Daily News And Advice
Interior Design Trends to Love Right Now
Even though vaccinations are widespread in the U.S. right now, many people are still spending a lot of time at home. Summer 2021 is likely going to bring some return to normalcy, but it’s probably going to be a slow process. You still want your home to feel like an oasis, and with that goal in mind, the following are some of the biggest interior design trends right now.
Maxed Out Design
Minimalism had its time to shine in the design world, but now we’re turning a corner into what you might want to call maximalism. This means that less is more isn’t holding true, and instead, more is more is a better approach.
It’s easy to see why over-the-top interior design style might be trending right now, following a pandemic. People want things that make them feel happy and uplifted, and that can come in the form of over-the-top interior design style.
This could mean colors, silhouettes, and patterns are all very attention-grabbing.
Peel and Stick Wallpaper
You might have thought the days of wallpaper were never coming back, but it’s here now in a big way. Peel and stick wallpaper is great because it gives you the chance to customize your space without the messy glue, and it doesn’t take long to put up. You can even add it to your rental.
Grandma style is really just a reference to a love of vintage items right now. Maybe this means florals and antiques, but grandma chic is a style that works well when newer pieces are integrated as well. Other facets of grandma chic style to explore include the use of velvet, toile, and fine china.
There’s a tendency, particularly among new home buyers to want to stop spending money on cheaper items and instead invest in fewer meaningful pieces that are high-quality or curated vintage.
White kitchens were a favorite among many homeowners for years, but now black is taking over. A black kitchen is bold but also functional. It’s easier to keep clean, and every little thing isn’t going to show like it does when you do an all-white kitchen.
Black cabinets look modern and sleek, and you have so many options as far as countertop colors and materials, your backsplash and hardware.
Black kitchens can also create a separation between this space and your living area if your home is open concept.
Monochromatic Doors and Trim
It’s a really seamless and beautiful look to make trim, including baseboards, window and door casings, and crown molding the same color as your walls. This could mean all white, or you can even do it with bolder colors.
When a room is all one color it feels high-end and opulent.
Earth tones tend to come and go as far as popularity in interior design, but they’re certainly in right now. Earth tones include beautiful greens, oranges, and burgundy. They’re rich and grounding, which are two terms you always want to associate with your home.
Finally, bathrooms are a good place to make an impact. You can use a bold color palette or wallpaper, add funky lighting and go out of the ordinary with the vanity you choose. Powder rooms are an especially popular place to do some experimentation with the wilder side of your style.
What Are the Pros and Cons of Buying a House in Cash?
If you ever watch real estate shows, you’ve probably heard the term “all-cash buyer.” It’s usually thrown out as a way to sweeten a deal, but what’s the reality about buying a house in cash? The world isn’t a TV show, and there are pros and cons to buying a house with cash as opposed to getting a mortgage.
Buying a House with Cash Is Increasingly Uncommon
If you’re in a position where you could buy a house with cash, you’re in the minority. With the median home sales price in the mid-300,000s, it’s not realistic for most people. Around 87% of home buyers finance according to the National Association of Realtors’ 2020 Profile of Home Buyers and Sellers.
If you do have enough saved to buy a home outright, that doesn’t mean you’re necessarily showing up with a suitcase full of cash.
What it does mean is that you’re not getting a loan. You might have savings, you may sell another property, or you could have investments you’re going to use.
The Upsides of Paying Cash
If you can pay cash for a home, there are undoubtedly some benefits, including:
• You’re a more attractive buyer to sellers. This is a big one right now. There is a huge amount of demand for homes in many parts of the country and a limited inventory. This means bidding wars. One way to be more competitive when you make an offer is to pay cash. That’s preferable to sellers because then they don’t have to worry about what happens if your mortgage financing falls through. A cash-only transaction is also usually faster, so you can get to the closing quicker, which sellers tend to like.
• When you buy a house in cash, you don’t have to worry about a mortgage payment of course, but you’re also not going to be paying the interest and fees that come with a home loan.
• Cash buyers have lower closing costs because you’re not paying the fees associated with a mortgage like lender fees and loan origination fees.
• A faster closing isn’t just a benefit for the seller. It’s advantageous for the buyer as well. You might be able to close on a home within a week of your offer being accepted. If you buy with a mortgage, it can take a month or more.
• Once you close, the home really is yours. You don’t have the fear of not being able to make the payments and subsequently losing your home.
The Downsides of Paying Cash
There are a few cons of paying cash for a home that you do have to think about as well.
• Your money isn’t liquid. If you’re using all of your cash to pay for a house, it’s not going to be easy to access it when you need it.
• You could make better returns by putting your money into another type of investment as opposed to putting it all into a house.
• You won’t be able to take advantage of mortgage tax deductions. With itemized deductions, you can deduct the interest paid on the first $750,000 of your mortgage, so your taxable income goes down.
If you’re weighing whether or not to buy a house in cash, it can be a good idea to talk to a financial professional first. They can go over all the different scenarios and how that choice could affect you for better or worse.
Of course, if you’d still have money in savings or investments after buying a house with cash, then it might make the decision easier.
Higher Rates Causing Concern for Buyers? Take a Closer Look
Potential homeowners keep an eye on interest rate moves. And so do lenders. Higher rates mean borrowing power is diminished. Some become more serious ‘rate watchers’ than others. Others less so. But just reading the headlines of recent rate moves need to be looked at with a little more scrutiny. Recent Federal Reserve moves, or the lack of them, indicate inflation isn’t a problem. As a matter of fact, the ‘Fed’ would like this rate to move up from where it is today.
The Federal Funds rate is the interest rate that banks charge one another so the borrowing bank can meet federal reserve requirements. If a bank sees its reserves falling below a certain level, the bank needs to borrow money…fast. It’s the Fed Funds rate that is charged for the transaction.
What is the Fed Funds rate now? 0.25%. It’s also interesting to note the Fed would actually like to see this rate closer to 2.00%. Historically, 2.00% is not enough to cause inflation but strong enough to indicate a healthy economy.
Now let’s return to the headlines. The Mortgage Banker’s Association collects and reports mortgage loan activity. An increase or decrease in the number of applications submitted can be a key indicator on the health of the economy. These applications can be either for a purchase or a refinance. If purchase loan activity is on the rise, the housing market is doing pretty well. If purchase loan activity falls, it can be a sign the economy is a little soft, or soon could be. But without looking at the details, potential borrowers might make a decision they shouldn’t have…either to wait to buy and finance a home or put off refinancing.
Various news outlets reported earlier that mortgage refinance applications dropped by 20% as the average mortgage rate hits a 10-month high. If one just read the headlines, they’re not getting the full story.
What is the full story? Part of that story is that yes, while refinance applications fell, there’s a pretty good reason for it…most everyone who could have benefitted from a refinance has already been down that path. Essentially, the refinance bucket of applications is now empty. There are fewer people that could benefit with a refinance. That would then mean fewer people would apply for a new refinance. And for those who have decided to temporarily put on hold a purchase because of this news, they’re making a mistake.
Yes, refinance demand dropped but we all know why. But it’s not because rates moved to a 10-month high. Potential buyers? The details are less staggering. The average 30-year fixed rate rose to 3.36%. But from where you might ask? 3.33%. That’s right, the rate increase making headlines is the result of a jump in rate of 0.03%. Let me put that in dollars for you. With a $300,000 mortgage, the increase is a paltry 5 bucks. 5 bucks led to the recent headlines.
I certainly get that reporters have to report stuff or otherwise they wouldn’t be reporters. But all you need to do is visit financial websites and you’ll see articles pointing to rate increases. However, unless you look at the details, you’ll find these rate moves aren’t all that impressive after all.
What’s the Difference Between a Vacation and Investment Home?
If you’ve ever considered buying a second home, the mortgage rules are a bit different from your primary residence.
There are also key differences between buying a second home and an investment property, and you should be aware of these distinctions because often the two terms are used interchangeably.
The Meaning of “Second Home”
The term second home refers to a property that you will live in for part of the year, in addition to your primary residence. It’s usually a vacation home, but a second home might also be somewhere you go for work. For example, maybe you have a condo in a city where you often work, but it’s not your main home.
If you’re going to get a mortgage for a second home, it will usually need to either be in an area known as a vacation or resort location, or it might need to be a specific distance from your primary residence.
A second home loan will often have a lower interest rate than an investment property loan.
Your loan will probably also have what’s called a Second Home Rider.
The rider says that as the borrower, you’ll occupy the property and use it as your second home. The property can’t be part of a rental pool or timeshare agreement, and there can’t be agreements requiring you to rent the property or give a management company or third-party control over the property’s use.
While the above is the general definition a lender might use, every lender is going to have their own specific requirements that might be different from these.
Some lenders, for example, won’t give you a second home loan if you’re going to rent out your home at all. Others will give you a loan as long as you plan to stay in the home for a certain number of days annually, even if you’re also going to rent it out.
What About Financing An Investment Property?
One of the reasons it’s important to understand the differences between a second home and an investment property is because the financing process is different. It tends to be significantly easier to finance a second home compared to an investment property.
Usually, a second home mortgage is going to have an interest rate that’s fairly comparable to those for buying a primary home, and credit requirements tend to be in line with one another too.
It’s harder to qualify for an investment property mortgage, and the interest rate is probably going to be higher, as are the origination fees.
That doesn’t mean an investment property mortgage isn’t without its own benefits.
With an investment property, some lenders are willing to give you a loan more easily because the idea is that the property will generate the cash flow needed to pay your loan and other expenses.
What About the IRS?
The IRS has its own guidance as far as the comparison between a second home and an investment property.
A property can be a second home if you use it for at least 14 days each year, or 10% of the days you rent it. If you don’t meet that standard, it’s an investment property.
Why does it matter?
If you have a second home, you may qualify for a mortgage interest tax deduction. That can be used on interest paid on up to $750,000 in qualifying residential debt.
If you have an investment property, you can use the deduction the same way, but you can deduct interest on your mortgage as a rental income expense.
As an owner of an investment property, you can claim an annual depreciation expense, which would lower the amount of your rental income that was taxable.
No matter how the home is specifically classified by the IRS, if you use it and rent it, you have to divide expenses by the time it’s rented and the time you use it personally.
Finally, if you’re thinking about fudging the truth a bit, that’s not a good idea. You will have to sign off on what your intended use of the property is going to be, and if you aren’t honest, it can be considered mortgage fraud, which is illegal.
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It May Improve Your
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|Mortgage Rates |
Averages as of July 2021:
30 yr. fixed: 3.02%
15 yr. fixed: 2.34%
5/1 yr. adj: 2.53%