May 16, 2023 | Real Estate
Hiring a home contractor can be a daunting task, as the success of your home renovation or construction project depends largely on the competence of the contractor you choose. Here are some critical tips to consider when hiring a home contractor:
Research: Do thorough research on potential contractors before hiring them. Check their credentials, licenses, certifications, and experience. Also, look for reviews and testimonials from past clients to get an idea of their work quality.
Get multiple quotes: Request quotes from multiple contractors and compare them. This will give you an idea of the average cost of the project and help you choose the contractor that offers the best value for your money.
Check for insurance: Ensure that the contractor has liability and worker’s compensation insurance. This will protect you from liability in case of accidents or injuries on the job site.
Define the scope of work: Clearly define the scope of work and project specifications in writing. This will help avoid misunderstandings or disagreements later on.
Set a timeline: Establish a realistic timeline for the project and make sure the contractor agrees to it. This will ensure that the project is completed on time and within budget.
Communication: Effective communication is crucial when working with a contractor. Make sure that the contractor is responsive and easy to communicate with, and that you are comfortable asking questions and expressing concerns.
Contract: Sign a contract that outlines all the terms and conditions of the project, including payment schedules, warranties, and dispute resolution procedures.
By following these critical tips, you can hire a reliable and competent home contractor who can deliver quality work on time and within budget. When contacting previous clients, be sure to ask specific questions about their experience, such as whether they completed the project on time, if they stayed within budget, and if they were responsive to any concerns or issues that arose during the project. This information can help you make an informed decision when choosing a contractor and give you peace of mind knowing that you have hired a competent and reliable professional.
May 15, 2023 | Financial Reports
Last week’s scheduled economic reporting included readings on inflation, consumer sentiment, and weekly readings on mortgage rates and jobless claims.
Inflation Rate Rises in April, Slower Pace Expected in Coming Months
The U.S. Labor Department reported the month-to-month pace of inflation rose by 0.40 percent in April and matched analysts’ expectations. April’s reading surpassed the March reading of 0.10 percent month-to-month inflationary growth. Inflation rose by 4.90 percent year-over-year in April. Analysts expect inflationary growth to continue, but at a slower pace through 2023.
Core inflation, which excludes volatile food and fuel sectors, rose at a month-to-month pace of 0.40 percent in April, which matched expectations and the March reading. Year-over-year core inflation rose by 4.90 percent in April as compared to the expected reading of 5.00 percent and the March reading of 5.00 percent.
Mortgage Rates Fall as Jobless Claims Rise
Freddie Mac reported lower average mortgage rates last week as rates for 30-year fixed-rate mortgages fell by four basis points to 6.35 percent. Rates for 15-year fixed-rate mortgages averaged one basis point lower at 5.75 percent. First-time jobless claims rose with 264,000 claims filed as compared to the expected reading of 245,000 claims and the prior week’s reading of 242,000 initial jobless claims filed.
As inflation slows, rapidly rising rental rates and home prices are also expected to increase at a slower pace. As homeownership becomes more affordable, fewer families will rely on rental homes. Less demand for rentals should help with easing very high rental rates seen in many metro areas. In general, more affordable housing choices could help ease housing challenges in areas with few affordable housing options.
The preliminary consumer sentiment survey for May reflects less consumer enthusiasm for current economic conditions. The initial index reading for May is 57.7, which fell short of the expected reading of 63.0 and April’s index reading of 63.5. May’s reading was the lowest since November 2022.
What’s Ahead
This week’s scheduled economic reporting includes readings on sales of previously-owned homes, housing market conditions, housing starts, and building permits issued. Weekly readings on mortgage rates and jobless claims will also be released.
May 12, 2023 | Real Estate
There are many do-it-yourself (DIY) home improvement projects that can be completed on a budget and still have a significant impact. Enhancing the appearance and functionality of your home doesn’t have to be costly or time-consuming.
New Light Fixtures
One simple and affordable way to update your home is by replacing old or outdated light fixtures. New light fixtures can give your home a fresh, modern look and can also help to improve the overall lighting in your living spaces. There is a wide variety of styles and price points to choose from, so you can find a light fixture that suits your tastes and budget. Keep in mind that working with electricity can be dangerous, so be sure to turn off the power before attempting any DIY electrical work.
New Cabinet Handles
Upgrading the hardware on your kitchen and bathroom cabinets can make a surprising difference in the overall appearance of these spaces. Replacing old, worn-out handles with new ones can give your cabinets a fresh, updated look. Cabinet handles come in a range of styles, materials, and prices, so you can easily find options that complement your home’s decor and fit within your budget.
New Faucets for Tubs and Showers
Another affordable DIY home improvement project is updating the faucets on your tubs and showers. Over time, faucets can become corroded or develop leaks, which can lead to wasted water and higher utility bills. Installing new faucets can improve the functionality of your plumbing fixtures and give your bathroom a more polished appearance. Be sure to research the proper installation techniques and gather the necessary tools before attempting this project.
A Fresh Coat of Paint
One of the most cost-effective ways to transform the look of your home is by applying a fresh coat of paint. A new paint color can completely change the atmosphere of a room and can help to cover up any scuffs, scratches, or stains on your walls. Painting a room is a relatively simple DIY project that requires only a few basic tools and supplies, such as paint, brushes, rollers, and painter’s tape.
Wrapping Up Your DIY Home Improvements
As you can see, there are several affordable DIY home improvements that can have a significant impact on the appearance and functionality of your living spaces. By tackling projects like installing new light fixtures, updating cabinet handles, replacing faucets, and applying a fresh coat of paint, you can refresh your home without spending a fortune. With a little creativity and effort, you can transform your home on a budget and enjoy the satisfaction of completing these projects yourself.
May 11, 2023 | Real Estate
What is PMI?
PMI (Private Mortgage Insurance) is a type of insurance that lenders may require borrowers to pay if they have a down payment of less than 20% of the home’s purchase price. The purpose of PMI is to protect the lender in case the borrower defaults on the loan.
However, once you have paid off enough of your mortgage or your home has appreciated in value, you may be able to get rid of PMI.
Here are some ways to do so:
Pay down your mortgage: If you make extra payments on your mortgage or pay more than the required monthly payment, you can build equity in your home faster and reduce the amount of PMI you have to pay. Once you reach 20% equity in your home, you can request your lender to remove the PMI.
Refinance your mortgage: If you can’t afford to make extra payments, you may consider refinancing your mortgage to a lower interest rate. This could lower your monthly mortgage payment and help you build equity in your home faster. Once you have enough equity in your home, you can request your lender to remove the PMI.
Get your home appraised: If your home has appreciated in value since you bought it, you may be able to get rid of PMI by getting your home appraised. If the appraisal shows that you have 20% or more equity in your home, you can request your lender to remove the PMI.
Wait for automatic termination: If you have a conventional mortgage, your lender is required to automatically terminate your PMI when you reach 22% equity in your home, provided you are current on your mortgage payments.
Why Do Lenders Require PMI?
Lenders require PMI (Private Mortgage Insurance) when a borrower has a down payment of less than 20% of the home’s purchase price. This protects the lender in case the borrower defaults on the loan. If the borrower defaults, the PMI will cover the lender’s losses up to a certain percentage of the loan amount, typically 20% to 30%.
Lenders require PMI because borrowers with less than 20% down payment are considered to be at a higher risk of defaulting on their mortgage. This is because they have less equity in the property, which means they have less of their own money invested in the home. If the borrower defaults, the lender may not be able to recover the full amount of the loan by selling the property.
Without PMI, lenders would likely require larger down payments, which would make it more difficult for many borrowers to qualify for a mortgage.
Note that PMI is not the same as homeowners insurance, which covers damage to the property.
PMI is solely for the benefit of the lender and does not provide any protection for the borrower. The specific requirements and procedures for removing PMI may vary depending on your lender and the type of mortgage you have. It is important to check with your lender to determine what steps you need to take to remove PMI.
May 10, 2023 | Real Estate
Buying a home comes with numerous financial planning obligations. It’s far from a turn-key operation and one of the significant challenges involves developing a working knowledge about things often outside your area of expertise.
For example, working as an educator, police officer, investment banker or office staffer does not necessarily make you an expert about home repairs or insurance coverage. Yet, the average homeowner is tasked with carrying a certain level of homeowners insurance coverage without a strong working knowledge.
Many homeowners just purchase enough insurance to cover the purchase price or take the advice of others. Both of those methods could prove wildly deficient.
Rethinking Total Replacement Costs
A distinct difference exists between a home’s purchase price, assessed value and total replacement costs. Let that idea sink in a minute. What you paid for your home and its assessed value have zero to do with what it would cost to rebuild in the event of a total loss!
If you based your homeowners coverage on purchase price or estimated value, the word that comes to mind is: “Yikes.” Here’s why.
Construction costs are based on prevailing market prices that include building materials and labor costs. These vary from region to region and can peak due to materials shortages and shifting prevailing wages. National home-building averages run anywhere from $117 to $125 per square foot. But, even as you read this article, that could change.
Beyond the fundamentals of calculating home construction costs on a square-foot basis, consider that rebuilding your home means that some type of catastrophe occurred. Whether that was a hurricane, tornado, flooding, fire or another disaster, there will likely be cleanup costs.
Before starting new construction, the damaged property will likely need to be razed and damaged materials removed. That comes at a cost.
Building permits and licenses will come at an additional cost. An architectural blueprint and design may need to be secured and that also comes at a cost. The permitting process can be challenging and that could result in you having to rent a temporary residence while your home is rebuilt. Obviously, there are plenty of unforeseen expenses.
Specialty Building Costs
Although average building costs per square foot are a viable standard measure, many homes enjoy specialty items.
Consider that you own a home built decades ago. The high-quality building materials used in construction may be considered specialty items today. They may inevitably be far more expensive than common building materials. If you want the home fully restored, that could cost more than the estimated average.
Accents such as rounded archways or plank-board floors are also more expensive to replace than many average materials. Those are all considerations that need to be tallied when insuring a home.
How To Recalculate Homeowners Insurance
Take the time to calculate the square footage of your home against average construction costs in your area. Factor in specialty items, permitting, razing and other potential hidden costs. Add 10-20 percent. According to some insurance experts, the average home is underinsured by upwards of 22 percent. After the carrier has paid out the coverage limit, overages could become out-of-pocket expenses.
Don’t hesitate to consult with a reputable home builder or insurance expert. Full coverage means accurately accounting for all of the rebuilding costs.
