Monday, October 28, 2019

4 Tips for Upgrading Your Kitchen on a Budget

After living in a home for a few years, you might start itching for a kitchen upgrade. However, it can be difficult to come up with a list of kitchen upgrades that you can complete on a budget. The average kitchen remodel costs nearly $20,000—a figure that is far beyond the reach of the average family on a budget. Instead of doing a full kitchen remodel, consider taking advantage of some of these affordable kitchen upgrades that will not break the bank.
1. Replace Outdated Light Fixtures
One of the most obvious signs of age in your kitchen is a dated light fixture. A brightly colored pendant light will give your kitchen a more modern look. These can be found online at surprisingly affordable prices. Taking some time to shop around is well worth your time. 
2. Install New Handles or Pulls for Cabinets and Drawers
Cabinet fixtures come in a wide range of colors and styles that include everything from traditional metal handles, such as copper or brushed nickel to trendy styles like handles that resemble tiny silverware. Replacing your cabinetry hardware is a quick, easy and affordable way to give your kitchen a facelift. 
While some people love trendy designs, carefully weigh your options before settling on something unusual. You might like it now, but how will you feel about it a year from now? You will not want to spend money replacing the handles again if you get tired of them or if the trend goes out of style.
3. Repaint Your Cabinets
If just replacing the hardware is not enough, consider repainting the entire row of cabinets. For the cost of a can of paint and a few hours of your time, you could have your kitchen cabinetry looking as good as new. Brand-new cabinets can be a costly upgrade, but freshly painted cabinets are almost as good at a fraction of the cost. 
4. Remove Cabinet Doors
If repainting your kitchen cabinets does not appeal to you, consider removing the doors entirely. Open-faced cabinets can instantly give your kitchen a more modern look. The one drawback to this strategy is that you will need to keep the contents of your cabinets neat and tidy in order for it to work. For this reason, many designers use open-faced cabinets on the upper levels and traditional closed cabinets on the lower levels.
Using one or all four of these strategies can help give your kitchen a facelift without breaking the bank or going over your budget on the project.

Tuesday, October 22, 2019

The Myth of the 20% Down Payment

You may have been told that you should put down 20% to buy a home. This may give you more choices and let you avoid private mortgage insurance, but this large amount may not be prudent, or necessary, in all circumstances. Some experts advise keeping your mortgage down payment small — a strategy that sets you up so you'll be better assured of liquidity when life happens.
What's going to happen with the economy? No one can be sure, but it's pretty certain that the economy and home prices are closely linked. That's why buyers who make large down payments find themselves overexposed to economic downturns compared with buyers who made small down payments.  
Take this scenario: You make a 20% down payment on a home. What you're really doing is converting $80,000 on a $400,000 house to build liquid home equity. What if, instead, you opt for the Federal Housing Administration mortgage program, with a down payment of just 3.5%? In this situation, that's only $14,000 down.
Now, if the economy turns for the worse, home values will plummet — in some markets dropping as much as 20%. These buyers' homes are now worth $320,000 with no home equity yet available. The buyer who made the large down payment finds that the money is lost and can't be recouped until the housing market recovers. The buyer who put down only $14,000  transferred the risk to the bank. The smaller down payment translates to a smaller risk.
You may say that a large down payment helps you afford more house, but turn that around: Maybe you shouldn't use your last dollar. You don't save a ton of money each month by putting down a lot.
And yes, there's always the PMI issue: When you get a conventional mortgage with a down payment of less than 20%, you have to get private mortgage insurance. However, if you go the FHA route, the agency doesn't charge more to people with lower credit scores, while PMI does. However, you cannot cancel annual mortgage insurance premiums if you put down less than 10% on an FHA loan.
Ultimately, it's wise not to deplete your retirement savings account or emergency fund to buy a home. You might need money to make repairs after moving in or run into a financial hardship. You won't have a cushion to fall back on. 
Besides, if you take advantage of down payment assistance programs that provide grants or loans, you can buy a home with only 3% down. And research shows that millennials tend to go with lower down payments than older generations did.
What this tells us is that the 20% down payment is no longer the standard: Down payment assistance programs are available. The 20% down payment myth is dispelling, opening the path to home ownership to younger generations. 
The bottom line? Don't make assumptions and get professional financial advice before choosing a mortgage and making a down payment decision.