Choosing Between a 15-Year or a 30-Year Mortgage

Posted on September 5, 2011 by Wes

Whether you’re building a new homing or purchasing one, it’s not only one of the largest investments you’ll probably ever make but also one of the most exciting. It can actually be a little scary as well, especially if you’re one of the millions that have to borrow money and get a mortgage on their home. You’ll be amazed at the many choices that will be thrown at you in terms of different mortgages. You’ll be very wise to educate yourself and learn all you can about them. The amount of money you can save by making the right choice can leave you extra money for furnishing your dream home! Whereas years ago, most homeowners chose the longest term mortgage they could get because it gave them smaller payments, today many are going for shorter term such as 15 years rather than the traditional 30-year mortgages of the past. Which one will work best for you?

Obviously, the interest you’ll be paying on your mortgage will play a large part in your decision. A 15-year mortgage is generally going to have lower interest rate than a 30-year mortgage, often from a ¼ to ½% lower. You’ll also have your home paid off in half the time. Most homeowner also don’t realize how much interest they’ve actually paid on their home by the time the loan is paid in full. Here’s an example. A homeowner borrowing $100,000 at 6% interest for 30 years will end up paying a total of $127, 545 in interest over the life of the loan. That same homeowner borrowing $100,000 at 5.75% for 15 years will pay $49,474 in interest.

That’s quite a sizable difference and almost makes it sound like the perfect choice. However, there are other factors to consider. Interest paid on mortgages loans is considered a huge tax break and one that’s available for every income bracket. For someone in a higher tax bracket, they’re not going to save quite as much on interest after the savings for the deductible interest is factored in the equation. Just something else you may want to keep in mind when choosing your loan term.

A 30-year mortgage is still going to cost you more in interest than a 15-year mortgage even with the tax savings. So, why the dilemma you’re probably asking. The payment on the 15-year mortgage is going to be higher than with the longer term loan, which will leave you with a lot less income to invest in other ways. The amount you’re saving each month by going with a 30-year mortgage can be put into an investment portfolio for your future. When your mortgage is paid off, you can have a nice nest egg sitting there, provided you actually invested the difference and depending on the type of investments.

However, another choice would be to wait until the 15-year mortgage is paid and then investments that equal what the difference was with the two monthly payments or the amount of your 30-year payments after the tax break. These are both financial strategies you can go over to help you determine which long type is going to work best for you in the long term. Obviously, the trends of the market are going to have a lot to do with the overall results, but generally the 30-year mortgage offers you more in terms of investment growth.

In spite of the many facts that point to reasons why a 30-year mortgage seems like a better idea, many homeowners are choosing a 15-year mortgage because it gives them the opportunity to own their home “free and clear” in half the time. Take your time making this huge decision so you’ll make the choice that works best for you and your family and, if still in doubt, consult with a financial advisor.

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Learning About a Buyer’s Market

Posted on September 5, 2011 by Wes

Depending on where you live, homes may be better at selling or better for buying. In other words, it will be a seller’s market or a buyer’s market, although, at times it may actually be both. There is certain criterion that contributes to an area being called a buyer’s market.

In an average real estate market, real estate agents expect a home to sit on the market for approximately six months before it sells. Of course, some homes may sell much sooner whereas other homes may take longer but this is the average expected time. The real estate agents document the DOM (days on the market) of every home they currently have listed as well as those listed in the past and when they’ve sold. With this average of six months in mind, an MLS (multiple listing services) can easily be sitting on an inventory of homes for sale for six months. If these homes begin to sell slower and they’re sitting on the market for more than six months, the market is described as a buyer’s market. A seller’s market is when they sell before the six month average.

When there’s a buyer’s market in place, it means there are not enough buyers for the number of homes on the market. When this happens, it takes longer to sell the homes and, consequently, the prices and values of the homes decreases. Obviously, this is good for those looking for a home to buy but not good for those trying to sell their homes.

Buyer’s markets often seem to occur in the winter months mostly because people don’t really wish to move in the colder months. However, there may be less people buying homes in the winter but there are also fewer homes on the market during this time so it almost balances itself. Homes during these quieter times are often advertised more heavily and occasionally are sold for a higher price than they would sell during a busy marketing time.

Buyer’s market occurs most often in the spring or summer months. Families with children, which make up the largest buying group, will choose to buy homes during this time so they can do their moving during the summer vacation. With so many families choosing to move during the summer, the DOM may be longer and a there may become more homes than buyers, resulting in lower prices and a buyer’s market.

Although buyer’s markets generally don’t last a real long time, there are certain circumstances that can make them last a long time. A large factory shutting down in a town may be one cause. An earthquake, flood, tornado or other natural disaster may also bring on a buyer’s market. Inflation and a poor economy are usually the most common cause of a buyer’s market.

Buyer’s looking for a home to buy during a buyer’s market often seem to have the upper hand. Often things that might not ordinarily be included in the sale will suddenly be thrown in just to make the sale. Sellers may also offer owner-financing, help with closing costs or provide other special incentives to get buyers.

A buyer’s market may not necessarily hurt the seller that has taken good care of their home through the years with regular maintenance and, therefore, has extra equity in the home. They may still be able to sell their home for its value whereas a home that has had little maintenance done through the years will be the first one whose price drops.

If there’s one thing about the buyer’s market it’s that it will never last. It can change in a day’s time in the same way as a seller’s market can change.

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How to Choose the Right Neighborhood When Buying a Home

Posted on September 5, 2011 by Wes

Too many people looking for homes today find themselves purchasing the first home they see based on their personal feelings about the house rather than spending time checking the important details about the neighborhood. While this is fine if you’re planning on buying a home in the middle of the forest or field far away from people, however, if you’re going to be around neighbors, you really need to check out the neighborhood. Even if you’re not overly concerned with your neighbors, there are many details you may want to learn before committing yourself to a community.

If you make a list of what you really want in a home and neighborhood, you’ll be much better prepared to make the right choice with different homes you look at prior to buying. With economy as it’s been in recent years, home ownership comes difficulty to many individuals and couples so when they do buy their home, they plan on being there forever. When you buy a home, you want one that will increase in value, so choose neighborhoods that are well maintained and lit up at night to discourage crimes, etc. The same goes for homes that are near public service buildings such as police stations, hospitals, etc.

If all the homes in the neighborhood are well taken care of, the value of the homes and neighborhood will increase through the years. Homes that are in districts filled with factories aren’t going to fare very well in the real estate market, at least not in value. The same goes for those near vacant buildings or those surrounded by pollution, litter and lots of traffic. These are all the kinds of things that increase crime and vandals. Keep all these factors in mind when you’re choosing a home. If the price seems really low, don’t just grab the house and count your blessings—investigate why it’s so low in price.

Some factors you may also want to consider is if you have now or plan to have children as well as your age. If you have children, you’ll definitely want to check out the best schools and look at homes near them. On the subject of schools, if you have children, check the schools out for yourself. Pay a visit to the schools and speak with the staff as well as parents that have children attending the school. If you’re an older couple, you may want an area with couples your age. While living next to families with children may offer fun and laughter, you may reach an age where all the noise may bother you.

There are different places you can look for homes in your ideal neighborhood. The internet is a fountain of information. They are sites that offer any information you want on cities and neighborhood based on almost any criteria you want including, attractions, price, school districts, etc. It’s been said that you can tell a lot about a town by its local newspaper and this is very true. If you’re considering moving to a certain city or district, check out the local rag. It can tell you a lot about activities, crime, schools, sports, etc. Believe it or not, sometimes the small town newspaper will tell you more than one from a large city.

If there are any neighborhood or town concerns, some of the local government offices can keep you informed. The Better Business Bureau will be aware of any local businesses that are or have been in the limelight. The local police department can also inform you about different areas and neighborhoods.

The best voices, however, for a neighborhood or town, are still the residents that live there. Don’t be afraid to speak with residents and get their feelings about the area and any changes they’d like to see made. You may also consider living there for awhile to learn for yourself.

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Guerrilla Marketing in For Sale by Owner Homes

Posted on September 5, 2011 by Wes

One of the biggest concerns for those considering a private home sale is marketing. Real estate agents, after all, have a number of marketing tools at their disposal. Multiple Listing Services, newspaper advertisements, real estate magazines, etc. Many have been turned off from selling their own for fear that they would not be able to attract enough interest through a lack of advertising.

Even without the resources of a real estate agent, however, there are many things that you can do in order to market your FSBO home. The classics, of course, are always available: classified ads in newspapers, yard signs with information sheets, etc. There are also many guerrilla marketing techniques you can use in selling your own home.

Guerrilla Marketing Techniques

One of the greatest boons to the private real estate industry in recent years has been the advent of the Internet. Never before has it been so cheap and so easy to advertise your For Sale by Owner home than now. Put up a classified ad on sites such as Craigslist. Sell your home through online auction sites such as eBay. You can also pay for the services of dedicated FSBO web sites which will assist you in getting out the word on your home, not only in your own community but throughout the country and even around the world. You never know just who might buy your home!

Without even touching a keyboard or picking up a pen, though, you can work on advertising your home. Simply tell your friends and family that your home is for sale by owner. Never underestimate the power of word-of-mouth marketing: many homes are sold every year based on nothing more than word-of-mouth.

Take a look around at grocery stores, convenience stores, libraries, gyms, apartment complexes, schools etc. in your town. Oftentimes they will have public bulletin boards available. Put up flyers on as many of these bulletin boards as you can and help get the word out on your FSBO home.

Another place to consider putting up flyers is at lower-priced homes in your area. If there are town homes in the neighborhood, you might find people who wish to upgrade from the town homes to a larger home without leaving the neighborhood. This could be a great place for you to pick up some potential buyers.

If there are large businesses in your area, call up their human resources departments and find out if they have bulletin boards. Chances are good that they will allow you to put up flyers on their bulletin boards for a minimal fee. This is another great way to let people know that your home is available.

Even if you don’t hire a seller’s agent and are doing a private home sale, you might consider allowing buyer’s agent to bring sellers to you. You will have to pay them a commission, although it will a smaller one than you would have to pay if you hired a seller. Write out a flyer for the agent informing them of the home, asking price and what commission you will pay them, and invite them to bring potential buyers to the property.

Some discount agents will even provide you with an MLS listing for a fee, without requiring you use them as a seller agent. Again you must pay the buyer’s agent should one of their clients purchase your home, but this is still a cheaper option than selling through a seller’s agent.

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FSBO House Hunting Tips: Picking the Right Neighborhood

Posted on September 5, 2011 by Wes

There is more to choosing a new home than just looking at houses. Almost as important as the home itself is the neighborhood. When looking for a For Sale by Owner (FSBO) home, you will want to do your research and look into neighborhoods to find an area that is just right for you; then start looking at houses in that neighborhood.

Maintaining the Value of a Property

A home is a major purchase. When looking for a home for a private real estate sale, you want to make sure that you are purchasing a home which will be able to maintain its value and actually grow in value. You want to find a clean, stable neighborhood, where other homes are well cared for and is well lit at night. People are always looking for a good home in a nice neighborhood, so picking a good neighborhood will help ensure the value of your home does not go down.

Another thing to consider is access to services, shopping, etc. Public services such as the fire department, hospitals, and more. Libraries, grocery stores. The closer a neighborhood has access to these necessities, the less you will have to travel in order to perform daily errands. Recent high gas prices have brought home how expensive it can be to have to drive long distances just to do basic things like shop for groceries.

If you have school age children, or plan to have children, you will also want to look at the local school district. Are the schools good? Would your children be well served there? Alternatively, are there good private schools in the area you might want to send them to instead? Schools are one of the most important issues for many people, and is something else to think about for preserving the value of your new FSBO purchase.

Where to Find Information on Neighborhoods

Nowadays, the Internet is a prime source of information on just about everything, including oftentimes neighborhoods. Many sites exist where you can examine and even search out new neighborhoods based on things such as demographics, crime statistics, proximity to amenities, schools and more!

Local government is also a great way to find out information. Planning offices will often have information on various neighborhoods. Local chambers of commerce, business bureaus and more can provide information on businesses in the area. You can find out about the schools in the area by even going down and checking out one or two of the schools in the district.

Community newspapers are another excellent source of information. This will give you a feel for the community, as well as inform you about events and happenings going on. If you are interested in a neighborhood you might even want to try attending any community events which they may be hosting. See what the local residents do for fun, and meet a few of them for yourself.

Don’t be afraid to find out as much as you can. After all, you are picking out a home for you and your family, it is important that you pick a good one. Feel free to ask people about the neighborhood, most people will be more than happy to tell you plenty of information about a town and about their neighborhood to help you make this important decision.

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Can I Sell My Home Privately?

Posted on September 4, 2011 by Wes 
Before making the commitment to market your own home, it's wise to consider both the benefits and commitments.

The greatest benefit and motivating factor is money. Although there's no standard commission rate, generally the average is between 5-7%. Consider a home valued at $200,000. The amount of commission charged would be between $10,000 - $14,000! It's not hard to imagine what you could do with that money in your bank account at the end of the sale.

If you have low equity on your property, the sales commission savings make private sale an attractive option.

As a private seller, you will not have to compete for your agent's time with other, more lucrative home sales. Your total energy will be focused on selling one home - yours!

There are factors to be considered. It will take time and energy to field calls, advertise and show your home. You will need to do research to determine the true value of your home. You will be the one to negotiate and close the deal. There will be some expenses and you will need to know your legal obligations. These things deserve careful consideration but they are attainable.

This website will provide the resources you need for a successful and profitable private home sale.
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