Posted on: April 27, 2016
Living through a renovation with kids at home can be done. Here’s how — from families that have survived it.
Your 3-year-old hasn’t slept through the night in two weeks. And you’ve just gotten a second note from your daughter’s first-grade teacher about disruptive behavior and missed homework.
You’re so frazzled you forgot to brush your teeth this morning. That’s when you ask yourself, “Is this remodel worth it?”
Given the alternative (waiting a decade or two when the kids are grown), parents with children at home can hardly be blamed for biting the psychological bullet and diving into a project that can take weeks — even months. The good news is that you really can have that amazing new kitchen without losing your mind (or custody of your kids). It just requires a fair amount of finesse — and these expert tips:
1. Don’t Skip Self-Care
Keeping your kids sane through a remodel starts with keeping yourself sane. Children pick up on your emotions. If you’re stressed, exhausted, and anxious, they’ll reflect those feelings right back at you.
“When you’re in an airplane, they say put the oxygen mask on yourself first, then you can help the person next to you,” says Dr. Eugene Beresin, executive director of The Clay Center for Young Healthy Minds at Massachusetts General Hospital, and a father of four who survived his own renovation with newborn twins in tow.
“You can’t take care of your kids, set routines, or think about how the kids are reacting to change if you’re stressed,” Beresin says.
“Check in with yourself and make sure you, as the parent and caregiver, have a self-care plan in place for your own construction sanity,” says Lisa Bahar, a California-based marriage and family therapist. That plan could be as simple as regular date nights with your spouse or sticking to your workouts.
2. Disrupt the House, Not Your Routines
Your home might be in shambles (literally!), but you’ll still need to maintain a sense of normalcy.
“Children rely on familiarity, routine, and structure,” says Beresin. “Knowing your children and how they react to change, you can actually prevent stress by using preventative measures as opposed to just reacting to their reaction.”
An example might include eating breakfast at the same time every day — even if it happens in the living room.
Keep in mind your children’s developmental levels, strengths, and weaknesses. For school-aged kids, knowing where they can sit down and do homework every evening goes a long way. Teenagers need a private space to relax, no adults or siblings allowed. And toddlers, who don’t understand why their home is in disarray, might need more cuddling and play.
3. Put the Kids In Charge (of Something Small)
No, you don’t have to hand over the decorating reins to your teenager (unless you were already planning on turning your foyer into a One Direction shrine, in which case, shine on). But allowing them to pick small things, like their bedroom paint color and duvet, or their own stool for the new kitchen island, helps them feel more connected to the renovation.
“If they’re invested, they’ll feel more a part of the whole process,” Beresin says. “The last thing you want is for your kids to feel like hostages.”
4. Model Good Behavior
“It’s inevitable arguments will occur, so you and your spouse or significant other should learn ways to take the discussion away from the children,” says Bahar.
This might mean taking a few deep breaths and escaping to the garage for a meltdown after the contractor tells you he needs two more weeks, or that there’s a structural problem that’s going to cost extra to fix.
5. Explain the Unexpected
For young kids, explaining precisely what a renovation entails can be a struggle. After all, six months feels like an eternity to them.
“Young children work out difficulties through play,” says Beresin. He recommends using Lego sets or building blocks to walk through the renovation process with your kids. Try building a house and knock part of it down, making something new or different with the fallen pieces. “It may not seem like a direct correlation, but it is for a first-grader.”
When Beresin renovated his historic home in Acton, Mass., he was juggling a teenager, toddler, and infant twins.
“One event scared the hell out of my 3-year-old,” he said. “We were in the kitchen and a guy literally fell through the ceiling. We hear this crash and see two legs sticking out.”
That’s some scary stuff for a kid. Beresin recommends reassuring your children that “these events aren’t going to be the way the world is.” Something scary happened, but you still have some control over your home. They’re still safe inside.
After explaining exactly what had happened and that no one was seriously hurt, his 3-year-old still harbored some residual fear whenever she entered the kitchen, but it didn’t take long before the event became a running joke.
“There will always be unforeseen events, whether you have twins or a guy falls through the ceiling,” says Beresin. “It takes a fair amount of resilience to cope with the unpredictable, but your kids need preparation and discussion, and need to know it’s only temporary.”
Posted on: April 20, 2016
Do you know what documents to keep and why? You risk wasting money and time if you don’t back up your income tax records.
Millions of Americans will remember to do their taxes juuust in time to sprint to the April 15 finish, fists stuffed with W2s and receipts. But if you’re a homeowner, wrangling income tax paperwork — or other home records — is a marathon, not a sprint. Even more than repainting your house’s facade or mowing your lawn, keeping important docs organized year round is a crucial part of home maintenance — it can save you $ and protect you from the Tax Man.
Here’s what could happen if you don’t keep accurate records and back them up:
1. You’ll Pay More Taxes Than You Should
Homeowners get access to various deductions and credits based on payments for owning, financing, and maintaining a home. If you don’t maintain your records, you may miss out on some of these major tax benefits:
- Real Estate Tax and Mortgage Interest Deductions. “A homeowner’s biggest tax break generally comes from his or their monthly mortgage payments since, for most folks, the bulk of that check goes toward interest, and all that interest is fully deductible on Schedule A,” says Kay Bell, tax analyst at Bankrate.com. Property taxes are also deductible.
What You Need: Your annual statement from your mortgage company, which usually includes property taxes. If you pay your real estate taxes directly, the bill from your local unit of government.
- Home Improvement Deductions: Improvements made for purpose of accommodating disabled residents can be included in medical expense deductions. Energy costs for certain medical-related improvements may also be partially deductible. What You Need:Receipts and a letter from a doctor.
- Tax Credits for Energy-Efficient Upgrades: Installing new energy-efficient systems (that meet Energy Star guidelines) like insulation, a roof, windows, water heater, or furnace can earn you a credit to offset your tax liability. What You Need: Receipts and certification from product manufacturers.
- Home Office Deductions: If you can deduct the costs of a home office , you will need to prove you paid those expenses. For example, if your home office takes up 10% of your home’s square footage, you can deduct 10% of your home insurance and utility costs. But you need proof you paid those bills. What You Need: Bank statements, bill receipts, insurance receipts, your mortgage documents, and any other documents of related expenses. If you’re self-employed, you’ll be taking this deduction on Schedule C.
2. You May Have Trouble Selling Your Home
It’s not just the IRS that requires paperwork. Ryan Fitzgerald, a REALTOR® in Raleigh, N.C., and owner of Raleigh Realty, recently ran into proof of ownership issues when a seller hadn’t backed up his paperwork, nearly causing a delay in the sale of his property.
“The original deed was filed with the wrong county in North Carolina. The original bank was sold to another bank, and there were several refinances in between that caused confusion as well. The original paperwork could not be located by the purchasing bank, and since the original bank was no longer in business, the seller was freaking out about the sale not being able to go through,” recalls Fitzgerald.
“The buyer’s attorney needed to prove that my seller did indeed own the property outright, and could not do so without the original deed,” he says. “This all could have been avoided if there were duplicate documents backed up.”
What You Need: Your home’s deed, or deed of trust if you have a mortgage that needs to be paid off.
3. You’ll Miss Some Tax Savings When You Sell
In addition to all the tax benefits and credits homeowners can claim when they maintain proper paper trails, Eric Nisall, tax pro and AccountLancer founder, reminds homeowners, “It’s important to keep receipts and detailed records” even on home improvements and repairs that are not tax deductible. Those non-deductible expenses could offset potential taxes on the sale of your home.
Any gain on the sale of a primary residence over $250,000, or $500,000 for married couples filing jointly, is taxable. “When it comes time to sell your home, those expenses can be used to increase the basis in the home,” says Nisall. “Adding the costs of improvements to the original purchase price increases the basis, which in turn can reduce the taxable gain on the eventual sale,” he adds.
What You Need: All receipts from major home improvements.
4. You Could Be Fined By the IRS
By now you’ve probably got this figured out: keep the damn paperwork! But it’s not just about missing out on tax deductions — it also protects you if the IRS comes knocking. Because if they do, and you don’t have the paperwork to back up your deductions, you could be fined penalties and interest! The IRS expects to see proof of payment for all expenses.
What You Need: All tax and expense records stored and securely backed up. Put all your paperwork with a copy of your tax return. Make at least one hard copy. A digital backup on a drive or in a secure server in the cloud is a good idea, too. Digital copies are often fine with the IRS, but they have the right to demand a hard copy. So be sure to put one physical copy in a safety deposit box or some other secure place that will protect against fire, flood, theft, etc.
Posted on: April 14, 2016
1. If You’re Early Into Your Mortgage
It may not be as instantly gratifying as a treehouse vacation in Costa Rica, but spending your tax refund to pay down your mortgage principal could save you enough funds to take a splurge-loaded vacation a bit later.
Let’s assume you have a 30-year-loan at the average loan amount of $292,000, a 4.5% interest rate, and you’re getting that average refund of about $3,000. If you apply that “found” money to your principal each year, CPA Micah Fraim of Roanoke, Va., says you can shave years off your mortgage — in this case, nearly four. That’s about 95 mortgage payments you won’t need to make! Even better is the more than $70,000 that you’ll save in interest payments over the life of the loan.
If you don’t want to make an annual commitment, think about this: Make that payment just once and you’ll cut seven months off your payments and save more than $8,000 in interest. And when you decide to sell, you’ll have more equity.
2. If You’re Planning to Sell
Invest it in staging, and you may be surprised by how quickly your home gets plucked from the market.
“Staging lets prospective buyers see the space as their own, instead of as belonging to the people who currently live there,” said Ashley Lewkowicz, owner of Ashley Kay Design in Bucks County, Pa.
“A home that’s not staged can sit on the market for six months or more,” she added. “A home I recently staged sold in less than two.”
Not only is a faster sale better for your bank account in terms of saved mortgage payments and utility bills, but a drawn-out listing can cause a home’s price to wilt. That makes those throw pillows, decorative bath salts, and rented furniture way worth the investment.
For a large, suburban home in a major metro area, staging can cost about $2,000 upfront, and then about $500 per month for furniture and accessory rentals, according to Lewkowicz. But a faster sale at a higher price can definitely more than double your money over the course of the sales process.
And most staging can be accomplished with simple little touches.
3. If You’re a Home Improvement DIYer
Who knew your home could be your own personal ATM? For many DIYers, putting that $3,000 tax return into small home improvements can result in getting far more than their investment out of the house later.
- A new steel front door costs about $250, but can add about $1,500 when you sell.
- New wood flooring costs about $1,770, but is worth $5,000 when you sell.
- Even new insulation, which costs about $700, can recoup about $2,000 at sale.
If you’re willing to scope materials yourself and put in a little elbow grease, your tax return can fund a renovation for you to enjoy now and reap the financial benefits later.
Posted on: April 5, 2016
Understand which mortgage loan is best for you so your budget isn’t stretched too thin.
It’s easier to settle happily into your new home if you’re confident you can afford it. Here’s what you need to know about your mortgage financing options, including how to choose the loan that matches your income and tolerance for risk.
Mortgage Financing Basics
The most important features of your mortgage loan are:
1. Term (how long the loan lasts)
Mortgages typically come in 15-, 20-, 30- or 40-year lengths. The longer the term, the lower your monthly payment. The interest rate on a 15-year mortgage might be 1% lower than the rate on a 30-year mortgage.
The trade-off for a lower payment on the 30-year mortgage is that you make more payments. Since you borrow the money for longer, you pay more interest to the lender.
2. Interest Rate (how much you pay to borrow money)
Mortgage interest rates generally come in two flavors: fixed and adjustable.
A fixed rate gives you the same interest rate and payment until the end of your mortgage. That’s attractive when you’re risk-averse, if your future income won’t rise, or when interest rates are low.
The interest rate you pay on an adjustable-rate mortgage (ARM) changes at some point in the future based on where interest rates are at that time. ARMs are named for how long the rates last. For example, with a 5/1 ARM, your rate changes after the first five years and again every year after that.
ARM Risks and Rewards
An adjustable-rate mortgage rate goes up or down based on a particular financial market index, such as treasury bills. Typically, ARMs include a limit on how much the interest rate can change, such as 3% each time the rate changes, or 5% over the life of the loan.
Rewards for the uncertainty:
- ARMs can be a good choice if you expect your income to grow significantly in the coming years.
- The interest rate may drop if the financial market index that it tracks dips.
- An ARM usually starts at a lower rate than a fixed-rate mortgage of the same length and that can mean big savings.
Risks: If rates go up, your ARM payment will jump dramatically. So before you choose an ARM, be comfortable with your answers to these questions:
- How much can my monthly payments go up at each adjustment?
- How soon and how often can my monthly payment go up?
- Can I afford the maximum monthly payment?
- Do I expect my income to increase or decrease by the time the mortgage payment adjusts?
- Do I plan to own the home for longer than the initial low-interest-rate period, or do I plan to sell before the rate adjusts?
- Will I have to pay a penalty if I refinance into a lower-rate mortgage or sell my house?
- What’s my goal in buying this property? Am I considering a riskier mortgage to buy a more expensive house than I can realistically afford?
More Mortgage Options: Government-Backed Loans
If you’ve saved less than the ideal downpayment of 20%, or your credit score isn’t high enough for you to qualify for a fixed-rate or ARM with a conventional lender, consider a government-backed loan from FHA or the Department of Veterans Affairs.
FHA offers adjustable- and fixed-rate loans at reduced interest rates and with as little as 3.5% down; VA offers no-money-down loans. FHA and VA also let you use cash gifts from family members.
Before you decide on any mortgage, remember that slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment. To determine how much your monthly payment will be with various terms and loan amounts, tryrealtor.com’s mortgage calculator.
G.M. Filisko is an attorney and award-winning writer who has opted for both fixed and adjustable-rate mortgages. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.