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Unpermitted Renovations Are Common But Can Complicate Home Sales



You’ve found your dream home and are moving toward closing. It has a beautiful, finished basement, a recently-updated kitchen and a great deck out back. But as the bank does its final checks, you and your lender learn that some of those features that you love so much are technically illegal. The seller or perhaps a previous owner didn’t pull permits for the renovations, and now the bank is hesitant about underwriting your loan.

Don’t panic. It’s true that work done without permits can complicate a home sale, but it doesn’t have to derail the whole thing.

Buyers, read on to see what to look out for when you’re shopping, and how to address this situation before finalizing your mortgage. And sellers, check out what you can do to avoid this complication in the first place.

What should buyers look out for when a home has unpermitted renovations?

Avoiding roadblocks in your real estate transaction starts with getting as much information as you can as early as you can in the process. As you’re shopping around, it’s a good idea to ask if features not original to the house were done legally. In most places, a seller will be required to disclose whether unpermitted work has been done to a property, although with older homes this question is often answered with an I don’t know.

The most common projects to be done without permits are bathrooms, kitchens and decks, according to Steve Cunningham, chair of the Remodelers Council at the National Association of Home Builders (NAHB). Real estate agents in various markets added that other conversions, like basements or garages to increase living space, are also common trouble spots in this regard.

Often, unpermitted work won’t be done in conformance with local building codes, so if something seems poorly finished during a property tour, it’s probably worth asking about.

“Typically the buyer can tell if something’s been done haphazardly or unprofessionally,” said Lisa Harris, an agent with RE/MAX Center in Atlanta.

Buyers can also research properties to make sure everything is certified, and should work with their home inspector to make sure work has been done properly.

“The seller might not have known because it wasn’t disclosed to them. For the buyer, it’s all about doing your due diligence and checking public records to fully understand what you’re buying,” said Ashley Thomas III, second vice president at the National Association of Real Estate Brokers.

Keep in mind that not all home renovation projects need permits. Aesthetic upgrades like paint, flooring or tile generally don’t. Only work that involves structural updates or changes to the plumbing, electric or HVAC systems usually do.

How can unpermitted work be addressed?

The easiest way to avoid permit issues in a real estate transaction is for the homeowner to get permits for any work from the start.

“When you have a project of that caliber going on and you’re spending that kind of money, you really want to do your due diligence and find a licensed contractor,” Cunningham said. “It protects the value of your home because it’s such a large investment.”

But of course, if the work is already done, that’s a moot point. Getting permits pulled for finished work can be costlier than having them filed upfront, but it’s often the only way to move the property sale along. In some cases, sellers could be required to undo their updates.

“Even if the buyer is ok with it, you could get all the way to underwriting, and the underwriting could derail the transaction at that point, where the underwriter could say, ‘we won’t do the underwriting until this is rectified,’” Harris said.

Working with experienced agents is crucial

Because permit issues make a sale more complicated, it’s especially important to work with knowledgeable real estate agents on sales where projects have been done without the proper paperwork.

Often, the lack of permits is addressed by the seller giving a buyer credit for updates or fixes that need to be done — everything from removing drywall for an inspection to more significant overhauls to get things up to code.

A credit takes responsibility off the seller for the updates and ensures they are done to the buyer’s taste, but also eases the financial burden on the buyer.

“It really needs strong professional agents that can walk both parties through the challenges so everyone can acknowledge how we got here. Usually when that happens, everyone is level-headed and fair,” Thomas said. “It’s common in my experience that we’re able to navigate to keep the transaction on track.”

What sellers need to know

For sellers, it’s important to keep in mind that even in this favorable market, work that’s been done to your home without a permit still puts you at a disadvantage.

Above all, you should disclose any such alterations to your agent as soon as you can. Beyond that, you should be prepared to offer buyers a credit, or possibly make updates to your home before putting it on the market.

“It’s a heart-aching conversation, because there’s no easy answer financially for that problem. You have to tear it out, you have to have it done again, or it needs to be opened up so inspections can be done,” Cunningham said. “I have seen people have trouble selling a house from having bad renovations done that are not permitted.”

Right now, sellers with unpermitted work are in a relatively strong position, however, because housing supply remains low.

“Many buyers are dealing with fatigue, so they might accept something that they wouldn’t in a buyer’s market,” Thomas said.

Bottom line

When a house has had work done without permits, it can make the sale of that property more complicated. But, experts said, that doesn’t mean selling or buying such a home is impossible.

“It can be ok and it’s not a deal killer,” Harris said. “It’s just something where, if you have educated and experienced agents on both sides of the transaction, they can do what they need to do to make it right for everybody.”

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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