What Is A Peer-to-Peer Loan and Should I Consider It to Buy A Home?

Peer-to-peer lending also known as P2P lending is an increasingly common trend nowadays. Thanks to recent internet attention, many new homebuyers are considering a peer-to-peer loan as an alternative to traditional mortgages from a bank or housing lender. By 2025, P2P lending is expected to grow to an over 1000 billion U.S. dollars industry. 

 

The majority of P2P lending is for financing home improvements or paying off credit card debt. However, it’s increasingly common for homebuyers to consider P2P lenders for their mortgage. How exactly does a P2P loan work, and should you consider it when buying a home? 

 

 

How Peer-to-Peer Loans Works

First, let’s look at how peer-to-peer investing works. Think of P2P lending as non-banking banking. That might sound confusing, but it simply means you cut out the “middle man,” or the banker. Instead of borrowing money from a bank or mortgage lender, you use a peer-to-peer platform to borrow directly from investors. 

 

As a borrower, the terms of your repayment and interest will depend on your particular agreement with your investors. Usually, this is through a P2P lending network which will set some parameters for everyone. There are a lot of benefits to using a P2P network rather than going the route of the traditional mortgage, mainly that you get to skip the costly and time-consuming banking process. 

 

 

Why Consider Peer-to-Peer Loans

Now that you know how P2P investing works, why is it a decent option for the right homebuyers? The main perk is that it’s simply faster. Homebuyers who want a mortgage through a bank will have to go through lengthy, traditional lending methods that aren’t time efficient. 

 

When you borrow directly from peers, you can get fast funding in as little as a week. You also have more options for short-term rates with lower interest. The size of your loan is up to you, and this means more flexibility. Homebuyers who choose peer lending will have access to investors who they wouldn’t be able to reach normally. The most common lending groups or networks are Prosper and Lending Club. 

 

 

Should You Consider a Peer-to-Peer Loan?

Is a P2P loan the right choice for your mortgage? First, you’ll need to take a look at the costs and your current situation. While many think it’s easier to get a loan through a peer network, this isn’t always the case. Most of these networks like those listed above still have strict credit and income requirements to keep in mind. 

 

You’ll still need to go through a similar application process to a traditional mortgage, though you’ll likely have lower service fees and wait times. One perk of up-and-coming P2P mortgage platforms like San Francisco based SoFi is that your mortgage will usually close in under a month. However, this isn’t without its own risks. If you’re unable to make payments on time, the collection fees are very steep and make up for the lowered interest rates. 

 

Ultimately, P2P lending is a great option for buyers who want more flexibility with their mortgage. It’s becoming increasingly popular for Millennial buyers who have a hard time securing traditional mortgages. It’s also possible to choose a hybrid strategy with some P2P and traditional lending. It’s up to you to consider your options to decide the best method for buying a home today.

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Should You Buy A Home While Having Student Debt?

Are you one of the 43% of college-educated Americans who are considering postponing your dream of home ownership to repay your student loans? Applying for a mortgage and signing up for all the costs that come with owning a house can be daunting when you are already carrying hefty student debt.

So, should you buy a house while paying off your student loans? Like many other financial decisions, the answer is not cut and dry. Here is a list of the different things to consider before making this life-changing decision. 

 

 

1. What is your credit score?

Your credit score is the first thing a potential lender will look at. It will determine what interest rate you will pay and if you can be approved in the first place. 

 

If your FICO credit score is at or below 650, now is not a good time to buy a house. Spend this extra time by working on raising your credit score by making regular payments on time and reducing your overall debt by making payments above the minimum due. 

 

If you have an excellent credit score (740 or above), your dream of buying a house might be within your reach. 

 

 

2. Is your debt-to-income ratio reasonable?

Another element mortgage lenders take into consideration when considering your application is your debt-to-income ratio (DTI). It is calculated based on the percentage of your income dedicated to debt repayment, including student loans. As a rule of thumb, lenders want you to spend 28% or less of your gross monthly income on houses expenses and 36% or less on debt repayment, including your future mortgage and your current student debt. 

 

If you are starting your career or going through a rough patch, your DTI might be too high and now might not be the time to buy a house. Consider earning a side income to reduce your current debt or consolidating it to lower your monthly payments. 

 

 

3. Determine how much house you can afford before going house hunting

A lot of people make the mistake of going house hunting first and realize too late that they do not qualify for the amount necessary to purchase their dream home. Avoid the heartache by getting pre-approved by a lender before falling in love with a house. 

 

Not only you will have a realistic expectation on your budget, but the closing process will be a lot faster and smoother. 

 

 

4. How will you pay your down payment and closing costs?

Your DTI is low, your credit score is high, and you have been pre-approved. Now what? You will need to have cash available upfront. A conventional mortgage usually requires a 20% down payment, and you will have to pay between 2 and 5% of the purchase price of the house in closing costs. 

 

However, you might qualify for government back mortgages like an FHA, USDA or VA loan. Keep in mind that a lower down payment is usually synonymous with having to pay private mortgage insurance (PMI) which will affect your monthly payments. 

 

 

5. How will owning a house affect your lifestyle? 

If you are a first-time homebuyer you may forget that buying a house comes with many financial obligations that go beyond a simple monthly mortgage payment. Although you might qualify for a mortgage, you will also have to consider fees such as real estate taxes, homeowner insurance, homeowner association fees, and general maintenance. 

 

Avoid becoming house-poor by taking an honest look at your budget. If it does not leave much room for unexpected issues after minimum student dent and your mortgage payment are made, now is probably not a good time to buy a house. It is more prudent to wait until your revenue increases or your student loans are paid back. 

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The Costs of Living In A City vs. A Suburban Neighborhood

When it comes to buying a house, one of the biggest decisions you’ll make is based on location. Choosing a home in the city is exciting, and it means you’ll be close to a lot of entertainment and dining options. On the other hand, there’s something idyllic about choosing to live in a suburban neighborhood where costs are cheaper and you have more access to green space. 

 

What are the cost differences between living in a city vs. a suburban neighborhood? Are they really as extreme as they seem? More importantly, which option is best for your budget and needs. In this article, we’ll explore the differences in the costs of living in a city vs. the suburbs. 

 

 

Lifestyle Costs

One of the first things people take into consideration when choosing between the city and the suburbs are the different lifestyle options. There are pros and cons of both, and they’ll really have to do with what you prefer more as an individual or family. 

 

In the city, you’re closer to entertainment, dining, and shopping. You also have less of a commute to get to work or entertainment. However, this comes at a cost. Those experiences and options aren’t always cheap, and you might pay a premium to enjoy these activities and amenities. 

 

On the other hand, life in the suburbs is quieter. While you might be able to find a close-in suburb that’s near downtown, these are costly and difficult to find. Living in a suburban neighborhood might afford you a great deal of peace, but you’ll also have fewer options when it comes to eating out, shopping, and events. 

 

 

Cost of Renting or Owning a Home

Besides lifestyle costs, many people want to crunch the monthly numbers before buying or renting a home in the city or suburbs. According to Forbes, the cost of renting in a U.S. city, on average, is $1,848 a month while it’s only $1,269 per month in the suburbs. This is a big difference, and it doesn’t just extend to renting. 

 

Buying a home in the suburbs will also get you more for your money. According to Realtor, the average home in the suburbs costs around $230,000 while a similar home in the city is over $430,000. That’s a huge difference, and you’re likely to have less space in the city than in the suburbs. 

 

You’ll also have to account in property tax differences which are more likely to be higher in urban city areas. Ultimately, it’s clearly more affordable to buy or rent in the suburbs, but you’ll still need to factor in the different costs. 

 

 

Transportation Costs

Finally, there are also some key differences between the costs of transportation and commuting. While it’s obvious this depends on where you work in particular, people on average spend less money (and time) commuting when they live in cities. However, you’ll also need to average in public transportation costs, especially if you don’t have your own car in the city. 

 

Commuting from the suburbs to a city for work each day isn’t cheap. Not only will you need to pair for gas and car maintenance, but you’ll also spend hours in traffic during rush hour. You’ll need to keep these numbers in time to quantify both your financial cost and your time cost of commuting depending on where you live. 

 

 

Which is Best: City vs. Suburbs?

It’s a tale as old as time…which is best, the city or the suburbs? As you can see from the sections above, it depends. In many cases living in the city is a great option. You will likely spend more when renting or buying your home, but you’ll save in lifestyle and transportation costs. However, it’s also a great option to live in the suburbs where housing is more affordable and you have more room to grow a family. 

 

At the end of the day, you need to make the best decision for you and your needs. There’s a cost of living everywhere, and you’ll need to factor in what matters more to you. 

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How To Install a Ceiling Fan

Making basic upgrades to your home can become costly if you always need to hire an expert. While there are some times when you should always consult an expert to protect your property, there are also many improvements you’d be surprised to find you can DIY yourself. 

These small repairs and alterations might not seem significant, but they’re a great way to improve the value of your home. Whether you’ve just moved into a new home or you’re preparing to sell, installing a ceiling fan is an easy upgrade anyone can handle on their own. 

 

 

Why Install a Ceiling Fan?

When it comes to home improvements, a ceiling fan is one of the most valuable. Not only does it increase the usability and comfort of a space, but it actually results in year-round energy savings. In the summer, ceiling fans reduce the strain on air conditioners with their cooling breeze. In the winter, the same is true by improving the heat circulation in the room.

To better understand the value of these savings, keep in mind that an air conditioner costs $0.36 an hour to run, while a ceiling fan only costs around $0.01 an hour. In addition, most ceiling fans are stylish and modern, adding to the design of a home. If your ceiling fan includes a lighting feature, this is also a big perk. 

 

 

Can You DIY Your Own Fan Installation?

First, let’s address whether this is a DIY you’ll be able to handle without any complicated skills. While installing a ceiling fan is relatively simple as far as home improvement tasks go, just how simple it is will depend on whether or not you already have an existing light fixture.

If there’s already a light fixture where you plan to add a ceiling fan, this is good news. Swapping this fixture with a fan is a simple task, though you’ll still have to be careful to make sure the existing electrical box can support the weight and vibration of a fan. 

On the other hand, if there is no existing light fixture, you’ll need to consult with a professional electrician. This is because you’ll need to bring some form of electric wiring to your specific room or area, and this will be a bit more complicated. 

 

 

Steps for Installing a Ceiling Fan

Now that you know whether you can handle a ceiling fan installation on your own, let’s jump into the specific steps. While installing a fan is relatively simple, make sure you’re following any steps or manufacturer’s instructions to ensure you won’t run into any electrical problems or weight support issues. 

1. Remove your existing light fixture. Of course, you’ll need to also check your electric to ensure it’s turned off, and be careful of any glass or old fixtures which can easily break. As you remove the fixture, you’ll need to disconnect any wires by twisting off the connectors. 
2. Cut a new hole. Next, you have to remove the existing electrical box from your ceiling. It likely won’t be able to handle the weight of your fan, so you need to install one that can. Follow the instructions on your electrical box to ensure you get the right fit if you need to cut a new hole. 
3. Attach the new electric box. Feed the cables through the new box and set the box into the new hole in your ceiling. You’ll need to attach the box with the screws proved in your electric box kit. If you have a ceiling medallion, it’s now time to fasten it to the ceiling. 
4. Mount the plate and assemble your fan. Next, mount the ceiling plate to your ceiling medallion. It’s time to assemble your fan according to the manufacturer’s instructions. Finally, make the wire connections between the fan and your electric box. 
5. Attach your blades and lights. Your ceiling fan base should be solidly connected now, so attach each flan blade to the blade iron. If there’s a light fixture, connect these wires and install the shades and bulbs. 

Finally, test your new fan and light. That’s it! You’re good to go. As long as you followed the instructions correctly, you should find it works perfectly. Now you’re all set for electric savings and comfort in your space! 

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Things To Consider When Pricing Your Home To Sell

Pricing your home to sell can be an intimidating process: doing it right can make or break the sale of your house. You don’t want to miss out on obtaining the best possible price on your home, but you don’t want it to sit on the market either. Your real estate agent (if you are working with one) can stir you in the right direction, but at the end of the day, as the seller of the property, you have the last word on listing price. When comes the time to sell your home, here are a few things take into consideration when it comes to pricing. 

 

 

1. What do your competitors look like?

The first thing to consider when you are thinking about pricing your house to sell is to take a good look at the properties currently on the market that your home will be competing with. Comparables houses are the houses that:

• Are located within ½ mile of your property (unless you live in a rural community)
• Were built around the same time than your house
• Have roughly the same amenities than your house (the same number of bedrooms and bathrooms for example)
• Are about the same size than your house (within 10% of the square footage)

Those houses are the ones that a potential buyer who would be interested in your property would also investigate. 

Have a look at how they compare within your house in terms of location (are they near a highway or a busy street for example), condition (were the bathrooms or the kitchen updated recently?) and additional features (do they have a bigger garage? A pool?). 

If similar houses currently listed for sale are priced significantly below the market, foreclosures or short-sales for example, you might need to factor it in if you want your home to be priced competitively. 

 

 

2. How does your house compare to the houses that already sold?

Similarly, look at houses comparable to your own that have sold recently, ideally within the past three months: they are the best indicator of what a buyer is willing to pay for. 

Investigate how long they were on the market before being sold, and how do their sale price compare to their listing price. Did they sit on the market for a long time before selling? Did the seller reduced the price several times before getting the house under contract, or on the contrary, did the house sell quickly above listing price? These are all indicative of what the market looks like. 

 

 

3. What about expired and withdrawn listings?

When you are planning to sell your house, it is always interesting to see which homes did not sell and why to avoid making the same mistake than your predecessors. 

Were these houses overpriced for example? Were they listed again at a later date? Which brokerage or listing agent was listing these properties?

 

 

4. What does the market look like overall?

Once you have a better idea about what houses around you are selling for, how long they are on the market, and if there is a significant difference between the listing and selling price, you will have a better idea whether you are in a buyers’ or sellers’ market. You can then price your house accordingly. 

You will also need to take into account the seasonality of the market. In most parts of the country, spring is considered the best time to put your house on the market while winter can considerably slow down. Of course, some places are affected differently: for example, a beach town’s market peak will likely be in the summer. 

 

 

5. Put yourself in a potential’s buyer shoes.

Removing all emotional attachment to your house can be a strenuous exercise for some, but if you want to price your home to sell, you must think like a buyer. Accept the fact that it is unlikely that an outsider will be to pay for personalized details. 

Keep an eye on your competitors when it comes to improving your property: for example, it is unlikely that a buyer for an entry-grade property would be willing to pay more for fancier (and costly) finishes, like marble countertops in the bathrooms. 

It can be a good idea to go check out your competition in person during an open house to get a feel of what type of houses potential buyers will have seen before walking into your home and how your property will compare.

 

 

6. Call on to the professionals.

Finally, if you are stuck, there are several ways to get a good idea of pricing. 

Most real estate agents offer Comparative Market Analysis (CMA) for free as a marketing tool to attract new listings. However, in some cases, they might provide an overblown value to entice a potential client. 

Real estate appraisers are impartial and will give you the best pricing estimate for your home. They can also give you some tips on which areas you might want to focus on to improve the value of your home. Although you will have to pay for their service, it can save you a lot of time and money in the long run. 

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The Pros and Cons of Buying A Historic Home

Buying a home is a thrill in and of itself.  Buy a historical home and the experience will be that much more exciting.  Historic homes typically appreciate in value.  Perhaps most importantly, your historic home will make you feel as though you own something truly special and unique.  Family, friends and others will look forward to the opportunity to visit you in your historical home.  Unfortunately, there are some drawbacks to historical homes as well.  Let’s take a quick look at the pros and cons to buying a historical home.

 

 

Pro: This is Your Chance to own Something of Historical Importance

Wouldn’t it be nice to own your own piece of history?  Your historical home is just that.  These buildings typically have elite craftsmanship and highly-stylized architecture.  Buy a historical home and you will find yourself marveling at its beauty and idiosyncratic qualities as you go about your daily routine.

 

 

Con: Historical Homes are a lot of Work

The downside to owning an old building with unique craftsmanship is it costs a lot to repair.  Furthermore, these costs seem to never end.  Making matters worse is the fact that historical homes tend to be large so there is that much more to take care of.  Everything from the wood floors to the slate roof will require a considerable amount of work.  If you aren’t good with your hands or lack the free time to perform extensive home maintenance and repairs, you will be better served with a  modern home.

 

 

Pro: Historical Homes are Coveted

There will always be a demand for your historical property as you own something truly distinct with lasting value.  Studies show property values in historical districts typically increase faster than the rest of the market.  If you ever decide to sell your historical home, there will be no shortage of buyers offering sizable sums for your property.  In fact, you might make a tidy sum if you time the market just right.

 

 

Con: An Elevated Chance of Potential for Asbestos and Lead

Lead and asbestos are sometimes found in older homes as the danger of these substances was unknown until a couple decades ago.  Some historical homes have plumbing pipes with lead paint along the interior and exterior.  Historical homes are also more likely to have asbestos behind the walls in the cellar or in the attic’s insulation.  These hazardous materials must be replaced, even if it costs tens of thousands of dollars.

 

 

Pro: Historical Homes are Located in Established Neighborhoods

The vast majority of historical properties are in neighborhoods with minimal construction, mature landscaping and peaceful environments.  These are established neighborhoods with less traffic and noise pollution than most others.  The icing on the cake is the fact that those who live in historic neighborhoods typically have some say in neighborhood alterations as suggestions for changes must pass through a review board.

 

 

Con: The Electrical and Plumbing Systems Might be Outdated

It can cost upwards of $40,000 to re-wire a large home.  If you are thinking about buying a home and cost is a major factor, do not underestimate the potential for a historical home to require extensive repairs.  Historical homes with antiquated electrical and/or plumbing systems really do have the potential to become money pits.  Unfortunately, some older homes lack the wattage necessary to operate today’s conveniences.  This means the electrical system will likely have to be updated if the prior owner failed to replace the old wiring.

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How To Remove Carpet In Your Home and Install A New One

Carpet gradually gathers dust, dirt, allergens, grime and other unsavory particles.  If it has been a while since you last replaced your home carpet, it is time for a change.  You will love the look and feel of your new carpet yet getting to this point will take some work.  Thankfully, removing the old carpet and adding new flooring is not as hard as most assume.  Here’s how to do it.

 

 

Perform a DIY Tear-out of Your Home Carpet 

There is no sense paying someone else to remove your carpet when you can do it on your own.  Though removing carpet takes some time, it is not as difficult as most anticipate.  Begin by removing all of the furniture.  Vacuum the carpet prior to removing it to decrease the amount of dust, dirt and allergens sent into the air.  Fold the carpet toward the middle of the room.  Use a utility knife to cut the carpet and padding to strips a couple feet in length so they are that much easier to carry outside for disposal.  Keep both hands on the knife at all times to prevent injury.  Vacuum the sub-floor beneath the old carpet and padding. 

 

Carpet padding is comprised of small sections compared to the actual carpet.  This padding is held in place with staples.  Most padding is connected to wood sub-flooring or a concrete pad.  Thankfully, glue is often used with the concrete pad so removal does not prove egregiously difficult.  Don a pair of gloves to pull out the staples along the outside of the padding.  You can let the tack strips remain on the floor as you will be installing new carpeting.  However, if you  notice any rusted tack strips, it is a sign there was a spill, a leak or another form of moisture exposure.

 

 

Installing the new Carpet 

Do not be intimidated by the prospect of installing new carpet.  This really is a DIY type of job.  Begin by measuring the room’s longest walls.  Square yardage can be determined by multiplying the length and width then dividing by 9.  Some advise adding about 10 percent or so to permit for irregularities.  The next step is to clean the area that will be carpeted.  This area should be smooth and void of all dirt and other gunk.  It will help to remove the doors so they do not get in the way while you lay the carpet.  

 

Use a strip cutter to cut the tackless strips on down to the right size.  Nail these strips half an inche out from the wall.  Epoxy adhesive or masonry tacks are best for carpet added atop a concrete sub-floor.  Position the carpet pad perpendicular to the position the carpet will be placed.  Staple the pad by the tackless strips.  Staple pad seams in an alternating fashion.  Stretch out the padding, pinpoint the tackless strip and cut along the strip edge interior to expose the tacks.  

 

Roll out the carpeting, notch the sides for the room’s unique length, add three inches to the longest point to be on the safe side and cut the carpet at the notch points.  Roll the carpet with its back facing out so the notches areas appear.  Draw a  line between notches.  Cut the carpet at this line and spread it out in the room. Remove the excess carpet, apply seaming tape with adhesives to connect pieces as appropriate, glue the seams at the carpet edges to form a seam and double check them to ensure they are straight.  Apply seaming tape below the seam with the adhesive side facing upwards.  Heat the seaming iron to the temperature advised by the tape manufacturer.  Let 20 seconds or so pass, move the iron near the tape and press the seam to the glue. Once the pieces connect, add a heavy object on the seam to keep it in place while the glue dries.

 

 

The Final Trimming and Carpet Placement 

The next step is to trim around the obstacles in the room.  Use a carpet knife for precision.  Connect the carpet to the tackless strip with a knee kicker.  The knee kicker face should be positioned against the carpet three inches or so out from the wall.  Apply force to the padded end so the carpet can stretch across the tackless strips.  Trim any excess carpet with a wall trimmer to ensure a straight cut.  If necessary, use a stair tool so the cut edges are pressed firmly beneath the baseboard’s trim.

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