How Fast Does Equity Build During Homeownership?

Building equity in your home is like a savings account – the more you put toward it, the better. Your home’s equity grows with each mortgage payment you make and with time.

According to BankofAmerica.com, you can calculate your equity based on current appraised value less any mortgages tied to your home. If your home is appraised at $400,000 and you owe $120,000, then your equity is $280,000. But that doesn’t mean you have savings of $280K; it just means that you have a general idea of how much your home will yield should you sell it at that moment, less closing costs, of course.

Lenders consider equity differently. You can begin building equity the moment you purchase your home with your down-payment. ($400K – 20% = $320K) Your loan amount would be $320K and the equity in your home would be $80,000. You can increase your equity by paying your mortgage regularly and paying a little extra every month, which speeds up the amortization of your loan.

To approve a home improvement loan or to determine whether to eliminate private mortgage insurance, lenders take the appraised amount and divide it by your loan balance to get a percentage of how much equity you have.  Divide your current loan balance by your home’s appraised value, then multiply by 100. ($120K ÷ $400K = 35%) That means you own 65% of your home. 

These numbers are theoretical until you sell your home. Meanwhile, watch your savings grow on your monthly mortgage statement!

Happy Halloween, or Not? Selling During the Holiday

For so many people, October brings back memories of Halloween—dressing up in a costume, carving a jack-o’-lanterns and trick-or-treating.

But this celebration of ghouls, ghosts and monsters isn’t for everyone. There are people who don’t celebrate Halloween for religious reasons and there are also people, especially children, who will be scared at your delightfully creepy decorations.

So no matter how much you like Halloween, if you’re selling your home, you don’t want to turn off any prospective buyers. But that doesn’t mean you can’t get festive in the fall. Here are some ways to stage your home at this time of year in a way that will make all visitors welcome.

Pumpkins, Not Jack-o’-Lanterns

Few people are likely to be offended by pumpkins, as long as they aren’t carved with scary faces. Decorate your porch with pumpkins of various sizes, shapes and colors. In addition to orange, you can find pumpkins that are green, white, yellow and blue, and all those together make a very festive scene. You’ll have a blast creating your very own pumpkin patch. Then, on Halloween, pick your favorite one to carve into a jack-o’-lantern for the big night. And be sure to get rid of it before the next potential buyer comes to your home.

Scarecrows

These aren’t necessarily for Halloween, they’re part of the celebration of harvest. Have some fun and make scarecrows of your favorite (non-horror) characters. Make them fun, colorful and welcoming. Not only does this provide some fun decorations, creating your amazing scarecrows is a terrific family activity.

The Smells of Autumn

No fruit says autumn like apples. Apple-themed decorations are great but buy actual real apples and offer them to visitors as a snack. Also, for open houses, bake or buy an apple pie, and fill your home with the delightful and homey smell only an apple pie can achieve. Pumpkin spice is another classic element of fall, so brew some pumpkin spice coffee, or buy pumpkin spice- and apple-scented candles. Pumpkin treats like cookies and muffins also can make a home feel and smell like autumn.

Courtesy RisMedia

Why You Shouldn't Make Homebuying Decisions Based on Emotion

When looking for a new place to call home, it’s natural to feel emotional. You may be thinking about watching your kids grow up in a new house or reminiscing about the home where you grew up. It’s important that you not let emotions cloud your judgment when making a major decision, such as which house to buy.

You May Fall in Love With the Wrong House
Many buyers fall in love with a house instantly because it evokes a positive feeling or reminds them of a place where they lived in the past. It’s important to buy a house where you feel comfortable, but you shouldn’t let emotion completely guide your decision-making process. You also have to consider the layout and condition of the house; characteristics of the neighborhood; crime; safety; school quality; proximity to your job, stores, restaurants and entertainment; and the total cost of homeownership.

If you fall in love with a particular house, you may not want to look at others or you may expect others not to measure up and won’t give them the amount of consideration they deserve. You may overlook major problems with the house that you fell in love with or wind up with a dream home that you can’t afford. 

You May Miss Out on a Good Deal
Some buyers want to get the best deal they possibly can. While negotiating the price is expected in many cases, focusing on a low price above all else can cause you to become too aggressive and pushy when negotiating. You may pass up a good deal in search of something better that doesn’t materialize.

How to Approach the Home-Buying Process
Before you begin looking at houses, figure out how much you can afford to spend. Don’t base that decision on the amount a lender pre-approved you for since the lender’s calculations may not have included important expenses, such as healthcare and childcare. Make a list of all your current bills and estimated costs for homeowners insurance, property taxes, maintenance, transportation and other expenses. That can help you figure out how much you can realistically afford. Set an upper limit on the amount you are willing to spend and stick to it.

Look at several houses. Even if you think you have found the perfect home early in your search, it may be a good idea to look at others so you don’t make a decision without seeing what else is out there.  

Ask your Berkshire Hathaway HomeServices Showcase Properties real estate professional for his or her opinion about each house and carefully consider both the pros and cons. Your agent can give you objective advice and may point out things that you have not considered. 

Courtesy RisMedia

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