There are a lot of reasons to consider going through with getting a home renovation, but there are other reasons why you should wait before acting on those projects. Home renovations are expensive and time-consuming, so you should always be certain you want to follow through with them. In addition, you may discover that you're happy with the home the way it is instead of changing things. Whether you're a new homeowner or just thinking about starting a project, here are some reasons why you might want to consider waiting.

Think it Through:

One of the reasons you should consider waiting on a renovation project is to make sure that it's actually something you want. A lot of people are very impulsive when it comes to wanting new things, and that extends to home projects. Things like pools, new furniture, different flooring, and creating new additions to the home, should take a lot of planning and thought before deciding. For example, the process of pool construction should not be taken lightly. There's no reason to get one during the fall and winter months, as you won't be able to use it until it warms up again. Even if you move in with plans to change something, you might want to consider giving it some time to see if you really like the décor you already have. A lot of homeowners recommend setting up a grace period so that you have time to get used to your new environment before making any big decisions.

Money:

Another reason that you might want to consider waiting on your plans is because of the financing it takes. Depending on the home renovation project you want to take on, it can cost you a lot of money just to start. Some projects, such as getting new furniture, may be fairly inexpensive, but larger projects that require contractors or changing a big part of the home will take some investment on your part. You'll need to either save money over time or be prepared to pay off the debts bit by bit. Similar to how you wait and think about whether you want to buy clothing or electronics, you should wait and think about whether you're ready to invest in the project, or whether it's even worth the money you'll spend. You don't want to finish a project and find out that it feels like money wasted.

Time:

Time is yet another reason home renovations should take a backseat in your life. It's easy to look at an area of your home and be amazed by its potential, but that kind of change doesn't happen overnight. You have to be willing to put in the time for the project. For example, if you want to put in new flooring, then you have to be willing to work around that room of your home for a while. That means moving all the furniture and probably avoiding the whole room while the work is being done. Some projects only take weeks, but others may take months. You have to be ready to invest that time for the renovation you want in order to get it like you want. And if it's not the way you imagined it the first time, you may have to invest even more into it. 

Ultimately, home renovation projects can be a great investment if you're unhappy with some part of your home. However, home makeover shows have romanticized the idea into making it seem like you can create something gorgeous with some basic imagination and desire to fix up a part of the house. Not everything in your home needs to be changed or fixed and not everyone is aware of how much effort it takes to finish the projects you start. That's why you should wait before you renovate. It may save you a lot of headaches down the road.

As you’ve certainly noticed, mortgage rates have drifted downward over the past year or so. For several reasons, maybe a slower economy or the Fed has lowered a key interest rate. Whatever the reason, lower rates can trigger someone to make a decision to refinance. And it makes perfect sense. 

If someone can refinance out of a higher rate into a lower rate, the payments will fall. You want to speak with your loan officer about whether or not a refinance is right for you, but in general as long as you own the property longer than it takes to recover the associated closing costs, it might be right for you. Or maybe you want to shorten the term of your loan to save on interest.  But again, let your loan officer tell you. 

Someone may also be deciding whether or not to refinance or would it be better to just take advantage of the local real estate market and sell the home? Either option is no small decision. Maybe you’re thinking of listing the home to see if you can get a good offer while also refinancing to a lower rate just in case a solid offer doesn’t come in. If you do decide to list while at the same time applying for a refinance, maybe the decision has already been made...by your lender.

Why is that? Lenders will shy away from starting a new loan for someone if it’s possible the property will be soon sold. Lenders really don’t start making a profit on a loan until well after the first year or so via monthly interest payments. Yes, lenders do charge upfront fees that will be collected at the settlement table but these charges typically are used to offset the costs of originating, processing, and underwriting a mortgage application. The lender is looking longer term.

How would the lender know? In an appraisal, the appraiser will state whether or not the property is currently or even recently listed. If so, this will put a hold on the refinance. If this is you or someone you know, you can expect to be asked for an explanation as to why the property was listed. It might very well be that you had a true change of heart and decided to stay put and hold off on making another purchase. Whatever the reason, lenders will be very wary of financing a home that shows the possibility of being sold out from under them before making any profit. It’s a losing proposition for the lender.

When you’re shopping for a new home, there are a lot of steps in what can be an overwhelming and frustrating process.

Much of that frustration comes from getting mortgage financing.

Before you start to look for a home, you might decide to get pre-qualified or pre-approved. There’s also the option to go through pre-underwriting. When the housing market remains competitive and bidding wars are common, there are some benefits to pre-underwriting, which we detail below.

What is Pre-Qualification?

Pre-qualifying for a loan is a single step on your way to a pre-approval. Pre-qualifying is part of a process when you work with a lender, and they decide the type of guarantee they will give you.

Then, once you get pre-qualified, you would move on to get pre-approved or pre-underwritten.

You don’t have to pre-qualify to do either of the next possible steps, but some people like to do it as their first step because they learn more about what they can afford.

It's a soft pull when you do a pre-qualification before your pre-approval. The pre-qualification won’t hurt your credit score, which is important for your interest rate and whether you’re approved at all.

A lender needs a few basic things for a pre-qualification—your monthly income, estimated monthly debts, and the down payment you can make.

The figure a lender gives you as a pre-qualification amount is estimated and based on assumptions of your financial situation. The number indicates a figure that a lender might be willing to give you, but it’s not definite.

You’ll probably need an actual pre-approval letter to start working with a real estate agent.

Getting a Pre-Approval

While a pre-qualification is a figure the lender would likely lend you, a pre-approval has the terms detailed for their theoretical offer. The details in a pre-approval will include your allowable purchase price, interest rate, and lending fees.

It would be best if you went into the process to shop for a mortgage with a pre-approval in hand. This is what a real estate agent wants to see to work with you to ensure you’re not wasting anyone’s time.

The pre-approval letter is a tentative amount of money that a lender says they would loan to you.

A pre-approval will require a hard pull.

Your lender will probably ask for quite a bit when doing a loan pre-approval. They’ll want to see all your financial information, including your tax returns and bank statements for at least the past 60 days. They’ll want retirement and brokerage statements for the past 60 days, totals for your monthly debt payments, and documents related to any foreclosures or bankruptcies.

Then, There’s Underwriting

Underwriting is the last step to actually getting financing to buy a home. After submitting everything to get approved for a loan, your loan goes through underwriting. This is a time when the lender will closely assess all of your finances to determine their risk level in extending you a mortgage.

This is where you’ll probably run into most of the delays.

Pre-underwriting is when you can go through this step before you’re under contract for a house. An underwriter can do everything on their end that would otherwise come after your offer is accepted before you start looking at properties.

With pre-underwriting, sellers know you’re someone they can have confidence in. You’re showing them there are limited opportunities for surprises or things to go wrong.

In a competitive market, pre-underwriting can be a tool that makes you a very strong candidate, and it can help you win a bidding war, even more so than offering more money.

Pre-underwriting is a somewhat new option, so your lender may not offer it, but if so, it can take some of the stress off of you and make it more likely you will get the home of your dreams.

​If you’ve ever gone online to check out the value of your home or to make comparisons, you aren’t alone. Online home value estimators can be a handy tool in some cases, but you have to understand their limitations.

Zillow’s Zestimate is perhaps the most well-known estimator, but Redfin has one too.

Below, we talk about what you should know about home valuation tools, also known as automated valuation models or AVM.

What is an Automated Valuation Model?
AVMs are computer-driven algorithms and formulas that use basic property features paired with pricing trends and local market information to create a value range or an estimated value for a home.

There are some cases where a lender might use an AVM to quickly get a potential estimate of the value of a property.

All the AVMs use their own formulas and may pull data from different databases. As you might imagine, the estimates' reliability and accuracy depend primarily on the quality and integrity of the data they’re pulling information from.

There are a lot of underlying assumptions made with an automated model.

For example, AVMs work on the assumption that all properties are in a similar condition to one another. There’s no way for these automated algorithms to consider if a home is in poor condition or if upgrades have been made.

Due to the fluctuations in the figures AVMs come to, lenders will set policies on whether they’ll use them and, if so, which they’ll use.

How Do Zillow Zestimates Work?
Zillow’s well-known Zestimates are based on what the company says is a proprietary algorithm. Zillow reports the estimates include data from public records and data users submit.

The company doesn’t claim that they’re 100% accurate. If all the properties within a small radius are similar, the prices are more accurate because there are less likely to be major variances throwing off the algorithm.

If the estimates come from a neighborhood with older homes, they’re likely to be less accurate. Some homes will have been improved and maintained over the years, and others won’t have been.

The accuracy of a valuation is measured using an error rate. An error rate calculates how often the algorithm is wrong. More specifically, how often the value of a property as measured by the AVM is very different from the sales price of a home.

The Zestimate gets within 5% of a home’s actual sales price more than 82% of the time. It’s within 10% of sales price more than 95% of the time and within 20% nearly 99% of the time.

That can sound pretty accurate at first, but it's less impressive when you figure out how many tens of thousands of dollars these variances can represent.

The Zestimate median error rate goes up to nearly 7% for off-market homes. If a home hasn’t been sold lately, there’s not much data that an AVM can pull on it.

Over time, the algorithms tend to get more accurate. Zillow says that it will make offers to buy homes at their Zestimate price in some markets, or at least it did when Zillow Offers was operational, which it recently announced was closing down.

Realtor.com Offers Three Figures
Realtor.com takes a different approach when it offers online users home value estimates. The company pulls estimates from data provided by different companies it partners with. There are three estimates so that people can see the picture of how much their home is worth is more variable than what they might get from just one figure.

Redfin vs. Zillow
Redfin and Zillow are two competing tools for estimating the value of a home. They can sometimes give different figures for the same property.

Overall, Zillow’s Zestimate seems to be more accurate. The median error rate is a little lower than what’s calculated for Redfin, including both on-market and off-market properties.

Redfin is very transparent, though, which is an advantage it has. Redfin provides a lot of information on how they get their figures.

You have to remember that while these tools might give you a general idea of how much a home is worth, they’re not the same as an appraiser.

Before a lender signs off on a home loan, they require an appraisal. Appraisers do a walk-through and then write a report. They will also include market data and comparable properties, so this will be much more accurate than what you see online.

Buying your first house? You’re likely driven mainly by budget, but there are some other important considerations you may not have thought of that can help you find the perfect place. Not only can these tips help you find a home that really suits your lifestyle, but also helps you afford to live there comfortably.

Can you afford to heat and cool it?
You may only be thinking of home size in terms of the number of rooms or square footage you want. But, in many cases, a larger home costs more to maintain. More space means more space to heat and cool. Although, a home that’s newer or that has updated systems can help defray costs because it’s more efficient. Your real estate agent may be able to get an idea of the monthly utility costs so you can have this information up front.

Who's going to mow the lawn?
If you’ve never had your own lawn or garden, you may not know if you have a green thumb or if you’ll regard the time it takes to care for it as a pleasure or a bummer. Then again, if you’re already dreading the idea of having to spend a couple hours out there each week, perhaps a single-family home isn’t for you. Yeah, you could pay someone else to do it, but you’re already stretching to buy your own place, right? Perhaps the lower-maintenance lifestyle offered by a condo or townhome is the best option for you.

What’s good for resale?
Are you thinking about how easy it will be to sell your home when you’re just about to buy it? Maybe not, but, the truth it it’s always a good idea to think like a seller when buying. Chances are, this starter home won’t be your forever home, and the same questions you have about the floorplan or location are likely the questions would-be buyers will be asking when you go to sell.

As it relates to the floorplan, it’s a good idea to think beyond what you think you might want and consider what’s popular in the area. If homes with downstairs master suites sell especially well and you haven’t considered that plan, this info may make you rethink your strategy.

How close are the schools?
Dying to walk your kids to and from school every day? That’s the dream for many a parent. But what you might not be envisioning is being able to watch—and hear—every kid in the school walk by twice a day, every day. What seems like a super-convenient location right on the walking path to the elementary school may just turn out to be too much of a good thing if it impacts your privacy and peace of mind.

Did anything weird happen there?
Yes, the seller will be required to disclose physical defects and also defects that create the potential for stigmatization. “What you’re talking about is the issue of ‘psychological damage’ to a property, to be distinguished from ‘physical damage,’” said NOLO. “In some cases, the psychological damage is so great—such as after a violent or highly publicized murder or suicide, or widespread reports of haunting—that the house is considered ‘stigmatized’ and therefore less valuable. In most states, the owner would indeed be expected to disclose a defect causing the house to be stigmatized, so that buyers could adjust their expectations and purchase price accordingly.”

A Comparable Market Analysis (CMA) can tell you what buyers recently paid for homes similar to yours, but that's not all you need to know to choose the right listing price. You need to know the market's appetite for your home, and that can only come from an overview of your community's current market conditions.

Market conditions are like a weather report; it helps you predict what the current crop of buyers will do. Using this knowledge, you can price your home to sell quickly and for the most money possible.

Why is a quick sale important? The right price generates a bumper crop of buyers. If you price your home too high compared to other similar homes, you'll appear to be testing the market. Buyers will assume that you're going to be too difficult in negotiations.

Here's what you need to know: what kind of a market are you in? Market conditions are formed by buyer attitudes, made sunny or cloudy by jobs, incomes, mortgage interest rates, and overall consumer confidence.

It's possible that your community could have buyer's and seller's markets simultaneously. For example, your neighborhood may be hot, while the subdivision a mile away is stone cold.

A seller's market is characterized by confident buyers, short "days on market" and low inventory levels of less than six months on hand. This usually results in rising prices.

A buyer's market is characterized by longer "days on market," and high inventory levels of seven months' supply or more. To get buyers to come in from out of the storm, sellers must offer incentives such as seller-paid closing costs or lower prices.


The market conditions will tell you the long and short-term trends. If the market is heating up, you can ask a little more for your home. If the market is cooling, you may need to price your home slightly under the market in order to attract more buyers.

One thing you absolutely should never do is ignore market conditions. It's said the market is always right. If you price your home too high, you'll know when you get few to no showings.

That's why it's important to ask your real estate agent for occasional market updates as well as a fresh CMA. You'll get a better idea of what your home will sell for and how long it will take to sell.

Buyers and their agents need to feel welcome to look at the property at their leisure without danger or distractions. So while you adore your sweet-tempered pit bull rescue, he could turn territorial, barking and growling at potential homebuyers. And it could cost you the opportunity to sell your home.

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Think of buyers as guests and work to make them feel comfortable as they consider your home for purchase. If you have a protective dog or one that isn't well-trained, drop her off at doggie day care when you know your home is going to be shown. Or call a pet sitter on call who can take your pet for a long walk while your home is being shown.

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If you must leave the dog at home, don't expect real estate professionals to handle your dog. They are not dog trainers and should not be expected to risk a dog bite to show your home to buyers. This is where crate-training can be a huge advantage. At least your dog is secured and more inclined to relax while your home is being shown.

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What you should not do is leave your dog loose in the backyard. Not only does the buyer not have access to part of the property, but your dog could bark so much that the din drives the buyer out of the house. Also, don't leave your dog at the neighbor's. It's just as bad if the buyer believes a noisy dog lives next door.

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Housecats can also repel buyers. Most homes aren't designed with a convenient place for the litter box, so cat owners do the best they can. Owners get used to the smells of catboxes and fishy foods, which could be offensive to buyers who don't have cats.

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While buyers aren't afraid of being cat-attacked, cats can still be startling -- they appear silently without warning and they jump on furniture and counters. And if you've taught your cat to jump on your shoulders, you can imagine what could happen to an unsuspecting buyer.

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Exotic pets can be showing-stoppers, too. Birds are gorgeous, but a puffed-up screeching cockatoo can be intimidating and dangerous. Imagine a buyer bringing small children who can't resist sticking their fingers in the cage and quickly get rewarded with a nasty bite from a very strong beak.

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When you're selling a home, keep in mind that the first two weeks on the market are crucial. That's the time you want your home to be pristine and move-in ready. You don't want any noise, smells or stains that could put buyers off.

Sell your home faster and for more money by making your home as inviting and accessible as possible, so that buyers have no barriers to overcome. Accessibility to your home is just as important as price, condition and location.

Adding on to your house is a very popular decorating idea nowadays. Whether you've always wanted a new addition or just think it's time to spruce up your home you need to have a plan to make the process go smoothly. From hiring a contracting company to figuring out exactly how to pay for the additions you want, it can be easy to get overwhelmed.

Making a Plan

The first thing you have to do is figure out what kind of addition you're looking to get onto your home and what you'll need to get started. There are multiple options for adding new features to your home or backyard. You can create an entertainment room in your family room, add a fire pit to your yard, add an entirely new room to your house, and so on. Each of these kinds of projects will take a different amount of time and determination to complete, but they'll be great once you're done with them. It can transform your house and make it a more friendly and open atmosphere, or just give you something new to enjoy.

So if you've got one of the smaller jobs such as the entertainment room or the fire pit, you don't necessarily need a contractor. However, before you start breaking down walls for a new room or adding a pool on your own, you might want to start checking some local contracting options to make sure that the addition is possible and that you have the proper funds for it.

Costs

Before you can actually start the build, you'll have to figure out how much to set aside for the project. If you're working on it yourself, then obviously you're going to have to buy the materials yourself. This is usually cheaper, although you'll have a lot more work to do on your own. If you're hiring a contractor, then you should get in touch with them and see how they're willing to accept payments: half up front, half when it's finished, paid periodically as the build is happening, or paying in installments after the fact. Especially since different options could cost you more or less.

For example, there are several different kinds of pools that could cost you differently depending on which one you choose. They come in different sizes and shapes as well as building materials. For example, a vinyl pool won't cost as much but it also won't last as long as a sturdier material like concrete. It all depends on what you think you want and what will work with your house. However, don't be discouraged if you think that you can't afford that dream pool. There are multiple kinds of pool financing options including pool loans or installment options. And the same goes for the other building projects as well. For those larger home renovations, you can take out loans so that you know you can make the payments. Once you've figured out how you're going to make the payments or cover the costs for your project, then you're ready to get started.

Starting the Build

And you can finally start the building process. Now, if you decided to work on your own project then you'll need to do some research and make sure that you know what you're doing before you start. You'd hate to mess up part way through and have to start over. One way to do this is by checking out online information guides to show you how to do the projects. Because of the rise of DIY projects, there are multiple guides to any project, including something as seemingly simple as building a fire pit. You can even check on the progress of some of your larger projects to see what you want to do after it's finished. You can furnish the new room, throw a party to use your new entertainment room or pool, or have a barbecue to make use of the new fire pit. And that brings you to the last step of the renovation process. Making sure to enjoy your new addition however you want. Just make sure to keep it paid off if you took out a loan or have more installments in the future.

When people talk about closing costs, it typically means the direct costs of getting a new mortgage. But there are two primary types of closing costs, often times referred to as recurring and non-recurring charges. Recurring charges include things that will happen again and again as one owns the home. What might they be? Recurring charges are things such as property insurance, interest and property taxes. Those will come due each and every year.

Non-recurring closing costs are one-time fees. The fees you’ll see on your settlement statement. These ‘one-offs’ are items such as a property appraisal fee, lender charges and other third party services such as attorney fees. These are one-time charges associated with your closing your loan.

These fees are all added together to arrive at a ‘cash to close’ amount. This of course means including your downpayment. When lenders ask for your bank or investment statements from the accounts you’re using to close your transaction, they make sure you have enough funds available that belong to you to pay everyone what they’re asking for. This also includes a ‘non-cash’ item that you don’t have to shell out any money for but you need to have them instead. These funds are referred to as ‘cash reserves.’ What are cash reserves?

Cash reserves are funds left over after the closing has taken place. This means some extra, liquid cash on hand available to you. Okay, so how much do cash reserves cost?

Cash reserves aren’t really a charge, you’ll keep the money in your bank account but lenders still ask that you have them. How much? Reserves are typically grouped into a month or two of mortgage payments. These payments include not just the principal and interest charges but also a monthly amount for the annual property tax and homeowner’s insurance tab. If the principal and interest payment is $2,000 and 1/12th of the property tax bill is $200 and insurance $100, then the total payment is then $2,300. If a lender’s loan guidelines ask for two months of reserves, there needs to be about $4,600 left over.

Why? Primarily because lenders don’t want you to go flat broke after a closing. Lenders know you can’t wait to start decorating your house with your new stuff so there needs to be some funds left. Again, cash reserves aren’t an out-of-pocket expense, but you do need to show that you have them.

When you’re buying a home, you’ll need two types of inspections—one is the actual inspection, and the other is the appraisal. They seem similar at first glance because both, as you might guess, involve a walkthrough of the property. They have different purposes, however. The information obtained is also reported to different parties.

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What is a Home Inspection?

An inspection is thorough and is done by a professional, qualified home inspector. The inspector will look at the safety elements of a home and the integrity of the structure.

The systems and structural elements an inspector looks at include the plumbing, electrical, and HVAC systems, roofing, and siding.

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A home inspection takes a few hours. Then, when it’s done, the inspector reports to the buyer.

If you’re the buyer, you can use the inspection information to decide whether or not buying the home is a suitable investment for you.

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When you sign a contract with a seller, one of the first things you’ll do is schedule an inspection. If you’re in a competitive market, you might hire an inspector before you make an offer.

It’s up to you to choose a good, reputable inspector.

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A buyer and their agent can attend an inspection, and it’s worth the time and money to make sure the property you want to buy doesn’t have any major, potentially expensive issues you should know about.

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Sometimes, you might waive the inspection contingency, so you have a stronger offer, but you’re taking a risk in doing so.

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Most states require sellers to disclose issues in a home when they’re selling it, but there’s no guarantee there isn’t a lurking issue that the seller simply isn’t aware of.

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What is an Appraisal?

An appraisal is something almost all lenders are going to require you to have to get a mortgage. The appraisal’s purpose is to determine the estimated market value of a home. A third-party appraiser makes this determination based on factors like the home's location, the value of properties that are similar and recently sold in the area, and the condition of the house.

The appraisal process will include a walkthrough, but it’s not as in-depth as an inspection. Then, the appraiser will research the comparables in the area and create a report.

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The report will highlight the appraiser’s determination of the market value of the home. The lender will then use the appraisal report when they decide to approve a loan amount.

A lender can’t finance more than 97% of the home's appraised value in most cases. If there’s an appraisal that comes back lower than the price you offer, then you have to pay the difference out of pocket, renegotiate, or leave the deal.

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If the appraisal comes back and it’s higher than your offer price, you already have more equity in your home.

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How Do the Two Compare?

The following are some specific differences between an inspection and appraisal:

• A home appraisal is something required by your lender if you’re buying a home, but a home inspection isn’t needed.
• Your lender orders an appraisal. If you want an inspection, you arrange this yourself.
  An inspection doesn’t affect your ability to get the loan amount you need, but an appraisal can.
• Appraisers only look at the surface features of a home, but an inspector looks for deeper issues.
• During an inspection, you’re encouraged to walk with the inspector, but an appraiser usually goes through the process without anyone present.
• During an inspection, if you’re there, the inspector will explain things to you as you go along. With an appraisal, you don’t know anything until the report is complete.
• Inspections only consider the property's condition during the assessment, but an appraisal looks at local factors like crime rates in the area, lot size, and comparable home prices.

Overall, while there are differences, both an inspection and an appraisal are beneficial to a homeowner because they help you get the peace of mind of knowing that your home is worth what you’re going to pay for it and that it’s a safe place for you to live.

Also, both are completed by a third party, so you can feel more secure in your overall decision to buy a home.