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Whether it is a cosmetic or a mechanical reason for upgrading a toilet, you may not know all the choices that are involved to choose the right one for your home. The current toilet may have cracks or leaks in the bowl or tank. It could be the aggravation of constant clogging or inefficient flushing. Maybe there is damage in the porcelain bowl or built-up mineral deposits that are clogging the inlet holes or syphon tube.

If frequent repairs have you on a first name basis with the plumber, it may be time to consider replacing the toilet. There are a lot of things to consider and the following list may help you sort through the choices.

• Round, oval or compact oval … There are two basic shapes of toilets: round and oval. The round bowl requires less space and are less expensive. The oval or elongated tend to be more comfortable but require more space from the wall than round ones. Most manufacturers produce a compact oval model also.
• One-piece, two-piece and wall hung … Manufacturers make one-piece models that mold the tank and bowl into one unit. These can be a little more expensive, but they take up less space. The two-piece with separate tank and bowl are more common. The wall hung requires less space and make the room look larger, but installation will be more expensive.
• Height … Standard toilet height is 15 inches. An alternative to the standard is a comfort height which is more like a chair at 17-19 inches tall. This can be an advantage for older and taller people as well as those with a mobility problem.
• Trapway – The trapway is a channel from the bottom of the bowl to the drainpipe that also keeps gas entering the home from the sewer. While the trapway shows on the outside of most models, there are skirted or concealed models available for a more aesthetic appearance.
• Single or dual flush … Single flush toilets use the same volume of water each time it is flushed. Dual flush toilets have two options for flushing liquid or solid waste. This gives the user the ability to conserve water when appropriate.
• Water per flush … In an effort to save water, in 1995 the Department of Energy required toilets to use 1.6 gallons per flush. Since then, California and Georgia, increased the restriction to 1.28 gpf which saves 20% more water.
• Gravity-feed or pressure assisted – For four hundred years, gravity has been used to move the water through a flushable toilet bowl to eliminate the waste. As water restrictions were added, pressure assisted toilets were introduced to assist the lower volume of water. A sealed cylindrical tank inside the ceramic toilet tank provides the additional pressure. These types of toilets are nosier than conventional flush types.

Once you’ve decided on what features are important, you can shop brands that fit your needs. If you’re curious to what kind of a job it is to install it, there are lots of videos on YouTube that will show you in detail what to expect. Whether you do it yourself or hire a professional, you’ll understand the process more.

Condensation occurs when the air has too much moisture in it which is felt as high humidity. The water deposits on various surfaces that are cooler than the air itself. Several things can contribute to the high humidity such as cooking, dishwashers, clothes dryers, bathing and long showers.

If the home has a crawl space under the floor, inadequate ventilation or insulation can cause moisture in the home. There seems to be a difference of opinions about whether to vent or not vent. First, determine if you are having a problem and then, weigh the options available to find the best solution.

Condensation that forms on windows and other surfaces in your home can cause damage to window trim, frames, drywall, floor coverings and sub-floors as well and the interior framing.

To reduce condensation in a home, the moisture saturating the air needs to be reduced. Just as steam from a shower can fog a mirror, warm air holds more moisture. When the air cools, it releases the moisture. There are other things that can be done to reduce the moisture and the condensation.

• Adjust humidifier
• Bathroom and kitchen exhaust fans
• Circulate the air; ceiling fans can help with this
• Open windows to release warm air
• Raise temperature
• Add weather stripping
• Window insulation kits
• Storm windows
• Move plants that release moisture in the air

The average life of a bathroom exhaust fan is about ten years with kitchen fans lasting about fifteen years. Regular cleaning can increase the life of the fans. Bathroom exhaust fans should be vented to the outside and should be run for 15-20 minutes after using the bath or shower to remove the moisture that causes mold and mildew.

Regulating the humidity in a home can protect against damage but it also promotes comfort in the form of breathing, relieving dry skin, sinus problems and sickness in general. Breathing is easier and the air feels more pleasant.

When a whole lobster was presented at the table of a restaurant, the customer noticed there was only one claw on it. He asked what happened to the lobster and the waiter said, maybe he lost a fight with another lobster. The customer replied to the explanation by saying “then, bring me the winner.”

There are approximately 1.3 million REALTORS® in the U.S. The July 2019 Existing Home Sales annualized about 5.4 million units with a listing side and a selling side that totals 10.8 million transactions. That means that the average number of units sold per agent is 8.

In any given market, 20% of the agents are selling 80% of the homes. 260,000 agents are selling 8,480,000 or an average of 32 transactions sides. Some markets are dominated by 10% of these successful agents selling 90% of the market. If that were the case, 130,000 agents are selling 9,720,000 or an average of 75 transactions sides.

The question you should ask yourself is who do you want representing you in the purchase or sale of the largest asset that most people have? Do you want an average agent, or do you want a powerhouse agent who can provide you the best advice, avoid issues that can cost time, and maximize the results that you expect and deserve?

Finding the right property is listed as the most difficult experienced by buyers (56%), according to the Home Buyers and Sellers Profile, together with the paperwork (20%) and understanding the process and steps (16%) makes these the most important areas of expertise needed when evaluating your agent.

An agent provides valuable services for buyers and sellers during the transaction that can make a difference in finding the “right” home or buyer, negotiating the best terms, and closing on time. The answers to the following questions can help you decide who to work with in your next purchase or sale.

• Describe your experience in real estate?
• What are your personal sales stats compared to the market? (For sellers, list price to sales price ratio, days on market; for buyers, average # of houses shown and closure rate)
• Describe your strategy to accomplish my needs?
• Do you have references and/or reviews?
• What makes you different than your competition?
• Can you help me find the other professionals and vendors?
• What is your fee and who pays it?

For more information, download the Sellers Guide and Buyers Guide.

The Internet has empowered all buyers with information and home buyers are no exception. The amount of information available to public includes details on size, condition, sales history, current inventory, recent sales, photographs, videos, school info, drive-times, entertainment and much more.

When a seller realizes that buyers are educated with facts, it becomes unlikely that they will pay more than a home is worth.

If a home is priced too high in the beginning, it may stay on the market longer than normal which could adversely affect the ultimate sales price. It is a natural reaction from people, personally or professionally, to assume that something must be wrong with a home that doesn’t sell in a reasonable time for that market.

The seller is entitled to maximize the equity in their home and pricing it properly in the beginning is the best way to achieve that. Overpricing can reduce buyers activity because they assume that the best homes are purchased soon after they are offered for sale and if one has been on the market longer than normal, there must be a problem with it. Similarly, sales associates may come to the same conclusion.

After buyers have seen a few homes in a certain price range, they begin to expect similar amenities in each home they look at. If a home is overpriced, it will not compare favorably with the other homes that are being viewed. Sometimes, the buyer may even think that another home could be a bargain because it offers much more for the same price as the overpriced listing.

Shopping the market means looking at the homes that meet a buyers’ wants and needs and selecting the one that gives them the most, whether it is in price or amenities. The overpriced listing doesn’t compete well, and it extends the market time. There is a documented study that shows that the longer a home stays on the market, the lower the price will be.

It is essential that a seller receive factual information to price their home to compete favorably in the current market. Some of the obstacles can include:

• Failure to objectively compare the current and sold homes with theirs
• Neighbors who mislead the seller as to how much they got for their home
• Fear of making a mistake and thinking they can start high and always lower the price
• Loss of perspective because the seller is emotionally involved
• Expecting the home to sell for more than fair market value because they need the money
• Agents who will accept a listing at any price in order to tie up the property until the seller realizes the price is too high

What a seller paid for the home or the cost to rebuild it today do not affect market value. Neither does the amount spent by sellers on certain improvements that were made for their own pleasure and enjoyment.

It is unrealistic to expect a buyer to pay more than market value for a home. The seller sets the price of a home but the buyer determines the value. If the home is priced properly in the beginning, it is more likely to sell for a higher price, in a shorter period and with less problems.

Insurance is required on a home by the mortgage company, but homeowners rely on it for peace of mind also. Unfortunately, people may not take the time to investigate their policy and what it covers until they need to file a claim, which could be too late.

While it may not seem like the best use of your time, an in-depth visit with your property insurance agent once a year could be valuable to you if you have losses and could increase your peace of mind.

The following are some questions you can ask your insurance agent:

• What is the insured value of the policy and the replacement cost of your home? Insured value is the amount that would be paid for a total loss but replacing the home could cost more than that amount.
• What is the deductible? Higher deductibles on the first amount of the loss are one way to lower the cost of the premium. It may sound good when you’re having to pay for the policy but feel very different at the time you file a claim.
• What does the policy cover? Typical policies cover fire, theft, vandalism and storms. Homeowner policies bundle personal belongings and some liability coverage. They can differ not only from company to company but from policy to policy. Be clear on what is covered.
• What does it not cover? … Some perils are usually not covered by policies like hurricane, flooding, power outage, rising water and earthquake. It can be confusing because a broken pipe might be covered but rising water from backed up sewer is not.
• What is your anniversary date? … Policies are usually written for one-year and should be renewed before they expire. Mortgage companies like to renew them a month before they expire so there will not be a lapse in coverage. That is why borrowers with escrow accounts for taxes and insurance must fund them accordingly.
• Is it paid by an escrow account with the mortgage? New homeowners should verify that their house payment includes 1/12th the annual taxes and insurance so they will not be surprised with a large bill when they become due.
• Does your policy include liability coverage? … This covers claims made by third parties of bodily or property damage done by the insured. It could be as simple as a guest slips and injures themselves in your home. It is important to know the limits of liability and consider larger amounts especially, if you have a higher net worth or risk profile.
• What is an umbrella policy? – This is a separate policy that increases the liability coverage above the limits of the homeowner’s policy. It can be a relatively inexpensive coverage.
• Are personal belongings included? … Most homeowners policies include an amount toward personal belongings like furniture, rugs, housewares, and clothes. It may be expressed as a percentage of the overall policy. The question is: will it cover your belongings or does it need to be increased?
• What is the process to file a claim? … Most claims require proof of purchase or a current inventory of the home. Since most people don’t have receipts except for big ticket items at best, the inventory becomes important. Videos, still pictures or a detailed list can help to satisfy this need. Click here for a digital Home Inventory.
• Are there additional living expenses included? … Some policies include temporary living expenses if you are displaced from your home.
• Does a home office require additional insurance? … Many homeowners work from their home and have special equipment that may not be covered normally. If you “meet and greet” people at home, ask about additional liability coverage.
• Ask about floater policies on big-ticket items? … Some items like jewelry, furs or collectibles need to be scheduled or covered on a separate policy.

Insurance is meant to give you peace of mind against possible losses that could financially harm you without it. Because insurance is very specific about what it does and does not cover, it is important that you have a good understanding of your policy. A policy is a contract between you and the insurance company, and it deserves due consideration.

Real estate has consistently been one of the highest rated investments available to individuals. TV shows certainly make rentals look easy and you may even know someone who has made a lot of money with them. Possibly, the thought has crossed your mind that if they can do it, you can too.

Before you contract for your first investment, ask yourself some questions that could save you time and energy. Not all people have the time, the inclination or even the skill to manage property. Landlords need to be good business people who can maximize revenue and minimize expenses. If investors don’t have the skills and talent to handle some of the repairs, they at least need to know reputable and reasonable service professionals.

Another important element is to be familiar with the state and local landlord tenant laws. You’ll need to know what are allowable security deposits and where the money can be held. Knowing how long you have to return it to a tenant is important and what to do if you plan to keep all or part of it for damages done. It is important to know about the eviction process and how fair housing applies.

If you decide that you may not be cut out for being a landlord, it won’t eliminate investing in rentals. It does mean that you will need to engage a property management company who is capable of dealing with all aspects of the process. The peace of mind and convenience will cost you a fee, usually a percentage of the rent collected. They can handle finding a tenant, doing the background check and writing the lease but there will be an additional fee for that service.

Even though your expenses will be higher with a property manager, with their experience, they should be able to help you lease the property for more money than you can get and will probably have service providers to do the work needed for less.

Occasionally, rental property requires out of pocket expenses for repairs and improvements which is like making another capital contribution. As equity builds in a rental property due to appreciation and principal reduction, the owner does have the option to take cash out of the investment either to pay additional expenses or to use any way the owner wants. Pulling equity out of a rental doesn’t even trigger a taxable event.

Single-family homes and up to four-unit buildings offer an investor the opportunity to get a high loan-to-value mortgage at a fixed interest rate for 30 years on appreciating assets with tax advantages and reasonable control compared to other alternative investments.

Many investors like the fact that you can borrow to purchase a rental investment where many other investments require cash. The use of borrowed funds can create an advantage called leverage. Assume you paid cash for a $100,000 home that generated $7,000 income after the rent was collected and expenses were paid. Divide the value of the home into the income and it would earn 7%.

If you decided to put an $80,000 mortgage on it at 5% interest, the interest expense would be $4,000 leaving only $3,000 income. However, at that point, you’d only have $20,000 invested in the property. Divide the cash invested into the income and the rate of return would increase to 15%.

This is a simple example of leverage showing that borrowed funds can increase an investor’s yield on a property.

Rental property can be an excellent investment when it is treated like the business that it is. Knowledge of the investment will reduce the risk and enhance the opportunity to make a profit. Some investors consider their rental income as “mailbox money” because each month, they go to their mailbox and they have money being sent to them by their tenants. The benefits of rental property can easily outweigh risk involved.

Contact me for more information on rental properties and the option to be the landlord or to delegate it to a property manager.

Occasionally, buyers who can qualify to purchase a home decide to “take a break” and wait to purchase a home. When the focus of buying a home is relaxed, other uses for the money that was going to be used for the home are considered.

Maybe they think how much fun it would be to have a Sea Doo or a motorcycle or a new car. It is amazing how many people would like to buy a home but either don’t have the down payment, the income or the good credit to make it possible.

Instead of spending the money, consider investing the money for two years until the time is right to buy a home. Let’s look at putting the money in a certificate of deposit that earns 2% or in the stock market that could average a 5% return.

Assume you were purchasing a $295,000 home on a FHA loan with 3.5% down payment. The $10,325 would grow to $10,742 in the CD which isn’t a big increase but at least it is safe and secure, and it will be available when you’re ready.

If the same amount were invested in a safe stock or mutual fund that earned 5%, it would grow to $11,383 in the same two-year period. It earns more but there is more risk involved.

Alternatively, if you invest the same amount in purchasing a home that appreciates at 3% a year, the equity would be $38,871 two years from now. The dramatic increase is due to leverage, being able to control a large asset with a small amount of cash. The appreciation is based on the purchase price not the down payment.

Another factor is that there is principal reduction with each payment that is made.

Make your own projections with Your Best Investment.

It is estimated that over 15% of the population in the U.S. are over 65 years of age. With one of the most common fears of seniors being their money will run out early, it is understandable that downsizing may be strategy to meet their goals.

Once the kids are grown, have careers, relationships and get a place of their own, parents find they may not need their “big” home like they did before. In other situations, their lifestyle might have changed, and the house just doesn’t “fit” anymore.

The benefits of a smaller home can include the following:

• Easier to maintain
• Lower utilities
• Lower property taxes
• Lower insurance
• More convenient location
• Single level
• Possibly more energy efficient
• Possibly lower maintenance

Like any other big change in life, it is recommended that a person should take their time to consider the possible alternatives and outcomes. Are they going to stay in the same area? What type of property would suit their needs for the future?

The tax-free exclusion allows a homeowner to take up to $250,000 of gain for single taxpayers and up to $500,000 for married taxpayers. Part or all of this could be used to generate income for retirement. Other uses for the equity could include paying off other debt, taking the trip of a lifetime or making a special gift.

There will be expenses involved in selling a home as well as the purchase of a new home. These will lower the amount of net proceeds you’ll have to invest in the new home.

Homeowners should consult their tax professionals to see how this applies to their situation. Please contact me at (503) 289-4970 or fred if you have any questions about what your home is worth or how long it might take to sell it. Other things that could be of value are our Homeowners Tax Guide or Sellers Guide.

The process of buying a home can be different based on the price range and whether a mortgage is needed. While some things are different, others are similar regardless of price, financing or local customs.

Each year, the National Association of REALTORS® surveys buyers and sellers who have purchased or sold in the previous twelve months in order to identify the process and steps taken. It provides a lot of information for the people who will be going through the process now and in the near future.

44% of all buyers looked online for properties for sale. This might be considered a logical first step to determine the prices of homes in certain areas and what features they offered.

17% of all buyers stated that their next step was to contact a real estate agent. In another REALTOR study, it is reported that 87% of all buyers purchased their home through a real estate agent or broker. Buyers identify a wide range of services the agents offer that is considered valuable in the purchase of a home.

The next step identified by most buyers is to look online for information about the home buying process. In many cases, agents share this information in their first substantial meeting but since it is identified as the third highest steps taken by buyers, some people may not be getting adequate information from their agents or they are verifying the process as explained to them.

The fourth step identified by buyers is to contact a bank or mortgage lender. The position this step takes place is interesting because many real estate professionals suggest that it be one of the first things buyers should do. The reason is to find out how much mortgage they can qualify for, so they are looking for homes in the right price range. This can save a lot of time and frustration.

The three next highest steps included driving by homes and neighborhoods, talking with a friend or relative about the home buying process and visiting open houses.

The buyers in this study mentioned that they depended on several sources for information during the home search. The most frequently used were online website, their real estate agent, mobile search device, open houses and yard signs.

The three most difficult steps listed were finding the right property, the paperwork and understanding the process and steps.

You can download a Buyers Guide that has a lot of interesting information. We have an array of Financial Apps that can provide insight on things like Rent vs. Own, Mortgage Payment and Your Best Investment. And of course, I’d be happy to schedule an appointment with you to go over all these things and talk to you about finding your next home. Call me at (503) 289-4970.

Equity build-up could be one of the biggest advantages to buying a home. There are two distinct dynamics that take place to make this happen: each house payment applies an amount to reduce the mortgage owed and appreciation causes the value of the home to go up.

It is easy to make a projection based on the type of mortgage you get and your estimation of appreciation over the time you expect to own the home. Even conservative estimates can produce impressive results.

Let’s look at an example of a home with a $270,000 mortgage at 4.5% for 30 years and a total payment of $2,047.55 payment including principal, interest, taxes and insurance. The average monthly principal reduction for the first year is $362.98. If you assume a 3% appreciation on the $300,000 home, the average monthly appreciation is $750 a month.

The total payment of $2,047.55 less $1,112.98 for principal reduction and appreciation makes the net monthly cost of housing, excluding tax benefits, $934.57. If this hypothetical person was paying $2,500 in rent, it would cost them $1,565.43 more to rent than to own. In the first year, it would cost them over $18,000 more to rent.

Together, the items in this example contribute over $1,100 to the equity in the home . This is one of the reasons a home is considered forced savings. By making your house payments and enjoying increases in value, the equity grows and the net cost of housing decreases by the same amount.

In this same example, the $30,000 down payment grows to $133,991 in equity in seven years. While this is equity build-up, the extraordinary growth is attributed to leverage. Leverage is an investment principle involving the use of borrowed funds to control an asset.

To see what your net cost of housing and the effect of leverage will have on a home in your price range, see the Rent vs. Own. If you have questions or need assistance, contact me at (503) 289-4970.

35% of respondents, in a recent annual Gallup poll that dates back to 2002, identified real estate as the best long-term investment option compared to 27% who identified stocks.

The top choices included real estate, stocks, savings accounts and gold. Even with the remarkable prices of the different U.S. stock indices recorded in 2019 through April and May, homes have the highest confidence in the minds of the respondents.

This seems to be based on the stability of the housing market and the expectation that home prices will continue to rise. Homeowners build equity from both appreciation as well as reducing principal with each payment made. These same factors exist for investors of rental homes in predominantly owner-occupied neighborhoods.

Real estate has another dynamic working to produce favorable investment results due to leverage. Leverage occurs when borrowed funds are used to control an asset. When the borrowed funds are at a lower rate than the overall investment results, positive leverage occurs which can increase the yield from an all cash investment.

Gold and savings accounts must be funded with cash. The maximum borrowed funds allowed for stocks is 50% and generally, at a rate higher than typical mortgage rates.

Homes are a particularly attractive investment because you can enjoy them personally by living in them. The interest and property taxes are deductible and gains on the profit are excluded up $250,000 for single taxpayers and $500,000 for married taxpayers filing jointly.

Many people consider an investment in a home for a rental property an IDEAL investment: Income, Depreciation, Equity Build-up & Leverage.

If you have questions or are curious about the process, contact me at fred or (503) 289-4970.

The Internal Revenue Service considers four different types of real estate. Specific types of properties have benefits based on their classification. The determination does not depend on the property itself as much as it depends on how the property is used and what the owner’s intentions are.

Principal Residence … a principal residence is the place a person lives or expects to return if they are temporarily away from it. It could be a single family, detached home or condominium or a duplex, tri-plex or four-unit. The owner(s) can deduct the qualified mortgage interest and property taxes on the schedule A of their tax return. There is a capital gains exclusion on profit of up to $250,000 for a single taxpayer and up to $500,000 for a married taxpayer.

Income Property – is improved property that is rented or leased to tenants as opposed to using it personally. It can include houses and condos, apartment buildings, office complexes, shopping centers, warehouses and other commercial buildings. Depreciation is allowed on the improvements. For property held more than one year, the profits are taxed at long-term capital gains rates. This type of property is eligible for a tax deferred exchange.

Investment Property … can be raw land or improved property that is not rented or leased. This property is not subject to depreciation. If the property is held for more than one year, the profits are taxed at long-term capital gains rates. It is also eligible for a tax deferred exchange.

Dealer Property … this type of property is primarily considered inventory because the intention is to sell it without intentionally holding it for more than a year. It could be new construction such as a home builder. It could be an investor who buys a property and expects to sell it for more. There is not a requirement to make improvements. The profits on dealer property are taxed as ordinary, “sweat of the brow” income. Dealer properties cannot be exchanged.

A second home is like a principal residence in that you can deduct the interest and property taxes on your Schedule A, up to the limits. A second home, as well as a principal residence, can be rented out up to 14-days a year without threatening the status of the property. Seconds homes are not eligible for exchange because personal use properties are not allowed. A second home is not a principal residence and profits are taxed like an investment property. If you own it for more than a year, it is taxed at long-term capital gains rates.

Vacation homes are rented for more than 14 days a year and are like income property but with some additional rules that apply. If your personal use is 14 days or less or 10% of the time it is rented, your expenses can be deducted in excess of income. If you use it for more than 14 days or more than 10% of the number of days it is rented, it is considered personal use and your expenses are limited to the amount of income collected with no losses being deductible.

Taxpayers can strategically change the property type based on their intentions. A principal residence can be converted to income property. Dealer property could become a principal residence. A rental property could become a principal residence.

Professional tax advice is always recommended to be able to understand the information and how it applies to your specific situation.

Leverage is an investment term that describes the use of borrowed funds to control an asset; sometimes referred to as using other people’s money. Borrowed funds can affect the investment in your home positively.

For instance, if you had a $100,000 rental property, collected the rents and paid the expenses and had $10,000 left, you would earn a 10% return (divide the $10,000 by the $100,000.) With no loan on the property, there is no leverage.

If you decided to get an 80% mortgage at 8%, you would owe an additional $6,400 in expenses leaving you only $3,600 net. However, your return would grow to 18% because your investment is now $20,000 in cash (divide the $3,600 by $20,000.)

Leverage, the use of borrowed funds, causes the return to increase in this example. While, most people associate leverage with rental properties, it also applies to a home. The larger the mortgage, the more leverage you have. A FHA mortgage with a 3.5% down payment has more leverage than an 80% loan.

Assume we’re looking at a $295,000 purchase price with 3% closing costs and a 4.5% mortgage for 30 years with a five-year holding period. The following table shows the return based on different down payments and appreciation rates. The initial investment is the down payment plus closing costs. The equity build-up at end of year five is the result of normal principal reduction and appreciation.

Another way to look at the 3.5% down payment example with 3% appreciation would be to say that a $10,325 down payment plus $8,850 in closing costs could grow into $82,482 of equity in a five-year period producing a 34% rate of return on the initial investment.

Estimate what your initial investment could grow to using this fred

Two things can happen when the mortgage rates go up before you’ve found a home or locked-in your mortgage. You’ll either pay the current mortgage rate which means a higher payment, or you’ll have to increase your down payment to keep the monthly payment at the same level.

If the rate were to go up by ½%, the payment on a $275,000 mortgage would increase by $82.87 per month for the entire 30-year term. That would increase the cost of the home by $29,835.

Some people are purchasing the maximum home that they can qualify for. In that case, they cannot qualify for a higher payment and the only way to buy the same price home is to put more money down which may not be a possibility. The other alternative is to buy a lower price home which may not be in the same area or size which will involve some compromises.

The rate is not the only dynamic that affects buyers waiting to purchase. The home they want could sell to someone else. Prices could increase as new homes come on the market. The question that many buyers ask themselves when they become a victim of the consequences of delay is “What could we have spent the money on if we didn’t have to make a higher payment?”

Mortgage rates are very attractive currently and within ½% of the all time low of 3.35% in December 2012. The highest rate was 18.45% in October 1981. Whether you’re purchasing or refinancing, it may not be this low again.

To see how it will affect the payment, plug your numbers into this Cost of Waiting to Buy calculator or call me at (503) 289-4970 and I’ll help you with it.

Square footage is commonly used to determine if a home will fit a buyer’s needs. The price per square foot can be used to compare the costs of different homes and even, determine the value of a property.

The challenge is what is the source of the square footage measurement and how was it done.

County records use square footage to determine assessed value for property tax purposes. They are assumed to be reliable but there can be inaccuracies in their tax rolls. Another source of square footage could be from the house plans but the problem there is that the builder may have made modifications, or a subsequent owner could have made additions.

Appraisers are required to measure the home to determine square footage and they generally, adhere to a standard method which leads to uniformity in the industry. The ANSI, American National Standards Institute, guidelines are considered the standard but there are no laws governing the process.

Because basements are below grade level, regardless of whether they are finished, they are typically not counted toward gross living area. Attics because they are above grade level can be included in gross living area if they are finished to the same standard as the rest of the home and they meet the minimum height requirement of seven feet.

Unfinished areas are usually not considered in the square footage because it is not livable.

For detached properties, it is common to measure the perimeter of the house but to only include the living areas, not porches, patios or garages. Gross living area includes stairways, hallways, closets with minimum height and bathrooms. Covered, enclosed porches would only be considered if they use the same heating system as the house.

By contrast, condominiums, generally measure the inside area of the unit. Some appraisers may add six inches to account for the wall thickness. If you were to compare the total of the interior room measurements of a detached home, it would be far less than the stated square footage using the normal method.

If the county records are significantly different from the appraisal or the plans, it will be necessary to determine which one is more accurate. This may require getting the home measured by an appraiser which should be less than paying for a complete appraisal.

Aside from standing water in your yard or water running out from under a sink, the first indication that you might have a water leak comes from a larger than normal water bill. Before calling a leak specialist or a plumber, there is a simple diagnostic you can perform.

Go through your home and make certain that all the faucets are turned off and that the toilets have indeed stopped filling the reserve. Then, go to the water meter and make a mark on the lens where the dial is currently. If there is water in the meter box, the meter itself could be leaking.

If the meter is still turning, the leak is between the meter and the house. By inspecting the area between the meter and the house, you can look for soft, muddy areas or grass that is greener than the rest of the yard.

One of the hardest places to isolate a leak is in a swimming pool. If you have an automatic filler, like in a toilet, you’ll need to turn it off. Mark the water line on the wall and wait to see if the water level goes down. There will be a certain amount attributable to evaporation.

Some leaks can be very difficult to locate. Plumbers, by the very nature of their job, will be more familiar with tracking down the source of the leak than a homeowner. There are some non-invasive techniques like acoustic listening devices, heat scanners and miniature video cameras on fiber optics that professionals can use.

Leaks can be expensive from the loss of water and the resulting damage that it can cause. Determining where the location of the leak can also cause damage because plumbing is usually concealed in walls or under concrete. For particularly difficult to locate leaks, discuss how the professional intends to locate the leak and minimize damage in the process.

Aside from standing water in your yard or water running out from under a sink, the first indication that you might have a water leak comes from a larger than normal water bill. Before calling a leak specialist or a plumber, there is a simple diagnostic you can perform.

Go through your home and make certain that all the faucets are turned off and that the toilets have indeed stopped filling the reserve. Then, go to the water meter and make a mark on the lens where the dial is currently. If there is water in the meter box, the meter itself could be leaking.

If the meter is still turning, the leak is between the meter and the house. By inspecting the area between the meter and the house, you can look for soft, muddy areas or grass that is greener than the rest of the yard.

One of the hardest places to isolate a leak is in a swimming pool. If you have an automatic filler, like in a toilet, you’ll need to turn it off. Mark the water line on the wall and wait to see if the water level goes down. There will be a certain amount attributable to evaporation.

Some leaks can be very difficult to locate. Plumbers, by the very nature of their job, will be more familiar with tracking down the source of the leak than a homeowner. There are some non-invasive techniques like acoustic listening devices, heat scanners and miniature video cameras on fiber optics that professionals can use.

Leaks can be expensive from the loss of water and the resulting damage that it can cause. Determining where the location of the leak can also cause damage because plumbing is usually concealed in walls or under concrete. For particularly difficult to locate leaks, discuss how the professional intends to locate the leak and minimize damage in the process.

Owning a home is the first step to building equity. Tenants build equity but not for themselves; they build it for the owners.

Equity is the difference in the value of the home and what is owed on the home. There are two dynamics that cause this to grow: appreciation and principal reduction.

As the home increases in value, it is said to appreciate. Various authorities will annualize an appreciation rate based on average sales prices from one year to the next. Since appreciation is based on supply and demand as well as economic conditions, it will not be the same year after year.

If you looked at a ten to twelve-year period, some would be higher than others and there may even be some individual years that it is flat or even declined. For the most part, values tend to appreciate over time.

Most mortgages are amortized which means that a portion of the payment each month is applied to the principal in order to pay off the loan by the end of the term. A $300,000 mortgage at 4.5% for 30 years has $395.06 applied to the principal with the first payment. A slightly larger amount is applied to the principal each following month until the loan is paid with the 360th payment.

If additional principal payments are made, it will save interest, build equity faster and shorten the term of the mortgage. Using the previous example, if an additional $250.00 principal contribution was made with each payment, it would only take 270 payments to retire the loan instead of 360. It would save $69,305 in interest and shorten the mortgage by 7.5 years.

To see the dynamics of equity due to appreciation and principal reduction, look at the Rent vs. Own. To see the effect of making additional principal contributions on your equity, look at the Equity Accelerator.

Whether you’re an owner now or expect to be one in the future, it is important to be familiar with the federal tax laws that affect homeownership. Since personal income tax was enacted in 1913 with the 16th amendment, homes have had preferential treatment.

The mortgage interest deduction is based on up to $750,000 of acquisition debt used to buy, build or improve a principal residence. In addition to the interest, the property taxes are deductible, limited to the new $10,000 limit on the aggregate of state and local taxes (SALT). The taxpayer may also deduct interest and property taxes subject to limits on a second home.

Homeowners can decide each year whether to take itemized personal deductions or the allowable standard deduction which was significantly increased under the Tax Cuts and Jobs Act of 2017.

Single taxpayers may exclude up to $250,000 of capital gain on the sale of their home and up to $500,000 if married filing jointly. They must have owned and lived in the home for at least two of the last five years. For gains more than these amounts, a lower, long-term capital gains rate is paid rather than one’s ordinary income tax rate.

Capital improvements made to a home will increase the basis and lower the gain. Homeowners are probably familiar that large dollar expenses like roofs, appliances or major remodeling are capital improvements. However, many lower dollar items may also be considered improvements if they materially add value or extend the life of the property or adapts a portion of the home to a new use.

Homeowners are urged to keep records of money they spend on the home that they own over the years so that their tax professional can decide at the time of sale what they must report to IRS.

You can download a helpful Homeowners Tax Guide that explains in more detail and includes a worksheet to keep track of the basis of your home and capital improvements.