More Home for a Lower Cost of Housing

What if you could live in a larger and possibly newer home for less than you are currently? Would you consider moving? Do you want to hear more?

Interest rates, while they’re expected to go up, actually took a small dip and are still hovering at the 4% or below mark for a 30 year mortgage and almost one percent less for a 15 year term. QUALITY COSTS3.png

Let’s assume that you have a $225,000 mortgage currently at 6% which has a principal and interest payment of $1,348.99. With a 4% rate, you could have a $282,561 mortgage with the same payment. A $57,000 more expensive home could help you get what you need most such as more square footage or a different location or a newer home.

If you’re going to be making that payment for years to come, why not allow lower interest rates to help you get the features you want without having to necessarily pay a higher payment. Taking that logic a little bit further, let’s see how utilities can make a difference too.

A newer home could easily have lower monthly utility costs than your current home due to being more energy efficient. Construction materials, windows, doors, insulation, modern HVAC systems and energy efficient appliances all contribute to lower utility costs. A new home with these advantages could easily save a homeowner up to 25-50% on utilities for the same size home.

The concept is simple: get the most home you can for the amount you spend on the payment and utilities. It will take some investigation and your real estate professional can help.

Get Ready for College

rental advantages.pngOne of the important things as a parent is to plan for their children’s education. Let’s look at two different approaches: a savings account or investing in rental real estate.

Assuming your child is five years old and you start putting $250 a month in a savings account earning 2%, in 13 years you’d have $44,497.41 to pay for their college. Anticipating that isn’t going to be enough, you’d have to save $500 a month to end up with $88,995.

Another way would be to make a lump sum contribution of $20,000 today in a mutual fund earning 5% that would be worth $37,713 in 13 years. You’d have to make a $47,196 initial contribution to end up with the same $88,995.

An alternative to savings would be to invest in a $100,000 home in a good area. Assuming a three percent appreciation and rent of $1,000 a month, an initial investment of $23,500 could have a future wealth position of $83,838 at the end of 13 years.

Obviously, this is just an example of why rental homes are the IDEAL investment providing Income, Depreciation, Equity build-up, Appreciation and Leverage. While rentals certainly have more risk and management than a savings account, they do provide an opportunity for a higher rate of return.

If you’re concerned about paying for college tuition in the future, it is certainly worth investigating the possibility of investing in rental homes today.

Wait a Year…It Won’t Matter?

There is a frequently quoted expression “more money has been lost from indecision than was ever lost from making a bad decision.” Regardless of the extent of its accuracy, most people can recall when procrastination has cost them money. 2015-16-250.jpg

There are markets so short of inventory that buyers have become frustrated after losing bids for several homes and have decided to wait until more homes come on the market. In the meantime, the shortage of homes is driving the prices up more by the month.

There are buyers who can’t find what they want for the price they want to pay and think that waiting will somehow change things. In some cases, what they want just keeps moving farther and farther away from them.

The other dynamic in play is, of course, the mortgage rates. While they’ve remained low for several years, most experts agree that they’re going to rise; it’s just a matter of when. If you look at what positive increases in both of these would do, it becomes apparent that waiting will matter.

A $250,000 home purchased today on a FHA loan at 4% for 30 years will have a principal and interest payment of $1,151.76. If a buyer were to wait a year and the price increased 5% and the rate went up by 1%, the payment would increase by over $200 a month. In a seven year period, the increased payment alone would cost the buyer over $17,000.

Use the Cost of Waiting to Buy calculator to see how much it will matter based on the home you want to buy and what you think the prices and rates will do in the next year.

George/Mary Ann Was Right!

Screen Shot 2015-08-01 at 10.01.25 PMIt’s been one of those weird weeks. Torn. That’s what I’ve been. Torn. Yes/No, Too Old/Just Right. Shoulda/Coulda/Woulda. What’s he talking about?

I’ve been doing two things this week: booking classes for the rest of 2015 and trail running lots of miles while focusing on getting extremely fit. Outside of those things and my wonderful evenings hanging out with my wife, Linda, not much else is happening. In a lot of ways I like that. Keep it simple, right? Well, both of those things have been going so well that the overriding theme of the week, at least in my mind, has been, “Why wasn’t I doing these things twenty years ago?”

Twenty years ago, had these activities been squarely on my plate, I could have “been a contender, I coulda been somebody.” Well, I was somebody twenty years ago and still am, but maybe you know what I mean. I think it can be difficult in life to find new passions in your, so called, twilight years. There is a part of the brain that says, “you’re doing well, you’re having a blast, but guess what? You are 63 years old and you can’t do this for much longer. You missed your chance.”

It’s the classic devil-angel confrontation (see picture above).

Screen Shot 2015-08-01 at 9.54.51 PMGeorge Eliot said, “It’s never too late to be what you might have been.” George Eliot, by the way, was really named Mary Ann Evans. George/Mary Ann was an author, probably most famous for the book Silas Marner. Well, George/Mary Ann not only hit the nail on the head, but showed up right on time. It is NEVER too late to become what you might have been, it is NEVER too late to have passion for life, it is NEVER too late to maximize the moment. Take THAT, devil shoulder!

So with George/Mary Ann firmly attached to the winning shoulder, here’s what I did this week: I booked five classes for the remainder of 2015 AND four for 2016. I will, by weeks end, run 90+ miles for the seven days, the most in AGES. I have entered my first Ultra Marathon, the North Face Challenge 50K (31+ miles) in December. And…… I feel like I’m just getting started. Busy ass, trail running Rich.

Yeah baby, we’re on a roll. And what do you do when you’re on a roll?

You keep rolling. 

It’s Hard to Imagine

iStock_000064771413_300.jpgMortgage rates below 5% since 2009, you’d think any homeowner who should refinance would have already. However, it is estimated, there are approximately 6.5 million borrowers who would benefit with significant monthly savings by refinancing.

Rodney Anderson of Supreme Lending, on his weekly radio program, described a recent pipeline meeting where they reviewed every pending mortgage application his company was processing. They had seven refinancing applicants whose current mortgage was over 9% and twelve with a rate between 7% and 9%.

“Some 550,000 American homeowners with a mortgage could save $500 or more each month by refinancing at today’s rates. Over three million could save at least $200 per month.” said Ben Graboske, CTO with Black Knight Financial Services.

Getting a lower interest rate should be reason enough but eliminating the mortgage insurance should make the decision a no brainer. With increased home values, the loan-to-value ratio may no longer require mortgage insurance which would add additional savings.

Homeowners need solid information about what their home is worth and whether they’d benefit from refinancing. The most reliable solution is to talk with a qualified mortgage professional. The internet is a great place for generalized info but each person’s situation is unique. Call if you’d like a recommendation of a trusted mortgage professional or would like to know what your home is worth.

Converting Leads Two Minute Tip 38 Part 1 of 2

Whether you are a new agent building your business or an established agent keeping your database fresh, maintaining a flow of potential customers is crucial to your success.

Attracting leads is key, but if you don’t have effective systems for converting them into closings, you’re leaving money on the table.
So let’s take a minute (or TWO….) to look at two of the four steps to successful Lead Conversion. We will complete the four in Tip 39.

Grilling Safety

iStock_000065187147-250.jpgMore people grill in July than any other month. While grilling is all about good food, fun, friends and celebrations, it is important to make sure that accidents don’t interrupt your activities. Approximately half of the injuries involving grills are thermal burns. If you work with fire, there’s a chance of getting burned.

  • 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 and connections for leaks before using it for the first time each year by using a light soapy water solution to see if bubbles appear.
  • If you 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 charcoal starters do not use fire but have a coil to ignite the coals.
  • When finished cooking, close off the grill vents to suffocate the fire and save some of the remaining charcoal.

Practice safe grilling and enjoy the occasions to cook outdoors and share with your family and friends.

Intermission, Goals and Dancing Hot Dogs

CAUTION! The video below may produce nostalgic memories, hunger or nightmares. Watch only after extreme forethought. Discretion is advised.

Happy July 1st. Half of the year is gone. It’s intermission. Anyone old enough to remember drive-in movies will fondly (or scarily) recall juggling popcorn bags, tightrope walking ice cream bars and of course, dancing hot dogs being the highlight of that halfway point at the movie.

So tell me (or someone else or just yourself), it’s intermission, how’s it going? Are you on schedule to have the kind of year you planned? Business working? Family? Recreational activities? Other things?

I don’t believe in New Years resolutions. To me, any day is a good day to set goals and strive to get better. I do know, however, that many goals are set in conjunction with the calendar year. So, since we’re at the halfway point, I’ll ask again, how is it going?

Today, I am on target for some of my goals (weight loss almost exactly at half of the goal), really close enough to call it “on target” for some others (mileage for the year and number of classes booked for 2015), and there are some that simply are not happening as I planned. As a result, I am optimistic about a few, hopeful on some others and ready to either alter a few OR find some new approaches that will help me achieve those pesky ones. Some have already been adjusted.

For me, and hopefully you as well, this is no surprise. I monitor my goals constantly. Like the blue dot steadily moving along the purple line of my iphone Google map, it helps me to be able to see where I am along the purple line that is my goals and the direction of my life. If I don’t know, well…… I don’t know. So, I want to keep track.

When the Cheshire Cat told Alice that it doesn’t matter which way you go if you don’t know where you’re going, he was unknowingly referring to goal setting and achieving. What he didn’t tell her was that if you not only don’t know (or care) where you are going AND have no idea where you are, you are in double trouble (ORRRRRR maybe completely happy not worrying about such things, but I digress…).

So what am I saying?

If unlike Alice, you have a goal, a destination, now is a good time to evaluate how your journey is progressing (as is every other day but halfway is kind of a landmark). If you’re on track – great. If not, it’s perfectly okay to alter the plan or even the goal. Yes, even the goal. They are yours, by the way, no one said they weren’t adjustable.

Intermission over. Back at it (if I could only erase the image of those hot dogs….).

Eliminate Mortgage Insurance

chopped.jpgWould you consider refinancing if your mortgage is only two or three years old and the rate is not considerably higher than what is currently available on new loans? Because you may be able to eliminate the mortgage insurance and have significant monthly savings.

Many homes have seen their values rise in the past few years. The current loan-to-value ratio may be low enough to no longer require mortgage insurance. In some cases, a homeowner might actually pay a little higher rate than they currently have but lower their monthly payment dramatically because the mortgage insurance isn’t required.

A rough rule of thumb is that mortgage insurance is not needed on loans at or less than 80% of value. There could be programs available that would allow a higher LTV than 80%.

Careful consideration should also be given to the fees required to refinance. Lenders differ in not only the rates they charge but also the fees associated with the loans and the process. If you’d like a recommendation of a trusted mortgage professional, we’d be happy to make a recommendation.

Where Have All the Sellers Gone?

unnamedLow inventories resulting in multiple offers are contributing to what experienced agents are calling the most challenging market they’ve ever worked. While buyers with resources may find the market difficult, purchasers with minimum cash and credit are struggling to find and get into a home.

First-time buyers feel the impetus to purchase because they’re renting and are concerned about being priced out of the market with rapidly appreciating prices and rising interest rates.

Sellers may not feel the same urgency because they already own a home. While they might find it appealing to change homes, they may not feel a pressing motivation causing them to act.

In some cases, sellers are so attached to their low interest rate mortgage that instead of selling, they’re keeping the home for a rental property. This may be a good investment for people with additional cash resources for the down payment and closing costs on the replacement property.

Why now is a good time to sell:

  1. The economy is strong.
  2. The majority of home sales occur in the months of May through September.
  3. Many buyers find it preferable to move in the summer because their children are out of school and they can avoid the winter weather.
  4. Mortgage rates are still very low but are starting to rise.
  5. Current low inventories in most markets result in higher prices and less competition.

Contact your real estate professional to evaluate the opportunities of making a move.