How to Fix Damaged Interior Window Trim

Oh the joy of dog ownership!
We let our dogs on the couch.  They like to lay with us when we are on the couch, one also sleeps on the couch.  Besides the major downside of the couch getting worn and stained over time, the dogs also like to perch on the back of the couch like cats and watch cars and people/other dogs walking by.  When they are particularly excited, like when they see Daddy walking home from the train, they paw at the window frame.

This is what the interior of our front window looked like:

Chewy

We left the windows un-repaired for some time for a couple of reasons.  We were waiting for Lucky to get old enough to not have accidents before we got a new couch; one that wouldn't allow them to perch by the window.  The other reason was that we couldn't locate the matching trim.  We brought pictures to Home Depot who said to call Andersen Windows but they couldn't help.  We did have a referral of someone who said they'd either find it or custom make it, and fix the window, all for $100, but we thought it'd just get destroyed again and be another $100 out the window (ha).

The big break was finding it on HomeDepot.com.  It wasn't carried in our local store but at another one not too far.

The process was pretty simple:

First, trim around the old apron with a box cutter.  There's likely tape around the edges and if you pry off the old apron it'll rip off a nice chunk of paint and maybe dry-wall.

Note that when you pry off the drywall with a hammer, use a thin board so that you don't damage the drywall.

Second, remove the old stool.  I again delicately trimmed around the edges with a box cutter.  Then I banged the shit out of the stool with a hammer to separate it from the other pieces of the window frame.

Third, remove any remaining nails and sand around the edges to remove old built up paint.

Fourth, cut the new stool and attach.  We bought a 7' piece of 1x2 select pine and cut it down in both dimensions to match the old piece.  I used a few 2 1/2" 8D brads to attach and counter-sunk them.

Fifth, cut the new apron and attach.  You'll need to cut at a 45 degree angle.  I also used even smaller finishing nails to attach.  Since our trim patter was pretty curvy, it was hard to find good spots to hammer in a nail.

Lastly, fill in nail holes, dings with wood filler, sand and paint.

Final final step, hope you don't have to do this all again in a few months!

Don't even think about it!

Hanging Flower Display

A triple whammy on this one - made something for Pamela (happy wife), spruced up our living room (happy home), and used only scrap material in the process!

The idea for the... shelf?  display?  came from something Pamela saw on Pinterest - a Floating Vase

We both really liked the idea of adding color to the walls with fresh flowers and set about to re-create.

As I started planning though, there was one thing I didn't like about the design.  The jar is attached by steel wire which is tied together to hold the jar aloft.  It does add a great "floating" element, but I thought this would make it difficult to clean out the jar / change flowers.  You'd need to change the water in the jar as you changed flowers, otherwise you'd get green residue.

My flower display would need to be easy to change.  I bought some large C-brackets from Home Depot, but they didn't make them large enough for the size of jar we wanted to use.  The above jar is a small maraschino cherry jar.  We planned to use larger Ball canning jars.  The idea was a C-bracket installed below as a platform, then another larger C-bracket near the mouth that would prevent the jar from being knocked over.  The look would be a bit more 'industrial' and they didn't have large enough C-brackets so I abandoned that idea.

Instead, we decided to simply build a flush-mounted mini shelf.

I used scrap wood and cut out two matching boards to 18.5" tall by 5.5" wide.  The width fit the jar with some extra space.  The height was targeted to be less tall than our mirror, but was really decided by the available scrap wood I had.

I next cut out a small platform for the jar to sit on.  The jar is somewhat supported below by a small block of wood I cut at a 45 degree angle.  The reality is that the platform is secured by two wood screws which I think would support it just fine.  The angled wood below is a design touch and will also prevent any sagging.

I was excited to also finally use my router on this project to counter sink the screws so it would sit flush with the wall.  I routed out a 1/2" circle around the supporting screw that would hold the display to the wall, as well as in the back so that the screw heads for the platform/support would let the project sit flat.

I used some primer paint I had sitting in the garage after sanding the project down.

Pamela picked some bold flowers and we'll be excited to change them with our mood and the seasons.  She also pointed out that we could do candles in the winter.

Prepare Your Lawn for Winter

Late August and into October is a great time to give your lawn some extra TLC to set yourself up for a beautiful lawn next spring.  Here in the Northeast, it seems to rain almost every night with midday temperatures in the 60s and 70s - that's perfect grass growing weather.

Aerate
Aerating is the process of cutting holes in your lawn which allows oxygen and nutrients to flow into the soil and help your grass develop deeper, stronger roots.

I bought a manual aerator at Home Depot for about $20.

Hole-maker

My house is on less than 1/4 acre and the lawn is split into a front and back yard.  I would tell you that even with this small of a yard, aerating was a pain to do manually.  I highly suggest renting a gas powered aerator from Home Depot.

If you do choose to go about it the manual way, do yourself a favor and either wait until a heavy rain has come through or give your lawn a good soak.  This'll make the soil a lot softer and save you from a lot of aches and pains.

The process of aerating is to jam the double spiked device into the ground, stomp it in with your foot, then pull out the cores.  You then repeat every four to six inches.  The cores from the prior holes should pop out as you drive the aerator in for the next holes, but in reality, they'll like get jammed up.  I took a long screwdriver and my hose to unclog the aerator.  If you aren't pulling cores, you can end up compacting the soil which doesn't have the same positive effect.

Repair Grass / Plant New Grass
This was a good opportunity for me to take care of three lawn problems I faced.  The first was a lot of brown or dead areas in the back yard from dog urine/waste.  The only real cure is to dig up some of the grass and plant new seed.

The second issue was an unlevel area in the back yard.  When I ripped up the belgian blocks and garden to expand the lawn, I didn't do a good enough job compacting the soil where the blocks had been.  As the new grass grew in, it seemed to sink over time.  This made mowing more difficult and created a great spot to twist your ankle.  I read that one solution is to dig under the turf at an angle and raise it using a mix of dirt and sand.  The other route, which I chose, was to simply add dirt/topsoil and compact it until it was more level.  I then added seed to grow new grass.  In about a week of regular rain and mid-60s temperatures, I can already see the grass growing in well.

The last issue was a bare patch in the front yard where a tree stump once was.  I had paid to have the stump ground down, the hole filled then new soil/grass put in.  The grass came up, but I could see it was very sparse and it never looked as good as the Scotts seed I use.  My guess is that they skimped on the quality.

I decided to make this an entire weekend project by digging up the area, sifting it to remove rocks and weeds, then drop dirt/topsoil and seed.  I found really large chunks of the former stump.  It had been 6 months, so I don't get the feeling these chunks were going to decompose well given their size - again, probably a low quality effort put forth by the workers.

Making a mess

I placed the sifted dirt down and compacted then gave it a watering.  The next day I added seed and topsoil as well as giving it a new watering.

Fertilize
New grass needs a few weeks of healthy growth before you can put down fertilizer.  I bought plenty of Scotts WinterGuard which is also supposed to help grow grass roots for a better spring.

Food for lawn

If I was really gung-ho, I'd aerate again since it has been a few weeks.  In hindsight, I probably should have repaired the lawn then aerated the whole thing once before dropping the WinterGuard.

The lawn is looking better already and I'm hoping for a few more weeks of good weather to set the yard up for a great spring.

Free Credit Report (without the song and dance)

We've all seen the commercials on TV for various "free" credit report offers.  The truth is, if they are advertising, they aren't doing this out of the kindness of their hearts.

The Fair Credit Reporting Act enables consumers a free copy of their credit report once a year - see details here. The companies that are advertising will get you your credit report for free, but they are trying to sign you up for a monthly monitoring service or other services for a fee.

The FTC's link brings you to AnnualCreditReport.com which is hosted by the three major credit reporting agencies - Experian, Equifax, and TransUnion.

You'll follow through the prompts on the site to fill out your personal information and then you'll have to select which of three agencies to get your report from.  Your credit report will show your various outstanding lines of credit.  The report will not provide you with your credit score.  You'll have the opportunity during the process to sign up (and pay) to receive your credit score.

Getting your free credit report once per year is a good way to monitor your credit, although if there are problems, a once-per-year report may not be timely enough.

If you are planning on looking for a house, you may want to pull your report before you begin.  If there are problems, such as fraudulent accounts, they can often take a long time to resolve.

For Sale!

As I noted in an earlier post, I am also in the process of selling a home in East Stroudsburg, PA.  It's been a bit of a rocky road to start, but we finally got the listing up:

The house is 1,200 sq. ft. with 2 bedrooms and 1 bathroom.  The house is in need of some repairs and renovation.  The key selling points are that the house is on 3.4 acres which  you could easily sub-divide, and the location - only minutes away from Route 80.

The listing price is $149,000.

Here is the official listing page.
Here is the listing on Zillow.

I'll be sure to keep everyone posted on our progress!

8 Step Home Buying Guide

The links below will provide you with a detailed 8 step guide to purchasing your first home.  The guide is interlaced with stories about our home buying process as well as tips we've picked up along the way.

• Step #1 - Buy or Rent
• Step #2 - How Much Can You Afford
• Step #3 - Searching Online
• Step #4 - Getting Pre-Qualified
• Step #5 - See Some Houses (Pt. 1)
• Step #5 - See Some Houses (Pt. 2)
• Step #6 - Make an Offer
• Step #7 - Offer Accepted, What's Next
• Step #8 - Onto Closing!

Step #8 - Onto Closing!

As you work with your broker / banker to get the final "clear to close", I would advise that you keep an open channel of communication with the seller's team.  They will be quite anxious themselves - it has probably been weeks since you signed the contract and there isn't a lot of information flowing back and forth.  I think it helps all parties to say "just fulfilling the final conditions; we are still on target for our scheduled closing date".  Surprises near closing are never good.

On or About
The closing date you've put in the contract of sale is referred to as an "on or about" date.  That means if you can close early, great.  If not, neither party should be surprised..  There will likely be language in the contract that will put some brackets around that date giving both sides room if delays occur.  Unless you have penalties written into the contract, there isn't much that can be done to force someone to close.


In our case, while we were ready to close on time (and ahead of our lease expiration), the seller wasn't ready.  This can happen for a host of reasons - is the seller closing on a purchase of his/her own new home?  Are they packing up and traveling far away?  Or, perhaps the seller doesn't want to begin packing the house up until he/she knows there is a deal in hand.

If you have some sort of inflexible timeline, such as a rental lease expiring, my first advice is to schedule a closing well in advance.  You'd love to have your lease end and move into your new home the same day, but as in our case, how big of a challenge will it be if you have to move out of your apartment but you and your belongings have no where to go?  What if the seller says he/she needs an additional two weeks?  You could make all sorts of empty threats about walking away, but #1) you won't and #2) depending on your contract, you might lose your deposit if you do so.

In that situation, you'd be livid about the injustice of it all (oh, I know), but there isn't anything you can do about it.  When drafting your contract of sale, you should discuss with the lawyer the idea of putting penalties in place if the closing is delayed outside of the brackets.  More often though, those delays will be the buyer's fault, so be careful.

Scheduling
Closing will require the presence of the buyer, seller, and their respective teams (agent, banker, lawyer).  This can also lead to slight delays, but everyone at this point wants to close the deal and get paid.  A few days before closing, you'll get your Closing Statement - this will be the final tally of closing expenses.  You'll need to get a certified check in this amount.  Take a good look over these expenses and have every item explained to you.  Most of these expenses should be the same as what you've seen on your Good Faith Estimates.

One area that can be a surprise is taxes.  You are required to reimburse the seller for the taxes that they've paid that cover the period beyond closing.  So if the seller paid a tax bill in June that covers July through December, and you close at the end of July, you'll have to reimburse the seller for August through December.  The amount you have to reimburse the seller depends on how many times per year your municipality collects taxes.

Once you've scheduled closing, I would suggest telling your cable / internet company of your planned move.  You can always cancel your request if closing gets pushed back or called off.  In our case, we waited until just before closing and then found we'd be without TV and internet for almost a month!

What Happens the Day of Closing?
On the day of closing, you'll first do a final walk-through of the house.  This is your last chance to spot anything amiss.  If the seller (accidentally or not) took an appliance that was part of the contract, and you don't notice for a few days, you are out of luck.  You'll want to look for the key items in the contract such as washers, dryers, and water heaters, and anything that was specifically written into the contract as an inclusion.  You'll want to check that all the appliances are in working order too.  Check the house to look for any damage caused when the seller moved out, and look for any damage that was maybe hidden by a piece of furniture or decoration.

After you have completed the final walk-through, you'll head to your lawyers office to sign the documentation.  It turns out banks won't lend you hundreds of thousands of dollars without asking you to sign an enormous stack of paper.  Depending on the type of mortgage you've applied for, document signing can take several hours.

At closing, there can be final negotiation of any outstanding items.  Sitting down and discussing things face to face can help bridge any gaps, although there is always a chance that the opposite could happen.  The others in attendance though are very close to getting paid and will likely help to push the two sides together.  In some cases, Realtors have agreed to reduce their commission if there is a small dollar difference on an issue that seems irreconcilable. 

Once the paperwork is signed, the seller should hand you the keys to the house.  Make sure to have the seller explain which key goes to which lock.

At this point, the house is yours!  You've just purchased a house and locked yourself into a mountain of debt.

Tips to Avoid Real Estate Scams

While we hopefully all know to avoid e-mails asking for money to release funds held in Nigerian, scam artists are trying new routes, both on and offline.

Avoid Anything Overseas
I ran into this one myself and actually followed along for an e-mail or two.  We were looking for a new rental; both apartments and houses for rent.  A seemingly normal Craigslist posting offered to rent a nice house for a low rate, but not astonishingly low rate.

I thought to myself, "well, this is possible, perhaps someone is downsizing or moving and looking for help with the mortgage payment for a few months".  I looked up the address on Zillow and saw that the house was also for sale.

I e-mailed the poster and got a response asking for more information about myself including when I'd like to move in and other basic questions.  To this point, the only red flag in my mind was that the asking rental price was low.

The next e-mail I received was a dead give-away.  Poorly written, several woe is me stories about the missionary work this person was currently doing overseas in Africa, and then a request to submit a full application.  The e-mail also said that upon receipt of my deposit, we'd be sent the keys.  I didn't respond.

Flash forward to a few months ago.  I mentioned this to our Realtor.  He said this was a growing scam.  Anyone can see which houses are for sale and possibly vacant.  They can copy the pictures from the listing to make it seem like they do live there.

Another Realtor in his office had driven past a home he was selling and saw moving trucks.  He stopped the people and asked what was going on.  They explained how they were renting the house and so forth.  He had the unfortunate task of informing these people they had been scammed and that the house was not for rent.  They had to put their belongings back in the moving truck.

Go Straight to the Source
This might not apply to many people, but this was a frustration I ran into when I was renting in NYC.  I found a post about an apartment on Craigslist.  It sounded nice and the broker said there would be no fees.  I actually knew the housing complex.

While it wasn't really a "scam", I met the broker on the street corner and he walked 25 yards with me to the leasing office.  The leasing agent for the complex handled the rest of the process.  I found out at the end that new renters either got $500 off, or $250 off and $250 to whomever referred them.  Apparently this broker (and others) were making $250 a pop for the 25 yard walk.

Tips for Checking Out New Neighborhoods Online

If you are moving from out of town or out of state, it can be a challenge to get a feel for a place you may be moving to.  While nothing compares to visiting and talking to locals to get a feel, there are some good online resources you can use if that is not an option.

Virtual Stroll
Pamela and I used Google Maps and its StreetView functionality to actually see what "Main Street" looked like and whether it was inviting.  You can do this by zooming all the way in on a map.  Once you hit the final zoom, the map converts to a view of the street, which Google takes by driving cars equipped with cameras and GPS devices around town.

Forums
I found that the forums on City-Data were very useful.  A lot of the questions you would like to ask have probably already been asked - "how are the schools?  what is the nightlife like?  what is there to do?  pros/cons?".  There is also a vibrant community of forum users who provide helpful responses very quickly.

Local News
Finding the local newspaper isn't always the easiest, but with a few good Google searches, you can probably be successful.  Through the local news, I found out about local events and attractions and you can also learn about the key local issues such as upcoming tax hikes, crime, new developments, etc.

Search
"Where to live in ____".

Will Assaulting the Seller Help Closing?

More than two weeks ago, the seller (through his attorney) asked us if we'd be ready to close on Friday, September 23rd as scheduled.  We said "Yes".

We got the "clear to close" on Monday, September 19th, but then the seller said he needs at least 7 days notice to close.  So we said, "Fine, let's do Monday, September 26th".

We next were told the earliest the seller could close would be Monday, October 3rd.  Our rental lease ends on Sept 30th, so this is a problem.  Could we move our belongings into the garage ahead of close, we asked.

Well, we've waited five days and finally were told by the seller's attorney "Well, there might be space in the house for your belongings, but I will advise my client against allowing you to do so because of the liability".

Should we physically assault the seller and his attorney?  (Just a joke!  I bet a lawyer could make a big deal out of this).

Because the seller apparently doesn't care about screwing us over (by the way, he is moving in with his mother 15 miles away, so it isn't like he's waiting on his next home to be ready) we will be moving our belongings into a U-Haul truck on Friday night.  We'll then need to find a place to park it.  Pamela, Akina, and I will then find a dog friendly hotel or stay with a friend until Monday.  We'll go to closing on Monday, and depending on when we get the keys, move in Monday night or Tuesday morning.

Lessons Learned

• If you are up against a deadline (lease ending) leave yourself PLENTY of time.  Besides delays in getting the "clear to close" you could run into a slow moving seller.  Or, perhaps the seller is waiting on their own new house to be ready.
• Put strong penalties into your contract if closing gets delayed due to laziness.  Once you have received "clear to close' make sure there are monetary penalties in place if either side fails to move at a reasonable pace.
• Communicate often.  I would've thought when the seller asked if we'd be ready to close in 2 weeks, that'd be the signal to start the clean up and move out process.  Apparently not.

Addendum
I have a sneaking suspicion that the seller's attorney is behind all of this.  We'll get to closing and the seller will have no idea how much trouble he has caused us.  "Oh, I thought you wanted to close on October 4th.  I was ready to go a week ago!".  That's my hypothesis at the moment at least.

Mortgage Rates and Calculations

If you follow the financial markets, you may have heard that the Federal Reserve took action to help the economy recently.  One part of the plan is to help keep mortgage rates low.  In fact, mortgage rates have hit lows not seen since 2009.

So Where Are Rates and Where Have They Been (and Where Are They Going)
I've mentioned on several posts where you can go to check mortgage rates.  These include Bankrate, Mortgage News Daily, or even the website of you local bank.

To get a sense of where rates have been recently, Mortgage News Daily puts together a chart here.

Rates are low and it is a great time to take out a mortgage, but I don't think you need to rush.  In order to spur the economy, and also to allow the government to refinance its own debt (a significant portion of which come due in the next few years), I believe rates will stay low for quite some time.

So now that you've got a sense of where rates are, how can you use that to figure out how much you'll pay each month?

Spreadsheets You Can Play With
I've created a spreadsheet with an Comparison tab and an Amortization tab.  Click here and you can make a copy of this spreadsheet for yourself.

The highlighted and bolded cells are the ones you should look to change.

The Comparison tab is built for just that purpose - you can play around with different purchase prices, down payments, interest rates, and mortgage terms.  This can be very helpful in your budgeting.  Once Pamela and I had made an offer, we used this spreadsheet to see how much our monthly payment would go up if we raised our offer by $5,000.

Once you have an offer accepted and you know the purchase price, you can change the interest rate cells to see how your monthly payment will changed based on the rate you get.

The Amortization tab shows you how your monthly payment will be split over the life of the loan.  You'll notice that early in the loan, you'll be paying a lot more interest.  As the balance of the loan goes down, those interest rates shrink and more of your payment goes towards paying down the loan balance.

The Additional Payment column is really insightful.  How quickly can you reach 20% equity or pay down your loan completely if you can add $100 to your monthly bill.

Conflicts of Interest

There are a few inherent conflicts of interest that you will likely run into during your home buying process.  I think it is useful for you to be aware, although hopefully you won't run into any bad situations.  You should interview as many real estate professionals as possible and rely on the advice of your friends to find someone who is trustworthy.

Your Realtor (Buyer's Agent)
The Realtor only gets paid a commission if you purchase a house.  So, like any other salesperson, you should have some skepticism if you aren't finding anything you like, but the Realtor is pushing you to reconsider.  A good Realtor will help you to understand if your expectations aren't realistic.  A bad Realtor will pressure you to move forward on a house that you are only luke-warm about.

This conflict can also come up after you've had your offer accepted - perhaps you discover something during the inspection that makes you consider walking away.  If you walk away from the deal, the Realtor's time to that point could be considered "wasted".  A good Realtor, of course, will be happy to help you look for a new house.

The buyer's agent also gets paid a percentage of the sale price.  It is in your best interest to pay the lowest price possible, but this does not help your Realtor.  Consider this when you are placing an offer on a house.  If you are a first time home buyer like I am, you'll probably rely heavily on your Realtor's advice.  If you feel strongly about what you want to bid, but your Realtor thinks you should go higher, take this advice with a grain of salt.  Consider the extensive budgeting and spreadsheet work you have done and don't let anyone push you into a house you cannot afford.

Your Banker / Mortgage Broker
Your banker / mortgage broker's job (I'll just refer to this person as a broker) is to generate business for his/her firm.  He is trying to make the most profit off of you as possible, without scaring you away.  Your best defense here is to shop around.  You can speak to multiple brokers and you can compare what they are offering on Bankrate.com.

Now, just because Bankrate says you should get a 5.00% mortgage but your broker is offering 5.15% doesn't mean he is trying to take advantage of you.  Rates on Bankrate are quoted using the most basic parameters (zip code, purchase price, % down, range of credit score).  Some lenders on the site will also show a rate such as 5%, but they will charge substantial fees.

Brokers earn money in two ways - fees and selling your loan.  Fees are pretty straight-forward - they'll charge you an application fees, processing fees, bank appraisal fees, etc.  If your broker doesn't work for a major bank, there is a good chance that they will not hold your loan.  In this situation, their goal is to charge you as high of an interest rate as possible (without you going elsewhere).  They are then able to sell that loan to a major bank which, for example, is happy to buy a 5.15% 30 year loan if you have a 800 credit score, when they know that would usually be priced at 4.75%.

It might not be a "conflict" but I think it is also important to make clear that once you've started down a process with a broker, it is difficult to change.  Over the past few years, new legislation has been introduced that requires brokers to provide a "Good Faith Estimate" or GFE which should detail all the costs of your mortgage.  Pay close attention to this, ask lots of questions about what each item means, and ask what numbers could change.  As you get closer or reach closing, make sure these numbers don't change.

Your Lawyer
You should actually feel pretty safe here.  Your lawyer gets paid whether you complete a deal or not.  The only conflict that could arise might be if your lawyer and your Realtor or broker have a close relationship.  If you are being charged hourly, of course they have incentive to bill you for more hours.

Your Inspector
Again, not much to worry about here.  He/she gets paid either way.

The good news is that Realtors, brokers, lawyers, and inspectors find a lot of business through referrals so it is most definitely not in their interest to treat you unfairly.  They also could face serious consequences for treating you unfairly.  It is up to you though to seek out real estate professionals you can trust.

Bad Home Buyers and the Real Estate Professionals Who Hate Them
From their point of view, there are a few bad behaviors that will leave them frustrated and less willing to help you:

• Home buyers who are unwilling to sign paperwork saying they are represented by a specific Realtor
• Home buyers who think house hunting is a fun way to spend their weekends but have no real intention of buying (and don't say so)
• Home buyers who get too excited, make offers, but then realize they can't afford the house
• Home buyers who get cold feet and try to create ways to get out of a deal
• Home buyers who try to negotiate with a seller on the side to reduce the purchase price on paper - this can lower the loan amount you need or could allow you to pay with income you haven't declared, but a lower purchase price means less commission for the Realtor and can raise red flags with your broker and lawyer
• Home buyers who drag their feet in getting paperwork to their broker, but then dump a pile of documents on them and get frustrated at the turnaround time

Buyer's Guide - Step #5 - See Some Houses (Part 2)

The Walk-through
Through your online searches, you have already eliminated the "No Interest" houses.  Now you want to narrow the remaining "Maybes" into a manageable pile of houses that really interest you.  Through this process, you'll also begin to get a sense of what is really out there - are there a lot of houses on the market that could potentially be yours, or are few good houses up for sale now?  You'll also begin to see the volume of new listings that meet your criteria.  If the volume is low, it may be safe to assume your purchasing options are in front of you.  If the volume is higher, there's always that chance that the perfect house at the perfect price might come on the market tomorrow.

Pre-Walk-through Preparation
I would recommend printing out the one-pager for the listing you are going to see before you go.  This will serve as a good sheet for taking notes and will later help you get organized.  You should also consider writing down some questions on this sheet before your visit - we would make notes such as "can't tell if back yard is big or not" or "how far from the street is the house / is it noisy?".

You should also feel free to bring a camera.  This is a good way to make note of parts of the house that may need more work - again, the pictures in the listing are taken to present the house in its best light.  Also feel free to bring a measuring tape.  Understanding the dimensions of a living room or bedroom might help you decide if your sectional sofa or your queen-sized bed will fit and whether there will be much room left over.

What to Look For
Pamela and I found that as we visited houses, we pretty quickly got a sense of whether "this could be the one" or not.  I would make the recommendation to you, that if you step into a house and you start to think that this could be a candidate, feel free to start the house tour over again with that mindset.  Sometimes you'll be headed out the door thinking, "wow, I really liked that house... but what did the second bedroom look like again... was the basement finished... will our bed and nightstands fit in the bedroom?".  During our house touring sessions we did end up asking our Realtor "can we go back to 123 Elm Street and see it again?" on a few occasions (including the house we ended up purchasing).  Sometimes, this will not be possible - the Open House is over, or maybe the seller is now back home and doesn't want more viewings that day.  It's clearly better to do the walk-through once and do it right.


If you end up putting an offer in on the house and it is accepted, you'll come back with an inspector to do a real top-to bottom poking and prodding of the house.  I mention this here, because for your walk-through you should be trying to decide if the house "makes the cut".

Below is my non-comprehensive checklist of things to look for.  Your Realtor will be able to help you pay attention to the interesting things about the house you are seeing, as he/she has ample experience in seeing houses and knows what other houses in the area have to offer.

• Outside
• Is the yard in good shape?  Does it look like it gets damaged by heavy rain?  Are there patches of shade where grass won't grow?
• Is there a front and back yard?  Are they big enough or too big?
• Is the exterior of the house attractive?  Will I want to re-paint as soon as I move in?
• Is the roof clean or is there moss (this can shorten the life of a roof)?  Does it look new?
• Do the windows look new?  Will I want to replace with newer windows to save energy?
• How close are the neighbors' homes? 
• Will we have enough privacy?
• Do we have a garage?  Will our car fit?  Will having two cars in the driveway be a problem?
• First Floor
• Are there ample closets?  A coat closet by the front door?
• Do I like the flow of the house?
• Do I like the floor materials?  Do they need re-finishing, re-carpeting?
• Can I set up the living room in a way that I like it or is there some feature (i.e. fireplace) that will dictate how it will be arranged?
• Is the kitchen large enough for our normal cooking adventures?  Is there ample counter-top space?
• Does the oven have an overhead vent that goes outside?
• Do I like the size, style, and newness of the appliances?
• Is there a full / half bathroom?
• Are there enough electrical, cable, internet plugs for our needs?
• Second Floor
• Will I be happy with the size of the master bedroom?
• Where do your windows face?
• How many bathrooms are there?  How are they shared between the rooms? Will that be sufficient for our size of family?
• How large are the other bedrooms?  Will they all be used for sleeping or perhaps an office?
• Are there enough electrical, cable, internet plugs for our needs?
• Basement
• Is the basement well lit?  Will I be able to do things down here or is it simply for some storage?
• Is the basement dry?
• What kind of electrical service is coming into the house? (Older houses may not have enough amps running into the house to suit a modern family with lots of electronics)
• How is the house heated - oil? gas?  Where is the oil tank? 
• Does the house have central air?
• Are the washer and dryer in the basement? (A typical location, but will you get annoyed carrying loads of dirty laundry down from the second floor to the basement, then up from the basement once clean?)

If you like what you've seen, perhaps it is time to make an offer!

Buyer's Guide - Step #5 - See Some Houses (Part 1)

Now that you've got a Realtor lined up, be sure to fill them in on your process so far and what you've seen and liked versus what you've seen and didn't like.  Without a good sense of what you are looking for, you and your Realtor are likely to waste time looking at houses that aren't interesting.

Your Realtor - Access to Information
Your Realtor has access to more information on the houses you might be interested in.  This includes the listing history of a home and the history of the asking prices.  This type of information is very valuable, particularly when it comes to putting in an offer.  Houses that have sat on the market for some time may still be over-priced.  The seller may be asking too much, but may also be willing to accept an offer that is much lower than their ask.  Seeing the history of asking prices can also clue you in to how serious the seller is about getting the house sold.  Consider a house where the seller has reduced the asking price by 1% every three months for the past year.  That likely indicates that they aren't willing to move much lower, perhaps because they owe a significant amount on the home, or they aren't in a rush to move, or maybe they just feel very strongly about the true value of their home.

Now consider the same house where the seller has reduced their asking price by 10% each of the past three months.  That's a pretty clear indication that the seller "needs" to get a deal done and might entertain a low-ball offer.

You also may find that a home you are interested in was taken off the market after an offer was accepted but is now back on the market because the deal fell apart.  Did the potential buyer find something wrong with the house?  Does the seller feel pressured to get a deal done quickly?  These are the types of questions your Realtor may be able to answer for you by calling the seller's agent.

Seeing a House with Your Realtor
Your Realtor can schedule a time for you to see a house that you are interested in.  Sometimes, you'll go to see an Open House, which is when the Listing Agent looks to host many potential buyers and other agents at the house to generate some interest.  Other times, the Realtor will contact the seller's agent and schedule a time for you to walk through the house on your own.

* Warning * I would advise against going to an open house on your own if you have begun working with your own Realtor.  The Listing Agent running the open house is not on your side and could potentially put some pressure on you to make an offer - you can already hear the agent saying "I've got another interested couple coming here in an hour and I think they are going to be putting in a offer", right?  While some undo sales pressure is the last thing you need, the other issue has to do with your relationship with your Realtor.

As we discussed in an earlier post, your Realtor ends up splitting the commission on the house you buy with the seller's agent.  Well, if you've gone to an open house without your Realtor, the seller's agent may not be required to split the commission with your agent if that is in fact the house you end up buying.  This is because at the time you weren't exactly represented by your agent.  So if you then tell your Realtor "hey, I went to this open house on Sunday and I really loved the house and want to make an offer" they may then be unwilling to help you along as their is no commission for them at the end.  You can then be stuck without a Realtor on your side, or you may have to make a separate arrangement to pay your Realtor to compensate them for their efforts.

The other purpose of an Open House is for the seller's agent to generate more business for him/herself.  The seller's agent will want to get your information knowing that you are in the market to buy.  Maybe he/she can help you with that?  Or maybe you are looking to buy a new home and will also need to sell your existing home - again, the seller's agent will be happy to give you his/her card.  This again gets back to the relationship you have with your Realtor.


Next, we'll continue our discussion on viewing houses in Part 2.

Buyer's Guide - Step #4 - Getting Pre-Qualified and Finding a Realtor

Up until this point in the process, it's been your time and energy spent on this endeavor and you will feel no shame if you wake up one day and decide you don't want to pursue this any further.  In this next step, you'll start to involve some others so it's probably a good idea to be past the point of just casually browsing.

I will pretty much guarantee that if you get pre-qualified or find a Realtor earlier in your process, they will be absolutely supportive if you all put forth some effort but decide to bail on your plan to buy a home.  They will tell you "I understand, you've got my card, please think of me if you start looking again" and they will mean it.  So I will also say, if you want to get others involved earlier in your process, go for it.  It might make more sense too - maybe you've got more debt than you'd like to admit to and you'd rather have a professional run some numbers to see if you can really get as big of a mortgage as you think.

I think the key message here in the intro is to recognize that these professionals are spending time with you when they could be with another potential client, so be respectful of their time.

Getting Pre-Qualified
Getting pre-qualified helps you find out (again, in rough terms) how much money a bank would be willing to loan you.  Once you have been pre-qualified, it's also a good signal to a Realtor that you are serious.

You can feel free to get pre-qualified online through a big bank like Bank of America, or go to your local bank to do so.  You might want to consider calling a Realtor first, if you have a reference, and tell them "I want you to help me look for a home, but I'd first like to get pre-qualified so that I have a better sense of what I can afford.  Could you recommend someone to me?".

Real Estate is a local business, and you'll find that many Realtors and mortgage brokers work together frequently and have a good sense of who gets deals done, whose deals tend to be hectic, and who shouldn't be dealt with at all.

The process of getting pre-qualified is simple.  A website or banker will ask for some basic information about your income, checking / savings levels, and your social security number so that they can pull your credit report.
* Warning *  I was told by one banker that I should be concerned about having my credit report pulled by multiple bankers / brokers because it can negatively affect my credit score.  I was later told and have more or less confirmed through research that this is not true.  Yes, having your credit pulled multiple times can affect your score, but the systems are actually more sophisticated - if your credit is pulled for a real estate related transaction, it doesn't matter if another mortgage broker pulls it.  I think the erroneous statement stems from the generalization that having your credit pulled means you are opening a line of credit, which isn't always the case, and it also might come from those who don't want you to shop around / go elsewhere.  There isn't a real purpose to shopping around for a pre-qualification, but don't feel like getting pre-qualified by Bank of America somehow obligates you to choose them for your mortgage.  They will, however, call you and follow up to try and get your business.

After the bank has your information, credit report, and credit score, they will give you a piece of paper saying you are pre-qualified for a $xxx,xxx mortgage.  It by no means says they are ready to write you a loan, but more says "based on our initial impression, we'd guess we could give you a mortgage of this amount if everything checks out".

Finding a Realtor
If you're reading my blog then you are likely new to the home purchasing process.  So the answer to the basic question of "do I need a realtor" is YES.  If a realtor is representing you, they are known as a Buyer's Agent.  When you and your Buyer's Agent go to an open house that you are interested in, the agent running the open house is known as the Listing Agent or Seller's Agent.  One more complicated situation can arise if your Buyer's Agent is the Seller's Agent for a home you want to purchase.  In this case, his allegiance is to the Seller, so you should be aware.

First things first - in the most simple terms, the Buyer's Agent works for free.  You will never receive a bill from a Buyer's Agent for anything.  He or she gets paid when you buy a house.  The Seller's Agent might get a 5% commission on the value of a house that he/she sells.  If you come make an offer with your Buyer's Agent, and you are the winning bid, the seller of the home will have to pay 6% in commission, which is split 3% and 3% between the Buyer's and Seller's agents.

You can also make the argument that this commission is baked into the sale price, and therefore you, as the buyer are paying both agents.  I agree this is a more accurate statement, but as a buyer, you are likely working through the math of what your mortgage payment will be and are worried about receiving a bill from a Realtor for his/her commission - it won't come, so don't worry.

Finding a Realtor seems to most often come via reference.  If you know anyone in the area who has bought or sold a home, ask them about their experience with their broker and for a referral.  Sites like Zillow.com have lots of Realtor listings and advertisements.

Finding a Realtor who has completed lots of transactions goes back to my earlier point about being connected.  A good Realtor will know the other Realtors and be able to help you in your negotiations if and when you put in an offer.  He/she will also know lots of mortgage brokers, lawyers, and inspectors and they will all owe him/her a favor which could come in handy for you.

In our case, our Realtor helped us find our mortgage broker, lawyer, home inspector, and was also able to push them a bit since we were trying to get a deal done on a shorter time frame.  He also was able to speak with the Seller's Agent and work with him to get the seller comfortable with the idea that we would be buying using an FHA loan and that we would not be putting much down.  I could easily see us having lost our home without this kind of help.


Now you are pre-qualified and you've found a Realtor.  You know about how much you can afford, and you have someone on your team ready to answer you question (simple, complex, or in between).  You are almost ready to Get Out There - See Some Houses

When to Get Pre-Approved?
Getting pre-qualified is simple.  Getting pre-approved is more involved.  A letter of pre-approval will be necessary if you are putting in a bid on a house.  So if you are going to go out and see houses with the hope of finding the right one, it would make sense to be pre-approved so that you can put in a bid if you are ready.

To get pre-approved, you must first choose your bank or mortgage broker.  This is a serious decision and will have profound implications on your home buying process.  I will probably write a completely separate post on whether to get a mortgage broker or not, but I will try to quickly distill the concepts here.

A mortgage broker is someone who will hold your hand through the process and make sure you are moving along at a fast enough pace.  They have access to many ultimate lenders, and therefore can likely get you very good rates.  Your Realtor should have some recommendations as to which mortgage broker to use.  You want someone that is local and someone that will be available, not someone at a 1-800 number that you can only get on the phone on rare occasions.

So why not use a mortgage broker?  They will charge you origination and/or processing fees, and they also might be earning a spread between what the lender is willing to quote and what you will ultimately have to pay.  This can increase your costs.  There are also plenty of horror stories out there where an unscrupulous  mortgage broker can provide you with false information and end up blowing up your whole deal.

On the other hand, you can use a site like www.bankrate.com to see what kinds of mortgage rates you might be able to get.  You can then work directly with a bank of your choosing, which will assign you to a loan officer.  This may be someone at your local branch or it could be someone from the loan division which is located hundreds of miles away.

In either case, the person you work with has plenty of incentive to make sure you get a mortgage.

Onto the Pre-Approval
Now that you've got your broker / banker lined up (we selected a mortgage broker), they'll start requesting every financial document you have and you'll have to put together a mortgage application.

After they've reviewed your documentation, a pre-approval letter is issued.  This letter enables you to make an offer on a house, but really doesn't mean much.  No one has committed to loaning you the money you need and a lot can change.


Whether you've gone ahead with pre-approval or decided to wait, it's time to get out there and start searching.

Buyer's Guide - Step #3 - Searching Online and Offline

So now that you've got a rough dollar figure in mind of what you can afford, have some fun searching online and looking at houses.  Sites like Zillow.com can be a great resource to look at houses for sale or see the price of houses sold in your area.  I've been told though that the houses for sale data can be stale.  Your best option is likely to find the website of a regional realtor.  You can find these through simple searches, or the next time you are out driving around, look at those "For Sale" signs in front yards.  They will always give an agent's name and his/her firm.


While we'll discuss serious budgeting a bit later, don't feel afraid to look 10% or 25% above your budget.  While you may not be actually able to afford houses in these price ranges, i think they can add some real benefits.  Firstly, it helps to understand what you can afford, and what you could potentially afford with a bit more saving.  Good house now or great house in a year?  Secondly, more expensive houses generally have better locations and better features.  You will start to get a better sense of what types of houses you might like, how important your acreage is, what features you'd like in a house, and whether there are some locations deserve premium prices (or not).  For this latter point, think about two identical houses across the street from each other that have a significant price difference.  One could be in a much better school district, or one could have a much more significant assessment which leads to higher annual taxes.  Maybe one is located on an exclusive street or subdivision.  This kind of searching should help you flesh out what is most important to you.

You've heard it before and I'll give my support to it as well - location, location, location.  When Pamela and I started our online searches, we were immediately attracted to houses that looked newer and had more features, regardless of their location.  We were advised to think differently and I'm glad we did.  There's a lot to be said for being in a good neighborhood - your neighbors will become your friends and the value of the surrounding homes will in part dictate the value of yours down the line.  If you move into a less desireable neighborhood, maybe your loud neighbors become a nuisane and maybe if you do eventually sell, you'll find fewer buyers that want to move into that neighborhood.  At the same time, we also looked at houses with the best location but dismissed them.  We weren't interested in paying up to be part of a neighborhood or school district where you were paying for a name / address (think 5th Avenue in NYC).  We also found that these locations attracted more affluent people but also charged significantly higher taxes.  Your property taxes are much like your rent - it's money that is "thrown away" and in some areas, it can be significant.

So you've searched online and found some listings of homes that look nice and are within or near your budget.  I would next suggest taking your search offline.  Pamela and I printed out the one-pagers for dozens of homes, grouped them geographically, then did drive-bys.  Each house for sale has a sign in the yard saying "For Sale" which makes them easy to find.  We found this to be some of the best research work we did.  You can likely see a lot of houses without spending a ton of time because they are often in similar neighborhoods.

While you won't be able to go into the houses, you can really learn a lot about the neighborhoods and even the outside appearance of the home.  Don't forget, sellers upload pictures of their homes that frame them in the best light.  They'll try to avoid a picture that shows their gem of a home is surrounded by slums or the photo that shows the front yard floods an is often a mud pit.  All the pictures, both indoors and out, try to use perspective to make rooms and features larger than they are.  Driving by the houses can help you put this all in your own perspective.

Now that you've perhaps figured out a few neighborhoods where you'd like to live and maybe even have a shorter list of houses you are really interested in, my next post will discuss the next steps you can take to Get Serious - Getting Pre-Qualified and Finding a Realtor.

Buyer's Guide - Step #2 - How Much Can I Afford?

Simply because you decided you might want to be a homeowner doesn't mean that its the right track quite yet.  Below, we'll talk about some dollars and cents and hopefully help you get an idea of how much you can afford.  After that, the fun starts - house hunting.  You might find that once you know your limits, there isn't anything appealing in your price range.  If you can only afford homes you doubt you'd be happy with, then remain a content renter and start saving with a purpose.  We definitely found that you can save a lot more money every month when you have a serious goal.

So on to some numbers...
You'll find some easy generalizations with a few simple searches, including: 6x your annual salary or 33% of monthly income after all debts is how much you can afford to pay on a mortgage.  You should hopefully have a good sense as to how much you are able to save on a monthly basis while renting, so you could also add that to your current rent to see how much you could afford to pay monthly.  Banks will look at your income and what you spend every month to service your debts.  They'll also look at your credit history to see if you've missed payments or perhaps have too many lines of credit open.

I would suggest visiting www.bankrate.com and playing around with their mortgage calculators to see how much of a mortgage you can afford based on your rough estimates of how much you can afford to spend on a home every month.  Keep in mind, there are going to be other charges in owning a home including taxes, home insurance, higher utility bills (compared to an apartment), and other regular maintenance items.  I've added an entire separate post on Financial Budgeting Tips.  It's a topic I could discuss all day and night, but let's not get too sidetracked.

The other big issue when it comes to affordability is how much you have to put towards your down payment.  0% down mortgages aren't likely to come back.  You can put down as little as 3.5% with an FHA mortgage and this is often a good option for first time home buyers (we purchased our home using an FHA mortgage an a lot less than 20% down).  Keep in mind that if you put less than 20% down, you'll have to pay for Private Mortgage Insurance (PMI), which helps assure the lender that they won't lose a lot of money if you quickly find you can't afford your home.  PMI is a monthly expense you'll have to pay until you reach 20% equity in your home, so you'll want to consider that in your budget.

From a seller's point of view, a bigger down payment shows a real commitment to the deal.  Imagine if you were selling a $500,000 home and you accept an offer from someone who is putting 1% down ($5,000) and financing the rest ($495,000).  You would be then risking the possibility that the buyer may not get approval for such a large loan, and with less money down, that buyer is more able to walk away if they find another house they are interested in.  A seller would often prefer to accept a lower offer from someone if they are more confident the deal will get done - don't forget, sellers are often moving themselves and the absolute last thing they want is to buy their new home and then find the sale of their old home has collapsed.

So, the bigger the down payment, the smaller the mortgage and the lower your monthly payments will be.  You'll also avoid PMI and your offer on a house will be viewed as more credible with a bigger down payment.  On the other hand, a small down payment may be all that you can afford, and sellers will likely understand that. 

I won't get into all the different types of mortgage options here - that's something you can do with your mortgage broker as you get going in your process - and we'll talk about mortgage brokers later.

With the next post, you are ready to move onto the fun part and get searching.

Buyer's Guide - Step #1 - Time to Buy a Home or Continue Renting

This is clearly a personal question with many different intricacies for different individuals / couples.  I can though, tell you about our experience and what I found that helped us come to a decision.

Before moving to the suburbs we were renters in NYC.  New York City likely has the most vibrant rental market in the US but it is also characterized by exorbitant prices, renter beware situations, and sometimes real estate agents who can do more harm than good.

When we moved to Westchester we continued to rent.  I think the first impetus to really think about buying a home came when we received our lease renewal statement from our landlord.  Our rent was set to jump significantly, in part because we had signed our first lease (18 months) not long after the bottom of the housing crisis.  While we had expected a jump in our rent, this increase was more than we had anticipated.  Thankfully, we could easily afford the new rent and still be able to put money away every month, but the key question really hit us: could we be doing better owning rather than "throwing away" rent every month?

If you do a quick search for Rent vs. Buy, you'll quickly find that most calculators out there are too complex, asking you to make assumptions about long term rental rate increases versus the appreciation of you first home's value, minus some annual depreciation, minus the cost of capital for your mortgage, don't forget the tx benefits of paying mortgage interest which varies depending on your marginal tax bracket and marital status, minus the money your savings could have been earning if they weren't applied to a down payment,... and don't forget your 15 year outlook on mortgage rates, whether you think a flood might occur EVER, and so on.

As we began to think about this, it really boiled down to a few things: #1 could we make a commitment to stay in one place for at least 5 years, and #2 do we really want a house.

#1 - committing to a town - do you really love it where you live or where you are looking to buy?  Do you want to become involved with your neighborhood?  Does the area provide good schools, whether you have kids or not, or will you need to relocate if your family grows?  These are difficult questions, but I used the word "love" for a reason - I think it is something you just know.  And even if you do feel like you love where you are looking to live, it's probably a good idea to go on "dates" with other towns for a day.  Pamela and I took the train or the car to a few other nearby towns that had been recommended to us to really test our feelings.  If you start looking at houses in your area but can't get that feeling out of the back of your mind that maybe this area isn't right for us, then you probably should consider renting for longer until you are sure.

#2 - do you really want a house - my boss, who was unaware that I was looking for a house, had told me that homes are "money pits" - things break, things need fixing, and if you aren't fixing, you'll probably decide to upgrade or renovate something.  Once you do that, you'll forever be in cycle of renovation projects.  I bring this up to hopefully get rid of that notion that rent = money thrown away, while monthly mortgage payment = building equity.  If you are looking solely for the best choice financially, you can make a case that owning is better than buying, but renting gives you the optionality to move every 12 months if you like and that really is quite valuable.

Outside of wanting to make the best financial decision, do you want / need more space?  Do you want a yard?  Do you want to have to take care of a yard (mow, rake leaves, etc)?


Back to those calculators - they were clearly developed during a time which is not similar to current times.  They all use this concept of "how much do you expect your home's value will appreciate each year" and "how many years until you sell, realize your profits, and plow them into your newer/bigger/better home".  I don't think that's going to be the case again for a while.

Deducting mortgage interest from your annual taxes really is a great benefit for homeowners, but I viewed that as an annual true-up - it wasn't part of thought process for the month to month expenses of owning a home or renting.

In summary, the rent vs. buy decision is largely based on intangibles, in my opinion.  We'll discuss some of the more detailed aspects of budgeting and comparing costs in a later post, but the simplest way for me to get past spending lots of time crunching numbers at this point was to recognize that the renting and buying markets are priced, by definition, to be about equal.  What I mean by this, is that if I own a house or apartment that I am looking to rent out to someone, I know that over time as the landlord, I will need to make some repairs and that each month I need to recoup more than the amount I put towards my mortgage payment.  The universe of renters out there are people that need a bit more flexibility to be able to move in 12 months if need be, or perhaps they want to buy, but need to save up more money for their dream home.  They have to be willing to pay monthly rent that is greater than the cost of paying a mortgage on that same home, plus a bit more for the optionality to leave in a year.

At this point, you need to decide, if the cost of renting a house was equal to owning it, would I be happier owning?  If you see yourself living in a home of your own and that gets you excited, then you should continue to the next step - figuring out how much you can afford.