The day I planned to close on an acre lot where I hoped to build a brand-new house, my real estate agent turned up a deed restriction that limited the number of garages I could construct. I had intended to build three, but according to the deed, I could have only two.

This seems like the ultimate First World problem, I know. But it was the first deed restriction I, as a new developer, had encountered, and I didn’t understand why this rule had come out of nowhere to block my progress on land I was paying good money for.

As it turned out, the restriction was more than 50 years old and created by a neighborhood association that had long ago ceased to exist—and therefore couldn’t enforce it. I ended up closing the deal, but I had to consider all the dreamy-eyed buyers who longed to build their own home and were thwarted by rules—archaic or not.

And here’s the rub: Deed restrictions and deed-restricted communities affect more than would-be home builders. Homeowners can be restricted by anything from the number of bedrooms in a house to the types of vehicles in the driveway. It’s best to know about deed restrictions before you buy, so let’s take a look at what they’re all about.

What Is a Deed-Restricted Community? What to Know Before You Buy or Build a Home

First, find out if your property has any deed restrictions

First, let’s back up for a second. Deed restrictions, often called “restrictive covenants” (especially in the context of homeowners associations), are contained in a deed and limit how a piece of real estate can be used, and what can be built on it. Most often, developers include restrictions not covered by community zoning regulations. The property doesn’t even have to be part of an HOA to be limited by some rule a developer included in the deed decades ago—as I discovered.

Deed restrictions turn up during title searches and a careful reading of the current deed. They “run with the land,” which means that anyone who buys the property in future is supposed to abide by the restrictions, whether they were attached to the property 20 years ago when the neighborhood was developed, or 100 years ago when the land was a farm.

“When building a new home, or even doing an addition to your current home, it’s vital that you check your deed for any building restrictions,” says Bill Golden, an Atlanta-area Realtor®.

Deed restrictions aren’t HOA rules

Don’t confuse deed restrictions with regular HOA rules. A HOA can decide one day that no home in the association can string up Christmas lights. But if all the homeowners in the community object, the HOA board can easily change its mind.

Deed restrictions, on the other hand, are difficult to change. Usually it takes a judicial ruling, not just community disagreement, to invalidate them. In the worst of all worlds, a property’s use can be limited by both deed and HOA restrictions.

Types of deed restrictions run the gamut

And deed restrictions aren’t just about construction. Zachary D. Schorr, a Los Angeles real estate attorney, says he’s seen restrictions that require exterior paint colors to match colors found in nature, or even restrict rental properties.

“With the rise of VRBO and Airbnb, we are even seeing restrictions on nightly rentals and the minimum rental period for a house,” Schorr says.

Today, HOAs and developers create regulations that, in theory, provide the greatest good for the greatest number of people in the community. Some common deed restrictions can cover the following:

  • Number of bedrooms (an attempt to avoid overwhelming sewer and septic tank capacity)
  • Building height, width, and siting (to prevent obstructing views, especially in scenic and vacation areas)
  • Number of vehicles allowed in the driveway or in front of the house, intended to keep the neighborhood from looking cluttered and junky
  • Type of vehicles allowed in the driveway, like motor homes, boats, and motorcycles
  • Type of fencing allowed (e.g., chain-link fences or very high privacy fences might be restricted)
  • Type and number of trees you can remove from the property (some regulations protect a percentage of trees on a lot, which may have been put in place years ago by neighboring farmers and still are attached to the land)
  • Style, color, and construction materials used in a renovation (an attempt to limit architectural variations in a neighborhood)
  • Pools, sheds, detached workshops, and extra garages can be forbidden or restricted
  • Use of your home as a business (to prevent a lot of strangers from coming and going)
  • Types of animals allowed on the property (many deeds restrict livestock, like chickens and goats; some also restrict breeds and number of pets)

Who enforces deed restrictions?

Prior to World War II, homeowners often wrote deed covenants that restricted the race and religion of future owners. However, in 1948, the U.S. Supreme Court ruled that covenants that impose racial or religious restrictions cannot be enforced.

Today, some title companies that research restrictions don’t even include these restrictive covenants in their reports, fearing that potential buyers might misconstrue the fact that they exist for their enforceability, leaving the title company open to discrimination charges.

Many covenants, in fact, exist in limbo, because no ruling body still exists to enforce them—just like the garage covenant on the deed to my property. Your real estate agent and title company can help you determine if the ruling body still exists or is actively enforcing the rules, an important piece of information to know before you buy.

How to change a deed restriction

Modifying a restrictive covenant isn’t easy, but it’s not impossible, either.

First, go to your county courthouse and obtain a copy of the covenant, which often contains provisions for changing it or, if you’re lucky, an expiration date. Sometimes, you can seek special permission from the governing body, like your HOA. Sometimes you can violate the covenant if you obtain permission from your neighbors.

In some states, laws allow property owners to modify covenants if they follow certain steps.

If all else fails, you may be able to persuade a judge to invalidate a covenant if it’s vague, impractical, illegal, or has been widely disregarded by neighbors.

What if you can’t change the restriction?

This is why we advise that you investigate all restrictions before buying. You may not want the hassle of begging enforcing groups or judges to allow you to build a work shed or park your boat in the driveway.

It’s often easier to adjust your expectations, or simply look at other real estate, when deed restrictions prevent you from building your dream home.

 

For this and related articles, please visit Realtor.com

You may recall the Tax Cuts and Jobs Act—the most substantial overhaul to the U.S. tax code in more than 30 years—went into effect on Jan. 1, 2018. The result was likely a big change to your taxes, especially the tax perks of homeownership. This revised tax code is still in effect today.

You may remember that during the height of the COVID-19 pandemic, the Internal Revenue Service delayed filing season by about two weeks. But just like last year, there are no extensions and the date for filing is April 18, 2023. (According to the IRS, “The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia for everyone except taxpayers who live in Maine or Massachusetts. Taxpayers in Maine or Massachusetts have until April 19, 2023, to file their returns due to the Patriots’ Day holiday in those states.”)

You might be wondering what else you need to beware of before filing your 2022 taxes, like whether your work-from-home setup might qualify for a tax deduction.

Whatever questions you have, look no further than this complete guide to all the tax benefits of owning a home, where we run down all the tax breaks homeowners should be aware of when they file their 2022 taxes in 2023. Read on to ensure you aren’t missing anything that could save you money!

Homeowners, Here's How to Get More Money Back on Your Taxes - CNET

Tax break 1: Mortgage interest

Homeowners with a mortgage that went into effect before Dec. 15, 2017, can deduct interest on loans up to $1 million.

“However, for acquisition debt incurred after Dec. 15, 2017, homeowners can only deduct the interest on the first $750,000,” says Lee Reams Sr., chief content officer of TaxBuzz.

Why it’s important: The ability to deduct the interest on a mortgage continues to be a significant benefit of owning a home. And the more recent your mortgage, the greater your tax savings.

“The way mortgage payments are amortized, the first payments are almost all interest,” says Wendy Connick, owner of Connick Financial Solutions. (See how your loan amortizes and how much you’re paying in interest with this online mortgage calculator.)

Note that the mortgage interest deduction is an itemized deduction. This means that for it to work in your favor, all of your itemized deductions (there are more below) need to be greater than the new standard deduction, which the Tax Cuts and Jobs Act nearly doubled.

And note that those standard deduction amounts increased for the 2022 tax year. For individuals, the deduction is now $12,950, and it’s $25,900 for married couples filing jointly. The deduction also went up to $19,400 for the head of household. And if you’re 65 or older, you can add on an extra $1,400 per person if married and filing jointly or an extra $1,750 if you’re a head of household or a single filer.

As a result of these increased standard deductions, itemizing your deductions may simply not be worth it this filing season.

So when would itemizing work in your favor? As one example, if you’re a married couple under 65 who paid $20,000 in mortgage interest and $6,000 in state and local taxes, you would exceed the standard deduction and be able to reduce your taxable income by itemizing.

Tax break 2: Property taxes

This deduction is capped at $10,000 for those married filing jointly no matter how high the taxes are. (Here’s more info on how to calculate property taxes.)

Why it’s important: Taxpayers can take one $10,000 deduction, says Brian Ashcraft, director of compliance at Liberty Tax Service.

Just note that property taxes are on that itemized list of all of your deductions that must add up to more than your particular standard deduction to be worth your while.

And remember that if you have a mortgage, your property taxes are built into your monthly payment.

Tax break 3: Energy efficiency upgrades

According to Bishop L. Toups, a taxation attorney in Venice, FL, qualifying solar electric panels and solar water heaters are good for a credit of up to 30% of the cost of the equipment and installation.

And you can also nab an energy-efficient home improvement lifetime credit of a $500 for improvements made to your home through December 31, 2022. Energy-efficient upgrades include things like exterior windows, doors and skylights, insulation, and the cost of home energy audits.

Here’s some more good news, the IRA passed an extension and expansion of the credit, so starting January 1, 2023, the amended credit will be worth up to $1,200 per year for a qualifying property.

Tax break 4: A home office

Good news for all self-employed people whose home office is the principal place where they work: You can deduct $5 per square foot, up to 300 square feet, of office space, which amounts to a maximum deduction of $1,500.

For those who can take the deduction, understand that there are very strict rules on what constitutes a dedicated, fully deductible home office space. Here’s more on the much-misunderstood home office tax deduction.

The fine print: The bad news for everyone still working remotely? Unfortunately, if you are a W-2 employee, you’re not eligible for the home office deduction under the CARES Act, even if you spent most of 2022 in your home office.

Tax break 5: Home improvements to age in place

To get this break, these home improvements will need to exceed 7.5% of your adjusted gross income. So if you make $60,000, this deduction kicks in only on money spent over $4,500.

The cost of these improvements can result in a nice tax break for many older homeowners who plan to age in place and add renovations such as wheelchair ramps or grab bars in bathrooms. Deductible improvements might also include widening doorways, lowering cabinets or electrical fixtures, and adding stairlifts.

The fine print: You’ll need a letter from your doctor to prove these changes were medically necessary.

Tax break 6: Interest on a home equity line of credit

If you have a home equity line of credit, or HELOC, the interest you pay on that loan is deductible only if that loan is used specifically to “buy, build, or improve a property,” according to the IRS. So you’ll save cash if your home’s crying out for a kitchen overhaul or half-bath. But you can’t use your home as a piggy bank to pay for college or throw a wedding.

The fine print: You can deduct only up to the $750,000 cap, and this is for the amount you pay in interest on your HELOC and mortgage combined. (And if you took out a HELOC before the new 2018 tax plan for anything besides improvements to your home, you cannot legally deduct the interest.)

 

For this and related articles, please visit Realtor.com

There isn’t much about taxes that gets people excited, except when it comes to the topic of deductions. Tax deductions are certain expenses you incur throughout the tax year that you can subtract from your taxable income, thus lowering the amount of money you pay taxes on.

And for homeowners who have a mortgage, there are additional deductions they can include. The mortgage interest deduction is one of several homeowner tax deductions provided by the Internal Revenue Service (IRS). Read on to learn more about what it is and how to claim it on your taxes this year.

Man filling out tax papers.

What Is The Mortgage Interest Deduction?

The mortgage interest deduction is a tax incentive for homeowners. This itemized deduction allows homeowners to subtract mortgage interest from their taxable income, lowering the amount of taxes they owe. This deduction can also be taken on loans for second homes as long as it stays within IRS limits.

Mortgage Interest Tax Deduction Limit: How Much Can I Deduct?

Signed in 2017, the Tax Cuts and Jobs Act (TCJA) changed individual income tax by lowering the mortgage deduction limit and putting a limit on how much you can subtract from your taxable income.

 

Before the TCJA, the mortgage interest deduction limit was on loans up to $1 million. Now the loan limit is $750,000. That means for the 2022 tax year, married couples filing jointly, single filers and heads of households could deduct the interest on mortgages up to $750,000. Married taxpayers filing separately could deduct up to $375,000 each.

 

However, there were a few exceptions:

  • Any mortgage taken out before October 13, 1987, is considered grandfathered debt and is not limited. All of the interest you pay is fully deductible.
  • Any home purchased after October 13, 1987, and before December 16, 2017, is still eligible for the $1 million limit ($500,000 each, if married filing separately).
  • Any home that was sold before April 1, 2018, is eligible for the $1 million limit – only if there was a binding contract entered before December 15, 2017, to close before January 1, 2018, and the home was purchased before April 1, 2018.

 

What Loans Qualify For A Mortgage Interest Deduction?

There are a many types of home loans that qualify for the mortgage interest tax deduction. These include a home loan to buy, build or improve your home. Home equity loans, home equity lines of credit and second mortgage may also qualify.

 

You can also use the mortgage interest deduction after refinancing your home. Just make sure the loan meets the previously listed qualifications (buy, build or improve) and that the home in question is used to secure the loan.

How To Claim The Home Mortgage Interest Deduction On Your 2022 Tax Return

Tax forms can help walk you through your filing step by step. Knowing which forms to fill out can be confusing. To make sure you are getting and filing the right form, follow these steps for deducting your mortgage interest on your 2022 taxes.

1. Choose A Standard Deduction Or An Itemized Deduction

If you choose the standard deduction, you will not need to complete more forms and provide proof for all of your deductions. It’s more of the “no questions asked” deduction, with a flat dollar amount that’s the same for most people. For the 2022 tax year, which will be the relevant year for April 2023 tax payments, the standard deduction is:

  • $12,950 for single filing status
  • $25,900 for married, filing jointly
  • $12,950 for married, filing separately
  • $19,400 for heads of households

If you choose an itemized deduction, you can pick and choose from various deductions. These include mortgage interest, student loan interest, charitable contributions, medical expenses and more. To itemize your deductions, you’ll need to fill out additional forms to list each one and be prepared to provide records, receipts and other documents that validate them.

 

Both standard and itemized deductions reduce your taxable income.

 

Mortgage Interest Deduction Example

 

So how do you decide which one to do? It all comes down to which method saves you more money. If your standard deduction saves you more money than your itemized deduction, take the standard deduction. Or vice versa.

 

Here’s an example. You itemize the following deductions as a single individual: mortgage interest ($6,000), student loan interest ($1,000) and charitable donations ($1,200). These deductions add up to $8,200. In this case, you would want to take the standard deduction of $12,950 instead because an additional $4,750 would be deducted from your taxable income.

 

Now let’s say your mortgage interest is $11,000 and the other deductions remain the same. Your itemized deductions would total $13,200. In this case, you would want to take the itemized deduction because it reduces your taxable income by $250 more than the standard deduction would.

 

Don’t forget: If you’re paying someone to prepare your taxes for you, it may cost more to have them itemize your taxes since this requires more work. Make sure you factor in the extra cost when deciding which method saves you the most money.

 

One of the most important things to know about taking either the itemized or standard deduction is that you can’t take both. You must choose one or the other.

2. Get Your 1098 From Your Lender Or Mortgage Servicer

To fill out the information about the interest you paid for the tax year, you’ll need a Form 1098 from your mortgage lender or mortgage servicer (the company you make your payments to). This document details how much you paid in mortgage interest and points during the past year. It’s the proof you’ll need for your mortgage interest deduction.

 

Your lender or mortgage servicer will provide the form for you at the beginning of the year your taxes are due. If you don’t receive it by mid-February, or have questions not covered in our 1098 guide and need help reading your form, contact your lender.

 

Keep in mind, you will only get a 1098 Form if you paid more than $600 in mortgage interest. If you paid less than $600 in mortgage interest, you can still deduct it.

3. Choose The Correct Tax Forms

You’ll need to itemize your deductions to claim the mortgage interest deduction. Since mortgage interest is an itemized deduction, you’ll use Schedule A (Form 1040), which is an itemized tax form, in addition to the standard 1040 form.

 

This form also lists other deductions, including medical and dental expenses, taxes you paid and donations to charity. You can find the mortgage interest deduction part on line 8 of the form. You’ll put in the mortgage interest information found on your 1098 in that section. Pretty easy.

 

Now comes the tricky part. If you make money from the home – whether using it as a rental property or using it for your business – you’ll need to fill out a different form. That’s because the way interest is deducted from your taxes depends on how you used the loan money, not on the loan itself.

 

You may need to use the following forms depending on your situation:

  • If you are deducting the interest you pay on rental properties, you must use Schedule E (Form 1040) to report it. This form is used for supplemental income from rental real estate.
  • If you use part of your house as a home office or if you use money from your mortgage for business purposes, you may need to fill out a Schedule C (Form 1040 or 1040-SR) to report it. This form is used for profit or loss from a business you owned or operated yourself.

You’ll list mortgage interest as an expense on either of these forms. Whatever mortgage interest you’re deducting and whatever form you’re using, it’s important to know what qualifies as interest and what isn’t deductible. If you’re itemizing your deductions, read on.

What Qualifies As Deductible Mortgage Interest?

There are a few payments you make that may count as mortgage interest. Here are several you may consider deducting.

Interest On The Mortgage For Your Main Home

This property can be a house, co-op, apartment, condo, mobile home, houseboat or similar property. However, the property will not qualify if it doesn’t have basic living accommodations, including sleeping, cooking and bathroom facilities. The property must also be listed as collateral for the loan you’re deducting interest payments from. You can also use this deduction if you got a mortgage to buy out an ex’s half of the property in a divorce.

 

You can still deduct mortgage interest if you receive a non-taxable housing allowance from the military or through a ministry – or if you have received assistance under a State Housing Finance Agency Hardest Hit Fund, an Emergency Homeowners’ Loan Program or other assistance programs. However, you can only deduct the interest you pay. You can’t use any interest that another entity pays for you.

Interest On The Mortgage For A Second Home

You can use this tax deduction on a mortgage for a home that is not your primary residence as long as the second home is listed as collateral for that mortgage. If you rent out your second home, there is another caveat. You must live in the home for more than 14 days or more than 10% of the days you rent it out – whichever is longer. If you have more than one second home, you can only deduct the interest for one.

Mortgage Points You Have Paid

When you take out a mortgage, you may have the option to buy mortgage points, which is a form of prepaid interest. Each point, which costs 1% of your mortgage amount, can get you about 0.25% off your mortgage rate. Mortgage points are paid at closing and must be paid directly to the lender to qualify you for the deduction.

 

In certain instances, points can be deducted in the year they are paid. Otherwise, you have to deduct them ratably over the life of the loan. If you have questions, you should consult a tax professional.

Late Payment Charges On Your Mortgage

As long as the charge wasn’t for a specific service, you can deduct late payment charges as home mortgage interest. However, just because you can deduct this, you should still never make late payments on your mortgage; doing so can result in damage to your credit score, along with other penalties.

Prepayment Penalties

Some lenders will charge you if you pay off your mortgage early. If you have to pay a prepayment penalty, you can deduct that as mortgage interest. However, the penalty must be from paying the loan off early and can’t be from a service or additional cost incurred from the loan. Rocket Mortgage® doesn’t charge prepayment penalties.

Interest On A Home Equity Loan

home equity loan is money borrowed from the equity you have in the home. You can receive it in a lump sum or as a line of credit. For the interest you pay on a home equity loan to qualify, the money from the loan has to be used to buy, build or “substantially improve” your home. If the money is used for other purposes, such as buying a car or paying down credit card debt, the interest isn’t deductible.

Interest Paid Before Selling Your Home

If you sell your home, you can still deduct any interest you paid before the home was sold. So, if you sold the home in June, you can deduct the interest you paid from January through May or June, depending on when you made your last mortgage payment on the home.

What’s Not Deductible?

Mortgage interest isn’t the only expense you’ll incur when you purchase and own a home. Many people believe these other expenses are tax-deductible, but they aren’t. Here’s a list of some of the most common expenses that are mistaken for being tax-deductible:

  • Homeowners insuranceYour homeowners insurance premiums won’t qualify.
  • Mortgage insurance premiums: Mortgage insurance premiums, VA funding fees and USDA guarantee fees are no longer considered deductible mortgage interest.
  • Other closing costs: Title fees, legal costs, recording fees, title insurance, agent commissions, home inspection expenses and credit check fees can’t be used.
  • Moving expenses: Unless you’re an active-duty service member, your moving expenses also can’t be deducted from your taxes.
  • Deposits, down payments or earnest money: If you forfeited any of these during the home buying process, you can’t claim them.
  • Interest accrued on a reverse mortgageSince you don’t pay interest until the loan comes due, you can’t get a deduction on something you aren’t paying yet.
  • Rent: Any payments made while living in the home before the purchase was finalized can’t be used on your taxes since it’s considered rent.

Remember, the mortgage loan’s interest can only be deductible if the home you purchased with the loan is used as collateral. For example, if you own a rental property and borrow against it to purchase a home, the interest doesn’t qualify because the home isn’t being used as collateral (the rental property is instead).

Special Circumstances

No two situations are alike, so naturally, there’ll be odd circumstances regarding the mortgage interest deduction. Here are a few examples:

  • If you’re a co-op apartment owner, you can deduct your share of the interest you pay on the building’s total mortgage.
  • If you rented out part of your home, you could treat the rented portion as part of your living space. You can do this as long as the rented portion is used as living space, it doesn’t have separate sleeping, cooking and toilet facilities, and you don’t rent to more than two people who have separate sleeping spaces.
  • If the home was a timeshare, you can treat it as a home or second home and deduct mortgage interest as long as it meets the standard requirements.
  • If the house is under construction, it can still qualify for up to 24 months as long as it becomes your qualified home after construction is complete.
  • If you used part of mortgage proceeds to pay debt, invest in a business or for something else unrelated to buying a house.
  • If your house was destroyed, it might still qualify for the mortgage interest deduction, but you must rebuild the home and move back in or sell the land within a reasonable period of time.
  • If you were divorced or separated and you or your ex paid the mortgage on a home you both own, you or your ex can deduct half of the total payments you made. The other person must include the other half as alimony.

For even more special circumstances, check out Pub. 936 from the IRS.

Mortgage Interest Deduction FAQs

Is all mortgage interest deductible?

Not all mortgage interest can be subtracted from your taxable income. Only the interest you pay on your primary residence or second home can be deducted if the loans were used to purchase, build or improve your property, or used for a business-related investment. If the interest doesn’t meet those requirements, then it doesn’t qualify.

Why is some mortgage interest not tax deductible?

As mentioned above, the deductibility of mortgage interest is also dependent on whether your loan is secured by the value of the mortgaged property being used as collateral. If the loan is unsecured, like a personal loan, the interest typically cannot be deducted. What’s more, if you’re looking to have the interest on a home equity loan or HELOC deducted but have used it for purposes other than purchasing or improving your home, like paying off credit card debt, you will likely be unable to do so.

What other tax deductions are there for homeowners?

In addition to the mortgage interest deductions discussed above, some homeowners might be eligible for deductions on their property taxes, state income taxes or capital gains taxes.

 

If you aren’t able to qualify for any tax deductions, tax credits might be another avenue to look into. A mortgage interest credit, for example, allows qualified homeowners to claim a credit on their tax return that’s worth a percentage of the mortgage interest they paid over the course of a given tax year.

Can you deduct mortgage interest after refinancing your home?

If you refinanced your primary or secondary residence, you might still be able to use the mortgage interest deduction. Mortgage interest can be deducted as long as the money from the refinance was used to increase the value of the home.

The Bottom Line

Consult your financial advisor or tax professional to get more assistance with filing your 2022 tax return. They can provide even more information about your mortgage interest deduction and help you decide what to deduct based on the type of loan you have and your financial situation.

 

For this and related articles, please visit Rocket Mortgage

There was a point, not too long ago, when buying a house was fairly straightforward: You’d schedule some tours, make an offer, and boom, you’re in the house before you know it.

Today, though, the housing market is a very different animal—fast, ferocious, and ever-changing. In such an environment, it’s no longer a given that all homebuyers will easily find a house and seal the deal. And even more surprisingly, those lucky folks who do succeed aren’t just sitting on piles of cash. On the contrary, real estate agents and other experts we spoke to say that successful homebuyers today simply possess a particular mindset and behaviors that help them persevere in today’s market.

So what are these qualities, you might ask?

1. They’re persistent

If your first, second, or third offer doesn’t get accepted, don’t give up.

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While the market might be slowing down in some places, in other areas buyers are still facing intense competition for available properties. This means you might have to make offers on a few homes before one is accepted. As a result, persistence pays off more than ever before.

“Persistent [homebuyers] may still continue to find success,” Danielle Hale, chief economist for Realtor.com®, noted recently.

Indeed, she adds, recent data “showed that homeownership rates increased from a year ago, both overall and for nearly every age and racial and ethnic group.”

The lesson here is if your first, second, or third offer doesn’t get accepted, don’t give up.

2. They keep their emotions in check

Successful buyers don’t take rejection personally.

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Buying a home can be a highly emotional process, particularly if you’re in a hot market where you’re competing in a multiple-offer situation. And if you fall in love with a certain home, watch out! The heartbreak that ensues if your bid is rejected might bring you to tears and, worse, despair.

While it’s understandable that feelings can run amok, try to not let your mind wander toward the dark side where you start thinking “What’s wrong with me?”

Successful buyers “don’t take rejection personally,” says Ashley Chambers, a partner at ASAP Cash Offer in Miami. “If a house doesn’t work out, they know there will be others.”

Try as best you can to lean on logic during emotional moments—and do your best to never allow yourself to get too attached to a house before the deal is done.

3. They’re open-minded and willing to move

With flexible work arrangements still available, home shoppers are able to consider homes farther afield of the office.

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Traditionally, if you were shopping for a home, you would look within a very small radius, particularly one that gave you a manageable commute to work. But now, with the rise of working from home, those rules have changed—and homebuyers’ standards should adjust along with it.

“One factor driving the success of home shoppers is an incredibly strong labor market that is giving workers the ability to negotiate remote or hybrid working arrangements, even as in-person work is growing more common,” explains Hale.

“With flexible work arrangements still available, home shoppers are able to consider homes farther afield of the office, in the more affordable suburbs or even in a new, less expensive state altogether, enacting their own personal plan to combat cost-of-living increases,” adds Hale.

If you have flexible work options available to you, consider expanding your home search beyond where you’d traditionally look. You might discover other options that will give you more value for your money.

4. They’re not afraid to ask questions

Bringing your questions to your real estate agent will ensure that you enter into your transaction with confidence.

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Before making the biggest purchase of their life, smart shoppers would have questions—about the property they hope to buy, the homebuying process itself, all of it. Yet in a fast, competitive market, some might feel pressure to keep questions to a minimum just to keep the deal moving, as though you should feel lucky a home seller accepted your offer at all.

Despite any reservations you might have, Rinal Patel, co-founder of We Buy Philly Home in Philadelphia, suggests bringing your questions to your real estate agent so that you can enter into your transaction with confidence.

“When looking at homes with your agent, be sure to ask them plenty of questions. Not only will this help you get a better understanding of the home and the market, but it will also give your agent a good sense of what you’re looking for,” he advises. “The more you know, the better equipped you’ll be to make the right decision.”

5. They see beyond how a home looks

The most successful buyers today are able to look beyond cosmetic repairs.

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Everyone wants the perfect home. However, in this market, it’s likely that you will have to make some compromises. Inventory is still low and multiple buyers are competing for the same few homes, all of which means that you’ll be more likely to find success if you’re willing to compromise.

“The most successful buyers today are able to look beyond cosmetic repairs,” says Ashley York, managing broker and owner of Realtopia Real Estate in Lockport, IL. “They can visualize the potential of a property that other homebuyers may overlook in trying to find that perfect home that everyone else also wants right now.”

6. They can draw a firm line between wants and needs

While needs can remain non-negotiable, be willing to be flexible when it comes to your wants.

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While house hunters of the past might have been able to snag their dream home without too much struggle, today’s homebuyers must be realists. And one way they do this is by knowing the difference between what they want and what they need in a home.

“I encourage buyers to make a list of needs versus wants,” says Marie Bromberg, an agent with Compass in New York City. “If the list of needs outweighs the wants, then they might need to reevaluate their criteria.”

While needs can remain non-negotiable, be willing to be flexible when it comes to your wants, especially if they are things that you can add to the property later on. This is what it takes if you ever hope to buy a home today.

7. They’re flexible and available

If your real estate agent calls you at the last minute with a great new listing, you should go as soon as you can.

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“Being flexible is another essential habit to adopt as a homebuyer,” says Kerry Sherin, a consumer advocate with Ownerly in Austin, TX. Since homes are selling at an extremely fast pace, waiting until the weekend to see it might be too late.

“If your real estate agent calls you at the last minute with a great new listing, you should go as soon as you can,” advises Sherin.

And if you do make an offer, Sherin adds that it also pays to be “flexible and accommodating when it comes to contract negotiations.”

If a home seller has multiple offers, the easygoing homebuyer is bound to stand out more than one who demands tons of repairs or other stipulations to close the deal.

 

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An iced cottage topped with gumdrops and peppermint candies is likely your first thought when you hear someone mention a gingerbread house.

But a gingerbread-style home is also a beautiful architectural style with deep historic roots. You’ll know a gingerbread house when you spy one, notes Beverly Solomon of the eponymous design firm.

“They’re the epitome of cute—I like to refer to these homes as ‘architectural lace,’” she says.

For more on this over-the-top home style, including the history, where you’ll find them, and what it’s like to live in and maintain a gingerbread-style home, read on.

The history of gingerbread homes

Photo by Luxe Interior International

Gingerbread-style homes grew in popularity during the Victorian era of architecture in this country, which spanned the late 1830s up until 1900. And it was these homes that were often decorated with delicate ornamentation common to the era’s design.

“The Victorian period in the U.S. was a time of great expansion of wealth, innovation, and an emerging middle class,” explains Solomon. “And this meant that average people wanted their homes to have those extra frills, just like their clothes, which had the same touches to indicate they were moving up in the world.”

But the gingerbread style can also trace its history to Haiti. Architects from this island nation traveled to Paris and then brought home the bold color combinations and decorative scrollwork to use on local residences and municipal buildings.

Key features of a gingerbread home

Photo by Becky Harris 

A gingerbread home isn’t its own style in the way Edwardian and Craftsman styles houses are. Instead, the hallmarks of the gingerbread style—think fancy millwork, scroll designs, steeply pitched rooflines, and lacelike cutouts and patterns—are most often seen grafted onto other architectural styles, notably Victorian-era homes.

Gingerbread houses are also known for their unusual paint shades (think teal, maroon, mustard yellow, and bright white) that were used to highlight the eaves and arches that line the rooftops, porches, and windows.

“A gingerbread-style home is truly special,” says Lacey Power, an associate broker with Premier Sotheby’s International Realty in Asheville, NC. “It’s not a standard cookie-cutter house, but one that evokes a magical emotion and whimsical flare.”

Where gingerbread homes are found

Photo by Becky Harris

Along with the historic Gingerbread District in Port-au-Prince, Haiti, you’ll also find these adorable cottagelike homes in Cape May, NJ, and a famous grouping in Oak Bluffs on Martha’s Vineyard in Massachusetts.

“Just about every town in the USA likely has at least one gingerbread house, and you’ll also find them throughout the Caribbean,” adds Solomon.

Living in a gingerbread house

Photo by Durabrac Architectural Components 

While the look embodies curb appeal at its finest, maintaining a gingerbread house takes a good bit of extra effort and patience, says Adam Graham, a construction industry analyst at Fixr.

“The intricate scrollwork in particular needs more attention in terms of time, labor, and cost when it comes to repainting and repairing it,” he says.

Bottom line: “All those different colors on the house can be time-consuming,” says Solomon. And unless you own a scroll saw and have experience using it, you’ll have to hire a pro to replace fallen or rotted-out pieces.

Fortunately, some reproductions of gingerbread house details are being produced in synthetic materials, which are less expensive and more easily maintained than wood.

And don’t forget to consider the weather when keeping a gingerbread home in good shape.

“Heavy rain, strong wind, and other elements can damage features of the house, weakening or breaking them off and peeling all that paint,” says Graham.

And since the color combinations are a key visual to this home’s appeal, it pays to pony up as much as you can to obtain durable high-quality paint for your exterior. Graham advises checking in with a paint expert to learn which kind is right for this home.

Photo by Durabrac Architectural Components 

While the upkeep of this type of home isn’t for the faint of heart, the desirability of the gingerbread style endures.

“These homes are very popular as folks love to buy older houses with character and that feel like they’re owning a piece of history,” says Power.

The cute factor doesn’t hurt either, adds Solomon, since “this house style is perfect for a candle store, bakery, sandwich or toy shop.” Add artists, bed-and-breakfast owners, and other romantics to the long list of homebuyers who love the look and feel of these homes since it reflects both their businesses and their personalities.

 

For this and similar articles, please visit Realtor.com

Is your kitchen begging for some updates or a full-on makeover? Then you’ll want to be up on the latest design trends and keep the environment in mind, too.

A new survey of 3,600 homeowners by Houzz has found that an overwhelming majority of people planning a kitchen renovation this year (92%) are looking to include eco-friendly features.

Some of the most popular upgrades chosen include energy-saving appliances (61%) and LED lights (65%), as well as more efficient windows (27%) and fixtures that conserve water (34%).

Yet saving the earth is actually more of a side benefit to homeowners’ main goal: saving money.

According to Houzz staff economist Marine Sargsyan, “the most frequent reason behind choosing sustainable options is long-run cost effectiveness, with environmental-friendliness as a secondary consideration.”

Photo by Kountry Kraft 

Saving cash isn’t easy, though, given the median spend on minor kitchen renovations has shot up 40% year over year, to $14,000. Meanwhile, the money plunked down for major overhauls (which include replacing all appliances and cabinets) has remained steady at $45,000.

Here’s a detailed look at the report’s findings, which might get some ideas cooking on how to change up your own kitchen, too.

A new year, a new style

Photo by Winder Gibson Architects 

As has been the pattern over the past few years, 83% of homeowners who are delving into a kitchen rehab are changing the room’s style. Top designs include transitional (23%), followed by modern (14%) and contemporary (12%). Still love the modern farmhouse look? It remains in the mix and even went up a point from last year, to 11%.

Open floor plans are still going strong

Photo by Paragon Custom Builders 

When it comes to kitchen design, the open plan is still in vogue. Last year, interest in this look dropped a bit, but per the latest numbers, 40% of renovating homeowners are opting for cook spaces that are open to the rest of their interiors, which is up from 38% in the previous year.

What’s more, 20% of folks are even looking to open up their new kitchens to the outdoors, with a set of double doors or row of doors taking the top choice (46%), a single door after that (29%), and a pass-through window last, at 14%.

White still rules, with wood tones next

Photo by rk MILES, Inc. 

Forty percent of homeowners surveyed still want white cabinets in their kitchens, but wood-toned options are gaining traction, up 3 percentage points, to 24%, this time around. And for those homeowners who are into contrasting island cabinet doors, black as well as medium and dark wood shades all increased at least 2 percentage points in 2022.

But blue (24%) and gray (15%) still win the kitchen island color contest, even though these hues declined 2 and 3 percentage points respectively since last year.

Electronic upgrades are everywhere

Photo by Mannino Cabinetry 

Sustainability, pretty colors, and a breezy open flow don’t mean a thing if you can’t charge all of the family phones in one easy spot. Electronic improvements continue to increase in desirability, per the report, which includes docking stations (49%, up 9 percentage points), wireless speakers for rocking out during Taco Tuesday (37%, up 11 percentage points), and stereos (up 10 percentage points, to 20%).

Homeowners also crave high-tech bells and whistles in their faucets and appliances. Sink tap choices include ones that save water (24%) and those that offer touch-only or touch-less activation (23%).

As for fridges and other big-ticket items, folks are putting in appliances with Wi-Fi connections (25%) and ones that can be controlled from a phone or tablet (24%).

Put that contractor on speed dial

Photo by M Prevost Design 

Homeowners know they need the right person on the job when it comes to kitchen rehabs, which is why 84% still pick a pro rather than going the DIY route. General contractors rank the highest (50%), with kitchen designers (22%), interior decorators (15%), and architects (11%) following behind.

And to get those green touches just right, 3% of us are hiring a dedicated source to advise on all things eco-friendly in the kitchen. Mother Earth thanks you!

 

For this and related articles, please visit Realtor.com

Window treatments—a catchall term for shades, blinds, shutters, and more—are one of the most impactful ways to make your new home feel cozier and more lived in. But once you start to explore your options (there are a lot) it can be easy to get overwhelmed. That’s why we asked experts to share the most important things you should know about window treatments, from the basics to the looks that are trending right now. Here’s what they had to say:

5 Essential Things You Need to Know About Window Treatments

Window treatments are for so much more than privacy.

One of the first things you probably think of when you think of window treatments is privacy. And yes, window treatments can provide excellent privacy, says Adam Skalman, Vice President of Sales Development at The Shade Store. But they also offer a variety of other benefits. Solar shades, for example, can prevent glare and block UV rays, while blackout shades can create a more healthful sleep environment. Throughout your home, cellular shades can help moderate temperature, keeping heat in during the winter and keeping it out in the summer. And, of course, they can be decorative.

“Window coverings are truly the jewelry of a room and frame the views beyond,” says interior designer Martyn Lawrence Bullard. “I feel they finish a room and add warmth and comfort to a space.”

When considering your options, Skalman says you should take two main things into consideration: “what you would like your window treatments to accomplish in a space and how you would like them to look.”

Most window treatments can be motorized (and they work with your smart-home tech, too). 

Smart shades are the new thing in window treatments, according to Jaret Nichols, co-owner and founder of TBES, which specializes in smart-home systems. These days nearly all of his customers want at least one motorized shade, and while most of his clients are creating custom-made window treatments, he says nearly all window treatments can be motorized. All you really need is a motor.

Popular brands include Lutron, HunterDouglas, Somfy, Control4, and Savant. Regardless of which brand of motor you choose or whether you have a professionally installed system or a DIY system, Nichols says almost all products have integration with Alexa, Google Home, and Apple HomeKit.

Window treatments can cost a lot of money, but they can also save you money.

When it comes to budget, there are plenty of affordable options out there: Cellular shades, wood, faux wood, or metal blinds, and roller shades are some of the most wallet-friendly options out there, according to Skalman. On the other end of the spectrum, there is no ceiling; the sky is really the limit, especially once you start adding in features like upholstered valances and automation. Want the option to have your shades be sheer or blackout? Considering blinds and drapes? Have to have Roman shades in heathered linen? It’s going to cost you.

The flip side is that window treatments can save you money by keeping heat out (and air conditioning costs down) or by keeping heat in (and reducing heating bills). The Department of Energy recommends looking for products with the Attachments Energy Rating Council (AERC) Energy Improvement rating to maximize savings, while Nichols suggests programming your system to lower the shades when it reaches a certain temperature. He also says that you can find specific fabrics, like KOOLBLACK, that reduce heat absorption and help your home stay cooler.

Colorful, patterned window treatments are having a moment. 

Some fabrics and styles will always be in vogue. Linen, for one, continues to be the most popular choice in materials, according to Bullard: “Its durability, natural beauty, and texture is always a winner.” Interior designer Cortney Novogratz adds that a textured white sheer on a French rod is her favorite classic look.”It is a style that is complementary to so many decors,” she says.

But if you’re looking to make a statement with your window treatments, the time to do so is now. “Both color and pattern are back in a big way,” says Bullard. “Patterns, like vines and palm leaves, are very strong motifs that transcend time and place, whilst green seems to be a very strong color in the design world currently. Florals and even chintz designs are back and making bold statements, especially in blinds.” As for linen? “Plain linen is giving way to textures and exotic weaves like the Moroccan basket weave and tone-on-tone embroidery.”

Window treatments should make use of the full window space.

Both Bullard and Novogratz agree that the biggest mistake people make with window treatments is not taking advantage of the full window space, including the space above the window. “You can create an illusion that your ceilings are higher, but you need to utilize every part of the window and above to be successful,” Novogratz says. Bullard adds that seeing a gap between the bottom of the floor and the hemline of your drape is definite no. “Either touch the floor or allow a small cuff of fabric to gather at the floor.”

 

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Many first-time homebuyers might presume they’re better off going used rather than new—in other words, purchasing a pre-existing property rather than pricey new construction.

While it’s true that brand-new homes often come with a heftier price tag upfront, these properties can actually end up being a good—even great—deal for first-time buyers.

“It is true that new-construction homes, on average, are 10% to 15% higher in sales price than resale homes, but that doesn’t mean that they are less affordable,” says Bob Seeman, vice president of sales for New Homes at Realtor.com. “Simply put, total homeownership costs are more than a monthly mortgage payment alone.”

Here’s why first-time homebuyers shouldn’t rule out new construction, and how these opportunities can be a better deal than many might think.

Low inventory means first-time buyers should explore all options

Unless you want to be waiting a long time to buy your first home, you should consider new-construction homes.

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In a housing market that’s still dealing with extremely limited inventory, the reality is first-time homebuyers can’t afford to dismiss this option.

According to the National Association of Realtors®, the inventory of existing homes on the market in December 2022 was at an all-time low of 910,000. That was a year-over-year decrease of 18%, and marks 31 straight months of declines in available homes.

“The housing shortage will get worse over the next year—we simply don’t have enough supply,” says John Hunt, chief analyst for MarketNsight.

For example, Hunt says, to get back to “normal” and meet demand, Atlanta alone would need 66,000 additional homes on the market over the next 12 months.

Compounding the problem is that homeowners who might normally sell aren’t doing so because they’re reluctant to buy a new home—and get a new mortgage—when interest rates are so high.

Translation: Unless you want to be waiting a long time to buy your first home, you should consider new-construction homes because there just aren’t enough homes of any kind to satisfy the current demand.

Builders can help first-time buyers with better financing

Many builders can offer financing through their company’s mortgage arm or through a lender affiliate and also have programs to help reduce the amount of cash a buyer needs to close on a home.

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Let’s face it, price matters. That’s true whether you’re buying your first home or third luxury vacation property. The difference with a new-construction purchase, however, is you might be able to save money through builder incentives.

These promotions—meant to attract buyers to a certain development project—frequently come in the form of financing help, and this is what can make a new-construction home purchase workable for a first-time buyer.

“What many first-time buyers most need are cash to close and monthly payments that they can afford,” says Seeman. “Because many builders can offer financing through their company’s mortgage arm or through a lender affiliate, they have programs to help reduce the amount of cash a buyer needs to close on a home.”

A reduction in the initial cash outlay can make all the difference for a first-time homebuyer. Many builders are also currently offering much lower mortgage rates through their lenders as well in order to attract first-time buyers who would otherwise be priced out of the market.

“We’re seeing builders get creative with financing—offering rates as low as 4.99% to 5.99% right now, which is lower than what you’ll see for existing homes,” says Alex Toth, director of homebuilder partnerships at Opendoor.

Since mortgage rates spiked in October to over 7% for a 30-year fixed-rate loan for the first time in 20 years, this could indeed determine if a first-time buyer can qualify for a home or not.

Another benefit of working with a builder’s lender is that the lender is usually well-versed in FHA and VA loan options. These low or no-down payment loans might also be a huge benefit to first-time homebuyers trying to secure a mortgage if they qualify.

New-construction homes can save you money on utilities

New homes are built to the latest building codes which set more stringent insulation and energy standards.

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Total homeownership costs include more than just a down payment and mortgage, but many first-time buyers forget that part of the equation.

“Even if a new home is 10% more than a resale home, new homes are built to the latest building codes, which set more stringent insulation and energy standards,” says Seeman. This means new homes might cost a buyer less in heating and cooling costs.

“Those efficiencies should help offset a slightly higher monthly mortgage payment,” adds Seeman.

Bill Samuel, owner of Blue Ladder Development, agrees.

“In most cases, a new-construction home will be considerably more energy-efficient than an older home since it was built to a higher standard of energy building code, so you’ll likely have lower utility expenses than an older, similar sized home,” Samuel explains.

However, Janice Glessner, the online sales and marketing manager for S&A Homes, suggests first-time homebuyers look for a builder that can offer proof of the home’s energy efficiency through a Home Energy Rating Score.

“This can translate to hundreds of dollars, even thousands, saved every year depending on where and how you live,” says Glessner.

New-construction homes often require fewer repairs—and come with warranties

Another way that a first-time homebuyer might save money by purchasing a new-construction home is through far lower maintenance expenses over the years since all of the components of the house are new.

“Older homes have hidden costs,” says Glessner. “For example, having to replace an HVAC system in an old home can cost thousands.”

But if something does go wrong with your new home, not only are there likely some manufacturer warranties in place, but many builders also include additional home warranties, which can save a first-time buyer from unforeseen expenses.

“Builder warranties usually come with multiple components,” explains Seeman. “For instance, a warranty may cover major appliances and systems—for example, plumbing, electrical—for two years, and structural defects for 10.”

Customization is cheaper than renovation

One of the biggest benefits of purchasing a new-construction home is the potential to customize the home to meet specific tastes.

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“Cost aside, a lot of first-time homebuyers are of the millennial generation, who are used to and expect customization in almost everything they do–and a new-construction home provides that,” says Toth. “From integrated smart home systems and technology to customizable finishes, today’s builders are giving first-time homebuyers a wealth of options.”

Numerous experts also agree that one of the biggest benefits of purchasing a new-construction home is the potential to customize the home to meet specific tastes. And this is also a financially savvy move since renovating a resale home can be costlier than new construction.

“Oftentimes a builder will have access to favorable pricing from its subcontractors and suppliers,” says Samuel. “So it is typically much more economical for them to perform upgrades during the construction process versus buying a property as is and hiring a retail contractor to make the requested improvements.

 

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Finding a new place to plant roots isn’t solely about the price tag. Your real estate search is likely to include a range of options: condo vs. townhouse, condo vs. house, house vs. townhouse and more. As you stack different types of properties against each other, it’s important to think about not only what you can afford, but also your preferences and expectations as a homeowner or renter.

“When it comes to deciding which style of home to focus their search on, buyers should consider their budget and lifestyle, as well as their desired amount of involvement in home maintenance,” says John Ameralis, a licensed associate broker and leader of The Ameralis Team at Compass in New York City.

Maybe you’re a first-time homebuyer, or an empty nester looking to downsize. No matter where you are in life, consider this your primer on what type of housing will best fit your needs.

A comparison of four housing types

Condo vs. house vs. townhouse vs. apartment

Living Space Cost Ownership Best for
Condo Down payment, monthly mortgage payment and HOA fees Unit First-time homebuyers, downsizers
House Down payment and monthly mortgage payment, maintenance House and property it sits on Couples, families
Townhouse Down payment, monthly mortgage payment and HOA fees Unit and property it sits on Those who want more space than a condo, but not all the responsibilities of a house
Apartment Security deposit and monthly rent No ownership Those who want flexibility to relocate or are saving for a down payment

Condos

condominium (or condo for short) is a salable unit within a larger community, which could be a high-rise building. Condos can be a good option for anyone who wants to keep home maintenance to a minimum, including first-time homebuyers, singles, older homeowners or people who travel frequently. Condos are similar to apartments, in that both are likely to share multiple walls with neighbors. There is one major point of distinction, however: You own a condo, and you rent an apartment.

Of all the home types on the market for sale, condos “require the least amount of maintenance. You only need to maintain the ‘walls in,’” Ameralis explains. So, if the roof is leaking or the carpet in the lobby needs to be replaced, that’s not your responsibility — the condo association handles those duties. In addition, some condo buildings have doormen and offer an extra level of security, particularly in large cities.

Of course, you and all your neighbors pay HOA or condo fees to cover the costs. Condo association rules can be highly restrictive, as well. You may not be able to customize your unit the way you want, and you may be prohibited from renting it out to others.

Those who value privacy might find a condo’s communal areas less than ideal, too. “It is important to keep in mind that in condos, even the most exclusive ones, you are still sharing elevators and other amenities,” explains Judy Zeder, a Realtor with the Jills Zeder Group at Coldwell Banker in Miami.

Pros

  • Limited maintenance
  • Extra security

Cons

  • Monthly fees
  • Communal spaces

Houses

When most people talk about buying a house, they mean purchasing a single-family home, which is a standalone structure on a foundation. It doesn’t share walls or common spaces as condos, apartments and townhomes do, and it may also come with a lot of land to enjoy.

Two of the biggest points in favor of buying a house are privacy and the freedom to decorate and maintain it however you like. (Within the frame of local ordinances and/or HOA guidelines, of course.) “Owning your own house gives you more freedom to live how you want to versus condos, which have bylaws that govern what you can and cannot do,” Ameralis says.

Single-family homes are usually the most spacious housing option, and you can expect a higher price tag to reflect that. The average single-family home sold for $58,000 more than a condo in 2020, according to data from real estate brokerage Redfin.

In addition to paying more up front, you’ll likely pay more down the road, too. Owning a house means you’ll be responsible for all of the lawn care, maintenance and repairs, which can be considerably more cumbersome than you’d have with another type of home.

Here are more house vs. condo differences.

Pros

  • Freedom over aesthetic choices
  • More space, both outdoors and inside

Cons

  • Higher price
  • All maintenance is your responsibility

Townhouses

Townhouses can be much cheaper to buy than a single-family home. Some even have small yards or patios. However, most modern townhouses have fairly small footprints and shared exterior walls with neighboring homes.

Townhouses also usually come with HOA rules and fees. When it comes to the ability to make your own choices, you might have a bit more autonomy than condo owners, but your decisions still typically have to be HOA-approved.

“The older a townhouse development, the higher the maintenance fees tend to be, because the communal parts of the property — whether it’s the grounds, a pool, roofs or siding — need to be repaired over time,” explains Andrea Webb, a Senior Real Estate Advisor with Keller Williams Realty in Montclair, New Jersey.

For homebuyers debating between a house or a condo, a townhouse might be the best of both worlds. You get more space, often in multiple levels (like a single-family house), with less exterior maintenance (like a condo).

Pros

  • Lower price
  • More space

Cons

  • Monthly fees
  • Shared walls

Apartments

An apartment is any residence inside of a residential building where the individual units are rented, not sold. In bigger cities, these can be condos that are being individually rented. Apartment buildings often have shared amenities for tenants, like a gym or a pool.

A big factor in determining if a condo or apartment is right for you comes down to money: Do you have enough cash to put toward a down payment? You can use Bankrate’s rent vs. buy calculator to get a good idea of which is a better financial move for you.

There are other questions to consider, too. How long do you plan to live there? Are you likely to have a job or lifestyle change that would require you to move? If you plan to move within five years, it could be better to rent than buy for now.

Renting an apartment provides a place to live minus most of the responsibilities that come with homeownership. However, as with condos, you’re limited in the changes you can make (think paint colors or fixtures), and the landlord can dictate things like whether to allow pets. Also, you won’t build any equity, nor get the tax perks that come with homeownership.

Here are more condo vs. apartment differences.

Pros

  • Flexibility to move
  • No maintenance

Cons

  • No equity or ownership benefits
  • Must abide by landlord’s rules

Bottom line

To help you choose among a condo, home, townhouse or apartment, consider your savings account, how much space you need, how long you plan to live there and how much money you can comfortably put toward repairs, maintenance and remodeling costs.

Visit open houses and search online listings to see what’s on the market in your price range. Consider working with a real estate agent to help you narrow your choices, and do in-depth research so you have a solid understanding of the process. If you aren’t sure of where you want to land just yet, follow Bankrate’s Housing Heat Index to get a sense of where you might be able to find a good deal today.

 

For this and related articles, please visit Bankrate.com

Lessons from the field that will save you time, money, and stress along your co-buying journey.

Most co-buyers are excited about the adventure of buying and owning a home together. At some point, many feel overwhelmed. This is normal. Buying a home is complicated, full stop. Compared to a married couple or a singleton, co-buyers have more research and planning to do. In fact, co-buyers face greater complexity across every aspect of their purchase and homeownership.

Here’s where many co-buyers who come to us say they’re having difficulties:

  • Navigating the process
  • Finding the right professionals
  • Managing market competition
  • Setting up co-ownership

While the preferences, circumstances, and goals vary from one situation to the next, there are common patterns and friction points.

In this post, we’ll look at how these obstacles hold co-buyers back. Understanding where things get tricky makes it easier to navigate around roadblocks.

⛔ Mistake #1: Searching for homes before getting approved for a mortgage

It may sound obvious. Still, nearly half of buyers start the home search before sorting out financing. This approach to home shopping is inefficient and ineffective.

First off, it’s shopping without a budget. According to a recent HarrisX survey, nearly 70% of first-time buyers misunderstood their budget.

Second, it generally results in disappointment. In competitive west coast markets, the most desirable homes are currently on the market for less than 14 days. Say you do find the perfect home online. By the time you and your co-buyer(s) have:

  1. worked through the important details of your joint purchase
  2. agreed on key elements of co-ownership
  3. secured financing

…there’s a good chance the home has already sold.

The costs of this approach can mount quickly, particularly in an environment where home prices are rising.

⛔ Mistake #2: Not getting clear about participation and contributions

It’s essential to get clear on who will be involved, how each party will participate, and what each party is bringing to the table.

→ Who will be an owner?

→ Who will be an occupant?

→ How much is each party contributing in cash up front?

→ How much will each party contribute to total monthly housing expenses?

→ What is each party’s credit situation?

These are just a few of the decisions that need to be ironed out—the earlier, the better. What you decide will impact every aspect of the purchase process and co-ownership. For starters, mortgage pre-approval will require clarity on these issues.

⛔ Mistake #3: Sticking to unrealistic expectations

It’s human to want more than we can afford, particularly when it comes to our home. A recent nationwide survey of first-time homebuyers found that 40% had to compromise on budget, features, amenities, or location. In competitive metros—where home prices are two to four times higher than the national average—most buyers have to compromise to get an offer accepted.

Managing expectations against reality is tough(er) for co-buyers. When compromise is required to successfully purchase a home, everyone must agree on what’s acceptable and what isn’t. Co-buyers may or may not have the flexibility or appetite to increase their budget, widen the geographic search area, or give up certain features. The list goes on. Ultimately, you need to weigh the desire to become a homeowner with the concessions required to get there.

⛔ Mistake #4: Selecting the wrong professionals

If you’re not a soccer fan, you’d probably struggle to put together a U.S. Olympic soccer team that could take home gold. Selecting the best professionals for your joint home purchase isn’t so different. Co-buyers depend on guidance from a range of pros who have the right skills, experience, and approach. There’s a vast spectrum of talent and different types of expertise. To achieve a successful outcome, the players have to work together.

It’s understandable why co-buyers struggle to select the right professionals in the wild. A typical home purchase involves 11 or more parties. Finding the right real estate agent, lender, attorney, and others—all with relevant experience in co-buying and co-ownership—would be a tall order. But having the right professional guidance is critical to a smooth purchase and the success of your co-ownership arrangement.

⛔ Mistake #5: Starting the journey without a roadmap (DIY approach)

Co-buying involves a multitude of moving parts before, during, and after the purchase. The decisions on any given issue—the target home, financial considerations, structuring co-ownership, day-to-day running of the home, etc.—have implications for other aspects of the co-buying journey.

Without a roadmap, navigating the co-buying process and decision points is (at best) inefficient. More unsavory outcomes include: not being ready in time to submit an offer, making multiple offers without success, the purchase falling through during closing, incurring unanticipated costs, incurring financial loss after the purchase, and experiencing disagreements during co-ownership.

“If you invest the time earlier to create structure and process around communication, planning, and goal setting, you can prevent missteps before they occur.”

-Christine Tsai

⛔ Mistake #6: Forgetting to plan your exit strategy

It’s said that there are two certainties in life: death and taxes. One way or another, the co-ownership period will eventually conclude through sale, buyout, or transfer of ownership. What an exit looks like depends on how co-ownership is structured.

When a married couple owns a home and divorces, the process of dissolving jointly held assets is defined. Still, 71% of divorcees wish they had more guidance splitting assets (Fidelity 2019). Co-owners who are not married to one another do not benefit from established legal frameworks or structures. Even amicable conclusions to co-ownership can have unintended consequences and costs in the absence of a defined exit strategy.

 

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