Tagged : Payment

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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

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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.

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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

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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

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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

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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.

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A recommended lender can give you specific

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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
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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 onlineand 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
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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.

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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

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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.

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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

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