Tag Archives: Real Estate

Home Improvements that Pay Off

Home Improvements“Everyone thinks that upgrading and improving different areas in the home will add value.  Unfortunately that’s not always true.  Sometimes you need to do upgrades in order to prepare you home for Sale, but that’s so you can compete in the market, not add value. Sometimes you want to change something so that it will meet your personal desire or taste, again, it may not add value.  Be aware of what adds value so that you have realistic expectations on the return for your investment.”

Denise Buck & Ed Johnson – DC Metro Realty Team

Despite what you see on TV and what the conventional wisdom says, most of the home improvement projects with the greatest return on investment are unglamorous. According to Remodeling Magazine’s 2014 Cost vs. Value report, you’ll recoup the greatest percentage of your investment on projects such as replacing the front door with a steel one, adding a wood deck, replacing old siding, replacing the garage door and replacing old windows. Also contrary to conventional wisdom, most home improvement projects do not return more than your investment when you sell. In fact, the average remodeling project only recoups 66 cents for every $1 you spend on it. To get the highest percentage of your remodeling dollars back when you sell, here’s what to improve, what not to improve and why.

Best Options: Practical, Midrange Projects

Do you want to get back 96.6% of what you spend on a home upgrade? Then replace your old front door with a new, mid-range steel door with a clear dual-pane half-glass panel and a new lockset. You’ll spend an average of $1,162 for this project, but you’ll get back $1,122 when you sell, Remodeling Magazine reports. Another project in the same price range is replacing your garage door for $1,534; you’ll recoup $1,283, or 83.7%. You won’t need a home-equity loan to tackle these projects, and their low cost and high impact on curb appeal make them smart choices.

“Curb appeal is the biggest selling factor,” says Diana George, founder of Oakland, Calif.,-based Bay Area real estate brokerage Vault Realty Group. “If the house looks unkempt on the outside, buyers automatically assume the same will apply to the interior of the house.

If you can afford to spend more, consider projects such as adding a 16’ x 20’ wood deck, which costs $9,539 on average but recoups 87.4% of its cost; replacing 10 old 3’ x 5’ windows with new, double-hung, wood or vinyl ones, which costs close to $11,000 for wood and nearly $10,000 for vinyl but recoups about 79%; or replacing vinyl siding, which costs $11,475 for 1,250 square feet but should bring back $8,975 when you sell.

“Windows, garage doors and decks aren’t necessarily big-ticket items in terms of price or luxury,” George says, but “updating these items gives the home an instant facelift and contributes to a modern aesthetic, which is exactly what potential homebuyers want to see when they drive up to look at a new home.”

Pricier Projects

Two of the priciest – but still relatively worthwhile – improvements include attic bedrooms and basement remodels. These projects will set you back tens of thousands of dollars, but are a relatively inexpensive way to increase your home’s useable square footage compared with an addition. Minor and major kitchen remodels also make the cut, as do bathroom remodels. However, while it may be true that kitchens and bathrooms sell houses, forget about doubling your money. You’re likely to recoup just 82.7% of your $18,856 cost on a minor remodel of a functional but dated 200-square-foot kitchen; 74.2% on a $54,909 major kitchen remodel and 72.5% on a $16,128 remodel of a 5’ x 7’ bathroom. These are the types of expensive projects you might be tempted to finance with a home-equity loan, but you should think twice before borrowing money and paying 6% interest or more to finance a project with a negative return.

The costs Remodeling Magazine provides are averages. If you can get a project completed well for less, you might be more satisfied with the percentage of its costs you get back when you sell your home. Costs vary by geographic region, project size and scope, and the quality of finishes you choose.

“Bathroom upgrades can be done for a minimal cost using materials that look expensive, but are quite affordable,” says Jeff Dumas, owner and broker at Home Ventures Realty in Tempe, Ariz., where he’s rehabbed and sold residential properties for more than 10 years. “Most of the time, I can take an average starter home, put in a new tub with a porcelain tile backsplash, new toilet and vanity, tile the floor, and use some decorative hardware for about $1,500 to $2,000. The results are amazing and help the wow factor when potential buyers are viewing the property,” he says.

Surprising Disappointments

Backup power generators and roofing replacements are among the projects on which homeowners will recoup the least at resale. You might get back just 67.5% of the $11,742 you spend on a generator and 67.6% of the $18,913 you spend on a roof. Also at the bottom of the list are sunroom additions, bathroom additions and master-suite additions. These projects are expensive and involve weeks or months of disruptive construction, so don’t take them on unless they’re for your personal enjoyment and you’re planning to stay in your home for years to come. Remodeling a home office is the least worthwhile project on the list, recouping just 48.9% of the $28,000 it’s likely to cost.

That being said, some of these projects are more valuable if you live in areas where they’re in higher demand. In the West South Central region, which includes storm-prone areas in Texas, Oklahoma and Louisiana, a backup generator will recoup 86% of its cost, on average.

By Amy Fontnellie, Originally Published on Yahoo Homes

‘Bad’ Rules of Thumb for Retirement

retirement-planning-283x249“We’ve all heard words of wisdom from our parents and grandparents over the years and other friends and relatives.  But was it always right?  What was it based on?  Today and tomorrow are  very different times than when previous generations were preparing for retirement.  Make sure you understand the impacts of some of those old Rules of Thumb for Retirement.”

Denise Buck & Ed Johnson – DC Metro Realty Team

What makes a good rule of thumb? It should be memorable, pithy and, above all, useful. It also shouldn’t overreach; it just gives good guidance. “Measure twice, cut once” is a great example. It doesn’t try to explain carpentry. It just reminds us to take our time, be precise and avoid making a mistake that can’t be undone. (Not bad for four words.)

What makes a bad rule of thumb? How about this: it doesn’t work. Or worse, it brings about exactly the opposite of what you intended. Retirement is full of advice that sound reasonable but may be bad for your retirement health. Here are three to be wary of:

Rule of Thumb #1: Save 3% of Salary for Retirement

The most frequent auto-deferral rate into a 401(k) is 3% of pay, probably because it typically maxes out the company match. Unfortunately, 3% is just not going to get the job done.

Think of it this way: you will likely work for about 40 years and retirement can last up to 30. That means 40 years of pay checks need to be spread across 70 years. Common sense suggests that 3% (even with a company match) is not going to be enough provide the spending you’d like once you’re in retirement.

Our recent research suggests that 10 to 13% is more reasonable. If that sounds like a lot, think of it this way: paying your future self 13% of your current pay can buy you 30 years of retirement spending. It may actually be a bargain.

Rule of Thumb #2: The 4% Drawdown

Let’s say you retire with one million dollars in savings. One of the most common rules of thumb is that the first year you should withdraw 4%, or $40,000. Next year, add a cost of living adjustment, say 2.5%, and take out $41,000. And so on.

The risk here is that if the market moves against you, the odds increase that a rigid withdrawal plan will increase the odds of running out of money. If the market rallies, the opposite can happen and you will leave behind a large unspent surplus. (Great for your heirs, of course, but you would have enjoyed retirement less than you could have.)

So what’s a better rule of thumb? Probably one based on a dynamic amount, a percentage of your portfolio. You may have less to spend some years, and more others, but the risk of spending down your assets is substantially reduced. What’s more, as you get older and have a shorter retirement period to fund, you can increase the percentage.

Rule of Thumb #3: 120 minus Your Age

We know that it makes sense to have a more conservative portfolio as you get older. This Rule says the equity percentage in your portfolio should be 120%, minus your current age. So a 60 year old should have 60% equity while a 75 year old should have 45%. We can quibble over the percentage, but this sounds reasonable, right?

Well, no. And here’s why. Let’s say the 60 year old is retired and the 70 year old is healthy, happy, still working and plans on working until 75. The 70 year old can actually tolerate more risk than the 60 year old because she has five years of future wages to grow her assets and offset market loses. The 60 year old has no more future wages to offset losses and may feel that 60% equity is too high.

This idea of factoring future wage potential into the allocation is actually what some investment strategies do, and why a 30 year old (with 35 years of wages ahead of him) has more equity exposure than a 60 year old with only five years of human capital left.

Originally published in ‘The Street’ By Chip Castille, Managing Director, BlackRock

Save Interest & Build Equity in Your Home

Pay down your mortgage“It’s amazing how much you can save in interest is you pay just a little extra each month on your mortgage.  There are several ways to do this…adding $’s to each payment, or paying bi-weekly instead of monthly are just two examples.  Check this out for more details that may help you.”

Denise Buck & Ed Johnson – DC Metro Realty Team

 

If you invest in a savings account, you’ll make less than 1% and would have to pay income tax on the earnings. On the other hand, contribute something extra to your house payment and you’ll earn at the mortgage interest rate which is certain to be more than you are earning in the bank.

Making additional principal contributions on your mortgage will save interest, build equity and shorten the term. An extra $100 a month in the example shown will save thousands in interest and shorten the term of the mortgage as well.

equity accelerator.png

Reducing your cost of housing is another way to improve the investment in your home. Becoming debt free is a worthy goal that is achieved with discipline and good decisions. Suggestions like this are part of my commitment to help people be better homeowners when they buy, sell and all the years in between.

Check out what would happen if you were to make additional payments on your mortgage.

Enjoy Your Improvements and Profit by Them

Home Improvement $$“One of the things our clients usually ask about is how they can improve the value of their home.  Different projects have different returns.  Some add value, while others maintain. Want to know more?  Check out this article below for a few quick tips.”

 

Denise Buck & Ed Johnson – DC Metro Realty Team

Homeowners can raise the basis or cost in their home by money spent on capital improvements. The benefit is that it will lower their gain and may save them taxes when they sell their home.

Improvements must add value to your home, prolong its useful life or adapt it to new uses. Repairs are routine in nature to maintain the value and keep the property in an ordinary, operating condition.

Additions of decks, pools, fences and landscaping add value to a home as well as new floor covering, counter-tops and other updates. Replacing a roof, appliances or heating and cooling systems would be considered to extend the useful life of the home. Completing an unfinished basement or converting a garage to living space are common examples of adapting a portion of the home to a new use.

Other items that can raise the basis in your home are special assessments for local improvements like sidewalks or curbs and money spent to restore damage from casualty losses not covered by insurance.

Here’s a simple idea that could save you money years from now.

Every time you spend money on your home other than the house payment and the utilities, put the receipt or canceled check in an envelope labeled “Home Improvements.” Regardless of whether you know if the money would be classified as maintenance or improvements, the receipt or cancelled check goes in the envelope.

Years from now, when you’ve sold your home and you need to report the gain on the property, you or your accountant can go through the envelope and determine which of the expenditures will be adjustments to your basis.

Some people disregard this idea because of the generous exclusion allowed on principal residences. At the unknown point in the future when you sell your home, circumstances may have changed and the proof of these expenditures will be valuable. The tax laws could lower the exclusion amount or eliminate it altogether. Your marital status may change because of death or divorce. The market value of your home may skyrocket.

Since the future is unknown, it is better to keep track of the improvements as they are made and how much is spent on them. Download an Improvement Register and examples or read more in Publication 523 on Increases to Basis.

What to Know about Home Appraisals

Home Apprasails“Whether buying, selling or refinancing, when you use a mortgage, a home appraisal will usually play a major role in in the transaction.  You’ll want to understand how the appraisal process works and how an appraiser determines a home’s value.”

Denise Buck & Ed Johnson – Dc Metro Realty Team

What Is a Home Appraisal?
An appraisal is an unbiased professional opinion of a home’s value.  Appraisals are almost always used in purchase and sale transactions and commonly used in refinance transactions.  In a purchase and sale transaction, an appraisal is used to determine whether the home’s contract price is appropriate given the home’s condition, location and features.  In a refinance, it assures the lender that it isn’t handing the borrower more money than the home is worth.

Lenders want to make sure that homeowners are not over-borrowing for a property because the home serves as collateral for the mortgage.  If the borrower should default on the mortgage and go into foreclosure, the lender will recoup the money it lent by selling the home.  The appraisal helps the bank protect itself against lending more than it might be able to recover in this worst-case scenario.

The Appraisal Process and How Appraisal Values Are Determined
Because the appraisal primarily protects the lender’s interests, the lender will usually order the appraisal.  According to the Appraisal Institute, an association of professional real estate appraisers, a qualified appraiser should be licensed or certified (as required in all 50 states) and be familiar with the local area.  Federal regulations state that the appraiser must be impartial and have no direct or indirect interest in the transaction.  Fannie Mae requires appraisers to certify that they have experience appraising similar properties in the same geographic area.

A property’s appraisal value is influenced by recent sales of similar properties and by current market trends.  The home’s amenities, number of bedrooms and bathrooms, floor plan functionality and square footage are also key factors in assessing the home’s value.  The appraiser must do a complete visual inspection of the interior and exterior and note any conditions that adversely affect the property’s value, such as needed repairs.

Typically, appraisers use Fannie Mae’s Uniform Residential Appraisal Report for single-family homes.  The report asks the appraiser to describe the interior and exterior of the property, the neighborhood and nearby comparable sales.  The appraiser then provides an analysis and conclusions about the property’s value based on his or her observations.

The report must include a street map showing the appraised property and comparable sales used; an exterior building sketch; an explanation of how the square footage was calculated; photographs of the home’s front, back and street scene; front exterior photographs of each comparable property used; and any other information, such as market sales data, public land records and public tax records, that the appraiser uses to determine the property’s fair market value.  An appraisal costs several hundred dollars, and generally the borrower pays this fee.

What Homebuyers Need to Know
When you’re buying a home and you’re under contract, the appraisal will be one of the first steps in the closing process.  If the appraisal comes in at or above the contract price, the transaction proceeds as planned.  If the appraisal comes in below the contract price, however, it can delay or derail the transaction.

Chances are neither you nor the seller wants the transaction to fall through.  As the buyer, you have an advantage in that a low appraisal can serve as a negotiating tool to convince the seller to lower the price so the transaction can move forward.  The bank won’t lend you or any other prospective buyer more than the home is actually worth.  While appraisals help buyers avoid overpaying for homes, a seller may feel that a low appraisal is inaccurate and be reluctant to drop the price.  If a bad appraisal is standing between you and your home purchase, look into getting a second opinion via a second appraisal.  Appraisers can make mistakes or have imperfect information.

What Home Sellers Need to Know
As a seller, a low appraisal, if accurate, means you will have to lower your home’s price to get it sold.  Lenders won’t approve loans for more than a home is worth, and holding out for an all-cash buyer who doesn’t require an appraisal as a condition of completing the transaction is unlikely to net you a higher sales price.  No one wants to overpay for a home.

Unfortunately, recent distressed sales in the surrounding area can lower your home’s appraisal value.  If you feel that your home’s value has been dragged down by the sales prices of nearby foreclosures and short sales, you may be able to convince the appraiser that your home is worth more if it’s in significantly better condition than those properties.  Sellers should also know that federal guidelines (intended to eliminate the inflated appraisal values that contributed to the housing crisis) sometimes cause appraisals to come in below fair market value and can make low appraisals difficult to challenge.

What Refinancing Homeowners Need to Know
If you’re refinancing a conventional mortgage, a low appraisal can prevent you from refinancing your home.  The home needs to appraise at or above the amount you want to refinance for your loan to be approved.  However, if your existing mortgage is an FHA mortgage, you can refinance without an appraisal through the FHA Streamline program.  FHA Streamline is a great option for underwater homeowners.

The Bottom Line
When everything goes smoothly, the home appraisal is just another box to tick on a loan-closing checklist.  When the appraisal value is lower than expected, the transaction can be delayed or even canceled.  Regardless of which situation you encounter in your home buying, selling or refinancing experience, a basic understanding of how the appraisal process functions can only work in your favor.

5 Factors That Influence a Home’s Value

Housing Questions“While Sellers always hope to get top dollar for their home, several factors will enter into what a buyer is actually willing to pay for it.  Calculating the right listing price is complex and requires evaluation of the multiple homes for comparison as well as an analysis of the current market condition and recent selling trends.  Recently ‘US News and World Report’ interviewed a number of real estate professionals to gain a better insight into the process.”

Denise Buck & Ed Johnson – DC Metro Realty Team

1. Location. The classic real estate refrain says, “location, location, location.” Location includes factors such as the price of recent nearby transactions, the quality of local schools and whether the area has a strong sense of community. “Buyers increasingly value community in the community where they’re buying,” says Amy Anderson, an agent with Davidson Realty, Inc. in St. Augustine, Florida. “They come to me not looking for a house for four years, but focusing much more on the community, the activities and the school district.”

As Americans scale back their dependence on automobiles, some homebuyers seek out communities that don’t require cars to get around. One resource is WalkScore.com, which rates neighborhoods throughout the U.S. based on access to public transit and proximity to grocery stores, parks and more.” I think walkability has become more important in many markets, especially amongst millennials,” says Ken Wilson, president of the Appraisal Institute, a professional association for real estate appraisers, and founder of Wilson Realty Advisors in Dallas. “You’re also finding empty nesters that are looking into properties that have walkability.”

But as Zillow.com chief economist Stan Humphries points out, location encompasses many other considerations. “Does it have a view? Is it a waterfront home?” he asks. “What’s it next to? Is it near retail establishments? Or a highway?”

2. Size and layout. While homebuyers used to swoon over ample square footage, many have fallen out of love with the McMansion. “I think people realize when they buy a 3,300-square-foot house, they’re not getting what they thought they were,” Anderson says. “There’s more upkeep and a lot more involved with taking care of these huge houses.”

Layout is a key factor because an open-concept design can look much more spacious than a boxy space of the same size. The number of bedrooms also influences a home’s value, so think twice before putting up a wall and subdividing one room into two. “Adding a bedroom will take away value,” Humphries says. “Fewer but larger bedrooms tend to boost value.”

3. Age and condition. Historic homes (assuming they’re livable and well-maintained) and new homes are typically more valuable than homes built somewhere in the middle. “Generally, as a home gets older, it becomes less valuable,” Humphries says. “Then there’s a U-shape where, at some point, homes become so old that they have historical significance. A home that’s built in 1910 is probably more valuable than one built in 1970.”

Age aside, condition matters too. “Someone will pay $15,000 more for a well-kept house that’s move-in ready than they will for a house that needs $5,000 worth of work,” Anderson says.

4. Upgrades. Renovations play into a home’s value, but if your home is considered “over improved” compared with other properties in the neighborhood, it can actually hurt the property’s value. “You want it to be common for the neighborhood or subdivision,” Wilson says. “It wouldn’t hurt to visit neighbors’ homes or visit a home via an open house to see what people are marketing [before undertaking big improvements].” You could also hire an appraiser to prepare a feasibility analysis that will help you determine the impact of renovations on your home’s value.

Unless you live in an area where granite countertops and built-in wine fridges are the norm, Humphries says you might be better off saving the money and choosing more basic finishes. “It’s harder to recoup [your investment] if you guild the lily, if you will, on granite this and chrome that in your kitchen,” he says. “You’re spending a lot of money on something that might have a lot of personal taste attached to it.”

However, you should keep records of repairs and upgrades to show potential buyers that the home has been well-maintained.

5. Negative events. If your property has issues like mold or experienced a fire or was the site of a violent crime, it could be a harder sell – and command a lower price. “Nowadays, people are very concerned if there was a fire, prior mold damage or even if there were some sort of death or crime at the property,” Wilson says. Federal law requires the disclosure of all known lead-based paints, but state laws vary in whether the seller must disclose issues related to natural disasters or crimes committed on the property.

Originally published in US News and World Report, by Susan Johnston

Annual Maintenance

Tool House“Once you’ve bought your ‘Perfect Home’ are you prepared to take care of it?  Do you know the little things do on a regular basis to help keep your home up and possibly save you money in the long run?  Take a look for a quick refresher.”

Denise Buck & Ed Johnson – DC Metro Realty Team

 

A common expectation of homeowners is to want the components and systems in their home to work when they need them. Periodic maintenance is just as important as having a trusted service provider to make necessary repairs.

Victims of Murphy’s Law can attest that their air conditioner goes out on the hottest day of the year or the water heater fails when you have out of town visitors.

If the convenience of having things work doesn’t justify maintaining your home’s systems, consider that it can be less expensive than the results of neglect causing repairs or replacement.

  • Replace burned-out, dim or missing bulbs in light fixtures and lamps. Consider switching to LED bulbs.
  • Dryer exhaust vents build up lint even though you may be cleaning the filter regularly.
  • Fire extinguishers need to be recharged or replaced after expiration date.
  • Establish a recurring appointment on your calendar to change filters in your HVAC.
  • Replace missing or damaged caulk around sinks, bathtubs, showers, windows and other areas.
  • Clean gutters.
  • Schedule an inspection with a pest control a minimum of once a year unless you have a service contract.
  • Schedule a chimney cleaning prior to using the fireplace for the first time in the season.
  • Keep all tree branches and shrubs trimmed away from the home.
  • Pressure wash exterior, deck, patio, sidewalks and driveway.
  • Keep levels of insulation in the attic above your ceiling joists.
  • Check appliances with water lines for leaks or worn hoses.
    • ice maker • washing machine • dishwasher • others
  • Test all GFI breakers and reset.
  • Inspect all electrical outlets for broken receptacles, fire hazards or loose fitting plugs.
  • Have furnace and air conditioner serviced annually.
  • Test smoke and carbon monoxide detectors and change batteries.

The early fall is a great time to take care of these items before the weather becomes harsh.

PMI = Money Down the Drain

money down the drain2“Are you still paying the PMI on your home loan?  Do you know if you can remove it?  Many people don’t realize that they can actually remove the PMI after meeting certain criteria.  Check this out to see if you can save $100’s each month by refinancing.”

Denise Buck & Ed Johnson – DC Metro Realty Team

Private mortgage insurance is necessary for buyers who don’t have or choose not to put 20% or more down payment when they purchase a home. It is required for high loan-to-value mortgages and it provides an opportunity for many people to get into a home who otherwise would not be able.

The problem is that it is expensive and a homeowner’s goal should be to eliminate it as soon as possible to lower their monthly payment and avoid putting good money down the drain.

FHA loans made after 6/1/13 that have 90% or higher loan-to-value at time of purchase have mortgage insurance premium for the life of the loan. FHA loans made prior to 6/1/13, can have the MIP removed after five years and if the unpaid balance is 78% or less than the original loan-to-value.

VA loans do not require mortgage insurance.

Conventional loans, in most cases, with higher than 80% loan-to-value require mortgage insurance. The cost of that insurance varies but with a $250,000 mortgage, it could easily be between $100 and $200 a month.

Your monthly mortgage statement should itemize what your monthly fee is for the mortgage insurance. Unlike interest that is deductible, most homeowners are not able to deduct mortgage insurance premiums.

If you plan to remain in the home or to stay there for a considerable number of years, the solution may be to refinance the home. If the home has increased since it was purchased, the loan-to-value at its new appraised value may not require PMI. You might even be fortunate enough to obtain a lower rate than you currently have.

Real Estate Investing – Cash Flow & Equity

Investor Calcs“If you have ever thought about buying investment properties, now may be a good time with interest rates still low.  Here is a strategy that we are currently helping our investors with in Today’s Market.  Give us a call today and let us help you analyze the numbers to see if this can work for you.”

Denise Buck & Ed Johnson – DC Metro Realty Team

 

Many years ago, Las Vegas hotels would entice customers with inexpensive rooms, meals and entertainment so they would gamble. It may have worked initially but if you’ve been to Las Vegas recently, the bargains are gone. Hotels expect each division to be a profit center on its own. As a consumer, I might not like the changes but as an investor, I’d have to be pleased with increased profitability.

Years ago, real estate investors used to accept negative cash flow buoyed by tax incentives in hopes of making a big payday due to appreciation when they sold it. Today’s investors are focusing on tangible, current results like cash flow and equity build-up.

Cash flow is the amount of money you have left over after collecting the rent and paying the expenses. Since rents have gone up considerably due to supply and demand in the last few years and mortgage rates are at near record lows, income is up and expenses are down, making the cash flows attractive.

If the cash flow is sufficient, you could have a good investment even if the value of the property never increased. Cash on Cash does not consider appreciation and measures the cash flow before tax advantages by the initial investment. A rental with $3,170 CFBT (Cash Flow Before Taxes) divided by an initial investment of $29,000 would generate a 10.93% Cash on Cash rate of return.

Low down payments on investor properties are also a thing of the past. Non-owner occupied mortgage money is available but the investor should expect to put down 25-30%. An advantage of having a smaller mortgage is a lower payment.

Most mortgages are amortized loans with both principal and interest due with each payment. The forced savings of the principal contribution builds equity in the property and can be considered a part of the rate of return.

A $100,000 mortgage at 4.5% for 30 years would have $1,613.29 applied to principal in the first year. Divide that by the same $29,000 initial investment and the amortization would generate another 6%.

Without factoring in appreciation or tax advantages, this rental example generates much more than most alternative investments. There certainly are many different aspects that affect the risk and return on rental investments. If you haven’t scrutinized single-family rental opportunities in a while, you should look again.

Which Filter to Use in Your Furnace?

Filters“It’s amazing that something so simple and relatively inexpensive, can make such a big difference in the quality of the air we breath every day.  Not to mention the fact that if you don’t bother to change it, a dirty air filter can cause all kinds of problems for your HVAC system.”

 

Denise Buck & Ed Johnson – DC Metro Realty Team

A dirty air filter decreases the effectiveness of your HVAC system because it inhibits airflow and allows dirt, dust, pollen and other materials to blow through the system.

The challenge is how often it should be changed to keep the system working efficiently and extend the equipment life. Too often and you’re wasting money and not often enough and your increasing the operating and maintenance costs.

Fiberglass panel filters are inexpensive and easy to find but they’re not very efficient and they allow most dust to pass through. They were popular years ago but there are much better products available currently.

Pleated air filters are available in MERV ratings from 5 to 12. As these filters collect dirt and other particles, they become less efficient to the point of impacting air flow. Allergy sufferers can benefit from this type of filter. These should be changed every two to three months based on local conditions.

HEPA filters stand for High Efficiency Particulate Arrestance. They are very efficient and more expensive than previously described filters. Since they are very efficient, they require changing more frequently; possibly, every month.

Electrostatic air filters are permanent and washable. They generally cost more initially but the savings will be based on how long they last. This type does not add to landfill issues or produce ozone.

Improperly maintained filters will lower the quality of the air in the home, have a negative impact on air flow, cause it to use more electricity and eventually require maintenance to the systems.

In an attempt to easily comparing filters, a rating system was created called MERV, an acronym for Minimum Efficiency Reporting Value. The rating from 1 to 16 indicates the efficiency of a filter based on standards set by ASHRAE. Higher ratings indicate a greater percentage of particles are being captured in the filter.

To create a system to remind you when to change your filters, set a reminder on your electronic calendar to recur for whatever frequency you determine is best for you. Be sure to keep a supply of filters on hand to be ready to change them out when the time comes.