Planning an Eco-Friendly Home Renovation


Plenty of people are now putting the sun, wind and water to work to cut their energy bill. Should you join them?

Before any shift to renewable energy technology, you’ve got to do some very individualized research and above all, work the numbers.

Solar energy seems to be getting the most attention. You might have heard recent news reports about solar energy’s sliding costs and rising support in Washington. A recent White House report ( noted that the average cost of a solar electric system has dropped by 50 percent since 2010 and that federal agencies are working to make it easier for lower-income taxpayers to borrow up to $25,000 for solar and energy efficient home improvements.

And many are rushing to do installations by the current year-end 2016 expiration date for the 30 percent federal consumer energy efficiency tax credits ( covering solar energy systems, small wind turbines and geothermal heat pumps.

How should you evaluate the cost of a renewable energy project? Consider these questions first:

Could incremental energy-saving projects be more practical? Start with baby steps. Before you decide on an expensive solar or other renewables project, see if smaller changes around the home could save money. You can improve the performance of heating and air conditioning systems and seal air leaks from windows, doors and other areas of the home. A do-it-yourself or professional energy audit ( might be a good first step in detecting energy waste.

What’s going on locally? When it comes to renewable energy, geography matters, and not just for tax breaks and credits for systems. Generally, weather, temperature, wind and sun exposure measurements matter when you’re choosing a particular project. For example, the Solar Energy Industries Association reports that solar installations are more common on the East and West Coasts, mainly because – that’s because sun exposure is greater on the coasts than in the center of the country. State and local organizations dealing with renewables can offer guidance to cost, effectiveness, installation and many other issues you’ll need to evaluate. A local evaluation of options is essential.

Do you really understand the technology? There is no doubt that technology is always evolving, and this is one of the reasons why solar and other renewable energy options are becoming cheaper. However, falling costs are one thing, but you need to fully understand what you’re buying so you can hire the best people to install it and service the system over time. For the basics, a good place to start is the U.S. Department of Energy’s site’s renewable energy section.

Should you buy, lease or borrow? One of the drivers behind the recent growth in solar is a new generation of vendors who provide one-stop shopping, installation and billing for systems at little or no initial cost. These vendors facilitate both purchase by loan and lease options. As convenient as this option might be, watch for inflation clauses, fees and penalties that could drive you above what you’re paying for conventional, utility-produced electricity.

How will it affect resale? There’s a fair amount of debate as to whether green home improvements actually boost home prices. Also, many real estate experts have mixed opinions about how prospective buyers feel about purchasing a home with existing renewable energy equipment that’s either been bought or leased.

Should I involve my financial and tax advisors? Whether you plan to buy, borrow or lease a system or do intermediary energy improvements around the home, talking to a qualified financial or tax advisor isn’t just worthwhile, it’s essential. It is also a good idea to speak with your homeowners insurance agent to see if your project will affect your coverage.

Bottom line: Want to save money while saving the planet? Do your homework and make sure an investment in renewable energy works for you.


By Nathaniel Sillin

Negotiating The Best Home Purchase Deal

how-to-sell-your-house-000012681402When buying a home, you are probably going to have a real estate agent helping you and giving you pointers on negotiating a price. However, it’s still your money on the line, and that means you should take an active role in getting the best deal.

Time it right
If you wait until you absolutely NEED to find a home to start looking, your bargaining power goes out the window. By starting the process well in advance, you create far more leverage since you have the ability to walk away from any bad deals.

Be reasonable
If your initial offer is extremely low the seller can become offended and refuse to even deal with you. Unless the asking price is just obscenely high, try to keep your initial offer at not more than 30% below that mark. In most cases 10-20% is going to be more appropriate.

Understand the market
By really knowing the comps—prices for similar houses in the area—you give yourself a leg up. Sometimes sellers aren’t realistic in their price. If you can reference real numbers for what nearby houses have gone for, you stand a greater chance of helping the homeowner see reality. Websites Zillow and Trulia are great sources for information on comps.

Gather and protect information
There’s a basketball drill in which two players, each dribbling a ball, try to steal the ball the other is dribbling while safeguarding their own ball. You can think of the information in a real estate deal in a similar way. Try to get as much information about why the seller is looking to unload the house. Are they leaving town in a week? Was their some facet of the home they weren’t satisfied with? Ask your real estate agent to try to find out some of these details since key information like this can help in your haggling. Also keep under wraps information about you the sellers could use to their advantage. Don’t mention that huge inheritance you just landed, or that your maximum price is actually above what they are offering.

Be creative
In some cases you are going to run across a seller who just isn’t willing to budge on their price. That doesn’t mean there aren’t other ways to have the pot sweetened. Ask the seller to leave the appliances or to cover your closing costs, home repairs or other expenses.

Don’t get too attached
As the old saying goes, sometimes the best deal is the one you don’t make. Being prepared to walk away from a negotiation gives you a great deal of leverage. Conversely, “falling in love” with a house puts you in danger of overpaying.

Include expiration dates with offers
If you are dealing with a seller who isn’t in a particular rush, or is indecisive, let them know that you are serious but that you aren’t going to wait around forever for them to respond to you. The time limit can even be as short as 24 hours.

Offer a quick process too
Often, sellers are willing to accept a price that is a bit lower if they feel confident the deal will close quickly. Getting pre-approved, eliminating any mortgage contingencies and putting down a sizeable amount of earnest money are all ways of letting the seller know you are serious about getting a deal done without any delays.

Having a negotiation plan and sticking to it can eliminate a lot of the stress of the home buying process. Work closely with your lender to establish a plan and see it through.


© 2014 BALANCE

Getting Your Home Ready to Sell

FSDAs the economy improves, today’s sellers are facing a very different environment than they were before the housing market stumbled in 2006.

Today’s housing market features new procedures and standards, not the least of which are continuing borrowing hurdles for prospective buyers. If you are thinking about a home sale in the coming months, it pays to do a thorough overview of your personal finances and local real estate environment before you put up the “for sale” sign. Here are some general issues to consider:

Make sure you’re not underwater. You may want to buy a new home, but can you afford to sell? The term “underwater” refers to the amount of money a seller owes on a house in excess of final sales proceeds. If what you owe on the home—including all selling costs due at closing—exceeds the agreed-upon sale price, then you will have to pay the difference out of pocket. If you’re not in a situation where you absolutely have to sell now, you may want to wait until your financial circumstances and the real estate market improves.

Evaluate your finances. Before you sell, make sure you are ready to buy or rent. Making sure all three of your credit reports are accurate is an important part of that process.

Consider “for sale by owner” vs. “for sale by broker.” “For Sale by Owner” (FSBO) signs were a common sight in many neighborhoods during the housing crisis. Shrunken home values convinced many sellers to sell their property themselves rather than pay 5-6 percent of profit in broker commission. However, consider what a licensed real estate broker could accomplish in your specific situation. Many experienced brokers have market knowledge and negotiating skills that could potentially get a better price for your property. Deciding which route to take shouldn’t be an overnight decision. Check leading FSBO and broker sites and talk with knowledgeable friends, attorneys and real estate professionals to learn as much as you can.

Think twice before spending on improvements. Not every home construction project pays off at sale time. Remodeling magazine’s annual Cost vs. Value Report tracks both pricing and cost recovery for leading remodeling projects. Before fixing up a bathroom, kitchen or any other area of your home, research whether the work will actually pay for itself at sale. For many sellers, it might be advantageous to hire a licensed home inspector to identify any structural, mechanical or major appliance repair issues that could delay or compromise a sale.

Don’t forget moving costs. According to the American Moving and Storage Association, a leading industry trade group, the average professional interstate move of 1,220 miles costs an average of $5,630; in state, the average moving cost is $1,170. After all the costs involved in selling a home, don’t forget how much it costs to relocate.

Bottom line: Selling your home requires planning. Before putting it on the market, get solid, qualified advice on how to sell smart in a still-recovering housing market.


By Nathaniel Sillin


Housing Decisions After A Divorce

Man and woman halve their house.When a marriage ends, housing can be one of the most challenging transitions to work through. If you are facing this hurdle, try as much as possible to remove emotions from the equation and use the following factors to make a choice that will set you up for a more secure financial future.

Know your options

If you own a home with your spouse, you have four main options for the house:

  • You can jointly sell the house and share the profit, if you have equity in the home (the house is worth more than what you owe on the mortgage)
  • Buy out your spouse
  • Be bought out by your spouse
  • Keep joint ownership

Facts to consider

  • The settlement—Understand that the rights to the house aren’t necessarily going to be split 50/50. Every situation is different and states often have unique laws. Consult with your divorce attorney or your Certified Divorce Financial Analyst (CDFA) to get a handle on what your share of the home’s value is anticipated to be.
  • Children’s needs—If you have children, clearly one of your first priorities will be to provide for them the best you can. Factors like their schooling, safety, proximity to family and friends, etc. will come into play. Making a list of the pros and cons of different options as they relate to their best interest can help to clarify your choice.
  • Your budget—Before you know what scenarios are realistic for housing, you need to know what you will be able to afford on a monthly basis given your new financial circumstances. Complete a budget based on your new income and expense levels to determine what is affordable. No matter how attractive a particular option might seem, it will only make your life more stressful if you can’t keep up on payments long-term.
  • Could you buy a new house or refinance your current one?—If you are interested in the possibility of selling the home and using any profit you reap to buy a new house or condominium, or want to refinance the home so that it is just in your name, you need to assess your ability to do it. Think about your credit standing and whether or not your current credit score and debt and income levels would qualify you for a mortgage by yourself. If you are unsure about all this, talk with your financial institution about how they see you as a potential loan candidate.
  • Income security—With two people, it is generally much easier to stay up on mortgage payments. Even if one person loses their job or is out of work for a period, the other person is there to pick up the slack during that time. If you are considering taking on a mortgage by yourself, take into account what would happen if you were to unexpectedly see a sharp drop in income or increase in expenses. If you are thinking of living in your current house or buying a new one, you may want to consider taking in a roommate or family member to help with the mortgage and bills.
  • Tax considerations—This kind of living decision hinges on more than just concerns of comfort and cash flow. There could be a sizable impact to your taxes too. Make sure to consult with either a CDFA or a tax professional to weigh the ramifications of different options.

There is no “right for everyone” answer to this question. However, if you carefully consider the available options, you should be able to arrive at the one that is best for you and for the future.


© 2012 BALANCE

Debt-to-Income Ratios Can Derail Your Home Purchase

debttoincomeYou’ve got your down payment. Your credit score is fantastic. You’ve even figured out your monthly budget for housing expenses.

So now you’re ready to charge ahead into the home buying process, right? Maybe not. If you’ve overlooked your debt-to-income ratios, you might not be as mortgage-ready as you thought.

What are they?

As the name suggests, debt-to-income ratios (DTIs), are ways of measuring a person’s monthly debt payments as they relate to incoming cash.

There are two main types of debt-to-income ratios used by mortgage lenders. These are known as the front-end ratio and the back-end ratio. The front-end ratio measures monthly payments for only housing-related expenses, like mortgage principal, interest, taxes, mortgage insurance, homeowner’s insurance and HOA fees (if applicable).

The back-end ratio encompasses all debts that are currently or will be paid on a monthly basis, like the housing-related expenses, home equity loans, credit card minimums, student loans, personal loans, alimony/child support and any other monthly debts.

Remember that your income figures should include not only any salary you receive, but also any alimony, child support, public assistance, stock dividends, profits from a side business, or regular bonuses (yearly totals divide by 12 for a monthly figure). Be sure to use gross (before tax) figures.

How do I calculate my DTIs?

Once you’ve added up your projected monthly housing expenses, simply divide them by your gross monthly income. This will give you your front-end DTI. For example, if your projected monthly housing expenses are $1,500 and monthly family gross income is $6,000, your front-end DTI is 25%.

To calculate your back-end ratio, just add your monthly debts as described above and then divide them by your gross monthly income.

Why is it so important?

Generally speaking, mortgage lenders want a potential home buyer to have a front-end DTI of no more than 28% and a back-end of 36%. While these numbers may vary from lender-to-lender or by location, it is wise to use these figures as targets when you are beginning the process of buying a home.

If you find yourself with numbers above the 28/36 thresholds, don’t despair. While it may be tough to quickly raise your recurring monthly income, it’s usually easier to examine your budget for ways to free up money to aggressively chop away at your debts. You may need to sacrifice a few luxuries for a while, but if doing so helps you get into a home you love, you will probably find it was all worth it.

© 2014 BALANCE


First-Time Home Buying Mistakes To Avoid

homebuying mistakes

The mistake: Using the same agent as the seller

How to avoid it: You may be told that you can save money by using one real estate agent for the transaction. However, the reality is that you are much better served by having someone looking out for ONLY your best interests.

The mistake: Buying points without considering how long you will stay in the home

How to avoid it: When you buy points on a mortgage, you lower the interest rate on the loan by providing more money up-front. This certainly makes sense if you are planning on staying in the property long-term and will save a large amount of money by paying less interest over that time frame. However, if you plan on moving within a few years or are buying the home with the idea of selling it relatively quickly, it probably doesn’t make much sense to buy points.

The mistake: Using an adjustable rate mortgage to buy before you are ready

How to avoid it: One of the reasons for the housing crisis of the late 00’s and early 10’s was homebuyers being encouraged to buy homes they couldn’t afford using a low initial interest rate that they could theoretically renegotiate as the value of the home increased. The problem came when many of those homes didn’t increase in value. Gambling that you will be able to refinance a mortgage or sell the home before the rate increases is not only risky, but puts you in a very stressful position as a homeowner.

The mistake: Including closing costs in the loan

How to avoid it: The lender may provide you the option of including the closing costs in the mortgage loan if you are not able to meet this expense at the time of closing. However, financing these costs means paying more since you will have to pay interest too. You are better off saving up for closing costs ahead of time since this will cost you much less in the long-run.

The mistake: Being unaware of service contracts for your home

How to avoid it: Hot water heater broken? Before you shell out the cash to have it fixed, check the paperwork to see if repairs are covered in a service contact included in the loan agreement. You don’t want to pay out of pocket for something that is already covered.

The mistake: Thinking a passing home inspection grade means no worries

How to avoid it: The best home inspectors will give you notes on possible future trouble areas even if they are working fine right now. However, this isn’t always the case. Don’t assume that a home inspector signing off on a property means that there won’t be any major expenses in the near future. Assuming that repair costs will spring up eventually and preparing accordingly is the best practice.

The mistake: Not budgeting for HOA fees

How to avoid it: With all the costs popping up as you move through the buying process, it can be easy to forget about Homeowners Association Fee. Unless you have money to burn, a successful home buying experience is going to involve understanding first what you can afford and then the total monthly cost of the property you are looking at—including potential increases.

The mistake: Failing to plan for potential increases in insurance or property taxes

How to avoid it: With a fixed-rate mortgage, you might think your mortgage expenses are locked-in. But think for a moment of parts of the country hit by natural disasters in the past few years. Many homeowners in these areas have seen dramatic increases in their homeowners insurance as a result. Hopefully you won’t be hit by any cataclysms, but even if the odds of this are low, it’s still wise to have some money set aside in a housing fund to cover increased costs.

© 2014 BALANCE