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Leveraging Your Home’s Equity
Owning your own home creates an opportunity for you to build equity, month after month, through each consecutive mortgage payment made. Which is why owning a home can be a lucrative investment opportunity, even as you use it as your primary residence. Keep reading as we discus leveraging your home’s equity.
But what is equity exactly? You have likely heard the term before, but do you really understand what it means and how it can benefit you?
Understanding home equity
Home equity is the difference between the remaining balance of your mortgage and the current market value of your home. As you make payments towards your mortgage you decrease the amount you owe, simultaneously building your equity. In other words, equity is the amount your home has earned over time. Typically, this means if you were to sell your home, the equity would be the total you are entitled to keep after the mortgage, and any liens tied to the home, have been repaid. If the remaining balance on your mortgage is higher than the current market value of your home, you have negative equity. Alternatively, if the remaining balance is less than the current market value of your home, you have positive equity.
Positive equity
Sometimes life takes unexpected turns that can pose financial challenges. Owning your own home with positive equity can ensure a safety net of funds. Funds available for you to leverage even without having to sell your home, should the unthinkable occur.
Your positive equity even has the potential to improve your financial standing, if used correctly. We turned to financing mortgage consultant Bill Steward at Penrith Home Loans to help us explore this in more depth.
Bill explained, with enough equity available, a cash-out refinance can potentially cover, or partially cover, the funds needed in an emergency. The best part is you can do this without having to sell your home. Bill also shared, “Once approved, you can use a cash-out refinance loan for anything.” There is no oversight or restrictions on how the funds are used. However he encourages you to exercise caution as, “It is still a loan you will have to repay.” Further suggesting to, “Keep this in mind before using funds from a cash-out refinance to splurge on “non-essential” items that you may not have much use for.” Instead, he recommends, “…money from a cash-out refinance be used for investments that can increase the value of your home or simplify your cash flow, and not for things like everyday expenses.”
Let’s dig deeper into a few ways that funds from a cash-out refinance loan can increase your financial standing instead.
Home improvements
Often times remodeling increases the value of your property. For example, switching to energy-efficient appliances, or adding a bedroom or bathroom can increase the value of your home. However, Bill warns, “…be wary of ‘improvements’ that may not add as much value as you originally thought”. He suggests working with your trusted real estate agent and mortgage consultant to determine if the desired home improvements will return enough bang for your buck. If you are not currently working with an agent, connect with us here.
Consolidating and reducing debt
Did you know a cash-out refinance typically has lower interest rates than credit cards? Using these funds to pay off your credit card debt can ultimately help you save money in the future. If you are struggling to get on top of your debt, this might be an option to consider helping reduce your debt and build financial wealth. Be sure to discuss your unique situation with your trusted lender and financial advisor to see if this is right for you. If you don’t have a relationship yet with a trusted lender, Bill Steward is an excellent resource you can connect with here.
Repay student loans
Student loans can take years to pay off. Bill explains, “Leveraging the equity you’ve built into your home to pay down federal or private student loan debt is a great strategy to consolidate and eliminate a common, yet heavy burden.”
Cover the cost of medical bills
Once again, Bill provides helpful solutions, explaining, “Instead of having to worry about defaulting on your medical expenses, you may be able to use the equity in your home to cover the cost. Dealing with a medical emergency is already stressful enough – you should not have to worry about where the money is going to come from.”
When considering the use of a cash-out refinance it is important to remember you must repay what is borrowed at the new terms agreed upon. Be sure to pay close attention to your new refinancing terms. Pay special attention to the interest rate. Understand what the new rate will do to your monthly mortgage payment. If you wish to reach Bill Steward NMLS #754408 at Penrith Home Loans and discuss the possibility of cash-out refinancing, you can contact him by clicking here or call him at 425-330-2990. Perhaps you wish to start building equity and a safety net of funds for your future by purchasing a home; connect with us here.
Not a commitment to lend. Penrith 2024, NMLS 252939, Penrithloans.com/legal, equal housing lender.
Make a Splash
With the weather quickly heating up people are avidly looking to make a splash in a pool. This time of year, creates a unique opportunity for real estate. Specifically real estate that encompasses a pool.
How a pool can affect a property
When selling a home with a pool in the Pacific Northwest, we know that timing is everything. It’s best to showcase the property when its standout features shine the most. Therefore, listing a home with a pool in late spring or summer when everyone is dreaming of cooling off with a dip in the pool can be ideal. These warmer months make the pool inviting, attracting potential buyers who can envision themselves enjoying it on a hot summer day.
Similarly, communities with amenities such as pools, gyms, and outdoor recreation areas tend to attract more buyers and renters this time of year. The allure of amenities is heightened often increasing both the demand and value in comparison to seasons with cooler weather. Especially when the pool is in tip top condition. However, a pool that has lacked maintenance can create the opposite effect.
Cost of a pool
We all know that pools can come with costs, maintenance, and responsibility year-round. Creating a safe, positive environment to relax and make memories is of the utmost importance and demands detailed planning, routine checks, and ongoing maintenance. While maintaining the pool yourself might save you money in the short term, it often comes at the cost of inadequate safety that could prove costly in the long run. This is precisely why Ben Basch, Business development executive with Ground Support Services in Brooklyn, NY, emphasizes the importance of collaboration with reliable pool professionals…suggesting that communities carefully weigh the financial benefits against the potential risks associated with insufficient expertise.
Have you ever made plans to accomplish a task, but when the time came to follow through there was so much else going on that you put the task off? You can’t do that with a pool. Ben says, “There’s always something to do every month. You can’t wing it”. Putting tasks off leads to last-minute decisions and cutting corners that ultimately endangers the safety and functionality of the pool.
Vendors
Creating clear expectations and interviewing several vendors early on can help ensure optimal enjoyment within your budget. Your chosen vendors should have a clear outline of their responsibilities in conjunction with your financial agreement. Creating mutual accountability while ensuring a positive ongoing relationship. Since maintenance often takes time, it is important to communicate with vendors specific time frames that the pool can be closed for maintenance and times when it must be ready to enjoy. If the vendor arrives during a pool party, everyone will be disappointed, and it could be costly. Effectively communicating and managing your vendor is of the utmost importance. Crystal Gill with Arriel Pool Services in Colleyville Texas says, “Communicate with your members, and communicate with your vendors. Communicate when there are pool closures and when they will tentatively reopen. When everyone is on the same page and everyone knows what to expect, the pool season runs more smoothly.” Consider following up with regular follow-ups to cover what’s going right and areas that might need improvement. Create opportunities for open communication where your vendors can provide insight on potential challenges and improvement.
Pool Safety
While pools can be a ton of fun, they can also pose significant risk. One of the utmost important things you can do is implement Pool Safety Rules and Prevention Plans. Start by developing a clear barrier to pool access to prevent any unauthorized access and inspect it regularly. Demonstrate your commitment to safety by developing succinct pool rules and measures of enforcement. Post the rules around the pool where they can be clearly seen and followed. Develop prevention plans in case of an emergency and review them regularly. Offer ongoing training and education opportunities around pool safety to staff and the community. Understanding pool safety and having clear and concise policies can significantly reduce risk.
Let’s talk about pool rules
Lifeguard credentials
Some pools have lifeguards on duty while others choose a swim-at-your-own-risk approach. If you choose to have lifeguards on duty, it is of the utmost importance to ensure that the lifeguards are certified. Just as important, there needs to be enough certified lifeguards to cover the entire time the pool is open, and enough lifeguards on duty at any given time to cover the size of the pool.
Swim-at-your-own-risk policies
Alternatively, if you choose against on duty lifeguards you may go the route of Swim-at-your-own-risk. Taking this approach alleviates liability. Instead, this approach puts responsibility on the individuals choosing to use the pool, reducing the association’s liability. To operate as a swim-at-you-own-risk pool, you must clearly post the policy and ensure that residents and their guests understand the risk they are taking by participating in using the pool.
Behavior focused rules
To avoid any fair housing law violations, make sure your rules/policies and developed around behaviors and not personal characteristics. Instead of posing an age requirement for using the pool, focus on crafting rules like no running on the pool deck, no diving, no glass.
Consider adopting these rules when drafting your own:
- Must wear proper swim attire.
- No glass, alcohol, smoking or vaping.
- Keep electrical devices away from the pool
- No swimming during inclement weather. If lightning is occurring within a 10-mile radius, the pool will be closed.
- What you bring in, you must take back out. Help keep our pool clean.
Proactive enforcement mechanisms
If a rule is broken, how will it be handled? What are the consequences and how will they be enforced? Prepare the answer in advance. Train staff so that it handled quickly and consistently.
Consider and post pool closures
It is important to schedule and announce pool closures. Whether it be for regular hours of operation, scheduled maintenance or possibly for budgeting purposes it is important to have closures posted so residence and their guests can plan accordingly and stay on positive terms. Regular operating hours and maintenance can seem straight forwards, but you might be wondering how can closures affect budgeting? Pool maintenance alone can be a significant cost, but keeping a pool warm can be even larger especially during the cooler months. It may behoove you to consider pool usage in comparison to the costs of heating the pool and closing it for a specific period to keep within budget.
We hope that you have found this information useful. Perhaps having your community managed for you looks a bit more appealing, if this is the case, we have the HOA Community association for you. Maybe your looking to buy or sell a home with a pool? Connect with us here.
The City of Anacortes
Once a bustling hub for shipbuilding, lumber mills, and fishing, the city of Anacortes, has transformed into a vibrant coastal community that perfectly balances its rich historical roots with a modern, thriving way of life. Founded in the late 19th century, Anacortes was a gateway to the San Juan Islands, where the bustling timber and fishing industries drove its early economy.
Today, the city retains its maritime charm, boasting a picturesque downtown, a vibrant arts scene, and a deep appreciation for the natural beauty that surrounds it. Anacortes is known for its picturesque downtown shopping & dining district, bustling marinas, water views, and expansive public forest lands. Some of the best destinations to take in views encompassing the essence of Anacortes can be found at:
Sharpe Park Montgomery Duban Headlands – Sares Head:
Dedicate about 25 minutes of your time to walking through 37-acres of marshlands, woods and coastline and discover one of the best views Anacortes has to offer. This grand viewpoint offers 180 degrees of visibility that looks out to Whidbey Island, the Olympic Peninsula, Olympic Mountains, the San Juan Islands. On clear days you can even see Victoria, Canada in the distance. It takes a bit of a hike to get to the viewpoint, but we can promise you it is worth it.
Washington Park – Juniper Point:
Here you will find views of Burrows Channel, Burrows Island, Rosario Strait and the San Juan Islands. Be prepared for a 20 to 25 minute hike to get to these viewpoints.
Mt. Erie:
Mt. Erie is Fidalgo Island’s highest spot standing at 1,273-feet tall. The mountain overlooks Whidbey Island, Olympic Mountain, Skagit Valley, Mt. Baker, and Mt. Rainier. Be sure to visit on a clear day. You can hike, climb, or drive your way to the lookouts.
The Majestic:
Featuring The Majestic Inn Spa and The Bistro & Bar At the Majestic. Being the second tallest building in downtown Anacortes, it quite literally offers the most majestic views from their rooftop lounge. Guests get a birds eye view of historic downtown, with stunning views of the San Juan Islands and Guemes Channel.
The city has embraced its heritage and offers residents and visitors a unique blend of history, culture, and natural beauty. It’s a place where the past meets the present, creating a warm and inviting atmosphere that captures the essence of life in the Pacific Northwest.
If you are interested in learning more about the City of Anacortes, or are interested in buying or selling a home and are not yet working with an agent connect with us here.
Homeowners Insurance and Mortgage Insurance
Homeowners insurance and mortgage insurance are both important types of insurance for any homeowner, but they serve different purposes. Often times when meeting with first time home buyers they question the difference is between homeowners insurance and mortgage insurance. If you are a first time home buyer, or are considering buying you might find yourself wondering the same. If this is the case, follow along as we have connected with Michelle Schmidt from Movement Mortgage who has provided insight into the differences from a lenders perspective.
Here’s a breakdown of the key differences:
Who it protects:
-
Homeowners insurance:
Protects the homeowner, their belongings, and their liability in case of damage or loss. This includes coverage for the structure of the home, personal belongings, and legal expenses if someone is injured on the property. Click here for access to a homeowners insurance guide.
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Mortgage insurance:
Protects the lender in case the homeowner defaults on their mortgage. It does not provide any benefits to the homeowner.
What it covers:
-
Homeowners insurance:
Covers a wide range of perils, such as fire, theft, vandalism, wind damage, hail, and water damage. Some policies also cover additional risks like earthquakes and floods. Click here to discover the most common causes of water damage.
-
Mortgage insurance:
Does not cover any physical damage to the home. It simply reimburses the lender for the outstanding loan balance if the homeowner defaults.
When it’s required:
-
Homeowners insurance:
Is required by most mortgage lenders. With less than 20% down you will be required to include the premium in your mortgage payment, with 20%+ down you have the option to pay the premium on your own / waiving impounds.
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Mortgage insurance:
Is typically required if the homeowner makes a down payment of less than 20% of the purchase price of the home. It may also be required for certain types of loans, such as FHA loans.
Cost:
-
Homeowners insurance:
The cost of homeowners insurance varies depending on several factors, such as the location of the home, the size and age of the home, and the level of coverage, along with the credit and claim history of the homeowner.
-
Mortgage insurance:
The cost of mortgage insurance is typically a percentage of the loan amount. The premium can be cancelled once the homeowner reaches 20% equity in the home with Conventional loans. FHA loans would need to refinanced to a Conventional loan to remove the mortgage insurance.
In summary, homeowners’ insurance is essential for protecting the investment in your home, while mortgage insurance protects the lender’s investment. Both types of insurance are important for homeowners to have.
I hope this helps! If you have further questions feel free to connect with Michelle Schmidt from Movement Mortgage. If you are not currently working with a Realtor and would like to discuss purchasing or selling a home, connect with us here.
Community Service Day 2024
They say, “small actions make big impacts”. We got to be a part of that big impact this last week here at Windermere. For 40 years, Windermere has dedicated a day of community service. Every office picks a project that solves a need in the communities in which they reside. Windermere agents and staff all over dedicate that day of work to those in need. From senior centers to playgrounds, food banks, and more, these hands-on projects benefit a wide variety of community-based organizations. This is a day that we look forward too all year. It is a day where we come together to give back to our communities and together we make a huge impact.
Here’s what we did in our North Sound offices:
Anacortes:
We partnered with Frontier Building Supply and Ace Hardware to refurbish 11 of the 13 benches in historic downtown Anacortes. For years these benches have served as a resting place for those visiting downtown Anacortes. They clearly served their purpose and had been well worn but it was due time for them to be revitalized to continue to be a welcoming resting place.
Originally we were going to re stain the wood and clean the base from moss but quickly realized these well loved benches needed much more than just a re coat of stain and some cleaning. These benches needed new wood entirely. We connected with Frontier Building Supply who generously donated the wood need to complete the project, and Ace Hardware donated the stain and brushes. Our agents came together on Thursday to stain the wood in our parking lot. By Friday we were ready to start the deconstruction of the old where we removed the old wood, cleaned the base of moss and debris, and finished by adding the new wood.
Be sure to take a stroll through Historic Downtown Anacortes and see these beauties. If you find yourself in need of wood or supplies support local and shop Frontier Building Supplies and Ace Hardware. They have gone above and beyond in supporting not only our Community Service Day, but have made a huge contribution to our community.
Skagit Valley:
Monday June 10th, there is a ribbon cutting event on the River Walk presenting a new sign. The grounds had overgrown during the cold season and the space needed a bit of sprucing up in preparation for the ceremony. Our agents and staff gathered together to pull weeds, pick up trash, and clean up the area. We hauled away over 10 large bags of debris and left the park looking beautiful for all to enjoy.
View this post on Instagram
Arlington:
This year, we joined forces with Patrick’s Quality Painting and Lowe’s in Smokey Point to bring the Stilly Valley Thrift Store a new paint job. One thing you may not know about the Stilly Valley Thrift Store is that the proceeds from the store support the daily operations of the Stilly Valley Center/Senior Center. Tackling this project helped relieve the thrift store of having to allocate time and funds for a new paint job. We started earlier in the week with a pressure washing day to get the property prepped for the new paint job. Friday morning part of our team started at the Stilly Valley Thrift Store while others started with highway clean up. Those that started with highway clean up later joined us to finish up and present the newly painted Stilly Valley Thrift Store.
If you have painting needs we highly suggest Patrick’s Quality Paint. Additionally, if you wish to further support our community, you can donate to or shop the Stilly Valley Thrift store.
With more than a million hours of community service logged to date, we’re proud to continue this tradition of giving back to the communities where we live, work, and play. Click here to connect with us.
A Lenders Perspective on Credit Scores
Have you ever wondered what a lenders perspective is on credit scores? Well the wait is over. Lender, Michelle Schmidt from Movement Mortgage goes the extra mile sharing not only how a credit score is viewed by lenders, but also provides a breakdown of five main factors that contribute to your score. Don’t skip out too early, she also offers a few key insights for how to fix your credit score if it is not quite where you would like it.
What is a Credit Score?
“A credit score is a three-digit number that ranges from 300 to 850 and is used by lenders to assess your creditworthiness, or how likely you are to repay a loan on time. The higher your credit score, the less risky you are considered to be by lenders, and the more likely you are to be approved for loans and credit cards at lower interest rates,” says Michelle. To better understand credit score range visit experian.com here.
There are five main factors that affect your credit score:
Payment history (35%)
Your payment history is the most important factor in your credit score. This includes whether you have made your payments on time in the past, and whether you have any late payments or collections on your credit report.
Credit utilization (30%)
Your credit utilization is the amount of credit you are using compared to the total amount of credit you have available. For example, if you have a credit card with a $10,000 limit and you have a balance of $5,000, your credit utilization is 50%. Ideally, you should keep your credit utilization below 30% to improve your credit score.
Length of credit history (15%)
The length of your credit history is also important. The longer you have had credit and the more consistently you have used it responsibly, the better your credit score will be.
Types of credit used (10%)
The types of credit you use also affect your credit score. Having a mix of different types of credit, such as credit cards, installment loans, and mortgages, can help to improve your score.
New credit (10%)
Opening new lines of credit can hurt your credit score in the short term, but it can also help to improve your score in the long term if you manage them responsibly.
You can check your credit score for free from annualcreditreport.com. You can also get your credit score from your credit card company or bank.
What if I have a low credit score?
There are a number of things you can do to improve it, such as:
- Pay your bills on time
- Keep your credit utilization low
- Don’t open too many new lines of credit
- Dispute any errors on your credit report
It takes time to build good credit, so be patient and don’t give up.
If you are not currently working with a lender and would like to talk with Michelle in more detail about your specific situation contact her at: michelle.schmidt@movement.com
If you are not already connected with an agent connect with us by filling out a request form here.
Celebrating 40 Years of Windermere’s Community Service Day
This year marks a significant milestone for Windermere Real Estate as we celebrate the 40th anniversary of our company-wide Community Service Day. Since 1984, Windermere associates have devoted a day each year to neighborhood improvement projects, reinforcing our deep-rooted commitment to the communities we serve.
The tradition began with a simple yet profound idea: real estate is not just about properties; it’s about people and the places they call home. Over the past four decades, our teams have engaged in countless projects, from revitalizing public spaces to supporting local charities, always striving to make our neighborhoods better places to live.
In honor of celebrating 40 years of Windermere’s Community Service Day, our offices are planning several impactful activities to give back to the communities that have supported us throughout the years. Stay tuned for more details on our upcoming projects. Here in the North Sound our unique projects will include bench restoration in downtown Anacortes, a clean up at the Riverfront Park in Skagit Valley in preparation for Monday night’s ribbon cutting presenting the new sign on the Riverwalk, painting the Stilly Thrift store and cleaning up the highway in Arlington.
This year we have been blessed by the support of our communities. Many local businesses have contributed to the cause, making this year efforts bound to have an even bigger impact on our communities. We would like to make a big shout out to Fronter Building Supplies, Anacortes Ace Hardware, Patrick’s Quality Painting, Lowes in Smokey Point, and Michelle & Earl from Movement Mortgage for their contributions.
Windermere’s Community Service Day is a reminder that investing in our neighborhoods goes beyond real estate transactions. It is about fostering a sense of community and making a positive difference where we live and work. Here’s to 40 years of service, and many more to come!
If you would like to learn more about what we do, connect with us.
Mango Salsa
In honor of May being National BBQ Month we decided to share one of our favorite go to recipes… MANGO SALSA.
This vibrant dish brings not only its pop of color to the table, but an extraordinary burst of flavor as well. Discover an irresistible combination of both sweet and spicy with this simple, six ingredient recipe.
How to pair Mango Salsa:
- Decorate the top of your fish tacos
- Dip your chips like any other salsa
- Sprinkle across your Carne Asada or any other meat
- Add it to the top of a salad
- Or call it “Mango Salad” and eat it with a fork and bowl… yes it is that good
How much does it make:
This recipe makes about 3 cups of salsa. If you need more, double it up. It takes about 15 minutes to prepare. We prefer it cold. We suggest making it in advance and letting it chill in the refrigerator before serving.
Ingredients:
- Dice 3 ripe mangos (If you have never diced a mango before check out how to here)
- Chop 1 medium red bell pepper
- Chop 1/2 a cup of red onion
- Chop 1/4 cup packed cilantro leaves
- Deseed and mince 1 Jalapeno
- Juice 1 Large Lime (for about 1/4 cup of lime juice)
- Salt to taste
Instructions:
- Combine diced mango, chopped bell pepper, chopped onion, chopped cilantro, and jalapeno in a large serving bowl. Cut the lime in half (take out the seeds) and squeeze the lime allowing the juice to drizzle over the ingredients.
- Gently stir the ingredients together with a large spoon. Season to taste with salt and mix again. For best results, cover and place in the refrigerator for at least 10 minutes.
If you have enjoyed this recipe share it with your friends and tag us in your Instagram posts with one of our tags:
Interested in purchasing a home here in the North Sound to host your own BBQ’s? Connect with us here.
Is it better to buy or rent?
The question of whether it is better to buy, or rent, will always exist. This is because the answer has a lot more to do with each individuals unique situation and their personal goals. We have composed a list of a few considerations that you should consider.
Supporters of buying a home point out you are making an investment. This is because not only are you paying down your mortgage total with each additional month you live in your home, but homes also typically increase by 5% each year in value. Combine the two together and you can quickly build wealth in equity. Additionally, if/when you decide to rent out your home your renters are essentially paying your mortgage. When you no longer have a mortgage, you will have positive cash flow every month.
Advocates of renting claim that the additional costs that accompany owning a home, such as taxes, interest payments, maintenance, unexpected repairs, ect. can add up rather quickly. They point out that there is no guarantee that those expenses will be regained when it comes time to sell the home. Rather than investing in a home, you might consider investing in stocks, bonds, and other financial securities.
Either way you are paying somebody’s mortgage until the home is paid off.
How long do you plan to stay in the home?
If your intention is to reside in the property for no more than five years, renting may be the more financially prudent choice. This is because the upfront costs associated with homeownership are typically spread out over the duration of a mortgage loan. Conversely, the longer you anticipate living in a home, the more advantageous it becomes to buy rather than rent. Therefore, if you’re prepared to commit to a residence for 7 to 10 years, purchasing a home is likely the optimal path. Over this timeframe, there’s a strong likelihood that the property will appreciate in value, offering potential financial gains in the long run.
Consider the Market Where You Plan to Live:
Every market is unique. It’s important to know what is happening in real estate on a national scale, but local as well. When purchasing, it is of the utmost importance to pay close attention to what is happening in the local markets. What is happening in one city might be drastically different than what is happening in another. Remember, when evaluating housing expenses, it is essential to consider the current market conditions in your city and even neighborhood, rather than relying on nation expenses. Look both at home prices and rental rates.
Consider the Cost of Buying and the Cost of Renting:
There are costs associated with both buying and renting. When you rent you typically need to pay upfront, your first and last month’s rent and a security deposit. This could be a hefty upfront cost. When buying your first mortgage payment often isn’t due the first month. However, there are escrow fees, closing costs and downpayments to consider. Be sure to talk to your lender so this doesn’t come as a surprise. If you plan right, you might even be getting back your security deposit from your previous rental that can help cover any costs. Your lender can help you determine if buying is right for you. They can provide options you might not have thought of. You might discover that you can buy a home for a monthly payment that is close to what you might rent for. Keep in mind when you buy, each payment made increases your equity.
Lifestyle:
When it comes to lifestyle differences between buying a home and renting one, ownership offers distinct advantages. Homeownership often means greater flexibility and freedom in personalizing your living space. For instance, homeowners have the liberty to make renovations, upgrades, and alterations to suit their preferences and needs. This includes options like painting walls, landscaping the yard, or even adding additional rooms. Additionally, homeowners typically have more flexibility in keeping pets, as they are not bound by the restrictions often imposed by landlords in rental properties. These aspects contribute to a sense of stability, security, and personalization that renting may not always offer.
Repairs and Improvements:
Keep in mind, when you are a homeowner you are responsible for the costs of repairs and maintenance. When looking to buy, it is important to get an inspection to have peace of mind that you are purchasing a sound home, or that you are aware of the costs associated with needed repairs and have taken them into consideration.
Can the home create an alternative revenue stream?
When making your considerations, be sure to weigh the potential opportunity for additional streams of income with the purchase of a home. Homes and properties have the potential to serve as valuable assets beyond just providing a place to live. They can also be sources of additional income streams. One way to generate extra revenue is by renting out space within the property, such as a spare bedroom, basement, or even an entire accessory dwelling unit (ADU). This can be particularly lucrative in areas with high demand for rental housing. Additionally, homeowners can utilize their property as office space for side jobs or small businesses, saving on external rental costs. For those interested in sustainable practices, properties with ample outdoor space can accommodate activities like beekeeping, gardening, or even hosting events, which can provide supplementary income while also contributing to environmental conservation efforts. By leveraging their properties in creative ways, homeowners can unlock various opportunities to generate additional revenue streams.
Do you have alternative investment opportunities available to you?
Under the right circumstance purchasing a home can be an easy way to invest. You can create significant savings while living in your home. However, for others renting an apartment and investing savings in stocks, bonds, and other financial securities is better for their circumstances.
Speaking with a financial advisor about your specific financial situation can help. A financial advisor can break down what you need to do to get the best return on your investments. They can also see the big picture for your unique situation when it comes to your money.
One Last Money Saving Consideration:
One significant benefit to buying is that if you can pay extra towards your monthly mortgage, you can knock years off the life of the loan. For example, if you pay an additional $300 a month towards a 30-year, $300,000 loan, you will take eight years off the life of the loan. You reduce your final bill by more than $63,000. That is savings you would never see if you rented. Additionally, every time you make that extra payment your equity in the home also increases.
For a unique look at your situation connect with your trusted Realtor. If you do not have one, connect with one of our experts. They can provide guidance in navigating your findings, analyzing additional factors, and exploring various home options. Click here to connect with a knowledgeable professional who can provide personalized assistance tailored to your unique needs and preferences.
Differences Between Pre-Qualified and Pre-Approved
It can be difficult to understand real estate jargon when it’s your first time purchasing a home. If you are in the process of purchasing or considering buying, we are here to help. One of the biggest misconceptions has to do with understanding the differences between pre-qualified and pre-approved when applying for a home loan. So, we took the question to the pros! We connected with Michelle Schmidt, a lender with Movement Mortgage. Michelle explained that while, “pre-approval and pre-qualified sound similar, they have significant differences when it comes to securing a loan or line of credit.” Are you ready to explore some of those differences with us?
Pre-qualified:
- Initial estimate: Based on basic information you provide, like income and debt, the lender gives a rough idea of the loan amount you might qualify for.
- Less rigorous process: No formal application or documentation required, often done online or with minimal verification.
- Not a guarantee: Not a firm commitment from the lender. Your actual approval may differ depending on further verification and credit checks.
- Lower commitment: Can be helpful for budgeting and narrowing down your search, but less persuasive to sellers or lenders.
Pre-approved:
- Formal commitment: Requires a full application and credit check. The lender verifies your income, assets, and debts. Generally, will also run your file through underwriting.
- More specific: You receive a pre-approval letter stating the exact loan amount, interest rate, and conditions you qualify for, under specified circumstances.
- Stronger leverage: Makes your offer more competitive to sellers, as it shows you’re a serious buyer with proven financing ability.
- Higher commitment: Requires more effort and may involve a hard credit inquiry affecting your credit score slightly.
Here’s when to choose each:
- Pre-qualified: Start your research, understand your potential borrowing power, and set budget limits.
- Pre-approved: When you’re serious about buying and want to make competitive offers or secure specific rates.
Michelle says, “In short, pre-qualified is like a preliminary assessment, while pre-approved is a conditional guarantee”. When planning to buy, it is important to assess your financial positioning. A lender can help you ensure your finances align with your home ownership goals. Talking with a lender early on can help you set your goals in motion and can help you feel confident in your purchase when you are ready to buy. When you are ready, getting your pre-approval is of the utmost importance. Your pre-approval letter demonstrates to the seller your seriousness about purchasing a home. It shows that you have done the legwork and is proof that you can purchase the home.
If you have any further questions about the differences between pre-qualified and pre-approved or any other loan or real estate term don’t hesitate to reach out to Michelle Schmidt, your own trusted lender, or get connected with one of our realtors if you are not currently working with your own by clicking here.
