Buying a home is a huge financial undertaking...quite possibly the largest one of your life. But it also offers a great way to increase your personal wealth if done correctly. However, you do not want to stretch yourself so thin that you struggle to make your mortgage payment each month. That is where the affordability factor comes in. How much home can you afford and still have a life to live?

The Affordability Factor

Debt-to-Income Ratio

Lenders want to see your total debt stay below 40% of your monthly income (before taxes). They also like to see your mortgage payment (including interest), taxes, and insurance at 28% or less of your monthly income. So, if your monthly household income before taxes is $6250, your total household expense (mortgage, taxes, insurance) should not exceed $1750. Some lenders offer programs that allow a higher debt-to-income ratio. However, this may affect your affordability factor. Remember, just because you qualify for a certain amount on a Tucson property does not mean that you need to spend that much.

Five-Year Plan

Think about the next five years. Do you plan on getting married? Starting a family? Retiring? Even buying a new car affects your affordability factor. Stick to a budget based on what you can afford today. Then, you should be able to handle your house payment in the future without any issue.

Mortgage Pre-Approval

Another way to understand your affordability factor is by obtaining a pre-approval from your lender. They look at your credit score, your bank statements, and all of your other financial information over the past two years to help determine how high of a loan you qualify for. Again, keep in mind that you do not need to spend the maximum amount a bank says you can afford, though. Stick within a budget that you feel comfortable with so you do not overextend yourself. A pre-approval letter also strengthens your offer when you find a home you like.

Your Tucson REALTOR® can help you with any questions you may have as well as suggest potential lenders to talk to about your home purchase. Nerd Wallet offers a fantastic, easy-to-use Affordability Calculator to help you determine how much home you can afford right now based on several factors. Feel free to contact me when you are ready to start looking for your next Tucson home.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

Last year, entertainment almost disappeared completely due to COVID concerns. Luckily, many places adapted as best they could. (Drive-through Thanksgiving dinner. Socially-distant Tucson Christmas lights.) Let's face it. Most of us feel a little stir-crazy staying at home no matter the reason. Thankfully, a beloved family tradition here in Tucson found a way to adapt to COVID times as well: the Zoppe Family Circus. 

What: Zoppe Family Circus
Where: Mercado San Agustin (100 S Avenida del Convento)
When: Every Wednesday through Sunday until January 31st
Cost: $49 to $199 per vehicle
Contact: Mercado District (520) 461-1107

Zoppe Family Circus 2021

The Zoppe Family Circus dates all the way back to 1842. Their founders' traditions passed on from generation to generation and continue well into the 21st century with today's performers. Usually, they enjoy interacting up close with the audience to make them part of the magic of the circus. However, this year, they must abide by COVID rules. But instead of canceling the event altogether, they chose to change things up by allowing their audience to watch from the comfort of their own vehicles.

How It Works

Just like a drive-in movie, you listen to the performers through your car stereo. Large screens set up next to the stage allow easy viewing from even the furthest row back. They allow only 100 cars per performance. Parking spaces radiate out in sections from the stage, the closest of which is the VIP section (naturally). Each subsequent section takes you out further from the stage and costs a bit less per vehicle. "Seating" is available on a first-come/first-served basis for your section. Gates open an hour before the show begins. Tailgating will be allowed but only if you observe social distancing rules. Portable restrooms will be set up around the lot. Make sure you bring your face masks to wear to and from the restrooms. No pets allowed.

Tickets

The circus remains "dark" (no shows) on Mondays and Tuesdays. Every Wednesday through Sunday, the performers put on a show at 7 pm. with a matinee thrown in at 4 pm on Fridays, Saturdays, and Sundays. Tickets for the Zoppe Family Circus cost:

• $49 for Section 6
• $79 for Section 5
• $149 for Section 4
• $159 for Section 3
• $175 for Section 2
• $199 for VIP (front row)

Keep in mind that these are all per vehicle. You cannot bring more people inside your vehicle than the maximum amount of seatbelts will allow. No limos, RVs, or buses allowed. Purchase your tickets online at the Zoppe Family Circus website.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

You purchased your Tucson home several years ago. It needs a bit of updating. Perhaps you are considering selling it sometime this year. But to keep up with the competition, you need to make some improvements first. Tap into your home's equity through either a HELOC or a Home Equity Loan.

How to Tap Into Your Home's Equity

Basic Equity Loan Info

Whether you use a home equity loan or a HELOC, both offer very competitive interest rates. Lenders will put a lien against your property in order to protect them in case of default on your part. So, if you do not pay, you run the risk of losing your Tucson home. That is why it is important to consider which loan works best for your situation and only borrow what you absolutely need.

Home Equity Loan

A home equity loan uses the equity built up in your Tucson home as collateral and provides funds in a lump sum. (As a reminder, equity equals the difference between what you currently owe on your home loan and your home's value.) This works great if you need to pay for a large expense, such as a major kitchen renovation. Typically, lenders offer fixed rates for these types of loans. Your monthly payment includes both principal and interest from the very first payment. Also, you may find that you end up paying the same types of fees that were included in the closing costs on your original mortgage loan. While some banks may go as low as $10,000 on a home equity loan, many require you to borrow at least $25,000. 

HELOC (Home Equity Line of Credit)

While a HELOC also uses your equity as collateral, it works quite differently than a home equity loan. Instead of a lump sum of cash, the bank opens up a line of credit (much like a secured credit card). In fact, you might even receive a credit card linked to this account to use as needed. Other ways to access these funds include an online transfer or writing a check against the account.

Banks allow you to only pay the interest during the draw period of a HELOC (usually between five and ten years). After that, you must pay both principal and interest. This drastically increases your monthly payment. If possible, it is best to pay a bit of both each month so as to avoid sticker shock later. 

Unlike a home equity loan, you may use as much or as little of your line of credit as you want. And you can dip into it more than once if needed (as long as you still have money left in your line of credit). You only pay interest on however much you end up using. That helps for things like making ends meet due to a job loss. 

Talk to your lender about the differences between a HELOC and a home equity loan. Weigh the pros and cons of both to determine which one works best for you. 

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

With all of the craziness happening in the world last year, many people started their holiday decorating early. In fact, most tree lots sold out just a couple of weeks before Christmas. Well, now that we welcomed the new year last week, it is time to take down the decorations. But if the City of Tucson refuses to pick up our old Christmas trees, where do we take them? Tucson TreeCycle 2021 to the rescue!

Tucson TreeCycle 2021

What to Do

Would you like to participate in the Tucson TreeCycle 2021 program? Great! First, take all of the decorations, lights, tinsel, etc. off of your tree. Next, take off the stand. Finally, take it to one of eight conveniently located TreeCycle facilities located around town. Just make sure you do it by the end of business on January 17th. Trees must be dropped off during business hours. They will not accept trees left outside the facility. Put all other green waste in your bin at home for regular curbside pickup.

Where to Go

Visit any of the following locations anytime during daylight hours (except as noted):

• Golf Links Sports Park - 2400 S Craycroft
• Joaquin Murrieta Park - 1400 N Silverbell Rd
• Los Reales Landfill - 5300 Los Reales Rd (6 am to 5 pm Monday thru Saturday)
• Oro Valley Naranja Park - 810 W Naranja Dr
• Purple Heart Park - 10050 E Rita Rd
• Randolph Golf Course - 600 S Alvernon Way
• Tank's Ina Land Reclamation Facility - 5300 W Inda Rd (7 am to 3:30 pm Monday thru Friday, 7 am to 2 pm Saturday)
• Tank's Speedway Recycling - 7301 E Speedway (7 am to 4 pm Monday thru Friday, 7 am to 2 pm Saturday)
• Tucson Rodeo Grounds - On 3rd, N of Irvington

Unfortunately, the City will not be hosting their Merry Mulch event this year. However, all trees received will be ground down into mulch and used at the City's new composting facility. Please feel free to contact the TreeCycle information line at (520) 791-5000 or visit their website if you have any questions.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

Now may be a great time to sell your Tucson home. But you like where you live. You just might like to see your monthly payment decrease. Fortunately, interest rates hit their all-time low this year. In fact, as of the writing of this post, Wells Fargo reports a 2.5% interest rate for a 30-year fixed-rate loan. Refinancing your mortgage loan may sound like a better option. While there are several reasons why a refi might be right for you, that is not always the case. 

Reasons to Refinance Your Tucson Home

Lower Interest Rate

Like I said above, one of the top reasons to refi your home loan is to lower the interest rate. In turn, this lowers your monthly payment. Then, you can take the money you save and use it to pay off your debts, create an emergency fund, or start investing in a retirement plan.

Bye, Bye PMI

Lowering your interest rate is not the only reason to refinance your Tucson home. If you put less than 20% of the purchase price down when you bought your home, you have been paying an extra fee each month for PMI. But, if the equity in your home rose to more than 20%, you can now stop paying it by refinancing. That saves you even more money to use in other ways.

Change Length of Mortgage

Did you purchase your Tucson home using a 30-year mortgage loan? A refi could shorten that to 15 or 20 years, saving you thousands of dollars in interest. However, you will pay more per month for your mortgage payment. With a lower interest rate, though, the increase could still be affordable. Check with your lender to find out more.

Exit Adjustable, Enter Fixed

An adjustable-rate mortgage (ARM) allows buyers to purchase a home with less money. But over time, the rate could climb much higher. A refi allows you to change your adjustable-rate to a more steady fixed-rate mortgage. That way, your payment remains steady for the life of the loan. That makes budgeting a little easier. After all, history shows that interest rates will not stay this low forever. 

Take Advantage of Your Equity

If you have owned your home for a couple of years, you most likely saw your equity increase. By refinancing, you can take advantage of that equity without having to sell your Tucson home (cash-out refi). This not only lowers your interest rate, but it allows you to use some of your equity to (again) pay off debts, perform major home improvements, or invest in your future. Another option for you to use your equity would be through a HELOC (Home Equity Line of Credit). Talk to your lender to find out which option would work best for your current situation.

Reason Not to Refi

Now, refinancing is not for everyone. For one thing, it does come with a cost. Typically, these costs range from 1 to 1.5% of the balance of your mortgage loan. So, if you owe $300,000 on your Tucson home, you might expect to pay anywhere from $3000 to $4500 in costs and fees to refinance on average. If you save $200 a month on your new mortgage payment, it would take 15 to 23 months to break even. If you plan on staying in your home for a while, this would not matter. However, if you plan on selling it in 2021, you will not have totally recouped your costs. Only you can determine whether or not it is worth it to refinance your home. 

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

Selling a home can be stressful even in a seller's market. Traffic may slow down during the holidays, but buyers still seek out homes to purchase. Did you list your Tucson home a few weeks ago but still have not put a "sold" sign up yet? Most of the time, a slight change may fix this. Other times, though, things may be completely out of your control.

Why Hasn't My Tucson Home Sold Yet?

Asking Price is Too High

In a seller's market, a homeowner needs to resist the urge to overprice their Tucson home. Your Tucson REALTOR® can help you determine an appropriate listing price for the market. You need to hire someone with experience in the local market. Let them run comps on recently sold homes in your neighborhood. If you hire the right person, you should be able to trust what they suggest for a listing price. So, listen to them and take their advice. Otherwise, your house might continue to languish on the market for a while to come.

Accessibility Issues

When buyers want to see a property, it might not be at the most convenient time for you. Therefore, you must remain flexible and allow tours whenever possible. Limiting accessibility limits potential buyers. This also means that you need to keep your Tucson home looking show-ready at all times. You never know when your buyer might walk through your front door.

One-of-a-Kind Property

"Quirky" homes tend to take longer to sell simply because they need to find their audience. Now, that does not mean that they will never sell. It just might mean that your marketing focus needs to shift. Talk to your Tucson REALTOR® if you have any questions.

Not Considering ALL Offers

Any offer should be considered a starting point to negotiations for your Tucson home...even a lowball offer. Keep an open mind. Take your emotions out of the equation. Talk to your agent about the absolute minimum price you are willing to accept for your property. This helps them know how to handle negotiations and where to set a counter offer.

Order of Listing Photos

Believe it or not, the order of your online photos might turn off buyers. Most buyers turn to the internet first when looking for a new home. The first photograph they see needs to be the best photo of your Tucson home. Keep all your best photos for the beginning of the series of photos. This might be the front of your house. But it could also be an interior photo (awesome kitchen, huge family room, Grade A master bath). It might even be an amazing view from your backyard or master bedroom overlooking a lake or the mountains. But before you even take photos for your listing, make sure your home is clean and properly staged. 

Bad Timing

Finally, your Tucson home might not have sold simply due to bad timing. Fall and winter tend to slow down in the real estate market in normal years. But, as the global pandemic continues, economic factors may cause buyers to hesitate. You might just need to be patient.

When you are ready to put your home on the market, contact me.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

When writing up an offer on a Tucson home, buyers might include some contingencies. These are conditions that need to be met before a sale can be completed. Beware, though. The more contingencies you include in your offer, the higher the chance that a seller might overlook or decline it. Talk to your Tucson REALTOR® to determine which common contingencies you should include and which you should avoid including in your offer. 

Common Contingencies When Buying a Tucson Home

Inspection

Even when buying a newly constructed home, always get a home inspection done on it even if you decide not to make it contingent on the home sale. An inspection helps identify current and possible future problems on a property. These may include mold or pest issues. If you do add it as a contingency, it allows you to go back to the seller and negotiate either a lower sale price to cover the cost of repairs or the requirement that these repairs are fixed before the sale is final. If both parties cannot reach an agreement, an inspection contingency allows the buyer to walk away from the sale with their earnest money deposit in hand.

Financing

Another one of the common contingencies we see in real estate is the financing contingency. If you need a loan but end up not qualifying for one, this contingency allows you to walk away from the deal. However, in today's market, it is highly recommended that you start the loan application process as early as possible in your Tucscon home search. Sellers like to see a loan approval letter included with an offer. That just means one less contingency to think about. That makes sellers happy.

Appraisal

Part of the loan approval process includes a property appraisal. A lender will not approve a loan for more than the value of the property. If an appraisal comes in low, a buyer must either come up with the difference out of pocket or try to negotiate the sale price down. That's where the appraisal contingency comes in to play. If negotiations reach an impasse, the buyer walks away with their earnest money intact.

Home Sale

Yet another one of the common contingencies we see in the real estate market is the home sale contingency. Many buyers need to sell their current house in order to qualify for a loan on a new Tucson home. So, in the past, buyers would put in a home sale contingency to cover them in case their property did not sell in a timely manner. Nowadays, however, buyers rarely use this contingency. Sellers never liked this in the first place. After all, they take their property off the market during escrow. If a buyer's home does not sell, they simply walk away from the deal. But the seller must then put their home back up on the market and start all over again. They lose both time on the market and exposure to other potential buyers. If you do include this contingency, beware that it might actually hurt your offer.

Title

Finally, we have the title contingency. Every transaction includes a title search. This shows who legally owned the property over the years. It also uncovers any liens or judgments against the property. These must be resolved before the final paperwork is signed. If something comes up that cannot be resolved before closing, the title contingency allows the buyer to walk away.

Always discuss these common contingencies with your Tucson REALTOR® before submitting your offer on a Tucson property. You want to protect yourself without irritating the seller. That is a fine line that an experienced, knowledgeable REALTOR® can help you with.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

Even with so much chaos happening around the world, it feels like we just celebrated Halloween. And Thanksgiving was not that far behind. Now...Christmas?! In fact, you only have 16 shopping days left to complete your Christmas list. What would the season be without sparkling lights? If you and your family want to view some Tucson Christmas lights this year in a safe way, check out my helpful guide below.

Your Guide to the 2020 Tucson Christmas Lights

Tucson Botanical Gardens

From 5:30 pm to 8:30 pm every Thursday through Sunday until January 3rd, the Tucson Botanical Gardens host their annual Wanderland. Here, guests walk through a beautiful wintery wonderland of luminarias, Korean lanterns, and thousands of twinkling LED lights. Santa's mailbox accepts letters from all the good little girls and boys who visit. Download a template for your child's letter to Santa here. Then fill it out at home and bring it with you when you come to the gardens. Simply drop it off in Santa's mailbox and the staff at the gardens will make sure the jolly old elf receives it. In accordance with CDC guidelines, the Tucson Botanical Gardens limits the number of people allowed on-site at one time. Visit the gardens' website here to purchase your tickets today.

Tucson Zoo

The Tucson Zoo never disappoints at Christmastime. While it may look a little different this year, ZooLights offers a magical glimpse of the zoo at night courtesy of millions of sparkling lights. Hot cocoa keeps you warm while you walk around. Plus, you will discover several great photo ops throughout the grounds. From now until December 23rd, they offer two separate entrance times (5:30 pm and 7 pm) each night to avoid overcrowding. Plus, in case you miss those dates, visit the zoo between December 26th and December 30th for an encore presentation. You must purchase your tickets in advance and choose the time you wish to visit. But you better hurry. Time slots are filling up fast!

Downtown Tucson

Finally, downtown Tucson offers the most budget-friendly viewing of a light display this year. Free to the public, the entire downtown area lights up at night. Jacome Plaza houses the 25-foot tree. Make sure you look up when you walk around downtown, too. You should be able to spot decorations on the roofs of some buildings. The Tucson Christmas lights will be up and viewable starting at dusk each night until the end of December. Please remember to stay at least six feet away from anyone you do not live with and wear a mask for the time this is unavoidable.

Happy holidays!

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

After weeks of searching, you finally found the Tucson home of your dreams. And it fits in your budget! Now what? It is time to submit your offer. But writing an offer takes some finesse, especially in a seller's market. So, before you submit your offer, take these negotiation tips into consideration first.

Writing an Offer

The Right Price is Critical

The seller wants $250,000 for their Tucson home. Your real estate agent believes it is worth much less. Plus, it has been sitting on the market for a few months now. Even if you already received pre-approval on a $250,000 loan, take a moment. For one thing, banks usually refuse to approve a loan for more than the appraised value of a property even if your financial history says you can afford it. Secondly, why overpay for a house? On the other hand, you do not want to run the risk of making the sellers angry by lowballing them.

Before writing an offer, ask your agent to run comps on homes sold in the area in the last 30 days. See how the property in question stacks up against these houses. Then listen to your agent's advice and put together a reasonable offer. 

When is it Time to Lowball?

You want a good deal. Sometimes, that means paying the list price. Other times, it means submitting a lowball offer. But when should you lowball when writing an offer? Very rarely, the stars align and a lowball offer is the right thing to do. Has the property been on the market for several months without any action? That might be time to offer up a price much lower than the asking price. But this is a rarely used strategy and can easily backfire. Discuss your best move with your real estate agent before you make your offer.

Include a Personal Letter

It may sound old fashioned, but include a personal letter when you submit your offer. In a multiple bid situation, the final decision could easily come down to who wrote the best letter. Sometimes, it is not about the money. Did the house include a dog run? Write about how much you would love to play fetch with Fido. Are the owners empty-nesters? Talk about how you could see your own family growing up in this fabulous house. Find out what you can about the sellers' hobbies and interests. Then craft a letter that appeals to the sellers' emotions. Your agent might be able help you find out more about the owner through their contacts. Just ask.

Eliminate/Minimize Contingencies

Finally, keep your contingency list to a minimum when writing an offer. Home inspection and home sale contingencies? Smart moves to keep you covered. But hanging a home sale on whether or not the seller will change the flooring or throw in the patio furniture might not be the best contingencies to include. Even if you end up offering the highest price, the seller could decide that it is better to go with a lower offer where the buyer is willing to forgo all contingencies. Again, discuss what contingencies should be added to your offer and which are best to leave off.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate

Thinking about putting your Tucson home on the market soon? Does your property need some updating first? New tariffs helped drive up building material costs. Before you start draining your bank account, mull over these home improvement projects that offer the best ROI (return on investment), according to Remodeling Magazine's Cost vs Value Report for 2020.

Home Improvement Projects With the Best ROI

1 - Manufactured Stone Veneer

Whenever you can increase the curb appeal of your Tucson home, it is a good thing. But when you recoup the entire cost of the project at that time of sale? That's even better. The only home improvement project that Remodeling Magazine found with a 100% return was adding/updating your home's stone veneer. Manufactured stone looks just like its natural cousin. But it comes at a lower price point. It also tends to be less heavy which places less stress on your house's frame. Even at a lower cost, it still tends to be pricey with an average price tag of $9179.

2 - Garage Door

Last year, replacing the garage door ranked highest in ROI. This year, it dropped down a notch to the #2 home improvement project with the best ROI. At just over $3600 on average to replace, upgrading your garage door increases your home value by $3484, a 96.1% ROI. Since the garage tends to take a majority of the facade of your Tucson home, replacing it also helps increase your curb appeal. Consider the security features, materials, safety features, and style when looking at your options.

3 - Kitchen Remodel (Minor)

Minor kitchen remodels sit at #3 for the home improvement projects with the best ROI. When they say "minor", they really mean more cosmetic changes than anything else. Changes made during a minor kitchen remodel include paint, countertops, updating appliances, flooring, refacing cabinets, and updating fixtures. People pay an average of $22,472 to complete a remodel of this size. That may sound like a lot but it is not when you consider a major remodel costs upwards of $52,000 or more. For the cost of a minor remodel, you increase your home's value by $17,845 (a 79.4% ROI). If you're handy or know someone who is, you might be able to bring your costs down a little more. 

4 - Fiber Cement Siding Replacement

Is the siding on your Tucson home looking a little worse for wear? You might want to replace it before you list it. Make sure they use house wrap underneath to protect the structure from moisture. Homeowners pay an average of $16,064 to replace siding with new fiber cement siding. That adds $12,620 to your home's value (78.6% ROI).

5 - Vinyl Window Replacement

Finally, take a look at your windows. Replace old, cracked windows with new, insulated low-E vinyl windows. These not only look better but they also improve your energy efficiency. Buyers like that and so will your pocketbook while you live there. To replace 10 standard 3'x5' double-hung windows, it costs approximately $17,641. In turn, this adds $13,161 in value to your Tucson home's worth (76.6% ROI).

In order to compete with other homes in your neighborhood, you need your Tucson home to stand out. Before you perform any home improvement projects, consider the ROI for each to determine where best to put your money.

Rebecca Schulte, Schulte Real Estate Group, Your Source for Tucson Real Estate