7 Answers to Your Mortgage and Home Maintenance Questions
Can I afford this house? Is now the right time to refinance? Should I do a home repair myself? Buying and owning a home comes with endless financial questions, and we’re addressing seven questions from our readers on homeownership topics that many of us face.
7 questions mortgage and home maintenance
Should I refinance my house or take out stocks?
My question is about refinancing my house so that I can take money out for home renovations so that my parents can live in the first-floor apartment in my two-family house (I live in the second-floor apartment).
I am at least six years from retirement. The only debt I have is 6.5 years left on my mortgage. I have excellent credit.
My mom is paying for the renovations, but she will have to cash out some of her stocks and pay high taxes on that. I thought maybe instead I could refi my house and take out the money for renovations. Then later when I inherit the stock money I would pay off the mortgage.
I know it’s risky because the stocks can go down. I thought I’d ask your opinion about this little plan that I came up with.
The concern I have with your plan is that it relies on you inheriting the stocks. What happens if your mother has a financial need for those stocks after you choose to get a home equity loan? What if it turns out that you don’t actually inherit those stocks?
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If you take the assumption that it is a 100% guarantee that you will have those stocks in a certain number of years, this is probably a reasonable move. However, I don’t see that as anything close to a guarantee, just a likelihood.
When you add the risk that you might not inherit the stocks onto the risk of the stock market in general, I think it’s a better idea to take the cash in hand now for the remodeling rather than taking out a loan and waiting on the inheritance.
How do I buy a house before home sale closes?
I got a new job in another city that starts January 1. I already resigned from my current job, so I have a few months to get the current house ready to sell and move. I would like to buy a home in the city I’m moving to by using the money from the sale of my current house, but that requires me to move into an apartment for a while. Is there any way to do this without moving twice?
You should talk to a lender about a bridge loan, which is exactly what you’re looking for in this situation. A bridge loan provides the money you need so that you can buy now, with the assumption that you’ll pay off a lot of that loan when your old house sells.
This is a pretty common thing to do and, if your credit is good at all, most lenders will be happy to work with you as it’s a pretty low-risk loan from their perspective. It’s essentially just a very short-term mortgage, as you’ll be paying off most or all of it within a few months of buying.
So, just head down to your local bank or credit union and talk to them about it, or contact a financial institution in your destination city.
Should I fix storm damage myself?
Hi fellow Iowan! I had some minor damage to the roof fascia barge board from the storm. It looks like a simple fix but I know nothing about roofs. All the home builders and repair places in my area are booked solid. I’m considering repairing it myself and watched a ton of YouTube videos. I have a tall enough ladder that a friend loaned me. My worry is what happens if I mess it up.
I can’t really tell from your description what the repair actually entails. I’m assuming the damage is like the damage to many homes in my area, where the barge board was pulled off in the storm.
Honestly, unless you’re an experienced amateur carpenter or have a friend who can help you, I would have a professional look at this. There are a number of issues that can cause long-term damage to your roof if this is done incorrectly. Another issue — given the amount of materials you’ll want to have up there, doing it on a ladder can be a real trick. It is definitely more complex than simply nailing a new board in place, which, if that were the extent of the repair, I would strongly encourage you to try yourself.
A missing barge board for a short period of time won’t be a major issue unless you have pre-existing roof problems, but you do want to get it replaced before it develops into a major issue.
How to convert a basement into an apartment
I purchased a home with an unfinished basement in 2009. It has an exterior entrance. I always had vague plans of doing something with it but it kind of just turned into storage. My wife and I are thinking of turning the basement into an apartment for my parents to live in. I’m not a DIYer at all, so I would hire someone to do this. My question is whether I should ask my parents to help pay for any of this conversion.
It really depends on the financial state of your parents. I don’t think it’s the wrong move to bring up the idea, particularly if your parents can afford it. In situations like this, particularly if your parents are in solid financial shape, they will want to be invested in this kind of project.
If I were in your shoes, my approach would be to suggest that this is something you’re interested in doing, but that you want them to be involved in the project if it’s something they want to be doing. If they are interested, let them be involved with the project, including designing the apartment. What features do they really want down there? Make sure that those are included, and do it as collaboratively as possible.
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Again, this hinges greatly on their financial shape. If they’re financially strapped, asking them to pay for a significant portion of this remodel is probably not an avenue you want to go down. If you still want to do it, you will need to shoulder the expense yourself.
How to find the right small house
I like the advice of buying a home on the smaller side. Extra space just turns into really expensive storage space, after all. But how are you sure you’re not buying one that’s so small it’s uncomfortable?
I’d start by thinking about where you currently live. What exactly is it that you would like to do that you can’t do in your current home, and is that thing something you would do consistently? Think about functionality, not space. At the same time, consider how much of your current living space you’re actually just using for storage of stuff.
For example, we wanted a home where each child would eventually have their own bedroom, but those rooms really didn’t need to be very big. We could have easily talked ourselves into a home with twice the square footage of our current home, with all kinds of reasons for it, but having lived here with three children for more than 10 years, the only thing I wish was that the kitchen was slightly larger, and a home remodel with smarter cabinet positioning would do that trick.
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You do need some space for storing stuff in your home, but you actually don’t need nearly as much as most people think. What typically happens is that people keep buying possessions to fill available space, and most of those possessions are things that they very rarely use. So, there’s no real reason to have that extra space.
Should I use a credit union for a mortgage?
Are there any advantages to using a credit union for home loan instead of a bank?
The biggest advantage of using a credit union is that they’re far better in terms of customer service and customer relations. At a typical credit union, it’s usually easy to find someone to talk to about your specific situation and you’ll usually get excellent customer service throughout. Credit unions are nonprofits, and this is the type of behavior they’re geared toward.
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Banks, on the other hand, aim for profit. They get customers by competing on rates, but generally fall short in customer service compared to credit unions. Once you’ve signed on the dotted line, you might find that bigger banks are generally pretty weak in the customer service department. It can be hard to get help when you need it, and most underwriting decisions are done by algorithms, not people.
Your choice between a bank and a credit union depends on what you’re looking for the most. If you’re seeking the lowest possible rate, you’ll probably wind up with a bank. If you’re seeing good customer service while still getting a good rate, you’ll probably wind up with a credit union.
What should I do with the money from selling my home?
In 2015, I bought a home shortly after getting married, but we divorced in 2018 and I kept the house. I dislike living here, especially with the housework and maintenance responsibility. I have decided to move back into a larger apartment where I don’t have to deal with it. What is the best thing to do with the proceeds? I am currently debt free other than the mortgage which will be paid off with the sale.
I’d start with asking myself what other goals I have in life. What do you want to do in the future? Do you want to retire early? Do you want to travel? Do you simply want security against whatever might happen to you?
Identifying what goals you have in life will help you figure out what to do with your money. For example, if you want to retire early, you’ll likely be putting your money into retirement accounts and long-term investments. If you want personal security, you’ll likely spilt things up among a number of investments, with some money easily available in emergencies.
I would simply assess my goals in life going forward then look for specific investment strategies for achieving those goals.
Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.
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