lifestyle topics.

Source: thepennyhoarder.com

How to Choose the Right School: 6 Tips for Parents

Find a school that makes the grade — all it takes is a little homework.

If you’re a parent, buying or renting a new home isn’t just about where you’ll tuck the kids into bed at night — it’s also about where you’ll send them off to school in the morning.

So, how can you be sure your dream house feeds into your child’s dream school? You’re going to have to do some homework.

1. Go beyond the numbers

Every state’s education department publishes an online “report card” for each district and school. But just as you wouldn’t buy a house based solely on square footage or listing photos, you shouldn’t select a school just for its test scores and teacher-to-student ratios.

Dr. Steve McCammon, chief operating officer at Schlechty Center, a nonprofit that helps school districts improve student engagement and learning, cautions that most reported test scores are for English and math. They don’t provide insight into arts or music programs or how well a school teaches critical thinking skills.

The right school isn’t something you can determine based on any statistics, numbers or even reputation, says Andrew Rotherham, co-founder of Bellwether Education Partners and writer for the Eduwonk blog.

“Don’t go where the highest test scores are or where everybody else says you should go,” he says. “Different kids want different things. Go to the school that fits your kid.”

Adds Rotherham: “The most important things are what does your kid need and what does the school do to meet those needs. Whether you’re talking public, private or charter, you can find excellence and mediocrity in all of those sectors.”

2. Take a school tour

Just as you’d look around potential homes before signing a contract, you’ll want to do the same with potential schools. Call and arrange to tour the school and observe.

“Be suspicious of any school that isn’t into letting you visit,” says Rotherham. Some schools may say visitors are too disruptive, but he calls that a cop-out. “With some fairly basic norms, you can have parents and other visitors around without disrupting learning.”

Sit in on a class or two and take notes. You want to see students who are genuinely engaged, not wasting time or bored. It’s OK for a classroom to have lots of talk and movement if it’s all directed toward a learning goal.

Schools should be relatively noisy places. McCammon says, “If you go into a middle school, and you hear no noises, I would be concerned that the principal is more interested in keeping order than in making sure kids are learning.”

Observe how teachers and administrators interact with the students and vice versa. Do they display mutual respect? “You don’t need to be an education expert,” says Rotherham.

See if student work is on display. “A good school is a school where, regardless of grade level, student work is everywhere,” McCammon says. “It means that place is about kids and their work.”

Talk to kids, too — they’re the subject matter experts on their school. And if you have friends with kids in schools you’re considering, ask them what they like and don’t like about their schools. Kids won’t try to feed you a line. “They’re pretty unfiltered,” Rotherham says.

Check out the physical space, suggests National PTA President Jim Accomando. However, don’t get caught up on the building’s age and overlook the quality of the programs going on inside.

Look for signs that the school community takes pride in the facility. It might not be pristine, but trash on the floors or signs of rampant vandalism are red flags. If you see something that seems off or odd, ask if there’s a plan to address it.

3. Check out the community

Go to a school board meeting for clues about the district. Are parents there because their children are being honored or their work is being showcased? Or are they there because of a problem? Likewise, attend a PTA or PTO meeting, and chat with the parents there. They are likely the most involved “outsiders” and can share school challenges and successes.

Another consideration: the makeup of the students. Chances are, if you opt for a neighborhood school, you’ll find a certain similarity between your kids and their classmates, because there are probably a lot of similarities between you and your neighbors. But a school that has a diverse student body offers a big benefit.

“We live in a diverse society,” Rotherham says. “If you want to prepare your kids for what their lives are going to be like in this country going forward, it’s important for them to have experience with diverse groups.”

Even if your child’s school isn’t particularly diverse, avenues like sports and music give them a chance to interact with students from different backgrounds.

4. Think long term

Today’s first-grader will be heading to middle school before you know it. Unless you plan on moving relatively soon, be aware of the middle and high schools in your district.

“If you pick a house because you love the elementary school, you’d better be psyched by the middle school and high school,” Rotherham says. “Or have some kind of a plan” for post-elementary years.

Of course, there is such a thing as planning too far ahead. The music prodigy wowing your friends at her third-grade recorder performance may decide she hates band and wants to focus on soccer by the time she hits middle school. Rest assured: If upper-level schools in your prospective district are about kids doing great work, they’ll likely be a good fit.

5. Watch for boundary issues

Pay attention to the boundaries of prospective school districts. The houses across the cul-de-sac could be in a different school service area or even a different school district. And boundaries often change. To be sure, call the school district and give them the specific address you’re interested in.

Don’t assume you can fudge an address or get a waiver to enroll your children in a school or a district that doesn’t match your address. Things that were allowed last year may not be this year. If an individual school or district is at capacity, they will get very picky about enrollment outside of the school assigned to your home, which can lead to heartbreak if you find yourself on the wrong side of that boundary line.

6. Look for a place where you feel welcome

Whatever involvement you put into your child’s school will pay off, says Accomando. “If you can be engaged at school, you will understand the pulse of what’s happening there.”

He also says that doesn’t mean getting sucked into a huge commitment. “You can read in your child’s first-grade class. You can hand out water at a fun run or contribute something for a teacher appreciation party at the high school. And when you do, walk the halls and see what’s happening.”

McCammon says good schools should welcome parents as volunteers and visitors. “Look for evidence of parents feeling comfortable and engaging with the school,” he says. The principal should be someone you feel comfortable talking with if there’s a problem.

No matter how welcoming the school, it’s natural to have some butterflies on the first day in a new school. Just as it takes time for a new house to feel like home, it takes time for kids to settle into a new school.

Once they’ve found their way to the restroom without asking directions, made some friends and gotten to know their teacher, they’ll be comfortable with their new learning home. And your research will have been well worth the effort.

Photos courtesy of Shutterstock.

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Originally published January 17, 2018.

Source: zillow.com