3 Things You Must Do after Inheriting a Home

3 Things You Must Do after Inheriting a HomeThere can be a lot of excitement when it comes to the realization that you’ve inherited a home, but simply because it’s an inheritance doesn’t mean there aren’t a few strings attached. Whether you’re expecting to be gifted with a home in the future or you’re currently going through this process, here are a few things you may need to watch out for.

The State Of The Mortgage

Once a home has been effectively handed over to you, it’s important to determine the status of the mortgage with the lender and if anything is still owed. While you have the option of taking over the mortgage in a lot of cases, in the event that there’s a reversible mortgage or you’re choosing to rent it out as a second property, you may not be able to transfer the mortgage. While this can often be a rather seamless process, if money is owed there can be other factors to consider.

Determine If You Want It

If you already have a first home and don’t want to take care of your second property as a rental unit, it’s important to realize that keeping the home may not be the best decision for you. While you have the option of organizing a short sale if you’d like to get it off of your hands, you can also contact a real estate agent who will be able to provide you with advice on how to proceed if you’re unwilling (or unable) to take control of the property.

Is It In Good Condition?

Whether you want to keep the home or not, there can be cases where it’s not even a question if it’s a home that you’re going to end up investing money into without much return. In the situation that a lot of money is owed on the house or there are serious issues with its general condition, you may want to release yourself from the inheritance and move on with your financial situation still intact.

There can be an instant feeling of acquired wealth in the event that you’ve inherited a home, but a home in bad condition or that you don’t want to take care of can end up being more of a headache than anything else. If you’re currently considering your options when it comes to a home inheritance, contact your local mortgage professional for more information.

3 Money-Smart Reasons To Downsize Your Home

3 Money-Smart Reasons To Downsize Your HomeLiving big isn’t necessarily living better. Apartment buildings, townhouses and multiplexes have become the new normal for increasing numbers of individuals, couples and families. It’s clear that for many people, smaller spaces are smarter, too.

This attitude is more than just a trend. According to TIME Magazine, multi-family dwellings like condominiums accounted for 40% of new construction in the United States in 2014 and the movement shows few signs of slowing down.

The change isn’t surprising when considering the benefits to moving, especially when it comes to sheer cost-savings. Whether residents are spending less cash or conserving their valuable time and resources, they’re going to see a difference in their bank accounts.

Here are three money-smart reasons to downsize that can lead to big savings.

1. Reduced Maintenance

Maintaining a single-family dwelling can be difficult. Clearing gutters, painting walls, weeding the garden and other unpleasant tasks have serious costs, as residents are forced to invest their valuable time and resources into these recurring chores.

Switching to a smaller space means less maintenance, which can lead to serious savings. Multi-family dwellings typically have a building manager who is responsible for upkeep, leading to serious savings.

2. Heating, Water and More

Utilities are much less costly after downsizing. The less square footage a home has, the less electricity, water and other utilities it will require. Residents have the potential to save hundreds of dollars in costs.

There’s also an added benefit if there are shared utilities divided between other residents of multi-family dwellings. Splitting subscriptions or services like Internet and cable can lead to much lower prices.

Moving to smaller spaces makes these invoices less expensive, which gives residents a bonus every month.

3. Location is Key

Apartment buildings, condominiums and other compact dwellings are often located in central areas close to useful services and businesses. This convenience is a major cost-cutting reason that encourages many people to move.

The Nielsen Company actually found that 62% of millennials would choose to live in communities that combine residential homes and businesses. By being closer to things they value, residents save themselves time, a valued commodity.

Why Moving is a Smart Move

These three money-smart reasons are major factors into why people move into smaller spaces. It’s hard to resist saved time and resources, reduced maintenance, lower utility bills and increased convenience. Learn more about potential savings from your local mortgage professional today.

Real Estate Terms: The ‘Debt to Income’ Ratio and How It Affects Your Home Purchase

Real Estate Terms: The 'Debt to Income' Ratio and How It Affects Your Home PurchaseThe real estate market is rife with terminology that can make a home purchase seem more than a little complicated. If you’re currently looking for a home and are considering your loan options, you may have even heard the term ‘Debt to Income’ ratio. In the interest of simplifying things, here are some insights on what this term means and how it can impact your home investment.

Determining Your ‘Debt to Income’ Ratio

It’s important to consider what exactly your DTI ratio is before your home purchase as this will quickly determine how much home you can actually afford. To calculate this number, take your monthly debt payments – including any credit card, loan and mortgage payments – and divide them by your monthly gross income to get a percentage. In the event that your monthly debt is $700 and you make $2800 in income, your DTI is 25%.

What Your DTI Means To The Bank

The DTI is a very important number when it comes to a home loan because it enables the bank to determine your financial situation. A DTI of 25% leaves some wiggle room, as most banks will allow a DTI percentage that runs between 36-43%. In the case of the above example, this means that the most debt this person could take on per month is about $1200. While banks vary on this percentage, credit history plays an important part in the DTI that will be allowed.

Paying Down Your Debt Or Purchasing A Home

In the event that you have a DTI ratio that exceeds what your bank will allow, you will need to consider your debts before moving on to investing in a home. If you’re planning on purchasing a home in the next year, it’s a good idea to tackle high-interest debt first. However, if you happen to have a chunk of money saved up that you’re planning on putting into a down payment, it’s worth considering that putting more than 20% down may slightly increase the DTI percentage your bank will accept.

There are many fancy terms that go along with the world of real estate, but it’s important to understand what they mean so you can make them work in your favor. If you’re calculating your DTI ratio and are planning a home purchase down the road, you may want to contact your trusted mortgage professionals for more information.