Getting the Biggest Bang for Your Buck

It’s no secret that renovations will help a home sell faster and for a higher price. But what’s the quickest way to increase your home’s value without decreasing your bank account?

Thanks to Remodeling Magazine’s new 2013 Cost vs. Value Report, you can figure out. The report, which breaks down the country by region, details how much homeowners can expect to recoup on major home improvement projects. This can be a particularly helpful list to watch if you’re considering making some cosmetic improvements to list your home.

In the Hampton Roads area, the top five value-adding projects will earn you a lofty return on your investment:

Entry door replacement (steel): 92.2%. A new steel front door will almost pay for itself with an average cost of $1,096 and an average return of $1,010.

Deck addition (wood): 83.4%. Add a new deck for your pleasure, but enjoy a substantial return on your investment too.

Basement remodel: 79.7%. With a sizable pricetag (an average job cost of $56,432), you can also get a sizable return of almost 80%.

Siding replacement (vinyl): 79.0%. Give your home a fresh new look and recoup nearly 80% of the cost.

Attic bedroom: 78.8%. Another high-price job will not only let you advertise an additional bedroom, but collect more than three quarters of the cost back!

Some of the projects to avoid: sunroom additions and home office remodels, each of which will return you less than 50% of your investment.

3 Important Tips When Selling Your Home

These may seem like very obvious tips to many, but they are extremely important to keep in mind when your house is on the market. Often, these tips are not adheared to, and it can cost the sale.

1. Sellers should not be around when a buyer is touring the home. When a seller is home, it makes it very difficult to feel comfortable. They cannot envision themselves living there, feel comfortable opening closets and pantries, or express their thoughts about the home (good or bad). Make sure to give a potential buyer some space by leaving the house.

2. Sellers should clean their house. This one is a number one rule, but it is very difficult to do in practice. Life gets in the way of the dirty dishes, but it is important that you make a plan with yourself and your family to keep your house clean. Put things you do not need to use in storage, get your carpets cleaned, mow the lawn, sweep the floors, and clean those dishes. Remember: your home is competing with all of the other homes on the market, so make it look the best!

3. Sellers should not overprice their house. Most buyers are not willing to take the time to negotiate down an overpriced home, and they may not even bother to walk into the house. Especially if a similar house with a lower price tag is also on the market. Always price to sell from the beginning. I can help you figure out the best price for your home based on recently sold homes in your area!

Lowering your Mortgage Costs

For most of us, our mortgage is the highest bill we pay every month. Wouldn’t it be great to keep it as low as possible? Here are 5 tips to help you keep your monthly payment as low as possible.

1. Refinance

When you refinance, you pay off your existing mortgage with a new one. If you qualify for a lower rate, it could save you a lot of money. A “Consumer’s Board to Mortgage Refinancing” published by the Federal Reserve Board, compared savings on monthly payments on a 30-year fixed-rate loan of $200,000 at 6% and 5.5%:

Monthly payment @ 6 percent	$1,199
Monthly payment @ 5.5 percent	$1,136
The difference each month is	$63
Over 10 years, you will have saved	$7,560

That is amazing! With interest rates so low right now, you could save even more.

2. Shop Around

Whether you are taking out a loan on a new home or refinancing, shopping around for the best rate is always a good idea. It could save you a lot of money!

3. Check into Your Home’s Value

It’s not great news to hear that your home’s value has decreased, but it also means that you won’t have to pay as much in property taxes. Getting your home reassessed ensures that you are not paying more in taxes than you should be.

4. Boost Your Credit Score

Before you take out a loan or refinance, check with your lender and find out the credit score you need to have to qualify for the rate you want, compared to the rate you will get at the score you currently have. Here is an example of the differences, according to myFICO, on November 13, 2012:

FICO Score	APR
760-850	2.926 percent
700-759	3.148 percent
680-699	3.325 percent
660-679	3.539 percent
640-659	3.969 percent
620-639	4.515 percent

5. Make Extra Mortgage Payments

It sounds strange, but it will help you pay off your mortgage early. And no mortgage payment is even better than a low payment! How does this help? Let’s say you had a $200,000, 30-year fixed-rate mortgage at 6 percent, with a monthly payment of $1,199. If you made just one extra payment a year (13 instead of 12), you could save $47,000 in interest and cut five years from your loan term, says Zillow in its report “7 easy ways to trim your mortgage costs.”

Increasing Optimism About Home Prices

According to results from Fannie Mae’s December 2012 National Housing Survey, Americans are gaining confidence in the housing sector. The survey shows that people are feeling positively that home prices will continue to rise, and 2013 purchasing activity will be up.

The growing confidence is due in part to several factors. Doug Duncan, senior VP and chief economist of Fannie Mae said, “Increasing household formation, encouraged by an improving labor market, is adding additional momentum to the housing recovery and putting upward pressure on rental price expectations. Expected increases in both owning and renting costs may encourage more consumers to buy and add further strength to the housing recovery already under way.”

With home prices increasing, more home owners will be motivated to sell, and with rental costs increasing, more people will be motivated to buy. It looks like it could be shaping up to be a very good spring in the housing market.

Fiscal Cliff Bill Benefits Home Owners

The fiscal cliff bill passed by Congress helped home owners in a few major ways. It kept the tax deduction for private mortgage insurance (PMI) payments, and it also says that home owners will not owe income tax on amounts forgiven during a mortgage workout, short sale or foreclosure.

When you put down less than 20% on a home, you pay PMI on a monthly basis to your lender. The fiscal cliff bill ensured that you will be able to continue to deduct PMI on your taxes.

In the past, home owners who were having a portion of their mortgage forgiven through a short sale, foreclosure, or workout plan were required to pay income tax on the amount that was forgiven. The Mortgage Forgiveness Debt Relief Act changed that, but it was set to sunset on December 31, 2012. Thanks to the fiscal cliff bill, it was further extended.

The fiscal cliff bill also continued to allow home owners to keep up to $500,000 (or $250,000 for individuals) in home sale profits tax-free. The major thing that changed is for home sellers whose income exceeds $450,000 (or $400,000 for individuals) and net more than $500,000 on the sale of their home. People who fall under this category would be required to pay taxes on the excess capital gains. The capital gains rate went up from 15% to 20%.