Look out for these pitfalls before you take the leap into purchasing a home.

Everton Allen, now 28, graduated from college and was living with his parents while working as a graphic designer for the Miami Dolphins when he decided he wanted to start his own company and buy his own home.

“I’d saved for a down payment over several years,” he says. “But I was worried it wouldn’t be enough, and that not having a traditional salary would affect my ability to qualify.”

Such misgivings are common — prevalent, even.

Fannie Mae’s Economic and Strategic Research Group conducted a survey to gauge consumers’ understanding of mortgage qualification criteria. About 40 percent of consumers responded “don’t know” when asked about requirements for minimum down payments, and 54 percent and 59 percent, respectively, said they didn’t know required minimum credit scores and maximum back-end debt-to-income (DTI) ratios.

Get professional advice

Allen sought help from a housing counselor at NID-HCA, a HUD-approved counseling agency in Miami Gardens. The counselor reviewed his credit, helped him make some adjustments, and assured him he could qualify for Fannie Mae’s HomeReady mortgage.

HomeReady lets borrowers put as little as 3 percent down. It also requires completion of a $75 online pre-purchase education course by Framework Homeownership. “The course was a great tool that helped me to reach my goal and feel really prepared,” says Allen.

Allen worked with a local real estate agent to purchase a 2-bedroom, 2-bath single-family home. He’s been a homeowner for about six months, and has transitioned to self-employment, retaining the Miami Dolphins as a client and adding the Miami Marlins.

“I’m handling the mortgage payments just fine,” he reports. “It’s great to own a home and be self-employed.”

Learn the process

By seeking help, Allen avoided the pitfalls that trap some would-be buyers.

“First-time buyers don’t know what they don’t know,” says Dawn Lane, broker/owner of Professional Realty Group in Las Vegas, NV. Lane says she’s seen it all — from tears to screams — when buyers can’t get a home they’ve fallen in love with.

“There’s a difference in how first-time buyers versus veteran home buyers view the purchase journey,” notes Steve Deggendorf, a director of market insights research in Fannie Mae’s Economic and Strategic Research Group.

“If consumers learn more about shopping for both their new home and their new mortgage, they will be more prepared to embark on the largest purchase most will make in their lifetime,” he states. A lack of home-buying knowledge can not only slow a deal, it can kill it, Lane points out.

Common pitfalls

Here are three predicaments first-time buyers may encounter along the purchase journey:

Going it alone. It’s great to do some online home shopping — and you might see homes in neighborhoods you’re considering and think a quick visit can’t hurt. Think again, warns Lane. Your first step should be talking with a housing counselor, lender, real estate agent, or other trusted adviser to help you understand if you’re ready to buy or if renting could be a better option.

According to the Zillow Group Consumer Housing Trends Report, only 46 percent of buyers did not get the first home on which they made an offer, demonstrating that in today’s fast-moving market, “disappointment and competition are now part of the process.” You need an ally who knows the system inside and out.

Looking at homes you can’t afford. Audrey Fox, a broker for Howard Hanna Real Estate Services in Elizabeth City, NC, insists that home buyers get pre-approved before she shows them homes. Pre-approval involves completing a loan application and submitting documentation like W-2s, tax returns, and pay stubs.

And remember, being approved for a certain amount doesn’t mean you have to spend that much. “You should decide how much you’re comfortable paying for your mortgage each month, considering all of your expenses beyond the mortgage, and focus on homes within your budget,” notes Deggendorf.

Not comparing mortgage quotes. Just because you have worked with one lender, or gotten pre-approved by them, doesn’t mean you have to stick with them. In fact, to get the best loan terms, you should shop around and compare quotes from different lenders, advises Deggendorf, who notes that Fannie Mae research has found only two-thirds of shoppers get more than one mortgage quote. “If you don’t look around, you could be leaving money on the table,” he says.

Buying a home? Check out our Home Buyers Guide and Mortgage Learning Center for all the resources you’ll need.

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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.

About the author

Laura Haverty

Laura Haverty is an author of three non-fiction books and journalist who spent more than 25 years in the publishing industry. As Fannie Mae’s editor in chief, she covers housing industry news and trends. Follow Fannie Mae on TwitterFacebook, and LinkedIn.
 
 

How to refresh your plants' soil and upgrade their dwellings. (Don’t worry. No mortgage needed.)

Repotting your plants might seem like a hassle, but you would be amazed at how they spring back to life in a few weeks. All it takes is a little root pruning, fresh potting mix, a larger pot — and maybe a little TLC to get them back on their feet.

Best of all, repotting gives you the opportunity to elevate your home with planters that have personalities to match your unique decorating tastes. Besides, an unhealthy plant is an ugly plant, right?

Follow these tips to give your plants a new lease on life.

Choose the right container

Soggy soil is a big killer of container plants, so use pots with drainage holes so that water will not stagnate and lead to rot. If you’re concerned about excess water damaging your floor or surfaces, place them in decorative cache pots or on saucers.

Size also matters. Pick a pot that is only slightly larger than the previous one so that the roots have room to grow. An oversized pot not only looks awkward, but the extra potting mix around the roots will stay soggy and lead to rot and disease.

Before committing to that old flowerpot you’ve been using since the ’80s, consider an upgrade. Even the humble terra-cotta pot is worth a look for its classic and earthy appeal, especially when you have a whole collection.

Glazed ceramic pots are on the pricier side, but rich colors and brilliant finishes make them invaluable additions to the home and garden. Use caution whenever using terra-cotta and ceramic pots outdoors though, since they’re prone to cracking in freezing weather.

If you’re looking for a pot that you can leave outdoors all winter, concrete and fiberglass are the way to go. Concrete planters range from rough and unfinished hypertufa troughs to sleek and boxy modern styles — but they’re heavy.

The new fiberglass pots on the market are lightweight, weather resistant, and make very convincing substitutes for whatever material you want to emulate. Best of all, they can be purchased at a fraction of the price you’d pay for their concrete and glazed ceramic counterparts.

Choose the right potting mix

Notice that the word ‘soil’ wasn’t used. Garden soil is inappropriate for container plants because it either drains poorly or too quickly, contains weed seeds and pests, and quite simply will lead to your plant’s untimely demise.

Instead, choose an all-purpose potting mix or one of its many variants. If you are planting hanging baskets, use a moisture-retentive mix, or add either peat or coir to keep the plants from drying out.

For succulents and other plants that require excellent drainage, use a cactus mix or add an amendment like perlite or vermiculite to keep the soil from getting too soggy.

Prepare plants for repotting

Water plants a day before repotting to make the roots less brittle and loosen up the potting mix to help plants better adjust to transplanting.

Have your materials together and ready to go before planting. This will limit exposure to the drying air and prevent unnecessary damage to the roots. If you have to leave the plants out for more than several minutes, wrap the roots with moist newspaper.

Gently tease the roots apart with your fingers to help them regrow and spread out quickly. If the roots are bound so tightly together that they’re impossible to break apart, use a clean knife to cut across the bottom of the rootball in the shape of an ‘x’ to quickly promote new growth.

While the plant is out of its container, inspect the roots and soil for any problems. Remove any rotted, mushy roots with a clean knife to prevent further rot after replanting.

Potting up

Once you’ve prepared the plants and have your materials ready, add enough potting mix so that you can set the plant in the pot with its crown an inch below the rim. Continue shoveling in potting mix until the pot is nearly full, then add water to help it settle around the roots.

If desired, cover the potting mix with a decorative mulch of stones, gravel, seashells, or orchid bark.

If you had to prune your plant’s roots while repotting, trim off their leaves or stems as well. They might look ugly at first, but trimming the top-growth prevents moisture loss and helps the plants recover from root-pruning.

Don’t worry! They’ll bounce back in no time and look better than ever.

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When you're moving, the last thing you need is a list of surprise fees tacked on at the end. Here's how to get an accurate estimate from the start.

When planning a residential move, it’s important to have an accurate idea of the final moving costs so you can set a realistic moving budget. Estimating your moving costs, however, is not as simple as it seems at first.

The movers will provide you with an estimate based on the total weight of your shipment and the actual distance to your new home. But plenty of other factors can also affect the final price and make your relocation significantly more expensive than anticipated.

To make a good financial plan for your upcoming move, you need to know exactly what can affect your moving estimate.

Required moving services

The factor that will most affect the final cost of your move is the amount of moving help you’re going to need.

If you want your movers to take care of all aspects of the relocation process (including packing your goods, loading them onto the moving truck, transporting them to your new home, and unloading and unpacking your items), your move will cost you a pretty penny.

But if you decide to do some of the work yourself (such as packing your belongings or disassembling your large furniture), you won’t have to pay for those services, and will be able to cut down the moving costs.

Keep in mind that any specific packing, handling, or transportation requirements you may have (like crating, exclusive use of the moving vehicle, or split pick-up or delivery) will also incur additional fees.

Sometimes, circumstances beyond your control may necessitate a specific service, regardless of whether you want to use it or not.

Poor access to the pick-up and/or drop-off location is the most common obstacle that affects the flow of a move and results in extra charges. Here are several examples:

  • If your old home (or your new property) is not accessible to large moving trucks because of physical constraints (such as narrow roads or weak bridges), your goods will be picked up or delivered with the help of smaller vehicles. This will incur an additional shuttle fee.
  • If the moving truck can’t stop in front of the entrance to your home and the movers have to carry your items over a considerable distance (greater than 50 to 75 feet), you’ll be charged a long-carry fee.
  • If the movers have to take your goods up or down a number of stairs (or wait long for an elevator), you’ll have to pay a flight charge (or an elevator fee).
  • If some of your furniture or appliances don’t fit through the doors or along the narrow hallways in your property, you will need hoisting services (that is, movers will take your large items in or out of the home through a window). These tend to be really expensive.

Storage needs are the second most common reason for increased moving costs. If you need your belongings to be stored in the carrier’s warehouse (because your new home is not ready to be occupied yet, or because you’re moving into temporary housing and want your items safely stored until you find a permanent residence), you’ll have to pay an additional storage fee.

And if your items have to be kept in storage for some time, because you’re unable to receive your shipment on the agreed date and time, all the warehouse handling costs will be at your expense.

You’ll also be charged extra for any idle time the movers waste waiting at your home if you’re not ready when they arrive to pick up your goods.

The time of your move

The specific time of year when your relocation takes place will also greatly affect the final moving costs.

It’s no secret that moving company rates are much higher during the summer — the busiest moving season— than they are for the rest of the year. So, moving off-season (anytime from September to mid-May) will significantly reduce your moving costs, and will also allow you to ensure the help of experienced moving professionals at the most convenient time for you (reputable movers are not easily available during the peak season).

Also, remember that moving rates are usually higher on national holidays and on the first/last day of a month, when many people need to move house because of rental agreements or job-related considerations.

If possible, avoid such peak periods and schedule your relocation for a day during the second half of a month when you can expect lower rates, plenty of available movers, and considerably less hassle.

As far as specific days of the week are concerned, the weekends are, of course, the busiest and the costliest. Tuesday, on the other hand, is the least preferred day for a move, so you may receive a significant discount if you decide to relocate on a Tuesday.

Your moving insurance

The basic liability coverage (60 cents per pound per item) you get for free when using professional moving services may not be enough to ensure your peace of mind, especially if you are relocating items of high sentimental or monetary value.

If you want full value protection (under which the carrier assumes liability for the full cost of repairs or the replacement value of any lost or damaged goods), your moving costs will go still higher.

With so many factors affecting your movers’ estimate, you need to be really careful when researching your moving options and choosing the best movers for you. Get three or four on-site binding estimates, compare the rates and conditions different moving companies offer, and make your pick wisely.

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.

About the author

Moving.Tips

Moving.Tips is a resource center that provides a complete solution for people on the move. From the pre-move tips, through the packing and moving day advice, to the post-move helpful information, it has it all. Moreover, budgeting your move and finding a mover can be child's play when you have an ally like Moving.Tips.
 
 

A refi could cut your monthly mortgage payment, but that doesn't necessarily mean it's the right move.

Even though rates spiked after the election and may rise further after the Fed meets December 14, there are about four million borrowers who will still benefit from refinancing, and of that, two million borrowers could save $200 or more per month by refinancing.

There are many reasons to refinance, but here’s what you should know before you act.

Refinancing costs money

There’s no such thing as a free refinance. You’ll need to pay closing costs, which typically run anywhere from 2 to 5 percent of your loan amount. So, if you’re refinancing a $150,000 loan, you might pay between $3,000 and $7,500 in closing costs upfront.

One option you have is for your mortgage lender to cover the closing costs using a no-closing cost refinance. But if you go that route, you’ll pay a slightly higher interest, says Ray Rodriguez, regional mortgage sales manager at TD Bank.

Therefore, “you need to calculate your time horizon,” says Rodriguez.

Before selecting a no-cost refinance, look at what the closing costs would be if you were paying for them separately, then calculate how long it would take the monthly payment savings from a refinance to repay the closing costs. Once you do that you can more accurately determine whether a no-closing cost refinance is mathematically sound for your situation.

Use a refinance calculator to see how long it will take for you to recoup the closing costs. If your breakeven point is four years but you only plan to stay in the home for two years, refinancing isn’t a smart move.

Savings should repay costs quickly

Refinancing makes sense when your interest rate on your mortgage is more than 100 basis points above current interest rates, says Todd Sheinin, a mortgage lender and chief operating officer at New America Financial in Gaithersburg, MD.

Of course, everyone has different objectives, so there’s no hard and fast rule on how much you should save, but generally your refi costs should be recouped in about two years or less.

For example, if you got a 30-year fixed loan of $200,000 loan in March 2011, your rate would have been 4.83 percent, according to Freddie Mac. This week that rate is 4.13 percent.

So if this refinance cost you $2,800 and saved you $179, your savings would repay the closing costs in 15 months. This means that after one year and three months, you’d truly benefit from the lower payment — a very favorable refi scenario.

In contrast, if you got that same $200,000 30-year fixed loan in August 2013, your rate would’ve been 4.45 percent. So if you paid $2,800 to refinance into this week’s rate of 4.13 percent and only saved $93, your savings would repay the closing costs in 30 months.

This is six months past the two-year mark, so it would take a while to truly benefit from the refi.  But some may deem the $93 per month savings meaningful enough to refinance. This is a discussion to have with your lender.

Before you commit, be sure to do your homework and compare refinance ratesfrom multiple lenders.

A refi could cancel your PMI

If you’re currently paying for private mortgage insurance (PMI) on your loan but have gained a substantial amount of equity in your home, refinancing could enable you to cancel your mortgage insurance.

Your loan balance must be 80 percent or less of your home’s appraised value in order for this to work, says Richard Redmond, mortgage broker at All California Mortgage in Larkspur, CA and author of “Mortgages: The Insider’s Guide.”

If your first mortgage is 80 percent or less of your home’s value when it’s appraised for the refinance, your new loan wouldn’t require PMI, and this new loan would replace the loan with PMI, thus cancelling your PMI obligations.

You’re rewinding the clock on your loan

When you refinance, you’re effectively resetting the life of your home loan. So if you’ve had your loan for many years, you’ve reached a point in your loan where most of your monthly payment is going to paying the loan down (rather than paying interest). Refinancing the loan will change this dynamic, so most of your payment is going to interest rather than paying your loan down.

Ask your lender to do a side-by-side loan amortization comparison so you can see how fast you’ll pay off your existing loan versus a new loan. Also ask them to show you how much faster you’d pay off the new loan if you took the savings from a refinance and applied it as an extra monthly pay-down on the new loan.

Your equity could be a good source of cash

cash-out refinance lets you take out a new mortgage for more than the amount you owe on your current loan and then pocket the difference — typically up to 80 percent of your loan-to-value ratio. That can be a good move, depending on how you’re planning to spend the money, says Rodriguez.

If you’re going to use the cash to build an addition to your home that’s going to increase your property’s value, taking a cash-out refi makes sense. But  keep in mind that cash-out refinance rates are slightly higher than rates for non-cash-out refinances.

If you’re going to use the money for discretionary spending, such as a vacation, think twice. It’s not advisable to use cash out proceeds for discretionary spending, although lenders don’t prohibit you from doing this.

One caveat: If home values in your neighborhood are decreasing, now may not be the right time to tap your equity. “Before you pull equity from your home, you need to weigh the costs and benefits,” Rodriguez says.

Related:

Note: Julian Hebron provided input for this article. 

About the author

Daniel Bortz

Daniel Bortz is a real estate agent in Maryland, Virginia, and Washington, D.C., and a writer with a background in financial reporting and editing. His work has been published by Baltimore magazine, Baltimore Style magazine, CNNMoney.com, Entrepreneur.com, The Fiscal Times, The Huffington Post, Money magazine, National Geographic Traveler, Trulia, and U.S. News & World Report. Follow Daniel on Twitter @danielbortz.
 
 

You start and end your day looking into one, so why not make it interesting?

When we wake up and rub our eyes in the morning, the first thing we do is head for the mirror to start our day.

The last thing we do before bed is wash away the day in front of the mirror.

Like lighting, mirrors are one of the most important elements in a bathroom scene. Because they are so integral to the bathroom’s ambiance and play an important role in our everyday life, why settle for something standard?

Here are a few ways to go big — perhaps literally — with your bathroom mirror.

Fun with frames

One way to add a touch of class to a bathroom is with a framed mirror. Depending on the style of the space, a framed mirror can make a dramatic statement or simply pull the room together.

frame
Photo from Zillow listing.

Carved wood frames are uncommonly found in bathrooms, and lend an antique style to an otherwise sterile space. As long as the room has proper ventilation, you don’t need to worry about moisture damaging the wood.

But the frame doesn’t have to be wood — consider metals, too. Polished brass offers a bright, yet warm, finish to a bathroom for an on-trend modern look. Antique brass is timeless, and could play well to one of 2017’s predicted trends: mixed metals in the bathroom.

Shape shifting

Instead of the standard rectangular shape, opt for a circle or teardrop silhouette to add softness and sophistication to your bathroom.

shape
Photo from Zillow listing.

A cheerful and shiny sunburst adds fun and function to a small powder room, while two large teardrops placed side by side add the perfect amount of shimmer to a double vanity.

Other shapes like ovals and hexagons add just the right amount of visual interest without crowding coveted wall space.

Speaking of wall space, if you’re adding an oversized mirror to the mix, hang two small pendants or a mid-size chandelier in the middle of the bathroom instead of installing wall sconces. The hanging light fixture will make the bathroom appear larger without overcrowding the wall.

Talk about texture

Because bathrooms are so often sleek and shiny on their own, adding texture can create a warmer environment — perfect for either a guest bathroom or relaxing master suite.

texture
Photo from Zillow listing.

Hang your mirrors with blistered rope for a nautical vibe, or use an antique frame with obvious color variation for a more worn-in look.

Nailhead trim around mirrors also offers a little more texture without sacrificing style. Opt for large nailheads to make a small statement, or several smaller ones for a more uniform style.

Related:

About the author

Kerrie Kelly

Kerrie Kelly is a Northern California interior designer and the founder of Kerrie Kelly Design Lab.She is an award-winning interior designer, multimedia consultant and an author of two books: “Home Décor: A Sunset Design Guide” and “My Interior Design Kit,” with Pearson Professional and Career Education.