Buying and selling a house — how to time it perfectly

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Need to sell your current home and buy another? Whether you’re a first time homebuyer or you’re ready to move into a different property, it can be challenging to time a move so the sales perfectly align. While every property transaction is unique, we’ve outlined the common pros and cons of selling a home first versus buying a home first.

Selling a home first

Congratulations, you sold your house! Now what? Here’s the inside scoop on the pros and cons of selling your home first.

  • Upside: By selling first, you’ll likely feel more financially secure as you begin searching for homes to buy. It can be helpful to know what kind of money you’ll walk away with at closing so you can set a responsible budget for house #2 and feel confident that you can get approved for your next mortgage loan.
  • Downside: There’s more to think about than just the money you’d acquire from a sale, though. Consider this: The current inventory of homes for sale is low and it may take longer than you think to find your next home. This means you may have to consider transitional housing or other creative solutions while you search for the perfect place to plant roots.

If you’re in the process of selling your home, and you’re concerned that you might close on your sale before finding your new home, you’re not without options. Together, we can try to negotiate for a later closing date when accepting a buyer’s offer. This will help you gain more time to find your next property.

Buying a home first

It’s also possible to buy a new home before you list your current home for sale.

  • Upside: By buying a new home before you sell your current home, you can search on your own terms and put an offer on the home of your dreams — rather than being tied to a timeline.
  • Downside: If you buy a new home before selling your current property, you’ll need to have enough cash on hand to cover the down payment for house #2, and you may end up paying two mortgages until your original home sells.

If you choose to buy first, be sure to prepare your finances and save as much money as possible in order to get approved for a second mortgage. This will also give you peace of mind as you commit to paying two mortgages for the short term (or possibly longer). And of course, you’ll want to hire a real estate agent who has strategies to help you sell quickly.

In some cases, homebuyers can use the equity of their existing home to fund their down payment for house #2, even if they haven’t closed on their first property sale yet. This kind of mortgage home equity loan* may be an option for those who are intending to sell, but it’s important to consult a home mortgage expert for tailored guidance.

Adding a contingency when buying

If you want to buy first, but avoid two mortgage payments, you can try to add a buyer’s home sale contingency in the purchase agreement of your new home. This contingency states that the transaction for the new house is dependent on the sale of your current property.

Consider that a seller may perceive a contingent offer as weaker than a non-contingent offer. And, in a housing market that favors sellers (like we have today), you may have a more difficult time getting a seller to accept a contingent deal.

Should I buy and sell a home at the same time?

This is a pretty common scenario, especially for homeowners who don’t have a “backup plan,” like the option to move in with family or friends for a few weeks or months.

At first, it may seem like the best-case scenario to both buy and sell at the same time. Here are a couple of considerations for you as you decide if this is the right path for you.

  • Upside: You can time your moves to coincide. This will allow for a seamless transition from one house to the next. Packing up a van and relocating a few miles away is about as easy as a move can get.
  • Downside: It can be a challenge to stage your for-sale home and keep it clean for showings, all while touring other homes, making offers and negotiating coinciding closings. If you think this would be too overwhelming, staggering your purchase and sale may be a better option.

So, what’s the best plan?

Unfortunately, there’s no one answer to this question. All homeowners are different, with unique finances, timelines and other logistical factors (like school and work schedules, family trips, short-term living options, etc.) to consider.

And, all homes are different, too! In an area without many homes for sale, sellers might accept an offer on a home in just a few days or even hours — while a seller with a less appealing property may wait months for just one offer.

All in all, the perfect option for one seller might not work for a different seller, even if they live on the same block. Together, we can weigh your personal and financial factors to determine if you should sell your home first, buy a home first or buy and sell at the same time.

Key points and next steps

Because the current housing market is full of demand, you’ll want to formulate a game plan in advance to organize the timing of your home sale, purchase, and a “Plan B” option. Reach out any time to get started on your journey of buying and selling.

*Not all buyers will qualify. Prosperity Home Mortgage, LLC does not offer financial advice. This information is provided for informational purposes only and does not constitute legal, tax, or financial advice.

Edina Realty Mortgage is an affiliate of Edina Realty. See Affiliated Business Arrangement Disclosure Statement

Prosperity Home Mortgage, LLC may operate as Prosperity Home Mortgage, LLC dba Edina Realty Mortgage in Minnesota and Wisconsin. All first mortgage products are provided by Prosperity Home Mortgage, LLC. dba Edina Realty Mortgage. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Prosperity Home Mortgage, LLC dba Edina Realty Mortgage is licensed in Minnesota and Wisconsin. Prosperity Home Mortgage, LLC is licensed by the Delaware State Bank Commissioner. Massachusetts Mortgage Lender License ML75164. Licensed by the NJ Department of Banking and Insurance. Also licensed in AK, AL, AR, AZ, CA, CO, CT, DC, FL, GA, ID, IL, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, NE, NC, ND, NH, NM, NV, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV and WY. NMLS ID #75164 (NMLS Consumer Access at http://www.nmlsconsumeraccess.org/) ©2022 Prosperity Home Mortgage, LLC.

11 Packing and moving tips for the big move

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While it may seem like an enormous task to pack up your entire life, try not to overthink the process of packing and moving. Here are hot tips from moving experts that will ensure your move from one residence to another goes off without a hitch. Plus money-saving tips so you don’t have to pay an extra dime!

From the moving timeline to tips on bubble wrap alternatives, here’s everything to consider when packing and moving.

6 Moving tips

If possible, prepare for the big move as early as possible. By prepping your family members and space in advance, you’ll set everyone up for success and avoid the potential headaches that could come from a lack of planning.

Plus, keep in mind that getting ready for a move includes more than just packing. For example, garage sales and utility transfers are also important steps. Keep reading as we dive into the top moving hacks and tips.

Have a garage sale

Even before you begin packing your belongings, consider hosting a garage sale where you can flip items that you no longer use. This will help you pare down the amount of stuff that you need to pack and transfer, which ultimately simplifies your moving process.

Here’s how to have a successful pre-move garage sale:

  • Advertise your sale around the neighborhood and on social media.
  • Offer items sold in bundles.
  • Set fair prices to get more sales.
  • Prepare plenty of change, or offer online payment options like Venmo or Paypal.

Start packing early

Once you’ve gotten rid of any excess items that won’t be coming along for the move, it’s time to pack up the belongings that will trek from one home to the next. While it’s best to start packing as soon as possible, you’ll want to keep your most-used items out until closer to your move date. Experts agree it’s ideal to start the packing process around six weeks before the move.

Finish packing the day before the big move

While gathering boxes to pack your belongings, remember that you won’t want to pack up your favorite kitchen utensils, daily toiletries, or beloved jackets until much closer to the move. It’s okay to still be packing all the way up until the day before the move, as long as you don’t leave the bulk of the packing to the last minute.

Schedule your utilities

Most utility companies can process a request for new services quickly, but it’s a smart idea to plan your utilities — both a service termination and initiation – a couple of weeks prior to your move. Making the extra call or completing an online application for utilities now will make the transition of moving much smoother later. And, the good news is, this step should only take a few minutes out of your day, but the payoff is substantial. All you have to do is:

  • Make a list of all of the utilities you currently use.
  • Contact your providers and update them with your change of address.
  • Pay off any current balances.
  • Schedule your new service to begin a day prior to your move, and your previous service to end a day after your move (so you don’t have a lapse of time without water or electricity at either place).

However, if this sounds like a lot of work, don’t worry! Because of Edina Realty’s partnership with a company called Updater, we can automatically get your address and utilities changed when you move. Reach out today for more information!

Set a moving budget

When moving, some homeowners start to rack up significant bills. It’s a good idea to prepare your finances in advance so you’re ready when the moving day comes. The price of the following tends to add up to a few thousand dollars for most movers:

  • Base fee with a moving company
  • Extra fee for specialty items (think oversized or extra fragile pieces)
  • Renting your own moving truck
  • Purchasing moving equipment, including boxes and tape
  • Transportation from your sold house to your newly purchased home
  • Storage units (especially if you opt for temporary transitional housing)
  • Booking a sitter for your pets or children

Eat what’s in your cupboards

Aside from purchasing a light amount of produce and other perishables, try to hold off on grocery shopping before your move. Eating what’s in your cupboards will mean you have fewer items to transport on moving day.

However, if you have a large spice collection or are hoping to move everything in your kitchen and pantry, you still can. Here are some food packing hacks for moving:

  • Pack dry food goods in plastic boxes to keep pests out.
  • Move refrigerated items only if your new location is less than 2 hours away.
  • Donate any food that can’t be taken with you, rather than throwing it out.

5 Packing tips

Packing can seem daunting. These methods to pack for moving will help simplify your process, while making sure all of your belongings make it to your new property safely.

Label everything

Attach a label to every box you pack. Not only will this help you identify what’s in each box, but it will also help your movers (whether a professional company or helpful friends) know where in your home to organize the boxes.

You can also come up with an easy color-coded system for each room in your new house, then label each box or bag with the correct color. Here are some materials that you likely have around your home already that work well for color-coding boxes:

  • Washi tape
  • Colored markers
  • Pieces of colored paper
  • Stickers

The best way to pack clothes for moving

Most of us don’t have enough garment bags to house all the clothing items in our closets, but it’s a waste of time to pack up each button-down shirt, dress and pair of pants into boxes. Instead, the best way to pack clothes for moving is to turn a plastic garbage bag upside down and make a small hole in the middle. Hook a group of 10 hangers into the opening, then seal the “top” of the bag using the bag’s original strings.

Voila! Now you can transport closet items with ease.

Switch peanuts and bubble wrap for clothes

When packing up your dinnerware, picture frames or other breakable items, you’ll want to protect them. And, it’s possible to keep these fragile items safe without spending a fortune on bubble wrap.

If you have unused Styrofoam party plates, layer them between breakables as you pack. Or, consider separating and wrapping fragile items with the following:

  • Clothes
  • Cloth napkins
  • Tablecloths
  • Placemats
  • Towels

The best way to pack shoes for moving

To maintain the condition of your shoes, you’ll want to follow these moving tips and tricks for shoes:

  • Place heavier shoes at the bottom of the box.
  • Wrap nicer shoes in a plastic bag, or keep them separated in their own box.
  • Tie pairs with laces together.
  • Stuff shoes with socks to maintain their shape — and save room.

How to pack a TV for moving

A television is typically a higher-ticket item, so you’ll want to take care when packing it. Ensure the screen doesn’t crack throughout the move by wrapping the TV generously with bubble wrap, packing paper or a blanket. Then, place the TV in the original box if you have it. Otherwise, use both a packing blanket and stretch wrap to secure the device.

Before you dismantle your TVs, computers or other electronics, take pictures of the cords behind them and how they interact with one another. Setup at your new home is a breeze when you have a visual guide for how to best connect your devices.

Ready to get moving?

These moving and packing hacks are bound to make your moving experience flow with ease. But moving is about more than just packing up — you’ll also want the insights and guidance of a local specialist who has your best interests in mind. Reach out today for tailored help from start to finish.

Ask an Edina Realty Lawyer: What do I do if my home has a discriminatory covenant on it?

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Homeownership can be complicated, but we also think it’s one of the most rewarding ventures out there. In our series, Ask an Edina Realty Lawyer, we are hoping to demystify some of the trickier aspects of buying, selling and owning a home.

In this edition, our lawyers discuss discriminatory restrictive covenants that appear on the title of some properties.

Dear Edina Realty Legal,

My mother recently passed away. When I was going through some paperwork on her home, I found a legal document that says that minorities are not allowed to own the property. What is this and is it even legal?

You’ve actually stumbled across documentation of one of the darker chapters in the history of housing in America. You’re likely looking at what’s called a restrictive covenant. Restrictive covenants are essentially rules recorded against a property that limit how the property can be used. If you live in a development, perhaps one with a homeowners association, you may have restrictive covenants that apply to your property with rules about whether you can put up a fence or operate a business in the home.

Of course, the restrictive covenant you have found is much more sinister than that. These discriminatory covenants first appeared in Minnesota and Wisconsin in the early 1900s. They were created by developers as a means of keeping minorities out of entire areas within cities, usually based on race, but sometimes also prohibiting Jewish persons from homeownership. These restrictive covenants were extremely prevalent and resulted in the segregation we see today in many large cities.

Are these covenants legal?

No, they are not. In 1948, the United States Supreme Court declared that these restrictive covenants were unenforceable. Later, the Minnesota Legislature adopted a law prohibiting restrictions based on race and religion (and more recently, national origin) and making existing ones void. So, if you happen to have a discriminatory restrictive covenant on your property, know that it has no effect.

Despite the fact that these covenants are not legally effective, their mere existence may be troubling to you. If so, there is something you can do about it.

What can I do about it?

Locally, the University of Minnesota has created the Mapping Prejudice project, which is engaging in a massive research project to map the locations of various discriminatory restrictive covenants. If you live in Hennepin County, you can actually search their data online to see if a restriction like this was found on your home.

The Just Deeds Project, which was co-founded by Edina Realty Title, is a group of community stakeholders, including a number of cities, city attorneys and REALTORS®, to assist, at no cost to you, in discharging a discriminatory restrictive covenant from your property in Minnesota. They can also advise you if your home is outside of Hennepin County, and you are unsure if there is a discriminatory covenant on the property. If you are interested, you can start here.

The Edina Realty Legal Department serves as in-house counsel for Edina Realty and does not represent private clients. This Insight is not intended to provide legal advice.

Ultimate homeowner spring cleaning checklist

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As the sun begins to shine and the cold is replaced by milder weather, you’ll know it’s time to begin your spring cleaning and home maintenance routine. To ensure your home is ready for the warmer months ahead, follow this homeowner checklist that covers everything from energy savings to the latest landscaping trends.

Check your systems and energy usage

Before that first 90-degree day hits, you’ll want to check in on your air conditioning unit. Hire a professional to make sure everything is in working order. Alternatively, you can follow these five DIY steps, courtesy of Bob Vila:

  • Check for any leaks in the hose connections.
  • Ensure drain pans are draining freely.
  • Vacuum dust and debris from the unit and its base.
  • Be sure to change your HVAC filter every 1-3 months.

The Ultimate homeowner spring cleaning checklist

Clean up your gutters, eaves and roof

Even if you cleaned your gutters last fall, it’s still possible that debris accumulated over the winter. Set aside time during the weekend to clear your gutters or hire a professional to do the job. Pricing for this task can depend on the size of your house, so get an estimate first to secure a price you’re comfortable with.

Spring is also a great time to have your roof inspected and repaired. If you suspect winter snowstorms may have damaged shingles or seals on your roof, now’s the time to set up an appointment with an expert.

Freshen up your landscaping

Is yellowed grass bringing you down? In just a few short weeks, you can bring it back to life again! Follow these simple lawn care tips to save your lawn from the effects of our harsh midwestern winters:

  • After the ground is fully dry, rake the lawn to aerate the soil.
  • Spread lawn seed in patchy areas.
  • Sprinkle water on the seeds weekly until they sprout.
  • Aerate soil three times once new grass appears.

Give your home’s exterior a facelift

Spring is an ideal time to get rid of grime on the exterior of your home. Pressure washing the outside siding of your home can help remove dirt and other stains that may have accumulated throughout the winter. Hire professionals to do the job, or save money by renting a pressure washer and making it a do-it-yourself project.

In addition, these mild-weather months are an optimal time to repair cracks or holes in your driveway or sidewalks. Concrete repair kits can be relatively inexpensive, but you may need help from a professional if you are working with asphalt.

Pay attention to your garage

Now is a good time to take a look at your garage door, too. Whether the face of your garage simply needs a good washing or it’s time to replace your garage door entirely, you’ll want to make sure it’s looking sparkly clean for spring.

Once the outside of your home is ready to go, spend some time organizing your garage. This may be especially necessary if you have extra tools laying around from your spring yard work. Here are some quick tips to approaching garage organization:

  • Sort your items by category, such as sports, gardening, cleaning, etc.
  • Pick all belongings off of the ground and rehome them in labeled bins.
  • Invest in shelving or extra storage containers to create more space.

Considering selling?

If you hope to sell in the spring, this spring homeowner checklist will help set you up for success. Even in a digital world, curb appeal is still super important to buyers. For more specialized advice on how to renovate your home or get it ready for the market, get in touch today.

If I sell my house, do I pay capital gains taxes?

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It may surprise you to know that many homeowners who sell their properties don’t end up having to pay capital gains taxes on the sale — even if they walk away from the closing table with a large sum of money.

While taxes can be complicated, and you should consult with your own tax advisor for your specific circumstances, there’s a general rule to help you determine if there will be tax implications when you sell your house, or if you will be able to keep the total amount earned. Read along for more insights you can use as you navigate the taxes associated with selling a home.

Note: While this article covers the capital gains taxes that may be paid after a home sale, there are other taxes paid in connection with a sale, including a deed tax and certain property taxes. Consult your tax advisor for more information on these payments.

If I sell my house, do I pay capital gains tax?

After selling a home, the profit from the transaction is known as the capital gain. Sellers who wish to avoid paying capital gains taxes must:

  • Have owned the property for at least two of the last five years.
  • Have lived in the home for two of the last five years.
  • Not have taken advantage of capital gain exclusion from another property sale in at least two years.

If all of these stipulations are met, home sellers can exclude capital gains up to $250,000 for solo owners (or for married couples who file separate tax returns) and $500,000 for married couples who file taxes jointly.

Even with our market’s fast-rising property prices, most property sales don’t net more than these maximums. So, many home sellers in Minnesota and western Wisconsin don’t end up paying taxes on the gains they earned from selling.

How to calculate your capital gain

Wondering how to calculate your capital gain? Let’s explore the basic math. Keep in mind that this is a generalized estimate, and it’s important for you to work with a tax or accounting expert to ensure you accurately calculate your capital gain.

  1. Start with the original purchase price of the home.
  1. Next, add the cost of any “capital improvements,” which are defined by the IRS as large-scale projects that add value to your home, prolong its life or adapt it to new uses. Keep in mind that a new roof or an addition would qualify, while improvements that return the home to its original value (such as replacing a few shingles or broken window panes) would not.
  1. Now, subtract any tax credits or insurance proceeds you got for making these improvements.
  1. Add the cost of any special tax assessments you paid for local improvements — not routine assessments — or any amount you paid to restore the property after a natural disaster. This number is your cost basis.
  1. Calculate the amount you earned at the closing table,subtracting your closing costs and the commission that you paid your real estate agent.
  1. Last, subtract your cost basis from your calculation in Step 5. This number represents your capital gain.

 

Infographic: How to calculate capital gains tax

If at the end of this calculation, you’ve earned less than $250,000 (individual filing) or $500,000 (joint filing), the final amount isn’t taxable — it’s just an asset that you’ve earned! You can use these funds to finance your retirement, put toward a new down payment or travel the world. See? The IRS isn’t always the enemy.

Keep in mind that when you are seeking to exclude your capital gains from tax obligations, you will need to have documentation of every number you submit to the IRS — from proof of the original purchase price and final sale price, to the capital improvements and sale expenses you are claiming.

Be sure to keep receipts for any large repairs you take on yourself, and official documentation of the payments made to contractors, plumbers, roofers, HVAC companies, etc., who have helped you with capital improvements or restoration efforts made after natural disasters.

What if my capital gain is above the maximum allowed?

If your capital gain is above $250,000 (or $500,000 for a couple filing jointly), then you will have to pay capital gains taxes on the sale of your home for the amount above the exclusion. The amount you owe will be determined based on your capital gain, as well as what tax bracket you fall into.

Remember, calculating capital gains taxes can be a complicated process — especially if you are selling a home for the first time or aren’t sure what updates count toward home improvements. Be sure to consult a tax advisor to help you ensure you calculate and pay the correct amount.

Are there any deductions I can take advantage of if I sell my home at a loss?

Unfortunately, losses incurred from the ownership of a private residence aren’t tax-deductible. So while you won’t have to pay taxes on the sale of your home, you also won’t earn anything back in the form of a tax deduction or credit.

Is there a way to avoid paying capital gains taxes when selling an investment or vacation property?

The capital gains exclusion only applies if you meet the three criteria mentioned above, which would not apply to an investment or vacation property. Some homeowners who own rental properties or vacation homes do avoid paying capital gains taxes when selling their property by moving into their home permanently for the two years before they sell it and making sure to spread their home sales out by two years. Also, if you are selling an investment or business property and are planning to purchase a similar property, you may qualify to defer the capital gain under what is called a 1031 exchange.

Other than that, you may have to pay a capital gains tax on the sale of a secondary property. Remember, tax fraud is a serious crime — so you should never claim that you lived permanently in a home if you didn’t.

Key points and next steps

Do these hypothetical numbers have you calculating your own home sale or considering what you’d do with the profits? Don’t go it alone! Get in contact any time for a no-pressure home value estimate.

How buyers can choose between two great homes

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Key insights

  • When choosing between two great homes, start by considering what you can’t change about the house — like its overall style or location.
  • Be honest about your future needs. Don’t be afraid to consider the resale value of the home, or to disregard that in favor of finding the right “forever home.”
  • Still in doubt? Nothing beats an old-school pros and cons list to make the final choice.

Today’s market has low inventory, and many buyers are worried about finding even one home that suits all their needs. But other buyers are having the opposite problem: they are having a difficult time choosing which home they should put an offer on.

Here are insights you can use as you choose between multiple properties for sale in Minnesota and western Wisconsin.

Measure the perks of each location

The saying, "Location, location, location" is a cliché for a reason. While you can change many things about a home, you cannot alter its proximity to the places you visit most often.

Few things can add or reduce stress more than the length of your daily commute, so consider the total time you’ll spend driving, walking or biking to your usual destinations from each home. Conversely, if you now work from home or have a hybrid work schedule, your work commute may be less of a factor than it was a few years ago. In that case, pay attention to the distance from each home to common destinations like schools, grocery stores, workout facilities and key family members or friends.

Focus on style and permanence

As HGTV has taught us, there are many things you can change about a home, but some elements will remain the same no matter how much money or effort you put in. As you look at both homes, evaluate the amount of work each will need — and how much that will change the overall feel once the renovations are complete.

For example, you may be torn between two homes: the first, an older home with great bones and style, but in need of a new kitchen. The second, a fully-updated home that doesn’t match your vibe. While a kitchen remodel on House #1 will be expensive and time-consuming, you could end up with your dream house after only a few months — rather than settling for Home #2 that doesn’t feel “quite right” even after years of smaller tweaks.

Stay true to yourself

Buying a fixer-upper has never been more en vogue, but there’s no shame in wanting a turnkey house where you can settle in easily. If you aren’t a do-it-yourself enthusiast, don’t be afraid to choose the higher-priced, move-in ready home that matches all your criteria, as long as it fits in your budget.

Look ahead to the resale value… or don’t?

While it can seem strange to consider selling a house you haven’t even bought yet, the potential resale value of a home may be an important factor in your decision. If you plan to live in the home for only a few years, you may wish to buy a house that is in an up-and-coming area, so you position yourself to make more when you sell.

On the other hand, if you are looking for a “forever home,” you should consider the neighborhood that works best for you today and down the road… without considering how much the home will be worth in a decade or more. For buyers who plan to stay in place, the return-on-investment won’t be translated into easy dollars and cents, but rather into the life they’re able to create after picking a house and area they love.

Write up the pros and cons

Still unsure? When in doubt, begin making a pros and cons list of each house. Then, rank each item in order of importance. Ask yourself questions that may seem a bit ridiculous: What’s more important, a home with an original claw-foot tub, or a house that’s just five minutes from a highway?

Tally up the totals and see if one is clearly on top of the other. Remember that instinct counts double! If you have a good gut feeling about one house, don’t be afraid to add that to the list of “pros” as you evaluate.

Need help with your home buying journey?

If you’re in the early stages of buying, reach out to get help setting expectations with an educated neighborhood specialist. Together, we’ll get you on the path to buying the perfect home.

Buy first, sell second: The mortgage option that makes it possible

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Key insights:

  • Many homeowners need the profits of their existing home sale to fund their next property — but they are worried about not being able to find a new home to purchase.
  • Homeowners with equity may be able to take advantage of a loan option that allows them to buy first and sell later.
  • By using their home’s equity, they can obtain a second loan with the best terms and no mortgage insurance.

As a homeowner, you likely know that it’s a great time to sell. Home prices have been rising for several years, and the median home price in the Twin Cities market has reached $332,500.

If you plan to re-enter the market as a buyer, you also know that in this tight market, it can take longer than desired to find the right home. While you may assume that you have to sell your home first, and buy second, that's not your only option. There are also loan solutions that allow you to fund your next home by tapping into your existing home’s equity.

Home equity loan solution

As housing prices have increased greatly over the last few years, so too has the average homeowner’s equity. This can mean that after a homeowner sells their home and purchases another, they are typically able to use their profits for a significant down payment on their new residence.

But what about when a homeowner wants to purchase a home first, before selling their existing residence? Without the profits from their home sale, they may not have a strong down payment to offer — which can make it difficult to obtain the best loan terms and to avoid paying private mortgage insurance.

Recognizing that the homeowner does have equity and finances they will be able to access in the near-term, banks now offer products that help consumers who are in this short-term position. “Piggyback loans,” as they are often called, allow homeowners to take out a home equity loan to apply toward the purchase of their new home.

Here’s how it typically works:

  1. The borrower secures a loan, for their new residence, that is dependent on a 20% down payment. This allows them to avoid paying mortgage insurance in the future.
  2. The borrower also secures a second “piggyback” loan, which draws from their home equity, to pay for part or all of the down payment on their new home*.
  3. When the homeowner sells their existing residence, they can use the proceeds of their home sale to pay off the second loan.
  4. The borrower now has a loan with the best available terms, that takes into account their overall financial situation.

It’s important to keep in mind that lenders need to minimize their risk with every borrower, so these options are not available to every homeowner. To determine your eligibility, get in touch with a home mortgage consultant who can advise you directly.

Take advantage of smart guidance

Today’s sellers understand that they are in a great position when they list their home — but they also rightfully worry about what happens when they re-enter the market as a buyer. If you wish to avoid this scenario, a home equity solution that allows you to buy first, and sell later, may be the right path for you.

Get in touch today to discuss this mortgage process in more detail.

*Not all buyers will qualify. Prosperity Home Mortgage, LLC does not offer financial advice. This information is provided for informational purposes only and does not constitute legal, tax, or financial advice.

Edina Realty Mortgage is an affiliate of Edina Realty. See Affiliated Business Arrangement Disclosure Statement

Prosperity Home Mortgage, LLC may operate as Prosperity Home Mortgage, LLC dba Edina Realty Mortgage in Minnesota and Wisconsin. All first mortgage products are provided by Prosperity Home Mortgage, LLC. dba Edina Realty Mortgage. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Prosperity Home Mortgage, LLC dba Edina Realty Mortgage is licensed in Minnesota and Wisconsin. Prosperity Home Mortgage, LLC is licensed by the Delaware State Bank Commissioner. Massachusetts Mortgage Lender License ML75164. Licensed by the NJ Department of Banking and Insurance. Also licensed in AK, AL, AR, AZ, CA, CO, CT, DC, FL, GA, ID, IL, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, NE, NC, ND, NH, NM, NV, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV and WY. NMLS ID #75164 (NMLS Consumer Access at http://www.nmlsconsumeraccess.org/) ©2022 Prosperity Home Mortgage, LLC

Essential spring lawn care tips after a harsh winter

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When it comes to spring lawn care in the Midwest, it’s easy to get overwhelmed. As the weather warms up and yards are flooded with snowmelt, it can be difficult to know what your lawn needs — and when.

Here are spring lawn care tips and insights you can use to get your yard in peak condition by early summer.

Tips on caring for Minnesota and Wisconsin lawns

As eternal optimists, we want to share some good news about how the spring thaw works in the Midwest. While lawns in warmer climates can only stand up to about four days of flooding before they may require all-new soil and sod, our Midwestern ground is able to endure standing water for longer. This is because our ground is thawing at the same time as the snow is melting — and before the grass has begun to grow again for the season.

So, even if your lawn is covered in standing water for a week or more, it’s likely hardy enough to sustain the damage from typical spring snowmelt, and even a bit of flooding. By following these spring lawn care steps, you can ensure your yard recovers fully from the early spring melt.

Prepare your lawn mower and yard equipment

First, as you eagerly await the spring season, focus on getting your lawn equipment in order. Make sure your lawnmower is serviced and that the blades are sharp. When sub-zero temperatures are in the rearview mirror, reconnect your hoses and turn on your exterior water supply. Last, check that in-ground sprinklers weren’t damaged during the snowy winter months.

March

While March isn’t always the start of spring here in Minnesota and Wisconsin, we do typically see a bit of snowmelt during this time. Take time to focus on early spring lawn preparation by picking up trash and debris that may have fallen in winter storms. Give your lawn time to dry out and allow the grass to start growing again. If spring arrives late, aim to complete the majority of the below tasks by mid-April instead.

Do’s:

  • Do rake your lawn to loosen up the soil and break up clumps.
  • Do remove excess leaves, branches and dead grass so your grass can grow freely.
  • Do wait until the grass has reached 2-3 inches to mow for the first time.

Don’ts:

  • Don’t fire up the lawnmower if the blade is dull! Dull blades rip grass from the root.
  • Don’t set your lawnmower to a short setting. By keeping it at the highest setting, your grass will grow thicker, faster.
  • Don’t mow if you haven’t lightly raked the lawn and cleaned up the winter yard waste.

April

In April, spring lawn care and treatment will begin in earnest. You’ll want to watch for green growth and keep a close eye on thatch. Over the winter, dead grass, roots and other plant stems may have broken off and bound together. This creates a layer of impenetrable “thatch” that won’t allow water and nutrients in; it will also prevent new grass growth from sprouting freely. If your thatch is more than ¾ inch thick, you’ll either want to:

  • Aerate your soil: Remove plugs of grass and soil so that water and nutrients can gain access to your grass’ roots.
  • Dethatch the ground: Remove thatch from your lawn using a rake, power rake or vertical mower.

Do’s:

  • Do wait until you have mowed two times to aerate your lawn.
  • Do rent an aeration machine from a hardware store, as your lawn may not require aeration every year.
  • Do consult an expert before dethatching your lawn.

Don’ts:

  • Don’t aerate your lawn if your thatch is less than ½ inch thick.
  • Don’t use a vertical mower unless you absolutely have to. In addition to pulling out thatch, a vertical mower may pull out the roots of your grass.

May

By May, your lawn should be returning to normal and the problem spots will become apparent. Now is the time for some targeted spring lawn treatment. While fall is the best time to overseed lawns in colder climates like the Midwest, you should be able to successfully overseed patchy areas in your yard in late April and early May. If the majority of your lawn is free of overseed, continue mowing it.

Do’s:

  • Do check with a lawn care specialist, who can help you determine what kind of seed is best for your problem areas.
  • Do water your seed daily, unless the area seems to be exceptionally moist.
  • Do focus your sprinkler only on the areas you’ve overseeded.

Don’ts:

  • Don’t water your entire lawn unless it’s been an exceptionally warm spring.
  • Don’t mow too low or bag up your grass clippings. Grass clippings make excellent (and free!) natural fertilizer.

Stand back, and admire your work

As the thatch recedes and yellowed grass turns into a thick cover of green, be sure to take a step back and admire your handiwork. While spring lawn care can test your patience and take up a lot of time, it’s also the best way to ensure your yard is looking its best throughout our gorgeous summer months in the Midwest.

And if you spruced up your lawn in order to attract spring and summer buyers, call or email today to discuss setting up a smart seller plan.

What’s the best month to sell a house? A complete guide

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While the last few years of the housing market have been anything but typical, the flurry of year-round sales activity has led many sellers to wonder if there really is a “right” time or best month to sell a house.

Even though spring is still considered a great time to sell a house for many sellers, the truth is that there are advantages and disadvantages to each season. Let’s explore.

Selling your home in spring

It should come as no surprise that spring has a high volume of buyers and sellers. For sellers who desire a more traditional home transaction, spring may be the best time to list. Here are some key tips and considerations to best set yourself up for a spring home sale:

  • Buyer activity is high during this season. Prepare for plenty of buyers to set their sights on your property.
  • Lakeshore and cabin owners may benefit from a spring sale. This is a great time to showcase the beauty of the home and the nearby lake. Plus, buyers will likely want to be in the property before summer is in full swing.
  • If you’re hoping to list without holding many showings or open houses, spring may not be the best option for you. Buyer interest during this time will likely drive up the desire to view the property.

Selling your home in summer

Eager buyers who didn’t find a property in spring will still be around in summer, searching for a home. Sellers should still prepare for significant buyer interest during this time, and remember these summer selling tips:

  • For an easy approach to showing your property to potential buyers, plan your listing around a vacation. Clean your home once, then leave town when open houses and showings are scheduled.
  • Summer can be a busy time of year for many families involved in sports, camps and other activities. This can make scheduling a move slightly more difficult.

Selling your home in fall

Fall homebuyers tend to be highly motivated, especially in the Midwest — they’ll want to get into their new home before the coldest days of winter. This can make fall an ideal time to sell a home, if you’re hoping for a swift sale but less traffic than in the spring. Here are some quick tips when considering a fall home sale:

  • Buyers may want to beat the snow and move before winter hits full swing, or to be in their new house for the holidays. Well-appointed homes should still be in demand.
  • Typically, fewer homes are for sale during this season, shifting the balance of buyers and sellers into your favor. Depending on the year, fall can be a great time to sell if you’re looking for a quick sale.

Selling your home in winter

For the most part, people only buy or sell in the winter if they have to — making winter the one season where buyers and sellers tend to hold similar motivations. Keep these winter home sale pros and cons in mind:

  • Only the most motivated buyers and sellers will be active during this time. When interest is initiated, it will likely result in a serious offer.
  • In the past, buyers may have waited until winter with the hopes of discounted home prices. However, inventory is still imbalanced, and winter buyers understand there won’t be lower prices during the winter until the market balances out. Even in the winter, sellers can expect offers at or above the listing price.

Is it the right time for you to sell your home?

Determining the best time to sell likely requires you to reflect on your home and lifestyle. Certain months may have stronger market activity, but what really signifies if you’re ready to sell are the following personal indicators:

Signs you’re ready

  • Your family has expanded, either with little ones or older relatives, and you need extra space for everyone to coexist.
  • You know exactly the house or location you’d move to, if the time came to sell.
  • Your budget has increased, either because of a new job, increased savings or other factors.
  • You’re craving a dedicated home office space, now that you’re officially on a “hybrid” schedule.
  • You’re eager to have your own bathroom space to get ready in the morning.
  • Signs you’re not ready
  • Your budget would be stretched much too thin if you upgraded to your ideal house or location.
  • Your work is unstable or you’re unsure if you’ll continue working from home.
  • You’re not sure what home features or location you’d want, even if you could move.

Moving forward with Edina Realty to sell your home

All in all, certain months tend to have a livelier market than others, but we recognize that many factors determine the best time for you to sell. Whether you are ready now or want help timing it just right, reach out any time to get in touch with a local selling expert who has your best interests in mind.

How will rising rates impact first-time buyers?

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There is no question that first-time buyers — whose budgets and down payments tend to be more modest — are deeply affected when mortgage interest rates increase. Here are insights you can use if you’re a first-time homebuyer in Minnesota or western Wisconsin.

How affordability works

Affordability is easier to understand when you can review a few examples. Let’s run the numbers.

Let’s say a homebuyer has $2,000 to spend on their monthly mortgage payment. If interest rates are 4 percent and the borrower secures a 30-year fixed conforming loan, they could take out a loan up to $419,000.

Now let’s say rates rise 1 percentage point to 5 percent. With all the mortgage terms remaining equal, the borrower would have to adjust their budget to $372,500 in order to remain in their $2,000 monthly budget. That’s a difference of $46,500, or an 11% reduction in buying power.

In other words, as interest rates increase, the borrower’s buying power is reduced.

A chart showing how interest rates affect your buying power

Why first-time buyers will be affected most

Many first-time buyers do not have a large down payment, and government and private lenders have changed their standards in order to accommodate these high earners with minimal savings. For example, FHA loans can now be secured for as little as 3.5% down, while conventional (private) loans have a minimum of 3% down.

While these new minimums have prompted many first-time buyers to enter the market, it also means these buyers are relying heavily on loan-based financing. In fact, first-time buyers financed nearly 93% of their home purchase in 2021, meaning that these buyers had saved an average of 7% for their down payment. (Repeat buyers, meanwhile, put down an average down payment of 17%.)

If rates were to rise 1 percentage point, most first-time buyers would not be able to increase their down payment to make up the difference in affordability. If rates increase, their only choice will be to lower their home buying budget.

How buyers can combat rising rates

By boosting your down payment, you may be able to offset the impact of rising interest rates. If saving a large sum of money seems difficult or even impossible, consider:

  • Asking a friend or relative for mortgage gift funds. 24% of first-time buyers in 2021 used gift funds.
  • Requesting a no-interest or low-interest loan from a family member or friend who can’t afford to gift you the money. 4% of last year’s first-time buyers took loans from family or friends.
  • First-time buyers can also apply for down payment assistance on many homes in our area, which can offset the stress of a rate increase.

Getting ready to buy

Prepping to buy your first home is an exciting time, and certain steps can put you in a better position with sellers. A pre-approval will tell you the loan amount you will qualify for, allowing you to set a responsible budget (and expectations) as you begin looking at properties online and in person.

Not sure where to start? Get in touch if you’d like to be connected with a mortgage expert you can trust.

Edina Realty Mortgage is an affiliate of Edina Realty. See Affiliated Business Arrangement Disclosure Statement
Prosperity Home Mortgage, LLC may operate as Prosperity Home Mortgage, LLC dba Edina Realty Mortgage in Minnesota and Wisconsin. All first mortgage products are provided by Prosperity Home Mortgage, LLC. dba Edina Realty Mortgage. (877) 275-1762. Prosperity Home Mortgage, LLC products may not be available in all areas. Not all borrowers will qualify. Prosperity Home Mortgage, LLC dba Edina Realty Mortgage is licensed in Minnesota and Wisconsin. Prosperity Home Mortgage, LLC is licensed by the Delaware State Bank Commissioner. Massachusetts Mortgage Lender License ML75164. Licensed by the NJ Department of Banking and Insurance. Also licensed in AK, AL, AR, AZ, CA, CO, CT, DC, FL, GA, ID, IL, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, NE, NC, ND, NH, NM, NV, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV and WY. NMLS ID #75164 (NMLS Consumer Access at http://www.nmlsconsumeraccess.org/) ©2022 Prosperity Home Mortgage, LLC.

Status Definitions

For sale: Properties which are available for showings and purchase

Active contingent: Properties which are available for showing but are under contract with another buyer

Pending: Properties which are under contract with a buyer and are no longer available for showings

Sold: Properties on which the sale has closed.

Coming soon: Properties which will be on the market soon and are not available for showings.

Contingent and Pending statuses may not be available for all listings