Don’t drive yourself away from a successful transaction…

How a Car Loan Can Put the Brakes on Chances for a Mortgage

car and  house made of dollars
ShutterstockLate auto loan payments can wreck a credit score, which can then ditch your chances of getting a mortgage.

The next time you’re in the market for a car, nowhere will you ever see a disclosure or a word of caution from the salesman about how financing that car could hurt your future chances for buying a house. Unfortunately, auto loans will affect your ability to purchase a house no matter how big or small the loan is. Lenders account for all liability payments the same. It’s not what you owe, but what you pay that counts.

So you could have a car loan for $30,000 and your balance has no bearing on your ability to close on a house; rather, it’s the payment associated with that balance that changes the game. This is key, especially if you proactively prepay your auto loan in an effort to pay off the debt faster. If

Whether or not you buy a car first depends on how far away you are from closing escrow on a house.

you choose to pay more, that’s your prerogative, but for the purposes of qualifying for a mortgage, the minimum payments are king.

As for whether you lease or finance the car, it’s all the same. Let’s say you have a car payment for $500 per month and you have two more years left on your lease. That would be the same as if you had a personal car loan for $500 per month with a longer-term obligation. The same reasoning applies to both: The minimum payment is what lenders will use to calculate how the liability will affect your ability to purchase a home.

How Auto Loans Affect Your Credit Score: Having a clean auto loan payment history will do wonders for your credit score, and a favorable credit rating will actually help you qualify for a mortgage. Conversely, late auto loan payments can destroy a credit score, which can kill your chances of getting a mortgage.

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How to buy like a pro…

Rookie Mistakes: Learn From First-Time Home Buyers’ Biggest Regrets

 Emily Heffter | Zillow | June 5, 2014 | link

Virginia real estate agent Bic DeCaro has a psychology degree that comes in handy when she’s showing homes, especially to first-time buyers. They get emotional. They fall in love. They get caught up in bidding wars they can’t afford.

a 35 years old man taking his head with his hand, his face expresses failureThey make mistakes.

“The big thing is buying for the moment and not looking down the road,” she said.

That sums up the regrets of many first-time home buyers Zillow surveyed after their boxes were unpacked and their infatuation had faded. Almost half of them said they would do things differently if they had it to do over.

Here are their biggest regrets.

Size and layout

Of buyers with regrets, 62 percent said they wish their homes were bigger or laid out differently. They wish they had bigger kitchens, more storage space or just more space in general.

“Almost always, they outgrow it faster than they think,” DeCaro said.

Bobby Harding, a Keller Williams agent in Louisville, says first-time buyers think too much about square footage and not enough about the floor plan.

“Everybody wants 1,400 square feet, 2 bath, 2 beds … They’re thinking about Mom and Dad’s house, a segmented house,” he said.

Sometimes, they just need to consider something more modern.

The cost

In the Zillow survey, 40 percent of first-time buyers with regrets said they either paid too much or should have put more money down on their new homes.

More than a third (38 percent) said they were surprised by how much it costs to maintain their new homes, and 20 percent were surprised by the cost of closing.

Of their lessons learned about costs, 20 percent wish they had negotiated more on price, and 14 percent wish they had shopped around more for a mortgage.

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And the #1 reason people move is…

No. 1 reason people move

Hint: It’s housing related

From 2012 to 2013, 36 million people who are one year and older moved, but why?

School. Work. Friends. Family. All of these are valid options, but the U.S. Census Bureau released a report putting real numbers and reasons behind the question.

The number one reason cited: housing.

Family, which made up 30.3%, employment, 19.4%, and other, 2.3%, closely followed behind housing, which made up 48%.

“We asked people to select the reason that contributed most to their decision to move. Picking one reason can be difficult as moves are often motivated by many different, and oftentimes competing, factors,” said the report’s author, David Ihrke, a demographer in the Census Bureau’s Journey to Work and Migration Statistics Branch.

“For instance, if one’s primary reason for moving is to be closer to work or having an easier commute, they may have to sacrifice other preferences. This could include forgoing cheaper housing options or settling for a different neighborhood. If they mainly want cheaper housing, they may have to deal with a longer commute.”

Key findings in the report include that males were more inclined to move for job-related reasons than females.

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What’s the WORST thing you can do before you try to sell your home?

Worst Decorating Mistakes

I recently wrote an article for Houzz in which I acknowledged the dumbest decorating decisions I’d ever made. More than 300 of you responded with your own tales of woe. Most of them fell into four categories:

1. Painting anything yellow.
2. Furniture that wouldn’t fit through doorways.
3. Leaving town while someone worked on your home.
4. Painting anything yellow.

Because it can take a while to read 300 comments, I collected some of the most memorable tales from fellow Houzzers to share with you. Schadenfreude alert: Some of the following stories may cause involuntary laughter. Don’t resist.

Note: Photos are for illustration purposes only and do not portray the actual disasters described.

Color Trouble
Once my color-blind husband picked the color to paint our traditional home. He said it was tan. I came home to a lavender house.

I love the color purple, so I wanted one room in purple. Well, it looks like Barney puked all over the walls.

When building our first house I painted the whole house what seemed to be gray with a purple undertone. My first mistake was in not understanding how tough it is to get gray right. My second mistake was not getting a test pot and trying it out in the space. My third mistake was being out of town when the painters did the job. “Slight purple undertone” was Barney purple. My entire home. Needless to say, my husband was less than pleased having to repaint it. All I can say is test pots, test pots, test pots.

I painted a two-story Florida room a Pepto-Bismol pink called “Rose.” Then paid the painters to come back and repaint the room Bennington Grey. Only my husband was so mad at me he only let them paint one coat! The results actually turned out interesting – a mauve that shifts around in color from morning to evening. I can’t tell you how many people have asked me the paint color. (“Well, it’s complicated …”)

A few days prior to a huge Thanksgiving gathering I noticed how dingy our living/dining room looked and decided to paint it a cheerful and bright color. Went and picked out something called “English Rose.” When I tested it on a small area of the wall, it looked quite nice, so I painted the whole room. Once finished, I stepped back to look. To my horror, my “English Rose” room looked as if it had been painted in Pepto-Bismol – not the look I wanted just prior to Thanksgiving … or anytime, actually!

comfy by design
When I was in design school I decided to paint my kitchen yellow. “Wow” is all I can say. I felt like I had been swallowed by Big Bird!

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Vacation Homes 101: How to Avoid Risk

Vacation Homes: Their Risks, and How to Insure Against Them

deck chairs at the beach
ShutterstockQualities that make a location perfect for your dream home unfortunately might also make it an insurance nightmare

A vacation home should be a paradise — a safe haven from the bustle and stress of everyday life. For those who rent out their properties for parts of the year, vacation homes also can be an additional source of income. But protecting those assets from natural and manmade disasters takes work and money. The smart vacation homeowner makes sure the second home doesn’t generate more stress than it relieves. The right insurance coverage can go a long way toward putting an owner’s mind at ease.

Standard homeowners policies won’t do it all: You may think the homeowners insurance policy on your primary residence fully protects you and your possessions. Many standard policies do include some coverage for personal property at an additional residence, but protection for a second home typically

One way to circumvent the risks of leaving your vacation home vacant is to rent it to tenants while you’re away. But don’t assume you’ll just pocket easy money when you do.

doesn’t go any further than that unless you’ve purchased a second policy.

If you took out a mortgage on your vacation home, your lender likely required you to buy a separate home insurance policy. However, vacation homes come with unique risks, so standard coverage may not include all the protection you really need.

Some insurance carriers offer coverage options specifically designed for vacation homes. For others, you’ll have to navigate the fine print yourself. Here are a few of the biggest risks and potential coverage gaps for vacation homeowners, as well as suggestions on how to overcome them.

Location, location location: Unfortunately, the qualities that make a location perfect for your dream home are often the same qualities that make it an insurance nightmare. Consider an oceanfront property, for example. In addition to being susceptible to hurricanes — wind and hail damage account for nearly half of all homeowners insurance claims per year, according to the Insurance Information Institute, or III — they also frequently experience flooding, which is not covered under most standard policies.

Mountain homes have a problem, too; standard policies typically exclude all forms of earth movement, including landslides.

Vacancies leave you vulnerable: If your vacation home is not your primary residence, it’s probably safe to assume it will sit unoccupied for several weeks or months every year. In terms of risk, consider the possibility of a small electrical fire or a leaky pipe in an empty house. Both could escape notice until they become serious threats. Additionally, burglars and trespassers are more likely to target homes that appear unoccupied.

Considering the average costs per claim for these three hazards combined (fire, water damage and theft) totaled more than $44,929 in 2013 (according to the III), it’s certainly worth it to take a few easy precautions to ensure you won’t face these costs on your own.

First, make sure your policy’s coverage limits line up with your home’s current replacement cost. Then see that your electrical and plumbing systems are up to date and in good shape. It’s not a bad idea to hire a professional for a thorough inspection.

Leasing liabilities: One way to circumvent the risks of leaving your vacation home vacant is to rent it to tenants while you’re away. But don’t assume you’ll just pocket easy money when you do. Neglecting to take proper precautions as a landlord also could end up costing you in the long run.

Consider this: If one careless tenant leaves the stove on, damages your belongings or is injured while on your property, you could face the entire cost of cleanup, hospital bills and even lawsuit expenses – a tab that could easily top $30,000[1] — on your own.

Homeowners insurance might cover you if you only occasionally rent out your home for short periods of time. However, it’s still a good idea to cover all your bases with background checks and lease agreements. You also should consider investing in an umbrella policy to help protect yourself against the extra liabilities of having tenants.

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20% down still the best option for buyers…

Putting a Down Payment on a Home? Seek the 20% Solution

home and stacks of money...
ShutterstockA 20 percent down payment on a home can save you a sizable amount on monthly loan payments as well as interest.

Buying a home? If you are, one of the very first questions you’ll need to answer is, “how much of a down payment should I make?” The answer: ideally, 20 percent. Granted, it’s not easy to save 20 percent of the home’s sale price for a down payment, but the benefits can be huge. For starters, you’ll avoid paying private mortgage insurance (PMI), and your monthly mortgage payments will be lower.

“Saving for a down payment remains the No. 1 obstacle to homeownership for many Americans,” said Erin Lantz, vice president of mortgages at Zillow. “To qualify for a conventional mortgage, you need to have a down payment of at least 5 percent of the purchase price. However, putting less than 20 percent down can have significant financial implications. Not only could a 20 percent down payment save you hundreds of dollars on your monthly payment, but you’ll build equity in the house more quickly and save a considerable amount of money on interest.”

Learn more about the benefits of a 20 percent down payment below.

CORRECTION, 6/4/14: An earlier version of this graphic listed an incorrect amount for savings over the lifetime of the loan. The figure has been adjusted below.


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Luxes most wanted!

10 Must-Have Items That Luxury Home Buyers Want Most

Shelly Little | | May 30, 2014 | link

The epitome of a luxurious home is not just a well-appointed home. Rather, a luxurious home is one whose amenities allow for the owner to feel lavished upon or spoiled. Think royalty; Think opulence; Think extreme extravagance.

The word luxury brings to mind plenty of conveniences such as, pools, saunas, in-home gyms, backyard tennis courts, game rooms, and fully-stocked kitchens ̶ but what are the items that luxury home buyers want the most?  What is a luxury homebuyer looking for when shopping for their new abode?

Here are 10 ideas listed in order of popularity that we think may intrigue even the wealthiest of home shoppers (or if you’re not among the jet-set, then here are 10 lavish home ideas that you can attempt to replicate on a much lower scale and less affluent budget).

1.  A Home Where Character Counts – Open Floor Plans Triumph

A home is not luxurious unless it has a grand entryway with a large two-story staircase and an expansive, airy open floor plan.  In fact, an open floor plan is the number one criteria cited in a 2013  luxury home survey done by Coldwell Banker .

grand entryway 10 Must Have Items That Luxury Home Buyers Want Most

2.  Technology

We cannot shy away from the ever-increasing swarm of technological innovations. Today’s homeowners want it all when it comes to technology, and the builders that cater to this tech-trend are the ones who stay at the top of the real estate market.

Literally, with a touch of a button on your iPhone you can now lock your doors, control your homes climate, control lights and control your alarm system ̶ all from the other side of the country! These are the built-in features that today’s luxury homebuyers are looking for.

Builders who install these wireless home automation devices are spot-on with the trends that luxury homebuyers want. On the opposite end of the technology spectrum is a growing trend for reclaimed materials. Homeowners are increasingly becoming aware of their environmental imprint and are looking for homes that use old reclaimed materials such as wood beams, wood flooring and doors.

smart home 10 Must Have Items That Luxury Home Buyers Want Most

3.  Fully-Stocked Kitchen with Warming Draws and Wine Cellar

Ah the kitchen, the heart of the home. Opulent living requires a magnificent kitchen. Forbes Magazine cites that an appliance-lined, commercial-grade kitchen is a necessity when it comes to a million dollar home.  An affluent kitchen will always contain warming draws, wine fridges, restaurant quality appliances, and plenty of storage via a walk-in pantry.

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Does your front door welcome buyers?

Curb Appeal Starts at Your Front Door

There are lots of things you can do to add a bit of curb appeal to your home (learn lots of our favorite tricks in our Ultimate Guide to Curb Appeal!), but you’ll find that one of the simplest and most impactful changes you can make is with a touch of color.

Jenni Radosevich, author of I Spy DIY, spotted this vivid gate and loved the unexpected pop of color. The sunny shade and bold contrasting rectangle design make this front gate way less forbidding than one constructed of wrought iron, and way more fun than the traditional white picket models. Plus, the colorfully painted gate spruces up the simple stucco exterior of the home without the owners having to spend a lot of money (read: it’s less expensive than adding plants and trees).


Here’s how to really make an entrance by painting your wooden front gate an unexpected color:

1. Remove the gate from the hinges, take off existing hardware, and clean the surface with warm soapy water. Let dry completely.

2. Repair any cracks or gashes in the gate using a quick-drying wood filler, let dry, then sand so the surface is smooth. Use an old paint brush or tack cloth to remove the dust from sanding.

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Investors beware – how to protect your credit score…

Investment That Can Ruin Your Chance for a Mortgage

Scott Sheldon | | May 30, 2014 | link

debt concept   in the red   a...
ShutterstockIf there is a history of losses on rental property that you own, those can limit your borrowing power.

Do you own a rental property? If yes, and you’re looking to get a new mortgage, your gain or loss identified by your tax returns may help or hinder your chances.

Lenders can use up to 75 percent of the rent generated on your rental property as income to help you qualify for a mortgage. However, if there is a history of rental losses, those losses may limit your borrowing power. Here’s what you should pay attention to if you have a mortgaged rental

Own more than four financed properties? Some lenders may not be willing to lend to you, and others may charge a pricing premium.

property and want to buy another home.

Know Your Schedule E: The schedule E of your Form 1040 is the area of your personal income tax return where you report rental property. If, at the end of the calendar year, you have a net loss on your property for your tax return, you could face a tough time qualifying for a mortgage because the loss is counted as a liability, much like a minimum payment is on a car loan, credit card or other consumer debt.

Lenders will usually average a two-year history for each rental property owned. An averaged gain or loss from the Schedule E will determine if you cut the mustard for qualifying.

How a Lender Sees Your Rental: For each rental property, it’s not as simple as using gross income to offset a mortgage payment (comprised of lender payment + taxes +insurance; here’s a good way to figure out what your monthly housing budget should be). The other factors that come into play for carrying a rental property include maintenance expenses as well as depreciation, which is required on rental properties. This is especially important if the rental property was your primary residence at one point and has now been converted into a rental property. The depreciation schedule will specifically delineate at what point in time the property became a rental, which is crucial for the lender to consider income generated.

Here is the special formula lenders use to determine if your rental property is a liability against your income, using the annualized figures from Schedule E on your 1040: Gross rents + taxes + plus mortgage interest + insurance + depreciation + homeowner’s association dues (if applicable) – total expenses divided by 12 = net gain or loss

The lender will look at these numbers for the past 24 months and this formula will be performed for each rental property you have whether or not there is a mortgage on that particular property.

Mortgage Tip: If any rental property is free and clear of any mortgages, there is almost always a net gain — resulting in more useable income for the loan.

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Luxury DIY do’s and don’ts from top designers…

Renovation Tips from Top Designers and Architects

Suzanne Tucker of Tucker & Marks refurbished a formal living room.
Pieter EstersohnSuzanne Tucker of Tucker & Marks refurbished a formal living room and decorated it with shades of yellow, brown, and peach.

Interviews by Melissa Feldman

Today’s great design minds reveal their chic, clever tips for remodeling, from small jobs to total makeovers.

Suzanne Tucker, Interior Designer
“The warm tones of butter-yellow are always flattering-to art, antiques, and us!”

William Sofield, Interior Designer
“Imagine all the surfaces of a room simply as reflectors of light and then choose paint values, tones, and colors that will accentuate or minimize differences. I often paint each surface a different color in order to achieve the right balance.”

Robert Couturier, Architect/Designer
“To soundproof a room, upholster the walls and use thick carpets. I also put Green Glue behind the drywall-it’s a very effective noiseproofing compound.”

Lee Ledbetter, Architect/Designer
“Paonazzetto is my current favorite marble for baths because it has graining reminiscent of a Franz Kline painting. It’s difficult to find the really beautiful slabs with a lot of contrast, but the hunt is worth the trouble.”

Sandra Nunnerley, Interior Designer
“Rooms with high ceilings need generous baseboards. I have them made ten inches tall when necessary.”

shower fitting
Baccarat’s shower fitting for THG.

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