A waterfront home offers surroundings unlike any other. Their prime locale and stunning views virtually guarantee a lifetime of relaxation, waterfront get-togethers, and summer nights under the stars. Waterfront homes have great potential as investment properties as well. But for all the perks waterfront homeownership offers, it comes with its own set of responsibilities, too.

Should I buy a waterfront home?

Beyond the lifestyle benefits, owning a waterfront home also has a significant financial upside. Because waterfront properties are more scarce than landlocked homes and their location is highly desirable, the buyer demand is generally high. As a homeowner of these special properties, you can rest assured that a well-maintained waterfront home will generate significant buyer interest when you’re ready to sell. A property with any combination of water views, boat slips, docks, and water access is a recipe for appreciation over time.

A waterfront property is a popular choice for homeowners who are in the market for a second home, or even as a primary residence for those looking to eventually move into their vacation home when the time is right. They’re also primed for converting into a short-term rental. Due to their location, they have a competitive advantage over many other short-term rentals. Depending on the local laws and any relevant Homeowners Association rules, waterfront homes can be rented out year-round or seasonally. For example, if you decide to rent out your home during the summer, you’re able to capitalize on seasonal demand.

• Designing Your Rental to Feel Like Home

Image Source: Getty Images – Image Credit: bradwieland

Owning a waterfront property also comes with extra risks you’ll need to keep in mind. Weather conditions can be extra harsh on these homes, given the fact that they’re situated face to face with nature in a way most homes aren’t. Make sure you have proper coverage through your homeowners insurance policy and inquire about the need to purchase additional wind, flood, or hazard coverage. Local climate dictates what a comprehensive coverage plan will look like for your home, but what’s important is that you’re fully covered.

Something else to keep in mind is that beyond the typical tasks associated with owning a home, waterfront structures like retaining walls, boat lifts, and docks require a certain amount of ongoing maintenance. As the seasons change, so will your responsibilities as a homeowner. Properly winterizing a waterfront property requires a few additional steps beyond the typical routine, depending on how low temperatures dip during winter in your area.

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One of the best ways prospective home buyers can empower themselves when purchasing a home is to improve their buying power. The numbers may seem daunting but identifying ways to strengthen your financial standing will help you each step of the way.

When visualizing your dream home, it’s common for buyers to focus on the physical characteristics. But to mortgage lenders, a home is a numbers game. The following categories related to your buying power demonstrate how lenders identify your financial standing and determine your eligibility for a home purchase. Improvements in these areas will increase your buying power, propelling the strength of your offer when you’re ready to put it on the table.

How to Increase Your Buying Power

Increase Savings For Your Down Payment

As the saying goes, cash is king. The down payment—often 20% of the home’s sale price—can sometimes be the deciding factor between competing offers for a particular home.

Try stashing away a little of each paycheck to build up your savings over time. Set a savings goal, commit a dedicated amount to each pay period, and watch the savings build as time goes on. If you prefer to keep your money separate, open a new account to which you can dedicate the added savings. Another way to save for your down payment is to generate additional income. If you have interest or experience in an area outside of your current job, explore opportunities for part-time work and dedicate the income earned to your down payment savings.

There are numerous benefits to offering a serious down payment. Putting 20% or more down can help your offer stand out, it may allow you to negotiate a lower interest rate on your mortgage and could remove the need for private mortgage insurance (PMI).

Improve Your Credit Score

Plain and simple—a better credit score leads to better interest rate on your mortgage. Your payment history, amounts owed, length of credit history, credit mix, and new credit all factor into your credit score. Although improving it will not happen overnight, a higher credit score will pay dividends in the long run.

To improve your credit score, focus on paying down your credit cards, especially those with high interest. Refrain from opening new lines of credit that aren’t necessary and stay away from large purchases leading up to the time when you are preparing to make an offer. Keep in mind that student loans factor into your financial picture. Paying them off consistently will improve your financial standing in the eyes of lenders.

Stabilize Your Debt to Increase Buying Power

When assessing what you can afford, banks will examine your debt-to-income ratio. Lenders want to know that you’ll be able to pay your mortgage on top of your remaining debt.

They do this by looking at your housing ratio, or front-end ratio, to determine what portion of your income will go to paying your mortgage. Your front-end ratio is calculated by taking your monthly mortgage payment and dividing by your monthly gross income. The higher the ratio, the higher risk of default.

Next, your back-end ratio, or debt-to-income ratio, is used to determine how much of your monthly income goes toward paying your debts. Your back-end ratio is calculated by taking your monthly debt expense (the principal, interest, taxes, and insurance of your mortgage payments, credit card payments, student loans, and any other loan payments), and dividing it by your gross monthly income.

Similar to your credit score, paying off credit cards, and making steady, consistent progress on your loans will help to decrease your debt and improve your debt-to-income ratios, which will increase your buying power.

Although these aspects of your finances don’t cover everything that goes into the purchase of a home, they do play a significant role in how lenders assess your financial standing and thereby eligibility for approval. Increasing your buying power takes time and strategy. Plan accordingly so that when you find your dream home, you’re in the best position possible to buy it.

As you prepare to sell your house and move to a new one, you may be taking a fresh look at your belongings. You might be wondering how they’ll work in the new home or if you’ll need to upgrade to new ones. If you’re staging your current home and need to declutter, you are probably considering which items you can live without. A yard sale is a great way to get rid of old items, reduce what you have to move with you, and make room for the new. Here are some tips to make your yard sale a success.

Determine What to Sell

A good rule of thumb when deciding what you want to sell is, if you haven’t used it in more than a year, get rid of it. This doesn’t hold true for keepsakes and heirlooms, but if it’s not sparking joy and it’s been in storage for a year or more, add it to the “for sale” pile.

Make It a Neighborhood Event

Consider contacting your neighbors to coordinate having one large neighborhood sale on the same day. This will help attract more buyers. Have each participating household pitch in a few bucks for signage you can post around the area directing people to your sales. When the buyers have left and you’re finished packing up, bring out the grills and make it a block party!

Helpful hint: check your local laws or HOA rules to see if you need permits for a community sale or outdoor party.

Get the Whole Family Involved

If you have kids and they want to sell some of their things, have them help by putting price stickers on their items or, depending on their age, making change when people pay for their purchases. If you aren’t selling children’s items but you have young ones who still want to be involved, help them set up a lemonade stand or host a small bake sale.

Promote on Social Media

Create a Facebook event page and invite all your friends. Tweet about it and create a fun hashtag, then offer a prize to those who repost about your sale. Post a carousel of the images for sale on Instagram. Use Nextdoor or another neighborhood app to invite people you may not know in other neighborhoods. Whatever old knick-knacks you may uncover are sure to be a hit for somebody, and spreading the word of your sale beyond those who are nearby will help them find you.

Offer Multiple Payment Options

Not everyone carries cash these days. If you offer them the ability to pay via PayPal, Venmo, Zelle, or another peer-to-peer payment platform, you’ll make more sales. You’re also more likely to turn passers-by into buyers, especially if they are walking or on a bicycle and aren’t carrying their wallet.

Be Flexible with Prices

Decide which, if any, big-ticket items you will not haggle over, and then be willing to adjust your prices and leave room for some friendly negotiation for everything else. The idea is to get rid of things—not get rich.

Donate the Leftovers

After your sale is over, do not put the leftovers back in your house, garage, or storage. Immediately box or bag them up and drive them to your local Goodwill, Salvation Army, or other donation center. That way, there is no chance of procrastination, second guessing, or keeping things you do not need.

Selling a home is an exciting time for homeowners. Once you and your household have decided that you’ll hit the market, it’s easy to think solely about the revenue that comes with the sale. However, selling a home comes with its own set of costs. Knowing what these costs are will help you budget throughout the selling process. Here are ten most of the most common costs that come with selling a home.

10 Costs Associated With Selling Your Home

1. Commission Fees

Of all the expenses that come with the sale of a home, agent commission fees are usually the largest and for good reason. Real estate agents are professionals, wielding their industry knowledge and local expertise to get the job done and save countless hours of work for the homeowner. The commission is split by the agents representing both buyer and seller

2. Pre-sale Home Inspection

Pre-sale home inspections are not mandatory; however, if a seller does not conduct one, it could lead to major costs down the road. The inspection allows the seller to find any issues with the home and properly disclose them to the buyer. If the buyer’s home inspector finds repairs that need to be made, they can ask the seller for a price reduction or require that they be fixed in order for the sale to go through.

3. Home Repairs

There are varying degrees of home repairs that can increase the value of your home. Cosmetic fixes like improving your landscaping will do wonders for your curb appeal. Painting and decluttering help to present the home in the best light for buyers. Larger projects like replacing appliances, roofing, plumbing, and full-scale upgrades are a more significant investment but can increase your home’s value.

4. Staging Costs

During the selling process, it pays to put effort into the presentation of your home. Staging helps buyers to visualize living in the home. Professional stagers will enhance your home’s qualities while minimizing its deficiencies. Their cost will depend on the level of staging your home requires.

5. Utilities

In the interim period between when you move out and the buyers move in, you’ll want to continue paying utilities. Without running water, electricity, and heat, your home could be difficult to show to buyers.

6. Remaining Mortgage

Another cost of selling your home is the remaining loan balance on your mortgage. If you have been steadily paying your mortgage, your home sale will greatly aid in paying back the remaining amount, if not cover it completely.

7. Escrow Fees

In a home sale, there’s always the question: Who handles the cash? That’s where escrow comes in. It’s common for buyers and sellers to split the cost of escrow services. Be mindful of additional costs during escrow such as transfer fees and notary services.

8. Capital Gains Tax

The capital gains tax is assessed by taking the difference between what you paid for your house and what you sold it for. There are common exclusions for the tax, but there are situations where the exclusions may not apply. For example, if the home was not your primary residence, you could end up paying taxes on the whole gain. Talk to your Windermere agent for more information.

9. Property Tax

If your home sale takes place after you’ve paid taxes for the year, you may get a rebate at closing. In this case, the buyer reimburses the seller for the applicable taxes paid. Otherwise, the seller should pay the prorated share of property tax until the sale closes, placing the money in escrow.

10. Moving costs

Finally, the home sale is final, and you’re ready to move. Whether you’re moving locally or across the country, moving costs can add up quickly. Moving as many of your items yourself can save money, but for larger, more difficult to transport items, you’ll likely need to incur the cost of hiring professional movers to ensure your items arrive at your new home safely.

These are just some of the costs associated with selling your home. Each home sale is different, and the costs vary accordingly. Knowing what you can expect to spend throughout the selling process will help you budget accordingly. For more information on the costs in the selling process and how to sell your home, connect with an experienced Windermere agent today.