Showing posts from June, 2021

Are You Covered?

A home warranty is a service contract that protects your home's appliances and some systems from repairs or possible replacements.   A convenient benefit of a home warranty is that when you report an item, they will assign a service provider to evaluate whether it should be repaired or replaced without the owner having to act like a middleman. Homeowner's insurance is required by most mortgage lenders when there is an outstanding loan.   This coverage protects the structure and the dwelling and the homeowner's personal property from named occurrences like theft, natural disaster, or accident.   Homeowner's insurance does not cover the systems and appliances for repairs or replacements due to normal wear. The fees for home warranties can vary based on deductibles and how much of the risk the homeowner is willing to accept. Additional items can be included to the standard coverage to include pool, spa, additional refrigerators, septic tanks, and other items.   There

Thoughts on Credit and Getting a Mortgage

Credit plays a huge role in getting a mortgage because it is a variable that helps the lender determine the likelihood that the loan will be repaid on a timely basis.   Credit bureaus evaluate people's credit worthiness using a FICO score.   The higher the score the better the borrower's credit. The mortgage rate charged to a borrower depends on their credit score.    There is an inverse relationship between credit score and interest rate changed.   The higher the score the lower the rate and the lower the score, the higher the rate.   Two separate buyers with the same income, purchasing the same price home may both be approved by the lender, but they may be charged different interest rates based on their credit scores. You could save thousands of dollars over the life of a loan by improving your credit score by just a few points.   A $350,000 mortgage at 3.5% has a principal and interest payment of $1,571.66.   By improving your credit score to qualify for a 3% rate, it

First Love, Second Wife or Third REALTOR

There is a story of a real estate agent's prayer: "Dear Lord, if I can't be someone's first love, or second wife, at least, please let me be their third REALTOR®."  In a normal market with a balanced supply of sellers and buyers, this describes the preference that it might be better to be the third listing agent to help the seller after they became more realistic about their list price. In today's market, it might have more to do with buyers because of the increased competition, their chance of having an accepted offer is greatly reduced and it is only after they have lost several that they become more aggressive in the negotiations. Competition for homes being sold has greatly increased over the previous two years, according to a recent REALTORS® Confidence Index Survey from NAR.   In April of 2021, there were nearly five offers for every home sold which increased from two offers in 2019 and 2020. Utah reported the highest number of offers per home sold

Simple Rates of Return

Looking for a simple way to determine if a rental property will give you the rate of return you want?   This modified annual property operating data may be just what you've been looking for. There are many different rates of return that investor's consider to determine whether a property will generate the yield that they expect.   Sometimes the simplest of calculations can tell you whether you want it or not and if you get the other things like tax advantages and appreciation, it just makes it that much better. The first yield we will look at is commonly called the Cash-on-Cash rate of return.   It is calculated by dividing the initial investment, usually down payment and closing costs, into the Cash Flow Before Tax. To arrive at Net Operating Income, it is simply taking the gross scheduled income, less vacancy allowance and all operating expenses.   From that is deducted the annual debt service which is the principal and interest payment times twelve.   The remaining amo

Is a Home Inventory Necessary?

Most homeowners have insurance on their home that additionally, gives them coverage on their personal property.   That is the first level of peace of mind to know that it is available to you if there is an unfortunate need for it from a burglary, fire, or some other insured circumstance. Personal property is handled slightly different than real property.   The claims adjustor could start by asking you for a list of the things lost.   You are allowed to reconstruct it but there is a distinct possibility that you'll forget things, sometimes for months or years after the claim was settled. An interesting exercise would be for you to visualize two rooms, possibly, the kitchen and main living area.   Without being in the room, create a list of all the personal items in plain sight and those in the closets and cabinets.   When you're through with the list, go into each room to check to see what kind of things were not on your list and what the value of those items amounted to.