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Daniel Toth R(Sales)
January 2022
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Daily News And Advice
Today's Feature Stories

Should You Hire an Interior Designer?

Whether you’re moving to a new home or considering a refresh or remodel for your current one, you might be asking yourself whether or not you should hire an interior designer. A designer is someone who can create a beautiful space, but this scenario isn’t for everyone.

The following are considerations and both pros and cons that come with working with a designer.

What is Your Budget?

Budget will have to be the biggest consideration when you think about whether you should hire a designer. Designers are not cheap, particularly when they’re experienced. If you’re doing a remodeling project or moving into a new home, you have to think about the significant costs a designer can add to your overall budget.

Some designers will charge a flat fee. Others will charge by the hour.

Some designers will make purchases on your behalf and charge a percentage on each item they buy.

Regardless of the pricing structure, talk to some designers in your area to get a feel for the rates. You may figure out a designer isn’t even in your budget. It could force you to sacrifice in other areas of your project that you’d rather not if you hire someone.

What Services Do You Need?

Designers can do a lot of different types of work, and they may have varying areas of specialty. Services many designers offer can include design consultations, space assessment and space planning. Designers may offer purchasing and procurement or full-scale project management if you’re doing a remodel or custom build.

Some designers won’t work with you unless you’re paying for their full services, but others will charge by the hour and work with you on an as-needed basis.

Do You Have a Distinct Style?

When you hire a designer, even if their vision is similar to your own, ultimately they’re bringing their personal style to your home. Some people like this, but if you have a style that you prefer or a vision, you might be better off doing things yourself.

If you’re someone, on the other hand, who’s indecisive and takes a long time to figure out what you like, a designer can actually end up saving you time and money. They can become someone who guides your decisions.

Some people love to make decisions and find that it’s easy for them to do so, and if you’re that person, you could find it hard to work with a designer. On the other hand, if you’re someone who’s overwhelmed by choices, a designer can be well worth their fee.

You may find that a designer doesn’t create a space you feel reflects who you are. A good designer will work with you to learn about your family, your priorities, and how you use spaces, but still they may not capture these elements as you would.

Are You Patient?

An interior designer can help you figure out the logistics of home design that you might not otherwise think about. They do tend to take their time with projects, however. Good design can take time, and designers will often carefully select items, and they may opt for custom pieces as well. If you want to work quickly, it’s unlikely a designer will be the best choice.

You might instead pick all of your items online or from a local store so that you can bring everything together at once rather than piece by piece.

For some people, hiring a designer is absolutely the best option. It makes things easier for them and helps ensure they get a beautiful and cohesive space. For other people, a lot of the fun of a home project or buying a new home is decorating it and personalizing the space, so you have to decide which category you fall into.

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What Should You Know About Buying a Starter Home?

You may hear the term starter home pretty frequently, but wonder as a buyer, what does that really mean?

When you’re buying a home for the first time, you have to not only understand what a starter home is for you but also whether it’s best to skip ahead and invest in your forever home.

What’s Considered a Starter Home?

A starter home can be a single-family house, a condo, or a townhome. Starter homes are something the average first-timer buyer can afford but will likely outgrow. A starter home, relative to the local real estate market, will be on the lower end of things.

These homes may be older, small, or generally modest. They might also be brand-new but still designed to meet the needs of entry-level buyers.

There aren’t going to be all the features you maybe hope to have someday, but you can envision that for the near-term future, a starter home will suit your lifestyle.  

You may find that you stay in your starter home forever, for whatever reason. You might, on the other hand, move up eventually to a home that’s in a more desirable neighborhood or is more expensive.

What’s a Forever Home?

A forever home is one that can be not just larger but may be updated or have more outdoor space. A forever home can have some of those features that are highly desirable and make a property competitive when it hits the market. It may have a big, private yard and be in a great school district, for example.

Of course, a forever home is subjective. For some people, that home may be one where they can envision raising a family. For others, a forever home might be a fixer-upper that needs some TLC but is in a great neighborhood.

A forever home doesn’t have to be inherently luxurious, but one defining feature is that they tend to be bigger than a starter home.

The Benefits of a Starter Home

If you’re at a point where you weigh whether you should buy a starter home or a forever home, both have pros and cons.

A starter home will be less expensive typically so you can save for a down payment faster. Then you can begin to build equity sooner as well. If you wait to afford a forever home, that’s more time you’re going to sink into rent and less you’re investing in equity. When you’re ready for your forever home, you can then use the equity you’ve gained to buy it.

The downside of a starter home is that you’ll likely outgrow it when you enter another phase in your life. For example, maybe you’ll get married or have kids, and a starter home will no longer meet your needs.

If you decide it’s time to move from your starter home, you have to sell or rent it. You’ll have to find another home, get approved for another mortgage, and pay closing costs.

The Benefits of a Forever Home

If you think you might like to skip the starter home and go straight to your forever home, there are benefits. There’s a peace of mind that comes with knowing you plan to stay in your home for the long term without having to worry about selling it or moving.

You can take time to settle in and make the home perfect for your needs gradually.

The downside is that a forever home will probably be more expensive, meaning it takes longer to save a down payment and you’re delaying building equity.

Which is Right For You?

The most important thing when you’re buying a house, whether a starter or forever home, is to spend what you can genuinely afford. The general rule of thumb is to spend no more than 28% of your gross monthly income on anything related to housing costs. You shouldn’t pay more than 36% on debt including not just your mortgage but other loans and credit cards.

If you shop for a forever home, it can be a good move in terms of taxes. When you sell a home too fast after buying it, you may have to pay a capital gains tax if the value goes up. There’s an exclusion of up to $250,000 if you file taxes individually or $500,000 if you’re a married couple filing jointly for capital gains on real estate. You lose that exclusion if you own the home for less than two years.

Along with budget and tax benefits, think about the long-term value of a home before you buy one. You want to look for properties, no matter the price, that have an excellent potential resale value. Sometimes you do also have to remember that what you think is forever right now might not really be forever.

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Assets and Your Mortgage Application: What to Know

When you’re applying for a mortgage, you shouldn’t underestimate the important role of including your assets. Making sure you list all your assets can affect the type of mortgage you get, as well as your interest rate.

When lenders are assessing applications for a home loan, they look at your credit score, debt and income, and also your total net worth. Your net worth is how much money you actually have. To calculate your net worth, the lender will subtract the debts you owe from your total assets. Your assets are relevant because the higher your net worth, the more likely you will get approval.

Your lender will consider your assets to make a determination of how you’d make your payments if you lost your job, for example, and whether you could float your expenses for a few months.

Below, we go into more detail about what you should know as far as assets and their role in the process of applying for a mortgage.

What Are Assets?

Assets are things you own with a monetary value.

We can usually group them into three broad categories—cash, cash equivalents, and property. Your total asset value will usually go up as you move through life. Your salary and income information are part of your mortgage application but aren’t an asset.

Cash and Cash Equivalents

Cash is anything you have on hand that’s already liquid. For example, if you have money in a checking or savings account, this would be an asset. Cash equivalent assets might include what you have in certificate of deposits or money market accounts, for example.

Physical Assets

Your physical assets are things that theoretically if you needed to, you could sell for funds that you would then use to qualify for a home loan or make payments on it. This could include houses, cars, jewelry, art, RVs or boats. If you’re going to use a physical asset to qualify for a mortgage, you have to sell that asset before you close.

Nonphysical Assets

A nonphysical asset can include things you have that have value but aren’t liquid and don’t have a physical presence. A house is a physical asset. An IRA or stocks are nonphysical assets. Yes, you can make them liquid, but they’re not immediately available.

There’s a fine line between nonphysical assets and liquid assets. A liquid asset can be converted into cash very quickly, so a stock you can trade and get cash from right away is a liquid asset. A nonphysical asset might be a retirement account, by contrast. Yes, you can get some money from it, but again, it can be more complicated to do so.

Fixed Assets

Fixed assets can include furniture and some types of real estate. The value can change over time, and you can sell them for cash, but it takes longer.

Equity Assets

If you have ownership in any businesses, like mutual funds, they can be equity assets.

As you might have noticed, there is often overlap in the categories of assets. What’s important is that you include an exhaustive list when you apply for a mortgage.

Which Assets Do Lenders See As Most Important?

In the eyes of a mortgage lender, cash and cash equivalent assets are most important. You could use these liquid assets quickly if you needed to pay your mortgage. Physical assets are also somewhat important to a lender.

If you have items like artwork that you aren’t sure of the value of, you may need to work with an appraiser.

Do Lenders Verify Your Assets?

Keep in mind that if you list any assets on your mortgage application, your lender will verify them and make sure everything you provide is correct. Your assets need to be traceable, and they need to be verifiable as your own.

As far as being traceable, if you have a big cash deposit in your account and there’s no resource to trace it back to you, a lender might have questions.

If you’re overwhelmed about including assets on your mortgage application, you might want to talk with a financial professional. They can help go over your assets and make sure there aren’t any red flags that would prevent you from being approved.

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What is the Hardest Part of Buying a House?

Everyone experiences things differently, and that includes buying a house. You may think one element or purchasing a home is hard, while someone else could find another more challenging.

With that being said, in general, the following are some of the things many people say are most difficult when they’re buying a home.

Home Price

Home prices have been soaring since the pandemic. Homeowners say even after they’re able to purchase a property, when they look back on the experience, the prices were the most challenging part of everything.

In certain markets currently, major bidding wars are going on, especially for starter homes but often for properties across all budget ranges. There’s a limited inventory of homes, people are afraid to sell because they don’t know if they’ll find something else, and mortgage rates remain at record lows. All of these factors can make it feel impossible to buy a home.

The Paperwork

When you decide to buy a home, you may find the paperwork most challenging, although how hard this is depends on the type of loan you’re applying for and your job and financial situation.

For example, if you’re self-employed, the paperwork and loan process itself can be more difficult. You’ll have to show several years of tax returns and bank statements, just to start.

As you’re waiting to finalize the loan, you may find that it creates a lot of anxiety. Your loan often isn’t finalized until just a few days before you close. You have to wait in limbo until the last moment, and you may not have a clear idea of what’s happening with it during this time of uncertainty.

The Emotions

You may not realize it until you actually start the process but buying a home can be highly emotional in different ways. You might find yourself falling in love with a house that’s way out of your budget for example, and overspending. When you work with a great realtor, they can help you stay objective so you don’t put yourself in a precarious financial situation because of your emotions.

It’s easy to start to feel overwhelmed and discouraged when you lose out on a house as well.

You overall have to learn how to manage your expectations when you go into the home-buying process. You have to prioritize the most important things and be ready to walk away if something like a bad inspection happens.

Saving for a Down Payment

The down payment is related to the cost of the home you plan to buy, and it’s one of the biggest hurdles to buying a home. It can be incredibly challenging to save for a substantial down payment when you’re already paying rent.

Agreeing

If you’re buying a home with your partner, agreeing might end up being the hardest part for you.

You may have an ideal home in your mind that’s completely different from what they have in mind. You could fall in love with something that your partner says absolutely no to. It can be challenging, but you can void some of these pitfalls by having in-depth discussions about what you both want early on.

Many of the other hardest things about buying a home can be navigated by an experienced real estate agent—that’s what they’re there for—to make things easier on you and bring their expertise to an otherwise stressful situation.

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Ask the HOA Expert: Governing Documents

Question: Our governing documents are vague about how to allocate expenses among the unit owners. The board decided to base it on unit square footage.

Answer: If the governing documents don't specifically state otherwise, equal allocation of expenses is the default formula. The board has no authority to change the allocation formula. Only the members themselves have the power to change the allocation formula. And in some states, fees cannot be changed without a 100% FULL STORY->

January Real Estate Roundup

Freddie Mac's results of its Primary Mortgage Market Survey® shows that "Following a month-long rise, mortgage rates effectively stayed flat this week. Recent rate increases have yet to significantly impact purchase demand, as history demonstrates that potential homebuyers who are on the fence will often enter the market at the start of rate increase cycles. We do expect rates to continue to increase but at a more gradual pace. Therefore, a fair number of current homeowners could continue FULL STORY->

What Does It Mean If You’re Underwater On Your Mortgage?

If you’ve heard the term underwater mortgage, it refers to a situation where the balance on a mortgage is more than the home’s fair market value. Being in a situation with an underwater mortgage was common after the housing crash in the late 2000s. Many homeowners rapidly saw their homes lose a significant amount of value.

Real estate has recovered since then, but there are still many parts of the country that have a large share of homes where the owner would be considered FULL STORY->

The World Has Changed...Has My Dream of Home?

The pandemic has changed the way we look at a wide range of essential things: home, work, careers, security, leisure, real estate….

For many real estate buyers, the vortex of change around them has altered the way they look at the process of buying and at the home they want to buy.    

Whether you started home shopping during the pandemic or you’ve been waiting for “normalcy” to return to pricing, take a deep breath and make sure your thinking is FULL STORY->

Should You Hire a Virtual Assistant If You’re a Real Estate Agent? FULL STORY->


Mortgage Rates
Averages as of January 2022:


30 yr. fixed: 3.05%
15 yr. fixed: 2.3%
5/1 yr. adj: 2.37%








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Daniel Toth R(Sales),Daniel Toth
E-mail: danieltoth@coldwellbanker.com
Website: http://DanielTothColdwellBanker.com
Cell: 808-268-7614
Coldwell Banker Island Properties
808-875-7000
3750 Wailea Alanui Dr., Ste. B35
WAILEA, HI 96753


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