This Week’s Mortgage News

The latest mortgage news, from Alan Kennedy’s blog, Home Mortgage Help:

House prices are up. For the past year-and-a-half house prices have been increasing, which is good news for home owners as their investment is worth more (or perhaps recovering somewhat from loss of value during earlier years), they are in a better position with their mortgages, and they can sell their homes for a higher price. This may seem to be bad news for those looking to buy right now, as their new home will cost more, but there is some good news to offset this:

Mortgage rates are down. Your new home may cost more, but lower interest rates may help make a new mortgage more attractive. Sellers can also rejoice at this news, as the lower interest rates may entice more prospective buyers to sign on the dotted line.

Delinquent loans are up. While this is not a good sign for the economy, buyers and investors may be able to take advantage of the situation and find good deals on foreclosures. Coupled with lower mortgage rates, this could make home ownership possible for some who could not afford it otherwise.

Do you want to learn how the latest mortgage news could benefit you? Call me to discuss your situation and your home ownership goals.

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Mortgage Interest Deduction

Here is an article from Alan Kennedy’s blog, Home Mortgage Help:

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Mortgage Interest Deduction allows home buyers a little perk to help offset the pain of a mortgage. In an economic atmosphere where every deduction helps, the interest paid on a home can be deducted on income taxes, helping to lower the total taxes paid. The fate of this deduction has been debated lately, and one of the most powerful proponents of the policy, the National Association of Realtors (NAR), in an op-ed piece list the merits and voice their support for the continuation of the policy.

What does this mean to the homeowner? With over one million members, the NAR was able to rank #13 in political contributions in 2012. With its influence in Washington, its voice will be heart, and the policies it endorses will be considered. This gives the mortgage interest deduction a chance of standing and offering homeowners a bit of relief. This deduction means more to new homeowners who are paying more interest early in their mortgages than those who are near the end of their loan, and perhaps offers a small incentive to those who are considering a new home.

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Home Buying Advice

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Here are seven bits of home buying advice to keep in mind, even if you’re not actively looking for a home yet:

1. Scout out the area of the new home at different times of the day and night, weekdays and weekends. Get a good feel for the dynamics of the neighborhood.

2. Consider the school district the home is in, even if you don’t have kids. The better the school district, the higher the resale price could be.

3. Make sure your monthly mortgage and associated fees are no more than 28% of your monthly income. A higher percentage could place a strain on your budget.

4. Opt to buy one of the smaller, less expensive houses in the neighborhood rather than the largest or most expensive. These houses will appreciate at a higher rate and will be easier to sell.

5. Find out what the property taxes will be on the house. This varies widely from state to state, and county to county.

6. Hire a home inspector to detect any problems with the house which might cause financial strain in the future. Any problems could become negotiating points in making an offer on the house.

7. Prepare for buying a home by having money set aside for a down payment and other fees. The higher your down payment, the less interest you will pay.

8. Team up with a reliable real estate agent and mortgage banker to help you with this most important financial decision.

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Mortgage: How Much Can I Afford?

Here is another helpful video from Alan Kennedy’s blog:

Looking for a home or thinking of selling your existing home? Let’s talk!

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Mortgage: Can I Afford a New Home?

Here is a helpful video from Alan Kennedy of Cornerstone Home Mortgage:

Practical advice to determine whether you can afford a new home.

Please contact me if  you are looking for a new home or are interested in selling your current home:

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Help Your Kids Build a Solid Financial Foundation

Here is an article from Alan Kennedy’s blog:

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As your kids prepare to leave home you want to give them all you can to help them be successful. What you don’t want is to have them saddled with debt from student loans, new car payments and credit card debt. Teaching them responsible money management strategies and talking with them about the cold hard facts of finances can help them learn early and avoid some costly mistakes. You can help them have a solid financial foundation by focusing on a few of the principles below.

Credit Cards Need to be Handled Responsibly

Kids need to understand how credit cards work and see how the interest mounts up with each purchase and just how small the “minimum payment” impact really is. A credit card sponsored spending spree may put a smile on their face for a while and help them look great at the homecoming dance, but inevitably the bill comes due and reality sets in.

Action: Use these calclulators to help explain how much that $250 pair of jeans will actually cost when purchased with a credit card and making minimum payments. Compare that to what they would have paid if they used cash instead, and encourage them to use cash or a debit card to eliminate steep interest payments and overspending.

The More Student Loans You Take Out, the More You Have to Pay Back

Kids also need to understand that student loans need to be paid off, which sounds easy when they are applying for them because at the end of the education they expect a job. If that job doesn’t happen, the loans are still there and those payments still need to be made.

Action: Try to limit the amount of student loans your child needs by considering the cost of the school they want to attend. Consider whether the cost of the school is realistic, or if it will leave them in a mountain of debt. Help them apply for all the scholarships and grants for which they are eligible. Talk to them about attending a local school, which would reduce the cost of housing, or a less expensive school, which would be less of a financial strain. Talk to them about the impact the income from a part time job would have on their total loan amount. Go to this school loan calculator to see how long it will take to pay off a school loan and what it will really cost.

Buying a House Costs More than the Price of the House

Children need to understand what a mortgage looks like and the reality of interest and down payment and insurance, etc. The monthly payments mom and dad make are not the price of the house divided by the number of months of the loan. There is much more to it, and they need to understand this so they can begin preparing to become homeowners.

Action: Help them realize what interest is and how that is paid back, and how a large down payment can help you get a lower mortgage with lower interest rates. Go to this mortgage calculator and print an amortization schedule and talk to them about the structure of a mortgage. Talk to them about starting to save for that crucial down payment.

There are many other things you can do to help your children prepare for their financial success, but by focusing on one or more of these three principles, they should be off to a good start.

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Home Buying Considerations for Your Senior Years

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When looking at homes for sale, the listings often tout features that make the home well suited for kids and pets, such as “top-rated school system” and “fenced yard”. But if you are planning on making that home the last home you buy, paying attention to other features will save you trouble and money as you enter your senior years or find your mobility limited.

Walking Distance to Shops, Restaurants and Entertainment

Keeping active and saving money are two good reasons to live within walking proximity of places you visit frequently. But having a short, well-known commute, whether it’s walking, biking or driving, also helps you stay safe. And should you find yourself in a wheelchair or scooter, you will be able to have more independence if you can manage your errands and entertainment yourself.

One Story / Open Floor Plan

Keeping everything on one level can help you avoid falls at any age, but especially in your senior years when falls can cause more complicated health issues. Having an open floor plan with wide doors can make your home more walker and wheelchair accessible, even if it’s short term use after a surgery.

In-Law Suite

Buying a home with an in-law suite would allow for a live-in caretaker or family member, or you could move into the suite and have your children live in the main part of the house. This would give you the added security of not being alone in the house in case of emergency, having someone to help you as needed, or simply having the enjoyment of your family.

Finished Basement Suite

A finished basement suite can give you the same benefits as an in-law suite, but perhaps much more privacy. This arrangement can almost seem like a duplex, allowing you freedom and privacy while still having someone close by. In such an arrangement, the level of the house with easiest access is most appropriate for the senior.

Whether you are nearing retirement age, or just getting the babies into kindergarten, if you are planning on a long-term commitment with a new home (or looking for resale features) consider the list above. These features can be of benefit at every stage of life and make your home more attractive to buyers should you ever decide to sell.

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