Real Estate – 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?

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.

Finding the Right Mortgage Lender

Obtaining a mortgage for your new home is not about picking the first person or company you find on the web or call. Selecting the right mortgage lender is essential. The mortgage lender should make you feel confident that he/she will work with you to find the best loan to fit your mortgage needs. It’s important to find a full-time professional who specializes in residential loans and is familiar with local conditions, values, and practices. A loan officer experienced in putting together unusual transactions is also beneficial.

Here are a few questions to help you select the right loan officer.

What percentage of your business is FHA & VA compared to conventional mortgages and how long have you been doing them?
What percentage of your loans close on time according to the sales contracts?
Will my credit score affect my interest rate?
Will you help me select the best loan product for me regardless of your commission?
Are there prepayment penalties on any of the loans we’re considering?
Are there any restrictions on refinancing any of the loans we’re considering?
When is my loan rate locked-in? Is there a charge for that?
Is your loan underwriting in-house?

Ask your real estate professional to recommend a few trusted lenders.

Finding the Best Interest Rate

Homebuyers will endlessly search for the right home, but what about the right interest rate? Over 50% of buyers don’t do their homework when it comes to finding the best interest rate for their new mortgage. They will accept the rates and terms from the very first lender.

There are many factors that affect the interest rates and terms provided by a lender. The borrower, the property, credit score, home location, price and loan amount, down payment, loan terms, interest rate and loan type are all interpreted differently by each lender.

Researching several lenders to compare rates and terms for your mortgage could result in a lower payment and less cumulative interest paid over the life of the loan. You would be surprised to see the difference 0.5% can make on your mortgage loan.

If you’re worried about your credit score being affected by having multiple lenders check your credit, don’t be concerned. Credit bureaus will understand when several similar requests appear during a specific period of time.

Contact www.gayleharveyrealestate.com for a list of trusted mortgage professionals to consider.

It’s Tax Time

Whether you’re doing your own income tax return or having them done professionally, you need to gather information to determine if any portion of your home ownership is deductible. Here are a few questions to help identify if you may be eligible for home ownership deductions:

Did you refinance your home this year? If YES, points may be taken as an interest charge.

Do you itemize deductions or use standard deduction? Your best bet is to compare the mortgage interest, property taxes, and other eligible deductions to see which will provide you with the largest deduction.

Are you paying mortgage insurance premiums with your payment? If YES, you may be able to use this as a deduction.

Did you purchase a home in 2014? If YES, look at your HUD-1 statement from closing for any possible deductions. An example: If the seller paid points on your behalf, you may be able to deduct them. If you need another copy of your HUD-1, contact your real estate professional.

Did you purchase or install any qualified residential energy efficiency property or improvements in 2014? If YES, you may be eligible for tax credits.

Do you have a designated exclusive area in your home for a home office? If YES, you may be able to deduct a pro-rata share of home expenses such as insurance, utilities, phone, and other expenses.

For more information, visit:

2014 IRS Home Deductions – www.irs.gov/pub/irs-pdf/p936.pdf

2014 Home Mortgage Interest Deductions – www.irs.gov/pub/irs-pdf/i1040sca.pdf

8 Luxury Home Modifications That May Reduce The Value Of Your Home

According to CNN Money, “When it comes to adding value to a high-end home, an amenity with a large price tag doesn’t guarantee a return on investment. Sometimes, a customized modification can actually reduce a home’s value”.

Here are some examples of over-the-top customizations that might not be worth the money:

Ornate Landscaping – Fancy shaped bushes, shrubs and trees can create an overwhelming appearance for a buyer. Instead, a clean cut yard with neat and simple landscaping and less fuss will be more attractive to a buyer.

Elaborate Outdoor Pools – Elaborate features in and around the pool may look appealing, however, the cost to maintain the pool area can be a deterrent or a safety factor for many buyers.

Huge tubs in the bathroom – The days of the large multi-person Jacuzzi tub are gone. Buyers desire a normal-sized tub, large shower, and most importantly, a walled off toilet area .

High-end materials – Imported high-end materials, such as marble and granite, are often too ornate. Buyers are looking for a more minimalist and natural finish in a home.

Unique Paint Color –Homes using a variety of colors throughout the cabinets, tiles, and floors will make it difficult for buyers to envision their own personalization of the home. Keep it simple with a neutral color palate.

Too much automation and security – Having the ability to control your home remotely is nice, but the automation still needs to be manageable for the homeowner. Buyers want one touch control versus a complicated system they have to decipher. An overabundance of security cameras can instill a sense of fear or insecurity of the home or area.

Oversized rooms – Creating a larger room for extra family space or a wine cellar by taking away a bedroom will possibly reduce a home’s value. A buyer’s initial detail is the number of bedrooms. When thinking about converting a garage into living space, think twice because buyers of high-end homes want a place to store their many toys.

The man cave – The emphasis on a special man room is losing interest and being disregarded and changed by buyers

Screening/media room – With large screen technology now present in most homes, media rooms are failing to offer true value to buyers.

Pet–Friendly Spaces

Pets are a part of the family too. Builder magazine featured an article on Visbeen Architects showcasing four plan ideas with pet-friendly details to amaze cat and dog owners alike.

Dining Area Just for Fido or Fluffy

A mud room right off the kitchen offers a great opportunity to serve as a pet dining area as well. It gives your pet their own special place out of sight, yet close enough to not feel left out. One floor plan idea from Visbeen Architects featured a cabinet with a bottom drawer that slightly pulls out enough to have food and water bowls. The drawer can be pushed back in when needed.

All Essential Mud Room

Mud rooms connecting the garage to the home can also be a great place to keep the daily necessities for your pet. Have a cabinet with hooks and shelves to store leashes, dog-walking supplies, food, pet carrier and other essentials. This will not only allow easy access to leashes as you take your dog for a walk, but will also provide you with organization to simplify your life. Another nice feature is a bench to sit down and prepare for outdoor exercise with Fido.

No More Muddy Paws

Whether its dirt, mud, or sand, having a shower area just inside the entrance to the mud room can provide an ideal place to wash those dirty paws and keep your floors clean.

Hideaways

Pet area containment can leave you with kennels and baby gates which stand out in your home. Instead, create hideaways to corral your canine. Coat closets at the rear entrance to your home can be a great place for a built-in kennel. Another hideaway to consider is installing pocket doors in various areas which just pull-out when needed.

The Sacrifices First-Time Home Buyers Make to Purchase a Home

Dreams do come true! The American Dream of having a place to call home where you can raise a family and create a lifetime of memories can bring about sacrifices as well. So what types of sacrifices are first-time home buyers willing to make in order to make that dream come true?

Here’s a survey from the 2014 National Association of Home Buyers and Sellers:

	All Buyers
Cut spending on luxury items or non-essential items	72%
Cut spending on entertainment	56%
Cut spending on clothes	45%
Canceled vacation plans	24%
Earned extra income through a second job	13%
Sold a vehicle or decided not to purchase a vehicle	12%
Did not need to make any sacrifices	54%

Last year, the guidelines for qualifying on a loan to purchase a home were increased, but the record-low mortgage rates are allowing more buyers to purchase homes. Therefore, this survey validates the importance of owning a home and making that American Dream come true.