After receiving the preapproval on your home loan -- the anxiously awaited first big step toward homeownership -- you likely breathed a sigh of relief that the official "proving yourself" part of the process was over.
Not so fast, if you're searching for a home during the holidays.
Before you get swept up in the tide of frantic holiday shopping, it's important to know that going overboard on gifts for friends and family can impact the total loan amount you're ultimately approved for, and it could even kill the approval entirely.
Here are a few ways you can ensure you make it all the way from preapproval to purchase with no hiccups en route.
1. Don't apply for new credit or rack up new debt.
When you reach the cash register with your arms full of holiday gifts, it's easy to entertain the idea of opening a store credit card. Just fill out the application, add your John Hancock, and you could be walking away with a significant amount off your total purchase.
However, opening this line of credit requires a hard credit inquiry -- one that could ding your credit in the process. In addition, you could impact your debt-to-income ratio or signal to the lender that you are a greater risk than they previously thought.
Tammi Robson, a mortgage broker at Metro Lenders in Denver, tells her clients about the importance of being debt-free or keeping debt levels stable during the home-buying process. This means avoiding major purchases such as a car or that new dining-room set until the entire home-buying process is complete.
"Most lenders do 'debt monitoring' during the loan process, meaning they pull internal credit reports," Robson says. "If new debt shows up or credit scores go down, it will affect loan qualification."
2. Don't move around large amounts of money.
While constantly shuttling funds back and forth might be how you manage your money, it can create a huge headache for lenders, who must be able to track the movement of funds from account to account. If they cannot track the funds, the money movement could appear suspicious -- a red flag signaling undocumented funds or money troubles they hadn't seen before.
In addition, if your family is all about doling out the cash for the holidays, you could be putting yourself in a precarious position. Lenders will also be scouring your accounts for any unusual deposits -- those that are 50 percent or more of your monthly income -- or any unusual cash withdrawals. These will need to be thoroughly explained to maintain your approved status.
Unfortunately, even if your holiday spending gets out of hand, loan preapproval isn't a pass to be less diligent about maintaining a spot-free bill payment history. In fact, it's more important than ever to make sure all bills are paid on time and in full.
Payment history makes up 30 percent of your credit score, and even one late payment can have devastating effects. How much exactly? According to Credit.com, if your payment is over 30 days late (the typical grace period given by lenders), it could lower your score anywhere from 60 to 110 points -- a substantial amount even if you're starting with a high score.
If that late payment is on an existing mortgage, a lender could opt to deny your loan altogether. Even if it's not a complete denial, you'll need to explain in writing why the late payment occurred.
Here's the bottom line.
If you've been preapproved for a mortgage, you've successfully cleared one substantial hurdle -- a bank or lender has looked at your overall financial health and stamped you as a qualified candidate.
But preapproval is not the same as approval, and now, as holiday sales are calling, it's important to keep the finish line in sight. After all, you wouldn't want a few financial missteps to make your dream of homeownership come to a crashing halt.
If you like old homes, you may have aspirations of living in a century-old farmhouse or perhaps a row house constructed in the 1800s. It's not for everyone, but for some people there's something charming and almost whimsical about living in a house that's been around longer than your grandparents. It's the history, it's the look and it's certainly the construction. They just don't build them like they used to.
That's meant as a compliment, but it's possible to purchase a house that's 100 years old -- or even 200 years or older -- and eventually long to live in a cookie-cutter home that looks like every other residence on the block. As Kent Owen, an insurance agent from Silverhill, Alabama, puts it: "Older homes may look nice at first glance, but think of them like a person who has been divorced a few times. You might be able to make it work, but you'll be finding problems from the past in there somewhere."
That might be fine with you, especially if you enjoy do-it-yourself projects. But if you're thinking of buying a century-old house, you want to know what you might be in for -- and get out your wallet. These are some issues century-old homes tend to have in common.
Faulty, Dangerous or Old Wiring
Here's the good news. If you're buying a house that is 100 years old, the wiring probably has been replaced, says Welmoed Sisson, a home inspector with Inspections by Bob, headquartered in Boyds, Maryland.
Sometimes, Sisson says, she and her husband will find houses with the original wiring, "and it's almost never in good working order."
Here's a fun fact: "Old houses with electricity frequently had knob and tube wiring, which relied on exposed wires running through porcelain tubes and around porcelain knobs," Sisson says.
If you hear a homeowner or realtor refer to K&T wiring, they're referring to knob and tube wiring. And a not-so fun fact: "Many insurance companies will not issue coverage on homes with K&T," Sisson says.
Corroded Water Pipes
A major problem for city governments around the country is that water lines have to be replaced. They don't last forever. In fact, the American Water Works Association's 2015 State of the Water Industry report says that replacing aging water lines is currently the most important item on the industry's to-do list. Not surprisingly, if you have a house that's 100 years old or older and previous homeowners haven't replaced the pipes, that job will fall to you.
Heather Brewer, who has a public relations firm in Albuquerque, New Mexico, says she owns a beautiful craftsman house built in 1919 (OK, just shy of a 100-year-old house), and water issues have often been a problem from the beginning.
"Once, as I was cleaning out my desk, my almost-3-year-old son saw my checkbook, pointed to it and said, 'That for the plumber.' Literally, the only time he ever saw me write checks was to the plumbing company," says Brewer, whose son is now almost 4 and likes to pretend he's a plumber when he plays with his toys.
There are many reasons for water problems, according to Randal Weeks, a designer, architect and founder of Aiden Gray Home, a home furnishings and decor manufacturer in McKinney, Texas. "Houses like this have been occupied and not throughout the years. That resting water damages and decays the pipes, thus leading to leaks and basically dirty water that takes time and may or may not flush out," Weeks says.
And water issues that come with a 100-year-old home won't likely be covered by insurance, Owen points out. Not if those problems have been festering for years, anyway.
"Preexisting conditions and slow damage that is preventable over time isn't covered," Owen says.
At least you'll know this going in, and it won't be a surprise. But it could take some getting used to.
"Most old homes only have a single bathroom. Having multiple bathrooms in a house is definitely a modern creation," says Rob Williams, a real estate agent at DC Home Buzz, a real estate brokerage in the District of Columbia.
It isn't an issue you would typically think about, but you'll find it in a lot of old homes, says Tracy Abriola, a marketing and communications professional who lives in Philadelphia. She and her husband, a real estate agent, are living in her second 100-plus-year-old house.
"A lot of times," she warns, "you're spending a great deal of money to refinish the hardwood floors, but then find added expense addressing uneven flooring."
Lilli Keinaenen agrees. A freelance graphic designer in San Francisco, she owns a house built in 1908, and says that if the floors aren't always even, something else may not be either.
"It came as a pretty big surprise when we noticed our room ceiling heights aren't the same," says Keinaenen, who is still renovating. "But also, the floor height between one side and the other vary, too, due to one part of the house having been a porch at some point. So our master suite will have odd steps, ups and downs. That's all part of the charm, we hope."
That's right. Your old house may have problems beyond the house. If there are 100-year-old trees near the home, for instance, those may need serious pruning or need to come down, Abriola says.
Of course, none of this means you shouldn't buy house that's a centenarian. It does mean that if you're looking for a starter home, make sure your 100-plus home has been maintained well over the years, or be prepared for a lot of updates.
That wasn't exactly the case with Keinaenen's home. She and her husband have had to replace their home's foundation, roof, wiring and plumbing over the last few years. They replaced the entire sewer lateral line, rebuilt the front and back stairs, repaired windows, painted the outside and the inside, added water heaters -- and will soon be involved in kitchen and bathroom renovations.
Keinaenen says she has no regrets. But you may, if you have big dreams but a small budget. You don't want a starter home to finish you off.
WASHINGTON (AP) -- U.S. home prices rose in September from a year earlier at the fastest pace in 13 months as a lack of houses for sale has forced buyers to bid up available properties.
The Standard & Poor's/Case-Shiller 20-city home price index, released Tuesday, increased 5.5 percent in September compared with a year ago, the largest annual gain since August 2014.
Steady job gains and low mortgage rates have propelled a solid rebound in home sales, which are on track to reach the highest level since 2007. The unemployment rate fell to 5 percent in October as employers added the most jobs since December. Borrowing costs have ticked up but remain below 4 percent, a low level historically.
San Francisco reported the largest annual home price increase, at 11.2 percent, followed by Denver at 10.9 percent. Portland had the third largest gain, at 10.1 percent. All 20 cities surveyed reported higher prices than a year earlier.
On a monthly basis, prices rose 0.2 percent in September from August. Prices rose in seventeen of 20 cities from the previous month. They fell in Chicago, Cleveland and Washington, D.C.
Sales of existing homes, while improving, have been volatile this year. They slipped in October after a healthy jump the previous month, according to the National Association of Realtors.
Overall, home sales have increased 3.9 percent in the past 12 months. At the same time, the number of available homes has fallen 4.5 percent.
That squeeze has pushed up prices. The typical home sold for $219,600 last month, up nearly 6 percent from a year ago, the Realtors group said Monday. That is the highest median price for the month of October since October 2005, at the height of the housing bubble.
Home prices are rising at more than double the pace of inflation and much faster than wages, pricing many Americans out of the housing market. That has also pushed up rents as Americans increasingly stay in apartments.
Still, home prices are rising at a much slower pace than the double-digit gains seen in most of 2013. David Blitzer, chairman of the S&P Dow Jones Index Committee, said that the higher prices aren't out of line with rising rents. That's a change from the housing bubble, when home prices soared much higher than rental costs.
Several factors are likely holding back the supply of available homes. Many Americans still don't have much housing equity and as a result would profit little from a sale. That may be delaying them from listing their homes.
In addition, the average rate for a 30-year mortgage has picked up in the past three years. It is currently almost 4 percent, which is still low. But millions of Americans have refinanced their mortgages at much lower rates and may be reluctant to trade up to a new home because doing so would require taking on a higher mortgage rate.
Developers are also building homes at a historically modest pace. Construction of single-family homes dropped 2.4 percent in October compared to the previous month, the Commerce Department said last week.
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The September figures are the latest available.
Mortgage rates for 30-year fixed home loans fell this week, with the rate borrowers were quoted on Zillow at 3.75 percent Tuesday, down four basis points from last week.
The 30-year fixed mortgage rate fell throughout the week before settling at 3.75.
"Mortgage rates remained fairly flat last week," said Erin Lantz, vice president of mortgages at Zillow. "There is a risk of short-term volatility this holiday-shortened week due to lower than normal market participation and several important data releases."
Additionally, the 15-year fixed mortgage rate was 2.93 percent. For 5/1 ARMs, or adjustable-rate mortgages, the rate was 2.92 percent.
Check Zillow for mortgage rate trends and up-to-the-minute rates for your state, or use the mortgage calculator to calculate monthly payments at the current rates.
The countdown to turkey, stuffing and pumpkin pie has begun. Thanksgiving's arrival means many of us are scouring the closet for pants with stretchy waistbands so we can prepare to feast.
The holiday is all about giving thanks and spending a day with loved ones. But cooking the festive Thanksgiving meal can lead to fires. And fires can lead to injuries, deaths or property loss, so make sure to follow some safety suggestions for this holiday.
Check the Stats
Thanksgiving Day is the peak day for cooking fires in homes, accounting for about three times as many fires as any other day of the year, according to the National Fire Protection Association (NFPA).
Each year between 2011 and 2013, Thanksgiving Day produced an average of 2,100 residential building fires, resulting in $28 million in property damage, 50 injuries, and 10 deaths, according to a report by the U.S. Fire Administration.
What causes most Thanksgiving fires? More than 71 percent of fires were attributed to cooking, and the highest percentage of fires (24.6 percent) occurred between noon and 3 p.m., the report said.
Eyes on the Prize
Er, turkey. Leaving food unattended while it was cooking was the leading cause of Thanksgiving cooking fires, according to the NFPA. You'll want to visit with your guests during this holiday, but it's far more important to pay attention to what's in the oven or on the stovetop so that you don't become a statistic.
Also, assign guests items to bring for the meal. Having a potluck-style Thanksgiving dinner will prevent you from doing all the cooking, so you won't be trying to cook multiple dishes at once. Giving your undivided attention to one dish at a time will help to keep food from burning and starting fires.
And when you want to chat with your guests while you're cooking, call them into the kitchen with you. Leaving the room while food is in the oven or on the burners is a risky move that makes your insurance provider sweat.
Don't Wear Loose Clothing While Cooking
Let's set the scene: You're wearing a baggy sweater as you cook vegetables in oil or butter, and you divert your attention to talk to a family member. A fire ignites, and, in a panic, you attempt to move the pan to the sink to run water over it. When you move the pan, your loose sleeve connects with the flames and, in a flash, your entire arm is on fire.
There are several things wrong with this scenario. The first is that you should avoid wearing loose-fitting clothes while cooking, as it puts you at an increased risk to catch fire and be injured.
Secondly, never move a pot that's on fire, or try to put out a grease or oil fire with water. It's best to put a lid on top of the pot to smother the fire, leave the pot where it is, and turn the heat off when the fire has been tamed.
Getting distracted while cooking is also a no-no.
Keep Fire Hazards Away From the Stove
Just like ill-fitting clothing is a hazard that can easily ignite, so are things like potholders, wooden utensils, towels, and flowers. Keep these items away from burners and the oven to reduce the chances of having a kitchen fire.
It's also important to keep pets out of the kitchen. Say you just turned off the burner, but your pup comes sniffing around, puts his paws up on the counter, and accidentally slides a towel on top of the still-hot burner without you noticing, causing it to be engulfed in flames. Avoid this type of scenario by keeping the dog in a gated room and keeping other hazards at bay.
Know the Biggest Risks
Frying is the greatest risk for home fires. So if you're deep-frying the turkey this year, take extra precautions.
Keep the fryer away from the house and on even ground. The fryer should be set up more than 10 feet away from the home, and on level ground to keep the oil even.
Completely thaw and dry the turkey first. Only fry a turkey after it has been fully thawed and dried off to reduce the possibility of splattering grease, which can ignite fires.
Keep children and pets away, and have a fire extinguisher nearby. The last thing you want on Thanksgiving Day is for a child or pet to knock over the fryer and get injured.
If You Have a Thanksgiving Day Fire
The majority of non-fatal Thanksgiving Day fire injuries occurred when people tried to fight the fires themselves. If your home catches fire when you're preparing Thanksgiving dinner and you don't have a fire extinguisher on hand, just get everyone out of the house.
Keep yourself, your family, and your guests safe. You can call 911 when everyone has evacuated.
The good news is that property damage and liability coverage for incidents involving fires are typically eligible for coverage under standard home insurance policies. That's something to be thankful for.
Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow or AOL Real Estate.
Real estate agents see and hear a lot, and while shockingly few things surprise them, there's a fine line between need-to-know and TMI. But the more transparent a client is during the buying or selling process, the better the broker can meet his or her needs.
Luis D. Ortiz, associate broker at Douglas Elliman Real Estate and star of Bravo's "Million Dollar Listing New York," equates the nitty-gritty details of a seller's personal life to a doctor visit. When the doctor asks how often you drink, "everybody says 'socially' when really they drink every night," Ortiz says. "The more transparent you are of a person, the more they can get to the core of the problem."
To get the most out of your relationship with your real estate agent, avoid these red flags that can end up landing you with the wrong agent or the right one running for the hills.
Telling an Agent You're Not Sure About Selling
Agents typically don't collect a fee until their client either sells his or her current home or purchases a new one. Any time and money spent before then on marketing and other services is out of the agent's pocket. Simply dipping your toes in the water to see if your house generates interest -- and then pulling back -- isn't going to be very enticing for a broker.
"I'm not sure I'm going to take that seller on as a client," says Greg Cooper, manager and broker at Berkshire Hathaway Home Services in Indianapolis. "The process costs everybody time and money, so why waste it unnecessarily?"
And as Ortiz points out, putting your house on the market experimentally can have adverse effects on other homes that are actually for sale. "It gives the buyers [a] perception that the apartment is not sellable [or] that the market may be turning into a buyer's market," Ortiz says.
Saying You Don't Have a Time Frame
Not having a deadline can leave brokers unsure of your commitment. Agents understand when their clients have a strict time frame, and can appreciate a few extra days or weeks to close a deal on the right home. But being told they have no target date to sell or purchase a home will leave them wondering if they're wasting their efforts.
Cooper says serious homebuyers will typically have a reason, such as a growing family or moving for a job, that brings about the change in living situation. A lack of deadline puts up a flag that you may also lack commitment to carrying out a deal. "My question for them would be, 'Why do you have all the time in the world? What are you trying to accomplish?' That goes back to, 'We're not really sure what we want to do,' and that's just not a situation, in all candor, that's beneficial 98 percent of the time to the client and the broker," Cooper says.
One of the first questions Ortiz asks on any listing appointment is why the homeowners is selling. "You have to know if this person is real or not," Ortiz says. "I want to know because that sets the conversation and what my expectations should be."
Lying About Your Motivation
Your real estate agent will have to know a lot about you -- your financial health, your needs and wants in a living space and any life-changing events that could cause you to buy or sell at a specific time -- to do his or her job properly. In order to work successfully with your agent, honesty is the best policy.
Cooper says one of the first questions he asks potential clients is why they are looking to sell, primarily to get a full understanding of the clients' needs and how he can best fill them. "If I've got a seller who is changing jobs or who is going through a divorce, those things clearly affect the motivation level they have to sell the home," he says.
An agent you've carefully selected and can trust will keep your personal life private. And by knowing your reason for moving, he or she can better meet your needs. Joe Manausa of Joe Manausa Real Estate in Tallahassee, Florida, says full disclosure can also help prepare agents for what they may face down the line. He gives the example of spouses left in the dark: "There are times we've been hired to sell a home, and after they sign the documents I get a call from one of them saying, 'Hey, he doesn't know it, but we're getting divorced, and that's why we're selling."
Overpricing Your Home
You've hired a professional to help you throughout the process, and it's important to give the agent enough breathing room to be the pro, particularly when it comes to pricing. Starting the process with nonnegotiable expectations is a good way to get off on the wrong foot.
Manausa explains that overpricing your home will often leave it on the market longer because the right buyers won't see it. "People go online and the first thing they do is they shop by price range. If you're overpriced, the people that do see your house [are] comparing it to nicer houses -- they don't want to see yours," Manausa says.
Asking Your Friends What They Think Your Home is Worth
Ortiz says a friend's pricing recommendation often show how kind the friend is but has nothing to do with the actual value of the home. "They're all your friends and they'll tell you for the sake of telling you your house is worth $20 million [when] it's only worth five dollars," Ortiz says.
Rather than have the agent compete with other opinions, keep your friends' kind valuations of your home to yourself.
When something breaks, immediately calling the professionals may not make the most sense.
As a homeowner, sometimes it feels as though the constant stream of repairs, upgrades, and replacements is never-ending. Winter maintenance makes for a cozy cold season, especially in cities such as Minneapolis and in other northern towns, while summer is all about staying cool. With all the cash flowing out of your pocket, saving a bit of money with each repair can add up and boost your bank balance over time.
But when something breaks, immediately calling the professionals may not make the most sense. Before you pick up the phone, check out our list for some money-saving DIY home projects.
1. Off-season Repairs
A few repair items have fluctuating prices depending on the time of year. With the arrival of fall, furnace maintenance calls are at an all-time high; the same for gutter cleaning. Why not have these items checked and repaired in the summer, during the slow season? You could score a discount, and you'll feel like a rock star for dealing with them well in advance.
Often, a bit of research into a DIY repair issue can save you hundreds of dollars. The number and variety of instructional videos on YouTube is mind-boggling. The topic of furnace repair features more than 90,000 videos. Chances are, you're going to find what you're looking for. When you find an instructive and helpful video, consider subscribing to the channel. Next time you take out your tool belt, finding the perfect video will be a snap.
3. Salvaged Material
Building and repairing items with salvaged materials is not only a money saver, it's also environmentally friendly. From lumber to doors, windows, vanities, and light fixtures, pretty much everything can be purchased for a fraction of the price secondhand. Familiarize yourself with the return policy in the event your purchase is not in great working order.
4. Rent/Borrow Tools
DIY is the American way, but the cost of tools can be a huge out-of-pocket expense before you even get started. Rather than buying a tool you're going to use only once, consider renting. Big home improvement stores have a large selection of rentable power tools, all properly maintained and ready to go. Or post a notice on your neighborhood group and ask if anyone would be willing to lend out their shiny new circular saw for your next project.
5. Purchase Materials and Labor Separately
When hiring a contractor, inquire upfront about material cost. Specifically, ask if there will be a markup or if they will be sharing their contractor's discount. If the former, ask for a list and buy the materials yourself. Not only will this probably save you money, but you'll also know exactly what you're getting rather than coming home to a lovingly installed 1970s avocado-green toilet.
6. Manufacturer's Rebates
If you're purchasing major appliances or materials for your home, check the manufacturer's website or store fliers for rebates. Some manufacturers offer rebates on surplus items as well as out-of-season items. Energy-saving appliances also come with additional money-saving opportunities: utility costs. Utility-cost savings are the gift that keeps on giving. Every month, you can reap the benefits of a lower water and/or electricity bill, something you will be happy about if you decide to refinance.
Bonus: Check the IRS website to see if you're eligible for an energy-savings tax credit/deduction.
7. Preventive Maintenance
Regular maintenance can extend the life of your home's major systems. Simply changing the filter on your furnace regularly can make this expensive appliance last longer. Also, the occasional deep clean, debris removal, and visual inspection can keep your home in working order and eliminate many costly home repairs. If you notice a small issue during routine maintenance, deal with it immediately rather than giving it time to become a larger, more costly one down the road.
Mortgage rates for 30-year fixed loans fell this week, with the rate borrowers were quoted on Zillow at 3.79 percent, down four basis points from last week.
The 30-year fixed mortgage rate fell Friday, then hovered around 3.80 percent before dipping to the current rate Tuesday.
"Last week, mortgage rates remained flat until weak U.S. economic data and stronger than expected oil supplies caused a drop at the week's end," said Erin Lantz, vice president of mortgages at Zillow. "Rates are unlikely to move much higher this week, as markets make sense of the political situation in Europe and look to U.S. inflation and output data, as well as the release of minutes from the Federal Open Market Committee's October meeting and commentary from several committee voters."
After 17 months on and off the market, the Mediterranean-style mansion where "Scarface" left its bloody mark on cinematic history has sold for a whopping $22.7 million less than its original asking price. The buyer said, "Say hello to my $12.3 million!" And the seller said, "Alrighty then."
The 1983 movie starring Al Pacino was filmed partially at the 1906 mansion in Santa Barbara, which originally was listed for $35 million. The most recent asking price was $17.9 million.
The Mediterranean estate surrounded by fountains and Persian gardens is memorable as the site of the Pacino character's most famous line, shouted over the blast of his machine gun: "Say hello to my little friend!"
The Roman-style mansion at 631 Para Grande Lane was designed by architect Bertram Goodhue. Its name, "El Fureidis," means "Tropical Paradise," according to the listing. The four-bedroom, nine-bath home sits on 10 acres. Its rooms are artistically detailed with painted and gold-leaf ceilings, tiled rooms, woodwork and carvings, and a unique pool with fountains.
You've found the perfect house in the cutest neighborhood. And you're tired of writing a rent check every month, with nothing to show for it. All that's keeping you from making an offer on your first home is that big down payment.
So is it OK to use your 401(k) account to buy your first home? Before making that decision, you need to decide if it makes more sense to keep your money in your 401(k)'s stocks and mutual funds, or if you'll make more money in the long term by shifting that money to your primary residence.
Weighing Your Options
Real estate is just starting to recover after the bubble burst on prices during the Great Recession, but it's a hot investment right now: The National Association of Realtors says the median price for existing single-family homes is $229,400 -- up 8.2 percent from the previous year.
That outperforms nearly anything that you'd find in target-date funds that are included in many 401(k) plans; for instance, the Vanguard Target Retirement 2050 fund (ticker: VFIFX), for those who are planning to retire about 2050, has returns of 1 percent in the last year.
Of course, a one-year snapshot doesn't tell the whole story. The markets are in a six-year bull run, but returns are lower this year because of August's correction and concerns that the Federal Reserve will raise interest rates. Fidelity says its average 401(k) account dropped from $91,100 to $84,400 in the third quarter.
Robbing Peter to Pay Paul
It comes down to a decision, financial advisors say, between trying to increase your long-term investment portfolio through your home or through the stock market, mutual funds and bonds held in a 401(k).
Andrea Heuson, finance professor at the University of Miami, says a 401(k) is a better investment vehicle because investors can choose where to invest their money, and they have the ability to get to it quickly in an emergency.
"That is probably not a wise economic decision [to dip into your retirement] simply because, from an investment standpoint, a 401(k) gives you much more flexibility as an investor than a house does," she says.
Taking money from your 401(k) also comes with a big penalty, unless you've turned 59 1/2. Investors can expect to pay tax of 10 percent, which means that money is already lost before the initial transaction. And by draining 401(k) accounts, buyers could also miss out on the magic of compounding interest.
"If it's not one of the worst things you can do, it's close," says Chris Copley, a regional sales manager for TD Bank in Pennsylvania and New Jersey.
Copley says there is seldom a time where he would recommend that a client liquidate a 401(k) account. "That would be an occasion with special circumstances," he says, adding that potential buyers should be able to put 3 percent down plus cover closing costs without dipping into their retirement accounts. If they don't have the money, Copley says they should hold off.
Heuson says buying a home locks an investor into a geographic area, and it is an expensive investment to get into and out of. Closing fees take 5 percent of the value of a house off the table, while fees for most mutual funds, exchange-traded funds and target-date funds are fractions of a percent.
Tapping into a 401(k) account to pay for a house also means that a person is relying on the idea that the appreciation rate while they live in the house will be at least as high as the appreciation rate of the investments that they have in their 401(k), Heuson says. A typical 401(k) investment in the stock market has returned, on average, around 8 percent a year since 1920 -- much higher than 2015's performance -- but few housing markets in the U.S. can be relied on to return that high a percentage.
And if money is withdrawn from a 401(k), investors are assuming their real estate investment will make up for the financial penalties incurred.
Taking a Loan Against Your 401(k)
Another option, if an employer allows, is to secure a 401(k) loan, which would allow investors to dip into their retirement account without risking taxes or penalties. However, the money must be paid back, and the account would lose the advantage of compounding interest that makes 401(k)s so valuable.
Michael Wiginton, a financial adviser in Jasper, Alabama, says many people who borrow from their 401(k) accounts never pay themselves back and find themselves in a worse financial position than they were previously. Wiginton says people have 401(k) accounts because there are no loans for retirement. If you can't afford a property without dipping into your retirement account, rent elsewhere until you can, he suggests.
"Borrowing against one's 401(k) is almost never advisable," Wiginton says. "That's typically very poor advice, no matter how many so-called justifications you see promoting it."
But Barry Jenkins, a real estate agent for Better Homes and Gardens Real Estate's Native American Group in Virginia, says he would rather have his money in real estate than the stock market. He liquidated his 401(k) account to invest in real estate.
"I know I'm going to look out for my best interest more than a mortgage broker," says Jenkins, who owns more than 17 homes and bought his first as an investment property at age 18.
It is an idea that resonates with millennials, Jenkins says. They want to be in control of their finances, and they trust themselves more than they trust others, he says, adding that he regularly has millennial clients who choose to use their 401(k) money when purchasing a home.
Recognizing the advice of financial professionals, Jenkins acknowledges he is missing a financial opportunity by not contributing to a 401(k), but it's a sacrifice he's willing to make. Jenkins says he is increasing the number of investment properties that he owns, building his wealth in the process.
"I'm just doing so well with real estate," he says.
Dining rooms are a wonderful place to express your style through furniture, lighting, art, and color. Here are five favorite dining room styles, and the elements that make them so appealing.
Tailored and Traditional
Traditional style is all about the details: intricate carving, unique upholstery, textured linens, and statement lighting contribute to this exquisite look. Take your style traditional by focusing on architectural details like embellished table legs or an ornate console serving as a bar.
Paneling is also a classic element found in traditional dining rooms. A gray-toned wall with bright white trim creates a crisp and clean look. Top off the style with an eye-catching chandelier and a few sconces along the wall for ideal ambiance.
Some other style-boosting elements? Mixed finishes, graceful decorations, and textured rugs balance the look.
Modern and Modish
The modern-style dining room takes many shapes and forms, but some themes are very prominent and consistent throughout. Abstract art serves as a must-have focal point in any contemporary setting, but especially in a dining room. Modern art and decor add just the right amount of movement to an otherwise structured style.
Clean lines and crisp corners are another important detail in contemporary design. Whether your chairs' frames are perfectly rectangular, or your table's angles are prominent and precise, having perfectly formed 90-degree angles is key to a modern motif.
Other favorite contemporary design elements include high-gloss finishes, metallic details, and sleek and simple tablescapes.
Rustic design often conjures up images of old log cabins and less-than-lovely ski lodges. Because the rustic look is so heavily influenced by wood and organic textures, it's best to keep it as light and airy as possible, adding in elements of contemporary and traditional designs.
Try creating fresh farmhouse style with exposed beams, a distressed dining room table with bench seating, and plenty of greenery. Details like barn-inspired doors, nailhead trim, and reclaimed wood offer up a refined version of the classic rustic style.
Cool and Cottage
If you're partial to the calm and collected vibe of the Nantucket shoreline, you might be a fan of cottage design. This cozy and unpretentious style offers a light and bright alternative to traditional design with distressed wood elements, tons of texture, and simple, elegant lighting. You can't go wrong pairing a seagrass rug with an ornate dining table.
Keep colors soft and sinuous with tones of gray, beige and white, and lightly add pattern with an area rug, table linens, or upholstered chairs. Other cottage elements to consider: gentle patina on surfaces like tables, consoles, and shelves, slipcovered chairs, and curated tabletop decor.
Trendy and Transitional
Taking cues from modern and traditional design, the transitional style is a cultivation of contemporary elements and classic architecture. Minimal accents and culled accessories lend a clean touch to a timeless dining room setting, and the less-is-more-approach is alive and well throughout the space with statement lighting and just a few curated fittings detailing the space.
If you'd like to mimic the transitional style further, consider these design elements: crisp window treatments, a calming color palette, and organic decor.
While these are only a handful of the possible design styles to outfit your dining room, they are great starting points.
Even if you didn't fall in love, every open house is an opportunity to learn still more about what you're really looking for in a home.
You can learn a lot from a visit to an open house, from whether a home is really as amazing as it looks in photos to whether the street noise is tolerable. But one thing that isn't always so clear after visiting an open house is what to do next.
Whether you've fallen in love or never want to set foot in a certain neighborhood again, how do you best put that information to use? Here are the key steps buyers should take after an open house.
You've Fallen in Love? Do This
You've fallen in love with that Florida home for sale in Boca Raton, and you're ready to make an offer: Huzzah! Here are your immediate next steps.
1. Determine your best offer. Talk with your real estate agent to figure out your initial bid. Kimberly Ehardt, a Texas real estate agent, says your agent can help you find comparable home sales in the area, look up facts such as how long the property has been on the market, and help you factor in any repairs the property may need. "Don't make a move without an agent," she says.
2. Be prepared to hurry up and wait. Accepting an offer is a big decision for the seller too, and as soon as your agent hears something, you'll be the first to know. The waiting is the hardest part, so try to find ways to distract yourself.
3. Don't jump the gun. When in doubt, listen to your gut. If you're worried you may be offering more than you'll be comfortable with, scale down. It's better to lose the property and find another that fits your budget than to win the bidding war and be house-poor.
4. Don't forget the inspection. Getting your bid accepted is only the first step. If the home inspection reveals any major problems the sellers aren't willing to address, you could still find yourself needing to walk away.
If You're on the Fence
When you're feeling lukewarm about a home, sometimes a little thoughtfulness can help sway you in one direction. Here are some tips to help you determine whether a home is right for you.
5. Sleep on it. Don't let a false sense of urgency push you into making a decision you're not 100 percent sure about. If the thought of sleeping on it and potentially losing the home to a more aggressive buyer leaves you brokenhearted, that could be your answer right there. If not, give it a good night's rest and see how you feel in the morning.
6. Know your must-haves. Writing out a list of qualities you consider non-negotiable and deal breakers should definitely be on your home-buying checklist. Compare this property with this list. What matches up? What doesn't?
7. Schedule a personal tour. Open houses can be misleading. The sellers' agent (or the seller himself) is extolling the home's best features, there's mood lighting and fresh-baked cookies, and you hear other buyers ooh and ah. If you're really not sure about a house, make an appointment with your agent to take a second look. "Bring a friend or family member who can offer a fresh perspective," Ehardt says.
8. Consider your lifestyle. If you're a light sleeper and the home is on a busy, noisy street, it probably won't work for you in the long term. If you have a big, active family and there's a tiny backyard, no amount of great rooms inside will keep everyone happy. Imagine yourself living in the home and ask yourself if the fit is right.
9. Consider the add-ons. The cost of a home is often more than just the final closing price -- you'll also want to tally any additional costs you'll incur, such as fixtures and appliances you want to upgrade, items that need repair, and your maintenance costs. (Read: That vaulted ceiling in the main living area can drive up your energy bills.) After considering all these extras, does buying the home still feel like a good deal?
10. Come back at different times of day. That quiet neighborhood you loved on a Sunday afternoon could become mayhem during rush hour or on a Friday night. Make sure you like the property at all times of day.
11. Trust your instincts. Indecision is rarely a 50/50 split. There's often a gut reaction or a little voice in the back of your head pulling you in one direction or the other. Listen to these instincts for a clue into what you're really thinking.
When You Hate the Open House, Learn From It
If you absolutely could not wait to get out of that open house, don't give up just yet. It's OK. There are lots of things you can apply to your house hunt even if you feel as if every house you've seen so far isn't even in the ballpark. Here's the key to following up after an open house you didn't love.
12. Identify the issues. Knowing what you didn't like about a property, and why, can help you hone your search so you have success in the future. Whatever your turnoffs with this home -- location, layout, style -- remember these qualities as you consider visiting new listings.
13. Expand your horizons. Maybe you thought you wanted a ranch-style home, but you're beginning to realize a Tudor or split-level might be a better fit for you. Maybe you're running out of solid options in your target neighborhood, so it's time to broaden your search into similar areas you hadn't yet considered.
14. Don't settle. It can be frustrating to visit home after home that just isn't doing it for you. But don't let frustration tempt you to settle for something that isn't right for you. While no home will be "perfect," there's a difference between making a few small compromises and making a big mistake you'll have to live with for many years to come.
Mortgage rates for 30-year fixed loans rose this week, with the rate borrowers were quoted on Zillow Mortgages at 3.83 percent Tuesday, up 17 basis points from last week.
The 30-year fixed mortgage rate rose steadily throughout the week before settling at the current rate.
"Mortgage rates moved decisively higher last week as the commentary of several Federal Open Market Committee members and an exceptionally strong jobs report solidified expectations for a December Fed rate hike," said Erin Lantz, vice president of mortgages at Zillow. "Markets will look for further signals about the strength of the economy in inflation and consumer confidence data in this holiday-shortened week."
Additionally, the 15-year fixed mortgage rate was 2.98 percent. For 5/1 ARMs, or adjustable-rate mortgages, the rate was 2.99 percent.
Check Zillow Mortgages for mortgage rate trends and up-to-the-minute mortgage rates for your state, or use the mortgage calculator to calculate monthly payments at the current rates.
Trust Neil Young. It's better to burn $4.5 million off the price of your Hawaiian paradise than to fade away. The rocker listed it for $24.5 million last summer, about the time his new album, "The Monsanto Years," dropped. He unloaded it for a cool $20 million, the Los Angeles Times reports.
The acreage sits between two bays. "It's one of the most exceptional properties on the Kohala Coast," said listing agent Carrie Nicholson of Hawai'i Life Real Estate Brokers. "It's right off a well-known surf break and a beautiful, white sand beach."
The property boasts 830 feet of ocean frontage and encompasses a beach house with five bedrooms and four baths, plus two two-bedroom guest cottages, two greenhouses and a pool house.
Snorkel in secluded Kiele Bay on the south side of the home, or enjoy lush views from the estate's spacious verandas.
Many tropical trees grow on the estate, producing lemons, papayas, pomelos, mangoes and a variety of coconuts.
Photos courtesy of Hawai'i Life Real Estate Brokers via Zillow