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How can I add value to my home?
You don’t get a second chance to make a first impression, and this bit of wisdom can apply to your home and its value.
“Your property’s curb appeal does make a difference,” Duffy says. “Make your home welcoming and tidy — cut your grass, trim any shrubs and add some new plants or flowers.”
A fresh coat of paint either on the interior or exterior of the house will more than pay you back for the money spent, Duffy adds: “This is one of the most cost-effective ways to improve value.”
A minor bathroom or kitchen update (as opposed to large-scale renovations) can also help improve your home’s resale value. You can simply replace an outdated sink, old tiles or dated light fixtures to give these spaces a refresh.
“It also pays to install a new garage door,” Duffy says. “Some reports estimate a new garage door can increase home values by 4 percent — great curb appeal does matter.”
How Much Down Payment Do I Need?
Another key number in answering the question of how much home you can afford is your down payment.
The rule of thumb still stands: 20% of the home value is the ideal amount of money for a down payment. This amount buys you equity in the home, which helps secure the loan. When you don’t have a least 20% to put down, you have to find alternate means to secure the mortgage.
This can mean private mortgage insurance (PMI), which is an added monthly charge to secure your loan. If you don’t have enough money for a down payment, many lenders will require that you have mortgage insurance. You’ll have to pay your monthly mortgage as well as a monthly insurance payment, so it’s not the best option if your budget is tight.
You’ll stop paying PMI when your mortgage reaches about 78% of the home’s value. While certain homebuyers can qualify for little or no down payment, through VA loans or other 0% down payment programs, most homeowners who don’t have a large enough down payment will have to pay the extra expense for PMI.
My homes value went down. What should I do?
While home values across the board have increased, there could be factors beyond the homeowner’s control that can cause prices to decline.
“Local political issues, climate changes, transportation and employment opportunities — or lack of these last two things — can influence home values,” says Gerard Splendore, an associate broker with Warburg Realty in New York City. “Selling may not be a good idea, unless it is apparent that values will continue to decrease.”
If you can wait out a downturn rather than making a rash decision, that may often be best.
“Home property values are typically influenced by the current economic climate, as well as the supply of houses on the market, which will change over time,” Duffy says. “If you can prolong moving, housing prices will eventually start to rebound.”
How can I start my mortgage application?
Get started through any of these convenient ways:
Our simplified and secure online mortgage application will walk you through the process step by step. If you’re a Wells Fargo customer and use your Wells Fargo Online® username and password we’ll prefill some of your information, making it easier to complete the application.
Talk to a consultant
You can also connect with a home mortgage consultant and have a conversation – about your home financing needs, your loan choices, and how much you may be able to borrow. When you’re ready, your home mortgage consultant will help you complete an application.
How Much Mortgage Can I Afford?
Even though Martin can technically afford House #2 and Teresa can technically afford House #3, both of them may decide not to. If Martin waits another year to buy, he can use some of his high income to save for a larger down payment. Teresa may want to find a slightly cheaper home so she’s not right at that maximum of paying 36% of her pre-tax income toward debt.
The problem is that some people believe the answer to “How much house can I afford with my salary?” is the same as the answer to “What size mortgage do I qualify for?” What a bank (or other lender) is willing to lend you is definitely important to know as you begin house hunting. But ultimately, you have to live with that decision. You have to make the mortgage payments each month and live on the remainder of your income.
So that means you’ve got to take a look at your finances. The factors you should be looking at when considering taking out a mortgage include:
- Credit score
- Existing debt
- Down payment and savings
- Mortgage term
- Current interest rates
- Private mortgage insurance
- Local real estate market
Plugging all of these relevant numbers into a home affordability calculator (like the one above) can help you determine the answer to how much home you can reasonably afford.
But beyond that you’ve got to think about your lifestyle, such as how much money you have leftover for travel, retirement, other financial goals, etc. You might find that you don’t want to buy the most expensive home that fits in your budget.
A report made by a qualified person to estimate the value of a property, often used to help determine an appropriate loan limit. If you’re purchasing, the appraised value usually needs to be equal to or greater than the home’s purchase price.