Owning a Home Archives

Cheap Vinyl Window ReplacementAs Whether you want to admit it or not, windows on a house are a commodity. As time goes on, you will “use up” your windows. The windows in my house are construction grade windows that were original to the house 24 years ago. The seals on the windows are still good, but they look terrible and are not very sound proof or energy efficient. So I started researching vinyl window replacement, and honestly it’s a pretty strange world.

There are a few ways to approach window replacement, but ultimately if you want to do it the cheapest, you are probably going to have to buy the windows yourself and install them yourself. The alternative to this of course is to call a professional company, and most likely they will send a sales representative (usually who works off commission) to come to talk with you on pricing. The situation feels entirely like a used car sales situation, but with more gimmicks. “Buy Two Get One Free,” “Free TVs,” and “50% off if they can showcase your house.” But the gimmicks don’t just stop there. Kevlar brackets, wool-fiber transition seals, bulletproof glass material vent latches, foam filled windows, and low e filter. What they don’t tell you is that the glass they use is most likely identical to that of windows found in the stock windows at Home Depots or Lowes. Truth be told, there are only a handful of window glass makers, and most of them distribute to local window sellers to be cut.

Is there a difference between their frames and Home Depots? Almost certainly. The biggest difference overall probably is the  finishing features, the trim of the window. As for the gimmicks like Kevlar brackets, I’m not sold it really is that big of a difference. But rest assured that most window salesman will tell you that their window is better and any competitor will improperly install their inferior windows if you choose them. Also all sales representatives will say “they custom make your windows.” But rest assured that is exactly what Home Depot will do for you as well.

I ordered a custom made window from Home Depot today. An American Standard 39.25 by 57.625inch  single hung, argon filled, low e, energy star rated, replacement vinyl window with the grid in the glass. The cost: $169.57 before discounts. Cost after discounts: $153.49. Now I am certain that if I talked to a windows representative, they would tell me this window is trash and that it will fail, but you know what? I intend on finding out first hand. I’ve put my money where my mouth is, and I’m ready to see first hand if these windows are similar quality.

The sad part of the world of windows is the lack of reliable information. If you get online and do searches for brands, you will get completely bias reviews for literally any product line. Even installers of certain types of windows will bash the other high priced name brand windows. Ultimately I want to try the self-install method and see how it goes. The main reason is the window salesman are just too shady for me to deal with. They don’t break down pricing very well, they offer phony promotions, and you never feel that you truly have an understanding why their window is better than another window. They also will never sell their windows directly to you (because they don’t want to show the price of the item versus installation costs).

Time to see if I threw away $153.49. I’ll keep you updated on this my vinyl window replacement. 

The Housing Market Post 2012 is Looking Terrible

Today there was a revision to the housing market predictions for 2012. Over one hundred housing analysts and expert were surveyed by Zillow. The conclusion made was that they believe housing prices will drop 0.7% in 2012 and will hopefully return to “trend levels” by 2016. “Trend levels” apparently now mean roughly 3.5% a year of appreciation. These statements have officially made me view housing as one of the worst possible investments you can possibly make in the foreseeable future.

All of these realtors and experts don’t talk about one of the most important factors, inflation. If you have a 0.7% decline in the housing market in 2012, you also have to add in yearly inflation in as a loss as well. Think about it, if you own you home outright, you need your house to increase at the rate of inflation to break even (although wise it’s a deprecation asset). So that 0.7% decline is really going to be  3.2% loss if inflation is 2.5% for 2012 (2.5% is a complete guess on inflation rates). Own a $250,000 house? You are looking at an inflated adjusted net loss of roughly $8,000 in 2012.

Let’s also note that these experts are hoping that it recovers to these “trend levels” by 2016! “Trend levels” would be roughly 1% if you also adjusted them to 2.5% inflation. So basically in 2012, 2013, 2014, 2015 you are probably going to see an inflation adjusted net loss on your property and in 2016 they are hoping you score an inflation adjusted  1% gain.

If these analysts were right, which they rarely are, a linear transition to these “trend levels” would look something like this:

2012
: –0.70% 2013: +0.35% 2014: +1.40% 2015: +2.45% 2016+: +3.50%

Housing Market 2012


Adjusted for 2.5% inflation the actual net would be:
2012: –3.10% 2013: –2.15% 2014: –1.10% 2015: –0.05% 2016+: +1.00%

Housing Market 2012 Recovery


Sadly would take you 2016, 2017, 2018, 2019, 2020, 2021, and half of 2022 to recover the 6.5% inflation adjusted loss in years of 2012 through 2015. These analysts are usually bias in favor of the housing market, but what they are predicting is that you will break even sometime in 2022, assuming a 2.5% inflation rate. You want to take it a step further? Assuming you put 20% down on your home and you could have earned just 5% return on that money, it would add 1% of your home value off opportunity cost. Adding that opportunity cost into the inflation adjusted numbers above you get:

2012: –4.10% 2013: –3.15% 2014: –2.10% 2015: –1.05% 2016+: +0.00%

Housing Market 2012 is Going Down

 


Total Inflation and Opportunity Cost:  10.5% of your home value (ignoring all other costs of buying, selling, and owning a home).

 

I am a homeowner and when I hear and read about the housing market, it scares me. The reason it scares me the most is the only way home ownership makes any sense financially is if the “trend levels” go back to pre-bubble and I absolutely never want the “trend levels” to be that high ever again for the rest of my life. Even at today’s prices I view home ownership as terrible investment and if prices go higher, I don’t think I would ever want to own a home again. Although according to these housing experts, that doesn’t seem to be a concern since prices are probably going to decline when you factor in inflation.

Disclaimer: Home ownership is much large than just investing, I cannot place a value on any personal factors when it comes to a housing decisions (family, personal pride, etc.). This article is strictly opinion and has made assumptions that are not backed up by anything (2.5% inflation and 5% return on money). This article should not be the base of any decision making. Always consult a professional.

Planning to buy a home when you’re in debt – Is this a feasible idea?

Are you planning to buy a house of your own? If answered yes, you have to go through a nerve-wracking experience as the entire process is not a simple one. Buying a house is a huge investment as the money involved is also a large amount. You need to be watchful before taking the ultimate plunge as there are many small details that can lead you to a mess. Did you incur a huge amount of unsecured debt on all your credit cards and your student loans? If answered yes, you have to think twice about taking the plunge as a homeowner. Taking out a home loan with unsecured debt is a huge risk. Here are some points that you should take into account while taking out a home loan despite owning a huge amount of unsecured debt.

Can you afford a home loan after making the high interest debt payments?

Calculating your mortgage loan affordability is the most important factor when it comes to being a homeowner. Unless you calculate your affordability, you’ll never know what amount of loan you can afford according to your budget. Apart from this, if you already owe debt on your credit cards, can you afford to repay the secured loan on time? As your home is pledged as collateral, you have to be sure that you don’t miss the payments lest you lose your home to a forced foreclosure. Therefore, considering your mortgage loan affordability before taking the loan out should be the first job of a prospective homeowner.

Can you afford to pay down the required amount after paying your credit card debt?

You must be aware of the fact that you have to pay down at least 20% of the loan amount as down payment so as to lower the interest rates on the loan. But if you have enough credit card debt, will you be able to manage paying down the required amount as the down payment? You should think twice before taking this decision as you may be subject to PMI or Private Mortgage Insurance that can unnecessarily increase your monthly payments. PMI only benefits the lender and not the borrower. Therefore, consider your choices about repaying your credit card debt or taking out a home mortgage loan so that you don’t fall in a mess in the long run.

Can you maintain your home loan payments while repaying your credit card debt?

When you’ve taken out a home mortgage loan, you have to maintain the payments throughout the term of the loan so that you don’t lose your home to a forced foreclosure. However, if you have too much credit card debt and if you don’t change the financial habits that have lead to debt, you may dig deeper into the financial mess. Therefore ask yourself whether you can manage to change your financial habits so that you can save enough money for making the monthly payments on your home mortgage loan.

Whenever you ask any financial expert about the possibilities of taking out a mortgage loan despite having credit card debt, they will advise you against it. You just have to make sure that you repay the debt so that you can lower the DTI ratio and improve your credit score before grabbing the loan. This way you can secure a mortgage loan at an affordable rate and save enough money while repaying the loan throughout the repayment term of the loan.

About the author : Ryan is a contributory writer associated with the http://www.debtcc.com and has written several articles for various financial websites. He holds his expertise in the Debt industry and has made significant contribution through his various articles.

Small House Living and Why You Should Do it

The Tiny House BlogSmall House Living is not a new concept, but with the recent global recession small housing is getting a lot more attention. There are many reasons to live in a small house, but why live in a small house? Here are some reasons to consider living in a small house.

1. It’s Cheap

It goes without saying that most likely, your small house is going to be cheaper. Who doesn’t like having a small payment each month.

2. Can open you up to opportunity

Owning a smaller house produces a lower commitment than a larger home, and with this lower commitment, there is more flexibility when it comes to relocating for potential opportunities. Imagine you are offered a career of a lifetime, but you are forced to relocate. Now imagine how much easier it would be to relocate if you had a $50k home versus a $200k home.  Let’s also not forget that you have to pay an estimated 6 to 7% to get out of most homes, which means it will cost you about 400% more in fees to sell your 200k home. If you aren’t able to sell right away, you also have much lower carrying costs in the smaller home.

3. Helps you Escape “Consumer Treadmill”

A lot of people can most likely relate to the idea of a “consumer treadmill.” By actively living below your means, you will much less likely to allow your lifestyle to creep up to a point where it consumes the majority of your income. Living in a small house will most likely give you better perspective of what is important when it comes to spending your money.

4. It Forces you to Downsize Possessions

If you have a 700 square foot apartment full of crap, there is a good chance you will have a 2500 square foot home full of crap. The idea of furnishing a large space can be daunting and expensive. Also with more storage room, usually comes more stored items that you don’t really need.

5. Less Hassle and More Time

Less time messing with a giant yard and home maintenance and more time for loved ones and activities that you enjoy.

6. Living more “Green”

Small house living also promotes smaller energy bills and less maintenance that results in waste.


For more information on small house living, check out “The Tiny House Blog” (one of my favorite blogs.)

 

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