What is a Bridge Loan and How Does it Work?

Even if you’re an amazing saver, sometimes you just don’t have cash on hand at the exact moment when you really need it. For example, what if your dream home comes on the market at the right price, but your money is tied up in equity in your current home? Or you need to move across the country for a new job. How can you make a down payment before your own home sells?

There are plenty of circumstances where you have to move quickly to secure a deal, and sometimes liquidating assets or securing long-term funding doesn’t happen as quickly as you need it to.

In these instances, interim funding options, like a bridge loan, can help you get the money you need to get things done.

Let’s dig a little deeper into how bridge loans work: what the rates are, the pros and cons, and an alternative source of funding you may have overlooked.

What is a Bridge Loan?

A bridge loan, also known as a swing loan, gap financing, or interim financing, is a temporary loan that bridges the gap between the down payment of a new property and the mortgage balance of your previous home.

Bridge loans tend to have six- to 12-month payoff periods and typically have higher interest rates than other types of loans. Basically, a bridge loan is a short-term loan taken out by a homeowner against their current property in order to finance the purchase of a new property.

One of the most common uses for bridge loans is to put a down payment on a new home before selling a current home. If you don’t have a contract with a home sale contingency clause or aren’t able to pay cash for the down payment on the new house, you may very well need assistance to bridge that gap.

Bridge loans often use an asset such as a current home as collateral. Borrowers generally need to have at least 20% equity in their first home in order to qualify for a bridge loan.

Buying a home? With SoFi there are no
hidden fees, and as little as 10% down.

Benefits of a Bridge Loan

The main benefit of a bridge loan is the ability to quickly secure short-term financing without having to wait until you sell your home. You may be able to delay payments for several months and you have the option of paying off the loan before or after you secure long-term financing.

Bridge loans can be a major benefit in a time crunch: the home seller can immediately put their home on the market and use the funds to move into another house. This can be especially helpful if you’re a homeowner going through a period of sudden transition.

For example, if you have a new job in another city or are trying to time your move with the beginning of your children’s school year, a bridge loan could be helpful. Bridge loans are not a replacement for a mortgage but a temporary solution. They are generally designed to be repaid within six months to three years.

Drawbacks of a Bridge Loan

Bridge loans may help you get fast financing, but they can come with some risks. Because qualifying and being approved for a bridge loan can be a faster process than that of an unsecured personal loan, bridge loan rates and terms can vary widely from lender to lender and are typically higher than market rates for mortgage loans.

Borrowers may also encounter differences in how lenders deal with interest payments. Some require monthly interest payments while others require an upfront or end-of-term lump sum interest payment.

Bridge mortgage loans are secured with the borrower’s current home, which means it can be foreclosed on if the bridge loan is defaulted on. The standards for qualifying for a bridge loan tend to be high, typically requiring a low debt-to-income ratio and excellent credit. After all, you’re trying to prove that you can afford not one, but two homes.The short-term financing of a bridge loan can also be one of the major drawbacks.

Until you are able to sell your previous home, you’ll be carrying two mortgages and paying down the bridge loan. If you are trying to sell a home in a weak real estate market, a bridge loan can create financial strain because you might not have the time you need to let your home sit on the market and wait for a prospective buyer.

Exploring Other Financial Options

Borrowing a bridge loan can be risky. You may be required to start paying off the mortgage on the new home and the bridge loan at the same time. You’re also depending on the sale of your current home in order to pay off the bridge loan, which could take time depending on the state of the real estate market as you are selling your home. Bridge loans can be risky investments for banks, too, which means they can be difficult to get.

Due to the risks and costs that come with a bridge mortgage loan, borrowers may want to consider one of these other options.

HELOC

One alternative to a bridge loan is a home equity line of credit (HELOC) which allows you to draw equity against the value of your current home in a similar way to a bridge loan.

With a HELOC you’ll usually get a better interest rate, pay lower closing costs, and have more time to repay the loan than you would with a bridge loan. It’s important to note that some lenders may not approve a HELOC on a home that is currently on the market for sale.

If you are considering borrowing a HELOC, you may want to look for one without any prepayment penalties or early closure fees, which could significantly cut into your profits in the event that your home sells quickly.

Personal Loan

Another alternative to a bridge loan is taking out an unsecured personal loan. If you have a decent credit history and a steady income, an unsecured personal loan can be a viable option that provides additional flexibility at more competitive rates than those typical of bridge loan interest rates.

In addition, because unsecured personal loan lending is a more diversified market, you can likely find unsecured personal loans without origination fees. Personal loans, including the ones available with SoFi, are often unsecured and therefore require no collateral.

The Takeaway

No matter what, make sure to do your homework. Thorough research is what will help you find the option that works best for your personal situation and get you the home you need at a cost that works for your budget.

And when you borrow an unsecured personal loan with SoFi there are no prepayment penalties, which means if your home sells quickly, you can pay off the loan without losing any of your profits.

Looking to move into a new home? With SoFi Personal Loans, you can bridge the gap so that you can move into your new house now instead of later.

Want to learn whether a SoFi Personal Loan can help you make a down payment on another home before you sell your current home? Checking your rates takes just two minutes.


SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Source: sofi.com

Solar Panel Financing in 4 Ways

Installing solar panels in your home can be one way to do your part for the planet, but the cost to purchase and have them installed might be a deterrent. Even if you know you’ll save money over the long term, it may be hard to find the funds for solar panels in the interim.

Before you make a decision either way, a couple of things to consider are whether solar panels are worth the cost to you and what methods are available for solar panel financing.

The Cost of Solar Panels

When it comes to the cost of solar panels, there isn’t a fixed number. How much it will cost will depend on how big a system you want to install. In 2021, it’s estimated that the cost is typically around $3 per watt for a complete solar panel system with installation.

Since the average buyer installs a 6,200-watt system, the cost averages $18,600 per system. However, if you decide that you need more watts because you have a bigger family or a bigger home, the cost of solar panels will run higher.

Similarly, if you have a smaller family or a smaller home, solar panels might cost you less. Either way, buying solar panels can be expensive, and it may require some kind of solar power financing to purchase panels.

Potential Benefits of Solar Panels

One of the main benefits of solar panels is the potential to reduce or completely eliminate your energy bills. Depending on how much sunlight there is where you live, how many panels you install, and your energy use, you could potentially receive enough power through solar panels to completely meet your needs.

Installing solar panels could result in significant savings, especially if you live in an area where power is expensive. Given that the average monthly U.S. household energy costs are about $122, that easily could translate into significant savings.

Even with the cost of solar panel installation, the expense of the purchase can be recouped in an average of eight to 11 years, depending on your installation costs, how much electricity your panels produce, how much electricity costs in your area, and how your local electric company regulates solar power. After recouping installation costs, the amount you’ll potentially save over the life of your panels can also add up.

Another benefit of solar panels is the potential to increase the resale value of your home. Research has shown that, on average, the resale value of a home with solar panels increases by about $15,000.

Solar panels are also known to extend the life of a roof since they shelter the roof and protect it from damage in storms and everyday wear and tear. If a homeowner plans to replace their home’s entire roof at the same time as a solar panel installation, it’s less likely that they’ll need to re-roof during the solar panel lifetime.

For some people, one of the biggest benefits of installing solar panels, however, is knowing that they’re using renewable energy and helping to reduce greenhouse gasses. This could especially be important for those living in a state where the majority of the energy generated is through non-renewables power sources.

Potential Drawbacks of Solar Panels

Solar panels have the potential to save homeowners money and do a lot of good for the planet, but not everyone buys them because they do tend to have a large upfront cost. And while solar power financing can help make solar energy possible for more people, not everyone qualifies.

Another drawback to solar energy is that how much you can save on energy costs depends entirely on the weather. If there is a long stretch of overcast weather or if you live in an area that doesn’t get a lot of sun, for example, you might not be able to generate enough solar energy to take care of your energy needs. Battery storage systems have vastly improved in the last decade, however, and can improve the overall solar setup.

Solar energy also uses a lot of space, so make sure your roof is large enough to have enough panels to power your entire home. If you choose not to put them on your roof, they will take up space in your yard.

Saving Money by Installing Solar Panels

More than 2.5 million homeowners in America currently have solar panels—and the savings can quickly add up. Not only can solar panels last for 25 years or longer, but a homeowner who might spend an average of $150 a month on an electric bill would save more than $65,000 in that same amount of time.

Of course, the cost of solar panel installation upfront can be prohibitive, so it’s best to examine your solar panel financing options before you proceed with a purchase.

Four Options for Solar Panel Financing

How many years can you finance solar panels? The average loan duration for solar panel financing is 10 to 20 years, though you may find loans with maturity periods ranging anywhere from three years to 30.

If you’re looking into solar panel financing, here are a few things you should consider:

1. Tax Credits and Rebates

Smart solar power financing strategy includes the use of all available tax credits and rebates. The federal government currently offers tax benefits on solar panels installed through Dec. 31, 2023, and many states offer rebates that further reduce the cost. To find out more about what’s offered in your area, check out the Database of State Incentives for Renewables & Efficiency®.

On top of that, many states also offer Solar Renewable Energy Credits (SRECs) . Homeowners who own their solar power systems can sell these credits to utility companies throughout the year.

If you generate excess energy, you can also potentially sell this back to the utility company, which is also a key part of any solar panel financing strategy. While that won’t pay for your system upfront, it could help you cover part of the costs of solar financing. Check with a tax professional to see if you are eligible for any of these benefits.

2. Solar Panel Leases

One unique strategy for solar panel financing is to lease your solar panel. With a lease, a company typically pays to install the panels on your roof and charges you a monthly fee over the term of the lease. The company owns the panels and remains responsible for any maintenance required on them.

While you will not be eligible for federal tax credits if you go this route, solar panel leasing may be a good option for those who struggle to find solar panel financing or don’t qualify for a solar panel loan.

3. Secured Solar Panel Loans

Since you are adding to your home, you may opt to use a Home Equity Line of Credit (HELOC) to finance solar panels. This is a type of revolving credit line that is secured by your home equity. Because it is a secured loan, you may qualify for a relatively low interest rate. However, if you fail to pay it back, the lender can take your home as repayment for the loan. Also, you need to have equity in your home to qualify for a HELOC.

4. Unsecured Solar Panel Loans

An unsecured solar panel loan is an unsecured personal loan that you can use to purchase solar panels without requiring that you have home equity. To qualify, the lender considers your income and your credit rating (among other financial factors that vary from lender to lender). As unsecured loans are installment loans, you may seek out a loan term that fits your budget.

The Tax Benefits of Solar Panels

Installing solar panels can help reduce a homeowner’s federal income tax due in the year the installation is complete. There is a 26% tax credit in place for systems installed in 2020-2022, and 22% for systems installed in 2023. The solar panel tax credit expires starting in 2024 unless Congress renews it before then.

To qualify for the solar panel tax credit, your solar panels must be installed at your primary or secondary U.S. residence between Jan. 1, 2006, and Dec. 31, 2023. You also must own the solar panel system, i.e. you purchased it with cash or solar panel financing but you are neither leasing nor are in an arrangement to purchase electricity generated by a system you do not own—and it must be new or being used for the first time. The credit can only be claimed on the original installation of the solar equipment.

You might be able to take advantage of state and city incentives, including rebates, as well. To see what’s available in your area, refer to the Database of State Incentives for Renewables & Efficiency .

The Takeaway

There’s no question that solar panels are environmentally friendly. Over time they can also be economically friendly, saving homeowners money on their electricity bill. Doing some research about residential solar panels and financing available for this home improvement are good steps to take to see if it’s the right choice for your home.

SoFi Personal Loans have competitive rates and loan terms that may fit your budget. Since they’re unsecured, there is no need to have home equity to be eligible.

Are you interested in solar panel financing? See if you pre-qualify for a personal loan from SoFi in just two minutes.


SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.

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Source: sofi.com

Should I Pay Off Debt Before Buying a House?

Ready to buy your own home? There’s a lot to consider, especially if this is your first time applying for a mortgage and you’re carrying debt. Debt is not necessarily a dealbreaker by any means.

Is it a good idea to pay off debt or save for a house? Is it possible to do both? Understanding how the home loan process works could help you make those decisions—and avoid mistakes that could keep you from getting your dream home.

When a lender considers you for a mortgage, you can expect debt to be a factor when it comes to how much you’ll be able to borrow, the interest rate you might pay, and other terms of the loan.

Understand Your Debt-to-Income Ratio

When lenders want to be sure borrowers can responsibly manage a mortgage payment along with the debt they’re carrying, they typically use a formula called the debt-to-income ratio (DTI).

The DTI ratio is calculated by dividing a borrower’s recurring monthly debt payments (future mortgage, credit cards, student loans, car loans, etc.) by gross monthly income.

The lower the DTI, the less risky borrowers may appear to lenders, who traditionally have hoped to see that all debts combined do not exceed 43% of gross earnings.

Here’s an example:

Let’s say a couple pays $600 combined each month for their auto loans, $240 for a student loan, and $200 toward credit card debt, and they want to have a $2,000 mortgage payment. If their combined gross monthly income is $8,000, their DTI ratio would be 38% ($3,040 is 38% of $8,000).

The couple in our example is on track to get their loan. But if they wanted to qualify for a higher loan amount, they might decide to reduce their credit card balances before applying.

That 43% threshold isn’t set in stone, by the way. Some mortgage lenders will have their own preferred number, and some may make exceptions based on individual circumstances. Still, it can be helpful to know where you stand before you start the homebuying process.

Consider How Debt Affects Your Credit Score

A mediocre credit score doesn’t necessarily mean you won’t be able to get a mortgage. Lenders also look at employment history, income, and other factors when making their decisions. But your credit score and the information on your credit reports likely will play a significant role in determining whether you’ll qualify for the mortgage you want and the interest rate you want to pay.

Typically, a FICO® Score of 620 will be enough to get a conventional mortgage, but someone with a lower score still may be able to qualify.

Or they might be eligible for an FHA- or VA-backed loan. The bottom line: The higher your score, the more options you can expect to have when applying for a loan.

A few factors go into determining a credit score, but payment history and credit usage are the categories that hold the most weight. Payment history takes into account your record of making on-time or late payments, or if you’ve filed for bankruptcy.

Credit usage looks at how much you owe in loans and on your credit cards. An important consideration in this category is your credit utilization rate, which is how much revolving credit you have available compared with how much you’re using. The lower your rate, the better. Most lenders prefer a utilization rate under 30%.

Does that mean you should pay off all credit card debt before buying a house?

Nope. Debt isn’t the devil when it comes to your credit score. Borrowers who show that they can responsibly manage some debt and make timely payments can expect to maintain a good score. Meanwhile, not having any credit history at all could be a problem when applying for a loan.

The key is in consistency—so borrowers may want to avoid making big payments, big purchases, or balance transfers as they go through the loan process. Mortgage underwriters may question any noticeable changes in your credit score during this time.

Don’t Forget, You May Need Ready Cash

Making big debt payments also could cause problems if it leaves you short of cash for other things you might need as you move through the homebuying process, including the following.

Down Payment

Whether your goal is to put down 20% or a smaller amount (the median down payment for recent buyers was 12%, according to a 2021 National Association of Realtors® report), you’ll want to have that money ready when you find the home you hope to buy.

Closing Costs

The cost of home appraisals, inspections, title searches, etc., can add up quickly. Average closing costs are 2% to 5% of the full loan amount.

Moving Expenses

Even a local move can cost hundreds or even thousands of dollars, so you’ll want to factor relocation expenses into your budget. If you’re moving for work, your employer could offer to cover some or all of those costs, but you may have to pay upfront and wait to be reimbursed.

Remodeling and Redecorating Costs

You may want to leave yourself a little cash to cover any new furniture, paint, renovation projects, or other things you require to move into your home.

Be Aware of Housing Market Trends

Trends in the housing market may help you with prioritizing saving or paying down debt. So it’s a good idea to pay attention to what’s going on with the overall economy, your local real estate market, and real estate trends in general.

Here are some things to watch for.

Interest Rates

When interest rates are low, homeownership is more affordable. A lower interest rate keeps the monthly payment down and reduces the long-term cost of owning a home.

Rising interest rates aren’t necessarily a bad thing, however, for buyers who’ve been struggling to find a home in a seller’s market. If higher rates thin the herd of potential buyers, a seller may be more open to negotiating and lowering a home’s listing price.

Either way, it’s good to be aware of where rates are and where they might be going.

Inventory

When you start your home search, you may want to check on the average amount of time homes in your desired location sit on the market. This can be a good indicator of how many houses are for sale in your area and how many buyers are out there looking. (A local real estate agent can help you get this information.)

If inventory is low and buyers are snapping up houses, you may have trouble finding a house at the price you want to pay. If inventory is high, it’s considered a buyer’s market and you may be able to get a lower price on your dream home.

Price

If you pay too much and then decide to sell, you could have a hard time recouping your money.

The goal, of course, is to find the right home at the right price, with the right mortgage and interest rate, when you have your financial ducks in a row.

If the trends are telling you to wait, you may decide to prioritize paying off your debts and working on your credit score.

Have debt? See how a credit card consolidation
loan can help get you on track to pay off your debt.

Remember, You Can Modify Your Mortgage Terms

If you already have a mortgage, you can make some adjustments to the original loan by refinancing to different terms.

Refinancing can help borrowers who are looking for a lower interest rate, a shorter loan term, or the opportunity to stop paying for private mortgage insurance or a mortgage insurance premium.

Consider a Debt Payoff Plan

If you decide to make paying down your debt your goal, it can be useful to come up with a plan that gets you where you want to be.

Because here’s the thing: All debt is not created equal. Credit card debt interest rates are typically higher than other types of borrowed money, so those balances are more expensive to carry over time. Also, lenders generally look at loans for education as “good debt” and credit card debt as “bad debt,” which means they might be more understanding about your student loan debt when you apply for a mortgage. (Car loans are usually categorized as somewhere in the middle of the two.)

As long as you’re making the required payments on all your obligations, it may make sense to focus on dumping some credit card debt.

The Takeaway

Should you pay off debt before buying a house? Not necessarily, but you can expect lenders to take into consideration how much debt you have and what kind it is. Considering a solution that might reduce your payments or lower your interest rate could improve your chances of getting the home loan you want.

When you consolidate your credit card debt, you pay off each one of your credit cards with a single fixed-rate personal loan with a set term. The interest rate may be lower than the rates on your credit cards.

Taking control of your debt can bring you one step closer to owning a home. View your rate on a SoFi Personal Loan.


SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.

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Source: sofi.com

What is the Cost to Rewire a House?

Electrical issues are the third most common cause of house fires in the United States. Updating the wiring in a house is not an inexpensive undertaking, but keeping old wiring could have disastrous consequences.

Modern technology demands are also reasons for rewiring a house. Powering multiple electronic devices, having adequate interior and exterior lighting, and heating and cooling a home to today’s standards are more difficult if a home’s electrical system is not up to the task.

What Is Rewiring Your Home?

Rewiring a home involves removing the outdated wiring inside a home’s walls and installing new, modern wiring that can safely meet today’s electrical needs. Rewiring is typically done by a licensed electrician who strips out the old wiring and runs new wiring throughout the entire house, installs a new circuit breaker panel to handle the load of the new wiring system, and ensures building codes governing electric wiring are met.

In the past, families may have needed only one or two outlets per room because there were fewer electric items used. Now, homeowners use outlets for phone chargers, routers, computers, TVs, video game consoles, and speaker systems—and that doesn’t even cover kitchen gadgets that have come into common use over the years. All of these modern electronics can overload older electrical wiring that wasn’t designed for our increasing technology needs.

When Do You Need to Rewire Your Home?

Common circumstances that indicate a home might need to be rewired are flickering lights, outlets making a popping sound, or tripped breakers. When buying an older home, a home inspection during the buying process typically reveals if rewiring is recommended or necessary.

Building inspectors examine both the inside and outside of a house to try to determine if the home’s wiring is up to date or will need to be replaced. Even before a home inspection, prospective home buyers may be able to get a good idea of how the home is wired by peeking into the attic, basement, or crawl space.

One type of wiring to look for that will almost certainly indicate old wiring is knob and tube wiring, which was common through the mid 1900s. With this type of wiring, electrical connections aren’t made in plastic or metal junction boxes. Instead, it uses ceramic tubes to protect the wire going through studs or joists and ceramic knobs as supports along the wire.

Another way to check for outdated wiring is to find the electrical panel and see if it has modern breaker switches or round fuses. The round fuses indicate the system is outdated, and rewiring a house might be recommended.

It can be helpful to ask the seller, too, since a lot of older homes may still have non-working remnants of these older systems, even after being retrofitted with something modern. Seller disclosure laws vary from state to state, so it’s not recommended to depend on the good faith of the seller, but for the home buyer to do their own examination of a home’s working systems.

If you’re currently living in a home with older wiring and notice that your circuit breakers trip often, lights flicker frequently, the light switches fees warm to the touch, or there is a burning or otherwise odd smell coming from an outlet, scheduling an appointment with an electrician to have the electrical system inspected is a good idea.

How Much Does It Cost To Rewire a 1600 to 2000 Sq Ft House?

Many variables contribute to the cost of rewiring a house such as square footage and how easy or difficult it is to access the space, but on average it will cost between $6 and $10 a square foot to rewire a house.

The costs for rewiring generally include labor and materials, but not new fixtures the homeowner might want to have installed by the electrician. A 1600-square-foot house typically ranges from $4,800 to $8,000 to rewire. A 2,000-square-foot house typically ranges from $6,000 to $10,000 to rewire.

Rewiring an older home can cost upwards of $30,000 because the wiring might be more difficult to access, the panel and other components may need to be upgraded, and the job just might be more involved overall.

Can You Rewire a House Without Removing Drywall?

If you have access to a basement, attic, or crawl space, a house may be able to be rewired without removing much, if any, drywall. Having access to the blueprint of the house will help, since the circuitry plan is typically included on a blueprint. Being able to access a crawlspace, basement, or attic space can also make rewiring a house simpler.

To rewire without removing drywall, the usual process is to cut openings at the tops or bottoms of the walls for the wiring to be pulled through. Another way is to cut a section of drywall around the perimeter of the room to make it easier to access studs.

Is It Worth It to Rewire a House?

Although the cost to rewire a house might seem cost-prohibitive when buying a home, owners of older homes with outdated wiring systems may find that the average cost to rewire a house can be money well spent.

If your electrical system is out of date, it’s likely worth it to rewire the house. Replacing outdated wiring can help prevent a house fire and potentially add value to the property. While not generally included in the average cost to rewire a house, updated, energy-efficient fixtures are sometimes included in a remodeling job of this scope and can potentially lower the homeowner’s utility costs.

How Long Does It Take to Rewire a House?

The amount of time it takes to rewire a house can vary based on the electrician’s existing work schedule, as well as the size of the house and any problems encountered through the process, but on average it takes around a week for an electrician crew to rewire a 2,000-square-foot home. You may consider staying with family or a friend as rewiring a home likely will disrupt your living space for that duration of time.

Planning for Rewiring Construction

Some people choose to move out of their home during the rewiring process so that electricians can quickly access old wiring and avoid the construction mess. This means planning for a week of hotel living and restaurant dining while the work is completed.

Additionally, because the electricians will be cutting into your walls (and potentially ceilings and floors, too), you may need to budget additional funds for patches, paint, and other repair work.

The Takeaway

Having an electrician rewire your house is a major expense of homeownership and some short-term inconvenience. But you will make up for it by knowing that your home has been updated with updated wiring that is safe for you and your family and will keep up with modern electrical demands.

Wondering how you’re going to pay for it all? An unsecured personal loan is one way to pay for the average cost to rewire a house. SoFi Personal Loans have competitive interest rates with fixed payments and no fees. No collateral is needed, so there’s no need to have a certain amount of home equity to be considered when applying.

Learn more about how a personal loan from SoFi can help cover the cost of rewiring a house.


SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Source: sofi.com

House or Condo: Which is Right For You? Take The Quiz

There’s something to be said for having peace of mind, even if it might cost you. For many, that can easily take the form of having a place to truly call your own—space that gives you privacy and the ability to customize it to your dream preferences.

Maybe you’re already picturing your deep sunken tub, eye-catching fireplace, and garden with its organically-grown fresh vegetables and bright, sweet-smelling flowers that will attract and support the honeybees.

Or, maybe the idea of having a place all your own appeals to you, but you sure don’t want to get tied down with all the upkeep that goes along with a home purchase—and the need for privacy doesn’t rank very high on your list, at all. What really matters to you is a sense of community.

If you find yourself nodding when you read the first paragraph, then it’s very possible that buying a house could be the right move for you; if you have that same type of positive reaction when reading the second paragraph, then a condo may be the better choice.

But, is it really that simple? To find out what might be right for you, we invite you to take our House or Condo Quiz—and, unlike many quizzes, this one can help to answer two important questions for you:

•   Does it make sense to purchase a home or condo, or should I stay where am I for now?
•   If it does make sense to buy, which one could be better for me? Condo or house?

Let’s get started with the quiz!

Buying a Condo vs. House

Now that you’ve taken the quiz, what do you think? Are you clear about which direction you want to take? If so, consider checking out our home affordability calculator to get a better understanding of how much house you can afford.

If not, it may be because there are several pros and cons to each choice (aren’t there, always?) and you may just need to mull them over a bit more.

Pros of Buying a House Typically Include More:

•   privacy
•   space, including storage space
•   yard
•   ability to customize your home
•   room to garden and create a pleasing outdoor space
•   control, including but not limited to having pets
•   typically no homeowners association (HOA) or HOA dues

Another pro of buying a house is that they are generally considered better investments overall.

Cons of Buying a House Typically Include:

•   higher cost
•   more work to maintain inside
•   more work to maintain outside

If, after taking the quiz and weighing the pros and cons, buying a house feels like the right choice for you, you can start brainstorming about your dream house, including its size, number of rooms, location, style and more.

Attend open houses to help decide where you could see yourself putting down roots and to see what home layout really grabs your attention. It can also be a good idea to check home prices for the type of home (size/layout) and area you are drawn to and see if it is in your price range.

Plus, SoFi offers some great home ownership resources to help you along your journey. Including a first-time home buyers guide.

Now, let’s dive into the pros and cons of buying a condo.

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Pros of Buying a Condo Typically Include:

•   more affordable
•   lower expenses
•   more ease of maintenance
•   amenities included
•   less expensive homeowners insurance
•   covered maintenance
•   security
•   community activities

Cons of Buying a Condo Typically Include:

•   less privacy
•   no yard
•   rules and restrictions (noise levels, style/colors, pets and more)
•   less overall space
•   HOA fees
•   limited parking
•   slower appreciation in value
•   easier to outgrow

Plus, the mortgage interest rates might actually be higher on a condo vs. a house, and condos can be harder to sell. Lenders sometimes charge more for loans on condo units because of the strength of the condo association financials and other factors are taken into consideration and evaluated for risk.

If, after reviewing pros and cons you decide the benefits of a condo are right up your alley, then you can start creating a list of what you definitely need in yours, along with what you’d like to have, and then start looking at your options.

When to Buy

You may know what you’d like to buy (condo vs. house) and where (in what neighborhood), but do you feel as though now is the right time? If so, fantastic!

You might decide, though, that you want to rent for a while longer under certain circumstances, which can include:

•   wanting to pay down debt first, whether that’s credit card debt or student loan debt, as just two examples
•   wanting to save more money for the down payment and any associated expenses
•   needing to boost your credit score first
•   wanting more time to look at houses/condos before deciding

Renting is typically the cheapest option available for housing, because rent can be less than typical mortgage payments in certain areas of the country. Plus, there isn’t a down payment to pay (just a one-time security deposit), and the landlord usually covers repair and maintenance costs. Renting also gives you more freedom to move and, when you decide to live somewhere else, you haven’t invested your capital into the property.

Pro tip: If you want to buy a house or condo but don’t feel financially ready (or have other reasons to wait), consider putting the decision on hold while you reconfigure your budget and get ready for home ownership. You may discover that, in a relatively short time frame, your decision has changed.

Making Your Dream Home or Condo a Reality

At SoFi, you can make your home owning dreams come true with as little as 10% down on mortgages for qualified borrowers and properties. We’ve been named a 2019 award winner for the Best Mortgage Lenders for First Time Home Buyers.

Potential benefits of choosing SoFi for your mortgage loan include a more affordable down payment that allows you to buy more house, the fact that we charge no application fees or origination fees—and that we have no prepayment penalties. The pre-qualification process is painless and you can conveniently apply online.

Find out more about applying for a mortgage loan at SoFi today!


IMPORTANT: The projections or other information generated by this quiz regarding the likelihood of various outcomes are purely hypothetical, do not reflect actual results and are not guarantees of future results. The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi Mortgages are not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com/eligibility-criteria#eligibility-mortgage for details.

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Source: sofi.com

How to Financially Prepare to Buy Your First Home

Home-buying season is coming up. With the warmer weather approaching, home buyers are eagerly waiting to find their dream place.

Since buying a house is typically the biggest purchase you’ll make, preparing your finances can give you a significant win. For example, if your credit score is high enough, you can get more competitive rates with mortgage lenders.

Besides saving up for the down payment, there are other costs with the home buying process.

If you’re looking to become a homeowner soon, let me show you how to prepare your finances so that you can get a better deal on your house and still have money left over for other expenses!

Buying a House: More Than Just the Down Payment

While most attention is given to getting a good-sized down payment ready, there’s more involved than just your mortgage payments. 

Lenders are looking at factors like income, debt to income ratio, but a huge factor is also your credit score. Your credit score is based on your credit reports. You have three credit reports and scores from each of the credit bureaus – Experian, Equifax, and TransUnion.

Want the Best Rate? Boost Your Credit Score

While the exact algorithm isn’t publicly disclosed, we do know the key factors that go into calculating your score. 

  • 35% Payment History
  • 30% Amount Owed
  • 15% Length of Credit History
  • 10% New Credit
  • 10% Types of Credit

Looking at how things are weighted, if you want to make the biggest impact on your credit score, you need to focus on your payment history and keeping your debts in check.

Let’s see how you can improve them which can help you boost your score before you start your home search.

The first thing you need to do is to get a copy of your credit report and make sure that it is accurate. Believe it or not, there is a chance that your report may have a mistake. In fact, it’s been estimated that more than 20% have an inaccuracy on their credit report. While it might be a minor detail like a misspelled name, if there’s any error with your payments or if it shows an open account that isn’t yours, that can really hurt you.

Because of the pandemic, you can now get your credit reports for free weekly over at AnnualCredit Report.com. If you do find a problem, you can then file a dispute with the credit bureau. In the meantime, keep your payment history in tiptop shape by automating them using your bank or credit union’s bill pay system.

You also want to keep in mind since lenders are assessing your finances to make sure you can handle a mortgage, you’ll want to make sure that your debt to income ratio is fairly low. Paying down your high-interest debts can be a huge win. If they are credit cards, after you pay them off, you may want to keep the accounts open at least until after you’ve bought your house. Lenders typically look favorably for those who have unused lines of credit. If you want to avoid the temptation of using it, you can tuck away your credit cards in an inconvenient, but safe place around your house.

Figuring Out How Much House You Can (Comfortably) Afford

Now that your credit report is accurate and your score has improved, it’s time for the next step in preparing your finances – finding out how much house you can afford. Besides having your mortgage lender calculate how much you can afford, it is also wise that you run the number yourselves. Chances are you have other goals than just buying a house.

When we were house hunting for our first place, we ran the numbers and then we checked them against what the lender had. With their calculations, we could ‘afford’ a significantly more expensive house. We looked at our number again and quickly realized if we went with their maximum budget, we’d be able to buy a house, but nothing else.

You may be thinking the same way. You’d love to buy a house, but you also want some money left over to enjoy it and other goals. You won’t be able to achieve them if your budget is maxed out on your house. You need to see for yourselves what you’re comfortable with so you can be a homeowner and still hit your goals. So how do you find out how much house you can afford?

The rule of thumb is that you should try to keep your mortgage no more than 2 ½ to 3 times your annual income. Let’s say that your family’s annual income is $65,000. Using that guideline, you’d be looking at homes around $163,000 – $195,000. If you’re a family making $120,000, then you can enjoy hunting houses between $300,000 – $360,000 and still have some money left over for other dreams.

Once you know how much you need to save you can use features like Mint’s Goals to keep track of your progress with the down payment. I’ve noticed that having a visual reminder has motivated many families towards their goals. As you hit certain milestones, have a small celebration.

Why Your Down Payment Matters

One of the biggest reasons why’d you like a larger down payment is to avoid paying private mortgage insurance (PMI). That gives lenders and extra assurance with the money they’re lending, but it can be an unnecessary weight on you.

Start automating transfers into savings with each payment, even if it’s a smaller amount than you hoped. You can then beef up your down payments by redirecting any windfall income (like a bonus, stimulus check or tax refund) into your savings. Having a bigger stash can be a huge help when you buy your home!

Closing Costs: What You Need to Know

You’ve saved your down payment, found an agent, and have found your dream house. Your offer was accepted. Before you celebrate, keep in mind there are some more expenses that come with the closing process.

I pulled out the paperwork from when we were buying a house a few ago and here’s what I found:

  • Appraisal
  • Home Inspection
  • Homeowners’ Insurance
  • Transfer Taxes
  • Underwriting Fee
  • Loan Discount Points
  • Pre-Paid Interest
  • Property Tax
  • Pest Inspection

It probably seems like too much and to a degree, I can understand. Some of these fees are non-negotiable and while others aren’t. However, you want to be careful with which expenses you try to save on. Skipping a home inspection is not a smart move, even with a new build. Believe me, we’ve been there.

When we bought our first house, it was a new build and so we thought it would be fine to skip the inspection and save some cash. However, new builds don’t guarantee good work. We had small mistakes become big headaches and by the time we sold our place about five years later, we had to have all but one of the windows replaced.

Would the inspection help us catch all of these things? No, but it would’ve given us a clearer idea of expenses to expect. With our second house, we did get an inspection and not only did it help us understand what future projects we’d need to tackle, but we were also able to use it as a negotiation tool.

Your Thoughts

I hope these tips give you a jumpstart towards your goal of becoming a homeowner. I want you to buy a home that you love, but allows you to pursue all of your financial and family goals!

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Source: mint.intuit.com