Month: August 2016

What to Do After Inheriting a Home

The idea of owning another home may be attractive, but does it make financial sense?

By Kristin McFarlanddownload
Before deciding to keep an inherited home, take a close look at the other issues and financial questions involved. (GETTY IMAGES)

Receiving an inheritance is often an emotional experience. Inheriting property, such as the family home or a vacation home can be especially trying, as you weigh decisions that have both emotional and practical considerations.

It is also common for the remaining parent to leave a house to all of their children. Depending on the family dynamic and the varying wishes for the property, it may be more difficult to reach a consensus.

 

Selling an inherited home. As you consider the option to sell the inherited property, it is important to understand how the transaction will be taxed. When you inherit property such as a home or vacation home, the basis for tax purposes is the market value at the date of death. This stepped-up value is always considered long term for capital gains taxes. If the property is subsequently sold for more than the stepped-up basis, the gain will be taxed at long term capital gains rates.

If the property is later sold at a loss, it will likely be considered a capital loss. Up to $3,000 in capital losses may be deducted against your income each year, but the balance may be carried forward to future years. It is advisable to consult a tax professional for specific advice related to your situation.

Benefits of selling an inherited home. Each family will have different reasons for deciding to keep or sell inherited property. For many, the benefits of selling the house are as follows:

  • Affordability: Most individuals cannot afford to suddenly take on another home. Even if the home is paid off, there are the costs of insurance, real estate taxes and maintenance. If the home has a mortgage the analysis becomes more complex. Although relatives are allowed to keep the existing mortgage, how you plan to use the inherited property (e.g. as a rental) may require you to get a new mortgage or refinance.
  • Protect gains: Due to the favorable step-up basis for tax purposes, your tax exposure may be limited if the sale is made rather quickly. Real estate markets can be volatile, so it may make sense to sell after consulting a real estate agent.
  • Diversify for other goals: Owning and maintaining inherited property is not typically a financial goal for many individuals. Using the proceeds from the sale to fund other goals, such as retirement, education, or a bucket list vacation, eliminates the market risk of holding real estate while saving for your other objectives.
  • Preserving family relationships: Sharing a home with adult siblings doesn’t always work out the way it was intended. Large income disparities between siblings may create conflict as unexpected expenses arise and cannot easily be paid for. Compromise can be challenging when negotiating use of the home over desired vacation times. The burden of managing the property is likely to rest on one person. If no one is willing to step up, it may be best to sell.
Keeping an inherited home. Although the decision to keep an inherited home is most often made for purely emotional reasons, that alone doesn’t make it an unwise choice. Individuals with greater financial resources may be able to keep the family home in the family, without a measurable impact to their overall situation. Further, some beneficiaries may jump at the chance to raise their family in the house they grew up in.

Before deciding to keep the house, take a close look at the other issues and financial questions involved. What will your mortgage be? What are the taxes, insurance, and maintenance costs? What is the real estate market like in the area? Will you rent the home or use it? Do you live close enough to handle ongoing maintenance or will you need to hire someone?

If you plan on owning the home with other family members, try to evaluate it like any other business decision. Should someone’s financial situation change – will another family member buy them out or will you sell the property (perhaps at a loss)? Who will be responsible for the upkeep of the property? How often will each person wish to use the home? If you would like to use the property as a vacation rental to help offset the expenses, who will be responsible for the logistics?

When multiple beneficiaries (usually siblings) inherit a home, there’s often mixed consensus about what to do with the property. Most commonly, one sibling will buy the others out. This is much easier to facilitate if you have the cash on hand to do so. If not, you will likely need to explore a cash-out refinance if there is sufficient equity in the home.

A cash-out refinance will turn the home’s equity (current market value less the mortgage balance) into cash, which will be used to buy out the other beneficiaries. The equity you receive in cash will be added to the existing mortgage and refinanced. This leaves buyers with a much larger mortgage payment.

If you find yourself struggling to convince your practical side of the merits of keeping the home, take a step back and ask yourself:

  • Would I like to own a home in this location at this price point if it were not passed down to me?
  • Would I go into business with my co-beneficiary family members?
  • Do I have sufficient cash flow or other liquid assets to cover the additional ongoing expenses and maintain a safety margin?
  • How will owning this home impact my lifestyle, both financial and otherwise?
  • What is my short and long-term plan for this property?
  • Will using the home as a rental be worth the additional wear and tear?
  • Has the real estate market in the area been relatively stable? Do you expect prices to rise considerably in the future?
Benefits of keeping an inherited home. The reasons for keeping an inherited property will vary for each person. While keeping the home in the family is usually the desired outcome, it isn’t always an option financially. Assuming it fits into your overall financial picture, there are some benefits of keeping the home:
  • Nostalgic reasons: After the passing of a loved one, it is difficult to deal with the inevitable changes. Keeping the property in the family may help preserve your memories and provide comfort during this time.
  • Investment: Depending on the location and condition of the property, it could be a good investment if the local real estate market is strong. Although you will owe capital gains taxes on the gain when you sell down the road, the stepped-up basis will help to limit the tax liability.
  • Legacy: Some homes have been in the family for generations. Continuing the tradition may be an important estate planning goal.
Inheriting the family home often sparks mixed emotions. Take your time when making the decision – there’s a good chance you may go back and forth a few times. Your financial advisor can help you with the affordability aspect, but you and your family will need to make sense of the emotional side of the decision, undoubtedly the hardest part.

 

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Study: Paint Color Affects House Price

Room painted in certain colors, like creamy yellow or light green, can fetch sellers $1,000 more than expected.

By Mike Chamernik, Associate Editor

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Photo courtesy Sherwin Williams.
August 10, 2016

Homeowners looking to sell should immediately paint their slate gray walls a new color, according to findings from Zillow Digs, a website where users can browse millions of photos for home improvement and design inspiration.

Zillow Digs analyzed photos of nearly 50,000 homes sold across the U.S. over the last 10 years and determined that a room’s paint color influences the selling price.

The report took into account the wall color and the type of room, with controls for all other wall colors, square footage, the age of the home, the date of the transaction, and the location.

Creamy yellow or wheat-colored kitchen walls were most alluring to buyers, increasing a home’s sale price by as much as $1,360 above the expected Zillow estimate (or Zestimate). Light green and khaki were also popular, with bedrooms painted in those colors fetching $1,332 more than expected. Purple was found to be a nice fit for dining rooms, and homes with mauve, eggplant, or lavender walls earned $1,122 above the expected price.

When it comes to colors that exert a less-than-positive influence on home price, buyers shied away from terra-cotta and orange-toned living rooms (houses with these hues sold for $793 less) and dark-brown bathrooms ($469 less than normal). But slate and dark gray hues were found to be the biggest turnoffs. Homes that featured dining rooms in those colors sold for $1,112 less. Lighter grays, particularly living rooms painted in a dove tone, fared much better, earning $1,104 more than expected.

White and eggshell-color in kitchens, surprisingly, could also have a negative effect on a home’s sale price. Generally a popular choice for designers because of the color’s versatility and clean, timeless appearance, homes with kitchens painted white sold for $82 less than expected.

“A fresh coat of paint is an easy and affordable way to improve a home’s appearance before listing,” said Svenja Gudell, Zillow chief economist, in a statement. “However, to get the biggest bang for your buck, stick with colors that have mass appeal so you attract as many potential buyers to your listing as possible. Warm neutrals like yellow or light gray are stylish and clean, signaling that the home is well cared for, or that previous owners had an eye for design that may translate to other areas within the house.”

Your Ultimate Garage Organization Guide

By Jennifer Kelly Geddes

organized-garage

Jodi Jacobson/Getty Images

Your garage isn’t a giant storage pod, so why is it crammed with junk while your car sits in the driveway? The fix: garage organization, which not only gives your vehicle some breathing room, but can also boost your home’s market value when you eventually sell.

According to a survey of 500 Realtors®, 82% say a messy garage is a big turnoff for potential buyers. Don’t let yours do the same! Here’s how to whip your garage into shape.

Purge

Old newspapers, magazines, and catalogs that have been banished to the garage are never going to be read again—so just toss them, says Emma Gordon, an organization expert at Clutter.com. Ditto for those plastic trays that came with your plants (keep them around and you’ll be dealing with spiders), paint stirring sticks, disposable paint trays, and other remnants of DIY projects.

“Almost every garage in America has a flimsy aluminum tray coated in house paint, with a matching roller in a crumpled grocery bag,” says Gordon. The reality is, you’re not going to get another use out of these items. Odds are, you’ll forget you have them and buy them again anyway!

But take note: Gardening chemicals, old paint, and other hazardous materials need proper disposal so they don’t end up in the water supply, notes Julie Coraccio, an organization coach at Reawaken Your Brilliance in Raleigh, NC.

Call your local health department for the location of the nearest special waste drop-off site. Or if the items you’re chucking may still have value, consider holding a garage sale or donating instead. We’re talking about old PCs, printers, outgrown sporting equipment, deflated balls of every variety, too-small shoes, clothes, VCRs, and VHS and cassette tapes (no, they’re never going to make a comeback).

Categorize

Once you’ve tossed and donated your unwanted items, start your garage organization by grouping what’s left into piles of like items. Some to consider: lawn and garden, automotive, tools, sports equipment, and seasonal decorations. Designate a section of the garage for each category and decide how to store them. Clear plastic bins are ideal for Christmas lights and wreaths, and shelves can hold liquids (paints, solvents, gardening sprays). For tools, including rakes, shovels, ladders, trowels, and other gardening implements, mount a pegboard.

“Get as much stuff off the floor as possible,” Gordon advises. If things aren’t hung up, they’ll morph into piles and those piles will become clutter. Once you have things arranged on your wall, take a dark marker and outline each tool so you’ll know exactly where to place it after it’s used.

modern-shed

Photo by CLOSET ENVY INC.

Store

Open wire or chrome metro shelving is another good way to tackle garage organization. Make areas for camping items (sleeping bags, lanterns, tents), sports equipment (skates, tennis balls, rackets), and pet stuff (shampoo, leashes, and toys).

“Label everything so you can easily find what you need—or create a map that you can keep near the garage door,” says Gordon. And don’t forget the ceiling! (Think S-hooks or simple planks laid across beams.) “This is a great place for things that you don’t access frequently, such as luggage or holiday decor,” she notes.

Lastly, set up a small “mud room” near the door with a bench or chair, tray or large basket for shoes, and a few hooks. You’ll be encouraging family and guests to take off their footwear and hang up their coats in your now nicely organized garage.

traditional-shed

Photo by Organized Living

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10 Easy Yet Beautiful DIY Garden Trellis Projects

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If you have grown some climbing plants and now they are in a need of a trellis then you can easily make one by yourself too. We have collected some DIY and easy versions of garden trellises that you are not only going to admire but would want to try as well. So, take a look at the ideas below:

1. Make a Ladder Like Trellis with Twigs and Rope

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Image via: gardenista

2. Get Thrifty and Recycle Old Garden Tools Like These Shovel, Rake and Spade

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Image via: sadie seasongoods

3. Re-imagine an Old Wagon Wheel into a Trellis

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Image via: life aspire , pinterest

4. For Trying Something New Build an Obelisk Trellis from Wood for Just 10 Bucks

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Image via: momma d and da boyz

5. Another Budget-Friendly Option Could be a Pallet Trellis

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Image via: Sues Country Corner , the garden glove

6. Make a Beauteous Lattice Trellis with Bamboo

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Image via: the owner builder network

7. You Can Make a Wonderful Trellis with Old Bike Wheels

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Image via: suited to the seasons

8. Upcycle Springs of an Old Mattress into a Trellis

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Image via: bonney lassie

9. Make a Hinged Trellis with a Wood Frame and Chicken Wire

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Image via: the home steady

10. Make a Stylish Chevron Trellis from Wood

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Image via: remodelaholic

 

How to Write an Offer Letter That Will Win the House

By Cathie Ericson

offer-letter

You love the house sooo much. The problem is, lots of other people probably do, too. How can you stand out in a competitive environment? Try writing an offer letter that knocks the seller’s socks off.

You love the house sooo much. The problem is, lots of other people probably do, too. How can you stand out in a competitive environment? Try writing an offer letter that knocks the seller’s socks off.

A winning game plan

The words that wooed: After seeing a number of properties that have not “spoken” to us in a significant way, we were delighted to discover your home, with its mixture of charm and warmth. We envision family gatherings within its open living area and drinking coffee while watching our children play in the pool. As basketball is in the family blood (Steve is a former employee of the National Basketball Association), I’m sure there will be plenty of pick-up games for everyone.

Why it worked: “My clients were up against a better offer from a builder, but the seller couldn’t bear the idea of their house being torn down,” explains Anne West, a Realtor with Coldwell Banker Residential Brokerage in Winnetka, IL. “They wanted to sell their home to someone who would raise their family there and who would love it as much as they had, and my clients were able to articulate that they were just that family.”

How to do it yourself: Find out some backstory about the owners or other bidders if you can. The tidbit about the builder, for example, was crucial knowledge. But for any property, most sellers who have taken good care of their homes want to make sure they will be loved by the next owner, too, so let your enthusiasm shine to gain the edge over pricier offers.

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Must love dogs

The words that wooed: My husband and I have been searching for our first home, and we believe your house will be the perfect place to raise our growing family. Our son is due in September, and I know he will be so happy playing in the fabulous backyard with our two dogs.

Why it worked: “The seller appreciated her praising specific things that were obviously installed by the homeowners,” says Mindy Jensen, a Realtor in Longmont, CO. “But the tipping point was when she included a picture of her dog with the letter. The seller specifically allowed her to match the highest offer, based solely on her dog.”

How to do it yourself: Make yourself relatable. Take a cue from the lovingly tended roses or, in this case, a dog, and try to glean what the seller values. It could be kids, a dog, or even a love of gardening. If you share those same interests, offer them up. You never know what phrases may spur the seller to choose your offer over another.

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This way to Easy Street

The words that wooed: We are not looking for a bargain, just a fair price for something nice. This would be a cash sale, and we could close quickly or at a convenient time for you. 

Why it worked: “This was a no-brainer for the seller, because you can tell these folks are clued in, and money talks,” says Bruce Ailion, a real estate agent with Re/Max Atlanta. “This letter makes it clear that this is going to be an easy transaction: cash sale, market price, close quickly or on your timetable.”

How to do it yourself: Get your ducks in a row before you make an offer. Even if you’re not doing an all-cash offer, have a pre-approval in hand. Especially in a seller’s market, make it clear that you are going to be easy to work with and that the seller can call the shots.

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Sentiment sells

The words that wooed: We grew up in the city and our parents live very close by; one of them is living very close to your home. It’s important to find a home close to our family, so that when we start our family, our children will be close to their grandparents.”

Why it worked: “If the seller has raised their own family there, they have an emotional connection to the house,” says David Feldberg, broker/owner of Coastal Real Estate Group in Newport Beach, CA. “Talking about several generations plucks those heart strings.”

How to do it yourself: Include details about your family and connection to the area. And always include a photo. When the seller is considering multiple offers, the photo makes your offer stand out from the pack.

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Flattery can get you everywhere

The words that wooed: From the moment I walked in, I knew this place felt like home. (Well if I am being honest, I fell in love with the wallpaper in the bathroom first!! ha-ha.) I also really appreciate the attention to detail in the upgrades you made: the stain on the floors, the wall colors and the charming lights, and I absolutely love your furniture selection.

Why it worked: “My client clearly admired the seller’s decor decisions,” says John Michael Grafft with Berkshire Hathaway Koenig Rubloff in Chicago. “It turned out she was an interior designer. Everyone appreciates a sincere compliment.”

How to do it yourself: Find details that you love about the home and mention them so it’s clear you’re not sending a generic letter to every potential property seller. The seller chose those design elements, so find something you love that you can mention sincerely. Even if you are planning to change everything about a place you consider a fixer-upper, compliment the fact that the seller took great care of the home.

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Short and sweet

The words that wooed: Semper fi.

Why it worked: “The rest of the letter was great, but in all honesty, that phrase at the end of his letter sealed the deal. He and the seller were both Marines,” says Mindy Jensen, a Realtor in Longmont, CO.

How to do it yourself: Common interests can make all the difference, but don’t lie. That goes for military service, of course, but also other details. Don’t tell the seller that you want to raise your children there, if you don’t have any. Instead, if you hope to eventually have a family, you can say, “I hope to someday be able to raise my children in this beautiful home.”

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Kitchens that Get Black & White Just Right

By Nancy Mitchell

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Black and white is a classic color combo that works pretty much anywhere, but we happen to think it’s especially nice in the kitchen. Here, for your inspiration, are 19 incredibly stylish kitchens that work contrast to their advantage.

Above: Black accents enliven a kitchen from Coco Lapine Design.

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(Image credit: Leva & Bo via La Maison de Anna G)

Black and white and just a bit of color, from Leva & Bo (via La Maison de Anna G).

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(Image credit: Vogue)

Black and white but definitely not boring — there’s tons going on in this kitchen fromVogue. Two kinds of tiles, stainless cabinets, and plenty of art layer together for a space that’s sophisticated but also warm.

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(Image credit: Ollie & Seb’s Haus)

Dark cabinets add drama in a kitchen spotted on Ollie & Seb’s Haus.

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(Image credit: My Domaine)

The lovely kitchen of a Paris apartment spotted on My Domaine.

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(Image credit: Elle Decoration)

White cabinets look nice with a dark countertop in this kitchen from Elle Decoration. The black and white theme is repeated in the rug, and in the subway tile matched with dark grout.

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(Image credit: A Merry Mishap)

Contrast rules in an uber-minimal kitchen from A Merry Mishap.

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(Image credit: Milk Decoration)

Black and white mix in this kitchen from Milk Decoration. The dark cabinets, appliances, and rage hood add drama, while the white-tiled walls feel clean and bright.

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(Image credit: Bo Bedre)

A little bit of contrast is just right for this kitchen from Bo Bedre.

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(Image credit: Skona Hem)

You’ve seen tiled backsplashes, and tile countertops, but this kitchen from Skona Hem has tile (paired with dark grout) absolutely everywhere, for a look that seems simultaneously fresh and also a bit of an 80s throwback.

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(Image credit: Oracle Fox)

White marble and black cabinets in an Australian kitchen from Oracle Fox.

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(Image credit: Emma Hos)

Dark grout ups the style factor in this kitchen from Emma Hos.

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(Image credit: Nuevo Estilo)

Little things make a big difference: this kitchen from Nuevo Estilo is mostly white, but the steel-framed door and black lighting and furniture help to ground the space and keep things interesting.

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(Image credit: The Style Files)

A black and white cement tile backsplash adds panache to this kitchen from The Style Files.

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(Image credit: House & Home)

White marble and black make an unexpectedly delicious combination. Image fromHouse & Home.

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(Image credit: Dustjacket Attic)

Contrast is king in this kitchen from Dustjacket Attic: the traditional molding and the modern kitchen, and the bright white countertops and black cabinets.

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(Image credit: SF Girl by Bay)

A black tiled backsplash adds a bit of style to a kitchen from SF Girl by Bay.

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(Image credit: Residence Magazine)

Black and white (and just a bit of grey) in a traditional-meets-modern kitchen fromResidence Magazine.

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(Image credit: Miss Moss)

Black and white are perfect partners in this kitchen from Miss Moss.

 

Theme Your House Right: 3 Little Things That Affect the Feel Of Your Home

By Toby Nwazor:

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Do you want to live in a beautiful house with well-furnished and decorated rooms? I bet you do. But when it comes to actually turning your house to heaven on earth, it can be a bit of a challenge and often times, a large mess.

Interior decoration is not about slapping colors against the wall hoping it’ll turn out nice. Neither is it only about pushing furniture around. Interior décor is an art. When pulled off properly, it’s a medium through which homeowners can flaunt their personality and lifestyles while at the same time keeping it practical, functional and relaxing. In essence, each room is a reflection of who you are.

A mural hung on the wall in the dining area, or beddings having a particular fabric are carefully calculated so as to encourage the mood or vibe of a room. So, every item vibrates something about you. Get it wrong and you’ll be unjustly misrepresented.

Sounds complicated? It doesn’t have to be.

You can decorate any room in the house to reflect your own style and personality. All you need is to arm yourself with the knowledge of how each item, color or texture affects each room. This post has got you covered.

1. Think Color

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Aside from having a powerful effect in a room, color is just as powerful enough toaffect your mood. In fact, it invokes some psychological and emotional responses which can make you feel a certain way when you are in a room with a particular color. For example light colors make a room look larger, unlike dark colors which give large rooms a more intimate feel.

Put in a dash of yellow which represents happiness if you want to add some cheer in a room.

Home Interior Decoration

Blue and a lighter tone of purple aids relaxation and calm. Green also gives a calming effect to a room. So they often work for a bedroom.

Red and orange increase the vibe of a room. They make people feel excited and energetic. This is why red is commonly used for dining rooms and living rooms.

2. Fabric

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Just like colors, fabrics also affect the feel of a room. Although the connection made with fabric is more physical than visual, it still manages to define a room’s vibe.

Psychologically, silk is normally associated with luxury. Having silk in a room makes the room feel and look rich. The shiny nature of silk aids in reflecting light, as a result, it makes a room brighter.

The real effect of fabrics is at play with curtains when it comes to increasing or decreasing the amount of light in the room. Heavy fabrics like velvet and wool-blends make the color of the room dark no matter how bright the color on the walls are. Since they are thick they make the room warmer in temperature which is not wise choice for the summer.

Light flowing fabrics like lace and chiffon have a reverse effect as they make the room brighter and airy.

3. Wall Art And Ornaments

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As one of the hottest homeware trends of 2016, Julian Charles identified the presence of ethic boho-chic and modern mix can be exemplified with tribal art and ornaments. This comes to show that the type of wall art or ornaments you have in a room can accentuate the theme you have in mind for the room.

Wall art gives a good focal-point especially when the artwork is a large one and makes the room appear complete. Ornaments have a way they tease the theme of a room. Ornaments with smooth surfaces make the room look sleek and classy but aloof. However, ornaments with rougher textures give it a more intimate feel. That is something to watch out for when you consider buying sculptures or carvings.

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Feel free to play around with the colors of artwork and ornaments. For example, bronze or clay ornaments will give the room a cozy feel because of the presence of warm colors like orange, deep brown, or terracotta. The neutral color gray from metallic ornaments can further accentuate a modern themed room.

Working with Wallpapers that have some form of expression of your desired moods isn’t a bad idea either. A bright blue wallpaper depicting vibrant sea life for instance in your bathroom just might do wonders for your mood in the bath.

In the end, it all boils down to your preference. Interior décor doesn’t have to be complicated or messy. It just has to be what you want or the house wouldn’t really feel like home. It’s fun too, once you get the hang of it.

The Worst Home Renovation Advice You Might Actually Try

By
Margaret Heidenry

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There’s a ton of terrific, true, and essential home improvement advice out there. “Measure twice, cut once” comes to mind. Ditto “Pick remodeling projects with the best ROI.”  But “Screw contractors, do it all yourself”? Not so much.

Bottom line: There’s some very, very bad advice out there, fighting for attention along with the good. And much of this misdirection may actually be trotted out by friends and family who mean well. Unfortunately, good intentions won’t keep your home from becoming seriously messed up.

So before you pick up a hammer, make sure to check this list of the worst home renovation advice you might be tempted to try. Then slowly back away from the toolkit and think twice! Maybe even three times.

‘Tearing down a wall is no big deal’

Why you might hear this: That half-wall into the dining room is just that: half a wall. Tearing it down seems like a cheap and easy way to open up tons of space. They do it on “Property Brothers” all the time! Like, every week!

Why it’s bad advice: Some walls may not look it, but they are indeed structural, meaning they’re holding up the floors or framework above. And what’s in those walls—electric and plumbing—can make ripping into one on par with opening a vat of Maori eels.

“Water, drain, and electrical lines may be inside,” says Nancy Dalton of Seattle’s Baywolf Dalton, a design/build firm. Always have a professional determine the implications of tearing down a wall and what’s required by code—or you could be in for “significant sticker shock.”

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‘Update to what’s trendy’

Why you might hear this: If a home improvement design is in vogue, it must be good—and could boost your home’s value if you’re looking to sell.

Why it’s bad advice: Just because something is popular doesn’t mean it’s appropriate for your needs. Be open to input. Just “never let anyone talk you into a renovation that you really don’t want or don’t like,” says designer Pablo Solomon of Austin, TX.

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‘A historic home needs to be modernized’

Why you might hear this: If a house is historic, it’s bound to feel stuffy and old-fashioned unless you do a 100% rehab.

Why it’s bad advice: Eliminating the historic appeal or character of a home—think tearing out original woodwork, built-ins, and claw-foot bathtubs—is one of the worst things you can do, according to Realtor® Matt Forcum with Century 21 Realty Concepts in Effingham, IL.

While completely updating an older home may appeal to certain homeowners, those changes may result in a house whose interior style doesn’t match the exterior, or that doesn’t match the character of the neighborhood. This makes it “a market outlier” and might drag down the value of the property and the speed of sale.

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‘Replace your worn-out wood floors with something easy to clean’

Why you might hear this: Your hardwood floors look like a Louisville slugger after the World Series. Putting down laminate or wall-to-wall carpeting is an inexpensive fix.

Why it’s bad advice: “Unless you’ve had significant water damage, it doesn’t take much to replace hardwood flooring,” says Luis Leonzo with TableLegsOnline.com. And ripping out old floors may actually lower the value of your house.

“The older the home, the higher the quality of hardwood, which might have cost $20 a square foot when it was built. Replacing the flooring with laminate or carpet at $1 a square foot is like reupholstering your leather couch with canvas!”

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‘Use the best-quality materials—and by that, we mean the most expensive’

Why you might hear this: Hey, whatever costs the most is the very best.

Why it’s bad advice: While some pricey new countertops can improve a home’s value, outrageously expensive renovations will rarely pay off, according to Morgan Franklin of United Real Estate Lexington in Kentucky. Instead, Franklin suggests finding nice granite for $35 to $50 instead of marble that would run $100-plus a square foot.

“In the eyes of the appraiser and the next buyer, there isn’t much difference,” Franklin says. Bottom line: When considering upgrades to a home you plan to sell in the future, understand what value the market places on those upgrades.

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‘Just do whatever your gut tells you’

Why you might hear this: You know what you like. Besides, it’s your home and your money.

Why it’s bad advice: Sure, in some cases you can renovate however you see fit, but it’s far wiser to understand the pros, cons, and realistic costs of each renovation you want to undertake.

Too often “people don’t research the facts as to what renovations actually will pay off in a higher resale value for their home,” says Solomon. A good place to start is to check out these renovations that really pay off.

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‘You can always DIY!’

Why you might hear this: You’ve watched a ton of HGTV, right? And so you pretty much understand everything from framing to finishing.

Why it’s bad advice: This all comes down to the size of the project. Don’t shy away from a renovation you’re capable of doing yourself. But attempting one you’re not up to can turn into one giant mess. And what you think might save a few hundred dollars upfront can cost thousands if a contractor has to fix your work. When clients ask him if they can tackle projects themselves, says Joe I. Human of Designs by Human, it usually means “more work, delays, and generally subpar quality.”

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Mortgage Documents You’ll Encounter When Buying a House

HAL M. BUNDRICK, CFP

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New rules went into effect for mortgage closings in 2015. The Consumer Financial Protection Bureau’s “Know Before You Owe” initiative aimed to simplify loan disclosures and help borrowers better understand their mortgage terms — and perhaps reduce last-minute loan closing drama. (“Wait, what? That was a teaser interest rate?”)

What documents should you expect during the mortgage loan process — and what could trigger a three-day delay in the closing process? Here’s what you need to know.

TRID mortgage closing docs explained

The TILA-RESPA Integrated Disclosure Rule, also known as TRID, boils down loan disclosures to two main sets of documents, eight pages in all.

THE LOAN ESTIMATE

You’ll receive the loan estimate within three days of providing basic information to each potential lender. It details the terms of your loan, including:

  • Expenses, with clear “yes” or “no” answers to important questions, such as whether each amount can increase after closing, whether or not your loan includes a prepayment penalty or a balloon payment, and which expenses are included in your escrow account.
  • The projected monthly mortgage payment, including taxes, insurance and other assessments.
  • Estimated closing costs and the amount of cash you’ll need to have on hand at the time of settlement.
  • Information on services you can, and cannot, shop for — such as pest inspections, survey fees and the appraisal.

The loan estimate also offers data that can help you compare loan offers, including total costs, the annual percentage rate — your interest rate including fees — and the amount of interest you’ll pay over the loan term, expressed as a percentage of your total loan amount.

THE CLOSING DISCLOSURE

The closing disclosure replaces the HUD-1 Settlement Statement and the Truth-in-Lending Statement. It provides the information from your loan estimate — such as the locked-in costs of your loan and the amount you’ll need to pay at closing — in final form.

You’ll receive this document three days before your scheduled loan closing. Use this time to review the document for any changes.

What can cause a three-day delay

A substantial revision to the loan terms triggers a new three-day review. However, a change in the amount of a real estate agent’s commission, modifications to the escrow, or adjustments to prorated payments for taxes and utilities and the like don’t qualify. The CFPB says only three things can reset the 72-hour clock:

  1. The APR increases by more than 1/8 of a percentage point for fixed-rate loans or more than 1/4 of a percentage point for adjustable loans. But this is not new. Such rate changes have required a three-day notice since 2009.
  2. A prepayment penalty is added to the loan terms.
  3. The basic loan product changes, such as moving from a fixed-rate to an adjustable-rate loan or to an interest-only mortgage.

What you can do

The “Know Before You Owe” disclosure rule might simplify mortgage paperwork, but it doesn’t simplify the mortgage process itself. Keep the lines of communication open with your lender and seller to avoid closing roadblocks.

Delays, even short ones, can put buyers at a disadvantage to cash bidders in hot real estate markets. But understanding your loan terms can save you from headaches later.