You'll need to know about recent sales, work needed on the home
and what the sellers are looking for to determine the right asking price. (Getty
questions to help you create an offer that will put you in the best position to
have it accepted by the seller.
Now that you’ve found a house you're interested in buying, you
definitely don’t want to overpay. Who does? That sweet spot where both the
buyer and seller get what they want is where
the best deals are made.
To figure out how much your initial offer
should be, you have to work backwards from how much you're willing to pay when
all is said and done. Analyze comparable sales, market conditions, property
conditions and financial considerations along the way. Sound difficult? Not
really. As long as the homework is done right and the ducks are lined up, you
confident in your initial offer.
Here are 10 questions to ask as you determine your offer price
on a house.
What is the market value? In
short, market value is what someone is willing to pay for a home. After looking
at all the recent comparable sales and
factoring in current market conditions, this is the price both the seller and
buyer can agree on.
Market value is not a specific number, but a range. At the low
end, you're getting a great deal, and at the high end you're paying top dollar.
Where you end up on the market value spectrum is determined by a combination of
market conditions, motivation and financial comfort.
What do the comps tell you? When
determining the sale price, analyzing comps is the most crucial step. Comparable sales are listings which
have sold in the past 6 months and are located in the same subdivision or
geographic area as the house you're researching.
By focusing primarily on sold homes, you
keep the focus on true market value. Active listings only reflect what a seller
thinks their home is worth, not what a buyer is willing to pay for it.
Every home and lot is unique, so you'll
need to lean on your real estate agent to help you select the most like-kind
comps and add or subtract value based on differences in condition, updates,
size and more.
What's the list price? Now that you've analyzed
the comps to determine what you objectively believe the market value spectrum
is, see how this matches up to the list price the sellers have set.
Have they priced the house on the low end
of the spectrum in a hot market to
potentially attract multiple offers? Are they fishing to see what they can get
and have set the price at the high end, or even above the spectrum? Are they
making significant price drops regularly?
Most importantly, assume nothing. While
analyzing the sellers' strategy can give you some insight into their head space
and potentially help determine your offer price, don’t overthink it. No one
knows the sellers' true motivations and sometimes not even the sellers
themselves know just how far they are willing to bend until they see an offer
in front of them.
What does the market look like? Have your
real estate agent pull all active, under contract and sold listings from the
past 6 months. If there are relatively few active listings compared to sold,
current inventories are low and houses are more likely to sell quickly, and
vice versa. Of those under contract, if the majority were on the market for a
short period of time before changing status, this is another indicator of a hot
market. Finally, look at sale price compared to list price to see if houses
were selling quickly and for above list price.
How much work is needed on the home? As you tour the home, pay close
attention to what improvements or upgrades may be needed, including appliances,
HVAC, water heater, roof and more.
While some buyers will assume any of these
items can be negotiated after the home inspection, in many
areas it's common practice that you won’t be able to ask for replacement or a
credit to do so simply based on the age of a unit. Factor these expenses into
the initial offer price, or plan for budgeting monthly.
Have you considered the whole offer? Remember
that offer price is only one aspect of a much larger picture. Find out where
your priorities lie and have your agent do his best digging to find out the
same for the sellers. Finding the middle ground is where the best deals lie,
whether that means leasing the house back to the sellers for a couple months or
purchasing the property as-is, for example.
When should you go low? Typically, an offer at
the low end of the value range, or even below, is more likely to be entertained
by a house that has been on the market for an extended period of time. As long
as you're reasonable and justified in your offer, there's no reason to worry
about offending the seller with a low offer.
But never assume. Even if a house has only
been on the market a week and you feel it's overpriced, there’s no harm in
offering what you feel is reasonable. The only way to really find out how bad
the owner wants to sell it is to put an offer on the table.
Depending on how the sellers counter a low
offer, you'll have a clearer idea of what their ultimate target price is. If
you come in 5 percent below list price price and they counter at just 0.5
percent below, you know they aren’t willing to budge much. You’ll have to
decide how far you want to push it and when you want to dig your heels in.
When should you go high? A spring market can
be more difficult, as bidding wars are more
prevalent and there's typically a quick turnover of listings. Keep your focus on
the market value spectrum and don’t let the competition drive you to buyer’s
remorse by overpaying.
If you're searching in a hot market and a
new listing pops up that is well priced, get over to see it as soon as
possible. Once you've researched the comps and feel comfortable with the offer
price, this may be an excellent time to present an offer with very little room
for negotiation. In the end, it could potentially save you money by not
allowing the house to end up in a bidding war.
What about multiple offers? Make
sure your real estate agent finds out if the sellers have one or more offers
and if so, when the listing agent plans to present all offers to the sellers.
If there are multiple offers, don't expect
to negotiate the price. Once again, have your buyer’s agent ask plenty of
questions: Will the sellers entertain an escalation clause, or do they simply
want your highest and best offer? Are they mostly motivated by price or are
there other aspects of the contract that mean more to them? For example, would
they like a leaseback? Would they prefer an as-is offer?
Multiple-offer situations are
the pressure cookers of residential real estate. If you aren’t careful, you may
feel obligated to do whatever necessary to win the bidding war and ultimately
end up with buyer’s remorse. Trust in your research from reviewing the comps
and determine the price you're willing to go up to without losing sleep
regardless of whether you win.
How do you avoid regrets? One
strategy buyers have used is to bid an extremely high price to
beat out the other competitors with the expectation that the appraisal will
come in low and you can renegotiate later. Do yourself a favor and do not adopt
this method. Not every appraiser truly knows the market and may just give you
the benefit of the doubt that the agreed-upon sale price is justified.
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Your credit history can determine if you can get a loan, and even where
you live or work. Credit scores are built from your credit history and can
determine how much you pay to borrow money for a car or house. Yet, many people
don’t know where to start when it comes to building, improving, or protecting
their credit history. Three common credit problems are:
Lack of enough credit
Denied credit application
Fraud and identity theft
Below are some tips on how to deal with these issues.
1. Lack of enough credit history
Many people may not know that having no credit history, or a limited
credit history, can create issues similar to having negative information in
your credit history. If you don’t currently have a credit history, you’re not
alone. One in ten adults experience "credit
invisibility," meaning they do not have any credit history with one of
the three nationwide credit reporting companies. Many more don’t have enough of
a credit history, sometimes referred to as having "thin" credit, to
generate a credit score. People with thin or no credit history may find it
difficult to apply for a loan or rent an apartment.
What you can do:
Take action to help build your credit history responsibly. There are a
number of products considered helpful in establishing or rebuilding credit
histories, and they provide you with the opportunity to practice making on-time
payments that are reported to the credit reporting companies. These may include
secured credit cards, credit builder loans, or retail store credit cards.
Use our Building
credit from scratch checklist to learn more about these and other ways to
build your credit history.
2. Denied credit application
If you’ve been denied an application for a loan or line of credit, there
are steps you can take to improve your credit score or dispute inaccurate
information on your credit report.
Find out why your application was denied. If a lender rejects your
application, they are required under the Equal
Credit Opportunity Act (ECOA) to
tell you why your application was rejected or tell you that you have the right
to learn the reasons if you ask within 60 days.
If you were denied due to an "insufficient credit file," you can
use this checklist
to learn how to build and keep good credit.
If a lender rejected
your application based on your credit report, they must provide specific
information about why your application was rejected or tell you that you have
the right to learn more about why you were denied if you ask within 60 days.
your credit reports. Make sure the information in your credit reports is
accurate. If you find errors, take steps to correct them.
your credit history with a few best practices, such as paying your bills on
time and limiting your credit use to no more than a third of your credit limit.
3. Fraud or identity theft
theft occurs when someone uses your name, Social Security number, date of
birth, or other identifying information, without authority, to commit fraud.
If you think you’ve been a victim
of fraud or identity theft, there are several steps you can take to protect
your personal information from being misused. These steps include:
Reviewing your credit
reports each year to make sure they contain only information about you
any inaccurate or suspicious information on your credit reports
Placing a fraud
alert or security
freeze on your credit reports
Consider signing up for identity
monitoring or credit
monitoring services. Some of these services are free, and others cost
money. If you’re considering these services, be aware that there are other free
and low-cost services to protect consumers, including a security freeze or
If you are considering signing up for identity or credit monitoring
services, make sure you fully understand the terms and conditions related to
trial periods, fees, cancellation requirements, and other conditions so that
you don’t face unexpected fees, charges, or other limitations.
If you were impacted by the Equifax data breach, we have additional
information on the steps
you can take to respond when your personal information is exposed in a data
Building or rebuilding your credit will take time and planning. The steps
above can guide you on your journey.
If you want more help, consider talking to a credit
counselor. Most reputable credit counseling organizations do provide free
educational materials and workshops, though some do not. Building or improving
on your credit won’t happen overnight. Anyone who claims to be able to do this
for you may be scamming
To learn more about credit reports and scores, check out our tips
and frequently asked questions.
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are two types of home equity loans: term, or closed-end loans, and lines of
are sometimes referred to as second mortgages, because they’re secured by your
property, just like your original (first) mortgage.
equity loans and lines of credit are usually for a shorter term than first
mortgages. The most common type of mortgages runs 30 years, while equity loans
typically have a life of five to 15 years.
home equity loan, sometimes called a term loan, is a one-time lump sum that is
paid off over a set amount of time, with a fixed interest rate and the same
payments each month. Once you get the money, you cannot borrow further from the
loan. To see current home equity loan rates, use Bankrate’s home equity loan rates tables.
home equity line of credit (HELOC) works more like a credit card. You are
allowed to borrow up to a certain amount for the life of the loan — a time
limit set by the lender. During that time you can withdraw money as you need
it. As you pay off the principal, your credit revolves and you can use it
again. Let’s say you have a $10,000 line of credit. You borrow $5,000, but then
pay back $3,000 toward the principal. You now have $8,000 in available credit.
This gives you more flexibility than a fixed-rate home equity loan.
lines have a variable interest rate that fluctuates over the life of the loan.
Payments will vary depending on the interest rate and how much credit you have
used. When the life span of a line of credit has expired everything must be
paid off. A lender may or may not allow a renewal. To see current home equity
line of credit rates, use Bankrate’s home equity line of credit rates tables.
of credit are accessed by specially issued checks or a credit card. Lenders
often require you to take an initial advance when you set up the loan, withdraw
a minimum amount each time you dip into it and keep a minimum amount
institutions negotiate a home equity loan just like they do a mortgage: You
have to pay off the loan or line of credit when you sell the house.
type should you choose?
answer to this question is seldom black and white.
there are some scenarios where the choice is obvious. For example, let’s say
you need $7,000 to pay for your daughter’s wedding next month and $3,000 to fix
your roof, which will take a week. You know exactly how much you need and both
amounts are due in full fairly quickly. If you don’t have plans to borrow
again, a straight home equity loan for $10,000 is more suited to your purpose.
if you need money over a staggered period of time — for example, at the
beginning of each semester for the next four years to pay for Jimmy’s schooling
or for a remodeling project that will take three years to finish — a line of
credit is the better choice. It gives you the flexibility to borrow only the
amount you need, when you need it.
if you borrow relatively small amounts and pay back the principal quickly, a
line of credit can cost less than a home equity loan.
card debt consolidation
who have run up credit card debt will often borrow a lump sum and pay off their
Visa, MasterCard and department store charges, then pay back the bank over time
at a lower interest rate than the cards would have imposed. This sort of debt
consolidation is the single most-popular reason people have for taking out home
equity loans, and fixed-rate home equity loans are used slightly more often for
this purpose lines of credit.
To help you determine which
loan best suits your needs, ask yourself:
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a Home Apply to
sure you understand how these two types of mortgages differ.
with credit problems, low income or not much saved for a down payment may have
trouble finding a home loan. For those borrowers, an FHA-insured loan might be
a good solution. Here's what you should know if you're weighing whether a conventional
or FHA mortgage is the best way to go.
with credit problems, low income or not much saved for a down payment may have
trouble finding a home loan. For those borrowers, an FHA-insured loan might be
a good solution. Here's what you should know if you're weighing whether a conventional
or FHA mortgage is the best way to go.
What Is an FHA Loan?
The FHA insurance
program provides a means for many prospective homeowners to achieve the dream
of owning a home who might not have otherwise been able to do so.
An FHA loan is a
mortgage issued by a federally approved bank or financial institution that,
unlike a conventional mortgage, is insured by the Federal Housing
Administration. This mortgage insurance provides the security that qualified
lenders need in order to take on a riskier loan.
But that security
comes with a cost for the buyer: With FHA loans, the buyer must pay a 1.75
percent upfront mortgage insurance premium at closing, regardless of the down
payment. Then, the buyer must make monthly mortgage insurance payments for
the life of the FHA loan if the down payment is less than 10 percent. It can be
canceled after 11 years if the down payment is 10 percent or more.
According to the
agency's website, the FHA has insured more than 47.5 million properties since
the program was created in 1934, making it the largest mortgage insurer in the
Comparing FHA With Conventional Mortgages
There are several key
differences between FHA and conventional loans. Each has its advantages and
drawbacks. Here's a quick comparison:
Minimum FICO credit score
Typically no lower than 620
Typically as low as 580
Minimum down payment
As low as 3 percent, but 5 to 20 percent is
As low as 3.5 percent
Monthly payments are required if you have a
down payment of less than 20 percent, but generally, the insurance can be
canceled when your loan-to-value ratio reaches 80 percent.
Upfront and monthly payments, sometimes for
the duration of the mortgage term, are required.
Your FICO credit
score, which is the most widely used score among lenders, generally needs to be
at least 580 to qualify for an FHA loan. If your score is between 500 and 579,
you need to come up with a down payment of at least 10 percent. Conventional loans
generally require that you have a FICO credit score of at least 620 to qualify,
and a higher credit score is needed to qualify for the best interest rates.
You can get an FHA
loan with a down payment as low as 3.5 percent. Though some conventional
mortgages have a down payment requirement as low as 3 percent, most typically
require a down payment of 5 to 20 percent, according to the Consumer Financial Protection
No mortgage insurance
is required on a conventional loan with a down payment of at least 20 percent.
Though if your down payment is less than 20 percent, you will be required to
pay for private mortgage insurance, or PMI. Once your loan-to-value ratio (the
amount left on the mortgage divided by the property's appraised value) reaches
20 percent, the PMI requirement will go away and so will the need to pay this
monthly cost. This is not done automatically: You will need to request that
your lender remove the PMI payment.
By contrast, FHA loans
require an upfront mortgage insurance premium and monthly mortgage insurance
You can usually
qualify for an FHA loan with a less favorable debt-to-income ratio, known as a
DTI. Your DTI is calculated by taking the amount you pay each month toward debt
and dividing it by your monthly gross income. Your debts may include car, rent,
mortgage, student loan payments, installment debt and child support payments,
and monthly minimum payments on credit cards. The lower your DTI, of course,
Conventional loans can
be used to purchase a vacation home, investment property or primary residence.
FHA loans are limited to owner-occupied properties, which can include
multi-unit properties as long you live in at least one of the units.
generally present fewer hurdles in terms of processing and inspections. For
example, the FHA has minimum property standards, and if the property doesn't
meet them, the seller or the buyer may need to pay for repairs before it can
qualify for a mortgage. This might include ensuring that any peeling paint in
the property is addressed. Who pays for the repairs might be a topic of
negotiation between the buyer and seller.
"While FHA loans
can be advantageous for some home purchases, some sellers don't want to deal
with the red tape involved with FHA buyers," says Christopher Clepp, a
financial advisor with the Chicago office of Strategic Financial Group. In a competitive
bidding situation where sellers have many offers to choose from, this can put a
buyer at a disadvantage.
It's a common
misconception that FHA loans are only for lower-income borrowers with credit
challenges. However, one aspect of the FHA program that might dissuade a
higher-income borrower is its loan limits, which are, in many cases, lower than
those of conventional mortgages.
For 2018, you can take
out an FHA home loan in a low-cost area for less than $300,000. In a pricey
area, the FHA loan limit is nearly $700,000, according to the U.S. Department of Housing and
Urban Development. Limits vary depending on your location. There are
special exceptions for both FHA and conventional loan limits for Alaska,
Hawaii, Guam and the U.S. Virgin Islands, which have a single-unit limit of
more than $1 million.
For example, in a
low-cost area, the loan limits are:
In a high-cost real estate market such as San Francisco or the District of
Columbia, the limits are:
Sources: HUD and Fannie Mae
Choosing the Right Type of Loan for You
Consider these factors
when deciding between an FHA loan or a conventional mortgage:
Your FICO score and credit history
"An FHA loan is a
great option for those with poor credit," says Casey Fleming, mortgage
advisor with C2 Financial Corp. and author of "The Loan Guide: How to Get
the Best Possible Mortgage."
Indeed, for those with a particularly low credit score, an FHA loan
might be your only option. You may also decide to put off buying a house and
work on building
your credit instead.
The down payment you can afford
If you don't have the cash for a large down
payment, an FHA home loan might be your best option. FHA loans require a down
payment of at least 3.5 percent. Some lenders offer conventional loans with
down payments as low as 3 percent, but most require a down payment of 5 to 20
How long you plan to own the
On an FHA loan, the monthly mortgage
insurance premiums will stay in place for at least 11 years. A conventional
loan typically has no upfront premium and allows the borrower to request that
the lender cancel the monthly premium when the loan-to-value ratio hits 80
If you are only planning to put down less
than 20 percent and expect to stay in the home for a short period of time, the
FHA monthly mortgage insurance premium may not matter much. However, if you
plan to own the home for at least 11 years, you will pay the monthly premium
for the full 11 years, even if your loan-to-value ratio improves. In the
future, you may be able to refinance to a conventional mortgage with no
mortgage insurance requirement, if your financial situation qualifies.
The APR and overall cost
When determining what the best loan is for
you, factor in any upfront closing costs, required mortgage insurance and other
fees that can come with the mortgage. These types of costs can turn a mortgage
with a lower interest rate into an unattractive option.
The APR, or annual percentage rate, is the
annual cost of procuring your loan and includes not only the quoted interest
rate but also any other fees that you will be paying over the life of the loan.
Comparing loan APRs is a good way to evaluate their overall costs.
Fleming cautions, "FHA loans can be a
more expensive option after factoring in the mortgage insurance due at closing
and the monthly mortgage insurance premiums, even if the stated interest rate
is lower than a conventional alternative."
Consider Hiring a Mortgage Broker
While you can certainly assess mortgage
options on your own, it may make sense to hire a knowledgeable professional,
like a mortgage broker.
Ask friends, family members and colleagues
to refer someone who is reliable and who will put your needs first. As you
evaluate brokers, it's also a good idea to check out their experience,
professional affiliations and, of course, if they've had any major complaints
against them. Make sure the broker knows about all types of loan programs spanning
conventional, FHA and the VA programs if you are a veteran or active-duty
military service member. Often, the broker's fees may be paid by the lender or
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Your credit score matters (especially if it’s low), but it’s not
the only number that you should care about when it comes to your money. If
you’re paying off debt, for example, you want to be aware of something called
your debt-to-income ratio. It doesn’t just affect your ability to
get loans; it’s also just a good overall measure of your financial health.
your debt-to-income (DTI) ratio?
Generally speaking, your debt to income ratio is pretty much
what it sounds like: the ratio of debt you have divided by your gross monthly
income. Whereas your credit report and score doesn’t include any details about
your income relative to your debt load, that’s exactly what your DTI ratio is
“DTI is a more holistic way to see if you’re living within your
means because it provides a true view of your monthly debt obligations relative
to your monthly income,” says Erin Lowry, author of Broke Millennial. “A credit
score is certainly a piece of your financial profile, but not the full picture.
For example, you can be heavily burdened with debt and still have a strong
If your DTI ratio is high, lenders might not loan you money or
credit, or they may give you worse interest rates, even if your credit score is
in shape. This doesn’t really matter if you’re not shopping for a loan or
credit card, but you still want to avoid a high DTI ratio if only because a
higher ratio means you’ll have a harder time paying back your debt.
calculate your DTI ratio
It’s pretty easy to calculate your own DTI ratio, but there are
online tools that will do it for you automatically and keep track of it, too.
Intuit’s newly released Turbo app, for example, monitors your credit score but
also tracks your DTI ratio and gives you personalized advice. If you’re already
a TurboTax or Mint.com user, you can use your login credentials to try Turbo
If you want to do the math yourself, it’s simple:
"DTI ratio is a simple formula. Divide your monthly debt
obligations divided by your gross monthly income, and multiply that number
times 100,” says Lowry, who partnered with Turbo.
For example: Let’s say you pay $200 a month in student loans,
$850 on rent and $120 for your auto loan. Your monthly gross income is $3,500.
($200 + $850 + $120) ÷ ($3,500) = 0.3342
Then, x 100
= 33.42 percent
When you’re applying for a mortgage, be aware of something
called your household ratio in addition to your DTI ratio
(which can also be referred to as your back-end ratio.) Your household ratio is
the amount of your home-related expenses (including property tax, prospective
mortgage, insurance, etc.) divided by your monthly income.
“While mortgage lenders typically look at both types of DTI, the
back-end ratio often holds more sway because it takes into account your entire
debt load,” Nerdwallet says.
“ideal” DTI ratio
Ideally, you want to keep your DTI at 36 percent or less, Lowry
says. At least, that’s a ballpark figure lenders look for when deciding your
creditworthiness. According to Nerdwallet, mortgage lenders also prefer a
household ratio that’s even lower.
“Lenders tend to focus on the back-end ratio for conventional
mortgages, loans that are offered by banks or online mortgage lenders rather
than a government program,” they report. “If your front-end DTI is below 28
percent, that’s great. If your back-end DTI is below 36 percent, that’s even
Of course, you should aim for a DTI ratio of 0 percent if your
goal is to be debt free. Either way, it’s another number to keep tabs on,
beyond your credit score.
Here’s what they could save with just
one more quote
begin their home-buying process, they rarely shop around for their mortgage, most often preferring
to go with the first lender they find.
The Consumer Financial Protection Bureau previously
cited that almost half of borrowers seriously consider only a
single lender or broker before deciding where to apply. And 77% of borrowers
only end up applying with a single lender or broker.
it turns out, this could be causing them to lose out on a lot of money,
according to the April Insight report from Freddie Mac.
By examining the dispersion of 30-year fixed mortgage rates
across all lenders during a typical week, Freddie Mac could that borrowers
could save an average of $1,500 over the life of the loan by getting just one
additional rate quote.
fact, 80% of borrowers who obtain one additional rate quote while shopping for
a mortgage will save between $966 and $2,086 over the life of the loan.
that savings increases to $2,914 if the borrower receives five rate quotes.
About 80% of borrowers who obtain five quotes will save between $2,089 and
shopping more than one mortgage lender, consumers are more likely to get a
better interest rate and save money in both the short and long term,” said Len
Kiefer, Freddie Mac chief economist. “With lower monthly payments and lower
fixed fees, the loan will be more affordable and thus safer, and consumers may
have hundreds or thousands of dollars more in their pockets. Not a bad return
for a few phone calls or clicks.”
1. The savings will be proportionate to loan size.
2. Borrowers who expect to have their mortgage for a longer
term, and neither refinance nor move, will gain more from a reduced rate.
3. The dispersion of rate offers greatly affects the amount of
If you're a homeowner, you probably already know that recent tax
legislation means you can now deduct only up to $10,000 worth of property taxes
from your federal tax bill. And if you live in a high-tax state—New Jersey, Illinois, and Texas, we're looking
at you—that probably feels like a drop in the bucket.
it's understandable if you're feeling a little extra burn as you pull out your
checkbook this tax season. But what can you do besides complain? (Or move?)
Sadly, there's no "get out of paying property tax"
loophole—it's an ongoing burden that homeowners everywhere must take on. But
there is a
chance you can shrink the amount of taxes you owe on your home. Here's how.
"game" is the wrong word. There's absolutely nothing fun about it!
But the property tax system is somewhat labyrinthine and you do need to know
the rules. And the most important one is that the amount you pay in taxes
depends on the value of your property.
property owner’s chances of successfully appealing his or her property taxes
depends upon whether the tax assessment is fair and accurate," says Anthony
F. DellaPelle, a property tax attorney in Morristown, NJ.
other words, the assessment of your home should reflect its fair market value.
If those two figures don't line up, you should be able to reduce the
assessment—and pay less.
you're lucky, your tax assessor will agree to a reduction without requiring you
to file a tax appeal, DellaPelle says.
there's still a lot you'll need to do to back up your claim.
you can contest your property tax assessment, you have to know what it is,
right? Some communities may allow you to access this information online.
Otherwise, you'll have to get it from your tax assessor’s office.
you have the information in hand, verify the following:
much is their property
tax? It really is your business.
win an appeal, you want proof that your neighbors who live in a
house comparable to yours pay less in taxes than you do. Search here for homes in your neighborhood that
have recently sold, or contact a real estate agent and ask for comps to be
pulled. The real estate agent may be kind enough to do it without the promise
of a sale. You can also be nosy and just ask your neighbors.
a word of caution: “Be sure you’re comparing apples to apples as reasonably as
possible,” Dowler says.
tax assessor will be skeptical if you argue that your brand-new,
six-bedroom house should be taxed the same amount as a 100-year-old,
four-bedroom home down the street. And be aware that any improvements
you've made to your home (or plan to make) could send your tax bill right back
sure where to start to uncover all this info? Think about hiring a
licensed real estate appraiser or property tax appeal service. These
pros can put together an official report that includes an expert opinion of
your property value.
keep this in mind: If your appeal proceeds to court, your appraiser will likely
be required to testify, DellaPelle says. And the appraisal report may not be
considered legit unless the appraiser's available to testify, so choose someone
local that you trust.
say that you do find something incorrect on your assessment—maybe your home’s
listed as 40,000 square feet instead of 4,000. You can’t just email your tax
assessor’s office and demand it be corrected.
each state has different tax appeal procedures, appeals usually have an annual
deadline that is strictly enforced,” DellaPelle says. Miss that deadline,
and you’ll have to wait until the following year to appeal. (And keep paying
your tax bill until then.)
also need to know to whom to appeal. Your
tax board could be local, county, or regional. Some states even have a special
tax court, DellaPelle says.
because you like DIY projects doesn’t mean you’re qualified to tackle this one.
tax appeals have special rules and procedures that vary from state to state,”
cautions DellaPelle. “The consequences of failing to adhere to them can be
since there are several ways your appeal can get thrown out (and lots of heady
math involved), a tax attorney can help you figure out whether you have a
case—and help you win it.
on where you live, certain laws can raise or lower your taxes.
instance, in parts of Maine tapping into solar power could raise your
taxes. Some states such as Illinois offer property tax exemptions and
deferrals to seniors and people with disabilities. Other states are even considering creating loopholes to
ease the pain of the new tax legislation.
even if there isn't a law that can help you, chances are good you can find
other people also questioning their property taxes.
this for inspiration? When 70,000 parcels in Georgia's Muscogee County were
reassessed last summer, some property taxes jumped as much as 1,000%. A local
homeowners association quickly mobilized—filed a petition, asked the state to
intervene, and even threatened a class-action lawsuit. A
week later, residents were given the option to pay their taxes at
the 2016 rate or at 85% of the new rate if things weren't resolved by the end
of the year.
you're displeased by your tax bill, there's a good chance your neighbors are,
too. Start by talking with them, and see how low you can go.
things first, there are two types of credit pulls; a “soft pull” and a “hard
pull,” and there’s a stark difference between the two.
soft pull often happens without you ever knowing about it and doesn’t affect
your credit score. Sometimes these types of inquiries are done without your
permission, such as in the event you receive an unsolicited pre-approved credit
card offer in the mail or when a prospective employer pulls your credit as part
of a background check on you. Other times a soft pull happens when you check
your own credit score. And if either of these two things have happened, they
are categorized as soft pulls, and will not chip away at your score.
“hard pull,” on the other hand, can affect your
score. When you’re shopping around for a mortgage, it’s not uncommon for you to
speak with multiple lenders. And that means multiple requests for your credit
report. This can be concerning because with every “hard pull,” your score can
be impacted—unless each pull happens within a specific window. Credit bureaus
are aware that potential borrowers will “rate shop,” so you generally have
between a 14- to 45-day window, depending on which credit bureau, where all
pulls are consolidated and considered just one.
the purposes of applying for a mortgage, you can almost guarantee the lender
will do a hard pull of your credit report. This inquiry will stay on your
credit report for two years but will only impact your score for one year. It
can shave a few points off your score per inquiry so if you’re shopping around,
it’s important to shop around in a set amount of time to avoid being penalized
for each inquiry.
though these hard credit pulls will stay on your credit report for two years,
lenders will be able to see from your report that you’re shopping around for a
mortgage, so even if your score is a few points lower than you’d like thanks to
a hard inquiry, lenders may take your rate shopping into consideration when
assessing your history. A Read
more about ways to boost your credit score here.
there is a bit of a grace period to shop around for rates, take advantage. If
you shop and compare rates from lenders, you can potentially save thousands of
dollars. Because buying a home is one of the most expensive endeavors you’ll
have, saving any amount of money can be beneficial.
only will shopping around and comparing rates help you get the best deal but
reading lender reviews and knowing the ins and outs of the quotes you’re
receiving can help you avoid paying extra fees. You should talk through your
options with a lender and compare their rates with quotes from other lenders.
You can also anonymously request quotes from different lenders on Zillow.
also important to check your own credit score, so you know where you stand
before you request these hard pulls. If you know your credit isn’t quite where
you want it to be, you’ll have time to correct it before a lender pulls it to
evaluate you. And since soft pulls won’t negatively impact your score, you can
check your score with peace of mind.
process of buying a home loan can be confusing, especially at the closing.
All mortgages, including those insured by the Federal Housing
Authority, come with a laundry list of closing fees that typically
add up to 3 percent to 5 percent of your purchase price, depending on the terms
you negotiate with your seller and lender.
what you need to know about FHA closing costs—and
how to get the best deal.
loans are issued by private banks and financial institutions approved by the
U.S. Department of Housing and Urban Development. Because the loans are
insured by the FHA, a government agency, lenders are more likely to
approve buyers with less than stellar credit scores and those who can’t afford
a large down payment. In fact, buyers can get FHA loans with as little as 3.5
secure an FHA loan, however, the borrower must pay an upfront insurance premium
of 1.75 percent of the loan amount, as well as ongoing monthly
insurance premiums that vary depending on the loan amount,
loan-to-value ratio and length of the loan.
costs for FHA loans are similar to those of conventional loans, because private
lenders incur the same costs when making the loans, including fees for credit
reports, appraisal, title search and other costs. Under HUD rules, lenders are
allowed to charge “customary and reasonable closing costs,” not to exceed 3
percent of a qualified loan of $100,000 or more, or 5 percent on loans of
$60,000 to $100,000.
means that if you buy a $200,000 house with a $7,000 down payment, you could
potentially pay up to $5,790 in closing costs ($193,000 x .03). In other words,
you’d need to save up $12,790 to secure your loan.
rates for mortgage refinancing are still very low. Is it time for you to refi?
how to determine whether you will benefit by refinancing your mortgage.
2 major types of refinances:
reasons people refinance: to replace an adjustable-rate mortgage with a
fixed-rate loan, to settle a divorce or to eliminate FHA mortgage insurance.
Check today’s low rates on a mortgage
point = Total closing costs ÷ monthly savings
months to break even = $3,000 in closing costs ÷ $100 a month in savings
you plan to keep the house for less than the break-even time, you probably
should stay in your current mortgage.
the term in rate-and-term
formula above doesn’t measure your total savings over the life of the new
mortgage. A refinance can cost more money in the long run if you start your new
loan with a 30-year term.
has been paying $998 a month for 10 years. If Kris doesn’t refinance, the
payments will total $239,520 over the next 20 years.
refinance, Kris could pay $697 a month to repay the new loan in 30 years, or
$885 a month to pay it off in 20 years.
$697 x 360 months = $250,920
240 months = $212,400
example above, Kris borrowed $186,000 at 5 percent. 10 years later, Kris had a
remaining balance of $146,000, and refinanced at 4 percent.
mortgage calculator to compare your own loan scenarios:
credit can save you lots of money on your mortgage. Check your credit score for
free at myBankrate.
and cons of cash-out refinances
Cash-out refinances often are
used to pay down debt. They have pros and cons.
Imagine that you use a cash-out
refinance to pay off credit card debt. On the pro side, you’re reducing the
interest rate on the credit card debt. On the con side, you may pay thousands
more in interest because you’re taking up to 30 years to pay off the balance
you transferred from your credit cards to your mortgage.
But the biggest risk in this
scenario is in converting an unsecured debt into a secured debt. Miss your
credit card payments, and you get nasty calls from debt collectors and a lower
Miss mortgage payments, and you
can lose your home to foreclosure. Home equity debt that’s added to the
refinanced mortgage always was secured debt.