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Showing posts from January, 2020

Who Earns the Commission?

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What do you think the motivating reason would be for the 5% of all homebuyers who chose not to work with an agent but instead conducted their own home search, contacted the seller, negotiated the contract, located their financing, arranged their inspections and all of the other services provided by REALTORS®?Most people would probably guess the buyers were wanting to do the work themselves and earn the commission in the form a lower purchase price.Looking at it from the seller's perspective, what would be the reason for the 8% of all home sellers who chose not to work with an agent but instead did their own research to determine the value of their home, coordinated all of the marketing efforts necessary to have sufficient exposure to the market, negotiate directly with the buyer, and investigate all of the other steps necessary to close the sale?Is it possible and even probable, that they too were trying to earn the commission and net more proceeds from the sale?If the home sold f…

Take the Standard Deduction & the Home

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Now that the standard deduction is increased to $12,200 for single taxpayers and $24,400 for married ones, many homeowners are better off with the standard deduction than itemizing their deductions to write off their mortgage interest and property taxes.  There was some speculation that without the tax advantages, homeownership is not the investment it once was.By looking at the other benefits, you can see that homeownership is still one of the best investments people can make.A $275,000 home financed with a 4.5%, 30-year FHA loan would have an approximate total payment of $2,075.  The difference in the value of the home and the amount owed on the mortgage is called equity.  Two things cause equity to increase: the home appreciating in value and the principal loan balance being reduced with each payment made on an amortizing loan.In this example, if the home were appreciating at 2% annually, the value would increase by $5,500 the first year which would be $458.33 per month.  At the sa…

Understanding Reverse Mortgages

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Reverse mortgage loans are like traditional mortgages that permits homeowners to borrow money using their home as collateral while retaining title to the property.Reverse mortgage loans don't require monthly payments.The loan is due and payable when the borrower no longer lives in the home or dies, whichever comes first.Since no payments are made, interest and fees earned are added to the loan balance each month causing an increasing unpaid balance.Homeowners are required to pay property taxes, insurance and maintain the home, as their principal residence, in good condition.
Reverse mortgages provide older Americans including Baby Boomers access to their home's equity. Borrowers can use their equity to renovate their homes, eliminate personal debt, pay medical expenses or supplement their income with reverse mortgage funds.
Homeowners are required to be 62 years and older and meet the following requirements:
Own the home free and clear or owe very little on the current mortgage t…

Downsizing in 2020

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Approximately 52 million or 16% of Americans are age 65 and over.It is easy to understand that some of them are thinking of downsizing their home because they don't need the same space they did in the past.It can be liberating to divest yourself of "things" that have been accumulated over the years but are no longer needed.Moving to a less expensive home, could provide savings for unanticipated expenditures or cash that could be invested for additional income.Savings can be realized in the lower premiums for insurance and lower property taxes, as well as,  the lower utility costs associated with a smaller home.Typically, owners downsize to a home to 2/3 to 50% of their current home's size.In some situations, it is not only economically beneficial, but their interests may have changed so that a different style of home, area or city might fit their lifestyle better.The sale of a home with a lot of profit will not necessarily trigger a tax liability.Homeowners are eligi…