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Getting the Most Out of Your Remodel Dollars in 2014!

by David DeGioia and Todd Hill

As a serial remodeler, I’m looking forward to spending part of my winter holiday curled up on the sofa planning the wonderful things I’m going to do to my home in 2014. If you’re also day-dreaming about your next home improvements, these ideas (plus some eye candy) from the experts at realtor.com can help you balance the impulsive and emotional (I must have purple countertops!) with the long-term value-adds (Buyers don’t like my purple countertops!) of remodeling. 

Plus, if you’re thinking of financing your project — with equity or a refi — we’ll help you plan with the a housing market forecast.

Future-Proof Kitchen

I’m nearing the end of what turned out to be a nearly two-year long kitchen remodel, but if you’re still in the contemplation stage, consider some of 2014’s top kitchen remodeling trends care of property listing site realtor.com:

  • Modern design with white or gray cabinetry
  • Simple countertops
  • Minimalist designs
  • Appliances that blend into the cabinetry
  • Hammered, matte brass hardware

Several of these kitchen “trends” — particularly white, minimalism, and simplicity — are actually not trendy, but enduring. You’ll find most of them on HouseLogic’s definitive list of timeless kitchen features. They’re the features you’ll love now and in 10 years — and that will be marketable when it’s time to sell.

Flex Rooms   

The hordes of relatives visiting your house this year say they’re staying just a little while, but chances are, one of them will want to move in with you at some point. Embrace the multigenerational trend, says realtor.com, by creating flex rooms.

Adding or converting a bedroom to include a sitting area and bathroom makes a lovely sanctuary for your guests now and a cozy space for your mother in her later years. Consider a separate entrance, too.  When you get up there in age yourself, you can supplement your retirement income by renting out the space.

Related: Multigenerational Remodeling Strategies

Paint Color

The official color of 2014 (according to the official arbiter of color, Pantone) is radiant orchid — a souped-up lilac. Purple accent pillows for the sofa? Definitely yes. But radiant orchid as a dominant color in your house? Not so much.

“Be wary of any trend that has the potential for a short shelf life,” realtor.com advises. Stick to neutral colors for anything in your home (inside and outside) that’s not as easy to replace as a pillow.

Home Equity Rising

OK, now for the brass tacks part of remodeling: paying for it. A few real estate predictions for 2014 might help your sort out your options.

Experts predict home prices should rise in 2014, which means you could have the home equity you need to fund your next renovation. Areas where foreclosures are falling and buyer demand outstrips the number of homes on the market have the best chance of seeing rising prices.

Related: When to Use Home Equity and When Not To

Interest Rates Headed Up

You may have more home equity in 2014 than you did in 2013, but doing a cash-out refinance to pay for your remodel will be harder and more expensive to do in the year ahead due to rigid underwriting rules and rising interest rates. Lenders say loan files are now routinely hundreds of pages long, so lower your expectations about how fast and how easy it is to refinance. Don’t let your frustration with the process wreck your enthusiasm for your remodeling dream.

Related: Turned Down for Refinance? Don’t Take No for an Answer

And Now for that Eye Candy

Whenever you’re remodeling, it’s smart to make sure you don’t over- or under-improve compared with neighbors’ homes. So check out some of the home listings on realtor.com in your Zip code, many of which include interior pictures.

Once you’ve spied on the Joneses, check out these hilarious pictures of the wildest home features of 2013.

I won’t even guess what installing a rowboat bathtub or cathedral-themed wine room would do to your home’s resale value, but looking at them could sure amuse you on a long winter’s night.



Read more: http://www.houselogic.com/blog/home-improvement/experts-getting-most-your-remodel-dollars-2014/#ixzz2p4XNHo2l

2013 Year in Review: Charlotte’s Residential Market Recovers

by David DeGioia and Todd Hill

If 2008 was the year Charlotte’s real estate market came crashing down, 2013 was the year it surged as if the boom times of the 1990s had returned.

Granted, the local for-sale housing market had nowhere to go but up. The steady rise in home prices is nonetheless impressive.

Consider: Home prices in metro Charlotte posted year-over-year gains for the 24th month in a row in November, according to the Charlotte Regional Realtors Association. And Charlotte-area home closings were up 15.2 percent from the same time a year earlier.

The association says Realtors closed on 2,619 home sales in November in the 10-county area it tracks, up from 2,274 in November 2012.

The average home sales price in November was $223,725, up 9.2 percent from $204,820 a year earlier. The median sales price — considered a more accurate measurement — rose to $175,000, up 9.4 percent from $160,000 in November 2012.

Properties are remaining on the market an average of 136 days from listing to closing, a decline of 10 days from the November 2012 level.

There were other, anecdotal signs of recovery. For example, some local investors found success in flipping homes. And this month, Premier Sotheby’s International Realty opened an office in SouthPark — its first outside Florida. Observers view that as evidence that the luxury, second-home market is on the rise.

The key question for the new year: How long will such trends continue?

Read More: http://www.bizjournals.com/charlotte/news/2013/12/27/2013-year-in-review-charlotte-s-residential-market.html?page=all

Owning a Home is Still the American Dream

by David DeGioia and Todd Hill

The American dream of home ownership is alive and well even after the battering prices and budgets took during the housing crisis, according to a survey by Chase. A total of 87% of respondents said owning their home is something they have always wanted.

“Owning a home is at the heart of most Americans’ dreams,” said Chase Mortgage Banking CEO Kevin Watters. “And people are saving as much as possible to achieve home ownership.”

While 66% believe housing is a good financial investment, 75% see it as an important part of raising a family.

“Owning a home will not only give my husband and me pride and roots, but it will also bring pride in my children and respect from my friends and family,” said one respondent.

Potential home buyers are gaining confidence. Compared to six months ago, nearly twice as many potential first-time buyers are optimistic about being able to save for a down payment over the next six months.

Overall, 56% of consumers expect their finances to improve over the next six months while only 8% expect them to worsen.

“First-time home buyers are crucial to the housing market and the overall economy — and to their communities,” Watters said. “As families buy their first home, they are investing in their communities and enable other families to move up. That will eventually spur more new construction, generating additional jobs.”

Other survey findings include:

  • Twice as many consumers who refinanced plan on spending more over the next six months than those who did not refinance.
  • 68% of renters want to own a home, but cite saving money to purchase a home as becoming increasingly difficult. While pulling together a down payment has always been challenging, tighter requirements have raised the hurdle.
  • 60% of home owners plan to invest in improving their property in the next year.



Read more: http://www.houselogic.com/news/why-home-ownership-matters/owning-home-still-american-dream/#ixzz2nhdeICfL

For Millennials in the Market for a Home Mortgage: 5 Key Questions

by David DeGioia and Todd Hill

Securing a mortgage in a normal housing market can be long and complicated, and the process has become even more arduous in the current environment. With tight lending practices and low inventory levels, potential buyers are facing significant hurdles. What's more, first-time buyers, usually of the Millennial generation, have the added pressure of a weak job market and massive student loan debt that limits their purchasing power.

"[Owning a home] is really about deferred gratification," says Michael Corbett, Trulia's real estate expert. "You know where the market's going -- you need money, a job history, and you need to show your debt is low compared to your income." Before Millennials start the home-buying process, experts suggest coming up with a financial plan and meeting with a mortgage professional. While everyone has a different financial situation, a professional can create a strategy for buying that first home.

Saving for a down payment, overcoming a disproportionate amount of debt versus income and understanding a particular market is difficult -- but not impossible, says Andre Brooks, regional sales manager at Wells Fargo Home Mortgage. "There are pockets where people have become successful; it's a matter of being educated and informed about your market and the finances to buy a home."

It's no secret that homeownership requires major financial planning and comes with sacrifices. Experts suggest Millennials ask the following questions to determine if buying a home is the right decision and how to make the process as smooth as possible:

Is this the right time to buy a home? The cost of owning a home is a lot more than just the monthly mortgage payments. Buyers need to be prepared to cover costs like maintenance, decor and insurance.

"Just because you can get a loan does not mean it's the best thing," says Karen Goodfriend, certified public accountant and principal at KK Wealth Advisors. Buying a home can be very emotional, but sometimes it's best to wait until things are better positioned in life.
"What's really important to you and what things are you really willing to do to save?" she asks.

Where do you want to buy? "The key is, if I know and understand the real estate market I'm buying in, if I know the options to accumulate money, then I can figure out a game plan," says Brooks. "This game plan may extend over six, 12 or 36 months."

The amount of time that a buyer plans to spend in the new home is important when it comes to recovering closing and moving costs -- which can take up to seven years. For a buyer not planning to stay that long, Brooks suggests buying in a marketplace that's experiencing a sustained price increase to have the best chance of breaking even.

What can you afford? Lenders need to see sellers can afford the mortgage -- long gone are the days of unverified loans. "Speak to a mortgage professional to find out what it will take to qualify for a loan," says Goodfriend. Before looking for a home, experts suggest getting prequalified to set price limits. Along with income, lenders also take into account a borrower's debt-to-income ratio, known as a DTI, and any credit card and student loan debt can raise this ratio. "Your DTI will tell you what kind of house you can afford -- a massive student loan will eat into your income," says Corbett.

While quickly eliminating student debt is a big hill to climb, Frank Donnelly, chairman of the board of the Mortgage Bankers Association of Metropolitan Washington, advises consolidating these loans to lower your monthly payments and DTI ratio. "It all starts with a budget and having good discipline," says Goodfriend. "Living within one's means and not having credit card balances will help someone afford a loan and get a loan." Paying off student loans will really help you qualify for a mortgage but this requires a plan to pay off debts and layering in everything else that will help you get a mortgage.

Do you have good credit? Before applying for a mortgage, experts suggest consumers review their credit history and address any issues. "Know what you need to do to build credit if you don't have a lot of it," says Cara Ameer, broker associate and Realtor at Coldwell Banker Vanguard Realty based in Ponte Vedra Beach, Fla. Good credit not only helps get qualified for a mortgage but it also helps keep the interest rate on the mortgage low.

"Think about your credit score as an asset," says Goodfriend. "You want to be in the best position possible to get a mortgage." Paying credit cards late or carrying a high balance can make getting a mortgage difficult. "Be disciplined about spending and paying credit cards on time," she adds.
Some young buyers who haven't established a strong credit history might need some help. "Without good or enough credit, you may need a cosigner on the loan," says Ameer.

Have you saved enough for a down payment? "If buying a home is a goal, it may take years to be able to save for a down payment but have a strategy and work towards it," says Goodfriend. Although everyone's income will likely increase over time, experts suggest putting 20 percent down on a new home. "Just because the bank will loan it to you doesn't mean you should take the loan," says Corbett. "If you aim for the 20 percent down, the worst you can have is money in the bank."

Many first-time buyers make some kind of sacrifice to save this amount, says Donnelly. Cutting back on discretionary spending, such as dinners out and entertainment, will help lower expenses, and getting another job can increase your income.

"Research the different loan programs that are geared towards a first-time buyer," says Ameer. Some assistance programs can help with the down payment and closing costs but these loans might be more expensive.

A Financial Plan for Your Home

by David DeGioia and Todd Hill

Your home is probably your biggest investment. To manage it, create a financial plan that takes into account repairs, upgrades, mortgages, insurance, and taxes.


Do you pay each home-related expense as it comes? If so, you’re missing opportunities for upgrades, or much worse, heading into a financial crisis when a slew of surprise maintenance items hit. So take a holistic look at what it costs to operate your house and set up a home financial plan.

Use our home financial plan budget worksheet, and start by writing a list of expenses, such as:

  • Mortgage
  • Taxes
  • Home insurance, including liability
  • Repairs and maintenance, such as new furnace, roof, painting
  • Voluntary upgrades, such as a swimming pool, a premium range, a new powder room

What will you learn from this home financial plan weekend exercise?

  • How much you have to spend
  • How much you need to allot in the short- and long-term for necessary maintenance and voluntary improvements

With this newfound grip on your home’s expenses, you can create a home financial plan that’ll help you there for years with maximum enjoyment and minimum anxiety.

Here’s how to manage other aspects of your home finances:

The mortgage: Pay it — and then some
Insurance: Protect your property
Repairs and renovations: By choice or necessity
Taxes: (Almost) no way around them

 

The mortgage: Pay it—and then some

Yup, you already shell out a lot for your mortgage, but can you pay more? Even a little extra each month can add up to an earlier payoff. Let’s say you have $200,000 in outstanding principal and a 20-year fixed-rate mortgage at 5%. Your monthly payment is $1,319.91. But if you can manage to pay another $100 a month, you’ll save $14,887 in interest. 

Run the numbers yourself for your home financial plan.

Advantages of an early payoff, says Alan D. Kahn, a financial planner in Syosset, N.Y.:

  • Less debt means more money to spend later.
  • It feels darn good to own your house outright as soon as possible.
  • Minimal tax loss. Toward the tail end of the life of a loan most of your payment goes to the principal, not the interest, so you’re getting only a small tax break anyway.

Of course, if you’re still saving for retirement, put the 100 bucks elsewhere:

  • A retirement plan
  • An account for the inevitable home repairs
  • An account for discretionary improvements, which can raise your home’s value

 

Insurance: Protect your property

 

Your vegetable garden is pointless without a fence to keep out rabbits; likewise, your home financial plan will come to nothing without an insurance “fence”:

Homeowner’s insurance. Basic coverage for your home and everything in it. The average cost is $636 per year but this varies widely by state.

Liability coverage. Protects you from a lawsuit if someone gets hurt on your property, for example. Your best bet: An umbrella policy.  For about $300 a year you can by a typical $1 million policy.

Various disaster insurance policies. Optional policies cover flood, earthquake, and hurricane damage. As part of your home financial plan, you have to research to see what disaster coverage, if any, you need in your area, and what your standard policy already covers. For $540 a year you can buy flood insurance, for example.

Don’t under- or overbuy insurance

For your basic policy, get homeowners insurance with full replacement coverage in case your house burns to the ground.

That sounds simple, but heads up on calculation. Remember that you own a house as well as the land on which it sits. So even though you bought your home for $300,000, it may cost only $100,000 to rebuild it. Your policy limits should reflect this. This difference will vary widely by region. 

Another heads up: Don’t make the common and potentially disastrous mistake of thinking that because your home has fallen in value you need less insurance. If you bought a $1.2 million townhouse in Florida during the boom, it’s true it now may only sell for $600,000. But the replacement cost of the townhouse hasn’t changed much, so you can’t improve your home financial plan by cutting insurance costs that way.

Other ways to cut your insurance budget:

  • If you make structural improvements, such as adding storm shutters, your insurer may give you a break.
  • If you belong to certain groups, such as AARP or veterans’ organizations, your premiums may be lower.

 

Repairs and renovations: By choice or necessity

 

You own a home, so you’ll be spending money on everything from a new faucet to — surprise! — a new roof. Freddie Mac and other authorities say as part of your home financial plan, you should be prepared to spend 1% to 3% of the market value of the home annually on maintenance. To be extra-prudent, open a savings account and make regular payments until your account reaches 1% to 3% of your home’s current value. 

To help you budget: 

Start with the inspection report you received when you bought the house. Did the inspector indicate that you would need a new roof in five years? A new furnace in 10?  

Keep a log of your major appliances’ age so you can estimate when they’ll need replacing. Some estimated life spans:

  • Roof: 20-25 years
  • Heating systems: 15-20 years
  • Range/ovens: 11-15 years
  • Water heaters: 8-13 years

Then get estimates on what replacements will cost and start saving. 

Consider ongoing non-emergency maintenance, too. Do you live in New England? Price a snow blower and get bids from plow services. 

Resist the siren call of the home equity loan to take care of everything. That just defeats your efforts to pay off the mortgage early.

Separate out what you want from what you need. Does it make more sense to do a $50,000 to $60,000 kitchen remodel, which recoups about 69%, or a minor remodel, which recoups about 75%, according to Remodeling magazine’s 2013 Cost vs. Value Report? 

If you can afford to redo, go for it. Just don’t confuse your necessary repairs (new oil furnace — about $4,000) with your discretionary upgrades (Viking range — $6,000 and up).

 

Taxes: (Almost) no way around them

Even if your lender handles your property taxes from an escrow account, you need to budget for them in your home financial plan. They creep up almost every year, it seems. Take responsibility for tracking the changes in your area: Look over past tax bills to get a sense of how quickly they’ve risen in the past. 

Or if your lender handles escrow and you haven’t saved your bills, ask for an accounting. The median annual property tax payment is $1,812, but that hides the enormous range in medians from state to state.

You can generally deduct property taxes on your federal return. A tax pro can tell you how much of a tax break you’ll get, to help you fine tune your home financial plan.

You may be able to reduce your tax burden by getting a reassessment. Do your homework first: Are comparable houses taxed less than yours? Ask the local assessor what formula is used to set tax rates. You can challenge the assessed value and get yourself a rollback.

If you’re in a special group, you might get some help from state or local programs. Check around to see what’s available in your area. New York State, for example, has its Star Program for giving senior citizens some relief from school-related property taxes.



 

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Contact Information

Photo of David DiGioia Real Estate
David DiGioia
Realty Executives Unlimited
17718 Kings Point Dr, Suite B
Cornelius NC 28031
704-506-6434
Fax: (866)476-8652