Second homes are a great choice whether you’re looking for a summer retreat or an investment property. There is a laundry list of considerations to think about before making such a huge investment, however. Make sure you’re informed about all your options before you buy.

A Smart Purchase

There are two reasons most homeowners buy a second home: as a vacation property or investment. Regardless of what you use your new house for, any second home can easily be both of the above. Real estate is one of the safest and most profitable long-term investments a person can make. And if you’re careful about where you purchase your new home, there’s no reason it can’t be a weekend getaway for you and a money making rental property as well!

Rent It or Not?

A smart purchase in a desirable area means your new vacation home can double as a place to rent out to others when you’re away. By charging a reasonable rate to pre-screened, short term renters, you can easily make enough to pay for your new mortgage payments and even pocket a little bit extra on the side. Of course, not every homeowner wants to deal with the hassles of trusting their home to strangers. If that sounds like you, don’t fret. By being smart about where you buy and what you purchase, you’ll end up with a home that is attractive to both renters and future buyers. Either way, purchasing a second home is a win/win proposition.

Additional Considerations

Here are a few ideas to consider as you begin your search for the perfect new house:

• Look for homes with great views and ones that are close to parks and open space. Not only will these features make them more attractive to renters looking for a vacation getaway, but they also increase the re-sale value of your home. Unobstructed views of mountains and oceans can add up to 60% to a home’s value, while proximity to parks and open space can raise property values up to 20%.
• Calculate possible rental rates before you buy, whether you plan to rent or not. You might change your mind later about renting out your home when your away, but even if you don’t, a house that demands higher rent makes it more attractive to future buyers.
• Think about selling your current home and buying two new homes! If you’ve been paying down your mortgage and have lived in your current home for a while, think about using the equity you’ve built up in your current residence to help purchase your second property. And if you’re close to retirement and the kids have all flown the coop, think about downsizing to a smaller home for your primary residence as well. You could easily end up owning two homes for about the same price you were paying for the first!
• Look for a Low Maintenance Home. This is important for several reasons. For starters, you won’t be there all the time to keep up on maintenance chores, and when you are there you won’t want to waste your vacation working on the house. Secondly, most vacation homes are in areas where the elements take their toll. Whether it’s a seafront property or a mountain getaway, these climates tend to wear on a house quicker than in other areas. Purchasing a solid home built with low maintenance materials will ensure your time and money are spent on nights on the town instead of on mounting repairs.

Buying a house is the dream of many, but poor planning can turn that dream sour in a heartbeat! As many folks have found out the hard way. The best mortgage advice is knowing what to expect before you sign. Here are a few tips to make the process of buying a home what it should be: a dream come true.

Basic Mortgage Planning

It’s fine to want the best home you can afford, but be certain that it is comfortable affordability. Although you may find certain mortgage lenders who will stretch your qualification ratios (the ratio of your total mortgage payment to your total income) the traditional ratios of a mortgage payment that’s about 28% of your income and the total of your mortgage payment plus your monthly debt payments at around 36% of your income are good basic guidelines. Of course, many homeowners have entered a mortgage with less. When problems arise, however, those who stick with these ratios tend to come out on top in the end.

Planning Is Easier with a Defined Budget

Your household budget can tell you a lot about which properties are a good fit and which are best left alone. The fact is, however, that many folks don’t keep a well-defined budget at all. Take a few months, save every receipt, and get an accurate view of what you spend. Most importantly, write it down! Once you have it all on paper, it is much easier to see how the cost of mortgage payments, insurance, and property taxes can fit into your normal monthly spending.

This kind of budget examination will make the process of mortgage planning infinitely easier and could also give you a better idea of where (or how) you should live to pay your bills and still put money aside. For example, you may find that too a large percent goes to gas to and from work or to a particular pizza shop down the block; setting up residence closer to work or out of your favorite restaurant’s delivery range could greatly reduce your monthly expenses.

Pay Off Small Debts

Another great piece of mortgage advice is to pay off your lesser debts before you sign, Having 3 small credit card balances will only cloud the big picture. Even though the total is small, all 3 will have minimum payments, credit lines, etc. Pay as many of these small debts down to $0 balances and you’ll have fewer monthly bills and may even raise your credit score.

Document Organization

It is not necessary that you have every piece of mail you’ve ever received on hand before you apply for a mortgage, but there are a number of documents you will need eventually and the approval process will go much smoother if you begin to gather them now. Examples: W-2’s and income tax returns from the last few years (especially if you are self-employed), copies of pay stubs, a copy of your credit report, records of any child support or alimony (either going out or coming in), and bank statements for all accounts (checking and saving) for the last several months.

Don’t Forget about Closing Costs

One often neglected step in mortgage planning is preparing for your closing costs. Depending on the type of loan and your location, these costs can range from 3-5% of the mortgage amount, will be paid in cash at the closing, and shouldn’t (or cannot) be borrowed funds. Closing costs are a small percent of the total house price, but are too big a chunk of change to ignore!

Compare Different Loan Options

An article on mortgage planning would be sorely neglectful if it didn’t tell you to compare different sources for your loan. There are lots of sources for mortgage funds; your local bank or credit union, mortgage brokers, and Internet resources are all available and should be considered. Be certain to compare equal terms, down payments, and loan types.

Consider a 15 or 20 Year Term

Most mortgage planning is done with a 30 year loan in mind, but if you can swing it, a shorter term mortgage will save you plenty. There are various choices out there when it comes to choosing a mortgage, so you need to be smart about which terms you choose. Many home buyers make the assumption that a shorter term will boost their payments out of reach, but unless you make the comparison, you will never know if a 15 or 20 year term could have been affordable. If you are concerned about committing to the higher payment of a shorter term, try this tactic: Mortgage the home with a 30 year loan but have the lender develop a 15 and a 30 year amortization sheet for you. Then, do your best to pay the mortgage at the shorter term payment. It will do wonders for your equity position!

It is becoming more and more common amongst potential home buyers to pursue the most efficient route possible to a brand new home. Instead of going through the process of scouting out a neighborhood or collecting flyers, intelligent buyers are instead making a lender their first stop. Instead of spending hours on the wrong home, getting the sale price first is becoming a much more popular and simpler way to pursue a home.

Indeed, getting a financial frame of reference for your home search first can greatly cut down on the amount of time you spend looking through ads and walking through properties with a real estate agent. These are often the most time consuming parts of a home search and by simplifying them at least somewhat, you can spend more time on homes better suited for your financial situation.

However, there has been some misconception over the difference between getting pre-qualified for a particular amount and getting pre-approved for a particular purchase price. These two terms mean very different things and as a seller is looking over your offer, each term conveys something different and has a very different impact on that offer.

What Is Pre-Qualification?
In both processes, a lender will take down your financial information and provide you a rough estimate of what you can afford to pay for a home. A pre-qualification exercise can be seen as more of a rough draft of what you might be able to afford. While a lender will ask for your financial information, the lender will not typically go through the process of verifying your information or doing more research into your financial viability.

If you tout that you have been pre-qualified for a particular amount, it is certainly better than not having any idea of what you can afford. However, it says nothing about your actual ability to get a loan for that amount and instead says that you could probably get a loan for that amount. If a seller sees that you are pre-qualified for an amount approximating the sale price of the property, that does communicate some amount of credibility but not the credibility pre-approval suggests.

What Is Pre-Approval?
In contrast to pre-qualification, pre-approval is given to a potential buyer by a lender that has done significant homework into your financial history and has agreed to loan you the amount you have been pre-approved for. This carries much more weight than pre-qualification and communicates very clearly that your finances are in order and you are in prime position to buy a property that falls within range of the pre-approved figure.

When a seller sees that you have been pre-approved for the amount of the sale price, that seller takes your offer as a much more credible prospect than a contract that does not have pre-approval attached. Not only can pre-approval save you time during the search for a home, it can save you time when you eventually find that property. Pre-approval saves the time typically taken to secure financing after an offer is made and can often deliver a home to a potential buyer quicker.

As you ponder beginning a search for a first or new home, it is a great idea to first see a lender that can examine your financial situation and give you an idea of what kind of home you can afford. When you take that meeting, ask about what it might take to get pre-approved for the amount the lender suggests. Pre-approval not only shortens your search but conveys a sense of credibility in your offer to a home seller that you cannot achieve through pre-qualification or through pursuing the home first and financing second.

Review the article titled, “Don�t Buy a Car,” and apply it to any major purchase that would create debt of any kind. This includes furniture, appliances, electronic equipment, jewelry, vacations, expensive weddings�

�and automobiles, of course.

Don�t Move Money Around

When a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts.

If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them.

The mortgage underwriter (the person who actually approves your loan) will probably require a complete paper trail of all the withdrawals and deposits. You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious.

Perhaps you become exasperated at your lender, but they are only doing their job correctly. To ensure quality control and eliminate potential fraud, it is a requirement on most loans to completely document the source of all funds. Moving your money around, even if you are consolidating your funds to make it “easier,” could make it more difficult for the lender to properly document.

So leave your money where it is until you talk to a loan officer.

Oh�don�t change banks, either.

Expert advice on how to prepare your furnace for winter, including how to recognize potential furnace problems and keep your furnace operating smoothly and efficiently.

The official start of the fall season means leaves are changing, squirrels are feverishly collecting nuts, and pumpkin spice everything has invaded your grocery store. It also means winter is quickly approaching, and homeowners need to ensure their heating systems are ready for the cold days ahead.

These four signs indicate your furnace needs a fix. For more about how to do your own furnace repairs, see Furnace Not Working—DIY Furnace Troubleshooting and Repair.

Noises. If air vents emit a high-pitched, tuning-fork-like sound, it usually (but not always) indicates a lack of return air. When the system needs to pull more air, the pressure and velocity of air moving through it increases, making for some noisy vents.

Vents also might make a rattling or flapping sound, usually due to debris in the duct.

A rattling sound coming from the furnace itself might mean a part has come loose and is moving around inside, while squeals or shrieks can indicate a bad belt. A metal-against-metal scraping sound can mean that part of the blower system is coming loose.

Unusual odors. If you smell gas, oil, burning, an electrical odor or a musty odor coming from the furnace area, it could be something as simple as an air filter that needs changing, or as serious as a gas leak.

Furnace doesn’t heat. If the furnace is not heating, or not bringing the home to the temperature on the thermostat, it could be one of several culprits, as discussed in the video below.

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Furnaces runs continuously. If the system is constantly running without ever turning off, this indicates a problem.

Furnace Maintenance Tips

Some of the maintenance steps in this video can head off many furnace issues.

Start the heating season with a fresh air filter, and replace it every month or so if it’s a standard paper-style filter. A clean air filter will reduce indoor contaminants as well as facilitate proper airflow into your home.

Perform a visual check of the furnace closet/area to make sure nothing has gotten placed against it (especially combustible and flammable items). The area around the furnace should be clear and open.

Take off the front panel of the furnace to make sure everything inside is in order (sometimes rodents or insects nest in this compartment). Gently clean the inside with a vacuum attachment or soft brush to remove dust from the furnace components. Keeping dust off the electronic components doesn’t take long, and can save a lot of money down the road.Inspect ductwork for any air leaks, and seal with either a liquid sealant or heavy-duty aluminum foil HVAC tape. Anything you can do to close the system makes a furnace more efficient.

Clear any register blockages. If you have furniture or other items in front of heating registers, it will prevent heat from reaching living spaces, which can strain the system.

Replace the furnace’s water panel. Also known as a humidifier pad, this furnace component ensures proper humidity to keep the home’s air from getting too dry. Replace the water panel, set the relative humidity between 35 and 45 percent, and turn the water supply to the furnace back on.

About DIY Furnace Repairs

When you do it yourself, buy replacement parts at a trusted website like RepairClinic.com that sells only original replacement parts. This way, you can be confident the parts you’re purchasing are approved for use and guaranteed to work in your furnace.

Know when to call in a pro. While homeowners can perform some HVAC maintenance themselves, something like an unusual smell generally merits having a professional come in. Additionally, every few years (depending on where in the country you live), it’s a good idea to have professionals come to your home to handle internal ductwork cleaning to remove dust and allergens from the duct work.