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Showing posts from August, 2015

More Home for a Lower Cost of Housing

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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 at 6% which has a principal and interest payment of $1,348.99. With a 4% rate, you could have a $282,561 mortgage with the same payment. A $57,000 more expensive home could help you get what you need most such as more square footage or a different location or a newer home. If you’re going to be making that payment for years to come, why not allow lower interest rates to help you get the features you want without having to necessarily pay a higher payment. Taking that logic a little bit further, let’s see how utilities can make a difference too. A newer home could easily have lower monthly …

Get Ready for College

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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 have to save $500 a month to end up with $88,995. Another way would be to make a lump sum contribution of $20,000 today in a mutual fund earning 5% that would be worth $37,713 in 13 years. You’d have to make a $47,196 initial contribution to end up with the same $88,995. An alternative to savings would be to invest in a $100,000 home in a good area. Assuming a three percent appreciation and rent of $1,000 a month, an initial investment of $23,500 could have a future wealth position of $83,838 at the end of 13 years. Obviously, this is just an example of why rental homes are the IDEAL investm…

Wait a Year...It Won't Matter?

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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 the market. In the meantime, the shortage of homes is driving the prices up more by the month. There are buyers who can’t find what they want for the price they want to pay and think that waiting will somehow change things. In some cases, what they want just keeps moving farther and farther away from them. The other dynamic in play is, of course, the mortgage rates. While they’ve remained low for several years, most experts agree that they’re going to rise; it’s just a matter of when. If you look at what positive increases in both of these would do, it becomes apparent that waiting wil…

Who is Your Champion?

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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 are not equally matched, and they rarely are, it is important to have a champion on your side to fight for your cause. The price of the home, the type of financing and concessions, personal property, closing dates and possession are just a few of the many things that can be negotiated in a contract. Since the seller wants to get the most for their house and the buyer wants to pay the least, their causes are diametrically opposed. Even after the contract is signed, removing the contingencies can cause considerable negotiations. The inspections or the appraisal could be the source of reeva…