Homeowners should recognize that the same trusted professional who helped them buy or sell their home can be a valuable resource while they own their home too.
Think of your REALTOR® as an indispensable homeowner’s resource who can make recommendations about a variety of services that homeowners will use throughout the tenure in their home. This experience far exceeds personal experience because of the day-to-day activities working in the industry.
- To recommend reputable and reasonable service providers.
- To offer information about your community, nearby businesses and local agencies.
- To solicit general homeowner knowledge such as protesting your property tax assessment, determining fair market value, determining the best improvements and other things.
- To assist with advice and suggestions about maintenance, protecting value and saving money.
Our goal is to have a long-term relationship with you. We want to help you be a better homeowner not only when you need to buy or sell but all of the year’s in-between. We want to earn a recommendation to your friends. We want you to consider us your REALTOR® for life.
- Affordability and stability are reasons homebuyers choose a 30-year fixed rate mortgage. It makes the payment lower than a 15-year mortgage and the principal and interest portion of the payment will be constant for 30 years.
A common belief among homeowners for decades was that they would always have mortgage payment. The Great Recession has caused many individuals to rethink that concept and make plans to get their home paid for sooner.
For people who can afford it, shorter term mortgages will provide a lower interest rate and build equity faster. A 3.09% 15-year fixed-rate mortgage compared to a 3.87% 30-year loan will have a $562.42 higher payment.
The equity would be $66,903.04 greater on the 15-year term at the end of seven years. Even after you consider the higher payment on the shorter term, the equity difference is still almost $20,000 greater.
By choosing a 15-year loan, a borrower is committing to the higher payment for the term of the mortgage in exchange for a slightly lower interest rate. Another approach would be for the borrower to acquire a 30-year mortgage and make payments as if it were on a 15-year term. The slightly higher rate would allow the borrower the flexibility of not having to make the higher payment in the event he could not afford it on any particular month.
Well last year at this time I wrote that we returned from visiting my mom in Salt Lake City and there was a “thin veneer or the white stuff” on the lawn and driveway. Again, Dave and I are going to Utah and I DON’T think we will be returning to any “veneer.” Last year, little did we know, that thin veneer was ALL we were going to get!
But, always the optimist Dave is taking the snow blower in for its yearly checkup and getting his snow tires on tomorrow. We will be ready if, when we return next week, there is any of the frosty stuff. We really hope for a good snow this year. Last year was soooo…yucky. No skiing, only inadvertent skating.
I’ll do my skating on the rink thank you.
As of this writing, Tuesday was the last race of the Bonnie Sosa series. It was at Kincaid so it was lit up nicely. This was important since daylight savings time doesn’t kick in until November 1st. (That has already happened by the time you read this I’m sure.) On that note Dave can hardly wait for the extra hour of daylight to walk the pups. Without any snow to reflect the light and it being dark anyway, it is really hard to see the moose having their breakfast. And they REALLY don’t like being interrupted while they are eating.
So with last Tuesday being the last of the Bonnie Sosa races and the PFD checks in everyone’s boxes, daylight savings time in effect, the only thing left is some holiday SNOW. So let’s cross our fingers and eyes and even our tees, and bring on that white veneer. This is Alaska after all. It rains in Seattle, cooks in Phoenix and snows in Alaska. Or so I have heard. I have seen the pictures. I wonder if Mr. El Nino has tickets to Anchorage this year. Though I know hoping for El Nino isn’t always a positive thing.
Adios for now!
Insurance and homeowners go together like peanut butter and jelly. Lenders require fire insurance at a minimum for homes with a mortgage but many owners opt for a more comprehensive coverage with a homeowner’s policy.
However, comprehensive doesn’t mean that everything is covered. Filing a claim is not the time to learn that you don’t have the right coverage. Discuss the following issues with your insurance agent to get a better understanding of your policy and whether some adjustments might be in order.
Certain kinds of pets or breeds of dogs?
Limits on jewelry and cash?
The whole concept behind buying insurance is to transfer the risk of loss that you cannot afford for an annual premium that you can. Price and coverage need to be considered when comparing policies. Call your agent and make sure you understand what you’re insured for and if there are alternatives available.
A variety of factors have led to a shortage of rental units, especially single family homes, and as a result, rents have been steadily increasing nationwide. In most markets, it is considerably less to own than to rent.
In some cases, the total house payment is less than the rent for a similar size and condition home which supports a purchase. However, when you factor in some of the financial benefits like principal reduction, appreciation and tax savings, the difference becomes even more dramatic.
Let’s look at an example of a $250,000 home with 3.5% down payment and a 4.50% mortgage for 30 years. We’ll assume a 3% annual appreciation, 25% federal tax bracket, $1,200 annual maintenance and current rent of $2,100 a month.
The total house payment with property taxes, insurance and mortgage insurance premium would be $1,834 a month. Once the principal reduction, appreciation, tax savings and maintenance have been considered, the net cost of housing is about $673 a month. It costs a tenant over $1,400 more a month to rent than to own which would amount to $17,000 in the first year alone. That’s almost twice as much as the down payment to get into the home.
In this example, the down payment of $8,750 grows to almost $94,000 in seven years due to appreciation and amortization of the loan. Owning a home is one of the few investments available that allow these personal and financial benefits.
One of the obstacles in the past five to seven years has been a borrower’s inability to qualify for a mortgage but new programs and relaxed requirements have allowed more people to be eligible for mortgages. The important step is to talk to a trusted mortgage professional very early in the home search process. Your REALTOR® can make recommendations based on experience from actual closed transactions.
Use the Rent vs. Own calculator to see what the benefits might be in your price range.
Rental homes have several distinct advantages compared to alternative investments. These advantages coupled with the opportunity for a higher yield make it a clear choice for some investors.
- Most investments must be paid for in cash. Stocks can be purchased with 50% cash but if the value goes down, more cash has to be used to keep the margin at 50%. Rentals can readily be financed with only 20-25% down payment.
- Most loans made for business or investment purposes are at a floating interest rate compared to the prevalent fixed-rate mortgage on non-owner occupied real estate.
- Terms for investment loans if possible are generally six months to a year with a possible renewal but real estate commonly has long term loans up to 30 years.
- Real estate has a long-term history of appreciation.
- Real estate enjoys tax advantages like long-term capital gains treatment, cost recovery and tax deferred exchanges that are not available to many other types of investments.
- Single family homes and similar properties give the investor a reasonable amount of control to make improvements and manage the property which are limited to simply determining when to buy and sell for other investments.
The ins and outs of stocks, bonds, mutual funds, commodities and other investments are unfamiliar with most people. It is obviously possible for anyone to invest in them but the lack of knowledge about how they work could make it more difficult to have a successful outcome. On the other hand, homeowners can use their experiences to select, manage and sell with much more confidence using a single family home for rental purposes.
To find out more about investing in rental properties, contact your real estate professional.