How first-time buyers are nabbing their dream homes for (way) less
If you’re a first-time buyer stressed out by the low inventory (and escalating bids) in the Twin Cities metro, it may be time to switch up your strategy. While a move-in home is ideal, there are fixer-uppers on the market — plus, there’s a loan option that comes with built-in remodeling money.
Here are insights you can use to secure a renovation loan and land your own HGTV-style dream home.
What is a renovation loan?
Many budding homeowners give up on fixer-uppers because they assume they can’t afford the home and the renovations that it will require.
However, many first-time buyers are finding relief by leveraging a renovation loan from the Federal Housing Administration (FHA). An FHA 203(k) loan combines a standard FHA mortgage with a construction loan, allowing buyers to purchase a starter home and cover the remodeling costs required to make it their own.
How do you determine the total of a FHA 203(k) loan?
Your lender will help you determine the proper amount for your renovation loan. But typically, 203(k) borrowers aim to secure a loan for the home’s future appraised value (after the renovations have been made).
Streamlined 203(k) loans
There are two types of 203(k) loans. The first, called a “streamlined” 203(k), is for smaller repairs that will total less than $35,000.
Streamlined loans cover:
- Remodeling to existing rooms
- Basement refinishing
- Roof repairs
- Addition or replacement of a deck or patio
Standard 203(k) loans
A standard 203(k) loan is for repairs that will exceed $35,000. Often, these loans are needed when the property has structural damage or the new owners plan to “gut” it completely
Are there limitations?
Yes, FHA loan limits vary by county, and the total of the 203(k) loan must be within the county limits
- Adding new rooms
- Relocating load-bearing walls
- Fixing damages to the structure of the property
How do I qualify for the loan?
Every borrower’s finances differ, and your lender will evaluate your savings, credit and employment history to determine if you’re a good fit for an FHA loan.
Typically, FHA borrowers have:
- A credit score of 580 or higher
- 3.5 percent for a down payment
- A front-end debt-to-income ratio between 28-33 percent
- A back-end debt-to-income ratio between 36-42 percent
One final tip: Start planning repairs ASAP
House Hunters junkies are at an advantage when it comes to securing a 203(k) loan. These renovation loans require that repairs begin within 30 days after closing, and are completed within six months after closing. To stay in bounds on your loan, be sure to secure a contractor with 203(k) experience and create a plan that gives you the home you’ve been dreaming of.
To learn more about buying or qualifying for a mortgage, follow #BuyerInsights and #SellerInsights on Facebook, Twitter, YouTube and Instagram.
Cost, upkeep and resale value: How to decide between hardwood and carpet once and for all
As hardwood and inexpensive laminate alternatives continue to rise in popularity, carpet is starting to get a bad rap. We analyzed the pros and cons of these flooring choices in terms of price, upkeep and resale value so you can determine what will work best for your home.
1. Initial price
If you hope to install traditional hardwood floors, the cost will be much higher than carpet. According to home remodeling experts at HomeWyse, carpet costs just over $4 per square foot, while installing hardwood costs $8 per square foot on average. If your home has hardwood floors that simply need to be uncovered and refinished, the project should run just over $4 per square foot.
Unwilling or unable to pay double for hardwood? You can also look into laminate wood alternatives, which are emerging in popularity due to their durability and ease of installation. Wood laminate varies in cost, but HomeWyse estimates a cost of about $6 per square foot on average.
2. Maintenance and upkeep
When it comes to maintaining your flooring options, it’s a bit of a draw.
Traditional hardwood floors show more wear and tear than laminate alternatives, but they can also be sanded down and refinished to look new. For that reason, it outlasts laminate over the long-term.
Laminate is much more durable in the short-term but if an area is ruined, it can be tricky to repair. In most cases, laminate wood flooring is put in place by “locking” in individual pieces like a puzzle. Replacing individual pieces is easy enough, but the material can fade over time, making it difficult to create a perfect match.
The easiest way to avoid constant professional cleaning on carpet is to vacuum it early and often, especially if you have pets or small children. That way, soil and dirt particles don’t get ground in past the surface. Shaw Floors says that when carpets are regularly vacuumed, they should only need professional steam cleaning every 18 months.
When it comes to everyday maintenance, most homeowners agree that a quick sweep of a hardwood floor is easier than a cumbersome vacuum session
3. Resale value
If you’re planning to stay in your house for 10 years or more, the resale value of flooring options may not be top of mind. But if you’re getting your home in shape to sell, consider this fact: 54 percent of homebuyers said they’d pay more for a house with hardwood floors. On average, these buyers said they’d be willing to spend a little over $2,000 on a home with a wood floor finish.
The survey didn’t cover what buyers thought of laminate wood floors, but it’s assumed that the value of a laminate alternative would be much lower. Still, many home sellers install laminate to help their house appear more modern in listing photos and in person.
Once and for all: Carpet or hardwood?
When it comes down to making a decision, everyone should assess for themselves if they’d benefit more from carpet, hardwood or laminate wood flooring. Many homeowners prefer to have carpet in their bedrooms and finished basements, and to use hardwood or laminate in more highly trafficked common areas. However, if you’re thinking of selling and have gorgeous hardwood floors underneath your aging carpet, it’s a no-brainer to unveil your wood floors before putting your home up for sale.
Looking for more tips on buying or selling? Follow #BuyerInsights and #SellerInsights on Facebook, Twitter, YouTube and Instagram.
Seven things you need to know about lake home insurance
When buying a lake home in Minnesota or western Wisconsin, it’s important to secure a homeowner’s insurance policy that matches the property and how you plan to use it. Here are insights you can use to insure your lakeshore home without paying for extra coverage
1. Map the home to the nearest fire department
It’s common for lake home insurance premiums to be based on the distance from the nearest fire department. If you can, check the distance to local fire stations as you search for lake homes, and get a quote on each property prior to purchasing.
2. Get coverage for unattached buildings
Unlike your primary residence, waterfront homes may have unattached buildings on the property, including bunkhouses, garages, large storage sheds and even — eek! —outhouses. Check with your insurance agent to be sure that all these “extra” structures are covered under your policy.
3. Consider umbrella coverage
Homeowners are liable for injuries that occur on the premises, and “umbrella policies” kick in after the limits have been reached on your standard (homeowner’s, auto or boat) policies. When buying a lake home, it’s smart to purchase umbrella policy coverage, or add to your existing umbrella, to protect against personal liabilities.
4. Insure watercraft and off-road vehicles
For many lake homeowners, owning boats, jet skis, ATVs or golf carts is part of the fun of being “Up North.” Typically, these vehicles aren’t covered under the insurance policy for a waterfront property, but you can easily add separate policies to get them covered.
5. Reduce your personal content coverage
Will you keep fewer possessions of value at your lakefront home? If so, consider opting for a lower contents coverage policy — just keep in mind that your dock will likely be covered under contents
6. Covering semi-permanent water structures
While you discuss your contents coverage policy, ask your insurance agent about how to cover water structures like swim rafts, water trampolines and boat lifts.
7. Check for past flooding activity
As with your primary residence, homeowner’s insurance for a lakeshore property doesn’t cover flooding. Research if the home has a history of flooding activity, and secure a flood policy if necessary.
Looking for more buyer tips?
Need to talk to somebody about homeowner’s insurance for your lakeshore home? Reach out today to chat with an Edina Realty Insurance representative.
What will "The House of the Future" look like? A peek into emerging luxury and new construction trends
When you picture the House of the Future, are you still thinking of a Jetsons-style space pad, complete with a robot butler? If so, it’s time to adjust your expectations (and in some cases, increase them). Whether you plan to build in a few years or just want to know what’s coming around the bend, here are insights you can use as you set your future housing goals.
1. Fully connected smart homes
You’ve likely heard of Nest, the Google-owned programmable thermostat that reduces energy costs. Nest is one of dozens of “smart” home products that leverage connected technology to fix a common housing issue. Others include:
To get your front-end ratio, add up:
- Door locks that offer “virtual keys” to visitors like landscapers or out-of-town guests
- Refrigerators that can tell you if you’re out of milk
- Sprinklers that water your lawn at perfect levels and frequency
All of these features sound amazing (if a little over the top), so why aren’t they integrated into every new home across the country? In short, these products were developed separately, and they are missing the “hub” that would allow them to work together.
The true “House of the Future,” then, will make sure that your automated sprinklers don’t turn on at the same time your in-laws are set to arrive from the airport. As they enter the home, their favorite coffee will be brewing and the refrigerator will remind them that their preferred creamer is on the second shelf.
2. Going beyond green building
Today’s green builders leverage solar panels to reduce energy usage, but tomorrow’s homes could create even more energy than they use. A non-profit institute in Germany recently built Active House B10, a sustainable home prototype that generates twice the energy it needs while producing no emissions.
Photo credit: Zooey Braun
The prefab home, which can be installed in one day using a crane — and relocated just as easily — has a “self-learning heating and power system” that allows it to not only pick up on homeowner patterns, but to forecast future behavior. While 970 square feet will seem a bit snug, Active House has a fold-out patio that can close up to keep the sun and heat out when occupants are away.
As exponential population growth continues, modular housing like the Active House B10 is expected to become more common in urban areas. And the additional energy it produces can be used to power electric cars or neighboring buildings.
3. Guest housing is a given
The last trend has less to do with technology and more to do with a lifestyle trend that keeps on growing. Many builders are reporting that first-floor guest suites or separate “mother-in-law” units are among the top requests they receive when working with buyers who plan to build from scratch. The need for guest housing is on the rise for a multitude of reasons.
Guest suites can be used to offer:
- Semi-independent living for aging parents who are moving in with their children
- A separate space for young professionals moving back in with their parents
- A dedicated space for visitors or long-term guests, especially as more young Americans move long distances for employment or cheaper housing
These spaces aren’t only practical, they’re also a status symbol. By offering more than a pull-out couch and a half-bath off the kitchen, homeowners can maintain their sanity while providing their short-or-long term guests with an experience that rivals even the nicest local hotel.
Ready for your future home?
Whether you hope to incorporate green trends or a guest suite into your next abode, we can help you build or find your dream home. Reach out todayReach out today to get started on the path to owning your house of the future.
To see other buyer tips and trends, follow #BuyerInsights and #SellerInsights on Facebook, Twitter, Instagram and YouTube.