August 11, 2011
Avoid Escrow Surprises
HOW TO AVOID SURPRISES AT YOUR CLOSE OF ESCROW
Read my lips: no new bills (or other financial blips). Most savvy buyers know better than to run out and buy a car while they’re trying to buy a home. But you’d be surprised at how many don’t think twice before opening new credit accounts to buy appliances or finance the kitchen remodeling work they plan to have done as soon as they get the keys to the place. Many a lender will run a quick credit check right before closing, mostly so they can detect whether your bills – your monthly obligations – have increased to a point that pushes your debt-to-income ratio too high to qualify for the home, or would make it tough for you to pay your new mortgage. Read the rest of this entry »
October 4, 2010
Mortgage tips for retirees
Don’t let loan paydown create future cash crunch
By Jack Guttentag, Monday, September 27, 2010.
Seniors approaching retirement with a mortgage balance and financial assets are faced with the question of whether they should liquidate assets to pay off the mortgage. With income declining at retirement, the mortgage payment becomes more of a strain. Yet liquidating assets to repay the mortgage reduces the income being generated by the assets, and leaves the borrower with less to liquidate later on when needs may be even greater.
This is not the first time I have written about this topic, but the world has changed and so have some of my perspectives. I never squarely confronted the core problem, which is that we don’t know how much money we will need to support our lifestyle in retirement because we don’t know how long we will live. The only foolproof solution to that problem is to accumulate more wealth than we can possibly outlive, but most seniors can’t manage that. For all the others, the question of whether to pay off the mortgage looms large.
My general view is that for most seniors, paying off the mortgage (or paying it down by enough to reduce the payment significantly) is a prudent move. The major reason is that for most borrowers, the interest rate they are paying on their mortgages exceeds the rate they can earn with a reasonable degree of safety on their assets.
Paying off a 5 percent mortgage is an investment that yields 5 percent with no risk, so if you can do it by liquidating assets yielding 2 percent, you increase your wealth. In comparing the return on mortgage repayment with the return on alternative investments that are taxable, it doesn’t matter whether the comparison is made before-tax or after-tax. If mortgage repayment earns the higher return before-tax, it also earns the higher return after-tax. If income on the alternative investment is not taxable, however, returns should be compared after-tax.
Some borrowers facing retirement don’t want to deplete their cash by an amount sufficient to pay off their mortgage, but they will have excess cash flow for a period, which they can allocate to mortgage repayment. The borrower in this situation confronts a new investment decision every month.
February 16, 2010
Is Loan Modification for You?
Modifying a loan is the best tool that you can use if you haven’t paid several monthly payments. Once a loan is modified, it will be restructured in such a way that the monthly payments will fit into your budget. If you’re not sure about this alternative, you may need to talk to some professionals. Read the rest of this entry »
December 22, 2009
Rules for Military and Foreign Service Re: Tax Credit
Special Rules for Members of the Military, the Foreign Service
and the Intelligence Community
From The National Association of Home Builders
Congress has acknowledged the unique circumstances affecting members of the military, the foreign service and the intelligence community by making the following exceptions that apply to both the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers.
Exemption From Tax Credit Recapture Rules
- Typically, homes that are sold or that cease to be used as a principal residence within three years of the initial purchase are subject to recapture of the tax credit.
- However, qualified service members who sell or move from a tax credit home within three years of the initial purchase due to official extended duty are exempt from the recapture rule.
Extension of Tax Credit Deadlines
- The home buyer tax credit is available for qualified purchases with a binding sales contract in place on or before April 30, 2010 and closed by June 30, 2010.
- However, for qualified service members who are ordered on a period of official extended duty, these dates are extended for one year. For these home buyers, the tax credit applies to sales with a binding sales contract in place on or before April 30, 2011 and closed by June 30, 2011.
Definitions
- “Qualified service member” means a member of the uniformed services of the U.S military, a member of the Foreign Service of the U.S., or an employee of the intelligence community.
- “Official extended duty” means any period of extended duty while serving at least 50 miles away from home for a period in excess of 90 days.
For personal help with buying or selling in the Sacramento California area contact me (Gay Sprague)
October 23, 2009
List/sale price gap diminishes
The following just in from the CAR Newsline…. (California Association of Realtors)
10-15-09
Home buyers still are paying less than a home’s asking price, but had slightly less negotiating power in August than they did in July, according to the August Zillow Real Estate Market Reports. Buyers paid a median $6,525, or 3 percent, less than the last listing price on homes bought in August, down from $7,018, or 3.3 percent, less for homes bought in July, according to the report. Negotiating power peaked in January 2009, when buyers were paying 4.5 percent less than last listing price, a median of $10,096.
Sellers also continued to cut prices on unsold homes. One quarter (24.7 percent) of all homes listed for sale on Zillow had at least one listing price reduction as of Oct. 1, 2009. For the U.S. as a whole, the median U.S. price reduction was 6.6 percent off the original listing price.
Several Metropolitan Statistical Areas (MSAs) in Florida made the top 25 list of markets nationwide with the greatest gap in list price to sale price; no MSA in California made the list. In two California markets, buyers paid more than asking price during August, according to the report: In the El Centro MSA, buyers paid 2.2 percent, or a median $2,479, more than asking price; in the Stockton MSA, buyers paid 1.3 percent, or $2,515, more.
“Negotiating power is a clear reflection of inventory levels, which dropped nationally in August. Tighter supply in some markets is translating into less of a discount off listing price,” said Zillow Chief Economist Dr. Stan Humphries. “Unfortunately, the brisk spring and summer home shopping season is drawing to a close now, and with foreclosures on the rise again, inventory levels will likely head back up in the coming months, leading buyers’ negotiating power to regain the ground it lost in August.”
October 10, 2009
Spruce Up Your Home for Sale with Staging
Selling a house can be a daunting task for any home owner. One of the most important things a home owner looks for when selling property is the prospect of a quick sale. No one likes to keep a house on the market indefinitely with no likelihood of a buy. Getting a reasonably good price is another equally important factor. This is where a home staging interior designer can help. Read the rest of this entry »
July 31, 2009
Tips on How to Sell Your Home
Selling a home can depend on a number of little things other than the actual home being sold. If the prospective buyer is looking at properties of similar value and quality then it’s the little things that can help seal the deal. A negative experience from viewing the house will be enough to turn buyers away. If you are conducting the viewing yourself be honest and straight forward with the viewers and if you have an estate agent working for you ensure that they are on the same page as you. Read the rest of this entry »
