Is Your Home Staging a #PinterestFail?

There you sit, watching “The Vanilla Ice Project” on the DIY Network when a thought bubble forms over your head. If Vanilla Ice can remodel houses on television, you could probably save yourself the expense of a pro home stager and take the job into your own hands. Your Realtor will be so impressed that she’ll probably put it on her Instagram account right away.

This is a critical decision point. Do you put down the remote control and get to work making your home presentable for buyers or do you keep watching in hopes that Vanilla Ice breaks out into random song? It’s a hard decision.

As you lean forward to turn the television off, your spouse calls to see if you picked up milk on the way home from work. Of course you did. It’s just that important.

You may not realize it now, but one day you’ll see how close you came to total annihilation. That might be a bit dramatic, but you definitely came close to something…

What’s the Big Deal with Home Staging?

Staging a home is a delicate art meant to accentuate the positive features of your home, often with furniture you can’t afford or would never choose because of its basic impracticality. Who really owns a fainting couch in this day and age?

No one. Nacho cheese Doritos, football and fainting couches don’t mix.

This is why interior decorating pros often bring their own furniture and accessories to vacant or partially emptied homes. With their own furnishings, pro designers have a lot more control over how your home is presented and they can go wild creating a lot of interior decorating fantasies for people who will never own furniture like what your home is showcased with.

Even so, when potential buyers later see your professionally decorated home online, they’re far more eager to take a look right now than if your home is photographed empty, or worse, full of furniture that is practical and functional, but makes no sense with the architectural style. If your furniture were music, it would sound like a 10 year old learning to play the violin.

Does Professional Home Staging Make Sense for You?

There are some homes that absolutely demand home staging. That ancient manor on the hill, for example, that’s a place that needs to be photographed with furniture in it or else it’s just a series of long, scary, dark rooms. Put the right furnishings inside, from curtains to a long, elegant dining table, and suddenly it’s a glamorous and ornate dreamscape for someone.

A house like that, with a value in the millions of dollars, clearly is getting treatment that yours may not, but you’d might be surprised how well you can come out. According to reporting by Realtor.com, staging can cost about $2,400 per month and a typical contract is for three months, even if you sell sooner. That brings the total to around $7,200, give or take.

Before you decide you can do better on that kind of budget, take a moment to check out these sales-related stats from the National Association of Realtors 2017 Profile of Home Staging report:

* 39 percent of Seller’s Agents reported that staging greatly decreased time on the market. That means fewer house payments for you and a faster transition into your new place.
* 33 percent of Buyer’s Agents told NAR that staging resulted in a one to five percent increase in their clients’ offers. Nationally, the median home sold in August 2018 went for $320,200. If this home were staged, the owner would have seen an initial offer of $3,202 to $16,010 more than similar homes that weren’t staged.
* On the flip side of that, 29 percent of Seller’s Agents reported the same one to five percent increase in sales price versus comparables nearby, another 21 percent said they saw a six to 10 percent increase in the final sales price. If you do the math on this, that same $320,200 home staged may bring up to $32,020 more just because it was easier for the buyer to visualize themselves in the space.

Obviously, where you live and how in demand the area is will make a big difference in whether or not it makes sense to hire a home stager. The cost can initially be alarming, but with the right type of home and the right market, it becomes a bit of a magical money machine.

Before You Stage Your Home Yourself…

Why not drop in on your HomeKeepr community? Not only is it an easy way to find trusted and reliable home stagers in your area, you can touch base with your Realtor before you do anything rash. After all, that life-sized velvet painting of Elvis in your bathroom is cool, but it’s not exactly what homeowner fantasies are made of…

Understanding Mortgage Insurance

Whether you’re in the process of buying your first home or you’ve been a homeowner for years, there are few phrases that hit right to the bone like “mortgage insurance.” Why, you’re not sure entirely, but lots of people indicated that it was terrible and you were going to regret it.

As usual, the truth lies somewhere closer to the middle. Mortgage insurance is not your enemy, but it can be a costly surprise if you’re not prepared. Let’s dive into this hot button topic.

What Exactly is Mortgage Insurance?

Mortgage insurance is a type of coverage that your lender will take out on your loan to help shield them against loss should you default. They generally only require it if you have less than 20 percent down and often, this monthly payment will drop off once you’ve paid your home loan down to the point that your house has about 22 percent in equity versus its mortgage.

To be clear, this insurance does not cover you — at least not directly. In the case of default, the bank gets the check, but you get something, too. In many states, even recourse states, the mortgage insurance can be enough to prevent the bank from coming back on you for the difference between what you owe and what it was able to recover at a public sale.

Having mortgage insurance does not guarantee you will be free and clear should you lose your home, but it sure helps, especially if that house is in good condition when you turn it over to the bank. Its original purpose was to make it easier for people to get mortgages, even if they couldn’t come up with a big down payment, but during the housing bubble a decade ago many homeowners discovered that it can help on the back end, too.

MIP, PMI and Funding Fees

Mortgage insurance is a blanket term for several different insurance programs that essentially do the same thing. Rather than just calling it “mortgage insurance” across the industry, due to the way each program came into being in sort of a vacuum, different loan types have different names for it. For example:

* FHA calls it MIP, the Mortgage Insurance Premium. It was one of the first programs and the name is an original, for sure. It requires both an upfront and monthly payment.
* Private Mortgage Insurance is available on conventional loans and will be provided by one of a few different companies, MGIC being one of the biggest.
* Many people think that VA loans don’t have mortgage insurance, but they do — it’s a one time charge at closing known as the “Funding Fee.”

For most people, having mortgage insurance is just a reality of life. They can either continue to give their entire payment to someone else to pay off real estate the renter will never have a stake in, or they can give a fraction of their payment over to the bank in order to be given a chance to establish some equity and build a little wealth, even if it’s in the form of the family home.

Since the pricing of your mortgage insurance is based largely on your outstanding mortgage balance, the payment will get smaller and smaller each year. You can expect to pay from a half percent to one percent of your total mortgage balance annually. So, for example, if you borrow $300,000 to buy your home, your mortgage insurance payment will be anywhere from $1,500 to $3,000, or $125 to $250 a month, the first year.

Getting Rid of Mortgage Insurance

Although mortgage insurance has its place, you don’t want to pay it forever. That’s where this section of the blog comes in! If you borrowed using an FHA program after the summer of 2013 and had less than 10 percent down, you probably have lifetime mortgage insurance. There’s no joking, this is not a great situation.

Usually, once you reach 78 percent loan to value, based either on the original appraisal or an updated one, the bank will drop your mortgage insurance. You may have to write a formal request, but it’s not that big of a deal. With these FHA products, the mortgage insurance is meant to stay for the entire life of the loan. So, your options to shed it are a little trickier. You can:

1. Avoid it entirely by using a piggyback loan. This is a combination mortgage made up of an 80 percent LTV conventional loan and a 15 percent LTV secondary loan. That secondary loan, however, can have a pretty high base interest rate and may have terms like an adjustable rate, a shorter amortization period or a prepayment penalty.
2. Bring more to closing. Hey, it’s not fun to crack your piggy bank or 401(k) to get extra money, but there are times when it makes sense. This is one of them. You always need somewhere to live, you might as well be building equity, too.
3. Refinance the monster. If you’ve noticed prices in your neighborhood rising dramatically or you’ve just been paying on your mortgage a while, it could pay to refinance your loan. Your Realtor can help you determine if it will be worthwhile to spend the money for a new appraisal and new loan paperwork. That’s also the downside, though. It can cost as much to refinance at the wrong time as you’re paying in mortgage insurance.
4. Sell your home. You know, it was a good home, but you’re sick to death of paying the mortgage insurance. You plan to take the sale proceeds to buy another place that you can put at least 10 percent down on to avoid further incidents of lifetime mortgage insurance.

Most of the time, if you compare your mortgage insurance to the alternatives, it’s not really that big of a deal to pay an extra percent for the ability to buy a home with five percent down, rather than when you finally have 20 percent down.

Keep in mind that although interest rates have been in the three to four percent zone for a while now, pre-bubble, they were between six and eight percent for a prime mortgage and no one blinked an eye. Effectively having a four to five — or even six — percent interest payment doesn’t have that much of a relative impact on your monthly housing costs.

Ready to Shed That Mortgage Insurance?

Log in to your HomeKeepr community, where you can meet bankers who can help you refinance, builders who can help you add instant equity to your home and, of course, your Realtor who can help you build your case if you’ve accumulated enough equity naturally to be rid of mortgage insurance entirely. Because the entire community is powered by recommendations, you know the people you’ll meet can be trusted to follow-through in a totally professional way..

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