Tag: gayle harvey real estate

House Payment with an Adjustable Rate Comparison

If you have a high house payment, that doesn’t mean your home is more valuable, it may indicate that your mortgage rate is higher than it has to be.

Although fixed rates are currently low, you might consider looking into an adjustable rate mortgage.  Depending on how long you plan to own your home, an ARM may provide the lowest cost of ownership. 

There are different types of ARMs. One type, an FHA ARM, features a maximum rate change of 1% during one period and the maximum lifetime cap of 5% over the initial rate.

The chart below shows an example of a 30 year mortgage with a five year fixed rate that can adjust every one year after that, based on independent indexes.  The payment on the adjustable is $153.48 lower for the first five years/60 payments.  The lower interest rate loans amortize faster than higher interest rate loans.  The ARM in the example below has a lower unpaid balance of $4,239 at the end of the first five years.

At the end of the first period, the total savings on the ARM is $13,477.  The breakeven point for this loan would be 8.5 years. If the borrow felt they would sell the home prior to this point, the housing cost for this ARM would be lower, even if the mortgage rate increased to the maximum level at each adjustment period.

Always consult with a trusted mortgage professional to learn more about the advantages and disadvantages of varying programs.  You can also contact one of our agents to help guide you as well. 

For more information, visit:  www.freddiemac.com/pmms

Are you ready to buy a home?

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Don’t think twice! Are you thinking about buying a home, but keep delaying your decision?  You may want to reconsider based on the conditions of today’s market and the potential for the future market.

Today’s rental market has seen an increase to the point where it’s significantly less expensive to own than to rent.  The monthly cost of housing can be lower, even after repairs are factored into the comparison, as interest rates are low, principal accumulation due to amortization, as well as appreciation and tax savings from owning your home.

The Federal Reserve recently announced that they intend to start increasing the rates.  Experts are agreeing that an increase in interest rates is an inevitable conclusion. With that said, a $300,000 home today could be considerably more a year from now.   If you have a down payment of 20%, prices increase by 3%, interest rates increase by .5%, the principal and interest payment at 3.625% would be $1,094.52 for 30 years compared to $1,198.05 at 4.125%.

Here’s something to ponder when thinking about postponing a long term decision to buy a home.  If you wait too long and the rates go up, can you afford that increased amount in a monthly payment because you weren’t ready to make a decision?  Do you want to continue paying rent when you could put that money towards the equity of your own home? 

 

The Empty Nest

It’s just too big for us now!  At one time, the large home was perfect, but lifestyles change, kids grow up and move out on their own.  The house doesn’t seem to fit the family needs anymore.  So maybe downsizing to a smaller home will meet this new empty nest lifestyle.

You may ask, why do I want to downsize and what are the benefits to a smaller home?  Here is a list to consider:  

  • It’s easier to maintain both inside and out so there’s not as much to house clean or lawn to mow
  • Convenience of a single level  for simple living
  • Lower utilities, property taxes, and  insurance
  • Possibly more energy efficient  and lower maintenance

How about the financial benefits from the equity in your larger home?  Here is a list of possible ways to utilize the money:

  • Invest for your retirement income
  • Buy that second home
  • Travel to those places you’ve longed to visit
  • Invest in an education for your children or yourself
  • Set aside a nest egg to cover unexpected expenses
  • Tax-free money? Your profit, in most cases, will be tax-free up to the exclusion limits set by the IRS.

The empty nest lifestyle is a big life change, and there will be expenses associated with selling your home and buying a new one.  Make sure you take the time to review the potential benefits and outcomes of downsizing to a smaller home.  If you have questions, contact Gayle Harvey Real Estate to find out what your current home is worth. We will also help you find the right home for the next stage of your life. 

The Most Popular Trends in Kitchen and Bathroom Design

If you’re thinking about updating your home, kitchens and bathrooms still top the list as the most popular construction renovations.  According to Residential Architect, they have identified some of the latest trends in kitchen and bathroom design.

It’s not just about cooking! Kitchens are becoming the central hub of the family home.  Yes, kitchens are where you store and prepare food, but kitchens are also being used for family gathering, entertaining family and friends, and for everyday living.  How many of you have a computer, phone chargers, or some type of technology in your kitchen?  You need to have easy accessibility to that recipe you saw on-line, or that “honey, please stop by the store and pick up…” for those missing ingredients.

For 2014, Residential Architect found LED lighting to be the most popular feature in a kitchen.  This feature is followed by computer areas with recharging stations, large pantry spaces, upper-end appliances, double islands, adaptability/universal design, and drinking water filtration systems.

When it comes to bathroom designs, Residential Architect found the most popular features to be LED lighting, door less showers, as well as adaptability/universal design.

So if you’re contemplating a renovation to your home, consider the current trends in both kitchen and bathroom designs.