Bob Reilley
April 2023
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Can You Keep Your House If You File Bankruptcy?

No one wants to file for bankruptcy, but it can be the best option in some financial situations. When you declare bankruptcy, you may wonder if you can keep your home; the answer is that it depends.

Three primary things will play a role in whether or not you can keep your home after you file for bankruptcy.

The first is the type you file, also known as the Chapter of bankruptcy being filed. The second is the equity you have in your home, and the third is whether or not you can afford your mortgage payments based on your debt.

Chapter 7 vs. Chapter 13 Bankruptcy

The two types of available bankruptcy are Chapter 7 and Chapter 13. There are pretty major differences between these, but one of the biggest relates to the exemptions you’re allowed.

The legal assumption is that everyone should try to pay off their debt, and if you have what could be considered excessive property, you should have to sell it to pay your debt.

At the same time, the primary objective of bankruptcy is to give you a new start rather than leave you in poverty. With that in mind, federal and state governments will have exemptions. If your property value is under a certain dollar amount, you may be able to keep it.

Chapter 7 exemptions are stricter and lower overall compared to Chapter 13. If you file for Chapter 13, your opportunities for keeping your home are greater.

Your Equity

Even when filing for Chapter 7 bankruptcy, you might still be able to keep your house, but the decision-making factor becomes your equity.

Equity is how much the market value of your house minus whatever you owe on your mortgage or home equity loan. If you don’t have that much equity in your home, which is often the case for people filing bankruptcy, then your house could be exempt, and you might not have to sell it as part of your bankruptcy.

If you’ve built some substantial equity in your house that puts you over the limit of exemption, you might be required to sell it and then pay your debt or buy it back by paying a trustee the home’s value.

Mortgage Affordability

If you hang onto your home while going through bankruptcy, you can keep it when the process is done, but you still have to be able to pay the mortgage.

If you can eliminate the rest of your debt, maybe it becomes fairly easy for you to afford your mortgage payments, and you can keep your house.

The bank might foreclose if your income doesn’t allow you to realistically keep up with payments.

When you file for bankruptcy, you can walk away from your mortgage without additional penalties or consequences. It can be advantageous to do so in many cases. Then, as you wind down the bankruptcy process, you aren’t burdened by a big monthly payment for your mortgage, and you actually are giving yourself the opportunity for a fresh start. You have to be careful to avoid trying to hang on to things that will put you right back in a similar financial situation to what led to your bankruptcy.

Exempting Your Equity

With both types of bankruptcy, you have to figure out if you can protect your home’s equity. The exemptions will vary depending on your state, and only a few states let you keep all of your home’s equity if you file for bankruptcy. The majority of states have a low homestead exemption.

If you’re thinking about bankruptcy and wondering what would happen to your home, the best thing to do is talk to an attorney because the rules vary so much by state, the type of bankruptcy, and your financial situation.


How to Make Your Home Look High-End on a Budget

Designing a home isn’t an inexpensive endeavor, but ultimately, the outcomes you tend to want are spaces that look curated and high-end. Have you ever walked into a house, and it just felt expensive? Whether or not it actually is can be the question.

Designers often use tricks and tips to elevate spaces and give them that luxe, high-end appeal, no matter the budget.

The following are a few things you can consider doing.

1. Add Moldings

Decorative molding is one of the least expensive and most impactful ways to give your home or just a single room a high-end facelift. Adding moldings is also a project you can likely do on your own on the weekend.

Adding moldings gives your home a timeless look and can be used to create architectural features where there are none. For example, if you’ve ever seen a relatively plain, boxy room with added moldings, you know what a difference this can make.

Moldings can also draw the eye upward when installed at your ceiling, giving the illusion of higher ceilings.

2. Add an Antique

If your room feels somehow unfinished or unpolished, think about adding a piece of antique furniture. For example, maybe add an antique console table or an antique wardrobe in a living space.

There are a few reasons this makes your home feel more high-end.

First, a room will often feel cheap if all the furniture seems like it matches a little too well or you bought it off a showroom floor. Adding an antique piece is a thoughtful way to make sure you don’t run into this issue.

You’ll also see in professionally designed rooms, there tends to be a lot of mixing and matching and bringing together pieces from different sources and time periods.

There’s something about an antique piece you can’t recreate in an item you buy online or in a big box store. The materials used to make older furnishings were high-quality, and the details were unlike what we see in new furniture.

3. Change Your Light Fixtures

You can relatively easily change out light fixtures or have an electrician come and do it for you. Light fixtures aren’t a huge investment, but they greatly impact a room.

A statement light fixture creates a focal point in a room, and for a pretty low price tag, you can get a big change.  

4. Create Interest With Texture

Looking at many design magazines or books, you may feel like the spaces are luxurious, but you can’t put your finger on exactly what it is. Even a simple overall design can get a boost from texture.

Texture creates visual interest, but you can stay within a relatively subdued or neutral color palette.

Incorporate texture by adding rugs, throw pillows, and blankets.

5. Incorporate Curved Lines

Another way to add subtle and chic visual interest in a room is to use curved shapes and lines instead of sticking only with straight lines. You can add curves in the form of a mirror, the legs of your furniture, accessories, lamps, or anywhere.

This is going to give you the depth that can only come from the use of varied shapes.

6. Custom Window Treatments

Custom shades or curtains aren’t the cheapest upgrades you can make, but they can have the biggest overall effect. They’re more affordable than ever, thanks to offerings from online retailers. Custom window treatments help the entire space feel custom, even when it’s not.

7. Use Dimmer Switches On Your Lights

Lighting plays a huge role in how a room is perceived and how you feel when you spend time in it. During the day, natural light is best.

In the evening, when you add dimmer switches to your home, you can lower the lighting to relax and make everything look a little warmer and cozier.

Bright overhead lighting is harsh and makes everything feel cheap and washed out.

8. Accessorize

Finally, even in professionally designed spaces where the goal is simplicity, you’ll still see carefully chosen accessories. A bold accessory can make a statement, replicating the look of a room designed professionally.  


When Your Purchase Needs Repairs

Is one of the homes you’re thinking about buying something akin to a ‘scratch and dent’ special? In general the property is okay but there are certainly some things that you’d want to fix before or right after you moved in, should you in fact do so. This is where the property inspection report comes into play. Note here, the inspection report is not the same as a property appraisal. 

The appraisal helps determine the market value of the home while the inspection attempts to identify any structural or physical issues. A full appraisal, should your lender require one, will in fact make note of the property’s overall condition but basic repairs, relative minor ones, are not listed. BTW, if you’re tempted to forgo an inspection, I think you’re making a mistake. A thorough inspection is well worth the investment. Your real estate agent can point you to some qualified property inspectors.

Let’s first look at some basic repairs. Maybe the windows need some recaulking. Perhaps the carpet is a bit too worn out. Cracks in the sidewalk? All of these items are relatively minor and your lender probably won’t care about any carpeting issues before approving a home loan application. The cracks in the sidewalk might be an issue but typically won’t be  unless the interior door jams show signs of settlement. 

If this turns out to be one of your prospective buys, it pays to hire an engineer to determine the cause of the settlement and if the property needs to be lifted in certain parts of the home in order to alleviate any settlement. Otherwise, the property should move through the loan approval process.

However, there are some needed repairs that appraisers will note ‘deferred maintenance’ associated with the home. As the name implies, the property needs to have certain issues fixed that should have been fixed some time ago. The issues weren’t alleviated but instead put off. Maybe to let the next buyer deal with them. But if the term ‘deferred maintenance’ does pop up somewhere, your lender will have a problem with that.

Mold in the home noted? Your lender will want more information before moving further. Foundation cracks? It’s time to call in the engineer for a report. Cracked or broken windows? That’s typically a lender call but in all likelihood the lender will want these repairs to be completed.

Your prospective home is probably the biggest expense you’ll incur in your lifetime. That said, it pays to make sure the property is in livable condition, and the lender wants to make sure the home is in such a condition that financing won’t be a problem.


Temporary Leave

Okay, so you decided to take some time off and travel. You’ve certainly saved up enough money to take an extended vacation, so why not go ahead and take that ‘temporary leave of absence?’ Not many homeowners have the ability to take such an extended leave but there are many who do. Yet there are some questions that suddenly present themselves when considering the notion of packing up and walking out the door. At least for a while.

For one, who’ll pay the utility bills while you’re gone? What about your cable TV? What about other expenses associated with homeownership? With the convenience of online banking and auto-draft, this part can be easily accomplished. In fact, many already have their monthly bills taken from their accounts automatically so this won’t be an issue. So will you just leave the house empty while you’re gone? Probably not.

If your vacation is just for a month or two, leaving the house as-is most likely will be the preferred selection. Put your mail and newspaper on hold and you’re off to the races. Even if you decide to leave the lights on, it’s probably relatively easy to take care of the expenses with the home while taking your vacay. That’s how it’s done in most every instance. But what about a longer stay?

This is where things can take a few turns. Let’s say you’ve decided to take a cruise. An extended cruise, maybe even around the world.  Now we’re talking about an extended leave. You certainly don’t want to leave the house empty for that long. In this instance, It’s time to call your real estate agent and find a tenant who will rent the property during the length of your leave. The agent will identify prospective tenants, select them, collect the rent and maintain the property all the while you’re sailing away. This isn’t something you should try and handle while you’re chasing down a mimosa one morning on your cruise. Let the agent take care of all this.

Now, what about if you decide to leave altogether but keep the property as a rental? Again, an agent should be able to help with all this but suddenly your owner-occupied property is now a non-owner occupied property. It’s a rental. Rates are a tad higher for a rental property. Your mortgage agreement might not say anything about the implications of renting the home after you’ve owned it for a few years. (the lender will certainly care if you tell the lender you’re going to occupy the home with no intentions of ever doing so!) However, your mortgage agreement may have such a clause regarding approving renting out the home.

If you’re not sure, and many aren’t, pull out your original mortgage agreement and do some research. If you’re not sure, contact the lender. In fact, it’s probably best to contact your lender at the outset.


Making Changes

It’s perfectly natural for people to avoid changes. We get in our own lane and stay there mainly because it’s comfortable. We know the lane we’re in and quite frankly disturbing that route means making other adjustments which of course takes some effort. Changes interrupt our daily pattern and get in our way when all we’re doing is just going about with our daily routine. However, sometimes change is required. And even in the mortgage industry, there are changes that can happen in FULL STORY->

Creative Ideas For Small Outdoor Spaces

When spending so much time at home these days, it’s more important than ever to spruce up your outdoor living space so you have extra room to spread out.

And fixing up that space is worthwhile in more ways than one. In addition to extending your living space, it’s a way to put your creativity to work, both in designing the area and making or repurposing items to decorate it. It will help pass the time while working toward the goal of having a beautiful oasis in which to relax. And FULL STORY->

How to Prepare for Your First Real Estate Auction

There are different scenarios where you might be interested in buying a property at an auction. It could be that you want a fixer-upper as your new home, and you want a good deal. You might also be considering an investment. For example, you can buy a property at auction and flip it or rehab it and rent it out.

Regardless of what you’re looking for, real estate auctions can be exciting and can offer great deals, but they can also be stressful and intimidating.

Going to a real FULL STORY->

Six Creative Ways to Drum up Interest in Your Home

A perfectly updated home at the right price in a highly coveted neighborhood may sell right away, but what about the rest of the homes that hit the market? You should be able to depend on a well-connected, experienced real estate agent to create a solid marketing plan, network with fellow agents, and hold open houses. But is there something you might be able to do to help get your home sold? There sure is.

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Organize a block party

If you live in a FULL STORY->

Ask the HOA Expert: Dissenting Board Member

Question: Our six member board voted 5-0 to pursue one course of action and a dissenting board member who was not in attendance at the meeting is now undermining that decision with the membership. What can be done?

Answer: The board president should speak to this board member reminding him that he's entitled to his personal opinion but should not misrepresent the board. What does that mean? It's fine for him to state that he did not agree with the vote, but the board is FULL STORY->

Mortgage Rates
Averages as of April 2023:

30 yr. fixed: 6.42%
15 yr. fixed: 5.68%
5/1 yr. adj: 5.74%

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Bob Reilley CREA Real Estate Broker
Cell: 630-533-0011

American Realty Network Inc.
800 Lee St
Des Plaines Il.60016

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