Blog : American Home Shield

Homeownership Expenses That Your Clients May Overlook

Homeownership Expenses That Your Clients May Overlook

By the time buyers contact you for help in making a real estate purchase, they’ve likely considered their budget and determined how much they can afford to spend on a new home. They’ve probably considered a down payment, mortgage payments, closing costs, taxes, and insurance. Your buyers even may have obtained pre-approval from a lender. Even when they’ve been very thorough, buyers may overlook or underestimate some of these common homeownership expenses:

Lawn care

Caring for turf, gardens, shrubbery, and trees can add up, even for do-it-yourself homeowners and for those with smaller yards. Buyers will likely have expenses for gardening equipment, fertilizer, weed killer, mulch, plants, lawn and garden products, plus any professional care. If there are trees on the property, buyers will need to budget for regular trimming, fertilization, and removal of hanging tree limbs that can fall and damage roofs, windows, and other trees, shrubbery, and plants.

Snow removal

In some climates, homeowners will need to contract for snow removal from driveways, walkways, and the roof or budget for snow removal equipment to do the job themselves.

Chimney cleaning

If the home has a wood-burning fireplace, regular chimney maintenance is necessary for fire safety. According to the Chimney Safety Institute of America (CSIA), the National Fire Protection Association (NFPA) Standard 211 says, “Chimneys, fireplaces, and vents shall be inspected at least once a year for soundness, freedom from deposits, and correct clearances. Cleaning, maintenance, and repairs shall be done if necessary.” The Chimney Safety Institute of America also recommends that open masonry fireplaces should be swept at 1/8″ of sooty buildup and sooner if there is any glaze present in the system.

General maintenance

Depending on the size and condition of the property, there can be a variety of seasonal and annual expenses associated with filter changes, roof repair, caulking, sealing, and other upkeep.

Termite and pest control

Protecting a home from termite and other pest infestations can vary according to region. Still most homes need some level of protection from termites as well as other common household nuisances, including rodents, ants, flies, roaches, bed bugs, and others.

Swimming pool/spa maintenance

If the property has a swimming pool and/or spa, there will be costs associated with cleaning, chemicals, filters, pump maintenance and repairs, and possibly winterization in some climates.

Automatic irrigation maintenance

Lawn sprinkler systems can be convenient but will require expenses for system inspections, winterization, replacement of sprinkler heads and lines as needed, plus water utility costs.

Repair or replacement costs

Home system and appliance component failures due to normal wear and tear are an inevitable part of homeownership. Per-trade estimated repair or replacement costs* that homeowners without home warranty coverage could experience include:

  • Plumbing up to $1,200
  • Appliances up to $1,500
  • Heating up to $3,625
  • Cooling up to $3,800
  • Pool and spa up to $600

An American Home Shield® home warranty offers your clients budget protection for covered home system component breakdowns at special Real Estate Edition prices. In addition to industry-leading home warranty coverage, your clients can choose from customizable plans specifically designed for the needs of home buyers and sellers.

Helping your clients consider basic home maintenance costs can help them with more than budgeting. When your clients have an accurate understanding of the expenses required in homeownership, they’re more likely to enjoy their new home and be happy with their real estate purchase.

*Based on the 2019 ClearVantage report “A Study of Homeowners’ Appliance and Home System Service Experiences.” The “up to” costs listed above are in the 80th percentile of repair or replacement of high cost items in each category.

To learn more about our partners at American Home Shield, check out their blog.

5 Ways to Be a Memorable Real Estate Agent

5 Ways to Be a Memorable Real Estate Agent

Building a strong repeat and referral network through long-term client relationships is a major part of growing business as a real estate professional. It’s important that the service you provide and the connections you form are memorable enough to prompt clients to recommend you to friends and family and call on you again when they wish to buy or sell a home in the future. What can you do to be a memorable agent? Here are five ways to make a lasting impression:

1. Be responsive.

Buying or selling a home can be a stressful time for your clients. That’s why they appreciate it when you respond to questions and requests promptly and completely. When it comes to being memorable, the importance of good communication cannot be underestimated. Return phone calls, text messages, and emails as soon as you can. If a client asks for information, gather it right away and make sure they receive it. Always follow up to see they understand the answers or data you provided and find if they have additional questions or needs. If you haven’t heard from a client in a while, take the initiative to check in with them. Offer regular updates and progress reports on listing activity, market changes, and other real estate-related news to keep them informed and in the loop.

2. Little things matter.

People often remember the small gestures that can make life easier, and the real estate transaction process more pleasant. Things like bringing hand sanitizer and cold water to showings, offering clients an umbrella when it’s raining, and bringing in their newspaper from the driveway or their garbage can from the curb can make big impressions. Always look for little ways to demonstrate to clients that you’re always looking out for their best interests and putting them first.

3. Stay in touch.

If you want your client relationships to continue after transactions are finished, look for ways to keep in touch long after deals close. Send holiday greetings in the mail or electronically. Share market updates regularly as well as any information or links that might help them as homeowners. If you have extra tickets to local events, offer them to your clients for their enjoyment. Check-in frequently to inquire about their family and pets, as well as to see if they are still enjoying their home.

4. Close with a gift.

In addition to thanking clients for their business, the gesture of a closing gift can serve to remind clients of the important service you provided, and the relationship you built with them. Try to choose closing gifts that will last over time, such as something for their home or garden. Candlesticks, serving trays, a small tree to plant, a garden sculpture, or a framed rendering of their home can all be proudly displayed and a reminder of the successful transaction spearheaded by you.

5. Include American Home Shield® home warranties in transactions.

One of the best ways to show clients that you care about them is to include American Home Shield real estate home warranties with every transaction. Each time clients have a covered repair handled, they will be grateful to you for the budget protection and the repair solution provided by their home warranty plan. American Home Shield’s Livable and Forgivable Coverage is built for every day, real life, with no age limits, no inspections, and no maintenance records required. Livable and Forgivable Coverage can mean less frustration, higher client satisfaction, and more appreciation for you. Contact your American Home Shield Account Manager or call 800.735.4663 for more information.

Another way to stay on your clients’ radar is to connect through social media. Be sure to follow your clients on their preferred social media platforms where you can interact with them as well as keep up with what’s happening in their lives.

For more information from our partners at American Home Shield, check out their blog!

What to Do When the Inspection Report Isn’t Good

What to Do When the Inspection Report Isn’t Good

Whether you’re representing the buyer or the seller, the home inspection can be a critical time in the real estate transaction process. When the home inspection report is good, a collective sigh of relief can often be detected from agents and clients alike. When the home inspection report isn’t good, it’s time for agents to swing into action. Here are some steps to consider:

Know your market.

To some extent, reaction to a less-than-stellar inspection report may be tempered by whether you’re dealing with a buyers’ or a sellers’ market. If it’s a buyers’ market, sellers may be on the line to fix most of the deficient items noted in the report before the deal can continue. In a sellers’ market, buyers may not have as much negotiating power. It’s important to understand the current real estate climate and explain to your clients how the market conditions factor into home inspection expectations.

Work with the other agent.

As soon as possible, contact the other agent in the transaction to discuss the inspection report findings. Acknowledge that the report contains bad news and start the conversation about next steps. As much as possible, try to get a sense of their reaction and willingness to make concessions.

Ask for more time.

The real estate contract often specifies a date or timeframe for removing the home inspection contingency. Requesting an extension of that date may give you and your clients the chance to consider the report, gather additional information or estimates, negotiate repairs, fix deficient items, or decide your next steps. If you think some extra time would help keep the deal on track, request it.

Get multiple estimates.

If the cost of repair work noted in the report concerns the buyer or the seller, gathering several quotes from qualified sources may help pinpoint what exact costs are likely to be. In some cases, repair costs may be lower than the client’s project, which can be reassuring. If the estimates come in higher than clients predict, they have the accurate information they need for negotiation and decide whether to move forward.

Communicate.

With accurate figures in hand, have a heartfelt conversation with your clients to understand how the inspection report affects their financial and emotional commitment to the deal. Be ready to communicate their position to the other agent clearly.

Negotiate.

After you’ve assessed market conditions, have an accurate understanding of costs involved, and have communicated with your clients, it’s time to negotiate. In some cases, you may be negotiating which repairs the seller needs to make before the deal can close. In other cases, you might negotiate a reduction in selling price or a credit at closing to cover the repair costs. If you’re facing an unusual inspection issue, seek advice from trusted colleagues who may have handled similar situations in the past.

Request documentation.

For everyone’s protection, specify that sellers submit documentation of repair work performed from qualified service professionals. It’s also a good idea to schedule a follow-up inspection or a walk-through to confirm that the negotiated work was satisfactorily completed.

Add American Home Shield® Home Warranty Coverage.

300,000 real estate transactions per year include American Home Shield home warranties, and for a good reason. In addition to offering important budget protection for covered items, American Home Shield coverage can help mitigate unexpected home inspection issues to keep transactions on track. Home warranty protection can also offer valuable reassurance to buyers, especially when the age or condition of covered home systems and appliances are in question.

When home inspection reports are disappointing, it’s important for clients to see their agent responding calmly and deliberately. They will always remember the valuable, professional, and steady guidance that you offer during a critical time.

For more helpful tips from our partners at American Home Shield, check out their blog!

How Video Can Help You Stay in Front of Clients

How Video Can Help You Stay in Front of Clients

Successful real estate professionals know the importance of using all the tools at their disposal. In today’s selling environment, video can be one of those effective tools. Whether you’re new to video technology or a seasoned pro, understanding how it can help your business is the first step to using it to your best advantage. Video communications can be beneficial to your real estate career by helping you:

Connect

When people can see your face and hear your voice, it’s much easier to connect with your message. Whether you’re talking about a listing, offering real estate advice and expertise, or sharing via social media, video communications can be more effective and memorable than other forms. With video, you can express your personality as well as share your expertise.

Sell

Video tours can help you market properties, even when prospective buyers are in different geographic locations. When you have clients who are buying, video can help them narrow down their choices without wasting valuable showing time. With the 3D virtual tour technology available today, videos can help you show the actual layouts and room flow of properties much more effectively and accurately than still photographs can.

Inform

Video can be a great way to share information with clients, colleagues, and the general public. For example, sellers can use videos to show their spaces while you make suggestions for listing preparation. You can send videos of listings to colleagues to spark interest and to share with interested clients, or as a way to follow up after private showings or open houses. If prospective buyers have follow-up questions about properties, you can provide visual information or confirmation instead of written answers. Video tours can be great ways to get the word out about new listings to generate interest.

Distance

When social distancing is required or recommended, video tours can provide an opportunity to keep real estate deals moving forward. Video tours, showings, and even open houses can be conducted virtually. In some cases, home appraisals and home inspections can be completed in full via video.

For the latest in virtual home tour technology, be sure to check out Streem®, a dynamic new video chat tool, and enhanced communication platform being developed and tested by American Home Shield®. Streem enables you to share digital space with clients using one-way video and two-way audio. In addition to virtual home tours, Streem can also aid in remote listing preparation and documentation. With the helpful StreemshotsTM feature, you can highlight, share quick sketches and diagrams, and capture full-resolution photos during chats. For more information about Streem, contact your American Home Shield Representative.

For more helpful tips from our partners at American Home Shield, check out their blog!

5 Tips on How to Successfully Work Remotely

5 Tips on How to Successfully Work Remotely

The events of 2020 prompted more people than ever to find ways to work and study remotely. According to Gallup Panel data from April, sixty-two percent of employed Americans said they worked from home during the Covid-19 crisis, a number that doubled since mid-March of the same year. Whether you’re currently working remotely or plan to do so in the future, here are some suggestions for a successful experience.

1. Stick to a schedule.

Having an agenda each day can help you manage your time and stay on track with projects and deadlines. A schedule can also help provide structure to your day. It’s usually best to design your schedule around the same timeframes that you’d be keeping if you were in an office with your co-workers. Of course, one of the biggest benefits of working remotely is that you won’t have to factor in commuting times.

2. Give yourself space.

With laptops and tablets, it can be tempting to work from the couch, or even from your bed. From productivity and ergonomic standpoint, it’s usually best to designate a specific work area where you can keep the tools, supplies, and resources you need within easy reach. A dedicated office space can also help you corral all your work materials in one place, preventing them from being spread out all over your home. Make your designated workspace as comfortable as possible, with good lighting, a stable work surface, and a chair that provides good back and leg support.

3. Keep quiet.

When you’re on calls and videoconferences, try to minimize any background noise. Even when you’re working remotely, it’s best to maintain a professional atmosphere. You’ll also want to be able to hear and understand your colleagues and customers correctly. Close the door to your workspace to limit noise from pets and other family members, as well as sounds from household appliances, street traffic, and neighbors.

4. Take a break.

If you normally stop mid-morning and take a break at the office, it’s a good idea to keep up that habit. Even if you don’t leave home for lunch, fight the urge to take your meal back to your work station and eat elsewhere to give yourself a change of scenery. If the weather permits, fit in a walk around the block or sit outside during your breaks to enjoy some fresh air and sunshine. You’ll likely be more productive when you step away from work and clear your head periodically during the day.

5. Connect with people.

Working in isolation can be intense and lonely. Make time each day to relate with others outside of zoom conferences and work-related communications. Keeping up social connections, even while socially distanced, can be important for your mental and emotional health as well as for your outlook.

Working remotely can have many advantages, including proximity to your family, pets, and your kitchen. You can often dress in a more relaxed fashion and can save on commuting costs. Whether you plan to work remotely permanently or temporarily, finding ways to stay productive and creative can add to your overall job satisfaction.

For more helpful tips from our partners at American Home Shield, check out their blog!

How to Prepare Your Kids to Move

How to Prepare Your Kids to Move

No matter what real estate trends you’re dealing with in your market, moving is always stressful and difficult, but it’s even more overwhelming when you have to prepare kids for the process. Kids usually don’t want to leave their friends and school behind, and they may anticipate missing family members. But it’s important to frame moving as the start of a new adventure, while giving kids space to grieve for the things they’re leaving behind.

Get your kids ready for a move by starting discussions about it as soon as you can. These moving tips will help you get your kids ready for a big change of lifestyle.

Don’t Put Off Telling Your Kids About the Move

If you have an upcoming move, the best thing you can do is let your kids in on it as soon as possible. Telling your kids about the move early on gives them a chance to process their feelings about it and get used to the idea. This is especially important for older kids and teens, who are the most likely to react poorly to a planned move; they are more strongly tied to their social groups and more likely to be looking forward to events and outings, like prom with their friends, that they might miss because of a move.

Kids will tend to react to news of a move with apprehension, so it’s a good idea to talk to them about it often and give them as much information about it as you can. Answer their questions and address their concerns with reassurance. Kids need to know that moving can be a good thing. If possible, take them to the town or neighborhood so they can get an idea of what to expect. If it’s not possible to take kids to their new home in advance, try to find as much information about the new community as you can. Look for pictures of the new town and school, activities they can get involved in or facilities they might enjoy.

Give Your Kids Some Decisions to Make

Kids will feel more confident about an upcoming move if you involve them in the decision-making process. You could take them house hunting with you, or if that’s not practical, show them the online listings for houses you’re considering and ask for their input. Older kids can even help you look for promising listings.

Once you’ve found a new place, give kids some input on getting the new home ready. Maybe they’d like to choose a paint color for their new bedroom or spend some time planning new bedroom layouts with crayons and paper. Getting new furniture? Let kids choose their own bedroom sets or decorative elements. Take the opportunity to start teaching kids about home maintenance or plan some outdoor DIY projects for them to look forward to.

Ease the Transition

Very young children, under five years old, may not understand what moving means. Use stories or books to explain the concept, and explain what’s happening again when you’re packing up. Ease the transition for very young children by trying to keep the same furniture and layout in their new bedrooms and play areas, if not throughout the house.

Older kids can understand the process and will appreciate being given some role in the move. School-aged children may be sad about leaving friends and relatives, or anxious about a new school. Prepare for the move by gathering as much documentation as you can for the new school, including test scores, medical records and curriculum information. School-age children will want to know everything they can about their new school, new teachers and potential new friends, too.

Teens are most likely to struggle with a move, since they are often so closely connected to friends and social groups and are deeply committed to extracurriculars and hobbies. They may resent uprooting their lives, leaving their friends and missing out on upcoming social events. Give teens the chance to express and come to terms with their feelings, while reassuring them that moving is difficult for everyone and helping them plan to maintain their relationships with those they’re leaving behind. Planning a post-move trip to visit old friends and relatives might help, as well as encouraging teens to maintain connections via social media and correspondence.

If a move happens in the middle of a school year, it might be worth letting teens finish out the school term with a close family friend or trusted relative. If your teen is close to finishing school, it may be easiest for everyone if he or she is allowed to graduate with his or her friends before joining the family in the new home for the summer before college.

While moving is often logistically difficult and stressful for adults, it can be exciting for children. Getting your kids ready for a move can give them the foundation they need to thrive in their new home, and buying a home warranty can give you the budget protection you need to focus on helping your kids adjust, instead of worrying about unexpected repairs. American Home Shield® today to find out more about protecting your new home.

8 Ways to Attract New Clients

8 Ways to Attract New Clients

For real estate professionals, building business usually means attracting new clients. With long hours and busy days, it can be difficult for agents to find the time and energy target prospects and market to them. If you feel like you’ve plateaued recently in your prospecting efforts, here are some ideas that may help:

1) Include testimonials in your promotional materials.

Testimonials are a highly effective marketing technique, especially in service-oriented businesses. Ask former clients if they’d be willing to write a few sentences describing the service you provided to them, and then ask for permission to publish their statements and their names on your website, social media accounts, and printed materials. These testimonials could tip the scale in your favor when prospective clients read them.

2) Target your advertising.

Instead of taking a blanket approach to marketing your services, think about the segment of real estate clients you want to attract, and then narrow your efforts to avenues that would reach those demographics. For example, you might want to send mailings to certain zip codes or place door hangers in specific neighborhoods. If you specialize in relocations, contact companies in your area that transfer personnel into the area.

3) Personalize your social media.

More than most avenues, your social media accounts enable you to let your personality shine through, which can attract people to you. In addition to advertising listings, use your social media pages to post recent pictures, share videos, and to give a glimpse into what you do as an agent and who you are as a person. Interacting with other accounts can help increase your online profile and express your individuality as well.

4) Ask for referrals.

​​​​​​​It may not occur to people that your business can benefit from referrals, so don’t be afraid to let them know. Tell former clients, friends, and family that you’d appreciate them sharing your name and experience with others, especially those who are actively looking for real estate assistance. Supply them with business cards and other printed marketing materials to pass along. Periodically share on your social media accounts that you welcome referrals and include information about how you can be contacted. When someone does refer a client to you, don’t forget to thank them promptly with a phone call, card, or small gift to let them know that you’re grateful for their trust and their effort.

5) Be social.

​​​​​​​Networking doesn’t just happen at industry events. In fact, you can meet new clients at just about any social occasion. Accept invitations, attend events, be active in your community, and volunteer for charity work. While you’re participating, talk to people about what you do, work your experience and knowledge into the conversation, and share your contact information.

6) Be an excellent communicator.

Check all your message portals frequently, and return calls, texts, emails, and direct messages as soon as possible. You don’t want to miss a message from a prospective new client, and you want to make a good first impression by getting back to them promptly.

7) Ask for the business.

​​​​​​​When you hear that someone is about to sell their house, wants to find another, or maybe just wants to look around at real estate and kick some tires, don’t be afraid to offer your services. A personal phone call or visit from you at an opportune time may be all it takes to land a new client.

8) Go the extra mile for your clients.

​​​​​​​Satisfied clients will be more likely to tell others about you and the service you provide. One way to provide personal service and to let clients know that you care about them even after deals close is to add an American Home Shield® Home Warranty to every transaction. American Home Shield offers valuable protection for home buyers and sellers alike for many of a home’s most critical home system components and appliances, as well as a reliable resource to call for help with covered malfunctions. When clients feel that you care enough about them to go the extra mile, they may be more willing to refer you and to return in the future as repeat customers.

As important as it is to attract new clients your business, don’t forget to stay in touch with previous clients, too. In addition to being a great source of referrals to you, building long-term relationships with people can be one of the biggest joys of having a real estate career.

For more helpful tips from our partners at American Home Shield, check out their blog!

10 Tips for Avoiding Germs While in the Field

10 Tips for Avoiding Germs While in the Field

When you’re out and about showing homes, meeting clients, and networking with colleagues, you may be exposed to harmful germs that could possibly lead to illness. As a busy real estate professional, unplanned time away from work can cause disruptions for you, your clients, and your transactions. While you can’t avoid every single germ, it’s important to take prudent steps to protect yourself and to give yourself the best shot at remaining healthy and productive. Here are some practical tips to that can help keep certain types of germs at bay:

1. Wash Your Hands

Wash hands often and well with soap and warm or cold running water, then rinse and dry them. When you don’t have access to running water and soap, substitute with hand sanitizer. Remember to clean under your fingernails and around rings and jewelry, which can harbor germs.

2. Social Distancing

Avoid standing or sitting too close to people, leaving at least six feet of space on either side of you. Remember to do this even when standing in lines or sitting in waiting rooms.

3. Wipe Down Surfaces

Frequently wipe down surfaces such as your phone, keyboards, door knobs, desk and counter surfaces, and car door and faucet handles.

4. Avoid Touching Public Items When Possible

When in public spaces, such as restrooms or elevators, avoid directly touching things like door knobs, handles, hand rails, and buttons. Instead, use a disposable wipe, paper towel, or operate the items with your clothed elbow if you can.

5. Avoid Touching Your Face

Avoid touching your face as much as possible. When you must, wash your hands first.

6. Don’t Share Personal Items

Don’t share food, beverages, straws, cosmetics, dishes, or towels with others.

7. Stay Up to Date on Vaccinations

Make sure to get an annual flu shot, and check with your medical provider to see if you’re up to date on other important vaccinations.

8. Use Technology for Interactions

Meet clients at showings instead of driving them in the same vehicle to avoid close contact. When possible, use FaceTime or Zoom to connect and communicate.

9. Take Common Sense Measures

To avoid food poisoning when you’re eating at restaurants, the Centers for Disease Control and Prevention suggests taking common sense measures like checking health inspection scores and food safety training certificates, watching for safe food handling practices, ordering properly cooked food, and avoiding food that’s served lukewarm.

10. Take Care of Yourself

Take care of yourself. Give your immune system every advantage by eating a balanced diet, getting adequate rest, exercising, staying hydrated, and avoiding stress. Talk to your doctor to see if you should be on a vitamin regimen.

If you feel like you’re getting sick, stay home and isolate yourself from others as much as you can. While you might not be able to protect yourself at this point, you can protect others and help prevent the spread of some illnesses.  Even if it’s a false alarm, it’s best to err on the side of caution. With online access and remote office capabilities, you may even be able to stay in contact with your clients and get some work done when you’re feeling better.

For more helpful tips from our partners at American Home Shield, check out their blog!

How to Buy a House When You Have Student Loans

How to Buy a House When You Have Student Loans

If you went to college in the U.S., chances are you have student loans. One in five American adults, or 44.7 million people, has student loan debt. And while most Americans with student loan debt are young, many are older — the number of people over 60 carrying student loan debt has doubled in the past decade. Some will be paying off student loan debt for their entire lives.

But just because you have student loans doesn’t mean you can never buy a home. Even large student loan debts don’t have to preclude homeownership, as long as you’re comfortable carrying two long-term debts at the same time. You need to plan carefully for a home purchase, but that’s true of every first-time buyer looking for a home, even those without student loan debt.

Prepare for the Costs of Homeownership

When homeowners have buyer’s remorse about a home purchase, it’s usually because they didn’t prepare themselves adequately for the realities of homeownership and its hidden costs. The costs of homeownership don’t end with your down payment and mortgage payment. They also include the cost of homeowners insurance, property taxes and homeowners association (HOA) fees.

If you have a small down payment, you’ll have to pay for private mortgage insurance (PMI), which is an additional fee tacked on to your monthly mortgage payment. Get pre-approved for a loan so you can get some idea of how much you can afford and what your average closing costs will be. You’ll also have to pay for home maintenance and repairs, which can total thousands of extra dollars in a bad year, or no extra dollars in a very good year.

By preparing yourself to face these costs, you can mitigate their impact on your life. You can choose a home in an area with low property taxes or without an HOA. You can learn about the things that tend to drive up homeowners insurance, like wood-burning furnaces or pools, so you can avoid homes with those features. Educate yourself on current real estate trends in your market and what to look for when buying a house, so you can find a property that needs minimal or no work to make it move-in ready. And you can buy a home warranty to offset the out-of-pocket costs of home maintenance and repairs.

Clean Up Your Credit Score

You’ll be more likely to get a home loan and get a better interest rate if you have a good credit score. You should aim for a score above 680. Credit scores above 740 get the best rates.

To improve your credit score, pay your bills on time. Paying your bills in full and on time is one of the biggest factors of a healthy credit score, because it shows lenders that you can be trusted to make your payments. Keep your credit utilization ratio, or the ratio of credit account balances to total credit usage, below 30 percent. To help with this, keep old credit accounts open — doing so can improve your credit utilization ratio. Plus, the older the age of your open credit accounts, the longer your credit history, and the higher your credit score.

You should also try to use different types of credit. While using credit cards wisely can improve your credit score, showing a mix of installment loans and revolving credit accounts on your history shows your ability to juggle different types of credit.

Bring Down Your Debt-to-Income Ratio

Lenders will look at your debt-to-income (DTI) ratio, which shows what percentage of your monthly income goes to debt repayment, when deciding whether to give you a mortgage. Ideally, your monthly debt payments should be lower than 36 percent of your total income, and your total housing expenses should be less than 28 percent of your income. However, some lenders and loan programs are more flexible when it comes to DTI.

To improve your DTI, you can consolidate your student loans to get a lower monthly payment. If you have credit card debt, try paying it off or consolidating it with a lower-interest personal loan. If you have federal student loans, try applying for an income-based repayment plan to lower your monthly payments. You can also try improving your DTI by raising your income, either by asking for a raise or taking on a second job or side gig.

Get Down Payment Assistance

The biggest challenge most prospective home buyers face is getting together the down payment. While you can use money gifted from a relative towards your down payment, your lender will require a gift letter to verify that the money is, in fact, a gift rather than a loan, and that the giver is someone you’re closely related to. Lenders will examine your financial history closely and will require an explanation of any large, out-of-payroll amounts counting towards your down payment.

Traditionally, you’d need a down payment of 20 percent, but that’s no longer the case. FHA loans require a down payment of only 3.5 percent, although you’ll have to carry PMI if you have a smaller down payment. If you want to buy in a rural area, you can get a USDA loan with no down payment. Veterans and active military members may also qualify for down payment assistance, and some states offer down payment assistance to low-income residents or single parents. With down payment assistance from a government program, you don’t need a substantial savings account or help from relatives to swing a house down payment.

Student loan debt might seem to preclude homeownership, but the truth is that you don’t have to let it keep you from realizing your dreams. With careful budgeting, almost anyone can afford a home of their own. Once you’ve got the keys in hand, protect your budget with a home warranty from American Home Shield®.

For more helpful tips from our partners at American Home Shield, check out their blog!

What First-Time Homeowners Need to Know About Filing Taxes

What First-Time Homeowners Need to Know About Filing Taxes

If you bought a home for the first time in 2019, you probably have questions about filing your taxes. Learn more about filing taxes for the first time as a homeowner.

Buying your first home is a big deal. It’s perhaps the biggest purchase you’ll ever make, and it can bring independence, privacy, self-reliance and stability, as well as setting you on the path towards financial security, freedom and flexibility.

If you bought your first home in 2019, you’ll be filing taxes as a homeowner for the first time this April. You may have heard that first-time homeowners can get a big tax break. Well, we have some bad news and some good news regarding that.

Bad news first: The homeowner tax credit for first-time home buyers is a rule that no longer exists. You can only take advantage of it if you purchased your first home on or before September 30, 2010.

But the good news is that there are still tax advantages to homeownership. The added good news is that you don’t necessarily have to be a first-time homeowner to take advantage of them. You can continue to benefit from homeowner tax advantages for the entire length of time you own your home and even after you sell it. These tax tips for new homeowners will show you how.

You Can Deduct Mortgage Interest and PMI

Under the Tax Cuts and Jobs Act of 2017 (TCJA), you can deduct any interest you paid on your mortgage, as long as you borrowed $750,000 or less. This includes mortgage interest you paid as part of closing costs. If you bought your home on or before December 15, 2017, you’re grandfathered in under the old limit of $1 million, so you can deduct loan interest on mortgages up to that amount. You can take this deduction every year you’re paying on your mortgage, and for subsequent home purchases as long as your loan amount is below the threshold. You can also deduct the interest you paid on a home equity loan up to $100,000, as long as you use that money to improve your home.

If you borrowed for your home with a downpayment of less than 20 percent, you probably have private mortgage insurance, or PMI. You can deduct PMI payments as long as your adjusted gross income is less than $100,000 if you’re married or $50,000 if you’re single.

You Can Deduct State and Local Taxes

You can deduct your state and local taxes, or SALT, from your federal taxes, up to a limit of $10,000 under the TCJA. If you pay your taxes through an escrow account, you’ll see that amount on your Form 1098. If you pay local taxes directly to your municipality, make sure to keep a record of your payments so you can deduct those from your taxes, too.

A caveat: you have to itemize in order to deduct SALT payments, PMI payments and mortgage interest. SALT deductions, and mortgage interest deductions, too, might benefit you at tax time if you live in an expensive, high-tax area. Otherwise, you may be better off taking the standard deduction, especially if you’re married. If you’re single, on the other hand, your mortgage interest, PMI and SALT might easily exceed your standard deduction.

Do You Qualify for a Homeowner Exemption?

In many states, some homeowners qualify for a homeowner exemption or homestead exemption, which can lower your property tax bill, usually by lowering the assessed value of your home.

Who qualifies? Well, that really depends on your local laws. Typically, these things are decided on the state, county or municipal level, and requirements can vary widely. Commonly, homeowner exemptions are given to the elderly, the disabled and veterans, but some jurisdictions give them out to homeowners below a certain income threshold or homeowners who make specific improvements to their property, such as planting a rain garden or a coconut tree. Typically, you do have to use the home as your primary residence in order to qualify.

Some Energy-Efficient Upgrades Still Bring Tax Benefits

You can’t get tax breaks for most energy-efficient home upgrades anymore, but you can still get them for solar panels through 2021. If you had solar panels installed in 2017 through the end of 2019, you can get back 30 percent of your costs in the form of a tax credit. If you install panels in 2020, you can get back 26 percent of the cost, and if you install them in 2021, you can get back 22 percent of the cost.

Home Office Deductions May Be Available, Too

Whether you work from home full-time or just have a side hustle, you may be able to take a business use of home deduction. You can deduct $5 per square foot for up to 300 square feet of office space for a total deduction of up to $1,500. However, you should make sure that your home office is exclusively used for business purposes, and check with a tax professional to make sure you’re meeting the strict guidelines required to qualify for this deduction.

Before you file taxes as a homeowner for the first time, you need to know what tax credits and deductions you qualify for. Homeownership brings many tax advantages on the federal, state and local levels. It’s just one of the many reasons why owning your own home pays off.

For more helpful tips from our partners at American Home Shield, check out their blog!