Living • March 24, 2022

How to Prevent and Deal with Mold

by Don Koonce

Whether you are buying or selling a home, mold is something to be mindful of. Health concerns and potential damage make mold a red flag for buyers. Even if you’re not planning to sell any time soon, taking care of mold problems now can prevent even larger and more costly issues in the future. Contrary to what some people think, mold is not a geographic problem—it can occur anywhere, no matter where you live. Here is some basic information about mold and how to deal with it.

What is mold?

Molds are microscopic organisms that are found virtually everywhere indoors and outdoors. There are thousands of different kinds of mold. Their natural function is to help break down dead materials such as stumps and leaves so the nutrients can be used by the environment. For molds to grow, they need two things: an organic food source—such as leaves, wood, paper, or dirt—and moisture.

Mold Causes Damage

Mother Nature uses mold to decompose plant material. Unfortunately, when present indoors, it can be equally destructive. Mold growth can damage furnishings, such as carpets, couches, and cabinets. If it goes undetected or neglected, it can also cause serious damage to walls and structural elements in your home.

Mold is present everywhere, and most people tolerate exposure with no adverse effects. If allowed to spread, however, it may cause problems. As molds grow, they release thousands of tiny spores that travel through the air. When inhaled in large enough amounts, these spores may increase the risk of adverse health effects in some people, particularly respiratory problems. A less-common strain of mold called “black mold” can be particularly troublesome to those who are especially sensitive.

Common Causes of Mold Growth in Homes

No matter your local climate, your home is vulnerable to mold. There are many sources of mold problems, from faulty air conditioners to poorly positioned sprinkler systems. Here are the most common sources of mold inside the home:

Flooding
Leaky roofs or damaged gutters
Heating or cooling system problems
Poor drainage next to foundation
Plumbing leaks from toilets, refrigerators, and dishwashers
Damp basement or crawl space
Leaking windows or doors
Steam from shower or cooking
Indoor exhaust from dryer

Detecting Mold in Your Home

If you can see or smell mold inside your home, it’s time to act. Any area that has sustained past or ongoing water damage should be thoroughly inspected—you may find hidden mold growth in water-damaged walls, floors, or ceilings. Walls and floors that are warping or discolored can also indicate moisture problems, as can condensation on windows or walls.

How to Prevent Mold in Your Home

Since mold is always present, there’s no way to eliminate it completely. You can control indoor mold growth, however, by controlling moisture.

Remove the source of moisture by fixing any leaks or other water problems.
Make sure your bathroom fans and dryers are properly vented to the outside. Always use the exhaust fan when cooking or showering.
Use a dehumidifier to reduce moisture levels in the air. Make sure your AC system is well maintained and is the correct size for your home. A faulty AC system can cool the air without removing the water vapor, creating high humidity.
Insulate your home well to prevent indoor condensation.
Have your heating, ventilation, and cooling systems professionally cleaned annually. Air-duct systems can easily become contaminated with mold.
Regularly clean moist areas such as the bathroom with products that treat mildew.
Dry clean your carpets (as opposed to wet cleaning them).
Avoid carpeting bathrooms and basements.
Clean any moldy surfaces as soon as you notice them.

How to Deal with Mold in Your Home

Mold can be a manageable problem. If you have a mold problem that is isolated to a small area—less than a square yard or so—you can try to resolve it yourself. However, if your mold problem is severe or if you have extensive water damage, it’s best to call a professional contractor who specializes in mold removal.

Porous items that are hard to clean, such as carpet and drapes, should be discarded. Moldy sheetrock and ceiling tiles can be removed and replaced. Hard, nonabsorbent surfaces such as glass, plastic and metal should be thoroughly cleaned with soap and water and allowed to dry completely. For solid items that are semi-porous, such as floors, cabinets, and wood furniture, scrub with an ammonia-free cleaner and hot water to remove the mold. Rinse with water and dry thoroughly. After cleaning, apply a mildewcide to kill mold and spores.

When cleaning mold, remember to wear gloves, a mask, and eye protection, and work in a well-ventilated area. Never mix cleaner containing bleach and ammonia; this can result in the release of a toxic gas. And be sure to throw away any sponges or rags that you use for cleaning. For more information on how maintaining your home can prevent damage, read our blog post on how to handle water damage.

How to Handle Water Damage in Your Home

Sellers • March 22, 2022

How to Prepare for an Open House

by Don Koonce

To successfully sell your home, you need to attract buyers. This is why open houses are an integral part of the selling process: they allow buyers to experience the property for themselves and envision what life will look like in their new home. To prepare for an open house, you’ll need to work closely with your agent. They can advise you on what buyers in your area are looking for to increase your chances of selling your home.

How to Prepare for an Open House

The earlier you can begin prepping your home for an open house, the better, since getting it in prime showing condition will take time. Start by decluttering and organizing room by room. To truly get your home sparkling clean, you can’t miss those hard-to-reach areas like the baseboards, under your furniture, and your appliances.

To best position your home to sell, consider hiring a professional stager. A well-staged home helps it appeal to the widest possible array of potential buyers, not only for in-person showings, but in online photos as well. Professional staging is equal parts science and art. Stagers are experts in depersonalizing a home while maintaining its stylistic qualities to give buyers the opportunity to imagine the space for their own use. It isn’t just about psychology, though. Staging is a high-ROI expenditure that can add real value to your home.

It may feel counterintuitive, but your absence can be your greatest asset in making your open houses successful. Buyers will often feel uneasy in the presence of the seller as they tour, which will limit their ability to envision their own lives in the home and get excited about the prospect of ownership. Accordingly, you may need to arrange for temporary accommodations during the times your home is being shown. It’s helpful to solidify these plans several weeks in advance to avoid an eleventh-hour scramble.

Working with Your Agent

Your agent will be your greatest asset in preparing for open houses. They are experts in understanding how to effectively market your home and how the local market conditions will impact their marketing plan. Once you know it’s time to sell, they’ll analyze data to accurately price the property and keep it competitive in the current market. They’ll also work with you to schedule open houses at the times when buyers are maximally available and actively searching for listings.

Your agent will also help you to stay safe while selling your home. The reality of open houses is that you’re opening your doors to an influx of unfamiliar faces, and it’s worth it to take a few safety precautions beforehand. Perform a thorough walkthrough of your home with your agent to make sure all valuable belongings, medications, family heirlooms, and other important items have been properly secured and/or removed. Once you’ve given your home a clean sweep, discuss your process for screening potential buyers.

For more resources on preparing to sell your home, Windermere’s Home Selling Guide has everything you need: selling tips, moving checklists, our Home Worth Calculator, and info on how an agent can help.

Seller Essentials – Home Selling Guide

Design • March 17, 2022

5 Design Projects to Improve Your Backyard

by Don Koonce

Your home’s façade and front yard play a role in its curb appeal, but the backyard is for you and your household to enjoy. Spending time making improvements to your backyard will help to maximize your enjoyment of your property and can increase its value. These backyard design projects will help to beautify your yard while creating opportunities for new ways of spending time in it.

5 Design Projects to Improve Your Backyard

1. Improve Your Deck

Just as the kitchen can often be the heart of a home’s interior, a deck is typically the central hub of the backyard. To maximize the seating capability of a deck with a smaller footprint, consider tiering your deck into multiple levels. By adding some separation vertically, you’ll make the most of its square footage.

Consider butting up your built-in seating to your deck’s banister or railing and wrapping it around the perimeter. This will help make your deck more welcoming while saving space that would be taken up by chairs. For an even more efficient space-saving strategy, keep the space underneath your built-in seating open or install a drawer system to store your backyard and/or outdoor kitchen items and tools. If a deck rebuild isn’t in the cards, try simpler improvement projects like restraining it or adding outdoor lighting.

2. Build a Tool Shed

Every backyard requires maintenance, and you typically need tools to keep it in tip-top shape. A useful DIY project for your backyard is to build a tool shed to house your garden tools and landscaping equipment. This will give them a safe, dry storage space, which helps to extend their useful life and avoids having to make unnecessary replacements. When in doubt, add extra shelving space, as you very well may build out your tool collection over time. Once your shed is complete and all your tools are in their right place, install a secure locking system to protect your equipment.

3. Create an Outdoor Cooking Area

Outfitting your backyard for a robust outdoor kitchen with all the bells and whistles can be expensive. Fortunately, you can create an outdoor cooking area without having to break the bank. Depending on your local climate, it may be wise to cover this area with some sort of roof structure. If so, be sure to leave ample room between your cooking equipment and the height of the roof to allow flames and fumes to safely escape.

Different types of barbecues can satisfy your outdoor kitchen needs, depending on how much room you have to work with. Charcoal grills are ideal for smaller spaces, while built-in barbecues can provide a more comprehensive grilling setup if you have the allotted square footage.

4. Give Your Flower Beds a Makeover

Flower beds have quite an impact on the overall aesthetic of your backyard. If your flower beds are overgrown, start by pulling out the weeds. Use a garden trowel; this will help to dig up the roots and decreases the chance of recurring weeds. Remove all the weeds and debris, then rake the soil to prepare it for composting. While you rake, keep an eye out for rocks and gravel and remove them from the flower bed.

Now you’re ready to add a new layer of compost. This does wonders for the health of the soil and encourages new plant growth. Sprinkle in two to three inches of compost and work it into the soil with a shovel. You can also experiment with adding other nutrient-rich ingredients or plant materials that are conducive to soil in your climate, such as peat or manure.

5. Build Your Ultimate Patio

For many homeowners, building a patio exists at the crossroads between a DIY project and one that requires a professional’s expertise. Whichever route you choose, executing a patio installation can take your backyard to the next level. Choosing your patio material is the first step. Concrete, flagstone, brick, terra-cotta, and pea gravel are all common patio materials that have their respective advantages and disadvantages. If having a patio that’s built to last is your top priority, then brick, flagstone, or concrete may be the way to go. These materials also complement a variety of house styles, as well. If you’re looking to create a more relaxed environment in your backyard, then pea gravel or clay may be more your style. These materials recall aspects of the beach and seaside living.

For more information on how you can take your yard to the next level, read Windermere’s blog post on seven ideas for creating a beautiful yard:

7 Ideas for Creating a Beautiful Yard

Sellers • March 15, 2022

Common Real Estate Contingencies

by Don Koonce

Contingencies help to spell out the specifics of a real estate transaction by dictating what must happen so the contract becomes legally binding. If certain conditions aren’t met, the applicable contingency gives the buyer and the seller the right to back out of the contract per their agreed-upon terms. When selling your home, a buyer may make their offer with contingencies attached. Here are some common contingencies you might see in a buyer’s offer and what they mean for you.

Common Real Estate Contingencies

Home Inspection Contingency

A home inspection contingency allows the buyer to have the home professionally inspected within a certain window of time. If the buyer finds outstanding repairs that need to be made, they can negotiate them into their offer. If the seller chooses not to make the repairs outlined in the buyer’s home inspection report, the buyer can cancel the contract.

As a seller, it’s important to be transparent in listing any issues with the home. This is why many sellers find a pre-listing inspection to be beneficial: it provides transparency about the home’s condition ahead of time and can help to streamline the buying process, which can be especially helpful when selling in competitive markets.

Financing Contingency

Also known as a “mortgage contingency,” a financing contingency gives the buyer a specified period of time to secure adequate financing to purchase the home. Even if a buyer is pre-approved for their mortgage, they may not be able to obtain the right loan for the home. If they are unable to finance the purchase, the buyer can back out of the contract and recover their earnest money, and the seller can re-list the home.

The seller won’t be on the hook if the buyer fails to cancel the contract. Even if the buyer is not able to secure financing by the agreed-upon date, they are still responsible for purchasing the home if they do not terminate the contract.

Appraisal Contingency

An appraisal contingency states that the home must appraise for, at minimum, the sales price. It protects the buyer in that it allows them to walk away from the deal if the property’s appraised value is lower than the sales price, and typically guarantees that their earnest money will be returned. This can be an issue in certain markets where demand is driving prices up to numbers that appraisals don’t reflect. Depending on the agreement you make with the buyer, you may be able to lower the price of your home to the appraised amount and sell it at that price. When selling your home, remember that there is a difference between appraised value and market value. An appraiser’s value of a property is based on several factors using comparative market analyses, whereas market value is what buyers are willing to pay for a home.

Home Sale Contingency

If a contract includes a home sale contingency, it means that the buyer is tying their purchase of a home to the sale of their existing one. Though it is common for homeowners to buy and sell a house at the same time, attaching a home sale contingency to an offer does create some added variability in a real estate transaction that sellers should be aware of before accepting such an offer. This contingency allows buyers to sell their current home and use the proceeds to finance the purchase of their new one. Although you will have the right to cancel the contract if your buyer’s home is not sold within a specified time, you’re still waiting on them for the deal to go through, which means you could potentially miss out on other offers while you wait.

Title Contingency

Before the sale of a home goes final, a search will be performed to ensure that any liens or judgements made against the property have been resolved. A title contingency allows a buyer to raise any issues they may have with the title status of the property and stipulates that the seller must clear these issues up before the transfer of title can be complete. If an unpaid lien or unpaid taxes turn up in the home’s title search, this contingency also allows the buyer to back out of the deal and look for another home. A majority of sellers will pull a pre-title report to provide transparency for a smooth transaction.

These are just some of the contingencies you may encounter in a buyer’s offer. Work closely with your agent to understand the terms of these contingencies and how they impact the sale of your home as you go about finding the right buyer. For more information on the process of selling your home, read my blog post on common mistakes to avoid:

10 Mistakes to Avoid When Selling a Home

Design • March 10, 2022

How to Find the Right Lighting for Your Home

by Don Koonce

The right lighting can give your home the quality and mood you’re looking to achieve. Knowing about the different temperatures of light, lighting types, and how to blend lighting elements will help you narrow down your choices and find the best fixtures for your home.

How to Find the Right Lighting for Your Home

Before taking a trip to the hardware or lighting store, it’s worth your time to understand the different types of lighting and how they complement each other to fill the large surface areas of your home while spotlighting the nooks and crannies. Ambient lighting, accent lighting, and task lighting are the three basic lighting types that cover the spectrum of illuminating a home.

Ambient Lighting

Ambient light is what fills a room. Also known as “general light,” this is the primary light source for the spaces in your home. When selecting your ambient lights, know that your choice in color will play a significant role in the atmosphere of that room, since this type of lighting is so widely distributed.

Accent Lighting

Accent lighting has a smaller footprint than ambient lighting. It is meant to direct focus and attention to a specific spot. By pulling the eye toward this spot lit area, it allows you to highlight décor and design pieces, such as picture frames and artwork, houseplants, or small sculptures.

Task Lighting

It’s all in the name when it comes to task lighting. This form of lighting exists to help you perform tasks. Whether it’s cooking, working on arts and crafts, tinkering away at a desk, or tending to your indoor garden, having task lighting in place will ensure that you’re able to see while you work. Feel free to experiment with closeup light sources when installing task lighting to provide the maximum attention to detail while you work. Task lighting fixtures can be as simple as a floor lamp or desk lamp.

Different Temperatures of Light

There are three basic light temperatures: warm, cool, and neutral. Warm light creates a cozy, comfortable feeling, and functions best in rooms where you plan to kick back and relax, such as the bedroom or the living room. Cold light encourages attention to detail, and therefore works well in places like the kitchen and bathroom. Neutral light sits between warm and cold light but functions like cold light in that it can help you focus on the task at hand in the rooms where it’s used. Places like the garage, home office, or bonus/utility rooms are all fitting homes for neutral light.

Different Lighting Fixtures

After you’ve researched the different types of lighting and decided which temperatures fit best throughout your home, it’s time to pick your fixtures.

Chandeliers

Chandeliers have been around for centuries and they are still popular today. Due to their formal nature, they can set the stage for dining rooms and foyers alike with traditional style. Chandeliers typically give off lots of light, making them perfect for filling larger spaces.

Surface Lights

Surface lights sit flush against the wall where they are installed. These lights are typically used in smaller areas such as hallways.

Pendant Lights

Pendant lights are commonly found in the kitchen or the dining room. Suspended from the ceiling, pendant lights come in a variety of styles, but often appear as a linear series of lights that run the length of a table or slab underneath them.

Recessed Lights

Recessed lights sits inside the wall and provide a level distribution of illumination. These lights are a popular choice for vaulted ceilings, where you’ll usually see them spaced evenly apart to fill the room with ambient light.

For more information and resources on putting together the home you envision, read my blog post on how to upgrade your dining room:

How to Upgrade Your Dining Room

Design • March 8, 2022

Farmhouse Interior Design

by Don Koonce

Known for its signature chic comfort, the farmhouse style is a popular method of interior design for homeowners looking to blend elements of modern and traditional design. With a rustic charm at its heart that recalls images of the countryside and wide-open landscapes, the farmhouse style steadily picked up steam in the 2010s and continues to grow in the 2020s. The following information is a guide to understanding the characteristics that make up the farmhouse style and how you can translate them into your home.

What is farmhouse style?

The farmhouse style predominantly uses a white/grey/beige color palette which provides a foundation for complementing elements and brighter colors. Against this clean backdrop, rustic materials can really shine. Exposed wood beams of timber or reclaimed wood, shiplap, and wrought iron are materials typically used help to round out the aesthetic, creating that rural-with-a-touch-of-modern feeling that the farmhouse style is known for. These combinations create a sense of openness and simplicity in the spaces where they’re used. In the kitchen, the farmhouse style feels clean and inviting; in the living room, it beckons members of the household and guests alike to sit back and relax; and in the dining room, it creates the perfect setting for enjoying a meal together.

How to Decorate in a Farmhouse Style

When it comes to furniture, there are specific choices you can make that will help reinforce your personal farmhouse style. Functionality is a core principle of farmhouse design, exemplified by its use of reclaimed and found materials. When looking at furniture, tune your radar to pieces that are simple and functional rather than ornate and complex. Farmhouse’s warmth contrasts the colder feel of minimalism, so when thinking about texture, know that you’re not bound to selecting only the cleanest possible lines—feel free to experiment! With natural elements like stone and wood already providing a varied blend of textures, you can afford to be bold in your choice of throw pillows, blankets, carpeting, and furniture set pieces.

The farmhouse style will give you license to decorate with antiques and vintage materials. Items like armoires, wooden iceboxes, and vanities will find a fitting home among your complementary decorative items. With a prevalence of wood, choose grain patterns and wood tones that complement each other well without clashing. Clutter can get in the way of the coziness that the farmhouse style naturally evokes, so it’s important to keep your main living areas well maintained to truly let your home’s interior design flourish.

With the farmhouse style, it all comes back to comfort. If you’re looking to make the spaces in your home more comfortable, either fully adopting or borrowing from the farmhouse style may be just the ticket. For more helpful tips on home design, read my blog post on how to upgrade your bedroom:

A Guide to Upgrading Your Bedroom

Buyers • March 3, 2022

A Guide to Understanding Escrow

by Don Koonce

The process of buying a home is made up of several stages. After preliminary stages like getting pre-approved, searching for homes, and finding a buyer’s agent, various contracts and buyer-seller agreements will enter the fold as the purchase of a home is finalized. Escrow is a pivotal point in the buying process that will ultimately lead to you, the buyer, receiving the keys to your new home. Here is your guide to understanding escrow and how it works.

A Guide to Understanding Escrow

What is escrow?

Escrow is a vehicle for temporarily holding the funds in a real estate transaction and making sure they distribute properly when the deal goes through. The funds and documents are held by a third party “in escrow” until the terms of the agreement have been filled. Escrow accounts protect the buyer’s “good faith deposit” (also known as “earnest money”) to ensure it goes to the seller as outlined in the real estate contract. These funds show that the buyer is serious about staying true to their offer and does, in fact, intend to pay the seller.

The seller accepting your offer is your cue to begin the escrow process. Your first step is to open an escrow account. Then, you’ll go about securing a mortgage and obtaining insurance for the home. When the deal goes through, the funds in will go towards your down payment and closing costs. Sometimes, the escrow funds are held in the account after the sale of the home has been finalized. This is known as an “escrow holdback.” This situation can often arise if a buyer discovers an issue with the home in their final walkthrough that wasn’t present during an earlier inspection. If the home is in a worse condition than what shows in the contract, then the good faith deposit will go back to the buyer, and they are released from the contract.

How does escrow work?

Once all the I’s have been dotted and the t’s have been crossed, an escrow officer will issue a deed with you listed as the new property owner. Then, you’ll order a wire transfer for the funds to be allocated. Once closing is complete, the third party holding the escrow funds will distribute them per the terms of the agreement. This distribution of funds make up a part of the total closing costs for buyers, which include, among others, real estate agent commissions, title and insurance fees, and any HOA dues that may apply.

Escrow evolves after the purchase of a home. Once you’ve bought your new house, your lender will open a mortgage escrow account, through which you’ll pay for your property taxes and homeowners insurance. Held by your lender, the money in this account is added to your monthly mortgage payment.

To not get overwhelmed during the escrow process, it’s important to read your documents carefully and ask questions to make sure you understand them. When it comes time to close on the home, read through everything carefully to make sure you haven’t missed anything before the deal goes final. For more information on the required financing throughout the home buying process, read my blog post on the different types of home loans available to buyers:

The Different Types of Home Loans for Buyers

Design • March 1, 2022

What is Spanish Style Architecture?

by Don Koonce

The Spanish style of home design and the architecture from which it originates goes by many names but is commonly known as “Spanish Eclectic” or “Spanish Revival.” This distinct style has a long history that has helped to shape the residential aesthetic of certain parts of the United States, predominantly the Southwest. By digging into the history and design elements of this unique look, we can understand a bit more about why these homes are so special.

Spanish Eclectic

The Spanish Eclectic aesthetic is an amalgam of Native American, Mexican, and Spanish missionary styles. The first appearances of this housing style on American soil trace back to the days of the earliest Spanish settlers as they began to build out their dwellings. These homes were built with the materials that have become defined by their appearance: adobe, stucco, and clay. In this way, Spanish Eclectic shares some similarities with the Mediterranean style of architecture. Over time, this style saw periods of revival, during which construction of these homes experienced an uptick. Throughout these revival periods, additional features were added to the homes to accommodate the needs of modern living at the time.

What is Spanish style architecture?

The Spanish Eclectic style has several distinct characteristics in both its interior and exterior design. The thick stucco walls provide the backdrop for their unique look, but also help to keep the home cool during hot days and insulated at night. These homes typically have low-pitched terracotta roofs, exposed wooden support beams, and arched entryways and corridors, reflecting the features of their missionary origins.

Additional design details include wrought iron, colorful tile, and small windows. Though they may not be present in every Spanish Eclectic home due to limited space, courtyards are a common feature of this house style. You’ll often see a courtyard in the center of the home for a plaza-like arrangement, on the side of the home, or in the back.

For more information on the different home styles, read my blog post on cottage homes:

What is a Cottage Home?

SOLD • February 24, 2022

PENDING SALES: Auburn Rambler, Tukwila Craftsman, Burien Condo

by Don Koonce

5103 S 360th Street
Auburn, WA 98001
$439,950

Beds: 3
Baths: 2
1,536 sqft
Days on Market: 18

This lovely Auburn/Federal Way rambler sits on an oversized lot w/detached 2 car garage! This open concept updated 3-bedroom, 1.75-bath rambler features a large kitchen with refinished backsplash, built in front deck, ample storage space, vinyl plank flooring and extra entertainment room. All appliances come with home, including washer and dryer. The backyard is ready for entertaining with a built-in deck and fire pit. This is a great home to live in and has great potential as an investment or first-time buyer.

Information provided as a courtesy only, buyer to verify. For more, go here.

5671 S 150th Place
Tukwila, WA 98188
$777,999

Beds: 5
Baths: 3
2,545 sqft
Days on Market: 2

Must see this centrally located craftsman home! Tucked away in a quiet cul-de-sac, with an easy drive to freeways, Seattle, Seatac Airport & Westfield Mall. Come enjoy the exquisite touches including one of a kind Brazilian cherry floors. Solid oak stairs with wood inlay designs. Beautiful crown moulding accents throughout with many arches and pillars. Downstairs boasts 2 bedrooms & bath as well as a large living space with new laminate floors, new led lighting package and freshly painted walls. So much to see and enjoy! Central vac system, wood burning fireplace in the main living space and 3-4 cords of firewood to warm your home. In the summer bring your outdoor furniture and enjoy meals while relaxing under your gazebo!

Information provided as a courtesy only, buyer to verify. For more, go here.

127 SW 154th Street #103
Burien, WA 98166
Listing price: $255,000

MLS #1875370
1 bedroom
1 bath
679 sqft
Main Level Master, Walk-In Closet(s)
Gated Community
Insulated Windows
1 Wood Burning Fireplace

Information provided as a courtesy only, buyer to verify. For more, go here.

Buyers • February 22, 2022

The Different Types of Home Loans for Buyers

by Don Koonce

Financing terms are the nuts and bolts of a successful home purchase. Once you’ve decided you’re ready to buy a house, it’s a matter of making the numbers work. So, which home loan is the right one for you? Knowing the different types of mortgage loans available to you will allow you to pinpoint the one that best fits your needs and is financially viable.

The Different Types of Home Loans for Buyers

Conventional Loans

Conventional loans are the most popular type of home loan issued to borrowers. Offered by private lenders, they are not backed by the government. Conventional mortgages divide into two subsets: conforming loans; which adhere to Federal Housing Financing Agency (FHFA) guidelines, and non-conforming loans; which do not. Due to the added risk taken on by the lender, non-conforming loans typically have higher rates. A jumbo loan is an example of a non-conforming loan, due to its loan amounts being higher than the amount limits laid out in the underwriting guidelines. The two most common conventional loans are 30-year and 15-year fixed-rate mortgages.

15-Year and 30-Year Fixed-Rate Mortgages

The terms of your loan will drastically impact all aspects of your mortgage. With a 30-year mortgage, you’ll have lower monthly payments and a higher interest rate than you’d have with a 15-year mortgage, meaning you’ll pay more in interest over the life of the loan. With a 15-year mortgage, you’ll pay less interest, but you’ll have a higher monthly payment. Compared to a 30-year mortgage, a 15-year mortgage can save you money over the life of the loan, simply because you’re in debt for half the time; however, the higher monthly payments may be unaffordable for some.

Government-Backed Loans

Whereas conventional loans are not backed by a federal entity, there are several unconventional loans that are backed by the U.S. government. These unconventional loans can often provide a path to homeownership for borrowers who don’t have the credentials to qualify for a conventional loan.

FHA and USDA mortgages are two common types of government-backed loans. Instead of having to make a 20% down payment on a conventional loan to avoid private mortgage insurance (PMI), an FHA loan allows buyers to qualify for a mortgage with a down payment as little as 3.5%. USDA loans enable buyers to purchase a home with reduced interest rates. VA loans offer several benefits for active service personnel and veterans looking to buy a home, including not having to purchase mortgage insurance.

Fixed-Rate vs. Adjustable-Rate Mortgages

Fixed-rate mortgages allow you to lock in a specified interest rate for the life of the loan. With an unchanging monthly mortgage payment, a fixed-rate mortgage makes financial planning easier. Adjustable-rate mortgages’ interest rates will go up and down based on market conditions. Many ARMs will start with a fixed-interest rate period followed by a variable interest rate until the loan amount is paid off. Keep in mind that a sudden change in your financial situation could make your monthly ARM payments unaffordable, which could result in a loan default.

Other Home Loans

There are other more niche financing options available for prospective home buyers. For example, a construction loan can be useful if you’re planning on building a home. Balloon mortgages and sub-prime mortgages can make homeownership feasible for those who aren’t financially prepared for the typical repayment structure of a mortgage. These loans, however, come with greater risks. Talk to a mortgage broker to understand the terms of these agreements before making a final decision.

For more information on financing your next home purchase, read my blog post on bridge loans:

What is a Bridge Loan?