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October 2018

Five Renovations That Add Value to Your House

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The title of this post should really be “Five Renovations That Add Value to Your House THIS Year in YOUR Local Real Estate Market.” The five best projects to do before you sell will depend on the year and your location. That said, home renovations on a budget can take a lot of work. 

Health/safety issues and other big red flags should always top the list. If the roof leaks, your foundation cracked, or the walls contain mold, solve these problems.

After that, invest renovation dollars in appearance and the impression your house makes. Do the research: check the 2018 Cost vs. Value Report, and ask your realtor how to be competitive in your market.

home renovations on a budget

Curb Appeal is Out in Front

A house makes its first impression from the curb out front, which is why Curb Appeal consistently ranks #1 for Return on Investment. A lush lawn, for example, whether it needs reseeding or grooming, will repay what you put into it. As will well-tended plants and an inviting front door area with fresh details and good lighting.

The Cost vs. Value Report recommends some other projects for 2018. Replacing the garage door had the highest increase in ROI, up 18.6%. Outdoor living space has been a buyers’ priority in recent years, so the ROI for adding a wood deck is now up 17.7%. And, the report says, stone veneer is currently popular.

Kitchens and Bathrooms Count

Good kitchens and baths add value: People spend time in those rooms every day, and buyers often don’t want to take on expensive remodels. But buyers also don’t expect a house to be brand new, so you can add value without a full renovation.

The cost-conscious 2018 Report suggests that a little renovation is enough, and inexpensive small projects add up. Fresh paint, a new faucet, new lighting fixtures, and simple, matching pulls on cabinets and drawers go a long way, while refinishing cabinets costs much less than replacing them.

It’s important to ask your agent about the market before you make plans for home renovations on a budget. If comparable homes for sale all have granite countertops, you might need to invest to keep up.

Energy and Weather Upgrades

What is true for countertops is also true for energy upgrades. You might assume, for example, that today solar power and panels are always a winner. If everyone around you does have them, that’s one thing. But if not, think carefully about this renovation.

In some climates, solar panels just can’t bring ROI. They can even turn buyers off because technology changes so rapidly; like the latest phone, home technology becomes yesterday’s news fast. Also, leased panels add to the monthly payment. Realtors have found this added cost discourages buyers despite the panels’ money-saving potential.

However, no matter where in the world you live, there are always ways to make your home more energy efficient.

Depending on your climate, good weather-proofing around doors and windows, and servicing or replacing the HVAC system, can be a better investment. Attic insulation, where applicable, has always had high ROI. Some communities even offer free energy-efficiency assessments and advice that can help you add value.

Wonderful Wood

The wood floor remains eternally popular, for practical and aesthetic reasons. If you have wood floors, refurbishing them to look their best is worth the investment. You may not get full ROI, but floors are a large visual in any house, and beautiful wood floors have a “wow” factor.

If you don’t have wood floors, you may want to invest in them, or in laminates that resemble wood but cost less. After all, you are moving out, and it’s important to think like a salesperson.

Home Renovations on a Budget

Whatever home renovations on a budget that you choose, don’t underestimate decluttering, deep-cleaning, and staging. Realtors agree they are key steps to presenting a home that prospective buyers can imagine living in, and that is what sells houses.

All your personal stuff, signs of everyday life, and anything other than minimal, fairly neutral décor, needs to disappear. Let people see the house itself, a house where they could potentially live, rather than the house where you live. Remember to declutter closets and storage areas, too, to highlight their spaciousness.

Deep-clean the house from ceiling to floor, including washing walls, cabinet corners, and inside appliances. Buyers will notice and like sparkling cleanliness, which often does increase their offers, adding real value. Don’t neglect smells as part of your cleaning.

Staged homes consistently sell more quickly and for more money than empty homes. You or a professional stager can arrange rooms for easy flow and to display the lifestyle the house offers. Emphasize features like fireplaces and views, and define “extra” rooms as offices, family spaces, etc. Create vignettes that give spaces atmosphere and tell a story. These steps matter outside as well, so declutter and groom your landscaping, and stage outdoor living areas.

No amount of renovation will compensate for a cluttered, dirty house. And these three steps are the frosting on the cake of your other home renovations on a budget.

If you’re looking for a home to get started in Minnesota — contact us today!

saving for a minnesota house

10 Tips to Start Saving for a House in Minnesota

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Unless you can get a VA no-down payment loan, you are going to work on saving money for a house for a first home deposit. Conventional mortgages usually require at least five percent down, and FHA loans will ask for three percent. If you are buying a second home or if you have compromised credit, you will have to come up with more cash. Let’s look at some ways to accumulate that elusive down payment when you are saving money for a house, including those awesome side gigs.

Saving for a house

Image via bankrate.com

Treat Money Wisely

You don’t necessarily have to go on the peanut butter only diet to save cash, but with some commodities like milk, the bottom of the shelf brand that the stores try to hide is probably the same product as the more expensive nationally branded milk. Try it, and if it tastes the same, buy the cheaper brand and you’ll save money every week.

Pay Yourself

According to SavingLoop, “it’s important to set up a bi-weekly direct deposit to a savings account—same as a deduction taken from your check. You won’t feel it, and you will accumulate dollars fast.”

Ditch the Corvette

Saving Money with Kia

*Save money with a Kia lease

Get a sensible car that is reliable. Think KIA Soul, and if you can drive a manual transmission, you can lease one of these for under $200 per month.

Become a Landlord

Rent your garage or an extra bedroom and pick up cash monthly. This strategy really helps saving for a house. Let’s say you have an apartment in an area like Uptown, well, maybe you have a money-making opportunity on your hands. Rent it out!

Sell It to Start Saving for a House

Old cards, vintage guitars and collectibles that you never will use can sometimes fetch great prices. If you are not using it, turn it into cash.

Don’t Be a Walmart Snob

Stuff is cheaper there and you can really save some money at Costco. It really is. That $4.50 two-ounce tube of cortisone cream you just bought at CVS is probably sold at Walmart for two bucks. Check out dollar stores as good retail alternatives also, and saving for a house will be less of a hassle.

Saving for a house with Costco

Get a Side-Hustle to Start Saving for a House

This means a second income stream. Cut lawns, wash cars, walk dogs, babysit, work catering gigs; just find out what else you are good at beside your regular job and work a few extra hours.

Locate Your Rich Uncle

Your family may include someone that will loan you down payment cash. Don’t be afraid to ask.

Buy a Smaller House

If your dream home is out of reach, go intermediate and buy a smaller or starter home. Treat it nicely and in a few years, you can sell it and move on up.

Find a Duplex

Duplex

If you have only saved a minimum down payment, find a duplex where you can rent the other side. While this falls into the starter home category, think of the advantages that having someone else paying half of your mortgage will afford you.

All in all, there are a ton of ways to save money; we’re not saying one is better than the other. A lot of people use really cool apps like Digit, but there are a ton of ways you can do it, too.

As you know we, at C4D really hope you can get traditional financing. But if you can’t, be sure to let us know. Yes, we also require down payments, but our innovative use of MN Contract for Deed has allowed us to help many that had previously thought home ownership was impossible. Be sure to contact us!

First Time Minnesota Home Buyer Programs

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While you may think that you are at a disadvantage being a first time home buyer, there are Minnesota first time home buyer programs that can assist you. First, let’s talk about the difference between being a first-time buyer and a multiple-time home buyer.

The U.S. government and the State of Minnesota both want everyone to be able to participate in the American Dream of home ownership, but they realize that there are barriers to entry. One of the biggest problems is the ability to accumulate a large enough down-payment. Initial down-payment requirements can range from zero to 10 percent or more. Ten percent on a $200,000 home is $20,000, and that can be difficult for a new buyer to come up with.

What Do You Know About Closing Costs

Another issue is closing costs, even with Minnesota first time home buyer programs. If you have good credit (yes, you can still buy with bad credit), and you are offered a credit card, there are usually no fees involved. Even with some personal and auto loans, there can be very in fees required to complete the transaction. Look, however, at this list of closing costs for a residential home loan:

Item

Fee
Loan Origination Fee

$2,500 (1%)
Discount Fee $625 (0.25%)
Processing Fee $450
Underwriting Fee $500
Wire Transfer $25-$50

Credit Report

$35
Tax Service $50
Flood Certification $20
Title Insurance $550
Escrow/Signing $450
Courier Fee $20
Appraisal $450
Recording $110

Homeowner’s Insurance first year premium

 $700
6 Months’ Property Tax Reserves

$1,500

Those are a substantial amount of potential fees, and closing costs can easily rise to almost $10,000 in some transactions. Yes, you can try and get the seller to pay for some of these, but again, closing costs can be a problem to overcome. Luckily, there are Minnesota first-time home buyer programs in place to help.

National First Time Home Buyer Programs

First let’s talk about national programs. VA loans are available for veterans and they require no minimum credit score, low down-payment requirements, and do not require PMI or private mortgage insurance. There usually is a VA funding fee, however. If you are a veteran, first look to the VA, as this is one of the most advantageous programs out there.

If you’re not a veteran, you can investigate FHA Minnesota first-time home buyer programs. FHA loans can usually be done with only a three percent down-payment requirement. Even if you have a very low credit score, you still can possibly get a loan with a higher down-payment rate however.

Minnesota First Time Home Buyer Programs

Minnesota First Time Home Buyer Programs

According to our friends a www.nerdwallet.com, “As a [Minnesota] first-time home buyer, you may benefit from loan programs offered by the Minnesota Housing Finance Agency, or Minnesota Housing. If you’re eligible for these programs, you’ll also have access to down payment and closing cost assistance. Minnesota Housing defines a first-time home buyer as anyone who hasn’t owned a home in the past three years; however, certain programs are available to repeat buyers as well.”

Check out this site for further information.

What Are The Alternatives?

As we have consistently mentioned, we like traditional financing and hope that you are approved for it. But even if some of the available Minnesota first-time home buyer programs don’t work for you, please contact us at C4D. We are Minnesota contract for deed experts, and we have ways to provide the path for home ownership that others do not.

Tips to Find Money for Your Down Payment

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Buying a home sometimes seems impossible. For starters, how do you come up with money for a down payment? Should you get first time home buyer down payment assistance? And what does that even mean? Well, let’s get into the details.

If you don’t own your own home now, let’s say you’re leasing an expensive place in the ever-popular Austin, Texas, then you’re probably paying rent to someone. In many cases, that rent payment would probably be the same as a home mortgage payment; the only problem is, you usually need a down payment in order to qualify for a mortgage. Some reasons for this are:

  • It protects the lender. If you default, at least they have received some cash.
  • It shows you will be motivated to pay the mortgage because you have skin in the game.
  • It shows that you can save money while at the same time paying your bills.

Even if you are buying a home using an FHA mortgage, you’ll still have to come up with at least three percent of the purchase price, and with a $350,000 home, this can still be over $10,000. So how do you go from zero to $10,000 relatively quickly? What first time homebuyer down payment assistance is available?

first time home buyer down payment assistance

First Time Home Buyer Down Payment Assistance Gifts

It is completely legal for someone to gift you your down payment assistance for first time home buyers, and the way tax laws work, relatives can give you up to $15,000 tax free. They could also give that amount to your spouse, so taxes are not an issue. If you do use gift money for a down payment, the lender is going to want to track it, so make sure that this transaction is completely transparent.

Consistently Save and Start Early

Just as interest compounds on credit cards and student loans (advice here if you need help with those overbearing student loans), the magic of compounding works the other way also. Save $100 per month at an average rate of four percent, and you will have $14,983.62 at the end of ten years. So, if you start saving when you are 16 years old, you’ll have a nice down payment at age 26 and you won’t be looking for first time homebuyer down payment assistance.

There are also many sites out there, much like our friends at the Saving Expert, that will help you get your finances on track. And don’t forget about that side hustle; online jobs can be a huge help!

Compound Interest

Loans

Check out what the State of Minnesota has to say about first time homebuyer down payment assistance:

“When you get a Minnesota Housing mortgage, you can also receive an optional down payment and closing cost loan up to $15,000. Down payment and closing cost loans are only available when you get a Minnesota Housing first mortgage loan and additional eligibility requirements may apply, including income limits.”

Other states have similar programs also.

Tap Your IRA

If you have a substantial IRA, it may be worth it to withdraw funds. Our friends at nerdwallet.com tell us:

“IRA withdrawals for home purchases are allowed, up to $10,000. Roth withdrawals are tax-free and without penalty if you’ve had the account for at least five years. Tapping a traditional IRA will trigger income taxes.”

Crowdfund It

Have a good story? Set up a Kickstarter or GoFundMe site and see if you can reach your goal. Again, the lender will of course want to track your down payment dollars, so make sure everything is easily documentable.

Real Estate Crowdfunding

Down payments may seem daunting, but with planning and diligence, you should be able to raise the funds to get you on the path toward home ownership.

Mortgage Loan Denial: Is This A Racial Problem?

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So, you need a down payment on a house, but you do not have handfuls and handfuls of cash to make it happen. A mortgage loan can help with that, but what if you can’t get one?

Well, many persons think that race and ethnicity are major factors in mortgage loan denials, and the following chart backs this up:

Down Payment on a House - Mortgage Denial

Others, however, feel that observed denial rates do not give the true picture, and that what is called “real” denial rates paint a truer picture:

Mortgage Denial Reporting

According to Urban Wire, “the real denial rate is still a blunt tool, because it requires the simplification of complex data and trends. It considers credit scores, loan-to-value ratios, debt-to-income ratios (DTI), and product and documentation types, but it does not consider income or income variability (we only have access to DTI; the lender will have more detailed financial information).”

Mortgage Loan Denial: Racial Profiling?

Statistics can be molded to show whatever authors want them to show, and both charts seem to portray that more minorities are denied mortgages than whites. Of course, there could be many reasons for this, and the raw data just does not tell us what that is.

Some think, however, that if a person of color walks into a mortgage lender’s office—even if they have a down payment on a house–the would-be borrower is automatically subjected to a higher level of scrutiny that then causes them to become credit denied. While this can be possible, these anomalies don’t guide the way we do business at C4D.

Down Payment on a House: We Can Help

Whether you are Asian, white, black, Hispanic or a Native American, we just don’t care. We know that good people can simply have bad credit problems. We understand that your credit rating may have been injured because:

  • You lost a job within the last year.
  • You have a lot of student loan debt.
  • Your credit cards are maxed out.
  • You got a divorce.
  • You owe taxes to the state.
  • You have legal judgments against you.
  • You declared Chapter 13 or Chapter 7 bankruptcy.
  • You defaulted on a personal loan.
  • You faced foreclosure.
  • You don’t have a large enough down payment on a house.

There can be many other reasons that you may not qualify for traditional financing, but we at C4D are here to help you. We utilize a very innovative program called MN contract for deed. It works like this:

  • You find a house.
  • We buy it.
  • We sell it to you on a MN contract for deed basis.
  • We keep the deed until you make all of your payments.

Yes, you still will need a down payment on a home, but we consider things that a bank does not.

Our Process to Help with Your Down Payment on a House

Down Payment Assistance

Fill out our online application, and we will evaluate your situation. If there is any way we can help you, we will first talk on the phone, and then we will get together personally. We do work with a local bank, and the bank respects our judgment. If we can make a good case that you have a down payment on a house and that you will be able to make the payments, we do everything possible to get the deal done.

We have said it before:  We love traditional financing and wish that everyone could get a standard mortgage. If you can’t, however, don’t give up. Talk to us today!