How loans reduce purchasing power, DIY home repairs


Dear David,

I have two loans that will be paid off in the next six months. Should I wait until they are cleared to sell my current house and buy a new one? – PLANNING AHEAD

DEAR PLANNING: There’s no need to wait if you are ready to move now. The process of selling your current home and buying a new one can be expected to average about 60 to 120 days from start to finish. While this timeline falls short of your loan repayment schedule, sitting down with your mortgage advisor ahead of time may help to eliminate the debt that could otherwise prevent you from buying a larger home.

As I’ve said in previous columns, if you’re thinking of moving, you need to be wary of taking on new loans. As your monthly financial obligations increase, the size of the mortgage for which you qualify will decrease. A loan for as little as $500/month can reduce your real estate buying power by approximately $100,000 — a pretty compelling reason to rethink other major purchases, perhaps until after you’ve moved and have had the chance to reassess your budget.

It’s often possible to obtain mortgage approval on the condition that other debts are reduced. I suggest you take a small portion of the proceeds from the sale of your current home to pay off the balance on your loans. Speak to your mortgage advisor about how to approach this. With only six months of payments left on your current loans, I would expect the adjustment to be pretty straightforward.


Dear David,

My husband is very frugal. He never wants to pay someone to do a job he can do himself. Could this impact the value of our house in the long run? – MRS. DO IT YOURSELF

DEAR MRS. DIY: This is a common concern. The vast majority of us struggle with the notion of paying someone else to do work that we could do ourselves. That said, there are certain times when it pays to put your trust in an experienced professional (and I’m not just talking about the dentist’s chair).

While I commend your husband’s willingness to try new things, using your largest investment as a practice ground may not be to your advantage. I suggest surrounding yourself with seasoned professionals if you’re not one already. Even a job like painting, which most people can do, looks better when approached with the right tools and a confident hand.

If you can hire someone to do a $1000 job and create a $10,000 return, by all means, take advantage of their expertise. When it comes time to sell, the last thing you want a buyer to see is workmanship that makes them wonder if shortcuts have been taken. What a shame it would be if your home was dismissed for the sake of saving a few hundred dollars. My apologies in advance to your hubby!