Monday, July 29, 2013

It Can't Hurt to Wait, Can It?

Wait.pngIt’s been said that more money has been lost due to indecision than was ever lost because of a bad decision. Regardless of whether you agree with the statement, delaying the decision to buy in today’s market is going to cost the buyer more. 

Home prices have gone up considerably in almost every market in the country in the past year and while inventories are beginning to grow, prices are expected to continue to rise. Mortgage rates jumped 1% from the beginning of May to now. They could easily reach 5% by the end of the year and continue to rise in 2014.

Many of the financial experts in the country believe that the economy will not be strong until rates are in the 7% area.

The two components that move the cost of housing are price and mortgage rates. Escalation of either one will have an affect but when both are going up simultaneously, it is dramatic. It can literally eliminate buyers who could have purchased earlier.

The following example shows what would happen to the payments on a $200,000 home if the price were to go up 3% at the same time that the mortgage rates went up 1%. Not only would the payments go up by $150.81 per month, the price of the home would be $6,000 more. Even though the down payment may not change much, the new owner would have to borrow more money. By not acting, it is costing them more in price and payment. The loss of the appreciation would have been equity had they purchased prior to the rise in price.

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Check out the Cost of Waiting to Buy to see what the effect will be using your own projections.

Friday, July 26, 2013

How To: Add Stone to Your Cement Foundation Wall

Adding stone veneer to your exterior concrete foundation wall is a great way to boost your curb appeal!
Stone veneer can be used in a lot of different ways and has a significant visual impact for a relatively small price. The look of stone can take just about any plain surface and give it an upgraded and upscale look.
We have broken this How To into just 4 simple steps, but we remind you that before you tackle any DIY project you must do your homework! A poorly done or half-finished project wont boost your curb appeal at all.

STEP 1) Pick Your Veneer
Fieldstone, Ledgestone, Riverstone...There are a lot of options and each will give you a very different look.  Remember that you want to pick a veneer that will compliment your home, not look out of place.

STEP 2) Clean the Cement Foundation Wall
Depending on how dirty the cement is, you may be able to just use water and a scrub brush.  However, if the foundation has had a sealant added you will need to use a power washer to prep it for the mortar. The stone veneer will stick best to a clean wall.
STEP 3) Apply the Mortar
Some experts recommend adding a scratch coat of mortar and allowing that to dry for 24-48 hours before adding the veneer to your foundation. Make sure that you choose a mortar appropriate for stone veneer, and follow the directions closely then preparing your mix. As always, do not be afraid to ask a professional for some assistance if you're unsure about any part of this process!

STEP 4) Add the Stone Veneer
Often the most simple way to do this is to start at a bottom corner and work your way horizontally across the surface.  keep a stick handy to help you maneuver the stones once you've place them- you don't want to get mortar on your hands.  Once your stones have been set for about 30 minutes, go back and press them into the wall again to make sure they're setting properly.

STEP 5) The unadvertised step.... Enjoy your handy-work!

For more information about how to add stone veneer to your cement foundation wall check out ehow or this SFGate tutorial.

Happy DIY-ing!

Monday, July 22, 2013

If I'd Known...

If.jpgWe’ve probably all said or at least thought “if I knew then, what I know now, I would have done things differently.” We should have stayed in school longer. We should have listened to our parents. We should have bought Apple stock in 2002 for $8.50 that sells for $400 today. Or we could have bought gold in 2000 for under $300 for a four-fold profit today.

Years from now, if we look back at 2012, we may say that it was the best buyer’s market ever. Even now, in 2013, it’s apparent that both housing and mortgage prices are going up and they may never return to the record low levels.

The housing affordability index, which is considered to be good at 100, had increased to over 200 this past December, January and February. Shrinking inventories and rising prices in most markets have caused the index to fall to 172.7 for May 2013.

This market applies equally to acquiring a home to live in or a home to use as a rental. It is estimated that about 30% of the property purchased last year was done by investors. It is understandable because the positive cash flows far exceed most other investment alternatives. HAIndex.png

Homeowners moving up in a rising market may sell their home for more by waiting but it will also cost them more for a new house. Typically, a person buys a 50% larger home when they move up. If they wait for prices to go up 10% on the $150,000 home they're selling, they’ll realize $15,000 more but will pay $22,500 more for the new home purchase. They’ll actually net $7,500 less by waiting for prices to go up and may have to pay a higher mortgage rate too.

The question homebuyers and investors alike are faced with today is whether they will be saying years from now that they seized or missed an opportunity of a lifetime.

Thursday, July 18, 2013

Spotlight Listing: 5986 S. Nine Mile

"Move-In Ready" is definitely an understatement!

This 1152 square foot ranch has been updated inside and out, top to bottom.  The home has a newer roof, soffit, facia, siding, windows, and front porch. Inside the 2.5 car attached garage you'll find new canned lighting and extra insulation- which makes the large space perfectly suited for everything from storage to large family barbecues! Oh, and don't overlook the new paver path walkway leading to the beautiful front door.

The updates continue as you tour the inside of the house.  From the front door you enter into the large living room which has new laminate floors.  From here you can wander into the kitchen and dining room which have new flooring of their own- beautiful ceramic tile.  You'll also notice that there are new stainless appliances and beautiful cabinets.  Sliding glass doors let plenty of natural light in and lead to a huge backyard complete with deck, fire pit, shed, and plenty of space for a swing-set, volleyball net, or even a garden area.

Back inside the house, you'll find three bedrooms each with newer trim and carpet, fabulous windows, and more than enough space.  The bathroom also has its share of updates.  There is a full size ceramic-tile shower, newer vanity with double sinks, and beautiful tile floors.

Before you leave, make sure that you wander down to the spacious full basement.  This space is unfinished and just waiting for you to personalize it. Toy room, home-gym, studio, or an extra living room...the possibilities are endless.

However you decide to use this beautiful home, it is ready and waiting for you now!  For more information about this Spotlight Listing take a virtual tour and contact Tim Sodini at Park Place Homes.

Monday, July 15, 2013

Retirement Without a Mortgage

iStock_000014489150XSmall.jpgPlanning for retirement is obviously important and many times, an activity plagued by procrastination. Some people plan to have their home paid for by that magical date so they won’t have payments after they retire. It makes sense to eliminate a large recurring expense before they quit working.

One strategy would be to be make regular principal contributions in addition to the payments so that it will eliminate the debt by the target retirement date.

Let’s say that a homeowner refinanced their $200,000 mortgage at 4% last year with the first payment due on May 1, 2012. Under normal amortization, the home would be paid for at the end of the term; 30 years in this example.

By making additional principal contributions with each payment, it would accelerate the payoff on the home. An extra $250.00 a month would pay off the mortgage in 10 years. $524.55 extra with each payment would pay off the loan in 15 years; and $796.23 would pay off the loan in 12 years.

Having a home paid for at retirement has the obvious benefit of no house payment. It is also a substantial asset that could be borrowed against or sold if unanticipated events should occur.

Another strategy might involve purchasing a smaller home now to use as a rental that you intend to live when you retire; see Retirement Home Now.

To make some projections to pay off your own mortgage, use this Equity Accelerator.

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Thursday, July 11, 2013

Tall Ships Celebration 2013
The Tall Ships have arrived! It's time to put on your eye patch and head to the docks!

This weekend, the largest gathering of Tall Ships in the state of Michigan will be docked along the Saginaw River in downtown Bay City. The weekend long festival will certainly be one of the most spectacular events we'll see all year. 

July 12-14th there will be guided boat tours, special maritime music in addition to a music festival, hands-on crafts for children, reenactments, a fine arts show, and even special movies and shows at the Temple Theater. Even if you're not interested in paying the $8 fee for admission to the festival itself, the entire down town area will be alive with Tall Ships excitement.  Don't miss out on this historic and spectacular event!

Visit the Tall Ships Celebration website for information about tickets, history, and all of the special events surrounding the festival.

Monday, July 8, 2013

When Rates Go Up

FreddieMac PMMS 2013.pngRising interest rates are great if you are renewing a certificate of deposit but not so much when you’re borrowing money. With interest rates on the rise as well as home prices, housing affordability is a concern for would-be homeowners.

A rough rule of thumb is that a person’s or family’s housing should not exceed 28% of their monthly gross income. While rental rates and home prices have been consistently increasing, mortgage rates have been soaring in the past month. In one week, according to the Freddie Mac Primary Mortgage Market Survey, they jumped by .5%.

This means that people have to pay a larger percentage of their income for housing unless their incomes have been increasing at an equal pace.  A $200,000 mortgage would be over $100 more per month if closed in July compared to closing at the interest rates available in January of 2013.

If rates increase by .5% by the time you close on the same size mortgage, payments would increase by almost $60 per month. In order to keep the payments the same, a borrower would have to put an additional $11,000 down to lower the mortgage amount. 

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Check out how your payment would be affected if interest rates continue to rise.

The National Association of REALTORS® suggests that housing is more affordable now than one year ago. However, with all of the variables in play including inflation that was not addressed in this piece, it is unclear how long conditions will remain “affordable”. 

Monday, July 1, 2013

FHA & VA Assumptions

fha-va assumptions.pngNot many buyers have assumed a mortgage in the past 25 years. Most people think it was because FHA and VA in the late 80’s began to require that buyers qualify for the assumptions. Not having to qualify for a mortgage would certainly benefit certain buyers. 
If a homeowner must qualify for an assumption like a new loan, they'll generally choose the mortgage with the lower interest rate.  Over the past 25 years, rates have been trending down but it appears that rates have bottomed out and will gradually increase.   As they continue to rise, the lower rates on the FHA and VA loans created in the last few years will appeal to buyers even if they do have to qualify for the assumption.
There are significant advantages to assuming one of these government insured mortgages if the current interest rate on a new loan is higher:
1. Mortgage is further into amortization schedule
2. Lower interest rate loans amortize faster than higher interest rate loans
3. Lower closing costs than a new mortgage
4. Easier to qualify than on a new mortgage
5. No appraisal required
FreddieMac PMMS.pngFHA assumptions are only allowed as owner-occupied residents. The borrower must meet current FHA guidelines for borrowers. The total debt ratio including house payment to be assumed cannot exceed 41% of borrowers’ monthly gross income.
VA loans are also assumable with buyer qualification. However, in order for the veteran Seller to have their eligibility reinstated, the buyer must also be a veteran with eligibility.
A 1% difference in the current rates and a lower assumable mortgage rate begins to make it very attractive to assume a mortgage. When the differential becomes even greater, assumptions will become more prevalent than they’ve been in over twenty years.