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Looking to buy a house? You'll need to save money for a down payment.
Let’s start with the basics. A down payment is the cash you bring to the closing table when buying a home. You may borrow money from the bank in the form of a home loan or mortgage, but a portion of the total cost must come directly from you.
Here’s why: The down payment acts as an insurance of sorts for your lender. When you hand over money from your own account, you’re officially invested. You’re more likely to make good on your mortgage payments month after month and year after year. Banks like working with folks like you.
By saving up for a down payment, you not only prove yourself to a lender, but you also set your own mind at ease. A sizeable down payment reduces your monthly house payment, allowing you to choose a shorter mortgage term so you can say goodbye to this debt sooner rather than later.
It’s no secret that we don’t like debt. That’s because car loans, student loans and credit card debt can tie up our income, leaving us with less money for the things we really want to do.
So how much should you save? That’s the million-dollar question! But don’t worry. You won’t need anything close to one million dollars to set yourself on the right track for buying a home. However, you do need to work through the process below to arrive at your magic number.
We’ll use an imaginary family—the Clarks—in our example.
1. Determine how much you can afford each month. The rule of thumb is to spend no more than 25% of your monthly take-home pay on your mortgage payment. If you tie up too much of your budget in your monthly payment, you leave yourself unprepared to face emergencies or embrace opportunities. We find that 25% (or less!) is the sweet spot.
For the Clarks, 25% of their monthly take-home pay equals $1,050 each month. Keep in mind that this number should include taxes and insurance, escrow, and homeowner association fees.
Do the math: Write down how much money you (and your spouse, if applicable) bring home each month. Multiply this number by .25 to find your monthly mortgage amount.
2. Use your monthly mortgage payment to arrive at a total mortgage amount. Let’s play around with Dave Ramsey’s Mortgage Calculator to see what price range the Clarks should stick with.
When it comes to the type of mortgage you select, we recommend a 15-year fixed rate, which is guaranteed to save you tens of thousands of dollars compared with the traditional 30-year option.
We know the Clarks have $1,050 to spend on their monthly mortgage payment. Using the mortgage calculator and its set interest rate of 3.66%, we discover that they can purchase a $145,000 home with a 20% down payment, a $130,000 home with a 15% down payment, or a $125,000 home with a 10% down payment.
Do the math: Spend some time on our mortgage calculator. Input different numbers into the home value and down payment section with the goal of hitting your preferred total monthly payment. Make note of your options and talk things over with your spouse, a trusted friend or family member.
3. Aim for between 10% and 20% for your down payment. If you haven’t already, hone in on the percentage that works best for your family. Ideally, you’ll choose to put down 20%, which can lower your interest rate, open you up for a 15-year mortgage, and help you avoid private mortgage insurance (PMI).
Let’s assume the Clarks decide to put down 20% on a $145,000 home. That means they’ll need to set aside $29,000 for a down payment.
Do the math: Multiply the total mortgage amount by the percentage you plan to put toward the purchase of a home. Now you’ve got your savings goal! Circle it, post it on your fridge, and get ready to start saving!
Remember how we acknowledged that lenders aren’t exactly our best friends?
Spoiler alert: Banks don’t just expect a down payment. They also require you to pony up for other fees that might feel hidden if you don’t know about them ahead of time. Let’s cover those now, shall we?
Short for Private Mortgage Insurance, PMI is a fee tacked on to your monthly mortgage payment if you put down less than 20% on your home. You can count on PMI upping your monthly payment by about $50 for every $100,000 you spend on a home.¹
In order for your lender to sign off on your mortgage, you’ll need to have your future home appraised and inspected. Each of these can cost just over $300 on average.²³
A lot of work goes into signing on the dotted line. And unless the seller agrees to pick up the tab, you’ll be responsible for fees between 2% and 5% of the total mortgage value.⁴
Our imaginary family, the Clarks, already plan to save $29,000 for a down payment of 15%. And now that they’re in the know about the “hidden” fees of buying a home, they’ll need to set aside a bit more to cover them. Time for more math!
- The Clarks purchase a $145,000 home with $21,750 down.
- Their mortgage amount equals $116,000.
- The cost to cover the first month’s PMI at closing is $65.
- An appraisal and inspection equal $600.
- Fees from closing costs could be as much as $5,800.
- In addition to the $21,750 down payment, the Clarks should set aside an additional $6,465.
And, if the Clarks get lucky and the seller agrees to cover closing costs, that leaves them with a good chunk of money to put to good use elsewhere.
When buying a home, it’s not just about how much you spend, it’s also about timing. How will you know you’re ready?
We follow the Baby Steps for true financial peace. With this method, we first set aside $1,000 as a beginner emergency fund. Then we pay off all non-mortgage debt with a vengeance, followed by beefing up our emergency fund until it reaches between three and six months of expenses.
Once you tackle these first three steps, you’re ready to buy a home. Here’s why:
- Invest for retirement.
- Save for children’s college.
- Pay off your home early.
- Build wealth and give generously.
Trust us, get the timing right and all you’ll need to worry about is what to do with that pink tile in your new bathroom.
Start with a smaller number.
Does that big, looming down payment goal overwhelm you? Divide it up! Decide when you’d like to buy. How many months away is your goal date? Simply divide your needed down payment by the number of months you have to save.
Our imaginary Clark family wants to save $34,465 to cover a down payment and all closing costs of purchasing a new home. They’d like to buy a home in two years, so they’ll need to save $1,478 each month to hit their goal.
Because the Clarks are following the Baby Steps, they have no debt, already saved six months of expenses, and have some flexibility in their budget to sock away a lot of cash each month.
If you do the math and find that your monthly savings amount is just too high, that’s okay. Give yourself a little more time to save up and be on the lookout for creative ways to save. Here are some suggestions:
1. Set up a Down Payment Fund.
First things first: Once you figure out what you should save each month, create a fund in your EveryDollar budget to track your savings and reach your goal.
2. Throw extra money toward your Down Payment Fund
Look for ways to trim your budget so you can put more toward your down payment. Here are a few ideas:
- Cut cable
- Pack your lunch
- Make coffee at home
- Cancel gym memberships
- Work overtime
- Start a side business
- Get a second job
3. Store your down payment savings the smart way.
There will come a time, probably about halfway to buying a home, that you (or your spouse) will be tempted to take a spontaneous trip to Europe with your savings. Trust us, it happens.
To protect yourself from yourself, don’t store your down payment money in your regular bank account. Try a separate savings account or a money market account instead.
https://www.everydollar.com/blog/how-to-save-money-to-buy-a-house
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New windows can make a huge impact on your home. Not only can installing new windows make your place look better, but those windows can also make it a lot easier to heat and cool as well. Sure, replacing old windows can eliminate drafts, but that’s only a small part of how installing new windows can increase your home’s energy efficiency.
Information about the efficiency of new windows is printed on a sticker that’s attached right to the glass. Unfortunately, if you don’t know what you’re looking at then these stickers may raise more questions than anything. If you need a little help understanding exactly what you’re looking at on your window sticker, here’s a rundown of everything you need to know.
What’s the U-Factor?
When looking at window stickers, two values are listed as “Energy Performance Ratings.” The first of these is the U-Factor, which provides information about the insulating ability of the window. This is similar to the R-Value that you find on insulation, and the U-Factor value will usually be somewhere between 0.20 and 1.20 on new windows. The lower this value is, the better the window is at insulating your home and preventing heat transfer between the inside and outside. If you want to think about this in terms of R-Value instead, simply divide 1 by your U-Factor value and you’ll end up with the corresponding R-Value (so a U-Factor of 0.20 would correspond to an R-Value of 1 ÷ 0.20 = 5, while a U-Factor of 1.20 would correspond to an R-Value of 1 ÷ 1.20 = 0.83.)
What About Solar Heat Gain Coefficient?
The other value listed under “Energy Performance Ratings” is the Solar Heat Gain Coefficient (SHGC). This measures how much heat is transferred through the window from sunlight (as opposed to the air heat transfer that is indicated by U-Factor.) The SHGC scales between 0 and 1, with lower values indicating a greater ability to block heat transfer from sunlight.
What Is the Visible Transmittance?
Beyond the “Energy Performance Ratings” entries on a window sticker, three other values are also provided to help you choose the window that best fits your needs. One important listing among these additional performance ratings is Visible Transmittance (VT). As with SHGC, the VT of a window scales between 0 and 1. In most cases you will want a high VT, however, as it indicates how much light passes through the window glass to provide daylight for your home.
What’s the Condensation Resistance Rating?
As the name suggests, the Condensation Resistance (CR) rating of a window indicates how well it can resist the formation of condensation on its surface. This not only indicates how likely you are to experience “fogging” and liquid condensation but can also indicate the likelihood of frost formation in the winter as well. This rating ranges from 1 to 100, with higher CR numbers indicating a greater resistance to condensation.
What Does Air Leakage Mean?
Another important performance rating is Air Leakage (AL). As the name implies, this measures how much air can leak through the window and affect the internal climate of your house. These values typically scale between 0.1 and 0.3, with lower values indicating a smaller amount of air leakage. One thing to keep in mind is that this is considered an optional rating, meaning that not all manufacturers will provide AL data; as a result, some window stickers might only have ratings for the other four values.
Need Help Crunching the Numbers?
Even knowing what the numbers on your window stickers mean, finding the window that has the best balance of these values for your home can be tricky. If you aren’t sure which windows to buy, let the pros at HomeKeepr help you find the perfect window for your needs. Because our system is built on recommendations instead of generic ratings, you can rest assured that the professional you choose will be just the right fit.
There are few things that homeowners dread more than mold in the house. You’ve likely heard horror stories about people living with mold infestations that made them seriously ill. Is this just hype, or is there a real danger to having mold in your home? More importantly, what can you do if you find mold growing somewhere in the house?
What Is Mold?
Mold is a broad group of fungi, with thousands of species and subspecies around the world that typically prefer dark and damp habitats. Often fuzzy in appearance (though occasionally slimy or cottony), molds spread across materials and break them down to get the nutrients the mold needs to survive and thrive. Instead of seeds, molds release single-celled spores that in many cases are too small to see with the naked eye; these spores float through the air to land on a variety of surfaces, beginning growth once they find themselves in a suitable habitat. Though molds are made up of a number of individual stalks fibers, a connected clump of mold is considered to be a single living entity.
Types of Mold
There are several common types of mold that you might see around the house. While some of these may not be inherently dangerous, any mold can trigger reactions in anyone with an allergy or sensitivity. The five most common of these molds are:
Is Mold Actually Dangerous?
While many molds are allergens, most will not cause severe reactions unless you have a mold sensitivity or have other health problems that make you more prone to infection. However, some molds (such as black mold) actually are toxic and can make you very sick if you’re around them for too long. Symptoms of a mold allergy or toxic mold exposure can include a chronic cough, skin rashes, fatigue, difficulty focusing and even pain or infection in your sinuses, eyes and ears.
Mold Testing and Removal
If you suspect that you have mold problems, there are home tests available to help you identify the type of mold in your home. These should only be a first step, however, as they often aren’t enough to definitively show you the scope of your mold problem. Call in an expert to confirm the results of your test or take a scraping of the mold and have it analyzed. Be sure to wear a dust mask or other breathing protection if you aren’t sure what type of mold you’re dealing with until the problem is taken care of.
For many mold infestations, getting rid of leaks or other sources of humidity is a great way to slow or even stop mold growth. Mold can cause serious damage over time, however, so you may need professional mold removal and repair services if you can’t get the problem under control early.
Is your home in need of some serious mold removal? HomeKeepr can help you find a mold remediator to get the mold out quickly and at a price you can afford. Because we utilize references instead of reviews, you’ll be able to rest assured that the expert you choose can really get the job done.
Several of the biggest fire hazards in your home all live in your kitchen. The oven, the stovetop, your toaster… when you think of all of the heat sources your kitchen contains, it’s almost a wonder that it doesn’t burst into flames on the regular. Joking aside, the kitchen is usually a pretty safe place so long as you keep an eye on things. That doesn’t mean that you should ignore fire safety rules when in the kitchen, of course – knowing how to handle a kitchen fire can mean the difference between a scare and a tragedy.
Kitchen Fire Safety
There are a number of potential causes of kitchen fires. There are the usual fire hazards such as electrical shorts, but you also have kitchen-specific risks such as splashing oil or something falling onto a heating element. Because there are so many potential causes of a kitchen fire, your fire safety measures need to be a bit wider reaching than what you might use for other rooms in your house.
A smoke detector is important in the kitchen, as is a fire extinguisher that you can access easily. Make sure you choose the right fire extinguisher, though; opt for an ABC fire extinguisher if possible. These can be used on Class A (trash/wood/paper), Class B (oil and liquids) and Class C (electrical equipment) fires. Establish an area where you can put oven mitts, cookbooks and similar materials far enough away from the stovetop to prevent any of them from falling onto a hot surface. Inspect kitchen appliances regularly for damaged cords or other fire hazards and replace anything that could present a danger.
Oven Fires
If a fire breaks out in your oven, your first instinct is likely to open the oven and try to put the fire out. That’s one of the worst things that you can do, though; opening the oven provides much-needed air to the fire and can make it significantly worse. Just opening the oven door can cause the fire to explode outward, potentially burning you and spreading to surrounding surfaces.
Instead, turn off the oven and leave the door closed. This will limit the availability of oxygen, causing the fire to die down and eventually go out on its own. Keep an eye on the fire, though, since if it doesn’t start dying out or seems to be getting stronger, you’ll likely need to call the fire department to deal with it.
Fires on the Stovetop
Stovetop fires come in several forms. If something falls onto a hot burner, that can cause a fire. If oil or other flammable liquids get too hot or splash out of a pan, that can also cause a fire. Even letting a pan boil dry can cause a fire. Fortunately, the majority of stovetop fires are preventable by keeping an eye on the stove whenever there’s at least one hot burner.
If a fire breaks out on the stovetop, there are a few things that you can do. If it’s a very small fire such as a grease fire in a pan, simply putting a metal lid on the pan may be enough to put the fire out. Slightly larger fires can be doused using baking soda, but do NOT use flour… though you may have heard that flour is okay to use, flour is finely ground dried plant material and is actually very flammable. Your fire extinguisher is also an option, as is calling the fire department before things get too far out of control.
Keeping Your Kitchen Safe
One key part of fire safety is making sure that your smoke detectors, fire extinguishers and other fire safety equipment stays in good working order in case you need them. HomeKeepr can help you find the pros you need for preventative maintenance, fire extinguisher inspections and more essential fire prevention services.
If you own a rental property, you know how important it is to have the right tenant. Good renters will take care of the property as though it were their own, leaving it as close to how they moved in as possible. Bad renters, on the other hand, make it obvious that they don’t care, since it’s not actually their house; it can take a significant amount of time and money to get your property back to rentable condition after they move out. Wouldn’t it be great if you could only rent to the first group and avoid the second group entirely?
While you may still occasionally get a bad tenant, with a bit of smart screening you can greatly increase your chances of finding good renters every time. This goes beyond the standard screening techniques like a credit check; it’s all about the questions you ask before making your decision. Here are a few of the best questions to ask potential renters to see if they’re the ones you really want to rent to.
Why Are You Moving?
This is a great question to start with because it gives you an idea of what motivates potential renters. Ideally, you’ll find someone who’s moving for a reason such as work relocation, trying to find a bigger house for their family or trying to find a better neighborhood or school system for their children. Watch out for people who complain about their current landlord or who seem to be trying to escape a negative situation.
Would Your Current Landlord Provide a Reference?
Talking to a current landlord gives you two important pieces of information: It lets you find out what sort of a tenant the potential renter is, and also tells you that they have been upfront with their landlord about the fact that they’re moving. Someone who wants to keep you from talking to their landlord may have something to hide.
Have You Ever Broken a Lease?
There are legitimate reasons to break a lease. Reasons such as work relocation and having to move because of unexpected family circumstances shouldn’t weigh against a potential tenant, and asking this up front gives them a chance to open up about any broken leases in their past. If they try to cover it up or cite reasons such as landlord conflicts or problems paying rent, though, then this could be a big red flag.
How Long Have You Been with Your Employer? How About the One Before That?
This is perhaps even more important than how long they’ve lived in their current home. A long period of employment shows job stability and being a new hire after working for a long period can show ambition and a desire to get ahead. On the flip side, people who have trouble maintaining a job for longer periods could have trouble paying the rent.
Who Will Live on the Property? Will There Be Any Pets?
When asking these questions, be sure not to lead the answer by saying things like “This property is intended for two people” beforehand. Give potential tenants a chance to answer to help ensure that they do so honestly. If the answer violates a no-pets policy or sounds excessive for the property, you can reveal this afterward to let them know that they’re not right for your property.
Will There Be Any Smokers on the Property?
An increasing number of rental units are going no smoking, in part because of the difficulty associated with getting smoke stains and smells out of curtains and carpet. While it’s up to you to decide on your smoking policy, if you don’t want smoking in the house then make sure that potential renters know that up front.
Will You Consent to a Background Check/Credit Check?
Not all landlords use credit and background checks, but it’s always a good idea to ask if potential renters will consent to one. If they have credit history issues or legal problems in their past, it gives them a chance to be upfront about it and provide you with the information you need to make a decision. If they don’t justify why they don’t want the info checked, it may also hint at problems they’re trying to hide.
Do You Have Any Questions for Me?
Giving potential renters a chance to ask you questions helps you make sure that they know everything they want to know about your property and your policies. If they don’t ask questions, consider how attentive they were during previous questions when you make your decision. If they were just trying to get through the interview process without paying attention, they may not be the renter for you.
Get Rental Screening Guidance from a Pro
If you’re still worried about who you might rent to, consult with one of the professional property managers on HomeKeepr. Our referral system can help you find a trustworthy property manager, vouched for by people you know. They can help you find the right tenant and bring their years of experience to your property as well.
Moving to Colorado Springs?
If you are moving to Colorado Springs, you may want to do your research. Check out some of the reasons you may want to think about before you relocate.
If you or someone you know would like more information on moving to Colorado Springs, Christy and the Dunfee Group would love to help you.
Call us today at 719.425.9144
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A burst water pipe is no laughing matter. Depending on the size of the damaged area, a large pipe can lose a gallon or more per second. Even smaller pipes can cause a significant amount of water loss, not only driving up the water bill but also potentially causing a lot of water damage. When you’re dealing with a burst pipe, it’s important to take action quickly to stop excessive water loss and get the pipe fixed as soon as possible.
Depending on the pipe that bursts, though, do you even know who to call? If a pipe is in your home then you obviously need to call a plumber, but do you know who’s responsible for maintenance if the rupture happens outside of your home? As it turns out, the responsible party depends on where the pipe is located.
Is a Pipe Really Broken?
Before you pick up the phone, make sure that you know that a burst pipe is the problem. If you’re simply experiencing a drop in water pressure, it’s possible that you don’t have a burst pipe at all. Look for some of the signs of burst pipes, including:
If the pipe is located in your house, then you may also notice damp spots on the walls, blistering paint, an increase in mildew or even water stains appearing on your walls or ceiling.
Burst Water Mains
If a water main bursts, the responsibility for the pipe falls on the city or water district you get your water from. That means you need to contact them and let them know that there’s a damaged pipe near your home. Provide as much information as possible about the break, including the location and how much water seems to be coming from the pipe. If there were extenuating circumstances surrounding the break such as an accident or a worker driving a post down into the pipe, be sure to provide this information as well.
Pipes in Your Yard
In most cases, if the pipe that breaks is in your yard then it’s considered your responsibility. Even if it’s the pipe that connects your home to the water main, there will likely be very little that your water district will be able to do about it. This means that you’re going to need to call a plumber and let them know what’s going on. Provide as much detail about the problem as you can so they’ll have a better idea of what equipment is needed to fix the burst pipe.
Household Plumbing
If you have a broken pipe inside your home, then you’ll definitely need a plumber. Some household pipe problems are easy to spot, such as a pipe that’s spraying water in your basement. Others are hidden in walls or only have small cracks and may require some work to get to. As with pipes in your yard, provide the plumber with as much information as you can so they can take care of the problem quickly.
What to Do When a Pipe Breaks
In addition to calling the appropriate party to get the leak fixed, there are other things you should do when you discover a broken pipe. If the pipe is in your yard or home, locate the water shutoff valve in your yard (usually hidden under a black or metal cover) and turn it to shut off the water flow. Clear out any affected areas, removing or relocating items that could be damaged by the water and placing them in areas where they can dry. At your first convenience, head to the store and pick up a few gallons of bottled water to serve as drinking water until the problem is fixed. Make sure that you have enough to last a few days if you had a ruptured water main, as there will likely be a boil water order to follow.
Finding the Right Plumber
If you have a desperate need for a plumber, HomeKeepr can help you find one who will get the job done right, without breaking the bank. Because we focus on referrals instead of easy-to-manipulate ratings systems, you’ll know that your plumber comes highly recommended from people just like you.