5 Financial Considerations When Buying a New House

5 Financial Considerations When Buying a New House

Few things you’ll do in your life are as simultaneously thrilling and terrifying as buying a home. On the one hand, it’s incredibly exciting to explore the idea of securing a place that’s entirely your own — that you can grow comfortable, make memories, and possibly even raise a family in. On the other hand, though, it’s a serious commitment, and one that can wind up being one of the bigger purchases you ever make.

To an extent, these conflicting excitements and fears are unavoidable. But the fears don’t have to be quite as bad as they’re sometimes made out to be — particularly with regard to pure finances. Sure, purchasing a new house makes for a major expense relative to your income, and that’s just the way it is. But if you go into the process strategically, and with clear eyes regarding the various financial considerations at hand, you can alleviate a lot of the stress in this department.

To help with this, I’ve put together a few words on some of those financial considerations. If you give these some thought and keep them in mind while planning out your home purchase, you may well find that the whole process becomes a little less daunting — and a little more exciting!

1. What are your value priorities?

One of the very first things you should consider from a financial perspective is what you’re most willing to pay for in a new house. Among the factors that affect house values, there are numerous factors to think about — from nearby schools, to surrounding community, to curb appeal, to (increasingly) energy efficiency. These and many more things can hold tremendous sway over what a home costs, which means it’s a necessary financial strategy to determine which of them are important to you. That way if, for instance, you don’t plan on having children anytime soon, you can look to minimize costs by not paying a premium for a home that happens to be in close proximity to an excellent school system.

2. What is your budget?

This may be the obvious question, but it’s one that’s important to think about with specific regard to homes you’re considering. Use those to initially identify the price range of homes you like. Among those homes, are any less expensive than you would expect? Which ones do you feel justify their costs? Once you’ve figured out the cost of a new home is in line with the sort you’re looking for, you may have found your approximate price range for a new house. Then, factor in additional costs such as inspection and moving expenses, closing costs, etc., to come up with a rough estimate for how much the whole endeavor will cost. It’s only at that point that you can really dig into your budget and start trying to make it work.

  1. What is your credit score?

    While this is a fairly simple question to answer, it’s also an important one. A credit score’s effect on a home purchase has to do with both the mortgage you qualify for and the interest rate you have to pay on the loan. Naturally, a stronger credit score (ideally over 700, but the higher the better) will result in more favorable interest calculations — whereas with a lower credit score you can still purchase a home, but the bank and/or lending company will need to protect itself more. If you’re not confident in your credit score, it may actually be worthwhile to take a few months to work diligently toward improving it so as to secure better conditions when you do purchase a new house.

    4. What will your insurance costs be?

    This is a question you’ll have to consider in time — but plenty of people fail to think about it in advance, particularly if this is a first-time home purchase. Ultimately, it’s a good idea though to look into potential insurance costs as early as possible, so that you can begin to factor them into your financial planning. It may also be helpful to learn if your provider will allow you to bundle this new cost with other insurance you’re already paying (such as auto), or whether it will be kept separate. There’s no getting around the costs as a new homeowner, but having a clear perspective on what to expect will help you with your overall process.

    5. What will the property taxes be?

    Here too it’s simply helpful to consider the matter ahead of time so that you don’t end up seeing property tax as an unexpected or forgotten expense. I would note that the average property tax rate can vary fairly significantly from state to state, which makes it difficult to provide a general estimate of what to expect. But do be sure to look this up in advance and plan accordingly. For that matter, if you aren’t sure where you want to buy your new house yet, you can even let property tax rates influence your decision!

    Preparing to buy a new house will still mean doing a lot of careful budgeting and financial planning on your own. But the idea here is to keep these factors in mind so that you can lower costs where possible and prepare effectively for them otherwise. Believe it or not, this will take some of the apprehension out of the process and enable you to focus on all the positives.

Article written for DesignBasics.com
Authored by Ruth Jordan

Ruth Jordan

Author’s Bio: Ruth Jordan left her desk job as a financial advisor two years ago to pursue a dream of travel and writing. Though the former has been put on pause due to recent events, writing continues to be a source of joy for Ruth, who loves writing about everything from health and wellness, to the economy and personal finance. Being able to learn new things — and impart some bit of knowledge to others in the process — is one thing that she’s always loved about putting pen to paper. When she’s not working, Ruth enjoys yoga and taking long walks with her dog, Charlie.

Cover Image: https://images.pexels.com/photos/101808/pexels-photo-101808.jpeg?auto=compress&cs=tinysrgb&dpr=2&h=650&w=940

Choosing the Right Flooring for Your Bathroom

Choosing the Right Flooring for Your Bathroom

Vinyl? Tile? Wood? Laminates? The newer Luxury Vinyl Tile (LVT) or Luxury Vinyl Plank (LVP)? What’s the right choice for your new bathroom? Her Home™ Magazine recently posed that question to Joe Dubsky, Manager for Thornton Flooring (Sioux City, Iowa, branch). Based out of Sioux Falls, South Dakota, Thornton Flooring is one of the Midwest’s largest flooring retailers.

Of today’s popular flooring materials, Dubsky quickly dismissed wood as an option for bathroom flooring due to wood’s inherent problems with getting wet. Both solid hardwood and engineered wood planks will swell and “cup” from water absorption, ruining the floor. Similarly, some laminate manufacturers discourage its use for bathroom flooring due to water intrusion issues.

The remaining choices basically come down to aesthetics, durability, and budget.

Traditional sheet vinyl flooring is available in a wide range of attractive colors and patterns, including replicating natural stone and hardwood. Glued-in-place as one continuous piece, sheet vinyl offers excellent resistance to water damage. Relatively easy-care, sheet vinyl is often the least expensive flooring option, with pricing and durability typically varying depending on the thickness of the material and the thickness of its (top) wear layer. Thicker vinyl flooring, while more expensive, generally offers greater scuff and gouge resistance as well as longer warranties.

Luxury Vinyl Sheet flooring is at the high-end of vinyl roll flooring. It may be twice the thickness of cheaper vinyl flooring, warmer and softer, and more comfortable underfoot as well as significantly quieter. Dubsky likes the Beauflor® Blacktex HD Luxury Vinyl Roll, stating, “It’s much more durable than traditional vinyl sheet flooring, but less than LVP.” Beauflor’s Blacktex HD is backed by a lifetime residential warranty, compared to the more typical 10-year limited residential warranties common to traditional sheet vinyl.

BeauFlor Futurist Earth

(Photo courtesy: BeauFlor)

LVT/LVP/WPC/SPC has quickly become the choice of builders and home buyers alike. Essentially identical except for appearance (LVT looks like ceramic tile, LVP looks like wood plank), these products offer comfort, excellent performance, and amazing realism. The core material is typically considered waterproof varying from a vinyl plastic, wood plastic composite (WPC), or even a stone composite core (SPC), the latter being harder and better able to handle temperature extremes, which might be important if your bathroom sits atop an unheated garage. Typically, beneath the core is an attached foam pad, contributing to the comfort and warmth, and according to Dubsky, superior sound deadening. The printed layer, atop the core material, is protected by a wear layer that provides a hard scratch-, stain-, and scuff-resistant protective coating, measured in mils. Dubsky advises looking at the wear layer and the overall thickness of the product when considering LV products, “Wear layers are commonly 12 mil to 30 mil. I like to recommend 12-20 mil thick wear layers for homes.”

“Some LVP is smooth, while some is embossed in register, with indentations giving it the feel of natural wood or tile as well as added depth and texture.” Dubsky pointed to a less expensive LVP’s woodgrain and a knot, printed in high definition, which looked exactly like authentic wood planks. Yet its uniform smoothness, especially in that knot area, detracted from the authenticity of actual wood. The embossed in register LVP wherein the feel and texture, particularly in the knot area, was virtually indistinguishable from wood flooring. Dubsky mentioned that the embossed in register LVP was also a bit more slip-resistant, which can be an important factor in bathroom floor choice.

Selecting your flooring for your bathroom can be fun and easy. With today’s technology, many manufacturers offer tools to help you visualize your dreams. Many companies have a room scene visualizer where you can take a photo of your room, select your style and color, and even choose the direction to run your flooring.

As with other vinyl flooring, LVP and LVT prices also tend to vary by thickness of the product. The product has caught on with applications throughout the home, not just in bathrooms. Unlike sheet vinyl’s low-price stigma, for its many practical and aesthetic advantages, LVT and LVP is finding its way into million-dollar homes, often replacing what would have been hardwood and tile floors. Importantly, luxury vinyl planks and tiles, if damaged, can be replaced and sometimes even repaired. In contrast, gouged or otherwise damaged sheet vinyl must be fully replaced.

Ceramic and porcelain tile have long been the go-to choice for custom bathrooms. Both are clay-based, but the clay used in porcelain tile is more dense and more refined. Porcelain tile is also fired at hotter temperatures for a longer period of time, making it harder, more durable, and impervious to water. Due to the materials used and manufacturing process, Dubsky notes, “Porcelain tiles are generally a little more expensive than ceramic, but basically, color dictates most people’s tile selection.” Ceramic is also water-resistant, but more porous than porcelain. While generally a fine choice for bathroom floors, there is a chance of liquid spills staining a ceramic tile, even with the glaze.

Porcelain or ceramic, most tiles are printed with what is essentially a high definition ink-jet process; then the glazing, where an enamel or liquid glass top coating is applied. That glaze protects the tile and its printed surface and may be either a gloss (shiny) or matte (dull) finish. Some tiles also have a slip-resistant texture, which can be especially important for the elderly. Often tile-floor bathrooms also feature tile shower and tub surrounds as well as tile wall accents. Dubsky has found that one porcelain importer (Happy Floors) offers porcelain tile that matches up well to their LVT products, so his customers can enjoy the benefits of both products in their bathroom.

“Tile has stood the test of time,” Dubsky said, “but it is at the high-end of bathroom flooring choices.” One other drawback is that tile floors can feel quite cold to walk on. For that reason, he often installs Schluter® Systems in-floor electric heating underneath tile bathroom floors. In-floor heating can be surprisingly inexpensive when done at the time of construction.

MSI BathRoom Visualizer

So, what is the right choice of flooring for your bathroom? Check out MSI's BathRoom Visualizer Tool - visualize backsplash, wall tile, and floor tile options. Use this quick tool to mix and match your choice of colors to visualize the ideal bathroom. With a simple click—email, print, or save your favorites to help in making final selections. (Photo courtesy: MSI)

Again, it comes down to the look and performance you want, and price considerations. The following chart may help guide your decision.

Bathroom Flooring Chart

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Cover photo: BeauFlor

Home Improvements to Watch for in 2021

Home Improvements to Watch for in 2021

As many homeowners will list their home for resale at some point in the future, here we offer some home improvements you can do now to ensure a successful home sale when the time comes. Also, if you are building a new home, you may find some of these suggestions helpful when designing your new home. See our other posts: New vs. Resale: Peace of Mind and Cost of Ownership - Resale Value

You probably had a lot of big plans for the year 2020; traveling and gathering alike. But with all the changes in society due to the COVID-19 pandemic, most of those things have been put on hold due to social distancing efforts and quarantine safety measures. That said, your home environment has probably become extremely important not only for safety but also for your mental health and overall well-being.

If you’re curious as to what the forecast for home improvements in 2021 looks like, read on for some tips and tricks that will help you plan your next renovation, both economically and rationally.

The Importance of Home Improvements

Putting money back into your home can be a huge advantage for many people. While you may be sacrificing some money upfront to finance renovations, luckily you will be able to reacquire some cash on the back end if you ever sell your home.

If you’d like to make some improvements to your home in 2021, it’s necessary to weigh the pros and cons of each prior to breaking ground. For starters, you will want to make note of the current market value of your home so you can measure the risk of your renovation plans. Be sure to assess your property value beforehand and how it compares to other houses for sale in your area. Pursuing costly improvements may not be worth it based on factors out of your control like where your home is located, changes in the economy, and interest rates.

However, there are some projects that have withstood the test of time in terms of providing value to your home. The key is choosing which upgrades to do when and budgeting for them over the course of homeownership. Fortunately, several of these upcoming trends and improvements coincide nicely with desirability when balancing resale value and pandemic living situations.

Upcoming Trends and Improvements

This year has given us all a lot to think about! When it comes to trends and improvements to try out in your home, consider the following in terms of what will be worth your time and investment, so you don’t encounter any more headaches than you have to in 2021.

Light and Airy Surroundings

After all of the time we’ve spent indoors this last year, it’s no wonder that light and airy surroundings will be a focal point for 2021. Windows and doors are one area of the home that rarely get a facelift until major problems start to develop. Staying proactive on their maintenance and upkeep can go a long way for your improvement expenditures.

If you are in the market for new windows and doors, choosing models that allow in more light and natural air will go a long way in terms of your investment. Believe it or not, window replacement has an ROI of a whopping 81% while door replacement averages a 74% ROI, meaning you will get much of your money back when it comes time to sell.

If you don’t plan on putting your home on the market any time soon, you still benefit either way. For example, did you know that natural light provides many health benefits? In a time when things look bleak, boosting the amount of natural light in your home can help improve your sleep, increase the amount of vitamin D you receive, and reduce the negative effects of seasonal depression. If you’re feeling trapped due to the pandemic, now may be the perfect opportunity to lighten your mood and your home by including more room for natural light.

VELUX Skylights Bedroom

(Photo courtesy: VELUX)

Bathroom Bespoke

Catering your home to the specific needs of you and your family is essential to foster a hospitable environment. If everyone in the house is fighting over the same vanity, it may be time to find some room for improvement to your bathroom, like utilizing space-saving solutions.

Whether you add a new one completely or simply update the one, or multiple you already have, you can’t go wrong with putting this project at the top of your to-do list. Studies show that a bathroom redesign can award you upwards of 70% on your ROI, meaning that when it comes time to sell you will reap some major compensatory benefits. And, with everyone confined to one house, having a more functional bathroom will also save you plenty of aches and pains as well!

All Things Considered

This year has presented homeowners with a lot of overwhelming challenges. From isolating during quarantine to abiding by stay at home orders, people’s homes have become so much more than just a place to rest their heads. That’s why taking the time to properly plan any improvements will give you plenty to look forward to in 2021, even if you are stuck at home!

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Photo: <a href='https://www.freepik.com/photos/people'>People photo created by yanalya - www.freepik.com</a>

Futureproofing: Another Reason to Buy New

Futureproofing: Another Reason to Buy New

Your expectations for the future will have a big impact on identifying the best home for you. How long do you see yourself living in the new home? Life happens! What will likely change, such as kids moving out or parents moving in? Are aging-in-place features important? Is your home easily adaptable to future needs? Wider doorways may not be feasible at a later date. You’re single, so two sinks in your bedroom suite’s bathroom and a private toilet area may not be important to you but ignoring such amenities could be a real drawback in the future.

None of us has a crystal ball. Prior to 2020, who imagined the impact the COVID-19 pandemic would bring? Still, when it comes to our homes, looking at what’s popular today provides some insight into what we can expect to likely be popular five to ten years from now. Continuing the bedroom suite bathroom example – large showers are in demand, particularly “curbless” showers with no lip or threshold to step over. Safer and more comfortable, choosing such an amenity when building your new home is a wise choice, especially compared to a resale home with combination tub/shower or a tub with separate, modest-size shower. Even something as mundane as cleaning the shower is a factor – small showers are harder to clean because there’s simply not enough room to move around when you are standing in that shower.

Storage and organization has become a higher priority with today’s home buyers. Neighborhood restrictions prohibiting sheds, coupled with our seemingly insatiable appetite for more stuff (along with our reluctance to part with it!) has fueled the interest in larger garages with more room for storage. In the Palmer (plan #42057), note the parcel drop at the front porch alongside the garage for securing home deliveries – freeing you up from having to wait around for the delivery driver to pick up/drop off packages for your home-based business. Increased storage extends to the bigger closets in our homes, deep walk-in kitchen pantries and flexible storage areas – particularly those that can be accessed from outside. As a rule of thumb, more square footage is being devoted to storage in today’s new homes than what you usually find in resales, a trend that is likely to continue.

The Palmer (below) provides extra storage in its 3-car garage as well as storage accessed from outside (behind the garage). Look at that kitchen pantry! Another draw – privacy for the covered porch.

Outdoor living space, already a “must-have” for many new home buyers, gained even further importance during the pandemic. Better than a simple patio or deck, prospective buyers wanted a roof over that space so that they didn’t necessarily have to cancel their outdoor plans just because it was raining. The Palmer plan has its covered patio to the side, behind the pantry, providing yet another desired amenity – added privacy. Sure, many resale homes have outdoor living spaces, too, but do they integrate with the home’s design, or look as if they were merely added-on at some point?

We assess an amenity’s value by both what we ourselves personally know and our experience with it.  Something as elementary as a pull-out wastebasket drawer in the kitchen. Once you’ve experienced that simple pleasure, you’ll never settle for less. We also observe the value we see others place in it, especially if we think its popularity is increasing. Millennials have largely ignored and passed over those 5,000 square foot-plus “McMansions” popular with their parents’ generation. Older homeowners have sometimes lost money when selling those larger homes they no longer need or want due to a lack of buyers. But 32-inch wide interior doors throughout the home and laundry rooms that don’t double as the entry from the garage – those are futureproofing must-haves. When it comes to resale, Realtors tell us that regardless of the presence of a tub in the primary suite bathroom, if there isn’t a nice shower, many of today’s prospective home buyers are simply going on to the next home.

There will come a point in time when your new home goes on the market as a resale. Thoughtful design today translates into better resale tomorrow. Take curb appeal. It not only makes your home more attractive now, but it can also have a significant impact on the future resale of your home, both in terms of how quickly you get offers and the perceived value of your home. Example – the humble garage door. As with your front entry door, an attractive garage door enhances curb appeal!

The Rainey plans below share a common floor plan, but exude distinctive exterior styling. While a fairly traditional garage door style can work for the Rainey Gables (left), that simple 32-panel garage door would detract from the Rainey Chase's contemporary design (middle), and the Rainey Farm's Modern Farm House design (right). 

Choosing a brand-new home, with today’s most-wanted amenities, will be significantly more attractive to most prospective future buyers than if you’re trying to resell a home that was already 30 years old when you bought it.   

Next time - What Your Home Says About You.

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Cover plan featured: Palmer (plan 42057)

New vs. Resale Homes: Peace of Mind

New vs. Resale Homes: Peace of Mind

Over half of all home buyers consider new construction according to Zillow’s Consumer Housing Trends Report. Maybe it’s because they get grossed out by toenails.

We were touring an open house as was another couple when all of a sudden, we heard, “Eeew!” Apparently, the current owners had a habit of clipping toenails in the owner’s bedroom. Having removed her shoes, one of the other visitors had stepped on something and bent down to see what it was – a yellowed toenail clipping. That couple left without finishing their tour.

Our oldest child was two years old when we decided to replace the living room carpeting in our first home. Even though it was a starter home built in the 1950s, most of the rest of the floors were hardwood. We were aghast to discover all of the former resident’s apparent pet “accidents” staining the back of that living room carpeting, which our son had been crawling around on!

It’s not just toenails and pet urine. It could be smoking odors or allergens, or multitudes of dust mites in the air ducts. It could be mold trapped behind a fresh coat of stain-blocking paint caused by an unseen water leak. Some things are just hidden, even to professional home inspectors.

We value certainty. Stickers on the furnace and water heater of the resale home you’re considering indicate both are 10 years old. While you didn’t climb up there, the roof shingles looked okay. And though they are by no means new, the seller is leaving all of the kitchen appliances. Those items represent some of the potential expenses when buying a resale home that can wreak havoc on your budget. You don’t know when they’re going to fail, and you don’t know how much it will cost to repair or replace them. In contrast, your new home warranty and all of the associated warranties behind the products installed in your new home, mean you can budget and buy with confidence when choosing a brand-new home.     

Beyond the dollars, there is a parallel – your time, knowledge, skill, and ability. You may want to tackle rebuilding that old deck yourself. You watch a couple online videos on the subject and can block out two weekends plus schedule to take the afternoons off during the week between. Still, you’ve never done this type of project before, and aren’t sure you have the right tools to tackle the job. And when you’re all done, will you be happy with the result?

Current technology. You may not yearn for the newest tech gadgets, but you’re used to a smart thermostat. You hope there’s an instruction manual for the “programmable” one in the used home. There’s no structured wiring, but a good router should provide a strong wi-fi signal throughout the home. Replacing that old doorbell with a video doorbell shouldn’t be too difficult; however, installing a smart garage door opener means hiring someone. From security to entertainment, technology offerings in new homes allow you to enjoy that new home more.  

Chamberlain myQ Garage App

(Photo courtesy: Chamberlain; myQ SMART Home)

Technological advancements are also evident in new homes’ energy efficiency. As reported on energystar.gov, “In a typical house, about 20%-30 % of the air that moves through the duct system is lost due to leaks, holes, and poorly connected ducts.” But to meet today’s stiffer energy codes, many builders and their HVAC contractors employ advanced testing to reduce conditioned air leakage in ductwork down to 3%-4%. Energy-efficient products and construction have resulted in homes built today being as much as 60% more energy efficient than homes built 20 years ago.

Originally designed with 2x4-inch exterior walls, the Buckland Showcase (plan #9170) can alternatively, like most plans available from Design Basics, be ordered with 2x6-inch walls, allowing more insulation in those outside walls. The outside dimensions do not change; inside, the rooms get slightly smaller when plans originally designed with 2x4-inch walls are revised for 2x6-inch exterior wall construction. For even higher performance, the Buckland Showcase ICF (plan #9170BTX) is designed for building with 10-inch thick Insulated Concrete Forms (ICF) construction. Because of the added wall thickness of ICF construction, ICF-adapted plans do increase in overall width, depth, and square footage so that the interior rooms don’t become too small.

Below: The Buckland Showcase as originally designed for 2x4-inch exterior wall construction (left: main and upper level floor plans) and adapted for 10-inch thick ICF walls (right: main and upper level floor plans). To accommodate the thicker walls and minimize cutting of the ICF, the ICF home grew three feet in width; from 1,984 to 2,218 total sq. ft.

Buckland Showcase - #9170 ML
Buckland Showcase - #9170 UL

Buckland Showcase - #9170
(As originally designed: 1,984 sq ft)

Buckland Showcase - #9170BTX ML
Buckland Showcase - #9170BTX UL

Buckland Showcase ICF - #9170BTX
(Adapted for ICF construction: 2,218 sq ft)

Technology shows up in healthier new homes, too. You see it in in “hands-free” toilets and faucets as well as water purification systems; in having lots of natural light; and in having a quiet home, which minimizes internal and external noise. But perhaps nowhere else is technology more evident than indoor air quality. From air quality monitors that turn on ventilation fans if/when indoor pollutants exceed healthy levels, to air purification systems that can trap and kill most bacteria and viruses, high-tech solutions available mean new homes can be considerably healthier than used.

Join us next time as we look at how “futureproofing” considerations affect your home purchase decision.

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(Product spotlights are for informational purposes only.)

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