The RE/MAX Associates Louisville Real Estate Blog

Reasons to Avoid PMI, and How to Skip it

Private Mortgage Insurance doesn’t seem to be a costly expense, but it definitely adds up over the life of your loan. Commonly known as PMI, private mortgage insurance is an extra fee on top of your monthly mortgage payment as well as escrow and taxes. It’s an insurance that protects the lender in case the borrower defaults on the loan. Whoever gave you the loan is the entity handling the PMI. PMI doesn’t do a single thing for the homeowner other than cost you $100 a month. Here’s why and how you should avoid paying PMI.

You don’t have to pay PMI

PMI isn’t mandatory for all homeowners. Lenders charge PMI when borrowers finance more than a certain percentage of a home purchase, it’s usually less than 20%. It makes no difference what you look like on paper, this is the lenders duty to protect themselves. Usually when you reach around 80% equity, you can drop the PMI. Avoid having to pay PMI by putting down a bigger down payment, and expect to pay it if you put down less than 20%.

PMI mortgage insurance does nothing for you

Yes it’s true, you are basically throwing money away. This payment strictly protects the lender, it doesn’t go towards the equity of your home, and it can’t be recouped from the sale of the house. It’s not tax-deductible like your interest, and doesn’t affect your loan balance.  It’s simply a fee to pay if your home-loan-to-home-value ratio is less than 80%.

It’s difficult to get rid of

You build equity as you pay down the principal amount on your mortgage. Even if you financed more than 20% of the purchase price of your home, you should eventually pay down your loan, or your home will increase in value, so that you owe less than 80% of what your home is...

Capital Gains Tax on Real Estate: The Misconeptions

Knowing the rules before you begin is important in any task you to decide to undertake. It doesn’t matter how you gained value on your property, whether the market naturally made your home value rise, you completed a few big time renovations, or whatever, it’s still exciting. The only thing that can diminish your excitement is taxes on your gain. This is called the capital gains tax.

The law passed in 1997 called the Taxpayer Relief Act helps homeowners keep much of the gains on their home sale. Before 1997 homeowners could only “pull out the once-in-a-lifetime card” that exempted them from taxes up to $125,000 on a home sale, or their home earnings were expected to roll into the purchase of their next home. Today’s rules aren’t so strict, so let’s take a look at those loopholes.

Tax Treatment: house flippers vs. homeowners

A common misconception is that all house sales are treated equally. This is not the case for house flippers. In order to receive the best tax treatment on your gains, you need to use that house as your permanent residency for at least two years. For professional house flippers, houses are considered inventory as opposed to capital assets, and the profit is taxes as income. The long-term capital gains tax is 15% for most people, and 20% for those in the top tier tax brackets. If your gains are taxes as income (professional flippers) your taxes could span from 10% to 40% depending on the rest of your income. House flippers cannot simple avoid the tax by rolling their profits into the next house.

Exemption Limits: Filing married vs. single

The Taxpayer Relief Act voided the once-in-a-lifetime tax exemption of $125,000, exemption limits haven’t completely fallen by the wayside. You are now allowed to keep up to half a million dollars of each home sale profit...

3 Signs to Keep Your Home Off the Market

A handful of sellers think they’re ready to sell their house, but often times they are pressured to make a move. Most real estate contracts only offer “outs” for buyers, and not sellers; so it is a smart move to sit still if contemplating selling your house.

If your home sits on the market for too long, buyers will begin to think there is something wrong with it. If you are going to list your home, and any one of these three things applies to you, you should seriously wait.

Haven’t let emotional attachment go

Selling your home and selling your car are two different things, there is much more emotion involved. Did you make incredible, irreplaceable memories in your home? Is the home sale a result of a major life event like a death, or divorce?

If this is the case, allowing strangers to inspect every inch can be gut-wrenching and painful, but to make the pain better, consider holding off. Take your time to accept the loss of whatever is passing, and list the property when you are ready to move on with your life. If you don’t, it’s going to be an agonizing process.

Your desired price is more than 10% of what agents are telling you

Homes get the most attention in the first couple weeks it is on the market. If you priced your home too high, it could still be on the market months later. At this point you will have few options, and your best tone is to drop the price, and the buyers will get you for a lot less than what you had in mind.

If you get a second opinion from another agent, and they say it will sell for 10 percent below what you were expecting, you should probably wait on selling your home. Try doing some quick renovations to bump the price up a little.

You don’t have a solid exit strategy if you get a deal...

How to Warm Your Bathroom In Style

Winter can be a hard time for your house, especially when it comes to comfortability. Sometimes bathrooms can be one of the most treacherous parts of your house, especially in the morning!

There’s a good chance your bathroom is made of tile, marble, or porcelain, and they aren’t conducive to warmth. With a little innovation and some sweat, you can make your bathroom enjoyable in the winter mornings by filling it with heat. Here are a few ways to heat up the bathroom

Heated floors

Warm bathrooms begin at the ground and heat is known to rise. Heated floors are one of the best things to step on in the morning. It keeps your toes warm, but also keeps the temperature of the room warm. The greatest benefit is it adds significant value to the home, so when you are ready to sell, expect a decent price increase!

This isn’t exactly easy, you will have to rip up the existing floor and lay electric cables or hydronic tubing. Once it is installed though, you’ll wonder how you went without it your whole life. These work really well because bathrooms are typically smaller, and can contain the heater better than a wide open room.

Towel Warmer

Everyone knows the second the shower turns off, it’s a race to grab the towel and get warm. Heated towel racks make getting out of the shower not so painful. They look like miniature ladders with heat-emitting rungs, and are large enough to hold several towels and maybe a robe.

Adding a heated towel rack can be easy or difficult, it’s essentially up to you. You can buy a freestanding one that has to be plugged in, or you can mount one to the wall or floor. The mounted ones tend to be hydronic based, and are connected to the homes plumbing.

Different models come with different options, like a timer, temperature control, how many towels, etc. Regardless,...

Fixtures, Furniture, and Finishes. Misunderstandings that Kill Home Sales

Most sellers know that staging a home exponentially increases the odds of selling it. This means spending time, effort, and money, to get the house looking the way it needs to be to catch a potential buyer’s eye. Most of the time people hire a professional to stage their house, and the professional moves out a few of your items and brings their own in pace of them.

Sometimes when buyers see a home and they fall in love with it, they want it as is, furniture included. It’s not always the seller’s items to provide with the sale. Sellers often times have to lay out what items can stay, and what goes with them. Some items can be confusing, like light fixtures, built-in objects, etc. and will need reasoning why they will be staying or going.

What’s a fixture, and what’s its significance

A fixture is anything inside the home as long as it is attached to the property, meaning if it was removed it could cause damage. Typically, if it requires a screwdriver to uninstall, it’s a fixture.

Appliances

Dishwashers, microwaves, cooktops, and sinks usually stay with the house. The fridge and washer/dryer are often up for negotiation. If it is built into the cabinets, it stays, if it stands on its own, it goes with the seller. Everything is up for negotiation though; this is just the general rule.

Light fixtures

The chandelier in the foyer is often a point of question. These usually will remain with the home, but don’t be surprised of the seller makes a quick swap between your last walk through and signing day. If it’s something you really want, make sure to get it in writing which items stay.

Window treatments

Blinds and shades should stay since they are fitted for...

Boosting Cell Signals in Your Home

Are you living in an apartment with terrible cell phone reception? No matter where you stand inside your calls always seem to fail. The lobby or hallways have full bars, but the moment you step inside your place the magic bars suddenly drop to one bar. Everyone knows how frustrating flakey cellphone service can be. There are explanations on why this happens, and the solutions are right here.

Problems

Your buildings cellphone antenna

Cell providers put their cell sites near or close to the ground, because that’s where people are usually. Sometimes they are on the corners of buildings 20-30 feet up, angled facing the street. If you live on the 40th floor, you might be out of luck.

Building materials can block radio signals

Big bulky metal objects, tinted windows, concrete, all interfere with your cellphone reception. Often times, stepping outside on the balcony or holding your phone out the window will improve your reception.

Living in a densely populated area

Have you ever noticed service tends to slowdown during nights and/or on the weekends, or when you attend a big event half the city is going to? The more people who use the network, the slower it runs. Each tower has a finite amount of radio channels it can use, so the endless amount of people drawing from it slows it down considerably. Once it has reached its capacity, you will have all the bars you need, but it won’t provide you with any data or call service.

Solutions

Buy a cellphone booster

This is truly an investment because these things are not cheap. They usually run anywhere from $400 - $1,000....

15 Easy Feng Shui Tricks for Your Home

Could the right feng shui in your living space result in better in better living conditions, from sleeping to your bank account? You bet! Feng shui is the ancient Chinese art that we as humans are connected to our environment. The objects we bring into our homes and the placement of them affect the energy that surrounds us. It can affect everything from our health, to our happiness.

Most people think feng shui is achieved by adding a bunch of Chinese items in your home, but this isn’t true. Here are some easy steps to improving your feng shui around your house.

Maintain a 6-foot clearance – All surfaces within six feet of the front door, inside and outside, need to be clutter free. This allows energy to flow in and out without running into clutter. Floor mats are fine, but avoid objects like coat and shoe racks right at the door.

Add plants – Potted plants on balconies, patios, and near windows can help energy flow around the home. Plants are living objects that have energy despite how still they are.

Choose your palette carefully – Red happens to be feng shui’s color for 2016, but it is highly discouraged to paint your walls and/or doors red. It is noted as bad luck to have them red, but do what you will. It’s better to have smaller items red, like rugs, pillows, blankets etc.

Add living objects – pets and plants are alive and well, and they move energy throughout the house.

Shape and scale - Feng shui doesn’t limit itself to furniture with round edges. A variety of shapes are your best bet here. Your furniture should be large enough to fit in proportion with your room. Don’t get massive...

What to Know When Shopping for Homeowner Insurance

There are so many parts to buying a home; we often pay attention to certain parts more than others. One area you want to pay attention to is getting home insurance. If anything happens to your home, the right insurance can be the world of a difference. Before you sign up for a plan, here are a few tips to help make this easier.

Shop for insurance from at least three providers

Mortgages typically require you to have homeowner insurance, and you will also have to buy other insurance for disasters. The market is yours to shop in, and there’s no one specific place you are supposed to go. You will want to look around the market and compare coverages, prices, and customer reviews. When shopping, keep in mind you want to shop for quality, not the best price you can get. Be sure to read their customer reviews because you mostly deal with insurance companies during times of disaster, and you will want to be companies with the bets reviews.

Escrow insurance payments with mortgage payments

Most homeowners tack their monthly insurance payments onto their mortgage check. The lender pays your insurance premiums (sometimes property taxes too) out of your escrow account. Lenders like this option because they know your premiums are being paid, and they are protected. You will probably pay for one year of insurance at closing. Bring information about your insurance policy and the money to cover the first year’s premium.

Get adequate coverage

You should know the most important part of homeowner insurance is the level of coverage. Don’t pay for more than you need. Here are the most common types of coverage.

HO-2 – Broad policy that protects against 16 perils that are named in the policy.

...

How to Manage Winter Lawns

Winter isn’t always a break from lawn care, often times depending on where you live in the United States. Generally, lawn care comes down to the three needs, keeping your grass protected, short, and fed.
In between snows, make sure you pick up any branches your lawn might have, and leave the leaves as long as they’re not piling up. Mow them up to spread them around as they will act as a good mulch to protect and nourish the lawn.

Dormant lawns

If your lawn is brown in the winter, it means it’s dormant, and not growing. It’s best to keep this type of lawn short and let the earth water it. Don’t waste your time trying to water your dormant grass. You will essentially be preventing any diseases and pests that could benefit from dead blades of grass. Dormant laws are low maintenance; just do your best to protect it from debris, people walking on it, road salt, and anything else that could bother it while it sleeps.

Active growing lawns

If your lawn is somehow still growing green grass, then it’s obviously still growing. If you have over seeded your lawn with a cool-season lawn like Kentucky bluegrass, then water it regularly. Pretty much water it as needed to keep it green.  If you don’t want to tend to it, there’s always the option of letting it go brown. This is a good option if you want to save water, and don’t feel like mowing.

Fertilizing is only needed when you live in the southern states where it’s usually warm. Only feed them during winter, before it frosts over. Pull what weeds you can find, and spray herbicide in late winter.

Any lawns

These tips help, but leaving your lawn alone doesn’t hurt either. Here’s what you don’t want to do.

Do not let heavy foot traffic stamp...

How to Unpack in Your New Home

After you’ve made all the preparations for moving, packed everything in the truck, and unloaded your belongings into your new home, there’s only one thing left to do, unpack. With boxes galore in almost every room, where do you start?

No matter how badly you want this process to be over with, it will never get finished without rolling up your sleeves and just doing it. Here’s the best way to get started

Clean and prepare your new home – It’s easier to find everything’s proper place when spaces are clean. Wipe down shelves, windows, mop the floors, and start thinking where your belongings would fit best. If time is a factor you don’t have, consider hiring a cleaning service.

Inspect and organize your stuff – check all your boxes against your inventory sheet to make sure you have all your stuff, and it’s intact. Then put all the boxes in the rooms where it belongs. If your boxes are all marked and labeled, this won’t be a big chore.

Open the boxes of essentials – Your essentials are your tools, toiletries, clothes, medicines, packed foods, basic kitchenware, and other lifesaving things you need.

Set major furniture and appliances – place your large furniture and household appliances first. This way, any smaller items you unpack later directly into their right places. It’s helpful to plan your interior design well in advance, so you aren’t moving things around several times.

You want to make sure right after you unpack your necessities, is that they are readily accessible. So prioritize, and unpack the necessities first.

Bedding – Chances are you won’t be able to unpack the entire bedroom right away, but you will need to set up that bed right when you move in. Put it together, put on the sheets, and unpack the pillows, and make the bed, because without it, you’ll be sleeping on the floor.

Bathroom...

Mortgage Rate 2/3/2016

Mortgage rates fell this week. For the 30-year fixed mortgage, the rate settled at 3.5% after falling 11 basis points from last week. Rates fell throughout last week and rise on Sunday to 3.47%. This was the lowest they’ve been since 2013, before creeping up to the current point. Friday’s monthly job report will give a better indication of where the market will move.  

The 15-year fixed mortgage settled on 2.72%, and for 5/1 ARMs, the rate was 2.73%. 

...

Most Common Secrets Sellers Hide

You have finally found the home you want to buy, but beware before signing your name. Sellers can often mislead buyers by not disclosing the serious problems that may inhabit the house. If you fail to notice these issues until after the closing, you are in trouble. Here are a few of the problems sellers most commonly try to hide, and the questions that will expose the truth.

Leaks

Pipes, faucets, radiators, ceilings, roofs, whatever, real estate agents, brokers, and sellers could try to pull a fast one and quick (and cheap) fix that drip to attract offers. The only thing that will 100% work is honesty and admitting faults can benefit the seller. Leaks are never a major problem, and as long as they are honest about it, they can be fixed quickly.

Pests

To love a house is to know what’s behind the walls. Any house that looks amazing on the outside could still hold termites eating away at the walls. It’s important to know that pest laws vary from state to state. If you think there could be pests invading or living in your new home, don’t risk it and just get a pest inspection.

Emotional defects

This one comes down to the state law, some states allow for sellers to leave out if a house is “haunted” or if a death, or murder happened in their house. This may not be a deal breaker for some, but for others, they can’t sleep at night knowing someone has died in the other room. As the new home owner you also have the right to know. If the state you live in keeps sellers from telling you, DiedinHouse.com can give you a heads up.

Issues with the roof or foundation

Knowing if a house has major issues with the foundation or roof can really kill the deal quickly. These repairs are always costly...