MONEY Ask the Expert

How To Get Your Kids To Do Some Real Work Around the House

For Sale sign illustration
Robert A. Di Ieso, Jr.

Q: I owe my handiness to projects I helped my father with as a kid. But my children show no interest in lifting a hammer. How do I motivate them to become capable do-it-themselfers?

A: Thanks to affluenza as well as the draw of computer-based learning, instead of hands-on tutorials, many of today’s young digital natives are sorely lacking in analog skills. We are creating a generation that may never know how to paint a straight line or re-shingle a shed.

The effects are twofold. First, your kids may grow up into adults who, for every household project, are at the mercy of those few capable peers who become handymen and contractors. They’ll pay every time they need to tighten a rattling window or fix the toilet.

Also this lack of hands-on knowledge is—ironically—a contributing factor as to why other countries are outcompeting the United States in science, technology, engineering, and math education, those so-called STEM subjects where many of the good jobs of the future promise to be.

Getting your kids involved with you in safe, age-appropriate DIY projects is a great way to bolster their “spatial awareness,” an understanding of 3D space and how things work that helps later with engineering and physics, according to Vanderbilt University psychologist David Lubinski.

Thus spending a few hours away from their screens helping you build garage shelves or plant flower bulbs can give your kids a leg up on a career in the very technology they love.

Of course, as any parent knows, telling them that may not be enough to motivate them. Yet don’t resort to bribing your kids with a trip to Five Guys or extra screen time to get them to help out, says Carol S. Dweck, a psychology professor at Stanford University. That sends the message that the job is an unpleasant one that no child in her right mind would want to do.

You’re better off channeling Tom Sawyer and making the project feel fun and interesting. It helps if you pick an exciting improvement task, such as building a fire-pit, hanging cabinets in the recreation room, or painting the kid’s own bedroom in her choice of color (perhaps from a list preselected by you), rather than a maintenance job like snaking a drain or bleeding the radiators. Older youth may be enticed by the chance to use power tools (with plenty of knowledgeable and safe parental supervision).

Projects with relatively immediate gratification, like painting or laying sod, are more inspiring for young minds. Thus make it a project that they’ll get to enjoy the results of—and do it at a time when distractions like video games and social networking are off limits anyway. Then, let her post photos of the finished work on Facebook, if she wants, to help build her pride and a sense of accomplishment in her work.

 

Got a question for Josh? We’d love to hear it. Please send submissions to realestate@moneymail.com.

MONEY Millennials

What Everyone Gets Wrong About Millennials and Home Buying

Millennials on porch in suburbia
Katherine Wolkoff—Trunk Archive

Conventional wisdom says that millennials are a new and different generation. But when it comes to housing, they're likely to be more conservative and traditional than their parents were.

If you’ve come across any stories mentioning millennials and home ownership, you’ve likely heard this refrain: Young people just aren’t very interested in buying a house. Instead, the story goes, they want to rent a cool apartment, live in a city, and walk to coffee shops. Forever.

This narrative was eloquently expressed in a recent New York Times article about a hip, 30-year-old, unmarried couple choosing to rent in a swanky Virginia high-rise. What made these millennials pick a rental apartment over a nest of their very own? The developer of the couple’s new home, Joshua Solomon, had his theories:

“That generation of folks has seen people really get hurt by homeownership,” said Mr. Solomon, president of the company, which is based in Waltham, Mass. “The petal has really fallen off the rose as it pertains to homeownership. People don’t want to be tied down to a mortgage they can’t get out of quickly.”

Sounds like a reasonable conclusion, right? Multi-unit construction is up, after all, and first-time home buyers are in historically short supply.

But if you dig a little deeper, both Solomon’s generalization and the “millennials don’t really want to own homes” trope turn out to be largely untrue. A number of surveys have shown that the vast majority of millennials would love to own a place of their own. Recent research from housing site Zillow, for example, found that adults age 22 to 34 are actually more eager to own a home than older Americans.

According to Zillow’s data, young married couples in which both partners work (represented by the orange line in the left graph below) currently own homes at a rate close to or above historical norms for their demographic. Even single employed millennials (the yellow line in the right graph) are slightly more likely to own a home than their counterparts in the ’70s, ’80s, and ’90s.

Zillow

So if young adults want homes more than previous generations, why is their homeownership rate at a historic low? The answer is that millennials are getting married later in life, and not having two income streams makes it much harder to scratch together a down payment.

From 1960 to 2011, Americans’ median age at the time of their first marriage increased by six years, to around 29 from 23 for men and 26 from 20 for women, according to Census data. Then came the financial crisis, which pushed marriage back even further by making financial stability—a marital prerequisite for many— a rarity among recent college graduates. According to one recent study from the University of Arizona, only about half of adults ages 23 to 26 and at least one year out of college have a full-time job.

As a result, the millennial generation’s overall home purchases are down—but they probably won’t be down forever. Zillow’s analysis shows that if millennials were marrying at the same pace as previous generations, their rate of homeownership would be 33%, four percentage points higher than now and roughly the same as in the 1990s. Once this generation begins to tie the knot, the evidence suggests, it’ll be buying homes at least as frequently as older Americans once did.

Old School Values

In fact, there’s some evidence that home ownership is more important to millennials than it is to Gen Xers or boomers. In a recent survey, forty-six percent of respondents ages 18 to 34 told Zillow they believe “owning a home is necessary to being a respected member of society,” and 65% said “owning a home is necessary to live The Good Life and The American Dream.” Both results were higher (in most cases, significantly higher) than older age groups.

America’s newest generation—post-millennials—are perhaps the most old-fashioned of all. A shocking 97% of teens age 13 to 17 believe they will one day own a home, and 82% say homeownership is the most important part of the American dream. If anything, buying a home seems to be getting more attractive, not less.

So millennials really want a home, but they still want a cool home, right? One that’s urban, and different, and close to a Blue Bottle Coffee? Maybe when they’re still young and single, but a large amount of evidence suggests that even today’s young adults look to the suburbs once children come along. Highly dense “core cities” like San Francisco and New York are attractive to millennials looking for fun and adventure, but they’re also extremely expensive to live in when dependents enter the picture.

Research suggests a negative correlation between big cities and child populations. City Journal found that between 2000 and 2010, the population of children 14 and younger fell by 500,000 in the country’s densest urban areas, including Los Angeles, Chicago, and New York. As children disappeared from cities, the nation’s 51 largest metro areas lost 15% of adults 25 to 34—the same age range when many begin to marry and start families. “While it’s not possible to determine where they went,” the Journal noted, “suburbs saw an average 14 percent gain in that population during the same period.”

Mollie Carmichael, principal at John Burns Real Estate Consulting, is already seeing millennials flee cities to more child-friendly environments. “We do find that the millennials want to be in urban areas, but usually when they’re not married and they’re renting” says Carmichael. “But the trigger is marriage, and then frankly they want more traditional areas and more traditional environments than even their parents. They want suburban; they want single-family detached; they want a yard.”

What about millennials’ much-reported fixation on urban-ness? There’s some truth to it, Carmichael acknowledges, but “urban to them means they want the ability to walk to the park and walk to the Starbucks. It’s more about accessibility, and that could be driving to those great places they want to go.”

In the end, America’s newest adult generation isn’t that different from the previous ones. Millennials may Instagram their new home instead of sending photos through the mail, but not much else has changed.

MONEY energy costs

7 Easy Ways to Lower Winter Energy Costs

Radiator with dollar signs on knob
Getty Images

Don't lose your whole paycheck to the polar vortex this winter. Use these tips to stay warm for less.

There’s snow in the forecast. As much as I’d like to ignore all the fallen leaves in our backyard and gloss over the shorter daylight hours, the fact remains: Winter is upon us.

We’re in a new-to-us home this year, so how much our heating might cost is a wildcard. Thankfully, we’ve lined up some defenses to keep our energy bills as low as they can be. And these simple tips are universally helpful whether you live in a 1960s ranch or an 1880s Victorian.

1. Tame Drafts

The best way to keep the warm air in is to make sure it isn’t flowing out. Take a tour around your home and examine windows and doors for any drafts. Our front door had a sizable gap at its base, so we installed weatherstripping and it took care of the cold air problem immediately.

There are many ways to fill in voids, including stripping, insulator kits, foam, silicone, etc. If you’re in an apartment or just want a temporary fix, you can also use one of those draft guards. Here’s a DIY tutorial using an old pair of tights, polyfill, and only a few stitches.

2. Lower the Thermostat

How low can you go on your thermostat this winter? Start just one degree and you could save up to 5% (or around $10 per day) on your overall heating bill according to an analysis released by EnergyHub in 2012. The EPA recommends settings on 70 degrees during the eight hours most people are home turning it down to 62 degrees for the 16 hours when people are away or sleeping. And if you can get away with keeping your thermostat on lower (we keep ours on 67 during the day), that’s great, too. Using a programmable thermostat also helps you save by taking out the manual temperature changing.

3. Cover Yourself

Feeling nervous about taking the plunge? Keeping comfortable at lower thermostat levels isn’t difficult. Wear more clothing! Long sleeves, pants, thick socks, and layers are the fashion statements in our house during the winter. We also keep a fleece blanket on the couch to ward off chills in the evening. Our beds are topped with flannel sheets and wool covers for the nights when our thermostat is at its lowest setting. You don’t want to be frigid all season long, but some common sense is employed here.

4. Zone It Out

My family lives in a 4-bedroom home, but we’re currently only using two of those bedrooms on a daily basis. So, we’ve closed the hot air vents in those rooms to redirect the heating to the spaces we’re living in and keep the doors shut most hours of the day. If you have baseboard heating, see if there’s a localized switch in your room so you can turn it off and shut the door. The savings here are hard to quantify because so many factors are involved (room size, etc.), however — the less area to heat, the more money that stays in your pockets.

5. Use Curtains

During the day, take advantage of the sun’s rays by opening your curtains to let the light in. Even on the coldest days you’ll get a boost, especially with those south-facing windows in the afternoon rays. Then in the evening, close your curtains to help keep the heat indoors. If your windows are bare (or you only have sheers), consider purchasing some insulated curtains, which protect your home from heat loss through conduction, infiltration, convection, and radiation. They come in all colors and patterns, too!

6. Service Your Furnace

It’s one of those annoying home maintenance tasks you don’t think you should need to do, but getting your furnace cleaned and evaluated each year can help save you cash and unexpected breakdowns. (It’s also a safety thing, as furnaces can leak carbon monoxide into your home without your knowledge.) You’ll also need to change out the filter at least once per season — or whenever it’s dirty — to keep everything flowing as it should. Check your local coupon books to see if any HVAC providers are offering promotions.

7. Add Insulation

If your house is still feeling quite cold, take a trip to your attic to assess the insulation situation. In our last home, we were surprised to find only a few inches of the stuff keeping our heat from flowing out the roof. (Insulation acts like a hat does on your body.) We added a thick fiberglass roll to the entire attic ourselves and could tell the difference in our second floor level almost immediately. How much insulation you add and where you add it is going to depend on your home. If you plan to stay there for quite a while, it certainly makes sense to evaluate and correct any issues that might cost you big dollars as the years go on.

Read more articles from Wise Bread:

MONEY buying a home

7 Tips For Buying a Vacation Home

Beach house
Astronaut Images—Getty Images

You may be tempted to finally buy that vacation place now that the housing market has healed. Here's what to consider before you start house hunting.

Many Americans contemplating a vacation home abandoned that dream when the housing market collapsed. But now that home values have climbed month after month, with the median price up about 20% since its bottom nearly three years ago, you may once again be toying with the idea of that lakefront, ski or beach getaway place. About 13% of homes purchased last year were intended as vacation homes, up from 11% in 2012, according to the National Association of Realtors.

Yet you shouldn’t let the fact that the market has stabilized drive your buying decisions. Instead follow these seven steps to take to make sure a vacation home is right for you, and won’t turn out to be an expensive headache.

1. Choose the Location Carefully

This may sound obvious, but before you start shopping you need to be able to specify why exactly you want this second home. The answer should shape where you look. For example, 87% of vacation home purchasers in 2013 planned to use the property primarily to getaway with their families, according to the NAR. Thus the typical home purchased was an average 180 miles from the buyers’ primary residence.

If the main purpose is for you and your loved ones to gather together and enjoy the house as a family, you’ll need it to be in an area that is easily accessible for everyone, and that offers plenty of activities for different age groups. While you may think jumping on a flight to Florida isn’t a big deal, elderly grandparents or parents of small children may disagree.

Buyers who plan to rent the home to others- as 25% of purchasers do- may want to choose a location with numerous seasons of rental demand, so you aren’t limited to income only, say, three months of the year (likely when you want to use the home too). When you’re viewing the home as an investment property you’ll also care more about projected growth rates of the communities you’re considering, as well as the health of the local economy.

Related: 6 Amenities to Ensure Repeat Business in Your Vacation Rental

2. Rent Before You Purchase

Before you lock yourself in, rent a place (more than once is best) in the area you’re considering to be certain you’ll actually enjoy it. Stay for at least two weeks to make sure you don’t grow bored on extended stays.

Try to visit in different seasons to understand weather and crowd patterns. For example, you may realize that you hate needing to book a dinner reservation well in advance during the summer busy season, when you’re there to relax.

Or if you plan to eventually move to the home full-time, as one-third of buyers do, you may decide a house outside of town is actually too lonely and inconvenient. Only 32% of vacation homes purchased last year were in a small town or rural locale.

You’ll also learn what part of town you prefer. For example, in Orlando vacation homes are spread out throughout the city, but you may prefer the shops and restaurants in Kissimmee over Davenport.

3. Buy Under Your Budget

Don’t fall into the trap of purchasing a property that is a stretch to afford. Buying a house with too high of monthly carrying costs causes stress, and most people go on vacation to getaway from troubles. It also means that if you eventually decide you want to hire someone to manage the place, or care for the yard, there won’t be any wiggle room in your budget to afford it.

Keep in mind that you can always upgrade to a bigger house down the road.

4. Be Realistic About How Often You’ll Use It

My wife and I have three kids. When they were young we bought a vacation home near our house. We used it all the time. As the kids got older, though, we visited the house less and less. Weekend sports games, friends sleeping over, and church and school activities left too little time to get there.

Be realistic when you make assumptions about how often you’ll actually be able to use the place. You may be better off working out a rental agreement with an owner in the area to use his or her place two or three times a year- and forget about the place when you’re not there.

5. Understand the Tax Implications

Don’t assume you know what the tax consequences of owning that property will be, based on your experience with your primary residence. Second homes can be more complicated.

If you are going to rent out the property, you will need to pay income taxes on the rental income you receive. Your property taxes may also run higher than what you pay now, either because the tax rate in the vacation area is higher than where you live, or because its a second home and not a primary residence. For example, the taxes on second homes in Florida are usually much higher than for primary residences.

A qualified real estate agent should be able to provide details about taxes in the area, and possibly even tips on ways to save, such as buying just outside the city limits.

6. Make a Conservative Estimate of Rental Income

Most buyers tend to be overly optimistic about how often they’ll rent out the place. Talk to a local vacation rental agency about how many weeks of the year you can realistically expect demand. For example, even in a winter and summer destination such as Lake Tahoe you can’t expect to fill the place every month of the year.

You also need a realistic estimate of how much expenses will eat into that income. Presume repairs will cost about 1.5% of the value of the house. So for a $100,000 place budget for at least $1500 a year in repairs. Each year the tab might be higher or lower than the estimate, but this rule of thumb will give you some flexibility from year to year.

Similarly, find out ahead of time what your home insurance tab will run, since second homes are often in hurricane or flood areas and thus pricey to insure, and also may cost more simply because they are empty more often.

7. Don’t Get Caught Up in the Moment

If a friend, family member or another investor brings you an opportunity to buy a vacation home, or to acquire land with aspirations of building a grand home, don’t let yourself be easily persuaded. The proposal can sound romantic but quickly turn into a horror story. Sometimes people have alternative motives. Other times they haven’t actually done their homework to uncover that the so-called deal isn’t really a good one.

Related: How to Market Your Vacation Rental to Ensure Maximum Bookings

So slow down, take your time — and do your research. Move forward only after you have thoroughly run the numbers yourself. An opportunity that turns sour will eat up your money- as well as your precious vacation days.

 

More from BiggerPockets:

10 Things Only Personal Finance Nerds Would Understand

5 Tenant Characteristics Its Wise to Discriminate Against

5 Ways to Reduce Booking Cancellations On Your Vacation Home

 

Another version of this article originally appeared on BiggerPockets, the real estate investing social network. © 2014 BiggerPockets Inc.

MONEY Ask the Expert

Here’s the Right Amount to Spend On a Home Renovation

For Sale sign illustration
Robert A. Di Ieso, Jr.

Q: When remodeling my house, I don’t want to spend a lot of money on updates that don’t actually increase my home value. How do I know how much is a smart amount amount to invest, and when I would be going overboard?

A: Jump into a renovation project without first setting a budget and you may spend loads of cash on all sorts of lovely options—from a marble island-top for your kitchen to a two-person hot tub for your new patio—that you won’t get paid back for if you sell your house in a few years.

While that may not be a concern if you’re staying put for the long haul, if you’re likely to move in 10 years or less, it pays to limit your spending to what you might reasonably hope to get back at resale.

Thus start with renovating only spaces that are functionally obsolete, says Omaha, Nebraska, appraiser John Bredemeyer, a spokesman for the Appraisal Institute, a trade association. “Changing out a perfectly good, 10-year-old kitchen, for example, just because you don’t like the previous owner’s style choices, is not an investment that will pay you back at resale,” he says. But if that kitchen is from the 1940s, 1960s, or even the 1970s, a well-budgeted renovation makes financial sense.

How much should you invest? Bredemeyer’s rule of thumb is to spend no more on each room than the value of that room as a percentage of your overall house value (you can find an approximate value of your home at zillow.com).

Here’s how the percentages break down for each room:

Kitchen: 10% to 15% of house’s value

Kitchen renovation budget for a:

$300,000 house: $30,000 to $45,000

$500,000 house: $50,000 to $75,000

$750,000 house: $75,000 to $112,500
Master Bathroom Suite: 10% of house’s value

Master bathroom suite renovation budget for a:

$300,000 house: $30,000

$500,000 house: $50,000

$750,000 house: $75,000

 

Powder Room/Bathroom: 5% of house’s value

Powder room/bathroom renovation budget for a:

$300,000 house: $15,000

$500,000 house: $25,000

$750,000 house: $37,500

 

Finished Attic or Basement: 10% to 15% of house’s value

Attic or basement finishing budget for a:

$300,000 house: $30,000 to $45,000

$500,000 house: $50,000 to $75,000

$750,000 house: $75,000 to $112,500

 

Other Rooms: 1% to 3% of house’s value

Living room, dining room, or bedroom renovation budget for a:

$300,000 house: $3,000 to $9,000

$500,000 house: $5,000 to $15,000

$750,000 house: $7,500 to $22,500

 

Patio, Deck, Paths, and Plantings: 2% to 5% of house’s value

$300,000 house: $6,000 to $15,000

$500,000 house: $10,000 to $25,000

$750,000 house: $15,000 to $37,500

 

Got a question for Josh? We’d love to hear it. Please send submissions to realestate@moneymail.com.

MONEY homeowners insurance

Why You Soon May Have to Pick Up More Home Repair Costs

measuring tape with money
Bart Sadowski—Getty Images

Insurers are moving from flat deductibles to higher ones based on the value of your home. Here's what you need to know about this change.

Two years after Superstorm Sandy, State Farm agent Jen Dunn is busy explaining new insurance math to her customers in upstate New York. Instead of the dollar-amount deductibles they have been used to for years, she is now writing their policies based on percentages.

For many, it means turning the typical $500 deductible into 1% of the insured value—for a $250,000 house, that means a gasp-producing $2,500.

“My clients who have been offered this initially say, ‘I don’t like this,'” Dunn says. But then she explains that the higher amount is usually offset by a lower annual premium. If they go years without a claim, they can save in the meantime.

Jason Corbett, 39, who lives in central Georgia, is using a 1% deductible. Because Corbett’s rural home is valued at slightly less than $200,000, it was a better deal than a flat $1,000 deductible. The difference between the two deductibles was only a couple of hundred dollars. However, he saved money by lowering his premium, so over time the difference in his out-of-pocket costs will be negligible.

If he had a $300,000 home and the deductible was double what he pays now, “that would be a different decision,” says Corbett, who writes a personal finance blog.

State Farm, the largest U.S. property and casualty insurance company by market share, says a “significant” number of its policies now have percentage deductibles. Other carriers, like Allstate Corp, USAA, and Nationwide, also offer the option to consumers in certain states, but the prevalence is not yet tracked nationwide. The practice is near-universal in Texas at this point, according to that state’s insurance office.

With a percentage deductible policy, things are a little different than the old-fashioned flat rate. Here are seven things you need to know:

1. Do not be afraid of high deductibles

You might be used to $500, but a higher deductible could actually be better for you.

“It’s a very smart move to buy high deductibles if you can afford it,” advises J. Robert Hunter, director of insurance for the Consumer Federation of America.

The main reason? Every claim you make against your homeowners insurance can raise your rates. One claim pushes it up an average of 9% and two claims will raise it by 20%, according to a recent study by insuranceQuotes.com. So you want to pay out of pocket for small claims anyway.

2. The 1% deductible is not a percentage of your loss

The new terminology makes people think of health insurance, but homeowner claims do not work that way, says Jim Gavin, director of insurance information services for the Independent Insurance Agents of Texas trade group.

Rather, the out-of-pocket deductible you have to pay before the company will cover any claims is based on a percentage of the insured value of your home—which is not the market value or the appraised value, but the cost of replacing your home should it burn to the ground and need to be rebuilt.

For example: If a kitchen fire damaged your $250,000 home with a 1% deductible, and it cost $5,000 to repair the damage, you would receive a check from the insurance company for $2,500 after paying the other half yourself.

3. Your out-of-pocket costs will regularly increase

Your $500 deductible stays flat forever, but a percentage deductible will go up incrementally over time as the insured value of your home rises.

Some homeowners may not even notice this, like Will Harvey, 34, of Tyler, Texas, who is five years into a 1% policy on his home. “If it went up, it wasn’t enough for me to remember it,” he says.

4. You will still have other deductibles on top of the basic rate

Many homeowners have add-on clauses like a 5% hurricane deductible that is common in coastal areas, or 2% for wind and hail damage. Many states require separate coverage for earthquakes and floods.

Those all still apply on top of the basic coverage for fire and theft, says Amy Danise, editorial director of Insure.com. So if you have any damage that is caused by a specified risk, you will have to pay out of pocket first for that.

5. Your might be able to pay down your percentile

If 1% is too much for you, you may have the option to accept a higher premium to lower out-of-pocket costs—going from 1% to half a percent or some other fraction. The value to you depends on how much your house is worth and how much you can afford to pay out of your savings if something goes wrong, says State Farm’s Dunn.

6. You can still shop around

Even in Texas, where almost every company offers a deductible of at least 1%, or sometimes up to 1.5% or 2%, some carriers still do things the traditional way. Texas insurance agent Criss Sudduth says the customers who might benefit more from a flat-fee policy are those whose premiums do not actually go down despite the percentage policy—either because the weather risks are too high or because their personal credit is bad.

7. You should still figure out your dollar amount

After years of hearing complaints from consumers who are confused, the Texas legislature passed a bill recently requiring carriers to explain what the percentage deductible translates into, in dollars.

In other states, if your carrier does not do this, you should find out the information yourself and write it on your declarations page, says Deeia Beck, public counsel and executive director of the Texas Office of Public Insurance Counsel.

MONEY home improvement

$336 Made This Blah Bathroom Awesome

A budget remodel turned this bleak bathroom into an attractive cottage-style space. Here's how the homeowners pulled it off.

Nothing’s more boring than basic beige. While the master bath at Meredith and Stephen Heard’s ranch house, in Fayetteville, Arkansas, was perfectly functional, it was a bleak blank box of washed-out finishes. To give it some oomph, Stephen created a high-contrast look on the walls with white-painted board-and-batten wainscot made from low-cost lath and furring strips; above it, Meredith used a dark gray paint to add depth.

The vanity was in great shape, so Stephen just replaced the cultured-marble top with stained and sealed butcher block and, to create more deck space, put in a vessel sink. Meredith updated the cabinet doors with white paint and satin-nickel pulls left over from their kitchen remodel. To brighten the space, Stephen replaced the old strip vanity light with a three-shade fixture and the standard overhead flush-mount with a drum-shade pendant. Finally, Meredith added a sunny shower curtain she made herself. Having banished the bland, she says, “It’s so much more welcoming now—we feel like we really gave the room some personality.”

The Project Tally

• Tacked up lath and furring strips, board-and-batten style, using a nail gun; filled knots, sanded, and caulked; then sealed it all with leftover primer and paint $26
• Painted the walls a dark gray, custom mixed at the store from paint they had on hand $0
• Freshened the vanity with leftover paint and pulls $0
• Topped the vanity with a new butcher-block counter, vessel sink, and faucet from a big-box store $170

For the full tally, click here for the original article from This Old House.

Read next: The Secret to Getting a Ridiculously Cheap Thanksgiving Flight

MONEY home financing

It Could Soon Be Easier to Get a Mortgage

Fannie Mae headquarters in Washington, DC
Kevin Lamarque—Reuters

The nation's largest mortgage firms plan to once again buy loans where the borrowers put as little as 3% down.

Perhaps you thought the days of putting little money down for a home were gone. Well, not so fast. On Monday the CEO of Fannie Mae, Timothy Mayopoulos, announced that the housing giant planned to once again buy loans for which the borrowers put as little as 3% down. Mayopoulos told the crowd gathered at the Mortgage Bankers Association conference in Las Vegas that Fannie, which along with Freddie Mac supports the bulk of the mortgage market today, is working to finalize the details of the offering and gain regulatory approval to proceed. “We want this business,” he said.

So far no details have been announced about what income or credit score requirements borrowers making such small down payments will need to meet the group’s standards. Mayopoulos said more information would be released in the coming weeks. Both Fannie and Freddie previously purchased loans with 3% down but had stopped in recent years. Today the firms usually require at least a 5% down payment on most loans.

Melvin Watt, director of the Federal Housing Finance Authority, which regulates the two government enterprises, said his group was working with them to develop “sensible and responsible guidelines” for the 3% loans, in an effort “to increase access for creditworthy but lower-wealth borrowers.” He cited “compensating factors” in evaluating such borrowers, though he didn’t say what those factors would be.

A 3% down payment is not exactly nonexistent today. The Federal Housing Administration has been offering mortgages with as little as 3.5% down for years. Traditionally, most borrowers were lower income, and the amount they could borrow was capped, but today even higher income folks use FHA loans to buy homes in expensive areas (loan limits vary by state but typically top out at $625,500). In recent years, these mortgages—which come with higher fees than traditional loans, as well as pricey mortgage insurance—have accounted for a larger than normal share of the market.

Now Fannie seems intent to grab some of that business. The low-down-payment loan, Mayopoulos promised, “will also be competitively priced, including against FHA execution.”

In a related move, FHFA’s Watt also announced that the agency is working to provide more details on when the housing giants can force a lender to buy back a loan that goes bad, which he hopes will encourage banks to loosen their lending standards. Over the past few years Fannie and Freddie have required lenders to buy back millions of dollars of bad loans, “sometimes for seemingly minor issues, such as missing a piece of paperwork,” said Keith Gumbinger, vice president at mortgage information publisher HSH.com.

“This clarification might allow lenders to look at riskier borrowers with less fear of having to buy these loans back in the future,” he said. He noted, though, that any changes are likely to be incremental: “It might let a few more borrowers in at the margin, but it won’t be like flipping a light switch where FICO scores down to 640 are now in.”

It’s important to note that Fannie and Freddie can’t force banks to lower their lending standards. In fact, most banks today require tougher standards than the government agencies impose, partially because they are fearful of having to buy back loans that go bad. For example, Fannie and Freddie will buy loans with FICO scores as low as 620, but most banks require at least a 660 or 680, Gumbinger said.

Similarly, lenders could always decide not to offer 3% down loans, even though Fannie and Freddie have agreed to eventually start buying them again. So it remains to be seen whether and how much the rule changes, when they are formally announced in the next few weeks, will ease the way for borrowers.

Read More About Getting a Mortgage in Money101:
How Much House Can I Afford?
What Mortgage Is Right for Me?
How Do I Get the Best Rate on a Mortgage?

MONEY Ask the Expert

Here’s How to Make Leaf Clean Up Easy This Fall

For Sale sign illustration
Robert A. Di Ieso, Jr.

Q: I’m debating whether to invest in some high-quality equipment to help pick up the leaves in our yard this fall, or hire a pro to tackle the job. How much would I need to spend on tools if I go the DIY route?

A: The problem with hiring a landscaper to do your fall leaf cleanup isn’t necessarily the $250 to $500-plus price tag, it’s that this is not a once-a-season job. In many regions of the country, autumn lasts weeks and weeks, so it takes a handful of cleanups to keep your property neat and tidy. (This is especially true if you have a neighbor who waits until absolutely every branch is bare before he’ll lift a rake, ensuring that his leaves continue to blow onto your lawn until the first frost glues them to the ground.)

The good news is that do-it-yourself leaf removal doesn’t have to be a blister-raising, hamstring-stressing effort. With the right tools, the leaves can be gone before the first afternoon football game kicks off. Here’s what you need to make that happen.

Lawnmower: Throughout the spring and summer, setting the mower to maximum height is one of the best things you can do for your lawn’s health. But come fall, drop it down as low as it’ll go without scalping the turf. Short grass gives leaves less to get caught on as they drift around the neighborhood. It also means the mower will vaporize any leaves that have already fallen (assuming a light coating). Use a mulching mower—meaning the kind without a bag that pulverizes clippings and drops them back into the turf to feed it—such as the Toro 20370 ($309 at Home Depot).

Leaf Blower: Raking is hard work, but so is using a wimpy hand-held leaf blower. The typical plug-in version isn’t powerful enough to extinguish a birthday candle, never mind move a pile of damp leaves—or a single well-nestled acorn. If you’re of strong enough body to rake, you’re probably of strong enough body to handle a gas-powered backpack blower, such as Husqvarna’s top-of-the-line 356BT ($439 at amazon.com). These machines have flexible hoses and variable speed triggers, so you have plenty of power to remove those leaves stuck in your azaleas and also a gentle enough touch for cleaning up around a screen porch without sending dirt inside. (Just please wear ear protection, because even this quieter-than-most version is quite loud.)

Tarp: Don’t try to transport a big pile of leaves all the way to the woods for disposal- or the curb if your municipality picks them up with a vacuum truck— using a blower, not even a backpack one. Instead, rake or blow them onto a tarp and drag them to their destination or, better yet, blow them onto the EZ Leaf Hauler, $40 from plowhearth.com, which has three sidewalls to help corral and relocate large piles.

Bagger: If you need to pack your leaves into brown paper bags for municipal curb pickup, check out the Leaf Chute ($9 at Lowe’s or Home Depot). It’s a low-tech, three-sided plastic tube that props open the empty bag and has a wide mouth for easy loading. Once the bag is full enough to stand on its own, remove the chute and pack in as many more leaves as you can stamp down.

Your Kids: Leaf pickup is an ideal chore for the young people who are eating you out of house and home. Start them with rakes—and quality, well-fitted work gloves—and let them learn the old fashioned way. Then, once they’re capable rakers, understand the basics of the job, and are ready for power tools, let them grab a hold of that sweet new blower.

 

Got a question for Josh? We’d love to hear it. Please send submissions to realestate@moneymail.com.

MONEY Rentals

The Money Mistake That 48% of Renters Make

List of bills to pay, with "paid" written in red on top
David Gould—Getty Images

They assume their on-time payments will help boost their credit score, according to a new TransUnion survey.

Most Americans know that a good credit score can open the door to lower cost loans for big adult milestones, such as buying a home or car.

Yet it turns out that many renters are misinformed about what goes into that somewhat mysterious three-digit number: Nearly half of renters ages 18 to 64 think rental payments to their landlords are automatically reported to the credit bureaus, according to survey results released last week by TransUnion, one of the nation’s three major credit reporting agencies. The survey also revealed that more than half of renters believe payments for cable and internet, utility and cellphone bills are regularly reported to the bureaus.

Credit agency firms TransUnion and Experian did recently start allowing rental payments to be collected and factored into credit reports. But in practice, most landlords do not yet share with the data collectors that you’re paying on time each month, says Ken Chaplin, senior vice president of TransUnion’s consumer division. Cable, internet, utility and cell providers also typically do not, he says.

Even if your landlord or service firm is one of the few that does report, the payments may not be included in the most common credit score lenders use, called the FICO score. So if you were counting on your on-time monthly rent checks to help you build your credit score, you’re out of luck.

Keep in mind that although being conscientious on paying your rent and utilities won’t help you, your failure to make a payment can hurt you. Some landlords and utility companies do report delinquent customers—not to mention the fact that your accounts could end up in collections. So this isn’t an excuse to stop paying these bills.

Instead it should serve as a wake up call that you may need to work in other ways to improve your credit score, such as paying car loans, student loans and credit card bills on time each month.

Related:

What is a credit report and when is it used?

How is my credit score calculated and how can I improve it?

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