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  • Save Money (and the Planet): Energy Efficient Mortgages

    Are you a buyer with your eyes on a charming older house or a bargain fixer-upper?

    As you’re researching what it will take to buy the property, you’ll likely come across some hefty costs for updates to replace the outdated furnace and drafty single-pane windows. And that might leave you thinking you can’t afford the home after all—especially if those costs come on top of making your mortgage payments.

    We’ve got some good news on a type of mortgage you probably never heard of. An Energy Efficient Mortgage, or EEM, allows you to make energy upgrades to your home and roll those costs into your mortgage loan. Here’s what you need to know to determine if an EEM is right for you.

    What is an Energy Efficient Mortgage?
    An EEM, also known as a green mortgage, allows homebuyers to purchase (or homeowners to refinance) homes that meet specific efficiency standards. The cost of the energy upgrades then gets included in the financing of the mortgages.

    And even though EEM has been around for a long time, few homebuyers know it exists. They’re not talked about much in the industry, but these loans are great for energy-efficient upgrades.

    EEMs are offered through the Federal Housing Administration, the U.S. Department of Veterans Affairs, and conventional loans via approved lenders. The maximum amount of money that can be wrapped into your mortgage depends on your loan type and how much you’ll save on utilities with the upgrades.

    How do you qualify for an EEM?
    An EEM requires a bit more legwork than a traditional mortgage. Borrowers first need to qualify for a loan and then get a professional home energy audit to determine whether the improvements are cost-effective.

    Energy auditors use the Home Energy Rating System, a nationally recognized system for inspecting and measuring a home’s energy performance. The HERS scoring scale runs from 0 to 150. The lower the number, the more energy-efficient the home is. So for example, a score of 100 represents a standard home; a home rated at 70 is 30% more energy-efficient than a typical home.

    Auditors assess which improvements would reduce energy consumption and estimate how much the upgrades save monthly.

    Once the energy auditor makes recommendations, it’s up to the lender—not the homebuyer—to decide which upgrades will make the cut.

    The financed portion of the cost of the energy-efficient improvements must be less than the value of the energy saved over the estimated useful life of the improvements. Note that an audit typically ranges from $300 to $800. That cost can be added to the loan, or the borrower can pay out of pocket.

     

    What types of energy-efficient improvements are allowed?

    In a nutshell, the upgrades must be cost-effective and greatly improve energy efficiency.

    Think of improvements such as high-efficiency doors and windows, new furnaces or water heaters, insulation, solar panels, or energy-efficient appliances.

    The FHA, VA, and other approved lenders each have their specific guidelines. But some other standard energy-efficient upgrades include replacing a cooling system and integrating solar, geothermal, and wind technologies. You can also generally add in fixing or replacing a chimney and installing smart thermostats.

    How much money can be rolled into an EEM?
    Each type of EEM has limits for the value of energy-saving upgrades that can be added to the base loan amount of the mortgage.

    Here’s a brief breakdown of each:

    • Conventional: Freddie Mac and Fannie Mae allow you to borrow as much as 15% of the home’s appraised loan-to-value to make energy-efficient improvements. Once you close on this loan, you’ll have 180 days to complete the upgrades.
    • FHA: Borrowers can finance up to 5% of the property value (capped at $8,000), 115% of the median price of single-family dwellings in your area, or 150% of the conforming Freddie Mac limit. The upgrades must be completed within 90 days of mortgage closing.
    • VA: Typically, there is a limit of $6,000 for energy efficiency improvements on top of the VA loan for a home purchase or refinance. The VA criteria focus is on more permanent energy upgrades, so things like appliances or vinyl siding won’t fit the bill. The new energy upgrades must be completed within six months of closing.

    Is an EEM worth it?
    Whether or not an EEM is worth the extra effort all comes down to how much it will benefit you, your bottom line, and the environment. An EEM requires a professional energy assessment, which comes with an added cost. Plus, you’ll spend some extra time during the underwriting process before loan approval.

    But in the pro column, you could qualify for a larger loan amount, which will help you afford upgrades to your property. And if done right, you’ll save money on your utility bills in the long run. Another bonus: If you ever sell, having an energy-efficient home increases your home’s potential resale value.

  • 5 Beautiful Decor Combinations to Add Value to Your Bathroom

    Some things are just meant to go together: macaroni and cheese, Pam Beesly and Jim Halpert, a bubble bath and a glass of wine. But when it comes to bathroom decor, some pairings are less obvious.

    If you’re looking to liven up your look or add value to a bathroom in your home you plan on selling, the following design ideas are sure to provide some inspiration. Here are five dreamy bathroom design pairs made in heaven:

    1. Natural wood cabinetry + black walls
    If you have a natural wood vanity in your bathroom, this tip is for you. The painted black walls really make the wood tone pop. The mix of rustic wood and black walls is fast becoming the newest take on modern farmhouse decor. Lighter oak finishes are having a moment, and what better way to highlight them than with the dark contrast of black walls.
    Get the look: Complement the light wood cabinetry in your bathroom by painting the walls Midsummer Night by Benjamin Moore.

    2. Brick flooring + cream-color walls
    Whether you start with the cream-color walls or the timeless brick flooring, there’s no denying the power of this decor combo. The design creates such a wonderfully warm bathroom with creamy walls and rustic flooring. The natural world is being brought into bathroom design lately to great effect: creamy natural colors and organic materials are all trending right now. Cream and beige tones have eclipsed gray as the neutral shades du jour.
    Get the look: Get in on this trend by painting your bathroom walls Pink Damask by Benjamin Moore and installing herringbone tile that looks like brick (without the brick price tag).

    3. Exposed beams + a Turkish rug
    When you have a neutral-tone bathroom, lean on colorful, handwoven textiles to invigorate the space. We love the combination of the wood beams and the vintage Turkish rug. This combination of materials and textures creates an eclectic look that works for a variety of different design styles, from bohemian to modern.
    Get the look: Shop for antique Turkish rugs on Etsy, or up the warmth in your bathroom with colorful washable rugs.

    4. Marble wainscoting + a bronze mirror
    Marble and metallics are a classic combination for the bathroom. Marble wainscoting adds a sense of sophistication and refinement to a powder room, while brass decor adds a touch of glamor. The result is a high-end and cohesive design that’s visually stunning, functional, and easy to maintain.
    Get the look: Combine Carrara marble tiles with a bronze mirror for an opulent powder room.

    5. Vintage vanity + geometric tiles
    There’s nothing quite like pairing something old (like a vintage vanity) with something new (like a geometric tile backsplash). Using a vintage piece of furniture as a vanity is a great way to repurpose materials and bring true design cred to your space, while the geometric tiles climb the wall like a trellis and work to draw the eye upward.
    Get the look: Pair your perfectly vintage vanity with these marble mosaic tiles.

  • How to Avoid Foreclosure with a Short Sale

    There are many flavors of compromise you can strike with your lender if you are facing foreclosure. One of the toughest to execute is the short sale.

    What Is a “Short Sale”?
    The title “short sale” is somewhat misleading; many assume that “short” means quick, implying a transaction that has a short escrow period. Au contraire. A short sale refers to a homeowner’s sale of their home for a net sales price (after commissions, closing costs, etc.) that is less than what the homeowner owes their mortgage lender(s).

    Why Is a Short Sale Desirable?
    A short sale is an alternative to foreclosure. A short sale prevents you from having to go through foreclosure and eviction. A short sale does make a smudge on your credit report but is much less traumatic to your credit than a foreclosure.

    What Makes a Short Sale Hard to Complete?
    Because a short sale results in the lender losing (a) funds they are owed and (b) the property which secured the mortgage loan, these transactions must be done with the full participation and agreement of the homeowner’s lender(s).

    Lenders are institutions, not people. They often move at a snail’s pace when evaluating a request for a short sale. Short sales are more frequent in a declining market — many lenders are simply not equipped to handle the deluge of short sale requests they receive.

    Realtors who work on short sale transactions all have stories of trying for weeks to get the short sale “package” to the correct person in the loss mitigation department! Once the package is in the hands of the right person, the bank may have some reason they disagree with the deal between the buyer and seller and may insist on inserting the bank’s price increase, reduction in closing cost credits, or other major alteration of the terms of the deal.

    During a short sale, the buyer, seller and even the real estate agents are somewhat subject to the whims of the bank — the deal cannot be done without the bank’s agreement.

    How to Get Your Lender to Agree to a Short Sale
    With all that said, short sale transactions are completed every day! Because the lender is likely to take so much time processing your short sale request — and because time is of the essence — you must ensure that your short sale request itself is as articulate, thorough, and persuasive as possible. Here are some concrete actions you can take to maximize your chances for success.

    1. Approach your lender as soon as you think you might need to request a short sale. If you are struggling to make your mortgage payments, list your home with a reputable real estate agent as soon as possible. If they advise you that your home is likely to sell for less than you owe on it, immediately contact your lender’s “workout” department to request a short sale package. If you can get your lender to indicate how much of your mortgage, they are willing to forgive upfront, you boost your chances of working with a buyer to create a deal that is a bargain for them, but likely to be accepted by the bank, too.
    2. Authorize your real estate agent — in writing — to work and to negotiate directly with the lender. But make sure to stay on top of the communications between your agent and your lender. Delegate; don’t abdicate!
    3. Make sure an offer is presented in its best light. Make sure your real estate agent includes a cover letter that explains the buyer’s qualifications to buy your home, how much down payment money they propose to put in— anything that might boost the lender’s confidence. If the buyer is requesting any closing cost credits, be sure to tell the lender if the buyer is a first-time homebuyer; lenders are more likely to agree to concessions for first-time buyers than for investors.
    4. Your lender will request a hardship letter from you. Make sure you handwrite it and present your finances in the worst light. If you lost a job, had an illness or death in the family, are a senior citizen or have any other circumstances then let the lender know! Let them know that you are considering filing bankruptcy and that this short sale would prevent you from doing that; because bankruptcy stops the foreclosure process cold, the lender would much rather approve your short sale than have you file bankruptcy. Also, explain any facts that might make it harder for the bank to resell your house — anything that makes the bank grateful that someone has made an offer.
    5. Make sure your short sale package is impeccably thorough. At a minimum, the lender will want to see:
      • *The offer to purchase your home, including the buyer’s preapproval letter.
      • *Your hardship letter.
      • *A balance sheet listing your monthly income and expenses.
      • *Statements from your checking, savings, and other asset accounts.
      • *A net sheet from your real estate agent listing all the closing costs that must be paid for your short sale to close.
      • *Supporting documentation, including two months’ worth of paycheck stubs and all your bills.
      • *Your last two federal income tax returns.

    Don’t make them have to come back and ask you for any of these items. Make sure the package is complete the first time your real estate agent sends it.

  • Questions for First-Time Homebuyers

    Now that Spring is quickly approaching, you might be considering taking the leap from renting to buying your first home!  This is a very exciting step to take, but it also comes with a lot of questions.  Before you decide on whether or not you want to purchase a home, take a look at these frequently asked questions by first-time buyers!

    Why should I buy instead of rent?
    A home is an investment. When you rent, you write your monthly check and that money is gone forever. But when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. This will save you a lot each year because the interest you pay will make up most of your monthly payments for most of the years of your mortgage. You can also deduct the property taxes you pay as a homeowner.

    How much of my income should go towards a mortgage?
    When you own a home, the ideal percentage of your gross monthly income that should go toward your mortgage is 20 percent. That means if you make $1,000 per month, no more than $200 should go toward your monthly mortgage payment and related expenses, such as taxes and homeowners’ insurance.

    How much money should I save before purchasing a house?
    Saving for a down payment is a big part of purchasing your first home. Although it is common to put 20% down on a house, if you are a first-time homebuyer, you may qualify to put down as little as 3%. But putting down less than 20% may mean higher costs and paying for mortgage insurance (PMI), and even a small down payment can still be hefty.

    For example, a 5% down payment on a $200,000 home is $10,000.  The good news is once you hit your 20% down payment, you no longer have to pay the PMI. There are programs and first-time homeowner loans you can look into that will allow you to put a smaller down payment and have the same monthly payments.

    You will also want to make sure that you account for any closing costs and moving expenses when you are budgeting for your next move!

    While it might be tempting to put all of your savings into a down payment, don’t forget that you may want to keep some to purchase items you’ll need to help maintain your new home.

    What other costs will I need to account for when buying a home?
    In addition to your mortgage, you will have your monthly utilities. If your utilities have been covered in your rent, this may be new for you. Your real estate agent will be able to help you get information from the seller on how much utilities normally cost. In addition, you might have homeowner association dues. You’ll definitely have property taxes, and you also may have city or county taxes. Taxes normally are rolled into your mortgage payment.

    Another cost to consider is if you might need to be paying Homeowners Association fees. Your real estate agent can help you determine what these costs will be and help you determine your home’s price range accordingly.

    While buying your first home can seem like a stressful and complicated process, we are here to make sure that every step runs smoothly.  Once you have made a decision to purchase your first home, it’s time to find a realtor.

  • Housing Outlook 2023

    What will the new year bring for homebuyers, homeowners, and home sellers? Lower or higher home prices? Higher or lower mortgage interest rates? Or a continuation of the overheated pandemic-inspired housing market?

    There’s no question that the blistering housing market of the past three years was hard on homebuyers. By October 2022, the average mortgage interest rate for a 30-year fixed is 7.24%, more than double the 3.22% level in January 2022.

    According to Fannie Mae, the combination of high inflation, monetary policy tightening, and a slowing housing market is “likely to tip the economy into a modest recession in the first quarter of 2023.”

    Many economic forecasters believe housing prices will decline, but that homebuyers shouldn’t fear buying during a declining market. Morgan Stanley predicts a 7% dip in home prices for 2023 that would return housing prices to where they were in January 2022 – 32% higher than prices were in March 2020 when the pandemic began. Economists with Goldman Sachs and Moody Analytics are predicting 5% to 10% declines in home prices, based on a lack of homebuyer affordability, slowing housing sales, fewer mortgage applications and a looming recession, however mild.

    BusinessInsider.com reports that the Federal Reserve’s overnight rate hikes have raised mortgage interest rates, pushing affordability to new lows, but that a recession could bring interest rates down again. That combined with softer homebuying demand due to inflation and sellers lowering their prices would make spring and summer 2023 great times to buy a home.

  • Planning To Sell Your House? It’s Critical To Hire a Pro.

    With higher mortgage rates and moderating buyer demand, conditions in the housing market are different today. And if you’re thinking of selling your house, it’s important to understand how the market has changed and what that means for you. The best way to make sure you’re in the know is to work with a trusted housing market expert.

    Here are five reasons working with a professional can ensure you’ll get the most out of your sale.

    1. A Real Estate Advisor Is an Expert on Market Trends
    Leslie Rouda Smith, 2022 President of the National Association of Realtors (NAR), explains:
    “During challenging and changing market conditions, one thing that’s calming and constant is the assurance that comes from a Realtor® being in your corner through every step of the home transaction. Consumers can rely on Realtors®’ unmatched work ethic, trusted guidance and objectivity to help manage the complexities associated with the home buying and selling process.”
    An expert real estate advisor has the latest information about national trends and your local area too. More importantly, they’ll know what all of this means for you, so they’ll be able to help you make a decision based on trustworthy, data-bound information.

    2. A Local Professional Knows How To Set the Right Price for Your House
    Home price appreciation has moderated this year. If you sell your house on your own, you may be more likely to overshoot your asking price because you’re not as aware of where prices are today. If you do, you run the risk of deterring buyers or seeing your house sit on the market for longer.
    Real estate professionals provide an unbiased eye when they help you determine a price for your house. They’ll use a variety of factors, like the condition of your home and any upgrades you’ve made and compare your house to recently sold homes in your area to find the best price for today’s market. These steps are key to making sure it’s set to move as quickly as possible.

    3. A Real Estate Advisor Helps Maximize Your Pool of Buyers
    Since buyer demand has cooled this year, you’ll want to do what you can to help bring in more buyers. Real estate professionals have a large variety of tools at their disposal, such as social media followers, agency resources, and the Multiple Listing Service (MLS) to ensure your house gets in front of people looking to make a purchase. Investopedia explains why it’s risky to sell on your own without the network an agent provides:
    “You don’t have relationships with clients, other agents, or a real estate agency to bring the largest pool of potential buyers to your home.”
    Without access to the tools and your agent’s marketing expertise, your buyer pool – and your home’s selling potential – is limited.

    4. A Real Estate Expert Will Read – and Understand – the Fine Print
    Today, more disclosures and regulations are mandatory when selling a house. That means the number of legal documents you’ll need to juggle is growing. NAR explains it like this:
    “Selling a home typically requires a variety of forms, reports, disclosures, and other legal and financial documents… Also, there’s a lot of jargon involved in a real estate transaction; you want to work with a professional who can speak the language.”
    A real estate professional knows exactly what all the fine print means and how to work through it efficiently. They’ll help you review the documents and avoid any costly missteps that could occur if you try to handle them on your own.

    5. A Trusted Advisor Is a Skilled Negotiator
    In today’s market, buyers are also regaining some negotiation power as bidding wars ease. If you sell without a professional, you’ll also be responsible for any back-and-forth. That means you’ll have to coordinate with:

    The buyer, who wants the best deal possible

    The buyer’s agent, who will use their expertise to advocate for the buyer

    The inspection company, which works for the buyer and will almost always find concerns with the house

    The appraiser, who assesses the property’s value to protect the lender

    Instead of going toe-to-toe with all the above parties alone, lean on an expert. They’ll know what levers to pull, how to address everyone’s concerns, and when you may want to get a second opinion.

    Don’t go at it alone. If you’re planning to sell your house this winter, let’s connect so you have an expert by your side to guide you in today’s market.

  • Top Reasons for Selling Your House

    Many of today’s homeowners bought or refinanced their homes during the pandemic when mortgage rates were at history-making lows. Since rates doubled in 2022, some of those homeowners put their plans to move on hold, not wanting to lose the low mortgage rate they have on their current house. And while today’s rates have started coming down from last year’s peak, they’re still higher than they were a couple of years ago.

    Today, 93% of outstanding mortgages have a rate at or below 6%. That means a strong majority of homeowners with mortgages have a rate below what they’d get if they moved right now. But if you’re a homeowner in that position, remember that mortgage rates aren’t the only thing to consider when making a move. Your mortgage rate is important, but there are plenty of reasons you may still need or want to move.

    RealTrends explains:
    “Sellers who don’t have to move won’t be moving. The most common sellers will be: Homeowners downsizing . . . people moving to get more space, [households] looking for better schools…etc.”

    So, if you’re on the fence about selling your house, consider the other reasons homeowners are choosing to make a move. A recent report from the National Association of Realtors (NAR) breaks down why homeowners have decided to sell over the past year:

    • 21% Want to move closer to loved ones
    • 11% Moving due to retirement
    • 11% Neighborhood has become less desirable
    • 10% Home is too small
    • 9% Change in structure of household

    The most commonly cited reasons for selling were the desire to move closer to loved ones, followed by moving due to retirement, and their neighborhood becoming less desirable. Additionally, the need for more space factored in, as did a change in household structure.

    If you also find yourself wanting a change in location or needing space your current house just can’t provide, it may be time to sell.

    What you want and need in a home can be reason enough to move. To find out what’s right for you, work with a trusted real estate professional who will offer advice and expert guidance throughout the process. They’ll be able to lay out all your options – giving you what you need to make a confident decision.

    Bottom Line
    When deciding whether or not to move, you have a lot to consider. There are plenty of non-financial reasons to factor in. Let’s connect today to weigh the benefits of selling your house.

  • Garden Trends to Revamp Your Landscaping

    It’s an exciting time for gardeners. We’ve reached mid-spring and now is the time to start making our summer-garden plans. While it’s always important to touch up your garden this time of year, why not go a little bigger this time and give your landscape a complete renovation with these hot summer trends?

    1. Go Bold
    Plant dahlias such as the Coral Gypsy, Tempest, and Beach Bum varieties to bring bright color to your yard. Planting summer-cypress adds serious pops of color, and by adding some of your standard favorites, you can perfectly complement the bright reds. For year-round boldness, plant some hardy succulents or evergreens in large, brightly colored planters that make a statement.

    Wildflower and perennial meadows also create a casual style of planting. Gardens are getting more natural and less manicured, so you should think about how you can keep your arrangements loose and less structured, which will make your garden standout. Think like the Japanese, who are known to embrace garden imperfections, asymmetry, and incompleteness.

    2. Try Textures
    Silvery dusty miller and ruffled ferns are in style this season. Bounce colors off one another with orange lilies and purple verbena. Contrast shapes by planting things like yucca and lantana. Don’t forget those hanging baskets, either. Start your hanging basket with a tall statement piece, surround it with something that fills the gaps well, and finish with some color to spill over the edges.

    3. Get Cooking
    Spending more and more time outside, including time to make a nice meal, is nothing new. Outdoor kitchens are rising in popularity, especially for homeowners who entertain a lot. When designing your outdoor cooking space, try to take your design choices in a different direction than your indoor kitchen to keep the space feeling unique. Contrasting the indoors with the outdoors is what will make your space feel truly refreshing.

    4. Get Out
    A place to relax within your garden can feel like a vacation, especially for those who don’t have the time for an official trip. Creating a lovely area to relax, read, or meditate is gaining in popularity as people become more aware of the need to decompress. Find a secluded space in your garden and set up some of your favorite chairs and a table. Or if you want to go big, build a little open-air art studio situated around or within your favorite plantings. A garden is a great place to refresh after a long day.

    5. Give Back
    You can get much more enjoyment out of something when you share it. Give to your neighbors and give back to the planet. Look into how you can make your garden a Certified Wildlife Habitat to benefit wildlife. Donate some of your fresh produce to your local food bank or share with your neighbors to really build a feeling of homeliness. Find natural solutions for weeds, slugs, and snails. Include plants that attract pollinators. Enhance your soil with organic compost by creating your own composter. It’s simple and keeps a lot of waste out of the garbage piles and puts it to work in your garden. You can also buy packaged or bulk compost at most home and garden stores.

  • Home Projects You Can Tackle in a Weekend

    Looking for something to do this weekend? How about finally tackling one of those home projects you have been putting off? Using this time to cross some of those items off your list will make for a smooth transition into the summer months.  Take a look at some of the easy projects you will be sure to finish in a weekend!

    Start an Herb Garden
    As spring has officially sprung, many of us are looking to start our gardening activities. For those of you who love cooking at home and are avid herb enthusiasts, this is a great time to create your own herb garden and avoid those last-minute trips to the store! Many grocery stores and hardware stores sell herb seeds and small plants that can quickly blossom and thrive. Whether it be a good chunk of square footage in your yard, a nice section in your balcony, or even a collection of small pots on your windowsill, there are tons of ways to get fresh herbs growing in and around your home.

    Deep Clean Your Home
    It’s been ingrained in our minds how important it is these days to keep sanitizing and disinfecting our homes, but you should definitely take the time to move beyond that and dive in deeper. Get into all those spots you’ve frequently missed and scrub down your shower, tub, bathroom and kitchen sinks, drains, toilets, cabinets, and kitchen appliances. Toss those bath and kitchen mats into the washer, shiny up those wood floors, and top it all off with a nice vacuuming.

    Install New Kitchen or Bathroom Hardware
    Are you in need of a quick kitchen fix that will instantly modernize the entire space? Swapping out your old nickel hardware for some chic burnished brass ones is an easy DIY that will make your kitchen feel brand-new.  You can also easily swap out your old shower head for a larger one to create a spa-like experience the next time you shower!

    Clean out the Fridge
    Refrigerators are just one of those not-so-frequently cleaned areas in your home. Really cleaning the fridge is more than just wiping down the shelves. You’ll need to remove all the food. Be sure to pop it into a cooler to keep it chilled for a bit – especially the frozen foods. As you empty the fridge, check expiration dates and throw out any old condiments that you didn’t know were expired. Once your fridge is empty, wipe down every surface with a food-safe cleaner. If you don’t have one, you can make your own.  When your fridge is clean, return the foods to the fridge with the soonest expiration date in the front and the ones not likely to expire soon in the back.

    Paint Interior and Exterior Doors
    One of the easiest ways to give your home a fresh look is by making over the interior doors Update boring, plain doors by adding trim and fresh paint, or refinishing them a new color and style.  This season, painting your outside doors a fun and bright color like a robin’s egg blue or bright yellow is a great way to add color to your home!

    Whether you want to test your gardening skills by making an herb garden or want to put your organizing ability to good use, there are tons of projects around your home that you can get done in just a weekend!

  • 6 Ways Home Buyers Mess Up Getting a Mortgage

    Getting a mortgage is, by general consensus, the most treacherous part of buying a home. Many homebuyers said they found the mortgage experience stressful and complicated. Even lenders agree that it’s often a struggle. If you’re out to buy a home, you have to be vigilant. To clue you into the pitfalls, here are six of the most common ways people mess up getting a mortgage.

    Waiting until you can make a 20% down payment

    A 20% down payment is the golden number when applying for a conventional home loan, since it enables you to avoid paying private mortgage insurance (PMI), an extra monthly fee of 0.3% to 1.15% of your total loan amount. But with mortgage rates where they are today—in a word, low—waiting for that magic 20% could be a huge mistake, since the more time passes, the higher mortgage rates and home prices may go!

    All of which means it may be worth discussing your home-buying prospects with lenders right now. To get a ballpark figure of what you can afford and how your down payment affects your finances, punch your salary and other numbers into a home affordability calculator.

    Meeting with only one mortgage lender

    According to the Consumer Financial Protection Bureau, about half of U.S. home buyers only meet with one mortgage lender before signing up for a home loan. But these borrowers could be missing out in a big way. Why? Because lenders’ offers and interest rates vary, and even nabbing a slightly lower interest rate can save you big bucks over the long haul.

    In fact, a borrower taking out a 30-year fixed rate conventional loan can get rates that vary by more than half a percent So, getting an interest rate of 4.0% instead of 4.5% on a $200,000, 30-year fixed mortgage translates into savings of approximately $60 per month, or $3,500 over the first five years.

    So, to make sure you’re getting the best deal possible, meet with at least three mortgage lenders. You’ll want to start your search early (ideally, at least 60 days before you start seriously looking at homes). When you meet with each lender, get what’s called a good-faith estimate, which breaks down the terms of the mortgage, including the interest rate and fees, so that you can make an apples-to-apples comparison between offers.

    Getting pre-qualified rather than pre-approved

    Mortgage pre-qualification and mortgage pre-approval may sound alike, but they’re completely different. Pre-qualification entails a basic overview of a borrower’s ability to get a loan. You provide a mortgage lender with information—about your income, assets, debts, and credit—but you don’t need to produce any paperwork to back it up. In return, you’ll get a rough estimate of what size loan you can afford, but it’s by no means a guarantee that you’ll actually get approved for the loan when you go to buy a home.

    Mortgage pre-approval, meanwhile, is an in-depth process that involves a lender running a credit check and verifying your income and assets. Then an underwriter does a preliminary review of your financial portfolio and, if all goes well, issues a letter of pre-approval—a written commitment for financing up to a certain loan amount.

    Bottom line? If you’re serious about buying a house, you need to be pre-approved, since many sellers will accept offers only from pre-approved buyers.

    Moving money around

    To get pre-approved, you must show you have enough cash in reserves to afford the down payment. (Presenting your mortgage lender with bank statements is the easiest way to do this.) Nonetheless, your loan still needs to go through underwriting while you’re under contract for your loan to be approved. Because the underwriter will check to see that your finances have remained the same, the last thing you want to do is move money around while you’re in the process of buying a house. Shifting large amounts of money out or even into your accounts is a huge red flag. So if you’re in contract for a home, your money should stay put.

    Applying for new lines of credit

    If you apply for a new credit card or request a credit limit increase a few months before closing, watch out: Credit inquiries ding your credit score by up to five points. So, don’t let the credit inquiries add up.

    Applying for multiple lines of credit while you’re buying a house can make your mortgage lender think that you’re desperate for money—a signal that could change your mortgage terms or even get you denied altogether, even if you’ve got a closing date on the books.

    Changing jobs

    Mortgage lenders like to see at least two years of consistent income history when pre-approving a loan. Consequently, changing jobs while you’re under contract on a property can create a big issue in the eyes of an underwriter.

    Your best bet? Try to wait until after you’ve closed on your house to change jobs. If you’re forced to switch before closing, you should alert your loan officer immediately. Depending on the lender, you may simply need to provide a written verification of employment from your new employer that states your job status and income.