During campaign season, it is not unusual to hear a candidate criticized because they make a lot of money but pay little in income tax. While it might not seem fair, taxpayers are allowed to arrange their affairs so that they minimize the amount of tax paid.
Salary, wages and commissions, along with interest and dividends are taxed at ordinary income rates which can range from 10% to 39.6%. However,... [Read more]
The seller has three tools available to affect the marketability of their home: price, condition and terms. Price is the easiest to adjust for the competing properties, amount of inventory or market conditions. However, lowering the price is not necessarily the best decision when trying to maximize the proceeds of sale.
If a home is in poor or outdated condition, updating can be done to make it show... [Read more]
If competition is a buyer’s biggest concern, for goodness’ sake, get in the game. In a new survey of close to a thousand home buyers conducted by Redfin, affordability is still the number one concern but due to low inventories, competition from other buyers is moving its way up the poll.
26% identified affordability while 19% mentioned competition and 15% mentioned low inventory as their respective... [Read more]
Rental homes can be a natural alternative investment choice for homeowners because they are already familiar with houses. Maintenance on a rental is not that much different than on your personal home. The same plumbers, painters and other workmen can be used to make repairs.
Single family homes offer an investor high loan-to-value mortgages at fixed interest rates for long terms on appreciating assets... [Read more]
Parents, with children getting closer and closer to entering college, may also be feeling stress because they haven’t saved enough for tuition and other expenses. It’s estimated that the average cost for the 2015-16 school year is $32,405 for private colleges, $9,410 for state residents of public colleges and $23,893 for out-of-state residents.
If you started saving the year your child was born,... [Read more]
It is estimated that seven million out of 50 million homeowners could save money by refinancing their existing mortgages. Obviously, if the replacement mortgage has a lower rate than your existing one, you will save money.
If you bought a home before 2011 and are paying mortgage insurance, you should investigate refinancing to eliminate that requirement. Even if you don’t get a lower interest rate,... [Read more]
Huge opportunity!! If you are contemplating purchasing a home, now may be one of the best times. The Neighborhood lift program is kicking off on June 10/11 2016 It will be held downtown Minneapolis at the convention center and you need to make a reservation to meet with a loan officer to review the program and get qualified. Contact me and I’ll tell you about this amazing program sponsored by... [Read more]
Are you underwater on a loan and want to look at the possibilities of a refinance? Check out this link I found on the new HARP guidelines- HARP Loan Program : Eligibility & Guidelines for 2016
http://themortgagereports.com/259/harp-making-home-affordable-guidelines . Maybe refinancing is an option. Are you considering selling and would like to know the currently value of your home, let me know... [Read more]
You’ve saved the money and are ready to pay cash to build a new pool for your home. However, that’s just the beginning of your soon to be increased expenses which will include maintenance, higher utilities and higher taxes.
Homeowners obviously benefit by a larger equity when their home increases in value due to appreciation. A not-so-obvious effect that will also more than likely take... [Read more]
Real estate lost a lot of value during the recession but most areas have rebounded considerably. In some cases, the homes are worth more than they were before the housing bubble burst.
The dynamics are classic for this type of market: inventories are low, mortgage rates are low and demand is high. All price ranges are on the rise with some at an even higher rate because the short supply is causing... [Read more]
There is an infrequently-used mortgage program available that could be the solution to a buyer’s or seller’s problem.
A temporary buydown is fixed rate mortgage that the seller has prepaid interest at closing to lower the payments for a number of years. The borrower must qualify at the note rate but gets the benefit of lower payments for the early years.
A 2/1 is a common buydown that... [Read more]
Buying rental property can be an excellent decision and the better informed you are, the more likely you’ll have favorable results. The following suggestions can help you with your decisions.
Real estate is a long term investment affected by supply, demand and the economy. It isn’t an investment that is easily converted to cash. The costs to acquire and dispose of real estate are sizable... [Read more]
“If I tell you it’s going to rain, you can put the buckets on the porch.” If you grew up in the south, you made have heard this expression when a person is testifying to the veracity of his word. If you know a person and/or their reputation, you know whether you can trust their word or not.
However, with a stranger such as a buyer, the seller doesn’t know whether they’ll... [Read more]
Credit scores are used by lenders to measure the credit worthiness of borrowers. While there are several different companies that offer scores, the FICO, Fair Isaacson Corporation, is the model that is used most often.
There are five key components that determine the overall score or rating. The most emphasis, 35% of the overall score, is placed on payment history which reflects whether the borrower... [Read more]
A homeowner’s tax savings 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]
You might be surprised how many people contact real estate offices because they want to buy a home but they don’t have the down payment or the credit to qualify. Occasionally, an agent will be working with someone who does have the down payment and credit but for whatever reason, decides to postpone the decision to purchase now for some point in the future.
It’s not uncommon that once they’re... [Read more]
“Anyone may arrange his affairs so that his taxes shall be as low as possible…” While Judge Learned Hand was talking about federal income taxes, it can be applied to property taxes as well.
States have a process of assessing the value of a property based on a number of things that can include size, amenities, location and what the owner paid for the property. Most states make adjustments... [Read more]
Leverage gives the user a maximum advantage whether it is physically lifting a large object or rapidly building equity in a home. In the case of the home, the high loan-to-value mortgage allows the profits made to be greater than simply the cash invested.
A $250,000 home can be purchased on a FHA loan with a 3.5% down payment of $8,750. If the home appreciates at 2% a year, in seven years the equity... [Read more]
Ask any real estate professional if they have sold a house without the buyer having physically seen it and they’ll most likely tell you they have. While it may have been an unconventional sale, it is more prevalent today than it was twenty or even ten years ago.
The digital world of the Internet has changed the process of buying a home. It is evolving as people have become more comfortable with... [Read more]
The principle to pay yourself first has been referred to as the Golden Rule of Personal Finance.
The concept is that one of the first checks you write each month is for your own savings. The rationale is that if there is no money left after a person pays their bills, there is nothing to contribute to savings or investments that month.
By establishing a priority to save, a person realizes that the... [Read more]
Similar to an annual wellness physical, homeowners should consider an annual review of the financial elements of their home. It’s particularly valuable based on the fact that their home and its equity is generally, one of their largest assets.
• List of similar properties recently sold and currently available
• Information on challenging property tax assessment
• Refinance Analysis to: ?... [Read more]
Let’s say that you just won $8,750 on a lottery scratch-off ticket. You’ve decided to be frugal and invest the money and have decided on three alternatives: buying a certificate of deposit, a mutual fund or use the money as a down payment for a $250,000 home.
To compare the three alternatives, let’s look at the equity in each one three years from now.
The certificate of deposit can be invested... [Read more]
People tend to fear what they don’t understand. Homeowners understand fixed rate mortgages and remember the horror stories of people who lost their homes because they could no longer afford them when their adjustable rate mortgages went up.
Interest rates on fixed-rate mortgages have be so low for enough years, that borrowers haven’t even given much consideration to an adjustable rate mortgage.... [Read more]
You are probably aware that Federal law entitles you to a free copy of your credit report annually by each of the three credit bureaus: TransUnion, Experian, and Equifax. By regularly looking at each of these reports, you can determine if there are any errors on them and be aware of your credit worthiness.
Instead of ordering all three at the same time, experts recommend that you stagger them throughout... [Read more]
Technology has certainly streamlined the home buying process and introduced things that help purchasers make better decisions. Buyers have enthusiastically embraced video tours, digital signatures and the enormous amount of information available about a home, neighborhood, schools and neighbors.
The ironic thing is that buyers are ignoring the one single thing that can help them secure the “right”... [Read more]
Most of us understand the expression “burning the candle at both ends” to mean working so hard that you burn yourself out. Normally, that wouldn’t be a good idea unless it is intentional.
If the candle is your mortgage and the strategy is to get it paid off early, being “burned out” would be a good thing. One end of the candle would be your regular mortgage payments and the other... [Read more]
The Federal Emergency Management Agency (FEMA) recommends that all Americans have some basic supplies on hand in order to survive for at least three days if an emergency occurs. It is recommended that the Ready Kit should be assembled well in advance of an emergency.
The concept is to be able to survive for at least 72 hours until local officials and relief workers arrive on the scene. The disaster... [Read more]
One of the big banks has a voluntary program available that transfers $100 each month from your checking account to your savings account. In five years, the account owner would have over $5,000 because of a type of forced savings.
Similarly, when a person buys a home with a standard amortizing loan, each month, a part of the payment is used to reduce the principal loan amount. Amazingly, over $4,000... [Read more]
The more equity in your home, the more options you have. Since equity is determined by the difference between value and what is owed on a property, when homes lost value during the Great Recession, homeowners’ equity decreased.
Negative equity occurs when the value is less than the mortgage owed. According to CoreLogic, 91% of all mortgaged properties have equity and only 4.4 million properties... [Read more]
The first thing every homeowner needs to know about plumbing is how to turn the water off in case of an emergency. It’s like having a fire extinguisher; you hope you never need it but you want it just in case you do.
Generally, the cutoff is in the front of the home. There may be a separate cutoff box on the owner’s side of the meter. If not, the owner needs to be able to open the water meter and... [Read more]
Appreciation, tax advantages, cash flow, leverage and equity build up each contribute to the rate of return on rental real estate. If that sounds confusing and it’s keeping you from investing in rentals, try looking at it a different way.
Consider this, look at only cash flow and equity build-up to determine whether to buy the property. They are easy to calculate and their outcomes are both reliable... [Read more]
An Automated Valuation Model, AVM, is a computer approach that looks at public records to make a determination based on square footage, comparable sales and other elements. It is as easy as putting your address in a blank but unfortunately, AVM results may only be accurate about 20% of the time.
A popular AVM, Zestimate®, states “It is considered a starting point at determining a home’s value.”... [Read more]
Homeowners should recognize that the same trusted professional who helped them buy or sell their home can be a valuable resource while they own their home too.
Think of your REALTOR® as an indispensable homeowner’s resource who can make recommendations about a variety of services that homeowners will use throughout the tenure in their home. This experience far exceeds personal experience because... [Read more]
Affordability and stability are reasons homebuyers choose a 30-year fixed rate mortgage. It makes the payment lower than a 15-year mortgage and the principal and interest portion of the payment will be constant for 30 years.
A common belief among homeowners for decades was that they would always have mortgage payment. The Great Recession has caused many individuals to rethink that concept and make... [Read more]
Insurance and homeowners go together like peanut butter and jelly. Lenders require fire insurance at a minimum for homes with a mortgage but many owners opt for a more comprehensive coverage with a homeowner’s policy.
However, comprehensive doesn’t mean that everything is covered. Filing a claim is not the time to learn that you don’t have the right coverage. Discuss the following issues with... [Read more]
A variety of factors have led to a shortage of rental units, especially single family homes, and as a result, rents have been steadily increasing nationwide. In most markets, it is considerably less to own than to rent.
In some cases, the total house payment is less than the rent for a similar size and condition home which supports a purchase. However, when you factor in some of the financial benefits... [Read more]
Rental homes have several distinct advantages compared to alternative investments. These advantages coupled with the opportunity for a higher yield make it a clear choice for some investors.
1. Most investments must be paid for in cash. Stocks can be purchased with 50% cash but if the value goes down, more cash has to be used to keep the margin at 50%. Rentals can readily be financed with only 20-25%... [Read more]
According to a Federal Reserve report on Consumer Finances, homeowners’ net worth is 36 times greater than that of renters. Building on that study, the National Association of REALTORS® believes that by the end of 2015, the factor will grow to 41 times greater.
There can be several factors that contribute to this disparity but an important one is the forced savings that is achieved due to an... [Read more]
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]