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Determining How Much You Can Afford For A Home

by Jon Smith, CRB, CRS, GRI

It's the question you need to ask yourself before you even begin your new home search. How much you can afford is the most important factor in determining where and how you look for your new home. You don’t want to purchase a home that will leave you overextended.  To make sure that the house you are thinking of buying is going to be affordable, make sure you do your research and budgeting before you sign the paper work.

There are many factors that determine how much you can borrow, but it is the amount of your monthly payments, however, that will ultimately decide how much home you can afford. The general rule of thumb is that your mortgage payments should not exceed 28 percent of your income. Your entire debt-to-income ratio, which includes all recurring debt, including mortgage, car loan, and credit card payments, should not exceed 36 percent of your income.

Most people can afford a home that costs up to three times their annual household income, if they can make a 20% down payment and have only a moderate amount of other debt. If you have little to no debt and can put 20% down you can probably buy a house worth up to four times your annual income. Calculate how much house you can afford with this home affordability calculator.   Enter your income, liabilities, and debt, as well as your new loan assumptions to see an estimate of how much you can potentially afford for your new home.

When it comes to deciding how much you can afford to spend consider the following:

  •  Make sure you get pre-qualified or pre-approved for your loan before you start looking.
  •  Be sure to figure in moving expenses if you buy a home in a different city. If you move to another region of the country, you may also face a change in the cost of living.
  •  If you buy a condo or a home that requires you to join the homeowner's association, your monthly dues will directly reduce how much you can afford to spend on a home. Some dues can be very costly, be sure to include the cost into your budgeting.
  •  Remember to assess and figure in the costs for any remodeling and repair projects.

If you're considering a new home purchase, it is crucial that you spend time calculating what you can truly afford. Remember, just because the bank says they will give you a certain amount of money, that doesn't mean you can actually afford it. Everyone's situation is different, and by planning ahead to ensure you're not overextending yourself, you can make it through the difficult times

Fixed vs. Adjustable: Which Option Is Better For You?

by Jon Smith, CRB, CRS, GRI

During the home buying process you will have to make many important decisions. One of the most important decisions you face in the loan process-and often the hardest is whether to take out a fixed or adjustable rate mortgage. There are many different options to consider when making your decision and the type of mortgage  that's right for you depends on many factors, such as your tolerance for risk and how long you expect to stay in your home.

Fixed rate mortgages

With a fixed rate mortgage, the interest rate remains the same throughout the life of the loan. Your monthly payment (consisting of principal and interest) generally remains the same as well. The entire mortgage is repaid in equal monthly installments over the term (length) of the loan.

Fixed rate mortgages offer  stability and that  is one reason why fixed rate mortgages are the most popular way to finance a home in America. However, having a fixed interest rate on your mortgage has both positive and negative aspects. If interest rates rise, yours won't; and thus, your monthly mortgage payment will always remain the same. For homeowners on tight budgets or with fixed incomes this can be reassuring and this type of mortgage is typically the best choice.

On the other hand, if interest rates go down, yours won't, and your mortgage payment will remain the same. However, a possible option may be to refinance your home, paying off the higher-rate mortgage with one that carries a lower interest rate. Keep in mind the interest rate might need to drop significantly to offset the expenses associated with refinancing, and you'd need to remain in your home long enough to recoup those expenses.

Adjustable rate mortgages (ARMs)

With this type of mortgage, sometime also called a variable rate mortgage, your interest rate is adjusted periodically, rising or falling to keep pace with changes in market interest rate fluctuations. Your monthly payment amount is recalculated with each rate adjustment. Depending on what's specified in the mortgage contract, an ARM can be adjusted semi-annually, quarterly, or even monthly, but most are adjusted annually.

Adjustable-rate mortgages come with special rules (rate caps) that limit how much your payment can increase.  These rate caps are important because they protect you from unlimited higher payments, no matter how high or how quickly market interest rates rise.
If you are uncertain as to if an ARM is for you, consider if  the following apply to you:

  • Want or need more home than you can qualify for now at a fixed rate.
  • You can afford to pay the increased cost.
  • Plan on moving within seven years of buying your home.
  • You can tolerate uncertainty in your mortgage interest rate and fluctuations in your monthly mortgage payment amount

There are many different types of ARM mortgages and although somewhat riskier than a fixed rate mortgage, an ARM may benefit you if you have certain needs or find yourself in certain circumstances. In other circumstances, you may be better off with a fixed rate or other type of mortgage. Examine your financial and life situation with the help of your loan officer  or financial advisor. Use this mortgage comparsion chart to help you in your decision making. .

Household Pest Management

by Jon Smith, CRB, CRS, GRI

Now that the weather will start getting warmer, soon the bugs will be making an appearance. Pests are a reality of everyday life, there are over 94,000 species of pests in the United States. Pests can not only cause physical damage to your home, they can also spread germs, irritate allergies and generally make the environment in your home uncomfortable. Today, you can choose from many different methods as you plan your strategy for controlling pests. Sometimes a non-chemical method of control is as effective and convenient as a chemical alternative. For many pests, total elimination is almost impossible, but it is possible to control them.  There are many things you  can do to help prevent and eliminate pests in and around the home without using pesticides.  Here are a few:

 MOISTURE CONTROL – Removing moisture that attracts pests
• Repair leaky roofs, faucets, pipes and appliances.
• Clean gutters and downspouts.
• Direct water away from the house.
• Eliminate standing water and water in outdoor containers.
• Ensure that crawlspaces have vents and a vapor barrier.

EXCLUSION – Sealing keeps pests out
• Seal foundation cracks and gaps where utility lines enter.
• Keep doors, windows and vents screened and well sealed.
• Keep exterior wood painted, stained or sealed.
• Seal items in storage. Store items in plastic, not cardboard.
• Before bringing in new items, inspect them for pests.

SANITATION – Cleaning removes food and hiding places
• Keep trash containers clean and tightly sealed.
• Keep foods in sealed containers.
• Don’t leave dog/cat food or birdseed out for long periods.
• Remove clutter and junk, indoors and out.
• Vacuum regularly.

PREVENTION – Making your home unattractive to pests
• Eliminate wood-to-ground contact.
• Use gravel or rock instead of wood mulch.
• Use concrete or plastic instead of wood landscape timbers.
• Keep plants trimmed and woodpiles away from house.
• Use yellow “bug lights” in exterior light fixtures

Home Fencing Options

by Jon Smith, CRB, CRS, GRI

The decision to erect a fence on your property is usually made for any number of reasons: to provide a safe space for children and pets to play, to increase privacy on your property, or to protect your possessions. There are many factors to consider when deciding on a fence:

 • Personal Taste - Take a look around your neighborhood and determine what you like - style, material etc. Also, determine what type of fence will compliment the architectural style of your home, landscaping and neighborhood.

• Safety - Do you need to keep your children and pets in? Or do you need to enclose a pool area?

• Privacy - How much privacy do you want? You can choose either the private 6-foot-tall fencing with solid board or a shorter version with more space between boards.

• Budget - Keep in mind the cheapest fence initially, may not be the cheapest fence over the life of the fence.

 Types Of Fences 

There are several different options for fencing to accommodate any budget and situation. Visit the fence project estimator to get an idea of cost and how to find a quality fence company in your area.

 Wood Fences. This type of fencing is an excellent choice for privacy fencing and cost effective. Wood fences can be made out of Western red cedar, cypress, or treated pine. When maintained properly, wood fences can endure the harshest weather and provide you with several years of serviceability. Wood fences can come in privacy, picket or rail style.  If you decide to install the fence yourself, here are some tips and suggestions to help you!

 • Vinyl (PVC) Fencing. Vinyl fences are strong and highly durable - retaining their shape, color and structural integrity. In addition to their attractive appearance, this style of fencing offers many benefits. It is fireproof, wont rust or rot, termite resistant and is virtually maintenance free. While this type of fencing is more costly than wood, you will not need to replace the fence in a few years, they are built to last a lifetime. There are many styles of vinyl fencing available to suit your needs from privacy to picket.

 Chain Link Fencing. Chain link fences are an economical way to provide years of maintenance-free security and access control. These types of fences are extremely versatile; they can be made in a variety of heights, and can handle anything from a simple boundary marker for a homeowner to perimeter security. You can also get vinyl coated chain link fences in different colors for added versatility.

• Wrought Iron Fences.. This style of fencing is extremely durable and has a classic look. They are available in different colors, patterns and heights. This style of fencing can be used for walkways, porches, and perimeter and driveway gates as well. Click here to find wrought iron fencing contractors in your area.

Whether you choose to install the fence yourself or hire a professional, it is important to remember the following:

• Determine the actual property line. Reference property deeds and legal surveys to confirm property boundaries.
• Remember to check on local building codes. You may need a permit and there may be other restrictions.
• Beware of underground utilities. Call the local power company. Utility companies in many areas of the country have free services and they will mark the power line with paint on the ground itself. So check with each of the companies that service the home and have them locate underground power, water and gas.

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Contact Information

Photo of Jon Smith, CRB, CRS, SRES, SFR Real Estate
Jon Smith, CRB, CRS, SRES, SFR
Iowa Realty
3521 Beaver Ave.
Des Moines IA 50310
Fax: 515-453-6404



Licensed in the State of Iowa