3 things you probably didn’t know about your credit score

A photo illustration shows charts for credit scores on a computer in North Vancouver, B.C., Wednesday, June, 15, 2016.

A photo illustration shows charts for credit scores on a computer in North Vancouver, B.C., Wednesday, June, 15, 2016.

Jonathan Hayward/The Canadian Press

Here’s what most Canadians likely know about their credit score: It’s a number somewhere on a scale from 300 to 900 — and the higher that number, the easier and cheaper it generally is to get credit.

If you want to take out a mortgage or auto loan, a good credit score improves your chances of being approved and getting a lower interest rate. A high score may also give you access to instant-approval credit cards and loans.

 

But here’s something you probably didn’t know:

No one really knows exactly how credit scores work

For obvious reasons, Canada’s two credit-reporting agencies, Equifax and TransUnion, do not reveal the exact formula through which they come up with credit scores. If they did, it would become easy for anyone to game the system.

READ MORE: Can’t afford to pay your tax bill? Here’s what you can do

The implication here is that most advice you get about how to improve, build or repair your credit score is really an educated guess. Based on anecdotal evidence and what they see dealing with clients, financial advisers have a pretty good idea of how different types of behaviour affect credit scores. But they can’t tell exactly how much of a difference each one really makes.

That’s why Douglas Hoyes, a licensed insolvency trustee at Kitchener, Ont.-based Hoyes, Michalos and Associates, is skeptical of strategies that entail taking out costly loans just so you can supposedly build or repair your credit score faster.

WATCH BELOW: Huge price to pay for payday loans

Borrowing at, say, 30 per cent interest is guaranteed to cost you a pretty penny. The gain, on the other hand, it quite uncertain. Taking out a loan will definitely improve you score if you make your payments on time, but how much of a difference will it really make? No one can say for sure.

Given the uncertainty, Hoyes advises borrowing through the lowest-cost debt you can access and trust that your credit score will gradually improve if you keep on top of your finances.

WATCH BELOW: Dollars and sense: Credit score basics

For those with no credit history or a poor credit score, a good first step is getting a secured credit card such as the Home Trust Visa, according to Hoyes. “Secured” credit means the lender will ask you to put down, say, a $1,000 security deposit for a $1,000 credit card limit. The point of such a credit card isn’t to borrow money to finance expenses for which you don’t have cash at hand but to show that you can make disciplined debt repayments.

Secured credit cards normally come with steep interest rates. The no-fee version of the Home Trust Visa charges interest of 19.99 per cent, but borrowers need not worry about it if they pay off their balance in full and on time, Hoyes noted.

 

Credit scores are designed with banks, not you, in mind

You might think that diligently paying off your credit card bills as soon as they come would get you the best possible score. You might be wrong.

Some financial advisers and debt management experts believe carrying a small balance of up to 30 per cent of your available credit on your card might actually boost your score more than having a balance of zero.

That’s because “credit scores are meant for the benefit of the banks, not you,” said Hoyes.

Banks are happy with customers who reliably repay their debt. But they also make money off charging interest. So they may be happiest with customers who will eventually repay their debt but keep carrying a balance, on which they’ll have to pay interest, explained Hoyes.

He advises doing what’s best for your pocketbook and skipping on financial behaviour that will ultimately cost you more — even if it means your credit score will be a bit lower.

 

Credit scores don’t matter as much as you think

A third thing to keep in mind about credit scores is that they aren’t necessarily the only metric a bank will use to assess your creditworthiness. “Banks may have their own formulas, too, which are different from whatever Equifax and TransUnion are using,” noted Hoyes.

Finally, he added, a bad credit score won’t shut you out of borrowing forever. Even bankruptcy is something you can recover from relatively quickly, if you have a good, stable job and show financial discipline, said Hoyes.

“I have plenty of clients who bought houses two years after being discharged from bankruptcy,” he told Global News.

READ MORE: Why it’s important to check your credit history

Source: Global TV –

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Credit scores are getting a makeover. Here’s what you should know

Soon, you may be able to have a credit score even if you have no borrowing history and  don't use credit cards.

Soon, you may be able to have a credit score even if you have no borrowing history and don’t use credit cards.

Getty Images

Credit scores are the linchpin of the consumer lending system — and they’re mostly focused on debt.

Banks need to have a way to measure the risk that customers will default on their loans so they can decide whether to lend, how much and at what interest rate. But the main financial behaviour credit scores pick up on is the ability to pay back debt. Usually, it doesn’t matter much whether you’ve never missed rent or have been dutifully squirrelling away money into your savings account.

 

That may be about to change. In the U.S., Fair Isaac Corp. (FICO), creator of North America’s widely used FICO score, is rolling out a so-called UltraFico score based on how cash flows in and out of customers’ chequing, savings and money market accounts. The company is planning to roll out the new score early next year.

By signing up through an app, Americans who agree to data collection from their bank accounts will get an UltraFICO score that could boost their FICO score. That could improve their chances to be approved for a loan or allow them to borrow at cheaper rates.

WATCH: Apps that help Canadians save

The company says seven out of 10 consumers who show average savings of $400 without going into overdraft for three months will see a credit score boost. It also estimates that 15 million consumers who currently don’t have a regular FICO score could get an UltraFICO score. The idea is that this could be a toehold on the credit score ladder for many people.

It isn’t clear how soon the UltraFico score will make it to Canada. Credit bureau Equifax Canada, which uses a number of FICO scores, told Global News it’s “too early to share specific details on new scores.” TransUnion did not return a request for comment.

But others are working on coming up with new ways to calculate customers’ credit default risk.

 

In Ontario, DUCA Credit Union is also trying to develop metrics for lending without using borrowing history.

One of its pilot programs targets Canadians with low credit scores. Through a partnership with fintech startup CacheFlow, the credit union is hoping to be able to lend to those with low credit using their cashflow data.

CacheFlow’s software for financial advisers creates a cashflow plan that, among other things, tells clients how much they can spend every month in order to achieve their savings or debt-repayment goals.

 

Working with Prosper Canada, a financial literacy charity, DUCA plans to offer cheaper loans to CacheFlow users with low credit scores who would normally turn to expensive debt options like payday lenders. The credit union will structure loan repayments according to each individual’s cashflow.

The goal is to lower the share of income that goes to loan repayment and, in the long run, help clients be debt-free or graduate to mainstream lending.

“What you don’t want to do is find a new way to assess credit, only to fill a gap with another loan that’s reused all the time because all you’ve done is put a Band-Aid on a symptom,” DUCA president and CEO Doug Conick told Global News.

 
In a similar vein, the credit union is also focusing on professionals who are newcomers to Canada, where they have no credit history.

It can take some time for, say, a doctor from Southeast Asia to be able to practice in this country. Accreditation is often a complicated and expensive process, said Keith Taylor, executive director of the DUCA Impact Lab, which is spearheading these new lending initiatives.

With no access to credit, foreign-trained professionals often end up getting a low-paying job so they can support their families, Taylor said. And that can significantly delay and sometimes compromise their ability to get Canadian licencing.

 

But is it all good?

Licensed insolvency trustee Doug Hoyes is no fan of the old way of calculating credit scores.

There are some obvious problems with the current system, which “rewards borrowing,” Hoyes said.

For example, current credit rating models recommend borrowers who use a low percentage of what they can take out on revolving credit accounts such as credit cards and lines of credit. This means that someone with three credit cards, each with a $10,000 limit and a $3,000 outstanding balance, may have a better credit score than someone earning the same income who has a $600 balance on one $1,000 card, Hoyes wrote in a blog post.

“That is ridiculous,” he said.

Relying on a record of cash transactions could be a good thing, he added, but the devil is in the details.

 

For one, Hoyes is concerned about privacy.

“This creates a pipeline to your bank account. Is it worth it?”

After all, he noted, credit bureaus have not been immune from data hacks. In 2017, Equifax revealed it had suffered a breach that affected nearly 150 million Americansand over 19,000 Canadians.

The other question is whether a cashflow-based risk rating could also end up encouraging consumers to take out loans they can’t comfortably afford or aren’t able to manage.

Relying on banking information would eliminate the need for people to take out loans they don’t need just so they can build a credit history and work their way up to, say, being able to get a mortgage.

It could also benefit individuals with low credit scores who display financially responsible behaviour.

 

But Hoyes worries they could also encourage some to borrow too much too soon.

For young people and those new to Canada and its financial system, it might not be a bad idea to be able to borrow only small amounts at first.

“If you don’t pay off your $500 credit card, that will rarely be financially fatal,” he said. Missing payments on a mortgage would be a much more serious mistake.

“I can see how (the new system) could help some people but also hurt others,” Hoyes said.

For his part, DUCA’s Conick says he’s determined to stay on the right side of that fork in the road.

“What I don’t want to get us involved in is finding a much better mouse trap to assess risk and provide credit that can be abused,” he said.

Source: Global TV –

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The fast track to your first home

Thinking about buying your first home? Saving for a down payment sooner rather than later is easier than you think. Here are nine strategies to boost your financial fitness and fast-track your way to homeownership.

  1. GAUGE YOUR FINANCIAL FITNESS

You need an honest assessment to know which areas of your financial house are on track and which areas need improvement. Get your Financial Fitness Score by taking the Genworth Canada/Canadian Association of Credit Counselling Services Financial Fitness survey at caccs.ca.

  1. CHECK YOUR CREDIT

Order a copy of your credit report from TransUnion or Equifax so you can check your credit score and history, as well as ensure there are no errors. Contact the credit report-ing agency if you identify any mistakes.

  1. BUMP UP YOUR CREDIT SCORE

The higher your credit score, the better the lending terms you’ll receive, whether for a mortgage, car or consumer credit loan. The most effective ways of improving your credit score are paying your bills on time, dramatically paying down – or, better yet, clearing – your credit card balance each month and repaying any loans.

  1. CREATE A MONTHLY BUDGET – AND TRIM THE FAT

Find a template online or download a household budgeting app to your smartphone. How much do you spend each month on rent, utilities, transportation, groceries, child-care, insurance, gym memberships and clothing? You need accurate info about your income and expenditure to evaluate how much house you can afford. At the end of the month, you’ll be able to spot patterns and identify the most effective places to save money, whether your spending vice is a two-lattes-per-day habit or too many taxi rides each month.

 

  1. DETERMINE HOW MUCH HOUSE YOU CAN AFFORD

Use your budget to evaluate how much of a mortgage you can afford. A bank may approve you for monthly mortgage payments of up to 32 per cent of your gross monthly household income, but can you afford it? Work out what your future expenses will look like each month (mortgage + insurance + utilities + taxes + other expenses). Do you make enough to cover this – with enough left over to save? If not, maintain breathing room by opting for a more affordable first home.

  1. START “PAYING” YOUR MORTGAGE

If your future mortgage payments will cost approximately $1,800 per month and you currently pay $1,300 in rent, now’s the time to start setting aside an extra $500 per month, so you can get into the habit of budgeting $1,800 per month for shelter. That will grow your savings faster.

  1. BULK UP YOUR INCOME

Another way to hold on to your money is to make more of it! Consider a second job, extra hours or selling those collectibles on eBay. (Bonus: Fewer boxes on moving day!)

  1. PAY YOURSELF FIRST

Get serious about paying yourself first by setting up bi-weekly automatic transfers from your chequing account to your savings account. Beyond the down payment and closing costs associated with a new home, homeownership might come with surprise expenses like a leaky roof and a broken washing machine. A healthy savings account will make you less stressed about those possibilities.

  1. CONSIDER PROFESSIONAL ADVICE

Once you’re on track, see a financial advisor to work out short- and long-term strategies for your ongoing financial goals, from homeownership to retirement savings. You’ll get more from the meeting if you have already determined your goals and actions.

Source: HomeOwnership.ca

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The Best Cities To Own Rental Property In Florida

 

Credit: Getty Royalty Free | Miami Beach. Florida. USA. The Miami metro area is a hotbed for investment property investing.

Florida is an intriguing state when it comes to buying and owning rental property. On one hand, demand for homes — especially single-family homes — has been consistently on the rise in Florida. Yet despite the demand, it doesn’t necessarily convert to more homebuyers. Instead, even though Florida boasts fairly low housing prices statewide, many people are still opting to rent instead of buy. As a result, rental rates are skyrocketing.

Now add into the mix low property taxes and insurance, as well as no state income tax. Great climate and top-of-the-line healthcare are bonuses that help make Florida one of, if not the best, states for America’s retiring Baby Boomer masses.

Here’s a look at the best places in Florida to own rental property and turn a solid profit.

Tampa

Although Tampa home prices have risen in recent years, the city still has plenty of neighborhoods and zip codes where investors can find properties at affordable prices, and rent them out for $1,405 to $1,527 a month on average.

Tampa’s economic prospects really boost the city’s appeal to rental property owners. Tampa’s year-over-year employment growth beat the U.S. average. According to Bureau of Labor Statistics data, U.S. nonfarm employment increased approximately 1.6% from 2017 to 2018, while Tampa managed a 2.3% increase.

Healthcare and social assistance is the dominant employment sector in Tampa. This isn’t a bad thing considering jobs such as home health aides, personal care aides, physician assistants and nurse practitioners all rank among the top-10 fastest growing occupations in the country, according to BLS Employment Projections.

Here’s a breakdown of some important figures to consider before buying property in Tampa:

  • Median list price – All Homes: $312,995
  • Median list price – Condo: $239,900
  • Rent list price: $1,527
  • Median rent: $1,405
  • 1-year job growth rate: 2.3%
  • 5-year population growth: 12%
  • Average 30-year fixed mortgage rate: 4.40%
  • Rental yieldSee rental yields for Tampa

The trajectory of Tampa’s population growth is very conducive to potential future property owners. Since 2013, Tampa’s population has risen by an impressive 12%, one of the highest rates in the country. With a local economy worth well over $130 billion, Tampa is easily one of Florida’s best markets to buy and own rental property. For a more in-depth look, or just to explore, take a look at this interactive map of the Tampa real estate market.

Jacksonville

Robust job and population growth as well as great affordability greet prospective investment property owners in Jacksonville. Florida’s largest city is also home to a first-rate healthcare system, and burgeoning biological sciences sector. The population in Jacksonville has grown about 8% from 2013 to 2018, and 24% since the year 2000. Plus, the median home price is $210,000 in Jacksonville, which is 33% cheaper than the national average, $278,900.

Jacksonville’s average rental yield is among the highest in the U.S. Rent growth is also healthy. The city’s 2.6% increase is better than the national year-over-year average of 0.5%. Specific markets within the Jacksonville metro area, such as Butler Beach, are displaying rent growth rates in excess of 10%.

Here’s a breakdown of some important figures to note before buying property in Jacksonville:

  • Median list price – All Homes: $210,000
  • Median list price – Condo: $134,950
  • Rent list price: $1,250
  • Median rent: $1,345
  • 1-year job growth rate: 3.2%
  • 5-year population growth: 8%
  • Average 30-year fixed mortgage rate: 4.40%
  • Rental yieldSee rental yields for Jacksonville

The reasons for all this growth and development are manifold. Jacksonville’s cost of living is below the national average. And to this is we can add the usual Florida amenities, like warm weather, conducive business climate and no state income tax.

See interactive map of Jacksonville real estate market >>

Orlando

In terms of both employment and population growth, Orlando really outshines. From summer 2017 to 2018, employment increased 4.3%, which is almost three times the U.S. average growth rate. Its population surged by 14% from 2013 to 2018.

The most common employment sectors for those who live in Orlando are accommodation and food service (12.3%), which includes workers of Orlando’s world-class resorts like Disney World and Universal Studios Orlando. Second most common sector is healthcare and social assistance (11.9%), followed by retail trade (11%).

Here’s a breakdown of some important figures to consider before you buy property in Orlando. Also, here’s an interactive map of Orlando’s real estate market to help out.

  • Median list price – All Homes: $285,000
  • Median list price – Condo:$140,000
  • Rent list price: $1,600
  • Median rent: $1,478
  • 1-year jogrowth rate: 4.3%
  • 5-year population growth: 14%
  • Average 30-year fixed mortgage rate: 4.40%
  • Rental yieldSee rental yields for Orlando

Rents grew 2.3% in the last year, which is well ahead of the U.S. overall growth rate. Rent yield in Orlando is markedly higher than in most other cities. Comparatively low home prices combine with relatively higher rent prices to create a city that is especially suitable to owning rental property.

Source: Forbes –
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Rent-to-Own Homes: How the Process Works

If you’re like most home buyers, you’ll need a mortgage to finance the purchase of a new house. To qualify, you must have a good credit score and cash for a down payment. Without these, the traditional route to homeownership may not be an option.



There is an alternative, however: a rent-to-own agreement, in which you rent a home for a certain amount of time, with the option to buy it before the lease expires. Rent-to-own agreements consist of two parts: a standard lease agreement and an option to buy. Here’s a rundown of what to watch for and how the rent-to-own process works. It’s more complicated than renting and you’ll need to take extra precautions to protect your interests. Doing so will help you figure out whether the deal is a good choice if you’re looking to buy a home.

You Need to Pay Option Money

In a rent-to-own agreement, you (as the buyer) pay the seller a one-time, usually nonrefundable, upfront fee called the option fee, option money or option consideration. This fee is what gives you the option to buy the house by some date in the future. The option fee is often negotiable, as there’s no standard rate. Still, the fee typically ranges between 2.5% and 7% of the purchase price. In some contracts all or some of the option money can be applied to the eventual purchase price at closing.

Read the Contract Carefully: Lease Option vs. Lease Purchase

It’s important to note that there are different types of rent-to-own contracts, with some being more consumer friendly and flexible than others. Lease-option contracts give you the right – but not the obligation – to buy the home when the lease expires. If you decide not to buy the property at the end of the lease, the option simply expires, and you can walk away without any obligation to continue paying rent or to buy.

Watch out for lease-purchase contracts. With these you could be legally obligated to buy the home at the end of the lease – whether you can afford to or not. To have the option to buy without the obligation, it needs to be a lease-option contract. Because legalese can be challenging to decipher, it’s always a good idea to review the contract with a qualified real estate attorney before signing anything, so you know your rights and exactly what you’re getting into.

Specify the Purchase Price

Rent-to-own agreements should specify when and how the home’s purchase price is determined. In some cases you and the seller will agree on a purchase price when the contract is signed – often at a higher price than the current market value. In other situations the price is determined when the lease expires, based on the property’s then-current market value. Many buyers prefer to “lock in” the purchase price, especially in markets where home prices are trending up.

Know What Your Rent Buys

You’ll pay rent throughout the lease term. The question is whether a portion of each payment is applied to the eventual purchase price. As an example, if you pay $1,200 in rent each month for three years, and 25% of that is credited toward the purchase, you’ll earn a $10,800 rent credit ($1,200 x 0.25 = $300; $300 x 36 months = $10,800). Typically, the rent is slightly higher than the going rate for the area, to make up for the rent credit you receive.But be sure you know what you’re getting for paying that premium.

Maintenance: It May Not Be Like Renting

Depending on the terms of the contract, you may be responsible for maintaining the property and paying for repairs. Usually, this is the landlord’s responsibility so read the fine print of your contract carefully.  Because sellers are ultimately responsible for any homeowner association fees, taxes and insurance (it’s still their house, after all), they typically choose to cover these costs. Either way you’ll need a renter’s insurance policy to cover losses to personal property and provide liability coverage if someone is injured while in the home or if you accidentally injure someone.

Be sure that maintenance and repair requirements are clearly stated in the contract (ask your attorney to explain your responsibilities). Maintaining the property – e.g., mowing the lawn, raking the leaves and cleaning out the gutters – is very different from replacing a damaged roof or bringing the electric up to code. Whether you’ll be responsible for everything or just mowing the lawn, have the home inspected, order an appraisal and make sure the property taxes are up to date before signing anything.

Buying the Property

What happens when the contract ends depends partly on which type of agreement you signed. If you have a lease-option contract and want to buy the property, you’ll probably need to obtain a mortgage (or other financing) in order to pay the seller in full. Conversely, if you decide not to buy the house – or are unable to secure financing by the end of the lease term – the option expires and you move out of the home, just as if you were renting any other property. You’ll likely forfeit any money paid up to that point, including the option money and any rent credit earned, but you won’t be under any obligation to continue renting or to buy the home.

If you have a lease-purchase contract, you may be legally obligated to buy the property when the lease expires. This can be problematic for many reasons, especially if you aren’t able to secure a mortgage. Lease-option contracts are almost always preferable to lease-purchase contracts because they offer more flexibility and you don’t risk getting sued if you are unwilling or unable to buy the home when the lease expires.

Who’s an Ideal Candidate for Rent-to-Own

A rent-to-own agreement can be an excellent option if you’re an aspiring homeowner but aren’t quite ready, financially speaking. These agreements give you the chance to get your finances in order, improve your credit score and save money for a down payment while “locking in” the house you’d like to own. If the option money and/or a percentage of the rent goes toward the purchase price – which they often do – you also get to build some equity.

While rent-to-own agreements have traditionally been geared toward people who can’t qualify for conforming loans, there’s a second group of candidates who have been largely overlooked by the rent-to-own industry: people who can’t get mortgages in pricey, nonconforming loan markets. “In high-cost urban real estate markets, where jumbo [nonconforming] loans are the standard, there is a large demand for a better solution for financially viable, credit-worthy people who can’t get or don’t want a mortgage yet,” says Marjorie Scholtz, founder and CEO of Verbhouse, a San Francisco–based start-up that’s redefining the rent-to-own market.

“As home prices rise and more and more cities are priced out of conforming loan limits and pushed into jumbo loans, the problem shifts from consumers to the home finance industry,” says Scholtz. With strict automatic underwriting guidelines and 20% to 40% down-payment requirements, even financially capable people can have trouble obtaining financing in these markets.

“Anything unusual – in income, for example – tosses good income earners into an ‘outlier’ status because underwriters can’t fit them neatly into a box,” says Scholtz. This includes people who have nontraditional incomes, are self-employed or contract workers, or have unestablished U.S. credit (e.g., foreign nationals) –  and those who simply lack the huge 20% to 40% down payment banks require for nonconforming loans.

High-cost markets are not the obvious place you’ll find rent-to-own properties, which is what makes Verbhouse unusual. But all potential rent-to-own home buyers would benefit from trying to write its consumer-centric features into rent-to-own contracts: The option fee and a portion of each rent payment buy down the purchase price dollar-for-dollar, the rent and purchase price are locked in for up to five years, and participants can build equity and capture market appreciation, even if they decide not to buy. According to Scholtz, participants can “cash out” at the fair market value: Verbhouse sells the home and the participant keeps the market appreciation plus any equity they’ve accumulated through rent “buy-down” payments.

Do Your Homework

Even though you’ll rent before you buy, it’s a good idea to exercise the same due diligence as if you were buying the home outright. If you are considering a rent-to-own property, be sure to:

  • Choose the right terms. Enter a lease-option agreement rather than a lease-purchase agreement.
  • Get help. Hire a qualified real estate attorney to explain the contract and help you understand your rights and obligations. You may want to negotiate some points before signing or avoid the deal if it’s not favorable enough to you.
  • Research the contract. Make sure you understand:
    • the deadlines (what is due when)
    • the option fee and rent payments – and how much of each applies towards the purchase price
    • how the purchase price is determined
    • how to exercise your option to buy (for example, the seller may require you to provide advance notice in writing of your intent to buy)
    • whether pets are allowed
    • who is responsible for maintenance, homeowner association dues, property taxes and the like.
  • Research the home. Order an independent appraisal, obtain a property inspection, make sure the property taxes are up to date and ensure there are no liens on the property.
  • Research the seller. Check the seller’s credit report to look for signs of financial trouble and obtain a title report to see how long the seller has owned it – the longer they’ve owned it and the more equity, the better.
  • Double check. Under which conditions would you lose your option to buy the property? Under some contracts, you lose this right if you are late on just one rent payment or if you fail to notify the seller in writing of your intent to buy.

The Bottom Line

A rent-to-own agreement allows would-be home buyers to move into a house right away, with several years to work on improving their credit scores and/or saving for a down payment before trying to get a mortgage. Of course, certain terms and conditions must be met, in accordance with the rent-to-own agreement. Even if a real estate agent assists with the process, it’s essential to consult a qualified real estate attorney who can clarify the contract and your rights before you sign anything.

Source: Investopedia – Jean Folger Nov. 6, 2018

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20 Common Home ‘Renovations’ That Can Accidentally Lower A House’s Overall Value

When it’s time to sell their house, a homeowner will want to do everything they can to increase its market value. Of course, they’re aiming to turn the best possible profit, so that means they’ll need to ensure their home is in pristine condition when realtors bring around potential buyers.

You’d think a home with all the latest bells and whistles would be a surefire target for buyers, but the truth is there are plenty of upgrades that actually decrease a home’s value—and therefore make it far less marketable than comparable listings. You’ll never guess some of the ways putting money into your home can actually work against you!

1. Fancy light fixtures: While you might think adding dramatic touches to your home’s decor would make a listing more appealing, it can actually turn potential buyers away. If the light fixtures don’t match the style of the home, it can be a huge turn-off.

2. Wallpaper: Wallpaper is notoriously difficult to remove, and sometimes the choices in patterns can be a little too “in your face.” Instead of fancy designs, go with neutral paint instead. This allows the buyer to envision their own decorating—and it makes for an easier sale for you!

3. Textured walls: As with wallpaper, ornate textures on walls and ceilings can be a real pain to remove. Instead, check out textured wall decor; it’s far easier to remove, not to mention it’s usually cheaper.

4. Unique tiling: Many people have a tendency to lay down tiles that fit their own personal style, but chances are a potential buyer won’t have the same taste. Go with a traditional neutral floor and customize your space with a unique (and easy to remove) rug instead.

5. Carpeting: According to a study, 54 percent of homebuyers are willing to pay more for hardwood floors, which means homes with a lot of carpeting are less desirable. Carpets show their wear earlier, and colors and styles are usually based on personal preferences.

6. Bold paint: Bold and vibrant paint colors usually turn off potential buyers since the hues here are limited to the current owner’s preference. Fortunately, repainting rooms is an easy and affordable fix—and it’s a worthy investment.

7. High-end kitchens: In 2015, the national average for a kitchen remodel was a little less than $60,000, but the resale value was only priced at $38,000. To avoid spending so much on a project that will cost you in the end, only focus on the aspects of a kitchen that truly need sprucing up.

8. Luxury bathrooms: As awesome as a whirlpool tub is, it can be difficult to clean and sometimes hard to step into for some people… and that will deter buyers. A simpler walk-in shower appeals to more people looking to buy a home.

9. Home offices: Modern technology has allowed for more and more people to work from home, and they usually convert a bedroom into a personal work space. However, that can knock as much as 10 percent off a home’s value. If you have to use a bedroom, avoid bulky desks and shelving units so the room can easily be converted back.

10. Combining bedrooms: Combining two bedrooms that are next to each other to create a bigger room is perfectly fine for couples without children, but if they don’t plan on living there forever, the removal of one bedroom will knock down a home’s value.

11. Closet removal: Some people make the decision to turn large walk-in closets into other spaces, but this can actually hurt a home’s resale value. People will always need closets; they won’t always need a larger bedroom or bathroom.

12. Sunrooms: Sunrooms are actually some of the worst renovations to make to a home when it comes to return on investment! Homeowners need to think carefully about how much they’ll actually use the space before splurging on the expensive addition.

13. Built-in aquariums: These aquatic additions might make a home feel modern, but they require a massive amount of upkeep that many potential buyers aren’t willing to put in. Opt for a standard stand-alone fish tank instead.

14. High-end electronics: As cool as in-home movie theaters and other high-end electronic equipment may be, they usually throw off potential buyers who aren’t looking for these types of luxuries. Certain built-in technologies can also quickly become outdated.

15. Swimming pools: Many people might think swimming pools increase a home’s value, but it’s actually the opposite. Sure, if a buyer has children who will use it every day, that’s one thing—but many times, people see pools as money pits!

16. Hot tubs: Just like pools, hot tubs are always a gamble. The constant maintenance can throw off a buyer, and they’re also potential hazards for small children. Portable hot tubs are a much smarter investment if you truly want one.

17. Garage conversions: Some homeowners park in their driveways so they can renovate their garages into custom spaces like home gyms. However, many buyers actually want to park in their garages, not work on their lifting form.

18. Intricate landscaping: Unless the person buying your home is a landscaper who intends to maintain an intricate garden, costly outdoor decor will deter potential buyers. Keep gardens beautiful—but easy for upkeep.

19. Messy trees: No one likes to spend their afternoons raking up massive piles of leaves, but many types of trees will ensure that happens every year. If you plan on planting vegetation, keep in mind which types will create a huge workload come autumn.

20. DIY projects: Many people come up with unique ideas while they’re living in their home, and they put the effort in to make the renovations. However, not everyone is going to want something like an attic bedroom when they’re looking to buy! Keep that in mind.

The takeaway? Don’t over-personalize your living space! Keep it neutral and appeal to as many potential buyers as possible. If you’re putting you home on the market any time soon, don’t make these mistakes!

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Can you walk away from your home?

The fluctuating housing market can make purchasing a house a bit of a gamble. If you buy when prices are high and the value of your home goes down, most homeowners can just wait it out. Houses are long-term investments and eventually with time you know the market will rise again.

“If you bought at the market high and prices drop, you could be underwater on paper, which means you owe more than the home is worth. If you’re not planning to sell and you can meet your payments, you don’t lose,” says Scott Terrio, manager of consumer insolvency for debt relief experts Hoyes, Michalos & Associates. “It becomes a problem for someone who discovers they can’t carry the mortgage payment plus all their other debt, especially if they’ve lost a job, dealt with an illness or they’ve simply run out of credit.” In those instances, it may make fiscal sense for the homeowner to abandon their mortgage and walk away. The home goes into foreclosure — the home is turned over to the lender, who attempts to recover their investment by forcing the sale of the home and using the money to pay off most of the debt.

If you have lots of debt and you’re not meeting your payments, can you simply choose to pack up your belongings and walk away from your high-priced mortgage?
If you have lots of debt and you’re not meeting your payments, can you simply choose to pack up your belongings and walk away from your high-priced mortgage?  (CONTRIBUTED)

This happened frequently in the U.S. during the financial crash in 2008; lenders were forced to absorb the unrecovered debt. Could this happen in Canada? It’s not quite as simple here. “In Ontario and most other provinces, there are full recourse rules, which means you can’t walk away from your mortgage obligation without recourse from the lender, who can pursue mortgage shortfalls in court,” explains Terrio. However, homeowners can file a proposal or bankruptcy, which makes any shortfall unsecured (like other debt such as student loans, payday loans, car loans, line of credit and credit card debt). “Once a proposal or bankruptcy is filed, you can’t be sued for any shortfall, which is the difference between what you owe and what the lender can get for the house.”

What is the difference between filing a proposal and filing for bankruptcy? They’re both solutions to resolve debt and provide legal protection from creditors (for example, creditors stop wage garnishments). In bankruptcy, you surrender certain assets in exchange to discharge debt. When you file a proposal, you make an offer to settle debt for less than you owe.

“Proposals are filed more frequently with our clients now than bankruptcy,” explains Terrio. While you have to make a better offer to your creditor than what they would get if you filed bankruptcy, “it has less impact on your credit long-term and you can keep your belongings, which makes it a very realistic and favourable option for many.”

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