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Coming up with enough money for a down payment is a struggle for many people, particularly first-time homebuyers. Family members and others often want to help. If youd like to provide money for a down payment as a gift, be sure that you understand the guidelines, required documentation and potential tax implications.

Why Do Lenders Care About Sources of Down Payment Funds?
A mortgage lender will want to know where a borrower got money for a down payment. If someone received a large sum of money from another person, the lender will want to know that the money was a gift, not a personal loan thatll need to be repaid and that could cause the borrower to be unable to afford the mortgage.

Underwriters will want to know the source of any large deposit in a borrowers account. Some lenders define a large deposit as a single deposit thats more than 50 percent of the total monthly qualifying income for the loan, while others verify deposits that are more than 1 percent of a homes adjusted purchase price or appraised value. In some cases, an underwriter will verify the source of any larger-than-usual deposits, no matter how much money the borrower earns or how much the house costs.

Who Can Provide Money for a Down Payment?
All lenders allow gifts from family members, but various lenders have somewhat different definitions of who is considered a family member. Some lenders allow gifts from employers, labor unions, charitable organizations, sellers, builders, developers and real estate agents.

Although the amount that can be given as a gift is not limited, a lender may require a buyer to provide a percentage of the down payment from personal funds. The rules depend on whether the home will be a primary or secondary residence, whether its a single- or multi-family house, and the type of mortgage to be obtained.

Documentation and Taxes
If you give someone money as a gift for a down payment, the lender will require a letter including your name, address, phone number, and relationship to the borrower, as well as the amount and date of the gift, the source of the funds, and a statement that the money is a gift and that you dont expect to be repaid. The letter should also include the address of the property to be purchased and your signature. You should keep detailed records showing exactly where the money originated and how you transferred it to the recipient.

If you give someone a gift for a down payment, you may need to pay taxes on the money. Check with an accountant to find out if youll owe taxes and how much.

Be Informed Before Giving a Gift
Giving money for a down payment can help make a loved ones dream of owning a home a reality. If you want to provide funds as a gift, make sure you understand the lenders rules and the applicable tax laws.

This article is intended for informational purposes only and should not be construed as professional or legal advice.

Published with permission from RISMedia.

Smart home technology continues to grow in popularity among luxury buyers, and millennials in particular. Its a feature that can help your property to stand out from the rest, yet many homeowners are still on the fence about installing an automation system in their home.

Truth be told, there are plenty of benefits of having smart home technology. Here are just a few of the ways it can improve your life!

Energy Efficiency
Smart thermostats are proven to reduce the energy required to heat and cool your home. This means that in addition to lowering your impact on the environment, youre also saving on utility bills each month. Some systems can even monitor water usage to ensure there isnt a leak thats going to run up your bill.

Security
Once youre able to control and monitor your home security through your smartphone, theres no going back to the old days. You can see whos ringing the doorbell via live video stream when youre at work or unlock the backdoor for the dog walker when you go away for the weekend.

Convenience
The convenience that smart home technology affords is virtually endless, whether that means preheating the oven on your way home from the grocery store or turning on the coffee maker before youre out of bed. Youll soon start to wonder how you ever got anything done before.

Entertaining
When friends come over, you can use voice commands to turn on some tunes, get the mood lighting just right, and fire up the grill, all while mixing cocktails. Dinner parties just got that much easier.

Peace of Mind
Perhaps smart home technologys greatest quality is the peace of mind that comes with having control over your house. You can check on the baby with a camera-equipped monitor or make sure you closed the garage door while youre on vacation and rest assured that everything is okay.

Published with permission from RISMedia.

In all likelihood, your home is the biggest investment you’ll make in your life. To protect that investment, you should perform regular maintenance to ensure your home runs efficiently for years to come. Although most homeowners already know the importance of maintenance and tackle the most obvious jobs, you may be surprised to learn there are a few tasks you probably overlook.

Clean Your Refrigerator Drip Pan
Did you know that most refrigerators have drip pans? The pans need to be cleaned regularly; otherwise, they can be prone to mold growth. Pull the pan out carefully to prevent spills, dump excess liquid and clean the pan with an all-purpose cleaner.

Flush Your Water Heater
Check the temperature of your water heater to ensure it’s set below 120 degrees Fahrenheit to prevent scalding. Test its safety relief valve once a year so that it operates properly, and flush the system to remove sediment buildup, which can cause system failure.

Reseal Your Grout
Grout needs to be resealed annually to protect your tile from wear and tear. Most grout is made of sand and cement; this means it can absorb water, bacteria and even stains. Resealing will help your grout look better and last as long as possible.

Test Smoke Alarms
Testing smoke alarms and changing their batteries is a vital maintenance task for safety reasons. Smoke alarms should be tested twice a year. Remember, at minimum, you should have one detector on every level of your home, and in each bedroom.

Change Your HVAC Filters
Have your heating system inspected, serviced and cleaned annually. Proper maintenance can extend the life of your furnace, postponing an expensive replacement. Change air filters seasonally to monthly, depending on your home’s needs, to protect against major HVAC issues.

Block Out Pests
Prevent pests from setting up camp in your home by caulking small holes or cracks inside and outside the house to deter bugs. Also, use hardware cloth to cover any larger areas.

Mastering home maintenance tasks can be a chore, but by ensuring you’re not missing these all-too-often-ignored jobs, you’ll be able to rest easy knowing your home is that much more protected.

Source: Brentnie Daggett/RISMedias Housecall

Published with permission from RISMedia.

A homes roof is its most important feature, and for good reason. If the roof leaks or is damaged in some way, it can lead to a host of problems ” and insurance claims.

Many home insurance companies limit how they insure roofs, so its worthwhile before buying home insurance to know how your roof will be covered. Here are some of the ways a roof can be covered by insurance:

Old roof may need to be replaced

Some insurers wont renew an existing policy or issue a new one on a home with a roof thats 20 years old or older unless it passes an inspection.

Even if they do, they may only pay actual cash value for the older roof if its damaged, meaning theyll only pay for what the roof is worth at the time of the claim and not for the cost to fully replace it.

Are leaks and damage covered?

Some types of roof damage are covered by most home insurance policies: fire, vandalism, hurricanes and tornadoes. Others, such as wind, rain or hail may only be covered based on the age of the roof, or not at all.

For example, a leak on a roof thats 10 years old may be fully covered. But a roof thats 20 years old may only be covered for a leak for the value of the roof after 20 years of wear and tear.

If proper maintenance wasnt done to stop a leaky roof, then only partial reimbursement or none at all may be provided.

Coverage limitations

Other than an old roof, insurers may also limit coverage for such things as having a wood shake roof. A wood shake roof or wood shingle roof may require adding an endorsement to the policy, which is a written document attached to an insurance policy that excludes or restricts coverage of those wood features. Only the actual cash value of a wood shake roof, for example, might be covered.

Insurers may also want proof that there wasnt pre-existing damage before insurance coverage begins.

This can be assessed by a roof inspector who can give you a written report on the condition of the roof. It can include a cost estimate of repairs.

Cosmetic roof exclusions may also be included in an insurance policy. For example, a metal roof thats damaged by hail that causes dings in the roof may not be covered because its considered cosmetic and doesnt harm the durability of the roof.

For more real estate information, feel free to contact me.

Published with permission from RISMedia.

Whether you’re scoping out a vacation property or looking into becoming a homeowner for the first time, applying for a mortgage is a lengthy and complicated process. While your real estate agent and lender will be there to walk you through the details, knowing what possible errors could lay in waiting will help you make the best decision. Let’s review some of the most common mortgage mistakes so you can avoid making them.

1. Weak credit history
Loans are all about credit history ” it’s hard to land a mortgage without one. But having a credit history doesnt mean you have a lot of credit; it simply means you have been given credit in some form and have a documented history of repaying it. How much credit? Lenders often like to see at least three lines of credit with a minimum two-year history on each.

And of course, you don’t just need a credit history; you need a good one. Pay down credit cards and loans regularly to heighten your score.

Pro tip: Paid off that credit card? Don’t cancel the account. Keeping the account active, even if it’s unused, helps build a strong credit history.

2. Weak work history
You’re less likely to get a loan if you can’t prove you’re able to hold down a job. And even if you do get approved with a weak work history, you may not be able to qualify for a good interest rate. What is a strong work history? Aim for at least two current, consecutive years of employment in the same occupation.

Of course, certain circumstances may provide an exception to this rule. If you are a recent graduate with proof of future income, or someone who is coming back out of retirement, some lenders may not hold a lack of recent employment history against you.

3. Opening new credit accounts
Maybe you got a big raise and are applying for a mortgage and leasing a brand new car all in the same month ” bad idea. If you’re thinking of applying for a loan, avoid opening brand spanking new credit lines. Lenders like to see solid, stable credit histories, and a brand new line of credit can’t offer that. Unfortunately, some people make this mistake thinking that it will help their credit score, when in truth it can hinder it.

4. Making big purchases
Slow down there, big spender. Just like lenders want to see stable credit history and employment, they want to see stable spending. If you make large charges to your existing credit accounts around the time youre shopping for a mortgage, you can increase your debt-to-income ratio. So hold off on that new furniture set or big screen TV until after you’ve purchased your home.

5. Not reviewing your credit report
When is the last time you checked your credit? Often, credit reports have errors, and you want to right these before it’s time to apply for your mortgage.

6. Not knowing what you can afford
These days, it’s very easy to figure out how much home you can afford. Simply find a mortgage calculator online, take a look at how much you can pay each month, and plug in the numbers. This will give you a solid idea of how much house you can afford, which can help you avoid disappointment down the road. It’s also important to get pre-approved for a loan before you begin your home search. There have been many instances where a home sale falls through because the buyers made an offer that they couldnt back up with a mortgage. By showing that pre-approval letter, the buyers are showing the sellers they can afford to make good on their offer, and may also be in a better position to negotiate. And these days, many real estate professionals won’t work with a buyer who isn’t pre-approved.

Published with permission from RISMedia.