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]
Awesome Two Story-Check this out and call me for a private showing: http://homesite.obeo.com/Viewer/Default.aspx?tourid=881594
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Awesome 4 bedroom home in fantastic location. What the video http://homesite.obeo.com/Viewer/Default.aspx?tourid=882205 Call me for more information and a private tour.
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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]
With interest rates lower than they’ve been in over 40 years, it may be difficult to think of a “window of opportunity” closing. However, it isn’t difficult to understand that it may very probably cost more to live in a home in the near future due to rising interest rates and prices.
Zillow recently reported results from a nationwide study that home values are expected to appreciate by 4.5%... [Read more]
IRS allows taxpayers the option to take the standard deduction or the itemized deduction. The astute taxpayer will compare to see which one will result in the greatest deduction and the election can be made each year.
The 2013 standard deduction for a married couple filing jointly is $12,200 and $6,100 for a single taxpayer. It doesn’t require any proof of actual expense and has no requirement... [Read more]
Prepaid interest, sometimes called “points”, is generally tax deductible when a person pays them in connection with buying, building or improving their principal residence. When points are paid on a refinance, they are not a current deduction but have to be taken prorata over the life of the mortgage.
For instance, if $3,000 in points were paid on refinancing a 30 year mortgage, a deduction of... [Read more]
Here is a fun video about real estate. I hope you enjoy it. Contact me if I can help you.
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The Qualified Mortgage Rule came into effect on January 14, 2014 as one of the results to the Dodd Frank Reform Act to protect consumers from predatory lending practices. This will affect the underwriting standards that the majority of lenders will use to qualify borrowers.
The ability to repay rule states that financial information must be supplied by the borrower and verified by the lender. The... [Read more]
These are some presentations I have put together. Hope you enjoy them. Please call me with any questions or if I can be of assistance.
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A water meter key is like insurance; buy it before you need it.
Imagine a pipe has burst and there is water flowing like a river through your home. There may a cut-off valve to each sink if it works and if that’s where the leak is coming from. Your home may have a master cut-off valve but if you haven’t used it before, you might not know where it is. The last resort is to cut off all the water... [Read more]
Do you have a luxury home and are looking for some enhance marketing to get your home sold? Let’s meet and discuss how I can be of service.
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Watch my latest TV show as I discuss the local Minneapolis St Paul real estate marketplace.
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Coffee should be hot. Beer should be cold. Mexican food should be spicy. However, if these things are less than the standard that you expect, there are not any lasting consequences.
As the value of the object in question rises, either in price or gravity, the expectations usually increase and decisions become progressively more important. Marriage, children, health and careers are certainly a few... [Read more]
The more things you have, the more you have to take care of. And in this case, the more that you have to store that gets in the way of finding the things that you actually use. Periodically, you need to go through every closet, drawer, cabinet and storage area to get rid of the things that are just taking up space in your home and your life.
Every item requires the decision to retain or remove. ... [Read more]
A ½% increase in interest rate may not sound like much but it is roughly equivalent to a 5% increase in price. It becomes obvious when you compare the payments.
If you financed 100% of the cost of a $250,000 home at 4.5% interest for 30 years, the payment would be $1,266.71 per month. If the mortgage rate went up to 5%, the payment would be $1,342.05. If the home increased 5% in value, the $262,250... [Read more]
Whether you continue to rent or decide to buy a home, according to recent Zillow 2014 housing projections, the cost is going up. Zillow projects home prices to increase nationally by 3%, mortgages to rise to %5 interest rate by the end of the year and rents to go up by 2.5% on average.
If it will cost a person more whether they rent or buy, the conclusion can be made that one way or the other, they... [Read more]
A certificate of deposit will generate a cash flow based on the interest rate that it pays which is the only way it generates a return for the investor.
An investment in a stock that doesn’t pay dividends, would need to be worth more than you paid for it to earn a profit. On the other hand, a stock that paid dividends could make the investor a profit even if it sold for the same price that he paid... [Read more]
I recently sat down with a home warranty vendor. Take a look at this video and think about if it might be of benefit to you-either a buyer or seller.
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You’ll need to earn $2.00 for every $1.00 you want to spend assuming you pay 50% of your earnings on income tax, social security and Medicare. On the other hand, you get to keep 100% of every dollar you save on your personal expenses because the taxes have already been paid.
Periodically, review your expenditures with the diligence of an exuberant IRS agent on commission. It’s an exercise that... [Read more]
Dear Lending and Real Estate Partner:
The City of Woodbury’s DPA programs have been amended both to increase the income limits and increase the maximum purchase price.
These changes will make more homebuyers and more properties eligible for our programs.
As a reminder, with the recent changes to FHA financing and increasing mortgage interest rates, Woodbury’s funds can help your clients reduce... [Read more]
“I’d wish I’d know that before I made a decision.” If you’ve ever regrettably said this to yourself, having a checklist might have prevented the issue in the first place. This list of questions can provide you with things to discuss when interviewing a moving company.
• What is the charge for packing?
• Does it include boxes? If not, what do they cost and will you deliver them?
•... [Read more]
The two most frequently quoted constants in life are death and taxes. Two more things would-be homeowners can expect in the near future are increases in mortgage rates and housing prices.
Interest rates have been kept artificially low for several years by the Federal Reserve in an effort to strengthen the economy. Policy is shifting to allow them to seek their own natural level and that will surely... [Read more]
One of the most frequent calls from homeowners to their agents is about the listing’s inactivity due to the lack of showings. The homeowner commonly believes that the home is shown only when a buyer walks through the house with an agent.
Today’s buyers are more sophisticated than in the past due to the abundance of information available to the public on the Internet. There are seemingly inexhaustible... [Read more]
If you’ve considered changing your light bulbs to energy-saving LED bulbs but decided not to make the investment because the prices were too high, you might want to investigate again. The prices have come down considerably.
An initial investment now will generate immediate returns through energy costs and because they last longer, you won’t need to replace them for years.
The life of LED bulbs... [Read more]
The energy-efficient home upgrades tax credit is scheduled to expire on December 31st this year. If you need to make improvements to your home, this could be an incentive to do it before the end of the year. If you have already made qualifying improvements without realizing the tax credit is available, it may seem like a holiday gift you weren’t expecting.
The equipment must be installed to... [Read more]
With a 2,000+ mile long winter storm affecting much of the country, there are plenty of home owners who wish they were better prepared. Even when you live in warm climates, some of these things are important to check periodically.
Preparing for the change of seasons can make your home more comfortable and protect your investment. Regular maintenance extends the various components of a home and can... [Read more]
The Winter Home Buyer Report conducted in the second week of November by REALTOR.com® revealed the sentiments of current home buyers expecting to buy a house during the winter months. It appears that there is pent-up demand with buyers who were unable to purchase a home recently.
Most cited as an impediment to purchase was the challenge of low inventory. Strong demand coupled with short supply explains... [Read more]
Most school children would probably say that Thanksgiving dates back to the Pilgrims at Plymouth as early as 1621. By the late 1660’s, it had become traditional to hold a harvest festival in New England.
President George Washington declared the first nation-wide thanksgiving in 1789 “as a day of public thanksgiving and prayer to be observed by acknowledging with grateful hearts the many and signal... [Read more]
Tonight I replaced old light bulbs with new CFL bulbs. Was I surprised at the better white light the bulb generated. In fact, the fixture requires 4 bulbs. Two were new and two were old. Boy what a difference. I also had my home energy tested this past year and I’ve started making the recommended changes as well. Are you a “green” buyer or seller? Consider some of the points mentioned in the... [Read more]
Most people are familiar with the various reasons a homeowner refinances their home which generally result in two major benefits: saving interest and building equity.
There is however another reason to refinance which may not be as common which is to remove a person from the loan. In the case of a divorce, when one party wants to keep the home and the other party wants their equity out of the home,... [Read more]
As a homeowner, you obviously pay for your mortgage but as an investor, your tenant does. Equity build-up is a significant benefit of mortgaged rental property. As the investor, collects rent and pays expenses, the principal amount of the loan is reduced which increases the equity in the property. Over time, the tenant pays for the property to the benefit of the investor.
Equity build-up occurs... [Read more]
The division of assets between the spouses is an important decision to finalize a divorce. The exercise looks relatively simple: assign a value for each of the assets and divide them based on a mutual agreement between the parties.
The challenge is to make a fair division which requires an analysis to determine their value after they’re converted to cash.
Assume the two major assets in the example,... [Read more]
Would you like to know more about the trends and what is happening in our local market? Check out my newsletter on this topic
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When you’re buying or selling, the obvious source to get your real estate question answered is your agent but where do you go the rest of the time? As a homeowner for many years to come, you’ll need reliable help and solid suggestions.
Our business goal is to have a select group of our friends and past customers who consider us their lifelong real estate professional. We want to earn that trusted... [Read more]
Lenders, like any business, have to make a profit. The cost of acquiring the funds, the operating costs to service and the expected profit margin are easily identified. The variable in pricing is the type of mortgage and the credit worthiness of the borrower.
A loan with a 3.5% down payment is riskier than a loan with 20% down payment. If the lender has to take the property back to recover their... [Read more]
One of the anxiety highpoints during the sale of a home is waiting for the buyer’s home inspection report. Most sellers willingly disclose what they know about their home to any potential buyers. The concern stems from the inspector finding something that they’re totally unaware of and that it will either cost them a lot of money to correct or the buyer will simply use it to void the contract.... [Read more]
Man’s best friend enjoys many of the benefits of his master’s home besides food and shelter and a comfortable place to live and play. In return, dog owners expect companionship and possibly, protection; after all, even a small dog can bark to signal intruders.
Few people doubt that most dog owners love their pets and treat them well. The costs associated with having a dog can include medical... [Read more]
You’ve seen lists telling buyers what to do to find the right home but knowing what not to do can be just as important. After finding the right home, negotiating a contract, making a loan application and inspections, buyers, understandably, start making plans to move and put their personal touches on the home.
In today’s tenuous lending environment, little things can derail the process which... [Read more]
Equity is the difference in what your home is worth and what you owe. Ideally, as the value goes up and the unpaid balance goes down with each amortized payment made, the equity grows from two directions.
This dynamic leads to increasing a person’s net worth much faster than many other investments.
A homeowner has minimal control over value. It is necessary to maintain the property to avoid depreciation... [Read more]
Just some information that you might or might not know or have thought of.
More often than you’d expect, homeowners refer to the person they bought their insurance from as their agent. It sounds reasonable but it’s definitely not accurate. That person is the agent of the insurance company and they legally represent the company, not the customer. Even an independent agent who can place a policy... [Read more]
Originally, in 1913 with the Sixteenth Amendment, Income Tax allowed a deduction on any interest paid by a taxpayer. Prior to World War I, most interest was paid for business purposes and very little paid by individuals. Credit cards, revolving credit, student loans and home equity loans that would charge interest would not become popular for decades.
However, by the 1930’s, the Federal Housing... [Read more]
Did you know that RE/MAX is a leader in commercial real estate as well as residential? We use a separate MLS system (MNCAR) and other resources besides the regular NorthStar MLS, of which I am a member. Let me know how I can help you-residential, commercial or investment properties.
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The profit potential in single family homes for investment has been a consistently good long-term investment. They offer investors the opportunity of high loan-to-value mortgages at fixed interest rates for 30 years on appreciating assets, tax advantages and reasonable control that other investments don’t offer.
Last year, Warren Buffett said that if he had a way of buying a couple hundred thousand... [Read more]
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It’s a common practice for buyers to make a list of what they want in a home during the search process and to explain it to their agent. However, maybe the first list they should make would have the skills they want their agent to have.
The Profile of Home Buyers and Sellers identifies what buyers want most from their agents and as you’d expect, help with finding the right home was ranked highest... [Read more]
You’ve saved for a rainy day or retirement. Congratulations but don’t get too comfortable yet; where is it invested? It’s estimated that over 25% of Americans have their long-term savings in cash instead of investments like stocks, bonds or real estate.
The memories of the financial crisis of 2008 are recent enough to understand why some people may want to avoid the stock market and real estate.... [Read more]
Following his heart surgery last week, after an issue was discovered during his annual physical, President George W. Bush encouraged everyone to get regular check-ups.
Another important checkup that should be done on a regular basis and can be just as beneficial for your finances is an annual homeowner advisory. Why would you treat your investment in your home with less care than you... [Read more]
It’s been said that more money has been lost due to indecision than was ever lost because of a bad decision. Regardless of whether you agree with the statement, delaying the decision to buy in today’s market is going to cost the buyer more.
Home prices have gone up considerably in almost every market in the country in the past year and while inventories are beginning to grow, prices are expected... [Read more]
Rising interest rates are great if you are renewing a certificate of deposit but not so much when you’re borrowing money. With interest rates on the rise as well as home prices, housing affordability is a concern for would-be homeowners.
A rough rule of thumb is that a person’s or family’s housing should not exceed 28% of their monthly gross income. While rental rates and home prices have been... [Read more]