So you’ve outgrown or simply grown tired of the place you’ve called home the last several years. After some serious thought, you’ve finally decided to start looking for a place that is more suited to your needs. So where do you start?
The first step of any real estate transaction is to meet with your financial advisor. Perhaps that’s you yourself. But whoever it is, have a determination made of the amount of home ownership costs that your budget can comfortably afford. The budget for home ownership costs should include mortgage payments, real estate taxes, home insurance, HOA fees, maintenance and utilities.
The next step would be to meet with a mortgage company or banker to get pre-qualified for the amount of loan that corresponds with the mortgage payment you have already determined. This is a relatively easy process, but one that is very necessary at the time that you submit an offer on a home. A seller will typically want to see evidence of your ability to purchase their home before they will consider your offer. I should note that the mortgage company will calculate a couple of debt to income ratios that will determine the maximum mortgage payment / loan amount that they feel comfortable with. And that is the amount that they typically will indicate on the pre-approval letter. If it is lower than what you calculated, it is a good wake up call. Go with the lower amount. But if it is higher, you should stick with the lower amount you already feel comfortable with. Everyone has their own appetite for risk. But when taking into consideration the security that home ownership provides, it seems prudent to stay within your comfort level.
At this point, you can start seriously looking for a home. With the internet, you can search a myriad of websites to get a feel for home styles and prices. But after some preliminary research, I recommend that you choose a real estate agent to represent you. Keep in mind that an experienced, full-time, local, service oriented real estate professional can answer questions on schools, neighborhoods, demographics, etc., to help you decide on the selection criteria of the homes you would want to view. Then, the realtor can quickly sort through the thousands of homes on the market in Montgomery County and present to you a packet with details on homes that meet your specific criteria. And then the realtor can make appointments and accompany you to view the homes and give you their professional opinion. And the best part of this is that it’s free! Remember, the seller pays the realtor commission.
After you select a home, your realtor will be an integral part of the negotiations by providing you with comparable home values and working with you and the seller’s agent on various contract issues. Once your offer is accepted, your realtor will prepare the contract and provide information on inspections, appraisals, walk-throughs, etc. In fact your realtor will be with you every step of the way until completion of the contract. Buying a new home can be one of the most stressful events you will ever encounter. But it doesn't have to be. I feel that following the above steps will minimize the stress and may even make it a fun, enjoyable adventure!
For more information, please visit my website, http://www.claudiahohlt.com/, or call me at 936-537-1656.
Sunday, May 25, 2008
Monday, May 5, 2008
Pros and Cons of Paying off a Mortgage Early
A home is often the largest asset owned by most families. Unfortunately, the mortgage associated with that asset is often the largest debt of most families. The difference between the two of course is your home equity. Home equity will steadily increase as you make your monthly mortgage payments and decrease if you take on an additional home equity loan. It will always rise and fall along with general housing prices in your area.
One way to increase your home equity more quickly is to make additional principal payments along with your regular monthly mortgage payment. Additional principal payments can rapidly increase your home equity and dramatically advance the timing of that “mortgage burning” party. For example, on a $200,000, 30 year, 6% mortgage, $100 additional principal payments will payoff that mortgage almost 5 ½ years early and avoid $49,000 in interest payments. If you also send in half of that $10,000 bonus you receive each December, the mortgage gets paid off in about 14 ½ years and you avoid $131,000 in interest payments.
There are investment gurus out there that will advise you to not pay off your mortgage. They will tell you that they can get you a higher return than 6% in other investment products, so if you have any discretionary funds, send it to them and you will come out ahead in the long run. They may be right. Only time will tell. But it is indisputable, that paying off a 6% mortgage will yield a risk-free 6% return (before taxes). The guru may promise to get you a 10% return, but I guarantee that it is not risk free. Paying off your mortgage is risk-free!
Of course, a sound financial plan typically prioritizes where discretionary funds go. Before paying off a mortgage early, you should have 6 months or more of earnings set aside in a savings account to draw on in case of emergencies. And of course you should pay off debt with higher interest rates first, such as credit cards and car loans. And taking advantage of company sponsored 401K’s is of utmost importance, especially if your employer matches your contributions. But as soon as those things are taken care of, paying of your mortgage is a prudent wealth building strategy. Plus the peace of mind that comes with owning your home free and clear is very comforting.
Should you decide that paying off your mortgage is a tactic that you wish to pursue, the ClaudiaHohlt.com team has developed a handy little tool called “The Mortgage Terminator”. It helps track those additional principal payments and provides you with an instant readout giving you your new payoff date as well as the amount of interest savings you have avoided. It is easy to use and best of all, IT’s FREE! Just respond to this email at Claudia@ClaudiaHohlt.com and it will be forward to you ASAP. My mission is “helping people on the move”. And as I’ve said before, my business is about the mission, not the commission.
One way to increase your home equity more quickly is to make additional principal payments along with your regular monthly mortgage payment. Additional principal payments can rapidly increase your home equity and dramatically advance the timing of that “mortgage burning” party. For example, on a $200,000, 30 year, 6% mortgage, $100 additional principal payments will payoff that mortgage almost 5 ½ years early and avoid $49,000 in interest payments. If you also send in half of that $10,000 bonus you receive each December, the mortgage gets paid off in about 14 ½ years and you avoid $131,000 in interest payments.
There are investment gurus out there that will advise you to not pay off your mortgage. They will tell you that they can get you a higher return than 6% in other investment products, so if you have any discretionary funds, send it to them and you will come out ahead in the long run. They may be right. Only time will tell. But it is indisputable, that paying off a 6% mortgage will yield a risk-free 6% return (before taxes). The guru may promise to get you a 10% return, but I guarantee that it is not risk free. Paying off your mortgage is risk-free!
Of course, a sound financial plan typically prioritizes where discretionary funds go. Before paying off a mortgage early, you should have 6 months or more of earnings set aside in a savings account to draw on in case of emergencies. And of course you should pay off debt with higher interest rates first, such as credit cards and car loans. And taking advantage of company sponsored 401K’s is of utmost importance, especially if your employer matches your contributions. But as soon as those things are taken care of, paying of your mortgage is a prudent wealth building strategy. Plus the peace of mind that comes with owning your home free and clear is very comforting.
Should you decide that paying off your mortgage is a tactic that you wish to pursue, the ClaudiaHohlt.com team has developed a handy little tool called “The Mortgage Terminator”. It helps track those additional principal payments and provides you with an instant readout giving you your new payoff date as well as the amount of interest savings you have avoided. It is easy to use and best of all, IT’s FREE! Just respond to this email at Claudia@ClaudiaHohlt.com and it will be forward to you ASAP. My mission is “helping people on the move”. And as I’ve said before, my business is about the mission, not the commission.
Wednesday, April 9, 2008
Home Appraisals
If you want to sell your vehicle, you can go to a “blue book” and quickly determine its worth. But if you want to find out what your home is worth, you have to get an appraisal. Wouldn’t it be nice if there was a “blue book” for homes?
The good news is that is that it’s easy to get a home appraisal. Most real estate agents have been trained to do a Comparative Market Analyses or CMA. Just like “blue book values” for vehicles, CMA’s base a home’s fair market value on recent sales information with adjustments for a property’s individual characteristics and condition. And CMA’s prepared by most realtors are free!
There are more detailed appraisals prepared by certified appraisers that are prepared with additional precision. They also have a perceived objectivity. Certified appraisals are typically required by lenders while compiling support for a home loan approval. The cost of a certified appraisal can run into the hundreds of dollars. And most times, certified appraisals are very close to one prepared by a qualified, experienced realtor.
So what are some of the factors that make your home worth more or less that another? Here are just a few:
1. The primary difference is always size of the home. When you sell your home, you are primarily selling square footage. So the more you have, the more you’re going to get.
2. Another major difference is location. As we all know, homes in Montgomery County, TX cost less than homes in Los Angeles, Ca.
Size and type of lot. A large, shady waterfront lot is on one extreme while a small, interior, barren lot is on the other.
3. Condition of home. A rotting front porch, dated wall paper and poor curb appeal are all items that some buyers just can’t look past.
4. Neighborhood amenities. A gated community, golf course, playground, and swimming pool are just a few things that attract buyers to certain communities.
5. Energy efficiency. Especially with oil prices hovering over $100 / bbl, low-e double paned windows, thick insulation, radiant barrier decking, tankless water heaters and fluorescent lighting increase the attractiveness of a home.
6. Outbuildings. Yes, you do get credit for that 40x50 air-conditioned workshop. Might not be as much as you want, but you do get credit.
When you first contact a Realtor about an appraisal, you will be asked about many of the above items. Then, prior to touring your home, the Realtor should have done a Comparative Market Analysis that takes those relevant items into consideration. By reviewing all recent sales of similar homes, the Realtor has determined the low, average and top range of those homes. He/she will then make adjustments to put yours on a comparable basis. This will provide a framework to use prior to making final adjustments after the home is toured. After all, some homes have a certain charm or allure that is hard to define, but certainly adds value. So the realtor is hard pressed to make a final recommendation until he/she has seen the unique characteristics of your home.
But keep in mind that all appraisals, whether CMA’s or certified appraisals, are only estimates. Real estate markets are dynamic and supply/demand can change rapidly. At the end of the day, a property’s value is determined by the highest offer a qualified buyer is willing to make.
If you are interested in selling your home, please feel free to contact me at Claudia@ClaudiaHohlt.com or call me at 936-537-1656. All CMA’s are done on a confidential basis. And as I mentioned above, it’s free with no obligation. For more real estate information, logon to http://www.claudiahohlt.com.
Subscribe to:
Posts (Atom)
