Track Your Home’s Value Using This State-of-the-Art Tool

When you buy or sell a used car, you can get a good idea of its value and the price it will sell for by surfing several widely advertised web sites. When buying or selling a house, you can do the same thing by using Homes.com’s Home Value Calculator which uses automated valuation models, or “AVMs”, to give you an estimate of a home’s value.

Homes.com’s state-of-the-art valuation tool is sufficiently sophisticated that you can use it to understand and track changing home values in your local neighborhood. Hyper-local valuation trends are much more useful and more important to buyers and sellers than the national or regional trends reported in the news media.

Using Homes.com’s AVM When Buying, Selling, or Financing

Having an accurate estimate of a property’s value will help you make selling, refinancing, or buying decisions. Homeowners can get an excellent idea of how much equity they have in their homes without incurring the cost of an appraisal– equity is the difference between the value of your home and the amount you still owe on your mortgage, if any. Owners considering refinancing or selling can use the calculator to help them decide when is the best time to do so. Buyers can use the calculator to compare a seller’s asking price with the AVM’s estimate before they make an offer. The calculator’s valuation estimate will also help buyers avoid low appraisal problems when they are deciding how much to put down.

Here’s how to use the calculator:

  1. Go to Homes.com’s valuation calculator and enter the address of the property.
  2. You will see a satellite map of the neighborhood with the home’s current estimated valuation in blue. On the right-hand side of the screen, you will see a form you can fill out titled “ask about this home.” If you fill it out, you will receive calls from local real estate agents who can tell you more about the home’s value. 
    home valueshome values
  3. Scroll down, and in the center you’ll see an Estimated Home Value in large type in the center of the screen. This is the maximum value the property might be worth in current market conditions. To the right of the estimate, you will see a range that ends with the maximum value.
    home valuehome value
  4. Scroll down further and you will come to a table that lists the current median value for the zip code, street, neighborhood, city/town, state and the entire nation. Click on each option and you will see a line graph that compares the value of the property with the median value over time. This will give you a good idea of how the home’s value compared with neighboring properties.
  5. Continue to scroll down until you come to “price history.” Here you can find the actual prices paid for the home in past sales. You can find the same historical price information on listings of homes for sale and also find out how long a property has been listed on Homes.com.
    home values home values

How Automated Valuation Models Work

Using data on recent, nearby home sales and market trends, AVMs can provide an estimate that will be very helpful when you are exploring a new community, making a budget to buy a home, saving for a down payment, preparing an offer or, if you already are an owner, deciding whether or not to refinance. These calculators use algorithms designed with the help of economists and use mathematical modeling to convert the most recent local sales data into an estimate on a property. Like appraisers, AVMs find several homes that are the same size, same age, and are located as close as possible to the property being valued.

AVM estimates can vary as much as 10% from the actual value, primarily because AVMs can’t inspect the property to see if the house might need expensive repairs to fix, such as a wet basement, leaky roof, mold infestation, outdated circuit breaker, or termite damage. It doesn’t know the age or condition of a home’s appliances and its systems― electrical, plumbing, heating, and air conditioning. Big ticket repairs like aging roofs and windows, damaged foundations, or landscaping may be so old that new owners will have to spend serious money soon after they move in.

Until very recently, all mortgage lenders have required an appraisal of a property by a licensed appraiser before they will approve a mortgage. Lenders use the appraisal to determine how much they will lend the borrower. If the appraisal of the home values the property less than the amount the borrower needs to finance the purchase (the sales price minus the borrower’s down payment), either the borrower will have to increase the down payment or the seller must lower his price.  Such low appraisals are a major reason that sales fall through. About 10% of home sales encounter appraisal-related problems.

The variety of and quality of information on home prices and values you can find on Homes.com will give you a good idea of how a home stacks up in your current “hyperlocal” market. Market conditions in your zip code, neighborhood and even on a specific street will be more valuable to you than metro-wide, state or national trends.

Surf through local listings of homes for sale to find nearby properties that are roughly the same size and age as the home you are researching. You can also identify comparable homes that have recently sold to give you a sense of local market trends. You might also conduct valuations once a month to see if values have changed in response to market conditions.  If you are buying or selling, ask your real estate agent for “competitive market analysis” of a property or a neighborhood in which you are interested will include information from recent local sales and professional opinion of the property’s future prospects based on local market trends.


Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.

Source: homes.com

What’s On The Mind Of A 2020 Buyer: Sustainability and Climate Change

Sometimes trying to guess what’s on the mind of buyers can be a difficult challenge. Do they want the suburbs or city? Do they want single family residences or condos? While some of those answers vary, statistics are showing us that despite location or style of home, buyers have one thing on their minds: sustainability and climate change. According to a National Association of Realtors survey, 69% of their members said energy efficiency promotion in listings had value, and 59% of those Realtors found clients were had interest in sustainability. So, while you may not be able to change the style or location of your home, you can certainly cater to buyer’s sustainability wishes.

Climate Change and Flood Insurance

While the entire globe is affected by climate change, coastal cities are seeing dramatic impacts by the damage of climate change. In fact, in a recent study by First Street Foundation, rising seas eroded $15.8 billion in home value from Maine to Mississippi. And buyers are paying attention to this. They don’t want to be left holding the bag on a property that declines in value due to climate change. While buyers aren’t completely shying away from flood-prone areas, they are seeking solutions for possible flooding- including elevating the property, retaining walls, and site work. It’s important if a buyer is buying in a flood zone, they get accurate pricing for flood insurance; however, those rates can (and often times do) increase annually.

Large solar panels on rooftop of modern comfortable house or cottage in natural environmentLarge solar panels on rooftop of modern comfortable house or cottage in natural environment

Energy Efficient Homes

In the National Association of Realtors 2019 Profile of Home Buyers and Sellers, they found that heating and cooling costs were the most important environmental features for buyers, with 85% finding these features somewhat important. Buyers aren’t looking to replacing windows, HVAC, or duct work– they want these items not only in working order, but also upgraded to conserve energy and spending. Many local municipalities and utility companies are helping homeowners cater to this need by offering rebates for energy efficient appliances, thermostats, or insulation. These rebate programs can pay big to the seller by receiving the upgrades at a fraction of the cost while appealing to the 2020 buyer.

Steps to improve your energy efficiency:

  • Have a professional energy audit conducted to identify areas of improvement
  • Upgrade attic insulation to meet current standards and to help with heating/cooling costs
  • Swap out dial thermostat with smart, programmable thermostat
  • Replacing old, single pane windows can significantly help resell value
  • Replace all light bulbs with LED bulbs
  • Have existing HVAC units serviced seasonally

Recycled and Reclaimed Materials

Part of the appeal of sustainability to buyers is having the ability to reduce their carbon footprint on the globe, and one of the popular ways of doing that has been incorporating more recycled products within the home. Buyers appreciate upgraded finishes; however, the 2020 buyer is looking for more than that, they want recycled and reclaimed finishes in their new home. Not only can recycled materials decrease overall building or remodel costs, they are a better alternative for the environment.

Ideas for incorporating recycled materials:

Buyer preferences from stainless steel appliances to open-concept designs vary greatly, but incorporating more sustainable features in a home is likely to appeal to the largest group of home buyers: millennials. When listing your home for sale with a licensed Realtor, be sure to focus heavily on the green features present in the home.


Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

We Bought a House Sight Unseen—and It Turned Out To Be a Total Nightmare

I thought I was up to the challenge of a long-distance home purchase during a pandemic. After all, I was moving back to my hometown after only three years away. I knew the area. Family members could fill in the rest. I had a trusted real estate agent from my last house purchase. Plus, I look at real estate listings as a hobby even when I’m not in the market for new property. What could go wrong?

But after purchasing a midcentury modern ranch sight unseen and trekking 1,800 miles across the country to finally get an in-person look at it, my husband and I couldn’t be more shocked.

The front of the house.
The front of the house.

Wendy Schuchart

There were so many shoddy details that hadn’t translated through video and photos. The ceilings were lower and the rooms were narrower than they seemed in photos. The countertops that had looked like granite in photos were actually laminate. Every single counter and bathroom fixture was customized for a short person. After seeing broken fixtures and a layer of grime over everything, it was clear that I would have to cure decades of bad maintenance.

Grime discovered in the kitchen on move-in day.
Grime discovered in the kitchen on move-in day.

Wendy Schuchart

And then there was the constant noise pollution from the nearby interstate. Our ground team thought the sound was minimal, but a month after we moved in, the surrounding trees dropped their leaves and the dull murmur grew to a roar heard through closed windows.

So what were our mistakes?

Don’t depend on listing photos

In general, experts agree that buying a home without setting foot in it can be a dicey proposition at best and a nightmare at worst. And online listing photos, while helpful in narrowing down your property search, won’t give you the full picture of a house’s condition.

“I’ve visited homes only to discover that the yard is steeper than it looked online, the rooms are smaller, and you couldn’t tell there were power lines right behind the house,” says Steve Heard, a Realtor® with The Heard Group in the Sacramento, CA, area.

There were so many deal breakers that I would have noticed had I been able to set foot inside the home instead of relying so heavily on listing photos and videos. Case in point: Visitors at the front door of my new home have a direct sightline to the main bathroom’s toilet.

“Much like anything you buy online, a home’s listing is created to sell, not inform. They’re marketing,” says Shana O’Brien, owner of Cascadia NW Real Estate in Washington and Oregon.

Go beyond standard due diligence

A home inspection is standard operating procedure for anyone buying a home, but a long-distance purchase should always go through rigorous vetting to make sure you’re not buying a money pit.

Typically, the buyer pays for the home inspection during the escrow period. This can cost around $300 to $500, according to the U.S. Department of Housing and Urban Development. But to cover your bases and make sure there aren’t any major system failures before you sign a purchase agreement, experts advise bringing in an additional pair of eyes.

Go to the American Society of Home Inspectors, where you can search by your home’s address for a local inspector who can examine the house on your behalf.

Barton L. Slavin, a senior litigation and transaction attorney on Long Island, NY, advises hiring an experienced licensed and insured engineer to inspect the premises before the purchase.

That would have been great in my own long-distance home purchase. After the home inspection, the seller had “fixed” some conditional electrical work that my home inspector found, but those fixes broke other things, which resulted in an electrician visit on my dime. And on the first cold day, when I turned on the furnace, it failed to heat, which was another big repair bill that would have been covered by a warranty.

In my first two months in this house, I’ve also found faulty plumbing hacks and a massive rodent infestation.

How to beat the odds

“The key to success is extreme buyer due diligence,” O’Brien says. “That means having a team of trusted ‘boots on the ground’ to physically visit and inspect the home.”

In retrospect, my live-video walk-through was fairly quick, less than 15 minutes. At the time, it felt like it was enough, but now I realize it wasn’t nearly long enough.

Our experts advise an extensive live-video walk-through with a long-distance home purchase.

“FaceTime works great,” O’Brien says. If buyers see something they have questions about during the walk-through, the real estate agent can zoom in. They can even take still photos and close-ups, which have better detail than streaming video.

Pay attention off-property, too.

“Walk around the block, video camera on, and capture the neighborhood, the condition of the sidewalks, the level of pride of ownership in the surrounding homes,” says O’Brien. “Is the narrow street jammed with parked cars? Are the sounds from the elementary school super loud at recess? What’s the street traffic and street noise like? The buyer will not know unless their agent does the investigation.”

Be realistic

Despite all of your best efforts, though, there’s still a chance your long-distance home purchase will not be all you bargained for. When that happens, O’Brien suggests taking it all in stride.

“Real estate is almost always a good investment,” she says.

As for me, I’m already planning out my investment strategy and making the best of my midcentury modern surprise fixer-upper.

Source: realtor.com

9 Things I Wish I Had Known About Owning My First Home (Before I Bought It)

Years before I ever dreamed of homeownership for myself, I was an HGTV connoisseur. In college, I double majored in “Property Virgins” and “House Hunters” and spent hours glued to the TV with my roommate, ogling other people’s granite countertops.

Fast forward nearly a decade, and the time had arrived for me to purchase my own home. (No granite countertops here—my house was more like the “before” scene in an episode of “Fixer Upper”).

Not surprisingly, TV homeownership didn’t prepare me for the real thing. There are lots of lessons I’ve had to learn the hard way.

If you’re gearing up for your own journey into homeownership, turn off the TV and gather ’round. I’ll fill you in on a few things I wish I had known beforehand, and a few surprises (some happy, some frustrating) that I encountered along the way.

1. A beautiful yard takes work

That lawn's not going ti cut itself
That lawn’s not going ti cut itself

mustafagull/iStock

I never met a succulent that I didn’t kill. Even my fake plants are looking a little wilted right now. But even though I don’t have a green thumb, landscaping and yard maintenance are forever on my to-do list.

Each spring, I spray Roundup with impunity, attempting (and failing) to conquer the weeds. My husband handles mowing and edging.

I’ve slowly started to learn which plants can endure abuse, neglect, and a volatile Midwestern climate. I still have a long way to go in my landscaping journey, but all this work has given me a new appreciation for other people’s lush, beautiful lawns.

When you’re house hunting, keep in mind that those beautiful lawns you see—and that outdoor space you covet—come at a steep price. Either your time and frustration, or a hefty bill for professional landscapers, will be necessary to keep things presentable.

2. You might get a bill for neighborhood improvements

Your property taxes should pay for every improvement to the neighborhood, right? Not necessarily.

When my neighbors came together to petition the city for a speed bump on our busy street, the cost was passed on to us homeowners. It wasn’t covered by property taxes, so we got a bill in the mail a few months later. Surprise!

When you’re preparing to buy a house, make sure you budget for homeownership expenses—not just repair and HOA costs, but those pesky fees that crop up when you least expect them.

3. Brush/trash removal? It works differently in every city

You might not be able to just leave your leaves on the curb...
You might not be able to just leave your leaves on the curb…

Instants/iStock

As a kid, I spent many fall weekends scooping leaves into yard waste bags that we left on the curb for pickup. But when I became a homeowner, I realized that my early brush with brush removal was unique to the suburb where I grew up. Every city handles it differently, if the city handles it at all.

In Milwaukee, where I live, homeowners can put leaves on the curb for pickup on designated days. For big branches, you need to request a pickup, or potentially dispose of them yourself. Check with your city to find the ordinances and regulations where you live.

4. You’ll want to clean (or hire someone to clean) your nasty windows

Window maintenance was never on my radar as a renter, probably because I never had more than a few windows in an apartment. But then I became the proud owner of many, many windows—and all of them were coated in a thick film of gunk after years of neglect.

After we moved in, I started to tackle the cleaning on my own. But I quickly realized I was getting nowhere fast, and there was no way I could safely clean the exterior windows up in the finished attic.

So, I swallowed my pride and hired window washers. It was some of the best money I’ve ever spent.

5. You may feel a sudden urge to stock up on seasonal decorations

I never looked twice at a $50 wreath or decorative gourd before becoming a homeowner. Now, I have a burgeoning collection of lawn ornaments in the shape of snowmen and spooky cats. Sometimes I don’t even know who I am anymore.

6. You’ll need to create a budget for Halloween candy

Stock up...
Stock up…

leekris/iStock

At least I did in my Halloween-loving neighborhood, where the trick-or-treaters come out in droves.

I spent upward of $100 on candy my first year as a homeowner, and most of it was purchased in a panic at the Dollar Store after I noticed that our supply was dangerously low just halfway through the evening.

Now, I stock up in advance and shop with coupons to save a few bucks.

7. DIY renovation is equally rewarding and soul-crushing

Maybe just call someone next time...
Maybe just call someone next time…

neirfy/iStock

For the first few months after we closed on our house, my husband and I spent every free hour after work and on the weekends ripping out carpeting, pulling nails one by one from the hardwood floors, and scrubbing away at generations’ worth of grime in the bathrooms and kitchen. It was some seriously sick stuff.

Being frugal and ambitious means we can accomplish a lot on a small budget. But acting as our own general contractors became a full-time job on top of both of our full-time jobs.

Simple pleasures like “having a social life” or “Friday night with Netflix” became distant memories. It’s easy now to say it was all worth it, but at the time, I daydreamed about winning the lottery and hiring a team of pros to handle our rehab.

____________

Watch: Here’s How Low You Can Go in Making an Offer on a Home

____________

8. My impulse to check real estate listings lingered for a while

When I started house hunting, I obsessively searched for new home listings every day, poring over MLS descriptions and swiping through photos. Reaching for my phone to refresh the realtor.com app became muscle memory.

But after we closed on our house, my impulse to follow the market didn’t disappear overnight. Even though I was a homeowner, I also had a phantom limb where “checking the real estate listings” used to be.

A friend of mine put it best when she wrote about the sensation of loss she experienced when she “no longer had an excuse to occupy [her] free time with these real estate apps.” It’s surprisingly challenging to turn off your home-buying brain after months of being on high alert.

9. You’ll never want to go back to sharing walls

I like my neighbors. I like them even more because, for the most part, I can’t hear them. Gone are the days of people above me making bowling sounds late at night.

Now, I enjoy the sweet, sweet silence of detached living—no adjacent neighbors blasting music or loudly quarreling. All the yard work in the world is worth it for this level of quiet.

Source: realtor.com

How to Find All Your Debts: 4 Tips

Paying off your debts is a critical part of a healthy credit profile. Here’s what you need to know about how to find your debts.

It’s uncomfortable to admit, but it’s entirely possible that you have debts you didn’t even know about. Whether mail went missing or communication about medical debt got mixed up, it’s possible an account with your name on it is languishing somewhere in collections. Get some tips to find out all your debts so you can make educated decisions about how to clean up your credit history.


How to Find All Your Debts

Even if you keep meticulous records, it’s possible for some debts to have fallen through the cracks. And perhaps you know you owe a debt, but it’s been passed around between collection agencies so many times you’ve forgotten who currently owns the debt. Here’s how to find out which collection agency you owe or uncover debts you don’t know about.

1. Check Your Credit Reports

Our first tip for finding your hidden debts is to turn to your credit report. While not every debt is reported, many are. And if you’re in collections or have owed the debt for a while, chances are someone has placed a negative item on at least one of your credit reports.

The trick here is getting copies of all three of your credit reports from the major bureaus. Not all creditors report to all three, so TransUnion, for example, could have a detail that Equifax and Experian do not—and vice versa.

You can get one free copy of your credit report from each agency every year at AnnualCreditReport.com. (They’re available weekly for a limited time due to COVID-19.) But for those who really want to get a handle on who they owe and what’s on their report, a service such as ExtraCredit is a good choice.

ExtraCredit lets you see your credit reports from all three bureaus—anytime. The reports are pulled monthly. It also gives you regular updates on 28 of your FICO® scores, so you have a clear picture of what your credit history looks like to lenders. Plus, you can get rewards and offers for valuable credit services, including credit monitoring and credit cards.

2. Go Through Old and New Mail

Who among us hasn’t picked up the mail, only to put it in a stack by the front door and leave it there to languish for months? Life gets busy, and it can be tempting to slide unopened envelopes into a bin or drawer and forget about them. But mail can back up before you realize it, and you might miss a notice of a bill or debt.

Take some time to gather all the mail you have. Open it and sort it, carefully looking to see whether you need to take action on something or if you might owe someone money. Keep a notebook or computer nearby so you can make a list.

3. Listen to All Those Old Voicemails

Voicemail can back up just like snail mail. Many people never actually check their voicemail, assuming those who need them will call them back or text them.

Legitimate creditors and collections agencies should leave a voicemail, including contact information. They’ll also usually show up on your caller ID. 

Clear out your old voicemail, listening to each one and making notes about it. Compare that information with the notes you got from your mail and what’s on your credit report to compile a master list of debt you might owe. Keep an ear open for potential debt collection scammers and do your research before following up with anyone.

4. Contact Creditors You Think You Owe

In some cases, you know you owe someone, but it’s been a while. You can contact the last creditor you remember and find out if they still own the debt or if they wrote it off and sold it to a collection agency. They should be able to confirm your debt and give you the name and contact information for the agency that they sold the debt to, if applicable.

What to Do After You Find Your Debt

Once you go through a debt finder process and figure out who you owe money to, you have some decisions to make. Here are three tips for dealing with debt once you find it.

1. Decide Whether You Can—or Will—Pay

You might rush to pay off old debts thinking it will boost your credit, but that may not happen. Yes, the debt should then be marked as paid on your credit report. But the damage from the late payments and collection accounts could still linger.

So, you need to consider seriously how you can and will deal with old debt. If you simply can’t afford to pay, talk to a legal professional about your options, rights, and what consequences could come from paying or not paying old debt. For example, if you start making payments, the statute of limitations could restart and leave you at risk of lawsuits and legal collection activity much longer.

2. Consider Credit Repair Services

One result of digging through credit reports and chasing down old debt can be finding errors or collections you don’t actually owe. If you find inaccurate information on your credit reports, you might consider working with a credit repair service.

Credit repair services work on your behalf to dispute inaccurate information with the credit bureaus. You can actually do credit repair yourself, but if you don’t have time or just know you aren’t going to follow up, you might get more value by paying professionals to handle it for you.

3. Keep Up with Credit Reports and Debts in the Future

Finally, once you do the work to find your debt and clean it up, keep up with your credit reports in the future. While every single debt may not appear on your credit report—or appear right away—staying on top of your credit report ensures you’re aware of most of them. ExtraCredit gives you the access to your accounts that you need to keep track of your debts and your credit score.

Bonus Tip: Once you’ve found all your debts, use a debt management app like Tally to keep track of them moving forward so you’ll never have to wonder about them again.

TL;DR: ExtraCredit Could Help You Identify and Manage Your Debts

If you’ve lost track of your debts and what you owe to who, it can take some work and time to track everything down. But once you do, stay ahead of these things with help from ExtraCredit.


Source: credit.com

Years of Work Needed to Afford a Down Payment – 2021 Edition

Years of Work Needed to Afford a Down Payment – 2021 Edition – SmartAsset

Tap on the profile icon to edit
your financial details.

Assembling enough money for a down payment is typically the largest hurdle to clear when securing a mortgage. The median home price in the U.S. is up 14% year-over-year, according to a November 2020 Redfin report, and as the housing market gets more expensive, so too will the deposit that you have to front for a home. Working with professional financial advisors can help you strategize so that your money’s doing the most for you, but in some places compared to others, scraping together that bundle of cash can be particularly daunting. Keeping all this in mind, SmartAsset investigated where it takes longest to save for a down payment.

To do this, we examined data on the 50 largest U.S. cities, using median home values, median income figures and assuming that workers would save 20% of their income each year. We calculated the years needed to save for both the recommended 20% down payment as well a 12% down payment (the median down payment among all homebuyers in 2019, according to the National Association of Realtors). For details on our data sources and how we put all the information together to create our final rankings, check out the Data and Methodology section below.

This is SmartAsset’s fifth look at how many years of work it takes to afford a down payment. You can read the 2020 edition here.

Key Findings

  • Oakland takes over in the Bay. In the last three editions of this study, San Francisco homeowners have always needed to work longer than Oakland homeowners to afford a down payment. This year, however, Oakland has surpassed San Francisco and moved to the No. 2 spot, bumping the Golden Gate City to No. 3. San Francisco real estate is still pricier – with a median home value of more than $1.2 million – but the differences in average income make Oakland second only to Los Angeles on our list.
  • It still takes less time in Midwestern and Southern cities to assemble funds for a down payment. Residents in the East Coast and West Coast cities that comprise our top 10 will need more than three times longer to save up for a down payment than residents in the Midwestern and Southern cities that comprise the bottom 10. To save up for a 20% down payment, those in the top 10 will need to work an average of 8.90 years, compared to only 2.83 years in the bottom 10. For a 12% down payment, it will take 5.34 years for residents in the top 10 cities to reach their home buying goals, while it will take 1.70 years for residents in the bottom 10 to do so.

1. Los Angeles, CA

It will take residents in Los Angeles, California the longest to save for a down payment. The median home value is $697,200, which means that they will need to save $139,440 for a 20% down payment. If a person earns the median household income of $67,418 and saves 20% of that each year, then he or she will need to work 10.34 years to have enough money to afford a down payment.

2. Oakland, CA

In Oakland, California where the median home costs $807,600, a 20% down payment equals $161,520. The median household income here is $82,018, so a person saving 20% annually will need to work for 9.85 years to afford a down payment. For comparison, saving up a 12% down payment of $96,912 will require 5.91 years, but this means having to pay significantly higher mortgage payments.

3. San Francisco, CA

The median home value in San Francisco, California is $1,217,500 – the only city in our study with a seven-figure price tag. A 20% down payment on that median value would cost $243,500. With a median household income of $123,859, the average person saving 20% annually could afford a down payment in 9.83 years.

4. New York, NY

In the Big Apple, homeowners will need 9.81 years to make a 20% down payment on a home. The median home value is $680,800, which means a 20% down payment is $136,160. And for a comparison, a New Yorker saving 20% annually at a median household income of $69,407 will need 5.89 years to save for a 12% down payment of $81,696.

5. Long Beach, CA

Long Beach, California has a median home value of $614,400. To buy the median house with a 20% down payment, the average resident will need $122,880. If you earn the median income of $67,804 and save 20% of your income each year, then you will be able to afford a down payment in 9.06 years.

6. San Jose, CA

San Jose, California is in the heart of Silicon Valley, and as you might expect, the median home value is fairly high – at $999,990. A 20% payment on that home value is $199,980. The median household income in the city is $115,893, so if a resident saves 20% of his or her income each year, then the person could afford a down payment in 8.63 years.

7. Miami, FL

Miami, Florida is the only Southeastern city in the top 10 of our study. The median home value is $358,500, which means that a 20% down payment costs $71,700. The median income in Miami, however, is $42,966. So a resident saving 20% of that median household income ($8,593) each year could afford a 20% down payment in 8.34 years.

8. Boston, MA

It takes someone saving 20% of the median household income in Boston, Massachusetts 7.93 years of work to afford a 20% down payment on a home. The median home value is $627,000, with a 20% down payment coming to $125,400. The median household income in Boston is $79,018.

9. San Diego, CA

The median home value in San Diego, California is $658,400, which means that a 20% down payment is $131,680. Someone earning the median household income of $85,507 will need 7.70 years to afford that down payment. For comparison, a 12% down payment of $79,008 takes 4.62 years to save up for, with the caveat that paying a smaller down payment now means larger mortgage payments later.

10. Seattle, WA

Seattle, Washington rounds out the top 10 on our list, with a median home value of $767,000. This means that a 20% down payment is $153,400. So if you earn the median household income of $102,486, then it will take you 7.48 years – saving 20% of your income each year – to afford that payment.

Data and Methodology

To rank the cities where the average household would need to save the longest to afford a down payment, we analyzed data on the 50 largest U.S. cities. We specifically considered two pieces of data:

  • 2019 median home value.
  • 2019 median household income.

Data for both factors comes from the Census Bureau’s 2019 1-year American Community Survey.

We started by determining the annual savings for households by assuming they would save 20% of the median annual pre-tax income. Next, we determined how much a 20% down payment as well as a 12% down payment for the median home in each city would cost. Then, we divided each of the estimated down payments in each city by the estimated annual savings. The result was the estimated number of years of saving needed to afford each down payment, assuming zero savings to begin with. Finally, we created our final ranking by ordering the cities from the greatest number of years needed to the least number of years needed for each.

Tips for Hassle-Free Home Buying

  • Consider investing in expert advice. If you’re thinking of buying a home or starting to save, consider working with a financial advisor before you take the plunge. Finding the right financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors, get started now.
  • Prevent potential mortgage mishaps. The payments don’t stop after you’ve put money down; you’ll also need to make mortgage payments. Figure out what those might be before you move forward by using SmartAsset’s mortgage calculator.
  • It pays to read the fine print. When thinking about your home buying transaction, don’t forget closing costs. These may seem small compared to the down payment, but every dollar counts.

Questions about our study? Contact press@smartasset.com. 

Photo credit: ©iStock.com/valentinrussanov

Ben Geier, CEPF® Ben Geier is an experienced financial writer currently serving as a retirement and investing expert at SmartAsset. His work has appeared on Fortune, Mic.com and CNNMoney. Ben is a graduate of Northwestern University and a part-time student at the City University of New York Graduate Center. He is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance (CEPF®). When he isn’t helping people understand their finances, Ben likes watching hockey, listening to music and experimenting in the kitchen. Originally from Alexandria, VA, he now lives in Brooklyn with his wife.
Read next article

About Our Home Buying Expert

Have a question? Ask our Home Buying expert.

smartasset.com

A Casa for Your Cryptocurrency? 11 Homes You Can Buy With Bitcoin

Bitcoin is back! Not that it ever really left, but these days, the cryptocurrency with the ballooning value has become a tad more mainstream.

Tesla recently announced that it will soon be accepting bitcoin as payment for its electric vehicles.

And there’s no better place to park your bitcoin-bought Tesla than in front of a home that you purchased with virtual currency.

With bitcoin on the brain, we spotted 11 listings across the country that declare they’re ready to accept cryptocurrency for full or partial payment.

Of course, you might be able to purchase any home for sale with the internet-based payment system. A buyer could always inquire whether a seller is hip to the cryptocurrency. However, in the case of the listings below, you can rest assured that a digital payment will be welcome.

As a refresher, Bitcoin is an online monetary system independent of governments or banks, meaning that transactions are more direct. Each payment is documented and verified through blockchain—an online, shared database.

The upside? Transactions are more direct and can be completed in minutes or days, rather than the traditional closing period of weeks or months. A downside? Capital gains tax can apply. And, of course, with the wild oscillations of the crypto market, the currency is still a risky bet.

But if you happen to have a few coins burning a hole in your (online) wallet, here’s a look at how you could spend them. (Spoiler alert: Hope you like Florida.)

To give a sense of how much online coin you’d be parting with, we included a dollar-to-bitcoin currency conversion, calculated on Feb. 11, 2021. Prices range from the affordable to the aspirational, from cute condos to a massive Manhattan mansion. Take a look.

Price: $3,695,000, or 78.72 bitcoin
Property perks: Located atop the luxurious Trump Royale tower, this two-story, 4,300 square-foot dwelling offers panoramic views of the ocean, downtown Miami, and the Intracoastal Waterway.

The combined two-unit abode includes top-of-the-line finishes by the designer Roberto Cavalli, a German-designed kitchen, a private, pneumatic glass elevator, and oceanside and cityside terraces.

Amenities for residents include beach and pool services, restaurants, a beachside bar, gym, and tennis courts. Meanwhile, a gated entry and 24-hour security allow for peace of mind.

Sunny Isles Beach, FL
Sunny Isles Beach, FL

realtor.com

———

Price: $29.9 million, (or for digital currency equivalent to 1.5 times the offered price in U.S. dollars) 955.52 bitcoin
Property perks: Plunk down some serious coin for this majestic Beaux Arts abode. The tallest townhouse on the block, the residence from 1904 features 12,380 square feet of interior space, plus an additional 2,500 square feet of exterior space.

The spacious, 22-foot wide structure features 13-feet-high ceilings, seven bedrooms, and 9.5 bathrooms. A solid bronze marble entrance leads to a marble reception gallery and staircase connecting the space to the upper floors.

The townhome features 12 working fireplaces, and a separate penthouse on the fifth and sixth floors.

Manhattan townhouse
Manhattan townhouse

realtor.com

———

Price: $2.8 million or 59 bitcoin
Property perks: Located on Nob Hill, the “sensationally” remodeled four-bedroom, loftlike residence features soaring 12-foot beamed and coffered ceilings.

Luxuriate in views of the San Francisco Bay and the downtown skyline, as well as wide-open entertaining and living spaces. The master bedroom boasts a view of the iconic Transamerica Pyramid.

A renovation five years ago reimagined the 1920s-era design and updated it for a contemporary lifestyle.

San Francisco, CA
San Francisco, CA

realtor.com

———

Price: $1,488,000 or 31.36 bitcoin
Property perks: The property brought in a whopping $160,000 worth of rental income in 2020. The listing details note that the home offers an ideal vacation escape and plenty of rental income when it’s not in use by the owners.

The three-bedroom beachfront home includes a pool and outdoor entertainment area with a picnic table, sink, and fridge—and the house comes furnished. It’s just a block from downtown St. George Island shops and restaurants.

Apparently, someone has been sold on it, since it looks as if a sale is pending, after a little more than two weeks on the market.

St. George Island, FL
St. George Island, FL

realtor.com

———

Price: $579,000 or 12.17 bitcoin
Property perks: Enjoy the peaceful serenity of 20 acres in this home, built in 2016.

The two-story, five-bedroom abode is spread over three levels.The open-concept main level includes a living room with cathedral ceilings and a stone fireplace, a gourmet kitchen with an island, a formal dining room, and two offices.

The walkout lower level comes with a wet bar and bathroom. Along with a deck and backyard, the property includes ATV trails and flat areas for a pavilion or fire pit.

Port Crane, NY
Port Crane, NY

realtor.com

———

Price: $898,000, or 18.80 bitcoin
Property perks: Located in the exclusive Excelsior Tower of The Americana at Brand, this two-bedroom condo is perched above shops and restaurants.

With 1,335 square feet, the layout includes a designer kitchen with high-end appliances, Caesarstone countertops, and a custom tile backsplash.

The living and dining area includes hardwood flooring and glass doors that open to a private balcony. Bathrooms boast marble counters, and the bedrooms come with wool carpet. Building perks include two parking spots, concierge service, and a takeout and grocery-delivery service.

Glendale, CA
Glendale, CA

realtor.com

———

Price: $335,000, or 7 bitcoin
Property perks: This completely remodeled one-bedroom condo features skyline and water vistas. Take in the views from the private balcony off the living and dining area, which features an open kitchen and contemporary design.

The building offers a gym, tennis court, and parking space. Located in the Brickell neighborhood, this place is close to restaurants, shops, parks, and the beach.

Miami, FL
Miami, FL

realtor.com

———

Price: $2,870,000, or 59.99 bitcoin
Property perks: This spacious “home in the sky” comes with private elevators and unobstructed water and city views.

The light-filled four-bedroom unit comes with tile floors, and a gourmet kitchen with stainless-steel Sub-Zero fridge and Miele appliances.

A formal dining room and living room both open to the balcony. The master bedroom has glass doors and balcony access, an en suite bathroom, and a walk-in closet. Three balconies offer plenty of choices for basking in the sun.

Miami, FL
Miami, FL

realtor.com

———

Price: $1,119,000, or 23.42 bitcoin
Property perks: Located just outside town and about 15 minutes to Sundance, this 13-acre property includes a five-bedroom main house with room enough to add another dwelling.

The 4,705-square-foot custom home has a formal dining and living area, plus a separate, eat-in kitchen. The family room has a fireplace and easy access to the outdoors.

A master bedroom includes a sitting area plus a balcony. For folks looking to farm more than cryptocurrency, the grounds include a barn and two livestock corrals.

Wallsburg, UT
Wallsburg, UT

realtor.com

———

Price: $608,000, or 12.73 bitcoin
Property perks: Built in 2005, this golf-course home has been “meticulously maintained.” The layout of the four-bedroom residence includes a formal dining room and redone island kitchen, with top-of-the-line appliances.

Upstairs, the oversized master suite has two walk-in closets and a balcony with golf course views. Along with front and rear porches, the property comes with an oversized, two-car garage.

The large lot has a big backyard with a fire pit and swim spa. After a price drop last month, the charming abode may have found a buyer.

Fort Myers, FL
Fort Myers, FL

realtor.com

———

Price: $377,600, or 7.81 bitcoin
Property perks: Move right in to this fully remodeled corner-unit condo, with water views. The two-bedroom space features a wide open, state-of-the-art kitchen with new appliances and stone countertops.

The living and dining areas open to a patio, and the ceilings feature LED lighting in every room. Building amenities include two pools with daytime cabanas, tennis courts, a putting green, and a gym.

Aventura, FL
Aventura, FL

realtor.com

Source: realtor.com

What Is Title Insurance, and How Much Does Title Insurance Cost?

Buying a home often entails also buying various types of insurance to protect your property, and one type you might need to get is called title insurance.

When you buy a home, you “take title” to it and establish legal ownership. A title insurance policy protects you against the possibility that someone else might have a claim on your home. In essence, it ensures that a homeowner and their lender will be okay in the event that the seller or previous owners didn’t have absolute ownership of the house. (It sounds crazy, but sometimes it turns out that the homeowner is not the only one with rights to a home!)

If you need a mortgage to buy real estate, your lender will likely require you to buy a title policy from a title insurance company. Although it’s a cost home buyers incur, getting a title policy from a title insurance company is critical to establishing peace of mind.

Let’s examine the ins and outs of title insurance, why home buyers need it, how much you can expect to pay, and how you can save on a title insurance policy.

What is title insurance?

Holding a title insurance policy means you and your mortgage lender are protected against any financial loss or title issues due to liens, disputes between prior owners over wills, clerical problems in courthouse documents, or fraudulent claims against the property or forged signatures.

A title search will be performed by your title or settlement company to uncover any issues with your title that could give you legal troubles down the line.

The title company then insures your claim to the property’s title. If anything is missed during the search or there are lawsuits questioning your legal ownership of the property after closing, your title insurance policy will cover the costs of resolving the problem.

Why a title search is required with a mortgage

When getting a mortgage to buy real estate, you’ll find that most lenders will typically require that you get a title search before you close the deal with your escrow company. Basically this would mean you’ll have to hire a title company to search local records on your property. Some of the issues they’re looking for include the following:

  • Disputes between prior owners over wills: If your property was inherited and then sold by the heirs, there could be other heirs contesting the will and claiming ownership of your property.
  • Liens for unpaid property taxes.
  • Liens for contractors who worked on the home but were never paid.
  • Clerical problems in courthouse documents: Believe it or not, a simple typo can lead to title claim problems.
  • Fraudulent claims against the property or forged signatures: For example, if a group of heirs can’t get a holdout to agree to sell the home, it’s possible that someone will forge a signature on a quit claim deed.

While most homeowners will never need to use their title insurance, its existence offers protection against a potentially aggravating—and very expensive—financial loss.

Lender’s title insurance vs. owner’s title insurance

There are two types of title insurance: lender’s and owner’s. Almost every lender will require you to pay for a lender’s title insurance policy. This protects the lender—not you—from incurring any costs if a title dispute pops up after closing.

Owner’s title insurance is usually optional, but it’s highly recommended. Without it, you’ll be left footing the bill for all the costs of resolving a title claim, which could be thousands or even hundreds of thousands of dollars. Even though it can feel like you’re hemorrhaging cash when you’re closing on a house, a title insurance policy is one of those things that can save you money in the long run.

“When you consider the benefits of title insurance and some of the unique aspects of title insurance relative to other kinds of insurance, it is clear why it’s risky and ill-advised to purchase real estate without a title insurance policy,” says Brian Tormey of TitleVest in New York City.

You can purchase basic or enhanced owner’s title insurance, with the enhanced insurance policy offering more coverage for things like mechanic’s liens or boundary disputes.

While your title insurance covers you for things such as mistakes in the legal description of your property or human error, be aware that it will have some exclusions—particularly in cases where violations of building codes occur after you bought your home.

How much does title insurance cost?

The average cost of title insurance is around $1,000 per policy, but that amount varies widely from state to state and depends on the price of your home.

Title insurance premiums can vary from a couple of hundred dollars to a couple of thousand dollars. Some factors that can affect the cost of your premium include the title search, examination, and expected cost of any title defects.

“In general, each policy price is based on the purchase amount of the home or the total amount of the loan,” explains Tormey. “Title insurance is a highly regulated industry, so title insurance policy types and costs will vary from state to state. Each state’s Department of Insurance can provide information on the pricing regulations in their state.”

In some states such as Texas and Florida, title insurance premiums are fixed by the government, so you will pay exactly the same amount no matter what. Other states such as California and New Mexico have unfixed premiums, which means that buyers can shop around. Iowa actually underwrites the insurance itself, resulting in the lowest premiums in the country: $110 for properties costing up to $500,000.

Unlike other types of insurance, a title insurance policy is paid with a single premium during escrow while closing for your mortgage. If you’re buying a real estate resale or refinancing, you may be eligible for a “reissue” rate, which could offer a substantial discount off the regular premium—because the title policy is already in effect, and the title research has already been completed.

Here’s a calculator that can help you figure out the cost for your area and purchase price.

How to save on title insurance

In some states, title insurance premiums are the same no matter who you work with, but in the majority of states, you can save money by shopping around. Even in states with highly regulated title insurance industries, there are ways to save. Here are some ways to lower your title insurance costs.

  • Shop around. If premiums are unregulated in your state, find the company that offers the best deals. Just make sure you’re not sacrificing customer service to save a few dollars: Resolving a title issue can be stressful, and you want a company that will help you through the process. Read reviews and talk to your real estate agent for recommendations.
  • Bundle. Some companies will offer a discount if you bundle your lender’s and owner’s policies.
  • Negotiate add-ons. Even if the premium itself is fixed, there are almost always other fees built into your total premium price. See if there is any wiggle room with those items. They may be optional, or the insurance company might be open to discounting them.
  • Negotiate with the seller. Closing costs are always open to negotiation, and picking up the tab for the title insurance might be worth it to a seller who’s highly motivated to close the deal. But be wary of using this tactic in a competitive market.

Michele Lerner contributed to this article.

Source: realtor.com

Rent-to-Own Real Estate: The Benefits and Risks for Home Buyers

Rent-to-own real estate may sound like a dream come true. Under the best circumstances, everyone benefits: Sellers collect rent and have a purchase commitment from the buyers, and the buyers can move in right away.

In addition, credit score problems or other financial issues that could hamper a buyer’s ability to get a mortgage matter much less in a rent-to-own agreement than when you’re buying a house right out.

Either way, though, buying a home is still a major financial commitment. While rent-to-own real estate contracts may not be traditional, they’re not necessarily always less complicated than negotiating on a purchase price and getting a loan.

You may not need to come up with a big down payment or have the best credit score to enter into a rent-to-own agreement, but still, this type of contract isn’t always easy to manage.

The key to a smooth transaction is ensuring that you understand the entire process. Here’s what you need to know about rent-to-own homes, as well as the risks involved for buyers.

Why choose a rent-to-own agreement?

Ordinarily, sellers don’t like being landlords. They prefer to get their money in one lump sum and avoid dealing with tenants.

Rent-to-own homes are more common when there is a downturn in the real estate market and numerous homes on the market are vacant. Under a rent-to-own plan, the seller can lock in a price before the market drops further.

But it can be a great choice for tenants, too. While leasing can be a great option, you might be tired of looking for homes to rent. In fact, maybe you’re finally ready to buy that forever home.

However, the high recent purchase price on homes in your area may seem daunting, and you might know that you can’t afford a hefty down payment. This is when a rent-to-own contract might work for you.

Terms of rent-to-own real estate

Always read your contract closely and be sure you can handle the terms. The rent-to-own real estate contract should include the home price, the cost of rent, and the deadline that establishes when you should exercise your option to buy.

It should specify what portion of the rent payment is credited toward the home purchase—or if you need to write two checks each month, for the rent and for the home payment—and under what circumstances the contract can be voided.

You should make certain that there is no language allowing the landlord to evict you for a minor infraction after you have made a substantial financial investment.

It’s worth the expense to have an experienced real estate attorney look at your lease-option contract to make sure you are protected.

When the agreed-upon lease option expires, the tenants will get the chance to buy the house.

Most of the money the tenants have invested in the house is going towards the purchase price, so if they are able to qualify for a home loan, they can be in a good place to buy the house.

If, however, they aren’t able to swing a home loan, and can’t afford the house, they could be out more money than they would be if they had simply been renting during the period.

Renting to own may at first seem like a lease agreement with a pot of gold at the end.

However, if you’re not careful, the deal could go south, and you could end up in big financial trouble. Don’t let your excitement over becoming a homeowner keep you from doing your homework.

Rent-to-own home fees

There are extra fees when it comes to rent-to-own properties, including an option fee and maintenance fees.

The option fee is likely to cost between 1% and 5% of the purchase price. Tenants also can expect their rent to total slightly more than the market rate during the lease.

Usually, all or part of the option fee will be set aside as a down payment. While the home is being rented, the landlord retains ownership but often requires the tenant to assume responsibility for maintenance.

Remember that maintenance on a house can be expensive, so consider carefully what state the house is in before agreeing to a rent-to-own property.

Know the risks of rent-to-own real estate

Buyers can get plenty of benefits out of rent-to-own agreements—but not without some big potential roadblocks.

In many cases, buyers are counting on being able to rebuild their damaged credit rating while living in the rent-to-own home and paying above-market rent.

To benefit, they must be able to get their finances in order and qualify for a home loan before their lease option expires.

Should the market drop significantly, the buyers/renters may end up owing a lot more on a house than it’s worth. It will also be harder to move out should their lifestyle change.

Leasing with an option to buy can be a good financial tool if you know what you’re doing. You could make plans for buying a house without needing to qualify for a home loan or ponying up a hefty down payment.

Make sure that before you go the rent-to-own real estate route, you talk to a lender or mortgage broker to make sure that you will be able to qualify for a loan.

Updated from an earlier version by Emmet Pierce

Source: realtor.com