Rent or Buy – You Pay for the House You Occupy

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The ironic thing about people who think they can’t afford to buy a home for themselves, end up buying the home for their landlord. There are several facts that support this notion.

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Mortgages, whether held by an owner-occupant or an investor, are usually amortized so that each payment reduces the principal amount owed so that the loan will be repaid totally over the term. A tenant is inadvertently retiring the landlord’s mortgage with his monthly rent.

In most cases, the mortgage payment including taxes and insurance will be lower than the rent tenants are paying. Some experts are saying that we may never again experience the incredibly low mortgage interest rates currently available.

Renting precludes a person from enjoying the advantage a home has as a leveraged investment. When the borrowed funds cost less than the investment is returning, the rate of return on the down payment grows much faster. As you can see from the chart, a 2% appreciation on a home could result in big returns on the down payment. In most cases, there are very few or no alternative investments that offer homeowners similar returns.

Even if a buyer agrees with all of these things but doesn’t have the down payment or cannot qualify for a loan, they still need to investigate further. To find out exactly what types of loans are available and the specific down payment required which can be a whole lot less than 20%, they need to consult with an experienced, trusted loan professional (an Internet lender or a “BIG” bank may not be the best choice.) Call for a recommendation.

What a Difference 50 years Makes

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In 1966, a gallon of gas was $0.32 and today, it is $2.49. A dozen eggs were $0.60 but they’ve only doubled to $1.33. A gallon of milk was $0.99 and today, it costs $3.98. You could send a letter for five cents and now, it costs forty-seven cents.

The average cost of a new car in 1966 was $3,500 and today, it will cost $33,560. New cars have more features than the earlier models but they’re still ten times more expensive. The median price of a new home was $21,700 and now, is $304,500.

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Interestingly, mortgage rates are actually lower today at 4-4.5% than they were fifty years ago when they were just under 7%. The rates have been low for long enough that many people have been lulled into believing that they are not going to go up.

Yes, rates are a little higher but in perspective, they’re still a bargain. Years from now, will you be remembering and comparing what they were back when?

 

21910 Rabbit Run

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Rare Gem located in serene Mallard Lakes. You can come home to a custom built beauty just minutes away from the city & enjoy living in a luxury retreat every day. Take time to visit this exquisite listing in the upscale neighborhood of Mallard Lakes that offers 6227 sq. ft. with 5 bedrooms, fame room, 4 full baths, & two half-baths, room for the family & guests.

Wake up each morning to the glorious view retreat-like setting with salt water pool, waterfall, Jacuzzi, & quartzite deck that overlooks one of the three contained ponds. You can cuddle up with a good book by the double sided fireplace inside, or take advantage of the outside kitchen and fireplace when you are ready to entertain. The custom finishings in this home are extensive. Let’s start with an elevator that will take you to the media room, or the attic if needed, take the time to go to the man cave above the garage. If that wasn’t enough to keep you busy, take solace in the complete private master retreat and bath. Total indulgence with the custom designed double walk through rain shower, Jacuzzi tub, marble counters, & custom designed mirrors, along with ample counter and storage space included in the adjacent MASSIVE walk in closet. You will love the over-sized island where you can store everything imaginable in this 14’ x 17’ space, along with a wall of a hanging room that accommodates attire for every season of the year. Step right into the detailed laundry room where there is more storage, shelving, and unique features. With three beds, 2 baths, & media room on the second level, there is still plenty of room for your guests in the private mother-in-law suite on the main floor that has its own private bath, custom shower & private entrance to the pool. Covered parking for 5 …ample parking space for more with plenty of land to take quiet peaceful walks in the morning or afternoon.

Schedule your private tour soon and be one of the first to take advantage of this amazing property.

 

It Isn’t Final Until It’s Funded

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Mortgage approval isn’t final until it’s funded.  Things can change prior to the loan being closed that can affect a pre-approval such as changes in the borrowers’ financial situation or possibly, factors beyond their control like interest rate changes.40783733-250.jpg

Good advice to buyers is to do nothing that can affect your credit report until the loan closes. Opening new credit cards, taking on new debt for a car or furniture or changing jobs could affect the lender’s decision if they believe you may no longer be able to repay the loan.

The benefits of buyer’s pre-approval are definitive: it saves time, money and removes the uncertainty of knowing whether the buyer is qualified. The direct benefits include:

  • Amount the buyer can borrow – decreases as interest rates rise
  • Looking at “Right” homes – price, size, amenities, location
  • Find the best loan – rate, term, type
  • Uncover credit issues early – time to cure possible problems
  • Bargaining power – price, terms, & timing
  • Close quicker – verifications have been made

It is a very common practice for mortgage lenders to require income and bank verifications and to re-run the borrowers’ credit one final time just prior to closing. Mortgage approval isn’t final until it’s funded.

It’s the Principal of the Thing

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Most people think they’ll have a house payment and a car payment for the rest of their lives but it doesn’t have to be with a plan and a little discipline. The plan is to make additional principal contributions to a fixed rate mortgage to shorten the term and save tens of thousands in interest.

 

If a person were to make an additional $100 pay65125303-250.jpgment each month applied to principal on a $175,000 mortgage, it would shorten the loan by five years six months. If the person were to make $200 a month additional payments, it would shorten the loan by 9 years. $459 additional payment would shorten it to 15 years.

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If a person does make a decision to regularly pre-pay their mortgage, it will be their responsibility to verify that the lender is applying the money to the principal each time as opposed to being placed in the reserve account for taxes and insurance.

In today’s market, a savings account pays around 0.5% or less. Even with the low mortgage rates available, there is still a considerable savings. People who might need the funds in the near future should carefully consider this option due to the difficulty to access equity easily from one’s home.

Make your own projections using the Equity Accelerator.

Country Living…

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Step back in time with this unique cottage home that was built with materials that are far too hard to come by today. This four bedroom/two bath cottage home has the quiet comfort and solace that can only be found, like this, in the country. With walls made of Pecka Cypress, as well as the ceilings, and floors in most of the home, original solid wood doors, original wood flooring, and the comfort of a large
covered back porch, with fenced in yard, and almost 2,000.00 sq ft of living, you cannot escape what this rare gem has to offer your family.
Along with that, there is a two car carport with extra parking in front, storage shed attached to the carport and a large RV Port. In addition, you
are in a district with top rated schools, and just minutes away from shopping at Gonzales or Hammond. You will not regret checking out this
home, it has quite the charm and you can make it our own. Did not Flood, not in a Flood Zone.

When the rate goes up

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It’s not “if” the rate goes up but “when” the rate goes up; it could make a big difference for some buyers. Freddie Mac predicts that mortgage rates will be at 4.5% a year from now.

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If buyers can afford a home with higher interest rates, it means higher payments. Higher payments might mean they won’t have the money to spend on other things like furniture or improvements to the home or an unrelated purchase like a new car.

When the rate moves 0.50% on a $250,000, the payment goes up by $70.66 a month. If it moves 1.00%, the payment goes up by $143.74 per month, each and every month for the entire term of the mortgage which means paying over $50,000 more for the house.

The question facing every borrower in this situation is “How will you feel about having to pay more to live in the same house because you were not ready to commit?”

Then, there’s the borrower who is absolutely maxed out as to what they can qualify for or sometimes, it is a borrower who just refuses to pay a higher payment. When that’s the case, the buyer has to make a larger down payment. In the same example, a 0.50% increase in rate would require $14,873 more in down payment. That could make the purchase impossible or require the buyer to buy a lesser price home that will not have the same amenities.

Mortgage rates have been low for so long that some people think that is what they should be. There are some economists who believe that the economy will not be strong again until mortgage rates are in the 7% range.

To see how this type of scenario might affect you, go to the   http://www.betterhomeowners.com/FinancialApps/RateGoesUp.aspx?AccountId=EDlpyr3ghkCnBFQdFv9dGQ&Auth=1

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Pay Off Your Mortgage?

Becoming debt free is as much a part of the American Dream as owning a home but there certainly can be conflicting circumstances that make the decision to pay off your mortgage early unclear                                                                                                            .32498400-250.jpg

The advantages of paying off debt early is increased cash flow, less interest paid and a higher credit score. The disadvantages are lower cash flow available as discretionary funds for meals, entertainment and other things. If the ultimate goal is financial security, is it worth the intermediate sacrifice?

Whether you pay off your mortgage early is a personal decision that may be right for one person and not for another. Consider the following before you get started:

Reasons you should

  • Peace of mind knowing that you don’t have a mortgage
  • You’ll save interest regardless of how low your mortgage rate is
  • Lowering your housing costs before you retire

Reasons you shouldn’t

  • You can invest at a higher rate than your mortgage
  • You have other debt at a higher rate than your mortgage that needs to be paid off
  • You might need the money in the future and want to remain liquid
  • You might not qualify for a mortgage currently
  • You should pay off other debt with higher interest rates
  • Your employer has a matching retirement plan that would benefit you more
  • You have more urgent financial needs like emergency fund, life, health and disability insurance
  • You expect high inflation and the value of your mortgage debt will decrease

Use this Mortgage Accelerator to determine how quick you can pay off your mortgage.

Picture This…

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Listing photos may be one of the most important marketing efforts that lead to a potential buyer.

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Nearly, all buyers use the Internet during the home search process. They usually start looking at homes online before they contact an agent. It’s far more efficient to screen properties by looking at the pictures that have been posted than to make appointments with each homeowner, drive all over town and waste a lot of time looking at homes that would never meet a buyer’s criteria.

There needs to be enough pictures of a property to adequately represent the home; most websites allow for at least 24 and more may be needed if it is a large home.
Take horizontal shots to accommodate the format of most listing websites.
The pictures should be well-lit so that it is easy to see all of the features of the room. Natural light is preferred over the limitations of flash.
They should be taken with a wide-angle lens so that you can see the majority of the room in one picture.
Large rooms can be taken from different angles to give the buyers a different perspective.
Rooms should be set if not staged prior to taking the pictures so they will give the buyer an idea of what the room might look like with their own things in it.
Arrange pictures in website to help buyers visualize the floorplan as if walking through it.
Think about using a tripod; professionals do to absolutely hold the camera still.
They should definitely not be “photoshopped” to modify factual elements like removing power lines.
Everyone occasionally takes a great picture but it doesn’t make them a photographer. Since the photography can be one of the most important marketing efforts, consider using a professional photographer to show the home to its best advantage.