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Showing posts from May, 2015

Who would want to be without one?

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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 Profile states the trend in owners trying to sell their home themselves has declined over the past ten years from 14% in 2003 to only 9% in 2014. Similarly, the number of buyers purchasing directly through an owner has decreased from 2001 to 2014 from 15% to 5%. It is natural to think that a seller wants to get the highest price for their property while the buyer wants to pay the least possible. Negotiations may be the most valuable service provided by an agent because of the clear conflicts of interest such as the price, terms and condition. Other areas of contention that could affect a party wit…

You've Got Money!

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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 as your social security or retirement income. Rental homes are a popular choice for passive income because they are an investment that most people understand based on their experience owning a home. They’re easy to manage and the rents should keep pace with inflation. Mortgage loans for investors are available to investors with good credit and at least 20% down payments. While 30 year terms are the most common, some investors wanting to have the home paid for by retirement may choose a 15 or 20 year term. A tried and true strategy is to choose average or slightly below average price…

Live the Dream

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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 time to buy. Half of the respondents expect rent and home prices will go up. Top Ten reasons to move the dream to reality: It’s cheaper than renting in most cases Avoid rental increases in the future Equity build-up with amortization of each payment going to principal A home is a forced savings account Appreciation increases your equity and your overall investment Mortgage interest and property tax deductionsHome equity interest deduction A place you can call your own A place to share with friends and family Capital gains exclusion on profit���…

Amortization

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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, the interest due on the next payment is calculated on the unpaid balance after the previous payment was made. This means that an increasing amount is applied to principal on each payment while the amount owed in interest decreases. If normal payments are made each time, on time, the loan will be completed paid off at the end of the term. You can see in the example of a mortgage of $200,000 at 3.25% for 30 years that it has a fixed principal and interest payment of $870.41. There is $541.67 due in interest with the first payment and the remainder is applied to principal leaving an unpa…