Posts

Showing posts from November, 2020

First Things First

Image
If you are making a particular meal for the first time, it is essential to have a recipe so that it turns out the way it should.   Knowing the ingredients and preparation can guide you through the process. Buying a home is really no different than making a new recipe.   There are certain things that need to be done, many of which should occur in a particular order to save time, money, effort and disappointment.   Your first inclination may be to start searching the Internet for homes and schedule some showings or possibly visit open houses.   Even though this is very gratifying, it shouldn't be done until you have gone through the preliminaries. Buying a home for the first-time implies you haven't been through the process before and even though, you may have a rough idea of what needs to be done, selecting the right agent in the beginning will give you the benefit of years of personal and professional experience that can help you avoid some of the common mistak...

More Time at Home

Image
We are all spending more time at home and will probably need to continue to do so for a while longer.   Depending on the makeup of your family, your home is now a home office, a gym, a virtual classroom and considerably more meals have been prepared in your kitchens in the past six months than normal. Some businesses have undergone a metamorphosis that has shown them that maybe they do not need the big commercial spaces for their employees.   They realize that they can be just as productive with their work force offsite which will cut expenses. If this scenario sounds familiar, it may be worth exploring what moving would look like for your situation.   To analyze the options, you will need to know what your home is worth and what the net proceeds will be after selling it. You will need to know what homes are available with the amenities you are looking for together with the prices and mortgage money.   Depending on the interest rate on your current mortgage, th...

Moving "Down" in an "Up" Market

Image
Selling a home and buying a lower priced home that meets your current needs can be to your advantage in an "Up" market like the current one with low inventory.   The advantage is that you can maximize the price for the home you're selling and not have to reinvest it all in your replacement. Just to illustrate the point, let's say there is a 10% premium in the sales price of a home currently.   If you're selling a home for $750,000, it would be $75,000.   If you replaced the home with a $500,000 home, the premium would be $50,000 which means you're $25,000 ahead. Let's further assume that your home is debt free so that when you sell it, you have a large cash equity.   Instead of paying cash for the replacement home, get an 80% loan at today's low interest rates and reinvest the proceeds to supplement your retirement. You may be able to get as low as a 2.5% mortgage and earn significantly more on the proceeds in other investments. Home prices are...

Cutting Your Housing Costs in Half

Image
Cutting the price will generally bring buyers of anything out of the woodwork that were not serious before.   Some renters could easily lower their monthly cost of housing by half or more by purchasing a home with all the financial benefits that come with it. The most obvious thing in today's market is that the mortgage payment could be less than the rent the tenants are paying.   With mortgage rates hovering around 3%, this is a major factor of the savings. The two other major contributing factors are appreciation and amortization of the mortgage, neither of which benefit tenants continuing to pay rent.   According to the FHFA House Price Index, home prices rose 5.4% from July 2019 to July 2020.   There were 400,000 less homes on the market during the summer of 2020 than the previous summer which is influencing appreciation. With each payment a homeowner makes on their mortgage, a portion is used to reduce the principal amount owed.   This is like a savin...