Home Repairs Every Homeowner Can Expect to Make

I thought we’d continue on the topic we delved into last week (home repairs and improvements) and expand on it a little further this week.  As every homeowner knows, it takes an awful lot of green to be able to pay for the keys to your new front door (and, y’know, the rest of the house, too).  On top of having enough money stored away to be able to pay for the San Diego home loan itself, buyers need to have extra funds set aside to cover closing costs and insurance, not to mention any moving expense that inevitably come up and the real estate fees — all of which need to be taken care of before that first monthly mortgage bill even shows up.

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As we discussed last week on the subject of needed home repairs, a savvy-eyed home buyer would keep a look out for any part of the house that might need repair (fixing the roof, or upgrading any older appliances such as a kitchen stove) so they can report those and gets some credit towards those much-needed repairs.  But even if you didn’t notice those fixtures that needed repairing until AFTER you moved into your home, you shouldn’t fret too much, so long as you’ve found what needs to be fixed or replaced, and started setting aside funds for it now.

Many different home components — like your roof, electrical system, refrigerator, etc. — have a general life expectancy of anywhere between 18-30 years, according to most home inspectors.  Whenever a new or refinanced home is appraised, these components are inspected to gauge how close they are to the end of their “serviceable life”.  Depending on the quality of components, how often they’re used, and how well they’re maintained, serviceable life can vary quite a bit.

So what are some of the common repairs you can expect to make?

No need to worry about what to inspect, we’ve got your handy checklist right here on what to check for maintenance:

  • The roof.  That thing can take quite a beating, especially if you live in an area prone to more severe weather than, say, any of us in SD.  Standard-issue roofs last around 20 years.
  • The fridge.  Make sure you’re frequently checking your ice box for any dust build-up around the vents that make it run hotter.  A good refrigerator should last you at least 15 years.
  • Garbage disposal.  I learned the hard way as a kid that you’re not supposed to dump anything hard (like, say, popcorn kernels or chicken leg bones) in the disposal because, surprise!, those things can’t really ground anything that tough up.
  • The A/C.  Again, living in SD, this isn’t something most of us think about all that often (at least until those Santa Ana winds start blowing in), but you should always check you A/C unit for any signs of leakage and plug those up sooner rather than later to save on your energy bill.

Got some home repair tips of your own of what to look out for?  We wanna hear them!

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Home Improvement FHA Loans

Buying a “fixer-upper” is something many San Diego home loan buyers have done, and continue to do, when they’re looking for a starter home on the market.  In truth, quite a few starter homes require a bit of maintenance, so don’t feel too bad when you discover the hot water heater goes out shortly after you settle in.

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Fortunately, there’s an option available for home buyers who may not have as much money stored away for home repairs as they had for the mortgage loan in the first place.  The FHA 203(k) mortgage program makes it possible for borrowers to take out a loan not only for the purchase of a home, but to cover any improvement or repair expenses as well.  The great thing about these types of loans is they generally let you borrow even more than the home itself is worth, so you can absolutely use those extra funds to repair and improve the look (and value) of your home.

Two types

The first thing you should know about the 203(k) loan is that it comes in two different types — the standard (great for more major repairs and improvements), and streamlined (better if you don’t need as many improvements at the start).  The most you’re allowed to borrow is either 110% of the purchase price, or the purchase price + improvement costs — whichever comes out to less.  Either way, the money is included as part of the loan itself, rolling into your mortgage payments from there on out.

So, what types of improvements can I make?

Now, don’t let your imagination run wild as you read this — there ARE limitations to the types of “improvements” you can make to a property with this loan.  You can shelve any ideas of putting in a fancy new swimming pool or any other “luxury” improvements, as those won’t exactly fly with lenders as necessary repairs.

You CAN use the money towards improvements like remodeling, say, the kitchen or bathroom, or building a deck for your backyard.  You can also certainly use it for smaller scale projects, too, such as new roofing, water heater/air conditioner repair, or even for new appliances.

Is there a catch?

You can put down just 3.5% on a purchase with a 203(k) loan, the same as other FHA mortgages.  The catch is, you’ll also have to pay an insurance premium of 1.75% upfront (or roll it into the loan amount), and a monthly premium of 1.35% for a 30-year mortgage if you did put down less than 5%.

This can make the loan a bit more costly than usual, but it’s still a great deal if you’re looking for a home to improve.

Ever bought a fixer-upper of your own?  Or tried your hand at home improvement?  Let us know how it went!

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When to Do a Cash Out Refinance

Whenever the subject of San Diego home loan refinancing is brought up, one of the most common questions asked is “what is a cash out refinance?” or “when should I do a cash out refinance?”

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Generally, if you’re asking about cash out refis, chances are pretty good that you’ve already got a pretty good amount of equity invested into your home and are interested in turning some of that into cash money.  If that sounds like something you’re interested in pursuing, read on.

So just what is a cash out refi?

A cash out refinance involves taking out a whole new home loan that’s even higher than what you actually owe on your current home loan and receiving the difference in cash.  So, say you have a home worth $400,000 that you currently owe $300,000 on.  If you decide to go with a cash out refi, you could receive a portion of the $100,000 in home equity that you have in actual cash.  If you wanted to take out $20,000 in cash, that would then be added onto the principal of your new loan, so keep that in mind when deciding how much to take out.

When should I use a cash out refi?

Cash out refis are good for a number of situations, including:

  • When you need the money for a large purchase or investment but are unable to acquire it through any other means
  • Debt consolidation and lowering your total monthly interest payments
  • If other financing options are too expensive than the rate offered by cash out refinancing

What can I use that cash money for?

Anything you want; it’s your money, after all.  Most people take the opportunity to pay off any high-interest credit card debts they may have.  This can be great for wiping out any large, outstanding debts they may have, freeing up their finances just a little bit more.

You can also use the extra cash as an investment or towards a major purchase.  Many people have used their equity monies for things like school loans, paying off emergency expenses, home improvement projects or even vacation time.

Interested in learning more about cash out refis?  We’ve got a team of people ready to answer any and all your questions!

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Home Loan Down Payment Options When Low on Cash

Coming up with a down payment for a San Diego home loan can be quite a feat for potential homebuyers seeking to take advantage of low prices and mortgage rates while they still can. If you’re having that problem, there are several options you might not have considered that can help you meet the down payment requirement for a mortgage loan.  And we’re gonna list the top 5 here, in no particular order:

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On asking the family for help

Many of us, when we’re just starting out on our own for the first time, receive some financial support from our parents when we buy a home.  And that’s fine to lenders — so long as you let them know the money you’re receiving is a gift and not a loan.  If you’re lucky enough to have parents that can support you THAT well financially, you’ll want to make sure and request a gift letter to present to lenders, stating who the money came from and its purpose.

Tap into those retirement funds

Yeah, no one really wants to tap into their retirement funds until they actually HAVE to, but when you need a place of your own to hang your hat every night, some sacrifices have to be made.  You can borrow money from your 401k, assuming your employer allows it.  You don’t have to worry about any penalties for early withdrawal of funds, but you do have to pay the loan back in 5 years, plus interest.  But since that money’s going back into your 401k anyway, it’s not too bad a trade-off.

Look into a VA or FHA mortgage loan

Most people already know that if you’re a veteran or active member of the military, you can get your hands on a nice, shiny VA loan.  These are great because not only are they backed by the government, they also rarely require a down payment of any form whatsoever.

And if you don’t qualify for a VA mortgage, don’t worry — you could also consider a government-backed FHA loan, which only require a 3.5% down payment, meaning you could buy a $200,000 home if you can pull around $7,000 together (with closing costs generally rolled into the loan).  With no income limitations to consider either, this isn’t a bad option for those looking.

And wouldn’t you know, we have a team full of people who can do just that!

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