MONEY home financing

The Right — and Dangerously Wrong — Ways to Pay Off Your Mortgage Early

Beware mortgage accelerators.

You probably don’t need a pricey service to pay down your mortgage more quickly.

There are many great reasons for wanting to pay off your mortgage fast — not in the least part because it can save you a lot of money in interest payments.

Although mortgage accelerators may be a tempting way to speedily pay down your loan, it’s worth being cautious. They just might be too good to be true.

How do mortgage accelerators work?

There are primarily two types of mortgage accelerator products, and they’re both designed to help you budget your finances.

One type of mortgage accelerator product asks borrowers to send the accelerator company money, and this company will in turn send biweekly checks to your mortgage lender. This product has an initiation fee of about $300, as well as a monthly fee of about $5. Biweekly payments can help you pay down your mortgage more quickly — but this isn’t something you can’t do yourself (without fees of about $2,000 over a 30-year period).

A second mortgage accelerator deposits your paycheck into an account that acts like a line of credit. As you pay your bills, you draw against this balance. Whatever’s left at the end of the month is then used to pay down your mortgage.

Here’s the rub: Some of these accelerator products have high upfront costs for the software that’s used to manage your monthly cash flow. And while you do have to pay interest against this line of credit whenever you draw against it, if you use this money to pay down your mortgage, you could ultimately end up paying a higher interest rate than the interest rate on your mortgage itself.

Rather than paying for a service to help you budget or borrowing from one loan to pay another, you can achieve the same goals with the help of easier budgeting tricks. You can simply set up a system on your own that eliminates any fees or interest you’d pay using a mortgage accelerator product.

Round up payments

By increasing monthly payments to the next $100, $500, or some other amount you choose, you can shave years off your mortgage payments. This money essentially prepays your mortgage and lowers your balance so that you owe less overall.

Make an extra payment

One extra payment a year can make a big difference. There are a few ways to approach this plan. Making half a mortgage payment every two weeks (instead of a full mortgage payment every month) will result in an extra payment — you’re making 26 payments a year with this plan. Another way to accomplish this is to calculate a new payment by multiplying your monthly payment by 13 and dividing by 12.

Refinance

If you can afford a much higher payment, refinancing your 30-year loan into a shorter 15-year or 20-year loan will not only shorten your mortgage term but also lower your interest rate. Consider your financial situation and job security before making the leap — higher payments could become a burden in the event of unemployment.

Make a lump-sum payment

When you have a nominal balance with no interest to deduct, a lump-sum payment could eliminate this debt. This strategy makes sense only if you have the cash readily available and aren’t planning on using money pulled from retirement plans, since there could be taxes and fees associated with anything you withdraw.

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MONEY home improvement

5 Home Upgrades That Just Aren’t Worth It

494488303
Nick David—Getty Images You might be able to recoup the cost of a kitchen backsplash, but the specific type of tile won't matter as much to buyers.

You may love your new pool, sunroom or kitchen tile, but none are likely to drastically increase your home’s overall value.

Myth: All upgrades will add value to your home.

Fact: You may never recoup the full cost of some home upgrades.

If you’re hoping to increase your home’s value (above and beyond the cost of an upgrade itself), you should know that some updates that are valuable to you may not be valuable to potential buyers.

Here are five of the most common upgrades that cause homeowners to lose money.

1. Putting in a pool

Pools can be hit-or-miss when it comes to added value. You may see some return, but often it’s not enough to pay for the pool itself.

In fact, adding a pool to your home could be a major turnoff to some buyers. Buyers with small children may be concerned about safety risks, those looking for a low-maintenance yard won’t want to deal with the hassle and upkeep of cleaning a pool, and buyers who are on a tight budget may not have the extra cash to deal with the added expense.

If you live in a warm-weather climate where people are inclined to use a pool year-round, you’re more likely to get a favorable response from buyers.

If you’re looking to add a pool, don’t forget that you’ll need to operate and maintain the pool yourself, and this comes with a sizable extra cost. Your likelihood of recouping the money you spent on maintenance, in addition to the installation costs, is pretty low.

2. Highly custom design decisions

Your idea of a dream kitchen probably isn’t everyone’s idea of a dream kitchen. Unless you plan to stay in your house for many years to come, think twice about renovations that are too personalized.

If you install a kitchen backsplash, you might recoup the cost, because the difference between “no backsplash” and “backsplash” is noticeable. But the specific type of tile might not matter to buyers. Similarly, choosing a beveled countertop edge that’s complex and ornate, rather than a basic beveled edge, can turn off buyers whose tastes don’t align with yours.

In fact, these custom features may wind up costing you come listing time, as many buyers will factor in the money they’ll need to spend to change the house to suit their own tastes. If you’re going to upgrade your kitchen just for the sake of selling, stick with neutral, builder-grade design decisions.

3. Room conversions

Buyers will be looking for certain basic staples when they tour your home: typically, three bedrooms, two bathrooms, and a garage. Getting rid of these expected spaces (or altering them into something unusual) may harm your resale value.

Every bedroom, for instance, is coveted space that can bump your listing up into the next bracket. Buyers are looking for a two-bedroom, three-bedroom, or four-or-more-bedroom home.

You might not need that extra room and dream of knocking down a wall to create a giant walk-in closet. Or perhaps you’d prefer to cover the walls with soundproof foam and convert it into a recording studio.

Unfortunately, most buyers likely won’t share your interests. Instead, they prefer an extra bedroom for children or guests.

4. Incremental square footage gains

Sizable square footage gains — like finishing your dingy basement so it becomes an additional livable floor — can be a boon in buyers’ minds. But tiny, incremental changes may not give you much of a return on your investment. (You may love your new sunroom, but it’s not likely to drastically increase your home’s overall value.)

Adding square footage in a way that doesn’t flow well with the floor plan can also backfire. Sure, a half bath on the first floor would be useful, but if buyers have to pass through the kitchen to get to it, the half bath loses some of its appeal.

5. Overimproving

No one wants to buy a megamansion on a block full of split-levels. When your upgrades feel overboard for your neighborhood, you alienate buyers on two fronts: buyers who are drawn to your neighborhood won’t be able to afford your home, and buyers who can afford a home of your caliber will prefer to be in a ritzier area.

Keep the “base level” of your neighborhood in mind. Tour some open houses on your block to see how your neighbors’ kitchens look before you invest a small fortune in granite countertops and high-end fixtures. Being a little nicer than the other houses around you can be a selling point, but being vastly more luxurious is not.

Pursue these upgrades for your own enjoyment — but don’t trick yourself into believing you’ll more than recoup the cost of the improvement in the form of additional home value. You can always opt for the projects that have the best potential to draw in a buyer instead!

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MONEY

8 Landscaping Tips That Can Save You Money

trimming hedge
Peter Dazeley—Getty Images

Try these low-cost approaches to sprucing up your yard.

Whether you are hoping to sell your home, or it’s summer and you just want an excuse to be outdoors and dig in the dirt, sprucing up your landscaping can be a wise investment. Research has found that sophisticated landscaping with large plants can increase a home’s value by as much as 12.7%.

But what are your options if you are trying to make every dollar stretch as far as possible? There are ways to make your yard look more inviting on a budget.

1. Mulch — for Free

Mulch can freshen up a flowerbed and save you time and money (less weeding and watering). Save by snagging free mulch. Some communities offer curbside pickup of lawn waste, which is then turned into mulch that’s yours for the asking. “If you simply bring a utility bill (to prove you live within city limits) to the distribution center, you can get free mulch by the truckload,” explains Cherie Lowe, blogger and author of Slaying the Debt Dragon: How One Family Conquered Their Money Monster and Found an Inspired Happily Ever After. Check with your local government to see if there is a program available in your area.

While you are at it, consider composting your food waste. Not only will you send fewer food scraps to the landfill, your plants will love you for it.

2. Prune, Trim, Pull

Simple pruning, trimming and weeding can make your yard appear tidy and more attractive. “The best, easiest and most inexpensive way to spruce up a yard is to trim/prune shrubbery, add new mulch or extra rock and plant some seasonal flower pots,” says Shawn Edwards, managing partner of A+ Lawn & Landscape in Des Moines, Iowa. “An instant and easy makeover!”

If you feel like you are in a constant battle with weeds, consider this inexpensive solution: homemade weed killer. Lowe says she makes her own weed killer from one gallon of white vinegar, 1-2 cups of salt (table or Epsom salts) and a small squeeze of dish detergent. “(It) can eliminate weeds like nobody’s business,” she says. “Mix it together in a spray bottle or a bigger weed sprayer and apply,” she advises. “It takes 1-2 days for it activate, killing off unwanted weeds and costs a fraction of the price.”

Some gardeners swear by an even cheaper weed killer: boiling water. Simply pour it directly on weeds, avoiding plants you don’t want to damage. Since it doesn’t cost anything, it is certainly worth a try.

3. Free Can Be Good

One way to make your money go further is to check Craigslist for free or low-cost plants. Garden clubs may also hold plant sales or swaps. Or ask a neighbor for a cutting from one you admire. Better yet, let them know that if they are thinning out their plants you are happy to help them do that — and take what’s no longer needed.

When Mary Leonard worked at a garden center, she bought plants at a fraction of their cost at the end of the season. In a story on Stretcher.com, she shared how a generous customer gave her hundreds of dollars in free plants and then revealed that she got many of hers for free by offering to dig them up from homes that were going to be demolished.

4. Love Your Lawn

A freshly cut lawn always looks and smells great. And it can look even more elegant if it’s “striped” using an attachment added to a lawnmower. “It always gives your yard that great look whether you have a big or small yard,” says Mark Savoree, owner of Savoree Properties. “They are very cost efficient, as the striper kits normally run $100 to $300.”

If you live in an area of the country where grass doesn’t grow abundantly, or watering restrictions make it impractical to maintain a lush lawn, native grasses can be a practical alternative. “In drought areas like California, replacing a turf grass with a native or climate-compatible grass can substantially reduce costs,” says Cassy Aoyagi, president of FormLA Landscaping in Los Angeles.

5. Buy Smart

Before you plant, get your soil tested to help you understand which types of plants or grasses will grow best on your property, suggests Jeff Oddo, president of City Wide Maintenance. “This will leave you with lush lawns, shrubs and flowers–instead of an unsightly exterior and money wasted on dead and dying landscaping,” he says. Inexpensive testing may be available through your Cooperative Extension service (see the final tip).

He also urges homeowners to know their climate and “pay attention to placement and understand how much sun/shade your plant needs to ensure it looks its best all season long.”

6. Plant Local

“Substantial cost savings are possible with native foliage, as they will be naturally climate-appropriate and many are perennial, saving annual planting costs,” says Aoyagi. “Also, natives will thrive without costly chemical fertilizers and pesticides.” These plants can also invite wildlife, such as birds and butterflies, making your surroundings even more attractive. Wild Ones, a not-for-profit environmental education and advocacy organization offers information on starting native plant projects.

7. Lighten It Up

Try outdoor lighting. “Outdoor lighting can be done for as little as $50,” says Steve Bollinger, owner of Landscaping by André, Inc. in Scottsdale, Ariz. “You can add night time visibility, security, decorative and do it yourself for anywhere from $50 to $500, depending on the size of your space,” he says.

“LED solar lights can add a warm hue (and safety) to your environment and they are great for areas used for entertaining since they don’t attract bugs,” says Danyelle Kukuk, VP Category & Product Management at Batteries Plus Bulbs. For spot and flood lights, she recommends LED bulbs: “These will save 86% energy, last over 20 years, and retain light levels so the yard will shine bright even when autumn comes back around,” she says.

8. Ask the Experts

Have questions about choosing plants or helping the ones you already have thrive? Expert help may be available for free through your local Cooperative Extension program, or through volunteer programs and services offered by ”master gardeners,” individuals who are trained in horticulture and then volunteer in their communities. In my community, for example, master gardeners are available to answer questions at no charge at local libraries on a specific Saturday each month. Not long ago, I picked the brain of one stationed at a local home improvement store to dispense advice. (She wasn’t there to sell something; in fact, her advice included the phone number of someone she knew who was giving away some plants.)

Feel free to share your best tips for saving money on landscaping in the comments!

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MONEY Ask the Expert

The Best Landscape Lighting to Showcase Your Yard

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

Q: I’ve always loved the dramatic look of landscape lighting shining up on a house and its trees, and I see solar-powered do-it-yourself lights that look affordable and easy. Are they a good option?

A: While DIY solar lights are unquestionably affordable and easy to install (just press them into the dirt like a tent stake), they probably won’t deliver the dramatic results you’re seeking.

Solar-powered path lights, fence-post-toppers, step lights, and spotlights get their energy from the sun by day then come on automatically by night. No wiring or professional installation is required, and you’ll pay only about $10 to $30 per light, depending on the style.

But these products tend to provide only dim illumination and generally don’t have enough power supply to shine all through the night (especially after a cloudy day or if they’re located in a spot that doesn’t get all-day sun).

Stepping up to the next grade of do-it-yourself outdoor lighting means spending $20 to $40 per fixture—and several hours connecting and burying the wires. These lights use low-voltage wiring, meaning you don’t need an electrician to install them as long as you have exterior outlets you can plug into.

You connect the wires by crimping them together and bury them either under your mulch or several inches underground, according to the manufacturer’s instructions.

Look for a product that uses LED lights, which are brighter and use less power than halogens so they last longer into the night. Also, check the bulbs’ color temperature: “Aim for 2700 kelvin, or something close,” says Michael Potucek, of Artistic Outdoor Lighting, in Lombard, Illinois. “Once you get up to 4000 or 5000 kelvin, the light is very stark and cold.”

Better yet, hire a specialist—or your landscaper—to install a pro-grade lighting system. You’ll get the 2700k light of traditional incandescent bulbs, plus higher-grade electronics, buried in deep trenches with protective conduit in locations where you’re likely to dig (like mulch beds). That means no cut wires from gardening projects or short-outs from water that seeps into the wire connections.

You’ll pay around $3,000 to $4,000 for the full package—pathway lights, uplights on the house and trees, step lights on the stoop.

And you’ll get more than just a higher quality product. A good lighting specialist will bring professional design techniques to your lighting plan, not just by placing the lights for the best results but also using a variety of different lenses on the fixtures and wattages for the bulbs to create a pleasing scene.

“There’s an art to getting it right, almost like lighting a stage,” says Potucek. A professional job will fully illuminate your path rather than just its edges, for example, your trees will look dramatic whether their leafed out in summer or bare branches in winter, and every part of your house will be equally bright, from its highest peak to the lowest.

MONEY landscaping

7 Spectacular Summer Flowers for Gardeners on a Budget

These heat-tolerant blooms will brighten up your front stoop or backyard — for as little as $2.

  • Asters

    Asters in bloom.
    Andrew Weathers—Getty Images Asters in bloom.

    These beautiful daisy-like perennials burst into blooms of bright starry flower heads, ranging in shades of color from blue, purple, pink, or white. Attracting butterflies and birds, aster grows well in full sun exposure and moist, well-drained soil, specifically in climates of the USDA hardiness zones 3-9. Aster can grow up to around eight feet tall and four feet wide, best planted as borders around your yard or home.

    Thriving through the summer and into fall, you can find these flowers at nurseries by the gallon for under $20. Aster is known to be drought resistant, but look out for powdery mildew collecting on your asters, as this fungus disease takes away plant nutrients and can potentially kill your flowers. Perfect for windowsills or tabletop centerpieces, a cluster of asters will refresh any space with their pretty pastel colors.

  • Bachelor’s Button

    Close-up of a Bachelor's Button, commonly known as the cornflower.
    Getty Images Close-up of a Bachelor's Button, commonly known as the cornflower.

    This long lasting old-fashioned flower has been blooming in gardens for centuries. Bachelor’s buttons are annuals that will reseed freely in your garden for years. Easy growing and drought tolerant, you can purchase one quart of bachelor’s buttons from your local garden nursery for around $13. Growing to about three feet tall, these blooms will tolerate almost any condition, as long as they receive plenty of sun. Bachelor’s buttons are traditionally blue in color, but can now be found in other shades, such as pink, red, and white. These frilly flowers will outlast others in arrangements, but can suffer from powdery mildew and rust if they get too wet. Also known as cornflower and centaurea, bachelor’s buttons can be planted just about anywhere, but prefer loamy soil and will last for about a month after the first blooms.

  • Hollyhocks

    Hollyhock flowers (Alcea rosea) in field, close-up.
    Toshiaki Ono—Getty Images Hollyhock flowers (Alcea rosea) in field, close-up.

    The perfect blooms for your cottage garden, hollyhock is an easy to grow summer bloom that spikes in stalks of ruffled pink, yellow, purple, red, and white flowers. With regular watering in partial to full sun, these beautiful blooms can grow up to eight feet tall. You may find hummingbirds and butterflies flying by your garden with hollyhock planted, but this low maintenance flower will bring color to your landscaping.

    Try planting hollyhock along borders, fences, or walls, as they will grow quickly and are popular in gardens as an ornamental plant. Hollyhock grows easiest from planting seeds in zones 3-8, and can live for several years if stalks are cut properly at the end of summer. The vibrant shades of hollyhock will fill your summer garden with bright sturdy stalks of blooms that will not fade from the summer sun. You can get a packet of 50 seeds for less than $2 or a 12-pack of hollyhock plants for less than $20 at your local hardware store.

  • Marigolds

    Marigold flowers in a park.
    Anthony Swinton—Getty Images Marigold flowers in a park.

    The cheerful marigold flower blooms all summer long. Looking similar to daisies and carnations, these golden flowers need a lot of sunshine and not a lot of fertilizer. Marigolds tend to do better in moderately fertile soil, growing up to three feet tall in yellow, orange, or cream puff balls. Marigolds grow rapidly in a wide range of conditions, blooming midsummer and lasting until the first frost. Pests, insects and fungal infections are possible, but can be prevented with water or insecticidal soap.

    With their strong scent and bold petals, marigolds are great for bouquets (cut or dried), and are also edible. The petals have been known for their tangy taste similar to saffron, added as a garnish to salads. If you want to start form scratch you can purchase 50-100 marigold seeds for about $5, or you can get containers of marigolds for less than $3.

  • Pansies

    Pansies blooming outdoors.
    Ruby Wong—Getty Images Pansies blooming outdoors.

    The ultimate annual flowers, pansies bloom all year long whether planted in the winter, spring, summer, or fall. These colorful flowers come in a wide range of hues and are easy to grow from seeds, and even easier by pansy plug plants. With white, yellow, purple, red, and blue petals, pansies should be planted in moist, well-drained soil with full sun exposure.

    To keep your pansies always growing, make sure they are watered regularly and that dead or faded flowers are removed from the bunch to help new flowers grow. Look out for slugs and snails sneaking into your garden of pansies. This garden favorite can grow up to nine inches in height and three inches in diameter. Pansy plants will give your beds or containers months of color even when your other plants are dormant. Get started planting your pansies by purchasing a 6-pack of plants for $3.

  • Petunias

    Surfinia Petunia, Solanaceae
    De Agostini—Getty Images Pink petunias in bloom.

    One of the most popular beddings flowers, petunias bloom throughout the summer, preferring full sun exposure, but when in extreme heat they will need partial shade. In order to keep your blooms fresh and bright, petunias will require deadheading and pruning to encourage growth. Blooming in red, pink, purple, yellow, and white, petunias are best planted in well-drained soil spaced about a foot apart in order to mature to average heights of 6-12 inches. Water your petunias about once a week and be sure to look out for leaf spots and pests that can harm your plants. If you’re looking to add color to your front steps or garden, petunias are great for containers or window boxes, and if taken care of properly can last all summer long. You can plant your own petunias this summer by purchasing a 12-pack of flowers for $12.

  • Zinnias

    The zinnia ( zinnia elegans ) is a dahlia like flower formerly known as blue point.
    Richard Rudnicki—Getty Images/Lonely Planet Images The zinnia ( zinnia elegans ) is a dahlia like flower formerly known as blue point.

    These long lasting perky blooms are a popular annual flower to plant in full sun. When growing zinnias from seed, they need a minimum temperature of 60 degrees Fahrenheit, in fertile well-drained soil. When planting zinnias, seeds should be spaced several inches to multiple feet apart, allowing air circulation for the plant to fully mature. These blooms will bring a burst of color to your garden, window boxes, or borders, with daisy-like flower heads from a single stem.

    An attractive flower to be freshly cut, zinnia can grow up to three feet tall, but can also develop powdery mildew when wet, as well as attract birds, butterflies, caterpillars and other pollinators. Zinnias typically take 70 days to develop from seed to flower, and will require deadheading and pruning to keep growing strong throughout the summer season, until the winter frost arrives. You can buy a pint of zinnia flowers for $2 or you can get giant mixed color zinnia seeds for the same price!

    Get more gardening and home improvement ideas at Porch.com.

MONEY Housing Market

Renting a Home Could Become the New Normal

Residential Real Estate As City Becomes The Least Affordable U.S. Housing Market
Bloomberg—Bloomberg via Getty Images Pedestrians walk past a "For Rent" sign that is displayed outside of an apartment building in the Mission district of San Francisco, California, U.S., on Thursday, May 7, 2015.

Homeownership rates have been falling for the last decade.

Is renting a home the new American dream? A report by the Urban Institute projects that even after the housing crash and the Great Recession are a distant memory, homeownership rates in America will continue to decline.

The report estimates that between 2010 and 2030, the majority (59%) of the 22 million new households that will form will rent, while just 41% will buy their homes.

The homeownership rate has been falling since 2006, when the housing bubble began pricing out many would-be homeowners — and the recession furthered that trend. In 2006, the homeownership rate was 67.3%; it now sits at 63.6%, even lower than it was in 1990, according the U.S. Census’ most recent American Community Survey.

But even the economic recovery won’t reverse that trend, according to the Urban Institute. It offers six reasons:

  1. Wages. Real wages have declined among adults ages 25 to 34 since 1996. “Even for young adults with good jobs, low vacancy rates and high rents make it more difficult to save,” the report says.
  2. Student loan debt. Total outstanding debt was about $300 billion in 2003; now it is over $1.3 trillion. Long-term debt makes additional long-term debt less appealing.
  3. Delayed household formation. Both women and men are waiting four years longer before marriage than in 1980. “Because of the delayed marriage and childbearing, homeownership is apt to occur later. At a result, people will spend less of their lives as homeowners, placing a drag on the homeownership rate,” according to the Urban Institute.
  4. Lingering effects of the recession. Roughly 7.5 million Americans lost their homes during the recession; most will have a hard time buying a new one, dragging down the homeownership rate.
  5. They’re not that into homebuying. More Americans are consciously choosing to rent over buy. One study looked at “prime candidates” — married couples earning at least $95,000 annually who have at least one child. “Even for this group, after controlling for race and ethnicity, the homeownership rate declined from 87.3% in 2000 to 80.6% in 2012,” the report says.
  6. Higher borrowing standards. The report says that lenders are still “historically tight,” particularly among borrowers with lower credit scores.

The report also considered changing demographics — a majority of new households formed in the U.S. during the next two decades will be non-white — and while those groups traditionally have lower homeownership rates, the Urban Institute found that will not contribute significantly to overall homeownership rates in the future. That story is a mixed bag, however.

“For at least the next 15 years, whether the economy grows slowly or quickly, the homeownership rate for African Americans will decrease while the rate for Hispanics will increase,” the report found. “More than 50 percent of the 9 million new owners between 2010 and 2030 will be Hispanic, nearly one-third will be other races or ethnicities, 11 percent will be African American, and only 7 percent will be white.”

The shift from owning to renting means that many more rental units should be built, the Urban Institute says.

“This change will create a surge in rental demand from now until 2030 that we are unprepared to meet,” it says.

It also suggests that mortgage lending standards be relaxed to nudge more would-be renters to buy their homes.

That conclusion doesn’t sit well with everyone, however.

Logan Mohtashami, a California-based loan officer, says the notion that lending standards are tight is a myth.

“There remain a number of highly respected housing ‘gurus’ who continue to profess that it is unfairly tight lending standards, not the lack of qualified buyers that are suppressing a housing recovery. The difference is not academic,” he says. “A quick review of the requirements for some of mortgage loans available may surprise you.”

VA loans require no down payment, for example, he notes. And buyers can get other mortgages with credit scores as low as 560, with 50% debt-to-income ratios, or down payments as low as 3%.

“At this point all you can do is bring back 0% down loans and stated income loans for wage earners,” said. “Look who is really pushing the tight lending thesis. People in New York, D.C., San Francisco. What I call economic bubble cities. Main Street America gets this thesis I am saying.”

Read next: Should You DIY These 5 Home Improvements?

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MONEY buying a home

When Your Dream House Appraises for Less Than The Accepted Offer

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Astronaut Images—Getty Images/Caiaimage

Never pay more than the appraisal value.

It’s a nightmare situation: You’ve spent months searching for your dream house, finally get an offer accepted, and then … the house doesn’t appraise for the agreed-upon price.

DOOM.

Now what?

Take a deep breath

“It can be heart-wrenching for the buyer and seller if the deal falls apart because of the appraisal,” says Virginia real estate agent Lori Strickland.

But you’re not alone. This situation happens more often than you might think, especially in rising markets.

Sometimes the comparable sales aren’t applicable to the home you want, or maybe distressed sales in the area have skewed the appraisal.

“Traditional lenders will generally only lend funds up to a certain percentage of the appraised value [80% of appraised value as opposed to 80% of the contract price],” says Michael R. Santana, a Florida attorney.

If the appraisal is less than your offer, you might need to come up with more cash — but you do have other options.

Look over the appraisal contingency clause

An appraisal contingency clause built into your contract means you can reevaluate the situation or renegotiate. But even with a contingency clause, you could end up spending more or walking away to look for another house.

Sometimes all parties need to band together to make the deal work: sellers, buyers, and agents. Sellers might come down on price, you might pay closing costs, and agents might take less of a commission — but the deal still goes through.

Get a second opinion

Maybe the appraisal you got was inaccurate. If so? Sam Heskel, CEO of Nadlan Valuation Inc., a New York City appraisal company, recommends a value appeal.

“The appraiser will review the appeal and respond by reevaluating the property or explaining why he or she did not use the comparable sales the lender sent,” says Heskel.

“In some instances, especially if you are well qualified, sellers are willing to pay for the second appraisal to keep the deal on the table,” says Santana. Another option is to try working with your lender to get a second appraisal. They might be willing to accept the subsequent, higher appraisal.

To help guard against a lower appraisal, make sure you let the appraiser know the reason you made the offer you did.

“The selling agent should meet the appraiser at the property to provide comparable sales and listings,” says Casey Fleming, a former appraiser and author of The Loan Guide: How to Get the Best Possible Mortgage.

Try not to pay more than appraised value

You might have found the only house you’ll ever love, but with that mindset, you’re liable to get hurt. Distance yourself a bit.

Try to remove your emotions from the equation. “The euphoria of offering and counteroffering on a home can quickly become buyer’s remorse,” says Nevada real estate professional Bruce Specter.

“Do not pay more than the appraisal,” says Lori Strickland. If you do, you’ll pay more than the house is worth. If you wouldn’t pay more than the list price for a car (or even for shoes for that matter), you generally shouldn’t do so for a house either.

Forget about whether you’re in a hot market

Although some buyers pay a premium for houses in hot markets, keep in mind that yours isn’t the only stomach churning at the thought of a low appraisal.

“Even in a hot market, the seller panics when the appraisal comes in low,” says Gary Lucido, president of Lucid Realty in Chicago. Unless cash buyers are ready to swoop in, you can use the low appraisal as an opportunity to renegotiate.

As long as you’re not in a hot market, Tamela Ekstrom, owner of Haven Real Estate in Detroit, says, “the seller will typically drop down and sell for the appraisal amount.” Once people are entrenched in a deal, they usually try to work things out.

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MONEY buying a home

3 Tips for Buying a Vacation Home

Photograph by Gregory Reid; Prop styling by Megumi Emoto

1.1 million vacation homes sold in 2014. Here's how to find a hideaway of your very own.

Second–home sales leaped 57% last year, according to the National Association of Realtors. Why? A strong stock market and an influx of baby boomers buying vacation homes for retirement have helped, as well as still-depressed prices in some second-home markets. That said, Lawrence Yun, the NAR’s chief economist, expects prices–and sales–to rise in 2015.

Are you looking? Consider these buying tips:

Search for bargains. Nearly half of all vacation homes purchased last year were foreclosures or short sales. While that puts the number of distressed properties at an eight-year low, some vacation markets still have a hefty backlog, according to Realty Trac. Among them: Miami, Ocala, and Winter Haven, Fla.

Rent your place. If you hope to generate some cash, think about buying where rental demand is strong. Coastal North Carolina, Telluride, Colo., and around California’s Lake Tahoe and Bass Lake are very hot now, according to HomeAway. Just remember: If you rent for more than 14 days, the income is taxed, though you can deduct mortgage interest and other expenses.

Learn the market. Visit several times—and in different seasons. One vacation doesn’t make you an expert.

MONEY home improvement

3 Money-Smart Ways to Boost Your Home’s Curb Appeal

yellow victorian style house
Stewart Cohen—Dream Pictures Dallas, TX

Cosmetic fixes can put a prettier face on a plain-Jane home, and the bill doesn't have to hurt.

Just as every mother believes her son is a handsome devil, we homeowners tend to see the best in our houses—or at least we become comfortably familiar with the way they look.

But let’s face it, to the objective eye, not every man is George Clooney and not every house is a Frank Lloyd Wright masterpiece. There are a lot of drab, even downright gloomy façades out there, especially among homes that were built shortly after World War II, when many builders abandoned traditional architectural styling to streamline costs and mass-produce housing.

Thankfully, the cosmetic surgery required to put a beautiful face on your home doesn’t require a big-ticket construction job. “Creating curb appeal isn’t about trying to transform the house from a plain-Jane ranch into a grand Victorian,” says Charlotte, Vt., architect Ted Montgomery. “Just changing one or two little details is all it takes.” It’s an investment that will boost your home pride, endear you to the neighbors, and generate a lot more interest from buyers someday.

To find inspiration, you can hire an architect (about $100 an hour) to offer ideas and maybe sketch a plan (expect these to take a few hours each). Or look at similar homes in your area while keeping the following strategies in mind.

Subtract Flaws

Assuming the house and yard are already well maintained, job one is to get rid of blemishes left by a penny-pinching builder or the misguided efforts of previous owners:

Replace the garage doors. The most prominent facial feature of many homes is a pair of big garage doors, which all too often are flat, lackluster slabs of steel or vinyl. Trade them for more visually appealing doors with moldings, windows, or an old-fashioned carriage-house look ($3,000 to $8,000 a door, including labor). See DesignerDoors and ClopayDoor for examples.

Remove siding. Sometimes ugliness is only skin deep. “Peek under dreary aluminum, vinyl, or asbestos siding and you may find well-preserved wood clapboards,” says Asheville, N.C., architect Jane Mathews. If so, remove the siding, repair the old wood, and give the house an attractive paint job ($10,000 to $20,000). If not, you could paint the siding or replace it with fiber cement siding, a no-maintenance product that looks like real wood ($15,000 to $25,000).

Lose the funky railings. Swap out bad porch or stoop railings, such as black iron bars or chunky pressure-treated decking components, for visually interesting banisters and spindles that are worthy of their prominent placement ($1,000 to $10,000).

Add Character

Like a dimple or a cleft chin, the addition of an interesting architectural element can give your house some distinctiveness.

Install a salvaged door. The typical post- war front door is decidedly dull, but the entry should be your home’s focal point, says Corvallis, Ore., architect Lori Stephens. For interesting replacements, look in an architectural salvage yard (see page 26). Consider a recycled mission-style oak door, a six-panel Colonial with blown-glass windows, or arch top French doors ($400 to $1,600; more if you’re converting a standard opening to an arch top).

Add moldings. Many newer homes lack exterior trim; the siding just butts up against the windows and doors. A contractor can give the house a more sophisticated, traditional look by cutting back that siding and slipping in wide, flat moldings around the openings and possibly at the corners of the house and between its stories ($3,000 to $4,000). It’s best to use a synthetic product like cellular PVC for your new moldings, since it looks like wood but will never rot.

Enhance the roof. A straight, unadorned roofline makes a house look about as interesting as a shipping container. So consider adding windowed dormers (a.k.a. gabled peaks) or extending the eaves (the roof overhangs) a few feet beyond the front of the house with detailed moldings on the underside ($2,500 to $10,000 per dormer or eaves extension). This is major surgery, though; do not attempt it without first getting an architect’s input.

Enhance the Effect

Invasive procedures aren’t always necessary. Just adding the right accents can transform your home’s outer look—not unlike a pair of stylish new specs or a good haircut.

Replace light fixtures and hardware. Lose generic shiny brass or black house numbers and mailbox and porch lights (especially bare-bulb fixtures) and substitute something unique and substantial, perhaps made of antiqued copper, bronze, or brushed nickel. For ideas, see Rejuvenation and Restoration Hardware.

Plan for a nonstop flower show. Most of the flowers in your yard probably bloom in the late spring, which makes for a beautiful May—or whenever the big show happens in your climate—but leaves you with a bland yard for the other 10 or 11 months of the year. A local nursery can help you choose and plant additional bulbs, shrubs, and trees with different bloom times (as well as plants with colorful autumn foliage and winter berries), so there will always be something performing ($50 to $250 a shrub, $500 to $1,500 a tree).

Add color. A paint job ($2,000 to $10,000) in pleasing hues can make any structure appealing. “But don’t choose a bright, high-contrast color scheme—that only exaggerates a house’s flaws,” Montgomery warns. For subtler suggestions, check out the book House Colors by Susan Hershman ($26 at Amazon) or go for the colors of nature—muted greens, deep reds, and pale yellows—and keep the body and trim close in color. That will give your home a friendly, peaceful look rather than make it say, “Hey, look at me!” Sort of like an average-looking guy choosing a simple charcoal suit instead of a flashy powder-blue one that only a Hollywood star could pull off.

For more on money-smart home upgrades, check out The Money Guide to Home Improvements, available on newsstands June 12.

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