Category Archives: Personal Finance

What is a Home Equity Loan?

“As Spring approaches you might be looking into a larger home project, that could cost several thousands of dollars.  A Home Equity Loan might be a good answer for how to pay for it.”

Denise Buck & Ed Johnson – DC Metro Realty Team

Here’s What You Need to Know about Home Equity Loans

A home equity loan allows homeowners to borrow against the equity they have in their home, or the difference between what they owe on their home and what their home is worth.

Home equity documents

So, you need some money – and a lot of it. Maybe you have medical bills to pay, or college tuition bills for your children. Maybe you need to update, renovate or make repairs to your home. Whatever the reason, you’ve been wondering whether a home equity loan is right for you. Such a loan could let you borrow a large amount of money, and because it would be secured by your home, it’d be easier to get than a personal loan.

But, before you call your mortgage broker, you need to know the ins and outs of these financial products. What are home equity loans, and how do they work? What are the pros, cons and alternatives? And what are the best ways to protect yourself and your family when you take out a home equity loan? Read on to learn the answers to these questions, and more.

What is a Home Equity Loan?

A home equity loan is basically a type of mortgage. Like the mortgage you took out when you purchased your home, a home equity loan is secured by the home itself.

Homeowners can and do use home equity loans to fund repairs, updates, renovations and improvements to the home. If you use a home equity loan to fund certain home improvements, you may be able to deduct the interest from your taxes. However, once you have the money, you can do whatever you want with it – pay for your kids’ college, start a business, or buy a second property, for example.

How Do Home Equity Loans Work?

A home equity loan usually allows you to borrow between 80 to 85 percent of the difference between what you owe on your home and what it’s worth. For example, if your home is worth $300,000, and you owe $100,000, you should be able to borrow up to 80 to 85 percent of the difference – or about $160,000 to $170,000.

However, a home equity loan is a second mortgage, and it’s structured just like a purchase mortgage. You’ll have to put in an application and your lender will assess your ability to repay the loan. You’ll pay closing costs, and your home will secure the loan. You’ll make monthly payments over a fixed number of years, but your interest rate should be fixed for the life of the loan. Home equity loans are amortized, which means that each payment will reduce both some of the interest and some of the principal of the loan.

Pros and Cons of Home Equity Loans

Home equity loan benefits

Like any other loan product, home equity loans have their pros and cons. It’s generally pretty easy to get a home equity loan, because they’re secured by your home. Interest rates are typically much, much lower than they are for credit cards, personal lines of credit and personal loans, and if you’re currently paying a low mortgage rate, you don’t have to jeopardize that with a cash-out refinance. Payments are the same every month, so they’re easy to fit into your budget, and closing a home equity loan is faster than a cash-out refinance.

However, home equity loans can be inflexible – you have to take a lump sum of money at once, which can be inconvenient if you need to use the cash incrementally, such as for college tuition payments or a renovation project. You’ll pay interest on the money even if you’re not currently using it. Home equity loans can also represent significant debt, and they come with closing costs and fees. Of course, because your home secures the loan, you could lose your house if you don’t pay it back.

Alternatives to Home Equity Loans

As an alternative to traditional home equity loans, many banks now offer home equity lines of credit, or HELOCs. Instead of receiving a lump sum in a specific amount, you can get approved for a maximum amount of available credit, and just borrow what you need against that amount. A HELOC offers more flexibility if you need to spend the money incrementally, or if you otherwise need to borrow multiple times. That way, you only pay interest on the money you actually spend. You may even be able to make smaller monthly payments in the beginning.

Cash-out refinances are another option for homeowners who find that their home is worth much more than they owe. This involves taking out a mortgage for more than you owe and pocketing the difference. It’s a good idea if you need a large sum of money for renovations, home improvements, college tuition, or other expenses, and it can be especially beneficial if you’re able to secure a lower mortgage rate.

How to Protect Yourself and Your Family When Taking a Home Equity Loan

A home equity loan can be a wonderful tool, but a wise homeowner uses caution when wielding it. Just as with a mortgage, you should shop around for the best rates before choosing a lender.

Before you take out a home equity loan, make sure you understand the terms. Don’t borrow more than you can pay back, and don’t sign up for high monthly payments that are unsustainable. If you choose a HELOC instead of a home equity loan, be careful; some HELOCs require the borrower to borrow a minimum amount, whether they need it or not. Of course, you could still make such an arrangement work for you, as long as you have the discipline to pay back the difference between what you need and the minimum loan amount.

Most importantly, don’t treat your house like an ATM. It can be tempting, especially with a HELOC, to just keep borrowing money. Your home should be a means of building wealth, and continually borrowing against your home equity undermines that. Use your home equity in ways that can help you grow or protect yours and your family’s wealth (such as by funding improvements, renovations, repairs, or the purchase of more property) or your potential to create wealth (such as by funding higher education, or starting a business).

If you’re a homeowner, you could be sitting on a source of cash to cover major expenses in the form of your home’s equity. But, while home equity can be a great resource, it’s vital to know exactly what you’re getting into with a home equity loan, so that you don’t end up regretting a second mortgage.

Plan a Family Vacation on a Budget

“We all loves taking vacations, but we hate paying for them.  Follow some basic tips on how to lessen the cost and impact of paying for that big Family Trip”

Denise Buck & Ed Johnson – DC Metro Realty Team

5 Ways to Start Planning a Family Vacation on a Budget

Simply follow these tips, and you’ll be well on your way to making memories — and saving some serious cash.

Budget family vacation

Some of the most memorable vacations are those that are well thought-out in advance. And often, a well-planned family vacation can end up also being an affordable family vacation. Planning a family vacation on a budget may sound difficult and time-consuming, but it’s actually quite easy. Simply follow these tips, and you’ll be well on your way to making memories — and saving some serious cash.

1. Consider your timing.

If you have any flexibility with your timing, use that to your advantage. For example, flying midweek — Tuesdays and Wednesdays, in particular — and with a stop or two (versus direct) can save you hundreds of dollars on your family’s airfare. Likewise, traveling during off-peak seasons can save some serious dough. Have to travel in the summertime? Do a little research to see what your destination’s most popular weeks are and schedule your vacation just before or after those weeks to help you save.

Related: How to Control Pre-Vacation Chaos

2. Shop around.

Through the magic of the internet, the world is literally at your fingertips. Lucky for you, that means you can compare prices online for everything from hotel rooms to rental cars. Some of the more popular travel comparison sites are Orbitz and Expedia. But sites like Airfare Watch Dog can send you alerts when airlines have sales. And sites like Better Bidding allow you to find out what other travelers paid for rooms in major cities using name-your-own-price sites like Priceline or Hotwire, allowing you to bid those prices — and likely get them accepted — for your stay.

3. Take advantage of coupons and other discounts.

Coupons go a long way, when it comes to family vacations on a budget. Just as you would search for deals in your hometown — when you’re saving money with a “staycation,” for example — visit sites like Groupon or Living Social to see what kinds of discounts you can score on food and activities at your vacation destination. Likewise, visit coupon websites, like The Krazy Coupon Lady, consistently before your vacation to get more travel deals and to stock up on all of your travel essentials with coupons before the big trip. Are you a member of a warehouse club? A military member? Or a student? You may be eligible for other discounts, as well.

4. Reach out to locals.

Renting an entire house can often be more cost-effective (and comfortable) than paying for multiple hotel rooms, especially if you’re traveling with a large family. Consider using VRBO or Airbnb to score a great deal on an individually owned place. In addition to providing a great place to stay at a great price, many of these owners can also give you first-hand knowledge and advice for getting the best deals in the area throughout your stay.

5. Think bite-sized.

In addition to scoring discounts on your travel expenses, one of the biggest impacts you can make on your wallet is to create a vacation budget and start putting money aside as soon as the urge to travel hits you. If you start setting a small, totally feasible amount of money aside when you begin planning the perfect vacation, you can end up potentially saving a considerable amount. Consider this: If you start planning for a vacation four months before your travel dates, and you put aside $100 each week, you’ll end up with more than $1,500 toward your travel expenses!

Originally Posted by American Home Shield

6 Ways to Cool Off Without Air Conditioning

“The summer heat is here and we’re all trying to stay cool. So how can you do that without cranking up the A/C? Read on and learn some interesting ideas.”

Denise Buck & Ed Johnson – DC Metro Realty Team

How to Maintain Your Water Heater to Save You Money in the Long Run

“Hot Water Heaters are expensive to replace.  Take a few extra steps to help make them last longer.  We’ve actually started getting ours drained each Spring now, hopefully that will help!”

Denise Buck & Ed Johnson – DC Metro Realty Team

Making water heater maintenance a habit will help extend the life of this appliance and reduce costly repairs. Learn how easy it is to maintain with tips from plumbing professionals.

Adjusting water heater

Replacing a water heater can be expensive and inconvenient.  To help extend the life of this important household appliance and to help it run more efficiently and economically, routine maintenance is important.  Matt Lindsay of The Lindsay Company in Houston, Texas, says that to help your water heater operate better and last longer, it’s best to start maintenance activities within the first year of a unit’s operation.

“We recommend checking the temperature and pressure relief valve every year and replacing it every three years,” Lindsay says.  “This is important because the valve is a key safety feature on the water heater.”

Keeping the water heater set at the correct temperature is also important, according to Lindsay. “Most manufacturers recommend keeping the temperature set below 120 degrees Fahrenheit on water heaters,” he says. “This is for safety and efficiency, and it helps keep energy bills low, too.”

Lindsay says that it’s also recommended to drain the water heater regularly to prevent sediment from forming inside the tank.  “A water heater tank should be drained every year,” he says. “A helpful way to remember is to drain it every year when you check the temperature and pressure relief valve.”

When sediment builds, it can accumulate as the water heats and form a ball inside the tank.  “Sometimes the sediment can collect to the size of a golf ball and will bang around inside and make noise,” Lindsay explains. “It can accumulate to a size that can’t be drained.”

Draining a tank doesn’t have to be done by a professional plumber and can be a DIY task, but Lindsay says that homeowners should carefully read their water heater’s manufacturer’s directions and follow the specific instructions for their unit.  While the directions for your unit may vary or the order of steps may be different, Lindsay says that these are some of the basic steps you might expect:

(Be sure to wear appropriate safety equipment, such as heavy gloves and goggles.)

  • Turn off the gas or electricity to the water heater.
  • Hook up a garden hose to the boiler drain, which is usually found on the bottom of the unit.
  • Open the boiler drain for about 10 minutes into a tub or directed outside the home.
  • Shut off the valve to the boiler drain.
  • Shut off the main cold water supply, which is usually found on the unit’s top right.
  • Open the relief valve, which can usually be located on the top third of the unit on the right.
  • Open the hot water tub faucet.
  • At this point, the water heater should start draining.
  • After the water has drained, open the cold water valve again.
  • Flush the unit one more time for about five minutes.
  • Close the boiler drain.
  • Fill up the water heater until no air is released from the tub or shower valve, whichever is open.

An American Home Shield® Home Warranty Systems Plan can help protect water heater components, as well as other key home systems, from covered malfunctions.  An AHS Home Warranty is a one-year service contract that covers the repair or replacement of many home systems and appliances that break down over time due to normal wear and tear.

Originally Appearing on American Home Shield (AHS.com)

Energy Tips for Daylight Savings Time

“Now that we have ‘Sprung Forward’, it’s time to take advantage of this time of the year.  Use this annual event as a reminder of things to do before the weather gets warmer.”

Denise Buck & Ed Johnson – DC Metro Realty Team

 

Energy Tips for Daylight Saving Time

As the days get longer and the weather gets warmer, your energy bill gets bigger. Take advantage of these tips to reduce the energy consumed in your home as spring and summer approach.

Photo by: American Home Shield

Daylight Saving Time will be here before you know it. With it comes longer, hotter days that can drastically affect your energy bill. Here are some creative tips to help you save money for the spring and summer months ahead.

Take Advantage of the Extra Sun

Natural light is a great way to reduce your energy costs. Instead of hiding behind closed blinds, open them up and let the sunlight brighten your home. When your air conditioner is on, keep your blinds closed during the day to lower the temperature of your home.

Keep Your Cool

Find your threshold for cool air and set the temperature accordingly. As a basis, 78˚ when you’re at home and 85˚ when you’re not is a good way to lower costs. Also, to maximize the effectiveness of your unit, don’t forget to change your air filters and clear any vent blockages.

Fans Are Your Friends

One of the biggest contributors to your energy bill is your air conditioner. Turn it off completely and cool down your home with window, ceiling and whole-house fans for big savings.

Turn Down the Heat

Water heaters account for about 18% of your home energy costs. Lowering the temperature on your unit to around 120˚ will help reduce how much energy it consumes.

Seal Your House

Weather stripping, caulking windows and sealing air leaks will keep the cold air in and the hot air out. This trick will benefit your heating costs in the cold winter months as well.

Strategically Run Your Appliances

Running the dishwasher and dryer during the day increases the temperature of your home. Wait until the sun goes down to do the dishes and laundry so your air conditioner won’t have to work as hard to cool your home. Washing your clothes in cold water helps lower costs, as does unplugging electronics when they aren’t in use.

Fire Up the Grill

Need an excuse to spend more time manning the BBQ? Grilling outdoors, as opposed to using your oven, also reduces the heat of your home.

Sources:
Pacific Power
Energy.Gov

Originally published by American Home Sheild

The AHS Top 10: Best Money-Saving Apps for Budgeting

Who doesn’t like to save money?  Check out these Apps and see which ones might work for you!

Denise Buck & Ed Johnson – DC Metro Realty Team

Budget apps

Whether you’re saving money for the upcoming holiday season or following up on that long-ago resolution to pay off all of your debts, these money-saving apps can help you stay on track.

Related: How to Get Your Finances in Order

1. PocketGuard (Android, iOS)

Want to know how to stay in the clear and out of the red zone on your accounts? PocketGuard can take care of that. The app securely accesses your accounts while simultaneously factoring in your spending habits to let you know how much you can afford to spend each day.

2. Wally (Android, iOS)

For added convenience and flexibility when it comes to expense tracking, Wally lets you manually enter your spending or take photos of your receipts. To save you a step, it can even identify your location. And all along the way, the app will adapt to your spending habits and help you achieve your savings goals.

Related: Prepare for the Unexpected: Do You Have the Budget to Fund Your Next Emergency?

3. Personal Capital (Android, iOS)

If you want to focus more on planning for the future and your investments, Personal Capital is the money-tracking app for you. In fact, thanks to its dedicated advisors, you’ll know if you’re paying too much in fees in addition to being able to get help with your asset allocations.

4. Spendee (Android, iOS)

Spendee not only lets you see a breakdown of your spending over time; it goes even further to show what specific items and categories you’re spending your money on. The best part? You can simply snap photos of your bills and receipts for easy organization.

5. Mint (Android, iOS)

Want to see your entire financial picture in one place? Mint can handle that. It not only tracks your expenses across all your different credit, checking, savings and investment accounts; you can even add in assets, such as cars or houses, to get a better sense of your net worth.

Related: Plan Your Shopping Budget for the Year: A Monthly Strategy

6. Mvelopes (Android, iOS)

Sure, you may have heard that the envelope system is the only way to truly ensure success when it comes to budgeting. But why bother with the physical paper when you can utilize the same system on your phone? The best part is that, when you charge something on a credit card, Mvelopes automatically moves that amount of money out of your “spending” envelope and puts it into an envelope set aside for paying your credit card bill. Genius, huh?

7. Digit (Android, iOS)

Using the Digit app is possibly the easiest, no-brainer way to save a few extra bucks without even trying. In fact, when it comes to putting money in your savings account, Digit handles it all. Every few days, the app uses its spending tracker and moves a small amount of money — whatever you can safely afford — over to a savings account. And, don’t worry, you’re never going to go into overdraft mode. The creators of the app guarantee it.

8. GoodBudget (Android, iOS)

GoodBudget is similar to Mvelopes; however, it’s designed to be synced across all of your devices and the web so you can share the progress with your family members. This app is great if money management is a team effort in your household.

9. Albert (iOS)

Want a personal financial advisor without paying for a personal financial advisor? Albert’s your man (or app, rather). Teaming up with various financial institutions to get accurate advice, Albert can help you make a plan and stick to it. What’s more, you can save and withdraw money straight from the app free of charge.

10. You Need a Budget (Android, iOS)

When it comes to apps that help you save money, You Need a Budget (YNAB) goes over and beyond. More than just an app that observes and analyzes your spending habits, YNAB actually tries to improve those habits — resulting in an entire lifestyle change.

Related: Money Matters: Budgeting for Unexpected Home Repairs and Expenses

Want to see more of our tech favorites? Check out our top ten security apps, our top ten home renovation apps and our top ten voice-controlled devices.

Originally Published by American Home Shield

Do You Need to Adjust Your Thermostat When the Weather Changes?

“Now that the temperatures outside are finally starting to fall, it’s time to think about how to control the temperature inside, along with costs.  It’s not always as simple as you might think.”

Denise Buck & Ed Johnson – DC Metro Realty Team

Turn on the heater or turn off the A/C? As summer becomes fall, temperatures fluctuate from hot to cold. Use these tips to keep heating and cooling costs in check!

Temperature changes outside

Whether you choose to describe it as being “up and down” or as “running hot and cold,” as a homeowner, you know that autumn weather can be unpredictable. Autumn temperatures that veer between extremes can make keeping your home comfortable a real challenge. As the season’s warm days turn into cool nights, how do you avoid running back and forth to adjust your thermostat — or even switching back and forth between your air conditioning and heating systems? Here are some tips to help when switching from cooling to heating as the seasons change.

Related: Reduce Your Winter Heating Costs
  • Change your filters regularly. Your air conditioning system has gotten you through the worst of the summer, but September and early October can still be torrid. Don’t tax it any more than you have to. To keep your HVAC system running efficiently, change its filters regularly. Consider these general guidelines for filter changes.
    • If your home is occupied by multiple people and pets, change your filters every 30 to 45 days.
    • If your home is occupied by multiple people and only one pet, change your filters every 60 days.
    • If your home is occupied by multiple people but no pets, change your filters every 90 days.
  • Get an automatic or programmable thermostat. If you don’t already own a programmable thermostat, hire a professional to install one. Set the baseline temperature within your home to ensure your preferred level of comfort, then back off that temperature setting by a few degrees, especially for those hours of the day when you aren’t actually at home. According to the United States Department of Energy, you can save as much as 10 percent a year in energy usage (and on your utility bills) by making smart adjustments to your thermostat.
  • Pile on the cozy bedding.This may seem low-tech, but that’s just another way of saying it’s a tried-and-true solution. If your house feels a little too cool at night, snuggle up under an extra blanket or two until it’s time to turn on the heater full-time.
  • Have your heating system serviced.Before completely switching from cooling to heating, have a professional HVAC technician make sure your heating system is operating properly before the full blast of winter arrives. During this inspection, have the technician check for any signs of carbon monoxide leakage. Carbon monoxide is a colorless and odorless gas that is potentially deadly. According to the Centers for Disease Control (CDC), every year nearly 400 Americans die from carbon monoxide poisoning, and more than 4,000 Americans are hospitalized due to carbon monoxide exposure.
  • Make sure your home is sealed.Check around your windows and doors for drafts. If you feel air moving or a disparity in temperature in these areas, use caulk or weather stripping to block the exchange of air between the interior and exterior of your home. Improperly sealed homes can easily cause your energy bill to increase by as much as 10 to 15 percent.
  • Lower the temperature on your water heaterYou can save between 3 and 5 percent in energy costs for every 10 degrees you lower the high-temperature setting on your water heater. Keep your hot water simmering at about 120 degrees and insulate your water heater and its exposed pipes to reduce heat loss.
Related: How to Maintain Your Water Heater to Save You Money in the Long Run
  • Change out your light bulbs.As the days grow shorter and nights longer, replace standard incandescent bulbs with compact fluorescent (CFL) or LED bulbs that use less energy and have a longer lifespan. Non-incandescent bulbs also give off less heat, meaning cooler temperatures inside a well-lit home during those days when winter still seems a long way off.

Of course, you can help protect your budget from home repair and replacement costs with an American Home Shield® Home Warranty Plan. We have options for every budget, and you can even choose from several flexible plans.

Originally Published by American Home Shield

5 Money-Saving Gadgets That Make Life Easier

“Who doesn’t love gadgets, especially those that can save you money!”

Denise Buck & Ed Johnson – DC Metro Realty Team

5 Money-Saving Gadgets That Make Life Easier

Who doesn’t love products that can save us money and time? Here are five of our favorite money-saving gadgets:

Fruit freshness extender
(Source)

1. Battery Charger

It seems like battery chargers were big when they first came out but, over time, it seems the energy died down and everyone stopped talking about them. Not us. We think they’re incredibly convenient, and they can potentially save you a lot of cash — especially if you find yourself constantly changing out the batteries in your kids’ favorite toys and devices. In fact, one user wrote about saving more than $75 each year with rechargeable batteries! Besides, who wants to make additional trips to the store for replacements when you can renew the batteries that you already have at home for free?

2. Self-Cleaning Electric Shaver

When it comes to money-saving health gadgets, you can’t go wrong with a self-cleaning electric shaver, especially if you’re a regular groomer. Although the initial investment may end up setting you back a couple hundred dollars, it should only take you about eight months to break even and start seeing the savings. Likewise, the thought of not having to buy disposable razors and shaving cream on a weekly basis anymore — and you still get a fresh shave — should make you a true believer.

Related: 7 Household Gadgets That Make Great Gifts

3. Motion-Sensing Light Switch

Want to save money but consider yourself too lazy to even turn the lights off when you leave the room? No problem. Just install motion-sensing light switches. They’re some of the greatest energy-saving products because you literally don’t have to lift a finger to use them (after the initial installation, that is). They sense when you come in and go out of the room, turning the lights on and off for you, and typically reducing your energy consumption by 35–45 percent. Never worry about tripping over furniture in a dark room again!

 

Related: Energy Tip: Light Your Home More Efficiently

4. Food Freshness Extender

We know how it feels. You’re so proud of yourself for going to the grocery store and picking out all those fresh fruits and vegetables. Then, you “accidentally” let them sit in the fridge a little longer than you intended and they’re suddenly wilted and rotten after only a few days. Cut down on the wasted food and money — up to $600 for a family of four! — by simply tossing a freshness extender ball in your crisper drawer. It works by absorbing the ethylene gases in your fridge, which tell the produce to continue ripening. And it lasts for up to three months, keeping your produce fresher longer.

5. Learning Thermostat

Perhaps one of the top energy-saving devices around, learning thermostats go beyond your typical temperature programming. They learn your habits after only a few days of adjusting the temperature yourself and then take the reins, adjusting the temperature accordingly for you. Don’t worry; you still have full control over the units. It’s just incredibly convenient not having to worry about adjusting the thermostat all the time — and saving between $131 and $145 a year, on average, while you’re at it. In fact, learning thermostats actually go beyond merely keeping your house comfortable. They can sense when no one is home (thus, refraining from heating or cooling the air for no reason) and determine how you can use your heating and air conditioning units more efficiently, as well.

Originally Published by American Home Sheild

Are You Getting the Home Tax Deductions You’re Entitled To?

“Do you know all the deductions you can get with your home? You might be surprised at some of the ways you can use your home to save on your taxes.”

Denise Buck & Ed Johnson – DC Metro Realty Team

Visit houselogic.com for more articles like this.

Copyright 2017 NATIONAL ASSOCIATION OF REALTORS®