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Feb. 20, 2021

Financial Apps

Posted in Financial Apps
Feb. 20, 2021

IN TOUCH

 https://betterhomeowners.com/PhilLande/2021/02/19/Reporting-Internet-Crimes Fri, 19 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/19/Reporting-Internet-Crimes https://betterhomeowners.com/PhilLande/2021/02/18/Rent-Own-Comparison Thu, 18 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/18/Rent-Own-Comparison

Mortgage insurance benefits the lender if a borrower with less than a 20% down payment defaults on their loan.  Most conventional mortgages greater than 80% and all FHA loans require the borrower to have this coverage.

Private mortgage insurance on conventional loans can range from 0.5% to 2.25% based on the loan-to-value and the credit worthiness of the borrower.  A $350,000 mortgage would have a monthly mortgage insurance premium of $146 a month at the low-end of the scale and over $600 on the high-end.

You may request that your mortgage servicer cancel the PMI when the principal balance reaches 80% of the original value at the time the loan was made.  You should have received a PMI disclosure form when you signed the mortgage documents stating the date.  If you have made additional principal contributions, it will accelerate the date.

Other criteria considered to cancel the PMI on your loan is:

  • The request must be in writing.
  • You must be current on your payments with a good payment history.
  • The lender may ask that you certify there are no junior liens in effect.
  • If the lender is concerned that the value has declined, an appraisal may be required to show that it is eligible.

Conventional loans are supposed to remove the mortgage insurance when the unpaid balance is 78% of the original purchase price. 

Another possibility is that the lender/servicer must end the PMI the month after you reach the midpoint of your loan's amortization schedule.  For a 30-year loan, it would be after the 180th payment was paid.  The borrower must be current on the payments for the termination to occur.

With the rapid appreciation that many homes have enjoyed in recent years, homeowners may be able to refinance their home and if the new mortgage amount is less than 80% of the current appraised value, no mortgage insurance would be required.

The owner would incur the cost of refinancing but eliminate the cost of the mortgage insurance.  To calculate the savings, subtract the new principal and interest payment from the old principal and interest with PMI.  Then, divide the savings into the cost of refinancing to determine the number of months necessary to recapture the cost.

FHA loans have two types of mortgage insurance premium: up-front and monthly.  For loans with FHA case numbers assigned on or after June 3 2013 with LTV% greater than 90%, the MIP will be paid for the entire term of the loan.  If that is the case, refinancing on a conventional loan is the only way to eliminate the MIP.  For loans with original LTV% less than 90%, the MIP is collected for 11 years until the balance is 78% of the original amount.

When buying a home, purchasers may not have enough resources for a large down payment.  It is understandable to use the best mortgage available to buy the home.  The next goal should be to manage the mortgage to lower the overall costs.  In this article, we explored eliminating the private mortgage insurance.

https://betterhomeowners.com/PhilLande/2021/02/17/Is-It-Time-to-Cancel-the-Mortgage-Insurance Wed, 17 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/17/Is-It-Time-to-Cancel-the-Mortgage-Insurance https://betterhomeowners.com/PhilLande/2021/02/16/Mortgage-Forgiveness Tue, 16 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/16/Mortgage-Forgiveness https://betterhomeowners.com/PhilLande/2021/02/15/Home-Renovation Mon, 15 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/15/Home-Renovation https://betterhomeowners.com/PhilLande/2021/02/12/Perfect-Match Fri, 12 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/12/Perfect-Match https://betterhomeowners.com/PhilLande/2021/02/11/Roof-Leaks Thu, 11 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/11/Roof-Leaks

This strategy is not about trying to negotiate the best price; it is about beating out the competition and buying the home.  It may be difficult to understand until you have lost a few homes to better offers but when the reality of the situation is that there are not that many homes on the market, the competition heats up and different tactics are necessary. 

Sales in December were annualized at 6.76 million, a 22.2% increase year over year according to the National Association of REALTOR®.  The median sales price is $309,800 which is up 12.9% from the previous year.  Inventory for December fell to 1.9 months' supply from 3.0 months' supply in December of 2019.  Six months inventory is considered a balanced market.

Things that work in a buyer's market will not work in a seller's market.  The shortage of available homes for sale has led to not only shorter market times but multiple offers that have sales prices above the listing price.  Buyers, especially in entry to mid-level priced ranges, may have lost out multiple times to buy a home. 

Buyers must be strategic if they want to successfully find a home.  There are some things that are absolutely essential to just be in the game.

Unless you are paying cash and have adequate proof of funds, you need to get pre-approved.  REALTORS® and financial advisors have been saying this for decades, but it is critical now.  There are plenty of reasons that benefit the buyer but most importantly, it is to show that a buyer is serious and has gone through the effort to have a lender run his credit and verify his income, expenses, employment, and credit.

If the home fresh on the market, in a desired location and price range, you need to assume there will be competing offers and you may never even get a counteroffer from the seller.  You need to consider making your highest and best offer first, as if you will not get a second chance.  This is more difficult for some people than others because of their bargaining nature.

Earnest money that accompanies a contract shows that the buyer is acting in good faith.  The amount that may be customary may not be enough in a competing market.  Consider two or three times what might be normal.  Talk to your agent about what would make an impression on the seller.

While contingencies will protect your earnest money from specific concerns like loan approval and inspections, the seller will look at them as ways that the buyer can get out of the contract and they'll need to put the home back on the market.  If a seller is presented multiple offers, they might be prone to accept one with the least contingencies, especially, if the prices are comparable.

There is usually a period connected to the different contingencies that are allowed to complete them.  By shortening these times as much as possible limits the time the seller might feel they are in limbo.

If you have the flexibility, you might express your willingness to move the closing and/or possession dates to accommodate the seller's schedule.  This could be an important factor in your favor and could be done in a verbal statement conveyed from your agent to the listing agent.

These are things buyers should consider and discuss with their agent before they find the home that they want to buy.  While you are formulating your position, another offer may be accepted before you even make yours.  For more information, download our Buyers Guide.

https://betterhomeowners.com/PhilLande/2021/02/10/Make-Your-Best-Offer-FIRST Wed, 10 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/10/Make-Your-Best-Offer-FIRST https://betterhomeowners.com/PhilLande/2021/02/09/PreApproval-Is-Good-for-Everyone Tue, 09 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/09/PreApproval-Is-Good-for-Everyone https://betterhomeowners.com/PhilLande/2021/02/08/What-is-a-Point Mon, 08 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/08/What-is-a-Point https://betterhomeowners.com/PhilLande/2021/02/05/Find-a-Wall-Stud Fri, 05 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/05/Find-a-Wall-Stud https://betterhomeowners.com/PhilLande/2021/02/04/BEFORE-you-accept-the-buyers-letter Thu, 04 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/04/BEFORE-you-accept-the-buyers-letter

Many homeowners with mortgages pay for both types of insurance but only one of them protects the owner.

Homeowner's insurance covers damage to your property and losses from fire, burglary, vandalism, and other named natural disasters.  When an insured has a loss, they file a claim with the insurance carrier which would be subject to the deductible mentioned in the policy.

If the homeowner has a mortgage on the property, the lender will require that the borrower carry adequate insurance on the property and name the lender as an additional insured.  This protects the lender that the home will continue to be sufficient collateral for the loan in case of a loss.

Mortgage insurance is not like homeowner's insurance in that it is solely for the protection of the lender if the borrower defaults on the loan.  Usually, lenders require mortgage insurance on any loan greater than 80% loan-to-value.  Occasionally, they may require it on some loans less than 80% based on their underwriting requirements and possibly, from anticipated risk from the borrower.

VA loans do not require mortgage insurance.  Conventional lenders must remove the mortgage insurance when the loan amortizes below the stated percentage.  FHA loans require mortgage insurance for the life of the loan.

When a property appreciates so that when the owners refinance, the loan-to-value ratio is less than 80%, no mortgage insurance would be required.  This can be a strong motivation for some owners to refinance to save the cost of the mortgage insurance.

Mortgage insurance premiums are not regulated by law like homeowner's insurance is in most states.  Most buyers are concerned about the interest rate on their mortgage, but few question the amount of the mortgage insurance premium.

The homeowner can select the carrier for his homeowner insurance, but the lender determines the carrier for the mortgage insurance.  When you are interviewing lenders, the type of insurance that will be required and the price of the mortgage insurance should be included in the discussion.

https://betterhomeowners.com/PhilLande/2021/02/03/Home-Insurance-and-Mortgage-Insurance Wed, 03 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/03/Home-Insurance-and-Mortgage-Insurance https://betterhomeowners.com/PhilLande/2021/02/02/FHA-Streamline-Refinance Tue, 02 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/02/FHA-Streamline-Refinance https://betterhomeowners.com/PhilLande/2021/02/01/PreApproved-First Mon, 01 Feb 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/02/01/PreApproved-First https://betterhomeowners.com/PhilLande/2021/01/29/Way-to-Prepay-a-Mortgage Fri, 29 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/29/Way-to-Prepay-a-Mortgage https://betterhomeowners.com/PhilLande/2021/01/28/Free-Credit-Reports Thu, 28 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/28/Free-Credit-Reports

Staying at home in 2020 caused of lot of owners to think about how nice it would be to have a larger home to accommodate the additional activities that come along with isolating.  Particularly for people with children at home or possibly, the potential of either adult children or parents coming to live with them.

There are other owners who are trying to weigh the pros and cons of selling their larger home and downsizing.  For entirely different reasons, the advantages could be very appealing to an owner.  A smaller home is easier to maintain and usually, has lower utilities, insurance, and property taxes.

Some people might be considering the convenience and ease of mobility of a single level home.  It may be finding a location with proximity to the activities they are now interested in.  A newer home might have less maintenance and be more energy efficient.

Married taxpayers who have owned and occupied a principal residence for two years can exclude up to $500,000 of capital gain while a single taxpayer can exclude up to $250,000.  Liquidating the equity in their home without a tax liability could have multiple benefits.

Some people might choose to pay cash for the replacement home.  Others might put 20% down to avoid mortgage insurance and possibly, even get a 15-year loan to get the lowest rate.  The balance of the equity could be invested at a rate higher than the interest on their new mortgage.  Still, others might want to have some reserve funds available for whatever the next unanticipated crisis might be.

It could be a way to fund a longtime goal like children's or grandchildren's education, or wedding, or a once-in-a-lifetime trip.  Maybe part of the equity could be used to start a business or make a grant to a worthwhile charity.

Selling a home and purchasing another will have expenses involved that have to be taken into consideration.  Purchase costs could be 1.5 to 3% while sales expenses could be easily be 2.5 times that much.

Regardless of whether it is moving to a larger home or a smaller one, now is a good time to make the move.  Due to the low inventory in most markets, homes are selling quickly, many times, in less than three weeks.  Normally, the winter months have less activity which means less competition also.

And then, there are the mortgage rates.  As of 1/21/21, the 30-year fixed rate was at 2.77% and the 15-year at 2.21%.

Like any other big change in life, it is recommended that you take your time to consider the possible alternatives and outcomes.  Your real estate professional can provide information that can be valuable in the discernment process such as what your home is worth, what you will net from a sale as well as, alternative properties for your next stage in life. https://betterhomeowners.com/PhilLande/2021/01/27/Moving-UP-or-DOWN Wed, 27 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/27/Moving-UP-or-DOWN https://betterhomeowners.com/PhilLande/2021/01/26/Types-of-Showings Tue, 26 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/26/Types-of-Showings https://betterhomeowners.com/PhilLande/2021/01/25/Mortgage-Rate-History Mon, 25 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/25/Mortgage-Rate-History https://betterhomeowners.com/PhilLande/2021/01/22/Homeowner-Basics--Turn-Off-Water Fri, 22 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/22/Homeowner-Basics--Turn-Off-Water https://betterhomeowners.com/PhilLande/2021/01/21/Itemized-Deductions-2020 Thu, 21 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/21/Itemized-Deductions-2020

Rental homes whether they be single-family detached properties, condos, two, three or four-unit properties share many of the same benefits.  Most people instinctively understand many of the working parts because they are the same as their home.  They have a basic understanding of value and how to maintain the property.  The service providers for a home would be the same for a rental home.

These properties allow an investor to obtain a large loan-to-value mortgage at fixed interest rates for up to thirty years.  They appreciate in value, currently exceeding many other assets; have defined tax advantages and allow an investor more control than many alternative investments.

Most lenders require 20-25% down payment and will finance the balance at rates close to owner-occupied homes.  Buyer closing costs will add another three to four percent to the amount of cash needed to close.  It is also prudent to have available funds for repairs and maintenance.

There are successful real estate investors in every price range and part of town.  If your ultimate goal is to have the rent handle the holding costs and to sell the appreciated property at the end of a seven to ten year holding period, it might be advantageous to stay in predominantly owner-occupied neighborhood.  They usually appreciate faster and will appeal to a buyer who wants it for their home.  Chances are, this type of buyer will pay a higher price than an investor who may not be willing to pay as high a price.

By staying in an average price range, or possibly, slightly lower, you'll be able to appeal to the broadest group of not only buyers but also tenants while you are renting the property.  Even during the mid-80's when FHA interest rate was 18.5%, buyers were still purchasing homes.  Whereas the higher priced homes have a tendency to slow down during trying economic times.

Ask your real estate professional what price ranges sell the best, rent the best and have mortgage money available.

Some investors manage their properties themselves and others don't want to be involved.  Professional property management has advantages like expertise, established contacts, operating statements and economies of scale.  The main disadvantage is the cost factor but if they can rent it for a higher price and keep expenses lower than you can, it could minimize the difference. 

A possible consideration might be to have a real estate professional place the tenant, check the credit and write the lease.  There would be a one-time fee for this, but the owner/investor could then, manage the property, saving the expense of a monthly fee.

Understanding the landlord tenant laws would be particularly important to an investor managing their own property but regardless, the investor needs to have a basic familiarity of the law.  There can be civil as well as criminal aspects.  Examples might be that a landlord is required to change the locks on a property for a new tenant; the number of days before a landlord must return a deposit and what to do if there are damages causing all or part of it to be withheld.

Another tool that can be very helpful for investors is an investment analysis that will assist them in selecting a property that is likely to provide a satisfactory rate of return.  Ask your real estate professional if they can provide this for you.  They should be more familiar with rents and expenses to be able to determine the cash flow and what kind of yield you may be able to expect over your intended holding period.

For more detailed information, download our Rental Income Properties and contact me to schedule a meeting to talk about the possibilities. 

https://betterhomeowners.com/PhilLande/2021/01/20/Rental-Home-Investments Wed, 20 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/20/Rental-Home-Investments https://betterhomeowners.com/PhilLande/2021/01/19/Excluding-the-Gain Tue, 19 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/19/Excluding-the-Gain https://betterhomeowners.com/PhilLande/2021/01/18/Annual-Percentage-Rate Mon, 18 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/18/Annual-Percentage-Rate https://betterhomeowners.com/PhilLande/2021/01/15/Share-with-Appraiser Fri, 15 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/15/Share-with-Appraiser https://betterhomeowners.com/PhilLande/2021/01/14/Median-Down-Payment Thu, 14 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/14/Median-Down-Payment

Imagine what happens when there is not a pre-listing inspection.  The buyer contracts for the home with a provision for professional home inspection.  When it is made, there could be things that the buyer didn't expect or even, anticipate.  If it doesn't trigger an action to terminate the contract, the buyer will inevitably, ask the seller to make all the repairs.

When presented with the buyer's request, the seller may take the opposite position of not wanting to do any of the repairs.  The buyer could accept the property in its "as is" condition or negotiate the repairs or a reduced price with the seller.

Any experienced agent can tell you that sometimes a mutually agreed negotiation is reached and other times, an impasse is met that cannot be resolved.  The contract is terminated, and the house has to go back on the market but this time, a disclosure has to be made to all parties looking at the home which may deter showings.

Taking a pro-active approach, by obtaining a pre-listing inspection, the seller can find out about things that will probably show up in a buyer's inspection.  They can get them repaired before the home is shown and it will help the buyer feel more confident with the home.  Another option would be to disclose them as not working and make a price adjustment, either way, the seller is in control and is taking a position of transparency with potential buyers.

In some cases, the pre-listing inspection may show things in working order that the buyer's inspection indicates as needing repair.  With two disinterested parties having opposing opinions, negotiations have a more likely chance for a mutual agreement.

Disclosing things that are not in working order can reduce liability in the future.  Some deficiencies with the home are not discovered prior to the closing and the surprise issues could lead to liability.  The pre-listing inspection by a professional combined with the seller disclosing it properly can reduce potential liability.

For the small investment in the pre-listing inspection, the benefits are well worth the expense.  You and potential buyers will have a better idea of the condition of your property and know what to expect.  You can present the property in a transparent way that will build confidence with the buyer.  You'll avoid unpleasant surprises as well as possible delays.  Pre-listing inspections can lead to faster sales and satisfaction for everyone involved.

For more information, download the Sellers Guide.

https://betterhomeowners.com/PhilLande/2021/01/13/PreListing-Inspections Wed, 13 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/13/PreListing-Inspections https://betterhomeowners.com/PhilLande/2021/01/12/Mistakes-Firsttime-Buyers-Should-Avoid Tue, 12 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/12/Mistakes-Firsttime-Buyers-Should-Avoid https://betterhomeowners.com/PhilLande/2021/01/11/Going-to-Cost-More Mon, 11 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/11/Going-to-Cost-More https://betterhomeowners.com/PhilLande/2021/01/08/Make-It-Feel-Larger Fri, 08 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/08/Make-It-Feel-Larger https://betterhomeowners.com/PhilLande/2021/01/07/Checklist-for-Homeownership Thu, 07 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/07/Checklist-for-Homeownership

A much-repeated investment strategy is to buy low and sell high.  Some people who purchased around the financial crisis of 2010-2012 are poised to make considerable profits.

The median home price in America is now $295,300 up from $155,600 in February 2012 which calculates close to an 8% annual increase.  The median equity that homeowners have earned during the same period is $140,000.

Inventory is in short supply while demand is high which has caused prices to increase.  Factors that continue to contribute to the lower number of homes on the market are record low mortgage rates and housing starts have not met expectations since the Great Recession.  This year, people spending more time at home due to the pandemic has caused some people to rethink their current living space which has added to the demand.

Some experts believe that a significant portion of the workforce will continue to work from home after the pandemic has passed making the motivation for a larger home more of a long-term effect.

The median days on the market for a listing is 24 which is a direct result of the low inventory and heightened competition.  Sold homes are receiving an average of three offers with some situations ending in a bidding war.  This is an advantage for a seller who can not only realize a higher sales price but also accelerate a move into another home.

While the pandemic has certainly wreaked havoc on some businesses like the hospitality industry, real estate has continued to boom. Seven out of ten sales contracts are closing on-time which can give sellers a great deal of confidence.

Taxpayers can exclude up to $500,000 of qualified gain if they are married and up to $250,000 if single.  Some homeowners are taking the profit from their homes while at the top of the market, reserving part of their equity for investments, and purchasing another home with a higher loan-to-value mortgage at the incredibly low mortgage rates now available.

If you're curious to see if this might work for you, contact us at (317) 863-2356 to find out what your home is worth now and what homes are available that may fit your lifestyle better.  Download our Sellers Guide.

https://betterhomeowners.com/PhilLande/2021/01/06/Would-you-move-if-it-was-to-your-advantage Wed, 06 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/06/Would-you-move-if-it-was-to-your-advantage https://betterhomeowners.com/PhilLande/2021/01/05/Your-FICO-Score Tue, 05 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/05/Your-FICO-Score https://betterhomeowners.com/PhilLande/2021/01/04/503020-Budget Mon, 04 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/04/503020-Budget https://betterhomeowners.com/PhilLande/2021/01/01/Happy-New-Year Fri, 01 Jan 2021 06:00:00 GMT https://betterhomeowners.com/PhilLande/2021/01/01/Happy-New-Year https://betterhomeowners.com/PhilLande/2020/12/31/How-1031-Exchanges-Work Thu, 31 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/31/How-1031-Exchanges-Work

Debt-to-Income ratio is a tool that lenders use to qualify buyers for a mortgage and is an important factor in determining loan approval.  It provides an indication of the amount of debt that a potential borrower is obligated to in relation to how much income they have.

Total monthly debts are determined by adding the normal and recurring monthly debt payments such as monthly housing costs, car payments, minimum credit card payments, personal loan payments, student loans, child support, alimony, and other things.

By dividing the monthly income into the monthly debt, you arrive at a percentage of the monthly income.  Lenders actually look at two different ratios commonly called the front-end and the back-end.

The front-end ratio is the proposed total house payment including principal, interest, taxes, insurance, mortgage insurance if required, and homeowner association fees.  Lenders generally don't want these expenses to be more than 28% of the monthly gross income. 

The back-end ratio includes the same items that are in the front-end ratio plus any other monthly obligations like the ones mentioned earlier.  Lenders prefer to see this ratio not to exceed 36% of monthly gross income but some lenders may extend that to 43%.  Borrowers obtaining an FHA mortgage might also be allowed an even higher back-end ratio.

If a borrower had $8,000 monthly gross income, their proposed house payment should not exceed $2,240 or 28% of their monthly gross income.  Then, their house payment and monthly debt should ideally not exceed $2,880 or 36% of their monthly gross income. 

For the sake of an example, let's say that their monthly debt was $900.  That would only leave $1,980 for the maximum house payment.  The monthly debt became a limiting factor affecting the house payment.

In addition to determining whether the buyer qualifies for the mortgage, it could affect the interest rate.  Having good credit and having the proper ratios can result in being approved for a mortgage.  On the other hand, if the debt is on the upper side of an acceptable range, the lender may charge a higher interest rate for the addition risk of a marginal borrower.

While the math is not difficult to come up with your ratios, it is not necessarily a do-it-yourself project.  A trusted lending professional can assess your situation and give you an accurate picture of what price home you can afford and the rate you can expect to pay.

Both things are important to know before you start looking at homes and especially before you contract for one.  All lenders are not the same.  Call me to get a recommendation of a trusted mortgage professional who specializes in the type of mortgage you want. Download this FREE Buyers Guide. 

https://betterhomeowners.com/PhilLande/2020/12/30/DebttoIncome-Ratio-Affects-Approval--the-Interest-Rate Wed, 30 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/30/DebttoIncome-Ratio-Affects-Approval--the-Interest-Rate https://betterhomeowners.com/PhilLande/2020/12/29/Good-Investment Tue, 29 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/29/Good-Investment https://betterhomeowners.com/PhilLande/2020/12/28/Mortgage-Forbearance Mon, 28 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/28/Mortgage-Forbearance https://betterhomeowners.com/PhilLande/2020/12/25/Happy-Holidays Fri, 25 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/25/Happy-Holidays https://betterhomeowners.com/PhilLande/2020/12/24/Equity-Accelerator Thu, 24 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/24/Equity-Accelerator

Ideally, each party will pay their own closing costs associated with the purchase and the sale of a home, but they can be negotiable based on lender requirements and market conditions.

The fees are usually paid at the settlement and will be itemized on the closing statement.  Buyers should be aware of them before contracting for a home.  If a mortgage is involved, the lender will want to verify that the borrower has ample funds available at closing to pay for them.

Buyer's closing costs can range between two to five percent of the sales price.  The real estate agents should be able to give you an estimate of what a buyer can expect.  The most accurate estimate will come from the lender at the time the loan application is made. They may or may not include other fees that will be charged to buyers by the title or escrow company.

Buyers are required to be provided a standard Closing Disclosure form at least three business days before the loan closing date.  This document will include the loan terms, estimated monthly payments, loan fees and other charges.  This can be compared to the loan estimate provided by the lender when the application was made.

Fees connected to a mortgage

Loan origination fee ... This is the lender's fee for processing the mortgage application.  It can vary in amount but typically, it can be one percent of the mortgage amount.  It may be possible to negotiate this fee into the rate of the mortgage.

VA funding fee ... This is a fee charged to the veteran for closing the loan.  It can be paid in cash or rolled into mortgage.  The amount is based on the status of the veteran, their down payment and whether they have had a VA loan before.

Appraisal ... This is a fee paid for a licensed appraiser to determine the value of the property.  It validates that the mortgage will not exceed the purchase price and that the buyer has enough down payment based on the type of mortgage applied for.

Attorney fee ... This fee is charged to ensure that the legal documents are drawn properly so the lender will have an enforceable mortgage.  It is not for legal representation of the buyer.

Discount points ... A point is one percent of the mortgage.  These fees are considered prepaid interest and can be used to adjust the interest rate on the mortgage.

Lender's title insurance ... This coverage insures that the lender has an enforceable lien from title claims on the property.  This policy is usually issued in connection with an owner's title policy and is priced separately.

Mortgage insurance ... Most loans made in excess of 80% of loan to value require mortgage insurance to protect the lender from loss if the property must be foreclosed on.  There is no mortgage insurance requirement on VA loans. FHA mortgage insurance premium has two parts.  There is an up-front charge of 1.75% of loan amount and then, a monthly amount which is added to the payment.  Conventional loans usually collect the first month's premium in advance and subsequent amounts are rolled into the mortgage payment.

Recording fees ... These are fees that are for filing the legal documents with the municipal or county recorders.  The documents would include the mortgage and the deed.

Survey fees ... This fee is necessary, based on requirements of the lender, to verify property lines, shared fences and driveways and to identify any other encumbrances.

Underwriting fee ... This is a separate fee that covers the research and determination that the entire loan package meets the lender's requirements.

Fees required by mortgage for escrow account

Property taxes ... Lenders can require two to three months taxes to be held in escrow so that there will be enough to pay them in full 60 to 90 days before they are due.

Property insurance ... Insurance is paid in advance and the annual premium will be due at closing.  The lender further requires one additional month's amount so that one month prior to the anniversary date, the premium can be paid for the renewal.

Flood insurance ... The lender may require flood insurance on the property based on their assessment of the location in a flood zone or proximity to a flood zone.

Fees connected to purchase of a home

Settlement fee ... This is the buyer's portion of the fee paid to the title or escrow company, or attorney who handles the closing of the sale.

HOA Fee ... Home Owner Association fees are usually paid in advance by the owner.  They are prorated at closing for the amount paid that the seller does not benefit from.

Owner's Title insurance ... This coverage insures that the buyer, the new owner, received clear and marketable title from the seller.  It will protect the new owners' interests should they be challenged.  Even though it may not be required, it is recommended.

Pest inspection ... A pest inspection by a licensed exterminator can be required by a buyer to determine if there are active termites or termite damage, dry rot or another pest infestation.

Property inspection ... A home inspection conducted by a professional can be required to determine structural integrity of the property as well as all the systems in the home.  It can include but not be limited to plumbing, electrical, roof, heating and air conditioning, appliances and other things.

Title search ... Sometimes, title companies waive this fee when an owner's title policy is issued.  It can be customary that a separate fee is charged in addition to the premium for the title insurance.

Transfer taxes ... When government taxes are required, these fees must be collected.

The Consumer Financial Protection Bureau is a U.S. government agency that makes sure banks, lenders and other financial companies treat the public fairly.  You can download a Closing Disclosure Explainer from their website.

https://betterhomeowners.com/PhilLande/2020/12/23/Buyers-Closing-Costs Wed, 23 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/23/Buyers-Closing-Costs https://betterhomeowners.com/PhilLande/2020/12/22/Reasons-American-Buy-Homes Tue, 22 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/22/Reasons-American-Buy-Homes https://betterhomeowners.com/PhilLande/2020/12/21/Housing-Prices-4X Mon, 21 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/21/Housing-Prices-4X https://betterhomeowners.com/PhilLande/2020/12/18/Mortgage-Demand Fri, 18 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/18/Mortgage-Demand https://betterhomeowners.com/PhilLande/2020/12/17/What-an-Investment Thu, 17 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/17/What-an-Investment

Mortgage assumptions have not been a practical matter for the last 30 years because mortgage rates have been on a steady decline.  Even if the seller had a rate lower than the current rate, the new purchaser must qualify to assume the loan. 

In the case of conventional loans, the lender has the right to increase the rate to the current rate which neutralizes the reason for assuming the loan.  This change took place in the early 1980's when lenders added due on sale provisions so lower rates could not be assumed.

FHA and VA loans can be assumed at the existing rate with the provision that the purchaser qualifies for the loan.  This could be an advantage if the rate on the loan to be assumed was lower than the current mortgage rate for FHA or VA and the buyer is going to owner-occupy.  Unfortunately, investors are prohibited from assuming FHA and VA loans.

Besides the obvious advantage of a lower rate which would have a lower payment, the closing costs are lower on an assumption than originating a new loan.  Another benefit is that the loan will be further into the amortization schedule than starting a new 30-year loan which means it would be retired sooner while the equity is also growing faster.

The current rates are close to one-percent lower than they were a year ago, so, assumptions are probably not a method of financing a home purchase in the near future.  The Freddie Mac forecast expects rates to remain low, possibly at a yearly average of 3.0% in 2021. 

Mortgage rates have remained low since the Great Recession even though experts anticipated they would start trending upward.  If rates increase, especially rapidly, assumptions of FHA and VA loans could easily be a tool that buyers and real estate professional alike will be employing.  For sellers with an assumable loan at a below market rate, it could add to the value of the property as well as the marketability.

https://betterhomeowners.com/PhilLande/2020/12/16/Where-Did-the-Assumptions-Go Wed, 16 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/16/Where-Did-the-Assumptions-Go https://betterhomeowners.com/PhilLande/2020/12/15/What-to-Avoid Tue, 15 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/15/What-to-Avoid https://betterhomeowners.com/PhilLande/2020/12/14/What-are-Points Mon, 14 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/14/What-are-Points https://betterhomeowners.com/PhilLande/2020/12/11/Mortgage-Rate-Lock Fri, 11 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/11/Mortgage-Rate-Lock https://betterhomeowners.com/PhilLande/2020/12/10/2020-PHBS--FSBO Thu, 10 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/10/2020-PHBS--FSBO

Vacation home sales are up 44% year-over-year according to the National Association of REALTORS® based on sales during the July to September period.  Not only are the number of units up, but they are also selling faster than in previous years.

On a national basis, 72% of existing vacation homes closed in October were on the market for less than one month.

The increased desirability and affordability of vacation homes, according to the National Association of Realtors, seems to be influenced by the pandemic and low mortgage rates.  The ability to work from home seems to be contributing to this increase. 

Freddie Mac reports the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 2.83% in October compared to the aver commitment rate for all of 2019 which was 3.94%. 

There may also be a safety factor involved with these decisions to purchase vacation or second homes.  Contagious diseases flourish more in highly populated areas like big cities and suburbs. The locations of the vacation or second homes are generally in areas with less residents.

The slower pace from the city may also add to the appeal of considering second homes.  Proximity to the mountains or water, whether it be the ocean, rivers or lakes, have become a lure to people who realize that if where they work doesn't matter, they can select a place where they want to be.

Historically, Americans on the east coast left the cities during the 1793 yellow fever epidemic.  The same migration took place in the mid-19th century during three waves of Cholera and Scarlet fever. 

Trends have yet to determine whether some of these new vacation home buyers may consider moving permanently or may reconsider the decision after the pandemic.  Currently, it does have broad-based appeal and offers a lot of flexibility to owners who can afford it.

https://betterhomeowners.com/PhilLande/2020/12/09/Vacation-Home-Sales-Up-44 Wed, 09 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/09/Vacation-Home-Sales-Up-44 https://betterhomeowners.com/PhilLande/2020/12/08/FHA-2021-Loan-Limits Tue, 08 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/08/FHA-2021-Loan-Limits https://betterhomeowners.com/PhilLande/2020/12/07/Amazing Mon, 07 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/07/Amazing https://betterhomeowners.com/PhilLande/2020/12/04/Wish-you-had... Fri, 04 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/04/Wish-you-had... https://betterhomeowners.com/PhilLande/2020/12/03/Showcasing-your-home-to-fit-their-profile Thu, 03 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/03/Showcasing-your-home-to-fit-their-profile

A home inspector is another key professional involved in a real estate transaction.  Many times, the sales contract will have a provision that allows the purchaser to have inspections made to discover issues that are not readily apparent or have not been disclosed by the seller.

It is important to have a qualified individual perform the inspection.  Regardless of whether a license is required, buyers should ask about the inspector's experience, training, years in business and if they are familiar with the area and type of property involved.

Membership in professional associations can indicate an inspector's commitment to education and training.  References from both customers and agents are helpful and may be more meaningful.  You are encouraged to call the references, especially, if you are concerned about any specific areas.

Errors and Omission insurance is intended to cover mistakes made during an inspection.  It would be good to find out if the inspector has this type of insurance and how mistakes are handled or if omissions are made.

Find out exactly what is included in the inspection and what will trigger the inspector to recommend that you get an opinion by a specialist.  They should be able to provide you with a sample report so you can see the detail with which the items will be explained.  Ask if items that need attention will also be documented with pictures.

Some inspectors will allow you to accompany them during the inspection.  They will be able to point out their concerns and answer any questions you may have about different things.  An inspection can take two to three hours depending on the size of the property.

Generally, there is a time allotted in the sales contract for the inspections to be made and not completing them in a timely fashion could waive your right to use the contingency.  Your real estate professional will be able to guide you through this process.

https://betterhomeowners.com/PhilLande/2020/12/02/Home-Inspections Wed, 02 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/02/Home-Inspections https://betterhomeowners.com/PhilLande/2020/12/01/Refinance-Breakeven-Point Tue, 01 Dec 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/12/01/Refinance-Breakeven-Point https://betterhomeowners.com/PhilLande/2020/11/30/2021-Conforming-Loan-Limits Mon, 30 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/30/2021-Conforming-Loan-Limits https://betterhomeowners.com/PhilLande/2020/11/27/Average-Person-Moves Fri, 27 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/27/Average-Person-Moves https://betterhomeowners.com/PhilLande/2020/11/26/Thanksgiving-2020 Thu, 26 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/26/Thanksgiving-2020

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 mistakes made when buying a home.

This agent can direct you to find the other team members that are required like the lender, title company, inspectors and others.  Each member of the team has an important role to play that if not done correctly, could cause delays and possibly, jeopardize the transaction.

An important step is getting pre-approved so that you'll know exactly what price mortgage and home you'll qualify for.  This may even allow you to lock-in a mortgage rate before you contract for a home.  The pre-approval could also prove very helpful in negotiating with the seller by removing some of the doubt in their mind regarding an unknown buyer.  Another advantage to pre-approval is that if you are competing with multiple offers, you have the advantage of being more of a known commodity.

You'll need to assemble some documents for the lender including pay stubs from the past two months, W-2's from last year, proof of additional income, tax returns for the past two years, bank statements for the last three months, list of all open credit accounts and balances, copy of driver's license and history of residence for past two years.

Buying a home is one of the most important decisions in your life and it should be done with care and research.  When all the things are done in the right order, finding the "right" home is just like following a recipe.  For more information, download this Buyers Guide that includes great information to help you through the process.

https://betterhomeowners.com/PhilLande/2020/11/25/First-Things-First Wed, 25 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/25/First-Things-First https://betterhomeowners.com/PhilLande/2020/11/24/Mortgage-Trivia Tue, 24 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/24/Mortgage-Trivia https://betterhomeowners.com/PhilLande/2020/11/23/EllieMae--October-2020-Numbers Mon, 23 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/23/EllieMae--October-2020-Numbers https://betterhomeowners.com/PhilLande/2020/11/20/Vacation-Sales-Up Fri, 20 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/20/Vacation-Sales-Up https://betterhomeowners.com/PhilLande/2020/11/19/Your-Best-Investment Thu, 19 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/19/Your-Best-Investment

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, there may not be much difference in payment for a larger mortgage at today's incredibly low rates.

Another option that some homeowners are considering is to not reinvest all the proceeds from the sale of their existing home into the new home.  They are reserving some of the cash as a contingency fund for the unexpected. This strategy is providing peace of mind in uncertain times.

It is said that an investor is faced with three decisions every day: buy, sell, or hold.  The equity in a home represents, for most people, their largest investment asset.  While it is an asset, it is also an amenity.

Prudential thinking would insist on protecting your investments, but it would also suggest that you would evaluate alternatives to avoid missing opportunities.  Having the facts available will make the options clearer and possibly, the decisions will become obvious.

We are available to help you assemble the information you need to consider what is best for you.

https://betterhomeowners.com/PhilLande/2020/11/18/More-Time-at-Home Wed, 18 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/18/More-Time-at-Home https://betterhomeowners.com/PhilLande/2020/11/17/Working-with-Builders-NOW Tue, 17 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/17/Working-with-Builders-NOW https://betterhomeowners.com/PhilLande/2020/11/16/Housing-Indicatorssept20 Mon, 16 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/16/Housing-Indicatorssept20 https://betterhomeowners.com/PhilLande/2020/11/13/Rent-or-Buy Fri, 13 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/13/Rent-or-Buy https://betterhomeowners.com/PhilLande/2020/11/12/Surviving-Spouse Thu, 12 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/12/Surviving-Spouse https://betterhomeowners.com/PhilLande/2020/11/11/Thank-you-Veterans Wed, 11 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/11/Thank-you-Veterans

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 up significantly over last year and they're selling on average in three weeks.  Inventory is down and there is less competition for your home than normal which can lead to a higher price.  Closed sales increased 9% from August to September according to a Zillow report.

Moving down in an "up" market may be to your advantage.  It could lower your cost of housing by saving on property taxes, insurance, utilities and maintenance while being able to take cash out of your home to reinvest in your retirement.

 You'll be using "other people's money" to free up your equity that you can reinvest at a rate higher than you'll be paying on your mortgage.  The difference would be profit.

To explore this opportunity, give me a call and we'll look at your numbers.

https://betterhomeowners.com/PhilLande/2020/11/10/Moving-Down-in-an-Up-Market Tue, 10 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/10/Moving-Down-in-an-Up-Market https://betterhomeowners.com/PhilLande/2020/11/09/Who-Uses-FHA Mon, 09 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/09/Who-Uses-FHA https://betterhomeowners.com/PhilLande/2020/11/06/Accumulate-Wealth Fri, 06 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/06/Accumulate-Wealth https://betterhomeowners.com/PhilLande/2020/11/05/Digital-Marketing-Plan Thu, 05 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/05/Digital-Marketing-Plan

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 savings account for the owner because it lowers their unpaid balance and increases their equity.

The equity becomes an asset that can be accessed by doing a cash-out refinance or a home equity line of credit once the equity has reached 80% loan-to-value.

A $300,000 home purchased with an FHA loan at 3% for 30 years would have a payment of approximately $2,013 including principal and interest, taxes, insurance, and mortgage insurance premium.  If the tenant were paying $2,400 in rent, this would be a savings of almost $400 a month.

The monthly principal reduction would average $500 a month for the first year which would lower the net cost of housing.  The other major item to consider would be the appreciation.  Assuming, in this example, the home was appreciating at 3% annually, the monthly appreciation in the first year would be $750 which would further lower the cost of housing.

Rent

$2,400

Total House Payment

$2,013

Less Monthly Principal Reduction

$513

Less Monthly Appreciation

$750

Plus Estimated Monthly Maintenance

$200

Net Cost of Housing

$950

 

In this example, it would cost over $1,400 per month more to rent than to own.

A different approach to this would be that the equity in this home in seven years would be $121,579 based on appreciation and principal reduction.  If the same person continues to rent, there would be no equity build-up.

If you're curious as to how much you could cut your housing cost, go to the Rent vs. Own or contact your real estate professional.

https://betterhomeowners.com/PhilLande/2020/11/04/Cutting-Your-Housing-Costs-in-Half Wed, 04 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/04/Cutting-Your-Housing-Costs-in-Half https://betterhomeowners.com/PhilLande/2020/11/03/Vote-2020 Tue, 03 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/03/Vote-2020 https://betterhomeowners.com/PhilLande/2020/11/02/7-Reasons-to-Buy-Now Mon, 02 Nov 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/11/02/7-Reasons-to-Buy-Now https://betterhomeowners.com/PhilLande/2020/10/30/Halloween-2020 Fri, 30 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/30/Halloween-2020 https://betterhomeowners.com/PhilLande/2020/10/29/Gift-Limits-2020 Thu, 29 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/29/Gift-Limits-2020

Banks are concerned about making loans that will be repaid not about making loans that are tax deductible for homeowners.  It is good business for the bank but how is the homeowner supposed to know?

Most homeowners and potential homeowners are aware there are tax benefits associated with ownership.  For instance, mortgage interest and property taxes have been deductible expenses from federal income tax since it was enacted in 1913. 

The current law provides that homeowners can deduct the interest on Acquisition Debt which is the amount of debt incurred to buy, build or improve a first or second home up to $750,000.  The amount of acquisition debt decreases as payments are made and it cannot be increased unless the additional funds borrowed are used for capital improvements.

It is not uncommon for a homeowner to refinance their home for any number of reasons.  It could be to get a lower interest rate that would lower the payments or remove mortgage insurance.  However, when additional funds are borrowed for reasons beyond "buy, build or improve", the excess is considered personal debt and the interest is not deductible according to IRS.

Maybe this is not important if the owner is taking the standard deduction because it is higher than the total of the property taxes, qualified mortgage interest and charitable deductions made by the taxpayer.  Currently, it is estimated that 90% of homeowners are electing to use the increased standard deduction implemented with the 2017 Tax Cuts and Jobs Act. 

A confusing issue that occurs at the end of the year is when the lender reports to the borrower the amount of interest that was paid.  While that amount is most probably accurate, the bank doesn't know if it is qualified mortgage interest for the borrower. 

It is the responsibility of the taxpayer to keep track of outstanding acquisition debt and whether part of the balance is considered personal debt.

Another area where it could become important is if the property was lost due to foreclosure, deed in lieu of foreclosure or a short sale.  The provisions of the Mortgage Forgiveness Act have been extended through 12/31/20 which exempts the forgiven debt from being considered income and therefore taxable.  However, it only applies to acquisition debt.  Any part of a mortgage refinance that is considered personal debt could be taxable in that situation.

As an example, let's say that homeowners originally borrowed $300,000 to purchase a home that they owned for 15 years.  During that time, the home appreciated significantly, and they refinanced it twice.  Once, they made some improvements and took out cash to pay off personal loans and the second time, it was only a cash out.

Original acquisition debt

$300,000

Remaining acquisition debt including improvements

225,000

Unpaid balance on current mortgage

$550,000

Personal debt

325,000

 

In the example above, the personal debt of $325,000 would be considered income on foreclosure and recognizable as income on that year's income tax return.

If you have never refinanced your home or have refinanced it but never taken any money out of it except to make capital improvements, your unpaid balance in most likely acquisition debt.  However, it you have refinanced your home and pulled money out of it for purposes other than capital improvements, those funds may be considered personal debt.

This article is for information purposes.  If you are unclear about the current acquisition debt on your home or need advice for your individual situation, contact your tax professional.  Additional information can be found in IRS Publication 936, Home Mortgage Interest Deduction.

https://betterhomeowners.com/PhilLande/2020/10/28/Some-Mortgage-Interest-May-Not-be-Deductible Wed, 28 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/28/Some-Mortgage-Interest-May-Not-be-Deductible https://betterhomeowners.com/PhilLande/2020/10/27/Reasons-to-Refinance Tue, 27 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/27/Reasons-to-Refinance https://betterhomeowners.com/PhilLande/2020/10/26/Find-Your-Down-Payment Mon, 26 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/26/Find-Your-Down-Payment https://betterhomeowners.com/PhilLande/2020/10/23/Prevent-Smelly-Disposal Fri, 23 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/23/Prevent-Smelly-Disposal https://betterhomeowners.com/PhilLande/2020/10/22/Gift-the-Down-Payment Thu, 22 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/22/Gift-the-Down-Payment

The concern today when putting your home on the market should not be whether you'll get a contract; it's whether you are going to recognize the majority your net proceeds without any unnecessary delays.

What you realize from the sale of your home has to do with maximizing the sales price while minimizing the sales expenses.  Interestingly, the buyers will be trying to minimize the price they have to pay for your home and possibly, have you pay some of their expenses.

Taking a few pictures with a cell phone and putting a sign in the yard may be enough to get a buyer but successfully selling a home in today's market requires expert marketing and expert negotiations. 

Marketing begins with the preparation of the property to optimize the first impressions it makes to potential buyers.  A skilled professional can make recommendations that can help the home sell for the most money and in the shortest amount of time.  Cleaning, painting, depersonalizing, removing unnecessary items and possibly staging are a few of the recommendations you might receive.

93% of buyers rely on the Internet to search for properties and information and is something they engage even before they find an agent.  Positioning the home so it only can be found effectively in the search is making it appeal favorably and requires careful consideration.

Professional-level photography will make the property look appealing.  Experience knowing the right angles, the proper lighting, and having the right lens are only a few of the things can make a property stand out from the competition.

Negotiations plays a huge part in the sale of any home.  There will be negotiations during the offer/contract stage with the buyer and the other agent.  After that, there may be negotiations regarding inspections, repairs, the appraisal, or anything that might threaten the ultimate closing.

The following are seven questions that you can ask when interviewing an agent to market your home.  The answers should help you evaluate and select an agent who can represent you and your interests.

  1. Do you use a professional photographer?
  2. Have you sold homes in this area recently?
  3. Explain your timetable for preparation, "going live" and market exposure.
  4. Describe your efforts during the negotiation process.
  5. Do you have a pricing analysis, showing actives and solds, for my neighborhood?
  6. Which properties will be our strongest competition?
  7. How do you get the most exposure to get competing offers?

On the surface, it may appear that all agents are the same.  They are all be licensed to sell real estate and can put your home in the MLS for other agents to find.  Experience and skill sets can vary widely among agents and the questions provided in this article can help you determine who can do the best job for you in today's environment and the market your home is located.

https://betterhomeowners.com/PhilLande/2020/10/21/Seven-Questions-to-Ask-Before-You-Choose-an-Agent Wed, 21 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/21/Seven-Questions-to-Ask-Before-You-Choose-an-Agent https://betterhomeowners.com/PhilLande/2020/10/20/PreApproval-is-Good-for-All-Parties Tue, 20 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/20/PreApproval-is-Good-for-All-Parties https://betterhomeowners.com/PhilLande/2020/10/19/Payments-Can-Go-Up Mon, 19 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/19/Payments-Can-Go-Up https://betterhomeowners.com/PhilLande/2020/10/16/Family-Estate-Planning Fri, 16 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/16/Family-Estate-Planning https://betterhomeowners.com/PhilLande/2020/10/15/Paying-Cash Thu, 15 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/15/Paying-Cash

Just like buyers should be pre-approved before they begin to look at houses, Sellers should have their home pre-approved.  The reasons are similar: appeal to the "right" buyers, discover issues with the home early, improve marketability, increase negotiations position and close quicker.

For the seller, there are few things that need to be done before the sign goes in the yard and definitely before prospective buyers see the home.  The first is to understand that once you decide to sell the home that it needs to appeal to the broadest base of buyers and that means depersonalizing your home.

Once the home is sold, you will need to pack your things for the new home.  Think of this as starting the process early.  Get moving boxes and make decisions on what you intend to give away or discard in each room and closet.  Identify and pack those items before the home goes on the market. This will be the first wave of making your home more marketable.

When your home hits the market, it needs to be a neutral commodity and not "your" home.  A good rule of thumb is to remove items that involve religion, hunting and sports.  That means removing personal items like family photos or collections displayed in the room.

Next, in round two, go through every room to remove the items that make too large of a statement or take up too much room.  Pool tables may be appropriate in a game room, but they are not in a dining room or a living room.

Personal collections may have taken you years to accumulate and you're proud of them but the people who come to see your home will either not appreciate them or they will become distracted by looking at them instead of the home.  The livability of your home needs to be the focal point.  The buyers need to visualize themselves living in the property that will become "their" home.

The four most important rooms to address are the primary bedroom, kitchen, living room and dining room.  These rooms have a major influence on buyers when determining whether "it is the right home."   Bright colors, possibly used as accent walls, should be neutralized. 

After you have depersonalized the home and removed non-essential items that could make the rooms or closets look small, you might want to consider another technique referred to as staging.  Rearranging furniture so the room shows to its best advantage is simple and doesn't cost a thing.  You might decide that a coffee table or statement piece would be nice and your REALTOR® or stager can suggest a place to rent it rather than buying it.

Once the home is depersonalized and staged, you are ready to have a professional photographer take the pictures that visually describe your home to potential buyers long before they ever look at the home physically.  These will be used on websites, portal sites, MLS, and social media.  Anyone with a point and shoot camera thinks they are a photographer but a pro with the correct wide angle lens, who understands lighting and has an "eye" for what makes a great picture is worth every dime you'll spend.

One more consideration should be to have the home inspected before it goes on the market.  It won't replace the buyer's inspections but it will discover any items that need repair and they should be done before the home goes on the market.  This will probably save you money because it might cost less to repair them than they'll want in second round of negotiations when their inspector finds it.

Another benefit is that if their inspector identifies a problem area that your inspector did not, you have a basis for legitimate disagreement that could just be personal opinion instead of a "fact."

While the process of depersonalizing should take part before you put the home on the market, you'll want you have the benefit of your real estate agent's experience to help you with the process.  At age 18, a person can expect to move nine more times but by age 45, they may only expect to move another 2.7 times.  Your REALTOR®'s experience can be valuable not only in saving your time and money but actually, make the difference in a successful sale.

https://betterhomeowners.com/PhilLande/2020/10/14/Four-Things-Sellers-Should-Do-Before-the-Sign-Goes-in-the-Yard- Wed, 14 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/14/Four-Things-Sellers-Should-Do-Before-the-Sign-Goes-in-the-Yard- https://betterhomeowners.com/PhilLande/2020/10/13/Kids-to-Work Tue, 13 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/13/Kids-to-Work https://betterhomeowners.com/PhilLande/2020/10/12/Loan-Application-Checklist Mon, 12 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/12/Loan-Application-Checklist https://betterhomeowners.com/PhilLande/2020/10/09/Homeowner-Basics--Caulking Fri, 09 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/09/Homeowner-Basics--Caulking https://betterhomeowners.com/PhilLande/2020/10/08/Points Thu, 08 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/08/Points

More and more homeowners are employing smart home technology within their homes.  It may start with a video doorbell or lights and progress to other devices.  The smart-home device market is rapidly growing and Forbes research expects it to grow from $55 billion in 2016 to $174 billion in 2025.

The popularity of these high-tech features will require a few additional steps to consider when selling a home.  The seller should determine which items will and will not stay with the sale of the home and identify them in the listing agreement.

Confusion can arise when a home's marketing mentions its smart-home technology and is unclear if a piece like the hub, which is easily considered personal property but is integral to the working of the system.  Some might consider it an accessory and others a component.

A smart home can contain multiple technology devices connected to the Internet that allow them to be controlled or accessed from computers, tablets or most commonly, on mobile apps.  Many of the devices can also be accessed through a hub like an Amazon Echo or Google Home.

Thermostats and lights may have been some of the first such devices but the video doorbells added a new level of WOW factor by being able to see and talk to the person at your door and even get a video recording.  Porch pirates are now seeing their images on social media caught in the act thanks to these devices.

Homeowners sometimes start with one item like a smart sprinkler system control.  When they find out how cool it is and that it actually saves them money not to mention how convenient it is, they starting planning their next smart-home device purchase.  Some of these items absolutely are permanent and become real property and others, border between personal and real property.

If the seller is including smart devices with the sale of the home, they should have administrative access and any personal information removed and return the devices to the default settings.  The seller should also review the privacy settings and delete the permissions for their personal mobile devices.  For the benefit of the buyer, any manuals or warranties should be left for the new owner.

Equally as important, the buyer should verify that the smart devices have been returned to their factory settings and no longer coupled with the seller's mobile devices.  The buyers can create their own account to register the devices in their name.  Then, as security updates are available, they will be notified.  At the same time, the buyer will want to create new access codes and preferences. https://betterhomeowners.com/PhilLande/2020/10/07/Selling-or-Buying-Smart-Homes Wed, 07 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/07/Selling-or-Buying-Smart-Homes https://betterhomeowners.com/PhilLande/2020/10/06/Home-Prices-Rose Tue, 06 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/06/Home-Prices-Rose https://betterhomeowners.com/PhilLande/2020/10/05/40-Times-Greater Mon, 05 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/05/40-Times-Greater https://betterhomeowners.com/PhilLande/2020/10/02/Deferred-Interest-Loans Fri, 02 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/02/Deferred-Interest-Loans https://betterhomeowners.com/PhilLande/2020/10/01/Need-It-Test Thu, 01 Oct 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/10/01/Need-It-Test

In a recent article, The Wall Street Journal reported that investors have rarely been this flush with cash.  The economic uncertainty due to the pandemic and the volatility of the stock market has caused assets in money-market funds to increase to approximately $4.6 trillion, the highest level on record according to Refinitv Lipper.

The question becomes should an investor be "out of the market" until things settle down or should they seek to find alternative investments to produce satisfactory results.  Even in the middle of this uncertainty, residential rental property has been a stable performer.

Rents are continuing to increase along with values.  Investor mortgages are available at 80% loan-to-value at fixed interest rates for 30-year terms.  Most other investments must be purchased for cash or at best, are limited to low loan-to-value loans, at floating interest rates for relatively short time frames.

The use of borrowed funds, especially at today's low interest rates, contribute to the rate of return and in some cases, increase it.  This characteristic is known as leverage.

Income properties enjoy specific tax advantages like long-term capital gains rates lower than ordinary income rates, standard depreciation, which is a non-cash deduction, as well as expensing many big-ticket items in the year purchased.

Tax deferred exchanges are available for investors wanting to avoid the tax due on sale and defer the profit into the replacement property.

One of the most cited reasons people invest in rental homes is that they feel they are more in control.  They understand a rental home because it is the same type of property and requires the same maintenance as the home they live in.  They can make the decisions to improve it, repair it, what rent to charge and when to sell it.  For most owners, a home represents their largest financial asset.  That familiarity becomes a natural bridge to decide to invest in rental property rather than something they are less familiar.

If you'd like to know more about the benefits, download the Rental Income Properties guide and call me at (317) 863-2356 to discuss what kind of opportunities are available.

https://betterhomeowners.com/PhilLande/2020/09/30/Alternative-Investments Wed, 30 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/30/Alternative-Investments https://betterhomeowners.com/PhilLande/2020/09/29/6-Mistakes-to-Avoid Tue, 29 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/29/6-Mistakes-to-Avoid https://betterhomeowners.com/PhilLande/2020/09/28/Homeowner-Equity Mon, 28 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/28/Homeowner-Equity https://betterhomeowners.com/PhilLande/2020/09/25/Who-is-This Fri, 25 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/25/Who-is-This https://betterhomeowners.com/PhilLande/2020/09/24/Wholesale-or-Retail Thu, 24 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/24/Wholesale-or-Retail

It seems like most homes have sprinkler systems and if they do, they have some form of controller to automatically turn the water on and off for the time and days you feel necessary.  It seems like basic functionality and if it isn't broken, you may not feel the need to replace it. 

Today, there are so many smart home devices that are not only convenient, but they'll end up saving you enough money to pay for the upgrade.  There are different manufacturers, but you should at least consider the Rachio if for no other reason than the easy installation procedure. 

The process is simple.  Unplug the old controller and disconnect the wires being sure to label which wires went to which stations.  Using the Rachio template, mark three spots on the wall, drill holes in the drywall, insert the anchors into the holes and screw the new controller to the wall. 

This model has convenient wire connectors that do not require crimping a wire around a screw.  It is quick and easy to put the numbered wires in the corresponding slot.  The directions are simple and easy to follow.  When complete, connect the power source and plug it into a wall socket. 

Now, install the Rachio app to your phone and continue following the instructions to connect the controller to the Wi-Fi.    In minutes, you'll be sitting in a lawn chair making adjustments and seeing what it will do. 

Some of the features you'll find very convenient are the multiple schedules that can be created and easily switched from one to another.  As you set up each zone, you can take a picture of the area and be able to identify with a glance which area you want when individually selecting one. 

Another thing you might like is that when you're trying to track down a broken head or just need to adjust it, you can turn on a zone from your phone while looking at the yard.  When you identify which head is the culprit, turn the water off from your phone, make the adjustment or repair and turn the water back on to test it without having to go back and forth to wherever your controller is located. 

Rachio will even monitor the weather to skip a scheduled cycle in case of rain, high wind or freezing temperatures.  You could literally be anywhere in the world where you have an Internet connection and you'll be able to adjust your watering cycle.  This device really does save time and money while being fun to operate. 

https://betterhomeowners.com/PhilLande/2020/09/23/Smart-Sprinkler-Controller Wed, 23 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/23/Smart-Sprinkler-Controller https://betterhomeowners.com/PhilLande/2020/09/22/Poorly-Fitting-Door Tue, 22 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/22/Poorly-Fitting-Door https://betterhomeowners.com/PhilLande/2020/09/21/Primary-Mortgage-Market-Survey Mon, 21 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/21/Primary-Mortgage-Market-Survey https://betterhomeowners.com/PhilLande/2020/09/18/Worry Fri, 18 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/18/Worry https://betterhomeowners.com/PhilLande/2020/09/17/Hanging-a-Picture Thu, 17 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/17/Hanging-a-Picture

People are always looking for a "down and dirty" way to determine the value of a home and square footage seems to be one of the most common things used by people whether they are buyers, sellers or real estate agents.  While it seems straight forward, there are several variances that can lead to inaccurate determinations.

The market data approach to value uses similar properties in size, location, condition and amenities to compare with the subject to arrive at a price.  Differences in any of these things can affect the price per square foot.  Appraisers are trained and licensed to make these adjustments but the differences are not necessarily objective and that is where opinions start to influence the value.

Even if a person were to make accurate adjustments, they would be based on the assumption that the square footage of the comparable properties is correct.  That leads to the next area of concern: how was the subject property measured.

It is commonly accepted to the measure the outside of the dwelling on detached housing.  Is it customary in this area to include porches and patios under roof and if so, do they get full value or only partial value?  Is there any value given to the garage since it isn't living area?  What about other areas that do not have HVAC coverage?

Some areas don't give consideration to basement square footage at all.  Others might give some value if it is finished or has access directly to the outside like a walk-out basement.  Similarly, attic space could be finished and under HVAC but if the ceiling height is not standard for the home, it may not receive value.

The problems become exacerbated when different comparables are not treated consistently and yet the common denominator ends up being an average of the square foot price of each.   This is calculated by taking the sales price and dividing it by the number of square feet being quoted.

The source of the square footage should be listed to help determine the accuracy.  It could be what the builder said it was to the original purchaser.  If there is a set a plans available, that might seem credible but it is not uncommon for the builder to make changes while the home is being built which could increase or decrease the square footage.

Another source is the tax assessor.  In many cases, they don't actually measure the home but take the word of the builders or appraisers for it.  If permits were obtained to add on to the home since it was built, it should be reflected in the square footage.  However, sometimes permits are not secured properly.

After reading this, you may think that more doubts have been introduced than solutions and you are correct.  It takes diligence on the part of all parties to determine the correct amount.  The most highly trained person will be the appraiser and they should be measuring the home in its "as is" condition but understand that even a competent person can inadvertently make a mistake.

https://betterhomeowners.com/PhilLande/2020/09/16/How-Does-It-Measure-Up Wed, 16 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/16/How-Does-It-Measure-Up https://betterhomeowners.com/PhilLande/2020/09/15/Missed-Payment Tue, 15 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/15/Missed-Payment https://betterhomeowners.com/PhilLande/2020/09/14/Leave-a-Key Mon, 14 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/14/Leave-a-Key https://betterhomeowners.com/PhilLande/2020/09/11/Placing-the-tenant Fri, 11 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/11/Placing-the-tenant https://betterhomeowners.com/PhilLande/2020/09/10/Working-with-Builders-in-2020 Thu, 10 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/10/Working-with-Builders-in-2020

There are hundreds of thousands of people who believe, for one reason or another, they cannot afford to buy a home currently.  Some people  may not for any number of reasons but it would be very surprising to know how many who can buy but have gotten some bad information along the way.  It's worth digging a little deeper to find out the facts.

John and Karen have been renting a home for the last five years at $2,000 a month.  During that time, the value of the home they were renting went up by $30,000 in value while the unpaid balance decreased by $18, 400.  Even though they were fortunate enough the rent remained constant over the five years, they missed out on close to $50,000 of equity that the owner realized instead of them.

Another thing to consider with today's low interest rates, it is quite common for a mortgage payment to be lower than a tenant is paying rent for a similar property.  So, in this example, John & Karen paid more to rent than a house payment would have been and missed out on the equity build-up that occurred due to appreciation and amortization.

The simple fact is when tenants like John and Karen pay their rent, the landlord is the beneficiary of the rent received as well as the equity earned.  Over time, the rent paid by John and Karen and other tenants will pay for the landlord's rental.  It a great concept and a good investment.

True, not everyone can afford a home.  A buyer needs money for a down payment and closing costs.   They also need to have income and good credit to qualify for the mortgage.  Some of these may seem insurmountable but instead of imagining that buying a home is not in the cards at the current time, talking to a real estate professional is a better route to take.

There are lots of low-down payment mortgages available including 100% financing for qualified veterans and USDA eligible buyers.  It is sometimes more difficult to find sellers willing to pay all or part of a buyers closing costs when inventory is low, but lenders do allow it.  It is a matter of finding the willing seller.

The source of the down payment could be a gift from a family member as long as there is no repayment expected.  It's amazing how many parents or grandparents might be willing to help a relative get into a home.  Funds for a down payment may be available as loans or withdrawals from qualified retirement programs like IRAs or 401k plans.  It's worth investigating based on what retirement programs you have.

Good credit is necessary to qualify for a loan but buyers should not assume that theirs is not adequate.  A trusted mortgage professional can assess a situation and may be able to suggest some things that will not only raise the score enough to be approved but possibly, even raise the score enough to qualify for a better interest rate.

There are a lot of misunderstandings about whether a person can or cannot qualify for a home at this time.  Instead of relying on second hand information or something that might be floating around on the Internet, spend some time with a real estate professional who can give you the facts, assess your situation and if necessary, point you in the right direction to get help from a trusted mortgage professional.  Call (317) 863-2356 to schedule an appointment where we'll help you dig deeper to determine whether you can buy a home now.

Download our Buyers Guide to give you more information.

https://betterhomeowners.com/PhilLande/2020/09/09/Its-Worth-Digging-a-Little-Deeper Wed, 09 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/09/Its-Worth-Digging-a-Little-Deeper https://betterhomeowners.com/PhilLande/2020/09/08/Home-Security-Upgrades Tue, 08 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/08/Home-Security-Upgrades https://betterhomeowners.com/PhilLande/2020/09/07/Happy-Labor-Day Mon, 07 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/07/Happy-Labor-Day https://betterhomeowners.com/PhilLande/2020/09/04/Homeowner-Basics--Garage-Door Fri, 04 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/04/Homeowner-Basics--Garage-Door https://betterhomeowners.com/PhilLande/2020/09/03/Safe-Road-Trip-Covid19 Thu, 03 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/03/Safe-Road-Trip-Covid19

More people grill in July, June & August than any other months and correspondingly, there are more injuries, as well as fires, due to grilling accidents in those months. Even though Labor Day is in September, we still need to be aware of safety.

Close to 20,000 patients per year visit the emergency room due to injuries involving grills.  Approximately half of the injuries involving grills are thermal burns.  If you are around fire, there's a chance of getting burned. 

About 2/3 of American households own at least one outdoor barbecue, grill or smoker.  Interestingly, gas grills contribute to more fires than charcoal grills.  In addition, there are over 10,600 home fires started by grills each year.

While grilling is associated with celebrations, good food, fun and friends, it is important to make sure that accidents don't interrupt your activities. 

  • Only use BBQ grills outdoors and in ventilated areas
  • Place the grill away from home or anything that could be flammable
  • Keep grill stable
  • Keep fire under control
  • Keep children away from grill
  • Never leave the grill unattended
  • The grill lid should always be open before lighting it.
  • Grease should not be allowed to build up in the grill
  • Use long-handled utensils

Gas/Propane

  • Check the tank hose for leaks before using it for the first time each year by using a light soapy water solution to see if bubbles appear.
  • You should not smell gas when the grill is lit.  Move away from the grill and call the fire department.
  • If the flame goes out, turn off the gas for 15 minutes and open the lid before re-lighting it.

Charcoal

  • Never add any starter fluid or other flammable liquid to a fire
  • Only use charcoal starter fluid and not gasoline, kerosene or other flammable liquid.
  • Keep starter fluid away from heat sources and out of reach of children.
  • Electric starters have a coil that ignites the charcoal.
  • When finished cooking, close off the grill vents to suffocate the fire and save some of the remaining charcoal.

Practice safe grilling and enjoy any occasion to cook outdoors and share time with your family and friends.

https://betterhomeowners.com/PhilLande/2020/09/02/Grilling-Safety Wed, 02 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/02/Grilling-Safety https://betterhomeowners.com/PhilLande/2020/09/01/Protect-your-ATM-card Tue, 01 Sep 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/09/01/Protect-your-ATM-card https://betterhomeowners.com/PhilLande/2020/08/31/Low-Down-Payment-Mortgage-Options Mon, 31 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/31/Low-Down-Payment-Mortgage-Options https://betterhomeowners.com/PhilLande/2020/08/28/Changing-the-World Fri, 28 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/28/Changing-the-World https://betterhomeowners.com/PhilLande/2020/08/27/Check-Insulation Thu, 27 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/27/Check-Insulation

Forbearance is a temporary postponement of mortgage payments.  The lender can grant this option to a borrower instead of forcing the property into foreclosure.  The CARES Act provides protections for homeowners with mortgages that are federally or Government Sponsored Enterprise backed or funded such as FHA, VA, USDA, Fannie Mae and Freddie Mac.

A mortgage holder should contact the lender to explain the temporary difficulty they are having making payments and ask for relief under forbearance or other options.  Once the lender grants approval, it is important for the borrower to get the terms of the forbearance agreement in writing to be clear about when the payments will resume and how the missed payments will be recovered.

Generally speaking, homeowners in a forbearance plan will not incur late fees and it should not adversely affect their credit.  Unfortunately, borrowers must be vigilant to see that the lender is protecting them from delinquent credit marks according to their agreement.

Forbearance is easy to receive but not so easy to recover from.  Free credit reports can be obtained on a weekly basis until April 21, 2021 at www.AnnualCreditReport.com.  Reports are available from Experian, Equifax and TransUnion.  This will allow borrowers to monitor whether the lender has inadvertently reported items inaccurately.

Prior to the end of the forbearance period, borrowers should contact their loan servicer, the company that accepts their payments.  Review the terms of the forbearance plan and expectations for repayment.  Verify the unpaid balance and that there are not any payments marked as late or delinquent during the forbearance period.

One more item to discuss with the loan servicer is the payment of the property taxes and insurance.  Since multiple mortgage payments may have been missed and most payments include 1/12 of the annual amounts for these items, there may not be enough to pay for them when they become due.

Since it is estimated that there are over four million borrowers in forbearance currently, it may be difficult to talk to the servicer but starting the process early and being persistent will be helpful. 

At the end of forbearance, the borrower needs to resume regular payments and establish a plan with the lender to repay the missed payments.  The terms are negotiated between the borrower and the lender.

One way is through a loan modification which can restructure the loan.  In some cases, it would add the missed payments to the loan balance and recalculate the payments for the remainder of the term. 

A borrower could pay the forbearance money in cash but the practicality of that is not realistic.  If the person couldn't make the payments during forbearance, they probably don't have the liquidity to pay them afterward.  This option is entirely at the buyer's election.

Forbearance is a temporary way to postpone the mortgage payments with the understanding that you will be able to resume repaying the loan.  If the circumstances that caused the issue initially become permanent, then, other remedies must be considered.  If there is equity in the property, selling the home may be the way to materialize it for the homeowner.

Please contact us at (317) 863-2356 if you need to know what your home is worth and how long it would take to sell it.  We're happy to provide this information as a service without obligation so you can be aware of your options.

https://betterhomeowners.com/PhilLande/2020/08/26/Forbearance-is-Not-Forgiveness Wed, 26 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/26/Forbearance-is-Not-Forgiveness https://betterhomeowners.com/PhilLande/2020/08/25/Testing-the-Market Tue, 25 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/25/Testing-the-Market https://betterhomeowners.com/PhilLande/2020/08/24/Moving-Stats Mon, 24 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/24/Moving-Stats https://betterhomeowners.com/PhilLande/2020/08/21/Costly-Insurance-Mistakes Fri, 21 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/21/Costly-Insurance-Mistakes https://betterhomeowners.com/PhilLande/2020/08/20/Bad-haircut Thu, 20 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/20/Bad-haircut

During the first major stay-at-home event that most of us have experienced in this country, a pool can give you and your family enjoyable recreation without leaving the home.  For those without a pool, the NPD group reports that the Covid-19 pandemic has increased pool building by 161% this year.

When your children are small, pools become a magnet for not only your children but their friends as well.  It can also be a great place for the summer holidays, Memorial Day, 4th of July and Labor Day.  Any day during the summer, especially on the weekends, can be an opportunity to enjoy the pool, cook outside and bask in the sun.

Some of you may have even made the transition from your children enjoying the pool to your grandchildren.  Usually, there is an interim where you may have wished that your home didn't have a pool so you would not have the maintenance and required upkeep.  Then, the new generation of family starts using it regularly and again, you are glad you have a pool, so you'll see the grandchildren more. 

For those people who don't have a pool but are considering one, there are some things that you need to think about.

If you've watched some of the TV shows like Pool Kings, most of those builds look like resorts or water parks and the price tag that comes with them can be staggering.  Even a modest gunite, in-ground pool with a limited amount of decking can be as expensive as a luxury car, especially after including the cost of landscaping and pool furniture.

If you finance the pool as a home improvement, the term will probably be between seven to fifteen years.  If you refinance your current mortgage and wrap the cost of the pool together, you could get a 30-year term.

Pool cleaning and chemicals depend on the size of the pool but will generally start at about $175 a month through a service.  Your utilities will see an increase because you're going to use more electricity and water than you did before you had a pool.

Then, of course, there is food and refreshments to consider for not only your family but your guests.  There are also pool toys, floats, sunscreen, towels and other minor things that do add up.

People going through the pros and cons of building a pool usually tell themselves that the house will go up in value.  It is true but not nearly as much as the cost of the pool.  Long time pool owners will tell you that they have had lots of great memories and it has been a good investment in their family.  It just may not be a good financial investment. 

Once you've made the decision to build a pool, find a reputable pool builder, ask for references and check them out.  Ask friends who have pools, who built them and would they use the company again.  Most pool companies hire and coordinate with subcontractors to do the work.  It is important to know that the builder will be around if something goes wrong and how they'll solve the issue.

The Better Business Bureau has some suggestions about hiring a pool contractor and they warn about scammers who are eager to take advantage of the increased demand for pools.

https://betterhomeowners.com/PhilLande/2020/08/19/Building-a-Pool-Is-Just-the-Beginning Wed, 19 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/19/Building-a-Pool-Is-Just-the-Beginning https://betterhomeowners.com/PhilLande/2020/08/18/DIY-Shower-Cleaner Tue, 18 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/18/DIY-Shower-Cleaner https://betterhomeowners.com/PhilLande/2020/08/17/Refinance-Fee Mon, 17 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/17/Refinance-Fee https://betterhomeowners.com/PhilLande/2020/08/14/True-Test-of-Integrity Fri, 14 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/14/True-Test-of-Integrity https://betterhomeowners.com/PhilLande/2020/08/13/Paint-front-door Thu, 13 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/13/Paint-front-door

Three reasons to refinance a home include lowering the cost of housing, shortening the term of the mortgage to pay it off sooner or to using the equity to accomplish another purpose.

Replacing the mortgage at a lower interest rate, which is entirely possible in today's market, would reduce the payment.  On the other hand, shortening the term of the mortgage could make the payments increase but would allow the home to be paid for sooner.  In either case, the equity would not be reduced unless the refinancing costs were rolled into the new mortgage.

Refinancing the home to take money out would increase the mortgage on the property and lower an owner's equity; careful consideration should be made before doing so.

Mortgage rates are considerably lower than credit card rates and usually lower than short term borrowing like student loans or car loans.  For that reason, homeowners will sometimes refinance to payoff higher cost debt.

Some people refinance for more than their current balance to improve their cash position, possibly, to have funds available in case they need it.  Other reasons could be to use it for an investment such as rental property or other things.  Still others may use it to make capital improvements on their home like remodeling or a pool.

Another legitimate reason to refinance may be to combine a first and second lien on the home that might result in lower payments and a savings in interest. 

One more situation that causes a person to refinance a home is to remove a former spouse or co-borrower from the existing mortgage.  In the case of a divorce, a couple may no longer be married and one of the former spouses may have no financial interest in the home any longer but because they signed the note originally, they are still liable along with the other spouse.  This could be an untenable position.

There can be a lot of reasons that cause a homeowner to refinance the home.  The equity is a valuable asset that has powerful borrowing power combined with the good credit and income of the homeowner.  A Refinance Analysis can help you to determine the new payments and how long it will recapture the cost of refinancing.

For the recommendation of a trust lender, give me a call at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2020/08/12/Three-Reasons-to-Refinance Wed, 12 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/12/Three-Reasons-to-Refinance https://betterhomeowners.com/PhilLande/2020/08/11/Home-about-to-be-shown Tue, 11 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/11/Home-about-to-be-shown https://betterhomeowners.com/PhilLande/2020/08/10/Amortize-Faster Mon, 10 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/10/Amortize-Faster https://betterhomeowners.com/PhilLande/2020/08/07/Low-Inventory-Buying-Strategy Fri, 07 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/07/Low-Inventory-Buying-Strategy https://betterhomeowners.com/PhilLande/2020/08/06/Garage-Sale-Tips-During-Covid Thu, 06 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/06/Garage-Sale-Tips-During-Covid

The soothsayer in Shakespeare's Julius Caesar issued his famous warning "Beware the Ides of March."  Who knew that in 2020, around the middle of March, the world, as we knew it, would force such dramatic changes on us from the Coronavirus.

In America, it has brought our economy to its knees as we sheltered in place for over four months.  During this time, changes have affected our lives and many of those changes could be permanent.

Previously, smaller homes were becoming the trend for not only efficiency but upkeep so owners would have more time to do things including travel.  Now, travel is minimal and our world, in some respects, is reduced to our home.

For families with children, their home has become a school.  With so many people working from home, it has become our office or store or studio.  If there is more than one working adult in a home, it needs to have space for each party to work.  The home fitness industry is experiencing record sales in exercise equipment so the home can become a gym.

Since we're all spending more time at home, it is also the place to recreate.  We're cooking more; a larger kitchen and dining area would be nice.  We want to enjoy the yard, garden, pool or balcony and our current home may not even have them or we'd like to upgrade. 

People are wanting and needing more space to do all of these things at home.  Many experts are anticipating that these changes we thought were temporary may be part of the new normal even after a vaccine and cure have been discovered.

If you have had any of these thoughts and would like to know more about how to buy or sell a home in our current market, we would love to tell you about the many options available while being responsible to stay safe.  Whether it is buying for the first time, moving up or moving on, I would like to help.  Call me at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2020/08/05/Things-Have-Changed Wed, 05 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/05/Things-Have-Changed https://betterhomeowners.com/PhilLande/2020/08/04/Personal-or-Real-Property Tue, 04 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/04/Personal-or-Real-Property https://betterhomeowners.com/PhilLande/2020/08/03/Its-just-not-true Mon, 03 Aug 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/08/03/Its-just-not-true https://betterhomeowners.com/PhilLande/2020/07/31/Ask-your-home-inspector Fri, 31 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/31/Ask-your-home-inspector https://betterhomeowners.com/PhilLande/2020/07/30/Cut-insurance-cost Thu, 30 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/30/Cut-insurance-cost

Whether you like to or not, buying and selling a home involves negotiation at all stages of the process.  It is not like the retail world where once you decide to purchase, you pay the price.  It is easily the most expensive purchase or sale that most people experience and emotions get involved that could affect the negotiations adversely.

The word "home" by itself conjures up emotions and selling a home you've lived in for a while could even complicate things more.  A real estate professional can separate their emotions from the process to be able to help the one they are representing.

The price of the home, the type of financing and concessions, closing costs, 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 objectives are diametrically opposed.

Even after the contract is signed, removing the contingencies can cause considerable negotiations.  The appraisal, the inspections or the repairs could be a source of reevaluating the terms and provisions of the contract.

Negotiating the sale or purchase of a home is a competition; for one person to get something, someone has to give something up.  If you don't feel comfortable with this, it is important to work with an agent who can bring their skills to the table on your behalf.  As your advocate, they can champion your position.

I'd like to share how my skills, training and experience can benefit you in a sale or purchase.  Call me at (317) 339-7653.

https://betterhomeowners.com/PhilLande/2020/07/29/Do-you-like-to-negotiate Wed, 29 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/29/Do-you-like-to-negotiate https://betterhomeowners.com/PhilLande/2020/07/28/Section-121-Exclusion Tue, 28 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/28/Section-121-Exclusion https://betterhomeowners.com/PhilLande/2020/07/27/Keep-personal-info-safe Mon, 27 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/27/Keep-personal-info-safe https://betterhomeowners.com/PhilLande/2020/07/24/Stay-at-Home Fri, 24 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/24/Stay-at-Home https://betterhomeowners.com/PhilLande/2020/07/23/Who-is-visiting-your-open-house Thu, 23 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/23/Who-is-visiting-your-open-house

The National Association of REALTORS® just released the Market Recovery Survey of a random sampling to close to 100,000 members conducted June 24-26, 2020.  The following statements are the members' opinion on various aspects of the recovery to the Covid-19 pandemic as it relates to real estate.

In response to the safety of buyers, sellers and agents, REALTORS® are expecting within the next year to have increased demand for the following technologies used to market properties:

  • 67% - Zoom or other video technology to communicate with clients
  • 66% - virtual tours
  • 63% - live virtual tours conducted by agent using video
  • 60% - virtual open houses

Nine out of ten respondents indicated that some of the buyers have returned to the market or never left the market.  Agents currently working with buyers report that slightly more than half of buyer's timeline has remained the same with about the same level of urgency.  27% believe the buyers have more urgency.

The most popular reason cited by buyers with an increased timeline is that the delay during the pandemic has amplified their demand for a new home.  Others realize that new home features would make their home life more comfortable.  Some buyers are wanting to buy before a potential second peak of Covid-19 occurs. 

During the week the survey was taken, three out of four buyers saw the home in person physically while 26% did not.

Roughly 2/3 of the buyers are looking for the same features as they were prior to Covid-19 while new feature considerations include home office, space to accommodate family, larger home for more space, place to exercise and bigger kitchen.

Most buyers are looking for the same type home, however, respondents reported that 13% are moving away from multi-family properties to a single-family home and only 1% are going from SFH to multi-family.

89% of respondents stated that some of the sellers have returned to or never left the market.  Only 23% reported more urgency to sell a home due to the pandemic.

On the commercial side, 2/3 of REALTOR® respondents felt like the demand for office space would decrease and 72% felt that retail space demand would decrease.

The stats mentioned in this article pertain nationwide.  To find out specifics in your market, call your REALTOR® Phil Lande at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2020/07/22/REALTORS-Thoughts-on-the-Recovery Wed, 22 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/22/REALTORS-Thoughts-on-the-Recovery https://betterhomeowners.com/PhilLande/2020/07/21/90-of-Taxpayers Tue, 21 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/21/90-of-Taxpayers https://betterhomeowners.com/PhilLande/2020/07/20/Owners-Without-Agents Mon, 20 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/20/Owners-Without-Agents https://betterhomeowners.com/PhilLande/2020/07/17/Home-Pricing-Strategy Fri, 17 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/17/Home-Pricing-Strategy https://betterhomeowners.com/PhilLande/2020/07/16/Compare-Benefits Thu, 16 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/16/Compare-Benefits

The seller can put a price on the home but the value is ultimately, determined by the buyer. Individually, a buyer could pay over market value because they love the location, or the elevation of the home or the proximity to something that is important to them.  The shortage of available homes resulting in increased competition among buyers could drive the value higher.

Most experts agree initially pricing it properly will generally result in the highest sales price.  If a home starts out too high, it could actually sell for a lower price after it has been on the market for a while.  It gives the impression that there must be something "wrong" with the house because it didn't sell immediately.  

So, how does a seller determine what price to put on the home?  It has nothing to do with what the seller needs to get out of it.  Nor does the price the seller paid for it make any difference now.  Even if the seller made considerable improvements, they may not affect the value of the home.

There are three common sources for a seller to determine market value: an appraisal, a broker price opinion or an automated value model found online.

AVM, automated value models, are mathematical estimates that analyze limited public record data to determine a value.  While this process can easily compare square footage, age, number of bedrooms as objective data, it is much more challenging to make adjustments for subjective data like appeal, quality of construction, floorplan and updating.  Zillow Zestimates are the most common AVMs but there are many others providing similar services.

Appraisals can only be made by a licensed appraiser.  Most mortgages require an appraisal as part of the underwriting process to verify that there is ample collateral to secure the mortgage in case of default by the borrower.  FHA, VA, FNMA, Freddie Mac and USDA as well as most private lenders require an appraisal especially for high loan-to-value mortgages.  In some situations where the risk is lower, some lenders may use an AVM.

An appraisal requires the appraiser to visit the property, perform a visual inspection, analyze the property considering three approaches to value and accurately report the property information that is verifiable.

Broker Price Opinion, BPO, as the name indicates, is a price opinion on a property made by a licensed real estate agent.  The determination of whether the estimate accurately reflects the market will depend on the experience of the agent with that type of property and market area.  It is possible that a BPO could be more sensitive to the actual market because it will consider homes currently for sale and recently expired properties as well as comparable sales.

While all three methods, used recent, comparable sales to arrive at a value, the appraiser and the real estate professional can make a series of adjustments for the differences in the comparables.  While the appraiser is highly trained in this technique, the real estate professional also adds credibility to this process based on their experience in how the buying public might react to specific features and the home in general including positive and negative influences.

Current condition of the property is very important for a number of reasons.  In some price ranges, a buyer may only have the necessary down payment and closing costs but is not able to make improvements like paint, floor coverings, appliances or other major items.  In this situation, a buyer would have to live with the house in its current condition until they could afford to make wanted improvements.

Investors may not be deterred by making an additional investment in the home after purchasing it but will probably be motivated to do so only if it will increase the potential profit to be made.

An AVM can be a tool that a homeowner, prospective buyer, mortgage officer, appraiser or real estate agent can use to get a quick idea of price but there are inherent limitations that can only be considered by personal examination balanced with experience in the market place.

Experience and understanding of the subject property and the marketplace are critical to having confidence that a value is accurate.  Any person could go through the same steps to arrive at a value but an experienced, well-trained professional is far more likely to assess all of the variables more accurately.  If you are curious what your home is worth, call (317) 863-2356 or email plande@atlasrealty.com for a Broker Price Opinion.

https://betterhomeowners.com/PhilLande/2020/07/15/Who-Decides-Value Wed, 15 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/15/Who-Decides-Value https://betterhomeowners.com/PhilLande/2020/07/14/4-Reasons-to-Buy-Now Tue, 14 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/14/4-Reasons-to-Buy-Now

According to the FNMA Mortgage Lender Sentiment Study for the second quarter of 2020, 52% of participants said during the past three months, they have tightened credit standards for mortgages that can be purchased by government sponsored enterprises, GSE, like Fannie Mae and Freddie Mac.  64% reported they had also tightened standards for non-GSE eligible mortgages.

61% had tightened standards for government-backed mortgages such as FHA, VA, and USDA loans.  While these programs have minimum standards set for the borrower, lenders can impose stricter requirements for them to specifically make the loan.

As reported in the second quarter 2020 survey "After years of stability, this quarter, the majority of lenders reported tightening credit standards. Across all loan types, the net share of lenders reporting easing credit standards for both the prior three months and the next three months significantly decreased, reaching survey lows."

It is expected that lenders will continue to tighten standards for the third quarter.  The reasons precipitating these changes included concern over COVID-19 related factors including home price uncertainty, higher unemployment, policy changes and lower inventory.

It is more important than ever for borrowers to be pre-approved prior to beginning the process looking for homes.  This valuable step can save time, effort, and money.  Your real estate professional, Phil Lande, can recommend a trusted mortgage professional who can give you the answers you need.

https://betterhomeowners.com/PhilLande/2020/07/13/Tighter-Credit-Standards Mon, 13 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/13/Tighter-Credit-Standards https://betterhomeowners.com/PhilLande/2020/07/10/Reasons-to-Refinance Fri, 10 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/10/Reasons-to-Refinance https://betterhomeowners.com/PhilLande/2020/07/09/Most-Difficult-Steps-in-Home-Buying-Process Thu, 09 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/09/Most-Difficult-Steps-in-Home-Buying-Process

You've done your homework, contacted a mortgage company and believe you are pre-approved.  That part of the process is finished and you can concentrate of finding a home and moving...or can you?

Pre-qualified and pre-approved are two different things but some people, including some in the business, use the terms interchangeably.  Pre-qualified is an opinion of likelihood that a borrower will be approved based on preliminary information about their income and credit.  Whereas, in a pre-approval, the borrower's credit report is updated and pulled, income and assets verified and involves pre-underwriting.

Even when you have a highly qualified loan officer, the real decision maker is the underwriter who can commit the lender.  Generally speaking, a person who has been pre-approved receives a written letter stating the terms and conditions of the commitment.

A second opinion from a different lender can be a comforting thing for a borrower.  It will either confirm that the first lender was correct and that the rate and terms being offered are competitive or it will reveal that there could be differences that would warrant more investigation.

Mortgage money is a commodity and while competition usually keeps lenders close to each other in the rates and terms they offer, you won't know for sure unless you shop around.  The cost for being pre-approved is usually a nominal amount and when you are considering the size of the mortgage you'll be borrowing for up to thirty years, it makes sense to get a second opinion.

Occasionally, during the process of being pre-approved, an unexpected credit problem may be discovered.  It is better to learn about it early so you'll have time to correct it before you have contracted on a home.

Your real estate professional, Phil Lande, will be able to recommend lenders who are active, experienced in the area and can share their experience with you regarding previous loans they have made.  The benefits far exceed the time and effort it takes.  You'll be looking at the right priced homes; getting the best loan, rate and terms; have increased negotiating power with the Seller and can close quicker because many of the verifications have already been made.

https://betterhomeowners.com/PhilLande/2020/07/08/Good-Decision-for-a-Second-Opinion Wed, 08 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/08/Good-Decision-for-a-Second-Opinion

FICO, the company that standardized a credit scoring model to allow lenders to evaluate a person's ability to repay a loan has now added a new tool called the FICO Resilience Index.  This measurement can be used to determine a consumer's ability to withstand uncertain financial times.

It uses credit bureau information from before and after the Great Recession of 2007-2009.  It operates on a scale of 1 to 99 with lower index ratings indicating more resilience to fare financial turmoil. This index will not replace the credit score but be used together with it to evaluate the risk.

Higher resilient consumers are expected to have had fewer credit inquiries during the last 12 months together with fewer active accounts with lower total balances.  This would tend to indicate that the consumer has more experience in managing their credit.

It is expected that this tool will provide some consumers with lower credit scores to qualify based on this indication that they're capable of getting through tough financial times.  A good credit score indicates they will meet their credit obligations during normal times.  This new index factors in what may happen based on an economic downturn.

https://betterhomeowners.com/PhilLande/2020/07/07/FICO-Resilience-Index Tue, 07 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/07/FICO-Resilience-Index https://betterhomeowners.com/PhilLande/2020/07/06/Stay-Safe Mon, 06 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/06/Stay-Safe https://betterhomeowners.com/PhilLande/2020/07/03/Let-your-tenants-send-your-kids-to-college Fri, 03 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/03/Let-your-tenants-send-your-kids-to-college https://betterhomeowners.com/PhilLande/2020/07/02/Basis-in-Gift Thu, 02 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/02/Basis-in-Gift

Paying off your mortgage can provide peace of mind and is a worthy goal but is it the best thing for you to do at this time.

Do you have higher interest rate debt currently?  If you have credit card debt with double-digit rates or personal, car or student loans, you'll probably save more money from interest by paying these things off before you pay off your mortgage which is usually one of the lower rates on debt.

Many financial advisors recommend funding your annual retirement contribution before paying down a mortgage.  If your company offers matching funds for your contribution, you would be leaving money on the table by not making the contribution to your retirement.  For instance, you would be getting a $10,000 value by putting $5,000 into your retirement if your company matches it.

Creating an emergency fund is another favorite of financial advisors.  When the rainy day arrives and you need funds, it may be difficult to get money from the equity of your home, especially if you have lost your job.  Six months' worth of living expenses is a good target to have available should you need it and a year's worth would be even better.

Children's college funds may be another priority that takes precedent overpaying off the mortgage.  Whether you're saving or investing to pay for their education, it is going to cost more than it did when you were in school.

When you are ready to start paying off your mortgage, decide on the best way to do it.  Regular principal contributions on a monthly basis are very predictable and will get the job done.  Setting up an automatic bill pay with your bank will assure that you don't re-prioritize that extra amount every month because there is always going to be something else to do with extra money.

It is important to be sure that the lender applies the additional payment amounts to the principal and not to the escrow account.

Use the Refinance Analysis to see what extra amount you'd have to pay to retire your mortgage in a certain time frame or by making a specific additional amount each payment, you can find out when the loan will be paid.  Regardless of which way you go, prepaying a loan will save interest, build equity and shorten the term on a fixed-rate mortgage.

https://betterhomeowners.com/PhilLande/2020/07/01/Prepaying-Your-Mortgage Wed, 01 Jul 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/07/01/Prepaying-Your-Mortgage https://betterhomeowners.com/PhilLande/2020/06/30/Mortgage-Closing-Scams Tue, 30 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/30/Mortgage-Closing-Scams https://betterhomeowners.com/PhilLande/2020/06/29/Pillows-need-washing Mon, 29 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/29/Pillows-need-washing https://betterhomeowners.com/PhilLande/2020/06/26/5-mistakes-to-avoid-when-making-an-offer Fri, 26 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/26/5-mistakes-to-avoid-when-making-an-offer https://betterhomeowners.com/PhilLande/2020/06/25/Smoke-Detectors Thu, 25 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/25/Smoke-Detectors

Homeowners still have considerable advantages from the amortization of the mortgage and the appreciation enjoyed by most homes even with taking the standard deduction instead of itemizing to take the interest and property tax deduction. 

There is an adage, "Rent or buy, you pay for the house you occupy."  You either pay for it yourself or for your landlord.  The people who have job security, sufficient income, good credit and the funds for the down payment and closing costs can enjoy the many financial and emotional benefits of homeownership.

Looking at a $350,000 home purchased with an FHA mortgage with 3.5% down payment at 3.25% interest for 30-years, the total payment would be $2,420 a month.  During the first year, the average monthly principal reduction is $573 a month which build the owner's equity in the home.

At an estimated 3% appreciation, this home would increase in value at the rate of $875 a month during the first year which again builds the owner's equity in the home.

Even if you consider the buyer will now be responsible for repairs and possibly homeowner's association fees, the monthly net cost of housing in this example is $1,122 or less than half the monthly payment.  The difference goes to equity which a tenant does not benefit from.

If the buyer were paying $2,750 monthly rent, they would be paying $1,628 more each month to rent than to own.  In a year's time, they would lose $19,500 of equity by continuing to rent.  The down payment in this example is only $12,250 which would leave $7,000 to pay for buyer's closing costs.

Purchase Price

$350,000

Down Payment

$12,250

Total Monthly Payment (PITI + MIP)

$2,420

Less Monthly Principal Reduction (average first year)

$573

Less Monthly Appreciation (average first year at 3% annually)

$875

Plus Estimated Maintenance & HOA

$175

Net Cost of Housing

$1,122

The equity for the homeowner in this example at the end of seven years would be almost $140,000 based on the appreciation and amortization of the mortgage.  Whether you rent or buy, you pay for the house you occupy.

Use this Rent vs. Own to plug in your own numbers for the price home you'd like to buy.  If you need help with it, contact me and we can do it over the phone at (317) 863-2356 or in an online meeting.

https://betterhomeowners.com/PhilLande/2020/06/24/Lower-Your-Cost-of-Housing Wed, 24 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/24/Lower-Your-Cost-of-Housing

"Mise en place" is the French term for having all your ingredients ready to be used before you start cooking.  It makes things go smoother and prevents things from being forgotten.   Similarly, becoming pre-approved for a mortgage puts the rest of the home buying process "in place."

  1. It will save time from contract to closing if you are pre-approved.
  2. Sellers expect agents to show homes to only qualified buyers.
  3. Don't waste your valuable time searching for something that is not possible
  4. Don't suffer embarrassment of not being approved after negotiating a contract.
  5. Don't spend money on inspections, appraisal and other fees unless you will be approved.
  6. It may be the deciding factor to accept your offer if you are in a multiple offer scenario.
  7. It removes doubt in the seller's mind about whether the contract will actually close.
  8. You'll feel comfortable that you can afford the price home you want to buy.
  9. If something comes up on the credit report before you find a home, it can give you time to correct it.
  10. The confidence of pre-approval increases your negotiating power.
  11. Most good agents won't work with buyers who are not pre-approved.
  12. Peace of mind knowing you can be approved on the home you want.

Think of pre-approval as the prep time for your home purchase.  If you'd like a recommendation for a trusted mortgage professional, give me a call at (317) 863-2356.  For more information, download this Buyers Guide.

https://betterhomeowners.com/PhilLande/2020/06/23/Reasons-to-be-preapproved Tue, 23 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/23/Reasons-to-be-preapproved https://betterhomeowners.com/PhilLande/2020/06/22/Mortgage-Rate-History Mon, 22 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/22/Mortgage-Rate-History https://betterhomeowners.com/PhilLande/2020/06/19/Home-Buying-Team Fri, 19 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/19/Home-Buying-Team https://betterhomeowners.com/PhilLande/2020/06/18/Reduce-Homeowner-Premiums Thu, 18 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/18/Reduce-Homeowner-Premiums

Homeownership is a privilege and a responsibility. Even after decades of owning a home, you may still need some help to handle some of its challenges by focusing on the three "M"s of homeownership: maintenance, minimizing expenses and managing debt and risk.

While many people recognize the benefits of annual wellness, financial, vehicle and equipment maintenance visits, an important checkup that you may not have considered is an annual homeowner advisory or real estate review. Why would you treat the investment in your home with less care than you treat your car or your HVAC system?

Consider exploring the following:

  • Do you know the current value of your home? (You can, by obtaining a list of comparable sales in your immediate area, as well as what is currently on the market for sale.)
  • Have you compared your assessed value for tax purposes to the fair market value in order to possibly reduce your property taxes?
  • Even if you've refinanced in the last two years, can you save money and recapture the cost of refinancing in the length of time you plan to remain in your home?
  • Have you considered reducing your mortgage debt with low-earning cash reserves that will not be needed soon?
  • Do you have a record of the improvements you've made to your home since you purchased it? Do you know what items can be included?
  • Have you considered investing in rental homes in good neighborhoods to increase your yields and avoid the volatility of the stock market?
  • When was the last time you updated your home inventory of personal belongings? Do you have pictures as well as written documentation?
  • Do you need recommendations of repairmen and other service providers?

This service is part of my point of difference as a real estate professional to provide information to help homeowners not only when they buy and sell but all the years in between too.  My goal is to create lifelong relationships with our customers as their "go to" person whenever they have a real estate question.

My strategy is to provide reliable, consumer-based information about homeownership on a regular basis through email and social networking.  If it benefits you by helping you be a better homeowner, maybe you'll consider us your real estate professional.

When you don't know the answers to real estate questions, you know where to get them.

We're always here to serve your real estate needs. By helping you with the three "M"s of homeownership, we can earn your confidence and trust for the next time you move or a friend of yours needs a recommendation.

If you'd like to have a list of the market activity in your area or any of the other information mentioned, please contact me at (317) 863-2356 or plande@atlasrealty.com.  We're happy to provide it along with informative guides regarding the subjects mentioned.

https://betterhomeowners.com/PhilLande/2020/06/17/Annual-Advisory Wed, 17 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/17/Annual-Advisory

June is National Homeownership month encouraging people to enjoy the social, security and financial benefits.  According to the Joint Center for Housing Studies at Harvard University, the following reasons were given for Americans buying a home.

  • Good place to raise children and provide them with a good education
  • Physical structure where you and your family feel safe
  • More space for your family
  • Control over what you do with your living space, like renovations and updates
  • Good way to build up wealth that can be passed along to my family

There are significant financial benefits to homeownership that include:

  • The net worth of homeowners is over 40 times more than renters
  • Each payment on an amortized loan reduces the principal and builds equity
  • Appreciation increases the value of the home and the owner's equity
  • Some homeowners will benefit by taking itemized deductions including interest and property taxes
  • Exclusion of capital gain ... up to $250,000 for single taxpayers and $500,000 for married filing jointly
  • Stepped-up basis for heirs which results in reducing or eliminating gain

For more information, download the Homeowners Tax Guide and the Buyers Guide.

https://betterhomeowners.com/PhilLande/2020/06/16/National-Homeownership-Month Tue, 16 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/16/National-Homeownership-Month https://betterhomeowners.com/PhilLande/2020/06/15/Raise-Your-Credit-Score Mon, 15 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/15/Raise-Your-Credit-Score https://betterhomeowners.com/PhilLande/2020/06/12/Never-do-this-before-closing-on-your-home Fri, 12 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/12/Never-do-this-before-closing-on-your-home https://betterhomeowners.com/PhilLande/2020/06/11/Tax-Deferred-Exchange Thu, 11 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/11/Tax-Deferred-Exchange

It takes a team of professionals to buy a home like the lender, the appraiser, the inspector, the property insurance agent, the title officer, and others but the real estate professional may play the most critical role.

Baking bread seems so simple.  There are only four ingredients: flour, salt, yeast, and water; yet, there are steps that should be followed as well as a certain sequence to get the proper results.  Some people mix all of the dry ingredients before adding the hot water to activate the yeast.  Other people will activate the yeast in the warm water first to allow it to "bloom."

Both methods can achieve satisfactory results but one knowledgeable person needs to be in charge of the bread instead of having multiple people to be concerned with just their one ingredient or contribution like mixing, kneading, fermentation, benching, shaping, proofing or baking.

Similarly, in a home purchase, the buyer's agent can be the one who puts things in the proper order and sees that no steps are missed.  The buyer's agent coordinates between the other professionals with the common goal of getting the home closed on time according to the terms agreed in the sales contract.

Even if a buyer has been through the process before and possibly, multiple times, the buyer's agent will most likely have far more experience because it is their job. They perform their job on a daily basis and are not personally or emotionally involved like a buyer is.

Your agent understands what and when the various steps should be done and by whom.  They have worked with enough of the other professionals to know who is good at their job and can offer recommendations.  They have seen the things that make a transaction go smoothly and what can derail one.

Experience is a great teacher, but the lesson does not have to be learned by going through it by yourself.  Take the luxury of using your real estate professional's experience acquired through years of study and practice.  Allow your agent to advise you and coordinate the efforts to achieve the results you are expecting and deserve.

Learn more about the process and different steps by downloading the Buyers Guide

https://betterhomeowners.com/PhilLande/2020/06/10/Why-homebuying-begins-with-the-agent Wed, 10 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/10/Why-homebuying-begins-with-the-agent https://betterhomeowners.com/PhilLande/2020/06/09/National-Homeownership-Month Tue, 09 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/09/National-Homeownership-Month https://betterhomeowners.com/PhilLande/2020/06/08/Primary-Mortgage-Market-Survey--6420 Mon, 08 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/08/Primary-Mortgage-Market-Survey--6420 https://betterhomeowners.com/PhilLande/2020/06/05/Other-peoples-money-can-increase-yield Fri, 05 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/05/Other-peoples-money-can-increase-yield https://betterhomeowners.com/PhilLande/2020/06/04/Existing-Home-Sales-April-2020 Thu, 04 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/04/Existing-Home-Sales-April-2020

Homeowners receive a generous exclusion on the gain of their principal residence up to $250,000 for single taxpayers and $500,000 for married taxpayers filing jointly.  Most people probably consider the gain or profit in a home to be the difference between the purchase price and the sales price.

IRS allows a taxpayer to lower the sales price by the selling expenses before calculating gain.  Normal expenses like real estate commission, title policy, attorney fees, and other sales expenses may be included if they are normal and customary.

Another significant adjustment is that capital improvements made during the holding period can be added to the cost basis.  Normal maintenance like repairs are not considered improvements.  IRS says that if the expenditure materially adds value (features) to the property, or appreciably prolongs the useful life of the property, or adapts a portion of the property to a new use, it can be considered a capital improvement.

Examples could include replacing a heating or air conditioning system, storm windows, new permanent landscaping like trees or shrubs or completing an unfinished basement.  They don't necessarily have to be high-ticket items but can include things like adding dead bolts, ceiling fans, video doorbell and other items.  For more information, see IRS Publication 523.

The total amount of the money that is spent on capital improvements increase the cost basis of the home which in turn will reduce the amount of gain when sold.  With the average person staying in a home for 10 ... 12 years, the total improvements could be significant.

As an example, let's say a single taxpayer sold their home for $350,000 more than they paid for it.  If their selling expenses were $25,000 and they had made $75,000 of capital improvements during the holding period, the gain would be $250,000 and within the limits for a single taxpayer to exclude all of it instead of having a $100,000 gain.

It is necessary to be able to prove the amount spent and for that reason, a routine should be established to keep the receipts and cancelled checks for all expenditures on their principal residence.  Even if the owner is not sure whether they qualify as an improvement, by having the receipt available at the time of sale, a tax professional can help a homeowner with the determination.

In addition to receipts and cancelled checks, a contemporaneous register listing the date, description and amount spent will provide accurate information for calculations and serve as evidence should it be needed in the future.

There is more information in the Homeowners Tax Guide that is available for download.

https://betterhomeowners.com/PhilLande/2020/06/03/Why-Keep-Track-of-Home-Improvements Wed, 03 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/03/Why-Keep-Track-of-Home-Improvements

There are would-be homebuyers who are currently questioning their decision to buy a home in today's volatile marketplace.  The nervousness about the Coronavirus has some people feeling that waiting may be a prudent thing to do.

It certainly may feel natural to question it but there are some things you might want to consider.  Mortgage interest rates are at a fifty-year low.  Locking in a 30-year mortgage at these incredibly low rates may never be available again.

The same market force that is driving down mortgage rates, also drives down savings rates.  Even if it was in a "high yield" savings account, it would probably be earning less than one percent.  If you have your down payment ready to be used, it is not going to earn much.

Inventory is still low across most of the nation and homes are expected to appreciate three to five percent this year.  Homeowners enjoy appreciation on the value of the home and not just the down payment they have invested in it. 

The spring usually brings out the buyers who have been dormant during the winter which causes more competition among the best homes but due to the stay at home orders, sales were down.  It is expected that the summer market this year will be the spring market..  You may be fortunate enough to not only find the home you want; in the area you want but not have to getting in a bidding war for it.

Compare three places to put your $30,000 down payment while you wait for two years for things to calm down.  The objective is to decide where you will be best off financially at the end of the two years. 

If you could invest in a certificate of deposit earning 2%, in two years, it would be worth $31,212.  If you put it in the stock market and it went up 3%, it would be worth $31,827 if you picked the right stocks.

If you use the down payment on a $300,000 home that appreciates at 3% a year, the $30,000 would grow to $57,973 in equity in the same two-year period.  A home is leveraged investment because your down payment allows you to earn on the value of the home going up because you are using "other people's money" to finance it when you get a mortgage.

Plug your own down payment and price home you are waiting to buy to see what Your Best Investment would be.

https://betterhomeowners.com/PhilLande/2020/06/02/Uncertainty-in-the-Market Tue, 02 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/02/Uncertainty-in-the-Market https://betterhomeowners.com/PhilLande/2020/06/01/Moved-in-the-past-five-years Mon, 01 Jun 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/06/01/Moved-in-the-past-five-years https://betterhomeowners.com/PhilLande/2020/05/29/Strong-housing-market Fri, 29 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/29/Strong-housing-market https://betterhomeowners.com/PhilLande/2020/05/28/Equity Thu, 28 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/28/Equity

The last two months of the new normal stay at home has led many homeowners to rethink the way they live in their home.  It has now become an office for working at home; a school for children; a gym to stay in shape; and a place for recreation.

The repurposing has people evaluating whether their home still meets their needs or if some changes are necessary.  In some cases, adult children have moved back home, and, in others, there are parents who have moved in for the first time.

Staying at home and sheltering in place is necessary but how much togetherness can one family take and how long is it going to last?  Temporary is stretching into longer than expected and even when vaccines and treatments are discovered, will things really go back to the way they were?

A home is a place to call your own; to raise your family, share with your friends and to feel safe and secure.  Covid-19 has changed the scope of feeling safe and secure at home and may now be considered a sanctuary of safety more than ever before.

Many of the chief economists in the country feel that real estate will likely lead the country out of this recession.  The housing market is experiencing low inventory and has for almost a decade.  Building has not kept up with demand and prices of existing homes have continued to go up; 8% over last year.  

With 30-year mortgage rates at close to 3.25% and prices expected to continue to rise, an investment in a home can fit your needs and show returns in satisfaction, comfort, enjoyment, and monetary value.

If you are going to be spending more time in your home for all the reasons mentioned, maybe now is the time to consider finding a home that better suits your needs. It can be done in a responsible and safe manner using an online meeting with your real estate professional.  Find out what is available and what the process entails to protect you and your family.

 

https://betterhomeowners.com/PhilLande/2020/05/27/Rethinking-Home Wed, 27 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/27/Rethinking-Home

Whether you're getting pre-approved to find out what kind of mortgage you qualify for or have signed a contract subject to getting a loan or even refinancing your existing mortgage, borrowers need to produce a number of documents that will prove to the lender that the loan can be repaid.  Putting your hands on some of these things may take some time so it is a good idea to start early so you'll have them available when they're needed.

In most cases, the original document is not needed; copies will suffice. However, they will need the entire document with all the pages and supporting schedules such as in tax returns and bank statements.

Check with your lender to see if providing them digitally is acceptable; in most cases, it will be.

All Borrowers

  1. Driver's License & Social Security card for all applicants
  2. Employment history for last two years with addresses and contacts
  3. Recent two years W-2 statements
  4. Recent two years' tax returns
    • Complete returns & schedules
    • Personal and business if applicable
    • K1 forms if less than 25% owner
  5. Most current pay stubs/receipts for last 30 days
    • Social security or disability awards letter if applicable
  6. Proof of commissioned or bonus income
  7. Complete bank statements for all accounts for last two months
    • Explanation for unusually large deposits
  8. Quarterly statements for all IRA, 401k, CD, stocks, etc.
  9. Copy of sales contract*
  10. Insurance quote and agent contact information*

*If loan application is made for pre-approval purposes, these items are not required until a home has been contracted for.  At this time, borrower will be required to pay for the appraisal.

Documents may be required

  • Previous bankruptcy requires petition for bankruptcy and discharge including supporting schedule
  • Divorce decree if applicable
  • VA loans require copy of DD214 discharge paper
  • Gift letters if applicable

Refinance situations

  • Copy of note, settlement statement and survey

https://betterhomeowners.com/PhilLande/2020/05/26/Documentation-for-a-Mortgage-Application Tue, 26 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/26/Documentation-for-a-Mortgage-Application https://betterhomeowners.com/PhilLande/2020/05/25/Memorial-Day Mon, 25 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/25/Memorial-Day https://betterhomeowners.com/PhilLande/2020/05/22/Firsttime-homeowner-mistakes Fri, 22 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/22/Firsttime-homeowner-mistakes https://betterhomeowners.com/PhilLande/2020/05/21/Not-in-the-disposal Thu, 21 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/21/Not-in-the-disposal

During the mortgage meltdown that caused the Great Recession a decade ago, some homeowners lost their homes to foreclosure or constructed a short sale to get out from under the debt.  In most of the cases, the lenders forgave all or part of the debt owed them.

Similarly, in the early 90's after the failure of the Savings & Loans in the U.S., thousands of homeowners lost their homes in the same way but back then, the policy of the IRS was to consider the forgiven debt as income.  Today, it is still considered income which means that a homeowner could lose their home because they could not afford to pay for it and to make matters worse, they would owe income tax on the debt relieved.

The good news is that in 2007, Congress passed the Mortgage Forgiveness Act and it has continued to be extended with its current expiration of 12/31/20.

The amount forgiven for income tax purposes may not be the same amount owed to the lender.  Mortgage forgiveness has a limited exclusion for discharged home mortgage debt for a principal residence only; it does not include second homes or investment properties.  Only the amount of mortgage debt that can be treated as acquisition indebtedness in included.

In the example below, a homeowner purchased a home and refinanced the home five years later at 80% of the market value.  The new loan proceeds were used to payoff the original mortgage and make $30,000 of new capital improvements.  The revised acquisition debt is the acquisition debt at the time of refinance plus the capital improvements made with the loan proceeds.

The new $400,000 loan produced $39,417 of home equity debt which is not considered acquisition debt.  Home equity debt is money borrowed on a home and can be used for any purpose, but it may not be tax deductible or considered acquisition debt.  Acquisition debt is money borrowed to buy, build or improve a principal residence subject to a $750,000 limit.

Assume that the borrower never made a payment on the new loan.   If the new loan went through foreclosure while the Mortgage Forgiveness Relief Act is in effect, the forgiveness would be limited to the acquisition debt of $360,583 and the remaining amount of $39,417 would be considered income and subject to tax.

This article is meant to inform homeowners of liabilities associated with foreclosures and possible remedies that may be available.  This example is meant to illustrate the portion of a loan that could be forgiven.  Taxpayers should always consult their tax professional regarding their specific situation and the way the law would apply to their situation. For more information, see IRS Publication 4681.

 

Example

 

Purchase Price ... 5 years ago

$400,000

Mortgage at time of purchase ... Acquisition Debt

$360,000

Fair Market Value ... Today, 5 years later

$500,000

Refinanced 80% - Loan to Value

$400,000

Replaced unpaid balance - current acquisition debt

$330,583

Capital improvements made with loan proceeds

$30,000

Revised acquisition debt

$360,583

Home equity debt ... difference in refinanced amount and acquisition debt

$39,417

 

 

https://betterhomeowners.com/PhilLande/2020/05/20/Mortgage-Forgiveness Wed, 20 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/20/Mortgage-Forgiveness

Approximately 63% of U.S. homeowners have mortgages and their equity increased 5.4% in the fourth quarter of 2019 over the same period a year earlier.  ATTOM Data Solutions, in its fourth-quarter 2019 report, showed that 14.5 million residential properties were considered equity rich.  That means the combined estimated amount of loans secured on those properties was 50% or less of their estimated market value.

The equity in these homes are assets that homeowners could access to raise cash to use to weather the economic downturn caused by Covid-19.  Normally, this equity might be used for home improvements, or a lifetime event like weddings, college, or investing for retirement.

Lenders typically like homeowners to maintain a 20-25% equity position and will consider a loan for the difference in the existing first mortgage and 75-80% of the fair market value documented by an appraisal.

As unemployment has increased in the last month, it has become more difficult for homeowners to access the equity in their home through cash-out refinancing or HELOC, home equity line of credit.  Many lenders have increased lending restrictions to current bank customers and in some cases, have raised their minimum required credit scores for borrowers.

Further restrictions regarding jumbo loans are being experienced by borrowers for purchases as well as refinancing.  Jumbo loans are those that exceed the dollar amount limits put in place by FNMA and Freddie Mac.  In most of the U.S., the amount for a single-family home is currently $510,400 but areas deemed high cost could be higher.

https://betterhomeowners.com/PhilLande/2020/05/19/Equity-Relief Tue, 19 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/19/Equity-Relief https://betterhomeowners.com/PhilLande/2020/05/18/Housing-Affordability-Index Mon, 18 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/18/Housing-Affordability-Index https://betterhomeowners.com/PhilLande/2020/05/15/ACT--smiles Fri, 15 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/15/ACT--smiles https://betterhomeowners.com/PhilLande/2020/05/14/what-sellers-can-do-now Thu, 14 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/14/what-sellers-can-do-now

The convenience of selling your home without the hassle of getting it ready, putting it on the market, showings, open houses, negotiations and repairs comes at a cost ... a significant part of your equity. 

The companies, referred to as iBuyers, that buy homes from sellers are for-profit organizations.  They expect to make a profit from sellers who are willing to discount the proceeds they'll realize as an alternative to the conventional method of selling a home for people who need a quick sale.

The promotions for these companies generally state that you can receive a cash offer in a few minutes after putting your address online.  The discount can be between 10 to 18% compared to normal selling costs from 6 to 9%.   The cost to a person with a $100,000 equity could be as much as ten thousand dollars.

Even after you have accepted an offer, there can be contingencies in the contract that allow the company to inspect the home to discover the condition and reassess the offer to possibly make even more deductions.  If the seller isn't willing to accept them, the buyer can withdraw from the sale without penalty.

This appears on the surface to be a friendly, accommodating service but it can be an adversarial situation.  The seller wants to maximize their proceeds and the buyer wants to buy it as cheap as possible.

Compare this to working directly with a real estate professional acting as your agent.  They have to put your interests above their own.  They have a fiduciary duty of care, integrity, honesty and loyalty in their dealings with you.  Other duties include confidentiality, disclosure, obedience and accounting to the seller.

In this traditional model, your agent will provide you with the facts of what homes have sold for in the area and their opinion and recommendations on what the most likely sales price will be.  Your agent will provide you an estimate of the sales expenses based on different sales possibilities. 

They can advise you on work to be done prior to putting the home on the market, staging so your home will show at its best and estimate the time it will be on the market.  Based on low inventories in some price ranges, it could be surprisingly short.

As an owner, you made an investment in your home in cash and maintenance.  You are entitled to maximize your proceeds based on the risk taken to purchase a home instead of renting.  The convenience of a quick offer has a cost to it.  You need to compare the two alternatives to see which one benefits you the most based on your individual situation.

For more information, download the Sellers Guide.

https://betterhomeowners.com/PhilLande/2020/05/13/Convenience-at-a-Cost Wed, 13 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/13/Convenience-at-a-Cost https://betterhomeowners.com/PhilLande/2020/05/12/Home-Warranty Tue, 12 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/12/Home-Warranty https://betterhomeowners.com/PhilLande/2020/05/11/Clean-Windows Mon, 11 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/11/Clean-Windows https://betterhomeowners.com/PhilLande/2020/05/08/Bleach-Solution-Disinfectant Fri, 08 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/08/Bleach-Solution-Disinfectant

According to the Mortgage Bankers Association, homeowners seeking payment forbearance has gone from less than 4% to more than 6%.  According to financial data firm Black Knight, about 3.5 million home loans in America are already in payment forbearance

During a short-term crisis, lenders can issue homeowners forbearance that allows them to pause their mortgage payments.  This procedure has been an available tool to protect lenders and borrowers with natural disasters or temporary emergencies that disrupts normal living and income.  In the light of the current pandemic, lenders are not requiring proof of hardship except for a statement from the borrower.

The forbearance options can vary based on whether the mortgage is government-backed like FNMA, Freddie Mac, FHA, VA or GNMA or a privately owned mortgage.  The CARES Act addresses the government backed mortgages by offering up to one year's forbearance where lenders cannot foreclose.

When the forbearance ends, several options are possible based on specifics regarding the loan and its legal documents.  The borrower can pay the delayed payments and interest accrued in full or there could be an extended repayment plan, or the loan could be modified.

Both FNMA and Freddie Mac have recently said that they do not require a homeowner to repay missed payments all at once at the end of the forbearance plan unless they choose to do so.

Homeowners can sell their home during forbearance.  The foreborn amount would be reflected in the unpaid balance for the seller to pass clear title.

If your current financial situation makes it impossible to stay current with your mortgage obligation, contact your lender as soon as possible about what relief options are available.  If you stop making payments without going through the process of forbearance, your credit will be adversely affected, and you could end up in default on your mortgage subject to foreclosure. https://betterhomeowners.com/PhilLande/2020/05/07/Relief-for-Homeowners Thu, 07 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/07/Relief-for-Homeowners

The deadline for challenging your property tax assessment this year may be later than normal due to the stay at home orders but when you are notified, you'll want to be ready to decide whether you can save some money on property taxes this year.

There are two elements that determine the amount of property taxes you'll pay for the year: the assessment of value and the property tax rate.  Both determinations occur long before the property tax statement is sent.

Property owners are notified in writing what their assessed value is for the year.  It is estimated that most owners don't challenge that value even though it could lower their tax bill.  Not all appeals are successful, but many homeowners believe that it is worth the effort to try.  Procedures for challenging the assessment are generally included with the letter and a deadline for filing the challenge.

An initial step is to determine the accuracy of the information on your property's record such as market value and square footage.  If the record shows a higher square footage than actual, it can cause the value to be higher than it should be.  Even though it may not be required, an appraisal could be proof of actual square footage that shows the square footage and value by an independent party.

Recent comparable sales are used by assessors to determine market value of a property but are usually not identified in the property record.  Property owners can research comparable sales that indicate a lower value and submit them to the assessor's office either informally or in a challenge hearing.

It is important that the properties proposed to establish the value of the subject property are recent, comparable in size, condition, amenities and in the same area. 

There are companies who will represent the owner to lower their assessment.  The fee charged is usually a percentage of the taxes that are saved.  It is not a complicated procedure and can be very gratifying to make the effort.

Your real estate professional can be a valuable source of information and experience to guide you through the process.  Call me at (317) 863-2356 for more information and a list of comparable sales.

https://betterhomeowners.com/PhilLande/2020/05/06/It-Starts-Before-the-Statement-is-Sent Wed, 06 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/06/It-Starts-Before-the-Statement-is-Sent https://betterhomeowners.com/PhilLande/2020/05/05/Retrofitting-for-Aging-in-Place Tue, 05 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/05/Retrofitting-for-Aging-in-Place https://betterhomeowners.com/PhilLande/2020/05/04/Home-Equity-Options Mon, 04 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/04/Home-Equity-Options https://betterhomeowners.com/PhilLande/2020/05/01/ACT--Adjust-Your-Sails Fri, 01 May 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/05/01/ACT--Adjust-Your-Sails https://betterhomeowners.com/PhilLande/2020/04/30/Mortgage-Debt-Forgiveness Thu, 30 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/30/Mortgage-Debt-Forgiveness

Taking cash out of the equity of your home could be a legitimate way to fund a temporary cash crisis now or to have it on-hand if the need arises.  Most homeowners can pull out the difference in 80% of the fair market value of their home and what they currently owe.

The most frequently cited reasons for refinancing are to lower the payment, eliminate the private mortgage insurance, combine mortgages, consolidate debt, convert an ARM to a fixed rate mortgage, remove a person from the loan or to take cash out for another reason.

The option of using your equity to deal with unexpected living expenses or potential lost wages in the future could be a good reason for doing a cash-out refinance.  It is important to consider that it could increase your monthly payment instead of lowering it which would result in higher expenses during uncertain economic times.

Some lenders have recently raised the minimum credit score requirement but borrowers with good credit and the ability to repay should be able to refinance.  Lenders are reporting that during the Covid-19 crisis their processing time is taking longer but they have implemented procedures to safely facilitate the application as well as the appraisals.

While homeowners with an FHA loan are available for a streamline process because FHA is already insuring the mortgage to be refinanced, the cash-out is limited to $500.  Even though the owner may not be able to pull funds out of their FHA equity, refinancing may lower their payment and therefore, lower their expenses.

Unlike conventional loans that require income through a job or other sources, refinancing an existing FHA loan does not require income verification or an appraisal.  The borrower cannot be delinquent on their current FHA loan and it must be at least six months old.  The refinance must reduce the current interest rate or term or both. 

Another alternative for homeowners is a HELOC, home equity line of credit, where you do not incur interest expense unless you actually draw on the line of credit.  It will be a variable rate home equity loan similar to a credit card letting you borrow up to a specific limit when you want and repay it slowly over time.

Refinancing a home incurs closing costs which can be paid in cash or added to the financed amount.  The breakeven point to recapture the cost of refinancing is determined by dividing the monthly savings into the cost of refinancing.  If you stay in the home less than that time, refinancing could be an unnecessary expense. https://betterhomeowners.com/PhilLande/2020/04/29/One-More-Reason-to-Refinance Wed, 29 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/29/One-More-Reason-to-Refinance https://betterhomeowners.com/PhilLande/2020/04/28/Rental-are-IDEAL-Investments Tue, 28 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/28/Rental-are-IDEAL-Investments https://betterhomeowners.com/PhilLande/2020/04/27/Points-on-Refinancing Mon, 27 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/27/Points-on-Refinancing https://betterhomeowners.com/PhilLande/2020/04/24/Gift-15000 Fri, 24 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/24/Gift-15000 https://betterhomeowners.com/PhilLande/2020/04/23/Whats-the-Difference Thu, 23 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/23/Whats-the-Difference

Of course, it is!  We haven't experienced a global pandemic in our lifetime.  We haven't had an economic shutdown like this before.  Uncertainty is understandable and people tend to fear what they don't understand. With all that said, it doesn't mean there are not opportunities for people who can act in this unprecedented environment.

During the recent Great Recession, housing prices experienced dramatic reductions in value due to the subprime mortgage crisis.  Homeownership in the U.S. peaked in 2004 at 69.2% when lenders with questionable practices would approve almost anyone who applied for a mortgage. 

Since the Great Recession, Congress and the mortgage industry enacted significant rules that require a person to actually qualify based on the ability to pay back the loan, cash and savings necessary to close, the house securing the loan and sufficient credit history.

Both first-time buyers and investors were able to capitalize on opportunities during that recession by acquiring properties at below market prices.  These buyers had good credit, the necessary down payment, income and the willingness to act at the moment.  Interestingly, those prices did not stay depressed for long.

Today, there is a big part of America that has good credit, the necessary down payment and sufficient income to qualify but are in a wait and see posture.  It is understandable that both sellers and buyers across the country are uncertain whether now is a good time for them individually to make a move. 

Consumers should understand the difference in the ability to qualify for a home and the ability to afford and maintain it.  If a buyer is secure with their income and job status, a real estate market with less competition can definitely be an opportunity.

Currently, the homeownership rate is estimated at 65.1% based on the U.S. Census Bureau.  This is only slightly lower than its all-time high.

"The housing sector enters this current recession underbuilt rather than overbuilt" states Robert Dietz, chief economist with the National Association of Home Builders, "that means as the economy rebounds ... which it will at some stage ... housing is set to help lead the way out."  Ali Wolf, chief economist with Meyers Research, believes housing will be the hero this time "Last time housing led the recession.  This time it's poised to bring us out."

The majority of housing economists don't expect prices to fall because we're still experiencing a housing shortage.  Both existing homes on the market and new construction cannot meet the high demand from buyers, some who have been trying to buy and have lost bidding wars.

There is probably an equal number of sellers and buyers who are waiting to see what happens to the economy which will reduce the overall sales.  However, for the sellers who are in the market, their prices may stay solid based on the lack of inventory for the buyers who are staying in the market.

All real estate is local and each market, in its various price ranges have their own current characteristics.  If you would like to investigate how it might affect your decision to buy or sell, now or in the near future, we can arrange a video meeting.  We can provide you with current inventory levels in your area and price range, recent sales and current demand levels.

https://betterhomeowners.com/PhilLande/2020/04/22/Its-Different-This-Time Wed, 22 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/22/Its-Different-This-Time https://betterhomeowners.com/PhilLande/2020/04/21/FHA-Streamline-Refinance Tue, 21 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/21/FHA-Streamline-Refinance https://betterhomeowners.com/PhilLande/2020/04/20/Terms--Virtual-Tour Mon, 20 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/20/Terms--Virtual-Tour https://betterhomeowners.com/PhilLande/2020/04/17/Tell-Someone-They-Matter Fri, 17 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/17/Tell-Someone-They-Matter https://betterhomeowners.com/PhilLande/2020/04/16/Wont-Hurt-Your-Credit-Score Thu, 16 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/16/Wont-Hurt-Your-Credit-Score

Everyone knows someone it has happened to or has heard a tragic story.  It could have been a fire, a flood, a burglary or some other disaster but to file a claim on their insurance, they need the receipts or a list for what is being claimed.

Since you're at home anyway and may even have kids at home who need something to do, now is a great time to get a current home inventory done.  One of the easiest ways to accomplish this seemingly, daunting task is to put together a collection of pictures of every room in your home.    

The more valuable, the more important it is to take a close-up picture.  It will be necessary to open the drawers and closets and, in some cases, to pull things out in order to show everything in the picture.  That's why having someone to help you makes it faster and easier.

Not to get distracted from the job at hand, you may discover things that you had forgotten you had which is why you should do an inventory rather than trying to reconstruct it after the loss.  In some cases, it may be years after you've filed a claim when you remember you forgot some things.

Having photos or videos of the different rooms in your house combined with a list of the items can serve as the proof you need for your claim.

There are other benefits to doing a home inventory also.  You'll know the "right" amount of insurance to have on your personal belongings by assigning replacement costs to them.  It will simplify filing a claim if you ever need to. 

To organize your photos and even provide a detailed list of higher value items, you can download a Home Inventory in an interactive PDF that you can complete.  You can put it together on your computer and store it online to make it available if the computer is stolen or damaged.

https://betterhomeowners.com/PhilLande/2020/04/15/Check-This-Off-Your-LIst Wed, 15 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/15/Check-This-Off-Your-LIst https://betterhomeowners.com/PhilLande/2020/04/14/Terms--Forbearance Tue, 14 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/14/Terms--Forbearance https://betterhomeowners.com/PhilLande/2020/04/13/Social-Distancing Mon, 13 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/13/Social-Distancing https://betterhomeowners.com/PhilLande/2020/04/10/Wash-your-hands Fri, 10 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/10/Wash-your-hands https://betterhomeowners.com/PhilLande/2020/04/09/Stay-at-Home-Routine Thu, 09 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/09/Stay-at-Home-Routine

The American bank robber, Willie Sutton, was asked why he robbed banks and his answer was "because that is where the money is."  During his 40-year career, he stole about $2 million but Internet scammers are stealing many times that amount in phishing schemes preying on unsuspecting home buyers.

These crooks know where the money is because buyers have the down payment and closing costs and are expecting to transfer it to the close the sale of their home.  The FBI, in their 2018 Internet Crime Report, stated victims lost over $149 million and the CFPB estimates the losses at over $1 billion as a result of fraud in real estate transactions.    The scammers want to take advantage of the situation while it is still in the buyer's account.

Commonly, during the closing process, scammers will send spoofed emails to homebuyers from someone they expect to hear from regarding the transaction like the real estate agent or the settlement agent.  They will include false instructions for the closing funds.

Following these suggestions can help to protect you and possibly, avoid scams:

  • Call before you click to verify the wiring instructions to transfer funds.  DO NOT use the phone number or email in the email request.  Use a trusted source, preferably, in person, of contact information.
  • Confirm everything independently with your real estate agent and closing officer.   Confirm the actual instructions with the bank before transferring money.
  • Verify immediately, within four to eight hours, with the title company and real estate agent that the money was received.  If it has not been received, notify the bank immediately to determine if it can be cancelled.

If you believe you have been the victim of a phishing scheme, call your bank immediately and ask them to issue a recall notice on the money transfer.  File a complaint with the FBI at www.IC3.gov and report it to your local FBI office.

The Consumer Financial Protection Bureau has released two documents in an effort to inform consumers about wire fraud scams that commonly occur during closings: Mortgage Closing Checklist and Mortgage Closing Scams.

This is for information purposes only and should not be considered legal advice.

https://betterhomeowners.com/PhilLande/2020/04/08/Mortgage-Closing-Scams Wed, 08 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/08/Mortgage-Closing-Scams https://betterhomeowners.com/PhilLande/2020/04/07/Digital-Marketing-Plan Tue, 07 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/07/Digital-Marketing-Plan https://betterhomeowners.com/PhilLande/2020/04/06/ACT--Safe-at-Home Mon, 06 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/06/ACT--Safe-at-Home https://betterhomeowners.com/PhilLande/2020/04/03/Surviving-Spouse Fri, 03 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/03/Surviving-Spouse https://betterhomeowners.com/PhilLande/2020/04/02/Highly-Contagious Thu, 02 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/02/Highly-Contagious

While you're isolating at home, there are things you can do to help buy a home now or in the near future.  Instead of spending time surfing the Internet looking at homes, do the groundwork necessary to be able to purchase the home that you find.

  • There is a lot of documentation necessary to qualify for a mortgage and to be approved.  This part of the homebuying process can be done in advance, long before you even start looking at homes much less finding the one that you want.
    • Assemble all documents to make a pre-approval
    • Photo ID
    • Two months current pay stubs
    • Last two years' W2s
    • Complete copies of checking and savings statements for last three months
    • Copies of statements for IRAs, 401k, savings, CDs, money market funds, etc.
    • Employment history for last two years with addresses and contacts
    • Proof of commissioned or bonus income
    • Residency history for last two years with addresses and contacts
    • Assets for down payment, closing costs, and reserves; must provide paper trail
    • If self-employed, last two years tax returns, current profit and loss statement and balance sheet; copy of partnership/corporate tax returns for last two years if owning more than 25% of company
    • FHA requires driver's license and social security card
    • VA requires original certificate of eligibility and DD214
    • Other things may be required such as previous bankruptcy, divorce decree
  • Get pre-approved giving you the confidence
    • Determining the amount you can borrow - decreases as interest rates rise
    • Looking at "Right" homes - price, size, amenities, location
    • Finding the best loan - rate, term, type
    • Uncovering issues early - time to cure possible problems
    • Creating bargaining power - price, terms, & timing
    • Being able to close quicker - verifications have been made
  • If using a gift as a down payment, construct your gift letter
    • The donor's relationship to borrower
    • State the dollar amount is a gift and not a loan
    • State that no repayment is required
    • Signed and dated by the donor and borrower
    • Include all contact information
  • Build your homebuying team
    • REALTOR® - this person will coordinate the efforts of the other team members to make the transaction move smoothly, without unnecessary delays to close on time.
    • Lender* ... consider a trusted professional you can meet with face-to-face
    • Title company* ... guaranteeing the title and closing on time is important
    • Inspector* ... more than a flashlight and a clipboard

*Your agent can recommend these professionals based on their experience and having worked with them in the purchase and sales of other homes.  This can keep you from getting hooked-up with someone that may not be familiar with the type of home, area, or loans that you might be considering.

Additional information about the buying process and things that you can be doing while you're waiting to look at homes can be found in the Buyers Guide.

https://betterhomeowners.com/PhilLande/2020/04/01/What-Buyers-Can-Do-While-Staying-at-Home Wed, 01 Apr 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/04/01/What-Buyers-Can-Do-While-Staying-at-Home https://betterhomeowners.com/PhilLande/2020/03/31/Best-Firsttime-Buyer-Loans Tue, 31 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/31/Best-Firsttime-Buyer-Loans https://betterhomeowners.com/PhilLande/2020/03/30/JCHS-Covid19-Resource-List Mon, 30 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/30/JCHS-Covid19-Resource-List

In between binge-watching episodes while we're all staying at home to do our part to fight the spread of the Coronavirus, you can fulfill your requirement to complete the United States Census 2020.  It is now underway and you can respond online, by phone or by mail.

The census provides critical data that lawmakers, business owners, teachers, and many others use to provide daily services, products, and support for you and your community. Every year, billions of dollars in federal funding go to hospitals, fire departments, schools, roads, and other resources based on census data.

The results of the census also determine the number of seats each state will have in the U.S. House of Representatives, and they are used to draw congressional and state legislative districts.

It's also in the Constitution: Article 1, Section 2, mandates that the country conduct a count of its population once every 10 years. The 2020 Census will mark the 24th time that the country has counted its population since 1790.

Watch this video.  The 2020 Census is for everyone.  Take the Census.

https://betterhomeowners.com/PhilLande/2020/03/27/Census-2020 Fri, 27 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/27/Census-2020 https://betterhomeowners.com/PhilLande/2020/03/26/WD40 Thu, 26 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/26/WD40

During these unsettling times, sellers and buyers are concerned about staying healthy and virus-free as we all are.  To keep all parties safe, new procedures should be considered regarding the procedure for showing houses.

Agents are reporting that they are selling homes where the buyers have not physically been in the home and base their decision on the virtual tour found online.  Some states have suspended showings because they are not considered essential services and other states have not addressed the subject.

In the spirit of stepping up to do what is necessary, the following suggestions should be considered:

  • Buyers should view the pictures online first to see if the home meets their needs.  Most listing agents upload enough pictures to get a good idea of what a home looks like.
  • Buyers should ask their agent questions that the photos don't address.  Then, their agent can go through the listing agent to ask the seller direct.
  • It may be possible for the agent or owner to do a Facetime walk-through which would allow the buyers to ask questions and direct the agent or owner where to point the camera.
  • When possible, buyers can make an appointment to see the home through their agent.  They should meet the agent at the home in their own car.  No children should attend showings.
  • Recommended safe distances will be maintained between the owners and listing agent, if present, the buyers and their agent.
  • Transfer is almost inevitable, and all precautions should be taken.  Buyers should carry their own sanitizing wipes and or gloves and avoid unnecessarily touching surfaces.  Allow their agent to open doors and cabinets.
  • They should be disposed of in a trash bag in their car after they exit the home.

The social distancing and isolation could present some buying opportunities due to a lack of competition.  At the same time, the lack of inventory in many markets could keep prices high.  Overall, home prices nationwide are stable and, in many cases, continuing to rise which makes it a far less volatile alternative to investing in the stock market.   

With mortgage rates being at historic lows, there will probably never be a cheaper time to finance a home. 

Thank you again for looking at our listings and let us know if we can help you in anyway.

Please stay safe; wash your hands; practice social distancing and follow all the guidelines necessary to promote good health. We're all in this together!

https://betterhomeowners.com/PhilLande/2020/03/25/Showing-Procedures-During-Covid19 Wed, 25 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/25/Showing-Procedures-During-Covid19

Working from home can be challenging if you're new to it or if there are a lot of distractions in your home, especially, when there are other people there too.  Whether it is a roommate, a spouse or children who are normally in school, it can be difficult to focus on what you need to be doing.

Even if there isn't anyone else in the home or possibly, you have a separate room you can retire to, the distractions of being in the same space that you live and work can be tricky.  You want and probably, need to be productive and you've got to eliminate or ignore the distractions that prevent this.

Consider the following suggestions:

  1. Identify the space ... make it dedicated, if possible
  2. Proper furniture ... desk, chair, light, monitor, high-speed Internet
  3. Plan the night before of what you want to accomplish today
  4. Establish a routine and stick to it
  5. Determine your hours and don't be distracted
  6. Get up at least an hour before you start working
  7. Get dressed like you're going to work
  8. Don't multitask chores at home
  9. Don't work with the TV on but low volume music is okay
  10. Take lunch and other short breaks during the day
  11. Communicate with your colleagues throughout the day
  12. Don't take your work "home"    
  • Turn off your email and instant messaging
  • relax and socialize with family and friends
  • call friends and family and reaffirm each other
  • Use Facetime or Zoom to feel better connected
  • Eat right, exercise and get fresh air without breaking protocols

https://betterhomeowners.com/PhilLande/2020/03/24/Working-from-home Tue, 24 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/24/Working-from-home https://betterhomeowners.com/PhilLande/2020/03/23/Wash-your-hands Mon, 23 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/23/Wash-your-hands

A legitimate source of a down payment can be from a gift as long as it meets certain requirements of the lender.

The person making the gift needs to be related to the recipient.  In most cases, you might think of a parent or grandparent making this gift, but it can work the other direction.  A child or grandchild could also make a gift to a parent or grandparent.

A person can donate up to $15,000 a year without incurring gift taxes and the recipient is not required to pay tax on it.  A father and mother could gift $15,000 each to a child making it a total of $30,000.  If the child was married, the father and mother could each donate $30,000 to their child and the child's spouse, if they were married.

There could be other avenues available to gift more than these amounts but would warrant talking to your tax professional about your individual situation.

Once the basics of the gift have been determined, the lender is going to require a written gift letter explaining the specifics before the loan package can go to underwriting.  The letter needs to contain:

  • The donor's relationship to borrower
  • State the dollar amount is a gift and not a loan
  • State that no repayment is required
  • Signed and dated by the donor and borrower
  • Include all contact information

https://betterhomeowners.com/PhilLande/2020/03/20/Gift-the-Down-Payment Fri, 20 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/20/Gift-the-Down-Payment https://betterhomeowners.com/PhilLande/2020/03/19/Preapproval--Confidence2 Thu, 19 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/19/Preapproval--Confidence2

You don't have to watch TV for long before Tom Selleck, Henry Winkler or Robert Wagner will tell you why seniors should consider a reverse mortgage.  However, there are a seniors who are resisting the conventional wisdom of having their home paid for and opting for a mortgage with payments on their home.

In some cases, seniors will downsize into a smaller home and have a large amount of equity to pay cash for the new home.  In other situations, they may have their home paid for and decide to do a cash-out refinance which will require making payments.

The logic behind either of these examples could be motivated by the fact that since mortgage rates are so low currently, the owners can reinvest the money at a higher yield and make money on their equity.  This will give them more money for their retirement income.

A common question that is asked by owners considering such a strategy is whether they'll be able to qualify for the new mortgage since they may no longer be employed.  The Equal Credit Opportunity Act prohibits discrimination against borrowers based on age.

All borrowers, whether they are working or not, need to show that they have good credit, reasonable debt and enough stable income to repay the mortgage.  Lenders cannot base their decision on loan term based on an applicant's life expectancy, so a 30-year loan is possible regardless of the borrower's age.

Fannie Mae, one of the largest purchaser of mortgages on the secondary market, is concerned on income that is stable, predictable and likely to continue.  Retirees' income can come from Social Security, pensions, or distributions from retirement accounts like IRAs, 401(k)s, Keogh or other plans.  Lenders will analyze these sources to estimate how long it will last. 

Other investments can be considered like stocks, bonds, mutual funds and annuities.  Based on the type and the volatility of the investment, lenders may be restricted from considering 100% of the income.

Getting the facts as it pertains to you as an individual is important to be able to know if you are eligible and how much you can borrow.  A trusted mortgage professional who understands this type of borrower is very important to help you determine the right mortgage vehicle and provide information to decide if this option is right for you.  Call me at (317) 863-2356if you would like a recommendation.

https://betterhomeowners.com/PhilLande/2020/03/18/Why-have-a-mortgage-during-retirement Wed, 18 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/18/Why-have-a-mortgage-during-retirement https://betterhomeowners.com/PhilLande/2020/03/17/Reasons-to-Refinance Tue, 17 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/17/Reasons-to-Refinance https://betterhomeowners.com/PhilLande/2020/03/16/lint-screen Mon, 16 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/16/lint-screen

Large credit card debt is like a 30-year mortgage.  If you only pay the minimum amount each month, it would take roughly, 30 years to pay it off...assuming you don't add anything new to the balance.

A $20,000 credit card balance at 18.9% interest with a minimum payment of 2% would take over 30 years to payoff the balance.  In that time, the borrower would have paid $58,256 in interest or three times the amount owed.

For some people, trying to save enough to pay off credit card debt is futile.  The solution must begin with living within one's means and making it a priority to eliminate credit card debt entirely.

Part of the problem is the high rates associated with credit cards with average rates of 17% but only for the borrowers with the best credit scores.  Lower credit scores could have a person paying 27% and above.

A cash out refinance on a home with enough equity could reduce the interest to below 5%.  In most cases, it would still take 30-years to pay off the debt because that is the standard term for mortgages.  The big difference is that the rate would be much lower. 

An extra $20,000 to pay off the credit cards added to the current mortgage would be $101.34 a month at 4.5% for 30 years plus whatever the payment would be on the refinanced unpaid balance.

Borrowing the money at lower rates as a part of a cash out refinance can be a legitimate source for the funds that will provide the lowest interest rates available.  There are lots of people that relieved the pressure caused by crippling debt only to build the credit card balances again.  Before using this method, it is important to make decisions with the people in your household that living beyond your means is unhealthy both financially, mentally and physically.

https://betterhomeowners.com/PhilLande/2020/03/13/Equity-to-Partially-Solve-Credit-Card-Debt Fri, 13 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/13/Equity-to-Partially-Solve-Credit-Card-Debt https://betterhomeowners.com/PhilLande/2020/03/12/Control-Bathroom-Mold Thu, 12 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/12/Control-Bathroom-Mold

A lower rate will not only result in a lower payment, it will amortize the loan quicker.  A $250,000 mortgage at 4.5% for 30 years will have a $1,266.71 principal and interest payment.  At 4%, the same loan will have $1,193.54 payment saving $73.18 a month and the unpaid balance would be $1,776 lower at the end of five years.

Mortgage lenders tend to price their mortgages based on the credit score of the borrower.  The higher the credit score, the lower the mortgage rate.  There is an inverse relationship that the lower the credit score, the higher risk and therefore, a higher rate is needed to balance the risk.

In order to get a valid rate that will be available to you with your credit score, you need to be pre-approved. The process of making a loan application before you find a home, allows the lender to verify your credit, income, and ability to repay the loan.  Lenders usually only charge the cost of the credit report for this type of service.  Be aware that pre-approval is not the same thing as pre-qualification which is simply a loan officer's opinion.

When you shop for a mortgage with multiple lenders, the credit bureaus count them as a single credit inquiry if they are done within a two-week period. On the other hand, restrain yourself from applying for other credit such as cars, furniture or credit cards until after you have closed on the purchase of your home because those inquiries can negatively affect your credit score.

The Consumer Financial Protection Bureau recommends that you let lenders know that you are shopping the mortgage for the best rate and fees.

Instead of going to the Internet and Googling mortgage lenders, start with recommendations for a lender from your real estate professional.  They see the good, the bad and the ugly and can save you a lot of time.  Another reliable source would be from a friend who has recently purchased a home.

There are lenders who bait unsuspecting borrowers with lower rates and fees into making an application and after critical time has lapsed, try to switch them to a different program.  By that point, many buyers feel they don't have any choice but to accept what is offered.

Another confusing factor is the way that loans are priced to the public.  They are usually quoted at a rate with a certain amount of points.  A point is one percent of the amount borrowed.  An example would be a quote for a loan at 4.5% with 1 point or at 4% with 2.5 points.

The points combined with the rate affect the yield the lender will earn, and you will pay.  A simple way to make this an apple to apple comparison is to have the lender quote the loan as a "par-value" loan with no points involved.  Then, the lowest rate will produce the lowest cost to you.

Another way to compare loans will be to uses a financial app called Will Points Make a Difference.  You can plug in the rate and points to calculate the lowest yield over a projected holding period or the full term.

The lenders do not want to make it easy for you to compare.  Mortgage money is a commodity and shopping will be worth the effort. 

https://betterhomeowners.com/PhilLande/2020/03/11/Shopping-for-a-Mortgage Wed, 11 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/11/Shopping-for-a-Mortgage https://betterhomeowners.com/PhilLande/2020/03/10/EPA-disinfectants Tue, 10 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/10/EPA-disinfectants https://betterhomeowners.com/PhilLande/2020/03/09/Primary-Mortgage-Market-Survey Mon, 09 Mar 2020 05:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/09/Primary-Mortgage-Market-Survey

You'll need to earn $2.00 for every $1.00 you want to spend assuming you pay 50% of your earnings on income tax, social security and Medicare.   On the other hand, you get to keep 100% of every dollar you save on your personal expenses because the taxes have already been paid.

Periodically, review your expenditures with the diligence of an exuberant IRS agent on commission.  It's an exercise that most people don't feel they have time to do but the rewards make it entirely worthwhile.

  • Get comparative quotes on car and home insurance to save money
  • Review and compare utility providers
  • Review plans and usage on mobile phones
  • Review plans on cable TV, satellite for unused channels and packages or receivers
  • Review on-demand streaming services to see how much they are being used
  • Review available discounts on property taxes.
  • Consider refinancing home ... lower rate, shorter term or cash out to payoff higher rate loans
  • Consider refinancing cars
  • Call credit card companies to ask for a lower rate
  • Review all of the automatic charges on your credit cards ... do you need or still use the service?
  • Discover late fees that are regularly being paid and eliminate them.
  • Review all recurring monthly charges for services; determine if they are necessary or can be eliminated.

An alternative to scrutinizing a credit card statement and having to call each company regarding a charge you don't recognize is to cancel the card and have the bank replace it with a new number.

You can notify the companies that you recognize with the new card number.   The mystery companies will have to notify you to get a card with a valid number.  You can decide if you need to continue the service or cancel it.  If the companies don't contact you and you still don't know what the charge was, you obviously didn't need it and you saved money.

Most service companies that compete with other companies for your business have customer retention departments.  Before you change your current provider, check with customer retention to see if they have a better deal for you.  These companies realize the value of a lower the price rather than losing a customer. https://betterhomeowners.com/PhilLande/2020/03/06/Personal-Financial-Review Fri, 06 Mar 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/06/Personal-Financial-Review https://betterhomeowners.com/PhilLande/2020/03/05/net-cost-of-housing-2020 Thu, 05 Mar 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/05/net-cost-of-housing-2020

A well-planned garage or yard sale can give you extra space in your home, get rid of unused items and make some money but it needs some of the same considerations that any business needs to be successful. 

  • Start early to research and plan
  • Promotion is key
  • Display items attractively
  • Price items right
  • Organize checkout

Determine the date of your sale, remembering that there are exceptions, but Saturdays are generally the best day.  Experienced garage-salers believe that a well-planned one-day event will do as well as a multi-day event.  Serious purchasers will look for the "new" sale and most people don't come back multiple days.

Recognize that the first day of the sale will have the most people.  Everyone will be looking for a bargain but some of them actually want to purchase things for them to resell at their own sales.

Advertise in local newspapers and free online classified sites like Craigslist.  If several families are going together for the sale, mention that in the ad; it will be a big draw.  Mention your bigger-ticket items like furniture, equipment and baby items.

Garage sale signs can be purchased or you could have them made at Office Depot or FedEx Office.  Signs need large lettering so they're easy to read without too many words on them.  Remember that people will be driving when they see them.  Most important info: Garage or Yard Sale, address, date and time.  Directional signs are also important along with balloons and streamers to attract attention.

Consider using the service Square so that you can take credit cards.  The cost is 2.6% + 10¢ per swipe and you can do it on your smartphone or iPad.  You'll need to sign up at least two weeks in advance to receive your reader.

You will be amazed at what sells and what doesn't.  If your goal is to get rid of some things regardless, put those items in the sale and at the end of the sale, donate what you can to Goodwill and the balance goes to the dump.  If you can't bear to do that, box them up and try again next year or possibly, at one of your neighbors' sales.

Other supplies you'll need will be:

  • Labels and markers for pricing items.
  • Newspaper and clean, grocery bags to wrap breakables.
  • Tables to display the items.

Unless you're having an estate sale, keep your home locked.  You don't want people wandering through your home while you're outside.  If you start to accumulate a lot of money, take some of it inside.  Don't discuss how much money you've made during the sale or how successful it has been.

People will want to bargain; it's the nature of the game.  Consider this strategy: less negotiations early in the sale and possibly, more toward the end of the sale.

https://betterhomeowners.com/PhilLande/2020/03/04/Get-Ready-to-Garage-Sale Wed, 04 Mar 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/04/Get-Ready-to-Garage-Sale https://betterhomeowners.com/PhilLande/2020/03/03/6-things-to-do-to-get-out-of-debt-and-buy-a-home Tue, 03 Mar 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/03/6-things-to-do-to-get-out-of-debt-and-buy-a-home https://betterhomeowners.com/PhilLande/2020/03/02/Compare-standard-itemized Mon, 02 Mar 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/03/02/Compare-standard-itemized

Buying a home isn't a business — it's personal. That's why dealing directly with sellers, rather than through a real estate agent, can be tricky and uncomfortable for people who are on the hunt for a new home.

For starters, going it alone and searching for potential properties can be a daunting task. One of the hardest parts of the home buying process is finding the perfect house in the first place. It's a real estate agent's job to do the research on available homes and gather information on the current market. Taking on that work yourself can be time-consuming and frustrating, so getting help from a professional can save unnecessary stress and will most likely yield greater results.

Agents also have valuable knowledge of the neighborhood you're buying in that a seller might not share with you. Investing in a home means you're investing in the area as well, so you have to make an informed decision on where you buy. REALTORS will make sure you know what you're getting into and save you from being unpleasantly surprised just because a seller kept you in the dark.

When sellers show their home directly to buyers, it's very easy for interactions between the two parties to turn into confrontations. Any flaws that you might point out about the house, can be insulting to sellers and put them on the defense. Not to mention, a buyer and seller's goals are intrinsically at odds: you want to buy for the lowest price possible while they want to sell for the highest price possible.

Without an agent acting as an advocate for you, you're left on your own to negotiate with the seller. Unfortunately, not everyone has negotiation skills, and you might end up paying much more than you should. Real estate agents are savvy negotiators and they act as intermediaries who facilitate communication in a positive manner. Keeping them in the loop can save the buying and selling experience from turning sour.

REALTORS are invaluable when it comes to figuring out what kinds of inspections you need and deciphering complicated paperwork. They'll also have your back and make sure you receive all the disclosures you're entitled to that a seller might leave out during negotiations. They've been through it all and can point out contractual conditions you might have missed on your own that could trip you up down the line.

In the end, using a real estate agent can minimize the risk that comes with buying a house and ensure a smoother transition into your new home. So, don't make house hunting any harder than it needs to be. Let the professionals do the heavy lifting and enjoy the search for your future.  

Download a Buyers Guide for more information.

https://betterhomeowners.com/PhilLande/2020/02/28/Dealing-with-Sellers Fri, 28 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/28/Dealing-with-Sellers https://betterhomeowners.com/PhilLande/2020/02/27/Homeowners-over-65 Thu, 27 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/27/Homeowners-over-65

It is the way the property is used that determines the type of property it is, not what it looks like.  Based on the intent of the owner, the property could be a principal residence, income property, investment property or dealer property.

A principal residence is a home that a person lives in.  There can be only one declared principal residence.  It is afforded certain benefits like deducting the interest and property taxes on a taxpayers' itemized deductions, up to limits.  Up to $250,000 of gain for a single taxpayer and up to $500,000 for a married couple filing jointly can be excluded from income if the property is owned and used as a principal residence for two out of the previous five years.

An income property is an improved property that is rented for more than 12 months.  The improvements can be depreciated based on a 27.5-year life for residential property or 39-years for commercial property.  This is a non-cash deduction that shelters income.  When the property is sold, the cost recovery is recaptured at a 25% tax rate.

An investment property could be an improved property or vacant land that does not produce income and is not eligible for depreciation or cost recovery.  The gain on both income and investment properties are taxed at a lower, long-term capital gain rate and are eligible for a tax deferred exchange.

Second homes are properties that a taxpayer primarily uses for personal enjoyment but is not their principal residence.  For IRS purposes, it is treated as an investment property in that the gain is taxed at preferential long-term rates if it is held for more than 12 months.   However, it is not eligible for exchanges because personal use properties are excluded from that benefit.

Properties that are built or bought to make a profit are considered inventory and are labeled dealer properties.  The gain is taxed at ordinary income rates and they are not eligible for section 1031 deferred exchanges.

The financing available differs considerably based on the intent of the owner which determines the type of property.  Owner-occupied homes, used as a principal residence, are eligible for low down payment mortgages like VA, FHA, USDA and conventional ranging from nothing down to 20%.

A second home, in most cases, requires a minimum of 10% down payment.  Investment and Income properties, generally, require 20% or more in down payment with some possible exceptions.  There is not any long-term financing available for dealer property. https://betterhomeowners.com/PhilLande/2020/02/26/What-kind-of-properties-are-these Wed, 26 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/26/What-kind-of-properties-are-these https://betterhomeowners.com/PhilLande/2020/02/25/Insurance-Conversation Tue, 25 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/25/Insurance-Conversation

The advantages of a 15-year loan over a 30-year include the obvious shorter term, usually a slightly lower interest rate and that equity builds faster.  The disadvantages are higher payments that are required regardless of temporary personal economic conditions.

If a borrower is experiencing unexpected expenses that make it difficult to make the higher payments on the 15-year loan, there is no option to make a lower 30-year payments until the situation improves.

The borrower could have originated a 30-year loan but make payments like it were a 15-year loan.  The additional amount would be applied to the principal which would still save interest, build equity faster and shorten the term of the mortgage.  The big difference in this scenario is that the higher payment is optional.

If the situation arises, the borrower is only obligated to make the 30-year payment.  When the situation improves, the borrower can resume the higher payments to retire the loan early.

A $300,000 mortgage at 3.6% for 30 years has a P&I payment of $1,363.94.  If it were amortized for 15 years, the payment would be $2,159.41 or $795.47 more.

Let's assume you made the higher payment for three years and then, made the lower payment for six months due to some financial situation.  After that you resumed the higher payment each month.  At the end of ten years, the unpaid balance would be $124, 485.48.

The 15-year loan would have an unpaid balance of $118,411.03.  When you factor in the six months of lower payments that were made, there is only a $1,301.63 difference. 

Using the option of the 30-year loan and paying it like a 15-year can provide options that may be very beneficial should unexpected financial conditions occur.  Since unexpected expenses are more common than unusual, getting the 30-year is almost planning for the inevitable while trying to meet your goal of paying the loan in a shorter period.

To do some planning with your own situation, check out rates on 30 and 15 year mortgages on www.FreddieMac.com and use the 30yr vs. 15yr Comparison.

https://betterhomeowners.com/PhilLande/2020/02/24/The-30year-Option Mon, 24 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/24/The-30year-Option

When two people decide, whether they're married or not, to buy a home, they're probably considering what a great idea it is.  If later, they rethink the decision and determine to go their separate ways, simply deeding the home to the remaining person may not solve the potential liabilities.

In the case of a marriage, the divorce court can determine who can live in the home and who is responsible for the payments and upkeep and even which party gets title to the home.  What the court cannot change are the terms of the loan which is a contract between the lender and borrower at the time the mortgage was made when the parties were still married.

When two people originate a mortgage, both people remain "jointly and severally" liable for the loan.  Regardless of any mutual agreement between the parties or even a court decision, the lender still holds both parties who originally signed the note liable and can come after both or either if there is a default. 

Deeding one's rights to the property conveys title but it doesn't affect the note. 

Two solutions to the issue would be the following:

  1. Sell the property to a third party, pay off the existing mortgage, and divide the equity according to the divorce decree or mutual agreement.
  2. Refinance the home in the remaining party's name only.If the divorce didn't remove the spouse's name from the deed, it will need to be done at this time.Depending on the terms of the divorce, there may need to be a cash settlement to the spouse when the equity is realized.

Some people may not become aware of this type of problem until years later when they might want to sell the property.  A situation like this involves legal rights and a person should consider legal advice.

https://betterhomeowners.com/PhilLande/2020/02/21/Removing-a-Person-from-a-Mortgage Fri, 21 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/21/Removing-a-Person-from-a-Mortgage https://betterhomeowners.com/PhilLande/2020/02/20/46-FHA Thu, 20 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/20/46-FHA

The least amount in a down payment is an attractive option when people are thinking of buying a home.  A common reason is to have cash available for furnishing the new home and  possible unexpected expenses.

Some people don't have any options because they only have enough for a minimum down payment and the closing costs.  For those fortunate buyers who do have extra money available, let's look at why you'd want to do such a thing.

Most loans in excess of 80% loan to value require mortgage insurance to protect the lenders for the upper portion of the loan if the home were to go into foreclosure.  FHA requires an up-front premium of 1.75% of the amount borrowed plus a monthly amount of .85% on the balance.  FHA mortgage insurance premium must be paid for the life of the loan.

Mortgage insurance on conventional loans varies depending on the borrowers' credit and the amount of down payment being made.  Unlike FHA, when the unpaid balance reaches 78% of the original amount borrowed, the mortgage insurance is no longer needed.  If the home enjoys rapid appreciation, after a period, the lender may allow the borrower to get an appraisal to show that the unpaid balance is now less that 78% of the current appraised value.

The premium for mortgage insurance on conventional loans can be paid as a single premium upfront in cash or financed into the mortgage.  A second option would be monthly mortgage insurance included in the payment until it is no longer needed.  A third option could be lender-paid MI where the cost is included in the mortgage interest rate for the life of the loan.

VA loans do not require mortgage insurance but there is a one-time funding fee of 2.3% that can be paid in cash at closing or added to the amount borrowed.  Disabled veterans and Purple Heart recipients are not required to pay the funding fee.

Putting at least 20% down payment on a home not only will avoid the mortgage insurance, it could also help you to get a little lower interest rate.  Since the loan to value is lower, there is less risk for the lender.

A $350,000 with a 10% down payment at 4% interest could have a monthly mortgage insurance cost between $70 to $130.  A trusted mortgage professional can help you assess the options you have available.  It is always better to make some of these decisions before you start shopping for a home.

This is another reason it is good to start by getting pre-approved with a trusted mortgage professional.  If you need a recommendation, call me at  (317) 863-2356. https://betterhomeowners.com/PhilLande/2020/02/19/Why-Put-More-Down Wed, 19 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/19/Why-Put-More-Down

There are a multitude of companies across the Internet, referred to as iBuyers, who are suggesting that sellers can save the hassle of putting their home on the market, showings, repairs, open houses and other things by accepting their instant offer to purchase.

The adage goes "if it sounds too good to be true, it probably is."  The price to be paid for the convenience of not having to deal with the hassle is a lower net sales price than you'd probably realize if you took a more conventional approach to selling your home.

These companies are not charities and therefore, will need to make a profit.  The offer you receive is based on an automated value model that takes public information about your home and the market to arrive at a price.  Since the "buyer" of your home will then become a seller, the costs for the commission, repairs, selling expenses, holding costs and other things will have to be considered in the price you'll be offered.

For the company to take on the risk associated with owning an asset of that size, they will have to anticipate expenses that may not actually be incurred.  Some of these companies may even factor in a profit also.

There may be situations when an iBuyer or instant buyer would be worth it due to the circumstances.  However, if a seller wants to maximize the equity out of their home, it may not give them the proceeds they want, need and/or deserve.

At the very least, you should meet with a local real estate professional who can evaluate your home personally to consider things that automated value models do not.  This pro can also estimate what a reasonable sales price could be, how long it may take to sell and what marketing efforts would be needed. 

An owner who has made an investment in the home for years along with the risk and responsibility of ownership, deserves to maximize the proceeds they can receive.

https://betterhomeowners.com/PhilLande/2020/02/18/Instant-Buyers-Save-Time-But-Cost-Money Tue, 18 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/18/Instant-Buyers-Save-Time-But-Cost-Money https://betterhomeowners.com/PhilLande/2020/02/17/Primary-Mortgage-Market-Survey Mon, 17 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/17/Primary-Mortgage-Market-Survey https://betterhomeowners.com/PhilLande/2020/02/14/Home-is-where-the-heart-is Fri, 14 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/14/Home-is-where-the-heart-is

There's a fine difference between a second home and a vacation home.  If you are going to primarily use the home for yourself, then, it is probably a second home.  If you're going to use it some during the year and rent it out the rest of the time, it is probably a vacation home.

There is another possibility.  If you use it for 14 days a year or less, the property could be a rental property which means you may have some benefits that are not available to vacation properties.  These may seem insignificant, but the tax laws require that they are handled differently.

Try to be realistic about what your expectations are for the property.  Are you looking for an investment that will earn rental income and go up in value?  Are you trying to find a way to lower the costs of vacations by owning the property?  How do you feel about strangers using your property when you're not there? 

Vacation rentals are short-term which may realize higher rents, but they could also have higher than normal vacancy rates.  Maintenance and management are usually more than on long term rentals.

If your objective is to have an investment, you could analyze the property as a vacation property and a long-term rental to see which might provide you the best results.

It would be a good idea to do some research on the area you're considering investing to find out about appreciation trends and the local economy.  A local REALTOR® can provide you with valuable information before you invest as well as revenue and expense estimates.

There are a lot of things to consider besides it being a nice place to recreate.  If you'd like a recommendation for a real estate professional in the area you're interested in, let me know and I'll put you in touch.  Send me an email at plande@atlasrealty.com or call me at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2020/02/13/Before-Buying-a-Vacation-Home Thu, 13 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/13/Before-Buying-a-Vacation-Home

Home improvement loans provide a source of funds for owners to finance the improvements they want to make.  These are usually, personal installment loans that are not collateralized by the home itself.  Since there is more risk for the lender with this type of loan, the interest rate is higher than a normal mortgage loan.

In today's market, the rates on home improvement loans could vary between 6% and 36%.  A borrower's credit score will determine the interest rate; the lower the score, the higher the rate and the higher the score, the lower the rate.

Smaller loan amounts are under $40,000 with larger loan amounts over $40,000 based on the extent of the improvements to be made.  With all things being equal, a larger loan may have a lower interest rate.

Besides the interest rate being higher than a regular mortgage, the term is shorter.  Similar to a car loan, the term can be between five and seven years.  A $50,000 home improvement loan for a borrower, with good but not great credit, could have a 12% interest rate for seven years.  That would make the monthly payment $882.64.

An alternative way to fund the improvements would be to do a cash out refinance.  These types of loans are collateralized by the home.  The current mortgage would be paid off with the new mortgage plus the amount for the improvements.  Lenders will usually require that the owner maintain a minimum of 20% equity in the home.

Assuming a homeowner owed $230,000 on the existing mortgage and wanted $50,000 for improvements.  The new loan amount would be $280,000 and the home would have to appraise for at least $350,000 for the homeowner to have a 20% equity remaining. 

Another thing that occurs on a refinance is that the standard term for mortgages is 30 years which means the owner would be financing the improvements for 30 years instead of a shorter term.  The advantage would be a smaller payment.

Let's say in this example, the owner originally borrowed $250,000 at 4.5% for 30 years with a payment of $1,266.71.  After 54 payments, the unpaid balance is $230,335.  If they did a cash out refinance at 4.5% for 30 years for the additional $50,000 and financed the estimated closing costs of $8,700, the new payment would be $1,464.50.

Using the home improvement loan, the combined payments would be $2,149.35 which would be $684.85 higher.  While the cash out refinance produces a lower payment, it adds $8,700 to the amount owed and stretches it out over a longer period.  Home improvement loans have lower closing costs than regular mortgage loans.

Another alternative loan is a HELOC or Home Equity Line of Credit which can be explored and compared to the two options mentioned above.  If a homeowner is going to finance improvements, a comparison of different types of loans and payments can be helpful in the decision-making process. 

A trusted mortgage professional is a valuable resource to assist you with current and accurate information.  If you need a recommendation, please call me at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2020/02/12/Financing-Home-Improvements Wed, 12 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/12/Financing-Home-Improvements https://betterhomeowners.com/PhilLande/2020/02/11/2019-Buyer-Characteristics Tue, 11 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/11/2019-Buyer-Characteristics

On any given day, investors who own rental property want to buy more or they want to get rid of what they have.  In most cases, it doesn't have to do with the satisfaction of the investment itself; it has more to do with the management.

Managing property and dealing with tenants can be headache and it may not be the best use of an investor's time and effort.  The solution isn't to sell the rentals but to get a property manager.

To begin with, managers understand the landlord tenant laws and what is required and what makes good business sense.  They are familiar with all the necessary paperwork, documents, and procedure that a casual investor may not be.

Property managers usually have connections with workmen and service providers to get repairs done right, at lower prices and in a timely fashion.  Your manager can handle issues with tenants that seem to come up in the middle of the night or on a holiday weekend.

Some investors have taken on the duties because they're trying to save the management fees.  It is very possible that professional management can shorten vacancy times, increase rents, and lower expenses which might not only cover the cost of the fee but increase your cash flow.

Being a real estate investor and managing the property are separate decisions.  You might enjoy being an investor a lot more if you had professional management.  For a recommendation, give me a call at (317) 863-2356 or download Rental Income Properties.

https://betterhomeowners.com/PhilLande/2020/02/10/Property-Management Mon, 10 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/10/Property-Management

Knowing what to do in an active shooter situation could save lives...yours and others.  FEMA has active shooter training that recommends a simple three step approach:

  1. Run, if you can safely get away from the situation.
  2. Hide, if there is not a safe way to remove yourself from the situation.
  3. Fight is a last resort and you need to be prepared to fight back against an active shooter.

FEMA describes an active shooter as "an individual actively engaged in killing or attempting to kill people in a confined and other populated area...Active shooter situations are unpredictable and evolve quickly."

The Emergency Management Institute of FEMA has produced an independent study program that was written specifically for non-law enforcement employees.  After completing this online course, the participant will be able to describe actions to take when confronted with an active shooter, describe actions to take to prevent and prepare for potential incidents and other things.

For more information, go to https://www.ready.gov/active-shooter

https://betterhomeowners.com/PhilLande/2020/02/07/Active-Shooter-Information Fri, 07 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/07/Active-Shooter-Information Headed out of town?  The USPS can hold your mail safely at your local Post Office until you return, and you can do it quickly online.  https://holdmail.usps.com/holdmail    https://betterhomeowners.com/PhilLande/2020/02/06/Hold-Your-Mail Thu, 06 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/06/Hold-Your-Mail

House-hacking refers to buying a multifamily property on an owner-occupied mortgage, living in one unit and renting the others.  If you're thinking about becoming a rental mogul, starting early is an advantage.  Not only will you have longer to accumulate a larger portfolio, you can increase the leverage on the first acquisitions if they are owner-occupied. 

Leverage is the use of other people's money to finance an investment.  The higher the loan-to-value, the greater the leverage which can increase the yield.

A $200,000 rental property with an 80% LTV at 4.5% for 30 years producing a 16.88% before-tax rate of return would increase to a 23% return on investment by increasing the mortgage to 90%.  A typical down payment on an investor property in today's market is 20-25% but, in some cases, a higher loan-to-value is possible.

Owner-occupied, multi-unit properties, two to four units, allow a borrower to occupy one of the units and rent the others out.  The cash flows from the rental units subsidize the cost of housing for the unit occupied by the owner.  VA will guarantee 100% of the mortgage for eligible veterans, while FHA will loan up to 96.5% for qualifying borrowers.

Consider a four-unit property was purchased as owner-occupied and the other three units were rented for $800 each.  If an FHA loan was obtained, the owner could live for roughly $355 a month after collecting the rent and paying the expenses.  Assume the owner lived in it for two years and then, rented out the fourth unit for the same $800 per month.  The cash flow would rise to $4,800 a year with a before-tax rate of return of 30% based on a 2% appreciation.

 

Occupy 1 unit

Rent all 4 units

Gross Scheduled Income @ $800 monthly each

$2,400

$3,200

Cash Flow Before Tax

$4,59

$4,861

Before Tax Rate of Return

20.77%

30.56%

 

Rental properties offer the investor to borrow large loan-to-value mortgages at fixed interest rates for up to 30 years on appreciating assets with tax advantages and reasonable control that many other investments don't enjoy.

Some people consider rental properties the IDEAL investment with each letter in the acronym standing for a benefit it provides.  It provides income from the rent which many investments do not have.  Depreciation is a non-cash deduction from income that increases cash flow.  Equity buildup occurs as each payment is made by reducing the principal owed.  Appreciation happens over time as the value of the property increases.  L stands for leverage that was explained earlier in this article.

You may be able to buy another four unit as an owner-occupant before you need to start using a normal investor's down payment.  In the meantime, you could have eight units that are increasing in value while the mortgage balance is decreasing with every payment made.  If there is sufficient equity in the properties by the time, you're ready to buy more, you may be able to take cash out of the existing ones to use for the down payments.

This can be a great way to turbocharge your net worth by becoming an owner and a real estate investor at the same time.  To learn more about rental properties, download the Rental Income Properties guide and/or contact me at (317) 863-2356 to schedule an appointment to meet to discuss the possibilities. https://betterhomeowners.com/PhilLande/2020/02/05/HouseHacking-Rental-Property Wed, 05 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/05/HouseHacking-Rental-Property

Sometimes, there can be confusion on what goes with the house and what goes with the seller when they move.  Generally speaking, the house is the land and buildings and any fixed or attached property.

Permanently installed and built-in items are considered real property.  Some things are obvious such as built-in appliances, wall-to-wall carpeting, light fixtures including chandeliers, shrubbery and landscaping, and window shutters. 

One indication is that if the item was removed, there be evidence that it was missing.  For example, if there was a wall mounted TV in the home, the TV is personal property, but the TV wall mount is real property.

Factors that determine if something is permanently installed or built-in would be:

  1. Was the installation intended to be permanent?
  2. How is the item attached and will the surrounding property be damaged if it is removed?
  3. Is the item made specifically for the property?

Personal property examples would include furniture, area rugs, pictures, non-built-in appliances like washer, dryer and refrigerator.  Confusion could arise between a mirror that is hung like a picture and one that is attached to the wall.  Most people would think that the former is personal, and the latter is real property.

Sellers are encouraged to have an open discussion with their listing agent about items that are not going to be included in the sale of the home.  The agent can advise you if they should be mentioned in the listing agreement and property description.

If buyers are concerned about items that may or may not be included, they should review with the agent items that the Seller has identified as not included in the sale.  If necessary, some items may be negotiated in the sales contract.

https://betterhomeowners.com/PhilLande/2020/02/04/What-goes-with-the-house Tue, 04 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/04/What-goes-with-the-house https://betterhomeowners.com/PhilLande/2020/02/03/Characteristics-of-Home-Buyers Mon, 03 Feb 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/02/03/Characteristics-of-Home-Buyers

Qualifying for a mortgage can be explained with 4 C's.  Capital indicates the borrower has the necessary funds for the down payment and closing costs without exhausting their savings.  Capacity shows that the borrower has the ability from income to pay back the loan.  Credit history reveals the borrowers FICO score, which is a composite of payment history, amounts owed, length of credit, new accounts and the different types that are open.  The final C is for collateral proving that the home's value will secure the loan.

To protect consumers and the lending market, the Dodd Frank Reform Act became law in January 2014.  The Qualified Mortgage Rule affects the underwriting standards that most lenders use to qualify buyers.

The ability to repay rule states that financial information must be supplied by the borrower and verified by the lender.  The borrower must have enough assets or income to pay back the loan which limits the maximum debt-to-income ratio of 43%.  To present a more accurate picture of the costs to the borrower, teaser rates can no longer hide a mortgage's true cost.

A maximum of 3% in upfront points and fees can be paid on behalf of the borrower.  There can be no negative amortization, interest-only or balloon payments and the loan term limit cannot exceed 30 years.

While there are more requirements, most deal with good underwriting practices that are followed by reputable lenders such as considering and verifying things that affect the ability to repay the mortgage like income, assets, employment status, simultaneous loans, debt, alimony, child support and credit history.

Even though most mortgage lenders are bound by this law and its many rules, all lenders may not deliver the service that you expect and require.  For a recommendation of a trusted mortgage professional, give me a call at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2020/01/31/The-4-Cs-of-Qualifying Fri, 31 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/31/The-4-Cs-of-Qualifying https://betterhomeowners.com/PhilLande/2020/01/30/Rent-or-Buy Thu, 30 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/30/Rent-or-Buy

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 for fair market value, it would be reasonable to assume that the seller won out over the buyer.  If it sold for less than market value, it seems that the seller didn't realize his full equity in the home.  In either case, both buyer and seller engaged in activities that they were less experienced and capable than the real estate professional.

The Profile of Home Buyers and Sellers (Exhibit 8-1) reports that 14% of sales were For-Sale-by-Owners in 2004 compared to just 8% in 2019.  The trend shows that agent-assisted sales rose to 89% in 2019 from 82% in 2004.

The three most difficult tasks identified by for-sale-by-owners is getting the price right, preparing or fixing up the home for sale, and selling within the length of time planned.   

The time on the market for sale by owners experienced was less than that of agent assisted homes; two weeks compared to three weeks.  This could indicate that the home didn't maximize its potential sales price.  According to the previous mentioned survey, for sale by owners typically sell for less than the selling price of other homes.

The reality is that both parties cannot earn the commission.  It is earned by providing specific services that are essential to the transaction.  The capital asset of a home represents the largest investment most people make.  An investment of that importance certainly deserves the consideration of a professional trained and experienced to handle the complexities involved. There is value to having a third-party advocate helping each party to the transaction.

The tasks involved in buying and selling a home exist and must be done.  Since nine out of ten transactions involve an agent and therefore, a commission.  It comes down to deciding which is more important: time or money.  If a buyer or seller values their time more than the commission, they'll usually work with an agent.  If money is more valuable to a buyer or seller, they may try purchasing or selling without an agent.  One thing is for sure: there are two parties to the transaction and only one commission.

https://betterhomeowners.com/PhilLande/2020/01/29/Who-Earns-the-Commission Wed, 29 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/29/Who-Earns-the-Commission

Ideally, what every owner wants when they sell their home is to get the highest possible sales price in the shortest period with the least inconveniences.  They may not realize that's what they want but if you ask enough questions, they are the three most common expectations.

Even when REALTORS® put their home on the market, they have the same three expectations.

The challenge is that to achieve two of these may come at the expense of the third item.  The maximum price in the shortest time may not be the most convenient.  The shortest time with the least inconvenience may not achieve the maximum price.  The maximum price with the least inconvenience may not occur in the shortest time.

It can certainly be the goal to achieve all three, but realistic expectations are important.

If the home is priced below market value, it will probably sell quicker.  If the home is in good condition, it will probably sell for a higher price.  If there is less competition on the market than normal, it could favorably affect the time and price.

Managing these expectations could be the reason that nine out of ten homeowners entrusted the sale of their home to real estate professionals last year.  Owners can increase the likelihood of a favorable outcome by sharing their expectations with agents prior to listing their home for sale.

Think of your REALTOR® as an invaluable part of the team who is going to help you meet your expectations.  They need to know your expectations and your timetable.  They know the market and how to get you the maximum price in the shortest time with the least inconvenience.

Your real estate professional can also coordinate with the other professionals involved that will make up your team.  They can make recommendations based on experience to ensure that they'll do what is needed when it needs to be done.

The bottom line is that it takes a group of skilled people to sell a home.  It takes good communication so that everyone understands the goals.  And, it takes someone you can trust to coordinate everything.

https://betterhomeowners.com/PhilLande/2020/01/28/Expectations Tue, 28 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/28/Expectations https://betterhomeowners.com/PhilLande/2020/01/27/Homeowner-Tip-1 Mon, 27 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/27/Homeowner-Tip-1

If you have a mortgage on your home, your total house payment may include 1/12 the cost of the annual taxes and insurance.  Those amounts are held in an escrow account so the lender can pay them when they become due.

The most common reason an escrow account shortage occurs is that taxes and insurance premiums increase, and the amount being collected isn't enough to pay them when they become due.

As an example, let's say the taxes increased and there was a $600 shortage.  The lender will probably give the borrower the option to pay the $600 in cash or adjust the payment to cover the shortage.  If the borrower chooses the increased payment, it will be increased not only $50 to cover the shortage from last year but another $50 a month to pay the increased amount for the coming year.

Regardless of which option the borrower takes, their payment will increase.  If they pay the shortage in cash, the payment still must go up to cover the increased taxes for the next year.

Lenders will perform an escrow analysis annually to determine if there will be enough funds to pay the taxes and insurance.  Even though the lender is paying these bills on your behalf, the tax authorities and insurance agent will notify you what is going to happen.  You'll usually find out much sooner than the lender knows but not recognize that it will affect your payment.

A fixed-rate mortgage determines the principal and interest portion of the payment for the term of the loan.  The property taxes and insurance are variables that contribute to the total payment which will make the house payment change over the years.

https://betterhomeowners.com/PhilLande/2020/01/24/Escrow-Shortage Fri, 24 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/24/Escrow-Shortage Each type of showing plays a valid and necessary role in marketing the home.  Some buyers look at a home online leading them to drive by the home to see if it continues to be what they're looking for before they will make an appointment to look at the inside of the home. https://betterhomeowners.com/PhilLande/2020/01/23/Types-of-Home-Showings Thu, 23 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/23/Types-of-Home-Showings

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 same time, with each payment made, an increasing amount would reduce the unpaid balance which would average $363.00 a month in the first year.

The homeowner's equity would increase over $800 a month.  Instead of paying rent, the homeowner is building equity in their home.  It becomes a forced savings and lowers their net cost of housing.  In seven years, the homeowner in this example would have $80,901 in equity instead of seven years of rent receipts.

This example doesn't consider tax advantages at all.  If the homeowner would benefit from itemizing their deductions, it would lower their cost of housing even more.

The IRS recommends each year to compare the standard and itemized deductions to see which would benefit you more.  Items such as substantial charitable donations, mortgage interest, property taxes and large out-of-pocket medical expenses could increase the likelihood of itemizing deductions.

You can see the benefits using your own numbers without tax advantages by using the Rent vs. Own. https://betterhomeowners.com/PhilLande/2020/01/22/Take-the-Standard-Deduction--the-Home Wed, 22 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/22/Take-the-Standard-Deduction--the-Home https://betterhomeowners.com/PhilLande/2020/01/21/2019-Remodeling-Projects Tue, 21 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/21/2019-Remodeling-Projects

Most homebuyers probably know that their FICO mortgage score can determine whether they qualify for a loan, but they may not be aware that it can determine what interest rate they'll pay.

The same $300,000, 30-year, fixed-rate mortgage can have a principal and interest payment that ranges from as low as $1,340 or as high as $1,619 based on this recent picture in time.  The variable is the FICO score of the borrower.  Use this calculator to see current rates and your loan amount.

$300,000 30-year Fixed Rate Mortgage

FICO Score

Interest Rate

Monthly Payment

Total Interest Paid

760-850

3.456%

$1,340

$182,320

700-759

3.678%

$1,377

$195,763

680-699

3.855%

$1,407

$206,621

660-679

4.069%

$1,444

$219,914

640-659

4.499%

$1,520

$247,156

620-639

5.045%

$1,619

$282,741

 

While you can get a conventional mortgage with as low as a 620 FICO score assuming the rest of your qualifications are strong, a higher FICO score will lower the rate you'll have to pay which results in lower payments and ten of thousands of dollars less in interest over the life of the mortgage.

It can be a smart idea to counsel with a trusted mortgage professional about your current FICO mortgage score and find out what you need to do to raise it. Call (317) 863-2356 for a recommendation.

https://betterhomeowners.com/PhilLande/2020/01/20/Your-Rate-Depends-on-your-Score Mon, 20 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/20/Your-Rate-Depends-on-your-Score

Nearly a third of American households were labeled cost-burdened last year because they are spending more than 30 percent of their total household income for housing.  The report done by the Joint Center for Housing Studies of Harvard University looked at both homeowners and renters.

Today's low mortgage rates help the cost of housing in many markets to be lower for owners than renters.  The total house payment can easily be lower than the rent buyers are paying.  Other factors like principal reduction and appreciation provide equity enjoyed by owners that renters cannot realize.

Analysis can compare the costs of renting over owning.  To look at your own numbers, go to this Rent vs. Own.  If you need help or have questions, give me a call at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2020/01/17/Some-Households-CostBurdened Fri, 17 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/17/Some-Households-CostBurdened https://betterhomeowners.com/PhilLande/2020/01/16/Times-to-Visit-a-Home-Before-You-Buy Thu, 16 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/16/Times-to-Visit-a-Home-Before-You-Buy

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 that can be paid off with the proceeds
  • Live in the home as their primary residence
  • Be current on all taxes, insurance, and association dues and all federal debt
  • Prove they can keep up with the home's maintenance and repairs

Payouts are based on the age of the youngest spouse. The younger the age, the less money can be borrowed. Reverse mortgages offer two terms ... a fixed rate or variable rate. Fixed rate HECMs have one interest rate and one lump sum payment. Variable rate loans offer multiple payout options:

  • Equal monthly payouts
  • A line of credit with access until the funds are gone
  • Combined line of credit and fixed monthly payments for a specified term
  • Combined line of credit and fixed monthly payments for the life of the loan

Traditional reverse mortgages, also called Home Equity Conversion Mortgage, HECM, are insured by FHA. There are no income limitations or requirements and the loan funds may be used for any purpose. The borrower must attend a counseling session about the HECM, its risk, benefits, and how much can be borrowed. The final loan amount is based on borrower's age and home value. FHA HECMs require upfront and annual mortgage insurance premiums but can be wrapped into the loan.

Proprietary HECM loans are not federally insured. Lenders create their own terms, including allowing loan amounts higher than the FHA maximum. Proprietary HECMs don't require mortgage insurance (upfront or monthly), which may result in more funds available. Proprietary reverse mortgages typically have higher interest rates than FHA HECMs.

Advantages

  • Create a steady stream of income during retirement
  • The proceeds aren't taxed or risk borrower's Social Security payments
  • Title and rights to the home are retained by the homeowner
  • Monthly payments are not required

Disadvantages

  • The loan balance increases over time rather than decreases as with an amortizing loan
  • The loan balance may exceed the property value eliminating inheritance
  • The fees may be higher than traditional mortgage loans
  • Any absence of the home for longer than 6 months for non-medical or 12 months for medical reasons makes the loan due and payable

More information is available about reverse mortgages from the Consumer Financial Protection Bureau or Federal Trade Commission or HUD.gov.

https://betterhomeowners.com/PhilLande/2020/01/15/Understanding-Reverse-Mortgages Wed, 15 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/15/Understanding-Reverse-Mortgages https://betterhomeowners.com/PhilLande/2020/01/14/Moving-Tips Tue, 14 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/14/Moving-Tips

A mortgage lock-in is a lender's agreement to hold a specific interest rate for a stated period for a loan at the prevailing market interest rate.  This provides the borrower some protection against the interest rates going up during the lock period.

If you think the rates are going down, the advantage would be to "float" and take advantage of the lower rate.  If you think the rates are going up, you could lock when you apply or when the application is approved.  Some buyers are marginally qualified at the current rate and if the rates go up, it could keep them from buying the price home they want or must make a larger down payment.

The lender will require the borrower to pay a fee for the lock-in.  It could be a flat dollar amount or a percentage of the loan to be made.  Usually, the longer the rate lock period, the higher the fee will be. 

The agreement should include the terms you've locked in such as the mortgage rate, points and other costs, the lock's effective and expiration dates, the cost of the lock itself, and any options that may be available.  As with any contract, it should be in writing to avoid misunderstanding.

The risk in a lock-in is that if the rates go down, you won't be able to take advantage of it unless there is a "float down" clause in the agreement.  If so, you must advise the lender that you want to take advantage of it.  You may incur additional costs to rewrite the lock-in.

Locks can be anywhere from 15 to 60 days.  Your lender can advise you how long it should take to get it approved and close the loan.  If it doesn't close on time, the lender may extend the lock for free, charge an additional fee or a percentage of the loan.

Mortgage brokers act as middlemen for the lender and borrower.  It is important to know who is locking the rate because generally, a mortgage broker cannot write the lock but has to obtain it from the lender.

For more information, see the Federal Reserve Board's Consumer Guide to Mortgage Lock-Ins.

https://betterhomeowners.com/PhilLande/2020/01/13/Mortgage-Lockin Mon, 13 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/13/Mortgage-Lockin https://betterhomeowners.com/PhilLande/2020/01/10/Would-you-like-a-list-of-the-homes-that-sold-in-your-area Fri, 10 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/10/Would-you-like-a-list-of-the-homes-that-sold-in-your-area

Imagine having an emergency in your home and needing to find something that will solve the problem.  You need to be able to put your hands on it quickly. 

A fire extinguisher hung in a conspicuous place, easy to reach, is a prudent precaution.  Everyone in the house should know where it is and how to use it if it is necessary.

A water meter key could easily divert another kind of household disaster assuming it could quickly and easily be found and if a person knew how to use it to shut off the water to the home.

With household water pressure generally below 100 pounds per square inch, a significant amount of water can still be dispersed into a home if a pipe were to burst.  That amount of water can do drywall and floor damage, as well as cause losses to electrical appliances like TV's, clothes, furniture and other things.

While some houses may have a main shutoff valve separate from the meter, the question would be if all of the occupants knew where it was and how to operate it.

Purchase a water meter key from a local hardware or box store and learn how to use it.  Once the meter is open, a wrench is needed to close and open the valve.  Some water meter keys have a wrench on the other end of the key making a separate wrench unnecessary.

Consider hanging the water meter key next to the fire extinguisher so that both are easily found.  Training the responsible parties in the house is also necessary to minimize damage.

https://betterhomeowners.com/PhilLande/2020/01/09/In-Case-of-an-Emergency Thu, 09 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/09/In-Case-of-an-Emergency

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 eligible for an exclusion of $250,000 of gain for single taxpayers and up to $500,000 for married taxpayers who have owned and used their home two out of the last five years and haven't taken the exclusion in the previous 24 months.

Homeowners should consult their tax professionals to see how this may apply to their individual situation.  For more information, you can download the Homeowners Tax Guide.

Call me at (317) 863-2356 to find out what your home is worth and what it would take to make the move to another home.

https://betterhomeowners.com/PhilLande/2020/01/08/Downsizing-in-2020 Wed, 08 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/08/Downsizing-in-2020

Deciding between a fixed-rate mortgage and an adjustable-rate is one of the choices buyers make when getting a loan to purchase a home.  While the rate remains constant for the term of the mortgage on a fixed-rate loan, it does not mean that the payment will remain the same.

Most lenders require borrowers to include the monthly amount of the property taxes and insurance with each principal and interest payment.  The lender wants to be certain that the taxes are paid, and that the property is insured to protect their collateral for the loan.

The funds are held in escrow so they can be paid when they are due.  Periodically, the lender will audit the escrow account to see if there is enough money available.

If the taxes or insurance increase, the total payment will have to increase to cover the additional expense.  Once the lender determines there is not going to be adequate funds to pay the taxes and insurance, they can give the borrower the option to deposit additional funds to cover the shortage in the escrow account.

The borrower may choose instead to pay a higher payment that will accumulate by the time the expenses are due to equal the amount.

It is worth verifying the taxes and insurance premiums to see that the lender is using the correct amounts in case a mistake has been made.

https://betterhomeowners.com/PhilLande/2020/01/07/Fixedrate-Payments-Change Tue, 07 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/07/Fixedrate-Payments-Change https://betterhomeowners.com/PhilLande/2020/01/06/Who-are-firsttime-homebuyers Mon, 06 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/06/Who-are-firsttime-homebuyers

The trend in homeowners successfully selling their own home has declined from 15% in 1981 to only 8% in 2019.  In the 2019 Profile of Home Buyers and Sellers, six out of ten sellers knew the buyers who were predominantly a friend, relative or a neighbor. 

The fact that these sellers knew the buyer was mentioned as the main reason to sell as a for sale by owner. In these situations, the time on the market was usually less than a week and sellers reported that they received 101 percent of the asking price.  76% of the sellers who knew the buyers did not actively market the home.

The most important reason for selling the home for sale by owner was to keep from paying a commission or fee mentioned by 35% of all sellers.  Interestingly, only 14% of sellers who knew the buyer was trying to save the commission while 63% of sellers who did not know the buyer were trying to save the commission.

For sale by owners tend to sell for a lower sales price than homes listed through real estate professionals. The median sales price was $275,000 for all sellers; $200,000 for all for sale by owners and $280,000 for all agent-assisted homes.  Exhibit 8-6

The most difficult tasks mentioned by for sale by owners included getting the price right, preparing or fixing up the home for sale, and selling within the length of time planned.

https://betterhomeowners.com/PhilLande/2020/01/03/Selling-on-Your-Own Fri, 03 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/03/Selling-on-Your-Own

Equity in a home is the difference between what the home is worth and what is owed on the home.  As the property goes up in value, the unpaid balance is going down with each payment being made.  These dynamics are working in different directions to make the equity grow.

Leverage, the use of borrowed funds to control the investment, is another dynamic working in favor of homeowners. $9,975 invested in a certificate of deposit at 2% for three years would be worth $10,586.  The same amount invested in the stock market at 7% would be worth $12,220.  Using the same $9,975 to purchase a $285,000 home that appreciates at 2%* annually would have an equity at the end of three years of $41,350.  All three examples have compound growth but only the home uses borrowed funds.

Buying a home requires money for a down payment and closing costs, good credit and the income to pay back the loan.  Even if a person has all three of these requirements, sometimes, they are not sure if it makes sense to buy rather than rent.  A Rent vs. Own comparison can show you the financial advantages without considering the tax benefits.

Most homeowners will say that their home is the best investment they have made.  Not only in the satisfaction of owning their own home, where they can raise their family and a place to share with friends but also as a strong financial decision.

 

*Core Logic reports national home prices are up in October 2019 by 3.5% year over year and predicting 5.4% for 2020.

https://betterhomeowners.com/PhilLande/2020/01/02/Why-a-Home-Works-for-You Thu, 02 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/02/Why-a-Home-Works-for-You

Borrowing from a 401k, 403b or the cash value of life insurance policy is a common financial strategy.  While taxpayers are not allowed borrow from either a traditional or Roth IRA, they can withdraw funds before age 59 ½ for specific purposes like a first home purchase, qualified higher education expenses or permanent disability without incurring a 10% penalty.

First-time home buyers can make a penalty-free withdrawal of up to $10,000 if they haven't owned a home in the previous two years.  This would allow a married couple who each have an IRA to withdraw a lifetime maximum of $10,000 each, penalty-free for a home purchase.

In many cases, the money would be used for a down payment or closing costs.  However, some buyers might consider this source to increase their down payment so they could qualify for a loan without mortgage insurance.

There is another condition where a taxpayer can withdraw money from their IRA without triggering the tax or penalty if it is returned to the IRA within 60 days.  This can only be done once in a 12-month period.  Unless you're certain you can redeposit the money in the strict time frame, the potential tax and penalties makes this a risky and expensive way to arrange temporary funds.

If the taxpayer qualifies for the penalty-free withdrawal, there may still be taxes due.  Contributions to traditional IRAs are made with before-tax dollars and the tax is paid when the funds are withdrawn.  Since Roth IRAs are made with after-tax dollars, there is no tax due when the funds are withdrawn.

Another interesting fact about this provision is that the taxpayer making the withdrawal can help a qualified relative which includes children, grandchildren, parents and grandparents.

Before withdrawing money from an IRA, taxpayers should get advice from their tax professional concerning their individual situation.

https://betterhomeowners.com/PhilLande/2020/01/01/Another-Source-for-a-Down-Payment Wed, 01 Jan 2020 06:00:00 GMT https://betterhomeowners.com/PhilLande/2020/01/01/Another-Source-for-a-Down-Payment https://betterhomeowners.com/PhilLande/2019/12/31/2020-New-Year Tue, 31 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/31/2020-New-Year https://betterhomeowners.com/PhilLande/2019/12/30/Homebuying-Timeline Mon, 30 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/30/Homebuying-Timeline https://betterhomeowners.com/PhilLande/2019/12/27/Mortgage-Market-Survey-121919 Fri, 27 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/27/Mortgage-Market-Survey-121919

60% of buyers paid for their down payment by saving according to the 2019 Profile of Home Buyers and Sellers, recently released in San Francisco at the National Association of REALTORS Convention.  The most difficult step in the process was saving for a down payment cited by 13% of respondents.

51% of those surveyed mentioned student loans as the main deterrent to saving.  Credit card debt was mentioned by 45% which is up from 37% in 2018.  Car loans were stated by 38% which is up three percentage points from the previous year.

Childcare was cited by 16% of the people which was one percentage point less than 2018.

The median years of debt delayed home buyers from saving for their down payment or buying a home was stated as four years.  That is up from three years mentioned by buyers in 2018.

https://betterhomeowners.com/PhilLande/2019/12/26/Whats-Keeping-Buyers-OUt-of-the-Market Thu, 26 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/26/Whats-Keeping-Buyers-OUt-of-the-Market

The largest expenditure a buyer has when purchasing a home is the down payment which can range from zero for veterans or 3.5%, 5%, 10% and 20%.  With mortgages come closing costs which can be another 2-4% and must be paid at settlement in cash.

Most mortgages require an escrow account to pay the property taxes and insurance when they are due.  Generally, the lender will require one to three months of taxes and one month of insurance so they can be paid before the actual due date.

First-time buyers should be aware that they'll need this amount of funds available to purchase a home.  Unlike tenants who are not responsible for repairs, homeowners are, and it is necessary to be able to pay for them when they're needed.

Newer homes will need less repairs and older homes probably, more.  At some point, components like the furnace, air-conditioner and appliances will need to be replaced which could crush a homeowner's budget if they are not expecting them.

Homeowners should expect between one and four percent of the value of the home in annual repairs.  The age and condition of the home and whether some of the items have been replaced will help assess the anticipated expenditures. 

Components

Estimated Life

Dishwasher

9-10 years

Refrigerator

13 years

Furnace

15-25 years

Air-conditioner

8-15 years

Stove top

13-15 years

Oven

15 years

Compactors

6 years

Water heater

8-12 years

Faucets

15-20 years

 

A $175,000 home with 2% estimated repair expenditures would be $3,500 a year or about $300 per month.  Some years, it may not run that much and other years, it might be more.  By anticipating the maintenance expenses, a homeowner is more likely to handle things when they arise.

Another way to handle the risk of unexpected repair expenses would be to purchase a home warranty.  For $500 -700 a year, repairs and sometimes, replacements will be handled by the protection plan.

Call me at (317) 863-2356 for a list of trusted protection plans available in our area.

https://betterhomeowners.com/PhilLande/2019/12/25/Anticipating-the-Cost-of-a-Home Wed, 25 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/25/Anticipating-the-Cost-of-a-Home https://betterhomeowners.com/PhilLande/2019/12/24/Happy-Holidays Tue, 24 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/24/Happy-Holidays https://betterhomeowners.com/PhilLande/2019/12/23/Characteristics-of-Home-Buyers--multigenerational Mon, 23 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/23/Characteristics-of-Home-Buyers--multigenerational https://betterhomeowners.com/PhilLande/2019/12/20/89-homeowners-sold-with-agent Fri, 20 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/20/89-homeowners-sold-with-agent

Refrigerators may save your leftovers and produce, but they can spend energy at the same time.  Refrigerators typically account for 13 percent of energy bills, the second-highest expense after air conditioners. It's one of the only things in your house that is never turned off.

According to the FDA, refrigerators should be kept at about 40 degrees and freezers should be kept at zero degrees. If you don't have a thermometer, make sure your temperature dial is set to its midpoint. Keeping your unit at these standard temperatures can save from paying extra for a temperature that's just a few degrees cooler. If possible, it also helps to situate your fridge as far away from your oven and dishwasher as you can because the heat from those appliances can impact its efficiency.

Refrigerators release their own heat from condenser coils, where the refrigerant is cooled. When these coils get dusty or are clogged with dirt or pet hair, they're not able to release heat properly and it must work harder to stay cool. The coils should be cleaned at least twice a year.

Occasionally clean the door gasket using a toothbrush and some mild soap or a baking soda solution to keep dirt and food residue from damaging or weakening the seal. You can test the strength of the gasket's suction by shutting the door on a dollar bill. It should hold the dollar bill tightly.

A full refrigerator is more efficient than an empty one. Make sure the air can circulate between items though, and don't block any vents. When you're saving those tasty leftovers, always let them cool off before putting them into the refrigerator so as not to introduce any warm temperatures to the environment.

An efficient refrigerator will keep your stomach and your wallet happy.

https://betterhomeowners.com/PhilLande/2019/12/19/Help-with-Your-Refrigerator Thu, 19 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/19/Help-with-Your-Refrigerator

Even if Benjamin Franklin never actually used the expression "a penny saved is a penny earned", the reality is that it has been a sentiment for frugality for centuries.  He did say: "Beware of little expenses; a small leak will sink a great ship."  At the end of the day, it is not about how much you make as much as it is about how much you keep.

The first step in a personal finance review is to discover where you are spending your money. It can be very eye-opening to have a detailed accounting of all the money you spend.  Coffee breaks, lunches, entertainment, happy hour, groceries and the myriad of subscription services you have contribute to your spending.

This revelation can lead you to obvious areas where savings can be accomplished.  The next step is to dig a little deeper to see if there are possible savings on essential services.

  • Get comparative quotes on car, home, other insurance.
  • Review and compare utility providers.
  • Review plans on cell phones.
  • Consider eliminating the phone line in your home.
  • Review plans on cable TV, satellite for unused channels and packages or receivers.
  • Consider entertainment alternatives for cable like Hulu or Netflix.
  • Review available discounts on property taxes.
  • Consider refinancing home ... lower rate, shorter term or cash out to payoff higher rate loans.
  • Consider refinancing cars.
  • Call credit card companies to ask for a lower rate. 
  • Consider transferring the balance from one card to a new card with a lower rate and then, pay off the balance as soon as possible.
  • Review all the automatic charges on your credit cards ... do you need or still use the service?
  • Discover late fees that are regularly being paid and eliminate them.
  • Review all bank charges for accounts and debit cards; determine if they can be reduced or eliminated.
  • Pay your bills on time and avoid all late fees.
  • Monitor your bank account and avoid over-draft charges.
  • Some companies have customer retention departments that can lower your rates to retain your business.

A strategy that some people use is to report their credit cards as lost so new cards will be issued.  When they are contacted by the companies to get a valid credit card, they can determine if the service is still needed.

The money you save can ultimately help you in the future for a rainy day, an unanticipated expense, a major life event or retirement.  Cutting back now will give you more later, possibly, when you need it even more.  Tennessee Williams said "You can be young without money, but you can't be old without it."

https://betterhomeowners.com/PhilLande/2019/12/18/Personal-Finance-Review Wed, 18 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/18/Personal-Finance-Review

Non-owners' information was also reported in the 2019 Profile of Buyers and Sellers in an effort to understand aspiring buyers.  74% of those surveyed are currently renters and 26% currently live with someone else without having to pay housing costs.

Millennials are the largest share of non-owners with GenXers comprising 26% and Younger Boomers at 12%.  Six out of ten non-owners are single and have never married compared to ¼ being married currently.

Over half of non-owners describe that it would be difficult for them to become homeowners based on their current financial condition while approximately one-fourth believe that it would not be difficult.

The study concluded that 75% of non-owners believe homeownership is part of their American Dream and eight out of ten want to own a home in the future even though they felt like they couldn't afford owning a home now or needed the flexibility of renting.

Non-owners suggested that if things changed such as marriage, starting a family, retiring or improvement in their financial condition, they would become an owner in the future.

https://betterhomeowners.com/PhilLande/2019/12/17/Aspiring-Owners Tue, 17 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/17/Aspiring-Owners https://betterhomeowners.com/PhilLande/2019/12/16/2019-Remodeling-Project--Highest-Joy-Scores Mon, 16 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/16/2019-Remodeling-Project--Highest-Joy-Scores

Autumn is the perfect time to get out in your yard and put nature to work for your benefit. You can do so by harvesting the abundance of fallen leaves and branches for a compost pile. Composting will not only give you a healthier garden but will also contribute to a healthier planet.

Much of what we throw away is compostable, but when it ends up in a landfill instead, it contributes to significant damage to our atmosphere. In landfills, waste lacks the oxygen needed to decompose easily and releases methane gas, which is a harmful greenhouse gas. Landfills are filling up at an increasing rate, and according to the Environmental Protection Agency, 30 percent of what we send to the landfill could be diverted by being composted.

Turns out, there's value to be found in the things you throw away. By composting them, you'll add great nutrients to your plants and increase the amount of organic matter in your garden. That serves as a healthy alternative to chemical fertilizers and can protect against plant diseases. Compost also helps retain soil moisture, so you won't need to waste as much water on yard work

Compostable materials are biodegradable and are either carbon or nitrogen-based. Common carbon materials include branches, dry leaves, newspaper, and cardboard. Nitrogen materials usually come from the kitchen — things like fruit and vegetable scraps, coffee grounds, and tea bags, as well as grass clippings.

There should always be more carbon materials in your compost pile than nitrogen. Those bulky brown materials allow oxygen to work through the compost and keep it from developing an odor.

Don't put meat scraps or bones in your compost, unless you want to attract critters to your property, and stay away from anything that might have been treated with pesticides. Chopping up your materials will help them break down faster. It also helps to avoid putting lots of one material in at the same time, like leaves or sawdust. These might clump up and make it difficult for the oxygen to work its magic.

Choose the composting method that works best for your home. Someone with a lot of outdoor space may choose to create an open compost pile right on the ground, while an enclosed bin might work better for someone in an urban environment. However you do it, composting is an easy way to get creative in your yard and live a healthier lifestyle.

https://betterhomeowners.com/PhilLande/2019/12/13/Composting-is-a-Good-Option Fri, 13 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/13/Composting-is-a-Good-Option https://betterhomeowners.com/PhilLande/2019/12/12/If-the-rate-goes-up Thu, 12 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/12/If-the-rate-goes-up

Looking for an investment that will turn $10,000 into $80,000 in seven years?  Sound too good to be true?  What if I told you that you could live in it every day during that seven years?  Would that sound even better?

A $300,000 home purchased today on an FHA loan would have a $10,500 down payment.  If it appreciated at 2% annually, which is less than  the U.S. average, the future value of the home would be $344,606 in seven years.  The unpaid balance on the loan would be $256,350 based on normal amortization which would make the equity in the home $88,256.

The annual compound rate of return on the down payment would be 35%.  This number sounds so large, that you might start doubting the credibility of this example.

Looking at some alternative investments, a ten-year Treasury note is currently paying 1.73%.  You can earn 2.1% on a ten-year certificate of deposit.  If you could handle the volatility of the stock market and pick the right stock, you might earn 7-10%. 

There really is no alternative investment that can earn the return that an owner-occupied home can offer while giving you the ability to live and enjoy the home during the holding period.

Even if you could find an investment that paid a good return, when you realize the gain, you'll be required to pay income tax, either at long-term capital gains rates or ordinary income.  However, a person who has lived in a home for at least two of the last five years can exclude up to $250,000 of gain from their income if they are single and up to $500,000 of gain if the owners are married, filing jointly.

A home can certainly be a place of your own to feel safe and secure, to raise your family, share with friends and build memories.  A home could be considered an emotional investment and one that pays big dividends.  A home is also a financial investment not just for the reasons mentioned above but also because the equity can be accessed by doing a cash-out refinance or a home equity line of credit.

See what your investment might look like by using the Rent vs. Own and giving us a call at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2019/12/11/an-Investment-Perspective-on-a-Home Wed, 11 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/11/an-Investment-Perspective-on-a-Home

Veterans are no longer restricted to a loan limit beginning January 1, 2020.  Previously, veterans were limited by the same restrictions set by the Federal Housing Finance Agency on conforming loans.  While these limits were national in nature, there were exceptions for high-cost counties and jumbo loan procedures.

The elimination of loan limits doesn't mean that veterans will have unlimited borrowing power.  Buyers must still qualify with enough income and credit requirements to meet the lender's requirements to qualify for the loan.

Lenders can set their own in-house maximum loan amounts which means it could vary from lender to lender.  Veterans who have an active VA loan or have defaulted on a previous VA loan are still limited by the previous loan limits.

The VA funding fee is increasing on January 1, 2020 to 2.3% of the loan amount for "first-use" borrowers from the previous fee of 2.15%.  Subsequent use borrowers will pay 3.6% of the loan amount instead of the current 3.3%.

Beginning in 2020, the funding fees will be the same for regular military, National Guard and reservists.  At the same time, Purple Heart recipients are exempt from paying the VA funding fee.

It is recommended that a veteran, as well as any buyer, be pre-approved before beginning the home buying process.  Veterans can find answers to specific questions they may have from a qualified and trusted loan professional.  Call us at (317) 863-2356 for a recommendation.

https://betterhomeowners.com/PhilLande/2019/12/10/VA-loan-limits-removed Tue, 10 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/10/VA-loan-limits-removed https://betterhomeowners.com/PhilLande/2019/12/09/Method-used-t-sell-a-home Mon, 09 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/09/Method-used-t-sell-a-home https://betterhomeowners.com/PhilLande/2019/12/06/2019-PHBS--buyer-characteristics1 Fri, 06 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/06/2019-PHBS--buyer-characteristics1

Homeownership is a privilege and a responsibility falling into one of three categories: maintenance, minimizing expenses and managing debt and risk.  Even after decades of owning a home, you may still need some help to handle some of these challenges.

One of the most frequent calls REALTORS® receive from past customers is to ask for a recommendation of a service provider. 

The Internet search engines have replaced the yellow pages or newspaper ads as a quick source to find a workman.  While convenient, the problem with search engines is the global nature of the web makes some companies look established or local when, they may not be at all.

The recommendation from a trusted friend or professional is by far your best resource. Reviews from strangers can be helpful but an endorsement from someone you know, and trust can make you feel more confident you'll find the right person to help you with your project.

Almost every transaction requires something to be done to either prepare a home to increase marketability or make a repair discovered by inspections prior to closing.  The frequency of transactions leads agents to build an extensive list of service providers that provide reliable work at reasonable prices and have reputations to back up their service.

We're here to serve your real estate needs, not just when you're buying and selling but all the years in between.  By helping you with the three M's of homeownership, we can earn your confidence and trust for the next time you move or can recommend us to your friends.

If you need a recommendation of a service provider, give me a call - (317) 863-2356. https://betterhomeowners.com/PhilLande/2019/12/05/Maintain-Minimize-Manage Thu, 05 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/05/Maintain-Minimize-Manage

Mortgage interest paid on your principal residence is deductible today as it was in 1913 when 16th amendment allowed personal income tax.  The 2017 Tax Cut and Jobs Act reduced the maximum amount of acquisition debt from $1,000,000 to $750,000.

Acquisition debt is the amount of debt used to buy, build or improve a principal residence, up to the maximum amount.  A common misunderstanding among taxpayers is that you are entitled to that much debt even if you refinance a home during your ownership years.

Acquisition debt is a dynamic number that changes over time.  It decreases with normal amortization as the principal amount of debt is reduced.  The only way to increase acquisition debt after a home is purchased is to borrow additional funds that are used for capital improvements.

Assume a person buys a home with a new mortgage and after the home has enjoyed significant appreciation, refinances the home for much more than is currently owed.  Let's also say that the refinance amount is less than $750,000 which might lead the borrower to an erroneous conclusion that all the interest will be deductible.

The current acquisition debt is transferred to the new mortgage.  Only the portion of the funds used to pay for new capital improvements can be combined to equal the increased acquisition debt.  The interest on that part of the mortgage is deductible as qualified mortgage interest.

The remainder of the refinanced mortgage is attributed to personal debt and the interest paid on that is not deductible.

Lenders are not generally concerned with making a homeowner a fully tax-deductible loan.  Lenders are interested in making a loan which will make a profit and be repaid according to the terms.  The annual statements that most lenders issue to borrowers indicate how much interest was paid in a calendar year as they are required to do by federal law.

Part of the confusion may be because homeowners believe they can deduct interest on debt up to $750,000 and this annual statement shows the interest paid for the year.  It is up to each homeowner to keep track of their acquisition debt and only deduct the qualified mortgage interest.

Your tax professional can be very helpful in determining this amount.  It is important to notify them that you have refinanced a home during the tax year for which the taxes are being reported.  For more information, see IRS Publication 936 and Homeowners Tax Guide.  Home equity debt has not been allowed since the beginning of 2018.

https://betterhomeowners.com/PhilLande/2019/12/04/Understanding-the-Mortgage-Interest-Deduction Wed, 04 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/04/Understanding-the-Mortgage-Interest-Deduction

Just because that convenient grinding machine in your drain is called a garbage disposer, that doesn't mean you should treat it like your garbage can. There are many things that you should simply toss out instead of washing into your sink.

As a first rule of thumb, only put biodegradable things into the disposer. This may sound like a no brainer, but many plumbers report pulling things like paper and plastic out of drains when a disposer is blocked.

You still need to be careful with biodegradable items as well, though. If an object is too hard to cut with a knife, that's a sign it's destined for the trash, not your pipes. Things like animal bones and fruit pits are difficult for disposer blades to process and will likely end up damaging them. Save yourself a call to the handyman and step away from the sink with those ribs.

Pipes often fall victim to slicker culprits too, like grease, oil, and fat. These substances sit in your pipelines and harden as they cool. Coffee grounds can also accumulate in your plumbing and settle down like sediment. If you're worried about making a mess, put these substances in used disposable cartons instead and then, throw them out.

Dinner scraps like pasta, bread, and rice should be avoided too. They may seem soft and harmless, but they all expand as they absorb water, so they can build up and cause blockages. A few small pieces won't bring the house down but be sure to keep the water running to help flush them out.

Fibrous vegetables like celery and asparagus have stringy pieces that can wrap around your disposer's blades, and believe it or not, eggshells and onions have membranes that do the same thing. So, forget what you heard about eggshells sharpening the blades — it's a myth.

And if it seems that food is clogged in your disposer, put the harsh chemical drain cleaners away and just use ice and dish soap instead. The ice should clean up the area and the soap should break down grease and make your kitchen smell nicer too.

https://betterhomeowners.com/PhilLande/2019/12/03/Think-Before-You-Put-It-in-the-Disposer Tue, 03 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/03/Think-Before-You-Put-It-in-the-Disposer https://betterhomeowners.com/PhilLande/2019/12/02/home-buying-team Mon, 02 Dec 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/12/02/home-buying-team

While the public is focused on Black Friday Sales and Christmas shopping, you can take advantages of the lower sales activity in the real estate market in the fourth quarter. 

It makes sense that most people have shifted their attention from home search to holidays which results in less people continuing to find the right home.  The lower activity could easily result in better purchase prices and less likelihood that you could be competing with other offers.

https://betterhomeowners.com/PhilLande/2019/11/29/Black-Friday-Alternative Fri, 29 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/29/Black-Friday-Alternative We're grateful throughout the year and especially at this time of the year, for all our friends who have trusted us with the purchase or sale of their home. https://betterhomeowners.com/PhilLande/2019/11/28/Happy-Thanksgiving Thu, 28 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/28/Happy-Thanksgiving

Most people who have car, home and health insurance have probably made claims and wouldn't consider being without it.  However, it might be difficult to find a homeowner who has made a claim on their title insurance which could lead a person to think that it may not be necessary. 

Title insurance covers the largest investment most people have and if there was a loss, it could be devastating.  Title insurance indemnifies the policy holder from financial loss sustained from defects in the title to the property.  The policy holder is determined by their interest in the property.  

An owner's title policy protects the owner of the property from title issues that may arise other than the mortgages that are being placed on the property at the time of purchase.  The title of the property goes back in time to check that clear title (no unsatisfied liens or levies and poses no question to legal ownership) was passed from owner to owner up to the current seller.

A mortgagee's or lender's policy protects the lender by guaranteeing they have an enforceable lien on the property and legal claims from parties asserting they have a claim against the property.  Lender's generally require the borrower to provide this coverage.

The title search is an examination to determine and confirm legal ownership and if there are clouds on the title so the seller can pass a clear title.  A cloud is defined as any document, claim, unreleased lien or encumbrance that might invalidate or impair the title to real property.

If a person passes title to a buyer that has unsatisfied liens on the property, the new buyer could become responsible for the money owed and it could affect their ability to sell the property in the future.

Unlike most insurance that has a specific term and periodic premiums, title insurance covers the insured for a single premium.  An owner's policy lasts for as long as they or their heirs have an interest in the property.  It guarantees the title up to the date and time that the property was deeded to you and recorded in the public records.

The majority of homes purchased in America have title policies insuring the new owner.  You could live in the home for five, ten or twenty years without an incident.  Then, when you're ready to sell the home, a title claim could happen.  The title policy would still protect you at that point.  It is a peace of mind coverage that is part of the investment in your home.

https://betterhomeowners.com/PhilLande/2019/11/27/Title-Insurance Wed, 27 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/27/Title-Insurance

A HELOC is a home equity line of credit that allows homeowners to borrow money using their home equity as collateral.   Once approved, the borrower can access the amount they need when they need it.  Some homeowners arrange for a HELOC to have an option available should funds be needed and will not owe interest until that point.

The interesting thing about a HELOC is that while it is a mortgage, it behaves like a credit card.  It is revolving credit up to a specific amount.  A homeowner can draw from the amount and needed and as it repaid, the amount available is replenished.

One of the benefits of a HELOC is that interest rates are usually, much lower than credit cards with revolving balances.  The borrower must be credit worthy, have income to repay the loan and have adequate equity in their home.

If the funds are used to make capital improvements to their home, the interest could be deductible subject to the rules for qualified mortgage interest.

https://betterhomeowners.com/PhilLande/2019/11/26/Taking-Equity-from-Your-Home Tue, 26 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/26/Taking-Equity-from-Your-Home https://betterhomeowners.com/PhilLande/2019/11/25/Common-Homebuyer-Mistakes Mon, 25 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/25/Common-Homebuyer-Mistakes https://betterhomeowners.com/PhilLande/2019/11/22/Reconsider-this-advice-for-home-buyers Fri, 22 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/22/Reconsider-this-advice-for-home-buyers

Clogged drains may be a pain, but liquid drain cleaners are even worse. They're no friend to the environment with their high toxicity levels that make them hazardous water pollutants. And their fumes are bad for air quality and unhealthy to inhale. Even if you plug your nose while you pour the stuff down the drain, the fumes hang in the air for longer than you'd think.

Basically, these products cause damage everywhere they go. The chemicals in the cleaners are corrosive to plumbing lines made of iron and steel. And if your lines are made from PVC, the chemical reaction that occurs creates heat and can soften the plastic. The liquid is likely to end up sitting in your pipes, so the more you pour, the weaker they will get. In the end, you'll end up with rusted or even broken pipes, which will cost you a whole lot more to fix than a clog should.

It's also important to know what kind of clog you're dealing with. Drain cleaners only have the potential to be useful if it's organic material that's backing things up. If there's a sewage problem, on the other hand, or if you have a broken pipe, those cleaners won't do a thing.

All in all, it's much smarter and safer to go with an alternative. A plumber's auger is like a shorter, manual drain snake and can break up clogs from hair and grease. There are also plungers that can loosen the clog, and enzyme and bacteria-based cleaners that can break down matter without harming you, your pipes, or the environment.

So don't take the easy way out. In the end, liquid drain cleaners cause much more harm than good, and the alternatives are more effective anyway. If nothing else works, you can always depend on your trusted and licensed handyman or plumber.

https://betterhomeowners.com/PhilLande/2019/11/21/Liquid-Drain-Cleaners Thu, 21 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/21/Liquid-Drain-Cleaners

Some people don't need a reason to buy a home, they just want it.  That can be enough justification by itself.  Other people need some solid logic before they're ready to make the commitment.  The following reasons might help you to make a decision.

  1. Pride of ownership ... among the most popular reasons given by homebuyers is that they want a place they can call their own and decorate and improve it the way they want.  It is a place to feel safe and secure and a place for their family.  They can share it with their friends and enjoy living in it.
  2. Good investment ... Homeowners have a 80 times greater net worth than renters.  By investing in a home that appreciates over time, it contributes to an increasing equity.  The high loan to value mortgages that are available combined with the low mortgage rates also contribute to the investment through leverage which has been described as "using other people's money" to control an investment.
  3. Interest and property tax deductibility ... Homeowners can deduct their qualified mortgage interest and up to a maximum of $10,000 of their property taxes as itemized deductions on their federal income tax return.  In some instances, the standard deduction may benefit them more, but they can elect to choose either method each year, whichever helps them the most.
  4. Capital gain exclusion ... A single homeowner can exclude up to $250,000 of capital gain and if married filing jointly, can exclude up to $500,000 of gain on their principal residence.  The need to have owned and occupied it as their home for two of the last five years.
  5. Cash out refinance ... Generally speaking, a lender will allow an owner with good credit and income to borrow the difference in their current unpaid balance and 80% of the fair market value.  This money can be used for any purpose and is not a taxable event.
  6. Equity buildup ...The difference in the value of the home and the unpaid mortgage balance is called equity and it increases with each payment made.  It is like automatic savings.
  7. No landlords ... Instead of dealing with landlords who may impose restrictions on things like painting, improvements and pets.  Owners are not concerned about rent increases and will have a fixed principal and interest payment for as long as they have a mortgage.

A bonus reason to buy a home now are the low mortgage rates available. The lowest rate recorded by Freddie Mac is 3.35% in December 2012.  Today's rates are 3.75% on a 30-year fixed rate mortgage and 3.21% on a 15-year fixed rate mortgage.  So, they are certainly very close to all-time lows.

The highest rate on a 30-year fixed rate mortgage was 18.45% in October 1981.  When you put today's rates in perspective, they are an incredible bargain.  Many industry experts expect that they will not remain as low as they are now.  Locking in a low rate can keep your housing costs low.

A $275,000 mortgage at 3.75% for 30 years has a principal and interest payment of $1,273.57.  If the rate goes up by 1%, the payment would increase to $1,434.53 or $160.96 per month for the 30-year term. Check the Rent vs. Own to see how the numbers look in your situation.

https://betterhomeowners.com/PhilLande/2019/11/20/7-Reasons-to-Buy-a-Home Wed, 20 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/20/7-Reasons-to-Buy-a-Home

There are telltale signs that a home is wasting energy that every homeowner should be aware.

  • Drafts ... if you feel drafts in rooms when doors and windows are closed, it can indicate a leak that can adversely affect heating or air-conditioning.
  • Moisture on windows ... condensation occurs when warm moist air meets cooler dry air like when a bathroom mirror steams up after a shower.  The inside or outside of window can sweat due to temperature differentials.
  • Ice dams form at the edge of a room and prevent melting snow from running off the roof.  The water that backs up can leak into the home causing damage.
  • Higher than normal utility bills indicate that more energy is being required to keep the property at a desired temperature.
  • Excessive dust in a home can be the result of dirty HVAC filters or from air duct leaks that could be sucking in dust from the attic.
  • Mold thrives in warm, moist conditions which could exist because of leaking roof, walls, windows or poor ventilation.
  • Sinus problems affecting residents can be the result of conditions mentioned above like dust and mold.

Recognizing these conditions exist and resolving them can bring a homeowner more comfort and a safer, healthier home.  The cost of repairs may be able to be recaptured through utility savings.  Preserving energy provides a cleaner environment by eliminating greenhouse gas emissions that contribute to climate change.

https://betterhomeowners.com/PhilLande/2019/11/19/Home-Energy-Loss Tue, 19 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/19/Home-Energy-Loss https://betterhomeowners.com/PhilLande/2019/11/18/Additional-Expenses-When-Buying Mon, 18 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/18/Additional-Expenses-When-Buying https://betterhomeowners.com/PhilLande/2019/11/15/FHA-Gift-Letter Fri, 15 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/15/FHA-Gift-Letter

Unexpected and possibly dangerous situations in the home require immediate response and knowing where critical items are in the home can minimize the damage.  It can also provide peace of mind knowing what to do when and if the time comes. 

  • Gas ... The gas supply to home can be cut off by going to the meter and closing the valve which will probably require a wrench.Each individual appliance that uses gas will have its own cutoff valve.
  • Electrical breaker box ...The electrical panel usually has two columns of circuit breakers that are numbered by the manufacturer.The numbers won't identify where they go and should be labeled.This is a good project for two people with cell phones where one will label the panel after turning off a breaker and having the other person verify what it turned off.There is also a larger main breaker that may be at the top of the panel that will disconnect power to the entire circuit breaker panel.
  • Main water shutoff ... In an emergency such as a broken pipe or anything when water is rapidly flowing, you'll want to shut off the main water supply to the home.There may be a valve that goes into the house but not all homes have one.You may need to go to the water meter and turn it off there.Most water meters require a key to get into them which can usually be purchased from a hardware store.It is important to have one convenient located to use in an emergency.Getting into the meter is only one part, you'll also need a tool, like a wrench to turn the valve.Some tools have the key on one end and the wrench on the other.It would be good to practice doing this before you need to do it.
  • Shutoff valves - Toilets, sinks and washing machines typically have a separate shutoff valve for the supply line to feeds water to the device.Overtime, because they are not used, they can become frozen and will not operate.It is good to close and open them periodically to see if they work and to keep them operational.
  • Fire extinguishers ... This safety device can be a key component in containing a fire that could cause considerable damage.It is estimated that 60% of fires are unnotified because they were not severe, and we handled with a fire extinguisher.

 

https://betterhomeowners.com/PhilLande/2019/11/14/Home-Emergency-Preparedness Thu, 14 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/14/Home-Emergency-Preparedness

Before looking for a home, you need to know how much you can afford. While you may have a number in your head, the lender has the final say. Securing a pre-approval from a lender helps make the home buying process easier and helps to avoid delays.

Many buyers confuse the terms pre-qualification and pre-approval. They mean two different things. In simple terms, a pre-qualification is an estimate of what you can afford. A pre-approval is a conditional approval based on the proof you provide.

The pre-qualification is a preliminary step some borrowers take to get a feel for what price home they can afford. Based on your income, assets, and estimated credit score, lenders can estimate what you can afford.

It's important to know, there's nothing binding about a pre-qualification. It's simply a starting point.   When you are serious about buying a home, though, you want a pre-approval.

Before you shop for a home, meet with a recommended lender to get a pre-approval letter. Sellers and/or Realtors value this letter because it shows you are likely to secure the necessary financing and serious about buying a home.

Lenders meet with you in person to create the pre-approval. You'll provide the lender with all the following:

  • Permission to order your credit report
  • Paystubs, W-2s and/or tax returns to prove your income
  • Asset statements, investment statements or any other proof of assets
  • Proof of employment
  • Any other miscellaneous documentation required by lender

Lenders evaluate the documents and determine your conditional approval. The letter will state the mortgage amount you qualify for, the loan's terms, and any conditions the approval is contingent upon. 

Normally, final approval is contingent on a fully executed sales contract of the property to be purchased, a satisfactory appraisal and clear title on the property.

Once a purchase contract is signed, the lender completes the underwriting on your loan. They will confirm that the property meets the necessary requirements. The lender will also re-confirm your income, assets, employment, and credit information before closing on the loan.

Securing a pre-approval prior to beginning the home buying process will give you confidence and can help your negotiations with the seller. Your REALTOR® can provide you more information in an Buyers Guide and recommendations of trusted lenders.

https://betterhomeowners.com/PhilLande/2019/11/13/Whats-the-Difference-in-PreQualification-and-PreApproval Wed, 13 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/13/Whats-the-Difference-in-PreQualification-and-PreApproval

A recent survey from Bankrate reported that 36 percent of millennials prefer investing in real estate over all other options, including the stock market, cash investments, and cryptocurrency. According to Business Insider, the generation is also responsible for the largest share of new mortgage loans. Here's why millennials are betting on real estate, and you should too.

Unlike stocks, which can completely lose value, or cars which depreciate in value over time, real estate stays valuable no matter what. Because it's a tangible asset and completely in your hands, you have the power to improve its value over time through repairs and renovations. That's a huge benefit compared to the stock market, which is entirely out of your control and incredibly volatile.

In buying a home, you will never lose the full value of your investment and you'll enjoy a rare kind of investment flexibility. Buy earlier on in your life, and not only will the value of your home increase over time, but the risk of loss will decrease the longer you hold onto it. That means the window for building equity is wide open.

There are many practical benefits to owning a home as well. You can leverage a real estate investment for cash, and you can claim a mortgage deduction on your taxes. What's more, real estate is a great opportunity to find extra cash flow. If you invest in the stock market, you don't see that money again until you sell. But if you invest in real estate, you can rent out the property to bring in a new stream of monthly income. That can be a huge help when it comes to the expenses of owning a home, repairing it, and paying off the mortgage.

With surefire ways to see a return on your investment, relatively low initial costs, and the potential for a lifetime of memories, buying a home now is a strategic and exciting thing to do.  Plug in your numbers to this Rent vs. Own and see what kind of investment it can be for you.

https://betterhomeowners.com/PhilLande/2019/11/12/Millennials-Do-Understand-It Tue, 12 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/12/Millennials-Do-Understand-It https://betterhomeowners.com/PhilLande/2019/11/11/Lower-your-insurance-costs Mon, 11 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/11/Lower-your-insurance-costs

Finding ways to conserve energy in your home will save money and help reduce the nation's demand for the resources needed to make that energy, like fossil fuels. You'll also reap the more immediate benefits of enjoying a more comfortable home when it is powered just right. Here are a few ways you can cut back on costs and live a life that is healthier for the planet. 

Heating and cooling your home typically uses up 35 to 45 percent of your total energy budget. You can minimize that damage by investing in smart or programmable thermostats that will adjust while you are away or sleeping. Cutting back on air conditioning or heating for 8 hours a day can save you 10 percent per year on energy bills, according to the Department of Energy.

To keep your air conditioners or heaters from working unnecessarily hard, it's also important to identify any air leaks in your home. Otherwise, the temperature that you're paying for might slip right through the cracks. These leaks are most commonly found in windows and doors, and you can seal them up using caulk or weather-stripping.

You're also wasting energy any time you leave an electronic device plugged in — even if it's not turned on. That's right, items like your T.V. and computer are still using electricity even though they're off. That kind of energy waste is often called a phantom or vampire load. To save yourself from those horrors, you can utilize advanced or smart power strips that will shut off the electrical current until you actually turn the device on again.

One of the easiest ways to increase the energy efficiency of your home is to switch to LED lightbulbs. According to the DOE, an average American home has 70 lightbulbs screwed in at any given time. LEDs, use up to 90 percent less energy than incandescent bulbs, and a single one can save you more than $80 during its lifetime. Just think of the savings if you switched out each of those 70 bulbs with LEDs.

Taking smalls steps like these costs you little to no money upfront, but saves you a tidy sum in the long run. Start reducing your energy use today and enjoy the benefits for years to come.

https://betterhomeowners.com/PhilLande/2019/11/08/Save-Energy-in-your-Home Fri, 08 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/08/Save-Energy-in-your-Home https://betterhomeowners.com/PhilLande/2019/11/07/Finding-an-Inspector Thu, 07 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/07/Finding-an-Inspector

Maybe you're not ready to move into it but that doesn't mean that you shouldn't take advantage of the present opportunities to acquire the home you want to live in during retirement. The combination of the low mortgage rates, high rental rates, positive cash flows and tax advantages can help you get it paid for by the time you're ready to move into it.

Your tenant could literally buy your retirement home for you.  One idea would be to finance it with a 15-year loan that will have a lower rate than a 30-year loan and it will obviously be paid for in half the time. With every monthly rental check from your tenant, you make the payment on the mortgage which includes a portion that reduces debt and builds equity. Even if you don't have the home paid for by the time you retire, your equity will be larger. 

Consider you sell your current home which could be paid for by then when you are ready to move into this retirement home .  Taxpayers can exclude up to $500,000 of tax-free gain for a married couple. That profit could be used to fund your retirement.

Even if you don't retire to this home, it could be a placeholder to control the costs of the home you do move into.  For example, you could buy a home in a destination location now, rent it out and build equity in it until you're ready to use it as your principal residence.  That home would have kept pace with other homes in the area so that you would not be priced out of the market you want to retire to.

With home prices and mortgage rates certain to rise, this may be one of the best decisions you can make. We want to be your personal source of real estate information and we're committed to helping from purchase to sale and all the years in between.

Contact us if you'd like to talk about the idea or if you need a recommendation of real estate professional in another city. https://betterhomeowners.com/PhilLande/2019/11/06/Buy-Your-Retirement-Home-Now Wed, 06 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/06/Buy-Your-Retirement-Home-Now https://betterhomeowners.com/PhilLande/2019/11/05/Mortgage-Timeline Tue, 05 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/05/Mortgage-Timeline

Homeownership is a privilege and a responsibility falling into one of three categories: maintenance, minimizing expenses and managing debt and risk.  Even after decades of owning a home, you may still need some help to handle some of these challenges.

One of the most frequent calls REALTORS® receive from past customers is to ask for a recommendation of a service provider. 

The Internet search engines have replaced the yellow pages or newspaper ads as a quick source to find  workmen.  While convenient, the problem with search engines is the global nature of the web makes some companies look established when, they may not be at all.

The recommendation from a trusted friend or professional is by far your best resource. Reviews from strangers can be helpful but an endorsement from someone you know, and trust will make you feel more confident that you'll find the right person to help you with your project.

Almost every transaction requires something to be done to either prepare a home to increase marketability or make a repair discovered by inspections prior to closing.  The frequency of transactions leads agents to build an extensive list of service providers that provide reliable work at reasonable prices and have reputations to back up their service.

We're here to serve your real estate needs, not just when you're buying and selling but all of the years in between.  By helping you with the three M's of homeownership, we can earn your confidence and trust for the next time you move or can recommend us to your friends.

If you need a recommendation of a service provider, give me a call (317) 863-2356.

https://betterhomeowners.com/PhilLande/2019/11/04/Maintain-Minimize-Manage Mon, 04 Nov 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/04/Maintain-Minimize-Manage https://betterhomeowners.com/PhilLande/2019/11/01/Homeowners-Net-Worth Fri, 01 Nov 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/11/01/Homeowners-Net-Worth

If you consider the current difference in a 15-year loan is approximately ½% lower, then, yes, it may a good idea.  But, if you can't afford the higher payment amortized over half the time of a 30-year, then, no, it may not be a good idea.

It may be good for some people based on their ability to make a higher payment if one of their goals is to build equity in their home faster or to pay it off sooner.

The term of the mortgage is a long-term commitment.  You are agreeing to make the specified payment each and every month.  If funds are tight one month, they don't allow you to make the 30-year payment one month and go back to the 15-year payment the following month.

An alternative to getting a 15-year loan, would be to get the 30-year loan and make the payments as if it were a 15-year mortgage.  You won't benefit from the lower interest rate available to shorter term mortgages, but the principal will reduce to match the shorter term.

$300,000 Mortgage

30 years

15 years

Interest Rate

3.64%

3.16%

Mortgage Payment

$1,370.69

$2,094.91

Unpaid balance at end of 10 years

$233,436

$116,127

Additional Monthly Payment

 

$724.22

Additional Total Payments

 

$86,906

Savings

 

$30,403

 

To see what it would be for your situation, use the 30yr vs. 15yr Comparison.

https://betterhomeowners.com/PhilLande/2019/10/31/Is-a-15year-Mortgage-a-Good-Idea Thu, 31 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/31/Is-a-15year-Mortgage-a-Good-Idea

You may have noticed that REALTORS® seem to always think now is a good time to buy and they can usually justify it with solid reasoning.  While it can be true in general, a good time to buy has more to do with the individual than anything else.  There are four things to consider.

It is a good time to buy a home when you have good credit.  Since the Great Recession and the housing crisis, lenders have been required to be sure that the borrowers have good credit.  This actually benefits not only the lenders but the borrowers because no one wants to buy something that they cannot afford and run the risk of losing it to foreclosure.  FHA has the most lenient FICO credit score of 580+.  VA requires a little higher at 620 while Fannie Mae guidelines on conventional mortgages require a 700 score.

It is a good time to buy a home when you have a good job that gives you the income to qualify for the mortgage and the likelihood that you'll continue to be employed in the future.  Two years of steady employment in the same industry with no significant gaps is a measure that lenders consider.

Lenders use qualifying ratios to make a determination.  The total house payment, principal, interest, taxes and insurance, should not exceed 28% of the borrower's monthly gross income.  Their total monthly debt including the house payment should not exceed 45% of monthly gross income.  There is some flexibility in the ratios for the right circumstances.

It is a good time to buy a home when you have the available funds for the down payment and closing costs plus a little cushion for the unexpected.  The down payments can range from 0% for VA loans to 3.5% for FHA and 3% to 20% for conventional.

In addition to the down payment, borrowers will have closing costs that can range from 2 to 3.5% depending on the loan type.  It is possible for the seller to pay the buyer's closing costs but it needs to be negotiated in the sales contract.  The lender's underwriter wants borrowers to have cash available for unexpected expenses related to the house and their normal living expenses.

It is a good time to buy a home when you have stability ... In addition to employment, stability applies to not moving soon, marital status, children and unanticipated expenses.  Market or economic conditions could also affect stability.

So, the answer to the question "is it a good time to buy a home" depends on several things that are relative to the buyer.  While it might be a great time to buy for one buyer, it may not be the best time for another buyer.

Make a self-assessment to the best of your knowledge on these issues and then, schedule an appointment for a live interview with a trusted mortgage professional to get their opinion based on what underwriting will look at.  Call me at (317) 863-2356 if you'd like a recommendation.  After you determine it is a good time to buy a home, it is time to meet with your real estate professional.

https://betterhomeowners.com/PhilLande/2019/10/30/A-Good-Time-to-Buy-a-Home Wed, 30 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/30/A-Good-Time-to-Buy-a-Home https://betterhomeowners.com/PhilLande/2019/10/29/Things-that-should-not-be-put-in-the-disposer Tue, 29 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/29/Things-that-should-not-be-put-in-the-disposer

If you're familiar with running out of hot water before you're through with your shower, a tankless water heater may be for you. If you like conserving energy and saving your money too, tankless heaters are definitely for you.

These "on-demand" units typically operate on gas or electricity and only heat your water when you actually turn on the faucet. This feature eliminates the need, and cost, of keeping gallons upon gallons of water heated in a storage tank on standby. When you turn on the faucet, the unit draws cold water into its system, heats it inside its walls, and sends it back out hot. It will provide you with a continuous and unlimited supply of hot water, which is especially good news for you hot tub owners out there. Some units can deliver as much as 5 to 7 gallons per minute.

Tankless heaters use 20 to 50 percent less energy than traditional units with tanks. And while you're doing your part to help the planet, Energy Star estimates that a certified tankless water heater could save a family of four about $95 per year on gas bills. The average unit lasts 20 years, so that's $1,900 saved during the unit's lifetime compared to a standard gas storage model, which typically lasts only 10 to 15 years.

While typical water heaters require annual maintenance to ensure a healthy lifetime, tankless units can go four to five years before any work is necessary. They also have a lower risk of causing water damage, leaks, or dreaded floods.

Still not convinced? Tankless heaters will save you precious space too. They are so compact, they can be mounted to walls or placed in cabinets or closets. Some units are even designed to be installed outside your house.

Smaller units are typically placed near the point of use, which eliminates possible heat loss through the piping. This placement also saves time and water usually wasted while waiting for it to get hot, providing you with your desired temperature within seconds, rather than minutes. Larger units for the whole home are available too and are capable of keeping your entire family warm. Sayonara, cold showers.

https://betterhomeowners.com/PhilLande/2019/10/28/No-More-Cold-Showers Mon, 28 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/28/No-More-Cold-Showers

You may be amazed at the impact of making regular, additional principal contributions can have on your unpaid balance.

Each month, an increasing portion of the principal and interest payment goes to reduce the payment.  However, when you make an additional principal contribution above the normal payment, it is applied entirely toward principal reduction.

You will save interest, reduce your unpaid balance and shorten the term of your fixed-rate mortgage.

If you are committed to doing this program, set an automatic bill payment through your checking account.  Add the additional amount to the normal payment amount for a total that will cover the principal, interest, taxes and insurance plus the additional amount to be applied toward principal.

Verify with your lender each month that the additional amount was applied to principal instead of being added to the escrow account.

Use the Equity Accelerator to estimate the impact of making regular, additional principal contributions and what your payment would need to be to have it paid off in a certain number of years.

https://betterhomeowners.com/PhilLande/2019/10/25/Regular-Principal-Contributions Fri, 25 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/25/Regular-Principal-Contributions https://betterhomeowners.com/PhilLande/2019/10/24/Waiting-Period Thu, 24 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/24/Waiting-Period

Whether it is a cosmetic or a mechanical reason for upgrading a toilet, you may not know all the choices that are involved to choose the right one for your home.  The current toilet may have cracks or leaks in the bowl or tank.  It could be the aggravation of constant clogging or inefficient flushing.  Maybe there is damage in the porcelain bowl or built-up mineral deposits that are clogging the inlet holes or syphon tube.

If frequent repairs have you on a first name basis with the plumber, it may be time to consider replacing the toilet.  There are a lot of things to consider and the following list may help you sort through the choices.

  • Round, oval or compact oval ... There are two basic shapes of toilets: round and oval.  The round bowl requires less space and are less expensive.  The oval or elongated tend to be more comfortable but require more space from the wall than round ones.  Most manufacturers produce a compact oval model also.
  • One-piece, two-piece and wall hung ... Manufacturers make one-piece models that mold the tank and bowl into one unit.  These can be a little more expensive, but they take up less space.  The two-piece with separate tank and bowl are more common.  The wall hung requires less space and make the room look larger, but installation will be more expensive. 
  • Height ... Standard toilet height is 15 inches.  An alternative to the standard is a comfort height which is more like a chair at 17-19 inches tall.  This can be an advantage for older and taller people as well as those with a mobility problem. 
  • Trapway - The trapway is a channel from the bottom of the bowl to the drainpipe that also keeps gas entering the home from the sewer.  While the trapway shows on the outside of most models, there are skirted or concealed models available for a more aesthetic appearance.
  • Single or dual flush ... Single flush toilets use the same volume of water each time it is flushed.  Dual flush toilets have two options for flushing liquid or solid waste.  This gives the user the ability to conserve water when appropriate.
  • Water per flush ... In an effort to save water, in 1995 the Department of Energy required toilets to use 1.6 gallons per flush.  Since then, California and Georgia, increased the restriction to 1.28 gpf which saves 20% more water.
  • Gravity-feed or pressure assisted - For four hundred years, gravity has been used to move the water through a flushable toilet bowl to eliminate the waste.  As water restrictions were added, pressure assisted toilets were introduced to assist the lower volume of water.  A sealed cylindrical tank inside the ceramic toilet tank provides the additional pressure.  These types of toilets are nosier than conventional flush types.

Once you've decided on what features are important, you can shop brands that fit your needs.  If you're curious to what kind of a job it is to install it, there are lots of videos on YouTube that will show you in detail what to expect.  Whether you do it yourself or hire a professional, you'll understand the process more.

https://betterhomeowners.com/PhilLande/2019/10/23/Time-for-a-Toilet-Upgrade Wed, 23 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/23/Time-for-a-Toilet-Upgrade

Whether it's a fire, burglary or other disaster, one of the first things your insurance agent is going to ask for are the receipts for your personal items or a home inventory.

You can reconstruct the inventory from memory, but you run the risk of forgetting items, possibly for years after you file the claim.  Having a photos or videos of the different rooms in your house combined with a list of the items can serve as the evidence you need for your claim.

There are other benefits to doing a home inventory also.  You'll know the "right" amount of insurance to have on your personal belongings.  It will simplify filing a claim if you ever need to. 

Periodically update your inventory with pictures, descriptions, values and receipts for any new purchases that are made.

Download a Home Inventory in an interactive PDF that you can complete and store online, anywhere you'd like.

https://betterhomeowners.com/PhilLande/2019/10/22/Home-Inventory Tue, 22 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/22/Home-Inventory https://betterhomeowners.com/PhilLande/2019/10/21/Mortgage-Rates Mon, 21 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/21/Mortgage-Rates https://betterhomeowners.com/PhilLande/2019/10/18/Dont-Believe-It Fri, 18 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/18/Dont-Believe-It

93% of Americans surveyed would rather make a mortgage payment than pay monthly rent.  They believe that owning a home makes them happier than being a tenant and they now have an emotional attachment to their home with an improved lifestyle and increased homeowner interests.  83% say they couldn't go back to renting after owning.

The intangibles of owning a home include how they spend their time now and strengthened relationships with their family and friends.  Two thirds of homeowners  who took part in the Bank of America Fall 2019 Buyer Insights Survey felt  their families had a sense of pride and allowed them to entertain more.  New hobbies include landscaping and gardening, cooking and grilling, and interior design and remodeling.

Current homeowners reported higher levels of satisfaction than prospective buyers in several areas including spending more time pursuing their hobbies, the quality of their social lives, their financial well being and their life overall.

Those surveyed agree that homeownership builds emotional and financial equity.  The emotional benefits of owning a home include a way to build lifelong memories with family and friends which could make it difficult to move in the future.

https://betterhomeowners.com/PhilLande/2019/10/17/Emotional-Equity-Among-Buyer-Benefits Thu, 17 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/17/Emotional-Equity-Among-Buyer-Benefits

Condensation occurs when the air has too much moisture in it which is felt as high humidity.  The water deposits on various surfaces that are cooler than the air itself.  Several things can contribute to the high humidity such as cooking, dishwashers, clothes dryers, bathing and long showers. 

If the home has a crawl space under the floor, inadequate ventilation or insulation can cause moisture in the home.  There seems to be a difference of opinions about whether to vent or not vent.  First, determine if you are having a problem and then, weigh the options available to find the best solution.

Condensation that forms on windows and other surfaces in your home can cause damage to window trim, frames, drywall, floor coverings and sub-floors as well and the interior framing.

To reduce condensation in a home, the moisture saturating the air needs to be reduced.  Just as steam from a shower can fog a mirror, warm air holds more moisture.  When the air cools, it releases the moisture.  There are other things that can be done to reduce the moisture and the condensation.

  • Adjust humidifier
  • Bathroom and kitchen exhaust fans
  • Circulate the air; ceiling fans can help with this
  • Open windows to release warm air
  • Raise temperature
  • Add weather stripping
  • Window insulation kits
  • Storm windows
  • Move plants that release moisture in the air

The average life of a bathroom exhaust fan is about ten years with kitchen fans lasting about fifteen years.  Regular cleaning can increase the life of the fans.  Bathroom exhaust fans should be vented to the outside and should be run for 15-20 minutes after using the bath or shower to remove the moisture that causes mold and mildew.

Regulating the humidity in a home can protect against damage but it also promotes comfort in the form of breathing, relieving dry skin, sinus problems and sickness in general.  Breathing is easier and the air feels more pleasant.

https://betterhomeowners.com/PhilLande/2019/10/16/Interior-Condensation-Solutions Wed, 16 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/16/Interior-Condensation-Solutions https://betterhomeowners.com/PhilLande/2019/10/15/USDA-Mortgages Tue, 15 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/15/USDA-Mortgages

"Either help or do no harm" is advice found in the Epidemics, Book 1 of the Hippocratic school.  It's good advice for all professionals who represent the interests of others.  While REALTORS® do not protect their customers' lives directly, homeownership affects their lives in financial, social and emotional ways.

One of our objectives is to help people be better homeowners when they buy, sell and all the years in between.  We want to be your "go to" person for all real estate related questions.  We want to be a resource for you in all things related to your home.

We believe that by doing this, you'll allow us to assist you when you buy and sell and be so satisfied with our service that you'll even recommend us to your friends.

As with many professionals, we not only comply with continuing education requirements to maintain our license, we go beyond that so that we can offer the highest level of service to our customers and clients.

We share that knowledge and experience with you through our newsletter, social media posts, blog and in our conversations.  When you have a question about real estate regardless of whether you're buying or selling, please call us at <phone>.  It is our pleasure to serve you.

https://betterhomeowners.com/PhilLande/2019/10/14/Help-or-Do-No-Harm Mon, 14 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/14/Help-or-Do-No-Harm https://betterhomeowners.com/PhilLande/2019/10/11/toothbrush-replacement Fri, 11 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/11/toothbrush-replacement

The cost of a VA home loan is going up beginning January 1, 2020 when the funding fee is being increased from 2.15% to 2.3% for first time use.  The amount increases to 3.6% for subsequent zero-down payment loans.  Reservists and national guard veterans are subject to a slightly higher fee.

Veterans pay a funding fee when purchasing a home with a VA insured loan.  This one-time charge, collected by the Department of Veteran Affairs, is based on the loan amount to value with the fee decreasing as the down payment goes from 0% to 5% or 10% or more.  It can be paid upfront or rolled into the mortgage.

VA loans do not require mortgage insurance like FHA or 90-95% conventional loans.  They are backed by the Department of Veterans Affairs by guaranteeing a portion of the loan to the lender if a borrower defaults.  This relieves U.S. taxpayers the full burden of backing the loans.

The funding fee is waived for disabled veterans and surviving spouses of a veteran who died in service or from a service-connected disability.  Active-duty service members who have received a Purple Heart will be exempt from the funding fee beginning January 1, 2020.

https://betterhomeowners.com/PhilLande/2019/10/10/VA-Funding-Fee-Going-Up Thu, 10 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/10/VA-Funding-Fee-Going-Up

When a whole lobster was presented at the table of a restaurant, the customer noticed there was only one claw on it.  He asked what happened to the lobster and the waiter said, maybe he lost a fight with another lobster.  The customer replied to the explanation by saying "then, bring me the winner."

There are approximately 1.3 million REALTORS® in the U.S.  The July 2019 Existing Home Sales annualized about 5.4 million units with a listing side and a selling side that totals 10.8 million transactions.  That means that the average number of units sold per agent is 8.

In any given market, 20% of the agents are selling 80% of the homes.  260,000 agents are selling 8,480,000 or an average of 32 transactions sides.  Some markets are dominated by 10% of these successful agents selling 90% of the market.  If that were the case, 130,000 agents are selling 9,720,000 or an average of 75 transactions sides.

The question you should ask yourself is who do you want representing you in the purchase or sale of the largest asset that most people have?  Do you want an average agent, or do you want a powerhouse agent who can provide you the best advice, avoid issues that can cost time, and maximize the results that you expect and deserve?

Finding the right property is listed as the most difficult experienced by buyers (56%), according to the Home Buyers and Sellers Profile, together with the paperwork (20%) and understanding the process and steps (16%) makes these the most important areas of expertise needed when evaluating your agent.

An agent provides valuable services for buyers and sellers during the transaction that can make a difference in finding the "right" home or buyer, negotiating the best terms, and closing on time.  The answers to the following questions can help you decide who to work with in your next purchase or sale.

  • Describe your experience in real estate?
  • What are your personal sales stats compared to the market? (For sellers, list price to sales price ratio, days on market; for buyers, average # of houses shown and closure rate)
  • Describe your strategy to accomplish my needs?
  • Do you have references and/or reviews?
  • What makes you different than your competition?
  • Can you help me find the other professionals and vendors?
  • What is your fee and who pays it?

For more information, download the Sellers Guide and Buyers Guide.

https://betterhomeowners.com/PhilLande/2019/10/09/Selecting-an-agent Wed, 09 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/09/Selecting-an-agent https://betterhomeowners.com/PhilLande/2019/10/08/Right-price-for-a-rental Tue, 08 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/08/Right-price-for-a-rental

  • FHA loans are available for one to four family unit properties with one unit being owner-occupied.
  • The minimum down payment for an FHA loan is 3.5%.
  • FHA has a minimum credit score of 500 to 579 but it requires a 10% down payment.  Not all lenders are willing to make loans to borrowers with lower credit scores.
  • There is a program for a borrower to roll the cost of the repairs into the mortgage.
  • Mortgage Insurance Premium is required on all loans
  • Mortgage Insurance Premium is required for the life of the loan.
  • Refinancing an FHA loan has a simplified process of qualifying.
  • FHA loans are easier to qualify for than conventional loans.
  • Borrower needs a valid Social Security number.
  • Borrower needs to provide proof of U.S. citizenship, evidence of legal residency or eligibility to work in the U.S.
  • Borrower must be of legal age according to the state's borrowing laws.
  • Sellers can pay some of the borrower's closing costs.

https://betterhomeowners.com/PhilLande/2019/10/07/Little-known-facts-about-FHA-mortgages Mon, 07 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/07/Little-known-facts-about-FHA-mortgages https://betterhomeowners.com/PhilLande/2019/10/04/Lock-Take-Hide Fri, 04 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/04/Lock-Take-Hide

Your home is meant to be your haven, a safe and healthy place for you and your family. So, you might be surprised to learn that research from the Environmental Protection Agency shows that indoor air quality can be 2 to 5 times more toxic than outdoor air. There are many contributing factors to poor indoor air quality, with the cleaning supplies you use being at the top of the list.

In addition to cleaner indoor air, making your own cleaning products is far cheaper than buying store-bought products. Since you will be using these products to clean, buy bulk-sized options. Here is what you need to get started:

  • 4 or more new spray bottles
  • Vinegar
  • Hydrogen peroxide
  • Organic coconut oil
  • Salt
  • Borax
  • Baking soda
  • A green dish soap or liquid castile soap
  • Lemon or essential oils for scent

Multi-Surface Cleaner - Mix a solution of 1-part water and 1-part white vinegar in a spray bottle to use as your go-to multi-surface cleaner. While apple cider vinegar may smell a bit better it can stain some surfaces. To improve the aroma of white vinegar, add 10 drops of citrus or peppermint essential oil, or add a bit of citrus rind to the spray bottle.

 Coconut oil has many uses including but not limited to:

  • Use to remove sticky adhesive
  • Remove crayon on the wall
  • Polish wood or leather, test in a small patch first though
  • Remove scuff marks on the floor
  • Lubricate squeaky hinges

DIY Abrasive Cleanser - Baking soda or salt can be mixed with liquid soap to create an abrasive cleanser. However, with frequent cleaning and the right cleaning brushes you shouldn't need to use them often.

Even green cleaning companies have a few non-green chemicals they turn to as needed, most of which are used for cleaning the toilet and shower. So, if you find your green cleaners aren't getting the job done, you can use a more traditional cleanser as needed. Be sure to use as directed and open windows when cleaning to ensure airflow.

Making your own green cleaners will save you money but if you don't have the time to make your own, you can always purchase green cleaners. There is an impressive option of choices to choose from for every room in the home which can be found in health food stores, Walmart, Target, Home Depot, and most grocery stores.

 To further improve indoor air quality, take a look at Harvard's Homes for Health report.

https://betterhomeowners.com/PhilLande/2019/10/03/Improve-Your-Indoor-Air-Quality-with-DIY-Cleaners Thu, 03 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/03/Improve-Your-Indoor-Air-Quality-with-DIY-Cleaners

The Internet has empowered all buyers with information and home buyers are no exception.    The amount of information available to public includes details on size, condition, sales history, current inventory, recent sales, photographs, videos, school info, drive-times, entertainment and much more.

When a seller realizes that buyers are educated with facts, it becomes unlikely that they will pay more than a home is worth. 

If a home is priced too high in the beginning, it may stay on the market longer than normal which could adversely affect the ultimate sales price.  It is a natural reaction from people, personally or professionally, to assume that something must be wrong with a home that doesn't sell in a reasonable time for that market.

The seller is entitled to maximize the equity in their home and pricing it properly in the beginning is the best way to achieve that.  Overpricing can reduce buyers activity because they assume that the best homes are purchased soon after they are offered for sale and if one has been on the market longer than normal, there must be a problem with it.  Similarly, sales associates may come to the same conclusion.

After buyers have seen a few homes in a certain price range, they begin to expect similar amenities in each home they look at.  If a home is overpriced, it will not compare favorably with the other homes that are being viewed.  Sometimes, the buyer may even think that another home could be a bargain because it offers much more for the same price as the overpriced listing.

Shopping the market means looking at the homes that meet a buyers' wants and needs and selecting the one that gives them the most, whether it is in price or amenities.  The overpriced listing doesn't compete well, and it extends the market time.  There is a documented study that shows that the longer a home stays on the market, the lower the price will be.

It is essential that a seller receive factual information to price their home to compete favorably in the current market.  Some of the obstacles can include:

  • Failure to objectively compare the current and sold homes with theirs
  • Neighbors who mislead the seller as to how much they got for their home
  • Fear of making a mistake and thinking they can start high and always lower the price
  • Loss of perspective because the seller is emotionally involved
  • Expecting the home to sell for more than fair market value because they need the money
  • Agents who will accept a listing at any price in order to tie up the property until the seller realizes the price is too high

What a seller paid for the home or the cost to rebuild it today do not affect market value.  Neither does the amount spent by sellers on certain improvements that were made for their own pleasure and enjoyment.

It is unrealistic to expect a buyer to pay more than market value for a home.  The seller sets the price of a home but the buyer determines the value.  If the home is priced properly in the beginning, it is more likely to sell for a higher price, in a shorter period and with less problems.

https://betterhomeowners.com/PhilLande/2019/10/02/Price-It-Right-the-First-Time Wed, 02 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/02/Price-It-Right-the-First-Time https://betterhomeowners.com/PhilLande/2019/10/01/Cost-of-Waiting-to-Buy Tue, 01 Oct 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/10/01/Cost-of-Waiting-to-Buy

In a recent rental investment class, one of the students said that he had a property where the tenant had been there for over 25 years.  The class was amazed but not as much as his next statement "My tenant actually paid for the home for me."

Each payment on an amortized loan pays the interest due and reduce a portion of the principal so that at the end of the mortgage term, the debt will be completely paid.

It may be unusual for a tenant to be in the same home for the entire term of the mortgage, but regardless of how many different tenants a rental has over time, they will pay for the home for the investor.

Tenants who have the credit, income and down payment to buy a home but do not, are helping to buy the home they rent for their landlord.  Whether you rent or buy, you pay for the home you occupy.

If you're a tenant and want to know exactly what it will take to buy a home in today's market, give me a call at (317) 863-2356.  You may be surprised that the mortgage payment may be less than what you're paying in rent now.

If you're curious about having a tenant pay for a rental home for you, contact me at (317) 863-2356.

Who are you buying the home for, yourself or your landlord?

https://betterhomeowners.com/PhilLande/2019/09/30/My-tenant-actually-paid-for-the-home-for-me Mon, 30 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/30/My-tenant-actually-paid-for-the-home-for-me https://betterhomeowners.com/PhilLande/2019/09/27/Sponges-should-be-replaced Fri, 27 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/27/Sponges-should-be-replaced https://betterhomeowners.com/PhilLande/2019/09/26/Mortgage-Delays Thu, 26 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/26/Mortgage-Delays

Insurance is required on a home by the mortgage company, but homeowners rely on it for peace of mind also.  Unfortunately, people may not take the time to investigate their policy and what it covers until they need to file a claim, which could be too late.

While it may not seem like the best use of your time, an in-depth visit with your property insurance agent once a year could be valuable to you if you have losses and could increase your peace of mind.

The following are some questions you can ask your insurance agent:

  • What is the insured value of the policy and the replacement cost of your home?  Insured value is the amount that would be paid for a total loss but replacing the home could cost more than that amount.
  • What is the deductible?  Higher deductibles on the first amount of the loss are one way to lower the cost of the premium.  It may sound good when you're having to pay for the policy but feel very different at the time you file a claim.
  • What does the policy cover? Typical policies cover fire, theft, vandalism and storms.  Homeowner policies bundle personal belongings and some liability coverage.  They can differ not only from company to company but from policy to policy.  Be clear on what is covered.
  • What does it not cover? ... Some perils are usually not covered by policies like hurricane, flooding, power outage, rising water and earthquake.  It can be confusing because a broken pipe might be covered but rising water from backed up sewer is not.
  • What is your anniversary date? ... Policies are usually written for one-year and should be renewed before they expire.  Mortgage companies like to renew them a month before they expire so there will not be a lapse in coverage.  That is why borrowers with escrow accounts for taxes and insurance must fund them accordingly.
  • Is it paid by an escrow account with the mortgage?  New homeowners should verify that their house payment includes 1/12th the annual taxes and insurance so they will not be surprised with a large bill when they become due.
  • Does your policy include liability coverage? ... This covers claims made by third parties of bodily or property damage done by the insured.  It could be as simple as a guest slips and injures themselves in your home.  It is important to know the limits of liability and consider larger amounts especially, if you have a higher net worth or risk profile.
  • What is an umbrella policy? -  This is a separate policy that increases the liability coverage above the limits of the homeowner's policy.  It can be a relatively inexpensive coverage.
  • Are personal belongings included? ... Most homeowners policies include an amount toward personal belongings like furniture, rugs, housewares, and clothes.  It may be expressed as a percentage of the overall policy.  The question is: will it cover your belongings or does it need to be increased?
  • What is the process to file a claim? ... Most claims require proof of purchase or a current inventory of the home.  Since most people don't have receipts except for big ticket items at best, the inventory becomes important.  Videos, still pictures or a detailed list can help to satisfy this need.  Click here for a digital Home Inventory.
  • Are there additional living expenses included? ... Some policies include temporary living expenses if you are displaced from your home. 
  • Does a home office require additional insurance? ... Many homeowners work from their home and have special equipment that may not be covered normally.  If you "meet and greet" people at home, ask about additional liability coverage.
  • Ask about floater policies on big-ticket items? ... Some items like jewelry, furs or collectibles need to be scheduled or covered on a separate policy.

Insurance is meant to give you peace of mind against possible losses that could financially harm you without it.  Because insurance is very specific about what it does and does not cover, it is important that you have a good understanding of your policy.  A policy is a contract between you and the insurance company, and it deserves due consideration.

https://betterhomeowners.com/PhilLande/2019/09/25/What-every-homeowner-should-know-about-their-property-insurance Wed, 25 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/25/What-every-homeowner-should-know-about-their-property-insurance https://betterhomeowners.com/PhilLande/2019/09/24/Desire-to-own-a-home Tue, 24 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/24/Desire-to-own-a-home https://betterhomeowners.com/PhilLande/2019/09/23/Staging-Your-Home-For-Sale Mon, 23 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/23/Staging-Your-Home-For-Sale https://betterhomeowners.com/PhilLande/2019/09/20/Energy-Tips--Vampires Fri, 20 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/20/Energy-Tips--Vampires https://betterhomeowners.com/PhilLande/2019/09/19/Passport-to-Homeownership Thu, 19 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/19/Passport-to-Homeownership

Real estate has consistently been one of the highest rated investments available to individuals.  TV shows certainly make rentals look easy and you may even know someone who has made a lot of money with them.  Possibly, the thought has crossed your mind that if they can do it, you can too.

Before you contract for your first investment, ask yourself some questions that could save you time and energy.  Not all people have the time, the inclination or even the skill to manage property.  Landlords need to be good business people who can maximize revenue and minimize expenses.  If investors don't have the skills and talent to handle some of the repairs, they at least need to know reputable and reasonable service professionals.

Another important element is to be familiar with the state and local landlord tenant laws.  You'll need to know what are allowable security deposits and where the money can be held.  Knowing how long you have to return it to a tenant is important and what to do if you plan to keep all or part of it for damages done.  It is important to know about the eviction process and how fair housing applies.

If you decide that you may not be cut out for being a landlord, it won't eliminate investing in rentals.  It does mean that you will need to engage a property management company who is capable of dealing with all aspects of the process.  The peace of mind and convenience will cost you a fee, usually a percentage of the rent collected.  They can handle finding a tenant, doing the background check and writing the lease but there will be an additional fee for that service.

Even though your expenses will be higher with a property manager, with their experience, they should be able to help you lease the property for more money than you can get and will probably have service providers to do the work needed for less.

Occasionally, rental property requires out of pocket expenses for repairs and improvements which is like making another capital contribution.  As equity builds in a rental property due to appreciation and principal reduction, the owner does have the option to take cash out of the investment either to pay additional expenses or to use any way the owner wants.  Pulling equity out of a rental doesn't even trigger a taxable event.

Single-family homes and up to four-unit buildings offer an investor the opportunity to get a high loan-to-value mortgage at a fixed interest rate for 30 years on appreciating assets with tax advantages and reasonable control compared to other alternative investments.

Many investors like the fact that you can borrow to purchase a rental investment where many other investments require cash.  The use of borrowed funds can create an advantage called leverage.  Assume you paid cash for a $100,000 home that generated $7,000 income after the rent was collected and expenses were paid.  Divide the value of the home into the income and it would earn 7%.

If you decided to put an $80,000 mortgage on it at 5% interest, the interest expense would be $4,000 leaving only $3,000 income.  However, at that point, you'd only have $20,000 invested in the property.  Divide the cash invested into the income and the rate of return would increase to 15%.

This is a simple example of leverage showing that borrowed funds can increase an investor's yield on a property.

Rental property can be an excellent investment when it is treated like the business that it is.  Knowledge of the investment will reduce the risk and enhance the opportunity to make a profit.  Some investors consider their rental income as "mailbox money" because each month, they go to their mailbox and they have money being sent to them by their tenants.  The benefits of rental property can easily outweigh risk involved.

Contact me for more information on rental properties and the option to be the landlord or to delegate it to a property manager. https://betterhomeowners.com/PhilLande/2019/09/18/Want-to-be-a-Landlord Wed, 18 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/18/Want-to-be-a-Landlord

Recycling is essential to keeping our neighborhoods clean, but it's easy to get mixed up on what goes in which bin. As regulations have changed, it's time to rethink recycling! Here's a quick and easy guide to what you should recycle and what you should dispose of in a specialized manner. 

At-home trashcan...

  • Styrofoam
  • Window glass
  • Mirrors
  • Plastic bags and soft plastics (bread bags or chocolate wrappers)
  • To-go coffee cups or take out containers
  • Napkins and paper towels
  • Baby diapers

 At-home recycling bin...

  • Cardboard such as newspapers, paper, magazines
  • Glass bottles and jars that have been cleaned for food waste or residue
  • Plastic containers such as milk, ice cream, margarine, and yogurt containers that have been cleaned for food waste or residue
  • Aluminum such as soft drink cans, foil trails, and steel cans
  • Shredded paper ... Due to its fine nature, shredded paper can clog machines at a recycling plant which makes it difficult to recycle; keep it bagged separately

For all items mentioned above, be sure to actively check for the recycle symbol. While the general rule of thumb says that these items are recyclable, there is always the exception. You don't want to contaminate the recycling process!

A specialized recycling center...

  • CFL bulbs that you purchased at Home Depot, IKEA, etc.
  • Ink cartridges
  • Batteries
  • Electronic waste (TVs, computers, cellphones, tablets, hairdryers)
  • Anything that can get tangled (wires, cords, chains, headphones, Christmas lights)
  • Propane cylinders (See if you can return to the original place of purchase!)

For any specialized item, be sure to look up the proper disposal method in your specific area. For example, some Staples and Best Buys accept wires, cords, and other electronic items for recycling. Additionally, in general, every municipality has different regulations, so it's always helpful to go through the process of learning yours whenever you relocate! Do it once and you'll be good to go.

https://betterhomeowners.com/PhilLande/2019/09/17/Rethinking-Recycling Tue, 17 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/17/Rethinking-Recycling https://betterhomeowners.com/PhilLande/2019/09/16/Maintain-Your-AC Mon, 16 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/16/Maintain-Your-AC https://betterhomeowners.com/PhilLande/2019/09/13/Success-is-doing-ordinary-things Fri, 13 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/13/Success-is-doing-ordinary-things https://betterhomeowners.com/PhilLande/2019/09/12/Fixedrate-payments-can-increase Thu, 12 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/12/Fixedrate-payments-can-increase

Occasionally, buyers who can qualify to purchase a home decide to "take a break" and wait to purchase a home.  When the focus of buying a home is relaxed, other uses for the money that was going to be used for the home are considered.

Maybe they think how much fun it would be to have a Sea Doo or a motorcycle or a new car.  It is amazing how many people would like to buy a home but either don't have the down payment, the income or the good credit to make it possible.

Instead of spending the money, consider investing the money for two years until the time is right to buy a home.  Let's look at putting the money in a certificate of deposit that earns 2% or in the stock market that could average a 5% return.

Assume you were purchasing a $295,000 home on a FHA loan with 3.5% down payment.  The $10,325 would grow to $10,742 in the CD which isn't a big increase but at least it is safe and secure, and it will be available when you're ready.

If the same amount were invested in a safe stock or mutual fund that earned 5%, it would grow to $11,383 in the same two-year period.  It earns more but there is more risk involved.

Your Best Investment

 

CD

Stock Market

Home

Cash to Invest

$10,325

$10,325

$10,325

Wealth Position

$10,742

$11,383

$38,871

Profit Taxed as

Ordinary Income

Long-term capital gains

§121 exclusion applies

 

Alternatively, if you invest the same amount in purchasing a home that appreciates at 3% a year, the equity would be $38,871 two years from now.  The dramatic increase is due to leverage, being able to control a large asset with a small amount of cash.  The appreciation is based on the purchase price not the down payment.

Another factor is that there is principal reduction with each payment that is made.

Make your own projections with Your Best Investment.

https://betterhomeowners.com/PhilLande/2019/09/11/Money-You-Saved-for-a-Down-Payment Wed, 11 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/11/Money-You-Saved-for-a-Down-Payment https://betterhomeowners.com/PhilLande/2019/09/10/Preapproval-is-an-important-step Tue, 10 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/10/Preapproval-is-an-important-step https://betterhomeowners.com/PhilLande/2019/09/09/For-Sale-by-Owners Mon, 09 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/09/For-Sale-by-Owners https://betterhomeowners.com/PhilLande/2019/09/06/Summer-Safety-Tips-for-Pets Fri, 06 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/06/Summer-Safety-Tips-for-Pets

Change your Locks ... As a new homeowner, you have no idea who may have a key to your new home. Re-keying the existing locks or installing new locksets will add an increased level of security and peace of mind.

Discarding boxes ... Placing the box of a new TV on the curb could be an unintentional announcement to thieves.  Breaking those boxes down and putting them in your receptacles could be a safer way to dispose of them.

Displaying Your Name ... Even though you may be very proud this is your home, it is probably better not to use name plates on your mailbox or door.  It may be more prudent to make it less convenient to tell strangers who you are.

HOA or Mail List ... It is good to communicate with the neighbors because you have shared interests.  Recommendations of vendors, to local customs and posting for help locating a lost pet can be very easy through a website or by email.  It makes it easy to stay up to date with what is going on in the neighborhood.

Home Inventory ... You've probably purchased some new things now that you have a new home and you may have gotten rid of some things that you had in your old home.  It is a good time to make a new inventory of your personal belongings.  You can do it with pictures or video or download this free Home Inventory.

Water Shut Off ... Locate the main water shut off valve and learn how to use it.  If a water key or special tool is needed, purchase one and put it in a convenient spot so you can get to it quickly in an emergency.

https://betterhomeowners.com/PhilLande/2019/09/05/Tips-for-a-New-Homeowner Thu, 05 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/05/Tips-for-a-New-Homeowner

It is estimated that over 15% of the population in the U.S. are over 65 years of age.  With one of the most common fears of seniors being their money will run out early, it is understandable that downsizing may be strategy to meet their goals.

Once the kids are grown, have careers, relationships and get a place of their own, parents find they may not need their "big" home like they did before.  In other situations, their lifestyle might have changed, and the house just doesn't "fit" anymore.

The benefits of a smaller home can include the following:

  • Easier to maintain
  • Lower utilities
  • Lower property taxes
  • Lower insurance
  • More convenient location
  • Single level
  • Possibly more energy efficient
  • Possibly lower maintenance

Like any other big change in life, it is recommended that a person should take their time to consider the possible alternatives and outcomes.  Are they going to stay in the same area?  What type of property would suit their needs for the future?

The tax-free exclusion allows a homeowner to take up to $250,000 of gain for single taxpayers and up to $500,000 for married taxpayers.  Part or all of this could be used to generate income for retirement.  Other uses for the equity could include paying off other debt, taking the trip of a lifetime or making a special gift.

There will be expenses involved in selling a home as well as the purchase of a new home.  These will lower the amount of net proceeds you'll have to invest in the new home.

Homeowners should consult their tax professionals to see how this applies to their situation.  Please contact me at (317) 863-2356 or plande@atlasrealty.com if you have any questions about what your home is worth or how long it might take to sell it.  Other things that could be of value are our Homeowners Tax Guide or Sellers Guide.

https://betterhomeowners.com/PhilLande/2019/09/04/Downsizing-is-an-Alternative Wed, 04 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/04/Downsizing-is-an-Alternative https://betterhomeowners.com/PhilLande/2019/09/03/Firsttime-Buyers-Interviewed-Agents Tue, 03 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/03/Firsttime-Buyers-Interviewed-Agents https://betterhomeowners.com/PhilLande/2019/09/02/Labor-Day Mon, 02 Sep 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/09/02/Labor-Day https://betterhomeowners.com/PhilLande/2019/08/30/OptOutPreScreen2019 Fri, 30 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/30/OptOutPreScreen2019 https://betterhomeowners.com/PhilLande/2019/08/29/HB--considering-a-Fixer-upper Thu, 29 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/29/HB--considering-a-Fixer-upper

The process of buying a home can be different based on the price range and whether a mortgage is needed.  While some things are different, others are similar regardless of price, financing or local customs.

Each year, the National Association of REALTORS® surveys buyers and sellers who have purchased or sold in the previous twelve months in order to identify the process and steps taken.  It provides a lot of information for the people who will be going through the process now and in the near future.

44% of all buyers looked online for properties for sale.  This might be considered a logical first step to determine the prices of homes in certain areas and what features they offered.

17% of all buyers stated that their next step was to contact a real estate agent.  In another REALTOR study, it is reported that 87% of all buyers purchased their home through a real estate agent or broker.  Buyers identify a wide range of services the agents offer that is considered valuable in the purchase of a home.

The next step identified by most buyers is to look online for information about the home buying process.  In many cases, agents share this information in their first substantial meeting but since it is identified as the third highest steps taken by buyers, some people may not be getting adequate information from their agents or they are verifying the process as explained to them.

The fourth step identified by buyers is to contact a bank or mortgage lender.  The position this step takes place is interesting because many real estate professionals suggest that it be one of the first things buyers should do.  The reason is to find out how much mortgage they can qualify for, so they are looking for homes in the right price range.  This can save a lot of time and frustration.

The three next highest steps included driving by homes and neighborhoods, talking with a friend or relative about the home buying process and visiting open houses.

The buyers in this study mentioned that they depended on several sources for information during the home search.  The most frequently used were online website, their real estate agent, mobile search device, open houses and yard signs.

The three most difficult steps listed were finding the right property, the paperwork and understanding the process and steps.

You can download a Buyers Guide that has a lot of interesting information.  We have an array of Financial Apps that can provide insight on things like Rent vs. Own, Mortgage Payment and Your Best Investment.  And of course, I'd be happy to schedule an appointment with you to go over all these things and talk to you about finding your next home.  Call me at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2019/08/28/Steps-in-Home-Buying-Process Wed, 28 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/28/Steps-in-Home-Buying-Process https://betterhomeowners.com/PhilLande/2019/08/27/Are-you-living-in-the-home-you-want Tue, 27 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/27/Are-you-living-in-the-home-you-want https://betterhomeowners.com/PhilLande/2019/08/26/Back-to-School--Walking-Safety Mon, 26 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/26/Back-to-School--Walking-Safety https://betterhomeowners.com/PhilLande/2019/08/23/Proceed-with-Care Fri, 23 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/23/Proceed-with-Care https://betterhomeowners.com/PhilLande/2019/08/22/Length-of-Home-Search Thu, 22 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/22/Length-of-Home-Search

Equity build-up could be one of the biggest advantages to buying a home.  There are two distinct dynamics that take place to make this happen: each house payment applies an amount to reduce the mortgage owed and appreciation causes the value of the home to go up.

It is easy to make a projection based on the type of mortgage you get and your estimation of appreciation over the time you expect to own the home.  Even conservative estimates can produce impressive results.

Let's look at an example of a home with a $270,000 mortgage at 4.5% for 30 years and a total payment of $2,047.55 payment including principal, interest, taxes and insurance.  The average monthly principal reduction for the first year is $362.98. If you assume a 3% appreciation on the $300,000 home, the average monthly appreciation is $750 a month.

The total payment of $2,047.55 less $1,112.98 for principal reduction and appreciation makes the net monthly cost of housing, excluding tax benefits, $934.57.  If this hypothetical person was paying $2,500 in rent, it would cost them $1,565.43 more to rent than to own.  In the first year, it would cost them over $18,000 more to rent.

Together, the items in this example contribute over $1,100 to the equity in the home .  This is one of the reasons a home is considered forced savings.  By making your house payments and enjoying increases in value, the equity grows and the net cost of housing decreases by the same amount. 

In this same example, the $30,000 down payment grows to $133,991 in equity in seven years.  While this is equity build-up, the extraordinary growth is attributed to leverage.  Leverage is an investment principle involving the use of borrowed funds to control an asset.

To see what your net cost of housing and the effect of leverage will have on a home in your price range, see the Rent vs. Own.  If you have questions or need assistance, contact me at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2019/08/21/Invest-in-Equity-Buildup Wed, 21 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/21/Invest-in-Equity-Buildup https://betterhomeowners.com/PhilLande/2019/08/20/Real-Property Tue, 20 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/20/Real-Property https://betterhomeowners.com/PhilLande/2019/08/19/Equity-Rich-2019 Mon, 19 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/19/Equity-Rich-2019 https://betterhomeowners.com/PhilLande/2019/08/16/Mortgage-Process-Timing Fri, 16 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/16/Mortgage-Process-Timing https://betterhomeowners.com/PhilLande/2019/08/15/HBgarage-door-manually Thu, 15 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/15/HBgarage-door-manually

35% of respondents, in a recent annual Gallup poll that dates back to 2002, identified real estate as the best long-term investment option compared to 27% who identified stocks.

The top choices included real estate, stocks, savings accounts and gold.  Even with the remarkable prices of the different U.S. stock indices recorded in 2019 through April and May, homes have the highest confidence in the minds of the respondents.

This seems to be based on the stability of the housing market and the expectation that home prices will continue to rise.  Homeowners build equity from both appreciation as well as reducing principal with each payment made. These same factors exist for investors of rental homes in predominantly owner-occupied neighborhoods.

Real estate has another dynamic working to produce favorable investment results due to leverage.  Leverage occurs when borrowed funds are used to control an asset.  When the borrowed funds are at a lower rate than the overall investment results, positive leverage occurs which can increase the yield from an all cash investment.

Gold and savings accounts must be funded with cash.  The maximum borrowed funds allowed for stocks is 50% and generally, at a rate higher than typical mortgage rates.

Homes are a particularly attractive investment because you can enjoy them personally by living in them.  The interest and property taxes are deductible and gains on the profit are excluded up $250,000 for single taxpayers and $500,000 for married taxpayers filing jointly. 

Many people consider an investment in a home for a rental property an IDEAL investment: Income, Depreciation, Equity Build-up & Leverage.

If you have questions or are curious about the process, contact me at plande@atlasrealty.com or (317) 863-2356.

https://betterhomeowners.com/PhilLande/2019/08/14/America-Still-Considers-Real-Estate-the-Best Wed, 14 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/14/America-Still-Considers-Real-Estate-the-Best https://betterhomeowners.com/PhilLande/2019/08/13/Core-Logic-Q12019 Tue, 13 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/13/Core-Logic-Q12019

HUD has reduced the maximum loan-to-value on cash-out refinance loans to 80%.  Previously, a homeowner could borrow up to 85% of the loan to value which would mean that they would be able to take more cash out of the equity in their home.

Previous 85% Loan-to-Value Limit

New 80% Loan-to-Value Limit

Property Value Example

$275,000

Property Value Example

$275,000

Current Loan

$175,000

Current Loan

$175,000

85% Loan to Value

$233,750

80% Loan to Value

$220,000

Closing Costs

$6,000

Closing Costs

$6,000

Cash to Borrower

$52,750

Cash to Borrower

$39,000

 

The new 80% loan to value limit goes into effect on September 1, 2019.  If you make application to refinance your home by August 30, 2019, the 85% loan to value limits will still be in effect.  It is important that your loan officer generate a case number for your application that identifies the date.

If you're considering an FHA refinance, it would be wise to not wait until the end of August because the end of the month is naturally busy for mortgage lenders and with this deadline taking place, it will add to their work load.

If you'd like a recommendation for a trusted mortgage professional, give me a call at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2019/08/12/Cash-Out-Refinance-Changes Mon, 12 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/12/Cash-Out-Refinance-Changes https://betterhomeowners.com/PhilLande/2019/08/09/Back-to-School--Bus-Safety Fri, 09 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/09/Back-to-School--Bus-Safety https://betterhomeowners.com/PhilLande/2019/08/08/Borrowers-Get-Help Thu, 08 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/08/Borrowers-Get-Help

The Internal Revenue Service considers four different types of real estate.  Specific types of properties have benefits based on their classification.  The determination does not depend on the property itself as much as it depends on how the property is used and what the owner's intentions are.

Principal Residence ... a principal residence is the place a person lives or expects to return if they are temporarily away from it.  It could be a single family, detached home or condominium or a duplex, tri-plex or four-unit.  The owner(s) can deduct the qualified mortgage interest and property taxes on the schedule A of their tax return.  There is a capital gains exclusion on profit of up to $250,000 for a single taxpayer and up to $500,000 for a married taxpayer. 

Income Property - is improved property that is rented or leased to tenants as opposed to using it personally.  It can include houses and condos, apartment buildings, office complexes, shopping centers, warehouses and other commercial buildings.  Depreciation is allowed on the improvements.  For property held more than one year, the profits are taxed at long-term capital gains rates.  This type of property is eligible for a tax deferred exchange.

Investment Property ... can be raw land or improved property that is not rented or leased.  This property is not subject to depreciation.  If the property is held for more than one year, the profits are taxed at long-term capital gains rates.  It is also eligible for a tax deferred exchange. 

Dealer Property ... this type of property is primarily considered inventory because the intention is to sell it without intentionally holding it for more than a year.  It could be new construction such as a home builder.  It could be an investor who buys a property and expects to sell it for more.  There is not a requirement to make improvements.  The profits on dealer property are taxed as ordinary, "sweat of the brow" income.  Dealer properties cannot be exchanged.

A second home is like a principal residence in that you can deduct the interest and property taxes on your Schedule A, up to the limits.  A second home, as well as a principal residence, can be rented out up to 14-days a year without threatening the status of the property.  Seconds homes are not eligible for exchange because personal use properties are not allowed.  A second home is not a principal residence and profits are taxed like an investment property.  If you own it for more than a year, it is taxed at long-term capital gains rates.

Vacation homes are rented for more than 14 days a year and are like income property but with some additional rules that apply.  If your personal use is 14 days or less or 10% of the time it is rented, your expenses can be deducted in excess of income.  If you use it for more than 14 days or more than 10% of the number of days it is rented, it is considered personal use and your expenses are limited to the amount of income collected with no losses being deductible.

Taxpayers can strategically change the property type based on their intentions.  A principal residence can be converted to income property.  Dealer property could become a principal residence.  A rental property could become a principal residence.

Professional tax advice is always recommended to be able to understand the information and how it applies to your specific situation. https://betterhomeowners.com/PhilLande/2019/08/07/Determining-Property-Type Wed, 07 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/07/Determining-Property-Type https://betterhomeowners.com/PhilLande/2019/08/06/6-Reasons-to-Own-a-Home Tue, 06 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/06/6-Reasons-to-Own-a-Home https://betterhomeowners.com/PhilLande/2019/08/05/Home-Equity-Loans Mon, 05 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/05/Home-Equity-Loans https://betterhomeowners.com/PhilLande/2019/08/02/More-people-will-be-convinced-by-your-logic Fri, 02 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/02/More-people-will-be-convinced-by-your-logic

Making additional principal contributions to your mortgage will save interest, build equity and shorten the term on a fixed-rate mortgage.  The concept is sound but bi-weekly may not be the best way to do it. 

One strategy is to make a payment every two weeks throughout the year in the amount of half of your required principal and interest payment.  Twenty-six half payments would equal thirteen full payments which would be one extra full payment per year applied to the principal.

The practical problem with this approach is that lenders may not accept partial payments throughout the year.  This means that you'd have to arrange a third-party company to accept your payments and forward them at a time that is acceptable to the lender.  Likely, there would be a fee for providing this service.

Another problem with this approach is that many people are paid on the first and fifteenth of the month and making payments every two weeks may not be practical due to cash flow.

Another way to accomplish this saving would be to make one additional principal and interest payment per year that would be applied to the principal owed.  The practical issue here is that it might be an amount that isn't convenient unless a person receives a bonus annually.

There is a much easier way to handle this.  Determine how much you can afford to pay monthly in addition to your regular mortgage payment.  Use your bank's autopay program to write the check and send it to the lender.

This will make the process automatic and after a while, you'll probably forget that you're even paying extra.  However, when you see how your unpaid balance is reducing faster and your equity is growing, you'll feel good about your decision.

Use this Equity Accelerator to see how it would work with your mortgage.

https://betterhomeowners.com/PhilLande/2019/08/01/BiWeekly-is-a-Weak-Choice Thu, 01 Aug 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/08/01/BiWeekly-is-a-Weak-Choice

Leverage is an investment term that describes the use of borrowed funds to control an asset; sometimes referred to as using other people's money.  Borrowed funds can affect the investment in your home positively.

For instance, if you had a $100,000 rental property, collected the rents and paid the expenses and had $10,000 left, you would earn a 10% return (divide the $10,000 by the $100,000.)  With no loan on the property, there is no leverage.

If you decided to get an 80% mortgage at 8%, you would owe an additional $6,400 in expenses leaving you only $3,600 net.  However, your return would grow to 18% because your investment is now $20,000 in cash (divide the $3,600 by $20,000.)

Leverage, the use of borrowed funds, causes the return to increase in this example.  While, most people associate leverage with rental properties, it also applies to a home.  The larger the mortgage, the more leverage you have.  A FHA mortgage with a 3.5% down payment has more leverage than an 80% loan.

Assume we're looking at a $295,000 purchase price with 3% closing costs and a 4.5% mortgage for 30 years with a five-year holding period.  The following table shows the return based on different down payments and appreciation rates.  The initial investment is the down payment plus closing costs.  The equity build-up at end of year five is the result of normal principal reduction and appreciation.

Down Payment

1% Appreciation

2% Appreciation

3% Appreciation

3.5%

21%

28%

34%

10%

12%

17%

21%

20%

7%

10%

13%

Another way to look at the 3.5% down payment example with 3% appreciation would be to say that a $10,325 down payment plus $8,850 in closing costs could grow into $82,482 of equity in a five-year period producing a 34% rate of return on the initial investment.

Estimate what your initial investment could grow to using this Rent vs. Own.  If you need any help, let me know at (317) 863-2356 or plande@atlasrealty.com. https://betterhomeowners.com/PhilLande/2019/07/31/Get-Leverage-Working-for-You Wed, 31 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/31/Get-Leverage-Working-for-You https://betterhomeowners.com/PhilLande/2019/07/30/Mistakes-When-Pricing Tue, 30 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/30/Mistakes-When-Pricing https://betterhomeowners.com/PhilLande/2019/07/29/Rate-Lock Mon, 29 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/29/Rate-Lock https://betterhomeowners.com/PhilLande/2019/07/26/Locate-Shutoff Fri, 26 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/26/Locate-Shutoff https://betterhomeowners.com/PhilLande/2019/07/25/Get-cash-out-of-a-home Thu, 25 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/25/Get-cash-out-of-a-home

Two things can happen when the mortgage rates go up before you've found a home or locked-in your mortgage.  You'll either pay the current mortgage rate which means a higher payment, or you'll have to increase your down payment to keep the monthly payment at the same level.

If the rate were to go up by ½%, the payment on a $275,000 mortgage would increase by $82.87 per month for the entire 30-year term.  That would increase the cost of the home by $29,835.

Some people are purchasing the maximum home that they can qualify for.  In that case, they cannot qualify for a higher payment and the only way to buy the same price home is to put more money down which may not be a possibility.  The other alternative is to buy a lower price home which may not be in the same area or size which will involve some compromises.

The rate is not the only dynamic that affects buyers waiting to purchase.  The home they want could sell to someone else.  Prices could increase as new homes come on the market.  The question that many buyers ask themselves when they become a victim of the consequences of delay is "What could we have spent the money on if we didn't have to make a higher payment?"

Mortgage rates are very attractive currently and within ½% of the all time low of 3.35% in December 2012.  The highest rate was 18.45% in October 1981.  Whether you're purchasing or refinancing, it may not be this low again.

To see how it will affect the payment, plug your numbers into this Cost of Waiting to Buy calculator or call me at (317) 863-2356 and I'll help you with it.

https://betterhomeowners.com/PhilLande/2019/07/24/Delay-Will-Usually-Cost-More Wed, 24 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/24/Delay-Will-Usually-Cost-More https://betterhomeowners.com/PhilLande/2019/07/23/One-inch-of-flood-water Tue, 23 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/23/One-inch-of-flood-water https://betterhomeowners.com/PhilLande/2019/07/22/Mortgage-Rate-History Mon, 22 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/22/Mortgage-Rate-History https://betterhomeowners.com/PhilLande/2019/07/19/Open-Houses Fri, 19 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/19/Open-Houses https://betterhomeowners.com/PhilLande/2019/07/18/I-wish-we-had-known-this Thu, 18 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/18/I-wish-we-had-known-this

Square footage is commonly used to determine if a home will fit a buyer's needs.  The price per square foot can be used to compare the costs of different homes and even, determine the value of a property.

The challenge is what is the source of the square footage measurement and how was it done.

County records use square footage to determine assessed value for property tax purposes.  They are assumed to be reliable but there can be inaccuracies in their tax rolls.  Another source of square footage could be from the house plans but the problem there is that the builder may have made modifications, or a subsequent owner could have made additions.

Appraisers are required to measure the home to determine square footage and they generally, adhere to a standard method which leads to uniformity in the industry.  The ANSI, American National Standards Institute, guidelines are considered the standard but there are no laws governing the process.

Because basements are below grade level, regardless of whether they are finished, they are typically not counted toward gross living area.  Attics because they are above grade level can be included in gross living area if they are finished to the same standard as the rest of the home and they meet the minimum height requirement of seven feet.

Unfinished areas are usually not considered in the square footage because it is not livable.

For detached properties, it is common to measure the perimeter of the house but to only include the living areas, not porches, patios or garages.  Gross living area includes stairways, hallways, closets with minimum height and bathrooms.  Covered, enclosed porches would only be considered if they use the same heating system as the house.

By contrast, condominiums, generally measure the inside area of the unit. Some appraisers may add six inches to account for the wall thickness.  If you were to compare the total of the interior room measurements of a detached home, it would be far less than the stated square footage using the normal method.

If the county records are significantly different from the appraisal or the plans, it will be necessary to determine which one is more accurate.  This may require getting the home measured by an appraiser which should be less than paying for a complete appraisal.

https://betterhomeowners.com/PhilLande/2019/07/17/Measuring-Square-Footage Wed, 17 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/17/Measuring-Square-Footage https://betterhomeowners.com/PhilLande/2019/07/16/Borrowers-Get-Help Tue, 16 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/16/Borrowers-Get-Help https://betterhomeowners.com/PhilLande/2019/07/15/Who-Pays-the-Commission Mon, 15 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/15/Who-Pays-the-Commission

Moving is a big job and having help to guide you through the process is valuable.

This free Moving Guide has lots of information about the moving timeline, forwarding mail, tips on packing, selecting a mover and many other things that every person needs to know before they move.

Click here to download the Moving Guide.

https://betterhomeowners.com/PhilLande/2019/07/12/Moving-is-a-Big-Job Fri, 12 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/12/Moving-is-a-Big-Job https://betterhomeowners.com/PhilLande/2019/07/11/Dangerous-Pet-Situations Thu, 11 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/11/Dangerous-Pet-Situations

Aside from standing water in your yard or water running out from under a sink, the first indication that you might have a water leak comes from a larger than normal water bill.  Before calling a leak specialist or a plumber, there is a simple diagnostic you can perform.

Go through your home and make certain that all the faucets are turned off and that the toilets have indeed stopped filling the reserve.  Then, go to the water meter and make a mark on the lens where the dial is currently.  If there is water in the meter box, the meter itself could be leaking.

If the meter is still turning, the leak is between the meter and the house. By inspecting the area between the meter and the house, you can look for soft, muddy areas or grass that is greener than the rest of the yard.

One of the hardest places to isolate a leak is in a swimming pool.  If you have an automatic filler, like in a toilet, you'll need to turn it off.  Mark the water line on the wall and wait to see if the water level goes down.  There will be a certain amount attributable to evaporation.

Some leaks can be very difficult to locate.  Plumbers, by the very nature of their job, will be more familiar with tracking down the source of the leak than a homeowner.  There are some non-invasive techniques like acoustic listening devices, heat scanners and miniature video cameras on fiber optics that professionals can use.

Leaks can be expensive from the loss of water and the resulting damage that it can cause.  Determining where the location of the leak can also cause damage because plumbing is usually concealed in walls or under concrete. For particularly difficult to locate leaks, discuss how the professional intends to locate the leak and minimize damage in the process.

https://betterhomeowners.com/PhilLande/2019/07/10/Checking-for-Water-Leaks Wed, 10 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/10/Checking-for-Water-Leaks https://betterhomeowners.com/PhilLande/2019/07/09/Why-shop-for-a-mortgage Tue, 09 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/09/Why-shop-for-a-mortgage https://betterhomeowners.com/PhilLande/2019/07/08/Warning--Cameras Mon, 08 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/08/Warning--Cameras https://betterhomeowners.com/PhilLande/2019/07/05/Consumer-Sentiment Fri, 05 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/05/Consumer-Sentiment https://betterhomeowners.com/PhilLande/2019/07/04/Independence-Day Thu, 04 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/04/Independence-Day

Owning a home is the first step to building equity.  Tenants build equity but not for themselves; they build it for the owners.

Equity is the difference in the value of the home and what is owed on the home.  There are two dynamics that cause this to grow: appreciation and principal reduction.

As the home increases in value, it is said to appreciate.  Various authorities will annualize an appreciation rate based on average sales prices from one year to the next.  Since appreciation is based on supply and demand as well as economic conditions, it will not be the same year after year. 

If you looked at a ten to twelve-year period, some would be higher than others and there may even be some individual years that it is flat or even declined.  For the most part, values tend to appreciate over time.

Most mortgages are amortized which means that a portion of the payment each month is applied to the principal in order to pay off the loan by the end of the term.  A $300,000 mortgage at 4.5% for 30 years has $395.06 applied to the principal with the first payment.  A slightly larger amount is applied to the principal each following month until the loan is paid with the 360th payment.

If additional principal payments are made, it will save interest, build equity faster and shorten the term of the mortgage.  Using the previous example, if an additional $250.00 principal contribution was made with each payment, it would only take 270 payments to retire the loan instead of 360.  It would save $69,305 in interest and shorten the mortgage by 7.5 years.

To see the dynamics of equity due to appreciation and principal reduction, look at the Rent vs. Own.  To see the effect of making additional principal contributions on your equity, look at the Equity Accelerator.  

https://betterhomeowners.com/PhilLande/2019/07/03/Building-Equity Wed, 03 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/03/Building-Equity https://betterhomeowners.com/PhilLande/2019/07/02/Favorite-Foods-to-Grill Tue, 02 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/02/Favorite-Foods-to-Grill https://betterhomeowners.com/PhilLande/2019/07/01/Primary-Mortgage-Market-Survey Mon, 01 Jul 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/07/01/Primary-Mortgage-Market-Survey https://betterhomeowners.com/PhilLande/2019/06/28/Thomas-Paine-quote-051 Fri, 28 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/28/Thomas-Paine-quote-051 https://betterhomeowners.com/PhilLande/2019/06/27/Cost-of-Waiting-to-Buy Thu, 27 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/27/Cost-of-Waiting-to-Buy

Whether you're an owner now or expect to be one in the future, it is important to be familiar with the federal tax laws that affect homeownership.  Since personal income tax was enacted in 1913 with the 16th amendment, homes have had preferential treatment.

The mortgage interest deduction is based on up to $750,000 of acquisition debt used to buy, build or improve a principal residence.  In addition to the interest, the property taxes are deductible, limited to the new $10,000 limit on the aggregate of state and local taxes (SALT).  The taxpayer may also deduct interest and property taxes subject to limits on a second home.

Homeowners can decide each year whether to take itemized personal deductions or the allowable standard deduction which was significantly increased under the Tax Cuts and Jobs Act of 2017.

Single taxpayers may exclude up to $250,000 of capital gain on the sale of their home and up to $500,000 if married filing jointly.  They must have owned and lived in the home for at least two of the last five years.  For gains more than these amounts, a lower, long-term capital gains rate is paid rather than one's ordinary income tax rate.

Capital improvements made to a home will increase the basis and lower the gain.  Homeowners are probably familiar that large dollar expenses like roofs, appliances or major remodeling are capital improvements.  However, many lower dollar items may also be considered improvements if they materially add value or extend the life of the property or adapts a portion of the home to a new use. 

Homeowners are urged to keep records of money they spend on the home that they own over the years so that their tax professional can decide at the time of sale what they must report to IRS.

You can download a helpful Homeowners Tax Guide that explains in more detail and includes a worksheet to keep track of the basis of your home and capital improvements.

https://betterhomeowners.com/PhilLande/2019/06/26/Taxes-and-the-Homeowner Wed, 26 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/26/Taxes-and-the-Homeowner https://betterhomeowners.com/PhilLande/2019/06/25/Replace-smoke-detectors Tue, 25 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/25/Replace-smoke-detectors https://betterhomeowners.com/PhilLande/2019/06/24/4-Cs-Mortgage-Qualifying-Guidelines Mon, 24 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/24/4-Cs-Mortgage-Qualifying-Guidelines https://betterhomeowners.com/PhilLande/2019/06/21/Home-Buying-Process Fri, 21 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/21/Home-Buying-Process https://betterhomeowners.com/PhilLande/2019/06/20/Whats-the-difference Thu, 20 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/20/Whats-the-difference

June and July are the busiest home sale months of the year. When inventory is in short supply and you may be competing with other offers, it is important to show the seller you're serious. Make your offer look as good as possible because you may not get the chance to make or accept a counter-offer.

Put yourself in the seller's shoes.  Your home has just gone on the market.  There is lots of activity and suddenly, there is more than one offer to purchase.  The seller's first consideration may be to accept the highest offer but there are many other things to consider like closing dates, closing costs, possible repairs, contingencies and of course, the ability of the borrower to get a loan.

Offer a fair price for the property in your initial purchase agreement.  It shows sincerity and good faith that you're actually trying to purchase the home and not trying to take advantage of the seller.  The old adage that you can always go up later may never happen if there are multiple offers on the property in the beginning.

  1. Remove the uncertainty that you may not be approved for a mortgage by having a pre-approval letter from your mortgage company.
  2. Show your sincerity by increasing the normal amount of earnest money customary for the area and price of the home.  The earnest money will be applied toward your down payment and closing costs.  Consider placing even more money in escrow when the contingencies have been met.
  3. Specify a closing date in the contract but acknowledge that you can be flexible to accommodate the sellers' moving date.  If it becomes an issue, it still must be mutually agreed upon.
  4. Make the contingency periods shorter if possible to make the seller feel that they'll know sooner that the offer is solid.
  5. If the contingency really isn't important to you, leave it out of the offer.  The more contingencies included in a contract, the more the seller will wonder what might happen to keep it from closing.
  6. Write a personal note to the seller explaining why you like and want their home.  Consider including a picture of your family and pets.
  7. If you're not using a digital contract, physically sign the offer with a felt tip pen of contrasting color.  You'd be surprised how this adds a personal touch to the offer.

One way to eliminate the competition of multiple offers is by not procrastinating.  When you have decided to write a contract, don't wait; do it immediately and ask your agent to deliver it quickly.  Your agent will be able to help you craft a solid offer that makes you look serious and can give you advice that may be unique to your situation.

https://betterhomeowners.com/PhilLande/2019/06/19/Show-Them-Youre-Serious Wed, 19 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/19/Show-Them-Youre-Serious https://betterhomeowners.com/PhilLande/2019/06/18/Normal-toilet-use Tue, 18 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/18/Normal-toilet-use https://betterhomeowners.com/PhilLande/2019/06/17/Tax-benefits-for-homeowners Mon, 17 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/17/Tax-benefits-for-homeowners https://betterhomeowners.com/PhilLande/2019/06/14/4-reasons-to-buy-now Fri, 14 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/14/4-reasons-to-buy-now https://betterhomeowners.com/PhilLande/2019/06/13/What-buyers-want-from-their-agent Thu, 13 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/13/What-buyers-want-from-their-agent

You've been planning this trip for some time and almost every detail has been considered...or has it?  Have you thought about how to protect your home while you're out of town?  What's going to make sure that everything you left is still there in you return?

Nothing could ruin a trip more than coming back to find out your home has been burglarized or worse.  It makes sense to spend a little time before you leave on making sure your home is as safe and sound as it can be.

There are a host of devices to use across the Internet including camera door bells, video cameras, door locks, garage door openers, light and thermostat controls.  You can monitor your home whenever you have an Internet connection.  The question is whether you want the distraction from your trip.

Consider these low-tech suggestions along with your other normal efforts:

  • Tell your neighbors you'll be out of town and to be aware of any unusual activity.
  • Notify your alarm company
  • Discontinue your postal delivery
  • Use timers on interior lights to make it appear you're home as usual.
  • Don't make it easy for burglars by leaving messages on voice mail or posting on social networks.
  • Post on social networks after you've returned about your vacation.
  • Remove the hidden spare keys and give it to a trusted neighbor or friend.
  • Lock everything, double-check and set the alarm.
  • Take pictures of your belongings in case you need them.
  • Disconnect TVs and other equipment in case of unexpected power surges.
  • Adjust your thermostat.
  • Arrange for lawn care.
  • Consider disconnecting the garage door opener.
  • Put irreplaceable valuables in a safety deposit box.

It's nice to go out of town on a well-deserved trip and it's always nice to get back home...especially when it is just the way you left it.

https://betterhomeowners.com/PhilLande/2019/06/12/Dont-Leave-Home-Without... Wed, 12 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/12/Dont-Leave-Home-Without... https://betterhomeowners.com/PhilLande/2019/06/11/Lowerpropertytaxes Tue, 11 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/11/Lowerpropertytaxes https://betterhomeowners.com/PhilLande/2019/06/10/Checkout-the-HOA Mon, 10 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/10/Checkout-the-HOA https://betterhomeowners.com/PhilLande/2019/06/07/Return-on-Investment Fri, 07 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/07/Return-on-Investment https://betterhomeowners.com/PhilLande/2019/06/06/Things-of-Value Thu, 06 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/06/Things-of-Value

IRS has provisions for homeowners regarding the sale of a principal residence that allows for temporarily renting the home without losing the ability to exclude the gain if the home is sold under the correct conditions.

The rules for the exclusion of gain on the sale of a principal residence are:

  • Up to $250,000 of gain may be excluded for single taxpayers and up to $500,000 for married taxpayers filing jointly.
  • Ownership and Use must have been a principal residence for two of the five years preceding the date of sale (closing date).  This allows for a temporary rental for up to three years maximum.
  • Either spouse may meet the ownership test.
  • Both spouses must meet the use test.
  • No exclusion has been used in the previous 24-month period.

Let's pretend that a person had owned a home from more than two years.  This person married and moved into their new spouse's home two years, six months ago.  That person decided to sell the home and would have approximately $200,000 of gain in the sale.

If the property is put on the market, sold and closed prior to the three-years that they moved out, the home would still be eligible for the section 121 exclusion on the sale of a principal residence.  If the sales closes after that three-year period, the owner would owe tax on the gain.  If the long-term capital gains rate for the owner was 15%, they would owe approximately $30,000 in taxes.

If you or a person you know is in a situation like this, they should certainly seek professional tax advice as well as discussing the marketing and value of the property with their real estate professional.  This is something that I have experience with; call me at (317) 863-2356.  The timing is very important and critical to a favorable outcome.


https://betterhomeowners.com/PhilLande/2019/06/05/Temporarily-Renting-a-Home Wed, 05 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/05/Temporarily-Renting-a-Home https://betterhomeowners.com/PhilLande/2019/06/04/Best-months-to-sell Tue, 04 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/04/Best-months-to-sell https://betterhomeowners.com/PhilLande/2019/06/03/Home-water-usage Mon, 03 Jun 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/06/03/Home-water-usage https://betterhomeowners.com/PhilLande/2019/05/31/Freshen-your-disposer Fri, 31 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/31/Freshen-your-disposer https://betterhomeowners.com/PhilLande/2019/05/30/Call-Your-REALTOR Thu, 30 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/30/Call-Your-REALTOR

For people who have experienced a distressed sale of a home and gotten their finances and credit back in shape, there can still be an unanswered question of "How long do we have to wait to qualify for another mortgage."  The loan types for the new loan will differ in amounts of time based on the event. 

The different lending authorities, VA, FHA, Fannie Mae (FNMA) and Freddie Mac (FHLMC), establish their own waiting periods.  A borrower may be eligible to qualify for one type of mortgage before another type, even though during this waiting period, that the person was current on all payments and maintained a history of good credit.

The following chart indicates how long a person might have to wait.

waiting period for distressed sales.png

A recommended lender can give you specific information regarding your individual situation and can make suggestions that will improve your ability to qualify for a mortgage.  This process should be started before looking at homes because of the time constraints listed here can vary based on current requirements and possible extenuating circumstances of your case.

We want to be your personal source of real estate information and we're committed to helping from purchase to sale and all the years in between.  Call us at (317) 863-2356 for lender recommendations.


https://betterhomeowners.com/PhilLande/2019/05/29/Time-to-Buy-Again Wed, 29 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/29/Time-to-Buy-Again

There are telltale signs that a home is wasting energy that every homeowner should be aware.

  • Drafts ... if you feel drafts in rooms when doors and windows are closed, it can indicate a leak that can adversely affect heating or air-conditioning.
  • Moisture on windows ... condensation occurs when warm moist air meets cooler dry air like when a bathroom mirror steams up after a shower.  The inside or outside of window can sweat due to temperature differentials.
  • Ice dams form at the edge of a room and prevent melting snow from running off the roof.  The water that backs up can leak into the home causing damage.
  • Higher than normal utility bills indicate that more energy is being required to keep the property at a desired temperature.
  • Excessive dust in a home can be the result of dirty HVAC filters or from air duct leaks that could be sucking in dust from the attic.
  • Mold thrives in warm, moist conditions which could exist because of leaking roof, walls, windows or poor ventilation.
  • Sinus problems affecting residents can be the result of conditions mentioned above like dust and mold.

Recognizing these conditions exist and resolving them can bring a homeowner more comfort and a safer, healthier home.  The cost of repairs may be able to be recaptured through utility savings.  Preserving energy provides a cleaner environment by eliminating greenhouse gas emissions that contribute to climate change.


https://betterhomeowners.com/PhilLande/2019/05/28/Home-Energy-Loss Tue, 28 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/28/Home-Energy-Loss https://betterhomeowners.com/PhilLande/2019/05/27/2018-PHBS--veteran-buyers Mon, 27 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/27/2018-PHBS--veteran-buyers https://betterhomeowners.com/PhilLande/2019/05/24/A-Running-Toilet Fri, 24 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/24/A-Running-Toilet https://betterhomeowners.com/PhilLande/2019/05/23/What-does-your-policy-cover Thu, 23 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/23/What-does-your-policy-cover

According to the 2018 Profile of Buyers and Sellers, 52% of buyers want help to find the right home to purchase.  Physically locating the home is certainly part of what buyers want from their agent but finding the right home at the right price and terms is also crucial.

87% of buyers purchased their home through a real estate agent or broker.  Slightly more than half of buyers were referred to their real estate professional by/or is a friend or relative or had used the agent previously to buy or sell a home.

There are tech tools that can be used together with the expertise and experience of your real estate professional to make the home buying process efficient and effective.

Listing Alert ... while this service is called by other names, the buyer identifies the specifics about the home they want, and it will notify them directly when a new listing comes on the market that matches their needs.

Real estate smartphone apps ... imagine driving a neighborhood, seeing a sign and immediately being able to know the price and specifics about the home; very convenient.  There are a variety of different apps available such as Homesnap, and others, ask your agent for their recommendation before installing one.

Digital documents ... companies like DocuSign have revolutionized real estate negotiations by doing everything digitally so that you're not going back and forth between the parties signing and initialing changes.  It is safe and secure and your agent will handle this end of it for you.

ColorSnap Visualizer ... this Sherwin Williams app for iPad allows you to paint walls on a picture, match photos to find paint colors and other things before you commit to a color.

Google maps ... plug in an address on Google Maps and you see street view of the home, satellite view, surrounding businesses, traffic speed and other things.

Sex Offender Registry ... NSOPW, the National Sex Offender Public Website is a safety resource that provides the public with access to sex offender data nationwide.

Financial Calculators ... fill in the blank applications that can illustrate the benefits of renting vs. owning, Equity Accelerator, Adjustable Rate Comparison, Cost of Waiting to Buy and many other homeowner situations.

Free Public Records Directory - OnlineSearches provides access to public record sources like deeds and assessor and property tax records.  While this service is free, some state and county agencies may charge fees for accessing public records.

Virtual open house ... an alternative to physically viewing a home is to look at the multiple photos online.  If the property is interesting, you can schedule a physical showing with your agent.

Check your credit ... Order free credit reports from Equifax, Experian and TransUnion each once a year at www.AnnualCreditReport.com.

The final recommendation is your phone.  When you have a question, contact your agent.  Calling another agent may seem like an expedient way to get an answer, especially if you cannot get a hold of your agent but it could inadvertently, cause issues.

Your real estate professional can assist you with these and other tools to help you find the right home.  If you have any questions, feel free to call us at (317) 863-2356.


https://betterhomeowners.com/PhilLande/2019/05/22/Tech-to-Find-the-Right-Home Wed, 22 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/22/Tech-to-Find-the-Right-Home https://betterhomeowners.com/PhilLande/2019/05/21/How-long-do-you-need-to-keep-these Tue, 21 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/21/How-long-do-you-need-to-keep-these https://betterhomeowners.com/PhilLande/2019/05/20/Hold-Mail-Service Mon, 20 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/20/Hold-Mail-Service https://betterhomeowners.com/PhilLande/2019/05/17/Dangerous-food-for-your-dog Fri, 17 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/17/Dangerous-food-for-your-dog https://betterhomeowners.com/PhilLande/2019/05/16/VA-loan-advantages Thu, 16 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/16/VA-loan-advantages

Heating and air-conditioning are frequently referred to as the "comfort systems."  If one has gone out in the dead of winter or the heat of summer, lack of comfort becomes a primary concern.  Regular maintenance with a HVAC checklist is something that homeowners can do themselves to ensure that the units operate properly.

Periodically

  • Change your filter every 90 days; every 30 days if you have shedding pets. 
  • Maintain at least two feet of clearance around outdoor air conditioning units and heat pumps.
  • Don't allow leaves, grass clippings, lint or other things to block circulation of coils.
  • Inspect insulation on refrigerant lines leading into house monthly and replace if missing or damaged.

Annually, in spring

  • Confirm that outdoor air conditioning units and heat pumps are on level pads.
  • Pour bleach in the air conditioner's condensation drain to clear mold and algae which can cause a clog.
  • Avoid closing more than 20% of a home's registers to keep from overworking the system.
  • Replace the battery in the home's carbon monoxide detector.


While using this list will prevent some things that may impede the comfort system's proper performance, it is recommended that you have your units serviced annually by a licensed contractor.  Furnaces should also be inspected for carbon monoxide leaks. Preventative maintenance may help avoid costly repairs.


https://betterhomeowners.com/PhilLande/2019/05/15/Comfort-Systems Wed, 15 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/15/Comfort-Systems https://betterhomeowners.com/PhilLande/2019/05/14/Character-is-much-easier-kept-than-recoverd Tue, 14 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/14/Character-is-much-easier-kept-than-recoverd https://betterhomeowners.com/PhilLande/2019/05/13/Method-Used-to-Sell-a-Home Mon, 13 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/13/Method-Used-to-Sell-a-Home https://betterhomeowners.com/PhilLande/2019/05/10/Happy-Mothers-Day Fri, 10 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/10/Happy-Mothers-Day https://betterhomeowners.com/PhilLande/2019/05/09/Equity-Buildup Thu, 09 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/09/Equity-Buildup

Your income tax is probably filed for last year by now and you've been through your expenses for the year.  Money spent on repairs to your home is not deductible but being aware of how much you spent last year may help you make a decision that could save you money this year.

Sellers, often, provide a home warranty to buyers to give them peace of mind by limiting some of the out-of-pocket money spent on unexpected repairs for one year.  Home warranties can be renewed by the buyer by paying the annual fee and any homeowner can purchase one for their home whether they had one when they bought it or not.

A home service contract typically covers mechanical systems and built-in appliances in the home.  Many times, these items are not covered by the homeowner's insurance policy.  They can also include other things such as pool and spa equipment, and free-standing appliances like refrigerators, washers and dryers.

The process is simple.  It doesn't cover pre-existing conditions.  Once a plan is in effect, you call to report a claim.  The company will assign a local profession to assess the problem and if covered, they will repair or replace the item.  You will only pay a service fee.

Home protection plans can range in prices depending on area and coverages.  Most start around $400-500 a year which could easily cover the cost for one claim alone.

For more information on home warranties in general, you can go to HomeServiceContract.org which is an association representing some of the premier home service contract providers.  If you'd like to have a recommendation based on companies we work with in our area, give me a call at (317) 863-2356.


https://betterhomeowners.com/PhilLande/2019/05/08/A-Home-Warranty-Can-Save-Money Wed, 08 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/08/A-Home-Warranty-Can-Save-Money https://betterhomeowners.com/PhilLande/2019/05/07/Hot-water-is-a-waste Tue, 07 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/07/Hot-water-is-a-waste https://betterhomeowners.com/PhilLande/2019/05/06/88-of-home-buyers-financed Mon, 06 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/06/88-of-home-buyers-financed https://betterhomeowners.com/PhilLande/2019/05/03/ReThink-Lemons-in-the-Disposer Fri, 03 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/03/ReThink-Lemons-in-the-Disposer https://betterhomeowners.com/PhilLande/2019/05/02/FreddieMac-Rates Thu, 02 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/02/FreddieMac-Rates

There are an increasing number of real estate companies, termed iBuyers, like Open Door, Offerpad, Zillow, Knock and others that market a service that has an appeal to homeowners.  The pitch for these quick cash offer companies will include some variation of "let us buy your home in days without the normal hassles of listing."

This approach attempts to provide an alternative to selling a home in a normal manner at the expense of not realizing the full equity a homeowner is entitled. There is no fiduciary relationship requiring the broker to put a seller's best interest above their own interest.  An iBuyer does not represent a seller and does not owe client-level services like loyalty, obedience disclosure among other things required by most state license laws.

The offer is based on an automated valuation model, many times, without a physical inspection of the home.  In some cases, a contract is written but there are provisions that allow iBuyers time to possibly "flip" the property to an investor or use an "out" in the contract to void the sale.

The reality is that a company cannot stay in business if they pay too much for the property.  The iBuyer becomes the Seller who now must be concerned with pricing the home properly to cover the normal selling expenses as well as repairs, improvements, and holding costs that will be incurred until the property sells.

There could be circumstances that make it necessary for a homeowner to sell their home at a discount.  The seller could be in a distressed situation needing immediate cash.  They might need a quick sale and don't want to be bothered with repairs or marketing efforts.  Or possibly, they may have found their next home   and need to act quickly. The instant liquidity comes at a cost to the seller in lower proceeds from the sale.

To realize the maximum possible equity, a real estate professional in your area can advise you about the fair market value of your home, a reasonably expected sales price, the costs involved and how long it will take.  Before accepting a price to sell your home to a wholesaler, you owe it to yourself and your family to find out what you can expect if you take a conventional sales route.


https://betterhomeowners.com/PhilLande/2019/05/01/iBuyers--Convenient-at-a-Price Wed, 01 May 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/05/01/iBuyers--Convenient-at-a-Price https://betterhomeowners.com/PhilLande/2019/04/30/2018PHBS--who-are-the-firsttime-buyers Tue, 30 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/30/2018PHBS--who-are-the-firsttime-buyers https://betterhomeowners.com/PhilLande/2019/04/29/Homeowners-Affordability-Index-Feb-2019 Mon, 29 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/29/Homeowners-Affordability-Index-Feb-2019 https://betterhomeowners.com/PhilLande/2019/04/26/What-goes-in-your-home-safe Fri, 26 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/26/What-goes-in-your-home-safe https://betterhomeowners.com/PhilLande/2019/04/25/7-of-homes-sold-FSBO Thu, 25 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/25/7-of-homes-sold-FSBO

The FNMA HomeStyle conventional mortgage allows a buyer to purchase a home that needs renovations and include them in the financing.  This facilitates the purchase of the home and the renovations in one loan rather than getting a separate second mortgage or home equity line of credit.

The combination of these loans should save closing costs as well as interest rates which would typically be higher on a home improvement loan.

The borrower will need to have an itemized, written bid from a contractor covering the scope of the improvements.  Any type of renovation or repair is eligible if it is a permanent part of the property.  Improvements must be completed within 12 months from the date the mortgage loan is delivered.

  • 15 and 30-year fixed rate and eligible adjustable rate loans are available.
  • Typical FNMA down payments are available starting as low as 3% for a one-unit principal residence to 25% for three and four-unit principal residence and one-unit investment properties.
  • Borrower must choose his or her own contractor to perform the renovation.
  • Lender must review the contractor hired by the borrower to determine if they are adequately qualified and experienced for the work being performed. The Contractor Profile Report (Form 1202) can be used to assist the lender in making this determination.
  • Borrowers must have a construction contract with their contractor. Fannie Mae has a model Construction Contract (Form 3734) that may be used to document the construction contract between the borrower and the contractor.
  • Plans and specifications must be prepared by a registered, licensed, or certified general contractor, renovation consultant, or architect. The plans and specifications should fully describe all work to be done and provide an indication of when various jobs or stages of completion will be scheduled (including both the start and job completion dates)

Up to 50% of the renovation funds may be advanced for the cost of materials after the closing of the loan.

This mortgage does have a provision for the borrower to do a portion of the work themselves if it doesn't exceed 10% of the total project and it must pass inspection on completion just as the contractor's work.

It is recommended that borrowers thoroughly research this program before they commit to a loan.  For detailed information, see FNMA HomeStyle Renovation Mortgage and Selling Guide Announcement SEL-2017-02.   It is important to work with a mortgage officer who is familiar with these loans who can guide you through the process.


https://betterhomeowners.com/PhilLande/2019/04/24/One-Loan-for-Purchase--Renovations Wed, 24 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/24/One-Loan-for-Purchase--Renovations https://betterhomeowners.com/PhilLande/2019/04/23/No-Credit-History Tue, 23 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/23/No-Credit-History https://betterhomeowners.com/PhilLande/2019/04/22/First-Steps-During-Home-Buying-Process Mon, 22 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/22/First-Steps-During-Home-Buying-Process https://betterhomeowners.com/PhilLande/2019/04/19/Jim-Rohn-Inspirational Fri, 19 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/19/Jim-Rohn-Inspirational https://betterhomeowners.com/PhilLande/2019/04/18/Organize--clear-financial-clutter Thu, 18 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/18/Organize--clear-financial-clutter

Periodically, you need to rid yourself of things that are taking up you time and space to make room for more of what you like and want.

There's a frequently quoted suggestion that if you haven't used something for two years, maybe it isn't essential in your life. 

If you have books you'll never read again, give them to someone who will.  If you have a deviled egg plate that hasn't been used since the year your Aunt Phoebe gave it to you, it's out of there.  Periodically, go through every closet, drawer, cabinet, room and storage area to get rid of the things that are just taking up space in your home and your life.

Every item receives the decision to keep or get rid of.  Consider these questions as you judge each item:

  • When was the last time you used it?
  • Do you believe you'll use it again?
  • Is there a sentimental reason to keep it?

You have four options for the things that you're not going to keep. 

  1. Give it to someone who needs it or will appreciate it
  2. Sell it in a garage sale or on Craig's List.
  3. Donate it to a charity and receive a tax deduction
  4. Discard it to the trash.

Start with your closet.  If you haven't worn something in five years, get rid of it.  Then, go through the things again and if you haven't worn it in two years, ask yourself the real probability that you'll wear it again.

Another way to do it is to move it from your active closet to another closet.  If a year goes by in the other closet, the next time you go through this exercise, those clothes are on their way out.

If the items taking up space are financial records and receipts, the solution may be to scan them and store them in the cloud.  There are plenty of sites that will offer you several gigabytes of free space and it may cost as little as $10 a month for 100 GB at Dropbox, to get the additional space you need.  It will certainly be cheaper than the mini-storage building.


https://betterhomeowners.com/PhilLande/2019/04/17/Get-Rid-of-Things-You-Dont-Need Wed, 17 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/17/Get-Rid-of-Things-You-Dont-Need https://betterhomeowners.com/PhilLande/2019/04/16/Buyers-search-10-weeks Tue, 16 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/16/Buyers-search-10-weeks https://betterhomeowners.com/PhilLande/2019/04/15/Avoid-Vinegar-on-Stone Mon, 15 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/15/Avoid-Vinegar-on-Stone https://betterhomeowners.com/PhilLande/2019/04/12/Compare-to-see-which-one-is-best Fri, 12 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/12/Compare-to-see-which-one-is-best https://betterhomeowners.com/PhilLande/2019/04/11/Risk-on-Investment Thu, 11 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/11/Risk-on-Investment

If you're at an age where you need to be taking Required Minimum Distributions (age 70.5) from your IRA, a qualified charitable contribution and some planning may allow you to lower your overall tax liability.

Let's say that a couple's 2019 itemized deductions include $8,000 in property taxes, $4,400 in interest and $20,000 in charitable contributions.  That would total $32,400 which exceeds the 2019 $25,300 standard deduction for married couples, 65 years of age or older, filing jointly. 

Their required minimum distribution from their IRA is $40,000 which will be taxed at ordinary income.  If this couple is in the 24% tax bracket, the tax liability would be $9,600.

Alternatively, if they made the $20,000 in charitable contributions from their IRA as a Qualified Charitable Contribution, it would not be taxable in the withdrawal.  The balance of the RMD of $20,000 would be taxable at 24% which would have a tax liability of $4,800.

Their $32,400 worth of itemized deductions would be reduced by the $20,000 because it was paid from the IRA which makes their itemized deductions $12,400.  The $25,300 standard deduction would benefit them more by an amount of $12,900 increased deductions.  At 24%, this would reduce their liability by $3,096.

In the first instance, they would owe $9,600 in taxes due to the $40,000 RMD from their IRA.  In the second example, because of the increased amount by taking the standard deduction, the net tax liability would be $1,704 ($9,600 - $4,800 - $3,096 = $1,704).

This example shows how shifting contributions to a Qualified Charitable Contribution will get the same amount to the charity but lower the Required Minimum Distribution that must be recognized as ordinary income.  The shifting also gives the taxpayers the advantage of a higher amount of the standard deduction than the itemized deduction.

As always, before taking action, you should get advice from your tax professional on how this strategy may impact you.  There is information available on www.IRS.com for IRS Required Minimum Distribution FAQs and Qualified Charitable Distributions.


https://betterhomeowners.com/PhilLande/2019/04/10/Qualified-Charitable-Contribution Wed, 10 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/10/Qualified-Charitable-Contribution https://betterhomeowners.com/PhilLande/2019/04/09/Rooms-Most-Likely-to-be-Staged Tue, 09 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/09/Rooms-Most-Likely-to-be-Staged https://betterhomeowners.com/PhilLande/2019/04/08/Credit-Score Mon, 08 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/08/Credit-Score https://betterhomeowners.com/PhilLande/2019/04/05/Leverage Fri, 05 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/05/Leverage https://betterhomeowners.com/PhilLande/2019/04/04/Consumers-Energy-Efficient Thu, 04 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/04/Consumers-Energy-Efficient

In the time that it takes to write one check, you can set it up with your bank and never have to do it again.  You won't have to write checks, envelopes or buy stamps anymore.  You'll save time, money and benefit in other ways too.

  1. Never be late ... avoid late fees and protect your credit
  2. Schedule additional principal contributions monthly to save interest, build equity and shorten the mortgage term.
    An extra $200 a month applied to the principal on a $200,000 mortgage at 4.5% for 30 years will result in shortening the loan by 8.5 years.  If the loan was paid to term, it would save $52,977 in interest.  Use the Equity Accelerator to see how much you can save.
  3. It's convenient ... by doing it online with your bank, you'll have a centralized history of the payments.
  4. Protect your credit ... your payment history is the single biggest component of your credit score and accounts for over 1/3 of your credit score.

Establishing the practice of auto bill pay could run the risk of overdrawing an account and incurring overdraft charges.  Monitor your bank account to be sure that you have enough cash to cover your automatic payments.

Schedule the Auto Pay to allow for processing and the time it takes to reach the lender so that you don't incur late fees.

And even though, you set up the Auto Pay, it is still your responsibility to monitor your bank account to see that they are executing it properly.  If you are making additional principal contributions, you must see that the extra amount was indeed applied to principal reduction and not somewhere else like in the escrow account.

Some banks offer email or text reminders to let you know when checks are about to be written or if your balance is low.


https://betterhomeowners.com/PhilLande/2019/04/03/Auto-Pay-Your-Mortgage-Payment Wed, 03 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/03/Auto-Pay-Your-Mortgage-Payment https://betterhomeowners.com/PhilLande/2019/04/02/PreQualified-PreApproved Tue, 02 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/02/PreQualified-PreApproved https://betterhomeowners.com/PhilLande/2019/04/01/Things-to-reduce-your-homeowners-premium Mon, 01 Apr 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/04/01/Things-to-reduce-your-homeowners-premium https://betterhomeowners.com/PhilLande/2019/03/29/Winston-Churchill-inspirational Fri, 29 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/29/Winston-Churchill-inspirational https://betterhomeowners.com/PhilLande/2019/03/28/Buyers-Financed-Home Thu, 28 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/28/Buyers-Financed-Home

Checklists work because they contain the important things that need to be done.  They provide a reminder about things we know and realize but may have slipped our minds as well as inform us about things we didn't consider.  Periodic attention to these areas can protect the investment in your home.

  1. Change HVAC filters regularly.  Consider purchasing a supply of the correct sizes needed online and they'll even remind you when it's time to order them again.
  2. Change batteries in smoke and carbon monoxide detectors annually.
  3. Create and regularly update a Home Inventory to keep track of personal belongings in case of burglary or casualty loss.
  4. Keep track of capital improvements, with a Homeowners Tax Guide, made to your home throughout the year that increases your basis and lowers gain.
  5. Order free credit reports from all three bureaus once a year at www.AnnualCreditReport.com.
  6. Challenge your property tax assessment when you receive that year's assessment when you feel that the value is too high.  We can supply the comparable sales and you can handle the rest.
  7. Establish a family emergency plan identifying the best escape routes and where family members should meet after leaving the home.
  8. If you have a mortgage, verify the unpaid balance and if additional principal payments were applied properly.  Use a Equity Accelerator to estimate how long it will take to retire your mortgage.
  9. Keep trees pruned and shrubs trimmed away from house to enhance visual appeal, increase security and prevent damage.
  10. Have heating and cooling professionally serviced annually.
  11. Check toilets periodically to see if they're leaking water and repair if necessary.
  12. Clean gutters twice a year to control rainwater away from your home to protect roof, siding and foundation.
  13. To identify indications of foundation issues, periodically, check around perimeter of home for cracks in walls or concrete.  Do doors and windows open properly? 
  14. Peeling or chipping paint can lead to wood and interior damage.  Small areas can be touched-up but multiple areas may indicate that the whole exterior needs painting.
  15. If there is a chimney and fires are burned in the fireplace, it will need to be inspected and possibly cleaned.
  16. If the home has a sprinkler system, manually turn the sprinklers on, one station at a time to determine if they are working and aimed properly.  Evaluate if the timers are set properly.  Look for pooling water that could indicate a leak underground.
  17. Have your home inspected for termites.

Instead of remembering when you need to do these different things, use your calendar to create a system.  As an example, make a new appointment with "change the HVAC filters" in the subject line.  Select the recurring event button and decide the pattern.  For instance, set this one for monthly, every two months with no end date.  You can schedule a time or just an all-day event will show at the top of your calendar that day.

By scheduling as many of these items as you can, you won't forget that they need to be done.  If you don't delete them from the calendar, you'll continue to be "nagged" until you finally do them.

If you have questions or need a recommendation of a service provider, give us a call at (317) 863-2356.  We deal with issues like this regularly and have experience with workers who are reputable and reasonable.


https://betterhomeowners.com/PhilLande/2019/03/27/ToDo-List-for-Better-Homeowners Wed, 27 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/27/ToDo-List-for-Better-Homeowners https://betterhomeowners.com/PhilLande/2019/03/26/Mistakes-to-Deny-a-Mortgage Tue, 26 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/26/Mistakes-to-Deny-a-Mortgage https://betterhomeowners.com/PhilLande/2019/03/25/Things-That-Can-be-Negotiated Mon, 25 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/25/Things-That-Can-be-Negotiated https://betterhomeowners.com/PhilLande/2019/03/22/Dont-Believe-It Fri, 22 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/22/Dont-Believe-It https://betterhomeowners.com/PhilLande/2019/03/21/Suggested-landscape-maintenance Thu, 21 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/21/Suggested-landscape-maintenance

Single family homes offer the investor an opportunity to borrow large loan-to-value loans at fixed interest rates for long terms.  Lenders will loan 75-80% of the purchase price at 5.5% to 6.5% interest rate for thirty years.  Compare that with other popular investment alternatives like precious metals, commodities, stocks, and mutual funds and it will be hard to find financing available at all. 

There may be some short term, one-year, loans at a floating rate tied to prime plus with no guarantee that it will be renewed.  Some of those loans require you to have a 50% margin of equity and if the value goes down, you'll have to put up additional cash or be forced to sell.

The advantage of having long-term mortgages is that an investor could find the optimal time to sell the property instead of needing to sell it because the term is due, and no other financing is available.   Supply and demand cause the real estate market to be higher and lower and a long-term mortgage provides options to sell when the price is optimal.

Single family homes enjoy distinct tax advantages.  If the rental or investment property is held for more than 12 months, the gain is taxed at lower, long-term capital gains rates rather than ordinary income rates.

Another advantage of rental homes is that the improvements can be depreciated over a 27.5-year life.  This is a non-cash deduction that reduces income and shelters income.  The accumulated depreciation taken over the life of the property is recaptured when the property is sold.

Since rental homes provide income that other investments may not, tax would have to be recognized on the annual income.  IRS allows normal operating expenses like interest, property taxes, insurance, repairs, and management to be deducted including the annual depreciation.

Rental and investment property are eligible for tax-deferred exchanges to avoid paying tax at the time of disposition.  Real estate also enjoys stepped-up basis which means that when an heir inherits a property, instead of having a potential gain from the value the decedent had purchased it for less depreciation taken, the heir's basis becomes the fair market value at time of death.  All potential gain may be permanently avoided.

Appreciation is a much-anticipated benefit of real estate because value tends to go up over time.

Another big benefit is the control that an investor has with rentals that is not available with other investments like stocks, bonds, or commercial real estate.  It takes a relatively small amount of cash to control the entire investment in a home that wouldn't be available in other investments without partners or publicly traded companies.

Single family homes are an investment that homeowners understand because they are essentially the same as the home they live in.  They're used for rental purposes but the maintenance is the same, the service providers are the same, and the neighborhood are the same.  Most homeowners understand rentals far better than alternative investments.

Contact me at (317) 863-2356 if you'd like to know more about rental property.


https://betterhomeowners.com/PhilLande/2019/03/20/Reasons-Rental-Homes-Rank-Highest Wed, 20 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/20/Reasons-Rental-Homes-Rank-Highest https://betterhomeowners.com/PhilLande/2019/03/19/CLUE-Report Tue, 19 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/19/CLUE-Report https://betterhomeowners.com/PhilLande/2019/03/18/Preapproval--confidence Mon, 18 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/18/Preapproval--confidence https://betterhomeowners.com/PhilLande/2019/03/15/Humidity-Monitor Fri, 15 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/15/Humidity-Monitor https://betterhomeowners.com/PhilLande/2019/03/14/4-basic-questions--investments Thu, 14 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/14/4-basic-questions--investments

Lenders typically quote mortgages at a market rate but can offer a lower interest rate loan if the borrower is willing to pay points up-front which is considered pre-paid interest.  These points are generally tax deductible for the year paid when the borrower pays them in connection with buying, building or improving their principal residence.

A point is one-percent of the mortgage amount.  A lender will quote a lower-rate mortgage with a certain number of points.  There is not a standard amount; it is an individual company policy.

A simple comparison of the two alternatives based on the borrower's ability to pay the points and whether the borrower will stay in the home long enough to recapture the costs will help to determine which loan will provide the cheapest cost of housing.

In the example below, two choices are compared; a 4.25% loan with no points vs. a 4.00% loan with one point.  If the buyer stays in the home at least 69 months, they will recover the $3,150 cost for the point on the lower interest rate.

If the purchaser stays ten years, he'll save two thousand three hundred dollars over the cost of the point.  A less obvious advantage will be realized because the unpaid balance on the lower interest rate loan will results in an additional $2,076 savings.

Points a Difference.png

Use this Will Points Make a Difference app to discover whether paying points will make a difference in your situation.  This is an example of a permanent buy-down but temporary buy-downs are also available.  A trusted mortgage advisor can help you determine alternatives.

For more information about the deductibility of points, see IRS Publication 936 and if you're refinancing a home, there is a section specifically on that.  For advice on your specific situation, contact your tax professional.


https://betterhomeowners.com/PhilLande/2019/03/13/Will-Points-Make-a-Difference Wed, 13 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/13/Will-Points-Make-a-Difference https://betterhomeowners.com/PhilLande/2019/03/12/Temporary-Buydown Tue, 12 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/12/Temporary-Buydown https://betterhomeowners.com/PhilLande/2019/03/11/Net-Worth Mon, 11 Mar 2019 05:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/11/Net-Worth https://betterhomeowners.com/PhilLande/2019/03/08/Buyers-found-agent Fri, 08 Mar 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/08/Buyers-found-agent https://betterhomeowners.com/PhilLande/2019/03/07/Rent-or-Buy Thu, 07 Mar 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/07/Rent-or-Buy

For a short time after the housing crisis a decade ago, some homeowners thought the value of home is a place to live rather than an investment.  A home certainly has an appeal as a place to call your own, raise your family, share with your friends and feel safe and secure.  It can be more than an address; it can also be one of the largest investments homeowners have.

Most mortgages apply a portion of the payment toward the principal amount owed in order to pay off the loan by the end of the term.  This acts like a forced savings for the homeowner because as the loan is reduced, the equity grows which increases their net worth.

The other contributor to equity is appreciation.  Most homeowners don't realize the increase in value until they sell the home or do a cash-out refinance, but the increase is real and part of their equity.  If the expected appreciation is averaged over the anticipated time for the home to be owned, the value of the equity increase can be proportioned annually or monthly.

Combining appreciation and principal reduction with leverage, it's possible to build a case that a home is definitely an investment.  Leverage is the ability to control a larger asset with a smaller amount of cash using borrowed funds.  It has been described as using other people's money to increase your yield and it applies to homeowners and investors alike.

The table on the picture above shows that even a modest amount of appreciation combined with the amortization of a loan can cause a substantial rate of return on the down payment and closing costs.

This example assumes a 3% acquisition costs on the home with a 4.5% mortgage rate and the resulting equity at the end of five years.  The larger down payments lower the yield because it decreases the amount of borrowed funds.

If a borrower buys a home that appreciates at 2% a year with a 3.5% down payment on a FHA loan for 30 years, the down payment and acquisition cost factored by the equity will produce a 28% return on investment each year during the five year period.

A home can be many things including an investment.  You can use this Rent vs. Own calculator to see the effect that appreciation and principal reduction can have on a home purchase in your price range.  If you have any questions, I'm a phone call away at (317) 863-2356.


https://betterhomeowners.com/PhilLande/2019/03/06/More-Than-Just-an-Address Wed, 06 Mar 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/06/More-Than-Just-an-Address https://betterhomeowners.com/PhilLande/2019/03/05/Median-time-buyers-expect-to-live-in-a-home Tue, 05 Mar 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/05/Median-time-buyers-expect-to-live-in-a-home https://betterhomeowners.com/PhilLande/2019/03/04/Suggested-outdoor-landscape-lighting Mon, 04 Mar 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/04/Suggested-outdoor-landscape-lighting https://betterhomeowners.com/PhilLande/2019/03/01/Label-Circuit-Breakers Fri, 01 Mar 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/03/01/Label-Circuit-Breakers https://betterhomeowners.com/PhilLande/2019/02/28/Cash-Flows--Investments Thu, 28 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/28/Cash-Flows--Investments

Affordability, stability and flexibility are the three reasons homebuyers overwhelmingly choose a 30-year term.  The payments are lower, easier to qualify for the mortgage and they can always make additional principal contributions.

However, for those who can afford a higher payment and commit to the 15-year term, there are three additional reasons: lower mortgage interest rate, build equity faster and retire the debt sooner.

The 30-year, fixed-rate mortgage is the loan of choice for first-time buyers who are more likely to use a minimum down payment and are concerned with affordable payments.  For a more experienced buyer who doesn't mind and can qualify making larger payments, there are some advantages.

Consider a $200,000 mortgage at 30 year and 15-year terms with recent mortgage rates at 4.2% and 3.31% respectively.  The payment is $433.15 less on the 30-year term but the interest being charged is higher.  The total interest paid by the borrower if each of the loans was retired would be almost three times more for the 30-year term.

Let's look at a $300,000 mortgage with 4.41% being quoted on the 30-year and 3.84% on the 15-year.  The property taxes and insurance would be the same on either loan.  The interest rate is a little over a half a percent lower on the 15-year loan, but it also has a $691.03 higher principal and interest payment due to the shorter term.

The principal contribution on the first payment of the 30-year loan is $401.56 and it is $1,235.09 on the 15-year loan.  The mortgage is being reduced by $833.53 more which exceeds the increased payment on the 15-year by $142.50.  Interestingly, over three times more is being paid toward the principal.

Some people might suggest getting a 30-year loan and then, making the payments as if they were on a 15-year loan.  That would certainly accelerate amortization and save interest.  The real challenge is the discipline to make the payments on a consistent basis if you don't have to.  Many experts cite that one of the benefits of homeownership is a forced savings that occurs due to the amortization that is not necessarily done by renters.

Use this 30-year vs. 15-year financial app to compare mortgages in your price range.  A 15-year mortgage will be approximately half a percent cheaper in rate.  You can also check current rates at FreddieMac.com.


https://betterhomeowners.com/PhilLande/2019/02/27/Depends-If-You-Can-Afford-It Wed, 27 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/27/Depends-If-You-Can-Afford-It https://betterhomeowners.com/PhilLande/2019/02/26/How-Cold-is-Too-Cold-for-Pets Tue, 26 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/26/How-Cold-is-Too-Cold-for-Pets https://betterhomeowners.com/PhilLande/2019/02/25/Homeowner-Affordability-Index-1218 Mon, 25 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/25/Homeowner-Affordability-Index-1218 https://betterhomeowners.com/PhilLande/2019/02/22/Francis-Bacon-Inspirational Fri, 22 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/22/Francis-Bacon-Inspirational https://betterhomeowners.com/PhilLande/2019/02/21/Prevent-Credit-Card-Fraud Thu, 21 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/21/Prevent-Credit-Card-Fraud

Fear of the unknown is common among all ages.  Kids, at night, imagine monsters in their closets or under their beds and adults are unsure of what the future might bring.

It may be natural for first-time buyers to be unsure of the process because they haven't been through it before but even repeat buyers need to know changes that have taken place since the financial housing crisis.

The steps in the home buying process are very predictable and generally follow the same pattern every time.  It certainly makes the move stay on schedule when you know all the different things that must be done to get to the closing.

  • In the initial interview with your real estate professional, you share the things you want and need in a home, discuss available financing and learn how your agent can represent you in the transaction.
  • The pre-approval step is essential for anyone using a mortgage to purchase a home to assure that they're looking at the right price of homes and so they'll know what they can qualify for and what the interest will be.
  • Even with lower than normal inventory, it is difficult to stay up-to-date with the homes currently for sale and the new one just coming on the market.  Technology has simplified this process, but the buyer needs to implement them.
  • Showings can be accommodated online through virtual tours, drive-bys and finally, a personal tour through the home.  Your real estate professional can work with you to see all the homes in the market through REALTORS®, builders or for sale by owners.
  • When a home has been identified, an offer is written and negotiation over price, condition and terms takes place.
  • A contract is a fully negotiated, written agreement.
  • Escrow is opened to deposit the earnest money from the buyer as a sign they're acting in good faith.  The title search is also started so that clear title can be conveyed from the seller to the buyer and that the lender will have a valid lien on the property.
  • 88% of home sales involve a mortgage.  The lender will require an appraisal to be sure that the home can serve as partial collateral for the loan.  If the buyer has been pre-approved, the verifications will be updated to be certain that they're still valid.  The entire loan package when completed, is sent to underwriting for final approval.
  • When the contract is completed, at the same time the title search and mortgage approval are being worked on, the buyer will arrange for any inspections that were called for in the contract.
  • After all contingencies have been completed, the transaction goes to settlement where all the necessary papers are signed, and the balance of the buyer's money is paid.  This is where title transfers from the seller to the buyer.
  • Possession occurs according to the sales contract.

One of the responsibilities of your real estate professional is to make sure that things are done in a timely manner so that the transaction will close according to the agreement on time and without unforeseen or unnecessary problems.

Even if you're not ready to buy or start looking yet, you need to be assembling your team of professionals.  Let us know and we'll send you our recommendations, so you can read about them on their websites.

If you have any questions, download this Buyers Guide and call us at (317) 863-2356; we're happy to help.  Informed buyers lead to satisfied homeowners and that is better for everyone involved.


https://betterhomeowners.com/PhilLande/2019/02/20/Do-You-Know-the-Way Wed, 20 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/20/Do-You-Know-the-Way https://betterhomeowners.com/PhilLande/2019/02/19/Cost-of-Waiting-to-Buy Tue, 19 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/19/Cost-of-Waiting-to-Buy https://betterhomeowners.com/PhilLande/2019/02/18/Mortgage-Process-Timeline Mon, 18 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/18/Mortgage-Process-Timeline https://betterhomeowners.com/PhilLande/2019/02/15/toxic-to-pets Fri, 15 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/15/toxic-to-pets https://betterhomeowners.com/PhilLande/2019/02/14/Valentines-Day Thu, 14 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/14/Valentines-Day

Most parents don't put a lot of credence in the statements "Everyone is doing it" and "No one does that anymore."  They'll dig a little deeper and get the facts of the situation.  Interestingly, when it comes to buying a home, similar common myths continue to prevail surrounding what it takes to buy a home.

One of the most common myths is that it takes 20% down payment to get into a home.  Certainly, an 80% mortgage might have the most favorable interest rate. It won't require mortgage insurance and qualifying requirements might be a little less but there are alternatives.

"88% of all buyers financed their homes last year and consistent with previous years, younger buyers were more likely to finance their home purchase.  In 2018, the median down payment was 13% for all buyers, 7% for first-time buyers and 16% for repeat buyers." Stated by the 2018 NAR Profile of Buyers and Sellers.

  • Qualified Veterans are eligible for zero down payment, 100% mortgage loans without mortgage insurance.
  • Conventional loans are available with as little as 3-5% down payments.
  • FHA mortgages have a 3.5% down payment.
  • USDA mortgages for rural housing have two major products: one does not require a down payment and the other has a 3% down payment.  Maps, based on population numbers, are available to determine if the area you're interested in purchasing in is eligible for a USDA mortgage.

We've come to believe that facts can be instantly verified by searching on the Internet.  Unfortunately, there are a lot of things on the Internet that are questionable and certainly, that includes some information on mortgages.  Specifically, some loans are not available in certain areas and to a particular persons based on their income and credit history.

The best approach, when it comes to buying a home, is to get the facts from a knowledgeable and trusted loan professional before you begin the home search process.  Contact me at (317) 863-2356 for a recommendation.

 A website may not provide relevant information for your individual situation.  Purchasing a home is a large investment and taking the time to find out the facts is worth the effort.

 


https://betterhomeowners.com/PhilLande/2019/02/13/When-Its-Important...Find-the-Facts Wed, 13 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/13/When-Its-Important...Find-the-Facts https://betterhomeowners.com/PhilLande/2019/02/12/student-debt Tue, 12 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/12/student-debt https://betterhomeowners.com/PhilLande/2019/02/11/Value-or-Price Mon, 11 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/11/Value-or-Price https://betterhomeowners.com/PhilLande/2019/02/08/Ralph-Waldo-Emerson Fri, 08 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/08/Ralph-Waldo-Emerson https://betterhomeowners.com/PhilLande/2019/02/07/Moving-Tips Thu, 07 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/07/Moving-Tips

Being a better homeowner is a full-time job.  It takes good information to make good decisions not only when you buy and sell but all the years you own a home.

Think of times when you need advice on financing, taxes, insurance, maintenance, finding reasonable and reliable contractors and lots of other things.  Imagine how nice it would be to have a real estate information line you could call whenever you have a question.

 

Our objective is to move from a one-time sale to customers for life; a select group of friends and past customers who consider us their lifelong real estate professional.  We believe that if we help you and your friends with all your real estate needs, we can earn the privilege to be your real estate professional.

Throughout the year, we'll send reminders and suggestions by email and social media that enhance your homeowner experience.  When we find good articles to help you be a better homeowner, we'll pass them along.  You'll discover new ways to maintain your property, minimize expenses and manage debt and risk. 

We want to be your "Go-To" person for everything to do with real estate.  We're here for you and your friends...now and in the future.   Please let us know how we can help you.


https://betterhomeowners.com/PhilLande/2019/02/06/Your-Real-Estate-Resource Wed, 06 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/06/Your-Real-Estate-Resource https://betterhomeowners.com/PhilLande/2019/02/05/Best-Benefits-of-a-VA-Loan Tue, 05 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/05/Best-Benefits-of-a-VA-Loan https://betterhomeowners.com/PhilLande/2019/02/04/New-Postal-Rates Mon, 04 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/04/New-Postal-Rates https://betterhomeowners.com/PhilLande/2019/02/01/Abundance Fri, 01 Feb 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/02/01/Abundance https://betterhomeowners.com/PhilLande/2019/01/31/Chargers-for-Electronics Thu, 31 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/31/Chargers-for-Electronics

Here's the scenario: you have a project and need to borrow some money, but you want to do it in the most economic manner.  You've got a low rate on your existing first mortgage and don't want to do a cash-out refinance and pay a higher rate.  Is a home equity loan an option?

Prior to 2018, homeowners could have up to $100,000 of home equity debt and deduct the interest on their personal tax return.  The Tax Cuts and Jobs Act of 2017 eliminated the home equity deduction unless the money is used for capital improvements.

Regardless of the deductibility, lenders will still loan money to owners who have equity in their home and good credit.  The most common reasons people borrow against their home equity are:

  • Consolidate debt with higher interest rates
  • Make improvements on their home
  • Refinance an existing home equity line of credit
  • Down payment for another home or rental investment
  • Creating reserves or available access for potential needs

One available loan is a fixed-rate home equity loan, commonly referred to as a second mortgage.  It is usually funded at one time, with amortized payments for terms that could range from five to fifteen years.

Another option is a home equity line of credit or HELOC, where a homeowner is approved for up to a certain amount at a floating-rate over a ten-year period.  The borrower can draw against the amount as needed and would pay interest every month and eventually, pay down the principal.

The amount of money that can be borrowed is determined by the equity.  Lenders generally will not exceed 80% of the value of the home.  If a home was worth $400,000, the 80% ceiling would be $320,000.  If the homeowner had an unpaid balance on their first loan of $240,000, an amount up to $80,000 would be possible.

The next variable is the borrowers' credit score which will determine the rate of interest that will be charged.  The higher the score, the lower the rate the borrower will pay.  And the converse is true, the lower the score, the higher the rate.

Another common variable considered is the borrowers' total debt to income ratio.  Ideally, the combination of regular monthly debt payments should not exceed 43% of their monthly gross income.

If you have good credit and an adequate amount of equity, your home could be the source of the funds you need.  There is a lot of competition among lenders and shopping around can make a difference.

Call us at (317) 863-2356 for a recommendation of a trusted mortgage professional.  If you have questions about whether the interest on the loan will be deductible, talk to your tax professional.


https://betterhomeowners.com/PhilLande/2019/01/30/Is-a-Home-Equity-Loan-an-Option Wed, 30 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/30/Is-a-Home-Equity-Loan-an-Option https://betterhomeowners.com/PhilLande/2019/01/29/Basic-Emergency-Supply-Kit Tue, 29 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/29/Basic-Emergency-Supply-Kit https://betterhomeowners.com/PhilLande/2019/01/28/Home-Good-Investment Mon, 28 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/28/Home-Good-Investment https://betterhomeowners.com/PhilLande/2019/01/25/Standard-Deduction Fri, 25 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/25/Standard-Deduction https://betterhomeowners.com/PhilLande/2019/01/24/Considering-a-Home-for-Retirement Thu, 24 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/24/Considering-a-Home-for-Retirement

Generally speaking, when you need an inventory of your personal belongings, it is too late to make one.  Sure, you can reconstruct it but undoubtedly, you'll forget things and that can cost you money when filing your insurance claim.

Most homeowner's policies have a certain amount of coverage for personal items that can be 40-60% of the value of the home.

Homeowners who have a loss are usually asked by the insurance company for proof of purchase which can come in the form of a receipt or current inventory of their personal belongings.

The most organized people might find it difficult, if not impossible, to find receipts for the valuable things in their home.  Think about when you're rummaging around a drawer or closet looking for something else and you discover something that you had totally forgotten that you had.

An inventory is like insurance for your insurance policy to be certain that you list everything possible if you need to make a claim.  Systematically, make a list of the items by going through the rooms, along with the drawers and closets.  In a clothes closet, you can list the number of shirts, pants, dresses and pairs of shoes but higher cost items should be listed separately.

Photographs and videos can be adequate proof that the items belonged to the insured.  A series of pictures of the different rooms, closets, cabinets and drawers can be very helpful.  When video is used, consider narrating as it is shot and be sure to go slow enough and close enough to see the things clearly.

For more suggestions and an easy to use, interactive form, download a Home Inventory, complete it, and save a copy off premise, either in a safety deposit box or digitally in the cloud if you have server-based storage available like Dropbox.

home inventory 001.png

https://betterhomeowners.com/PhilLande/2019/01/23/Home-Inventory Wed, 23 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/23/Home-Inventory https://betterhomeowners.com/PhilLande/2019/01/22/Overflowing-Toilet Tue, 22 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/22/Overflowing-Toilet https://betterhomeowners.com/PhilLande/2019/01/21/Home-Protection-Plan Mon, 21 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/21/Home-Protection-Plan https://betterhomeowners.com/PhilLande/2019/01/18/Inspirational--Success Fri, 18 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/18/Inspirational--Success https://betterhomeowners.com/PhilLande/2019/01/17/Three-Things-Buyers-Want Thu, 17 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/17/Three-Things-Buyers-Want

The Tax Cuts and Jobs Act of 2017 increased the standard deduction to $24,000 for married couples.  There will be some instances that homeowners may be better off taking the standard deduction than itemizing their deductions.  In the past, homeowners would most likely be better off itemizing but the $10,000 limit of state and local taxes (SALT) adds one more issue to consider.

Let's look at a hypothetical homeowner to see how a strategy that has been around for years could benefit them now even though they haven't used it in the past.  The strategy is called bunching; by timing the payments in a tax year so that they can be combined to make a larger deduction.

Let's say that the married couple filing jointly has a $285,000 mortgage at 5% for 30 years that has about $14,000 in interest being paid.  The property taxes are $6,000 and they have $4,000 a year in charitable contributions for a total of $24,000 of allowable itemized deductions on Schedule A.

Standard Itemized.jpg

Since that deduction amount is the same as the Standard Deduction, there is no monetary advantage one way or the other.  However, if the taxpayers were to pay their interest because they must make timely house payments but only pay $2,000 of the 2018 property taxes in December of 2018 and the balance of the $4,000 in January, they transfer part of the deduction into 2019.

Additionally, if they make their intended charitable contribution for 2018 in January of 2019, it makes that deductible on the 2019 return.

Since the total deductible amounts paid out in 2018 was $16,000, the taxpayers would have an $8,000 benefit that year from taking the Standard Deduction. 

Assuming they made the same $4,000 charitable contribution in 2019 during the year and paid the house payment and property taxes on time, their total deductions for 2019 would be $32,000 which is $8,000 more than the Standard Deduction.

In this example, the taxpayers in 2018 and 2019, would benefit a total of $16,000 in tax deductions by bunching and electing to take the standard deduction one year and itemizing the next. 

This is only an example but if your situation is similar, it might benefit you to consider an alternative when to take the standard deduction and when to itemize.  This is a conversation you need to have with your tax professional to see if it would work for you.


https://betterhomeowners.com/PhilLande/2019/01/16/Standard-or-Itemized-Deductions Wed, 16 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/16/Standard-or-Itemized-Deductions https://betterhomeowners.com/PhilLande/2019/01/15/Alternative-to-Shredding Tue, 15 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/15/Alternative-to-Shredding https://betterhomeowners.com/PhilLande/2019/01/14/Source-of-Down-Payments Mon, 14 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/14/Source-of-Down-Payments https://betterhomeowners.com/PhilLande/2019/01/11/Next-to-Paying-Cash Fri, 11 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/11/Next-to-Paying-Cash https://betterhomeowners.com/PhilLande/2019/01/10/Bad-Advice-for-Sellers Thu, 10 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/10/Bad-Advice-for-Sellers

Mortgage insurance premium can add almost $200 to the payment on a $265,000 FHA mortgage.  The decision to get an FHA loan may have been the lower down payment requirement or the lower credit score levels, but now that you have the loan, is it possible to eliminate it?

Mortgage Insurance Premium protects lenders in case of a borrower's default and is required on FHA loans.  The Up-Front MIP is currently 1.75% of the base loan amount and paid at the time of closing.  Annual MIP for loans with greater than 95% loan-to-value is .85% per year. 

For loans with FHA case numbers assigned before June 3, 2013, when the loan is paid down to 78% of the original loan amount, the MIP can be cancelled.  The borrower may need to contact the current servicer.

However, for loans greater than 90% with FHA case numbers assigned on or after that date, the MIP is required for the term of the loan.

Most homeowners with FHA mortgages are not eligible to cancel the MIP because they either originated their loan after June 3, 2013, put less than 10% down payment and/or got a 30-year loan.  If they have at least 20% equity in the home, they can refinance the home with an 80% conventional loan which in most cases, does not require mortgage insurance.

With normal amortization on a 30-year loan, it takes approximately 11-years to reduce the original loan to the 78-80% requirement based on normal amortization.  There is another dynamic involved which is the appreciation on the home.  As the home goes up in value and the unpaid balance goes down, the equity increases.

If the homeowners believe that they have enough equity that would eliminate the need for mortgage insurance, they can investigate refinancing with a conventional loan.  Borrowers refinancing will incur expenses in starting a new mortgage and the interest rate may be higher than the existing rate.  Analysis will determine how long it will take to recapture the cost of refinancing.

Call me at (317) 863-2356 for a recommendation of a trusted mortgage professional.


https://betterhomeowners.com/PhilLande/2019/01/09/Eliminate-FHA-Mortgage-Insurance Wed, 09 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/09/Eliminate-FHA-Mortgage-Insurance https://betterhomeowners.com/PhilLande/2019/01/08/Owners-Without-Agents Tue, 08 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/08/Owners-Without-Agents https://betterhomeowners.com/PhilLande/2019/01/07/VA-Jumbo-Loan Mon, 07 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/07/VA-Jumbo-Loan https://betterhomeowners.com/PhilLande/2019/01/04/63-of-Sellers Fri, 04 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/04/63-of-Sellers https://betterhomeowners.com/PhilLande/2019/01/03/Disappearing-Tax-Deductions Thu, 03 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/03/Disappearing-Tax-Deductions

One of the first steps in a good outcome is knowing a little bit about what you're about to undertake.  By being aware of some of the areas regarding homes that may not come up every year in a tax return, you'll be able to point them out to your tax professional or seek more information from IRS.gov.

Look through this list of items for things that could affect your tax return.  Even if you have relied on the same tax professional for years to look out for your best interests, they need to be aware that there could be something different in this year's return.

If you bought a home for a principal residence last year, check your closing statement and identify any points or pre-paid interest that you or the seller paid based on the mortgage you received.  These can be deducted on your Schedule A as qualified home interest if you itemize your deductions.  See Home Mortgage Interest Deduction | IRS Publication 936 (2018 version not released as of this newsletter).

Keep track of all money you spend on your home that might be considered a capital improvement.  Get in the habit of putting receipts for money spent on your home that is not the house payment or utility bills.  Repairs are not tax deductible but improvements, even small ones, can be added to the basis of your home which can lower the gain when the home is sold.  Years from now, your tax preparer can sift through them and determine whether they're capital improvements or maintenance. See Increases to Basis | IRS Publication 523 Selling Your Home (2018 version not released as of this newsletter).

By making additional principal contributions with your mortgage payment, you'll save interest, build equity and shorten the term of a fixed-rate mortgage.  See Equity Accelerator.

If you sold a home last year, the payoff on your old mortgage included interest from the last payment you made to the date of the payoff.  That interest is tax deductible.  You may need a breakdown of the payoff to the mortgage company; you should be able to get that from your closing officer.

If you refinanced your home, unlike a home purchase, points paid to refinance are not deductible as interest in the year paid; they must spread ratably over the life of the mortgage.  See Home Mortgage Interest Deduction | IRS Publication 936 (2018 version not released as of this newsletter).

For homeowners who have lost a spouse, there is an exception regarding the exclusion on the sale of a principal residence.  If the surviving spouse concludes a sale of the home within two years of the death of their spouse, they may exclude up to $500,000, instead of $250,000 for single taxpayers, of gain provided ownership and use tests are met prior to death.

The two-year period begins on the date of death and ends two years after that date.  See Sale of Main Home by Surviving Spouse | IRS Publication 523 Selling Your Home (2018 version not released as of this newsletter).

There could be significant tax consequences to a person selling a home that was received as a gift as compared to receiving the home through inheritance.  With a gift, the basis of the donor becomes the basis of the donee.  With inheritance, the heir usually gets a stepped-up basis and avoids potential unrecognized gain.  See Home Received as Inheritance | IRS Publication 523 Selling Your Home (2018 version not released as of this newsletter).

Click here to download a Homeowners Tax Guide.  This is meant for information purposes only and advice from a qualified tax professional should be sought to find out about your individual situation.tax guide 001.png
https://betterhomeowners.com/PhilLande/2019/01/02/Year-End-Tax-Newsletter Wed, 02 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/02/Year-End-Tax-Newsletter https://betterhomeowners.com/PhilLande/2019/01/01/Happy-New-Year Tue, 01 Jan 2019 06:00:00 GMT https://betterhomeowners.com/PhilLande/2019/01/01/Happy-New-Year https://betterhomeowners.com/PhilLande/2018/12/31/Median-distance-between-homes Mon, 31 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/31/Median-distance-between-homes https://betterhomeowners.com/PhilLande/2018/12/28/Mortgage-Rate-Average-by-Decade Fri, 28 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/28/Mortgage-Rate-Average-by-Decade https://betterhomeowners.com/PhilLande/2018/12/27/Maya-Angelou Thu, 27 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/27/Maya-Angelou

Being a better homeowner is a full-time job.  It's not just about making better decisions when you buy and sell; it's making better decisions throughout the time you own the home.

It takes good information to make good decisions.  Think of times when you need advice on financing, taxes, insurance, maintenance, finding reasonable and reliable contractors and lots of other things.  Imagine how nice it would be to have a real estate information line you could call whenever you have a question.

During the purchase or sale, the obvious place to get real estate answers is your agent but where do you go the rest of the time? Since homeowners are now staying in their homes for ten to twelve years or more, they need a reliable resource for good information and advice.

Our objective is to move from a single purchase or sale to customers for life; a select group of our friends and past customers who consider us their lifelong real estate professional.   We believe that if we help you and your friends with all their real estate needs not just when they buy or sell but for all the years in between, we can earn the privilege to be your real estate professional.

Throughout the year, we'll send reminders and suggestions by email and social media that enhance your homeowner experience.  When we find good articles to help you be a better homeowner, we'll pass them along.  You'll discover new ways to maintain your property, minimize expenses and manage debt and risk.

We want to be your "Go-To" person for everything to do with real estate.  If you have a question, please call us at (317) 863-2356.  If we don't have the answer, we'll find it for you or at least, point you in the right direction.

We're here for you and your friends...now and in the future.  Please let us know how we can help you.
https://betterhomeowners.com/PhilLande/2018/12/26/Your-Real-Estate-Resource Wed, 26 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/26/Your-Real-Estate-Resource https://betterhomeowners.com/PhilLande/2018/12/25/Merry-Christmas Tue, 25 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/25/Merry-Christmas https://betterhomeowners.com/PhilLande/2018/12/24/multigenerational-home Mon, 24 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/24/multigenerational-home https://betterhomeowners.com/PhilLande/2018/12/21/87-of-Buyers-purchased-through-an-agent Fri, 21 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/21/87-of-Buyers-purchased-through-an-agent https://betterhomeowners.com/PhilLande/2018/12/20/Veterans-Home-Buyers Thu, 20 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/20/Veterans-Home-Buyers

Smart home technology promises to make your home more comfortable, convenient and secure.  It may not be the home from the Jetson's but artificial intelligence is the hope to make it the home of the future which is available now and controlled from anywhere you have an Internet connection.

When Alexa appeared at Christmas-time two years ago, most people thought it was a novelty to ask what the weather will be or to play a song.  Few people understood the vision of Amazon would be verbally purchasing everything imaginable and that your calendar, contacts, lights, and appliances would all be connected.

There are plenty of players in the market including Amazon Alexa, Google Assistant, Samsung Smart Things, Apple and others.  It starts with a hub that acts like a brain for your system to connect the different home automation devices.  You'll establish an online account with the hub manufacturer so that you can adjust settings and controls.

You could start simple with switch and plug receptacles that would allow you to control lights either vocally through your hub or from your Smartphone or tablet anywhere in the world where you have an Internet connection.

Programmable thermostats can lower your monthly utility costs while conveniently regulating your comfort by adjusting temperatures on your heating and cooling systems.  These can be particularly effective in homes with zoned systems where you might live in one area during the day but sleep in a different zone.

Door bells might be one of the next additions to your automation.  Not only can you communicate with the person at your door, you don't have to go to the door to do it.  The device cameras are motion activated so you'll see who is there regardless of whether they rang the doorbell or not.

Door locks can be convenient because instead of giving someone a key, you can issue a temporary code to let them enter.  You can give them permanent access and rescind it any time you want without having to change the locks.  You'll know when they enter and leave your home.

Other security options can include door and window sensors, motion detectors and cameras for outside or inside the home.  The homeowner will be able to monitor from inside or anywhere else they have an Internet connection.

Smoke and carbon monoxide detectors, as well as water sensors to determine leaking water around water heaters or in basements give homeowners peace of mind.

Most of these devices are available in wireless models so you won't have to string wire throughout the home.  The Wi-Fi can introduce a potential problem of hackers who could illegally access your system.  This is true with any home that has a Wi-Fi router and precautions should be taken.

The big box stores like Lowes, Home Depot, and Amazon offer a wide variety of brands and modules.  Many people prefer it as a do-it-yourself project and others would rather have a professional do it for them.  YouTube has a lot of videos that can probably show you exactly how to install the ones you select. https://betterhomeowners.com/PhilLande/2018/12/19/More-Comfortable-Convenient-and-Secure Wed, 19 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/19/More-Comfortable-Convenient-and-Secure https://betterhomeowners.com/PhilLande/2018/12/18/2019-Loan-Limits Tue, 18 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/18/2019-Loan-Limits https://betterhomeowners.com/PhilLande/2018/12/17/Steps-to-Smooth-Financing Mon, 17 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/17/Steps-to-Smooth-Financing https://betterhomeowners.com/PhilLande/2018/12/14/Cavett-Robers--character Fri, 14 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/14/Cavett-Robers--character https://betterhomeowners.com/PhilLande/2018/12/13/Fire-Feature Thu, 13 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/13/Fire-Feature

Price, condition and terms are factors that any owner must consider when marketing their home.  Price is usually the easiest to adjust to compensate for shortcomings in location or condition of the home.  Improving the condition of the property is more time consuming but updates to kitchens, baths and other things can appeal to a buyer.

One of the most overlooked marketing factors are terms which are also referred to as financing concessions.

Paying part or all a buyer's closing costs is the most common financing concession.  By doing so, the buyer doesn't need as much cash to get into the home which can be attractive to more buyers.

There is another financing concession that is not used very often in today's market but it is still allowed and can increase the marketability of a home. A temporary buy-down of the interest rate makes a lower payment for an initial period.

It is still a fixed-rate mortgage that the buyer must qualify for at the note rate and there is no negative amortization.  The seller pre-pays the interest in advance at closing so the buyer has lower payments in the initial period.

Instead of lowering the price of the home, let's say the seller has decided to offer $6,875 worth of financing concessions that the buyer can apply any way they want.  One way might be to get a 2/1 buy-down which means that the first year, the payment would be based on 2% less than the note rate of the mortgage and the second year, it would be 1% less than the note rate.  The third through thirtieth years, the payment would be the actual note rate.

On a $275,000 home with a 3.5% down payment at 5% for 30 years, the first year's mortgage payment would be figured at 3% which would be $305.76 less than normal.  The second year's payment would be figured at 4% and would be $157.65 less than normal.  The third through thirtieth years, the payment would be the normal payment of $1,424.59.

Financing Concessions.png

It would save the buyer $5,560.90 in interest in the first two years and there would still be $1,314 of the financing concession to apply toward the buyer's closing costs.

The financing concessions paid by the seller give the buyer lower payments for the first two years and less money needed for the closing cost.  An added bonus for the buyer is that the buyer can deduct the pre-paid interest the seller paid as qualified mortgage interest.

Some lenders may tell you that temporary buy downs cannot be done.  They've been around for over thirty years and can still be done today on FHA, VA and conventional loans.  Call (317) 863-2356 if you need a recommendation of a trusted mortgage professional or check out a 2/1 Buydown with your own numbers.
https://betterhomeowners.com/PhilLande/2018/12/12/Another-Type-of-Financing-Concession Wed, 12 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/12/Another-Type-of-Financing-Concession https://betterhomeowners.com/PhilLande/2018/12/11/Lever-Door-Handle-Replacement Tue, 11 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/11/Lever-Door-Handle-Replacement https://betterhomeowners.com/PhilLande/2018/12/10/Freddie-Mac-Mortgage-Rates Mon, 10 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/10/Freddie-Mac-Mortgage-Rates https://betterhomeowners.com/PhilLande/2018/12/07/Cleaning-gutters Fri, 07 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/07/Cleaning-gutters https://betterhomeowners.com/PhilLande/2018/12/06/Acquisition-Debt Thu, 06 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/06/Acquisition-Debt

The Federal Reserve Board's Triennial Survey of Consumer Finances recently revealed the net worth of a homeowner was $231,400 compared to $5,200 for a renter.  The net worth of homeowners increased 15% from 2013 to 2016 while renters' decreased by 5%.

Appreciation and principal reduction are the two dynamics that affect a homeowner's equity.  Each payment is applied to the interest for the previous month and the principal reduction to retire the mortgage.

A $300,000 home purchased with a $294,566 FHA mortgage at 5% for 30 years has an average monthly principal reduction $362 in the first year. Two percent appreciation would benefit the buyer by $500 a month.  In this example, the equity grows by $860 a month for the homeowner.  A tenant would have to invest $660 a month over and above the rent they're paying.

Based on the assumptions listed above, the $10,500 down payment would become approximately $85,000 of equity in seven years. Leverage and forced savings contribute to the difference in addition to the appreciation and principal reduction.

The rent paid by tenants help the landlord recoup their investment in the home and a return on their investment.  Some people say, regardless if a person rents or buys, they pay for the house they occupy.  The choice is whether to buy it for themselves or their landlord.

Check out some of the benefits using your own numbers with this fill-in-the blank Rent vs. Own.
https://betterhomeowners.com/PhilLande/2018/12/05/44-Times-More-Than-a-Renter Wed, 05 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/05/44-Times-More-Than-a-Renter https://betterhomeowners.com/PhilLande/2018/12/04/Cost-of-Waiting-to-Buy Tue, 04 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/04/Cost-of-Waiting-to-Buy https://betterhomeowners.com/PhilLande/2018/12/03/Preappproval-confidence Mon, 03 Dec 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/12/03/Preappproval-confidence https://betterhomeowners.com/PhilLande/2018/11/30/Bruce-Barton-quotation Fri, 30 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/30/Bruce-Barton-quotation https://betterhomeowners.com/PhilLande/2018/11/29/Home-Protection-Plan Thu, 29 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/29/Home-Protection-Plan

There is a little-known mortgage program that could provide the vehicle for the right person to get into a home.  If a person sells their home to another for less than the fair market value, the difference in the appraised value and the sales price is considered a gift of equity for the buyer.

FHA requires that borrowers receive gifts of equity only from family members transferring title to the borrower. 

An appraisal is required to determine the value of the home.  The sales price is subtracted from the appraised value to determine the equity to be gifted.  If a home appraises for $300,000 when the owner will sell it for $250,000, the gift is $50,000.

The gift is applied to the down payment.  In this example, the borrower would have to qualify for a $250,000 mortgage which would require private mortgage insurance because a 20% down payment on a $300,000 home would be $60,000.  If the buyer had an additional $10,000 in cash to put down, the PMI would not be required, and the monthly payments would be lower.

The seller would need to provide a gift letter stating the amount of the gift, the date the gift, and that no repayment is expected or required.  It also needs to have the donor's name, address, phone, email and relationship to the buyer.  In addition, the settlement statement will need to show the gift being credited from the seller to the buyer.  The lender may require additional documentation.

Beginning in 2018, the annual gift tax exemption is increased to $15,000 per person per year and lifetime exemption to $5.6 million.  The fact that the $50,000 exceeds the individual amount doesn't mean there will necessarily be any gift tax due now.  The seller should consult their tax professional.


https://betterhomeowners.com/PhilLande/2018/11/28/Gift-of-Equity Wed, 28 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/28/Gift-of-Equity https://betterhomeowners.com/PhilLande/2018/11/27/Changing-Air-Filters Tue, 27 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/27/Changing-Air-Filters https://betterhomeowners.com/PhilLande/2018/11/26/Regular-Principal-Contributions Mon, 26 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/26/Regular-Principal-Contributions https://betterhomeowners.com/PhilLande/2018/11/23/Before-You-Call-The-Plumber Fri, 23 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/23/Before-You-Call-The-Plumber https://betterhomeowners.com/PhilLande/2018/11/22/Thanksgiving Thu, 22 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/22/Thanksgiving

It may be natural for first-time buyers to be unsure of the process of buying a home because they haven't been through it before but even repeat buyers need to know changes that have taken place since the financial housing crisis.

The steps in the home buying process are predictable and generally follow the same pattern.  It certainly makes the move stay on schedule when you know all the different things that must be done to get to the closing.

  • In the initial interview with your real estate professional, you share the things you want and need in a home, discuss available financing and learn how your agent can represent you in the transaction.
  • The pre-approval step is essential for anyone using a mortgage to purchase a home to assure that they're looking at the right price of homes and so they'll know what they can qualify for and what the interest will be.
  • Even with lower than normal inventory, it is difficult to stay up-to-date with the homes currently for sale and the new one just coming on the market.  Technology has simplified this process, but the buyer needs to implement them.
  • Showings can be accommodated online through virtual tours, drive-bys and finally, a personal tour through the home.  Your real estate professional can work with you to see all the homes in the market through REALTORS®, builders or for sale by owners.
  • When a home has been identified, an offer is written and negotiation over price, condition and terms takes place.
  • A contract is a fully negotiated, written agreement.
  • Escrow is opened to deposit the earnest money from the buyer as a sign they're acting in good faith.  The title search is also started so that clear title can be conveyed from the seller to the buyer and that the lender will have a valid lien on the property.
  • 88% of home sales involve a mortgage.  The lender will require an appraisal to be sure that the home can serve as partial collateral for the loan.  If the buyer has been pre-approved, the verifications will be updated to be certain that they're still valid.  The entire loan package when completed, is sent to underwriting for final approval.
  • When the contract is completed, at the same time the title search and mortgage approval is being worked on, the buyer will arrange for any inspections that were called for in the contract.
  • After all contingencies have been completed, the transaction goes to settlement where all of the necessary papers are signed, and the balance of the buyer's money is paid.  This is where title transfers from the seller to the buyer.
  • Possession occurs according to the sales contract.

One of the responsibilities of your real estate professional is to make sure that things are done in a timely manner so that the transaction will close according to the agreement on time and without unforeseen or unnecessary problems.

Even if you're not ready to buy or start looking yet, you need to be assembling your team of professionals.  Let us know and we'll send you our recommendations, so you can read about them on their websites.

If you have any questions, call us at (317) 863-2356; we're happy to help.  Informed buyers lead to satisfied homeowners and that is better for everyone involved.


https://betterhomeowners.com/PhilLande/2018/11/21/Do-You-Know-the-Way Wed, 21 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/21/Do-You-Know-the-Way https://betterhomeowners.com/PhilLande/2018/11/20/Difference-in-Deadbolts Tue, 20 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/20/Difference-in-Deadbolts https://betterhomeowners.com/PhilLande/2018/11/19/Bad-Advice-for-Buyers Mon, 19 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/19/Bad-Advice-for-Buyers https://betterhomeowners.com/PhilLande/2018/11/16/Oliver-Wendell-Holmes Fri, 16 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/16/Oliver-Wendell-Holmes https://betterhomeowners.com/PhilLande/2018/11/15/46-of-REALTORS--Tree-Care Thu, 15 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/15/46-of-REALTORS--Tree-Care

It's been said that if you can find a home that has most of what you want, you should go ahead and purchase it.  Many first-time buyers are using everything they have for a down payment and closing costs and would have to "live" with the less than perfect home until they can save the money to make the changes.

The FHA 203(k) mortgage allows a borrower to purchase a home and provides additional funds for improvements to be made.  These types of renovations can include kitchen and bathroom remodels, flooring, plumbing, heating and air conditioning systems, additions and other things.

The benefit to the buyer is that they have the opportunity to consider a home that needs repairs and might have been unacceptable without a program like this.  Being a FHA loan, a minimal down payment is required, fair interest rates and generous qualifying requirements.

The 203(k) Streamline can be used for cosmetic improvements, appliances and minor remodeling up to $35,000 in cost.

As you can imagine, this is a specialized program and not all lenders choose to make 203(k) loans.  They usually take longer to process and getting firm bids on the work to be done will be required.  It is important to find out how much experience a lender has with this particular type of loan.    

It will also be required that you work with a 203(k) consultant in addition to the mortgage officer.

For more information, go to Hud.gov.  FNMA has a similar conventional loan program called HomeStyle Mortgage.  Your real estate professional will be able to help with recommendations.  Call me at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2018/11/14/Roll-the-Repairs-into-the-Mortgage Wed, 14 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/14/Roll-the-Repairs-into-the-Mortgage https://betterhomeowners.com/PhilLande/2018/11/13/Mistakes-Waiting-to-Close Tue, 13 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/13/Mistakes-Waiting-to-Close https://betterhomeowners.com/PhilLande/2018/11/12/Home-Equity-Conversion-Mortgages Mon, 12 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/12/Home-Equity-Conversion-Mortgages https://betterhomeowners.com/PhilLande/2018/11/09/Veterans-Day Fri, 09 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/09/Veterans-Day https://betterhomeowners.com/PhilLande/2018/11/08/Burglary-Deterrents Thu, 08 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/08/Burglary-Deterrents

Finding the right home is still the biggest challenge buyers are faced with in today's market as is shown in the latest Confidence Index Survey.  Assuming the buyers find the "right" home with determination, perseverance and the help of a real estate professional, 88% of all transactions last year required financing to get the buyer's address on the home.  93% of first-time buyers needed financing.

Pre-approval is an essential step that needs to be handled before buyers begin searching for a home.  The benefits to the buyer fall into the category of confidence.

PRE-APPROVAL GIVES YOU CONFIDENCE

  • Knowing the amount you can borrow 
    the mortgage amount decreases as interest rates rise
  • Looking at the right priced homes
    price, size, amenities, location
  • Comparing and identifying the best loan
    rate, term, type
  • Uncover issues early that could affect the most favorable loan terms
    time to cure possible problems
  • Bargaining power to negotiate with the seller and possibly, competing buyers
    price, terms, & timing
  • Settlement can occur sooner after contact is accepted
    verifications have already been made

Items Needed for Pre-Approval

  • Photo ID
  • Two months current pay stubs
  • Last two year's W2s
  • Complete copies of checking and savings statements for last three months
  • Copies of statements for IRAs, 401k, savings, CDs, money market funds, etc.
  • Employment history for last two years with addresses and contacts
  • Proof of commissioned or bonus income
  • Residency history for last two years with addresses and contacts
  • Assets for down payment, closing costs, and reserves; must provide paper trail
  • If self-employed, last two years tax returns, current profit and loss statement and balance sheet; copy of partnership/corporate tax returns for last two years if owning more than 25% of company
  • FHA requires driver's license and social security card
  • VA requires original certificate of eligibility and DD214
  • Other things may be required such as previous bankruptcy, divorce decree

Contact us at (317) 863-2356 or plande@atlasrealty.com if you'd like a recommendation of a trusted mortgage professional.


https://betterhomeowners.com/PhilLande/2018/11/07/Getting-the-Right-Home Wed, 07 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/07/Getting-the-Right-Home https://betterhomeowners.com/PhilLande/2018/11/06/Vote-2018 Tue, 06 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/06/Vote-2018 https://betterhomeowners.com/PhilLande/2018/11/05/More-Affordable Mon, 05 Nov 2018 06:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/05/More-Affordable https://betterhomeowners.com/PhilLande/2018/11/02/PreApproval Fri, 02 Nov 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/02/PreApproval https://betterhomeowners.com/PhilLande/2018/11/01/Acquisition-Debt Thu, 01 Nov 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/11/01/Acquisition-Debt

As storybooks go, the character is introduced, they meet their love interest, a villain thwarts their intentions, true love overcomes, they marry and live happily ever-after.  It's a very familiar formula.

Similarly, there is a formula that couples follow in real life.  They go to college, get a good job, rent a home, fall in love, get married and buy a starter home.  They start a family, move into a larger home, save for their children's education, start planning for their retirement and if they live within their means, they invest their surplus funds.

Financial Timeline.png

An alternative to this might be to start investing in rental homes early in their adult life before their standard of living becomes so expensive that they don't feel like they have the money to purchase rentals.  There are infinite possibilities but let's say a single person, after getting a good job, buys a small three or four-bedroom home with an owner-occupied, minimum down payment.  They move into the home and possibly, rent out the bedrooms to other singles who need a place to live.

At some point, they decide to buy another home to live in with a minimum down payment and either rent out their bedroom in the first home or rent the whole home to a tenant.  And they repeat the process again with the second home.

This could continue until they acquired several homes.  Let's say, that in the meantime, they have met their love interest, decide to get married and together, they buy a starter home for them to live in.

This concept advances the investment in rental homes from the latter part of their lives to the early part of their life.  The early investment gives them more time for appreciation and wealth accumulation.  A simple principle of investing is that sooner is better than later.  By delaying gratification to own your "dream home" early, a person may be able to accumulate more net worth in the same period of time.

Buying a property initially as owner-occupied permits a lower down payment of 3.5% compared to a typical down payment for non-owner-occupied properties is 20%.  By using more borrowed funds, leverage can increase the yield on the investment.

It may be too late for some people reading this article to adopt this strategy but if they have kids in college, it may be something for them to consider.
https://betterhomeowners.com/PhilLande/2018/10/31/Start-Early-and-Live-Happily-Everafter Wed, 31 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/31/Start-Early-and-Live-Happily-Everafter https://betterhomeowners.com/PhilLande/2018/10/30/Halloween-Safety Tue, 30 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/30/Halloween-Safety https://betterhomeowners.com/PhilLande/2018/10/29/Outdoor-Kitchen Mon, 29 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/29/Outdoor-Kitchen https://betterhomeowners.com/PhilLande/2018/10/26/Out-of-clutter-find-simplicity Fri, 26 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/26/Out-of-clutter-find-simplicity https://betterhomeowners.com/PhilLande/2018/10/25/Now-Is-A-Good-Time Thu, 25 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/25/Now-Is-A-Good-Time

When the standard deduction for married couples filing jointly was increased from $12,700 to $24,000 for 2018, there was some speculation that the bloom was off the rose of homeownership.  The thought was that if the tax benefits from being able to deduct the property taxes and interest was less than the standard deduction, that maybe, the buyer would be better off continuing to rent.

With mortgage rates as low as they have been for the past eight years, payments have been lower and so has the amount of interest that was paid.  This and the fact that sales and local taxes, which include property taxes, are limited to $10,000 a year on the Itemized Deduction form have made it harder to reach the increased standard deduction.

The reality of the situation is tax benefits are only one of the components that make a home an excellent investment and it probably contributes the least of the top three benefits.  Principal reduction and appreciation build an owner's equity in an automatic way that is like a forced savings account.

In today's market, it is common for the total house payment to be lower than the rent a first-time home buyer is currently paying.  As a homeowner, the buyer would have additional expenses like maintenance and possibly, a HOA. 

To illustrate the net effect, let's look at a purchase price of $275,000 with 3.5% down payment on a 4.75% 30-year FHA loan.  We'll assume the home appreciates at 3% annually and the buyer is currently paying $2,000 a month rent.

newsletter 102218.png

The total payment is $2,115.44 including principal, interest, property taxes, property and mortgage insurance. However, when you consider the monthly principal reduction, appreciation, maintenance and HOA, the net cost of housing is $1,205.72. It costs $794.28 more a month to rent than to own. In a year's time, it would cost $9,531.36 more to rent than to own which is more than the down payment required to buy the home.

In seven-years, the $9,625 down payment would grow to over $101,000 in equity.  The equity build-up far exceeds the tax benefits which some people would have as an additional incentive.  Use this Rent vs. Own to see what the net cost of housing would be using a home in your price range or call me at (317) 863-2356 and I'll do it for you.
https://betterhomeowners.com/PhilLande/2018/10/24/Its-Not-Just-the-Tax-Benefits Wed, 24 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/24/Its-Not-Just-the-Tax-Benefits https://betterhomeowners.com/PhilLande/2018/10/23/Protect-Your-Move Tue, 23 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/23/Protect-Your-Move https://betterhomeowners.com/PhilLande/2018/10/22/44X-Greater-Than-a-Renter Mon, 22 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/22/44X-Greater-Than-a-Renter https://betterhomeowners.com/PhilLande/2018/10/18/Avoid-Trips-Slips-Falls Thu, 18 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/18/Avoid-Trips-Slips-Falls  

In September, the Federal Reserve raised interest rates for the third time in 2018 and they're expected to go up one more time this year and three times next year.  If you have a Home Equity Line of Credit, HELOC, you're paying more to use that money and it is going to become more expensive.

It may make sense to refinance your home and consolidate the balance of your HELOC to lock in a lower mortgage rate.  Most lenders require that the combination of these loans should not exceed 80% of the home's fair market value and that you have good credit and adequate income to support the payment.

A HELOC is a first or second mortgage that allows the borrower to withdraw money as needed, up to the line of credit provided by the lender.  A draw period is established where the borrower is only required to pay interest. 

Since all HELOC loans are variable rate mortgages, during periods of rising rates, the cost of the funds increase.  However, unlike adjustable rate mortgages that have specified adjustment periods and caps, a HELOC adjusts when the prime interest changes.

The formula for determining available funds on a refinance are to take 80% of the fair market value, which will probably have to be verified by appraisal, less the existing first mortgage and the costs to refinance.  The balance would need to cover the cost of replacing the HELOC.  Any remaining balance may be available for cash to be taken out.

Now is a great time for a mortgage review. In many cases, the equity you have in your home may allow you to eliminate mortgage insurance and substantially lower your monthly payment. As with all tax matters, always consult with a tax professional before making any decisions.  Call us at (317) 863-2356 for a recommendation of a trusted mortgage professional.


https://betterhomeowners.com/PhilLande/2018/10/17/HELOCs-Becoming-More-Expensive Wed, 17 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/17/HELOCs-Becoming-More-Expensive https://betterhomeowners.com/PhilLande/2018/10/16/Housing-Affordability-Index Tue, 16 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/16/Housing-Affordability-Index https://betterhomeowners.com/PhilLande/2018/10/15/High-Low-Now Mon, 15 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/15/High-Low-Now https://betterhomeowners.com/PhilLande/2018/10/12/Teal-Pumpkin Fri, 12 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/12/Teal-Pumpkin https://betterhomeowners.com/PhilLande/2018/10/11/Show-Me-the-House Thu, 11 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/11/Show-Me-the-House

FHA allows owner-occupants to purchase up to a four-unit property with a minimum 3.5% down payment.  The rent collected on three units could be used to make the payment and the owners' pro-rata share would be less than ¼ of the payment itself.

The owner-occupied unit would be considered their principal residence.  The other three units are treated as rental property and eligible for cost recovery, a non-cash deduction plus all the normal business expenses.  The rental income of the three remaining units is calculated as income and assists the buyer in qualifying.

A homeowner could buy a four-unit, live in one for two years, buy another four-unit with a minimum down payment, move into one unit, rent the other three as well as the previous unit in the first property.  Then, after another two years, repeat the same process over again.

The fifth year, the homeowner/investor would have a total of 11 rental units plus the one that they are occupying.  An acquisition strategy like this might be difficult for a family with children and a single person or couple might find it easier to move more frequently.

As the equity increases in these properties, due to appreciation and amortization, the money could be pulled out through refinancing to purchase additional income properties.  Another objective might be to pay the mortgage off as soon as possible and any cash flow after tax could be applied directly to the principal.

FHA has a nationwide mortgage limit for a four-unit of $521,250 but some high-cost areas have been designated with increased limits.  There are also loan programs for two and three-unit properties with limits of $347,000 and $419,425 with similar exceptions for high-cost areas.

The low mortgage rate and minimal down payments for owner-occupied FHA mortgages makes this strategy attractive because it gives investors an opportunity to highly leverage their investment.  Most non-owner-occupied (investor) mortgages would require 20-25% down payment and have a slightly higher interest rate than for an owner-occupant.

To learn more about this opportunity, call (317) 863-2356 and we can give you information on specifics in a variety of areas.


https://betterhomeowners.com/PhilLande/2018/10/10/Fast-Track-Rental-Property Wed, 10 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/10/Fast-Track-Rental-Property https://betterhomeowners.com/PhilLande/2018/10/09/Dimmer-Switches Tue, 09 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/09/Dimmer-Switches https://betterhomeowners.com/PhilLande/2018/10/08/Primary-Mortgage-Market-Survey Mon, 08 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/08/Primary-Mortgage-Market-Survey https://betterhomeowners.com/PhilLande/2018/10/05/Zig-Ziglar-quote001 Fri, 05 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/05/Zig-Ziglar-quote001

It may be an all too common belief that a person will have a house payment and a car payment for the rest of their lives.  However, with a plan and some determination, you can be mortgage free.

Planning for retirement is obviously important and many times, an activity plagued by procrastination.  Some homeowners' goal is to have their home paid for by retirement, so they won't have payments.  It makes sense to eliminate a sizable recurring expense before they quit working.

By making regular principal contributions in addition to the payments, the debt can be eliminated by the target retirement date.

Assume a homeowner refinanced their $300,000 mortgage at 4% last year for 30 years with the first payment due on May 1, 2017.  With normal amortization, the home will be paid for at the end of the term. 

Additional principal contributions with each payment will save interest, build equity and of course, accelerate the payoff on the home.  An extra $250.00 a month would pay off the mortgage 7.5 years sooner.  $786.81 extra with each payment would pay off the loan in 15 years.

Having a home paid for at retirement has the apparent benefit of no house payment.  A debt-free home is also a substantial asset that could be borrowed against or sold if unanticipated events should occur. 

To make some projections to pay off your own mortgage, use this use the Equity Accelerator calculator.

https://betterhomeowners.com/PhilLande/2018/10/03/Mortgage-Free Wed, 03 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/03/Mortgage-Free https://betterhomeowners.com/PhilLande/2018/10/01/Incentives-for-Buyers Mon, 01 Oct 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/10/01/Incentives-for-Buyers https://betterhomeowners.com/PhilLande/2018/09/27/Buyers--school Thu, 27 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/27/Buyers--school

The gutters and downspouts on your home are intended to channel rainwater away from your home and its foundation.  When they're blocked and not functioning properly they can lead to the gutters coming loose, wood rot and mildew, staining of painted surfaces, and even worse, foundation issues or water penetration into the interior of the home.

Most experts recommend cleaning the gutters at least once a year.  More often might be necessary depending on the proximity of leaves and other debris that could collect.

If this is a task that you feel comfortable about tackling yourself, there are few things to consider.  If the debris is dry, it will be easier to clean the gutters.  Safety is important, and precautions should be taken such as using a sturdy ladder and possibly, having someone hold it while you're on the ladder.

Other useful tools will be a five-gallon plastic bucket to hook on the ladder to hold the debris; work gloves to protect your hands from sharp edges of the gutters; a trowel or scoop and a garden hose with a nozzle.

·         Start by placing the ladder near a downspout for the section of gutter to be cleaned.

·         Remove large debris and put it into the empty bucket. Work away from the downspout toward the other end.

·         When you're at the end of the gutter, using the water hose and nozzle, spray out the gutter so it will drain to the downspout.

·         If the water doesn't drain easily, the downspout could be blocked.  Accessing the spout from the bottom with either the hose with nozzle or a plumber's snake, try to dislodge the blockage.

·         Reattach or tighten any pieces that were removed or loosened while working on the downspout.

·         Flush the gutters a final time, working from the opposite end, as before, toward the downspout.

There are specialized tools at the home improvement stores like Lowes and Home Depot that can make this job easier.  Check out their websites and search for "gutter cleaning".


https://betterhomeowners.com/PhilLande/2018/09/26/How-to-Clean-Gutters Wed, 26 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/26/How-to-Clean-Gutters https://betterhomeowners.com/PhilLande/2018/09/25/4--reasons-to-purchase Tue, 25 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/25/4--reasons-to-purchase https://betterhomeowners.com/PhilLande/2018/09/24/colorcoded-cutting-boards Mon, 24 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/24/colorcoded-cutting-boards https://betterhomeowners.com/PhilLande/2018/09/21/Will-Rogers--045 Fri, 21 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/21/Will-Rogers--045 https://betterhomeowners.com/PhilLande/2018/09/20/Fire-Extinguisher Thu, 20 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/20/Fire-Extinguisher

Congress enacted the Dodd-Frank Act in 2010 in response to the mortgage crisis that led to America's Great Recession.  The two parts that apply closely to homebuyers are the Ability-to-Repay (ATR) and Qualified Mortgages (QM).

A Qualified Mortgage is a category of loans that have certain, more stable features that help make it more likely that borrowers will be able to afford their loan.  These loans do not allow certain risky features like an interest-only period when no money is applied to reduce the principal; negative amortization that would allow the mortgage balance to increase; and, "balloon payments" at the end of the loan that are larger than the normal periodic payments.

A debt-to-income ratio of less than or equal to 43% has been established to provide a limit on how much of a borrower's income can go toward total debt including the mortgage and all other monthly debt payments.  However, the Consumer Finance Protection Bureau believes these loans should be evaluated on a case-by-case basis and in some cases, can exceed 43%.

There is a limit for up-front points and fees the lender can charge.

By showing that the lender made an effort to be certain that the borrower has the ability to repay the loan, the lender in turn, receives certain legal protections.  Underwriting factors considered by the lender include:

  1. current or reasonably expected income or assets 
  2. current employment status
  3. the monthly payment on the covered transaction 
  4. the monthly payment on any simultaneous loan 
  5. the monthly payment for mortgage-related obligations
  6. current debt obligations, alimony, and child support
  7. the monthly debt-to-income ratio or residual income
  8. credit history

For more information, see the Consumer Financial Protection Bureau fact sheet ... protecting consumers from irresponsible mortgage lending.


https://betterhomeowners.com/PhilLande/2018/09/19/Consumer-Protection-from-Irresponsible-Mortgage-Practices Wed, 19 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/19/Consumer-Protection-from-Irresponsible-Mortgage-Practices https://betterhomeowners.com/PhilLande/2018/09/18/Homeowners-Net-Worth Tue, 18 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/18/Homeowners-Net-Worth https://betterhomeowners.com/PhilLande/2018/09/14/Keep-Your-Info-Secure-Offline Fri, 14 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/14/Keep-Your-Info-Secure-Offline

No one wants to waste water or money.  For that reason, take a few minutes every other month to do the following inspections:

  1. Check to see if cutoff valves on sinks and toilets are working properly. 

    Many times, builders will put individual cutoffs on supply lines to sinks and toilets.  It is reasonable to expect them to work but after some time, they can corrode which prevents opening and closing.  It is a good idea to test them occasionally before you need them in an emergency.

  2.  Fill each sink with a few inches of water to see if they drain in what you feel is a normal time.

    A slow-draining sink can be an indication of a clog that builds up around the insides of the pipe.  Common causes are food, grease, hair and soap scum.  Plunging can take care of some slow-running sinks.  After partially filling the sink with water, seal the plunger over the drain and pump it up and down a few times.

  3.   Inspect each toilet to see if they are leaking water from the tank into the bowl.

    Toilets that continue to run after being flushed can use a large amount of water in a month's time.  Generally, the problem comes from a flapper that doesn't seat properly.  Sometimes, the chain is keeping it from closing properly or the flapper itself may need to be replaced.

    Another issue could be that the flush valve needs to be replaced.  These can be purchased at Lowe's or Home Depot for about $20.00 and are relatively easy to change out.  There are lots of instructional videos on the internet and it can save money if you give it a try.

If you need a recommendation for a good plumber to take care of something you discover, please feel free to call me at (317) 339-7653.

https://betterhomeowners.com/PhilLande/2018/09/12/Quick-Plumbing-Inspection Wed, 12 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/12/Quick-Plumbing-Inspection https://betterhomeowners.com/PhilLande/2018/09/11/Average-Investment-in-Living-Areas Tue, 11 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/11/Average-Investment-in-Living-Areas https://betterhomeowners.com/PhilLande/2018/09/10/Why-you-need-a-pro Mon, 10 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/10/Why-you-need-a-pro https://betterhomeowners.com/PhilLande/2018/09/07/Homepricestrategy22 Fri, 07 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/07/Homepricestrategy22 https://betterhomeowners.com/PhilLande/2018/09/06/Mortgage-Rates-FICO-Score Thu, 06 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/06/Mortgage-Rates-FICO-Score

Whether it is hesitation or procrastination due to uncertainty, it can cost buyers by having to pay more for both the house and the financing.  This is one of those markets where most of the experts expect interest rates and prices will continue to rise through 2019.

The National Association of REALTORS® reports there is currently a 4.2-month supply of homes for sale which is close to the same as last year's inventory.  Normal inventory is considered to be a 6-month supply.

If during the period you're waiting to buy, the price of the home goes up by 5% and the mortgage rate increases by 1%, the payment on a $275,000 home with a 95% mortgage could be $233.80 more each and every month.  Over a seven-year period, the delay to purchase would total close to $20,000.

To act decisively, you need good information; a confused mind will not generally make a decision.  In today's market, you need to know exactly what price home you can qualify for and you need to know what kind of home you can expect for that price. 

You'll want a housing and a mortgage professional you can trust to give you the information you need to make good decisions for yourself and your family.  We'd like to be your real estate professional and can recommend a trusted mortgage professional.

To get a better idea about what it may cost you for a home in your price range, use the Cost of Waiting to Buy calculator.  If you have any questions, call me at (317) 863-2356.

https://betterhomeowners.com/PhilLande/2018/09/05/Act-Decisively Wed, 05 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/05/Act-Decisively https://betterhomeowners.com/PhilLande/2018/09/04/Preparedness-Month Tue, 04 Sep 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/09/04/Preparedness-Month https://betterhomeowners.com/PhilLande/2018/08/31/The-most-important-thing-in-communication Fri, 31 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/31/The-most-important-thing-in-communication https://betterhomeowners.com/PhilLande/2018/08/30/Leveraged-Investment Thu, 30 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/30/Leveraged-Investment

There is much more than a lower rate and payment to determine whether to refinance a mortgage.  Lenders try to make refinancing as attractive as possible by rolling the closing costs into the new mortgage so there isn't any out of pocket cash required.

The closing costs associated with a new loan could add several thousand dollars to your mortgage balance.  The following suggestions may help you to reduce the expense to refinance.

·         Tell the lender up-front that you want to have the loan quoted with minimal closing costs.

·         Check with your existing lender to see if the rate and closing costs might be cheaper. 

·         Shop around with other lenders and compare rate and closing costs.

·         If you're refinancing an FHA or VA loan, consider the streamline refinance.

·         Credit unions may have lower closing costs because they are generally loaning deposits and their cost of funds is less.

·         Reducing the loan-to-value so mortgage insurance is not required will reduce expenses and lower the payment.

·         Ask if the lender can use an AVM, automated valuation model, instead of an appraisal.

·         You may not need a new survey if no changes have been made.

·         There may be a discount on the mortgagee's title policy available on a refinance.

·         Points on refinancing, unlike a purchase, are ratably deductible over the life of the loan ($3,000 in points on a 30-year loan would result in a $100 tax deduction each year.)

·         Consider a 15-year loan.  If you can afford the higher payments, you can expect a lower interest rate than a 30-year loan and obviously, it will build equity faster and pay off in half the time.

A lender must provide you a list of the fees involved with making the loan within 3 days of making a loan application in the form of a Loan Estimate and a Closing Disclosure Form.  Every dollar counts, and they belong to you.
https://betterhomeowners.com/PhilLande/2018/08/29/Reduce-Refinancing-Costs Wed, 29 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/29/Reduce-Refinancing-Costs https://betterhomeowners.com/PhilLande/2018/08/28/Call-Your-REALTOR Tue, 28 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/28/Call-Your-REALTOR https://betterhomeowners.com/PhilLande/2018/08/27/Low-down-payment-mortgage Mon, 27 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/27/Low-down-payment-mortgage https://betterhomeowners.com/PhilLande/2018/08/24/Questions-to-Ask-Your-Agent Fri, 24 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/24/Questions-to-Ask-Your-Agent https://betterhomeowners.com/PhilLande/2018/08/23/Components-of-FICO-score Thu, 23 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/23/Components-of-FICO-score

Moisture is mold's best friend and it thrives between 40 and 100 degrees Fahrenheit which is why it is commonly found in homes.  Mold spores float in the air and can grow on virtually any substance with moisture including tile, wood, drywall, paper, carpet, and food.

Moisture control and eliminating water problems are key to preventing mold. Common sources of moisture can be roof leaks, indoor plumbing leaks, outdoor drainage problems, damp basements or crawl spaces, steam from bathrooms or kitchen, condensation on cool surfaces, humidifiers, wet clothes drying inside, or improper ventilation of heating and cooking appliances.

  • Control the moisture problem
  • Scrub mold off hard surfaces using soap and water or other cleanser; dry completely
  • Do not paint or caulk moldy surfaces
  • Discard porous materials with extensive mold growth
  • Avoid exposing yourself or others to mold
  • Periodically, inspect the area for signs of moisture and new mold growth

The EPA suggests that if the moldy area is less than ten square feet, you can probably handle the cleanup yourself.  If the affected area is larger than that, find a contractor or professional service provider. 

Increasing ventilation in a bathroom by running a fan for at least 30 minutes or opening a window can help remove moisture and control mold growth.  After showering, squeegee the walls and doors. Wipe wet areas with dry towels.  Cleaning more frequently will also prevent mold from recurring or keep it to a minimum.

A simple solution to clean most mold is a 1:8 bleach/water mixture.  Since homes have thermostatically controlled temperatures and water is used all day long in the kitchen and bathrooms, the environment is conducive to mold. 

See Ten things you should know about mold written by the EPA.

https://betterhomeowners.com/PhilLande/2018/08/22/Moisture--Mold Wed, 22 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/22/Moisture--Mold https://betterhomeowners.com/PhilLande/2018/08/21/Benefits-of-Homeownership Tue, 21 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/21/Benefits-of-Homeownership https://betterhomeowners.com/PhilLande/2018/08/20/Drip-Irrigation Mon, 20 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/20/Drip-Irrigation https://betterhomeowners.com/PhilLande/2018/08/17/Bed-bugs Fri, 17 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/17/Bed-bugs https://betterhomeowners.com/PhilLande/2018/08/16/Value-or-Price Thu, 16 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/16/Value-or-Price

It's understandable; you're excited; you've found the right home, we have helped you negotiate a contract, you made a loan application and the house passed inspections.  Closing is not that far away, and you are making plans to move and put personal touches on your new home.  It is so easy to get caught up in the dreaming and planning for after the closing!  

Even if you have an initial approval on your mortgage, little things can derail the process which isn't over until the papers are signed at settlement and funds distributed to the seller.  The lender will usually do verifications on your credit score and your employment status just prior to the closing to determine if there have been any material changes to the borrower's credit or income that might disqualify the borrower.  Lenders do not want to see changes in your financial situation, even small changes that may seem insignificant to you.  

Most lending and real estate professionals recommend:

  • Do not make any new major purchases that could affect your debt-to-income ratio
  • Do not buy things for your new home until after you close
  • Do not apply, co-sign or add any new credit (even ORDERING that new furniture or appliances can cause a change in your credit)
  • Do not close or consolidate credit card accounts without advice from your lender
  • Do not quit your job or change jobs or even accept a promotion 
  • Do not change banks
  • Do not talk to the seller without your agent 

Don't do anything that would affect your credit or income while you're waiting to sign the final papers at settlement.  That new furniture won't do any good if you can't put it into the house you are trying to purchase.  

https://betterhomeowners.com/PhilLande/2018/08/15/What-to-Avoid-Before-Closing-Your-New-Home Wed, 15 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/15/What-to-Avoid-Before-Closing-Your-New-Home https://betterhomeowners.com/PhilLande/2018/08/14/Cavett-Roberts Tue, 14 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/14/Cavett-Roberts https://betterhomeowners.com/PhilLande/2018/08/13/Mortgage-Prices Mon, 13 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/13/Mortgage-Prices https://betterhomeowners.com/PhilLande/2018/08/10/Homeowners-are-attached Fri, 10 Aug 2018 10:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/10/Homeowners-are-attached https://betterhomeowners.com/PhilLande/2018/08/09/No-longer-deductible Thu, 09 Aug 2018 10:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/09/No-longer-deductible

Mortgage rates have risen 0.5% in 2018 on 30-year and 15-year fixed rate mortgages and experts expect them to continue to increase. Buyers paying attention to the market understand the relationship that inventory has on pricing; when the supply is low, the price usually goes up. Rising interest rates can affect the cost of homes also.

When interest rates go up, fewer people can afford homes. Lower numbers of buyers can affect the demand, which could cause prices of homes to come down. The question is how much do the interest rates have to go up to affect demand?

As the rates gradually go up, the affect may not be noticeable at all except for the fact that the payments for the buyer have increased.

A 1/2% change in interest is approximately equal to a 5% change in price. A $300,000 mortgage at 4.5% for a 30-year term will have a $1,520.06 principal and interest payment. If the mortgage rate goes up 0.5%, it would affect the payment the same as if the price had gone up 5%. The difference in payments for the full term of the loan would be $32,547.

There are some things beyond buyers' control, but indecision isn't one of them. If they haven't found the "right" home yet, it is understandable. However, when that home does present itself, the buyer needs to be ready to make a decision. If they are preapproved and have done their due diligence in the market, they should be able to contract before significant changes occur in the mortgage rates.

https://betterhomeowners.com/PhilLande/2018/08/08/Rising-Rates-Affect-the-Cost-Too Wed, 08 Aug 2018 05:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/08/Rising-Rates-Affect-the-Cost-Too https://betterhomeowners.com/PhilLande/2018/08/07/Sacrifices-to-Purchase-a-Home Tue, 07 Aug 2018 10:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/07/Sacrifices-to-Purchase-a-Home https://betterhomeowners.com/PhilLande/2018/08/06/First-Time-Buyer Mon, 06 Aug 2018 10:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/06/First-Time-Buyer https://betterhomeowners.com/PhilLande/2018/08/04/Winston-Churchill-Optimist Sat, 04 Aug 2018 10:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/04/Winston-Churchill-Optimist https://betterhomeowners.com/PhilLande/2018/08/03/Earnest-money-needed Fri, 03 Aug 2018 10:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/03/Earnest-money-needed https://betterhomeowners.com/PhilLande/2018/08/02/Personal-vs-Real-Property Thu, 02 Aug 2018 10:00:00 GMT https://betterhomeowners.com/PhilLande/2018/08/02/Personal-vs-Real-Property https://betterhomeowners.com/PhilLande/2018/07/31/Opt-Out-Prescreen Tue, 31 Jul 2018 10:00:00 GMT https://betterhomeowners.com/PhilLande/2018/07/31/Opt-Out-Prescreen

If it's not broken, why would a homeowner consider replacing something as expensive as a toilet when there may be other things in the home to replace that provide more aesthetic appeal. Don't be too quick to ignore the functionality and the reliability of this basic convenience.

The first rationalization might take place at the economic level. A water-saving model could easily pay for itself in a few years and then, there is the good feeling of participating in the conservation of our natural resources.

Having to plunge a toilet more than once a week could motivate a homeowner to spend money on a replacement especially, if having made repairs to the flapper and fill valve didn't solve the issue.

Maybe your existing toilet has ugly scratches that make it difficult to clean. Maybe there are cracks in the tank or bowl that you're concerned will develop into a leak at the worst possible time.

The average cost to replace a toilet is around $400 with models ranging more and less based on the features and brands. Round toilet bowls tend to take up less room, are less expensive and better suited for children. Elongated bowls generally take more room, have more powerful flushing action, more comfortable, more stylish and cost more.

Replacing the shut-off valve for the toilet could be a good thing to do while you're replacing the toilet. Generally, it is as old as the toilet and having a reliable valve that works could be very convenient in a future repair or emergency.

There are a variety of videos on YouTube that could give you the confidence to do it yourself or simply, to have a better understanding of the scope of the project

https://betterhomeowners.com/PhilLande/2018/07/30/Replace-It-Anyway Mon, 30 Jul 2018 10:00:00 GMT https://betterhomeowners.com/PhilLande/2018/07/30/Replace-It-Anyway

If it's not broken, why would a homeowner consider replacing something as expensive as a toilet when there may be other things in the home to replace that provide more aesthetic appeal. Don't be too quick to ignore the functionality and the reliability of this basic convenience.toilet.jpg

The first rationalization might take place at the economic level. A water-saving model could easily pay for itself in a few years and then, there is the good feeling of participating in the conservation of our natural resources.

Having to plunge a toilet more than once a week could motivate a homeowner to spend money on a replacement especially, if having made repairs to the flapper and fill valve didn't solve the issue.

Maybe your existing toilet has ugly scratches that make it difficult to clean. Maybe there are cracks in the tank or bowl that you're concerned will develop into a leak at the worst possible time.

The average cost to replace a toilet is around $400 with models ranging more and less based on the features and brands. Round toilet bowls tend to take up less room, are less expensive and better suited for children. Elongated bowls generally take more room, have more powerful flushing action, more comfortable, more stylish and cost more.

Replacing the shut-off valve for the toilet could be a good thing to do while you're replacing the toilet. Generally, it is as old as the toilet and having a reliable valve that works could be very convenient in a future repair or emergency.

There are a variety of videos on YouTube that could give you the confidence to do it yourself or simply, to have a better understanding of the scope of the project


https://betterhomeowners.com/PhilLande/2018/07/29/Replace-It-Anyway Sun, 29 Jul 2018 10:00:00 GMT https://betterhomeowners.com/PhilLande/2018/07/29/Replace-It-Anyway

Along with all the planning of what you're going to do and where you're going to stay, consider this checklist to make you feel more comfortable while you're away from home.

  • Ask a trusted friend to pick up your mail, newspaper and keep yard picked up to avoid an appearance of not being at home.
  • Stop your mail (USPS Hold Mail Service) and your newspaper.29938746-250.jpg
  • Don't post about your trip on Facebook and other social media until you return; some burglars look for this type of announcement to schedule their activities.
  • Do notify police or neighborhood watch - especially if you're going to be gone for more than just a few days. Let your monitoring service know when you'll be gone and if someone will be checking on your home for you.
  • Light timers make it look like someone is home. Set multiple timers for various times to better simulate someone at home. There are plug-in modules for lights and appliances that would allow you to control them from your phone while your out of town.
  • Do unplug certain appliances - TV, computers, toaster ovens that use electricity even when they're off and to protect them from power surges.
  • Don't hide a key; burglars know exactly where to look for your key and it only takes them a moment to check under the mat, above the door, in the flower pot or in a fake rock.

These easy-to-handle suggestions may protect your belongings while you're gone while adding a level of serenity to your trip.


https://betterhomeowners.com/PhilLande/2018/07/22/Before-You-Leave-Town... Sun, 22 Jul 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/07/22/Before-You-Leave-Town...

When comparing the cost of owning a home to renting, there is more than the difference in house payment against the rent currently being paid. It very well could be lower than the rent but when you consider the other benefits, owning could be much lower than renting.31066694-250.jpg

Each mortgage payment has an amount that is used to pay down the principal which is building equity for the owner. Similarly, the home appreciates over time which also benefits the owner by increasing their equity.

There are additional expenses for owning a home that renters don't have like repairs and possibly, a homeowner's association. To get a clear picture, look at the following example of a $300,000 home with a 3.5% down payment on a 4.5%, 30-year mortgage.

net cost of housing.jpg

The total payment is $2,264 including principal, interest, property taxes, property and mortgage insurance. However, when you consider the monthly principal reduction, appreciation, maintenance and HOA, the net cost of housing is $1,218. It costs $1,282 more to rent at $2,500 a month than to own. In a year's time, it would cost $15,000 more to rent than to own which is more than the down payment and closing costs to buy the home.

With normal amortization and 3% annual appreciation, the $10,500 down payment in this example turns into $112,00 in equity in seven years. Check out your own numbers using the Rent vs. Own or call me at (317) 863-2356. Owning a home makes sense and can be one of the best investments a person will ever make.


https://betterhomeowners.com/PhilLande/2018/07/15/Owning-Makes-More-Sense Sun, 15 Jul 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/07/15/Owning-Makes-More-Sense

Acquisition Debt is the amount of money borrowed used to buy, build or improve a principal residence or second home. Under the new tax law, mortgages taken after 12/14/17 are limited to a combination of $750,000 on the first and second homes. The mortgage interest on this debt is tax deductible when itemizing deductions.12844696-250.jpg

It is a dynamic number that is reduced with each payment as the unpaid balance goes down. The only way to increase acquisition debt is to borrow money to make capital improvements.

Prior to the new law, homeowners could additionally borrow up to $100,000 of home equity debt for any purpose and deduct the interest when itemizing deductions. Mortgage interest on home equity debt is no longer deductible unless it is for capital improvements.

Acquisition debt cannot be increased by refinancing. Some confusion occurs because mortgage lenders are concerned in making home loans that will be repaid according to the terms of the note and using the home as collateral. That does not include making a tax-deductible mortgage.

Another thing that adds confusion to the issue is that the lenders will annually report how much interest was paid in a year but only the amount that is attributable to acquisition debt is deductible.

Even if the interest on the cash-out refinance is not deductible, it may be advantageous to pay off higher interest debt such as credit card debt and replacing it with lower mortgage debt.

It is the responsibility of the taxpayer to know what part of their mortgage debt is deductible. The challenge becomes more difficult after a cash-out refinance. Homeowners should keep records of all financing and capital improvements and consult with their tax professional.


https://betterhomeowners.com/PhilLande/2018/07/08/A-Word-Homeowners-Need-to-Understand Sun, 08 Jul 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/07/08/A-Word-Homeowners-Need-to-Understand

It's common for Sellers to consider offering a home warranty or protection plan to make their home more marketable. A growing number of homeowners are now purchasing this type of protection for themselves to limit the unexpected expenses of repairs and replacements.34399062-250.png

A home protection plan is a renewable service contract that covers the repair or replacement of many of the components in a home. Some homeowners especially like the convenience that it organizes a qualified service provider as well as the cost of the repairs or replacements.

There are a variety of companies that offer home warranties and the coverage may differ but the majority of things will include heating, air conditioning, most built-in and some free-standing appliances, as well as other specific items. Additional specific coverage may be available for other items like pool and spa equipment.

Some investors are even placing this coverage on their rental properties to limit the amount of repairs during the year. It is a viable way to manage the financial risk and the stress dealing with unexpected expenses.

Call me at (317) 863-2356 if you'd like a recommendation of available programs.


https://betterhomeowners.com/PhilLande/2018/07/01/Unexpected-Expenses Sun, 01 Jul 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/07/01/Unexpected-Expenses

Carbon monoxide is a silent killer you don't want in your home but because it is colorless and odorless; you may not even be aware the deadly condition exists. The Center for Disease Control says more than 400 people in the U.S. die annually from carbon monoxide poisoning and over 10,000 require medical treatment each year.16485740-250.jpg

Unmaintained furnaces, water heaters and appliances can produce the deadly gas. In addition, other sources could be leaking chimneys, unvented kerosene or gas space heaters or exhaust from cars or trucks operating in an attached garage.

The Environmental Protection Agency suggests the following to reduce exposure in the home:

  • Keep gas appliances properly adjusted
  • Install and use an exhaust fan vented to the outdoors over gas stoves
  • Open flues when fireplaces are in use
  • Do not idle car inside garage
  • Have a trained professional inspect, clean and tune-up central heating systems annually

Headaches, nausea, vomiting, dizziness and feelings of weakness or fatigue are a few of the most common symptoms. Lower levels of exposure to carbon monoxide may be mistaken for the flu.

Carbon monoxide alarms should be on every level of a home and especially, in sleeping areas. The alarms can be purchased for as little as $25 and plugged into the wall like a night light.

Regardless of the government requirements, no one would want to put their family, guests or themselves at risk for something so deadly.


https://betterhomeowners.com/PhilLande/2018/06/24/Dont-Let-a-Killer-In Sun, 24 Jun 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/06/24/Dont-Let-a-Killer-In

An economist responded when asked how interest rates would change: “They may fall some and then, rise and after that, they’ll fluctuate.”43276292-250.jpg

Just because interest rates have been low for ten years doesn’t mean they are supposed to be low. The Federal Reserve has raised interest rates twice this year and are expected to go up twice more plus three times next year.  Mortgage rates have risen from 3.95% to 4.62% since the first of January.

Increased rates directly affect the payments on homes but so does the price. With inventory levels remaining low, the prices will continue to go up. When interest rates and prices rise at the same time, it costs buyers a lot more.

If the mortgage rates go up by one percent and prices increase by five percent in the next year, the payment on a $250,000 home could go up by $200 a month. In a seven-year period, the buyer would pay $18,000 more for the home.

People planning to buy a home, need to investigate the possibilities of accelerating their timetable to take advantage of lower rates and prices. Use the Cost of Waiting to Buy  calculator to see how much more it could cost you to wait.  Call (317) 863-2356 if you have questions about what can be done now.

Cost of Waiting 061818.jpg
https://betterhomeowners.com/PhilLande/2018/06/17/Waiting-Will-Cost-More Sun, 17 Jun 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/06/17/Waiting-Will-Cost-More

A principal residence and a second home have some similar benefits, but they have some key tax differences. A principal residence is the primary home where you live and a second home is used mainly for personal enjoyment while limiting possible rental activity to a maximum of 14 days per year.10213246-250.jpg

Under the 2017 Tax Cuts and Jobs Act, the Mortgage Interest Deduction allows a taxpayer to deduct the qualified interest on a principal residence and a second home. The interest is reduced from a maximum of $1,000,000 combined acquisition debt to a maximum of $750,000 combined acquisition debt for both the first and second homes.

Property taxes on first and second homes are deductible but limited to a combined maximum of $10,000 together with other state and local taxes paid.

The gain on a principal residence retained the exclusion of $250,000/$500,000 for single/married taxpayers meeting the requirements. Unchanged by the new tax law, the gains on second homes must be recognized when sold or disposed.

Tax-deferred exchanges are not allowed for property used for personal purposes such as second homes. Gain on second homes owned for more than 12 months is taxed at the lower long-term capital gains rate.

This article is intended for informational purposes. Advice from a tax professional for your specific situation should be obtained prior to making a decision that can have tax implications.


https://betterhomeowners.com/PhilLande/2018/06/10/The-Tax-Difference-in-Second-Homes Sun, 10 Jun 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/06/10/The-Tax-Difference-in-Second-Homes

A home that isn't being maintained like others in the neighborhood can negatively affect your visual sense of appeal and in some extreme cases, even affect property values. It might be an overgrown yard, a fence in need of repair, excessive noise, unruly pets, paint peeling on the home or even a car or boat parked in front of the home that hasn't moved in weeks.2676519-250.jpg

Most people want to be good neighbors and may be willing to correct an issue once it is brought to their attention. A practical, but possibly confrontational, solution is to contact the responsible person and describe your perception of the issue. However, they may not always agree with the same urgency and it might be necessary to seek other remedies.

An owner-occupant may be more sympathetic to the neighbors and willing to correct the issue. If you think the home might be a rental property, check with the county tax records to identify the owner. They may be unaware of the situation and welcome the notification to protect their investment.

Another alternative might be to notify the homeowner's association, if there is one. One of the benefits of a HOA is to enforce community appearance standards as set in the covenants or bylaws that specify how properties must be maintained. This could be a less personal method of reaching a beneficial outcome.

If the source of the problem is a code or housing violation, the city may be the ultimate authority. Most cities have a separate code and neighborhood services division and some cities have 311 for non-emergency assistance.


https://betterhomeowners.com/PhilLande/2018/06/03/When-Neighbors-Dont-Seem-to-Care Sun, 03 Jun 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/06/03/When-Neighbors-Dont-Seem-to-Care

The American flag is obviously a symbol of our country but it has come to remind us of every man and woman who has fought for the freedom that we enjoy. The emotions that are stirred by images of our flag can run from happiness to sadness to trust and everything in between.flag2.png

Most of us learned American flag etiquette or the Flag Code when we were young but occasionally, it is a good idea to review the guidelines so that the flag is treated with the respect it deserves.

  • The U.S. flag should not be flown at night unless a light is shown on it.
  • The U.S. flag should not be flown upside down except as a distress signal.
  • The flag should never touch the ground.
  • A U.S. flag should be displayed at the peak of the staff unless the flag is at half-staff in mourning.
  • When displaying multiple flags of a state, community or society on the same flagpole, the U.S. flag must always be on top.
  • When flown with flags of states, communities, or societies on separate flag poles which are of the same height and in a straight line, the flag of the United States is always placed in the position of honor - to its own right. No flag should be higher or larger than the U.S. flag. The U.S. flag is always the first flag raised and the last to be lowered.
  • When the U.S. flag is flown with those of other countries, each flag should be the same size and must be on separate poles of the same height. Ideally, the flags should be raised and lowered simultaneously.

More information on flag etiquette can be found at the Veterans of Foreign Wars website.


https://betterhomeowners.com/PhilLande/2018/05/27/Flag-Protocol Sun, 27 May 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/05/27/Flag-Protocol

Imagine a homeowner consulting with their agent about the price to place on their home. The agent suggests that the market data indicates that $200,000 to 210,000 would produce a quick sale by pricing it properly. The owner puts a $210,000 price on the home.76605908-250.jpg

The first person who looks at the home offers $205,000. When the seller receives the offer, he comments that he thinks he priced the home too low and counters for  full price. The counter-offer is rejected, the home stays on the market and at the end of the first month when based on market conditions, the home should be sold, no other offers have been made.

It may be human nature that when an offer is received so quickly, the first thought to come to mind is that it was priced too low. A more appropriate thought might be that it was priced correctly. In some cases, when a home comes on the market, there is increased competition (real or perceived) among the buyers waiting for the "right" home to come on the market. The home can sell for a higher price than if it sits on the market for several months.

There may be stories of sellers who turned down the first offer and ended up receiving a better offer that would net more money. However,  real estate professionals say the first scenario occurs frequently.

The wisdom of experience advises owners to find a real estate professional that they trust and have confidence. Allow that professional to become familiar with your home and compare it to similar homes in the market that have sold recently and ones currently on the market. Determine the demand for homes in the area compared to the inventory. Decide on a price that will allow the home to sell within a relatively short period of time. And lastly, be satisfied if your home sells quickly near the price you put on it.


https://betterhomeowners.com/PhilLande/2018/05/20/Second-Guessing-Price Sun, 20 May 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/05/20/Second-Guessing-Price

As people near or enter retirement, one of the decisions that typically comes up is whether to sell their "big" home and buy a smaller one. If you know anyone who has been faced with that situation, selling one home and buying a smaller one may not save enough money to make it worthwhile.79996505-250.jpg

There are sales expenses on the property being sold and acquisition costs on the replacement home. Generally speaking, homeowners may not mind a home with less square footage, but they usually don't want to give up amenities or locations that they've become accustomed.

After a little number crunching, the move may not make enough difference in savings and they end up staying in their current home even if it doesn't fit their needs anymore.

What if while this couple were still in their peak earning years, they acquired a home in an area where they would consider retiring and rent it during the interim. They could put it on a 15-year mortgage and possibly, even accelerate the principal payments to have it paid off by their anticipated move.

In the meantime, they could continue living in the "big" home until it is time to make the transition. Sell the "big" home that may be paid for by then and avoid up to $500,000 of capital gain. Take part of the proceeds and remodel the rental/transitional home and invest the proceeds for retirement income.

Ideally, the former rental would be mortgage free by this point, so the retirees would not have a house payment. Even if at this point, they changed their mind about retiring to this particular home, they still have a property that acted as a hedge against rising prices and have sufficient equity to purchase something else without using the proceeds from the "big" home.

It is difficult to know what the situation will be years from now when a person retires. It is clearly advantageous to have a plan that allows for options and choices. To find out more about purchasing your retirement home today, give me a call at (317) 863-2356.


https://betterhomeowners.com/PhilLande/2018/05/13/A-Home-for-Tomorrow Sun, 13 May 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/05/13/A-Home-for-Tomorrow

For the last 25 years, most buyers have gotten a new mortgage or paid cash when purchasing a home. For a practical reason, owner-occupant buyers have another alternative: assuming a lower interest rate existing FHA or VA mortgage.29377293-250.jpg

In the late 80’s, both FHA and VA began requiring buyers to qualify to assume their mortgages. Prior to that, good credit or even a job wasn’t required. The real reason there haven’t been significant numbers of assumptions in the past 25 years is that interest rates have been steadily going down. If a person had to qualify, they might as well do it on a new loan and get a lower interest rate.

Even though mortgage money is currently attractive and available, it is at a four-year high. When interest rates on new mortgages are higher than the rates of assumable FHA and VA mortgages originated in the recent past, it may be more advantageous to assume the existing mortgages.  Conventional loans have due on sale clauses that prevent them from being assumed at the existing rate.

FHA loans that originated with lower than current interest rates have great advantages for buyers and sellers.

  1. Interest rate won't change for qualified buyer
  2. Lower interest rate means lower payments
  3. Lower closing costs than originating a new mortgage
  4. Easier to qualify for an assumption than a new loan
  5. Lower interest rate loans amortize faster than higher ones
  6. Equity grows faster because loan is further along the amortization schedule
  7. Assumable mortgage could make the home more marketable

This financing alternative can save money for the buyer in closing costs and monthly payments. While the equity may be more than the down payment on a new mortgage, second mortgages are available to make up the difference. Call us at (317) 863-2356 to find out if this may be an option for you.


https://betterhomeowners.com/PhilLande/2018/05/06/Assumptions-May-be-an-Alternative- Sun, 06 May 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/05/06/Assumptions-May-be-an-Alternative-

Homeowners are familiar that they can deduct the interest and property taxes from their income tax returns. They also understand that there is a substantial capital gains exclusion for qualified sales of up to $250,000 if single and $500,000 for married filing jointly. However, ongoing recordkeeping tends to be overlooked. 38285944-250.jpg

New homeowners should get in the habit of keeping all receipts and paperwork for any improvements or repairs to the home. Existing homeowners need to be reminded as well, in case they have become lax in doing so.

These expenditures won't necessarily benefit in the annual tax filing but may become valuable when it is time to sell the home because it raises the basis or cost of the home.

For instance, let's say a single person buys a $350,000 home that appreciates at 6% a year. Twelve years from now, the home will be worth $700,000. $250,000 of the gain will be exempt with no taxes due but the other $100,000 will be taxed at long-term capital gains rate. At 15%, that would be $15,000 in taxes due.

Assume during the time the home was owned that a variety of improvements totaling $100,000 had been made. The adjusted basis in the home would be $450,000 and the gain would only be $250,000. No capital gains tax would be due.

Some repairs may not qualify as improvements but if the homeowner has receipts for all the money spent on the home, the tax preparer can decide at the time of sale. Small dollar items can really add up to substantial amounts over many years of homeownership.

You can download a Homeowner's Tax Worksheet that can help you with this recordkeeping. The important thing is to establish a habit of putting receipts for home expenditures in an envelope, so you'll have it when you are ready to sell.


https://betterhomeowners.com/PhilLande/2018/04/29/Overlooked-Recordkeeping Sun, 29 Apr 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/04/29/Overlooked-Recordkeeping

The one experience that homeowners can agree upon after completing a remodeling project is that it costs more and takes longer than expected. It doesn't really matter that you researched, planned, and received multiple bids, it will, invariably, cost more and take longer than you originally anticipated.96303159-250.jpg

Replacing floorcovering or painting is a project that a homeowner can easily get bids and contract with the workmen directly. A new level of complexity occurs when the project involves more specialized contractors, like plumbers, electricians, carpenters, counters, and others.

Now, a homeowner is faced with dealing with one general contractor who will run roughshod over the sub-contractors or make the decision to do it themselves. Typically, you'll pay more for a general contractor, but the trade-off is that they have the contacts and experience to make things go smoothly.

Subs are notorious for wanting to finish their "part" of the project and move onto to the next job. Sometimes, they're not interested in the "big picture" enough to consider doing things in a way that are best for the overall outcome.

When you start tearing out some things, you find out that there may be unexpected expenses involved. Another common occurrence is that during the project, you get a new thought about changing something else "since it is already torn up anyway." This will add time and money to the job.

There can be the situation that the homeowner doesn't even know the right questions to ask or what to consider when trying to coordinate the different workers. The most detailed timetable can be thrown off track if one set of workers don't show up or finish on time. At best, it delays the project for a few days. At worst, it can delay it for a few weeks because the individual workers may have committed to other jobs that don't allow them to reschedule.

Once the work is done in a professional manner, you're probably going to live with it for years. If it is something you've wanted to do and it will allow you to enjoy your home more, it is worth doing. Just be patient and enter this adventure with the understanding that it will cost more and take longer than you expect.


https://betterhomeowners.com/PhilLande/2018/04/22/Costs-More--Takes-Longer Sun, 22 Apr 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/04/22/Costs-More--Takes-Longer

A couple is planning to tour the United States in a travel trailer during their first few years of retirement. They are going to sell their current home now and purchase another home when they finish their travels. 30349530-250.jpg

An interesting exercise is to determine the optimum time of selling the home: now or when they're ready to buy their replacement home.

If they intend on traveling for more than three years, then, it may be a good decision to sell prior to the sojourn to avoid paying taxes on the gain in their home. IRS allows for a temporary rental of a principal residence while still keeping the $250,000/$500,000 capital gains exclusion intact. A homeowner must own and use a home for two out of the previous five years which means that it could be rented for up to three years, but it would need to be sold and closed before that three-year window expires.

If the travel will be less than three years, there is an option of selling now or later. Using the example below, the homeowner sold the home, paid their expenses and invested the proceeds in a three-year certificate of deposit until the replacement home was purchased.

case study retirement-1.jpg
As an alternative, if the homeowner rented the home, not only would they have income, the home would continue to appreciate and the unpaid balance would go down resulting in larger net proceeds. Based on a 5% appreciation and continued amortization of the mortgage, the net proceeds could easily be $40,000 more.

case study retirement-2.jpg
Obviously, there are a lot of considerations that affect the decision to sell now or later but in an appreciating real estate environment, being without a home for several years could affect the financial position of the owner in the replacement property. It is certainly reasonable to look at various alternatives before making a decision. Call me at (317) 863-2356 to help you look at the different possibilities and talk to your tax professional.


https://betterhomeowners.com/PhilLande/2018/04/15/Case-Study--Housing-Decision-During-Retirement Sun, 15 Apr 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/04/15/Case-Study--Housing-Decision-During-Retirement

"How long do we have to wait to qualify for another mortgage" is the question concerning people who've had a foreclosure, short sale or bankruptcy. The loan types for the new loan will differ in amounts of time to heal credit scores based on the event.43296989-250.jpg

The following chart is meant to be a general guide for how long a person might have to wait. During this waiting period, it's important that the person be current on all payments and maintains a history of good credit.

A recommended lender can give you specific information regarding your individual situation and can make suggestions that will improve your ability to qualify for a mortgage. This process should be started before looking at homes because of the time constraints listed here can vary based on current requirements and possible extenuating circumstances of your case.

Waiting periods Distressed sales 2.png

We want to be your personal source of real estate information and we're committed to helping from purchase to sale and all the years in between. Call us at (317) 863-2356 for lender recommendations.


https://betterhomeowners.com/PhilLande/2018/04/08/Waiting-Period-After-Distressed-Sale Sun, 08 Apr 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/04/08/Waiting-Period-After-Distressed-Sale

With the first quarter of 2018 in the books, the 30-year fixed rate mortgage is nearing what Freddie Mac predicted it would be in the second quarter. If this pace continues, rates will exceed the five percent mark expected by the end of the year.42814186-250.jpg

The Fed has had its first of an expected three raises for this year and two more are expected in 2019. While these rates are not directly related to mortgages, they certainly have an effect.

Delaying the decision to purchase or refinance could be an expensive missed opportunity. A $270,000 mortgage at 4.44% has a principal and interest payment of $1,358.44 per month. If the rate were to rise one-percent in the next twelve months, the payment would be $1,522.88.

The $164.44 increase would cost a homeowner an additional $13,812.97 in seven years and close to $60,000 over the full term of the loan.

The question facing people is "what would you spend $164.44 each month if you had acted sooner to get the lower rate?"

If you're curious to know what your "missed opportunity" could be costing you, try this Cost of Waiting to Buy calculator . Use 0% increase on price change if you are refinancing a home you already own.


https://betterhomeowners.com/PhilLande/2018/04/01/Waiting-Will-Cost-More Sun, 01 Apr 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/04/01/Waiting-Will-Cost-More

The Federal Housing Administration, operating under HUD, offers affordable mortgages for tens of thousands of buyers who may not qualify for other types of programs. They are popular with both first-time and repeat buyers.

The 3.5% down payment is an attractive feature but there are other advantages:fha3.png

  • More tolerant for credit challenges than conventional mortgages.
  • Lower down payments than most conventional loans.
  • Broader qualifying ratios - total house payment with MIP can be up to 31% of borrower's monthly gross income and total house payment with all recurring debt can be up to 43%. There is a stretch provision taking it to 33/45 for qualifying energy efficient homes.
  • Seller can contribute up to 6% of purchase price; this money must be specified in the contract and can be used to pay all or part of the buyer's closing costs, pre-paid items and/or buy down of the interest rate.
  • Self-employed may qualify with adequate documentation - two year's tax returns and a current profit and loss statement would be required in addition to the normal qualifying and underwriting requirements.
  • Liberal use of gift monies - borrowers can receive a gift from family members, buyer's employer, close friend, labor union or charity. A gift letter will be required specifying that the gift does not have to be repaid.
  • Special 203(k) program for buying a home that needs capital improvements - requires a firm contractor's bid attached to the contract calling for the work to be done. The home is appraised subject to the work being done. If approved, the home can close, the money for the improvements escrowed and paid when completed.
  • Loans are assumable at the existing interest rate with buyer qualification. Assumptions are easier than qualifying for a new mortgage and closing costs are lower.
  • An assumable mortgage with a lower than current rates for new mortgages could add value to the property.

Finding the best mortgage for an individual is not always an easy process. Buyers need good information from trusted professionals. Call (317) 863-2356 for a recommendation of a trusted lender who can help you.


https://betterhomeowners.com/PhilLande/2018/03/25/FHA-Advantages Sun, 25 Mar 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/03/25/FHA-Advantages

Taxpayers can decide each year whether to take the standard deduction or their itemized deductions when filing their personal income tax returns. Roughly, 75% of households with more than $75,000 income and most homeowners itemize their deductions.Standard or Itemized-250.png

Beginning in 2018, the standard deduction, available to all taxpayers, regardless of whether they own a home, is $24,000 for married filing jointly and $12,000 for single taxpayers.

Let's look at an example of a couple purchasing a $300,000 home with 3.5% down at 5% interest. The first year's interest would be $14,630 and property taxes are estimated at 1.5% of sales price would be $4,500.

The interest and property taxes would provide a combined total of $19,130 which is less than the $24,000 standard deduction. Unless this hypothetical couple has other itemized deductions like charitable contributions that would make the total exceed $24,000, they would benefit more from taking the standard deduction.

If the mortgage rate were at 8%, the combined total of taxes and interest would be almost $28,000 which would make itemizing the deductions more beneficial.

Tax professionals will compare available alternatives to find the one that will benefit the taxpayer most. For more information, see www.IRS.gov and consult a tax advisor.


https://betterhomeowners.com/PhilLande/2018/03/18/Standard-or-Itemized Sun, 18 Mar 2018 15:00:00 GMT https://betterhomeowners.com/PhilLande/2018/03/18/Standard-or-Itemized

In any given market, inventories fluctuate based on supply and demand considering area and price range. The National Association of REALTORS considers a balanced market to be a six-month supply of homes.47945268-250.jpg

If it takes longer than six months to sell, it is thought to be a buyer's market and less than six months, a seller's market. Most buyers and sellers probably feel a balanced inventory is more like three months' supply of homes.

The inventory of existing homes has been reduced to approximately 1.5 million houses which is 10.3% lower than a year ago. According to the Federal Reserve Bank of St. Louis there are 5.7 months' supply of new homes currently on the market in the U.S.

Inventory has a direct impact on price. When demand is constant, but inventory is reduced, price tends to increase because the same number of people are trying to buy a smaller than normal number of homes.

As easy as it is to recognize the signs of spring, one should be able to spot the direction prices will be moving. When prices and mortgage rates are increasing, buyers are affected by not being able to afford the same price or size of homes.


https://betterhomeowners.com/PhilLande/2018/03/11/Inventory-Continues-to-be-a-Challenge Sun, 11 Mar 2018 16:00:00 GMT https://betterhomeowners.com/PhilLande/2018/03/11/Inventory-Continues-to-be-a-Challenge

One of the silver linings to filing your income tax return is finding out that you are going to receive a refund. If you happen to be one of these fortunate taxpayers, your next decision is what to do with it. With the average tax refund around $3,000, it could be the difference that makes a home a reality sooner rather than later.46795263-250.jpg

Many would-be buyers think it takes 10% or more down payment to purchase a home, but actually, it can be much less. There are VA and USDA mortgages that have no down payment for qualified buyers. FHA has a 3.5% down payment program and FNMA has 3% down payment mortgages for qualified creditors.

Closing costs for originating new mortgages can easily range from two to three percent of the purchase price but most lenders will allow the seller to pay part or all of them based on the agreement in the sales contract.

While the average tax refund might not cover the down payment on the median price home, it certainly helps. Your refund could make it as simple as 1-2-3 to get into a home.

  1. Get the hard, cold facts for the homes and mortgages in your area and price range.
  2. Get pre-approved with a trusted mortgage professional.
  3. Start looking at homes.

Call me at (317) 863-2356 or plande@atlasrealty.com to get started.


https://betterhomeowners.com/PhilLande/2018/03/04/Your-Refund-Could-be-the-Difference Sun, 04 Mar 2018 18:00:00 GMT https://betterhomeowners.com/PhilLande/2018/03/04/Your-Refund-Could-be-the-Difference

Buyers who have been concerned about what might happen to the tax laws affecting home ownership should feel more comfortable about moving forward with their decision to purchase. The 2017 Tax Cut and Jobs Act passed by Congress and signed by the President continues to treat real estate as a favored investment.31496145-250.jpg

Whether it is for a home to live in as your principal residence or to use as rental property, the tax laws are in place but other dynamics to be concerned with are not; mortgage rates are expected to rise as well as prices.

Reasons to buy now:

  1. The mortgage interest deduction is intact for most taxpayers.
  2. The capital gain exclusion for principal residences up to $500,000 remains in place.
  3. Taxpayers can elect annually to take newly increased standard deduction or itemize deductions whichever will benefit them the most.
  4. The house payment with taxes and insurance is most likely cheaper than the rent.
  5. Rents will continue to rise making the difference even greater in the future.
  6. Lock-in the principal & interest payment with a fixed-rate mortgage.
  7. 30-year mortgage terms are available to most borrowers.
  8. Prices will likely increase due to lower inventories and several years of low housing starts.
  9. Section 1031 exchanges, capital gains and depreciation remain the same for rental properties.

For a summary of specific real estate provisions in the 2017 Tax Cut and Jobs Act, click here.


https://betterhomeowners.com/PhilLande/2018/02/25/Fair-Skies-on-Horizon Sun, 25 Feb 2018 18:00:00 GMT https://betterhomeowners.com/PhilLande/2018/02/25/Fair-Skies-on-Horizon

In 1968, mortgage rates were 8.5%. The next year, rates went down to 7%. Homeowners could buy a 15-20% larger home for the same payments if they could find someone to assume their mortgage.Mortgage rate history2a.png

FHA and VA mortgages were very popular in certain price ranges and they allowed anyone to assume the mortgage regardless of the credit. If you could find a person to take over your note, you were free to qualify for another mortgage.

In October 1981, mortgage rates reached 18.63%. A $250,000 mortgage had a monthly principal and interest payment of $3,896.46. As astronomical as that rate sounds, people were still buying homes and were good investments.

Four years later, they were still over 12%. The monthly payment was $2,571.53. Believe it or not, people were excited to be paying only 2/3 what they had to pay a few years earlier.

Fast forward to late 1991 when the rates went below 9% and that same payment was to $2,015.16. At the turn of the 21st century, rates were 8.15% and that made the payment $1,860.62. Not much change in rates during that decade.

If we look around the housing bubble, late 2008, the rates were 6.04% and the payment was $1,505.31. By 2009, mortgage rates had fallen below 5%. The lowest mortgage rate was 3.31% on November 2012 with a payment of $1,096.27.

Rates fluctuated for the next few years until now, and most of the experts are expecting them to be above 5% by the end of 2018.  Rates have increased each week for the last six weeks to 4.38% with payments of $1,240.12.

The average mortgage rate for the past 47 years is a little over 8%. The real estate and mortgage markets are cyclical. Rates have been historically low for a long period but will probably continue to rise. Most buyers don’t pay cash and mortgages enable them to purchase now. Based on history, even 8% would be an excellent rate. Until it reaches that point again, everything lower is a bargain.


https://betterhomeowners.com/PhilLande/2018/02/18/Historical-Perspective Sun, 18 Feb 2018 18:00:00 GMT https://betterhomeowners.com/PhilLande/2018/02/18/Historical-Perspective

Some buyers think that finding the right home is the critical part of the buying process and that is how they determine which agent to use. While it is important, there may be a broader skill set to consider when selecting your real estate professional.what buyers want-2017.png

The most recent NAR Profile of Home Buyers and Sellers indicate that 52% of buyers do want help in finding the right home to purchase. There was a time when the public did not have access to all the homes on the market, but the Internet has changed that.

Helping to negotiate the price and terms of sale were identified by almost 25% of the buyers. No one wants to pay more than is necessary and the terms of the sale can be as important as the price.

The next largest area of assistance that buyers value has to do with financing and the paperwork. Even if a buyer has been through the process before, it very likely could have been several years and things have probably changed.

Since the cost of housing is dependent on the price paid for the home and the financing, a real estate professional skilled in these specialized areas can be very valuable in finding the "right" home. An agent’s experience and connections to allied professionals and service providers is equally important.

Ask the agent representing you to specifically list the tools and talent they have available to address these areas.


https://betterhomeowners.com/PhilLande/2018/02/11/The-Right-Agent-and-the-Right-Home Sun, 11 Feb 2018 18:00:00 GMT https://betterhomeowners.com/PhilLande/2018/02/11/The-Right-Agent-and-the-Right-Home

The new tax law doubles the standard deduction and it is estimated that over 90% of taxpayers will elect to use it. However, even without considering tax benefits, homeownership has convincing advantages.26694742-250.jpg

Besides the personal and social reasons for owning a home, one of the most compelling is that it is cheaper. Principal reduction and appreciation are powerful dynamics that reduce the effective cost of housing.

Amortized loans apply a specific amount of each payment to the principal amount owed to retire the loan over the term. Some people consider it a forced savings account; when the payment is made, the unpaid balance is reduced.

The price of homes going up over time is appreciation. While there are lots of variables and it is not guaranteed, it is easy to research the history of an area and make predictions based on supply and demand.

Interest rates are still low and can be locked-in for 30 years. Without considering the tax benefits at all, the appreciation and the amortization dramatically affect the “real” cost of owning a home.

Consider a $250,000 home that appreciates at 2% a year for the next seven years instead of paying $2,000 a month in rent. In the example, the payment is less than the rent being paid even including the property tax and insurance.

rent vs own 020518.png

When you factor in the monthly principal reduction and appreciation and consider additional owner expenses like maintenance and possible homeowners association, the net cost of housing is considerably lower than the rent. In this example, reduced cost in the first year alone is more than the down payment required on a FHA loan.

Based on the assumptions stated, the down payment of $8,750 could grow to $73,546 in equity in seven years. Can you name another investment with this kind of potential that also provides you a place to live, enjoy, raise your family and share with your friends?

Use this Rent vs. Own to make projections using your own numbers and price range. We’re available to answer any questions you have and to find out what it will take to own your own home.


https://betterhomeowners.com/PhilLande/2018/02/04/Convincing-Advantages-with-Standard-Deduction Sun, 04 Feb 2018 18:00:00 GMT https://betterhomeowners.com/PhilLande/2018/02/04/Convincing-Advantages-with-Standard-Deduction

Mortgage loans for more than 80% loan-to-value typically require private mortgage insurance. Mortgage insurance reimburses the lender if a borrower defaults on a loan. PMI is expensive, and homeowners should be aware of how to remove it when certain conditions have been met.31001236-250.jpg

A borrower can request in writing for the lender to cancel the PMI when the mortgage balance has reached 80% of the home’s original appraised value. However, they are required to eliminate it when the balance reaches 78%. It is a good idea to monitor this, especially if additional principal contributions are being made to pay off the loan early.

Other methods to eliminate PMI sooner than through normal amortization include the following:

  • If the value of the home has increased, the owner may consider refinancing with a loan that does not require PMI. There will be refinancing charges involved but you can determine how long it will take to recapture those costs from the monthly savings.
  • Some lenders will consider using a new appraisal to verify that the home’s mortgage is below the 80% requirement. Find out in advance from your lender if they will accept this procedure and get the names of approved appraisers they will recognize. The cost of an appraisal could range between $450 to $600.
  • Another strategy is to make additional principal contributions on a regular basis to reduce your mortgage balance to 78-80% level that would allow the lender to eliminate the PMI.

Mortgage insurance is not required on VA loans regardless of the loan-to-value. FHA mortgages made after June 3, 2013 are required to have Mortgage Insurance Premium for the life of the loan. For FHA loans made prior to that date, the MIP should automatically cancel when the loan-to-value ratio reaches 78% and has been in effect for a minimum of five years.

To obtain additional information specific to cancelling your mortgage insurance, contact info can usually be found on the annual statement provided by your mortgage servicer.


https://betterhomeowners.com/PhilLande/2018/01/28/Lower-Your-Expenses-without-PMI Sun, 28 Jan 2018 18:00:00 GMT https://betterhomeowners.com/PhilLande/2018/01/28/Lower-Your-Expenses-without-PMI

It can be shocking to hear how many people spend more time planning their vacation or next mobile phone purchase than planning for retirement. It is hard to imagine that they are expecting Social Security will take them through their golden years. A person who has paid in the maximum each year to social security can assume to receive about $30,000 a year.investable assets.png

Every adult in the work force, should go to SSA.gov to find out what they can expect based on their planned retirement age. Since it probably won’t be the amount you need to retire comfortably, at least you’ll know how much you’ll be short so that you can devise an investment plan.

There’s an easy rule of thumb used to estimate the investable assets needed by the time they retire to generate a certain income. The target annual income is divided by a safe, conservative yield to determine the investable assets needed.

A person who wants $80,000 annual income generated from a 4% investment would need investable assets of $2,000,000. If a person had $500,000 now, they would need to accumulate $1.5 million more by the time they retire. They would need to save about $100,000 a year to be ready for retirement in 15 years.

If saving that amount does seem possible, an IDEAL alternative could be to invest in rental homes. The familiarity of rental homes like owning a personal residence can reduce some of the risk. Rentals also enjoy other characteristics like income from the operation, depreciation in the form of tax shelter, equity buildup from the amortization of the loan, appreciation and leverage from the borrowed funds controlling a larger asset.

Some investors explain the strategy by buying good rentals with mortgages and having the tenant to retire the debt for you. Single family homes offer the investor an opportunity to meet their retirement and financial goals with an investment that is easily understood and controlled.

A Retirement Projection calculator can give you an idea of how many rental homes you’ll need to supplement your social security and other investments.


https://betterhomeowners.com/PhilLande/2018/01/21/Ready-for-Retirement Sun, 21 Jan 2018 18:00:00 GMT https://betterhomeowners.com/PhilLande/2018/01/21/Ready-for-Retirement

The benefit of insurance is to transfer the risk of loss to a company in exchange for a premium. The deductible is an amount the insured pays out of pocket before the insurance starts covering the cost of the loss. The challenge is to balance the risk an insured can accept with the premium being charged.28227782-250.jpg

To manage insurance premiums, policy holders often consider adjusting their deductibles. Lower deductibles result in less money out of pocket if a loss occurs in return for higher premiums. Higher deductibles will lower premiums but require that the insured bear a larger amount of the first part of the loss.

Insurance companies offer deductibles as a specific dollar amount or as a percentage of the total amount of insurance policy. The amount is usually shown on the declaration page of homeowner and auto policies.

A small fire in a $300,000 home that resulted in $5,000 of damage might not be covered because it is less than the 2% deductible which would be $6,000. If the homeowner can afford the cost of repairs in exchange for lower premiums, it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible for higher premiums could be considered.

Raising deductibles can save money in the present when paying the premium but could cause problems later if a claim occurs. Homeowners should review deductibles with their property insurance agent to be familiar with the amounts and make any changes that would be appropriate.


https://betterhomeowners.com/PhilLande/2018/01/14/Balancing-Risk-and-Deductibles Sun, 14 Jan 2018 18:00:00 GMT https://betterhomeowners.com/PhilLande/2018/01/14/Balancing-Risk-and-Deductibles

The new tax law that was signed into effect at the end of 2017 will affect all taxpayers. Homeowners should familiarize themselves with the areas that could affect them which may require some planning to maximize the benefits.

Some of the things that will affect most homeowners are the following:

  • Reduces the limit on deductible mortgage debt to $750,000 for loans made after 12/14/17. Existing loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap.40009294-250.jpg
  • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the existing mortgage being refinanced.
  • Repeals the deduction for interest on home equity debt through 12/31/25 unless the proceeds are used to substantially improve the residence.
  • The standard deduction is now $12,000 for single individuals and $24,000 for joint returns. It is estimated that over 90% of taxpayers will elect to take the standard deduction.
  • Property taxes and other state and local taxes are limited to $10,000 as itemized deductions.
  • Moving expenses are repealed except for members of the Armed Forces.
  • Casualty losses are only allowed provided the loss is attributable to a presidentially-declared disaster.

The capital gains exclusion applying to principal residences remains unchanged. Single taxpayers are entitled to $250,000 and married taxpayers filing jointly up to $500,000 of capital gain for homes that they owned and occupied as principal residences for two out of the previous five years.

Not addressed in the new tax law, the Mortgage Forgiveness Relief Act of 2007 expired on 12/31/16. This temporary law limited exclusion of income for discharged home mortgage debt for principal homeowners who went through foreclosure, short sale or other mortgage forgiveness. Debt forgiven is considered income and even though the taxpayer may not be obligated for the debt, they would have to recognize the forgiven debt as income.

These changes could affect a taxpayers’ position and should be discussed with their tax advisor.


https://betterhomeowners.com/PhilLande/2018/01/07/Homeowner-Tax-Changes Sun, 07 Jan 2018 18:00:00 GMT https://betterhomeowners.com/PhilLande/2018/01/07/Homeowner-Tax-Changes

Planning to go to the Masters next April 2-9th and don’t have a place to stay. Each year, there are homeowners who rent their home for a big premium during the Masters because hotels are in short supply and demand for private homes is up.47360108-crop.jpg

Homeowners go on vacation and make tax-free income while temporary tenants rent their home. Homeowners can benefit from a little known provision in the tax code that does not require taxpayers to recognize the income derived from renting their home for less than 15 days per year. See Plan Ahead for Tax Time When Renting Out Residential or Vacation Property- special rules.

This situation can particularly benefit homeowners where there are large sporting events nearby like golf and tennis tournaments, championship games or other high attendance venues. The demand for a private residence can be more attractive than staying in a hotel which makes the price go up.

Obviously, there are challenges with personal belongings and damage but getting a premium rental rate and not having to recognize the income could be worth it. You’ll certainly want to discuss this with your tax professional prior to making this decision. You’d probably also want to get some help from an experienced real estate professional.


https://betterhomeowners.com/PhilLande/2017/12/31/Surprise-When-Renting-Your-Home Sun, 31 Dec 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/12/31/Surprise-When-Renting-Your-Home

Some police departments report as high as 98% of calls are false alarms. Not only is this an incredible waste of police resources that could be available for legitimate emergencies, it annoys neighbors, startles pets and results in expensive false alarm fees.36192772-250.jpg

Know your codes – entering an incorrect keypad code is a common mistake leading to false alarms. The solution is to create codes that are easy for all members of the family to remember without them being obvious to potential burglars like your street number. Let everyone know when you change your code.

Secure windows and doors – be sure that all windows and doors are closed before activating your alarm. Disarm your system before opening a window or door.

House guests – tell visitors that you have an alarm system and when you normally arm it. Housekeepers, baby sitters, outside family and close friends also need to be aware of your procedures and possibly give them a code to disarm the system if it is accidentally activated.

Batteries – most systems have battery backup in case the power goes out. Know how often you need to replace the batteries; some last considerably longer than others.

Motion detectors – pets can trigger a motion detector and then, the alarm. There are sensors made for households with pets providing an alternative to turning them off. Other things that could activate motion detectors are helium balloons or curtains and plant leaves being blown in front of a sensor.

Home alarm systems are valuable to homeowners by increasing security, providing peace of mind and lowering insurance premiums. Some municipalities require a license fee for any home with an alarm. Use your alarm wisely.


https://betterhomeowners.com/PhilLande/2017/12/24/Prevent-False-Home-Security-Alarms Sun, 24 Dec 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/12/24/Prevent-False-Home-Security-Alarms

During the holidays as throughout the year, getting cash from an ATM is normal for many people. ATM’s are available 24 hours a day and they’re located in bank branches, convenience stores, grocery stores, malls, airports, sports venues and on street corners.46024154-250.jpg

Unfortunately, the convenience aspect can compromise personal safety especially if you are distracted or not paying attention. Planning for an ATM withdrawal and applying common sense can help you avoid trouble.

  • Be aware of your surroundings throughout the entire transaction like people sitting in a nearby parked car or someone offering to help you.
  • Safeguard your PIN. Don’t share it with anyone. Don’t write it down. Don’t use your birthdate, last four digits of your phone number or other obvious numbers.
  • If there are other people at the ATM to make a withdrawal, shield the keypad when entering your PIN number.
  • Keep your car doors locked and windows raised, except for your driver’s window, when using a drive-up ATM.
  • Minimize the time spent at the ATM by being prepared with your card ready, what you plan to do and do not count your money until you are in a safe place away from the ATM.
  • Take your receipt with you and destroy it if you decide to discard it.
  • Be aware that some thieves use skimming devices to steal account and PIN numbers. If something doesn’t look “just right”, consider finding another machine to use.
  • Especially at night, pay attention to locations with adequate lighting and being visible from the street. Don’t compromise your safety just because it is convenient.
  • After you have your money, pay attention to see if someone might be following you. If you are concerned, go to a nearby police or fire station or well-trafficked business and call the police.
  • If you feel uneasy during a transaction, cancel it, remove your card and LEAVE.

There may be a time in the not too distant future when we don’t have a need for cash anymore. Until that time, paying attention to simple safety precautions can help protect us during the holidays and throughout the year.


https://betterhomeowners.com/PhilLande/2017/12/17/ATM-Safety-Tips Sun, 17 Dec 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/12/17/ATM-Safety-Tips

If you’re beginning to feel the pressure of running out of time to find the perfect gift, here are a few suggestions that may not be on their “list” but will certainly be appreciated.The perfect gift-300.png

The gift of really listening without interrupting, daydreaming or planning your response can be exactly what people want when they have something important to say.

The gift of affection with appropriate hugs, kisses and pats on the back can demonstrate your love for family and friends better than words.

The gift of laughter by sharing articles, cartoons and funny stories will say "I love to laugh with you."

The gift of a simple, written note shows sincerity and real heartfelt sentiment that may be remembered for a lifetime and could even change a life.

The gift of a sincere compliment supports a person’s need to be accepted and appreciated. "You look great in that color", "That was outstanding" or "I really enjoyed that" can make someone's day.

The gift of random kindness or good deeds like holding a door or allowing someone to move ahead of you in a checkout lane shows respect for others.

Your smile, however, may be your most rewarding gift. Invariably, the person receiving the smile will in turn, smile back. The gift you gave will now be given back to you. It will be the right size and you can always use one more smile.


https://betterhomeowners.com/PhilLande/2017/12/10/Eleventh-Hour-Gifts-Without-Shopping Sun, 10 Dec 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/12/10/Eleventh-Hour-Gifts-Without-Shopping

You’ve got $500,000 in liquid assets for your retirement and you’re still 15 years away. All your bills are paid; you have a small mortgage on your home; cars are paid for and great credit. Don’t break your arm patting yourself on the back yet.31001231_s.jpg

People think more about what they’re going to do when they retire than whether they’ll have the funds to do them. Ask anyone who has retired, it takes more money than you thought it did. Let’s look at a hypothetical situation.

To retire with $125,000 income in today’s dollars with a life expectancy of 25 years after retirement, you’ll need to have a net worth of $1.5 million at retirement including what Social Security may provide. Your $500,000 will grow to $1,045,420 in 15 years which will leave you about a half million short. You’ll need to save $24,149 each year for the next 15 years to reach your goal.

Retirement Projection3.png

Is this surprising? Did you imagine that this example would be that far from its goal? It might seem staggering to save $24,000 each year but there is another way…investing in rentals.

Real estate over the long term has proven to be a solid, predictable investment.  Cash flows, appreciation, equity buildup and tax advantages are the components that contribute to the rate of return. Increasing rents, available financing and solid appreciation make rentals particularly attractive in today’s environment.

Call me at (317) 863-2356 to find out more about how rental homes can help you reach your retirement goals.


https://betterhomeowners.com/PhilLande/2017/12/03/Dont-Pat-Yourself-on-the-Back-Just-Yet Sun, 03 Dec 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/12/03/Dont-Pat-Yourself-on-the-Back-Just-Yet

FHA insured mortgages serve a sector of the market that is not necessarily being met by other loan programs.

Securing an 80% conventional mortgage that doesn’t require mortgage insurance may be the lowest cost of financing but if the buyer doesn’t have 20% down payment, it isn’t really an option.42257772-250.jpg

Securing a 100% VA loan doesn’t require a down payment or mortgage insurance but if the buyer isn’t a veteran with his/her eligibility intact, it isn’t an option either.

There are conventional loan programs with as little as 3% down payment but they not only require mortgage insurance, they also require a credit score of 740 or above which may eliminate some buyers.

For these reasons, FHA is a viable alternative to about 20% of new and existing home sales. The Federal backing of these mortgages makes it easier for first-time and low-income buyers to qualify because the requirements are not as demanding. They’re even more lenient towards buyers who have previously experienced bankruptcy, foreclosure or a short sale.

Finding the right mortgage for the right home is a team effort where both mortgage and real estate professionals work in harmony to get a buyer into their own home. Call us at (317) 863-2356 for a recommendation of a trusted mortgage professional.

General FHA loan requirements include:

  • The loan is for primary residences only but can include two, three or four units.
  • The property must be appraised by an FHA-approved appraiser.
  • The property must be safe, sound and secure, in compliance with minimum property standards as defined by the U.S. Department of Housing and Urban Development.
  • The borrower must be a legal resident of the U.S. and have a valid Social Security number.
  • The minimum credit score of 580 with a down payment of at least 3.5 percent, or a minimum credit score of 500 with a down payment of at least 10 percent.
  • The borrower may not have delinquent federal debt or judgments, or debt associated with past FHA loans.
  • The borrower must have steady employment history.
  • Documentation is required if the down payment was gifted by a family member.
  • The borrower must have a debt-to-income not exceed limits of 31% for front-end and 43% back-end ratio (some exceptions may apply).
  • Any judgments or collections on the credit report must be resolved or satisfactorily explained.


https://betterhomeowners.com/PhilLande/2017/11/26/FHA-is-a-Good-Option Sun, 26 Nov 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/11/26/FHA-is-a-Good-Option

In 2007, Congress passed an energy act that required new energy-efficient standards for basic light bulbs. Standard incandescent bulbs are being phased out and eventually will be unavailable.41630011-250.jpg

The alternative bulbs differ considerably in price. LED bulbs are the most efficient but they also cost the most. CFLs are a less expensive alternative.  Interestingly, the more expensive replacements offer lower operating costs and longer economic life.

One approach will be to inventory the different types and quantities of light bulbs you need in your home. Then, research either online or a big box store to find out what each type of bulb costs. This information will give you a total budget for converting your lighting.

It could be a significant expense to replace all the bulbs in a home at one time, especially when most of the bulbs still work. That’s where a plan might make sense.  

Replace the bulbs in the rooms where the lights are used the most such as kitchen, family rooms and bathrooms. There may be other “rooms” where the lights are used frequently like certain hallways or stairs. Outside flood lights for security purposes may be a large energy consumption.

Bulbs can vary in light output measured in lumens as well as color of light from warm white to bright white and daylight. The lighting label required by the Federal Trade Commission on all packaging will help you determine which will give you the most bang for your buck.

Lighting Plan.png


https://betterhomeowners.com/PhilLande/2017/11/19/Lighting-Conversion-Plan Sun, 19 Nov 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/11/19/Lighting-Conversion-Plan

The last thing you want if you’re traveling these holidays is to worry about someone burglarizing your home. Use this check list to add some peace of mind while you’re out of town.15632491-250.jpg

  • Ask a trusted friend - to pick up mail, newspaper and keep yard picked up to avoid an appearance of being empty.
  • Consider discontinuing your mail (USPS Hold Mail Service)
  • Don’t post about your trip on Facebook and other social media until you return – some burglars actually look for this type of announcement to schedule their activities.
  • Do notify police or neighborhood watch – especially if you’re going to be gone for more than just a few days. Let your monitoring service know when you’ll be gone and if someone will be checking on your home for you.
  • Light timers make it look like someone is home – use several sets for different times to better simulate someone being at home.
  • Do unplug certain appliances – TV, computers, toaster ovens that use electricity even when they’re off and to protect them from power surges.
  • Don’t hide a key – burglars know exactly where to look for your key and it only takes them a moment to check under the mat, above the door, in the flower pot or in a fake rock.

These easy-to-handle suggestions may protect your belongings while you’re gone while adding a level of serenity to your trip.


https://betterhomeowners.com/PhilLande/2017/11/12/Holiday-Travels Sun, 12 Nov 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/11/12/Holiday-Travels

Would someone really refinance their home and not take money out of it? Certainly, if they could get a lower rate, build equity faster and pay off the home sooner.65125303-250.jpg

For people with extra cash available, this can be very attractive compared to the low savings rates being paid by banks.

In the example below, the current mortgage is 5% for 30 years after 48 payments of $1,342.05. The owner can refinance for 15 years at 3.37%. If they put $36,000 into the refinance, their payments will be slightly more but the mortgage will be paid off in 15 years. At that same point, if they keep the current mortgage, their unpaid balance will be $136,049.03.

If you have a goal to get your home paid off and have the available funds, a Cash-In Refinance may be just the strategy for you.

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https://betterhomeowners.com/PhilLande/2017/11/05/CashIn-Refinance Sun, 05 Nov 2017 17:00:00 GMT https://betterhomeowners.com/PhilLande/2017/11/05/CashIn-Refinance

When loans are quoted by lenders, most buyers pay attention to the interest rate but not so much to the points that may be charged along with the rate.19269905-250.jpg

A point is one-percent of the mortgage amount and considered pre-paid interest that affects the yield on the loan. Buyers or sellers can pay points but there can be limits based on underwriting guidelines for different types of loans.

A lower note-rate would obviously make the payments less. However, with a little analysis, you can determine how much points paid up-front can save a borrower or whether you'll recapture the additional costs in the anticipated time in the home.

In the example below, two choices are compared; a 4.25% loan with no points vs. a 4.00% loan with one point. If the buyer stays in the home at least 69 months, he will recover the $2,700 cost for the point on the lower interest rate.

If the purchaser stays ten years, he’ll save two thousand dollars over the cost of the point. A less obvious advantage will be realized because the unpaid balance on the lower interest rate loan will results in an additional $1,780 savings.

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This is an example of a permanent buy-down but temporary buy-downs are also available.  A trusted mortgage advisor can help you determine alternatives.


https://betterhomeowners.com/PhilLande/2017/10/29/Upfront-Points-to-Lower-the-Rate Sun, 29 Oct 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/10/29/Upfront-Points-to-Lower-the-Rate

The Mortgage Debt Forgiveness Act, originally passed in 2007, was extended three times to protect homeowners from paying income tax on debt that was relieved due to foreclosure, short sales or deed in lieu of foreclosure.  Mortgage Debt Relief example 2017.png

The law expired on December 31, 2016 and unless it is extended again, homeowners with debt relief in 2017 may be subject to tax.

A homeowner might feel a sense of relief without the obligation of a delinquent mortgage but just because the payments are no longer due doesn’t mean that there isn’t another obligation that replaces it. If a lender cancels or forgives debt, a taxpayer must include the cancelled amount in their income for tax purposes depending on the circumstances. The tax significance could be serious.

This previously allowed relief only applied to a taxpayers’ acquisition indebtedness of their principal residence which did not include second homes and investment property. The maximum amount was limited to $2 million of mortgage debt forgiveness or $1 million if filing separately.

Due to the serious consequences involved in short sales and foreclosures, it is advised that homeowners faced with this possibility should seek expert advice from their legal and tax professionals.


https://betterhomeowners.com/PhilLande/2017/10/22/Debt-Relief-May-Trigger-Tax Sun, 22 Oct 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/10/22/Debt-Relief-May-Trigger-Tax

There could be some legitimate reasons for not buying a home but indecision is not one of them. Indecision is rooted in not having enough information to move forward to own a home or continue renting.18443593-250.jpg

If you keep renting, at the end of the year, you have had a place to live and a pile of receipts that helped the landlord pay for his house. Deciding to buy a home will give you a place to live that is yours and all the things that come with that.

When you consider principal reduction, appreciation and tax savings, your monthly cost of housing could be much less than the rent you’re paying. The principal reduction included in each payment is like a forced savings account that increases as your mortgage balance decreases. Your equity in the property will also grow due to appreciation as the home goes up in value. The equity is part of your net worth and an investment in your family’s future.

The income tax savings can be an additional financial consideration if the combined interest and property taxes are greater than the allowable standard deduction.

Trends are showing that both tenants and homeowners are staying in their homes longer. It’s been said that whether you rent or own, you’re paying for the home. Do you really want to buy the home for your landlord? Check out your numbers on a Rent vs. Own and then, call us to help make it happen.


https://betterhomeowners.com/PhilLande/2017/10/15/Indecision-is-Not-a-Decision Sun, 15 Oct 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/10/15/Indecision-is-Not-a-Decision

Regardless of what a lender quotes on mortgage rates, the actual rate a borrower pays is based on a number of variables. Lenders determine whether to loan money and at what rate based on the risk involved with the transaction.Sorry not available.png

Factors that increase the risk that the loan will be repaid will proportionately increase the interest rate charged to the borrower. If the risk becomes too high, the loan will not be approved.

  • Loan amounts – conventional mortgages above conforming limits as set by Fannie Mae and Freddie Mac are considered jumbo loans and generally have a higher interest rate.
  • FICO score – the lowest interest rate is reserved for the highest score; the lower the score, the higher the rate the borrower will pay.
  • Occupancy – borrowers occupying a home as their principal residence are considered a better loan risk than second homes and investment properties.
  • Loan purpose – purchase transactions generally have the lowest interest rate with refinancing for better rates and terms being priced slightly higher. An even higher rate might be charged for refinancing and taking cash out of the property.
  • Debt-to-Income Ratio – a borrower’s monthly liabilities divided by their gross monthly income develops a ratio that helps lenders to assess the borrower’s ability to repay the mortgage.
  • Property Type – some types of property are considered higher risk than others which could adversely affect the rate.
  • Loan-to-value – the lower the percentage of the loan to the appraised value of the property will generally lower the interest rate.

Any combination of these factors could limit a borrower’s ability to secure a mortgage at the rate initially quoted. Pre-approval by a trusted mortgage professional can be the best way to know what rate you can expect to pay. Please call for a recommendation of a trusted mortgage professional.


https://betterhomeowners.com/PhilLande/2017/10/08/Risk-Rate-Relationship Sun, 08 Oct 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/10/08/Risk-Rate-Relationship

Buyer’s mortgage pre-approval is good for everyone in the transaction. It saves time, money and removes the uncertainty of knowing whether the buyer will be qualified after negotiating a contract. The direct benefits include:

  • Looking at “Right” homes - price, size, amenities, locationPre-approval is good for everyone.png
  • Find the best loan - rate, term, type
  • Uncover credit issues early - time to cure possible problems
  • Negotiating power - price, terms, & timing
  • Close quicker - verifications have been made

There is a significant difference in having a trusted mortgage professional take a loan application and run all the necessary verifications compared to going through calculators on a lender’s website. Beside the peace of mind, the cost of being pre-approved is a bargain and generally, limited to the cost of the credit report.

Even if a person has been pre-approved, a second opinion from a different lender may be a good option. It can verify there is a good deal or you’ll discover that you can improve it. Either way, it works to your advantage. Contact me if you’d like a recommendation of a trusted mortgage officer.


https://betterhomeowners.com/PhilLande/2017/10/01/Preapproval-is-Good-for-Everyone Sun, 01 Oct 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/10/01/Preapproval-is-Good-for-Everyone

It’s much easier to play a game when you know the rules so you can avoid mistakes that may keep you from winning. Homeownership isn’t a game but there are some rules that will protect your investment and increase your enjoyment.

Most people want a home of their own to raise their family, share with their friends and to feel safe and secure. In most cases, it is also their largest asset. These suggestions can help protect your investment and make homeownership more enjoyable.12519621-250.jpg

  • Don’t overpay for your home
  • Maintain your home to protect its value
  • Minimize your assessed value to lower property taxes
  • Make extra contributions to save interest and build equity
  • Validate the insured value of improvements and contents
  • Be aware of current surrounding property values
  • Make mortgage interest payments deductible
  • Invest in capital improvements that increase market value
  • Don’t over-improve the neighborhood comparables
  • Keep records of capital improvement & other maintenance

We’d like to be your personal source of real estate information and we’re committed to helping from purchase to sale and all the years in between. If you need assistance with any of the items mentioned in this article or need a recommendation for a service provider, it would be our pleasure to help.


https://betterhomeowners.com/PhilLande/2017/09/24/Easier-to-Play-the-Game Sun, 24 Sep 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/09/24/Easier-to-Play-the-Game

One of the “big” three credit bureaus recently announced that a massive hack has exposed the personal information of up to 143 million people. To add perspective to that statement, that is about two-thirds of American credit card holders or close to half the population of the United States.  Part of protecting your credit is being vigilant and making it difficult for thieves to steal your identity. 17405556-250.jpg

If you suspect you are a victim of identity theft, an initial step is to place a fraud alert on your account. Contact one credit reporting company (Equifax, Experian or TransUnion), tell them you are an identity theft victim and ask the company to put a fraud alert on your credit file. Confirm that the company will contact the other two companies.

The initial fraud alert will make it harder for an identity thief to open accounts in your name. The alert lasts for 90-days and it can be renewed.

A more severe precaution called a credit freeze restricts access to your credit report. A credit freeze makes it more difficult for thieves to use your identity to apply for loans or credit cards in your name.

By contacting each of the three credit reporting agencies separately, you can request a temporary freeze. This would prevent them from providing credit information without both your explicit permission and a PIN that temporarily lifts the freeze.

Unlike the fraud alerts, the agencies may charge you a fee for instituting the freeze in addition to another fee to lift the freeze each time.

A credit freeze will not affect your credit score. If you are in the process of buying a home, contact your loan officer and discuss the decision you are considering. If you will be making a mortgage application in the near future, you can temporarily lift the freeze for the lender you are using.

A trusted mortgage professional is a key team member in purchasing a home. Making an appointment with them is one of the first steps along with determining your real estate professional. Contact us to get a recommendation of a trusted mortgage professional.

To request a credit freeze, you can do it online or by phone:

Equifax – 800-349-9960 | Experian – 888-397-3742 | Trans Union – 888-909-8872

For more information, see Credit Freeze FAQs at the Federal Trade Commission.

It is important to personally monitor your credit reports through annual credit report.com to discover any unusual activity.


https://betterhomeowners.com/PhilLande/2017/09/17/Protecting-Your-Credit Sun, 17 Sep 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/09/17/Protecting-Your-Credit

The grass tends to look greener on the other side of the fence. Maybe that’s why some people invest in things they don’t understand. It has been said that the grass is just as hard to mow on the other side of the fence so stay with what your most familiar.3283858-250.jpg

Single-family homes used for rental property give a person a chance to invest in something they understand: a home. They also have distinct advantages over other types of investments.

An investor can borrow up to 80% of the value at fixed interest rates 30 years. The financing creates leverage so that the investor can benefit from the increase in value of the home not just the down payment.

It is reasonable to expect that the home will appreciate while providing tax advantages and practical control that are not available with many other investments. Low housing inventory in many markets has caused rents to increase and low new home growth will make it difficult to keep up with demand.

Consider a $150,000 home purchased for cash that would rent for $1,500 per month. With $18,000 income and allowing for property taxes, insurance and maintenance, it is still reasonable to expect $10,000 net income. There would be an 8% return on investment without considering tax savings or future appreciation compared with 5-year CDs paying less than 2.35% and a 10-year Treasury yield at 2.13%.

An added bonus is the amortization that occurs on the loan as the principal is reduced with each payment. It becomes a forced savings account that increases the equity and isn’t taxable until the property is sold.

The reasonable control has a lot of appeal to many investors who find the volatility of the stock market unacceptable and don’t want the risk associated with alternative investments. Please contact me if you’d like to know more about available opportunities.


https://betterhomeowners.com/PhilLande/2017/09/10/Investing-on-Your-Side-of-the-Fence Sun, 10 Sep 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/09/10/Investing-on-Your-Side-of-the-Fence

The purpose of insurance is to shift the risk of loss to a company in exchange for a premium. Most policies have a deductible which reduces the amount of the claim that is paid by having the insured share in the first part of the loss.38973594-250.jpg

In the process of managing insurance premiums, policy holders often consider higher deductibles to lower the premium. Lower deductibles mean less money out of pocket if a loss occurs but also results in higher premiums. Higher deductibles result in lower premiums but require that the insured bear a larger part of the loss.

A small fire in a $300,000 home that resulted in $2,500 of damage might not be covered if the policy holder has a 1% deductible. If the homeowner can afford to handle the cost of repairs in exchange for cheaper premiums, it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible could be considered.

Homes in high-risk flood areas with mortgages from federally regulated or insured lenders require additional flood insurance. However, each homeowner needs to assess the risk of being able to financially sustain a flood loss on their home when flood insurance is not required. The recent events in south Texas and Louisiana are evidence that the unexpected can happen.

It is important to review your deductible and discuss risks with your property insurance agent so that you’re familiar with the amount and make any changes that would be appropriate before a claim is made.  The FEMA website has information and frequently asked questions about flood insurance.


https://betterhomeowners.com/PhilLande/2017/09/03/Deductible-Dilemma Sun, 03 Sep 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/09/03/Deductible-Dilemma

A home equity line of credit, HELOC, is a mortgage loan made to homeowners to be used on an as-needed basis. A lender, such as a bank, will approve a borrower for a specified amount based on the equity in their home and all the necessary paperwork is signed to authorize the loan.43355754-250.jpg

The line of credit amount is available to the borrower and no interest is due until some or all the money is used. When the money is paid back, the line of credit is again available in full to the borrower.

The specifics of the repayment will depend on the HELOC lender. It may require interest only or it may require amortized payments of principal and interest.

The proceeds from a HELOC can be used to make improvements on the home or anything else such as medical expenses, college tuition or unexpected expenses or other liquidity issues.

Unlike personal credit card interest, the interest on a HELOC may be tax deductible. Your tax advisor will be able to let you know about your situation.

Rates and fees can vary widely on HELOC loans. Borrowers should shop around, compare and get recommendations before deciding on a lender.


https://betterhomeowners.com/PhilLande/2017/08/27/Your-Homes-Equity-Could-Be-the-Answer Sun, 27 Aug 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/08/27/Your-Homes-Equity-Could-Be-the-Answer

What your home is worth depends on why you ask the question. It could be one value based on a purchase or sale and an entirely different value for insurance purposes.Values-250.png

Fair market value is the price a buyer and seller can agree upon assuming both are knowledgeable, willing and unpressured by extraordinary events. This value is generally indicated by a comparable market analysis done by real estate professionals.

Insured value is determined for insurance coverage. Homeowner policies typically have replacement clauses in them and the cost of demolition, new construction and the added complexities of matching existing construction could exceed the cost of new construction.

Investment value is based on the income it can generate during its useful life. This value is dependent on what kind of yield an investor requires to capitalize the value over time. The formula for this is to divide net operating income by the capitalization rate required by the investor.

The assessed value of a home is used to determine the property taxes the owner must pay. This value is determined by the responsible state government agency.

Homeowners are generally more familiar with their home’s market value. Since it can be lower than the replacement cost, owners should review the insured value with their property insurance agent periodically.

There can be a surprising difference in each of these separate values. It is important to know the purpose that it is going to be used for the value.


https://betterhomeowners.com/PhilLande/2017/08/20/Which-Value-Do-You-Want Sun, 20 Aug 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/08/20/Which-Value-Do-You-Want

Whether you’re refinancing your current home or buying a new one, something worth considering is a 15-year loan rather than a 30-year term. The payments will be a little higher but you’ll get a lower interest rate and you’ll build equity much faster.30348233-250.jpg

Let’s look at an example of a $300,000 mortgage with the choice of a 30-year term with a 3.92% rate compared to a 15-year term with a 3.2% rate. The payments would be $682.28 higher on the shorter term but the equity would be considerably higher even after you adjust for the higher payments.

Another benefit is that the shorter-term loan creates a forced savings situation where the savings on longer term loan might end up being spent rather than being saved and invested.  A conscious decision to pay more in payments could pay big dividends in the future.

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https://betterhomeowners.com/PhilLande/2017/08/13/Shorter-Term--More-Savings Sun, 13 Aug 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/08/13/Shorter-Term--More-Savings

After the mortgage payment, the largest homeowner expense is for utilities and the major component is energy.  Contributing factors include air leaks, insulation, heating and cooling equipment, water heaters and lighting.Where does my money go.png

Computers, monitors, TVs, cable and satellite boxes, DVRs and power adapters are spinning your electric meter even when they’re not being used. Even though they only represent a small percentage of a home’s total energy consumption, about 3/4 of the electricity is used when the products are turned off.

Unplugging devices can actually make a difference in the size of your electric bill. Plugging several of these offenders into a power strip with a single on/off switch may make the task easier. Most computers have options to put them into sleep mode or even turn when not in use.

The Department of Energy has an Energy Saver Guide and do-it-yourself suggestions.


https://betterhomeowners.com/PhilLande/2017/08/06/Home-Energy-Aware Sun, 06 Aug 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/08/06/Home-Energy-Aware

Home is a place you should feel safe and secure. Sometimes, we take it for granted and unfortunately, we do need to remain vigilant about things we do that could compromise our safety. Here are a few tips to consider:Home Safe Home.png

  • Everyone loves an inviting home including burglars. Make sure it looks occupied and is difficult to break in.
    • Always lock outside doors and windows even if you’re only gone for a brief time.
    • Lock gates and fences.
    • Leave lights on when you leave; consider timers to automatically control the lights.
    • Keep your garage door closed even when you’re home; don’t tempt thieves with what you have in your garage.
    • Suspend your mail and newspaper delivery when you’re out of town or get a neighbor to pick it up for you.
  • Posting that you’re out of town or away from home on social networks is like advertising your home is unprotected.
  • Equally dangerous could be allowing certain social network sites to track your location.
  • Don’t leave keys under doormats, in flowerpots or the plastic rocks; thieves know about those hiding places and even more than you can think.
  • Trim the shrubs from around your home; don’t give criminals a place to hide.
  • Use exterior motion detectors and yard lighting.
  • Have an alarm system and use it when you leave home and go to bed.
  • Put 3 ½” deck screws in door plates and door hinges.
  • Have good deadbolts on all exterior doors.
  • Exterior doors should be solid core.


https://betterhomeowners.com/PhilLande/2017/07/30/Home-Safe-Home Sun, 30 Jul 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/07/30/Home-Safe-Home

Consider the goal of funding a child’s college education in the future. If “other people’s money” in the form of a scholarship is not a possibility, there still may be another way to use some “other people’s money.”26458431-250.jpg

A $25,000 investment into a mutual fund paying 5% would earn $1,250 in the first year. Alternatively, the $25,000 as a 20% down payment to purchase a $125,000 rental home appreciating 3% a year would have gone up by $3,750 or three times that of the mutual fund in the first year.

The mutual fund’s growth depends on the value of the money invested. Rental real estate benefits because a 20% down payment controls a much larger asset because you’re using “other people’s money.” Leverage allows the investor to profit not only from the amount of cash invested but from the value of the investment.

With a 20% down payment and current interest rates, a typical rental would have a positive cash flow. In ten years, the equity could be $75,000. On the other hand, the $25,000 initial investment in a mutual fund earning 5% annually would only grow to about $40,000 in the same 10 years. It would require an additional $2,700 each year to reach the same $75,000 value.

Leverage is just one of the many benefits that make rental real estate the IDEAL investment. Whether you are saving for higher education, retirement or wealth accumulation, consider rental real estate. Using single-family homes as investments are attractive because homeowners have a better understanding than many other investments and self-management is a possibility.


https://betterhomeowners.com/PhilLande/2017/07/23/Other-Peoples-Money-for-College Sun, 23 Jul 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/07/23/Other-Peoples-Money-for-College

FHA VA Assumption.png

In the late 80’s, both FHA and VA began requiring buyers to qualify to assume their mortgages. The main reason there haven’t been many assumptions in the past 25 years is that interest rates have been steadily going down and if a person has to qualify, they might as well do it on a new loan and get a lower interest rate.

Based on projections by Fannie Mae, Freddie Mac, the MBA and NAR, rates for the second half of 2017 and 2018 are expected to be higher. When interest rates on new mortgages are higher than the rates of assumable FHA and VA mortgages in the recent past, it becomes more advantageous to assume the existing mortgages.

FHA and VA loans originated with lower than current interest rates have great advantages for buyers and sellers.

  1. Interest rate won't change for the qualified buyer
  2. Lower interest rate means lower payments
  3. Lower closing costs than originating a new mortgage
  4. Easier to qualify for an assumption than a new loan
  5. Lower interest rate loans amortize faster than higher ones
  6. Equity grows faster because loan is further along the amortization schedule
  7. Assumable mortgage could make the home more marketable

An Assumption Comparison can help determine the savings and financial benefits of an assumable mortgage with a lower rate. https://betterhomeowners.com/PhilLande/2017/07/16/Assumptions-are-an-Alternative Sun, 16 Jul 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/07/16/Assumptions-are-an-Alternative

Anytime a lender and borrower can agree on rates and terms, it can be a good match but IRS has specific rules that govern the transaction especially when the parties are family or friends.26614035-250.jpg

The loan must be done in a business-like manner with a written note specifying the loan amount, interest rate, term and collateral. IRS requires that the mortgage be a recorded lien to allow the interest deduction.

Sometimes, a friends and family situation might have a less than normal interest rate on the mortgage. However, the rate charged in the note is regulated by the minimum applicable federal rate which is published monthly by IRS based on current Treasury securities. For July 2017, the rate is 2.57% for terms over nine years.

The seller must report the interest paid to them along with the name, address and Social Security number on schedule B when the buyer uses the property as their principal residence.  A mortgage between family and friends can be good for both parties. It may allow the borrower a slightly lower rate without the expenses of a traditional lender while giving the note holder a higher rate than they can earn in available investments.

Your tax professional can guide the transaction whether you’re a buyer or a seller and your real estate professional can help arrange to have the documents drawn and filed.


https://betterhomeowners.com/PhilLande/2017/07/09/Family--Friends-Mortgage Sun, 09 Jul 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/07/09/Family--Friends-Mortgage

There is increasing difficulty for first-time home buyers to save for their down payment as indicated in the graph.  Several factors that contribute to this trend include rising rents, rising home prices, student loan debt and flat wages.down payment graph.png

Some would-be buyers feel they cannot buy a home today but a large part of those decisions may be based on inaccurate assumptions.

Nine out of ten non-owners believe they need ten percent or more for a down payment. The typical down payment for first-time buyers is six percent. VA has 100% loan programs as well as USDA for certain qualifying areas and buyers. FHA is known for 3.5% down payments. And FNMA and Freddie Mac have down payments as low as 3% and 5%.

There are gift provisions available for buyers who have an “angel” who would like to help them with their down payment.

There are ways to borrow against a person’s qualified retirement program for a down payment. It isn’t necessarily limited to the buyer but could include a relative. Interestingly, a son or daughter can borrow against their retirement to benefit their parents.

In some respects, having good credit and sufficient income is more important than the down payment. Don’t rely on “common knowledge.” Get expert advice and counsel to see if there is a way to advance your dream of owning a home.


https://betterhomeowners.com/PhilLande/2017/07/02/Down-Payment-Problem--Are-You-Sure Sun, 02 Jul 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/07/02/Down-Payment-Problem--Are-You-Sure

If you haven’t heard of a CLUE report, it has nothing to do with the table game searching for a murderer. It is a report showing the insurance claims on your home and car for the past five to seven years.10340976-250.jpg

This database is used by insurance companies to evaluate risks and determine rates. C.L.U.E. stands for Comprehensive Loss Underwriting Exchange. Rates can be increased not only due to legitimate claims but data entry errors also. Sometimes, simply asking a question without filing a claim can be logged as a claim.

For that reason, similar to verifying the accuracy of your credit report, it is important to check out the CLUE report on your home and car. The reports are free and there is a process for correcting mistakes.

An interesting and sometimes costly surprise occurs during the home buying process. The claim experience of the prior seller could impact the price of the premium of the new buyer. For that reason, you can ask for a copy of the CLUE report on the home you’re interested in buying prior to writing a contract.


https://betterhomeowners.com/PhilLande/2017/06/25/Dont-Have-a-CLUE Sun, 25 Jun 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/06/25/Dont-Have-a-CLUE

Mickey Mantle said “If I knew I was going to live this long, I’d have taken better care of myself.”

Similarly, if people planning their summer travel knew they were going to have an emergency, they would have the right things available. Only 5% of drivers carry all recommended emergency supplies in their cars.9111296-250.jpg

The Federal Emergency Management Agency (FEMA) recommends that all Americans have some basic supplies on hand in order to survive for at least three days if an emergency occurs. Some of these things would be more important if you lived or traveled in remote areas.

  • Reflective hazard triangle or road flares
  • Spare tire
  • Jumper cables
  • First-aid kit
  • Flashlight and extra batteries
  • Cell phone and charger
  • Crucial medications
  • Emergency radio with batteries
  • Bottled water for each person and pet in your car
  • Non-perishable, high-calorie food
  • Distress signal flag
  • Matches or lighter

During cold weather, additional items are recommended:

  • Windshield scraper and brush
  • Blankets and extra warm clothing
  • Road salt or cat litter to help with tire traction
  • Tarp for working outside in weather

It is recommended that emergency supplies should be checked at least twice a year to see that all of the items are in working order and in good condition. It is important that items are replaced if any of them are used during the year.

The American Red Cross is among many sources where emergency preparedness kits and supplies can be purchased.


https://betterhomeowners.com/PhilLande/2017/06/18/Emergency-Kit-for-the-Car Sun, 18 Jun 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/06/18/Emergency-Kit-for-the-Car

Businesses must treat customers fairly if they expect to do business with them again or get recommendations to their friends. Customers of stores like Nordstrom’s understand that a salesperson is an employee and represents the company.13959026-250.jpg

The line becomes less clear in some industries, especially ones that involve real estate. Agency is a legal relationship authorizing a person to act for or in the place of another. It involves responsibilities that exceed treating a person fairly.

The duties a buyer or seller can expect to receive from a real estate salesperson or broker include but are not limited to honesty, accountability, full disclosure, representation and reasonable skill and care. Buyers and sellers might additionally expect obedience, loyalty and confidentiality.  State laws can differ on specific duties.

Mortgage and title officers are limited in their duties to the buyer to honesty and accountability and specific requirements under the federal Real Estate Settlement and Procedures Act.

A special relationship with a real estate agent makes it advantageous to have them coordinate efforts with the other professionals in the home buying process. Since most buyers’ and sellers’ transactions are infrequent, the agent can bring valuable experience to the transaction.

Every buyer and seller should discuss the level of service they expect from the real estate professional they work with. Another good question is what happens if the purchase and sale are within the same company.


https://betterhomeowners.com/PhilLande/2017/06/11/What-Can-You-Expect Sun, 11 Jun 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/06/11/What-Can-You-Expect

Hands-only CPR can save lives.  The American Heart Association states that "Almost 90% of people who suffer out-of-hospital cardiac arrests die.  CPR, especially if performed in the first few minutes of cardiac arrest, can double or triple a person's chance of survival."  Most people who survive a cardiac emergency are helped by a bystander.   

  1. Check for responsiveness – shake the person and shout “Are you OK?”11700251-250.jpg
  2. Call 9-1-1 – either tell someone to call or make the call yourself
  3. Compress - Push hard and fast in the center of the chest at a rate of 100 per minute.

The victim should be flat on their back preferably on the floor. Place the heel of one hand on the center of the victim’s chest and place the heel on top of the other hand lacing your fingers together. Lock your elbows and compress the chest forcefully; make sure you lift enough to let the chest recoil.

Chest compressions should be continued until the person shows obvious life-like breathing, the scene becomes unsafe, an AED (automatic external defibrillator) becomes available, or a trained responder takes over the emergency treatment.

Alternating mouth-to-mouth breaths is not necessary using this method. Compressions are adequate except in drowning or drug overdose situations where 30 chest compressions are followed by two mouth-to-mouth breaths.

Watch this two-minute video and consider taking instructions from the Red Cross or other qualified provider. Every household should have at least one person trained in life-saving skills.


https://betterhomeowners.com/PhilLande/2017/06/04/HandsOnly-CPR Sun, 04 Jun 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/06/04/HandsOnly-CPR

Surely, you remember being a child at an amusement park when after having stood in line with your friends and family, waiting to get on a terrific ride, you discovered the sign that read, “you must be this tall to ride.”This Tall3.png

Not only was it disappointing, it was slightly embarrassing. You never want to go through that again.

A remarkably similar situation occurs when people are buying a home. After finding the right home and negotiating the contract, they find out that they don’t measure up financially.  It’s not something that anyone wants to go through if they have a choice.

Regardless of what you think you know, if you’re buying a home with a loan, you need to physically visit with a trusted mortgage professional before you get serious.

  • You’ll find out your credit score which will directly affect the mortgage rate you’ll pay.
  • You might discover blemishes on your credit that possibly can be corrected.
  • You’ll even get a pre-approval letter that you can submit with an offer which could dramatically affect your negotiations in the current competitive market.

Some rides don't turn out to be as good as you thought they were going to be.  A person certainly doesn’t want that disappointment with a lender. Contact me for a recommendation of trusted mortgage professional.


https://betterhomeowners.com/PhilLande/2017/05/28/Must-Be-This-Tall-to-Ride Sun, 28 May 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/05/28/Must-Be-This-Tall-to-Ride

59% of non-owners are not comfortable taking on a mortgage with their student debt according to the Aspiring Home Buyers 2017 survey. It is estimated that the college graduates have an average of $37,172 in student debt.16522219-250.jpg

Fannie Mae, who has loan programs with as little as three to five percent down payments, has announced changes to how student loan debt is treated that could make the difference in qualifying for a mortgage.

For the 5 million borrowers who participate in the reduced payment plans, actual payments are considered for calculating debt-to-income ratio rather than maximum payment amount.

Non-mortgage debts paid by another party for at least 12 months won’t be included in calculating debt-to-income ratio.  For example, payments being made on a student loan by the parents would not be counted against the DTI ratio for the student.

These changes can make it possible for would-be buyers with student debt to get a home now instead of waiting for years. Being pre-approved by a trusted mortgage professional is the best way to confirm that these changes apply to your situation. Call today for a recommendation of a trusted mortgage professional.


https://betterhomeowners.com/PhilLande/2017/05/21/Wouldbe-Buyers-with-Student-Debt Sun, 21 May 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/05/21/Wouldbe-Buyers-with-Student-Debt

While low inventory is certainly challenging buyers, not having a clear understanding of mortgage financing is also causing issues. By having good information, they are able to make better decisions as well as compete favorably.Mortgage Rate History0517.png

Most buyers don’t realize how the mortgage rate is determined for a borrower. While annual income is important, a good credit score, low debt-to-income ratio, loan-to-value ratio and ability to repay the loan are vital concerns.

A variety of myths seem to permeate the market such as rates are set and released once a day; FHA loans are for first-time buyers only; pre-qualification commits the lender; lender fees are not negotiable and adjustable rate mortgages always go up.

Misunderstanding of actual mortgage practices may be a contributing factor to why more buyers are not taking advantage of what are still historically low mortgage rates.

While getting solid information about mortgages and being pre-approved from a lender are very important, it is only one step in the home buying process. Success in buying a home in today’s market should begin with a real estate professional who will coordinate all the different parts of the transaction including mortgage, title, insurance, inspections.


https://betterhomeowners.com/PhilLande/2017/05/14/Good-Info--Good-Decisions Sun, 14 May 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/05/14/Good-Info--Good-Decisions

Regardless of the reason to refinance a home, the basic question to ask is: “Do you plan to live in the home long enough to recapture the cost of refinancing?” There are always expenses involved in refinancing which can be paid in cash or rolled into the new mortgage.

From a strictly financial standpoint, the break-even point is achieved when the cost of refinancing has been recaptured by the monthly savings. It would take approximately 23 months to recapture $4,000 of refinance costs with a lower payment of $175 a month.22683914-250.jpg

  1. Lower the rate
  2. Shorten the term so that the loan will build equity faster and be paid off sooner.
  3. Lower your payment to reduce your monthly cost of housing.
  4. Convert an ARM to a FRM to stabilize your payment due to concern of rising interest rates.
  5. Cash out equity to be able to use the money for another purpose.
  6. Combine a first and second mortgage.
  7. Consolidate personal debt so the interest is tax deductible.
  8. Payoff higher cost debt such as credit cards, student debt, etc.
  9. Remove a person from a loan as in the case of a divorce.

Points paid to purchase a principal residence are tax deductible completely in the year paid. However, the points must be spread over the life of the mortgage on a refinance. For that reason, consider getting a “par” value loan with no points. It may have a slightly higher rate but the interest will be fully deductible and it will lower the cost of refinancing.

Determine the break-even point on your situation by using the Refinance Analysis . Call for a recommendation of a trusted mortgage professional.


https://betterhomeowners.com/PhilLande/2017/05/07/Reasons-to-Refinance Sun, 07 May 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/05/07/Reasons-to-Refinance

“More has been lost due to indecision than was ever lost to making the wrong decision.” Interest rates have as much effect on housing costs as price and when they are both trending upward, it can be very expensive to wait. 25787590cropped.jpg

There can be some legitimate reasons for postponing a purchase such as needing to save the down payment, improve your credit or waiting to find out about a possible transfer. The problem is that prices and interest rates could, and very likely will, go up in the future.

If the price of $250,000 home went up 5% and the interest rate went from 4.5% to 5.25%, the payments would increase by $176.42. The additional cost over a seven-year period would be close to $15,000.

The questions that indecisive buyers need to ask themselves is “how am I going to feel knowing that if I had not waited, I could have been living in the home for less money?” and “What would I have spent the money on if I didn’t have to make the larger payment?”

Use the Cost of Waiting to Buy calculator to find out how much indecision may be costing you.


https://betterhomeowners.com/PhilLande/2017/04/30/Indecision-May-Cost-More Sun, 30 Apr 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/04/30/Indecision-May-Cost-More

Some would-be buyers have emotional reasons to own a home like having a place of their own where they can raise a family, feel safe and secure and enjoy their friends’ company. Other buyers’ dominant reasons might be financial in nature such as building equity or lowering their cost of housing.52407681-250.jpg

Regardless of what might be motivating people to want their own home, it is easy to justify that now is a good time to purchase. Let’s look at a $250,000 example using a FHA loan.

The total payment will be about $1,835 dollars a month. If the payment is lower than the rent a person is paying, that should encourage a person to continue investigating.

In this example, when you consider the monthly principal reduction, the monthly appreciation and the tax savings, even with money added for monthly maintenance, the net cost of housing is less than half the total house payment.

Considering all those advantages, the would-be buyer is spending over $1,100 per month more to rent than it would be to own. In a year’s time, they would lose close to $14,000 which is more than the down payment of $8,750 required on this price home.

Most would-be buyers understand that a home is a big investment but they may not understand the advantage of the leverage caused by the low down payment mortgage. The benefits extend beyond a return on the down payment but to the value of the home.

In this example, the $8,750 down payment grows to an equity of $73,546 in seven years based on 2% annual appreciation and normal amortization on a 30-year loan. If you calculated that as a rate of return, you’d be challenged to find anything that could compare with it.

rent vs own 2017.png

To see what your numbers might look like, check out this Rent vs. Own. If you need any help or have any questions, contact us. Part of our greatest satisfaction is helping would-be buyers understand why they should-be.


https://betterhomeowners.com/PhilLande/2017/04/23/Wouldbe-to-Shouldbe Sun, 23 Apr 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/04/23/Wouldbe-to-Shouldbe

The cartoon character Wimpy would say that he’d gladly repay you Tuesday for a hamburger today. Some real estate investors say a similar thing to Uncle Sam to be able to hold on to their proceeds from the sale of an investment and agree to pay the tax later. exchange.png

The benefit of a 1031 exchange is that it allows the investor to defer the tax due from the sale into the replacement property. This allows more money to be reinvested. In the example shown, the investor has 27% more to invest now by deferring the tax into the future.

The property to be exchanged must be like-kind which means real estate for real estate.   Rental property can be exchanged for other rental or investment property.  Personal-use properties like a first or second home are not eligible for exchanges.

There are some critical dates that restrict the validity of the exchange. The investor must identify the replacement property within 45 days of the sale of the relinquished property. The replacement property must be closed within 180 days of the sale of the relinquished property.

  • The replacement property must be equal to or greater in value, equity and debt than the one being relinquished.
  • All net proceeds must be used in acquiring the replacement property.

There are specific rules involved in constructing a valid tax-deferred exchange. There are three professionals that should be involved: a tax advisor, a real estate professional and a qualified intermediary who will assist in the acquisition and transfer of both the relinquished property and the replacement property. Additional information can be found in IRS Publication 544.


https://betterhomeowners.com/PhilLande/2017/04/16/An-Alternative-to-Paying-Tax-Today Sun, 16 Apr 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/04/16/An-Alternative-to-Paying-Tax-Today

Credit card debt in America is back to levels prior to the recession. The average credit card APR is just under 16% according to CreditCards.com Weekly Credit Card Report.  33967393-250.jpgHomeowners have an advantage over renters when it comes to getting their arms around debt issues.

Basic money management suggests that higher rate debt be replaced with lower rate debt. Credit cards, personal cars, boats, motor vehicles and other personal property, typically have interest rates higher than that of real estate loans.

Borrowing against a person’s home usually provides the lowest rate of financing. Refinancing a home mortgage to take cash out to retire personal debt is one option. Another would be to secure a home equity or HELOC, home equity line of credit.

An alternative advantage of borrowing against one’s home is that the interest may be tax deductible unlike the interest on most personal debt. Qualified mortgage interest includes acquisition debt which can only be used to buy, build or improve a principal residence and up to $100,000 of home equity debt which can be used for any purpose.

Managing money is a critical life skill that people need to master. While the goal may be to become debt-free, paying the least amount of interest possible can be a good first step. Owning a home provides an asset that allows for options not available to tenants. Seek professional advice to determine your best course of action.


https://betterhomeowners.com/PhilLande/2017/04/09/Lower-the-Rate--Deduct-the-Interest Sun, 09 Apr 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/04/09/Lower-the-Rate--Deduct-the-Interest

Rental homes are the IDEAL investment because they offer a higher rate of return than other investments without the volatility of the stock market. With certificates of deposit and bonds at less than 2%, people need an alternative investment that they understand and with a reasonable amount of control.

In this case, IDEAL is an acronym identifying the advantages of rental properties.Ideal Investment-2.png

  • Income from the monthly rent contributes to paying the expenses and a return on the investment.
  • Depreciation is a non-cash deduction that shelters income for some investors.
  • Equity buildup occurs with amortized mortgages because each payment is composed of interest owed and principal reduction to retire the loan by the end of the term.
  • Appreciation is achieved as the value of the property goes up.
  • Leverage can increase the return on investment by using borrowed funds to control a larger asset.

These individual benefits working together make rental real estate a good investment for today’s economy. Increased rents, high rental demand, good values and low, non-owner occupied mortgage rates contribute to positive cash flows and very favorable rates of return. 

To find out more about how rentals might complement your current investment plans, contact your real estate professional.


https://betterhomeowners.com/PhilLande/2017/04/02/Rentals-are-IDEAL Sun, 02 Apr 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/04/02/Rentals-are-IDEAL

During the banking crisis in the Great Recession, certain types of mortgages were unavailable that are once again being offered. Fortunately, the 80-10-10 mortgage is one of those making a reappearance and it can save borrowers a considerable amount of money. 80-10-10.png

The objective of an 80-10-10 mortgage is to avoid the expense of mortgage insurance for buyers wanting a 90% loan. A buyer can obtain an 80% first mortgage and a 10% second mortgage with a 10% down payment and not be required to have private mortgage insurance.

For example, a buyer could put $30,000 down on a home priced at $300,000 and get an 80% first mortgage without mortgage insurance. The borrower could get a second mortgage, either through the same lender or a third party.

In the example, the 80-10-10 would save a buyer $193.71 per month which can be a considerable amount of money over a ten-year period. The interest rate on the second loan will be higher than the first because there is more risk.

Helping buyers make better choices is a valuable service real estate professionals can provide. Having the right tools and information can make the decisions easier to understand. Using an 80-10-10 calculator, you can see what the savings might be for your situation.


https://betterhomeowners.com/PhilLande/2017/03/26/Save-the-Cost-of-Mortgage-Insurance Sun, 26 Mar 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/03/26/Save-the-Cost-of-Mortgage-Insurance

An estate plan is a collection of documents to ensure that your wishes are carried out because of death or incapacity to make decisions for yourself. Spouses, minor children, adult children, property and investments can all be factors that should motivate a person to undergo the process.12902925-250.jpg

Will – this document specifies the way a person wants to manage and distribute his/her assets after their death. When a person dies without a will, the laws of the state where the person resided will determine the distribution of the property.

Durable Power of Attorney – this document grants to a designated person the authority to act on behalf of the principal in in legal affairs should the principal become incapacitated. Among other things, this would allow the attorney-in-fact to buy and sell property on the behalf of the principal.

Healthcare Proxy – this document grants that a designated person can legally make healthcare decisions on behalf of the principal when they are incapable of making and executing specific decisions stated in the proxy.

Living Will – this document directs physicians with respect to life-prolonging medical treatments in case they become unable to communicate their decisions.

Hippa Release – this document allows heath care providers to release your health care information to a designated person. Otherwise, they are required by federal law to protect the privacy of your health information.

Letter of Instruction – This document contains information and instructions about a person’s wishes upon death. It is intended to offer details on whom to contact and where to find important documents about personal and financial matters.

Requirements of these documents can vary from state to state and legal advice should be obtained. If you need a current estimate of value on real estate that may be involved, usually a price opinion from a licensed real estate professional will suffice. It would be my privilege to assist you with this at no cost or obligation.


https://betterhomeowners.com/PhilLande/2017/03/19/Important-Estate-Documents Sun, 19 Mar 2017 15:00:00 GMT https://betterhomeowners.com/PhilLande/2017/03/19/Important-Estate-Documents

U.S. taxpayers have enjoyed specific tax benefits for home ownership since personal income tax was introduced by the 16th amendment in 1913. While these benefits may not be the primary reason that motivates a person to buy a home, they are still tangible and not available to tenants.26005238-266.jpg

The exclusion of capital gains tax on the profit made from a home is unique from other investments and provides homeowners significant savings. Single taxpayers can exclude up to $250,000 gain and married taxpayers up to $500,000 gain. During the five-year period ending on the date of sale, a taxpayer must have: owned the home for at least two years; lived in the home as their main home for at least two years; and, ownership and use do not have to be continuous nor occur at the same time.

Gain on the sale of a principal residence in excess of the allowed exclusion are taxed at the lower long-term capital gain rate of the owner.

A homeowner may take the standard deduction or itemized deductions in any tax year based on which will create the largest deduction. Property taxes and qualified mortgage interest are allowable itemized deductions.

Qualified mortgage interest is acquisition debt plus home equity debt not to exceed the maximum amounts. Acquisition debt is the amount of debt incurred to buy, build or improve a first and second home up to $1,000,000. Home equity debt is limited to $100,000 over the current acquisition debt on the combination of a first and second home and may be used for any purpose.

For more information, see your tax advisor or see IRS Publications 523, Selling Your Home and 936, Home Mortgage Interest Deduction.


https://betterhomeowners.com/PhilLande/2017/03/12/Tax-Benefits-of-Home-Ownership Sun, 12 Mar 2017 16:00:00 GMT https://betterhomeowners.com/PhilLande/2017/03/12/Tax-Benefits-of-Home-Ownership

The National Association of REALTORS® reports in its 2016 Profile of Home Buyers and Sellers that 12% of all buyers paid cash for their home.50441319-250.jpg

Before paying cash for a home, a buyer should decide if they might put a loan on the home in the near future.  It may affect the ability to deduct the interest on a mortgage placed on the home at a later date.

Homeowners can currently deduct the interest on up to $1 million of acquisition debt which are the borrowed funds used to buy, build or improve a home. Paying cash for a home establishes acquisition debt at zero. The only deductible interest to the owner would be home equity debt which is limited to $100,000 over acquisition debt.

Paying cash certainly seems like a simple decision but it may limit a homeowner’s ability to deduct interest on a future mortgage. You can get more information about this from IRS Publication 936 or from your tax professional.


https://betterhomeowners.com/PhilLande/2017/03/05/Before-You-Pay-Cash-for-a-Home Sun, 05 Mar 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/03/05/Before-You-Pay-Cash-for-a-Home

Lenders regularly publish mortgage rates but they may not be available for all buyers. 59607784-250.jpg

Imagine that the mortgage payment based on an advertised rate influenced a buyer to make an offer on a home. After negotiating a binding contract, this buyer makes a loan application and finds out that for any number of possible reasons, that rate isn’t available.

Even if the person does financially qualify for a loan at a higher interest rate, it will not be the payment that the buyer expected when the contract was negotiated.

Lenders evaluate several factors such as the borrower’s credit score, debt-to-income and loan-to-value ratios. These variables are used to assess the risk associated with the repayment of the loan.

While mortgage money is a commodity, it isn’t priced the same way items are that involve cash for goods. The lender puts up the money today based on a promise from the borrower to repay over a long term, possibly up to thirty years.

The simple solution to avoid surprises such as the one described here is to get pre-approved at the beginning of the home search process. Since pre-qualification does not mean the same thing to all lenders, call if you’d like a recommendation of a trusted mortgage professional.


https://betterhomeowners.com/PhilLande/2017/02/26/Not-Available-for-All-Buyers Sun, 26 Feb 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/02/26/Not-Available-for-All-Buyers

Single-family homes offer an investor the ability to borrow large loan-to-value amounts at fixed interest rates for long terms on appreciating assets, tax advantages and reasonable control. Some of these characteristics are not available through other investments.rental advantages-2-250.png

75-80% loan-to-value mortgages are available on most residential properties up to four units. Comparatively, the stock market allows you to borrow up to 50% on a stock but if the price goes down, they will require additional cash to keep the ratio at or below 50%. If it isn’t available, your stock can be sold to satisfy the loan.

Real estate investors call getting a long-term mortgage putting an investment to bed. The fixed-rate and the 20-30 year terms are exceptions to loans for most other investments, if they’re available at all. 

Real estate tends to go up in value over time. There can be a lot of variables that affect the price like supply and demand, condition and available mortgage money, in addition to the general economy.

Rental real estate has several different tax advantages. The profits are taxed at lower, long-term capital gains rates for investors who have owned the property for more than 12 months. While the property is being rented, investors are given a non-cash deduction based on cost recovery of the improvements. Tax deferred exchanges can also be available if specific conditions are met which allow an investor to postpone paying the tax on the gain.

It isn’t necessary to have a partner with most rental homes if the investor can qualify for the mortgage. This allows investor control to make all the decisions that an owner is entitled such as setting the rent, making improvements and determining when to sell.

Rental real estate can earn a much higher rate of return than other available investments while providing income during the holding period. It certainly is worth investigating the possibility with a real estate professional who understands and works with rental properties.


https://betterhomeowners.com/PhilLande/2017/02/19/Six-Reasons-to-Consider-Rental-Homes Sun, 19 Feb 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/02/19/Six-Reasons-to-Consider-Rental-Homes

Yogi Berra said he’d give his right arm to be ambidextrous. While most first-time home buyers are not going to that extreme, it is interesting to see what sacrifices are being made according to the National Association of REALTORS® 2016 Profile of Home Buyers and Sellers.42271463-250.jpg

  • 43% - cut spending on luxury or non-essential items
  • 34% - cut spending on entertainment
  • 27% - cut spending on clothes
  • 14% - canceled vacation plans
    9% - earned extra income through a second job
  • 7% - sold or decided not to purchase a vehicle
  • 44% - did not need to make any sacrifices

Forty-percent of first-time buyers experienced some difficulty during the mortgage application and approval process. Single, male buyers expressed a higher incidence of difficulty than single females and married or unmarried couples.

Pre-approval from a qualified mortgage lender before the home search process begins is still considered the best advice for all buyers who will purchase with a mortgage. Your real estate professional can make recommendations for a loan officer that could help you avoid unnecessary aggravations.


https://betterhomeowners.com/PhilLande/2017/02/12/What-Would-You-Give Sun, 12 Feb 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/02/12/What-Would-You-Give

Occasionally, when dealing with close relatives who might also become heirs, signing a note and handling the paperwork properly may seem like a needless effort but it could mean the difference in being able to take a legitimate interest deduction.35442708-250.jpg

Home mortgage interest is deductible only if the loan is a secured debt which involves the buyer signing an instrument like a mortgage or deed of trust that makes the ownership of the home security for the debt. That instrument must then be recorded or otherwise perfected according to state or local law and the home, in case of default, must be able to satisfy the debt.

In a family situation, a parent, grandparent or other relative may decide to loan a buyer the money to purchase a home because they have it available and it isn’t earning much in certificates of deposit. They offer to loan it for a rate equal to what a conventional lender is charging but without the fees.

While it may appear to be a win-win situation, there could be problems if things are not done correctly. Even if the borrower makes the payments, they are not entitled to an interest deduction unless three criteria are met: 1) sign a debt instrument specifying the terms 2) securing and record the debt properly and 3) the home is sufficient collateral for the loan.

It would be prudent to consult with an attorney before you sign the final settlement papers to be comfortable that both buyer and the lender-relative are complying with IRS regulations. For more information, see IRS Publication 936 – Home Mortgage Interest.


https://betterhomeowners.com/PhilLande/2017/02/05/Mortgage-Loans-from-Relatives Sun, 05 Feb 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/02/05/Mortgage-Loans-from-Relatives

People who experience a property loss are usually asked by their insurance company for proof of purchase which can come in the form of a receipt or current inventory of their personal belongings.receipts or inventory.png

Even the most organized people might find it challenging to find receipts for all the valuables in their home. If the inventory isn’t up-to-date, a homeowner might forget to add some items to the claim and may not recognize the omission for long after the claim is settled.

The inventory can serve as a guide to make sure a homeowner gets compensated for all the loss.

Photographs and videos can be adequate proof that the items belonged to the insured. A series of pictures of the different rooms, closets, cabinets and drawers are helpful. When video is used, consider commenting as it is shot and be sure to go slow enough and close enough to things becoming recorded.

For your convenience, download a Home Inventory, complete it, and save a copy off premise. Good places for your inventory could be a safety deposit box or digitally, in the cloud if you have server-based storage available like Dropbox.


https://betterhomeowners.com/PhilLande/2017/01/29/Proof-of-Purchase Sun, 29 Jan 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/01/29/Proof-of-Purchase

There seems to have been an accepted progression for homeowners going from starter home, to gradually moving into one’s dream home, then, downsizing after becoming an empty nester and finally, into a retirement home. However, Marianne Cusato’s 2016 Aging-in-Place Report indicates that many older Americans don’t plan on following that pattern.46668033-250.jpg

61% of homeowners above the age of 55 intend on staying in their homes indefinitely. 2/3 of them believe that the home’s layout will serve their needs without having to make aging-related improvements.

Some of the reasons being cited for staying in place are:

  • 66% say their home is conveniently located
  • 38% say they live close to their family
  • 68% say they feel independent in their home
  • 54% say they are familiar with their neighborhood
  • 66% say the feel safe in their home

Typical renovations that might be considered for their current home are things like grab bars in the tub or shower, shower seats, taller toilets, handheld showerheads and additional handrails on stairways.

It seems that the report’s conclusion is that regardless of a homeowner’s age, they want to thrive in their home. The same emotional reasons that causes a person to want to buy a home are the things that cause them to hold onto them if is practical.


https://betterhomeowners.com/PhilLande/2017/01/22/Boomers-Are-Staying-InPlace Sun, 22 Jan 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/01/22/Boomers-Are-Staying-InPlace

There is a common body of knowledge among real estate professionals that indicates that the longer a home is on the market, the lower the price will be. Many sellers discount this belief in the beginning because they feel confident their home will sell quickly.incentives - article.png

Lowering the price is the most obvious thing that can be done to encourage buyers but it might be good to look at what builders do. Builders offer a variety of incentives such as upgrades, seller-paid closing costs, interest rate buy downs, washers, dryers, refrigerators or big screen TVs.

Interestingly, much of the resale market doesn’t employ these techniques. According to the latest NAR Home Buyers and Sellers Profile, 64% of sellers did not offer any incentives at all.

21% of sellers offer a home warranty. 16% of sellers offered assistance with closing costs and 6% offered credit toward remodeling or repairs. 

The attached chart indicates that while 80% of sellers were not willing to offer incentives in the beginning of their marketing period, as weeks passes and their home hasn’t sold, closer to half did add incentives.

The ideal outcome is to maximize proceeds in the shortest time possible with the fewest unexpected issues. This involves having a firm understanding of current, local market conditions and crafting a marketing plan that will insure results.

There is so much at stake, the value of a trusted real estate professional is essential.


https://betterhomeowners.com/PhilLande/2017/01/15/Attracting-Buyers Sun, 15 Jan 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/01/15/Attracting-Buyers

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.Home is Leveraged Investment-300.png

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.


https://betterhomeowners.com/PhilLande/2017/01/08/Rent-or-Buy--You-Pay-for-the-House-You-Occupy Sun, 08 Jan 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/01/08/Rent-or-Buy--You-Pay-for-the-House-You-Occupy

  • “It’s impossible to get low down payment loans.” – MYTH!
    FHA down payments are 3.5% and VA is 0%. In some areas, there may be some 0% down payment USDA loans available. FNMA and Freddie Mac have 3% down payment programs.

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  • “It takes perfect credit to get a loan.” - MYTH!
    There is a relationship of better rates to better credit but many issues on a credit report can be explained or corrected. The way to know for sure is to speak to a reliable lender.
     
  • “If I’ve had a bankruptcy or foreclosure, I can’t qualify.” - MYTH!
    Credit history following a bankruptcy or foreclosure is very important and there can be extenuating circumstances. It only takes a few moments with a reliable lending professional to find out if your individual situation will allow you to qualify for a new mortgage.

  • “Getting pre-approved is expensive.” - MTYH!
    Usually, the only expense to getting pre-approved is the cost of the credit report which could be around $35. The advantage is that you will know that you qualify for a particular mortgage amount.

  • “I should wait to qualify until I find a home.” - MYTH!
    It can take weeks to qualify for a mortgage especially if there are issues that need to be corrected. The best interest rates are only available for the highest credit scores. It is to your advantage to start the qualifying process early in your home search.

  • “All lenders are the same.” - MYTH!
    Reliable lending professionals will explain the entire process before collecting fees, quote fees up-front, have competitive products, do what is necessary to get the loan approved and close at the locked rate and terms. Ask for recommendations from recent borrowers.

  • “Adjustable Rate Mortgages are more expensive than fixed rate mortgages.” - MYTH!
    Adjustable Rate Mortgages can be less expensive than fixed rate mortgages if the buyer’s circumstances warrant it. If a buyer is only going to be in a home for a few years before selling, it can be determined if an ARM loan will result in the lowest way to finance the property. There are many variables and you need to be aware of them before deciding which type of loan to finance your home purchase.

Buyers and Sellers need solid information to make good decisions. Call us with your questions or to get a recommendation of a reliable lender who can give you the real facts.


https://betterhomeowners.com/PhilLande/2017/01/01/Facts-or-Myths Sun, 01 Jan 2017 18:00:00 GMT https://betterhomeowners.com/PhilLande/2017/01/01/Facts-or-Myths

Every year, it seems like the same things are on the list but this could be the year you really do invest in a rental home.Resolutions.png

Rents are climbing, values are solid and mortgage rates are still low for non-owner occupied properties. A $150,000 home with 20% down payments can easily have a $300 to $500 monthly cash flow after paying all of the expenses.

There are lots of strategies that can be successful but a tried and true formula is to invest in below average price range homes in predominantly owner-occupied neighborhoods. These properties will appeal to the broadest range of tenants and buyers when you’re ready to sell.

Single family homes offer an opportunity to borrow high loan-to-value mortgages at fixed rates for long terms on appreciating assets with tax advantages and reasonable control.

This can be the year to make some real progress on your resolutions. The first step may be to invest some time learning about rental properties by attending a FREE webinar on January 4th at 7:00 PM Central time zone by national real estate speaker Pat Zaby. Click here to register. If you can’t attend live, by registering you’ll be sent the link to watch at your convenience.


https://betterhomeowners.com/PhilLande/2016/12/25/This-is-going-to-be-the-year Sun, 25 Dec 2016 18:00:00 GMT https://betterhomeowners.com/PhilLande/2016/12/25/This-is-going-to-be-the-year

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. stamp.png

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.

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?


https://betterhomeowners.com/PhilLande/2016/12/18/What-a-Difference-50-years-Makes Sun, 18 Dec 2016 18:00:00 GMT https://betterhomeowners.com/PhilLande/2016/12/18/What-a-Difference-50-years-Makes

Since the election, rates have started going up and it will have a direct effect on the cost of housing. There is a rule of thumb that a ½% change in interest is approximately equal to 5% change in price. 14439217-250.jpg

As the interest rates go up, it will cost you more to live in the very same home or to keep the payment the same, you’ll have to buy a lower priced home.

Before rates rise too much, it may be the best time to buy a home whether you’re going to use it for your principal residence or a rental property. Low interest rates and lower prices make housing more affordable.

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https://betterhomeowners.com/PhilLande/2016/12/11/Can-0.5-Really-Equal-5 Sun, 11 Dec 2016 18:00:00 GMT https://betterhomeowners.com/PhilLande/2016/12/11/Can-0.5-Really-Equal-5

During the Great Recession, some homeowners elected to rent their home rather than sell it for less than it was worth.

IRS tax code allows for a temporary rental of a principal residence without losing the exclusion of capital gain based on some specific time limits. During the five year period ending on the date of the sale, the taxpayer must have:14095450-250.jpg

  • Owned the home for at least two years
  • Lived in the home as their main home for at least two years
  • Ownership and use do not have to be continuous nor occur at the same time

If a home has been rented for more than three years, the owner  will not have lived in it for two of the last five years. So the challenge for homeowners with gain in a rented principal residence that they don’t want to have to recognize is to sell and close the transaction prior to the crucial date.

Assume a person was selling a property which had been rented for 2 ½ years but had previously been their home for over two years. To qualify for the exclusion of capital gain, the home needs to be ready to sell, priced correctly, sold and closed within six months.

All of the gain may not qualify for the exclusion if depreciation has been taken for the period that it was rented. Depreciation is recaptured at a 25% tax rate.

A $200,000 gain in a home could have a $30,000 tax liability. Minimizing or eliminating unnecessary taxes is a legitimate concern and timing is important.

Selling a home for the most money is one thing; maximizing your proceeds is another. For more information, see IRS publication 523 and an example on the IRS website and consult a tax professional. 


https://betterhomeowners.com/PhilLande/2016/12/04/Time-May-Be-Running-Out Sun, 04 Dec 2016 18:00:00 GMT https://betterhomeowners.com/PhilLande/2016/12/04/Time-May-Be-Running-Out

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.


https://betterhomeowners.com/PhilLande/2016/11/27/It-Isnt-Final-Until-Its-Funded Sun, 27 Nov 2016 18:00:00 GMT https://betterhomeowners.com/PhilLande/2016/11/27/It-Isnt-Final-Until-Its-Funded

A person called into a radio talk program with a situation that was troubling to the caller and disturbing based on the potential tax liability that may have been avoided.18732493-250.jpg

The caller’s elderly father had deeded his home to his daughter a few years earlier because in his mind, his daughter was going to get the home eventually and this would be one less thing to be taken care of after his death. The daughter didn’t really care because the father was going to continue to live in the home and take care of it so that it would be no expense to her.

Obviously, unknown to either the father or the daughter, transferring the title of a home from one person to another could have significant tax implications. In this case, when the father “gave” the home to his daughter, he also gave her the basis in the home which is basically what he paid for it. If she sells the home in the future, the gain will be the difference in the net sales price and her father’s basis which could be considerably higher than had she inherited it.

If the home was purchased for $75,000 and worth $250,000 at the time of transfer, there is a possible gain of $175,000. However, when a person inherits property, the basis is "stepped-up" to fair market value at the time of the decedent's death.  If the adult child had inherited the property, at the time of the parent's death, their new basis would be $250,000 or the fair market value at the time of death and the possible gain would be zero.

In most cases, there are less tax consequences with inheritance than with a gift. There are other factors that may come into play but being aware that there is a difference between a gift and inheritance is certainly an important warning flag that would indicate that expert tax advice should be sought before any steps are taken.


https://betterhomeowners.com/PhilLande/2016/11/20/Gift-or-Inheritance--Does-It-Matter Sun, 20 Nov 2016 18:00:00 GMT https://betterhomeowners.com/PhilLande/2016/11/20/Gift-or-Inheritance--Does-It-Matter

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. 65125303-250.jpg

If a person were to make an additional $100 payment 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.


https://betterhomeowners.com/PhilLande/2016/11/13/Its-the-Principal-of-the-Thing Sun, 13 Nov 2016 18:00:00 GMT https://betterhomeowners.com/PhilLande/2016/11/13/Its-the-Principal-of-the-Thing

Homeownership, part of the American Dream: a home of your own where you can feel safe, raise your family, share with your friends and enjoy life. The benefits are easily recognizable but maintenance is just as real and should be considered.Maintenance.png

Property taxes and insurance are two of the largest expenses homeowners have aside from their mortgage interest. But, as any homeowner knows, there will be occasional expenses for repairing toilets, faucets, windows and other things. There are also the significantly larger expenses that arise like replacing a water heater or HVAC unit. And don’t overlook the periodic maintenance like painting or floor coverings.

Financial experts suggest that homeowners save one to four percent of the home’s value per year for repairs and maintenance. Two to eight thousand dollars a year may sound like more than you’ll need but the cost of an air conditioning unit can easily be $6,000 and some homes have more than one unit, which hopefully, won’t need to be replaced in the same year.

Some homeowners purchase home warranties to avoid the unexpected costs. An annual premium instead of an unexpected large expenditure. Coverage varies from company to company and are not intended to cover existing conditions.

The alternative to not saving for these anticipated expenditures means that a homeowner might have to put it on a credit card at a very high interest rate or get a home improvement loan. Appreciation is a distinct benefit of home ownership and deferred maintenance can limit the value as well as lengthen the market time when it sells.


https://betterhomeowners.com/PhilLande/2016/11/06/A-Cost-to-Consider Sun, 06 Nov 2016 17:00:00 GMT https://betterhomeowners.com/PhilLande/2016/11/06/A-Cost-to-Consider

There is certainly no shortage of retirement planning strategies available to individuals who actually take the time to consider them. What most financial experts do agree on is that the closer you are to retirement, the less time you have to recover from a loss. For that reason, many people start dialing down their risk factors as their age increases.

24141125-250.jpgOne way to minimize risk is to invest in things that you know and understand. For the majority of homeowners, their largest asset is the equity in their home which they generally have more familiarity than other types of investments.

Buy the home you’d like to retire to today and use it as a rental property. Finance it with a 15 year loan so it will amortize quickly and possibly be paid for at retirement.

Continue living in your current home until you’re ready to move into the home you’ve designated at your retirement home which will not create a taxable event. Prior to moving in, you can rehab the home so that it fits your style and needs exactly.

If you’ve lived in the current home for at least two of the last five years, you can exclude up to $250,000 of gain for single taxpayers and up to $500,000 for married taxpayers. The proceeds could then, be invested for income.

Some of the attractive features of this proposal is that you’re familiar with the operation of a rental due to similarity of owning a home. Most experts agree that home prices will continue to rise and so will rents. The maintenance people that you use for your home can also work on your rental. If you don’t want to deal with tenants that can easily be delegated to a property manager. Low mortgage rates with short terms and high rental values contribute to positive cash flows that will pay for the property.

Obviously, there are many other considerations you’ll want to investigate with your tax and real estate professionals these can get the conversation started.

https://betterhomeowners.com/PhilLande/2016/10/30/Dial-Down-Risk-for-Retirement Sun, 30 Oct 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/10/30/Dial-Down-Risk-for-Retirement

Saving the down payment may be unnecessarily keeping would-be buyers from getting into a home. They may be unaware that the funds might be available.

The NAR Profile of Home Buyers and Sellers reports that 81% of first-time buyers got all or part of their down payment from savings. Less than 4% said that all or part of the down payment came from a withdrawal in their IRA and 8% from their 401(k) or pension fund. 21330457-250.jpg

Traditional IRAs have a provision for first-time buyers which include anyone who hasn’t owned a home in the previous two years. A person and their spouse, if married, can each withdraw up to $10,000 from their traditional IRA for a first-time home purchase without incurring the 10% early-withdrawal penalty. However, they will have to recognize the withdrawal as income in that tax year. For more information, go to IRS.gov

Allowable withdrawals from traditional IRAs can be from yourself and your spouse; your or your spouse’s child; your or your spouse’s grandchild or your or your spouse’s parent or ancestor.

Roth IRA owners can withdraw their contributions tax-free and penalty-free at any age for any reason because the contributions were made with post-tax income. After age 59 ½, earnings may be withdrawn as long as the Roth IRA have been in existence for at least five years.

Up to half of the balance of a 401(k) or $50,000, whichever is less, can be borrowed by the owner at any age for any reason without tax or penalty assuming the employer permits it. There can be specific rules for loans from a 401(k) that would determine the repayment; interest is usually charged but goes back into the owner’s account. You can consult with your HR department to find out the specifics.

A risk in borrowing against a 401(k) comes if your employment ends before the loan has been repaid. The loan may have to be repaid as soon as 60 days to keep the loan from being considered a withdrawal and subject to tax and penalty. Even if you continue with the same employer, failure to repay the loan could be considered a withdrawal also.

Your tax professional can provide you specific information on how making a withdrawal from your retirement program might affect you. Additional information can be found on www.IRS.gov.


https://betterhomeowners.com/PhilLande/2016/10/23/Down-Payment-FOUND Sun, 23 Oct 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/10/23/Down-Payment-FOUND

“It’s not far, if you know the way.” What this expression implies is that you could have a long way to go if you don’t know where you’re going or how to get there. Just like reading a map, there are some definite steps that will improve your success in buying a home in today’s market.12137546-250.jpg

  • Know your credit score – the best mortgage rates are available to borrowers with the highest scores. Unless you know what your credit score is at all three major credit bureaus, you don’t really know what rate you’ll have to pay.
  • Clean up your credit – it is estimated that about 90% of credit reports have errors. Some are not serious but others could affect a borrower from getting the loan they want. It is your responsibility to know what is on your different reports and correct them if possible. You’re entitled to a free copy of your credit report each year from Experian, Trans Union and Equifax.
  • Get pre-approved – Taking the time to make a loan application with a qualified lender even before you start looking at homes will provide peace of mind, make sure that you are looking at the “right” homes and may help you negotiate the best price on the home you select.
  • Do your homework – when you find the home that meets your needs and desires, get the home inspected and research the tax assessments, school ratings, crime activity, possible zoning changes and comparable sales in the area.

Call for a recommendation of a trusted mortgage professional and an inspector.


https://betterhomeowners.com/PhilLande/2016/10/16/Its-not-far-if-you-know-the-way Sun, 16 Oct 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/10/16/Its-not-far-if-you-know-the-way

Special consideration is made by IRS for the sale of a jointly-owned principal residence after the death of a spouse. Surviving spouse may qualify to exclude up to $500,000 of gain instead of the $250,000 exclusion for single people if certain requirements are met.30725703-250.jpg

  • The sale needs to take place no more than two years after the date of death of the spouse.
  • Surviving spouse must not have remarried as of the sale date.
  • The home must have been used as a principal residence for two of the last five years prior to the death. 
  • The home must have been owned for two of the last five years prior to the death.
  • Survivor can count any time when spouse owned the home as time they owned it and any time the home was the spouse’s residence as time when it was their residence.
  • Neither spouse may have excluded gain from the sale of another principal residence during the last two years prior to the death.

If you have been widowed in the last two years and have substantial gain in your principal residence, it would be worth investigating the possibilities. Time is a critical factor in qualification. Contact your tax professional for advice about your specific situation. Contact me to find out what your home is worth in today’s market. See IRS Publication 523 – surviving spouse.


https://betterhomeowners.com/PhilLande/2016/10/09/Sale-of-Home-by-Surviving-Spouse Sun, 09 Oct 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/10/09/Sale-of-Home-by-Surviving-Spouse

Real estate is the overwhelming preferred choice by Americans as identified in a recent survey. With the Dow Jones industrial average reaching record highs, it might be expected that the stock market would be the favored choice but that wasn’t the outcome.

Analysis of the report suggests that the popularity for houses could be that they are tangible assets that you can see where your money is actually invested compared to stocks and bonds which tend to be unclear where the money is invested.Best way to invest.jpg

There are several distinct advantages of homes as investments over other popular alternatives.

  1. High loan-to-value mortgages available
  2. At fixed interest rates
  3. For long periods of time
  4. On appreciating assets
  5. With definite tax advantages
  6. And reasonable control.

Another advantage of rental homes is that most people are comfortable with them. It is the same type of property that they live in but used as a rental. They have a tendency to understand the key components such as value, appreciation, rent, maintenance and financing. 


https://betterhomeowners.com/PhilLande/2016/10/02/Rental-Real-Estate-is-Preferred-Choice Sun, 02 Oct 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/10/02/Rental-Real-Estate-is-Preferred-Choice

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.Mortgage Rate History0916.png

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 mortgage, 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 If the Rate Goes Up calculator.


https://betterhomeowners.com/PhilLande/2016/09/25/When-the-rate-goes-up Sun, 25 Sep 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/09/25/When-the-rate-goes-up

Some people wait to buy a home until they have 20% down payment to avoid paying the mortgage insurance which is required by lenders when the loan-to-value ratio is greater than 80%, with the exception of VA loans. 9379386-250.jpg

To illustrate a typical situation, let’s assume that buyers have $10,000 for a down payment on a $200,000 home. They could purchase it today with a 95% loan or save another $30,000 in order to get an 80% loan without mortgage insurance.

If it took three years to save the additional down payment, the $200,000 home at 3% appreciation would cost $218,545. A 20% down payment on the increased sales price would be $43,709, less the $10,000 the buyers currently have leaves them $33,709 to save which would amount to $936.36 a month. They would secure a $174,836 mortgage at the then current mortgage rates, which in all likelihood, will be higher than today’s rates.

The alternative is for the buyer to purchase the home today with a 95% loan at today’s low interest rates plus approximately $85 a month for mortgage insurance depending on their credit score. At the end of three years, the unpaid balance would be $179,548.  Assuming the home will be worth the same $218,545, the buyer’s equity would be almost $39,000.  To reduce the mortgage to the same amount as the first example, the buyer would need to make an additional $125 a month principal contribution above the normal payment. Then, the mortgage would have an unpaid balance at the end of three years of $174,775.

When there is sufficient equity in the home, the mortgage insurance is no longer required. Some lenders may drop the mortgage insurance requirement with an appraisal to provide proof. In other situations, it may require refinancing to eliminate the insurance.  Call to discuss options that may be available to you.

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https://betterhomeowners.com/PhilLande/2016/09/18/Waiting-to-Buy...WHY Sun, 18 Sep 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/09/18/Waiting-to-Buy...WHY

Having a dust-free home isn’t difficult, but it takes a serious commitment and a housekeeping strategy that addresses the dust and its causes. Whether your motive is cleanliness or to eliminate the cause of some allergies and asthma symptoms, it will be worth it. 10043513-250.jpg

  • Try to dust your home at least twice a week. Dust the tallest items and work your way down. Dust picture frames, blinds, baseboards and anything that stands out from the wall.
  • Feather dusters can spread more dust than they collect compared to microfiber cloths that attracts dust because they have an electrostatic charge.
  • Filters on heating and air-conditioning systems should be changed often not only to remove dust from the air but to increase the efficiency of the units themselves. Special HEPA filters can improve the overall indoor air quality.
  • Frequently changing the bag or emptying the container in your vacuum is helpful in eliminating dust.
  • Vacuum the floors at least once a week. Vacuum under furniture and periodically, move appliances to clean behind and underneath. Use the proper attachments to vacuum upholstered furniture and under cushions.
  • Eliminate dust magnets like carpet, heavy drapes and upholstered furniture. Consider hard surface flooring like wood or tile instead of carpet.
  • Keep windows closed to keep dust out.
  • Clean your pillows and drapes.
  • Damp mopping and dusting with plain water helps hold the dust and is environmentally friendly.
  • A humidifier can eliminate static electricity which holds dust.
  • Air purifiers circulate air and capture dust and other pollutants.

https://betterhomeowners.com/PhilLande/2016/09/11/DustFree-Home Sun, 11 Sep 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/09/11/DustFree-Home

Fair market value is the price that real estate would sell for on the open market without any unusual forces being involved. The definition is relatively simple but there certainly different methods of determining what it is.27939218-250.jpg

A homeowner could order an appraisal before they put their home on the market but would incur the expense of an appraisal and more likely than not, it won’t or can’t be used by the buyer or their lender. The advantage is that an appraisal is a professional approach by a disinterested party to establish value.

Licensed appraisers use three approaches to value: the market data, the replacement cost and the income approach. The appraiser can put more weight on one approach than another based on his/her assessment of what would be appropriate.

The replacement cost looks at what it would cost to rebuild the property today less the depreciation it has experienced by age and wear and tear plus the value of the lot.

The income approach uses a capitalization rate based on the net operating income of a property to determine value. It is more applicable to commercial properties than it is for homes used by homeowners and not rented.

The market data approach relies on recent sales of similar properties near the subject. The appraiser will make monetary adjustments for differences in the comparables that are used to create a more accurate comparison.

Real estate agents use a similar approach to determine fair market value by performing a Competitive Market Analysis, CMA. Like the market data approach of an appraisal, it looks at recent sales of similar properties, it also considers properties currently for sale and what homes were unsuccessful in their attempt to sell. This approach is sensitive to supply and demand and may be more reactive to rapidly rising or declining markets.

Both appraisals and CMAs have a distinct advantage because of the personal opinion as a professional compared to online website estimates using raw data and mathematical formulas. Regardless of which method is used, it is an estimate. Obviously, some estimates are more accurate based on the experience of the person making the estimate. A price is placed on the property by the seller but value is ultimately determined by the buyer when a final sale is achieved.

https://betterhomeowners.com/PhilLande/2016/09/04/Getting-to-Value Sun, 04 Sep 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/09/04/Getting-to-Value

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.

https://betterhomeowners.com/PhilLande/2016/08/28/Pay-Off-Your-Mortgage Sun, 28 Aug 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/08/28/Pay-Off-Your-Mortgage

There are two negotiation periods in some home sales. The primary negotiation takes place when the contract is agreed upon that includes the price, closing and possession. Buyers and sellers alike feel relieved once this first round has resulted in an agreement but there may be more negotiations to come if there are contingencies for financing, inspections or other things.Round 1-250.png

The purpose of an inspection is for the buyer to receive an objective evaluation about the condition of the home and its components to identify existing defects and potential problems. The expense for inspections can be several hundred dollars and it’s reasonable for buyers to not want to spend the money before they find out if they can come to terms with the seller. From a different perspective, sellers want to know quickly if the buyer is going to reject the home due to the inspections.

Sometimes, buyers will expect sellers to make all of the repairs listed on the report and this is where the second round of negotiations begins. If the seller refuses, the negotiations can go back and forth until the other party accepts the offer on the table or the contract falls apart.

When purchasing a new home from a builder, it is expected for everything to be in working order; after all, it is new. However, it is reasonable to expect that existing homes, that are not new, have a different standard. While it’s understandable that buyers would want to be aware about major items that are not in “working order”, normal wear and tear of components based on its age should be expected.

In a highly competitive seller’s market, buyers might do whatever they can to get their contract accepted, realizing that there is another place to negotiate when they’re not competing with other buyers’ offers to purchase.

For this to be a WIN-WIN negotiation, both seller and buyer must feel good about the transaction. Neither party should feel that they have been taken advantage of.


https://betterhomeowners.com/PhilLande/2016/08/21/Two-Negotiations Sun, 21 Aug 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/08/21/Two-Negotiations

It’s surprising to realize that most people spend more time planning their next vacation or cell phone purchase than they do on their own retirement. Let’s look at a hypothetical situation where you have $35,000 to invest for your retirement in 15 years. Have you compared where you might have the best opportunity?

The safest place to put it might be a certificate of deposit because it’s insured but unfortunately, rates would be less than 2%. The value would grow to $47,233.26 at the end of the 15 year holding period.Where to invest - 250.jpg

Investing in a mutual fund has more risk but also a greater opportunity to earn a higher rate of return. An estimated 7% return would project an accumulated value of $99,713.14.

Using the $35,000 for a 20% down payment and closing costs on a $150,000 rental home could realize much higher proceeds. Using a familiar investment analysis spreadsheet, the $35,000 could grow to a future wealth position of $153,302. This analysis considers leverage, 3% appreciation, re-investing cash flows, 7% sales expenses and paying applicable taxes which the previous examples do not.

The rate of return on these three examples are 2% for the CD, 7% for the mutual fund and a comparable 14.19% return on the rental. As the rate of return increases on investments, additional risk is reasonable.

Most people are much more familiar with homes than they are with mutual funds, bonds and other similar investments. The same REALTOR® who helped you with your home can help you invest in a rental home.


https://betterhomeowners.com/PhilLande/2016/08/14/Ready-for-Retirement Sun, 14 Aug 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/08/14/Ready-for-Retirement

“If you waste my time, don’t expect me to hang out with you very long.” This could have been said by a buyer or seller or a real estate agent. Time is valuable and no one wants to waste their time. 45568020-250.jpg

Most people can’t put their lives on-hold while they’re trying to buy or sell a home. Whether they have a family, a couple or single, life continues and the time constraints of moving can become burdensome.

Your agent is committed to helping you save time while making the experience memorable. They know the process and the potential problem areas and can help you move through them.

To preserve your time and your agent’s, please consider the following:

  • If your plans to buy or sell change, let your agent know.
  • Be on time for appointments or if it is necessary, cancel them with as much notice as possible.
  • Get pre-approved through a trusted mortgage professional.
  • Cooperate with your loan professional by providing all requested documentation.
  • Don’t wander into builder or REALTOR® open houses without your agent. If you find yourself in that situation, immediately notify them that you have an agent.
  • Only talk to the other party through your agent until after closing.

Your agent is working to help you meet your goals. Things work best when it’s like a partnership where each party mutually respects the other and their resources including their time.


https://betterhomeowners.com/PhilLande/2016/08/07/Avoid-Wasting-Time Sun, 07 Aug 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/08/07/Avoid-Wasting-Time

Listing photos may be one of the most important marketing efforts that lead to a potential buyer.50557127-250.jpg

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.


https://betterhomeowners.com/PhilLande/2016/07/31/Picture-This Sun, 31 Jul 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/07/31/Picture-This

It has been said that change is the only constant. Most of the financial experts have been expecting interest rates to increase along with home prices. While homes, in most markets, have definitely seen increases over the past five years, the mortgage rates today are actually lower than they were a year ago. FreddieMac PMMS 072816 rev.jpg

If the interest rates were to increase by 1% over the next year while homes appreciated at 6% during the same time frame, a $250,000 home would go up by $15,000 and the payment would be $211.53 more each month for as long as the owner had the mortgage. The increased payments alone would amount to $17,769 for the next seven years.

When facing a decision to postpone a purchase for a year, a legitimate question to ask oneself would be: “how will it feel to have to pay more to live in basically the same home a year from now?”

It is easy to understand that if the price of a $250,000 home goes up by 6%, it increases the price by $15,000. A slightly more difficult concept to realize is that if the interest rate were to go up by ½%, it is approximately equal to a 5% increase in price. A 1% increase in mortgage rates would approximately equal a 10% change in price. This means that if a home goes up in price by 6% and the interest rate goes up by 1%, it is equivalent to the price of the home going up by a little more than 16%.

Use the Cost of Waiting to Buy calculator to estimate what it might cost to wait to purchase based on your own estimates of what interest rates and prices will do in the next year.


https://betterhomeowners.com/PhilLande/2016/07/24/How-Will-It-Feel Sun, 24 Jul 2016 15:00:00 GMT https://betterhomeowners.com/PhilLande/2016/07/24/How-Will-It-Feel

While all contracts must have certain required elements, mutual assent, consideration, capacity and legality, there are some things that increase its chance of being accepted.

19269905-250.jpgThe seller generally wants the highest possible price with the fewest inconveniences in the shortest period of time. In the same way, the buyer generally wants the lowest possible price with the fewest inconveniences in the shortest period of time.

The perspective of the principal can change depending on how these different parts of an agreement are structured.

  • Offer Price - While the price of the home seems to be the major point of contention in a home negotiation, the seller’s net proceeds and the buyer’s mortgage payment may actually be more critical.
  • Financing - 86% of buyers financed their recent home purchase as opposed to the 14% who paid cash. Some financing has higher fees than other types of financing and in some instances, sellers must pay the additional charges on behalf of the buyer.
  • Concessions
    • Seller-paid closing costs – paying all or part of a buyer’s closing cost requires less cash outlay for the purchaser and makes it easier or more appealing for them to buy the home.
    • Seller-paid buydown – prepaying interest to the lender on behalf of the buyer gives them lower payments for the first one, two or three years even though they must qualify at the note rate of the fixed-rate mortgage.
    • Personal property – seller may agree to include existing or new personal property like washer, dryer or refrigerator.
    • Improvements – seller may agree to make modifications to the existing condition of