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The “Welcome Home” Checklist: 6 Homeowner Tips to Help You Get Settled

Buying your first home is an exciting, life-changing experience. But it’s no secret that it comes with a lot more responsibility than, say, renting.

Locks. Maintenance. Mail. Lawn care. It can seem a bit overwhelming, especially at first, but don’t sweat it. We’re here to calm those nerves with a “welcome home” checklist of 6 homeownership tips that’ll help you settle into your new digs in no time.

Let’s get into it, shall we?

6 Homeownership Tips for Every First-Timer

Change Your Locks

First things first: Replace the set of keys you just got with a new set. This tip mostly applies to those who bought an older home, but those new-build homeowners might want to follow suit.

The simple fact is that you’re never 100% sure how many copies of those old keys exist. You could have the only set, but there could be a few others out there. Luckily, replacing locks is a relatively easy process — and these days, you have more options than you’ll probably know what to do with.

We’re big fans of automation (have we introduced you to Octane?), so we recommend smart door locks. Some products come with keys for unique combinations, some can be unlocked with your phone, and others combine both features with the ease of a traditional metal key. No matter your selection, replacing your locks can help you feel more secure at home.

Scout the Sewer Lines & Septic Tank

Sure, the house looks great on the outside, but who’s to say if the previous owners loved to flush baby wipes? ‘Getting sewer lines and septic tanks scoped during the inspection is our official recommendation, but in case you had to sidestep an inspection to close the deal, getting it done after the fact is just as helpful.

This isn’t just to check for blockages — it’s to check for damaged and leaky pipes as well. These problems can lead to backups, flooding, foundation damage, and a host of health risks.

Flush Your Water Heater

We’d like to think that houses are as well-kept as a certified pre-owned car with a complete history of repairs and upgrades. The simple truth is that you can never be 100% sure of what the previous owner (or builder) did to ensure every piece of equipment is in as good condition as possible.

Water heaters are a big thing to look out for, and flushing them is a relatively easy process that doesn’t necessarily require a professional plumber (but hey, if they’re there to scope your sewer lines…).

Water heaters should be flushed at least once a year. When they go without flushing for extended periods of time, sediment builds up and corrosion becomes a concern. This sediment can decrease your heater’s capacity, hurt its performance, and in the most serious cases…could have explosive results.

A simple annual flush can save you from a sizable repair bill down the line.

Caulk The Cracks

Drafts pose a danger to your energy bill and cracks allow all sorts of critters to crawl in. A few tubes of caulk can help seal window cracks, repair minor roof damage, or protect your bathroom from water damage.

Window CracksRoof DamageWater Damage

Look for siliconized latex caulking, which combines the long-term sealing effects of silicon caulk with the paintability of latex. 

Grab an asphalt-based sealant for roof gaps, damaged shingles, and minor roof leaks. It’s durable, weather-resistant, and watertight.

Good old-fashioned 100% silicone caulk will help seal up any spaces between tilework to prevent water from seeping behind walls or under floors.

Clean & Replace Filters

Breathe easy, buyer. Changing the air filters when you move in is good for myriad reasons: First, you get to see what size filters are needed throughout the home. Second, you’ll be able to rest easy knowing the filters you put in are new and up to standard.

But don’t stop at air filters. Dishwashers, refrigerators, washing machines, and dryers all have filters or screens that can be cleaned or replaced. Replacing or cleaning these items can prevent blockages and keep equipment in good working condition for years to come.

Find Out When Trash Day Is

A simple task, but a helpful one. After all, no one wants to be the neighbor who puts their trash out on the wrong day, at the wrong time. Knowing when the garbage truck arrives (and how to arrange bulk pick-up) will also help you plan any home improvement projects. Your neighborhood’s schedule can usually be found online.

While you’re at it, find out if recycling is a required activity or if it’s something you’ll have to handle yourself. Some locales require recycling, and sometimes recycling bins are picked up on non-garbage days. If your area doesn’t provide a recycling bin or have a designated ordinance for the activity, it’ll likely fall on you.

Confidence: Restored

These simple 6 homeownership tips should help you feel more at-home in your new home — but here’s one last tip: If you’re ever overwhelmed by the projects ahead of you, make another list and order them by importance. Not everything needs to be tackled right away, and not every problem requires a professional solution.

Your home is your responsibility, but we’ll make sure you don’t go it alone.

Not everything needs to be tackled right away, and not every problem requires a professional solution.

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The Cost of Home Ownership

For many, the dream of home ownership seems out of reach. Between the high cost of homes, a competitive market, and the relative ease of renting in comparison to owning, it’s easy to see why people often remain reluctant—trapped in rental agreements for far longer than necessary.

And sure, buying a home can be expensive. It can be challenging. However, it can be equally as rewarding and yield long-term financial benefits many prospective homeowners forget about or fail to consider in the first place.

Don’t be that person. Sit tight, study up, and work with NAF Financial. We’ll help you uncover the true cost of home ownership.

Concerning Costs

Earlier this year, a study reported that 64% of millennials had at least one regret about buying a house. We could wax poetic about how the sample size was relatively small (there are a lot of millennials in the country, after all), but let’s take that percentage at face value for a minute: More than half of millennial homeowners have regrets about their decision to buy.

That’s a lot.

That list of regrets included many related to the financial aspects of purchasing. Some (12%) didn’t like the rate they got. Some (21%) weren’t prepared for maintenance costs. Some (13%) felt their monthly payments were too high. Others (13%) simply felt as if they paid too much for what they got.
Taking the data at face value, what can we infer from those reasons?

Too many people didn’t go into the process fully prepared, or—perhaps—lacked a deeper understanding of the cost of home ownership in comparison to renting.

That’s not okay, and that’s exactly why we’re here to help you (millennial or not) make a more informed decision before committing to your journey toward home ownership.

Reasons to Rent…or Not?

Right off the bat, one of the most appealing things about renting is the relative ease of doing so. You fill out an application, they run your credit, you sign some papers, and you move in. Depending on where you live, you might also benefit from access to amenities like a swimming pool, a gym, or a dog park.

Beyond that, renting is a totally valid solution for people in need of short-term living arrangements, people who are working on improving their credit (good for you), and people who aren’t in a financial position to save for a down payment.

When you rent, you’re tied to a consistent payment for a period of up to a year (longer, in some cases). Then, two to three months out from your renewal date, you get a letter from your landlord. If you want to renew, you’re going to pay more rent. In many cases, rent increases by 3–5% per year. If you can’t afford that, you begin the process anew—searching for a new home, paying new application fees and security deposits (not to mention the costs associated with moving).

If you do the math, those upfront costs can match or exceed what you’d pay, on average, if you had just renewed your lease and stayed put.

Let’s say you stayed put though. Let’s say you renewed your lease consistently for five years, committing to an increase of 5% per year. For a $1,500 apartment in year one, that’s an additional $900 over the course of your second year.

In addition to paying nearly $5,000 in additional rent, over a period of six years you would have shelled out more than $120,000—roughly ⅓ of the median cost of a home in the United States in 2021. Where’s that money going? Straight to your landlord, or whatever company managing the property you live on.

No equity. No credit. No sense of ownership.

Is seasonal access to a pool (that’s never as private as you’d like) and piecemeal maintenance work worth that much for a unit that’s never truly yours? We think not.

The Cost of Home Ownership

Some of the scariest costs of home ownership include the upfront costs like down payments, inspection and appraisal fees, and closing costs. Depending on your situation, you could be looking at a sizable chunk of change that’s due almost immediately.

Then you consider the ongoing costs of home ownership following the purchase. Remember, home warranties aside, you’re now responsible for maintenance costs like plumbing, landscaping, pest control, and HVAC work. Living in a community with a homeowner’s association? Go ahead and cough up those HOA dues too.

And while we can’t blame you for asking “Where’s it all end?”, we’d also caution you to reconsider your angle. These costs can be scary, but they don’t have to be.

  • Plumbing repairs may be expensive, but those repairs just added equity to your home—one less thing the next owner, should you ever decide to sell, has to worry about.
  • If you bought a home built in the 60s and upgraded its HVAC system, you’ve increased its value.
  • If you replace the roof, you’re protecting the home from future damage.
  • When you replace aging appliances and windows, you’re saving money on energy use.

Almost every dollar you put into your home is value added. Value you can take advantage of if or when you decide to sell or refinance.

Beyond that equity, there’s also the benefit of a consistent mortgage payment. Not for just one year, but for decades. Instead of paying an additional 3–5% in rent every year (plus repeated moving costs), you can now use that money for home improvement projects or save it for your next family vacation.

And, if those high upfront costs are still cause for concern, there are a variety of programs first-time homeowners can take advantage of for help—including down payment assistance and grants.

Consider the Pros & Cons:

Renting Pros:
– Covered maintenance
– Included amenities		Buying Pros:
– Costs less over time
– Your property, your decisions
Renting Cons:
– Annual rent increases
– Lack of ownership/equity		Buying Cons:
– Hefty upfront costs
– Increased responsibility

Decisions, Decisions

We’re not here to twist your arm. Ultimately, this decision is yours to make. If you’re in need of short-term living arrangements or if the idea of included amenities appeals to you, renting is a valid lifestyle. But if you’re looking to settle down and benefit from long-term consistency, we’d recommend buying.

And when it comes to figuring out how much you’ll pay either way, we recommend NerdWallet’s rent vs. buying calculator. It’s easy to use—just plug in a few numbers to find out how much you’ll pay over an extended period of time. You may be surprised to learn the cost of home ownership is often less expensive in the long run.

You may be surprised to learn the cost of home ownership is often less expensive in the long run.

Did you make the switch from renting to owning? Share your story with us on Facebook and Twitter.

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Tax Proration: How to Pay Property Taxes Like a Pro

Barring very special circumstances, taxes are a fact of life for the vast majority of people. Sales tax, income tax, and for home buyers and owners alike, property tax. By now, you’ve probably already paid property tax on your vehicle. But paying property tax on a home? That hits different.

Depending on the date of closing, the amount of property tax that a home buyer and seller are responsible for will vary. The process of figuring out who pays how much is called tax proration, and it’s one cost that many home buyers overlook when calculating their cash to close.

What Is “Tax Proration”?

Simply put: Tax proration helps level the playing field. Property taxes on homes are billed at the beginning of the calendar year for the year prior. So in 2023, you’d get a property tax bill for 2022. Let’s say you bought and closed on a home in November. Should you be responsible for the property taxes owed on that home for the months before closing? Didn’t think so. Proration involves a bit of math (don’t worry, nothing you need to worry about) to figure out how much of the bill each party is responsible for.

Tax proration /ˈtaks prō-​ˈrā-​shən/ n. When property taxes are fairly divided between buyer and seller based on date of ownership transfer or closing.

Here’s where it gets a little headache-y: Homeowners (or the sellers) don’t typically pay their part of the property tax bill directly. Depending on the date of closing, or the particular situation, there are a couple of options to consider:

Escrow

Credit

In this situation, the sellers place their payment for the property tax bill in an escrow account. The buyers would do the same, and the bill would be paid from that escrow account when it’s due. 

This process could be continued even after the buyers take the keys for the next annual property tax bill. Part of their monthly mortgage payment would go into the escrow account, accumulate over the year, and be used to pay the property tax bill on time. 

Nope, not a line of credit. In this situation, the sellers issue a “credit” to the buyers at closing. 

This doesn’t lower the home’s price directly, but it’s a similar mechanic. It’s essentially a discount on the closing costs, which would require the buyers to bring less cash to close — allowing them to use that “extra” cash to help pay the annual property tax bill. 

Three Proration Pro-Tips

Before you walk into closing, keep these three tips in mind:

  1. Leverage
    Depending on the market, the property tax bill could be used as leverage. In a seller’s market, where there are tons of competing bids, motivated buyers might offer to pay the seller’s portion of property taxes to get a leg up on the competition or expedite the sale. In a buyer’s market, the seller might offer to “pay” the entire property tax bill in exchange for coverage of other closing costs.
  2. Exemptions
    Age and disability status could come with tax implications, for yourself or the sellers. Those implications affect tax responsibility. For example, perhaps the seller is a disabled senior citizen. Local laws might have provided relief for that person — relief that is unlikely to be passed on to the buyer. Communicate with your team to determine potential roadblocks.
  3. Projects
    New builds, rehabilitation, and renovations will result in different tax assessments. New builds may not have received a tax assessment at the time of closing, and since there was no previous owner, the buyer would be responsible for an entire year’s worth of taxes. Rehab and renovation projects increase a home’s value, which could result in an increased tax bill. Make sure your assessment is up-to-date to avoid any surprises.

Coming Full Circle

After figuring out your initial prorated tax bill, new homeowners will be responsible for state and local property taxes for as long as they own the home. If that seems like a dim future, we’ve got some light: You may be able to deduct those property taxes (up to a certain amount) when it comes time to file your tax returns. Individually, you can deduct up to $5,000 in property taxes. Filing jointly? Double that figure and enjoy a $10,000 deduction.

But hey, we’re a mortgage company talking taxes here. Consult a tax professional to confirm your eligibility.

Now that you’ve got more detail on property tax proration, you’re prepared to close with confidence. But have you considered the elements of purchasing a home? Are you pre-approved? Do you know what goes into a down payment? We can help with those, too — it’s all part of our goal to give you the tools you need to feel better about borrowing.

Simply put: Tax proration helps level the playing field.

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Pre-Qualification vs. Pre-Approval: Which Is Better?

You know those eye-catching envelopes you find stuffed in your mailbox? The ones that claim you’ve been “pre-qualified” or “pre-approved” for a new credit card or car loan? If you’ve been shopping for home loans, you’ve likely noticed those same terms floating around.

As if buying a home wasn’t daunting enough without needing a dictionary to define the differences between the two, some mortgage professionals use the terms interchangeably. We’re here to help eliminate as much confusion as possible. So, let’s break down pre-qualification vs. pre-approval so you can bid on that dream home with confidence.

The basics of pre-qualification vs. pre-approval.

Think of pre-qualification vs. pre-approval as circles in a Venn diagram. The two terms are closely related, but represent separate steps in the home buying process.

pre-app

According to the Consumer Financial Protection Bureau (CFPB), both options are statements from a lender estimating how much you might be able to borrow.

Fast Facts:

  • Pre-qualification: When you submit basic information to get a rough budget for your home purchase.
  • Pre-approval: When a lender completes a full review of your information (credit score, income, assets, etc.) and extends a preliminary loan offer. In a competitive housing market, a pre-approval can really give you an edge over other buyers.

Prepping for Pre-Qualification

Pre-qualification is a solid first step in your home buying process. It’s ideal for establishing a general budget and price range for homes, and typically requires answers to questions about income, employment, and debts.

Pre-Qualification Pro-Tip: Your pre-qualification isn’t an official loan offer and is only as accurate as the information you provide. Artificially inflating your income won’t help much when it’s time to apply for your loan. Estimate your mortgage amount and monthly payments with our free mortgage calculator.

Pursuing Pre-Approvals

Think of pre-qualification as a surface-level look at your information. Pre-approval, on the other hand, requires actual documentation and a deeper review by an underwriter before generating a conditional* offer that’s (usually) good for 60 days.

For a pre-approval, your lender reviews your W-2s, pay stubs, tax returns, and more to estimate a loan amount. Pre-approval is ideal if you’ve started your home search, partnered with a real estate agent, and are actively searching for a loan.

*The lender will confirm your financial documents, loan terms, and other conditions before the final approval.

Pre-Approval Pro-Tip: You may be pre-approved to borrow more money than you need or more than you’re comfortable spending on a home. Be mindful of your budget and don’t feel pressured to take the full amount. We recommend limiting your search to homes within a comfortable price range—something only you can decide.

Which One Is Right for You?

Now that you know the key differences between pre-qualification and pre-approval, it’s time to start thinking about which option best suits your needs. Ask yourself: How far along are you in the journey of homeownership? Are you just looking around, or are you ready to talk numbers? Our handy table below can point you in the right direction.

 Pre-qualificationPre-approval
Where are you in the process?Searching around to find out how much you might be able to borrow.You’ve found your dream 
house and you’re ready to 
make an offer.
What are you willing to provide?Basic details 
(i.e. income and employment)		Proof of income, assets and other financial details.

How to handle a pre-qual curveball

While you may receive pre-qualification from a lender, that doesn’t mean you’re approved to borrow that loan amount. Pre-qualifications are a general estimate of your home loan eligibility. Pre-approvals dig a lot deeper, but neither are final home loan approvals.

In some cases, lenders may provide pre-qualifications and pre-approvals for less than what you expected. Alternatively, lenders may not extend either of those options at all. If that happens, don’t panic. These decisions aren’t made lightly, but there are steps you can take to prepare for next time.

  • Contact the lender to find out why you weren’t approved for a certain loan amount or why you were denied an offer outright. Was your credit score too low? Have certain accounts gone delinquent? Is your debt-to-income ratio too high? Knowledge is power, and the right lending partner will help you identify areas of improvement.
  • Ask the lender for a copy of the credit score they used or take the time to request your own report. If your pre-approval was denied, lenders are required to provide a notice containing the credit score they used to make the decision and instructions on how to obtain a free copy of your credit report.

So, ready to get pre-approved for your mortgage?

That wraps up today’s lesson! Now that you know the ins-and-outs of pre-qualification vs. pre-approval, it’s time to make the next move. Are you ready to start looking at homes? Do you already have one in mind? No matter where you are in the process, our team can help.

Now that you know the key differences between pre-qualifications and pre-approvals, it’s time to start thinking about which option best suits your needs.

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Here’s What Not to Fix When Selling a House

Thanks to certain home improvement channels, renovations might seem like a relatively easy way to increase your home’s value. A new door, new floors, a coat of paint, and a few new appliances appear to strap a bottle rocket to the price tag. Never mind the market conditions, price comparisons and other contributing factors — every drop of sweat and every dime you put into your home should result in a price hike, right? That’s why they call it sweat equity!

And yet, that’s not the case. Sure, when you’re planning to sell, a few improvements here and there can help. But how do you know which projects are yours to take on and which ones should be left for the new owner? We’ve got the answers — here’s what not to fix when selling a house.

Cosmetic Changes

Do you keep track of all the year’s hottest paint colors? Are you a semi-professional (or self-acclaimed) interior designer? Doesn’t matter. While an accent wall or new fixtures can appeal to some buyers, most have their own tastes and preferences. You may love brushed nickel, but a buyer might dig gold. That baby blue home office? Someone’s going to cover it with something earthy the second they get the keys.

What most buyers are going to care about is the structure of the home. We’re talking plumbing, electrical, HVAC — all the things that make the home work. Instead of focusing on chipped paint and replacing door hardware, put that energy (and that cash) into getting the HVAC unit tuned up or replacing windows…stuff that’s going to keep the new owners comfortable.

Pro-tip: Getting the carpet cleaned is a worthwhile investment, especially if you have pets. The new owners may clean it again, but no one wants to enter an open house to be hit with the stench of wet dog.

Cracked Concrete

Curb appeal, curb appeal, curb appeal. Flowerbeds, trimmed trees, and a luscious green lawn all play a part in this, so it’s easy to see how repairing your driveway, sidewalk and walkways might be worthy investments as well.

You’d be half right.

Creating curb appeal is an important part of creating interest and reeling in prospective buyers, but concrete repairs aren’t something to focus on — especially if sidewalks are publicly owned and maintained by local government. If that’s the case, it doesn’t hurt to at least put in the request for repairs before putting your home on the market.

Amazing Appliances

If your home is home to a few old appliances, you shouldn’t worry about replacing those either unless they’re damaged, broken, or stick out like a sore thumb. It might seem like a kitchen renovation is a quick way to boost your home’s value, but it’s a costly short-term solution.

According to This Old House, minor kitchen remodels ($15,000 or less) have a return-on-investment (ROI) of 87% a year later. Major kitchen remodels (averaging nearly $40,000) have an ROI of 80% a year later. While you may recoup some — or even most — of that money if you sell within a year, you won’t get all of it back. And depending on your mortgage situation, those renovations may not lead to much of a profit.

Like cosmetic changes, new appliances can be an issue of personal preference as well. You love white appliances, someone else loves stainless steel, so what happens to the white appliances you just bought and installed?

Oh, did someone order a dumpster?

Okay, so what SHOULD you fix?

Now that you know what not to fix when selling a house, you’re probably wondering which projects you should take on. We’ve got the answers:

  1. Square Footage Improvements: Whether it’s an addition or a finished basement, more square footage is one of the best ways to improve a home’s value.
  2. Backyard Entertainment: Some folks like a patio, some like a deck, others opt for a pool. Turns out, a backyard deck is a low-cost method of boosting your home’s value by thousands of dollars.
  3. Garage Door Replacement: Out-of-style or aging garage doors can actually bring your home’s value down. A replacement can cost less than $2,000, but can add a few thousand dollars in value to your home. Easy and affordable…what’s not to love?

Ready, set, sell.

Equipped with this knowledge, you’re ready to tackle a few reasonable side projects before handing your listing to a local real estate agent. We hope you get the biggest bang for your buck!

Every drop of sweat and every dime you put into your home should result in a price hike, right? That’s why they call it sweat equity!