The Androscoggin Bank Blog


Where we offer quick tips, news and community updates.


Which Should Come First: Buying or Selling Your Home?

picture of neighborhoodIt may not have seemed like it at the time, but buying your first home was simpler than buying your next home. Why? Because now you have to deal with that previous mortgage and concern yourself with timing the purchase of your new home. Before making that offer on your new home, you must decide which makes more sense: to sell your existing home before purchasing a new one or to wait to sell until you have found a new home for yourself. Like any major decision, it helps to sort out the pros and cons:

Should You Sell First?

Good Idea:

It feels great to sell your house and release yourself from that mortgage. Selling first enables you to free up the equity of your current home—something many homebuyers need to do to pay for closing costs and that down payment on your next house.
Selling first also means that you avoid paying the cost of two homes, including utilities and real estate taxes. And don’t forget the cost of the dual mortgage payment.

Bad Idea:

If you sell your house before finding your next one, the stress of being without a roof over your head may lure you into a hasty deal. Short-term apartment rentals can help alleviate the feeling of pressure and prevent poor, reaction-based decisions when you need to find a new house quickly. Some sellers who find themselves in between homes negotiate a “rent-back agreement” with the lenders and the buyers to be able to stay in the home for a set period of time. While this type of arrangement can alleviate timing hurdles, it’s also a more complicated legal arrangement that can open up another realm of complexities to your housing search and transition.

Should You Buy First?

Good Idea:

Let’s not forget the reason you are moving in the first place. For a variety of reasons, you need a home that is more suitable for you and your family. It might be in a better location, it might have certain amenities that your current house lacks. One of the major advantages of buying your next house before selling your current home is time. You won’t be in a rush and can take the time to find a home that truly suits your needs.
If you can afford the luxury of buying first, you can avoid the inconvenience of having to find a suitable apartment to live in for some indefinite period, plus the cost of storing belongings that won’t fit in the short-term rental.

Bad Idea:

For the non-investor, holding a dual-mortgage is usually not a desirable situation. Relying on the timing of real estate deals and closing timeframes can be a bad idea because deals don’t always go smoothly. Closing delays can prolong the process for weeks. What if your buyer has trouble getting their mortgage? What if the home inspector isn’t so impressed with the improvements you made in your kitchen? These kinds of issues can turn the closing season into a longer period than anticipated, costing you more money as you deal with dual-mortgages.
Another risk associated with buying your new home before selling the old one is that you might be more inclined to accept a low bid that undervalues the home. Buying into a second mortgage can put you in a more desperate position that has you begging for deals you would have swiftly turned down if not the victim of a vulnerable position.
Whichever option you decide fits your situation the best, prepare yourself for necessary costs as you make the transition into your next home. It’s important to look at both the financial costs and the emotional costs for you and your family.



Do You Need a Mortgage Preapproval? Why (and how) to Get One.

woman with a calculator

Unless you were recently selected as the No. 1 pick in the NFL draft or released a hit album, you probably won't pay for your new house in cash. Like millions of Americans, you'll take out a mortgage.


Before you begin your housing search, it’s worth your time to get a mortgage preapproval, which is usually good for up to 90 days. Lenders will review and verify some of your financial information, then tell you how much money they'd be willing to let you borrow.


Getting preapproved can speed up the homebuying  process. In a competitive market, it’s not uncommon for sellers to receive multiple offers on the same home. When you’re looking at homes, a preapproval letter can be a great tool with which to impress sellers. The document indicates that you're serious about buying.


More importantly, it shows you'd probably get the needed financing and that you have the backing of a lender to go through with a deal. Having that kind of support could even give you additional leverage when negotiating a home’s final price.


Don't confuse preapproval with prequalification.


Although they sound quite similar, a mortgage prequalification is not the same as a preapproval letter. The former is simply when a lender provides a potential homebuyer with a rough estimate of how large of a loan he or she might be able to take out. This is based on little background information, and so prequalification letters don't carry much weight if presented to a seller.


On a very basic level, buying a home is like deciding where to go for dinner. Although the possibilities may seem endless, you'll need to stick to your budget. Ask yourself, how much house can I afford? And stay within that range. Otherwise, you may end up overextended and regretting your decision. A mortgage preapproval ensures that you can focus on looking at homes that you can afford.


How to get a mortgage preapproval.


To obtain a preapproval, you'll need to provide your would-be lender with some financial documentation, including a copy of your credit report, tax returns, pay stubs and checking and savings account statements. This helps financial institutions determine your creditworthiness. Usually it's free, but you may have to pay the lender's cost to get your credit report.


Getting a mortgage preapproval isn't a 100% guarantee that you'll receive a loan. However, as long as there aren't any dramatic changes in your personal finances, it's fairly safe to assume that the lender will let you borrow the stated amount. Therefore, it's best not to switch jobs just before applying for a mortgage and to avoid racking up additional debt between getting preapproved and actually trying to borrow the money.


Before applying for a preapproval, work on improving your credit score. Reduce your debt as much as possible while making sure not to accumulate any more of it. These moves will make you look like a better risk to lenders.


Once you have a preapproval letter in hand, you'll be that much closer to buying your own home.


© Copyright 2016 NerdWallet, Inc. All Rights Reserved.






Ready to sell your home? 10 Steps to Take Before the First Showing

image of living room

Preparing to sell your home can be surprisingly difficult. For some, it’s an emotional process. For others, it’s simply an asset and they want the highest return on their investment.


Regardless, when it’s time to sell your home, you need to spend time thinking like a buyer. These 10 tips will help you prep your home, inside and out.


  1. Do a drive by. If a potential buyer sees trash on the lawn or overgrown weeds, they won't be enticed to come inside. Boost your home's curb appeal by planting a few colorful flowers at the entrance, and mow the lawn.
  2. Declutter. Most people are familiar with the deceptive cleanup strategy of stuffing all the mess under the bed or in a closet. Count on potential buyers checking closets and cupboards, and make sure they are tidy and organized.

  3. Lighten up.  Open up the blinds to allow as much natural light as possible. Consider adding extra lamps that can be dimmed for ambiance.

  4. Add accents. You don't have to do a major renovation to make your home more appealing. Little accents such as new sink hardware and cupboard knobs can make a big difference. If you opt for a bigger project, make sure it will add value instead of detracting from it.

  5. Neutralize. While you may love a bright orange living room, it could be too much for a potential buyer. Neutralize the color scheme by painting walls white and covering up any brightly colored furniture.

  6. Put up mirrors. Replace bold artwork with mirrors to make a room look bigger and lighter. As potential buyers walk through the house, they can catch glimpses of themselves, helping them envision themselves in the home.

  7. Aromatherapy. There’s no need to buy fancy candles or incense. On the day of a showing, simply place a couple of tablespoons of vanilla extract or other essential oil in the oven at 300 degrees. Within minutes, the home will be filled with a beautiful aroma.

  8. Feng shui. As potential buyers walk through the home, it should flow nicely. They shouldn't be bumping into furniture. Ensure each room is spacious and has a clear purpose. If you have a room that's an office/guest room/crafting trifecta, decide which role works best and then rearrange it for that purpose.

  9. Beautify the bathroom. Transform a bathroom into a spa. Fresh linens, bath mats and candles can make all the difference. Put the toilet seat down, and you can even fold the final sheet of the toilet paper into a fancy triangle.

  10. Clean. Ensure that your house is clean for showings. Don't forget to scrub the baseboards, remove the shower scum and dust. Consider getting carpets steam-cleaned as well. If you don’t have time, consider hiring a cleaner for important showings or an open house.



Try walking through your home, pretending to be a potential buyer, to see what needs fixing, and then tackle those details. Whether it’s a foul pet smell, a cluttered playroom or a outdated appliances, ask your real estate agent or a friend for honest feedback. With a few repairs, the house will be ready for showing  in no time.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved.


Tips for Hiring a Contractor for Homebuyers and Sellers

image of contractor jumping in air

Not every home is ready to sell without some TLC. Likewise, many homes are far from move-in ready, or lack the cosmetic features a homebuyer desires. Whether you are a homeowner selling your home or a buyer looking to move, hiring and working with contractors is a common aspect of the home selling or buying process. These considerations will make the process a little smoother:

1. Prioritize home improvement projects to get ready to sell.

When you have multiple improvements needed to get your house ready for the sale, it is paramount to prioritize the projects. The most important fixes need to get attention before any luxury upgrades. These are essential for the basic functioning of the house, including major components such as windows, doors and the roof. 

After taking care of the essential fixes, evaluate your remodeling budget. How much do you have leftover to fund additional improvements? If you have $10,000 left in the budget, prioritize again and consider what matters most to buyers: the kitchen or bathroom. A $100,000 leftover budget would enable you to invest in adding an extra room or installing high-end appliances in a complete kitchen makeover. Often this level of construction is only necessary if the home can’t compete in a very competitive buyer’s market.

2. Screen the contractor.

Hiring a qualified contractor is a significant part of getting improvements done on your house in a timely and quality manner. Start by asking people you trust for referrals. Contractors rely heavily on the strength of their reputation with past clients.

Part of the pre-qualifying process is making sure the contractor understands the scope of work involved and your goals for selling the home. If you receive bids from multiple contractors and one of the bids is significantly lower than the others, do some extra homework to be identify the variance in cost. Do they fully understand the project? Are they planning to use quality materials? When you hire, ask for the specific details of your agreement in a written contract, with both parties receiving a copy.

3. Work successfully with a contractor.


Recognizing that you want to put your house on the market, time is another critical factor. Look for a contractor who has the capacity to complete your project on your timeline. Before making the commitment, ask for a detailed schedule to be completed in the contract. If you are hiring the contractor for a small project amidst their larger projects, you could see delays on getting it completed, which will only slow your home sale.

It is ultimately up to you to keep the project on track and get your house on the market within your required timeline. Keep in contact with the contractor to confirm that the company is keeping the project on track. Work out a payment plan, in writing, that allows you to pay in increments as milestones are reached along the way.


Budget for a contractor during the buying process.

Many homebuyers rely upon a contractor to help customize a home they intend to buy. As a homebuyer, the inspection process is particularly important. Be sure that you understand the inspection and repair contingencies before signing the contract. Scrutinize the details concerning the scope of inspections and get a clear idea of when any repairs provided by the seller will be completed.

1. Budget for the right contractor.


In addition to the cost of your new home, some of your budget will be allocated to a contractor for home improvement projects to get the house ready for move-in. Consider drawing up a budget based on the estimates you get from contractors for the entire scope of work.

2. Work effectively with your contractor.


Making your new home ready for your family to move in should be your top priority. To make this happen, you need to work effectively with your contractor. The home inspector can uncover problem areas with the house, but only a contractor can give you actual prices for fixing these problems. The contractor can also suggest fixes that both you and the inspector missed. Communicating with your contractor during an on-site walk-through prior to the closing will give you an accurate picture of what needs to be done and how much it will cost.





Should I Put 20% Down on My Mortgage?

Many lenders will advise: if you can afford to put 20 percent down on a mortgage, you should. While 20 percent down may be considered the “rule of thumb,” it’s simply not possible for many families, particularly for first time homebuyers. If you’ve budgeted to buy a $250,000 house, a 20 percent down payment is $50,000 down. That’s a hefty down payment, but it can certainly bring long-run benefits. 


If you’re not sure how much to put down, consider that the down payment is something you need to pay only one time; the size of your monthly payments and interest rates influence your costs for years. The benefits of saving up for that big down-payment might actually save you thousands of dollars over the lifetime of your mortgage.


The pros of putting 20% down.

Save on Mortgage Insurance: Most lenders will require mortgage insurance if you are borrowing more than 80 percent of the home’s value. Lenders need to hedge their additional risk by requiring mortgage insurance that could cost you thousands of dollars. This is money that might be better spent on home equity. 

  • Lower Monthly Payment: In addition to reducing the size of your loan, a 20 percent down payment will give you a lower monthly payment. Over the life of your mortgage, you’ll save on bulky interest payments. 
  • Lower Interest Rate: When you put a large amount of cash down on your mortgage, you lower the risk to the lender. As a result, you can enjoy paying lower interest rates—and even slightly lower interest rates can add up fast. In fact, over a 30-year mortgage, you might be able to save tens of thousands of dollars with lower interest rates! 
  • Immediate Equity: By putting 20 percent down on your home you’ll have confidence that you have immediate equity in your home—regardless of what is happening in the market. 

Alternatives to 20% down.

Not every lender requires a 20 percent down payment. While there are many advantages to a traditional large down payment, there are numerous other mortgage options. For instance, we offer the Wealth Builder Home Loan that features no money down as a special tool that is designed to help you build equity right away. 

For many families, a smaller down payment allows you to invest in a home to start building some equity, rather than continue paying rent. Alternatives to a 20 percent down payment include loans such as: 



10 Costs to Expect When Selling Your Home

images of realtor


Just as with buying a home, selling also comes with its share of expenses. You need to prepare your home for prospective buyers as well as pay part of the closing costs, which average around 3% of the home price. Here's are 10 common costs you can expect when it’s time to sell:

  1. Home repairs, inspections and staging: Before the sale, you'll probably want to fix up carpet stains, window cracks or other home features that have suffered minor damage over time. You also might decide to pay for an inspection for termites or other pests to avoid any unpleasant experience for prospective buyers checking out the home. To impress buyers, hiring a professional home decorator or stager can help you organize and make your home more appealing. The money you put into these areas could result in a higher offer.
  2. Settlement company fees: If you decide to use a third-party settlement company to ensure all documents and procedures between you and the buyer are correct, you pay the company for your portion of the closing costs and potentially an administrative cost. In return, the company will pay off your mortgage and those closing fees to the lender.
  3. Real estate commission: Generally, you have to pay for the real estate fees for both your agent and the buyer's agent. The cost can be negotiated, but it typically ranges between 5% and 7% of the home price, split between agents. The money goes to the agents' brokerages, who will then pay them. This commission can be one of your biggest expenses.
  4. Attorney fees: Lawyers can be certified as real property specialists and in some states might be required to help close a home sale.
  5. Property taxes: Ideally, the buyers and sellers pay their respective shares of the property taxes for when they lived in the home that year. Depending on when you sell, you might pay all taxes for that year and have the buyers reimburse you for the time they started living there. Additionally, if your home increased in value more than a certain amount, you might have to pay a capital gains tax.
  6. Seller's concession: If the buyer is having trouble paying for some of the closing costs, the seller can agree to pay a percentage of them. In exchange, that amount can be added into the home price the buyer pays.
  7. Title search: Although the title search is generally the buyer's responsibility, you might decide to pay for it as part of the deal. The title search involves a professional reviewing public records to confirm you own the property that you're selling and that no unpaid dues interfere with your title of ownership.
  8. Lien releases: From the title search, you might discover that some debt hasn't been paid. If you owe any taxes, contractor costs, utilities or other bills on your home, you'll receive a lien, or a record of any unpaid amount on your home. You must pay it off to clear your title and be able to sell your home.
  9. Owner's title insurance: If the title search misses something, a lien remains unpaid or the seller doesn't actually own the property, this insurance protects the buyer from any financial loss. The seller generally pays for this.

  10. Home warranty: As part of the negotiation with the buyer, you might decide to pay for a one-year protection plan on the buyer's behalf. This will cover certain repair costs if needed.

Knowing the possible costs when selling your home can keep the process straightforward. Despite being potentially expensive and time-consuming, selling at a good price and without complications can save you time and energy. 

© Copyright 2016 NerdWallet,   Inc. All Rights Reserved