It seems fairly innocuous; a friend or family member wants you to co-sign on a loan because they don’t qualify. They assure that they’ll make the payments; they’re quite convincing and very appreciative. You don’t want to disappoint them and after all, it’s not like it’s going to cost you anything…is it?
Think of it this way. They couldn’t get a loan unless you co-sign for them. If... [Read more]
As rates are inching up but still very affordable, buyers should remember that there is an alternative to a fixed rate mortgage that can provide the lowest cost of housing for the homeowners who understand the parameters.
A $300,000 fixed-rate mortgage at 4% has a principal and interest payment of $1,432.25 per month for the entire 30 year term. A 5/1 adjustable mortgage at 3% has a $167.43 lower... [Read more]
The City of Woodbuyr continues to offer $25,000 in deferred financing to income-qualified first-time homebuyers.
Please visit www.woodburyloans.com to see the program guidelines and learn more information.
As a reminder, five main advantages of our program that may save you hundreds of dollars per month include:
1. The principal of the Woodbury loan is deferred for 30 years.
2. Woodbury’s... [Read more]
Making additional payments toward the principal of your mortgage will do three things for the homeowner: save interest, build equity and shorten the term on fixed rate mortgages.
These things should be beneficial enough to justify the extra payments but another huge advantage is available to those who have private mortgage insurance on their loan. Mortgage insurance rates vary but can range from seventy-five... [Read more]
A home can easily be a person’s largest personal asset and it can be a powerful tool to increase financial stability also.
Since most mortgages are amortizing, the loan becomes a forced savings account that reduces the unpaid balance with each payment. The equity could be used to improve a homeowner’s financial position involving other loans.
While every homeowner recognizes that they can... [Read more]
Some people take their credit for granted and don’t start paying attention to it until they need it. The problem with this is that it could delay if not altogether cause the loan to be denied.
The most common issue is not correcting items on your credit report. A large majority of credit reports have errors but not all of them are critical. Since it takes time to remove them, it is a good practice... [Read more]
An unexpected, larger-than-normal water bill could lead a person to think that they might have a leak. Before incurring the cost of a plumber, it is fairly easy to run your own test.
Locate your water meter. They’re usually in the front of the house, near the street. In some cases, you might need a meter key to open it; they can be purchased at Lowe’s, Home Depot or other hardware stores.
Step... [Read more]
What if you could live in a larger and possibly newer home for less than you are currently? Would you consider moving? Do you want to hear more?
Interest rates, while they’re expected to go up, actually took a small dip and are still hovering at the 4% or below mark for a 30 year mortgage and almost one percent less for a 15 year term.
Let’s assume that you have a $225,000 mortgage currently... [Read more]
One of the important things as a parent is to plan for their children’s education. Let’s look at two different approaches: a savings account or investing in rental real estate.
Assuming your child is five years old and you start putting $250 a month in a savings account earning 2%, in 13 years you’d have $44,497.41 to pay for their college. Anticipating that isn’t going to be enough, you’d... [Read more]
There is a frequently quoted expression “more money has been lost from indecision than was ever lost from making a bad decision.” Regardless of the extent of its accuracy, most people can recall when procrastination has cost them money.
There are markets so short of inventory that buyers have become frustrated after losing bids for several homes and have decided to wait until more homes come on... [Read more]
The Super Bowl and World Series determine the football and baseball champions. Since there can only be one champion, the other team loses the competition. In feudal times, a knight might champion for the king or a patriotic, romantic or religious cause.
Fierce competition can occur when buying or selling a home because each party wants to get the “best deal” possible. When the buyer and seller... [Read more]
With mortgage rates below 5% since 2009, you’d think any homeowner who should refinance would have already. However, it is estimated, there are approximately 6.5 million borrowers who would benefit with significant monthly savings by refinancing.
Rodney Anderson of Supreme Lending, on his weekly radio program, described a recent pipeline meeting where they reviewed every pending mortgage application... [Read more]
The majority of tenants say they’d like to own a home but continue to pay rent and missing out on financial and emotional advantages. There seems to still be a lot of misinformation in the marketplace.
There are a number of programs for low or no down payment options. Veterans can get into a home with no down payment or closing costs. In qualifying areas, USDA has zero down payment programs. FHA... [Read more]
Equity is an asset and an appreciating home is an investment. While some people have resolved themselves that a mortgage payment is a normal part of life, others have set goals to get their home paid for as soon as possible. There are several strategies that will work but they all require persistent vigilance.
A shorter term mortgage such as 20, 15 or even 10 years will not only pay off sooner, it... [Read more]
Among the many reasons people have to own home, they include having a place of their own, to raise a family and to share with friends. Additional benefits include security, investment, peace, pride and enjoyment.
Together with the benefits come the responsibility to take care of the home for its livability and viability as a sound decision. A homeowner’s concerns can be broken down into three areas.... [Read more]
Why would you consider refinancing if your mortgage is only two or three years old and the rate is not considerably higher than what is currently available on new loans? Because you may be able to eliminate the mortgage insurance and have significant monthly savings.
Many homes have seen their values rise in the past few years. The current loan-to-value ratio may be low enough to no longer require... [Read more]
More people grill in July than any other month. While grilling is all about good food, fun, friends and celebrations, it is important to make sure that accidents don’t interrupt your activities. Approximately half of the injuries involving grills are thermal burns. If you work with fire, there’s a chance of getting burned.
• Only use BBQ grills outdoors and in ventilated areas.
• Place the... [Read more]
Low inventories resulting in multiple offers are contributing to what experienced agents are calling the most challenging market they’ve ever worked. While buyers with resources may find the market difficult, purchasers with minimum cash and credit are struggling to find and get into a home.
First-time buyers feel the impetus to purchase because they’re renting and are concerned about being priced... [Read more]
Preserve the memories you’re making by taking photographs of your home now. The pictures will remind you of the role your home played with your family and life.
Reminiscing is easier when scrolling through pictures to remind you of people and times. One of the least heard regrets is that we should have taken more pictures.
Shots to consider:
• The front of the home from across the street
•... [Read more]
If a seller was looking at two offers for exactly the same price on their home, there would still be things that could make one standout more than the other. If there happens to be more than two offers, things can really get sticky for a buyer. For that reason, it is good to craft the most attractive offer possible because even if you don’t have competition now, another offer could come in during... [Read more]
When the 75 year old man who had been widowed four times was asked why he was getting married again, he said “for the little bit that they eat, I wouldn’t want to be without one.”
In a torrential rainfall, you wouldn’t want to be without an umbrella. It is also understandable that when purchasing or selling a home, more and more people want an agent involved.
NAR’s Homebuyers and Sellers... [Read more]
Imagine that after checking www.SSA.gov to see what you can expect when you retire and estimated what your minimum required distributions from your retirement accounts will be, you’ve discovered that you’re not going to have enough retirement income to cover your living expenses.
Ideally, it would be perfect if the extra money you need would just come to your mailbox each month with the same certainty... [Read more]
Consumers are more easily living the American Dream of owning a home because of the incredibly low mortgage rates. Today, most buyers can get a much lower rate than their parents or grandparents got on their first home.
In a recent housing survey, FNMA released information about consumers’ thoughts on the current market. Almost two-thirds would rather buy than rent and believe that now is a good... [Read more]
The word describes the process of accounting that will repay a loan over time. Residential buyers will most commonly be required to have an amortized mortgage.
When amortizing a fixed rate mortgage, the payment remains constant for the entire term but the allocation of what goes to principal and interest changes with each payment that is made. Since an amount of each payment retires the principal,... [Read more]
Paying more for your house payment does not make your home more valuable. It does mean that the mortgage rate may be higher than it has to be.
Even though fixed rates may never again be as low as they are currently, an adjustable rate mortgage may provide the lowest cost of ownership depending on how long a borrower plans to own a home. There are different types of ARMs but the one in this example... [Read more]
Many times, young adults feel “bullet-proof” and don’t consider the urgency to get involved or spend the money to take care of certain legal aspects of their lives because they think they’re going to live forever. Since no one is guaranteed longevity of life, if you want to be in control of who gets what and who is in charge now based on an untimely incapacitation or death, it is important... [Read more]
For whatever reason you’ve delayed buying a home, it may be time to reconsider that decision based on today’s conditions and what is expected to happen in the future.
Rents are continuing to increase to the point that in most markets, it is significantly less expensive to own than to rent. Even after you factor repairs into the equation, the low interest rates, principal accumulation due to amortization,... [Read more]
After you take the training wheels off your bike and learn to ride it, you’d never consider putting them back on again. Similarly, once you’ve owned a home, you might think you’ll own a home from now on but there may be some situations where it might make sense to rent again.
Big shifts in a person’s life like a divorce, death of spouse, empty nesting or a temporary transfer to a new city... [Read more]
Once the kids are grown, have careers, relationships and get a place of their own, parents find that they may not need their “big” home like they did before. Their lifestyle may have changed and the house just doesn’t “fit” anymore.
Benefits of a smaller home:
• Easier to maintain
• Lower utilities
• Lower property taxes
• Lower insurance
• More convenient location
• Convenience... [Read more]
Buyers with a minimum down payment are generally faced with the decision of whether to get a FHA or a conventional loan. With the new 3% down payment program on conventional loans, it may become more confusing which loan to pursue.
The two loan programs have mortgage fees that can differ greatly. FHA has a 1.75% up-front mortgage insurance charge in addition to the monthly mortgage insurance charge... [Read more]
Finding a mortgage lender is not a problem. Selecting someone who will help you find the best loan product for your situation even if it means sending you to another lender is paramount.
There is a huge advantage to be able to sit across the table from someone you’re doing business with and look them straight in the eye. It’s difficult to make an informed decision based on a website and a phone... [Read more]
Most people’s first introduction to Radon is during the inspections of a home. It can be as much a surprise to a seller as it is a buyer. Radon is an invisible and odor-free, cancer-causing radioactive gas.
Radon can get into a home through cracks in solid floors, construction joints, cracks in walls, gaps in suspended floors, gaps around service pipes, cavities inside walls and even the water supply.
It... [Read more]
There are sites all over the web that offer to tell you what your home is worth. Simply plug in your address and email and you’ll get a value. It’s fast; it’s easy but is it accurate?
The value is determined by what is called an Automated Valuation Model (AVM) that analyzes public record data with computer decision logic. Square footage, age, number of bedrooms and location are easily definable... [Read more]
There are many reasons people want a home with the most frequent responses being a place of their own, to raise their family, share with their friends and feel safe and secure. These are all strong motivations fueling the American Dream of owning your own home.
The motivation is so dominant that buyers are willing to make sacrifices to have their dream come true. According to the 2014 National Association... [Read more]
Insurance is a way to hedge the risk of a possible loss on an asset that a person or entity cannot afford. The cost of the coverage is determined by risk and exposure to the insurer and reflected in the premium.
Another way to say it is: don’t buy insurance when you can afford the loss. If you have a mortgage on your home, you must have insurance. It is probably prudent for most people to have... [Read more]
Even if you’re having a professional help you with your income tax return, you need to provide them with information on the money you spent that might be deductible. Look at the following list to see if any of these things need a little more investigation to determine if they apply to your situation.
· If you refinanced your home for the second or subsequent time in 2014, there may be points that... [Read more]
Over 50% of homebuyers don’t shop to find the best interest rate for their mortgage. While a buyer wouldn’t rarely purchase the first home they look at, they will accept the rate and terms offered by only one lender.
While the borrower and the property affect the rate and terms that a lender may offer, it is not to be said that all lenders will offer the same terms and rates to the same buyer.... [Read more]
A simple decision to rent your current home instead of selling it when moving to a new home could have far reaching consequences.
If you have a considerable gain, in a principal residence and you rent it for more than three years, it can lose the principal residence status and the profit must be recognized.
Section 121 provides the exclusion of capital gain on a principal residence if you own and use... [Read more]
A well-planned garage or yard sale can make room in your home, get rid of unused items and make some money but it needs some planning to be successful.
• Start early to research and plan
• Promotion is key
• Display items attractively
• Price items right
• Organize checkout
Saturdays are generally the best day but there may be some exceptions. Experienced garage-salers believe that a well-planned... [Read more]
With roughly 12.5% of the population over 65 years of age, it is understandable that some of them are thinking of downsizing because they may not need the amount of space they did in the past. There is something to be said for the freedom acquired by divesting yourself of “things” that have been accumulated over the years but are no longer needed.
Moving to a less expensive home, could provide... [Read more]
0% financing has induced car buyers into taking the plunge because it doesn’t cost anything to use someone else’s money. While mortgage rates are not at zero, they’re close enough that many buyers are applying similar logic.
Qualified mortgage interest is deductible on taxpayers’ returns subject to the maximum acquisition debt of one million dollars. For the fortunate homeowners... [Read more]
There are many reasons for wanting to have a home of your own like a place to raise your family, share with friends and feel safe and secure. While investment opportunities rank high for most people based on the fact that homeowners’ net worth is over forty times higher than that of renters, so do the tax benefits that reduce tax liability.
• Taxpayers who have owned and used a home for at least... [Read more]
Everyone knows that ice can make a drink cool or reduce swelling, but if you put it on your cell phone, it might just save your life.
The concept is simple. Make a contact record in your address book with the name “ICE”, which stands for In Case of Emergency. In the note section of the record, you would list your name, blood type and medical conditions along with prescriptions and physicians.... [Read more]
Appreciation and tax savings are legitimate contributors to an overall rate of return on rental real estate but what if you didn’t consider them at all. If you only looked at one or two, very conservative measurements, you might decide to invest especially knowing that there are more benefits that will accrue to your investment.
If we bought a property for cash, collected the rent and paid the expenses,... [Read more]
A good neighbor might be characterized as someone who’ll look after your home when you’re out of town by picking up your mail and watering your plants. You’d most likely reciprocate for anyone who’d be so generous toward you.
In some cases, you might only be able to name one or two of your neighbors who would step up to that level of service. Wouldn’t it be nice if more people on your... [Read more]
If you have a mortgage with an escrow account to pay your property taxes and insurance, you expect the company servicing your loan to pay this year’s taxes this year so that you can deduct them on your 2014 income tax return. After all, your monthly payment includes 1/12 the annual amount so there will be money available for them to be paid on time.
IRS requires that expenses must actually be paid... [Read more]
With fixed rate mortgages as low as they are, most purchasers or owners wanting to refinance might not even consider an adjustable rate loan. The determining factor should be how long the person plans to be in the home and which mortgage will provide the cheapest cost of housing.
For instance, if you compare a $300,000, 30 year term mortgage with a 4.125% rate on the fixed and a 3.25% on the 5/1 adjustable,... [Read more]
A homeowner’s tax saving benefit is generally realized when they file their federal income tax return after the money has been spent for the interest and property taxes. Some people look forward to the refund as a means of forced savings but some people need to realize the savings during the year.
It is possible to adjust the deductions being withheld from the homeowner’s salary so they realize... [Read more]
A list of talking points can be very valuable to guide the conversation with an agent that will lead to a decision to have he or she represent you in the sale of your home. If you haven’t been through the process before or it has been a while, the answers to these questions can reveal things about the experience and where-with-all of your candidate.
Even if you only intend to interview one agent... [Read more]
There is a simple alternative in rental real estate.
Single family home for rental purposes offer an excellent rate of return in an investment that most people understand better than other investments. The concept is simple: stay with predominantly owner-occupied homes in a slightly below average price range. In most areas, tenants are easy to find and they’ll usually stay two to three years or... [Read more]
If you invest in a savings account, you’ll make less than 1% and would have to pay income tax on the earnings. On the other hand, contribute something extra to your house payment and you’ll earn at the mortgage interest rate which is certain to be more than you are earning in the bank.
Making additional principal contributions on your mortgage will save interest, build equity and shorten the term.... [Read more]
Homeowners can raise the basis or cost in their home by money spent on capital improvements. The benefit is that it will lower their gain and may save them taxes when they sell their home.
Improvements must add value to your home, prolong its useful life or adapt it to new uses. Repairs are routine in nature to maintain the value and keep the property in an ordinary, operating condition.
Additions... [Read more]
Sometimes, there are costs associated with not taking a particular action. If a person left their money in a certificate of deposit earning 2% when they could have made an investment that earned 8%, the difference is the opportunity costs associated to not taking action.
If a couple has a down payment and good credit, locking in a low interest rate mortgage for 30 years could easily provide their lowest... [Read more]
An agent was presenting a contract to a single, senior woman who was moving into a retirement home. It was a full price offer with reasonable terms and timelines but the seller wouldn’t accept it. When the agent probed deeper, she discovered that the seller was concerned with her dining room table.
It had been the first piece of nice furniture that she and her husband had purchased and they... [Read more]
September is REALTOR® Safety month when special attention is focused on the security of having a home on the market and the concerns for the well-being of owners is a day-to-day effort. The following list may help sellers secure their home and minimize risk.
• Locks – doors and windows should be locked at all times. Additional locks like deadbolts or safety locks can provide a higher level of... [Read more]
Private mortgage insurance is necessary for buyers who don’t have or choose not to put 20% or more down payment when they purchase a home. It is required for high loan-to-value mortgages and it provides an opportunity for many people to get into a home who otherwise would not be able.
The problem is that it is expensive and a homeowner’s goal should be to eliminate it as soon as possible to lower... [Read more]
A common expectation of homeowners is to want the components and systems in their home to work when they need them. Periodic maintenance is just as important as having a trusted service provider to make necessary repairs.
Victims of Murphy’s Law can attest that their air conditioner goes out on the hottest day of the year or the water heater fails when you have out of town visitors.
If the convenience... [Read more]
Many years ago, Las Vegas hotels would entice customers with inexpensive rooms, meals and entertainment so they would gamble. It may have worked initially but if you’ve been to Las Vegas recently, the bargains are gone. Hotels expect each division to be a profit center on its own. As a consumer, I might not like the changes but as an investor, I’d have to be pleased with increased profitability.
Years... [Read more]
A dirty air filter decreases the effectiveness of your HVAC system because it inhibits airflow and allows dirt, dust, pollen and other materials to blow through the system.
The challenge is how often it should be changed to keep the system working efficiently and extend the equipment life. Too often and you’re wasting money and not often enough and your increasing the operating and maintenance... [Read more]
How old is your bedroom furniture and what did you pay for it? Don’t know? That’s okay, let’s try an easier question. When did you buy the TV in your family room and is it a plasma, LCD or a LED?
Whether you are the victim of a burglary, a fire or a tornado, most people are comforted they have insurance to cover the losses. However, unless you’ve filed a claim, you may not be familiar with... [Read more]
With all of the encouragement from celebrity spokespersons like Fred Thompson, Robert Wagner and Henry Winkler, there is a growing awareness of reverse mortgages. The fact is that our population is getting older and more than 25 million homeowners meet the age requirement.
A reverse mortgage will allow homeowners age 62 or older currently living in their home to tap into their equity. The amount available... [Read more]
In an attempt to compare homes, one of the common denominators has been price per square foot. It seems like a fairly, straight forward method but there are differences in the way homes are measured.
The first assumption that has to be made is that the comparable homes are similar in size, location, condition and amenities. Obviously, a variance in any of these things affects the price per square... [Read more]
The Veterans Administration guarantees home loans for eligible veterans. It is considered an attractive loan because the veteran can purchase the home with no down payment up to specific loan limits and no mortgage insurance. This makes the monthly payment considerably lower.
Let’s assume a buyer wants to purchase a $200,000 home and can get a 4.5% interest mortgage for 30 years.
A FHA loan would... [Read more]
More money has been lost to indecision than was ever lost to making the wrong decision. The economy and the housing market have caused some people to take a “wait and see” position that could cost them in lost opportunities as well as almost certain higher costs in the future.
To illustrate what the opportunity cost might be, let’s compare what the value of the down payment two years from now... [Read more]
The first home purchase can be the culmination of years of planning and consideration. Buyers typically look for 12 weeks and use a variety information sources for research before purchasing. However, many renters are not near as thorough in their study.
Like any other commitment a person makes, careful consideration and understanding is required. There are things that every renter should know before... [Read more]
Freddie Mac chief economist, Frank Nothaft, says that affordability, stability and flexibility are the three reasons homebuyers overwhelmingly choose a 30 year term. However, for those who can afford a higher payment, there are three additional reasons to choose a 15 year term: save interest, build equity and retire the debt sooner.
First-time buyers have a higher tendency to use a minimum down payment... [Read more]
It’s disappointing, frustrating and sometimes, discouraging when you lose a home you want to buy.
One of the hardest lessons for today’s buyers is that writing an offer doesn’t mean that you’ll get the home or even a counter-offer. The low inventory affecting many of the housing markets requires a different strategy to give you the best chance to get the home you want.
1. Make your best offer... [Read more]
In a study released by TD Bank, 65% of buyers with mortgages that required mortgage insurance said the higher monthly payment was more than they originally expected.
Private mortgage insurance is required on loans that exceed 80% of the home’s value. For conventional loans, the premiums range from 0.5% to 1% annually. The PMI could add close to $100.00 a month to the payments on a $200,000 mortgage... [Read more]
It is generally considered a seller’s market when the conditions favor the seller. This condition exists when demand is high and supply is low without any significant adverse economic conditions taking place.
Demand is determined by ready, willing and able buyers. Low interest rates with indications that they will begin to rise fuels part of this demand. Rising prices also creates a sense of urgency... [Read more]
Planning a summer trip is usually focused on what you’ll do, see and experience. Enjoy it even more by spending a little time before you leave to make sure your home is safe while you’re gone.
Consider these suggestions along with your other normal efforts:
Tell your neighbors you’ll be out of town and to be aware of any unusual activity.
• Notify your alarm company .
• Discontinue... [Read more]
Most taxpayers know that they will pay a 10% penalty if they withdraw funds from their IRA before they turn 59.5 years old. There is an exception for first-time home buyers that allows a penalty-free withdrawal of up to $10,000 per person if they haven’t owned a home in the previous two years.
This would allow a married couple who each have an IRA to withdraw a lifetime maximum of $10,000 each,... [Read more]
There is a significant difference in how the money you spend on your home is treated for income tax purposes. Repairs to maintain your home’s condition are not deductible unlike rental property owners who can deduct repairs as an operating expense.
On the other hand, capital improvements to a home will increase the basis and affect the gain when you sell which may save taxes.
Additions to a home... [Read more]
Serious shoppers wait for a 50% off sale to make the decision because of the bargain factor. Renters who are serious about lowering their monthly cost of housing should consider buying with today’s low mortgage rates. For an example, let’s assume a person buys a $200,000 home with 3.5% down payment on with a 4.5% FHA mortgage for 30 years.
The total house payment would be approximately $1,508... [Read more]
One of the most common reasons buyers want to deal directly with the seller is because they feel they can save the commission. It’s a valid consideration but interestingly, it’s the same reason the seller isn’t employing an agent; they feel they can save the commission.
Both parties cannot save the commission. The buyer feels they have earned it because they’ve had to find the home, determine... [Read more]
Consideration associated with a contract is generally thought to be the price and terms but being sympathetic and courteous towards the seller could make a difference in getting the home you want.
Business people, like store owners, expect to deal with customers and even become to expect behavior that might not be accepted in a purely social atmosphere. Homeowners, on the other hand, may not be aware... [Read more]
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Paying cash for a home seems like a huge advantage to qualifying for a mortgage and an appraisal. However, for the fortunate few who don’t need a mortgage, there is a question they should answer before they make that decision: Do you think at any point in the future, you might put a mortgage on this property?
It’s important because paying cash for a home could affect the ability to deduct the... [Read more]
94% of purchasers last year opted for a fixed-rate mortgage at some of the lowest rates in home buying history. Yet, some of them will pay more in interest than necessary based on the time they’ll own the home.
If a person only plans to be in the home a few years, the adjustable-rate can offer significant savings.
Not only is the interest rate on the adjustable-rate lower than the fixed in the initial... [Read more]
Section 1031 exchange for rental and investment real estate is a tool that allows investors to move the gain from one property to another without immediate income tax consequences.
An instant benefit is to postpone the tax due which gives the investor a larger amount of proceeds to invest. In the example shown, the investor has 21% more proceeds to invest and grow over time than if he had paid the... [Read more]