Banking & Savings

Should I Buy or Build a House?

If you’re looking for a place to call your own, the thought of building a home may have popped into your head. Constructing a new home is generally more expensive and takes more time and effort, but it can also ensure you get a home that’s move-in ready and customized to your liking.

Here’s what to consider if you’re deciding whether to buy or build a home:

Is it cheaper to buy or build a house?Pros and cons of building a housePros and cons of buying a houseShould you buy or build a house?

Is it cheaper to buy or build a house?

It’s generally cheaper to buy an existing home compared to a new-construction property, according to the National Association of Home Builders. The average cost of building a new home was $296,652 in 2019, but buying land and budgeting for pandemic-related price increases will drive up that price tag.

When you combine those costs in 2021, the average price of a new single-family home was $477,800 in October, compared to just $377,300 for an existing home.

Of course, the actual cost of each type of home could look different for you depending on location and what you’re looking for.

Cost of buying a house

You probably already know that you need to save for a down payment, closing costs, and cash reserves when getting a mortgage for an existing home — the same as you would with a newly constructed property. But there are some additional costs you’ll likely incur when buying a home:

Type of costEstimated costHomeowners insurance premium$1,478 per year for a 10-year-old homeReal estate agent’s commission5% to 6% of the home’s sales priceOngoing maintenance1% of the home’s value per yearAppliances$1,889Property taxesVaries by location. May be higher on a new-construction home because they’re often valued higher than resale properties. Sources: National Association of Home Builders, RedFin, and The Zebra

Shopping around for a mortgage can be stressful. Fortunately, Credible simplifies this process and makes comparing multiple lenders easy. You can see prequalified rates from our partner lenders and generate a streamlined pre-approval letter in just a few minutes.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now


Cost of building a house

There are lots of pieces that go into building a home, and your home designer or builder can help you create a budget. In addition to the costs that come with buying a house, you’ll need to budget for the following building costs:

Type of costEstimated rangeLand and site work$5,000 – $38,000Foundation work$16,600 – $72,000Framing$16,600 – $95,000Exterior work$20,000 – $95,000Major systems$17,000 – $72,000Interior finishes$42,000 – $167,000Source: HomeAdvisor

Pros and cons of building a house

You’ll have to consider whether the chance to build the home of your dreams is worth the trade-offs. Some of the pros and cons of building a house include:

Pros of building a house

Customization: Depending on availability and the builder’s options, you may be able to fully customize your home in the neighborhood of your choice. Maintenance: Because everything is brand new, you likely won’t have to budget for major repairs and maintenance projects until later on. The builder may also cover the home under a builder warranty.Energy costs: Newly built homes come with windows, doors, HVAC systems, and appliances that are designed to keep homes as energy-efficient as possible. Using less energy keeps utility costs down and lowers your carbon footprint. Toxic materials: Some older homes are built with toxic materials such as asbestos, lead paint, and formaldehyde. New builds likely won’t use these materials.Competition: In a seller’s market, a home listing might attract multiple offers. But when you’re building a home, you won’t need to compete with other buyers once you buy the land.

Cons of building a house

Cost: When you factor in the cost of land, building a home is typically more expensive than buying an existing one.Effort: Although you’re not the one picking up the power tools, you may put in a lot of work making decisions as the home is being built.Time: It takes 6.8 months, on average, to build a new single-family property, according to the U.S. Census Bureau. You’ll need to budget for alternative living costs during this time.Contractors: You’ll need to work with the general contractor along with various subcontractors throughout the homebuilding process. That means you could encounter more delays and issues because more people are involved.Landscaping: If your newly built home doesn’t come with landscaping, you’ll need to spend time and money getting the yard you want.

Also See: Construction Loans: What They Are and How They Work

Pros and cons of buying a house

Buying an existing home is the more traditional approach as it typically saves you time and money. Some of the pros and cons of buying a home include:

Pros of buying a house

Convenience: Buying a move-in ready home is a quicker and more convenient process than building a home.Time: Building a home takes almost seven months on average, while the timeline for buying an existing house is much shorter. Cheaper: Nationwide, the cost of buying an existing property is generally lower than building a new home. However, that may change based on where you are and what you’re looking for.Landscaping: Older homes typically come with mature landscaping, so you won’t have to spend time and money on a new lawn and plants. More style options: Homes in older neighborhoods often have a variety of architecture styles and floor plans, and they may come with a certain antique charm.

Cons of buying a house

Competition: The average home listing received four offers in early 2021. In a competitive market with low inventory, you’ll need to make your offer stand out when buying a home.Ongoing repairs: The cost of ongoing repairs varies with each home, but professionals say it typically comes out to 1% of the home’s value per year. So a $200,000 home may cost $2,000 per year to maintain. Not as energy-efficient: An older home may come with older appliances and internal systems, so you’ll either pay higher utility bills or pay to replace these features.You may get less for your money: Existing homes are generally smaller than new construction, which means they may cost more per square foot. May contain toxic materials: Some older homes were built with hazardous materials such as lead and asbestos, which could put your family at risk. If you’re buying a resale home, it’s a good idea to test for these materials during the home inspection.

Don’t Miss: How to Buy a House: Step-by-Step Guide

Should you buy or build a house?

Because resale homes are generally cheaper and more convenient to move into, you might want to start your home search with existing properties. You can target desirable neighborhoods and spend a few weeks checking out the inventory there. These homes may not be in perfect condition or have exactly what you want — so plan on budgeting for renovations, new appliances, and ongoing repairs — but you might be willing to compromise if the price is right.

If you haven’t found what you’re looking for, then a new-construction home might be a good bet. Check out the costs of building in your area and the price of available land. Building a new home is usually more expensive, but there’s a reason for it. New homes come with new appliances, less maintenance, and better energy-saving measures, and they’re typically larger than what you’d find on an older home.

Check Out: How to Know If You Should Buy a House

The post Should I Buy or Build a House? appeared first on Credible.

Banking & Savings

What Is a Vendor Take-Back Mortgage and How Does It Work?

A vendor take-back mortgage can help homeowners and real estate investors sell properties that aren’t moving in a tough market. They can also help buyers finance homes in a tight lending environment, or in a lending market that can’t accommodate their finances.

This type of mortgage can offer flexible solutions to challenging homebuying scenarios. However, it can also pose major risks for both buyers and sellers.

Here’s what you need to know about vendor take-back mortgages:

What is a vendor take-back mortgage?How vendor take-back mortgages workBenefits and risks of a vendor take-back mortgageVendor take-back mortgage vs. traditional mortgageExample of a vendor take-back mortgageWhen to consider a vendor take-back mortgage

What is a vendor take-back mortgage?

A vendor take-back (VTB) mortgage is a loan from a property seller to a property buyer. It can cover all or part of the purchase price.

Vendor take-back mortgages aren’t a popular way for individuals to buy and sell a primary residence. More often they’re used by real estate investors.

A vendor take-back mortgage is considered a type of creative financing, or an alternative to traditional financing. Whether you’re considering this option as a buyer or seller, proceed with caution.

What else is a VTB mortgage called? There are a wide variety of terms used to describe a vendor take-back mortgage, such as:

Seller financingSeller take-back mortgageSeller carry-back mortgageCarry-back financingOwner financing

How vendor take-back mortgages work

A vendor take-back mortgage functions much like a traditional mortgage, only there’s no lender serving as the middleman. The seller will act as a lender and have a lien on the home, and the buyer will make monthly payments to the seller. Like a traditional mortgage, the home serves as collateral for the take-back loan.

Here’s what to expect if you’re using a vendor take-back mortgage to buy or sell a home:

If you’re buying a home using seller financing: The seller will become your mortgage lender. They might be your only lender, or you might also finance part of the purchase price through another source, such as a bank. You’ll need to sign a promissory note legally agreeing to the deal’s terms. A buyer might consider a take-back home loan if they have poor credit, a lot of debt, or some other factor preventing them from qualifying for a mortgage.If you’re selling a home using seller financing: You’ll become the buyer’s mortgage lender. You’ll need to own your home free and clear before you can consider this option. Depending on the buyer’s needs, you might lend the entire purchase price or just part of it. A seller might consider this type of financing in a strong buyer’s market.

What are typical terms of a VTB mortgage?

If a vendor take-back mortgage will be the only financing, the buyer and seller have a lot of flexibility in structuring the deal.

Sellers will typically ask for a higher interest rate since they’re taking on risk by serving as the lender of the loan. But, the type of loan and length of the loan term can vary depending on the buyer’s needs.

Overall, there’s a lot of room for negotiating terms and closing costs, which is what makes vendor take-back mortgages enticing for both buyers and sellers.

Tip: While vendor take-back mortgages offer a great deal of flexibility for both parties, as the seller, you’ll still need to comply with state and federal mortgage lending laws.

Under federal law, that includes charging a fixed interest rate (or an adjustable rate that adjusts after five years) and making a good faith determination that the buyer can pay back the loan.

State law may require several pages of disclosures in a vendor financing agreement. And usury laws may cap how much interest you can charge as the seller, depending on how your state categorizes the transaction.

Be sure to hire an experienced lawyer to help you through the legal aspects of the transaction.

Benefits and risks of a vendor take-back mortgage

Whether you’re the buyer or the seller in a vendor take-back deal, you’ll want to understand the benefits and risks before signing any paperwork.

Benefits for buyers

As a buyer, you might be interested in a seller take-back mortgage because of these potential benefits:

More financing opportunities: If you’ve shopped around extensively and can’t find a lender that’ll give you a mortgage, seller financing might allow you to fund the purchase. Fewer closing costs: With seller financing, you shouldn’t have to pay for an origination fee or mortgage insurance premiums. Other closing costs, like a home appraisal and title search are up to your discretion (though, they’re generally encouraged to help protect your investment).Customized financing terms: You’ll still have to follow state and federal laws, but you won’t have to follow rules established by entities like Fannie Mae and the Federal Housing Administration. This leaves more room for negotiating the terms of your loan, and you might wind up with more favorable terms as a result.

Risks for buyers

However, you should also be wary of some serious potential drawbacks:

Higher interest rates: If you can’t get a traditional mortgage because lenders think your financial profile is too risky, an individual seller will likely feel the same way. If they do agree to a vendor take-back mortgage, they may charge a high interest rate to compensate them for the risk.Potential for mortgage fraud: A seller who doesn’t have the right (or intention) to give you a legal interest in the property might take your monthly payments under the guise of offering seller financing. You might think you’ve purchased a home when you’re really just renting it. And, if the property is already mortgaged and the borrower doesn’t pay, you could get evicted.Foregoing traditional protections: If you’re not experienced in buying and selling real estate, you could easily overpay for the home or buy a property with title defects that threaten your ownership rights. This is why most lenders require a home appraisal and title search.

Read: How to Get a Mortgage with a 600 Credit Score

Benefits for sellers

If you’re selling a home, here’s what might entice you to offer seller financing to a homebuyer:

Extra income on interest: Becoming a private lender might appeal to you if the price is right as it could end up netting you a higher return than your other interest-bearing investments. Of course, you’ll still need to pay tax on the interest income.Better chance at closing: In a buyer’s market where you haven’t been able to sell your home, a vendor take-back mortgage might help make the transaction possible and allow you to get closer to your asking price when other buyers have made lower offers. And since you’ll avoid lender processing times and other steps in the underwriting process, you may be able to close the deal faster.Tax breaks: If you’re eligible, you might not owe tax on the first $250,000 in profit from selling your home; that exemption doubles if you’re married. Using a vendor take-back mortgage might also allow you to treat the sale as an installment sale and pay less tax by receiving the proceeds over several years.

Risks for sellers

As a seller, you’ll also face certain risks if you offer seller financing to homebuyers:

Not getting all of the cash upfront: If you’re selling your home, you probably want to use the proceeds to buy a different home, increase your savings, or put toward some other expense. Providing seller financing means getting paid over time instead.Additional risk: If the borrower stops paying and you’re the sole lender, you may have to pursue costly and time-consuming foreclosure proceedings. If you provide secondary financing, you’re still likely to come up empty-handed since you hold the second lien. The primary lender will hold the first lien and will get paid first from foreclosing and selling the home.Unqualified or fraudulent buyers: There’s a good chance you don’t have the know-how or relationships to check a buyer’s creditworthiness with the thoroughness and accuracy that traditional mortgage lenders can. The buyer may not have the capacity or willingness to repay the loan.Important: Because vendor take-back mortgages are complex transactions, these are just a few of the potential benefits and risks. If you’re seriously considering this type of financing, whether as a buyer or seller, it would be wise to speak with a real estate attorney.

Vendor take-back mortgage vs. traditional mortgage

There are some key differences between vendor take-back mortgages and traditional mortgages:

VTB mortgageTraditional mortgageLenderHome sellerIncludes banks, mortgage lenders, and credit unionsInterest rateGenerally higher than traditional mortgage ratesVaries depending on a number of factors, including market conditions, loan size, and your credit scoreClosing costsUp to the two parties, but usually lower than what you would pay with a traditional lenderTypically 2% to 5% of the loan amountLoan termsMust have a fixed rate or an adjustable interest rate with no adjustment in the first five years; other terms, such as the term length, are negotiableVaries by lender (many lenders offer fixed-rate and adjustable-rate loans with terms between 10 to 30 years)QualificationsWhatever the seller will accept, subject to state and federal lawsVaries by loan type and lender (often a credit score of at least 620, a down payment of at least 3%, and a DTI of 50% or less)Mortgage insuranceNoneOften required with less than 20% down

Example of a vendor take-back mortgage

A vendor take-back mortgage can provide all or part of the financing a buyer needs. Here’s how those two options might work.

Partially funded VTB mortgage example

Let’s say you’re selling your house for $800,000, but no one has offered close to your asking price — and you’re not willing to sell for less.

A buyer’s agent suggests that you accept an offer in which the buyer makes a down payment of $50,000, gets a first mortgage for $650,000, and you finance the remaining $100,000 as a second mortgage (the VTB mortgage).

At closing, you would get $700,000 (the down payment plus the first mortgage). Over the next five years — or whatever terms you agreed to with the buyer — you would get the remaining $100,000.

Fully funded VTB mortgage example

Perhaps you’re in the market to buy a home, but can’t get pre-approved for a mortgage. But your agent convinces an investor who owns many homes to sell one to you and provide all of the financing.

The seller agrees, as long as you agree to an interest rate of 8% and pay off the loan in 10 years. The seller would hold the first and only mortgage against the home in the form of a VTB mortgage.

When to consider a vendor take-back mortgage

Vendor take-back mortgages come with significant risk for both the buyer and seller. They also require a level of financial sophistication that many individuals don’t have.

Here are the types of people who should and shouldn’t consider a vendor take-back mortgage:

Who a VTB mortgage is best suited for: A wealthy real estate investor or someone with a higher risk tolerance and experience with real estate transactions.Who a VTB mortgage is not suited for: Anyone whose retirement nest egg or personal savings is largely tied up in their home equity. Same goes for anyone unfamiliar with real estate laws and transactions. If any of this applies to you, and you lack the resources to hire a real estate attorney, you should probably avoid seller financing.

Keep Reading: 13 Tips for First-Time Homebuyers: Your Must-Know Advice

The post What Is a Vendor Take-Back Mortgage and How Does It Work? appeared first on Credible.

Banking & Savings

14 Home Prep Tasks to Take Care of Before Winter Hits

Winter weather can be hard on your home if you’re not prepared. But by taking care of a few key tasks, you can often avoid expensive damage and prevent premature wear and tear.

Even if you live in a milder climate, you’ll want to review the list below. See which home tune-up tasks you may want to perform now to keep your home clean, safe, and comfortable throughout the coldest, darkest days of the year.

Here are 14 tasks to complete before winter arrives:

Get professional maintenance for your heating systemTest your carbon monoxide detectorsLocate air leaksInsulate your homeUpgrade your windowsPrepare your pipesInstall a programmable or smart thermostatInsulate your hot water tankReverse the direction your ceiling fan spinsHave your fireplace and chimney inspectedUpdate your emergency supplies for winter stormsClean your gutters and downspoutsInspect your roofCheck tree health

1. Get professional maintenance for your heating system

It’s smart to hire a professional to inspect your heating system before the cold weather sets in. They’ll perform routine maintenance that you might not have the time for, like changing air filters, vacuuming registers, and cleaning dirt and debris in and around the unit that could harm its functioning.

They’ll also check for leaks, identify obstructions, lubricate moving parts, look for signs of corrosion, and generally use their expertise to extend your system’s life and minimize the chance of it breaking down on the coldest day of the year.

Transform Your Space: 8 Popular Pandemic Home Renovations

2. Test your carbon monoxide detectors

Carbon monoxide is a dangerous odorless gas that can send you to the emergency room or even kill you. You might think you’re coming down with the flu when you’re actually being poisoned by carbon monoxide. If you’re sleeping, you may not experience any symptoms before it’s too late. Pets are susceptible, too.

Heed these warnings from the Centers for Disease Control and Prevention, and make sure you have working carbon monoxide detectors throughout your home, especially near sleeping areas. They’re important year round, but especially in winter. Oil and gas furnaces, fireplaces, and generators can cause toxic CO to build up in your home.

3. Locate air leaks

If you want to go all out, you can hire a professional to conduct a blower door test. This test can locate leaks you might be unaware of and identify places where your home could use more insulation, according to the US Department of Energy.

It’s also fine to look for leaks yourself. Homes tend to leak air in places you can easily check: around doors and windows, electrical outlets, baseboards, pipes, vents, and anywhere else there’s a hole in a wall or connection between the inside and the outside. Focus on fixing the biggest leaks with caulking and weatherstripping.

Check Out Other Simple Projects: 18 Home Improvement Projects You Can Wrap Up in a Day

4. Insulate your home

Along with sealing leaks, adding insulation to your home can help you maintain a more comfortable temperature while using less energy. Basements, attics, walls, and other areas where your living space meets the outdoors or an unconditioned space (like an attached garage) are all candidates for more insulation, especially in older homes.

Hiring a professional will cost more up front but may pay off through better results. An expert can evaluate where additional insulation will make the biggest difference, how much you need, and the best type to use. They can also install it correctly to make sure it’s effective.

5. Upgrade your windows

If you have old windows, especially single-paned ones, you know they’re not great at keeping your home warm in the winter or reducing noise from outside. Sometimes, they’re unattractive as well.

Replacing every window in your home can be an expensive project (one you might want to finance with a home improvement loan), and it might take you years to recoup your investment. At the same time, though, you’ll save money on heating and cooling costs over the long run, make your home more comfortable, and boost the property’s value.

Tip: If you want to keep costs down, consider replacing the windows in one room where you’ll notice the difference most, like your bedroom. Homeowners can expect to spend $300 to $1,200 for one new window, depending on type and size, plus $150 to $800 for installation, according to HomeAdvisor.

You may be able to claim a federal tax credit of up to $200 for Energy Star-rated windows you purchase before Dec. 31, 2021.

6. Prepare your pipes

Insulating exposed pipes is a simple and inexpensive project most able-bodied homeowners can do themselves. Six feet of foam pipe insulation from a major home improvement retailer will cost you less than $5. Installing it is as easy as slipping the insulation over the pipe and taping the seams.

This project can reduce your water heating costs, but the real savings lie in preventing burst pipes and water damage to your home during freezing weather. You’ll also want to disconnect garden hoses and place insulating covers over outdoor faucets.

7. Install a programmable or smart thermostat

A smart thermostat can also help prevent burst pipes by letting you monitor and control your home’s temperature from your smartphone, even if you’re out of town. You can find a quality smart thermostat for anywhere between $100 to $250.

Energy Star-rated smart thermostats can help you save even more money on heating and cooling costs. They also offer convenient features like voice activation, occupancy sensing, and energy use monitoring.

Spend less: Your electric company or city might have rebates on qualifying smart thermostats, reducing your overall cost. Check online or contact your electric provider to see if there are any offers you can take advantage of.

A programmable thermostat that’s not WiFi-connected can also reduce your energy use. They cost less, at around $30 to $90, but you may spend more time adjusting the settings with schedule and weather changes.

To install a new thermostat, you might want to hire an electrician or HVAC technician, but some units are simple enough to install yourself.

8. Insulate your hot water tank

If you have an older electric water heater, correctly installing an insulation blanket made specifically for this purpose can save you money. The insulation will reduce some of the heat the tank loses to the air around it, especially if your tank is in an unconditioned space like a garage or outside cabinet.

The job isn’t complicated, but you may need a helper. Ask your electric company: they might come out and do it for you. Supplies will cost around $30, but the job can pay off after the first year.

9. Reverse the direction your ceiling fan spins

You can run your ceiling fans on low to make your home more comfortable and save energy during the winter. All it takes is nudging a small switch on the fan (or fan remote control) so the blades spin clockwise.

Changing the blade direction will help pull cool air up from the floor and push warm air down from the ceiling. You can do this task yourself with a stepladder and good balance.

Warning: Don’t attempt this task with fans on high ceilings: not only is it dangerous, but it won’t give you any benefit.

10. Have your fireplace and chimney inspected

Having your fireplace and chimney professionally inspected and possibly cleaned before you use it for the first time each year is a critical safety task. No one wants smoke building up in their living space, carbon monoxide poisoning, or a chimney fire.

That said, you may want to avoid burning wood in your home at all. The chemicals and ultrafine particles in wood smoke have the potential to cause life-threatening health problems. If you love sitting fireside, consider a professional conversion to a cleaner-burning gas fireplace.

11. Update your emergency supplies for winter storms

A winter storm could leave you without power for days and make roads unsafe. The insulation and leak sealing suggested above can really help in such a situation when you’re sheltering in place at home.

Here are a few supplies you’ll want to keep handy in case of a winter emergency:

Extra blankets and warm clothingBottled water and at least a 3-day supply of foodAir-activated hand warmersBackup power supplyHand crank radioBattery-powered LED lantern or flashlightEmergency supply of medicines (including pain relievers, prescription medications, and bandages)

12. Clean your gutters and downspouts

Free-flowing gutters protect your home from water intrusion and moisture damage. When your gutters get clogged with debris, they won’t work correctly: rain and melting snow can’t flow through them and may freeze, and the weight of that ice can cause your gutters to sag and pull away from the roof edge. Clogged gutters can also encourage harmful ice dams on your roof.

If you have a one-story house and a sturdy ladder, you might consider cleaning your gutters yourself. Otherwise, the safety risks of falling off a ladder are too great. Leave the task to a professional. You can expect to pay around $90 to $225 for gutter cleaning on a two-story home, according to HomeAdvisor.

Fun Ideas: 16 Fast Weekend Projects to Boost Your Home’s Curb Appeal

13. Inspect your roof

A roof inspection in advance of winter weather can spare you from the water damage of leaks. And a professional is usually the best choice for this job. Not only do you want to avoid falling off your roof, you most likely don’t have the training to identify potential weak spots like loose or missing flashing and poor seals around vents.

If your roof is in really bad shape, it may be time to replace it. The national average cost for new asphalt shingles, including installation, is around $8,500, according to HomeAdvisor. If you want to use higher-end shingles, need to replace rotted roof decking, or decide to add ventilation, costs can be higher.

Tip: Accessing your home equity through a home equity loan or line of credit can make sense in a situation like this, because protecting your home from damage is essential.

14. Check tree health

Most of us don’t take a close look at our trees on a regular basis. Even if we did, we might not know when they’re sick, weak, or otherwise posing a threat to our home. The worst-case scenario is a toppled tree crashing through your roof during a winter storm, causing expensive damage and leaving your home exposed to the elements.

To avoid harm to your home — and yourself — from unstable trees or large limbs that might break off due to winter weather, hire an arborist. These highly trained tree experts can help prevent problems as well as evaluate possible damage after a storm.

Read More: 10 Ways to Craft an Elegant Outdoor Space

Paying for winter-related home projects

If you’re concerned about paying for some of the pricier items on this list, a cash-out refinance could be a good solution. Mortgage rates are near historic lows, and home values have swung up across the country.

By replacing your existing mortgage with a new, less expensive one and cashing out some of your equity, you may be able to slide some essential home projects into your budget as well.

Credible makes it easy to compare mortgage refinance options. You can see rates from all of our partner lenders without leaving our platform. Check out the table below to get started.

window.credibleAsyncInit = function() {
CredibleSDK.initWidget(‘#credible-rate-table’, {
environment: ‘production’,
product: {
marketplace: ‘mortgage-combined’,
type: ‘rate-table’,
variation: ‘shortened’,
loantype: ‘refinance’,
analytics: {
source: ‘credible_blog’,
CredibleSDK.initWidget(‘#mortgage-combined-rate-widget-simple’, {
environment: ‘production’,
product: {
marketplace: ‘mortgage-combined’,
type: ‘rate-widget’,
variation: ‘simple’,
analytics: {
source: ‘credible_blog’,>

The post 14 Home Prep Tasks to Take Care of Before Winter Hits appeared first on Credible.

Did you miss our previous article…

Banking & Savings

Underwater Mortgage: What Is It and What Are Your Options?

Your home can be your biggest asset and a primary tool for building wealth over the long term. But like other assets you invest in, such as stocks and bonds, the value fluctuates. These fluctuations can put you underwater with your mortgage.

Here’s what you need to know about underwater mortgages and what you can do if you have one:

What is an underwater mortgage?Signs of an underwater mortgageProblems with underwater mortgagesUnderwater mortgage options

What is an underwater mortgage?

An underwater mortgage, also known as an upside-down mortgage or having negative home equity, is a home purchase loan with a principal balance that exceeds the value of the home — in other words, you owe the lender more than your home is worth.

Underwater mortgages were common during the Great Recession from 2007 to 2009, when home values throughout the country plummeted and continued to decline for several years after the recession’s end. Homeowners with purchase or refinance loans based on pre-crash home values found themselves underwater as a result.

Underwater mortgages are less common today because of tighter underwriting standards and record price increases since the pandemic. Median home prices increased nearly 25% from June 2020 to June 2021, so there’s a good chance that your home is worth more now than when you bought it.

Signs of an underwater mortgage

Situations that might push you into negative equity include a decrease in local property values. A low appraisal is also a good indicator that you might be underwater on your mortgage.

Here’s how to find out if your loan is underwater.

Figure out how much you owe

You can find out how much you owe by checking your mortgage statement. You’ll see the amount listed under “principal balance” or “outstanding principal”.

If you need to know the exact amount immediately, you’re best off calling your loan servicer and asking for your payoff amount. That figure will include interest and fees that have accrued since the lender prepared your statement.

Whether you’re researching rates or looking to buy a home, Credible is here to help. You can compare prequalified rates on home loans from all of our partner lenders in just a few minutes.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now


Determine your home’s value

The only way to get an accurate opinion of value is to have your home appraised by a licensed home appraiser. A professional home appraisal is usually worth the cost if you’re hoping to sell your home. Otherwise, you can get a ballpark figure for free from a real estate portal site like Redfin or

Subtract your home value from your principal balance

The final step is a simple math problem that will show whether you’re underwater:

Value – Balance = Equity

If, for example, your home is worth $200,000 and you owe $225,000 on your mortgage, the equation will look like this:

$200,000 – $225,000 = -$25,000

In this scenario, you’re $25,000 underwater on your home loan.

Problems with underwater mortgages

An underwater mortgage doesn’t always have a negative impact on a homeowner. If your mortgage is affordable and you’re not planning to sell or refinance, you might not worry about it at all. However, when that’s not the case, an underwater mortgage can put you at a serious disadvantage.


Lenders protect themselves against default by limiting how much of your equity you can refinance. The limit might be 80% for a cash-out refinance, for example, or 95% for a rate-and-term refinance. But if you have negative equity, you have nothing to draw against.

Even in the event you find a loan that lets you refinance 100% of your home’s value, the new loan won’t fully repay the underwater one. In that case, you’ll have to pay enough cash at closing to make up the difference.

Also See: How to Refinance Your Mortgage in 6 Easy Steps


Most mortgage loans have a due-on-sale clause that makes the loan due in full when the owner sells. In the case of an underwater mortgage, where the sale won’t cover the amount needed to pay off the loan, you’ll need enough cash at closing to make up the difference.


Your lender can’t foreclose simply because you’re underwater, but being underwater increases your risk of foreclosure because it limits your options. Since you might not be able to refinance or sell the home, there’s a greater chance of your home going into foreclosure if you can no longer keep up with the mortgage payments.

Underwater mortgage options

You don’t necessarily have to take action when your mortgage is underwater, but it’s probably a good idea, even if only to ward off future problems. If you’re already struggling, a quick response can keep you from losing your home.

Stay in your home

The simplest option is to remain in your home and continue making your regular mortgage payments. By paying down your principal balance, you’ll continue to build equity. Consider making extra principal payments to pay down your loan balance faster.

You can also try to increase the value of your home. Home remodeling projects rarely generate a positive return on investment unless you can do the work yourself, but simple jobs that improve curb appeal can give your home value a boost for little cost beyond elbow grease.

Tip: If you can’t afford to make extra principal payments or remodel your home, sit tight and wait for a market cycle more favorable to sellers. This can right your mortgage naturally as values appreciate.


Refinancing an underwater mortgage is tricky because you typically need equity to do it. However, you might be in luck if your loan is backed by Freddie Mac.

The Freddie Mac Enhanced Relief Refinance is meant for homeowners whose mortgages are underwater. This option could make your loan more affordable by lowering your mortgage rate and monthly payment or allow you to increase your equity faster with a shorter repayment period.

The program is available if you took out your home loan on or after Oct. 1, 2017, and are current with payments. Additional requirements include having had no 30-day delinquencies within the last six months and no more than one 30-day delinquency in the last year. Fannie Mae has a similar program but has paused it temporarily.

What about government-backed loans? Certain government-backed loans may still allow you to refinance if your mortgage is underwater. The FHA streamline refinance program, for instance, doesn’t require an appraisal, so you can refinance your FHA loan even if you have negative equity.

On the other hand, the VA no longer guarantees loans where the loan-to-value ratio exceeds 100%. Some lenders do set a higher cap on streamline refinances, but the cap includes closing costs and funding fees that the lender rolls into the loan. These costs can put you even further into negative equity.

Sell your home

You’ll have to meet one of two conditions to sell a home with an underwater mortgage:

Make up the difference between your loan balance and the sale price with a cash payment at closingGet permission from your lender to sell short

Unless you’re struggling to make payments, in which case you probably lack the funds to bring cash to closing, it doesn’t make sense to sell while your mortgage is underwater. But if you are struggling, a short sale can be an alternative to foreclosure.

Your lender won’t allow a short sale unless you document a hardship that’s likely to keep you from making payments for the foreseeable future, such as a job loss or disability. It can also take months before your lender approves the short sale.

In the meantime, you might rack up enough late payments that a short sale will do as much harm to your credit as a foreclosure would. And if the lender does approve the short sale, you might have to pay tax on the amount of the loan balance the lender forgives.

Walk away

Your last resort is to simply walk away from your home and let the lender foreclose on it. This option is called a strategic default because you’ll have concluded that you’re unable to stay in the home and instead plan to use the money to pay off other debt or build savings for rent.

Foreclosure will negatively impact your credit and remain on your credit report for seven years. As such, you might find it difficult to rent a home. Paying some or all of your rent upfront, though, gives you a better chance at having your rental application approved.

Important: One more option you can try before walking away is a loan modification. This is an agreement between you and your lender that changes the terms of your loan and makes your mortgage payment more affordable. Your credit might still take a hit, but it can at least help you avoid foreclosure. Talk to your lender to see if you qualify.

The post Underwater Mortgage: What Is It and What Are Your Options? appeared first on Credible.

Did you miss our previous article…

Banking & Savings

4 Ways to Determine House Value

Whether you’re thinking of buying, selling, or refinancing — or you’re just curious — you might want to know how to determine a house’s value. Fortunately, there are several ways to find out how much a house is worth, and you might get different results from each one.

Here are some options for finding the value of a home:

Online home value calculatorsComparative market analysis from a real estate agentFHFA House Price Index CalculatorProfessional appraisal

How to find the value of your home

To determine your home’s value, try one or more of these methods.

1. Online home value calculators

Online home value calculators use automated valuation models, or AVMs, to estimate how much your home is worth. These estimates are based on a wide range of property and local market data, including your home’s square footage, number of bedrooms and bathrooms, recent comparable sales, local market trends, and more.

Online valuation tools don’t account for unique features of your home that might increase or decrease its value, such as how old your roof is or when you last remodeled your kitchen. For that, you’ll need a professional appraisal.

Tip: You’ll also get different home values from different calculators because they use proprietary formulas.

Here are two home value calculators we like:

PennyMac Home Value EstimatorRedfin Home Value Estimator

If you’re in the market for a new home, you’ll want to secure a great mortgage rate for your home loan. Credible can help with this. We make comparing rates from multiple mortgage lenders easy. In just a few minutes, you can see prequalified rates and compare a wide range of loan options for free — our process is safe and secure, and checking rates with us won’t affect your credit score.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now


2. Comparative market analysis from a real estate agent

If you’re planning to hire a real estate agent to help you sell your home, you can ask them for a comparative market analysis, or CMA. They’ll look at similar, recently sold properties in your area and analyze how they compare to yours. After that, they’ll arrive at a fair market value and help you set a strategic listing price for your home.

A CMA requires a knowledgeable local agent who can assess how other homes’ characteristics contributed to their selling price, along with how your home compares and how to estimate its value accordingly.

Your agent will also need to understand nuances such as how much buyers in your area will devalue a property that backs up to a major road or how much value a screened-in patio adds.

See: How to Increase Your Home Value: Complete Guide

3. FHFA House Price Index Calculator

The Federal Housing Finance Agency’s (FHFA) House Price Index (HPI) Calculator is an online tool that can tell you how the estimated value of a home in a given metropolitan statistical area (MSA) may have changed since you purchased it. Its calculations are based on the percentage change in home values in the MSA during that time span.

The FHFA’s HPI calculator is not likely to be useful to an individual who is buying or selling a home. That’s because the values it provides are based on averages, and it can’t tell you the actual value of a specific house. Homes within the same MSA can have wildly different values because an MSA encompasses such a large area. The HPI doesn’t account for neighborhood conditions or a specific home’s attributes.

This tool, and all the data behind the HPI, might help you out if you’re a researcher or an economist, or if you simply want a quick overview of how property values have trended in the area over the years. But if you’re looking for a more accurate valuation of your home, we’d recommend going with a professional appraisal.

4. Professional appraisal

Hiring a professional appraiser costs several hundred dollars but is often the best way to get the most accurate value for your home. That’s why mortgage lenders often require a home appraisal before they’ll approve your mortgage application.

Good to know: Lenders do sometimes rely on AVMs to save time and money or even waive the appraisal for a refinance or second mortgage.

Here are some of the factors appraisers take into account when establishing a value for your home:

LocationSquare footageInterior and exterior conditionNumber of bedrooms and bathroomsLot sizeAge of the homeHeating and coolingUpdates and renovations (such as a new garage door or hardwood floors)Neighborhood and surrounding propertiesHome designCurrent market conditions

What is home value?

There’s more than one way to determine a home’s value. Here are three valuation methods for residential real estate and the different purposes they serve.

Fair market value

Fair market value is how much someone is willing to pay for your home. It’s based on supply and demand and explains why old mansions in Midwestern cities with major population losses can cost less than starter homes in bustling West Coast cities.

Fair market value assumes that the seller isn’t giving the buyer any breaks on the price, and that the buyer has a solid understanding of the property’s characteristics.

ppraised value

Appraised value is how much your home is worth for lending purposes. It’s determined by a state-licensed appraiser.

The appraised value may be higher or lower than fair market value. If it’s lower, the seller will need to lower the price. Otherwise the borrower will need to increase their down payment to gain mortgage approval and close the deal.

Tip: Appraisers try to be objective, but can make mistakes or be biased. You can challenge a low home appraisal with solid data.

ssessed value

Assessed value is how much your home is worth for property tax purposes. To find the assessed value of your home, you can look at your property tax statement or contact your local property tax assessor.

Some jurisdictions even have websites where anyone can look up a property’s assessed value. Assessed value may be less than the property’s current fair market value. Common reasons for this include homeowners exemptions and statutory limits on annual property tax increases.

Keep Reading: Property Tax Assessment: What It Is and What It Means

The post 4 Ways to Determine House Value appeared first on Credible.

Did you miss our previous article…

Banking & Savings

4 Steps to Becoming Finance Fit

Due to the COVID-19 pandemic, payments and interest accrual have been paused on federal student loans by the CARES Act through Jan. 31, 2022.

If you have federal student loans, this means you only have a short time until your payments resume — which is why it’s important to get your finances in shape so you’ll be prepared.
Are you ready to start making federal student loan payments again? Take the quiz below to find out — plus get the chance to win a $50 e-gift card*!

Find Out If You’re Financially Fit

NO PURCHASE NECESSARY TO ENTER OR WIN. The Financially Fit Survey Sweepstakes begins on Oct. 5, 2021 at 12:01 a.m. PT and ends on Oct. 19, 2021 at 11:59 p.m. PT. Open to legal residents of the 50 United States & D.C., who are at least 18 years of age at time of entry. One entry per user. Void where restricted or prohibited by law. See Official Rules for eligibility/ restrictions/ Entry Periods/ prize descriptions and complete details. Void where prohibited. Privacy Policy is located at

Here are four ways to get financially fit before you start making federal student loan payments again:

Create a budgetRefinance high-interest debtPay down high-interest debtBuild an emergency fund

1. Create a budget

Creating a budget is a great way to track your monthly income and expenses. Additionally, you can see how federal student loan payments will fit into your current budget and make adjustments if necessary.

For example, if your payments will strain your budget, you can look into trimming expenses, such as canceling unused subscriptions.

To set up a budget, you’ll need to:

Calculate your monthly income. This might include traditional employment as well as other non-traditional sources, such as a side hustle.Calculate your monthly expenses. List out your essential expenses (such as rent and utilities) as well as your non-essential spending (such as entertainment or dining out).Subtract your expenses from your income. This amount is the extra room you have in your budget — as well as how much you can afford to pay on your student loans.Tip: Creating a budget can also help you plan for your short-term and long-term financial goals.

For instance, if you want to pay off your student loans in five years, you can check your budget to see how much you can afford to pay on your loans each month and then set a payoff date.

2. Refinance high-interest debt

If you have high-interest debt, you might be able to get a lower interest rate through refinancing. This could save you hundreds or even thousands of dollars on interest — freeing up money in your budget to put toward your student loans.

Or you could opt to extend your repayment term to reduce your monthly payments. Just keep in mind that this means you’ll pay more in interest over time.

Here are a few ways to refinance depending on the kind of debt you have:

Student loan refinancing

Student loan refinancing interest rates are hovering near record lows. If you have private student loans as well as good to excellent credit, you might be able to take advantage of these low rates by refinancing your student loans.

This could save you money on interest and even potentially help you pay off your loans faster.

Keep in mind: While you can refinance both federal and private loans, refinancing federal student loans will cost you access to federal benefits and protections — such as income-driven repayment plans and student loan forgiveness programs.

You’ll also no longer be eligible for the suspension of federal payments and interest accrual under the CARES Act.

If you decide to refinance your student loans, be sure to consider as many lenders as possible to find the right loan for your needs. Credible makes this easy — you can compare your prequalified rates from multiple lenders in two minutes.

Find out if refinancing is right for you

Compare actual rates, not ballpark estimates – Unlock rates from multiple lenders in about 2 minutesWon’t impact credit score – Checking rates on Credible won’t impact your credit scoreData privacy – We don’t sell your information, so you won’t get calls or emails from multiple lendersSee Your Refinancing Options
Credible is 100% free!


Debt consolidation loan

A debt consolidation loan is a type of personal loan used to pay off various kinds of debt, such as credit cards or other loans. Consolidating your debt will leave you with just one loan and payment to manage, which could make it easier to budget for your student loan payments.

Keep in mind that personal loan interest rates have remained at record lows — so depending on your credit, you might qualify for a lower interest rate than what you’re currently paying.

Balance transfer card

Another way to consolidate credit card debt is with a balance transfer card. With this option, you can move your balance from one credit card to another.

Some balance transfer cards come with a 0% APR introductory offer. This means you could avoid paying interest if you can repay your balance before this period ends.

However, keep in mind that if you can’t pay off the card in time, you could be stuck with some hefty interest charges.

3. Pay down high-interest debt

If you have multiple debts and can’t refinance them for a lower interest rate, you might need to simply concentrate on paying them off as soon as possible.

Repaying some of your debt over the next few months and lessening this strain on your budget could also make it easier to manage federal student loan payments when they resume.

Here are a couple of strategies that might help you do this:

Debt avalanche method

With the debt avalanche method, you’ll focus on paying off your debt with the highest interest rate first. Here’s how it works:

Tip: While the debt avalanche method can be a good way to save money on interest over time, it can also take a while to see your savings.

If you’re more motivated by small wins, you might consider following the debt snowball method instead.

Debt snowball method

If you use the debt snowball method, you’ll start by paying off your smallest debt first. Here’s how it works:

Tip: The debt snowball method typically offers more immediate success, which could be helpful if you’re driven by small wins.

But if you’d rather save more money on interest and don’t mind waiting to see your results, the debt avalanche method might be a better option for you.

4. Build an emergency fund

Having an emergency fund can help you pay for unexpected costs and avoid racking up more debt.

In general, it’s a good idea to save enough in an emergency fund to cover three to six months’ worth of expenses — including student loan payments.

Here are a couple of savings options you might consider:

High-yield savings account: This type of savings account generally offers above-average interest rates. This means you could get a higher rate of return compared to regular savings accounts. Several high-yield savings accounts don’t require an initial deposit, which could be helpful for starting an emergency fund.Money market account: This is another savings option that typically provides a higher rate of return than regular savings accounts. Money market accounts often come with higher initial deposits and maintenance requirements compared to high-yield savings accounts, so could be a good option if you already have some money stashed away.Tip: To get started on your emergency fund, you might save as little as $5 or $10 per week.

As you get used to saving, you can gradually increase the amount you plan to save in your budget.

accordions_header_toggle = “no”;
accordions_click_track = “yes”;
wizard_accordion = $(“#accordions-55641.accordions .items”).accordion({
event: “click”,
heightStyle: “content”,
animate: (“linear”, 1000),
navigation: true,
active: 999999,
beforeActivate: function(event, ui) {
if (ui.newHeader[0]) {
var currHeader = ui.newHeader;
var currContent =“.ui-accordion-content”);
} else {
var currHeader = ui.oldHeader;
var currContent =“.ui-accordion-content”);
var isPanelSelected = currHeader.attr(“aria-selected”) == “true”;
currHeader.toggleClass(“ui-corner-all”,isPanelSelected).toggleClass(“accordion-header-active ui-state-active ui-corner-top”,!isPanelSelected).attr(“aria-selected”,((!isPanelSelected).toString()));
if (isPanelSelected) { currContent.slideUp(); } else { currContent.slideDown(); }
return false;
changestart: function(event, ui) {
child.accordion(“activate”, false);
var child = $(“.child-accordion .items”).accordion({
beforeActivate: function(event, ui) {
// The accordion believes a panel is being opened
if (ui.newHeader[0]) {
var currHeader = ui.newHeader;
var currContent =“.ui-accordion-content”);
// The accordion believes a panel is being closed
} else {
var currHeader = ui.oldHeader;
var currContent =“.ui-accordion-content”);
// Since weve changed the default behavior, this detects the actual status
var isPanelSelected = currHeader.attr(“aria-selected”) == “true”;
// Toggle the panels header
currHeader.toggleClass(“ui-corner-all”,isPanelSelected).toggleClass(“accordion-header-active ui-state-active ui-corner-top”,!isPanelSelected).attr(“aria-selected”,((!isPanelSelected).toString()));
// Toggle the panels icon
// Toggle the panels content
if (isPanelSelected) {
} else {
return false; // Cancels the default action
heightStyle: “content”,
collapsible: true,
animated: “swing”,
$(“.previous, .next”).click(function () {
var index = 0;
if ($(this).hasClass(“next”)) {
index = gCurrentIndex + 1;
else {
index = gCurrentIndex – 1;
if (index
$(“#accordions-55641 .expand-collapse”).click(function() {
if( $(this).hasClass(“active”) ) $(this).removeClass(“active”);
else $(this).addClass(“active”);
accordion_id = $(this).attr(“accordion-id”);
$(“#accordions-“+accordion_id+” .ui-accordion-header:not(.ui-state-active)”).next().slideToggle();
$(“#accordions-55641 .accordions-head”).click(function () {
toogle_text = $(this).attr(‘toogle-text’);
main_text = $(this).attr(‘main-text’);
if( $(this).hasClass(‘ui-state-active’) ){
if( main_text != null && main_text != ”){
} else {
if( toogle_text != null && toogle_text != ”){
id = $(this).attr( ‘id’ );
header_id = $(this).attr(‘header_id’);
post_id = $(this).attr(‘post_id’);
type: ‘POST’,
context: this,
data: {
“action” : “accordions_ajax_track_header”,
“header_id” : header_id,
“post_id” : post_id,
success: function( data ) {>
#accordions-55641 {
text-align: left;
background:#ffffff url() repeat scroll 0 0;
padding: 2px;
#accordions-55641 .accordions-head{
background:rgba(255,255,255, 1) none repeat scroll 0 0;
margin:0px 0px 0px -12px;
padding:7px 7px 7px 0px;
#accordions-55641 .accordions-head-title{
#accordions-55641 .accordions-head-title-toogle{
#accordions-55641 .accordions-head:hover .accordions-head-title{
#accordions-55641 .ui-state-active{
background: #ffffff;
#accordions-55641 .accordion-content{
background:rgba(255,255,255,1) none repeat scroll 0 0;
margin:5px 5px 5px -5px;
#accordions-55641 .accordion-icons{
background: ;
#accordions-55641 .accordions-head:hover .accordion-icons{

#accordions-55641 .expand-collapse{

@media screen and (min-width: 1200px) {
#accordions-55641 {
width: 100%;

@media screen and (max-width:1199px) and (min-width: 768px) {
#accordions-55641 {
width: 100%;

@media screen and (max-width: 767px) {
#accordions-55641 {
width: 100%;

.accordions-head-title {
font-family: “Open Sans”, sans-serif;
.accordion-content {
font-family: “Open Sans”, sans-serif;
.accordion-content p {
line-height: 1.7 !important;
margin-top: .5em;
.ui-helper-reset {
line-height: 1.7 !important;
.accordions .accordions-head {
align-items: baseline;
.accordion-icons {
top: -.125em;
.accordions-head-title h3 {
margin-top: 0;
font-weight: 600;
.ui-widget-content a {
color: #4eb696 !important;>
jQuery(document).on(‘keyup’, ‘#search-input-55641’, function(){
keyword = jQuery(this).val().toLowerCase();
content_head = [];
content_body = [];
$(‘#accordions-55641 .items .accordions-head-title’).each(function( index ) {
content = $( this ).text().toLowerCase();
content_head[index] = content;
$( this ).parent().removeClass(“accordion-header-active”);
$( this ).parent().removeClass(“ui-state-active”);
$(‘#accordions-55641 .items .accordion-content’).each(function( index ) {
$( this ).hide();
content = $( this ).text().toLowerCase();
content_body[index] = content + ‘ ‘ + content_head[index];
n = content_body[index].indexOf(keyword);
if(nFinancially Fit Survey Sweepstakes
Official Sweepstakes Rules

Financially Fit Survey Sweepstakes
Official Sweepstakes Rules


The following promotion is intended for participants in the fifty (50) United States and Washington D.C. only and shall be construed and evaluated according to the laws of the United States. Do not proceed in this promotion if you are not a legal U.S. resident residing in the fifty (50) United States or Washington D.C. Further eligibility restrictions are contained in the official rules below.

1. SWEEPSTAKES DESCRIPTION: The Financially Fit Survey Sweepstakes begins on Oct. 5, 2021 at 12:01 a.m. PT and ends on Oct. 19, 2021 at 11:59 p.m. PT.

The sponsor of this Sweepstakes is Credible Labs, Inc. (“Sponsor”). Sweepstakes void where prohibited or restricted by law. THIS SWEEPSTAKES IS IN NO WAY SPONSORED, ENDORSED, ADMINISTERED BY, OR ASSOCIATED WITH TWITTER OR INSTAGRAM.

2. ELIGIBILITY: The Sweepstakes is open only to legal residents of the fifty (50) United States and the District of Columbia who are physically located and residing therein and who are at least eighteen (18) years of age and the age of majority in their state of primary residence at the time of entry (“Entrant”). Entrants are limited to one entry each. Employees, shareholders, officers, directors, agents, and representatives of Sponsor, Presenter, Administrator (collectively, “Sweepstakes Entities“), and each of their respective parent companies, affiliates, divisions, subsidiaries, agents, representatives and promotion and advertising agencies are not eligible to participate in the Sweepstakes. Immediate family and household members of such individuals are also not eligible to enter or win. For purposes of the Sweepstakes “household members” shall mean those people who share the same residence at least three months a year and “immediate family members” shall mean parents, step-parents, legal guardians, children, step-children, siblings, step-siblings, or spouses. Void in Puerto Rico, all U.S. territories and possessions and overseas military installations, and where prohibited.

3. HOW TO ENTER: During the Entry Period, eligible Entrants may participate by completing the Financially Fit survey.

Online Entry:

Entrant must complete the following steps for Online Entry:

Visit (the “WebsiteFollow the onscreen instructions to complete the survey.Affirmatively accept the Official Rules and click “Enter”.

Limit one (1) Submission per Entrant, per Entry Period. Any attempt by an Entrant to obtain more than the stated number of entries by using multiple/different identities, registrations, logins, and/or any other methods will void such Entrant’s Submission and that Entrant may be disqualified from the Sweepstakes.

Entries generated by a script, macro or other automated means will be disqualified. Incomplete, unreadable, or unintelligible entries will be disqualified. ELIGIBLE ENTRANTS MUST SUBMIT THEIR ENTRY IN ACCORDANCE WITH THESE OFFICIAL RULES. NO ALTERNATE FORM OF ENTRY WILL BE ACCEPTED. Participation in the Sweepstakes constitutes Entrant’s understanding of and full and unconditional agreement to and acceptance of these Official Rules. Sweepstakes Entities reserve the right to disqualify any Entrant that they determine to be in violation of any term contained in these Official Rules. Sweepstakes Entities reserve the right to move, change or extend deadlines or dates in their sole discretion. Such changes, if applicable, will be communicated on the Website, on the Sponsor’s Instagram account, and on the Sponsor’s Twitter account.

4. WINNER SELECTION & NOTIFICATION: Following the conclusion of each Entry Period, in accordance with the dates and times as detailed in the Entry Period Chart above, Administrator will randomly select one (1) potential winner from all eligible entries for the corresponding Entry Period. Potential winner notification will vary according to the channel of Sweepstakes entry:

Online Entry

If the potential winner entered via Online Entry, he or she will be contacted via the email address provided on the entry form.

Winners will be responsible for any and all federal, state and/or local taxes resulting from acceptance of the Prize. No cash or prize substitution is allowed except at the discretion of Sweepstakes Entities. If a prize cannot be awarded due to circumstances beyond the control of the Sweepstakes Entities, a substitute prize of equal or greater retail value may be awarded; provided, however, that if Prizes are awarded but unclaimed/forfeited by recipient, Prize may not be re-awarded, in Sweepstakes Entities’ sole discretion. Other restrictions may apply.

5. CONDITIONS OF PARTICIPATION/RELEASES: All federal, state and local laws and regulations apply. By participating, each Entrant agrees to be bound by these Official Sweepstakes Rules and the decisions of the Sweepstakes Entities, which shall be final in all respects. By participating in this Sweepstakes and/or by accepting any prize that they may win, each Entrant agrees to release and indemnify the Sweepstakes Entities; each of their respective parent, subsidiary and affiliated companies, units and divisions and advertising and promotional agencies and Prize suppliers; each of their respective officers, directors, agents, representatives and employees; and each of these companies and individuals’ respective successors, representatives and assigns (collectively, the “Released Parties“) from any and all actions, claims, injury, loss or damage arising in any manner, directly or indirectly, from participation in this Sweepstakes and/or acceptance, use, or misuse of any prize. Acceptance of a prize authorizes the Sponsor, Presenter and their designees to use each winner’s Social Media handle, Social Media profile picture, name, voice, likeness, biographical data, city and state of residence in programming or promotional material, throughout the universe in perpetuity, or on a winner’s list, if applicable, without further compensation unless prohibited by law. By entering the Sweepstakes, Entrants agree that: (1) any and all disputes, claims, and causes of action arising out of or connected with the Sweepstakes, or any prizes awarded, shall be resolved individually, without resort to any form of class action; (2) any and all claims, judgments and awards shall be limited to actual out-of-pocket costs incurred, including costs associated with entering the Sweepstakes, but in no event will Entrant’s attorneys’ fees be awarded or recoverable; and (3) under no circumstances will any Entrant be permitted to obtain any award for, and Entrant hereby knowingly and expressly waives all rights to seek, punitive, incidental or consequential damages and/or any other damages, other than actual out-of-pocket expenses, and/or any and all rights to have damages multiplied or otherwise increased. The Released Parties shall not be liable for: (i) late, lost, delayed, stolen, misdirected, postage-due, incomplete, unreadable, inaccurate, garbled or unintelligible entries, communications or affidavits, regardless of the method of transmission; (ii) telephone system, telephone or computer hardware, software or other technical or computer malfunctions, lost connections, disconnections, delays or transmission errors; (iii) data corruption, theft, destruction, unauthorized access to or alteration of entry or other materials; (iv) any injuries, losses or damages of any kind caused by the prize or resulting from acceptance, possession, use or misuse of a prize, or from participation in the Sweepstakes; (v) the Entrant’s claim that he or she has somehow been defamed or portrayed in a false light or (vi) any printing, typographical, human administrative or technological errors in any materials associated with the Sweepstakes. The Released Parties assume no responsibility for any damage to an Entrant’s computer system, or for any computer system, phone line, hardware, software or program malfunctions, or other errors, failures, delayed computer transmissions or network connections that are human or technical in nature, or for the incorrect or inaccurate capture of information, or the failure to capture any information. Sweepstakes Entities reserve the right, in their sole discretion, to cancel, modify or suspend the Sweepstakes (or any portion of the Sweepstakes) should a virus, bug, computer problem, unauthorized intervention or other cause or problem corrupt or inhibit the administration, security or proper play of the Sweepstakes and, in such situation, to select the Winner from eligible non-suspect entries received prior to and/or after such action or in such manner as deemed fair and appropriate by the Sweepstakes Entities. Sweepstakes Entities may prohibit you from participating in the Sweepstakes or winning a Prize if, in their sole discretion, they determine you are attempting to undermine the legitimate operation of the Sweepstakes by cheating, hacking, deception, or any other unfair playing practices of intending to annoy, abuse, threaten or harass any other Entrants or the Released Parties representatives.



7. ARBITRATION PROVISION: By participating in this Sweepstakes, each Entrant agrees that any and all disputes the Entrant may have with, or claims Entrant may have against, the Released Parties relating to, arising out of or connected in any way with (i) the Sweepstakes, (ii) the awarding or redemption of any prize, and/or (iii) the determination of the scope or applicability of this agreement to arbitrate, will be resolved individually and exclusively by final and binding arbitration administered by the National Arbitration Forum (the “Forum”) and conducted before a sole arbitrator pursuant to the Code of Procedure established by the Forum. The arbitration shall be held at a location determined by the Forum pursuant to the Code of Procedure, or at such other location as may be mutually agreed upon by the Entrant and Sponsor. The arbitrator’s decision shall be controlled by the terms and conditions of these Official Rules and any of the other agreements referenced herein that the applicable Entrant may have entered into in connection with the Sweepstakes. There shall be no authority for any claims to be arbitrated on a class or representative basis; arbitration can decide only the Entrant’s and/or Sponsor’s individual claims and the arbitrator may not consolidate or join the claims of other persons or parties who may be similarly situated. The arbitrator shall not have the power to award special or punitive damages against the Entrant or Released Parties. For more information on the Forum and/or the Forum’s Code of Procedure, please visit their website at If any part of this Arbitration Provision is deemed to be invalid or otherwise unenforceable or illegal, the balance of this Arbitration Provision shall remain in effect and shall be construed in accordance with its terms as if the invalid or illegal provision were not contained herein.

8. PRIVACY POLICY: Any personal information supplied by you to Sponsor will be subject to Sponsor’s privacy policy posted at [URL] By entering the Sweepstakes, you grant Sponsor permission to share your social media handle, email address and any other personally identifiable information with the other Sweepstakes Entities for the purpose of Sweepstakes administration and prize fulfillment. Sponsor will not sell, rent, transfer or otherwise disclose your personal data to any third party other than as described herein or in accordance with Sponsor’s privacy policy.

9. SPONSOR: Credible Labs, Inc. 115 Sansome Street, Suite 600, San Francisco, CA 94104

The Sweepstakes is in no way sponsored, endorsed or administered by Instagram or Twitter. Instagram and Twitter are completely released of all liability by each Entrant in this Sweepstakes.

The post 4 Steps to Becoming Finance Fit appeared first on Credible.

Did you miss our previous article…

Banking & Savings

Contingent vs. Pending: What’s the Difference?

When you’re looking at real estate listings, you might come across homes described as “pending” or “contingent” instead of “for sale” or “active.” If you’re wondering whether you should consider these listings in your home search, you’ll need to understand the difference between the two terms.

Here’s what contingent and pending mean in real estate, and whether you can place an offer on homes with one of these statuses:

What is the difference between pending and contingent?What does contingent mean in real estate?What does pending mean in real estate?Common contingency clausesCommon pending clausesCan you put an offer on a house that is contingent?Can you put an offer on a house that is pending?

What is the difference between pending and contingent?

The difference between pending and contingent lies in how many things still need to happen before the home sale can close. Both terms mean that the seller has already accepted an offer, however the difference lies in how far along the home is in the sale process:

Pending: A pending home indicates that all contingencies have been met by the prospective buyer.Contingent: A home listed as contingent still has certain contingencies open.

The seller of a pending or contingent home may or may not be open to receiving additional offers. It depends on how likely they think the transaction is to close.

Important: Since a pending home is closer to closing, you’re more likely to have your offer accepted on a contingent home than a pending home. Technically, either type of listing represents a home that hasn’t actually been sold yet, so it’s worth inquiring to the seller’s agent if it’s your dream home and you’re serious about buying it.

What does contingent mean in real estate?

Contingent means that certain conditions — aka contingencies — need to be met before the deal can close. A homebuyer will often include contingencies in their offer to make sure they can get their earnest money back if the home does not appraise high enough, their mortgage isn’t approved, or another specified condition can’t be met.

A contingent listing is less likely to end up sold than a pending listing because of these conditions. If the purchase contract contingencies can’t be met, then the buyer or seller can terminate the contract without penalty.

What does pending mean in real estate?

Pending means the home has not sold yet, but the deal is likely to go through. Either the contract did not have any contingencies, or all the contingencies have been met and the sale is being processed.

Tip: Some multiple listing services use the term “under agreement” instead of pending. Homes listed as pending are so likely to close that the National Association of Realtors uses the number of pending home sales to gauge how well the housing market is performing.

Common contingency clauses

Here are five common contingency clauses homebuyers and sellers often include in purchase agreements.

ppraisal contingency

An appraisal contingency allows you to back out of the deal if your lender determines that the home’s value is less than the purchase price.

For a home purchase, a professional home appraiser typically evaluates the home inside and out to determine its fair market value.

Financial contingency

A financing contingency, also called a mortgage contingency, allows you to exit the contract if you can’t secure a mortgage.

Ideally, you’ll get pre-approved for a mortgage before making an offer on a home. However, even with pre-approval, the lender may uncover additional information during underwriting, your financial situation may change for the worse, or mortgage rates may go up and make it harder for you to qualify.

In situations like these, you may be unable to secure a mortgage and, therefore, unable to buy the home.

With Credible, you can find prequalified rates and generate a streamlined pre-approval letter in a matter of minutes. Our online tools allow you to easily compare loan options from all of our partner lenders to find a mortgage that’s right for you.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now


Inspection contingency

An inspection contingency involves you — the buyer — hiring a professional home inspector to look for major problems that could affect the home’s value, safety, or livability.

If the home inspection reveals significant issues, you and the seller can negotiate a solution to keep the deal intact. For example, the seller might make the necessary repairs or lower the purchase price by the estimated cost of the repairs so you can have the work performed after closing.

Contingency with a kick-out clause

A kick-out clause in a home purchase contract means the seller and buyer have agreed that the seller will continue accepting backup offers because the buyer’s offer is contingent upon the sale of their property.

A kick-out clause goes hand-in-hand with a sale contingency, described below. The listing might have a “48-hour kick-out clause” or “72-hour kick-out clause,” indicating how long the buyer currently under contract has to waive their sale contingency and provide proof of financing before the seller can accept a backup offer.

Title contingency

A title search is an important part of any real estate transaction. You’ll pay a title company to make sure the seller is the only one with any legal claim on the home.

A title contingency allows you to walk away if the title search reveals title defects that cannot be resolved. For example, if the home has a contractor’s lien from work the seller hasn’t paid for, a title contingency would require the seller to pay off that lien if they want to sell the home to you.

Sale contingency

A sale contingency allows you to exit the contract if you cannot sell your current home. Let’s say you are moving from New Orleans to Nashville and you only want to move your belongings once. But to get the money to buy a new place in Tennessee, you’ll need to first sell your current place in Louisiana.

You’d want to put a sale contingency in your purchase agreement for the Nashville home so you won’t lose your earnest money if your New Orleans home doesn’t sell within the time period stated in the purchase contract.

Tip: You can avoid having to use a sale contingency by getting a bridge loan.

Closing contingency

Let’s say you’ve found a buyer for your New Orleans home, but the deal isn’t final. A closing contingency, also called a settlement contingency, would allow you to get out of your Nashville contract without penalty if your buyer can’t close within a specified time.

Common pending clauses

If you see a home that’s listed as pending, it might come attached with one of these additional descriptions.

Pending – taking backups

“Pending – taking backups” means that the seller isn’t confident the deal with their current buyer will close. The buyer might be having trouble obtaining financing, for instance. Whatever the case may be, this status indicates the seller is willing and contractually able to accept backup offers should the current deal fall through.

Pending – short sale

This listing status describes a situation where the owner wants to sell but must get their mortgage lender’s approval first. That’s because in a short sale, the property’s market value is lower than the mortgage balance, and the lender will have to take a loss.

“Pending” in this case does not mean that the transaction is about to close. It means the seller has accepted an offer and is waiting for their lender to approve it. You’re more likely to see these types of listings during a recession or after a major housing market decline.

Good to know: Depending on which listing service you’re using to search for homes, you might also see a home in this situation listed as “contingent short sale.” And with some listing services, “pending short sale” does indeed mean that the seller is under contract with a buyer and the bank has approved the short sale.

Pending – more than 4 months

This is a self-explanatory status that means a property has been listed as pending for longer than four months. The property might still be under contract but experiencing delays, or it might have been sold and the listing status is incorrect. A public records search can determine whether the home was recently sold if the listing agent can’t be reached.

Can you put an offer on a house that is contingent?

It is sometimes possible to place an offer on a house that is contingent. One way sellers can indicate that they’re open to additional offers is to have their agent change the property’s listing status from “active” to “active under contract.” Active under contract means the seller has accepted an offer, but that offer has contingencies, and the seller may consider additional offers.

Ask your real estate agent to contact the seller’s agent for more information. Then, your agent can guide you through the process of making an offer on a contingent listing if it seems worthwhile.

Can you put an offer on a house that is pending?

You probably won’t be able to make an offer on a house that is pending because this status means the house has a scheduled closing date and everything is on track to close. Plus, the seller’s contract with their existing buyer may prohibit them from accepting additional offers.

If the seller is not accepting backup offers and it’s your dream home, you might want to contact the listing agent. You can always express your interest and ask them to get in touch with you if the home ends up back on the market.

The post Contingent vs. Pending: What’s the Difference? appeared first on Credible.

Banking & Savings

USDA vs FHA Loans: Which Loan is Better?

Mortgage loans from the United States Department of Agriculture (USDA) and Federal Housing Administration (FHA) are generally easier to qualify for than a conventional mortgage. This makes them good options for first-time homebuyers and low- to moderate-income borrowers.

While both of these loans are backed by government agencies, there are several key differences between the two that you’ll need to consider before applying for one. For instance, USDA loans require you to live in a rural setting and meet your area’s income limit.

Here’s a closer look at each loan program so you can decide which one best fits your needs:

USDA vs. FHA eligibilityUSDA vs. FHA vs. conventionalUSDA pros and consFHA pros and cons

USDA vs. FHA eligibility

The USDA and FHA both offer home loans for single-family residences.

For an FHA loan, you’ll apply for a 203(b) basic home mortgage loan to purchase your primary residence.

However, there are two USDA home loan programs to choose from and the eligibility standards are slightly different:

USDA Guaranteed Loan: For low- to moderate-income households that a private lender issues but the USDA backs. You won’t have a borrowing limit or property restrictions for this loan.USDA Direct Loan: For low- and very-low-income borrowers that need additional underwriting. The USDA funds the loan and it has stricter income and property qualifications. Also, the borrowing limit is $285,000 in most counties.

Here are the basic requirements you’ll need to meet for each loan:

USDA loansFHA loansMin. down payment0%3.5% (with a credit score of 580 or above)
10% (with a credit score between 500 and 579)Min. credit score640500Income limitsUp to 115% of median household incomeNoneDebt-to-income ratio (DTI)Up to 29% of monthly housing costs
Up to 41% of monthly debt paymentsUp to 31% of monthly housing costs
Up to 43% of monthly debt paymentsLoan limitsNone for Guaranteed Loans
Up to $285,000 for most Direct Loans$356,362 for single-family residences in most areasLocation requirementsUSDA-eligible rural areas onlyNoneQualifying property typesSingle-family primary residences onlyPrimary residences between 1 and 4 unitsMortgage repayment terms30-year fixed30-year fixed, 15-year fixed, and adjustable-rateUpfront fee1% guarantee fee1.75% upfront mortgage insurance premiumAnnual fee0.35% annual feeUp to 0.85% annual mortgage insurance premium

Also See: Conventional Loan Requirements

USDA home loans have stricter income limits than FHA loans and also require you to live in an eligible rural area. Your home address and annual household income determine your borrower eligibility for USDA loans.

FHA borrower requirements, on the other hand, are more lenient as you can have a lower credit score. Multi-unit properties are also eligible. However, you’ll need to make a down payment with an FHA loan.

USDA vs. FHA vs. conventional

Many homebuyers will use a USDA, FHA, or conventional mortgage to purchase their home. Here’s a closer look at how these three loan types differ.

USDA loans

These loans are only available to rural homebuyers with low or moderate incomes. The income limits vary by region but are relatively strict. USDA loans don’t require a down payment but you’ll need a minimum credit score of 640 and have to pay an upfront 1% guarantee fee plus an annual fee equal to 0.35% of your loan amount.

FHA loans

Of the government mortgage programs, you may have the easiest time qualifying for an FHA loan. You’ll only need a 3.5% down payment when your credit score is at least 580.

With that said, you’ll most likely pay mortgage insurance for the life of the loan unless you can put down at least 10%. Doing this allows you to waive your remaining payments after 11 years.

Conventional loans

Conventional mortgages have the strictest credit requirements but they also offer competitive rates and can end up being cheaper in the long run. For example, you can avoid private mortgage insurance with a minimum 20% down payment.

Credible doesn’t offer FHA or USDA loans, but we can help you find a great rate on a conventional loan. Simply enter some basic financial information, and you’ll see several prequalified rates in minutes. After that, you can explore your loan options and find one that best fits your budget.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now


USDA pros and cons

USDA loans offer several advantages for borrowers, but you’ll need to consider some of the drawbacks as well.

USDA pros

Here are some of the best reasons to consider a USDA loan:

No minimum down payment: Conventional loans and FHA loans both demand some form of down payment, but USDA loans have no such requirement.May not need cash reserves: Lenders may not require cash reserves to secure financing. However, including your qualifying balances might make it easier to qualify.No set maximum purchase price: USDA loans don’t have a borrowing limit. Instead, your maximum loan amount depends on your repayment ability.Lower mortgage insurance fees: Your upfront USDA guarantee fee is 1% of the loan amount and the annual fee is 0.35%. Both rates are lower than the FHA mortgage insurance premiums. Seller can pay closing costs: The seller can contribute up to 6% of the sales prices. You can also receive unlimited gift funds to reduce your loan amount.

USDA cons

These are the main disadvantages of this loan program:

Good credit required: You’ll need a minimum 640 credit score to be eligible for this loan, similar to conventional lenders. FHA lenders may only require a score of 580 or less.Geographic restrictions: You must live in a rural area to qualify for USDA financing. Thankfully, the definition is flexible and many suburban and bedroom communities can be eligible if the population is below a certain amount.Maximum income limits: For a USDA Guaranteed Loan, your household income cannot exceed 115% of your county’s median household income (MHI). Households with an income 80% below the MHI will need to apply for a USDA Direct Loan. Direct Loans can have stricter property and application requirements but, like Guaranteed Loans, they don’t require a down payment.Lifetime guarantee fee: All USDA loans require an upfront and annual guarantee fee for the life of the loan. Unlike FHA and conventional loans, making a qualifying down payment won’t have any effect on whether or not you’ll pay mortgage insurance.Single-family homes only: Single-family homes are the only eligible property type. This includes townhouses and condos, as long as you use the unit for your primary residence. Investment properties are ineligible.

FHA pros and cons

FHA loans are a good option, especially if you have low credit or a lot of debt. But they come with their own set of drawbacks too.

FHA pros

Some of the best reasons to apply for an FHA home loan include:

Lenient credit requirements: You can generally qualify for maximum FHA financing with a credit score of 580 versus a 640 score for a USDA loan. You might also be eligible with a credit score between 500 and 579 if you can make a 10% down payment.Higher debt-to-income ratios: Your back-end DTI — that is, your total monthly debt obligations — can be as high as 45% for FHA loans, but only 41% for USDA loans.Potentially lower interest rates: FHA interest rates can be lower than rates for USDA loans because you have the option to choose shorter repayment terms, including a 15-year fixed interest rate. The USDA only offers 30-year fixed loans, which naturally have higher rates.Multi-family units can qualify: Properties with up to four units can qualify for financing with an FHA loan when one unit is your primary residence. For example, purchasing a duplex with an FHA loan is allowed as long as you live in one half of the property. Like USDA loans, however, second homes and investment properties are ineligible.

FHA cons

Higher down payment requirements: Depending on your credit score, you’ll need to make a 3.5% or 10% down payment. USDA loans require no down payment.Higher mortgage insurance premiums: Your upfront and annual mortgage insurance premiums are higher than the USDA guarantee fee and annual fee.Difficult to cancel mortgage insurance: You’ll pay an annual mortgage insurance premium for the life of the loan unless your down payment is at least 10% — in which case, you’ll only pay mortgage insurance for the first 11 years.Mortgage limits: The maximum loan amount in 2021 is $356,362 for most counties. You can qualify for a higher limit if you live in a high-cost area.

Keep Reading: FHA vs. Conventional Loans: Which One’s Right for You?

The post USDA vs FHA Loans: Which Loan is Better? appeared first on Credible.

Did you miss our previous article…

Banking & Savings

How to Refinance an Inherited Property to Buy Out Heirs

In addition to the sorrow of losing a loved one, inheriting a house with a mortgage can be a stressful time, especially when there are several heirs. If you want to claim full possession of the house, you’ll need to buy out the other heirs. One way to do this is by refinancing the inherited property.

Here’s a closer look at how to refinance an inherited property to buy out heirs:

Refinancing an inherited property explainedHow to refinance an inherited property to buy out heirsOther optionsTips on refinancing inherited property

Refinancing an inherited property explained

The inheritance rules can be more flexible for surviving spouses and children. Mortgage loans have what’s called a “due-on-sale” clause that requires the loan to be paid in full if it transfers to a new owner. However, lenders are prohibited by federal law from enforcing this clause in the event of a borrower’s death.

When inheriting a property with a mortgage, there are two possible scenarios you’ll have to plan for:

Inheriting the estate as the lone heir: This is the most straightforward scenario. You can simply transfer the mortgage to your name and assume payments. Inheriting the estate with multiple heirs: You and the co-heirs will need to work with the executor of the estate and mortgage lender to decide what will happen to the property. If you want to own the property but don’t have the funds on hand to buy out each heir, you can opt for a cash-out refinance and use the proceeds from that to buy out the heirs.Tip: It’s essential to determine the estate value for each heir early during the refinancing process so you can estimate the total buyout cost. You and the heirs will also need to pay off any outstanding balance on the mortgage before you can receive the home.

Read: What Happens to Your Mortgage When You Die?

How to refinance an inherited property to buy out heirs

You can follow these steps to refinance your loved one’s property:

Review the estate plan: The deceased’s will should list the heirs entitled to a share of the property. The heirs and the estate executor can estimate how much each heir receives from the estate.Communicate with co-heirs: It’s important to discuss your mortgage transfer and refinance options with the other inheritors to avoid disputes. Determine the property value, expenses, and buyout amounts to estimate your borrowing needs.Transfer the mortgage deed: You’ll need to continue making mortgage payments during the transition to prevent foreclosure. However, it’s possible to add your name to the deed and assume the current payment terms. Contact the mortgage servicer for more info.Review due-on-sale clauses: Most mortgages have a due-on-sale clause requiring the remaining loan balance to be paid in full on transferred mortgages. The Garn-St. Germain Act of 1982 prohibits lenders from enforcing this clause when a borrower dies and a family member inherits the property.Calculate your refinancing terms: Prequalifying for a mortgage refinance will provide you with an estimate of your new monthly payment and payment schedule. If mortgage rates are lower than the current rate, refinancing can help you save money on interest.Complete the refinancing process: After finding the best lender, it’s time to apply for a refinance and secure a new rate and term. The lender will require a home appraisal to determine the value of the home (and, in turn, the available equity). Other closing costs will also apply.Pay each heir: If you get a cash-out refinance, you’ll receive a lump sum payment which you can use to pay the remaining heirs. As the refinanced mortgage is in your name, you’ll be responsible for making all mortgage payments going forward.

If you’re considering a cash-out refinance, be sure to look at as many lenders as possible. Credible makes finding a great deal easy — you can compare options from our partner lenders and see prequalified rates in as little as three minutes.

Get the cash you need and the rate you deserve

Compare lendersGet cash out to pay off high-interest debtPrequalify in just 3 minutesFind My Loan
No annoying calls or emails from lenders!


Other options

Refinancing may not be the best option if you cannot find favorable terms or raise enough funds to buy out your co-heirs.

1. Rent or sell the property

Renting or selling the property can be the best option when your family cannot agree on a settlement amount or the court requires the estate to sell the home.

You may also have to sell the inherited property if it has a reverse mortgage as there may be insufficient equity to refinance or buy out the heirs.

Tip: If you cannot afford to refinance right now, turning the house into a rental property can help you continue to pay the mortgage and build equity. You can always decide to refinance or sell later when your circumstances improve.

2. Assume the mortgage

You might be able to assume the current mortgage payments by meeting the lender’s minimum standards. This can be the smarter option if the current loan terms are better than your refinancing options.

If you’re a co-borrower or cosigner, assuming the mortgage requires minimal effort as you are already on the mortgage and responsible for payments. The guidelines, however, can be different for conventional and government-backed mortgages.

3. Request loan modification

After adding your name to an inherited home loan, you’re considered a “successor in interest,” which essentially means you have an ownership stake in the property but you aren’t required to repay the loan. If the current loan terms are difficult to afford, you can request a loan modification.

A loan modification allows you to permanently change the terms of your mortgage. Your mortgage modification might involve:

Extending the repayment termReducing the interest rateSwitching to a fixed interest rate

Federal guidelines don’t require the lender or servicer to determine your ability to repay the mortgage before you can take it over and modify the terms. As a result, a loan modification can be easier to qualify for than a mortgage refinance.

4. Use a home equity line of credit (HELOC)

If the remaining mortgage balance on the inherited property is small — and assuming you own a home with equity — you can use a home equity line of credit to pay off the mortgage and other heirs.

A HELOC generally has lower closing costs than a cash-out refinance (and some lenders may even waive these costs), making it a good choice if you’re limited on cash. HELOCs are also more flexible than cash-out refinances in that you can borrow any amount (up to your limit) at any time — and you’re not charged interest for any unused funds.

Downsides of a HELOC to consider: Some drawbacks to this option are that HELOCs tend to come with an adjustable interest rate and a shorter repayment period. You’ll also be responsible for two loans instead of just one.

5. Inherit a house free and clear

Depending on the estate plan instructions, you might be able to inherit the property free and clear — that is, without any debts or liens attached to the home. In this situation, the estate uses liquid assets — like investments or cash — to pay off the mortgage.

If any balance remains, you have the ability to pursue refinancing or make a lump sum payment from your savings.

6. Consider hard money loans

Hard money loans from private lenders can be easier to qualify for than traditional mortgage refinancing and often have a quicker closing process. But, unfortunately, these loans typically have short repayment terms and come with much higher interest rates.

If you need to pay the heirs fast and can’t qualify for a home equity loan or cash-out refinance, you might consider this loan. Many hard money loans can close in just a few business days.

Important: Hard money loan interest rates can range from 7% to 15%, and maybe even higher depending on the lender. While they are a viable option if you’re in a pinch, make sure to consider other, less-riskier options first.

7. Pursue foreclosure

Foreclosure might be the least desirable option. With foreclosure, you’ll lose possession of the house and cannot tap the home equity.

Current laws don’t require survivors to continue making mortgage payments unless they are a co-borrower or cosigner on the mortgage.

If neither you or another heir wants to take over the mortgage payments, the mortgage servicer can pursue foreclosure without damaging your finances.

Good to know: A court may also order foreclosure if the estate plan doesn’t detail how to pass on the property or the heirs cannot reach a distribution agreement.

Tips on refinancing inherited property

These suggestions can make the estate settlement and refinance process go more smoothly:

Identify co-borrowers and cosigners: Co-borrowers and cosigners are automatically responsible for making payments. It can be easier to inherit the property if you already have one of these designations when the estate plan instructions are unclear about how to liquidate a property.Determine who pays the refinancing costs: Unfortunately, closing costs can reduce the available equity or require out-of-pocket payment. You must decide if you’ll pay all the costs or split them between the other heirs.Try to reduce the mortgage balance: Look for ways to reduce the mortgage principal so you won’t have to refinance as much. One option is to sell off the estate’s liquid assets.Compare lenders: Getting quotes from several mortgage refinance lenders can help you find favorable loan terms and also minimize your closing costs.Determine how to use the home equity: Calculate the percentage each heir will receive from the cash-out refinance payment in advance.Estimate inheritance taxes: Federal and state inheritance taxes may apply for any inheritance you receive. There can be exemptions for surviving spouses and children. A tax professional can provide additional guidance. Hire an estate lawyer: It can be difficult to probate an estate with outstanding debt. An estate lawyer can help you settle disputes between heirs, advise you on taxes, and navigate you through the refinancing process.

The post How to Refinance an Inherited Property to Buy Out Heirs appeared first on Credible.

Banking & Savings

15 Home Improvement Projects to Complete Before You List Your Home

If you’re planning to list your home for sale, you’ll want to make a great first impression. That usually means making a few repairs and upgrades, inside and out.

Here are 15 home improvements you might want to complete to help your home sell quickly — and at the best possible price:

Paint the exterior of your housePaint the interior of your houseRefinish or replace flooringFix or replace window and door screensRemove wallpaperRefresh countertopsReplace light fixturesDeep clean your homeGet a new roofSpruce up your landscapeCreate an outdoor living spaceHave your home stagedFix leaky plumbingCorrect obvious safety problemsReplace knobs and handles

1. Paint the exterior of your house

Few things can revitalize a house like a fresh paint job. The prep work will eliminate many of your home’s blemishes — like chips and cracks in the trim — to help it look newer.

More than just an aesthetic update, painting the exterior also prevents moisture and termite damage and helps the home stay in good condition for many years to come.

If a full paint job is not in your budget, consider having a professional pressure wash your home and touch up any areas where the paint is chipped or flaking.

2. Paint the interior of your house

Painting the inside of your house is a cost effective way to spruce it up. It’s also fairly easy if you have a steady hand and an eye for detail. Just make sure you can complete the proper preparations. That means cleaning the walls, filling and sanding holes, taping off trim, and protecting floors with drop cloths.

You can paint an entire room in a day or two, and with some planning you could do all the rooms in your home over a few weekends. Consult with your real estate agent about the best neutral colors to appeal to a wide range of buyers and ask your local paint store about the best tools and paint for the job.

Not Moving? Refinance Your Mortgage Quickly: Find a Better Rate and Prequalify in Just 3 Minutes

3. Refinish or replace flooring

Historic wooden floors are often an essential part of a home’s character and a desirable feature for buyers. They can also be refinished if they’re not looking their best anymore. Durable tile, stone, and engineered hardwood can look good for decades with the proper care.

But if you have old carpet or worn-out vinyl, replacement may be your best bet. Old carpet harbors stains, smells, and allergens; old vinyl can make your home look cheap. Ask your real estate agent for advice on the most popular flooring choices in your area and consider making a replacement.

If you’ll be selling your home with its existing floors, consider having them professionally cleaned. This affordable option will still help your home show better (and possibly smell nicer, too).

4. Fix or replace window and door screens

Bent or torn window and door screens, especially on the front of your home, leave your property looking neglected. Plus, damaged screens can’t do their job of letting fresh air in while keeping insects out.

Low-cost fixes include cleaning and patching (or completely removing) damaged screens. An ideal solution, if it fits your budget, is to replace the screens with new ones.

If you’re handy, you can replace them yourself. Otherwise, professional services are available to measure and install custom window screens onsite at your home. And if you’re not in a hurry, you can take the measurements yourself and order custom screens online.

5. Remove wallpaper

Wallpaper can make a striking impression, but not always a good one. Tastes in patterns and textures vary more than tastes in paint colors, and buyers won’t be excited about the messy and time-consuming prospect of removing an unsightly wallpaper. Taking care of this task before listing your home will put it one step closer to being turnkey.

Get Inspired: 18 Home Improvement Projects You Can Wrap Up in a Day

6. Refresh countertops

After the exterior, the kitchen may be the next most important thing for catching a buyer’s attention. While a full kitchen remodel is a time-consuming and expensive undertaking that is unlikely to provide a good return on your investment, replacing outdated or worn-out countertops is a simpler solution that can make a big difference.

If that’s out of the question, look into resealing, resurfacing, or refinishing. The best option will depend on your countertop material.

7. Replace light fixtures

Older homes often have older fixtures, or mismatched fixtures from a variety of decades. New light fixtures, both inside and out, can update a home’s look for minimal expense and effort. They can also help you create a cohesive style, from traditional to mid-century modern to contemporary.

When you replace the fixtures, you can also install smart light bulbs. These allow you to adjust each bulb’s color, temperature, and brightness right from your phone to create the perfect ambience. Plus, these bulbs use energy-efficient, money-saving LEDs and last for years.

8. Deep clean your home

Even if you’re still living in your home until it sells, a deep clean before listing it will make a big difference. We all become somewhat blind to the hard water stains by the sink, the dust on our drapes, and the grime on our windows. If scrubbing isn’t your favorite form of stress relief, hire a professional cleaning service. They’ll knock out these tasks and many more to make your house sparkle.

9. Get a new roof

A new roof is not a glamorous or exciting home improvement project. It’s also not an expense future homeowners want to deal with. What they do want is the security of knowing that the major purchase they’re about to make won’t suffer water damage from a leak the next time it rains. If your roof is nearing the end of its life, consider getting some bids to replace it.

It’s possible that this project will be too costly to be worth the investment, and it’s not a good place to test your DIY skills. But do keep in mind that if a buyer’s home inspector says your roof is shot, you might have to lower your asking price.

Related: Home Improvement Loans

10. Spruce up your landscape

Curb appeal is the first thing a prospective buyer will notice when they come to your home, and your yard can make or break their impression. Bright flowers and neatly trimmed hedges will help them envision the compliments their guests will give them at the housewarming party. Weeds will make them wonder how much to budget for gardening service.

Also keep in mind that less is more. Buyers will appreciate a clear view of the house, so if your trees are overgrown or your potted plant collection has overtaken the front porch, look for ways to scale back.

11. Create an outdoor living space

Speaking of guests, many buyers love the idea of relaxing and entertaining in the backyard. Try to convince them that your home is the place to do it (after they buy it, of course).

You don’t need to build an outdoor kitchen to check this item off your list. Simply create an outdoor space that suggests an inviting place to gather, like four comfortable chairs around a fire pit or a long picnic table with colorful place settings.

12. Have your home staged

The most functional items for comfortable living, like reclining sofas and blackout curtains, usually aren’t the most attractive options for showing off your home. That’s why you might want to use a home staging company.

Home staging is technically not a home improvement, but it will make your home massively more appealing to buyers. A professional designer’s staging tricks and arsenal of furniture and decor can make your home look like the bright, airy, and on-trend “after” shots from your favorite home improvement show.

13. Fix leaky plumbing

Similar to replacing the roof, this one’s not exciting. But if buyers see a dripping faucet or shower head, they might wonder what other maintenance you’ve neglected.

If your fixtures are fancy, they may be worth repairing. Otherwise, a replacement might be the best option, especially if the repair would be labor intensive or the fixture is old. Consider enlisting a handyman or plumber for this work if you’re not interested in crawling under the sink.

Also See: 8 Popular Pandemic Home Renovations to Transform Your Space

14. Correct obvious safety problems

If your smoke detectors don’t work, the furnace is broken, or the stair railing is loose, buyers (or at least their home inspectors) will notice.

Similar to leaky faucets, safety issues are a sign of neglect. They can also prevent buyers from getting approved for certain mortgages. Bite the bullet and pay for these repairs up front.

15. Replace knobs and handles

Here’s a project almost anyone can crank out with a ratcheting screwdriver and a trip to the hardware store. Unscrew all the scratched up and worn out drawer handles and cabinet knobs in your kitchen, bathrooms, and laundry room and replace them. Make sure to select new ones with the same hole alignment. This minor improvement can make a surprisingly big difference, especially if your hardware is dated.

Consider a cash-out refinance

A cash-out refinance can help you pay for multiple home projects and lower your mortgage rate. It can be a good choice if you’re not moving anytime soon. If selling is in your shorter-term plans, consult with your real estate agent to go over the most profitable home improvements that’ll help you sell your home.

Credible can get you started with your cash-out refinance. You can compare loan options from all of our partner lenders and get prequalified rates in just a few minutes.

Get the cash you need and the rate you deserve

Compare lendersGet cash out to pay off high-interest debtPrequalify in just 3 minutesFind My Loan
No annoying calls or emails from lenders!


The post 15 Home Improvement Projects to Complete Before You List Your Home appeared first on Credible.