What The Average Mid-Sized American Home Costs

Buying a home can be a difficult process. One of the first challenges that most individuals looking for a new home face is determining how much they can afford and calculating their total cost of living.

While the true cost of living depends largely on your geographic location, you can still get a good idea of what you should expect to spend based on the average cost of a mid-sized home in the United States.

For a family with an average income living in a middle-class neighborhood, here is what you can expect to spend on your home.

 

 

Home Cost

Zillow keeps yearly records regarding the median home listing and sale prices in the United States.

According to this data, median home prices in the country have risen by 7.5% over the last year. The current median home price in America is $225,300, and Zillow expects this price to increase by an additional 6.6% over the next year. This current median price represents a price of $150 per square foot.

Additionally, Zillow states that the current median home listing price is $275,000 with the median sale price being $226,500.

Of course, this can vary significantly by states. Washington, for example, has a median home price of $334,000 while Idaho’s median home cost is $189,800.

 

 

Annual Maintenance Costs

In addition to the average cost of a mid-sized American home, you need to consider potential maintenance costs. While there might not be anything that needs to be immediately taken care of when you move in, you are sure to run into problems over the years.

A good rule of thumb is to follow the one percent rule. This rule indicates that you should plan to set aside at least one percent of your home’s total cost for annual maintenance. If your home costs $200,000, you should try to save at least $2,000 for maintenance on a yearly basis.

Other factors like the age of your home or its location might lead to additional maintenance costs. Homes in areas that experience severe weather are more likely to need frequent maintenance.

 

 

Utilities

Utility costs also need to be factored into the total cost of purchasing and owning a home. According to Nationwide, the typical United States family should expect to spend at around $2,000 per year on utilities. This includes:

• Water
• Gas
• Electricity
• Recycling
• Internet/Cable
• Phone

Of course, the total cost of certain utilities like gas, electricity, and internet depends on how often you use them. However, $2,000 – $3,000 per year is what the average middle-class American family can expect to pay for utilities.

 

 

Homeowners Insurance

Homeowners insurance is another important expense that every homeowner should have. This insurance can protect your home against theft, natural disasters, and other potentially devastating events.

ValuePenguin recorded the average cost of homeowners insurance nationwide to be $1,083; however, depending on the state, your insurance rate could be as low as $600 or as high as $2,000.

Again, these costs often vary significantly by state, city, and county; however, they can give you a good idea of what you can expect to spend on your home as a middle-class family in the United States.

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Why a Real Estate Agent Can Withdraw From Your Home Listing

There are a lot of unexpected challenges that can delay your home selling process. While some things are common, such as struggling to find the right buyers in your market, many home sellers fail to think about the possibility of your real estate agent withdrawing from your home listing.

 

It’s not all that uncommon for your listing to expire with your current agent or for your listing to be canceled altogether. While in a perfect world you’ll be in complete understanding with your real estate agent, this isn’t always the case. Here’s why a real estate agent can withdraw from your home listing as well as the steps you can take to prevent it from happening to you.

 

 

Real Estate Listing and Withdraw

When you agree to sell your home with a particular agent or brokerage, you agree to a contract. This contract includes a period of time when you agree to work with this agent to sell your home. Once you’re under contract, your home will be listed with the real estate agent or their brokerage, and it will also be placed on multiple listing services (MLS). An MLS is any online listing platform, whether it’s a local marketplace or a well-known service like Zillow or Realtor.

 

If your listing is withdrawn, this means your property is still listed as for sale with your agent. However, it won’t be on any listing services since these listings expire and need to be renewed. During this time, you’re still under contract with this agent and won’t be approached by other real estate agents.

 

An expired listing is when the period of time for your contract has come to an end. You’re now free to approach and be approached by other real estate agents who wish to represent your property. Finally, a canceled listing is when either you as the seller or your agent decides to terminate the listing. At this time, you’ll be free to pursue other real estate agents.

 

 

Reasons for Withdrawing or Cancelling

Why might a real estate agent withdraw a listing or cancel a contract? While it’s not talked about much in the home selling community, it does happen. It’s something you need to keep an eye on when looking for a reputable real estate agent. Many times the agent and the seller will come to an agreement that this relationship isn’t a good match, and they’ll go their separate ways. This is the best case scenario.

 

Other times it’s not so well-intentioned. Sometimes real estate agents feel dissatisfied about the commission split for the listing. They might not feel it’s fair, and thus they decide to simply boycott it altogether. They’ll stop showing the house to prospective buyers, and they’ll let the listings expire. Unfortunately, this will result in the home not getting exposure to buyers, and it’ll stay on the market for longer.

 

This is a lose/lose situation for sellers. Not only are they trapped in a contract until the agent finally withdraws, but they waste time that could have been spent with the right agent. How can you avoid this for your own home? First, be careful about who you hire. A reputable agent will be there to assist you throughout the home selling process.

 

Next, be realistic with your commission split. Do research on the average fees in your area and set realistic expectations. You want to attract high-quality, experienced real estate agents, and this might mean being generous with your commission split. Finally, always read your contract carefully before you enter an agreement with a real estate agent or brokerage.

 

Unfortunately, your real estate agent can withdraw from contracts or let them expire without taking adequate action. You need to take steps up front to protect yourself and your home. Working with the right agent not only will give you peace of mind, but it will help your home sell faster.

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Do Energy-Efficient Home Appliances Really Save You Money?

One of the easiest ways to cut your monthly utility costs is to replace those outdated home appliances with the energy-efficient variety.  Though you will certainly have to plunk down a nice chunk of change to purchase new home appliances, these high-tech machines pay for themselves in the long run.  Consider the fact that the typical household in the United States spends $2,200 each year on energy.  According to Energy Star, about half of this yearly total is spent on heating and cooling.  Appliances like dishwashers, washing machines, dryers and refrigerators chew up about 13 percent of the total.  Another 12 percent is attributable to lighting.  About 14 percent is used up when heating water.  Let’s take a look at how much you can save by upgrading to energy-efficient home appliances.

 

 

Your Savings Depends on the Appliance Being Replaced

If you replace a dishwasher that is less than five years old with an energy-efficient model, you are unlikely to enjoy a major savings as the dishwasher accounts for a small percentage of your total energy use.  Alternatively, if you substitute an energy-efficient appliance for one of your home’s major appliances that is ten years or older, you really will enjoy meaningful savings.  Antiquated home appliances simply do not compare to the current federal energy standards.  As an example, a brand new energy-efficient refrigerator uses half the energy or even less than half the energy of a refrigerator that is a dozen years old.

 

Consider a family that replaces its washer from the early 1990s with an Energy Saver model.  The typical family of four would save around $110 each year on utility bills after making such a switch.  Keep in mind the typical major appliances is likely to last a decade or two at most.  Opt for a new model with the latest technology and it is likely to prove useful that much longer.

 

 

Be Strategic When Shopping for new Home Appliances

Try to think of your home’s appliances as items with dual price tags.  One of these price tags shows the initial cost of buying the appliance.  The second price tag is unseen; this tag represents the true cost of operating the appliance across its estimated useful life.  You will have to cover the cost of both price tags across the appliance’s lifespan as a component of your monthly energy expense. 

 

Take a look at the yellow EnergyGuide label to get an idea of what it will cost to operate the appliance you have your sights set on.  Purchase an ENERGY STAR product and you will have done your part to minimize the cost of the second, unseen price tag.  ENERGY STAR refrigerators and washing machines are 20 percent more energy-efficient than conventional models.  These green dishwashers use a mere 5.8 gallons of water in a single cycle as compared to the 10 gallons used in dishwashers from the 1990s.

 

 

Be Patient and Watch the Savings Add Up

The total amount of money you save each year after making the transition to energy-efficient appliances ultimately hinges on the size of your household and the age of your current appliances.  Bite the bullet, pay what it costs to add new energy-efficient appliances to your home and this investment will gradually pay for itself in due time through reduced utility bills.  Even if you decide to sell your home before you completely recoup the investment, the presence of energy-efficient appliances in your home will prove to be quite the strong selling point.

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What To Know About Mortgage Rate Locks

Mortgage rates are constantly moving up or down through the day. This fluctuation can either save or cost you thousands of dollars over the course of your loan. Mortgage rate locks are a way to deal with this in a safe manner. 

 

 

What Is A Mortgage Rate Lock?

A mortgage rate lock is an option offered by the lender of the loan that guarantees the interest rate of your loan for a specified period of time. Obtaining this option can sometimes cost money at first. The lock time regularly stretches from initial loan approval, through processing and underwriting, to loan closing. However, it can be a lengthened period for construction loans.

 

After being approved your interest rate won’t be changed unless there are any future application detail changes. Mortgage rate lock will then prevent your interest from going up as well as going down. In some cases, you may have the one time option “float down” where you can get a lower rate. 

 

If there are changes in your application such as employment, credit score, income, or appraisals then your mortgage rate lock could be voided.

 

 

When Should You Lock A Rate?

Good luck trying to predict your homes interest rate. If you can do that then you should start writing a book or create a seminar. If you can’t then read on. You should lock your mortgage rate on a price you know works well for you and is comfortable. Lock periods can be 30 days, 60 days or longer. Select one that allows plenty of time to closing.

 

 

What Are The Possible Scenarios?

Interest rate goes up. If this happens then you can take a sigh of relief since you will be protected by your mortgage rate lock. This event is exactly what locking your mortgage rate is designed for.

Interest rate goes down. In this situation, you sometimes have the one time option of “float down” where you can meet this lower rate.

Interest rate stays the same. You might feel like you wasted money if you had to pay for a mortgage lock but that’s the price you pay to protect yourself from higher rates. It’s better safe than sorry.

 

 

What Does It Cost?

Some properties offer to lock your mortgage rate for free while others sometimes charge. The fees will vary but the standard is around .25% of your total loan value.

 

 

Is A Mortgage Rate Lock Worth It?

The benefits of locking your rate out-ways many risks especially if its a free option. A rate lock is about stopping your mortgage payment from going up due to a wave of rate hikes before your closing. Regardless, trust your decision making and know what you are capable of affording.

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When and How To Break Your Lease

Whether it is a change in your financial situation, as the loss of a job, or in your personal life, like a new job, a divorce or the arrival of a baby, there are many reasons why you may need to break your lease. However, the chances are small that your landlord will be thrilled about the situation.

A lease is a legally binding contract between the tenant and the landlord and breaking it can have long-lasting consequences. It is not a decision to take lightly.

 

Here are the things you need to keep in mind when you are considering breaking your lease and how to make the process as painless as possible.

 

 

 

1. What are the consequences of breaking a lease?

If you don’t have any legal basis to break your lease, you might face some dire consequences depending on the state you live in and the virulence of your landlord.

• You may need to pay the remainder of your lease, at least until the landlord finds a new tenant to rent the property
• You may lose your security deposit to cover the costs for your landlord to re-rent the place, like marketing fee or loss of income
• Your credit score could take a hit if your landlord decides to report you to report you as delinquent to the main credit bureaus, which would hurt your chances to find a new place to live
• Your landlord could engage in a civil lawsuit against you to recoup back rent payments if you refuse to pay off the lease balance

 

 

2. When can you legally break a lease?

In some cases, you may be able to break your lease legally, which protects you from legal and financial consequences. Depending on the state you live in, these situations may include:

• The landlord does not maintain the property up to health and safety standards: there is no heat, no running water mold, etc. It could be considered as a breach from the landlord and allows you to break the lease legally

• The landlord is harassing you or entering the property without legal reasons (to make repairs or show the apartment to prospective tenants for example) and notice
• If you are active duty military and have received orders to relocate for at least 90 days, you are protected by the Servicemembers Civil Relief Act (SCRA)
• The property is not a legal renting unit
• You are the victim of a documented domestic violence act

 

 

3. How to break a lease?

If you are set on breaking your lease, here are some steps to follow to make the process as smooth as possible:

• Read through your contract: there may be an early termination clause detailing the steps to follow when breaking your contract, including how much notice to give and how to notify your landlord, whether you are required to find a replacement tenant, and which situations (like a job transfer or divorce for example) may allow you to break your lease
• Give your landlord as much notice as possible
• Find a sub-tenant (if allowed in the contract) or a new tenant for the remainder of your lease

• Document every conversation you may have with your landlord regarding the situation, especially when it comes to money
• If you are in a difficult situation and pressed by time, consider making your landlord a termination offer to help alleviate some of the costs incurred by your departure, like forfeiting your security deposit
• Finally, if you are having some issues with your landlord, consult your local tenant’s union to know your rights and answer any questions you may have

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How To Negotiate A Lower Rent with A Potential Future Landlord

If you are looking for a place to live, you should know the average landlord is willing to consider negotiating the price of the rent.  Take some time to add up all your monthly costs of rent to utilities, your phone, cable TV, internet, food, gasoline, car insurance and spending money.  If the apartment you have your heart set on is a little bit out of your price range, offer less than the asking price just as you would when negotiating the price for anything else.  The landlord might budge a bit once you tell him or her about how you have planned out your monthly costs in a detailed budget and determined you can afford rent at the number offered to start the negotiation.

 

 

Negotiating the Rent

The average landlord will not accept your first offer unless it is near the initial asking price.  Remember to start out below what you are willing to pay.  The landlord will either counter with a higher number or stand pat on the initial asking price.  However, if no one else is interested in the apartment, the landlord might accept your first offer if you can provide proof of employment and pay the first and last months’ rent before moving in.

 

 

Consider the Cost of Living

Think long and hard before setting financial parameters for renting an apartment or house.  Aside from rent, you will also have to pay for internet, cable TV, utilities and your phone.  These electronic services add up to at least $200 to $300 per month.  Plan on spending $10 per day or $300 per month on food.  Automobile insurance and gas will run another couple hundred dollars per month.  Do not forget to budget in at least $200 per month for discretionary spending.  If you have student loans, you will likely have to reserve another $250 or more each month to cover your monthly payment.  Once you have added up your monthly expenses, you will have a better idea of what you can afford in terms of rent. 

 

 

Negotiating Strategies to get the Lowest Monthly Rent

You can enhance your appeal as a prospective tenant by offering to pay several months rent ahead of time.  This down payment of sorts just might convince the landlord to agree to your negotiated monthly rent rate.  Landlords also respond positively to offers to extend the lease beyond the initial 6 months or year. 

 

Find out if the lease can be extended to 18 months for a reduced rate.  If you are guaranteed one or several parking spots in the parking lot, consider giving up one or both for a rent reduction.  This negotiating strategy is perfect for those who walk, bike or take public transportation around town.  If you have a friend or family member looking for an apartment, tell the landlord.  You might be able to get a monthly rental rate reduction of $20 to $50 or more for referring a friend with a stable source of income in need of a place to live.

 

 

Timing is Everything

If possible, try to snag a new apartment in the winter months.  Landlords are willing to rent apartments at lower rates during the winter as it is the slow time of the year, or depending on the time of year to rent or buy.  If there is inclement weather, it is a hassle to drive on over to the property to show the apartment multiple times without any guarantee someone will bite.  Search for your apartment during this slow period and you just might be able to score a fantastic rate through savvy negotiating.

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Why Does A Short Sale Take So Long?

If you aren’t familiar with the term, a short sale occurs when a home loan is larger than the price that the home is sold for — similar to being upside-down on a car loan. When this happens, the seller of the property is asking the bank to accept less than what is actually owed.

 

This process can get complicated, leading to the sale taking much longer than anticipated. A short sale isn’t quite as simple as a regular real estate transaction. Here are a few reasons why a short sale can take such a long time.

 

 

Bank Reviews

In order to perform a short sale, the seller has to get approval from the lender. This process is similar to applying for a loan.

 

Your lender will likely require you to submit information regarding your finances, including your debts, assets, and credit score. This is necessary as the bank isn’t going to approve a short sale if it turns out that you have enough money to pay off the home.

 

In order to speed up this process, it’s important that you have all your financial information collected and ready to be submitted before trying to complete a short sale.

 

 

Missing Documents

The package that you are required to submit to your bank when trying to complete a short sale will typically include hundreds of pages of documents — many of which require signatures from all parties involved in the sale, including the seller, buyer, and agents.

 

Often, due to the number of documents involved, things go missing. Unfortunately, it can take quite a long time to review the entire package and notice any missing documents. You might not hear from the bank for up to a month only to find out that they haven’t completed the review due to missing documents.

 

 

Outdated Information

As the process of having a short sale approved drags on, many important documents may become outdated.

When information becomes outdated, it must be resubmitted and re-reviewed before being approved. By the time your lender realizes your information is outdated, you might have already wasted weeks.

 

You should be sure to review all information before it is submitted to ensure that it is completely up-to-date.

 

 

Foreclosure

In many cases, foreclosure departments and short sale departments do not work together and foreclosure overrules everything else.

 

You might be on your way to having your short sale approved; however, if you are behind on your mortgage payments, you might still be foreclosed on. When this happens, the bank takes ownership of the property, so you have no right to sell it to an interested buyer. As a result, a foreclosure can make the weeks or months of planning and preparing for a short sale completely pointless.

 

 

Multiple Loans

Multiple loans can severely complicate the short sale process.

Dealing with banks can be very difficult. Dealing with multiple banks is even worse. When dealing with multiple lenders, the short sale process can be set back by several weeks or months as the lenders don’t communicate or cooperate with one another. Approval times and deadlines can make your short sale take much longer than you anticipated.

 

Short sales are, unfortunately, a necessary process for individuals whose home loans are more expensive than they are able to sell their homes for. Short sales can be delayed by a number of factors, so be prepared to deal with these obstacles if you are attempting to perform a short sale.

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